Annual Report 2016 Transformation to the trade fair of the future

Transcription

1 since 1924 Annual Report 2016 Transformation to the trade fair of the future

2 U2 Table of contents At a glance Foreword Easy in, easy win More wows New ways Fresh know-how Always on Management report on Koelnmesse GmbH and the Koelnmesse consolidated companies for the fiscal year from 1 January to 31 December 2016 Consolidated balance sheet Consolidated income statement Balance sheet of Koelnmesse GmbH Income statement of Koelnmesse GmbH Notes concerning the consolidated financial statement and annual financial statement Consolidated cash flow statement Consolidated shareholders equity list Audit opinion Supervisory Board report Table of contents 02/03

3 At a glance Koelnmesse in figures 2016 Key trade fair figures Key financial figures Events Exhibiting companies Koelnmesse s own trade fairs Koelnmesse s own trade fairs abroad Guest events Total Koelnmesse s own trade fairs Koelnmesse s own trade fairs abroad Guest events Special events Total ,108 13,240 6,211 35,559 Koelnmesse consolidated companies Sales EBITDA Net loss Investments 1 Equity Total assets Equity ratio 1 including additions from initial consolidation EUR million EUR 17.9 million EUR 0.9 million EUR 32.4 million EUR million EUR million 48.1 % Visitors Koelnmesse s own trade fairs Koelnmesse s own trade fairs abroad Guest events Total 1,306, , ,770 2,315,222 Koelnmesse GmbH Sales EBITDA Net loss Investments Equity Total assets Equity ratio EUR million EUR 12.2 million EUR 4.7 million EUR 30.0 million EUR million EUR million 50.3 % Koelnmesse consolidated companies workforce size (average for the year) 784 Hall capacity 284,000 m 2 At a glance 04/05

4 Executive Board of Koelnmesse: Katharina C. Hamma, Gerald Böse and Herbert Marner Transformation to the trade fair of the future Koelnmesse is launching its strategic investment programme without inherited liabilities Gerald Böse, President and Chief Executive Officer Cologne, May 2017 With investments in the trade fair grounds and its infrastructure, digitisation of halls and services, internationalisation of the portfolio, and further development of events, Koelnmesse is advancing its transformation into the trade fair authority of the future. So in years to come, we will continue to offer the perfect setting for our customers business and success at events tailored to the industries they serve. Above all, our investments and developments are intended to serve them: the exhibitors and visitors! On the following pages, we have visualised how we imagine accomplishing that: EASY IN, EASY WIN _ Easy, stress-free access to the trade fair grounds. MORE WOWS _ Experiencing outstanding events in attractive, multifunctional halls. NEW WAYS _ Reaching objectives, efficiently and flexibly. FRESH KNOW-HOW _ Quickly and systematically benefiting from market and industry expertise. ALWAYS ON _ Being part of the industry, 365 days a year. We surpassed our own ambitious projections again in Sales by the consolidated companies reached 274 million euros, more than 17 million higher than the forecast. The expected cyclical shortfall is less than one million euros. This result is significantly better than expected. With sales of more than 320 million euros, in 2017 we intend to break the previous record set in This positive trend is not a fair-weather phenomenon: In a four-year comparison, average sales are more than 19 percent higher. Sales for the next few years are at a high level as well. Thus, Koelnmesse remains on track for long-term success. We repaid all of the loans from previous years in the financial year under report. This frees us up to vigorously strengthen our investment programme. Become part of this endeavour and join us: in the transformation to become the trade fair authority of the future! We succeeded in strengthening the basis for the success in which our company and our customers share once again in the fiscal year completed. Foreword 06/07

5 Easy in, easy win Individual transportation concepts, optimally tailored to the events they serve, smart logistics areas within the trade fair grounds and in the immediate vicinity of Koelnmesse, new parking spaces in the new Car Park Zoobrücke reaching the trade fair halls is easy and stress-free for exhibitors and visitors alike. They can immerse themselves directly and easily in the world of their industry and achieve their goals: transacting business, celebrating successes. Koelnmesse 08/09

6 More wows Emotional events, perfectly staged: The halls that organisers, exhibitors and visitors experience at Koelnmesse are flexible and attractive. Trade fairs, exhibitions, congresses or special events this is where innovative design ideas become unforgettable experiences. In future, new, multi-functional event spaces for outstanding events will be available: CONFEX and Hall 1plus. Koelnmesse 10/11

7 New ways Koelnmesse is getting in shape for the future. New hall technology and an innovative IT infrastructure make the trade fair grounds easy to navigate: visitors quickly reach their destinations, and exhibitors are easy to locate. The planned Terminal adds even more flexibility to use the trade fair complex by creating a clearly laid-out and transparent structure, free of detours. Koelnmesse 12/13

8 Fresh know-how Many years of experience, combined with an international network of established subsidiaries and respected partners: our customers benefit quickly and systematically from the market and industry expertise that Koelnmesse has to offer. Their knowledge bundles them into global fields of expertise. With path-breaking events, Koelnmesse itself provides fresh inspiration for whole sectors of the economy. Koelnmesse 14/15

9 Always on With digital processes, services, and offers, Koelnmesse sets new standards. Attention is focussed year-round on our exhibitors and visitors needs. ambista the business network for the furnishing industry supplies our customers with attractive contacts, globally and locally. Even if there are no trade fairs in progress. 365 days a year, the Internet platform promises direct access to industry-related news, events, products and contacts. To be continued. Koelnmesse 16/17

10 more than 50, exhibiting companies from around countries 3 millionvisitors Management report on Koelnmesse GmbH and the Koelnmesse consolidated companies for the fiscal year from 1 January to 31 December 2016 leading trade fairs for around 25sectors of the economy I. Profile of the company and the consolidated companies 1. Business Model The figures refer to the total programme of Koelnmesse. Business operations at Koelnmesse encompass the planning, organisation and execution of trade fairs, exhibitions and events in Cologne and in the leading markets worldwide, as well as the execution of guest events in Cologne. For this purpose, at its location in Cologne the company operates trade fair and exhibition halls along with related equipment and facilities that it constantly maintains and develops. In addition to the rental of stand area, Koelnmesse offers its customers a complete portfolio of services for the execution of trade fairs and exhibitions. These include stand construction, technical and logistics services, together with digital marketing, hotel reservation services and other services. With an overall programme in which more than 50,000 exhibiting companies from 127 countries and around 3 million visitors from 210 states participate, Koelnmesse is one of the largest international trade fair organisers in the world. It organises the leading trade fairs for around 25 sectors of the economy. Each year, Koelnmesse organises and manages around 80 trade fairs, exhibitions, guest events and special events in Cologne and in the most important markets all over the world. Along with events of its own abroad, Koelnmesse also organises participation in foreign trade fairs for stakeholders in Germany, as well as German pavilions at world expositions. The global network with representative offices in more than 100 countries provides the greatest possible proximity to customers, industries and markets. On average, 70 percent of the exhibitors and more than 40 percent of the visitors come from abroad. The trade fair grounds in Cologne is the world s sixth-largest: 284,000 m² of hall space and 100,000 m² of outdoor area are available for all manner of events. In the face of competition, the trade fair grounds are particularly noteworthy for their size, their flexibility, their location close to the city centre and the ease and speed with which they can be reached with all modes of transportation. A majority share of the Koelnmesse consolidated companies is held by the City of Cologne ( %) and the German state of North Rhine-Westphalia (20 %). The consolidated companies consist of Koelnmesse GmbH together with ten subsidiaries abroad, as well as Koelnmesse Ausstellungen GmbH. Expolink Global Network Ltd., of Bangkok/Thailand, has been included in the consolidated financial statements for the first time. Rounding out the portfolio are a 49-percent share each in KölnKongress GmbH (City of Cologne: 51 %) and in KölnKongress Gastronomie GmbH (KölnKongress GmbH: 51 %), and a 50-percent share in Koeln Parma Exhibitions S.r.l., Parma/Italy. Management report 18/19

11 2. Aims and strategies Koelnmesse is a source of momentum for a host of international industries. The company promotes markets by creating a qualified and efficient convergence of supply and demand using trade fair, congress and online platforms. At the same time, Koelnmesse benefits the city and region to a considerable degree. Each year, trade fair attendees expenditures generate more than 1.1 billion euros in sales in Cologne alone. The trade fair business secures more than 11,000 full-time jobs in the city in retail, trades, transport, logistics, and in the hotel and restaurant industries. 1 As a survey of 1,500 inter- national companies conducted in 2016 as part of the Cologne branding process revealed, after its business strength and quality of life, trade fairs and congresses in Cologne play the strongest role in the location s attractiveness among business circles worldwide. With its Course 101 corporate strategy, Koelnmesse secures its place among the leading international trade fair organisers worldwide and continues to strengthen its pre-eminent importance for the business location of Cologne, North Rhine-Westphalia and Germany. As a sustainable approach, the strategy extends until 2025; it is named after the 101 birthday of Koelnmesse in that year. Koelnmesse s long-term internationalisation strategy aims mainly to develop and expand events abroad and advancing an efficient worldwide sales structure. Asia and South America remain important target markets. As part of Fit for Growth in Asia, the sales structure in Asia was improved further in Successful events were placed in the target market of South America. Particularly with an eye to achieving the objectives in the dimensions of Innovation and Infrastructure, under the rubric of Koelnmesse 3.0, the company launched the largest investment programme in its history. Applying sweeping modernisation and new construction, the project aims to produce the most attractive city-centre trade fair grounds in the world by Koelnmesse 2016 has established another area of global expertise devoted to the future themes of Digital Media, Entertainment and Mobility. It complements the strategic cornerstones of Global Competence in Food and FoodTec in the food field as well as Global Competence in Furniture, Interiors and Design in its interior fairs. This strengthens the unique profile of Koelnmesse vis-à-vis customers and the general public. This new area of expertise comprises the events gamescom, dmexco, photokina, INTERMOT Cologne, THE TIRE COLOGNE as well as DIGILITY. subsidiaries abroad countries To make the most of the business opportunities and potential of digitisation, Koelnmesse is continuing to push ahead with its digital strategy across all dimensions of activities. The focus is upon developing new digital business models and service offers. With new hardware and software, Koelnmesse also relies on optimising its own processes, and promotes networking and knowledge management. Another area of emphasis involves digitisation of the trade fair grounds. foreign representations in more than 1 These figures are based on a study from the year Management report 20/21

12 II. Economy Report 1. General macroeconomic and industry conditions A. General macroeconomic conditions B. Industry conditions The global economy experienced a modest upturn in According to the German Federal Ministry for Economic Affairs and Energy (BMWi), however, global early indicators generally point to further positive momentum. The International Monetary Fund (IMF) has calculated global economic growth of 3.1 % for The IMF expects an increase of 3.4 % and 3.6 %, respectively, for 2017 and For the Eurozone, following economic growth of 1.7 % in 2016, it predicts a 1.6 % increase for The economies of the developing and emerging countries grew by 4.1 % in 2016; this fell somewhat short of the mark predicted by the IMF (4.3 %). The Fund predicts an increase of around 4.5 % for 2017, and of some 4.8 % in The German economy continued its moderate pace of growth at the end of According to the German Federal Statistical Office, the economic situation in Germany in 2016 was characterised by solid and steady economic growth. The average increase over the year 2016 on the whole was 1.9 %. According to the Federal Statistical Office, positive impulses came particularly from the domestic market: The state increased its consumption outlays by 0.8 %, and household spending rose again slightly, by 0.3 %. The trend in investments, particularly in buildings, was positive. According to the Annual Economic Report 2017 completed on 27 January 2017, the German federal government expects growth in gross domestic product of around 1.4 % during the current fiscal year. AUMA, the Association of the German Trade Fair Industry reports an extraordinarily positive overall result for 2016: With about 191,000 exhibitors and more than 7.5 million square metres of booked stand area, new records were set, according to preliminary calculations by the industry association. Only the number of visitors, at around 10.5 million, fell just short of the record from 2001 (10.7 million). Compared to the respective previous events, around 1 % more exhibitors took part in the 186 international and national trade fairs in Germany in The rate of growth rate thus fell short of the previous year s level (2.0 %). The number of foreign exhibitors grew at an above-average rate once more, by 2.5 %. The stand area booked increased in 2016 as well even if the rate of increase was not as high as the previous year (2016: 0.5 %, 2015: 1.1 %). After an increase in 2015 (2.6 %), the numbers of visitors fell slightly, by 0.5 %, in The German trade fair organisers are planning 316 outbound trade fairs for 2017, and hence more than in previous years (2015: 295, 2014: 303). The regional focus remains on South, East and Central Asia, followed by the non-eu countries of europe. For the 159 planned trade fairs in Germany, AUMA forecasts steady to slightly increasing exhibitor and visitor figures for 2017 compared to the respective previous events. A survey by AUMA within the framework of the association survey of the Institut der Deutschen Wirtschaft (IW) found that the mood in the industry tends to be optimistic. Among German trade fair organisers, a clear majority has plans for higher investments in Many companies would also like to increase the number of employees. Outbound trade fairs of German trade fair organisers 277 Outbound trade fairs Outbound trade fairs 2017 (forecast) Management report 22/23

13 2. Trend of business and situation of the Koelnmesse consolidated companies Current status Current status modernisation and new construction from 2015 New construction projects in the next 15 years A. Trend of business of the Koelnmesse consolidated companies Koelnmesse achieved significantly better figures than planned in Sales by the consolidated companies stood at around 274 million euros, more than 17 million higher than the forecast. In a four-year comparison, average sales were approximately 19 % higher, rising from around 232 million euros between 2009 and 2012 to 277 million euros between 2013 and At 0.9 million euros, the loss that was anticipated due to cyclical effects was considerably lower than the planned shortfall of 17.0 million euros. Factors that contributed towards these marked improvements in result included very positive trends among own events, the guest-event business, outbound fairs, the service business and the lasting impact of the efficiency programmes. The 73 trade fairs and exhibitions held worldwide in 2016 featured more than 35,500 exhibiting companies from 102 countries and in excess of 2.3 million visitors from 190 countries. Added to this were some 144,000 participants in congresses that were held outside of the trade fairs and organised by KölnKongress GmbH. There were 25 own and 20 guest events held in Cologne, together with a special event; there were also 27 trade fairs held abroad. Pueri Expo, in São Paulo/Brazil, celebrated its première in Other events held in the Koelnmesse portfolio for the first time were the International Exhibition for the Food and Beverage Industry Alimentec in Bogotá/Colombia; the Dairy Industry Conference in Karnal/Haryana/India; and Cibus Tec, in Parma/Italy. Premières were held in Cologne for veganfach, and for DIGILITY, the new trade conference and expo for Augmented and Virtual Reality. In terms of all three of the key parameters for trade fairs identified by AUMA, the Association of the German Trade Fair Industry, a large share of Koelnmesse s own programme developed at a rate higher than the industry average in Significant growth in the ranks of exhibitors over previous events were reported by INTERMOT Cologne, dmexco and ORGATEC. There was steep growth in visitorship versus prior events for dmexco, ORGATEC and spoga+gafa/spoga horse (autumn). In terms of the take-up of exhibitor space, there was considerable growth in fairs including dmexco, ORGATEC, spoga horse (autumn) and ProSweets Cologne. Most of the guest events in Cologne assisted by Koelnmesse Ausstellungen GmbH reported higher growth than was forecast over the respective previous events. The Koelnmesse 3.0 investment programme continued to advance in Between now and 2030, it will prepare the trade fair grounds in Cologne for the high demands of the trade fair sector of the future. The programme also sets standards in terms of efficiency, flexibility, attractiveness and equipment. In late March, a jury selected the winning design for the new buildings in the southern part of the trade fair grounds. Since then, concrete plans have been taking shape for Hall 1plus; the flexible trade fair, congress and event hall CONFEX ; and the central entrance Terminal as a new connecting axis. The new Koelnmesse created within the framework of Koelnmesse 3.0 is the heart of the extensive infrastructural development along the east banks of the Rhine River in Cologne. The first new construction measure began in 2016 with the Car Park Zoobrücke. A modern car park is being built in the immediate vicinity of the trade fair grounds that will offer not only 3,260 parking spaces but also a logistics area for set-up and dismantling operations while at the same time providing relief to traffic in neighbourhoods on the east side of the Rhine in Cologne. Further modernisation work was performed as well: Roofing works were carried out in the south part of the trade fair grounds, and the building control system for the entire trade fair grounds was replaced. Management report 24/25

14 employees of Koelnmesse GmbH employees of Koelnmesse Ausstellungen GmbH employees of foreign subsidiaries Koelnmesse s long-term internationalisation strategy remains successful. In 2016, Koelnmesse continued to expand its involvement particularly in South America. There, it successfully implemented the Brazilian trade fair duo FIT 0/16 and Pueri Expo in São Paulo; Alimentec, the expo for food and food-service equipment, in Bogotá/Colombia; and ANUTEC BRAZIL, the trade fair for nutrition technology in Curitiba/Brazil. By establishing the company Koeln Parma Exhibitions S.r.l. jointly with Fiere di Parma, Koelnmesse is pursuing its objective of substantial expansion in its position of market leadership in the area of food technology. With a worldwide network of representative offices in more than 100 countries, the very high rate of participation of foreign exhibitors and visitors in leading trade fairs in Cologne and some 30 foreign trade fairs, a number of them leading industry platforms in their respective regions, Koelnmesse is well-positioned internationally. As a result of trade fair cycles, foreign business in 2016 was stronger than in 2015, with sales before consolidation of 38.1 million euros (previous year: 25.7 million euros). Foreign business thus constitutes 14 % of total sales and reaches the strategic objective, set in 2011, of a share between 12 % and 15 %. On average, there were a total of 784 employees employed with the Koelnmesse consolidated companies in 2016 (previous year: 720). Of these, 594 (previous year: 564) worked at Koelnmesse GmbH, 15 (previous year: 16) at Koelnmesse Ausstellungen GmbH and 175 (previous year: 140) at the foreign subsidiaries of Koelnmesse GmbH 1. Koelnmesse received a total of around 5,200 job applications in 2016, around 600 of these alone for advertised apprenticeships beginning 1 August Koelnmesse currently employs 18 aspiring event managers spanning 3 cohorts, together with 7 trainees. Koelnmesse received honours again in 2016 for its outstanding achievements in career training. Of the 6 trainees who completed their training in 2016, 4 were awarded marks of very good, automatically qualifying them to compete for top honours by the Cologne Chamber of Industry and Commerce. One trainee actually completed her job training as the best of her year for North Rhine-Westphalia. All in all, given its outstanding appeal to applicants, Koelnmesse was again in a position to easily fill nearly all of the positions advertised with highly qualified applicants. The company offered internships to 43 school pupils and university students in It continues its effort to promote the best talent through one scholarship at the University of Cologne, supports the research and instruction efforts of the Institute of Trade Fair Management and Distribution Research and, together with the four other Cologne companies, participates in a cross-mentoring programme for women. Koelnmesse used the results of the 2015 risk assessment to make further improvements in its employees career activities, for instance by offering seminars on forms of relaxation and stress reduction. As part of the Digital Strategy, in 2016 all employees were equipped with new hardware and software that enables them to work in an environment that is digital, mobile and networked. This is one way in which Koelnmesse is responding to the ever-changing world of work. The new devices give the workforce the flexibility to work in their offices in the Messehochhaus or from home. Along with the underlying conditions in Cologne as a trade fair venue, with the sixth-largest trade fair grounds in the world, modern infrastructure and ideal access, it is particularly the committed, creative and service-driven Koelnmesse staff who are decisive to the company s success. The management expressly thanks the entire workforce for the very good performance in the year Workforce figures at all subsidiaries including the respective Executive Vice Presidents Management report 26/27

15 B. Situation of the Koelnmesse consolidated companies Net asset position: Total assets were higher on the reporting year and went from million euros to million euros. On the assets side, the increase is mainly the result of investment in fixed assets, which were higher by a total of 10.5 million euros. There were additions in the amount of 32.4 million euros alongside depreciation of 17.5 million euros and disposals of 4.6 million euros (taking first-time consolidation effects into effect). Aside from classic investments by the consolidated companies in this case particularly by Koelnmesse GmbH there were also additions from first-time consolidation of the Brazilian, Thai and Italian companies in the amount of 9.3 million euros. Fixed assets amounted to 51.4 % of total assets (previous year: 49.0 %). The average depreciation rate stood at 11.3 %, compared to 11.7 % in the previous year. The 24.2-million-euro decline in cash and cash equivalents, on the other hand, was influenced by investments as well as the investment of cash and cash equivalents in investment securities in the amount of 17.3 million euros. Trade receivables, on the other hand, were 4.9 million euros higher year-over-year, due to cyclical effects. On the liabilities side, total assets were 7.0 million euros higher, due chiefly to the 9.4-million-euro increase in other provisions. This increase comes mainly from the increase in the other provisions at the parent company. A 1.1-million-euro increase in other liabilities, as well as a slight, 1.6-million-euro increase in advance payments received due to reporting-date effects, compares with a decrease of 4.2 million euros in liabilities to financial institutions, which now stand at 0. Liabilities overall are 2.0 million euros as a result. Equity is 0.3 million euros lower and stands at million euros. The change is the result of net income, holdings by other shareholders and the changes in per contra items from foreign currency translation. The result of the nearly unchanged equity relative to slightly higher other liabilities is a slight decrease in the equity ratio, from 49.4 % to 48.1 %. Financial situation: Cash funds according to the cash flow statement in the amount of million euros (previous year: million euros) include 104 million euros in cash and cash equivalents, together with investment securities totalling 17.3 million euros and acquired in The increase in these funds owes mainly to the positive cash flow from ongoing business operations in the amount of 37.7 million euros (previous year: 56.5 million euros). This compares with 26.7 million euros in cash flow from investments in fixed assets (previous year: 14.3 million euros); 4.2 million euros of this amount is mainly the result of repayment of the remaining loan (previous year: 4.2 million euros). Koelnmesse GmbH was in a position to meet its payment obligations at all times throughout the year Construction and modernisation measures within the scope of the project Koelnmesse 3.0 can lead to medium-term financing requirements at Koelnmesse GmbH. A credit requirement totalling around 120 million euros is expected in the first of three investment phases. Due to the very high level of cash and cash equivalents and to the currently exceedingly very attractive opportunities for borrowing, the company assumes that sufficient liquidity will be available in the years to come. Thanks to repayments of loans amounting to 4.2 million euros, the consolidated companies liabilities to financial institutions were repaid in full in The capital structure is characterised by an equity ratio that has decreased slightly by 1.3 percentage points. Results: Sales by the consolidated companies in the 2016 fiscal year were unable to meet the previous year s record sales of million euros; this was the result of cyclical effects. At million euros, though, it is surpassing the amount forecast by a considerable 17.3 million euros and is the company s highest sales figure for an even-numbered year. At 2.5 %, the decrease in event-related expenses versus 2015 was less steep weaker than the decrease in net sales. Excluding the reclassifications at Koelnmesse GmbH in the course of implementation of the German Accounting Law Implementation Act (BilRUG), event-related expenses would have been 5.1 million euros lower, thus falling by 5.3 % year-over-year. Personnel expenses rose by 9.7 % or 4.6 million euros. Of the increase in expenses for the consolidated companies, 2.9 million euros were attributable to the German companies, and 1.7 million euros to the foreign subsidiaries. Due primarily to provisions, expenditures abroad were 28.7 % or by 0.8 million 17.3 Mio. EUR Sales increase above forecast Mio. EUR Sales forecast 2016 euros in Singapore and by 0.9 million euros as a result of first-time inclusion of the companies in Brazil, Italy and Thailand. The income tax expense for the 2016 financial year stems mainly from foreign companies. 0.4 million euros of this amount can be attributed to the subsidiary in India, and 0.5 million euros to the new joint venture in Italy. Other taxes relate for the most part to property tax for Koelnmesse GmbH. The consolidated companies net loss of 0.9 million euros was 16.1 million euros better than the forecast. Earnings before interest, taxes, depreciation, and amortization (EBITDA) stand at 17.9 million euros (previous year: 62.1 million euros), exceeding last year s targets by 15.7 million euros. By the way, we refer to the explanations on the results of Koelnmesse GmbH Mio. EUR Sales 2016 For the remainder, we refer to the explanations on the net asset position of Koelnmesse GmbH. Management report 28/29

16 3. Trend of business and situation of Koelnmesse GmbH A. Trend of business of Koelnmesse GmbH B. Situation of Koelnmesse GmbH Koelnmesse GmbH organised 25 own trade fairs and exhibitions in Cologne in Most of these events developed positively at an above-average rate. Individual trade fairs report sales growth in the double-digit percentage range. Participation in outbound trade fairs supplements the high-quality Koelnmesse platforms in the most important target markets. There were 22 projects realised worldwide in 2016, including 17 by commission of the German Federal Ministry for Economic Affairs and Energy (BMWi) and 3 on behalf of the German Federal Ministry of Food and Agriculture (BMEL). On behalf of BMWi, Koelnmesse also realised and built an industry expo of the German dental industry in New York in Another project was implemented privately. At 50.7 million euros, the Services Division made a significant contribution to sales. The aim is to continuously expand the share of this revenue generated through services for exhibitors in the business fields of stand construction, technical and marketing services, and hotel and catering services. Net asset position: Total assets at Koelnmesse GmbH were 11.8 million euros lower and stood at 267 million euros. The decline in assets is mainly attributable to the repayment of a cash pooling facility of Koelnmesse GmbH for a foreign company with a total amount of 14.0 million euros. Cash and cash equivalents were lower alongside the inter-company payment as a result of securities investments of 17.4 million euros and due as well to high levels of investments in fixed assets. In total, cash and cash equivalents in Koelnmesse GmbH decreased by 43.1 million euros. Due to extensive investments in intangible and tangible assets as well as in financial assets, fixed assets were 11.8 million euros higher during the fiscal year under report and stood at million euros. 30 million euros in additions to investments compared with depreciations of 16.2 million euros and book value disposals of 2.0 million euros. 5.3 million euros in addition to intangible assets, including reclassified completed works, apply mainly to software cloud solutions; 2.1 million euros concern the acquisition of event rights. Assets under construction were 8.1 million euros higher, due particularly to additions totalling 12.1 million euros incurred chiefly within the scope of Koelnmesse 3.0. On the other hand, there were reclassifications of 4.0 million euros, particularly to intangible assets. Financial investments were related to commitments freshly entered into for subsidiaries and shareholdings in Italy, Thailand, Brazil and Germany. Among other things, a loan was also converted to equity vis-à-vis an affiliated company in the amount of 1.9 million euros. On the liabilities side, in addition to reduced equity and the increase in provisions, the 4.2 % reduction in total assets is based mainly on the decline in liabilities. Equity was lower by the amount of the net loss for million euros and stood at million euros. Because the drop in total assets was steeper than the drop-in equity, the equity ratio increased to 50.3 % (previous year: 49.8 %). Net provisions were 8.5 million euros higher. The increase is due to the increase in other provisions, and specifically to the further increase in rental provisions for the Northern Halls. Virtually unchanged, the tax provisions mainly concern the assessment period All in all, liabilities were 15.3 million euros lower. Liabilities to affiliated companies decreased significantly by 12.5 million euros, mainly due to the repayment of the cash pooling facility for a subsidiary. Liabilities to banks decreased by 4.2 million euros the amount of the scheduled loan repayment. Liabilities from advance payments received for purchase orders rose by 3.2 million euros due to cyclical effects; trade payables were 2.4 million euros lower as well, also for cyclical reasons. Financial situation: At the end of 2016, cash and cash equivalents of Koelnmesse GmbH totalled to 76.7 million euros, compared with million euros the previous year. In addition to the investment in securities and in fixed assets, the steep decline is attributable mainly to the repayment of liabilities to affiliated companies. There was a positive operating cash flow with a countervailing effect. The existing, long-term loans were repaid as planned in the amount of 4.2 million euros and expired at the end of Koelnmesse GmbH was in a position to meet its payment obligations at all times during the year under report. Results: Net sales at Koelnmesse GmbH for the 2016 fiscal year total to million euros (previous year: million euros). The year-over-year decrease is mainly the result of different trade fair cycles. Compared to the respective previous events, with overall growth in price and quantity, planned sales of million euros were considerably exceeded. At 3.3 %, event-related expenses decreased (by 6.4 % excluding BilRUG reclassifications) less steeply than sales (minus 18.7 %), resulting in lower gross profit. This owes especially to the fixed costs contained as a component of expenses, standing at 22.7 million euros as a result of the high, contractually agreed rental expenses for the Northern Halls and Congress Centre North. Personnel expenses rose by 7.4 % or 2.9 million euros. The increase is particularly due to tariff increases in salaries and workforce growth of 30 employees or 5.3 %. There was also continued relief during the reporting year as a result of changes made in personnel provisions during the year prior. Koelnmesse GmbH derived income in the amount of 8.2 million euros from the profit transfer by Koelnmesse Ausstellungen GmbH and Koelnmesse Inc., Chicago/USA. Earnings before interest, taxes, depreciation, and amortisation (EBITDA) including income through profit transfers, total to 12.2 million euros (previous year: 58.2 million euros). Tax charges in 2016 are mainly the result of property taxes. The net loss on the year totals to 4.7 million euros, an amount 16.5 million euros higher than the forecast. Management report 30/31

17 4. Trend of business and situation of Koelnmesse Ausstellungen GmbH Koelnmesse Ausstellungen GmbH, the wholly owned Koelnmesse subsidiary specialising in guest events and the event business, concluded the 2016 fiscal year with a positive trend of business and total sales in excess of forecast levels. During the past financial year, there were 20 guest events and a special event held in the Cologne location in which according to organisers more than 6,200 exhibitors and more than 366,700 visitors took part. The annual trade fair FIBO proved itself a source of guaranteed sales: For the fourth consecutive year, the renewed growth in space, the generation of additional first-time exhibitors and another record level of visitor ship that ensured an increase in sales and result for Koelnmesse Ausstellungen GmbH. The two newly acquired events, Passenger Terminal EXPO and BIO-europe, also contributed significant to improved sales and results. By marketing and renting free hall capacity to national and international trade fair organisers, companies and event agencies, Koelnmesse Ausstellungen GmbH had sales of 14.5 million euros, achieving 20.8 % more than the amount forecast. The company has a surplus before profit transfer in the amount of 6.3 million euros and, here, too, exceeded expectations by 2.1 million euros. Koelnmesse Ausstellungen GmbH organised a special event in It was staged with the concept of the cube solution developed by Koelnmesse Ausstellungen GmbH and will be carried on again in The trend in the net asset position was cyclical; total assets were 33 Teuros higher year-over-year and stood at 960 Teuros. On the assets side, this slight increase results particularly from the 299 Teuros increase in trade receivables, which stood at 756 Teuros. Compared to this, receivables from affiliated companies were 256 Teuros lower yearover-year. On the liabilities side, the slightly higher total assets are mainly the result of the 42 Teuros increase in trade payables and the 21 Teuros decrease in other provisions. The decline in liabilities is the result of reporting-date effects. The equity ratio decreased to 52.1 % in consequence of increased total assets (previous year: 54.0 %). Opportunities for the company arise from the Koelnmesse 3.0 investment programme. Particularly the addition and flexibilisation of space will significantly increase acquisitions of guest events, special-interest fairs and special events. The company sees risk factors particularly in insufficient hotel capacity and high hotel prices in Cologne. The company is included in the cash management system of its parent company Koelnmesse GmbH. Plans are for Koelnmesse Ausstellungen GmbH to organise 23 guest events and 3 special events in It anticipates sales of 14.7 million euros and a surplus before profit transfer of 6.0 million euros. 5. Overall presentation The Koelnmesse consolidated companies and Koelnmesse GmbH continued to grow strongly in the 2016 financial year compared with the respective previous events. The trend in business exceeded expectations and led a significant increase in sales and earnings compared to plan. III. Processes of special importance after the close of the fiscal year We have not received any information subsequent to the reporting date that would have resulted in a different statement of the company s situation with regard to mandatory reporting in accordance with Section 289 (1) of the German Commercial Code (HGB).

18 IV. Outlook and assessment of opportunities and risks As part of the Koelnmesse 3.0 programme, one of the most up-to-date car parks in Germany is being built. 1. Assessment of opportunities and risks The existing trade fairs and exhibitions at Koelnmesse continue to develop in a positive overall direction. New trade fairs are being organised and carried out in Germany and abroad. The Cologne branding process demonstrates that Koelnmesse, an attractive trade fair and congress location with events for the international business community, is the one of the most important aspects for Cologne as a business location. Over the medium term, the positive trend in events is expected to lead to increasing sales and net profits. From the point of view of management, the expected development is subject to operational and economic opportunities and risks. The risk-opportunity management system in place within the Koelnmesse consolidated companies ensures that these opportunities and risks are monitored and assessed promptly and systematically. Koelnmesse takes measures in response where necessary. A distinction is made between strategic, political/legal and technical risks, market and financial risks, and the corresponding opportunities. In some cases, business risks are covered by insurance plans. Management sees fundamental strategic opportunities in the location close to the city centre that is attractive to exhibitors and visitors alike. The attractiveness of the trade fair grounds is manifested and further developed through the measures taken under the Koelnmesse 3.0 investment programme. These investments represent the most comprehensive modernisation programme undertaken in the history of Koelnmesse. Koelnmesse is working to respond to the challenges with regard to the parking and traffic situation through construction of a new car park. With professional planning in advance of the measures with external specialists as well as through a special controlling within the scope of the Koelnmesse 3.0 programme, the company has taken all steps to keep the work of expansion from adversely affecting events held there. The favourable economic situation specific to construction could mean construction costs that run higher than originally anticipated. Market risks exist relative to extensions of event contracts. Densely packed event schedules, particularly in the spring and autumn time windows, may lead to scheduling conflicts. On the other hand, there are opportunities associated with self-generated and newly acquired events. In certain market segments, there are also risks as a result of increasing competitive pressure. Particularly noticeable is the sometimes tight situation in the hotel market with regard to individual events, which can lead to capacity bottlenecks and an associated competitive disadvantage in relation to hotel rates for Koelnmesse exhibitors and visitors. Another risk factor for the fair programme is the tense security situation in terms of international terrorism. Infrastructure such as airports, railway stations and event centres are particularly in focus. Koelnmesse responds to this with individual security concepts and increased cooperation with police and authorities in the context of its events in Cologne. Financial risks and opportunities exist in the form of currency risks in the event of wide fluctuations in the value of the euro relative to the currencies of the Koelnmesse subsidiaries. Management report 34/35

19 2. Outlook In its decision handed down on 29 October 2009, the European Court of Justice identified a violation by the City of Cologne of European laws on the award of contracts in the conclusion of the lease between the Grundstücksgesellschaft Köln Messe GbR and the City of Cologne for the northern section of the trade fair grounds. Consequently, the City of Cologne terminated the lease and discontinued payment of rental fees. Under the terms of an interim agreement, the Northern Halls remain available for use by Koelnmesse without any restrictions. In exchange, it pays a usage fee, currently in the amount of 75 % of the original rental fee agreed between the Grundstücksgesellschaft Köln Messe GbR and the City of Cologne. The difference between this and the original rental fee is set aside in the annual financial statement with a negative impact on earnings. If the concluding rent level should turn out to be lower than the original rent level, the result is a considerable income opportunity. Liquidity risks would arise if the concluding rent level is higher than the usage fee currently paid under the interim agreement. A termination of the interim agreement is possible at any time, subject to a notice period of three months, but has not been exercised to date. In connection with the aforementioned risks, at its meeting on 7 April 2011, the Cologne City Council decided to take all the measures required to ensure that Koelnmesse GmbH can continue to operate securely at all times in the future. This will be done in view of Koelnmesse s importance for the economy of Cologne and all of North Rhine-Westphalia and will involve all the legally permitted steps, whereby the requirements of the European state aid law in particular will be taken into account. In 2002, the company concluded a cross-border leasing agreement for the Southern Halls of the trade fair grounds. The agreement would initially remain in effect until December To date, this transaction has not produced any additional obligations or risks for the company, and none is currently discernible or expected in the medium term. Koelnmesse GmbH is a member of the supplementary pension fund of the City of Cologne (ZVK). The ZVK is responsible for providing its members employees with a supplementary pension for old age, occupational disability, incapacity, and surviving dependents. Currently, these supplementary benefits are financed through assessments. Parallel to this, ZVK is setting up capital cover. There is currently a shortfall in coverage in the amount of 32.8 million euros (consolidated companies: 34.0 million euros). If, during the transitional period from financing through assessments to financing with capital cover, ZVK should find itself unable to meet its obligations, Koelnmesse would be required to carry the obligations resulting from a residual shortfall in coverage. Koelnmesse does not anticipate an obligation to pay such additional contributions. No further major risks that could undermine the future development of the company are discernible is expected to be the last year for a long time with a negative result for the Koelnmesse consolidated companies. It anticipates sustained profits from 2017 onward and throughout its medium-term plan expects average sales in excess of the 300-millioneuro mark. All of the surplus flows to the Koelnmesse 3.0 investment programme, into further development of events in Germany and abroad, and into the digitisation of the service offer. The first events of 2017 confirm the path to growth at Koelnmesse. imm cologne/livingkitchen achieved record visitorship, and ISM again reported growth in the numbers of exhibitors. Hosted for the first time in the new annual cycle, ProSweets Cologne achieved stable visitor numbers, and spoga horse (spring) further established itself as an international platform for the industry. Successful events also include Asia-Pacific Sourcing, the International Dental Show IDS and h+h cologne. Signs for the further programme are positive throughout, whether for own events such as gamescom, dmexco, Anuga or interzum, or for guest events with leading trade fairs such as FIBO and ANGA COM. Koelnmesse is organising 79 trade fairs and exhibitions in the 2017 fiscal year. Of these, 27 are own events, 23 are guest events and 3 are special events. 26 trade fairs and exhibitions are taking place abroad. In addition, Koelnmesse expects to organise 28 foreign trade-fair participations in Premières will be celebrated by ProFood Tech in Chicago/ USA; and by the WellFood Summit in São Paulo/ Brazil. Also joining the Koelnmesse portfolio for the first time are IDEC Indonesia Dental Exhibition & Conference in Jakarta/Indonesia; EmTech HONG KONG in Hong Kong/China; and the KRUSHIK Exhibition in Pune/Maharashtra/India. Under the Koelnmesse 3.0 investment programme, the first phase of construction of the car park will be completed in The ambista B2B platform for the furnishings industry, which was launched at imm cologne in 2017, will continue to establish itself. Other digital services will follow; the focus also remains on digitisation of the trade fair grounds. Based on expected economic and business development, the sales forecast for the consolidated companies in 2017 is around 329 million euros, and for Koelnmesse GmbH 291 million euros. The projected result for the consolidated companies is 19.8 million euros. Profit forecast for Koelnmesse GmbH stands at 18.3 million euros. Plans for the consolidated companies assume an EBITDA in 2017 amounting to 43.6 million euros. Management report 36/37

20 V. Management statement In 2015, legislation was passed that calls for equal participation by women and men in leadership positions in the private sector and public service (Participation Act). As at year s end 2015, the proportion of female executives in the Supervisory Board stood at 19 %, at management level I at 33 %, at management level II at 6 % and at the management level III at 28 %. Under the new legislation, the Supervisory Board of Koelnmesse GmbH was required to set a target for the proportion of women in the Supervisory Board and the Management Board, and to lay down a deadline for achieving these goals. In addition, the Management Board had an obligation to set targets for the proportion of women in the two management levels below the Management Board, and to specify deadlines for achieving these targets. The first deadline for goal achievement must not extend past 30 June The Supervisory Board and Management Board have each decided to specify the period until 30 June 2017 as a first target deadline. The shareholders of Koelnmesse GmbH have set the target for the proportion of women in the Supervisory Board and the Management Board at 30 % and has notified the Supervisory Board of this decision. As a target for the proportion of women at management levels II and III, the Management Board of Koelnmesse GmbH has set 6 % for management level II and 28 % for management level III. The Management Board ties this specification to the express intention to work to increase the values stated insofar as vacancies arise at the respective levels during the period until 30 June 2017 and can be filled with suitable and interested female candidates. Cologne, 12 May 2017 Gerald Böse Katharina C. Hamma Herbert Marner

21 Consolidated financial statement for the fiscal year from 1 January to 31 December 2016 Consolidated balance sheet Assets EUR TEUR Liabilities EUR TEUR A Fixed assets I. Intangible assets 1. Concessions, industrial rights and 9,663, ,811 similar rights and assets as well as licences to such rights and assets purchased 2. Goodwill against payment 8,428, ,091, ,395 II. Property, plant and equipment 1. Land, leasehold rights and buildings including buildings on third-party land 106,967, , Technical machinery and equipment 3,728, , Other equipment, plant and office equipment 9,361, , Advance payments and construction in progress 14,590, , ,647, ,797 III. Financial assets 1. Investments in affiliated companies Loans to affiliated companies , Participating interests 139, , , ,878, ,388 B Current assets I. Inventories Supplies 220, II. Receivables and other assets 1. Trade accounts receivable 12,221, , Receivables from affiliated companies Receivables from associated companies and other investees 663, Other assets 9,206, ,739 22,091, ,596 A Equity I. Subscribed capital 51,200, ,200 II. Capital reserve 42,038, ,038 III. Retained from earnings Other retained earnings 381, IV. Consolidated accumulated profit 49,309, ,179 V. Per contra items from foreign currency translation -469, VI. Holdings by other shareholders 586, ,047, ,372 B Provisions 1. Provisions for pensions and similar obligations 5,854, , Tax provisions 5,167, , Other provisions 61,924, ,511 72,946, ,119 C Liabilities 1. Liabilities to financial institutions , Customer advance payments received for purchase orders 59,686, , Trade accounts payable 12,679, , Liabilities due to associated companies Residuary liabilities 6,555, ,479 of which from taxes EUR 633, (previous year TEUR 595) of which with respect to social security contributions EUR (previous year: TEUR 1.2) 78,921, ,965 III. Other securities 17,279, D Prepaid/deferred items 2,466, ,864 IV. Cash on hand, balances with credit institutions 104,013, , ,605, ,091 C Prepaid/deferred items 928, E Deferred tax liabilities 30, ,412, , ,412, ,371 Consolidated balance sheet 40/41

22 Consolidated income statement 2016 EUR 2015 TEUR 1. Net sales 274,031, , Other operating income 4,175, ,326 Total output 278,206, , Event-related expenses a) Expenses for supplies -8,707, ,112 b) Expenses for purchased services -169,620, , ,327, ,904 Gross income 99,878, , Personnel expenses a) Wages and salaries -42,503, ,660 b) Statutory social security contributions and expenses for pensions -9,861, ,079 of which for pensions EUR 3,007, previous year TEUR 2,612-52,365, , Amortisation of intangible fixed assets and property, plant and equipment -17,228, , Other operating expenses -28,751, , Other interest and similar income 772, Amortisation of investment securities -117, Other interest and similar expenses -1,008, ,813 of which expenses associated with interest accrued on provisions EUR 437, previous year TEUR 1, Earnings before taxes 1,179, , Income taxes -1,138, ,172 of which deferred taxes EUR -20, previous year TEUR Profit after taxes 40, , Other taxes -720, , Consolidated companies net loss/profit before holdings by other shareholders -679, , Profit/loss accruing to other shareholders -188, Consolidated companies' net loss/profit -868, , Profit carried forward 50,178, , Consolidated accumulated profit 49,309, ,179 Consolidated income statement 42/43

23 Annual financial statement of Koelnmesse GmbH for the fiscal year from 1 January to 31 December 2016 Balance sheet Koelnmesse GmbH Assets EUR TEUR Liabilities EUR TEUR A Fixed assets I. Intangible assets 1. Concessions, industrial rights and 8,451, ,740 similar rights and assets as well as licences to such rights and assets purchased 2. Goodwill against payment 1,362, ,814, ,324 II. Property, plant and equipment 1. Land, leasehold rights and buildings including buildings on third-party land 106,944, , Technical machinery and equipment 3,720, , Other equipment, plant and office equipment 8,789, , Advance payments and construction in progress 14,590, , ,044, ,184 III. Financial assets 1. Investments in affiliated companies 3,358, , Loans to affiliated companies 1,900, , Participating interests 5,440, ,698, , ,557, ,780 B Current assets I. Inventories Supplies 220, II. Receivables and other assets 1. Trade accounts receivable 6,880, , Receivables from affiliated companies 2,866, Receivables from associated companies and other investees 679, Other assets 7,597, ,138 18,024, ,641 A Equity I. Subscribed capital 51,200, ,200 II. Capital reserve 42,038, ,038 III. Retained from earnings Other retained earnings 381, IV. Consolidated accumulated profit 40,616, , ,236, ,892 B Provisions 1. Provisions for pensions and similar obligations 5,694, , Tax provisions 4,581, , Other provisions 59,378, ,767 69,655, ,125 C Liabilities 1. Liabilities to financial institutions , Customer advance payments received for purchase orders 44,477, , Trade accounts payable 10,097, , Liabilities due to associated companies and other investees 823, , Residuary liabilities 5,196, ,550 of which from taxes EUR 620, (previous year TEUR 581) of which with respect to social security contributions EUR (previous year TEUR 1.1) 60,596, ,863 III. Other securities 17,278, IV. Cash on hand, balances with credit institutions 76,716, , ,240, ,725 C Prepaid/deferred items 156, D Prepaid/deferred items 2,466, , ,954, , ,954, ,744 Balance sheet of Koelnmesse GmbH 44/45

24 Income statement of Koelnmesse GmbH 2016 EUR 2015 TEUR 1. Net sales 231,131, , Other operating income 3,038, ,119 Total output 234,170, , Event-related expenses a) Expenses for supplies -8,027, ,374 b) Expenses for purchased services -156,020, , ,048, ,727 Gross income 70,122, , Personnel expenses a) Wages and salaries -33,457, ,297 b) Statutory social security contributions and expenses for pensions -8,599, ,859 of which for pensions EUR 2,939, previous year TEUR 2,536-42,056, , Amortisation of intangible fixed assets and property, plant and equipment -16,132, , Other operating expenses -23,496, , Income from participating interests 1,871, of which from affiliated companies EUR 1,871, (previous year TEUR 0) 8. Income from profit- and loss-sharing agreements 6,313, ,205 of which from affiliated companies EUR 6,313, (previous year TEUR 7,205) 9. Income from loans from financial assets 57, of which from associated companies EUR 57, (previous year TEUR 0) 10. Other interest and similar income 621, of which from affiliated companies EUR 0.00 (previous year TEUR 0) of which income from discounting EUR Amortisation of financial assets and securities -221, Interest and similar expenses -1,007, ,809 of which to associated companies EUR 0.00 (previous year TEUR 0) of which expenses associated with interest accrued on provisions EUR 436, (previous year TEUR 1,087) 13. Earnings before taxes -3,928, , Income taxes -133, , Profit after taxes -4,062, , Other taxes -593, , Net loss/profit -4,655, , Profit carried forward 45,272, , Accumulated profit 40,616, ,272 Income statement of Koelnmesse GmbH 46/47

25 Notes concerning the consolidated financial statement and the annual financial statement I. General information The consolidated financial statement and the annual financial statement of Koelnmesse GmbH, Cologne (District Court of Cologne, Commercial Register entry no. HRB 952), have been drawn up in accordance with the provisions of the German Commercial Code and the law concerning limited liability companies. The following notes pertain to both the consolidated financial statement and the annual financial statement of Koelnmesse GmbH. Unless specifically noted otherwise, these remarks pertain to both financial statements. Koelnmesse GmbH is a large joint stock company as defined by German commercial law (Section 267 (3) HGB). The income statements were drawn up in accordance with the gross cost method as laid down in Section 275 (2) HGB. The material expenses item was renamed event-related expenses, as is usual for the trade fair sector. The German subsidiary included in the consolidated financial statement, Koelnmesse Ausstellungen GmbH, avails itself of the exemption clause for subsidiaries in Section 264 par. 3 HGB and thus waives the filing of an annual financial statement. First-time application of the German Accounting Law Implementation Act (BilRUG), the breakdown of the income statement was shortened through removal of the item for Profit/loss from ordinary activities and expanded to include the item for Earnings after tax. II. Scope of consolidation In addition to Koelnmesse GmbH, one German and ten foreign companies were also included in the consolidated financial statement in accordance with the regulations of full consolidation. The scope of consolidation encompasses the following companies, in the case of each of which Koelnmesse GmbH either directly or indirectly owns 100 % (Koelnmesse YA Tradefair Private Ltd., Mumbai: 75 % and Expolink Global Network Ltd., Bangkok: % of the share capital, 55 % of the voting rights since 2016) of share capital: Koelnmesse Ausstellungen GmbH, Cologne Koelnmesse S.r.l., Milan Koelnmesse Inc., Chicago Koelnmesse Pte. Ltd., Singapore Koelnmesse Ltd., Hong Kong Koelnmesse Co. Ltd., Beijing Koelnmesse Co. Ltd., Tokyo Koelnmesse Co., Ltd., Bangkok Koelnmesse Organização de Feiras Ltda., São Paulo Koelnmesse YA Tradefair Private Ltd., Mumbai Expolink Global Network Ltd., Bangkok Koelnmesse YA Tradefair Services Private Ltd., Mumbai, has drawn up an interim financial statement for the calendar year, as the local financial reporting closing date for that company is 31 March. The closing date is the same for the financial statements of the other included companies, as well as for the consolidated financial statement. The share in trade fair organiser Expolink Global Network Ltd., Bangkok (share: %; voting rights: 55 %) has been held by Koelnmesse GmbH since 2016 (formerly by Koelnmesse Co., Ltd., Bangkok). Due to the majority of voting rights held, a dominant influence is exercised over business policy; consequently, the investment is now included in the consolidated financial statement and fully consolidated for the entire financial year. The Brazilian subsidiary founded in 2014, Koelnmesse Organização de Feiras Ltda., São Paulo, was included for the entire fiscal year due to its increased importance to the consolidated companies. The registered office of the company was moved from Rio de Janeiro to São Paulo. Founded in 2016, the Italian participation Koeln Parma Exhibitions S.r.l., Parma, in which Koelnmesse GmbH holds a 50 % share, was proportionally included on a pro rata temporis basis from 29 April 2016, in accordance with Section 310 HGB. Not included in the consolidation were investments by Koelnmesse GmbH in KölnKongress GmbH, Köln, and in the KölnKongress Gastronomie GmbH, Cologne, which was newly established in 2016 (share capital holding: 49 % in each). A specific agreement regulating the relation of financial, economic and organisational dependence between the controlled and the controlling company is in effect between the primary shareholder and KölnKongress GmbH as well as KölnKongress Gastronomie GmbH. The shareholder Koelnmesse GmbH does not have a claim to distribution of profits under these agreements. These are reserved solely for the controlling shareholder of KölnKongress GmbH and KölnKongress Gastronomie GmbH. There is thus no requirement to consolidate the investments pursuant to Section 310 HGB, nor pursuant to Sections 311, 312 HGB. III. Principles of consolidation With the exception of equity, all balance sheet items of the foreign subsidiaries have been translated at the current exchange rate as of the balance sheet reporting date. The translation of the income statements of the foreign subsidiaries was carried out using annual average exchange rates. The translation differences were recorded directly in equity without affecting results. In accordance with Section 301 HGB, capital consolidation was carried out with the revaluation method (up until and including 2009: carrying value method) by crediting the acquisition costs (initial value) of the holdings to the portion of the consolidated companies equity as of the date of acquisition or first consolidation. Where Koeln Parma Exhibitions S.r.l., Parma, is concerned, the option of pro rata consolidation in application of Section 310 (1) HGB was exercised. Within the scope of the debt consolidation, all accounts receivable and payable between the companies included in the consolidated financial statement were offset against one another. As a result of the consolidation of expenses and income, expenses and income among the Koelnmesse consolidated companies were offset against one another, also taking profit and loss transfer agreements into account. There were no interim results. IV. Accounting and valuation methods During the financial year under report, the new provisions of commercial law were implemented fully as a result of the German Accounting Law Implementation Act (BilRUG). The impacts in which this results on recognition, valuation and reporting are set forth in the disclosures on the respective items of the annual financial statement. Notes concerning the consolidated financial statement and the annual financial statement 48/49

26 The annual financial statements of the companies included in the consolidated financial statement as well as the consolidated financial statement have been uniformly drawn up in accordance with the accounting and valuation principles applied by Koelnmesse GmbH, while also taking into account the continuation of business operations. The accounting and valuation principles applied to the previous annual financial statements and the previous consolidated financial statement were retained. Intangible assets are valued at acquisition cost at the time of transition of economic or legal ownership, less straight-line depreciation. The scope of acquisition cost is in accordance with Section 255 (1) HGB. Acquisition price reductions were deducted. Scheduled depreciation amounts are based on customary useful lives in accordance with the relevant, valid official tables specifying the depreciation allowances. The useful lives for paid-for industrial rights and similar rights and assets range from three to five years. Goodwill has a depreciation of more than ten years in the consolidated financial statement, as this corresponds to the expected duration of use. Self-provided intangible assets and development expenditures were not capitalised. Property, plant and equipment are valued at acquisition cost at the time of transition of economic or legal ownership, less straight-line compound rates. The scope of acquisition cost corresponds to Section 255 (1) HGB. The useful life of technical machinery and equipment is between 8 and 15 years; for other equipment, plant and office equipment, it is between 3 and 15 years. Buildings are measured at acquisition cost less linear compound rates, and for purchases prior to first-time application of the German Accounting Law Modernisation Act (BilMoG) less linear or digressive compound rates. Scheduled depreciation amounts are recognised according to the ordinary useful life pro rata temporis and take technical and economic depreciation into account. The useful life of buildings and similar rights is between 24 and 99 years. With regard to buildings on third-party property, Koelnmesse assumes (in line with appraisal reports on Koelnmesse net asset values drawn up by the City of Cologne) an ordinary useful life that can extend beyond the point at which the relevant leaseholds expire. In the year of their addition, low-value assets are recorded as expenses in the year of acquisition if the acquisition cost for each asset does not exceed euros. Low-value assets the acquisition cost of which are between and 1, euros are grouped as a compound item subject to straight-line depreciation over a period of five years. Financial investments are stated at acquisition cost at the time of transition of economic or legal ownership, and in the case of loans at nominal value; where there is expected permanent impairment, they are measured at the lower fair value as at the closing date. Inventory (supplies) are recorded at acquisition cost taking into consideration the lower of cost or market principle. All storage materials are depreciated at a suitable amount based on the storage period and the item s limited usability. Advertising and mailing materials are assessed at fixed value. Accounts receivable and other assets are recorded at par value. Default risks in trade accounts receivable are taken into account by means of a lump specific allowance. The lump specific allowance on trade accounts receivable was determined based on a depreciation rate of 70 % for receivables more than a year old as at the reporting date, and based on a depreciation rate of 10 % for receivables more than 6 months old. Receivables dating back less than one year are depreciated separately at 3 % and 5 %, respectively, for domestic and foreign receivables. In justified cases, individual allowances are deducted insofar as identifiable risks exist. Receivables and payables are offset if the netting criteria have been met. Securities are assessed at the lower of acquisition cost or current market value. Cash and cash equivalents are stated at par. Payments made in the fiscal year under review for the following year are recorded as prepaid/deferred items. Subscribed capital is valued at par and has been completely paid up. Provisions take into account all identifiable risks and uncertain obligations. Valuation is calculated in accordance with the required settlement amount as determined by a reasonable commercial assessment under consideration of estimated future cost increases. Provisions with a term to maturity of more than one year are discounted at a rate appropriate to their duration based on the average market interest rate as at 31 December 2016, for the prior seven years (pension provision: ten years) as published by the German Bundesbank. Provisions for pensions and similar obligations are calculated in line with the projected unit credit method on the basis of actuarial calculations that utilise Klaus Heubeck s Richttafeln 2005 G, which take generation-based life expectancies into consideration. These provisions are discounted on the basis of the average market interest rate for the prior ten years as published by the German Bundesbank on 31 December 2012, whereby this average rate results from an assumed term to maturity of 15 years (Section 253 (2) sentence 2 HGB). This interest rate is 4.0 %. As at the reporting date, the difference between recognition of pension provisions based on a flat-rate market interest rate from the past 10 financial years and recognition of provisions based on a flat-rate interest rate from the past 7 fiscal years stood at 500 Teuros. The yield due to change in the assumed interest rate was allocated to interest expense. Further calculation assumptions were based on pension increases of 0 % p. a. or 2 % p. a. Wage and salary increases were not factored in. Provisions for the employee-anniversary payouts stated under other provisions are constituted in the same way as pension provisions and apply the projected unit credit method. They are discounted on the basis of the average market interest rate for the prior seven years as published by the German Bundesbank on 31 December 2016, whereby this average rate results from an assumed term to maturity of 15 years (Section 253 (2) sentence 2 HGB). This interest rate is 3.2 %. For 2016, the expense due to change in the assumed interest rate amounts to 20 Teuros and was allocated to interest expense. Further calculation assumptions relative to pension provisions were based on pension increases of 0 % p. a. or 2 % p. a. Wage and salary increases were not factored in. Where provisions for employee Notes concerning the consolidated financial statement and the annual financial statement 50/51

27 anniversaries at the company are concerned, assumptions were based on annual wage and salary increases of 2 % as well as a fluctuation rate of 2.98 %. Provisions for semi-retirement were calculated in accordance with the block model. These provisions were discounted at an interest rate of 1.69 % that adequately takes into account risks and terms to maturity; this rate was determined in accordance with actuarial principles and in line with Section 253 (2) sentence 1 HGB. For 2016, the expense due to change in the assumed interest rate amounts to 3 Teuros and was allocated to interest expenses. Klaus Heubeck s Richttafeln 2005 G served as the basis for the calculations. Annual wage and salary increases of 2 % p. a. were taken into account. Provisions for contingent losses from events are made on the basis of the coverage contribution 2, taking into account specific administrative and event-related overheads. Overhead costs (particularly the costs for hall rental and depreciation) are assigned to the individual events at an individual cost unit rate for each square metre used. Liabilities were stated at their settlement amounts. Business transactions in foreign currencies are measured at the exchange rate on the day of the transaction or at the less-favourable mean spot rate on the reporting date. Losses from exchange rate movements are valued at the rate on the reporting date. Assets and receivables denominated in foreign currency with a remaining term of up to one year are always measured at the mean spot rate on the reporting date. Payments made in the fiscal year under review for the following years are recorded as prepaid/deferred items. Deferred tax assets and deferred tax liabilities for the parent company Koelnmesse GmbH and for the respective controlled company are stated where future tax assessments or relief are expected. Possible deferred taxes are created by differences in reporting requirements for commercial balance sheets and tax balance sheets. They result primarily from the following obligations and generate an active surplus in the separate financial statements and for the consolidated companies as a whole: Provisions for pensions Semi-retirement provisions Provisions for contingent losses Provisions for pending rental obligations Loss carry forwards also lead to deferred tax assets if a claim is expected. Given a uniform tax rate of 30 % across all of the consolidated companies, deferred taxes among the companies lead to possible deferred tax assets in the amount of 23.4 million euros. The company did not make use of its option to record deferred tax assets resulting from tax reductions Section 274 (1) sentence 2 HGB. Deferred tax liabilities are disclosed in the consolidated financial statements in accordance with Section 306 sentence 1 HGB. Deferred tax liabilities are the result of debt consolidation. Deferred taxes of the previous year have been reversed. Deferred taxes newly incurred in 2016 total to 31 Teuros as at 31 December The items pursuant to Section 306 HGB were not summarised with the items pursuant to Section 274 HGB. Applying the tax rate of approx. 30 % applicable in Germany and earnings before tax (but less other taxes) in the amount of 459 Teuros, tax expense within the group of companies would total to 138 Teuros. Particularly due to the non-capitalisation of deferred tax assets in the case of negative results in individual countries, and due as well to expenses that in individual cases are not tax-deductible and lead to tax rates in excess of 30 %, but also taking into account offsetting use of loss carryforwards in individual countries, the result is an effective tax expense of 1,139 Teuros or an effective tax rate of %. V. Notes regarding the balance sheets Fixed assets For the period from 1 January 1 to 31 December 2016, the composition and development of the consolidated companies fixed assets and the fixed assets of Koelnmesse GmbH are given in the following tables: Notes concerning the consolidated financial statement and the annual financial statement 52/53

28 Development of consolidated fixed assets as of 31 December 2016 Acquisition-cost trend Amortisation trend Residual As of Addition Value adjustment/ reclassification Disposal Currency differences As of As of Addition Disposal Currency differences As of As of As of EUR EUR EUR EUR EUR EUR EUR EUR EUR EUR EUR EUR EUR I. Intangible assets 1. Concessions, industrial rights and similar rights and assets as well as licences to such rights and assets purchased payment 1 28,215, ,788, ,252, ,574, , ,809, ,403, ,288, ,574, , ,146, ,663, ,811, Goodwill against payment 2 1,056, ,898, , , ,733, , , , ,305, ,428, , ,271, ,686, ,252, ,015, , ,543, ,876, ,088, ,574, , ,451, ,091, ,394, II. Property, plant and equipment 1. Land, leasehold rights and buildings including buildings on third-party land 497,574, , , , ,058, ,689, ,418, , ,090, ,967, ,884, Technical machinery and equipment 17,156, , , ,231, ,068, , , ,503, ,728, ,088, Other equipment, plant and office equipment 3 53,047, ,191, , ,920, ,841, ,752, ,598, ,876, , ,480, ,361, ,295, Advance payments and construction in progress 6,529, ,142, ,021, , ,590, ,590, ,529, ,308, ,695, ,252, ,030, ,721, ,510, ,452, ,895, , ,074, ,647, ,797, III. Financial assets 1. Investments in affiliated companies 4 70, , , Loans to affiliated companies 5 3,800, ,800, ,800, Investments 6 325, , , , , , , ,196, , ,069, , , , ,196, ,776, ,394, ,115, , ,404, ,387, ,540, ,469, , ,526, ,878, ,388, Additions involve 1,303, euros in acquisition costs and 69, euros in cumulative amortisation from changes in the scope of consolidation. 2 Additions involve 8,037, euros in acquisition costs and 73, euros in cumulative amortisation from changes in the scope of consolidation. 3 Additions involve 182, euros in acquisition costs and 168, euros in cumulative amortisation from changes in the scope of consolidation. 4 Disposals involve 70, euros in acquisition costs from changes in the scope of consolidation. 5 Disposals involve 3,800, euros in acquisition costs from changes in the scope of consolidation. 6 Disposals involve 198, euros in acquisition costs from changes in the scope of consolidation. Notes concerning the consolidated financial statement and the annual financial statement 54/55

29 Development of fixed assets of Koelnmesse GmbH as of 31 December 2016 Acquisition cost trend Amortisation trend Residual As of Addition 1 Value Disposal 1 As of As of Addition Disposal As of As of As of adjustment/ reclassification EUR EUR EUR EUR EUR EUR EUR EUR EUR EUR EUR I. Intangible assets 1. Concessions, Industrial rights and similar rights and assets as well as licences to such rights and assets purchased payment 27,415, ,420, ,252, ,574, ,514, ,675, , ,574, ,062, ,451, ,740, Goodwill against payment 720, , ,580, , , , ,362, , ,136, ,280, ,252, ,574, ,094, ,812, ,042, ,574, ,280, ,814, ,323, II. Property, plant and equipment 1. Land, leasehold rights and buildings including buildings on third-party land 497,517, , , , ,975, ,636, ,412, , ,031, ,944, ,881, Technical machinery and equipment 17,131, , , ,196, ,047, , , ,476, ,720, ,084, Other equipment, plant and office equipment 51,263, ,861, , ,749, ,897, ,573, ,246, ,711, ,108, ,789, ,689, Advance payments and construction in progress 6,529, ,142, ,021, , ,590, ,590, ,529, ,441, ,331, ,252, ,860, ,660, ,256, ,089, ,730, ,615, ,044, ,184, III. Financial assets 1. Investments in affiliated companies 1,344, ,118, ,463, , , ,358, ,344, Loans to affiliated companies 3,800, ,900, ,900, ,900, ,800, Participating interests 127, ,312, ,440, ,440, , ,271, ,431, ,900, ,803, , , ,698, ,271, ,849, ,044, ,334, ,558, ,069, ,236, ,304, ,001, ,557, ,780, Disposals among loans to affiliated companies, and additions among investments in affiliated companies, include the conversion of a loan to equity in the amount of 1.9 million euros. Notes concerning the consolidated financial statement and the annual financial statement 56/57

30 Receivables and other assets Trade receivables as well as other assets with a remaining term of more than one year total to 0 Teuros (previous year 126 Teuros) for Koelnmesse GmbH and to 62 Teuros (previous year 287 Teuros) in the consolidated financial statement. All other receivables and other assets have a remaining term of less up to one year. Receivables by Koelnmesse GmbH from associated companies and from other investees are trade receivables. Receivables from other investees recognised in the consolidated financial statement constitute trade receivables as well. The composition of the companies included in the consolidated financial statement changed in In the consolidated financial statement as at 31 December 2016, trade receivables in considerable amounts (2,708 Teuros) stem from Koeln Parma Exhibitions S.r.l., Parma/Italy, which is commensurately included in the consolidated financial statement beginning in Other assets at Koelnmesse GmbH include receivables due from the City of Cologne in the amount of 213 Teuros (previous year 370 Teuros). Securities Securities consist of a bond fund and a balanced fund. These are distributing funds. Equity Accumulated consolidated profit for Koelnmesse GmbH and the Koelnmesse consolidated companies for the 2016 fiscal year is the outcome of the respective profit carried forward in the amount of 45,272 Teuros (Koelnmesse GmbH) and in the amount of 50,179 Teuros (consolidated companies) and the respective net losses for Provisions The pension provisions in the amount of 5,855 Teuros posted in the consolidated balance sheet consist primarily of Koelnmesse GmbH s obligations (5,694 Teuros) resulting from the company pension scheme. The tax provisions posted in the consolidated financial statement (5,167 Teuros) include 4,081 Teuros in tax provisions by Koelnmesse GmbH for taxes on income in As of 31 December 2016, other provisions consisted of the following: Consolidated companies GmbH TEUR TEUR TEUR TEUR Rental obligations 40,878 36,673 40,878 36,673 Personnel expenses 8,325 6,770 7,232 6,405 Outstanding invoices 9,413 5,665 9,222 5,513 Contingent losses from pending transactions Remaining provisions 2,386 2,443 1,124 1,215 61,925 52,511 59,379 50,766 Notes concerning the consolidated financial statement and the annual financial statement 58/59

31 Liabilities of the consolidated companies by terms of maturity Liabilities of Koelnmesse GmbH by terms of maturity Remaining term Remaining term of Remaining term Total of up to 1 year more than 1 year of more than up to 5 years 5 years TEUR TEUR TEUR TEUR Remaining term Remaining term of Remaining term Total of up to 1 year more than 1 year of more than up to 5 years 5 years TEUR TEUR TEUR TEUR Liabilities to financial institutions Liabilities due to prepayments received on orders 59, ,686 Trade accounts payable 12, ,680 Liabilities from associated companies Residuary liabilities from taxes within the context of social security remaining liabilities 4,555 1, ,922 77,526 1, ,921 Liabilities to financial institutions Liabilities due to prepayments received on orders 44, ,478 Trade accounts payable 10, ,098 Liabilities due to associated companies and other investees Residuary liabilities from taxes within the context of social security remaining liabilities 3,471 1, ,575 59,492 1, ,596 During the previous year, liabilities to financial institutions with a remaining term of more than one year and up to five years amounted to 0 Teuros. The liabilities are not secured by liens or similar rights on the part of the group companies. The composition of the companies included in the consolidated financial statement changed in In the consolidated financial statement as at 31 December 2016, trade payables in considerable amounts (1,123 Teuros) stem from Koeln Parma Exhibitions S.r.l., Parma/Italy, which is commensurately included in the consolidated financial statement beginning in During the previous year, liabilities to financial institutions with a remaining term of more than one year and up to five years amounted to 0 Teuros. A total of 824 Teuros in liabilities to associated companies consists of trade liabilities. Koelnmesse GmbH has trade accounts payable to the City of Cologne in the amount of 7 Teuros (previous year 191 Teuros). Notes concerning the consolidated financial statement and the annual financial statement 60/61

32 VI. Notes concerning the income statement Net sales Net sales were generated in Germany and abroad as follows Other operating income of Koelnmesse GmbH contains prior-period income from the reversal of provisions in the amount of 864 Teuros (consolidated companies 871 Teuros), on payments on writtendown claims in the amount of 64 Teuros (64 Teuros for the consolidated companies) and exchange gains from currency translation amounting to 34 Teuros (710 Teuros for the consolidated companies). Taking into account the requirements of the German Accounting Law Implementation Act (BilRUG), the previous year s figures would have been 498 Teuros lower. Consolidated companies GmbH TEUR TEUR TEUR TEUR Domestic 133, , , ,940 Abroad 140, , , , , , , ,295 With regard to their sources, net sales break down as follows Consolidated companies GmbH TEUR TEUR TEUR TEUR Investment income 156, , , ,950 Execution of events 8,647 6,108 8,648 6,110 Admission proceeds/catalogues 20,924 26,710 21,678 26,916 Services 48,632 57,134 45,570 54,601 Other revenues 39,826 39,374 28,219 27, , , , ,295 The previous year s figures for event-related expenses would have been 3,932 Teuros higher taking into account the provisions of BilRUG. Of the amount for event-related expenses, 5,235 Teuros concerns additions to provisions for rental obligations. Other operating expenses at Koelnmesse GmbH include prior-period expenses from the derecognition of receivables amounting to 789 Teuros (803 Teuros for the consolidated companies), and from additions to the provisions for contingent losses of 923 Teuros (923 Teuros for the consolidated companies). In addition to this, other operating expenses also include exchange losses from currency translation in the amount of 22 Teuros (313 Teuros for the consolidated companies). Taking into account the requirements of the German Accounting Law Implementation Act (BilRUG), the previous year s figures would have been 4,429 Teuros lower. Other interest and similar income, as well as other taxes, include income as a result of the judgement relative to value-added tax on catalogues, amounting to a total of 770 Teuros. VII. Commitments and contingencies Due to the US Cross-Border Leasing transaction conducted in the 2002 fiscal year, Koelnmesse GmbH has an external civil commitment to pay rent to the U. S. investor for the entire duration of the rental agreement until such time as the purchase option may be exercised in Regarding these payment obligations, assumption of the performance obligation is contractually agreed by the party that has committed to perform. As long as the parties that have committed themselves to perform to do so, Koelnmesse GmbH will not have to make any payments. There are currently no indications that the party in question might not be able to meet its obligations. In the years 2006 through 2008, Koelnmesse GmbH issued an indefinite Letter of Comfort/Financial Support to each of its subsidiaries in Japan, Singapore, Thailand, China and Hong Kong. Under the terms of these letters, Koelnmesse GmbH, as creditor and shareholder, covenants not to require repayment of amounts owed by the respective subsidiary until the company s resources permit. In addition, Koelnmesse GmbH covenants to provide ongoing financial support to the respective subsidiary insofar as it has the capacity to fulfil financial commitments, so that the requirements of a going concern continue to be met. The likelihood of utilisation under these obligations is deemed low; this is substantiated based on past experience and the forecast economic development of the companies. Koelnmesse GmbH is a member of the supplementary pension fund of the City of Cologne (ZVK). ZVK is responsible for providing its members employees with a supplementary pension for old age, occupational disability, incapacity, and surviving dependents. The assessment is currently 5.8 % of the remuneration subject to supplementary pension payments. To set up a capital cover, a surcharge of 3.2 % will be levied for 2016 (unchanged in 2017: 3.2 %). The shortfall in coverage attributable to the company, for which in an exercise of the accounting option under Art. 28 EGHGB no provisions have been created, totals to 32,828 Teuros as at 31 December 2016 (consolidated companies: 33,975 Teuros). The distribution-blocked difference amounts to 4,042 Teuros (consolidated companies: 4,198 Teuros). With respect to the consolidated companies, the wages and salaries subject to assessment amounted to 28,763 Teuros in the year under report. With respect to Koelnmesse GmbH, they amounted to 28,030 Teuros. In addition, there are annual liabilities to various pension funds for the pensions of the Executive Vice Presidents and several Vice Presidents. These liabilities total to 257 Teuros for the consolidated companies and to 252 Teuros for Koelnmesse GmbH. Given the current shortfall, the likelihood of utilisation is considered to be very low. This assessment results from the fact that the annual reports of ZVK are subject to independent audit, and that the business development was considered to be positive. According to the actuary, the current level of capital cover also exceeds target values. Based on what is known at this time, then, it can be assumed that ZVK is in a position to meet all of its commitments. Notes concerning the consolidated financial statement and the annual financial statement 62/63

33 VIII. Other financial commitments For an interim period extending from 1 August 2010, the City of Cologne, Koelnmesse GmbH and the owners of the new trade fair halls built in 2005 have agreed in principle to retroactively reduce the rental fees for the halls to an average of currently 75 % of the amount originally agreed upon. The Koelnmesse GmbH Supervisory Board and the Cologne City Council have approved the interim agreement. However, the owners of the halls expressly do not waive their right to receive the original amount of the rental fee. A final agreement is still pending. From the beginning of 2017 onward, for Koelnmesse GmbH and the consolidated companies, the financial obligations under the original lease and original term of lease for the new Northern Halls would total to 392,710 Teuros plus ancillary costs. In March 2016, the Council of the City of Cologne, the company bodies at Koelnmesse and the shareholders of the Grundstücksgesellschaft Köln Messe GbR approved of the settlement agreed among the contracting parties in connection with the legal dispute involving the Northern Halls site. The settlement provides for a permanent reduction in annual rental payments for the Northern Halls and hence the future financial obligations that this involves. The settlement between the parties to the contract, and the decisions by the parties decision-making bodies, are subject to the proviso that the EU grants its consent from a state-aid and public-procurement standpoint. As long as this agreement is not forthcoming, it cannot be assumed that positive earnings effects will emerge from these decisions. The leases for the Congress Centre North newly built in 2005, and for the Messehochhaus, give rise to long-term obligations to Koelnmesse GmbH, and at the consolidated companies level, that total to 65,510 Teuros plus ancillary costs. In addition, there are commitments from long-term rental and leasing contracts for business and office equipment (company cars, copiers, computers and peripheral equipment, etc.) at Koelnmesse GmbH totalling 17,057 Teuros (at the level of the consolidated companies: 19,882 Teuros). IX. Other notes Average workforce figures for the year Salaried Hourly-paid Total employees employees Consolidated companies GmbH The employee of the company commensurately included at 50 % was recognised with the value of 0.5. Notes concerning the consolidated financial statement and the annual financial statement 64/65

34 Total remuneration of the members of management consists of a fixed annual salary, a performancebased bonus and other remuneration components, in particular a company car and the insurance contributions paid into the company pension programme. There is no public-law pension system in place for members of management and their surviving dependents. Total remuneration of members of management The expenses for remuneration of management for its work during the year under report total to 1,741 Teuros; among members of management, this amount broke down as follows as of 31 December 2016: Fixed salary Bonus 1 In-kind and other Total remuneration 2 EUR EUR EUR EUR Böse, Gerald 369, , , , Hamma, Katharina C. 226, , , , Marner, Herbert 250, , , , Variable remuneration provisions containing long-term incentives were agreed with Executive Vice Presidents, to take effect beginning with the 2012 fiscal year. Payment of the bonus is extended over several years. For 2016, the entire bonus amount is paid into a bonus bank. Only one-third of the amounts accrued in the bonus bank is paid out each year; consequently, for the 2016 financial year, Mr Gerald Böse will receive 215, euros, Ms Katharina C. Hamma 122, euros and Mr Herbert Marner 142, euros paid out in the form of bonuses. The result-based share of the bonus amounts to 30 % for the Chief Operating Officer and the Chief Financial Officer, and to 35 % of the total bonus for the President and Chief Executive Officer. This result-based share is subject to a malus provision and paid out based on levels of target achievement in subsequent years. In the event of clear failure to meet the results-based targets, this leads to a corresponding reduction in the bonus bank balance. In 2016, the bonus shares subject to this malus provision totalled to 69, euros for Mr Gerald Böse; to 35, euros for Ms Katharina C. Hamma; and to 40, euros for Mr Herbert Marner. The actual expense for active current members of management totalled to 1,749 Teuros for 2015 and was thus at the previous year s level. During the fiscal year there were no benefits paid to members of management on the occasion of the end of their employment. In the event of a premature termination of employment, there are no public-law pension provisions or claims to severance pay in effect for any member of management. Remuneration for former Executive Vice Presidents and their surviving dependents totalled to 415 Teuros during the fiscal year under report. Pension provisions of 5,694 Teuros are set aside for former Executive Vice Presidents and their surviving dependents. The members of the Supervisory Board of Koelnmesse GmbH and of Koelnmesse Ausstellungen GmbH each receive a meeting stipend for their work in relation to every meeting attended. The same holds true for the members of the Finance Committee, the Internationalisation Committee and the shareholders representatives at the general meetings. For members of the respective committees, the stipend for each meeting attended was 250 euros; the respective chairperson receives twice this amount and his or her deputy one and a half times this amount. Under the Articles of Association, the Chairman of the Supervisory Board of Koelnmesse GmbH also receives an additional expense allowance. During the 2016 fiscal year at Koelnmesse GmbH, there were five meetings of the Supervisory Board, two meetings of the Finance Committee, three shareholders meetings, three meetings of the Internationalisation Committee, and a meeting of the new Executive Committee. At Koelnmesse Ausstellungen GmbH, there were two meetings of the Supervisory Board and one shareholders meeting. 1 Because exact levels of target achievement remain to be determined, the bonus amounts shown are estimates as of the date the annual financial statement was drawn up. The corrected value will be reported in the next annual financial statement. 2 In-kind and other remuneration includes the costs of a premium-based pension plan, among other things. Notes concerning the consolidated financial statement and the annual financial statement 66/67

35 Total remuneration for the individual members of the Supervisory Board for meetings in the Supervisory Board Committee, the Finance Committee, the Executive Committee and the Committee on Internationalisation of Koelnmesse GmbH was as follows: Remuneration for members of the Supervisory Board Total remuneration 1 TEUR Henriette Reker (Chairwoman) 17.3 Kirsten Jahn (1 st Vice Chairwoman) 3.1 Claudia Wörmann-Adam 3.0 (2 nd Vice Chairwoman) Torsten Burmester 1.8 Susana dos Santos Herrmann 1.3 Dr. Ralph Elster 2.5 Jochen Felix 1.2 Reinhard Houben 1.3 Axel Kaske 2.9 Niklas Kienitz 1.3 Alfred Kohlenberg 1.0 Dr. Barbara Lübbecke 2.0 Dr. Rüdiger Messal 2.0 Bernd Petelkau 2.0 Ulf C. Reichardt 1.5 Manfred Richter 1.0 Ingo Riedeberger 1.0 Matthias Schlüter 2.0 Martin Schumaier 1.3 Alexander Stary 1.3 Torsten Weil 1.5 Of the total remuneration at Koelnmesse GmbH, 39 Teuros is attributable to the Supervisory Board, 5 Teuros to the Finance Committee, 2 Teuros to the Executive Committee, and 6 Teuros to the Committee of Internationalisation. The remuneration of the Supervisory Board in the consolidated companies (Koelnmesse GmbH and Koelnmesse Ausstellungen GmbH) totals to 42 Teuros. The total fee charged by the BDO AG accounting firm in the 2016 financial year stood at 298 Teuros. Of this amount, 83 Teuros applies to the audit of the annual and consolidated financial statements (including 53 Teuros for Koelnmesse GmbH) and 215 Teuros to other services. No important business under normal market conditions was conducted during the fiscal year with affiliated individuals or companies not included in the consolidated financial statement as direct or indirect wholly owned subsidiaries. The company is included in both its own consolidated financial statement (smallest group of companies or scope of consolidation) and in the communal consolidated financial statement of the City of Cologne (largest group of companies or scope of consolidation). The consolidated financial statement of Koelnmesse GmbH is available at company headquarters and is published in the Federal Gazette (Bundesanzeiger). It can be accessed online at The communal consolidated financial statement of the City of Cologne is published on the homepage of the City of Cologne, at Koelnmesse GmbH holds a direct or indirect share of more than 20 % in the companies listed below: Headquarters Share Group of Equity Last companies/ net income GmbH percent EUR EUR Koelnmesse Ausstellungen GmbH 1 Cologne , Koelnmesse Inc. 2 Chicago , , Koelnmesse S.r.l. 2 Milan , , Koelnmesse Pte. Ltd. 2 Singapore , ,905, Koelnmesse Ltd. 2 Hong Kong ,775, ,841, Koelnmesse Co. Ltd. 2 Beijing 100-4,460, , Koelnmesse Co. Ltd. 2 Tokyo 100-1,517, , Koelnmesse Co., Ltd. 3 Bangkok , ,622, Koelnmesse Organização de Feiras Ltda. 4 São Paulo 100 1,254, , Koelnmesse YA Tradefair Private Ltd. 2 Mumbai 75 2,038, , Koeln Parma Exhibitions S.r.l. 5 Parma 50 1,514, ,259, Expolink Global Network Ltd. 6 Bangkok , , KölnKongress GmbH 2 Cologne , no information KölnKongress Gastronomie GmbH 2 Cologne 49 25, no information Total A profit-and loss-transfer agreement is in place. 2 The holdings in these companies are owned by Koelnmesse GmbH. Data for the Koelnmesse YA Tradefair Private Ltd. holding is based on the interim financial statement for the calendar year that was provided for the consolidated financial statement. 3 Koelnmesse GmbH owns 50 % of this company. The subsidiaries in Singapore and Hong Kong each hold 25 %. 4 In 2016, Interfeiras Eventos Ltda., São Paulo, was merged with Koelnmesse Organização de Feiras Ltda., Rio de Janeiro, and the headquarters were relocated to São Paulo. 5 The participation has been held by Koelnmesse GmbH together with another company since The tabular data concerning the participation contain the proportionate values of Koelnmesse GmbH. In each case, the participation contains proportionate current assets in the amount of 2,966 Teuros, proportionate non-current assets in the amount of 215 Teuros, current obligations of 1,668 Teuros, and no long-term obligations. The participation involved proportionate income of 3,039 Teuros and expenses of 1,780 Teuros. There are no financial obligations. 6 The participation has been held by Koelnmesse GmbH since 2016 (formerly by Koelnmesse Co., Ltd., Bangkok). Koelnmesse GmbH owns 55 % of the voting rights. 1 Individual values rounded 2 Total value represents the total of unrounded amounts Notes concerning the consolidated financial statement and the annual financial statement 68/69

36 Company bodies The company bodies are comprised as follows: Management Board Gerald Böse, Cologne President and Chief Executive Officer Katharina C. Hamma, Cologne Chief Operating Officer Herbert Marner, Dernau Chief Financial Officer Supervisory Board Henriette Reker, Member of Cologne City Council Chairwoman Mayor of the City of Cologne Kirsten Jahn, Member of Cologne City Council 1 st Vice-Chairwoman Certified Geographer Claudia Wörmann-Adam 1 2 nd Vice-Chairwoman Retired Torsten Burmester Head of Department, Ministry for Economics, Energy, Industry and Commerce of the German State of North Rhine-Westphalia Susana dos Santos Herrmann, Member of Cologne City Council Editor Dr. Ralph Elster, Member of Cologne City Council Corporate Consultant Jochen Felix 1 Retired Reinhard Houben, Member of Cologne City Council Business graduate/executive Vice-President Axel Kaske Businessman Niklas Kienitz, Member of Cologne City Council Certified attorney/real estate economist Alfred Kohlenberg 1 1 st Vice-Chairman Supervisory Board Dr. Barbara Lübbecke Executive Vice-President Dr. Rüdiger Messal Secretary of State in the Ministry of Finance of the State of North Rhine-Westphalia Bernd Petelkau, Member of Cologne City Council Business graduate Ulf C. Reichardt Executive Director of the Cologne Chamber of Industry and Commerce Manfred Richter, Member of Cologne City Council Personnel manager Ingo Riedeberger 1 Project manager Matthias Schlüter 1 Project manager Martin Schumaier 1 Employee Alexander Stary 1 Chairman of Works Council Torsten Weil Office manager, State Chancellery of the Free State of Thuringia, Office of the State Premier (since mid-2016) 1 Employee representatives of Koelnmesse GmbH Notes concerning the consolidated financial statement and the annual financial statement 70/71

37 Proposal for the appropriation of net income The management proposes to the company bodies that the net profit of Koelnmesse GmbH for 2016 be carried forward to a new account. X. Processes of special importance after the close of the financial year There were no processes of special importance to the company within the meaning of Section 285 No. 33 HGB after the close of the fiscal year. Cologne, 12 May 2017 Gerald Böse Katharina C. Hamma Herbert Marner Notes concerning the consolidated financial statement and the annual financial statement 72/73

38 Consolidated cash flow statement 2016 TEUR 2015 TEUR Consolidated companies net loss/profit after holdings by other shareholders ,747 Earnings share of minority shareholders Amortisation (+) / value adjustments (-) of items from the fixed assets +17, ,673 Increase (+) / Decrease (-) of provisions +9,018 +5,109 Other expenses (+) / income (-) that do not affect payments Non-cash effects from companies acquired in previous years and consolidated for the first time +3,851 0 Increase (-) / decrease (+) of inventories, trade accounts receivable and other assets not related to investment or financing operations +12, Increase (+) / decrease (-) of trade accounts payable and other liabilities not related to investment or financing operations -4,745-5,699 Profit (-) / loss (+) from the disposal of items from the fixed assets Interest expense (+) / interest income (-) ,526 Interest received (+) Income tax expense (+) / income tax income (-) +1,139 +7,172 Income tax payments (-) / income tax refunds (+) ,665 Cash flow from ongoing business operations +37, ,488 Payments for investments in intangible fixed assets (-) -5,345-1,683 Payments for investments in property, plant and equipment (-) -17,514-8,742 Payments for investments in property, plant and equipment (-) -12-3,831 Deposits due to financial investments within the scope of short-term financial disposition (+) Payments resulting from the purchase of consolidated companies (-) -4,000 0 Cash flow from investing activities -26,716-14,256 Payments for the redemption of loans and (financial) credits (-) -4,218-4,218 Interest paid (-) Cash flow from financing activities -4,727-4,848 Changes resulting from foreign currency translation Changes to cash funds that affect payments +6, ,120 Access to cash funds from the initial consolidation +1,539 0 Cash funds at the beginning of the period +113, ,107 Cash funds at the end of the period +121, ,227 Cash funds are comprised of cash on hand in the amount of 297 Teuros, bank deposits amounting to 103,717 Teuros, as well as securities in the amount of 17,279 Teuros. During the previous year, there were bank deposits (fixed deposits) with a maturity of more than 3 months from the conclusion of the contract (previous year 15,000 Teuros) that were not allocated to cash funds in application of the relevant German Accounting Standard (DRS 21). Consolidated cash flow statement 74/75

39 Consolidated shareholders equity list Equity of the parent company Non-controlling shares Consolidated equity Equity- Consolidated Non- Non- Subscripted differences Profit income controlling controlling capital from currency carried to the parent shares before shares of attri- Reserves translation forward company Total net income butable profits Total Total Capital Retained Total reserve reserve TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR As of ,200 42, , , , ,796 Currency translation Consolidated companies net income ,747 36, ,840 As of ,200 42, , ,432 36, , ,372 As of ,200 42, , , , ,372 Currency translation Changes in the scope of consolidation Consolidated companies net income As of ,200 42, , , , ,047 Consolidated shareholders equity list 76/77

40 Audit opinion We have audited the annual financial statement (consisting of the balance sheet; the income statement; and the notes, which are published together with the notes concerning the consolidated financial statement), taking into account the bookkeeping system of Koelnmesse GmbH, Cologne, and the consolidated financial statement (consisting of the balance sheet; the income statement; the notes, which are published together with the notes concerning the annual financial statement; the cash flow statement; and the shareholders equity list) it drew up, as well as the summarised management report on the situation of Koelnmesse GmbH for the fiscal year from 1 January 2016 to 31 December The bookkeeping and the preparation of these documents in accordance with German commercial law and the supplemental provisions of the articles of association are the responsibility of the company s legal representatives. Our responsibility is to express an opinion, based on our audit, concerning the annual financial statement, together with the bookkeeping system, the consolidated financial statement it drew up, and concerning the summarised management report of the consolidated companies. We conducted our audit of the annual and consolidated financial statements in accordance with Section 317 HGB (German Commercial Code) and the generally accepted standards for the audit of financial statements promulgated by the German Institute of Public Auditors (IDW). Those standards require that we plan and perform the audit in such a way that any misstatements or violations of applicable law that materially affect the presentation of the net assets, financial position, and results of operations in the annual and consolidated financial statements in accordance with German principles of proper accounting and in the summarised management report on Koelnmesse GmbH and the Koelnmesse consolidated companies are detected with reasonable assurance. Knowledge of the business activities and the economic and legal environment of the company and evaluations of possible misstatements are taken into account in the determination of audit procedures. The effectiveness of the internal accounting control system and the evidence supporting the disclosures in the books and records, the annual and consolidated financial statements, and the summarised management report on Koelnmesse GmbH and the Koelnmesse consolidated companies are examined primarily on the basis of random samples within the framework of the audit. The audit includes assessing the accounting information of the sub-areas included in the consolidated financial statement, the definition of the scope of consolidation, the accounting and consolidation principles used, and the significant estimates made by the company s legal representatives, as well as evaluating the overall presentation of the annual and consolidated financial statements and the summarised management report of Koelnmesse GmbH and the Koelnmesse consolidated companies. We believe that our audit provides a reasonably sound basis for our assessment. Our audit has led to no objections. On the basis of the audit s findings, we have come to the conclusion that the annual and consolidated financial statements conform to the statutory provisions and the supplemental provisions of the articles of association, and that they give a true and fair account of the net assets, financial position, and results of operations of Koelnmesse GmbH and the Koelnmesse consolidated companies, in accordance with German principles of proper accounting. The summarised management report on Koelnmesse GmbH and the Koelnmesse consolidated companies agrees with the annual and consolidated financial statements and complies with applicable requirements of law. It provides a reliable overall understanding of the situation of Koelnmesse GmbH and the Koelnmesse consolidated companies, and it accurately depicts the opportunities and risks associated with future developments. Cologne, 12 May 2017 BDO AG Wirtschaftsprüfungsgesellschaft /signed/ Herrlein Auditor /signed/ Pitzen Auditor Audit opinion 78/79

41 Supervisory Board report In the year under review, the Supervisory Board fulfilled the duties entrusted to it according to the laws and regulations and monitored the management of Koelnmesse to ensure it was conducted in an orderly manner. During the past business year, the Supervisory Board regularly advised the Executive Board and monitored its activities in the course of regular and extraordinary meetings. The Supervisory Board was always informed promptly and thoroughly by the Koelnmesse Executive Board about the company s business development and its resulting profitability and liquidity. The major transactions that had to be submitted to the Supervisory Board for approval as a result of legal stipulations or the Articles of Association were discussed extensively during several sessions before a decision was made. Important business policy issues were addressed in depth. The consolidated financial statement, the annual financial statement, and the management report on Koelnmesse GmbH and the Koelnmesse consolidated companies for the fiscal year from 1 January to 31 December 2016 were audited by BDO AG, the auditing company commissioned for this purpose at the shareholders meeting. The auditors issued an unrestricted audit certificate for the financial statements. The Supervisory Board has approved the corresponding audit reports. The Supervisory Board has reviewed and approved the consolidated financial statement, the annual financial statement, and the management report on Koelnmesse GmbH and the Koelnmesse consolidated companies for the fiscal year from 1 January to 31 December The Supervisory Board approves the Executive Board s proposal carry the accumulated profit for 2016 forward to new account. The shareholders meeting will be informed about this decision. The Supervisory Board thanks the Management Board and all of the Koelnmesse employees for the work they have accomplished in the past year. Cologne, June 2017 Henriette Reker Mayor of the City of Cologne Chairwoman of the Supervisory Board Supervisory Board report 80/81

42 Anhang und Konzernanhang 00/00

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