Annual Report 2017 Trade fair reconsidered

Transcription

1 Annual Report 2017 Trade fair reconsidered

2 At a glance Foreword Table of contents Processes reconsidered Networks reconsidered City trade fair reconsidered Customer satisfaction reconsidered Trade fair grounds reconsidered Management report on Koelnmesse GmbH and the Koelnmesse consolidated companies for the fiscal year from 1 January to 31 December 2017 Consolidated balance sheet Consolidated income statement Balance sheet of Koelnmesse GmbH Income statement of Koelnmesse GmbH Notes concerning the consolidated financial statement and the annual financial statement Consolidated cash flow statement Consolidated shareholders equity list Audit opinion Supervisory Board report

3 Key trade fair figures At a glance Koelnmesse in figures 2017 Exhibiting companies Koelnmesse s own trade fairs Koelnmesse s own trade fairs abroad Guest events Total Events Koelnmesse s own trade fairs Koelnmesse s own trade fairs abroad Guest events Special events Total 23,499 12,357 7,220 43, Sales EBITDA Net profit Investments Equity Total assets Equity ratio Key financial figures Koelnmesse consolidated companies EUR million EUR 55.2 million EUR 27.3 million EUR 44.0 million EUR million EUR million 51.0 % Visitors Koelnmesse s own trade fairs Koelnmesse s own trade fairs abroad Guest events Total 1,249, , ,592 2,175,023 Koelnmesse GmbH Sales EBITDA Net profit Investments Equity Total assets EUR million EUR 50.8 million EUR 26.3 million EUR 43.8 million EUR million EUR million Equity ratio 53.7 % Koelnmesse consolidated companies workforce size (average for the year) Hall capacity ,000 m 2 At a glance 04/05

4 Trade fairs reconsidered Koelnmesse shapes the digital future Gerald Böse, Katharina C. Hamma, Herbert Marner, Koelnmesse Management Board Cologne, March 2018 Digitalisation is one of the most important trends of our time and it also has wide reaching implications for the trade fair industry. We tap into the opportunities this affords and implement them to best benefit Koelnmesse s exhibitors, visitors and employees. A crucial element of taking this step into the future is the ability to go beyond the beaten path and entirely reconsider what was previously considered given. In doing this, our goal is always to help our customers, the exhibitors and visitors, reap all the benefits for their trade fair visit and participation, while at the same time providing entire sectors with the perfect platform for future-oriented trends and innovations. Only by doing this we can continue to live up to our motto, We energize your business. We have visualised the key steps on the following pages: Processes reconsidered _ connected and efficient work flow. Networks reconsidered _ global transfer of know-how. City trade fair reconsidered _ impetus for Cologne and the surrounding region. Customer satisfaction reconsidered _ a focus on exhibitors and visitors. Trade fair grounds reconsidered _ digitalised halls. We take digital transformation very seriously as the basis for new business models and as a way to improve our own processes. By 2022 we will be investing over 50 million euros in digitalisation within the framework of the investment programme Koelnmesse 3.0 for innovative digital services like the interior design platform ambista as well as a modern IT infrastructure. We further expanded the foundation for this in This was an excellent year for Koelnmesse. With consolidated sales of over 357 million euros, we clearly exceeded the previous record set in The results are also impressive, as Koelnmesse closed 2017 with a profit of over 27 million euros. It therefore exceeds planning figures by over 7 million euros. Thus, we have not only achieved our ambitious growth targets, but even exceeded them. We are looking forward to the next steps. Follow us into the digital future and find out how we are rethinking the trade fair of the future! Foreword 06/07

5 PROCESSES RECONSIDERED _ CONNECTED AND EFFICIENT WORK FLOW. Gabriele Jenner, Team Leader Process and IT Requirements Management The employees are part of the digitalisation process and ensure Koelnmesse s future. Internal processes are being further optimised using cutting-edge hardware and software combined with targeted training. Digital, mobile and connected: workflows and processes are being made significantly easier, faster and better with new technology for all Koelnmesse employees. Above all, this also benefits our customers! Koelnmesse 08/09

6 NETWORKS RECONSIDERED _ GLOBAL TRANSFER OF KNOW-HOW. Sebastian Rosito, EXPO 2020 Dubai Pavilion Director and Wasim Wahba, Deputy Pavilion Director Koelnmesse has its sights set on worldwide industry expertise. 36 of its own events in the global hot spots are serving to strengthen the international cluster for the food industry and interior design industries, for example, with leading trade fairs like Anuga and imm cologne. Koelnmesse is thus further expanding its position in the trade fair world. At EXPO 2020 in Dubai with the motto Connecting Minds, Creating the Future, the company will be providing a place of encounter for many nations and cultures as well as ideas and developments on behalf of the Federal Government as organiser and operator of the German Pavilion. Creative, digital and innovative it is helping to shape the future. Koelnmesse 10/11

7 CITY TRADE FAIR RECONSIDERED _ IMPETUS FOR COLOGNE AND THE SURROUNDING REGION. David Oldfield, Project Manager Digital Development At its Cologne site, Koelnmesse employs over 600 people and a wide range of service providers. Every second hotel bed is booked as part of our events. With its future-oriented trade fairs and events, Koelnmesse also continues to make a positive contribution to the city s image as a modern business location. Initiatives such as the digital campus incube8 also highlight Koelnmesse s role as an intermediary between established companies and digital start-ups. As such we provide important impetus for the digital future of the city and the region. Koelnmesse 12/13

8 CUSTOMER SATISFACTION RECONSIDERED _ A FOCUS ON EXHIBITORS AND VISITORS. Marcus Heimann, Employee Marketing and Technical Services Today more than ever, Koelnmesse is focussing its attention on individual customer needs. Examples of digital services and business models include trade fair apps, matchmaking and lead tracking tools, the business network of the furnishing industry ambista as well as marketing packages adapted specifically to the respective exhibitions. We are increasing process efficiency, ease of communication and customer satisfaction. Koelnmesse is proving itself to be a truly modern and service-oriented company. Koelnmesse 14/15

9 TRADE FAIR GROUNDS RECONSIDERED _ DIGITALISED HALLS. Norbert Schmitz, Project Manager Construction and Master Plan and Anna Marie Fröhlich, Manager Construction Comprehensive modernisation and new building projects are opening up new potentials for Koelnmesse and the city of Cologne. The Koelnmesse 3.0 project, which includes the multifunctional event location CONFEX, will attract further top-notch conventions and corporate events to the city on the Rhine. All along the customer journey, tailor-made offerings including digital ticketing, easy access to online networks and digital navigation tools are providing for efficient management of time and communication. We are thus creating sustainable added value for our customers. Koelnmesse 16/17

10 more than 53, exhibiting companies from countries 3 million around visitors Management report on Koelnmesse GmbH and the Koelnmesse consolidated companies for the fiscal year from 1 January to 31 December 2017 leading trade fairs for around 25 sectors 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 space, 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, as well as marketing, hotel reservation, catering and other services. With an overall programme in which more than 53,500 exhibiting companies from 122 countries and around 3 million visitors from 221 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 around 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, sectors and markets. On average, 70 % of the exhibitors and more than 40 % of the visitors come from abroad. The trade fair grounds in Cologne are the thirdlargest in Germany and among the top ten in the world: 284,000 m² of hall space and 100,000 m² of outdoor area are available for all types 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. Rounding out the portfolio are a 49-percent share in KölnKongress GmbH (City of Cologne: 51 %) and KölnKongress Gastronomie GmbH (KölnKongress GmbH: 51 %) as well as a 50-percent share in Koeln Parma Exhibitions S.r.l. in Parma/Italy. Management report 18/19

11 2. Aims and strategies Koelnmesse provides impetus for a host of international sectors. 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. Every 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, the trades, transport, logistics, and in the hotel and restaurant industries. 1 A survey of 1,500 international companies conducted in 2016 as part of the Cologne branding process revealed that, 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. as well as an efficient worldwide sales structure. In addition to China, Southeast Asia and India, Koelnmesse further reinforced its international activities in South America, and especially in Brazil and Colombia in The investment programme Koelnmesse 3.0 is another strategic pillar for the company s success. By 2030 Koelnmesse will offer the most attractive inner-city trade fair grounds in the world. As the first new building measure, the first section of the Car Park Zoobrücke was opened according to plan in autumn of 2017 with 2,000 parking spaces. Upon full completion in spring of 2018, it offers space for approximately 3,260 vehicles. To make the most of the business opportunities and potential of digitisation, Koelnmesse is continuing to push ahead with its digital strategy. Continued focus is on developing new digital business models and service offers. With new hardware and software, Koelnmesse is also relying on optimising its own processes, and promoting networking and knowledge management. Other areas of emphasis include digitalisation of the trade fair grounds as well as digital trade fair topics. The new Car Park Zoobrücke is one of the most modern car parks in Germany. Koelnmesse s long-term internationalisation strategy primarily aims to develop and expand events abroad 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 Compared with the previous year, the global economy continued its upward trend in According to the German Federal Ministry for Economic Affairs and Energy (BMWi), global indicators generally point to further positive momentum. The International Monetary Fund (IMF) has calculated global economic growth of 3.7 % for The IMF expects an increase of 3.9 % each year for 2017 and The German economy is in a strong upswing. According to the German Federal Statistical Office, the economic situation in Germany in 2017 was characterised by strong economic growth. According to initial estimates, the average increase over the entire year was 2.2 %. According to the Annual Economic Report 2018 completed on 31 January 2018, the German federal government expects growth in gross domestic product of around 2.4 % during the current financial year. The IMF predicts economic growth in Germany of 2.3 % in 2018 and 2.0 % in AUMA Association of the German Trade Fair Industry reports an increase in the number of exhibitors and amount of stand space at trade fairs in Germany in At the 157 international and national events, approximately 2.5 % more exhibitors were registered and about 2 % more stand space was booked than at the respective previous events. These are the results of preliminary AUMA calculations. Thus both the number of exhibitors and the amount of booked stand space increased more in 2017 than compared to the previous year (2016: 1.5 % and 1.0 % growth rates respectively). A slight decline (0.5 %) was seen only in the number of visitors. As in the previous years, a major driver of growth consisted of the participation of both exhibitors and visitors from abroad. The number of exhibitors from outside Germany again grew by around 5 %. According to AUMA, one reason for this is Germany s strong economy, which provides better opportunities to export to Germany. The proportion of visitors from abroad rose by about 4 %, thus evidencing the attractiveness of German trade fairs. At the same time, the number of German exhibitors appears to be stabilising. More start-ups and companies that had not previously participated discovered the trade fair as an instrument of personal dialogue about a real product. As a result, 2017 did not see the same slight decline experienced in the previous years. The number of exhibitors and visitors from abroad at German trade fairs continues to grow. 4 % 5 % The German trade fair organisers are planning 314 trade fairs outbound in 38 countries for 2018, thus maintaining a level similar to the previous years (2017: 316, 2016: 319). The regional focus remains on South, East and Central Asia, followed by the non-eu countries of Europe. For the 178 planned trade fairs in Germany, AUMA forecasts slightly increasing exhibitor figures and an increase in the number of visitors for 2018 compared to the respective previous events. Approximately 4 % more visitors from abroad in 2017 Approximately 5 % more exhibitors from abroad in 2017 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 2017 was a peak year for Koelnmesse. Sales by the consolidated companies amounted to million euros and is therefore over 29 million euros higher than planned. The sales amount to more than 36 million euros over the previous record year The results also significantly exceeded the forecast, as Koelnmesse completed 2017 with a profit of 27.3 million euros. It therefore exceeds planning figures by over 7 million euros. The good result is primarily due to the development of its own and guest events at the fair in Cologne and in the most important markets worldwide, as well as in the service business. The 82 trade fairs and exhibitions held worldwide in 2017 featured more than 43,000 exhibiting companies from 119 countries and more than 2.1 million visitors from 218 countries. In addition to this, there were approximately 130,000 participants in congresses that were held outside of the trade fairs and organised by KölnKongress GmbH. 27 of the company s own events, 23 guest events and 4 special events were held in Germany, all of which took place in Cologne except for Koelnmesse s own event art berlin. 28 trade fairs took place abroad. Premieres were celebrated in 2017 by ProFood Tech in Chicago/USA, the WellFood Summit in São Paulo/ Brazil and the Hardware Forum in Milan/Italy. Also joining the Koelnmesse portfolio are IDEC Indonesia Dental Exhibition & Conference in Jakarta/Indonesia; EmTech HONG KONG in Hong Kong/China; and the KRUSHIK Exhibition in Pune, Maharashtra/India. In Cologne, the innovative conference Digital Interior Day conference was held for the first time. In Berlin, Koelnmesse organised the art berlin for the first time. In terms of all three key parameters for trade fairs (exhibitors, visitors and stand space) identified by the AUMA 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 The international trade fair for suppliers of the furnishings and interior design industry, interzum, as well as the international trade fair for crafts and hobby, h+h cologne, even showed increases in all three parameters. Significant growth in the numbers of exhibitors compared to the previous event were reported by FSB, dmexco and imm cologne among others. There was steep growth in visitors versus prior events for IDS, Anuga, gamescom and Asia-Pacific Sourcing. In terms of the take-up of exhibitor stand space, there was considerable growth in fairs including spoga horse (autumn) and Kind + Jugend. 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. It is thus setting standards in terms of efficiency, flexibility, attractiveness and amenities. The new Car Park Zoobrücke with 2,000 parking spaces and a logistics area for over 300 trucks was opened in September in time for dmexco Various modernisation measures were also implemented. Initial renovation work has already been completed under the halls and in the sanitation facilities. Hall 1plus will be the next new building measure to be started. It can be used both as a convention centre or as an exhibition hall with a surface area of up to 10,000 m². Planning is advancing for the new CONFEX, the multifunctional event location, which will bring further top-notch conventions to Cologne. Comprehensive modernisation and new building projects are making the new Koelnmesse the heart of the extensive infrastructural development along the right bank of the Rhine River in Cologne. In 2017 Koelnmesse primarily developed its digital strategy in four directions. On the one hand, focus is being placed on the development of digital services and business models. The B2B platform for the interiors industry ambista was launched for imm cologne and provides direct access to industry news, events, products and contacts 365 days a year. The new lead tracking service for long-lasting trade fair success and other digital tools like the stand construction configurator also offer customer benefits. Koelnmesse is implementing new hardware and software to address the changing world of work and enable digital and connected work for its employees. The starting shot was also fired for digital signage on the trade fair grounds in Koelnmesse is thus further advancing the digitalisation of its grounds. The competence field Digital Media, Entertainment and Mobility serves to bundle Management report 24/25

14 employees of Koelnmesse GmbH employees of Koelnmesse Ausstellungen GmbH employees of foreign subsidiaries Koelnmesse s digital trade fair know-how. Across all sectors, digital connectedness is playing an important role within the framework of established events as well as new formats such as the Digital Interior Day, which has been promoting the exchange between established companies and start-ups since With these strategic cornerstones, Koelnmesse is focussing on the needs of its customers and offers solutions to meet the increased demands of its exhibitors and visitors as a modern service-oriented company. Koelnmesse s long-term internationalisation strategy remains successful. As compared to the previous events, trade fairs abroad including Pueri Expo together with FIT 0/16 in São Paulo/Brazil, Annapoorna World of Food India in Mumbai/India and THAIFEX World of Food Asia in Bangkok/ Thailand showed significant growth rates with regard to both exhibitor and (trade) visitor numbers. In 2017 the German Federal Ministry for Economic Affairs and Energy (BMWi) also commissioned Koelnmesse to organise and operate the German Pavilion at the world exhibition in Dubai from October 2020 through April Following Japan in 2005 and China 2010, the company will have been involved in three of the four large EXPOs of this century so far. 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 36 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 2017 was weaker than in 2016, with sales before consolidation of 33.2 million euros (previous year 38.1 million euros). Thus foreign markets accounted for 9 % of turnover. On average, there were a total of 804 employees employed with the Koelnmesse consolidated companies in 2017 (previous year 759). Of these, 605 (previous year 570) worked at Koelnmesse GmbH, 14 (previous year 14) at Koelnmesse Ausstellungen GmbH and 185 (previous year 175) at the foreign subsidiaries of Koelnmesse GmbH. 1 Koelnmesse received a total of around 4,000 job applications in 2017, several hundred of these alone for the 6 advertised apprenticeships beginning 1 August Koelnmesse currently employs 15 aspiring event managers spanning 3 training years, together with 6 trainees. Koelnmesse received honours again in 2017 for its outstanding achievements in career training. One of the 6 trainees, who completed their training in 2017, received the top grade and scored the best test results in her year in North Rhine-Westphalia. She therefore also participates in the competition for top honours by the Cologne Chamber of Industry and Commerce. The company offered internships to 46 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. For the third time, Koelnmesse is participating in a cross-mentoring programme for women together with five other Cologne companies. The company s own network Female Leadership 2.0 offers dedicated Koelnmesse employees the opportunity to network, engage in a professional and personal exchange, and use specific continuing education measures. Koelnmesse also offered its employees a variety of targeted training opportunities in Around 400 employees participated in the multi-part course on the topics of communication, organisation and collaboration using the programmes OneNote, Outlook and Skype for Business. With this offering coupled with modern hardware, Koelnmesse is responding to the quickly changing world of work and enabling all its employees to work in a digital, mobile and connected way. Koelnmesse s company employees are committed, creative and extremely service-oriented. In combination with the framework conditions provided by the trade fair city of Cologne with one of the largest trade fair grounds in the world, a modern infrastructure and ideal access, it is these employees 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. Previous year s figures adjusted for employees on parental leave. Management report 26/27

15 B. Situation of the Koelnmesse consolidated companies Net asset position: Total assets significantly increased from million euros to million euros. On the assets side, the increase is again primarily the result of investment in fixed assets, which were higher by a total of 23.3 million euros. Additions to the amount of 44.0 million euros compared with depreciations of 20.3 million euros. Additions were primarily investments of Koelnmesse GmbH. Fixed assets accounted for 52.7 % of the total assets (previous year 51.4 %). The average depreciation rate stood at 11.5 %, compared to 11.3 % in the previous year. In addition to the investments in fixed assets, the increase in assets primarily stems from expansion of investment securities by 7.5 million euros. On the liabilities side, total assets were 36.8 million euros higher due chiefly to the increase in equity by 27.5 million euros and other provisions by 15.4 million euros. The increase in equity by 19.2 % to million euros primarily stems from the net income, which has been combined in full with the accumulated profit carried forward and added to the retained earnings. The result of the significantly increased equity relative to higher other liabilities is an increase in the equity ratio, from 48.1 % to 51.0 %. The increase in other provisions comes mainly from the increase in the other provisions at the parent company. Liabilities decreased by 7.3 million euros, significantly due to the cyclical decline of trade accounts payable by 5.8 million euros and other liabilities by around 2.1 million euros. For the remainder, we refer to the explanations of assets of Koelnmesse GmbH. Financial situation: Cash funds according to the cash flow statement in the amount of million euros (previous year million euros) includes million euros in cash and cash equivalents together with investment securities totalling 24.8 million euros. The increase in these funds owes mainly to the positive cash flow from ongoing business operations in the amount of 54.1 million euros (previous year 37.7 million euros). The cash flow from investments in fixed assets at 44.0 million euros (previous year 26.7 million euros) has a countervailing effect. Therefore it was possible to finance investments from operational cash flow without the company having to borrow. 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 even for the planned significant investment measures in the years to come. The capital structure is characterised by an equity ratio that has increased by 2.9 percentage points. Results: Consolidated sales in 2017 rose as compared to the previous year by 83.9 million euros or 30.6 % to million euros and therefore exceeded the record sales of million euros achieved in Forecast sales of million euros was also exceeded by 29.3 million euros. The event-related expenses were weaker than growth in sales revenues at 19.0 % compared to This results in a higher gross profit of 49.2 million euros. The margin increased by 5.4 percentage points to 41.3 %. Personnel expenses rose by 3.5 % or 1.8 million euros. Rise in personnel expenses in the consolidated companies amounted to 2.6 million euros in the German companies and -0.8 million euros in the foreign companies. The income tax expense for the 2017 years (7.2 million euros) primarily stems from the parent company (6.0 million euros) and the US subsidiary (0.7 million euros). Other taxes relate for the most part to property tax for Koelnmesse GmbH. The consolidated companies net profit of 27.3 million euros was 7.5 million euros better than the forecast. Earnings before interest, income taxes, depreciation, and amortisation (EBITDA) stand at 55.2 million euros (previous year 17.9 million euros), exceeding targets by 11.6 million euros. For the remainder, we refer to the explanations on the results of Koelnmesse GmbH Mio. EUR Sales increase above forecast Mio. EUR Sales Mio. EUR Sales 2017 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 27 own trade fairs and exhibitions in Most events developed exceptionally well. Sales increased at an average rate of around 13 % compared to the respective previous events. 8 events from all areas of expertise show growth in sales in the double-digit percentage range. Participation in trade fairs outbound supplements Koelnmesse s activities in the most important target markets. There were 25 projects (German Pavilions) realised worldwide in 2017, including 22 by commission of the German Federal Ministry for Economic Affairs and Energy (BMWi) and one project on behalf of the German Federal Ministry of Food and Agriculture (BMEL). 2 additional projects were also organised privately. At 81.2 million euros, the Services division made a significant contribution to consolidated sales. The aim still consists of continually increasing this share. To this end, new services were introduced and sales was further developed in The Technical Services division achieved sales of 39.5 million euros and the Catering Services division recorded 16.0 million euros in sales. An online shop for ordering catering and delivery services was set up and is already having positive effects. The Marketing Services division achieved 16.6 million euros in sales. In the area stand construction systems, around 86,000 m² of stand space was built and approximately 4,000 exhibitors supported. 9.4 million euros in sales were recorded here. Net asset position: Koelnmesse GmbH s total assets increased by 31.8 million euros to million euros chiefly due to the fixed assets, which increased by 16.6 % or 25.6 million euros to million euros. This increased primarily due to the extensive investments made in tangible fixed assets as part of the Koelnmesse 3.0 project. Capital additions to the total amount of 43.8 million euros compared with depreciations to the amount of 18.1 million euros. Additions to the intangible assets including reclassified completed works to the amount of 1.3 million euros are accounted for by software programmes. Additions for operational and commercial buildings amounting to 21.1 million euros are predominantly due to the first phase of construction of the Car Park Zoobrücke in The assets under construction increased by 8.1 million euros. They primarily include the not yet completed part of the new car park as well as entries on the assets side for the planned Hall 1plus, CONFEX, the Terminal and the Southern Halls. Trade receivables were 4.8 million euros higher year-over-year due to cyclical effects. On the liabilities side, the 11.9 % increase in total assets is due to the increase in provisions, in addition ot higher equity. Equity increased to the amount of the 2017 net profit by 26.3 million euros to million euros. Due to the fact that equity showed a percentage increase higher than that of the total assets, the equity ratio rose to 53.7 % (previous year 50.3 %). Net provisions were 17.6 million euros higher. The increase is particularly due to the rise in other provisions by 15.7 million euros, which mainly include provisions for outstanding invoices, legal disputes and rental provisions. The tax provisions primarily concern the 2017 assessment period. All in all, liabilities were 11.9 million euros lower. Liabilities arising from advance payments received for orders decreased by 5.6 million euros year-overyear due to cyclical effects. Trade receivables also decreased by 3.9 million euros year-over-year due to cyclical effects. Part of the decline corresponds to the increase in the provision for outstanding invoices. Financial situation: At the end of 2017, the liquid assets of Koelnmesse GmbH were 71.4 million euros as compared to 76.7 million euros the previous year. In addition to the investment in securities to the amount of 7.5 million euros, the decline primarily stems from the investments made in fixed assets to the amount of 43.8 million euros. There was a positive operating cash flow to the amount of 45.4 million euros with a countervailing effect. Koelnmesse GmbH was in a position to meet its payment obligations at all times during the year under report. Credit lines of 120 million euros have already been pledged for Koelnmesse 3.0, but not yet activated. Results: Sales revenue at Koelnmesse GmbH for the 2017 financial year total to million euros (previous year million euros). The strong year-over-year increase to the amount of 84.8 million euros compared to the previous year is mainly the result of different trade fair cycles. Overall, significant growth was realised compared to the respective prior events. The planned sales volume was exceeded by over 24 million euros. At 21.4 %, the event-related expenses increased less than sales (36.7 %). This is primarily due to the fixed costs included in the expenses, which are proportionally lower compared to the high total sales. Personnel expenses rose by 5.8 % or 2.5 million euros. The increase resulted in particular from tariff increases in salaries as well as hiring of 35 additional employees, equalling an increase of 5.9 %. Koelnmesse GmbH derived income in the amount of 8.5 million euros from the profit transfer by Koelnmesse Ausstellungen GmbH and Koelnmesse YA Tradefair Private Ltd. in Mumbai/India. Earnings before interest, taxes, depreciation, and amortisation (EBITDA) including income through profit transfers and investment income total to 50.8 million euros (previous year 12.2 million euros). Tax charges in 2017 are mainly the result of income taxes for the current year as well as property taxes. Net profit totals to 26.3 million euros and is thus 8.0 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 event business, concluded the 2017 fiscal year with new records in sales and result. During the past financial year, there were 23 guest events and 4 special events held in the Cologne location, in which more than 7,200 exhibitors and more than 309,500 visitors took part. In addition to the large FIBO event held in Cologne, 6 new events, FVG Select, Deutsche VET, The Future of Transportation World Conference, GDHS Handelskongress, RETRO CLASSICS COLOGNE and gat/wat, significantly contributed to the improvements in both sales and earnings. By marketing and renting free hall capacity to national and international trade fair organisers, companies and event agencies, Koelnmesse Ausstellungen GmbH had sales of 17.9 million euros, achieving 22 % more than the amount forecast. The company achieved a surplus of 8.0 million euros before profit and loss transfer, thus outperforming expectations by more than 33 % in this case as well. Total assets increased by 1,446 Teuros to 2,406 Teuros as compared to the previous year. On the assets side, the strong increase results particularly from 1,498 Teuros increase in trade receivables, which stood at 2,254 Teuros. Conversely, receivables from affiliated companies were lower by 131 Teuros compared to the previous year. On the liabilities side, the significantly higher total assets primarily result from the liabilities to affiliated companies to the amount of 1,065 Teuros as well as the other provisions, which were 285 Teuros higher and corresponded to provisions for outstanding invoices. The equity ratio decreased to 20.8 % as a consequence of increased total assets (previous year 52.1 %). Great opportunities for the company arise from the Koelnmesse 3.0 investment programme. In particu- lar, the new CONFEX as well as space flexibility and improved quality of existing space is expected to help significantly increase the acquisition of new events. The company sees risk factors particularly in insufficient hotel capacity in the upper segment as well as high hotel prices in Cologne. The company is included in the cash management system of parent company Koelnmesse GmbH. Plans are for Koelnmesse Ausstellungen GmbH to organise 22 guest events and 2 special events in It anticipates sales of 15.6 million euros and a surplus before profit transfer of 6.8 million euros. 5. Overall presentation The Koelnmesse consolidated companies and Koelnmesse GmbH continued their successful development in the 2017 fiscal year. The trend in business also exceeded expectations and led a significant increase in sales and earnings compared to plan. Overall, the strong trade fair cycle and the above-target trend in events made 2017 an extremely successful year for both Koelnmesse GmbH and the consolidated companies with record sales and profit in the double-digit millions. 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 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 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 revenue 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 relevant opportunities. In some cases, business risks are covered by insurance plans. The Management sees fundamental strategic opportunities in the location close to the city centre that is attractive to exhibitors and visitors as well as the company s expertise with regard to digitalisation. 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 tackling the challenges concerning 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 by a special controlling during 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. Management report 34/35

19 2. Outlook Financial risks and opportunities take the form of currency risks in the event of wide fluctuations in the value of the euro relative to foreign currencies of the Koelnmesse subsidiaries. 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 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 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). ZVK is responsible for providing its members employees with a supplementary pension for old age, occupational disability, incapacity, and surviving dependants. 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 35.3 million euros (consolidated companies: 37.2 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. In 2018 Koelnmesse intends to continue its sustainable growth, thereby laying the foundation required to invest in its infrastructure and events from its own financial strength in the future. Provided that the global economy remains stable, it plans to achieve average annual profit in the double-digit millions and annual sales that regularly exceed 300 million euros. The first events of 2018 confirm the path to growth at Koelnmesse. imm cologne had more visitors again this year, while ISM and ProSweets Cologne underlined their roles as central platforms for the respective sectors. As usual, spoga horse (spring) had a high level of international trade visitors and exhibitors, while the ZOW supplier fair for the furniture and interior design industry in Bad Salzuflen organised for the first time by Koelnmesse was launched successfully. Signs for the further programme are positive throughout, both with regard to Koelnmesse s own events like the INTERNATIONAL HARDWARE FAIR COLOGNE, Anuga FoodTec or THE TIRE COLOGNE as well as guest events with leading trade fairs like DACH+HOLZ International and FIBO. Koelnmesse is organising 78 trade fairs and exhibitions in the fiscal year Of these, 26 are Koelnmesse s own events and 22 are guest events, whereas there were 2 special events. 28 trade fairs and exhibitions took place abroad. In addition, Koelnmesse expects to organise 20 participations in trade fairs abroad in THE TIRE COLOGNE and INDICOM celebrate premieres in Cologne. The ZOW supplier fair in Bad Salzuflen and Feria Mueble & Madera in Bogotá/Columbia are taking place for the first time in Koelnmesse s portfolio. As part of the Koelnmesse 3.0 investment programme, the second phase of construction of the Car Park Zoobrücke will be completed and construction of Hall 1plus will commence in The first phase of renovation will also begin in hall 10. Given the economic and business trends expected, the planned sales for 2018 is 322 million euros for the consolidated companies and 278 million euros for Koelnmesse GmbH. The projected result for the consolidated companies is 0.7 million euros. Loss forecast for Koelnmesse GmbH stands at 2.3 million euros. Plans for the consolidated companies assume an EBITDA in 2018 amounting to 23.7 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). According to the new regulation, 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 define 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. In 2015, the Supervisory Board and Management Board 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 %, of which the Supervisory Board is informed. 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. As of 30 June 2017, the proportion of women on the Supervisory Board of Koelnmesse GmbH was % and the proportion in company management was 33.3 %. The proportion of women was 12 % in the first level below company management and 29.9 % at the second management level below company management in the Koelnmesse Group. According to the decision made by the Supervisory Board and General assembly on 29 June 2017, a target for the proportion of women in the Supervisory Board of Koelnmesse GmbH was defined as 30 % by 30 June 2018 to the extent possible. In addition to this, the targeted proportion of women in Koelnmesse GmbH s management was defined to be 30 %. This target is currently in place and to be maintained past 30 June Company management has defined 30 June 2022 as the deadline for reaching the targets for management levels II and III stipulated by Section 36 (4) of the German Limited Liability Companies Act (GmbHG). The current values as of 30 June 2017 (management level II: 12 %, management level III: 29.9 %) shall be at least maintained through 30 June 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 2022 and can be filled with suitable and interested female candidates. Cologne, 23 March 2018 Gerald Böse Katharina C. Hamma Herbert Marner Management report 38/39

21 Consolidated financial statement for the fiscal year from 1 January to 31 December 2017 Consolidated balance sheet Assets Liabilities EUR TEUR EUR TEUR A Fixed assets I. Intangible assets 1. Concessions, industrial rights 8,086, ,663 and similar rights and assets as well as licences to such rights and assets purchased 2. Goodwill against payment 6,419, ,428 14,506, ,091 II. Property, plant and equipment 1. Land, leasehold rights and buildings including building on third-party land 124,320, , Technical machinery and equipment 4,163, , Other equipment, plant and office equipment 10,375, , Advance payments and construction in progress 22,696, , ,556, ,647 III. Financial assets Participating interests 139, , ,202, ,878 B Current assets I. Inventories Supplies 264, II. Receivable and other assets 1. Trade accounts receivables 14,612, , Receivables from associated companies and other investees 67, Other assets 10,243, ,206 24,923, ,092 A B C Equity I. Subscribed capital 51,200, ,200 II. Capital reserve 42,038, ,038 III. Retained from earnings Other retained earnings 77,018, IV. Consolidated accumulated profit ,310 V. Per contra items from foreign currency translation -239, VI. Holdings by other shareholders 484, ,500, ,047 Provisions 1. Provisions for pensions and similar obligations 5,977, , Tax provisions 6,532, , Other provisions 77,340, ,925 89,850, ,947 Liabilities 1. Customer advance payments received for purchase orders 60,283, , Trade accounts payables 6,857, , Residuary liabilities 4,497, ,555 of which from taxes EUR 819, (previous year TEUR 633) of which with respect to social security contributions EUR (previous year TEUR 3,0) 71,638, ,921 III. Other securities 24,810, ,279 IV. Cash on hand balances with credit institutions 106,851, , ,848, ,605 D Prepaid/deferred items 2,168, ,466 C Prepaid/deferred items 1,132, E Deferred tax liabilities 24, ,183, , ,183, ,412 Consolidated balance sheet 40/41

22 Consolidated income statement 2017 EUR 2016 TEUR 1. Net sales 357,947, , Other operating income 3,217, ,175 Total output 361,164, , Event-related expenses a) Expenses for supplies -9,282, ,707 b) Expenses for purchased services -202,850, , ,133, ,327 Gross income 149,031, , Personnel expenses a) Wages and salaries -43,489, ,504 b) Statutory social security contributions and expenses for pensions -10,713, ,861 of which for pensions EUR 3,271, previous year TEUR 3,007-54,203, , Depreciation of intangible fixed assets and property, plant and equipment -20,331, , Other operating expenses -38,388, , Other interest and similar income 599, Depreciation of investment securities Other interest and similar expenses -911, ,009 of which expenses associated with interest accrued on provisions EUR 571, previous year TEUR Earnings before taxes 35,795, , Income taxes -7,238, ,139 of which deferred taxes EUR -5,878 previous year TEUR Profit after taxes 28,557, Other taxes -1,163, Consolidated companies net profit/loss before holdings by other shareholders 27,393, Profit accruing to other shareholders -66, Consolidated companies net profit/loss 27,326, Profit carried forward 49,309, , Inclusion in retained earnings -76,636, Consolidated accumulated profit ,310 Consolidated income statement 42/43

23 Annual financial statement of Koelnmesse GmbH for the fiscal year from 1 January to 31 December 2017 Balance sheet of Koelnmesse GmbH Assets Liabilities EUR TEUR EUR TEUR A Fixed assets I. Intangible assets 1. Concessions, industrial rights 7,235, ,451 and similar rights and assets as well as licences to such rights and assets purchased 2. Goodwill against payment 1,214, ,363 8,450, ,814 II. Property, plant and equipment 1. Land, leasehold rights and buildings including buildings on third-party land 124,304, , Technical machinery and equipment 4,155, , Other equipment, plant and office equipment 9,872, , Advance payments and construction in progress 22,696, , ,028, ,045 III. Financial assets 1. Investments in affiliated companies 3,358, , Loans to affiliated companies 1,900, , Participating interests 5,440, ,440 10,698, , ,177, ,557 B Current assets I. Inventories Supplies 264, II. Receivables and other assets 1. Trade accounts receivables 11,651, , Receivables from affiliated companies 2,727, , Receivables from associated companies and other investees 67, Other assets 7,377, ,598 21,823, ,025 A B C Equity I. Subscribed capital 51,200, ,200 II. Capital reserve 42,038, ,038 III. Retained from earnings Other retained earnings 67,310, IV. Consolidated accumulated profit , ,548, ,237 Provisions 1. Provisions for pensions and similar obligations 5,816, , Tax provisions 6,450, , Other provisions 75,031, ,379 87,297, ,655 Liabilities 1. Customer advance payments received for purchase orders 38,882, , Trade accounts payables 6,167, , Liabilities due to associated companies and other investees 14, Residuary liabilities 3,674, ,197 of which from taxes EUR 676, (previous year TEUR 621) of which with respect to social security contributions EUR (previous year TEUR 0,3) 48,739, ,596 III. Other securities 24,809, ,279 IV. Cash on hand, balances with credit institutions 71,425, , ,323, ,241 C Prepaid/deferred items 253, D Prepaid/deferred items 2,168, , ,754, , ,754, ,954 Balance sheet of Koelnmesse GmbH 44/45

24 Income statement of Koelnmesse GmbH 2017 EUR 2016 TEUR 1. Net sales 315,905, , Other operating income 2,782, ,038 Total output 318,688, , Event-related expenses a) Expenses for supplies -8,488, ,027 b) Expenses for purchased services -190,733, , ,221, ,048 Gross income 119,466, , Personnel expenses a) Wages and salaries -35,224, ,458 b) Statutory social security contributions and expenses for pensions -9,290, ,599 of which for pensions EUR 3,197, previous year TEUR 2,940-44,515, , Depreciation of intangible fixed assets and property, plant and equipment -18,083, , Other operating expenses -31,676, , Income from participating interests 507, ,872 of which from affiliated companies EUR 507, previous year TEUR 1, Income from profit- and loss-sharing agreements 8,032, ,313 of which from affiliated companies EUR 8,032, previous year TEUR 6, Income from loans from financial assets 60, of which from affiliated companies EUR 60, previous year TEUR Other interest and similar income 493, of which from affiliated companies EUR 0.00 previous year EUR Depreciation of financial assets and securities Interest and similar expenses -859, ,007 of which to affiliated companies EUR 0.00 previous year EUR 0 of which expenses associated with interest accrued on provisions EUR 570, previous year TEUR Earnings before taxes 33,426, , Income taxes -6,041, Profit after taxes 27,385, , Other taxes -1,073, Net profit/loss 26,311, , Profit carried forward 40,616, , Inclusion in retained earnings -66,928, Accumulated profit ,617 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. HR B 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 (3) HGB and thus waives the filing of an annual financial statement. 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 % (exception: Koelnmesse YA Tradefair Private Ltd., Mumbai: 75 % as well as Expolink Global Network Ltd., Bangkok: % of the share capital, 55 % of 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 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 all 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 Italian participation Koeln Parma Exhibitions S.r.l., Parma, in which Koelnmesse GmbH holds a 50 % share, was proportionally included in accordance with Section 310 HGB. The holding of Koelnmesse GmbH in KölnKongress GmbH, Cologne and in KölnKongress Gastronomie GmbH, Cologne, which was founded in 2016 were not consolidated (share of capital stock: 49 % 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. Under these agreements, 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 Section 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 The annual financial statements of the companies included in the consolidated financial statement, and 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 Notes concerning the consolidated financial statement and the annual financial statement 48/49

26 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 is depreciated on a straight-line basis over ten years in the consolidated financial statement, as this corresponds to the expected duration of use. The recoverability of goodwill is reviewed annually using the simple German income approach. If necessary, non-scheduled depreciation is applied. 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 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 costs of which are between euros 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 of 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. Investment securities are assessed at the lower of acquisition cost or current market value. Cash on hand and balances with credit institutions are valued 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 of 31 December 2017, for the prior seven years (pension provision: 10 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 utilize 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 10 years as published by the German Bundesbank on 31 December 2017, whereby this average rate results from an assumed term to maturity of 15 years (Section 253 (2) sentence 2 HGB). This interest rate is 3.7 %. 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 financial years stood at 557 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 0.0 % p.a. or 2.0 % p.a. Wage and salary increases were not factored in because the group of beneficiaries consists exclusively of pensioners. 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. These provisions are discounted on the basis of the average market interest rate for the prior 7 years as published by the German Bundesbank on 31 December 2017, whereby this average rate results from an assumed term to maturity of 15 years, (Section 253 (2) sentence 2 HGB). This interest rate is 2.8 %. For 2017, the expense due to change in the assumed interest rate amounts to 12 Teuros and was allocated to interest expenses. Where provisions for employee anniversaries at the company are concerned, assumptions were based on annual wage and salary increases of 2.0 % as well as a fluctuation rate of 2.9 %. Provisions for semi-retirement were calculated in accordance with the block model. These provisions were discounted at an interest rate of 1.3 % 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 2017, the expense due to change in the assumed interest rate amounts to 1 Teuros and was allocated to interest expenses. Notes concerning the consolidated financial statement and the annual financial statement 50/51

27 Klaus Heubeck s Richttafeln 2005 G served as the basis for the calculations. Annual wage and salary increases of 2.0 % 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 overhead costs. 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 meter used. Liabilities were stated at their settlement amounts. Business transactions in foreign currencies are valuated at the exchange rate on the day of the transaction or at the more unfavourable mean spot rate on the reporting day. Losses from exchange rate movements are valued at the rate on the reporting date. Assets and receivables denominated in foreign currency with a maturity of up to one year are always valuated at the mean spot rate on the reporting day. Payments made in the financial 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. They 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 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 19.3 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 2017 total to 25 Teuros as of 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 approximately 30 % applicable in Germany and earnings before tax (but less other taxes) in the amount of a 34,632 Teuros, tax expense within the consolidated companies would total to 10,389 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 7,238 Teuros or an effective tax rate of 20.9 %. V. Notes on the balance sheets Fixed assets For the period from 1 January to 31 December 2017, 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 2017 Acquisition cost trend Depreciation trend Residual As of Addition Value Disposal Currency As of As of Addition Disposal Currency As of As of As of adjustment/ differences differences reclassification 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 licenses to such rights and assets purchased payment 30,809, , ,061, , , ,851, ,146, ,786, , , ,765, ,086, ,663, Goodwill against payment 9,733, , , ,540, ,305, ,951, , ,121, ,419, ,428, ,543, , ,061, , , ,392, ,451, ,737, , , ,886, ,506, ,091, II. Property, plant and equipment 1. Land, leasehold rights and buildings including buildings on third-party land 498,058, ,132, ,306, , ,489, ,090, ,080, , ,168, ,320, ,967, Technical machinery and equipment 17,231, , , , ,118, ,503, , , ,954, ,163, ,728, Other equipment, plant and office equipment 56,841, ,967, , ,543, , ,328, ,480, ,060, ,526, , ,953, ,375, ,361, Advance payments and construction in progress 14,590, ,903, ,733, , ,696, ,696, ,590, ,721, ,681, ,061, ,613, , ,633, ,074, ,593, ,528, , ,077, ,556, ,647, III. Financial assets 1. Investments in affiliated companies Loans to affiliated companies Investments 139, , , , , , , , ,404, ,992, ,714, , ,166, ,526, ,331, ,629, , ,963, ,202, ,878, Notes concerning the consolidated financial statement and the annual financial statement 54/55

29 Development of fixed assets of Koelnmesse GmbH as at 31 December 2017 Acquisition cost trend Depreciation trend Residual As of Addition Value Disposal 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 licenses to such rights and assets purchased payment 28,514, , ,061, , ,720, ,062, ,522, , ,484, ,235, ,451, Goodwill against payment 1,580, ,580, , , , ,214, ,362, ,094, , ,061, , ,301, ,280, ,670, , ,851, ,450, ,814, II. Property, plant and equipment 1. Land, leasehold rights and buildings including buildings on third-party land 497,975, ,132, ,306, , ,407, ,031, ,074, , ,103, ,304, ,944, Technical machinery and equipment 17,196, , , ,078, ,476, , ,923, ,155, ,720, Other equipment, plant and office equipment 54,897, ,828, , ,453, ,427, ,108, ,891, ,444, ,554, ,872, ,789, Advance payments and construction in progress 14,590, ,903, ,733, , ,696, ,696, ,590, ,660, ,534, ,061, ,523, ,610, ,615, ,412, ,446, ,581, ,028, ,044, III. Financial assets 1. Investments in affiliated companies 3,463, ,463, , , ,358, ,358, Loans to affiliated companies 1,900, ,900, ,900, ,900, Participating interests 5,440, ,440, ,440, ,440, ,803, ,803, , , ,698, ,698, ,558, ,780, ,00 1,624, ,715, ,001, ,083, ,547, ,537, ,177, ,557, Notes concerning the consolidated financial statement and the annual financial statement 56/57

30 Consolidated companies goodwill Capital consolidation Separate financial Total TEUR TEUR TEUR Acquisition costs ,828 3,905 9,733 Addition Disposal Currency differences ,828 3,713 9,541 Provisions The pension provisions in the amount of 5,977 Teuros posted in the consolidated balance sheet consist primarily of Koelnmesse GmbH s obligations (5,816 Teuros) resulting from the company pension scheme. As of 31 December 2017, other provisions consisted of the following: The tax provisions posted in the consolidated financial statement (6,533 Teuros) include 6,450 Teuros in tax provisions by Koelnmesse GmbH, which is predominantly for taxes on income in Accumulated depreciation ,305 Addition Unscheduled 0 1,020 1,020 Disposal Currency differences ,040 2,082 3,122 Residual ,788 1,631 6,419 Residual ,371 3,057 8,428 Consolidated GmbH companies TEUR TEUR TEUR TEUR Rental obligations 45,795 40,878 45,795 40,878 Personnel expenses 7,763 8,325 7,119 7,232 Outstanding invoices 14,009 9,413 13,663 9,222 Contingent losses from pending transactions Remaining provisions 8,836 2,386 7,516 1,124 77,341 61,925 75,031 59,379 Receivables and other assets Trade receivables as well as other assets with a maturity of more than one year total to 0 Teuros (previous year 0 Teuros) for Koelnmesse GmbH and to 67 Teuros (previous year 62 Teuros) in the consolidated financial statement. All other receivables and other assets have a maturity of up to one year. Receivables by Koelnmesse GmbH from associated companies and from other investees are trade receivables and, with regard to Koelnmesse Ausstellungen GmbH, also from the balance of cash pooling and profit sharing. Receivables from other investee companies recognised in the consolidated financial statement constitute trade receivables as well. Investment securities The marketable securities consist of a diversified fund. This is a distributing fund. In the year 2017, reversals were made amounting to 69 Teuros. Equity The accumulated profit in 2017 for Koelnmesse GmbH and the consolidated companies to the amount of 0 Teuros is the outcome of the respective profit carried forward to the amounts of 40,617 Teuros (Koelnmesse GmbH) and 49,310 Teuros (consolidated companies), the respective net profits in 2017, and the increases in retained earnings to the amounts of 66,928 Teuros (Koelnmesse GmbH) and 76,636 Teuros (consolidated companies). The other provisions include 5,132 Teuros of provisions for possible claims for damages. Other assets at Koelnmesse GmbH include receivables due from the City of Cologne in the amount of 302 Teuros (previous year 213 Teuros). 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 of Remaining term Remaining term Total up to 1 year of more than of more than 1 year up to 5 years 5 years TEUR TEUR TEUR TEUR Remaining term Remaining term Remaining term Total up to 1 year of more than of more than 1 year up to 5 year 5 years TEUR TEUR TEUR TEUR Liabilities due to prepayments received on orders 60, ,283 Trade acccounts payables 6, ,858 Residuary liabilities from taxes within the context of social security remaining liabilities 3, ,807 71, ,639 Liabilities due to prepayments received on orders 38, ,882 Trade accounts payables 6, ,168 Liabilities due to associated companies and other investees Residuary liabilities from taxes within the context of social security remaining liabilities 2, ,997 48, ,739 The liabilities are not secured not by liens or similar rights on the part of the consolidated companies. The composition of the companies included in the consolidated financial statement did not change in A total of 14 Teuros in liabilities to affiliated companies consists of trade liabilities. Koelnmesse GmbH has trade accounts payable to the amount of 25 Teuros (previous year 7 Teuros) to the City of Cologne (consolidated companies 3 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 Consolidated GmbH companies TEUR TEUR TEUR TEUR Domestic 161, , , ,470 Abroad 196, , , , , , , ,132 With regard to their sources, net sales break down Consolidated GmbH companies TEUR TEUR TEUR TEUR Investment income 200, , , ,017 Execution of events 9,162 8,647 9,162 8,648 Admission proceeds/catalogues 32,399 20,924 33,625 21,678 Services 61,772 48,632 60,193 45,570 Other revenues 54,388 39,826 40,096 28, , , , ,132 Other operating income at Koelnmesse GmbH includes income related to other periods from the liquidation of provisions amounting to 1,159 Teuros (864 Teuros for the consolidated companies), to incoming payments on written-down claims in the amount of 80 Teuros (80 Teuros for the consolidated companies) and exchange gains from currency translation amounting to 15 Teuros (300 Teuros for the consolidated companies). The event-related expenses to the amount of million euros concerns additions to provisions for rental obligations. Other operating expenses at Koelnmesse GmbH include expenses related to other periods from the charge-off of receivables amounting to 707 Teuros (708 Teuros for the consolidated companies), and from additions to the provisions for contingent losses of 938 Teuros (938 Teuros for the consolidated companies). In addition to this, other operating expenses also include exchange losses from currency translation in the amount of 67 Teuros (1,125 Teuros for the consolidated companies) and from expenses from provisions for possible claims for damages to the amount of 5,132 Teuros. VII. Commitments and contingencies Due to the US Cross-Border Leasing transaction conducted in the fiscal year 2002, 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 With regard to 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, 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 dependants. 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 2017 (unchanged in 2018: 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 million euros as of 31 December 2017 (consolidated companies: million euros). The distribution-blocked difference amounts to million euros (consolidated companies: million euros). With respect to the consolidated companies, the wages and salaries subject to assessment amounted to million euros in the year under report. With respect to Koelnmesse GmbH, they amounted to million euros. In addition, there are annual liabilities to various pension funds for the pensions of the Executive Vice Presidents and several Vice Presidents. For the upcoming fiscal year, these total 256 Teuros for the consolidated companies and 251 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 amount currently equal to 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 Northern Halls would total to 390,548 Teuros plus ancillary costs. 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 million euros plus ancillary costs. Long-term liabilities to the amount of 73,5 Teuros result from the lease contracts for the Southern trade fair grounds, which were extended in December In addition, there are commitments of million euros (14,051 Teuros for the consolidated companies) from long-term rental and leasing contracts for business and office equipment (company cars, copiers, computers and peripheral equipment, etc.) at Koelnmesse GmbH. IX. Other notes Average workforce figures for the year Salaried Hourly-paid Total employees employees Consolidated companies GmbH 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. 1 The employees 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 performance-based bonus and other remuneration components, in particular a company car and the insurance premiums paid into the company pension programme. There is no public-law pension system in place for members of management and their surviving dependants. 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 2017: Fixed salary Bonus 1 In-kind and Total other remuneration 2 EUR EUR EUR EUR Böse, Gerald 369, , , , Hamma, Katharina C. 240, , , , Marner, Herbert 250, , , , Variable remuneration provisions containing long-term incentives were agreed with Executive Vice Presidents, to take effect beginning with the fiscal year Payment of the bonus is extended over several years. For 2017, 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 2017 financial year, Gerald Böse will receive 242, euros, Katharina C. Hamma 146, euros and Herbert Marner 161, 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 of the bonus bank balances. In 2017, the bonus shares subject to this malus provision totalled to 69, euros for Gerald Böse; to 38, euros for Katharina C. Hamma; and to 40, euros for Herbert Marner. The actual expense for active current members of management totalled to 1,741 Teuros for 2016 and was thus at the previous year s level. During the financial year there were no benefits paid to members of management on the occasion of the end of their employment. claims to severance pay in effect for any member of management. Remuneration for former Executive Vice Presidents and their surviving dependants totalled to 424 Teuros during the financial year under report. Pension provisions of 5,816 Teuros are set aside for former Executive Vice Presidents and their surviving dependants. 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 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 Chairperson of the Supervisory Board of Koelnmesse GmbH also receives an additional expense allowance. During the 2017 financial year at Koelnmesse GmbH, there were four meetings of the Supervisory Board, two meetings of the Finance Committee, two shareholders meetings, three meetings of the Internationalisation Committee, and four meetings of the Executive Committee. At Koelnmesse Ausstellungen GmbH, there were two meetings of the Supervisory Board and one shareholders meeting. In the event of a premature termination of employment, there are no public-law pension provisions or 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) 19.3 Kirsten Jahn (1 st Vice Chairwoman) 5.0 Claudia Wörmann-Adam (2 nd Vice Chairwoman) 3.8 Hans-Werner Bartsch 1.8 Torsten Burmester 2.8 Susana dos Santos Herrmann 0.8 Dr. Ralph Elster 0.0 Jochen Felix 1.3 Reinhard Houben 1.0 Christian Joisten 0.3 Axel Kaske 2.6 Niklas Kienitz 1.0 Alfred Kohlenberg 0.8 Dr. Barbara Lübbecke 2.8 Dr. Rüdiger Messal 0.9 Dr. Patrick Opdenhövel 0.6 Bernd Petelkau 1.0 Ulf C. Reichardt 1.3 Manfred Richter 0.8 Ingo Riedeberger 0.8 Matthias Schlüter 1.8 Martin Schumaier 1.0 Alexander Stary 1.0 Torsten Weil 1.3 Of the total remuneration at Koelnmesse GmbH, 33 Teuros is attributable to the Supervisory Board, 5 Teuros to the Finance Committee, 9 Teuros to the Executive Committee, and 6 Teuros to the Committee on Internationalisation. The remuneration of the Supervisory Board in the consolidated companies (Koelnmesse GmbH and Koelnmesse Ausstellungen GmbH) totals to 36 Teuros. The total fee charged by the BDO AG accounting firm in the 2017 financial year stood at 154 Teuros. Of this amount, 89 Teuros applies to the audit of the annual and consolidated financial statements (including 8 Teuros for the year 2016 and 53 Teuros for Koelnmesse GmbH) and 65 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 Shareholders rate Equity Last Consolidated net income companies/gmbh percent EUR EUR Koelnmesse Ausstellungen GmbH 1 Cologne , Koelnmesse Inc. 2 Chicago 100 1,620, ,271, Koelnmesse S.r.l. 2 Milan , , Koelnmesse Pte. Ltd. 2 Singapore , , Koelnmesse Ltd. 2 Hong Kong ,542, ,767, Koelnmesse Co. Ltd. 2 Beijing 100-3,802, , Koelnmesse Co. Ltd. 2 Tokyo 100-1,588, , Koelnmesse Co., Ltd. 3 Bangkok , , Koelnmesse Organização de Feiras Ltda. 2 São Paulo 100-1,090, ,379, Koelnmesse YA Tradefair Private Ltd. 2 Mumbai 75 1,635, , Koeln Parma Exhibitions S.r.l. 4 Parma 50 1,279, , Expolink Global Network Ltd. 5 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. The figures for the holding Koelnmesse YA Tradefair Private Ltd. are 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 The share 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 1,126 Teuros, proportionate non-current assets in the amount of 191 Teuros, current obligations of 38,000 euros, and no long-term obligations. The participation involved proportionate income of 18 Teuros and expenses of 253 Teuros. There are no financial obligations. 5 The share 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, MdR 1 Chairwoman Mayor of the City of Cologne Kirsten Jahn, MdR 1 1 st Vice Chairwoman Certified Geographer Claudia Wörmann-Adam 4 2 nd Vice Chairwoman Retired Hans-Werner Bartsch, MdR 1 (starting 14 February 2017) Mayor of the City of Cologne Torsten Burmester Head of Department, Ministry for Economics, Innovation, Digitalisation and Energy of the German State of North Rhine-Westphalia Susana dos Santos Herrmann, MdR 1 (ending 14 February 2017) Editor Dr. Ralph Elster, MdR 1 (ending 14 February 2017) Management consultant Jochen Felix 4 Retired Reinhard Houben, MdB 3 Business graduate/executive Vice-President Christian Joisten, MdR 1 (starting 14 November 2017) Management consultant Axel Kaske Businessman Niklas Kienitz, MdR 1 Certified attorney/real estate economist Alfred Kohlenberg 4 1st Vice Chairman of Works Council (ending 1 July 2017) Dr. Barbara Lübbecke Executive Vice-President Dr. Rüdiger Messal (ending 29 Aug. 2017) Secretary of State in the Ministry of Finance of the State of North Rhine-Westphalia Dr. Patrick Opdenhövel (starting 29 Aug. 2017) Secretary of State in the Ministry of Finance of the State of North Rhine-Westphalia Bernd Petelkau, MdL 2 Business graduate Ulf C. Reichardt Executive Director of the Cologne Chamber of Industry and Commerce Manfred Richter, MdR 1 Personnel manager Ingo Riedeberger 4 Director Matthias Schlüter 4 Director Martin Schumaier 4 Employee Alexander Stary 4 Chairman of Works Council Torsten Weil Office manager, State Chancellery of the Free State of Thuringia, Office of the State Premier 1 MdR = Member of the Cologne City Council 2 MdL = Member of the Landtag of North Rhine-Westphalia 3 MdB = Member of the German Bundestag 4 Employee representative at 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 as well as the accumulated profit from 2016 be added to the retained earnings. X. Events of particular significance after the balance sheet date There were no processes of special importance to the company within the meaning of Section 285 No. 33 HGB after the close of the financial year. Cologne, 23 March 2018 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 2017 TEUR 2016 TEUR Consolidated companies net loss/profit after holdings by other shareholders +27, Earnings share of minority shareholders Depreciation (+) / value adjustments (-) of items from the fixed assets +20, ,229 Increase (+)/Decrease(-) of provisions +15,630 +9,018 Other expenses (+) / income (-) that do not affect payments Non-cash effects from companies acquired in previous years and consolidated for the first time 0 +3,851 Increase (-) / decrease (+) of inventories, trade accounts receivable and other assets not related to investment or financing operations -3, ,071 Increase (+) / decrease (-) of trade accounts payable and other liabilities not related to investment or financing operations -7,586-4,745 Profit (-) / loss (+) from the disposal of items from the fixed assets Interest expense (+) / interest income (-) Income tax expense (+) / income tax income (-) +7,238 +1,139 Income tax payments (-) / income tax refunds (+) -6, Cash flow from ongoing business operations +54, ,279 Payments for investments in intangible fixed assets (-) ,345 Payments for investments in property, plant and equipment (-) -43,681-17,514 Payments for investments in property, plant and equipment (-) 0-12 Deposits due to financial investments within the scope of short-term financial disposition (+) Interest received (+) Payments resulting from the purchase of consolidated companies (-) 0-4,000 Cash flow from investment activities -43,440-26,326 Payments for the redemption of loans and (financial) credits (-) 0-4,218 Interest paid (-) Dividends paid to other shareholders (-) Cash flow from financing activities ,727 Changes resulting from foreign currency translation Changes to cash funds that affect payments +10,369 +6,527 Access to cash funds from the initial consolidation 0 +1,539 Cash funds at the beginning of the period +121, ,227 Cash funds at the end of the period +131, ,293 Cash funds are comprised of cash on hand plus bank deposits in the amount of million euros (of which 251 Teuros from proportionately consolidated companies), as well as marketable securities in the amount of million euros. Consolidated cash flow statement 74/75

39 Consolidated shareholders equity list Equity capital of the parent company Non-controlled shares Consolidated equity Equity Consolidated Profit differences from income to the attributable Sub- currency Profit parent company Non-controlling to non- scribed translation carried shares before controlled capital Reserves forward Total net income shares Total Total Capital Retained Total reserve earnings TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR TEUR As of ,200 42, , , , ,372 Currency translation Changes in the scope of consolidation Consolidated companies As of ,200 42, , , , ,047 As of ,200 42, , , , ,047 Distribution Currency translation Inclusion in retained earnings ,636 76, ,179-27, Consolidated companies ,326 27, ,393 As of ,200 42,038 77, , , ,501 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 2017 to 31 December The bookkeeping and the preparation of the annual and consolidated financial statements as well as the summarised report on the situation 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, 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 German standards for the audit of financial statements promulgated by the Institut der Wirtschaftsprüfer (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 the consolidated companies, as well as 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 on Koelnmesse GmbH and the Koelnmesse consolidated companies. We believe that our audit provides a reasonably sound basis for our assessment. Our audit has not led to any reservations. 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, 23 March 2018 BDO AG Auditing Company /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 the situation of Koelnmesse GmbH and the Koelnmesse consolidated companies for the fiscal year from 1 January to 31 December 2017 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 companies financial statement, the annual financial statement, and the report on the situation of Koelnmesse GmbH and the Koelnmesse consolidated companies for the financial year from 1 January to 31 December The Supervisory Board approves the Executive Board s proposal add the net profit for 2017 and the accumulated profit for 2016 to the retained earnings. The shareholders meeting will be informed of this decision. The Supervisory Board thanks the Executive Board and all of the Koelnmesse employees for the work they have accomplished in the past year. Cologne, April 2018 Henriette Reker Mayor of the City of Cologne Chairwoman of the Supervisory Board Supervisory Board report 80/81

42 Koelnmesse GmbH Messeplatz Köln Germany Telefon Telefax info@koelnmesse.de blog.koelnmesse.de GB-Printed in Germany