Sto Geschaeftsbericht 2018 Englisch

Building with conscience.
Sto SE & Co. KGaA | 2018 Annual Report

Sto at a glance
Sto Group 2013 2014 2015 2016 2017 2018 Changes in %
18/17
Turnover 1,166.0 1,208.7 1,216.6 1,230.7 1,277.4 1,332.4 4.3 %
Germany 534.7 549.2 535.4 548.7 562.8 596.0 5.9 %
Non-Germany 631.3 659.5 681.2 682.0 714.6 736.4 3.1 %
Investments (not including financial assets) 32.4 39.1 35.8 37.5 32.7 32.1 –1.8 %
Depreciation/amortisation
(without financial assets) 29.0 29.9 31.0 32.7 33.3 31.3 –6.0 %
EBITDA 128.9 126.9 112.6 103.0 117.3 113.2 –3.5 %
EBIT 99.9 97.0 81.5 70.3 84.0 81.9 –2.5 %
EBT 99.0 96.2 81.2 68.1 82.2 80.2 –2.4 %
EAT (earnings after taxes) 68.4 66.0 55.7 45.7 55.8 53.8 –3.6 %
Earnings per limited ordinary share (EUR) 10.68 10.29 8.71 7.14 8.62 8.33 –3.4 %
Earnings per limited preference share (EUR) 10.74 10.35 8.77 7.20 8.68 8.39 –3.3 %
Cash flow from current operating activities 80.9 93.9 78.9 95.4 86.5 80.7 –6.7 %
per share (EUR) 12.60 14.61 12.28 14.85 13.46 12.56 –6.7 %
Total assets 703.6 751.3 641.9 714.2 749.6 784.4 4.6 %
Equity capital 481.4 506.5 404.7 425.2 450.1 477.5 6.1 %
in % of total assets 68.4 67.4 63.0 59.5 60.1 60.9
Employees (year end) 4,791 4,979 5,032 5,251 5,308 5,333 0.5 %
of which in Germany 2,586 2,623 2,652 2,895 2,884 2,887 0.1 %
of which non-Germany 2,205 2,356 2,380 2,356 2,424 2,446 0.9 %
Sto SE & Co. KGaA (HGB) 2013 2014 2015 2016* 2017* 2018* Changes in %
18/17
Turnover 589.1 604.2 598.8 610.7 627.0 667.1 6.4 %
Export ratio in % 16.8 17.4 18.7 20.5 19.9 20.2
Investments
in property, plant and equipment,
and Intangible assets 12.3 11.6 20.1 15.5 9.5 14.5 52.6 %
in financial assets 6.1 6.4 9.6 14.7 18.4 5.5 –70.1 %
Depreciation/amortisation
(without financial assets) 12.8 13.4 13.4 12.7 12.8 12.5 –2.3 %
Earnings before income taxes** 88.8 79.1 64.6 56.5 62.0 59.3 –4.4 %
Net profit for the year 71.7 62.8 48.2 45.4 45.8 40.8 –10.9 %
Cash flow from current
operating activities*** 35.1 41.9 35.6 47.6 56.3 18.3 %
Dividend
per limited ordinary share (EUR) 0.25/4.56 0.25/25.14 0.25/4.56 0.25/3.00 0.25/3.78 0.25/3.78
per limited preference share (EUR) 0.31/4.56 0.31/25.14 0.31/4.56 0.31/3.00 0.31/3.78 0.31/3.78
Total assets 526.0 560.6 446.0 475.2 508.2 531.5 4.6 %
Equity capital 402.0 433.9 318.7 333.1 357.9 372.6 4.1 %
in % of total assets 76.4 77.4 71.5 70.1 70.4 70.1
Employees (year end) 2,118 2,134 2,148 2,133 2,102 2,093 –0.4 %
(figures in EUR million unless otherwise indicated)

* From 2016 in accordance with BilRUG (Accounting Directive Implementation Act)
** Until 2015 earnings on ordinary activities
*** From 2014 cash flow was adapted to comply with the new DRS 21 (German accounting standard)
Rounding of amounts may lead to minor deviations in totals and in the calculation of percentages in this report.
Sto SE & Co. KGaA | 2018 Annual Report
Foreword2 D. Events after the reporting period 42

Report of the Supervisory Board 6 E. Risks and opportunities report 42
Corporate Governance Report 11 F. Outlook report 52
Management Report for the The Sto share 56
Sto Group (IFRS) 18 Sustainability and
The 2018 fiscal year at a glance 19 Corporate Social Responsibility 60
A. Group fundamentals 19 Consolidated annual financial statements
B. Financial report 24 of the Sto Group (IFRS) 83
Overall economic and sector-related Statement of profit and loss 84

general conditions in 2018 25 Statement of comprehensive income 85
Business performance and development Statement of financial situation 86
of turnover 26 Statement of changes in equity 88
Income situation 28
Cash flow statement 90
Financial situation 30
Notes 91
Asset situation 32
Audit certificate 172
C. Other performance indicators 33
Responsibility statement by the
Employees 33 legal representatives 179
Research and development 36 Financial calendar 180
Production and procurement 39
For reasons of simplification, the terms 'colleague' and 'employee' shall be used to refer to both female and male
colleagues and employees in this Annual Report.
Picture caption for title page:

The new construction of the Anton Bruckner Private University brings together twelve institutes in one building,
which had previously been spread all over the Austrian city of Linz. The spectacular facade consists of elements that
were prefabricated at the factory. Insulation was provided by the StoVentec R rainscreen cladding system and the
StoTherm Classic external wall insulation system. The planners of the architectural office Architekturbüro 1 placed
hundreds of white slats in front of the areas rendered in white. These slats wrap the three-storey building, which
serves as an education centre for music, dance and drama, in an undulating curtain. The slats provide shade to the
classrooms and lend the entire building complex a playful lightness.
Sto SE & Co. KGaA | Foreword
Foreword
and purchased goods once again increased

significantly over the course of the year, and
we were unable to compensate for this trend,
even though we had adjusted our sales prices.
Incoming freight costs increased considera-
bly with a negative effect on the gross profit
margin.
The development of business in 2018
showed two things: Firstly, it is becoming
clear that the growth initiatives, which were
launched in Germany as part of the New Bal-
ance programme, triggered the intended effects
on the market side. Our growth in turnover
as well as our new title, ‘Global market leader
for external wall insulation systems’, which we
were officially awarded at the beginning of
2018, is wonderful confirmation of the results
Rainer Hüttenberger, Spokesman of the Executive Board that we have achieved. It once again testifies
to our excellent position in the facade systems
Dear Shareholders, market, the most important product segment in
the Sto Group.
Sto SE & Co. KGaA reached its forecast targets We also made technological progress and
in the 2018 fiscal year and once again managed once again strengthened our industry-wide,
to grow significantly through its own strength. pioneering expertise with numerous innovations
Without the considerable negative currency and also the acquisition of Liaver GmbH & Co.
translation effects, which significantly slowed KG, which became effective on 1 January 2019.
down growth within the Group, we would The second trend confirmed by the develop-
have even exceeded our turnover forecast. ment of business in 2018 is the need for action
However, even with the increase of 4.3 % to when it comes to returns in the Sto Group.
EUR 1,332.4 million, we are overall satisfied We have moved even further away from our
with business development, at least in terms of targets and have to quickly counteract this
sales. We are particularly pleased, as we were trend. We are addressing this issue at all stages
able to strengthen our core business of facade of the value added chain: from procurement
systems, despite the German market for exter- and development to sales and the product mix,
nal wall insulation systems (EWIS) looking like which must be aimed even more consistently at
it has only marginally grown according to first high-income offers and markets than before.
calculations. The improvement of profitability with a si-
Despite the consolidated EBIT reaching the multaneously rising business volume will be one
forecast bandwidth, it decreased by 2.5 % of our main tasks in 2019. In the current year,
to EUR 81.9 million year-on-year. As a result, we expect an increase in turnover of 4.1 % and
return on sales, relating to earnings before EBIT between EUR 81 million and EUR 91 mil-
taxes, also decreased from 6.4 % to 6.0 %. The lion in the Group. However, our environment
greatest pressure on gross profit came from the is fraught with numerous factors that create
procurement side. The prices for raw materials uncertainty.
2
Foreword | Sto SE & Co. KGaA
These include global economic develop- The many uncertainties do not make it
ments, which are marked by trade disputes, easy to act with foresight and to adapt to the
customs duties, political unrest, and the requirements of the market and the customers.
increasing protectionism around the world, as The weather is another factor that always has
well as a lack of a clear way forward in many a crucial impact on Sto's turnover and earnings
respects at a political and regulatory level. One development as is the continuing significant
such example is climate protection, which cur- uncertainty among building contractors in the
rently is the hot topic after the Federal Ministry German EWIS market, which we counteract
for the Environment, Nature Conservation, by providing information and clarification.
and Nuclear Safety (BMU) presented a relevant A huge increase in statutory provisions, e.g.
draft bill in February 2019. It aims to embed relating to product licensing and labelling, and
the 2030 climate target in law. We regard this to fire protection also have an effect. Despite
as a massive opportunity for the industry and the numerous obstacles, we are confident that
for Sto, as in objective terms, efficient building we will successfully meet the challenges ahead
insulation is indispensable for achieving the and achieve our long-term target of generating
specified CO2 savings. However, if the neces- Group-wide income-oriented growth. Because
sary steps are not specified or implemented, it is one of our strengths to react to changes at
these huge potentials cannot be exploited an early stage and from a good starting position
further. and to correct our course as required.
In our opinion, the current draft of the We are currently reviewing our strategic
Building Energy Act (GebäudeEnergieGeset- alignment, for instance. By doing so, we
zes – GEG) also lacks substance. This new law, account for technological changes such as
which is to be introduced in 2019, combines digitalisation and its far-reaching consequences,
the provisions of the Energy Conservation Act for example, as well as the increasing im-
(Energieeinsparungsgesetz – EnEG), Energy portance of sustainability topics which have
Conservation Ordinance (Energieeinsparver- always played an important role in our Group.
ordnung – EnEV), and Renewable Energies This is expressed in our corporate mission of
Heat Act (Erneuerbare-Energien-Wärmegesetz ‘Building with conscience.’, which we are now
– EEWärmeG). The Building Energy Act defines developing further and modernising under
aspects such as the building energy standards the catchphrase ‘Building with conscience. Re-
required by the EU. According to these stand- loaded.’ It continues to stand for our ambition
ards, only buildings with the lowest possible for Sto to contribute to maintaining the value
energy consumption may be constructed as and aesthetic appeal of buildings. The review
from 2021 onward, and for public buildings of our strategy does not mean that we are
this rule already applies as from 2019. The new turning our backs on the established Sto values.
law, which is currently being reconciled by the Quite the contrary – our mission remains strong
political bodies, is also to stipulate the building and reliable. But our environment is changing,
restoration requirements crucial for potential which is why we have to continuously reflect on
subsidies. In our opinion, one critical aspect of our position, our image in the eyes of market
the draft bill is that the required standard of participants, ways of exploiting opportunities,
the EnEV 2016 could be weakened due to the and how to best reach our targets.
inclusion of electricity from renewable energies Up to now, in over 60 years of Sto's com-
and that potential exceptions for over-indebted pany history, we are lucky that the company
municipalities are mentioned. has mostly been on an upwards trajectory.
3
Sto SE & Co. KGaA | Foreword
A flair for people, products, and markets, a

good eye and courage to invest in the right
projects at the right time, a long-term orien-
tation – these and many other contributing
factors
have made the Sto Group what it is today:
a successful and strong international Group,
with its majority share owned by the family –
a Group that sets standards in its industry and
holds an excellent, or even leading, position
in numerous markets. Our shareholders also
benefit from this position.
The personally liable partner STO Manage-
ment SE proposed to once again distribute
around EUR 26 million from the earnings in the
2018 fiscal year. This means that limited pref-
erence shareholders will receive an unchanged
ordinary dividend of EUR 0.31 and a bonus
of EUR 3.78 per share, and limited ordinary
shareholders an ordinary dividend of EUR 0.25
plus a bonus of EUR 3.78 per share. This would
result in a dividend yield per preference share
of 5.0 % based on the 2018 closing price of
EUR 82.00.
Our basis for the years to come is solid.
We now have to improve the ratio between
turnover and costs in the Group as this did
not develop as planned in recent years. It is
important that we have recognised the reasons
for this development and are now jointly
working on achieving our target returns. To do
this, we need the effort of the entire workforce
who is always highly committed to tackling
challenges. Sto's employees are a crucial
success factor for the company, and on behalf Rainer Hüttenberger
of the Executive Board I would like to take this Spokesman of the Executive Board of STO
opportunity to thank them for their impressive Management SE as the personally liable partner
achievements. of Sto SE & Co. KGaA
4
Foreword | Sto SE & Co. KGaA
5
Sto SE & Co. KGaA | Report of the Supervisory Board
Report of the Supervisory Board
Members of the Supervisory Board
Fritz Stotmeister,
Öhningen/Germany | Honorary Chairman
Dr Max-Burkhard Zwosta, Wittnau/Germany,

Chartered accountant and tax consultant | Chairman
Lothar Hinz*, Reutlingen/Germany,

Chairman of the Group Works Council and Chairman of the
Works Council for the Baden-Württemberg sales region of
Sto SE & Co. KGaA and StoCretec GmbH | Deputy Chairman
Dr Max-Burkhard Zwosta, Chairman
Maria H. Andersson unich/Germany, and Head

M Barbara Meister*
Munich/Germany, Managing of the Fraunhofer Institute for Blumberg/Germany, Deputy
Director of N4 Beteiligungs- Building Physics Chairperson of the Group Em-
gesellschaft mbH, Family ployee Representative Council
Officer/Single Family Office Peter Zürn and Chairperson of the Weizen
Bretzfeld-Weißlensburg/Ger- Employee Representative Coun-
Dr Renate Neumann- many, Member of the Manage- cil, Sto SE & Co. KGaA
Schäfer, Überlingen/Germany, ment of the Würth Group
Business consultant, Economist Roland Schey*
Wolfgang Dell* Tengen/Germany, Head of
Cornelia Reinecke Hattersheim/Germany, Respon- Finance and Accounting of the
Emmendingen/Germany, sible for Maintenance Plant Sto Group
Head of Human Resources and Technology, Sto SE & Co. KGaA
Member of the Management Martina Seth*
Board of Sick AG Frank Heßler* Uelzen/Germany, Personnel
Mannheim/Germany, Political Developer and Trade Union
Prof. Dr Klaus Peter Trade Union Secretary and Secretary of IG BCE, Head
Sedlbauer, Rottach-Egern/ Deputy regional manager IG Office in Hanover/Germany
Germany, Chairholder at the BCE of the regional district of
Institute of Building Physics Baden-Württemberg * Employee representatives
at the Technical University of
6
Report of the Supervisory Board | Sto SE & Co. KGaA
Dear Shareholders, and development perspectives of the Group

described in the reports of the Executive Board
The Supervisory Board of Sto SE & Co. KGaA of the personally liable partner were discussed
conscientiously and with due diligence fulfilled in detail. Furthermore, the Supervisory Board
the duties incumbent upon it by law, the obtained assurances that the actions of the
articles of association, the German Corporate Executive Board of the personally liable partner
Governance Code and the rules of procedure STO Management SE were legitimate, orderly,
in the 2018 fiscal year. We have advised the and fit for purpose. None of the members
personally liable partner STO Management SE in of the Supervisory Board had any conflicts of
the management of the Group and continu- interest regarding the execution of their offices
ally monitored its work. This cooperation was during the reporting period, and none of them
constructive and based on an open and trusting missed half or more of the meetings of the
exchange between the parties. The personally Supervisory Board.
liable partner briefed the Supervisory Board on
a regular, timely, and comprehensive basis on all Key issues dealt with by the Supervisory
issues relating to the company and the Group. Board
These contents were discussed in detail within During the 2018 fiscal year, the Supervisory
the Supervisory Board and its committees. Board held five regular meetings, on 19 April,
In addition to the Supervisory Board meet- 21 June, 27 July, 31 October, and 20 December
ings, the Supervisory Board maintained con- 2018. The Supervisory Board was able to pass
stant contact with the Executive Board of the resolutions at all times. The members of the
personally liable partner through its Chairman Executive Board of the personally liable partner
and obtained information about current devel- STO Management SE were present at all the
opments within the Group as well as material meetings unless topics had to be discussed in
business transactions. Important questions and their absence.
decisions were also discussed with the Executive The deliberations of the Supervisory Board
Board in a continuous and close exchange. focused on the regular reports prepared by
Overall, the Supervisory Board was always the Executive Board on the business activities
comprehensively informed about the current with detailed information on the strategy, the
situation of the company and Sto Group, respective economic, turnover and earnings
the planned business policy, Group planning, development, opportunities and risks for the
including financial, investment, and personnel company, personnel matters, and investments.
planning, the income situation, and the position In particular, the current development of raw
of the individual company and Group, including material and purchase prices, and questions of
the risk situation, risk management, and com- sales price enforcement as well as the strategic
pliance situation. approach in connection with the acquisition
The members of the Supervisory Board of potential acquisition objects were discussed
also comprehensively reviewed decisions and intensively in 2018. The deliberations also
measures of the personally liable partner as focused on Group planning. Furthermore, the
and when required, sometimes based on the Board dealt with the following main topics at its
preparations of the responsible committees. individual meetings:
In decisions that were of crucial importance to At the meeting on 19 April 2018, the focus
the Group, the Supervisory Board was always was on the 2017 annual financial statements
involved immediately. The economic situation of Sto SE & Co. KGaA and the Sto Group. They
7
were explained in detail and discussed together and discussed in this context. Furthermore, the
with the respective management reports, audit Board addressed various structural corporate
reports of the auditor, who was present at the management measures.
meeting, sustainability report and dependent On 31 October 2018, we examined the
company report in accordance with Sections current development of business, and the
312 et seq. of the German Companies Act projection of the Sto Group as at 31 December
(AktG). The results of the Audit Committee, 2018. We also intensively talked about specific
which had been intensively reviewing the acquisition projects.
documents in preparation, were included in the Planning for 2019 for both Sto SE & Co.
discussion. The annual financial statements of KGaA and the Sto Group was the main item on
Sto SE & Co. KGaA, and the consolidated finan- the agenda to be deliberated at the Supervisory
cial statements of the Sto Group for the 2017 Board meeting held on 20 December 2018. The
fiscal year were approved by the Supervisory draft of the 5-year plan for 2019 to 2023 was
Board of Sto SE & Co. KGaA in accordance with also debated. It is to be finalised in the meeting
Section 171 of the German Companies Act scheduled for April 2019. Other important
(AktG) after being subjected to comprehensive topics were the auditor’s preliminary audit of
reviews by the latter which did not result in any the 2018 annual financial statement of Sto SE
reservations. & Co. KGaA, the system for the early detec-
The Board also finalised the Supervisory tion of risks, the risk situation, as arises from
Board report for the 2017 fiscal year and warranty risks for instance, and the adoption
the agenda for the ordinary Annual General of the Declaration of Conformity in accordance
Meeting on 21 June 2018. The appropriation with Section 161 of the German Companies
of earnings proposed by the personally liable Act (AktG).
partner was approved by the Supervisory Board. The Supervisory Board reviewed its activities
The 5-year plan for 2018 to 2022 for the as part of an efficiency review in accordance
Sto Group, including the planning principles with Item 5.6 of the German Corporate Gov-
reviewed by the Finance Committee, various ernance Code (DCGK) in a special organisa-
corporate management measures of STO Man- tional meeting of the Supervisory Board on
agement SE, and the digitilisation strategy of 26 February 2018.
the company were also discussed in detail.
The Supervisory Board meeting on 21 July Supervisory Board committees
2018 dealt with topics relating to the Annual In the 2018 fiscal year, the Supervisory Board of
General Meeting taking place on the same day Sto SE & Co. KGaA formed an Audit Commit-
and questions relating to the restructuring of tee and a Finance Committee. These bodies
business activities in Eastern Europe. make preparations for the agenda items to be
At the Supervisory Board meeting on discussed by the Supervisory Board and the
27 July 2018, the Board discussed various decisions which need to be taken.
topics, including current business develop- In 2018, the Audit Committee and Finance
ments, particularly the development of the raw Committee held four meetings each. The Audit
material prices, which had a negative effect on Committee primarily focused on the 2017 an-
the gross profit margin during the course of the nual financial statement of Sto SE & Co. KGaA,
year, and opportunities relating to pre-made the 2017 consolidated annual financial state-
modular construction methods. The company's ment, the management reports, the dependent
central purchasing unit was also introduced company report, and the auditor’s report. The
8
Report of the Supervisory Board | Sto SE & Co. KGaA
2018 interim reports and the half-year report that the management reports appropriately
were also reviewed in detail. Furthermore, describe the economic situation of Sto SE &
the committee members discussed the 2018 Co. KGaA and the Sto Group as well as the
Declaration of Compliance, the effectiveness of opportunities and risks associated with future
the internal control and risk management sys- development. The effectiveness of the monitor-
tem, as well as the internal audit. The Finance ing system within the scope of Section 91 par-
Committee examined the key management agraph 2 of the German Companies Act (AktG)
measures carried out by STO Management SE, was also confirmed. The auditors therefore
particularly potential acquisitions, the devel- issued an unreserved audit opinion.
opment of some of the company's business The annual financial statements of the com-
sectors, as well as Group planning. pany and the Group, the management reports,
and the auditor reports as well as statements
Corporate Governance and Declaration of to be published in the annual report which
Compliance were not to be reviewed by the auditor were
In the year under review, the Supervisory Board distributed to all Supervisory Board members in
of Sto SE & Co. KGaA once more thoroughly a timely manner. The Audit Committee pre-ex-
dealt with the German Corporate Govern- amined these documents in its meeting held
ance Code. A Declaration of Conformity in on 24 April 2019. In advance of the committee
accordance with Section 161 of the German and Supervisory Board meeting, other prelim-
Companies Act (AktG) was issued in December inary examinations and explanatory meetings
2018 which is based on the current version of were held between the personally liable partner
the Code of 7 February 2017. It is permanently STO Management SE, the Chairman of the
available on the company's website. Details can Supervisory Board, and the Chairman of the
be found in the Corporate Governance section Audit Committee to discuss key audit matters.
of the 2018 Annual Report. At the ordinary Supervisory Board meeting on
25 April 2019, the statements and reports as
Audit of the annual financial statement well as declarations were discussed in detail
On 21 June 2018, the ordinary Annual General and consequently reviewed. Auditor represent-
Meeting of Sto SE & Co. KGaA appointed atives were present at both meetings to report
Ernst & Young GmbH Wirtschaftsprüfungs- on the audit results and provided additional
gesellschaft, Stuttgart/Germany, to act as the information when requested. They confirmed
auditor for the 2018 fiscal year. It audited the the effectiveness of the monitoring systems
annual financial statement of Sto SE & Co. within the scope of Section 91 paragraph 2 of
KGaA, prepared by the personally liable partner the German Companies Act (AktG) to the Su-
STO Management SE, the management report, pervisory Board. The auditors also confirmed in
the consolidated annual financial statement, writing that, apart from the audit, they did not
and the Group management report for the provide the company with any other significant
2018 fiscal year as well as the dependent com- services in the fiscal year and there were no
pany report in accordance with Sections 312, circumstances that could impair their independ-
278 of the German Companies Act (AktG). The ence as auditors.
relevant audit partners with respect to Section The auditors from Ernst & Young GmbH
319a paragraph 1 sentence 4 of the German issued the dependent company report with
Commercial Code (HGB) were Dr Eckart Wetzel the following audit certificate: ‘In our opinion,
and Stephan Busser. The auditors confirmed based on the examination which we have car-
9
ried out in accordance with professional stand- The Supervisory Board thanks all employees
ards, the factual information contained in the of Sto SE & Co. KGaA and the members of the
report is correct, and the consideration given Executive Board of the managing STO Manage-
by the Company for the legal transactions ment SE for their commitment and perfor-
referred to in the report was not unreasonably mance in the 2018 fiscal year. We wish them
high.’ all every success in meeting the challenges they
The Supervisory Board carried out its own in- face in fiscal 2019 and in achieving their goals.
depth audit of the annual financial statements,
the management reports of Sto SE & Co. KGaA Stühlingen/Germany, April 2019
and the Sto Group as well as of the statements
to be published in the annual report which
were not to be reviewed by the auditor, and
did not have any objections. The Supervisory
Board approved the annual financial state-
ment of Sto SE & Co. KGaA prepared by the Dr Max-Burkhard Zwosta
personally liable partner STO Management SE, Chairman of the Supervisory Board
and the consolidated annual statement for
2018 after its own comprehensive review in
accordance with Section 171 of the German
Companies Act (AktG), as well as the depend-
ent company report. The Supervisory Board will
hence propose the approval of the financial
statements of Sto SE & Co. KGaA for the 2018
fiscal year at the Annual General Meeting of
Sto SE & Co. KGaA to be held on 19 June
2019. The non-financial statements, in particu-
lar those statements and data on sustainability
and Corporate Social Responsibility, have been
reviewed by the Supervisory Board and have
been judged to be accurate in its analysis and
objective.
The Supervisory Board agrees to the
proposal of the personally liable partner STO
Management SE to recommend a dividend
distribution of EUR 26,049,060.00 at the An-
nual General Meeting. This means that limited
preference shareholders are expected to receive
an ordinary dividend of EUR 0.31 as well as
a bonus of EUR 3.78 per share, and limited
ordinary shareholders an ordinary dividend of
EUR 0.25 and also a bonus of EUR 3.78 per
share.
10
Corporate Governance Report | Sto SE & Co. KGaA
Corporate Governance Report/

Declaration on management of the company
Corporate Governance at Sto of Compliance in accordance with Section 161

This next section contains a report from Sto SE of the German Companies Act) in the ‘Investor
& Co. KGaA and its personally liable part- Relations’ area of the ‘Unternehmen’ (Com-
ner STO Management SE on the company’s pany) section.
corporate governance in accordance with Item
3.10 of the German Corporate Governance Bodies
Code (the ‘Code’). In addition, this summarised Responsibility for managing Sto SE & Co. KGaA
document incorporates the declaration on key lies with the personally liable partner STO
company management practices in accordance Management SE. The bodies of the company
with Sections 289f and 315d of the German also include the Supervisory Board of Sto SE &
Commercial Code (HGB). As a component Co. KGaA and the Annual General Meeting.
of the 2018 Annual Report, this chapter is Thus, there is a separation in terms of personnel
published on the website www.sto.de under between management of the company and
‘Company’ in the ‘Investor Relations’ section. monitoring of the Management Board in
The supplementary remuneration report is part accordance with the statutory regulations for
of the Notes to the consolidated annual finan- a German public limited company (Aktienge-
cial statement of the Sto Group. sellschaft). Both the personally liable partner
As a basic principle, Sto is committed to and the Supervisory Board of Sto SE & Co.
responsible and transparent management KGaA consistently abide by the standards of
and monitoring of the company (corporate proper corporate management at all times and
governance), with a focus on sustainable value collaborate closely for the company's benefit.
creation. All internal decision-making and
control processes in the Sto Group are based on Shareholders and the Annual General
this guiding principle. Meeting
Statutory regulations, ethical standards, a At the end of 2018, Sto SE & Co. KGaA's
sound financial policy, the Sto SE & Co. KGaA subscribed capital amounted to an unaltered
strategy that is geared towards sustainability, figure of EUR 17.556 million. It is divided into
and the Code all provide the foundation for 4.32 million registered limited ordinary shares
corporate governance. Sometimes, there are (‘ordinary shares’) and 2.538 million limited
departures from the Code in relation to issues preference bearer shares (‘preference shares’).
that concern the specific requirements of a Each ordinary share always grants one vote.
medium-sized family business or the legal form Preference shares do not have voting rights but
of a partnership limited by shares (Kommandit- take priority for the purpose of profit distribu-
gesellschaft auf Aktien). In these cases, adapted tion and are entitled to a higher dividend. In the
standards are applied instead. Deviations from year under review, there were no shares with
the recommendations of the Code in its current multiple or preferential voting rights.
version of 7 February 2017 and the reasons for The shareholders exercise their voting right at
deviating in each case are explained in the com- the Annual General Meeting. As the personally
pany's Declaration of Conformity in accordance liable partner of Sto SE & Co. KGaA, STO Man-
with Section 161 of the German Companies agement SE is responsible for convening the An-
Act (AktG). Current and previous versions of nual General Meeting and the timely dispatch of
this declaration are published on the website at all statutory reports and documents, including
www.sto.de and can be found under ‘Entspre- the agenda. The documents and the Annual
chenserklärung nach § 161 AktG’ (Declaration Report are also available on the Sto website.
11
Sto SE & Co. KGaA | Corporate Governance Report
At the Annual General Meeting, the sory Board as a whole, unless the shareholder
personally liable partner presents the annual or the employee representatives object to the
financial statement of Sto SE & Co. KGaA, the overall fulfilment in accordance with Section
consolidated annual financial statement of the 96 Paragraph 2 Sentence 3 of the German
Sto Group as well as the management/Group Companies Act. A corresponding objection
management report for the previous fiscal year was unanimously agreed upon and declared by
and explains the key events. The annual finan- the Supervisory Board of Sto SE & Co. KGaA.
cial statement is then ascertained by the Annual Accordingly, the Supervisory Board must include
General Meeting. For shareholders who are un- at least two women and two men on both the
able or unwilling to exercise their voting rights shareholder and employee representative sides.
themselves, a proxy of the company bound by Currently, three of the six shareholder repre-
their instructions is available in each case. sentatives on the Supervisory Board and two of
the six employee representatives are women.
Supervisory Board The composition of the company's Supervi-
The Supervisory Board of Sto SE & Co. KGaA sory Board ensures that the necessary expertise,
monitors and advises the personally liable skills, and professional experience required to
partner STO Management SE in the manage- properly carry out the Board’s responsibilities are
ment of its business. Furthermore, it checks for represented. All members are proven experts in
compliance with the statutory disclosure rules in their respective fields. They are solely responsi-
the manner detailed by the Supervisory Board. ble for engaging in the education and training
The work of the Board is regulated by law, the measures that are necessary for them to meet
articles of association, the Code, and rules of the requirements placed on them as Supervi-
procedure. sory Board members, and receive appropriate
In accordance with the German Co-De- support from Sto SE & Co. KGaA in doing this.
termination Act, the Supervisory Board is Among others, Maria H. Andersson and Dr
composed of an equal number of shareholder Renate Neumann-Schäfer qualify as independ-
and employee representatives, i.e. six share- ent financial experts for the purposes of Section
holder and six employee representatives. They 100 Paragraph 5 of the German Companies Act
are introduced in the report of the Supervisory (AktG).
Board that forms part of this annual report. When proposing new members, the Super-
Information on remuneration of the Supervi- visory Board must ascertain that the candidates
sory Board is contained in the Notes/Notes to can invest the necessary time involved and must
the consolidated annual financial statement examine their personal and business relation-
as well as in the Declaration of Compliance in ships with the Group, corporate bodies, and
accordance with Section 161 of the German major shareholders.
Companies Act (AktG). The Supervisory Board is directly involved in
In accordance with Section 96 Paragraph all decisions that are of fundamental impor-
2 Sentence 1 of the German Companies tance to Sto SE & Co. KGaA. In the 2018 fiscal
Act, it must be ensured that at least 30 % year, the Supervisory Board gathered for five
of the Supervisory Board consists of women ordinary meetings. The details of what was dis-
or men respectively when new members are cussed and the focal points of the meetings are
being appointed to the Supervisory Board of reported in depth in the report of the Supervi-
co-determined listed companies. The minimum sory Board. Beyond the regular gatherings, the
percentage must be fulfilled by the Supervi- Supervisory Board is briefed by the personally
12
liable partner STO Management SE on a contin- special knowledge required for this position. He
ual, timely, and comprehensive basis about the does not simultaneously serve as the Chairman
Group strategy, planning, business develop- of the Supervisory Board and has not been a
ment, the financial and income situation, the member of the Executive Board for the past
employee situation, as well as the risk situation, two fiscal years.
and risk management. Any departures from A Nomination Committee is formed in ad-
defined plans in the context of business devel- dition if there are upcoming Supervisory Board
opment are discussed, and relevant documents elections. The next ordinary elections for share-
are made available to the Supervisory Board in a holder representatives to the Supervisory Board
timely manner. will take place at the Annual General Meeting
It is the job of the Chairman of the Super- in 2022. The elections of employee represent-
visory Board to coordinate the Board's work, atives are conducted in compliance with the
steer the meetings, and represent it externally. Co-Determination Act from 1976. They start
Between meetings, he maintains close contact with the announcement by the company and
with the members of the Executive Board of finish with the election.
the personally liable partner STO Management
SE, discussing – in particular – issues relating Personally liable partner
to strategy, business development, and risk Sto SE & Co. KGaA is led and managed by the
management. Executive Board of the personally liable partner
The Supervisory Board reviews the consol- STO Management SE. It acts under its own
idated annual financial statement of the Sto authority and in the interests of the company
Group and the annual financial statement of while keeping the needs of shareholders, em-
Sto SE & Co. KGaA on the basis of the findings ployees, and other stakeholders in mind with a
of the auditor and Audit Committee. Prior to view to achieving sustainable added value. For
the publication of the half-year financial report this purpose, the Management Board develops
and the interim reports within the first and a strategy and ensures its implementation. In
second half of the year, the Executive Board addition, it makes arrangements necessary to
discusses these reports with the Chairman of ensure compliance with legal requirements and
the Supervisory Board and the Chairman of the internal corporate guidelines within the Sto
Audit Committee, who consult with the other Group.
members of the Supervisory Board. The responsibilities of the personally liable
The Supervisory Board regularly checks the partner also include the preparation of the an-
efficiency of its work. To increase the efficiency nual financial statement of Sto SE & Co. KGaA
as much as possible, technically qualified com- and the consolidated annual financial statement
mittees are formed. Sto SE & Co. KGaA features of the Sto Group, as well as the establishment
an Audit Committee and a Finance Committee. and further development of the risk manage-
In the periods leading up to the Supervisory ment and control system. Detailed information
Board meetings, they deal with complex issues about risk management is provided in the
and prepare the findings for the full Supervi- Group management report, which is part of this
sory Board meetings. The Chairperson of the annual report.
relevant committee provides the Supervisory Without exception, the personally liable
Board with reports on the committee’s work. partner STO Management SE complies with
The Chairman of the Audit Committee is statutory regulations, and observes the Code,
independent and, as a financial expert, has the as well as other recognised external standards,
13
and company regulations. Information about any suitable female candidates during the 2018
the applicable remuneration system of the STO fiscal year. This means that the proportion of
Management SE Executive Board is summarised women at the second management level below
in the Group management report; the earnings the Executive Board still falls short of the quota
of the Executive Board are summarised in the target set.
Notes to the consolidated annual financial The obligation applicable to the Supervisory
statement of the Sto Group. Board in accordance with Section 96 Paragraph
2 Sentence 1 of the German Companies Act
Diversity (AktG) stipulating that it must be comprised
In accordance with Section 76 Paragraph 4 of at least 30 % women or men respectively
of the German Companies Act (AktG), the is fully satisfied: currently, three of the six
Executive Board of listed companies sets target representatives of the shareholders on the
figures for the percentage of women in the two Supervisory Board and two of the six employee
management levels below the Executive Board. representatives are women.
At the Kommanditgesellschaft auf Aktien (cor-
responds approximately to a partnership limited Key practices of Corporate Governance/
by shares) established in accordance with Sec- Compliance
tion 278 Paragraph 3 of the German Compa- Over and above the statutory regulations and
nies Act (AktG), this is the responsibility of the the German Corporate Governance Code,
personally liable partner STO Management SE. there are additional company management
The latter also promotes diversity as required by practices that Sto SE & Co. KGaA applies. These
the Code and considers it an important success include both internal regulations and external
factor for the future of the Group. Industry-spe- standards such as the ‘UN Global Compact’.
cific conditions and the current proportion of Sto joined this global initiative in 2009. It is
women in the workforce were also taken into run under the auspices of the United Nations
account when setting the target quotas for the and encompasses ten principles in the areas of
two management levels below the Executive human rights, labour standards, environmental
Board. protection, and anti-corruption. Measures that
The Executive Board of the personally liable we have put in place in order to implement the
partner STO Management SE has established ‘Global Compact’ are outlined in the chapter on
the goal of achieving a quota of 0 % for man- ‘Sustainability and Corporate Social Responsi-
agement positions a level below the personally bility’. This report also represents the annual
liable partner, i.e. the division manager level, Communication on Progress (COP) required by
and of 10.8% for the department manager level the ‘Global Compact’.
by 30 June 2017. On 31 December 2018, 0 % Our most important internal regulations
of the division manager positions and 8.2 % of include the ‘Principles for Cooperation and
the department manager positions were held by Management within the Sto Group’, a set of
women. By 31 December 2020, these percent- Group-wide practice guidelines for all employ-
ages are to be at 0 % and 12.0 % respectively. ees and managers. In addition to regulations
Despite the relevant requests having been for internal work procedures, they also include
submitted during the process of searching for information on the principles stipulated by
candidates when making new appointments at ‘Global Compact’.
the first and second management levels below Compliance with laws, internal and external
the Executive Board, it was not possible to find regulations, as well as responsible handling of
14
risks is part of the Corporate Governance at Share trading

Sto. Procedures and systems for compliance Persons with management functions at STO
are linked to the Group's risk and opportu- Management SE or Sto SE & Co. KGaA must
nity management. Within the framework of disclose any private transactions involving Sto
compliance management, Sto creates the pre- limited preference shares to the German Federal
requisites for making internal regulations and Financial Supervisory Authority (BaFin) and to
directives known throughout the Group and Sto SE & Co. KGaA in accordance with Art. 19
all business practices legally compliant. This of the MAR (Directors’ Dealings). No notifica-
illustrates our strong commitment to ethical tions of Directors’ Dealings occurred in fiscal
and fair behaviour in our own organisation, 2018.
and creates the framework for dealing with
our environment. The compliance organisation Accounting and auditing of financial
and systems at Sto ensure legally compliant, statements
risk-aware, opportunity-oriented, and informed The accounting of the Sto Group is based on
action in a dynamic business environment, in the International Financial Reporting Stand-
order to guarantee the Sto Group's competi- ards (IFRS) as applied in the European Union.
tiveness and sustainable success. The annual financial statement of the parent
company Sto SE & Co. KGaA is based on the
Transparency reporting standards of the German Commercial
Sto provides information to its shareholders, Code (HGB).
financial analysts, the media, and the general The annual financial statement of Sto SE
public in an even-handed and timely manner & Co. KGaA as well as the statement of the
through regular, open, and up-to-date com- Sto Group, including the respective manage-
munication. The most important topics include ment reports, are audited by an independ-
the economic situation and development of the ent auditing company elected at the Annual
company/Group as well as important business General Meeting following a proposal by the
changes within the Group. The company uses a Supervisory Board. The nomination proposal is
variety of media for this purpose. preceded by an independence check in order to
All key information – such as annual and ensure that any conflicts of interest that might
interim reports, press releases, and voting rights give rise to doubts concerning the impartiality
announcements, insider information, as well as of the auditor are ruled out at an early stage.
all financial and sustainability reports – is availa- The auditing company commissioned by Sto,
ble online under ‘Company’ on the Sto website Ernst & Young GmbH Wirtschaftsprüfungs-
(www.sto.de) – much of it also in English. An- gesellschaft, Stuttgart/Germany, has issued a
nual and half-yearly financial reports are lodged corresponding statement in this regard. The au-
with the companies register and the German ditor responsible takes part in the deliberations
federal government gazette (Bundesanzeiger) of the Supervisory Board of Sto SE & Co. KGaA
on the day of publication. concerning the annual financial statement and
All key dates for publications and functions the consolidated annual financial statement as
are listed in the calendar of financial events, well as in the corresponding Audit Committee
which is announced well in advance. The finan- meeting where he reports on the key findings
cial calendar, valid as of the end of March 2019, of his audit.
can be found both in the 2018 Annual Report
and on the company’s website.
15
Information in accordance with Sections are held by the Stotmeister family who thus
289a and 315a of the German Commercial holds 90 % of the voting rights.
Code (HGB) and explanations by the per-
sonally liable partner Holders of shares with special rights
The following information reflects the situation At Sto SE & Co. KGaA, there are 2,538,000
as at the balance sheet date. preference shares with a special right in the
form of an advance dividend in the amount of
Composition of subscribed capital EUR 0.06 as well as a minimum dividend in the
The subscribed capital of Sto SE & Co. KGaA amount of EUR 0.13 per preference share in
amounts to a total of EUR 17,556,480.00. It is accordance with Section 16 of the articles of
divided into 4,320,000 registered limited ordi- association of Sto SE & Co. KGaA.
nary shares ('ordinary shares') and 2,538,000
limited preference bearer shares ('preference Type of control of voting rights in case of
shares') at a notional nominal value of EUR 2.56 employee shareholdings
each. The employees have no autonomous sharehold-
ing in Sto SE & Co. KGaA. Nevertheless, no em-
Restrictions on voting rights or the ployee is prevented from acquiring and selling
transfer of shares preference shares on the capital market.
To the knowledge of the personally liable
partner STO Management SE, there are no Appointment and dismissal of the
restrictions relating to the transfer of preference Management Board as well as amend-
shares. In accordance with Sections 4 Paragraph ments to the articles of association
1, 16 of the articles of association of Sto SE & In the legal form of a 'Kommanditgesellschaft
Co. KGaA, the preference shares do not confer auf Aktien' (KGaA, partnership limited by
any voting rights. Of the 4,320,000 ordinary shares), the personally liable partner has the
shares, the Stotmeister family holds a total of legal authority to manage and represent the
3,888,000 shares (Stotmeister Beteiligungs company. The personally liable partner of Sto
GmbH 3,887,996 shares, Jochen Stotmeister SE & Co. KGaA is STO Management SE. It acts
1 share, Gerd Stotmeister 1 share, Helga through its Executive Board. The co-determined
Stotmeister 1 share, Heidi Heimburger 1 share), Supervisory Board of Sto SE & Co. KGaA is not
while 432,000 shares are held by Sto SE & Co. authorised to appoint or dismiss the personally
KGaA. The ordinary shares held by the family liable partner or its Executive Board. Rather, the
are limited in their transferability due to the fact personally liable partner has joined the com-
that they are registered shares and hence re- pany by means of a corresponding declaration.
quire the consent of the company, represented The appointment and dismissal of the Executive
by the personally liable partner (furthermore by Board of STO Management SE is carried out by
family-internal agreements), and are not traded the Supervisory Board of STO Management SE
on the capital market. in accordance with the provisions of the articles
of association and the law. As stipulated by Sec-
Direct or indirect shareholdings in capital tions 278 Paragraph 3, 133, 179 of the German
exceeding 10 % of the voting rights Companies Act (AktG), amendments to the arti-
The 432,000 ordinary shares held by Sto SE & cles of association of Sto SE & Co. KGaA require
Co. KGaA do not have any voting rights. As a resolution by the Annual General Meeting of
described above, the remaining ordinary shares Sto SE & Co. KGaA. This resolution requires a
16
majority of at least three quarters of the voting

share capital represented at the adoption of the
resolution. Furthermore, amendments to the ar-
ticles of association also require the consent of
the personally liable partner STO Management
SE in accordance with Section 285 Paragraph 2
of the German Companies Act (AktG).
Powers of the personally liable partner

STO Management SE, in particular with
regard to the possibility of issuing or buy-
ing back shares
At Sto SE & Co. KGaA there is currently neither
authorised nor contingent capital; no share
buyback programme is in place either.
Material agreements of the company

under the condition of a change of control
following a takeover bid
With the exception of a syndicated loan con-
tract, the company has not entered into any
significant agreements which would become
effective in the case of a change in control. The
aforementioned syndicated loan contract stipu-
lates legal consequences in the case that 50 %
or more of the capital shares or voting rights in
Sto SE & Co. KGaA are to be transferred to one
or more persons acting in concert. This does
not apply as long at Stotmeister Beteiligungs
GmbH directly or indirectly holds more than
50 % of the capital shares and more than 50 %
of the voting rights in Sto SE & Co. KGaA.
Compensation agreement of the company

with the members of the Executive Board
of the personally liable partner or employ-
ees in the event of a takeover bid
The company has not entered into any com-
pensation agreements with the members of the
Executive Board of the personally liable partner
or employees in the event of a takeover bid.
17
Sto SE & Co. KGaA | Management Report for the Sto Group (IFRS)
Management Report for the Sto Group (IFRS)
The Sto Executive Board

(from left to right): Michael Keller,
Rainer Hüttenberger, Jan Nissen,
and Rolf Wöhrle.
Members of the Executive Board of STO Management SE in the fiscal year of 2018
(personally liable partner of Sto SE & Co. KGaA)
Rainer Hüttenberger, Jan Nissen,

Stein am Rhein/Switzerland | Spokesman of Trossingen/Germany | Chief Technology
the Executive Board responsible for Marketing Officer responsible for Process Engineering, In-
and Sales Sto Brand International novation, Materials Management, and Logistics
Michael Keller, Rolf Wöhrle,

Bonndorf/Germany | Chief Sales Officer Bad Dürrheim/Germany | Chief Financial
responsible for Sales Sto Brand Germany, Officer responsible for Finance, Controlling,
Distribution, and Central Services IT, Legal, and Internal Audit
18
Management Report for the Sto Group (IFRS) | Sto SE & Co. KGaA
The 2018 fiscal year at a glance

• The Sto Group grows organically in 2018: despite significant negative currency effects, turnover
increases by 4.3 % to EUR 1,332.4 million
• Domestic turnover increases by 5.9 % to EUR 596.0 million, and turnover abroad by 3.1 % to
EUR 736.4 million
• Earnings down on previous year due to significant increases in procurement costs, but achieving
the forecast key figures
• Compared to the previous year, consolidated EBIT decreases by 2.5 % to EUR 81.9 million; earn-
ings before tax (EBT) at EUR 80.2 million (previous year: EUR 82.2 million)
• Return on sales down from 6.4 % to 6.0 %
• Unaltered dividend of EUR 0.31 per limited preference share and EUR 0.25 per limited ordinary
share plus a bonus of EUR 3.78 per share
• Cash flow from operating activities amounts to EUR 80.7 million (previous year: EUR 86.5 million)
• Slight rise in Group's workforce by 25 to 5,333 employees
• Outlook for 2019: increase in turnover of 4.1 % to around EUR 1,387 million and an EBIT of be-
tween EUR 81 million and EUR 91 million expected
A. Group fundamentals System build-up of StoVentec R

1 Sub-construction
2 Insulation
Business model 3 Carrier board
The Sto Group is a major international manu- 4 Base coat
5 Reinforcement
facturer of products and systems for building
6 Finishing render
coatings. The product range is divided into
four product groups: the core business of StoVentec R is a ventilated
facade systems encompasses external wall rainscreen cladding system
insulation systems (EWIS), a segment in which with a seamless render surface,
our company occupies a leading position, and which can be supplied in both a
rainscreen cladding facade systems (RSC). In the non-combustible and a flame-
fiscal year of 2018, the share of this product retardant version. StoVentec
group was 47.7 % of the total group turnover. Carrier Boards made of ex-
Facade coatings, which includes render and panded glass granulate form the
paint systems, made up 22.7 % of the turnover core of the system, for which a
in the year under review. Products for interiors, thermal bridge-free sub-con-
such as plaster and paint systems for home The comprehensive expertise of the Sto struction is available. The cover
and office spaces, decorative coatings, interior Group is a strategic factor in its success. We can picture of our Annual Report
claddings, and acoustic systems for regulating provide our customers with everything relating shows the Anton Bruckner
sound, reported a turnover share of 14.3 %. to facades from a single source, thanks to our University in Linz/Austria. Its
Furthermore, Sto produces and sells high-qual- range which offers products that complement facade was constructed with
ity floor coatings and products for concrete one another perfectly, and at the same time StoVentec R.
repair which are attributed to Other product give building owners maximum freedom to
groups. create their own designs. Sto boasts extensive
19
knowledge not only on our core business of for external wall insulation systems’. A scientific
facade systems, but also on related areas such study conducted by the University of St. Gallen
as design and consultancy services and for in cooperation with the German business mag-
alternative coating materials or claddings such azine ‘Wirtschaftswoche’ confirmed that Sto SE
as brick slip and stone facades. As the individual & Co. KGaA meets all the criteria required for
components of our range of services work in being included in the world market leader index.
perfect harmony with one another, efficiency
can be boosted and value maintained in the
long term.
Our business model is built on a foundation Building with conscience.
of expertise, quality, and customer benefits, The Group’s innovative strength is one
and is complemented by a consistent market of the keys to its corporate success and the
presence in every country. This has enabled Sto positive image the Sto brand has cultivated.
to carve out a position for itself as one of the Worldwide, we are regarded as one of the
industry sector’s best-known product brands technological pacesetters in the industry, estab-
on the international stage. We maintain four lishing trends in the area of products, systems,
core values at the heart of our brand strategy and services. To secure this leading position
– something that we continually optimise and while also developing new growth markets,
adapt to suit the current general conditions. research and development are considered core
These core values are Close, Experienced, strategic activities at Sto. This is also reflected in
Performing, and Advanced. Since the beginning our corporate vision ‘Technology leader in the
of 2018, Sto has had the honour of officially sustainable design of living space tailored to
being able to call itself the ‘world market leader human needs. Worldwide.’
Sto subsidiaries
Sto partners
20
Sales markets tribution as a second distribution channel for a

The Sto Group’s business activities are divided number of years now. Via this channel, selected
into the regional segments of Western Europe products that we have clearly defined as distinct
and Other, with the latter broken down into from our core business and that have their own
Northern/Eastern Europe and America/Asia market niche, such as lacquers and fillers, are
for internal reporting purposes. Our corporate provided via wholesalers and specialist retailers.
management is primarily focused on these re- We intend to expand two-stage distribution
gions. In Western Europe, which includes includ- gradually over the coming years and to tap into
ing Germany and which is also the most impor- additional sales potentials.
tant market, Sto generated a share of 76.9 % of
the consolidated turnover in 2018. 11.8 % was Group structure
attributed to Northern and Eastern Europe while The registered office of the operating parent
America and Asia generated 11.3 % of the company is Sto SE & Co. KGaA in Stühlin-
business volume. The most significant individual gen/Germany in the South of the state of
market is Germany. In the year under review, it Baden-Württemberg. In addition to function-
contributed around 44.7 % to the consolidated ing as the Group’s holding company, it is also
turnover of the Sto Group. responsible for operating domestic business
We continuously work on systematically involving facade systems and coatings as well as
targeting and tapping into selected regions in interior products.
order to exploit additional sales potential world- On a domestic level, the main companies of
wide, spread the business risk, and compensate the Sto Group are the following:
for fluctuations in individual countries. The • StoCretec GmbH, located in Kriftel/Germany,
globalisation of our business activities is hence a is responsible for the areas of floor coatings
key strategic target for Sto. At the end of 2018, and concrete repair.
the Group was represented in 36 countries with • Innolation GmbH, located in Lauingen/
49 subsidiaries of our own as well as their oper- Germany, produces insulants and develops
ating sites, and maintained supply partnerships innovative insulant technologies.
with sales partners in numerous other countries. • Verotec GmbH, located in Lauingen/Ger-
Sto products are used both in the construc- many, produces carrier boards for acoustic
tion of new buildings and in the renovation of systems, rainscreen cladding systems, and
existing buildings. The comparative importance architectural elements on behalf of other
of these two market segments in individual Group companies. It also sells its products
regions depends on the characteristics specific and services to external partners.
to each country. Renovation business generates • VeroStone GmbH, located in Eichstätt/Ger-
the majority of Group turnover worldwide. many, is the company within the Group that
specialises in natural stone as a construction
Customers and distribution system material.
The Sto brand range is targeted at profes- • Ströher GmbH, located in Dillenburg/Ger-
sional applicators such as painters and building many, and its subsidiaries, focus on brick
contractors, as well as architects and planning surfaces, outdoor ceramics, and interior tiles.
offices, who are supported locally by means of • Südwest Lacke + Farben GmbH & Co. KG,
a direct distribution system. In Germany, this located in Böhl-Iggelheim/Germany, is the
covers almost the entire country. Additionally, Group’s specialist for paints and lacquers,
Sto has also been developing multi-stage dis- and works primarily with trading companies.
21
Abroad, the Group’s business is largely tem. The primary key operating ratios employed
handled by national companies operating inde- are net turnover, earnings before interest and
pendently, with the service spectrum offered in taxes (EBIT), earnings before tax (EBT), and
each case being tailored to suit local conditions return on sales. Additionally, ROCE (Return on
and specific requirements. For the most part, Capital Employed) is used as a key figure for
the products are either produced on site, or monitoring return on capital employed. It is
purchased via the Group. A list of all subsidiar- based on the EBIT divided by the average capi-
ies of Sto SE & Co. KGaA is reproduced in the tal employed. These key figures are also used in
Notes for the Group. the planning and controlling process.
The business fields are each managed by a The reports compiled within this standard-
team of product managers which is responsi- ised reporting are submitted directly to the
ble for products and systems worldwide. The Executive Board of STO Management SE, which
Heads of the Business Fields are responsible then forwards all relevant information to Sto’s
for the strategic positioning of their areas and Supervisory Board. Additionally, management
products, and coordinate marketing and sales meetings between the Executive Board and the
objectives with the subsidiaries. This allows executive staff of the subsidiaries or sales re-
us to become better acquainted with the vast gions take place on a regular basis. This control
range of different requirements that the various system strengthens the decentralised entrepre-
markets have and tap into additional sales po- neurial responsibility of our employees at a local
tential through our targeted market approach level while also guaranteeing a high degree of
and specialist technical expertise. transparency within the Group.
The business fields are complemented by In addition to the internal indicators, we
central units such as technical service or strate- also regularly monitor external early indica-
gic marketing. These provide global support to tors as part of our planning processes and as
all our subsidiaries and product groups when it a means of corporate and risk management.
comes to dealing with issues that are present Especially relevant are economic data and
on an overarching level. This creates the right detailed industry information such as the de-
conditions for efficient management on a velopment of the building construction volume
global scale, and for targeted further develop- or the segments of new construction and
ment of the service portfolio. renovation.
The specifications relating to the Declaration
Business management control system on management of the company, as outlined in
Sto SE & Co. KGaA's business affairs are Section 315d of the German Commercial Code
managed by the four-strong Executive Board of (HGB), as well as the specifications according
the personally liable partner STO Management to Sections 289a and 315a German Commer-
SE. It develops the Group strategy and ensures cial Code (HGB), and the explanations by the
its implementation. The parent company Sto personally liable partner can be found in the
SE & Co. KGaA, its subsidiaries, and the other ‘Corporate Governance Report’ chapter of
Group units are controlled and managed by the Annual Report and online at www.sto.de/
reference to strategic and operational targets Unternehmen/Investor Relations. The non-
as well as key financial covenants. These are financial statement in line with Section 315b of
based on business figures which are uniformly the German Commercial Code (HGB), provided
determined throughout the Group and which, as a supplement to the Group management
in turn, are part of a standardised reporting sys- report, is contained in the ‘Sustainability and
22
Corporate Social Responsibility’ chapter of the This corporate vision, along with the other
Annual Report, which is also available to view principles on which our practice is based, is
online at www.sto.de/Unternehmen/Investor defined in the Sto Guiding Principles, providing
Relations. It provides information about key employees and managers with guidance when
considerations in five areas: environmental mat- making strategic and operational decisions.
ters, employee matters, social matters, respect Our Sto-Guiding Principles define our strategy,
for human rights, and combating of corruption which contains the following core compo-
and bribery. nents:
• Income-oriented growth – We align our
Fundamentals of the remuneration system decisions with this overarching corporate
The remuneration of the members of the Exec- objective.
utive Board consists of a fixed component and a • Internationalisation – By systematically
variable component, which can carry signifi- developing and penetrating selected regions,
cantly more weight, but is capped. The variable we increase our sales opportunities and re-
element comprises a long-term incentive, based duce our dependency on individual markets.
on the turnover development of the Sto Group, • Development of alternative distribution
and the ROCE key figure of the past three channels – Sto’s proven direct distribution
fiscal years in comparison to the target for this system is being expanded to include a mul-
reporting period, as well as an income-depend- ti-stage distribution concept. This will enable
ent short-term incentive. No stock options are us to attract additional groups of customers
granted. and widen our base.
The members of the Supervisory Board of Sto • Group expertise – Organic further develop-
SE & Co. KGaA receive a fixed remuneration ment or suitable acquisitions reinforce and
and a compensation for costs incurred. The expand the Sto Group's expertise.
Chairman of the committee is entitled to four • Attractive employer – We develop and im-
times and his or her deputy to two and a half plement measures to recruit new specialists
times the amount of the basic remuneration. and managers, and to improve our employ-
The Chairman of a Supervisory Board Com- ees’ levels of qualification, performance, and
mittee is additionally remunerated with a fixed satisfaction.
annual amount. If a committee has only been • Research and development – We contin-
formed for part of a fiscal year, it is paid on a ually intensify our activities in the area of
pro rata basis. R&D in order to consolidate our position as
The Notes contain additional information on an innovative pacesetter in the sector, and
the remuneration of administrative bodies in underpin the vision as a technology market
the company. leader. Additionally, we take an active role in
trade associations and interest groups so that
Strategic objectives we can contribute to the process of shaping
The Sto business model is oriented towards general conditions within the industry and
long-term success. In our view, the essential the technology it uses.
foundations for this are sustainable, solid busi- • Corporate Social Responsibility – By con-
ness management, constant progress, and a sistently implementing and developing our
financially strong basis. We pursue the goal of strategy of sustainability, we take respon-
global technology leadership in the sustainable sibility towards customers, the company,
design of living space tailored to human needs. employees, other stakeholders, shareholders,
23
and the environment. Our business activities between EUR 80 million and EUR 90 million,
support awareness of the importance of but remained below the previous year's level of
value-conserving construction and attractive EUR 84.0 million. This was mainly attributable
building design. to the enormous cost increases in procurement,
which continued through the entire course of
the year and which could not be fully offset
B. Financial report by increasing the sales prices. Significantly
higher incoming freight costs also exerted
Overview of business performance in 2018 significant pressure on the gross profit margin.
and general statement on economic devel- In 2018, earnings before taxes (EBT) totalled
opment EUR 80.2 million (previous year: EUR 82.2 mil-
Sto SE & Co. KGaA, a major international lion; forecast: EUR 78 million to EUR 88 million),
manufacturer of products and systems for and the return on sales was 6.0 % (previ-
building coatings, was able to grow from its ous year: 6.4 %; forecast: 5.9 % to 6.6 %).
own resources in the fiscal year of 2018. Con- Compared to 2017, consolidated net profit
solidated turnover grew by 4.3 % year-on-year for the year dropped from EUR 55.8 million to
to EUR 1,332.4 million, almost reaching the EUR 53.8 million. At 15.6 %, the return on cap-
forecast increase of 4.4 % that would have ital employed (ROCE) was also lower than the
taken it to around EUR 1,333 million. Had it previous year (previous year: 16.1 %), but still
not been for the negative currency effects of within the forecast range of 14.9 % to 16.8 %.
EUR -15.3 million in the year under review,
organic growth would have accounted for an
increase of 5.5 % compared to the previous
year, although the cold spell in March and the
extremely hot weather at the end of July and The Sto Group’s financial and asset situation
during August inhibited construction work in remained solid, with the equity ratio increas-
some markets. On the other hand, the favour- ing to 60.9 % (previous year: 60.1 %) and
able weather conditions at the year end were cash and cash equivalents to EUR 105.3 mil-
highly conducive to positive development. lion (previous year: EUR 84.4 million). Taking
In particular, the turnover-generating growth borrowings into account, net financial assets
initiatives that had been launched back in 2017 stood at EUR 90.5 million (previous year:
as part of the New Balance programme pro- EUR 72.6 million). Cash flow from operating
duced positive effects in the year under review. activities stood at EUR 80.7 million (previous
These initiatives primarily included medium- to year: EUR 86.5 million).
long-term measures, such as the improvement Through its Executive Board, the person-
of sales efficiency. Within certain sections, we ally liable partner STO Management SE will
were also able to benefit from the diversifica- propose an unaltered dividend payout of
tion of our product range, which was consist- EUR 26,049,060.00 to the Annual General
ently geared towards growth areas. Meeting on 19 June 2019. This means that
The development of earnings in 2018 was limited preference shareholders will receive an
disappointing even though all key performance ordinary dividend of EUR 0.31 and a bonus
indicators were in line with the forecast values. of EUR 3.78 per share, and limited ordinary
Standing at EUR 81.9 million, the consoli- shareholders will receive an ordinary dividend of
dated EBIT was within the planned range of EUR 0.25 plus a bonus of EUR 3.78 per share.
24
The current reporting period got off to a tween the EU and the Italian government, and
good start because of the much more favour- the many questions surrounding Brexit.
able weather conditions compared to the As in previous years, the strongest sources
previous year. In total, consolidated turnover of momentum were to be found in developing
exceeded typical seasonal expectations during and emerging countries. In these countries,
the first three months. GDP rose by a total of 4.6 % (previous year:
For 2019 as a whole, we expect to see 4.7 %). In China, the economy lost some of
growth in consolidated turnover of 4.1 % to its momentum, with its GDP rising by 6.6 %.
around EUR 1,387 million. As things stand, Meanwhile, in Brazil and Russia, growth was up
earnings before interest and taxes (EBIT) are only slightly.
likely to amount to between EUR 81 million In 2018, the German economy grew for the
and EUR 91 million. The Executive Board of STO ninth year in a row but lost some of its momen-
Management SE continues to view the business tum: According to calculations by the Federal
prospects of the Sto Group as positive at the Statistical Office (Destatis), the price- and cal-
time of compiling the Group management endar-adjusted GDP was 1.5 % higher than the
report. The expected development of the Sto 2017 level, following on the heels of a 2.2 %
Group is discussed in more depth in the ‘Out- increase in each of the two previous years. The
look report’ section. main drivers of growth in 2018 came from
within Germany: There was an increase in both
private (+1.0 %) and public consumer spending
Overall economic and (+1.1 %) compared to the previous year, but
sector-related general growth was also lower than in recent years.
Gross investment rose much more sharply than
conditions in 2018 consumption, increasing by a total of 5.4 %.
Building investments were up by 2.4 % and
Global economic development most of these went into public civil engineering.
The global economy slowed more and more
over the course of 2018. According to the International trends for the construction
International Monetary Fund (IMF), which had sector
originally expected the global economy to grow The European construction industry remained
by 3.9 %, global growth in 2018 decreased on a growth course in 2018 but lost a lot of
from the previous year's rate of 3.8 % to 3.7 % momentum in the 19 member states of the
once adjusted for price changes. EUROCONSTRUCT network. In their November
The industrial nations increased their 2018 forecast, the construction experts said they
gross domestic product (GDP) by a total of were expecting to see a lower increase than
2.3 % (previous year: 2.4 %). The biggest share the previous year, with a drop from 4.1 % to
of the growth was attributable to the USA, 2.8 %. Growth in the construction sector was
which saw an increase of 2.9 %. By contrast, strongly supported by the largely healthy gen-
the eurozone suffered a noticeable slowdown eral economic conditions in most EU states, the
in growth from the previous year's rate of very low interest level, and greater immigration
2.4 % to 1.8 %. The primary factors hampering and internal migration. Pent-up demand also
growth were the restrictive US trade policy and played an important role in quite a few Euro-
the less dynamic Chinese economy. In Europe, pean countries. Whereas residential construc-
uncertainty was also created by the conflict be- tion had been one of the key growth drivers in
25
previous years, it was civil engineering that was 6 % is forecast for the non-residential sector,
the greatest stimulator of growth in 2018. This including commercial buildings. Office space
sector is expected to have increased by 5.0 % construction, which benefited from the healthy
(previous year: 1.8 %). By contrast, in residen- general economic situation, is thought to have
tial construction – which accounted for around seen particularly strong growth of 9 %.
47.6 % of all European construction in 2018 2018 was another successful year for the
– the increase slowed to 2.8 % (previous year: Chinese construction industry. According
5.6 %). Within this context, new residential to GTAI, investments in real estate increased
building projects still experienced an increase by a hefty 10.2 % in the first seven months
of 5.5 %. Meanwhile, the figure recorded for compared to 7.9 % for the corresponding
maintenance and modernisation measures on period of 2017. This growth was exclusively
existing residential buildings was 0.7 %, only attributable to the residential construction sec-
slightly above the previous year’s level. In the tor, which experienced an increase of 14.2 %,
non-residential construction sector, the volume while the office construction and retail space
of construction services rose by 1.5 %. sectors suffered a decrease (-9.9 % and -8.9 %
The German construction market main- respectively). Over the course of the year,
tained a stable growth rate in 2018: according demand became slightly less dynamic overall
to provisional calculations by the HDB (General due to rising prices and various purchasing
association for the German construction restrictions. Energy efficiency is one area of
industry) and the ZDB (German Construction the Chinese construction industry that offers
Confederation), turnover in the main construc- considerable potential, as buildings account for
tion sector increased by 6.0 %. A nominal a large share of primary energy consumption.
increase of 6.5 % in the residential construc- The Chinese government also wishes to reduce
tion sector is assumed by both organisations. this significantly, but the necessary initiatives are
However, expansion in the areas of production not currently in place. There is also appreciable
and building completions was limited to the still demand in the area of refurbishments because
booming apartment construction sector, with so many buildings are in need of renovation.
the construction of conventional owner-occu- The emphasis here is on renovating interiors as
pied homes stagnating at the previous year's the renovation of facades is usually subject to
level. The HDB and ZDB are expecting a 7.0 % a complex decision-making process involving a
increase in turnover for the commercial and large number of apartment owners.
industrial construction sector in 2018; for the
public sector, a rise of 5.0 % is anticipated.
In the November edition of ‘Germany Trade
Business performance and
and Invest’ (GTAI), building investments in the development of turnover
USA were predicted to increase by around
6 % in 2018, although the sector lost more In the 2018 fiscal year, the Sto Group gen-
and more steam in the second half of the erated a turnover of EUR 1,332.4 million
year. Additional construction and real estate (previous year: EUR 1,277.4 million). Despite
financing costs have acted as the main brake strong negative currency translation effects,
on demand for residential and commercial this meant growth was up by 4.3 % compared
property since the summer of 2018. Overall, the to the previous year. The appreciation of the
residential construction volume is expected to euro against the US dollar, Swiss franc, Swedish
have increased by 7 %. Meanwhile, growth of krona, and Turkish lira inhibited a stronger
26
Sto Group Turnover In 2018, consolidated turnover in Germany

in EUR million amounted to EUR 596.0 million – a plus of
5.9 % as compared to the previous year's
1,300
1,332.4
value of EUR 562.8 million. An increase of

1,277.4
1,200
1,230.7
3.1 % to EUR 736.4 million (previous year:

1,216.6
1,208.7
1,166.0
1,100 EUR 714.6 million) was achieved outside of

1,000 Germany. Without including negative currency
900 translation effects, this means that the underly-
ing growth outside of Germany was 5.2 %. In
800
comparison to the previous year, the share of
700
Group turnover generated outside of Germany
600 decreased slightly from 55.9 % to 55.3 %.
500
400 Sto Group Regional breakdown of
300 consolidated turnover
200
Western Europe
100 (incl. Germany)
76.9 %
2013 2014 2015 2016 2017 2018
increase. Once adjusted for these turnover-

reducing currency translation effects, which
amounted to EUR -15.3 million (previous year:
EUR -6.7 million) in the reporting period, this Northern/Eastern
equates to organic growth of 5.5 % as com- Europe 11.8 %
pared to 2017.
America/Asia
Sto Group Domestic and foreign 11.3 %
turnover in EUR million
Turnover in the Western Europe seg-
736.4
700
714.6
ment (including Germany) grew by 5.5 % on

682.0
681.2
659.5
600 2017 to EUR 1,024.4 million (previous year:

631.3
596.0
EUR 970.8 million). In contrast to the strong

562.8
549.2
548.7
535.4
534.7
500 sales performance in Germany, business devel-

opment in France and Switzerland, in particular,
400 fell short of expectations. In Switzerland, ex-
change rate developments also had a negative
300 impact on the level of turnover achieved.
In the Northern/Eastern Europe segment,
200
Sto demonstrated growth of 3.4 %, with the
turnover figure rising to EUR 156.7 million
100
(previous year: EUR 151.5 million). Turnover in
Northern Europe, which was additionally hit
2013 2014 2015 2016 2017 2018 by negative exchange rate effects, fell short of
Germany Non-Germany
27
expectations. This contrasted with the devel- in the other business fields. This was mainly the
opment of the Eastern European companies, result of very good demand for floor coatings.
which although varied was largely positive.
The America/Asia segment recorded a Income situation
decline in turnover from EUR 155.1 million to In 2018, development of earnings at the Sto
EUR 151.3 million. In addition to disappointing Group was heavily affected by the substantial
business development in the USA, the exchange increase in procurement costs for raw materials
rate losses in the US dollar zone – in particu- and purchased goods, which was higher than
lar – had a dampening effect. Net growth was we expected it to be and continued to exert
achieved in Asia. This is exclusively attributable pressure over the entire course of the year.
to demand in China, which remained strong in This led to a significant rise in material costs,
spite of difficult general conditions. which amounted to EUR 615.9 million in 2018,
exceeding the 2017 value by 7.9 % (previous
Performance of product groups year: EUR 570.6 million).
Much to its satisfaction, Sto managed to To offset the persistent cost pressure when
increase turnover in its core business of facade buying in raw materials and purchased goods,
systems. Although provisional estimates for the focus of Sales in 2018 was on sales price
2018 suggest that the volume only increased adjustments. For example, sales prices were
slightly on the German EWIS market – a mar- raised twice in the same calendar year in the
ket which has been waning for years – and German market of Sto SE & Co. KGaA. How-
although the controversial debate concerning ever, these measures have not yet proven suffi-
the use of external thermal insulation compos- ciently effective, with the result that the cost of
ite systems continued to rage, Sto was still able goods sold rose significantly at the Sto Group
to win market share and generate turnover from 44.7 % in the previous year to 46.2 %.
growth. The main factors contributing to this Personnel expenses in the Group increased
were the diversified product range and the to EUR 352.3 million, mainly due to collective
turnover-boosting growth initiatives of the New wage agreements. As a result, they were 3.1 %
Balance programme, as well as the intensifica- higher than the previous year's value (previous
tion of sales activities. Significant growth was year: EUR 341.8 million).
recorded in the area of external wall insulation At EUR 273.9 million, the other operating
systems based on mineral wool. expenses remained slightly below the previous
In the product group of facade systems, year’s level (previous year: EUR 274.8 million)
which contributed 47.7 % of total turnover, the despite significantly higher freight costs in
Sto Group achieved a total growth of 5.6 % the year under review. These were offset by
to EUR 634.9 million. In the business area of reductions in other cost items. Other operat-
facade coatings with its high margins, turnover ing income fell by 16.1 % to EUR 22.9 million
fell by 1.7 % to EUR 302.3 million. This was (previous year: EUR 27.3 million). This is be-
particularly due to the decline in turnover in the cause the value for the previous year included
USA and China, and meant that the corre- an extraordinary source of income amounting
sponding share in Group turnover dropped to to EUR 3.8 million that had come as part of a
22.7 %. In 2018, turnover generated by interior settlement following the conclusion of court
products increased by 2.5 % to EUR 190.7 mil- litigation proceedings in the USA. The balance
lion (share: 14.3 %). An increase of 12.2 % to of other operating income and other oper-
EUR 204.5 million (share: 15.3 %) was recorded ating expenses stood at EUR -251.0 million as
28
compared to EUR -247.5 million in the previous EUR 7.9 million). Once again, this is because

year. the value for the previous year included an
In comparison to the previous year, consol- extraordinary source of income amounting
idated earnings before interest, taxes, and de- to EUR 3.8 million that had come as part of a
preciation/amortisation (EBITDA) fell by 3.5 % settlement following the conclusion of court
from EUR 117.3 million to EUR 113.2 million. litigation proceedings in the USA.
Depreciation and amortisation of intangible In 2018, income from financial investments
assets as well as property, plant, and equipment and investment property in the Sto Group to-
amounted to EUR 31.3 million and was hence talled EUR -1.7 million, following EUR -1.8 million
6.0 % below the previous year’s value (previous in the previous year. Within this context, interest
year: EUR 33.3 million). This had the effect of income remained largely stable at EUR 0.7 mil-
reducing consolidated earnings before interest lion, with the interest expense increasing margin-
and taxes (EBIT) by 2.5 % to EUR 81.9 million ally from EUR 2.5 million to EUR 2.6 million.
(previous year EUR 84.0 million). The Sto Group recorded a drop in total con-
solidated earnings before tax (EBT): these de-
Sto Group EBIT in EUR million creased by 2.4 % to EUR 80.2 million (previous
year: EUR 82.2 million), with a return on sales
of 6.0 % following 6.4 % in the previous year.
100
The tax rate rose from 32.1 % in the previous
99.9
97.0
90 year to 32.9 %. The Sto Group’s net profit for

the year fell by 3.6 % from EUR 55.8 million to
80
84.0
81.9
81.5
EUR 53.8 million.
70
70.3
60 Sto Group Net profit for the year

in EUR million
50
40 70
68.4
66.0
30 60
55.8
55.7
20 50
53.8
10
45.7
40
2013 2014 2015 2016 2017 2018 30
When broken down by segment, EBIT in 20

Western Europe amounted to EUR 77.0 million
10
and hence remained virtually unchanged in
comparison to the previous year (previous year:
EUR 77.1 million); in Northern/Eastern Europe,
2013 2014 2015 2016 2017 2018
EBIT increased to EUR 1.9 million despite pre-
cautionary measures having proven necessary Diluted and basic earnings were EUR 8.39
in Sweden (previous year: EUR -1.4 million). The per limited preference share (previous year:
America/Asia segment achieved a significantly EUR 8.68), and EUR 8.33 per limited ordinary
lower EBIT of EUR 3.2 million (previous year: share (previous year: EUR 8.62).
29
As at 31 December 2018, the ROCE (return financial requirements – which can fluctuate
on capital employed) figure had fallen from significantly with the seasons over the course of
16.1 % to 15.6 % as compared to the same the year – are mainly covered using operating
day of the previous year. cash flow and available liquidity. Where nec-
essary, we also make use of temporary credit
Sto SE & Co. KGaA – Dividend facilities based on a syndicated loan agreement
Earnings before income taxes of the parent whose remaining term expires in 2022. Further-
company Sto SE & Co. KGaA, determined in more, we made use of leases during the year
accordance with the German Commercial Code under review. At the 2018 year end, the present
(HGB), amounted to EUR 59.3 million com- value of disbursements due from finance leases
pared to a figure of EUR 62.0 million for the in the future stood at EUR 0.4 million (previous
previous year. Net profit for the year fell from year: EUR 0.6 million).
EUR 45.8 million to EUR 40.8 million. The finan- To minimise the effect of exchange rate
cial and asset situation of Sto SE & Co. KGaA fluctuations on consolidated earnings, foreign
remained extremely solid, with an equity ratio currency items are netted within the Group. Ad-
of 70.1 % (previous year: 70.4 %). ditionally, during the planning phase we deter-
Through its Executive Board, the person- mine the foreign currency cash flows within the
ally liable partner STO Management SE will Group for the following year, and devise suita-
propose a total unaltered dividend payout of ble hedging strategies on this basis. Planned
EUR 26,049,060.00 to the Annual General cash positions are hedged through instruments
Meeting on 19 June 2019. This means that congruent to the time and economic state from
limited preference shareholders will receive an the area of derivatives.
ordinary dividend of EUR 0.31 and a bonus of Most of the Sto Group subsidiaries operating
EUR 3.78 per share. Limited ordinary share- in the eurozone are integrated into a cash-pool-
holders will be paid an ordinary dividend of ing system which is used to control liquidity
EUR 0.25 as well as a bonus of EUR 3.78 per management centrally. This allows us to net
share. cash surpluses and cash requirements within the
Group, and minimise the number of external
Financial situation banking transactions. We invest any surplus
The most important objectives of financial liquidity under conditions that are as favourable
management in the Sto Group are to ensure as possible to improve our net interest income.
the Group’s liquidity worldwide, optimise The duties of the Sto Group's treasury
financial expenses and income, and control and department include the recognition of financial
minimise currency and interest risks. Sto uses resources for internal and external financing
a wide range of financial instruments in order as well as the control of financial risk manage-
to ensure as little dependence as possible on ment. By doing this, we are taking into account
individual markets and methods of financing. the Group’s continuing internationalisation and
When working with banks, top priority is given the increasing risk management requirements
to those that enjoy the highest credit ratings that come with it.
and are able to build long-term relationships
characterised by mutual trust. Liquidity movements in 2018
We aim to establish a balanced relationship In 2018, cash flow from operating activ-
between equity and debt capital in order to ities within the Sto Group dropped from
ensure a long-term financing scope. Our current EUR 86.5 million to EUR 80.7 million. The lower
30
earnings and higher income tax payments were amounted to EUR -31.0 million (previous year:
essentially counteracted by effects from the EUR -40.7 million).
change in provisions and the lower increase in In 2018, cash flow from financing activi-
capital that was tied up in net current assets. ties totalled EUR -24.2 million (previous year:
Net interest income and other financial earnings EUR -24.9 million). Once again, the majority
remained virtually stable at EUR -1.8 million. of this was accounted for by the dividend
The cash flow margin fell from 6.8 % to 6.1 %. payout to shareholders, which increased from
A total of EUR 35.9 million was used for EUR 21.0 million to EUR 26.4 million compared
investment activities in 2018 (previous to the previous year.
year: EUR 45.0 million). Outflows relating to In 2018, net changes from exchange rates
investments in property, plant, and equipment and, in accordance with IFRS 9, impairments
as well as Intangible assets decreased slightly due to anticipated losses on cash and cash
from the previous year's value of EUR 32.4 mil- equivalents, amounted to EUR 0.2 million (pre-
lion to EUR 32.0 million. In addition, funds vious year: EUR -2.3 million).
of EUR 11.0 million were disbursed in 2017 In the course of the year, the Sto Group’s
from the acquisition of an investment that was cash and cash equivalents rose by a total
consolidated using the equity method (2018: of EUR 20.9 million from EUR 84.4 mil-
EUR 0.0 million). In the year under review of lion to EUR 105.3 million. Once again, this
2018, funds amounting to EUR 33.0 million sum significantly exceeded the borrowings
(previous year: EUR 49.7 million) were released of EUR 14.8 million (31 December 2017:
from financial investments on expiry of the EUR 11.8 million) declared on the reference
maturity date, and cash and cash equivalents date of 31 December 2018.
of EUR 37.9 million were reinvested (previous
year: EUR 54.0 million). Thus, cash flow from Investments
investment activities adjusted for deposits There was a slight change in the amount
and disbursements for financial investments invested in property, plant, and equipment,
and Intangible assets at the Sto Group. This
Sto Group Cash flow statement decreased from EUR 32.7 million in the
in EUR K previous year to EUR 32.1 million, which was
significantly below the planned budget of
2018 2017
EUR 42 million. Firstly, this was because of a
Cash flow greater reluctance to invest in companies that
from operating activities 80,684 86,478 were not developing as planned and, sec-
from investment activities –35,866 –44,965 ondly, because some projects ended up being
from financing activities –24,192 –24,852 postponed. Across the Group as a whole,
Change in cash and cash equivalents EUR 26.8 million (previous year: EUR 27.4 mil-
from changes in exchange rates and lion) of the total amount was invested in the
impairments in accordance with Western Europe segment, EUR 2.0 million
IFRS 9 246 –2,310 (previous year: EUR 1.8 million) in the Northern/
Cash and cash equivalents Eastern Europe segment, and EUR 3.3 million
at beginning of period 84,422 70,071 (previous year: EUR 3.5 million) in America/Asia.
Change in cash and cash equivalents 20,872 14,351 In the year under review, investments in
Cash and cash equivalents tangible assets within the Group amounted to
at the end of period 105,294 84,422 EUR 30.5 million and hence remained slightly
31
Sto Group Investments and deprecia- Within this context, the reduction in intangible
tion/amortisation (without assets to EUR 47.8 million (31 December 2017:
financial assets) in EUR million EUR 49.1 million) contrasted with a marginal in-
crease to EUR 254.9 million in the area of prop-
40 erty, plant, and equipment (31 December 2017:
39.1
EUR 254.3 million) and with a marginal increase

37.5
35.8
to EUR 11.1 million in terms of investments
33.3
32.7
32.7
32.4
30
32.1
reported on the balance sheet using the equity
31.3
31.0
29.9
29.0
method (31 December 2017: EUR 11.0 million).

At EUR 22.4 million, other non-current assets
20
remained at the previous year's value.
Current assets demonstrated a year-on-year
gain of 8.6 % to EUR 448.2 million (31 Decem-
10
ber 2017: EUR 412.8 million). At EUR 97.9 mil-
lion, inventories were slightly above the previous
year's level (31 December 2017: EUR 96.7 mil-
2013 2014 2015 2016 2017 2018 lion). Current trade receivables increased by
Investments Depreciation/amortisation 7.8 % to EUR 134.7 million (31 December
2017: EUR 125.0 million), in particular due to
below the 2017 level of EUR 30.6 million. One the healthy business development at the 2018
focal point was the expansion of the Group- year end. There was also a clear increase in
wide distribution network, primarily in Austria current financial assets from EUR 76.5 million
and Germany. In addition, we once again made to EUR 83.3 million due to financial investments
replacement and expansion investments as part with maturities ranging from more than three
of the ongoing ‘Retrofit’ programme, such as months up to a year. Other current assets de-
the replacement of two stacker cranes at the creased from EUR 27.7 million to EUR 24.5 mil-
logistics centre at the Stühlingen headquarters.
In total, intangible assets accounted for Sto Group Balance sheet structure
EUR 1.6 million (previous year: EUR 2.1 million) as at 31 December 2018
of the Group investments. In 2018, there were
no investments in financial assets (previous Assets Liabilities
year: EUR 11.0 million).
Asset situation
Non-current assets
As at the reference date of 31 December, 42.9 %
Equity
the consolidated balance sheet of Sto SE 60.9 %
& Co. KGaA witnessed an increase from
EUR 749.6 million in the previous year to
EUR 784.4 million. In the category of non-
Current assets
current assets, which were worth a total Non-current provisions
43.7 % and liabilities
of EUR 336.2 million (31 December 2017: 15.3 %
EUR 336.8 million), fixed assets decreased Current provisions

slightly year-on-year by 0.2 % to EUR 313.8 mil- and liabilities
Cash 23.8 %
13.4 %
lion (31 December 2017: EUR 314.4 million).
32
lion. This item mainly includes refund claims. liabilities from EUR 2.2 million to EUR 6.1 mil-
Cash and cash equivalents increased year-on- lion. Trade payables increased slightly year-on-
year from EUR 84.4 million to EUR 105.3 million. year to EUR 47.2 million (31 December 2017:
On the liabilities side, equity rose from EUR 46.0 million). Current financial liabilities
EUR 450.1 million to EUR 477.5 million thanks grew from EUR 28.5 million to EUR 32.6 mil-
to the positive development of income, result- lion while other current liabilities fell from
ing in a figure that was 6.1 % above the value EUR 45.3 million to EUR 44.4 million.
at the 2017 year end. The item of Share of mi- At the end of December 2018, total bor-
nority interests, accounting for EUR 7.6 million rowings amounted to EUR 14.8 million after
(31 December 2017: EUR 7.8 million), primarily EUR 11.8 million in the previous year. Taking
related to the proportion of minority sharehold- into account cash and cash equivalents of
ers with a stake in Ströher. As at 31 December EUR 105.3 million, net financial assets stood at
2018, the equity ratio within the Sto Group EUR 90.5 million, an improvement on the previ-
had improved to a very solid 60.9 % (31 De- ous year (31 December 2017: EUR 72.6 million).
cember 2017: 60.1 %).
The total non-current provisions and
liabilities increased slightly year-on-year from
C. Other performance
EUR 118.7 million to EUR 119.7 million. Both indicators
the post-employment benefit provisions and the
other non-current provisions remained largely Employees
stable at EUR 99.3 million (31 December 2017:
EUR 99.1 million) and EUR 14.6 million (31 De- At the 2018 year end, the Sto Group had 5,333
cember 2017: EUR 14.6 million) respectively. employees worldwide as compared to 5,308 on
Deferred tax liabilities decreased slightly from the same day of the previous year (+25 employ-
EUR 2.3 million to EUR 2.1 million. Non-current ees; +0.5 %). While the number of personnel
borrowings increased to a total of EUR 3.3 mil- at the German locations remained more or less
lion (31 December 2017: EUR 2.0 million), stable at 2,887 (previous year: 2,884), certain
mainly because of a publicly funded investment subsidiaries outside of Germany with short- and
loan. Meanwhile, non-current financial liabilities
and other non-current liabilities remained at the Sto Group Number of employees
previous year's level, amounting to EUR 0.3 mil-
lion and EUR 0.01 million respectively.
2,800
2,895
2,887
2,884
There was a net increase in current pro-

2,652
2,623
visions and liabilities to EUR 187.2 million

2,586
2,400
2,446
2,424
2,380
2,356
2,356
(31 December 2017: EUR 180.7 million). Other

2,205
2,000
current provisions decreased by EUR 3.4 mil-
lion to EUR 45.5 million (31 December 2017: 1,600
EUR 48.9 million). The most significant item
in this case, recorded in the area of warranty 1,200
provisions within sales, relates to insurance 800
refund claims that are included on the assets
side as other current assets. Current bor- 400
rowings increased from EUR 9.8 million to
EUR 11.5 million and current income tax 2013 2014 2015 2016 2017 2018
Germany Outside of Germany
33
medium-term growth prospects experienced a HR strategy

slight increase. These new appointments were In the year under review, we consistently pur-
contrasted by targeted restructuring measures in sued the HR strategy defined for the Sto Group
regions battling difficult general economic condi- that keeps us steadily on course in the area of
tions. The total number of personnel employed Human Resources (HR). The HR context within
outside of Germany stood at 2,446 (previous which we had to operate in 2018 was shaped
year: 2,424), meaning that the percentage of by the following factors: the increasing impor-
the Group's workforce employed outside of Ger- tance of flexibility, cross-cultural competence,
many rose from 45.7 % to 45.9 % year-on-year. increased cost pressure, the ongoing shortage
As at the end of December 2018, the work- of specialists, the need to respond as quickly
force figures were as follows for each of the as possible, the ageing workforce, a noticeable
various segments: 4,094 employees in Western shift in values, and new requirements for our
Europe (incl. Germany), 636 in Northern/Eastern specialist personnel and managers. Guided
Europe, and 603 in America/Asia. by these general conditions, we successfully
introduced the measures that had been planned
Sto Group Employees by region for all the key issues in our HR strategy in 2018,
and made significant progress in these areas.
To be specific, these included:
• Promoting the Sto culture: This culture is
Western Europe
(not including Germany) based on mutual respect, enables our work-
22.7 % force to play their part in shaping the com-
pany, and encourages our employees to take
Germany responsibility for ambitious targets. We are
54.1 % constantly developing the Sto culture while
at the same time upholding its core values.
Northern/Eastern
During the year under review, we made the
Europe 11.9 %
necessary preparations for the employee
survey scheduled for 2019, and stepped up
America/Asia dialogue between Management and the
11.3 % workforce. In addition, the new concept for
appraisal interviews at Sto SE & Co. KGaA
The average age of the Sto workforce in was successfully introduced at the Stühlingen
2018 was 43.5 (previous year: 43.4), and the site and at StoCretec GmbH.
proportion of female employees in the Group • Professional personnel and managerial
amounted to approximately 25 %, a figure development: Customised qualification
similar to the previous year’s. Sto recognises programmes are our way of ensuring that
that teams with a heterogeneous make-up have our workforce is constantly prepared for the
shown themselves to be better at solving com- demands of the future, and systematically
plex tasks, and it therefore considers diversity developing our stock of expertise. Addi-
to be one of the keys to the company being tionally, we want to discern specific areas
successful in the future. We are constantly of management potential that are present
examining the extent to which diversity is in the Group. In addition to systematically
present within the company, which enriches our improving managerial development, in 2018
corporate culture. we strengthened our network of consultants
34
in the areas of coaching and organisational principle, we aim to keep the rate of reportable
development. accidents at work or on the way to and back
•
Employer attractiveness and securing the from work consistently below 10 accidents per
next generation of employees: We are 1,000 employees per year. In 2018, the rate
consistently working to boost our attractive- at Sto SE & Co. KGaA was 16.2 compared to
ness as an employer and add talented young 12.6 the previous year. Around half of these
professionals to our team. We do this to consisted of trips or falls, and were the result of
ensure that the Group can keep expanding inattentiveness or inappropriate practice. In the
at all its locations around the world, and to year under review, no incidents occurred due to
play an active role in combating the shortage defective machinery or installations. As a means
of young talent and skills. We also establish of preventing accidents, employees receive
attractive general conditions for applicants ongoing training in occupational safety, and
and employees, as well as a solid vocational we raise their awareness on the subject to help
training programme. In addition to this, we them become more attentive and act in a less
established an IT system for applicant man- risky manner. In the event that serious accidents
agement at specific companies. do occur, they are systematically subjected to an
•
Creating competitive employment condi- investigation and the relevant risk assessment is
tions: Our aim is to give our employees an adapted or revised in light of the findings.
attractive working environment that affords
them a great deal of flexibility, while at the At the end of 2018, the Sto
same time ensuring that the Group is taking Group had 5,333 employ-
advantage of efficient cost structures. The ees worldwide.
previous year, various measures had been
implemented as part of the New Balance
programme. With a view to anchoring
these securely within the Group, we offered
our employees a wide range of support. In
addition, the pay systems underwent further
development, and the general conditions
for mobile working were improved. Another
item on the agenda for 2018 was occupa-
tional reintegration management.
Alongside these key issues, the HR department

also works continuously to improve efficiency
and professionalism in everything it does. To this Our aim is to keep our fluctuation rate
end, a global HR conference was held in 2018 within the Sto Group in the lower single-digit
and a system was developed to provide key percentage range. This rate is calculated
indicators for controlling the HR department. by looking at the number of exits from the
company (not including natural ones, such as
Working safety people entering retirement) in relation to the
One of the most important elements of our HR average number of permanent staff. In the year
policy is preventing accidents or at least keep- under review, this value increased to 3.8 % in
ing the number as low as possible. As a basic Germany (previous year: 2.9 %), which was
35
mainly attributable to the personnel restructur- professional training at Sto in Germany. The
ing measures implemented as part of the New range of available options includes 25 different
Balance programme. The percentage of volun- industrial and commercial training paths. In
tary terminations remained virtually unchanged addition, we also offer the option of complet-
at 2.0 %, demonstrating that Sto continues to ing an integrated work/study programme in a
be an attractive employer. variety of subjects within the Group.
In 2018, the average period of employment At the year end, the number of trainees and
with the Sto Group was 10.8 years. During the work/study programme students in Germany to-
completed fiscal year, one of our employees talled 214 (previous year: 199). In relation to the
was honoured for 50 years of service, the first total German workforce, this equates to a share
one ever to reach this milestone at Sto. of 7.4 %. As a result, Sto far exceeds the 4.8 %
training rate of all the businesses working in the
Health management chemical industry in Germany.
We believe that ensuring the well-being of our
employees includes establishing an environ-
ment that promotes health and enhances
performance. We support this through a health
management programme that is structured
around our target groups. In relation to this,
further options were offered in 2018 in the
areas of nutrition, sport, and protection against
influenza. Furthermore, cooperation with
the Sto Sports Club is to be stepped up even
further over the coming years and its range of
offers is also to be broadened. The Health Man- In autumn of 2018, Sto trainees constructed a woodland
agement Team was reorganised for even faster playground, which was an initiative of the 'Jung & Alt –
individually tailored support and authorisation Attraktives Dorfleben' (Young & old – Attractive village
of health-promoting measures. life) association in Stühlingen-Mauchen/Germany.
Further education and training activities A special page dedicated to providing exten-
With the aim of fostering the skills and interests sive information about professional training can
of our workforce as well as preparing them for now be found on the Sto Group website. Not
the requirements they will need to fulfil in the only that, but in 2018 we once again took part
near future, the Sto Group offers a compre- in numerous education fairs and careers days
hensive range of opportunities for gaining within Germany. These events provide prospec-
qualifications and further training. In the year tive employees with the opportunity to gain an
under review, the focus was on managerial and in-depth insight into the Sto Group as an em-
sales training, as well as the range of available ployer and find out more about the company.
methodology training, e.g. in the area of pro-
ject management.
Research and development
Training at Sto
At the start of the new training year in Sep- Through our intensive and continuous R&D
tember 2018, 80 young people started their work, we are consistently enhancing the skills
36
that are present within the Group, securing Product innovations

the position we are aiming for as a technology In terms of product innovations in 2018, the
leader in our industry sector, and opening up emphasis was on further expanding the Sto-
opportunities for tapping into new markets and Color Dryonic product line. The new additions
finding new customers for Sto. Furthermore, to this included StoColor Dryonic S, a version
our extensive activities mean that the materials offering optimised resistance to fading, and a
we need to ensure the high quality of our prod- particularly wide choice of colours. The biomi-
ucts are always available in sufficient quantities metic StoColor Dryonic facade paints follow
and offer a reasonable cost-benefit ratio – in a principle found in nature by repelling water
spite of the constantly changing situation to keep facades dry, thereby protecting them
concerning raw materials, which is affected by against algae and fungi.
general regulatory, ecological, and economic Within the interior segment, the StoColor
conditions. Rapid paint is one of the most successful
Our Group-wide development activities take products. In 2018, it underwent an extensive re-
place predominantly at our Stühlingen head- launch and further improvement. Among other
quarters. In addition, there are R&D depart- things, the wet scrub resistance (an important
ments based at various sites in and outside of indicator of the product's fitness for purpose)
Germany. Their activities are geared specifically was further optimised without altering the
towards the national situation concerning the other outstanding features of the product.
supply of raw materials, product features, and Sto has developed the StoPrim GT primer
price structures. In 2018, a total of EUR 13.5 specifically for use with silicate products. With
million (previous year: EUR 14.1 million) was its special gel structure, it enables work to
recorded with an impact on profit and loss for be carried out without any drips and ensures
research and development – corresponding to a streak-free result. It is suitable for virtually
1.0 % (previous year: 1.1 %) of consolidated all interior substrates. This dispersion silicate
turnover. primer is particularly beneficial when used on
The regulatory challenges surrounding crumbling or absorbent substrates that place
research and development activities became very high demands on the primer. In addition,
even more severe during the year under re- StoPrim GT is free of solvents and plasticisers, is
view. Among other things, there were various a low-emission product, and contains very few
reclassifications and changes in the labelling preservatives, thereby meeting the requirements
obligations with regard to the raw materials for healthy and ecologically sound interior
used, both in Europe and at a national level. For construction.
example, new EU-wide regulations were intro- The StoColl Mineral HP high-performance
duced concerning the limit values for the label- bonding mortar is a newly developed product
ling of particular input materials. This resulted in that has been designed for use in external wall
considerable additional expense being incurred insulation systems, specifically for mineral wool
by Sto in some areas, e.g. the costs of qualifying and EPS insulation boards. The mineral-based
alternative raw materials and suppliers. It has mortar adheres brilliantly to a large number of
also tied up resources that were originally mildly absorbent substrates such as wood and
intended for areas of innovation. In addition, board materials, solid wood, and bitumen. It is
fire protection requirements have become much non-combustible, highly permeable to water
more stringent, with the result that existing vapour, offers good stability under load, and is
systems have had to be adapted accordingly. easy to apply.
37
StoMurisol SW plus has been specially and development project that was extremely
developed for the plinth area of buildings. It is thorough, this highly functional facade paint
a new mineral-based bonding and reinforcing was shown to be capable of breaking down
mortar that can also be used as a float-finish nitrogen oxides and ozone, and preventing the
render. Furthermore, it is capable of withstand- formation of secondary fine particulate matter.
ing a water pressure of 1.5 bar. Thanks to the The R&D department that was responsible at our
integrated moisture protection, there is no end helped oversee the experiment by participat-
need for additional sealing of the render coat in ing in numerous conversations and discussions,
the plinth area, which avoids having to switch and by contributing scientific expertise. Provided
products within the coating system. The advan- that the paint is given enough space to perform
tage of single-component mortar compared to its function, StoColor Photosan has the potential
two-component solutions lies in the construc- to become an important component for improv-
tion site logistics. ing air quality in congested urban areas.
The StoPox 590 EP coating has been In addition to the many new regulations and
modified and successfully repositioned on the decrees issued at a national and European level,
market for highly stressed floor slabs made the other key challenges faced by R&D in 2018
from waterproof concrete. The special feature included unusually severe shortages of raw ma-
of this epoxy resin coating, which is primarily terials right through to their complete unavail-
used in underground and multi-storey car parks, ability, particularly as a result of the EU REACH
is that it combines water vapour permeability Regulation. Consequently, directly interchange-
with crack-bridging properties. This makes the able materials had to be found and additional
product unique on the market. fallback plans had to be drawn up to ensure
In the wake of the emissions scandal in the long-term security of supply going forwards, as
automotive industry and the resulting pub- well as the customary high quality of Sto prod-
With its intense colours, StoColor lic discussions, the existing product StoColor ucts. The complexity of production and diversity
Dryonic S keeps facades dry and Photosan attracted a great deal of attention in of the products produced at the different sites
bright for a long time. 2018. In the course of a fundamental research also play a significant role within this context.
Fundamental research
One of the prerequisites for successful develop-
ment and product adaptation work at Sto takes
the form of the extensive fundamental research
activities that we use – among other things
– to unlock new and improved technologies.
To ensure that as much expertise as possible
feeds into our research, our R&D team regularly
works with universities and external partners as
well. Among other things, we have continued
to participate in a project that is being funded
by the German Federal Ministry of Education
and Research and run jointly between us and
the Institute of Building Materials Research and
Chair of Building Materials (IBAC) at Aachen
University.
38
Production and procurement

The basis for the reliable, high quality of our
products is our outstanding production exper-
tise. Sto is constantly working on the further
development of applications and methods,
as well as the optimisation of production
processes, so that it can remain at the same
high level and continually acquire new skills and
areas of expertise.
The most important products/materials
produced in-house at the Sto Group are coating
materials such as renders and paints, as well
as adhesive and reinforcing compounds. We
also produce some of our expanded poly-
styrene (EPS)-based insulants exclusively for
supply within the Group at the Innolation sites In order to be able to continuously improve The Sto Group's production facilities
in Lauingen/Germany and Amilly/France. This the performance of the production facilities are regularly inspected and modern-
allows us to strategically develop our technical within the Sto Group, we constantly check the ised as necessary.
expertise in this sensitive area, and reduce the rate of defective batches. Our aim is to keep
extent to which we are dependent on suppliers. this proportion of the total production volume
Moreover, our Swedish subsidiary produces that cannot be delivered due to defects below
special insulants based on EPS. 0.1 % across the Group. At the European Sto
factories, this level of quality is already being
International production network achieved almost consistently. Potential weak-
At the 2018 year end, the Sto Group’s global nesses are identified and eliminated as early as
production network comprised 31 locations, possible, which is something that our employ-
of which 11 were in Germany and 20 outside ees receive training in worldwide.
of Germany. In the year under review, all of Due to the market conditions and our cus-
Sto’s factories operated in two- or three-shift tomer structure, the business of the Sto Group
operation at least some of the time. As in is dominated by orders with short lead times.
the previous year, the capacity utilisation was For this reason, a high level of goods availabil-
mostly good. ity – which is also facilitated by having flexible
The Group's existing production capacity is production conditions – and a fast delivery
being modernised and expanded on an ongo- service are absolutely vital for the company.
ing basis as part of the 'Retrofit' programme, Hence the Sto Group does not consider key
e.g. the filling system for water-based primer figures relating to order receipt and backlog to
products in Stühlingen. In 2018, there was a be significant.
particular focus on renewing the electronic sys-
tem controls at the parent plant in Stühlingen, Tested quality management
a process which had begun the previous year. All key production facilities are registered and
The control technology in the storage area and audited within the integrated management
for receiving raw materials has already been system of the Sto Group that incorporates the
successfully replaced. existing quality, environmental, safety, and
39
energy management systems of each individ- Program' (SHARP). Meanwhile, Sto Scandinavia
ual facility. Additionally, the majority of the AB in Sweden and Beissier S.A.U. in Spain have
Group’s plants are certified in accordance with been audited in accordance with OHSAS 18001
external standards. At the 2018 year end, 25 (Occupational Health & Safety Assessment
out of a total of 31 locations had been assessed Series). Both programmes are designed to main-
in accordance with the international qual- tain high standards of health and safety. Verotec
ity management standard ISO 9001, and 15 GmbH and Innolation GmbH have received
according to ISO 14001 for their environmental OHRIS (Occupational Health and Risk Manage-
management system. In the course of the year, ment System) certification in recognition of their
20 production sites in and outside of Germany occupational health and safety system, and
underwent successful recertification in accord- are thus meeting global standards concerning
ance with ISO 9001:2015, with surveillance health and safety at work, while Sto Sp. z o.o.
audits taking place at five production compa- in Poland is operating in line with the AQAP
nies and four sales companies. In addition, 13 (Allied Quality Assurance Publications) standard.
production sites were recertified in accordance Furthermore, Sto has introduced the
with ISO 14001:2015 and surveillance audits ISO 50001 energy management system at sev-
were carried out at two production companies eral of its locations over recent years. As at the
and three sales companies. Internal audits were end of 2018, Sto SE & Co. KGaA’s headquarters
conducted at the headquarters and five plants in Stühlingen, all the production sites and Sales
belonging to Sto SE & Co. KGaA, as well as at Centres in Germany, and four subsidiaries had
five subsidiaries in and outside of Germany. received certification.
In the area of EPS insulation board produc-
tion, Sto is enhancing its existing quality man- Procurement
agement strategy by implementing advanced The key raw materials sourced by the Sto Group
measures beyond the standard that has been in include base materials such as sand, cement,
place to date. These are designed to ensure that and lime, as well as speciality chemicals and
a high level of product quality is maintained by crude oil based raw materials. Examples of
all the suppliers involved in the manufacturing other items that are procured include insulants,
process. Innolation GmbH in Lauingen/Germany mesh, and containers.
acts as a Group-wide centre of expertise for In 2018, the situation on the procurement
insulants. Among other things, 2018 saw the markets was characterised by very strong de-
development and introduction of new software mand for those input materials that are impor-
to digitally link up the areas of production, qual- tant to Sto. Within some sub-areas, this led to
ity control, and maintenance. As a result, we are a tense supply situation involving long delivery
now capable of quickly capturing and evaluat- times and bottlenecks, as well as above-average
ing machine data, process and quality param- price increases. There was a particularly heavy
eters, stoppages or faults, shift schedules, and increase in the material costs of binding agents,
quality records, as well as product tracebacks. pigments, and packaging materials such as
Overall, the software helps prevent defects in containers and pallets. In addition, there were
production and increases transparency. appreciable delays involving upstream suppliers,
The factories of the US subsidiary Sto Corp. e.g. in the case of additives, binding agents, and
in Glendale (Arizona) and Rutland (Vermont) dispersion powders. The procurement situation
have been audited in accordance with the local also became more and more acute with regard
'Safety & Health Achievement Recognition to insulants such as polystyrene and mineral
40
wool, which meant having to cope with costs this function was further expanded. So-called
that were significantly higher than planned. indirect procurement supports the subsidiaries
To counter this development, we intensified by providing tailored advice, experienced know-
the strategic stockpiling of key input materials how, and state-of-the-art procurement tools.
and, to an extent, secured supply by putting As a means of identifying price fluctuations
contracts in place. In addition, we built up a and supply bottlenecks early on, we systemat-
pool of alternative suppliers to provide our ically monitor the supply chain at every stage,
procurement network with some extra breadth. from the purchase of raw materials to storage
All in all, we were – for the most part – able to and all the way through to the customer. We
ensure supply for customers over the course use special software to assist us in this process.
of the year, but managed to offset the adverse By consistently applying and constantly opti-
trend in purchase prices only partially. In 2018, mising this system, we are able to continuously
the Group's cost of sales ratio rose by 1.5 per- improve the supply chain within the Sto Group.
centage points in total, from 44.7 % to 46.2 %. In addition, our comprehensive classification
Apart from the high demand from the of the marketing structure for individual items
construction and also other sectors, bottlenecks makes for an efficient and faster planning and
became an increasing problem within the logis- scheduling process.
tics sector as did delivery complications, leading With a view to optimising efficiency within
to a continuous increase in transport costs. The the buying process even further, we began
factors that were primarily the reason for this implementing a software solution for supply re-
were the serious shortage of lorry drivers across lationship management in mid-2018. Processes
the whole of Europe, the sharp increase in
diesel prices in the second half of the year, and The raw materials delivered for
the extension of the HGV toll on 1 July 2018 renders and paints are checked
to include federal highways in Germany as well at the quality lab.
as motorways. The situation was exacerbated
by the very low water levels in Germany's rivers
over the summer, which led to reduced produc-
tion at some supplier sites.
On the other hand, Sto was able to save on
electricity and gas costs in the energy sector.
The early price negotiations and conclusion of
contracts also played a crucial part in securing
these reductions.
Procurement management
The basis for uninterrupted security of supply at
all production locations of the Sto Group is pro-
active procurement management. This is based
on many years of close cooperation with sup-
pliers. The parent company Sto SE & Co. KGaA
acts as an internal service provider within the
Group for the professional procurement of cap-
ital goods, services, and consumables. In 2018,
41
were also improved for a defined set of product that handles all indirect material requirements
groups by incorporating the forecast from Sales with a standardised approval process across the
into planning at an early stage. As a result, we Group. It is also linked directly to the Group-
are able to achieve a high OTIF (on-time and wide SAP system.
in-full delivery) for Sto customers.
Twice a year, we perform a systematic
supplier evaluation at our key European Sto
D. Events after the
companies. This involves assessing the com- reporting period
panies based on the criteria of price, quality,
commercial cooperation, sustainability, and Between the end of the 2018 fiscal year and
supply conditions. The results are weighted in the point at which this report was signed off,
different ways and are condensed into a single there were no other events with a significant
key figure. The maximum score is 100; in the impact on the earnings, financial, and asset
case of Sto SE & Co. KGaA, the target score situation of the Sto Group.
was 90.0, as was the case in the previous year.
Its result of 87.2 (previous year: 87.5) meant
that it fell slightly below this value in the year
E. Risks and opportunities
under review. The main reasons for this were report
the aforementioned bottlenecks on the pro-
curement markets and transport market, which Risks and opportunities
led to delivery delays. As a company with an international orientation
Inventory ratios (average inventory in relation and business activities, Sto SE & Co. KGaA is
to annual sales) are agreed with the Sto sub- regularly confronted with opportunities and
sidiaries as part of Group-wide stock manage- risks. This means that managing these opportu-
ment. In 2018, these values ranged between nities and risks in a way that focuses on our ob-
3.0 % and 38.5 %, depending on whether the jectives is an integral part of our management
company concerned was a production and/or of the company, and is crucially important to
sales company. The process of defining the tar- ensuring that the Group follows a positive path
gets also involved analysing the relevant market over the long term. The risk strategy developed
conditions, such as product launches and logis- by STO Management SE, as the personally liable
tics-related changes. Higher stock values were partner of Sto SE & Co. KGaA, asks for oppor-
approved in cases where this was necessitated tunities that arise to be exploited with rigour,
by production-related or strategic stockpiling. while undertaking risks only where a commen-
Thanks to the Sto Group's consistent and pro- surate contribution to earnings can be expected
active approach to inventory management and and a threat to the company's existence can be
ongoing monitoring of materials with longer excluded. Generally speaking, we define risks
stock turnover periods, the targets were largely and opportunities as potential deviations from
met during the year under review. To prevent the planned result.
bottlenecks involving raw materials and trading The positive general economic conditions
goods, stocks on hand were increased during that we are currently experiencing in our
the course of the year in some cases. key markets are an opportunity to generate
In 2018, the Sto-eProcure system was also additional growth using our own resources.
launched at Sto Ges.m.b.H in Austria. Sto-ePro- The fact that we are well positioned in terms
cure is a transparent internal ordering system of technology, have once again managed to
42
improve the product range in comparison controlling department immediately of any new
with the previous year, and our close proxim- risks which are identified in the course of the
ity to customers and high customer retention year.
level should create favourable conditions for Sto works with internationally renowned
developing more strongly than the market as a insurance companies to insure material prop-
whole. erty and assets against loss and consequen-
tial business interruption caused by unfore-
Risk management system seeable events such as fire, explosion, or
The active management of risks is pursued at natural disasters. Third-party liability damage
Sto by means of a comprehensive risk manage- caused by Sto or Sto products is also covered by
ment system (RMS), which forms an integral insurance. We bear minor damage ourselves,
part of our business, planning, and control while maintaining a sufficiently high coverage
processes. This system allows us to identify and against major claims. In spite of our meticulous
analyse risks in good time, assess the expected approach, the insurance coverage may turn out
effects on the finance, income, and asset situ- to be insufficient in isolated cases. For this rea-
ation, and have the opportunity to implement son, we regularly review the insurance coverage
appropriate countermeasures where necessary. within the Group and perform risk analyses in
The most important component of the RMS order to reduce the risk of underinsurance. In
is a detailed reporting system, which records this area, we also seek the advice of an inter-
all operational activities in the Group both in nationally operating and experienced industry
terms of quantity and quality in accordance insurance broker.
with a specified scheme. Through constant
monitoring of clearly defined key figures, we Internal control system
can identify undesirable developments at an Risk and opportunity management in the
early stage and quickly initiate countermeas- Sto Group is extended to include an internal
ures. It is supplemented by a risk manual control system (ICS). This system covers all
defining various risk categories, guidelines for principles, procedures, and measures which are
assessing risks, and procedural instructions for intended to ensure the effectiveness, economic
every Group company. This manual is binding efficiency, and reliability of the Group account-
throughout the Group. These two instruments ing as well as compliance with the relevant
are complemented by an annual risk inventory, legal regulations. Additionally, the ICS includes
which is used to categorise and document all an internal monitoring system comprising
current risks on a timely basis. There are three in-process elements and elements independ-
risk categories based on a weighted value ent of the process concerned. One example of
indicating the level of damage that could be an important in-process measure is the 'dual
sustained: 'low', 'medium', and 'high'. The control principle', which is supplemented by
weighted damage value is calculated on the automated IT process controls.
basis of the likelihood of damage occurring The digitised accounting process is controlled
and the potential consequences for earnings. using the ERP software SAP, which has been
In terms of the likelihood of damage occur- implemented at most Sto companies. It records
ring, there are also three categories: 'below and processes all issues and data relevant to
30 %', '30 % to 60 %', and 'above 60 %'. The accounting. Sto SE & Co. KGaA has an elec-
managing director of the respective business tronic workflow in place for centralised invoice
unit is required to notify the central investment processing and archiving, and this has been
43
gradually rolled out to the majority of subsidi- The regular management meetings between
aries. Access to various types of data is clearly the Group management and the managing
regulated and corresponding access restrictions directors of the subsidiaries are a further impor-
are in place. tant element of the ICS. A meeting focusing on
A manual containing corporate accounting the annual financial statements takes place for
guidelines, which is regularly updated, provides each operationally active subsidiary between
the basis for drawing up the annual financial the local Management Board, representatives of
statements in accordance with IFRS, which Group Accounting or Investment Controlling,
must be included in the consolidated annual and, in most cases, the Chief Financial Officer
financial statement of the Sto Group. This en- of STO Management SE as a representative of
sures the uniform implementation of valuation the Group’s parent company. The local auditor
and reporting rules throughout the Group. All is also present at this meeting. Additionally, a
balance sheets as well as income and cash flow national control committee – such as the Board
statements drawn up by the subsidiaries and of Directors – or the Group auditor may partici-
other business fields are audited by the Group pate in the meeting if necessary.
accounting department and the central invest- The rules of procedure for managing
ment controlling department to verify that they directors in the Sto Group include mandatory
are correct, complete, and in compliance with rules for correct conduct of business processes,
the accounting guidelines. which must be adhered to throughout the
With regard to the consolidated account- Group.
ing process, the most important monitoring The transparency required for the increas-
measure independent of the business processes ingly complex corporate processes is ensured
concerned is auditing of the consolidated an- by the Internal Audit department, which also
nual financial statement of the Sto Group and makes allowance for the growing compliance
the incorporated separate financial statements requirements. As an independent department,
of the Group companies by an external Group Internal Audit reports directly to the personally
auditor. This ensures that inventories are taken liable partner and to the Chairman of the Su-
correctly and that assets and liabilities are as- pervisory Board. The extensive company compli-
sessed, valued, and reported appropriately. The ance system for monitoring adherence to legal
compulsory measures and accounting records requirements and internal corporate guidelines
additionally provide reliable and traceable is part of our risk management strategy. The
sources of information. Correct accounting is internal publication of the main features of our
also supported at Sto SE & Co. KGaA by the Compliance Management System in accord-
involvement of other auditing bodies such as ance with the latest recommendations of the
the tax audit authorities. German Corporate Governance Code was com-
We also ensure the correctness and reliability pleted at the beginning of the 2019 fiscal year.
of our accounting processes by applying specific In relation to this, a Chief Compliance Officer
key figure analyses, and through the processing was appointed for the Sto Group in 2018 and a
and control of complex business transactions by Code of Conduct was drawn up, the worldwide
different persons. The separation of administra- introduction of which is scheduled for 2019.
tive, executing, accounting, and approval func- The end of 2017 saw the launch of a stand-
tions, and the performance of these functions ardised whistle-blower system for compliance
by multiple persons ('dual control principle') breaches. This is now publicly accessible via our
also reduces the attendant risks. website, www.sto.de, and not only gives whis-
44
tle-blowers the necessary protection against losses which may not be fully recovered due to
sanctions, but also provides a platform on limited processing capacity. The same applies
which inappropriate practice can be reported, to sustained periods of rainfall and hot spells.
extensively investigated, and resolved – around Conversely, favourable weather conditions can
the clock and with anonymity guaranteed if have a positive effect on business development.
required. The system is open to employees, In most cases, weather-related fluctuations in
managers, customers, suppliers, and other turnover also have a significant impact on earn-
stakeholders alike. It is administered by an ings. Measured in relation to the profit obtained
independent operator and its data is stored in a year with average weather conditions, they
on protected servers located in Germany. The may, in extreme cases, cause earnings before
contents of the reports are processed exclusively interest and taxes (EBIT) to increase or decrease
through Sto. by as much as EUR 30 million.
The effectiveness of the RMS and ICS is reg-
ularly examined in accordance with the relevant Risks in procuring raw materials and exter-
statutory requirements – externally by our au- nal products
ditor in relation to the accounting process and To manufacture its products, the Sto Group
internally by the Investment Controlling, Group uses raw materials such as lime, marble and
Accounting, and Internal Audit departments. quartz sands, cement, pigments, silicates, sili-
The Supervisory Board and, in particular, the cones, and water-based dispersion agents. Risks
Audit Committee receive regular information could arise from the concentration tendencies
from the Executive Board of STO Management on procurement markets, as well as from politi-
SE as well as the auditor and Internal Revision. cal unrest, additional trade barriers, and natural
Despite every care being taken to prevent disasters.
them, it is not possible to completely rule out There is a price dependency in products that
the occurrence of decisions based on personal we produce ourselves and external products
judgements, flawed checks, criminal actions that are made of raw materials based on crude
by individuals, or other circumstances that oil; these include paints, renders, and polysty-
may impair the effectiveness and reliability of rene insulation boards, for example, and even
the deployed ICS. Additionally, even seamless our plastic containers (such as Sto pails). The
application of the deployed systems cannot fully trend regarding these basic raw materials gen-
guarantee the correct, complete, and timely erally used to correlate closely with the price of
recording and reporting of facts in the Group crude oil. Since then it has become clear that an
accounting. independent, highly volatile trend is emerging –
The main risks for the Sto Group are pre- often influenced by global supply and demand.
sented below in order of decreasing signifi- The demand for numerous speciality chemi-
cance: cals, for which there is a dwindling number of
available suppliers around the world, is also set
Dependence on weather conditions to increase further in the long run – particularly
A major proportion of Sto’s products is used on in emerging and developing countries. This will
the exterior. This means that their application is affect titanium dioxide, for example. In the me-
dependent on weather conditions, something dium to long term, the price trend is expected
that Sto is unable to influence. In particular, to continue climbing sharply.
harsh and long winters at the beginning and/ In the Sto Group, strong increases in pro-
or end of a calendar year may result in turnover curement prices could trigger a significant rise
45
in material costs. As it is not usually possible some cases, highly exaggerated media reports.
to pass price increases on to customers in the The fact that energy prices are currently still
short term, this results in a rise in the cost of relatively low is not very conducive to generat-
sales percentage. Based on our experience, ing demand. Hence, the entire industrial sector
costs of sales can increase by up to 2 percent- faces the risk of failing to fully exploit sales
age points, which in turn can result in a decline potential. As the market leader, Sto may feel
in earnings of as much as EUR 27 million. an above-average impact, which in turn may
As well as this, a rise in demand for certain be reflected in corresponding levels of turnover
raw materials and goods could trigger supply and income losses.
shortages. We confront the resulting risks Qualitätsgedämmt e.V., an association
through advance procurement as well as early founded by German family-owned businesses
contracts with our partners and suppliers. Ad- of which Sto is also a member, holds the belief
ditionally, the Sto divisions involved in procure- that it is possible to bolster the confidence of
ment, R&D, and production continually work to users and investors in the long term by provid-
optimise the use of materials and make it more ing them with objective information and clear
flexible in order to ensure a sustainable supply explanations of the product properties that fa-
of the raw materials that are needed. To this cade systems offer. Additionally, this sales risk is
end, alternative materials and suppliers are also mitigated by Sto’s success in regional diversifica-
taken into consideration. tion and the long-term upward trend in energy
In view of the number of items we handle prices, which has made facade insulation an
and our procurement volume, external products appealing prospect from a financial perspective.
are becoming increasingly important to Sto. The decision-makers’ commitment to adhere
For this reason, we have established an inde- to the targets of achieving energy savings and
pendent group focusing on quality assurance CO2 reductions increases the opportunities for
for these products, which is to be gradually launching relevant incentive measures and for
expanded. In addition to actually monitoring achieving better environmental conditions.
the quality of external products, we are also Sto responds to the conflicting and, in some
ramping up our efforts to conclude quality cases, highly exaggerated media reports with
agreements with specific terms and carry out objective, fact-based communication, additional
supplier audits. quality measures as well as a quality manage-
ment system that far exceeds the standard level
Sales risks on the market.
As things currently stand, we do not expect We counter the risk of external wall insula-
future sales of Sto products to present any tion systems being substituted with competing
significant risks over the long term, as the sales products by continually developing the quality,
potential of facade systems should in principle safety, environmental compatibility, and effi-
remain high thanks to a healthy stock of older ciency of our solutions. Inherent system weak-
buildings. Nevertheless, the public debate being nesses can be recognised through the analysis
held in Germany on the general advantages of of product life cycles, allowing deficiencies that
facade insulation systems and their ecological arise over time to be detected and eliminated.
impact, has caused investors and, in particu- Continuing technical progress and the knowl-
lar, private building owners to adopt a very edge derived from this enable Sto to further
cautious attitude. These feelings of uncertainty develop and improve products and systems.
have been fuelled further by conflicting and, in
46
Overall economic and industry-specific of product life cycles contributes to a higher

risks risktransparency.
The Sto Group with its facade systems and At the same time, however, innovations can
coatings is dependent on the underlying trends involve risks. While new Sto products or product
in the construction industry to a substantial versions are only ever launched on the market
degree. Demand in Germany – which remains once they have undergone extensive testing, it
Sto’s largest individual market – plays an im- is not possible to completely rule out the pos-
portant role in this. Here, the sale of building sibility of warranty claims being made against
products responds directly to the general level Group companies. We reserve the right to react
of economic activity as well as to general eco- appropriately to recognised risks through ade-
nomic and tax-related conditions. A continued quate innovations, modification of mature prod-
downswing in the main German construction ucts, or the adjustment of relevant processes.
sector may lead to high levels of surplus capac- Where the media reports on systems that
ity and intense competition accompanied by use EPS insulation boards are concerned, at
strongly declining prices. On the other hand, present the Sto Group does not believe that
a sharp rise in demand would be accompa- there are any significant risks of liability arising
nied by the risk that it may not be possible to from past or future activities. It is particularly
exploit sales potential to its full extent, at least worth noting that every case investigated by
over the short term, due to factors such as Sto has met the thermal conductivity (U-value)
limited capacity in traditional trade enterprises. specifications stipulated in the German Energy
We counter this economy-based risk mainly Saving Ordinance (EnEV) or funding guidelines.
through internationalisation of our business Sto’s comprehensive quality assurance measures
activities, which ensures regional diversification ensure that our EPS facade insulation boards
and makes us more independent of fluctuations meet our stringent quality requirements, and
in specific countries. This also puts us in a posi- will continue to do so in the future.
tion to reduce subsidiary risks for the Sto Group The US insurance industry currently does not
resulting from market interest rate changes: offer any sufficiently comprehensive and eco-
significant rises in interest can result in a decline nomically viable insurance coverage for product
in building investments. risks of facade systems and coatings. The
On top of that, difficulties in the recruitment effects of potential damages or liability claims
of craftsmen could potentially restrict the capac- in the USA on the finance and income situation
ity of trade enterprises. We are doing everything of the Sto Group cannot be assessed reliably on
we can to counter these risks through the var- account of the country’s legal system. In order
ied activities of the Sto Foundation and the Sto to further limit the risks inherent in our activities
Group that are aimed at arming Sto customers abroad, we engage the services of external
with the qualifications they need. consultants during decision-making procedures,
where necessary. This also applies to technical
Warranty-related and legal risks matters.
Ongoing research and development activities, As the range of products we provide is
and the introduction of innovations, are of stra- rounded off by supplementary services, Sto is
tegic importance for the Sto Group. These open exposed to legal risk in the form of liability as-
up opportunities to develop additional markets sociated with consultancy services. For example,
and buyer groups, and to reinforce the loyalty employees of Sto SE & Co. KGaA provide our
of existing customers. In addition, the analysis customers with support in relation to tenders,
47
quotations, technical issues, and building There is a particular need for cash in the first
design details. Sto’s in-house Liability Directive few months of a calendar year, whereas cash
instructs all employees on how to handle such inflows dominate during the second half of
issues both internally and in their dealings with the year. Risks arising from these fluctuations
customers. This clear set of guidelines has led to in payment flows are limited at Sto by the
a marked reduction in risks. available liquid funds. In addition, Sto has at
Risks can arise due to changes in general its disposal an adequate and contractually
legal conditions, such as a change to classifica- guaranteed variable credit facility as part of
tion and labelling obligations. One of the ways a syndicated loan agreement, amounting to
in which we counter these risks is by qualifying EUR 100 million.
alternative raw materials. In order to reduce our exposure to liquidity
risks, we also maintain intensive communication
Financial risks with our banks and operate an active financial
In times of recession, there is an increased risk management system. This includes the use of
of default on receivables. To limit the finan- derivatives in the form of interest swaps as a
cial consequences potentially arising from means of reducing the risk of changes in inter-
this, a credit management system has been est rates in the case of long-term, interest-bear-
implemented in the Sto Group. This takes into ing liabilities to banks.
account the specific conditions prevailing in Sto’s treasury activities have been pooled and
individual countries. In Germany, the most are handled in an independent department.
important component of the system in place is This measure strengthens the recognition and
a set of rules containing guidelines for granting control of financial resources for internal and
and monitoring merchandise credits. Consistent external financing as well as financial risk man-
application of these rules will allow us to keep agement. Hedging strategies and clear rules for
the default quota at a low level even during financial investments, foreign exchange transac-
difficult economic times. tions, and internal and external financing have
As a result of the internationalisation of its been defined and introduced across the Group
business activities, Sto is exposed to currency worldwide. In the year under review, the struc-
risks. We control these risks by means of tures and processes underwent further improve-
currency hedges. Relevant risks from foreign ment and the financing costs were optimised.
currency cash flows are analysed, recorded, and Work began on implementing a central treasury
reduced by applying suitable hedging meas- management system across the Group, along
ures; these processes take place throughout with Group-wide implementation of a payment
the Group. Our main focus is on the currencies transaction system integrated into SAP. The aim
of countries where we do not have produc- here is to further improve transparency and
tion equipment, i.e. where regular supply and security. The key features of a treasury guideline
cash flows are necessary to maintain business with a modular structure have been sketched
operations. In 2018, this applied to countries out, with step-by-step expansion and imple-
such as Switzerland, Canada, and the United mentation of the guideline set to take place.
Kingdom. In specific cases and where necessary,
we perform additional hedging. IT risks
As a result of seasonal variability, the de- A global company like Sto can only be man-
mand for liquidity to finance current business aged with the support of complex IT systems.
at Sto is subject to significant fluctuations. SAP is the central system used within the Sto
48
Group. Serious malfunctions like system fail- systems. This is regulated by a comprehen-
ures, attacks on networks, and loss or manip- sive IT Policy, with the least privilege principle
ulation of data have the potential to endanger applying in each and every case. What is more,
Sto’s supply readiness and result in declines in Sto makes use of services by the Cyber Security
turnover. Competence Center, provided by the federal
The use of Internet-based systems and cloud- association VOICE, in order to stay constantly
based services is growing, and this is imposing abreast of the latest information concerning
a significant duty of care on us when it comes prevailing threats.
to integrating information flows and developing
our own cloud-based solutions. We have made Availability:
some preparations for the hybrid IT architecture The redundant configuration of all core opera-
that we are aiming to have in place so that tional systems and network connections ensures
the systems we use will be able to handle Sto maximum availability for all key business pro-
information securely. cesses. An automated monitoring system serves
The significant increase in threats such as to continuously monitor system availability. We
those posed by phishing, ransomware or Tro- counteract risks that might result from difficulty
jans makes it necessary to intensify our training in replacing hardware components or the inabil-
measures for employees. Therefore, warnings ity to update software using a gradual strategy
and recommended courses of action are pub- of modernising infrastructure in the computing
lished on a regular basis within Sto’s internal centre and as part of our 'Retrofit' programme.
communication channels. In order to meet the requirements of Industry
4.0 activities in terms of security, the production
Continuity: areas are kept separate from core systems by
The core systems necessary to the company’s using special security systems that permit the
operating business, such as SAP and Lotus flow of required data only.
Notes, are deployed in redundant and fully vir-
tualised form. This ensures maximum continuity Human resources risks
of the systems and the appurtenant services. In The expertise and dedication of Sto employ-
2016, a new, state-of-the-art data centre was ees are amongst the key building blocks of
put into operation. This ensures ample separa- corporate success. If, in the light of competition
tion between the redundant data centres. The for skilled specialists and managers, we do not
data on the core systems are backed up daily succeed in recruiting appropriate personnel,
and stored separately. this may have a negative impact on our future
corporate development. This risk may become
Integrity: even more serious in the medium to long term
To prevent unauthorised access to the infor- due to demographic trends, particularly in west-
mation systems of Sto SE & Co. KGaA, we use ern industrialised countries. Not only could the
technological security systems that are available pool of talented young professionals become
on the market wherever possible. Alongside this smaller, but many people may also leave the
multiple-step architecture, we also counter the company for reasons of age which would entail
risk by adopting a restrictive approach to issuing loss of knowledge.
access authorisation and prohibiting the storage Sto SE & Co. KGaA implements numerous
of company-related information in unauthor- measures to eliminate these risks and position
ised, unprotected areas, such as Internet cloud itself as an attractive employer. For example, we
49
provide extensive career development opportu- Sto also operates in countries with complex
nities as well as excellent further and advanced tax regulations which could be interpreted in
training, and we take steps to make achieving various different ways. Any future interpretation
a good work-life balance easier. This enables us or development of the tax system could impact
to win over new professionals and executives, tax liabilities, profitability, and business activities.
as well as foster the sense of loyalty felt by Sto is subject to regular audits by financial
those already working for the Sto Group. authorities in relation to taxes and levies. Tax
and duty-related risks are identified and evalu-
Environmental risks ated on an ongoing basis with the support of
Production at Sto takes place in modern, largely local, external tax specialists.
automated plants. This means that manufactur-
ing processes pose only minor environmental Opportunities and risks for business
risks. We have also implemented an environ- development in 2019
mental management system in the Group Predictions on future business development
which is geared to international standards. are generally subject to major uncertainty. At
More information about our environmental pro- Sto, one of the major factors to account for is
tection measures can be found in the section the set of highly volatile general conditions to
entitled 'Production and procurement' and in which the international construction industry
the Sustainability Report in this Annual Report. is exposed. Furthermore, our planning is based
both on our own forecasts concerning trends
Risks concerning processes and added in currencies that are relevant to Sto, which
value may also be subject to significant fluctuations,
Events outside of our control, such as natural and on the assumption that a stable political
disasters or other incidents such as fire, can environment will prevail. Should these premises
heavily compromise production or operating prove incorrect, however, then expectations for
processes in particular. This could in turn lead to 2019 may deviate from the actual situation.
bottlenecks or even stoppages resulting in a de- Additionally, the risks presented may bring
viation from planned production volumes. We about some short-term influencing factors that
counteract such risks by introducing fire precau- may have either a positive or a negative effect
tions, for example, and – when financially viable on Sto’s development. Currently, this includes
– by taking out insurance coverage. the ongoing controversial debate surrounding
the ecological impacts, fire protection issues,
Tax-related risks and efficiency associated with facade systems,
As a company operating worldwide, Sto is and surrounding building culture in general.
subject to different tax legislations and regula- This debate is continuing with no end in sight
tions in various countries. Any changes to these in the foreseeable future. With this in mind, it
tax rules may lead to higher tax expenses and is not possible to make a reliable prediction of
payments. In addition, changes to laws and how EWIS sales will develop. If there are further
regulations can have a significant impact on declines, Sto will be particularly heavily affected
tax demands and liabilities, and on deferred tax given its position as a market-leading company.
assets and liabilities of the company. Moreover, The issue of sovereign debt within the eu-
uncertainty in terms of tax in some regions can rozone continues to have risks associated with
restrict the company's ability to exercise its own it. Fundamental challenges such as huge debt
rights. levels and a loss of trust in some countries have
50
yet to reach a satisfactory conclusion, or any have the corresponding effect and facade prod-
conclusion at all, meaning that the possibility uct manufacturers may not be compensated for
of a resurgence in the financial and economic the advance expenses they have incurred. Delays
crisis cannot be ruled out altogether. in decisions on the policies underpinning these
Other uncertain factors are the effects of the measures also exacerbate the risk to which pro-
austerity measures that local authorities are tak- viders are exposed, as potential building owners
ing in various European nations (in some cases, may refrain from making investments, resulting
on a significant scale) as part of fiscal consolida- in temporary demand shortfalls.
tion efforts. In the affected countries, this could Provided that the economy performs better
result in a decline in construction investments in than expected in regions where we only make
the public sector. plans with a great degree of caution, 2019 will
If the global economy fares better in 2019 see opportunities for business development.
than research institutes have predicted, the Targeted internationalisation of our activities
demand for raw materials may rise at a dispro- will also open up opportunities for growth,
portionate rate and lead to sharp non-sched- arising from exploiting new markets as well as
uled price increases. These higher costs could from more intensive development in countries
be offset by turnover effects resulting from in which we are already represented.
higher demand for construction services and by In the long term, we estimate that opportu-
passing on the costs in the form of higher sales nities for Sto will outweigh the risks. The need
prices. Additionally, opportunities could arise if to install energy efficiency measures within
raw materials prices develop more favourably buildings in order to reduce CO2 emissions is
than assumed in our forecasts. set to rise. Furthermore, decision-makers in the
Energy prices, including in particular the area of climate protection are now speaking
price of crude oil, may lead to risks or opportu- with one voice. As we also expect to see prices
nities depending on trends going forward, since for key fossil fuels to escalate again in the me-
this will have an impact on the time it takes for dium term, we believe that facade systems will
energy investments to pay off. become increasingly appealing from a financial
The dependency of the construction industry perspective as well. For Sto, as the leading man-
on the weather remains a significant element ufacturer of external wall insulation systems,
of uncertainty. Despite technological progress, this means additional sales potential.
extreme weather conditions can still prove a
hindrance for construction activities. Conversely, Overall risk exposure
favourable conditions in the winter months, in The risks are listed below in descending order
which work on the construction site is often not according to their potential impact on earnings
possible, can have a positive impact on turnover and have been categorised on the basis of their
and earnings. weighted damage value:
Government funding has shown to have a
positive impact on the sale of facade systems. Risk type Risk
Therefore, Sto can expect opportunities to arise category
when new programmes are launched or existing
Dependence on weather
ones are extended. This does, however, require
conditions high
these incentive measures to be designed in a
transparent way that is tailored to the relevant Risks in procuring raw materials
target groups. Otherwise, the measures may not and external products high
51
Growth of 2.0 % is forecast for the indus-

Risk type Risk
trial nations as a whole, and the USA will be
category
the biggest contributor to this if it grows by
Sales risks average the expected figure of 2.5 %. As things cur-
Overall economic and rently stand, the eurozone and Japan are – by
industry-specific risks average contrast – set to see below-average expansion
Warranty-related and legal risks average of 1.6 % and 1.1 % respectively. The devel-
oping and emerging countries are expected
Financial risks average
to grow by a total of 4.5 %. This will primarily
IT risks average
be driven by India and also by China, which is
Human resources risks low still likely to experience above-average growth
Environmental risks low in spite of the anticipated slowdown. The IMF
Risks concerning processes anticipates a significant revival of the economy
and added value low in Brazil. Meanwhile, the Russian economy
Tax-related risks low is – once again – expected to expand only
slightly, and the Turkish economy to stagnate
The assessment of the overall risk for the Sto completely.
Group is carried out using our risk management As things currently stand, Germany is ex-
system. Following the assessment of current pected to suffer an economic downswing as a
and potential future individual risks, and taking result of the weaker global economy and Brexit,
into account the countermeasures already among other factors. The German Federal Gov-
initiated, the Executive Board of the personally ernment has significantly adjusted its forecast
liable partner STO Management SE and the downward for the current year and is now only
Supervisory Board have come to the conclusion expecting to see growth of 1.0 %. As recently
that no assessable risks are discernible at pres- as the autumn, an increase of 1.8 % was still
ent that could have enduring and significant on the horizon.
adverse consequences for the asset, income,
and finance situation of the Sto Group. Trends for the international construction
industry
F. Outlook report In the opinion of the EUROCONSTRUCT net-
work, the European construction industry
Global economy will continue to expand until 2021, although
The many economic and political uncertainties there will be a gradual decrease in the growth
have dampened the outlook for the global rate. Growth is likely to decline significantly in
economy in 2019. At the beginning of the the areas of new residential construction and
year, the International Monetary Fund revised renovation, in particular. Meanwhile, the civil
its forecast for global economic growth from engineering sector is expected to see a higher
3.7 % down to 3.5 % accordingly. The biggest percentage rate of growth over the next few
risks include the trade disputes between the US years. In the view of the EUROCONSTRUCT
and China, and the US and Europe, US tariffs, experts, the total volume of construction will in-
increasing protectionism, and the decrease in crease by 2.0 % in 2019. They are expecting to
economic momentum in China. Brexit and the see increases of 1.1 % for residential construc-
general conditions in Italy and France could also tion, 1.5 % for non-residential construction,
have a dampening effect on the economy. and 4,5 % for civil engineering.
52
The HDB and ZDB associations believe that The current reporting period got off to a
construction activity in Germany will con- good start thanks to the much better weather
tinue to experience a high level of growth in conditions than the previous year. Overall,
2019. Once again, they are expecting to see a consolidated turnover thus exceeded typical
nominal sales growth rate of 6 % in the main seasonal expectations during the first three
construction sector. In light of this, an increase months.
of 5.5 % is expected in residential construction, As things stand, consolidated earnings
and turnover in both commercial construction before interest and taxes (EBIT) are likely
and public-sector construction is likely to rise by to amount to between EUR 81 million and
6 %. EUR 90 million in 2019, and earnings before
As things currently stand, the US construction taxes (EBT) to between EUR 78 million and
industry is expected to grow slightly less strongly EUR 88 million. Where the resulting return on
in 2019 than in the previous year. According to sales is concerned, we are likely to see a value
GTAI, building investments are set to increase by between 5.6 % and 6.3 %. After allowing for
around 5 %. Construction consultants Dodge the application of IFRS 16, we expect the return
Data & Analytics expect growth to slow down in on capital employed (ROCE) to be between
virtually every category of real estate, including 13.0 % and 14.6 %.
residential buildings, retail facilities, and ware- This forecast is based on the expectation
houses. At best, a slight increase in growth can that the global economy will grow, and that
be expected in office space construction. How- the volume of construction will increase glob-
ever, if additional trade tariffs are introduced, ally as suggested, thereby providing a solid
this could dampen the forecast. foundation for positive development of the
It is likely that the construction industry Sto Group throughout the world. We are also
in China will be able to continue its positive assuming that we will largely be able to offset
growth in 2019 in spite of the weakening further increases in the costs of procuring raw
economy. This is mainly attributable to the materials and external products in 2019 by
full order books. According to GTAI, 18 % higher sales prices for our customers. We are
more residential building projects were started also assuming a largely stable euro rate. From
between January and July 2018 than during our perspective, there are various uncertainties
the corresponding period of the previous year as a result of the many economic risk factors,
when measured by the amount of living space. particularly in the USA, China, and specific
Prices are continuing to increase drastically and European countries.
although this is resulting in a further drop in The United Kingdom’s exit from the EU may
momentum, the lack of investment options have a negative impact on sales figures in the
means that the Chinese real estate market country. We are paying close attention to the
should still develop positively. exit negotiations that are currently under way.
However, we believe that Brexit will not have a
Projected performance of the Sto Group significant impact on Sto for reasons including
Assuming normal weather conditions, Sto the relatively low business volume that the
expects business development to remain pos- United Kingdom accounts for.
itive in the 2019 fiscal year. Group turnover In the area of facade systems, we expect the
is expected to increase by 4.1 % to around business volume to continue growing in 2019.
EUR 1,387 million, with growth rates falling in The objective advantages offered by energy-re-
the mid-single digit range in all segments. lated facade insulation hold significant potential
53
for EWIS sales across the globe. With this in Once again, we are expecting procurement
mind, our range of products meets the very bottlenecks to occur in 2019, although the
highest quality standards in terms of insulating tense situation linked to the high level of de-
performance, ecology, cost-effectiveness, fire mand should improve slightly compared to the
protection, durability, and design freedom. previous year. We are expecting further price
However, the ongoing debate on the use of ex- increases, particularly in relation to insulants,
ternal wall insulation systems in Germany may organic binding agents and additives, as well as
have a negative impact on the industry sector freight costs.
and on Sto as the market leader. We have planned a budget of around
Another aspect that remains unclear is what EUR 43 million for investments in property,
the political landscape is going to look like in plant, and equipment, and Intangible assets in
terms of implementing climate protection meas- 2019 (without including the right-of-use assets
ures and promoting energy efficiency. Although according to IFRS 16). The main focal points in-
the need for action was once again affirmed at clude the planned construction of a new logis-
the International Climate Conference held in tics building at Südwest Lacke + Farben GmbH
the Polish city of Katowice at the end of 2018, & Co. KG in Böhl-Iggelheim/Germany. The aim
the agreed compromise on limiting the increase here is to improve the efficiency of logistics at
in global warming does not contain any con- the site as well as that of the finished goods
crete steps. Nor has Germany yet managed to and raw materials warehouses. Moreover, we
define how the climate targets laid down at the will once again be investing in the long-term
United Nations Climate Change Conference in measures that have been developed as part
Katowice are to be achieved. of our 'Retrofit' programme for modernising/
We remain in a very competitive position in replacing the production equipment within
our other product areas too, and believe that the Group. In addition, we will be continuing
we will see a growth in business volume here with the Group production control automation
in 2019. In our view, the greatest potential for programme that has been running for several
growth lies in interior coatings within the inte- years.
rior products range. In the HR area, we are planning to slightly
With economic effect from 1 January 2019, increase the number of employees in line
Sto SE & Co. KGaA acquired 100 % of the with the company's growth targets. New
limited partnership shares of Liaver GmbH & appointments are planned in countries with
Co. KG as well as all company shares of Liaver medium-term growth prospects. Meanwhile,
Beteiligungen GmbH. The company is located targeted restructuring measures are once again
in Ilmenau, a city in the German state of Thur- likely at companies battling difficult general
ingia, and the process of fully consolidating it economic conditions. The HR strategy will
will commence from the current year. It is one remain in place without any changes. In 2019,
of the few German manufacturers of expanded the focus will be on the scheduled Group-wide
glass granulates made from recycled waste employee survey, and on the managerial devel-
glass. In addition, Liaver has earned itself a solid opment that will allow us to rigorously exploit
international position as an innovative supplier and develop the potential that exists within the
thanks to its highly sound-absorbing, non-com- international organisation.
bustible, and fibre-free acoustic products. Thus, Turning to the area of financing, we do
it is expanding Sto's technological expertise in not currently have any extraordinary measures
this business area. planned for 2019.
54
Review of strategic direction for achieving these aims, and by introducing

The Sto Group has enjoyed long-term success the review of our strategic direction we have
throughout its corporate history. With a view put ourselves firmly on the right track at an
to sustaining this in the years to come, we early stage.
have decided to start reviewing our strategic
direction and aligning it with the challenges General statement on future development
and opportunities for Sto, some of which are Sto is one of the leading providers of high-qual-
new. In 2019 and the years that follow, we will ity facade systems and coatings with an
be fine-tuning our approach on the market side outstanding brand in the industry, an exten-
accordingly and, in particular, intend to improve sive, top-quality product range that takes
profitability. Our primary aim of achieving account of various regional and quality-based
Group-wide income-oriented growth remains requirements, an excellent position on the
unchanged. international stage, and a strong capacity for in-
Key measures in 2019 will include continu- novation. We set the pace of technology in the
ing projects launched during the New Balance industrial sector and want to reinforce this po-
programme, which have already produced sition over the long term. The factors that rein-
positive effects on the market side in 2018. force the success we have had in our corporate
After a thorough analysis, we have defined development include our extensive sales base
promising areas of growth within which we are and our well-qualified, dedicated workforce.
targeting investments, are increasingly gearing For 2019, we are anticipating a 4.1 % growth
our worldwide sales activities towards target- in turnover and an EBIT of between EUR 81 mil-
group-based segmentation, and have thus lion and EUR 91 million. We also believe that
begun to optimise our process organisation. In we will be able to strengthen our robust asset
addition, we intend to improve our transaction and financial situation even more.
and project activities.
Alongside the growth initiatives, one of our Stühlingen/Germany, April 2019
top priorities is to increase the gross profit mar-
gin within the Group in the short term. To this Sto SE & Co. KGaA
end, we intend to tap optimisation potential represented by STO Management SE
in every area of the company – from adjusting Executive Board
the sales prices based on efficiency-enhancing
measures in procurement and development
right through to optimising the product mix. By
concentrating on higher-margin offers and mar-
kets, we aim to free up the resources required
to bring about an improvement in the quality of
our earnings.
We continue to aim for an increase in
turnover to EUR 2 billion as well as improved
profitability by 2022. In addition to relying on
organic growth, we intend to make selective
acquisitions where the right opportunities arise.
Our strong market position and our success fac-
tors provide us with an excellent starting point
55
Sto SE & Co. KGaA | The Sto share
The Sto share
Sto limited preference share data 2018 on the stock markets

Stock markets showed a disappointing devel-
Ticker symbol STO3 opment in 2018. All major indexes worldwide
suffered losses for a variety of reasons. These
ISIN DE0007274136
reasons included the continuous decline in
WKN 727413 early indicators in the euro zone, the ECB's
Share category Non-voting decision to end its bond purchase programme,
preference share political uncertainty with regard to Brexit and
Italy, interest rate hikes by the US Federal
Market segment Regulated market Reserve, weakening growth in China, and the
Level of transparency General Standard trade war between the USA and China. The
Euro Stoxx 50, which is heavily dependent
German Securities Exchange
on world trade, lost around 15 % of its value
sector Consumer
in the year-end comparison, the American
German Securities Exchange Home Construction Dow Jones Industrial Index over 6 %, and the
subsector & Furnishings Chinese leading index Shanghai Composite just
Number of limited under 25 %.
preference shares 2,538,000 The DAX was at the bottom of the Western
European share indexes, falling by 18.3 %
Number of non-listed limited
in its first year of losses since 2011. In 2018,
ordinary shares 4,320,000
the German stock market barometer, which
Share price trend for 2018

(indexed on 30 December 2017 = 100)
120
S to limited preference
shares 110
DAX
D AXsector 100
Construction
90
80
70
60
50
40
Jan. Feb. March April May June July Aug. Sept. Oct. Nov. Dec.
56
The Sto share | Sto SE & Co. KGaA
is dependent on foreign trade, suffered dis- Sto limited preference share

proportionately from the trade conflict and key figures
the concerns that arose in the course of the Values per share in euros
year about a global economic slowdown. The
2018 2017
outperformance of German second-line stocks
that had lasted several years also came to an Earnings per preference share 8.39 8.68
end for the time being with the global decline Cash flow from current
in share prices in autumn of 2018. Due in par- operating activities 12.56 13.46
ticular to a very weak fourth quarter, the SDAX Equity 74.31 70.04
recorded a loss of around 20 % at the end
Dividend payout per limited
of the year. Construction stocks in Germany
preference share
recorded an even more pronounced decline:
Dividend 0.31 0.31
the Construction sector index of the Frankfurt Bonus + 3.78 + 3.78
Stock Exchange dropped by around 36 %.
Share price at year end* 82.00 125.90
Sto share declines significantly Year high* 128.00 132.00

The difficult environment in 2018 also im- Year low* 79.20 90.00
pacted the rate of the Sto share. Year-on-year, PER (31 Dec) 9.77 14.51
the stock went down in value by 34.9 %. After PER (high) 15.26 15.21
a stable start to the year, the highest price in
PER (low) 9.44 10.37
2018 of EUR 128.00 was already achieved at
the end of January. This was followed by a de- Capitalisation of preference shares
scent until the lowest price of EUR 79.20 was on 31 Dec (in EUR millions) 208.1 319.5
reached on 18 December. At the end of 2018,
* XETRA closing price
the share was listed at EUR 82.00.
The market capitalisation of around Diluted and basic earnings were EUR 8.39
2.538 million Sto limited preference shares per limited preference share (previous year:
hence significantly decreased from approx. EUR 8.68) and EUR 8.33 per limited ordinary
EUR 319.5 million on 31 December 2017 to share (previous year: EUR 8.62).
EUR 208.1 million at the end of the year under In 2018, the parent company Sto SE & Co.
review. KGaA reported earnings before income taxes
(HGB) of EUR 59.3 million and a net profit for
Income situation burdened by high the year of EUR 40.8 million. Through its Exec-
procurement costs utive Board, the personally liable partner STO
In 2018, Sto SE & Co. KGaA’s consolidated Management SE will propose a total dividend
turnover rose by 4.3 % to EUR 1,332.4 mil- payout, which is unchanged compared to the
lion. Consolidated earnings were affected previous year, of EUR 26,049,060.00 to the
by significant cost increases in procurement Annual General Meeting on 19 June 2019. This
which could not be offset by raising the sales means that limited preference shareholders will
prices and saving on other expense items. In receive an ordinary dividend of EUR 0.31 and a
total, consolidated EBIT decreased by 2.5 % to bonus of EUR 3.78 per share. Limited ordinary
EUR 81.9 million as compared to the previous shareholders will be paid an ordinary dividend
year, and the consolidated net profit for the of EUR 0.25 as well as a bonus of EUR 3.78 per
year declined by 3.6 % to EUR 53.8 million. share.
57
Sto SE & Co. KGaA | The Sto share
Based on the 2018 closing price of

EUR 82.00, the proposal would result in
a dividend yield of 5.0 % per preference
share. Based on the closing price for 2017 of
EUR 125.90, this means a yield of 3.3 %.
Trading volume in 2018

The number of Sto SE & Co. KGaA limited
preference shares that were traded in the
XETRA electronic system of the Frankfurt Stock
Exchange in the 2018 fiscal year went down to
541,693, compared with 707,045 shares in the
previous year.
Shareholder structure
As at 31 December 2018, it is estimated that
more than 50 % of the 2.538 million Sto
limited preference shares were in the hands of
institutional investors. The remaining shares
were free float. The number of non-listed
limited ordinary shares remained unaltered at
4.32 million. 90 % of these were held by the
Stotmeister family via Stotmeister Beteiligungs
GmbH. As at the reference date, the remaining
10 % were held by Sto SE & Co. KGaA.
58
The Sto share | Sto SE & Co. KGaA
59
Sto SE & Co. KGaA | Sustainability and Corporate Social Responsibility
Sustainability and Corporate Social Responsibility
This report presents the combined non-financial optimised for home and office interiors, deco-
declaration of the Sto Group and Sto SE & Co. rative coatings, interior claddings, and acoustic
KGaA in accordance with Sections 289b and systems for regulating sound. Furthermore, Sto
315b of the HGB (German Commercial Code). produces and sells high-quality floor coatings
It complements the Group management report and products for concrete repair which are
and the management report of Sto SE & Co. attributed to Other product groups.
KGaA for 2018, which is part of this Annual In terms of regions, business activities of
Report and is available on the website www. the Sto Group are divided into the segments
sto.de. of Western Europe and Other, with the
The non-financial declaration provides infor- latter being broken down into the regions of
mation on the major factors in the five areas Northern/Eastern Europe and America/Asia
of environmental matters, employee matters, within the internal reporting framework. Our
social matters, respect for human rights as well corporate management is primarily focused on
the combating of corruption and bribery. The these regions.
declaration is based on the ten principles of the The Sto business model is oriented towards
UN Global Compact and describes the corre- long-term success. The corporate vision is to
sponding measures, results, and potential risks. be the worldwide technology leader in the
sustainable design of living space tailored to
human needs. The key foundation for long-
Part A term success is sustainable and solid econom-
ics, constant progress, and a financially sound
Business model and sustain- footing.
ability management at Sto Detailed information on the structure,
strategy, and the competitive situation of the
Sto Group and the segments is available in the
The Sto Group Group management report.
Sto SE & Co. KGaA specialises in products and
systems for building coatings and is one of the Assuming responsibility
most important global manufacturers in this Sustainability and Corporate Social Responsi-
industrial sector. In the 2018 fiscal year, the bility (CSR) have been important topics for Sto
Group, which is listed on the regulated market ever since the company was founded, and they
of the German stock exchange, had 5,333 em- are anchored in our Guiding Principles and are
ployees in 49 operating companies as well as its part of our corporate mission 'Building with
places of operation worldwide and achieved a conscience.' in a condensed form.
consolidated turnover of EUR 1,332.4 million. A major part of Sto's business model is the
The product range of the Sto Group is contribution that our products make to sus-
divided into four product groups: the core tainability in the construction sector, especially
business of facade systems combines external to climate protection. We have been develop-
wall insulation systems (EWIS), a segment in ing and selling facade insulation systems for
which our company occupies a leading position, more than 50 years now, and thanks to their
and rainscreen cladding facade systems (RSC). efficient building insulation capacity, we have
The product group of facade coatings includes been able to help achieve significant savings
external render and paint systems. Products for in energy through both the refurbishment of
interiors encompass plaster and paint systems existing buildings and the construction of new
60
Sustainability and Corporate Social Responsibility | Sto SE & Co. KGaA
Thermal insulation helps to protect the environment

The energy savings from the use of Sto facade insulation systems correspond to around 103 billion litres of heating oil.
=
28,000 l
4,000 l
250,000,000 l
x 25.75 million oil tanks x 3.68 million tanker lorries x 412 oil tankers
Between 1965 and 2018, facade insulation systems from Sto played a direct role in saving the barely conceivable volume of 103 billion litres of
heating oil. With this, Sto has made a notable contribution to global climate protection: the facade insulation systems from the southern Black
Forest have managed to avoid around 330 million tonnes of CO2 emissions. In 2018 alone, Sto products reduced emissions of this combustion gas
by around 20 million tonnes.
buildings. The Sto systems that have been Sustainability strategy

installed worldwide since 1965 have resulted In order to strengthen the topic of sustainability
in around 103 billion litres of heating oil being in the strategic orientation, to professionalise
avoided up to and including 2018, with the activities and bundle measures, we established
year under review accounting for around the Sustainability department at Group level
6 billion litres of this figure alone. The result in 2012. This department reports directly to
ing reduction in CO2 emissions totalled more the Chief Technology Officer. In addition to
than 330 million tonnes, including approx. our self-imposed claim, which is anchored in
20 million tonnes in 2018. In this way, Sto our Guiding Principles, we are thus meeting
makes a significant continuous contribution to the increased demands of our stakeholders,
climate and environmental protection. This also especially our customers and legislators. The
improves the living comfort and quality of the measures include consultations, concepts and
relevant buildings. instruments to take account of sustainability
Furthermore, our high-quality facade and aspects at product level and in the organisa-
coating systems protect the building fabric and tion. These are implemented in all areas of
thus ensure the conservation of value, longevity the company: from product development,
and resource efficiency of buildings. In the procurement, production, sales and marketing,
interior, our positive contribution lies above all to communication. The aim is to identify and
in health protection and well-being through address demands and needs in order to create
a wide range of low-emission products and a stable basis for continuous, income-oriented
products that are free from harmful substances. growth and also to make a positive, social con-
Apart from that, we are also addressing new tribution which is important for environmental
product requirements that arise due to sustain- protection.
able building concepts and, for example, are To ensure that we are ready to face future
intensively working on the subject of a recycling challenges, we are following the development
economy as a strategic focal point of our prod- of megatrends, changes in the market, as well
uct-related sustainability activities. as regulations and laws that are relevant to Sto.
61
In 2018, we focused our efforts primarily on 'CSR topics'. This survey covers the relevant
areas including: training and responsibilities for the individual
• Germany’s Climate Action Plan 2050, the issues within a company, compliance with social
purpose of which is to steer the country standards, such as the prohibition of child and
towards a largely greenhouse-gas-neutral forced labour, equal treatment of men and
future women, measures for occupational safety, envi-
• Topics on compliance with climate action ronmental and resource protection, corruption
targets which were discussed at the 2018 and violations of the law, donation activities,
Katowice Climate Change Conference in as well as social commitment. If standards are
Poland not complied with and deviations are reported,
• Global weather events in 2018 the measures to be taken are to be described.
• Energy efficiency as a cornerstone of the The information is recorded centrally at Sto and
move towards renewable sources of energy then evaluated. In conjunction with the new
and climate protection plans CSR disclosure rules and the different levels of
• The recycling economy and resource effi- maturity regarding sustainability in the various
ciency as elements of resource, climate, and regions and companies, our questionnaire is
environmental protection regularly revised and an extended reporting sys-
• Operational and product-related environ- tem for sustainability and CSR in the Sto Group
mental protection as a means of conserving is being implemented. To this end, we identified
ecosystems relevant topic areas and key figures in the
• Compliance with strict requirements regard- reporting period and then evaluated options
ing the use of ingredients which are sus- for data to be recorded centrally using IT-based
pected of being damaging to human health systems. A decision regarding implementation is
and the environment expected in 2019.
• The health and well-being of employees,
applicators, and users Structures and regulations for sustainability
• Qualification and training in order to combat Sto has been reporting voluntarily on its CSR
a shortage in young talent, and skills activities for many years, based on the ten
• Commitment to social issues, signalling principles of the UN Global Compact, which
solidarity and individual support we joined in 2009. The UN Global Compact
is a global strategic initiative for responsible
In terms of the introduction and implemen- corporate governance and global justice under
tation of voluntary CSR measures we act in the auspices of the United Nations. Signatories
accordance with the motto 'think global – of the Global Compact commit to aligning
act local'. Hence our principles, especially their business activities and strategies with ten
the compliance with the ten principles of the universally acknowledged principles taken from
UN Global Compact, apply to all regions and the areas of human rights, labour standards,
companies worldwide. The specific measures environmental protection, and the fight against
to comply with and promote these principles as corruption. They are also committed to support-
well as specific activities to promote sustainable ing the objectives that go hand in hand with
construction may vary locally. They are geared this.
to the respective local needs and circumstances. Since the 2017 fiscal year, capital market-
Since 2010 we have been conducting annual oriented companies with more than 500 em-
surveys among all Sto companies on selected ployees and total assets of more than
62
EUR 20 million or a turnover of more than European CSR Directive and the explanatory
EUR 40 million in Germany are required to memorandum to the German CSR Directive
disclose non-financial information. Due to this Implementation Act as one of the international
so-called CSR disclosure rule, we modified our frameworks on the basis of which a CSR report
disclosure structure in 2017 and provide more can be prepared.
direct and detailed information on the specific Furthermore, we have started to align our
aspects we are to cover as part of non-financial sustainability activities with the United Nations'
reporting (see Part B). We use the UN Global 17 Sustainable Development Goals (SDGs)
Compact as the basis, which is named in the adopted in 2015.
We believe we can make the largest contribu- Goal 9: Build resilient infrastructure, promote
tions to the following of the 17 Sustainable inclusive and sustainable industrializa-
Development Goals: tion and foster innovation.
Goal 3: Ensure healthy lives and promote Goal 11: Make cities and human settlements in-
well-being for all at all ages. clusive, safe, resilient and sustainable.
Goal 8: Promote sustained, inclusive and Goal 12: Ensure sustainable consumption and
sustainable economic growth, full and production patterns.
productive employment and decent Goal 13: Take urgent action to combat climate
work for all. change and its impacts.
63
As part of their sustainability initiative 'Sto- At Sto SE & Co. KGaA, the specifications
Climate', our Austrian company Sto Ges.m.b.H. of external frameworks are complemented by
also published a comprehensive sustainability company-internal guidelines. In particular,
report about their CSR activities in 2018. This these include the 'Principles of Cooperation
was generated in accordance with the Global and Management within the Sto Group', which
Reporting Initiative guidelines (GRI-4 core and we use to translate the general ideas outlined
extended requirements) and particularly refers in our Guiding Principles into concrete actions.
to fiscal years 2016 and 2017 in the Austrian Furthermore, the following guidelines and prin-
market. ciples form an integral part of our thirteen stra-
Since 2014, Sto has participated in the sus- tegic Group goals: 'Corporate Social Respon-
tainability initiative Chemie³ in Germany, which sibility and Sustainability', 'Technology leader
was initiated jointly by the German Chemical through a sustainable product range tailored
Industry Association (VCI), the Mining, Chem- to human needs', 'Living the corporate culture
ical and Energy Industrial Union (IG BCE), and through management and employees' and
the German Federation of Chemical Employers’ 'Promoting a constructive collaboration with
Associations (BAVC). It encompasses impor- employee representatives'. These goals form the
tant guidelines for sustainable development basis for our Group-wide strategic planning tool
in Germany’s chemical industry and provides and are assigned appropriate measures.
various tools for implementing these in practice,
including the 'Chemie³ Sustainability Check', Key sustainability factors
which Sto is applying in various European Sto In addition to the Chemie³ sustainability check
companies. we use our Sustainability Compass in order to
Sto also participated in the activities carried perform a concrete evaluation of single sustain-
out by the initiative in 2018, and made use of ability activities at company and product level.
various Chemie³ events to engage in discus- Not only does this tool ensure that all aspects
sions on examples of best practice, and actively of sustainability are taken into consideration,
helped organise a webinar on sustainability it also provides a source of support during
reporting. decision-making processes in accordance with
The companies of the Sto Group also partic-
ipate in various sustainability initiatives in their
respective countries. For example, we have
been involved in the Sustainability Management
Initiative (Wirtschaftsinitiative Nachhaltigkeit,
WIN) of the State of Baden-Württemberg for
many years now, and signed the WIN charter
in 2014. In addition to the UN Global Compact,
Sto is thus committed to twelve guiding princi-
ples and goals of sustainable economic activities
of companies based in Baden-Württemberg.
In Austria, Sto Ges.m.b.H. is a member
of 'respACT – austrian business council for
sustainable development', the leading business
platform for Corporate Social Responsibility
(CSR) and sustainable development in Austria.
64
our corporate mission of 'Building with con- the products and services of the manufacturers
science.'. As different criteria often have to be on a daily basis. The aim of the market research
weighed up, the Sustainability Compass helps survey is to find out who has managed to have
us create a four-dimensional mindset encom- impress their customers – which equals the
passing ecology, economy, social aspects, and German expression of 'Stein im Brett'. There are
well-being in order to arrive at the best possible more than 30 product categories, ranging from
solution. This approach gives a pivotal role to acoustics to EWIS. Companies were assessed
not only the values that define the main areas with regard to quality, price, user-friendliness,
of focus and the direction in which decisions and recommendations.
are made, but also the information that enables Based on our stakeholder analysis carried out
analysis and evaluation to remain as objective in 2017, we identified the following as relevant
as possible. stakeholder groups: shareholders, authorities/
state, customers/consumers, service providers/
Dialogue with stakeholders suppliers, society/the public, representatives,
Maintaining dialogue with our stakeholders is employees, press/media, and the competition.
an exceptionally important part of our sustaina- The 'Stakeholder analysis – sustainability check'
bility efforts. We do this in a variety of formats process involves determining and document-
in order to accommodate the many different ing stakeholders’ requirements and deriving
subjects that are raised, often in specialist or obligations. At the same time, we are meeting
product-specific areas. These include our own the new requirements relating to the recertifi-
colloquiums involving architects, planners, cation of our quality management in accord-
tradesmen, and energy consultants, as well ance with ISO 9001:2015, our environment
as events held by and with market partners, management system in accordance with ISO
and a range of trade fairs – another area in 14001:2015, and our energy management
which sustainability is becoming an increasingly system in accordance with ISO 50001:2018. In
pressing issue. In 2018, key areas of focus were, accordance with the revised standards, organ-
for example, dismantling and recycling building isations need to develop an understanding for
materials, the safe use of specific ingredients their own context, must evaluate opportunities
or avoiding their use, healthy living spaces, and and risks, while paying special attention to
sustainable construction with suitable building including everyone involved in the planning of
products. the management systems. The frequency with
Among other things, we consider the which the requirements of interested parties are
awards that Sto wins every year to be ac- stated is incorporated into the evaluation of the
knowledgement of this commitment. In 2018, environmental aspects.
the company was voted Gold Winner of the We participate in both national and interna-
Architects' Darling Award in the category of tional trade associations to discuss important
external thermal insulation systems for the third issues that affect different companies, such as
time in a row in Germany. Sto SE & Co. KGaA new legislation and sustainability criteria for
won the 'Stein im Brett' award for the second building products, the harmonisation of product
time. Since 2017, the Münster-based building directives, or the grading of hazardous materi-
information company ibau has been awarding als. For example, Sto has been a member of the
this prize on behalf of skilled tradesmen in Ger- German Sustainable Building Council (DGNB
many. The award is based on a survey of more e.V.) since 2008 and has served on its advisory
than 2,500 people who come into contact with board for building products since 2016.
65
At association level, Sto takes part in the and the regional meetings of the Wirtschaftsi-
'Sustainable Building' working group of nitiative Nachhaltigkeit (Economic initiative for
Deutsche Bauchemie e.V. (German Association sustainability).
for Manufacturers of Construction-chemical
Products), the 'Sustainability' working group of Product Information
the Verband der deutschen Lack- und Druck- We consider it vital to engage with these envi-
farbenindustrie e.V. (German Paint and Printing ronmentally relevant and health-related topics
Ink Industry Association, VdL), the Verband für in an open and honest manner, as it is not just
Dämmsysteme, Putz und Mörtel e.V. (Associa- down to us to determine how the sustainability
tion for Insulation Systems, Renders, and Mor- of our products is interpreted and evaluated –
tars, VDPM), as well as the respective European the opinion and decisions of the public, experts,
umbrella associations in each area (such as market partners, and customers also play a role.
FEICA, CEPE, EMO, and EAE). Furthermore, Sto Comprehensive information and transpar-
has been an active member of the Bundesver- ency on our products, especially with regard to
band energieeffiziente Gebäudehülle (Fed- aspects related to the environment and health,
eral Association for Energy-efficient Building aim to provide assistance in this regard.
Envelopes, BuVEG) since 2017. This association We provide numerous services that are
promotes the potentials that building envelopes designed to support customers and market
have for the urban culture, good living and partners in their quest for sustainable solutions.
work spaces, and the economical use of energy. The expert service provided by Sto employees
In Austria, Sto is a partner of the Austrian Sus- represents the most important element in this.
tainable Building Council (ASBC). For this reason, we also communicate sus-
Sto also maintains a direct dialogue with tainability to our staff in detail and give them
non-governmental organisations (NGOs), intensive training in handling it. This personal
experts, media representatives, and research approach to delivering information is accom-
institutions. We exchange views on the latest panied by eco-labels, product declarations, and
sustainability issues in the construction industry product data sheets.
and the specific desires and demands being
expressed by society, politics, and our mar- Labels & certificates
ket partners. The Österreichisches Institut für Environmental labels and certificates such as
Baubiologie und Bauökologie (Austrian Institute Der Blaue Engel, TÜV, and natureplus® are
for Building Biology and Building Ecology, IBO) primarily aimed at end consumers, private
in Vienna and the IG Passivhaus Tirol (Tyrolean consumers, and public procurers. For building
Passive House Union), which connects experts certification systems such as the one provided
from the building industry and would like to by the DGNB, environmental certificates are
establish the passive house concept as a new often used as proof of a particularly high
standard, are doing important scientific and ecological standard. Products are evaluated
practical work in the fields of building biology based on various criteria defined by the relevant
and building ecology. Additional key sources of issuing authority.
momentum and opinions are provided at and Sto exclusively uses recognised test seals and
by events held as part of the Chemie³ sustain- seals of quality, and has had a large number
ability initiative as well as those held by the of products certified in the areas of thermal
initiating associations VCI, IG BCE, and BAVC, insulation, facade coating, and interiors;
the national networks of the Global Compact, recertification is carried out where a certifi-
66
cation has expired. The natureplus® eco-label been labelled would then have to be given
for EWIS confirms not only that the products eco-labels from a range of different regions or
efficiently save energy, but also that stricter en- their certificates would require additional dec-
ergy efficiency requirements are fulfilled in the larations. This is one of the major reasons why
product’s production, environmental properties, we have stepped up the provision of Sustaina-
and substances in the system components. The bility Data Sheets.
Blue Angel (Der Blaue Engel) for EWIS certifies
the use of materials which result in less of an Sustainability Data Sheets
impact on the environment compared with The voluntary self-declaration in the form of a
other products within their product group, and Sustainability Data Sheets, which we specifi-
which contain no harmful substances requir- cally developed ourselves, plug gaps that may
ing disposal, demonstrate excellent durability, be left by existing product information or
and are installed in accordance with statutory eco-labels, and meet the increasing demand for
regulations. concrete, product-specific data on ecological
A large part of our interior product range and health-related criteria. Spanning around
carries the TÜV seal of quality awarded by TÜV four pages, they provide all the key information
SÜD – 'low-emission, physiologically harm- on the DGNB and LEED building certification
less, and production monitored' – or has been systems, as well as substances, emissions, and
tested for harmful substances in accordance other environmental aspects. Like our Technical
with Oeko-Tex® standard 100. Several of our Data Sheets and Safety Data Sheets, our Sus-
products are also natureplus®-certified, meaning tainability Data Sheets are available to down-
that they adhere to the very strictest criteria in load free of charge or can be posted directly to
respect to their composition, substance prohi- anyone who requests them. Sustainability Data
bitions, substance restrictions (emissions), raw Sheets in 18 different languages were available
material extraction, pre-product manufacturing, for over 500 Sto products as at the end of
production, and processing. For the Swiss mar- 2018.
ket, we additionally label our interior products
with the Swiss eco-label from the Stiftung Farbe Environmental Product Declarations (EPDs)
(Paints Foundation). Whereas in France, Sto Environmental Product Declarations (EPD) in
interior products are all labelled with the French accordance with EN 15804 represent a third
VOC label 'Émissions dans l’air intérieur'. building block in our efforts to provide infor-
mation about the sustainability of Sto products.
Central to these declarations is a Life Cycle
Assessment (LCA) as well as additional informa-
tion, e.g. about aspects such as the production
process, service life, and provisions for recycling
of a product over its entire life cycle. EPDs are
purely informative and do not assess a product,
The numerous eco-labels available in the but require verification from an independent
form of private and public product labels are third party. This internationally valid document
posing an increasing challenge. In most cases, explains numerous building product properties
they are only recognised at national level and from an environmental perspective and pro-
can therefore only offer added value in a single vides useful data for determining a building’s
market. As a result, products that have already sustainability, a factor that primarily depends on
67
the building material used. There is a particular to select building products not only according
demand for EPDs for building certifications on to technical, economic and aesthetic parame-
the Scandinavian market as well as for building ters, but also on the basis of concrete environ-
projects certified in accordance with LEED and mental information that reflects the complete
DGNB. life cycle of a building product. Sto caters to
We are also increasingly using what are this development by providing EPDs and by
known as sample EPDs for our products. These keeping a close eye on and participating in the
have been developed in collaboration with PEF programme. At the same time, we believe
various associations on the basis of framework this poses methodical risks and additional costs
formulations, with each representing a product for our company. In principle, we prefer the
group. This removes the need for the time-con- comparison of building products at the building
suming process of calculating and producing level in relation with a specific building project,
individual, product-specific EPDs for every single since building products are intermediate prod-
manufacturer. ucts whose performance and environmental
As part of its consumer protection efforts, impacts can only be assessed concretely and
the European Union wishes to promote the pro- holistically on the building. Furthermore, a high
vision of individual, product-specific, ecological data quality and uniformity of databases must
parameters and launch a standardised eco-label be guaranteed in order to exclude uncertainties
on the European market that is based on a life in the calculation and to not distort the direct
cycle assessment. To this end, the European comparison of construction products. The
Commission initiated the Product Environmental provision of life cycle assessments on the basis
Footprint (PEF) project and various pilot projects of individual products – sample EPDs would no
from 2013 to 2017, including some on paints longer be usable according to the philosophy
and insulation materials that Sto was informed of direct comparison of individual construction
about and some of which Sto was involved products – involves a great deal of effort, which
in. The EU started a consultation process in we would have to take into account and plan
2018 to obtain feedback on the use of existing for accordingly in a timely manner in terms of
environmental labels and methods of ecological personnel and within our organisation.
evaluation of products to allow them to make a
decision on the further development of PEF for
the evaluation and communication of environ-
mental information after the pilot phase. At the
same time, the European Commission set up a
technical working group to revise the criteria for
life cycle assessments in accordance with the
European standard EN 15804 and to verify their
compliance with the PEF methodology used.
This development is relevant with regard to
the comparison of the environmental perfor-
mance of individual construction products, in
particular the so-called 'grey energy' and the
CO2 balance, as envisaged, for example, by
the European Commission or the DGNB. In
future, planners, architects and consumers are
68
Part B Information on the principles 1 to 6:

Human rights and labour standards
Report on the material At the end of 2016, the Federal Cabinet
non-financial aspects based adopted the National Action Plan for Busi-
ness and Human Rights 2016-2020 (NAP),
on the ten principles of the thus implementing the corresponding guiding
UN Global Compact principles of the United Nations. The aim is to
enforce compliance with human rights in global
supply chains. In addition to the state's duty to
The 10 principles of the UN Global Compact protect, the responsibility of companies is also
addressed. The Federal Government expects all
Human rights companies to integrate the following five core
01 Businesses should support and respect the elements of due diligence in the field of human
protection of internationally proclaimed rights in the supply chain into their business
human rights. processes in a manner appropriate to their size,
02 Businesses should make sure that they are industrial sector, and position:
not complicit in human rights abuses. 1) A human rights policy statement
2) Procedures for the identification of actual or
Labour potential adverse impact on human rights
03 Businesses should uphold the freedom of 3) Measures to ward off potentially adverse
association and the effective recognition of impacts and review of the effectiveness of
the right to collective bargaining. these measures
04 Businesses should uphold the elimination of 4) Reporting
all forms of forced and compulsory labour. 5) A grievance mechanism
05 Businesses should uphold the effective abo-
lition of child labour. As a concrete goal, the NAP stipulates that
06 Businesses should uphold the elimination of by 2020 at least half of all companies in Ger-
discrimination in respect of employment and many with more than 500 employees will have
occupation. verifiably integrated the core elements of due
diligence in the field of human rights (defined in
Environment the NAP in Chapter III) into their business pro-
07 Businesses should support a precautionary cesses. To this end, the German government has
approach to environmental challenges. developed a monitoring procedure that monitors
08 Businesses should undertake initiatives to the progress of companies according to scientific
promote greater environmental responsi standards. If less than 50 % of companies have
bility. implemented the NAP by 2020, the NAP will call
09 Businesses should encourage the devel- for further steps, including legislative measures.
opment and diffusion of environmentally It is important to us that all actors along
friendly technologies. the value chain are guided by the principle of
sustainability, including in particular the obser-
Anti-Corruption vance of international human rights, and labour
10 Businesses should work against corruption standards.
in all its forms, including extortion and Compliance with legal and ethical stand-
bribery. ards is integral to our understanding of good
69
corporate governance. The principles laid We also require our suppliers to accept the
down in our mission statement and in the UN Global Compact principles and thus assume
Global Compact, our 'Principles of Cooperation certain minimum obligations. We procure the
and Management within the Sto Group', the majority of our raw materials from countries
strategic Group goals as well as the general that have implemented high social standards
obligation to comply with the law apply to our which they also monitor. Through our 'Supplier
own sites and companies. Code of Conduct' we generally demand volun-
In order to identify and avoid human rights tary self-commitment to the above standards
violations, appropriate data and information and principles, and use a questionnaire to ob-
are required. Complaints mechanisms that are tain information on the compliance with them.
accessible to those potentially affected are Due to the complexity of today's supply chains,
an essential part of providing the necessary we are evaluating the participation in a suitable
data. With the introduction of a whistleblower industry-specific initiative, such as the chemical
system for compliance infringements, we have industry's 'Together for Sustainability' initiative,
been offering such a standardised complaints to further promote 'Sustainability in the supply
mechanism since 2017. This is described in chain'.
more detail under Principle 10 'Anti-Corrup- With regard to our products, we see an
tion'. We obtain information on deviations and important contribution to the observance and
corresponding countermeasures regarding the consideration of human rights in providing
ten principles of the UN Global Compact via our professional and transparent information. We
annual 'CSR inquiry'. provide information on the correct use of our
Our Group-wide value-competence model products as well as their ingredients and harm-
plays a special role in ensuring ethical, moral ful substances in our Technical Data Sheets,
and fair conduct. Important values such as Safety Data Sheets, and Sustainability Data
'responsible, trusting, honest' are anchored in Sheets which we provide internationally in the
this model. In accordance with our four brand language(s) of the respective country.
values 'Close, Experienced, Performing, and In a broader sense, socially relevant issues
Advanced', we have also described specific such as health and well-being can also be seen
behaviours that we expect from our employees from the perspective of human rights and labour
and managers. This competence model forms standards. Where buildings are concerned, this
the basis for our employee-oriented processes particularly touches on areas such as thermal
within the Sto Group worldwide. For example, and acoustic comfort, indoor air hygiene, and
we use this model when selecting new employ- health protection. Sto building products, such as
ees and when evaluating and developing our sound-absorbing acoustic panels and paints with
workforce. a photocatalytic effect, have the potential to
In 2018, we appointed a Chief Compliance make a direct, positive impact on these subjects
Officer for the Sto Group, and have drawn up of concern. At the same time, the ongoing
a Compliance Code, which will be introduced analysis and external monitoring to which we
internationally in 2019. subject our products ensure that applicators and
Discrimination based on origin, gender, reli- users receive safe goods of excellent quality.
gion or belief, disability, age or sexual identity Any potentially harmful substances are indi-
will not be tolerated. Detailed information on cated transparently in Safety and Sustainability
the topic of diversity can be found in the Corpo- Data Sheets as well as Environmental Product
rate Governance Report in this Annual Report. Declarations. Many of our products are certified
70
in accordance with natureplus®, TÜV SÜD, and ensure that the energy demand for buildings is
other eco-labels. This confirms that the impact decreased significantly. Since 1965, more than
of raw materials or emissions on health and the 300 million tonnes of CO2 emissions have been
environment is either ruled out altogether or avoided by the use of Sto products and systems.
reduced to a minimum. In 2016, we introduced an energy manage-
ment system in line with the global ISO 50001
Information on the Principles 7 to 9: standard in order to provide a methodical tool
Environment for recording, implementing, and tracking all
Environmental protection is an essential aspect the climate protection activities taking place in
of our sustainability activities. Our products the Sto Group. In doing so, we have laid the
contribute to minimising the environmental foundations for a continuous improvement
impact of buildings, e.g. through energy-sav- process relating to energy efficiency. At the
ing insulation measures, the protection of the same we are meeting the legal requirements
building envelope, and measures to maintain for performing energy audits in accordance
the building fabric. We are also actively working with EN 16247-1. As at the end of 2018, the
to minimise the environmental impact of our headquarters of Sto SE & Co. KGaA in Stüh-
products, our production and our corporate ac- lingen/Germany, five production locations, 84
tivities, for example by using renewable energy, SalesCentres as well as four subsidiaries includ-
using resources sparingly and avoiding waste. ing external warehouses and branch factories
We strive for the responsible use and pro- had a certification. The systems that have been
curement of natural resources (water, energy, implemented ensure that the use and purchase
materials, and land) in the manufacture and of renewable sources of energy are constantly
sale of our products and services. Each individ- monitored, and that energy consumption and
ual employee is to contribute to the protection the CO2 emissions of our fleet of vehicles are
of the environment within his or her sphere of permanently reduced. Energy efficiency meas-
responsibility and influence. We also go beyond ures implemented in buildings and investments
legal standards and commit ourselves to volun- are also monitored, and we encourage employ-
tary environmental and energy management ees to play an active role in all our initiatives for
standards such as ISO 14001 and 50001. saving energy. In the context of replacement
and new investments in operating resources,
Climate protection machinery and equipment, an examination of
We see climate protection as a focal point of energy efficiency in accordance with the state
our activities. Of particular relevance for the of the art is also taken into account in addition
German market is the Climate Protection Plan to the technical and economic aspects. Our me-
2050 adopted by the German government in dium-term goal is to identify verifiable changes
November 2016. The goal of this plan is to via our energy management system.
achieve an almost climate-neutral building stock We have defined the optimisation of ener-
by 2050. This calls for demanding new building gy-related services as an important goal in the
standards and long-term renovation strategies Sto Group. To achieve these values, individual
for existing buildings as well as a gradual shift projects were defined and action plans were
away from fossil heating systems. Sto believes drawn up. Yearly consumption values that are
that the plan reinforces the direction in which recorded and analysed monthly, form the basis
the company is moving, and that its high-qual- for the determined key figures. Measured by
ity facade insulation systems do their part to the units audited, we have been able to achieve
71
total energy savings of around one percent per we calculate the CO2 emissions generated dur-
year since 2014. Fuel consumption accounts for ing raw material supply and production in the
around one third of the total energy consump- case of these products, and balance the them
tion of the business units in the realm of the with emission certificates that benefit a climate
certification. This is why we attach particular protection project. In 2018, the StoCryl BF 700
importance to the appropriate selection of com- and StoCryl V 700 products from the StoCretec
pany cars, balance travel and route planning GmbH portfolio were made climate-neutral
as well as training for sales representatives on via ClimatePartner. Among other things, the
efficient driving. An important element of our relevant certificates are used to support a
energy management system is the network hydropower project in Madagascar, which con-
'Energieeffizient bei Sto' (Energy Efficiency at tributes to avoiding around 450 tonnes of CO2.
Sto). This network was founded in 2016 and, In Austria we also made our products StoColor
via the Verband der Chemischen Industrie e.V. Sil In and StoColor Climasan for interiors as well
(German Chemical Industry Association), is reg- as StoColor Lotusan and StoSilco® blue for the
istered as the official energy efficiency network facade climate-neutral via certificates of the
of the German federal government and repre- ecoregion of Kaindorf. Through the targeted
sentatives of the German economy. If offers a build-up of humus in the Kaindorf ecoregion,
systematic and open exchange of experience depleted soils are made fertile again, the water
and ideas between company units and locations absorption capacity is increased, and wash-offs
in order to increase energy efficiency. The are reduced. As a result, up to 36 tonnes of
network members meet twice a year. Measures CO2 per hectare of arable land are bound in the
that have been implemented are presented and form of humus every year and stored in the soil
discussed as to whether they can be transferred in the long term. Our StoTherm Wood insula-
to other locations as well. During the meetings tion system is not only climate-neutral, but also
in 2018, it became clear that the technical climate-improving: Photosynthesis and storage
measures have already been fully exploited in of carbon during the growth phase of a tree
many areas, and the focus must shift to process means that insulation boards made of wood as
optimisation in order to realise more energy a raw material compensate significantly more
savings. The Austrian Sto Ges.m.b.H. has taken CO2 than is emitted during its manufacture.
an alternative path in the implementation of
climate protection measures: It records its CO2
emissions which cannot be avoided through
procurement, production, administration and Urkunde
Partner im
logistics, throughout the entire company, and Klimaschutz
compensates for them by purchasing CO2
certificates. The company is thus-climate neutral StoCretec GmbH
StoCryl BF 700
from 2018 to 2021 and supports a hydroelectric Klimaneutrale Farbe 2018

Diese Urkunde bestätigt die Kompensation
von Treibhausgasemissionen durch
project in Uganda as well as a solar and wind

zusätzliche Klimaschutzprojekte.
CO2-Äquivalente
400.000 kg
energy project in India.

Unterstütztes Klimaschutzprojekt
Wasserkraft
Antsirabé
Madagaskar
ClimatePartner-ID
11656-1805-1001
Ausgestellt am
Climate protection on product level

08.05.2018
Another measure to protect our climate on Über folgende URL erhalten Sie
product level are our CO2-neutral products.

weitere Informationen über die Kompensation
und das unterstützte Klimaschutzprojekt:
climatepartner.com/11656-1805-1001
Based on an Environmental Product Declaration,
72
Mobility, logistics, and procurement the use of software solutions for online meet-
Mobility represents a key area of climate pro- ings that can be conducted from the workplace
tection in terms of reducing kilometres, fuel has risen sharply and is at a high level with an
and CO2. With the help of modern monitor- average of 250 active users.
ing systems we optimise truck and transport With respect to procurement, regional
routes, ensure a solid degree of utilisation, products – wherever this is possible and eco-
use DHL GoGreen, and promote economical nomically feasible – are given preference in
and environmentally conscious driving. By pro- order to keep the transport routes short and
ducing building products regionally we avoid the resource consumption low. In Germany,
many transport kilometres. In Villach/Austria, around 72 % of the purchasing volume of the
for example, local production compared with main raw materials, such as mineral extenders,
imports from Germany means that 315,000 and packaging are procured within a maximum
truck kilometres are avoided at an annual pro- radius of 350 km, and insulation boards usually
duction volume of 8,000 tonnes of material, within a maximum radius of 250-300 km.
which corresponds to savings of over 94,000 Our climate protection activities are also
litres of diesel and a reduction in CO2 emissions attributable to procurement through the
of around 550 tonnes per year. In 2018, Sto consistent sourcing of certified green electricity
Ges.m.b.H. was appointed a 'climate-active from 100 % hydropower. This made it possible
mobile partner' for the project 'Tour optimi- to avoid 10,522 tonnes of CO2 in 2018 when
sation and sustainable mobility' and officially compared to the German electricity mix.
belongs to the Austrian network of climate-ac- As a manufacturing company that uses raw
tive energy and mobility professionals. materials from mining and the chemical indus-
We are also continuously reducing our try and that markets its products worldwide,
emissions through the composition of our it is unavoidable to have an influence on the
passenger car fleet. The average value of CO2 environment. However, through conscious
emissions for newly ordered passenger cars in handling, we consider the resulting risks to
the Sto Group fell by around 6 % from 127 g/ be relatively small and well manageable.
km in 2014 to 119 g/km in 2018, while fuel Major environmental damage, for example
consumption for the passenger car fleet was due to unintentional leakage of chemicals, is
reduced by 7.2 % from an average of 6.9 l/100 avoided through high safety standards. Internal
km to 6.4 l/100 km over the same period. In environmental officers at the production sites
addition, we are investing in e-vehicles to test ensure that hazards are identified at an early
new, environmentally friendly forms of indi- stage and measures are initiated as quickly as
vidual mobility – not least to secure locations possible.
in rural areas where there are hardly any alter- We see a general, non-insurable business
natives to individual means of transport. For risk in that natural events can influence the
business trips by train, Sto employees use the supply of raw materials and production.
BahnCard Business which guarantees mobility Identifiable risks in our companies due to the
in long-distance trains within Germany using effects of weather are recorded via our risk
100 % green electricity. In order to avoid trav- management system. In principle, our sales are
el-related emissions and costs, we have also subject to weather-related fluctuations in many
installed video conference rooms worldwide – markets. This risk is explained in the manage-
in 2018, 33 of these systems were available at ment report.
28 locations and are used regularly. In addition,
73
Environmental management systems therefore, resource protection are concerned.

An important element of corporate environ- Without a protection layer, buildings would age
mental protection are our established envi- much more quickly and then require refurbish-
ronmental management systems. As at the ment years earlier than anticipated. Addition-
end of 2018, almost half (15 out of 31) of our ally, our especially hard-wearing coatings help
production sites worldwide had been exter- protect the rain screen of insulated buildings
nally certified in accordance with international from external influences – an increasingly im-
standard ISO 14001. The implemented systems portant factor to consider given the rising num-
ensure a methodical and verifiable group-wide ber of storms and occurrences of heavy rainfall
approach and allow the continuous identifi- with accompanying hailstorms worldwide.
cation of improvement measures, which is an We see another challenge in the fact that the
essential requirement for optimum control of positive contribution of Sto products to climate
business operations. and building protection is not recognised and
Environmental aspects at ISO 14001-certified valued to the desirable extent and is therefore
sites are identified and assessed once a year and not fully exploited. This applies in particular to
cover the entire product life cycle, i.e. from re- the German market. Controversial discussions
search and development through procurement about the use of external thermal insulation
and production to sales and disposal. Concrete systems have arisen as a result of contradic-
environmental goals are derived from this, tory and sometimes much exaggerated media
e.g. the reduction of waste through optimised coverage with partially inaccurate information.
processes. The result is validated as part of an These cause uncertainty among private building
internal audit. The process owner is responsible owners and have led to losses of business. We
for implementation. counter this sometimes unobjective reporting
Within the scope of the certificates 9001 and with technical and factual information and
14001 (DQS-AZ: 003651), no deviations from education, for example within the framework
legal requirements were identified by internal of the 'Dämmen lohnt sich' (Insulation is
audits in 2018. No deviations are currently worth it) campaign of Qualitätsgedämmt e.V.
reported by the operators. Compliance with the (Association for Quality Insulation), in which we
contents of the quality and environmental man- are actively involved. We seek a direct dialogue
agement systems at the relevant locations, that with our stakeholders such as customers,
include occupational health and safety, infra- planners, architects, investors, representatives
structure and buildings, security, environmental of environmental associations, and politicians,
protection and obligations, has been substanti- for example in specialist committees for the
ated through safety-related supervision. building industry.
Furthermore, we continuously optimise our
Environmental and resource protection on products with regard to a better environmen-
product level tal compatibility and health protection. These
Aspects of environmental and resource protec- include the reduction and avoidance of the use
tion also pay an important role in our products. of solvents and plasticisers that began in the
The majority of Sto products are coatings which 1980s, the consistent encapsulation of biocides
are used to protect buildings. This is, in itself, as film protection agents since 2010, and the
one of the most important contributions we early switch-over from the now banned flame
make towards sustainability as far as durability, retardant HBCD to polymer FR in EPS insulation
weather protection, building preservation, and, boards in 2015.
74
To avoid biocides as film protection agent, Sto mixtures containing titanium dioxide, but this
offers various solutions, in particular our facade would nevertheless have practically unimple-
paints StoColor Dryonic and StoColor Lotusan, mentable consequences in the waste sector.
which use a biomimetic active principle to en- Together with the relevant associations, we are
sure dry facades that are protected against algae working to ensure that the use of titanium diox-
and fungi. The avoidance of biocides is also the ide is not seen as a material issue, but as a dust
topic of 'preservative-free products'. In 2018, issue. Thus, the protection of health against
this played a major role in the area of in-can titanium dioxide dust would be regulated and
preservation of indoor products. With the use of guaranteed within the framework of occupa-
in-can preservatives, the industry has succeeded tional health and safety, while the safe use of
in ensuring that the majority of paints, varnishes, the substance of titanium dioxide in products
and other organic coatings are now water-based would remain label-free.
and solvent-free. The preservation prevents the For exteriors, Sto has also been offering Sto-
products from being attacked by bacteria and Color Photosan, an innovative facade coating
fungi. In-can preservatives are covered by the that actively counteracts environmental pollu-
Biocidal Products Ordinance and are subject to tion and significantly reduces the formation of
the two-stage authorisation procedure described fine dust. In numerous cities, the statutory limits
therein. At the same time, the demand has for fine respirable dust are being exceeded more
risen for preservative-free products without and more often. This impairs people's quality of
compromising the functionality and shelf life of life and health. Our surface-active facade paint
the products. In order to meet these demands, automatically and effectively breaks down nitro-
we have adapted the product property 'pre- gen oxides and ozone pollution, and can thus
servative-free' for dispersion silicate products. make an important contribution to improving
Through our activities in associations, we are at the air quality in cities and municipalities.
the same time committed to reaching a stand- Our activities to make our products easier
ardised definition of the term 'free of preserva- and better to dismantle and recycle have again
tives', and appropriate handling of preservatives formed a focal point in 2018. We regard this
in technically demanding product groups. as a major future trend in the construction in-
Furthermore, a political discussion on the
use of titanium dioxide was held in 2018. A
procedure for classifying titanium dioxide as
a hazardous substance is underway via the
European Commission, which was put to a vote
within the Commission in 2018. Classifying
and labelling all mixtures containing titanium
dioxide, including paints and varnishes, as 'pre-
sumably carcinogenic by inhalation' would have
far-reaching consequences for the marketing,
environmental labelling, and disposal of these
products and, in our view, appears neither Ewald Rauter, Head of Product
reasonable nor justified since titanium dioxide Management at Sto Ges.m.b.H.
is not released in powder or dust form by Sto (left), and Managing Director Walter
products. By the end of 2018, classification Wiedenbauer are delighted about
and labelling are to be restricted to powdery the TRIGOS award.
75
dustry. In particular, these activities include the Furthermore, two research projects were
further development of our innovative facade launched in 2018 that focus intensively on
insulation system StoSystain R, which enables the recycling of building products and are
significantly optimised separation, reuse and actively accompanied and supported by Sto. In
recycling of the main components by means cooperation with DECHEMA Gesellschaft für
of a hook-and-loop fastening technology. In Chemische Technik und Biotechnologie e.V.
Austria, this development received three awards (DECHEMA Association for Chemical Tech-
in 2018. nology and Biotechnology), the pilot project
Further approaches for increased resource 'KUBA – Nachhaltige Kunststoffwertschöpfung-
protection and recycling are the use of skette: Pilotfall Kunststoffe in Bauwirtschaft
recyclates, such as waste glass in StoVentec und Gebäuden' (KUBA – Sustainable plastics
Carrier Boards and PET in Sto acoustic panels, value chain: Pilot case – Plastics in the building
as well as the selection of raw materials and industry and buildings) was initiated. The aim
components that can be recycled as easily as of the project is to develop a concept for the
possible and fed back into existing circuits. sustainable use of plastics from the building
These include, for example, stainless steel sector and for the recycling of a considerable
and aluminium in RSC sub-constructions. In part of the carbon in building plastics. The
addition, packaging materials and uncontam- pilot project started in December 2018 and is
inated, HBCD-free EPS insulation boards are funded by the Federal Ministry of Education
recycled via certified return systems. At the and Research (BMBF).
Austrian location in Villach, unused paints, plas- The research project 'RESSOURCE.WDVS –
ters, renders, and adhesives from Austria and Ressourceneffiziente Nutzung von qualitäts-
abroad are returned to the cycle for recycling gesichertem Sekundär-EPS sowie der miner-
production and processed into our own highly alischen Fraktionen aus WDVS' (RESSOURCE.
recyclable products – at a consistently high WDVS – Resource-efficient use of quality-
quality and to the benefit of the environment. assured secondary EPS and mineral fractions
Calculations have shown that a reuse in Villach from EWIS) is being carried out in cooperation
is more profitable than disposal at the place of with the Institute for Water, Resources and
origin despite longer transport routes. Environment at Münster University of Applied
We attach special importance to develop- Sciences. The aim of this project is to develop
ments in the area of dismantling and recycling a collection and recycling concept for EWIS
methods for external wall insulation systems waste which, in addition to developing a
with polystyrene. In 2018, the implementa- suitable processing technology for separating
tion of the solvent-based Solvolyse process EWIS components, also includes optimised
(CreaSolv® process) for the recycling of EPS logistics and reliable separation of EPS qualities
insulation materials and other polystyrene (HBCD-free / HBCD-contaminated).
products was continued. As part of the
'PolyStyreneLoop Cooperative', a first plant Information on Principle 10:
with a capacity for 3,000 tonnes of EPS waste Anti-Corruption
per year is being built in the Netherlands. This All forms of bribery and corruption are un-
means that, in addition to thermal recycling acceptable for us and will not be tolerated.
in waste incineration plants, there will also be Further details relating to corporate governance
a material recycling option for EPS waste with at Sto can be found in the Corporate Govern-
HBCD available from 2020. ance Report in the current Annual Report. We
76
also require our suppliers to observe the Global The Bright Hill Pre-School in Windhoek/
Compact principles. Namibia is one of the international projects
The transparency required for the increas- that Sto has supported for many years. With
ingly complex corporate processes is ensured our financial support, training as well as
by the Internal Audit department, which also construction measures have been successfully
makes allowance for the growing compliance implemented in the past. Around 120 children
requirements. are cared for in the pre-school in the mornings
In 2017, Sto introduced a reporting channel and learn English in particular in order to be
in case of compliance infringements. This able to attend a state school later. The institute
reporting channel is publicly accessible via also assists old people and those who need
our website. Reliable reporting of compliance help who live in the slums of Windhoek. The
infringements and the protection of whistle- grants in 2018 and 2019 are planned primarily
blowers against sanctions are indispensable for extension buildings in order to improve the
for effective compliance, as they contribute to working conditions for teachers and to increase
the reporting, comprehensive investigation and the burglar resistance of the facility.
clarification of possible misconduct. The online A charitable project in northeastern Morocco
compliance reporting system is a secure way was completed in 2018. We had been commit- Sto supported a project of the
of reporting possible infringements. This way, ted to this project since 2012 and had provided non-profit organisations Operation
infringements can be recorded at any time any intensive support with planning, materials and Smile and Article 25: A special
day. The system is open to employees, manag- know-how. In this region, children are born clinic for the treatment of children
ers, customers, suppliers, and other stakehold- with a cleft lip, jaw or palate to an above-av- with malformations was built in
ers alike. It is administered by an independent erage degree. Until then, there had been no the Moroccan city of Oujda. It was
operator and its data is stored on protected specialists and no suitable clinics, and not many insulated with a Sto facade system
servers located in Germany. The contents of the people can afford the necessary operations in and features Sto products in the
reports are processed exclusively through Sto. the capital city. With the support of the Lon- interiors.
More information is available on the landing
page of the reporting system on our website
www.sto.de.
Part C
Assumption of responsibility
through voluntary commit-
ment
Social commitment, and donations
Sto attaches great importance to voluntary
initiatives and measures that serve the good of
society. They form part of our basic understand-
ing of Corporate Social Responsibility and have
a long tradition in the company. In 2018, again
many activities took place. We will report on a
few of them.
77
don-based non-profit organisations Operation annual electricity consumption of more than

Smile and Article 25, which help disadvantaged eight two-person households. More than 90 %
people and people in need, a new dental clinic of the hardware handed over was re-marketed,
was built in the Moroccan city of Oujda to defective devices were dismantled and recycled.
treat children born with malformations. For the By returning the equipment to the economic
project, Sto provided an external wall insulation cycle, electronic scrap is avoided, and natural
system designed to ensure a balanced indoor resources are conserved. In addition, a job for
climate and low energy consumption, easy-to- a person with a disability was secured through
clean high-quality floor coatings, sound-absorb- the equipment donation, as AfB (Work for Peo-
ing acoustic ceilings as well as low-emission ple with a Disability) is an inclusion company. As
wall coatings. The building and the clinic were at the end of 2018, the IT company employed
completed and put into operation at the end of more than 370 people at 19 locations across
2018. Every year, the facility will provide profes- Europe, around 45 % of whom had a disability.
sional medical support to over 600 families in The partnership with Sto brings the inclusion
the poverty-stricken region. company one step closer to its vision of creating
Since 2017, we have been in a special so- 500 long-term jobs for people with disabilities.
cio-ecological commitment with the non-profit
integration company AfB gGmbH, which spe-
cialises in reprocessing discarded IT hardware
and returning it into the use cycle. In 2018,
over 100 of Sto's decommissioned IT devices,
On behalf of the entire company, mainly PCs, notebooks, and flat screens, made
Marvin Gatti and Jochen Rohrer a contribution to environmental protection and
from Sto's IT department accept inclusion. The cooperation between Sto and
the thanks and the certificate from AfB prevented 6,961 kg of iron equivalents,
Tobias Negwer and Maximilian 6,071 kg of CO2 equivalents, and 18,003 kWh
Blum from AfB. of energy. The latter corresponds to the average
As in the previous year, Sto's annual social

project carried out by trainees at the Stühlin-
gen location benefited the association Jung &
Alt Mauchen/Germany. This association had
planned to build a forest and nature playground
in 2018 and was looking for helping hands.
For four days, the Sto trainees transformed an
overgrown property into a colourful forest play-
ground. Since 2012, the non-profit association
has been committed to helping people in the
78
region to make life easier for the older gener-

ation in their familiar rural environment. The
association is also active in infant care.
Other Sto companies also place great em-
phasis on social commitment and embrace it in The Sto Foundation – future through edu-
many different ways. In the USA, for example, cation
Sto Corp. donated a total of USD 60,000 to Under the motto 'Wissen hilft' (Knowledge
charitable institutions. In addition, numerous helps), the Sto Foundation has been supporting
smaller fundraising campaigns took place in a range of different national and international
2018. For example, the Austrian Sto Ges.m.b.H. charitable projects since 2005. They support
held a fundraising campaign for people in need. young talent in the industry sectors that are
Of particular importance to Sto is the promo- particularly important to Sto: The young gen-
tion of young talent. The interactive travelling eration of painters, decorators, and plasterers,
exhibition 'Green up your future', which is as well as those studying architecture and
dedicated to 'green jobs' for young people, is civil engineering. The aim of the foundation
funded by the Federal Ministry for the Envi- is to live up to Sto SE & Co. KGaA's motto of
ronment, Nature Conservation, Construction 'Building with conscience.', and it invests in
and Nuclear Safety, and the European Social the craftsmanship and academic training of
Fund. It is making stops in several German cities tomorrow's experts. The objective of all these
between 2017 and 2019. In this context, four measures is to raise the awareness of construc- Knowledge helps: at the second
young Sto colleagues describe how their work tion companies and workers for environmen- 'Deutsche Fachschultage' (German
is connected to the topics of biomimetics and tally compatible and human design of living Technical School Days) in Wup-
sustainability. Many short and clever videos spaces. Young individuals who require personal pertal/Germany, apprentices and
show the user what this looks like in practice. or financial support and who distinguish them- vocational teachers gained helpful
For example, these videos demonstrate the selves through their outstanding performance, insights into various routes to
Lotus effect, the StoColor Dryonic product and ambition, and remarkable commitment receive becoming qualified as a painter and
the monitoring of the energy consumption of financial support. decorator.
our new office building using state-of-the-art
technology. With this they want to motivate
others to take up a profession in the 'green
area' and to learn from nature.
79
The funding amount was upped again with The international summer schools have
effect from 1 January 2018, as the need and been supporting students with projects where
demand for support have increased sharply in they do the building themselves all around the
recent years. The families of the ordinary share- world for a long time now. These projects help
holders, who contribute to the Foundation’s students learn to develop awareness of the
funding pot every year, have each increased different cultural, social, and energy-related
the sum they dedicate to the Sto Foundation in requirements across the globe. The focus is
equal shares to a total amount of EUR 300,000 also on aspects of sustainable planning and
per year. The responsible parties already had a construction. In Lima/Peru, for example, a
total annual budget of EUR 900,000 at their workshop for architecture students provided
disposal for 2018 to finance national – and the basis for the design and realisation of a
increasingly international – funding measures. public dining hall with a day-care centre. The
This move serves as yet another proof of how community centre being created is making
close the Stotmeister families feel to the com- an important contribution to enhancing the
pany and the Foundation and how commit- district. Additional summer schools in Germany
ted they are to both. The number of projects also set up meeting and contact centres for
funded increased from 43 in 2017 to 53 in the various parts of the community.
year under review.
The November Reihe (November Talks) was
held for the thirteenth time with great success
in the architecture funding area at six Euro-
pean universities. Once again, top-class project
reports ensured the auditoriums were full,
The thirteenth edition of the with animated discussions between students
'November Reihe' (November Talks) and world renowned speakers such as Tatiana
with renowned speakers once Bilbao and Stefan Behling. The numerous
again ensured the auditoriums presentations on contemporary architecture
were packed, providing an open contribute towards preparing future architects
exchange between the lecturing for possible work areas and for professional life
architects and the students. and construction practices.
International summer schools help student of archi-

tecture understand the different cultural, social, and
energy-related requirements in relation to design
and construction all around the world. In Lima/Peru,
developing the design of a community centre made it
possible to set the foundation for sustainable develop-
ment of the 'Alto Peru' quarter.
In the funding area for craftsmanship, the

best of the best entered the latest round of the
competition 'You've got what it takes!' which
has been running since 2012 and where more
80
than 500 painter and decorator apprentices

have been awarded boxes with high-quality
tools, and iPads. Not only German and Aus-
trian apprentices won awards – for the first
time this year, excellent painter and decorator
apprentices from South Tyrol in Italy were also
rewarded for their hard work.
For the purposes of the education pyramid
of the Sto Foundation, another successful pro-
ject has been continued: the second 'Deutsche
Fachschultage' (German Technical School
Days) at the Bergisch University of Wuppertal
provided helpful insights into various routes to
becoming qualified as a painter and decorator.
Under the motto 'Handwerk weiterdenken'
(Taking craftsmanship further), around 150
apprentices and vocational teachers came to
Wuppertal/Germany. In workshops with topics In 2018, boxes equipped with high-quality tools were awarded for the first time in the best of
such as project and process management, qual- the best competition 'You've got what it takes!' in South Tyrol/Italy.
ity management, or further education options,
they acquired information about potential
career paths. The seven state vocational schools
for 'Colour and design' who had extended
invitations to the event were also provided with
important information on the current chal-
lenges the trade is facing.
More information on the numerous funding
activities being carried out are available at the
website www.sto-stiftung.de in the form of
text, images, and videos.
81
82
Consolidated annual financial statements of the Sto Group (IFRS) | Sto SE & Co. KGaA
Sto SE & Co. KGaA, Stühlingen/Germany

Consolidated annual financial statements
of the Sto Group (IFRS)
· Statement of profit and loss

· Statement of comprehensive income
· Statement of financial situation
· Statement of changes in equity
· Cash flow statement
· Notes
83
Sto SE & Co. KGaA | Consolidated annual financial statements of the Sto Group (IFRS)

Consolidated statement of profit and loss for 2018
Notes 2018 2017

EUR EUR K
1. Revenue (1) 1,332,369,617.58 1,277,397

2. Changes in product inventories –199,069.47 –278
3. Other internally generated assets capitalised (2) 145,610.47 68
Total revenues 1,332,316,158.58 1,277,187
4. Other operating income (3) 22,925,746.00 27,285

5. Cost of material (4) –615,930,964.64 –570,602
6. Personnel expenditure (5) –352,261,642.49 –341,800
7. Other operating expenses (6) –273,853,074.09 –274,753
EBITDA (earnings before interest, taxes, 113,196,223.36 117,317
depreciation and amortisation)
8. Depreciation and amortisation of intangible assets as well as property,

plant and equipment (7) –31,298,685.80 –33,345
EBIT (earnings before interest and taxes) 81,897,537.56 83,972
9. Earnings from assets accounted for using the equity method (8) 118,210.63 0
10. Interest and similar income (9) 726,005.81 726
11. Interest and similar expenditure (9) –2,575,396.96 –2,536
EBT (earnings before taxes) 80,166,357.04 82,162
12. Taxes on income and earnings (10) –26,356,031.61 –26,338

EAT (earnings after taxes) 53,810,325.43 55,824
of which:
Share of minority interests 144,312.20 293
Share of earnings attributable to the shareholders of Sto SE & Co. KGaA 53,666,013.23 55,531
Earnings per share basic/diluted in EUR

Limited ordinary share (11) 8.33 8.62
Limited preference share (11) 8.39 8.68
84

Consolidated statement of comprehensive income 2018
2018 2017
EUR EUR K
EAT (earnings after taxes) 53,810,325.43 55,824
Currency translation:
Currency translation differences –799,174.80 –6,842
Earnings to be reclassified in the statement

of profit and loss in future periods –799,174.80 –6,842
Revaluation of post-employment benefit obligations

Gains/losses from the revaluation of defined benefit plans 2,270,697.21 –4,255
Deferred taxes –491,775.31 1,138
Earnings not to be reclassified in the statement

of profit and loss in future periods* 1,778,921.90 –3,117
Other earnings after taxes 979,747.10 –9,959
Total comprehensive earnings after taxes 54,790,072.53 45,865
of which:
Share of minority interests 186,809.99 309
Share of earnings attributable to the shareholders of Sto SE & Co. KGaA 54,603,262.54 45,555
*For further explanations concerning equity, see Note (20). For further explanations on the revaluation of post-employment benefit obligations, see Note (22).
85

Consolidated statement of financial position as at 31 December 2018
Assets Notes 31 Dec 2018 31 Dec 2017

EUR EUR K
A. Non-current assets
I. Intangible assets (12) 47,768,128.67 49,087

II. Property, plant, and equipment (13) 254,848,007.30 254,297
III. Financial assets accounted for using the equity method (14) 11,138,210.63 11,020
Fixed assets 313,754,346.60 314,404
IV. Non-current trade receivables (16) 1,068,668.70 1,208

V. Non-current financial assets (17) 500,544.60 1,175
VI. Other non-current assets (18) 334,930.40 416
VII. Deferred tax assets (10) 20,540,920.54 19,580
Other non-current assets 22,445,064.24 22,379
Total non-current assets 336,199,410.84 336,783
B. Current assets
I. Inventories (15) 97,863,118.48 96,740

II. Current trade receivables (16) 134,701,624.72 124,978
III. Current income tax receivables 2,577,333.16 2,552
IV. Current financial assets (17) 83,257,458.31 76,454
V. Other current assets (18) 24,530,949.65 27,668
VI. Cash and cash equivalents (19) 105,294,493.07 84,422
Total current assets 448,224,977.39 412,814
Total assets 784,424,388.23 749,597
86
Liabilities Notes 31 Dec 2018 31 Dec 2017

EUR EUR K
A. Equity
I. Subscribed capital (20) 17,556,480.00 17,556

II. Capital reserves (20) 57,803,590.41 57,804
III. Revenue reserves and other reserves (20) 394,546,765.99 367,007
Share attributable to the shareholders of Sto SE & Co. KGaA 469,906,836.40 442,367
IV. Share of minority interests (21) 7,638,336.97 7,777

Total equity 477,545,173.37 450,144
B. Non-current provisions and liabilities
I. Provisions for post-employment benefits and similar liabilities (22) 99,266,936.60 99,094
II. Other non-current provisions (23) 14,555,083.17 14,625
III. Non-current borrowings (24) 3,344,538.22 2,032
IV. Non-current trade payables (25) 151,000.00 355
V. Non-current financial liabilities (26) 283,000.00 316
VI. Other non-current liabilities (27) 9,580.71 9
VII. Deferred tax liabilities (10) 2,099,097.63 2,289
Total non-current provisions and liabilities 119,709,236.33 118,720
C. Current provisions and liabilities
I. Other current provisions (23) 45,468,816.77 48,887

II. Current borrowings (24) 11,459,450.36 9,757
III. Trade payables (25) 47,154,982.33 46,035
IV. Current income tax liabilities 6,135,170.75 2,240
V. Current financial liabilities (26) 32,581,467.26 28,472
VI. Other current liabilities (27) 44,370,091.06 45,342
Total current provisions and liabilities 187,169,978.53 180,733
Total debt capital 306,879,214.86 299,453
Total assets 784,424,388.23 749,597
87

Statement of changes in equity as at 31 December 2018
in EUR K Equity attributable to the shares
Subscribed Capital Revenue Currency Reserve for

capital reserves reserves translation pensions
reserve
Notes (20) (20) (20) (20) (20/22)
As at 1 January 2017 17,556 57,804 380,402 11,521 –26,380
EAT (earnings after taxes) 0 0 55,531 0 0

Other earnings (after taxes) 0 0 0 –6,842 –3,133
Total comprehensive earnings 0 0 55,531 –6,842 –3,133
Dividend payout 0 0 –21,037 0 0
Deposit by associates 0 0 0 0 0
Minority shares from corporate
acquisition 0 0 0 0 0
As at 31 December 2017 17,556 57,804 414,896 4,679 –29,513

Effects from the first-time application
of IFRS 9 as of 1 January 2018 0 0 –1,015 0 0
Equity as at 1 January 2018 after
first-time application effect 17,556 57,804 413,882 4,679 –29,513
As at 1 January 2018 17,556 57,804 413,882 4,679 –29,513
EAT (earnings after taxes) 0 0 53,666 0 0

Other earnings (after taxes) 0 0 0 –799 1,736
Total comprehensive earnings 0 0 53,666 –799 1,736
Dividend payout 0 0 –26,049 0 0
Deposit by associates 0 0 0 0 0
Minority shares from corporate
acquisition 0 0 0 0 0
As at 31 December 2018 17,556 57,804 441,499 3,880 –27,777
For further details on equity, see Note (20) et seq.
88
of the parent company Share of Total

minority equity
Treasury Total interests
stock
(20) (21)
–23,055 417,848 7,373 425,220
0 55,531 293 55,824

0 –9,975 16 –9,959
0 45,556 309 45,865
0 –21,037 0 –21,037
0 0 96 96
0 0 0 0
–23,055 442,367 7,778 450,144
0 –1,015 11 –1,004
–23,055 441,353 7,789 449,140
–23,055 441,353 7,789 449,140
0 53,666 144 53,810

0 937 43 980
0 54,603 187 54,790
0 –26,049 –337 –26,386
0 0 0 0
0 0 0 0
–23,055 469,907 7,639 477,545
89

Consolidated cash flow statement for 2018
in EUR K Notes 2018 2017
1. Cash flow from operating activities

Earnings before income taxes 80,166 82,162
Depreciation of fixed assets (7) 31,299 33,346
Earnings from disposal of fixed assets 458 –1,087
Earnings from valuation using the equity method (8) –118 0
Net interest income (9) 1,849 1,809
Income taxes paid –24,642 –21,644
Change in provisions –1,046 7,457
Change in net current assets –7,282 –15,565
Cash flow from operating activities 80,684 86,478
2. Cash flow from investment activities

Investments in property, plant and equipment, and intangible assets (12/13) –31,966 –32,443
Payments for the acquisition of investments consolidated using the
equity method 0 –11,020
Payments received from other disposal of intangible assets and plant,
property and equipment 540 2,196
Interest payment received 522 579
Disbursements for financial investments –37,926 –54,000
Deposits from financial investments 32,964 49,723
Cash flow from investment activities –35,866 –44,965
3. Cash flow from financing activities

Deposits from minority shareholders 0 96
Taking out of non-current borrowings (24/31) 2,500 1,000
Payments for non-current borrowings (24/31) –61 –1,268
Payments for current borrowings (24/31) –3,043 –5,739
Payments received for current borrowings (24/31) 3,512 2,880
Dividend payout (11) –26,386 –21,037
Payments of interest –714 –784
Cash flow from financing activities –24,192 –24,852
Changes in cash and cash equivalents due to changes in exchange rates

and in impairments due to expected losses on cash and cash equivalents
in accordance with IFRS 9 246 –2,310
Cash and cash equivalents at beginning of period (19) 84,422 70,071
Change in cash and cash equivalents 20,872 14,351
Cash and cash equivalents at the end of period* (19) 105,294 84,422
The cash flow statement is explained in Note (29).
*Cash and cash equivalents at the end of period equal the item Cash and cash equivalents shown in the balance sheet.
90

Notes to the consolidated financial statements
as at 31 December 2018
General information SE & Co. KGaA on 17 April 2019 for approval

at the Supervisory Board meeting on 25 April
1. Information on the company 2019.
Sto SE & Co. KGaA and its connected, de
pendent Group companies manufacture and 2. Basis of preparation
market products, components, and functional Sto SE & Co. KGaA has prepared its consol
systems – energetic and other – which are used idated annual financial statement of the Sto
in and on buildings and consist of material Group for the year 2018 in accordance with
components and/or coatings. Services aimed the International Financial Reporting Standards
at maintaining the value of buildings also form (IFRS) as applicable in the European Union and
an integral part of the company’s scope of the interpretations issued by the IFRS Interpre
product. tations Committee (IFRIC). The supplemental
commercial regulations according to Section
The only shareholder of the personally liable 315e of the HGB were also applied.
partner STO Management SE, Stühlingen/
Germany, is Stotmeister Beteiligungs GmbH, All standards and interpretations subject to
Stühlingen/Germany, in which the Stotmeister compulsory application in fiscal 2018 were
families have bundled their assigned Sto SE & observed.
Co. KGaA limited ordinary shares.
Effects of new accounting standards
Stotmeister Beteiligungs GmbH is the major The accounting principles applied remained
ity shareholder and ultimate parent company largely unchanged from the previous year. The
of Sto SE & Co. KGaA. The address of the following standards and interpretations, which
registered offices of Sto SE & Co. KGaA is were applied for the first time in 2018, are an
Ehrenbachstraße 1, 79780 Stühlingen/Ger exception.
many. It has been entered in the trade register
of the district court of Freiburg under number Standards/ Title Can be applied Effects on Sto
HRB 711236. Sto SE & Co. KGaA is a listed Interpretations from
company. Its limited preference shares are listed Changes to IAS 40 Transfers of Investment 1 January 2018 Not applicable
in the ‘Regulated Market’ segment for official Property
trading on the stock exchange operated by
Changes to IFRS 2 Classification and valuation 1 January 2018 Not applicable
Deutsche Börse AG, Frankfurt am Main/Ger
of share-based payment
many as well as Börse Stuttgart AG, Stuttgart/ transactions
Germany. The other Group companies are
engaged in the same business sector as Sto SE Changes to IFRS 4 Application of IFRS 9 with 1 January 2018 Not applicable
& Co. KGaA. IFRS 4
IFRS 9 Financial instruments 1 January 2018 Of importance

The consolidated annual financial statement
and management report of Sto SE & Co. KGaA IFRS 15 Revenue from Contracts with 1 January 2018 Insignificant
was drawn up on 12 April 2019 by the person Customers
ally liable partner STO Management SE and will
Changes to IFRS 15 Clarifications to IFRS 15 1 January 2018 Insignificant
be forwarded to the Supervisory Board of Sto
91
Standards/ Title Can be applied Effects on Sto First-time application effects of IFRS 9 on
Interpretations from equity
Improvements to Amendments to various IFRS 1 January 2018 Insignificant in EUR K
Effects on equity
IFRS (2014-2016) (IFRS 1, IFRS 12, and IAS 1)
IFRIC 22 Advance payments in con- 1 January 2018 Insignificant Equity as at 31 December 2017
nection with foreign currency (before the introduction of IFRS 9) 450,144
transactions
Changes in cash and cash equivalents -194
Changes in financial investments -165
The IFRS 9 introduces a uniform approach to
Changes in other financial assets -14
the classification and valuation of financial
assets and financial liabilities. As a basis, the Changes in value adjustments to
trade receivables -1,032
standard refers to the cash flow characteristics
and the business model according to which Deferred taxes on first-time
these are managed. In addition, the standard application effects 401
provides for a new impairment model based Equity as at 1 January 2018
on expected loan defaults compared to loan (after the introduction of IFRS 9) 449,140
defaults that have already occurred. IFRS 9 also
contains new rules on the application of hedge IFRS 15 establishes a comprehensive framework
accounting, which the Group does not apply for determining whether and to what extent
in 2018 as there are no derivative financial in and at what point in time sales revenue is rec
struments that meet the criteria for an effective ognised. It replaces existing guidelines on the
hedging relationship. recognition of sales revenue, including IAS 18
Revenue, IAS 11 Construction Contracts, and
IFRS 9 is applied for the first time in accordance IFRIC 13 Customer Loyalty Programmes.
with the modified retrospective method without
adjusting the figures from the previous year. The standard uses a ‘five-step model’ for
These amendments result in changes to the turnover recognition according to which the
Group’s earnings, financial and asset situation company must first identify whether it has a
at the first-time application effective 1 January contract with a customer as defined in the
2018. The first-time application effects of IFRS 9 standard. The company’s performance obli
on equity are shown on the following pages. gations explicitly or implicitly defined in the
contract must be identified separately and the
transaction price to be received by the customer
must be allocated to those performance obliga
tions. When control is transferred, sales revenue
is recognised either on the basis of a specific
point in time or of a time period.
The stipulations of IFRS 15 are applied as of

1 January 2018 using the modified retrospective
approach. This did not have any material effect
on the opening balance sheet as of 1 Janu
ary 2018. In accordance with the transitional
92
provisions of the standard, the comparative were not applied in the reporting period be
year-on-year figures have not been adjusted. In cause either recognition by the EU is still pend
April 2016, the IASB issued clarifying amend ing or the application was not yet mandatory.
ments to IFRS 15, which are also mandatory
for fiscal years beginning on or after 1 January The Group intends to apply all standards at the
2018. In addition, the Group makes use of the time of their first mandatory application.
simplification regulation of IFRS 15.C7 and IFRS
15.C5(b) and does not revaluate contracts that Standards/ Title Can be applied Effects on Sto
were fulfilled or amended before the date of Interpretations from
first-time application of 1 January 2018. Changes to IAS 19 Plan change, curtailment or 1 January 2019 Insignificant
settlement
IFRS 15 generally results in new quantitative
Changes to IAS 28 Long-term interests in associ- 1 January 2019 Insignificant
and qualitative disclosures in the notes. How ates and joint ventures
ever, the application did not identify any mate
rial changes with regard to the point in time or Changes to IFRS 9 Early repayment options with 1 January 2019 Insignificant
negative early repayment
the sales revenue amounts, and therefore did
penalty
not have a material impact on the statement
of profit and loss. In the balance sheet, IFRS 15 IFRS 16 Leases 1 January 2019 Significant
generally requires separate recognition of con Improvements to Amendments to various IFRS 1 January 2019 Insignificant
tract assets and contract liabilities, which was IFRS 2015 - 2017 (IFRS 1, IFRS 11, IAS 12, and
waived due to immateriality. As of 1 January IAS 23)
2018, no contract assets had to be recognised
IFRIC 23 Tax risk items from income 1 January 2019 Insignificant
for service obligations rendered for which no taxes
unconditional payment claim exists, or for costs
incurred in initiating or fulfilling the contract. In January 2016, the IASB published the IFRS 16
Leases, which replaces the previous IAS 17
In addition, there were no material changes Leases as well as related Interpretations. The
to the Group’s earnings, financial and assets IFRS 16 eliminates the previous classification
situation at the time of first-time application on of leases by lessees as operating and finance
1 January 2018. leases. Instead, IFRS 16 introduces a uniform
lessee accounting model under which, at the
A more detailed explanation of the effects on inception of the lease, lessees are required to
the consolidated annual financial statement due recognise a liability equal to the present value
the amendments to the standards can be found of the lease payments to be made, the lease
under 6. Presentation of the major accounting liability and an asset for the right granted to use
and valuation policies. the leased asset during the lease term, the right
to use the leased asset.
3. International Financial Reporting
Standards (IFRS) and Interpretations (IFRIC) As a result, operating leases previously rec
issued but not yet mandatory ognised as expenses will in future have to be
recognised in the balance sheet. This is largely
Accounting standards not applied early comparable with the current recognition of
The IASB and IFRIC have issued additional finance leases. However, the new standard
standards and interpretations. These regulations contains two exceptions for lessees from the
93
obligation to recognise the leasing contracts in IFRIC 23 Uncertainties over Income Tax Treat
the balance sheet. Leases where the underlying ments was issued by the IASB in May 2017. The
asset has a low value, and short-term leases interpretation clarifies the requirements for the
with a term of up to twelve months, can con recognition and valuation of uncertain income
tinue to be recognised as expense. tax items. In assessing the uncertainty, a com
pany has to evaluate whether it is likely that
IFRS 16 is to be applied for fiscal years begin the tax jurisdiction will accept the income tax
ning on or after 1 January 2019. The Group treatment. The new regulations must be applied
will apply the standard retrospectively in a for fiscal years beginning from 1 January 2019.
modified manner for the fiscal year beginning The Group is currently assessing which possible
on 1 January 2019, i.e. the previous year’s fig effects the application might have on the future
ures will not be adjusted. The Group will apply assets, financial and earnings situation of the
this standard to contracts previously classified Group.
as leases in accordance with IAS 17 and IFRIC
4. The new standard will not apply to contracts The amendments to IAS 19 relate to the ac
that had not previously been regarded as leases counting of plan adjustments, curtailments or
according to IAS 17 and IFRIC 4. In addition, it settlements made during a reporting period.
is planned to make extensive use of the simplifi These amendments stipulate that current ser
cation regulations existing under IFRS 16 in the vice costs and net interests be recalculated for
transition from IAS 17 to IFRS 16. the remaining period if there is a modification,
curtailment or settlement of a pension plan dur
The changeover effect mainly affects leased real ing the year. This recalculation must be based
estate and vehicles, for which no exemption on the actuarial assumptions valid at the time
can be claimed for low-value and short-term of the event. The amendments to IAS 19 must
leases. be applied to plan adjustments, curtailments or
settlements that occur at or after the beginning
With the application of IFRS 16, straight-line of the first fiscal year beginning on or after
expenses for operating leases are replaced by 1 January 2019. Early adoption is permitted.
depreciation expenses for the rights of use They only apply to plan adjustments, curtail
and interest expenses for the leasing liabilities. ments or settlements that will be made by the
An increase in fixed assets and borrowings of Group in the future. The Group does not expect
around EUR 70 million as well as an increase the application to have substantial effects on
in depreciation and interest expense on the the assets, financial and earnings situation.
one hand, and a decrease in other operat
ing expenses on the other are expected. This In October 2018, the IASB issued the amend
will result in an increase in EBITDA of around ment standard ‘Definition of Significant
EUR 20 million and in an increase in EBIT of less Amendments to IAS 1 and IAS 8’ in order to
than EUR one million as well as in a lower ROCE sharpen the definition of materiality in the IFRS
figure and a decrease in the equity ratio of and to harmonise the various definitions in the
approx. five percentage points. In the cash flow framework and in the standards. Accordingly,
statement, the changed recognition of leasing information is material when it can reasonably
expenses will lead to a reduction in cash flow be expected that its omission, misstatement or
from financing activities and an improvement in concealment will affect the decisions of primary
cash flow from operating activities. users of general purpose financial statements.
94
The amendment is mandatory for fiscal years shares are held, control was assured via further
beginning from 1 January 2020. The Group contractual agreements. This only applied to Sto
plans to analyse the effects of an application Gulf Building Material LLC., Dubai/UAE.
on net assets, financial and earnings situation.
In the case of joint ventures, Sto can exercise
The following new regulations have not yet joint control over another company together with
been approved by the EU: at least one other party via contractual agree
ments. Joint control is the case when decisions
• Amendment of the references to the frame- on the relevant activities of the company must be
work concept taken unanimously. Depending on the rights and
• Amendments to IAS 1 and IAS 8 - Definition obligations of the parties, joint agreements are
of materiality either joint operations or joint ventures. In joint
• Changes to IFRS 3 Business Combinations: operations, the controlling parties have direct
Definition of a business rights to the assets and obligations to the liabili
• IFRS 17 – Insurance contracts ties. In the case of joint ventures, the parties with
joint control have a share in the net assets of the
The Group has not yet started with the imple company by virtue of their status as partners.
mentation. These changes are not expected to
have substantial effects on the assets, financial In the case of associated companies, Sto SE &
and earnings situation. Co. KGaA has a material influence on the busi
ness and finance policy. This is usually the case
4. Companies consolidated when between 20 % to 50 % of the voting
The consolidated annual financial statement rights in a company are held.
includes Sto SE & Co. KGaA, the national and
foreign subsidiaries, joint ventures, and associ The companies in which the capital share was
ated companies. less than 50 % and which were not controlled,
are consolidated using the equity method. This
When evaluating the companies consolidated, applies to Inotec GmbH, JONAS GmbH, and
the joint control, or the type of joint control, JONAS Farbenwerke GmbH & Co. KG. JONAS
no significant evaluations or assumptions were GmbH and JONAS Farbenwerke GmbH & Co.
necessary, because the allocation was clear. KG are held as an indirect investment via Sto BT
GmbH, Stühlingen/Germany.
In the case of subsidiaries, Sto SE & Co. KGaA
is able to exercise a controlling influence as de The Slovak STOMIX Slovensko s.r.o was
fined in IFRS 10. Control as defined in IFRS 10 renamed Sto Slovensko s.r.o, the Norwegian
exists when an investor has exposure or rights Hesselberg Bygg AS was renamed StoCretec
to variable returns from its involvement with Flooring AS, and the German Sto BTJ GmbH
the investee and has the ability to use its power was renamed Sto Building Solutions GmbH.
over the investee to affect the amount of the
investee’s returns. In the present consolidated The companies consolidated are disclosed in
annual financial statement, this is the case for Note (38) List of subsidiaries and investments.
shareholdings of more than 50 % without The following fully-consolidated German com
exception. In the case of fully consolidated panies organised as limited-liability entities or
companies where less than 50 % of capital as partnerships according to Section 264a of
95
the HGB have fulfilled the conditions of Section the total cost method. The fiscal year is identical
264 (3) and/or Section 264b of the German to the calendar year. The consolidated financial
Commercial Code (HGB) in terms of preparation statements were prepared in euros. Unless oth
facilitation options and disclosure and make use erwise indicated, all values were rounded up or
of the exemption rules: down in line with commercial rounding to the
nearest thousand euros (EUR K).
• StoCretec GmbH, Kriftel/Germany
• Innolation GmbH, Lauingen/Germany The consolidated financial statements were
• Sto BT GmbH, Stühlingen/Germany generally prepared according to the cost-of-ac
• Verotec GmbH, Lauingen/Germany quisition principle, except for derivatives and
• VeroStone GmbH, Eichstätt/Germany assets measured at fair value.
• Gefro Verwaltungs-GmbH & Co. KG,
Stühlingen/Germany The major accounting and valuation policies
• Südwest Lacke + Farben GmbH & Co. KG, applied in preparing the consolidated financial
Böhl-Iggelheim/Germany statements are as follows:
• Ströher Produktions GmbH & Co. KG,
Dillenburg/Germany Currency translation
Monetary items (in particular, cash and cash
5. Consolidation principles equivalents, receivables and liabilities) are first
The assets and liabilities of the domestic and translated at the rate prevailing on the trans
non-domestic companies included in the con action date and then measured at fair value
solidated financial statements are recognised through profit and loss as at the reference date.
and measured in accordance with the uniform Non-monetary items recognised at historical
accounting methods. cost of acquisition or production are translated
using the rate at the time of the transaction.
Receivables and liabilities as well as expenses
and income between consolidated companies The financial statements of the consolidated
are netted. Inventories and transactions are ad companies prepared in a foreign currency are
justed for interim results. The income tax conse translated in accordance with the functional
quences of consolidation are taken into account currency principle using the modified closing
through the recognition of deferred taxes. rate method in accordance with IAS 21.
The shares in a joint venture or an associated The functional currency is defined as the na
company accounted for using the equity tional currency in question as the companies
method are valuated according to the same perform their business independently in finan
accounting and valuation policies which are cial, economic and organisational terms.
also applied to the determination of the share
of equity of fully-consolidated companies. Assets and liabilities were translated at the clos
ing rate, and expenses and income at annual av
6. Presentation of the major accounting erage rates. Equity is translated at historic rates.
and valuation policies Any resultant currency translation differences
The current/non-current distinction is observed are recognised separately under equity and with
in the recognition of assets and liabilities. The no effect on profit and loss until such time as
statement of profit and loss was prepared using the subsidiary in question is deconsolidated.
96
The exchange rates used for currency translation are set out in the following table:
Closing rate on Average annual rate

EUR 1 = 31 Dec 2018 31 Dec 2017 2018 2017
AED United Arab Emirates 4.2039 4.4119 4.3270 4.1845
BRL Brazil 4.4440 3.9729 4.3085 3.6054
CAD Canada 1.5605 1.5039 1.5294 1.4647
CHF Switzerland 1.1269 1.1702 1.1550 1.1117
CLP Chile 794.3524 738.6330 758.3645 737.7068
CNY People’s Republic of China 7.8751 7.8044 7.8081 7.6290
COP Columbia 3,717.0885 3,584.3845 3,502.5432 3,379.2622
CZK Czech Republic 25.7250 25.5400 25.6470 26.3260
DKK Denmark 7.4673 7.4449 7.4532 7.4386
GBP Great Britain 0.8945 0.8872 0.8847 0.8767
HUF Hungary 320.9800 310.1400 318.8900 309.1900
MXN Mexico 22.4921 23.6612 22.7054 21.3286
MYR Malaysia 4.7317 4.8536 4.7634 4.8527
NOK Norway 9.9483 9.8403 9.5975 9.3270
PAB Panama 1.1446 1.2010 1.1780 1.1393
PLN Poland 4.3000 4.1709 4.2615 4.2570
RUB Russia 79.4605 68.8668 74.0416 65.9383
SEK Sweden 10.2548 9.8438 10.2583 9.6351
SGD Singapore 1.5591 1.6024 1.5926 1.5588
TRY Turkey 6.0588 4.5464 5.7077 4.1206
USD USA 1.1450 1.1993 1.1810 1.1297
Business combinations Costs incurred within the scope of a business

Business combinations are accounted for using combination are recognised as expenses and
the acquisition method. The cost of acquisition reported as administrative costs. An agreed
of a company comprises the sum total of the contingent consideration is recognised at fair
consideration transferred, measured at fair value at the time of acquisition. Any subse
value at the time of acquisition, and of the quent changes to the fair value representing
shares without a controlling influence (minority an asset or a liability are either recognised in
interests) on the company acquired. The pur the statement of profit and loss or in other
chaser valuates the shares of minority interests earnings. A contingent consideration classified
of the acquired company, either at fair value or as equity is not remeasured, and its settlement
at the corresponding share of the identifiable at a later date is accounted for in equity.
net assets of the company acquired.
97
When the Sto Group acquires a company, the mum lease payments or the activated fair value
classification and designation of financial assets of the assets which is depreciated on a straight-
and liabilities in accordance with the contrac line basis according to the economic useful
tual terms and conditions, and the economic life. The obligations arising from future lease
circumstances and conditions are assessed. payments are carried as discounted liabilities.
Goodwill is measured at cost of acquisition on In the case of operating leases, the lease pay
first-time recognition, calculated at the surplus ments are recognised as expenses directly in the
of the consideration transferred and the shares statement of profit and loss.
without a controlling influence on the assets
acquired and liabilities assumed. Such goodwill Intangible assets
is submitted to testing once a year or as needed Goodwill is not amortised on a scheduled
to determine any impairment in its value basis, but only on a non-scheduled basis as a
(impairment-only approach). If any impairment result of a lack of recoverability based on an
in the value of the goodwill is established, the impairment test. For this, the carrying amount
corresponding impairment is recognised accord of the cash-generating unit (CGU), including
ingly. If the consideration transferred is below the allocated goodwill, is compared with the
the fair value of the net assets of the subsidiary recoverable amount of the CGU. A CGU is
acquired, then the difference is recognised with the smallest identifiable group of assets that
an impact on profit and loss in equity. generates cash inflows that are independent
of the cash inflows from other assets or groups
In the case of successive corporate acquisitions, of assets. The recoverable amount of a CGU is
the previously acquired equity share is remeas the higher value of fair value less cost of sale
ured at fair value at the time of acquisition and and the value in use. At the balance sheet date,
the result is recognised through profit and loss. the recoverable amount was determined on the
basis of the value in use.
Leases
The assessment as to whether a contract in If goodwill is found to be impaired, its value
cludes a lease is made at the time of contract is adjusted accordingly. If the impairment is
ing on the basis of the economic content of greater than the value of the goodwill, the ex
the contract and calls for an evaluation as to cess amount is distributed across the remaining
whether settlement of the contractual agree assets of the CGU.
ment is dependent on the use of a certain asset
and whether the contract grants a right to use For the CGUs Sto, Beissier S.A.S, and Ströher,
the asset, even if this is not explicitly specified.significant due to their existing goodwill, fore
casts were made on the basis of external factors
Leased property, plant, and equipment satisfy with regard to the economic situation in order
the conditions for classification as finance leases to determine turnover and gross income. The
in accordance with IAS 17 provided that all the main forecasts based on internal factors were in
opportunities and risks incidental to ownership each case related to empirical values regarding
of these assets have been transferred to the les the 5-year plan, in particular with regard to
see. In this case, property, plant, and equipment steady turnover growth in the single-digit per
in question are recognised at the lower value, centage range due to growing sales potential,
which is either the present value from the mini a constant gross profit, a constant discount in
98
terest rate per company and a 1 % growth rate Research and development costs
for the period beyond the planning horizon. Research and development costs were recog
nised with an impact on profit and loss since
A 5-year plan as of 31 December 2018 for capitalisation of the development costs in the
the fiscal years 2019 to 2023 of the respective form of Intangible assets is not possible under
CGUs is the starting point for determining the IAS 38 as the requirements are not met. The
value based on the best possible information main tasks of the research and development
available internally and externally. This is based department are the identification of alternative
on the expectation of a positive development of materials, products, and processes.
demand for thermal insulation as well as on the
planning of maintenance investments. Property, plant, and equipment
Property, plant, and equipment are recognised
A growth rate of 1.0 % was assumed for all at acquisition or production cost less cumula
CGUs, as in the previous year, since this suffi tive depreciation and cumulative impairment
ciently reflects the uncertainty which increases losses.
during this time period.
The cost of acquiring property, plant, and
For discounting the cash flows, the weighted equipment comprises the purchase price
average cost of capital after taxes (WACC after including import duties and non-refundable
taxes) is used as the discount factor, which purchase taxes as well as any costs directly at
differs by country-specific variations. Based on tributable to bringing the asset to the location
the respective WACC after taxes, the implicit and condition necessary for it to be capable of
WACC before taxes is determined by iteration. operating.
The WACC takes into account both equity costs,
which include a risk-free basic interest rate, the The production costs for property, plant and
respective country risk, and the entrepreneurial equipment comprises the expenditure incurred
risk (market risk premium multiplied by a specific in utilising goods and services for such a
beta factor), as well as borrowing costs. The production or manufacture. In addition to the
discount rates before taxes were between 7.8 % directly attributable costs, this also includes a
and 12.1 % (previous year: 5.8 % to 11.3 %). reasonable share of the necessary overheads.
The following pre-tax interest rates were used Depreciation is calculated on a straight-line
for CGUs which are key CGUs in the sense of basis using the following useful lives:
goodwill: Sto: 9.3 % (previous year: 7.3 %),
Beissier S.A.S.: 10.9 % (previous year: 8.3 %), Useful lives
Ströher: 9.3 % (previous year: 7.3 %).
Buildings 20 to 30 years
Management believes that no expected change Fixtures to land 8 to 12 years
in key assumptions will cause the carrying Technical equipment and machinery 8 to 10 years
amount of the CGU to exceed its recoverable Other plant, operating and business
amount. equipment 3 to 10 years
The essential goodwill items are listed in The useful lives and residual carrying amounts
Note (12). are audited regularly.
99
Maintenance and small repairs are recognised a customary transaction less the incurred costs,
through profit and loss. whereas the value in use is the present value of
the estimated future cash flows expected from
Plants under construction are assigned to prop the use of an asset plus the remaining value
erty, plant, and equipment and are recognised at the end of its useful life. The recoverable
at their procurement and production costs. amount is either estimated for an individual
Depreciation only takes place from the time of asset, if it generates cash and cash equivalents
readiness for operation. independently from other assets, or for the
cash-generating unit in total.
Borrowing costs
Borrowing costs which are to be directly If the impairment no longer exists or has
assigned to the acquisition, construction or decreased, a reversal of the impairment loss is
manufacture of an asset for which a substantial recognised as income in the statement of profit
period of time is required in order to render and loss. No reversal is made to an impairment
the asset ready for its intended use or sale are of goodwill.
capitalised as part of the cost of acquisition
or production of the relevant asset. All other Financial assets accounted for using the
borrowing costs are recognised as an expense equity method
in the period in which they were incurred. The financial assets accounted for using the
Borrowing costs are interest and other costs in equity method relate to a joint venture for
curred by a company in connection with taking which a contractual agreement exists regarding
on debt capital. the joint control of the company, and to two
associated companies.
The Group did not hold any assets to which
borrowing costs were directly allocated. The The shares are first accounted for at their cost
unallocated portion of borrowing costs was of acquisition. Then the carrying amount of the
insignificant. shares is increased or decreased annually to
recognise the share of after-tax profits or losses,
Impairment on property, plant, and equip- distributed dividends, impairment, and other
ment, and intangible assets changes to equity. In determining an impair
Property, plant, and equipment, and intangible ment loss for the Group’s share in the invest
assets are tested for impairment if there is any ment accounted for using the equity method,
evidence that their carrying amount may no the difference between the recoverable amount
longer be recoverable. If the carrying amount and the carrying amount of the share is recog
of an asset exceeds its recoverable amount, an nised in profit and loss as an impairment loss.
impairment loss is recorded with an impact on
profit and loss for property, plant and equip Trade receivables and other financial assets
ment, and intangible assets initially recognised Trade receivables and other originated financial
at acquisition or production cost. The recov assets were recognised at amortised acquisition
erable amount is the higher value of the net costs net of any individual value adjustments
realisable amount and the value in use. and flat-rate value adjustments in accordance
with IFRS 9, which take sufficient account of
The net realisable amount is the amount which the expected default risk.
can be recovered from the sale of the asset in
100
The impairment model under IFRS 9 requires All receivables and financial assets were tested
the recognition of expected losses and replaces for existing impairment and default risks. The
the impairment model under IAS 39, which default risk for trade receivables increases signif
is based on losses incurred. When valuating icantly if they are more than one year overdue.
impairments in accordance with IFRS 9, the sim
plified approach was chosen, which leads to the Inventories
expected impairment of trade receivables over Inventories were recorded at the lower of
the entire term being taken into account. The acquisition or production cost and the net real
model can be applied to financial assets that are isable amount. The net realisable amount is the
valuated at amortised costs or at fair value with recoverable selling price in the ordinary course
changes in value recognised in other earnings. of business less the costs of completion and the
costs necessary to make the sale.
Suitable models for determining default rates
were developed to implement the new impair Costs incurred in bringing the inventories to
ment rules. The starting point for this was an their location and present condition were rec
analysis of historical default rates within the ognised as follows:
Sto Group. These default rates are reviewed
annually and adjusted if necessary. The value • Raw materials, processing aids, operating
adjustments in the consolidated financial materials, and trading goods
statements were all recognised in profit and – Weighted average price
loss, and the amount of impairment losses in • Finished assets and assets under construction
accordance with IFRS 9 was mainly the result –D irect labour and material costs as well as
of overdue items and, in the case of individual a reasonable share of the production over
value adjustments, based on the existence of heads based on the normal capacity of the
objective indications. Defaults on receivables led production equipment net of borrowing
to a direct derecognition of the receivables in costs.
question.
Cash and cash equivalents
The expected 12-month losses were deter Cash and cash equivalents comprise cash in
mined on the basis of credit default swaps in hand and credit balance with banks including
order to calculate the impairment of finan liquid deposits available at short notice, which
cial investments. Impairment losses on other can be converted into cash and cash equivalents
financial assets were divided into relationships at any time, with original settlement periods of
with suppliers and associated companies. The a maximum of three months and which are not
credit rating by Creditreform was used for the subject to any significant fluctuations in value.
calculation.
The expected 12-month losses based on credit
Furthermore, credit assessment of customers default swaps were used to determine the
was carried out by obtaining information from impairment of securities, and cash and cash
credit agencies and using credit management equivalents.
software, which was also used to determine
a credit limit. If the individual credit limit was Financial instruments
exceeded, an approval was only given after an According to both IAS 39 and IFRS 9, a financial
examination of the specific case. instrument is a contract that gives rise to a
101
financial asset for one company and a financial Financial instruments measured at fair
liability or equity instrument for another. value through profit and loss
Financial instruments at fair value through profit
Financial instruments result from contractual or loss include financial assets held for trading,
agreements that do not necessarily have to be derivatives as well as financial assets and equity
drawn up in writing. instruments for which the fair value option was
exercised upon initial recognition.
IAS 39 defines the following different cate-
gories for financial assets: Financial assets are classified as held for sale
• Financial instruments measured at fair value if they had been acquired for the purpose of
through profit and loss being sold in the near future. Subsequently,
(Fair Value through Profit or Loss = FVtPoL) these financial instruments are examined to
• Held-to-maturity financial assets determine whether the intention to sell still
(Held-to-Maturity Investments = HtM) exists. Gains or losses from this category are
• Loans and receivables recognised through profit and loss.
(Loans and receivables = LaR)
• Available-for-sale financial assets Reclassification to financial instruments meas
(Available-for-Sale = AfS) ured at amortised costs depends on the nature
of the asset and does not affect financial instru
IFRS 9 defines the following different cate- ments designated at fair value through profit or
gories for financial assets: loss under the fair value option.
• Financial instruments measured at fair value
through profit and loss Held-to-maturity financial assets
(Fair Value through Profit or Loss = FVTPL) Held-to-maturity instruments in accordance
• Financial instruments measured at fair value with IAS 39 are non-derivative financial assets
with no impact on profit and loss with fixed or determinable payments and fixed
(Fair Value through Other Comprehensive maturities if the Group has the intention and
Income = FVOCI) ability to hold them to maturity and if there is
• Financial assets measured at amortised costs an active market for such assets. After initial
of acquisition recognition, held-to-maturity financial assets
(Financial Instruments at amortised costs are measured at amortised costs of acquisition
= FAAC) using the effective interest method. Gains and
losses are recognised in profit or loss for the
Financial liabilities are classified as follows period in which the assets are derecognised or
in accordance with IAS 39 and IFRS 9: impaired, and through the amortisation process.
• Financial liabilities at fair value through
profit and loss (according to IAS 39 Financial Loans and receivables
Liabilities Held for Trading = FLHfT, according According to IAS 39, loans and receivables are
to IFRS 9 Financial Liabilities measured at fair non-derivative financial assets with fixed or
value through profit and loss = FLTPL) determinable payments that are not quoted in
Financial liabilities measured at amortised an active market. After initial recognition, loans
cost (FLAC) and receivables are measured at amortised
costs of acquisition using the effective interest
method net of any impairment losses. Gains
102
and losses are recognised in profit or loss for Financial assets measured at amortised
the period when the loans and receivables are costs of acquisition
derecognised or impaired. Financial assets measured at amortised costs
of acquisition are debt capital instruments for
In the case of current receivables and liabilities, which the business model condition is met to
amortised costs of acquisition equal the nomi the extent that cash flows are generated from
nal or settlement amount in principle. the holding, or holding and sale of assets, and
for which the cash flows consist exclusively of
Available-for-sale financial assets interest and principal payments.
According to IAS 39, available-for-sale financial
assets are non-derivative financial assets that Non-derivative financial assets with fixed or
are designated as available for sale and not determinable payments and fixed maturities
allocated to any of the three above-mentioned are recognised at amortised acquisition costs
categories. After initial recognition, they are if the Group has the intention and ability to
measured at their fair value. Unrealised gains hold them to maturity and if there is an active
and losses are recognised directly within equity. market for such assets. After initial recognition,
If such a financial asset is derecognised or held-to-maturity financial assets are measured
impaired, the cumulative gains or losses hith at amortised costs of acquisition using the
erto recognised within equity are recognised effective interest method. Gains and losses are
through profit and loss. recognised in profit or loss for the period in
which the assets are derecognised or impaired,
Financial instruments measured at fair and through the amortisation process.
value with no impact on profit and loss
Financial instruments measured at fair value Financial assets are assigned to one of the
with no impact on profit and loss in accordance above valuation categories upon initial recogni
with IFRS 9 comprise equity instruments and tion. Where permissible and necessary, they are
debt capital instruments where the business reclassified at the end of the accounting period.
model condition is met, i.e. where the company
intends to hold or sell these instruments to The Group expects a significant increase in the
generate the contractually agreed cash flows. In default risk for a financial asset if contractual
addition, the cash flow condition must be met payments are more than 365 days overdue. In
for debt capital instruments, i.e. the cash flows addition, the Group may in certain cases expect
of the financial instrument consist exclusively of that a financial asset will default if internal or ex
interest and principal payments. ternal information indicates that it is unlikely that
the Group will receive all outstanding contractual
Financial instruments in this category are meas amounts in full before all credit collateral held
ured at fair value and changes in value or gains by it is taken into account. A financial asset is
or losses are recognised without impact on depreciated if there is no reasonable expectation
profit and loss in reserves. When a debt capital that the contractual cash flows will be realised.
instrument is derecognised, the accumulated
gains or losses are reclassified to the statement All purchases and sales of financial assets in ac
of profit and loss (‘recycling’). When an equity cordance with normal market conditions are re
instrument is derecognised, any incurred gains corded on the trading day, i.e. the day on which
or losses remain in reserves. the Group assumes the obligation to buy or sell
103
the asset. These transactions are in accordance derivative financial instruments are recognised
with normal market conditions if delivery of the at their fair value as of the date on which
assets takes place within a defined period. the contract is entered, and are measured in
subsequent periods at their fair value with an
Financial liabilities at fair value through impact on profit and loss. An asset or liability is
profit and loss recognised depending on whether the fair value
Financial liabilities at fair value through profit is positive or negative.
and loss comprise financial liabilities held for
trading as well as other financial liabilities which Derivative financial instruments are currency
are initially recognised as financial liabilities at forwards. These are used to hedge the risk
fair value through profit and loss. arising from fluctuations in the cash flow of a
recognised asset, a recognised liability, a highly
The Group has not yet made use of the probable future transaction, or a currency risk
designation of financial liabilities at fair value of an unrecognised firm commitment.
through profit and loss.
The fair value of the currency forwards is
Financial liabilities at amortised cost calculated on the basis of the current forward
Financial liabilities measured at amortised costs exchange rate for contracts with a similar matu
are initially recognised at fair value and subse rity structure.
quently measured using the effective interest
method less value adjustments, repayments and In the fiscal year of 2018, there were no hedges
taking into account discounts, premiums, and satisfying the strict hedge accounting criteria.
transaction costs.
Treasury stock
Gains or losses are recognised through profit Sto SE & Co. KGaA’s treasury stock is deducted
and loss upon derecognition or disposal. from equity. The purchase, sale, issue and
redemption of treasury stock is not recognised
A financial liability is derecognised if the obliga in profit and loss.
tion underlying the liability no longer exists.
Post-employment benefit provisions
If an existing financial liability is exchanged by Actuarial measurement of the post-employment
some other financial liability of the same lender benefit provisions is based on the project
subject to substantially different contractual ed-unit-credit method for defined benefit plans
terms and conditions, or if the terms and con for pension schemes as defined in IAS 19.
ditions of an existing liability are significantly Under this method, the pension obligations and
changed, then such an exchange or modifica acquired entitlements existing at the balance
tion will be treated as derecognition of the orig sheet date are determined on the basis of aver
inal liability and recognition of a new liability. age life expectancy, future salary and pension
The difference between the respective carrying increases, the expected retirement age, and the
amounts is recognised through profit and loss. expected fluctuation.
Derivative financial instruments Average life expectancy is estimated on the

In the Group, derivative financial instruments basis of acknowledged biometric models.
are used for hedging of currency risks. The Actuarial gains and losses are recognised after
104
the consideration of deferred taxes in other Deferred taxes

earnings with no impact on profit and loss. As a matter of principle, deferred taxes are rec
ognised for all temporary differences between
The defined benefit asset or liability comprises the tax balance sheet and the consolidated
the present value of the defined benefit obliga balance sheet.
tion less existing plan assets which are used to
directly settle obligations. The plan assets are They are not set up if a temporary difference
qualified insurance policies that are protected arises from goodwill or the initial recognition
against access by creditors and cannot be paid of other assets and liabilities from a transaction
out to the Group. Valuation is based on the fair (other than a business combination) which
value. As for the pension plan of the Euro com affects neither tax earnings nor commercial
panies, this corresponds to the present value of earnings.
the covered liability.
Deferred tax assets which are not expected to
Other provisions be recognised in a defined period of time are
In accordance with IAS 37, provisions are formed value-adjusted. At each balance sheet date, an
for present liabilities towards third parties from assessment is made as to whether the asset can
a past event which is likely to result in a future be capitalised. In addition, deferred tax assets
outflow of economic resources, the amount of on tax loss carryforwards are to be recognised if
which can be estimated as accurately as possible. use can be expected.
Provisions are reviewed and adjusted at each Deferred tax liabilities are formed for temporary
balance sheet date. differences arising from shares in subsidiar
ies, associated companies, and joint ventures
Provisions in which the interest effect exercises unless the parent company is able to control
a significant effect in connection with the the reversal of the temporary difference and
settlement of the obligation are recognised at the temporary difference is unlikely to reverse
the present value of the expected expenses. The within a defined time period.
discount is based on risk-free interest rates. The
settlement amount also includes any expected Deferred tax assets and liabilities are netted if
increase in costs. the deferred taxes relate to one and the same
tax payer and the same taxation authority and if
If the conditions for setting up a provision are there is a legally enforceable right to set off the
not met but the likelihood of an outflow of tax reimbursement claims against tax liabilities.
resources embodying an economic benefit is
not unlikely, the corresponding liabilities are Deferred taxes are measured in accordance with
reported under contingent liabilities. the applicable national income tax rates ex
pected as of the date of realisation, on the basis
Trade payables and other financial liabilities of applicable or enacted tax law or the changes
Trade payables and other financial liabilities are to the tax law that can be reliably estimated.
measured at amortised cost of acquisition. Any
differences between historical acquisition costs Deferred taxes are recorded as tax asset or ex
and the settlement amount are reported in pense in the statement of profit and loss unless
accordance with the effective interest method. they relate to other earnings items recognised in
105
equity that have no impact on profit and loss. In by the Group in exchange for the goods or
this case the deferred taxes are also recognised services. If a contractual consideration includes
in equity with no impact on profit and loss. a variable component, the Group determines
the amount of the consideration to be received
Recognition of income and expenses in exchange for the transfer of the goods to
Revenues from contracts with customers are the customer. The variable consideration is esti
recognised when control of the goods or ser mated at the inception of the contract and may
vices is transferred to the customer. be included in the transaction price only if it is
highly probable that there will be no significant
In the manufacture of products and systems change in the cumulative amount of revenue
for thermal insulation and building coatings, and if the uncertainty associated with the varia
revenues from contracts with customers mainly ble consideration does not exist.
result from deliveries of goods, which are
generally recognised at the time of delivery. The In determining the transaction price, expected
payment period is usually 30 to 90 days after rebates and discounts are separated from the
delivery. In addition, services are provided on agreed price, both in the case of the separate
a small scale for which the sales revenues are sale of goods or services and in the case of the
recorded in the period in which the services are combined sale of goods and services, according
rendered. The payment period is usually 30 to to the principle of individual valuation, without
60 days after the service has been rendered. revenue being recognised for them.
Some contracts are designed in such a way Advance payments received from customers are
that both an original delivery of goods and an short-term, i.e. at the inception of the contract
associated craftsman’s service are provided. This it is expected that the period between the
is a service obligation to be accounted for as transfer of the promised good or service and
a whole, as the delivery and processing of the payment will not exceed one year. Therefore,
materials are related in accordance with the un the Group makes use of the simplification
derlying agreement. Revenue is recognised after regulation of IFRS 15 and does not adjust the
the complete service has been rendered. amount of the promised consideration by the
effects of a significant financing component.
The Group is responsible for providing the
statutory warranty for remedying defects that In addition, the Group makes use of the sim
existed at the time of sale. Provisions are set up plification regulation of IFRS 15.121 and does
for the expected utilisation. Furthermore, in very not disclose any remaining service obligations
rare cases, the Group grants a warranty that whose underlying contracts have an expected
extends beyond the statutory period. This is a original term of one year or less. Revenue other
separate performance obligation of the Group than from contracts with customers is recog
for which the sales revenues are not recognised nised if it is probable that economic benefits
as contract liabilities due to insignificance and will flow and if the revenue amount can be
are recognised with an impact on profit and determined reliably, irrespective of the time of
loss over the contract term. payment. Revenue is measured at the fair value
of the consideration received or to be received,
The amount of revenue recognised corresponds taking into account contractually agreed pay
to the consideration expected to be received ment terms, excluding taxes or other levies.
106
Interest income and interest expenses are rec meet his payment obligations according to
ognised for all financial instruments measured the conditions of a debt instrument. Financial
at amortised cost using the effective interest guarantees are treated as insurance contracts
rate. This is the discount rate used to discount pursuant to IFRS 4 as contingent liabilities until
estimated future cash receipts and payments a claim will become probable. An obligation is
over the expected term of the financial instru then recognised in the balance sheet.
ment or, if applicable, a shorter period, to the
net carrying amount of the financial asset or Events after the balance sheet date
financial liability. Interest income is reported Value-enhancing events occurring after the
in the statement of profit and loss as part of balance sheet date which provide significant
financial income. information on the Group’s situation at the bal
ance sheet date are included in the statement
Operating expenses are reported upon utilisa of financial position. Events occurring after
tion of the service or on the date on which they the balance sheet date that impact value are
are caused. disclosed in the notes.
For some projects, income and expenses from Discretionary decisions by Management
construction contracts are recognised accord The preparation of the consolidated financial
ing to the degree of completion (percent statements requires discretionary decisions by
age-of-completion method). The percentage of Management, which affect the recognition and
completion is determined on a pro rata basis ac valuation of the reported assets, and liabilities,
cording to the costs incurred up to the balance income, and expenses in the period under
sheet date in relation to the total estimated review.
costs for the project.
This affected the segment reporting in accord
Funding from the public sector ance with IFRS 8 where the business areas Amer
Funding from the public sector is recognised in ica and Asia were pooled as one segment under
accordance with IAS 20 if there is certainty that Other. This arrangement of segments results
the conditions for the funding will be met in from internal management control and internal
the form of conditions and that the funding will reporting which follows this control as well as
be granted. from comparable economic characteristics relat
ing to the products and sales methods that have
Expense-related funding is collected through led to comparable gross profit margins.
profit and loss in the period in which the
expenses to be defrayed are incurred. The con Current financial assets included financial
ditions to be fulfilled will be reviewed when the instruments that met the business model and
grant is called in in order to prevent repayments cash flow conditions, so that they were classi
later on. fied as financial instruments at amortised costs.
Financial guarantees Estimates and assumptions by

Financial guarantees extended by the Group Management
are contracts which obligate the making of The preparation of the consolidated financial
payments, and indemnify the guarantee holder statements requires Management to make esti
for a loss arising from a debtor who did not mates and assumptions on the basis of available
107
information, which affect the recognition and EUR 2,289 K) and the deferred tax assets at
valuation of reported assets, debt, income and EUR 20,541 K (previous year: EUR 19,580 K).
expenses as well as contingent liabilities in the The income tax liabilities total EUR 6,135 K
period under review. (previous year: EUR 2,240 K), the income tax
receivables EUR 2,577 K (EUR 2,552 K).
In particular, the expected future business
development, the circumstances prevailing at • Non-current and current provisions
the time of preparation of the consolidated The assumptions for the calculation of
financial statements and the development of warranty provisions are based on empirical
the global and industry-related environment values for complaints and the latest infor
deemed probable were taken as a basis. mation available. Furthermore, uncertainties
arise with regard to pending court cases
In applying the Group’s accounting policies, regarding compensatory damages in terms
Management has made the following estimates of compensation payments and the duration
or assumptions that have a material impact of the proceedings. In general, we expect
on the valuation in the consolidated financial the provision to be utilised only after damage
statements: recovery.
• Impairment of non-financial assets • Pension benefits

If the carrying amount exceeds the fair value, The expense from defined benefit plans after
the fair value is compared with the value in termination of employment and the present
use as a further impairment test. The calcu value of pension obligations are determined
lation of fair value less cost of sale is based by actuarial calculations based on various
on data from binding sales transactions assumptions. These parameters include
between independent business partners con future discount rates, the mortality rate,
cerning similar assets or observable market the expected age of retirement, and future
prices less directly attributable costs of selling pension increases. Due to the complexity
the asset in question. The discounted cash of the valuation and its long-term nature, a
flow method is used to calculate the value defined benefit obligation reacts sensitively
in use. The cash flows are derived from the to deviations from these assumptions. All
finance plan for the next five years, but with assumptions are reviewed at balance sheet
out expansion investments. The value in use date.
is also dependent on the underlying discount
as well as on the growth rate. In determining the discount rate, Manage
ment relies for guidance on the interest rates
• Taxes of corporate bonds in the respective currency
Uncertainties exist concerning the interpre with at least an AA rating; these interest
tation of complex tax-related regulations, rates are adjusted to the expected term of
amendments to taxation law as well as the the defined benefit obligation by extrapola
extent and time of origin of earnings taxable tion.
at a future date.
The mortality rate is based on publicly acces
On 31 December 2018, the deferred tax lia sible mortality tables for the country in ques
bilities stood at EUR 2,099 K (previous year: tion. Future increases in wages and salaries
108
as well as pensions are based on expected On 31 December 2018, the carrying
future inflation rates for each country. The amount of the trade receivables to
expected age of retirement is determined talled EUR 135,770 K (previous year:
on the basis of company-specific data of the EUR 126,186 K).
past few years as well as future expectations.
• Provisions
The present value of the perfor Management is required to make assess
mance-oriented liabilities in the amount ments, especially as regards recognition and
of EUR 134,377 K (previous year: valuation of warranty provisions. Provisions
EUR 133,745 K) will be netted against the for warranties are set up if the occurrence of
fair value of the plan asset in the amount of a warranty commitment is considered to be
EUR 35,110 K (previous year: EUR 34,651 K). probable. For instance, the assessment of the
Post-employment benefit provisions degree of probability and the extent is based
amount to EUR 99,267 K (previous year: on past experience, external experts, and
EUR 99,094 K). current information available.
• Fair value of financial instruments As at 31 December 2018, the carrying

To the extent that the fair value of financial amounts of the current and non-current
assets and financial liabilities recognised in warranty provisions amount to EUR 38,758 K
the statement of financial position cannot and EUR 9,056 K respectively (previous year:
be measured by means of data sourced EUR 38,965 K and EUR 9,148 K respectively).
on an active market, it will be determined
using measurement methods, including the On the date of preparation of the consolidated
discounted cash flow method. The input financial statements there were no significant
parameters included in the model are based risks to the underlying assumptions and esti
on observable market data as far as possible. mates which would have required significant
adjustments of the carrying amounts of the
A net receivable of EUR 186 K (previous assets and liabilities recognised in the consoli
year: liability of EUR 237 K) resulted from the dated balance sheet in the following account
financial instruments measured at fair value ing period.
on 31 December 2018.
• Receivables
Individual value adjustments, and value ad
justments are made in accordance with IFRS
9 for receivables in order to take account of
expected losses due to customers’ inability to
pay. The appropriateness of value adjust
ments of receivables are assessed on a case-
to-case basis and are also based on maturity
and experience with regard to defaults in the
past, as well as changes in payment behav
iour.
109
Consolidated segment reporting

as at 31 December 2018
Information on geographic Western Europe Other

segments by sales markets
Northern/Eastern Europe America/Asia
in EUR K
2018 2017 2018 2017 2018 2017
External revenues 1,024,410 970,751 156,671 151,532 151,289 155,115

Inter-segment revenues 40,880 38,203 1,738 1,415 41 25
Segment turnover 1,065,290 1,008,954 158,409 152,947 151,330 155,139
EBITDA 102,139 103,545 4,554 1,926 6,677 11,459
Depreciation/amortisation* 25,132 26,485 2,687 3,317 3,479 3,543
EBIT (earnings before

interest and taxes) 77,007 77,059 1,867 –1,392 3,198 7,916
Interest income 902 840 232 229 381 376

Interest expense 2,978 2,914 322 303 64 37
EBT (earnings before taxes) 74,930 74,985 1,777 –1,466 3,515 8,255
Segment assets 597,444 562,254 84,222 86,444 79,640 78,766
Investments 26,800 27,426 1,973 1,827 3,299 3,487
Employees as at the
balance sheet date 4,094 4,050 636 652 603 606
Notes on product groups

in EUR K Facade systems Facade coatings Interiors
2018 2017 2018 2017 2018 2017
External revenues 634,866 601,501 302,307 307,629 190,728 186,034
Segment reporting is explained in Note (30).
* The depreciation/amortisation of the current year includes EUR 14 K (previous year: EUR 1,622 K) of impairment expenses. Of that amount, EUR 7 K (previous year: EUR 1,075 K)
are attributable to Western Europe, EUR 7 K (previous year: EUR 465 K) to North/Eastern Europe, and EUR 0 K (previous year: EUR 82 K) to America/Asia.
110
Reconciliation/ Group
consolidation
booking entries
2018 2017 2018 2017
0 0 1,332,370 1,277,398
–42,659 –39,643 0 0
–42,659 –39,643 1,332,370 1,277,398
–174 388 113,196 117,317
0 0 31,299 33,346
–174 388 81,898 83,972
–788 –719 726 726

–788 –719 2,575 2,535
–56 388 80,166 82,162
23,118 22,133 784,424 749,597
0 0 32,072 32,740
0 0 5,333 5,308
Other
product groups Group
2018 2017 2018 2017
204,469 182,234 1,332,370 1,277,398
111
Notes on the statement

of profit and loss
(1) Revenues
For the purposes of segment reporting, rev
enues are broken down by geographic sales
market and business segment.
(2) Other internally generated assets

capitalised
As in the previous year, other capitalised,
internally generated assets mainly comprise
the internally generated asset for constructed
Technical equipment and machinery as well as
Buildings.
(3) Other operating income
in EUR K 2018 2017
Income from the reversal of

provisions and accrued liabilities 6,912 8,617
Income from the reversal of value adjust-
ments to receivables and other assets 5,229 4,200
Income from changes in exchange rates 3,913 3,886
Proceeds from derecognised receivables 416 482
Income from the disposal of assets 423 1,217
Income from recharged expenses
to third parties 115 79
Funding from the public sector 76 139
Other operating income 5,842 8,665
Total other operating income 22,926 27,285
Income from asset disposals does not include In the previous year, other operating income
any special effects in the current fiscal year (pre saw an addition of an extraordinary income of
vious year: EUR 846 K at VeroStone GmbH). EUR 3,842 K (USD 4,250 K) from the settlement
of a court litigation proceeding in the USA.
Funding from the public sector essentially
consists of research grants. To some extent,
this funding is subject to certain conditions.
We assume that we can meet the conditions
imposed.
112
(4) Cost of material
in EUR K 2018 2017
Raw materials, processing aids, and operating materials 280,745 264,194

Goods purchased 322,323 297,159
Total expenses for raw materials, processing aids,
operating materials, and goods purchased 603,068 561,353
Temporary staff 3,375 3,347

Commission production 9,488 5,902
Total expenses for services purchased 12,863 9,249
Total expenses for materials 615,931 570,602
Expenses for commission production were

mainly attributable to StoCretec Flooring AS
(formerly Hesselberg Bygg AS) to the amount
of EUR 5,337 K (previous year: EUR 2,426 K)
and to Sto Epitöanyag Kft. to the amount of
EUR 1,761 K (previous year: EUR 1,375 K).
(5) Personnel expenditure
in EUR K 2018 2017
Wages and salaries 286,685 278,237

Social security contributions 38,852 39,325
Expenses for social security contributions, and for support 26,725 24,238
Total personnel expenses 352,262 341,800
Expenditure on post-employment benefits pri In the year under review, approx. EUR 13.5 mil
marily comprises additions to the post-employ lion (previous year: approx. EUR 14.1 million)
ment benefit provisions as stated in Note (22). were recognised with an impact on profit and
loss.
Annual average headcount

Number 2018 2017
Employees 5,164 5,123

Trainees 197 204
Total number of employees 5,361 5,326
113
(6) Other operating expenses (7) Depreciation/amortisation

The amortisation of intangible assets and the
in EUR K 2018 2017 depreciation of property, plant, and equipment
are analysed in the appropriate parts of these
Selling and marketing costs 129,923 132,919 Notes.
Administration costs 49,552 48,772
Rental and lease payments 29,591 29,273 (8) Earnings from financial assets account-
ed for using the equity method
Operating costs 29,574 29,378
Value adjustments to Earnings from financial investments accounted
receivables and other assets 9,599 9,353
for using the equity method amounts to
Other staff costs 7,151 6,498 EUR 118 K (previous year: EUR 0 K) in the year
Expenses due to changes under review.
in exchange rates 4,630 4,923
Losses from the disposal (9) Net interest income
of non-current assets 881 130
in EUR K 2018 2017
Other expenses 12,952 13,507
Other interest and similar
Other operating expenses 273,853 274,753 income 726 726
Interest and similar expenses –760 –667
The item Selling and marketing costs mainly Interest expense for post-em-
ployment benefit obligations –1,590 –1,634
includes outbound freight, warranty services as
well as advertising and travel expenses. Compounding interest of
other non-current provisions
and liabilities –214 –221
Value adjustments of receivables and other
Interest expense for
assets include defaults on receivables of
finance leases –11 –13
EUR 1,082 K (previous year: EUR 2,260 K)
which have not been adjusted as well as addi
tions to value adjustments. Total net interest income –1,849 –1,809
Expenses from currency translation changes

primarily comprise exchange rate losses arising
between the date of the transaction and date
of payment as well as currency translation
losses using closing rates.
114
(10) Taxes on income and earnings
Breakdown of tax expense
in EUR K 2018 2017
Actual domestic tax expense 19,310 16,765

Actual non-domestic tax expense 8,280 10,866
Actual tax expense 27,590 27,631
of which off-period tax expense 984 –31
Expense/income from reversal of tax liabilities (off-period) –5 –44
Actual taxes on income and earnings 27,585 27,587
Deferred tax income/expense, domestic –1,133 –717
Deferred tax income/expense, non-domestic –96 –532
Deferred tax income/expense –1,229 –1,249
Income tax expense reported 26,356 26,338
In the 2018 assessment period, the statutory

corporate tax in Germany was levied at a rate
of 15.0 %, which is the same as in the previous
year. Including trade tax and the solidarity sur
charge, this resulted in an aggregate tax rate of
28.6 % (previous year: 28.6 %).
The local income tax rates for foreign compa

nies ranged between 0 % and 34.0 % (previ
ous year: 0 % to 35.7 %). Deferred taxes were
measured using the tax rates valid or enacted as
of the balance sheet date.
In 2018, the realisation of tax loss carryforwards

from previous years that had not been subject
to deferred taxes, led to a reduction in current
taxes on income and earnings of EUR 183 K
(previous year: EUR 50 K).
Tax loss carryforwards were valued at

Tax loss carryforwards of EUR 18,317 K (pre
vious year: EUR 15,969 K) are available for an
indefinite period, while EUR 4,321 K (previous
year: EUR 4,063 K) may only be utilised within
115
five years, and EUR 2,572 K (previous year: Recording actuarial profits and losses with no
EUR 2,452 K) only within ten years. impact on profit and loss in accordance with
IAS 19 resulted in a decrease in equity due
Of the tax loss carryforwards, a sum of to the decrease in deferred tax assets in the
EUR 14,751 K (previous year: EUR 14,339 K) amount of EUR 492 K in the current fiscal year
is assumed to not be available for the time (previous year: increase in equity due to the
being. Of these, EUR 7,858 K (previous year: addition of deferred tax assets in the amount of
EUR 7,959 K) are available for an indefinite EUR 1,139 K).
period, while EUR 4,321 K (previous year:
EUR 3,928 K) may only be utilised within No deferred taxes were recognised for tem
five years and EUR 2,572 K (previous year: porary differences of EUR 5,709 K on the
EUR 2,452 K) only within ten years. profits retained by subsidiaries (previous year:
EUR 5,392 K) as, historically, these profits have
Of the tax loss carryforwards rated available, always been used to extend business activities
EUR 7,470 K (previous year: EUR 5,173 K) were at the individual locations and will continue to
attributable to companies whose earnings for be used for this purpose in the future.
the year of 2018 was negative. As the affected
companies are mainly those companies with a The following deferred tax assets and liabilities
profit history and as the earnings plans of the are recognised to allow for recognition and val
affected companies for the following years are uation differences in the individual items of the
positive, the tax loss carryforwards in the corre balance sheet and the tax loss carryforwards:
sponding amount were classified as available.
A total of EUR 795 K (previous year:

EUR 1,061 K) of deferred tax income accounted
for temporary differences and tax rate changes.
Deferred tax income from temporary differ
ences amounts to EUR 830 K (previous year:
EUR 3,086 K).
Deferred tax expenses from changes to the

tax rates amount to EUR 35 K (previous year:
EUR 2,025 K). In the previous year, the effects
from the change to the tax rate mainly affected
the Group companies in the USA (tax rate re
duction from 37.6 % to 23.1 %) and in France
(tax rate reduction from 33.3 % to 28.0 %)
and were attributable to announced tax rate
reductions.
Deferred tax assets with no impact on profit

and loss amounted to EUR 9,117 K at the bal
ance sheet date (previous year: EUR 9,041 K).
116
Balance sheet item
in EUR K Deferred tax assets Deferred tax liabilities

31 Dec 2018 31 Dec 2017 31 Dec 2018 31 Dec 2017
Intangible assets 206 224 1,568 1,704

Property, plant, and equipment 1,631 645 4,919 5,107
Non-current financial assets 515 589 209 93
Inventories 1,818 1,796 204 174
Current trade receivables 1,532 1,526 1,011 336
Current financial assets 81 2 1 233
Other current assets 4 0 352 128
Cash and cash equivalents 167 69 491 9
Post-employment benefit provisions 16,175 16,399 71 434
Other non-current provisions 346 509 15 17
Non-current borrowings 31 20 0 0
Non-current liabilities 54 72 0 0
Current provisions 1,450 1,792 633 1,481
Current borrowings 53 164 0 0
Trade payables 69 86 28 0
Other current liabilities 1,419 1,112 0 0
Loss carryforwards 2,393 1,891 0 0
Tax reimbursements not yet utilised 0 111 0 0
Gross amount 27,944 27,007 9,502 9,716

Balancing 7,403 7,427 7,403 7,427
Balance sheet recognition 20,541 19,580 2,099 2,289
Deferred tax assets and deferred tax liabilities

are netted if the Group has a legally enforcea
ble right to set off the actual tax reimbursement
claims against the actual tax liabilities, and
the deferred tax assets and the deferred tax
liabilities related to income taxes levied by one
and the same taxation authority from the same
tax payer.
117
Change in deferred taxes
in EUR K Consideration in
Statement of
profit and loss Equity Total
Deferred taxes
as at 1 January 2017 7,382 7,825 15,207
Intangible assets 101 0 101
Property, plant, and equipment 1,690 0 1,690
Non-current financial assets –222 0 –222
Inventories –98 0 –98
Current trade receivables 3 0 3
Current financial assets 13 0 13
Other current assets 88 0 88
Cash and cash equivalents –70 0 –70
Post-employment benefit provisions 224 1,139 1,363
Other non-current provisions 18 0 18
Non-current borrowings 1 0 1
Non-current liabilities 0 0 0
Current provisions –443 0 –443
Current borrowings 57 0 57
Trade payables 34 0 34
Other current liabilities –335 0 –335
Loss carryforwards 338 0 338
Tax reimbursements not yet utilised –149 0 –149
Currency translation effects –382 77 –305
Deferred taxes
as at 31 December 2017 8,250 9,041 17,291
118
Change in deferred taxes
in EUR K Consideration in
Statement of
profit and loss Equity Total
Deferred taxes
as at 1 January 2018 8,250 9,041 17,291
Intangible assets 116 0 116
Property, plant, and equipment 1,241 0 1,241
Non-current financial assets –305 115 –190
Inventories 2 0 2
Current trade receivables –875 211 –664
Current financial assets 270 41 311
Other current assets –215 0 –215
Cash and cash equivalents –444 34 –410
Post-employment benefit provisions 525 –492 33
Other non-current provisions –160 0 –160
Non-current borrowings 11 0 11
Non-current liabilities –17 0 –17
Current provisions 493 0 493
Current borrowings –111 0 –111
Trade payables –40 0 –40
Other current liabilities 308 0 308
Loss carryforwards 543 0 543
Tax reimbursements not yet utilised –113 0 –113
Currency translation effects –154 167 13
Deferred taxes
as at 31 December 2018 9,325 9,117 18,442
119
Reconciliation of expected and reported income tax expense
in EUR K 2018 2017
Earnings before income taxes 80,166 82,162

Expected income tax expense (tax rate: 28.6 %; previous year: 28.6 %) 22,927 23,498
Reconciliation:
Tax-free income and permanent differences 3,005 –178
Change in tax rate 35 2,025
Deviations of local tax rates from Group tax rate –807 443
Deferred tax income on tax loss carryforwards capitalised for the first time –251 –149
Tax reduction for tax loss carryforwards not yet capitalised –183 –50
Effects of non-recognition of tax loss carryforwards 664 818
Off-period taxes 978 –74
Other effects –12 5
Income tax expense reported 26,356 26,338
Effective tax rate (%) 32.9 32.1
(11) Earnings per share

Basic earnings per share are calculated by
dividing the proportion of earnings attributable
to Sto SE & Co. KGaA’s shareholders by the
weighted average number of limited ordinary
and limited preference shares outstanding in
the year under review.
In addition to the issued shares, diluted earn

ings per share also include potential shares (e.g.
from options). Both at 31 December 2018 and
31 December 2017, there were no potential
shares. Hence, undiluted earnings per share
correspond to diluted earnings per share.
Amount Ordinary shares Preference shares

2018 2017 2018 2017
Weighted average number of shares outstanding
– basic/diluted 3,888,000 3,888,000 2,538,000 2,538,000
120
in EUR 2018 2017
Share of earnings attributable to the shareholders of

Sto SE & Co. KGaA 53,666,013 55,530,938
basic/diluted earnings – of which:
Limited ordinary shares 32,378,057 33,506,415
Limited preference shares 21,287,956 22,024,523
in EUR 2018 2017
Earnings per share

– basic/diluted
Limited ordinary share 8.33 8.62
Limited preference share 8.39 8.68
In the fiscal year of 2018, the following

dividend was paid out from the earnings of
2017: EUR 4.03 (previous year: EUR 3.25) per
ordinary share, consisting of a basic dividend of
EUR 0.25 (previous year: EUR 0.25) and a bonus
of EUR 3.78 (previous year: EUR 3.00), as well
as EUR 4.09 (previous year: EUR 3.31) per pref
erence share, consisting of a basic dividend of
EUR 0.31 (previous year: EUR 0.31) and a bonus
of EUR 3.78 (previous year: EUR 3.00).
In the fiscal year of 2018, the payout to the

ordinary shareholders hence amounted to
EUR 15,669 K (previous year: EUR 12,636 K)
and the payout to the preference shareholders
amounted to EUR 10,380 K (previous year:
EUR 8,401 K). The total payout amount was
121
Further notes on the statement of profit

and loss in accordance with IFRS 7
The Sto Group categorises financial instruments

as follows:
• Financial instruments at fair value through

profit and loss
• Financial assets measured at amortised costs
of acquisition
• Financial instruments with a value recogni
tion according to IAS 17
• Financial instruments that are subject to
hedge accounting
• Financial instruments outside the scope of
application of IFRS 7 (equity investments)
Net earnings from financial assets categorised in accordance with IFRS 9
in EUR K 2018 2017
Assets
Financial assets at fair value through profit and loss (FVTPL) 132 –590
Financial assets at amortised cost (FAAC) –4,154 –5,377
Liabilities
Financial liabilities at amortised cost (FLAC) –489 92
Financial liabilities at fair value through profit and loss (FLTPL) 35 0
Net earnings from financial assets and liabilities

recognised at fair value through profit and
loss include changes in market value as well
as exchange-rate related income and expenses
from these financial instruments. Interest ex
penses and interest income are not part of net
earnings.
122
Financial assets measured at amortised costs

include value adjustments of receivables and
other assets, income from the reversal of value
adjustments for receivables and other assets, as
well as proceeds from derecognised receivables
in the amount of EUR -3,954 K.
Total interest income and expense from financial instruments not recognised at fair
value through profit and loss
in EUR K 2018 2017
Interest income 534 630

Interest expenses 654 654
Net interest income –120 –24
Impairment losses on financial assets by class
in EUR K 2018 2017
Measured at amortised costs of acquisition 9,599 9,353
Income and expenses from measurement at

fair value are reported under other operating
income and other operating expenses, respec
tively.
123
Notes on the consolidated statement of financial position
(12) Intangible assets
Changes in intangible assets from 1 January until 31 December 2017
in EUR K Industrial
property rights
and licences
including Payments
software Goodwill made on account Total
Cost of acquisition/production
1 January 2017 39,697 43,881 513 84,091
Additions 1,412 0 673 2,085
Disposals 865 1,198 0 2,063
Transfers 311 0 –299 12
Exchange rate differences –497 –108 0 –605
31 December 2017 40,058 42,575 887 83,520
Cumulative depreciation and impairment losses

1 January 2017 28,762 5,506 0 34,268
Depreciation for the year 2,632 0 0 2,632
Impairment losses 5 0 0 5
Disposals 852 1,198 0 2,050
Transfers 5 0 0 5
31 December 2017 30,186 4,247 0 34,433
Net carrying amount as at 31 December 2016 10,935 38,375 513 49,823

124
Development of intangible assets from 1 January until 31 December 2018
in EUR K Industrial
property rights
and licences
including Payments
software Goodwill made on account Total
1 January 2018 40,058 42,575 887 83,520
Additions 1,198 0 425 1,623
Disposals 1,160 0 649 1,809
Transfers 157 0 0 157
31 December 2018 40,039 42,569 663 83,271

1 January 2018 30,186 4,247 0 34,433
Depreciation for the year 2,426 0 0 2,426
Impairment losses 0 0 0 0
Disposals 1,159 0 0 1,159
Transfers 2 0 0 2
Exchange rate differences –199 0 0 –199
31 December 2018 31,256 4,247 0 35,503

As in the previous year, the useful lives for Goodwill is not subject to scheduled amortisa
patents are generally 20 years, provided there is tion and is only adjusted if it is not recoverable.
no lower statutory period of protection, 3 to 8
years for software, and 3 to 20 years for other
intangible assets. These assets are depreciated
exclusively on a straight-line basis.
125
Goodwill
Goodwill reported, amounting to EUR 38,322 K
(previous year: EUR 38,328 K), breaks down as
follows:
Cash Generating Units in EUR K 31 Dec 2018 31 Dec 2017
Sto SE & Co. KGaA 15,760 15,760

Beissier S.A.S., La Chapelle La Reine/France 3,635 3,635
Ströher GmbH, Dillenburg/Germany 3,570 3,570
Südwest Lacke + Farben GmbH & Co. KG, Böhl-Iggelheim/Germany 2,780 2,780
Beissier S.A.U., Errenteria/Spain 2,679 2,679
Sto Sp. z o.o., Warsaw/Poland 2,402 2,402
Sto Epitöanyag Kft., Dunaharaszti/Hungary 1,764 1,764
Sto Isoned B.V., Tiel/Netherlands 1,189 1,189
Sto Norge AS, Oslo/Norway 1,001 1,007
Miscellaneous under EUR 1,000 K 3,542 3,542
Total goodwill 38,322 38,328
With the exception of Sto SE & Co. KGaA

and Ströher GmbH, the cash-generating units
(CGUs) identified for purposes of calculating
goodwill are identical to the legal entities. The
Sto CGU comprises Sto SE & Co. KGaA, Stüh
lingen/Germany, Verotec GmbH, Lauingen/Ger
many, and StoCretec GmbH, Kriftel/Germany.
The CGU Ströher consists of Ströher GmbH,
Dillenburg/Germany, Ströher Fliesen GmbH, Dil
lenburg/Germany, Ströher Produktions GmbH &
Co. KG, Dillenburg/Germany, as well as GEPADI
Fliesen GmbH, Dillenburg/Germany.
126
127
(13) Property, plant, and equipment
Changes in property, plant, and equipment from 1 January to 31 December 2017
in EUR K Land,
land rights Payments
and buildings Other plant, made on
including plant Technical operating and account and
buildings on land equipment business equipment under
owned by others and machinery equipment construction Total
1 January 2017 342,999 205,798 190,213 14,536 753,546
Additions 8,443 6,999 10,751 4,462 30,655
Disposals 1,557 2,281 8,075 101 12,014
Transfers 6,633 5,722 901 –13,268 –12
Exchange rate differences –3,317 –3,544 –1,705 –112 –8,678
31 December 2017 353,201 212,694 192,085 5,517 763,497

1 January 2017 180,409 158,463 155,915 273 495,060
Depreciation for the year 9,213 9,302 10,577 0 29,092
Impairment losses 1,521 77 5 14 1,617
Disposals 1,121 1,910 7,842 0 10,873
Transfers 53 28 –85 0 –4
Exchange rate differences –1,935 –2,515 –1,256 14 –5,692
31 December 2017 188,140 163,445 157,314 301 509,200
Net carrying amount as at 31 December 2016 162,590 47,335 34,298 14,263 258,486
of which leased assets classified as financial leases,

carrying amount as at 31 December 2017 0 0 650 0 650
128
Development of property, plant, and equipment from 1 January to 31 December 2018
in EUR K Land,
land rights Payments
and buildings Other plant, made on
including plant Technical operating and account and
buildings on land equipment business equipment under
owned by others and machinery equipment construction Total
1 January 2018 353,201 212,694 192,085 5,517 763,497
Additions 4,275 4,482 12,759 8,933 30,449
Disposals 325 1,589 7,562 135 9,611
Transfers 182 1,442 1,229 –3,010 –157
Exchange rate differences –175 124 57 10 16
31 December 2018 357,158 217,153 198,568 11,315 784,194

1 January 2018 188,140 163,445 157,314 301 509,200
Depreciation for the year 9,134 9,245 10,480 0 28,859
Impairment losses 0 0 0 14 14
Disposals 303 1,592 7,331 0 9,226
Transfers –21 –33 52 0 –2
Exchange rate differences 247 149 107 –2 501
31 December 2018 197,197 171,214 160,622 313 529,346
of which leased assets classified as financial leases,

carrying amount as at 31 December 2018 0 0 407 0 407
129
Property, plant and equipment in the amount of Impairment losses on property, plant, and
EUR 27,088 K (previous year: EUR 26,873 K) are equipment amounted to EUR 14 K (previous
encumbered with land charges which serve to year: EUR 1,617 K). The impairment loss in
secure payables to banks. The land charges are 2018 related to a building under construction
valued on the balance sheet date at EUR 89 K and a machine under construction, which were
(previous year: EUR 118 K). impaired due to lower market prices.
The future payments due from finance leases are shown in the following tables:
in EUR K up to 1 year 1–5 years 5–10 years 31 Dec 2017
Lease payments 280 330 3 613

Interest portions 9 8 0 17
Carrying amount / present value 271 322 3 596
in EUR K up to 1 year 1–5 years 5–10 years 31 Dec 2018
Lease payments 192 234 0 426

Interest portions 5 6 0 11
Carrying amount / present value 187 228 0 415
Call options have mostly been agreed for the

plants and equipment leased under financial
leases which are expected to be exercised.
Leases are based on a weighted interest rate of
2.5 % (previous year: 2.5 %).
(14) Financial assets accounted for using the equity method
As at 31 December 2018, the carrying amount Companies accounted for using the equity
of shares accounted for using the equity method require the joint approval of all share
method stands at EUR 11,138 K (previous year: holders to pay dividends or repay loans.
in EUR 11,020 K).
The Group had no contingent liabilities or con
Positive earnings of EUR 118 K (previous year: tingent receivables as of the balance sheet date.
EUR 0 K) as well as cumulative losses of EUR
320 K (previous year: EUR 365 K) resulted from
investments accounted for using the equity
method.
130
(15) Inventories
Inventories are measured at the lower of ac
quisition/production cost and the net realisable
amount. Impairment in relation to the gross
amount came to EUR 8,667 K (previous year:
EUR 8,430 K).
Net carrying amounts are reported as follows:
in EUR K 31 Dec 2018 31 Dec 2017
Raw materials, processing aids,

and operating materials 23,170 23,095
Work in progress 8,242 9,091
Finished products and goods 65,019 62,721
Payments made on account 1,432 1,833
Total inventories 97,863 96,740

Inventory with a carrying amount of
EUR 2,120 K (previous year: EUR 1,892 K) serve
to secure liabilities to banks. On the balance
sheet date, the value amounted to EUR 505 K
(16) Current and non-current trade receivables
in EUR K Carrying Carrying

amount as at amount as at
current non-current 31 Dec 2018 current non-current 31 Dec 2017
from
Third parties 134,700 1,068 135,768 124,976 1,208 126,184
Companies accounted for using
the equity method 2 0 2 2 0 2
Total trade receivables 134,702 1,068 135,770 124,978 1,208 126,186
The fair values of trade receivables equal Trade receivables with a carrying amount of
their carrying amounts. Value adjustments of EUR 1,771 K (previous year: EUR 737 K) serve
EUR 20,572 K (previous year: EUR 20,837 K) to secure liabilities to banks. On the balance
were taken into account. sheet date, the value amounted to EUR 264 K
131
(17) Non-current and current financial assets

Financial assets from third parties 82,163 501 82,664 76,429 525 76,954
Other receivables and financial assets
from companies accounted for using
the equity method 652 0 652 2 650 652
Positive fair value of derivative financial
instruments 442 0 442 23 0 23
Total financial assets 83,257 501 83,758 76,454 1,175 77,629
Financial assets from third parties include cash

investments due for settlement in more than
three months. In addition, this item includes
receivables from suppliers amounting to
In the reporting period, value adjustments were

made on financial assets in the amount of
EUR 370 K (previous year: EUR 0 K).
As in the previous year, the total positive fair

value of derivative financial instruments results
from currency hedging transactions.
Derivative financial instruments as a whole are

described in greater detail in Note (31).
132
(18) Other non-current and current assets

Other receivables from third parties 14,415 11 14,426 18,138 3 18,141

Other tax reimbursement claims 3,326 0 3,326 3,049 0 3,049
Prepaid expenses 6,203 324 6,527 6,103 413 6,516
Other payments made on account 587 0 587 378 0 378
Total other assets 24,531 335 24,866 27,668 416 28,084
Other tax reimbursement claims include VAT

reimbursement claims of EUR 3,157 K (previous
year: EUR 2,873 K).
No adjustments were made to Other assets in

the period under review and in the previous
year.
(19) Cash and cash equivalents
in EUR K 31 Dec 2018 31 Dec 2017
Credit balances with banks 104,473 83,738

Cheques, cash in hand 821 684
Total cash and cash equivalents 105,294 84,422
In the reporting period, value adjustments in

the amount of EUR 455 K were included due to
IFRS 9.
133
(20) Equity Capital reserves

Changes in equity and minority interests are Capital reserves essentially comprise additions
analysed in the statement of changes in equity. from premiums.
Subscribed capital Revenue reserves and other reserves

On 31 December 2018, the share capital of Sto Revenue reserves and other reserves comprise
SE & Co. KGaA amounted to EUR 17,556 K. the following items:
It was divided into 4,320,000 registered
limited ordinary shares and 2,538,000 limited • Reserves for accrued profits:
preference shares with no voting rights with a Reserves for accrued profits include the
notional nominal value of EUR 2.56 per share. current profits and profits from previous
The figures for the 2018 fiscal year correspond years earned by Sto SE & Co. KGaA and its
to the previous year. subsidiaries that were not distributed.
The limited preference shares each beforehand • Currency translation reserve:

bore a higher dividend than the limited ordinary The currency translation reserve is used to
shares by EUR 0.06. A minimum dividend of record any differences arising from the trans
EUR 0.13 per limited preference share was lation of the financial statements of foreign
guaranteed. If net income is not sufficient for subsidiaries.
an advance dividend of at least EUR 0.13 per
limited preference share in one or more fiscal • Reserve for pensions:
years, then the missing amounts (without inter The post-employment benefit reserve con
est) are subsequently paid from the net income tains actuarial gains or actuarial losses from
of the following fiscal years prior to a dividend the post-employment benefit provisions
being paid on limited ordinary shares. arising from differences between the actual
development and the assumed trends as well
Stotmeister Beteiligungs GmbH, Stühlingen/ as changes in the assumptions underlying
Germany was holding all but four of the limited calculations.
ordinary shares of Sto SE & Co. KGaA not in
the ownership of Sto SE & Co. KGaA. The • Treasury stock:
personally liable partner STO Management SE, As at 31 December 2018, Sto SE & Co.
Stühlingen/Germany, does not have a share in KGaA, Stühlingen/Germany, held treasury
the capital of Sto SE & Co. KGaA. stock in the form of 432,000 registered
limited ordinary shares with a notional value
The limited preference shares of Sto SE & Co. of EUR 1,105,920.00. This is equivalent to
KGaA are listed at the stock exchanges in 10 % of all ordinary shares, or 6.3 % of the
Frankfurt/Main and Stuttgart/Germany in the share capital of Sto SE & Co. KGaA. Treasury
‘Regulated market’ segment. The limited ordi stock is not entitled to dividends. The figures
nary shares are not listed on the stock market. for the 2018 fiscal year correspond to the
previous year.
The shares of STO Management SE, Stühlingen/
Germany, are held to 100 % by Stotmeister
Beteiligungs GmbH, Stühlingen/Germany.
134
Proposed dividend
in EUR K 31 Dec 2018 31 Dec 2017* Change in %
In accordance with Sections 278, 58 (4) of the
German Stock Corporation Act, the dividend Equity attributable to the share-
distributed is based on the unappropriated holders of Sto SE & Co. KGaA 469,907 442,367 6.2 %
surplus recorded in the financial statements Current borrowings 11,459 9,757 17.4 %
prepared according to German commercial law. Non-current borrowings 3,345 2,032 64.6 %
Hence, a net income of EUR 41,486 K (previous Less cash and cash equivalents 105,294 84,422 24.7 %
year: EUR 46,759 K) was recorded.
Net assets 90,490 72,633 24.6 %
% of equity 19.3 % 16.4 %
The personally liable partner of Sto SE & Co.
Equity ratio 60.9 % 60.1 %
KGaA, STO Management SE, Stühlingen/Ger
many, proposes via its Executive Board at the Return on Capital Employed (ROCE) 15.6 % 16.1 %
Annual General Meeting of Sto SE & Co. KGaA * before effects from IFRS 9
a dividend payout per limited ordinary share of
EUR 0.25 (previous year: EUR 0.25) plus a bonus In the fiscal year of 2018, the equity attributa
of EUR 3.78 (previous year: EUR 3.78) to form a ble to the shareholders of Sto SE & Co. KGaA
total of EUR 4.03 (previous year: EUR 4.03), and rose by 6.2 % as compared to the previous
EUR 0.31 (previous year: EUR 0.31) plus a bonus year. This was essentially the result of the in
of EUR 3.78 (previous year: EUR 3.78) to form crease in revenue reserves.
a total of EUR 4.09 (previous year: EUR 4.09)
per limited preference share, and hence a total As in the previous year, no net debt has been
payout amount of EUR 26,049 K (previous year: incurred in the current fiscal year.
EUR 26,049 K).
Due to the credit line agreed with a banking
It is also proposed to retain EUR 15,000 K consortium in December 2012, most recently
(previous year: EUR 20,000 K) as revenue extended in 2017, the Group is subject to
reserves and to carry the remaining amount of complying with financial covenants. In case
EUR 437 K (previous year: EUR 710 K) forward of non-compliance the lenders are entitled to
to a new account. terminate the loan for good cause. The agreed-
upon covenants were complied with in the year
Notes on capital management under review as well as in the previous year.
The purpose of capital management is to en
sure that the Group effectively achieves its goals (21) Share of minority interests
and pursues its strategies in the interests of the The shares of equity on the part of minority
shareholders, employees and other stakehold interests in the past fiscal year as well as in the
ers and that it successfully implements the previous year were attributable to shareholders
defined strategies. In particular, management of the Ströher Group, Dillenburg/Germany, UAB
focuses on achieving the minimum return on TECH-COAT, Klaipèda/Lithuania as well as to
invested assets sought by the capital market as shareholders of Sto Italia Srl, Empoli/Italy. All
well as on maintaining a solid return on equity. non-controlling interests are insignificant for the
In selecting financial instruments, the Group Group.
attaches importance to matching-maturities
finance.
135
(22) Post-employment benefits and similar EUR 9.20 per year of service and depending
liabilities on the employee’s status. The widow’s pension
Provisions for post-employment benefits are amounts to 60 % of the old-age and invalidity
recognised in accordance with entitlement aris pension.
ing under the company pension scheme. The
benefits provided by the Group vary according In Switzerland, the current benefits agreements
to the legal, tax and economic situation in the for employees are effected by plans which are
individual country and are based on the length regulated by Federal Law on Occupational Old-
of service and the salary of the entitled em age, Survivor’s and Disability Insurance (BVG).
ployees. The Group pension scheme primarily Pension plans in Switzerland are administered
comprises defined benefit obligation plans. In by collective foundations which are financed
addition, there are also some defined contribu by regular employee and employer contribu
tion plans. In the case of defined contribution tions. The final pension benefits are contribu
plans, the Company pays contributions into tion-based with specific minimum guarantees.
public or private pension funds in accordance Due to these minimum guarantees, pension
with statutory or contractual obligations. Upon plans in Switzerland are allocated as being
payment of these contributions, no further defined benefit plans, although they possess
obligations accrue for the company. Current many properties of defined contribution plans.
contribution payments (net of contributions The deficient cover can be remedied by various
to statutory pension funds) are reported as methods, such as increasing employee and
post-employment benefit expenses for the year employer contributions, lowering the interest
in question and in 2018 were valued in the Sto rate for retirement assets, or reducing future
Group at a total of EUR 1,070 K (previous year: benefit claims.
EUR 1,106 K).
The generally applicable calculation methods
Contributions to statutory pension funds came that are based on assumptions were used for
to EUR 20,974 K (previous year: EUR 18,702 K). the calculations. The sensitivity analysis listed
below shows the impacts of potential devia
The available company pension schemes are tions.
for the most part based on internally funded
defined benefit plans. Post-employment benefit provisions are calcu
lated in accordance with IAS 19 (Employee ben
Benefit obligations assumed by the German efits) using the projected unit credit method,
companies primarily exist for old-age, invalidity, which is the standard international method. For
widow’s and orphan’s pensions. A prerequisite this purpose, future obligations are measured
for receiving benefits is that upon occurrence of on the basis of the benefit entitlements ac
the event the employee either had a minimum quired as at the balance sheet date. In making
period of service of 10 years after the age of this assessment, assumed relevant trends are
25, or had been in an employment relationship taken into account. Actuarial calculations are
with Sto or has a non-lapsable entitlement. necessary for all pension systems.
Old-age pension is granted with receiving state Actuarial gains or losses arise from changes in
pension. The monthly old-age or invalidity the plan assets or deviations in actual trends
pension amounts to between EUR 5.11 and (e.g. income and pension increases, changes in
136
interest rates) from the assumptions, and from

changes in the assumptions underlying the
calculations. All actuarial gains and losses are
recognised in equity in full and with no impact
on profit or loss in the period in which they
arise. Actuarial gains and losses reported within
equity are presented in the following provisions
table.
Summary of the post-employment benefit provisions
in EUR K 2018 2017
Pension plan of the Euro companies –89,409 –87,236

Pension plan of Sto AG, Switzerland –9,858 –11,858
Total –99,267 –99,094
137
Changes in post-employment benefit provisions
Pension plan of the Euro companies
in EUR K Present Fair value Liability

value of the of the from the
defined-benefit plan assets defined-benefit
obligation obligation
As at 1 January 2017 –89,287 8,414 –80,873
Current service cost –2,967 0 –2,967
Interest expense/income –1,719 157 –1,562
Expenses for post-employment benefit
obligations recognised through profit and loss –4,686 157 –4,529
Pension benefits paid 2,311 –226 2,085

Actuarial gains and losses from changes
in demographic assumptions –91 0 –91
in financial assumptions –4,303 400 –3,903
Experience-based adjustments –56 0 –56
Profit/loss from reassessment
recognised in other earnings –4,450 400 –4,050
Employer contributions 0 131 131

As at 31 December 2017 –96,112 8,876 –87,236
138
Pension plan of the Euro companies

As at 1 January 2018 –96,112 8,876 –87,236
Interest expense/income –1,665 154 –1,511
Pension benefits paid 3,181 –227 2,954

in demographic assumptions –659 0 –659
in financial assumptions –457 421 –36
Experience-based adjustments 155 0 155
recognised in other earnings –961 421 –540

As at 31 December 2018 –98,757 9,348 –89,409
Current service costs are included in staff costs;

interest expenses on the obligation is reported
under interest expenses, Note (9).
The plan assets of the Euro companies are qual

ifying insurance contracts in the form of almost
risk-free direct insurances.
The contributions to the plan assets for the

following fiscal year are expected to amount to
EUR 124 K (previous year: EUR 120 K).
139
The calculation of pension provisions was

based on the following assumptions, with the
predominant share of the amount recognised
in the balance sheet being accounted for by
Germany.
Germany Non-Germany
2018 2017 2018 2017
Discount rate as at 31 December in % 1.95 1.75 1.95 1.75
Future pension increases in % 1.50 1.13 2.40 2.40
Age of retirement in years 65 65 62 – 65 62 – 65
Since 31 December 2018, the Heubeck 2018G The running period of the performance-ori
(previous year: Heubeck 2005G) tables have ented liability of the Euro companies averages
been used as the biometric basis for calcula at 18.85 years (previous year: 18.78 years) at
tions in Germany. the end of the reporting period.
Pension plan of Sto AG, Switzerland

As at 1 January 2017 –38,934 26,576 –12,358
Currency differences 3,304 –2,260 1,044
Interest expense/income –226 154 –72
Pension benefits paid 2,631 –2,631 0

in demographic assumptions 0 0 0
in financial assumptions 351 245 596
Experience-based adjustments –804 0 –804
recognised in other earnings –453 245 –208

Employee contributions –2,722 2,722 0
As at 31 December 2017 –37,633 25,775 –11,858
140
Pension plan of Sto AG, Switzerland

As at 1 January 2018 –37,633 25,775 –11,858
Currency differences –1,363 966 –397
Interest expense/income –248 170 –78
Pension benefits paid 5,321 –5,321 0

in demographic assumptions 0 0 0
in financial assumptions 2,369 241 2,610
Experience-based adjustments 134 0 134
recognised in other earnings 2,503 241 2,744

Employee contributions –2,980 2,980 0
As at 31 December 2018 –35,620 25,762 –9,858
The plan assets of Sto AG, Switzerland, take The calculation of post-employment benefit
the form of qualifying insurance contracts. All provisions of Sto AG, Switzerland, was based
regulatory benefits such as disability, death and on the following assumptions:
longevity are integrally covered in the insurance
contract. Switzerland
2018 2017
The contributions to the plan assets for the Discount rate as at 31 December in % 0.95 0.65
following fiscal year are expected to amount to Future salary increases in % 1.00 1.00
EUR 970 K (previous year: EUR 954 K). Age of retirement in years 65 65
The BVG 2010 Generation Life Table was used

as the biometric base for calculation.
The running period of the performance-ori

ented liability averages at 16.90 years at the
end of the reporting period (previous year:
17.10 years).
141
The following shows a quantitative sensitivity analysis of the

most important assumptions as at 31 December 2018:
in EUR K Effects on the

performance-based obligation
of the Euro countries
31 Dec 2018 31 Dec 2017
Discount rate
Decline by 0.5 % 10,357 9,265
Increase by 0.5 % –8,208 –9,073
Pensions
Decline by 1.0 % –12,331 –10,888
Increase by 1.0 % 10,794 11,909
Life expectancy
Decrease by 1 year –2,594 –3,809
Increase by 1 year 3,391 4,268
Retirement age
Decrease by 1 year 1,924 1,272
Increase by 1 year –1,522 –2,565
in EUR K Effects on the

performance-based obligation
of Sto AG, Switzerland
31 Dec 2018 31 Dec 2017
Discount rate
Decline by 0.5 % 3,303 3,553
Increase by 0.5 % –2,876 –3,089
Salary adjustments
Decline by 0.5 % –290 –306
Increase by 0.5 % 286 310
Life expectancy
Decrease by 1 year –620 –709
Increase by 1 year 594 682
To determine the above sensitivity analysis,

the provisions were determined based on the
internationally applicable projected unit credit
method taking into consideration the changed
142
parameters while keeping the other parameters

steady. These provisions were then compared
to the provision recorded as at 31 December
2018.
The following amounts are expected to be paid

over the next few years as part of defined-ben
efit liabilities:
in EUR K Expected Expected

disbursements disbursements
as at 31 Dec 2018 as at 31 Dec 2017
Within the next 12 months 4,088 3,952

Between 1 and 5 years 18,151 17,843
Between 5 and 10 years 29,331 24,062
Expected disbursements within the next 10 years 51,570 45,857
(23) Non-current and current provisions
in EUR K Human resources Production Sales Other Total

division division division provisions
As at 1 January 2017 17,326 1,243 37,421 1,680 57,670

Currency differences –17 0 –907 –121 –1,045
Consumption –3,928 –131 –8,881 –320 –13,260
Additions/formation 2,420 137 23,781 1,190 27,528
Actuarial gains 0 0 0 0 0
Compounding of interest 75 18 123 1 217
Reversal –4,257 0 –3,289 –52 –7,598
As at 31 December 2017 11,619 1,267 48,248 2,378 63,512
Currency differences –9 0 –670 –7 –686
Consumption –5,417 –196 –15,858 –517 –21,988
Additions/formation 2,755 101 20,316 1,220 24,392
Actuarial gains 0 0 0 0 0
Compounding of interest 68 15 155 0 238
Reversal –851 0 –4,232 –361 –5,444
As at 31 December 2018 8,165 1,187 47,959 2,713 60,024
of which current 3,989 406 38,903 2,171 45,469

of which non-current 4,176 781 9,056 542 14,555
143
Provisions in the staff area have been set aside of commercial representatives as well as provi
for anniversary expenses, termination settle sions for litigation risks. Provisions for warranty
ments and similar obligations, among other obligations are carried as liabilities for individual
things. cases.
Provisions of the production division comprise, In addition to provisions for acceptance obliga
inter alia, asset retirement obligations and tions and safe-keeping obligations, the remain
disposal costs. ing other provisions comprise additional factual
circumstances subordinate in nature in terms of
Provisions in the sales area essentially comprise their recognition.
provisions for warranties, compensation claims
(24) Non-current and current borrowings

Liabilities to banks 10,270 3,117 13,387 8,486 1,707 10,193

Liabilities under finance leases 187 228 415 271 325 596
Other borrowings 1,002 0 1,002 1,000 0 1,000
Total borrowings 11,459 3,345 14,804 9,757 2,032 11,789
The conditions applicable to the liabilities under

finance leases are explained in Note (13).
(25) Trade payables
in EUR K 31 Dec 2018 31 Dec 2017
from
Third parties 47,164 46,256
Companies accounted for using
the equity method 142 134
Total trade payables 47,306 46,390
The trade payables result almost entirely from The fair values of trade payables correspond to
current liabilities. the carrying amounts reported.
144
(26) Non-current and current financial liabilities

Negative fair values of

derivative financial instruments 256 0 256 260 0 260
Other liabilities
towards customers 15,114 0 15,114 13,307 0 13,307
towards employees 1,099 0 1,099 1,082 0 1,082
Other 16,112 283 16,395 13,823 316 14,139
Total financial liabilities 32,581 283 32,864 28,472 316 28,788
As in the previous year, the total negative fair

value of derivative financial instruments results
from currency hedging transactions.
Derivative financial instruments as a whole are

described in detail in Note (31).
(27) Non-current and current other liabilities

Advance payment received on orders 1,045 0 1,045 1,601 0 1,601

Other liabilities
from other taxes 9,397 0 9,397 8,668 0 8,668
social security liabilities 2,833 0 2,833 3,350 0 3,350
towards employees 25,191 0 25,191 25,599 0 25,599
Other 5,904 10 5,914 6,124 8 6,132
Total other liabilities 44,370 10 44,380 45,342 8 45,350
145
(28) Further notes on financial instruments in accordance with IFRS 7
Reconciliation of balance sheet items with financial instrument categories as at 31 December 2017
in EUR K Valuation Carrying Financial instruments No

category in amount financial
Amortised Fair Value Not
accordance instrument
costs of acquisition value recognition within the
with IAS 39
in the bal- scope of
ance sheet IFRS 7/Hedge
Carrying Fair in acc. with accounting
31 Dec 2017 amount value IAS 17
Assets
Equity investments n.a. 11,020 0 0 0 0 0 11,020
Trade payables LaR 126,186 126,186 126,186 0 0 0 0
Other receivables and financial assets
- Available-for-sale financial assets AfS 15 15 15 0 0 0 0
- Held-to-maturity investments HtM 7,175 7,175 7,156 0 0 0 0
- Financial assets held for trading FAHfT 0 0 0 0 0 0 0
- Derivative assets
with hedge relationship n.a. 0 0 0 0 0 0 0
without hedge relationship FAHfT 23 0 0 23 0 0 0
- Other assets LaR/n.a. 98,499 70,415 70,415 0 0 0 28,084
Total other receivables 105,712 77,605 77,586 23 0 0 28,084
and financial assets
Cash and cash equivalents LaR 84,422 84,422 84,422 0 0 0 0
Liabilities
Borrowings FLAC 11,193 11,193 11,193 0 0 0 0
Liabilities under finance leases n.a. 596 0 0 0 596 0 0
Total borrowings 11,789 11,193 11,193 0 596 0 0
Trade payables FLAC 46,390 46,390 46,390 0 0 0 0

Other liabilities and financial liabilities
- Derivative liabilities
with hedge relationship n.a. 0 0 0 0 0 0 0
without hedge relationship FLHfT 260 0 0 260 0 0 0
- Other liabilities FLAC/n.a. 73,879 28,529 28,529 0 0 0 45,350
Total other liabilities 74,139 28,529 28,529 260 0 0 45,350
and financial liabilities
146
Reconciliation of valuation categories under IAS 39 to the valuation categories under IFRS 9 as at 01 January 2018
in EUR K Valuation Carrying Valuation Change Valuation Carrying

category in amount category in of the adjustment amount
accordance accordance valuation
with IAS 39 with IFRS 9 category
1 Jan 2018 1 Jan 2018
Equity investments n.a. 11,020 Equity investments n.a. 0 0 11,020

Trade payables LaR 126,186 Trade payables FAAC 0 –1,032 125,154
Other receivables and Other receivables and

financial assets financial assets
- Available-for-sale
financial assets AfS 15 - Other investments FVTPL 0 0 15
- Financial investments HtM –7,175
- Held-to-maturity investments HtM 7,175 > 3 months FAAC 7,175 –17 7,158
- Derivatives without - Derivatives without
hedge relationship FAHfT 23 hedge relationship FVTPL 0 0 23
- Financial investments LaR –64,672
- Other assets LaR/n.a. 98,499 > 3 months FAAC 64,672 –148 64,524
LaR –5,743
- other financial assets FAAC 5,743 –14 5,729
- other assets n.a. 0 0 28,084
Total other receivables 105,712 Total other receivables 0 –179 105,533
and financial assets and financial assets
Cash and cash equivalents LaR 84,422 Cash and cash equivalents FAAC 0 –194 84,228
Total 327,340 Total 0 –1,405 325,935
147
Reconciliation of balance sheet items with financial instrument categories as at 31 December 2018
in EUR K Valuation Carrying Financial instruments No

category in amount financial
Amortised Fair Value Not
accordance instrument
costs of acquisition value recognition within the
with IFRS 9
in the bal- scope of
ance sheet IFRS 7/Hedge
Carrying Fair in acc. with accounting
31 Dec 2018 amount value IAS 17
Assets
Equity investments n.a. 11,138 0 0 0 0 0 11,138
Trade payables FAAC 135,770 135,770 135,770 0 0 0 0
Financial assets
- Other investments FVTPL 49 0 0 49 0 0 0
- Derivative assets without
hedge relationship FVTPL 442 0 0 442 0 0 0
- Other financial assets FAAC 6,301 6,301 6,301 0 0 0 0
- Financial assets – associated
companies FAAC 652 652 652 0 0 0 0
- financial investments FAAC 76,314 76,314 76,368 0 0 0 0
Total financial assets 83,758 83,267 83,321 491 0 0 0
Other assets n.a. 24,866 0 0 0 0 0 24,866

Cash and cash equivalents FAAC 105,294 105,294 105,294 0 0 0 0
Liabilities
Borrowings FLAC 14,389 14,389 14,389 0 0 0 0
Liabilities under finance leases FLAC 415 415 415 0 415 0 0
Trade payables FLAC 47,306 47,306 47,306 0 0 0 0
Other liabilities and financial liabilities
- Derivative liabilities without
hedge relationship FLTPL 256 0 0 256 0 0 0
- Other financial liabilities FLAC 32,608 32,608 32,608 0 0 0 0
- Other liabilities n.a. 44,380 0 0 0 0 0 –44,380
148
The carrying amounts of the financial instruments

are aggregated as follows in accordance with the
categories stipulated in IFRS 9:
in EUR K 31 Dec 2018 31 Dec 2017
Financial assets measured at fair value through profit and loss (FVTPL) 491 38
Financial assets measured at amortised cost (FAAC) 324,332 288,198
Financial assets measured at fair value through other
comprehensive income (FVOCI) 0 0
Financial liabilities measured at amortised cost (FLAC) 94,303 86,111
Financial liabilities measured at fair value through profit and loss (FLTPL) 256 260
Balance sheet items measured at fair value
in EUR K 31 Dec Level 1 Level 2 Level 3

2017
Financial assets measured at fair value through profit and loss
- Derivatives with no hedge relationship 23 0 23 0
Available-for-sale financial assets
- Derivatives with a hedge relationship 0 0 0 0
Financial assets measured at fair value 23 0 23 0
Financial liabilities measured at fair value through profit and loss
Financial liabilities recorded in other earnings with no impact
on profit and loss
Financial liabilities measured at fair value 260 0 260 0
in EUR K 31 Dec Level 1 Level 2 Level 3

2018
Financial assets measured at fair value through profit and loss
Available-for-sale financial assets
Financial assets measured at fair value 442 0 442 0
Financial liabilities measured at fair value through profit and loss
Financial liabilities recorded in other earnings with no impact
on profit and loss
Financial liabilities measured at fair value 256 0 256 0
149
The following financial assets and liabilities Level 3

accounted for at fair value are structured ac The measurement is effected using valuation
cording to the following levels: methods where the influential factors are not
based exclusively on observable market data.
Level 1
Financial instruments traded in active markets, Neither any reclassifications between the levels
the listed prices of which were adopted un and nor any additions or disposals were carried
changed for measurement purposes. out during the reporting period.
Level 2 The measurement of the portfolio of financial

The measurement is made on the basis of val instruments at fair value as at 31 December
uation methods in which the influential factors 2018 resulted in a net income of EUR 185 K
are derived either directly or indirectly from ob (previous year: expense of EUR 238 K). The
servable market data. They are measured based valuation result from fair value measurement is
on the observable exchange rates, the interest a component of Other operating income (Note
structure curves of the respective currencies as 3) and Other operating expenses (Note 6). No
well as the currency-related basic spreads be netting takes place.
tween the respective currencies. The derivatives
are currency hedges only.
Development of value adjustments of financial instruments measured at amortised acquisition

costs (trade receivables, other receivables and financial assets):
in EUR K Trade in EUR K Trade Financial

receivables receivables assets
FAAC
As at 1 Jan 2017 20,791 As at 31 Dec 2017 20,837 0
Exchange rate differences –146 First-time application of IFRS 9 1,032 374
Additions 7,093 As at 1 Jan 2018 21,869 374
Consumption –2,701 Exchange rate differences –185 0
Reversals –4,200 Additions 8,062 455
As at 31 December 2017 20,837 Consumption –3,950 0
Reversals –5,224 –4
As at 31 December 2018 20,572 825
150
Impairments in the reporting period
IFRS 9 Provisions for trade receivables as at 31 December 2018:
in EUR K Not 1 – 30 31– 60 61– 90 91– 120 121– 180 181– 364 365 – 730 > 730 Total
due: days days days days days days days days
Trade receivables 68,726 13,103 4,762 1,702 1,356 1,589 1,132 802 2,038 95,210
Risk efficient 2% 3% 6% 12% 15% 20% 26% 85% 95%
Provision for risk 1,375 393 286 204 203 318 294 682 1,936 5,691
IFRS 9 Provisions for financial assets as at 31 December 2018
in EUR K Basis for Discount in % Provision for risk

valuation
Financial investments, and cash
and cash equivalents (FAAC) 182,393 0.43 % 784
Other financial assets – associated
companies (FAAC) 653 0.16 % 1
Other financial assets – Third parties
(FAAC) 6,315 0.26 % 14
Total impairment loss, including individual value adjustments, for the reporting
period:
in EUR K Value adjustments of which

of the period recovery measures
Trade receivables 8,062 8,062
Financial assets at amortised
acquisition and production costs 455 455
Financial assets at fair value with
no impact on profit and loss 0 0
In the case of trade receivables, items that are

overdue are the key indicator of impairment
or the assumption of non-realisability. If trade
receivables become increasingly overdue, it is
assumed that there will also be an increasing
lack of realisability in accordance with IFRS 9.
Written-off trade receivables subject to en

forcement measures continue to be regularly
reviewed for the possibility of recovering open
items.
151
The following table shows the carrying amounts struments which typically barely differ between
and fair values of the financial instruments as carrying amount and fair values.
at 31 December 2018, excluding financial in
in EUR K Carrying amount Fair value Fair Value

31 Dec 2018 31 Dec 2018 level
Financial assets
Non-current
Investments 49 49 Level 2
Loans 1 1 Level 2
Other financial assets 451 451 Level 2
Total non-current financial assets 501 501
Current
Financial investments 76,314 76,368 Level 2
Loans 1,571 1,571 Level 2
Forward exchange contracts 442 442 Level 2
Other financial assets 4,930 4,930 Level 2
Total current financial assets 83,257 83,311
Total financial assets 83,758 83,812
Financial liabilities
Non-current
Borrowings 3,345 3,121 Level 2
Other financial liabilities 283 283 Level 2
Total non-current financial liabilities 3,628 3,404
Current
Borrowings 11,459 11,459 Level 2
Forward exchange contracts 256 256 Level 2
Other financial liabilities 32,325 32,325 Level 2
Total current financial liabilities 44,040 44,040
Total financial liabilities 47,668 47,444
The carrying amounts of cash and cash equiv Market Funds, fixed term deposits, loans and
alents, receivables and liabilities as well as overdrafts to credit institutions, as well as liabil
current borrowings and other liabilities nearly ities from financial leases. The fair values were
correspond to the fair values due to their short determined using the present value method
terms. The financial investments and borrow based on interest rates appropriate to maturities
ings are mainly borrower’s note loans, Money and creditworthiness.
152
Other disclosures
(29) Cash flow statement (30) Segment reporting

The cash flow statement shows how the For the purpose of corporate management by
Group’s liquidity position has changed in the the responsible corporate entity – the personally
course of the year under review as a result of liable partner STO Management SE – the Group
cash inflows and outflows. For this purpose, it is divided up into geographical business units.
distinguishes cash flow from operating activi The geographical business units were consoli
ties, cash flow from investing activities and cash dated to form the segments of Western Europe
flow from financing activities (IAS 7 Statement and Other with the segment Other being
of cash flows). broken down into the regions of Northern/
Eastern Europe and America/Asia. The business
The cash flow statement solely comprises the segment of Western Europe comprises the
cash and cash equivalents reported in the state geographical business units of the Euro zone
ment of financial position that include financial (without Finland and Slovakia), Switzerland, as
investments with an original term of up to three well as the United Kingdom.
months.
Internal reporting is carried out in accordance
Based on earnings before taxes, the cash flow is with IFRS.
indirectly derived from operating activities. Earn
ings before taxes are adjusted to take account The activities of all segments included the
of non-cash expenses (essentially depreciation) production and distribution of facade systems,
and non-cash income. Cash flow from operat facade coatings, interior products and Other
ing activities reflects changes in working capital. product groups.
Cash inflows and outflows from investing and The netting prices between segments conform
financing activities are calculated using the to arms-length conditions. Transfers between
direct method. Investment activities comprise business segments are eliminated on consolida
disbursements for additions to intangible assets tion.
and tangible fixed assets as well as disburse
ments for the acquisition of consolidated The segment results are reported in the levels
companies and other business units, interest EBITDA, EBIT and EBT.
received, deposits arising from the disposal of
intangible assets and property, plant and equip Depreciation/amortisation and investments
ment, as well as disbursements and payments relate to property, plant and equipment, and
for financial investments. intangible assets.
Financing activities comprise cash outflows from Segment assets mainly comprise property, plant
payments to shareholders, interest payments and equipment, intangible assets, inventories,
and the taking-out and repayment of loans, as trade receivables from third parties as well as
well as changes to other borrowings. Changes other receivable and financial assets from third
in items of the statement of financial position parties.
analysed for the cash flow statement cannot
be directly derived from the balance sheet on Income tax receivables in the amount of
account of non-cash currency translation effects EUR 2,577 K, and Deferred tax receivables in
and other non-cash transactions. the amount of EUR 20,541 K are listed in the
153
‘Reconciliation/consolidation booking entries’

column under ‘Segment assets’. In the same
column in line ‘EBT’, this table also shows the
elimination of earnings between the segments
as well as earnings to the amount of EUR 118 K
from investments of companies accounted for
using the equity method. No significant adjust
ments were made to earnings.
Owing to the broad customer structure, there is

no customer with whom 10 % or more of sales
revenues are generated.
The breakdown of sales revenues is made ac

cording to the customer’s head office.
in EUR K 2017
Germany France Others Total
External revenues 562,808 121,315 593,275 1,277,398

Intangible assets, property, plant,
and equipment 191,045 27,707 84,632 303,384
in EUR K 2018
Germany France Others Total
External revenues 596,003 124,897 611,470 1,332,370

Intangible assets, property, plant,
and equipment 189,220 27,379 86,017 302,616
154
(31) Financial risk management and of principle, the type and scope of hedging
financial instruments operations are determined by the underlying
transaction.
Hedging policy
The Sto Group’s international activities expose Liquidity risk
it to interest and currency risks in particular. Detailed liquidity planning is the basis of liquid
The goal of risk management is to adequately ity management. On balance sheet date, cash
hedge currency risks that can arise during and cash equivalents as well as existing, unused
planning. Forward exchange transactions with a credit lines were available. These credit lines are
term of up to one year are generally concluded mainly a syndicated loan, which was taken out
for this purpose. in 2012 and which was extended until 2022 in
2017.
Guidelines have been adopted to govern the
scope for hedging and internal monitoring. The following overview sets out the contractu
Within the framework of these guidelines, only ally agreed cash outflows from financial instru
hedging transactions with approved coun ments, including interest and not including cash
terparties may be concluded only to hedge outflows from finance leasing contracts shown
existing or planned transactions. As a matter in Note (13).
in EUR K Cash outflows 31 Dec 2017

up to 1 year 1 – 5 years 5 – 10 years
Borrowings 9,486 1,707 0 11,193

Trade payables 46,035 355 0 46,390
Other borrowings 28,213 316 0 28,529
Derivatives 40,938 0 0 40,938
Total cash outflows 124,672 2,378 0 127,050
in EUR K Cash outflows 31 Dec 2018

Borrowings 11,487 2,831 379 14,696

Trade payables 47,405 151 0 47,556
Other financial liabilities 32,356 283 0 32,639
Derivatives 38,656 0 0 38,656
Total cash outflows 129,904 3,265 379 133,547
There are contingencies in the amount of The amounts of the derivatives shown corre
EUR 795 K (previous year: EUR 678 K) for spond to the un-discounted cash flows. These
which no liability is currently expected to arise payments can be processed on a gross or net
(Note 32). basis.
155
In the following table, the cash outflows are

compared to the corresponding cash inflows:
in EUR K Cash inflows/outflows as at 31 Dec 2017 Total

Inflow 40,701 0 0 40,701

Outflow 40,938 0 0 40,938
Balance –237 0 0 –237
in EUR K Cash inflows/outflows as at 31 Dec 2018 Total

Inflow 38,841 0 0 38,841

Outflow 38,656 0 0 38,656
Balance 185 0 0 185
The following overview shows the changes in the liabilities from financing activities.
in EUR K 1 Jan 31 Dec

2017 Cash flows New leases Other 2017
current interest-bearing loans

(without the following item) 13,097 –3,696 85 9,486
current liabilities from financial leases 401 –431 63 238 271
Total current liabilities 13,498 –4,127 63 323 9,757
from financing activities
non-current interest-bearing loans

(without the following item) 792 1,000 –85 1,707
non-current liabilities from
financial leases 329 234 –238 325
Total non-current liabilities 1,121 1,000 234 –323 2,032
Total liabilities from

financing activities 14,619 –3,127 297 0 11,789
156
in EUR K 1 Jan 31 Dec

2018 Cash flows New leases Other 2018
current interest-bearing loans

(without the following item) 9,486 757 0 1,029 11,272
current liabilities from financial leases 271 –288 27 177 187
Total current liabilities 9,757 469 27 1,206 11,459
non-current interest-bearing loans

(without the following item) 1,707 2,439 0 –1,030 3,116
non-current liabilities from
financial leases 325 0 80 –177 228
Total non-current liabilities 2,032 2,439 80 –1,207 3,344
Total liabilities from

financing activities 11,789 2,908 107 –1 14,803
The effects of the reclassification of the long- obligations. The resulting risk was controlled
term portion of interest-bearing loans and by means of diversification and the careful
finance lease obligations as well as currency selection of counterparties. At the moment, no
translation differences over time are reported cash investments or derivative financial assets
under ‘Other’. are overdue or individually impaired on account
of default risks.
Default risk arising from financial assets
The credit and default risk arising from financial The default risk of financial assets in the form
assets entails the risk of a counterparty default of trade receivables was taken into account
ing and is limited to the maximum net carrying by means of value adjustments. There was
amount of the receivable due from the default no concentration of default risks, which were
ing counterparty. mainly measured by cluster risks, i.e. risk
concentrations with regard to borrower rating
In connection with the investment of cash and classes, customer structure and proportion of
the portfolio of derivative financial assets, there receivables from a customer in relation to total
are generally default risks due to the risks of receivables.
financial institutions failing to honour their
157
Presentation of net carrying amounts of financial instruments measured at amortised

costs of acquisition:
in EUR K Carrying
amount
not due, overdue,
not value- not value- overdue,
adjusted adjusted value-adjusted 31 Dec 2017
Other financial assets 77,506 11 88 77,605

Trade receivables 80,718 21,037 24,431 126,186
Cash and cash equivalents 84,422 0 0 84,422
Total financial instruments

measured at amortised cost
of acquisition 242,646 21,048 24,519 288,213
in EUR K Carrying
of which not due, of which overdue
amount
of which and value-adjusted and value-adjusted
individually in accordance in accordance
value-adjusted with IFRS 9 with IFRS 9 31 Dec 2018
Financial assets 25 77,906 5,337 83,268

Trade receivables 5,761 95,741 34,268 135,770
Cash and cash equivalents 0 105,294 0 105,294
Total financial instruments

measured at amortised cost
of acquisition 5,786 278,941 39,605 324,332
Trade receivables are assessed on the basis of Collateral amounting to EUR 6,754 K (previous
the creditworthiness of the respective customer. year: EUR 6,323 K*) was held in the fiscal year
Information is obtained and regularly updated for overdue and impaired trade receivables.
to assess the credit quality of financial assets This mainly relates to pledged land and bank
which are neither overdue nor adjusted. On the guarantees received.
basis of this and other information, the financial
assets are classified and credit limits defined. * figure in the previous year: EUR 555 K – transfer error
158
The gross carrying amount of receivables The financial assets measured at fair value are
which were individually value-adjusted stood at neither overdue nor impaired.
EUR 20,642 K (previous year: EUR 17,417 K) in
the reporting period. The gross carrying amount In the case of financial instruments that are not
of receivables which are subject to impairment due, and value-adjusted in accordance with
according to IFRS 9 stood at EUR 135,701 K. IFRS 9, there were no signs of possible default
as of the 2018 balance sheet date.
The gross carrying amount of the financial as
sets measured at amortised cost with individual
value adjustments stood at EUR 50 K (previous
year: EUR 0 K).
Maturity analysis of overdue and not value-adjusted financial instruments:
in EUR K overdue
up to 30 days 60 days more than

30 days to 60 days to 90 days 90 days 31 Dec 2017
Other financial assets 0 0 0 11 11

Trade receivables 11,637 3,759 2,075 3,567 21,037
Total overdue and not value-

adjusted financial instruments 11,637 3,759 2,075 3,578 21,048
Maturity analysis of overdue financial instruments value-adjusted in accordance with IFRS 9:
in EUR K overdue
up to 30 days 60 days more than

30 days to 60 days to 90 days 90 days 31 Dec 2018
Financial assets 3 1,741 1,351 2,242 5,337

Trade receivables 17,704 5,837 2,245 8,482 34,268
overdue financial instruments
value-adjusted in accordance
with IFRS 9 17,707 7,578 3,596 10,723 39,605
159
Currency risk Interest rate risk

Payments in foreign currency are determined in Interest rate risks according to IFRS 7 arise due
the budget phase for the following year. On the to possible changes in the market interest rates
basis of the planned payment flows, suitable for cash investments and due to the variable
hedging strategies are created, agreed upon interest rates for current and non-current liabil
with the relevant bodies, and implemented. ities.
The planned cash positions are hedged without
exception through hedging instruments congru The volume of non-current, variable-rate
ent with the time and economic state from the borrowings was so low that a change of the
area of derivatives. The currency hedge mainly market interest level by 100 basis points on
affected CNY/EUR, CZK/EUR, HUF/EUR, RUB/ 31 December 2018 would have had no signif
EUR, SGD/EUR, USD/EUR, NOK/EUR, SEK/EUR, icant impact on earnings, like in the previous
PLN/EUR, CAD/EUR, CHF/EUR, GBP/EUR as well year.
as CAD/USD. The changes in fair value were
recognised in the statement of profit and loss Due to the maturity of the financial investments
with an impact on profit and loss. with a running period of up to one year, there is
no interest rate risk for the as at 31 December
The main operative currency risks are due to 2018.
the manufacture of products in Germany and
their subsequent selling and delivery to foreign
subsidiaries in Euro. Currency risks occurred due
to business completed in euros with subsidiaries
outside the Euro zone, mainly in Switzerland,
Sweden, Poland, Hungary, Great Britain, Nor
way, and the Czech Republic.
All non-functional currencies in which the

Group holds financial instruments are used as
relevant risk variables in the sensitivity analysis
stipulated by IFRS 7.
The essential currency risk results from the

change in assets and liabilities in the non-
functional currency of the CNY/EUR currency
pair. If the Chinese renminbi had been 10 %
lower/higher against the euro, pre-tax earnings
would have been up by EUR 90 K (previous
year: EUR 91 K higher), or down by EUR 74 K
(previous year: EUR 74 K lower).
160
Valuation of derivative financial

instruments
The market values of the derivative financial
instruments are determined on the basis of the
tradability based on reference prices and valua
tion models and is presented as follows:
in EUR K 31 Dec 2018 31 Dec 2017

Nominal Total Nominal Total
volume market value volume market value
Forward exchange
transactions/options 38,872 185 40,986 –237
Total derivative
financial instruments 38,872 185 40,986 –237
The nominal volume of a derivative hedge The decrease in the nominal volume in a func
transaction is the reference amount for which tional currency in case of the foreign currency
the payments are derived. The hedged contract forwards is based on a reduced hedging volume
and the risk are not the same as the nominal of payments outside the functional currency.
volume but only reflect rate changes to which
they refer. The market value corresponds to the As a rule, the residual maturity of the currency
amount that would have to be paid at the bal derivatives lies within a year.
ance sheet date if the hedge had been settled.
(32) Contingencies
in EUR K 2018 2017
Guarantees from the Sto Group

to third parties 794 677
Reserve liability to cooperatives 1 1
Total contingencies 795 678
In the case of guarantees, no liability is currently

expected to arise.
161
(33) Litigation
Neither Sto SE & Co. KGaA nor its Group
companies are involved in any court litigation or
arbitration proceedings which are liable to exert
a significant influence on the Group’s economic
situation or have done so in the past two years.
There is no evidence that any such litigation or
proceedings will arise in the future. Provisions
in an appropriate amount have been set aside
by the individual Group companies to allow for
any expenses arising from court litigation or
arbitration proceedings.
(34) Other financial obligations
in EUR K 31 Dec Maturity

2017 within between after
one year 1 – 5 years 5 years
Liabilities from operating leases 59,992 21,279 35,166 3,547
Liabilities from maintenance contracts 5,552 3,592 1,960 0
Acceptance obligations 9,035 8,663 349 23
Other obligations 580 366 214 0
Total other financial obligations 75,159 33,900 37,689 3,570
in EUR K 31 Dec Maturity

2018 within between after
one year 1 – 5 years 5 years
Liabilities from operating leases 59,143 20,801 35,960 2,382
Liabilities from maintenance contracts 8,167 3,490 4,193 484
Acceptance obligations 13,770 11,157 2,591 22
Other obligations 7,357 6,985 372 0
Total other financial obligations 88,437 42,433 43,116 2,888
The liabilities from operating leases comprise

primarily building rental contracts as well as lia
bilities relating to the vehicle fleet, and plants.
There are no purchasing intentions at the

end of the leasing contracts. Insofar as final
payments are to be expected resulting from
damages, provisions have been made.
162
Of the acceptance obligations, an amount

of EUR 6,639 K (previous year: EUR 5,672 K)
relates to items of tangible fixed assets. Fur
thermore, acceptance obligations relating to
inventories as well as other acceptance obliga
tions exist.
(35) Auditors’ fees

The following fees paid to the auditors of the
consolidated annual financial statement of the
Sto Group, Ernst & Young GmbH, Wirtschaft
sprüfungsgesellschaft, Stuttgart/Germany, for
services provided are recorded as expenses in
2018:
in EUR K 2018 2017
Audits of financial statements 370 321

Other certification or valuation activities 4 4
Other services 0 11
Auditors’ fees in total 374 336
(36) Events after the balance sheet date

Between the end of the fiscal year and the point
at which this report was signed off, there were
no events of particular note and with a signifi
cant impact on the earnings, financial, and asset
situation of the Sto Group.
163
(37) Related party disclosures Beteiligungs GmbH, during the fiscal year or the
IAS 24 defines related parties as persons or year prior.
entities liable to be influenced by the reporting
entity or are capable of influencing the report As at 31 December 2018, members of the
ing entity in question. Executive Board of STO Management SE and
the Supervisory Board of Sto SE & Co. KGaA are
All business relations with related parties were members of the executive boards and supervi
conducted on arms-length terms. sory boards of other companies with which Sto
SE & Co. KGaA maintains relations as part of its
With the exception of the dividend payout, ordinary business activities. All transactions with
there were no transactions between the Group such companies are conducted on arms-length
and the ultimate parent company, Stotmeister terms.
The volume of deliveries and services, including net interest income, between companies in the
Sto Group and related parties and persons are set out in the following table:
in EUR K Share Rendered Received Receivables Liabilities

deliveries and deliveries and from to
services services
2018 2017 2018 2017 2018 2017 2018 2017
Inotec GmbH,
Waldshut-Tiengen/Germany 47.5 % 48 75 2,987 3,638 655 654 71 134
JONAS Farbenwerke GmbH &
Co. KG, Wülfrath/Germany 49.8 % 343 0 0 0 343 0 0 0
STO Management SE 859 808 4,080 3,698 90 79 1,965 1,714
Other 0 0 10 5 0 0 10 0
164
(38) List of subsidiaries and investments as at 31 December 2018
Fully consolidated companies in Germany Capital share

in %
Name, registered office
StoCretec GmbH, Kriftel/Germany 100
Verotec GmbH, Lauingen/Germany 100
Gefro Verwaltungs-GmbH & Co. KG, Stühlingen/Germany 100
Südwest Lacke + Farben GmbH & Co. KG,
Böhl-Iggelheim/Germany 100
Südwest Lacke + Farben Verwaltungs-GmbH,
Böhl-Iggelheim/Germany 100
VeroStone GmbH, Eichstätt/Germany 100
Innolation GmbH, Lauingen/Germany 100
Sto SMEE Beteiligungs GmbH, Stühlingen/Germany 100
Ströher GmbH, Dillenburg/Germany 50.1
Ströher Fliesen GmbH, Dillenburg/Germany 50.1
Ströher Produktions GmbH & Co. KG, Dillenburg/Germany 50.1
GEPADI Fliesen GmbH, Dillenburg/Germany 50.1
Sto BT GmbH, Stühlingen/Germany 100
Sto BTN GmbH, Stühlingen/Germany 100
For changes in the current year,
Sto Building Solutions GmbH, Stühlingen/Germany please refer to ‘General disclosures’
(formerly Sto BTJ GmbH) 100 Note 4 ‘Companies consolidated’.
165
Fully consolidated companies outside Germany Capital share

in %
Name, registered office
Sto Ges.m.b.H., Villach/Austria 100
Sto S.A.S., Bezons/France 100
Beissier S.A.S., La Chapelle La Reine/France 100
Innolation S.A.S., Amilly/France 100
Beissier S.A.U., Errenteria/Spain 100
Sto SDF Ibérica S.L.U., Mataró/Spain 100
Sto Isoned B.V., Tiel/Netherlands 100
Sto N.V., Asse/Belgium 100
Sto Italia Srl, Empoli/Italy 52
Sto Finexter OY, Vantaa/Finland 100
Sto Scandinavia AB, Linköping/Sweden 100
Sto Danmark A/S, Hvidovre/Denmark 100
Sto Norge AS, Oslo/Norway 100
StoCretec Flooring AS, Moss/Norway (formerly Hesselberg Bygg AS) 100
UAB TECH-COAT, Klaipėda/Lithuania 95
Hesselberg Sverige AB, Helsingborg/Sweden 100
Sto AG, Niederglatt/Switzerland 100
Sto Ltd., Paisley/Great Britain 100
Sto Sp. z o.o., Warsaw/Poland 100
Sto Epitöanyag Kft., Dunaharaszti/Hungary 100
Sto s.r.o., Dobřejovice/Czech Republic 100
STOMIX spol s.r.o., Skorosice/Czech Republic 100
Sto Slovensko s.r.o., Zvolen/Slovakia (formerly STOMIX Slovensko s.r.o.) 100
OOO Sto, Moscow/Russia 100
OOO STOMIX Orel, Orel/Russia 100
Sto Yapı Sistemleri Sanayi ve Ticaret A.Ş., Istanbul/Turkey 100
Sto Gulf Building Material LLC., Dubai/UAE 49
Sto Corp., Atlanta/USA 100
Sto Canada Ltd., Etobicoke/Canada 100
Industrial y Comercial Sto Chile Ltda., Santiago de Chile/Chile 100
Sto Colombia S.A.S., Bogota D.C./Colombia 100
Sto Mexico S. de R.L. de C.V., Monterrey/Mexico 100
Sto Brasil Revestimentos e Fachadas Ltda., Itaquaquecetuba/Brazil 100
Sto Corp. Latin America Inc., Panama/Panama 100
Shanghai Sto Ltd., Shanghai/China 100
Langfang Sto Building Material Co. Ltd., Hebei/China 100
Wuhan Sto Building Material Co. Ltd., Wuhan/China 100
For changes in the current year,
Sto SEA Pte. Ltd., Singapore/Singapore 100
please refer to ‘General disclosures’
Sto SEA Sdn. Bhd., Masai/Malaysia 100 Note 4 ‘Companies consolidated’.
166
Companies accounted for using the equity method Capital share No restrictions apply with regard to the liqui
in %
dation of assets or the payment of debts for
Name, registered office a fully consolidated company within the Sto
Inotec GmbH, Waldshut-Tiengen/Germany 47.5 Group.
JONAS Farbenwerke GmbH & Co. KG, Wülfrath/Germany 49.8
JONAS GmbH, Wülfrath/Germany 49.8
(39) German Corporate Governance Code ous year: EUR 164 K). As at 31 December 2018,
On 20 December 2018, the Executive Board post-employment benefit provisions for former
of the personally liable partner of Sto SE & Co. members of the Executive Board amounted to
KGaA, STO Management SE, and the Super EUR 2,062 K (previous year: EUR 2,039 K) due
visory Board of Sto SE & Co. KGaA issued the to offsetting against plan assets. Remuneration
declaration of compliance with the recom paid to former members of the Executive Board
mendations of the Government Commission and the Supervisory Board came to EUR 443 K
on German Corporate Governance Code in (previous year: EUR 424 K).
accordance with Section 161 of the German
Companies Act and made it available to share The remunerations of the Supervisory Board
holders on the Internet page of Sto SE & Co. of Sto SE & Co. KGaA and the compensation
KGaA on 20 December 2018. of expenditure in this regard as stipulated in
Section 6 Paragraph 3 of the regulations of
(40) Remuneration of the Executive Board Sto SE & Co. KGaA for the Supervisory Board
and the Supervisory Board of STO Management SE for the 2018 fiscal
The remuneration paid to the members of the year amounted to EUR 636 K (previous year:
Executive Board in the fiscal year of 2018 com EUR 627 K).
plies with the statutory provisions contained
in the German Companies Act. Current due The members of the Supervisory Board will only
remunerations of the Executive Board totalled receive currently due payments for their activ
EUR 2,689 K (previous year: EUR 2,462 K). The ities on the committee. Excluded from this are
long-term incentive payments, which are also compensation and other payments to opera
due in the short term, amounted to EUR 88 K tions employee representatives pursuant to their
(previous year: EUR 0 K). Short-term and employment contracts. No compensation has
long-term obligations amounted to a total of been granted for personally rendered services
EUR 2,777 K* (previous year: EUR 2,462 K). outside of committee activities by the members * Total remuneration for the Execu-
Expenses for future benefits after terminating of the Supervisory Board. tive Board pursuant to § 314 (1)
the employment relationship (current ser No. 6a of the German Commercial
vice cost) amounted to EUR 330 K (previous Following the decision at the annual general Code (HGB)
year: EUR 309 K). Executive Board remuner meeting on 16 June 2015, the need for dis
ations thus total EUR 3,107 K (previous year: closure in accordance with Section 314 No. 6a
EUR 2,771 K). sentence 5-9 of the German Commercial Code
(HGB) and Section 314 Paragraph 2 sentence 2
As at 31 December 2018, the non-current fi HGB in conjunction with Section 286 Paragraph
nancial liabilities for the current members of the 5 HGB has been dispensed with.
Executive Board amounted to EUR 128 K (previ
167
Members of the Executive Board of STO Management SE in the fiscal year of 2018
(personally liable partner of Sto SE & Co. KGaA):
Rainer Hüttenberger Jan Nissen

Spokesman of the Executive Board responsible Chief Technical Officer, responsible for Process
for Marketing and Sales Sto Brand International Engineering, Innovation, Materials Manage
Stein a. Rhein/Switzerland, Dipl.-Betriebswirt (FH) ment and Logistics
Member of the BOD of Sto Corp., Atlanta/USA Trossingen/Germany, Bachelor of Science
Chairman of the BOD of Shanghai Sto Ltd., Deputy Chairman of the Advisory Board of
Shanghai/China Inotec GmbH, Waldshut-Tiengen/Germany
Chairman of the BOD of Sto Scandinavia AB, Member of the BOD of Shanghai Sto Ltd.,
Linköping/Sweden Shanghai/China
Chairman of the BOD of Sto Danmark A/S, Member of the BOD of Sto SEA Pte Ltd.,
Hvidovre/Denmark Singapore/Singapore
Chairman of the BOD of Sto Yapı Sistemleri
Sanayi ve Ticaret A.Ş, Istanbul/Turkey Rolf Wöhrle
Member of the BOD of Sto Norge AS, Chief Financial Officer, responsible for Finance,
Oslo/Norway Controlling, IT, Legal, Internal Audit, and Infor
Member of the BOD of Sto Finexter OY, mation Technology
Vantaa/Finland Bad Dürrheim/Germany, Dipl.-Betriebswirt (BA)
Member of the BOD of Sto SEA Pte Ltd., Member of the BOD of StoCretec Flooring AS,
Singapore/Singapore Moss/Norway
Member of the BOD of Sto Scandinavia AB,
Michael Keller Linköping/Sweden
Chief Sales Officer, responsible for Sales Sto Member of the BOD of Sto Norge AS,
Brand Germany, Distribution and Central Oslo/Norway
Services Member of the BOD of Sto Finexter OY,
Bonndorf/Germany, Ing.-Päd. (TU) Vantaa/Finland
Member of the Supervisory Board of JONAS Far Member of the BOD of Sto Danmark A/S,
benwerke GmbH & Co.KG, Wülfrath/Germany Hvidovre/Denmark
Member of the Administrative Board of Beissier Member of the BOD of Sto Ltd., Paisley/
S.A.U., Errenteria/Spain Great Britain
168
Members of the Supervisory Board of Sto SE & Co. KGaA in the fiscal year of 2018:
Dr Max-Burkhard Zwosta Maria H. Andersson

Chairman of the Supervisory Board Munich/Germany
Wittnau/Germany, Chartered Accountant and Managing Director of N4 Beteiligungsgesellschaft
Tax Consultant mbH, Family Officer/Single Family Office, Munich/
Member of the Supervisory Board of STO Germany
Management SE, Stühlingen/Germany Member of the Supervisory Board of STO
Chairman of the Supervisory Board of Brauerei Management SE, Stühlingen/Germany
Ganter GmbH & Co. KG, Freiburg i.Br./Germany Member of the Advisory Board of Matador
Chairman of the Supervisory Board of Ganter Partners Group AG, Sarnen/Switzerland
Grundstücks GmbH, Freiburg i.Br./Germany
Chairman of the Advisory Board of Brauerei Dr Renate Neumann-Schäfer
Ganter Real Estate Nr. 1 GmbH & Co KG, Überlingen/Germany
Freiburg i.Br./Germany Business consultant, Economist
Chairman of the Supervisory Board of Freicon AG, Member of the Supervisory Board of STO
Freiburg i.Br./Germany Management SE, Stühlingen/Germany
Chairman of the Advisory Board of alfer alumin Member of the Supervisory Board of Villeroy &
ium Gesellschaft mbH, Wutöschingen/Germany Boch AG, Mettlach/Germany (until 23 March 2018)
Chairman of the Advisory Board of Walter Maisch Member of the Supervisory Board of R. Stahl
Familien Holding GmbH & Co. KG, Gaggenau/ Aktiengesellschaft, Waldenburg/Germany
Germany Member of the Administrative Council of
Member of the Supervisory Board of Testo SE & Samariter GmbH, Nürtingen/Germany
Co. KGaA, Lenzkirch/Germany Member of the Foundation Council of Samariter
Member of the Supervisory Board of Testo Stiftung, Nürtingen/Germany
Management SE, Lenzkirch/Germany Member of the Foundation Council of Stiftung
Member of the Advisory Board of EGT AG, Zeit für Menschen, Nürtingen/Germany
Triberg/Germany
Cornelia Reinecke
Lothar Hinz Emmendingen/Germany
Deputy Chairman of the Supervisory Board and Head of Human Resources and Member of the
employee representative, Reutlingen/Germany Management Board of Sick AG
Chairman of the Group Works Council and Chair
man of the Works Council for the Baden-Würt Prof Dr Klaus Peter Sedlbauer
temberg sales region, Sto SE & Co. KGaA, and Rottach-Egern/Germany
StoCretec GmbH Chairholder at the Institute of Building Physics of
the Technical University Munich/Germany
Head of the Fraunhofer Institute for Building
Physics, Stuttgart, Holzkirchen, and Nuremberg/
Germany
Deputy Chairman of the Supervisory Board of
Calcon AG, Munich/Germany
169
Peter Zürn Frank Heßler

Bretzfeld-Weißlensburg/Germany Employee representative, Mannheim/Germany
Member of the Management of the Würth Political Trade Union Secretary
Group, Künzelsau/Germany Deputy regional manager IG BCE of the
Member of the Supervisory Board of STO regional district of Baden-Württemberg
Management SE, Stühlingen/Germany
Chairman of the Administrative Board of Barbara Meister
InovaChem Engineering AG, Wetzikon/ Employee representative, Blumberg/Germany
Switzerland Deputy Chairperson of the Group Employee
Chairman of the Administrative Board of Representative Council and Chairperson of the
Würth á Islandi ehf., Garðabær/Iceland Weizen Employee Representative Council,
Chairman of the Administrative Board of Sto SE & Co. KGaA
Würth Norge AS, Hagan/Norway
Member of the Administrative Board of Tunap Roland Schey
International Trading Co., Ltd., Shanghai/China Employee representative, Tengen/Germany
Member of the Administrative Board of Head of Finance and Accounting Sto Group
Würth AG, Arlesheim/Switzerland
Member of the Administrative Board of Martina Seth
Würth International AG, Chur/Switzerland Employee representative, Uelzen/Germany
Member of the Administrative Board of Personnel Developer and Trade Union Secretary
Würth Logistics, Rorschach/Switzerland of IG BCE, Hanover Head Office
Member of the Administrative Board of Würth
Australia Pty. Ltd., Dandenong South/Australia
Member of the Supervisory Board of Wuerth
China Co. Ltd., Shanghai/China
Member of the Supervisory Board of Wuerth
Indonesia P.T., Jakarta/Indonesia
Member of the Supervisory Board of Würth
Szereléstechnika KFT, Budaörs/Hungary
Member of the Supervisory Board Würth
France SA, Erstein/France
Member of the Advisory Board of Würth
Técnica de Montagem Lda., Sintra/Portugal
Wolfgang Dell
Employee representative, Hattersheim/Germany
Administrator Maintenance Plant Technology,
Sto SE & Co. KGaA
170
Members of the Supervisory Board of STO Management SE in the fiscal year 2018
(personally liable partner of Sto SE & Co. KGaA):
Jochen Stotmeister
Chairman of the Supervisory Board
Grafenhausen/Germany
Dr Max-Burkhard Zwosta
Deputy Chairman of the Supervisory Board
Wittnau/Germany
Maria H. Andersson
Munich/Germany
Dr Renate Neumann-Schäfer
Überlingen/Germany
Gerd Stotmeister
Allensbach/Germany
Peter Zürn
Bretzfeld-Weißlensburg/Germany
Stühlingen/Germany, 12 April 2019
Sto SE & Co. KGaA

represented by STO Management SE
Executive Board
Rainer Hüttenberger Michael Keller

(Spokesman)
Jan Nissen Rolf Wöhrle
171
Sto SE & Co. KGaA | Audit certificate Sto Group
Audit certificate of the independent auditor
To STO SE & Co. KGaA • and the accompanying Group manage

ment report provides a suitable view of the
Report on the audit of the consolidated Group’s position. In all material respects, this
financial statements and the Group man- Group management report is consistent with
agement report the consolidated annual financial statement
of the Group, complies with German legal
Audit assessments regulations and accurately presents the op
We have audited the consolidated annual portunities and risks of future development.
financial statement prepared by STO SE & Co. Our audit opinion on the Group manage
KGaA, Stühlingen/Germany and its subsidiaries ment report does not extend to the contents
(the Group), comprising the consolidated state of the above-mentioned non-financial group
ment of financial position as at 31 December declaration and group declaration on corpo
2018, the consolidated statement of profit and rate governance.
loss, the consolidated statement of compre In accordance with Section 322 Paragraph 3
hensive income, the consolidated statement of Sentence 1 of the HGB (German Commercial
changes in equity, and the consolidated cash Code), we declare that our audit has not given
flow statement for the fiscal year from 1 Jan rise to any objections to the correctness of the
uary until 31 December 2018 as well as the consolidated annual financial statement of the
notes to the financial statements, together with Group and the Group management report.
a summary of important accounting methods.
Furthermore, we have audited the Group man Basis for the audit opinions
agement report of STO SE & Co. KGaA, Stühlin We conducted our audit of the consolidated
gen/Germany for the fiscal year from 1 January annual financial statements of the Group and
until 31 December 2018. In accordance with the Group management report in accordance
German legal requirements, we have not with Section 317 HGB and the EU regulation on
audited the content of the non-financial group statutory audits (no. 537/2014) while observing
declaration and group declaration on corporate the generally accepted German standards for
governance contained in the ‘Business man the audit of financial statements promulgated
agement control system’ section of the Group by the Institut der Wirtschaftsprüfer (IDW). Our
management report. responsibility in accordance with these regula
In our opinion based on the findings of our tions and principles is mostly described under
audit, ‘Responsibility of the auditor for the audit of
• the accompanying consolidated annual the consolidated annual financial statement of
financial statement of the Group complies the Group and the Group management report’.
in all material respects with the IFRSs as they We are independent of the Group companies in
are to be applied in the EU, and additionally accordance with European and German com
with German legal regulations to be applied mercial and professional legal regulations and
in accordance with Section 315e Paragraph have fulfilled our German professional duties in
1 of the HGB (German Commercial Code), accordance with these requirements. Further
and gives a true and fair view of the assets more, in accordance with Article 10 Paragraph
and financial situation of the Group as at 2 Letter (f) of the EU regulation on statutory
31 December 2018 as well as of its income audits we declare that we have not provided
situation for the fiscal year from 1 January any prohibited non-audit services pursuant to
until 31 December 2018, Article 5 Paragraph 1 of the EU regulation of
172
Audit
of certificate
the Sto Group (IFRS) | Sto SE & Co. KGaA
Sto Group
statutory audits. We are of the opinion that the procedures included inquiries of legal represent
audit evidence we have obtained is sufficient atives and other persons entrusted with these
and appropriate to provide a basis for our audit matters within the Group, obtaining written
opinion on the consolidated annual financial statements from internal legal advisors regard
statement of the Group and on the Group man ing the evaluation of the estimated outflow of
agement report. funds and the likelihood of occurrence, obtain
ing confirmation from external legal advisors,
Particularly important audit matters in the and assessing internal opinions on the reporting
audit of the consolidated annual financial in the consolidated annual financial statement.
statement of the Group In addition, we have assessed the accuracy of
Particularly important audit matters are those the estimates made by the legal representa
matters which, according to our dutiful judge tives with regard to the costs incurred and the
ment, were most significant in our audit of the probabilities of occurrence on the basis of the
consolidated annual financial statement for the development of the amounts of provisions set
fiscal year from 1 January until 31 December aside in previous years.
2018. These matters have been considered in Our auditing procedure has not given rise to
connection with our audit of the consolidated any objections to the reporting of provisions for
annual financial statement as a whole and in warranty risks.
forming our opinion thereon; we do not express
a separate opinion on these matters. Reference to related information
In the following, we describe what we consider The Sto Group has provided information on the
to be particularly important audit issues: accounting and valuation methods applied to
the provisions for warranty risks, and on the
1) Recognition and valuation of provisions amount of contingent liabilities resulting from
for warranty risks warranty risks under ‘6) Presentation of the
major accounting and valuation policies’, in
Reasons for determining this as a particu- the subsection ‘Estimates and assumptions by
larly important audit matter Management’ as well as under ‘Notes on the
The Group is exposed to considerable warranty consolidated statement of financial position’,
risks. For our audit, provisions for warranty risks Note (23).
are of particular importance as their recognition
and valuation are fraught with uncertainties 2) Recoverability of goodwill
and are highly dependent on the evaluations
and assumptions of the statutory representa Reasons for determining this as a particu-
tives. The assessment of the probability of dam larly important audit matter
age occurring and estimates of the costs which Goodwill is subjected to an impairment test at
would be incurred have a significant impact on least once per fiscal year as at 31 December
the assets and earnings situation of the Group. and additionally during the year if there are
indications of an unscheduled depreciation
Auditing procedure requirement in order to determine a possible
As part of our audit we have examined the depreciation requirement. These evaluations are
processes established by the Sto Group for regularly based on the present value of future
the identification, assessment, and reporting cash flows of the respective cash-generating
of provisions for warranty risks. Our auditing units to which goodwill has been allocated. The
173
result of these evaluations depends to a large Our auditing procedure has not given rise to
extent on the assessment of the future develop any objections to the measurement of goodwill
ment of the respective parts of the company by of cash-generating units.
the legal representatives and on the determina
tion of the discount rate. Reference to related information
Due to the complexity of this evaluation and The Sto Group reports on the procedure re
the discretionary scope available in the context garding the impairment test of cash-generating
of the evaluation, this impairment test was one units as well as their earnings in the Notes to
of the most significant matters in the context of the consolidated annual financial statement
our audit. under ‘6) Presentation of the major accounting
and valuation policies’ in the subsection ‘Intan
Auditing procedure gible assets’.
Within the framework of our audit, we have
followed the methodical procedure of the legal Other information
representatives for carrying out the impairment The Supervisory Board is responsible for the
test in accordance with IAS 36 with the assis report of the Supervisory Board. In all other
tance of internal evaluation experts. Among respects, the legal representatives are respon
other things, we compared the definition of sible for the other information. Other informa
the cash-generating units with the control tion comprises the components provided for
levels used in the Group at which goodwill is the Annual Report, of which we had received a
monitored. We have verified whether the legal version by the time this audit certificate was is
representatives have determined the carrying sued, in particular the sections ‘Sto at a glance’,
amount and the recoverable amount of the ‘Foreword’, ‘Report of the Supervisory Board’,
cash-generating units in an equivalent manner. ‘Corporate Governance Report / Declaration on
The corporate planning underlying the impair management of the company’, ‘The Sto share’,
ment tests of goodwill, especially regarding the ‘Sustainability and Corporate Social Respon
future development of turnover and the EBIT sibility’, ‘Responsibility statement by the legal
margin, have been compared with the planning representatives’ as well as ‘Financial calendar
of the future development of the company set with publisher’s details’.
up by the legal representatives and approved Our audit opinions on the consolidated annual
by the Supervisory Board. We have discussed financial statement of the Group and the Group
the major premises of the planning with the management report do not extend to other
legal representatives and compared it to the information, and accordingly we express neither
earnings and the inflow of cash and cash an audit opinion nor any other form of audit
equivalents in the past. The derivation of the conclusion.
discount rate and its individual components has In connection with our audit, we have the
been assessed by questioning the peer group, responsibility to read the other information and
comparing the market data with external evi to assess whether the other information
dence and verifying the arithmetical accuracy • is materially inconsistent with the consoli
of the calculation. We have also looked at the dated annual financial statement, the Group
growth rate assumptions on the basis of long- management report or our audit findings or
term inflation expectations for the respective • otherwise appears materially misrepre
countries. sented.
174
Audit
of certificate
Sto Group
Responsibility of the legal representatives (systems) which they have deemed necessary
and the Supervisory Board for the consol- to enable the preparation of a Group manage
idated annual financial statement and the ment report in accordance with the applicable
Group management report German legal regulations and to provide suffi
The legal representatives are responsible for cient suitable evidence for the statements in the
drawing up the consolidated annual financial Group management report.
statement, which complies with the IFRSs, as The Supervisory Board is responsible for mon
they are to be applied in the EU, and addi itoring the accounting process of the Group
tionally with the German legal regulations in for preparing the consolidated annual financial
accordance with Section 315e Paragraph 1 statement and the Group management report.
of the HGB (German Commercial Code) in all
material aspects. They are also responsible for Responsibility of the auditor for the audit-
ensuring that the consolidated annual financial ing of the consolidated annual financial
statement gives a true and fair view of the statement and the Group management
assets situation, financial position and earnings report
situation of the Group. In addition, the legal Our objective is to obtain sufficient certainty as
representatives are responsible for the internal to whether the consolidated annual financial
controls they have determined necessary to statement as a whole is free from material
enable the preparation of a consolidated annual misstatements, whether intended or not, and
financial statement that is free from material whether the Group management report as a
misstatements, whether intentional or not. whole provides a suitable view of the Group’s
When preparing the consolidated annual position and, in all material aspects, is in
financial statement of the Group, the legal accordance with the consolidated annual finan
representatives are responsible for assessing the cial statement and the findings of our audit,
capability of the Group to continue corporate complies with German legal regulations and
activity. Furthermore, it is their responsibility to suitably presents the opportunities and risks
disclose matters in connection with the contin of the development in the future, as well as to
uation of corporate activity where relevant. In issue an audit certificate which contains our
addition, they are responsible for preparing the audit opinions on the corporate annual financial
balance sheet on the basis of the accounting statement and the Group management report.
principle of continuing corporate activity, unless Sufficient certainty is a high degree of certainty
there is the intention to liquidate the Group or but no guarantee that an audit conducted
to discontinue operations or there is no realistic in accordance with Section 317 of the HGB
alternative. (German Commercial Code) and the EU
The legal representatives are also responsible regulation on statutory audits while observing
for preparing the Group management report the generally accepted German principles of
which gives a suitable view of the Group’s proper audits promulgated by the Institut der
position and which is consistent with the Wirtschaftsprüfer (IDW) will always reveal a
consolidated annual financial statement in all materially false statement. False statements can
material aspects, complies with the German result from infringements or inaccuracies and
legal regulations, and suitably presents the op are considered to be material if the reasonable
portunities and risks of the development in the assumption can be made that they, individually
future. Moreover, the legal representatives are or collectively, could influence decisions taken
responsible for the precautions and measures by addressees on the basis of this consolidated
175
annual financial statement and the Group man uncertainty, we are obliged to point out
agement report. the related disclosures in the consolidated
During the audit we exercise due discretion and annual financial statement and the Group
maintain a critical attitude. Furthermore, management report in our audit certificate
• we identify and evaluate risks resulting or, if these disclosures are inappropriate,
from materially false statements, whether to modify our respective audit certificate.
intentional or not, in the consolidated We draw our conclusions based on audit
annual financial statement and in the Group evidence obtained by the date of our
management report, we plan and conduct audit certificate. However, future events or
audit procedures as a reaction to these risks, circumstances may prevent the Group from
and obtain audit evidence which is suffi continuing its corporate activity;
cient and suitable to serve as the basis for • we assess the overall presentation, the
our audit opinions. The risk that material structure and the content of the consoli
misstatements are not detected is higher in dated annual financial statement, including
the case of infringements than in the case of disclosures, and whether the consolidated
inaccuracies, since infringements may involve annual financial statement presents the
fraudulent interaction, forgery, intentional underlying business transactions and events
incompleteness, misleading statements, or in such a way that the consolidated annual
the repeal of internal controls; financial statement gives a true and fair view
• we gain an understanding of the internal of the assets situation, financial position and
control system relevant for the auditing of earnings situation of the Group in accord
the consolidated annual financial statement ance with the IFRSs, as they are to be applied
and the precautions and measures relevant in the EU, and additionally with the German
for the auditing of the Group management legal regulations in accordance with Section
report in order to plan auditing procedures 315e Paragraph 1 of the HGB (German Com
which are appropriate for the given circum mercial Code);
stances but without the objective of issuing • we obtain sufficient and appropriate audit
an audit opinion of the effectiveness of these evidence for the accounting information
systems; of the companies or business activities
• we assess the appropriateness of the within the Group in order to issue an audit
accounting methods used by the legal opinion on the consolidated annual financial
representatives, and the reasonableness of statement and the Group management
estimates and related disclosures made by report. We are responsible for instructing,
the legal representatives; monitoring and conducting the audit of the
• we draw conclusions about the appro consolidated annual financial statement. We
priateness of the accounting principle of are solely responsible for our audit opinions;
continuing corporate activity applied by • we assess whether the Group management
the legal representatives and, based on the report is in accordance with the consolidated
audit evidence obtained, whether there is annual financial statement, its compliance
any material uncertainty in connection with with the law and the view it gives of the
events or circumstances that could raise sig position of the Group.
nificant doubts about the Group’s capability • we conduct audit procedures relating to the
to continue corporate activity. If we come future-oriented statements made by the legal
to the conclusion that there is a material representatives in the Group management
176
Audit
of certificate
Sto Group
report. On the basis of sufficient suitable on 20 November 2018. We have been the
audit evidence, we particularly retrace the Group auditors of STO SE & Co. KGaA, Stüh
significant assumptions underlying the lingen/Germany, without interruption since the
future-oriented statements made by the legal 1989 fiscal year.
representatives and assess the appropriate We declare that the audit opinions contained
derivation of the future-oriented statements in this audit certificate are consistent with the
from these assumptions. We do not issue additional report to the Audit Committee in
an independent audit opinion on the fu accordance with Article 11 of the EU regulation
ture-oriented statements and the underlying of statutory audits (Audit report).
statements. There is a significant unavoidable In addition to the audit, we performed the
risk that future events could differ materially following services, which were not disclosed in
from the forward-looking statements. the consolidated annual financial statements or
We discuss with those responsible for monitor the Group management report, for the group
ing, amongst other things, the planned scope companies:
and time schedule of the audit and significant • Advice on accounting, general legal and
audit findings, including any deficiencies in governance issues
the internal control system, which we identify • Non-legally required audits for specific indus
during our audit. tries
We issue a statement to those responsible for • Non-legally required agreed investigative
monitoring that we have complied with the rel actions with respect to financial information
evant independence requirements and discuss
with them all relationships and other matters Responsible chartered accountant
that can reasonably be expected to affect our The chartered accountant responsible for the
independence and the protective measures audit is Dr Eckart Wetzel.
taken to that end.
From the matters that we have discussed with
those responsible for monitoring, we determine Villingen-Schwenningen/Germany,
those matters that were most significant in 15 April 2019
the audit of the consolidated annual financial
statement for the current reporting period and Ernst & Young GmbH
which are therefore particularly important audit Wirtschaftsprüfungsgesellschaft
matters. We describe these matters in the audit
certificate, unless laws or other legal regulations Dr Wetzel Busser
exclude public disclosure of the matter. Chartered accountant Chartered accountant
Other statutory and other legal require-

ments
Other information in accordance with

Article 10 of the EU regulation on statuto-
ry audits
We were elected as Group auditors at the
Annual General Meeting on 21 June 2018. We
were commissioned by the Supervisory Board
177
178
Consolidated
Responsibility
annual
statement
financial
by the
statements
legal representatives
of the Sto Group (IFRS) | Sto SE & Co. KGaA
Sto Group
Responsibility statement
by the legal representatives
To the best of our knowledge, and in accord

ance with the applicable reporting principles,
the consolidated financial statements give
a true and fair view of the assets, liabilities,
financial position and profit and loss of the
Group, and the Group management report
includes a fair review of the development and
performance of the business and the position
of the Group, together with a description of the
principal opportunities and risks associated with
the expected development of the Group.
Stühlingen/Germany, 12 April 2019
Sto SE & Co. KGaA

represented by STO Management SE
Executive Board
Rainer Hüttenberger
(Spokesman)
Michael Keller
Jan Nissen
Rolf Wöhrle
179
Financial calendar 2019
Electronic publication of the annual financial statements for 2018........ 30 April 2019
Interim report on the first half of 2019..................................................... 15 May 2019
Annual General Meeting in 2019............................................................... 19 June 2019
Report on the first half of 2019................................................................. 30 August 2019
Interim report on the second half of 2019................................................ 19 November 2019
Electronic publication of the 2019 annual financial statement............... 27 April 2020
The annual financial statements of Sto SE & Co. KGaA (HGB) are available in
electronic form at www.unternehmensregister.de. In addition, they are published
on the website www.sto.de or may be requested in writing by post:
Sto SE & Co. KGaA

F-S department
Ehrenbachstraße 1
D-79780 Stühlingen
This report contains forward-looking statements which are based on Management’s current assumptions and
estimates concerning future developments. Such statements are subject to risks and uncertainties which Sto cannot
control or estimate precisely. If any uncertainty arises or the assumptions on which these statements are based prove
to be incorrect, actual results may differ significantly from these statements. Sto is under no obligation to update
forward-looking statements to incorporate any events which come to light after the publication of this report.
Publisher’s details
Published by Sto SE & Co. KGaA, Stühlingen/Germany

Concept and design Straub Druck+Medien AG
Text Redaktionsbüro tik GmbH
Printing Straub Druck+Medien AG
Photographic credits Cover photo: Christian Schellander, Villach/Austria

Page 2, 18, 35, 38, 39, 41: Martin Baitinger, Böblingen/Germany
Page 6: Bernd Schumacher, Freiburg/Germany
Page 19, 20, 36, 61, 78: Sto SE & Co. KGaA
Page 63: UN Global Compact
Page 75: Helga Auer, Vienna/Austria
Page 77: Operation Smile
Page 79: Christoph Große
Page 80 left: Kerstin Pommerenke
Page 80 right: IRGE/University Stuttgart/Germany
Page 81: Sto Foundation
180
Headquarters Subsidiaries – international
Sto SE & Co. KGaA Belgium Canada Russia Turkey
Ehrenbachstraße 1 Sto NV Sto Canada Ltd. OOO Sto Sto Yapı Sistemleri San. ve
DE-79780 Stühlingen Z.5 Mollem 43 1821 Albion Rd. #1 ul. Bolshaya Yakimanka 31 Ticaret A.Ş.
Telephone +49 7744 57-0 BE-1730 Asse Etobicoke RU-119180 Moscow Atatürk Cad. Yakut Sok. No:8
[email protected] Telephone +32 2 4530110 CA-ON M9W 5w8 Telephone +7 495 974-1584 TR-34815 Beykoz, Istanbul
www.sto.com [email protected] Telephone +1 800 221-2397 [email protected] Telephone +90 216 330 51 00
www.sto.be [email protected] www.sto.ru [email protected]
Branches/Sales Centres/ www.stocorp.ca www.sto.com.tr
distribution partners Brazil Switzerland
Sto Brasil Revestimentos e Columbia Sto AG U.K. and Ireland
Addresses and information avail- Fachadas Ltda. Sto Colombia S.A.S. Südstrasse 14 Sto Ltd.
able at: Rua Flor de Noiva, 886 Calle 79 # 68H-17 CH-8172 Niederglatt/ZH 2 Gordon Avenue
Telephone +49 7744 57-1010 Quinta da Boa Vista CO-Bogota D.C. Telephone +41 44 8515-353 Hillington Park
BR-08597 630 Itaquaquecetuba, Telephone +57 1 7451280 [email protected] GB-Glasgow G52 4TG
Subsidiaries – national Sao Paulo [email protected] www.stoag.ch Telephone +44 141 892 8000
StoCretec GmbH Telephone +55 11 2145 0011 www.stocolombia.com [email protected]
[email protected] Singapore www.sto.co.uk
Gutenbergstr. 6
www.argamont.com.br Malaysia Sto SEA Pte. Ltd.
DE-65830 Kriftel
Sto SEA Sdn. Bhd. 159 Sin Ming Road, #06-02 Hungary
Telephone +49 6192 401104
Chile No. 15, Jalan Teknologi 3/3A, Amtech Building Sto Épitöanyag Kft.
[email protected]
Industrial y Comercial Surian Industrian Park, SG-Singapore 575625 Jedlik Ányos u. 17
www.stocretec.de
Sto Chile Ltda. Kota Damansara, Telephone +65 64 533080 HU-2330 Dunaharaszti
Verotec GmbH Volcán Lascar Oriente 781 MY-47810 Petaling Jaya, Selangor [email protected] Telephone +36 24 510210
Hanns-Martin-Schleyer-Straße 1 Parque Industrial Lo Boza Telephone +603 8070 8133 www.sto-sea.com [email protected]
DE-89415 Lauingen/Donau CL-Pudahuel-Santiago www.sto-sea.com www.sto.hu
Telephone +56 2 949 35 93 Sweden
Telephone +49 9072 990-0
[email protected] Mexico Sto Scandinavia AB USA
[email protected]
www.stochile.com Sto Mexico, S. de R.L. de C.V. Gesällgatan 6 Sto Corp.
www.verotec.de
Prol. Reforma #51-803 SE-582 77 Linköping 3800 Camp Creek Parkway
SÜDWEST Lacke + Farben China Paseo de las Lomas. Santa Fe, Telephone +46 13 377100 Building 1400, Suite 120
GmbH & Co. KG Shanghai Sto Ltd. Álvaro Obregón. Mexico, D.F. 01330 [email protected] Atlanta, Georgia 30331
Iggelheimer Str. 13 288 Qingda Road Telephone +52 55 6384099 www.sto.se Telephone +1 800 221-2397
DE-67459 Böhl-Iggelheim Pudong [email protected] [email protected]
CN-201201 Shanghai Slovak Republic www.stocorp.com
Telephone +49 6324 709-0
Telephone +86 2158972295 Netherlands Sto Slovensko s.r.o.
[email protected]
www.sto.com.cn Sto Isoned BV Môtovská cesta 276 UAE
www.suedwest.de
Lingewei 107 SK-960 01 Zvolen Sto Gulf Building Material LLC.
VeroStone GmbH Denmark NL-4004 LH Tiel Telephone +421 905 770 774 Media One Hotel Tower
Willibaldstraße 38 Sto Danmark A/S Telephone +31 344 620666 [email protected] P.O. Box: 393488
DE-85072 Eichstätt Avedøreholmen 48 [email protected] www.sto.sk Level 38 Media City
Telephone +49 8421 9730-0 DK-2650 Hvidovre www.sto.nl (formerly STOMIX Slovensko s.r.o.) AE-Dubai
[email protected] Telephone +45 70270143 Telephone +971 45 51 55 61
[email protected] Norway Spain www.sto.com
www.vero-stone.de
www.stodanmark.dk Sto Norge AS Beissier S.A.U.
STRÖHER GmbH Waldemar Thranes gate 98 A Txirrita Maleo 14
Ströherstraße 2-10 Finland NO-0175 Oslo ES-20100 Errenteria
DE-35683 Dillenburg Sto Finexter OY Telephone +47 6681 3500 Telephone +34 902 100 250
Distribution partners –
Telephone: +49 2771 3 91-0 Mestarintie 9 [email protected] [email protected] international
[email protected] FI-01730 Vantaa www.stonorge.no www.beissier.es
Telephone +358 207659 191 Addresses and information available at:
www.stroeher.de
[email protected] Norway Spain Telephone +49 7744 57-1131
Ströher Fliesen GmbH www.sto.fi StoCretec Flooring AS Sto SDF Ibérica S.L.U.
Ströherstraße 2-10 Postboks 1023 Riera del Fonollar 13
DE-35683 Dillenburg France NO-1510 Moss ES-08830 Sant Boi de Llobregat
Telephone: +49 2771 3 91-0 Beissier S.A.S. Telephone 47 6927 3000 (Barcelona)
[email protected] Quartier de la Gare [email protected] Telephone +34 93 7415 972
www.stroeherliving.de FR-77760 La Chapelle la Reine www.stocretec.no [email protected]
Telephone +33 1 60396110 (formerly Hesselberg Bygg A.S.) www.sto.es
GEPADI Fliesen GmbH [email protected]
Kasseler Straße 41 www.beissier.fr Austria Czech Republic
DE-35683 Dillenburg Sto Ges.m.b.H. Sto s.r.o.
Telephone: +49 2771 3 91-0 France Richtstr. 47 Čestlice 271
[email protected] Sto S.A.S. AT-9500 Villach CZ-251 70 Dobřejovice
www.gepadi.de 224, rue Michel Carré Telephone +43 4242 33133-0 Telephone +420 225 996 311
FR-95872 Bezons Cedex [email protected] [email protected]
Telephone +33 1 34345700 www.sto.at www.sto.cz
Holding companies – [email protected]
national www.sto.fr Poland Czech Republic
Inotec GmbH Sto Sp. z o.o. STOMIX spol. s r.o.
Waldshuter Straße 25 Italy ul. Zabraniecka 15 Skorošice 197
DE-79761 Waldshut-Tiengen Sto Italia Srl PL-03-872 Warsaw CZ-790 65 Skorošice
Tel.: +49 7741 6805-0 Via G. di Vittorio, 1/3 Telephone +48 22 5116102 Telephone +420 584 484 111
[email protected] Zona Ind. le Terrafino [email protected] [email protected]
www.inotec-gmbh.com IT-50053 Empoli (Fl) www.sto.pl www.stomix.cz
Telephone +39 0571 94701
[email protected]
www.stoitalia.it
Headquarters
Sto SE & Co. KGaA
Ehrenbachstraße 1
D-79780 Stühlingen
Head office
Telephone +49 7744 57-0
Fax +49 7744 57-2178
Info service
Telephone +49 7744 57-1010
Fax +49 7744 57-2010
[email protected]
www.sto.com
Printed in Germany
Rev. no. 01/05.19
Art. no. 09673-118

Sto Geschaeftsbericht 2018 Englisch

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Building with conscience.

Sto SE & Co. KGaA | 2018 Annual Report

(figures in EUR million unless otherwise indicated)

Foreword2 D. Events after the reporting period 42

Overall economic and sector-related Statement of profit and loss 84

Picture caption for title page:

and purchased goods once again increased

A flair for people, products, and markets, a

Report of the Supervisory Board

Members of the Supervisory Board

Dr Max-Burkhard Zwosta, Wittnau/Germany,

Lothar Hinz*, Reutlingen/Germany,

Dr Max-Burkhard Zwosta, Chairman

Maria H. Andersson ­ unich/Germany, and Head

Dear Shareholders, and development perspectives of the Group

Corporate Governance Report/

Corporate Governance at Sto of Compliance in accordance with Section 161

risks is part of the Corporate Governance at Share trading

majority of at least three quarters of the voting

Powers of the personally liable partner

Material agreements of the company

Compensation agreement of the company

Management Report for the Sto Group (IFRS)

The Sto Executive Board

Rainer Hüttenberger, Jan Nissen,

Michael Keller, Rolf Wöhrle,

The 2018 fiscal year at a glance

A. Group fundamentals System build-up of StoVentec R

Sales markets tribution as a second distribution channel for a

Sto Group Turnover In 2018, consolidated turnover in Germany

value of EUR 562.8 million. An increase of

3.1 % to EUR 736.4 million (previous year:

1,100 EUR 714.6 million) was achieved outside of

increase. Once adjusted for these turnover-­

ment (including Germany) grew by 5.5 % on

600 2017 to EUR 1,024.4 million (previous year:

EUR 970.8 million). In contrast to the strong

500 sales performance in Germany, business devel-

compared to EUR -247.5 million in the previous EUR 7.9 million). Once again, this is because

90 year to 32.9 %. The Sto Group’s net profit for

60 Sto Group Net profit for the year

2013 2014 2015 2016 2017 2018 30

When broken down by segment, EBIT in 20

EUR 254.3 million) and with a marginal increase

to EUR 11.1 million in terms of investments

method (31 December 2017: EUR 11.0 million).

EUR 336.8 million), fixed assets decreased Current provisions

There was a net increase in current pro-

visions and liabilities to EUR 187.2 million

(31 December 2017: EUR 180.7 million). Other

medium-term growth prospects experienced a HR strategy

Alongside these key issues, the HR department

that are present within the Group, securing Product innovations

Production and procurement

Overall economic and industry-specific of product life cycles contributes to a higher

Growth of 2.0 % is forecast for the indus-

Review of strategic direction for achieving these aims, and by introducing

The Sto share

Sto limited preference share data 2018 on the stock markets

Foreword2 D. Events after the reporting period 42

Overall economic and sector-related Statement of profit and loss 84

Maria H. Andersson unich/Germany, and Head

Sto Group Turnover In 2018, consolidated turnover in Germany

increase. Once adjusted for these turnover-

60 Sto Group Net profit for the year

8. Depreciation and amortisation of intangible assets as well as property,