2011
Ann
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Sto AG | 2011 Annual Report
Sto. Hidden Champion and a strong brand
Head office
Sto AG
Ehrenbachstrasse 1
79780 Stühlingen, Germany
Head office
Telephone +49 7744 57-0
Fax +49 7744 57-2178
Info service
Telephone +49 7744 57-1010
Fax +49 7744 57-2010
www.sto.com
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Head office
Sto AG
Export department
Ehrenbachstrasse 1
79780 Stuehlingen
Germany
Phone +49 7744 57-1131
Fax +49 7744 57-2428
www.sto.com/international
Subsidiaries abroad
Austria
Sto Ges.m.b.H.
9500 Villach
Phone +43 4242 33133-0
www.sto.at
Belgium
Sto nv
1730 Asse
Phone +32 2 4530110
www.sto.be
China
Shanghai Sto Ltd.
201201 Shanghai
Phone +86 2158 972295
www.sto.com.cn
Czech Republic
Sto s.r.o.
25170 Dobřejovice
Phone +420 225 996311
www.sto.cz
Denmark
Sto Danmark A/S
2650 Hvidovre
Phone +45 702 70143
www.stodanmark.dk
Finland
Sto Finexter OY
01730 Vantaa
Phone +358 207 659191
www.stofi.fi
France
Sto S.A.S.
95870 Bezons
Phone +33 1 34345700
www.sto.fr
Hungary
Sto Épitöanyag Kft.
2330 Dunaharaszti
Phone +36 24 510210
www.sto.hu
Ireland
Sto Ltd.
Dublin 12
Phone +353 1460 2305
www.sto.ie
Italy
Sto Italia srl
50053 Empoli (FI)
Phone +39 0571 94701
www.stoitalia.it
Malaysia
Sto SEA Sdn. Bhd.
Baru Sri Alam
81750 Masai
Phone +607 388 1737
www.sto-sea.com
Netherlands
Sto Isoned bv
4004 LH Tiel
Phone +31 344 620666
www.sto.nl
Norway
Sto Norge AS
0664 Oslo
Phone +47 2207 2900
www.stonorge.no
Poland
Sto - ispo Sp. z o.o.
03-872 Warszawa
Phone +48 22 5116-102
www.sto.pl
Russia
Sto Russia
119180 Moskva
Phone +7 495 9741584
Singapore
Sto SEA Pte Ltd
Singapore 575625
Phone +65 64 533080
www.sto-sea.com
Slovak Republic
Sto s.r.o. organizačná zložka
83104 Bratislava
Phone +42 2 44648142
Slovenia
Sto Ges.m.b.H.
Podružnica Ljubljana
1000 Ljubljana
Phone +386 1 4303525
www.sto.com/si
Spain
Sto Ibérica S.L.
08302 Mataró (Barcelona)
Phone +34 93 7415972
www.sto-iberica.es
Sweden
Sto Scandinavia AB
582 77 Linköping
Phone +46 13 377100
www.sto.se
Switzerland
Sto AG
8172 Niederglatt/ZH
Phone +41 44 8515353
www.stoag.ch
United Kingdom
Sto Ltd.
Glasgow G52 4TG
Phone +44 141 404 9000
www.sto.co.uk
USA
Sto Corp.
Atlanta, GA 30331
Phone +1 404 3463666
www.stocorp.com
Adressen_Export_GB_12_2009.indd 2 03.12.2009 15:20:01
Head officeSto AGEhrenbachstrasse 179780 Stühlingen, GermanyTelephone +49 7744 [email protected]
Subsidiaries, internationalRussiaOOO STOMIX ORELul.Tscheskaya, d.6RU-302525 OrelTelephone +7 4862 363 [email protected]
SwitzerlandSto AGSüdstrasse 14CH-8172 Niederglatt/ZHTelephone +41 44 [email protected]
SingaporeSto SEA Pte. Ltd.159 Sin Ming Road, #06-02 Amtech BuildingSG-Singapore 575625Telephone +65 64 [email protected]
SwedenSto Scandinavia ABGesällgatan 6S-582 77 LinköpingTelephone +46 13 [email protected]
Slovak RepublicSTOMIX Slovensko s.r.o.Ul. 29.augusta 35SK-974 01 Banská BystricaTelephone +421 484 141 [email protected]
SpainBeissier S.A.Txirrita Maleo 14E-20100 ErrenteriaTelephone +34 902 100 [email protected]
SpainSto SDF Ibérica S.L.Pol. Ind. Les Hortes del Cami RalVia Sergia, 32 - nave 1E-08302 Mataró (Barcelona)Telephone +34 93 7415 [email protected]
Czech RepublicSto s.r.o.Čestlice 271CZ-251 70 DobřejoviceTelephone +420 225 996 [email protected]
Czech Republic STOMIX spol. s.r.o.Skorošice 197CZ-790 66 Skorošice Telephone +420 584 484 111 [email protected]
U.K. and IrelandSto Ltd.2 Gordon AvenueHillington ParkGB-Glasgow G52 4 TGTelephone +44 141 892 [email protected]
HungarySto Épitöanyag Kft.Jedlik Ányos u. 17H-2330 DunaharasztiTelephone +36 24 510210 [email protected]
USASto Corp.3800 Camp Creek ParkwayBuilding 1400, Suite 120Atlanta, Georgia 30331Telephone +1 800 [email protected]
Distribution partners, internationalAddresses and informationavailable from:Telephone +49 7744 57-1131
Subsidiaries, nationalStoCretec GmbHGutenbergstr. 6D-65830 KriftelTelephone +49 6192 [email protected]
BelgiumSto NV/SAZ.5 Mollem 70B-1730 AsseTelephone +32 2 [email protected]
ChileSto Chile Ltda.Volcán Lascar Oriente 781Parque Industrial Lo BozaCL-Pudahuel-SantiagoTelephone +56 02 949 35 [email protected]
ChinaShanghai Sto Ltd.288 Qingda RoadPudongCN-201201 ShanghaiTelephone +86 2158972295www.sto.com.cn
DenmarkSto Danmark A/SAvedøreholmen 86DK-2650 HvidovreTelephone +45 [email protected]
FinlandSto Finexter OYMestarintie 9FI-01730 VantaaTelephone +358 207659 [email protected]
FranceBeissier S.A.S.Quartier de la GareF-77760 La Chapelle la ReineTelephone +33 1 [email protected]
FranceSto S.A.S.224, rue Michel CarréF-95872 Bezons CedexTelephone +33 1 [email protected]
ItalySto Italia SrlVia G. di Vittorio, 1/3Zona Ind. le TerrafinoI-50053 Empoli (Fl)Telephone +39 0571 [email protected]
MalaysiaSto SEA Sdn. Bhd.No. 21, Jalan Rajawali 2Bandar Puchong JayaMY-47100 Puchong, SelangorTelephone +603 8070 [email protected]
NetherlandsSto Isoned BVLingewei 107NL-4004 LH TielTelephone +31 344 [email protected]
NorwaySto Norge ASWaldemar Thranes gate 98 AN-0175 OsloTelephone +47 6681 [email protected]
AustriaSto Ges.m.b.H.Richtstr. 47A-9500 VillachTelephone +43 4242 [email protected]
PolandSto – ispo Sp. z o.o.ul. Zabraniecka 15PL-03-872 WarszawaTelephone +48 22 [email protected]
RussiaOOO StoUl. Bolshaya Yakimanka 31RU-119180 MoscowTelephone +7 495 [email protected]
StoVerotec GmbHHanns-Martin-Schleyer-Strasse 1D-89415 Lauingen/DonauTelephone +49 9072 [email protected]
SÜDWEST Lacke + FarbenGmbH & Co. KGIggelheimer Str. 13D-67459 Böhl-IggelheimTelephone +49 6324 [email protected]
Hemm Stone GmbHMergentheimer StrasseD-97268 KirchheimTelephone +49 9366 [email protected]
Branches/SalesCentres/distribution partnersAddresses and information available from:Telephone +49 7744 57-1010
Holding company, nationalInotec GmbHWaldshuter Strasse 25D-79761 Waldshut-TiengenTelephone +49 7741 [email protected]
Sto at a glance
Sto Group 2006* 2007* 2008* 2009* 2010* 2011 Changes in %
11/10Turnover 854.8 884.7 946.7 924.6 986.0 1,106.8 12.3%
Germany 410.9 407.4 431.1 450.6 489.2 529.4 8.2%
Non-Germany 443.9 477.3 515.6 474.0 496.8 577.4 16.2%
Investments (without financial assets) 16.3 19.7 21.1 20.3 18.2 27.6 51.6%
Depreciation/amortisation (without financial assets) 24.7 24.4 24.4 24.5 25.2 29.7 17.9%
EBITDA 97.1 99.4 107.7 106.8 110.8 134.2 21.1%
EBIT 72.4 75.0 83.2 82.3 85.6 104.5 22.1%
EBT 65.9 69.9 76.7 79.2 84.2 103.5 22.9%
EAT (earnings after taxes) 50.4 48.5 52.1 55.9 58.5 70.3 20.2%
per ordinary share (EUR) 7.33 7.27 8.08 8.65 9.03 10.89
per preference share (EUR) 7.39 7.33 8.14 8.71 9.09 10.95
Cash flow from operating activities 80.00 78.90 87.50 113.20 93.00 92.70 –0.3%
per share (EUR) 11.67 11.89 13.62 17.62 14.48 14.43
Total assets 526.4 493.1 527.8 568.6 620.1 669.7 8.0%
Equity 224.5 242.9 284.0 325.3 375.3 426.0 13.5%
in % of total assets 42.7 49.3 53.8 57.2 60.5 63.6
Employees (year end) 3,913 4,056 4,155 4,145 4,249 4,695 10.5%
of which Germany 2,221 2,286 2,317 2,313 2,358 2,495 5.8%
of which non-Germany 1,692 1,770 1,838 1,832 1,891 2,200 16.3%
Sto AG 2006 2007 2008 2009 2010 2011 Changes in %
11/10Turnover 470.1 471.5 499.9 508.7 540.5 586.8 8.6%
Export ratio in % 19.6 20.9 20.6 18.2 16.7 17.5
Investments
in property, plant and equipment 7.3 6.3 7.7 6.4 9.2 11.9 29.3%
in financial assets 0.5 1.2 1.1 1.0 1.4 16.3 1,064.3%
Depreciation/amortisation 15.0 14.5 13.1 12.7 12.7 12.2 –3.9%
Earnings on ordinary activities 41.8 48.1 63.4 80.8 72.1 83.3 15.5%
Net profit for the year 37.6 37.2 49.3 65.6 51.1 65.4 28.0%
Cash flow from operating activities 43.9 48.6 61.2 86.9 84.8 70.6 –16.7%
Dividend/bonus
per ordinary share (EUR) 0.25/0.84 0.25/0.84 0.25/2.06 0.25/2.06 0.25/3.06 0.25/4.56
per preference share (EUR) 0.31/0.84 0.31/0.84 0.31/2.06 0.31/2.06 0.31/3.06 0.31/4.56
Total assets 374.9 356.1 398.9 447.0 458.0 492.0 7.4%
Equity 149.6 179.2 221.4 272.0 285.5 329.5 15.4%
in % of total assets 39.9 50.3 55.5 60.9 62.3 67.0
Employees (year end) 1,897 1,946 1,960 1,947 1,997 2,057 3.0%
(Figures in EUR mil l ion)
* Some details differ from the details in the consolidated annual statement for the fiscal year of 2010 as certain adjustments were implemented. For more details see the Notes – General part 7.
Rounding of amounts may lead to minor deviations in totals and in the calculation of precentages in this report.
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Sto AG | 2011 Annual Report
Picture caption for title page:
“Hidden Champions” are medium-sized enterprises which, although they are not the focus of public attention, are
leaders in their markets and are economically successful. Sto is such a company. A new study, which was published
in the German business magazine “Wirtschaftwoche” of 22 August 2011, investigated the “Brands of the Hidden
Champions” last year, taking not only brand management and reputation into account, but also entrepreneurial
success. Result: Sto ranks among the top 20 brands of the German “Hidden Champions”, achieving a very good
position in eleventh place.
Foreword
Report of the Supervisory Board
Corporate Governance Report
Management Report for the Sto Group (IFRS)
The fiscal year at a glance
Business and general conditions
Earnings, finance and asset situation of the Sto Group
Sto segment reporting
Sto – Employees
Sto – Research and development
Sto – Production and procurement
Events after the end of the fiscal year
Risk report
Forecast and opportunities report
Sto share
Sustainability and Corporate Social Responsibility
Consolidated annual financial statements of the Sto Group (IFRS)
Income statement
Statement of recognised income and expenses
Balance sheet
Statement of changes in equity
Cash flow statement
Notes
Audit certificate
Responsibility statement by the legal representatives
Calendar of events
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Sto AG | Foreword
Dear Shareholders,
Sto AG continued its earnings-oriented growth in 2011. Con-solidated turnover increased by 12.3% to EUR 1,106.8 million, consolidated earn-ings before interest and taxes (EBIT) improved by 22.1% to EUR 104.5 million, net profit for the year increased from EUR 58.5 to EUR 70.3 million. The already solid financial and asset situation was thus further strengthened which, among other factors, was expressed in a healthy equity ratio of 63.6%. Our good equity
capital resources were an important reason for having survived the current financial crisis unscathed. As we also want to be prepared for future crises while continuing our earnings- oriented expansion, having a solid financial structure is one of our main objectives. The pos-itive development of the past fiscal year enables us to again propose a higher dividend payout at the Annual General Meeting on 12 June 2012. The bonus payment is to be raised from EUR 3.06 to EUR 4.56 per preference and ordinary share. The basic dividend remains unchanged at EUR 0.31 per preference share and EUR 0.25 per ordinary share.
The continuing good demand for facade systems in our key markets to date, the expansion of our international business, and extraordinarily good weather conditions were the main reasons for the better than expected business development in 2011. The current popularity of facade systems among building owners is an indicator of the significance that is being placed on energy-efficient construc-tion or refurbishment in an increasing number of countries. As Sto is internationally well positioned on the market for facade insulation, we are delighted to be able to benefit from
the trend towards environmentally friendly insulation.
Continuity pays off. That is because we paved the way for facade insulation at an early stage and have consistently kept to our sustain-able and quality-oriented course throughout all business cycles. Our mission statement “Build-ing with conscience.” served as a compass with the long-term goal of becoming the technol-ogy leader in the sustainable design of living space tailored to human needs. In addition to continuity, Sto stands for quality, innovation, internationalisation and sustainable realisation of profits, i.e. for criteria which are a distin-guishing mark of successful companies. Despite their performance, companies such as Sto are often not directly in the focus of public atten-tion, but are among the “Hidden Champions” of the German economy. A “Hidden Cham-pion” also has to have a strong brand: a cor-responding survey on market presence or brand management confirmed this fact by the very good ranking again achieved.
We have also pursued our course unswerv-ingly on the capital market and have resisted all attempts of an all too short-term – not to say short-sighted – orientation for Sto. Not to the detriment of the shareholders, as since the reorientation of our investors towards sustainability, the long-term orientation of our corporate policy and the resulting success have also increasingly been reflected in the prefer-ence share rate. In addition, we have always distributed dividends to our shareholders up to now. And have been doing so since 1992: In May 2012, Sto preference shares will have been listed on the stock exchange for 20 years.
We are pleased that Sto has been able to acquire a key position in our sector over the last few years. Nevertheless, we do not want to rest on our laurels. We will also continue to target our efforts towards enhancing the company in the future. We have drawn up strategic guide-lines for that purpose that will be implemented on a continual basis. Among the most impor-
Foreword
Jochen Stotmeister, Chairman of the Executive Board
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Foreword | Sto AG
tant points are continuing internationalisation, developing additional sales potential, intensify-ing research and development and increasing the skills and performance of our employees. The generation change in management already initiated in 2010 within the “Sto-Future Plus” project enabled us to achieve a major milestone in 2011 with the establishment of a fourth management division ‘Marketing and Sales’. This means that conditions have also been met on management level to continue our positive corporate development.
With its increasing size, Sto’s responsibility is also growing, a fact of which we are very well aware. We will actively face this responsibility and position the Sto Group even more clearly in the area of Corporate Social Responsibility in the coming years. A first important step in this direction was taken when the company joined the “Global Compact” UN initiative in 2009. We support, without reservation, the ten principles contained in the initiative address-ing human and labour rights, environmental protection and measures against corruption; and we undertake to promote them within the scope of our responsibility. Since joining we have taken further structural measures and created conditions to enable us to continually raise our already high standards.
With our social responsibility in mind and on the occasion of us clearly exceeding the one billion mark in turnover, we initiated an impor-tant project at the end of 2011 as a thank-you to all our employees: Sto will provide a one-off amount of EUR 1 million to a support fund for employees in need. This enables the fund to assist employees of the Sto Group whose existence has been plunged into crisis through no fault of their own. Other examples of our social and environmental commitment can be found in the sustainability part of this annual report. At the same time, this corresponds to the requirements of the annual progress report to be drawn up according to the “Global Compact”.
Sto is well-positioned, both strategically and financially. Based on a solid balance sheet, we will also successfully master the future challenges in the competitive environment, provided economic downswings can be suc-cessfully circumnavigated. This confidence also applies to the fiscal year of 2012 which, with a view to the current high level of uncertainty in the euro zone and on the financial markets and the slowdown trends in major economies, will probably not be that easy. The expected slowdown will also affect Sto. We assume that there will be a moderate rise in consolidated turnover in the current year of around 3.5% to approx. EUR 1,145 million. As this slight growth will be also be accompanied by substantial cost increases, consolidated EBIT will still remain solid, but lie under the previous year’s level from today’s point of view.
Irrespective of whether the general con-ditions are favourable or turbulent, we can always rely on the Sto workforce. Thanks to their exemplary commitment and high level of know-how, our employees are an important guarantee of success.
On behalf of the Executive Board, I would like to thank all our employees and managers for their outstanding service and dedication once again during the last financial year.
Sincerely,
Jochen StotmeisterChairman of the Executive Board
Sto AG | Report of the Supervisory Board
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Report of the Supervisory Board
Members of the Supervisory BoardFritz Stotmeister, Öhningen | Honorary ChairmanDr. Max-Burkhard Zwosta, Wittnau, Chartered Accountant and Tax Consultant | Chairman (pictured)Helmut Göbeke-Teichert*, Marbach, Pensioner | Deputy Chairman
Helmut Hilzinger, Willstätt, Managing Shareholder of Hilzinger GmbHMag. Dr. Heimo Scheuch, Vienna/Austria, Chairman of the Executive Board of Wienerberger AGProf. Dr.-Ing. Klaus Sedlbauer, Stuttgart, Director of Fraunhofer InstituteCharles Stettler, Stäfa/Switzerland, Banker/freelance member of the Administrative BoardPeter Zürn, Westernhausen, Member of the Management of the Würth Group
Wolfgang Dell*, Hattersheim, Plant and Equipment Maintenance, Sto AG, since 01 March 2011 Klaus Eigenstetter*, Bonndorf, Head of Personnel Production Locations, Sto AG, until 28 February 2011Lothar Hinz*, Reutlingen, Chairperson of the Group Employee Representative Council and Chairperson of the Employee Representative Council for the Baden-Württemberg sales region, Sto AG, since 01 March 2011Barbara Meister*, Blumberg, Deputy Chairperson of the Group Employee Representative Council and Chairperson of the Weizen Employee Representative Council, Sto AGHolger Michel*, Hanover, Trade Union Secretary IG BCEJan Nissen*, Trossingen, Head of Materials Management within the Sto GroupErhard Röhl*, Wiesbaden, Technical Coordinator, Sto AG, until 28 February 2011
* Employee representatives
Report of the Supervisory Board | Sto AG
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Dear Shareholders,
Sto AG again developed in a positive direction in 2011 and was able to clearly exceed the one billion mark in consolidated turnover for the first time. This success is based on a sustainable strategy which the company has continually been pursuing. The performance and motiva-tion of our workforce are also important fac-tors. The Supervisory Board wishes to express its gratitude to all employees and executive staff for the exemplary dedication that they showed again last year.
Work of the Supervisory BoardThe Supervisory Board of Sto AG carried out the tasks assigned to it by statute law and the articles of association with immense dedication. The new structures introduced according to the recommendations of the German Corporate Governance Code have proved to be successful in practice. We regularly check the efficiency of our work. On the basis of the resolutions adopted at the Annual General Meeting on 21 June 2011, the work of the Supervisory Board will be regulated by completely revised rules of procedure.
The Supervisory Board again dealt at length and intensively with the Sto Group’s situation in 2011, continually assisted the Executive Board in an advisory capacity and monitored the Company’s management. The Executive Board briefed the Supervisory Board on a regular, timely and comprehensive basis on corporate planning, on operational business trends, on the Group’s situation including the risk position and risk management, and on compliance at Sto. Departures of business trends from defined plans and targets were explained to us in detail, and the company’s continued strategic develop-ment and orientation were coordinated with us. All major issues affecting the development of the company were discussed openly and exten-sively during Supervisory Board meetings.
The required information for fulfilling its responsibilities was provided to the Supervisory Board mainly in the form of comprehensive, written monthly reports. For business transac-tions requiring the approval of the Supervisory Board, the documentation specific to the issues at hand were handed to us, which provided the basis for detailed discussion and the subsequent decision-making process. During all decision-making processes, the Supervisory Board and the Executive Board observed the principles of corporate governance at all times.
The Chairman of the Supervisory Board was also in regular contact with the members of the board outside the official Supervisory Board meetings. Amongst other things, he attended several strategy and other meetings of the Executive Board. Moreover, numerous personal talks took place and telephone calls were made, focusing, above all, on the strategy, business development and risk management of the Sto Group.
Key issues dealt with by the Supervisory BoardDuring fiscal 2011, the Supervisory Board held four regular meetings, on 21 April, 27 July, 19 October and 14 December. Amongst the topics discussed on a regular basis as part of these meetings were the current business situation, the effectiveness of the risk management and internal control systems, along with strategic issues. The Board was quorate at all times; no Supervisory Board member missed more than half of the meetings held.
In addition to the regular agenda items, the audit and confirmation of the annual financial statements for 2010 of Sto AG, and the audit and approval of the annual financial statements of the Sto Group were on the agenda at the kick-off meeting held on 21 April 2011. The Executive Board also presented their planning for the fiscal year 2011. After intense discus-sion, the planning together with the accompa-
Sto AG | Report of the Supervisory Board
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nying budget were approved. The opportunities and risks of the possible takeover of the Czech manufacturer and direct distributor of mineral external wall insulation systems, STOMIX, were also discussed in detail. The Supervisory Board approved the acquisition of this company on the condition that the prerequisites for the purchase stipulated by the Executive Board can be fulfilled. After these prerequisites had been fulfilled, takeover took place on 1 July 2011.
In addition, new elections for the Supervisory Board Committees took place on 21 April. In this connection, the work of the Finance Com-mittee was newly regulated to further improve the efficiency of the work of the Supervisory Board. The activities of the previous Finance Committee, which to date also performed the tasks of the Audit Committee, will be taken over by an Audit and Investment Committee in future.
On 27 July, the Supervisory Board discussed in detail the development of the income, financial and asset situation of the Sto Group in the first half year of 2011. In addition, we were also informed in detail about the in-house insulant production in existence since 2010 and innovations in this area. Innolation GmbH has been responsible for our insulant activities since 1 January 2011. The plenum also decided to form a Nomination Committee with a view to the upcoming elections of the shareholder representatives to the Supervisory Board in 2012. The Committee will draw up a proposed list of suitable candidates and present it for agreement.
A main focus of the meeting on 19 October was the report from the Chairman of the Invest-ment Committee which presented current and future investment projects. On this occasion, the Supervisory Board also dealt with propos-als for updating the rules of procedure for the Executive Board.
At the last meeting on 14 December, the proposal of the Executive Board was discussed
that on the occasion of turnover exceeding the one billion mark, a one-off amount of EUR 1 million would be provided for a fund to assist employees of the Sto Group who are in need. The Supervisory Board expressed its respect and recognition for the Executive Board’s plan. It expressly supports this project. The requirements of the German Corporate Governance Code were also discussed in great detail at the meeting. The discussion focused on checking the efficiency of the work of the Supervisory Board. In addition, the Declaration of Conformity was passed in accordance with Section 161 of the German Companies Act (AktG). This document is permanently available on the Sto Internet web site at www.sto.de. Deviations from the recommendations of the Code described in the Declaration of Conform-ity primarily arise from the specific requirements of a medium-sized family business.
Work of the committeesA suitable instrument for raising the efficiency of the Supervisory Board’s work is the forma-tion of committees. These committees deal with complex factual issues outside the actual Supervisory Board meetings and prepare them for the full Board. When appointing commit-tee members we are able to draw on the vast knowledge of the members of the Supervisory Board, who are all proven experts in their respective fields.
The Sto Supervisory Board formed the fol-lowing committees: an Audit Committee which deals in particular with issues of accounting, risk management and compliance. The most important project is the analysis and preliminary examination of the annual financial statements of Sto AG and the Sto Group with representa-tives of the chartered accountant. In addition, it will also conduct a regular and detailed analysis of emerging trends in key financial indicators, particularly turnover and income, on the basis of monthly figures. The Investment Committee
Report of the Supervisory Board | Sto AG
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mainly discusses investment plans and checks the investment budgets required in each case. These two committees normally meet prior to the ordinary Supervisory Board meeting – that means they met four times in 2011.
The task of the Nomination Committee is to determine suitable candidates for the new election of the shareholder representatives to the Supervisory Board and present correspond-ing proposals to the plenary body. The election proposals are then based on these recommen-dations which the Supervisory Board submits at the Annual General Meeting. The Nomination Committee, which met once in 2011, consists of shareholder representatives only.
The Personnel Committee primarily deals with contractual matters which are relevant to the Executive Board, and with payment structures within the company. The Committee met two times in 2011. It was not necessary to convene the Arbitration Committee pursuant to Section 27, par. 3 of Germany’s Co-Determina-tion Act (MitbestG).
An ad-hoc committee, which met once, was set up for the project “Takeover of Inotec GmbH shares”. An extraordinary committee meeting was held to discuss the issue of the Supervisory Board’s organisation and, in par-ticular, to revise the Supervisory Board’s rules of procedure.
Audit of the 2011 annual financial state-ments of the Sto Group and Sto AGAt the Annual General Meeting of 21 June 2011, Ernst & Young GmbH Wirtschaftsprü-fungsgesellschaft, Stuttgart, were appointed auditors for fiscal 2011. Ernst & Young GmbH assured the Supervisory Board in writing that there were no circumstances that could impair their independence as auditors of the annual financial statements. We subsequently com-missioned Ernst & Young GmbH to audit the annual financial statements of Sto AG and the Sto Group, the management reports, the
early risk warning system in accordance with Section 91 of the German Companies Act (AktG), and the dependent company report of the Executive Board pursuant to Section 312 AktG.
Ernst & Young GmbH audited the annual fi-nancial statements and the management report of Sto AG, prepared by the Executive Board in accordance with the HGB (German Commercial Code), the consolidated annual financial state-ment and Group management report, prepared on the basis of International Financial Reporting Standards (IFRS), and the dependent company report of the Executive Board in accordance with Section 312 of the German Companies Act (AktG); and provided each of them with an unqualified Audit Certificate. The management reports provide an accurate depiction of the business and financial situation of Sto AG and of the Sto Group. The opportunities and risks of future development are described accurately. The audit by Ernst & Young GmbH was per-formed pursuant to Section 317 of the German Commercial Code (HGB), in accordance with the generally accepted auditing principles defined by the German Institute of Chartered Accountants (IDW).
The auditor also examined the efficiency of the functional early risk detection system and the accounting-related internal control system and judged them both to be appropriate.
The annual financial statements of Sto AG and the Sto Group, the management reports, the de pendent company report of the Execu-tive Board and the audit reports prepared by Ernst & Young GmbH were distributed to all the members of the Supervisory Board in due course and discussed in detail in the presence of the auditors at the financial meeting of the Supervisory Board on 20 April 2012. On the basis of our own examination of the annual financial statements, the management reports and the dependent company report of Sto AG, we approve the audit report. No objections were raised. The auditors from Ernst & Young
Sto AG | Report of the Supervisory Board
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GmbH issued the dependent company report with the following audit certificate: “Following our audit, which we carried out in conformity with professional standards, and subsequent assessment, we confirm that the factual infor-mation in the report is correct.”
The Supervisory Board approved the annual financial statements prepared by the Executive Board. The financial statements of Sto AG have thus been confirmed.
We agreed to the proposal of the Executive Board to raise the dividend distribution. Fol-lowing the agreement of the Annual General Meeting, shareholders will therefore receive an increased bonus of EUR 3.06 (previously: EUR 4.56) per preference and ordinary share. The basic dividend remains unchanged at EUR 0.31 per preference share and EUR 0.25 per ordinary share.
Personnel-related matters Mr. Rainer Hüttenberger has been appointed Chief Marketing and Sales Officer with effect from 1 April 2011. The Supervisory Board wishes Mr. Hüttenberger and all the employees of Sto AG much success in facing the chal-lenges in the current fiscal year of 2012.
Stühlingen, April 2012The Supervisory Board
Dr. Max-Burkhard ZwostaChairman
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Corporate Governance Report | Sto AG
Corporate Governance at StoThe Executive Board and the Supervisory Board of Sto AG are committed to responsible and transparent corporate governance with a long-term orientation. Adherence to statutory regula-tions and ethical standards, a sound financial policy, and a strategy of sustainability have been the cornerstones of Sto’s corporate philosophy ever since the company was founded. The norms established in the articles of association and rules of procedure are geared towards these principles and require their implementation. In this respect, the regulations, recommendations and proposals contained in the German Corporate Governance Code (“Code”) are to a large extent an integral part of our actual corporate culture.
Departures from the recommendations con-tained in the Code only occur in matters that specifically relate to medium-sized family busi-nesses. In these cases, correspondingly adapted arrangements are applied. Departures from the recommendations of the Code in its current ver-sion of 26 May 2010 and the respective reasons for doing so are explained in the Declaration of Conformity in accordance with Section 161 of the German Companies Act (AktG). The cur-rent Declaration of Conformity is available for download from the Internet. The same applies to legacy statements.
Below is our report on corporate govern-ance at Sto in accordance with No. 3.10 of the Code. This report forms part of the statement on corporate governance that can be found on Sto’s web site under www.sto.de in the section on “Investor Relations”.
Shareholders and the Annual General MeetingAt the end of 2011, Sto AG’s share capital amounted to EUR 17.556 million. The share capital was divided up into 4.32 million registered common shares and 2.538 million preference bearer shares. Each ordinary share carries the right to one vote at the Annual
General Meeting. Preference shares do not have voting rights but take priority for the purpose of profit distribution and are entitled to a higher dividend. There are no shares with multiple or preferential voting rights.
Sto shareholders exercise their rights in accordance with the relevant statutory provi-sions before or during the Annual General Meeting. The Annual General Meeting is held once each year. The Executive Board of Sto AG ensures timely dispatch of all reports and records required by legislation for the Annual General Meeting, including the agenda. These documents are published simultaneously on our website.
At the Annual General Meeting, the Executive Board presents the annual financial statements of the previous financial year and comments on key events. Each shareholder is entitled to attend the Annual General Meeting, to rise to speak at the meeting in relation to items on the agenda, and to ask questions and to propose motions on specific issues.
Management and control structureThe corporate headquarters of Sto AG are located in the southern German town of Stühlingen. This means we are subject to Ger-man law, to which our corporate governance activities must conform. In relation to the stock market listing and the financial market, the German Companies Act and in particular all the regulations of the capital market law must be adhered to. Also important are the German Commercial Code, the International Financial Reporting Standards (IFRS) and the German Co-Determination Act.
Sto AG has a two-tier management and control structure which, until 31 March 2011, consisted of an Executive Board of three Direc-tors, and since 1 April 2011 of four, and a 12-member Supervisory Board. Accordingly, the management of the Company and the process of monitoring it are strictly separated. Both
Corporate Governance Report
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Sto AG | Corporate Governance Report
bodies observe the rules of proper corporate governance at all times. The Executive Board and the Supervisory Board cooperate closely for the benefit of the company.
The Executive Board of Sto AG, whose current members are listed on page 129, is primarily responsible for managing the Com-pany with the objective of creating sustainable added value; and for the Company’s strategic orientation. The Executive Board coordinates its strategy with the Supervisory Board. In addition, the Executive Board makes any arrangements necessary to ensure compliance with legal requirements and internal corporate guidelines within the Sto Group. The Board’s functions also include the preparation of the annual financial statements for Sto AG and for the Sto Group, and the establishment and development of the risk management system. Detailed information about risk management is provided on pages 33 to 38 of this Annual Report. The work of the Executive Board is regulated through rules of procedure which were drawn up on a new basis in 2011. The Executive Board pays attention to diversity when filling management positions in the company and in particular aims to ensure that women are adequately taken into account.
The members of the Executive Board are committed to working for the benefit of the Company. For details of the remuneration of the members of the Executive Board, please refer to pages 17 and 128 of this Annual Report, and to the declaration of conformity in accordance with Section 161 of the German Companies Act (AktG).
Sto’s Supervisory Board is equally composed of shareholder and employee representatives in accordance with the German Co-Determination Act. The members are listed on page 4 and on pages 129 and 131 of the Supervisory Board re-port. On the basis of the resolutions adopted at the Annual General Meeting on 21 June 2011, the work of the Supervisory Board will be regu-lated by completely revised rules of procedure.
The key tasks of the Supervisory Board are to monitor and advise the Executive Board. For any decisions that are of fundamental importance to Sto AG, the Supervisory Board becomes involved in the decision-making process from the outset. It also defines the obligations for the Executive Board to notify and report to the Supervisory Board. At Sto, the Supervisory Board is briefed by the Executive Board on a regular, timely and comprehensive basis about all relevant issues relating to planning, business development, the risk situation and risk man-agement. Any departures in performance of the business from defined plans are discussed.
On the basis of the findings of the auditor, the Supervisory Board carries out an inspection of its own of the annual financial statements of the Sto Group and Sto AG. Moreover, the half-year financial report and the interim reports are discussed with the Chairman of the Supervisory Board within the first and second half of the year prior to their publication.
In determining the composition of the Supervisory Board, we take care to ensure that the necessary expertise, skills and professional experience required to properly discharge the Board’s responsibilities are represented. All members of the Sto Supervisory Board are proven experts in their respective fields. We also support diversity as required by the Code. The Supervisory Board and the Executive Board assess qualified applications for any new appointments in an impartial manner.
The body’s various duties are coordinated by the Charirman of the Supervisory board, who also maintains close contact with the Executive Board for the purpose of regularly deliberating on Sto’s business strategy, business performance and risk management. For details of the remuneration of the Supervisory Board, please refer to pages 17 and 128 of this Annual Report, and to the Declaration of Conformity in accordance with Section 161 of the German Companies Act (AktG).
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Corporate Governance Report | Sto AG
The Supervisory Board holds regular meet-ings – they met four times in 2011. The Supervi-sory Board report contains detailed information on the topics discussed. If required, meetings of the Supervisory Board are separately prepared by the shareholder and employee representa-tives. Where appropriate, the Supervisory Board meets without the Executive Board.
The Supervisory Board regularly checks the efficiency of its work. One way to improve efficiency is through appropriately qualified committees. An Investment, a Personnel, a Nomination and an Audit Committee have been established at Sto. In addition, Section 27, para. 3 of Germany’s Co-Determination Act (MitbestG) requires that an Arbitration Com-mittee be set up; however, it was not necessary to convene the committee during the last fiscal year.
In the periods leading up to the Supervisory Board meetings, these committees generally deal with complex issues and prepare the find-ings in appropriate form for the full Supervi-sory Board meetings. The Chairperson of the relevant committee continually provides the Supervisory Board with reports on the commit-tee’s work. The Chairman of the Audit Com-mittee is independent and not Chairman of the Supervisory Board. As a financial expert he has the special knowledge required for this position, and did not belong to the Executive Board during the past two years.
TransparencySto AG provides its shareholders, financial analysts, the media and the general public regularly and promptly with information about the economic situation and key events within the company. To this end, we use numerous instruments such as the annual and half-yearly financial reports as well as interim announce-ments within the first and second half-year. In addition, current topics are dealt with in press releases.
Annual and half-yearly reports as well as interim announcements are lodged with the Companies Register and the electronic German federal government gazette (“Bundesanzeiger”) on the day of publication. These documents – as well as any current press releases – are simultaneously posted on the Internet at www.sto.de under the heading “Company” in the “Investor Relations” section. The use of various communication channels ensures that all target groups are informed at the same time. As soon as any insider information directly affecting Sto emerges, we immediately report such information in accordance with the relevant legal provisions of Section 15 of the German Securities Trading Act (WpHG), i.e. even outside our regular reporting cycle.
All key dates for publications and functions are listed in the calendar of financial events, which is announced well in advance. The current calendar of financial events, valid as of the end of March 2012, is reproduced in this Annual Report. The current version of the cal-endar can always be viewed on the Internet.
According to Section 15a of the Securities Trading Act (WpHG), members of management and supervisory boards of publicly listed com-panies have a duty of notification. This means that persons with management functions at Sto AG must disclose any private transactions involving Sto preference shares (Directors’ Dealings) to the Federal Supervisory Authority for Financial Services (Bundesanstalt für Finanz-dienstleistungsaufsicht, BaFin) and to Sto AG within five working days. No notifications of Directors’ Dealings occurred in fiscal 2011.
Accounting and auditing of financial statementsThe accounting of the Sto Group is based on the internationally recognised principles of the International Financial Reporting Standards (IFRS). Detailed information on these Standards is set out in the Notes to this Annual Report.
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The annual financial statements of the parent company Sto AG are prepared in accordance with the German Commercial Code (HGB). Both the consolidated financial statements and those of Sto AG are audited by an independ-ent auditing company elected at the Annual General Meeting following a proposal by the Supervisory Board. The nomination proposal is preceded by an independence check in order to ensure that any conflicts of interest that might give rise to doubts concerning the impartial-ity of the auditor can be precluded from the outset. The auditing company appointed by Sto has issued an appropriate statement in this regard. The auditor responsible takes part in the deliberations of the Supervisory Board concerning the annual financial statements and the consolidated annual financial statement and reports on the key findings of his audit at the Audit Committee meeting.
Sto AG | Corporate Governance Report
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Corporate Governance Report | Sto AG
Sto AG | Management Report for the Sto Group (IFRS)
14
Management Report for the Sto Group (IFRS)
Members of the Executive BoardJochen Stotmeister, Grafenhausen | Chairman of the Executive Board, responsible for strategy and corporate development, marketing and sales (until 31 March 2011), central services and personnelGerd Stotmeister, Allensbach | Deputy Chair-man of the Executive Board, Chief Technical Officer, responsible for process engineering, innovation, materials management and logisticsRolf Wöhrle, Villingen-Schwenningen | Chief Financial Officer, responsible for finances, controlling, organisation and information tech-nologyRainer Hüttenberger, Stein a. Rhein/Switzer-land | Chief Marketing and Sales Officer (since 01 April 2011)
The financial year 2011 at a glance
• Stoconsolidatedturnoverupby12.3%toEUR1,106.8million• Ongoinggooddemandinthefacadebusinessincoremarketsandexceptionallyfavourable
weather conditions revive sales• GrowthinGermanyandabroad• Consolidatedearningsbeforeinterestandtaxes(EBIT)riseby22.1%toEUR104.5million• NetprofitfortheyearofEUR70.3millioncomparedtoEUR58.5millionin2010• Higherdividendpayout:bonusperpreferenceandordinaryshareincreasesfromEUR3.06to
EUR 4.56, basic dividend remains unchanged• CashflowfromoperatingactivitiesfairlystableatEUR92.7million• Anincreaseinthenumberofemployeesfrom4,249to4,695• Groupoutlookfor2012:slightincreaseinturnoveranddecliningEBITexpected
The Sto AG Executive Board (from left): Gerd Stotmeister, Rolf Wöhrle, Jochen Stotmeister and Rainer Hüttenberger
Management Report for the Sto Group (IFRS) | Sto AG
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Business and general conditions
Business activity and Group structure
Sto – specialising in facadesWith a turnover of approx. EUR 1.1 billion and just under 4,700 employees the Sto Group is one of the major international manufacturers of products and systems for building coatings. Its core business focuses first and foremost on ex-ternal wall insulation systems (EWIS), a segment in which the Group occupies a leading position, and also on rainscreen cladding systems. Both these product groups are pooled in the Facade Systems segment, which accounted for 50.3% of our consolidated turnover in the 2011 fiscal year. The render and paint systems for exterior application, which are assigned to the Facade Coatings division, made up 23.1% of the busi-ness volume. The product range also includes products for interiors e.g. plaster and paint systems optimised for home and office interi-ors, decorative coatings and acoustic systems for regulating room noise (share of turnover 13.1%). In addition to the products mentioned, Sto also offers high-quality floor coatings and products for concrete restoration.
The Sto brand for professionalsSto has positioned itself in the market for build-ing coatings as a supplier of quality products and systems with a high degree of technologi-cal know-how, and a comprehensive range of services. The range is therefore primarily targeted at professional users such as painters, plasterers and building contractors, as well as architects and planning offices. These target groups are served by means of a local direct
distribution system, which in Germany – still the most important individual market – covers almost the entire country. For selected products which are clearly separated from our core busi-ness, we intend to boost the expansion of our second distribution channel, the wholesale and retail sector, following the positive experi-ence of the past few years.
A further strategic focus is the continual and systematic extension of Sto’s range of services connected to its core business – for example, developing innovative insulation and coating materials, or offering extensive design services. The product and service components which ideally supplement each other are the basis of our Group competence related to building fa-cades. We offer our customers everything from one source, enabling building owners to have a high level of individual design freedom. The individual components of our range of services are also exactly matched, ensuring high-level efficiency during the application process. Con-sistent implementation of our business model and our uniform market presence throughout the Group has established the name of Sto as one of the best-known product brands in the industry.
1 Verklebung2 Dämmung3 Armierungsmasse 4 Armierungsgewebe5 Grundierung
1 2 3 4 5 6 3
6 Schlussbeschichtung
High insulation effect with a thin board – an aerogel, which has its origins in space technology, was further developed with a thermal conductivity of λ = 0.016 W/(m·K) now enables slim internal insula-tion structures. Employed in the “StoTherm In Aevero” system it is used for EnEV-compliant refur-bishment particularly for confined spaces.
1 Bonding2 Insulation3 Reinforcing compound4 Reinforcing mesh5 Primer6 Top coat
Sto AG | Management Report for the Sto Group (IFRS)
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Additional success factors: innovative strength and internationalisationSto’s innovative strength has also contributed to the brand’s positive image. Our company is internationally regarded as a technological pacesetter in the industry. To consolidate this leading position while also developing new growth markets, research and development are also considered core strategic activities at Sto. Further information is to be found in the section “Research and development”.
Sto began transferring its business model based on quality, innovation, direct distribu-tion and Group competence to other countries at an early stage. The systematic develop-ment of foreign markets has been a crucial requirement for the continual growth of our company. Today, Sto is active on the market in 27 countries with 39 subsidiaries or manufac-turing plants. In addition, we are in supplier relationships with distribution partners in many other countries. Business is currently focused in particular on Europe and the USA. The new executive division ‘Marketing and Sales’ is cur-rently focusing its international strategy on a more intense development of Asian markets – particularly China. In the medium-term, we would also like to systematically expand our activities in South America through our sub-centre “The Americas”.
Involved in renovation and construction workSto products are used both in the construc-tion of new buildings and in the renovation of existing buildings. The comparative weighting of these two market segments in individual regions depends on the characteristics specific to each country. In Asia, for example, the con-struction of new buildings is of much greater importance than renovation work, due to the prevailing pent-up demand. In the mature economies of the western world, the onus is rather on renovation business. According to
the EUROCONSTRUCT research association, in 2011, on average, this segment accounted for 55% of the total business volume in the con-struction industry, with the construction of new buildings making up the remaining 45%.
Generally speaking, the construction of new buildings is very sensitive to economic cycles. As it depends on general economic conditions it shows considerable fluctuations in sales. In contrast, demand in the renovation and refur-bishment area has been less volatile in recent decades, regardless of economic cycles. Renova-tion business generates the majority of Group turnover within the Sto Group.
Clearly defined corporate structureThe parent company of the Group is Sto AG, headquartered in Stühlingen. In addition to functioning as the Group’s holding company, it is also responsible for operative domestic business with facade systems, paints and renders. StoCretec GmbH, located in Kriftel, is responsible for floor coatings and products for concrete restoration. Innolation GmbH, located in Lauingen, produces insulants and carries out research in the area of innovative insulant technologies. Rainscreen cladding and acoustic systems, together with decorative profiles, are produced on behalf of the Sto companies by StoVerotec GmbH in Lauingen. In addition, the new diversification strategy for StoVerotec is aimed at also positioning their products and services in other industrial segments. The company Südwest Lacke + Farben GmbH & Co. KG in Böhl-Iggelheim, is the specialist for lacquers and varnishes within the Group, en-abling the other Sto companies to also top off their competence in lacquers. The company is specifically a partner for retail companies which either have, or will include, Südwest products in their range.
Foreign business is largely handled by national companies operating independently. They either produce the products themselves or
Management Report for the Sto Group (IFRS) | Sto AG
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purchase them via the Group. A list of all sub-sidiaries of Sto AG is reproduced in the Notes to this annual report.
Business management and control systemSto AG is managed by a four-member Executive Board. It develops the Group strategy and en-sures its implementation. An important instru-ment used is Sto’s targeted control system. The parent company, Sto AG, its subsidiaries and the other corporate units are controlled and managed by reference to strategic and opera-tional targets and key financial figures. These are based on business figures that are uniformly determined throughout the Group which, in turn, are part of a standardised reporting system. The key operating ratios employed by Sto are earnings before interest and taxes (EBIT), earnings before tax (EBT), cash flow from current operations and return on equity. The key figures determined for control purposes are also employed in the planning and controlling process.
The reports compiled within this standard-ised reporting system are submitted directly to the Executive Board, which then forwards the relevant information to Sto’s Supervisory Board. In addition to reporting, management consulta-tions are conducted between the Executive Board and the executive staff of the subsidiaries on a regular basis. The control system used by Sto strengthens the decentralised entrepre-neurial responsibility of our employees at a local level while also guaranteeing transparency within the Group.
In addition to internal ratios, we also monitor key external early indicators as a means of further improving our planning processes, as well as corporate and risk management. At Sto, such indicators primarily consist of economic data and detailed information on the sector, such as the trends in the volume of building construction, or the segments for new buildings and renovation.
Fundamentals of the remuneration systemThe remuneration for the Executive Board consists of a fixed component and a variable element, which clearly carries more weight. The level of the variable salary component is linked to the earnings situation of the Sto Group, whereby a cap has been agreed in this context. No stock options are granted.
The members of the Supervisory Board are provided with fixed remuneration beyond compensation for costs incurred. The applica-ble rule is that the Chairman is entitled to 4 times and the Deputy Chairman 2.5 times the amount of the basic remuneration. As from 1 January 2011, the Chairman of a Supervisory Board Committee will be additionally remuner-ated with a fixed annual amount. If a commit-tee has only been formed for part of a fiscal year, the remuneration shall be proportionate.
StrategyIt is our vision to become the worldwide tech-nology leader in the sustainable design of living space tailored to human needs. This vision is also anchored in our company’s Guiding Prin-ciples which forms a Group-wide orientation framework. We are convinced that long-term success is only possible through continual ac-tion and sustainable economic activity. Constant progress is the basis on which we wish to permanently fulfil our responsibility towards our customers, our employees, society and the environment, and all other stakeholders and shareholders.
We consistently align our strategy with the principles established in our Guiding Principles, which have recently been further developed within the “StoFuture Plus” project. The intro-duction of the fourth executive division ‘Market-ing and Sales’ has enabled us to successfully fur-ther one of the main points of focus addressed in the project – completing a generation change at management level. In addition, our current strat-egy plan contains the following key elements:
Sto AG | Management Report for the Sto Group (IFRS)
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An important project is the further develop-ment of our sustainability strategy which is to also contain a recycling concept for facade systems. In addition, we are intensifying our activities within international initiatives, such as “Global Compact”, as well as in local social and ecological projects.
Overview of business performance in 2011 and general statement by the Executive BoardSto AG continued its positive business develop-ment in 2011. Consolidated turnover increased by 12.3% to EUR 1,106.8 million and was thus clearly higher than forecasted at the beginning of the year. The main reasons are attributed to the ongoing good demand for facade systems in our key markets to date, the extraordinarily favourable weather conditions, and the expan-sion of our international business. We, there-fore, also achieved mainly growth in our foreign markets and were able to further consolidate our position in spite of at times difficult general conditions.
Thanks to this encouraging growth in turn-over, we successfully managed to again more than compensate for the significant increase in costs for raw materials and commercial prod-ucts as well as for personnel in 2011. Consoli-dated earnings before interest and taxes (EBIT), therefore, increased from EUR 85.6 million to EUR 104.5 million. Consolidated net income increased by 20.2% to EUR 70.3 million.
As a result of the growth in turnover and earnings, the financial and asset situation of the Sto Group also improved. The equity ratio stood at 63.6% at the end of December 2011 compared to 60.5% on the same day of the previous year. The stock of cash investments amounted to EUR 102.6 million. Net-financial assets, after taking financial liabilities into account, stood at EUR 69.6 million. Cash flow from operating activities remained stable at EUR 92.7 million.
• Internationalisationwillbecontinuedbyopening up new regions and improved devel-opment of markets in which we are already represented. The new executive division ‘Marketing and Sales’ is currently focusing on the Asian markets – and in particular China. In the medium-term, we aim to systemati-cally expand our activities in South America through our sub-centre “The Americas”. We are open to cooperating with partners where it makes sense.
• Wealsowishtodevelopnewsalespoten-tial on the distribution channel level. That includes extending alternative distribution channels, for example, the wholesale and re-tail sector. At the same time, we are planning to increasingly address new target groups, such as industrial customers.
• Wewillintensifyouractivitiesintheareaof research and development. The aim is to continually create value-creating innova-tions. In addition to making progress in the products and systems area, the develop-ment of custom-fit product strategies is also intensified. Furthermore, we are reinforcing our activities in professional associations and special interest groups.
• Thequalificationsandperformanceofallouremployees will be enhanced. This includes vocational and further training measures, successively introducing a health manage-ment system, and other measures for better reconciliation of work and family life. This will also enable us to strengthen Sto’s posi-tion as an attractive employer.
• Thecompanywillcontinueitsearnings-oriented growth. We consciously avoid ex-pansion at any price and implement modern control instruments in the operations area throughout the Group while starting regular cost-optimisation and efficiency-enhancing initiatives.
• WewillpositionStoevenmoredistinctlyinthe area of Corporate Social Responsibility.
Management Report for the Sto Group (IFRS) | Sto AG
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On the basis of Sto’s solid earnings, finance and asset situation, the Executive Board and the Supervisory Board will propose an increase in the dividend payout at the Annual General Meeting on 12 June 2012. Shareholders are therefore to receive an increased bonus of EUR 4.56 (previously EUR 3.06) per ordinary and preference share. The basic dividend remains unchanged at EUR 0.31 per preference share and EUR 0.25 EUR per ordinary share.
Sto stands for continuity, quality, innova-tion, internationalisation, and sustainable realisation of profits, i.e. for criteria which are a distinguishing mark of successful companies. In addition, it is a strong brand. Sto received confirmation of this fact last year in the course of a corresponding survey of the so-called “Hidden Champions” where it again achieved a very good ranking in terms of market presence and brand management.
Economic conditions in 2011Economic recovery recently slowed downGlobal economic trends on the whole were pos-itive in 2011: according to International Mon-etary Fund (IMF) estimates, global economic growth stood at 3.8%. This comparatively high increase mainly occurred in the first months of the year whereas the economy increasingly stagnated in the further course of the year. According to the IMF this was mainly a result of the successive intensification of the sovereign debt crisis in the euro zone and the difficult situation on the financial markets.
The largest contribution to growth in 2011 was once again made by the emerging econo-mies and developing countries which generated a total gain of 6.2%, although economic dyna-mism clearly declined there, too. In comparison, the increase in performance of the industrial na-tions was more moderate with a plus of 1.6%. The German economy was a positive exception among this group of countries. According to
information from the Statistisches Bundesamt (Federal Statistical Office), real gross domestic product rose by 3.0% in 2011. Despite this impressively strong growth, clouds were also appearing on the economic horizon in Germany towards the end of the year.
International trends for the construction sectorThe German construction industry also benefited from the good domestic economy. According to the Statistisches Bundesamt (Fed-eral Statistical Office), total turnover in the main construction sector increased by 12.5% to EUR 93.4 billion in 2011 - the highest increase since 1994. High levels of growth were achieved in commercial construction (+11%) and resi-dential construction (+14%) according to the Hauptverband der Deutschen Bauindustrie (As-sociation of the German Construction Industry). The real estate industry profited from the fact that apartments have once again found favour among investors as an investment due to the high level of uncertainty on the capital markets. In the public construction sector, turnover increased by 4%, whereby demand was partly funded by economic stimulus packages.
The situation in the construction industry still had its ups and downs in Europe as a whole, according to information from the EUROCON-STRUCT research network. Positive develop-ments, such as in Germany or France, were off-set in 2011 by a clear decline in other European countries. On balance, the building construction volume in Europe stagnated in 2011 with a minimal plus of 0.2% compared to the previous year’s level. At the same time, it was primarily the renovation business (+0.6%) which proved to be encouragingly stable. In contrast, ac-cording to EUROCONSTRUCT calculations, the volume of new construction even dropped by 0.2% in total.
The situation also remained difficult for the US American construction industry. According
Sto AG | Management Report for the Sto Group (IFRS)
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to information from “Germany Trade & Invest” (GTAI), the situation in the residential construc-tion sector was tense in 2011, particularly due to the continuing high unemployment rate and restrictive lending by the banks. The prices for residential properties also remained at a low level. At the same time, the number of construction projects for office and commer-cial properties fell. Estimates assume that the volume of construction in the non-residential sector went down again by 2.5% last year.
The Chinese construction sector once again achieved two-digit growth rates. According to GTAI information, the production value rose by 26.1% in the first six months of 2011 compared to the same period of the previous year. The driving forces were mainly continuing urbanisation and infrastructure construction. Market observers estimate that the upward trend will also continue in the second half of the year, although dynamism is assumed to have recently declined. The reason is the restric-tive measures taken by the government to pre-vent a bubble forming in the property market.
Earnings, finance and asset situation of the Sto Group
Sales and earnings situationSto AG increased its consolidated turnover in 2011 by 12.3% to EUR 1,106.8 million. The continuing good demand for facade systems in our key markets to date, the expansion of our international business, and extraordinarily favourable weather conditions were the main reasons for the better than expected business development in 2011. Additional impulses were also a result of state funding measures which were granted in some regions. As a specialist for facade systems, we were also able to benefit from these positive trends. There was, however, also demand for the other Sto product groups
last year: the robust state of the main construc-tion sector in Germany was among the factors which underlined this fact. In total, domestic turnover rose by 8.2% to EUR 529.4 million in 2011.
Overall, we were able to consolidate our po-sition in our foreign markets in spite of partially difficult general conditions. The majority of Sto’s subsidiaries expanded their business fur-ther. In total, foreign turnover grew by 16.2% to EUR 577.4 million so that the share of Group turnover stood at 52.2% compared to 50.4% in the previous year.
Sto Group Turnover in EUR million
2006 2007 2008 2009 2010 2011
500
400
300
700
600
200
100
800
900
884.
7
854.
8
1000
1100
946.
7
924.
6 986.
0
1,10
6.8
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The first-time consolidation of the Czech manufacturer and direct distributor of external wall insulation systems, STOMIX spol. s.r.o., which we took over together with its sub-sidiaries on 1 July 2011, contributed to the strong international growth. The integration of our Chilean subsidiary acquired in 2010 was also reflected in the increased turnover. The domestic Inotec GmbH, in which we raised our investment through share acquisition from 33% to 90%, was also newly adopted into the companies consolidated. The initial consolida-tion effect in the fiscal year of 2011 amounted to EUR 17.1 million in total. Changes in exchange rates contributed EUR 6.5 million to the Group’s growth in 2011. Positive currency translation effects, mainly from the Swiss franc and the Swedish crown, offset negative effects, in particular from the US dollar and Polish zloty.
Adjusted for currency and consolidation influences, consolidated turnover rose by 9.9% in 2011.
Considerable increases in costs were offset by the growth in business volume in 2011. High price increases had once again to be borne, for example, when purchasing commercial prod-ucts and raw materials which could only partly be bolstered by our active purchasing man-agement. Special chemicals in particular have become considerably more expensive. Overall, the increase of 17.3% to EUR 512.6 million in the cost of materials was clearly disproportion-ate to the increase in consolidated turnover. Staff costs also grew by 7.5% to EUR 271.8 million due to the expansion of the workforce and incremental costs related to collective wage agreements, but remained under the sales momentum.
The balance of the items other operating in-come and other operating expenses also only increased disproportionately – from EUR -184.1 million to EUR -188.1 million. Among the fac-tors reflected here were economies of scale due to the high level of capacity utilisation and positive one-off effects. In total, consolidated earnings before interest, taxes and depreciation/amortisation (EBITDA) thus improved by 21.1% to EUR 134.2 million.
After taking depreciation/amortisation on intangible assets and property, plant and equip-ment into account, which, at EUR 29.7 million, turned out higher than in the previous year (EUR 25.2 million), earnings from operating activities (EBIT) of EUR 104.5 million remained. This corresponds to an increase of 22.1%.
Net financial income/expense also con-tinued to improve last year: it amounted to EUR -1.0 million compared to EUR -1.4 million in 2010. This was caused by rising interest income, although the market interest level was declining. Against this background, consoli-dated earnings before tax (EBT) rose by 22.9% to EUR 103.5 million, somewhat stronger than EBIT.
The tax rate increased from 30.5% to 32.1%. This was mainly caused by higher non-
Sto Group Domestic and foreign turnover in EUR million
Germany Non-Germany 2006 2007 2008 2009 2010 2011
300
200
400
100
500
450.
647
4.0
600
410.
944
3.9
407.
4 477.
3
431.
151
5.6
489.
2 529.
4
496.
8
577.
4
Sto AG | Management Report for the Sto Group (IFRS)
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Code, of EUR 72.1 million, as compared to EUR 83.3 million in the previous year. Higher income from investments of EUR 30.8 million in comparison to EUR 24.8 million in 2010 were the main reasons for this improvement. This was reflected in the positive operative development of our subsidiaries in the last fiscal year. Net interest income amounted to EUR -0.3 million as opposed to EUR -1.4 million in the previous year. On balance, Sto AG net profit for the year increased from EUR 51.1 million to EUR 65.4 million.
On the basis of Sto’s solid earnings, finance and asset situation, the Executive Board and the Supervisory Board will propose an increase in the dividend payout at the Annual General Meeting on 12 June 2012. Shareholders are therefore to receive an increased bonus of EUR 4.56 (previously EUR 3.06) per ordinary and preference share. The basic dividend remains unchanged at EUR 0.31 per preference share and EUR 0.25 EUR per ordinary share.
deductible tax expenses and provisions for tax demands from a tax audit. A 20.2% higher consolidated net income of EUR 70.3 million remained on balance for the fiscal year of 2011 after deducting the tax expense of EUR 33.2 million (previous year: EUR 25.7 million). This is equivalent to earnings per preference share of EUR 10.95 (previous year: EUR 9.09), and earnings per ordinary share of EUR 10.89 (previ-ous year: EUR 9.03). There was no difference between basic and diluted earnings per share.
Sto AG – DividendThe parent company Sto AG reported earnings from ordinary activities in 2011, determined in accordance with the German Commercial
Sto Group EBIT in EUR million
2006 2007 2008 2009 2010 2011
10
20
30
40
50
60
70
80
90
100
82.3
72.4 75
.0
83.2 85
.6
104.
5
2006 2007 2008 2009 2010 2011
Sto Group Net profit for the year in EUR million
40
30
20
10
50
60
70
55.6
50.4
48.5 51
.8
58.5
70.3
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Liquidity movements in 2011Cash flow from operating activities stood at a very sound amount of EUR 92.7 million in 2011 and was, therefore, approximately within the range of the previous year’s level of EUR 93.0 million. The stable development resulted from the fact that improved consolidated earnings were almost able to compensate for the clearly risen commitment of funds in the working capital. In relation to consolidated turnover, we achieved a cash flow margin of 8.4% (previous year: 9.4%) in the period under review.
The cash flow from investment activities adjusted by inflows and outflows for finan-cial investments stood at EUR -24.9 million (previous year: EUR -19.4 million). The greater cash outflow is mainly a result of our increased investment activities which led to disbursements of EUR 27.1 million (previous year: EUR 22.0 million) for the acquisition of property, plant and equipment and intangible assets.
Sto’s solid financial situation enabled us to again invest EUR 106.5 million in safe financial investments at comparably attractive terms as part of our financial management in 2011. We also accrued EUR 103.3 million from transac-
Financial situationThe most important objectives of Sto’s financial management are to ensure the Group’s liquidity worldwide, optimise financial expenses and income, and control and minimise currency and interest risks. We employ a wide range of financing instruments for this purpose. This diversification provides us with greater scope for action and makes us less dependent on individ-ual markets. We work with banks which enjoy the highest credit ratings and rely on long-term relationships characterised by mutual trust.
In the area of financial management we also strive for a healthy balance between sharehold-ers’ equity and borrowed funds. This provides us with the long-term financial scope which we need in order to continue our sustainable and income-oriented growth strategy.
Current financial requirements are covered using a combination of operating cash flow, available liquidity and the use of credit lines. In addition to traditional bank financing we also employed leasing in 2011. The present value of disbursements due from finance leases in the future stood at EUR 3.9 million (previous year: EUR 4.8 million) on 31 December 2011.
To minimise the effect of exchange rate fluctuations on consolidated earnings, foreign currency items are netted within the Group. For any amounts remaining after the netting, we enter into currency hedging transactions, if required.
For our liquidity management activities, we have implemented a cash-pooling system that covers almost all of our subsidiaries operating in the euro region. Within the scope of this system, cash surpluses and cash requirements are automatically netted within the Sto Group. This allows us to minimise the number of exter-nal banking transactions, and surpluses can be invested on the best available terms. In this way, the cash-pooling activities also contribute to the optimisation of our net interest income, in addi-tion to ensuring liquidity.
Sto Group Cash flow statement in EUR K
2011 2010
Cash flow
from operating activities 92,717 93,026
from investment activities –28,081 –86,349
from financing activities –47,063 –32,289
Change in cash and cash equivalents from changes in exchange rates 24 3,912
Cash and cash equivalents at beginning of period 85,014 106,714
Change in cash and cash equivalents 17,597 –21,700
Cash and cash equivalents at the end of period 102,611 85,014
Sto AG | Management Report for the Sto Group (IFRS)
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continued expansion of our Logistics Centre in Weizen and the establishment of a new SalesCentre in Vienna. Both projects are to be completed in 2012. The start of construction of our new headquarters in Belgium, which was also scheduled, was postponed until the first half year 2012 due to delays in the approval procedures currently underway.
A further focus of investment in 2011 was continuing the “Retrofit” project in which we will bring the older production equipment and plants of the Sto AG parent company up to the latest technological standard with numerous single measures. Substantial funds were also invested in the replacement and expansion of handling and hoisting equipment and in both software and hardware systems.
Asset situation – solid consolidated balance sheetExpansion of our business activities and first-time consolidation effects were both reflected in the asset situation. In total, the consolidated balance sheet extended by 8.0% to EUR 669.7 million as at the end of December 2011. On the assets side, tangible fixed assets rose by 6.8%
tions which matured in 2011. These payments and the expenditure for investments in prop-erty, plant and equipment and intangible assets together result in a cash flow from investment activities of EUR -28.1 million (previous year: EUR -86.3 million).
Within our financing activities there was an outflow of funds from the company in 2011 totaling EUR 47.1 million compared to EUR 32.3 million the previous year. In addition to the scheduled repayment of non-current borrowings to the amount of EUR 15.2 million, outflows of EUR 8.6 million for other borrow-ings also played a part. These were almost entirely connected to the repayment of current loans at the companies which were acquired last year. Payments for dividend distribution rose from EUR 15.0 million to EUR 21.4 million.
Cash inflow outbalanced the disbursements by a total of EUR 17.6 million in 2011 (previ-ous year: EUR -21.7 million). As no important changes relating to exchange rates were recorded (previous year: EUR 3.9 million), this led to correspondingly higher cash and cash equivalents of EUR 102.6 million (previous year: EUR 85.0 million). This sum once again clearly exceeded the borrowings of EUR 33.0 million on the balance sheet date (previous year: EUR 39.8 million).
Investments clearly increasedIn 2011, Sto invested EUR 27.6 million in prop-erty, plant and equipment and intangible assets compared to EUR 18.2 million in the previous year. There were no investments in financial assets. The high-level funds for property, plant and equipment and intangible assets underline that we have pursued our continuous invest-ment policy. Despite the financial market and European sovereign debt crisis, there is no hold-up in replacement investments at Sto.
The sharp increase in investments was undertaken in connection with large projects. The projects concerned were, for example, the
Investments Depreciation/amortisation
Sto Group Investments and depreciation (without financial assets) in EUR million
2006 2007 2008 2009 2010 2011
30
20
10
20.3 24
.5
16.3
24.7
19.7
24.4
21.1 24
.4
18.2
27.6
25.2
29.7
Management Report for the Sto Group (IFRS) | Sto AG
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and other reserves from EUR 297.9 million to EUR 348.3 million. The equity ratio improved from 60.5% to 63.6%.
The reduction in liabilities to banks was continued throughout last year. Non-cur-rent borrowings were clearly reduced from EUR 23.8 million to EUR 9.3 million. The reduc-tion is attributable to the scheduled repayment of credit facilities. The increase in current bor-rowings from EUR 16.0 million to EUR 23.7 million was mainly a result of partial external financing at STOMIX. After deducting total bor-rowings of EUR 33.0 million from the cash and cash equivalents totaling EUR 102.6 million, net financial assets stand at EUR 69.6 million (previous year: EUR 45.2 million) at year end.
Current other provisions decreased from EUR 51.1 million to EUR 43.9 million. This was due to the utilisation of provisions formed in previous years with the corresponding disburse-ments and the reversal of provisions no longer required.
General statement on the current earnings, finance and asset situationThe start of the 2012 financial year was slow due to the weather. The decline in consoli-dated turnover, however, remained within the usual seasonal fluctuation range. The Executive Board, therefore, assessed the earnings, finance and asset situation to be positive on the whole at the time of compiling the Group manage-ment report. The key figures of the past fiscal year have once again confirmed that the Sto Group has an exceptionally stable financial basis on which to continue the earnings-oriented growth rate taken in the long-term, regardless of cyclical fluctuations.
Sto segment reportingSince fiscal 2009, segment reporting by the Sto Group takes place primarily according to the geographic business units “Western Europe”
to EUR 203.5 million as a result of increased investment activities. Current assets increased year-on-year by 10.2% to EUR 409.9 million. Receivables from deliveries and services were significantly higher at EUR 110.6 million as compared to EUR 99.6 million. The greatest impact was made by the weather-related, very favourable business in December together with the integration of the new subsidiaries. The increase in inventories from EUR 63.7 million to EUR 69.6 million was mainly attributable to the first-time consolidation of the STOMIX com-panies and Inotec GmbH. Selective stockpiling for important raw materials undertaken with regard to the ongoing difficult situation on the markets for raw materials was compensated by targeted reductions carried out at the same time in relation to uncritical materials.
The items “Current financial assets” and “Other current assets” increased in total by 4.0% to EUR 125.5 million. Cash stocks rose from EUR 85.0 million to EUR 102.6 million.
The balance sheet extension mainly reflected the increase in equity by 13.5% to EUR 426.0 million on the liabilities side, whereby the main impact was due to the rise in revenue reserves
Assets Liabilities
Non-current assets 39%
Equity capital64%
Non-current provisions and liabilities
Current provisions and assets
27%
Current assets46%
Sto Group Balance sheet structure as at 31 Dec 2011
Cash and cash equivalents
9%
15%
Sto AG | Management Report for the Sto Group (IFRS)
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in Eastern Europe were more difficult, as the countries there were more strongly affected by the effects of the euro and sovereign debt crisis. This was reflected in our activities in Hungary and Slovakia. The Polish subsidiary experienced a growth despite the headwind. The first-time inclusion of the acquired STOMIX Group in the middle of the year had both the effect of rais-ing turnover while cutting earnings at the same time. In total, the turnover of the Northern/Eastern European segment increased by 23.7% to EUR 111.3 million in 2011. Segment EBIT of EUR -1.0 million was below the previous year’s value of EUR 1.8 million.
At the end of the reporting period, we had a total of 698 employees in Northern/Eastern Europe compared to 451 on the same day of the previous year. This included 238 employees from the consolidation of STOMIX.
America/AsiaIn the America/Asia segment, turnover in-creased by 13.8% to EUR 95.6 million in 2011. This growth was mainly borne by our Chinese subsidiaries which had clearly expanded their business volume. On the other hand, a decline in turnover had to be absorbed in Singapore
and “Rest of the World”, whereby the “Rest of the World” segment is broken down in accord-ance with the internal reporting structure into the regions of Northern/Eastern Europe and America/Asia. The structure and content of the segment report correspond to the reports which are submitted on a regular basis to the internal decision-makers.
There is a further breakdown into Sto’s main product groups – Facade systems, Facade coatings, Interiors and other product groups. Segment reporting observes the same valuation rules and principles as the consolidated financial statement.
Western EuropeTurnover in the Western Europe segment, which includes the key market of Germany, rose by 10.8% in 2011 to EUR 900.0 million. Good developments in France, Great Britain, Austria and Belgium mainly contributed to this increase. Each of our subsidiaries in these countries were able to achieve two-digit growth rates. Whereas business was very sound in both Germany and the Netherlands, a decline in Italy and Spain had to be accepted as a result of the difficult market conditions. This also applies to Switzerland where a loss was recorded in the local currency, but resulted in a plus after translation into euros due to the strength of the Swiss franc. As the buoyant forces clearly outweighed the decline on the whole, the operative segment result (EBIT) improved by 27.5% to EUR 100.6 million. The number of employees rose by 172 to 3,539 (+5.1%). The first-time inclusion of Inotech GmbH accounted for 66 employees.
Northern/Eastern EuropeWith the exception of Finland, Sto’s northern European companies also showed a positive development for 2011 after demand clearly gathered momentum in the second half of the year. On the other hand, general conditions
Sto Group Regional breakdown of consolidated turnover
Western Europe81.3%
America/Asia8.6%
Northern/Eastern Europe 10.1%
Management Report for the Sto Group (IFRS) | Sto AG
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and Malaysia. In the USA we were able to achieve satisfactory growth of 8.5% despite continuing uncertain general economic condi-tions. However, due to the weakness of the US dollar, this meant only an increase of 3.5% on balance. Our Chilean subsidiary also showed encouraging development, having tripled its initial low level of turnover. Operative earnings for the segment dropped by 3.9% to EUR 4.9 million. At the end of December, the workforce stood at 458 employees compared to 431 the previous year.
Development of the product groupsWith regard to product groups we were able to expand our turnover in the core business of facade systems by another 8.5% to EUR 557.2 million thanks to the continuing high demand through to the end of the year. This segment, therefore, contributed 50.3% to Group turn-over as compared to 52.1% the previous year. Facade coatings also developed very well, achieving a plus of 18.5% to EUR 255.2 million so that its turnover share increased from 21.8% to 23.1%. The interiors segment grew by 8.5%
to EUR 145.0 million (share: 13.1%), the other business areas by 21.2% to EUR 149.4 million (share: 13.5%).
Sto – EmployeesPeople make the differenceQualified and committed employees are a mainstay of the Sto Group. They ensure our high-quality requirements are met, are reli-able contact persons for our customers and develop innovative solutions. With this in mind, our personnel policy is aimed at ensuring the long-term satisfaction and performance of our employees and aligning these attributes with the company’s long-term objectives. We offer our workforce good opportunities to develop their careers and encourage individual initiative. We also support our employees through further training programmes tailored to their needs. At the same time, through our modern personnel management, we position Sto as an attractive employer for qualified and skilled employees and managers.
Sto Group Key numbers by segments in EUR million and %
900.0 812.0 111.3 90.0 95.6 84.0 –0.1 0.0 1,106.8 986.0
928.4 837.3 111.4 90.1 95.7 84.3 –28.7 –25.7 1,106.8 986.0
100.6 78.9 –1.0 1.8 4.9 5.1 0.0 –0.2 104.5 85.6
10.8% 9.4% –0.9% 2.0% 5.1% 6.0% 0.0% 0.8% 9.4% 8.7%
23.3 14.9 1.9 1.1 2.4 2.2 0.0 0.0 27.6 18.2
3,539 3,367 698 451 458 431 0 0 4,695 4,249
Western Europe Other segments Consolidation Group
Northern/Eastern America/Asia Europe
2011 2010 2011 2010 2011 2010 2011 2010 2011 2010
External revenues
Total segment turnover
Operating result (EBIT)
Operating result (EBIT)/turnover
Investments without financial assets
Staff on balance sheet date
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Group’s workforce strengthenedAt the end of 2011, the Sto Group employed a total of 4,695 employees, equating to an increase of 446 people or 10.5% compared to the same day of the previous year. The substantial growth was in part due to targeted new hiring in regions in which we expect further growth in sales volume and turnover. In addition, acquisition of companies contributed significantly to the growth in personnel. This was the case especially for the first-time con-solidation of STOMIX, the Czech manufacturer and direct distributor of external wall insula-tion systems, through which 238 employees were added to the Sto Group. On 31 Decem-ber 2011, a total of 2,200 employees worked for us abroad, an increase of 309 employees or 16.3% compared to the same day of the previous year. In Germany, the workforce grew by 137 to a total of 2,495 employees (+5.8%). 66 of these joined the workforce as a result of the Inotec acquisition. The percentage of the Group’s workforce employed abroad was 46.9% at year end (previous year: 44.5%).
The breakdown of the workforce according to the individual segments is presented in the following diagram.
2006 2007 2008 2009 2010 2011
Germany Non-Germany
Sto Group Employees Number
2,400
1,800
1,200
600
2,31
31,
8322,
221
1,69
2
2,28
61,
770
2,31
71,
838
2,35
8
2,49
5
1,89
1 2,20
0
250
Sto Group Turnover per employee in EUR K
2006 2007 2008 2009 2010 2011
200
150
100
50
220
218
220 22
8
232 24
2
Sto Group Employees by region
Western Europe75.3%
America/Asia9.8%
Northern/Eastern Europe 14.9%
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Successful flexibility instrumentsThe instruments for more flexible employment introduced at the end of 2010 in cooperation with the general works council proved their value in 2011. The IT-based Control Cockpit for more efficient planning of personnel and capacities, which was implemented at the de-centralised locations, fully met the expectations placed on the system.
International personnel management brought forwardThe long-term growth objectives of Sto absolutely require forward-looking personnel planning. Of particular importance is a globally coordinated and joint process with overarching Group-wide goals, which makes an internation-ally oriented personnel management essential. We achieved important progress in 2011 in setting up and expanding the corresponding system. Among other things, we carried out a differentiated inventory of the respective per-sonnel policies in all subsidiaries worldwide. The current results of this investigation were then included in the strategic plan “StoFuture Plus”.
Reconciling work and family lifeA fundamental part of the personnel strategy is to cater for employees wishing to reconcile work and family life. To achieve this, together with an external auditor, we took the first step of developing goals and measures to create the necessary prerequisites at Sto.
Fit@Sto health management is up and runningIn order to maintain and improve the vitality, well-being and performance of our workforce, we introduced a preventive health manage-ment concept for Sto AG and StoCretec GmbH in 2010 and have already implemented initial measures. In 2011, we consistently carried on expanding Fit@Sto. Among others, the task
group in charge drew up the medium-term plan and organised the current activities. Meanwhile, the Fit@Sto programme is no longer oriented toward Sto AG and StoCretec alone. Other subsidiaries, such as in Italy, Austria, Poland, Switzerland and the USA, are also actively involved in health management.
Training activities increasedA further important pillar in the personnel concept at Sto is an active training policy. Every year we offer committed young people, espe-cially in Germany, the chance to learn one of now 20 future-oriented occupations within our group of companies. Last year we participated in training fairs and career orientation conven-tions, for example, to inform young people about training and perspectives at Sto and gain appropriate candidates for our company.
The increased training activities can also be seen in numbers: at the start of the 2011/2012 career training year, we hired 71 young people at German locations, compared to 62 on the same day of the previous year. In total, 181 apprentices were trained at Sto in Germany as at the end of the year (previous year: 162). In relation to domestic staff, this equals a high training rate of 7.3%. In comparison, the chemical industry, to which we are assigned for the purposes of collective labour agreements, had an average rate of 5.1%.
Further training intensifiedIn the area of further training, we have also developed our organisation further. Among other things, we expanded our range of in-ternal qualification programmes and adapted their contents to current requirements due to demographic changes. In 2011 we also adapted our management development pro-gramme to the Guiding Principles approved in 2010 and to the “Principles for cooperation within and management of the Sto Group”. This guarantees the alignment of the Group’s
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organisation with joint overarching objectives and uniform methods and thus ensures the pooling of strengths.
Sto – Research and development
Ensuring innovative strengthWith innovations, Sto has established and continues to establish trends in the facade area and counts among the technology leaders of the industry. We aim to further consolidate this position through intensive, continuous and targeted research and development activities. In addition to strengthening our technological competence, it is our goal to secure our current customer base and open up additional markets and growth opportunities through innovations. Research and development at Sto is carried out in a decentralised way at several locations to be as close to the market as possible.
Expanding our know-howDevelopment activities at Sto comprise two main areas: firstly, we carry out fundamental research, with the aim of opening up new technologies at the product and process level in the medium and long term. One of the current research focuses here is on innovative insulant technologies. We established a good founda-tion in this area with the launch of our own in-sulant factory in Lauingen. Further information on this can be found in the following under “Innovations in 2011”.
With our R&D activities, we generally aim to improve the application characteristics of our coating systems beyond the current technical limits. For example, in 2011 we succeeded in developing a highly moisture-retaining adhesive and also a finishing render that hardens at low temperatures. Improving the application characteristics also includes the integration of sustainability aspects, such as the so-called Environmental Product Declarations (EPD), with which relevant environmental data for a product are recorded and published. EPDs are of great importance especially in the strongly growing market for environmentally conscious building.
To speed up the innovation process, Sto also cooperates with universities and research institutes on basic research as needed. Most recently, we worked together with the Swiss Federal Laboratories for Materials Science and Technology (EMPA) in the area of moisture-retaining renders and with the Technical University of Braunschweig in the area of internal insulation. In addition, we take part in projects sponsored by the public sector concerning fields of technology which are of interest to us from an operational point of view. This currently means research on the use of the smallest carbon fibres to reinforce mineral building products as well as work to create a marking technology with which the efficiency of building-preserving depth impregnation can be measured.
At the Sto stand at the “Jobs for Future” educational and training fair, Sto AG trainees and cooperative state university students provide information on the numerous career training fields within the Group.
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Innovations in 2011The second major task of our R&D activities covers the further development of exist-ing product lines. The primary goal here is to improve customer benefits. For example, the functionality and application characteristics of individual Sto products should effectively complement each other in the context of an external wall insulation system, enhancing the benefits of the system as a whole.
A current Group-wide project includes work on an innovative internal insulation system based on the material aerogel with the objec-tive of achieving more efficient insulation boards with improved thermal conductivity. This system is to be diffusion-open and do without a vapour barrier. The special adhesive “StoLevell In Aevero” takes over the function of a tempo-rary moisture storage, which is important from a building physical point of view. In addition, we see the possibility to set new standards in terms of moisture storage with a modified plaster material, thus further improving indoor climate. The decision on developing a product that can be marketed with an adequate price-performance ratio will presumably be taken in the time period 2012/2013.
Sto – Production and procurementLeading process know-howSto mainly produces coating materials such as renders, plasters and paints. These are manu-factured in specialised production facilities. The most important input materials are marble and quartz sands, cement, lime and silicates, silicones and aqueous dispersion agents. The success of the Sto products is based on process know-how, which guarantees the high quality of our products.
For strategic reasons, we began to produce part of our needs for insulation materials,
such as EPS boards, ourselves in 2010. For this purpose, we started a high-capacity plant at the Lauingen location. With our own production, we reduce our dependence on suppliers and increase our depth of added value. In addition, we build up our technological know-how, since we aim to develop and produce innova-tive insulants in particular. With effect from 1 January 2011, we accordingly spun off the insulant activities to Innolation GmbH.
International production networkSto’s production network has been expanded step-by-step over the past few years. Addi-tional plants are built where the market shows the corresponding demand potential or new regions are to be entered. And so the number of production facilities and their geographic distribution are the immediate result of our long-term growth and internationalisation strategy. In 2011, two plants were added to the production network through acquisition of the STOMIX Group.
At the end of the last fiscal year Sto owned a total of 26 plants throughout the Group. Of these, 17 plants were located abroad and 9 in Germany.
Sustainable productionIn keeping with our commitment to environ-mental and ecological concerns as a major priority at our company, we implemented a comprehensive environmental management system in production. This system ensures a systematic and verifiable approach throughout the Group. At the same time, it also provides the basis for ongoing improvement in the area of resource consumption. To document the high standard of our environmental management system, we have had it certified in accordance with the international DIN EN ISO 14001 stand-ard at our key locations. We are successively expanding the group of plants tested according to this standard.
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Investment measures in 2011Sto constantly invests in its production facilities in order to make manufacturing processes as efficient and environmentally compatible as possible and to exploit potential for growth. One of the investment focuses last year was again the “Retrofit” project, which focuses on bringing older Sto AG production facilities into line with the latest technological standards through a series of specific measures.
In addition, we are expanding the Logistics Centre at the Weizen location. With the expan-sion, we are creating the prerequisites for the logistic handling of further increasing demand.
Procurement in 2011: continued difficult situation for speciality chemicalsThe basic materials required in the production of coatings, such as sand, cement and lime, are available worldwide without any restrictions and remained in adequate supply in 2011. In contrast, the situation in the market for special-ity chemicals was extremely tight, particularly in the first half of the year. It was marked by shortages of numerous products and long delivery times. This resulted in price increases along a wide front. Especially affected by this were binders such as styrene-acrylates or epoxy resins, with price increases of up to almost 30% at their peak. But in first place, as in the previous year, was the important white pigment titanium dioxide, whose price increased again by over 30% in the course of the year. At year end, the market situation relaxed somewhat as a result of decreasing economy-related demand so that the price rise slowed down compared to the previous year.
In the logistics area, too, increasing prices were seen almost universally in 2011. Especially fuel and freight costs rose, at times sharply. In the purchasing of electricity, the price reduc-tions achieved in individual cases were almost offset through higher allowances under the Renewable Energy Law.
Efficient procurement managementDespite the market turbulence, Sto succeeded in guaranteeing reliable supply at all produc-tion locations again throughout the entire year of 2011 thanks to its proactive procurement management. The basis for this was the very close cooperation with our strategic suppliers and our partners of many years. As support, we made use of the comprehensive market data and forecasts of a consulting company specialised in this area, which made it possible for us to achieve an even more reliable plan-ning and control of the necessary raw material inventories. In specific cases, this also included a targeted increase in inventories of strategically important input materials to reduce price and volume risks. Additional measures were projects to reduce the raw material requirements in pro-duction, which were carried out in cooperation with the Sto R&D area, as well as the acceler-ated expansion of our portfolio of secondary and substitute suppliers.
Events after the end of the fiscal yearThe start of the 2012 fiscal year was slow due to the weather. The decline in turnover remained within the fluctuation range typical of the season. Impacts on our planning for the entire year are therefore not currently expected.
In January, the Deutsche Amphibolin-Werke of Robert Murjahn Stiftung & Co KG (DAW) took a 45% share in our subsidiary Inotec GmbH as part of a capital increase. Sto AG has also held a share of 45% since the start of cooperation. The remaining 10% of the Inotec shares are owned by FAB Fördertechnik und An-lagenbau GmbH. With this step, the transaction filed with and authorised by the German Fed-eral Cartel Office is finally completed. The goal of the cooperation is to mutually seize upon the silo and machinery equipment business area,
Management Report for the Sto Group (IFRS) | Sto AG
33
which is not part of core activities of Sto and DAW, in the future. The range of machines and services of Inotec will be offered throughout Germany to all manufacturers of external wall insulation systems and as such leaves the exist-ing competitive relationships of the associates untouched.
Risk report
Risks and opportunitiesThe Sto Group operates worldwide. As for any enterprise, its national and international busi-ness activities harbour various opportunities and risks. Managing these factors in a target-oriented manner is crucial to Sto’s long-term success. We thus attach high priority to the management of opportunities and risks as an integral element of corporate governance.
The risk strategy developed by the Executive Board provides, among other things, for given opportunities to be exploited with rigour, while undertaking risks only where a commensurate contribution to corporate earnings can be ex-pected. Generally speaking, we define risks and opportunities as departures from the planned result.
Risk management at Sto is explained below. Current opportunities are covered in the fore-cast. Efficient risk management systemThe active management of risks is pursued at Sto by means of a comprehensive risk management system which forms an integral part of our business, planning and control processes. This system allows us to identify and analyse risks in good time, to assess the expected effects on the earnings, finance and asset situation and to implement appropri-ate countermeasures. In 2011, we rigorously applied our strategy to avoid and hedge risks once again.
The most important constituent of the risk management system at Sto is a detailed report-ing system that has been standardised for the Group. It records all operational activities, from purchasing through production to distribution, both quantitatively and qualitatively in accord-ance with a specified scheme. Through continu-ous monitoring of clearly defined key figures, we can identify undesirable developments at an early stage and quickly initiate countermeasures.
The second important element of the risk management system is a risk manual which is binding throughout the Group. This describes in writing various risk categories, guidelines for assessing risks and procedural instructions for every Group company.
These two instruments are complemented by an annual risk inventory, which is used to document all current risks throughout the en-terprise on a timely basis. The managers of the respective business units are required to notify the central investment controlling department immediately of any relevant new risks which are identified in the course of the year.
Internal control systemRisk management is complemented by an internal control system (ICS). With regard to the accounting process within the Sto Group, this system covers all principles, procedures and measures which are intended to ensure the effectiveness, economic efficiency and reliability of the consolidated accounting and compliance with the relevant legal requirements.
The ICS at Sto also incorporates an internal monitoring system comprising in-process elements and elements independent of the process concerned. Important in-process measures are checks, such as the “dual control principle”, which are implemented according to the maturity of the company. Added to this are machine-based IT process checks.
Another central element of the ICS is the SAP software system which is implemented at
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many Sto companies as a means of control-ling the IT-based accounting process. Uniform and consistent application of the SAP system ensures the correct and reliable recording and processing of accounting data and details throughout the Group. In 2011, we introduced an electronic workflow based on the SAP sys-tem first at Sto AG for centralised invoice pro-cessing and archiving. This will be successively extended to all subsidiaries. In general, access to the various types of data is clearly regulated and secured through access restrictions.
A further component of the internal control system is a manual detailing the consolidated accounting guidelines, which we drew up several years ago together with our auditor. This manual is revised on a regular basis. The guide-lines specified in the manual provide the basis for drawing up the annual financial statements in accordance with IFRS which require to be in-cluded in the consolidated financial statement. The aim of the guidelines is to ensure the uni-form implementation of valuation and reporting rules throughout the Sto Group. All balance sheets, income and cash flow statements drawn up by the subsidiaries and other business units are audited by the Group accounting depart-ment and the central investment controlling department to verify that they are correct, complete and in compliance with the account-ing guidelines.
Furthermore, the guidelines also stipulate that a standardised and complete set of forms and a uniform system of accounts must be used throughout the Group. The manual also includes specifications on the presentation and handling of Group accounting and the corre-sponding balance reconciliation.
Correct accounting is ensured at Sto AG by the involvement of an external Group audi-tor and other auditing bodies such as the tax inspectorate. The most important monitoring measure independent of the business processes concerned with regard to the consolidated ac-
counting process is auditing of the consolidated financial statements and the incorporated indi-vidual financial statements of the Group com-panies by the Group auditor. In particular this ensures that inventories are taken correctly and that assets and liabilities are assessed, valued and reported appropriately in the consolidated financial statements. The compulsory measures and accounting records additionally provide reli-able and traceable sources of information.
Other controlling activities, which are in-tended to ensure the regularity and reliability of the accounts, cover auditing with reference to specific key figure analyses and the processing and control of highly complex business transac-tions by different persons. The separation of administrative, implementing, accounting and approval functions and the performance of these functions by different persons (dual con-trol principle) reduces the attendant risks.
The regular controlling meetings between the Group management and the managing directors of the subsidiaries are a further impor-tant element of the ICS. In this connection, a meeting focusing on the annual financial state-ments takes place for each operationally active subsidiary between representatives of Group accounting or investment controlling and the local managing directors as well as the appli-cable national control committees, such as the “Board of Directors” (BOD), with participation of the local chartered accountant. If necessary, the Chief Financial Officer as representative of the Group’s parent company, and the Group auditor take part in the discussions.
The ICS also includes, for example, the standing orders for the managing directors of the Sto Group. These include mandatory rules for correct conduct of business processes, which must be adhered to by all managing directors throughout the Group. As part of the audit, the chartered accountant determines through random checks whether the specified procedures have been followed.
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The effectiveness of the risk management and internal control system is examined regu-larly in accordance with the relevant statutory requirements – externally by our auditor as part of his auditing commission and internally by the Investment Controlling and Group Accounting departments. The Supervisory Board, and the Audit Committee in particular, is kept informed on a regular basis by the Executive Board and the auditor.
By way of qualification it should be pointed out that decisions based on personal judge-ments, flawed checks, criminal actions by individuals or other circumstances may impair the effectiveness and reliability of the deployed internal control system, in view of which even Group-wide application of the deployed systems cannot fully guarantee the correct, complete and timely recording and reporting of facts in the Group accounting.
Essentially, the risks for the Sto Group are as follows:
Overall economic and industry-specific risksSto AG with its facade systems and coatings is dependent on the underlying trends in the construction industry to a substantial degree. Demand in Germany – which remains Sto’s largest single market – plays a very important role. Sales of building products are very sensi-tive to the general level of economic activity as well as to overall economic and tax-related conditions. The potential risks present in such circumstances were evident in the crisis of Ger-many’s main construction sector following the boom after German reunification, a crisis that lasted many years. The prolonged slump, which began in the mid 1990s and did not end until 2005, led to intense competition and strongly deteriorating prices as a result of high levels of surplus capacities.
We counter this economy-based risk mainly through internationalisation of our business
activities, which ensures regional diversification and makes us more independent of cyclical fluctuations in specific countries.
Risks in the procurement of raw materialsThe Sto Group uses raw materials such as marble and quartz sands, cement, silicates, silicones and water-based dispersion agents in the manufacture of its facade and coating prod-ucts. Risks could arise from the concentration tendencies on procurement markets.
There is a certain price-dependency of our self-produced products and commercially available products based on crude oil, includ-ing paints and polystyrene insulation board, for example, or even our plastic containers (e.g. yellow Sto pails). The continuing concern about the crude oil supply – aggravated by the Iran conflict – cause us to suspect that there will be a further strong increase in oil prices in 2012. From today’s perspective, this means an unchanged high price pressure on primary chemicals based on crude oil. The situation is compounded by the fact that the demand for numerous speciality chemicals, such as titanium dioxide, in the emerging and developing coun-tries is also increasing continually and is likely to produce additional upward price pressure in the long term. Due to the increasing needs of these countries, temporary supply bottlenecks cannot be ruled out for various raw materials and goods.
We are confronting these risks through ad-vance procurement and planning as well as con-tracts with our partners and suppliers. Moreover, constant work is performed in close cooperation between the Sto areas of procurement, R&D and production on optimising the use of materi-als and making it more flexible. The objective is to guarantee sustainable supply of the relevant raw materials. Simultaneously, the qualification of alternative materials and suppliers continues in order to increase the security of supply for all product units in the Group.
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Dependence on weather conditionsA major proportion of Sto’s products is used outside. Installation and application of these products are consequently exposed to weather influences. Measures introduced a number of years ago to reduce this dependency have so far enjoyed only limited success. Consequently, a long and hard winter or constant rain can still negatively impact turnover, the effects of which may be only partly recoupable in the follow-ing period due to limited processing capacity. Such weather-induced declines in the business volume generally lead to significant losses in earnings.
Environmental risksThe manufacturing processes for Sto products pose only minor environmental risks, as produc-tion takes place in modern, automated plants, which reduce the risk to the environment. We have also implemented an environmental management system geared to international standards. In addition, production is monitored by specially trained environmental control offic-ers at all Sto locations. More information about our environmental protection measures can be found in the section entitled “Production and procurement” and in the Sustainability Report in this Annual Report.
Sales risksNo increased risks are currently expected regarding future sales of Sto products. There is already plenty of potential for facade systems in the domestic market alone, since the number of older buildings is high. The risk is also further reduced by the long-term upward trend in en-ergy prices, the necessity for further reduction in CO2 emissions, and the underlying political climate which is favourable to energy efficiency measures.
We meet the risk of substitution through competitive products and systems through permanent further development regarding
quality, safety, environmental compatibility and economy. In addition, inherent system weak-nesses can be recognised through the analysis of product life cycles. In this way, deficits that may arise over time can be recognised and eliminated. Continuing technical progress and the knowledge derived from this enable Sto to further develop and improve products and systems.
Payment default risksIn times of recession the building industry also faces an increased risk of default on receivables. To avoid or mitigate the financial consequences arising from this, Sto has implemented a credit management system and adapted it to the spe-cific conditions prevailing in individual countries. The most important component of the system in place in Germany is a set of rules containing guidelines for granting and monitoring mer-chandise credits. Strict application of these rules has allowed us to keep the default quota at a low level even during difficult economic times.
Risks arising from fluctuations in payment flowsAs a result of the seasonal variability in the level of sales of Sto products, the demand for liquidity to finance current business also var-ies greatly in the course of a year. There is a particular need for cash in the first few months of the year. In the second half of the year, cash inflows exceed outflows. Risks arising from these fluctuations in payment flows are limited at Sto by the available liquid funds. In addition, we dispose of adequate and variable lines of credit backed up by a syndicated loan which is contractually assured until the end of 2012. These credit lines are tied to meeting contractu-ally stipulated financial targets (covenants). In the current year, we will begin negotiations in a timely manner to ensure subsequent financing. In view of our extraordinarily solid financial and earnings situation, we are confident we can
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reach a new agreement at appropriate condi-tions.
To further reduce the exposure to liquid-ity risks, we are also in constant and intensive communication with our banks and operate an active financial management system. This includes the use of derivatives in the form of interest swaps as a means of reducing the risk of changes in interest rates in the case of long-term liabilities to banks at variable interest rates.
IT risksThe information technology used in the Sto Group is becoming increasingly important. The Internet and data networks are subject to ever stronger cyber attacks, so the importance and complexity of safety measures grows each year. Regarding the use of Internet-based services (Cloud), we see both legal and technological risks, so we do not currently use these services for enterprise-relevant information and pro-cesses.
Continuity:The core systems necessary to the Sto Group’s operating business, such as SAP and Lotus Notes, are deployed in redundant and fully vir-tualised form. This ensures maximum continuity of the systems and the appurtenant services. In order to further enhance security and counter the consequences of possible collateral damage in the computer centre, an adequate physical separation of the existing, redundant computer centres was initiated. The data of the core systems are backed up daily in a data back-up system and stored separately.
Integrity: We counter the risks of unauthorised access to the Sto Group’s information systems to the extent possible through technological systems available in the market. Besides the multiple-step security architecture, these also include
the restrictive issue of access authorisation and the prohibition of storing enterprise-relevant information in unprotected areas, such as Inter-net Cloud systems.
Availability:The redundant configuration of all core op-erational systems and network connections ensures maximum availability for all relevant business processes. An automated monitoring system serves to continuously monitor system availability.
Warranty-related and legal risksOngoing research and development activities are of strategic importance for the Sto Group. Innovations open up opportunities to develop additional markets and buyer groups, and to earn the loyalty of existing customers. In addi-tion, the analysis of product life cycles contrib-utes to a higher transparency of risk.
At the same time, however, innovations can involve risks. Although newly developed products or versions of products are officially launched on the market only after extensive testing as a matter of principle we will never be able to completely rule out the possibility of warranty claims against Sto, including such claims arising after some time has elapsed. We reserve the right to react appropriately to recognised risks through adequate innovations or modification of mature products.
The US insurance industry currently does not offer insurance coverage for product risks of facade insulation systems. The effects of potential damages or liability claims in the USA on the finance and earnings situation of the Sto Group cannot be assessed conclu-sively on account of the legal system. In order to further limit the risks inherent in our activities abroad, we engage the services of external consultants, where necessary, during decision-making procedures. Apart from the legal issues, which are constantly increasing
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in importance, this also applies to technical questions.
A further legal risk for Sto is that of liability associated with consultancy services. This arises as a result of Sto offering customers services to complement its product range. For example, employees of Sto AG provide their customers with support for tenders, quotations, techni-cal issues and building design details. Sto’s recently introduced in-house Liability Directive instructs all employees on how to handle such issues both internally and in their dealings with customers. This clear set of guidelines has led to a marked reduction in liability risks. Currency risksSto embarked on a consistent strategy of developing foreign regions at an early stage in an effort to reduce dependence on the German domestic market. As a result of the gradual internationalisation of our operations, we are increasingly exposed to currency risks. We control these risks by means of currency hedges. Our focus is on the currencies of countries where we do not have produc-tion facilities, i.e. where regular supply and payment flows are necessary to maintain business operations. In 2011, this specifically applied to Switzerland. In addition, in specific cases and where necessary, we also perform additional hedging, in the Polish and Czech currencies, among others, as well as in the US dollar.
Overall risk exposureThe assessment of the overall risk for the Sto Group is carried out using our risk manage-ment system. Following the assessment of current and potential future individual risks, and taking into account the countermeasures already initiated, the Executive Board and the Supervisory Board have come to the conclu-sion that no assessable risks are discernible at present that could have enduring and
significant adverse consequences for the asset, earnings and finance situation of the Sto Group.
Forecast and opportunities reportThe global economy in 2012The majority of research institutes expect a marked cyclical weakening of the economy in 2012 in view of increased global risks. For example, the IMF expects an economic growth worldwide of only 3.3%. The previous estimate was 4.0%. A decisive reason for this more cautious forecast is the danger of a recession in the euro zone, whose economy could contract by 0.5% in total. In Germany, the economy is also cooling off markedly, but a moderate increase of 0.3% can still be expected. In total, the industrial countries could achieve a plus of 1.2%.
The perspectives for the emerging and developing countries in 2012 are likewise more subdued than was first expected. The Inter-national Monetary Fund assumes that growth of around 5.4% can still be achieved in these countries in total. According to the IMF, the reason for the lower growth is the dampen-ing effects from the industrial countries and weaker domestic demand.
The IMF forecasts are based on the assump-tion that the euro crisis will not accelerate fur-ther and politicians will find appropriate ways to meet the challenges.
Trends for the international construction industryAgainst the backdrop of the difficult eco-nomic situation in Europe, the development of the domestic construction industry will also remain weak. According to EUROCONSTRUCT, stagnation of the construction volume at the pan-European level can be expected again in
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2012. Slight improvements are expected in the countries that suffered a considerable decline in demand in 2011, but lower growth rates are forecast for those countries that experienced above-average positive developments last year. This applies, for example, to the German building industry, but its perspectives remain solid in total. The Hauptverband der Deutschen Bauindustrie (German building industry associa-tion) expects an increase in turnover of around 2.5%, despite economic uncertainty. According to the association, this growth will be carried again by residential construction (+6%) and commercial construction (+3%). In contrast, the volume in the segment of public construc-tion is expected to decline by about 2.5%. This overall optimistic assessment is confirmed by surveys of the ifo Institute. According to the institute, the business climate in the main con-struction sector continued to improve at the beginning of 2012 and rose in February to the highest value since German reunification.
The situation for the US construction sector will at least stabilise in 2012, according to cur-rent views. On the one hand, in the opinion of the GTAI, the financial leeway for infrastructure construction will be narrow, due to the end of economic stimulus packages and austerity programmes written into law. On the other hand, residential construction is showing some recovery from its low level. The non-residential building sector could also develop positively. Forecasts here assume an increase in the con-struction volume of almost 3%.
The climate for the construction industry in China could cool off somewhat in 2012 from its high level. The GTAI estimates that the restrictive measures taken by the government will be even more effective. In addition, damp-ening influences as a result of the worldwide slowdown in economic momentum can be expected. Infrastructure expansion could also be pushed more moderately than in previous years. And so market observers expect a slow-
down in growth. However, double-digit growth rates definitely remain possible due to the still large pent-up demand.
Under the described overall economic condi-tions, the situation in the markets for speciality chemicals remains difficult overall from today’s point of view. Further price increases can be expected, whereby titanium dioxide especially will remain in focus, according to the Verband der chemischen Industrie (German chemical industry association). Further increases in the range of double-digit percentages appear pos-sible.
Projected performance of the Sto business segmentsAssuming that the underlying economic condi-tions develop as forecast and with due regard to Sto’s position in the respective markets, we expect moderate growth in turnover in the lower single-digit percentage range in the Western Europe segment for 2012. The mod-erate increases in Germany, Austria and France, for example, are likely to contrast with further declines, especially in Spain and Italy. The latter countries will presumably again suffer mark-edly under the effects of the sovereign debt and euro crisis, as will the majority of eastern European countries. And so we expect a rather weak business for our subsidiaries there as well, but this could be offset in total by a rather positive development in Northern Europe. On balance, we expect a roughly stable turnover in the Northern/Eastern Europe segment.
In the North American business, the chances are good for increasing turnover due to the expected improving general conditions. In Chile, the positive development should likewise continue. Whereas the situation in Singapore and Malaysia is likely to continue to be difficult, we are optimistic with regard to China: there, we assume further growth, although at a more moderate speed than in previous years. In total, turnover in the America/Asia segment is likely
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to increase in the middle single-digit percent-age range.
Projected performance of the Sto GroupBased on the forecasts for the individual seg-ments, in 2012 we anticipate an increase of approximately 3.5% in consolidated turnover to around EUR 1,145 million. This moderate growth is accompanied by continued strong price increases in the procurement and logistics area. Staff costs, too, could increase faster than turnover due to the continued expansion of staff as well as expected strong increases in contractually agreed wage rates. This is the reason why, at present, consolidated earnings before interest and taxes (EBIT) are expected to be lower than the 2011 result of EUR 104.5 million.
Investments in property, plant and equipment will rise again in 2012 to around EUR 46 million, after the already large increase the previous year. The new and already initi-ated major projects will play a decisive role here. Considerable funds will flow into the ex-pansion of the Logistics Centre in Weizen, the construction of the SalesCentre in Vienna and additional retrofit measures. Also, construction of the new headquarters in Belgium will begin. Furthermore, capacity expansions in France are planned, among others, along with the usual replacement investments.
In the area of financing, new negotia-tions will take place in 2012 for the existing syndicated line of credit, which will expire at the end of the year. In view of our extraordinar-ily solid finance and earnings situation, we are confident we can reach a new agreement at appropriate conditions.
For the fiscal year of 2013, we expect a continuation of the above developments: since demand in the area of facade insulation, in particular, should, in general, remain positive as a result of increasing environmental and climate consciousness, we expect at least mod-
erate growth in consolidated turnover regard-less of economic fluctuations. But at the same time we assume that pressure on the operating result will continue due to further increasing raw material and staff costs.
Risks and opportunities for future developmentPredictions on the future business development are generally subject to major uncertainty, as the international construction industry is exposed to extremely volatile general condi-tions. In addition to the projected economic and sales scenarios, a prerequisite for achieving the forecast business performance is a stable political climate. Our planning is furthermore based on our own assessment of the trends for the currencies relevant to the performance of Sto. Should these assumptions prove incorrect, then actual conditions may deviate from the expectations described for 2012 to a greater or lesser degree.
The sovereign debt crisis in the euro zone is a major current risk. At this time, it cannot be assessed whether and how strongly the prob-lems of the financial sector and the recessive tendencies especially in the Southern European countries will impact the still robust econo-mies, like Germany’s. But their spreading can-not be excluded, in particular as the economic situation in the USA remains unstable, despite some signs of hope. The construction sector would also be affected by a general economic downturn.
The dependency of the construction industry on the weather remains another element of uncertainty. Despite technological progress, extreme weather conditions can still result in strong impairment of construction activities, as the widespread standstill of work in the very cold month of February 2012 emphatically showed. The likelihood of such extreme situa-tions could continue to rise in the coming years due to predicted global warming.
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Government funding measures have shown to have a positive impact on the sale of facade systems. And so delays in the corresponding political decision-making processes in some countries could temporarily result in insecurity and restraint on the part of potential buyers, which would possibly worsen sales for Sto as well.
Opportunities for operating improvements for Sto in 2012 could result if the economic trends in those countries for which our planning is very cautious turn out better than forecast. In particular, these include Italy, Spain and the Eastern Europe region.
In the long term, opportunities for Sto notably outweigh the risks. The main reason is the increasing attractiveness of facade systems: further increasing energy prices noticeably improve the already attractive cost-benefit ratio of thermal insulation measures and let us reach ever broader buyer segments. For Sto, as one of the technologically leading suppliers in this product segment, this means additional sales potential.
Increasing demand is expected for the same reasons even in regions such as Asia, where facade insulation has previously been uncom-mon. The potential in Eastern Europe in view of the great need for refurbishment of buildings is likewise considerable. While the current difficult financing conditions mean that no increase in sales can be expected in the short run, op-portunities in the medium- to long-term are significant from a technical standpoint.
A positive outlook for Sto also results from the fact that external wall insulation systems are a suitable instrument in the fight against climate change. To achieve the challenging eco-political goals that have been set, politicians may increasingly grant tax and other financial
support measures in coming years. These instru-ments considerably intensify the inclination toward modernisation investments.
General statement by the Executive Board on the future course of developmentSto is one of the leading companies for facade systems. We have a comprehensive, premium-quality product range, innovative strength as well as an efficient sales and distribution sys-tem, with which we are represented worldwide in the most important markets. And so we are confident that, in the coming years, we can benefit from the growing market for energy efficiency measures and the internationalisa-tion of our business activities. Future business developments will be supported by a very solid financial basis. An additional plus point is the motivated and qualified workforce. Sto is aware of its responsibility towards its employees and will continue its long-term personnel policy. Constructive cooperation with employee rep-resentatives will remain an important element here. We will face up to our social responsibility with equal vigour and integrate sustainability aspects even more firmly into our corporate structures.
Stühlingen, April 2012
Sto AGThe Executive Board
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Sto share
Ticker symbol STO3
ISIN DE0007274136
WKN 727413
Share category Non-voting bearer
preference share
Market segment Regulated market
Level of transparency General Standard
German Securities
Exchange sector DAX sector All Consumer
Number of preference shares 2,538,000
Number of non-listed
ordinary shares 4,320,000
Data on the Sto preference share
2011 on the stock markets2011 was a turbulent year for the world’s stock markets. Due to the international sovereign debt crisis and globally increasing economic risks uncertainty was spreading among the investors. This resulted in sharp fluctuations in the exchange rate, and net losses for the major-ity of the important share indices during the course of the year. In particular, this was true for the European stock exchanges that suffered most from the euro crisis which, at times, took dramatic turns in the second half of the year. Despite its robust domestic economic activity, the German share market was also affected by this unstable environment. On balance, the DAX leading index lost 14.7% of its value, the SDAX Small-Cap-Index 14.5%. Construction shares were also hit by the weakness of the market although, from a fundamental view-point, the sector developed more positively in
Share price trend for 2011(indexed on 30 December 2010 = 100)
150
140
130
120
110
100
90
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60 Jan. Feb. March April May June July Aug. Sept. Oct. Nov. Dec.
Sto preference share DAX Construction
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Key figuresValues per share in euros
2011 2010
Earnings per preference share 10.95 9.09
Cash flow from current operating activities 14.43 14.48
Equity capital 65.91 58.06
Distribution per preference share Dividend 0.31 0.31 Bonus 4.56 3.06
Share price at year end* 102.00 94.66
Year high* 126.20 96.50
Year low* 91.00 59.63
PER (31 Dec) 9.32 10.41
PER (high) 11.53 10.62
PER (low) 8.31 6.56
Capitalisation of preference shares on 31 Dec (in EUR million) 258.9 240.2
Average daily trading volume (number of shares)** 5,036 2,940
* XETRA closing price** All German stock exchanges
2011 than it had for a long time: on balance, the sector index, Construction, of the Frankfurt Stock Exchange was down 20.1%.
Sto share with a profitThe turbulences on the stock markets also af-fected the price development of the Sto prefer-ence share which had started off positively in 2011: in the first quarter, the share rose to its high for the year of EUR 126.20 based on the XETRA closing price. These remarkable gains were offset again in the wake of the high losses for the market as a whole during the summer months. However, the Sto preference shares proved their relative strength again during this period: the low for the year was reached in August and stood at EUR 91.00. The minus in comparison with the 2010 closing price of EUR 94.66 was rather moderate when com-pared to the partially high losses of other share certificates. This was due to the fact that inves-tors had started rebuying Sto preference shares already at that level, which caused a rebound to EUR 112.90. In the fourth quarter, the share experienced a slight downward trend on bal-ance with partly large fluctuations. It closed the year 2011 down at EUR 102.00. Hence, the Sto shareholders achieved an increase of 7.8% as compared to year end 2010 – a performance which was considerably better than that of the relevant benchmarks.
The market capitilisation of the 2.538 mil-lion Sto preference shares stood at EUR 258.9 million at the end of December, as compared to EUR 240.2 million on the same day of the previous year.
Improved earnings situation – higher dividend payoutThe gratifying corporate development played a decisive role in the robust price trend of the Sto preference share: consolidated turnover increased by 12.3% to EUR 1,106.8 million in 2011. The substantial expansion of the busi-
ness volume more than compensated for the significant increases in costs in the areas of procurement and personnel. The consolidated operating result (EBIT) improved by 22.1% to EUR 104.5 million, while consolidated net income increased from 20.2% to EUR 70.3 million. Earnings per preference share increased from EUR 9.09 to EUR 10.95, while earnings per ordinary share rose from EUR 9.03 to EUR 10.89. Apart from the solid, current busi-ness development, the positive long-term per-spectives are also reasons for a Sto investment: our company is well-positioned within the growth market of facade insulation; interna-tionally, we are one of the leading providers.
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On the basis of this improved earnings situ-ation, the Executive Board and the Supervisory Board will be proposing that the dividend distribution be raised at the Annual General Meeting. Shareholders are therefore to receive an increased bonus of EUR 4.56 (previously EUR 3.06) per preference and ordinary share. The basic dividend remains unchanged at EUR 0.31 per preference share and EUR 0.25 per ordinary share. This would result in a divi-dend yield per preference share of 4.8% based on the 2011 closing price. Based on the open-ing price for 2011 of EUR 94.99 this means a yield of 5.1%.
Trading volume in 2011Sto preference shares are traded on the regu-lated market on the stock exchanges in Frank-furt and Stuttgart, in the electronic trading system XETRA, and on the unofficial regulated market of the Berlin, Düsseldorf and Munich stock exchanges. In 2011, the high volatility of the financial markets was also reflected in the turnover of the Sto share. In total, around 1.3 million Sto preference shares were traded on all German stock exchanges in the past year as compared to approx. 752,000 the previous year. 74.8% (previous year: 79.9%) of the total turnover were traded on XETRA, 10.0% (previous year: 13.0%) in Frankfurt and 15.2% (previous year: 7.1%) at the other trad-ing locations. On average, around 5,040 Sto preference shares changed hands every day on the stock exchanges, in comparison to around 2,940 in 2010.
Shareholder structureOf the 2.538 million preference shares, approx. 50% were in the hands of institutional investors at the end of December 2011. The remaining preference shares were free float. The number of non-listed ordinary Sto shares remained unchanged at 4.32 million. At the cut-off date, 90% of these were held by the Stotmeister family, and 10% by Sto AG.
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Assuming responsibilityAs a company with a sustainable business practice, Sto recognises its responsiblity to its social, economic and ecological environment (Corporate Social Responsibility). We oper-ate on a global basis, which means that our actions have an influence on a large number of people, social areas and the environment. It is our objective to continuously improve the positive aspects of our activities in these three fields and to minimise unfavourable secondary effects.
Sto’s responsible and sustainable approach finds expression in the corporate guiding principles “Building with conscience.” This symbolically stands for our objective of main-taining the value of buildings in strict compli-ance with the needs of mankind and nature. At the same time, the Guiding Principles, together with the defined corporate vision of being the global technology leader in the sustainable design of living space tailored to human needs,
provide our employees and managers with terms of reference for corporate management as well as daily operations.
Furthermore, we observe recognised regula-tions such as the German Corporate Govern-ance Code for responsible and transparent corporate government. Compliance with legal and ethical standards and a sound financial policy are as integral to our understanding of good corporate governance as a long-term strategy. All forms of bribery and corruption are unacceptable for us and will not be tolerated. Further details relating to corporate govern-ance at Sto are to be found in the Corporate Governance report on pages 9 to 12.
Content-related guidelines for sustainable corporate management are also provided by the regulations of the “Global Compact”, a strategic initiative under the auspices of the United Nations. The “Global Compact” participants are committed to aligning their op-erations and strategies with ten universally ac-cepted principles in the areas of human rights, labour, environment and anti-corruption, and to supporting the corresponding objectives. Sto AG signed up to the initiative in 2009, in order to reinforce its commitment to sustain-able development and to document it on an international level. This report represents the
Sustainability and Corporate Social Responsibility
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created the basis for a Group-wide values and objectives system which now ensures a uniform course of action within the Sto Group.
Introduction of the Suppliers Code of ConductIn order to further develop our procurement processes to become more sustainable too, Sto introduced a Supplier Code of Conduct in 2011. It is based on the “Global Compact” principles as well, and was also aligned with the value concepts specified in the Guiding Prin-ciples. In the form of a questionnaire we will, in future, ask our suppliers to provide us with information on important social and ecological topics twice a year. These results and findings will be incorporated into the supplier’s evalua-tion and rating and are to be verified regularly through audits or during contract talks.
Environmental management system implemented in productionWe attach great importance to sustainability within the production process and hence imple-mented a comprehensive environmental man-agement system many years ago. This system ensures a systematic and verifiable approach in the production area. At the same time, it also provides the basis for ongoing improvement in the consumption of resources. To document the high standard of our environmental manage-ment system, we have the system certified in accordance with the international DIN EN ISO 14001 standard at our key locations. We will successively enlarge the circle of plants tested to this standard.
Comprehensive measures in the area of human resourcesA crucial sustainability objective is to offer all employees a health-promoting working environment. This is why Sto launched a health management system in 2010, first at Sto AG and StoCretec GmbH. In the long run, the
annual Communication on Progress (COP) required by the “Global Compact”.
A value-based framework of actionsWe specified the Guiding Principles, enshrined in the motto of “Building with conscience.”, in the “Principles for cooperation within and management of the Sto Group”. In addition to rules on internal cooperation at Sto, these principles also stipulate a binding commitment to respect human rights and to promote such rights within the company’s sphere of influence. Sto management personnel are to ensure that these principles are observed in their respective areas of responsibility.
The principles additionally affirm the em-ployees’ unqualified right to membership of trade unions or other organisations represent-ing employees. Forced labour, child labour and all forms of discrimination are proscribed. We also attach importance to the payment for our employees in all companies of the Sto Group being above the prevailing minimum wage in all instances. Beyond these basic rights, we aim to create a work environment for all our employ-ees which ensures freedom from physical and mental harm and is conducive to good health and realisation of the individual’s capabilities.
Controlling sustainabilityIn order to promote and control responsible procedures on all corporate levels, a Group-wide sustainability reporting system was imple-mented in 2010 in addition to the above-men-tioned procedural guidelines. It is based on the “Global Compact” principles. The management personnel of all companies belonging to the Sto Group are responsible for ensuring compliance with the corresponding rules and for imple-menting appropriate measures. In 2011, we successfully completed the informational and educational campaign on our vision and mission as well as the “Principles for cooperation within and management of the Sto Group”. We hence
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EconomyLong-term oriented actionsSto AG pursues a long-term corporate strategy. We aim to maintain an earnings-oriented growth strategy with due regard to social and ecological criteria. To do this we implemented the corresponding decision-making processes and corporate structures. These ensure forward-looking actions. At the same time it constitutes active risk management: by observing compre-hensive indicators, which go beyond purely eco-nomic aspects; risks and opportunities arising through changing market, environmental and social conditions can be identified and suitable measures be taken in less time. This contributes to permanently adding value to, securing of existing and creation of new workplaces. It also ensures reliable support of social and ecological projects.
As a family-run public limited company we also attach importance to continuity in corpo-rate management. The handover of manage-ment responsibilities to the next generation, which began in 2010, had been prepared in good time, so that further key positions were successfully filled in 2011.
Improving the efficiency of our corporate processes is also part of a sustainable strategy. In the past fiscal year we initiated the construc-tion of an automated silo cleaning plant at the Weizen location, for example. This plant not only works in a more economic but also a more resource-conserving way as the need for fresh water is significantly reduced at the same time.
EcologyThermal insulation helps to protect the environmentEcological and economic aspects blend seam-lessly at Sto. Our core business is the produc-tion of facade systems. Thanks to their efficient insulation capacity they contribute to significant
Fit@Sto system is to be implemented through-out the entire Sto Group. In 2011, we con-tinued to systematically build it up further. Among others, the task group in charge drew up the medium-term planning and organised the current activities, such as various health campaigns.
Furthermore, a fundamental part of the personnel strategy is to cater for employees wishing to reconcile work and family life. In a first step we developed objectives and measures together with an external auditor in order to establish the necessary prerequisites at Sto. Further information on our personnel strategy can be found in the employees section on pages 27 to 30.
Further sustainability activities in 2011Beyond the stated projects we were active in numerous other areas in 2011 in order to assume social responsibility. The following examples are presented according to the three sustainability dimensions of economy, ecology and social issues.
Numerous colleagues from Sto Corp. participate in the corpo-rate run, the so-called “Kaiser Permanente Walk” every year.
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savings in oil and gas as less heating energy is required. Hence, facade systems are not only an important growth driver for Sto, but also con-tribute noticeably to protecting the climate and the environment. The Sto systems which have been installed worldwide since 1965 resulted in savings in the order of approx. 64 billion litres of heating oil up until and including 2011, with last year accounting for around 5 billion litres of this figure alone. The resultant reduction in CO2 emissions totalled 199 million tonnes, including around 14 million tonnes in 2011.
Promoting environment-friendly technologiesBy actively supporting the widespread use of facade systems, we are promoting the development and spread of environment-friendly technologies – fully in keeping with the “Global Compact”. A key element of marketing operations is active PR work which we pursue in professional associations at a national and international level. We are a member of the European Association for External thermal insulation composite systems (EAE) and the
German Sustainable Building Council (DGNB), for example.
Environmental certification of Sto productsSto AG was one of the first suppliers of build-ing materials to receive Environmental Product Declarations (EPD) for a selection of its mineral adhesives and renders in 2009. Relevant data, such as eco-friendly properties, are determined, examined and published for such certified products. Environmental declarations are an im-portant tool for architects and planners who are involved in ecological building and who, in turn, seek certification for buildings in accordance with the DGNB guidelines, for example.
We continuously promote the environmen-tal certification of our product range. In 2011, we received EPDs for further external renders, organic adhesive and filler compounds as well as for primers and facade paints. Furthermore, we requested the declaration for six differ-ent external wall insulation systems last year. We expect to be receiving the so-called ESDs (Environmental System Declarations), which not only evaluate the single components, but the
Thermal insulation helps to protect the environment Energy savings from the use of Sto facade insulation systems correspond to around 64 billions litres of heating oil
=
Between 1965 and 2011, facade insulation systems from Sto played a direct role in saving the barely conceivable volume of 64 billion litres of heating oil. This represents a notable contribution to global climate protection: the facade insulation systems from the Black Forest have cut CO2 emissions by around 199 million tonnes. In 2011 alone, Sto products reduced emissions of this combustion gas by around 14 million tonnes.
x 2.3 million tanker lorries
28,000 l
x 16 million oil tanks
4,000 l
x 2,500 oil tankers
25,000,000 l
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aspects of a system in its entirety, in the first half-year of 2012.
Our StoTherm In Comfort internal insulation system received the “Natureplus” seal in 2011. The certificate, awarded by the recognised eco-institute of the same name, confirms the insulation system’s environmental compatibility and harmlessness in terms of health aspects.
Distinctions for StoSto AG is regularly awarded distinctions for its ecological commitment and dedication. In 2011, the French subsidiary, Beissier S.A.S., received the “Environmental Reward SMO” in accordance with ISO 14001-2004. Sto Isoned B.V., Netherlands, was awarded the “Passive House Award” for the “De Kroeven, Roozendaal” project.
Medium-term goal:Balance in terms of CO2 emissionsAnother medium-term goal of Sto is the promo-tion and support of an extensive environmental protection project in addition to its worldwide social commitment. For this reasons, a study is currently being evaluated which deals with the support of a large-scale forest protection pro-ject in South-East Asia. Further examinations of other suitable concepts are to follow. With the intended environmental protection measure, Sto AG aims to balance out its carbon footprint, which it leaves through its business activities.
Social issuesSto Foundation – Responsibility for the next generationsCommitment to social issues forms part of a long-standing tradition at Sto. The most important cornerstone is the non-profit Sto Foundation which we established to mark our company’s fiftieth birthday in 2005, providing it with funding to the tune of EUR 1 million. Funding was significantly increased on the occasion of the foundation’s five-year anniversary: since 2011, and until and including 2015, it will have EUR 350,000 available per year. These funds originate from returns on the Foundation’s capital and from grants which are contributed on a regular basis by Sto AG and its ordinary shareholders.
The primary aim of the Sto Foundation is to support young people who are serving an apprenticeship in the painting, decorating and plastering trades or studying construction engineering or architecture at university. The third focus is on further training activities for these two groups. The fourth area deals with project sponsorship. A special aspect of the Sto Foundation is the consideration of social components in the area of funding for young craftsmen. Socially disadvantaged young people beginning apprenticeships under difficult condi-tions qualify for support in this context.
1 Verklebung2 Dämmung3 Grundierung45 Armierungsgewebe6 Schlussbeschichtung
1 2 3 4 65
Unterputz
1 Bonding
2 Insulation
3 Primer
4 Base coat
5 Reinforcing mesh
6 Top coat
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In the trade area, the sponsoring and train-ing of the newly formed National Team of Plasterers was the main focus in 2011, as the “World Skills”, the world championship of trade professions, will take place in the autumn of 2012 in the Belgian city of Spa. The venue in July 2013 will be Leipzig, where the world’s best young tradesmen will be elected in Germany again for the first time in more than 40 years. The team, supported by Sto, will participate in the title race and, at the same time, function as an ambassador for an attractive profession, which links innovation, a broad sphere of activ-ity and traditional craftsmanship.
A highlight in the funding area of architec-ture in 2011 was the support of an exemplary project by the Planning, Building, Environment Faculty at the Technische Universität Berlin: the faculty chair initiated a German-Haitian work-shop following the earthquake that hit Haiti in 2010. The project “Experiencing life cycle in
buildings” has been designed to help recon-struct destroyed buildings in Port-au-Prince and preserve Haitian heritage at the same time. Taking regional conditions into consideration, the participants will design and build a house made of recycled materials.
The members of the German National Team of Plasterers at Sto.
University students from Berlin developed an alterna-tive construction concept in Port-au-Prince, Haiti, which had been destroyed by the earthquake.
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an aid fund at the end of 2011 for Sto Group employees in need. We will allocate it a one-off amount of EUR 1 million which is to help em-ployees whose existence has been plunged into crisis through no fault of their own.
Another important measure was the funding of a nursery school project in Namibia. It is the goal of the “Bright Hill Pre-School”, located in the slums of Windhoek, to contribute to improving the disastrous local conditions in the area of social and educational affairs. Around 100 students divided into four class levels currently attend the facility. In addition to the education they receive they are also given breakfast and lunch. The project is mainly financed through sponsorships and donations. Sto helps provide the project with a sound financial basis for the coming years.
The company was also active in Great Britain last year and, for the first time, participated in the traditional dragon boat race which forms part of a fund-raising event. The “Dragon Boat Challenge” takes place once a year and raises money for homeless persons in the United Kingdom. Although our dedicated employees did not win the actual race, they still won the “Charity Champions” prize, which is awarded for the highest donation.
Social responsibilitySto is involved in the social area even beyond the Foundation’s activities. With our social responsibility in mind and on the occasion of us clearly exceeding the one billion mark in turnover, we initiated the establishment of
Founder and Manager of the nursery school,
Franz-Josef Müller, with his
pupils.
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Sto AG | Consolidated annual financial statements of the Sto Group (IFRS)
· Income statement
· Statement of recognised income and expenses
· Balance sheet
· Statement of changes in equity
· Cash flow statement
· Notes
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Appendix 2011 2010*
EUR EUR K
1. Revenues (1) 1,106,782,513.60 986,045
2. Changes in product inventories –141,607.42 –1,395
3. Other internally generated assets capitalised (2) 96,899.43 11
Total revenues 1,106,737,805.61 984,661
4. Other operating income (3) 21,705,924.68 15,645
5. Cost of material (4) –512,631,908.75 –436,978
6. Personnel expenditure (5) –271,840,198.55 –252,832
7. Other operating expenses (6) –209,787,772.43 –199,731
EBITDA 134,183,850.56 110,765
8. Depreciation and amortisation of intangible fixed assets as well as property, plant and equipment (7) –29,669,430.35 –25,151
EBIT (Earnings before interest and taxes) 104,514,420.21 85,614
9. Share in profits of associates (8) 0.00 0
10. Interest and similar income (9) 3,302,810.59 2,799
11. Interest and similar expenditure (9) –4,225,148.72 –4,209
12. Other financial income (10) 18,988.16 43
13. Other borrowing costs (10) –103,364.71 –2
EBT (Earnings before taxes) 103,507,705.53 84,245
14. Taxes on income and earnings (11) –33,206,152.40 –25,734
EAT (Earnings after taxes) 70,301,553.13 58,511
of which: share of minority interests 147,351.64 317
share attributable to the shareholders of Sto AG 70,154,201.49 58,194
Earnings per share basic/diluted in EUR
Ordinary share (12) 10.89 9.03
Preference share (12) 10.95 9.09
* Some details differ from the details in the consolidated annual statement for the fiscal year of 2010 as certain adjustments were implemented. For more details see the appendix – General part 7.
Sto AG, Stühlingen | Consolidated income statement for 2011
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2011 2010*
EUR EUR K
EAT (Earnings after taxes) 70,301,553.13 58,511 Actuarial gains or losses 586,975.01 –1,308
Deferred taxes –160,373.66 378
Cash flow hedges:
changes to fair value recognised in equity –4,393.54 –286
transferred to the income statement 428,906.76 794
Deferred taxes –121,411.00 –146
Currency translation differences 991,205.09 7,082
Other earnings (after taxes) 1,720,908.66 6,514
Overall result 72,022,461.79 65,025
of which: share of minority interests 155,147.60 289
share attributable to the shareholders of Sto AG 71,867,314.19 64,736
* Some details differ from the details in the consolidated annual statement for the fiscal year of 2010 as certain adjustments were implemented. For more details see the appendix – General part 7.
For further explanations concerning equity, see Note (21).
Sto AG, Stühlingen | Consolidated statement of recognised income and expenses 2011
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Appendix 31 Dec 2011 31 Dec 2010* 01 Jan 2010*
EUR EUR K EUR K
A. Non-current assets I. Intangible assets (13) 43,606,244.46 42,238 42,489
II. Property, plant and equipment (14) 203,493,576.15 190,543 193,190
III. Investments in associates (15) 0.00 0 19
Fixed assets 247,099,820.61 232,781 235,698
IV. Non-current trade receivables (17) 820,958.59 723 921
V. Non-current income tax receivables 3,483,956.43 3,965 4,601
VI. Non-current financial assets (18) 837,475.46 2,072 1,306
VII. Other non-current assets (19) 355,968.36 360 203
VIII. Deferred tax assets (11) 7,169,750.18 8,445 8,131
Other non-current assets 12,668,109.02 15,565 15,162
Total non-current assets 259,767,929.63 248,346 250,860
B. Current assets I. Inventories (16) 69,552,491.65 63,677 57,578
II. Current trade receivables (17) 110,598,424.46 99,589 100,367
III. Current income tax receivables 1,646,601.83 2,851 2,424
IV. Current financial assets (18) 119,119,447.15 114,730 46,131
V. Other current assets (19) 6,384,709.39 5,934 4,483
VI. Cash and cash equivalents (20) 102,610,965.89 85,014 106,715
Total current assets 409,912,640.37 371,795 317,698
Total assets 669,680,570.00 620,141 568,558
* Some details differ from the details in the consolidated annual statement for the fiscal year of 2010 as certain adjustments were implemented. For more details see the appendix – General part 7.
Sto AG, Stühlingen | Consolidated balance sheet for the year ended 31 December 2011
Assets
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Appendix 31 Dec 2011 31 Dec 2010* 01 Jan 2010*
EUR EUR K EUR K
A. Equity I. Subscribed capital (21) 17,556,480.00 17,556 17,556
II. Capital reserves (21) 57,649,040.41 57,649 57,649
III. Revenue reserves (21) 348,329,813.45 297,886 248,563
Share attributable to the shareholders of Sto AG 423,535,333.86 373,091 323,768
IV. Share of minority interests (22) 2,429,106.87 2,274 1,516
Total equity 425,964,440.73 375,365 325,284
B. Non-current provisions and liabilities I. Provisions for post-employment benefits and similar liabilities (23) 40,876,522.00 39,408 36,323
II. Deferred tax liabilities (11) 3,992,383.79 4,927 5,404
III. Other non-current provisions (24) 4,119,496.28 4,616 5,207
IV. Non-current borrowings (25) 9,255,844.24 23,811 37,321
V. Non-current financial liabilities (27) 315,605.28 423 193
VI. Other non-current liabilities (28) 32,127.15 0 249
Total non-current provisions and liabilities 58,591,978.74 73,185 84,697
C. Current provisions and liabilities I. Other current provisions (24) 43,885,169.23 51,073 45,785
II. Current borrowings (25) 23,707,972.17 16,020 17,306
III. Trade payables (26) 41,678,760.96 39,746 33,971
IV. Current income tax liabilities 8,876,646.24 3,459 10,104
V. Current financial liabilities (27) 22,274,153.45 22,565 14,922
VI. Other current liabilities (28) 44,701,448.48 38,728 36,489
Total current provisions and liabilities 185,124,150.53 171,591 158,577
Total debt capital 243,716,129.27 244,776 243,274
Total assets 669,680,570.00 620,141 568,558
Liabilities
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Equity attributable to the shares of the parent company Minority shares Total equity Subscribed Capital Total capital reserves Currency Reserve Reserve for Revenue translation for cash flow Treasury reserves reserve pensions hedges stock
Sto AG, Stühlingen | Statement of changes in equity as at 31 December 2011
in EUR K
Status as at 1 January 2010 17,556 53,229 274,352 –2,684 752 –801 –23,055 319,349 1,515 320,864
Reclassification of guaranteed dividends for preference shares* 0 4,420 0 0 0 0 0 4,420 0 4,420
Status as at 1 January 2010 17,556 57,649 274,352 –2,684 752 –801 –23,055 323,769 1,515 325,284
EAT (Earnings after taxes) 0 0 58,194 0 0 0 0 58,194 317 58,511
Other earnings (after taxes) 0 0 0 7,094 –914 362 0 6,542 –28 6,514
Income and expenses recognised 0 0 58,194 7,094 –914 362 0 64,736 289 65,025
Dividend payout 0 0 –14,996 0 0 0 0 –14,996 0 –14,996
Transactions between shareholders 0 0 –417 0 0 0 0 –417 –55 –472
Acquisition of subsidiaries 0 0 0 0 0 0 0 0 524 524
Status as at 31 December 2010 17,556 57,649 317,133 4,410 –162 –439 –23,055 373,092 2,273 375,365
Status as at 1 January 2011 17,556 57,649 317,133 4,410 –162 –439 –23,055 373,092 2,273 375,365
EAT (Earnings after taxes) 0 0 70,154 0 0 0 0 70,154 147 70,301
Other earnings (after taxes) 0 0 0 991 418 303 0 1,712 9 1,721
Income and expenses recognised 0 0 70,154 991 418 303 0 71,866 156 72,022
Dividend payout 0 0 –21,422 0 0 0 0 –21,422 0 –21,422
Status as at 31 December 2011 17,556 57,649 365,865 5,401 256 –136 –23,055 423,536 2,429 425,965
* Some details differ from the details in the consolidated annual statement for the fiscal year of 2010 as certain adjustments were implemented. For more details see the appendix – General part 7.
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Equity attributable to the shares of the parent company Minority shares Total equity Subscribed Capital Total capital reserves Currency Reserve Reserve for Revenue translation for cash flow Treasury reserves reserve pensions hedges stock
Status as at 1 January 2010 17,556 53,229 274,352 –2,684 752 –801 –23,055 319,349 1,515 320,864
Reclassification of guaranteed dividends for preference shares* 0 4,420 0 0 0 0 0 4,420 0 4,420
Status as at 1 January 2010 17,556 57,649 274,352 –2,684 752 –801 –23,055 323,769 1,515 325,284
EAT (Earnings after taxes) 0 0 58,194 0 0 0 0 58,194 317 58,511
Other earnings (after taxes) 0 0 0 7,094 –914 362 0 6,542 –28 6,514
Income and expenses recognised 0 0 58,194 7,094 –914 362 0 64,736 289 65,025
Dividend payout 0 0 –14,996 0 0 0 0 –14,996 0 –14,996
Transactions between shareholders 0 0 –417 0 0 0 0 –417 –55 –472
Acquisition of subsidiaries 0 0 0 0 0 0 0 0 524 524
Status as at 31 December 2010 17,556 57,649 317,133 4,410 –162 –439 –23,055 373,092 2,273 375,365
Status as at 1 January 2011 17,556 57,649 317,133 4,410 –162 –439 –23,055 373,092 2,273 375,365
EAT (Earnings after taxes) 0 0 70,154 0 0 0 0 70,154 147 70,301
Other earnings (after taxes) 0 0 0 991 418 303 0 1,712 9 1,721
Income and expenses recognised 0 0 70,154 991 418 303 0 71,866 156 72,022
Dividend payout 0 0 –21,422 0 0 0 0 –21,422 0 –21,422
Status as at 31 December 2011 17,556 57,649 365,865 5,401 256 –136 –23,055 423,536 2,429 425,965
* Some details differ from the details in the consolidated annual statement for the fiscal year of 2010 as certain adjustments were implemented. For more details see the appendix – General part 7.
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Sto AG, Stühlingen | Consolidated cash flow statement for 2011
in EUR K 2011 2010*
1. Cash flow from operating activities Accounting profit 103,508 84,244
Depreciation of non-current assets 29,669 25,151
Net profit/loss from disposal of non-current assets –40 –479
Net profit/loss from the fair-value measurement of investments in associates 0 0
Net interest income/expense and other net finance income/expense 1,007 1,369
Income taxes paid –27,804 –30,523
Change in tax assets and tax liabilities 2,006 –2,291
Change in provisions –6,056 3,821
Change in net current assets –9,573 11,734
Cash flow from operating activities 92,717 93,026
2. Cash flow from investment activities Investment in property, plant and equipment and intangible assets –27,123 –22,022
Payments for the acquisition of consolidated companies and other business units (less acquired cash and cash equivalents) –1,501 –426
Payments received from other disposal of intangible assets and plant, property and equipment 759 952
Payment received from the disposal of consolidated companies and other business units 43 0
Interest payment received 2,941 2,124
Dividendes received 0 5
Disbursements for financial investments –106,471 –101,271
Deposits from financial investments 103,271 34,289
Cash flow from investment activities –28,081 –86,349
3. Cash flow from financing activities Payments for the acquisition of minority interests 0 –472
Payments for non-current borrowings –15,204 –14,324
Payments for current borrowings –8,635 –471
Dividend distribution –21,422 –14,996
Interest payments –1,802 –2,026
Cash flow from financing activities –47,063 –32,289
Change in cash and cash equivalents from changes in exchange rates 24 3,912
Cash and cash equivalents at beginning of period 85,014 106,714
Change in cash and cash equivalents 17,597 –21,700
Cash and cash equivalents at the end of period ** 102,611 85,014
* Some details differ from the details in the consolidated annual statement for the fiscal year of 2010 as certain adjustments were implemented. For more details – General part 7.
** Cash and cash equivalent at the end of period equal the item shown in the balance sheet.
The capital flow statement is explained in Note (29).
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General information
1. Information on the companyIn its capacity as the operating parent company, Sto AG, Stühlingen, whose majority shareholder is Stotmeister Beteiligungs GmbH, Stühlingen, produces and distributes paints, plasters, coatings of all kinds, heat and acoustic insulation systems, concrete maintenance systems and products and goods for the preservation of buildings.The address of its registered offices is Ehrenbachstrasse 1, 79780 Stühlingen, Germany. Sto AG was entered in the Commercial Register of the Local Court of Freiburg under number HRB 620675. It is listed in the “Regulated Market” segment for official trading on the stock exchange operated by Deutsche Börse AG, Frankfurt/Main as well as Boerse Stuttgart AG, Stuttgart. The other group member companies are engaged in the same business as Sto AG.
On 12 April 2012, the Executive Board passed a resolution to authorise the submission of Sto AG’s consolidated financial statements and the Group management report to the Supervisory Board.
2. Basis of preparationSto AG prepared its consolidated financial statements for the year 2011 in accordance with the International Financial Reporting Standards (IFRS) in the form to be applied in the European Union and the interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC). The supplemental commercial regulations according to § 315 a of the HGB were also applied. All standards and interpretations subject to compulsory application in fiscal 2011 were observed.
New and revised standards and interpretations used for the first time beginning on 1 January 2011:
for the first time, the amended edition of IAS 24 “Related Party Disclosures” was applied retrospectively. This revision simplifies the disclosure rules relating to entities in which the state has an interest. Also, the definition of affiliated companies and persons is clarified along with reportable transactions without amending the basic Related Party Disclosures. A systematic approach to related parties is emphasised and a clarification is provided as to how a person or persons in key positions of the company influence the related parties of this company. In this respect, the number of transactions of affiliated companies and persons that must be disclosed were expanded. Application of the revision did not result in any effects on the Group’s net assets, financial position or results of operations.
In May 2010, the IASB published its third collective standard for modification of various IFRS with the primary objective of eliminat ing inconsistencies and clarifying formulations. The collective standard “Improvements to IFRS 2010”, which must be applied retrospectively, provide for a separate transitional rule for each amended IFRS standard. Application of the new IFRS 7 rule “Financial instruments: disclosures” leads to an adaptation of the stipulated disclosures.
The following new rules and regulations are not applicable to the Sto Group and therefore have no effects on the Group’s net assets, financial condition and results of operations:
• AmendmenttoIAS32“Classificationofrights issues”
• IFRIC14“IAS19–Thelimitonadefinedbenefit asset, minimum funding requirements and their interaction”
• IFRIC19“Extinguishingfinancialliabilitieswith equity instruments”
Sto AG, Stühlingen | Notes to the consolidated financial statements as at 31 December 2011
Sto AG, Stühlingen | Consolidated cash flow statement for 2011
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62
The new features listed below on improvements to IFRS 2010 resulted in no effects on the accounting methods and the presentation of the Group’s net assets, financial position and results of operations:
–IFRS1“First-timeadoptionofInternationalFinancial Reporting Standards”
–IFRS3“Businesscombinations”–IAS1“Presentationoffinancialstatements”–IAS27“Consolidatedandseparatefinancial
statements”–IAS34“Interimfinancialreporting”–IAS21“Theeffectsofchangesinforeign
exchange rates”–IFRIC13“Customerloyaltyprogrammes”
Under Section 315a of the German Commercial Code, Sto AG is required to prepare its consolidated financial statements in accordance with the standards issued by the International Accounting Standards Board (IASB) in the form endorsed by the European Union. In addition to the disclosures stipulated by IFRS, these financial statements also include disclosures and explana tions required by German commercial law.
The consolidated financial statements provide a true and fair view of the Group’s net assets, financial condition and results of operations. This entails a true and fair description of the effects of the Group’s business transactions as well as of other events and conditions in accordance with the definitions and criteria contained in the IFRS framework for recognising assets, liabilities, revenues and expenses.
The current/noncurrent distinction is observed in the recognition of assets and liabilities. The income statement was prepared using the total cost method. Sto’s financial year is identical to the calendar year. The consolidated financial statements were prepared in euros.
3. International Financial Reporting Standards (IFRS) and Interpretations (IFRIC) which have been published but are not yet of mandatory applicationThe amendment to IFRS 7 “Financial instruments: disclosures” was published in October 2010 and is to be applied for the first time to the fiscal year beginning on or after 1 July 2011. The amendment defines extensive new qualita tive and quantitative disclosures on financial assets transferred that were not derecognised, and on the existing exposure until the reporting date in the case of financial assets transferred. This amendment has been implemented in European law by the European Union. If such transactions should be carried out in future, this amendment would lead to extended disclosures on the transfer of financial instruments.
In November 2009 and October 2010, the standard IFRS 9 “Classification and measurement” was published and supplemented. IFRS 9 must be applied retrospectively for the first time to the fiscal year beginning on or after 1 January 2015. The standard comprises new rules and regulations on the classification and measurement of financial assets and financial liabilities. According to the standard, debt instruments–dependingontheirrespectivecharacteristics and taking account the business model–aretoberecognisedeitheratamortised costs of acquisition or at fair value through profit or loss. However, due to the instrumentspecific optional selection, fluctuations in value of equity instruments may be recognised under other earnings. In this event, only certain dividend income would be recognised through profit or loss with respect to equity instruments. Exception: financial assets held for trading and which are required to be measured at fair value through profit or loss. For financial liabilities, the standard provides for existing classification and valuation rules to be retained subject to
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the following exceptions: impacts of modifying own credit risk in the case of financial liabilities classified at fair value through profit or loss are required to be recognised as having no impact on profit or loss, and derivative liabilities on nonlisted equity instruments may no longer be recognised at amortised cost. The standard provides for retrospective application in principle and has not yet been adopted in European law. The new standard will have an effect on the measurement of financial assets within the Sto Group.
IFRS 10 “Consolidated annual financial statements” was published in May 2011, and must be applied retrospectively for the first time in the fiscal year beginning on or after 1 January 2013. The new standard has not yet been implemented in European law by the European Union. IFRS 10 replaces the regulations of the former IAS 27 Consolidated and separate financial statements for group accounting and interpretationSIC-12Consolidation–specialpurpose entities. IFRS 10 sets forth a uniform control concept applicable to all companies, including special purpose companies. In comparison to the previous legal climate, the amendments introduced with IFRS 10 require a considerable degree of management discretion in evaluating the question of which companies should exercise control within the group and whether it is therefore required to include them in the consolidated annual financial statement by way of full consolidation. There is no change to the consolidated companies of the Sto Group as a result of the new IFRS 10.
IFRS 12 “Disclosure of interests in other entities” was also published in May 2011. IFRS 12 must be applied for the first time retrospectively in the fiscal year beginning on or after 1 January 2013 and has not yet been incorporated into European law. The standard uniformly regulates stipulated disclosures for Group accounting and
consolidates the disclosures for subsidiaries that had previously been regulated in IAS 27, and regulates the disclosures for jointly controlled companies and associated companies that had up until now been placed in IAS 31 and IAS 28. Since the new standard formulates new disclosure requirements in addition to the previous explanation duties, the Group disclosures concerning this consolidation of companies will be more comprehensive in the future.
IFRS 13 “Fair value measurement” was published in May 2011 and has not yet been incorporated into European law. IFRS 13 must be applied for the first time prospectively in the fiscal year beginning on or after 1 January 2013. The standard sets forth guidelines for determining fair value and defines comprehensive quantitative and qualitative information concerning fair value evaluation. IFRS 13 defines the fair value as the price on the date of the valuation that a party in a regular transaction between market participants would receive for the sale of an asset or would pay for the transfer of a liability. These changes will have no substantial effects on the Sto Group’s net assets, financial position and result of operations of the Sto Group.
In June 2011, the IASB IAS 1 “Presentation of financial statements” was amended; this has not yet been incorporated into European law by the European Union. This amendment must be applied retrospectively for the first time in the fiscal year beginning on or after 1 July 2012. The amendment of IAS 1 pertains to the presenting of elements of other earnings. Elements for which reclassification is intended in the future which will have an impact on profit and loss must be presented separately from elements that remain in equity. This amendment only affects the presentation in the financial statement and therefore has no effect on the Sto Group’s net assets, financial position or earnings situation.
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The amendment to IAS 12 “Income taxes” was published in December 2010 and has not yet been implemented in European law. This amendment must be applied for the first time retrospectively in the fiscal year beginning on or after 1 January 2012. The amendment provides for deferred tax assets and deferred tax liabilities to be valued for certain assets that are accounted for according to the new valuation method based on the assumption that the carrying amount of such assets is recovered in full by sale. This amendment will have no effects on the Sto Group’s consolidated financial statements.
In June 2011, the revised standard IAS 19 “Employee benefits” was published, and must be applied retrospectively for the first time in the fiscal year beginning on or after 1 January 2013. IAS 19 has not yet been implemented in European law. The adjustments made extend from basic amendments to simple explanations and reformulations. In the Sto Group, the amendment to IAS 19 will result in a different illustration and expanded explanatory notes in the employee benefits. The calculation of actuarial gains and losses is only still possible in the revised IAS 19 through equity. This will not lead to any changes for the Sto Group.
The amendment to IAS 32 “Financial instruments: presentation” and IFRS 7 “Financial instruments: disclosures” with respect to offsetting of financial assets and financial liabilities was published in December 2011. IAS 32 must be applied retrospectively for the first time in the fiscal year beginning on or after 1 January 2013, IFRS 7 must be applied retrospectively for the first time in the fiscal year beginning on1January2014.Thisamendmenthasnotyet been implemented in European law by the European Union. The amendment is intended to fix existing inconsistencies by supplementing the application guidelines. The existing basic regulation on offsetting financial instruments
was maintained however. For the Sto Group, disclosures for offsetting financial instruments have been expanded.
The following new rules and regulations are not applicable to the Sto Group and will therefore have no effects on the Group’s net assets, financial condition and results of operations:
• AmendmentstoIFRS1“First-timeadoption of the International Financial ReportingStandards”–Drastichyperinflationandremoval of fixed data for firsttime adopters.
• IFRS11“Jointarrangements”• RevisedIAS27“Separatefinancialstate
ments”• RevisedIAS28“Investmentsinassociates
and joint ventures” • IFRIC20“Strippingcostsintheproduction
phase of a surface mine”
4. Companies consolidatedThe consolidated financial statements include Sto AG as well as the domestic and nondomastic subsidiaries on which Sto AG is able to exercise a controlling influende as defined in IAS 27. IAS 27 defines control as the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. Subsidiaries are consolidated for the first time upon the control being acquired, this generally being assumed to be the case with a share of 50% or more.
During the last fiscal year, the companies consolidated changed as follows:
Effective as of 25 February 2011, Sto AG increased its shares and voting rights in Inotec GmbH, WaldshutTiengen, from 33.0% to 90.0% by acquiring additional shares.The core business of Inotec GmbH is maintenance and sale of construction technology of every description, in particular to Sto AG and
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the latter’s customers. Building technology essentially includes silo technology, mixers, pumps and tools of all kinds. Since Inotec GmbH is a key business partner to Sto AG in the field of building technology, the holding was increased, duly taking account of the opportunities and risks involved.
The carrying amount and the fair value of the shares already held is EUR 0 K. The Sto Group has decided to value the minority shares at fair value.
The fair values of identifiable assets and liabilities of Inotec GmbH at the time of acquisition are shown as follows:
Inotec GmbH’s receivables from Group companiesoverEUR243KandloanobligationsoverEUR 900 K are not considered part of the business combination.
In addition, transactionrelated costs to the amount of EUR 19 K were included in other operating expenses.
Since the end of February, Inotec GmbH has contributed EUR 6,725 K to consolidated turnover, and has caused a EUR 230 K drop in consolidated turnover. Had the corporate merger taken place at the beginning of the year, revenues would have increased by EUR 8,253 K and consolidated earnings beforetaxesbyEUR584K.
The gross amount of the receivables corresponds to the fair values thereof. Exception: trade receivables, amounting to EUR 1,571 K (gross). These receivables were depreciated by EUR 125 K.
The entire consideration in the amount of EUR 1 was settled by an outflow of cash and cash equivalents.
The assets and liabilities held for sale were sold at the end of May 2011. Sale of assets and liabilities held for sale had no effect on earnings in 2011.
A cash inflow of EUR 500 K resulted for the Sto Group from the disposal of the assets and liabilities held for sale. Intangible assets and property,plantandequipmentofEUR204K,inventories of EUR 78 K, trade receivables of EUR24K,otherliabilitiesandtradepayablesofEUR 56 K were disposed of. The cash outflow from disposed cash and cash equivalents amountedtoEUR457K.
in EUR K Fair value at the time
of acquisitionIntangible assets and property, plant and equipment 3,002
Income tax receivables 145
Inventories 1,913
Trade receivables 1,203
Financial assets and other assets 65
Cash and cash equivalents 17
Assets held for sale 758
Total assets 7,103 Trade payables 1,334
Borrowings 3,980
Other liabilities 1,046
Liabilities in connection with assets held for sale 86
Total liabilities 6,446
Total identifiable net assets at fair value 657
Minority shares valued at fair value* 0
Total consideration 657
Settlement of pre-existing relationships –657
Total payment on the transaction* 0
* The amounts were rounded to 0 (zero).
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In the first half of the year, the companies STO SMEE Beteiligungs GmbH, Stühlingen, and WT Gebäudemanagement GmbH, Stühlingen, were each established at 100% ownership and incorporated into the consolidated companies.
On 1 July 2011, 100% of the shares and voting rights in STOMIX spol s.r.o., Skorosice/Czech Republic were acquired, including their direct and indirect subsidiaries. STOMIX is a manufacturer and direct distributor of mineral external wall insulation systems with a total of six subsidiaries in Eastern Europe at the time of takeover. Two production locations belong to the group. For Sto AG, the acquisition of the STOMIX group means taking another strategic step towards strengthening its market position in Eastern Europe. The established STOMIX brand will be expanded within the company’s core markets. The fair values of identifiable assets and liabilities of the STOMIX companies at the time of acquisition are shown as follows:
Goodwill is allocated to the “Other” geographic segment and was contingent on expected future synergies from sales growth in the Eastern Europe market at the time of acquisition. Goodwill determined at the time of acquisition is not taxdeductible.
Also, transactionrelated costs in the amount ofEUR450Kweredirectlyincludedinotheroperating expenses.
Since 1 July 2011, the STOMIX companies have contributed EUR 9,186 K to consolidated turnover and decreased consolidated pretax earnings by EUR 1,218 K. Had the corporate merger taken place at the beginning of the year, revenues would have increased by
in EUR K Cash outflow due to corporate acquisition
Transaction costs of corporate acquisition (contained in the cash flow from operating activity) –19
Cash and cash equivalents acquired with the subsidiary, of which EUR 386 K is held as for sale (contained in cash flows from investment activity) 403
Transferred consideration –657
Actual cash outflow due to corporate acquisition –273
Settlement of pre-existing relationships 657
Actual cash inflow for the entire transaction 384
in EUR K Fair value at the time
of acquisition
Intangible assets and property, plant and equipment 9,972
Income tax receivables/ deferred tax receivables 101
Inventories 2,046
Trade receivables 2,986
Financial assets and other assets 225
Cash and cash equivalents 753
Total assets 16,083
Provisions 71
Deferred tax liabilities 314
Trade payables 3,491
Borrowings 12,090
Other liabilities 2,368
Total liabilities 18,334
Total identifiable net assets at fair value –2,251
Goodwill from corporate acquisition 4,251
Total consideration 2,000
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EUR16,484Kandconsolidatedearningsbeforetaxes by EUR 3,895 K.
The gross amount of the receivables corresponds to the fair values thereof. Exception: trade receivables, amounting to EUR 8,318 K (gross).
Contractual cash flows from trade receivables not expected to be recovered amount to EUR 5,332 K.
The extent of contingent consideration depends on the earnings performance of the acquired companies from 2011 through 2015. At the time of acquisition, the fair value of the contingent consideration was estimated at EUR 0. On 31 December 2011, no further liabilities result from present company figures and corporate planning. Even if the results in 2012 through 2015 improve disproportionately but still within a realistic range in comparison to present planning, there will be no further liabilities to the earlier owners. No maximum amount was agreed on for the contingent consideration.
A contingent consideration in the amount of EUR114Kresultedfromtheacquisitionoftheremaining two thirds of the shares in Productos Sto Balear S.L., Santa Marìa Del Camí/Spain in 2010, which were merged with Sto SDF Iberica S.L.U., Mataró/Spain.
The extent of contingent consideration depends on the earnings performance of the acquired company in 2010 and 2011 as well as the success in recovering valueadjusted receivables, with the amount of contingent consideration being limited. On 31 December 2010, the present value of the upwardlimited amount was already set as a liability and was only adjusted by the compounded interest amount based on the present data as of 31 December 2011. The consideration was determined in 2012.
In the current period, no substantial gains or losses were recorded from identifiable assets and assumed liabilities from prior business combinations.
In the second half of 2011, the Sto Group founded the companies Sto Colombia S.A.S., Bogota/Colombia, STO MEXICO S de RL de CV, Monterrey/Mexico and Sto Corp. Latin America, Inc., Panama/Panama. The companies did not yet have any active business operations in 2011.
The companies consolidated are set out in the list of Sto AG’s subsidiaries and investments, which forms part of the notes to the consolidated financial statements and has been lodged with the operator of the “Bundesanzeiger”.
The following fullyconsolidated affiliated German companies organised as limitedliability entities or as partnerships satisfied the condi tions setoutinSection264(3)and/orSection264b of the German Commercial Code and come under the exemption rules:
in EUR K Consideration
Outflow of cash and cash equivalents 2,000
Liabilitiy arising from contingent consideration 0
Total consideration 2,000
in EUR K Cash outflow due to corporate acquisition
Transaction costs of corporate acquisition (contained in the cash flow from operating activity) –450
Cash and cash equivalents acquired with the subsidiary (contained in the cash flows from investment activity) 753
Outflow of cash and cash equivalents –2,000
Actual cash outflow due to corporate acquisition –1,697
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• StoCretecGmbH,Kriftel• SüdwestLacke+FarbenGmbH&Co.KG,
BöhlIggelheim• GefroVerwaltungs-GmbH&Co.KG,
Stühlingen• StoVerotecGmbH,Lauingen• HemmStoneGmbH,Kirchheim• MalfaFarbenGmbH,Freiburg
5. Consolidation principlesThe assets and liabilities of the domestic and nondomestic companies included in the consolidated financial statements are recognised and measured in accordance with the uniform accounting methods applied by the Sto Group.Proportionate investments in associates are accounted for using the same accounting and valuation methods.When subsidiaries are consolidated for the first time, their assets, liabilities and contingent liabilities are measured at their fair value as of the date of acquisition. If the price paid for the investment exceeds the identified assets, liabilities and contingent liabilities, this difference is accounted for as goodwill. Such goodwill is submitted to annual testing to determine any impairment in its value (impairmentonly approach). If any impairment in the value of the goodwill is established, the corresponding loss is recognised accordingly.
Receivables and liabilities as well as expenses and income between consolidated companies are netted. Intragroup balances and transactions are eliminated from Group inventories and assets. Deferred taxes are recognised on consolidation transactions recognised through profit or loss.
With the exception of the adjustments made in accordance with IAS 8 and explained under Section 7, the remaining consolidation principles and accounting policies applied in the previous year were retained.
6. Presentation of material accounting and valuation policiesThe consolidated financial statements are generally prepared according to the cost of acquisition principle, except for derivatives, financial instruments available for sale as well as assets recognised at fair value through profit or loss, which are recognised at fair values as a matter of principle. The consolidated financial statements are prepared in euros. Unless otherwise indicated, all values are rounded up or down in line with commercial usage to one thousand euros (EUR K).The material accounting and valuation policies applied in preparing the consolidated financial statements are as follows:
Currency translationMonetary items in foreign currency (in particular, cash and cash equivalents, receivables and liabilities) are translated for the first time at the rate prevailing on the transaction date and measured at fair value through profit or loss as at the reference date.Nonmonetary items carried at historical cost of acquisition or production and denominated in a foreign currency are reported using the exchange rate at the date of the transaction.The financial statements of the consolidated companies prepared in a foreign currency are translated in accordance with the functional currency principle using the modified closing rate method in accordance with IAS 21.The functional currency is defined as the national currency in question as the companies perform their business independently in financial, economic and organisational terms. Assets and liabilities are translated at the closing rate and expenses and income at annual average rates.Equity capital is translated at historic rates. Any resultant currency translation differences are recognised separately under equity until such time as the subsidiary in question is deconsolidated.
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Business combinationsBusiness combinations are accounted for using the acquisition method. The cost of acquisition of a company comprises the sum total of the consideration transferred, measured at fair value at the time of acquisition, and of the shares without a controlling influence (minority interests) on the company acquired. In the course of each corporate merger, the purchaser acquires the minority shares of the acquired company, either at fair value or at the corresponding share of the identifiable net assets of the company acquired. Costs incurred within the scope of the business combination are recognised as expenses and reported as administrative costs. If the Sto Group acquires a company, it will assess the suitable classification and designation of financial assets and liabilities in accordance with the contractual terms and conditions,
commercial circumstances and con ditions prevailing at the time of acquisition. This also includes a separation of derivatives embedded in underlying contracts.In the case of successive corporate acquisitions, the equity share previously held by the purchaser in the company acquired is remeasured at fair value at the time of acquisition and the result is recognised through profit and loss.The agreed contingent consideration is recognised at fair value at the time of acquisition. In accordance with IAS 39, any subsequent changes to the fair value of contingent consideration representing an asset or a liability are either recognised in the income statement or in other net income. Contingent consideration classified as equity is not remeasured, and its settlement at a later date is accounted for in equity.
The exchange rates used for currency translation are set out in the following table:
Closing rate on Average annual rate
EUR 1 = 31 Dec 2011 31 Dec 2010 2011 2010Chile CLP 671.9091 621.5312 671.5289 658.7099
Denmark DKK 7.4342 7.4745 7.4506 7.4473
Great Britain GBP 0.8353 0.8638 0.8679 0.8578
Malaysia MYR 4.1055 4.0955 4.2558 4.2668
Norway NOK 7.7540 7.8340 7.7934 8.0043
Poland PLN 4.4168 3.9603 4.1206 3.9947
Russia RUB 41.7650 41.6850 40.8846 40.2629
Sweden SEK 8.9120 9.0040 9.0298 9.5373
Switzerland CHF 1.2156 1.2545 1.2326 1.3803
Singapore SGD 1.6819 1.7365 1.7489 1.8055
Czech Republic CZK 25.8000 25.0600 24.5900 25.2840
Hungary HUF 314.5800 281.8950 279.3700 275.4800
USA USD 1.2939 1.3416 1.3920 1.3257
People’s Republic of China CNY 8.1588 8.7697 8.9960 8.9712
Colombia COP 2,507.9344 2,551.4722 2,572.2200 2,502.9900
Mexico MXN 18.0512 16.5475 17.2877 16.7373
Panama PAB 1.2939 1.3416 1.3920 1.3257
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Goodwill is measured at cost of acquisition on firsttime recognition, calculated at the surplus of the total consideration transferred and the amount of the share without a controlling influence on the Group’s assets acquired and liabilities assumed. If such consideration is below the fair value of the net assets of the subsidiary acquired, then the difference is recognised through profit or loss.
Intangible assetsIntangible assets acquired for good consideration are recognised at historical cost. Amortisation expense is calculated on a straightline basis over the useful life of the assets in the absence of any impairment. This primarily comprises software, which is assumed to have a useful life of between three and eight years.
Goodwill is not subject to systematic amortisation. Instead, it is submitted to regular impairment testing (“impairmentonly approach”). The Sto Group determines on an annual basis whether goodwill has been impaired. Basically, the value in use or the higher net realisable amount of the respective cashgenerating unit as at 31 December 2011 was determined to be the recoverable amount. This recoverable amount is compared with the carrying amount of the respective cashgenerating unit. A cashgenerating unit is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. With the exception of Sto AG, the cashgenerating units (CGUs) identified for purposes of calculating goodwill are identical to the legal entities. The Sto AG CGU comprises Sto AG, Stühlingen, StoVerotec GmbH, Lauingen, and StoCretec GmbH, Kriftel.
If goodwill is found to be impaired, its value is adjusted accordingly. If the impairment is greater than the value of the goodwill, the
excess amount is distributed across the assets of the cash generating unit and adjusted accordingly.
The starting point is the current corporate planning of the respective legal entities at 31 December 2011. This is based on forecasts derived from external estimates of the economic situation and market studies as well as internal maintenance investment plans. The moderate growth rates in sales in particular at CGU Sto AG during the detailed planning period are based on expectations that the level of demand for thermal insulation will continue to grow in the future. Despite inflationinduced increases in the prices of raw materials and commodities and fluctuations in the price of oilbased products, we assume that the gross profit margins will decline slightly for all CGUs in the light of gross profit margin trends in previous years prior to the commencement of the budget period. The weighted average capital costs (WACC) before taxes are determined by taking account of a riskfree basic interest rate, entrepreneurial risk (market risk premium multiplied by a beta factor calculated on the basis of a peer group analysis), a growth discount in perpetual annuity, borrowing costs as well as the consolidated capital structure. As a matter of principle, cash flows are discounted using a uniform Group interest rate which is adjusted to allow for any differences in the base interest rates of the individual currencies. In the year under review, pretax interest rates of between7.6%and14.3%(previousyear:between 10.0% and 16.5%) were applied to the corporate planning period (five years). As in the previous year, the perpetual annuity is based on a growth rate of 1.0%.
The following material assumptions were made with regard to the key CGUs Sto AG and Beissier S.A.S., La Chapelle La Reine/France:
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• Pre-taxinterestrates:FortheCGUStoAG10.0% (previous year: 11.1%) and CGU Beissier S.A.S. 10.6% (previous year: 12.0%).
• Perpetualannuity:Asinthepreviousyear,the perpetual annuity is based on a growth rate of 1.0% for both CGUs.
• Turnovertrend:Duetothegrowingsalespotential in the markets of the two GCUs, turnover growth is assumed to be a low singledigit percentage.
• Marginchanges:Owingtoafurthersurgeinprocurement prices, slightly declining margins are assumed to apply to both CGUs.
For the cashgenerating unit STOMIX spol s.r.o., Skorosice/Czech Republic, the annual impairment audit was performed on 31 December 2011. Due to the very weak business development in the second half of the year, the corporate plan had to be revised. The recoverable amount of the cashgenerating unit STOMIX spol s.r.o., Skorosice/Czech Republic is determined based on the calculation of a value in use using cash flow forecasts based on the fiveyear plan. In the corporate planning in place at the time of acquisition, it was assumed that business development would be more positive that in the revised corporate planning. The revised plan is based on a more moderate business development. The discount rate before taxes used for the cash flow forecasts is 11.0%. The perpetual annuity growth rate is 1.0%. Subsequent to this analysis, the Sto GroupshowsanimpairmentofEUR4,188KcomparedtothegoodwillsofaratEUR4,251K, which was recorded in the income statement under depreciation.
Based on these calculations, there is no evidence that would indicate that the carrying amounts of the respective cashgenerating units could exceed the realisable amounts in the remaining cashgenerating units.
The essential goodwill items are listed in Note (13). Goodwill items in existence at the time of the changeover to IFRS are maintained in the Group’s currency in accordance with the relief provided by IFRS 1.
The sensitivity analysis for the CGU Sto AG has revealed that even a sustained planning error of 30% in terms of EBIT would not require a goodwill impairment.
In the cashgenerating unit STOMIX spol s.r.o., Skorosice/Czech Republic, the calculated recoverable amount is equal to the carrying amount. A negative change in a material assumption would consequently lead to a further impairment.
Research and development costs were taken to the income statement since capitalisation of the development costs in the form of internally generated intangible assets is not possible under IAS 38 where the requirements have not been met.
Property, plant and equipmentProperty, plant and equipment are recognised at historical cost less cumulative systematic depreciation and cumulative impairment losses.The cost of acquiring property, plant and equipment comprises the purchase price including import duties and nonrefundable purchase taxes as well as any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.The cost of selfconstructed items of property, plant and equipment comprises the expenditure incurred in utilising goods and services for such construction. In addition to the directly attributable costs, this also includes a reasonable share of the necessary overheads.
Depreciations are calculated on a straightline basis using the following estimated useful lives:
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The useful life and residual carrying amounts are audited regularly.
Maintenance and small repairs are recognised immediately through profit and loss.Building systems are assigned to property, plant and equipment and are recognised at their procurement and production costs. Assets under construction are recognised at historical cost under property, plant and equip ment. They are not depreciated until such time as they become available for operation.
Borrowing costsBorrowing costs capable of being directly assigned to the acquisition, construction or manufacture of asset for which a substantial period of time is required in order to render the asset ready for its intended use or sale are capitalised as part of the cost of acquisition or production of the relevant asset. All other borrowing costs are recognised as an expense in the period in which they were incurred. Debt capital costs are interest and other costs incurred by an entity in connection with taking on debt capital.
Borrowing costs for all qualified assets for which construction began on or after 1 January 2009 are required to be capitalised. In the Sto Group there were no qualified assets for which borrowing costs would have had to be capitalised.
LeasesThe assessment as to whether a contract includes a lease is made at the time of contract
ing on the basis of the economic content of the contract and calls for an evaluation as to whether settlement of the contractual agreement is dependent on the use of a certain asset or certain assets and whether the contact grants a right to use the asset, even if this is not explicitly stipulated in a contract.Leased property, plant and equipment satisfy the conditions for classification as finance leases in accordance with IAS 17 provided that all the risks and rewards incidental to ownership of these assets are transferred to the Group company in question.In these cases, the assets in question are recognised at the lower of the present value of the minimum lease payments or the fair value of the assets in question and are depreciated on a straightline basis over their useful lives.The obligations arising from future lease payments are discounted and recognised as liabilities.In the case of operating leases, the lease payments are recognised directly in the income statement on a straightline basis for the duration of the lease.
Impairment of assetsProperty, plant and equipment and intangible assets are tested for any impairment whenever any events or changes in circumstances indicate that their carrying amount may no longer be recoverable. If, in the case of property, plant and equipment and intangible assets initially recognised at cost, the carrying amount exceeds its recoverable amount, the difference is recognised as an impairment loss in the income statement. The recoverable amount is the higher of the fair value less cost of sale and the value in use.
The fair value less cost of sale is the amount which can be recovered from the sale of the asset under normal market conditions, whereas the value in use is the present value of the
Useful lives
Buildings 20 to 30 years
Fixtures to land 8 to 12 years
Technical equipment and machinery 8 to 10 years
Other equipment operating and business equipment 3 to 10 years
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estimated future cash flows expected from the continued use of an asset and its disposal at the end of its useful life. The recoverable amount is estimated for an individual asset or, if it does not generate any cash flows independently from other assets, for the cashgenerating unit.If the indication that an asset is impaired no longer exists or the impairment has decreased, the impairment loss is reversed and the proceeds taken to the income statement. No reversal is made to an impairment of goodwill.
Investments in associatesIn the previous year, investments is associates related to one associated company. An associate is an entity over which the Group has decisive control. Using the equity method, the shares are accounted for at their cost of acquisition the first time. The carrying amount is adjusted annually to allow for the share in such associates’ profit/loss, dividends received, any impairments and other changes to their equity.
Using the equity method, the Sto Group determines whether it is necessary to recognise an additional impairment for the shares of the Sto Group in associates measured according to the equity method. At each balance sheet date, the Sto Group determines whether there are objective indications as to whether the share of an associated valued according to the equity method might have been impaired. If this is the case, then the difference between the recoverable amount and the carrying amount of the share is recognised as an impairment in profit and loss.
Financial instrumentsFinancial instruments are defined in accordance with IAS 39 as contracts that give rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
IAS 39 defines the following different categories for financial assets:• Financialinstrumentsmeasuredatfairvalue
through profit or loss (Fair Value through Profit or Loss = FVtPoL)
• Held-to-maturityfinancialassets(Held-to-maturity investments = HtM)
• Loansandreceivables(Loansandreceivables= LaR)
• Availableforsalefinancialassets(Availablefor Sale = AfS)
Financial assets measured at fair value through profit or loss:Financial assets measured at fair value through profit or loss comprise assets classified as held for sale as well as financial assets which are initially recognised at their fair value.
Financial assets are classified as held for trading if they are acquired for the purpose of being resold in the near future. Derivatives are also classified as being held for trading except for those which are designated as hedges and are effective as such. Gains or losses from financial assets which are classified as held for trading are recognised through profit or loss.Financial assets to be measured at fair value through profit or loss are analysed to establish whether the intention to sell them in the near future still is appropriate.
For financial assets that cannot be traded on account of inactive markets and the intention to sell them in the foreseeable future is abandoned, management may decide to reclassify such financial assets in exceptional circumstances. The reclassification to loans and receivables, to available for sale or to held to maturity depends on the nature of the asset. This measurement has no impact on financial assets that were valued and classified at fair value through profit or loss by exercising the fair value option.
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Held-to-maturity financial assets:Heldtomaturity instruments are nonderivative financial assets with fixed or determinable payments and a fixed maturity that the Sto Group has the intention and ability to hold to maturity and there is an active market for such assets. After initial recognition, heldtomaturity financial assets are measured at amortised costs of acquisition using the effective interest method. Gains and losses are reported in the income statement for the period in which the assets are derecognised or impaired, and through the amortisation process.
Loans and receivables:Loans and receivables are nonderivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial recognition, loans and receivables are measured at amortised costs of acquisition using the effective interest method net of any impairment losses. Gains and losses are reported in the income statement for the period in which the loans and receivables are derecognised or impaired.
Available-for-sale financial assets:Availableforsale financial assets are those nonderivative financial assets that are designated as available for sale or are not allocated to any of the other three categories. After initial recognition, they are measured at their fair value. Unrealised gains and losses are recognised directly within equity. If such a financial asset is derecognised or impaired, the cumulative gains and losses hitherto recognised within equity are taken to the income statement.
The Sto Group accounts for financial instruments at amortised costs of acquisition or at fair value.
Financial assets or parts thereof are derecognised when the Sto Group loses control over
the contractual rights arising from the assets. Exceptions from this are bills or trade notes receivable passed on by us; these are cancelled only once they are settled by the drawee.
Financial assets are assigned to one of the above categories upon initial recognition. Where permissible and necessary, they are reclassified at the end of the accounting period.All purchases and sales of financial assets in accordance with normal market conditions are recorded on the day on which the Sto Group assumes the obligation to buy or sell the asset. These transactions are in accordance with normal market conditions if delivery of the assets is prescribed within a period defined by market regulations or conventions.
Financial liabilities are categorised as follows:• Financialliabilitiesatfairvaluethroughprofit
or loss (Financial Liabilities Held for Trading = FLHfT)
• Financialliabilitiesmeasuredatamortisedcost (Financial Liabilities measured at Amortised Cost = FLAC)
Financial liabilities at fair value through profit or loss:Financial liabilities at fair value through profit or loss comprise financial liabilities held for trading as well as other financial liabilities which are initially recognised as financial liabilities at fair value through profit or loss.
The Sto Group has so far not made use of the option to initially recognise financial liabilities at fair value through profit or loss.
Fair value: The fair value of financial instruments traded in organised markets is determined by the market price listed on the balance sheet date. The fair value of financial instruments for which there is
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no active market is measured by using valuation methods. These valuation techniques include recent armslength transactions between knowledgeable, willing parties, reference to the current fair value of another instrument that is substantially the same, discounted cash flow analysis and other valuation models.
Amortised costs of acquisition:Financial assets or liabilities held to maturity and loans and receivables are valued at amortised costs of acquisition. These are calculated using the effective interest method less adjustments, repayments and discounts or premiums on acquisition, including transaction costs and fees forming an integral part of the effective interest rate. In the case of current receivables and liabilities, amortised costs of acquisition fundamentally equals the nominal or settlement amount.
A financial liability is derecognised if the obligation underlying the liability is fulfilled, terminated or extinguished.If an existing financial liability is exchanged by some other financial liability of the same lender subject to substantially different contractual terms and conditions, or if the terms and conditions of an existing liability are materially changed, then such an exchange or modification will be treated as derecognition of the original liability and recognition of a new liability. The difference between the respective carrying amounts is recognised through profit or loss.
InventoriesInventories are recorded at the lower of cost and the net realisable amount. The net realisable amount is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.
Costs incurred in bringing the inventories to their present location and condition are recognised as follows:
• Rawmaterialsandsuppliesaswellasassetsheld for sale in the ordinary course of business
–Weightedaverageprice• Finishedassetsandassetsunderconstruction –Directlabourandmaterialcostsaswell
as a reasonable share of the production overheads based on the normal capacity of the production equipment net of borrowing costs.
Trade receivables and other originated financial assetsTrade receivables and other current assets are recognised at amortised costs of acquisition net of any individual adjustments. Impairment losses, which take the form of individual or general adjustments, are recognised to reasonably allow for the risk of default, with the criterion regarding the extent of the adjustment essentially being the overdue period. In the presence of objective indications of impairment, the latter is recorded via an adjustment account through profit or loss. In the Sto Group, the adjustment account is essentially used for recognition of impairments of trade receivables. In the event of specific defaults, the receivable in question is derecognised. All receivables and financial assets are tested for impairment.
Derivative financial instrumentsThe Sto Group uses derivative financial instruments such as currency forwards and interest rate swaps to hedge interest and currency risks. These derivative financial instruments are recognised at their fair value as of the date on which the contract is entered, and measured in subsequent periods at their fair value. Derivative financial instruments are recognised as assets if
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they have a positive fair value and as liabilities if they have a negative fair value.Gains and losses from changes in the fair value of derivative financial instruments which do not satisfy the conditions for recognition as hedges are immediately taken to the income statement.The fair value of currency forwards is calculated on the basis of the current forward exchange rate for contracts with a similar maturity structure. The fair value of interest swap contracts is calculated by reference to the market values of similar instruments.For hedge accounting purposes, hedging instruments are recognised as follows:
• Asfairvaluehedgesiftheinstrumenthedgesthe risk of a change in the fair value of a recognised asset or liability or an unrecognised firm commitment (excluding currency risk)
• Ascash-flowhedgesiftheinstrumenthedges the risk of fluctuation in cash flows which can be allocated to a recognised asset or liability, the risk arising from a highly probable forecast transaction or the currency risk arising from an unrecognised firm commitment
• Ashedgesofanetinvestmentinaforeignoperation
At the beginning of hedging, both the hedging relationship and the Group’s risk management goals and strategies regarding hedging are formally established and documented. The documentation contains the identification of the hedging instrument, the hedged item or transaction, the nature of the risk being hedged and how the Group will assess the hedging instrument’s effectiveness in offsetting the exposure to changes in the hedged item’s fair value or cash flows attributable to the hedged risk. Such hedges are considered to be highly effective at successfully offsetting the risks arising from changes in the fair value or cash flow. They are assessed on an ongoing basis to
determine whether they have been highly effective throughout the financial reporting periods for which the hedge was designate.
Hedges satisfying the strict hedge accounting criteria are accounted for as follows:
• Cashflowhedges: The effective portion of the gain or loss from
a hedging instrument is recognised through other earnings in equity, whereas the ineffective portion is immediately recognised in profit or loss.
The amounts recognised in equity are reclassified in the income statement in the period in which the hedged transaction affects the income statement for the period, e. g. when the hedged income or expenditures are recorded or an expected sale is executed. If a hedge results in the recognition of a nonfinancial asset or a nonfinancial liability, the amounts recognised in equity become part of the acquisition costs as of the date on which the nonfinancial asset or nonfinancial liability is first recognised.
If the forecast transaction or firm commitment are no longer expected to occur, the amounts previously recognised under equity are reclassified into profit and loss. If the hedging instrument expires or is sold, terminated or exercised (not including the replacement or rollover of a hedging instrument into another hedging instrument), the cumulative gain or loss on the hedging instrument that is recognised directly in equity from the period when the hedge was effective remains separately recognised in equity until the forecast transaction or firm commitment occurs.
In the Sto Group, derivative financial instruments are essentially currency forwards and options and interest rate swaps. These are used solely to hedge interest rate and currency risks.
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Cash and cash equivalentsCash and cash equivalents comprise cash in hand and cash at banks including highly liquid deposits available at short notice, which can be converted quickly into certain cash amounts, with original settlement periods of three or fewer months and which are not subject to any material fluctuation in value.
Treasury stockSto AG’s treasury stock is deducted from equity. The purchase, sale, issue and redemption of treasury stock is not recognised in profit and loss.
Post-employment benefit provisionsActuarial measurement of the postemployment benefit provisions is based on the projectedunitcredit method for postretirement benefit commitments as defined in IAS 19. This method takes account of the benefit obligations and entitlement accruing on the balance sheet date as well as expected life expectancy, future salary and pension trends and expected fluctuation.Average life expectancy is estimated on the basis of acknowledged biometric models. Actuarial gains and losses are recognised in other income in equity with no impact on profit or loss after deferred taxes.
Other provisionsIn accordance with IAS 37, provisions are recognised for present liabilities towards third parties from a past event which is likely to result in a future outflow of economic resources, the amount of which can be reliably estimated.Provisions are reviewed at each balance sheet date and adjusted in the light of the best current estimate.Provisions in which the interest effect exercises a material effect in connection with the settlement of the obligation are recognised at the present value of the expected expenses. The discount is based on riskfree interest rates. The
settlement amount also includes any expected increase in costs.If the conditions for recognising provisions are not met, the obligation in question is reported as a contingent liability provided that there is a reasonable likelihood of an outflow of resources embodying economic benefits.
Trade payables and other originated financial liabilitiesTrade payables and other originated financial liabilities are measured at amortised costs of acquisition. Any differences between historical cost and the settlement amount are reported in accordance with the effective interest method.
Deferred taxesAs a matter of principle, deferred taxes are recognised for all temporary differences between the taxable amounts and the consolidated balance sheet.Deferred taxes are recognised on tax losses provided that it is likely that they will be able to be used. They are not recognised if the temporary difference arises from goodwill or the initial recognition of other assets and liabilities in a transaction (other than a business combination) which affects neither accounting profit nor taxable profit (tax loss). Deferred tax liabilities are the amounts of income taxes payable in future periods in respect of taxable temporary differences arising from shares in subsidiaries, associates and joint ventures unless the parent company is able to control the reversal of the temporary difference and the temporary difference is unlikely to reverse in the foreseeable future.Deferred taxes are measured in accordance with the applicable national income tax rates expected as of the date of realisation, on the basis of applicable or enacted tax law.
Deferred tax assets which are not expected to be recognised in a reasonable period of time
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are adjusted. Deferred tax assets are reassessed at each balance sheet date. Deferred tax assets and liabilities are netted if the Group has a legally enforceable right to set off the recognised amounts and they relate to income taxes levied by one and the same taxation authority for one and the same tax payer. Deferred taxes are recorded as tax income or expense in the income statement unless they relate to other income items recognised directly in equity that have no impact on profit or loss, in which case they are also recognised in equity with no impact on profit or loss.
Recognition of income and expensesAs a matter of principle, revenues are not recognised until the goods or services in question have been supplied, i.e. the risks and rewards of ownership have been transferred to the customer. Operating expenses are reported as expense upon utilisation of the service or on the date on which they are caused. Interest income and expenses are recorded in the appropriate period. Dividends are recognised at the time when legal entitlement arises.
Government fundingGovernment funding is recognised in accordance with IAS 20 if it is certain that the conditions involved will be fulfilled and the government funding will subsequently be granted.Earningsrelated government funding is collected through profit or loss in the period in which the expenses to be defrayed are incurred. Government funding is generally tied to a number of conditions imposed. Fulfillment of these conditions is also verified when disbursing such government funding because expenses are generally refunded only once the expenses to be subsidised have actually been incurred. As a result, no repayments are anticipated.
Financial guaranteesFinancial guarantees extended by the Group are contracts which obligate the making of payments that indemnify the guarantee holder for a loss arising from a specific debtor who does not meet his payment obligations on time according to the conditions of a debt instrument. These financial guarantees are treated as insurancecontractspursuanttoIFRS4,inotherwords they are accounted for as contingent obligations until it becomes probable that a claim will be filed. If such is the case, the corresponding obligation is included in the balance sheet.
Events after the balance sheet dateEvents occurring after the balance sheet date which provide additional material information on the Group’s condition at the balance sheet date are included in the financial statements. Events occurring after the balance sheet date impacting value are disclosed in the notes.
Discretionary decisions, estimates and assumptions by ManagementThe preparation of the consolidated financial statements requires the use of discretionary decisions, estimates and assumptions which affect the extent and disclosure of assets and liabilities reported, income and expenses recognised and contingent liabilities in the period under review. Uncertainties associated with these assumptions and estimates, however, may give rise to results leading to substantial adjustments to the carrying amounts of the assets or liabilities affected in future periods.
The assumptions and assessments are based on premises which in turn reflect the knowledge available at that point in time. In particular, estimates concerning the Group’s expected future economic performance are based on the circumstances known as of the date on which the consolidated financial statements are prepared as well as probable expectations as to
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future trends in business conditions both globally and in the Group’s sector. Changes in these underlying conditions which deviate from these assumptions and are beyond management’s control may cause actual amounts to vary from the original estimates. If actual trends deviate from those expected, the premises and if necessary carrying amounts of the assets and liabilities concerned are adjusted accordingly. The essential assumptions and estimates relate to:
• Impairmentofnon-financialassets An impairment occurs if the carrying
amount of the asset or of a cashgenerating unit exceeds its recoverable amount. The recoverable amount of an asset or of a cashgenerating unit is the higher of the two amounts of fair value less cost of sale and the value in use. The calculation of fair value less cost of sale is based on available data from binding sales transactions between independent business partners concerning similar assets or observable market prices less directly attributable costs of selling the asset in question. A discounted cash flow method is used in order to calculate the value in use. Cash flows are derived from the finance plan of the following five years, however material future investments that will increase the profitability of the cashgenerating unit tested are not included. The recoverable amount is heavily dependent on the discount rate used within the scope of the discounted cash flow method as well as on the expected future cash inflows and the growth rate used for extrapolation purposes.
• Taxes Uncertainties exist concerning the interpre
tation of complex taxrelated regulations, amendments to taxation law as well as the extent and time of origin of earnings taxable at a future date. Owing to the immense bandwidth of international business relations
and the complexity of existing contractual arrangements, departures from the actual results and the assumptions made as well as future changes may call for adjustments to tax assets and tax liabilities already recognised. On 31 December 2011, the deferred tax liabilities stood at EUR 3,992 K and the deferred tax assets at EUR 7,170 K. The income tax liabilities on 31 December 2011 totalled EUR 8,877 K, and the income tax receivables EUR 5,131 K.
• Pensionbenefits The expense of defined benefit plans on
termination of employment and the present value of pension obligations are determined by actuarial calculations. An actuarial evaluation is made on the basis of various assumptions that may deviate from actual developments in the future. This includes determining the discount rates, future increases in wages and salaries, the mortality rate and future pension increases. Owing to the complexity of the evaluation, of the underlying assumptions and their longterm nature, a defined benefitoriented commitment reacts extremely sensitively to any changes to such assumptions. All assumptions are reviewed at each contracting cutoff date.
In determining the appropriate discount rate, Management relies for guidance on the interest rates of corporate bonds in the respective currency with at least an AA rating; these interest rates are adjusted by extrapolation to the expected lifetime of the defined benefit obligation.
The mortality rate is based on publicly accessible mortality tables for the country in question. Future increases in wages and salaries as well as pensions are based on expected future inflation rates for each country. Provisions for pensions and similar liabilities totalledEUR40,877Kon31December2011.
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• Fairvalueoffinancialinstruments To the extent that the fair value of financial
assets and financial liabilities recognised in the balance sheet cannot be measured by means of data sourced on an active market, it will be determined using measurement methods, including the discounted cash flow method. The input parameters included in the model are based as far as possible on observable market data. A net liability of EUR 1,988 K resulted on 31 December 2011 from the financial instruments valued at fair value.
• Receivables Allowances for bad debt are made in the
Sto Group in order to take account of anticipated losses resulting from customers’ insolvency. The basis for assessing the appropriateness of allowances for bad debt are the due dates of receivables and experience made in derecognising receivables in the past, as well as changes in payment behaviour. In the event of a deterioration of customer’s financial condition, the extent of derecognitions actually made may exceed the extent of the anticipated derecognitions. The carrying amount of the trade receivables was a total ofEUR111,419Kon31December2011.
• Provisions Management is required to make assess
ments, especially as regards recognition and valuation of guarantee provisions. Provisions for guarantee commitments are set up if the occurrence of a guarantee commitment is considered to be probable. For instance, the assessment of the degree of probability and the possible extent is based on past experience, external experts, volumes sold as well as on current information available. Owing to the associated uncertainties, the actual costs may differ from the original estimates and, therefore, from the amount provisioned.
On the date of preparation of the consolidated financial statements there were no additional material risks to the underlying assumptions and estimates which, from a current perspective, would have required material adjustments of the carrying amounts of the assets and liabilities recognised in the consolidated balance sheet in the following accounting period. The carrying amount of the guarantee provisions wasEUR34,558Kon31December2011.
7. Adaptation according to IAS 8According to IAS 8, a reclassification of the current and noncurrent borrowings to capital reserves is to be done retroactively on 1 Janu ary 2010 and 31 December 2010 and on 31 December 2011 in the amount of EUR 330 K andEUR4,090K,respectively,fortheannualminimum dividend payment on preference shares. The reclassification was done at the present value of the liability.
The interest expense in the net financial income/expense was reduced in the fiscal years of 2010 and 2011 by the current interest portion in the amount of EUR 330 K.
Earnings per share improved in the fiscal years of 2010 and 2011 for the preference shares and for ordinary shares by EUR 0.05 each.
With this the Sto Group adjusted to the now prevailing opinion in accounting practices.
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Group segment reporting as at 31 December 2011
Information on geographic
segments by sales markets
in EUR K
Notes on product groups
in EUR K
External revenues 899,980 812,023 111,300 90,038 95,601 83,959 –99 25 1,106,782 986,045
Inter-segment revenues 28,412 25,357 90 37 84 346 –28,586 –25,740 0 0
Segment revenues 928,392 837,380 111,390 90,075 95,685 84,305 –28,685 –25,715 1,106,782 986,045
EBITDA 121,065 99,623 6,109 4,068 6,861 7,000 149 73 134,184 110,764
Depreciation/amortisation 20,483 20,691 7,149 2,285 1,878 1,935 160 240 29,670 25,151
EBIT (earnings before interest and taxes) 100,582 78,932 –1,040 1,783 4,983 5,065 –11 –167 104,514 85,613
EBT (earnings before taxes)* 99,359 77,025 –985 2,030 5,166 5,360 –32 –171 103,508 84,244
Segment assets 525,132 492,897 66,653 50,932 65,596 61,051 12,300 15,260 669,681 620,140
Investments 23,347 14,908 1,866 1,060 2,387 2,200 0 0 27,600 18,168
Staff on balance sheet date 3,539 3,367 698 451 458 431 0 0 4,695 4,249
Western Europe Other Reconciliation/ Group consolidation Northern/Eastern Europe America/Asia booking entries 2011 2010 2011 2010 2011 2010 2011 2010* 2011 2010*
Other Facade coatings Facade systems Interiors product groups Group 2011 2010 2011 2010 2011 2010 2011 2010 2011 2010
External revenues 255,196 215,273 557,208 513,736 144,964 133,735 149,414 123,301 1,106,782 986,045
* Some details differ from the details in the consolidated annual statement for the fiscal year 2010 as certain adjustments were implemented.
For more details see the Notes – General part 7.
Segment reporting is explained in Note (30).
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External revenues 899,980 812,023 111,300 90,038 95,601 83,959 –99 25 1,106,782 986,045
Inter-segment revenues 28,412 25,357 90 37 84 346 –28,586 –25,740 0 0
Segment revenues 928,392 837,380 111,390 90,075 95,685 84,305 –28,685 –25,715 1,106,782 986,045
EBITDA 121,065 99,623 6,109 4,068 6,861 7,000 149 73 134,184 110,764
Depreciation/amortisation 20,483 20,691 7,149 2,285 1,878 1,935 160 240 29,670 25,151
EBIT (earnings before interest and taxes) 100,582 78,932 –1,040 1,783 4,983 5,065 –11 –167 104,514 85,613
EBT (earnings before taxes)* 99,359 77,025 –985 2,030 5,166 5,360 –32 –171 103,508 84,244
Segment assets 525,132 492,897 66,653 50,932 65,596 61,051 12,300 15,260 669,681 620,140
Investments 23,347 14,908 1,866 1,060 2,387 2,200 0 0 27,600 18,168
Staff on balance sheet date 3,539 3,367 698 451 458 431 0 0 4,695 4,249
Western Europe Other Reconciliation/ Group consolidation Northern/Eastern Europe America/Asia booking entries 2011 2010 2011 2010 2011 2010 2011 2010* 2011 2010*
Other Facade coatings Facade systems Interiors product groups Group 2011 2010 2011 2010 2011 2010 2011 2010 2011 2010
External revenues 255,196 215,273 557,208 513,736 144,964 133,735 149,414 123,301 1,106,782 986,045
* Some details differ from the details in the consolidated annual statement for the fiscal year 2010 as certain adjustments were implemented.
For more details see the Notes – General part 7.
Segment reporting is explained in Note (30).
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(1) RevenuesFor the purposes of segment reporting, revenues are broken down by geographic market and business segment.
(2) Other internally generated assetsOther internally generated assets in the year under review comprise the required capitalisation of planning costs and internally generated assets for the manufacture of transport silos. In the previous year, other internally generated assets comprised the required capitalisation of the Group’s use of its own products as well as the expenses for customising SAP software.
(3) Other operating income
Notes on the consolidated income statement
in EUR K 2011 2010
Income from the reversal of value adjustments for receivables and other financial assets 3,690 2,211
Income from the reversal of provisions and accured liabilities 9,796 5,151
Currency translation gains 2,116 3,292
Income from recharged expenses to third parties 30 148
Reimbursement of pre-retirement reduced working hours 23 97
Proceeds received towards derecognised receivables 628 579
Government funding 177 258
Income from the disposal of assets 413 566
Other operating income 4,833 3,343
21,706 15,645
The income from the reversal of provisions includesEUR1,394K(previousyear:0EURK)from the reversal of no longer needed provisions for guarantee payments in connection with legal disputes.Public funding consists essentially of research grants.
To some extent, this funding is subject to certain conditions; we safely assume that we can meet the conditions imposed. If this should not be the case, we would expect to incur repayment obligations of about EUR 32 K. We did not include this risk under liabilities in our balance sheet.
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(4) Cost of material
in EUR K 2011 2010
Raw materials and manufacturing supplies 235,733 204,102
Goods purchased 269,632 226,781
Total materials and supplies to be consumed in the production process and goods purchased 505,365 430,883
Temporary staff 5,672 4,701
Commission production 1,595 1,394
Total services purchased 7,267 6,095
Total cost of material 512,632 436,978
in EUR K 2011 2010
Wages and salaries 225,336 209,151
Social security contributions and expenditure on old-age pensions and support 46,504 43,681
Total personnel expenditure 271,840 252,832
(5) Personnel expenditure
Expenditure on postemployment benefits primarily comprises additions to the postemployment benefit provisions as stated in Note (23).
Annual average headcount
In the year under review, research and development costs accounted for approx. EUR 13.5 million with an impact on profit and loss (previous year: approx. EUR 12.0 million).
Number 2011 2010
Employees 4,401 4,092
Trainees/apprentices 180 160
4,581 4,252
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(6) Other operating expensesCurrency translation losses primarily comprise exchange rate losses arising between the date of the transaction and date of payment as well as currency translation using closing rates.
Adjustments of receivables and other assets include allowance for irretrievable accounts which have not been adjusted as well as additions to adjustments.
(7) Depreciation/amortisationThe amortisation of intangible assets and the depreciation of property, plant and equipment are analysed in the appropriate parts of these Notes.
In the year under review, the impairment test on goodwill of STOMIX spol s.r.o., Skorosice/Czech Republic, resulted in a depreciation in the amountofEUR4,188K.
Depreciation/amortisation in the year under review includes nonscheduled amortisation for a machine that is not needed for operations, in
the amount of EUR 219 K. Depreciation/amortisation in the previous year includes nonscheduled amortisation of a patent in the amount of EUR194K.
(8) Share in profits of associatesAs last year, earnings from financial investments valued at equity were accounted for by Inotec GmbH.
(9) Net interest income
* Some details differ from the details in the consolidated annual statement for the fiscal year of 2010 as certain adjustments were implemented. For more details see the Notes – General part 7.
in EUR K 2011 2010 Operating costs 22,126 22,533
Administration costs 37,107 34,540
Selling and marketing costs 89,442 80,326
Other staff costs 6,346 5,285
Rental and lease payments 28,731 26,848
Value adjustments for receivables and other financial assets 10,059 6,856
Currency translation expense 4,762 6,603
Losses from the disposal of non-current assets 373 87
Other expenses 10,842 16,653
209,788 199,731
in EUR K 2011 2010*
Income from securities 1 1
Other interest and similar income 3,302 2,798
Interest and similar expenditure –1,815 –1,831
Interest expense for post-employment benefit obligations –2,037 –1,984
Compounding interest of other non-current provisions and liabilities –169 –161
Interest expense for finance leasing –204 –234
–922 –1,411
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(10) Other net financial income/ expense
in EUR K 2011 2010
Expense arising from value measurement of derivatives –103 –2
Income arising from value measurement of derivatives 19 36
Income arising from value measurement of securities 0 7
–84 41
in EUR K 2011 2010
Actual domestic tax expense 19,254 15,350
Actual non-domestic tax expense 14,194 10,744
Actual tax expense 33,448 26,094
of which off-period tax expense (726) (–191)
Income from reversal of tax provisions (off-period) –63 –19
Actual taxes on income and earnings 33,385 26,075
Deferred tax income/liabilities, domestic –1,310 –621
Deferred tax income/liabilities, non-domestic 1,131 280
Deferred tax income/liabilities –179 –341
Income tax expense reported 33,206 25,734
(11) Taxes on income and earnings
Breakdown of income tax expense
Corporate tax in Germany was levied at a rate of 15.0% in the 2011 assessment period. Including trade tax and the solidarity surcharge, this results in an aggregate tax rate of 28.6%.
Contained in the offperiod income taxes are tax expenditures and tax assets based on tax audits of operations for prior years in the amount of EUR 796 K (previous year: EUR 0 K).
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The local income tax rates for foreign companies range between 10.0% and 37.6%. Deferred taxes are measured using the tax rates valid or enacted as of the balance sheet date.
In 2011, the realisation of unused tax losses from previous years led to a reduction in current taxes on income and earnings of EUR 28 K (previousyear:EUR154K).UnusedtaxlosseswerevaluedatEUR5,644K(previousyear:EUR4,458K).Unusedtax lossesofEUR631K(previousyear:EUR400K)are available for an indefinite period, while EUR 1,232 K (previous year: EUR 1,750 K) may only be utilised within 5 years and EUR 3,781 K (previous year: EUR 2,308 K) only within 10 years.Oftheunusedtaxlosses,asumofEUR5,477K(previousyear:EUR3,461K)isassumedtobenot available for the time being. Unused tax lossesofEUR464K(previousyear:EUR128K)are available for an indefinite period, while EUR 1,232 K (previous year: EUR 1,025 K) may only be utilised within 5 years and EUR 3,781 K (previous year: EUR 2,308 K) only within 10 years.
Ofdeterredtaxincome,EUR412K(previousyear: EUR 673 K) were from temporary differences.
The depreciation of a deferred tax asset from unused tax losses led to a deferred tax expense intheamountofEUR204K(previousyear: EUR 206 K).
Changes in tax rates resulted in deferred tax income of EUR 6 K (previous year: EUR 37 K).
Deferred tax liabilities set up in equity with no impact on profit or loss amounted to EUR 12 K on the balance sheet date (previous year: EUR 270 K).Utilisation of the option in accordance with IAS
19 to record actuarial profits and losses with no impact on profit or loss resulted in a reduction in equity of EUR 161 K in the current fiscal year (previous year: EUR 378 K) due to a reversal of deferred tax assets and the addition of deferred tax liabilities.Deferred taxes for cash flow hedge reserves reduced equity capital by EUR 121 K (previous year:EUR145K).
No deferred taxes were recognised on the profits retained by subsidiaries of EUR 3,208 K (previous year: EUR 2,600 K) as historically these profits have always been used to extend business activities at the individual locations and will continue to be used for this purpose in the future.
In 2006, as a result of statutory amendments in Germany, a corporate tax reimbursement claim was recognised for the first time in the income statement and reported in the balance sheet at present value. The reimbursement claim had apresentvalueofEUR4,272Katthebalancesheetdate(previousyear:EUR4,734K).
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The following deferred tax assets and liabilities are recognised to allow for recognition and measurement differences in the individual items of the balance sheet and the unused tax losses:
Balance sheet item
in EUR K Deferred tax assets Deferred tax liabilities
31 Dec 2011 31 Dec 2010 31 Dec 2011 31 Dec 2010
Intangible assets 15 121 742 691
Property, plant and equipment 174 118 8,592 8,926
Inventories 1,425 1,573 141 119
Current trade receivables 1,103 855 293 215
Current financial assets 0 0 1 47
Other current assets 9 0 553 533
Cash and cash equivalents 27 0 0 0
Special tax items 0 0 43 114
Post-employment benefit provisions 2,814 2,495 215 3
Other non-current provisions 243 366 59 58
Non-current borrowings 438 782 0 0
Non-current liabilities 3 0 0 0
Current provisions 5,914 6,992 438 837
Current borrowings 349 255 0 0
Trade payables 7 10 0 0
Other current liabilities 1,707 1,224 1 0
Unused tax losses 28 270 0 0
Gross amount 14,256 15,061 11,078 11,543
Offset 7,086 6,616 7,086 6,616
Amount recognised in the balance sheet 7,170 8,445 3,992 4,927
Deferred tax assets and deferred tax liabilities are netted if the Group has a legally enforceable right to set off the actual tax reimbursement claims against the actual tax liabilities and
the deferred tax assets and the deferred tax liabilities relate to income taxes levied by one and the same taxation authority for the same tax payer.
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Reconciliation of expected and reported income tax expense
In addition to shares outstanding, diluted earnings per share also include potential shares (e. g. from options). Both at 31 December 2011 and 31 December 2010 there were no potential shares. Accordingly, basic and diluted earnings per share are identical in both years.
in EUR K 2011 2010* Accounting profit 103,508 84,245
Expected income tax expense (tax rate: 28.6%; previous year: 28.6%) 29,603 24,095
Reconcillation: Tax-free income, other deductions and permanent differences 2,611 1,311
Change in tax rate –6 37
Deviations in local lax rates from deferred Group tax rate –402 97
Deferred tax income on unused tax losses recognised for the first time 0 0
Tax reduction for unused tax losses not yet recognised –70 –25
Effects of non-recognition of unused tax losses 642 308
Off-period taxes 663 –210
Other effects 165 121
Income tax expense reported 33,206 25,734
Effective tax rate (%) 32,1 30,5
* Some details differ from the details in the consolidated annual statement for the fiscal year of 2010 as certain adjust-ments were implemented. For more details see the Notes – General part 7.
The increase in the effective tax rate is essentially based on the valuation of unused tax losses, an increase in the nontaxdeductible expenses and effects due to tax audits for earlier fiscal years.
(12) Earnings per shareEarnings per share are calculated by dividing the proportion of earnings attributable to Sto AG’s shareholders by the weighted average number of ordinary and preference shares outstanding in the year under review.
Basic earnings in accordance with IAS 33 amounted to EUR 27,800 K for preference shares (previous year: EUR 23,076 K) and for ordinarysharesEUR42,354K(previousyear:EUR 35,118 K).
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In fiscal 2011, a dividend of EUR 0.25 per ordinary share plus a bonus of EUR 3.06 making a total of EUR 3.31 per ordinary share (total EUR 12,869 K) and EUR 0.31 per preference share plus a bonus of EUR 3.06 making a total of EUR 3.37 per preference share (total: EUR 8,553 K) was distributed from the earnings for2010,makingatotalofEUR21,422K.
In fiscal 2010, a dividend of EUR 0.25 per ordinary share plus a bonus of EUR 2.06 making a total of EUR 2.31 per ordinary share (total EUR 8,981 K) and EUR 0.31 per preference share plus a bonus of EUR 2.06 making a total of EUR 2.37 per preference share (total: EUR 6,015 K) was distributed from the earnings for2009,makingatotalofEUR14,996K.
Number Ordinary shares Preference shares
2011 2010 2011 2010Weighted average number of shares outstanding – basic/diluted 3,888,000 3,888,000 2,538,000 2,538,000
in EUR K 2011 2010*
Share attributable to the shareholders of Sto AG 70,154 58,194
Earnings per share – basic/diluted of which:
ordinary share 42,354 35,118
preference share 27,800 23,076
in EUR 2011 2010*
Earnings per share – basic/diluted
Ordinary share 10.89 9.03
Preference share 10.95 9.09
* Details differ from the details in the consolidated annual statement for the fiscal year of 2010 as certain adjustments were implemented. For more details see the Notes – General part 7.
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Further notes on the income statement in accordance with IFRS 7 (Financial instruments)
The Sto Group categorises financial instruments as follows:
• Financialinstrumentsatfairvalue• Financialassetsmeasuredatamortisedcosts
of acquisition,• Financialinstrumentswithavaluerecognition
in the balance sheet according to IAS 17, • Financialinstrumentsthataresubjectto
Hedge Accounting and• Financialinstrumentsnotcomingwithinthe
scope of IFRS 7.
Net profit/loss from financial assets categorised in accordance with IAS 39
in EUR K 2011 2010 Assets
Designated assets to be measured at fair value through profit or loss (fair value option) 0 6
Assets held for trading 876 –3,955
Sum total of financial assets measured at fair value through profit or loss 876 –3,949
Available-for-sale assets* 0 0
Held-to-maturity assets –199 43
Loans and receivables –6,439 –3,512
Liabilities
Financial liabilities measured at amortised cost –1,607 416
* The amounts were rounded to 0 (zero).
Net gains and losses from financial assets and liabilities at fair value through profit or loss include changes in the fair value as well as exchangerate related expenditure and income in connection with these financial instruments. Interest expenses and income are not part of the net result.
Net gains and losses from availableforsale financial assets include the share in profit of associates.Net gains and losses from loans and receivables are primarily derived from impairments and disposals.
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Total interest income and expense from financial instruments not recognised at fair value through profit or loss
in EUR K 2011 2010*
Interest income 2,971 2,397
Interest expense 1,825 1,807
1,146 590
* Details differ from the details in the consolidated annual statement for the fiscal year of 2010 as certain adjustments were implemented. For more details see the Notes – General part 7.
in EUR K 2011 2010
Measured at amortised cost 10,059 7,966
The measurement of the portfolio of financial instruments at fair value as at 31 December 2011 resulted in an expense, on balance, of EUR458K.
Income and expenses from measurement at fair value are reported under other operating income and other operating expenses, respectively, or in net financial income under interest and similar expenses or in other financing expenses.
Impairment losses on financial assets by class
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Notes on the consolidated balance sheet
(13) Intangible assets
Changes in intangible assets from 1 January until 31 December 2010
in EUR K Industrial property rights and licences Business including or Payments software Goodwill made on account Total
Cost of acquisition/production
01 January 2010 21,123 36,260 368 57,751
Additions 1,732 0 88 1,820
Change to companies consolidated 715 0 0 715
Disposal 392 0 0 392
Transfers 243 0 –262 –19
Exchange rate differences 124 42 0 166
31 December 2010 23,545 36,302 194 60,041
Cumulative depreciation and impairment losses
01 January 2010 15,262 0 0 15,262
Depreciation for the year 2,880 0 0 2,880
Disposal 391 0 0 391
Transfers 0 0 0 0
Exchange rate differences 52 0 0 52
31 December 2010 17,803 0 0 17,803
Net carrying amount as at 31 December 2009 5,861 36,260 368 42,489
Net carrying amount as at 31 December 2010 5,742 36,302 194 42,238
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Changes in intangible assets from 1 January until 31 December 2011
in EUR K Industrial property rights and licences Business including or Payments software Goodwill made on account Total
Cost of acquisition/production
01 January 2011 23,545 36,302 194 60,041
Additions 1,659 0 267 1,926
Change to companies consolidated 2,236 4,251 44 6,531
Disposal 817 0 106 923
Transfers 75 0 –75 0
Exchange rate differences –29 7 –3 –25
31 December 2011 26,669 40,560 321 67,550
Cumulative depreciation and impairment losses
01 January 2011 17,803 0 0 17,803
Depreciation for the year 2,681 4,188 0 6,869
Disposal 739 0 0 739
Transfers 0 0 0 0
Exchange rate differences 11 0 0 11
31 December 2011 19,756 4,188 0 23,944
Net carrying amount as at 31 December 2010 5,742 36,302 194 42,238
Net carrying amount as at 31 December 2011 6,913 36,372 321 43,606
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GoodwillGoodwill reported, amounting to EUR 36,372 K (previous year: EUR 36,302 K) breaks down as follows:
Cash Generating Units in EUR K 31 Dec 2011 31 Dec 2010
Sto AG 15,760 15,760
Südwest Lacke + Farben GmbH & Co. KG, Böhl-Iggelheim 2,780 2,780
Beissier S.A.S., La Chapelle La Reine/France 3,635 3,635
Beissier S.A.U., Errenteria/Spain 2,679 2,679
Sto – ispo Sp. z o.o., Warsaw/Poland 2,402 2,402
Sto Épitöanyag Kft., Budapest/Hungary 1,764 1,764
Sto Italia Srl, Empoli/Italy 1,398 1,398
Sto Isoned B.V., Tiel/Netherlands 1,189 1,189
Sto Norge AS, Oslo/Norway 1,160 1,153
Miscellaneous under EUR 1,000 K 3,605 3,542
36,372 36,302
With the exception of Sto AG, the cashgenerating units (CGUs) identified for purposes of calculating goodwill are identical to the legal entities. The Sto AG CGU comprises Sto AG, Stühlingen, StoVerotec GmbH, Lauingen, and StoCretec GmbH, Kriftel.
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(14) Property, plant and equipment
Changes in property, plant and equipment from 1 January to 31 December 2010
in EUR K Land, land rights Other equipment Rendered rights and buildings Technical operating advance including plant equipment and payments and buildings on land and business equipment under owned by others machinery equipment construction Total
Cost of acquisition/production
01 January 2010 251,038 145,074 154,893 4,500 555,505
Additions 1,401 3,152 8,412 3,384 16,349
Change to companies consolidated 226 30 52 0 308
Disposal 428 688 8,402 101 9,619
Transfers 209 3,918 375 –4,483 19
Exchange rate differences 3,966 2,747 2,793 66 9,572
31 December 2010 256,412 154,233 158,123 3,366 572,134
Cumulative depreciation and impairment losses
01 January 2010 120,609 110,122 131,447 137 362,315
Depreciation for the year 7,561 6,615 8,095 0 22,271
Disposal 276 680 8,147 –3 9,100
Transfers 137 0 0 –137 0
Exchange rate differences 1,829 1,979 2,297 0 6,105
31 December 2010 129,860 118,036 133,692 3 381,591
Net carrying amount as at 31 December 2009 130,429 34,952 23,446 4,363 193,190
Net carrying amount as at 31 December 2010 126,552 36,197 24,431 3,363 190,543
of which, leased assets classified as financial leases, carrying amount as at 31 December 2010 3,401 0 2,825 0 6,226
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Changes in property, plant and equipment from 1 January to 31 December 2011
in EUR K Land, land rights Other equipment Rendered rights and buildings Technical operating advance including plant equipment and payments and buildings on land and business equipment under owned by others machinery equipment construction Total
Cost of acquisition/production
01 January 2011 256,412 154,233 158,123 3,366 572,134
Additions 4,181 3,374 9,511 8,607 25,673
Change to companies consolidated 7,360 1,159 639 1,537 10,695
Disposal 109 1,535 7,350 97 9,091
Transfers 527 1,899 373 –2,799 0
Exchange rate differences 320 819 217 –48 1,308
31 December 2011 268,691 159,949 161,513 10,566 600,719
Cumulative depreciation and impairment losses
01 January 2011 129,860 118,036 133,692 3 381,591
Depreciation for the year 8,107 6,501 8,177 15 22,800
Disposal 117 1,563 6,877 0 8,557
Transfers 0 0 0 0 0
Exchange rate differences 407 723 262 –1 1,391
31 December 2011 138,257 123,697 135,254 17 397,225
Net carrying amount as at 31 December 2010 126,552 36,197 24,431 3,363 190,543
Net carrying amount as at 31 December 2011 130,434 36,252 26,259 10,549 203,494
of which, leased assets classified as financial leases, carrying amount as at 31 December 2011 3,160 0 2,385 0 5,545
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Land charges to property, plant and equipmentwithacarryingamountofEUR45,831K(previousyear:EUR45,019K)servetosecureliabilities to banks. The land charges are valued onthebalancesheetdateatEUR9,404K(previous year: EUR 10,696 K).
Call options have mostly been agreed for the buildings and equipment leased under finance leases and these are expected to be exercised. Leases are based on a weighted interest rate of 4.6%.
Future lease payments are set out in the following tables:
in EUR K up to 1 year 1–5 years 5–10 years 31 Dec 2010
Lease payments 1,529 3,766 0 5,295
Interest portions 136 359 0 495
Carrying amount/present value 1,393 3,407 0 4,800
(15) Investments in associatesInotec GmbH shares valued at equity in the previous year have been fully consolidated since 2011, and therefore no shares valued at equity were registered as of 31 December 2011 (previous year: EUR 0 K).
in EUR K up to 1 year 1–5 years 5–10 years 31 Dec 2011
Lease payments 1,631 2,559 0 4,190
Interest portions 139 185 0 324
Carrying amount/present value 1,492 2,374 0 3,866
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(16) InventoriesInventories are measured at the lower of cost or the net realisable amount. Impairments in relationtothegrossamountcametoEUR5,144K(previousyear:EUR4,704K).Ofthis,anamountofEUR440Kreducedearnings(previous year: EUR 2,183 K).
Net carrying amounts are reported as follows:
in EUR K 31 Dec 2011 31 Dec 2010
Raw materials and manufacturing supplies 19,500 18,071
Work in progress 2,882 3,062
Finished products and goods 45,813 42,019
Payments made on account 1,357 525
69,552 63,677
Inventories in excess of EUR 1,367 K (previous year: EUR 0 K) serves to secure liabilities to banks.
(17) Trade receivables
in EUR K Carrying amount Carrying amount current non-current 31 Dec 2011 current non-current 31 Dec 2010
from Third parties 110,598 821 111,419 99,577 723 100,300
Investments in associates 0 0 0 12 0 12
110,598 821 111,419 99,589 723 100,312
The fair values of trade receivables equal their carrying amounts. Adjustments of EUR 20,696 K (previousyear:EUR13,450K)weretakenintoaccount.
Trade receivables in excess of EUR 1,389 K (previous year: EUR 1,378 K) serve to secure liabilities to banks.
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Other tax reimbursement claims include VAT reimbursement claims of EUR 2,200 K (previous year:EUR2,394K).
in EUR K 31 Dec 2011 31 Dec 2010
Hedges against
currency risks 4 27
interest risks 72 157
76 184
(18) Non-current and current financial assets
(19) Other non-current and current assets
Financial assets due from third parties include cash investments due for settlement in more than three months. In addition, this item includes receivables from suppliers amounting to EUR 5,682 K (previous year: EUR 5,838 K). Financial asset adjustments of EUR 136 K (previousyear:EUR114K)weretakenintoaccount.
Financial assets in excess of EUR 58 K (previous year: EUR 0 K) serve to secure liabilities to banks.
in EUR K Carrying amount Carrying amount
current non-current 31 Dec 2011 current non-current 31 Dec 2010Financial assets due from third parties 119,043 838 119,881 114,545 2,072 116,617
Positive fair value of derivative financial instruments 76 0 76 184 0 184
119,119 838 119,957 114,729 2,072 116,801
in EUR K Carrying amount Carrying amount
current non-current 31 Dec 2011 current non-current 31 Dec 2010Other assets due from third parties 4 0 4 0 0 0
Other tax reimbursement claims 2,231 94 2,325 2,601 0 2,601
Prepaid expenses 3,752 262 4,014 3,018 360 3,378
Other payments made on account 398 0 398 316 0 316
6,385 356 6,741 5,935 360 6,295
Derivative financial instruments have the following positive fair values:
Derivative financial instruments as a whole are described in greater detail in Note (31).
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(20) Cash and cash equivalents
Credit balances are held at various banks in different currencies.
(21) Equity capitalChanges in equity capital and minority interests are analysed in the statement of changes in equity capital.
Subscribed capitalSubscribed capital equalled EUR 17,556 K as at 31 December 2011. It remains divided into4,320,000registeredordinarysharesand2,538,000 preference shares with no voting rights with a nominal value of EUR 2.56 per share.
The preference shares pay a higher dividend, by EUR 0.06, than ordinary shares from the start, and at least a dividend in the amount of EUR 0.13.If distributable profit is not sufficient to pay the priority dividend of at least EUR 0.13 per preference share in one or more fiscal years, then the missing amounts (without interest) are subsequently paid from the distributable profit of the following fiscal years once the share in the profit for those fiscal years has been distributed to the preference shares and prior to a dividend being paid on ordinary shares.
Preference shares are traded on the regulated market of the stock exchanges in Frankfurt/Main and Stuttgart. Ordinary shares are not listed.
Capital reservesCapital reserves essentially comprise additions from premiums. Capital reserves were increased by adapting the accounting and valuation policiesbyEUR4,420K.
Revenue reserves and other reservesRevenue reserves and other reserves comprise the following items:
• Reservesforaccruedprofits Revenue reserves include the current profits
earned by Sto AG and its subsidiaries and those generated in previous years that were not distributed.
• Currencytranslationreserve The currency translation reserve is used to
record any differences arising from the translation of the financial statements of foreign subsidiaries.
• Reserveforpensions The postemployment benefit reserve con
tains actuarial gains net of actuarial losses from the postemployment benefit provisions arising from differences between actual and assumed trends as well as changes in such assumptions.
• Reserveforcashflowhedges This item contains the portion of the gain
or loss from cash flow hedges identified as constituting an effective hedge.
• Treasurystock: Sto AG, Stühlingen, holds treasury stock intheformof432,000registeredordinaryshares with a notional par value of EUR 1,105,920.00. This is equivalent to 10% of all ordinary shares or 6.3% of the share capital of Sto AG. The treasury stock is not dividendentitled.
in EUR K 31 Dec 2011 31 Dec 2010
Credit balances with banks 101,364 84,151
Cheques, cash in hand 1,247 863
102,611 85,014
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in EUR K 31 Dec 2011 31 Dec 2010 Change 01 Jan 2010 in %Equity attributable to the shareholders of Sto AG 423,535 373,091 14 % 323,769
Current borrowings 23,708 16,020 17,305
Non-current borrowings 9,256 23,811 37,321
Less cash and cash equivalents 102,611 85,014 106,714
Net assets 69,647 45,183 52,088
% of equity captial 16 % 12 % 16 %
Proposed dividendInaccordancewithSection58(4)oftheGerman Stock Corporation Act, the dividend distributed is based on the unappropriated surplus recorded in the financial statements prepared according to German commercial law. The financial statements prepared by Sto AG according to German commercial law carry a distributable profit of EUR 65,552 K. At the annual general meeting, the Executive Board of Sto AG will be asking the shareholders to authorise a dividendofEUR0.25plusabonusofEUR4.56foratotalofEUR4.81perordinaryshare,andEUR0.31plusabonusofEUR4.56foratotalofEUR4.87perpreferenceshare,i.e.atotaldistribution amount of EUR 31,061 K with EUR34,000KtoberetainedandthebalanceofEUR450Ktobecarriedforwardtonewaccount.
Notes on capital managementThe purpose of capital management is to ensure that the Group is able to effectively achieve its goals and pursue its strategies in the interests of the shareholders, employees and other stakeholders. In particular, management focuses on achieving the minimum return on invested assets sought by the capital market as well as on achieving a solid return on equity. A further objective is to increase the longterm return on equity. To this end, it seeks to unlock as much value as possible within the Group and its subsidiaries to the benefit of all stakeholders.
In selecting financial instruments, the Group attaches importance to matchingmaturities finance, which is achieved by managing the terms of these financial instruments.
In 2011, the equity capital attributable to the shareholdersofStoAGroseby14%overtheprevious year. This was essentially the result of the increase in revenue reserves. In the current financial year, financial liabilities have been further reduced.
As in the previous year, no net debt has been incurred in the current fiscal year.
Under the terms of the syndicated loan of August 2006, the Group is bound by minimum capital requirements stipulated by the bank syndicate as the lender, under which net debt must not exceed equity capital. Any failure to comply with these minimum capital requirements entitles the lenders to terminate the syndicated loan for good cause.These external minimum capital requirements were observed.
(22) Share of minority interestsThe shares of equity on the part of minority interests in the current fiscal year are attributable to shareholders of Inotec GmbH, WaldshutTiengen/Germany, Sto Italia Srl, Empoli/Italy, as well as Industrial y Comercial Sto Chile Ltda., Santiago de Chile/Chile.
The capital structure at the balance sheet date is as follows:
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this purpose, future obligations are measured on the basis of the prorated benefits accruing at the balance sheet date. In making this assessment, assumed trends in the relevant determinants influencing the size of the benefits are taken into account. Actuarial calculations are necessary for all pension systems.
Actuarial gains or losses arise from changes in the plan assets or deviations in actual trends (e. g. income and pension increases, changes in interest rates) or from changes in the assumptions underlying calculations. In accordance with the option afforded under IAS 19, all actuarial gains and losses are recognised in equity in full in the period in which they arise. Net actuarial gains and losses reported within reserves for pensions, which result primarily from a change in the discounting rate, stand at EUR312K(previousyear:EUR–275K).
The shares of equity on the part of minority interests in the previous year were attributable to shareholders of Sto Italia Srl, Empoli/Italy, and Industrial y Comercial Sto Chile Ltda., Santiago de Chile/Chile.
(23) Post-employment benefits and similar liabilitiesProvisions for postemployment benefits are recognised in accordance with entitlement arising under the company pension scheme. The benefits provided by the Group vary according to the legal, tax and economic situation in the individual country and are based on the length of service and date of entry of the entitled employees.The Group pension scheme primarily comprises definedbenefit obligation plans. In addition, there are also some definedcontribution plans. In the case of definedcontribution plans, the Company pays contributions into public or private pension funds in accordance with statutory or contractual obligations. Upon payment of these contributions, no further obligations accrue for the Company. Current contribution payments (net of contributions to statutory pension funds) are reported as postemployment benefit expenses for the year in question and were valued in the Sto Group at a total of EUR422Kin2011(previousyear:EUR396K).In Germany, contributions to statutory pension funds came to EUR 10,958 K (previous year: EUR10,441K).The company pension schemes operated within the Sto Group are for the most part based on internally funded definedbenefit plans. Benefit obligations assumed by the German companies primarily entail fixed amounts based on length of service.
Postemployment benefit provisions are calculated in accordance with IAS 19 (Employee benefits) using the projected unit credit method, which is the standard international method. For
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in EUR K 2011 2010
DBO (= Post-employment benefit provisions) at 1 January 39,408 36,323
Actuarial losses/gains –586 1,308
Current service cost 1,410 1,341
Revenue from plan assets 0 0
Interest on obligation 2,037 1,984
Pension payments –1,392 –1,548
DBO (= net debt/post-employment benefit provisions
reported in the balance sheet) as at 31 December 40,877 39,408
in EUR K 31 Dec 2011 31 Dec 2010 31 Dec 2009 31 Dec 2008 31 Dec 2007
Present value of unfunded obligations 40,877 39,408 36,323 32,324 32,533
in EUR K 31 Dec 2011 31 Dec 2010
Current service cost 1,410 1,341
Revenue from plan assets 0 0
Interest on obligation 2,037 1,984Sum total of the expense recognised in the income statement 3,447 3,325
The following amounts for benefits were recognised in the balance sheet:
These amounts match the postemployment benefit provisions reported in the balance sheet.
The following amounts are reported in the income statement:
Current service costs are included in staff costs; interest expenses on the obligation is reported under interest expenses, Note (9).
Postemployment benefit obligations (net debt reported in the balance sheet) changed as follows:
The calculation of pension provisions was based on the following assumptions, with the predominant share of the amount recognised in the balance sheet being accounted for by Germany.
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The Heubeck 2005 G tables have been used as the biometric basis for calculations for German companies since 31 December 2005.
Historical adjustments, i.e. the effects of any difference between expected and actual actu
arial assumptions are set out in the following table, with a positive percentage indicating that the actual present value of the obligation is above the expected present value:
in % Germany Non-Germany
2011 2010 2011 2010Discount rate as at 31 December 5.20 5.25 3.00 – 5.20 4.35 – 5.25
Future salary increases 3.00 3.00 1.75 – 4.80 2.25 – 3.00
Future pension increases 1.51 1.69 1.36 – 4.40 0.00
Fluctation rate 2.90 2.80 2.80 – 15.00 0.0 – 15.0
in % 2011 2010 2009 2008 2007 Difference between expected and actual trends in the present value of the obligations 1.09 0.59 1.13 2.67 –0.19
(24) Non-current and current other provisions
in EUR K Personnel Production Sales Other area area area provisions Total
Status as at 1 January 2010 9,195 935 38,645 2,217 50,992
Current differences 33 0 1,494 1 1,528
Consumption –5,097 –124 –4,249 –430 –9,900
Netting of plan assets 0 0 0 0 0
Additions/formation 5,256 34 11,108 1,539 17,937
Interest cost 106 55 0 0 161
Reversal –329 0 –3,776 –923 –5,028
Status as at 31 December 2010 9,164 900 43,222 2,404 55,690
Current differences –11 0 709 –8 690
Consumption –5,221 –100 –3,361 –597 –9,279
Netting of plan assets 0 0 0 0 0
Additions/formation 5,050 319 3,495 737 9,601
Actuarial gains –5 0 0 0 –5
Change to companies consolidated 82 0 58 283 423
Interest cost 107 57 0 0 164
Reversal –725 –4 –7,989 –562 –9,280
Status as at 31 December 2011 8,441 1,172 36,134 2,257 48,004
of which current 5,406 561 35,968 1,950 43,885
of which non-current 3,035 611 166 307 4,119
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The covenants applicable to finance leases are explainedinNote(14).
26) Trade payablesThe terms of the trade payables is completely short term.
The fair values do not differ materially from the carrying amounts reported.
in EUR K 31 Dec 2011 31 Dec 2010
from Third parties 41,679 39,220
Investments in associates 0 526
41,679 39,746
Provisions in the staff area have been set aside for preretirement reduced working hours, anniversary expenses, termination settlements and similar obligations, among other things.
Provisions of the production division comprise, inter alia, asset retirement obligations and disposal costs.
Provisions in the sales area cover amounts set aside to allow for all selling risks. Provisions in the sales area essentially comprise provisions for warranties, compensation claims of commercial representatives as well as provisions for litigation risks. Provisions for warranty obligations are carried as liabilities for individual cases in
in EUR K Carrying Carrying Carrying non- amount non- amount non- amount current current 31 Dec 2011 current current 31 Dec 2010* current current 01 Jan 2010*
Liabilities to banks 22,216 6,882 29,098 14,697 20,333 35,030 16,416 32,696 49,112
Liabilities under finance leases 1,492 2,374 3,866 1,322 3,478 4,800 889 4,625 5,514
23,708 9,256 32,964 16,019 23,811 39,830 17,305 37,321 54,626
the Sto Group. The assumptions on which the calculation of warranty provisions are based are experience statistics for complaints and the latest information available. Furthermore, uncertainties arise with regard to pending compensatory damages court cases in terms of compensation payments and the duration of the processes. We expect the relevant costs for the adjustment of complaints to be incurred after settlement of damage.
In addition to provisions for purchase commitments, the remaining other provisions comprise additional factual circumstances subordinate in nature in specific cases in terms of their recognition.
(25) Non-current and current borrowings
* Some details differ from the details in the consolidated annual statement for the fiscal year of 2010 as certain adjust-ments were implemented. For more details see the Notes – General part 7.
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Derivative financial instruments have the following negative fair values:
Derivative financial instruments as a whole are described in detail in Note (31).
in EUR K 31 Dec 2011 31 Dec 2010
Hedges against currency risks 1,577 2,650
interest risks 487 899
2,064 3,549
in EUR K Carrying amount Carrying amount current non-current 31 Dec 2011 current non-current 31 Dec 2010
Negative fair values of derivative financial instruments 1,900 164 2,064 3,549 0 3,549
Other liabilities
liabilities towards customers 12,435 0 12,435 12,405 0 12,405
liabilities towards employees 1,055 0 1,055 656 81 737
Miscellaneous 6,884 152 7,036 5,955 342 6,297
22,274 316 22,590 22,565 423 22,988
in EUR K Carrying amount Carrying amount current non-current 31 Dec 2011 current non-current 31 Dec 2010
Advance payment received on orders 2,427 0 2,427 1,008 0 1,008
Other liabilities
from other taxes 6,704 30 6,734 7,025 0 7,025
social security liabilities 3,197 0 3,197 2,343 0 2,343
liabilities towards employees 27,108 0 27,108 24,645 0 24,645
Miscellaneous 5,265 2 5,267 3,707 0 3,707
44,701 32 44,733 38,728 0 38,728
(27) Non-current and current financial liabilities
(28) Non-current and current other liabilities
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in EUR K Measurement Carrying Financial instruments Non- category amount financial acc. to Amortised Fair Value Not in scope instrument IAS 39 costs of acquisition value recognition of application Carrying Fair balance sheet of IFRS 7/ 1 Jan 2010 amount value acc. to IAS 17 hedge
Assets
Investments in associates n.a. 19 0 0 0 0 0 0
Trade payables LaR 101,288 101,288 101,288 0 0 0 0
Income tax receivables n.a. 7,026 0 0 0 0 0 7,026
Financial assets and other assets
- Available-for-sale financial assets AfS 217 217 217 0 0 0 0
- Held-to-maturity investments HtM 6,708 6,708 6,692 0 0 0 0
- Financial assets held for trading FAHfT 110 0 0 110 0 0 0
- Derivative assets
with hedge relationship n.a. 0 0 0 0 0 0 0
without hedge relationship FAHfT 55 0 0 55 0 0 0
- Other assets LaR/n.a. 45,032 40,375 40,470 0 0 0 4,657
52,122 47,300 47,379 165 0 0 4,657
Deferred tax assets n.a. 8,131 0 0 0 0 0 8,131
Cash and cash equivalents LaR 106,714 106,714 106,720 0 0 0 0
Liabilities
Deferred tax liabilities n.a. 5,404 0 0 0 0 0 5,404
Borrowings* FLAC 49,111 49,111 49,194 0 0 0 0
Liabilities under finance leases n.a. 5,515 0 0 0 5,515 0 0
54,626 49,111 49,194 0 5,515 0 0
Trade payables FLAC 33,971 33,971 33,971 0 0 0 0
Income tax liabilities n.a. 10,105 0 0 0 0 0 10,105
Other liabilities
- Derivative liabilities
with hedge relationship n.a. 1,098 0 0 0 0 1,098 0
without hedge relationship FLHfT 705 0 0 705 0 0 0
- Other liabilities FLAC/n.a. 50,051 13,313 13,313 0 0 0 36,738
51,854 13,313 13,313 705 0 1,098 36,738
* Some details differ from the details in the consolidated annual statement for the fiscal year of 2010 as certain adjustments were implemented. For more details see the appendix – General part 7.
Further notes in accordance with IFRS 7 (Financial instruments)
Reconciliation of balance sheet items with financial instrument categories as at 1 January 2010
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in EUR K Measurement Carrying Financial instruments Non- category amount financial acc. to Amortised Fair Value Not in scope instrument IAS 39 costs of acquisition value recognition of application Carrying Fair balance sheet of IFRS 7/ 31 Dec 2010 amount value acc. to IAS 17 hedge
Assets
Investments in associates n.a. 0 0 0 0 0 0 0
Trade payables LaR 100,312 100,312 100,312 0 0 0 0
Income tax receivables n.a. 6,815 0 0 0 0 0 6,815
Financial assets and other assets
- Available-for-sale financial assets AfS 230 230 230 0 0 0 0
- Held-to-maturity investments HtM 14,602 14,602 14,602 0 0 0 0
- Financial assets held for trading FAHfT 117 0 0 117 0 0 0
- Derivative assets
with hedge relationship n.a. 0 0 0 0 0 0 0
without hedge relationship FAHfT 184 0 0 184 0 0 0
- Other assets LaR/n.a. 107,963 101,668 101,761 0 0 0 6,295
123,096 116,500 116,593 301 0 0 6,295
Deferred tax assets n.a. 8,445 0 0 0 0 0 8,445
Cash and cash equivalents LaR 85,014 85,014 85,583 0 0 0 0
Liabilities
Deferred tax liabilities n.a. 4,927 0 0 0 0 0 4,927
Borrowings* FLAC 35,030 35,030 35,031 0 0 0 0
Liabilities under finance leases n.a. 4,800 0 0 0 4,800 0 0
39,830 35,030 35,031 0 4,800 0 0
Trade payables FLAC 39,746 39,746 39,746 0 0 0 0
Income tax liabilities n.a. 3,459 0 0 0 0 0 3,459
Other liabilities
- Derivative liabilities
with hedge relationship n.a. 588 0 0 0 0 588 0
without hedge relationship FLHfT 2,961 0 0 2,961 0 0 0
- Other liabilities FLAC/n.a. 58,167 19,103 19,103 0 0 336 38,728
61,716 19,103 19,103 2,961 0 924 38,728
* Some details differ from the details in the consolidated annual statement for the fiscal year of 2010 as certain adjustments were implemented. For more details see the appendix – General part 7.
Reconciliation of balance sheet items with financial instrument categories as at 31 December 2010
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in EUR K Measurement Carrying Financial instruments Non- category amount financial acc. to Amortised Fair Value Not in scope instrument IAS 39 costs of acquisition value recognition of application Carrying Fair balance sheet of IFRS 7/ 31 Dec 2011 amount value acc. to IAS 17 hedge
Assets
Investments in associates n.a. 0 0 0 0 0 0 0
Trade payables LaR 111,419 111,419 111,419 0 0 0 0
Income tax receivables n.a. 5,131 0 0 0 0 0 5,131
Financial assets and other assets
- Available-for-sale financial assets AfS 251 251 251 0 0 0 0
- Held-to-maturity investments HtM 12,390 12,390 12,388 0 0 0 0
- Financial assets held for trading FAHfT 0 0 0 0 0 0 0
- Derivative assets
with hedge relationship n.a. 0 0 0 0 0 0 0
without hedge relationship FAHfT 76 0 0 76 0 0 0
- Other assets LaR/n.a. 113,981 107,240 107,342 0 0 0 6,741
126,698 119,881 119,981 76 0 0 6,741
Deferred tax assets n.a. 7,170 0 0 0 0 0 7,170
Cash and cash equivalents LaR 102,611 102,611 102,631 0 0 0 0
Liabilities
Deferred tax liabilities n.a. 3,992 0 0 0 0 0 3,992
Borrowings FLAC 29,098 29,098 29,098 0 0 0 0
Liabilities under finance leases n.a. 3,866 0 0 0 3,866 0 0
32,964 29,098 29,098 0 3,866 0 0
Trade payables FLAC 41,679 41,679 41,679 0 0 0 0
Income tax liabilities n.a. 8,877 0 0 0 0 0 8,877
Other liabilities
- Derivative liabilities
with hedge relationship n.a. 144 0 0 0 0 144 0
without hedge relationship FLHfT 1,920 0 0 1,920 0 0 0
- Other liabilities FLAC/n.a. 65,259 20,526 20,526 0 0 0 44,733
67,323 20,526 20,526 1,920 0 144 44,733
Reconciliation of balance sheet items with financial instrument categories as at 31 December 2011
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The carrying amounts of the financial instruments are aggregated as follows in accordance with the categories stipulated in IAS 39:
Balance sheet items measured at fair value
in EUR K 31 Dec 2011 31 Dec 2010* 01 Jan 2010*
Available-for-Sale (AfS) 251 230 217
Financial assets held for trading (FAhfT) 76 301 165
Held-to-maturity investments (HtM) 12,390 14,602 6,708
Loans and receivables (LaR) 321,270 286,995 248,377
Financial liabilities measured at amortised cost (FLAC) 91,303 93,879 96,395
Financial liability held-for-trading (FLHfT) 1,920 2,961 705
in EUR K 31 Dec 2010 Level 1 Level 2 Level 3
Financial assets measured at fair value through profit or loss
- Derivates 184 0 184 0
- Other 117 117 0 0
Financial assets measured at fair value 301 117 184 0
Financial liabilities recognised at fair value through profit or loss
- Derivatives with no hedge relationship 2,961 0 2,961 0
Financial liabilities recorded in other earnings with no impact on profit or loss
- Derivatives with a hedge relationship 588 0 588 0
Financial liabilities recognised at fair value 3,549 0 3,549 0
* Some details differ from the details in the consolidated annual statement for the fiscal year of 2010 as certain adjust-ments were implemented. For more details see the Notes – General part 7.
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The following financial assets and liabilities accounted for at fair value are structured according to the following valuation categories:
Level 1Financial instruments traded in active markets, the listed prices of which were adopted unchanged for measurement purposes.
Level 2The measurement is made on the basis of valuation methods in which the influential factors are derived either directly or indirectly from observable market data.
Level 3The measurement is effected using valuation methods where the influential factors are not based exclusively on observable market data.
in EUR K 31 Dec 2011 Level 1 Level 2 Level 3
Financial assets measured at fair value through profit or loss
- Derivates 76 0 76 0
- Other 0 0 0 0
Financial assets measured at fair value 76 0 76 0
Financial liabilities recognised at fair value through profit or loss
- Derivatives with no hedge relationship 1,920 0 1,920 0
Financial liabilities recorded in other earnings with no impact on profit or loss
- Derivatives with a hedge relationship 144 0 144 0
Financial liabilities recognised at fair value 2,064 0 2,064 0
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in EUR K 2011 2010
Amount on 1 January 13,564 12,795
Exchange rate differences –510 383
Additions 9,286 5,100
Consumption 3,275 2,503
Reversals 3,690 2,211
Additions from consolidated companies 5,457 0
Amount on 31 December 20,832 13,564
During the reporting period there were no transfers between measurements at fair value at Level 1 and Level 2 and no transfers to or from measurements at fair value at Level 3.
Trend relating to adjustments of financial instruments valued at amortised costs of acquisition (refers solely to trade receivables and other financial assets):
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(29) Cash flow statementThe cash flow statement shows how the Group’s liquidity position has changed in the course of the year under review as a result of cash inflows and outflows. For this purpose, it distinguishes cash flow from operating activities, cash flow from investing activities and cash flow from financing activities (IAS 7 Statement of cash flows).
The cash flow statement solely comprises the cash and cash equivalents reported in the balance sheet that include financial investments with an original term of up to 3 months.Based on earnings before taxes, the cash flow is indirectly derived from operating activities. Earnings before taxes are adjusted to take account of noncash expenses (essentially depreciation) and noncash income. Cash flow from operating activities reflects changes in working capital.Cash inflows and outflows from investing and financing activities are calculated using the direct method. Investing activities comprise disbursements for additions to intangible assets and tangible fixed assets, payments arising from the acquisition of consolidated companies and other business units, disbursements for the acquisition of consolidated companies and other business units, interest received, payments arising from the disposal of intangible assets and property, plant and equipment, as well as disbursements for financial investments.Financing activities comprise cash outflows from payments to shareholders, interest payments and the repayment of loans, as well as changes to other borrowings. Changes in items of the balance sheet analysed for the cash flow statement cannot be directly derived from the balance sheet on account of noncash currency translation effects and other noncash transactions.
(30) Segment reportingFor the purpose of corporate management by the Executive Board, the Group is divided up into geographical business units. The geographical business units were consolidated in the segments of western Europe and Otherm with the segment Other being broken down into the regions of northern/eastern Europe and the Americas/Asia. The business segment of western Europe comprises the relevant geographical business units of the euro zone, Switzerland, as well as the United Kingdom.Internal reporting is essentially carried out in accordance with IFRS.The activities of all segments extend to include the production and distribution of facade coatings, facade systems, interior products and other product groups.The netting prices between segments conform to armslength conditions. Transfers between business segments are eliminated on consolidation.
The segment results in the Sto Group are reported in the earnings categories of EBITDA, EBIT and EBT. The share of earnings from associates, amounting to EUR 0 K (previous year: EUR 0 K) has not been assigned to any segment and is reported within the scope of reconciliation/consolidation booking entries.
Depreciation/amortisation and investments relate to property, plant and equipment and intangible assets. In the Western Europe segment, a nonscheduled depreciation of a machine was performed in the amount of EUR 219 K. In the Western Europe segment, a nonscheduled depreciation of a patent was effected in the previous year in the amount ofEUR194K.Intheyearunderreview,theimpairment test on goodwill of STOMIX spol s.r.o., Skorosice/Czech Republic resulted in a depreciationintheamountofEUR4,188Kinthe “Other” segment.
Other disclosures
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Segment assets essentially comprise property, plant and equipment, intangible assets, inventories, trade receivables from third parties, financial assets as well as other financial assets from third parties. Income tax receivables and deferred tax receivables were listed in the “reconciliation/consolidation booking entries” column since they are not assigned to the individual segments.
The intersegment results are eliminated in the column “Reconciliation/consolidation booking
in EUR K 2010
Germany France Others Total
External revenues 489,219 94,349 402,477 986,045
Intangible assets, property, plant and equipment 164,270 11,024 57,487 232,781
(31) Financial risk management and financial instruments
Hedging policyThe Sto Group’s international activities expose it to interest and currency risks in particular. The purpose of risk management is to minimise or to exclude these risks. To this end, the usual instruments such as currency forwards, forward exchange, currency options, interest rate swaps and interest caps are used.
Hedging guidelinesGuidelines have been adopted to govern the scope for hedging and internal monitoring. As a matter of principle, the type and scope of hedging operations are determined by the hedged contract. Hedges may only be used to protect existing or planned transactions. For this purpose, according to internal guidelines only financial instruments with released counterparties may be transacted.
entries”. This column also includes the items which cannot be assigned to individual segments. No material adjustments were made to earnings.
Owing to the broad customer structure of the Sto Group, there is no customer with whom at least 10% of sales revenues are generated.
The breakdown of sales revenues is made according to the customer’s home country.
in EUR K 2011
Germany France Others Total
External revenues 529,366 116,124 461,293 1,106,783
Intangible assets, property, plant and equipment 165,218 11,192 70,690 247,100
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* Some details differ from the details in the consolidated annual statement for the fiscal year of 2010 as certain adjustments were implemented. For more details see the Notes – General part 7.
in EUR K Cash outflows 01 Jan 2010 up to 1 year 1 – 5 years 5 –10 years
Borrowings* 17,407 33,283 1,245 51,935
Trade payables 33,971 0 0 33,971
Other borrowings 13,308 0 0 13,308
Derivatives 17,172 389 13 17,574
Financial guarantees 295 0 0 295
82,153 33,672 1,258 117,083
in EUR K Cash outflows 31 Dec 2010 up to 1 year 1 – 5 years 5 –10 years
Borrowings* 15,613 20,930 0 36,543
Trade payables 39,746 0 0 39,746
Other borrowings 18,930 185 0 19,115
Derivatives 33,197 524 0 33,721
Financial guarantees 45 0 0 45
107,531 21,639 0 129,170
in EUR K Cash outflows 31 Dec 2011 up to 1 year 1 – 5 years 5 –10 years
Borrowings 22,706 6,895 219 29,820
Trade payables 41,679 0 0 41,679
Other borrowings 20,371 168 0 20,539
Derivatives 24,170 169 0 24,339
Financial guarantees 4,499 0 0 4,499
113,425 7,232 219 120,876
Liquidity riskA liquidity forecast covering a defined period as well as unused credit facilities available to the Sto Group in addition to cash and cash equivalents ensure adequate liquidity at all times. The main credit facilities were established in connection with the syndicate finance agreement entered into in 2006 and expiring in 2012. The
remaining credit facilities were arranged to expire in 2019 at the latest. The following overview sets out the contractually agreed cash outflows from financial instruments, including interest, not including cash outflows from finance leasing contracts shown inNote(14).
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in EUR K as at 31 December 2010 Total up to 1 year 1 – 5 years 5 –10 years
Inflow 30,223 0 0 30,223
Outflow –33,197 –524 0 –33,721
Balance –2,974 –524 0 –3,498
in EUR K as at 1 January 2010 Total up to 1 year 1 – 5 years 5 –10 years
Inflow 13,828 2,949 0 16,777
Outflow –17,172 –389 –13 –17,574
Balance –3,344 2,560 –13 –797
in EUR K as at 31 December 2011 Total up to 1 year 1 – 5 years 5 –10 years
Inflow 22,256 0 0 22,256
Outflow –24,170 –169 0 –24,339
Balance –1,914 –169 0 –2,083
Under guarantees disclosed within the scope of contingent liabilities, the occurrence of an obligation is not anticipated at present.
The amounts of derivative financial instruments shown above correspond to the undiscounted
cash flows. These payments can be processed on a gross or net basis provided that the levelling is not done on a net basis, and only cash outflows are shown in the above tables. In the following tables, the cash outflows are compared to the corresponding cash inflows.
Credit and default risk arising from financial assetsThe credit and default risk arising from financial assets entails the risk of a counterparty defaulting and is limited to the maximum net carrying amount of the receivable due from the defaulting counterparty. In connection with the investment of cash and holdings of derivative financial assets, the Group is exposed to the risk of losses in the event of financial institutions failing to honour their obligations. The Sto Group seeks to
mitigate such risks by means of diversification and the careful selection of counterparties. At the moment, no cash investments or derivative financial assets are overdue or impaired on account of defaults.Allowance is made for risks from originated financial instruments by making adjustments to receivables.
On account of its broad customer structure, there is no conspicuous clustering of default risks within the Sto Group.
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in EUR K Carrying
not yet overdue amount due and not and not value-adjusted value-adjusted value-adjusted 31 Dec 2010
Financial assets 116,353 58 89 116,500
Trade receivables 62,695 19,206 18,411 100,312
Cash and cash equivalents 85,014 0 0 85,014
264,062 19,264 18,500 301,826
Presentation of net carrying amounts of financial instruments measured at amortised costs of acquisition:
in EUR K Carrying
not yet overdue amount due and not and not value-adjusted value-adjusted value-adjusted 31 Dec 2011
Financial assets 119,862 9 10 119,881
Trade receivables 75,170 15,905 20,344 111,419
Cash and cash equivalents 102,611 0 0 102,611
297,643 15,914 20,354 333,911
The Sto Group assesses the credit rating of individual customers to reduce the risks arising from trade receivables. Information is obtained and regularly updated to assess the credit quality of financial assets which are neither overdue nor adjusted. On the basis of this and other information, the financial assets are classified and credit limits defined. Customer ratings are subject to ongoing monitoring by credit management.
Collateral amounting to EUR 26 K was held in the financial year for overdue and impaired trade receivables (previous year: EUR 26 K).
The financial instruments assigned to the category of financial assets measured at fair value are neither overdue nor impaired.
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Currency riskCurrency risks in connection with current receivables and liabilities are hedged by means of forward exchange transactions, currency forwards, and options. The currency hedge as at 31 December 2011 related only to USD/EUR, CAD/USD, CHF/EUR, CZ/EUR and EUR/CHF; the change in fair value was recognised in the income statement with an impact on profit and loss.
All nonfunctional currencies in which the Sto Group holds financial instruments are used as relevant risk variables in the sensitivity analysis stipulated by IFRS 7.
The essential currency risk in the Sto Group results from the change of the currency pair EUR/ CHF. If the euro had been 10% lower/higher against the CHF, pretax earnings would have been up by EUR 1,065 K (previous year: EUR 325 K), or down by EUR 1,302 K (previous year: EUR 325 K).
Interest rate riskThe interest rate risk for the Sto Group results from changes in market interest rates, particularly for current and noncurrent liabilities subject to floating interest rates. Cash flow hedges in the form of interest swaps are transacted to minimise the risk.
in EUR K overdue
more than more than up to 30 days 60 days more than 30 days up to 60 days up to 90 days 90 days 31 Dec 2011
Financial assets 9 0 0 0 9
Trade receivables 8,116 4,045 1,429 2,315 15,905
8,125 4,045 1,429 2,315 15,914
in EUR K overdue
more than more than up to 30 days 60 days more than 30 days up to 60 days up to 90 days 90 days 31 Dec 2010
Financial assets 58 0 0 0 58
Trade receivables 10,582 4,714 1,844 2,066 19,206
10,640 4,714 1,844 2,066 19,264
Maturity analysis of gross carrying amounts of overdue and not value-adjusted financial instruments measured at amortised costs of acquisition:
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The Sto Group uses interest swaps to reduce the risk of changes in interest in connection with noncurrent interestbearing bank borrowings. The cash flow hedge portion is set out below in the table entitled “Valuation of derivative financial instruments”.
The Sto Group identifies interest rate risks as defined in IFRS 7 by means of a sensitivity analysis. This sets out the effects of riskrelevant market interest rates on the Group’s net borrowing costs and equity capital.
If market interest rates as at 31 December 2011 had been 100 basis points (bp) higher, net profitaftertax–allotherthingsbeingequal–
Interest rate swaps/caps include cash flow hedgeswithamarketvalueofEUR-144K(previous year: EUR 588 K) and a corresponding nominal volume of EUR 12,000 K (previous year: EUR 22,000 K). The hedge relationship for hedging cash flows from interest payments up to 2012 was deemed highly effective. Accordingly, an unrealised loss of EUR 190 K net ofdeferredtaxesofEUR54Kisrecognisedinequity capital as at 31 December 2011. In the income statement for the period, EUR 19 K was recognised as an ineffective hedge. The change to the nominal volume of interest swaps/caps is due to the repayment of loans in 2011 as well as the sale and conclusion of an additional interest hedge.
would have turned out EUR 163 K higher (previousyear:EUR245K).If,bycontrast,theyhadbeen100bplower,netprofitaftertax–allotherthingsbeingequal–wouldhavebeenEUR 166 K (previous year: EUR 251 K) lower. In addition to the above effect, equity capital wouldhaverisenbyEUR49K(previousyear:EUR 150 K) or declined by EUR 50 K (previous year: EUR 151 K) after taxes.
Valuation of derivative financial instrumentsThe fair values of derivative financial instruments are determined on the basis of reference prices and measurement models.
The remaining terms of the currency derivatives are within 1 year and those of the interest derivativesarebetween1and4years.Thenominal volume of a derivative hedge transaction is the notional reference amount for which the payments are derived. The hedged contract and the risk are not the same as the nominal volume but only reflect the exchange or interest rate change to which they refer. The fair value is the amount which the Sto Group would have paid or received at the balance sheet date if the hedge had been settled. As the hedges are for the most part standard tradable financial instruments, fair value is derived from valuation models.
in EUR K 31 Dec 2011 31 Dec 2010 Nominal Market value Nominal Market value volume total volume total
Forward exchange transaction(s)/options 22,386 –1,573 30,153 –2,623
Interest rate swaps/caps 36,183 –415 58,406 –742
58,569 –1,988 88,559 –3,365
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(32) Contingencies
(33) LitigationNeither Sto AG nor any of the members of its Group are involved in any court litigation or arbitration proceedings which are liable to exert a material influence on the Group’s economic situation or have done so in the past two years. There is no evidence that any such litigation or proceedings will arise in the future. Provisions in an appropriate amount have been set aside by the individual Group companies to allow for any expenses arising from other court litigation or arbitration proceedings.
(34) Financial obligations
The obligations under rental contracts comprise primarily building rental contracts, while the obligations under leases relate to the vehicle fleet, equipment and IT hardware.
Of acceptance obligations, an amount of EUR4,699K(previousyear:EUR2,131K) relates to items of tangible fixed assets.
in EUR K 2011 2010
Guarantees 4,499 45
Other contingent liabilities 132 1
4,631 46
in EUR K 31 Dec 2011 Maturity 31 Dec 2010 Maturity
within between after within between after one 1 – 5 5 one 1 – 5 5 year years years year years years
Obligations under rental contracts and leases 68,632 19,893 37,977 10,762 63,386 17,284 35,201 10,901
Obligations under maintenance contracts 5,623 3,247 2,376 0 4,834 3,278 1,556 0
Acceptance obligations 9,083 8,993 90 0 5,703 5,661 42 0
Other obligations 385 240 145 0 216 122 94 0
83,723 32,373 40,588 10,762 74,139 26,345 36,893 10,901
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(35) Auditors’ feesThe following fees paid to the auditors of the consolidatedfinancialstatements,Ernst&Young GmbH, Wirtschaftsprüfungsgesellschaft, for services provided are recorded as expenses in 2011:
(36) Events after the balance sheet dateIn January, Deutsche AmphibolinWerke of RobertMurjahnStiftung&CoKG(DAW)tooka45%shareinoursubsidiaryInotecGmbH,WaldshutTiengen, as part of a capital increase. StoAGhasalsohelda45%sharesincethebeginning of the cooperation. The remaining 10% of the Inotec shares are owned by FAB Fördertechnik und Anlagenbau GmbH. With this step, the transaction filed with and authorised by the German Federal Cartel Office is finally completed. The goal of the cooperation is to mutually seize upon the silo and machinery equipment business area, which is not part of core activities of Sto and DAW, in the future. The machine programme and services of Inotec will be offered throughout Germany to all manufacturers of external wall insulation systems and as such leaves the existing competitive relationships of the associates untouched.
in EUR K 2011 2010 Audits of financial statements 343 342
Tax consulting services 0 6
Other certification or valuation activities 3 3
Other services 49 11
395 362
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(37) Disclosures on related parties (IAS 24)IAS24definesrelatedpartiesaspersonsorentities liable to be influenced by the reporting entity or capable of influencing the reporting entity in question.All business relations with related parties are conducted on armslength terms.Members of the Executive Board and the Supervisory Board of Sto AG are members of the management boards and supervisory boards of other companies with which Sto AG maintains relations in some cases as part of its ordinary business activities. All transactions with such companies are conducted on armslength terms. The volume of deliveries and services, including net interest income, between companies in the Sto Group and related parties are set out in the following table:
No goods or services were provided to or received from Stotmeister Beteiligungs GmbH as a related party in the year under review or in the previous year. Similarly, there were no receivables or liabilities.
* Until end of February 2011
in EUR K Rendered Received delieveries delieveries and and Receivables Payables Share services services to from
2011 2010 2011 2010 2011 2010 2011 2010Inotec GmbH, Waldshut-Tiengen 33%* 0 53 400 3,683 0 12 0 526
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(36) List of share ownership as at 31 December 2011
Domestic markets Capital share
in %
Name, registered officeStoVerotec GmbH, Lauingen 100
StoCretec GmbH, Kriftel 100
Gefro Verwaltungs-GmbH & Co. KG, Stühlingen 100
Südwest Lacke + Farben GmbH & Co. KG, Böhl-Iggelheim 100
Südwest Lacke + Farben Verwaltungs-GmbH, Böhl-Iggelheim 100
Malfa Farben GmbH, Freiburg 100
Hemm Stone GmbH, Kirchheim 100
Innolation GmbH, Lauingen 100
Inotec GmbH, Waldshut-Tiengen 90
WT Gebäudemanagement GmbH, Stühlingen 100
Sto SMEE Beteiligungs GmbH, Stühlingen 100
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Foreign markets Capital share
in %
Name, registered officeSto Ges.m.b.H., Villach, Austria 100
Sto S.A.S., Bezons/France 100
Beissier S.A.S., La Chapelle La Reine/France 100
Beissier S.A.U., Errenteria/Spain 100
Sto SDF Ibérica S.L.U., Mataró/Spain 100
Sto Isoned B.V., Tiel/Netherlands 100
Sto N.V., Asse/Belgium 100
Sto Italia Srl, Empoli/Italy 52
STOMIX Slovensko s.r.o., Slovensko/Slovakia 100
STOMIX Bratislava s.r.o., Bratislava/Slovakia 100
STOMIX Kosice s.r.o., Kosice/Slovakia 100
Sto Finexter OY, Vantaa/Finland 100
Sto Scandinavia AB, Linköping/Sweden 100
Sto Danmark A/S, Hvidovre/Denmark 100
Sto Norge AS, Oslo/Norway 100
Sto – ispo Sp. z o.o., Warsaw/Poland 100
Sto Epitöanyag Kft., Dunaharaszti, Hungary 100
Sto s.r.o., Dobřejovice/Czech Republic 100
STOMIX spol s.r.o., Skorosice/Czech Republic 100
STOMIX CZ s.r.o., Olomouc/Czech Republic 100
Sto AG, Niederglatt/Switzerland 100
Sto Ltd., Paisley/Great Britain 100
OOO Sto, Moscow/Russia 100
OOO STOMIX Orel, Orel/Russia 100
OOO STOMIX Export, Orel/Russia 100
Sto Corp., Atlanta, USA 100
Industrial y Comercial Sto Chile Ltda., Santiago de Chile/Chile 60
Sto Corp. Chile Ltda., Santiago de Chile/Chile 100
Sto Colombia S.A.S., Bogota/Colombia 100
Sto Mexico S de RL de CV, Monterrey/Mexico 100
Sto Corp. Latin America Inc., Panama/Panama 100
Shanghai Sto Ltd., Shanghai/China 100
Langfang Sto Building Material Co. Ltd., Hebei/China 100
Wuhan Sto Building Material Co. Ltd., Hubei/China 100
Sto SEA Pte. Ltd., Singapore/Singapore 100
Sto SEA Sdn. Bhd., Masai/Malaysia 100
With regard to the changes in the current year, we wish to refer to the “General disclosures” No. 4 “Companies consolidated”.
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(39) German Corporate Governance CodeIn December 2011, the Executive Board and Supervisory Board of Sto AG issued the declaration of conformance with the recommendations of the Government Commission on German Corporate Governance Code in accordance with Section 161 of the German Companies Act.
(40) Remuneration of the Board of Directors and the Supervisory BoardThe remuneration paid to the members of the Executive Board complies with the statutory provisions contained in the German Compa nies Act. For the fiscal year of 2011, current remuneration of the Executive Board, which was expanded in the year under review on 1 April 2011 from three to four members stood at EUR 3,782 K (previous year: EUR 2,616 K). The remuneration came to EUR 0 K on account of termination of the employment relationship (previous year: EUR 1,500 K). The expense for future services following the termination of the employment relationship came to EUR 219 K (previous year: EUR 135 K). As at 31 December 2011, the postemployment benefit provisions for the current members of the Executive Board stood at EUR 2,781 K (previous year: EUR 2,562 K). Postemployment benefit provisions for former members of the Executive Board were valued at EUR 1,977 K as at 31 December 2011 (previous year: EUR 2,053 K). Remuneration paid to former members of the Executive Board and the Supervisory Board came to EUR 225 K (previous year: EUR 207 K).
Remuneration paid to Sto AG’s Supervisory Board came to EUR 508 K (previous year: EUR402K).
The members of the Supervisory Board will only receive currently due payments for their activities on the committee. Excepted from this are compensation and other payments to opera
tions employee representatives pursuant to their employment contracts. No compensation has been granted for personally rendered services outside of committee activities by the members of the Supervisory Board.
The need for disclosure in accordance with Section314No.6asentence5–9oftheGermanCommercial Code (HGB) has been dispensed withpursuanttoSection314(2)sentence2HGB, read in conjunction with Section 286 (5) HGB.
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Members of the Executive Board:
Jochen StotmeisterChairman of the Executive Board Grafenhausen, Dipl.Betriebswirt (FH)Member of the BOD of Sto Corp., Atlanta/USAMember of the Supervisory Board of Golf AG Obere Alp, StühlingenMember of the Advisory Board of Karl Wörwag, Lack-undFarbenfabrikGmbH&Co.KG, Stuttgart
Gerd StotmeisterDeputy Chairman, Chief Technology OfficerAllensbach, Dipl.Ing. (FH)Chairman of the BOD of Shanghai Sto Ltd., Shanghai/ChinaCurator of the Fraunhofer Institute for Construction Physics (IBP), Stuttgart Member of the Advisory Board of Handte Umwelttechnik GmbH, Tuttlingen
Rolf WöhrleChief Financial OfficerVillingenSchwenningen, Dipl.Betriebswirt (BA)VicePresident of the Administrative Board of Sto AG Switzerland, Niederglatt/Switzerland
Rainer HüttenbergerChief Marketing and Sales Officer(since 01 April 2011)Stein a. Rhein/Switzerland, Dipl.Betriebswirt (FH)
Members of the Supervisory Board:Mandates 2011
Dr. Max-Burkhard ZwostaChairmanWittnau, Chartered Accountant and Tax Consultant Supervisory Board Chairman of Brauerei Ganter GmbH&CoKG,FreiburgSupervisory Board Chairman of Ganter Grundstücks GmbH, Freiburg Supervisory Board Chairman of Freicon AG, Freiburg Chairman of the Advisory Board of alfer aluminium Gesellschaft mbH, Wutöschingen Member of the Advisory Board of Christian BürkertGmbH&Co.KG,IngelfingenChairman of the Advisory Board of Walter MaischFamilienHoldingGmbH&Co.KG,Gaggenau
Helmut Göbeke-TeichertDeputy Chairman and Employee RepresentativeMarbachPensioner
Helmut HilzingerWillstättManaging Shareholder of Hilzinger GmbH, Willstätt
Mag. Dr. Heimo ScheuchVienna/AustriaChairman of the Executive Board of Wienerberger AG/Vienna, AustriaMember of the Supervisory Board of Soravia Group AG, Vienna/AustriaMember of the Supervisory Board of Wiener Börse AG, Vienna/Austria
Sto AG | Consolidated annual financial statements of the Sto Group (IFRS)
130
Prof. Dr.-Ing. Klaus SedlbauerStuttgart Chair of Construction Physics Faculty at StuttgartUniversity Head of the Fraunhofer Institute, Stuttgart, Holzkirchen,Kassel andNurembergChairman of the Supervisory Board of Calcon AG, Munich Member of the Supervisory Board of RWE Effizienz GmbHSenator of the Fraunhofer Society, Munich
Charles StettlerStäfa/SwitzerlandBanker/freelance Administrative BoardMember of the Administrative Board of BZBankAG,Wilen/Switzerland Member of the Administrative Board of Lienhardt&PartnerPrivatbankAG,Zurich/ Switzerland President of the Administrative Board Allco AG, LachenZurich/SwitzerlandMember of the Administrative Board of Intershop Holding AG, Zurich/SwitzerlandMember of the Administrative Board of Swiss-AustriaLeasingAG,Zurich/Switzerland Member of the Administrative Board of Gadola HoldingAG,Grüningen-Zurich/Switzerland President of the Administrative Board of Sto AG, NiederglattZurich/SwitzerlandMember of the Administrative Board of Wyler AG, Winterthur/Switzerland
Peter ZürnWesternhausenMember of the Management of the Würth Group, KünzelsauMember of the Supervisory Board of Würth á Islandi ehf., Garðabær/Iceland President of the Administrative Board of Würth Phoenix S.r.l., Bolzano/Italy Member of the Administrative Board of Würth AG, Arlesheim/Switzerland Member of the Administrative Board of Würth International AG, Chur/Switzerland
Member of the Administrative Board of Würth Svenska AB, Örebro/Sweden Member of the Advisory Board of Würth Norge AS, Hagan/Norway Member of the Administrative Board of Autocom Diagnostiv Partner AB, Trollhättan/Sweden Member of the Supervisory Board of Würth Belgie N.V., Turnhout/Belgium Member of the Supervisory Board of Würth Danmark A/S, Kolding/Denmark Member of the Administrative Board of Würth Hellas S.A., Athens/Greece Member of the Administrative Board of Würth Korea Co. Ltd., Seoul/South Korea
Wolfgang DellEmployee representative, Hattersheim(since 01 March 2011)Responsible for Maintenance Plant Technology, Sto AG
Klaus EigenstetterEmployee representativeBonndorf(until 28 February 2011)Head of Personnel Production locations, Sto AG
Lothar HinzEmployee representativeReutlingen(since 01 March 2011)Chairman of the Group Employee Representative Council and Chairman of the Employee Representative Council for the BadenWürttemberg sales region, Sto AG
Barbara MeisterEmployee representativeBlumbergDeputy Chairperson of the Group Employee Representative Council and Chairperson of the Weizen Employee Representative Council, Sto AG
Consolidated annual financial statements of the Sto Group (IFRS) | Sto AG
131
Holger MichelEmployee representativeHanoverTrade Union Secretary IG Bergbau, Chemie, EnergieMember of the Supervisory Board of Pirelli Deutschland GmbH, BreubergMember of the Supervisory Board of HT Troplast GmbH, Troisdorf
Jan NissenEmployee representativeTrossingenHead of Materials Management within the Sto GroupMember of the Advisory Board of Inotec GmbH(from January 2012)
Erhard RöhlEmployee representativeWiesbaden(until 28 February 2011)Technical Coordinator, Sto AG
Stühlingen, 12 April 2012
Sto AktiengesellschaftThe Executive Board
Jochen Stotmeister(Chairman)
Rolf Wöhrle
Gerd Stotmeister(Deputy Chairman)
Rainer Hüttenberger
132
Sto AG | Audit certificate Sto Group
Based on the final results of our audit of the consolidated financial statements and the Group management report we have issued the following auditors’ report.“We have audited the consolidated financial statement, comprising the statement of recognised income and expenses, the balance sheet, the statement of changes in equity, the cash flow statement, and the notes to the financial statements, together with the Group management report for the fiscal year from 1 January until 31 December 2011. The preparation of the consolidated financial statements and the Group management report in accordance with IFRS as they are to be applied in the EU and additionally Section 315a (1) of the German Commercial Code are the responsibility of the Company’s legal representatives. Our responsibility is to express an opinion on the consolidated financial statements and the consolidated management report based on our audit.We conducted our audit of the consolidated financial statements in accordance with Section 317 HGB and the German generally accepted standards for the audit of financial statements promulgated by the Institut der Wirtschaftsprüfer (IDW). Those standards require that we plan and perform the audit such that misstatements materially affecting the presentation of the net assets, financial position and results of operations in the consolidated financial statements in accordance with (German) principles of proper accounting and in the Group management report are detected with reasonable assurance. Knowledge of the business activities and the economic and legal environment of the Group and evaluations of possible misstatements are taken into account in the determination of audit procedures. The effectiveness of the accountingrelated internal control system and the evidence supporting the disclosures
in the books and records, the consolidated financial statement and the Group management report are examined primarily on a test basis within the framework of the audit. The audit includes assessing the annual financial statements of the companies included in consolidation, the determination of the companies to be included in consolidation, the accounting and consolidation principles used and significant estimates made by the general partner, as well as evaluating the overall presentation of the consolidated financial statements and Group management report. We believe that our audit provides a reasonable basis for our opinion.Our audit did not give rise to any objections.In our opinion, based on the findings of our audit, the consolidated financial statements comply with the legal requirements and give a true and fair view of the net assets, financial position and results of operations of the Group in accordance with IFRS as they are to be applied in the EU and additionally Section 315a (1) of the German Commercial Code (HGB). The Group management report is consistent with the consolidated financial statements and as a whole provides a suitable view of the Group’s position and suitably presents the opportunities and risks of future development.”
VillingenSchwenningen, 18 April 2012
Ernst&YoungGmbHWirtschaftsprüfungsgesellschaft
Nietzer Greiner Chartered Chartered Accountant Accountant
Audit certificate
Consolidated annual financial statements of the Sto Group (IFRS) | Sto AG
133
Responsibility statement by the legal representatives Sto Group | Sto AG
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 Group 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.
Stühlingen, 12 April 2012
Sto AktiengesellschaftThe Executive Board
Jochen Stotmeister(Chairman)
Gerd Stotmeister(Deputy Chairman)
Rolf Wöhrle
Rainer Hüttenberger
Responsibility statement by the legal representatives
133
134
Publisher’s details
Publisher Sto AG, StühlingenConcept and design StraubDruck+MedienAGText TIKText,Information&KommunikationGmbHPressure StraubDruck+MedienAG
Photographic credits
Interim report on the first half of 2012 .....................................................16 May 2012 Annual General Meeting 2012 ...................................................................12 June 2012Report on the first half of 2012 .................................................................30 August 2012Interim report on the second half of 2012 ................................................15 November 2012Electronic publication of the annual financial statements for 2012 ........30 April 2013
Calendar of events in 2012
The annual financial statements of Sto AG (HGB) are available in electronic form at www.unternehmensregister.de. In addition, they are published on the website www.sto.de or may be requested in writing by post:
Sto AGFS departmentEhrenbachstrasse 1D79780 Stühlingen
This report contains forwardlooking statements which are based on Management’s current assumptions and
estimates concerning future developments. Such statements are subject to risks and uncertainties which Sto cannot
control or estimate precisely. If any uncertainty arises or the assumptions on which these statements are based prove
to be incorrect, actual results may differ materially from these statements. Sto is under no obligation to update
forwardlooking statements to incorporate any events which come to light after the publication of this report.
Title: beermedia, Fotolia.com
Page 2, 30, 50, 53 top: Sto AG
Page4,14:BerndSchumacher,Freiburg
Page48:HubertKörner,Fotolia.com
Page 53 bottom: Habitat.Unit/TU Berlin
Page54:Franz-JosefMüller,Windhoek
Head officeSto AGEhrenbachstrasse 179780 Stühlingen, GermanyTelephone +49 7744 [email protected]
Subsidiaries, internationalRussiaOOO STOMIX ORELul.Tscheskaya, d.6RU-302525 OrelTelephone +7 4862 363 [email protected]
SwitzerlandSto AGSüdstrasse 14CH-8172 Niederglatt/ZHTelephone +41 44 [email protected]
SingaporeSto SEA Pte. Ltd.159 Sin Ming Road, #06-02 Amtech BuildingSG-Singapore 575625Telephone +65 64 [email protected]
SwedenSto Scandinavia ABGesällgatan 6S-582 77 LinköpingTelephone +46 13 [email protected]
Slovak RepublicSTOMIX Slovensko s.r.o.Ul. 29.augusta 35SK-974 01 Banská BystricaTelephone +421 484 141 [email protected]
SpainBeissier S.A.Txirrita Maleo 14E-20100 ErrenteriaTelephone +34 902 100 [email protected]
SpainSto SDF Ibérica S.L.Pol. Ind. Les Hortes del Cami RalVia Sergia, 32 - nave 1E-08302 Mataró (Barcelona)Telephone +34 93 7415 [email protected]
Czech RepublicSto s.r.o.Čestlice 271CZ-251 70 DobřejoviceTelephone +420 225 996 [email protected]
Czech Republic STOMIX spol. s.r.o.Skorošice 197CZ-790 66 Skorošice Telephone +420 584 484 111 [email protected]
U.K. and IrelandSto Ltd.2 Gordon AvenueHillington ParkGB-Glasgow G52 4 TGTelephone +44 141 892 [email protected]
HungarySto Épitöanyag Kft.Jedlik Ányos u. 17H-2330 DunaharasztiTelephone +36 24 510210 [email protected]
USASto Corp.3800 Camp Creek ParkwayBuilding 1400, Suite 120Atlanta, Georgia 30331Telephone +1 800 [email protected]
Distribution partners, internationalAddresses and informationavailable from:Telephone +49 7744 57-1131
Subsidiaries, nationalStoCretec GmbHGutenbergstr. 6D-65830 KriftelTelephone +49 6192 [email protected]
BelgiumSto NV/SAZ.5 Mollem 70B-1730 AsseTelephone +32 2 [email protected]
ChileSto Chile Ltda.Volcán Lascar Oriente 781Parque Industrial Lo BozaCL-Pudahuel-SantiagoTelephone +56 02 949 35 [email protected]
ChinaShanghai Sto Ltd.288 Qingda RoadPudongCN-201201 ShanghaiTelephone +86 2158972295www.sto.com.cn
DenmarkSto Danmark A/SAvedøreholmen 86DK-2650 HvidovreTelephone +45 [email protected]
FinlandSto Finexter OYMestarintie 9FI-01730 VantaaTelephone +358 207659 [email protected]
FranceBeissier S.A.S.Quartier de la GareF-77760 La Chapelle la ReineTelephone +33 1 [email protected]
FranceSto S.A.S.224, rue Michel CarréF-95872 Bezons CedexTelephone +33 1 [email protected]
ItalySto Italia SrlVia G. di Vittorio, 1/3Zona Ind. le TerrafinoI-50053 Empoli (Fl)Telephone +39 0571 [email protected]
MalaysiaSto SEA Sdn. Bhd.No. 21, Jalan Rajawali 2Bandar Puchong JayaMY-47100 Puchong, SelangorTelephone +603 8070 [email protected]
NetherlandsSto Isoned BVLingewei 107NL-4004 LH TielTelephone +31 344 [email protected]
NorwaySto Norge ASWaldemar Thranes gate 98 AN-0175 OsloTelephone +47 6681 [email protected]
AustriaSto Ges.m.b.H.Richtstr. 47A-9500 VillachTelephone +43 4242 [email protected]
PolandSto – ispo Sp. z o.o.ul. Zabraniecka 15PL-03-872 WarszawaTelephone +48 22 [email protected]
RussiaOOO StoUl. Bolshaya Yakimanka 31RU-119180 MoscowTelephone +7 495 [email protected]
StoVerotec GmbHHanns-Martin-Schleyer-Strasse 1D-89415 Lauingen/DonauTelephone +49 9072 [email protected]
SÜDWEST Lacke + FarbenGmbH & Co. KGIggelheimer Str. 13D-67459 Böhl-IggelheimTelephone +49 6324 [email protected]
Hemm Stone GmbHMergentheimer StrasseD-97268 KirchheimTelephone +49 9366 [email protected]
Branches/SalesCentres/distribution partnersAddresses and information available from:Telephone +49 7744 57-1010
Holding company, nationalInotec GmbHWaldshuter Strasse 25D-79761 Waldshut-TiengenTelephone +49 7741 [email protected]
Sto at a glance
Sto Group 2006* 2007* 2008* 2009* 2010* 2011 Changes in %
11/10Turnover 854.8 884.7 946.7 924.6 986.0 1,106.8 12.3%
Germany 410.9 407.4 431.1 450.6 489.2 529.4 8.2%
Non-Germany 443.9 477.3 515.6 474.0 496.8 577.4 16.2%
Investments (without financial assets) 16.3 19.7 21.1 20.3 18.2 27.6 51.6%
Depreciation/amortisation (without financial assets) 24.7 24.4 24.4 24.5 25.2 29.7 17.9%
EBITDA 97.1 99.4 107.7 106.8 110.8 134.2 21.1%
EBIT 72.4 75.0 83.2 82.3 85.6 104.5 22.1%
EBT 65.9 69.9 76.7 79.2 84.2 103.5 22.9%
EAT (earnings after taxes) 50.4 48.5 52.1 55.9 58.5 70.3 20.2%
per ordinary share (EUR) 7.33 7.27 8.08 8.65 9.03 10.89
per preference share (EUR) 7.39 7.33 8.14 8.71 9.09 10.95
Cash flow from operating activities 80.00 78.90 87.50 113.20 93.00 92.70 –0.3%
per share (EUR) 11.67 11.89 13.62 17.62 14.48 14.43
Total assets 526.4 493.1 527.8 568.6 620.1 669.7 8.0%
Equity 224.5 242.9 284.0 325.3 375.3 426.0 13.5%
in % of total assets 42.7 49.3 53.8 57.2 60.5 63.6
Employees (year end) 3,913 4,056 4,155 4,145 4,249 4,695 10.5%
of which Germany 2,221 2,286 2,317 2,313 2,358 2,495 5.8%
of which non-Germany 1,692 1,770 1,838 1,832 1,891 2,200 16.3%
Sto AG 2006 2007 2008 2009 2010 2011 Changes in %
11/10Turnover 470.1 471.5 499.9 508.7 540.5 586.8 8.6%
Export ratio in % 19.6 20.9 20.6 18.2 16.7 17.5
Investments
in property, plant and equipment 7.3 6.3 7.7 6.4 9.2 11.9 29.3%
in financial assets 0.5 1.2 1.1 1.0 1.4 16.3 1,064.3%
Depreciation/amortisation 15.0 14.5 13.1 12.7 12.7 12.2 –3.9%
Earnings on ordinary activities 41.8 48.1 63.4 80.8 72.1 83.3 15.5%
Net profit for the year 37.6 37.2 49.3 65.6 51.1 65.4 28.0%
Cash flow from operating activities 43.9 48.6 61.2 86.9 84.8 70.6 –16.7%
Dividend/bonus
per ordinary share (EUR) 0.25/0.84 0.25/0.84 0.25/2.06 0.25/2.06 0.25/3.06 0.25/4.56
per preference share (EUR) 0.31/0.84 0.31/0.84 0.31/2.06 0.31/2.06 0.31/3.06 0.31/4.56
Total assets 374.9 356.1 398.9 447.0 458.0 492.0 7.4%
Equity 149.6 179.2 221.4 272.0 285.5 329.5 15.4%
in % of total assets 39.9 50.3 55.5 60.9 62.3 67.0
Employees (year end) 1,897 1,946 1,960 1,947 1,997 2,057 3.0%
(Figures in EUR mil l ion)
* Some details differ from the details in the consolidated annual statement for the fiscal year of 2010 as certain adjustments were implemented. For more details see the Notes – General part 7.
Rounding of amounts may lead to minor deviations in totals and in the calculation of precentages in this report.
