ANNUAL REPORT
ABOUT THIS REPORT
NORMA Group publishes both financial and non-financial information in its
2020 Annual Report. In addition to the Group Management Report and
the Consolidated Financial Statements, the report also includes a Non-
financial Group Report in accordance with Sections 315c of the German
Commercial Code (HGB) in conjunction with Sections 289c to 289e HGB.
G L O B A L R E P O R T I N G I N I T I AT I V E ( G R I ) and
N O N - F I N A N C I A L R E P O R T
U N G LO B A L C O M PAC T
The Annual Report is published solely in digital form. It is available in PDF
WWW.NORMAGROUP.COM NORMA Group’s
format and as an online report.
Annual Report is published in German and English. In the event of any
deviations, the German version takes precedence. Due to commercial rounding,
minor changes may occur in the disclosure of amounts or percentage changes
at various points in this report.
When persons are mentioned in this publication, this always refers to female,
male and diverse (for example transsexual and intersexual) persons. For
reasons of better readability and/or formal or technical reasons such as
The following symbols indicate important information:
Further information can be found
elsewhere in the Annual Report.
Further information can be
found on the NORMA Group
website.
These contents are part of the Non-financial Group Report and were
subject to a separate limited assurance examination.
NON-F INANCIAL REPORT
Show content
Pageforward / back
limited space or the better findability of web texts, not all variants are always
mentioned.
Data and reporting standards
The reporting period covers the fiscal year from January 1 to Decem-
ber 31, 2020. To ensure the greatest possible timeliness, all relevant informa-
tion available up to the issuance of the assurance by the legal representatives
on March 11, 2021 is included. The Consolidated Financial Statements and
the Group Management Report have been prepared in accordance with the
International Financial Reporting Standards (IFRS), as applicable in the Euro-
pean Union (EU), as well as in accordance with the German Commercial Code
(HGB). Sustainability reporting fulfils the “core” option of the standards of the
Global Reporting Initiative (GRI).
UN GLOBAL COMPACT
GRI and
Independent Auditing
The Consolidated Financial Statements prepared by NORMA Group consist-
ing of the Consolidated Statement of Financial Position, the Consolidated
Statement of Comprehensive Income, the Consolidated Statement of Changes
in Equity, the Consolidated Statement of Cash Flows and the Notes to the
Consolidated Financial Statements, as well as the Group Management Report
I N D E P E N D E N T A U D I TO R ’ S R E P O RT and the Non-financial Group Report
A S S U R A N C E R E P O RT were audited by PricewaterhouseCoopers (PwC)
Wirtschafts prüfungsgesellschaft.
NORMA Group SE – Annual Report 2020
2
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION
T
N
E
T
N
O
C
INTRODUCTION
TO OUR
SHAREHOLDERS
CORPORATE
RESPONSIBILITY
REPORT
About This Report
Content
9
The Management Board
34 Corporate Responsibility Strategy
10
Letter from the Management Board
39 Governance
2
3
4
6
2020 Financial Figures
12 NORMA Group on the Capital Market
NORMA Group
18
23
Supervisory Board Report
Corporate Governance Report and
Declaration on Corporate Governance
CONSOLIDATED
MANAGEMENT
REPORT
CONSOLIDATED
FINANCIAL
STATEMENTS
70
85
Principles of the Group
Economic Report
110 Forecast Report
117 Risk and Opportunity Report
132 Remuneration Report
145
147
Other Legally Required
Disclosures
Report on Transactions with
Related Parties
149
150
Consolidated Statement of
Comprehensive Income
Consolidated Statement of
Financial Position
151 Consolidated Statement of Cash Flows
152
153
242
Consolidated Statement of Changes
in Equity
Notes to the Consolidated Financial
Statements
Appendix to the Notes to the
Consolidated Financial Statements
245 Responsibility Statement
246
Indenpendent Auditor’s Report
45
54
59
62
Environment
Social
Social commitment
Non-financial Report, GRI and
UN Global Compact
64 CR Performance Indicators
67 Assurance Report
FURTHER
INFORMATION
253 Glossary
258 List of Graphics
259 List of Tables
261 Overview by Quarter
262 10-Year Overview
264
Financial Calendar, Contact
and Imprint
NORMA Group SE – Annual Report 2020
3
2020 FINANCIAL FIGURES
Financial figures
Order situation
Order book 1
Income statement
Revenue
(Adjusted) material cost ratio 2
(Adjusted) personnel cost ratio 2
Adjusted EBITA 2
Adjusted EBITA margin 2
EBITA
EBITA margin
Adjusted EBIT 2
Adjusted EBIT margin 2
EBIT
EBIT margin
Financial result
(Adjusted) tax rate
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) 3
Balance sheet1
Total assets
Equity
Equity ratio
Net debt
Cash flow
Cash flow from operating activities
Cash flow from investing activities
Cash flow from financing activities
Net operating cash flow
2020
2019
Change in %
T001
EUR million
391.3
358.3
9.2
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
952.2
43.8
31.3
54.6
5.7
51.1
5.4
45.3
4.8
20.1
2.1
– 14.8
20.3
24.3
0.77
5.5
0.18
– 46.4
4.6
1,414.7
589.5
41.7
338.4
133.5
– 39.1
– 81.0
78.3
1,100.1
43.4
27.5
144.8
13.2
127.9
11.6
136.1
12.4
96.7
8.8
– 15.5
27.1
87.8
2.76
58.4
1.83
17.3
13.0
1,514.3
629.5
41.6
420.8
137.1
– 57.0
– 93.2
122.9
– 13.4
n / a
n / a
– 62.3
n / a
– 60.0
n / a
– 66.7
n / a
– 79.2
n / a
– 4.7
n / a
– 72.3
– 72.1
– 90.6
– 90.2
n / a
n / a
– 6.6
– 6.3
n / a
– 19.6
– 2.6
– 31.5
– 13.2
– 36.3
4
1_Figures as at balance sheet date Dec 31.
2_2020: adjusted by effects from purchase price allocation; 2019: adjusted by effects from purchase price allocation and one-offs.
3_Adjusted EBIT in relation to the average capital employed.
ADJUSTMENTS.
NORMA Group SE – Annual Report 2020
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION Non-financial figures
General information 1
Core workforce
Temporary workers
Total workforce
Number of invention applications
Governance / Integrity
Number of employees who were trained on compliance topics online
Defective parts
Customer complaints
Environment
CO2 emissions (Scope 1 and 2)
Energy consumption
Water consumption
Hazardous waste
Non-hazardous waste
Share of manufacturing locations certified according to ISO 14001
Social
PPM (parts per million)
average per month per entity
t CO2e
kWh / EUR thousand of revenue
liter / EUR thousand of revenue
kg / EUR thousand of revenue
kg / EUR thousand of revenue
%
Accident rate
Share of manufacturing locations certified according to OHSAS 18001 or ISO 45001
Average training hours
Female employees in relation to core workforce
accidents / 1,000 employees
%
hours per employee
%
2020
2019
Change in %
6,635
2,155
8,790
22
2,091
5.1
4.7
49,813
124.2
154.8
0.6
11.0
93.0
4.2
71.4
20.9
36.0
6,523
1,998
8,521
22
1,233
6.1
6.4
54,494
118.1
156.8
0.5
8.3
89.7
4.3
69.0
28.1
35.9
1.7
7.9
3.2
0
69.6
– 16.4
– 26.6
– 8.6
5.1
– 1.3
35.8
31.2
n / a
– 1.1
n / a
– 25.8
n / a
Share data
Initial public offering
Stock exchange
Market segment
ISIN
Security identification number
Ticker symbol
Highest price 2
Lowest price 2020 2
Closing price 1, 2
Market capitalization 1
Dividend 3
Payout ratio 3
Shares issued
April 2011
Frankfurt Stock Exchange
Regulated Market (Prime Standard), SDAX
DE000A1H8BV3
A1H8BV
NOEJ
EUR 42.38
EUR 14.38
EUR 41.88
EUR million 1,334.4
EUR 0.70
% 91.7
Number 31,862,400
1_Figures as at balance sheet date Dec 31, 2020.
2_Xetra price.
3_Subject to approval by the Annual General Meeting.
NORMA Group SE – Annual Report 2020
5
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION NORMA GROUP
NORMA Group is an international market and technology leader in joining 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 water
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 28 production facilities
as well as numerous sales and distribution sites across Europe, the Americas,
and Asia-Pacific.
Two strong distribution channels
Engineered Joining Technology (EJT)
The business area of EJT focuses on customized, engineered solutions that
meet the specific requirements of original equipment manufacturers (OEM).
For these customers, NORMA Group develops innovative, value-adding solu-
tions 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 individually
tailored to the exact requirements of the industrial customers while simulta-
neously guaranteeing the highest quality standards, efficiency and assembly
safety. NORMA Group’s EJT products are built on the Company’s extensive
engineering expertise and proven leadership in this field.
Standardized Joining Technology (SJT)
In the area of SJT, NORMA Group sells a wide range of high-quality, stand-
ardized joining technology products for various applications through different
distribution channels. Among its customers are distributors, OEM aftermarket
customers, technical wholesalers and hardware stores. Furthermore, the area
of SJT includes NORMA Group’s water business with applications for storm-
water management, drip irrigation and joining solutions for infrastructure in
the water area. NORMA Group’s extensive geographic presence, its global
manufacturing, distribution and sales capacities, its strong brands and high
service quality set NORMA Group apart from its competitors. NORMA Group
markets its joining technology products under its well-known brand names:
B
R
A
N
D
NORMA Group SE – Annual Report 2020
6
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION
NORMA Group worldwide
G001
M 1
D 2
M 1
D 2
EMEA
Germany
France
Italy
Netherlands
Poland
Portugal
Russia
Sweden
Switzerland
Serbia
Spain
Czech Republic
Turkey
United Kingdom
1_Manufacturing sites
2_Sales and distribution sites
Americas
Brazil
Mexico
USA
Asia-Pacific
Australia
China
India
Japan
Malaysia
Singapore
South Korea
Thailand
NORMA Group SE – Annual Report 2020
7
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION
TO OUR
SHAREHOLDERS
9
The Management Board
10
Letter from the Management Board
12 NORMA Group on the Capital Market
18
23
Supervisory Board Report
Corporate Governance Report and
Declaration on Corporate Governance
NORMA Group SE – Annual Report 2020
8
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION2 TO OUR SHAREHOLDERS TO OUR SHARHOLDERS
The Management Board
Dr. Friedrich Klein
Chief Operating Officer (COO)
Annette Stieve
Chief Financial Officer (CFO)
Dr. Michael Schneider
Chief Executive Officer (CEO)
NORMA Group SE – Annual Report 2020
9
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION2 TO OUR SHAREHOLDERS Letter from the Management Board
An extraordinary year lies behind us – a year we will remember for some time
to come. This is because 2020 had a lasting impact on us and our society.
The sudden outbreak of the novel coronavirus, its rapid global transmission
and the subsequent economic collapse caught all of us by surprise. This was
followed by unprecedented national and global measures to contain the
pandemic, which largely shut down all of our lives for several weeks in the
spring of 2020. Our usual globalized way of working, acting and traveling was
turned upside down.
The lockdown and the restrictions associated with the COVID-19 pandemic
also brought many challenges for NORMA Group last year. Protecting our
employees was always our top priority. In addition, we had to secure supply
chains, fundamentally change processes, and rapidly advance already-exist-
ing digitalization initiatives. On top of this came the self-imposed efforts we
undertook as part of our “Get on track” program in fiscal year 2020. These
measures from the global change program enabled us to set an important
course for optimizing our processes and increasing the flexibility and agility
of the Group in 2020, despite a difficult environment. As part of this program,
we also announced drastic measures such as the closure of our production
site in Gerbershausen by the end of 2022. The resulting relocation of produc-
tion to our plant in the Czech Republic and the elimination of a maximum of
100 jobs at our production site in Maintal are painful, but unavoidable in order
to make NORMA Group competitive again in the long term.
We achieved a great deal in this difficult environment in fiscal year 2020, even
though we had to contend with considerable losses in terms of both sales and
earnings, as did many other companies in our industry. We were unable to
compensate for the high losses we incurred in the spring of 2020 as a result
of the lockdown, despite a recovery in customer demand in the second half of
the year and a fourth quarter that was better than expected. By posting a
12.1% decline in sales to EUR 952.2 million, we were slightly ahead of the
estimates we made in October 2020. Adjusted EBITA amounted to
EUR 54.6 million and the adjusted EBITA margin to 5.7%. The decline in the
margin compared to the previous year reflects both the impact of the COVID-19
pandemic on our business and the additional expenses of around EUR 29 mil-
lion incurred as part of the “Get on track” program in fiscal year 2020 that
were not adjusted. Adjusted earnings per share were EUR 0.77, and thus
significantly lower compared to the previous year.
We have learned a lot from the corona crisis. The experiences of the past year
have made it all the more clear how important it is for us as a globally oper-
ating Group to adapt to sometimes rapidly changing conditions and to be able
to respond flexibly to them. But we also saw last year that we are right on
track with our long-term strategy, the diversification of our business and our
focus on future markets with the megatrends of climate change and resource
scarcity. Our water business also proved to be very crisis-resistant in COVID-19
year 2020 growing by 6.7% year-on-year. Our activities in the area of
electromobility also continued to gain momentum. With the eM-Twist, we
developed a new quick connector for battery-powered vehicles in 2020 that
is extremely lightweight and can be installed in a space-saving manner. This
means it is ideally suited for use in thermal management systems in electric
vehicles and hybrids. In addition, the connector saves around one third of CO2 in
its production compared to similar connectors in conventional cooling systems.
We also further developed and sharpened our strategy in fiscal year 2020.
By focusing on the specific market requirements in our strategic business fields
of Water Management, Industrial Applications and Mobility and New Energy,
we will continue to develop targeted products and solutions that meet our
customers’ needs. Processes and costs will continue to be systematically
optimized, and the organization will be aligned even more closely to the
requirements of the respective end markets. In this way, we hope to achieve
targeted and selective growth in our business fields and further improve our
value creation.
Through all of these efforts, we are focusing on strengthening our innovative
capabilities. After all, only innovative companies will be able to survive on the
market in the long term. The fact that we have an excellent team of developers
and product engineers at NORMA Group was also demonstrated by the recent
NORMA Group SE – Annual Report 2020
10
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION2 TO OUR SHAREHOLDERS example of a new product development from last year: When face coverings
were in short supply at the beginning of the pandemic, an interdisciplinary
team at NORMA Group developed a face shield within only a few weeks that
offers functionality and wearing comfort in equal measure, protects the eyes
and, in combination with a mouth-nose protector, significantly reduces the
risk of droplet infection. We thus made a contribution to alleviating the acute
shortage of face shields at the beginning of the pandemic.
To express our confidence in the continued positive development of
NORMA Group, we will propose a dividend of EUR 0.70 to you, dear share-
holders, at this year’s virtual Annual General Meeting on May 20, 2021. We
are thus paying out almost 92% of our adjusted net income this year, partly
offsetting the reduced dividend from last year. In the long term, we will return
to our customary dividend strategy with a payout ratio of around 30 to 35%
of adjusted net income.
We would like to express our special thanks to our more than 8,700 employees
worldwide. They have done a great job and have helped to steer NORMA Group
through these turbulent times through their commitment, flexibility and
solidarity.
Let’s successfully master the challenges in 2021 as well!
Sincerely,
Dr. Michael Schneider
Chief Executive Officer
(CEO)
Dr. Friedrich Klein
Chief Operating Officer
(COO)
Annette Stieve
Chief Financial Officer
(CFO)
This example shows once again how we live up to our corporate responsibil-
ity by coming up with innovative ideas. And we also made important progress
in other areas of sustainability last year. For example, in the environmental
area, we further tightened our climate target and launched the purchase of
electricity from renewable sources at our biggest European plants. In the social
area, a special focus was placed on containing the effects of the COVID-19
pandemic and protecting our employees. In the area of governance, we
updated and further improved the compliance management system with
regard to our behavioral guidelines and the associated training concept. The
basis of our commitment is our commitment to the ten principles of the UN
Global Compact in the areas of Human Rights, Employees, the Environment
and Anti- corruption. Our commitment to corporate responsibility and the
related measures are firmly anchored in our company strategy. Our improved
rating in various external sustainability rankings confirms our approach.
Dear shareholders, the performance of the NORMA Group share reflects the
ups and downs of the past year. In line with the market as a whole, our share
also reacted to the news about the global spread of the novel virus in the
spring of 2020 with bitter price losses. In fact, it even reached its lowest level
since the IPO in mid-March. As the year progressed and the markets eased,
however, the share price recovered and, at EUR 41.88 at the end of the year,
was even 10.2% above the opening price at the beginning of the year.
The times are and remain out of the ordinary. Even now, it is not yet possible
to foresee what challenges the pandemic will still hold in store for us. One
thing is certain: COVID-19 will continue to keep us busy in the current year.
Nevertheless, we look to 2021 with confidence. With our business model
geared to different end markets, our focus on the megatrends of climate change
and resource scarcity, and our solid financial situation, we are well positioned
for the future. We remain committed to our mission of being the global market
leader for joining and fluid-handling technology in today’s and tomorrow’s
markets.
NORMA Group SE – Annual Report 2020
11
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION2 TO OUR SHAREHOLDERS NORMA Group on the Capital Market
• NORMA Group share ends 2020 stock market year up 10.2%
• Annual General Meeting resolves minimum dividend of EUR 0.04
• Excellent Investor Relations work recognized once again.
Indices worldwide end volatile 2020 stock market year with
new all-time highs despite corona pandemic
The 2020 stock market year was characterized by very high volatility. After
an initial price rally at the beginning of the year with new all-time highs for
the global indices, a massive price correction set in in March. The main
negative factor was the global spread of the coronavirus and the associated
economic and social restrictions. With the decline in infection figures in the
second quarter and the gradual easing of national lockdowns, the interna-
tional stock markets regained momentum in the second quarter. This devel-
opment was supported above all by the expansionary monetary and fiscal
policies of central banks and the promise to provide extensive COVID-19
bailout packages by governments worldwide. Alongside the strong recovery
of the Chinese economy in the second half of the year, these measures
provided a tailwind for the international financial markets. In this environment,
a renewed rally on the stock markets began in November 2020 despite the
renewed sharp rise in infectious disease figures. This was triggered, among
other things, by the election results in the USA and the start of coronavirus
vaccinations. Despite renewed and even tighter lockdowns, this upswing was
only marginally curbed at the end of 2020, after which numerous indices ended
the 2020 stock market year at new all-time highs in some cases.
The performance of the German stock market was also strongly influenced
by the effects of the COVID-19 pandemic. Germany’s leading index, the DAX,
ended 2020 at 13,719 points, up 3.5% on the end of 2020. The MDAX per-
Index-based comparison of NORMA Group’s share price performance in 2020 with DAX, MDAX, SDAX and MSCI World Automobiles
G002
in %
180
140
100
60
20
Jan.
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
NORMA Group SE
DAX
MDAX
SDAX
MSCI World Automobiles
NORMA Group SE – Annual Report 2020
180
140
100
60
20
12
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION2 TO OUR SHAREHOLDERS formed even better, rising 8.8% to close the year at 30,796 points. The SDAX,
which also includes the NORMA Group share, closed 2020 at 14,765 points
and thus recorded a significant gain of 18.0% compared to the year-end level
in 2019. The performances of the US stock exchanges was quite similar: The
US indices were initially confronted with the fastest fall in the history of the
US stock market in the first half of 2020, but were subsequently able to more
than compensate for the losses by the end of the year. The Dow Jones Index
ended 2020 up 7.2%. The broader S&P 500 Index ended the 2020 stock mar-
ket year at a new record high and was up 16.3%. The MSCI World Automo-
biles Index, which is regarded as a trend indicator for the global automotive
market, recorded a significant increase of 79.7% compared to the end of 2019
and closed at 276 points on December 30, 2020.
The average daily Xetra trading volume of the NORMA Group share was
88,689 shares and thus considerably lower in 2020 compared to the previous
year (2019: 97,960 shares). Accordingly, the NORMA Group share ranked
34th out of 70 in the SDAX in terms of trading volume in December 2020
(Dec 2019: 25th out of 70 in the SDAX). This resulted in lower average daily
trading turnover of EUR 2.4 million in terms of value compared to the previous
year (2019: EUR 3.6 million).
The total number of shares traded on average per trading day in 2020 was
266,646 (2019: 277,693). Trading was distributed among the various trading
venues as follows:
Performance of the NORMA Group share
Distribution of trading activity in 2020
As was the case for many other companies in the automotive sector, the 2020
stock market year was also characterized by a clear V-shaped course. The
share entered the new stock market year on January 2 at a price of EUR 38.00.
In line with the price correction on the international stock markets in March,
the price of the NORMA Group share also fell dramatically. The share under-
performed the reference index SDAX and marked its lowest level since the
IPO. The international financial markets subsequently regained momentum.
In this environment, the NORMA Group share also showed a steady upward
trend, gradually recovering the price losses from the first quarter of 2020. The
share reached its highest level of the year of EUR 42.38 on December 31 and
ended the stock market year at a closing price of EUR 41.88. This represents
an increase of 10.2% compared to the closing price at the end of 2019.
35%
Block trades
31%
Alternative
trading platforms
Trading volume decreased
G003
34%
Official trading
As of December 31, 2020, the market capitalization amounted to approxi-
mately EUR 1.33 billion (2019: EUR 1.21 billion). This is based on an unchanged
number of shares of 31,862,400 compared to the previous year. Measured by
the free float market capitalization relevant for determining index member-
ship, which has been 100% since 2013, the NORMA Group share ranked 12th
out of 70 in the SDAX at the end of December 2020 (Dec 2019: 12th out of
70 in the SDAX).
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 SE has a regionally
highly diversified shareholder base with a high share of international inves-
tors mainly from the UK, Germany, the United States, France and Scandinavia.
NORMA Group SE – Annual Report 2020
13
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION2 TO OUR SHAREHOLDERS At the end of the reporting year, 0.06% (2019: 0.03%) of NORMA Group shares
were held by the Management (Management Board in its current composi-
tion). 4.0% (2019: 3.9%) were held by private investors. The remaining share
of around 96% was held by institutional investors. The number of private
investors (excluding the Management Board in its current composition and
the Supervisory Board) increased significantly during fiscal year 2020 and
stood at 5,019 at the end of December 2020. The number of private investors
had stood at 4,555 at the end of December 2019.
Free float by region
8%
France
13%
USA
Voting rights notifications in 2020
Based on the voting rights notifications received by the end of 2020, shares
of NORMA Group designated as free floating and exceeding 3% are held by
the following institutional investors:
29%
United Kingdom
Voting rights notifications
T002
as of December 31, 2020
Allianz Global Investors GmbH, Frankfurt / Main, Germany
15.20%
2020 Annual General Meeting
G004
26%
Germany
5%
Scandinavia
19%
Rest of World
therof Allianz Global Investors Fund SICAV, Senningerberg, Luxembourg
therof Allianz SE, Munich, Germany
Ameriprise Financial Inc., Wilmington, DE, USA
thereof Threadneedle (Lux), Bertrange, Luxembourg
Impax Asset Management Group Plc, London, UK
T. Rowe Price Group, Inc., Baltimore, Maryland, USA
T. Rowe Price International Funds, Inc., USA
3.30%
5.28%
4.13%
4.90%
5.08%
5,01%
3,92%
As of December 31, 2020. Please refer to the
information on the voting rights notifications received. All voting rights notifications are
published on the Company’s website.
WWW.NORMAGROUP.COM
APPEND IX TO THE NOTES for further
TheAnnualGeneralMeetingofNORMAGroupSEwasheldinFrankfurt/ Main
on June 30, 2020. Due to the COVID-19 pandemic, the Annual General Meet-
ing was held for the first time as a purely virtual event without shareholders
or their proxies being physically present. Of the 31,862,400 shares with vot-
ing rights, 24,812,442 shares or approx. 78 percent of the share capital were
represented in the voting. 31 shareholders participated live in the virtual Annual
General Meeting. NORMA Group’s shareholders approved all agenda items.
Among other items, the Supervisory Board and Management Board were
discharged by a clear majority. The remuneration system was also approved
by the Annual General Meeting. The proposal of the Management Board and
Supervisory Board to distribute a minimum dividend of EUR 0.04 per share
(2019: EUR 1.10) due to the impact of the corona pandemic was approved by
the Annual General Meeting by a majority of 99.90%. The total amount
distributed was approximately EUR 1.3 million (2019: EUR 35.0 million). This
resulted in a payout ratio of 1.5% of the adjusted net profit for fiscal year 2019
of EUR 87.8 million (2019: 30.5%). All voting results can be found in the Investor
Relations section of the NORMA Group website.
WWW.NORMAGROUP.COM
NORMA Group SE – Annual Report 2020
14
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION2 TO OUR SHAREHOLDERS
Directors’ Dealings
Analysts covering NORMA Group
T003
Three transactions were reported as Directors’ Dealings in fiscal year 2020.
These can be found in the Corporate Governance Report.
CO R P O R AT E
GOV ER NAN CE R EPORT
Baader Bank
Bankhaus Lampe
Bankhaus Metzler
Peter Rothenaicher
Christian Ludwig
Jürgen Pieper
Analysts covering NORMA Group
Bank of America Merrill Lynch
Kai Müller
17 analysts from various banks and research firms currently follow
NORMA Group. As of December 31, 2020, eight analysts recommended
buying the share, seven advised to hold the share and two recommended
selling the share. The average target price was EUR 32.15 at the end of Decem-
ber 2020 (2019: EUR 39.11).
Berenberg Bank
Commerzbank AG
Deutsche Bank AG
DZ Bank AG
Pareto Bank ASA
Hauck & Aufhäuser
HSBC
Philippe Lorrain
Ingo-Martin Schachel
Tim Rokossa
Thorsten Reigber
Tim Schuldt
Christian Glowa
Jörg-André Finke
Dr. Hans-Joachim Heimbürger
Alexander Wahl
Frank Schwope
Harald Eggeling
Daniel Kukalj
Franz Schall
G005
Kepler Cheuvreux
MainFirst Bank AG
7
NordLB
Hold
ODDO BHF
Quirin Privatbank
Warburg Research GmbH
Analyst recommendations
8
Buy
as of December 31, 2020
Sustainable Investor Relations activities
2
Sell
NORMA Group’s Investor Relations activities seek to further increase aware-
ness of the Company on the capital market, strengthen long-term confidence
in its share and achieve a realistic and fair valuation. For this reason, Man-
agement and Investor Relations hold many discussions with institutional
investors, financial analysts and private shareholders over the course of the
year. Due to the global spread of the COVID-19 pandemic, these took place
almost exclusively virtually in the past fiscal year.
NORMA Group SE – Annual Report 2020
15
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION2 TO OUR SHAREHOLDERS The Management Board and Investor Relations team of NORMA Group con-
ducted 16 roadshows in the world’s most important financial centers in fiscal
year 2020. Furthermore, NORMA Group attended the following conferences:
NORMA Group receives award
for its IR work again
• BAADER Investment Conference, Munich
• Bankhaus Lampe Sommerkonferenz Deutsche Aktien
• Berenberg / GoldmanSachs9thConference
• Commerzbank German Investment Seminar, New York
• Commerzbank Corporate Conference
• dbAccess Conference
• DZ BANK Equity Conference
• KeplerCheuvreuxGermanCorporateConference,Frankfurt / Main
• Oddo BHF Forum, Lyon
• Quirin Champions Conference
• Quirin Konferenz
• ESG SRI Conference
• Société Général Nice Conference
NORMA Group’s IR activities were recognized once again in fiscal year 2020.
The company ranked 6th out of 60 in the MDAX segment in the “Investors’
Darling” competition (NORMA Group was still listed in the MDAX during the
period under review). In the IR Magazine Awards Europe 2020, the Investor
Relations team’s digital presence was awarded first place in the category
“Best Investor Relations Website (Small Cap).” In addition, the 2019 Annual
Report entitled “Times Are Changing” was awarded “GOLD” in the FOX Finance
Awards. The 2019 Annual Report also achieved a good ranking in the 2020
Galaxy Awards: The report was awarded the “Silver” rating.
Share price development of the NORMA Group share since the IPO compared to the SDAX
Points
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
G006
EUR
80
60
40
20
0
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
NORMA Group SE (RHS)
SDAX (LHS)
NORMA Group SE – Annual Report 2020
16
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION2 TO OUR SHAREHOLDERS 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 interested parties can register for the distribution list by e-mail. The con-
tact details of the IR team are also available on the company’s website.
WWW.NORMAGROUP.COM
Key figures for the NORMA Group share since the IPO in 2011
T004
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011 8. Apr. 2011 1
Closing price
on Dec 31 (in EUR)
Highest price
(in EUR)
Lowest price (in EUR)
Score of the
comparison index 3
as of Dec 31
Number of
unweighted shares
as of Dec 31
Market capitalization
(in EUR million)
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
41.88
38.00
43.18
55.97
40.55
51.15
39.64
36.09
21.00
16.00
21.00 2
42.38
14.38
49.26
26.36
70.15
40.44
63.79
39.95
51.54
35.20
53.30
38.82
43.59
30.76
39.95
21.00
23.10
15.85
21.58
11.41
n/a
n/a
14,764.89
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
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
1,334
1,211
1,376
1,783
1,292
1,630
1,263
1,150
669
510
669
88,689
2.4
97,960
3.64
95,624
5.38
96,906
4.74
73,571
3.20
88,888
4.10
73,932
2.80
86,570
2.53
54,432
1.04
46,393
1.45
0.18 4
0.77
0.70 4
1.7 4
91.7 4
232.7 5
1.83
2.76
0.04
0.1
1.5
20.8 5
2.88
3.61
1.10
2.5
30.5
15.0
3.76
3.29
1.05
1.9
31.9
14.9
2.38
2.96
0.95
2.3
32.0
17.0
2.31
2.78
0.90
1.8
32.3
22.1
1.72
2.24
0.75
1.9
33.4
23.0
1.74
1.95
0.70
1.9
35.9
20.7
1.78
1.94
0.65
3.1
33.5
11.8
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
Selected indices
SDAX, CDAX, Classic All Share, Prime All Share, MIDCAP MKT PR, STXE TM Automobiles & Parts Index, STXE Total Market Small Index, STOXX All Europe Total
Market, STOXX Total Market Industrials Sector Price, EURO STOXX Total Market Price, Bloomberg ESG Data Index, Solactive ISS ESG Screened Europe Small Cap
1_IPO and first trading day of the NORMA Group share.
2_Issuing price.
3_Until 2018: MDAX score; since 2019: SDAX score because 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 May 20, 2021.
5_Related to the unadjusted earnings per share. The price-earnings ratio related to the adjusted earnings per share is 54.4.
NORMA Group SE – Annual Report 2020
17
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION2 TO OUR SHAREHOLDERS
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 2020 in accordance with
the legal regulations, the German Corporate Governance Code and
NORMA Group SE’s Articles of Association. In 2020, the COVID-19 pandemic
also had a major impact on the work of the Supervisory Board of NORMA Group SE.
Meetings of the Supervisory Board in 2020
The Management Board begins each regular Supervisory Board meeting by
reporting on the overall economic situation and sector-specific economic
expectations. It reports on the respective business performance of
NORMA Group and explains the earnings situation based on key indicators
and their development compared to the previous year and the budget.
The Management Board presents a detailed risk report at each regular meet-
ing of the Supervisory Board and the Audit Committee. In this context, the
relevant risks were also assessed in 2020 with regard to their probability of
occurrence and potential effects, considering any countermeasures already
initiated. 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 have also been discussed regularly. The respective
Chairmen report to the Supervisory Board on the committee meetings.
In 2020, the Management Board also addressed the effects of the COVID-19
pandemic in great detail at each meeting, in particular the implemented
hygiene concept, cases of illness and plant closures. Occupational accidents
and measures implemented to improve occupational safety as well as quality
and delivery reliability were also discussed at each meeting, as in previous
years. Furthermore, the Supervisory Board and Management Board discussed
NORMA Group’s long-term strategy. Other topics discussed at each meeting
in fiscal year 2020, in addition to the effects of the COVID-19 pandemic,
included the status of the “Rightsizing” and “Get on track” programs and the
introduction of ERP systems.
Günter Hauptmann
Chairman of the Supervisory Board
Following the meetings with the Management Board, the Supervisory Board
met internally without the Management Board. In 2020, the regular meetings
were held on May 8, 2020, June 30, 2020, September 18, 2020, and Novem-
ber 27, 2020.
NORMA Group SE – Annual Report 2020
18
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION2 TO OUR SHAREHOLDERS The Supervisory Board intensified its cooperation with the Management Board
and executives due to the COVID-19 pandemic and again significantly
increased the frequency of its meetings compared to the previous year.
the Rules of Procedure of the Supervisory Board that raised the age limit of
the Supervisory Board from 70 to 75 years.
Given the looming pandemic, a meeting was held as early as March 16, 2020.
Among other things, the fact that the 2020 Annual General Meeting would
have to be postponed to June 30, 2020, due to the health protection require-
ments was discussed. The decision to implement several measures aimed at
protecting liquidity was also made.
At the following meeting on March 20, 2020, the Supervisory Board discussed
the 2019 Annual Financial Statements and the ongoing supplementary audit
as well as the 2019 Non-financial Group Report with the auditors (Pricewater-
houseCoopers GmbH Wirtschaftsprüfungsgesellschaft, or PwC). It also dealt
with the impact of the COVID-19 pandemic, in particular on cash flow and
the “Get on track” program, and approved the conclusion of the new Man-
agement Board contracts with Dr. Schneider and Dr. Klein.
The Supervisory Board adopted the resolution to approve the 2019 Annual
Financial Statements at its meeting on March 24, 2020, which was also
attended by the auditors (PwC). At this meeting, it was also finally decided to
postpone the Annual General Meeting to June 30, 2020, and to propose
paying only a minimum dividend of EUR 0.04 for 2019. In addition, the Man-
agement Board explained how the company’s ability to act would be ensured
against the backdrop of the ongoing spread of the COVID-19 pandemic if all
members of the Management Board, which at the time consisted of only two
people, were temporarily unable to perform their duties.
At the meeting held on May 8, 2020, among other topics, the preparation of
the 2020 Annual General Meeting and the share of women in NORMA Group’s
workforce were discussed, targets for the reduction of CO2 emissions were
set for the Management Board as part of its contracts and the contract of the
future Chief Financial Officer Ms. Stieve was approved.
At the meeting held on June 30, 2020, the Supervisory Board met to address
the virtual Annual General Meeting that had just been held, among other
matters. Furthermore, financing agreements were discussed.
A closed meeting of the Supervisory Board was held on November 19, 2020.
First, the Management Board presented NORMA Group’s strategy in detail
with a special focus on water management. Furthermore, the Supervisory
Board dealt with current information on the “Get on track” program, personnel
topics and a review of the remuneration of the Supervisory Board.
On November 27, 2020, the Supervisory Board approved the budget for fiscal
year 2021 and the medium-term planning. It also dealt with an amendment
to ABS contracts, set the target total remuneration for the Management Board
for 2021, and resolved to raise the target for the share of women on the
Management Board to one-third. In connection with the remuneration of the
Management Board, the Supervisory Board discussed the remuneration of
senior management and the workforce as a whole.
From April 8, 2020, to August 26, 2020, the Supervisory Board held seven
additional conference calls specifically on the impact of the COVID-19
pandemic. At each of these meetings, the Management Board first reported
on the number of cases of sick or quarantined persons among the company’s
employees worldwide as well as the impact on sales, earnings and liquidity.
The Supervisory Board agreed with the Management Board on which
employees could take over the duties of the Management Board at short notice
if necessary. Other topics included personnel measures and the Management
Board’s decision to voluntarily waive a share of its remuneration. The Super-
visory Board also decided to waive a share of its remuneration for 2019 and
to donate this amount to the project already sponsored by NORMA Group
with the aid organization Plan International.
In two conference calls, the Supervisory Board dealt with special topics in
connection with the “Get on Track” program. On February 21, 2020, the Super-
visory Board discussed the purchasing-related aspect of the program with
the Management Board and approved the conclusion of a consultancy agree-
ment. On June 9, 2020, the Management Board presented the plans for the
closure of the plant in Gerbershausen and personnel measures in Maintal,
which the Supervisory Board approved.
At the meeting held on September 18, 2020, the Supervisory Board resolved
in particular on the new composition of its committees and an amendment to
Furthermore, the Supervisory Board passed further resolutions outside meetings.
Among other matters, it approved the new remuneration system for the
NORMA Group SE – Annual Report 2020
19
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION2 TO OUR SHAREHOLDERS Management Board and the appointment of Mrs. Stieve as a member of the
Management Board as well as the acquisition of the minority shares in Fengfan.
Outside of meetings and conference calls, the Management Board reported
to the Supervisory Board on a monthly basis on the business development of
NORMA Group SE and the Group and provided an outlook for the current
fiscal year. The development of sales and earnings as well as incoming orders
and the order level were each presented in detail compared to the
previous year and to the planning.
In addition to these monthly reports and the Supervisory Board meetings, the
Management Board and the respective Chairman of the Supervisory Board
regularly exchanged views on important topics in fiscal year 2020. During his
absence due to illness, Dr. Schneider, who at this time also continued to per-
form the duties of Chief Financial Officer on an interim basis, was represented
in this function in the meetings and conference calls of the Supervisory Board
by the Executive Vice President Group Accounting, Tax & Reporting. Dr. Klein
also temporarily assumed all the duties of the Management Board.
New Member of the Management Board,
change of Chairman of the Supervisory Board
and reorganization of committee memberships
Mr. Hauptmann left the Strategy Committee, of which he had been Chairman
until then. Mrs. Forst, who had already been a member of the committee, took
over as Chairwoman. Mr. Wilhelms joined the committee. Mrs. Schulte remained
a member of this committee.
Mrs. Schulte became a new member of the General and Nomination Commit-
tee. Dr. Michelberger and Mr. Hauptmann remained members of the General
and Nomination Committee. Mr. Hauptmann had already become Chairman
of this committee in his capacity as Chairman of the Supervisory Board with
effect from September 1, 2020, after Mr. Berg also left the Supervisory Board
and therefore also the General and Nomination Committee with effect from
the end of August 31, 2020.
The Supervisory Board of NORMA Group SE regularly has six members. After
the previous Chairman of the Supervisory Board, Lars Berg, resigned from his
position with effect from August 31, 2020 and left the Supervisory Board, the
Supervisory Board temporarily had only five members. In March 2021, Miguel
Ángel López Borrego could be recruited for the vacant position on the Super-
visory Board. The application for the court appointment of Mr. López to the
Supervisory Board of NORMA Group was filed on March 3, 2021. The appoint-
ment decision by the court is expected soon. Mr. López will stand for election
by the shareholders at the upcoming Annual General Meeting on May 20, 2021.
Annette Stieve has been Chief Financial Officer of NORMA Group SE since
October 1, 2020. The Management Board is thus fully staffed again.
Main activities of the Audit Committee
On August 26, 2020, Mr. Berg announced that he wanted to resign from his
position as Chairman of the Supervisory Board and step down from the Super-
visory Board with effect from the end of August 31, 2020. He justified his deci-
sion by citing health problems. Moreover, the Group had now overcome the
first, most difficult phase of the COVID-19 pandemic. Mr. Berg was succeeded
as Chairman of the Supervisory Board by Mr. Hauptmann with effect from
September 1, 2020.
On September 18, 2020 the Supervisory Board resolved the following changes
to committee memberships with effect from October 1, 2020:
Mrs. Schulte stepped down from the Audit Committee. The Audit Committee
temporarily has only two members, Dr. Michelberger, who remains its Chairman,
and Mr. Wilhelms. As soon as the Supervisory Board has six members again,
the Audit Committee will be enlarged again back to three members.
The Audit Committee of NORMA Group held eight telephone meetings in 2020.
Dr. Michael Schneider, represented by the Executive Vice President Group
Accounting, Tax & Reporting during his illness, and from October 2020, also
Mrs. Stieve, participated in all meetings and telephone conferences. Other
participants were department heads from the second management level on
their respective functional topics, in particular Accounting & Reporting,
Treasury, Compliance and Internal Auditing.
The Audit Committee discussed the focus, process and results of the audit of
the individual and Consolidated Financial Statements of NORMA Group SE
with the auditors and prepared the resolutions of the Supervisory Board.
Furthermore, the Audit Committee approved certain permissible non-audit
services to be provided by the auditors (PwC).
The Audit Committee monitored the effectiveness of the internal control
system, the risk management system, the internal auditing system and the
NORMA Group SE – Annual Report 2020
20
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION2 TO OUR SHAREHOLDERS compliance management system. The Audit Committee approved the audit
plan for internal auditing in 2020. Furthermore, the Audit Committee discussed
the quarterly publications with the Management Board. Other topics discussed
by the Audit Committee included budget planning for 2021 and medium-term
planning. In 2020, the Audit Committee also dealt in particular with the effects
of the COVID-19 pandemic, the “Get on track” program, the invitation to
tender for the audit of the financial statements for fiscal year 2021, the assess-
ment of audit quality and the amendments to IDW PS 340, as well as with
the implementation of the new requirement to prepare annual financial reports
in a uniform electronic reporting format, the European Single Electronic Format
(ESEF).
Attendance of meetings, training activities, no conflicts
of interest
All members of the Supervisory Board attended 16 of the 17 Supervisory
Board meetings and conference calls in 2020. Only one conference call to
discuss a consultancy agreement was not attended by Mrs. Forst. She did,
however, participate in the passing of the resolution. The other members of
the Supervisory Board attended all 17 meetings.
The eight meetings of the Audit Committee in 2020 were each attended by
all members, Dr. Knut Michelberger (Chairman) and Erika Schulte (until
September 30, 2020) and Mark Wilhelms.
Outside of the Audit Committee meetings, the Chairman of the Audit Com-
mittee was in regular personal and telephone contact with the Management
Board and the auditors to discuss possible areas of emphasis for the audit of
the 2020 Annual Financial Statements as well as the focus of the work of the
Audit Committee in fiscal year 2020.
The eight meetings of the General and Nomination Committee in 2020 were
each attended by all members, Lars Berg (Chairman and member until
August 31, 2020), Günter Hauptmann (Chairman from September 1, 2020),
Erika Schulte (member from October 1, 2020) and Dr. Knut Michelberger.
Main activities of the General and Nomination Committee
The General and Nomination Committee held eight meetings in 2020. It
initially focused on the remuneration system for the Management Board. The
General and Nomination Committee developed a new remuneration system
together with external consultants, which was approved by a clear majority at
the 2020 Annual General Meeting. In addition, the General and Nomination
Committee led the search for a new Chief Financial Officer and, following
Mr. Berg’s departure from the Supervisory Board, for a new member of the
Supervisory Board. The committee also lead the review of the Supervisory
Board’s remuneration, the conclusion of the contract with Mrs Stieve and the
extension of the contract with Dr. Klein.
Main activities of the Strategy Committee
The Strategy Committee met three times in 2020. The Strategy Committee
deals in particular with NORMA Group’s long-term orientation towards the
various end markets. In addition, the structures and resources required for this
are also discussed in particular. In 2020, the committee dealt with the
strategy for the international expansion of the strategic business units Water
Management, Industry Applications and Mobility and New Energy in the
regions. The focus was on expanding the water business.
Similarly, all members of the Strategy Committee, Günter Hauptmann
(Chairman and member until September 30, 2020), Rita Forst (Chairwoman
from October 1, 2020), Mark Wilhelms (member from October 1, 2020) and
Erika Schulte, attended the three Strategy Committee meetings in 2020.
Due to the COVID-19 pandemic, all meetings of the Supervisory Board and
its committees in fiscal year 2020 took place in the form of telephone or video
conferences.
In 2020, educational and training measures by the company focused on infor-
mation on the COVID-19 pandemic, particularly with regard to the legal frame-
work and governmental relief measures. External consultants provided the
members of the Supervisory Board with information on current requirements
for compensation systems. In addition, members of the Supervisory Board
attended seminars offered by auditing companies and law firms, among oth-
ers, on topics relating to accounting and auditing, as well as sustainability
issues and corporate governance. Most of these training measures took place
virtually in 2020.
There were no conflicts of interest between members of the Supervisory Board
and the company in fiscal year 2020.
NORMA Group SE – Annual Report 2020
21
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION2 TO OUR SHAREHOLDERS Information on the auditor
The 2020 Annual Financial Statements for NORMA Group SE presented by
the Management Board along with the Management Report and the corre-
sponding Consolidated Financial Statements and Group Management Report
were audited by the auditing firm PricewaterhouseCoopers GmbH Wirtschaft-
sprüfungsgesellschaft. The audit mandate for the 2020 financial statements
was issued on October 12, 2020. In addition, as part of the audit, the auditor
also had to assess whether the electronic reproductions of the financial
statements and management reports (“ESEF documents”) prepared by the
Management Board for disclosure purposes comply in all material respects
with the requirements of Section 328 (1) HGB.
The auditors Stefan Hartwig and Richard Gudd attended four Audit Committee
meetings and two Supervisory Board meetings on the respective agenda
items relating to the audit of the financial statements and explained the audit
of the financial statements.
Approval of the 2020 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 (Handels-
gesetzbuch, HGB) on the basis of the International Financial Reporting Stand-
ards (IFRS) as adopted in the EU. The auditor issued an unqualified opinion
for the 2020 Annual Financial Statements, including the Management Report,
the Consolidated Financial Statements and the Group Management Report
of NORMA Group SE. The documents pertaining to the financial statements,
the Management Board’s proposal for the appropriation of net profit and both
auditor’s reports were submitted to the Supervisory Board. The Audit Com-
mittee and the Supervisory Board in its entirety thoroughly examined the
reports and discussed and scrutinized them in detail in the presence of and
together with the auditor. The Supervisory Board accepted the auditor’s find-
ings. There were no objections.
The Supervisory Board then approved the 2020 Annual Financial Statements
of NORMA Group SE and the 2020 Consolidated Financial Statements together
with their respective Management Reports at its meeting on March 18, 2021.
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 Stock
Corporation Act (AktG).
The Audit Committee and the Supervisory Board also dealt with the separate
Non-financial Group Report for NORMA Group prepared by the Management
Board as of December 31, 2020. The auditing firm PricewaterhouseCoopers
GmbH Wirtschaftsprüfungsgesellschaft has conducted a limited assurance
test and issued an unqualified audit opinion. The Management Board explained
the documents in detail during the meetings, while 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 18, 2020: “NORMA Group SE (“the Company”) has
complied with the recommendations of the German Corporate Governance
Code (“GCGC”) as amended on December 16, 2019 (published on March 20,
2020), by the Federal Ministry of Justice in the official section of the Federal
Gazette (‘Bundesanzeiger’) since its last declaration was submitted and will
continue to comply with the recommendations.” The Corporate Governance
Declarations made by NORMA Group SE are available on the company’s
website.
WWW.NORMAGROUP.COM
The Supervisory Board would like to thank all employees of NORMA Group
throughout the world along with the Management Board for their personal
efforts and successful work in a difficult fiscal year 2020. The Supervisory
Board is confident that NORMA Group will develop positively in fiscal year
2021 and wishes the Management Board and employees every success and,
above all, good health.
Günter Hauptmann
Chairman of the Supervisory Board
NORMA Group SE – Annual Report 2020
22
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION2 TO OUR SHAREHOLDERS Corporate Governance Report and
Declaration on Corporate Governance
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 achiev-
ing sustained economic success while complying with the company’s social
responsibility. Transparency, responsibility and sustainability are the principles
that determine its actions.
Declaration of Conformity to the German
Corporate Governance Code
The Supervisory Board and Management Board of NORMA Group SE have
examined in detail which recommendations and suggestions of the German
Corporate Governance Code NORMA Group SE should follow and explain
which recommendations are deviated from and which reasons were decisive
for this. The current Declaration of Conformity dated December 18, 2020, and
all other previous Declarations of Conformity are published in the Investor
Relations section of NORMA Group’s website.
The declaration of December 18, 2020, reads as follows:
With the following exceptions, NORMA Group SE (“the Company”) has com-
plied since its last declaration was submitted, and will continue to comply, with
the recommendations of the German Corporate Governance Code in de
version of December 16, 2019, published on March 20, 2020, by the Federal
Ministry of Justice in the official section of the Federal Gazette (‘Bundesanzeiger’):
1. Change of control (G.13 1st sentence)
The service agreements of two members of the Management Board
provide for a special right of termination in the event of a change of control.
If these service agreements end as a consequence of such special termi-
nation right, the Company shall pay severance at the termination date
amounting to one and a half times the severance cap, but not more than
the value of the remuneration for the remaining term of the service contract.
This is a transitional arrangement. In the service agreement with the new
member of the Management Board, this special right of termination is no
longer included.
2. Remuneration of the Chair of the General and
Nomination Committee
The remuneration for Supervisory Board membership does not take
account of the larger time commitment of the Chair of the General and
Nomination Committee. The Chairman of the General and Nomination
Committee who is also Chairman of the Supervisory Board so far does
not receive an additional remuneration for being the Chairman of this
committee whilst the Chairman and the Chairwoman of the two other
committees receive an office bonus in addition to their fixed remuneration.
The relevant remuneration system was resolved upon by the Annual
General Meeting that took place on April 6, 2011.
Since its last declaration was submitted and until the current version of the
German Corporate Governance Codex entered into force, the Company
complied, with the following exceptions, with the recommendations of the
German Corporate Governance Code as amended on February 7, 2017, pub-
lished on April 24, 2017, by the Federal Ministry of Justice in the official
section of the Federal Gazette:
1. Maximum amount in former service agreements
(4.2.3 para. 2 sentence 7)
The maximum gross option profit from the Matching Stock Program under
service agreements that were entered into before 2015 with members
of the Management Board was limited in total to a percentage of the
average annual (adjusted) EBITA during the vesting period. Under this
program, payments are still made to former members of the Management
Board.
2. Remuneration of the Chair of the General and Nomination
Committee (5.4.6 para. 1 sentence 2)
The remuneration for Supervisory Board membership does not take
account of the larger time commitment of the Chair of the General and
Nomination Committee. The Chairman of the General and Nomination
Committee who, is also Chairman of the Supervisory Board so far does
not receive an additional remuneration for being the Chairman of this
committee whilst the Chairman and the Chairwoman of the two other
committees receive an office bonus in addition to their fixed remuneration.
The relevant remuneration system had been resolved upon by the Annual
General Meeting which took place on April 6, 2011.
NORMA Group SE – Annual Report 2020
23
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION2 TO OUR SHAREHOLDERS Publication of information in accordance with Section
289F of the German Commercial Code (HGB)
The Remuneration Report for the last fiscal year, the Auditor’s Opinio, the
applicable remuneration system and the last resolution on remuneration are
publicly available on the company’s website. In addition, the Rules of Procedure
of the Management Board and the Supervisory Board and the Articles of
Association of NORMA Group are publicly available on the website.
WWW. NORM AGROUP.COM
Allocation of responsibilities between the Management and
Supervisory Boards
NORMA Group SE uses a similar type of dual management system that Ger-
man stock corporations use. Here, the Management and Supervisory Boards
are separate bodies that have different functions and powers. The Manage-
ment Board manages the company under its own responsibility. The Super-
visory Board appoints, advises, monitors and dismisses members of the Man-
agement Board. NORMA Group SE has its registered office in Maintal. It is
registered with the Hanau Commercial Register under the number HRB 94473.
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 prof-
itability 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 pro-
vide an outlook on the expected future development of NORMA Group SE at
the Supervisory Board meetings. Other recurring topics at all meetings include
the monthly and quarterly figures, risk analysis and measures aimed at min-
imizing any risks that were identified, reports by the respective committee
Chairpersons on the previous meetings held and strategic projects. All Man-
agement Board members participate in the Supervisory Board meetings.
The Supervisory Board convenes separately before or after meeting with
the Management Board.
The Chairpersons of the Supervisory Board and 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 Chairperson of the Audit Committee and the CFO also
consult with each other.
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
for measures at NORMA Group SE, but also for measures at its subsidiaries.
In order to ensure that the Management Board is promptly informed of corre-
sponding 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 comprises three members:
Dr. Michael Schneider (Chairman of the Management Board), Dr. Friedrich Klein
(Chief Operating Officer) and Annette Stieve (Chief Financial Officer). The
resumes of the three Board members are posted at the company’s website.
Dr. Schneider had also assumed the rights and responsibilities of Chief
Financial Officer until Mrs. Stieve became a member of the Management
Board in October 2020.
Resolutions of the Management Board are usually passed by simple majority.
The Chairman has the deciding vote if the vote is tied. However, the members
of the Management Board are required to make an effort to reach unanimous
decisions. If a member of the Management Board cannot participate in a vote,
their vote will be obtained at a later date. The entire Management Board is
responsible with matters of particular importance. In accordance with the
Management Board bylaws, these include the following areas: producing the
Management Board reports for the purpose of informing the Supervisory Board
and the quarterly and half-yearly reports, fundamental organizational meas-
ures, including the acquisition or disposal of significant parts of companies
NORMA Group SE – Annual Report 2020
24
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION2 TO OUR SHAREHOLDERS Responsibilities of the Management Board
T005
Member of the Management Board
Responsibilities
Dr. Michael Schneider
Chief Executive Officer (CEO)
since November 14, 2019 and
Member of the Management Board
since July 1, 2015
Born in 1963
Nationality: German
Last appointed: 2018
Appointed until: June 30, 2023
Dr. Friedrich Klein
Member of the Management Board (COO)
since October 1, 2018
Born in 1962
Nationality: German
Last appointed: 2018
Appointed until: September 30, 2024
Annette Stieve
Member of the Management Board (CFO)
since October 1, 2020
Born in 1964
Nationality: German
Last appointed: 2020
Appointed until: September 30, 2023
Group Development
Regional Organization
Group Communications
Sales, Marketing
Corporate Responsibility and ESG
(Environment, Social, Governance)
Personnel
Legal and M&A
Risk Management
Compliance & Internal Auditing
Production
Purchasing
Supply Chain Management
Operational Global Excellence
Information & Communication Technology
(ICT)
Quality Assurance
EHS (Environment, Health and Safety)
Product Development
Research and Development
Divisional Organization
Finance & Reporting
Controlling
Treasury & Insurances
Investor Relations
and strategic and business planning issues, measures related to the imple-
mentation and supervision of a monitoring system pursuant to Section 91 (2)
of the German Stock Corporation Act, issuing the Declaration of Conformity
pursuant to Section 161 (1) of the German Stock Corporation Act, preparing
the Consolidated and Annual Financial Statements and similar reports,
convening the Annual General Meeting and inquiries and recommendations
by the Management Board that are to 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.
Board meetings are usually held at least once a month. The Management
Board has not formed any committees.
Every Management 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 2020.
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 2020.
The Supervisory Board must also approve any secondary activities by a
member of the Management Board. It had already agreed that the Chairman
of the Management Board, Dr. Michael Schneider, may continue to be a
member of the Supervisory Boards of two German companies. Dr. Klein
and Mrs. Stieve do not perform any secondary activities that are subject
to approval. Details concerning ancillary activities can be found on the
company’s website. The remuneration of the Management Board is presented
in the
REMUNERAT ION REPORT.
As part of its long-term succession planning, the Supervisory Board has
developed candidate profiles for all three positions on the Management Board
together with external consultants on the occasion of the search for the new
members and the permanent appointment of the Chairperson of the Manage-
ment Board. It updates these profiles on a regular basis. Section 3 para. 7 of
the Supervisory Board’s Rules of Procedure stipulates that the Supervisory
Board shall take diversity into account in the composition of the Management
Board and that the term of office of a member of the Management Board shall
NORMA Group SE – Annual Report 2020
25
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION2 TO OUR SHAREHOLDERS not continue beyond the member’s 65th birthday. The Supervisory Board has
agreed on a possible replacement rule with the Management Board. The
Management Board conducts annual talent reviews in the regions and at
Group level at which measures for the development of employees are defined,
and reports to the Supervisory Board on the results of the talent reviews and
possible candidates to succeed them on the Management Board.
No member of the Management Board currently has reached the age limit of
65 set out in the Rules of Procedure of the Supervisory Board or will do so
during the term of their contracts.
Local Presidents in the three regions of EMEA Americas and APAC are respon-
sible for managing the business on a day to day basis. Usually, the entire
Management Board meets at least once a year with the Presidents and their
managers at the regional headquarters – Singapore for the Asia-Pacific region,
Auburn Hills, Michigan, for the Americas region and Maintal for the EMEA
region. In addition, usually individual members of the Management Board meet
regularly on-site with their respective functional teams. In 2020, these meetings
were held virtually due to travel restrictions as a result of the COVID-19
pandemic.
The managers at NORMA Group SE work in a matrix structure in which they
have both a disciplinary as well as a technical superior.
Information on the internal control system can be found in the
R I S K A N D
OPPORT UNIT Y REPORT.
Supervisory Board: members, election, independence and
length of Supervisory Board membership
Following the departure of Mr. Berg at the end of 2020, the Supervisory Board
of NORMA Group SE consisted of the following members:
• Günter Hauptmann (Chairman of the Supervisory Board
since September 1, 2020)
• Erika Schulte (Vice Chairwoman of the Supervisory Board)
• Rita Forst
• Dr. Knut J. Michelberger
• Mark Wilhelms
All members of the Supervisory Board were elected by the Annual General
Meeting and are therefore shareholder representatives. NORMA Group SE is
not a codetermined company; therefore, worker representatives are not
represented on its Supervisory Board.
Miguel Ángel López Borrego was recruited to fill the position on the Supervisory
Board left vacant by the departure of Lars Berg. The application for the court
appointment of Mr. López to the Supervisory Board of NORMA Group was
filed on March 3, 2021. The appointment decision by the court is expected
soon. Mr. López will stand for election by the shareholders at the upcoming
Annual General Meeting on May 20, 2021.
The Chairman of the Supervisory Board represents the Supervisory Board
externally. He organizes the work of the Supervisory Board and chairs its
meetings. Resolutions of the Supervisory Board may be adopted by simple
majority, with the Chairman having the decisive vote in the event of a tied vote.
All members of the Supervisory Board are independent as defined in the
German Corporate Governance Code. 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 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.
NORMA Group SE – Annual Report 2020
26
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION2 TO OUR SHAREHOLDERS All members of the Supervisory Board of NORMA Group SE have been on the
Supervisory Board for less than twelve years.
There are no consultancy, other service or work contracts 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 their
75th birthday. No member of the Supervisory Board has exceeded this age limit.
All members of the Supervisory Board are obliged to report any conflicts of
interest. Significant and not merely temporary conflicts of interest for mem-
bers of the Supervisory Board should lead to the termination of the mandate.
No such conflicts of interest arose in 2020.
The Supervisory Board evaluates its work annually as part of a self assess-
ment, most recently in February 2020. This was carried out on the basis of a
questionnaire and without the involvement of other external consultants.
Transactions between the companies of NORMA Group on the one hand and
a member of the Supervisory Board or persons or companies related to them
on the other hand must be approved by the Supervisory Board in advance.
No such transactions were concluded in 2020.
17 meetings of the Supervisory Board were held in fiscal year 2020. All
members of the Supervisory Board took part in 16 meetings. The only
meeting in which Mrs. Forst was unable to participate in person was a
conference call on a consulting contract. She participated in the passing
of the resolution, however. Details of the meetings can be found in the
SU PE RVISORY BOARD REPORT.
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 com-
plies with a reguar limit of 15 years for the term of office. These goals have
all been met. In addition, the Supervisory Board should pay attention to inter-
national activities and diversity in proposals for the election of new members.
All members of the Supervisory Board in 2020 were German citizens since
Mr. Berg, who is Swedish, stepped down from the Board. The current members
satisfy the competence profile for the Supervisory Board as a whole. Some
members have special knowledge of the industry and its markets, in particular
the automotive industry, and NORMA Group SE’s business model. Several
members have experience as executives or members of Supervisory Boards
as well as international experience. As financial experts, Dr. Michelberger
and Mr. Wilhelms in particular have expertise in the fields of accounting
and auditing as well as 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 enough time to perform their duties.
Furthermore, no separate diversity concept within the meaning of Section 289f
para. 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 nom-
inations 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 Super-
visory Board already arise from the goals mentioned above and the Rules of
Procedure. The Management Board also has an age limit of 65, which is met
by all members.
Supervisory Board committees:
responsibilities, membership and meetings
The Supervisory Board has three committees: the Audit Committee, the
General and Nomination Committee and the Strategy Committee.
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
NORMA Group SE – Annual Report 2020
27
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION2 TO OUR SHAREHOLDERS collaboration between NORMA Group SE and the auditors and ensures that
opportunities for improvement identified during the audit are implemented
promptly. It is responsible for preparing the accounting documents and adopt-
ing the Supervisory Board’s resolution on the Consolidated and Separate
Financial Statements. Moreover, it is responsible for compliance and reviews
the adherence of statutory provisions and the internal guidelines.
The General and Nomination Committee is comprised of the Chairman of the
Supervisory Board, Günter Hauptmann (Chairman of the General and Nomi-
nation Committee since September 1, 2020), Dr. Knut Michelberger and, since
October 1, 2020, Erika Schulte. Until his departure, the former Chairman of
the Supervisory Board, Lars Berg, was a member and Chairman of the
General and Nomination Committee.
Dr. Knut Michelberger is Chairman of the Audit Committee. Its other member
is Mark Wilhelms. Erika Schulte was a member of the Audit Committee until
September 30, 2020. The committee regularly has three members. As soon
as the Supervisory Board has six members again, the Audit Committee is to
be expanded to three members again. Mark Wilhelms and Dr. Knut Michel-
berger are independent 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.
Eight meetings of the Audit Committee were held in fiscal year 2020. All Audit
Committee members took part in the meetings.
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 for-
mation, amendment and termination of employment contracts with members
of the Management Board in accordance with the remuneration 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 Man-
agement 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), approv-
ing contracts with members of the Supervisory Board pursuant to Sec-
tion 114 AktG and proposing suitable candidates to the Annual General Meet-
ing when there is a vote on Supervisory Board members.
The committee held eight meetings in 2020, and all members participated
in them.
Since October 2020, Mrs. Forst, who was already a member of the committee,
has been Chairwoman of the Strategy Committee, and Mr. Wilhelms has been
a new member of this committee. Mrs. Schulte remained a member of this
committee, while Mr. Hauptmann, who had also been the Chairman of the
Strategy Committee until then, resigned.
Three meetings of this committee were held in 2020, each of which was
attended by all members.
Further information on the work of the committees in the fiscal year can be
found in the
SUPERVISORY BOARD REPORT.
D&O insurance
The company has also taken out D&O insurance for the members of the Super-
visory 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.
Other mandates of the Supervisory Board members
Exercised professions and other mandates on Supervisory Boards or compa-
rable supervisory bodies of the members of NORMA Group SE’s Supervisory
Board in fiscal year 2020 are shown in the
TABLE 006: “OTHER MANDATESOF
THE SUPERVISORY BOARD MEMBERS“.
NORMA Group SE – Annual Report 2020
28
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION2 TO OUR SHAREHOLDERS Other mandates of the Supervisory Board members
T006
Supervisory Board member, exercised profession
Other mandates on Supervisory Boards and comparable committees
Günter Hauptmann (Chairman since September 1, 2020), Consultant
Member since: 2011
Member of the Advisory Board of Moon TopCo GmbH, Poing, Germany
(not listed on the stock exchange)
Lars M. Berg, Consultant
Chairman and member until: August 31, 2020
Erika Schulte (Vice Chairwoman),
Managing Director of Hanau Wirtschaftsförderung GmbH
Member since: 2013
Rita Forst, Consultant
Member since: 2018
Chairman of the Supervisory Board of Greater Than AB, Stockholm, Sweden
(listed on the stock exchange)
No seats on other boards or comparable committees
Member of the Board of Directors of AerCap Holdings N.V., Dublin, Ireland
(listed on the stock exchange)
Member of the Board of Directors of Westport Fuel Systems Inc., Vancouver, Canada
(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 iwis SE & Co.KG (former Joh. Winklhofer Beteiligungs GmbH &
Co. KG), Munich, Germany (not listed)
Dr. Knut J. Michelberger, Consultant
Member since: 2011
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 Moon TopCo GmbH, Poing, Germany
(not listed on the stock exchange)
Former member of the Advisory Board of Tegimus Holding GmbH, Frankfurt / Main, Germany
(not listed on the stock exchange, until June 3, 2020)
No further mandates on Supervisory Boards or comparable bodies
Mark Wilhelms, Chief Financial Officer of Stabilus S.A.
Member since: 2018
Targets for the share of women
The target figure for the share of women on the Supervisory Board is two
female members. The target is one-third for the Management Board. The tar-
get figure is a 25% share of women for the top management level of
NORMA Group SE. The aforementioned targets for the Supervisory Board and
senior management are each expected to apply until June 30, 2022. The tar-
get figure for the Management Board was newly resolved by the Supervisory
Board in 2020. Therefore, it is valid until October 31, 2025.
These targets were all either achieved or exceeded in fiscal year 2020.
With two female members out of five members, the target figure for the
NORMA Group SE – Annual Report 2020
29
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION2 TO OUR SHAREHOLDERS Supervisory Board has been achieved in 2020. One woman out of a total of
three members is on the Management Board, therefore this target figure has
also been achieved.
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. The Management Board has set the target for the share of
women in the first management level at a minimum of 25%. Compared to the
previous year, the share of women fell from three to two out of a total of five
executives because one female executive left the company and one male was
promoted to the position of Vice President. The target of 25% was thus still
exceeded. NORMA Group SE does not have a second management level for
which the Management Board would also have had to set targets.
Shareholders are entitled to vote if they are registered in the shareholders’
register of NORMA Group SE and, at least six days before the Annual General
Meeting, inform NORMA Group SE or another entity specified in the invitation,
in German or English, a that they will be attending. Each share entitles the
bearer to one vote.
NORMA Group SE publishes the invitation and all documents that are to be
made available at the Annual General Meeting promptly on its website. Infor-
mation regarding the number of attendees and the voting results are published
there after the Annual General Meeting.
Due to the COVID-19 pandemic, the 2020 Annual General Meeting was held
as a virtual event without shareholders or their representatives being present.
Shareholdings of the Management and Supervisory Boards
At NORMA Group, targets for the managing director level, the Supervisory
Board and the top two levels of management were also set for another com-
pany, NORMA Germany GmbH. This company is not listed, but codetermined,
and is headed by a female Managing Director.
Of the total of 31,862,400 shares in NORMA Group SE, the current members
of the Management Board and Supervisory Board together held 0.7% of the
shares on December 31, 2020.
Shareholders and Annual General Meeting
Directors’ Dealings
The shareholders of a Societas Europaea (SE) 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 resolves among other topics on how
earnings are to be distributed, the discharge of the Management Board and
Supervisory Board, the election of the auditor, but also on amendments to the
Articles of Association.
Members 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 20,000 within one
calendar year. NORMA Group SE was notified of the following transactions
by way of Directors’ Dealings announcements in 2020:
Directors’ Dealings
Buyer / Seller
Dr. Michael Schneider, CEO
Dr. Friedrich Klein, COO
Dr. Knut J. Michelberger,
Supervisory Board Member
Type of financial
instrument
Type of
transaction
Date of
transaction
Place of
transaction
Average price per
share
Total volume
Share
(DE000A1H8BV3)
Share
(DE000A1H8BV3)
Share
(DE000A1H8BV3)
Purchase
May 20, 2020
Tradegate Exchange
EUR 22.96
EUR 103,320.00
Purchase
May 12 2020
Xetra
EUR 21.48
EUR 99,881.74
Purchase
March 25, 2020
Xetra
EUR 16.00
EUR 80,000.00
T007
NORMA Group SE – Annual Report 2020
30
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION2 TO OUR SHAREHOLDERS Stock option plans and equity-based incentive programs
The principles of management remuneration are described in the
R EMU NE RATION REPORT, which is part of the Management Report.
A 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.
Declaration to the German Corporate Governance Code
No recommendations of the German Corporate Governance Code were not
applicable due to overriding statutory provisions.
Compliance
NORMA Group SE’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 are used to
take steps to reduce the risk of future violations. Concrete steps are defined,
implemented and tracked annually in a “Compliance Action Plan.”
Group-wide compliance activities are managed by the Chief Compliance
Officer of NORMA Group SE, who reports to the Chairman of the Management
Board. In addition to the Compliance Department in place at Group level, there
are Compliance Representatives at the regional and company levels. The three
regional Compliance Representatives 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 Representative, who reports to the
respective Regional Compliance Representative. The Supervisory Board mon-
itors compliance with the compliance rules vis-à-vis the Management Board.
The compliance organization conducts regular risk analyses together with the
respective units, functions and departments in order to determine and moni-
tor the risk profile of countries, Group companies and functions. Among other
things, an assessment system is used that takes both internal and external
factors into account (Transparency International’s Corruption Perception Index,
for example). Based on the global and local risk analyses, the compliance
organization identifies the respective need to take action and initiates the
appropriate measures.
Specific employee training courses are held regularly on selected risk areas
and important current topics or developments. In addition to training on spe-
cific focus topics, all employees worldwide are trained (on-site in personal
training sessions or in online training sessions) on the basic compliance rules
and important content of the compliance policies. Participation in these train-
ing courses is monitored. In 2020, the step-by-step implementation of the
training concept revised in 2019 took place. In this context, the content of the
online training sessions was adapted to the completely revised and updated
compliance guidelines and in particular to the current company specifics of
NORMA Group. In the past fiscal year, the rollout of online training sessions
on the Code of Conduct and on antitrust and competition law was completed.
The rollout of the online anti-corruption training is scheduled for the first
quarter of 2021. Employees also receive relevant, up-to-date compliance
information on a regular and ad hoc basis via various information channels,
for example the intranet, brochures, e-mails and notices.
COMPLIANCE G UIDELINES of NORMA Group are an important means of
The
communicating to employees NORMA Group’s understanding of compliance
and demonstrating their ethical and legal obligations. All compliance docu-
ments are reviewed regularly and, if necessary, adapted to new legal or social
requirements and thus always kept up to date. The compliance guidelines also
include requirements in the area of
H U M A N R I G H TS (including forced and
child labor, freedom of association and anti-discrimination).
The revision and publication of the compliance guidelines, which had been
reviewed and updated in the previous year, was completed in the 2020 fiscal
year. Suppliers are subject to their own code of conduct (“Supplier Code of
Conduct”), which was also fundamentally updated and published. The Sup-
plier Code of Conduct is intended to help ensure that laws and ethical rules
are also observed within NORMA Group’s supply chain. A compliance manual
also defines in detail the specific areas of responsibility and regulation,
describes basic compliance processes and provides a summary of the main
compliance topics with reference to the corresponding compliance guidelines.
Like the compliance guidelines, the compliance manual is regularly reviewed
to determine whether any changes are required and updated as necessary.
NORMA Group encourages its employees to report violations of regulations
and internal guidelines, if necessary also across hierarchy levels. In addition
to personally approaching, for example, superiors, the HR department or
the compliance officers, an Internet-based whistleblower system is available
for this purpose. This whistleblower system allows internal and external
NORMA Group SE – Annual Report 2020
31
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION2 TO OUR SHAREHOLDERS whistleblowers to report suspicious cases to NORMA Group’s compliance
organization and, if necessary, to maintain their anonymity. In cases where
the electronic whistleblower system cannot be easily used by employees for
technical or organizational reasons (for example, lack of PC access by employ-
ees in production), NORMA Group offers other suitable reporting channels,
such as information boxes at production sites. In addition, any member of
NORMA Group’s compliance organization can be contacted at any time regard-
ing all questions and issues related to compliance.
In the past fiscal year, the electronic whistleblowing system currently in use
was expanded to include additional functionalities that now enable the com-
pliance function to process and document whistleblowing and case handling
in a system-integrated manner. In addition to improving the processes for
submitting and processing reports, further compliance processes were suc-
cessively mapped in the system to increase user-friendliness and efficiency.
For example, the mandatory approval processes defined by compliance are
now fully mapped using a workflow-supported IT system.
The members of the compliance organization investigate any indications of
compliance violations. If violations of compliance rules are discovered or weak-
nesses in the organization are identified, the management initiates the nec-
essary and appropriate measures in consultation with the compliance organ-
ization in a timely manner. These measures range, for example – depending
on the specific individual case – from targeted training measures to changes
in organizational procedures to disciplinary measures including termination
of employment.
Corporate Responsibility and ESG
As Corporate Responsibility and ESG issues become more important, the
Supervisory Board, Management Board and employees are paying greater
attention than ever to the resulting aspects. For example, NORMA Group is
focusing on water management and the transformation to more environmen-
tally friendly drive systems. The strategy and specific goals of Corporate
Responsibility are explained in particular in the Non-financial Group Manage-
ment Report. On the Management Board, Dr. Michael Schneider is responsible
for Corporate Responsibility and for ESG.
Information on the auditor and internal rotation
PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft (PwC),
Frankfurt / Main,auditedtheAnnualFinancialStatementsofNORMAGroupSE
and its predecessor companies as well as the Consolidated Financial State-
ments for for fiscal years 2010 to 2020. Furthermore, PwC retroactively audited
the years 2009 and 2010 for the prospectus as part of the IPO in 2011.
As part of the audit of the financial statements, Stefan Hartwig acted as the
auditor signing on the left and Richard Gudd as the auditor signing on the
right in fiscal year 2020. Following an internal rotation within PwC, Mr. Hartwig
held the office of auditor-in-charge for the second consecutive year, and Mr.
Gudd has held the office of auditor-signatory on the right for the fourth year.
NORMA Group SE – Annual Report 2020
32
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION2 TO OUR SHAREHOLDERS CORPORATE
RESPONSIBILITY
REPORT
34 Corporate Responsibility Strategy
39 Governance
45
54
59
62
Environment
Social
Social commitment
Non-financial Report, GRI and UN Global Compact
64 CR Performance Indicators
67 Assurance Report
NORMA Group SE – Annual Report 2020
33
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS1 INTRODUCTION3 CORPORATE RESPONSIBILITY REPORT Corporate Responsibility Strategy
NORMA Group’s approach to Corporate Responsibility
For NORMA Group, Corporate Responsibility means reconciling the impact of
its business with the needs of society. This is done by ensuring that the Man-
agement and employees follow legal requirements and integrate social and
ecological aspects into the company’s strategy and processes. NORMA Group’s
products can already make a valuable contribution to a more sustainable society
by helping to reduce the negative effects of global challenges such as resource
scarcity and climate change.
NORMA Group has systematically implemented the concept of Corporate
Responsibility (CR) since 2012. The goal is to act in a responsible, sustainable
and lawful manner in all areas of the Company. To ensure that NORMA Group
as a whole remains oriented toward this goal, CR was integrated as a core
STRATEGY AND GOALS The Group-wide
element of the corporate strategy.
CR POLICY defines the basic understanding of responsibility as a company.
It was revised in 2020 and covers three key areas of action: “Environment,”
“Social” and “Governance.”. The policy describes the strategic approach with
the aim of coordinating NORMA Group’s responsibility in a structured way and
further developing it in a targeted manner. In its CR Policy, NORMA Group also
reaffirms its commitment to the UN Global Compact, the United Nations’
Sustainable Development Goals and ILO Fundamental Principles and Rights
at Work.
Management of CR
In order to strategically align and further develop the CR measures,
NORMA Group set up the CR Roadmap, which includes specific objectives
CR TARGETS AND SUSTAINABLE D EVELO PME NT GOALS
for each area of action.
For all material topics, the relevant departments propose targets, which are
reviewed and approved by the Executive Board.
GRAPHIC G007: ‘MATERIALIT Y
M AT R I X ’ Subsequently, these targets are cascaded to the regional and local
organizations of NORMA Group. The departments are responsible for backing
up these CR targets with measures and developing guidelines and manage-
ment approaches. This way, the CR topics can be addressed reliably and
standardized internationally. The Group-wide approaches are complemented
by nationally adapted, decentralized measures. To what extent CR topics are
managed and implemented Group-wide or decentralized depends on how
the respective CR objectives can be achieved as effectively as possible.
The general responsibility for CR lies with the CEO of NORMA Group. This also
includes the cross-departmental and cross-location coordination of CR topics
in the areas of purchasing, quality, human resources, legal and compliance,
among others. The CR areas of environment, occupational health and safety
(EHS) are the responsibility of and coordinated by the Chief Operating Officer.
CORPORATE GOVERNANCE REPORT The implementation of the coordination
in the CR area is carried out by the Investor Relations, Communications and
Corporate Responsibility department.
Stakeholders & materiality
Close exchange with stakeholders
NORMA Group sees itself as a transparent and open company. The company
specifically and proactively seeks exchange with its internal and external stake-
holders. This enables the company to effectively implement the continuous
improvement process, which is applied throughout the Group, for CR issues
as well. NORMA Group‘s most important stakeholders include its employees,
customers, shareholders and financial market players, suppliers and repre-
sentatives from science, the media, politics and non-profit organizations. The
company considers it part of its responsible corporate governance to incor-
porate the interests of stakeholders and the impact of its own business activ-
ities on stakeholders into its key decisions. Particularly in the strategic direc-
tion of the company, NORMA Group values an open and appreciative approach
to stakeholder expectations.
The Stakeholder Roundtable, which took place regularly in the past years, has
been an important format for NORMA Group to actively exchange with its
stakeholders on CR issues. The focus of the event has always been on sus-
tainability topics that have a strategic relevance to NORMA Group. The last
Stakeholder Roundtable in 2019 was dedicated to the topics of diversity
DIVERSIT Y AND EQUAL OPPORTUNIT Y
management and employer branding.
In 2020, no roundtable was organized due to the COVID-19 pandemic.
NORMA Group SE – Annual Report 2020
34
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS1 INTRODUCTION3 CORPORATE RESPONSIBILITY REPORT Materiality analysis defines scope of CR activities
Last year, NORMA Group updated its materiality analysis, in which it defines
the most important social, environmental and economic sustainability issues.
The methodology was based on the standards of the Global Reporting Initi-
ative (GRI): First, a comprehensive list of CR sub-topics was put together,
based on requests from external stakeholder groups and on the GRI stand-
ards and the requirements of the German Commercial Code (HGB). The indi-
vidual sub-topics were aggregated, and a total of 23 topics were defined,
which were divided into the three areas of action “Environment,” “Social” and
“Governance.”
For each of the 23 defined sustainability topics, NORMA Group evaluated the
relevance and impact. The relevance assessment was based on a survey of
NORMA Group employees, the weighting of external customer and financial
market ratings as well as an analysis of the assessment by media and exist-
ing and future legislation (relevance axis). The impact analysis assessed both
the extent to which NORMA Group‘s business activities influence the various
topics and what risks could arise for the Group from these topics (impact risk
axis). The latter was based on what are known as gross risks, i.e. those risks
with which the NORMA Group is confronted if no suitable countermeasures
areimplemented.Theassessmentwasdeductedonascaleof1(irrelevant / no
Materiality matrix
G007
e
c
n
a
v
e
e
R
l
6
5
4
3
2
1
0
Sustainable products
Health and safety
Compliance
management
Environmental management systems
Climate
protection
Human rights
Responsible procurement
Other emissions
Information security
Transparent government relations
Biodiversity
Local communities
Product quality
& safety
Diversity
and equal
opportunity
Water
Waste management
/ circular economy
Sustainable
products
Training and
development
Indirect economic impacts
on external actors
Responsible marketing
Employee satisfaction
Other working conditions
Materials / substances
of concern
1
2
3
Impact / risk
4
5
6
Not material
Managed on functional level
NORMA Group SE – Annual Report 2020
Managed on global, regional and local levels
35
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS1 INTRODUCTION3 CORPORATE RESPONSIBILITY REPORT impact)to6(veryrelevant / majorimpact)andthenprioritized(
GRAPHIC
G 0 0 7 : “ M AT E R I A L I T Y M AT R I X ”). This was divided into topics that are managed
regionally and locally with measurable targets (right outer area), topics that
are managed at the functional level through concrete measures (middle area),
and those that are not considered material.
The results were validated internally with the top management of all regions
and subsequently confirmed by NORMA Group’s Management Board.
CR Roadmap 2021
G008
Environment Social
Governance
CO2 emissions
50,470 tons
Incident rate
Defective parts
< 4.6
< 6.5
Indicator: Scope 1 and 2, tons
Indicator:
accidents / 1,000employees
Indicator: parts per million
Water consumption
Training hours
Customer complaints
2% improvement
> 30
< 5.6
Baseline: 2019
Indicator: m3 / EURthousand
of revenue
Indicator:
traininghours / employee
Indicator:
average per month per entity
Waste
Voluntary attrition rate
1% improvement
Local targets
Baseline: 2019
Indicator:kg / EURthousand
of revenue
Indicator: % of sites
that achieved local target
CR targets und Sustainable Development Goals
CR targets 2021
Based on the topics identified as being material, NORMA Group formulates
quantitative targets for each area of action. By integrating the findings of the
materiality analysis into the CR Roadmap, NORMA Group ensures that the
targets are also oriented towards stakeholders’ expectations. Thus, the
achievement of the specific Corporate Responsibility targets is an indicator of
NORMA Group’s performance in the area of corporate responsibility.
G RA P H I C
An overview of the CR targets for 2021 can be found in chart
G008: “CR ROADMAP 2021”. The group-wide targets presented were approved
by NORMA Group‘s Management Board and subsequently translated by the
specialist departments into sub-targets for regions and individual sites.
Progress in the material areas is regularly reviewed internally and reported
externally.
Climate target 2024 integrated into Management Board’s
remuneration
NORMA Group had already developed a comprehensive
ENVIRO NMENTAL
STRATEGY in 2018. A core component of this strategy is the reduction of green-
house gas emissions at NORMA Group‘s manufacturing sites. In developing
its climate target, NORMA Group followed the recommendations of the
SCIENCE- BASED TARGETS INITIATIVE . The target was tightened again last year
and now amounts to an around 19.5% reduction in greenhouse gases by the
end of 2024 compared to 2017, which corresponds to a target value of 44,434
tons. Among other things, the target is part of the remuneration of
NORMA Group’s Management Board.
REMUNERATION REPORT
NORMA Group SE – Annual Report 2020
36
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS1 INTRODUCTION3 CORPORATE RESPONSIBILITY REPORT United Nations‘ Sustainable Development Goals
In many different areas, the CR areas of action are in line with the United
Nations’ Sustainable Development Goals. The following issues are particularly
relevant for NORMA Group:
In addition, NORMA Group also contributes to the implementation of other
objectives (such as “Goal 3 – Good Health and Well-Being” as part of occu-
pational health and safety measures or “Goal 11 – Sustainable Cities and
Communities” through products in the area of infrastructure and water man-
agement).
Goal 4 – Quality Education: Through measures in the area of
training and development, NORMA Group enables its employees
to constantly advance their career and personal development.
TRAINING AND DEVELOPMENT
Sustainability ratings and sustainable finance
Positive feedback from sustainability ratings
Goal 6 – Clean Water and Sanitation: The
P R O D U C TS
NORMA Group offers globally make a contribution to the efficient
use of water. Water consumption is also to be reduced in
P RO D U CT I O N processes. Furthermore, with
NORMA Group’s
NORMA CLEAN WATER , NORMA Group sets a
its social project
strong example for awareness-raising regarding water manage-
ment in emerging and developing countries.
Goal 8 – Decent Work and Economic Growth: NORMA Group
pursues ambitious growth targets. At the same time, the
HEALTH AND SAFET Y of all employees is an important compo-
nent of the CR Scorecard.
INNOVA-
Goal 9 – Industry, Innovation and Infrastructure:
TIONS form the basis for future growth and for developing envi-
ronmentally friendly products. For this reason, NORMA Group
sets internal incentives for its employees to generate new ideas.
Goal 12 – Responsible Consumption and Production:
N AT U R A L
NORMA Group seeks to reduce consumption of
R ES O U R C ES I N P R O D U CT I O N and conducts measures to do so at
every plant. Furthermore, NORMA Group is increasingly taking sus-
PURCHASI NG MATERIALS.
tainability criteria into account when
In 2020, NORMA Group again received independent feedback from rating
agencies on its performance in the area of Corporate Responsibility. The ques-
tions asked to NORMA Group in this context are based on the most important
sustainability indicators from the areas of environment, social affairs and
corporate governance. As a rule, NORMA Group is required to be able to sub-
stantiate its commitment to sustainability with documents and certificates.
The results of the ratings are primarily used by two stakeholder groups:
customers and financial market players.
NORMA Group’s performance in sustainability ratings
T008
Sustainability ratings
Score 2019
Score 2020
CDP
EcoVadis
ISS ESG
MSCI
Sustainalytics
(standard report)
Sustainalytics
(Score-Log report
(2019 methodology))
• Score: C
• Awareness level
• Score: C
• Awareness level
• Score: 78 of 100
• Gold Standard
• Score: C+
• Prime Status
• Score: AA
• Risk Score: 21.2 of 100
• Medium Risk
• Score: 80 of 100
• Platin Standard
• Score: C+
• Prime Status
• Score: AA
• Risk Score: 16.7 of 100
• Low Risk
• Risk Score: 21.2 of 100
• Management Score: 57.5
• Risk Score: 16.6 of 100
• Management Score: 67.7
Goal 13 – Climate Action: NORMA Group’s environmental strat-
egy focuses on consistently
REDUCING GREENHOUSE GASES. This
applies to both its production sites as well as the entire value chain.
The feedback received on NORMA Group in 2020 was again positive: The CR
measures received consistently good to very good ratings from the rating
agencies. In the ratings of EcoVadis and Sustainalytics, NORMA Group con-
tinued to improve its score compared to the previous year.
NORMA Group SE – Annual Report 2020
37
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS1 INTRODUCTION3 CORPORATE RESPONSIBILITY REPORT For NORMA Group, the positive results mean a confirmation of its long-term
approach to CR. At the same time, the Company is using the feedback to
continuously develop its organization.
Improved loan terms through progress in sustainability management
For the first time, NORMA Group set up a loan in 2019 containing a sustain-
ability component to partially refinance its business activities. The sustaina-
bility component links the terms of refinancing to NORMA Group’s Corporate
Responsibility commitment. If NORMA Group can demonstrate that it has
improved its sustainability performance, the Company gets access to prefer-
ential credit terms.
The evaluation of the Sustainalytics rating agency is the basis for assessing
the sustainability performance. It assesses NORMA Group holistically in various
sustainability categories such as Corporate Governance, Climate Manage-
ment and Human Rights. While the rating methodology for the standard
Sustainalytics report is evolving, the methodology for the sustainability
component of the loan remains largely unchanged compared to the base
year 2019.
In 2020, NORMA Group was able to achieve the targeted improvement in the
management score and thus realize savings in the high five-digit range for 2021.
With a loan term of up to seven years, the integration of the sustainability
component in the refinancing is an important step towards integrating sus-
tainability aspects into NORMA Group’s core business in the long term. Further
information on the refinancing can be found on NORMA Group’s website
WWW. NORM AGROUP.COM.
NORMA Group SE – Annual Report 2020
38
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS1 INTRODUCTION3 CORPORATE RESPONSIBILITY REPORT Governance
The implementation of compliance-specific frameworks sets rules clearly and
transparently. The central compliance guidelines at NORMA Group are
Materiality matrix
G009
6
5
4
3
2
1
0
e
c
n
a
v
e
e
R
l
Compliance
management
Human rights
Responsible procurement
Product quality
& safety
Information security
Transparent government
relations
Responsible marketing
Indirect economic impacts
on external actors
Impact / risk
1
2
3
4
5
6
Compliance
Clear understanding of values embedded in globally applicable
guidelines
NORMA Group’s understanding of values forms the basis for all business
decisions and activities in the Group. In particular, the global focus of the
Company makes worldwide implementation and compliance with codes of
conduct especially important.
• the
• the
• the
C ODE OF CONDUCT,
ANTI-CORRUPTION POLICY and
SUPPLIER CO DE OF CONDUCT.
Requirements on
HUMAN RIGHTS (regarding freedom of association, forced
labor, no child labor, and anti-discrimination, among others) form an integral
part of the compliance guidelines. As part of regular update cycles, the
compliance guidelines were fundamentally revised and published in the
past fiscal year.
NORMA Group’s compliance management system aims to ensure that its
values and rules are lived throughout the Group. Concrete steps are determined,
implemented and comprehended each year in a Compliance Action Plan.
Group-wide compliance management
The Management Board of NORMA Group is responsible for an effective com-
pliance management system. The Chief Compliance Officer manages the
Group-wide compliance activities and reports directly to the Management
CO R PO RAT E G OV E R N A N C E R E PO RT Besides the central compliance
Board.
department at Group level, Compliance Representatives are appointed at the
level of the regions EMEA, Americas and Asia-Pacific regions as well as in all
operationally active individual entities. The Compliance Representatives of
the individual Group companies are in regular contact with the other local
departments and regularly report to the respective Regional Compliance
Representatives, who in turn report to the Chief Compliance Officer.
Any member of NORMA Group’s compliance organization can be contacted
at any time on any compliance issue. The compliance department is in close
communication with the legal department of NORMA Group in order to
continuously take into account new or changed legal requirements in the
compliance risk analyses and in the compliance program.
The effectiveness of the compliance organization set up by the Management
Board is monitored by the Supervisory Board of NORMA Group SE, which is
regularly informed about compliance-relevant matters.
NORMA Group SE – Annual Report 2020
39
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS1 INTRODUCTION3 CORPORATE RESPONSIBILITY REPORT As part of the continuous development of NORMA Group’s compliance
management system and in addition to updating the formal framework con-
ditions, the integration of compliance-relevant processes in IT systems was
advanced further in the past fiscal year. Accordingly, the whistleblowing sys-
tem already in use was expanded to include supplementary functionalities
that now enable system-integrated processing and documentation of the
information and case handling. In addition, an IT system was implemented
that maps the entire request and review process for matters requiring approval
in a workflow-based manner.
NORMA Group’s Compliance Management System
G010
Risk analysis
Reporting
channels
Compliance
Action Plan
Training
Guidelines
Close risk monitoring and control
Based on a rating system that incorporates both internal and external factors
(such as Transparency International’s Corruption Perception Index), the risk
exposure of each individual NORMA Group company is evaluated centrally
for possible compliance-relevant risks (compliance risk scoping) by
NORMA Group Compliance.
Together with the companies that have a higher risk value according to the
rating system, specific compliance risk assessments are carried out on-site,
performing a detailed analysis of the specific compliance risks of the company.
In addition to local Compliance Representatives, representatives of all relevant
departments are included, e.g. finance, purchasing, human resources, produc-
tion, and research and development.
The risks to which NORMA Group is exposed form the basis for determining
the compliance program and the corresponding measures. Implementing these
measures and adhering to the compliance rules are also regular audit tasks
of internal auditing.
Systematic, demand-oriented training of employees
To ensure the effectiveness of NORMA Group’s compliance management
system, all employees must be familiar with the relevant legal requirements
and internal compliance guidelines. The goal is that all employees of
NORMA Group know the compliance rules as well as the contact persons and
reporting channels.
The compliance training that NORMA Group offers serves as the basis for this.
It takes place in the form of face-to-face and online training sessions. Depend-
ing on the job and responsibility profile of an employee, the training courses
to be completed are assigned as needed. During the training, the employees
receive concrete support on which behavior is in line with the compliance
guidelines and may test their knowledge in practical assessments and case
studies. Accompanying the updating and publication of the compliance guide-
lines, the training concept and the training content were also updated in the
past fiscal year. The training courses of fundamental relevance, which must
be completed as basic training by every employee of NORMA Group, include
the online training courses “Code of Conduct & Compliance Basics” and
“Anti-Corruption.” Depending on the job profile, employees must attend specific
focus training sessions (including “antitrust law”). Furthermore, NORMA Group
NORMA Group SE – Annual Report 2020
40
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS1 INTRODUCTION3 CORPORATE RESPONSIBILITY REPORT has developed a concept to refresh the learning content so that the know-
ledge of employees on essential and basic compliance topics is updated and
extended regularly through refresher courses.
In the 2020 fiscal year, 2,091 employees (2019: 1,233) were trained in online
compliance training. In this context, training courses totaling 3,432 hours
(2019: 3,278) were conducted. The increase in the number of trained employ-
ees and the number of training hours is mainly due to the introduction of
the completely revised “Code of Conduct & Compliance Basics” and “Anti-
Corruption” training courses. Employees who are unable to participate in online
training due to language or technical reasons, especially industrial employees,
are informed about the content relevant to them via other formats and media
(e.g. face-to-face training by the Local Compliance Representatives, written
information or similar).
The need for training is checked regularly. Internal reporting records the status
of compliance training. This report is included in the status report on the Com-
pliance Action Plan and is reported to the Management Board on a regular
basis. Compliance-related topics are also communicated via additional chan-
nels such as posters, brochures, Compliance Safety Cards that summarize key
compliance topics in condensed form, and e-mails and intranet articles.
Various ways of reporting violations
NORMA Group encourages its employees to report violations of rules and
internal policies, even across hierarchical levels. Besides personally approach-
ing supervisors, the human resources department or Compliance Represent-
I N T E R N E T- B A S E D W H I ST L E B LOW E R SYST E M is yet
atives, NORMA Group’s
another example. It enables anonymous reporting of matters by internal or
external whistleblowers. The employees of the compliance organization always
follow up on indications of possible compliance violations. Further information
CORPORATE GOVERNANCE
on the whistleblower system can be found in the
R EPORT.
In 2020, a separate whistleblowing guideline was established, which intends
to provide even more transparency for those who report on the procedure for
handling notifications. The guideline already takes into account the require-
ments of currently foreseeable legal developments and established market
standards and is expected to be published in the first half of 2021.
For cases in which the electronic whistleblower system cannot easily be used
by employees for technical or organizational reasons (for example, lack of PC
access by employees in production), NORMA Group offers other suitable
reporting channels, such as notice boxes at the plants.
Human rights
NORMA Group is committed to international human rights
NORMA Group categorically rejects the violation and restriction of human
rights in any form. The Company is committed to the Universal Declaration of
Human Rights as well as to the core labor standards of the International Labor
STATEMENT OF PRINCIPLE ON HUMAN RIGHTS
Organization (ILO).
CR POLICY
NORMA Group rejects all forms of forced, compulsory and child labor. In doing
so, ILO Conventions numbers 138 and 182 are recognized as the minimum
standard for protection against child labor. The Company is also committed
to preventing slavery and human trafficking in its business activities.
Furthermore, NORMA Group recognizes the right of its employees to join unions
and to found employee representations. NORMA Group rejects discrimination
based on ethnic background, gender, sexual orientation and religion and
D I V E R S I T Y
supports measures to promote diversity within the company.
AND EQUAL OPPORTUNIT Y
NORMA Group SE – Annual Report 2020
41
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS1 INTRODUCTION3 CORPORATE RESPONSIBILITY REPORT Monitoring and awareness-raising measures
NORMA Group’s commitment to human rights is also reflected in its Code of
C ODE OF CONDUCT, a separate
Conduct. In the course of the revision of the
section on human rights was added to clarify NORMA Group’s position.
If employees observe human rights violations, they can report them at any
CO M P L I A N C E R E PO RT I N G C H A N N E LS. Among other things, the
time via the
NORMA Group whistleblower system provides them with the category
“Violations of social standards and human rights.” In the areas of anti-
discrimination and freedom of association, NORMA Group also monitors
whether its commitment is being met through regular internal reporting of
legal disputes. In 2019, there were no cases of discrimination or violations of
freedom of association by NORMA Group that were established by the courts.
NORMA Group also takes its responsibilities seriously along the value chain.
SUPPLIER CODE OF CONDUCT, the Company commits its suppliers to
In the
respect and comply with human rights. However, due to the size and com-
plexity of the value chain, human rights violations cannot be completely
excluded as a matter of principle. Beyond its direct business partners,
NORMA Group has only limited influence on compliance with minimum stand-
ards. If the Company becomes aware that business partners are committing
or tolerating human rights violations, the business relationship is re-evaluated,
and terminating the contract is considered. In the event of violations by
employees, NORMA Group will take measures that may even lead to termi-
nation of employment.
Product quality and safety
Product quality and safety is a key customer promise
Product quality is of great importance in all industries relevant to NORMA Group.
As joining elements for various individual parts, NORMA Group’s products are
often critical to proper functioning for the direct customers. Even if only one
single element has a leak, this could affect the functioning and the safety of
an entire application. That is why NORMA Group wants to guarantee its cus-
tomers the highest level of reliability with its brands. Quality, customer require-
ments and added value for society are thus directly linked.
An important control parameter for improving product quality is the number
of defective parts per million (PPM). In 2020, this number was at 5.1 PPM, and
thus once again below the prior-year figure (2019: 6.1 PPM). Further information
in the
on managing product quality and safety can be found
ECONOMIC REPORT.
Responsible procurement
Corporate responsibility in purchasing
In fiscal year 2020, NORMA Group purchased goods and services worth
EUR 404.1 million. It is ensured that aspects of corporate responsibility are
taken into account in this context. The purchasing department works on mak-
ing contractual relationships with suppliers socially and environmentally com-
patible and ensures that human rights, labor and environmental standards
are adhered to.
The purpose of the purchasing process is to ensure NORMA Group’s high
quality standards and to reduce direct costs in order to achieve maximum
value for the Company. The purchasing process is subject to risks with regard
to negative impacts on environmental and social standards in the supply chain.
For this reason, the purchasing process does not take only purely price factors
into consideration, but also evaluates quality, logistics and supplier sustainability.
ECONOMIC REPORT
Managing sustainability in purchasing is the responsibility of the global purchas-
ing organization, which reports to the Chief Operating Officer.
CORPORATE
G OV E R N A N C E R E PO RT Every team member of the purchasing organization
contributes to it in the course of making sourcing and nomination decisions.
Supplier Code of Conduct forms the framework
NORMA Group expects its suppliers to conduct their business in compliance
with laws, ethics, respect for human rights, occupational safety and environ-
mental standards.
For these reasons, the purchasing department has integrated social and eco-
logical sustainability aspects into its processes and organization. One key
example is the purchasing manual, which describes all essential processes
NORMA Group SE – Annual Report 2020
42
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS1 INTRODUCTION3 CORPORATE RESPONSIBILITY REPORT Supplier Code of Conduct:
basic understanding of sustainability management
in purchasing, signing is a condition to be
graded “preferred” supplier
Supplier Scoring:
carried out once a year, environmental and health
and safety certificates as well as sustainability self-assessement
are criteria in the scoring
Commodity Strategies:
contain sustainability fact sheets that quantify
impacts on climate and water and identify
improvement potentials
Training:
training of Purchasing employees
on sustainability tools in purchasing
and procedures used as a framework for the global organization. The basis
S U P P L I E R CO D E O F CO N D U CT. This
for sustainable supplier relations is the
globally valid code of conduct outlines NORMA Group’s expectations for the
sustainable management of its suppliers in the areas of human rights, occu-
pational health and safety, environment and business integrity. With regard
to human rights, the Supplier Code of Conduct is based on regulations issued
by the International Labour Organization, the Universal Declaration of Human
Rights, the UN Global Compact and the standard SA8000. In the past fiscal
year, the Supplier Code of Conduct - like the other compliance guidelines -
was fundamentally revised.
The commitment to the Supplier Code of Conduct plays an important role in
the regular purchasing processes. Only a supplier who signs the Supplier Code
of Conduct can be classified as “preferred” within the commodity group. At
the reporting date, these were 18 production material suppliers, which make
up around 21.9% of the production material turnover. The decrease compared
to the previous year (2019: 22 suppliers with a share of 27.8%) is due on the
one hand to the reduction of inventories during the COVID-19 crisis and a
changed sourcing strategy in the course of the Get-on-Track program. Approval
of the Supplier Code of Conduct is a binding requirement when selecting new
suppliers. Around 6% of preferred suppliers had signed the updated version
of the Supplier Code of Conduct as of year-end 2020.
Sustainability in commodity management
An important way of supporting sustainability in purchasing is the introduc-
tion of a new Commodity Strategy Template. These strategy documents include
Sustainability Fact Sheets as an analytical approach to assess sustainability
throughout the supplier base. The Sustainability Fact Sheets include informa-
tion on suppliers’ environmental and health and safety certificates (ISO 14001
and OHSAS 18001 or comparable standards). The fact sheets are in line with
ENVIRONMENTAL STRATEGY. They quantify each commod-
NORMA Group’s
ity’s impact on greenhouse gas emissions and water consumption in the
supply chain and show commodity managers direct improvement measures.
The majority of all commodity strategies already contain this sustainability
information.
NORMA Group SE – Annual Report 2020
43
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS1 INTRODUCTION3 CORPORATE RESPONSIBILITY REPORT NORMA Group has therefore launched the “Conflict Minerals Roadmap,” which
aims to create maximum transparency within the supplier base. The
NORMA Group purchasing organization commits itself to the principles of the
Responsible Minerals Initiative, including the use of due diligence processes
provided by the initiative. The due diligence processes are based on the Con-
flict Minerals Reporting Template (CMRT) of the Responsible Minerals Initia-
tive, which all relevant suppliers have to provide. The management of the
CMRT is integrated into the Group-wide e-Sourcing platform.
The Group purchasing organization trained purchasers at all sites on the impor-
tance of the issues of conflict minerals and the potential risk related to the
materials coming from suppliers who might be involved. In addition,
NORMA Group ensures that 100% of affected suppliers have signed the
Supplier Code of Conduct, which requires them to confirm that they cooper-
ate with conducting due diligence on conflict minerals issues.
NORMA Group shares the information it receives with its customers as trans-
parently as possible. Given the large number of products, suppliers and sub-
contractors, it is usually not possible with a reasonable amount of effort to
make any detailed traceability statements as to which melting operation or mine
the raw materials come from for a specific product for a particular customer.
Sustainability self-assessment for suppliers
In order to be able to better assess, compare and manage suppliers,
NORMA Group uses a Group-wide supplier scoring. In addition to the price,
numerous other factors are also taken into account, such as quality, cost trans-
parency and logistics services. One of the four pillars of scoring is “sustaina-
bility,” in which environmental and occupational safety certifications are
included into the scoring.
In 2020, the voluntary sustainability self-assessment again formed part of the
supplier scoring. NORMA Group asked its suppliers for detailed information on
social issues (freedom of association, grievance mechanisms and accidents),
environmental issues (including CO2 emissions, water consumption and waste
management) and compliance issues. The evaluation of the self-assessment
showed that it was completed by 32.0% of the suppliers included in the scor-
ing. This was an increase of 3.3 percentage points compared to last year
(2019: 28.7%).
Excluding conflict minerals from the supply chain whenever possible
NORMA Group also purchases minor amounts of components that contain
what are known as “3TG raw materials” – tin, tantalum, tungsten and gold in
small quantities. These raw materials are particularly controversial in that a
large part of the ore deposits lie in conflict regions (particularly those of the
Democratic Republic of Congo), where they are partially mined and processed
under serious violations of international law. NORMA Group aims to exclude
these “conflict minerals” from its supply chains as far as possible. NORMA Group
does not buy these minerals directly. However, they are partially included in
components from suppliers. For example, small amounts of gold are used in
urea lines, and some components are finished with a coating consisting of tin.
NORMA Group SE – Annual Report 2020
44
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS1 INTRODUCTION3 CORPORATE RESPONSIBILITY REPORT Environment
Materiality matrix
keeps this promise. Should this not be the case, NORMA Group would face
C L I M AT E -
medium to long-term risks in the area of sales development.
RELAT ED RISKS
G011
6
5
4
3
2
1
0
e
c
n
a
v
e
e
R
l
Environmental management systems
Climate
protection
Waste management
/ circular economy
Other emissions
Water
Biodiversity
Materials /
substances of
concern
Sustainable
products
The strategic orientation of NORMA Group‘s innovation management
therefore builds on these megatrends and focuses on emissions reduction
and scarcity of water. Based on these long-term trends, NORMA Group’s.
FO R ES I G H T M A N AG E M E N T and Business Development derives potential
market segments, for example in water management or the areas of battery
cooling and exhaust treatment. NORMA Group continuously measures its
ability to innovate based on the invention applications reported by employ-
ees in a formalized process. In 2020, the number of invention disclosures
was 22 (2019: 22).
Simultaneously, NORMA Group gives all employees the opportunity to actively
contribute their own ideas. In the evaluation of proposals, alignment with meg-
atrends is an important criterion for ensuring focused business development
in the strategically important areas of water management and electromobility.
The ideas are directly incorporated into product development. Furthermore,
NORMA Group has integrated sustainability aspects into the product devel-
opment process itself. Products are evaluated according to whether their mate-
rials are recyclable, whether the design is as light as possible (thus avoiding
unnecessary emissions in the use phase, especially in the automotive sector)
and whether they take environmental requirements, such as those relating to
hazardous substances, into account.
Impact / risk
Further information on innovation management can be found in the chapter.
RESEARCH AND DEVELOPMENT
1
2
3
4
5
6
Further information on the topics of electromobility and water management
WAT E R M A N A G E M E N T
can be found in the respective subchapters.
CLIMATE PROTECTION
Sustainable products and innovations
Sustainability in the innovation process and product development
NORMA Group offers product solutions that help its clients to respond to mega-
trends such as scarcity of resources and climate change. The long-term eco-
nomic success of NORMA Group also depends on whether NORMA Group
NORMA Group SE – Annual Report 2020
45
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS1 INTRODUCTION3 CORPORATE RESPONSIBILITY REPORT Environmental strategy and management systems
NORMA Group’s environmental strategy
In order to further structure and enforce its efforts in the area of environmen-
tal management, NORMA Group developed a comprehensive environmental
strategy in 2018. In developing the strategy, 2018’s Stakeholder Roundtable
was an important milestone as it helped to validate the Company’s approach
and provide new impulses which were subsequently integrated.
The basis of the strategy form the material topics that were identified in the
materiality analysis: climate, water and waste management.
STAKEHOLDERS
AND MATE RIA LIT Y The strategy clusters each of these topics into three levels
(
GRAPHIC G012: “ENVIRONMENTAL STRATEGY ”): at the core is the management
within NORMA Group’s own operations, the second level targets impact
assessments along the value chain followed by the outer level of pilot projects.
This three-level approach allows the Company to focus on those operations
that lie in its direct sphere of influence while not neglecting impacts that arise
in its supply chain or during the products’ use phase. The environmental
strategy is framed by communication measures and the further development
of due diligence and risk management approaches.
ISO 14001. As of December 31, 2020, 93% (26 of 28) of these manufacturing
sites were certified according to ISO 14001. The two locations missing are a
manufacturing site of subsidiary NDS in the United States and the subsidiary
Connectors in Switzerland, which moved to a new location in 2019. The basis
for management in accordance with ISO 14001 are the principles laid down
in NORMA Group’s global environmental policy.
ENVIRONMENTAL POLICY
Responsibility for the environmental management systems and the associated
topics regarding climate, water and waste at NORMA Group’s manufacturing
locations lies with the department for environment, health and safety (EHS),
which is staffed with qualified personnel at all production sites. On the global
level, the EHS management reports to the Management Board member that
is responsible for operations.
CORPORATE GOVERNANCE REPORT
This structure allows for developing and implementing specific measures in
accordance with local environmental challenges on the one hand and site-
specific production processes on the other. To ensure compliance with ISO
14001 standards, sites are audited regularly by external specialists. Progress
on the achievement of targets in the areas of climate, water and waste is
evaluated in regular management reviews on a local level and through report-
ing of aggregated data to the Management Board on a global level.
The targets set in the environmental strategy have been integrated into the
C R TA R G E TS Detailed approaches to the three different
CR Roadmap.
topics will be explained in the following chapters. Other environmental topics
such as biodiversity were viewed to be less relevant for NORMA Group. As a
result, they are not the focus of NORMA Group’s activities.
Along the supply chain, similar environmental risks as for NORMA Group
itself exist because the majority of suppliers also come from the manufac-
turing industry. Assessment and verification of these potential sustainability
and financial risks are the responsibilities of the purchasing department.
PURCHASING AND SUPPLIER MANAGEMENT
SUSTAINABILIT Y IN PURCHASING
Certification of manufacturing sites according to ISO 14001
The increasing importance of environmental management in production
processes is reflected in the increasing scarcity of resources, stricter regula-
tory requirements and expectations from customers, capital markets and
society towards the Company. If not managed systematically and implemented
throughout the entire Group, these trends might translate into risks for the
Company.
In order to confront these risks, NORMA Group has set itself the goal that all
manufacturing sites that have been integrated into NORMA Group for more
than 12 months should be certified according to the international standard
NORMA Group SE – Annual Report 2020
46
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS1 INTRODUCTION3 CORPORATE RESPONSIBILITY REPORT Environmental strategy
G012
Pilot
( P roject-based)
W
Clim ate
Other
indirect
emissions
(emissions from
investments,
capital goods,
waste, product
end of life, etc.)
n
o
i
t
a
c
i
n
u
m
m
o
C
a
t
e
r
Assess
( Q u a n tify impact)
Use of
products sold
Use of
products sold
NORMA
Clean Water
M anage
i t ative targets)
a n t
u
( Q
Emissions at
own sites and
through energy
purchased
Water consumption
and responsible
water discharge
Purchased
goods
Transportation
and distribution
Purchased
goods
Business
travel
Waste
management
and reduction
Purchased
goods
Waste
recycling
Product
end of life
Waste
R
i
s
k
m
a
n
a
g
e
m
e
n
t
a
n
d
d
u
e
d
i
l
i
g
e
n
c
e
NORMA Group SE – Annual Report 2020
47
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS1 INTRODUCTION3 CORPORATE RESPONSIBILITY REPORT
Climate protection
Active management of e-mobility opportunities
Climate-related opportunities and risks
Climate change has a direct impact on various sectors of the economy, which
could have direct and indirect consequences for NORMA Group over a long-
term time horizon until 2030.
On the one hand, both the reduction of greenhouse gases and the adaptation
to global warming offer opportunities for NORMA Group. These include, for
example, new or growing market segments in the fields of e-mobility and
water management, which can have a positive impact on sales development.
At the same time, energy savings offer the potential to reduce NORMA Group‘s
operating costs. Last but not least, NORMA Group can benefit from the increas-
ing relevance of this topic in the financial markets by positioning itself as a
sustainable investment and thus reducing capital costs.
Conversely, risks can also result from these developments. For example, the
increase in the production of alternative forms of drive leads to a decline in
the market for conventional drives, a market in which NORMA Group is also
active. Increased pricing of greenhouse gases may result in higher operating
costs. On the capital market side, a changed reputation can lead to reluctance
on the part of capital market players focused on sustainability and thus to
higher capital costs.
NORMA Group meets these opportunities and risks with a clear strategy and
E - M O B I L I T Y
active management in the areas of
RESEARCH AND DEVELOPMENT. With regard to the risks arising
as well as
from its own production processes, NORMA Group operates a structured
environmental management system at all production sites, with clear targets
for reducing greenhouse gases.
WAT E R M A N AG E M E N T,
An overview of opportunities and risks within the guidelines of the “Task Force
on Climate-Related Financial Disclosures” (TCFD) can be found in the public
CDP RE PORT of NORMA Group.
Progressive climate change does not only mean risks and opportunities for
NORMA Group’s business. NORMA Group’s business activities also contribute
to the emission of greenhouse gases. This applies in particular to emissions
caused by the production of purchased materials and its own production
processes.
NORMA Group aims to make an active contribution to e-mobility by develop-
ing new products such as quick connectors and thermal management systems.
These solutions support optimizing the cooling and heating of batteries as
well as the complex power electronics, the drivetrain and other sub- systems
of electric vehicles. During product development, they are tailored to solve the
main challenges faced by customers: weight savings, lack of space and the
reduction of pressure drops of coolants in the system. The latter is decisive to
ensuring optimal performance of the thermal management systems of
batteries, power electronics, drivetrain and other components: Only if the flow
of coolant is properly managed throughout the entire system is the thermal
management working efficiently, and no additional pump upsizing (and thus
extra weight and cost) is needed. As a result, the battery can deliver its optimal
performance and maximize the range of the vehicle.
In addition to providing solutions to these requirements, NORMA Group also
ensures high safety standards by applying its experience in the design of fuel
transport systems in the delicate environment of batteries and cooling water.
NORMA Group manages its e-mobility efforts in a project-based organization
at the interface between engineering and sales. In doing so, the company has
the flexibility to confront an emerging and very dynamic market and to
connect the new challenges to the existing product portfolio and customer
expertise. Last year, relevant internal stakeholders again received extensive
training. To ensure global alignment and steering, all projects are coordinated
and supported by the Global Product Management E-Mobility.
In fiscal year 2020, NORMA Group received several large orders for thermal
management systems. This includes both orders from traditional car manu-
facturers and battery manufacturers.
NORMA Group SE – Annual Report 2020
48
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS1 INTRODUCTION3 CORPORATE RESPONSIBILITY REPORT Strong decrease of production-related emissions
(scope 1 and 2) due to COVID-19 pandemic
Development of greenhouse gas emissions (scope 1 and 2)
from gas, electricity and district heating, in tons of CO2 equivalents
G013
NORMA Group is currently concentrating on the collection and management
of its greenhouse gas emissions from gas consumption (scope 1) as well as
from purchased electricity and district heating (scope 2) at its production sites.
Regarding electricity and district heating, emissions are calculated using
a combination of location-based and market-based methodologies:
NORMA Group uses emission factors from specific suppliers wherever these
are available (market-based). If this is not the case, NORMA Group uses
country emission factors provided by the International Energy Agency
(location- based). Values on emissions calculated according the location-based
methodology can be found under
CR PERFORMANCE I NDICATORS.
In fiscal year 2020, NORMA Group integrated the acquired units Kimplas
Piping Systems and Statek Stanzereitechnik into its environmental reporting.
In the course of this, the emissions were calculated back to the base year
2017 in accordance with the Greenhouse Gas Protocol (GRAPHIC G013: “DEVEL-
OPME NT OF GR EENHOUSE GAS EM ISSIO NS), the energy figures back to the date
of acquisition. The following figures refer to these revised figures (a compar-
C R P E R FO R-
ison to the previously reported values can be found under
MA NCE IND ICATORS).
In 2020, scope 1 emissions amounted to 5,417 tons of CO2 equivalents (2019
revised: 5,794 tons) while scope 2 emissions were 44,396 tons of CO2 equiv-
alents (2019 revised: 48,700 tons). Overall, emissions from Scope 1 and 2
were thus 49,813 metric tons of CO2 equivalents, 8.6% below the previous
year’s figure (2019 revised: 54,494 tons). The main reason for the sharp decline
of emissions was the reduction in production capacity due to the impact of
the COVID-19 pandemic.
The corresponding energy consumption of gas, electricity and district heating
(combined) was 118,214 megawatt hours or 124.2 kilowatt hours per
EUR thousand of revenue (2019 revised: 118.1 kilowatt hours per EUR thou-
sand of revenue). The sharp increase compared with the previous year can
also be explained by the effects of the COVID-19 pandemic. Energy consump-
tion did not fall in proportion to the decline in sales because certain types of
consumption (e.g. building heating) remained relatively stable.
60,000
60000
50,000
50000
40,000
40000
30,000
30000
20,000
20000
10,000
10000
0
55,166
3,022
53,727
2,709
54,494
3,120
49.813
52,145
51,018
51,374
49.813
2017
2018
2019
2020
CO2e emissions NORMA Group
Historic emissions of acquisitions 1
1_ Estimated emissions of Kimplas Piping Systems and Statek Stanzereitechnik, which were
integrated into environmental reporting in 2020. Non-revised values: 2017:
52,145 t; 2018: 51,018 t; 2019: 51,374 t. For calculation methodology, see GHG Protocol,
Chapter 5.
Development of specific energy consumption 1
in kilowatt hours per EUR thousand of revenues
G014
140
120
100
80
60
40
20
140
120
100
80
60
40
20
0
114.4
22.4
116.4
20.9
118.1
21.0
92.0
95.5
97.1
124.2
22,8
101.4
2017
2018 2
2019 2
2020
Electricity & district heating
Gas
Normalized energy consumption 2
1_ Deviations in decimal places may occur due to commercial rounding.
2_ In 2020, the acquired entities Kimplas Piping Systems Ltd. and Statek Stanzereitechnik
GmbH were integrated into NORMA Group’s environmental reporting. In order to ensure
comparability with previous years, historic energy consumption data was updated back
to the time of acquisition. Detailed information may be found in the data chapter.
CR KEY PERFOMANCE INDICATORS
NORMA Group SE – Annual Report 2020
49
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS1 INTRODUCTION3 CORPORATE RESPONSIBILITY REPORT Target to reduce greenhouse gas emissions
Water
For scope 1 and 2 emissions, NORMA Group set itself an absolute reduction
target: NORMA Group wants to reduce its absolute scope 1 and 2 emissions
by at least around 19.5% by 2024 compared to 2017. In setting its climate
target, NORMA Group followed the recommendations of the
SCIENCE-BASED
TARGETS INIT IATIVE (Science-based target setting tool 1.1, Absolute Contrac-
tion Approach). The target does not consider emissions resulting from growth
by acquisitions and forms part of the Management Board’s remuneration
components.
REMUNERATION REPORT
In order to achieve this goal, NORMA Group manages the energy consump-
tion of all production sites and is integrating the energy reduction targets into
its
ENVIRONMENTAL MANAGEMENT SYSTEMS. At NORMA Group, the individual
plant management is responsible for the concrete measures taken to reduce
energy consumption and thus greenhouse gas emissions.
Quantification of emissions along the value chain
In addition to its efforts to reduce emissions at its production sites, NORMA Group
is also committed to managing greenhouse gas emissions along the value
chain (scope 3 emissions). This includes the supply chain, as in many cases
large amounts of energy are required to produce the materials and compo-
nents that NORMA Group purchases.
RESPONSIBLE PROCUREMENT
NORMA Group’s products provide effective water
management solutions
The United Nations estimates that demand for water will increase by 40% by
2050. According to current calculations, one in four people will then be living
U N I T E D N AT I O N S NORMA Group recog-
in a country with water scarcity.
nized this megatrend at an early stage and has made establishing a global
position in water management a strategic priority. Most predominantly,
NORMA Group’s water management product offering includes drip irrigation
systems that save up to 60% of water consumption, compared to sprinklers
and hand watering, and stormwater management solutions that protect
properties from water damage and, increasingly, ensure that stormwater is
managed sustainably.
NORMA Group’s water management business is managed in its global “Water
Management” organization. It currently comprises NORMA Group’s US sub-
sidiary NDS in the Americas and growing organizations in EMEA and APAC.
All regions maintain a constant and intensive exchange.
In 2020, NORMA Group hired a President for the global Water Management
organization with significant experience in the water industry. The strategy
and organization for water management were further refined.
In addition, last year, NORMA Group quantified the resulting emissions for
other scope 3 categories (emissions from capital goods, waste, business travel,
commuting by employees). An overview of all scope 3 reporting categories
can be found in NORMA Group‘s public
CDP REPORT.
Despite the challenges in 2020, NORMA Group’s Water Management
organization benefitted from continuous investments made in e-commerce
infrastructure as the company saw a COVID-19-driven acceleration of online
purchase activity around the globe. To further expand this trend, NORMA Group
is investing significantly in its digital capabilities and content.
In addition, NORMA Group has substantially invested in new product devel-
opment to secure long-term profitable growth of the water business. These
developments are being recognized externally. In May 2020, the NDS Mini
Channel with Decorative Grate received the prestigious Red Dot Design Award.
The Mini Channel Drain was recognized in the “product design” category for
its innovative potential, functionality and sustainability. The channel drain
features a patented decorative grate which was a first in the stormwater
management market.
NORMA Group SE – Annual Report 2020
50
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS1 INTRODUCTION3 CORPORATE RESPONSIBILITY REPORT Reduction of water consumption in production
A total of 19% of the world’s water consumption is attributable to the produc-
tion processes of industry alone.
FAO With its worldwide presence,
NORMA Group is also represented in regions with a medium to high risk of
AQ U E D U CT methodology). Against this
water scarcity (according to the
backdrop, NORMA Group also has a special responsibility to handle this
resource carefully in its own production.
For years, NORMA Group has been working to continuously reduce the use
of water in its own production processes. In its environmental strategy,
NORMA Group addresses both the water consumption at its manufacturing
sites and along the value chain. For its own sites, NORMA Group has set a
target of 2% efficiency increase for 2021.
CR TARGETS
NORMA Group focuses on its manufacturing sites as a framework for data
collection and targets because water consumption at its administrative and
distribution sites plays only a minor role due to significantly lower consumption
levels. In 2020, NORMA Group integrated Kimplas Piping Systems Ltd and
Statek Stanzereitechnik GmbH into the environmental reporting. In the course
of this, water consumption back to the time of acquisition was recalculated.
The following figures refer to these revised figures (a comparison with the
previously reported values can be found in the
CR PERFORMANCE INDICATORS
chapter). The control of water consumption follows the structure and respon-
ENVIRONMENTAL MANAGEMENT SYSTEMS
sibilities of the
Water consumption
in liter per EUR thousand of revenue
G015
149.9
144.6
156.8
154.8
160
140
120
100
80
60
40
20
160
140
120
100
80
60
40
20
0
2017
2018 1
2019 1
2020
1_ In 2020, the acquired entities Kimplas Piping Systems Ltd. and Statek Stanzereitechnik
GmbH were integrated into NORMA Group’s environmental reporting. In order to ensure
comparability with previous years, historic water consumption data was updated back to
the time of acquisition. Detailed information may be found in the data chapter.
CR PERFORMANCE INDICATO RS
totaled 147,425 cubic meters. This translates into an decrease of water con-
sumption by 14.5% (2019 revised: 172.491 cubic meters). The reduction can
be attributed primarily to a drop in production capacity in the wake of the
COVID-19 crisis. The specific water consumption also sank by 1.3% to 154,8 lit-
ers per EUR thousand of revenues (2019 revised: 156,8 liters).
NORMA Group’s water is mainly sourced from municipal water supplies or
other public or private water utilities and – at some locations – from ground
and surface water and is used to a large extent for cooling processes within
production. Last year, the water consumption of NORMA Group’s production
The implementation of ISO 14001 at NORMA Group also covers the handling
of wastewater. The vast majority of wastewater at NORMA Group sites is
discharged to municipal wastewater systems or local sewage treatment plants.
NORMA Group SE – Annual Report 2020
51
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS1 INTRODUCTION3 CORPORATE RESPONSIBILITY REPORT Water consumption in the supply chain
Reducing waste volumes
Water consumption also plays an important role in the supply chain: For exam-
ple, NORMA Group purchases granulates, molded rubber parts and plastic
parts, some of which are manufactured using water-intensive processes in
the chemical industry. As in the area of CO2 emissions, NORMA Group in 2019
also quantified the water consumption resulting from the production of the
purchased direct materials. The result showed that the production processes
in the supply chain required around 1.9 million cubic meters of water. This
corresponds to twelve times the water consumption of the NORMA Group
production sites. NORMA Group therefore see it as its task to strengthen the
awareness of responsible use of water in the supply chain. The Company has
included both the reduction of water consumption and the safe handling of
waste water in its Supplier Code of Conduct and has included sustainability
fact sheets in the commodity strategies.
RESPONSIBLE PROCUREMENT
A key indicator of the efficient use of raw materials is the volume of waste.
NORMA Group collects data on both hazardous and non-hazardous waste
(metal, plastic, paper, wood and other waste). As with other environmental
data, NORMA Group reports waste data in relation to sales to improve inter-
nal and external comparability.
The reduction of waste generation is controlled in accordance with the envi-
ronmental management systems. The Environment, Health & Safety (EHS)
department is responsible for ensuring adequate waste management that is
implemented at the plant level in accordance with ISO 14001 standards.
ENVIRONMENTAL MANAGEMENT SYSTEMS In its CR Roadmap, NORMA Group
has set the goal of further reducing the amount of waste in relation to
revenues in 2021.
CR TARGETS
Resource efficiency and materials
Economic and environmental drivers for resource efficiency
As a manufacturing company, NORMA Group depends on various raw mate-
rials and primary products as important precursors of its products.
NORMA Group’s total production materials turnover amounted to
EUR 291.3 million in 2020 (2019: 335.1 million). The largest share was
accounted for by steel and metal components, granules, and plastic and
rubber products.
PURCHASING AND SUPPLIER MANAGEMENT Efficient handling
of the raw materials required for production is therefore both needed from
an environmental point of view and economically necessary to reduce pro-
duction costs.
Taking into account NORMA Group’s procurement portfolio, price increases
for raw materials are considered likely overall. However, the associated
RISK AND OPPORTUNIT Y REPORT
financial impact is estimated to be minor.
Volumes of various forms of waste
in kg per EUR thousand of revenue
T009
2020
2019 1
Change in %
Non-hazardous waste
Metallic waste
Plastic waste
Cardboard / paper waste
Wood waste
Other waste
Hazardous waste
11.0
6.7
1.1
0.8
1.0
1.4
0.6
8.3
5.7
0.6
0.7
0.5
0.9
0.5
31.2
17.3
99.7
12.5
122.5
44.9
35.8
1_ Figures do not include locations of Kimplas Piping Systems Ltd., Statek Stanzereitechnik
GmbH and – in the case of plastic, wood and other waste – National Diversified Sales Ltd
(NDS).
Last year, the absolute amount of non-hazardous waste decreased by 13.6%
to 10,429 tons (2019: 9,181 tons). In relation to sales revenues, non-hazardous
waste amounted to 11.0 kg per EUR thousand of revenue (2019: 8.3 kg per
EUR thousand of revenue), an increase of 31.2%. One reason for the sharp
increase was the inclusion of the acquired sites Kimplas Piping Systems Ltd.
and Statek Stanzereitechnik GmbH in environmental reporting in 2020. Unlike
in the case of water and energy consumption, the waste values of previous
years could not be included retroactively back to the time of acquisition due
to the lack of data availability.
NORMA Group SE – Annual Report 2020
52
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS1 INTRODUCTION3 CORPORATE RESPONSIBILITY REPORT Recycling and compliance with legal requirements on materials
Depending on the type of waste, NORMA Group employs different recycling
methods. For example, a large share of the waste generated in production
processes is externally recycled by NORMA Group’s contractors. Plastic waste
is reintroduced into the manufacturing process as far as possible, depending
on the type of plastic and reasonable costs. A certain portion of the resulting
plastic waste is re-granulated. If possible, NORMA Group also purchases recy-
cled plastic. One example of this is the US subsidiary NDS, whose purchased
plastics consist of more than 60% recycled materials.
NORMA Group is currently not in the position to recycle its own products
because these are usually used in end products such as engines and turbines,
and doing so would require a disproportionately high investment of time and
resources on the part of NORMA Group. All contractually regulated specifica-
tions on material type and recyclability are fulfilled. Compliance with the
statutory labeling requirement is also guaranteed. In this way, NORMA Group
complies with statutory regulations such as end-of-life vehicle regulations
and guidelines such as RoHS (Restriction of Hazardous Substances), REACH
(Registration, Evaluation, Authorisation and Restriction of Chemicals) or
California Proposition 65 on the requirements on drinking water infrastructure
and supports its customers’ recycling concepts.
Metallic waste continued to be the largest waste category. Although a signif-
icant proportion of NORMA Group products are made of plastics, the waste
produced in this process, however, can often be regranulated and reused in
the production process itself.
In 2020, the volume of hazardous waste was 0,6 kg per EUR thousand of rev-
enue (2019: 0.5 kg per EUR thousand of revenue). The handling of hazardous
substances affects only a few production areas, and compliance with legal
requirements is regularly monitored as part of the environmental management
systems.
Efficient production processes
NORMA Group optimizes the efficiency of its production through the imple-
mentation and continuous improvement of the NORMA Business System
(NBS). Among others, NORMA Group uses the NBS to monitor indicators to
improve material efficiency. This includes the number of defective parts
produced internally but not delivered to the customer (cf. defective parts under
PRODUCT QUALIT Y AND SAF ET Y) and the scrap rate, which sets the value of
the scrap in relation to the total production material consumed. To make
management as effective as possible, data is collected at the machine,
department and plant levels.
In addition to the high focus on these indicators, scrap Marketplaces were
set up at all sites. The aim of these “marketplaces” is to sensitize the work-
force to the avoidance of scrap and waste. Scrap is collected on the machine
level in red boxes and displayed visibly in the production halls. The clear
visibility is intended to encourage employees to look for solutions to produce
less waste. Depending on the plant, the contents of the Scrap Marketplaces
are checked weekly or even daily, the causes analyzed and appropriate
countermeasures defined.
NORMA Group SE – Annual Report 2020
53
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS1 INTRODUCTION3 CORPORATE RESPONSIBILITY REPORT Social
Materiality matrix
G016
6
5
4
3
2
1
0
e
c
n
a
v
e
e
R
l
Health and safety
Diversity
and equal
opportunity
Local communities
Training and
development
Other working conditions
Employee satisfaction
Impact / risk
1
2
3
4
5
6
Employee satisfaction
Employee satisfaction as an important parameter
Occupational health and safety, training and development as well as fair pay-
ment – all these aspects serve the satisfaction of the employees. NORMA Group
is convinced that satisfied employees are also more willing to perform in their
daily work. Measuring employee satisfaction is therefore an “organizational
thermometer” for the company, enabling strengths to be identified and poten-
tial for improvement to be implemented promptly.
In addition to a regular employee survey, NORMA Group uses the voluntary
attrition rate as an indicator of employee satisfaction. The voluntary attrition
rate describes the number of employees who have voluntarily left NORMA Group
in relation to the total number of employees. In 2020, the aggregated attrition
rate was 9.6%. However, there are very large regional and local differences,
depending on the respective operational, cultural and macroeconomic envi-
ronment. NORMA Group has therefore not set a global target for 2021 to
improve the attrition rate, but has defined individual local targets for all
locations with more than 60 employees.
Good performance is rewarded
NORMA Group aims to attract and retain qualified and committed employees.
In order to promote the employees‘ interest in a positive development of the
company‘s value and to allow them to participate in its economic success, the
remuneration system of NORMA Group includes a fixed salary and a perfor-
mance-related variable remuneration component. In the case of employees
in Germany who are covered by collective bargaining agreements and those
not covered by collective bargaining agreements, for example, this component
is based on key financial figures. In addition, the achievement of personal
targets by employees also has an influence on the assessment.
Cooperation with employee representatives even in difficult times
In the past few years, the cost and competitive pressure in the automotive
industry has increased continuously. NORMA Group is reacting to the increas-
ingly difficult environment with its “Get on Track” program.
E CONOMIC REPORT
Against this background, the Management Board announced in mid-June 2020
the relocation and bundling of production activities in Central Europe and the
closure of the production site in Gerbershausen by the end of 2022. The relo-
cation of production from Gerbershausen to existing plants in the Czech Repub-
lic and Germany is part of the medium-term goal of increasing the efficiency
and competitiveness of NORMA Group. In mid-June 2020, the Management
informed the works councils about the project and initiated the statutory par-
ticipation procedure. In September 2020, the Management reached an agree-
ment with the employee representatives on a social collective agreement to
implement the measures.
NORMA Group SE – Annual Report 2020
54
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS1 INTRODUCTION3 CORPORATE RESPONSIBILITY REPORT Occupational health and safety
Certification of all manufacturing sites
Protecting employees from health effects of COVID-19
The safety and health of its employees is a top priority for for NORMA Group.
Since the beginning of the COVID-19 pandemic, NORMA Group has therefore
taken measures to protect its workforce and contain the spread of the virus.
The measures are managed by a global COVID-19 Task Force. The task force
is responsible for implementing safety measures in accordance with the
recommendations of the World Health Organization (WHO) at the local and
regional levels as well as for their central control and monitoring. The meas-
ures include standardized emergency plans and internal COVID-19 guidelines
that regulate workplace behavior and are regularly adapted in line with current
local conditions. A weekly reporting system also ensures transparency regard-
ing current infection and quarantine cases and enables rapid intervention.
Global management approach to occupational safety
In addition to the acute measures to contain the effects of the COVID-19 crisis,
NORMA Group has been pursuing a Group-wide approach to occupational
health and safety for years. Regular risk assessments at the production sites
show that machinery and vehicle traffic are the most important factors here.
However, against the background of the systematic group-wide approach to
safety and health management, NORMA Group considers these risks to be
low overall.
Laws and regulatory frameworks are clearly defined standards for occupa-
tional health and safety in the Company, but in many cases NORMA Group
goes significantly beyond merely meeting requirements. In light of the sub-
HEALTH AND SAFET Y POLICY, which
ject’s importance, it is addressed in the
is valid throughout the Group. In the policy, NORMA Group commits to provid-
ing a safe and risk-free working environment for all employees and any other
stakeholders affected by its business activities. With supplementary programs,
the Company wants to ensure that all workplaces offer the highest level of
safety to avoid accidents. In particular, the locations make technical arrange-
ments and conduct training courses to prevent accidents at work. These high
standards apply to temporary workers as well as to regular staff. In addition,
NORMA Group also includes health and safety certifications into its supplier
scoring process.
SUSTAINABILIT Y IN PURCHASI NG
Throughout NORMA Group, all manufacturing sites have local health and
safety representatives, who – along with the respective plant management
and safety committees – ensure the implementation of health and safety stand-
ards and serve as subject matter experts for questions on the topic. At the
end of 2020, 20 of 28 of the production sites that had been part of NORMA Group
for more than 12 months were externally audited and certified according to
the international standards OHSAS 18001 or ISO 45001. Compared to the
end of 2019, the absolute number of certified sites stayed the same, while the
share increased from 69% to 71% due to due to newly acquired locations that
have not yet been certified.
OHSAS 18001 and ISO 45001 prescribe conducting regular assessments on
the site level to identify risks for the occupational health and safety of work-
ers. On this basis, regular internal audits are carried out in order to identify
potential for improvements and to define appropriate measures. Progress
resulting from these measures is tracked regularly. NORMA Group is finalizing
the transition of its OHSAS 18001:2007 certified manufacturing sites to the
new ISO 45001:2018 occupational health and safety standard. At the end of
2020, 14 manufacturing site had successfully transitioned to ISO 45001.
Health and safety governance on the global, regional and local levels
The success of NORMA Group’s health and safety management is assessed
by regular reporting from global Health and Safety Management to the
Management Board. Thorough root cause analyses are derived from this at
the site level, and countermeasures are defined. Progress on the measures is
also reported to the Management Board.
In addition, every region has now introduced a regular Health and Safety Circle
that requires all locations to conduct self-assessments on the current status
quo of their health and safety activities. Participants include the health and
safety managers of each location in the respective region as well as the
regional and global health and safety management. Usually the circles also
invite participants from other regions to increase the sharing of best practices
on a global level.
NORMA Group SE – Annual Report 2020
55
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS1 INTRODUCTION3 CORPORATE RESPONSIBILITY REPORT Accident rate as the key performance indicator
Introducing management systems for occupational safety is not an end in
itself. To monitor their effectiveness, NORMA Group monitors the accident
rate, which counts the number of accidents per 1,000 employees that result
in a loss of work of more than three working days. Since 2014, the accident
rate has already been reduced significantly. In 2020, the accident rate per
1,000 employees was 4.2, which means a significant decrease compared to
2019 (4.3). As in previous years, there have been no fatalities. The goal is to
further reduce the accident rate in the coming years. By the end of 2021, the
notifiable accidents per 1,000 employees per year should be at least below 4.6.
CR TA RG ETS
NORMA Group also monitors the number of medical treatments or accidents
that result in a work loss of less than three days (medical treatment rate). In
2020, this was 25.1 treatments per 1,000 employees. This value, too, decreased
significantly compared to 2019 (29.1).
In order to focus on preventive rather than reactive measures, NORMA Group
also monitors the number of “near miss” events, which are occasions where
an accident nearly happened but was just avoided. Incidents, medical treat-
ments and near misses are reported to line managers who report this
information to local health and safety representatives.
In another proactive measure taken in 2020, NORMA Group released a lock-
out-tagout group-wide policy outlining key requirements for the control of
hazardous energy sources. The objective is to ensure that dangerous machines
are properly shut off and not able to be started up again prior to the comple-
tion of maintenance or repair work. NORMA Group will continue developing
key health and safety standards like this in 2021 and beyond.
Development of the accident rate
in reportable accidents per 1.000 employees
G017
Learning and development
9
8
7
6
5
4
3
2
1
9
8
7
6
5
4
3
2
1
0
7.6
7.8
6.3
4.3
4.2
2016
2017
2018
2019
2020
Success factor for business activities
NORMA Group considers itself a learning organization, and therefore pursues
the goal of continuous development. This is important, among other things,
because the Company operates in a very dynamic environment with con-
stantly changing requirements. Trends such as digitalization, networking,
flexibility and sustainability are particularly relevant.
At the core of NORMA Group‘s business model is the ability to adapt quickly
and flexibly to changing customer requirements as well as economic and social
conditions. The targeted and effective training and development of employ-
ees and the utilization of their creative potential are the decisive keys to inno-
vative strength and corporate success. The aim is also to recruit as many
skilled workers as possible from the company‘s own junior staff and thus
become more independent of the external labor market.
As a responsible employer, NORMA Group wants to offer its employees a
supportive work environment that includes opportunities for further develop-
ment. At the same time, today‘s working world expects competencies that are
in line with the changes resulting from global megatrends. Thus, training and
NORMA Group SE – Annual Report 2020
56
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS1 INTRODUCTION3 CORPORATE RESPONSIBILITY REPORT development not only serves NORMA Group as a Company, but also the long-
term perspectives of its employees.
Ensuring the development of employees through training
In order to meet the requirements for the training and development of its
employees, NORMA Group has firmly anchored the topic in its human resources
strategy. Among others, the strategy is implemented at the regional level by
Learning & Development Managers and locally by the HR business partners.
The focus of the initiative is on designing and offering globally implementable
development processes and programs that are aligned with NORMA Group‘s
corporate values and growth objectives. In order to specifically promote learn-
ing at the workplace and the individual development paths of employees, both
direct supervisors and internal mentors and coaches are available. In addition,
various local and regional methods of personnel development have been com-
bined into a global portfolio. This ensures that all NORMA Group employees
worldwide have access to the same talent development program.
NORMA Group has set itself the target that each employee should receive an
average of at least 30 hours of training per year. Training includes both inter-
nal and external courses and workshops and also includes what are known
as bubble assignments (see page 58). In 2020, employees received an aver-
GRAPHIC G018: “DEVELOPM ENT OF
age of 20.9 training hours (2019: 28.1).
TRAIN INGS HOURS”
Development of training hours
in hours per employees
G018
2020 was characterized by extremely difficult conditions for training meas-
ures as plants were temporarily closed, all external and internal classroom
training was completely eliminated, and budgets were restricted due to the
crisis. The value that was achieved despite this situation shows that employ-
ees received continuous training even in the crisis year 2020.
In the meantime, NORMA Group is increasingly focusing on online training in
order to ensure continuous training of employees in the future, even in peak
phases of mobile working. An important component of this is NORMA Group‘s
Learning Management System.
The aim is to provide employees with an online platform on which standard
training courses can be offered, while at the same time enabling them to
advance their training in line with their individual needs. NORMA Group ensures
the effectiveness of the training courses through regular internal reporting of
participation rates and feedback.
In addition, NORMA Group initiated the global management training program
Leadership-Culture@NORMA, was launched, which is specially tailored to
the needs of NORMA Group and aims to promote the creation of a Group-
wide network. In addition to teaching the theoretical basics, existing knowledge
and social skills will be deepened in order to achieve a uniform understand-
ing of leadership within NORMA Group along the lines of its core values.
Within the next three years, the global program is intended to train all man-
agers. In the period from 2019 to 2021, all plant managers are to undergo
global management training. Once the pandemic has subsided, the training
will be continued in the regions and plants.
35
30
25
20
15
10
5
35
30
25
20
15
10
5
0
29.7
30.1
28.1
23.9
20.9
2016
2017
2018
2019
2020
NORMA Group SE – Annual Report 2020
57
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS1 INTRODUCTION3 CORPORATE RESPONSIBILITY REPORT Competency model
G019
NORMA Group offers apprenticeships for young people in various technical
and commercial fields every year.
Job- und
Job and success
profiles
Talentprofile
Performance
Leistungs-
management
bewertung
Recruiting
Personal auswahl
Nachfolge-
Succession
planning
planung
Competency
Kompetenz-
framework
modell
Onboarding
Onboarding
Development
Entwicklung
Assessment
Assessment
Feedback
Feedback
International exchange
In a globalized world and an international company such as NORMA Group,
cross-border exchange, network building and intercultural skills are crucial for
success on a personal level as well as on a corporate level.
D VERSIT Y AND
EQUAL OPPORTUNITIES With its assignment programs, NORMA Group therefore
offers its employees the opportunity to expand their experience and skills
abroad. The programs distinguish between “bubble Assignments” (up to three
months) and “long-term assignments” (more than three months). Skilled
employees and managers who participate in these initiatives bring with them
specialist knowledge and experience from other places while at the same time
benefiting from the expertise of their local colleagues. Exchanges can take
place within a country or internationally between countries and regions.
Diversity and equality of opportunity
Targeted acquisition of competencies
Diversity pays off
Employee training is most effective when it aligns with the demands of the
working environment. To ensure this, NORMA Group’s approach is principally
demand-oriented, based on bottom-up departmental reporting.
In addition, the competency model, which was developed specifically for
NORMA Group, defines the skills that are important to the Company, based
on numerous workshops and with the participation of employees in all regions.
The competency model is integrated systematically into the global and local
HRstructures(
GRAPHIC G019: “COMPETENCY MODEL”). For example, manag-
ers have been trained in how to further develop their employees using the
competency model, and methods have been introduced to ensure that the
selection of new employees is carried out along the framework of the compe-
tencies that are of importance to NORMA Group.
Numerous training opportunities for career starters
Studies show that companies that value diversity are more successful than
others with largely homogeneous teams. As an international company with
locations and represenatative offices in 25 countries, NORMA Group is already
structurally characterized by a high degree of diversity. By signing the
D I V E R S I T Y C H A RT E R NORMA Group commits itself to ensuring that all
employees are valued – regardless of gender, nationality, ethnic origin, religion
or belief, disability, age, sexual orientation and identity.
The basis for diversity management is NORMA Group‘s mission statement
on diversity. On the one hand, the mission statement defines the drivers for
diversity at NORMA Group (market proximity, innovation and employee
satisfaction) and sharpens the focus on appreciation and equal opportunities
within the company. To coordinate diversity management, NORMA Group has
appointed diversity officers at the group and regional levels.
In addition to part-time courses of study in industrial engineering, mechanical
engineering, mechatronics and business administration, NORMA Group also
offers internships for students in all departments and regions. In addition,
In 2020, NORMA Group has implemented concrete measures to further develop
its diversity management. These include the establishment of systems for
measuring the various diversity dimensions in the workforce, the introduction
of which will be completed in 2021. In addition, NORMA Group has implemented
NORMA Group SE – Annual Report 2020
58
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS1 INTRODUCTION3 CORPORATE RESPONSIBILITY REPORT extensive training on the topic of unconscious bias. On the one hand, these
were aimed at managers and were integrated into respective formats for the
development of managers. Secondly, an online training course was designed
for all employees, combining scientific findings with interactive application
examples. With around 1,700 employees participating by the end of 2020,
the online training was a great success. Similar formats will be continued
in the future.
In its communication activities, NORMA Group has also taken further steps to
give greater consideration to aspects of appreciation and equality. One example
is this report itself, in the preparation of which attention was paid to
gender-neutral wording.
NORMA Group‘s commitment to diversity is appreciated annually on Diversity
Day. Due to the COVID-19 crisis and the resulting contact restrictions, the
Diversity Day activities had to be cancelled at numerous locations this year.
Gender equality
NORMA Group actively opposes discrimination and considers it a matter of
course that women and men are paid the same amount for the same work
and qualifications. The proportion of women is generally based on the pro-
portion of women who are available through the job market and who have
the necessary qualifications. Accordingly, it varies worldwide between loca-
tions. At the end of 2020, the proportion of women in the entire core workforce
was 36.0% (2019: 35.9%)
G RA P H I C G 0 2 0 : “ D E V E LO P M E N T O F P RO PO RT I O N
OF WOM EN AMONG PERMANENT STAFF.” One woman is currently represented on
the three-person Management Board of NORMA Group SE, and there were
two women out of a total of five members on NORMA Group’s Supervisory
Board in the 2020 fiscal year.
CORPORATE-GOVERNANCE-REPORT
Development of proportion of women among permanent staff G020
in %
40%
35%
30%
25%
20%
15%
10%
5%
40%
35%
30%
25%
20%
15%
10%
5%
0%
36.4
34.8
35.9
36.0
2017
2017
2018
2018
2019
2019
2020
2020
Social commitment
NORMA Clean Water
Long-term partnership with Plan International
For NORMA Group, the responsible use of water is directly related to its core
business. For this reason, NORMA Group is also involved in this area with its
social project NORMA Clean Water. The project aims to show how the
challenges in the field of water, sanitation and hygiene can be met: through
cooperation between business and civil society.
In the meantime, the NORMA Clean Water project can look back on a part-
nership of several years. NORMA Group’s partner is the children‘s aid organ-
ization Plan International, which supervises and implements the projects in
the respective countries. In 2018, the cooperation between NORMA Group
and Plan International received public recognition: NORMA Clean Water was
among the finalists for the German CSR Award in the category “Civil Society
Engagement.” The prize is awarded to projects and initiatives that demon-
strate exemplary corporate responsibility.
NORMA Group SE – Annual Report 2020
59
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS1 INTRODUCTION3 CORPORATE RESPONSIBILITY REPORT Engagement in India and Brazil
From 2014 to 2017, NORMA Clean Water focused on the water supply and
hygiene situation in Indian schools in the greater Pune area. In a total of
27 schools, construction measures for the repair or renovation of toilet facili-
ties were implemented, and almost 18,000 students and around 600 teachers
were trained in the use of clean drinking water and hygiene. The training
courses formed the core of the work, as they ensure that the water facilities
are used to improve hygiene even after the project has ended.
Building on the successful project in India, NORMA Clean Water has been
continued since 2017 in the regions of Codó and Peritoró in the state of
Maranhão in northeastern Brazil. Here too, there is a lack of safe access to
clean water. The project therefore aimed to improve the living and health
conditions of children and their families. Specifically, a total of 600 families
were given access to clean water through the construction and repair of new
drinking water facilities. In addition, around 60 families benefit from vegeta-
ble gardens, which diversify and expand their food supply. Here too, training
was at the heart of the project to ensure the long-term success of NORMA
Clean Water. In all project communities, water committees were actively
involved in the implementation and maintenance of the construction and train-
ing measures, thus helping to anchor the project throughout the communities
in the long term.
Continuing the engagement
The first phase of the project in Brazil was completed in 2020. Due to the suc-
cess of the project so far and the continuing demand in the project region,
NORMA Group has extended the project in Brazil by a second project phase.
The total amount provided is EUR 325,000 over three years.
In the existing project communities, where gardens were planted in the first
phase, families will now receive advice on fruit and vegetable cultivation. In
addition, gardening tools and seeds will be distributed. In the area of health,
hygiene and equal opportunities, workshops and exhibitions will be organized
to anchor these topics in the communities. In addition, the project is being
extended to two further communities, where measures corresponding to
the first project phase are to be implemented (installation of water supply
systems, establishment of water committees, workshops on gender equality).
The expansion is expected to reach an additional 3,800 people.
Against the background of the strong spread of the COVID-19 virus in Brazil,
the project take an acute significance: the successes of the first measures –
improved access to water and a better understanding of hygiene – can make
an effective and lasting contribution to containing the COVID-19 pandemic
and other viral infections.
Corporate volunteering at NORMA Help Day
Civil society is of crucial importance for the functioning of society as a whole.
Against the backdrop of the current social challenges, NORMA Group is com-
mitted to getting involved and playing an active role. The basis for promoting
the civic involvement of employees was created with the NORMA Help Day,
which was held for the first time in 2014 in Maintal. The program has spread
internationally since 2015 to all NORMA Group sites, with employees’ partic-
ipation being voluntary. In recent years, more than 700 employees have reg-
ularly taken part in Help Day. Numerous non- governmental organizations
(NGOs) benefited from the commitment of employees worldwide. Since the
contributions or projects vary greatly from region to region, they are organized
and implemented on a decentralized basis.
Due to the coronavirus protection measures, it was only possible to hold a
Help Day at a few locations last year. For example, the sites in Brazil, Germany
and Italy organized fundraising campaigns for local social organizations, the
sites in Portugal and Sweden helped children‘s charities, employees at the site
in Wuxi supported the local fire department, and employees in the Czech
Republic did gardening and painting work at an animal shelter.
NORMA Group has received a lot of positive feedback from participants and
external project partners. An evaluation carried out in 2019 in cooperation
with the University of Mannheim also confirmed the positive effect. Thus, the
NORMA Help Day has been a complete success for NORMA Group and all
participants and will be continued in the coming years.
NORMA Group SE – Annual Report 2020
60
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS1 INTRODUCTION3 CORPORATE RESPONSIBILITY REPORT Donations and sponsoring at the locations
NORMA Group has long supported local non-governmental organizations
through donations and sponsoring with a focus on social, charitable and
cultural projects in the regions. The approach here is also decentralized, as
the efficiency of the support measures depends on the regional framework
conditions.
Staggered approval processes apply to all donation and sponsorship activities,
depending on the amount made available. The basis for this is the “Schedule
for internal approval authority.” Donations to politicians, political parties and
political organizations are expressly prohibited. Approval processes and report-
ing are also linked to NORMA Group's internationally applicable compliance
C O M P L I A N C E In the past year, expenses for sponsoring
management.
amounted to EUR 98 thousand, and expenses for donations totaled
EUR 111 thousand. The Supervisory Board waived part of its remuneration
for fiscal year 2019 in fiscal year 2020. This amount of EUR 25,000 was
donated to the international aid organization PLAN International and is
included in the total amount of donations.
Contribution to the fight against the COVID-19 crisis
In addition to initiatives to protect its employees, NORMA Group also took
measures last year to help combat the effects of the COVID-19 crisis in
society. One important initiative in this respect was the development of a face
shield in spring 2020 to counteract the shortage of mouth and nose protec-
tions. The
NORMA FACE SHIELD protects the wearer’s eye area against drop-
lets and splashes of liquids. Worn in addition to mouth and nose protection,
it further reduces the risk of droplet infection. The development from the first
prototype to the finished product was completed in only four weeks.
The face shield is licensed as personal protective equipment. It consists of an
ergonomically shaped plastic frame and a film that is clamped into the frame.
The polycarbonate film, which is impenetrable for liquids, provides very good
viewing for the person wearing it.
In December 2020, the NORMA Group donated 500 of the face shields to the
St. Vinzenz Hospital in Hanau.
NORMA Group SE – Annual Report 2020
61
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS1 INTRODUCTION3 CORPORATE RESPONSIBILITY REPORT Non-financial Report, GRI and
UN Global Compact
Non-financial report
Global Reporting Initiative (GRI) and UN Global Compact
The Corporate Responsibility Report in conjunction with other information
from the Annual Report fulfills the Core option of the GRI Standards. This
includes the implementation of the materiality analysis.
It also offers an orientation to GRI Standards within the non-financial report.
Above all, the materiality analysis, the presentation of management
approaches, and the key figures are oriented toward the specifications of the
GRI Standards. The GRI Content Index can be found on NORMA Group’s
website
WWW.NORMAGROUP.COM.
This report also serves as a Communication on Progress for the implementa-
tion of the ten principles of the UN Global Compact. References to the Global
Compact principles have been integrated into the GRI Content Index.
This CR Report serves to fulfill the legal requirements that have arisen for
NORMA Group in accordance with Sec. 315b III HGB in connection with Secs.
289b to 289e HGB (German Commercial Code (“Handelsgesetzbuch”). The
contents of the non-financial report can be found in the CR Report and in parts
of the Management Report and are marked with a line next to the respective
text. An overview of the compulsory components according to HGB can be
TABLE T010: “CONTENT OF NON-FINANC IAL DISC LOSURE” Refer-
found in the
ences to disclosures outside the annual report constitute additional informa-
tion and are as such not part of the non-financial report. The non-financial
report has undergone an assurance engagement according to ISAE 3000
(Revised) with limited assurance.
ASSURANCE REPORT
After the implementation of the net method in the determination of reportable
risks according to CSR-Richtlinien-Umsetzungsgesetz (CSR-RUG),
NORMA Group is not aware of any reportable net risks that are very likely to
have a materially adverse effect on reportable aspects. For a description of
R I S K A N D
NORMA Group’s risk management system, please refer to the
OPPORT UNIT Y R EPORT. The gross risks identified in the materiality analysis are
briefly described in the subchapters of the CR Report.
Reportable relations to the amounts of the Consolidated Financial Statements
have not been determined. The standards of the Global Reporting Initiative
served as a framework for the preparation of the non-financial report.
NORMA Group SE – Annual Report 2020
62
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS1 INTRODUCTION3 CORPORATE RESPONSIBILITY REPORT Content of non-financial disclosure
T010
Mandatory information according to HGB
Reconciliation in report content / material topics
Business model
Principles of the Group
Environmental strategy and management systems
Climate protection
Water
Resource efficiency and materials
Responsible procurement
Compliance
Human rights
Employee satisfaction
Occupational health and safety
Training and development
This aspect was found to be non-material in the materiality analysis.
Compliance
Human rights
Responsible procurement
Compliance
Environmental issues
Labor issues
Social issues
Respect for human rights
Combating corruption and bribery
Presentation of risks
Correlations to the
Consolidated Financial Statements
Page
70
46
48
51
52
42
39
41
54
55
56
See 34, 35
39
41
42
39
See corresponding subchapters
About this report
62
NORMA Group SE – Annual Report 2020
63
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS1 INTRODUCTION3 CORPORATE RESPONSIBILITY REPORT CR performance indicators
Governance / integrity
Indicator
Compliance management systems & compliance training
Employees who were trained on compliance topics online
Completed hours in compliance online training
Substantial fines for non-compliance with laws and regulations
Human rights: elimination of discrimination
Cases of discrimination determined by courts
Human rights: freedom of association
Violations of freedom of association determined by courts
Percentage of permanent staff covered by collective bargaining agreements
Product quality and safety
Manufacturing locations certified according to EN 9100
Defective parts per million producted parts
Customer complaints
Sustainability in purchasing
Purchasing turnover
Total production materials turnover
Share of preferred suppliers who have signed the Supplier Code of Conduct (SCoC)
Preferred production material suppliers 1
Share of preferred suppliers in production material purchasing spend
Share of suppliers in supplier scoring that participated in sustainability self-assessment
Unit
2020
2019
Change in %
T011
Number
Hours
EUR thousands
Number
Number
%
Number
ppm (parts per million)
Average per month per entity
EUR millions
EUR millions
%
Number
%
%
2,091
3,432
1,233
3,278
0
0
0
0
0
0
52.7
46.3
27
5.1
4.7
404.1
291.3
100.0
18
21.9
32.0
26
6.1
6.4
490.3
335.1
100.0
22
27.8
28.7
69.6
4.7
0
0
0
n / a
3.8
– 16.4
– 26.6
– 17.6
– 13.1
n / a
– 18.2
n / a
n / a
1_ The information refers to the status prior to the update of the Supplier Code of Conducts.
SUSTAINABILIT Y IN PURCHASING Around 6% of preferred suppliers had signed the
updated version as of December 31, 2020.
NORMA Group SE – Annual Report 2020
64
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS1 INTRODUCTION3 CORPORATE RESPONSIBILITY REPORT
Environment
Indicator
Eco-management systems
Unit
2020
2019
revised 1
2019
reported 1
Change in %
T011
Number of manufacturing locations certified according to ISO 14001
Share of manufacturing locations certified according to ISO 14001
Number
%
26
93.0
n / a
n / a
26
89.7
CO2 Footprint
Scope 1 emissions (from gas consumption 2)
Scope 2 emissions (from purchased electricity / heat, market-based 2)
Scope 1 and 2 emissions (from purchased electricity / heat, market-based 2)
Scope 1 and 2 emissions (from purchased electricity / heat, location-based 2)
Energy
Absolute energy consumption
Gas
Electricity
District heating
Normalized energy consumption
Gas
Electricity & district heating
Water in production processes
Water consumption
Water consumption (normalized)
Resource efficiency
Hazardous waste
Non-hazardous waste
Metallic waste
Plastic waste
Cardboard / paper waste
Wood waste
Other waste
tons CO2e
tons CO2e
tons CO2e
tons CO2e
MWh
MWh
MWh
MWh
kwh / EUR thousand of revenue
kwh / EUR thousand of revenue
kwh /EUR thousand of revenue
5,417
44,396
49,813
52,327
118,214
21,668
96,123
424
124.2
22.8
101.4
5,794
48,700
54,494
57,987
129,963
23,095
106,303
565
118.1
21.0
97.1
5,754
45,620
51,374
54,868
124,954
23,018
101,435
501
113.6
20.9
92.7
liter / EUR thousand of revenue
154.8
156.8
150.1
m3
147,425
172,491
165,155
tons
tons
tons
tons
tons
tons
tons
617
10,429
6,376
1,067
730
956
1,300
n / a
n / a
n / a
n / a
n / a
n / a
n / a
525
9,181
6,280
617
750
496
1,037
0
n / a
– 6.5
– 8.8
– 8.6
– 9.8
– 9.0
– 6.2
– 9.6
– 25.0
5.1
8.4
4.4
– 14.5
– 1.3
17.5
13.6
1.5
72.9
– 2.6
92.6
25.4
1_ In 2020, the acquired entities Kimplas Piping Systems Ltd. and Statek Stanzereitechnik GmbH were integrated into NORMA Group’s environmental reporting. In order to ensure
comparability with previous years, historic energy and water consumption data was updated back to the time of acquisition. CO2e emissions were re-calculated to the baseline year 2017
in accordance with the GHG Protocol (Chapter 5). Due to data availability, the waste data was not revised.
2_ Market-based emissions in accordance with GHG Protocol Scope 2 Guidance, using supplier-specific data as well as IEA emission factors. Scope 2 emissions calculated using
“location-based” method (calculated using exclusively IEA emissions factors).
NORMA Group SE – Annual Report 2020
65
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS1 INTRODUCTION3 CORPORATE RESPONSIBILITY REPORT
Social
Indicator
Occupational health and safety
Unit
2020
2019
Change in %
T011
Manufacturing locations certified according to OHSAS 18001
Share of manufacturing locations certified according to OHSAS 18001 / ISO 45001
Accident rate
Medical treatment rate
Lost time incidents
Medical treatments (non-notifiable accidents)
Number
%
Accidents / 1,000 employees
Treatment / 1,000 employees
Number
Number
Training and development
Average training hours per employee
Employee satisfaction
Attrition rate (voluntary)
Diversity and equality of opportunity
Countries in which NORMA Group is currently represented
Share of female employees in permanent staff
Women on the five-member (normally: six-member) Supervisory Board
Social commitment
Donations
Sponsoring
hours per employee
%
Number
%
Number
EUR thousands
EUR thousands
20
71.4
4.2
25.1
35.0
210
20.9
9,6
25
36,0
2
111
98
20
69.0
4,3
29,1
38
258
28,1
n / a
25
35,9
2
60
177
0
n / a
– 1,1
– 13,5
– 7,9
– 18,6
– 25,8
n / a
0
n / a
0
86,0
– 44,9
NORMA Group SE – Annual Report 2020
66
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS1 INTRODUCTION3 CORPORATE RESPONSIBILITY REPORT
Assurance Report
Independent Practitioner’s Report on a Limited Assurance
Engagement on Non-financial Reporting
hensive system of quality control including documented policies and proce-
dures regarding compliance with ethical requirements, professional standards
and applicable legal and regulatory requirements.
To NORMA Group SE, Maintal
We have performed a limited assurance engagement on the separate non-
financial group report pursuant to § (Article) 315b Abs. (paragraph) 3 HGB
(“Handelsgesetzbuch”: “German Commercial Code”) of Norma Group SE,
Maintal, (hereinafter the “Company”) for the period from 1 January to 1 Decem-
ber 31, 2020 (hereinafter the “Non-financial Report”).
Responsibilities of the Executive Directors
The executive directors of the Company are responsible for the preparation
of the Non-financial Report in accordance with §§ 315c in conjunction with
289c to 289e HGB.
This responsibility of Company’s executive directors includes the selection and
application of appropriate methods of non-financial reporting as well as mak-
ing assumptions and estimates related to individual non-financial disclosures
which are reasonable in the circumstances. Furthermore, the executive
directors are responsible for such internal controls as they have considered
necessary to enable the preparation of a Non-financial Report that is free from
material misstatement whether due to fraud or error.
Independence and Quality Control of the Audit Firm
We have complied with the German professional provisions regarding inde-
pendence as well as other ethical requirements.
Our audit firm applies the national legal requirements and professional stand-
ards – in particular the Professional Code for German Public Auditors and
German Chartered Auditors (“Berufssatzung für Wirtschaftsprüfer und verei-
digte Buchprüfer”: “BS WP/vBP”) as well as the Standard on Quality Control 1
published by the Institut der Wirtschaftsprüfer (Institute of Public Auditors in
Germany; IDW): Requirements to quality control for audit firms (IDW Quali-
tätssicherungsstandard 1: Anforderungen an die Qualitätssicherung in der
Wirtschaftsprüferpraxis – IDW QS 1) – and accordingly maintains a compre-
Practitioner’s Responsibility
Our responsibility is to express a limited assurance conclusion on the
information in the Non-financial Report based on the assurance engagement
we have performed.
Within the scope of our engagement, we did not perform an audit on external
sources of information or expert opinions referred to in the Non-financial Report.
We conducted our assurance engagement in accordance with the Inter national
Standard on Assurance Engagements (ISAE) 3000 (Revised): Assurance
Engagements other than Audits or Reviews of Historical Financial Informa-
tion, issued by the IAASB. This Standard requires that we plan and perform
the assurance engagement to allow us to conclude with limited assurance
that nothing has come to our attention that causes us to believe that the
Company’s Non-financial Report for the period from January 1 to December
31, 2020, has not been prepared in all material aspects in accordance with
§§ 315c in conjunction with 289c to 289e HGB.
In a limited assurance engagement, the assurance procedures are less in
extent than for a reasonable assurance engagement, and therefore a sub-
stantially lower level of assurance is obtained. The assurance procedures
selected depend on the practitioner’s judgment.
Within the scope of our assurance engagement, we performed amongst other
things the following assurance procedures and further activities:
• Obtaining an understanding of the structure of the sustainability organi-
zation and of the stakeholder engagement
• Inquiries of the Company’s management and relevant personnel involved
in the preparation of the Non-financial Report regarding the preparation
process, the internal control system relating to this process and selected
disclosures in the Non-financial Report
NORMA Group SE – Annual Report 2020
67
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS1 INTRODUCTION3 CORPORATE RESPONSIBILITY REPORT • Identification of the likely risks of material misstatement of the Non-
Intended Use of the Assurance Report
financial Report
• Analytical evaluation of selected disclosures in the Non-financial Report
• Verification of the implementation of central management requirements,
processes and specifications for data collection with the help of virtual
site visits at the following locations:
We issue this report on the basis of the engagement agreed upon with the
Company. The assurance engagement has been performed for purposes of
the Company, and the report is solely intended to inform the Company about
the results of the limited assurance engagement. The report is not intended
for any third parties to base any (financial) decision thereon. Our responsibil-
ity lies only with the Company. We do not assume any responsibility towards
third parties.
• NORMA Germany GmbH, Maintal, Germany
• NORMA Group Mexico S de RL de CV, Monterrey, Mexico
• National Diversified Sales, Inc., Lindsay, USA
Frankfurt / Main,March11,2021
PricewaterhouseCoopers GmbH
Wirtschaftsprüfungsgesellschaft
• Comparison of selected disclosures with corresponding data in the
consolidated financial statements and in the group management report
• Evaluation of the presentation of the non-financial information
Assurance Conclusion
Based on the assurance procedures performed and assurance evidence
obtained, nothing has come to our attention that causes us to believe that the
Company’s Non-financial Report for the period from January 1 to December 31,
2020, has not been prepared in all material aspects in accordance with §§ 315c
in conjunction with 289c to 289e HGB.
Nicolette Behncke
Wirtschaftsprüferin
German public auditor
ppa. Claudia Niendorf-Senger
Wirtschaftsprüferin
German public auditor
NORMA Group SE – Annual Report 2020
68
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS1 INTRODUCTION3 CORPORATE RESPONSIBILITY REPORT CONSOLIDATED
MANAGEMENT
REPORT
70
Principles of the Group
132 Remuneration Report
85
Economic Report
110 Forecast Report
117 Risk and Opportunity Report
145
Other Legally Required Disclosures
147
Report on Transactions with Related Parties
NORMA Group SE – Annual Report 2020
69
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT MANAGEMENT REPORT
Principles of the Group
Business model
NORMA Group is an international market and technology leader in joining
and fluid-handling technology. With its 28 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 port-
folio includes more than 40,000 high-quality joining products and solutions for
numerous cross-industry applications. The focus is on innovative solutions for
promising end markets with a focus on the areas of Water Management, Indus-
try Applications, Mobility and New Energy. With its products and solutions,
NORMA Group supports its customers and business partners in responding to
global challenges such as climate change and the increasing scarcity of
resources. 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
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).
As of December 31, 2020, NORMA Group SE holds shares in 50 companies
that belong to NORMA Group either directly or indirectly and are fully consol-
idated.
In fiscal year 2020, the following changes of the legal structure of the Group
were made:
With effect from December 31, 2019, NORMA Germany GmbH acquired all
assets of STATEK Stanzereitechnik GmbH. Therefore, as of January 1, 2020,
all actions and transactions of STATEK Stanzereitechnik GmbH are deemed
to be for the account of NORMA Germany GmbH.
In addition, NORMA Group acquired the remaining 20 percent of the shares
in the Chinese subsidiary Fengfan Fastener (Shaoxing) Co., Ltd. at the end of
August 2020 and thus now holds all shares in the company.
NOTES
NORMA Group SE is the parent company of NORMA Group. It has its head-
quartersinMaintalnearFrankfurt / Main,Germany.NORMAGroupSEserves
as the formal legal holding of the Group. It is responsible for the strategic man-
agement of business activities. In addition, it is also responsible for commu-
nicating with the company’s most important target audiences as well as Legal
and M&A, Compliance, Risk Management and Internal Revision.
Since the end of December 2020, the US holding company, NORMA Penn-
sylvania, Inc., has held all shares (100%) in the Brazilian group company
NORMA do Brasil Sistemas de Conexão Ltda. The US subsidiary of
NORMA Group SE, NORMA Michigan, Inc., had previously held minority shares
(1.82%) in NORMA do Brasil Sistemas de Conexão Ltda.
Group-wide central management responsibilities such as information tech-
nology (IT), Treasury, Group Accounting and Group Controlling, for example,
are all based at the wholly owned subsidiary NORMA Group Holding GmbH
which is also located in Maintal. Three regional management teams located
NORMA Group SE – Annual Report 2020
70
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT NORMA Group (simplified structure) 1
G021
NORMA Group SE
NORMA Group
Holding GmbH
(Germany)
NORMA Group
Asia-Pacific Holding Pte. Ltd.
(Singapore)
NORMA
Pennsylvania,
Inc. (USA)
NORMA
Germany
NORMA
Serbia
NORMA
Distribution
Germany
NORMA Group
DS Polska
Groen BV
(NL)
NORMA
Czech
NORMA
Turkey
NORMA
Sweden
NORMA
France
NORMA
UK
NORMA
Distribution
Center
Connectors
Verbindungs -
technik AG
NORMA
China 2
NORMA
Autoline France
Lifial
(Portugal)
NORMA
Polska
NORMA
Italy
NORMA
Spain
NORMA
Russia
Kimplas
(UK)
Craig Assembly
(USA)
NORMA
Michigan (USA)
NORMA EJT
(Wuxi, China)
NORMA
Thailand
NORMA
Australia
NORMA EJT
(China)
R. G. Ray
(USA)
NORMA Group
Mexico
Fengfan
(China)
NORMA Products
Malaysia
NORMA
Korea
NORMA
India
National
Diversified
Sales (USA)
NORMA
Brazil
NORMA DS
Mexico
NORMA
Japan
Kimplas
(India)
NORMA
Manufacturing
(USA)
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, 2020, can be found in the
NOTES.
2_ NORMA China is organizationally assigned to the Asia- Pacific segment. In
terms of company law, it belongs to NORMA Group Holding GmbH.
NORMA Group SE – Annual Report 2020
71
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT Group Management
Operative segmentation by regions
NORMA Group SE has a dual management system that consists of a Man-
agement 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 2020, the following
personnel changes took place in the Management and Supervisory Board:
Annette Stieve has been appointed CFO with effect from October 1, 2020.
She succeeded Dr. Michael Schneider as CFO, who joined NORMA Group as
CFO in 2015 and was appointed Chairman of the Management Board in
November 2019.
In accordance with the Articles of Association, the Supervisory Board of
NORMA Group SE consists of six independent members elected by the share-
holders at the Annual General Meeting. Günter Hauptmann has served as Chair-
man of the Supervisory Board since September 1, 2020, after Lars Berg resigned
from his position for health reasons effective August 31, 2020. Miguel Ángel
López Borrego could be recruited for the vacant position on the Supervisory
Board. The application for the court appointment of Mr. López to the Supervi-
sory Board of NORMA Group was filed on March 3, 2021. The appointment
decision by the court is expected soon. Mr. López will stand for election by the
shareholders at the upcoming Annual General Meeting on May 20, 2021.
Detailed information on the composition of the Management Board and the
Supervisory Board, as well as the distribution of responsibilities among them-
selves, 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 and Section 315b para. 3, 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 GOVERNANCE REPORT
Detailed information on the development of the non-financial indicators can
be found in the
CR REPORT, which is part of the Annual Report.
NORMA Group’s strategy is based, among other considerations, on regional
growth targets. In order to achieve these, the operative 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 dif-
ferent functions. The internal Group reporting and control system that Man-
agement uses is also therefore quite regional in nature. Distribution Services
is based on regional and local priorities.
Products and end markets
Two complementary distribution channels
NORMA Group supplies its customers via two different sales channels,
Engineered Joining Technology – EJT: directly to OEMs
and
Standardized Joining Technology – SJT (until 2019: Distribution Services
(DS): via retailers and sales representatives.
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 at the same time ensures the highest quality
standards.
The area of EJT includes sophisticated, individually customized joining tech-
nology and is particularly characterized by close development partnerships
with OEMs (original equipment manufacturers). NORMA Group’s central devel-
opment 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 chal-
lenges their end markets and customers face. As a result, they generate sub-
stantial 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 reduc-
tion and quick installation into consideration.
NORMA Group SE – Annual Report 2020
72
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT The EJT business area includes the strategic business units Mobility and New
Energy. The Mobility business unit can in turn be divided into the two end mar-
kets Light Vehicles (passenger cars) and Heavy Vehicles (commercial vehicles
and construction machinery). The New Energies business unit brings together
numerous applications for the sustainable energy industry, for example solu-
tions in the field of electromobility and renewable energies. These SBUs were
newly introduced at the end of fiscal year 2020 and are designed to ensure
an optimized focus on the respective end markets and customers with their
specific requirements in future.
Via its Standardized Joining Technology (SJT) [until 2019: Distribution Services
(DS)], which consists of the two strategic business areas Water Management
and Industry Applications, NORMA Group markets a broad range of high-quality,
standardized brand products. This also includes various products for storm-
water management, irrigation and water infrastructure solutions. 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 segment, do-it-yourself stores and applications in smaller industries.
The brands ABA®, Breeze®, Clamp-All®, FISH®, Gemi®, Kimplas® NDS®,
NORMA®, Raindrip®, R.G.RAY®, Serflex®, TORCA® and TRUSTLENE® shall
represent technological expertise, high quality and reliability and meet the
technical standards of the countries in which they are sold.
By combining expertise in the development of customized solutions for orig-
inal equipment manufacturers (OEMs) in the field of EJT and the provision of
high-quality standardized branded products via a global distribution network
(SJT), NORMA Group is able to realize not only cross-selling effects but also
numerous synergies in purchasing, production, logistics and distribution. 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.
Organizational structure of NORMA Group
G022
NORMA Group SE
EMEA
Americaa
Asia-Pacific
Engineered Joining Technology
(EJT)
Standardized Joining Technology
(SJT) 1
Mobility and New Energy
Light
Vehicle
Heavy
Vehicle
New
Energy
Water
Management
Industry
Applications
1_ The business area of Distribution Services (DS) was renamed to Standardized Joining
Technology (SJT) in the context of internal structural changes.
Product portfolio
NORMA Group’s products can basically be divided into three product catego-
ries across all business segments based on the technology used in the man-
ufacturing process: Fluid (fluid systems and connectors), Fasten (metallic
fastening clamps and joining elements) and Water (applications in the field
of water management).
The Fluid products are single or multiple layer thermoplastic plug-in connec-
tors 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 already being used in
thermal management systems in hybrid and electric vehicles.
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 affix metal
and thermoplastic pipes.
NORMA Group SE – Annual Report 2020
73
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT The Water product portfolio includes solutions for applications in the sectors
of storm water management and landscape irrigation, but also joining com-
ponents for infrastructure solutions in the area of water.
its customers especially temperature- and pressure- resistant products, as
well as weight- and assembly-time- optimized products that stand out from
the competition.
NORMA Group’s advanced Engineered Joining Technology is used in all appli-
cations in which pipes, 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 vehi-
cle, 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.
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
Q U A L I T Y
throughout the entire Group therefore play a crucial role.
MA NAG EM ENT A strong brand strategy geared toward regional growth targets
and 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.
Market and competitive environment
With its products, NORMA Group provides solutions for numerous industrial
applications. 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 that is char-
acterized by a very heterogeneous structure due to the abundance of special-
ized industrial companies. In this environment, NORMA Group sees itself as
a provider of tailor-made, value-creating solutions that are geared to the spe-
cific needs of the customer and are the result of long-term development part-
nerships. 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
In response to the structural changes in the automotive industry, NORMA Group’s
traditional core business, that have been emerging for a number of years, the
company positioned itself in the field of electromobility several years ago and
is closely monitoring current developments and trends in order to be able to
benefit from any positive developments. Meanwhile, NORMA Group has a
broad product portfolio with customized products and system solutions for
applications in electric and hybrid vehicles that it produces for the most part
in its existing production facilities and on the same equipment on which it also
manufactures the traditional products for gasoline and diesel vehicles. Besides
cooling systems for cars, trucks and charging infrastructure, these also include
solutions for battery thermal management and media-carrying systems,
fasteners and connectors for hydrogen vehicles.
In the much more standardized sales channel of Standardized Joining Tech-
nology (SJT), 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.
Strategy and goals
Increase in value
NORMA Group’s Strategy 2025 includes increasing the value creation of the
company as its central objective, building on NORMA Group’s successful entre-
preneurial development and focusing on sustained 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 sharehold-
ers, employees 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
NORMA Group SE – Annual Report 2020
74
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT corporate responsibility to reconcile the effects of its business activities with
the expectations and needs of society. For this reason, all entrepreneurial
decisions are based on the principles of responsible corporate management
and sustainable action. Corporate Responsibility (CR), NORMA Group’s respon-
sibility towards people and the environment, is therefore regarded as an
integral part of the Company strategy.
CR REPORT
NORMA Groups’ strategy for the long-term increase in value is based on the
following key objectives and strategic measures:
Profitable growth
NORMA Group‘s primary objective is to increase the value of the company. In
each region, the focus is therefore on the ongoing profitable expansion of busi-
ness activities. Through the continuous expansion of application solutions at
existing customers and the identification and acquisition of new customers,
business activities are expanded, and the international presence increasingly
strengthened. The core of NORMA Group‘s growth strategy is the selective
addition to the product portfolio, the expansion of the regional presence and
the expansion of the market position in the focused end markets of water
management, industry applications, mobility and new energy. In identifying
its business areas, NORMA Group focuses on markets with attractive mar-
gins, sophisticated products, strongly growing sales potential as well as a
fragmented competitive structure. Global megatrends such as climate change
are increasing the need for low-emission technologies. The increasing scar-
city of resources offers NORMA Group attractive growth potential, especially
for its water business.
Selective product portfolio
The technological requirements placed on the end products of NORMA Group
customers are constantly changing. Increasing environmental awareness, scar-
city of resources and growing cost pressures play a major role in almost every
sector of industry. Furthermore, the automotive and commercial vehicle indus-
tries, 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, electromobility and hydrogen.
L EG A L A N D R EG U LATO RY I N F LU E N C I N G AS P ECTS. These circumstances 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. A major focus here is also on the area
RESEARCH AND DEVELOPMENT. With its
of thermal management for vehicles.
strategic business field Water Management and the extensive product port-
folio for applications in landscape irrigation, storm water management and
infrastructure solutions in the water sector, NORMA Group supports its
customers in optimizing the use of scarce resources. Innovations play an impor-
tant 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.
In order to sustainably strengthen its innovative power, the Group plans to
spend around 3% of its sales in research and development activities each
year. R&D expenditure mainly relates to developments in Engineered Joining
Technology (EJT) and accounts for around 5% of EJT sales. Nevertheless, as
the water management sector becomes increasingly relevant and a strategic
focus, R&D activities are also being stepped up in this area. For this reason,
NORMA Group includes these activities in the calculation of R&D expenses
from the 2020 reporting year onwards and uses total sales as a reference
value to determine the R&D ratio.
RESEARCH AND DEVELOPMENT
Selective acquisitions to supplement organic growth
By making select acquisitions, NORMA Group contributes to the diversifica-
tion 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 development in the strategic business units Water Management,
Industry Applications, Mobility and New Energy continuously and contributes
to its consolidation 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 com-
petitive 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-grow-
ing water industry, which is to be expanded through further acquisitions in
this area.
NORMA Group SE – Annual Report 2020
75
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT Strategic and regional growth initiatives
In order to achieve the goals anchored in its Strategy 2025, NORMA Group is
driving specific initiatives in the various regions and strategic business fields.
These include, in particular, the concerted expansion of the water business in
all regions. The activities that are already underway in the area of water
management in the Americas are to be strengthened by further expanding
the online and e-commerce channels. The focus is also on expanding the water
business in the Asia-Pacific and Europe regions. This will involve using current
structures to further advance the water business in the Asia-Pacific region. In
the EMEA region, acquisitions in this area are also a possibility.
In the area of general industry applications, the focus is on active portfolio
management and a targeted brand strategy. E-commerce initiatives, particu-
larly in the EMEA region, are also to be strengthened in this field of business.
By localizing production even further, selectively expanding the product range
and focusing on fast-growing markets, the industrial business in Asia-Pacific
is to be further expanded and at the same time made to be more profitable.
NORMA Group also intends to further expand its activities in the mobility and
new energies sectors globally. Here, the company will focus on strategic and
profitable applications. At the same time, NORMA Group will seek to defend
its primary market position in all regions by constantly improving its cost
structures.
Goals regarding finance and liquidity management
NORMA Group’s objectives with respect to central finance and liquidity man-
agement 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. This was also an essential tool
for measuring and managing liquidity risk during the COVID-19 pandemic.
Financing flexibility is ensured by maintaining the appropriate credit lines.
These are negotiated loan commitments that 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 line can be drawn in various currencies and maturities up to an
amount of EUR 50 million. In addition, NORMA Group negotiated a liquid-
ity line for another EUR 80 million in the course of the COVID-19 pandemic
in June 2020, which, however, did not need to be drawn in 2020.
NORMA Group uses asset-backed security (ABS), factoring and reverse
factoring programs to manage liquidity, optimize working capital and
improve the predictability of cash flows.
The financing measures undertaken in fiscal year 2020 are described in detail
in the explanatory notes to the financial position.
FINANCIAL POSITION
NORMA Group SE – Annual Report 2020
76
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT Strategic goals of NORMA Group
G023
MARKET LEADER FOR JOINING AND
FLUID-HANDLING TECHNOLOGY FOR
EXISTING AND FUTURE MARKETS
INCREASE
IN VALUE
Overall
objectives
PROFITABLE
GROWTH
SELECTIVE VALUE-ADDING
ACQUISITIONS TO SUPPLEMENT
ORGANIC GROWTH
Strategic
measures
to achieve
objectives
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
NORMA Group SE – Annual Report 2020
77
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT II. Limiting financial risks
Control system and control parameters
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 rela-
tively 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, 2020, around 49% (2019: 41%) of all debt instruments
had variable interest rates and were not hedged by interest rate swaps.
In addition, existing risk positions are monitored regularly by Group Treas-
ury 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 management 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 allocation of cash and cash equivalents
in NORMA Group Holding and at the same time ensuring that the respec-
tive 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 ensure an optimized cash
balance for all Group companies, whereby the local terms for international
payments must be taken into account here, in particular.
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
NORMA Group’s most important financial performance indicators include the
following value- and growth-oriented key figures, which have a direct impact
on NORMA Group’s value creation: organic Group sales growth, adjusted EBITA
and adjusted EBIT as well as net operating cash flow. These key figures lead
to the NORMA Value Added (NOVA) as the primary strategic performance
indicator. NORMA Group uses these key figures to continuously monitor
growth, profitability, liquidity and capital efficiency.
Important financial control parameters
G024
Profitability
Growth
Liquidity
Organic Group
sales growth
(adjusted for
acquisitions and
currency effects)
Adjusted
EBITA and adjusted
EBIT margin
each in relation
to sales
Net operating
cash flow
Adjusted EBITDA
+ Δ working capital
– investments
Capital efficiency
NOVA
Adjusted EBIT
– Taxes
– Capital costs
(WACC x capital
employed)
NORMA Group SE – Annual Report 2020
78
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT Organic sales growth
As a growth-oriented company, NORMA Group attaches particular impor-
tance 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 con-
solidation (sales revenues from acquisitions).
Due to the broad market structure in the area of joining technology, the Man-
agement Board is guided by internal analyses as well as studies by leading
economic research institutes on the development of the gross domestic prod-
uct of the respective regions and on the production and sales figures of the
relevant customer industries in developing the forecast on the expected devel-
opment of sales. In addition, the Management Board observes certain early
indicators, such as customer order patterns in the retail business (Standard-
ized Joining Technology) and the order book in the area of Engineered Joining
Technology (EJT).
Operating earnings figures
Adjusted EBITA (EBITA before special items) is an important internal and exter-
nal control figure with regard to ongoing operating activities and is the basis
for incentivizing NORMA Group‘s workforce. The adjusted EBITA margin, which
shows adjusted EBITA in relation to sales, provides information on the profit-
ability of the business activities. In order to maintain the adjusted EBITA mar-
gin and thus profitability at a high level, NORMA Group works continuously
on optimizing its corporate processes and structures and focuses on reducing
key cost factors.
Adjusted EBIT forms the basis for the remuneration of the Management Board
under the fundamentally revised and restructured Management Board
contracts effective January 1, 2020, and was therefore newly included in the
control system in the 2020 fiscal year. From 2021 on, only adjusted EBIT and
adjusted EBIT margin will serve as key earnings and profitability indicators.
The incentive bases in the workforce contracts will be changed to these target
figures in 2021 in line with the Management Board contracts.
For long-term comparison and for a better understanding of the business
development, NORMA Group adjusts the operating result for certain expenses.
In a departure from previous years, since the 2020 financial year, only those
expenses that are related to the acquisition of subsidiaries are adjusted.
ADJUSTMENTS
Net operating cash flow
In order to maintain the Group’s financial independence and solvency at all times,
NORMA Group is also guided by net operating cash flow in addition to the afore-
mentioned 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 busi-
ness 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 focusing on constant optimization also has a positive effect on
net operating cash flow.
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 pos-
itive 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)
NORMA Group SE – Annual Report 2020
79
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT NORMA Value Added (NOVA)
Adjusted EBIT (in EUR million) 2
Group tax rate (in %)
Taxes (in EUR million)
Adjusted EBIT after taxes
(in EUR million) 2
– WACC 3 x capital employed
(in EUR million)
NOVA (in EUR million)
2020
45.3
20.3
9.2
36.1
82,4
– 46,4
T012
2019 1
135.0
27.1
36.7
98.4
81.1
17.3
1_ The values considered for the calculation of NOVA for fiscal year 2019 were shown with-
out the effects of IFRS 16 as these were relevant for the management remuneration.
2_ 2020: adjusted by expenses related to acquisitions; 2019: adjusted by expenses related
to acquisitions and expenses related to the Rightsizing program.
3_ Weighted Average Cost of Capital.
The base interest rate is derived from the interest rate structure data of
Deutsche Bundesbank (three-month average: October 1 to December 31,
2020). 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 beta factor represents the individ-
ual 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 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 on the basis of the terms of the current external financ-
ing of NORMA Group. Invested capital is calculated from consolidated equity
plus net financial liabilities as of January 1 of the fiscal year.
Capital employed as of beginning of the year (Jan 1)
Equity (in EUR million)
Net debt (in EUR million)
Capital employed (in EUR million)
2020
629.5
420.8
1,050.3
T013
2019
602.4
400.3
1,002.8
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.
The cost of capital rate is calculated on the basis of the following assumptions
and calculations:
Important non-financial control parameters
Assumptions for the calculation of WACC (in %)
Risk-free interest rate
Market risk premium
Beta factor of NORMA Group
Cost of equity rate
Borrowing cost rate after taxes
WACC after taxes
2020
– 0.20
7.50
1.27
10.23
1.78
7.85
T014
2019
0.20
7.50
1.33
11.01
1.79
8.09
The most important non-financial control parameters for NORMA Group
include CO2 emissions, the Group’s power of innovation, the problem-solving
behavior of its employees and the sustainable overall development of
NORMA Group as a whole.
CO2 emissions
Compliance with applicable environmental protection requirements and the
avoidance of environmental risks have a high priority for NORMA Group. The
company is guided by international standards and guidelines in this regard.
Climate-relevant CO2 emissions are a significant non-financial performance
indicator in the area of the environment that has also been part of the Man-
agement Board’s remuneration system since January 2020. NORMA Group
records the greenhouse gas emissions of all production sites resulting from
gas consumption (Scope 1) and the purchase of electricity and district heat-
ing (Scope 2) and strives to continuously reduce these CO2 emissions. For its
NORMA Group SE – Annual Report 2020
80
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT
own production processes, NORMA Group has set itself the target of reducing
emissions by around 19.5% by 2024 (reference year 2017). This target is
based, among other things, on calculations of the Science-Based Targets
Initiative.
PROTECTION OF CLIMATE
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 exter-
nal process of new patent applications. By establishing targeted internal incen-
tive systems, NORMA Group promotes its employees’ innovative thinking.
Quality figure
NORMA Group strives for high reliability and service quality. 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 high 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 tracking the number of
defectivepartspermillionofmanufacturedparts(partspermillion / PPM).
This metric is collected and aggregated at the Group level on a monthly basis.
QUA LIT Y MANAGEMENT
Other non-financial performance indicators
Other non-financial performance indicators include employee and environ-
mental indicators and indicators on occupational safety and healthcare
within the Group. More information can be found in the
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
FOR ECAST R EPORT.
Financial control parameters
T015
Group sales (EUR million)
Adjusted EBITA 1 (EUR million)
Adjusted EBITA margin 1 (%)
Adjusted EBIT 1, 2 (EUR million)
Adjusted EBIT margin 1, 2 (%)
Net operating cash flow
(EUR million)
NORMA Value Added
(EUR million)
2020
2019
2018
2017
2016
952.2
54.6
5.7
45.3
4.8
1,100.1
144.8
13.2
136,1
12,4
1,084.1
173.2
16.0
164.5
15.2
1,017.1
174.5
17.2
166.0
16.3
894.9
157.5
17.6
147.7
16.5
78.3
122,9
124.4
132.9
148.5
– 46.4
17,3
60.8
54.9
53.1
1_ 2020: adjusted by expenses related to acquisitions, 2019: adjusted by expenses
related to acquisitions and expenses related to the Rightsizing program. Adjustments
for previous years are described in the corresponding Annual Reports.
2_ Adjusted EBIT forms the basis for the remuneration of the Management Board under
the fundamentally revised Management Board contracts effective January 1, 2020,
and was consequently newly included in the control system in 2020.
Non-financial control parameters
T016
Number of invention
applications 1
CO2 emissions 2
2020
2019
2018
2017
2016
22
22
32
33
n / a
(tons CO2 equivalents)
49,813
54,494 3, 4 53,727 3, 4
55,166 3, 4
Parts per million (ppm)
5.1
6.1
7.1
16.1
n / a
32.0
1_ The number of invention applications has served as a key control parameter for measuring
the Group’s innovative ability since 2016, replacing the number of patent applications,
a figure that had lost significance in light of changes in the patent strategy.
2_ Greenhouse gas emissions of all production sites resulting from gas consumption
(scope 1) and the purchase of electricity and district heating (scope 2). Since 2020,
CO2 emissions have been a target for determining part of the long-term remuneration for the
Management Board. and were thus newly included in the control system in fiscal year 2020.
3_ Recalculated data due to the integration of the acquired companies Kimplas and Statek
into the environmental reporting in fiscal year 2020. For the calculation, refer to
Greenhouse Gas Protocol, chapter 5.
4_The figures of 2019 and before were audited with limited assurance.
NORMA Group SE – Annual Report 2020
81
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT
Research and Development
NORMA Group’s research and development activities are aimed at identifying
technological trends at an early stage and addressing them in a targeted
manner. The focus is always on opening up new markets, gaining new cus-
tomers and developing new products and system solutions. Newly introduced
technologies are assessed according to the extent to which they help to
optimize existing processes, minimize the use of materials or improve the
functionalities of end products. The research focus is on finding solutions for
the global challenges of the respective end markets. In addition to water man-
agement and electromobility, these include, for example, topics such as digi-
talization and stationary battery storage systems. By focusing on the
megatrends relevant to its customers, which are reflected in particular in
increasing environmental awareness and the economical use of resources,
NORMA Group is able to initiate technology developments at an early stage.
In order to better meet the constantly changing market requirements and
increase agility, the R&D department was converted over to the new organ-
izational structure implemented in the previous year in July 2020. The division
into the three product categories Fasten, Fluid and Water and the cross-
regional cooperation of the respective teams will result in an even better
dovetailing of development activities and thus an effective focus on the
specific requirements of the individual application areas.
Focus on innovations
The focus of NORMA Group’s research and development activities is on
strengthening the company’s innovative strength. The focus is therefore on
the early identification of new technological trends and the systematic plan-
ning and implementation of product developments. Observing the relevant
end markets and bundling the knowledge gained and integrating it into the
internal innovation management process are the tasks of the so-called Fore-
sight Manager. In the 2020 fiscal year, for example, Foresight Management
looked at various concepts in the field of vertical farming. This showed that a
large number of existing products from the company‘s portfolio can already
be offered in this end market, which is new for NORMA Group, in line with
market requirements.
NORMA Group also uses new methods and innovation management pro-
cesses. One such example is what is called “innovation roadmapping,” in
which long-term roadmaps for the development of new technologies are
The role of climate change and water scarcity in the
innovation process
G025
MEGATRENDS
Water scarcity & emission reduction
Define search areas
for new markets
and technologies
Evaluation
criteria
NORMA Group innovation process
Idea generation
Idea prioritization
Product development
Invention applications
Possibly patents
drawn up. The effects of the megatrends identified, including water scarcity
and emission reduction, on relevant markets and the resulting requirements
for potential new products can thus be taken into account at an early stage.
In fiscal year 2020, NORMA Group realigned the concept of the Innovation
Councils. Innovation Councils identify future topics and drive their implemen-
tation. For this purpose, all topics and new ideas are first collected, evaluated
and then prioritized in a ranking. To ensure strategic alignment with the meg-
atrends here as well, these are incorporated into the evaluation of the ideas:
The significance for dealing with water scarcity or electromobility is a key
NORMA Group SE – Annual Report 2020
82
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT Development focuses in 2020
R&D activities in fiscal year 2020 were again dominated by the three major
trend topics of water management, electromobility and digitalization.
In the field of electromobility, thermal management of batteries continues to
be a key topic. For this purpose, NORMA Group is developing special fluid sys-
tems that ensure uniform temperature distribution in the battery and maintain
the optimal operating state of the cells. As these fluid systems sometimes
have to accommodate very complex and space-saving geometries, the devel-
opment focus in 2020 was on optimizing the shaping of the line components
with reduced manufacturing tolerances. In addition, the R&D department con-
tinues to work on concepts for the development of what are called intelligent
fluid systems, which are capable of automatically and wirelessly recording,
evaluating and communicating assembly conditions and operating parameters.
NORMA Group has also been active in the field of fuel cells since 2018 and is
already supplying line systems for a fuel cell vehicle in series production to a
customer.
Against the backdrop of the COVID-19 pandemic and the bottleneck in the
supply of face coverings, an international team led by the R&D department
designed and developed a face shield within only a few weeks and brought
it to market maturity in this short time. With this development activity,
NORMA Group was able to provide important support to alleviate the acute
shortage of face coverings in the first half of 2020.
criterion here. This resulted in the identification of new future topics, for
example in the field of water irrigation as well as within electromobility and
digitalization.
Comprehensive simulation and testing of new technologies
The technologies based on the megatrends flow directly into the development
and design of new products. In addition to the usual requirements, such as
sealability and impermeability as well as temperature resistance, sustainability
criteria such as optimal flow behavior of liquids or the lighter weight of the
materials used are also being taken into account. The latter can contribute
significantly to emission and cost reductions, especially in the automotive sector.
In order to optimize the properties just mentioned and to improve the durabil-
ity of its products, NORMA Group uses computer simulations, among other
techniques. Besides these theoretical-technical analyses, the prototypes are
subjected to extensive physical tests. The test procedures are used in order
to be able to ensure consistent performance over the entire service life of the
product. The exact design of the testing varies greatly, as it is adapted to
individual customer and market requirements.
Strategic cooperation with customers and research institutions
In the area of EJT, when developing new products, NORMA Group works closely
with its end customers as well as research and development institutes,
suppliers and other external partners. This allows for customer requirements
to be addressed directly and taken into account as early as the development
stage of new products and technologies. This also ensures rapid marketing.
The details of these research collaborations are not published for competitive
reasons.
In the SJT area, which is rather a pure trading segment, such technological
research services are demanded by the market only to a limited extent. In this
area, the requirements of NORMA Group‘s customers focus more on a strong
brand image, availability of products at all times and a largely complete
product range. Therefore, the focus in the SJT area is on the meaningful
supplementation of the product range and targeted marketing measures.
MA RKET ING
NORMA Group SE – Annual Report 2020
83
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT Expertise protected by patents
The company’s unique expertise in the field of joining technology is a key
factor in NORMA Group’s success. For this reason, the Group protects its
innovations through patents. As of December 31, 2020, 985 patents and
utility models were held (2019: 1,094). The decrease results from a consol-
idation of the patent portfolio carried out as part of the „Get on track“
program. The numbers of internal invention disclosures (2020: 22; 2019: 22)
and newly filed patent applications (2020: 43; 2019: 46) remained almost
unchanged compared to the previous year.
R&D expenses
and sets them in relation to total sales. R&D expenses amounted to
EUR 29.0 million in 2020 (2019: EUR 31.2 million, excluding water manage-
ment), which equates to around 5.1% of EJT sales (2019: 4.7% of EJT sales)
and 3.1% of total sales. The capitalization ratio, i.e. the share of own work
capitalized in R&D expenses, amounted to 10.3% (2019: 9.0%) in the current
reporting year.
Employees in R&D
As of December 31, 2020, the Group employed 340 people (2019: 345) in
research and development worldwide. This represents around 5.1% of the
core workforce.
Due to the increasing strategic importance of the area of water management,
NORMA Group takes the increasing R&D activities in this area into account
since fiscal year 2020 when determining the total expenses in the area of R&D
R&D Key Figures
Number of R&D employees
R&D employee ratio (% of permanent staff)
R&D expenses 1 (EUR million)
R&D ratio 1 (% of sales)
Number of invention applications 2
2020
340
5.1
29.0
3.1
22
2019
2018
2017
345
5.3
31.2
4.7
22
365
5.3
30.5
4.5
32
344
5.6
29.4
4.6
33
T017
2016
305
5.6
28.8
5.4
n / a
1_ Up to and including 2019, only R&D expenditures in the EJT area were documented and reported. The R&D ratio resulted from the ratio to EJT sales. With the increasing strategic relevance
of water management at NORMA Group, R&D expenses in this area have also been recorded since 2020 and put in relation to total sales. The R&D ratio excluding NDS in relation to
EJT-sales was 5.1%.
2_ 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.
NORMA Group SE – Annual Report 2020
84
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT
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.
COVID-19 pandemic plunges global economy into a deep recession in 2020
In 2020, the global economy was hit extremely hard by the unexpectedly rapid
spread of the coronavirus and the resulting restrictions imposed in an attempt
to contain the pandemic. The lockdowns led to temporary shutdowns in industry,
and consumer-related sectors were restricted, in some cases permanently. These
conditions plunged many countries worldwide into a deep recession in the first
half of 2020. Fiscal stabilization packages were launched on a broad scale to
counter the severe burdens on the economy and the population. Monetary policy
also remained very expansionary throughout the year. In this environment, the
global economy shrank by 3.5% in 2020 according to the International Monetary
Fund (IMF) (2019: +2.8%). This means the economy did not slump as deeply as
feared during the year, mainly due to the pickup in industrial activity towards
the middle of the year.
With the outbreak of the virus in China at the end of 2019, the pressure on
the economy there came to bear earlier than in other countries. Nevertheless,
the deep economic slump in the first quarter of 2020 was quickly countered
by implementing government measures. With the subsequent revival, Chinese
industrial production grew by 2.8% in 2020. The production of automobiles,
machinery and electronic machinery and equipment increased disproportion-
ately strongly. Overall, the gross domestic product in China grew robustly by
2.3% in 2020. By contrast, the economy in Southeast Asia (ASEAN-5) con-
tractedby3.7%.Brazil(– 4.5%)andRussia(– 3.6%)slidintorecessiononce
again. India’s economy also slumped significantly by posting an 8% decline.
Overall, the developing and emerging nations contracted by 2.4% according
to the IMF, although an even deeper slump was avoided by growth in China.
The United States was hit harder by the coronavirus and its spread last year
than many other industrialized countries. The gross domestic product slumped
by 3.5%, with both private consumption and investment activity weak. US
industrial production decreased by 7.0%. Average capacity utilization for the
year fell by 59 basis points to 71.9%. While production in the automotive
sector in particular came under massive pressure in the past fiscal year, high-tech
industries and construction suppliers in particular recovered quickly from the
slump in the spring.
GDP growth rates (real) in %
World 1
USA 2
China 3
Euro zone 4
Germany 5
2020
– 3.5
– 3.5
2.3
– 6.8
– 5.0
2019
2.8
2.2
6.1
1.3
0.6
T018
2018
3.5
3.0
6.7
1.9
1.5
1_IMF
2_US Trade Ministry
3_National Bureau of Statistics (NBS)
4_Eurostat
5_German Federal Statistical Office (Destatis)
Massive economic slump in the euro zone mitigated by stabilization
pacts and revival in the summer of 2020
In the wake of the sudden global economic slump and the drastic restrictions
imposed during the first lockdowns, the economy in the euro zone experienced
a significant slump in the spring of 2020. Exports, investment activity and
private consumption all collapsed at the same time. Many government support
packages were launched to stabilize the situation. Furthermore, the European
Central Bank launched an emergency coronavirus bond-buying program worth
EUR 1.85 trillion. As a result, although industry recovered slightly from the
middle of the year on, consumer sectors remained under pressure throughout
the year. While France, Italy, Spain, Portugal and Greece fell into a deep reces-
sion, the economic losses in the Netherlands, Ireland, Finland and the Baltic
states were comparatively low. Overall, economic development in the euro
zone followed a negative trend in all countries in 2020, as a result of which
the euro zone economy contracted by a total of 6.8% in 2020 (2019: +1.3%),
according to the statistical office Eurostat.
NORMA Group SE – Annual Report 2020
85
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT
In this environment and as a result of the temporary production stoppages
during the first lockdown, industrial production in the euro zone continued to
decline in 2020, with massive losses in the period from March to May followed
byalowpointinthemonthofApril(– 41%).Forcapitalgoods,thedeclinein
April 2020 was around 41%, and for durable goods, the decrease was around
50%. Despite global demand stimulus during the summer, industrial produc-
tion output remained down from the previous year. Capacity utilization slumped
by up to 158 basis points to 66.8% in the second quarter of 2020. It stood at
78.1% in the final quarter of 2020 (Q4 2019: 81.2%).
Germany: Construction, industry and policymakers provided
support during the recession
Germany was also hit very hard by the pandemic and restrictive economic
constraints in2020. Privateconsumption (– 6.0%) contracted significantly
throughout the year, for example. Burdened by the downturn in the global
economy,exportsfellevenmoresharply(– 9.9%)despitetheslightupturnin
the summer. In addition, the investment activities of companies remained very
restrained. Investment in machinery and equipment fell by 12.5%, for instance.
Construction activity continued to be an important pillar of the economy. In
addition, policymakers helped contain the burden on citizens and stabilized
the economy by providing massive monetary aid. This also included special
rules on short-time working and insolvency. According to the Federal Statis-
tical Office (Destatis), the German economy contracted by around 5.0% in
2020(2019:+ 0.6%).
German industry came under further significant pressure in 2020 following
the already weak previous year. In some cases, supply chains were disrupted
and production sites were shut down temporarily during the lockdown. In the
period from March to August 2020, industrial production was down by
double digits year-on-year on a monthly basis, with a clear low point in April
(– 29.3%).Startingfromthislowbase,Germanindustrythenregainedsome
of its momentum, with capacity utilization averaging 80.8% at the end of
December 2020 according to Eurostat (Q4 2019: 82.7%).
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
dollarexposure,fluctuationsintheEUR / USDexchangerateinparticularaffect
earnings.
RISK AND OPPORTUNIT Y REPORT
In fiscal year 2020, NORMA Group generated around 25% of its sales in
US dollars.ThedevelopmentoftheUSdollaragainsttheeuroresultedina
negative sales effect in fiscal year 2020. Furthermore, changes in the exchange
rates of the following currencies had a negative effect on sales development:
British pound, Polish zloty, Turkish lira, Indian rupee, Chinese renminbi, Malaysian
ringgit, Thai baht and Russian rubel.
Industry-specific factors
Mechanical engineering in recession in nearly all areas again in 2020,
sharp decline in Germany
In the wake of the COVID-19 pandemic, the mechanical engineering industry
had to scale back its production worldwide with only a few exceptions. There
were drastic slumps in April and May, in particular, from which the industry
was able to recover to some extent in the further course of the year. Never-
theless, capacity utilization and output failed to reach pre-crisis levels. Con-
trary to the generally negative trend, individual segments, including construction
machinery, for example, benefited from sustained buoyant demand. According
to estimates by the VDMA industry association, global machinery sales
slumped by around 6% in real terms in 2020. In China, industrial production
(+ 2.8%)andfixedassetinvestments(+ 2.9%)showedencouraginggrowth.
ThisalsoboostedrealmachinerysalesinChina(+ 5%).Themachinerymar-
ketsinRussia(+ 4%),Turkey(+ 5%)andSouthKorea(+ 1%)werealsoslightly
up.Bycontrast,allothermajormarketsdeclined:USA(– 8%),Canada(– 13%),
Japan(– 14%)andtheMiddleEast(– 6%).LatinAmerica(– 21%),India(– 22%)
andtheUK(– 23%)experiencedparticularlysharpdeclines.
NORMA Group SE – Annual Report 2020
86
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT The export-oriented mechanical engineering industry in Europe also felt fur-
ther pressure after an already weak prior year. According to the VDMA, sales
in the EU (27) and the euro zone fell significantly by 13%. With the excep-
tion of Finland (+0%) and the Netherlands (+1%), demand in the Western
and Eastern European EU countries fell, in some cases noticeably. For exam-
ple, sales were down 13% in France and Spain, 16% in Italy and 15% in Ger-
many. The VDMA estimates that the production of machinery manufacturers
in Germany will have slumped by 14% in real terms in 2020.
Automotive industry slides deeper into a crisis in 2020, production
losses for cars and commercial vehicles
The situation in the automotive industry was quite mixed: On the one hand,
the traditional automotive industry faced a massive crisis in 2020 as a result
of the COVID-19 pandemic and lockdowns, while on the other hand, the tech-
nology shift continued at an accelerated pace. Sales of electric vehicles (EVs,
including hybrids) rose dynamically by 41% to 3.1 million units. Nevertheless,
total global sales of light vehicles (LV, up to 6 t) declined by 14.4% to 77.4 mil-
lion LV in 2020, according to LMC Automotive (LMCA). In the more narrowly
defined passenger car market, the global slump was 15%, falling to just under
68 million passenger cars, according to the VDA association. Manufacturers
reduced their LV production by a total of 15.8% worldwide due to the uncer-
tainconditions.ThemostdrasticcutswereseenintheUnitedStates(– 18.7%),
Mexico(– 20.3%),Japan(– 14.9%),Korea(– 9.6%)andIndia(– 23.9%).Incon-
trast, LV production in China declined by only 4.2% in 2020. Due to government
stimulus, the market there picked up again strongly in the course of the year.
In 2020, the negative economic environment also impacted manufacturers of
commercial vehicles (trucks, buses), in some cases rather severely. North Amer-
ica(– 28.3%)andEurope(– 24.4%)inparticularrecordedexceptionallyhigh
production losses. Nevertheless, with valuable contributions from China (sales
+31.0%, production +29.3%), the global market in 2020 was only moderately
down(sales– 3.5%,production– 5.5%).
of this decline and due to market weakness in virtually all export markets,
manufacturers in Europe reduced production by more than one-fifth in 2020
(– 21.8%,16.6millionLV).InGermany,productionwascutby24.4%,accord-
ing to LMCA data. The losses were also substantial in Italy, Spain and the UK.
However,thecutswereparticularlymassiveinFrance(– 38.6%).InEurope,
demand for commercial vehicles was also weak in all countries. According to
LMCA data, commercial vehicle sales slumped by 21.1%. In contrast, the ACEA
association puts the decline in Europe (EU + EFTA +UK) at 19.4%. Furthermore,
commercial vehicle production had to be scaled back significantly in 2020,
with plants temporarily idled. According to the LMCA, the number of trucks
and buses manufactured in Europe thus fell by 24.4% to around 470,000
(Germany– 33.6%).
Construction industry mainly faced headwinds worldwide in 2020;
China and Germany on the upswing
In China, India and Southeast Asia, the construction industry is growing struc-
turally. Growth is being driven by factors including urbanization and infrastruc-
ture expansion. However, construction activity came under strong pressure at
times in 2020 due to the pandemic. In China, the construction industry bucked
the general trend and recovered early in 2020. According to the NBS statistics
office, real construction investment rose by 3.9%, and investment in water
management by 4.5%. Investment in buildings increased by 7.0% in nominal
terms and by as much as 7.6% in residential construction. By contrast, con-
struction activity in Europe stalled significantly last year. According to the Euro-
construct industry network (including the ifo Institute), real construction output
fellby7.8%(2019:+2.9%),withWesternEuropeaccountingfor– 8.0%and
EasternEuropefor– 4.5%.Thedeclinewasinexcessof10%inFrance,Spain
and Ireland, while construction output in the UK even shrank by nearly a fifth.
At 3.8%, the decline in civil engineering was still moderate throughout Europe,
whereas the drop in residential construction was substantial at 8.6%. The rea-
son for this development was a more temporary shutdown of construction
sites. Building renovation activities were also down 7.3% in this environment
(newconstruction:– 10.5%).
In Europe (EU + EFTA + UK), demand for passenger cars fell by 24.3% to
12.0 million units last year, according to the ACEA (Association des Construc-
teurs Européens d‘Automobiles). The decline was 24.5% in Western Europe.
The negative trend could be seen in all countries with a double-digit drop, with
thepressurebeingparticularlynoticeableinFrance(– 25.5%),Italy(– 27.9%),
Spain(– 32.3%)andtheUK(– 29.4%).SalesinGermanyfellby19.1%.Inlight
Construction activity in Germany remained robust. Investments in construction
increased by 1.5% in real terms (2019: 3.8%; Destatis). According to the DIW
(German Institute for Economic Research), the volume of new residential con-
struction once again grew strongly by 5.2% in nominal terms (2019: 5.4%).
Despite the economic slump, new construction activity in commercial and
NORMA Group SE – Annual Report 2020
87
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT public buildings also remained moderately up (+1.9%). Construction work on
existing buildings (additions/renovations, modernization, maintenance), which
account for around two-thirds of the construction volume in Germany, also
grew robustly once again: for residential buildings, the increase was 4.7%
(2019: +9.5%), while construction work on other existing buildings rose by 3.4%
(2019: +5.6%).
US construction industry and water management see boost in 2020,
COVID-19 pandemic spurs maintenance and remodeling
Despite the poor economic environment, the US construction industry grew
strongly in 2020. For example, completions of private housing units increased
by 2.8%. Private construction spending grew by 4.7% in nominal terms. In this
context, private residential construction recovered strongly from the previous
year’s losses by posting an increase of 11.8%. By contrast, commercial con-
struction was down 5.3% for office buildings and 10.3% for industrial manu-
facturing buildings. Public construction spending increased by 4.8% in nominal
terms and went, among other things, to the expansion of highways and roads
(+1.8%), waste disposal (sewage/waste: +3.2%) and water supply (+16.2%).
The latter includes investments in screening and stormwater infrastructure.
NORMA Group’s US water business (NDS activities) correlates very strongly
with maintenance and conversion activities in addition to new construction.
These activities benefited in 2020 during the corona pandemic and were also
favored by a low interest rate environment. According to industry experts at
JBREC (John Burns Real Estate Consulting), total spending on building mate-
rials in this sector is estimated to have increased by 8.0% last year (new con-
struction:– 5.3%).Thecombinedmarketvolumethusgrewbyatotalof3.2%.
Legal and regulatory influencing aspects
In the context of the international focus of its business and against the back-
drop of its acquisition strategy, various legal and tax-related regulations are
relevant to NORMA Group, which include product safety and product liability
laws, construction, environmental and employment-related regulations as well
as foreign trade and patent laws.
RISK AND OPPORTUNIT Y REPORT
In addition, NORMA Group’s product strategy is influenced by increasing
density of regulations in environmental law and ongoing discussion on emission-
reducing drive technologies and the resulting structural change in the automo-
tive industry. New regulations on emissions and fleet management 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 com-
plexityofsystemsinvehicles– duetodownsizingorhybridvehicles,for
example – also increases the number of interfaces and thus the demand for
reliable joining technology. In addition, the increasing electrification of the auto-
motive industry presents OEMs with new challenges and opens up new oppor-
tunities and business fields for NORMA Group, especially in the area of thermal
management.
RESEARCH AND DEVELOPMENT
Due to NORMA Group’s growing water business and the increasing strategic
relevance of this business area, 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 2020
Business development affected by the corona pandemic
The development of NORMA Group’s business was severely affected by the
COVID-19 pandemic and its economic consequences in fiscal year 2020. Due
to the lack of incoming orders in the course of the first lockdown in March 2020
and also to protect its own employees, NORMA Group reduced production at
many of its plants worldwide in mid-March and in some cases shut them down
completely. This led to a significant drop in sales, especially in the second quar-
ter of 2020. Although the order situation eased significantly in the course of the
second half of the year, the losses from the first half could not be fully offset.
Overall, the situation remained tense and volatile throughout fiscal 2020,
creating a high degree of uncertainty and making it impossible to forecast the
development of the key financial indicators in fiscal 2020 until October 2020.
Personnel changes on the Management Board and Supervisory Board
With effect from October 1, 2020, Annette Stieve has been appointed CFO,
succeeding Dr. Michael Schneider, who joined NORMA Group as CFO in 2015
and was appointed Chairman of the Management Board in November 2019.
Annette Stieve joined NORMA Group from Hoffmann Group, an international
tool distribution company, where she also worked as CFO. Prior to that, she
NORMA Group SE – Annual Report 2020
88
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT held various management positions with the automotive supplier Faurecia
Automotive GmbH, most recently as Managing Director and CFO of the Northern
and Eastern Europe region. With the appointment of Annette Stieve, the
Management Board of NORMA Group now comprises three members and is
fully staffed. The contract of the COO, Dr. Friedrich Klein, was extended by a
further three years in November 2020.
Günter Hauptmann took over as Chairman of the Supervisory Board of
NORMA Group with effect from September 1, 2020. He succeeded Lars Berg,
who resigned from his position as Chairman and member of the Supervisory
Board for health reasons with effect from the end of August 31, 2020. Miguel
Ángel López Borrego could be recruited for the vacant position on the Super-
visory Board. The application for the court appointment of Mr. López to the
Supervisory Board of NORMA Group was filed on March 3, 2021. The appoint-
ment decision by the court is expected soon. Mr. López will stand for election
by the shareholders at the upcoming Annual General Meeting on May 20, 2021.
CORPORATE GOVERNANCE REPORT
Strategic measures implemented to optimize Group structures
Implementation of the measures under the “Get on track” program progressed
according to plan in fiscal year 2020. Against this backdrop, the Management
Board announced in mid-June 2020 the relocation and bundling of production
activities in Central Europe and the closure of the production site in Gerber-
shausen by the end of 2022. The relocation of production from Gerbershausen
to existing plants in the Czech Republic and Germany pays towards the medi-
um-term goal of increasing NORMA Group‘s efficiency and competitiveness.
The profile of the plant in Maintal as a highly automated, efficient location is
being sharpened, among other things through the creation of a TORRO
competence center. NORMA Group is thus responding to the environment in
the automotive industry, which has already been increasingly difficult for
several years with increased cost and competitive pressures. The management
informed the works councils about the project in mid-June 2020 and initiated
the statutory participation procedure. In September 2020, the management
and employee representatives agreed on a social collective agreement to
implement the measures.
Comparison of target and actual values
As part of the preparation of the business plan for fiscal year 2020, the Man-
agement Board of NORMA Group made assumptions regarding the develop-
2019 ANNUAL REPORT.
ment of the Group’s key figures in fiscal year 2020.
However, it had to revise this again before the publication of the Annual Report
at the end of March 2020 in the wake of the COVID-19 pandemic and the
associated lockdown of the global economy. Due to the great uncertainty and
the unforeseeable consequences of the COVID-19 pandemic on NORMA Group’s
business, the Management Board first did not provide a detailed forecast for
the full year but expected a significant negative deviation from the assump-
tions originally made.
An assessment of the development of the key performance indicators for the
full year 2020 was possible on October 20, 2020, only on the basis of the
preliminary figures for the third quarter of 2020. Since then, the Management
Board has assumed an organic year-on-year decline in sales of around 16%
for fiscal year 2020. With regard to the adjusted EBITA margin, it anticipated
more than 5% for fiscal year 2020, while adjusted EBIT margin was expected
to be above 4%. Expenses related to the “Get on track” program in the amount
of EUR 29 million are not adjusted. Furthermore, the Management Board
anticipated net operating cash flow of more than EUR 60 million for fiscal
year 2020.
TABLE T019: “ACTUAL BUSINESS DEVELOPMENT COMPARED TO FORECAST ” pro-
vides an overview of target and actual values as well as forecast adjustments
during the year.
Deviations from the target values
The organic decline of 12.1% in NORMA Group’s sales is above the assumption
made in October 2020 of a 16% decline in sales. Influenced by the COVID-19
pandemic and the additional expenses from the “Get on track” program, the
adjusted EBITA margin amounted to 5.7% in fiscal year 2020. The margin was
thus in line with the expected targets of more than 5%. Net operating cash
flow amounted to EUR 78.3 million and thus exceeded the expected value of
EUR 60 million. This was due to a positive development in working capital
despite the ongoing pandemic. NORMA Value Added (NOVA) amounted to
EUR– 46.4millioninfiscalyear2020andthusalsodevelopedasexpectedin
light of the difficult environment in fiscal year 2020.
NORMA Group SE – Annual Report 2020
89
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT Actual business development compared to the forecast
T019
Results in 2019 1
March 2020 2
October 2020
Results in 2020 3
n / a
n / a
EUR 952.2 million
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 SJT (former DS)
(Adjusted) cost of materials ratio
(Adjusted) personnel expense ratio
Adjusted EBITA margin
Adjusted EBIT margin
NORMA Value Added (NOVA)
Financial result
Adjusted tax ratio
Earnings per share
Net operating cash flow
Investments in R&D (related to EJT sales)
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%
12.4%
EUR 17.3 million
EUR – 15.5 million
27.1%
EUR 2.76 (adjusted)
EUR 1.83 (reported)
EUR 122.9 million
4.7%
Investment rate (excluding acquisitions)
5.0%
Dividend/payout ratio
Number of invention applications
Number of defective parts per million (PPM)
Average number of quality-related
customer complaints per month
EUR 0.04 / 1.5%
22
6.1
noticeable decline in organic sales
of 2% to 4%
stable organic sales
noticeable organic decline
slight organic decline
solid organic growth
noticeable organic decline
roughly at the same level as
in the previous year
roughly at the same level as
in the previous year
more than 13%
more than 12%
between EUR 10 million
and EUR 20 million
up to EUR – 15 million
between 26% and 28%
slight decline
around EUR 110 million
around 5% of EJT sales
operative investments of around
5% of Group sales
approx. 30% to 35% of adjusted
net profit for the period 5
more than 20
fewer than 20
organic decline of around 16%
significant organic decline
significant organic decline
noticeable organic decline
significant decline
noticeable decline
higher than in the previous year
noticeable increase compared to
the previous year
more than 5%
more than 4%
between EUR – 60 million and
EUR – 45 million
no adjustments
tax expenses / income:
EUR – 12 million to EUR +3 million
strong decline compared
to the previous year
more than EUR 60 million
no adjustments
no adjustments
approx. 30% to 35% of adjusted
net profit for the period 5
no adjustments
no adjustments
– 12.1%
– 15.5%
– 12.4%
– 1.2%
– 15.8%
– 6.5%
43.8%
31.3%
5.7%
4.8%
EUR – 46.4 million
EUR – 14.8 million
20.3%
EUR 0.77 (adjusted)
EUR 0.18 (reported)
EUR 78.3 million
5.1%
4.3%
EUR 0.70 4
91.7% 4
22
5.1
4.7
6.4
fewer than 8
no adjustments
1_ The adjustments in 2019 relate to effects from purchase price allocation as well as to expenses related to the “Rightsizing” program.
2_ The assumptions made by the Management Board when preparing the Annual Report with regard to the development of the financial figures in the 2020 fiscal year were revised by the
Management Board before the Annual Report was published at the end of March due to the unexpectedly rapid spread of the coronavirus and the resulting lockdown. At this point in time,
due to the high level of uncertainty regarding the further development of the pandemic, it was not possible to make a reliable forecast for fiscal year 2020, which is why the Management
Board assumed a significantly negative deviation from the original forecast without specifying it in more detail. For comparison purposes, the original forecast before the spread of the
coronavirus is included here.
3_ Adjustments in 2020 are related exclusively to depreciation and ammortization from purchase price allocation. Expenses related to the „Get on track“ program are not adjusted.
4_ In accordance with the Management Board‘s proposal for the appropriation of net profit, subject to the approval by the Annual General Meeting on May 21, 2020.
5_ To the extent permitted by the future economic situation, NORMA Group pursues a sustainable dividend policy based on a payout ratio of approximately 30% to a maximum of 35%
of the adjusted consolidated net profit for the year.
NORMA Group SE – Annual Report 2020
90
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT
Earnings, assets and financial position
Adjustments
General statement by the Management Board on the course of
business and economic situation
Fiscal year 2020 was significantly impacted by the COVID-19 pandemic and
its subsequent economic consequences. These had a negative impact on
NORMA Group’s business and led to a significant decline in customer demand
and sales, particularly in the automotive business (EJT). Sales in the EJT busi-
ness were 17.0% below the level of the previous year for the year as a whole,
although there were signs of a noticeable recovery in demand again in the
fourth quarter of 2020. The area of SJT also showed significant sales declines
in fiscal year 2020, although these were more moderate at minus 8.1% due
to broader industry diversification and the continued good development of the
US water business. Overall, NORMA Group’s consolidated sales declined by
13.4% to EUR 952.2 million in the COVID-19 year 2020.
Adjusted EBITA amounted to EUR 54.6 million in the fiscal year, 62.3% below
the previous year’s level (2019: EUR 144.8 million). The adjusted EBITA mar-
gin was also significantly lower at 5.7% (2019: 13.2%). Adjusted EBIT declined
by 66.7% to EUR 45.3 million compared to the previous year (2019:
EUR 136.1 million), and the adjusted EBIT margin was 4.8% (2019: 12.4%).
The economic consequences of the corona pandemic and the implementation
costs under the “Get on track” program, which amounted to EUR 29.1 million
in fiscal year 2020, had a negative impact on the operating result in the report-
ing year. However, the measures initiated as part of the change program also
showed initial success in fiscal year 2020, as planned.
Against the backdrop of the emerging recovery in demand in important cus-
tomer industries of NORMA Group, the Management Board is nevertheless
confident with regard to the fiscal year 2021 and expects organic sales growth
in the low double-digit range compared to the previous year. In addition,
the Management Board expects an EBITA margin adjusted for acquisition
effects of more than 13% and an adjusted EBIT margin of more than 12%.
FOR ECAST R EPORT
The Management of NORMA Group adjusts certain expenses and income for
the purpose of managing the Group‘s operations. The adjusted results pre-
sented below correspond to the management view. In contrast to previous
years, from the 2020 fiscal year onwards, only those expenses and income
items are adjusted within operating profit (EBIT) that are related to a company
merger. Consequently, the expenses from the transformation program „Get
on track“, which were recognized in the amount of EUR 25.2 million within
employee benefit expenses and in the amount of EUR 3.9 million within other
operating income and expenses, were not adjusted in fiscal year 2020 and
are included in EBIT. Within EBITA, depreciation of property, plant and equip-
ment from purchase price allocations in the amount of EUR 3.5 million (2019:
EUR 3.5 million) and within EBIT, amortization of intangible assets from pur-
chase price allocations in the amount of EUR 21.7 million (2019: EUR 22.5 mil-
lion) were adjusted additionally. Notional income taxes resulting from the
adjustments are calculated using the tax rates of the respective local compa-
nies concerned and included in adjusted earnings after taxes.
The adjustments in the previous year mainly relate to other operating expenses
(EUR 2.9 million), employee benefit expenses (EUR 9.9 million) and cost of
materials (EUR 0.2 million), and are connected with the “Rightsizing” program
initiated in the fourth quarter of 2018 to optimize Group structures.
In addition, expenses for integration costs of Kimplas and STATEK (EUR 0.4 mil-
lion), which were acquired in fiscal year 2018, were adjusted within other oper-
ating expenses (EUR 0.3 million,) and employee benefit expenses (EUR 53 thou-
sand) in fiscal year 2019.
In addition to the described adjustments, depreciation of property, plant and
equipment from purchase price allocations in the amount of EUR 3.4 million
was presented within EBITA (earnings before interest, taxes and amortization
of intangible assets) and amortization of intangible assets from purchase price
allocations in the amount of EUR 22.5 million within EBIT adjusted in fiscal
year 2019.
NORMA Group SE – Annual Report 2020
91
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT The following table shows earnings adjusted for these effects:
Development of 2020 sales
in EUR million
T020
2020 adjusted
Adjustments 2020 reported
H1: 445.0
H2: 507.1
Adjustments 1
in EUR million
Group sales
EBITDA
EBITDA margin (in %)
EBITA
EBITA margin (in %)
EBIT
EBIT margin (in %)
Financial income
Profit for the period
EPS (in EUR)
2020
2019
952.2
99.3
10.4
54.6
5.7
45.3
4.8
– 14.8
24.3
0.77
0
0
3.5
25.1
0
18.8
0.59
952.2
99.3
10.4
51.1
5,4
20.1
2.1
– 14.8
5.5
0.18
G026
952.2
1,100.1
1_ Deviations may occur due to commercial rounding.
Earnings position
Sales development
Group sales down significantly due to the COVID-19 pandemic
NORMA Group posted sales of EUR 952.2 million in fiscal year 2020 in a
difficult market environment. This represents a 13.4% decline compared to
the previous year (2019: EUR 1,100.1 million). Organic sales were down by
12.1%, while negative currency effects additionally reduced sales by 1.3%.
The significant decline in sales is mainly attributable to the COVID-19
pandemic and the temporary lockdown in the spring of 2020, which resulted
in a sharp drop in demand and temporary production downtime at many of
NORMA Group’s plants. With a decline in sales of 33.8%, the second quarter
of 2020 was the weakest quarter in NORMA Group’s history. In particular, the
European and American automotive business recorded significant sales losses
in this period. Despite significant easing of the situation and a recovery in
customer demand in the second half of the year, the sales losses from the
spring could not be fully offset. However, all regions showed positive organic
sales growth again in the fourth quarter.
0
H1: 564,7
200
400
600
H2: 535.4
800
1000
1200
200
400
600
800
1,000
EJT business hit hard by the spring lockdown, general industrial business
(SJT) strengthened by the water business
The automotive industry and thus NORMA Group’s EJT business were par-
ticularly affected by the lockdown and the consequences of the corona pan-
demic. With sales of EUR 552.6 million for the full year 2020, the EJT business
declined by 17.0% compared to the previous year (2019: EUR 665.5 million;
2020 organic: – 15.8%). At the same time, the performance of the individual
regions differed significantly: While production figures and thus demand from
the Chinese automotive industry already picked up noticeably in the second
quarter, the respective markets in the EMEA and Americas regions were still
down significantly in the second and third quarters of 2020 despite increasing
momentum from the third quarter onward. It was not until the fourth quarter
that demand in the European and US automotive sectors also recovered
noticeably.
In the Standardized Joining Technology (SJT) business – formerly the Distribution
Services (DS) business – sales in fiscal year 2020 were 8.1% below the previous
year’s level at EUR 395.5 million (2019: EUR 430.2 million). The organic decline
in sales amounted to 6.5%, while currency effects had an additional negative
impact on sales of 1.6%. The Standardized Joining Technology business was
also negatively impacted by the COVID-19 pandemic. Although the drop in
sales here was much more moderate due to broader sector diversification and
a consistently solid US water business, sales were down in all quarters, and
there was no significant recovery in the course of the year. The US water
business, on the other hand, showed solid growth in each quarter and grew
organically by 6.7% for the year.
NORMA Group SE – Annual Report 2020
92
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT Effects on Group sales 1
T021
in EUR million
Share in %
Group sales 2019
Organic growth
Currency effects
Group sales 2020
1_ Deviations may occur due to commercial rounding.
Development of sales channels
1,100.1
– 133.3
– 14.6
952.2
– 12.1
– 1.3
– 13.4
T022
Engineered Joining
Technology (EJT)
Standardized Joining
Technology (SJT)
2020
552.6
– 17.0
58
2019
665.5
61
2020
395.5
– 8.1
42
2019
430.2
39
Group sales (EUR million)
Change (in %)
Share of sales (in %)
Development of earnings
The developments described below relate to the key figures adjusted for spe-
cial effects for operational management purposes. Where adjustments have
been made to the figures reported in accordance with IFRS, this is indicated
in the text. Where the figures are not stated as “adjusted,” they correspond to
those reported in accordance with IFRS. While some of the adjustments in
fiscal year 2019 also related to adjustments of expenses in connection with
the Rightsizing program within EBITDA, the adjustments in fiscal year 2020
relate exclusively to adjustments of depreciation and amortization of tangible
and intangible assets from purchase price allocations. For this reason, the
comparability of some key figures with those of the previous year is limited.
EBIT, EBITA and ROCE
The operating result (earnings before interest and taxes, EBIT) amounted to
EUR20.1millioninfiscalyear2020andwasthussignificantly(– 79.2%)below
the previous year’s figure (EUR 96.7 million). The decline in EBIT is mainly due
to the significantly lower sales level in fiscal year 2020 and the additional
expenses from the “Get on track” change program. In addition, there were
expenses related to the COVID-19 pandemic that further reduced the
operating result.
As the expenses from the “Get on track” program in the amount of EUR 29.1 mil-
lion are not adjusted, they are also reflected in the adjusted EBIT and reduced
it in equal measure. EBIT adjusted exclusively for depreciation and amortiza-
tion from purchase price allocations amounted to EUR 45.3 million, a decrease
of 66.7% compared to the previous year (EUR 136.1 million). The adjusted
EBIT margin for the reporting period amounted to 4.8% (2019: 12.4%).
Earnings before interest, taxes and amortization of intangible assets (EBITA)
amountedtoEUR51.1million(2019:EUR127.9million),significantly(– 60.0%)
below the previous year’s figure. The EBITA margin was 5.4% (2019: 11.6%).
Adjusted EBITA of EUR 54.6 million was 62.3% lower than in the previous
year. (2019: EUR 144.8 million). The adjusted EBITA margin was 5.7%
(2019: 13.2%).
Return on capital employed (ROCE) as a ratio of adjusted EBIT to capital employed
was 4.6%, down from the previous year (13.0%). Among other things, the
disproportionate decline in sales as well as adjusted EBIT combined with a less
pronounced drop in average capital employed contributed to a deterioration
in the return on sales.
Return on capital employed (ROCE)
Adjusted EBIT (in EUR millon)
Average capital employed (in EUR millon)
ROCE (in %)
2020
45.3
989.1
4.6
T023
2019
136.1
1,043.8
13.0
NORMA Group SE – Annual Report 2020
93
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT
Key factors influencing the development of earnings
Cost of materials ratio and gross margin
Prices on the international commodity markets were extremely volatile in
fiscal year 2020. The great uncertainty and restrictions associated with the
lockdown in the spring of 2020 led to supply bottlenecks at times and resulted
in a significant increase in the general price level on the international
commodity markets towards the end of 2020. NORMA Group nevertheless
succeeded in keeping the prices of most product groups relatively stable over
the course of the year by contractually fixing them.
The cost of materials amounted to EUR 417.5 million in fiscal year 2020 and
was thus 12.6% lower than in the previous year (2019 adjusted: EUR 477.4 mil-
lion). However, due to the disproportionate decline in sales and the fact that
the cost of materials is not fully flexible as well as due to increased delivery
costs in materials purchasing and distribution, the cost of materials ratio (cost
of materials as a percentage of sales) increased to 43.8% in the current
reporting period compared to the previous year (2019 adjusted: 43.4%).
This resulted in 14.9% lower gross profit of EUR 536.7 million in fiscal year
2020 (2019 adjusted: EUR 630.6 million) and a reduced gross margin of 56.4%
(2019 adjusted: 57.3%).
Personnel cost ratio
Personnel expenses amounted to EUR 298.2 million in fiscal year 2020 and
decreased only slightly by 1.4% compared to the previous year (2019 adjusted:
EUR 302.4 million), despite the measures aimed at making costs more flexi-
ble, such as the use of short-time work, for example. This was due in particu-
lar to the one-time expenses of EUR 25.2 million incurred as a result of the
“Get on track” program, which were not adjusted and had a significant impact
on personnel expenses. These relate in particular to restructuring provisions.
The personnel cost ratio as a percentage of sales increased significantly to
31.3% (2019 adjusted: 27.5%) as a result of the above-mentioned effects.
Other operating income and expenses
The balance of other operating income and expenses amounted to
EUR–139.2millioninfiscalyear2020(2019adjusted:EUR– 141.0million).
This represents a decrease of 1.3% compared to the previous year. This means
the balance of other operating income and expenses fell at a much lower rate
than the decline in sales.
As a percentage of sales, the balance of other operating income and expenses
was 14.6%, an increase on the previous year (2019: adjusted 12.8%).
The increase in other operating expenses compared to the previous year is
also attributable to the impact of the ongoing COVID-19 crisis in fiscal year
2020. Thus, the increased risk of payment defaults by customers due to the
COVID-19 crisis and higher write-downs on trade accounts receivable due to
expected and actual defaults had a negative impact on other operating
expenses. In addition, recognized foreign exchange losses increased compared
to the previous year due to strong exchange rate fluctuations in the fiscal year.
Furthermore, additional costs from the “Get on track” program increased other
operating expenses by EUR 3.9 million. These were mainly related to consult-
ing fees. In addition, expenses for warranties, which also include penalties in
connection with delivery delays, increased significantly compared to the
previous year as a result of the effects of the COVID-19 pandemic and the
production relocations under the “Get on track” program.
Other operating income includes foreign exchange gains, income from the
reversal of liabilities for personnel-related obligations and provisions, and
government grants. The latter mainly result from the use of short-time
working at some sites in fiscal year 2020.
NOTES
NORMA Value Added (NOVA)
NORMA Value Added (NOVA), which also serves as the relevant benchmark
for the long-term remuneration of the Management Board, amounted to
EUR– 46.4millioninthereportingyear2020andthusdecreasedsignificantly
compared to the previous year (2019: EUR 17.3 million). The reasons for this
were the weak operating result (adjusted EBIT), which was impacted by the
COVID-19 pandemic and the additional expenses from the “Get on track”
program.
NORMA Group SE – Annual Report 2020
94
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT Financial result
Development of sales and earnings in the segments
The financial result was EUR– 14.8million in fiscal year 2020 (2019:
EUR– 15.5million)andthusimprovedslightlycomparedtothepreviousyear,
mainly due to lower interest expenses.
NOTES This positive development
is mainly due to the reduction in financial liabilities and the optimization of
Group-wide financing.
Income taxes
In the 2020 fiscal year, tax income at Group level amounted to EUR 0.1 million
(2019: tax expense of EUR 22.7 million). Based on a pre-tax result of
EUR5.4million(2019:EUR81.2million),thisresultedinataxrateof– 1.8%
(2019: 28.0%). The tax rate in the 2020 fiscal year was impacted in particular
by non-tax-deductible expenses and non-creditable foreign withholding taxes.
In addition, a one-time tax effect realized in the USA had a positive overcom-
pensating impact on the overall tax rate.
Profit for the period and appropriation of profits
The result for the period amounted to EUR 5.5 million in fiscal year 2020 and
was thus 90.6% lower than in the same period of the previous year (2019:
EUR 58.4 million). Based on the unchanged number of shares of 31,862,400
compared to the previous year, this results in earnings per share of EUR 0.18
(2019: EUR 1.83) after deduction of the profit for the period for non-controlling
interests.
Adjusted profit for the period amounted to EUR 24.3 million in fiscal year 2020,
down 72.3% on the previous year (2019: EUR 87.8 million). This results in
adjusted earnings per share of EUR 0.77 after deduction of the profit for the
period attributable to non-controlling interests (2019: EUR 2.76).
The Management Board and Supervisory Board will propose to the Annual
General Meeting on May 20, 2021, to distribute a dividend totaling EUR 22.3 mil-
lion from the unappropriated profit of EUR 41.0 million; this is equivalent to a
dividend of EUR 0.70 per no-par value share entitled to a dividend. The pro-
posed payout ratio is thus around 92% percent, which is significantly higher
than the range of 30% to 35% specified in the dividend policy. This is intended
to make up for part of the dividend shortfall in the previous year.
EMEA
ExternalsalesintheEMEAregionfellby15.7%(inorganicterms:– 15.5%)to
EUR 409.5 million in fiscal year 2020 (2019: EUR 486.0 million). The main
reason for the decline in sales was both the sharp drop in NORMA Group‘s
automotive business in Europe as a result of the COVID-19 pandemic (EJT:
– 15.8%;organic:– 15.5%)andasignificantdropinsalesintheStandardized
JoiningTechnologysegment(SJT:– 15.6%;organic:– 15.5%).Whilesalesin
the EJT business showed a return to growth in the fourth quarter of 2020 due
to the upturn in production figures in the automotive industry, the sales trend
in the SJT business remained significantly below the previous year’s figures
in all quarters. The EMEA region accounted for around 43% of total sales in
fiscal year 2020 (2019: 44%).
Adjusted EBIT in the EMEA region dropped by 83.7% to EUR 9.3 million in
fiscal year 2020 (2019: EUR 70.8 million). The adjusted EBIT margin was 2.1%
(2019: 13.5%). In addition to corona-related expenses, this was due, among
other factors, to the additional expenses incurred as part of the “Get on track”
program, which amounted to EUR 23.2 million in the EMEA region. These relate
mainly to provisions in the area of personnel expenses and are connected with
the relocations within Europe. Adjusted EBITA amounted to EUR 12.0 million
in the reporting year (2019: EUR 73.6 million). The adjusted EBITA margin was
2.7% (2019: 14.1%).
Americas
External sales in the Americas segment were down 14.5% to EUR 385.5 mil-
lion in the 2020 reporting year (2019: EUR 450.8 million). This includes a decline
inorganicsalesof12.4%andcurrencyeffectsof– 2.1%,whicharemainly
related to the US dollar. In the Americas region, the significant decline in pro-
duction figures in the automotive industry (light and heavy vehicles) was also
reflected in a significant drop in sales in NORMA Group’s EJT business. Demand
did not stabilize again until towards the end of the year so that organic sales
in the fourth quarter were again nearly at the previous year’s level. For the
year as a whole, sales of the EJT business amounted to EUR 146.0 million
(2019:EUR205.0million)andwerethusdownby28.8%(organic:– 26.5%).
Currencyeffectshadanegativeimpactof– 2.3%.SJTsalesintheAmericas
regiondecreasedby2.4%inthefiscalyear(organic:– 0.5%),includingneg-
ativecurrencyeffectsof– 1.9%.TheSJTbusinesswasdriveninparticularby
the solid water business of the US-subsidiary NDS, which was not affected
NORMA Group SE – Annual Report 2020
95
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT by the lockdown in the spring due to a special permit from the government
and grew organically by 6.7% over the year. The Americas region accounted
for 40% of sales in fiscal year 2020 (2019: 41%).
Adjusted EBIT in the Americas region amounted to EUR 31.0 million, down
46.4% compared to the previous year (2019: EUR 60.8 million). The adjusted
EBIT margin was 7.9% (2019: 13.2%). Earnings in the Americas region were
negatively impacted in particular by the consequences of the COVID-19
pandemic. In addition, expenses of EUR 0.4 million were incurred in connection
with the “Get on track” program. Adjusted EBITA amounted to EUR 34.3 million
in fiscal year 2020 (2019: EUR 64.0 million). The adjusted EBITA margin was
8.8% (2019: 13.9%).
Asia-Pacific
External sales in the Asia-Pacific region amounted to EUR 157.2 million in fis-
cal year 2020, which represents a 3.8% decline compared to the previous year
(2019: EUR 163.4 million). This includes a 1.2% drop in organic sales and neg-
ativecurrencyeffectsof– 2.6%.Contrarytothedevelopmentintheother
regions, the economy in China recovered significantly already in the second
quarter of 2020 following a hard lockdown at the beginning of the year. Con-
sequently, demand for joining technology, particularly from the automotive
industry, also picked up again starting in the second quarter. EJT sales in the
Asia-Pacific region were up from the previous year’s level in all quarters except
for the first quarter. For the year as a whole, EJT sales in the region increased
by 2.8% (organic: 5.1%) to EUR 103.5 million (2019: EUR 100.7 million). In
contrast, the SJT segment in the Asia-Pacific region showed a significantly
weaker development. Here, net sales amounted to EUR 52.9 million (2019:
EUR 62.4 million), which represents a decline of 15.4% (in organic terms:
– 12.2%).TheshareofsalesaccountedforbytheAsia-Pacificregionincreased
to 17% (2019: 15%).
Sales by segment
G027
17%
Asia Pacific
40%
Americas
43%
EMEA
Adjusted EBIT in the Asia-Pacific region amounted to EUR 20.0 million, up
1.6% (2019: EUR 19.7 million) despite additional expenses of around
EUR 1.5 million as part of the “Get on track” program. The adjusted EBIT mar-
gin was 12.6%, an improvement on the previous year (2019: 11.8%). Adjusted
EBITA amounted to EUR 21.3 million (2019: EUR 20.1 million), and the adjusted
EBITA margin was 13.3% (2019: 12.1%). The reason for the positive devel-
opment of the adjusted EBITA margin was mainly the full utilization of capac-
ities in China due to the good order situation in the automotive sector. In addi-
tion, government subsidies granted as support packages against the backdrop
of the COVID-19 pandemic had a positive impact on earnings.
NORMA Group SE – Annual Report 2020
96
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT – 4.4
– 3.8
5.7
1.6
G028
Development of segments
T024
in EUR million
Total segment sales
External sales
Contribution to consolidated sales (in %)
Adjusted EBITA 1
Adjusted EBITA margin (in %) 1, 2
Adjusted EBIT 1
Adjusted EBIT margin (in %) 1, 2
2020
439.6
409.5
43
12.0
2.7
9.3
2.1
EMEA
Americas
Asia-Pacific
2019
Δ in %
2020
2019
Δ in %
2020
2019
Δ in %
523.2
486.0
44
73.6
14.1
70.8
13.5
– 16.0
– 15.7
– 83.7
– 86.8
391.0
385.5
40
34.3
8.8
31.0
7.9
460.3
450.8
41
64.0
13.9
60.8
13.2
– 15.1
– 14.5
– 46.4
– 49.0
159.2
157.2
17
21.3
13.3
20.0
12.6
166.6
163.4
15
20.1
12.1
19.7
11.8
1_ 2020: adjusted by expenses related to acquisitions, 2019: adjusted by expenses related to acquisitions and expenses related to the “Rightsizing” program.
2_ In relation to segment sales.
ADJUSTMENTS
Asset position
Assets
Total assets
Total assets amounted to EUR 1,414.7 million as of December 31, 2020, a
decrease of 6.6% compared to the previous year (Dec 31, 2019:
EUR 1,514.3 million).
Non-current assets
Non-current assets decreased by 7.4% to EUR 891.7 million compared to the
previous year‘s reporting date (Dec. 31, 2019: EUR 962.8 million), mainly due
to currency effects. The carrying amounts of intangible assets decreased
by a total of 8.9% to EUR 600.3 million (Dec. 31, 2019: EUR 658.5 million).
The goodwill included therein decreased by 3.9% to EUR 377.6 million
(Dec. 31, 2019: EUR 393.1 million) due to the depreciation of the U.S. dollar
during the year. In fiscal 2020, a total of EUR 41.2 million was invested in fixed
assets (2019: EUR 54.8 million). The investments mainly related to the con-
struction of the new production site in Wuxi (China), investments in capacity
expansions for the water management business in the U.S., and investments
in manufacturing equipment, tools, and testing capacities with a regional focus
on Serbia, Poland, the UK, Mexico, and Malaysia.
Asset and capital structure
in EUR million
Assets
Non-current assets
892
963
0
400
400
200
Liabilities
Equity
590
629
2020
2019
2020
2019
Current
assets
Liquid
assets
338
185
1,415
372
179
1,514
800
1200
1600
600
800
1,000
1,200
1,400
1,600
Non-current
liabilities
Current
liabilities
502
323
1,415
620
265
1,514
200
400
600
800
1,000
1,200
1,400
1,600
NORMA Group SE – Annual Report 2020
97
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT The increase in deferred income tax assets within non-current assets is mainly
due to recognized deferred taxes on tax loss carryforwards in 2020.
Non-current assets accounted for 63.0% of total assets as of the reporting
date (Dec 31, 2019: 63.6%).
NOTES
Current assets
Current assets amounted to EUR 523.0 million as of the reporting date, a
decrease of 5.2% compared to the previous year’s reporting date (Dec 31, 2019:
EUR 551.5 million). This includes a 12.2% decrease in inventories to
EUR 152.2 million (Dec 31, 2019: EUR 173.2 million). In addition, trade receiv-
ables decreased by 3.1% to EUR 157.3 million as of December 31, 2020
(Dec 31, 2019: EUR 162.4 million). Here, exchange rate effects in connection
with the US dollar had a reducing effect. The decline in ABS and factoring, on
the other hand, had an increasing effect on the In addition, within trade
accounts receivable.
By contrast, cash and cash equivalents increased by EUR 5.4 million or 3.0%
to EUR 185.1 million (2019: EUR 179.7 million). At 37.0%, the share of current
assets in total assets increased slightly compared to the previous year’s report-
ing date (Dec 31, 2019: 36.4%).
(Trade) working capital
(Trade) working capital (inventories plus receivables less trade payables, in
each case mainly trade payables) amounted to EUR 160.8 million as of Decem-
ber 31, 2020, a decrease of 16.5% compared to the previous year (Dec 31, 2019:
EUR 192.5 million). This was due to the decrease in inventories and trade
receivables with a simultaneous increase in trade payables. The working
capital ratio (trade working capital in relation to sales) was 16.9% as of
December 31, 2020 (Dec 31, 2019: 17.5%).
Liabilities
Equity ratio
Group equity amounted to EUR 589.5 million as of December 31, 2020, a decline
of 6.3% compared to the previous year (2019: EUR 629.5 million). The decrease
in equity mainly resulted from negative currency translation differences in the
amountofEUR– 43.0million(2019:EUR+8.9million).Inaddition,thedividend
payment (minimum dividend of EUR 0.04 per share) following the Annual
General Meeting reduced equity by EUR 1.3 million (2019: EUR 35.0 million).
On the other hand, the net result for the period of EUR 5.5 million had an
increasing effect, which was significantly lower than in the previous year, how-
ever, due to the consequences of the COVID-19 pandemic (2019: EUR 58.4 mil-
lion). The Group equity ratio amounted to 41.7% as of the reporting date and
is thus virtually unchanged from the previous year (Dec 31, 2019: 41.6%).
Net debt
Net debt (financial liabilities, including derivative hedging instruments of
EUR 1.4 million, less cash and cash equivalents) amounted to EUR 338.4 mil-
lion at the end of the reporting period, a significant decrease of 19.6%
compared to the previous year (Dec 31, 2019: EUR 420.8 million). This was
mainly due to the decrease in non-current loan liabilities.
Financial liabilities
NORMA Group’s financial liabilities fell by 12.8% to EUR 523.5 million as of
the reporting date (Dec 31, 2019: EUR 600.5 million). This was mainly due to
the decrease in loan liabilities, which resulted, among other factors, from the
scheduled repayment and repayments of tranches ahead of schedule from
the promissory note loan in fiscal year 2020. In addition, effects from exchange
rate changes on the US dollar tranche reduced loan liabilities.
Lease liabilities decreased significantly compared to the end of 2019. Changes
due to repayments (payment of lease installments), the conclusion of new
leasing liabilities, and interest effects more or less offset each other in the cur-
rent fiscal year. However, exchange rate effects mainly on liabilities denomi-
nated in US dollars from subsidiaries in the United States and derecognitions
of lease liabilities due to reassessments of renewal options led to a decrease
at the end of 2020.
The decrease in other financial liabilities mainly resulted from the disposal
of financial liabilities in connection with the acquisition of the minority inter-
ests in Fengfan.
NOTES
Gearing (net debt in relation to equity) was 0.6 as of the 2020 balance sheet
date (2019: 0.7).
Leverage (net debt excluding hedging derivatives in relation to adjusted
EBITDA for the past twelve months) increased compared to the previous year
(Dec 31, 2019: 2.2) to 3.4. It was also impacted by the additional expenses
incurred as part of the “Get on track” program. The leverage relevant for the
financing agreements (excluding expenses under the transformation program)
was 2.6 as of the reporting date.
NORMA Group SE – Annual Report 2020
98
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT Assets not recognized in the balance sheet
NORMA Group’s trademark rights and patents to the brands it holds as well
as customer relationships, if acquired externally, are recognized in the balance
sheet under intangible assets. However, important influencing factors for a
successful business are also the awareness and reputation of these brands
among customers and their trust in NORMA Group products. The trustful cus-
tomer relationships based on NORMA Group’s long-established distribution
network are equally important. In addition, NORMA Group’s workforce makes
an important contribution to the company’s success with its extensive expe-
rience and specific expertise, so that the knowledge gained over many years
in the areas of research and development and project management is also
seen as a competitive advantage. The values listed are not recognized
individually in the balance sheet, but are partly reflected in goodwill.
Financial position
Financing measures
NORMA Group monitors risks from changes in exchange and interest rates
on a regular basis and aims to limit them by using derivative hedging instru-
ments 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 distri-
bution 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 had already successfully refinanced its bank credit lines in fis-
cal year 2019, thus creating further financial security and even greater flex-
ibility for the future. The credit agreement has a total volume of initially
EUR 300 million, including a revolving facility of EUR 50 million and a flexible
accordion facility. The refinancing was concluded with a banking syndicate
consisting of ten international banks. In addition, a sustainability component
links the financing conditions to NORMA Group’s commitment in the area of
corporate responsibility. In 2020, NORMA Group was able to achieve the tar-
geted improvement in its sustainability scoring and realize savings already
for 2020. After exercising the first of two extension options from the syndi-
cated loan agreement in fiscal year 2020, all components of the loan agree-
ment will be available to NORMA Group through at least 2025. This ensures
maximum financing flexibility.
In response to the COVID-19 pandemic, financial flexibility was increased
once again, and a further credit line of up to EUR 80 million was concluded.
This mainly involved the banks of the syndicated loan from 2019. This line
was installed for one year and can be extended for another six months. This
credit line was unused as of December 31, 2020.
The commercial paper program introduced in 2019 is used for short-term
liquidity management and was utilized in the amount of EUR 20 million as of
December 31, 2020. NORMA Group’s gross debt (liabilities to banks) declined
significantly from EUR 541 million to EUR 478 million in 2020.
As of December 31, 2020, none of the additional available credit lines totaling
EUR 130 million had been utilized. The accordion facility negotiated under the
syndicated loan agreement was also not utilized as of the reporting date
December 31, 2020.
NORMA Group uses interest rate hedges to hedge interest rate risks that
could arise from the external financing components. As of December 31,
2020, the average interest rate of the gross debt (excluding derivatives) was
1.58%. NORMA Group’s maturity profile, based on the utilization of the
short-term CP program and the promissory note loans I (2013), II (2014) and
III (2016) as well as the syndicated bank loan (2019), was as shown in the
GRAPHICS G029 AND G030: “MATURIT Y PROFILE BY FINANCIAL INSTRUMENT” AND
“MATURIT Y PROFILE BY CURRENCY ” as of December 31, 2020.
As of the balance sheet date in 2020, NORMA Group complied with all key
figures contained in the credit agreements (financial covenants: net debt in
relation to adjusted Group EBITDA). In order to counteract the risk of non-
fulfillment of covenants in individual instruments and the associated conta-
gion to other instruments, NORMA Group terminated individual promissory
note tranches in fiscal year 2020. Thus, a possible “cross default” on a larger
scale was excluded at all times. In addition, the term of individual parts of the
promissory notes was extended in the course of the negotiations.
Concrete future financing steps depend on the current changes in the
financing markets and acquisition potentials.
NORMA Group SE – Annual Report 2020
99
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT Maturity profile by financial instrument
in EUR
G029
300
250
200
150
100
50
0
27
239
20
62
7
4
20212021
2022
2022
41
14
2023
2023
16
7
2024
2024
42
2025
2025
2026
2026
Bank borrowings
Promissiory note I
Commercial paper
Promissiory note II
Promissiory note III
Maturity profile by currency
in EUR
G030
300
250
200
150
100
50
0
99
166
23
2024
42
2025
2026
35
54
11
45
4
2021
2022
2023
Euro
USD
Net operating cash flow
In fiscal year 2020, NORMA Group generated net operating cash flow (adjusted
EBITDA less changes in working capital and investments from operations) of
EUR 78.3 million (2019: EUR 122.9 million). Net operating cash flow was mainly
impacted by the lower adjusted EBITDA. However, the cash inflow from work-
ing capital achieved compared to the previous year, as well as the lower cap-
ital expenditure compared to the previous year in connection with the restrained
investment activity as a consequence of the corona pandemic, only partially
offset this negative effect.
Cash flow from operating activities
Cash flow from operating activities fell only slightly to EUR 133.5 million in
fiscal year 2020 (2019: EUR 137.1 million). It was influenced, among other
factors, by the significantly lower net profit for the period compared to the
previous year, which was, however, burdened by the partly non-cash expenses
for the “Get on track” program. The cash inflow from working capital had an
increasing effect on cash flow from operating activities.
NOTES
Cash flow from investing activities
Cash outflow from investing activities decreased to EUR– 39.1million in
fiscal year 2020 (2019: EUR 57.0 million). Investing activities in fiscal year
2020 were influenced by the COVID-19 pandemic and prioritized in terms of
their urgency and strategic importance. The focus was particularly on the
areas of water management and electromobility. In addition, ongoing
customer projects and strategic projects, for example as part of the “Get on
track” program, were prioritized.
Investments in the EMEA region included the expansion of production capac-
ities for electromobility applications in Poland, investments in tools in the United
Kingdom, and capacity expansions in the area of fluid systems in Serbia. Invest-
ments in the Americas region included capacity expansions in the area of
water management as well as investments in testing capacities in the area
of fluid components and systems, including for applications in electromobility.
In the Asia-Pacific region, construction of the new production site in Wuxi con-
tinued. In addition, investments were made in capacity expansions in the areas
of Fastening and Fluid as well as in the manufacture of products for the US
water market.
NORMA Group SE – Annual Report 2020
100
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT NORMA Group’s investing activities in fiscal year 2020 (property, plant and
equipment and intangible assets, excluding leasing) totaling EUR 41.2 million
(2019: EUR 54.8 million) resulted in an investment ratio of 4.3% of sales
(2019: 5.0%).
PRODUCTION AND LOGISTICS
In fiscal year 2020, production activity followed the strongly fluctuating course
of customer demand with many short-term adjustments on the one hand, but
was also temporarily limited again and again by pandemic-related absences
of employees and resources on the other.
Cash flow from financing activities
ThecashoutflowfromfinancingactivitiesdecreasedtoEUR– 81.0millionin
fiscalyear2020(2019:EUR– 93.2million).Thiswasmainlyduetolowerdiv-
idend payments compared to the previous year (EUR– 1.3million; 2019:
EUR– 35.0million)andlowerinterestpayments(EUR– 12.9million;2019:
EUR– 15.1million).Incontrast,thehighernetpaymentsforloanscompared
tothepreviousyear(EUR– 56.2million;2019:EUR– 32.1million),whichmainly
resulted from the scheduled repayment of the promissory note loan in fiscal
year 2020, had an increasing effect.
Bundling of production activities as part of “Get on track”
In fiscal year 2020, NORMA Group started implementing the change program
“Get on track,” which was first initiated in November 2019, in order to increase
efficiency and competitiveness. The first crucial measures were announced in
June 2020. Among other things, these include the closure of the Gerbershausen
site and the relocation and bundling of production activities in the Fasten
Division in Central Europe to the existing plants in the Czech Republic and
SIGNIFICANT DEVELOPMENTS IN FISCAL YEAR 2020
Germany by the end of 2022.
Production and logistics
New production sites and relocations
For the production and assembly of connectors and plastic connectors, a new
plant is currently being built in Wuxi, China, which is scheduled to start oper-
ations in mid-2021. At the same time, all activities as well as production will
be transferred from the current plant in Wuxi (NORMA EJT (Wuxi) Co. Ltd),
which was acquired as part of the Autoline acquisition, to the new plant. The
current site will be closed after the relocation has been completed.
NORMA Group manufactures and markets more than 40,000 different products
and has 28 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.
Production and capacity utilization severely impacted by the
COVID-19 pandemic
NORMA Group’s production activities and the capacity utilization of its plants
were significantly affected by the COVID-19 pandemic in fiscal year 2020.
Due to declining customer demand, also as a result of the production shut-
downs of numerous customers, NORMA Group had reduced its production
activities in most plants to below 50% from mid-March 2020 onwards or even
closed them down completely due to official orders. Since the end of the
second quarter of 2020, the average capacity utilization of NORMA Group’s
plants has gradually increased again successively.
NORMA Group SE – Annual Report 2020
101
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT In the fourth quarter of 2020, the relocation of the production of Fengfan
Fastener in Shaoxing to a new site in Changzhou with physical proximity to
NORMA Group’s existing site in Changzhou (NORMA EJT (Changzhou) Co.,
Ltd.) was started. The relocation is expected to be completed in the second
half of 2021. The previous plant in Shaoxing will be closed.
The relocation of production from the Auburn Hills site to the newly built
Mexican site in Tijuana, (NORMA Manufacturing NA SW, LLC) was success-
fully completed in mid-2020, thus closing the production site in Auburn Hills.
Investments in capacity expansions
Investment activities were also impacted by the COVID-19 pandemic in fiscal
year 2020. To further ensure financial flexibility, only the most urgent invest-
ments were therefore made. The focus was particularly on the areas of water
management and electromobility. In addition, ongoing customer projects and
strategic projects, as part of the “Get on track” program, for example, were
prioritized. The following table provides an overview of the most significant
investments in 2020.
Strategic investment highlights in 2020
Region
Country
City
Investment
T025
EMEA
Serbia
Subotica
Creation of additional production capacity for a newly developed SCR system for major orders from two leading European
automotive manufacturers in the fluid systems division
United Kingdom
Newbury
Investment in a new flexible tool concept in the area of V-profile clamps
Poland
Pilica
Investment in production equipment and tools for new high-volume customer orders from leading automotive manufacturers,
including in the area of cooling water systems for hybrid drives
Investment in the structural expansion and the strategic development of production capacities, including the area of multilayer
fluid lines for e-mobility applications
Americas
Mexico
Monterrey
Tool modernization in the area of fluid component production
USA
Tijuana
Lindsay,
California
St. Clair,
Michigan
Saltsburg,
Pennsylvania
Investment in equipment and tools for two customer orders in the area of e-mobility fluid systems
Investments in the establishment of production capacities and toolmaking in the area of clamp production
Significant expansion of manufacturing capacities in the field of water management
Substantial modernization and investment in new tools in the field of water management
Expansion of testing capacities for the fluid components and systems division
Investment in tools for a new customer order in the area of fluid components for e-mobility applications
Capacity expansion and modernization of in-house production of clamp components
Asia-Pacific
China
Wuxi
Continuation of the structural extensions to the fluid components production site
Changzhou
Investment in a new transfer press system to expand capacity for V-profile clamps
Investment in production expansion for Torro clamps for the Asian market
Investments in tooling and assembly equipment for major new customer projects in the Fasten division
Qingdao
Build-up of manufacturing capacities for a customer order in the field of NORMAQUICK fluid connectors
Malaysia
Ipoh
Significant investment in production of water management products for the US market
NORMA Group SE – Annual Report 2020
102
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT Continuous optimization of the entire value chain
At NORMA Group, all internal processing steps in the value chain are con-
stantly 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 appro-
priate 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 has been introducing the NORMA Group Production System
(NPS) in all of its plants since 2014. The goal of the NPS is to increase oper-
ational 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.
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. The
COVID-19 pandemic further highlighted the importance of short and direct
delivery routes in fiscal year 2020.
Despite these efforts, cross-border deliveries are indispensable for
NORMA Group in many places in order to be able to respond flexibly to cus-
tomer 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. Through
the supply chain security programs, in particular the Authorized Economic
Operator (AEO) and the Customs Trade Partnership against Terrorism (C-TPAT),
which are part of the global compliance program, NORMA Group strives to
ensure a fully compliant supply chain. By regularly reviewing all its business
partners, NORMA Group excludes the supply of legally sanctioned third par-
ties. 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 prod-
ucts of the customer. Any quality defects or functional failures could have a
significant impact on customers or end users. In this context, product safety
and the health of end consumers are regularly linked to the impeccable qual-
ity of NORMA Group products. Thus, it is a clear business imperative that
NORMA Group consistently delivers products that meet all customers’ quality
needs and expectations.
PRODUCT QUALIT Y AND SAFET Y
In order to ensure a global and standardized quality approach, all NORMA Group
production sites are certified according to international quality standards.
Currently, all production sites, with the exception of one site of the subsidiary
NDS, are certified according to a quality certificate and are either certified
according to ISO 9001, EN 9100 or according to IATF 16949.
In addition to the production sites, NORMA Group Holding GmbH is certified
according to ISO 9001. This certification helps to ensure that NORMA Group
as a whole, i.e. including all relevant specialist departments at the Group level,
complies with high quality standards. Compliance with industry-recognized
quality requirements also ensures the safety of end products through
continuous improvement measures such as risk assessments, training, incident
investigation and appropriately initiated countermeasures.
NORMA Group’s Quality Management is responsible for the introduction,
certification and continuous implementation of the quality management
system. There are local quality management officers at each NORMA Group
production site. They report to the regional quality managers and the global
quality management.
NORMA Group has global operations. A key challenge here is to recognize
and understand the different customer requirements as well as the numerous
different standards and market conditions. NORMA Group addresses this
by localizing production and using standardized tools, for example uniform
quality management software, which is an integral part of the Microsoft ERP
system that is being rolled out across the Group.
NORMA Group SE – Annual Report 2020
103
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT NORMA Group uses several metrics to measure customer quality, satisfaction
and delivery performance. The most important key performance indicator is
the number of defective parts shipped, expressed in parts per million (PPM).
This key performance indicator is reported on a monthly basis to the Manage-
ment Board. At the same time, root cause analyses are carried out at plant
level and countermeasures defined.
The number of defective parts per million (PPM) recorded in 2020 was 5.1
(2019: 6.1). This continues the year on year improvement trend and supports
NON FINANCIAL KEY PERFOR-
the customers’ ever more challenging targets.
MA NCE IND ICATORS
Purchasing and supplier management
The procurement costs of materials, goods and services have a significant
impact on NORMA Group‘s earnings situation. By managing all procurement
activities and selecting suppliers, Purchasing can make a significant contri-
bution to the success of the Group. The central task here is to optimize pur-
chased services and minimize costs by taking into account group-wide
economies of scale.
Global purchasing organisation
The purchasing activities of NORMA GROUP are divided into four main prod-
uct groups in line with the divisional organizational structure:
• 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)
In addition to this central structure, there is a subdivision into the regional seg-
ments EMEA, Asia-Pacific and the Americas. This organizational structure ena-
bles centralized control by the respective experts of the product groups and the
integration of the knowledge of the regional or local purchasing teams concern-
ing 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.
As part of the “Get on track” program initiated at the end of 2019, numerous
measures were launched in the area of purchasing in fiscal year 2020 which
have already led to short-term cost reductions in fiscal year 2020. In addition,
by strengthening the cross-functional cooperation between the various pur-
chasing departments worldwide, additional savings potential could be identi-
fied and, based on this, further cost-reduction levers for medium-term optimi-
zation of purchasing processes could be defined. This includes adapting
NORMA Group’s needs, optimizing processes and supply chains, and stand-
ardizing technical and commercial specifications.
Development of material prices
Adjusted costs of materials amounted to EUR 417.5 million (2019: adjusted
EUR 477.4 million) or 43.8% (2019: 43.4%) of sales revenue in fiscal year 2020.
As a result, the cost of materials ratio was slightly higher than in the previous
EARNING S POSITION The purchasing volume, which is used for inter-
year.
nal management purposes and adjusted for currency effects, amounted to
around EUR 404 million (2019: EUR 490 million). Of this amount, EUR 291 mil-
lion (72%) was attributable to sales of production materials.
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. It was also possible to reduce procurement prices slightly in many
cases for the metal components used, thus reducing overall procurement costs
in the area of Fasten. The punitive tariffs imposed by the Trump administra-
tion in 2018 remained in force in fiscal year 2020 and limited international
procurement opportunities for the Americas region. However, overall material
availability was very good. Due to the sharp drop in production in the second
quarter 2020 triggered by the COVID-19 pandemic, NORMA Group’s goods
procurement volumes in fiscal year 2020 fell significantly short of the volumes
procured in the previous year.
NORMA Group SE – Annual Report 2020
104
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT The price development of the new monthly fixed alloy surcharges (price com-
ponents include nickel, scrap and ferrochrome prices) in 2020 was a V-curve
for all austenitic materials (300 series) containing the alloy component nickel:
Whilefallingpriceswererecordedinthefirsthalfof2020– thelowforthe
yearwasreachedinMay2020– pricesroseagainsignificantlyinthesecond
half due to rising nickel prices. The highest quotation was recorded in Decem-
ber 2020.
Price fluctuations for ferritic materials (400series) were quite low due to very
stable starting material prices (scrap and ferrochrome prices).
In the product group of surface-refined non-stainless steel, lower purchase
prices were agreed upon in the price negotiations for European needs in both
the first and second halves of 2020.
Technical granulates, plastic and rubber products
Fiscal year 2020 was characterized by great volatility and uncertainty. The
development of oil prices and oil derivatives, which took an unforeseen devel-
opment in the course of the first lockdown and the collapse of the global econ-
omy as a result of the COVID-19 pandemic, was decisive for the engineering
plastics product group and fell significantly in the first half of 2020.
NORMA Group was able to take advantage of this situation with foresight
and achieve price reductions compared to 2019. Nevertheless, the earnings
effect fell short of expectations as the forecast processing volumes could not
be met due to restraint on the customer side. In particular, the noticeable
decline in demand in the automotive sector had a direct impact on demand
for engineering plastics.
The noticeable economic recovery in the second half of 2020 has stabilized
raw material prices again, and the surge in demand recorded in the fourth
quarter of 2020 has triggered additional price pressure and a temporary short-
age of volumes on the markets. NORMA Group was able to successfully fend
off several price increase demands, but the situation on the international pro-
curement markets remains tense.
Development of nickel prices and
the alloy surcharge 1.4301
16,000
16000
14,000
14000
12,000
12000
10,000
10000
8,000
8000
G031
1600
1,600
1500
1,500
1400
1,400
1300
1,300
1,200
1200
Jan 2020
Apr 2020
Aug 2020
Dec 2020
Nickel LME in EUR (from USD, left)
Alloy surcharges of flat products 1.4301 X5CrNi18-10 Europe
(Outokumpu) in EUR (from EUR, right)
Standard plastics, components and commodities
The situation was comparable for the standard plastics business. Here, too,
significant cost reductions were achieved on the basis of the price development
in the first half of 2020. Despite the ongoing COVID-19 pandemic, demand in
this commodity group remained strong during the year. Coupled with negative
impacts due to the strong hurricane season, however, this led to negative effects
on material availability in the second half of 2020. The raw material market for
standard plastics is expected to stabilize in 2021.
FORECAST REPORT
NORMA Group SE – Annual Report 2020
105
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT Purchasing turnover in 2020 by material groups
28%
Indirect material
(MRO)
6%
Alloy surcharges
4%
Electronic
components
4%
Others
G032
12%
Metal components
15%
Steel, wire
14%
Granules
11%
Plastic parts
6%
Rubber molded parts
Supplier management and structure
The purchasing organization continuously monitors the performance 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 the local
level. The evaluation process is mapped using e-procurement software.
Workforce
Decentralized organization, jointly lived company culture
The employees of NORMA Group make a significant contribution to the suc-
cess of the Group. For this reason, personnel management and development
play an important role.
NORMA Group’s personnel management is organized on a decentralized basis.
This reflects the international nature of the business and the rapid growth of
NORMA Group. The decentralized organization allows the individual sites to
adapt flexibly to local conditions at any time and to contribute their specifica-
tions in a targeted manner, particularly with regard to regional expertise in
human resources development and recruiting.
To promote a uniform company culture, NORMA Group has formulated
central guiding principles and standardized company values that reflect the
fundamental convictions of the company. These guiding principles are
communicated and lived at all sites.
Human resources development
In order to ensure the availability of specialized and managerial staff in the
future, NORMA Group places a strong focus on external and internal talent
search, the further development of its own staff and their loyalty to the com-
pany and its strategic orientation. Therefore, NORMA Group’s internal talent
management is of highest relevance for all business units and an integral part
of the portfolio of human resources development for management and staff.
SU STA INABILI T Y IN PURCHASING
Development of the workforce figures
In fiscal year 2020, additional tools were implemented, particularly in the areas
of risk monitoring and tracking savings as part of the “Get on track” program.
The focus of NORMA Group’s supplier selection is a balance of supplier con-
solidation to reduce complexity and avoid strong dependencies. This balance
is continuously optimized by the purchasing department. The current supplier
base is structured as follows: The share of the top 10 suppliers accounted for
approximately 27% in fiscal year 2020. The top 50 suppliers accounted for
around 58% of the total purchasing volume of production material, amount-
ing to EUR 291 million.
As of December 31, 2020, NORMA Group employed 8,790 people (core
workforce including temporary staff) across the Group, around 3.2% more
than on the previous year’s reporting date (December 31, 2019: 8,521).
2,155 temporary workers were employed at the end of December 2020
(December 31, 2019: 1,998). This equates to around 25% of the total work-
force (2019: 23%).
NORMA Group SE – Annual Report 2020
106
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT Development of personnel figures at NORMA Group
G033
Breakdown of employees by group
58%
Salaried employees
12,000
10,000
8,000
6,000
4,000
6,306
1,185
6,664
1,214
5,975
4,947
1,147
813
4,252 4,485
726
837
2,000
3,415
3,759
4,134
4,828
5,121
5,450
8,865
8,521 8,790
1,964
1,998
2,155
7,667
1,552
6,901
6,115
6,523
6,635
2011
2012
2013
2014 2015
2016
2017
2018
2019
2020
Core workforce
Temporary staff
In the Americas region in particular, there was a significant year-on-year reduc-
tion in the number of employees. There, the number of employees decreased
by 12.5%. This was due in particular to an adjustment of personnel structures
in connection with sales losses in the EJT business.
In the EMEA region, the number of employees increased by 8.7% compared to
the previous year, while in the Asia-Pacific region it remained largely constant.
Core workforce by segments
T026
EMEA
Americas
Asia-Pacific
Total
2020
Share in %
2019
Share in %
3,858
1,401
1,376
6,635
58
21
21
3,549
1,601
1,373
6,523
54
25
21
The total number of employees (core workforce and temporary workers) in
the current reporting year comprises 5,124 direct employees (2019: 4,672),
1,516 indirect employees (2019: 1,630) and 2,150 salaried employees (2019:
2,219). While direct employees are people involved in the manufacturing
G034
25%
Direct employees
17%
Indirect employees
process, indirect employees are people from production-related areas, such
as the quality department. The group of salaried employees is primarily
assigned to administrative functions.
Coping with the COVID-19 pandemic
The health and safety of its employees is a top priority for NORMA Group.
Therefore, NORMA Group introduced measures to protect its workforce and
to contain the spread of the virus right at the beginning of the COVID-19
pandemic. Against this backdrop, a global COVID-19 task force that
is responsible for implementing safety measures in accordance with the
recommendations of the World Health Organization (WHO) at the local and
regional levels and for centralized control and monitoring was established at
the end of February. A weekly reporting system provides the necessary trans-
parency concerning current cases of infection or quarantine and allows for
rapid intervention. In addition, standardized emergency plans were developed
and internal COVID-19 guidelines communicated to all management and staff
levels. These include rules for the behavior of the workforce on the job that
are adapted on a frequent basis to suit the current local conditions. Preventive
measures and infection protection facilities are also designed to ensure the
safety of the local workforce.
NORMA Group SE – Annual Report 2020
107
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT
In order to cushion the economic consequences of the COVID-19 pandemic,
various cost flexibilization measures have also been introduced. These included
the reduction of overtime, vacation and short-time working, hiring freezes
and the reduction of temporary workers.
Detailed information on the environmental strategy can be found in the
CR REPORT.
Marketing
Further information on
AND HEALTH
TU NITIES can be found in the chapter
TRAINING AND EDUCATION and
EMPLOYEE SATISFACTION
CR REPORT.
OCCUPATIONAL SAFET Y
DIVERSIT Y AND EQUAL OPPOR-
Environmental protection and ecological management
As a manufacturing company, NORMA Group is well aware of its environ-
mental, 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.
NORMA Group’s goal is to increase the efficiency of its production processes,
lower its energy consumption continuously, and reduce waste. The long-term
cost savings associated with this contribute to the economic efficiency of
the Group.
NORMA Group has set quantitative targets for the reduction of greenhouse
gases, water consumption and waste generated at its production sites. More-
over, NORMA Group includes environmental impacts resulting from the sup-
ply chain as well as from the application of its products in its environmental
strategy. 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 Management Board.
A significant non-financial performance indicator in the area of the environ-
ment, which has also been part of the Management Board’s remuneration
system since January 2020, is climate-relevant CO2 emissions (Scope 1 and 2).
NORMA Group aims to reduce CO2 emissions generated during its production
processes by around 19.5% by 2024.
CLIMATE PROTECTION
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 mar-
kets. The regional marketing units are responsible for executing the various
activities and synchronizing them with NORMA Group’s operative objectives.
Marketing focus in 2020
Key marketing activities in fiscal year 2020 included the following:
• Introduction and expansion of local e-commerce services for existing
customers (including in Germany)
• Introduction of digital information platforms and websites with a focus on
water management and outreach in regional markets (including China
and the US)
• Expansion of data structures within the product information management
(PIM) platform and automation of data exchange with other systems
• Marketing support for new product launches (e.g. eM-Twist Connector)
NORMA Group SE – Annual Report 2020
108
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT Traditional marketing activities, such as the organization of trade shows and
events, were significantly affected in 2020 by the restrictions due to the COVID-
19 pandemic. In this context, some trade shows were therefore held virtually,
postponed to 2021, or canceled without alternative.
Marketing expenditures 2020
Marketing expenditures amounted to a total of EUR 4.0 million in 2020 and
were thus significantly below the level of the previous year (2019: EUR 5.4 mil-
lion). Marketing expenses as a percentage of sales amounted to 0.4% in fiscal
year 2020 (2019: 0.5%).
Marketing expenses 2020 by segment
11 %
Group
8 %
Asia-Pacific
G035
24 %
EMEA
57 %
Americas
NORMA Group SE – Annual Report 2020
109
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT Forecast Report
Economic and industry-specific factors
The global economy in 2021:
recovery expected as the pandemic is gradually overcome
As expected, the COVID-19 pandemic is initially likely to continue to dominate
the economic outlook in 2021. However, as vaccination measures progress
over the course of the year, the economic environment is expected to gradu-
ally return to normal. Fiscal and monetary policies are expected to remain
expansionary. The current upswing in China is also having a stimulating effect,
as is the predominantly buoyant global industrial economy despite the COVID-19
pandemic. It can also be assumed that trade conflicts, which have been a burden
in recent years, will play a less important role. Based on this, the International
Monetary Fund (IMF) expects global trade to show positive growth (2021:
+8.1%; 2020: –9.6%). In its latest forecast for the global economy, the IMF
expects growth of 5.5% in 2021 (2022: +4.2%). With regard to 2021, this is
even 30 basis points more than it had assumed in its fall 2020 forecast.
Nevertheless, economic risks remain high in 2021 due to continuing uncer-
tainty. On the one hand, setbacks in the response to the pandemic, due to
delays in the availability of vaccines, resistant viral mutations and prolonged
lockdowns, for example, could pose a significant threat to economic growth.
On the other hand, income losses incurred during the pandemic and the
massive increase in debt pose a structural burden.
According to the IMF, the strong recovery of the Chinese economy was driven
by significant government support measures and investments as well as
expansionary monetary policy. The now far-reaching revival continued strongly
in light of the recent increase in momentum. Heavy industry in particular is
experiencing an upswing. The IMF expects the Chinese economy to grow by
8.1% in 2021. With the upward trend in China and stronger demand impetus
from the industrialized countries, the environment in Southeast Asia is also
expected to steadily improve. The ASEAN 5 countries are expected to return
to a vigorous expansion course as early as 2021 (+5.2%). There are also signs
of a sharp recovery in India following the severe slump (2021: +11.5%). Brazil
and Russia are also expected to grow strongly, so that the economies of the
developing and emerging countries (incl. China) are likely to expand by 6.3%
cumulatively in 2021 (2022: +5.0%).
The industrialized nations could also mutually benefit from livelier international
demand and impetus from the Chinese upswing as the pandemic is gradually
overcome. In addition, many governments, including the United States, are
planning extensive economic stimulus packages. The fact that interest rates
are expected to remain low should also have a positive effect. These precau-
tionary measures will lay the foundations for an accelerated, positive devel-
opment of the industrial economy in 2021. By contrast, however, the devel-
opment curve for consumer demand is likely to remain subdued for the time
being. According to the IMF, GDP growth in the industrialized nations is
expected to be around 4.3% in 2021 (2022: +3.1%). The US economy in par-
ticular is initially expected to recover strongly (2021: +5.1%) and even continue
to grow next year. The IMF also expects a lively economic upturn in Japan
and the UK.
Vaccination programs started in the euro zone at the beginning of 2021. Due
to high infection rates and the rapid spread of viral mutations, however, lock-
down rules were tightened again, and their duration was extended. As a result,
the return to normal in everyday life and the economy is likely to be delayed
for some time. Only marginal impetus can currently be expected from private
consumption. By contrast, major contributions to overcoming the recession in
the euro zone are expected to come from the industrial sector. On the one
hand, global demand is picking up, therefore exports could pick up again. On
the other hand, investment is likely to increase again following the deep slump
in 2020. Investments in the networking of trade and production processes and
in reducing CO2 emissions will be stimulated in particular by developments in
connection with digitalization and the energy transition. It can therefore be
assumed that the further tightened climate protection targets of the “Euro-
pean Green Deal” will provide additional impetus. Now that a hard Brexit can
be ruled out, complications in connection with important supply chains can
be avoided in Europe. There is no longer a risk that established sales markets
could collapse. The IMF forecasts relatively robust growth for the euro zone
on a region-wide basis in 2021 (2021: +4.2%, 2022: +3.6%). The pace of
expansion is estimated to be below average for Germany, however (2021:
3.5%; 2022: 3.1%).
NORMA Group SE – Annual Report 2020
110
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT The macroeconomic outlook forms the basis of NORMA Group’s outlook for
2021.
Forecast for GDP growth (in %)
World 1
USA 2
China 3
Euro zone 5
Germany 5
2020
– 3.5
– 3.5
2.3
– 6.8
– 5.0
2021e
5.5
5.1
8.1
4.2
3.5
T027
2022e
4.2
2.5
5.6
3.6
3.1
China is expected to continue (+7%). In the industrialized countries, demand
for machinery is expected to pick up noticeably in 2021. It is estimated that
the United States and Japan will each show growth of +6%. South Korea
(+4%), Canada (+12%) and the UK (+7%) are also expected to grow strongly.
A strong recovery is also expected for major emerging markets. Demand in
Russia (+6%), Turkey (+5%), Brazil (+9%) and India (+13%) is also expected
to improve significantly. Machinery sales are expected to rise even more
significantly in the euro zone and Germany, by 9% and 10% respectively, in
2021. According to the VDMA, mechanical engineering in Germany is expected
to increase production in real terms by 4%.
Sources: IWF; 1_IMF ; 2_US Department of Commerce; 3_National Bureau of Statistics
(NBS); 4_Eurostat; 5_German Federal Statistical Office (Destatis)
Engineering:
real change in industry sales (in %)
T028
Partly clouded general conditions for important customer industries
of NORMA Group
Assuming that the pandemic can be overcome and that the global economy
regains strength on a regional basis in 2021, the prospects for important
customer industries of NORMA Group should also brighten up again in 2021.
Mechanical engineering
China
USA
Euro zone
World (excluding China)
Source: VDMA
1_ Revised data according to VDMA.
Automotive industry
2019
2020
2021e
4
– 1
– 1
0 1
5
– 8
– 13
– 6
7
6
9
7
A strong industrial economy is expected to be the main driver of the global
economic recovery in 2021. It is assumed that the low interest rate environ-
ment, the current pent-up demand for investment, and ongoing projects for
the digitalization and sustainable design of manufacturing processes are likely
to stimulate investment activity more strongly again. Measures aimed at opti-
mizing international supply structures and value chains are also expected to
have a positive impact. In addition, demand for construction machinery and
the need for investments in logistics and technologies in the area of the energy
transition are also expected to remain buoyant. In the automotive industry,
manufacturing facilities are expected to be successively realigned and broad-
ened to cover the production of future-proof product mixes. The VDMA indus-
try association therefore expects to see a noticeable recovery in the mechan-
ical engineering sector. Accordingly, global machinery sales are expected to
rise by 7% in 2021 on a broad regional basis. The already strong upturn in
According to the German Association of the Automotive Industry (VDA), there
are signs of a “technical recovery” in the automotive sector in 2021, yet pres-
sure on the industry is still expected to remain high. Although global demand
for passenger cars is forecast to pick up again from the extremely low base
levels, sales and production are not expected to reach pre-crisis levels in 2021.
The pace of technological change is expected to accelerate further. However,
high upfront development costs will be incurred even with low volumes. Despite
dynamic growth, electric vehicles (EVs, including hybrids) are not expected to
reach substantial volumes until the medium term. The International Energy
Agency (IEA) estimates that sales of 25 million EVs can be achieved in 2030
(base scenario). For light vehicles (LV) (all types of drives), industry experts
from LMC Automotive (LMCA) estimate the market volume in 2030 to be
just under 111 million vehicles. Looking ahead to 2021, LMCA anticipates
NORMA Group SE – Annual Report 2020
111
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT
a significant upturn in the global LV market (sales +10.8%; production +17.3%
to 87.6 million LV). Based on LMCA’s forecast, manufacturers in Germany are
expected to increase their LV production by 26.8%, while the VDA anticipates
an increase of 20% in passenger car production. In the commercial vehicle
market, LMCA expects to see a strong recovery in 2021. The global market
for commercial vehicles is expected to grow significantly by 20.3%, particu-
larly in North America, but also by 14.5% in Europe. China’s commercial vehi-
cle production is an exception to this. Here, LMCA expects a decline of 16.9%.
Automotive industry:
global production and development of sales (in %)
T029
2019 1
2020
2021e
2022e
– 5.7
– 4.4
– 3.4
– 3.7
– 15.8
– 14.4
– 5.5
– 3.5
17.3
10.8
– 1.1
– 1.7
5.3
6.1
2.7
2.4
Production of light vehicles
Sales of light vehicles
Production of commercial vehicles
Sales of commercial vehicles
Source: LMC Automotive
1_Revised data according to LMC.
Construction industry
As the pandemic is increasingly overcome, Asia’s construction industry is likely
to pick up not only in China but also in other countries in the region. Thus,
expert assumptions indicate that the construction sector in India and South-
east Asia is expected to grow structurally at a dynamic pace. The immense
demand for housing and substantial investments, on the one hand in infra-
structure and on the other hand increasingly in environmental protection and
water management, are the main drivers of the projected development. How-
ever, the debt level has risen in 2020, in some cases substantially, in the wake
of the global spread of the coronavirus and the related measures implemented
by the government. Therefore, it cannot be completely ruled out that the pro-
jects planned will be postponed or cancelled. The industry network Eurocon-
struct (including the Ifo Institute) estimates a robust, steady upturn for the
construction industry in Europe. This forecast is based on the assumptions
that housing demand is currently high and that there is also considerable
demand for energy-efficient building refurbishment and infrastructure mod-
ernization. For 2021, Euroconstruct therefore expects a strong increase in real
construction output (+4.1%, west +4.5%, east –0.8%). Growth of 4.7% is fore-
cast for residential buildings. The construction industry in Germany is expected
to show a steady upswing due to impetus from lively residential construction.
As a result, construction investment is expected to increase by 2.6% in real
terms in both 2021 and 2022 (IfW). The DIW (German Institute for Economic
Research) expects residential construction to increase by 3.7% in nominal
terms in 2021. It is assumed that around 4.0% of this will be attributable to
new construction volume. In addition, construction work on existing buildings
is expected to increase by 3.6%. Moderate growth is also expected for other
building construction (non-residential +1.6%) and civil engineering (+1.8%).
The US construction sector is experiencing an upswing. The key data for pri-
vate residential construction is positive and suggests that the positive trend
will accelerate in 2021. Among other indicators, this is supported by the fact
that building permits rose by 4.8% and housing starts by 7.0% last year, thus
outpacing housing completions (+2.8%). The high level of public investment
in infrastructure envisaged by the new US administration could be another
key aspect and driver. This is also likely to favor the road construction and
sewer and storm water system sectors. Industry experts at JBREC (John Burns
Real Estate Consulting) believe that the industry drivers will initially turn as
the pandemic gradually fades: While demand for maintenance and remode-
lingisinitiallyexpectedtodeclinein2021(– 4.1%)followingtherecentsurge,
demand for building materials is expected to pick up very strongly in new con-
struction during the period under review 2021 (+16.7%). In total, JBREC expects
nominal market growth of 2.5% in 2021. For the following years, an even
stronger upward trend is forecast with very lively demand in both segments
(2022: +12%; 2023: +10%).
NORMA Group SE – Annual Report 2020
112
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT
Construction industry:
development of European construction output (in %)
T030
Western Europe
Eastern Europe
Europe
2019 1
2020
2021e
2022e
2.7
5.2
2.9
– 8.0
– 4.5
– 7.8
4.5
– 0.8
4.1
3.4
3.3
3.4
Source:Euroconstruct / ifoInstitute(19coremarketsintotal)
1_ReviseddataaccordingtoEuroconstruct / ifoinstitute.
economic recovery, which is also based on an expansive monetary policy and
the promise of extensive support packages from governments worldwide, the
Management Board anticipates a recovery in demand in the area of general
industry applications. In addition, growth impetus is also expected from the
US water business, although this already grew significantly last year.
For the EMEA region, the Management Board forecasts strong organic sales
growth in the low double-digit range, driven by both the recovery in demand
from the European automotive industry and strong SJT business.
Future development of NORMA Group
NORMA Group places a strategic focus on sustainable value creation. Key
objectives are sustainable sales growth, profitability above the industry average
and the most efficient use of capital possible. In addition, NORMA Group
orients itself towards sustainability goals in order to live up to its own claim of
STRATEGY AND GOALS
a responsible approach to people and the environment.
General statement by the Management Board on probable
development
For the Americas region, the Management Board expects high single-digit
organic sales growth, which should result from both the resurgence in demand
in the automotive sector (light and heavy vehicles) and the continued good
water business.
In the Asia-Pacific region, the Management Board now expects slight organic
sales growth following only a slight decline in the previous year.
Overall, the Management Board expects low double-digit organic Group sales
growth in 2021. This assumes that there is no further pandemic-related slump
in demand.
Sales growth in 2021
Development of the cost of materials ratio
Based on the current assessments of the relevant economic research insti-
tutes and industry associations, the Management Board anticipates a signif-
icant improvement in the economic environment in NORMA Group‘s key
customer industries in the 2021 fiscal year. However, this implies that it will
be possible to overcome the pandemic and that there are no renewed setbacks
and surprising slumps in demand in connection with the corona pandemic.
The situation on the international commodity markets will remain tense in
fiscal 2021 due to the COVID-19 pandemic, but price developments should
be less volatile. Against the background of the optimization measures
introduced in purchasing as part of the „Get on track“ program, the Management
Board therefore expects a significant year-on-year improvement in the
materials cost ratio in 2021.
Against this backdrop, the Management Board expects a noticeable recovery
of the automotive industry in fiscal year 2021, especially in Europe and
Americas, based on the uniformly optimistic assessments of the automotive
associations. Supported by NORMA Group‘s solid order situation at the time
the forecast was prepared and due to the low comparative levels of the
previous year, the Management Board therefore expects strong organic growth
in the low double-digit range for the EJT business in 2021.
For the SJT business, the Management Board also forecasts significant organic
sales growth in the high single-digit range. Due to the expected global
Development of personnel cost ratio
In the 2020 fiscal year, additional personnel expenses (around EUR 25 million)
from the ongoing „Get on track“ program and the sharp drop in sales as a
result of the COVID-19 crisis had a negative impact on the personnel cost
ratio. For fiscal year 2021, the Management Board expects significantly
lower personnel expenses as part of the „Get on track“ program. Against
this backdrop and assuming a significant recovery in sales, the Manage-
ment Board therefore expects a significantly improved personnel cost ratio
in fiscal year 2021.
NORMA Group SE – Annual Report 2020
113
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT
Expenses in research and development
Financial result of EUR – 13 million expected
To maintain its innovation capability and its competitiveness in the long term,
NORMA Group invests a fixed percentage of its sales in R&D activities every
year. Up to and including 2019, this ratio was stable at around 5% of EJT sales.
Due to the increasing strategic importance of the area of water management,
NORMA Group has taken into account the increasing R&D activities in this
area since the 2020 fiscal year when determining the total R&D expenses and
sets these in relation to total sales. Due to the higher basis for comparison,
the targeted investment ratio in R&D activities is therefore now around 3% of
total sales.
TheManagementBoardexpectsafinancialresultofuptoEUR– 13million
for the 2021 fiscal year. This includes interest charges on the Group‘s gross
debt with an average interest rate of approximately 1.9% as well as further
expenses for currency hedges and transaction costs.
Tax rate between 27% and 29%
For fiscal year 2021, the Management Board expects a tax rate of between
27% and 29%.
Adjusted EBITA and adjusted EBIT margin
Strong increase of adjusted earnings per share
An important focus of NORMA Group is on maintaining profitability. Accord-
ingly, all business activities are strategically aligned with this goal. The trans-
formation program „Get on track“, which was already adopted in November
2019, additionally pays off towards this goal. By optimizing site capacities in
allregions,systematicallyrevisingstructuresandprocesses– especiallyin
purchasing – and focusing the product portfolio, the aim is to sustainably
increase the Group‘s profitability again and maintain its competitiveness.
Cumulative total costs of around EUR 55 million are expected for the imple-
mentation and execution of the „Get on track“ program by 2023. Of this amount,
around EUR 30 million have already been incurred in the 2020 fiscal year.
Additional expenses of around EUR 5 million are expected in fiscal year 2021.
As in the past year, these costs will not be adjusted. Assuming a significantly
positive contribution to earnings from the measures initiated as part of the
transformation program and a significantly improved sales forecast, the Man-
agement Board expects the EBITA margin adjusted for acquisition effects to
exceed 13% and the adjusted EBIT margin to exceed 12% in fiscal year 2021.
Based on the assumptions described above, the Management Board expects
a strong increase in adjusted earnings per share in fiscal 2021.
Adjustments to the result
As in previous years, the Management Board expects adjustments from the
allocation of purchase prices to depreciable tangible and intangible assets
from acquisitions in previous years. These amount to a total of around
EUR 24 million. If new acquisitions are made in fiscal year 2021, the Manage-
ment Board reserves the right to make further adjustments.
NORMA Value Added (NOVA)
The Management Board expects NOVA for fiscal year 2021 to be between
EUR 10 million and EUR 25 million.
Investment ratio of between 5% and 6% targeted
Due to the pandemic-related lower investments in fiscal 2020, the Manage-
ment Board expects a growth-related revival of investment activity (excluding
M&A activities) in fiscal 2021, resulting in a slightly higher investment ratio of
around 5% to 6% of Group sales.
NORMA Group SE – Annual Report 2020
114
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT Net operating cash flow
Carbon dioxide emissions
Assuming a significantly better sales development compared to the previous
year, but also continuous optimization measures in the area of working capital,
NORMA Group‘s Management Board expects a net operating cash flow of
more than EUR 110 million in fiscal year 2021.
For its own production processes, NORMA Group has set itself the target of
reducing CO2 emissions by around 19.5% by 2024 (reference year 2017). This
corresponds to an annual average reduction (CAGR) of 3.0%. For 2021, the
Management Board expects to achieve this target.
Sustainable dividend policy
Problem solving behavior of employees
If the future economic situation allows, NORMA Group will pursue a sustainable
dividend policy based on a payout ratio of approximately 30% to a maximum
of 35% of the adjusted consolidated net income.
NORMA Group measures and controls the problem-solving behavior of its
employees by using the performance indicator number of defective parts
rejected by customers per million parts (parts per million, PPM). The annual
target for the PPM indicator is below 10.
Market penetration and innovation capability
The degree of market penetration is reflected in organic growth in the medium
term. Securing the ability to innovate is essential for the future and competi-
tiveness of NORMA Group. NORMA Group records the number of invention
applications per year as a key figure for measuring and managing innovative
strength within the company. For the Group, the target is more than 20 new
invention applications per year.
Sustainable development of the company
NORMA Group has published its CR Roadmap. The Group‘s goal is to consist-
ently implement the goals and measures formulated therein and to continue
to lay further important milestones for sustainable corporate governance in
the current year.
NORMA Group SE – Annual Report 2020
115
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT Forecast for fiscal year 2021
T031
Organic group sales growth
Low double-digit organic Group sales growth
Cost of materials ratio
Personnel cost ratio
R&D investment ratio
Adjusted EBITA margin
Adjusted EBIT margin
EJT: Strong organic sales growth in the low double-digit range
SJT: Significant organic sales growth in the high single-digit range
EMEA: Strong organic sales growth in the low double-digit range
Americas: High single-digit organic sales growth
APAC: Slight organic sales growth
Significantly improved material cost ratio
Significantly improved personnel cost ratio
Around 3% of sales 1
More than 13%
More than 12%
NORMA Value Added (NOVA)
Between EUR 10 million and EUR 25 million
Financial result
Tax rate
Adjusted earnings per share
Investment rate (without acquisitions)
Net operating cash flow
Dividend / dividend ratio
CO2 emissions
Up to EUR – 13 million
Between 27% and 29%
Strong increase in adjusted earnings per share
Investment ratio between 5% and 6% of Group sales
More than EUR 110 million
Around 30% to 35% of adjusted Group earnings
Reduction in CO2 emissions by around 19.5% 2 by 2024 (CAGR: 3.0 %)
Number of invention applications
Number of defective parts (parts per million / PPM)
More than 20
Below 10
1_ Due to the increasing strategic relevance of the area of water management, NORMA Group includes R&D expenses in this area in the calculation from the 2020 reporting year onwards
and uses total sales as a reference value to determine the R&D ratio (previously 5% of EJT sales).
2_Reference year: 2017.
NORMA Group SE – Annual Report 2020
116
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT Risk and Opportunity Report
NORMA Group is exposed to a wide variety of risks and opportunities that
can have a positive or negative short-term or long-term impact on its financial,
assets and earnings positions. For this reason, opportunity and risk manage-
ment 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 develop-
ments 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 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 management level and taken into con-
sideration in the company’s strategy. Analogous to medium-term planning,
the focus with respect to the valuation of specific risks and opportunities cov-
ers a period of five years, provided that no other period is specified in the indi-
vidual 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 soft-
ware 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 the 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 levels. 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 competitive anal-
yses. In certain cases, analyses of the process workflows as well as results
from internal and external audit reports are used. 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 have been identified, both in terms of their financial impact and their prob-
ability 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 risk controlling, the appropriate risk mitigating measures are devel-
oped and 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 occur-
rence. Risks are managed in accordance with the principles of the risk
management system as described in the Group risk management policy.
NORMA Group SE – Annual Report 2020
117
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT 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 take 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 appro-
priate countermeasures, individual risks of local business units, segments and
Group-wide risks are aggregated in a risk portfolio. Here, the scope of con-
solidation for risk management corresponds to the scope of consolidation of
the Consolidated Financial Statements. In addition, NORMA Group catego-
rizes risks according to type and the functional area they affect. This makes
it possible to aggregate individual risks into risk groups in a structured man-
ner. This aggregation enables NORMA Group to identify and manage not only
individual risks, but also trends, and thus sustainably influence and reduce the
risk factors with certain types of risks. If not indicated otherwise, the risk
assessment applies for all regional segments.
Opportunity management process
Operational opportunities are identified during monthly meetings held at the
local and regional levels, but also by the Management Board, and then doc-
umented and analyzed. Measures aimed at capitalizing on strategic and oper-
ational 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 plan-
ning. NORMA Group uses a systematic assessment procedure to evaluate the
opportunities and risks that have been identified, both in terms of their finan-
cial impact, i.e. gross and net impact on planned financial indicators, and their
probability of occurrence.
Risk management system of NORMA Group
G036
onitorin g
M
Risk
management
Risk
identification
I
d
e
n
t
i
f
i
c
a
t
i
o
n
Risk
reporting
Risk culture
Risk strategy
Methods
Technologies
Risk
assessment
Risk
analysis
Risk
aggregation
Counterme a s u r e s
Management Board and
Supervisory Board
NORMA Group SE – Annual Report 2020
118
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT
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 char-
acteristics: 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 require-
ments. 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 State-
ments. The need to provide accurate and complete information within pre-
defined timeframes represents a significant risk for 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 principle.” 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 depart-
ment 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 of the annual financial statements during the audit
based on the risk-based audit approach, whereby material errors and viola-
tions are to be uncovered with reasonable assurance.
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. Tax issues
and responsibilities are regulated in a Group tax guideline. 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 Group Management Report are
prepared according to a uniform time schedule for all companies. Each com-
pany in the Group prepares its separate financial statements in accordance
with the applicable local accounting guidelines and IFRS. Intra-Group deliv-
eries 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 bal-
ance 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 comprehen-
sive 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 Consoli-
dated Financial Statements. The preparation of the Consolidated Manage-
ment Report is the responsibility of the Investor Relations department, which
reports directly to the member of the Management Board of NORMA Group
responsible for finance, the CFO. 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.
NORMA Group SE – Annual Report 2020
119
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT The various IT systems that individual NORMA Group companies use to
perform financial accounting are being 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.
Risk and opportunity profile of NORMA Group
As part of the preparation and monitoring of its risk and opportunities profile,
NORMA Group assesses risks and opportunities based on their financial impact
and their probability of occurrence. The financial impact of opportunities and
risks is assessed in relation to EBITA, based on the EBITA forecast in the 2019
Forecast Report (before the global spread of the coronavirus). The following
five categories are used here:
• Insignificant: up to 1% of EBITA
• Minor: more than 1% and up to 5% of EBITA
• Moderate: more than 5% and up to 10% of EBITA
• Significant: more than 10% and up to 25% of EBITA
• High: more than 25% of EBITA
The range assigned sets the financial impact of a risk or opportunity in
relation to the EBITA of the Group or a segment if the respective risk or oppor-
tunity relates solely to a specific segment. 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 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:
• 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 occurrence
• 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 concen-
trates on the identification, evaluation and mitigation of risks, focusing on min-
imizing the potential negative impact on the company’s financial, asset and
earnings position. Derivative financial instruments are used to hedge particu-
lar risk items. Financial risk management is carried out by Group Treasury.
Group management defines the areas of responsibility and necessary controls
related to the risk management strategy. Group Treasury is responsible for
identifying, evaluating and hedging financial risks in close consultation with
the Group’s operating units. In this context, various processes and organiza-
tional structures work together to measure and evaluate 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 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 their potential impact on NORMA Group.
NOTES
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 con-
nection with only a few of its long-term 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
NORMA Group SE – Annual Report 2020
120
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT monitored. Changes in the value of the amounts included in this financial
indicator are limited by employing long-term hedging strategies. Other finan-
cial covenants exist only as part of a syndicated bank loan negotiated in 2019
and are tested only in advance of possible M&A transactions without justify-
ing the creditor banks’ right of termination.
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 trans-
actions. 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
supplied to only if they pay in advance. In addition, a diversified customer
portfolio reduces the financial repercussions of default risks. Despite the
aforementioned measures, the Group now considers the possibility of default
risks occurring to be probable (unlikely in the previous year), as it is impossible
to fully assess the future impact of the global COVID-19 pandemic on poten-
tial insolvencies of individual customers. The potential financial effects of
default risks are still judged to be insignificant considering the relevant factors,
such as bad debt losses experienced in the past, and due to the counter-
measures taken.
Liquidity risks and opportunities
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 positions. Due to the dynamic nature of
NORMA Group’s business, Group Treasury aims to maintain flexibility in financ-
ing by keeping committed credit lines available. Therefore, NORMA Group’s
primary objective is to ensure the uninterrupted solvency of all Group compa-
nies. Group Treasury is responsible for liquidity management and therefore
for minimizing liquidity risks. As of December 31, 2020, NORMA Group’s liquid
assets (cash and cash equivalents) amounted to EUR 185.1 million (2019:
EUR 179.7 million). Furthermore, NORMA Group has a high level of financial
flexibility thanks to a committed revolving credit line with national and inter-
national credit institutions in the amount of EUR 50 million. In the course of
the refinancing in 2019, yet another flexible accordion line was negotiated
that increases NORMA Group’s ability to take strategic action even further. In
addition, a firmly committed liquidity line with a volume of EUR 80 million was
negotiated with international banks in mid-2020. This line increases the exist-
ing financial leeway in order to be able to react to the effects of economic
upheavals, such as the challenges of the COVID-19 pandemic. NORMA Group
thus has a total of EUR 130 million in committed liquidity lines, which were
not used as of December 31, 2020. 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 financial, assets and earnings positions,
which enable the company to gradually reduce its capital costs. Accordingly,
the financing concluded in 2019 is characterized by even more committed
degrees of freedom and lower interest costs. This bank loan of EUR 250 mil-
lion also includes a sustainability component linked to an external rating. By
improving its sustainability rating in the past fiscal year, NORMA Group has
already reduced its external interest burden. The liquidity-related opportuni-
ties are considered likely despite the economic effects of the COVID-19 pan-
demic, especially due to the stable business relationships with banking
NORMA Group SE – Annual Report 2020
121
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT partners and the resulting reputation on the capital markets. 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
Currently, only a small share of the Group’s financing agreements contain
standard market credit conditions (financial covenants). If NORMA Group does
not adhere to these terms, the banks would be entitled to re-evaluate the
agreements and/or demand higher credit margins. In light of the measures
implemented to reduce the share of financial covenants in the current fiscal
year, non-compliance with these would now have moderate (high in the pre-
vious year) financial repercussions. Irrespective of the extent of financial cov-
enants, compliance with them is monitored continuously in order to be able
to take appropriate measures at an early stage if necessary and to avoid any
worsening of the conditions. NORMA Group partly uses rolling hedging trans-
actions to hedge balance sheet positions in foreign currencies whose valua-
tion leads to fluctuations in the profit and loss account. 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 continu-
ously monitored by means of risk simulation and discussed in senior manage-
ment meetings. The probability of liquidity risks having a negative impact on
NORMA Group’s activities is very unlikely given the high level of financial flex-
ibility provided by committed and unused bank credit lines. The risk of non-com-
pliance with financial covenants is still considered very unlikely due to the
company’s high profitability and 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 dol-
lar, 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 positions represent a considerable risk that
can only be partially hedged for a short-term period. In the medium term,
NORMA Group will strive to reduce its foreign currency risks by increasing
PRODUCTION AND LOGISTICS
regional production.
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 capabil-
ities to absorb short-term exchange rate fluctuations via targeted income and
expenditure management. The syndicated bank loan refinanced in fiscal year
2019 has also increased its flexibility in managing foreign currencies. The syn-
dicated bank loan provides for the use of credit lines in various currencies (e.g.
US dollar and euro tranches). In addition, the US dollar promissory note
tranches issued lead to better congruence of the payment profiles in US dol-
lars. The remaining foreign currency risks are continuously monitored in the
Group and, in the event that risk limits are exceeded, transferred to the euro
on a rolling basis using derivative hedging instruments. Translation risks are
continuously monitored by Group Treasury, but are not hedged using deriva-
tive 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 inevitably result in translation effects
when they 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 analy-
ses 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.
NORMA Group SE – Annual Report 2020
122
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT Changes in interest rates
Economic and cyclical opportunities and risks
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 positions. NORMA Group’s interest
change risk arises in particular from long-term loans.
In some cases, the current loans have fixed interest rates and are therefore
GOALS AND STRATEGIES REGARDING FINANCE
not subject to interest rate risk.
AND LIQUIDIT Y MANAGEMENT
Loans that initially had variable interest rates were partly synthetically con-
verted 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 157.5 million in total. The remaining USD floating rate loans
are unsecured and are continuously monitored by Group Treasury. On the
other hand, variable rate loans denominated in euros in the amount of
EUR 188 million are unhedged. Due to the Group’s internal interest rate
expectations, this item is deliberately not hedged. In the event of an increase
in interest rates, Group Treasury would limit the interest rate risk by using
appropriate hedging measures.
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
terms. In the US dollar zone, on the other hand, the probability of further inter-
est 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 backdrop 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 terms.
NORMA Group’s success largely depends on macroeconomic trends on its
sales markets and its customers’ sales markets. Therefore, important indica-
tors of economic development worldwide are taken into account both in plan-
ning as well as in risk and opportunities management. In order to gauge the
macroeconomic trend, NORMA Group mainly relies on the forecasts of widely
regarded institutions such as the IMF, the Bundesbank and reputable
economic research institutes. Accordingly, following the 3.5% contraction in
the global economy in the past fiscal year, global growth of 5.5% is expected
for 2021.
In the previous year, economic development was negatively influenced in par-
ticular by the unexpectedly rapid spread of the coronavirus (COVID-19) and
the related restrictions in connection with containment and quarantine meas-
ures. In the first half of 2020, in particular, there were significant drops in
demand and substantial production losses due to plant shutdowns. Despite
the countermeasures initiated by the government in terms of both containing
the pandemic itself and its economic consequences, the losses from the spring
could not be fully compensated for in the second half of the year. Apart from
the COVID-19 pandemic, the uncertain outcome of the negotiations on future
trade regulations with the EU following the Brexit process, protectionist activ-
ities in connection with the possible conclusion of a trade agreement between
the United States and the EU, and other geopolitical crises represented
significant risk factors.
For the current fiscal year, the further development of the COVID-19 pandemic,
in particular the success of the containment measures initiated as well as the
stimulating effect of economic and social policy measures to combat the pan-
demic and its economic consequences, continues to be seen as a significant
risk factor. In particular, setbacks in the fight against the pandemic, as a result
of vaccination delays, resistant virus mutations and longer lockdowns, for
example, can have a significant negative impact on expected economic
growth. Regardless of the pandemic-related risks, geopolitical risks and risks
in connection with trade conflicts continue to be major negative factors for
the global economy.
NORMA Group SE – Annual Report 2020
123
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT 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 pos-
sible taking these risks into account. Should these factors lead to a deteriora-
tion 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 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 developments in the respective cus-
PRODUCTS AND END MARKETS It should be borne in mind,
tomer industries.
however, that the customer industries in the regions relevant to NORMA Group,
EMEA, the Americas and Asia-Pacific, have partly specific characteristics
and challenges.
Business activities with OEMs for passenger cars and commercial vehicles as
well as customers in the aftermarket segment still represent the most impor-
tant 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 oppor-
tunities and risks for NORMA Group. NORMA Group’s current product port-
folio 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.
Thanks to its future-proof product portfolio, NORMA Group is also well posi-
tioned to serve the growth market of electric mobility. 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 dis-
cussion 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 sys-
tematically analyzes current market developments in the area of future tech-
nologies 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 been supplying a
line system for a fuel cell vehicle in series production since 2018 that 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 impor-
tant for NORMA Group to continue to be able to offer suitable innovative
RESEARCH AND DEVELOPMENT
product solutions in this dynamic environment.
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 indus-
tries 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 to be possible with a moderate financial impact.
NORMA Group SE – Annual Report 2020
124
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT Risks and opportunities associated with corporate strategy
NORMA Group’s strategic goal is to achieve a sustained increase in the com-
pany’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. With this in mind, the “Get on track” change program was launched
at the end of 2019 with the goal of increasing the profitability and flexibility
STRATEGY AND
of NORMA Group and consistently implemented in 2020.
GOA LS
Besides the company’s strategic activities aimed at continuing to develop the
business organically, NORMA Group sees considerable opportunities to sus-
tainably 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 suc-
cess of this strategy on many occasions in the past by completing its acqui-
sitions. If, however, in individual cases, the development of the acquired
companies falls behind the expectations at the time of acquisition or if inte-
gration 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.
products. Nevertheless, the broad diversification with respect to products,
regions and end markets also implies a certain complexity, which can be asso-
ciated 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 assem-
bly effort in countries with lower labor costs, thus securing and further increas-
ing 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 invest-
ment decisions and uses graded approval procedures. Risks from site deci-
sions already made are evaluated across all regions as part of the “Get on
track” change program and 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 com-
pany 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 stra-
tegic risks is considered unlikely, while the potential financial impact of
corporate strategy risks is considered moderate.
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
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.
NORMA Group SE – Annual Report 2020
125
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT 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 manage-
ment. Thanks to a powerful global Group purchasing structure, economies of
scale are being used to purchase the most important commodity groups 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. NORMA Group protects itself against
commodity price volatility 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.
Due to the ongoing punitive tariffs on imports of steel and metal components
in the United States, NORMA Group was confronted with generally higher
procurement prices in the past fiscal year, especially in the Americas region.
Since there are currently no indications of a reduction in protectionist meas-
ures, a politically induced reduction in procurement prices in the region is not
to be expected in fiscal year 2021, either. After a solid first quarter, the global
recession triggered by the COVID-19 pandemic in the second and third quar-
ters of the past fiscal year led to a significant global reduction in inventories
along the entire value chain. Since the fourth quarter, accompanied by an
increasing recovery in demand in NORMA Group’s key sales markets, the
demand for steel and metal components has risen significantly, which has
been accompanied by massive price increases on the part of manufacturers.
Thanks to its multi-supplier strategy for strategic products, NORMA Group
was able to fully cover the significant increase in purchase volumes without
having to raise prices significantly. While it was still possible to achieve slight
price reductions in the contracts for 2020 and 2021 with regard to the pro-
curement of stainless steel (flat/wire and metal components), significant price
increases had to be accepted again for the first time in 2021, especially in the
area of non-stainless steel. The contract duration was selected here individ-
ually to be short as possible, since lower purchase prices and improved mate-
rial availability are expected again in the second half of 2021. After a drop in
prices in the first four months of the past fiscal year, the alloy surcharges
relevant for stainless steel rose again for all nickel-based goods and were
significantly higher at the end of the year than at the beginning of 2020. In
addition to the development of ferrochrome and scrap prices, the alloying element
nickel acted as the most important price driver. Analysts are also assuming a
risk of rising nickel prices and a volatile market in the future, which is not least
due to the use of nickel in batteries for the growth sector of electromobility.
In the area of engineering plastics, demands for price increases were success-
fully averted several times in the past fiscal year. However, due to the recent
sudden surge in demand for these plastics (e.g. polyamide 66) associated with
the economic recovery and the manufacturers’ limited production capacities,
NORMA Group continues to see itself exposed to increased price pressure.
Regardless of this and despite the expected price increases for technical gran-
ulates, NORMA Group is optimistic that it will be able to meet current require-
ments below the price level of 2019 for fiscal year 2021 as well. In contrast,
a stabilization of the raw material market is expected for standard plastics
(e.g. PVC, PP).
Taking into account NORMA Group’s procurement portfolio, price increases
for raw materials are considered likely overall. However, the associated finan-
cial 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 procurement spectrum
and taking into account the prevailing volatility on the raw material markets,
potential price reductions are still considered unlikely overall.
NORMA Group SE – Annual Report 2020
126
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT Suppliers and dependencies on key suppliers
The loss of suppliers and dependencies on single suppliers can lead to mate-
rial shortages and thus to negative impacts on the Group’s activities. In order
to minimize this risk, NORMA Group works only 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
P U RC H AS I N G A N D S U P P L I E R M A N AG E M E N T
27% of the purchasing volume.
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 alternatives immediately. As a result, the loss of
suppliers is considered possible, but the potential financial impact is regarded
to be moderate (minor in the previous year). However, NORMA Group also
sees opportunities in this area as a result of its proactive approach both in
terms of current supplier relationships as well as identification of new suppli-
ers 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.
The financial impact of the measures initiated is still assessed to be low.
Quality and processes
NORMA Group’s products are often mission-critical with respect to the qual-
ity, 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 its cus-
tomers.
QUALIT Y MANAGEMENT Maintaining the right 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 its
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
P RO D U CT I O N A N D LO G I ST I CS Since
impact on NORMA Group’s business.
NORMA Group pursues a continuous process of improvement, there are oppor-
tunities over and above planning for positive deviations in the area of these
processes. This applies for all regions that NORMA Group is active in. The
company estimates the likelihood of cost savings to be possible. Since plan-
ning 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 produc-
tion processes is minor.
Customers
Customer risks result from a company being dependent on important buyers
for a significant share of its sales. They could take advantage of their bargain-
ing 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 behav-
ior 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 2020.
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.
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.
NORMA Group SE – Annual Report 2020
127
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT Risks and opportunities of personnel management
IT-related risks and opportunities
NORMA Group’s success is largely dependent on its employees’ enthusiasm,
commitment to innovation, expertise and integrity. The Group’s personnel man-
agement 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 NORMA Group’s operations. Furthermore, compe-
tition for the most talented employees as a result of demographic develop-
ments and the shortage of skilled labor in Western industrial nations is becom-
ing more and more intense.
NORMA Group counters these risks with far-reaching basic and advanced
training as well as employee development programs. The company also
encourages its employees to focus on its success through variable remuner-
ation systems. In return, the employees contribute to its continuous further
development by participating in employee surveys and improvement initia-
tives. Comprehensive representation 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 employ-
ees 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 develop their personal expertise even further through educational and train-
ing 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.
The use of functional and high-performance IT systems is of key 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 com-
pany’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 respective 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 unau-
thorized 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.
NORMA Group has therefore implemented appropriate measures to avoid
and reduce this type of risk. These measures are collectively embedded in the
IT risk management process and are adjusted 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 phys-
ically separated data center areas, using decentralized data storage and out-
sourced data archiving to a certified external provider, and by using state-of-
the-art firewalls and e-mail filters, including permanent network monitoring.
Employee access to sensitive information is ensured by means of authoriza-
tion 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 2020, 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 exam-
ple. If necessary, redundant internal and external resources are kept available
to mitigate these risks.
NORMA Group SE – Annual Report 2020
128
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT NORMA Group estimates the probability of IT-related risks occurring in all
regions despite the countermeasures implemented to be probable and the
potential financial impact to still be moderate.
The risks arising from the migration from the old ERP systems to uniform new
systems for the entire Group are also likely to be 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 opportuni-
ties that could result from this standardization are regarded as probable. The
related financial effects are expected to be at a low level.
Legal risks and opportunities
Risks related to standards and contracts
Future changes to legislation and requirements, especially liability law, envi-
ronmental law, tax law, customs law and labor law, as well as changes in
related standards, could have a negative impact on NORMA Group’s devel-
opment. 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 could result in legal
disputes and liability for damages. Likewise, the results of tax audits can lead
to tax payments, including penalties and interest.
Litigation developed differently in the regions in 2020. As in the previous year,
litigations in most cases involved labor disputes. In contrast to the previous year,
these issues were mainly concentrated on the EMEA region, especially Germany.
Besides lawsuits from former employees in connection with the termination of
employment relationships, disputes with employee representatives were a new
focus of labor law proceedings. Disputes with customers were usually related
to alleged product defects. In addition, NORMA Group companies in the Asia-Pa-
cific region conducted several legal proceedings due to payment claims against
customers. NORMA Group managed to assert claims against suppliers in con-
nection with defective deliveries. Furthermore, NORMA Group conducted pro-
ceedings on its own or third-party IP rights as well as due to customs issues.
NORMA Group uses its current compliance and risk management systems to
ensure that it complies with constantly changing laws and regulations. Fur-
thermore, the company ensures that it 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, that 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 consid-
ered 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.
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.
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 obli-
gations. NORMA Group has therefore implemented Corporate Responsibility
as an integral part of the Group strategy. In this context, a systematic Environ-
mental Management System was introduced at NORMA Group so that corpo-
rate 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.
EMPL OYEES
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.
The investments in the area of Corporate Responsibility serve not only to ward
off risks, however. 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 only a minor impact on its planning.
NORMA Group SE – Annual Report 2020
129
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT 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 devel-
oping customer-specific solutions and through its speed of innovation. At the
same time, it is also possible for NORMA Group to violate the intellectual prop-
erty of third parties. For this reason, developments for potential patent viola-
tions are reviewed at an early stage. Despite these measures, there is still a
risk of using third-party intellectual property. The probability of infringements
of intellectual property is therefore assessed as possible. The potential impact
of IP-related legal disputes and other possible infringements continues to be
assessed as moderate. In addition, consistently protecting intellectual property
and building up unique legal selling points are also seen as potential opportu-
nities that could lead to a slight deviation from the medium-term planning.
Assessment of the overall profile of risks and opportunities
by the Management Board
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 Manage-
ment 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 indi-
vidual Group companies as a going concern. Taking the aggregated oppor-
tunities 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.
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 could 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.
NORMA Group SE – Annual Report 2020
13 0
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT Risk and opportunity profile of NORMA Group 1
Probability of occurrence
Financial impact
Very
unlikely
Unlikely
Possible
Likely
Very likely
Change
comp.
to 2019
Insignifi-
cant
Minor
Moderate
Significant High
T032
Change
comp.
to 2019
Financial risks and opportunities
Default risk
Liquidity
Currency
Change in
interest rates
Risks
Opportunities
Risks
Opportunities
Risks
Opportunities
Economic and cyclical risks and opportunities
Risks
Opportunities
Industry-specific and technological risks and opportunities
Risks
Opportunities
Strategic risks and opportunties
Risks
Opportunities
Operational risks and opportunities
Commodity pricing Risks
Suppliers
Quality and
processes
Customers
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
standards and
contracts
Social and
environmental
standards
Property rights
Risks
Risks
Opportunities
Risks
Opportunities
1_If not indicated differently, the risk assessment applies for all regional segments.
NORMA Group SE – Annual Report 2020
131
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT
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 and provides information on the remuneration granted,
received and drawn in fiscal year 2020.
shareholder return (TSR)). NORMA Group SE’s TSR is compared with the
TSR of a predefined peer group of 15 listed companies. Depending on
NORMA Group SE’s ranking within the peer group, the payout amount
from the STI either increases or decreases by up to 20%.
Remuneration of the Management Board
In accordance with the recommendation of the German Corporate Governance
Code (GCGC) as amended on December 16, 2019, the Supervisory Board shall
agree on a clear and comprehensible system for the remuneration of the
members of the Management Board and determine the exact remuneration
of the individual members of the Management Board on the basis of this.
Accordingly, the Annual General Meeting must resolve – basically in an
advisory capacity – on the approval of the remuneration system presented
by the Supervisory Board.
New remuneration system for Management Board members since 2020
The Supervisory Board has fundamentally revised and redefined the system
for the remuneration of Management Board members with effect from Janu-
ary 1, 2020. In doing so, it specifically took into account the points of criticism
that had arisen in advance of the 2019 Annual General Meeting. The new
remuneration system, which complies with the requirements of the Act on the
Transposition of the Second Shareholder Rights Directive (ARUG II) and takes
the recommendations of the amendment to the German Corporate Govern-
ance Code (GCGC) into account, was explained to and approved by the
2020 Annual General Meeting.
The following key points and changes to the new remuneration system are
particularly worth noting:
• The bonus components are based on transparent results that have
actually been achieved and audited.
• The Short-Term Incentive (STI) depends on the absolute performance
factoradjusted,i. e.EBIT(earningsbeforeinterestandtaxes)of
NORMA Group adjusted for acquisitions, on the one hand. On the other
hand, the STI now depends on a relative performance factor (relative total
• Within the Long-Term Incentive (LTI), an amount of up to 20% of the
fixed annual salary now depends on the fulfillment of sustainability
targets,e. g.,thereductionofCO2 emissions (Environment, Social and
Governance- LTI, or ESG-LTI for short).
• With the introduction of a comprehensive share acquisition and share-
holding obligation, NORMA Group SE is implementing a new recommen-
dation of the German Corporate Governance Code. The members of the
Management Board must invest 75% of the amount paid out from the
LTI and 100% of the amount paid out from the ESG-LTI in shares of
NORMA Group SE. The company may also pay out this amount in full or
in part in shares of NORMA Group SE. As a result, more than 50% of the
payout target amount of the variable remuneration will either be 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. ESG-LTI
extends four years into the future and provides for a one-year holding
period. LTI will be supplemented by a four-year holding obligation for the
shares in the future.
• The Supervisory Board sets binding performance criteria for STI and LTI.
The Supervisory Board sets the targets for ESG-LTI before the start of the
fiscal year. The respective amounts to be paid out are calculated after
the end of the fiscal year on the basis of achievement of the targets. The
Supervisory Board has the option to adjust the terms of STI and LTI at its
reasonable discretion only in the event of exceptional events otherwise,
the Supervisory Board has no discretion in determining the STI and LTI
payout amounts.
• The change-of-control clause, according to which Management Board
members may leave the company with severance pay of three years’
remuneration in the event of a change of control, has been abolished for
new members of the Management Board.
NORMA Group SE – Annual Report 2020
13 2
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT • The variable remuneration components are subject to a clawback if the
audited Consolidated Financial Statements and/or the basis for determining
other targets on which the calculation of the variable remuneration is
based are subsequently found to be objectively incorrect and therefore
need to be corrected and the error has led to an incorrect calculation of
the variable remuneration.
tions of the German Corporate Governance Code, remuneration is composed
of a fixed component (fixed remuneration) as well as short-term variable and
long-term variable components.
Overview of the remuneration components and their respective
relative share of remuneration
Basic principles of the remuneration system
The system for the remuneration of the members of the Management Board
is designed to be clear and comprehensible. The goal of NORMA Group’s
remuneration system is to remunerate the members of the Management Board
in accordance with their tasks and performance and in an appropriate rela-
tionship to the company’s situation. In line with NORMA Group’s Strategy
2025, the remuneration of the members of the Management Board promotes
the business strategy as well as the long-term interests of NORMA Group and
thus contributes to the sustainable and long-term development of the com-
pany. The strengthening of profitable growth of NORMA Group’s divisions –
also by making certain acquisitions – as well as the consideration of the
sustainability strategy are the focus and the basis for the design of the remu-
neration system for the members of the Management Board.
In this context, the remuneration system takes into account various targets
aligned to profitability (through EBIT), return on investment (through NOVA),
development of the company’s value (through its share price and relative share
return) and environmental sustainability. The metrics used have different but
always multi-year terms to support the strategic success of the company on
a sustainable basis. The remuneration of the Management Board members
is designed to create an appropriate incentive system for the implementation
of the company strategy and sustainable value creation and enhancement.
Particular attention is paid to achieving the greatest possible congruence
between the interests and expectations of shareholders and Management
Board remuneration.
In line with the role and performance, individual target achievement is taken
into account by distinguishing between the fixed remuneration of the Man-
agement Board members on an individual basis. 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 recommenda-
The remuneration of the members of the Management Board includes fixed
and variable components. The fixed components of the remuneration of the
Management Board members are the fixed annual salary, fringe benefits and
the company pension plan. The variable components are the short-term var-
iable remuneration STI and the long-term variable remuneration. The long-
term variable remuneration in turn comprises the multi-year LTI and the ESG-
LTI, a multi-year variable component based on sustainability targets. The share
of long-term variable remuneration in total remuneration exceeds the share
of short-term variable remuneration. The relative shares of the fixed and var-
iable remuneration components are shown below in relation to the maximum
remuneration. The maximum payout amounts that are limited relative to the
fixed annual salary for STI (180% of the fixed annual salary), LTI (200% of the
fixed annual salary), ESG-LTI (20% of the fixed annual salary), the pension
expense for the company pension plan (service costs), and fringe benefits are
set in relation to the maximum remuneration.
Excluding the company pension plan and fringe benefits, the share of fixed
remuneration is 20% and the share of variable remuneration is 80% of the
sum of the fixed annual salary and the maximum payout amounts from STI,
LTI and ESG-LTI (“adjusted maximum total remuneration”). STI (maximum
payout amount of 180% of the fixed annual salary) accounts for 36%, LTI
(maximum payout amount of 200% of the fixed annual salary) for 40%, and
ESG-LTI (maximum payout amount of 20% of the fixed annual salary) for 4%
of the adjusted maximum total remuneration.
Taking the company pension plan and fringe benefits into account, for the
Chairman of the Management Board, the share of fixed remuneration (fixed
annual salary, pension expense (service costs) and fringe benefits) is approx-
imately 38% of the maximum remuneration, and the share of variable remu-
neration is approximately 62% of the maximum remuneration. STI (maximum
payout of 180% of the fixed annual salary) accounts for approximately 28%
of the maximum remuneration, LTI (maximum payout of 200% of the fixed
annual salary) for approximately 31% of the maximum remuneration, and
NORMA Group SE – Annual Report 2020
133
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT ESG-LTI (maximum payout of 20% of the fixed annual salary) for approxi-
mately 3% of the maximum remuneration. For ordinary Management Board
members, taking the company pension plan and fringe benefits into account,
the share of the fixed remuneration (fixed annual salary, pension expense
(service costs) and fringe benefits) is approximately 36% of the maximum
remuneration and the share of variable remuneration is approximately 64%
of the maximum remuneration. STI (maximum payout of 180% of the fixed
annual salary) accounts for approximately 29% of the maximum remuneration,
LTI (maximum payout of 200% of the fixed annual salary) for approximately
32% of the maximum remuneration and ESG-LTI (maximum payout of 20%
of the fixed annual salary) for approximately 3% of the maximum remuneration.
The above percentages may differ slightly due to the different actuarial
calculation of service costs for each fiscal year and each member of the
Management Board as well as the development of the cost of contractually
agreed-upon fringe benefits.
Determination of the target total remuneration
The Supervisory Board determines a target total remuneration for the individ-
ual members of the Management Board. The target total remuneration is the
sum of all remuneration components that are relevant for the total remuner-
ation. For STI, LTI and ESG-LTI, the target amounts are based on 100% target
achievement (“target amounts of variable remuneration components”) of the
budget values. The Supervisory Board determines the target amounts of the
variable remuneration components for each fiscal year. In doing so, the Super-
visory Board decides which targets the company should achieve on the basis
of the results of the previous fiscal years as part of the budget planning for
the current fiscal year.
neration calculated for a fiscal year exceeds the maximum remuneration, the
amount paid out under LTI is reduced to such an extent that the maximum
remuneration is complied with. If necessary, the Supervisory Board may at its
discretion reduce other remuneration components or demand reimbursement
of remuneration already granted. Irrespective of the maximum remuneration
set, the payout amounts of the individual variable remuneration components
are also limited in each case relative to the fixed annual salary.
Severance payments
In the event of premature termination of the service contract without good
cause, any possible severance payment is limited to the value of a maximum
of two years’ remuneration in line with the recommendations of the GCGC
and, if the service contract has a remaining term of less than two years, may
not exceed the contractual remuneration for the remaining term (severance
payment cap). The severance payment cap is always calculated on the basis
of the total remuneration for the past fiscal year and, if applicable, also the
expected total remuneration for the current fiscal year. If a special termination
right is exercised in the event of a change of control or due to reorganization –
only applicable if the member of the Management Board commences service
before 2020 – he or she will receive a severance payment equal to three years’
remuneration, but not more than the value of the remuneration for the remain-
ing term of the service contract. In line with the GCGC, the service contracts
of Mrs. Stieve and future members of the Management Board no longer include
a change of control clause. The annual remuneration is the current fixed annual
salary at the time of termination plus the variable remuneration components
granted for the past fiscal year.
Fixed remuneration components
Maximum remuneration
Fixed annual salary
The total remuneration to be granted for a fiscal year (total of all remunera-
tion amounts expended for the fiscal year in question, including the fixed annual
salary, variable remuneration components, pension expenses (service costs)
and fringe benefits) of the members of the Management Board – irrespective
of whether it is paid out in this fiscal year or at a later date – is capped in abso-
lute terms (“maximum remuneration”). The maximum remuneration is
EUR 3,900,000 for the Chairman of the Management Board and EUR 2,500,000
for each of the other members of the Management Board. If the total remu-
The Management Board members receive a fixed annual salary in twelve
monthly installments that are paid out at the end of each month. The amount
of the fixed annual salary is based on the tasks and the strategic and opera-
tional responsibility of the individual Management Board member.
NORMA Group SE – Annual Report 2020
134
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT Company pension scheme
The Management Board members Dr. Schneider and Dr. Klein are covered by
a company defined benefit plan. The entitlement to a pension arises when the
service contract ends and the Management Board member has reached age
65 or is permanently incapacitated for work. The pension level (retirement
pension) of the pension agreements is 4% of the fixed annual salary for each
completed year of service from being appointed a Management Board mem-
ber up to a maximum of 55% of the last fixed annual salary. A surviving
dependents’ pension is also provided for.
The Management Board member Ms. Stieve and future members of the
Management Board are granted a defined contribution plan on a reinsurance
basis. Under the defined contribution plan, the company is required to make
payments to an external provider each year. The amount of the payments is
in line with standard market practice.
Fringe benefits
The company provides each member of the Management Board with a com-
pany car for private use. In addition, Management Board members are included
in the company’s D&O insurance, and the company reimburses 50% of the
expenses for health and long-term care insurance up to a maximum of the
expenses the company would have to pay if an employment relationship under
social security law existed. The company also takes out accident insurance
(private and occupational accident) for the members of the Management Board
at its own expense.
Variable compensation components
The performance indicators used to measure the short-term and long-term
variable compensation components are derived from NORMA Group’s com-
pany strategy and are based on a three- or four-year observation period. The
variable compensation of the Management Board consists of the following
components:
Short-Term Incentive, STI
total shareholder return (TSR) of NORMA Group SE in relation to a peer group
into account. The payout amount of STI is calculated from a starting value and
an adjustment to the target achievement of TSR in the grant year. The calcu-
lation is shown in the following formula:
Payout amount = Initial value
(= average adjusted EBIT x individual STI percentage) x
TSR adjustment factor
The initial value results from multiplying the average EBIT, adjusted for acqui-
sitions, in the fiscal year for which STI is granted and the two fiscal years
preceding the grant year (arithmetic mean) by the individual STI percentage
specified in the service contract. The individual STI percentage is 0.33% for
the Chairman and 0.22% for the other members of the Management Board.
In a second step, this initial value is then multiplied by the TSR adjustment
factor, and the result represents the payout amount. TSR is defined as the
percentage change in the stock market price during the grant year, including
notionally reinvested dividends and all capital measures. In other words, TSR
is a measure of how the value of a share commitment has developed over a
period of time and takes into account both dividends accrued during the period
and any share price increases that may have occurred. In the current com-
pensation system, the share yield is taken into account as a relative perfor-
mance factor. The TSR adjustment factor is determined by measuring the TSR
development (share price and dividend development) of NORMA Group SE in
relation to the TSR development of the companies in the peer group during
the grant fiscal year. Depending on the results of the comparison, the starting
value of STI is adjusted upwards by 20% if a position in the peer group is
reached above the 75th percentile and downwards by 20% if a position in the
peer group is reached below the 25th percentile; the TSR adjustment factor
is thus limited to the range of 0.8 to 1.2. The peer group currently consists of
the following 15 listed companies with a size, structure and industrial sector
comparable to NORMA Group: Bertrandt AG, Deutz AG, DMG Mori AG, Elring-
Klinger 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 Supervisory Board is entitled to
adjust the peer group for future assessment periods before the beginning of
the respective assessment period.
STI is a performance-based bonus that takes the absolute performance indi-
cator adjusted EBIT (earnings before interest and taxes, adjusted for acquisi-
tions) of NORMA Group, on the one hand, and, on the other hand, the relative
The payment amount (= base value x TSR adjustment factor) is limited to a
maximum of 180% of the basic annual salary; the initial value (= average
adjusted EBIT x individual STI percentage rate) is limited to a maximum of
NORMA Group SE – Annual Report 2020
135
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT 150% of the fixed annual salary. The short-term variable compensation for
the past fiscal year is to be paid out the following year after approval of the
Consolidated Financial Statements by the Supervisory Board. If the Manage-
ment Board member did not work for the company for a full twelve months in
a fiscal year, the annual bonus will be reduced accordingly.
All claims to STI from a current fiscal year lapse without replacement or com-
pensation if the Management Board member’s service contract ends as a
result of extraordinary termination by the company for good cause attributable
to the Management Board member in accordance with Section 626 of the
German Civil Code (BGB), the appointment of the Management Board mem-
ber is revoked due to gross breach of duty and/or the appointment of the Man-
agement Board member ends as a result of resignation from office without
the resignation being caused by a breach of duty by the company or health
impairments of the Management Board member or of a close family member
(“bad leaver cases”). In the event of extraordinary events or developments,
e.g. the acquisition or sale of part of the company, the Supervisory Board is
entitled to adjust the plan conditions of STI temporarily and appropriately at
its reasonable discretion. The same applies if changes in the accounting stand-
ards applicable to the company have a material impact on the parameters
used to calculate STI and in the event that a fiscal year comprises less than
twelve months (short fiscal year).
The following table provides an overview of the short-term variable remuner-
ation in 2020:
Annual bonus
Dr. Michael Schneider
Dr. Friedrich Klein
Assessment basis
Adjusted EBIT of last three years
(arithmetic mean)
Adjusted EBIT of last three years
(arithmetic mean)
% rate
0.33%
0.22%
1.16
1.16
Annette Stieve
(since October 1, 2020)
Adjusted EBIT of last three years
(arithmetic mean)
0.22%
1.16
TSR factor
(0.8 – 1.2)
Calculation
T033
Payout Cap
EUR 110.2 million x 0.33% x 1.16 = EUR 0.42 million 180% of fixed salary
EUR 110. 2 million x 0.22% x 1.16 = EUR 0.28 million 180% of fixed salary
EUR 110.2 million x 0.22% x 1.16 = EUR 0.28 million
p.a., pro rata for the period from October 1 until
December 31, 2020: EUR 0.07 million
180% of fixed salary
NORMA Group SE – Annual Report 2020
136
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT
Long-term variable remuneration, LTI
Assumptions for the calculation of the WACC (in %)
The long-term variable compensation consists of two components, the NORMA
Value Added-LTI (NOVA-LTI) and the Environmental, Social and Governance-
LTI (ESG-LTI).
• NOVA-LTI
NOVA-LTI is granted in the form of a backward-looking performance cash
plan in annual tranches, supplemented by a share purchase and share
retention obligation. The Management Board members are granted a
tranche from the Performance Cash Plan on January 1 of each grant fis-
cal year. Each tranche of the Performance Cash Plan has a term of three
years and covers the grant fiscal year and the two fiscal years preceding
the grant fiscal year (“performance period”). The relevant performance
criterion for LTI is the average adjusted NORMA Value Added (“NOVA”)
during the three-year performance period. The amount to be paid out
under LTI is calculated by multiplying the individual LTI percentage defined
in the service contract by the average adjusted NOVA during the perfor-
mance period. The individual LTI percentage is 1.5% for the Chairman and
1.0% for ordinary Management Board members.
The annual increase in value is calculated according to the following formula:
NORMA Value Added =
(adjusted EBIT x (1 – t)) – (WACC x capital employed)
The calculation of the first component is based on the adjusted Group earn-
ings before interest and taxes (adjusted NORMA Group EBIT) of the fiscal year
and the average corporate tax rate. The second component is calculated from
NORMA Group’s weighted average cost of capital (WACC) multiplied by the
capital employed. The weighted average cost of capital (WACC) is derived
from the following assumptions:
Risk-free interest rate
Market risk premium
Beta factor of NORMA Group
Cost of equity rate
Borrowing cost rate after taxes
WACC after taxes
2020
– 0.20
7.50
1.27
10.23
1.78
7.85
T034
2019
0.20
7.50
1.33
11.01
1.79
8.09
The base interest rate is derived from the interest rate structure data of
the Deutsche Bundesbank (three-month average: October 1 to Decem-
ber 31, 2020). The market risk premium represents the difference between
the expected return of a risky market portfolio and the risk-free interest rate.
NORMA Group relies on the recommendation of the Institute of Public Audi-
tors in Germany (IDW) to determine this. The beta factor represents the indi-
vidual risk of a share compared to a market index. It is initially determined as
the average value of the non-leveraged beta factors of the comparable
companies (peer group) and subsequently adjusted to the individual capital
structure of NORMA Group. The cost of equity is the sum of the following three
components: the risk-free interest rate, the weighted country risk of
NORMA Group, the product of the market risk premium and the leveraged
beta factor of the peer group. The credit spread used for the calculation of the
cost of debt capital was determined on the basis of conditions of NORMA Group’s
current external financing. Invested capital is calculated from Group equity
plus net financial liabilities as of January 1 of the fiscal year.
NOVA-LTI is limited to a maximum of 200% of the fixed annual salary for all
Management Board members. The company can pay out the amount in cash
or in company shares. If it is paid in cash, the Management Board members
are obliged to purchase shares in the company for an amount equivalent to
75% of the net amount paid out and to hold these shares for a period of four
years (share purchase and shareholding obligation). The Supervisory Board
of the company may decide at its reasonable discretion to issue shares in the
company in whole or in part in lieu of a cash payment. If the company issues
shares in the company rather than a cash payment, the members of the Man-
agement Board are likewise obliged to hold 75% of the issued shares in their
ownership for four years. Regardless of whether the company makes the pay-
out in cash or shares, 75% of the net payout under NOVA-LTI must be invested
in company shares and held in ownership for a period of four years. After
NORMA Group SE – Annual Report 2020
137
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT
termination of the service agreement, the holding obligation generally contin-
ues until twelve months after the legal end of the service agreement unless
the four-year holding period has expired beforehand.
The cases described with regard to STI for a departure during a current per-
formance period apply accordingly. In the event of extraordinary events or
developments, e.g. in the event of an acquisition or the sale of part of the com-
pany, the Supervisory Board is entitled to temporarily adjust the plan condi-
tions of LTI as appropriate in its reasonable discretion. The same applies if
changes in the accounting standards applicable to the company have a
significant impact on the parameters used to calculate LTI and in the event
that a fiscal year comprises less than twelve months (short fiscal year).
The following table provides an overview of NOVA-LTI in 2020:
• ESG-LTI
In addition to NOVA-LTI, ESG-LTI is the second component of longterm
variable compensation. ESG-LTI is a variable compensation element in the
form of a forward-looking performance cash plan in annual tranches, sup-
plemented by a share purchase and shareholding obligation for members
of the Management Board. Each tranche of ESG-LTI has a term of four
years. A tranche begins on January 1 of the grant fiscal year and ends at
the end of December 31 of the third year following the grant fiscal year
(“ESG performance period”). The amount paid out under ESG-LTI depends
on the achievement of environmental, social and governance targets (“ESG
targets”). ESG targets may include reducing greenhouse gas emissions,
increasing employee satisfaction, increasing customer satisfaction, reduc-
ing workplace accidents, and increasing sustainability, for example.
NOVA bonus / LTI
Assessment basis
% rate
Calculation
Dr. Michael Schneider
Dr. Friedrich Klein
NOVA of the last three years
(arthmetic mean)
NOVA of the last three years
(arthmetic mean)
1.00%
Annette Stieve
(since October 1, 2020)
NOVA of the last three years
(arthmetic mean)
1.00%
1.50%
EUR 6.8 million x 1.5% = EUR 0.10 million
EUR 6.8 million x 1.0% = EUR 0.07 million
EUR 6.8 million x 1.0% = EUR 0.07 million p.a., pro rata
for the period from October 1 to December 31, 2020:
EUR 0.02 million
T035
Acquisition of shares /
payment
75% / 25%
75% / 25%
75% / 25%
Cap
200% of fixed
annual salary
200% of fixed
annual salary
200% of fixed
annual salary
NORMA Group SE – Annual Report 2020
13 8
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT
The target amount of ESG-LTI is 20% of the fixed annual salary. The payout
amount is capped at 100% of the target amount. The payout amount under
ESG-LTI is due for payment at the end of the month following the month in which
the Supervisory Board has approved the company’s Consolidated Financial
Statements for the grant year. The company may pay the amount payable
under ESG-LTI in cash or in company shares. In the case of cash payment, the
Management Board members are obliged to purchase shares in the company for
the entire net amount paid out and to hold these shares for a period of one
year (“share purchase and shareholding obligation”). The company’s Super-
visory Board may decide at its reasonable discretion to issue shares in the
company in whole or in part in lieu of a cash payment. In this case, too, the
Management Board members are obliged to hold 100% of the shares issued
for one year. As a result, 100% of the net payout amount from the ESG bonus
must be invested in the company’s shares and be held in ownership for a
period of one year.
The cases described with regard to STI for a departure during a current
performance period apply accordingly. In the event of extraordinary events or
developments, e.g. the acquisition or sale of part of a company, the Supervi-
sory Board is entitled to temporarily adjust the plan conditions of ESG-LTI as
appropriate in its reasonable discretion. The same applies if changes in the
accounting standards applicable to the company have a material impact on
the parameters used to calculate ESG-LTI or if a fiscal year comprises fewer
than twelve months (short fiscal year).
Share-based compensation (applicable exclusively to former
members of the Management Board)
Tranches of share-based compensation (allotment in 2015, 2016 and 2017)
were granted for members of the Management Board who were appointed
to the Management Board before 2015. These members of the Management
Board left the company in fiscal year 2019 at the latest. The compensation is
composed of the following components:
Matching Stock Program (MSP) at the time of allotment
T036
Tranches
Option factor
2017
2016
2015
1.5
1.5
1.5
Number of
options
128,928
128,928
128,928
Excercise price (EUR)
End of retention
period
41.60
46.62
44.09
2021
2020
2019
The Matching Stock Program (MSP) provided a share price-based long-term
incentive to commit to the success of the company. MSP was a share- based
option right. For this purpose, the Supervisory Board specified a number of
stock options to be allotted each fiscal year with the reservation that the
Management Board member makes a corresponding personal investment in
the company. 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, 2019 and 2020). The stock options related to those shares allotted or
acquired and qualified in accordance with MSP stipulated in the Management
Board contract. The number of stock options is calculated by multiplying the
number of qualified shares held on the grant date (for the years 2015 to 2017,
85,952 shares per year) by the option factor determined by the Supervisory
Board. The option factor was or is recalculated for each tranche and amounts
or amounted to 1.5 for each of the tranches in 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 prereq-
uisite 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. 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 Notes to the Consolidated
Financial Statements.
NORMA Group SE – Annual Report 2020
13 9
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT Remuneration of the Management Board in fiscal year 2020
Management Board remuneration for fiscal year 2020 is reported in accord-
ance with the applicable accounting principles (DRS 17) and the recommen-
dations of the German Corporate Governance Code.
Management Board remuneration in 2020 in accordance with
accounting standard DRS 17
The total remuneration of the Management Board pursuant to Art. 315e in
conjunction with Art. 315a para. 2 and Art. 314 para. 1 no. 6a sentence 5 HGB –
Art. 314 and 315a HGB in the version applicable up to and including Decem-
ber 31, 2019, shall apply to this Remuneration Report pursuant to Art. 83
EGHGB (transitional provision to the Act on the Transposition of the Second
Shareholder Rights Directive) – is distributed among the individual members
of the Management Board as shown in the following table:
Management Board Remuneration 2020
Dr. Michael Schneider
Dr. Friedrich Klein
Annette Stieve
(since October 1, 2020)
Bernd Kleinhens
(until July, 31 2019)
Total
In EUR thousands
2020
2019
2020
2019
2020
2019
2020
2019
2020
Fixed components
Performance-related components
Long-term incentive effect
Total remuneration
614
420
130
1,164
423
572
438
1,433
397
280
90
767
334
409
219
962
102
70
23
195
n / a
n / a
n / a
n / a
n / a
n / a
n / a
n / a
310
572
181
1,063
1,113
770
243
2,126
T037
2019
1,067
1,553
838
3,458
In fiscal 2020, no expenses were recognized in connection with the termina-
tion of an activity in the current fiscal year. (2019: EUR 1,480 thousand in
expenses for Mr. Kleinhens in connection with the termination of his employ-
ment) were recognized in fiscal year 2020. The performance-related compo-
nents include only short-term annual bonuses. All other bonuses are included
under the long-term incentive effect. A provision has been recognized for the
variable remuneration components. Stock options under MSP (Matching Stock
Program, an expired share-based option right) are measured on an ongoing
basis and recognized as an expense under other provisions. The expenses in
fiscal year 2020 amount to EUR 226 thousand. The benefits promised to the
members of the Management Board in the event of regular termination of their
service (cf. Section 315e in conjunction 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 in the following table
NORMA Group SE – Annual Report 2020
140
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT Overview of the promised pensions of the Board members
Dr. Michael Schneider
Dr. Friedrich Klein
Annette Stieve
(since Oct. 1, 2020)
Bernd Kleinhens
(until July, 31 2019)
Total
In EUR thousands
2020
2019
2020
2019
2020
2019
2020
2019
2020
Present value of pension
Expended amount
2,875
1,032
1,843
838
703
336
367
314
n / a
38
n / a
n / a
n / a
n / a
n / a
279
3,578
1,406
T038
2019
2,210
1,431
This means there is no detailed guidance on the presentation of Management
Board remuneration for fiscal year 2020 because GCGC 2017 is no longer
applicable for fiscal year 2020, the new provisions of ARUG II are not yet appli-
cable – the provisions on the remuneration report contained therein only apply
to fiscal years beginning on or after January 1, 2021 – and GCGC 2020 no
longer contains any details on the presentation of Management Board remu-
neration. The Government Commission has recognized this regulatory vacuum
and is holding companies accountable for reporting appropriately on Man-
agement Board remuneration and not allowing any transparency gaps to
arise. Therefore, the presentation using the model tables familiar from previ-
ous years has been retained in this Remuneration Report to ensure that no
transparency gaps arise.
In accordance with the German Corporate Governance Code as amended on
December 16, 2019, the remuneration of the Management Board is presented
as follows using the model tables recommended in the version dated Febru-
ary 7, 2017 – broken down by grant for the reporting year and inflow in or for
the reporting year.
The present value of all pension obligations to former members of the Man-
agement Board and their surviving dependents amounted to EUR 817 thou-
sand as of December 31, 2020 (2019: EUR 847 thousand).
Remuneration of the Management Board in 2020 in accordance with the
German Corporate Governance Code
The German Corporate Governance Code as amended on February 7, 2017,
(GCGC 2017) still had to be taken into account in the Remuneration Report
for fiscal year 2019. The remuneration of the Management Board was broken
down into the amount granted for the reporting year and the amount received
in or for the reporting year; the recommended model tables were used to pres-
ent these amounts. The amendment of the GCGC was initially planned for
2019; due to delays in the Act on the Transposition of the Second Shareholder
Rights Directive (ARUG II), the new version of the GCGC, the version dated
December 16, 2019, was published on March 20, 2020, and thus came into
force on that date (hence in short: GCGC 2020).
GCGC 2020 no longer contains any model tables; the reasons for this are as
follows: “The code refrains from making its own recommendations on report-
ing on Management Board and Supervisory Board remuneration, including
the model tables for item 4.2.5 para. 3 GCGC 2017, because Section 162 of
the German Stock Corporation Act (AktG) now provides for a meaningful remu-
neration report. The information to be included in the remuneration report
pursuant to Section 162 AktG goes beyond the content of the Code model
tables. [....] The Government Commission sees no need to recommend further
content for the remuneration report and does not consider it its task to make
recommendations on the format of reporting on the remuneration of the
Management Board and Supervisory Board [....]”
NORMA Group SE – Annual Report 2020
141
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT Remuneration granted to the Management Board
In EUR thousands
Fixed remuneration
Benefit
Total
One-year variable remuneration
Multi-year variable remuneration
Total
Pension expenses
Total
Dr. Michael Schneider
Dr. Friedrich Klein
2020
2020 (Min)
2020 (Max)
585
29
614
534
862
1,396
543
2,553
585
29
614
0
0
0
543
1,157
585
29
614
1,080
1,200
2,280
543
3,437
2019
396
27
423
572
438
1,010
357
1,790
2020
2020 (Min)
2020 (Max)
386
11
397
356
575
931
389
1,717
386
11
397
0
0
0
389
786
386
11
397
713
792
1,505
389
2,291
T039
2019
324
10
334
409
219
628
266
1,228
Annette Stieve
(since October 1, 2020)
Bernd Kleinhens
(until July 31. 2019)
Total
In EUR thousands
2020
2020 (Min) 2020 (Max)
2019
2020
2020 (Min) 2020 (Max)
2019
2020
2020 (Min) 2020 (Max)
2019
Fixed remuneration
Benefit
Total
One-year variable remuneration
Multi-year variable remuneration
Total
Pension expenses
Total
99
3
102
89
144
233
38
373
99
3
102
0
0
0
38
140
99
3
102
178
198
376
38
516
n / a
n / a
n / a
n / a
n / a
n / a
n / a
n / a
n / a
n / a
n / a
n / a
n / a
n / a
n / a
n / a
n / a
n / a
n / a
n / a
n / a
n / a
n / a
n / a
n / a
n / a
n / a
n / a
n / a
n / a
n / a
294
16
310
572
256
828
279
1,417
1,070
43
1,113
979
1,581
2,560
970
4,643
1,070
43
1,113
0
0
0
970
2,083
1,070
43
1,113
1,971
2,190
4,161
970
6,244
1,014
53
1,067
1,553
913
2,466
902
4,435
NORMA Group SE – Annual Report 2020
142
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT The grant table does not show the actual compensation paid. It shows the
target values of the respective compensation components and their theoret-
ically possible minimum and maximum values for 2020. The defined expected
and target values provide the indication required by GCGC of what would be
paid out if the targets (EBIT, NOVA and ESG) were to be achieved as planned
or typically expected. If the targets are not actually achieved, the payout is
correspondingly lower. This is shown in the following table:
Inflow from Management Board member remuneration (GCGC)
In EUR thousands
2020
2019
2020
2019
2020
2019
2020
2019
2020
Dr. Michael Schneider
Dr. Friedrich Klein
Annette Stieve
(since October 1, 2020)
Bernd Kleinhens
(until July 31. 2019)
Total
Fixed remuneration
Benefits
Total
One-year variable remuneration
Multi-year variable remuneration
LTI tranche 2016–2018
NOVA-LTI
Total
Pension expenses
Total remuneration
585
29
614
420
0
100
520
543
1,677
396
27
423
572
0
438
1,010
357
1,790
386
11
397
280
0
70
350
389
1,136
324
10
334
409
0
219
628
266
1,228
99
3
102
70
0
18
88
38
228
n / a
n / a
n / a
n / a
n / a
n / a
n / a
n / a
n / a
n / a
n / a
n / a
n / a
n / a
n / a
n / a
n / a
n / a
294
16
310
572
113
256
941
279
1,530
1,070
43
1,113
770
0
188
958
970
3,041
T040
2019
1,014
53
1,067
1,553
113
913
2,579
902
4,548
NORMA Group SE – Annual Report 2020
143
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT In the 2020 financial year, no remuneration was paid to former members of
the Executive Board (inflow in 2019: EUR 1,144 thousand to Mr. Kleinhens,
Mr. Deggim and Mr. Stephenson).
Remuneration of the Supervisory Board
In accordance with the recommendations of the German Corporate Governance
Code as amended on December 16, 2019, the remuneration of the Chairman,
Vice Chairwoman and Chairpersons and members of committees should take
appropriate account of the greater time commitment involved. The Chairman
is paid double the remuneration of the other members of the Supervisory
Board, and the Vice Chairwoman is paid one and a half times this amount. In
addition, the Chairpersons and members of the Supervisory Board’s commit-
tees, with the exception of the Chairman of the General and Nomination
Committee, are remunerated separately. These are exclusively fixed remu-
nerations. Work is currently underway on a modified compensation system
for the Supervisory Board for the future. The Supervisory Board members will
be remunerated for their activities on the day after the 2021 Annual General
Meeting as follows:
No remuneration was paid to Supervisory Board members in fiscal year 2020
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 guide-
lines. The members of the Supervisory Board arrange private insurance or are
personally responsible for the statutory deductible of 10% of the loss for the
D&O insurance policy carried for the Management Board and the Supervisory
Board of NORMA Group up to a limit of 1.5 annual salaries.
Remuneration of the Supervisory Board in 2020
T041
Supervisory Board
Member
Günter Hauptmann
Erika Schulte
Rita Forst
Membership / Chairperson of a Committee
Chairman of the Supervisory Board
since September 1, 2020
Chairman of the General and Nomination
Committee since September 1, 2020
Chairman of the Strategy Committee
until September 30, 2020
Member of the General and Nomination
Committee until August 31, 2020
Vice Chairwoman of the Supervisory Board
Member of the Strategy Committee
Member of the General and Nomination
Committee since October 1, 2020
Member of the Audit Committee
until September 30, 2020
Chairwoman of the Strategy Committee
since October 1, 2020
Member of the Strategy Committee
until September 30, 2020
Remuneration
(EUR)
95,382.51
95,000.00
63,770.49
Dr. Knut J. Michelberger Chairman of the Audit Committee
95,000.00
Member of the General and Nomination
Committee
Member of the Audit Committee
Member of the Strategy Committee
since October 1, 2020
Chairman of the Supervisory Board
until August 31, 2020
Chairman of the General and Nomination
Committee until August 31, 2020
Mark Wilhelms
Lars M. Berg
(until August 31, 2020)
Total
62,513.66
73,333.34
485,000.00
NORMA Group SE – Annual Report 2020
144
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT Other Legally Required Disclosures
An overview of the information required under Section 315a paragraph 1 of
the German Commercial Code (Handelsgesetzbuch, HGB) is presented below:
Section 315a (1) no. 6 HGB
Section 315a (1) no. 1 HGB
NORMA Group SE’s share capital totaled EUR 31,862,400.00 on December
31, 2020. 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 that could result in such restrictions.
Section 315a (1) no. 3 HGB
There are no direct or indirect capital holdings exceeding one tenth of the vot-
ing 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 control 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 same way as other shareholders in accord-
ance with applicable legislation and the Articles of Association.
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 Chairperson and Vice
Chairperson 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 that 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 Associa-
tion that 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 sections 4 and
5 of the Articles of Association in line with the issue of new shares from Author-
ized Capital 2020 and, if Authorized Capital 2020 has not been used or not
used in full by June 29, 2025, after expiry of the authorization.
The Supervisory Board is authorized to amend the wording of Articles 4 and
6 of the Articles of Association to reflect the issue of new shares from Author-
ized Capital 2020. The same shall apply insofar as the authorization to issue
convertible bonds, bonds with warrants and/or profit participation rights with
or without conversion or option rights or conversion or option obligations in
accordance with the resolution of the Annual General Meeting of June 30,
2020, is not exercised during the term of the authorization or the corresponding
option or conversion rights or option or conversion obligations lapse due to
the expiry of exercise periods or in any other way.
NORMA Group SE – Annual Report 2020
145
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT Shares may be redeemed without the redemption or its implementation requir-
ing a further resolution by the Annual General Meeting. The retirement of
shares generally leads to a reduction in capital. However, the Executive Board
may, in derogation of this, determine that the capital stock shall remain
unchanged upon redemption and that instead the redemption shall increase
the proportion of the capital stock represented by the remaining shares in
accordance with Art. 8 par. 3 AktG. In this case, the Executive Board and
Supervisory Board are authorized to adjust the number of shares stated 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
June 30, 2020, 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 3,186,240 on or before June 29, 2025, (including that
day) by issuing up to 3,186,240 new registered shares against cash and/or
non-cash contributions (Authorized Capital 2020). The Management Board
is authorized, with the Supervisory Board’s consent, to exclude shareholders’
subscription rights wholly or in part, once or repeatedly, in certain cases for
capital increases under the Authorized Capital.
Authorized Capital 2015, which was resolved by the Annual General Meeting
on May 20, 2015, has been cancelled by resolution of the Annual General
Meeting on June 30, 2020. Article 5 of the Articles of Association of
NORMA Group SE has been changed accordingly.
Conditional Capital
In accordance with the resolution passed by the Annual General Meeting on
June 30, 2020, the Management Board is authorized, with the Supervisory
Board’s consent, to issue once or repeatedly on or before June 29, 2025, (includ-
ing that day) bearer or registered convertible bonds and/or bonds with war-
rants 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 collectively referred to as “bonds,” and to grant the
creditors of bonds conversion/option rights and/or conversion/option obliga-
tions to subscribe to a total of up to 3,186,240 new registered shares of
NORMA Group SE 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 the issuance of up to 3,186,240 new registered shares
(Conditional Capital 2020). The purpose of Conditional Capital 2020 is to issue
shares to the creditors of convertible bonds and/or bonds with warrants and/
or participation rights carrying a conversion/option right and/or a conversion/
option obligation, which will be issued based on the authorizations granted
by the Annual General Meeting of the company on June 30, 2020, by
NORMA Group SE or companies in which NORMA Group SE directly or
indirectly holds a majority of the votes and the capital.
The authorization of the Management Board to issue bonds with warrants
and convertible bonds and participation rights with warrants and convertible
rights and Conditional Capital 2015 resolved by the Annual General Meeting
on May 20, 2015, were cancelled by shareholder resolution of the Annual
General Meeting on June 30, 2020. Article 6 of the Articles of Association of
NORMA Group SE has been amended accordingly.
Authorization to acquire treasury shares
Pursuant to the resolution of the Annual General Meeting on June 30, 2020,
NORMA Group SE is authorized to acquire up to a total of 10% of the share
capital of NORMA Group SE at the time at which the resolution is adopted or – in
the event that this value is lower – at the time that the authorization is exer-
cised, for any permissible purpose by June 29, 2025, (including that day). The
Management Board is authorized to use shares of the company for any legal
purpose. The shareholders’ acquisition right to these treasury shares is thereby
excluded in certain cases.
NORMA Group SE is authorized to acquire its own shares also by using deriv-
atives such as put options, call options, forward purchases or a combination
of these instruments and to conduct corresponding derivative transactions.
The acquisition of shares using derivatives is limited to a number of shares
that does not exceed a proportionate amount of 5% of the share capital exist-
ing at the time of the resolution.
NORMA Group SE – Annual Report 2020
146
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT Report on Transactions with
Related Parties
In fiscal year 2020, there were no reportable transactions with related
companies or persons besides the minority activities of members of the
Management Board described in the Corporate Governance Report.
Section 315a (1) no. 8 HGB
NORMA Group’s financing agreements, including the contracts for the prom-
issory 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. The service agreements of Dr. Schneider and Dr. Klein also contain a
Change of Control clause. In this respect, reference is made to the
R EM UNERATION REPORT.
Section 315a (1) no. 9 HGB
Dr. Schneider’s and Dr. Klein’s Management Board service contracts include
a special termination right in the event of a change of control. If their service
contracts end due to this special termination right, the company will pay
severance compensation when the termination takes effect in the amount of
one and a half times the severance cap, but not more than the value of the
remuneration for the remaining terms of the service contracts.
NORMA Group SE – Annual Report 2020
147
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION4 CONSOLIDATED MANAGEMENT REPORT CONSOLIDATED
FINANCIAL
STATEMENTS
149
150
Consolidated Statement of
Comprehensive Income
Consolidated Statement of
Financial Position
153
242
Notes to the Consolidated Financial
Statements
Appendix to the Notes to the
Consolidated Financial Statements
151 Consolidated Statement of Cash Flows
245 Responsibility Statement
152
Consolidated Statement of Changes
in Equity
246
Independent Auditor’s Report
NORMA Group SE – Annual Report 2020
148
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
in EUR thousands
Note
2020
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)
(8)
(9)
(10)
(11)
(12)
(18, 19)
(13)
(13)
(13)
(16)
(24)
(21, 24)
(21, 24)
(24, 26)
(15)
952,167
– 1,797
3,767
– 417,467
536.670
19,181
– 158,350
– 298,189
– 79,167
20,145
456
– 15,221
– 14,765
5,380
97
5,477
– 43,598
– 42,976
– 622
0
595
595
– 43,003
– 37,526
5,670
– 193
5,477
– 37,642
116
0.18
NORMA Group SE – Annual Report 2020
T042
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
1.83
149
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Note Dec 31, 2020
Dec 31, 2019
in EUR thousands
Note Dec 31, 2020
Dec 31, 2019
Equity and Liabilities
T043
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
(18)
(18)
(19)
(23)
(21)
(17)
(22)
(23)
(21)
(21)
(21)
(8)
(29)
377,610
222,649
270,005
2,088
0
750
18,634
891,736
152,189
18,675
2,470
429
6,514
157,312
270
185,109
522,968
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
Total assets
1,414,704
1,514,340
Equity
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
31,862
210,323
– 33,938
381,063
589,310
200
589,510
16,542
14,801
387,814
495
167
25,727
0
0
56,151
501,697
23,848
90,177
34,967
998
8,118
10,212
1,419
5,032
148,726
323,497
825,194
(24)
(26)
(27)
(21)
(28)
(8)
(20)
(21)
(21)
(17)
(27)
(21)
(28)
(8)
(20)
(21)
(21)
(21)
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
Total equity and liabilities
1,414,704
1,514,340
NORMA Group SE – Annual Report 2020
150
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS 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
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
T044
2019
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
Note
2020
5,477
79,167
944
26,110
– 18,386
17,209
16,614
– 5,622
– 90
12,140
– 303
282
133,542
443
– 14,390
– 39,418
330
(18, 19)
(26, 27)
(17)
(21, 22,
23)
(21, 28)
(29)
(18, 19)
(24)
(21)
(21)
– 39,088
– 57,033
– 560
– 12,880
– 1,274
0
43,748
– 99,977
– 14
– 10,012
– 80,969
13,485
179,721
– 8,097
185,109
0
– 15,070
– 35,049
– 43
263,664
– 296,600
– 83
– 10,058
– 93,239
– 13,189
190,392
2,518
179,721
151
NORMA Group SE – Annual Report 2020
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY
in EUR thousands
Balance as of December 31, 2018 (as reported)
Effects of IFRS 16
Balance as of January 1, 2019
Result for the period
Exchange differences on translation of foreign operations
Cash flow hedges, net of tax
Costs of hedging, 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
capital
Capital
reserve
Other
reserves
Retained
earnings
Note
Non-controlling
interests
Total
equity
Total
T045
31,862
210,323
2,517
31,862
210,323
2,517
9,016
– 1,750
67
356,022
– 2,033
353,989
58,422
– 1,519
600,724
– 2,033
598,691
58,422
9,016
– 1,750
67
– 1,519
– 35,049
– 35,049
(21)
(21)
(24, 26)
(24)
1,717
– 2
1,715
27
– 123
602,441
– 2,035
600,406
58,449
8,893
– 1,750
67
– 1,519
– 35,049
– 43
– 43
Balance as of December 31, 2019 (as reported)
31,862
210,323
9,850
375,843
627,878
1,576
629,454
Balance as of January 1, 2020
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
(21)
(24, 26)
(24)
(24)
31,862
210,323
9,850
375,843
627,878
1,576
629,454
– 43,285
– 622
5,670
595
5,670
– 43,285
– 622
595
– 193
309
5,477
– 42,976
– 622
595
119
– 1,274
229
– 1,274
348
– 1,492
– 1,274
– 1,144
Balance as of December 31, 2020
31,862
210,323
– 33,938
381,063
589,310
200
589,510
NORMA Group SE – Annual Report 2020
152
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
General information
1. Group information
NORMA Group SE is the ultimate parent Company of NORMA Group. Its head-
quarters are located at 63477 Maintal, Edisonstrasse 4, in the vicinity of Frank-
furt, 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”.
Engineered Joining Technology – EJT: directly to OEMs
and
Standardized Joining Technology – SJT (until 2019: Distribution Services
(DS)): via retailers and sales representatives
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
APPENDIX TO THE NOTES:
NORMA Group’s shareholdings, please refer to the
“ VOTI NG R IGHTS”.
NORMA Group was established in 2006 as a result of the merger of Rasmus-
sen GmbH and the ABA Group. Rasmussen was founded in 1949 as Ras-
mussen 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 world-
wide applications.
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.
NORMA Group supplies its customers via two distribution channels:
The two distribution channels differ in terms of the degree of specification of
the products, while having intersections in production and development.
The area of EJT includes sophisticated, individually customized joining tech-
nology and is particularly characterized by close development partnerships
with OEMs (original equipment manufacturers). NORMA Group’s central devel-
opment 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 chal-
lenges their end markets and customers.
Via its Standardized Joining Technology (SJT) – formerly DS – which consists
of the two strategic business areas Water Management and Industry Appli-
cations, NORMA Group markets a broad range of high-quality, standardized
brand products. This also includes various products for stormwater manage-
ment, irrigation and water infrastructure solutions. In addition to its own global
distribution network, the company also relies on multipliers such as sales rep-
resentatives, retailers and importers. The brands ABA®, Breeze®, Clamp-All®,
CONNECTORS®, FISH®, Gemi®, Kimplas® NDS®, NORMA®, Raindrip®, R.G.RAY®,
Serflex®, TRUSTLENE® and TORCA® all represent technological expertise, high
quality and reliability and meet the technical standards of the countries in
which they are sold.
NORMA Group SE – Annual Report 2020
153
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS 2. Basis of preparation
The principal accounting policies applied in the preparation of these Consol-
idated Financial Statements for the fiscal year from January 1, 2020, to Decem-
ber 31, 2020, are set out below. These policies have been consistently applied
to all the years presented, unless otherwise stated.
The Consolidated Financial Statements have been prepared in euros. Unless
otherwise indicated, all amounts are stated in thousands of euros (EUR thou-
sands). All amounts have been rounded. Therefore, in individual cases, differ-
ences in the order of one thousand euros may arise when adding individual
values to the total value.
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 reg-
ulations under commercial law as set forth in Section 315e of the German
Commercial Code (HGB) for the year ended December 31, 2020.
The Consolidated Statement of Comprehensive Income has been prepared in
accordance with the total cost method.
Accounting standards applied for the first time in the current
fiscal year
The Group has applied the following standards and amendments for the first
time:
• Amendments to IAS 1 and IAS 8: Definition of “material”
• Amendments to IFRS 3: Definition of a Business Operation
• Amendments to IFRS 9, IAS 39 and IFRS 7: “Interest Rate Benchmark
Reform”
• Revised IFRS Framework
COVID-19 related rent concessions
In May 2020, the IASB issued COVID-19-Related Rent Concessions – Amend-
ment to IFRS 16 Leases. The amendments introduce an optional practical
expedient that simplifies how a lessee accounts for rent concessions that are
a direct consequence of COVID-19. A lessee that applies the practical expe-
dient is not required to assess whether eligible rent concessions are lease
modifications and accounts for them in accordance with other applicable
guidance. The practical expedient will only apply if:
The Consolidated Financial Statements of NORMA Group SE were prepared
by the Management Board on March 11, 2021, and are scheduled to be
released for publication after approval by the Supervisory Board on
March 18, 2021.
• the revised consideration is substantially the same or less than the original
consideration;
• the reduction in lease payments relates to payments due on or before
June 30, 2021; and
• no other substantive changes have been made to the terms of the lease.
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 to use certain accounting estimates. It is also required to
exercise its judgment in the process of applying the Group’s accounting poli-
cies. The areas involving a higher degree of judgment or complexity or areas
where assumptions and estimates are significant to the Consolidated Finan-
NOTE 6 “CRITICAL ACCOUNTING ESTI MATES
cial Statements are disclosed in
AN D JUDG ME NTS”.
The amendments are effective for periods beginning on or after June 1, 2020,
with earlier application permitted.
NORMA Group has not made use of the option in the fiscal year and treats
lease concessions as a modification under IFRS 16 if necessary.
Standards, amendments and interpretations to existing standards
that are not yet effective and have not been applied early by the Group.
The IASB has issued a number of other pronouncements. These recently imple-
mented accounting pronouncements as well as the pronouncements that have
not yet been implemented have no material impact on NORMA Group‘s
Consolidated Financial Statements.
NORMA Group SE – Annual Report 2020
154
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS
3. Summary of significant accounting policies
Consolidation
(a) Subsidiaries
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.
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 or liability resulting from a contingent consideration arrange-
ment. 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 meas-
ure any non-controlling interest in the acquiree either at fair value (full good-
will 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 trans-
actions 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 subsidiaries are reported sepa-
rately 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 consid-
eration 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 subsidi-
ary 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 associ-
ate, 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.
NORMA Group SE – Annual Report 2020
155
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS
T046
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
Valuation 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
NORMA Group SE – Annual Report 2020
156
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS Fair value estimation
(b) Transactions and balances
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,
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.
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
Foreign exchange gains and losses that relate to borrowings and cash and
cashequivalentsarepresentedinprofitorlosswithin“financialincome / costs”.
All other foreign exchange gains and losses are presented in profit or loss
within“otheroperatingincome / expenses”.
Level 3: Inputs for the asset or liability that are not based on observable
(c) Group companies
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, 2020 and 2019, 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.
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:
• Assets and liabilities for each Consolidated Statement of Financial Position
presented are translated at the closing rate on the date of that Consoli-
dated 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 separate component
Foreign currency translation
of equity.
(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.
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.
NORMA Group SE – Annual Report 2020
157
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS The exchange rates of the currencies affecting foreign currency translation
are as follows:
Exchange rates
T047
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 combi-
nation in which the goodwill arose.
Spot rate
Average rate
(b) Development costs
per EUR
Australian dollar
Brazilian real
Chinese renminbi yuan
Swiss franc
Czech koruna
British pound sterling
Indian rupee
Japanese yen
2020
2019
Dec 31,
2020
1.5896
6.3735
8.0225
1.0802
26.2420
0.8990
89.6605
Dec 31,
2019
1.5995
4.5157
7.8205
1.0854
1.6552
5.8874
7.8701
1.0704
25.4080
26.4527
0.8508
0.8892
80.1870
84.5867
1.6103
4.4147
7.7329
1.1126
25.6680
0.8774
78.8145
126.4900
121.9400
121.7705
122.0522
South Korean won
1,336.0000
1,296.2800
1,334.9643
1,304.6216
4.9340
24.4160
4.5597
10.0343
91.4671
10.0343
1.6218
36.7270
9.1131
1.2271
4.5953
4.7929
21.2202
24.5142
4.2568
4.4438
4.6370
21.5534
4.2968
117.5700
10.4882
117.8292
69.9563
82.6337
10.4468
10.4882
1.5111
1.5734
33.4150
35.6900
6.6843
1.1234
8.0413
1.1414
72.4412
10.5853
1.5271
34.7642
6.3606
1.1195
Malaysian ringgit
Mexican peso
Polish złoty
Serbian dinar
Russian ruble
Swedish krona
Singapore dollar
Thai baht
Turkish lira
US dollar
Intangible assets
(a) Goodwill
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.
Costs of research activities undertaken with the prospect of gaining new sci-
entific 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.
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 amor-
tization period of generally three to five years. Development costs which did
not meet the requirements are expensed as incurred.
NORMA Group SE – Annual Report 2020
158
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS
(c) Other intangible assets
Separately acquired other intangible assets are shown at historical cost less
accumulated amortization. Intangible assets acquired in a business combi-
nation 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 allo-
cate their cost. Other intangible assets which are determined to have indefi-
nite 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 accord-
ance 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 indef-
inite 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 eco-
nomic 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 appro-
priate, 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”.
NORMA Group SE – Annual Report 2020
159
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS
The estimated useful lives for property, plant and equipment (excluding rights
of use under IFRS 16) are as follows:
• fixed payments (including de facto fixed payments, less any leasing
incentives to be received)
• Buildings: 8 to 40 years
• Machinery and technical equipment: 3 to 18 years
• Tools: 3 to 10 years
• Other equipment: 2 to 20 years
• 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
Leasing activities of the Group and their accounting treatment
that the lessee will exercise a termination option
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 exten-
sion 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 : 2 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, however, leased
assets may not be used as collateral for borrowings.
As of January 1, 2019, leases are recognized as rights of use and correspond-
ing 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:
Lease payments are discounted at the interest rate underlying the lease if this
can be determined. Otherwise, they are discounted at the lessee’s incremen-
tal borrowing rate. Rights of use assets are measured at cost, which is com-
prised 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 buildings”. 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”.
NORMA Group SE – Annual Report 2020
160
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS i. Extension and termination options
Market-related
Some of NORMA Group’s real estate leases contain extension options. Termi-
nation 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.
• legal and local regulations to be observed for the (permanent) obligation,
• alternative lease payments for comparable assets.
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.
In determining the term of leases, all facts and circumstances that provide an
economic incentive to exercise extension options or not to exercise termina-
tion 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.
As of December 31, 2020, potential additional cash outflows from extension
options in the amount of EUR 3,390 thousand (Dec 31, 2019: EUR 1,516 thou-
sand) is not included in the lease liability as it is not reasonably certain that
the leases will be renewed. As of December 31, 2020, there were no potential
reduced cash outflows from termination options (Dec 31, 2019: EUR 626 thou-
sand).
The following considerations are taken into account when determining the
term of the leases or the inclusion or non-inclusion of extension and termina-
tion options:
Contract-related
Due to changes in estimates of the term or amount of the expected lease pay-
ments (index-based payments), there were increases in the right of use assets
and lease liabilities in the amount of EUR 1,721 thousand. In addition, there
were reductions due to changes in estimates in the right of use assets in the
amount of EUR 1,725 thousand and in the amount of EUR 1,863 thousand in
the lease liabilities.
• existence of renewal or purchase options and their conditions,
• an obligation to dismantle installations or restore them to their original
Impairment of non-financial assets
condition,
• amount of lease payments (including all variable payments) for an
(a) Assets with finite useful lives
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,
• natureoftheleasedasset(specificvs.generic / generalleasedasset;
extent to which the leased asset is critical to the lessee’s operations).
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 indi-
cations, the amortized carrying 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 impair-
ment no longer exist. These may not exceed the amortized cost of acquisition.
NORMA Group SE – Annual Report 2020
161
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS
(b) Goodwill and other assets with an indefinite useful life
Moreover, other intangible assets with an indefinite useful life, other intangi-
ble 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 inter-
nal management purposes. These are the operating and reportable segments
EMEA, Americas and Asia-Pacific.
There is currently no goodwill in the Group that can be directly allocated to an
individual entity because this reflects the enterprise value of the acquired entity
regardless of the transaction.
The Company normally determines the recoverable amount using measure-
ment methods based on discounted cash flows.
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.
For cash-generating units, NORMA Group first determines the relevant recov-
erable amount as fair value less costs to sell, which it compares with the
respective carrying amounts, including allocated goodwill in the case of impair-
ment 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 INTANGIBLE ASSETS’.
Inventories
Inventories are stated at the lower of cost or net realizable value. Net realiz-
able 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 qualifying assets in
accordance with IAS 23, so that the acquisition or production costs do not
include capitalized borrowing costs.
NORMA Group SE – Annual Report 2020
162
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS
Financial instruments
(a) Financial assets
Measurement
Financial assets are initially recognized at fair value plus transaction costs for
all financial assets not carried at fair value through profit or loss.
Classification
Since January 1, 2018, the Group has classified its financial assets in the
following measurement categories:
Debt instruments
The subsequent measurement of debt instruments depends on the Group’s
business model for managing the financial asset and the cash flow charac-
teristics of the financial asset.
• Debt instruments measured at amortized cost (AC);
• Debt instruments measured at fair value through equity (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).
The classification depends on the business model according to which
NORMA Group manages its financial assets and the characteristics 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 purchase 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.
A debt instrument is measured at amortized cost if the objective of the busi-
ness 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 finan-
cial income using the effective interest method. Gains and losses from derecog-
nition, impairment and currency translation are recognized directly in the Con-
solidated Statement of Comprehensive Income and reported in other
operatingincome / expenses.
A debt instrument that is held in a business model in which both the contrac-
tual 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 Comprehen-
sive 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 effec-
tive interest method. Gains and losses from currency translation are recog-
nized directly in the Consolidated Statement of Comprehensive Income and
reportedinotheroperatingincome / expenses.
NORMA Group SE – Annual Report 2020
163
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS
The impairment losses recognized in the Consolidated Statement of Compre-
hensive Income are disclosed separately in the section “Notes to the State-
ment of Comprehensive Income.”
Receivables that 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.
All other debt instruments that do not meet these two conditions must be
measured at fair value through profit or loss (FVTPL).
The criteria that the Group uses to determine if there is objective evidence of
an impairment loss include:
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.
• 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.
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
otheroperatingincome / expenses.
Impairments
Since January 1, 2018, NORMA Group has assessed on a forward-looking
basis the expected credit losses associated with its debt instruments that 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;
• Contract assets from research and development activities; and
• Other debt instruments measured at amortized cost.
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 that are not reasonably expected to be realizable in full or in part
are written down accordingly, thus directly reducing the gross carrying amount.
For cash and cash equivalents, receivables from the ABS program and fac-
toring (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 prob-
ability of default. To ensure that our investments always fulfill the requirement
of being investment-grade during their lifetime, we monitor changes in credit
risk by tracking published external credit ratings.
NORMA Group SE – Annual Report 2020
164
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS
(b) Financial liabilities
Financial liabilities primarily include trade payables, liabilities to banks,
derivative financial liabilities and other liabilities.
Financial liabilities that are measured at amortized cost
After initial recognition, financial liabilities are carried at amortized 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 finan-
cial 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 con-
tract is entered into and are subsequently remeasured at their fair value. The
method of recognizing the resulting gain or loss depends on whether the deriv-
ative 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 commit-
ments (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 objec-
tives and strategies for undertaking the hedging transaction.
Further information on the instruments used by the Group and the hedging can
21 (F ) ‘DERIVATIVE
be found in
NOTE 5 ‘FINANCIAL RISK MANAGEMENT ’ and
FINANCIAL INSTRUMENTS.’
The development of the hedging reserve in equity can be found in
NOTE 21
(F ) ‘DERIVATIVE FINANCIAL INSTRUMEN TS’.
(d) 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 enforce-
able 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 insol-
vency on the part of the Group or the counterparty.
NORMA Group SE – Annual Report 2020
165
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS
The following tables present the recognized financial instruments that are
offset, or subject to enforceable master netting arrangements and other sim-
ilar agreements but not offset, as of December 31, 2020 and 2019:
Offsetting of financial instruments
in EUR thousands
Dec 31, 2020
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, 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
Gross amounts of
financial
assets / financial
liabilities
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
T048
Net amount
429
157,534
2,470
185,109
345,542
477,991
1,419
148,948
10,212
638,570
450
162,888
4,792
179,721
347,851
541,898
913
143,621
19,126
705,558
222
222
222
222
502
502
502
502
429
157,312
2,470
185,109
345,320
477,991
1,419
148,726
10,212
638,348
450
162,386
4,792
179,721
347,349
541,898
913
143,119
19,126
705,056
429
157,312
2,470
185,109
345,320
477,991
1,419
148,726
10,212
638,348
350
162,386
4,792
179,721
347,249
541,898
813
143,119
19,126
704,956
0
0
100
100
100
100
NORMA Group SE – Annual Report 2020
166
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS (a) Offsetting arrangements
NORMA Group gives volume-based discounts 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 counter-
party. The table above shows the impact on the Group’s balance sheet if
TA B L E T 0 4 8 ‘ O F FS E T T I N G O F F I N A N C I A L
all set-off rights were exercised.
INSTRU ME NTS’
Current and deferred income tax
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.
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 subsid-
iaries 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.
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 tax credits not yet used. Deferred income tax is deter-
mined 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 lev-
ied by the same taxation authority on either the taxable entity or different tax-
able 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 available against which the tem-
porary differences can be utilized.
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 prob-
able that the temporary difference will not reverse in the foreseeable future.
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 con-
tributions 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.
NORMA Group SE – Annual Report 2020
167
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS
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 actuar-
ies using the projected unit credit method. The present value of the defined
benefit obligation is determined by discounting the estimated future cash out-
flows using interest rates of high-quality corporate bonds that are denomi-
nated 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, that are
not included within the net interest on the defined benefit liability are recog-
nized within retained earnings in other comprehensive income (OCI).
(c) Short-term employee benefits
Employee benefits with short-term payment dates include wages and sala-
ries, social security contributions, vacation pay and sickness benefits and are
recognized as liabilities at the repayment amount as soon as the associated
job has been performed.
(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 associated 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.
Past service costs are recognized fully in the period of the related plan
amendment.
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 gen-
erally 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".
For defined contribution plans, the Group pays contributions to publicly or pri-
vately administered pension insurance plans on a mandatory, contractual or
voluntary basis. The Group has no further payment obligations once the con-
tributions have been paid. The contributions are recognized as employee ben-
efits 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 volun-
tary dismissal in exchange for these benefits. The Group recognizes termina-
tion 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.
NORMA Group SE – Annual Report 2020
168
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS
Provisions
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 out-
flow of resources will be required to settle the obligation, and the amount has
been reliably estimated.
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 obli-
gations as a whole. A provision is recognized even if the likelihood of an out-
flow 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, uncertainties 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 eco-
nomic relationship with the recognized provision, the expenses from the provi-
sion 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.
Revenues from contracts with customers (revenue recognition)
probable taking into account our customer’s creditworthiness. Revenue is the
transaction price NORMA Group expects to be entitled to. Variable consider-
ation is included in the transaction price if it is highly probable that a signifi-
cant 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 ser-
vices and the receipt of payment exceeds twelve months and there is a sig-
nificant financing benefit either to the customer or NORMA Group. If a contract
contains more than one distinct good or service, the transaction price is allo-
cated to each performance obligation based on relative stand-alone selling
prices. If stand-alone selling prices are not observable, the Company reason-
ably estimates them. Revenue is recognized for each performance obligation
either at a point in time or over time.
(a) Sale of goods
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 discounts 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.
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, among other things, collectability of consideration is
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
NORMA Group SE – Annual Report 2020
169
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS judgments. Under the percentage-of-completion method, changes in esti-
mates 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 consideration in exchange
for goods or services that have been transferred to the customer. The impair-
ment 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 that 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.
Considerations 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.
Government grants
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.
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 meet-
ing the obligations.
Grants related to depreciable assets are recognized in profit or loss over the
periods that bear the expense related to the depreciation 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.
NORMA Group SE – Annual Report 2020
170
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS
4. Scope of consolidation
With NORMA Group SE, the Consolidated Financial Statements contain all
domestic and foreign companies that NORMA Group SE controls directly or
indirectly.
The Consolidated Financial Statements for 2020 include 7 domestic
(Dec 31, 2019: 8) and 44 foreign (Dec 31, 2019: 44) companies.
The composition of the Group changed as follows:
Change in scope of consolidation
T049
2020
2019
Total
Domestic
Foreign
Total
Domestic
Foreign
52
0
1
51
8
0
1
1
7
44
0
0
44
52
0
0
52
8
0
0
8
44
0
0
44
as of January 1
Additions
Disposals
of which mergers
as of December 31
The merger in 2020 relates to the merger of STATEK Stanzereitechnik GmbH
with NORMA Germany GmbH as of January 1, 2020.
There were no additional acquisitions or establishments during 2020.
NORMA Group SE – Annual Report 2020
171
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS
The list of NORMA Group companies is shown in detail in the following table:
List of Group companies of NORMA group as of December 31, 2020
T050
No.
Company
Central Functions
Registered address
held by
Direct parent
company
of NORMA Group SE
Currency
Equity 1
Result 1
Share in %
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
16
17
18
19
20
21
22
23
24
25
26
27
NORMA Distribution Center GmbH
Marsberg, Germany
DNL GmbH & Co KG
NORMA Germany GmbH
NORMA Verwaltungs GmbH
DNL France SAS
NORMA Autoline France SAS
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
Groen Bevestigingsmaterialen B.V.
Purmerend, Netherlands
NORMA Netherlands B.V.
NORMA Polska Sp. z o.o.
Purmerend, Netherlands
Slawniów, Poland
NORMA Group Distribution Polska Sp. z.o.o.
Slawniów, 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
Tagelswangen, Switzerland
NORMA Grupa Jugoistocna Evropa d.o.o.
Subotica, Serbia
Fijaciones NORMA S.A.U.
L’Hospitalet de Llobregat, Spain
NORMA Czech, s.r.o.
Hustopece, Czech Republic
NORMA Turkey Bağlantı ve Birleştirme
Teknolojileri Sanayi ve Ticaret Limited Şirketi
Kadıköy / İstanbul, Turkey
01
01
03
03
03
03
03
08
08
08
03
12
03
03
21
03
17
03
03
03
21
03
03
03
03
07
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
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
100.00
100.00
kEUR
kEUR
20
106,814
– 4
0 2
0 2
– 79
0 2
0 2
44
2,175
6,148
60,773 4
20
29,845
24,840
– 1,184
2,883
5,479
15,958
18,104
7,784
5,235
516
412
– 621
6,000
5,474
1,574
179
8
159,020
20,428
15,564
5,161
7,874
– 184
10,293
33,144
86,462
41
252,851
45,438
3,392
246
3,930,710 – 704,701
4,433
– 591
312,158
– 7,789
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
kGBP
kGBP
kEUR
kEUR
kEUR
kPLN
kPLN
kEUR
kRUB
kSEK
kSEK
kCHF
kRSD
kEUR
kCZK
100.00
kTRL
14,297
6,534
CONTINUED ON NEXT PAGE
NORMA Group SE – Annual Report 2020
172
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS List of Group companies of NORMA group as of December 31, 2020
(continued)
T050
No.
Company
Segment Americas
Registered address
held by
Direct parent
company
of NORMA Group SE
Currency
Equity 1
Result 1
Share in %
28
29
30
31
32
33
34
35
36
37
38
NORMA do Brasil Sistemas De Conexão Ltda. Atibaia, Brazil
NORMA Group México S. de R.L. de C.V. 3
Monterrey, Mexico
NORMA Distribution and Services S. de R.L.
de C.V.
Craig Assembly Inc.
Juarez, Mexico
Auburn Hills, MI, USA
National Diversified Sales, Inc.
Woodland Hills, CA, USA
NG AM FINSRV I, LLC
Auburn Hills, MI, USA
NORMA MANUFACTURING NA SW, LLC
(Tijuana)
NORMA Michigan, Inc.
NORMA Pennsylvania, Inc.
NORMA U.S. Holding LLC
R.G. RAY Corporation (Juarez)
Auburn Hills, MI, USA
Auburn Hills, MI, USA
Auburn Hills, MI, USA
Auburn Hills, MI, USA
Auburn Hills, MI, USA
Segment Asia-Pacific
NORMA Pacific Pty. Ltd.
Dandenong South, Victoria,
Australia
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.
Wuxi, China
NORMA Group Products India Pvt. Ltd.
Pune, India
KIMPLAS PIPING SYSTEMS PRIVATE LTD
Nashik, Maharashtra, India
Kimplas Limited
NORMA Japan Inc.
Essex, Great Britain
Tokyo, Japan
NORMA Products Malaysia Sdn. Bhd.
Ipoh, Malaysia
NORMA Korea Inc.
Seoul, Republic of Korea
NORMA Group Asia Pacific Holding Pte. Ltd.
Singapore, Singapore
NORMA Pacific (Thailand) Ltd.
Chonburi, Thailand
39
40
41
42
43
44
45
46
47
48
49
50
51
36
35
35
36
36
35
35
36
01
36
36
50
50
03
50
50
50
50
45
50
50
50
01
50
100.00
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
99.99
100.00
100.00
60.00
100.00
100.00
100.00
99.99
100.00
100.00
kBRL
kUSD
– 7,605
– 12,225
– 2,953
– 6,125
100.00
kMXN
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
kUSD
kUSD
kUSD
kUSD
kUSD
kUSD
kUSD
kUSD
5,139
77,807
8,328
4,810
357,561
43,386
– 162
40
– 16,180
– 10,044
93,170
– 2,500
69,321
– 5,458
20,712
– 1,092
122,492
– 437
100.00
kAUD
17,981
2,798
100.00
100.00
100.00
100.00
100.00
100.00
100.00
60.00
100.00
kCNY
kCNY
kCNY
kCNY
kINR
kINR
kGBP
kJPY
kMYR
25,473
– 4,735
260,911
23,491
186,557
59,768
218,259
6,520
588,603
31,072
1,731,504
– 41,615
737
34
63,392
– 55,297
32,861
1,536
100.00
kKRW
545,540
– 29,506
100.00
100.00
kSGD
kTHB
194,815
3,722
115,951
15,768
1_ Reported values according to IFRS as of December 31, 2020; except for NORMA Group Holding GmbH, NORMA Germany GmbH and NORMA Distribution Center GmbH;
these values are prepared according to German GAAP as of December 31, 2020, but not yet finally audited. The values are translated with the exchange rates according to
NOTE 3 'SUMMARY OF SI GNIFICANT ACCOUNTING P RINCIPLES – IMPAIRMENT O F NON-FINANCIAL ASS ETS'.
2_A profit pooling contract exists.
3_Maquiladora operation of company No. 35.
4_Merger of STATEK Stanzereitechnik GmbH with NORMA Germany GmbH as of January 1, 2020.
NORMA Group SE – Annual Report 2020
173
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS 5. Financial risk management
(a) Market risk
Financial risk factors
The Group’s operations expose it to a variety of financial risks, including mar-
ket, 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.
Foreign exchange risk
NORMA Group operates as an internationally active Company in 100 differ-
ent countries and is exposed to the currency risk resulting from various foreign
currency positions in respect of the most important currencies: the US dollar,
Britishpound,Chineserenminbi,Indianrupee,Polishzłoty,Swedishkrona,
Swiss franc, Czech koruna, Serbian dinar and Singapore dollar.
Overview of financial risks
T051
Risk
Risk from
Assessment
Management
Future transactions and
recognized financial assets and liabilities
Market risk –
Foreign exchange risk
Market risk – Interest rate risk Long-term borrowings at variable interest rates
Cash and cash equivalents, derivative financial
Default risk
instruments, trade receivables and contractual assets
Payment obligations arising from
borrowings and other liabilities
Liquidity risk
Cash flow projections and
sensitivity analysis
Sensitivity analysis
Age structure analysis and
credit rating
Rolling cash flow forecasts
Forward exchange contracts and
natural hedges
Interest rate swaps
Diversification of bank balances,
credit limits and letters of credit
Availability of committed credit lines and
facilities and trade working capital management
as well as cash items
Financial risk management is performed by the Group Treasury & Insurance
department (Group Treasury). The responsibilities and necessary controls
related to risk management are defined by the Group’s management. The
Group Treasury 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 inter-
nal and external 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.
Taking into account the respective risk-bearing capacity of the subsidiaries,
Treasury Risk Management strives to achieve a reasonable degree of hedg-
ing 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.
NORMA Group SE – Annual Report 2020
174
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS
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 comprehen-
sive income in the hedging reserve as a component of equity.
In addition, the Group uses forward exchange contracts to hedge intercom-
pany financing transactions that involve foreign exchange risk arising from
intercompany loans denominated in non-functional currencies. The Group des-
ignates 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 hedg-
ing 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 that relate to the hedged underlying
transaction (“aligned forward element”) are also included in this item.
For more information on the foreign currency risk hedging instruments used by
NOTE 21 (F ) ‘DERIVATIVE FINANCIAL I NSTRUMENTS.’
the Group, please refer to
In accordance with the Group guideline, the essential contractual conditions
of the forward transactions for all hedging relationships 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
T052
Dec 31, 2020
Dec 31, 2019
in EUR thousands
+ 10%
– 10%
+10%
– 10%
Currency relation
EUR / USD
Profit before tax
EUR / GBP
Profit before tax
EUR / CNY
Profit before tax
EUR / INR
Profit before tax
EUR / PLN
Profit before tax
EUR / SEK
Profit before tax
EUR / CHF
Profit before tax
EUR / CZK
Profit before tax
EUR / RSD
Profit before tax
EUR / SGD
Profit before tax
– 64
30
– 139
– 89
647
255
74
115
– 230
– 1
78
– 36
169
108
– 791
– 312
– 90
– 141
281
1
– 607
743
121
– 148
– 634
– 62
890
339
63
273
– 63
– 136
776
76
– 1,088
– 415
– 77
– 334
77
167
Interest rate risk
NORMA Group’s interest rate risk arises from long-term borrowings with var-
iable interest rates. Borrowings issued at variable interest rates expose the
Group to cash flow interest rate risk which is partially offset by hedges (inter-
est rate swaps). As there are currently no signs of a more restrictive monetary
policy in the eurozone, NORMA Group considers the risk of interest rate
increases for the euro to be unlikely in the short term. In the longer term, how-
ever, the risk of interest rate increases is considered possible. On the other
hand, in view of the current low interest rate level in the eurozone, the oppor-
tunities that could result from a further decline in interest rates are considered
unlikely.
NORMA Group SE – Annual Report 2020
175
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS In the USD area, on the other hand, further interest rate reductions are con-
sidered 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 existing swaps cover around 26% (2019: 34%) of the outstanding
variable-rate loans. On the one hand, this reflects the expectations of a con-
tinuously low interest rate level and is also due to the fact that rising (currently
negative) interest rates in the euro area would initially not have any negative
impact at all on the floated financial instruments. In the floating-rate USD
loans, the comparable hedge ratio is 63%. For further information on the
instruments used by the Group to hedge the interest rate risk, please refer to
NOTE 2 1 (F ) ‘ DERIVATI VE FINANCI AL INSTRUMENTS.’
Below, the effects of changes in interest rates are analyzed for bank borrow-
ings 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.
In fiscal year 2020, if interest rates on euro- and US-dollar-denominated bor-
rowings had been 100 basis points (BPS) (2019: 100 BPS) higher with all
other variables held constant, profit before tax for fiscal year 2020 would have
been EUR 1,564 thousand lower (2019: EUR 1,183 thousand lower) and other
comprehensive income would have been EUR 568 thousand higher (2019:
EUR 1,531 thousand higher with a 100 basis points shift).
In fiscal year 2020, if interest rates on euro- and US-dollar-denominated
borrowings had been 50 basis points (2019: 50 BPS) lower with all other
variables held constant, profit before tax for fiscal year 2020 would have
been EUR 207 thousand higher (2019: EUR 84 thousand higher). Other
comprehensive income would have been EUR 270 thousand lower (2019:
EUR 786 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
RISK AND OPPORTUNIT Y REPORT.
(b) Credit risk
The credit risk incurred by the Group is the risk that counterparties fail to meet
their obligations arising from operating activities and from financial transac-
tions. Credit risk arises from cash and cash equivalents and deposits with
banks and financial institutions, 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 operat-
ing activities and financial transactions, each counterparty is assigned a credit
limit, the use of which is monitored regularly.
In order to reduce the credit risk arising from our investing activities and deriv-
ative 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 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.
NORMA Group SE – Annual Report 2020
176
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS
As of December 31, 2020, the credit exposure for the gross carrying amounts
of cash and cash equivalents and other financial assets was as follows:
In the course of the contractual adjustments to the promissory note documen-
tations, NORMA Group was also able to extend some promissory note por-
tions by another year and thus further optimize the maturity profile for the Group.
Credit risk exposure from cash and cash equivalents and
other financial assets
T053
as of December 31, 2020
in EUR thousands
Risk class 1 – low risk
as of December 31, 2019
in EUR thousands
Risk class 1 – low risk
Equivalent to
external rating
AAA – BBB –
Gross carrying
amount not
credit-impaired
193,983
Gross carrying
amount
credit-impaired
0
Equivalent to
external rating
AAA – BBB –
Gross carrying
amount not
credit-impaired
193,378
Gross carrying
amount
credit-impaired
0
Further details on the credit risk positions for trade receivables can be found
under
NOTES 21 (A) "TRADE AND OTHE R RECEIVABLES".
(c) Liquidity risk
Prudent liquidity risk management requires that sufficient cash and market-
able securities be held, that funding be available at appropriate levels through
committed credit lines, and that the Group be able to close out market posi-
tions. Due to the dynamic nature of the underlying business, Group Treasury
strives to maintain flexibility in funding by maintaining the availability of com-
mitted credit lines.
The remaining promissory note loans from 2013, 2014 and 2016 (outstand-
ing volume on December 31, 2020: EUR 219 million) were each issued in
5-, 7- and 10-year tranches, as well as partly in EUR and USD tranches.
Scheduled repayments from the promissory note loan from 2013 in the
amount of EUR 29 million were made in 2020. An unscheduled repayment
of EUR 25.1 million for the promissory note loan from 2014 was made in
December 2020.
In December 2019, the current syndicated bank loan from 2014 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 vol-
ume, was refinanced before maturity in 2022. Due to the current favorable
market environment, this refinancing was carried out by taking out a new
syndicated bank loan consisting of euro and dollar tranches (as of Decem-
ber 31, 2020: EUR 238.6 million) and a Commercial Paper program (as of
December 31, 2020: EUR 20 million). In addition, a revolving facility in the
amount of EUR 50 million and a flexible accordion facility based on leverage
were included. Both lines were unused as of December 31, 2020. The loan
agreement has been concluded for a term of five years and includes two
options to extend it by another year each. The first extension option was exer-
cised in 2020. The revolving credit facility was drawn in 2020 for an amount
related to COVID-19 of approximately EUR 39 million over a period of approx-
imately 2 months and repaid in June 2020.
In addition, the new syndicated bank loan also includes a sustainability com-
ponent. This links the financing conditions to NORMA Group’s commitment in
the area of corporate responsibility. This commitment is measured by a rating
from an external service provider. By improving its sustainability rating, the
company will be able to further reduce the interest burden of financing. This
improvement was already achieved in 2020. It was therefore already possible
to reduce the agreed interest margin accordingly last year.
The Commercial Paper program launched in 2019 with a total volume of up
toEUR300millionconsistsofshort-term(2 – 12weeks)bearerbonds.The
revolving issuance of such short-term debt securities enables the Group to
manage and optimize its short-term financing requirements even more flexi-
bly via the money and capital markets in addition to its current credit lines
with various banks.
NORMA Group SE – Annual Report 2020
177
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS
Due to the uncertain COVID-19 pandemic situation, NORMA Group agreed
on a flexible liquidity line of EUR 80 million in the second quarter of 2020,
however, which did not have to be utilized as of December 31, 2020.
The liquidity situation is continuously monitored with regard to how business
is developing, investments planned and the repayment of loans.
The following table contains the contractually agreed, undiscounted future
payments. Financial liabilities denominated in foreign currencies are translated
in the consolidated balance sheet at the closing rate. Interest payments on
financial instruments with a variable interest rate are determined on the basis
of the interest rates on the reporting date.
Maturity structure of non-derivative financial liabilities
as of December 31, 2020
in EUR thousands
Borrowings
Trade and other payables
Other financial liabilities
as of December 31, 2019
in EUR thousands
Borrowings
Trade and other payables
Other financial liabilities
up to 1 year
97,683
148,726
10,212
256,621
up to 1 year
57,594
143,119
17,496
218,209
> 1 year
up to 2 years
> 2 years
up to 5 years
10,244
0
0
10,244
360,466
0
0
360,466
> 1 year
up to 2 years
> 2 years
up to 5 years
110,813
0
0
110,813
379,415
0
1,631
381,046
T054
> 5 years
42,330
0
0
42,330
> 5 years
43,160
0
0
43,160
NORMA Group SE – Annual Report 2020
178
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS
The maturity structure of the derivative financial instruments based on cash
flows is as follows:
Maturity structure of derivative financial instruments
T055
as of December 31, 2020
in EUR thousands
Derivative receivables – gross settlement
Cash outflows
Cash inflows
Derivative liabilities – gross settlement
Cash outflows
Derivative receivables – net settlement
Cash outflows
as of December 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
up to 1 year
> 1 year
up to 2 years
> 2 years
up to 5 years
> 5 years
– 24,259
24,688
– 65
– 1,354
– 990
0
0
0
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
NORMA Group SE – Annual Report 2020
179
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS
Capital risk management
NORMA Group’s objectives when managing capital are to ensure that it will
continue to be able to repay its debt and remain financially 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 State-
ments as well as on special definitions of the bank facility agreements. 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.
There were no covenant breaches in 2020.
6. Critical accounting estimates and judgements
Estimates and judgments are continually evaluated and are based on histor-
ical 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 result-
ing accounting estimates will, by definition, seldom 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.
Estimates and discretionary decisions due to the COVID-19 pandemic
Estimates and discretionary decisions can affect the amounts of the assets
and liabilities reported, the disclosure of contingent assets and liabilities as of
the reporting date and the reported amounts of revenues and expenses
during the reporting period.
In the past fiscal year, NORMA Group’s business and economic environment
was adversely affected by the coronavirus pandemic (COVID-19), whereby
certain mitigating effects resulted from the various measures taken by the com-
pany or by governments and countries worldwide, including financial support.
NORMA Group’s order intake, sales revenues and earnings figures were
adversely affected by COVID-19 in the past fiscal year. The effects of COVID-
19 differed considerably depending on the region and customer industry. Due
to the ongoing spread of the virus and the resulting restrictions on public life,
it is difficult to predict the duration and extent of the resulting impact on
NORMA Group’s assets, liabilities, earnings and cash flows. The estimates
and assumptions made in preparing the Consolidated Financial Statements
as of December 31, 2020, that are relevant to the financial statements were
based on the knowledge available at the time and the best information avail-
able. NORMA Group applied a scenario in which it assumed that the current
COVID-19 situation would not be of a long-term nature. Accordingly,
NORMA Group assumes that the impact from this on the Consolidated Finan-
cial Statements will not be of a serious material nature. COVID-19-related
effects on the Consolidated Financial Statements could still result from the
following effects:
• declining and more volatile share prices
• interest rate adjustments in various countries
• the increasing volatility of foreign currency exchange rates
• deteriorating creditworthiness, payment defaults or delayed payments
• delays in order intake and also in order execution or contract perfor-
mance, contract cancellations, adjusted or modified revenue and cost
structures, volatility in commodity markets, limited or difficulty in making
forecasts and projections due to uncertainties regarding the amount and
timing of cash flows
• volatility on commodity markets
These factors may affect fair values and the carrying amounts of assets and
liabilities as well as cash flows. The actual amounts may differ from the esti-
mates and discretionary judgments made. The company believes that the
assumptions made reasonably reflect the situation at the time the Consoli-
dated Financial Statements were prepared.
NORMA Group SE – Annual Report 2020
180
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS
In the past fiscal year, this information, among other items, was included in
the calculation of expected credit losses on trade receivables. Furthermore,
the assessment of the loss-free valuation of inventories was updated to take
into account the expected effects of the COVID-19 pandemic, which did not
have any significant impact. In addition, impairment tests were performed for
the cash-generating units (EMEA, Americas and APAC) based on different
scenarios that confirmed the recoverability of the respective underlying car-
rying amounts.
Estimated impairment of goodwill
NORMA Group tests annually whether goodwill has suffered any impairment
N OT E 3 ‘ S U M M A RY O F
in accordance with the accounting policy stated in
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 ES – I M PA I R M E N T O F N O N - F I N A N C I A L AS S ETS ’.
The recoverable amounts of cash-generating units have been determined
based on fair value less costs to sell calculations. These calculations are based
NOTE 18
on discounted cash flow models, which require the use of estimates.
‘G OODWILL AN D OTHER INTANGIBLE ASSETS’
In 2020 and 2019, no impairment of goodwill, which amounted to
EUR 377,610 thousand on December 31, 2020 (Dec 31, 2019:
EUR 393,087 thousand), was necessary.
Income taxes
The Group is subject to income taxes in numerous jurisdictions. Significant
judgments are required in determining the worldwide liabilities for income
taxes. There are transactions and calculations for which the ultimate tax deter-
mination 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, 2020, income tax liabilities were EUR 5,032 thousand
(Dec 31, 2019: EUR 3,712 thousand) and deferred tax liabilities were
EUR 56,151 thousand (Dec 31, 2019: EUR 69,562 thousand).
Pension benefits
The present value of the pension obligations depends on a number of factors
determined on an actuarial basis using a number of assumptions. The assump-
tions 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 discount-
ing the estimated future cash outflows using the interest rates of high-quality
corporate bonds.
The Group determines the appropriate discount rate on the balance 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
NOTE 3 ‘SUMMARY
market conditions. Additional information is disclosed in
OF SIGNIFICANT ACCOUNTING PRINCIPLES – EMPLOYEE BENEFITS.’
Pension liabilities amounted to EUR 16,542 thousand on December 31, 2020
(Dec 31, 2019: EUR 15,890 thousand).
Useful lives of property, plant and equipment and intangible assets
The Group’s management determines the estimated useful lives and related
depreciation / amortizationchargesforitsproperty,plantandequipmentand
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 write-off
or write-down technically obsolete or non-strategic assets that have been
abandoned or sold.
NORMA Group SE – Annual Report 2020
181
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS
Accounting for leases
7. Adjustments
In connection with the accounting for leases, estimation uncertainties and
NOTE 3 ‘SUMMARY OF
discretionary decisions arise, which are described in
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 ES – L EA S I N G ACT I V I T I ES O F T H E G R O U P A N D
THE IR ACCOUNTING TREATMENT (FROM JANUARY 1, 2019).’
Business combinations
The management adjusts certain expenses and incomes for operational man-
agement purposes. Hence, the following results which are adjusted by these
expenses, reflect the Management Board’s perspective. In contrast to the prior
years, from the 2020 fiscal year onwards only those expenses and income
are adjusted within operating profit (EBIT) that are related to a business
combination.
In our accounting for business combinations, judgment is required in deter-
mining 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 con-
siderable judgment. The necessary measurements are based on information
available on the acquisition date and are based on expectations and assump-
tions 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:
Accordingly, the expenses from the transformation program “Get on track”,
which were recognized in the amount of EUR 25,222 thousand within employee
benefit expenses and in the amount of EUR 3,856 thousand within other
operating expenses, were not adjusted in fiscal year 2020 and are included
in EBIT.
In fiscal year 2020 no adjustments were made within EBITDA (earnings before
interest, taxes, depreciation of property, plant and equipment and amortiza-
tion of intangible assets).
• 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 of assets may
result in additional expense from impairment charges.
• Subsequent changes in the estimated fair values of liabilities and provi-
sions may result in additional expense (if increasing the estimated fair
value) or additional income (if decreasing the estimated value).
As in prior years, depreciation of property, plant and equipment from purchase
price allocations in the amount of EUR 3,485 thousand within EBITA (earnings
before interest, taxes and amortization of intangible assets) and amortization
of intangible assets in the amount of EUR 21,660 thousand from purchase
price allocations within EBIT were adjusted.
The adjustments in the previous year mainly relate to other operating expenses
(EUR 2,920 thousand), employee benefit expenses (EUR 9,935 thousand) and
cost of materials (EUR 213 thousand) in connection with the rightsizing pro-
gram initiated in the fourth quarter of 2018 to optimize Group structures. The
adjustments within employee benefit expenses relate to costs for project hours
of internal employees of the core workforce, costs for temporarily hired project
employees as well as costs for severance payments made.
NORMA Group SE – Annual Report 2020
182
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS
In addition, expenses for integration costs of Kimplas and STATEK
(EUR 363 thousand), which were acquired in fiscal year 2018, were adjusted
within other operating expenses (EUR 310 thousand) and employee benefit
expenses (EUR 53 thousand) in fiscal year 2019.
Besides the adjustments mentioned, depreciation of property, plant and equip-
ment from purchase price allocations in the amount of EUR 3,398 thousand
within EBITA (earnings before interest, taxes and amortization of intangible
assets) and amortization of intangible assets in the amount of EUR 22,484 thou-
sand from purchase price allocations within EBIT were adjusted in 2019 as in
past years.
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.
The following table shows profit or loss net of these expenses:
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)
2020
unadjusted
Step-up effects
from purchase
price allocations
Total
adjustments
2020
adjusted
T056
952,167
– 1,797
3,767
– 417,467
536,670
– 139,169
– 298,189
99,312
– 48,174
51,138
– 30,993
20,145
– 14,765
5,380
97
5,477
– 193
5,670
0.18
0
0
0
0
0
0
0
0
3,485
3,485
21,660
25,145
0
25,145
– 6,300
18,845
0
18,845
952,167
– 1,797
3,767
– 417,467
536,670
– 139,169
– 298,189
99,312
– 44,689
54,623
– 9,333
45,290
– 14,765
30,525
– 6,203
24,322
– 193
24,515
0.77
CONTINUED ON NEXT PAGE
0
0
3,485
3,485
21,660
25,145
25,145
– 6,300
18,845
18,845
NORMA Group SE – Annual Report 2020
183
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS Profit and loss net of adjustments (continued)
T056
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)
2019
unadjusted
Integration
costs
Step-up effects
from purchase
price allocations
“Rightsizing /
Footprint”
Total
adjustments
2019
adjusted
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
0
310
53
363
363
363
363
– 80
283
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
19,503
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
29,392
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
87,814
2.76
NORMA Group SE – Annual Report 2020
184
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS
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
T057
EMEA
Americas
Asia-Pacific
Consolidated Group
in EUR thousands
2020
2019
2020
2019
2020
2019
2020
2019
Engineered Joining Technology (EJT)
Standardized Joining Technology (SJT) (2019: DS)
Other revenues
303,102
103,862
2,552
409,516
359,776
123,052
3,142
485,970
145,955
238,801
743
385,499
205,001
244,679
1,088
450,768
103,540
52,852
759
157,151
100,681
62,439
238
163,358
552,597
395,515
4,055
952,167
665,458
430,170
4,468
1,100,096
Revenues in 2020 decreased by EUR 147,929 thousand compared to 2019.
This development resulted from negative organic growth. This was mainly
due to the COVID-19-related standstill of the global economy in the second
quarter. Negative currency effects also contributed to negative development.
For the analysis of sales by region, please refer to
N OT E 3 0 ‘ S E G M E N T
REPORTING.’
Contract assets and liabilities
Revenue by category
in EUR thousands
Revenues from the sale of goods
Revenues from other services
Other revenue
2020
947,017
1,498
3,652
952,167
T058
2019
1,093,903
1,750
4,443
1,100,096
Other revenue mainly consists of revenue from the sale of production residues
in metal production.
Revenues in 2020 include income of EUR 791 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 2019, EUR 1,758 thousand in revenues from
construction contracts are included.
Contract assets represent revenues from development services rendered that
were realized based on the ratio of costs already 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 liabili-
ties in the amounts of EUR 270 thousand and EUR 998 thousand respectively
(2019: EUR 525 thousand and EUR 420 thousand respectively) are expected
to be realized or settled within the next twelve months. The contract liabilities
from advance payments received in the amount of EUR 420 thousand recog-
nized as of January 1, 2020, were recognized as sales revenues, net of any
sales taxes, in the fiscal year.
Transaction price of unsatisfied performance obligations
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.
NORMA Group SE – Annual Report 2020
185
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS 9. Materials and consumables used
Raw materials and consumables used comprised the following:
Raw materials and consumables used
in EUR thousands
Cost of raw materials, consumables and supplies
Cost of purchased services
2020
– 380,999
– 36,468
– 417,467
T059
2019
– 444,876
– 32,752
– 477,628
The raw materials and consumables used lead to an increased ratio of 43.8%
(2019: 43.4%). In relation to the total value, raw materials and consumables
used also increased with a ratio of 43.8% compared to prior year’s ratio
(2019: 43.1%).
10. Other operating income
Other operating income comprised the following:
The increase in income from the reversal of provisions is attributable to the
valuation of the tranches of the Long Term Incentive Plan (LTI) of NORMA Group.
The LTI is a share-based payment plan with cash settlement in the form of
virtual shares and takes into account both, the performance of the Company
and the share price development.
The income from the reversal of liabilities is mainly related to the reversal of
personnel-related obligations.
NORMA Group has applied short-time work for its employees at various loca-
tions, which explains the increase of income from government grants in 2020
compared to the prior fiscal year. The payments made by NORMA Group to
the employee for the statutory short-time working allowance via the payroll
represents a transitory item and is offset against the inflows from the reim-
bursements. In contrast, reimbursements for social security expenses to be
borne by the employer are classified as government grants and reported as
other operating income.
Other operating income
in EUR thousands
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
2020
8,727
1,614
5,195
310
799
85
98
1,491
101
761
19,181
T060
2019
6,092
1,516
2,491
27
874
246
412
606
147
1,219
13,630
The other operating income in fiscal year 2020 was EUR 5,551 thousand
higher than in fiscal year 2019. The other operating income mainly included
foreign exchange gains from operating activities in the European area as well
as income from the reversal of liabilities and of unused provisions.
NORMA Group SE – Annual Report 2020
186
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS
11. Other operating expenses
Other operating expenses comprised the following:
Other operating expenses
in EUR thousands
Consulting and marketing
Expenses for temporary workforce and
other personnel-related costs
Freights
IT and telecommunications
Rentals and other building costs
Travel and entertainment
Currency losses operational
Research & development
Vehicle costs
Maintenance
Commission payable
Non-income-related taxes
Insurances
Office supplies and services
Write-offs and impairment losses on
trade accounts receivable
Guaranties
Other administrative expenses
Others
2020
– 19,234
– 24,508
– 32,011
– 18,042
– 6,333
– 3,185
– 10,038
– 2,952
– 2,075
– 3,198
– 4,735
– 3,348
– 3,058
– 2,044
– 4,568
– 6,587
– 7,867
– 4,567
– 158,350
T061
2019
– 18,129
– 32,554
– 31,363
– 17,326
– 5,364
– 10,907
– 6,330
– 3,099
– 2,856
– 3,652
– 6,150
– 3,052
– 3,161
– 2,734
– 946
– 1,670
– 6,949
– 1,637
– 157,879
Other operating expenses for 2020 were 0.3% higher than other operating
expenses for 2019.
The development of other operating expenses compared to the previous year
is also influenced by the COVID-19 pandemic in fiscal year 2020.
The increased risk of customer defaults due to the COVID-19 crisis and higher
write-offs on trade accounts receivable had a negative impact on other oper-
ating expenses. In addition, foreign exchange losses increased compared to
the previous year due to strong exchange rate fluctuations in the fiscal year.
Consulting costs increased slightly due to the ongoing “Get on track” program
in 2020. Consulting costs incurred as part of the “Get on track” program
amounted to EUR 3,488 thousand in 2020.
The increase in expenses for guaranties, which also include penalties in con-
nection with delivery delays, is attributable to the effects of the COVID-19
pandemic and the consequences of production relocations. In the area of freight
costs, additional expenses in connection with delivery delays also led to an
increase compared with to the previous year.
The lower demand for temporary workers due to temporary interruptions in
production and the resulting lower expenses for temporary workers had the
opposite effect. Furthermore, there were lower expenses for travel costs and
entertainment due to the COVID-19 restrictions and the associated reduc-
tion in travel.
In relation to sales, other operating expenses in the current reporting period
was 16.6% and thus increased compared to the previous year (2019: 14.4%)
also due to the drop in sales.
12. Employee benefits expense
Employee benefits expense comprised the following:
Employee benefits expense
in EUR thousands
Wages and salaries and other termination benefits
Social security costs
Pension costs – defined contribution plans
Pension costs – defined benefit plans
2020
– 246,800
– 38,559
– 10,645
– 2,185
– 298,189
T062
2019
– 256,715
– 42,339
– 11,692
– 1,630
– 312,376
NORMA Group SE – Annual Report 2020
187
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS Employee benefit expenses in 2020 decreased by 4.5% in comparison to the
previous fiscal year. Expenses from restructuring provisions for the “Get on
track” program initiated in November 2019 in the amount of EUR 25,223 thou-
sand increased the expenses. Excluding these costs, employee benefit
expenses decreased by EUR 39,410 thousand compared to the prior year. In
the prior year, employee benefit expenses were additionally impacted by
expenses from the rightsizing project initiated in Q4 2018 to optimize the
Group structure totaling EUR 9,935 thousand. Based on comparable employee
benefit expenses (2020: EUR 272,966 thousand; 2019: EUR 302,441 thou-
sand), employee benefit expenses as a percentage of total value increased
from 27.5% to 28.7%. This increase is mainly due to the lower business activ-
ity triggered by the already described effects of the COVID-19 pandemic.
Although NORMA Group counteracted this development by reducing overtime,
using government-sponsored short-time work and other government support
measures and by temporarily releasing employees, NORMA Group was una-
ble to fully compensate for the effects of the COVID-19 pandemic.
In 2020, the average headcount was 6,521 (2019: 6,798).
13. Financial income and costs
Financial income and costs comprised the following:
Financial income and costs
in EUR thousands
Financial costs
Interest expenses
Bank borrowings
Hedging instruments
Leases
Expenses for interest accrued on provisions
Expenses for interest accrued on pensions
Foreign exchange result on financing activities
Result on valuation of derivatives
Other financial cost
Financial income
Interest income on short-term bank deposits
Other financial income
2020
– 9,941
– 756
– 1,059
– 2
– 106
– 911
304
– 2,750
– 15,221
443
13
456
T063
2019
– 14,067
727
– 1,260
– 82
– 162
– 212
– 74
– 1,820
– 16,950
1,007
453
1,460
Net financial cost
– 14,765
– 15,490
The reduction in interest expense compared to the prior year was on the one
hand due to the effects of interest rate cuts in the US dollar region, which had
a positive impact on the US dollar tranches of the financing. On the other hand,
the scheduled repayments, from the promissory note loan from 2013 of
EUR 29 million, had a positive effect on interest expense.
The increase in other financial expenses is mainly related to the restructuring
NOTES 5 ‘FINANCIAL RISK MANAGEMENT ’
of the financing.
NORMA Group SE – Annual Report 2020
188
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS
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 dol-
lar 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
NOTE 14 ‘NET
reflected in the financial result. The net effect is disclosed in
FORE IGN EXCHA NGEGAINS / LOSSES.’
15. Earnings per share
Earnings per share are calculated by dividing net income for the period attrib-
utable 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 2020, as in the previous year, the average weighted
number of shares was 31,862,400 (2019: 31,862,400).
Other financial income mainly includes income from the adjustment of the lia-
bility from the option to acquire the outstanding non-controlling interests of a
NOTE 21 (E ) ‘FINANCI AL LIABILITIES AND NET DEBT ’
subsidiary.
As of December 31, 2020 and 2019, there were no dilutive effects on earn-
ings per share.
Earnings per share in 2020 and 2019 were as follows:
Transaction costs in connection with financing are netted with the bank bor-
rowings. They are amortized over the financing period of the respective debt
using the effective interest method. As of December 31, 2020, the value of
transaction costs recognized in the balance sheet and amortized over the
maturities of the bank borrowings amounted to EUR 848 thousand (2019:
EUR 1,129 thousand).
Earnings per share
Profit attributable to shareholders of the parent
(in EUR thousands)
Number of weighted shares
Earnings per share (un)diluted (in EUR)
2020
5,670
31,862,400
0.18
T065
2019
58,422
31,862,400
1.83
14. Net foreign exchange gains/losses
The exchange differences recognized in profit or loss are as follows:
16. Income taxes
The breakdown of income taxes is as follows:
Net foreign exchange gains / losses
in EUR thousands
Note
2020
Currency gains operational
Currency losses operational
Foreign exchange result on
financing activities
Result from foreign exchange
rate derivatives
(10)
(11)
(13)
(10, 13, 21)
8,727
– 10,038
– 911
401
– 1,821
Income taxes
in EUR thousands
Current tax expenses
Deferred tax income
Total income taxes
T064
2019
6,092
– 6,330
– 212
– 72
– 522
2020
– 18,083
18,180
97
T066
2019
– 27,936
5,193
– 22,743
NORMA Group SE – Annual Report 2020
189
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS
The combined income tax rate for the German companies for 2020 amounted
to 30.1% (2019: 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 respec-
tively, are expected to apply in the various countries at the time of realization.
The position “Other tax-free income” mainly includes a one-off tax effect
realized in the USA. In fiscal year 2020, NORMA Group decided to treat its
Brazilian subsidiary as a “disregarded entity” for US income tax purposes.
Considering various requirements, one-off tax write-offs were performed on
the carrying amount of the investment and on an existing shareholder loan of
the company, resulting in a tax benefit of EUR 5.0 million. The conditions of
deductibility of the write-off is subject to review by the US tax authorities.
The income tax expense of the Group actually reported differs from the
theoretical income tax expense based on the German combined income tax
rate for 2020 as follows:
Theincometaxcharged / crediteddirectlytoothercomprehensiveincome
during the year is as follows:
Tax reconciliation
in EUR thousands
Profit before tax
Group tax rate
Expected income taxes
Tax effects of:
Tax losses and tax credits from the actual year for
which no deferred income tax is recognized
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
2020
5,380
30.1%
– 1,619
T067
2019
81,192
30.1%
– 24,439
– 840
– 674
2,163
– 2,206
4,458
666
– 960
– 16
– 1,549
97
5,658
– 2,773
432
– 150
557
– 21
– 1,333
– 22,743
The item “Other” consists mainly of other income-based taxes (e. g. non-
creditable foreign withholding tax expense) in 2020 and 2019.
Income tax charged / credited to other
comprehensive income
2020
in EUR thousands
tax amount Tax charge / credit
Before
T068
Net of
tax amount
Cash flow hedges gains / losses
Remeasurements of post-employment
benefit obligations
Other comprehensive income
2019
– 877
802
– 75
Before
255
– 622
– 207
48
595
– 27
Net of
tax amount
in EUR thousands
tax amount Tax charge / credit
Cash flow hedges gains / losses
Remeasurements of post-employment
benefit obligations
Other comprehensive income
– 2,363
– 2,066
– 4,429
680
– 1,683
547
1,227
– 1,519
– 3,202
NORMA Group SE – Annual Report 2020
190
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS Notes to the Consolidated Statement of
Financial Position
17. Deferred income tax
The movement in deferred income tax assets and liabilities during the year is
as follows:
Movement in deferred tax assets and liabilities
in EUR thousands
Deferred tax liabilities (net) – as of January 1
Deferred tax income
Tax charged to other comprehensive income
Foreign exchange rate differences
First time adoption of IFRS 16
Deferred tax liabilities (net) – as of December 31
2020
60,187
– 18,180
– 48
– 4,442
0
37,517
T069
2019
66,528
– 5,193
– 1,227
705
– 626
60,187
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:
Deferred income tax assets
T070
in EUR thousands
Dec 31, 2020
Dec 31, 2019
Intangible assets
Property, plant and equipment
Other assets
Inventories
Trade receivables
Retirement benefit obligations / pension liabilities
Provisions
Borrowings
Other liabilities, incl. derivatives
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
4,314
517
5,616
3,057
1,502
3,053
6,988
60
4,385
976
7,511
37,979
– 2,377
35,602
– 16,968
18,634
4,146
585
1,005
2,560
909
2,937
490
176
2,656
651
3,430
19,546
– 2,245
17,301
– 7,926
9,375
Deferred income tax liabilities
T071
in EUR thousands
Dec 31, 2020
Dec 31, 2019
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
Untaxed reserves
Deferred tax liabilities (before offsetting)
Offsetting effects
Deferred tax liabilities
Deferred tax liabilities (net)
50,885
12,808
2,127
128
97
6
4,258
45
112
128
2,525
73,119
– 16,968
56,151
37,517
57,406
15,171
1,603
162
198
6
200
90
394
3
2,254
77,488
– 7,926
69,562
60,187
Deferred income tax assets are recognized for all deductible temporary dif-
ferences 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, 2020, 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 tempo-
rary differences.
In 2020 and prior years, the Group had tax losses at several subsidiaries in
several countries. In total, the recognized deferred income tax assets on tem-
porary differences for subsidiaries that have suffered tax losses in the current
or previous fiscal year amount to EUR 2,203 thousand.
NORMA Group SE – Annual Report 2020
191
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS
The increase in deferred tax assets by EUR 9,259 thousand compared to
December 31, 2019, is mainly due to recognized deferred taxes on provisions
and tax loss carry forwards in 2020. Compared to the previous year, the
increase in deferred income tax assets in the line item “provisions” results from
the recognition of a provision for severance payments at the level of NORMA
Germany GmbH as part of the “Get on track” program. 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. Deferred
income tax assets for unused tax losses and unused tax credits developed as
follows:
Expiry of recognized tax losses
T072
in EUR thousands
Dec 31, 2020
Dec 31, 2019
up to 1 year
> 1 year up to 5 years
> 5 years
Unlimited carry forward
Total
0
6,587
2,529
20,545
29,661
35
1,623
1,698
7,828
11,184
The Group did not recognize deferred income tax assets in respect of tax loss
carry forwards amounting to EUR 7,168 thousand on December 31, 2020
(Dec 31, 2019: EUR 6,516 thousand).
The expiration of tax loss carry forwards not recognized for tax purposes is
as follows:
Expiry of unrecognized tax losses
T073
in EUR thousands
Dec 31, 2020
Dec 31, 2019
up to 1 year
> 1 year up to 5 years
> 5 years
Unlimited carry forward
Total
0
0
0
7,168
7,168
0
0
0
6,516
6,516
Regarding to the taxable temporary differences, amounting to
EUR 414,177 thousand (Dec 31, 2019: EUR 419,395 thousand), associated
with investments in subsidiaries, no deferred tax liabilities are recognized as
of December 31, 2020, as the temporary differences are unlikely to reverse in
the foreseeable future.
NORMA Group SE – Annual Report 2020
192
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS
18. Goodwill and other intangible assets
The acquisition costs as well as accumulated amortization and impairment
of intangible assets consist of the following:
Development of goodwill and other intangible assets
T074
As of
Jan 1, 2020
Additions
Deductions
Transfers
Changes in
consolidation
Currency
effects
As of
Dec 31, 2020
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
427,996
277,163
1,918
44,639
56,859
71,801
30,160
8,716
919,252
34,909
106,189
1,747
39,391
14,677
41,294
16,128
6,423
260,758
667
– 421
686
4,081
325
5,759
16,226
25
2,783
1,524
4,551
5,486
398
30,993
– 771
– 1,192
– 420
– 770
321
132
– 453
0
0
– 17,699
– 19,787
– 38
– 993
– 4,597
– 4,063
– 1,564
149
– 48,592
– 2,222
– 7,550
– 35
– 884
– 1,194
– 2,714
– 1,006
12
– 15,593
410,297
257,376
1,880
44,213
52,262
68,556
31,906
8,737
875,227
32,687
114,865
1,737
40,870
15,007
43,131
19,838
6,833
274,968
– 1,190
0
0
NORMA Group SE – Annual Report 2020
193
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS
Development of goodwill and other intangible assets (continued)
T074
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
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
226,647
40
822
816
6,692
853
9,223
16,768
26
3,650
1,552
4,895
4,334
0
31,225
– 24
– 146
– 188
– 26
– 384
– 24
– 144
– 188
– 26
– 382
– 26
400
247
– 621
0
– 33
182
247
– 396
0
4,078
4,654
8
282
1,000
590
296
– 41
10,867
496
1,776
7
164
236
500
207
– 118
3,268
427,996
277,163
1,918
44,639
56,859
71,801
30,160
8,716
919,252
34,909
106,189
1,747
39,391
14,677
41,294
16,128
6,423
260,758
0
0
NORMA Group SE – Annual Report 2020
194
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS The carrying amounts for intangible assets as of December 31, 2020 and
2019, were as follows:
The change in goodwill is summarized as follows:
Goodwill and other intangible assets –
carrying amounts
Change in goodwill
T075
in EUR thousands
in EUR thousands
Dec 31, 2020
Dec 31, 2019
Carrying amounts
Balance as of December 31, 2019
Currency effect
Balance as of December 31, 2020
T077
393,087
– 15,477
377,610
Goodwill
Customer lists
Licenses, rights
Software acquired externally
Trademarks
Patents & technology
Internally generated intangible assets
Intangible assets, other
Total
377,610
142,511
143
3,343
37,255
25,425
12,068
1,904
600,259
393,087
170,974
171
5,248
42,182
30,507
14,032
2,293
658,494
The item “Patents and technology” on December 31, 2020, consists of pat-
ents worth EUR 6,911 thousand (Dec 31, 2019: EUR 8,494 thousand) and
technology worth EUR 18,514 thousand (Dec 31, 2019: EUR 22,013 thou-
sand).
Internally generated intangible assets include development costs for technol-
ogies in the amount of EUR 7,862 thousand (Dec 31, 2019: EUR 9,071 thou-
sand) as well as internally generated software in the amount of EUR 4,206 thou-
sand (Dec 31, 2019: EUR 4,960 thousand).
The item “Intangible assets, other” consists mainly of prepayments.
Significant individual intangible assets
T076
Carrying amounts
in EUR thousands
Dec 31, 2020
Dec 31, 2019
Remaining use-
ful life (in years)
NDS – Customer lists
93,743
109,801
14
The change in goodwill, customer lists and patents & technology results from
positive foreign exchange differences, mainly from the US dollar area.
Besides the goodwill, there are intangible assets within trademarks with an
indefinite useful life in the amount of EUR 25,996 thousand (2019:
EUR 28,396 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 indef-
inite. Trademarks with indefinite useful lives are fully allocated to the cash-gen-
erating unit (CGU) Americas.
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 O T E 3 ‘ S U M M A RY O F S I G N I F I CA N T
ACCOUNTING POLICIES – IMPAIRMENT OF NON- FINANCIAL ASSETS.’
On December 31, 2020 and 2019, 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:
NORMA Group SE – Annual Report 2020
195
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS
Goodwill allocation per segment
T078
Goodwill per segment – key assumptions
T079
in EUR thousands
CGU EMEA
CGU Americas
CGU Asia-Pacific
Consolidated Group
Dec 31, 2020
Dec 31, 2019
178,504
164,816
34,290
377,610
178,484
180,030
34,573
393,087
December 31, 2020
Terminal value growth rate
Discount rate
Costs to sell
Goodwill for the CGU Americas decreased in 2020 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.
N O T E 3 ‘ S U M M A RY O F S I G N I F I CA N T ACCO U N T I N G P O L I C I ES – FA I R
VA LU E EST I M AT I O N ’ 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 12.1% (2019: 11.71%) for the CGU
EMEA, 8.41% (2019: 9.82%) for the CGU Americas and 12.46% (2019: 11.88%)
for the CGU Asia-Pacific.
The key assumptions used for fair value less costs to sell calculations are as
follows:
CGU
EMEA
CGU
Americas
CGU
Asia-Pacific
1.00%
9.57%
1.00%
CGU
EMEA
1.00%
9.19%
1.00%
1.00%
6.94%
1.00%
1.00%
9.69%
1.00%
CGU
Americas
CGU
Asia-Pacific
1.00%
8.14%
1.00%
1.00%
9.28%
1.00%
December 31, 2019
Terminal value growth rate
Discount rate
Costs to sell
The assumptions are based on management’s expectations regarding future
developments.
A sensitivity analysis for the individual CGUs takes into account any changes
in the key assumptions that are considered possible. The sensitivity analysis
was performed in isolation for all significant 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.
Impact of the COVID-19 pandemic on the recoverability of goodwill
In updating the estimates and judgments, available information about the
expected economic development and country-specific government measures
were considered and included in the impairment test of goodwill.
Considering the uncertainties for the global economy caused by the COVID-
19 pandemic and the changing framework conditions of the economic envi-
ronment, impairment tests were performed for the cash-generating units
(EMEA, Americas and Asia-Pacific) taking into account various sensitivities,
which confirmed the recoverability of the respective underlying carrying amounts.
NORMA Group SE – Annual Report 2020
196
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS
Impairment losses on other intangible assets
No significant impairment losses or reversals of impairment losses were
recognized for intangible assets in fiscal year 2020.
19. Property, plant and equipment
The acquisition and manufacturing costs as well as accumulated depreciation
of property, plant and equipment consist of the following:
Development of property, plant and equipment
T080
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
As of
Jan 1, 2020
Additions
Deductions
Transfers
Changes in
consolidation
Currency
effects
As of
Dec 31, 2020
117,955
380,542
71,884
38,302
69,860
339
3,069
520
4,424
686,895
57,373
244,728
56,633
19
33,026
92
1,640
287
2,254
396,052
1,050
7,649
1,944
24,845
8,258
48
321
8
1,211
45,334
3,741
29,069
4,918
76
8,188
86
629
110
1,357
48,174
– 841
– 10,641
– 1,368
– 6
– 4,562
0
– 364
– 115
– 1,569
– 19,466
– 805
– 9,658
– 1,186
0
– 2,797
0
– 353
– 114
– 1,485
– 16,398
1,804
22,066
1,443
– 25,313
0
0
0
0
– 2,895
– 15,123
– 1,729
– 2,858
– 5,131
– 1
– 69
– 24
– 72
– 27,902
– 898
– 8,395
– 1,070
– 3
– 2,514
0
– 44
– 13
– 35
– 12,972
117,073
384,493
72,174
34,970
68,425
386
2,957
389
3,994
684,861
59,411
255,744
59,295
92
35,903
178
1,872
270
2,091
414,856
CONTINUED ON NEXT PAGE
NORMA Group SE – Annual Report 2020
197
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS Development of property, plant and equipment (continued)
T080
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
As of
Dec 31, 2018
As of
Jan 1, 2019 Additions
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
Deduc-
tions
– 29
– 3,342
– 2,693
– 72
– 3,956
0
– 299
0
– 388
– 10,779
– 28
– 2,887
– 2,602
– 7
– 3,639
0
– 274
0
– 333
– 9,770
Transfers
Changes in
consolidation
Currency
effects
As of
Dec 31, 2019
776
21,138
1,683
– 23,597
0
0
0
0
569
2,794
321
317
412
11
5
26
4,455
161
1,312
214
– 7
– 81
0
0
– 1
10
1,680
117,955
380,542
71,884
38,302
69,860
339
3,069
520
4,424
686,895
57,373
244,728
56,633
19
33,026
92
1,640
287
2,254
396,052
NORMA Group SE – Annual Report 2020
198
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS
The carrying amounts for property, plant and equipment as of December 31,
2020 and 2019, were as follows:
Right of Use Assets – carrying amounts
T082
in EUR thousands
Dec 31, 2020
Dec 31, 2019
Property, plant and equipment – carrying amounts
T081
Carrying amounts
in EUR thousands
Dec 31, 2020
Dec 31, 2019
Land and buildings
Machinery & tools
Other equipment
Assets under construction
Total
57,662
128,749
12,879
34,878
234,168
60,582
135,814
15,251
38,283
249,930
Land and buildings
Machinery & tools
Forklifts and warehouse
Office and IT equipment
Company cars
Total
32,522
208
1,085
119
1,903
35,837
36,834
247
1,429
233
2,170
40,913
The maturities of the nominal values and the carrying amounts of the lease
liabilities are as follows:
On December 31, 2020, the item “Machinery & tools” included tools valued at
EUR 25,861 thousand (Dec 31, 2019: EUR 30,688 thousand).
Maturity of lease liabilities Dec 31, 2020
No material impairment and no material write-ups were recognized on
property, plant and equipment in 2020 and 2019.
On December 31, 2020 and 2019, property, plant and equipment were
unsecured.
20. Leasing
The following disclosures contain information about NORMA Group’s leases
in fiscal year 2020 and 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 thousand
up to 1 year
> 1 year
up to 5 years
Lease liabilities – Nominal value
Lease liabilities – Carrying amount
8,960
8,118
18,920
16,957
Maturity of lease liabilities Dec 31, 2019
in EUR thousand
up to 1 year
> 1 year
up to 5 years
Lease liabilities – Nominal value
Lease liabilities – Carrying amount
9,466
8,427
20,328
17,790
T083
> 5 years
9,525
8,770
T084
> 5 years
13,555
12,378
NORMA Group SE – Annual Report 2020
199
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS
(ii) Amounts recognized in the income statement
(iii) Amounts recognized in the cash flow statement
The following amounts relating to leases are recognized in the income
statement:
Leases in the statement of profit or loss
in EUR thousands
Depreciation charge of right-of-use assets
Land and buildings
Machineries and technical equipment
Forklifts and warehouse equipment
Office and IT equipment
Company cars
Finance costs
Interest expenses
Currency gains / losses
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
2020
10,370
8,188
86
629
110
1,357
– 1,093
– 1,059
– 34
864
479
385
0
T085
2019
10,436
8,297
68
656
121
1,294
– 1,256
– 1,260
4
861
684
177
0
EUR 11,935 thousand in total is recognized as cash outflows in the cash flow
statement because of right-of-use assets (2019: EUR 12,179 thousand). Of
this, EUR 11,071 thousand was recognized under cash flows from financing
activities (2019: EUR 11,318 thousand) and EUR 864 thousand was recog-
nized under cash flows from operating activities (2019: EUR 861 thousand).
21. Financial instruments
The following disclosures provide an overview of the financial instruments
held by the Group, detailed information about each type of financial instru-
ment held and information about the accounting policies used.
Financial instruments according to classes and categories were as follows:
NORMA Group SE – Annual Report 2020
200
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS
Financial instruments – classes and categories
T086
in EUR thousands
Financial assets
Derivative financial instruments – hedge accounting
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 – fair value hedges
Trade and other payables
Lease liabilities
Other financial 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, 2020
Measurement basis IFRS 9
Fair value
through profit
or loss
Derivatives
used for
hedging
Measure-
ment basis
IFRS 16
Fair value
Dec 31, 2019
Amortized cost
n / a
n / a
Amortized Cost
FVTPL
Amortized Cost
Amortized Cost
33
396
135,183
22,129
2,470
185,109
135,183
2,470
185,109
22,129
FLAC
477,991
477,991
n / a
n / a
FLAC
n / a
FLAC
1,354
65
148,726
33,845
10,212
148,726
10,212
322,762
322,762
22,129
636,929
636,929
22,129
33
396
1,354
65
33,845
33
396
135,183
22,129
2,470
185,109
490,254
1,354
65
148,726
n / a
10,212
322,762
22,129
649,192
CONTINUED ON NEXT PAGE
NORMA Group SE – Annual Report 2020
201
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS Financial instruments – classes and categories
(continued)
T086
in EUR thousands
Financial assets
Category
IFRS 7.8
according
to IFRS 9
Carrying
amount
Dec 31, 2019
Note
Measurement basis IFRS 9
Fair value
through profit
or loss
Derivatives
used for
hedging
Measure-
ment basis
IFRS 16
Fair value
Dec 31, 2019
Amortized cost
Derivative financial instruments – hedge accounting
21 (f)
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
Lease liabilities
Other financial 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)
21 (a)
21 (b)
21 (d)
21 (c)
21 (e)
21 (f)
21 (e)
20
21 (e)
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
143,119
19,126
324,771
324,771
22,128
704,143
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
NORMA Group SE – Annual Report 2020
202
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS 21. (a) Trade and other receivables
Trade and other receivables were as follows:
Trade and other receivables
T087
in EUR thousands
Trade receivables
Other receivables
Dec 31, 2020
Dec 31, 2019
150,908
6,404
157,312
153,521
8,865
162,386
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:
Trade receivables
in EUR thousands
Trade receivables
Less: allowances for doubtful accounts
T088
Dec 31, 2020
Dec 31, 2019
152,907
– 1,999
150,908
155,158
– 1,637
153,521
Classification as trade receivables
i.
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.
Impairment and write-offs of trade receivables
ii.
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 customer 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, 2020, was determined as follows:
NORMA Group SE – Annual Report 2020
203
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS
Credit risk exposure trade receivables
as of December 31, 2020
in EUR thousands
Trade receivables – before allowances
ECL allowance
Trade receivables – after allowances
as of December 31, 2019
in EUR thousands
Trade receivables – before allowances
ECL allowance
Trade receivables – after allowances
Credit loss rate
< 1%
Credit loss rate
> 1% < 2.5%
Credit loss rate
> 2.5%
37,395
502
36,893
88,781
1,351
87,430
4,602
146
4,456
Credit loss rate
< 1%
78,072
704
77,368
Credit loss rate
> 1% < 2.5%
48,907
723
48,184
Credit loss rate
> 2.5%
6,051
210
5,841
T089
Total
130,778
1,999
128,779
Total
133,030
1,637
131,393
The impairment losses on trade receivables developed as follows from the
opening balance sheet value as of January 1, 2020, to the closing balance
sheet value as of December 31, 2020:
The gross carrying amount of trade receivable that are not reasonably
expected to be realizable are written off. In the fiscal year, the following
losses resulted from the write-off of trade receivables:
Impairment reconciliation
T090
Gains / losses arising from derecognition IFRS 7.20A
T091
Impairments on trade
receivables
in EUR thousands
Losses arising from
derecognition
2020
2019
Reasons for derecognition
3,991
893
Write-off (IFRS 9.5.4.4)
in EUR thousands
Impairment allowance as of Jan 1, 2020 – based on IFRS 9
Additions
Reversals
Consumption
Translation effect
Impairment allowance as of Dec 31, 2020
1,637
2,214
– 1,637
– 117
– 98
1,999
Impairment losses on trade receivables, together with those on contract
assets, are recognized in operating profit as net impairment losses. Unused
amounts reversed are included in the same line item. The net expenses
recognized in fiscal year 2020 from these impairment losses amounted to
EUR 577 thousand (2019: EUR 53 thousand).
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.
The increase in expenses for allowances for expected credit losses and for
losses on disposal relates to the impact of the COVID-19 pandemic and the
associated financial difficulties of some customers and the general
development of risk premiums for measuring the default risks of loans.
NORMA Group SE – Annual Report 2020
204
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS
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,
France and Poland sell trade receivables directly to external purchasers. As
part of this factoring program, receivables of EUR 7.0 million were sold as of
December 31, 2020, (Dec 31, 2019: EUR 6.4 million) whereof EUR 0.7 million
(Dec 31, 2019: EUR 0.6 million) are purchase price retention that are maintained
as a contingency 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 remaining continuing involvement in the amount of
EUR 64 thousand (Dec 31, 2019: EUR 59 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.Thefairvalueoftheguarantee / interestpaymentstobeassumedhas
been estimated at EUR 5 thousand (Dec 31, 2019: EUR 5 thousand), taken
through profit or loss and recognized under other liabilities.
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 7.9 million were sold as of December 31, 2020
(Dec 31, 2019: EUR 11.8 million). Due to a temporary agreement, the payments
under these disposals were made in full as of December 31, 2020. As of
December 31, 2019 EUR 2.4 million) were treated as purchase price retentions
and not paid out but rather held as security reserves and recognized as other
financial assets. 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.
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. As of December 31, 2020, domestic NORMA Group
entities had sold receivables in an amount of EUR 12.2 million (Dec 31, 2019:
EUR 14.0 million) under this asset-backed securities (ABS) program with a
maximum volume of EUR 20 million (2019: EUR 25 million). From the receiv-
ables sold, EUR 0.5 million (2019: 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 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 trans-
fer according to IFRS 9.3.2.1 are met, since the receivables are transferred
according 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 neither transferred
NORMA Group SE – Annual Report 2020
205
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS 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 219 thousand (Dec 31, 2019:
EUR 251 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
receivablestransferred.Thefairvalueoftheguarantee / interestpaymentsto
be assumed has been estimated at EUR 183 thousand (Dec 31, 2019:
EUR 205 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 20 million (2019:
USD 30 million), US American Group companies of NORMA Group sold
receivables amounting to EUR 11.3 million as of December 31, 2020 (Dec 31,
2019: EUR 19.5 million), of which EUR 0.5 million (Dec 31, 2019: EUR 0.8 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 253 thousand (Dec 31, 2019: EUR 619 thou-
sand) 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 175 thousand (Dec 31, 2019: EUR 227 thousand).
Trade receivables available for transfer
ii.
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.
NORMA Group SE – Annual Report 2020
206
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS
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.
Trade and other payables
T093
in EUR thousands
Dec 31, 2020
Dec 31, 2019
Trade payables and other payables
Reverse factoring liabilities
Refund liabilities
118,525
15,713
14,488
148,726
109,385
21,335
12,399
143,119
21. (d) Other financial assets
Other financial assets were as follows:
Other financial assets
T092
in EUR thousands
Dec 31, 2020
Dec 31, 2019
Receivables from ABS program
Receivables from factoring
Other assets
1,010
704
756
2,470
1,426
3,010
356
4,792
Receivables from the ABS program and from factoring include reserves for
N OT E 2 1 ( B ) ‘ T RA D E R EC E I VA B L ES T RA N S F E R R E D
the trade receivables sold.
OR AVAILABLE FOR TRANSFER ’ Other financial assets are generally required to
collect the contractual 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 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. 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 balance 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
discounts 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
NOTE 3
the end of the reporting period. For further details, please refer to
‘SUMMARY OF SIGNIFICANT ACCOUNTING P RINCIPLES.
NORMA Group SE – Annual Report 2020
207
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS
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.
ii. Bank borrowings
The borrowings were as follows:
Borrowings
in EUR thousands
Non-current
Bank borrowings
Current
Bank borrowings
Total borrowings
Dec 31, 2020
Dec 31, 2019
T094
387,814
387,814
90,177
90,177
477,991
495,927
495,927
45,971
45,971
541,898
Borrowings are recognized initially at fair value, net of directly attributable
transaction costs incurred. Borrowings are subsequently 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.
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 facility 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, 2020 and 2019, is as follows:
Maturity of bank borrowings 2020
in EUR thousands
Syndicated bank facilities, net
Promissory note, net
Commercial paper
Total
Maturity of 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
68,949
20,000
88,949
3,500
3,500
238,563
105,094
343,657
up to 1 year
> 1 year
up to 2 years
> 2 years
up to 5 years
29,000
15,000
44,000
99,739
247,740
108,072
99,739
355,812
T095
> 5 years
41,500
41,500
T096
> 5 years
41,500
41,500
NORMA Group SE – Annual Report 2020
208
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS 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.
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 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.
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.
a) Liabilities from the ABS and factoring
The liabilities from the ABS and factoring include liabilities from continuing
involvement in the amount of EUR 536 thousand (Dec 31, 2019: EUR 929 thou-
sand), liabilities from fair values of default and interest guarantees in the
amount of EUR 366 thousand (Dec 31, 2019: EUR 438 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 7,029 thousand (Dec 31, 2019: EUR 14,676 thousand) as part
ofthedebtor / receivablesmanagementperformedbyNORMAGroup.
b) Other liabilities
The liabilities recognized in other non-current liabilities as of Decem-
ber 31, 2019 for the option to acquire the remaining minority shares in
Fengfan Fastener (Shaoxing) Co., Ltd. (Fengfan) were derecognized in the
3rd quarter of the past fiscal year by cancelling the option right against
retained earnings.
NOTE 24 ‘EQUIT Y ’
There were no covenant breaches in 2020 and 2019.
iii. Other financial liabilities
Other financial liabilities were as follows:
Other financial liabilities
T097
in EUR thousands
Non-current
Other liabilities
Current
Dec 31, 2020
Dec 31, 2019
0
0
1,630
1,630
Liabilities from ABS and factoring
Other liabilities
Total other financial liabilities
7,930
2,282
10,212
10,212
16,043
1,453
17,496
19,126
NORMA Group SE – Annual Report 2020
209
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS
iv. Maturity of financial liabilities
The financial liabilities of NORMA Group have the following maturity:
Maturity of financial liabilities
T098
December 31, 2020
in EUR thousands
up to 1 year
> 1 year
up to 2 years
> 2 years
up to 5 years
> 5 years
Borrowings
Trade and other payables
Other financial liabilities
90,177
148,726
10,212
249,115
3,056
343,268
41,490
3,056
343,268
41,490
December 31, 2019
in EUR thousands
up to 1 year
> 1 year
up to 2 years
> 2 years
up to 5 years
> 5 years
Borrowings
Trade and other payables
Other financial liabilities
45,971
143,119
17,496
206,586
99,208
355,247
41,472
99,208
1,630
356,877
41,472
NORMA Group’s financial liabilities are by 12.8% below the level of Decem-
ber 31, 2019. The decrease in loans payable was mainly due to the net
repayment of loans in FY 2020. Furthermore, effects from exchange rate
changes on the US dollar tranche reduced loans payable.
Lease liabilities decreased significantly compared to year-end 2019, changes
due to repayments, additions due to recognition of right-of-use assets and
interest effects almost offset each other in the current fiscal year, however,
exchange rate effects mainly on the liabilities in US dollar and the reduction
of lease liabilities due to reassessments of renewal options led to a decrease
at year-end 2020.
The decrease in other financial liabilities was mainly due to the repayment of
ABS and factoring liabilities and the derecognition of liabilities from the option
to acquire Fengfan.
As of December 31, 2020, net debt decreased by EUR 82,453 (19.6%). The
main reason for this was an increase in cash and cash equivalents due to net
cash inflows from cash provided by operating activities of EUR 133,542 thou-
sand and net cash outflows from the procurement and sale of non-current
assets of EUR 39,088 thousand. This positive development was offset by
current interest expenses in the fiscal year and the valuation-related increase
in liabilities from derivatives.
Net debt
v.
Net debt of NORMA Group is as follows:
Net debt
in EUR thousands
T099
Cash-neutral positive net currency effects from foreign currency loans, cash
and cash equivalents, lease liabilities and other financial liabilities had a
positive impact on net debt.
Dec 31, 2020
Dec 31, 2019
Bank borrowings, net
Derivative financial liabilities – hedge accounting
Lease liabilities
Other financial liabilities
Financial debt
Cash and cash equivalents
Net debt
477,991
1,419
33,845
10,212
523,467
185,109
338,358
541,898
913
38,595
19,126
600,532
179,721
420,811
NORMA Group SE – Annual Report 2020
210
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS
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.
The derivative financial instruments are as follows:
Derivative financial instruments
T100
Dec 31, 2020
Dec 31, 2019
in EUR thousands
Assets
Liabilities
Assets
Liabilities
Interest rate swap – 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
33
396
429
0
429
1,354
65
1,419
0
1,419
435
15
450
120
120
330
911
2
913
684
684
229
Further details on the use of hedging instruments can be found in
NOTE 5
‘F INA NCIAL R ISK MANAGEMENT ’.
NORMA Group SE – Annual Report 2020
211
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS 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:
The effects of cash flow hedge accounting on financial position and performance
T101
Net book value as of
Dec 31, 2020
(Derivative financial
assets [+] / Deriva-
tive financial
liabilities [–])
Nominal
amount 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
Book value of
hedged item as
of Dec 31, 2020
81,444
– 1,354
81,444
2.11
1:1
2021
– 1,633
– 1,633
1,633
1,633
81,444
in EUR thousands
Hedging interest
rate risk –
interest rate
swap
Interest rate
swap USD
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.
Net book value as of
Dec 31, 2019
(Derivative financial
assets [+] / Deriva-
tive financial
liabilities [–])
Nominal
amount 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
Book value of
hedged item as
of Dec 31, 2019
160,353
435
60,600
– 684
76,753
– 227
23,000
1.25
2.01
1.54
1:1 2020 – 2021
1:1
1:1
2021
2020
– 1,646
1,646
160,353
in EUR thousands
Hedging interest
rate risk –
interest rate
swap
Interest rate
swap USD
Interest rate
swap USD
Interest rate
swaps EUR
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.
NORMA Group SE – Annual Report 2020
212
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS 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
T102
in EUR thousands
Balance as of January 1, 2019
Reclassification to profit or loss
Net fair value changes
Accrued and recognized costs of hedging
Balance as of December 31, 2019
Reclassification to profit or loss
Net fair value changes
Balance as of December 31, 2020
Reserve for costs of
hedging
Spot component of foreign
exchange derivatives
Interest rate swaps
Cross-currency swaps
Total
– 67
67
0
0
57
11
– 68
0
0
1,897
– 727
– 1,646
– 476
756
– 1,633
– 1,353
0
0
0
1,887
– 716
– 1,714
67
– 476
756
– 1,633
– 1,353
Amounts due to interest rate swaps recognized in the hedging reserve in
equity will be released in profit or loss before the repayment of the loans. In
fiscal year 2020 and 2019, no ineffective portion of cash flow hedges relating
to foreign exchange derivatives and interest rate swaps was recognized in
profit or loss.
NORMA Group SE – Annual Report 2020
213
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS
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
T103
Change in fair value
of the hedged item
used as the basis for
recognizing hedge
ineffectiveness for
the period
Net book value as of
Dec 31, 2020 (Derivative
financial assets [+] / Deriv-
ative financial liabilities [–])
Nominal amount
(+ Buy / – Sell)
Average
hedging rate
Hedging ratio Maturity
Change in fair value of
the hedging item since
Jan 1st
in EUR thousands
Currency risk hedging FVH
Currency forwards USD – EUR
Currency forwards AUD – EUR
Currency forwards JPY – SGD
Currency forwards PLN – EUR
311
37
1
– 18
1:1 1 ≤ 1 year
1:1 2 ≤ 1 year
1:1 2 ≤ 1 year
1:1 2 ≤ 1 year
311
37
1
– 18
– 311
– 37
– 1
18
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.
Net book value as of
Dec 31, 2019 (Derivative
financial assets [+] / Deriv-
ative financial liabilities [–])
Nominal amount
(+ Buy / – Sell)
Average
hedging rate
Hedging ratio Maturity
Change in fair value of
the hedging item since
Jan 1st
Change in fair value
of the hedged item
used as the basis for
recognizing hedge
ineffectiveness for
the period
15
– 2
940
574
4.36
80.28
1:1 1 ≤ 1 year
1:1 1 ≤ 1 year
15
– 2
– 15
2
in EUR thousands
Currency risk hedging FVH
Currency forwards PLN – EUR
Currency forwards JPY – SGD
1_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.
NORMA Group SE – Annual Report 2020
214
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS 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
2020
– 316
318
2
T104
2019
– 39
– 44
– 83
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, 2020, as well as December 31, 2019:
Financial instruments – fair value hierarchy
in EUR thousands
Recurring fair value measurements
Assets
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 – fair value hedges
Total
Level 1 1
Level 2 2
Level 3 3
33
396
22,129
22,558
1,354
65
1,419
0
0
0
0
T105
Total as
of Dec 31, 2020
33
396
22,129
22,558
1,354
65
1,419
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.
NORMA Group SE – Annual Report 2020
215
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS 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
435
15
22,128
22,578
911
2
913
0
0
0
0
T106
Total as
of Dec 31, 2019
435
15
22,128
22,578
911
2
913
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.
No transfers between the different levels occurred in 2020 and 2019. 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
Net gains or net losses on financial assets
measured at amortized costs
Net gains or net losses on financial liabilities
measured at amortized costs
T107
2019
2020
– 4,125
61
– 10,230
– 14,355
– 13,968
– 13,907
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.
NORMA Group SE – Annual Report 2020
216
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION
Currency effects from the translation of financial assets and liabilities
N OT E 1 4 ‘ N ET FO R E I G N EXC H A N G E
according to IAS 21 are shown within
23. Other non-financial assets
GA INS /LOSS ES’.
Other non-financial assets were as follows:
21. (i) Total interest income and expense from financial instruments
Interest expenses / income from financial assets and
liabilities (IFRS 7.20(b))
T108
in EUR thousands
2020
2019
Interest income
financial assets at costs
Interest expenses
financial liabilities at costs
22. Inventories
Inventories were as follows:
443
1,007
– 10,136
– 14,280
Inventories
in EUR thousands
Raw materials, consumables and supplies
Work in progress
Finished goods and goods for resale
T109
Dec 31, 2020
Dec 31, 2019
40,484
17,102
94,603
152,189
49,795
17,659
105,795
173,249
On December 31, 2020, impairments were made on inventories amounting
to EUR 10,331 thousand (Dec 31, 2019: EUR 7,672 thousand).
On December 31, 2020 and 2019, the inventories were not collateralized with
the exception of the customary business reservations of title.
Other non-financial assets
T110
in EUR thousands
Dec 31, 2020
Dec 31, 2019
Deferred costs
VAT assets
Prepayments
Consideration payable to a customer
Other assets
3,682
9,578
3,375
2,227
1,901
20,763
3,450
10,550
5,024
3,388
2,313
24,725
24. Equity
Subscribed capital
The subscribed capital of the Company on December 31, 2020 and 2019,
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.
Authorized and conditional capital
The Management Board is entitled to increase the share capital by up to
EUR 3,186,240 until June 29, 2025, by issuing up to 3,186,240 new no-par
valueregisteredsharesinexchangeforcashand / orcontributionsinkind
either once or several times by resolution of the Annual General Meeting held
on June 30, 2020, with the approval of the Supervisory Board, whereby the
subscription rights of shareholders may be restricted (Authorized Capital 2020).
The resolution of the Annual General Meeting of 20 May 2015, ‘Authorized
Capital 2015’, has expired. §5 of the Articles of Association of NORMA Group
SE was amended accordingly.
NORMA Group SE – Annual Report 2020
217
6 FURTHER INFORMATION5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION By resolution of the Annual General Meeting on June 30, 2020, the share
capital of the Company is conditionally increased by up to EUR 3,186,240 by
issuing up to 3,186,240 new no-par value registered shares for the purpose
of granting convertible bonds and / or bonds with warrants (Conditional
Capital 2020).
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
§6 of the Articles of Association of NORMA Group SE was amended
accordingly.
preference for their shares,
• amounts resulting from other capital contributions of the owners.
Retained earnings
Retained earnings consisted of the following:
Development of retained earnings
T111
Retained
earnings
Remeasurements of
post- employment
benefit obligations
IPO costs
directly
netted with
equity
Reimburse-
ment of IPO
costs by
shareholders
Acquisition
of non-
controlling
interest
Effects
from the
application
of IAS 19R
in EUR thousands
Balance as of December 31, 2018
(as reported)
Balance as of Jan 1, 2019
Profit for the year
Dividends paid
Acquisition of non-controlling interests
Effect before taxes
Tax effect
Balance as of December 31, 2019
(as reported)
Balance as of Jan 1, 2020
Profit for the year
Dividends paid
Acquisition of non-controlling interests
Effect before taxes
Tax effect
Balance as of December 31, 2020
365,040
365,040
58,422
– 35,049
388,413
388,413
5,670
– 1,274
392,809
– 2,710
– 4,640
4,681
– 6,588
– 2,710
– 4,640
4,681
– 6,588
– 2,066
547
– 4,229
– 4,640
4,681
– 6,588
– 4,229
– 4,640
4,681
– 6,588
229
839
839
839
839
802
– 207
– 3,634
– 4,640
4,681
– 6,359
839
– 600
– 2,033
Effects of
FRS 9
Effects of
IFRS 16
Total
– 600
0
356,022
– 600
– 2,033
353,989
58,422
– 35,049
0
– 2,066
547
– 600
– 2,033
375,843
– 600
– 2,033
375,843
5,670
– 1,274
229
802
– 207
381,063
A dividend of EUR 1,274 thousand (EUR 0.04 per share) was paid to the share-
holders of NORMA Group after the Annual General Meeting in June 2020.
NORMA Group SE – Annual Report 2020
218
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS
Other reserves
In fiscal year 2020, the outstanding option to acquire the existing minority
interest of 20% in FengFan Fastener (Shaoxing) Co., Ltd. expired and the
minority interest was acquired early in the fiscal year. The liability recognized
from the option in the amount of EUR 1,656 thousand was derecognized
against retained earnings with no effect on profit or loss. The purchase price
liability of EUR 2,800 thousand associated with the acquisition was recognized
against retained earnings. The minority interests of EUR 1,492 thousand
existing at the acquisition date were reclassified within equity from ‘Non -
controlling interests’ to retained earnings (EUR 1,373 thousand) and to other
reserves (EUR 119 thousand).
Other reserves consisted of the following:
Development of other reserves
in EUR thousands
Balance as of January 1, 2019
Effect before taxes
Tax effect
Balance as of December 31, 2019
Effect before taxes
Tax effect
Balance as of December 31, 2020
25. Share-based payments
Management incentive schemes
The Matching Stock Program
Cash flow hedges
Foreign exchange rate differences on
translating foreign operations
1,338
– 2,363
680
– 345
– 877
255
– 967
1,179
9,016
10,195
– 43,166
– 32,971
T112
Total
2,517
6,653
680
9,850
– 44,043
255
– 33,938
line with the new Management Board contracts, the MSP was closed. The last
allotment of options was in fiscal year 2017.
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
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.
NORMA Group SE – Annual Report 2020
219
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS The other tranches were allocated on March 31 of each of the following years.
The holding period is four years and ends for the 2017 tranche on March 31,
2021. The holding periods for the 2015 and 2016 tranches have already
expired.
1.2 times that of the exercise price. The pay-out is limited to 2% of the
average (adjusted) EBITA (tranches 2015, 2016 and 2017) 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.
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
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.
The option rights granted under the MSP changed as follows in the 2020 and
2019 fiscal years:
Development of the MSP option rights
T113
Expected duration until exercise in years
Proportional fair value per outstanding “share units” in EUR as of December 31, 2020
Fair value per 'share unit' in EUR as of December 31, 2020
Exercise price in EUR
Balance as of December 31, 2018
Tentatively granted “share units”
Exercised
Lapsed
Balance as of December 31, 2019
Tentatively granted “share units”
Exercised
Lapsed
Balance as of December 31, 2020
Tranche MSP 2015
Tranche MSP 2016
Tranche MSP 2017
0.25
325,605.00
3.35
40.05
97,322
1.25
415,264.00
5.58
42.62
74,465
97,322
74,465
2.25
317,947.00
7.53
38.50
51,607
9,375
42,232
97,322
74,465
42,232
NORMA Group SE – Annual Report 2020
220
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS
In fiscal year 2020, expenses in the amount of EUR 226 thousand (2019:
income of EUR 115 thousand) resulting from the MSP were recognized in
employee benefits expense against a corresponding net additions within the
provisions (2019: net reversals). Furthermore, no payment was made for the
exercised option rights (2019: no payment). The total provision for the MSP
amounts to EUR 1,059 thousand as of December 31, 2020 (Dec 31, 2019:
EUR 833 thousand).
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.
Long-term incentive plan
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).
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
definedduringtheperformanceperiodandtheCompany / regionalfactor.
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 percentage 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.
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.
NORMA Group SE – Annual Report 2020
221
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS
The share units granted under the LTI changed as follows in the 2019 and 2020 fiscal years:
Development of LTI
Expected duration until exercise in years
Fair value per “share unit” in EUR as
of December 31, 2020
Share price when granted in EUR
Balance as of December 31, 2019
Tentatively granted “share units”
Exercised
Lapsed
Balance as of December 31, 2020
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
4th tranche LTI 2016
5th tranche LTI 2017
6th tranche LTI 2018
7th tranche LTI 2019
8th tranche LTI 2020
T114
n / a
n / a
48.57
25,524
–
25,201
323
0
n / a
0
39.77
35,049
–
–
247
34,802
1.00
41.19
56.27
26,240
–
–
1,346
24,894
2.00
39.89
48.25
38,352
–
–
4,061
34,291
3.00
36.82
35.62
0
55,403
–
–
55,403
3rd tranche LTI 2015
4th tranche LTI 2016
5th tranche LTI 2017
6th tranche LTI 2018
7th tranche LTI 2019
n / a
n / a
36.89
30,930
–
30,930
–
0
n / a
35.62
48.57
26,464
–
–
940
25,524
1.00
37.38
39.77
37,631
–
–
2,582
35,049
2.00
36.59
56.27
28,808
–
–
2,568
26,240
3.00
35.72
48.25
0
38,352
–
–
38,352
In fiscal year 2020, expenses resulting from the LTI in the amount of
EUR 480 thousand (2019: EUR 334 thousand) were recorded under personnel
expense and within a corresponding provision, as well as income from the
valuation-related reversal amounting to EUR 961 thousand recognized as
other income. Furthermore, a payment amounting to EUR 90 thousand
(2019: tranche 2015: EUR 1,045 thousand) was made for exercised options
(tranche 2016).
In total, the provision for the LTI amounts to EUR 1,685 thousand as of
December 31, 2020 (Dec 31, 2019: EUR 2,271 thousand).
NORMA Group SE – Annual Report 2020
222
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS
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 max-
imum 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 1.3 million (2019:
EUR 1.4 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, addi-
tional future contribution payment obligations could arise. The funded status
NORMA Group SE – Annual Report 2020
223
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS 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 1.186 million for all plan participants (over 150 companies). The
portion of NORMA Group to this shortfall is 3.0% (based on information
provided for 2019). The expected employer contributions to the pension
schemes for the following year 2021 amount to EUR 1,391 thousand.
Reconciliation of defined benefit obligations (DBO) and plan assets
The amounts included in the Group’s Consolidated Financial Statements arising
from its post-employment defined benefit plans are as follows:
Components pension liability
T115
in EUR thousands
Dec 31, 2020
Dec 31, 2019
Present value of obligations
Fair value of plan assets
Liability in the balance sheet
20,103
3,561
16,542
20,495
4,605
15,890
The reconciliation of the net defined benefit liability (liability in the balance
sheet) is as follows:
Reconciliation of the net defined benefit liability
in EUR thousands
as of January 1
Current service cost
Past service cost
Administration costs
Interest expenses
Remeasurements:
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 assumptions
Experience (gains) losses
Employer contributions
Plan participants contribution
Benefits paid
Business combinations, disposals and other
Foreign currency translation effects
as of December 31
T116
2019
12,804
1,630
0
17
162
23
– 17
1,592
468
– 229
0
– 640
6
74
15,890
2020
15,890
2,250
– 65
17
106
– 55
– 35
197
– 909
– 212
– 95
– 544
0
– 3
16,542
NORMA Group SE – Annual Report 2020
224
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS
A detailed reconciliation of the changes in the DBO is provided in the following
table:
A detailed reconciliation of the changes in the fair value of plan assets is
provided in the following table:
Reconciliation of the changes in the DBO
T117
Reconciliation of changes in the fair value of plan Assets
2020
2019
in EUR thousands
in EUR thousands
as of January 1
Current service cost
Past service cost
Administration costs
Interest expenses
Remeasurements:
Actuarial (gains) losses from changes in demographic
assumptions
Actuarial (gains) losses from changes in financial
assumptions
Experience (gains) losses
Plan participants contribution
Benefits paid
Transfers
Business combinations, disposals and other
Foreign currency translation effects
as of December 31
20,495
2,250
– 65
17
115
17,786
1,630
17
210
– 35
– 17
197
– 909
393
– 544
– 1,833
0
22
20,103
1,592
468
108
– 709
– 807
6
211
20,495
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
Foreign currency translation effects
Fair value of plan assets at end of year
2020
4,605
9
55
212
488
0
– 1,833
25
3,561
Disaggregation of plan assets
The allocation of the plan assets of the benefit plans is as follows:
Disaggregation of plan assets
The total defined benefit obligation at the end of fiscal year 2020 includes
EUR 11,239 thousand for active employees, EUR 1,314 thousand for former
employees with vested benefits and EUR 7,550 thousand for retirees and
surviving dependents.
The transfer in the amount of EUR 1,833 thousand (2019: EUR 807 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.
in EUR thousands
Asset class
Insurance contracts
Cash deposit
Equity securities
Total
2020
3,462
7
92
3,561
Experience gains and losses recognized in fiscal year 2020 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 Management Board within
the plan in Germany.
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.
NORMA Group SE – Annual Report 2020
225
T118
2019
4,982
48
– 23
229
108
– 69
– 807
137
4,605
T119
2019
4,543
9
53
4,605
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS
Actuarial assumptions
The principal actuarial assumptions are as follows:
Actuarial assumptions
in %
Discount rate
Inflation rate
Future salary increases
Future pension increases
2020
0.32
1.43
1.85
1.52
T120
2019
0.43
1.52
1.90
1.60
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
Ifthediscountrateweretodifferby+0.25% / – 0.25%fromtheinterestrate
used on the balance sheet date, the defined benefit obligation for pension
benefits would be an estimated EUR 693 thousand lower or EUR 787 thousand
higher.Ifthefuturepensionincreaseusedweretodifferby+ 0.25% / − 0.25%
from Management’s estimates, the defined benefit obligation for pension
benefits would be an estimated EUR 396 thousand higher or EUR 378 thou-
sandlower.Thereduction / increaseinthemortalityratesby10%resultsin
anincrease / deductioninlifeexpectancydependingontheindividualage
of each beneficiary. That means, for example, that the life expectancy of a
male NORMA Group employee age 55 years as of December 31, 2020,
increases / decreasesbyapproximatelyoneyear.Inordertodeterminethe
longevitysensitivity,themortalityrateswerereduced / increasedby10%
for all beneficiaries. The effect on DBO as of December 31, 2020, due to a
10%reduction / increaseinmortalityrateswouldresultinanincreaseof
EUR 923 thousand or a decrease of EUR 897 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. 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.
Future cash flows
Employer contributions expected to be paid to the post-employment
defined benefit plans in fiscal year 2021 are EUR 235 thousand (2019:
EUR 240 thousand).
The expected payments from the plans for post-employment benefits are
distributed as follows for the next 10 fiscal years, whereby the last 5 years
are shown as a total:
Expected payments from post-employment benefit plans
in EUR thousands
Expected benefit payments
2021
2022
2023
2024
2025
2026 – 2029
in EUR thousands
Expected benefit payments
2020
2021
2022
2023
2024
2025 – 2029
T121
2020
770
764
757
882
848
5,608
2019
850
817
826
953
867
5,208
NORMA Group SE – Annual Report 2020
226
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS The weighted average duration of the defined benefit obligation is 15.69 years
(2019: 14.64 years).
27. Provisions
The development of provisions is as follows:
Development of provisions
in EUR thousands
Guarantees
Severance
Early retirement
Other personnel-related obligations
Outstanding invoices
Others
As of
Jan 1, 2020
Additions
Amounts
used
1,670
24
1,780
8,904
969
1,180
3,237
22,691
735
1,755
1,407
3,372
– 329
– 588
– 766
– 3,907
– 968
– 456
Total provisions
14,527
33,197
– 7,014
in EUR thousands
Guarantees
Severance
Early retirement
Other personnel-related obligations
Outstanding invoices
Others
As of
Jan 1, 2019
Additions
Amounts
used
1,560
25
2,412
9,703
1,012
1,298
917
89
477
4,681
994
859
– 562
– 56
– 1,115
– 4,476
– 1,049
– 881
Unused
amounts
reversed
– 187
– 1,307
– 15
– 105
– 1,614
Unused
amounts
reversed
– 257
– 40
– 1,105
– 6
– 108
T122
Interest
accrued
Changes in
consolidation
Transfers
Foreign currency
translation
As of
Dec 31, 2020
2
2
47
– 53
0
– 6
– 50
2
– 74
– 94
– 227
– 443
4,341
22,176
1,751
5,318
1,299
3,764
38,649
Interest
accrued
Changes in
consolidation
Transfers
Foreign currency
translation
As of
Dec 31, 2019
6
76
6
– 2
12
27
18
12
69
1,670
24
1,780
8,904
969
1,180
14,527
Total provisions
16,010
8,017
– 8,139
– 1,516
82
0
4
NORMA Group SE – Annual Report 2020
227
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS
Provisions – split current / non-current
December 31, 2020
December 31, 2019
in EUR thousands
Guarantees
Thereof current
Severance
Early retirement
Other personnel-related obligations
Outstanding invoices
Others
Total provisions
Total provisions
4,341
22,176
1,751
5,318
1,299
3,764
38,649
4,033
11,303
699
3,135
1,299
3,379
23,848
Thereof
non-current
308
10,873
1,052
2,183
385
14,801
Total
thereof current
1,670
24
1,780
8,904
969
1,180
14,527
1,464
24
671
4,709
969
706
8,543
T123
thereof
non-current
206
1,109
4,195
474
5,984
Guarantees
Severance payments
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.
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 provisions will be paid out in the following fiscal
year and are therefore reported under current provisions.
Restructuring
Early retirement contracts
Provisions for restructuring are recognized at the present value of future cash
outflows. Provisions are recognized when a detailed restructuring plan, which
has been approved by management and publicly announced or communicated
to employees or their representatives, is available. Only expenses directly
attributable to the restructuring measures are used to measure the amount
of the provision. Expenses related to future operating business are not taken
into account.
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’).Inthesecondphase,he / sheisexemptfromwork
(‘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.
The additions to provisions for restructuring in the current fiscal year result
from the measures under the “Get on track” program. The accruals include
personnel restructuring measures for which provisions can be recognized,
resulting in severance payments.
Accounting for early retirement (‘Altersteilzeit’) is based on actuarial valuations
taking into consideration assumptions such as a discount rate of – 0.28 %
p.a. (2019: 0.24% 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 699 thousand
for fiscal year 2021.
NORMA Group SE – Annual Report 2020
228
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS Other personnel-related provisions
Other personnel-related provisions are as follows:
Provisions – other personnel-related
in EUR thousands
Note
Total
Thereof current
Thereof
non-current
Total
thereof current
December 31, 2020
December 31, 2019
NORMA-VA-Bonus
ESG-Bonus (2019: LTI - Board Members)
STI – Board Members
Matching Stock Program (MSP)
LTI – Management
Anniversary provisions
Other personnel-related
(25)
(25)
188
55
950
1,059
1,685
263
1,118
5,318
188
950
1,059
938
3,135
55
1,685
263
180
2,183
913
59
2,198
833
2,271
1,203
1,427
8,904
913
59
2,198
347
348
844
4,709
T124
thereof
non-current
486
1,923
1,203
583
4,195
With effect from January 1, 2020, the LTI for the members of the Management
Board consists of two different long-term variable compensation components,
the NORMA Value Added Bonus (NOVA-Bonus) and the Environmental, Social
and Governance Bonus (ESG-Bonus).
The NOVA-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 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 NOVA-Bonus is limited to a maximum of
200% of the annual salary. The company may pay the payout amount in
cash or in shares of NORMA Group SE.
NORMA Group SE – Annual Report 2020
229
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS If paid out in cash, the Management Board obligates itself to purchase shares
of NORMA Group SE of 75 % of the net payout amount. The Supervisory Board
may, at its reasonable discretion, resolve to issue shares in whole or in part
instead of a cash payment. Regardless of whether the company pays the
amount due in cash or shares, 75 % of the NOVA-Bonus’ net payout must be
invested in shares of NORMA Group SE.
the members of the Management Board are obliged to hold 100% of the
shares issued for one year. If a member of the Management Board enters the
company’s service in the current fiscal year or does not work for the company
for a full twelve months in a fiscal year, the LTI is to be reduced on a pro rata
basis.
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 ESG bonus was adopted in fiscal year 2020 for the first time. It is granted
in annual tranches. Each tranche has a term of four years. A tranche begins
on January 1 of the grant fiscal year and ends at the end of December 31 of
the third year following the grant fiscal year (ESG performance period). The
amount paid out under the ESG bonus depends on the achievement of
environmental, social and governance targets. For the tranche of 2020, the
reduction of CO2-emissions was defined as target. The target amount of the
ESG bonus is 20% of the fixed annual salary. The payout amount is limited
to a maximum of 100% of the target amount. The company can pay out the
ESG bonus in cash or in company shares. In the case of cash payment, the
members of the Management Board are obliged to purchase shares in the
company for the entire net amount paid out and to hold these shares for a
period of one year (share purchase and shareholding obligation). The
company’s Supervisory Board may decide at its reasonable discretion to issue
shares in the company in whole or in lieu of a cash payment. In this case, too,
The STI for the members of the Management Board results from a short-
term variable remuneration component for the members of the Management
Board. The short-term variable remuneration takes on the one hand the
absolute performance indicator adjusted EBIT (earnings before interest and
taxes, adjusted for acquisitions) of NORMA Group into account and, on the
other hand, the relative return on shares (total shareholder return or TSR) of
NORMA Group SE in relation to a peer group. The payout amount of the STI
is calculated from a starting value and an adjustment to the target
achievement of the TSR in the fiscal year of the grant. Further information
can be found in the
REMUNERATION REPORT.
In fiscal year 2020 there was no payment for exercised option rights for
the Matching Stock Program (MSP) for the Management Board of
N OT E 2 5
NORMA Group (2019: no payment for exercised option rights)
‘SHARE-BASED PAYMENTS.
The LTI for Management (Long-Term Incentive Plan) is a variable remuneration
component based on the share price of NORMA Group. A detailed description
can be found in
NOTE 25 ‘SHARE-BASED PAYMENTS.’
The provisions for anniversaries were measured using an actuarial interest
rate of 0.45% p.a. and on the basis of the 2018 G mortality tables of
Prof. Dr. Klaus Heubeck in accordance with actuarial principles.
Other personnel-related provisions mainly include payable income tax and
social security contributions in foreign countries.
NORMA Group SE – Annual Report 2020
23 0
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS Other non-personnel-related provisions
Provisions for outstanding invoices 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.
28. Other non-financial liabilities
Other non-financial liabilities are as follows:
Other non-financial liabilities
T125
The decrease in personnel-related liabilities is mainly due to the decrease in
liabilities from expected bonus payments for employee.
NORMA Group received government grants of which EUR 1,230 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 respective local entities. NORMA Group recognizes
the government grants as income over the period in which related expenses
occur. In 2020, EUR 569 thousand were recognized as income (2019:
EUR 606 thousand).
The additional government grants received in the amount of EUR 922 thousand
mainly related to government grants in connection with the COVID-19
pandemic.
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, 2020
Dec 31, 2019
240
255
495
990
3,881
5,123
24,413
560
34,967
35,462
266
90
356
1,230
2,119
4,484
28,118
714
36,665
37,021
NORMA Group SE – Annual Report 2020
231
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS
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 amortization 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 133,542 thousand (2019: EUR 137,083 thousand) represents changes
in current assets, provisions and liabilities (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,
2020, reverse factoring liabilities in the amount of EUR 15,713 thousand are
recognized (Dec 31, 2019: EUR 21,335 thousand).
NOTE 21 (E ) ‘ TRADE AND
OT HER PAYA BLES’ 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.
The total amount of trade receivables sold within the factoring and ABS
NOTE 21 (B) ‘ TRADE RECEIVABLES AVAILABLE FOR
program can be found in
TRANS FE R ’.
Net cash provided by operating activities includes in 2020 cash outflows from
the payments of the cash-settled share-based payments in the amount of
EUR 90 thousand (2019: EUR 1,045 thousand), which result from the
Long-Term Incentive Plan (LTI) for NORMA Group employees (2019: LTI cash
remuneration for NORMA Group employees).
Othernon-cashincome(–) / expenses(+)innetcashprovidedbyoperating
activities mainly include foreign exchange rate gains and losses on external
debt and intragroup monetary items in the amount of EUR 149 thousand
(2019: EUR – 341 thousand).
Furthermore, other non-cash income (–) / expenses (+) include non-cash
interest expenses from the amortization of accrued costs, amounting to
EUR 282 thousand (2019: EUR 356 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 equipment and intangible
assets amounting to EUR 39,088 thousand (2019: EUR 57,033 thousand)
includingthechange(increase(–) / decrease(+))ofliabilitiesfrominvestments
in property, plant and equipment and intangible assets amounting to
EUR– 1,831thousand(2019:EUR2,942thousand).Fromtheinvestments
in non-current assets of EUR 41,249 thousand (2019: EUR 54,842 thousand),
expenditures in the amount of EUR 23,650 thousand (2019: EUR 33,009 thou-
sand) relate to growth and expenditures amounting to EUR 17,599 thousand
(2019: EUR 21,834 thousand) to maintenance and continuous improvements.
Cash flows from financing activities mainly comprise outflows resulting from
the payment of the dividend to shareholders of NORMA Group, amounting to
EUR 1,274 thousand (2019: EUR 35,049 thousand), cash outflows resulting
from interest paid (2020: EUR 12,880 thousand; 2019: EUR 15,070 thousand)
as well as repayments of derivatives in the amount of EUR 14 thousand (2019:
proceeds of EUR 83 thousand).
The correction of income due to measurement of derivatives in the amount of
EUR 303 thousand (2019: expense in the amount of EUR 73 thousand) relates
to fair value gains and losses recognized within the income statement assigned
to the cash flows from financing activities.
Furthermore, net repayments for loans amounting to EUR 49,092 thousand
NOTE 5 (C) ‘LIQUIDIT Y RISKS’
(2019: net repayments of EUR 32,145 thousand)
dividend payments to non-controlling interests in the amount of EUR 0 thousand
(2019: EUR 43 thousand), repayments for liabilities of ABS and factoring in
the amount of EUR 7,137 thousand (2019: proceeds of EUR 791 thousand)
NORMA Group SE – Annual Report 2020
232
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS and repayments for lease liabilities in the amount of EUR 10,012 thousand
(2019: EUR 10,058 thousand), disclosed as cash flows from financing
N OT E 2 0 ‘ L E A S E S ’ A N D 2 1 ( E ) ‘ F I N A N C I A L L I A B I L I T I E S A N D N E T D E B T ’
activities.
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.
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 180,938 thou-
sand on December 31, 2020 (Dec 31, 2019: EUR 174,918 thousand), as well
as cash equivalents with a value of EUR 4,171 thousand (Dec 31, 2019:
EUR 4,803 thousand).
Cash from China, India, Russia, Brazil and Malaysia (Dec 31, 2020:
EUR 47,268 thousand, Dec 31, 2019: EUR 43,364 thousand) cannot currently
be distributed due to restrictions on capital movements.
NORMA Group SE – Annual Report 2020
233
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS
Reconciliation of changes in assets and liabilities to cash flows from financing activities
T126
Financial liabilities
Derivatives held to hedge
financial liabilities
(assets (–) / liabilities (+))
Equity
in EUR thousands
Note
Short-
term
loans
payable
Long-term
loans
payable
Borrow-
ings from
the ABS /
factoring
programs
Liabilities
from put / call
option for
NCI
Interest rate
swaps –
cash flow
hedge
Foreign currency
derivatives – fair
value hedge
Lease
liabilities
Retained
earnings
Other
Reserves
Non-con-
trolling
interests
Total
Balance as
of December 31, 2019
Changes in cash flow
from financing activities
Loan proceeds
Loan repayments
Inflow (+) / outflow (–)
from hedging derivatives
Interest paid
Repayment of debts from
leases
Payments for the
acquisition of non-
controlling interests
Dividends paid
Total change in
cash flow from the
financing activities
45,971
495,927
14,676
38,595
1,631
476
– 13
375,843
9,850
1,576
975,180
(21. (e))
(21. (e))
43,748
– 67,750
– 25,090
– 7,137
– 10,399
(21. (f))
(21. (e))
(24)
(24)
– 1,059
– 10,012
– 756
– 14
– 560
– 1,274
43,748
– 99,977
– 14
– 12,214
– 10,012
– 560
– 1,274
(29)
– 34,401
– 25,090
– 7,137
– 11,071
– 560
– 756
– 14
– 1,274
0
0 – 80,303
CONTINUED ON NEXT PAGE
NORMA Group SE – Annual Report 2020
23 4
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS Reconciliation of changes in assets and liabilities to cash flows from financing activities
(continued)
T126
Financial liabilities
Derivatives held to hedge
financial liabilities
(assets (–) / liabilities (+))
Equity
Short-
term
loans
payable
Long-term
loans
payable
Note
Borrow-
ings from
the ABS /
factoring
programs
Liabilities
from put / call
option for
NCI
Interest rate
swaps –
cash flow
hedge
Foreign currency
derivatives – fair
value hedge
Lease
liabilities
Retained
earnings
Other
Reserves
Non-con-
trolling
interests
Total
– 1,535
– 12,808
– 510
– 2,597
– 72
190 – 17,332
1,634
– 304
– 1,633
– 303
9,645
282
70,497
– 70,497
1,059
– 1,987
9,846
n / a
756
n / a
11,742
n / a
n / a
n / a
n / a
n / a
n / a
– 1,987
9,846
0
80,142
– 70,215
0
8,918
0
(24)
n / a
n / a
n / a
n / a
0
n / a
0
n / a
756
n / a
19,601
n / a
6,494
– 43,667
– 1,566
6,494
90,177
387,814
7,029
33,845
999
1,354
– 331
381,063
– 33,938
200
903,337
in EUR thousands
Effects of changes in
exchange rates
Changes in the
fair value
Other changes
Based on debt
Interest expense
Derecognition of lease
liabilities
New leases
Transfer
Other changes
related to debt
Other changes
related to equity
Balance as
of December 31, 2020
NORMA Group SE – Annual Report 2020
235
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS 30. Segment reporting
Segment reporting
T127
EMEA
Americas
Asia-Pacific
Total segments
Central functions
Consolidation
Consolidated Group
in EUR thousands
Total
revenue
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
Total revenue
439,556
523,199
391,026
460,320
159,230
166,639
989,812 1,150,158
26,920
26,545
– 64,565
– 76,607
952,167
1,100,096
thereof inter-
segment revenue
Revenue from
external customers
Contribution to consol-
idated Group sales
Adjusted gross profit 1
Adjusted EBITDA 1
Adjusted EBITDA
margin 1, 2
Depreciation without
PPA depreciation 3
Adjusted EBITA 1
Adjusted EBITA
margin 1, 2
Adjusted EBIT 1
Adjusted EBIT
margin 1, 2
Assets 4
Liabilities 5
CAPEX 6
Number of
employees 7
30,040
37,229
5,527
9,552
2,079
3,281
37,646
50,062
26,920
26,545
– 64,565
– 76,607
409,516
485,970
385,499
450,768
157,151
163,358
952,166 1,100,096
0
0
0
0
952,167
1,100,096
43%
244,723
30,965
44%
296,828
90,815
40%
215,153
50,474
41%
257,378
79,606
17%
76,476
29,761
15%
76,007
28,012
100%
536,352
111,200
100%
630,213
n / a
198,433 – 12,169
n / a
– 11,116
318
281
422
– 89
536,670
99,312
630,635
187,228
7.0%
17.4%
12.9%
17.3%
18.7%
16.8%
10.4%
17.0%
– 18,981
11,984
– 17,201
73,614
– 16,129
34,345
– 15,585
64,021
– 8,505
21,255
– 7,909
20,103
– 43,615
67,584
– 1,074
– 40,695
157,738 – 13,243
– 1,734
– 12,850
282
– 89
– 44,689
54,623
– 42,429
144,799
2.7%
9,336
14.1%
70,782
8.8%
30,981
13.9%
60,798
13.3%
19,985
12.1%
19,666
60,302
151,246 – 15,293
– 15,100
281
– 88
5.7%
45,290
13.2%
136,058
2.1%
621,091
204,830
20,168
13.5%
632,012
204,606
25,003
7.9%
574,091
245,259
13,633
13.2%
655,301
271,858
18,041
12.6%
253,193
50,441
8,117
11.8%
258,943 1,448,375 1,546,256
530,196
500,530
55,396
41,918
53,732
12,352
263,481
584,564
919
301,560 – 297,152
631,795 – 259,900
n / a
1,510
4.8%
– 333,476 1,414,704
825,194
– 277,105
42,837
n / a
12.4%
1,514,340
884,886
56,906
3,613
3,612
1,413
1,735
1,378
1,340
6,404
6,687
117
111
n / a
n / a
6,521
6,798
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_Including capitalization for Right of Use Assets related to movable assets
7_Number of employees (average headcount).
NOTE 7 ‘ADJUSTMENTS’.
NORMA Group SE – Annual Report 2020
23 6
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS 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 are generated across all segments from the sale of products in the
three product categories metallic fastening clips and fasteners (Fasten), fluid
systems and connectors (Fluid), and water management applications (Water).
NORMA Group measures the performance of its segments through profit or
loss indicators which are referred to as ‘adjusted EBITDA’, ‘adjusted EBITA’
and ‘adjusted EBIT’.
’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.
‘Adjusted EBITA’ includes, in addition to EBITDA, the depreciation adjusted for
depreciation from purchase price allocations.
‘Adjusted EBIT’ comprises adjusted EBITA less amortization of intangible
assets.
In 2020 and 2019, expenses for special impacts were adjusted. An overview
of those adjustments and a reconciliation from unadjusted to adjusted income
statement is explained under
NOTE 7 ‘ADJUSTMENTS’.
Inter-segment revenue is generally recorded at values that approximate
third-party selling prices.
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.
Capex equals additions to non-current assets (property, plant and equipment
and other intangible assets including additions for leases for moveable assets).
Current and deferred tax assets and liabilities are shown in the conso-
lidation. On December 31, 2020, EUR 25,898 thousand (Dec 31, 2019:
EUR 19,155 thousand) in tax assets and EUR 61,183 thousand (Dec 31,
2019: EUR 73,274 thousand) in tax liabilities were shown in the consolidation.
External sales per country, measured according to the place of domicile of the
company which manufactures the products, are as follows:
External sales per country
in EUR thousands
Germany
USA, Mexico, Brazil
China
Other countries
2020
155,522
385,499
104,103
307,043
952,167
T128
2019
186,834
450,768
100,264
362,230
1,100,096
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:
NORMA Group SE – Annual Report 2020
237
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS
Non-current assets per country
T129
33. Related party transactions
Dec 31, 2020
Dec 31, 2019
Sales and purchases of goods and services
in EUR thousands
Germany
USA, Mexico, Brazil
Sweden
Other countries
Consolidation
31. Commitments
127,624
415,315
48,068
294,929
– 12,834
873,102
134,946
470,872
48,303
313,776
– 14,595
953,302
The Group has contingent liabilities in respect of legal claims arising in the
ordinary course of business (e.g. warranty obligations).
NORMA Group does not believe that any of these contingent liabilities will
have a material adverse effect on its business or any material liabilities will
arise from contingent liabilities.
32. Other financial obligations
Capital commitments
In 2020 and 2019, 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 2020 and 2019.
Compensation of members of the Management Board
Compensation of the members of the Management Board according to IFRS
is as follows:
Compensation of members of the Management Board
(IFRS)
in EUR thousands
Short-term benefits
Other long-term benefits
Post-employment benefits
Share-based payment
Total compensation according to IFRS
2020
2,071
55
970
0
3,096
T131
2019
3,458
0
902
– 31
4,329
Capital expenditure (nominal value) contracted for on the balance sheet date
but not yet incurred is as follows:
Commitments
in EUR thousands
Property, plant and equipment
T130
In the 2019 fiscal year, additional termination benefits amounting to
EUR 1,480 thousand were recognized. The total compensation for the fiscal
year 2019 summed up to EUR 5,809 thousand.
Dec 31, 2020
Dec 31, 2019
4,583
4,583
5,386
5,386
Provisions for the compensation of the members of the Management Board
are as follows:
There are no material commitments concerning intangible assets.
NORMA Group SE – Annual Report 2020
238
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS Provisions for compensation of the
Management Board members
T132
34. Additional disclosures pursuant to section 315e (1) of the
German Commercial Code (HGB)
in EUR thousand
Note
Dec 31, 2020
Dec 31, 2019
LTI – Management Board
STI – Management Board
Matching Stock Program (MSP)
NORMA-VA-Bonus
Total
(27)
(27)
(25)
(27)
188
950
1,059
188
2,385
59
2,198
833
913
4,003
Compensation of Board Members
The amounts presented below for the remuneration of the Management Board
and the Supervisory Board of NORMA Group SE result from the valuation
principles defined in the German GAAP (HGB) and may differ from the amounts
recognized in the IFRS Consolidated Financial Statements.
Details regarding the individual provisions can be found in the respective notes.
The remuneration of the Management Board and Supervisory Board was as
follows:
Besides the provisions shown above, a defined benefit obligation exists for
the Management Board. The present value of the obligation amounts to
EUR 4,518 thousand as of December 31, 2020 (Dec 31, 2019: EUR 4,114 thou-
sand).
NOTE 26 ‘RETIREMENT BENEFIT OBLI GATIONS’
Details regarding the compensation of the Management Board can be found
in the
R EMUNERATION REPORT.
Compensation of Board members
in EUR thousands
Total Management Board
Total Supervisory Board
2020
2,126
485
2,611
T133
2019
3,458
488
3,946
In the 2019 fiscal year, additional termination benefits amounting to EUR 1,480
thousand were recognized.
NORMA Group SE – Annual Report 2020
23 9
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS The remuneration of the members of the Management Board was as follows:
Compensation of members of the Management Board
Dr. Michael Schneider
Dr. Friedrich Klein
Annette Stieve
(since Oct 1, 2020)
Bernd Kleinhens
(until Jul 31, 2019)
Total
in EUR thousands
Fixed compensation
Variable compensation
Long-term incentives
Total compensation
2020
614
420
130
1,164
2019
2020
2019
2020
2019
2020
2019
2020
423
572
438
1,433
397
280
90
767
334
409
219
962
102
70
23
195
n / a
n / a
n / a
n / a
n / a
n / a
n / a
n / a
310
572
181
1,063
1,113
770
243
2,126
In the fiscal year 2019, expenses for the termination of Mr. Kleinhen’s activities,
in total EUR 1,480 thousand, were recognized.
Besides these expenses, expenses for a defined benefit obligation were
NOTES 26 ‘RETIREMENT BENEFIT OBLIGATIONS’:
recognized in 2020 as follows
Section 314 PARA 1 NO 6a HGB: Retirment Benefit Obligations
Dr. Michael Schneider
Dr. Friedrich Klein
Annette Stieve
(since Oct 1, 2020)
Bernd Kleinhens
(until Jul 31, 2019)
Total
in EUR thousands
Present value of the obligation
Amount spent
2020
2,875
1,032
2019
2020
2019
2020
2019
2020
2019
2020
1,843
838
703
336
367
314
n / a
38
n / a
279
n / a
n / a
n / a
279
3,578
1,406
The defined benefit obligation of pension commitments to prior members of
the Management Board and their dependents was EUR 817 thousand as of
December 31, 2020 (2019: EUR 847 thousand).
T134
2019
1,067
1,553
838
3,458
T135
2019
2,210
1,431
NORMA Group SE – Annual Report 2020
240
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS Fees for the auditor
Consolidation
Fees for the auditor, PricewaterhouseCoopers GmbH Wirtschaftsprüfungs-
gesellschaft,Frankfurt / Mainwereexpensedasfollows:
Name, place of domicile and share in capital pursuant to section 313 (2) No.
N OT E 4
1 HGB of the consolidated group of companies is presented in
‘SCOPE OF CONSOLIDATION’.
Fees for the auditor
in EUR thousands
Auditing services
Other confirmation services
Other services
2020
590
23
71
684
T136
2019
603
35
37
675
Proposal for the distribution of the earnings
The Management Board of NORMA Group SE proposes to Annual General
Meeting to pay a dividend of EUR 0.70 per share to the shareholders. The total
dividend payment thus amounts to EUR 22,303,680.
Corporate Governance (section 161 AktG)
In addition to auditing services, the auditor provided confirmation services
for financial covenants audit. Other services include audit of the Nonfinancial
Statement.
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.
Headcount
The average headcount breaks down as follows:
Average headcount
Number
Direct labor
Indirect labor
Salaried
2020
3,197
1,191
2,133
6,521
T137
2019
3,291
1,294
2,213
6,798
35. Exceptions under section 264, paragraph 3 of the German
commercial code (HGB)
In 2020, 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
36. Events after the balance sheet date
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
employeesinadministrative / sales / centralfunctions.
Up to March 11, 2021, there were no events or developments that would have
resulted in a material change in the recognition or measurement of the
individual assets and liabilities as of December 31, 2020.
NORMA Group SE – Annual Report 2020
241
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS
APPENDIX TO THE NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS
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.
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.
The following table gives an overview of all voting rights notifications that
have been sent to the Company as of March 11, 2021. It contains the
Voting rights notification
Notifying party
Impax Asset Management Group plc, London, UK
Ministry of Finance on behalf of the State of Norway, Oslo, Norway 1
T. Rowe Price International Funds, Inc., Baltimore, Maryland, USA 2
Ameriprise Financial, Inc., Wilmington, Delaware, USA 3
AVGP Limited, St Helier, Jersey, USA
Allianz SE, Munich, Germany
BNP Paribas Asset Management France S.A.S., Paris, France
Threadneedle (Lux), Bertrange, Luxembourg 3
Achievement of
voting rights
Touched
or exceeded
reporting threshold
Mar 1, 2021
Jan 14, 2021
Dec 8, 2020
Nov 3, 2020
Jun 17, 2020
May 14, 2020
Apr 8, 2020
Mar 30, 2020
Less than 5%
More than 3%
More than 3%
More than 3%
Less than 3%
More than 5%
Less than 3%
Less than 5%
T138
Share in %
Shares
Pursuant to WpHG
4.88
3.03
3.92
4.13
2.99
5.28
2.97
4.90
1,555,378
956,049
1,249,133
1,314,721
954,128
1,683,253
947,576
1,561,850
§§ 33, 34 WpHG
§§ 33, 34 WpHG
§§ 33, 34 WpHG
§§ 33, 34 WpHG
§§ 33, 34 WpHG
§§ 33, 34 WpHG
§§ 33, 34 WpHG
§§ 33, 34 WpHG
§§ 33, 34 WpHG
as well as § 38 Abs. 1
Nr. 1 WpHG and
§ 38 Abs. 1 Nr. 2
WpHG
§§ 33, 34 WpHG
§§ 33, 34 WpHG
The Goldman Sachs Group, Inc., Wilmington, Delaware, USA
Allianz Global Investors GmbH, Frankfurt am Main, Germany 4
T. Rowe Price Group, Inc., Baltimore, Maryland, USA 2
Mar 24, 2020
Feb 18, 2020
Feb 11, 2020
Less than 5%
More than 15%
More than 5%
4.44
15.20
5.01
1,414,358
4,843,141
1,596,572
1_ The Ministry of Finance on behalf of the State of Norway holds 3.000555513709% direct voting rights and 0.03% indirect voting rights through instruments, for a total of 3.03%
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_ Looking at the entire corporate chain, Ameriprise Financial Inc. (Wilmington, USA) holds a total of 4.13%. The two subsidiaries Threadneedle Asset Management Limited (London, Great
Britain) and Threadneedle Management Luxembourg SA (Bertrange, Luxembourg) hold 4.13% and 3.38%, respectively.
4_The15.20%ofAllianzGlobalInvestorsGmbH(Frankfurt / Main,Germany)containthe3.30%oftheself-reportableAllianzGlobalInvestorsFundSICAV(Sennigerberg,Luxembourg).
NORMA Group SE – Annual Report 2020
242
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS Corporate bodies of NORMA Group SE
Management Board Member
Supervisory Board member, exercised profession
Dr. Michael Schneider
Diploma in Business Administration Chief Executive Officer (CEO)
since November 14, 2019
Member of the Management Board since July 1, 2015
Günter Hauptmann
Chairman since September 1, 2020, Consultant
• Member of the Advisory Board of Moon TopCo GmbH, Poing, Germany
(not listed on the stock exchange)
• Member of the Supervisory Board of Novellus Holding AG (former
Leitwerk AG), Appenweier, Germany (not listed on the stock exchange)
• Member of the Supervisory Board of accuris AG, Munich, Germany
Lars M. Berg
Member and Chairman until August 31, 2020, Consultant
(not listed on the stock exchange)
Dr. Friedrich Klein
Master’s degree in Mechanical Engineering
Chief Operating Officer (COO) since October 1, 2018
• No seats on other boards or comparable committees
Annette Stieve
Diploma in Business Administration
Chief Financial Officer (CFO) since October 1, 2020
• 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
Rita Forst
Consultant
• No seats on other boards or comparable committees
• Member of the Board of Directors of AerCap Holdings N.V., Dublin, Ireland
(listed on the stock exchange)
• Member of the Board of Directors of Westport Fuel Systems Inc.,
Vancouver, Canada (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 iwis SE & Co. KG (former Joh. Winklhofer
Beteiligungs GmbH & Co. KG), Munich, Germany (not listed)
NORMA Group SE – Annual Report 2020
243
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS
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 Moon TopCo GmbH, Poing, Germany
(not listed on the stock exchange)
• Former member of the Advisory Board of Tegimus Holding GmbH,
Frankfurt / Main,Germany(notlistedonthestockexchange,
until June 3, 2020)
Mark Wilhelms
Chief Financial Officer of Stabilus S.A.
• No further mandates on Supervisory Boards or comparable bodies
Miguel Ángel López Borrego 1
Chairman of the Board of Directors of Siemens Gamesa Renewable Energy
S.A., Zamudio, Spain, and President and CEO of Siemens S.A., Spain, and of
Siemens’ Spanish operations..
• No further mandates on Supervisory Boards or comparable bodies
Maintal, March 11, 2021
NORMA Group SE
Dr. Michael Schneider
Chief Executive Officer
(CEO)
Dr. Friedrich Klein
Chief Operating Officer
(COO)
Annette Stieve
Chief Financial Officer
(CFO)
1_ The application for the court appointment of Mr. López to the Supervisory Board of
NORMA Group was filed on March 3, 2021. The appointment decision by the court is
expected soon.
NORMA Group SE – Annual Report 2020
244
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS
RESPONSIBILITY STATEMENT
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
Consolidated Management Report includes a fair review of the development
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 11, 2021
NORMA Group SE
The Management Board
Dr. Michael Schneider
Chief Executive Officer
(CEO)
Dr. Friedrich Klein
Chief Operating Officer
(COO)
Annette Stieve
Chief Financial Officer
(CFO)
NORMA Group SE – Annual Report 2020
245
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS INDEPENDENT AUDITOR’S REPORT
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 December 31, 2020, 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 fiscal year from January 1 to December 31, 2020, and notes
to the Consolidated Financial Statements, including a summary of significant
accounting policies. In addition, we have audited the Group Management
Report of NORMA Group SE for the fiscal year from January 1 to December
31, 2020. In accordance with German legal requirements, we have not audited
the content of those parts of the Group 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 comply, in all
material respects, with the IFRSs as adopted by the EU, and the addi-
tional 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
December 31, 2020, and of its financial performance for the fiscal year
from January 1 to December 31, 2020, and
• the accompanying Group Management Report as a whole provides an
appropriate view of the Group’s position. In all material respects, this
Group Management Report is consistent with the Consolidated Financial
Statements, complies with German legal requirements and appropriately
presents the opportunities and risks of future development. Our audit
opinion on the Group Management Report does not cover those parts of
the Group Management 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
Conso lidated Financial Statements and of the Group Management Report.
Basis for the audit opinions
We conducted our audit of the Consolidated Financial Statements and of the
Group Management Report in accordance with § 317 HGB and the EU Audit
Regulation(No.537 / 2014,referredtosubsequentlyas“EUAuditRegulation”)
and in compliance with German Generally Accepted Standards for Financial
Statement Audits promulgated by the Institut der Wirtschaftsprüfer [Institute
of Public Auditors in Germany] (IDW). Our responsibilities under those require-
ments and principles are further described in the “Auditor’s Responsibilities
for the Audit of the Consolidated Financial Statements and of the Group
Management Report” section of our auditor’s report. We are independent of
the group entities in accordance with the requirements of European 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 Regula-
tion, 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 provide a basis for our audit
opinions on the Consolidated Financial Statements and on the Group Manage-
ment Report.
NORMA Group SE – Annual Report 2020
246
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS Key audit matters in the audit of the
Consolidated Financial Statements
Key audit matters are those matters that, in our professional judgment, were
of most significance in our audit of the Consolidated Financial Statements for
the financial year from January 1 to December 31, 2020. 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.
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
a)
In the Consolidated Financial Statements of NORMA Group SE a total
amount of EUR 377.6 million, representing around 27% 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 (“impair-
ment 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 pre-
pared by the 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 as
well as the expected effects of the ongoing COVID-19 crisis on the
business activities of the Group. 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, also against the
background of the effects of the COVID-19 crisis, 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.
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 this connection, we also evaluated the assessment
of the executive directors regarding the effects of the COVID-19 crisis on
the business activities of the Group and examined how they were taken
into account in determining the future cash flows. 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
NORMA Group SE – Annual Report 2020
247
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS parameters used to determine the discount rate applied, and assessed
the calculation model. Furthermore, 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 comprehensible.
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 Group Manage-
ment Report:
• the statement on corporate governance pursuant to § 289f HGB and
§ 315d HGB included in section “Principles of the group” of the Group
Management Report
• 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 Group Manage-
ment Report and our auditor’s report.
Our audit opinions on the Consolidated Financial Statements and on the Group
Management Report do not cover the other information, and consequently
we do not express an audit opinion or any other form of assurance conclusion
thereon.
Responsibilities of the Executive Directors and the
Supervisory Board for the Consolidated Financial Statements
and the Group 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 compliance 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.
In preparing the Consolidated Financial Statements, the executive directors are
responsible for assessing the Group’s ability to continue as a going concern.
They also have the responsibility for disclosing, as applicable, matters related
to the 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 preparation of the
Group 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 development.
In addition, the executive directors are responsible for such arrangements and
measures (systems) as they have considered necessary to enable the
preparation of a Group 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 group management report.
In connection with our audit, our responsibility is to read the other information
and, in so doing, to consider whether the other information
The supervisory board is responsible for overseeing the Group’s financial
reporting process for the preparation of the Consolidated Financial Statements
and of the Group Management Report.
• is materially inconsistent with the Consolidated Financial Statements, with
the Group Management Report or our knowledge obtained in the audit, or
• otherwise appears to be materially misstated.
NORMA Group SE – Annual Report 2020
248
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS Auditor’s responsibilities for the audit of the Consolidated
Financial Statements and of the Group Management Report
Our objectives are to obtain reasonable assurance about whether the Conso-
lidated Financial Statements as a whole are free from material misstatement,
whether due to fraud or error, and whether the Group 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 German legal requirements
and appropriately presents the opportunities and risks of future development,
as well as to issue an auditor’s report that includes our audit opinions on the
Consolidated Financial Statements and on the Group 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 Regu-
lation 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 Group Management 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 Group 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 appropriate 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 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 Group 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
Group Management Report or, if such disclosures are inadequate, to
modify our respective audit opinions. 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 disclosures, 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 financial
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 Group 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 Group Management Report with the
Consolidated Financial Statements, its conformity with German law, and
the view of the Group’s position it provides.
• Perform audit procedures on the prospective information presented by
the executive directors in the Group 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 information and on the
assumptions used as a basis. There is a substantial unavoidable risk
that future events will differ materially from the prospective information.
NORMA Group SE – Annual Report 2020
249
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS We communicate with those charged with governance regarding, 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.
German legal requirements, this assurance engagement only extends to the
conversion of the information contained in the Consolidated Financial Statements
and the Group Management Report into the ESEF format and therefore relates
neither to the information contained within this reproduction nor to any other
information contained in the above-mentioned electronic file.
We also provide those charged with governance with a statement that we
have complied with the relevant independence requirements, and communi-
cate 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
Assurance Report in Accordance with § 317 Abs. 3b HGB on the Electronic
Reproduction of the Consolidated Financial Statements and the Group
Management Report Prepared for Publication Purposes
Reasonable assurance conclusion
We have performed an assurance engagement in accordance with § 317 Abs.
3b HGB to obtain reasonable assurance about whether the reproduction of
the Consolidated Financial Statements and the Group Management Report
(hereinafter the “ESEF documents”) contained in the attached electronic file
NORMA_Group_KA_KLB_ESEF-2020-12-31.zip and prepared for publication
purposes complies in all material respects with the requirements of § 328 Abs.
1 HGB for the electronic reporting format (“ESEF format”). In accordance with
In our opinion, the reproduction of the Consolidated Financial Statements and
the Group Management Report contained in the above-mentioned attached
electronic file and prepared for publication purposes complies in all material
respects with the requirements of § 328 Abs. 1 HGB for the electronic reporting
format. We do not express any opinion on the information contained in this
reproduction nor on any other information contained in the above-mentioned
electronic file beyond this reasonable assurance conclusion and our audit
opinion on the accompanying Consolidated Financial Statements and the
accompanying Group Management Report for the financial year from
January 1 to December 31, 2020, contained in the “Report on the Audit of
the Consolidated Financial Statements and on the Group Management
Report” above.
Basis for the reasonable assurance conclusion
We conducted our assurance engagement on the reproduction of the Conso-
lidated Financial Statements and the Group Management Report contained
in the above-mentioned attached electronic file in accordance with § 317 Abs.
3b HGB and the Exposure Draft of IDW Assurance Standard: Assurance in
Accordance with § 317 Abs. 3b HGB on the Electronic Reproduction of Financial
Statements and Management Reports Prepared for Publication Purposes (ED
IDW AsS 410) and the International Standard on Assurance Engagements
3000 (Revised). Accordingly, our responsibilities are further described below
in the “Group Auditor’s Responsibilities for the Assurance Engagement on the
ESEF Documents” section. Our audit firm has applied the IDW Standard on
Quality Management: Requirements for Quality Management in the Audit Firm
(IDW QS 1).
NORMA Group SE – Annual Report 2020
250
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS Responsibilities of the Executive Directors and the Supervisory
Board for the ESEF Documents
purpose of expressing an assurance conclusion on the effectiveness of
these controls.
The executive directors of the Company are responsible for the preparation
of the ESEF documents including the electronic reproduction of the Consoli-
dated Financial Statements and the Group Management Report in accordance
with § 328 Abs. 1 Satz 4 Nr. 1 HGB and for the tagging of the Consolidated
Financial Statements in accordance with § 328 Abs. 1 Satz 4 Nr. 2 HGB.
In addition, the executive directors of the Company are responsible for such
internal control as they have considered necessary to enable the preparation
of ESEF documents that are free from material non-compliance with the
requirements of § 328 Abs. 1 HGB for the electronic reporting format, whether
due to fraud or error.
• Evaluate the technical validity of the ESEF documents, i.e., whether the
electronic file containing the ESEF documents meets the requirements of
theDelegatedRegulation(EU)2019 / 815intheversionapplicableasat
the balance sheet date on the technical specification for this electronic file.
• Evaluate whether the ESEF documents enable a XHTML reproduction
with content equivalent to the audited Consolidated Financial Statements
and to the audited Group Management Report.
• Evaluate whether the tagging of the ESEF documents with Inline XBRL
technology (iXBRL) enables an appropriate and complete machine-
readable XBRL copy of the XHTML reproduction.
Further information pursuant to Article 10
of the EU Audit Regulation
The executive directors of the Company are also responsible for the submis-
sion of the ESEF documents together with the auditor’s report and the attached
audited Consolidated Financial Statements and audited Group Management
Report as well as other documents to be published to the operator of the
German Federal Gazette [Bundesanzeiger].
We were elected as the Group auditor by the Annual General Meeting on
June 30, 2020. We were engaged by the Supervisory Board on November 4,
2020. We have been the Group auditor of the NORMA Group SE, Maintal,
without interruption since the financial year 2010.
The supervisory board is responsible for overseeing the preparation of the
ESEF documents as part of the financial reporting process.
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).
Group auditor’s responsibilities for the assurance engagement on
the ESEF documents
German public auditor responsible for the engagement
Our objective is to obtain reasonable assurance about whether the ESEF
documents are free from material non-compliance with the requirements of
§ 328 Abs. 1 HGB, whether due to fraud or error. We exercise professional
judgment and maintain professional skepticism throughout the assurance
engagement. We also:
• Identify and assess the risks of material non-compliance with the
requirements of § 328 Abs. 1 HGB, whether due to fraud or error, design
and perform assurance procedures responsive to those risks, and obtain
assurance evidence that is sufficient and appropriate to provide a basis
for our assurance conclusion.
• Obtain an understanding of internal control relevant to the assurance
engagement on the ESEF documents in order to design assurance
procedures that are appropriate in the circumstances but not for the
The German public auditor responsible for the engagement is Stefan Hartwig.
Frankfurt / Main,March11,2020
PricewarterhouseCoopers GmbH
Wirtschaftsprüfungsgesellschaft
sgd. Stefan Hartwig
Wirtschaftsprüfer
(German Public Auditor)
sgd. ppa. Richard Gudd
Wirtschaftsprüfer
(German Public Auditor)
NORMA Group SE – Annual Report 2020
251
6 FURTHER INFORMATION4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION5 CONSOLIDATED FINANCIAL STATEMENTS FURTHER
INFORMATION
253 Glossary
258 List of Graphics
259 List of Tables
261 Overview by Quarter
262 10-Year Overview
264
Financial Calendar, Contact and Imprint
NORMA Group SE – Annual Report 2020
252
5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION6 FURTHER INFORMATION FURTHER INFORMATION
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 comple-
mentarypartsforthegoods.Thisinvolvesthesaleofservicesand / orparts
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 securities 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.
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.
CDP
Formerly “Carbon Disclosure Project,” non-governmental organization
focusing on environmental reporting in the areas of climate, water and forests.
Code of Conduct
A set of policies that 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.
Conflict minerals
Natural resources whose deposits are largely located in conflict regions
(especially the Democratic Republic of Congo), where they are mined and
traded in some cases in serious violation of international law; especially tin,
tantalum, tungsten and gold.
Corporate governance
A set of all international and national rules, regulations, values and principles
that 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.
NORMA Group SE – Annual Report 2020
253
5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION6 FURTHER INFORMATION Coverage
The regular assessment of the economic and financial situation of a listed
company by banks or financial research institutions.
Elastomers
Stable but elastic plastics that 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.
Cross-selling effects
The action or practice of selling an additional product or service to an existing
customer.
CSR-RUG
German CSR Directive Implementation Law.
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.
NOTES
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.
NOTES
EMEA
Abbreviation for the economic area of Europe (comprising Western and Eastern
Europe), the Middle East and Africa.
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.
Equity ratio
Equity in relation to total assets.
FAO
Food and Agriculture Organization of the United Nations.
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.
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.
Foresight management
Long-term strategic planning based on an analysis of changing environmental
conditions (e.g. technology trends and changes in the market environment).
EBITDA margin (adjusted)
The adjusted EBITDA margin is calculated from the ratio of adjusted EBITDA
to sales.
Economies of scale
Indicates the ratio of the production volume to the production factors used. In
the case of positive scale effects, 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 / orrepayloans.
Gearing
Gearing is a measure of a company’s debt level. Gearing is calculated from
the ratio of net debt to equity.
Gemba walk
Daily walk through production halls, inspecting individual processes in
the opposite order of workflow and analyzing potential opportunities for
improvement.
NORMA Group SE – Annual Report 2020
254
5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION6 FURTHER INFORMATION Global excellence program
A cost optimization program. It coordinates and manages all of NORMA Group’s
sites and business units.
ISO 45001
Health and Safety Management that replaces the current Occupational Health
and Safety Assessment Series 18001 (OHSAS 18001)
GRI – Global Reporting Initiative
Initiative that sets standards for sustainability reporting.
IATF 16949
An international standard that combines the existing general demands on
quality management systems of the (mostly North American and European)
automotive industry.
IDW
The Institute of Auditors in Germany (Institut der Wirtschaftsprüfer in
Deutschlande. 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.
ISO 14001
An international environmental management standard that specifies the
internationally accepted requirements for an environmental management
system.
ISO 9001
International standard that defines the minimum requirements that quality
management systems must meet.
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 better comparison, adjusted EBITDA LTM
includes the companies acquired during the year.
Lockout-tagout
Safety procedure used to ensure that dangerous machines are properly shut
off and not able to be started up again prior to the completion of maintenance
or repair work.
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 equivalents.
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 Group SE – Annual Report 2020
255
5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION6 FURTHER INFORMATION Scope 1, 2, 3
Method for differentiating greenhouse gases. Scope 1: Emissions from emission
sources within the company’s boundaries. Scope 2: Emissions from the
generation of energy procured from outside the boundaries (especially
electricity and heat). Scope 3: All other emissions caused by the company’s
activities but not under its control, for example from suppliers, service providers
or employees.
Securities ID number (WKN)
A six-character combination of numbers and letters used in Germany to identify
securities.
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 occupa-
tional 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.
Science-based targets initiative
Initiative that sets climate targets that support the Paris Climate Agreement
and meet the goal of limiting global warming to well below two degrees
Celsius.
NORMA Group SE – Annual Report 2020
256
5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION6 FURTHER INFORMATION Selective catalytic reduction (SCR)
Selective catalytic reduction is a method used to reduce particle and nitric
oxide emissions..
Thermoplasts (also known as plastomers)
Plastics that become elastic (thermoplastic) in a particular temperature range,
whereby this process is reversible.
SMED (Single Minute Exchange of Die)
Optimization of set up times of processes through both organizational and
technical measures.
UN Global Compact
United Nations initiative for corporate responsibility.
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.
Standardized Joining Technology (SJT)
One of NORMA Group’s two distribution channels with a wide range of
high-quality, standardized connection products for different application areas
and end customers. This distribution channel was known as Distribution
Services (DS) until 2019.
Sustainable Development Goals (SDGs)
The Sustainable Development Goals (SDGs) were adopted by the United
Nations General Assembly in 2015. They cover economic, environmental and
social aspects and consist of individual indicators that make implementation
measurable.
Weighted average cost of capital (WACC)
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.
NORMA Group SE – Annual Report 2020
257
5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION6 FURTHER INFORMATION List of Graphics
Graphic
Introduction
G001
NORMA Group worldwide
To Our Shareholders
G002
G003
G004
G005
G006
Index-based comparison of NORMA Group’s share price
performance in 2020 with DAX, MDAX, SDAX and MSCI
World Automobiles
Distribution of trading activity in 2020
Free float by region
Analyst recommendations
Share price development of the NORMA Group share since
the IPO compared to the SDAX
Corporate Responsibility Report
G007
G008
G009
G010
G011
G012
G013
G014
G015
G016
G017
G018
G019
G020
Materiality matrix
CR Roadmap 2021
Materiality matrix Governance
NORMA Group’s Compliance Management System
Materiality matrix Environment
Environmental strategy
Development of greenhouse gas emissions (scope 1 and 2)
Development of specific energy consumption
Water consumption
Materiality matrix Social
Development of the accident rate
Development of training hours
Competency model
Development of proportion of women among permanent staff
Page
Graphic
Page
Consolidated Management Report
G021
G022
G023
G024
G025
G026
G027
G028
G029
G030
G031
G032
G033
G034
G035
G036
NORMA Group (simplified structure)
Organizational structure of NORMA Group
Strategic goals of NORMA Group
Important financial control parameters
The role of climate change and water scarcity in
the innovation process
Development of sales 2020
Sales by segment
Asset and capital structure
Maturity profile by financial instrument
Maturity profile by currency
Development of nickel prices and the alloy surcharge 1.4301
Purchasing turnover in 2020 by material groups
Development of personnel figures at NORMA Group
Breakdown of employees by group
Marketing expenses 2020 by segment
Risk management system of NORMA Group
71
73
77
78
82
92
96
97
100
100
105
106
107
107
109
118
7
12
13
14
15
16
35
36
39
40
45
47
49
49
51
54
56
57
58
59
NORMA Group SE – Annual Report 2020
258
5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION6 FURTHER INFORMATION
List of Tables
Table
Introductiom
T001
Financial figures 2020
Corporate Responsibility-Report
T002
T003
T004
T005
T006
T007
Overview of the voting rights notifications
Analysts covering NORMA Group
Key figures for the NORMA Group share since the IPO in 2011
Responsibilities of the Management Board
Other mandates of the Supervisory Board members
Directors’ Dealings
Corporate Responsibility Report
T008
T009
T010
T011
NORMA Group’s performance in sustainability ratings
Volumes of various forms of waste
Content of non-financial disclosure
CR performance indicators
Consolidated Management Report
T012
T013
T014
T015
T016
T017
T018
T019
T020
T021
T022
T023
T024
T025
T026
T027
T028
T029
T030
T031
T032
T033
T034
NORMA Value Added (NOVA)
Capital employed as of beginning of the year (Jan 1)
Assumptions for the calculation of the WACC
Financial control parameters
Non-financial control parameters
R&D Key Figures
GDP growth rates (real)
Actual business development compared to the forecast
Adjustments
Effects on Group sales
Development of sales channels
Return on capital employed (ROCE)
Development of segments
Strategic investment highlights in 2020
Core workforce by segments
Forecast for GDP growth
Engineering: real change in industry sales
Automotive industry: global production and development of sales
Construction industry: development of European
construction output
Forecast for fiscal year 2021
Risk and opportunity profile of NORMA Group
Annual bonus
Assumptions for the calculation of the WACC
Page
Table
Page
T035
T036
T037
T038
T039
T040
T041
NOVA bonus / LTI
Matching Stock Program (MSP) at the time of allotment
Management Board Remuneration 2020
Overview of the promised pensions of the Board members
Remuneration granted to the Management Board
Inflow from Management Board member remuneration
Remuneration of the Supervisory Board 2020
Consolidated Financial Statements
T042
T043
T044
T045
T046
T047
T048
T049
T050
T051
T052
T053
T054
T055
T056
T057
T058
T059
T060
T061
T062
T063
T064
T065
T066
T067
T068
T069
T070
T071
Consolidated Statement of comprehensive income
Consolidated Statement of financial position
Consolidated Statement of Cash flows
Consolidated Statement of changes in Equity
Valuation methods
Exchange rates
Offsetting of financial instruments
Change in scope of consolidation
List of Group companies of NORMA group as
of December 31, 2020
Overview of financial risks
Foreign exchange risk
Credit risk exposure from cahs and cash equivalents and
other financial assets
Maturity structure of non-derivative financial liabilities
Maturity structure of derivative financial instruments
Profit and loss net of adjustments
Revenue by distribution channel
Revenue by category
Raw materials and consumables used
Other operating income
Other operating expenses
Employee benefits expense
Financial income and costs
Net foreign exchange gains / losses
Earnings per share
Income taxes
Tax reconciliation
Income tax char ged / credited to o ther comprehensive income
Movement in deferred tax assets and liabilities
Deferred income tax assets
Deferred income tax liabilities
4
14
15
17
25
29
30
37
52
63
64
80
80
80
81
81
84
85
90
92
93
93
93
97
102
107
111
111
112
113
116
131
136
137
138
139
140
141
142
143
144
149
150
151
152
156
158
166
171
172
174
175
177
178
179
183
185
185
186
186
187
187
188
189
189
189
190
190
191
191
191
NORMA Group SE – Annual Report 2020
259
5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION6 FURTHER INFORMATION Table
Page
Table
Page
T072
T073
T074
T075
T076
T077
T078
T079
T080
T081
T082
T083
T084
T085
T086
T087
T088
T089
T090
T091
T092
T093
T094
T095
T096
T097
T098
T099
T100
T101
T102
T103
T104
T105
T106
T107
T108
T109
T110
T111
T112
T113
Expiry of recognized tax losses
Expiry of not recognized tax losses
Development of goodwill and other intangible assets
Goodwill and other intangible assets – carrying amounts
Significant Individual Intangible Asset
Change in goodwill
Goodwill allocation per segment
Goodwill per segment – key assumptions
Development of property, plant and equipment
Property, plant and equipment – carrying amounts
Right of use – carrying amounts
Maturity leaseliabilities dec 31, 2020
Maturity leaseliabilities dec 31, 2019
Leases in the statement of profit or loss
Financial instruments – classes and categories
Trade and other receivables
Trade receivables
Credit risk exposure trade receivables
Impairment reconciliation
Gains / losses arising fr om derecognition IFRS 7.20A
Other financial Assets
Trade and other Payables
Borrowings
Maturity bank borrowings 2020
Maturity bank borrowings 2019
Other financial liabilities
Maturity financial liabilities
Net debt
Derivative financial instruments
The effects uf cash flow hedge accounting on financial
position and performance
Change in hedging reserve before tax
The effects of fair value hedge accounting on financial
position and performance
Gains and losses fair value hedges
Financial instruments – fair value hierarchy
Financial instruments – fair value hierarchy
Financial instruments – net gains and losses
Interst expenses / income from financial assets and
liabilities IFRS 7.20(b)
Inventories
Other non-financial assets
Development of retained earnings
Development of other reserves
Development of the msp option rights
192
192
193
195
195
195
196
196
197
199
199
199
199
200
201
203
203
204
204
204
207
207
208
208
208
209
210
210
211
212
213
214
215
215
216
216
217
217
217
218
219
220
T114
T115
T116
T117
T118
T119
T120
T121
T122
T123
T124
T125
T126
T127
T128
T129
T130
T131
T132
T133
T134
T135
T1368
T137
T138
development of LTI
Components pension liability
Reconciliation of the net defined benefit liability
Reconciliation of the changes in the DBO
Reconciliation of changes in the fair value of plan Assets
Disaggregation of plan Assets
Actuarial assumptions
Expected payments from post-employment benefit plans
Development of provisions
Provisions – split curr ent / non-current
Provisions – other personnel-related
Other non-financial liabilities
Reconciliation of changes in assets and liabilities
to cash flows from financing activities
Segment reporting
External sales per country
Non-current assets per country
Commitments
Compensation of members of the management board (IFRS)
Provisions for compensation of the management board
members
Compensation of board members
Compensation of members of the management board
Section 314 PARA 1 NO 6a HGB: Re tirment
Benefit Obligations
Fees for the auditor
Average headcount
Voting rights notification
Further Information
T139
T140
T141
Overview by quarters
10-year overview
Financial calendar 2021
222
224
224
225
225
225
226
226
227
228
229
231
234
236
237
238
238
238
239
239
240
240
241
241
242
261
262
264
NORMA Group SE – Annual Report 2020
260
5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION6 FURTHER INFORMATION Overview by Quarters 1
Income statement
Revenue
Adjusted EBITA 2
Adjusted EBITA margin 2
EBITA
EBITA margin
Adjusted EBIT 2
Adjusted EBIT margin 2
EBIT
EBIT margin
Adjusted profit for the period 2
Adjusted earnings per share 2
Profit for the period
Earnings per share
Balance sheet 3
Total assets
Equity
Equity ratio
Net debt
Cash flow
Cash flow from operating activities
Cash flow from investing activities
Cash flow from financing activities
Net oparating cash flow
Q1 2020
Q2 2020
Q3 2020
T139
Q4 2020
EUR million
EUR million
%
EUR million
%
EUR million
%
EUR million
%
EUR million
EUR million
EUR million
EUR
EUR million
EUR million
%
EUR million
EUR million
EUR million
EUR million
EUR million
253.6
27.1
10.7
26.4
10.4
25.1
9.9
18.6
7.4
15.6
0.49
10.8
0.34
1,566.8
639.2
40.8
437.3
9.8
– 9.5
32.2
6.7
191.5
– 22.5
– 11.8
– 23.3
– 12.2
– 24.6
– 12.9
– 31.0
– 16.2
– 22.9
– 0.72
– 27.7
– 0.87
1,472.2
602.2
40.9
415.7
29.1
– 6.0
– 41.1
1.8
245.9
261.2
28.7
11.7
27.9
11.4
26.3
10.7
20.3
8.3
15.8
0.50
11.4
0.36
1451.8
593.6
40.9
370.8
50.2
– 6.1
– 32.1
40.6
21.3
8.2
20.2
7.7
18.6
7.1
12.2
4.7
15.7
0.50
11.0
0.35
1.414,7
589.5
41.7
338.4
44.4
– 17.6
– 40.0
29.1
1_Minor deviations may occur due to commercial rounding for the full year compared with the summation of the corresponding quarterly amounts.
2_In fiscal year 2020, only adjusted for PPA items.
3_Figures as at balance sheet date end of quarter
ADJUSTMENTS
NORMA Group SE – Annual Report 2020
261
5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION6 FURTHER INFORMATION
10-Year Overview
Order situation
Order book 1
Income statement
Revenue
thereof EMEA
thereof Americas
thereof Asia-Pacific
Engineered Joining Technology (EJT)
Standardized Joining Technology (SJT)
(Adjusted) material cost ratio
(Adjusted) personnel cost ratio
Adjusted EBITA 2
Adjusted EBITA margin 2
EBITA
EBITA margin
Adjusted EBIT 2
Adjusted EBIT margin 2
EBIT
EBIT margin
Financial result
Adjusted tax rate 2
Adjusted profit for the period 2
Adjusted earnings per share 2
Profit for the period
Earnings per share
NORMA Value Added (NOVA)
EUR millions
– 46.4
Return on capital employed (ROCE) 3
R&D expenses
R&D ratio (related to sales) 4
Investment ratio in relation to sales
(without acquisitions)
%
EUR millions
%
%
4.6
29.0
3.1
4.3
2020
2019
2018
2017
2016
2015
2014
2013
2012
T140
2011
EUR millions
391.3
358.3
379.2
329.1
302.4
295.8
279.6
236.7
215.4
218.6
EUR millions
EUR millions
EUR millions
EUR millions
EUR millions
EUR millions
%
%
EUR millions
%
EUR millions
%
EUR millions
%
EUR millions
%
952.2
409.5
385.5
157.2
552.6
395.5
43.8
31.3
54.6
5.7
51.1
5.4
45.3
4.8
20.1
2.1
%
EUR millions
EUR
EUR millions
EUR
20.3
24.3
0.77
5.5
0.18
EUR millions
– 14.8
– 15.5
1,100.1
1,084.1
1,017.1
486.0
450.8
163.4
665.5
430.2
43.4
27.5
144.8
13.2
127.9
11.6
136.1
12.4
96.7
8.8
27.1
87.8
2.76
58.4
1.83
17.3
13.0
31.2
4.7
494.8
441.5
147.8
684.6
393.8
43.6
25.9
173.2
16.0
164.8
15.2
164.5
15.2
133.5
12.3
– 11.7
24.9
114.8
3.61
91.8
2.88
60.8
17.2
30.5
4.5
485.9
411.3
119.9
638.2
372.3
41.2
26.5
174.5
17.2
166.8
16.4
166.0
16.3
137.8
13.5
– 16.1
30.0
105.0
3.29
119.8
3.76
54.9
18.9
29.4
4.6
894.9
432.0
381.6
81.3
535.9
354.5
39.4
27.3
157.5
17.6
150.4
16.8
147.7
16.5
120.0
13.4
– 14.6
28.9
94.6
2.96
75.9
2.38
53.1
17.7
28.8
5.4
889.6
416.0
395.3
78.2
540.3
344.1
40.8
26.3
156.3
17.6
150.5
16.9
147.9
16.6
124.8
14.0
– 17.2
32.1
88.7
2.78
73.8
2.31
48.3
19.3
25.4
4.7
694.7
394.5
237.8
62.5
481.0
211.5
41.7
27.1
121.5
17.5
113.3
16.3
116.2
16.7
97.8
14.1
635.5
388.0
191.5
56.0
443.9
193.6
42.4
26.7
112.6
17.7
112.1
17.6
107.7
16.9
99.5
15.7
604.6
367.5
193.3
43.8
427.6
174.5
43.6
25.9
105.4
17.4
105.1
17.4
101.9
16.8
94.4
15.6
581.4
372.7
173.0
35.7
411.5
170.3
45.1
23.8
102.7
17.7
84.7
14.6
99.7
17.1
76.6
13.2
– 14.5
– 15.6
– 13.2
– 29.6
33.3
71.5
2.24
54.9
1.72
n / a
n / a
25.7
5.3
32.6
62.1
1.95
55.6
1.74
n / a
n / a
21.9
4.9
30.3
61.8
1.94
56.6
1.78
n / a
n / a
22.1
5.1
30.0
57.6
1.92
35.7
1.19
n / a
n / a
16.8
4.1
5.0
5.8
4.7
5.4
4.7
5.7
4.8
5.0
5.3
CONTINUED ON NEXT PAGE
NORMA Group SE – Annual Report 2020
262
5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION6 FURTHER INFORMATION
(continued)
Balance sheet 1
Total assets
Equity
Equity ratio
Net debt
Working capital
Working capital reltated to sales
Cash flow
Cash flow from operating activities
Cash flow from investing activities
Cash flow from financing activities
Net operating cash flow
Non financial figures
Core workforce 1
Temporary workers 1
Total workforce 1
Number of invention applications 5
Defective parts
Average customer complaints
per month per entity
CO2 emissions (Scope 1 and 2)6
Share data
Last price 1, 7
Market capitalization 1, 7
Dividend
Payout ratio
Price-earnings ratio
Number of shares issued
2020
2019
2018
2017
2016
2015
2014
2013
2012
EUR millions
1,414.7
1,514.3
1,471.7
1,312.0
1,337.7
1,167.9
1,078.4
EUR millions
%
EUR millions
EUR millions
%
EUR millions
EUR millions
EUR millions
EUR millions
PPM (parts
per million)
589.5
41.7
338.4
160.8
16.9
133.5
– 39.1
– 81.0
78.3
6,635
2,155
8,790
22
5.1
4.7
629.5
41.6
420.8
192.5
17.5
137.1
– 57.0
– 93.2
122.9
6,523
1,998
8,521
22
6.1
6.4
602.4
40.6
400.3
179.2
16.5
130.8
– 129.5
31.3
124.4
6,901
1,964
8,865
32
7.1
7.0
In t CO2e
49,813
54,494
51,018
EUR
EUR Mio.
EUR
%
41.88
1,334
0.70 8
91.7 8
232.7
38.00
1,211
0.04
1.5
20.8
43.18
1,376
1.10
30.5
15.0
534.3
40.7
344.9
158.2
15.6
146.0
– 70.8
– 77.7
132.9
6,115
1,552
7,667
33
16
9
n / a
55.97
1,783
1.05
31.9
14.9
483.6
36.2
394.2
144.5
16.1
149.2
– 133.8
49.6
148.5
5,450
1,214
6,664
n / a
429.8
36.8
360.9
151.9
17.1
368.0
34.1
373.1
141.8
20.4
128.2
– 44.5
– 70.4
134.7
96.4
– 265.1
57.7
109.2
5,121
1,185
6,306
n / a
4,828
1,147
5,975
n / a
823.7
319.9
38.8
153.5
110.8
17.4
115.4
– 43.4
51.7
103.9
4,134
813
4,947
n / a
691.8
289.2
41.8
199.0
115.9
19.2
96.1
– 58.1
– 34.1
81.0
3,759
726
4,485
n / a
32.0
n / a
n / a
n / a
n / a
8
n / a
n / a
n / a
n / a
n / a
n / a
n / a
n / a
n / a
T140
2011
648.6
256.0
39.5
198.5
106.2
18.3
71.7
– 33.7
– 0.5
66.8
3,415
837
4,252
n / a
n / a
n / a
n / a
40.55
1,292
0.95
32.0
17.0
51.15
1,630
0.90
32.3
22.1
39.64
1,263
0.75
33.4
23.0
36.09
1,150
0.70
35.9
20.7
21.00
16.00
669
0.65
33.5
11.8
510
0.60
33.2
13.4
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_Figures as at balance sheet date Dec 31.
2_ Since 2020: Adjusted exclusivly for expenses related to acquisitions; Prior years: Adjusted for expenses related to acquisitions and non-recurring items. Details regarding the adjustments,
can be found in the corresponding Annual Reports.
3_Adjusted EBIT in relation to the average capital employed.
4_Until 2019: in relation to EJT sales, since 2020: in relation to total sales.
5_ 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. There are no comparative figures for prior years.
6_ Since 2017, CO2 emissions have been reported according to the requirements of the Greenhouse Gas Protocol. The figures relating to the years 2019 and before are audited with
“limited assurance.”
7_Xetra price.
8_Subject to approval by the Annual General Meeting.
NORMA Group SE – Annual Report 2020
263
5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION6 FURTHER INFORMATION
Financial Calendar, Contact and Imprint
Contact persons Investor relations
Financial calendar 2021
T141
Date
May 5, 2021
May 20, 2021
Aug 4, 2021
Nov 3, 2021
Event
Publication of Interim Statement Q1 2021
Ordinary Annual General Meeting 2021, Frankfurt / Main
Publication of Interim Report H1 2021
Publication of Interim Statement Q3 2020
Andreas Trösch
Vice President Investor Relations,
Group Communications and Corporate Responsibility
Phone: +49 6181 6102-741
E-mail: andreas.troesch@normagroup.com
The financial calendar is constantly updated. Please visit the Investor
Relations section on the Company website
WWW. NORM AGROUP.COM/CORP/DE /INVESTORS /
Editor
NORMA Group SE
Edisonstraße 4
63477 Maintal
Phone: +49 6181 6102-740
E-mail: info@normagroup.com
www.normagroup.com
Contact
E-mail: ir@normagroup.com
Forward-looking statements
This Annual Report contains certain future-oriented statements. Future- oriented statements
include all statements that 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.
Vanessa Wiese
Senior Manager Investor Relations
Phone: +49 6181 6102-742
E-mail: vanessa.wiese@normagroup.com
Ivana Blazanovic
Manager Investor Relations
Phone: +49 6181 6102-7603
E-mail:
ivana.blazanovic@normagroup.com
Chiara von Eisenhart Rothe
Manager Investor Relations
Phone: +49 6181 6102-748
E-mail: chiara.voneisenhartrothe@normagroup.com
Corporate Responsibility
Elias Schwenk
Manager Corporate Responsibility
Phone: +49 6181 6102-7602
E-mail: elias.schwenk@normagroup.com
Design and Realization
MPM Corporate Communication Solutions, Mainz
Editing
NORMA Group SE
Date of publication
March 24, 2021
NORMA Group SE – Annual Report 2020
264
5 CONSOLIDATED FINANCIAL STATEMENTS4 CONSOLIDATED MANAGEMENT REPORT2 TO OUR SHAREHOLDERS3 CORPORATE RESPONSIBILITY REPORT1 INTRODUCTION6 FURTHER INFORMATION NORMA Group SE
Edisonstraße 4
63477 Maintal, Germany
Phone: +49 6181 6102-740
info@normagroup.com
E-mail:
Internet: www.normagroup.com