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ANNUAL REPORT 2014
ZF LENKSYSTEME GMBH
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SALES
OPERATING PROFIT
NET PROFIT BEFORE TAX
INVESTMENTS
EMPLOYEES
KEY FIGURES 2014 IN MILLION, EXCEPT EMPLOYEES
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CONTENTS
01 Group management report for 2014
06
Operations and organisation
07
Business environment and developments in theautomotive industry
07
Business development of ZF Lenksysteme
07
02 The Results
18
Consolidated income statement
19
Consolidated statement of comprehensive income
20
Consolidated balance sheet
21Consolidated cash ow statement
23
Consolidated statement of changes in equity
25
Notes to the consolidated nancial statements
27Audit opinion
67
We have issued the audit opinion presented below in compliance
with legal and professional requirements subject to the conditions
described in the enclosed „Engagement Terms, Liability and Con-
ditions of Use“.
If this document is used in electronic form for the purpose of sa-tisfying disclosure requirements in the Federal Gazette (Bundes-
anzeiger), only the les in the documents relating to the nancial
statements and, where a statutory duty to audit applies, the audit
opinion and the related auditor‘s certicate may be used for this
purpose.
NOTE
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O N E
2014
GROUP MANAGEMENT REPORT›
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7 Group management report for 2014
GROUP MANAGEMENT REPORT FOR 2014
Operations and organisation
ZF Lenksysteme GmbH was founded in 1999 as a joint venture
with Robert Bosch GmbH (BOSCH) and ZF Friedrichshafen AG
(ZF). Each company held a fty percent holding. Bosch and ZF sig-
ned an agreement on 14/15 September 2014 to increase the RobertBosch GmbH shareholding to 100 % in order to ensure that the
future requirements of an increasingly dynamic environment could
continue to be met in the future. The acquisition was subject to
the merger control proceedings of the supervisory authorities. The
ZF Friedrichshafen AG share in the company was transferred to
Robert Bosch GmbH on 30 January 2015 following approval by the
responsible competition authority.
ZF Lenksysteme is a worldwide supplier of steering systems to theautomotive industry. The company develops, manufactures and
markets innovative steering technology for passenger cars and
commercial vehicles. In addition to complete steering systems,
steering columns and steering pumps, the product portfolio also
features components such as valves, universal joints, steering
shafts and gear pumps.
The company is domiciled at, and has its biggest plant in, Schwä-
bisch Gmünd, in the German state of Baden-Württemberg. Otherplants in Germany are located in Berlin and Bietigheim; the sub-
sidiary ZF Lenksysteme Nacam GmbH is based in Bremen. With
another 14 locations in Europe, North America, South America,
China, Malaysia and India, ZF Lenksysteme also has a global pre-
sence which allows it to serve its internationally-focused custo-
mers with local development and production services all around
the world. Two other locations in China, as well as new facilities
which will expand the Group’s location in Hungary, are currently
under construction.
Business environment and developmentsin the automotive industry
The world economy grew in 2014 with an increase in global output of
2.7 %, lagging behind the long-term trend of 3.3 %. Reasons for this
were the ongoing impact of the sovereign debt crisis in Europe as
well as political tensions in eastern Europe, disappointing develop-
ments in Japan and structural problems in a number of emerging-
market economies. The situation was exacerbated by the critical
situation in some Middle Eastern countries. European economies
grew by just 1.2 %. In contrast, the North American economic area
developed positively. Although China maintained strong growth of7.3 % it failed to repeat the high pace of growth of previous years.
A total of 90.4 million units of passenger cars and commercial vehic-
les were manufactured worldwide in 2014, around 3 % more than the
year before. Around 4 % more vehicles were produced in the Euro-
pean Union. In North America, vehicle production increased by 5 %,
somewhat more than in the previous year. In contrast, output in
South America dropped by double-digits. At 8 %, vehicle production
grew most strongly in China, although this was only around half therate of growth reported the year before. Production gures in India
declined somewhat owing to the country’s weak performance in the
rst half of the year.
Business development of ZF Lenksysteme
ZF Lenksysteme reported total revenues during the period under
review of €4.4 billion, up 7 % on the previous year. The margin forgrowth of between 5 % and 7 % projected by the ZF Lenksysteme
Group last year was consequently met.
Sales trends
€ million
2014
2013
2012
4,387
4,114
3,997
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Group management report for 2014 8
Group sales were spread among its business elds as follows: 76 %
car steering systems, 16 % commercial vehicle steering systems and
8 % car steering columns.
Sales by business fields
Car steering systems
As in previous years, business with car steering systems developed
positively in 2014 and grew by 12 % over last year to reach record
sales of €3.4 billion. Accounting for 76 % of sales, car steering sys-
tems remained the largest business eld.
In line with the technological advance from hydraulic to electric car
steering systems on the global market, ZF Lenksysteme has deve-
loped a complete ZF Servolectric® product range for all passenger
car segments and for light commercial vehicles. ZF Lenksysteme
reported sales of these electric power steering systems in scal
2014 of €3 billion, equal to 18 % more than in the previous year.
With its innovative products, extended worldwide production
network and outstanding overall international position, the com-pany again acquired important large-scale projects which allowed
ZF Lenksysteme to secure and expand its share of the worldwide
market.
Commercial vehicle steering systems
ZF Lenksysteme’s commercial vehicle steering systems business
includes CV steering systems, CV steering columns and shafts as
well as CV and car steering pumps. The business unit ended the
year with reported sales totalling €682 million, 9 % down on theprevious year.
€382 million of this amount originated from commercial vehicle
steering assemblies and columns. The reduction in sales of 6 % was
mainly due to weak South American and European markets.
Sales of steering pumps dropped by 12 % to €300 million. The drop
in sales in the passenger car pumps segment was exacerbated by
the technological advance from hydraulic to electric car steeringsystems, particularly on the European market.
The commercial vehicle steering systems business unit obtained
important orders in 2014. Important product innovations which will
secure long-term business success were brought to series maturity.
Car steering columns
ZF Lenksysteme’s car steering columns business unit reported a 5 %
fall in sales to €341 million. This reduction aected the company’s
European locations in particular. At the same time, however, new
customer projects were acquired in America, Asia and Europe. Pro-
duction capacities continued to be expanded in Asia as planned.
8 %Car steeringcolumns
16 %Steering assembliesand columns forcommercial verhicles
76 %Car steeringassemblies
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9 Group management report for 2014
Regions
With 17 production sites in eight countries, ZF Lenksysteme opera-
tes on a worldwide basis. Proximity to customers and their markets
strengthens the company’s international competitive position as well
as allowing it to compensate for regional uctuations. External sales by European plants rose by 6 %. Sales increased in the Asia-Pacic
Region by 11 % and in NAFTA by 8 %. In contrast, sales in South Ame-
rica fell by 17 %.
Sales according to region
Earnings, assets and financial position
ZF Lenksysteme reported an operating prot of €250 million in
the scal year and increased EBIT by 5.7 % over and above the pre-
vious year. As a result, the prot margin projected for 2014 was
exceeded. At the same time, results were impacted by unforeseen
eects: Property, plant and equipment as well as intangible assets
held by the “pumps” unit of the CV Steering Columns division were
written down by €9 million owing to inadequate earnings pros-
pects. Write-downs of €11 million were also required for the stee-ring column product eld.
Trade receivables rose by €82 million and trade payables by €97
million. This was largely due to expansion of business activities at
locations in China.
Sustained high levels of capital spending on property, plant andequipment of €392 million easily exceeded depreciation. The value
of property, plant and equipment consequently rose by €210 mil-
lion to €1,147 million. ZF Lenksysteme is therefore prepared for
further growth.
The discounting rate on pension provisions followed the market
and fell once again, from 3.8 % last year to 2.25 % at the end of the
scal year. Losses arising from revaluations of dened benet plans
consequently rose again to €257 million by the end of the year.Liabilities rose to €638 million.
Deferred tax assets increased by €61 million. €46 million of this
amount was ascribable to the losses arising from revaluations of
dened benet plans.
Equity development
€ million
2013 2014
44 % Germany
18 % USA
10 % Europe
25 % Asia
3 % South America
Operating Profit
€ million
2014
2013
2012
250
167
160
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Group management report for 2014 10
Equity rose by €138 million to €903 million by the end of the pe-
riod under review. The equity ratio remained unchanged at 31 %.
ZF Lenksysteme regards this ratio as placing it in a good position
vis-à-vis its competitors.
Cash ow from operating activities rose to €512 million; €441 mil-lion owed out of the company in the form of investment activities.
With cash and cash equivalents of €265 million, available-for-sale
securities of €3 million and nancial liabilities of €154 million,
ZF Lenksysteme’s net nancial position at the end of the year 2014
was a positive €114 million. The Group continues to be in a sound
nancial position.
Business development is therefore regarded as positive. Anticipated
sales growth was achieved and the targeted prot margin exceeded.
Capital spending
ZF Lenksysteme invested the high amount of €392 million in
property, plant and equipment during the scal year. This capital
spending ratio of over 9 % of sales provides a good foundation for
further growth.
€87 million, or 22 %, of capital spending was invested in Germany.
The bulk of foreign direct investments were made in China, Hungary
and the USA.
ZF Lenksysteme concentrated its capital spending on new products
and customer projects as well as in necessary streamlining and re-
placement.
Employees
Worldwide, ZF Lenksysteme had an average of 13,732 employees
on its payroll during the scal year. The workforce has consequent-
ly grown by 5 % since the previous year. 6,756 people work in Ger-
many, 2 % more than in the previous year. Outside of Germany
the workforce rose by 8 % to 6,976. Most of this growth took place
at the company’s locations in China, where 2,794, or 20 % of the
total workforce, were employed. The location in Florence (USA)
was expanded further and, with 1,185 employees, is now one of
ZF Lenksysteme’s largest plants. The location in Hungary also ex-
panded and, with 755 employees, grew in importance accordingly.
Around 7 % of the company’s total workforce, 999 employees, now
works in South America.
Employees
2014
2013
2012
13,732
13,118
12,717
The “Keep values in mind” initiative, which was launched at all lo-
cations in 2013, was successfully concluded. Values will continue to
be integrated as part of our corporate culture on an ongoing basis,
e.g. in the form of employee appraisals and executive programmes.
The prot-sharing model for standard pay scale employees working
at German locations was extended to incorporate quality compo-
nents. This will encourage employees to focus more closely on thiskey corporate objective.
80 % of all employees participated in the global ZAS sta survey.
The survey concentrated in particular on communication between
management, executives and employees, as well as issues relating
to corporate strategy and leadership. Special emerging strengths
are the high level of responsibility demonstrated by our employees,
their strong identication with the company and excellent team-
based collaboration.
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11 Group management report for 2014
A network for female employees has been created – WOMEN@
ZFLS. This is a further element in making the company a more
attractive employer for women.WOMEN@ZFLS is designed to im-
prove communication and the exchange of ideas and experience
between female employees. The network will also address topics
such as the work-life balance, ways of engaging in continuingprofessional development and international delegations.
Research and development
Strength in innovation is a critical element in the business success
of ZF Lenksysteme. In order to full market requirements in terms
of product functionality and quality as well as possible, €260 million
was expended during the scal year on research and development;this is 9 % more than in the previous year.
Research and development spending
€ million
2013 2014
The electromechanical steering system (ZF-Servolectric®) minimises
energy consumption while providing drivers a high level of driving
comfort and precision. Car manufacturers benet from zero-main-
tenance and easy installation, while drivers obtain greater electric
steering functionality. ZF-Servolectric® supports this trend byproviding a wide range of assistance and safety features. Its series
applications increasingly include integrated functions to make life
easier, such as parking assistant functions and adjustable steering
characteristics. Safety is also enhanced by other functions (lane
keeping assistant, lane departure warning or oversteering/unders-
teering assistant).
The deployment of the ZF-Servotwin® electric steering system in
the commercial vehicle segment not only permits greater steering
precision and improved steering comfort, it also implements driver
assistance functions in commercial vehicles for the rst time. A
“Lane keeping assistance” project has also been launched to de-
monstrate the potential for improved road safety. This functionality
not only addresses issues of driving comfort, but also driving safety
by helping drivers to stay in lane by superimposing continuous andharmonious additional torque.
The “Innovation Truck” was a crowd puller at the IAA Commercial
Vehicles. This long truck can be easily manoeuvred from outside
the driver’s cabin using a tablet and an app specially developed by
ZF Lenksysteme. The practical value of this development is that it
will help to avoid expensive manoeuvring damage and will leverage
e ciency potential at depots and haulier’s facilities.
Purchasing
Purchases of product material, operating resources and services
increased by 6 % to €2.7 billion year-on-year.
ZF Lenksysteme’s global purchasing organisation, which has been
restructured in recent years, produces rolling global commodity
group strategies. These are coordinated and successfully imple-mented by regional procurement centres. This enabled the company
to achieve signicant improvements in its pool of suppliers, by
expanding sources of supply in emerging markets and by consoli-
dating well-developed existing procurement markets.
Parallel approvals of several suppliers for a single product enhanced
procurement exibility and contributed to a further improvement
in the quality of supplies obtained from third parties.
Important impetus was given by the newly established “Aftermarket”
purchasing unit. The methods and processes developed in this seg-
ment to guarantee customer requirements, i.e. for short lead times
and faster delivery of prototypes, are transferred directly to volume
business.
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Group management report for 2014 12
Production
Numerous processes were optimised during the course of the scal
year by consistently applying the ZF Lenksysteme production
system. New production facilities which comply with production
system requirements were commissioned and more eective usemade of space and buildings.
International meetings of plant managers as well as the Manufac-
turing Days created platforms which enabled managers to learn
about and make practical and planned use of the production system
methods. These meetings also provided an opportunity to address
leadership issues which play a key role in continuous improvement.
Quality
The quality of products and services is a decisive factor inuencing
sales growth and business results. Our aim is to achieve quality leader-
ship in all business elds and in every region. Signicant progress
was made in improving the quality of products even further as part
of the strategy of achieving zero defects. In particular, progress has
been made in reducing internal nonconformity costs by means of
systematic process development and standardisation and by im-proving the in-the-eld quality of products by making consistent
use of quality techniques.
The key focus of quality initiatives in 2014 was the topic of “Quality
in the product creation process”. This was also one of the main issues
addressed at the Quality Days held at all ZFLS locations.
IT
One of the main activities undertaken in the scal year was achieving
ongoing improvements in the technical and organisational protection
of IT systems and data. Substantial improvements were achieved in
this area by means of standardisation, by simplifying IT infrastruc-
tures and processes, and by introducing system redundancies and
high-performance monitoring systems. The technical infrastructure
for using mobile devices was also implemented on this basis.
Sustainability
Mobility and transport are hallmarks of a modern society and eco-
nomy. The climate protection debate has raised public awareness
of this issue considerably and reinforced demands for reductions
in carbon emissions in cars, including steering systems, and for agreater focus on environmental compatibility. ZF Lenksysteme’s
innovative products contribute to reducing the weight and energy
requirements of steering systems and thereby to mitigating the im-
pact on the environment of growing volumes of trac.
Environmental protection is systematically integrated in all the
company’s operations and processes. Appropriate measures are
taken to reduce the environmental impact associated with the ma-
nufacture, use and later disposal of ZFLS products to a minimum.This includes the sparing use of resources. Two block-type thermal
power stations were commissioned at the company’s Schwäbisch
Gmünd location during the scal year as a further component in
the strategy of reducing energy consumption.
Events after the end of the fiscal year
Robert Bosch GmbH acquired the 50 % share held by ZF Friedrichs-hafen AG in the previous joint venture ZF Lenksysteme GmbH on
30 January 2015 following approval by the responsible competition
authority. Bosch now therefore owns all the shares in the former
joint venture. The company will be incorporated into the Bosch
Group as a new independent division with the name Robert Bosch
Automotive Steering GmbH. The shareholders’ resolution on the
change of company name and corresponding entry in the commercial
register is planned for adoption in the rst quarter of 2015.
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13 Group management report for 2014
Mr Holeksa, Dr. Sauer and Dr. Sommer resigned from the Super-
visory Board on 30 January 2015 . Dr. Lindner, Mr Kurz and Dr.
Schirmer were elected to the Supervisory Board of ZF Lenksysteme
GmbH eective 31 January 2015 for the remaining period of oce
of the Supervisory Board.
Dr. Ottenbruch and Dr. Collenberg resigned from their positions
on the Management Board on 31 December 2014. On 1 January 2015,
Mr Sobottka was appointed Chairman of the Management Board and
Dr. Ketteler was appointed as a member of the Management Board
of ZF Lenksysteme GmbH.
No events occurred after the end of the scal year 2014 which were
of material signicance for the consolidated nancial statements of
ZF Lenksysteme.
Risk management
ZF Lenksysteme’s risk prole is regularly reviewed, evaluated and
documented to ensure compliance with KonTraG, the German
Corporate Monitoring and Transparency Act. Risk management
is an operative component of business processes and has proved
eective as an early warning system for the identication, evalu-ation and reporting of risks and opportunities. We are constantly
rening and improving this system to accommodate future require-
ments. Throughout the Group, risks are reported to the management
in accordance with uniform guidelines.
Original and derivative nancial instruments are used to hedge
interest rate and currency risks at market rates. As in previous years,
adequate insurance cover still exists for potential damages and
liability risks where this makes sound economic sense. The companyhas taken out liability and property insurance policies of a type
which are consistent with standard industry practice. The internal
audit department regularly examines workows and processes for
proper operation and eciency in the light of risk considerations.
It also submits proposals to improve the risk management system.
In addition, the risk management system is examined and assessed
by ZF Lenksysteme GmbH’s auditor to ensure that it functions as
required. During the period under review and with a view to the
future, there was no evidence of any risks that might pose a threat
to the continued existence of the company. Worldwide compliance
management ensures proper corporate governance, conformity with rules and information security within the company.
Outlook, opportunities and risk report
ZF Lenksysteme anticipates modest growth for the German and
European economies in the year 2015. North America is likely to
experience stronger growth. In China, growth will continue at its
currently high level and the economy will pick up in India afterseveral years of weak growth. Modest growth is anticipated once
more in South America. ZF Lenksysteme projects growth for 2015
of between 5 % and 7 % and predicts that the prot margin in the
scal year 2014 will be maintained in the current year. At current
exchange rates the weak euro oers opportunities for growing sales;
on the other hand, economies around the world could be vulnerable
to political and economic developments which might pose an ad-
ditional risk. Further risks arise from the sovereign debt and euro
crisis in Europe, political crises in Ukraine and the Middle East, as well as abrupt swings in the price of oil, gas and other commodities.
ZF Lenksysteme is prepared for a potentially volatile market situa-
tion in the coming year. The company aims to exploit opportunities
in countries which are experiencing accelerating economic growth
without neglecting those regions in which growth is weaker.
ZF Lenksysteme also anticipates signicant pressure on sales prices
comparable to that of previous years. ZF Lenksysteme is facing con-
siderable challenges on its procurement markets. The company willcontinue to pursue the goal of achieving protable growth while
ensuring ongoing liquidity to nance investments in all regions of
the world.
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Group management report for 2014 14
The 100 % acquisition of ZF Lenksysteme by Robert Bosch GmbH
will contribute to ensuring the success of the company: Bosch is
a leading global supplier of technology and service which oers
outstanding prospects for a successful future. As a pacesetter in
the eld of power steering systems ZF Lenksysteme contributes
key know-how to Robert Bosch GmbH in areas which will be im-portant for the mobility of the future, such as automated driving,
networking and electromobility for passenger cars and commercial
vehicles. As part of the strong Bosch Group the company is now
also in a superb position to develop its standing as a global market
leader for CV steering systems and to strengthen Bosch Mobility
Solutions.
Schwäbisch Gmünd, 13 February 2015
Christian Sobottka Dr. Hanns Bernd Ketteler
Dr. Marcus Parche Dr. Henning Wagner
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THE RESULTS ›
Consolidated Financial Statements
T W O
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19 Consolidated Financial Statements for 2014
Consolidated income statement for 2014
ZF LENKSYSTEME GMBH, SCHWÄBISCH GMÜND ›
Annex2014
€ million2013
€ million
Sales revenues (1) 4,387.7 4,114.4
Cost of sales (2) 3,602.8 3,482.7
Gross profit 784.9 631.7
Research and development expenses 259.8 237.9
Selling expenses 102.1 93.9
General administration costs 168.9 141.6
Other income (3) 44.5 38.1
Other expenses (4) 48.7 29.7
Operating profit 249.9 166.7
Net result from participation (5) 1.0 2.1
Interest income (5) 4.6 4.6
Interest expenses (5) 7.3 6.8
Other financial income (5) 12.6 4.9
Other financial expenses (5) 12.3 5.5
Net financial result -1.4 -0.7
Net profit before tax 248.5 166.0
Income taxes (6) 64.3 44.6
Net profit after tax 184.2 121.4
of which attributable to minority interests 51.7 37.8
of which attributable to ZF Lenksysteme GmbH 132.5 83.6
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Consolidated Financial Statements for 2014 20
2014€ million
2013€ million
Net profit after tax 184.2 121.4
Items which are not reclassified in the income statementRevaluation arising from defined benefit plans ›
Net profit before tax -159.0 -12.8
Deferred taxes 46.1 3.7
-112.9 -9.1
Items which may later be reclassified in the income statement
Unrealised gains (previous year losses) from available-for-sale
financial assets 16.7 -2.2
Unrealised gains (previous year losses) from currency translation 71.9 -23.1
88.6 -25.3
Other net profit or loss after tax -24.3 -34.4
Total result 159.9 87.0
of which attributable to minority interests 69.7 34.8
of which attributable to ZF Lenksysteme GmbH shareholders 90.2 52.2
Consolidated statement of comprehensive income for 2014
ZF LENKSYSTEME GMBH, SCHWÄBISCH GMÜND ›
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21 Consolidated Financial Statements for 2014
Assets Annex31.12.14€ million
31.12.13€ million
Current assets ›
Cash and cash equivalents 264.9 207.9
Financial assets (8) 3.0 0.0
Trade accounts receivable (9) 794.5 712.9
Other current assets (10) 58.7 75.2
Income tax receivables 13.0 17.9
Inventories (11) 340.3 294.2
1,474.4 1,308.1
Non-current assetsFinancial assets (12) 32.5 12.9
Property, plant and equipment (13 / 14) 1,147.1 936.8
Intangible assets (13 / 15) 122.5 116.6
Deferred taxes (6) 176.7 115.8
1,478.8 1,182.1
2,953.2 2,490.2
Consolidated balance sheet at 31 December 2014
ZF LENKSYSTEME GMBH, SCHWÄBISCH GMÜND ›
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Consolidated Financial Statements for 2014 22
Liabilities Annex31.12.14€ million
31.12.13€ million
Current liabilities ›
Financial liabilities (16) 48.8 4.3
Trade accounts payable (17) 638.8 541.5
Other current liabilities (18) 226.5 199.0
Income tax provisions 4.0 8.0
Other current provisions (19) 137.1 136.7
1,055.2 889.5
Non-current liabilities ›
Financial liabilities (20) 105.0 150.0Other non-current liabilities (21) 128.2 112.8
Provisions for pensions (22) 637.9 454.0
Other non-current provisions (23) 122.7 114.5
Deferred taxes (6) 1.5 4.9
995.3 836.2
Equity›
Subscribed capital (24) 127.8 127.8
Capital reserve (24) 195.3 195.3
Retained earnings 407.8 317.6
Equity attributable to ZF Lenksysteme GmbH shareholders 730.9 640.7
Minority interests 171.8 123.8
902.7 764.5
2,953.2 2,490.2
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23 Consolidated Financial Statements for 2014
Consolidated cash flow statement for 2014
ZF LENKSYSTEME GMBH, SCHWÄBISCH GMÜND ›
€ million 2014 2013
Net profit before tax 248.5 166.0
Reconciliation of earnings before tax and cash flow from operating activities ›
Depreciation/reversal of impairments for property, plant, equipment and intangible assets 264.0 244.1
Interest result 2.7 2.2
Other non-cash changes -1.1 -1.0
Result from disposal of property, plant, equipment and intangible assets 9.6 21.1
Change in assets and liabilities ›
Change in inventories -46.1 11.0
Change in trade receivables -81.6 -44.0
Change in other assets 13.6 -4.6
Increase in non-current provisions 33.1 20.3
Change in other liabilities 140.1 17.6
Impact of currency translation 6.7 -2.4
Interest received 4.6 4.6
Interest paid -6.2 -5.8
Income taxes paid -76.1 -62.7
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Consolidated Financial Statements for 2014 24
€ million 2014 2013
Cash flow from operating activities 511.8 366.4
Investments in property, plant, equipment, intangible assets and participations -451.0 -448.0
Result from disposal of property, plant, equipment and intangible assets 10.3 8.5
Cash flow from investing activities -440.7 -439.5
Dividends paid to ZF Lenksysteme GmbH shareholders 0.0 -40.0
Dividends paid to other shareholders -25.1 -17.2
Payments from transactions with minority shareholders 3.4 3.7
Cash flow from financing activities -21.7 -53.5
Change in cash and cash equivalents 49.4 -126.6
Cash and cash equivalents at the beginning of the fiscal year 207.9 338.9
Exchange rate-related changes in cash and cash equivalents 10.6 -4.4
Cash and cash equivalents at the end of the fiscal year 267.9 207.9
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25 Consolidated Financial Statements for 2014
Consolidated statement of changes in equity for 2014
ZF LENKSYSTEME GMBH, SCHWÄBISCH GMÜND ›
›Retainedearnings
€ millionSubscribed
capitallCapital-
reservesEquity earned by
the Group
1.1.2013 127.8 195.3 326.1
Dividend payments -40.0
Capital increase other shareholders
Other net profit or loss after tax
Net profit after tax 83.6
Comprehensive income 0.0 0.0 83.6
31.12.13 127.8 195.3 369.7
1.1.2014 127.8 195.3 369.7
Dividend payments
Capital increase other shareholders
Other net profit or loss after tax
Net profit after tax 132.5
Comprehensive income 0.0 0.0 132.5
31.12.14 127.8 195.3 502.2
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Consolidated Financial Statements for 2014 26
›
Refer to Accounting and Measuring Principles in the Notes to the consolidated financial statements for more details.
Retainedearnings
Equity attributableto ZF Lenksysteme
GmbH shareholdersMinorityinterests Group equity
Other equity components
Items which may later be reclassied inthe income statement
Items which arenot reclassified
in the income
statement
Currencytranslation
Available-for-salenancial
instruments
Revaluation arisingfrom denedbenet plans
32.4 7.2 -60.3 628.5 102.5 731.0
-40.0 -17.2 -57.2
0.0 3.7 3.7
-20.1 -2.2 -9.1 -31.4 -3.0 -34.4
83.6 37.8 121.4
-20.1 -2.2 -9.1 52.2 34.8 87.0
12.3 5.0 -69.4 640.7 123.8 764.5
12.3 5.0 -69.4 640.7 123.8 764.5
0.0 -25.1 -25.1
0.0 3.4 3.4
53.9 16.7 -112.9 -42.3 18.0 -24.3
132.5 51.7 184.2
53.9 16.7 -112.9 90.2 69.7 159.9
66.2 21.7 -182.3 730.9 171.8 902.7
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27 Consolidated Financial Statements for 2014
Fundamental principles
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR 2014 ›
General
These notes to the consolidated nancial statements provide se-
parate explanations of the individual items in the consolidated
income statement, the consolidated statement of comprehensive
income, the consolidated balance sheet, consolidated cash owstatement and consolidated statement of changes in equity.
ZFLS prepares its nancial statements in euros. Except where expli-
citly stated otherwise, all amounts are in millions of euros (€ million).
These consolidated nancial statements were approved by the
Management Board on 13 February 2015 for circulation to the
company’s shareholders.
The consolidated nancial statements and the consolidated ma-
nagement report for the scal year to 31 December 2014 will be
submitted to the Bundesanzeiger (German Federal Gazette).
Items on the consolidated balance sheet are categorised by maturity.
Assets or liabilities are classed as current if their value is to be re-
covered or settled within one year. Assets or liabilities are classed
as non-current if their value is to be recovered or settled in more
than one year. Contrary to this fundamental distinction, all tradereceivables and trade payables are carried as current items.
All assets and liabilities are stated at amortised historic cost, with
the exception of derivative nancial instruments and marketable
securities that are available for sale, both of which are stated at
their fair value.
Adoption of IFRS
The consolidated nancial statements of ZF Lenksysteme GmbH
(referred to in the following as “ZFLS”) for the scal year to
31 December 2014 have been prepared in accordance with Interna-
tional Financial Reporting Standards (IFRS) in the form applicable
within the EU, and in compliance with Section 315a Paragraph 1
of the German Commercial Code (HGB). The consolidated nancial
statements comply with the guidelines propagated by the International
Accounting Standards Board (IASB), London, in the version valid at
the balance sheet date. The term IFRS also subsumes those Inter-
national Accounting Standards (IAS) that remain valid. All inter-
pretations declared to be binding for scal 2014 by the IFRS Inter-
pretations Committee (IFRIC) were also applied in the preparation
of these statements.
The IASB and the IFRS Interpretations Committee have amended
or ratied the following standards and interpretations whose adop-
tion became mandatory for the rst time in scal 2014.
› IFRS 10 – Consolidated Financial Statements
IFRS 10 replaces the provisions of the previous IAS 27 Consoli-
dated and Separate Financial Statements and the interpretation
SIC-12 Consolidation – Special Purpose Entities. The provisions
applying to separate nancial statements remain in IAS 27. IFRS10 introduces a single consolidation model for all entities, inclu-
ding special purpose entities, based on control. This has no impact
on the consolidated Group of ZF Lenksysteme.
›IFRS 11 Joint Arrangements
IFRS 11 replaces IAS 31 Interests in Joint Ventures and the in-
terpretation SIC-13 Jointly Controlled Entities – Non-Monetary
Contributions by Venturers. IFRS 11 revokes the previous option
to apply proportionate consolidation to joint ventures. It is nowmandatory to include these enterprises in the consolidated nan-
cial statements using the equity method. This has no impact on the
consolidated nancial statements of ZF Lenksysteme.
› IFRS 12 Disclosure of Interests in Other Entities
IFRS 12 is a new and comprehensive standard on disclosure re-
quirements for all forms of interests in other entities, including
subsidiaries, joint arrangements, associates and unconsolidated
structured entities. As the new standard requires the disclosure ofadditional new information in addition to the previous disclosure
requirements the disclosures made by the Group on these entities
are more extensive than in the past.
› Amendment to IFRS 10, IFRS 12 and IAS 27 – Investment Entities
The new provision exempts entities which meet the denitional
criteria of an investment entity under IFRS 10 from the requi-
rement to consolidate. Investment entities are instead required
to use the fair value to measure investments in their subsidiaries
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Consolidated Financial Statements for 2014 28
recognised in prot or loss. This amendment is not relevant
for the Group as ZF Lenksysteme GmbH does not meet the
denitional criteria of an investment entity under IFRS 10.
› IAS 28 I nvestments in Associates and Joint Ventures
(revised 2011)Requirements relating to the use of the equity method for accoun-
ting for investments in associates and joint ventures. This has no
impact on the consolidated nancial statements of ZF Lenksysteme.
› Amendment to IFRS 36 – Recoverable Amount Disclosures for
Non-Financial Assets
The amendment is intended to eliminate undesirable eects on
the disclosure requirements arising from the introduction of IFRS
13. The amendment also requires disclosures on the recoverableamount for assets or cash-generating units for which an impair-
ment has been recognised or reversed during the reporting period.
The amendment only results in modied or additional disclosu-
res and does not aect the Group’s assets, nancial and earnings
position.
› Amendment to IAS 39 – Novation of Derivatives and
Continuation of Hedge Accounting
In certain circumstances the amendment allows for the continuationof hedge accounting in cases in which derivatives which are desig-
nated as hedging instruments are centrally cleared on the basis of
statutory or oversight regulations (novation). This has no impact
on the consolidated nancial statements of ZF Lenksysteme.
› IFRIC 21 Levies
IFRIC 21 deals with issues relating to the accounting for levies im-
posed by governments which are not income taxes within the scope
of IAS 12 Income Taxes and, in particular, claries when obligatingevents that give rise to a liability to pay such levies must be recog-
nised in the annual nancial statements as liabilities. This has no
impact on the consolidated nancial statements of ZF Lenksysteme.
The IASB has published the following standards and interpreta-
tions which have already been adopted under EU law as part of the
“comitology” procedure but which were not yet mandatory in the 2014
scal year. The ZFLS Group is not adopting these standards and inter-
pretations prematurely.
› Amendment to IAS 19 – Employee Benefits
The amendment of IAS 19 was published in November 2013 and
must be adopted for the rst time in the scal year which begins
on or after 1 July 2014. The amendment allows contributions made
in the period by employees or third parties to dened benet plans
to be recognised as a reduction in the ongoing service costs in theperiod in which the related service is rendered if the amount of
the contributions is independent of the number of years of service.
If employee contributions depend on the number of years of ser-
vice, the project unit credit method is mandatory. This amendment
must be applied retrospectively. The Group is currently evaluating
the extent to which the amendment will impact the consolidated
nancial statements.
› Improvements to IFRS (2010–2012)The improvements to IFRS 2010-2012 concern a collection of
amendments which were published in December 2013 and which
relate to narrow scope changes to IFRS 2, IFRS 3, IFRS 8, IFRS 13,
IAS 16, IAS 24 and IAS 38. These amendments must be applied
for the rst time in scal years beginning on or after 1 July 2014.
No material impact on the consolidated nancial statements of
ZF Lenksysteme is expected.
› Improvements to IFRS (2011-2013)The improvements to IFRS 2011-2013 concern a collection of
amendments which were published in December 2013 and which
relate to narrow scope changes to IFRS 1, IFRS 3, and IAS 40. These
amendments must be applied for the rst time in scal years begin-
ning on or after 1 July 2014. No material impact on the consolidated
nancial statements of ZF Lenksysteme is expected.
The IASB has published the following standards and interpreta-
tions which were not yet mandatory in scal 2014. These standardsand interpretations have not been recognised to date by the EU and
are not applied by the Group.
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29 Consolidated Financial Statements for 2014
› IFRS 9 Financial Instruments
With the publication of the nal version of IFRS 9 in July 2014, the
IASB has completed its project of replacing IAS 39. IFRS 9 intro-
duces a comprehensive standard for the classication and measu-
rement of nancial assets based on their cash ow characteristics
and the business model in which they are held. The standard alsoprovides for a new impairment model based on projected losses
from default events. The standard also includes new guidance
for hedge accounting to enable entities to better reect their risk
management activities in their nancial statements, particularly
with regard to the hedging of non-nancial risks. The new provisions
must be applied for the rst time in scal years beginning on or
after 1 January 2018. Earlier application is permitted. No material
impact on the consolidated nancial statements of ZF Lenksysteme
is expected.
› Amendment to IFRS 10, IFRS 12 and IAS 28
– Investment Entities – Applying the Consolidation Exception
The IASB published an amendment standard in December 2014
to address issues that have arisen in relation to the exemption
from consolidation for investment entities. The standard must
be applied as of 1 January 2016 but may also be applied earlier.
The amendments are not relevant for the Group as ZF Lenksysteme
GmbH does not meet the denitional criteria of an investment entityunder IFRS 10.
› Amendment to IFRS 10 and IAS 28 – Sales or contributions of
assets between an investor and its associate/joint ventur
The IASB published amendments to IFRS 10 and IAS 28 in September
2014 to address an inconsistency between the two standards for
the accounting of sales of an investor’s assets or the contribu-
tion of such assets to the investor’s associate or joint venture. If
the transaction concerns a business as dened in IFRS 3 BusinessCombinations, the resulting gain or loss must be recognised in
full by the investor; if, on the contrary, the transaction concerns
the sale of assets which do not constitute a business, only a partial
gain must be recognised. These amendments must be applied for
the rst time in scal years beginning on or after January 1, 2016.
Earlier application is permitted. No impact on the consolidated
nancial statements of ZF Lenksysteme is expected.
› Amendment to IFRS 11 Joint Arrangements – Acquisitions of
Interests in Joint Operations
The amendment to IFRS 11, which was published in May 2014,
claries that purchases and acquisitions of interests in joint
operations which constitute a business, as dened in IFRS 3
Business Combinations, must be accounted for by applying all ofthe principles on business combinations accounting in IFRS 3 and
other applicable IFRSs with the exception of those principles that
conict with the guidance in IFRS 11. The amendments are eective
prospectively for acquisitions of an interest in scal years begin-
ning on or after 1 January 2016, with earlier application being
permitted. ZF Lenksysteme currently does not hold any interests
in joint operations.
› IFRS 15 Revenue from Contracts with CustomersIFRS 15 was published by the IASB in May 2014 with the objective
of removing numerous inconsistencies in revenue recognition in
diverse standards and interpretations and of providing a single,
principles-based model to be applied for all industries and all
categories of revenue transactions. IFRS 15 species the amount
and timing of revenue recognition. The basic principle is that
revenue is recognised for the amount of consideration expected
from the transfer of goods or services. IFRS 15 also includes
additional guidance on multiple-element arrangements andnew rules on the treatment of service contracts and contract
modications. The new standard also requires disclosure of
various qualitative and quantitative information to enable the
users of nancial statements to understand the nature, amount,
timing, and uncertainty of revenue and cash ows arising from
a contract with a customer. IFRS 15 replaces IAS 11 Construc-
tion Contracts, IAS 18 Revenue and related interpretations.
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Consolidated Financial Statements for 2014 30
Application of the standard is mandatory for annual reporting
periods starting from 1 January 2017 onwards. Earlier application
is permitted. The transition guidance allows entities the option
of applying IFRS 15 in full to prior periods (with certain limited
practical expedients being available) or of adopting modied retro-
spective application. The latter would allow rst-time applicationof the standard beginning in the current reporting period without
the need to restate comparative periods, although additional infor-
mation must then be provided. The Group is currently evaluating
the extent to which the new standard will impact the consolidated
nancial statements.
› Amendments to IAS 1 Presentation of Financial Statements – Disclosure Initiative
The IASB published amendments to IAS 1 Presentation of FinancialStatements in December 2014 under its Disclosure Initiative. The
amendments aim in particular at clarifying assessments of the
materiality of disclosures; presentation of additional items in the
balance sheet, income statement or statement of comprehensive
income; the presentation of items of other comprehensive income
due to associates and joint ventures accounted for using the equity
method; the structure and content of disclosures in the notes and
disclosure of signicant accounting policies. The amendments are
eective for annual periods beginning on or after 1 January 2016.Earlier application is permitted. No material impact on the consoli-
dated nancial statements of ZF Lenksysteme is expected.
› Amendment to IAS 16 Property, Plant and Equipment and
IAS 38 Intangible Assets – Clarification of Acceptable Methods of
Depreciation and Amortisation
These amendments provide additional guidance on acceptable
methods of depreciation or amortisation. The amendments clarify
that a revenue-based method is not considered appropriate forproperty, plant and equipment and only in limited circumstances
for intangible assets. The amendments are eective for annual
periods beginning on or after 1 January 2016. Earlier application is
permitted. No impact on the consolidated nancial statements of
ZF Lenksysteme is expected.
› Improvements to IFRS (2012-2014)
The improvements to IFRS 2012-2014 concern a collection of
amendments which were published in September 2014 and which
relate to narrow scope changes to IFRS 5, IFRS 7, IAS 19 and IAS 34.
They must be applied for the rst time in scal years beginning on
or after 1 January 2016. No material impact on the consolidatednancial statements of ZF Lenksysteme is expected.
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31 Consolidated Financial Statements for 2014
Consolidated Group/list of shareholdings
Besides ZF Lenksysteme GmbH itself, the consolidated Group consists
of one (previous year: one) German subsidiary and fteen (previous
year: fteen) foreign subsidiaries in which ZF Lenksysteme GmbH
controls the majority of the voting rights.
The composition of the consolidated Group on 31 December 2014
is shown in the table below:
Company name and domicile Nominal capital Equity stake in %
Consolidated companies not including the parent company
ZF Lenksysteme Nacam GmbH, Bremen * 2,100,000 EUR 100
ZF-Systèmes de Directions France S.A.S., Marignier/France 7,975,000 EUR 100
ZF Systèmes de Direction Nacam S.A.S., Vendôme/France 21,350,000 EUR 100
ZF Lenksysteme Hungária Kft., Eger/Hungary 5,000,000 EUR 100
ZF Steering Systems LLC., Florence, Kentucky/USA 16,000,000 USD 100
ZF Sistemas de Direçáo Ltda, Sorocaba/Brazil 52,794,868 BRL 100
ZF Steerings (Malaysia) Sdn. Bhd., Penang/Malaysia 26,000,000 MYR 100
ZF Shanghai Steering Systems Co. Ltd., Shanghai/China 69,520,000 USD 51
ZF Shanghai Steering Systems (Yantai) Co. Ltd., Yantai/China 286,000,000 CNY 51
ZF Shanghai Steering Systems (Wuhan) Co. Ltd., Wuhan/China 138,000,000 CNY 51
ZF Steering Jincheng (Nanjing) Co. Ltd., Nanjing/China 11,000,000 USD 70
ZF Commercial Vehicle Steering (Shandong) Co. Ltd., Jinan/China 189,562,492 CNY 100
ZF Lenksysteme (Shanghai) Co., Ltd. Shanghai (Minhang)/China 156,000,000 CNY 100
ZF Lenksysteme (Shanghai) Management Co. Ltd., Shangai/China 2,100,000 USD 100
ZF Lenksysteme (Nanjing) Co. Ltd., Nanjing/China 80,000,000 USD 100ZF Lenksysteme India Private Limited Pune / India 2,945,000,000 INR 74
* Pursuant to Section 264 Para. 3 of the German Commercial Code (HGB),inclusion in these consolidated financial statements exempts this companyfrom the requirement to disclose separate annual financial statements.
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Consolidated Financial Statements for 2014 32
Principles of consolidation
Capital is consolidated using the acquisition method in accord-
ance with IFRS 3. The cost of acquired shares is allocated to
the assets, liabilities and contingent liabilities of consolidated
subsidiaries, whose value is restated at the time of acquisition. Any excess of cost over net fair value is capitalised as goodwill.
For all acquisitions eected before 1 January 2004, capital will
continue to be consolidated in accordance with the German
Commercial Code (HGB).Intercompany receivables, payables,
provisions, revenue, expenditure and prots between consolidated
companies are eliminated within the framework of consolidation.
Guarantees and warranties that exist between companies in the
consolidated Group are likewise eliminated.
The principles of consolidation remain unchanged from the previous
year.
Currency translation
Financial statements presented in foreign currencies by consolidated
companies are translated using the concept of the functional
currency (dened in IAS 21) and based on the modied closing rate
method. Since subsidiaries operate independently in terms of theirnancial, economic and organisational activities, the functional
currency is generally the local currency in the country where the
company is domiciled.
Accordingly, expenditure and revenue recorded in the foreign
currency nancial statements of subsidiaries are translated in the
consolidated nancial statements at the average rate, while assets
and liabilities are translated at the closing rate on the balance sheet
date. Discrepancies arising from the translation of equity at historicexchange rates are netted against retained earnings. Discrepancies
due to the use of dierent exchange rates in the income statement
are also included in retained earnings and are not recognised in
prot and loss.
In the stand-alone nancial statements prepared for ZF Lenksysteme
GmbH and for each of its subsidiaries, receivables and payables
denominated in foreign currencies are valued at the closing rate on
the balance sheet date. Realised foreign exchange gains or lossesare recognised in prot and loss.
Those exchange rates that underpin currency translation and have
a material inuence on the consolidated nancial statements changed
as follows (relative to one euro) in the period under review:
Closing rate Average rate
31 Dec. 2014 31 Dec. 2013 2014 2013
US dollars 1.2141 1.3791 1.32825 1.32828
Chinese renminbi (CNY) 7.5358 8.3491 8.18366 8.16620
Brazilian reals (BRL) 3.2207 3.2576 3.12150 2.87012
Malaysian ringgits (MYR) 4.2473 4.5221 4.34468 4.18770
Indian rupies 76.2600 84.964 81.02064 77.9337
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33 Consolidated Financial Statements for 2014
ACCOUNTING AND MEASUREMENT PRINCIPLES
Recognition of expenses and income
Revenues from the sale of products are recognised when ownership
or risk is transferred to the customer, when a price has been agreed
or can be identied, and when it is reasonable to assume that the
price will be paid. Revenues are reported net of cash discounts, priceconcessions, customer bonuses and other discounts.
The cost of sales includes the cost of producing sold goods and
the cost of sold merchandise. This gure includes material and
production costs that are directly attributable as well as production
overheads that are indirectly attributable, including depreciation
of production machinery and intangible assets. The cost of goods
sold also includes write-downs on inventories.
Research and non-capitalisable development expenses are
recognised in prot and loss at the time they are incurred.
Financial instruments
A nancial instrument is a contract that simultaneously creates a
nancial asset for one company and a nancial liability or equity
instrument for another company. Such instruments are recognisedat the settlement date. When recognised for the rst time, nancial
assets are stated at cost. Transaction costs are included, except in the
case of nancial assets that are carried at fair value and recognised
in prot and loss.
Financial assets as dened in IAS 39 are classied as nancial as-
sets at fair value through prot or loss, as loans and receivables,
as held-to-maturity investments or as available-for-sale nancial
assets.
After initial recognition, nancial assets that are available for sale
are carried at their fair values. Where market prices are not known,
the fair value of nancial assets that are available for sale is deter-
mined by using appropriate valuation methods (such as discounted
cash ow), subject to due account for market data available at the
balance sheet date. Gains and losses arising from changes in the fair
value of nancial assets that are available for sale are included in
equity. They are not recognised in prot and loss until the nancial
assets are disposed of or an impairment is incurred. In the event of
impairment, the cumulative net loss is subtracted from equity and
posted to earnings.
Receivables are Group loans or receivables that are not held for
trading purposes. These items are stated at amortised cost. Non-interest-bearing or low-interest-bearing receivables with maturities
of over one year are discounted. Impairments are eected to provide
for all perceivable risks.
In accordance with IAS 39, ZFLS regularly assesses whether there
is substantial objective evidence that a nancial asset or a group of -
nancial assets is impaired. If such evidence is found, the impairment
loss is recognised in prot and loss.
The ZFLS Group uses derivative nancial instruments only to
hedge currency risks and raw material price risks arising from
operating business and/or to reduce the nancing requirements
that result from operating business. In accordance with IAS 39, all
derivative nancial instruments (such as currency swaps and for-
ward exchange contracts) are stated at their fair value.
Insofar as the strict criteria specied by IAS 39 for hedge accounting
are met, these instruments are carried as fair value hedges or cashow hedges. Where hedge accounting principles cannot be applied,
changes in the fair value of derivative nancial instruments are
recognised in prot and loss.
Fair value hedges hedge exposure to changes in the value of balance
sheet items. In the case of a fair value hedge, the results of a fair
valuation of derivative nancial instruments and the underlying
transactions are recognised in prot and loss.
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Consolidated Financial Statements for 2014 34
Cash ow hedges are used to hedge exposure to variations in the
value of future cash ows. In the event of changes in the fair value
of derivative instruments used within the framework of cash ow
hedges, the portion of unrealised gains or losses on the hedging
instrument that is deemed to be the eective hedge is initially posted
to retained earnings and is not recognised in prot or loss. Saiditem is transferred to the income statement at the time when the
hedged transaction is recognised in prot and loss. The ineective
part of the hedge is immediately recognised in prot and loss.
Inventories
Inventories of raw materials, supplies and goods for resale are sta-
ted at the lower of average cost or net realisable value. Work inprogress and nished products are likewise stated at the lower of
cost or net realisable value. Production costs include all costs that are
directly attributable to the production process, plus an appropriate
portion of production overhead costs. The latter include production
-related depreciation, a share of administrative costs and a share
of social security expenses. Company pension expenses are stated
as part of the cost of production. Financing costs are not included
in this item.
Non-current financial assets
Investments carried under non-current nancial assets are stated
at fair value, mostly on the basis of stock prices.
Property, plant and equipment
All property, plant and equipment is used for operating purposes
and is stated at cost less depreciation. The straight-line method of
depreciation is used over the entire useful life of property, plant
and equipment.
Throughout the Group, property, plant and equipment is depreciated
over the following standard useful lives:
The depreciation of machinery operated for multiple shifts is acce-
lerated by appropriate shift-related surcharges.
The useful lives dened for assets are reviewed once a year and
adjusted where appropriate.
Leasing instalments and rental payments arising from operating leases
are stated as constant expenditure items in the income statement
throughout the term of the leasing or rental agreement. The future
burden arising from operating lease agreements is carried under
other nancial obligations.
Intangible assets
In accordance with IAS 38, purchased and self-constructed intangible
assets are capitalised if it is probable that use of these assets will be
linked to future economic benets and if the cost of the assets can be
measured reliably.
Development expenditure is capitalised at cost where costs can
be attributed unambiguously and where both technical feasibi-
lity and the ability to market the end product are guaranteed.It must also be reasonably certain that the development activity
will lead to future economic benets. Capitalised development
expenditures include all costs that can be attributed directly to
the development process. Capitalised development expenditure
is amortised from the time when production commences and
throughout the anticipated product life cycle (usually ve years).
in years
Land and buildings 10 bis 33
Technical equipment, plant and machinery 2 bis 10
Other equipment, factory and ofce equipment 3 bis 13
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35 Consolidated Financial Statements for 2014
Other intangible assets (primarily tool subsidies made available to
suppliers plus patents and software) are stated at cost and depre-
ciated in a straight line over the course of their useful life:
To this end, the recoverable amount – the higher of fair value less
selling costs and the value in use of the asset or smallest cash-
generating unit – is measured. The recoverable amount must be
measured for each individual asset. If an asset does not generate
cash inows which are largely independent of the cash ows ge-
nerated by other assets or groups of assets, the impairment test isnot performed at the level of the individual asset but at the level of
the cash-generating unit to which the asset can be assigned. Value
in use is the present value of future cash ows that are expected
from the ongoing use of the asset and its disposal at the end of its
useful life. An impairment is eected if the recoverable amount is
less than the carrying amount of the asset or of the cash-generating
unit. If the reason for an earlier impairment no longer applies, the
impairment can be reversed at most up to the amount of the amor-
tised cost.
The fair value, less the costs of disposal for a cash-generating unit,
is estimated using the discounted cash ow method. The fair value,
less the costs of disposal, of individual assets, is estimated on the
basis of the cost of similar assets.
Actual tax refund claims and actual tax liabilities
Actual tax refund claims and actual tax liabilities for the current
period and for previous periods are assessed based on the amount
of an expected refund from or payment to the tax authorities. This
amount is calculated on the basis of the tax rates and tax laws valid
at the balance sheet date.
Actual taxes relating to items which are recognised in equity are
themselves also recognised in equity, not in prot and loss.
Cost of debt
The cost of debt is recognised as expense when it is incurred, pro-
vided this is not incurred for qualifying assets.
Government grants
In accordance with IAS 20, government grants are carried only if
there is reasonable assurance that the relevant conditions will be
met and the subsidies will indeed be granted. Investment grants
are stated separately from non-current assets in the reporting period
in which they are acquired.
Impairment tests
Impairment tests are performed once a year (on 31 December) for
intangible assets that are not yet ready for use. For other intangible
assets and property, plant and equipment, corresponding tests are
performed at the balance sheet date to assess whether there is evi-
dence that such assets may be impaired. Should such evidence befound, existing valuations are reviewed in accordance with IAS 36.
in years
Tool subsidi es 1 to 6
Software 3 to 5
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Consolidated Financial Statements for 2014 36
Deferred taxes
In accordance with IAS 12, deferred tax assets and liabilities are
formed for temporary dierences between valuations for tax and
nancial reporting purposes. Deferred tax assets also include the
entitlement to tax breaks owing to the expected application of exis-ting loss carryforwards in subsequent years. Deferred taxes are
calculated on the basis of the tax rates that, in light of the current
legal situation, will be or are expected to be valid in the countries
concerned when said deferred taxes are realised.
Deferred tax assets relating to temporary dierences and tax loss
carryforwards are recognised only if it is more likely than not that
the resultant tax breaks will actually be realised in future.
Deferred tax liabilities due to temporary dierences relating to in-
vestments in subsidiaries are not recognised if it is possible to control
the timing at which temporary dierences are reversed, and if it
is likely that the temporary dierences will not be reversed in the
foreseeable future.
The carrying amount of deferred tax assets is assessed every ba-
lance sheet date and reduced to the extent to which it is no longer
probable that sucient taxable earnings will be available to osetat least part of the deferred tax assets. Unrecognised deferred tax
assets are assessed every balance sheet date and are recognised
to the extent to which it has become probable that future taxable
earnings will enable the deferred tax assets to be realised.
Taxes on income which relate to items stated directly under equity
are themselves also recognised in equity, not in prot and loss. De-
ferred tax assets and deferred tax liabilities are netted if the Group
is legally entitled to oset actual tax refund claims against actualtax liabilities, and if both items relate to income taxes payable by
the same tax-paying entity to the same scal authority.
Financial liabilities
Financial liabilities are stated at amortised cost.
Provisions for pensions
Provisions for pensions are formed using the projected unit credit
method in accordance with IAS 19. This method takes account of
pensions and vested rights that are known at the balance sheet
date, as well as of expected future increases in pensions, wages andsalaries. Calculations are based on actuarial appraisals and make
due provision for current biometric statistics. Actuarial gains and
losses are carried under equity in the period in which they occur.
They are not recognised in prot and loss. All expenses arising
from appropriations to pension obligations are attributed to the
costs of the functions concerned.
Other provisions
Other provisions are formed whenever obligations exist in respect
of third parties that are likely to be realised and for which the
probable amount that must be set aside as provisions can be esti-
mated reliably. To value other provisions (especially in the case of
warranties and anticipated losses on incomplete transactions), all
cost components are taken into account that are also capitalised in
inventories. Non-current provisions with maturities of more than
one year are stated at their discounted repayment amount at the balance sheet date.
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37 Consolidated Financial Statements for 2014
Discretionary decisions and uncertainties in connection with
estimates
Preparing consolidated nancial statements requires to some extent
the use of assumptions and estimates that aect the reported value
of assets and liabilities, the income and expenses for the reportingperiod and the contingent liabilities shown on the reporting date.
Signicant discretionary decisions which are aected by such
assumptions and estimates include the recoverability of assets,
provisions for anticipated losses on contracts, warranty obligations
and employee benets.
Recoverability of assets
Determining the recoverable amount of a cash-generating unit
involves the use of estimates. The recoverable amount is the higher
of fair value less selling costs and the value in use. The recoverable
amount is the discounted present value of estimated future cash
ows. The discounted value of future cash ows is estimated on
the basis of reasonable and supportable assumptions, including in
particular assumptions regarding future sales prices and volumes,
costs and discount rates. Although the Management is condentthat these assumptions are reasonable, the analysis may need to
be modied if there is a change in assumptions and circumstances.
This could result in future changes in value if the applied assump-
tions and estimates prove to be incorrect.
Likewise, whenever property, plant and equipment and other
intangible assets are tested for impairment, the determination of
the assets’ recoverable amount involves the use of estimates by
management and can have a material impact on the respective valuesand ultimately the amount of any impairment.
The measurement of receivables involves signicant judgement
and reviews of the creditworthiness and nancial solvency of in-
dividual customers. Such judgement and reviews are themselves
highly dependent on current worldwide economic developments
and may consequently change as a result.
The Group examines at each balance sheet date whether it is suf-
ciently probable that future taxable prots will be available in
order to realise deferred tax assets. This entails judgements such as
assessments of the tax benets arising from future taxable income.
The reported deferred tax assets could be reduced if the assumptions
regarding planned taxable income are adjusted downwards or ifchanges in current tax legislation limit the time during which or the
extent to which future tax benets can be realised.
Provisions for anticipated losses on contracts and for warranty
obligations
Provisions for anticipated losses on contracts are recognised when
current estimates of total costs exceed anticipated revenue. Theseestimates may change if new revenue and cost structure information
becomes available. Allowances for warranty risks also involve
signicant estimates of future costs and other assessments which
inuence the amount of potential obligations.
Employee benefits
Pensions and similar obligations are accounted for in accordance with actuarial assessments. These are based on statistical and other
factors that enable future events to be anticipated. The actuarial
assumptions, discount rate and pension trends are assessed as
the key material factors. These actuarial assumptions may dier
from actual developments and consequently result in a signicant
change in pension and other obligations. The resulting dierences
are recognised directly in equity in the period in which they arise
and not in prot and loss.
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Consolidated Financial Statements for 2014 38
Disclosures on major subsidiaries in which die ZF Lenksysteme
GmbH holds interests in the framework of a joint venture
The following nancial information relating to subsidiaries with mi-
nority interests has been produced on the basis of non-consolidated
values:
Equity share of other shareholders of ZF Shanghai Steering Systems
Co., Ltd. Group:
These companies are active in the eld of steering technology.
Condensed income statement of the ZF Shanghai Steering Systems
Co., Ltd. Group:
Condensed balance sheet of the ZF Shanghai Steering Systems Co.,
Ltd. Group:
Condensed cash ow statement of the ZF Shanghai Steering Sys-
tems Co., Ltd. Group:
in € millions 2014 2013
Assets
Current assets 397.3 302.5
Non-current assets 316.3 228.3
Liabilities
Current liabilities 387.9 299.3
Non-current liabilities 5.1 3.4
Equity 320.6 228.1
Equity attributable toZF Lenksysteme GmbH 163.6 116.3
Minority interests 157.0 111.8
in € millions 2014 2013
Cash flow from operating activities 153.3 148.9
Cash flow from investing activities -94.0 -109.7
Cash flow from financing activities -48.8 -40.7
Change in cash and cash equivalents 10.5 -1.5
2014 2013
ZF Shanghai Steering Systems Group ›
ZF Shanghai Steering Systems Co.Ltd., Shanghai / ChinaZF Shanghai Steering Systems(Yantai) Co. Ltd., Yantai / ChinaZF Shanghai Steering Systems(Wuhan) Co. Ltd., Wuhan / China
49 %
49 %
49 %
49 %
49 %
49 %
in € millions 2014 2013
Revenue 883.5 801.5
Cost of sales -656.0 -643.8
Operating result 124.1 87.0
Net financial resul 0.4 0.2
Net profit before tax 124.5 87.2
Income tax -17.2 -13.0
Net profit after tax 107.3 74.2
of which attributable to minorityinterests 52.6 36.3
Dividends paid to other shareholders 23.9 15.2
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39 Consolidated Financial Statements for 2014
Notes to the consolidated income statement
NOTES ›
(4) Other expenses
(5) Net financial result
(3) Other incomeCost-of-sales method
The consolidated income statement was prepared using the cost-
of-sales method.
(1) Sales
These sales gures consist almost exclusively of revenues from the
sale of goods.
(2) Cost of sales
Depreciation includes impairment write-downs totalling €20.0
million (previous year: €39.5 million). Further details are given
under (7) Other disclosures on the consolidated income statement,
(13) Consolidated statement of xed assets, (14) Property, plant
and equipment and (15) Intangible assets.
€ million 2014 2013
Germany 1,140.8 1,147.0
Other European countries 831.9 791.8
North America 1,006.7 885.8
South America 117.2 154.4
Asia/Pacific 1,270.3 1,130.4Other countries 20.8 5.0
4,387.7 4,114.4
€ million 2014 2013
Material costs 2,705.2 2,558.7
Personnel expenses 559.8 526.8
Depreciation and amortisation 240.1 225.1
Other 97.7 172.1
3,602.8 3,482.7
€ million 2014 2013
Income from exchange rate differences 27.8 22.3
Other income 16.7 15.8
44.5 38.1
€ million 2014 2013
Expenses from exchange ratedifferences 25.9 21.8
Expenses due to impairment ofreceivables 3.3 3.5
Losses on the disposal of property,plant and equipment 4.0 2.1
Other expenses 15.5 2.3
48.7 29.7
€ million 2014 2013
Net result from participations(income from participations) 1.0 2.1
Interest income (interest and similarincome) 4.6 4.6
Interest and similar expenses 6.2 5.8
Other compound interest 1.1 1.0
Interest expenses 7.3 6.8
Other financial income(from financial instruments) 12.6 4.9
Other financial expenses(from financial instruments) 12.3 5.5
Net financial result -1.4 -0.7
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Consolidated Financial Statements for 2014 40
(6) Income taxes
Actual tax expenses include taxes for previous years of €2.5 million
(previous year: €1.3 million).
In the period under review, corporate income tax stood at 15 % in
Germany (previous year: 15 %). Allowing for the solidarity charge
of 5.5 % and an average trade tax multiplier of 381 % (previous year:
381 %) the eective rate of income tax for companies domiciled in
Germany is 29 % (previous year: 29 %). This rate is also used to
reconcile the tax and nancial reporting gures.
In the scal year under review, the nominal rate of income tax in
other countries varied between 10 % and 37.55 % (previous year:10 % and 35 %).
Temporary dierences relating to shares held in subsidiaries and
for which no deferred taxes were recognised totalled €20.7 million
(previous year: €15.3 million). Deferred taxes were not calculated
because these temporary dierences will not be reversed in the
foreseeable future. The Group elected not to calculate the potential
impact on the tax burden as the eort involved would have been
inordinate.
Deferred tax assets and liabilities in relation to items on the balance
sheet on 31 December are listed below:
€ million 2014 2013
Actual tax expenses 77.0 51.9
Deferred taxes on temporary
differences -29.4 -23.4Deferred taxes arising from losscarryforwards and tax breaks dueto the appropriation of losses and taxcredit 16.7 16.1
64.3 44.6
€ million 31 Dec. 2014 31 Dec. 2013
Assets Liabilities Assets Liabilities
Receivables and other assets 2.1 3.1 5.9 5.4Inventories 3.5 1.7 1.9 1.4
Property, plant and equipment 8.6 50.8 6.0 46.7
Intangible assets 21.2 0.6 17.3 0.3
Provisions for pensions 91.6 43.6
Other provisions 43.6 34.4
Payables and other liabilities 27.7 0.4 10.6 0.7
Tax loss carryforwards 7.1 39.3
Tax credits 26.4 6.4
231.8 56.6 165.4 54.5
Netting -55.1 -55.1 -49.6 -49.6
Taxes recognised on the balance sheet date 176.7 1.5 115.8 4.9
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41 Consolidated Financial Statements for 2014
(7) Other disclosures on the consolidated incomestatement
The cost of materials carried in the consolidated income statement
breaks down into the following items: ›
In the scal year under review, deferred tax assets totalling €46.1
million (previous year: €3.7 million) were carried in relation to
temporary dierences for pension provisions but not recognised in
prot and loss. Currency translation dierences not recognised in
prot and loss arose of €5.5 million (previous year: -€2.1 million).
Adjustments, however, were recognised in prot and loss.
Loss carryforwards for which no deferred tax assets are recognis-
ed on the balance sheet stood at €151.1 million (previous year: €97.1
million). Of this amount, €151.1 million (previous year €76.2 million)
can be carried forward without limit in time. The remainder can be
carried forward over a period of three to 18 years.
The valuation of deferred tax assets was based on expected future
business development over the next three years from the time at
which the consolidated nancial statements were prepared. However,
ZFLS cannot rule out the possibility that actual developments will
be aected by external factors and may deviate from our original
estimates.
Reconciliation of expected to actual income tax expenses:
€ million 2014 2013
Net profit or loss before tax 248.5 166.0
Expected income tax expenses 72.1 48.1
Tax effects due to different national tax rate -4.1 -5.7
Revaluation of deferred taxes due to changes in tax laws -0.1 -1.1
Deviations from the tax assessment basis -0.5 -3.0
Changes in valuation adjustments on deferred taxes arising from temporary differences +1.3 +7.5
Current tax breaks arising from appropriation/ post-capitalisation of hitherto unrecognised losses andunrecognised deferred tax assets on current losses -4.0 +1.2
Deferred taxes on tax credits -1.8 -5.1
Impact of issues in previous periods on tax expenses +1.4 +1.7
Other tax effects 0.0 +1.0
Recognised tax expenses/refunds 64.3 44.6
€ million 2014 2013
Expenses for raw materials, supplies and merchandise 2,689.2 2,526.2
Expenses for purchased services 45.1 46.2
Other cost of materials 5.7 21.8
2,740.0 2,594.2
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Consolidated Financial Statements for 2014 42
Personnel expenses break down as follows:
The employer’s statutory contribution to pension insurance is sub-
sumed under social security contributions.
In scal 2014, benets totalling €5.0 million (previous year: €2.2
million) were paid in relation to the termination of employment
contracts (including but not limited to severance payments).
Impairment losses for the Passenger Car Steering Columns Business
Unit of €11.0 million were incurred (previous year: €6.9 million).
This amount is ascribable to property, plant and equipment.
Impairment losses for the “Pumps” function of the Commercial
Vehicle Steering Systems Business Unit of €9.0 million were incurred
(previous year: €32.6 million). €8.5 million of these impairment
losses are ascribable to property, plant and equipment and €0.5
million to intangible assets. The impairment losses are included in
the cost of goods sold.
Depreciation aected the following items on the consolidated
balance sheet:
Write-downs on intangible assets are included in the following
items in the consolidated income statement:
Research and development expenses stated in scal 2014 – inclu-
ding a write-down of €2.5 million (previous year €2.5 million) on
capitalised development costs – stood at €259.8 million (previous
year: €237.9 million).
The companies that make up the ZFLS Group lease or rent land,
buildings, equipment, ttings and xtures. Their leasing arrange-
ments are classed as operating leases. In scal 2014, leasing and rental
payments totalling €15.1 million (previous year: €14.7 million) were
recognised in the consolidated income statement.
€ million 2014 2013
Wages and salaries 614.5 565.0
Social security and benefit expenses 132.9 122.8
Pension expenses 52.6 46.6
800.0 734.4
€ million 2014 2013
Cost of sales 43.4 31.6
Research and development expenses 4.6 4.7
Selling expenses 0.2 0.2
General administration expenses 2.5 1.0
50.7 37.5
€ million 2014 2013
Intangible assets 50.7 37.5
Property, plant and equipment 193.3 167.1
244.0 204.6
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43 Consolidated Financial Statements for 2014
NOTES ›
Notes to the Consolidated Balance Sheet
(8) Current financial assets
(9) Trade receivables
The maturity structure for trade receivables is as follows:
At the balance sheet date, there was no indication that debtors
who owe trade receivables which are neither impaired nor overdue
might fail to meet their payment obligations.
(10) Other current assets
Other current assets include tax refund claims in the amount of
€35.1 million (previous year: €32.8 million) relating to other taxes,
derivative nancial instruments in the amount of €0.5 million
(previous year: €5.0 million) and other capitalised refund claims
totalling €1.6 million (previous year: €2.3 million).
Individual allowances were made for other receivables whose value
was impaired. There are no further indications of any threat to
payments due.
Year on year, the level of impairments changed as follows:
On 31 December 2014, trade receivables with a nominal value of
€14.7 million (previous year: €35.7 million) were impaired. Year
on year, the level of impairments changed as follows:
€ million 2014 2013
Impairments at 1 Jan. 1.3 1.6
Currency translation 0.0 -0.3
Additions 0.0 0.0
Appropriations 0.0 0.0
Reversals 0.0 0.0
Impairments at 31 Dec. 1.3 1.3
€ million 31.12.2014 31.12.2013
Current marketablesecurities
3.0 0.0
3.0 0.0
€ million 31.12.2014 31.12.2013
Carrying amount 794.5 712.9
Neither overdue
nor impaired 741.7 622.4Overdue but not impaired ›
1 to 30 days 24.9 32.4
31 to 60 days 11.3 19.8
61 to 360 days 12.7 9.8
More than 360 days 1.3 4.5
€ million 31.12.2014 31.12.2013
Receivables from thirdparties 776.8 696.2
Receivables from
participations 17.7 16.7794.5 712.9
€ million 2014 2013
Impairments at 1. Jan. 11.7 11.3
Currency translation +0.3 -0.2
Additions 4.4 2.4
Appropriations 2.5 1.5
Reversals 1.8 0.3
Impairments at 31 Dec. 12.1 11.7
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Consolidated Financial Statements for 2014 44
(11) Inventories
The participations primarily concern a 26 % interest in ZF Steering
Gear (India) Ltd., Pune. The inclusion of this company in the conso-
lidated nancial statements using the equity method was countered
by recurring circumstances which substantially limited the option
of signicantly participating in nancial and business policy deci-
sions in any way.
These available-for-sale nancial investments are recognised at
fair value. Unrealised gains and losses are recognised directly in
equity.
(12) Non-current financial assets
€ million 31.12.2014 31.12.2013
Raw materials and supplies 162.5 142.9
Work in progress 63.4 54.3
Finished goods andmerchandise 114.3 96.9
Payments on account 0.1 0.1
340.3 294.2
€ million 31.12.2014 31.12.2013
Participations 23.8 7.1
Derivative fnancial
instruments 0.9 0.0
Other receivables and loans 7.8 5.8
32.5 12.9
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45 Consolidated Financial Statements for 2014
Property, plant and equipment(€ million)
Land andbuildings
Technicalequipment,
plant andmachinery
Other equip-ment, factory
and ofceequipment
Payments onaccount and
assets underconstruction Total
Acquisition and production costs
1 Jan. 2013 285.0 1,405.0 392.3 134.9 2,217.2
Currency translation -1.7 -23.8 -3.2 -3.1 -31.8
Additions 19.0 90.1 48.2 230.3 387.6
Reclassifications 26.2 118.4 16.3 -164.0 -3.1
Disposals 0.4 43.6 26.3 0.2 70.5
31 Dec. 2013 328.1 1,546.1 427.3 197.9 2,499.4
Depreciation and amortisation
1 Jan. 2013 164.9 981.8 271.9 0.0 1,418.6
Currency translation -0.3 -15.5 -2.1 -17.9
Additions 8.1 123.7 35.3 167.1
Impairment (IAS 36) 26.6 12.3 38.9
Disposals 0.4 34.0 9.7 44.1
31 Dec. 2013 172.3 1,082.6 307.7 0.0 1,562.6
Carrying amount at 31 Dec. 2013 155.8 463.5 119.6 197.9 936.8
(13) Consolidated statement of fixed assets
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Consolidated Financial Statements for 2014 46
Property, plant and equipment(€ million)
Land andbuildings
Technicalequipment,
plant andmachinery
Other equip-ment, factory
and officeequipment
Payments onaccount and
assets underconstruction Total
Acquisition and production costs
1 Jan. 2014 328.1 1,546.1 427.3 197.9 2,499.4
Currency translation 7.7 55.8 7.4 10.2 81.1
Additions 24.9 31.3 45.5 290.3 392.0
Reclassifications 51.4 109.7 32.3 -192.0 1.4
Disposals 4.1 55.6 18.3 2.3 80.3
31 Dec. 2014 408.0 1,687.3 494.2 304.1 2,893.6
Depreciation and amortisation
1 Jan. 2014 172.3 1,082.6 307.7 0.0 1,562.6
Currency translation 1.4 28.4 4.4 34.2
Additions 10.0 139.5 43.8 193.3
Impairment (IAS 36) 16.8 2.7 19.5
Reclassifications 2.0 -12.1 10.1 0.0
Disposals 0.5 48.2 14.4 63.1
31 Dec. 2014 185.2 1,207.0 354.3 0.0 1,746.5
Carrying amount at 31 Dec. 2014 222.8 480.3 139.9 304.1 1,147.1
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47 Consolidated Financial Statements for 2014
Intangible assets (€ million)
Patents, licenses,software and
similar rights andassets
Developmentcosts
Payments onaccount Total
Acquisition and production costs
1 Jan. 2013 124.3 12.8 0.3 137.4
Currency translation -0.9 0.0 -0.9
Additions 56.7 0.9 2.8 60.4
Reclassifications 3.1 3.1
Disposals 4.7 0.1 4.8
31 Dec. 2013 178.5 13.6 3.1 195.2
Depreciation and amortisation
1 Jan. 2013 38.5 4.2 0.0 42.7
Currency translation -0.6 -0.6
Additions 35.0 2.5 37.5
Impairment (IAS 36) 0.6 0.6
Disposals 1.6 1.6
31 Dec. 2013 71.9 6.7 0.0 78.6
Carrying amount at 31 Dec. 2013 106.6 6.9 3.1 116.6
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Consolidated Financial Statements for 2014 48
Intangible assets (€ million)
Patents, licenses,software and
similar rights andassets
Developmentcosts
Payments onaccount Total
Acquisition and production costs
1 Jan. 2014 178.5 13.6 3.1 195.2
Currency translation 3.7 0.1 3.8
Additions 53.8 2.1 3.1 59.0
Reclassifications 1.6 -3.0 -1.4
Disposals 19.0 19.0
31 Dec. 2014 218.6 15.7 3.3 237.6
Depreciation and amortisation
1 Jan. 2014 71.9 6.7 0.0 78.6
Currency translation 1.6 1.6
Additions 48.2 2.5 50.7
Impairment (IAS 36) 0.5 0.5
Disposals 16.3 16.3
31 Dec. 2014 105.9 9.2 0.0 115.1
Carrying amount at 31 Dec. 2014 112.7 6.5 3.3 122.5
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49 Consolidated Financial Statements for 2014
The technical equipment and machines, as well as factory and oce
equipment of the Steering Columns Business Unit were written down
by €11.0 million (previous year: €6.9 million). The impairment is
based on a fair value less the costs of disposal for this cash-generating
unit based on current business planning and a rate of discount
(after taxes) of 8 % (previous year: 7 %) using the discounted cash
ow method. The devaluation was the result of the investments
made during the scal year in the light of continuing unfavourable
earnings prospects.
(15) Intangible assets
The main items classed as intangible assets are purchased soft-
ware, capitalised development costs and tool subsidies granted to
suppliers.
Assumptions made when capitalising expenditure incurred in the
development phase are based on the best possible estimates at the
time when the consolidated nancial statements were prepared.
The intangible assets of the cash-generating “Pumps” function of
the Commercial Vehicle Steering Systems Business Unit was written
down by a total of €0.5 million (previous year: €0.6 million). The
impairment is based on a fair value less the costs of disposal for this
cash-generating unit based on current business planning and a rate of
discount (after taxes) of 8 % (previous year: 7 %) using the discounted
cash ow method. The essential driver of this impairment was a
revaluation of the strategic business prospects for this product
group and is linked to the accelerated development of the steering
market from hydraulic to electric steering systems. Individual assets
were recognised at their fair values less costs of disposal determined
on a cost basis.
(14) Property, plant and equipment
On 31 December 2014, the ZFLS Group performed impairment
tests in accordance with IAS 36 to determine the recoverability
of its assets. This impairment test was primarily performed in
response to the negative results reported by certain cash-generating
units.
The recoverability of assets is determined by comparing the carrying
amount of the net assets of cash-generating units with the recove-
rable amount. The recoverable amount is the higher of fair value
less selling costs and the value in use.
ZF Lenksysteme determines the fair value of cash-generating units
by means of discounted cash ow measurements. The discounted
cash ows are drawn from ve-year forecasts which are based
on nancial plans. The forecast cash ows are based on market
assumptions as well as assessments of future developments made
by the company management. Cash ows outside the planning period
are extrapolated on the basis of a weighted ve-year forecast.
The technical equipment and machines as well as factory and of-
ce equipment of the cash-generating “Pumps” function of the
Commercial Vehicle Steering Systems Business Unit was written
down by a total of €8.5 million (previous year: €32.0 million). The
impairment is based on a fair value less the costs of disposal for this
cash-generating unit based on current business planning and a rate
of discount (after taxes) of 8 % (previous year: 7 %) using the discoun-
ted cash ow method. The essential driver of this impairment was
a revaluation of the strategic business prospects for this product
group and is linked to the accelerated development of the steering
market from hydraulic to electric steering systems. Individual as-
sets were recognised at their fair values less costs of disposal deter-
mined on a cost basis.
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Consolidated Financial Statements for 2014 50
(16) Current financial liabilities
Interest on nancial liabilities to third parties is payable at rates of
between approximately 1.33 % and 15.6 % (previous year: around
6.2 % and 13.8 %). Interest is paid on nancial liabilities to par -
ticipations at rates of between 0.00 % and 0.21 % (previous year
around 0.02 % and 4.80 %). Payable interest is generally aligned
with the EONIA rate.
Financial liabilities due to banks have an average maturity of between
three and six months. As a rule, the other liabilities are due at sight.
(17) Trade payables
No interest is due on trade payables, which normally have maturities
of between 30 and 90 days.
(18) Other current liabilities
Other liabilities include payments received on account of €8.4 million
(previous year: €8.7 million) and liabilities for social security of
€8.2 million (previous year: €6.9 million).No interest is payable on
other liabilities, which normally become payable in the rst half of
the subsequent scal year.
€ million 31.12.2014 31.12.2013
Financial liabilities to thirdparties (due to banks) 47.3 3.0
Financial liabilities toparticipations 1.5 1.3
48.8 4.3
€ million 31.12.2014 31.12.2013
Liabilities to employees 71.4 72.3
Sales liabilities 47.3 58.9Tax liabilities 25.3 12.7
Derivative financialinstruments 8.1 1.6
Deferred income andaccrued income 7.5 6.4
Other liabilities 66.9 47.1
226.5 199.0
€ million 31.12.2014 31.12.2013
Trade payables tothird parties 602.3 514.7
Liabilities to participations 36.5 26.8
638.8 541.5
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51 Consolidated Financial Statements for 2014
(20) Non-current financial liabilities
Non-current nancial liabilities include loans against borrower’s
note totalling €105.0 million (previous year: €150.0 million) on
which interest of between 1.6 % and 2.3 % (previous year: between
1.5 % and 2.3 %) is payable. The loan principal (€105.0 million)
will be repaid in the next 3 years. The loans against borrower’s note
include arrangements concerning compliance with a ratio (“Net
indebtedness/EBITDA”). The lender is entitled to terminate for
cause if this ratio is not complied with. The ratio has been con-
sistently complied with.
(21) Other non-current liabilities
Other non-current liabilities include deferred tool subsidies in the
amount €118.7 million (previous year: €108.3 million). No interest
is payable on these subsidies, whose value will be settled within
three years on average.
(22) Provisions for pensions
The company pension program distinguishes between dened contri-
bution and dened benet plans. In the case of dened contri bution
plans, the ZFLS Group assumes no obligations other than to channel
employees’ contributions into special-purpose funds or to private
pension insurance companies. In the period under review, dened
Provisions for obligations from sales consist primarily of provisions
for warranty obligations and for anticipated losses on delivery
commitments.
Provisions for warranty obligations are calculated on the basis of
warranty expenditure incurred in the current scal year, subject
to due provision for warranty periods. Specic provisions are also
formed to cover larger individual risks.
Provisions for anticipated losses on delivery commitments are formed
for commitments for which the unavoidable cost of performance
exceeds the expected economic benet. This calculation is based on
the best possible estimate of the expenditure that will be necessary
to full the commitment at the balance sheet date.
As in the previous year, provisions for obligations primarily consist of
commitments in respect of semiretirement arrangements.
All current provisions are expected to be appropriated in the course
of the next scal year.
Insurance refunds are expected to total €0.0 million (previous
year: €2.3 million). Refunds on insurance are carried as current
assets.
(19) Other current provisions
€ million1 Jan.2014
Translati-on adjust-
ments AdditionsApprop-riations Reversals
Reclassi-fications
31 Dec.
2014
Obligations from
sales 116.6 3.7 67.5 66.4 17.8 13.2 116.8
Obligations from
personnel 13.3 0.0 1.5 11.5 0.5 8.4 11.2
Other obligations 6.8 0.1 6.8 1.2 3.4 0.0 9.1
136.7 3.8 75.8 79.1 21.7 21.6 137.1
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Consolidated Financial Statements for 2014 52
contribution pension expenses (including the employer’s contribution
to statutory pension insurance) totalled €64.6 million (previous
year: €57.0 million).
Pension provisions are formed to cover vested rights and current
benet payments to existing and former employees of the ZFLS
Group and their surviving dependents. These obligations take the
form of dened benet plans. In this case, it is the responsibility of
the ZFLS Group to disburse the dened benets to existing and former
employees. Pension systems vary according to legal, economic and
tax conditions and constraints in dierent countries. The majority
of these systems are based on pension modules that are calculated
once a year and are in some cases linked to the employee’s period
of service and nal compensation amount.
The primary element of this liability arises from contribution plans
for existing and former employees at the company’s German loca-
tions. Pension commitments based on periods of service and salary
were entered into up to 31 December 1993. These were frozen and
have since been developed in line with the cost of living index.
From 1 January 1997 standard pay scale employees have been
assured “pension components” which are based on the ratio of pen-
sionable income to the assessment ceiling for contributions to the
statutory pension insurance scheme. Executives receive “pension
components” based on their position in the company hierarchy and
their own particular salaries.
The material risks for the Group arise from the actuarial risks, in-
cluding interest rates and pension trends.
The amount of pension obligations (projected unit costs or dened
benet obligation) is calculated using actuarial methods that
necessarily involve estimates. The following factors play an important
role in these calculations.
Actuarial gains and losses arising from dened benet pension
obligations are oset directly against equity in accordance with
IAS 19.93A. All actuarial gains and losses therefore appear on the
balance sheet.
The table below shows a breakdown of reported pension com-
mitments and the composition of expenses arising from pension
commitments:
% 2014 2013
Discount rate 2.25 3.8
Pension adjustment trend 1.30 1.3
€ million
Actual totals at 1 Jan. 2013 420.5
Current service cost 11.1
Past service cost 3.7
Interest expense 16.5
Transfer in/out -0.9
Pension payments -9.6
Currency translation effects -0.1
Expected totals at 31 Dec. 2013 441.2
Revaluations:
Actuarial gains/losses arising fromchanges in financial assumptions 15.5
Actuarial gains/losses arising fromexperience-based adjustments -2.7
Actual totals at 31 Dec. 2013 454.0
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53 Consolidated Financial Statements for 2014
The amounts for the current and previous four reporting periods
are as follows:
A one quarter percentage point change in the assumptions made
above, which were used to value the DBO on 31 December 2014,
would lead to an increase/decrease in the DBO as follows:
The method used to calculate the provisions recognised in the
corporate balance sheet was also used to calculate the sensitivity of
the DBO. The increase or decrease in the discount rate and pension
increase do not produce the same absolute gure for the DBO. If
several assumptions are changed at the same time, the overall
impact need not necessarily be equal to the aggregated individual
impacts.
€ million 2014 2013 2012 2011 2010
Present value of defined benefit obligations 637.9 454.0 420.5 324.3 272.4
Plan assets 0.0 0.0 0.0 0.0 51.9
Deficit cover 637.9 454.0 420.5 324.3 220.5
Experience-based adjustments to plan obligations -0.3 % -0.6 % +1.8 % +2.4 % +0.0 %
Experience-based adjustments to plan assets n.a. n. a. n. a. -2.4 % -2.2 %
€ millionReduction
by 0.25 % pointsIncrease
by 0.25 % points
Discount rate 33.2 -30.8
Pensionadjustment trend -20.9 22.0
Actual totals at 1 Jan. 2014 454.0
Current service cost 13.2
Past service cost 5.4
nterest expense 16.9
Transfer in/out -0.1Pension payments -10.5
Currency translation effects 0.0
Expected totals at 31 Dec. 2014 478.9
Revaluations:
Actuarial gains/losses arising fromchanges in financial assumptions 160.8
Actuarial gains/losses arising fromexperience-based adjustments -1.8
Actual totals at 31 Dec. 2014 637.9
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Consolidated Financial Statements for 2014 54
(24) Equity
Subscribed capital / Capital reserve
Subscribed capital of €127.8 million (previous year: €127.8 mil-
lion) and the capital reserve of €195.3 million (previous year:
€195.3 million) reect the gures carried on the balance sheet of
ZF Lenksysteme GmbH. On 31 December 2014, ZF Lenksysteme
GmbH’s shareholders were:
The changes in shareholder structure after the balance sheet date
are presented under “Events after the balance sheet date”.
Provisions for obligations from sales consist primarily of provisions
for warranty obligations and for anticipated losses on delivery
commitments. Details are provided under note 19. Most of these
obligations are likely to be appropriated over a period of two to
four years.
Provisions for obligations from personnel consist primarily of commit-
ments in respect of anniversaries and semiretirement arrangements.
About half of the provisions set aside to cover anniversary expenses
will be appropriated within two to ve years. The remaining half
will be appropriated after more than ve years. Commitments in
respect of semiretirement arrangements will probably be realised
within two to ve years.
(23) Other non-current provisions
€million
Sharein %
Robert Bosch GmbH, Stuttgart 63.9 50
ZF Friedrichshafen AG, Friedrichshafen 63.9 50
127.8 100
€ millionValue at 1
Jan. 2014
Currencytrans-lation
Addi-tions
Com-pound
interest
Appro-pria-tions Reversals
Reclassi-fications
Value at 31Dec. 2014
Obligationsfrom sales 86.4 1.4 24.8 0.3 0.7 4.0 -13.2 95.0
Obligationsfrom personnel 27.4 0.0 10.7 0.7 2.7 0.8 -8.4 26.9
Otherobligations 0.7 0.0 0.1 0.0 0.0 0.0 0.0 0.8
114.5 1.4 35.6 1.0 3.4 4.8 -21.6 122.7
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55 Consolidated Financial Statements for 2014
Managing capital
The Group manages capital primarily with the objective of ensuring
that a healthy equity ratio is maintained to underpin its business
activities. To this end, the Group aims to maintain a Group equity
ratio (reported equity, including minority interests, as a percentage
of total assets) of at least 30 %. This objective was achieved with an
equity ratio of 30.6 % in the period under review (previous year:
30.7 %).
The Group’s activities in this regard also involve managing the
equity of its consolidated subsidiaries, subject to compliance with
legal provisions (such as “thin capitalization rules”) in the taxation
law of individual countries.
Finally, capital management also includes ongoing monitoring of
nancial covenants.
Notes to the consolidated cash flow statement
The consolidated cash ow statement shows how cash inows and
outows have aected the ZFLS Group’s cash and cash equivalents
in the course of the scal year under review. In accordance with
IAS 7, distinctions are drawn between cash ows generated by ope-
rating activities, investing activities and nancing activities.
The structure of the cash ow statement was extended in scal
2014. The gures for the previous year have been adjusted.
Cash and cash equivalents include all liquid funds recognised on
the consolidated balance sheet, i.e. cash in hand, cheques and
balances in bank accounts as well as current marketable securities.
Cash ows generated by investing and nancing activities are calculated
in relation to payments made. By contrast, cash ows generated
by operating activities are calculated indirectly from consolidated
pre-tax earnings. For the purposes of indirect calculation, changes
taken into account in respect of balance sheet items which relate
to operating activities are adjusted for currency translation eects
and for changes to the consolidated Group.
Equity earned by the Group
Equity earned by the Group contains the cumulative earnings of
all companies included in the consolidated nancial statements,
insofar as said earnings are not distributed as dividends. This item
also contains reserves formed pursuant to rst-time adoption of
IFRS and the cumulative adjustments made for currency translation
which, pursuant to the option granted by IFRS 1.22, were not
recognised in prot and loss at the date of transition to IFRS.
Foreign currency translation differences
The currency translation adjustments item contains dierences
arising from the translation of nancial statements presented in
other currencies by foreign subsidiaries outside the euro zone after
rst-time adoption of IFRS. These adjustments are not recognised
in prot and loss.
Fair value of financial instruments
This item contains the eects of the after-tax valuation of available-
for-sale nancial instruments without recognition in prot and
loss.
In scal 2014, a €16.7 million (previous year: negative market
changes €2.2 million) increase in the fair value of marketable secu-
rities was included in equity and not recognised in prot and loss.
Revaluation arising from defined benefit plans
In scal 2014, actuarial losses totalling €159.0 million (previous
year: €12.8 million) were included in equity and not recognised
in prot and loss. Corresponding deferred taxes in the amount of
€46.1 million (previous year: €3.7 million) were netted against
equity and not recognised in prot and loss.
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Consolidated Financial Statements for 2014 56
Other disclosures
Other financial obligations
In addition to liabilities and provisions, the Group also has other
nancial obligations which, in particular, arise from rental and lea-
sing agreements, investment projects in progress and purchasing
agreements.
The sum of minimum future leasing instalments arising from
agreements and operating leases that cannot be terminated are
classied by maturity in the table below:
The leasing agreements primarily concern developed plots of
land and various tools and equipment. These agreements run for
between 1 and 10 years.
Litigation
Neither ZF Lenksysteme GmbH nor any of its Group companies are
involved in current or foreseeable legal or arbitration proceedings
that could have any material impact on the economic situation of
the ZFLS Group in future or, retroactively, over the past two years.
Suitable provisions have been formed to cover the likely nancial
burden of other legal and arbitration proceedings.
Risk management
As a company with a global reach, ZF Lenksysteme GmbH is ex-
posed to many and varied risks which are inseparably intertwined
with the pursuit of its business activities. Eective systems of risk
management and control have been put in place and are constantly
being improved to ensure that risks are detected and assessed
quickly and dealt with systematically. Key risks and corrective
measures are monitored by controlling cycles in the course of each
scal year.
In particular, ZF Lenksysteme GmbH’s assets and liabilities and its
planned transactions are exposed to risks arising from changes in
exchange rates. Financial risk management therefore aims to con-
tain these risks by constantly taking appropriate operational and
nancial action.
Foreign currency risk
The companies in the ZFLS Group hedge their currency risks
at market rates via the agency of the ZFLS Treasury unit at
ZF Lenksysteme GmbH. Both original and derivative nancial ins-
truments are used. Derivative nancial instruments are used only
to hedge existing underlying transactions or planned transactions.
The risk items in the charge of ZFLS Treasury are securitised exter-
nally with banks, subject to due provision for prescribed risk limits.
Hedging transactions are concluded in accordance with uniform
Group-wide guidelines.
Regular reports on the ZFLS Group’s foreign exchange positions
are submitted to the Management Board. Compliance with Group
guidelines is examined within the framework of internal audits.
€ million 31.12.2014 31.12.2013
Rental and leasing payments 45.1 35.6
Property, plant and equipmentpurchasing commitments
49.7 67.2
94.8 102.8
€ million 31.12.2014 31.12.2013
Nominal total future minimum
lease payments ›
due within one year 17.5 13.1
due between one to ve years 22.3 22.5
due after more thanfive years 5.3 0.0
45.1 35.6
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57 Consolidated Financial Statements for 2014
All future cash ows that are not eected in the functional currency
valid for the given Group company are exposed to foreign exchange
risks.
Within the ZFLS Group, planned foreign currency sales arising
from volume business are hedged within the connes of prescribed
hedging corridors. Net transaction amounts are hedged.
Risks arising from the translation into the Group’s presentation
currency of assets and liabilities stated by foreign corporate units
are not hedged.
External hedging is eected only by forward exchange contracts
and currency options. On 31 December 2014, the bulk of the
hedged volume was denominated in US dollars.
The table below illustrates the sensitivity of Group earnings before
tax to a reasonable assessment of possible changes in the euro/US
dollar exchange rate (due to changes in the fair value of monetary
assets and liabilities and changes in the fair value of foreign ex-
change contracts and currency options). All other variables remain
constant.
All the monetary assets and liabilities were analysed on the balance
sheet date and sensitivity analyses performed for the respective cur-
rency pairs in relation to the net risk in order to present currency
risks as required by IFRS 7 “Financial Instruments: Disclosures”
for the most important currencies used by the ZFLS Group.
There were no eects on equity.
Interest rate risks
The Group is exposed to the risk of uctuations in market rates of
interest, primarily because of its short-term investment of cash and
cash equivalents.
An increase of 100 basis points in the average rate of interest on the
short-term investment of cash and cash equivalents would increase
earnings before tax by €3 million (previous year: €3.2 million). A
decrease of the same magnitude would reduce earnings before tax
by €3 million (previous year: €3.2 million).
An increase of 100 basis points in the average rate of interest on -
nancial liabilities would reduce earnings before tax by €1.6 million
(previous year: €1.6 million). A corresponding decrease would
cause earnings before tax to increase by €1.6 million (previous
year: €1.6 million).
Credit risk
The ZFLS Group only does business with respected, creditworthy
third parties. Creditworthiness checks are performed for all cus-
tomers who wish to engage in credit-based business transactions
with the Group. In addition, outstanding receivables are monitored
on a permanent basis. As a result, the Group is exposed to no
material risk of default.
The Group’s other nancial assets include cash and cash equivalents,
nancial assets which are available for sale and certain derivative
nancial instruments. Should a counterparty default on its obliga-
tions, the risk of default in this context is limited to the carrying
amount of the instruments concerned.
Trend in the euro/US dollarexchange rate
Impact on earningsbefore tax
2014€ million
2013€ million
10 % depreciation 1.1 3.9
10 % appreciation -1.1 -3.9
C lid t d Fi i l St t t f 2014 58
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Consolidated Financial Statements for 2014 58
Liquidity risks
ZF Lenksysteme manages liquidity proactively to ensure that it can
meet all its payment obligations at any time. To this end, liquidity
planning covers payment ows arising from operating business for
a rolling 12-month period.
Further liquidity is available from the syndicated loan of €100 million
agreed in scal 2013.
Any surplus liquidity is invested with banks which enjoy rst-class
credit ratings in order to optimise returns.
The nondiscounted cash ows for the original nancial liabilities
are shown in the following table:
Carryingamount Nondiscounted cash flows
€ million 31.12.2014 2015 2016 2017 2018 2019
Original financial liabilities ›
Financial liabilities to thirdparties (due to banks) 152.3 50.2 2.1 107.1 0.0 0.0
Financial liabilitiesto participations 1.5 1.5 0.0 0.0 0.0 0.0
153.8 51.7 2.1 107.1 0.0 0.0
Carryingamount Nondiscounted cash flows
€ million 31.12.2013 2014 2015 2016 2017 2018
Original financial liabilities ›
Financial liabilities to thirdparties (due to banks) 153.0 6.0 47.2 2.2 107.1 0.0
Financial liabilitiesto participations 1.3 1.3 0.0 0.0 0.0 0.0
154.3 7.3 47.2 2.2 107.1 0.0
59 Consolidated Financial Statements for 2014
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59 Consolidated Financial Statements for 2014
Nondiscounted cash ows contain interest and principal payments.
The maturity structure of passive derivative nancial instruments is
shown in the following table:
Derivative nancial instruments entail rights and obligations
which both parties must full in full (gross settlement) as well as
obligations which one of the two contracting parties must settle net
on the maturity date.
€ million
Carrying amount
31 Dec. 2014 2015
Passive derivative fnancial instruments with gross settlement › 7.9
Cash inflow 73.1
Cash outflow 81.0
Passive derivative fnancial instruments with net settlement › 0.2
Cash outflow 0,2
€ million
Carrying amount
31 Dec. 2013 2014
Passive derivative fnancial instruments with gross settlement › 0.1
Cash inflow 6.3
Cash outflow 6.4
Passive derivative fnancial instruments with net settlement › 1.5
Cash outflow 1.5
Consolidated Financial Statements for 2014 60
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Consolidated Financial Statements for 2014 60
Carrying amounts, valuations, fair values and net results by
measurement category
The fair values of the nancial assets and liabilities carried on the
consolidated balance sheet are determined with reference to market
prices.
The full amount of marketable securities and equity participations
held as current assets and stated on the consolidated balance sheet
is carried at fair value. The fair value of the foreign exchange tran-
sactions and currency options subsumed under derivative nancial
instruments is calculated by referring to current forward exchange
rates.
For those nancial assets and liabilities that are not carried at fair
value, the carrying amounts approximately reect the fair value
owing to the short maturities involved.
Non-current nancial assets and liabilities are recognised at their
settlement amount, which corresponds to their fair value in light of
market rates of interest.
31 Dec. 2014 € million
Measurement
category inline with
IAS 39Carrying
amount CostFair value
in equityFair value in
proft and loss
Assets
Cash and cash equivalents LaR 264.9
Trade receivables LaR 794.5
Other receivables LaR 18.7
Participations AfS 23.8 0.1 23.7
Derivative financial instruments(with no hedging relationships) FAHfT 1.4 1.4
Liabilities
Liabilities due to banks FLAC 152.3
Financial liabilities FLAC 1.5
Trade payables FLAC 638.8
Other liabilities FLAC 44.0
Derivative financial instruments(with no hedging relationships) FLHfT 8.1 8.1
61 Consolidated Financial Statements for 2014
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61 Consolidated Financial Statements for 2014
The carrying amounts of items in the LaR and FLAC categories
correspond to amortised cost.
Based on the input parameters used for measurement purposes,
the fair value of disclosed nancial instruments is determined
using the three-level fair value hierarchy introduced by IFRS 7.27A.
Level 1 covers nancial instruments for which quoted prices are
available on an active market for identical instruments. The instru-
ments are assigned to level 2 if they can be measured using direct
(such as prices) or indirect (derived from prices) observable market
input parameters. Level 3 nancial instruments are measured on the
basis of inputs which are not based on observable market data.
31 Dec. 2013 € million
Measurementcategory in
line withIAS 39
Carryingamount Cost
Fair value inequity
Fair value in
proft and loss
Assets
Cash and cash equivalents LaR 207.9
Trade receivables LaR 712.9
Other receivables LaR 25.2
Participations AfS 7.1 0.1 7.0
Derivative financial instruments(with no hedging relationships) FAHfT 5.0 5.0
Liabilities
Liabilities due to banks FLAC 153.0
Financial liabilities FLAC 1.3
Trade payables FLAC 541.5
Other liabilities FLAC 24.7
Derivative financial instruments(with no hedging relationships) FLHfT 1.6 1.6
Consolidated Financial Statements for 2014 62
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Consolidated Financial Statements for 2014 62
The following table shows the assignment of nancial instruments
measured at fair value to the three levels of the fair value hierarchy:
31 Dec. 2014 € million Total Level 1 Level 2 Level 3
Assets
Participations 23.7 23.7
Derivative financial instruments (with no hedging relationships) 1.4 1.4
Liabilities
Derivative financial instruments (with no hedging relationships) 8.1 8.1
31 Dec. 2013 € million Total Level 1 Level 2 Level 3
Assets
Participations 7.0 7.0
Derivative financial instruments (with no hedging relationships) 5.0 5.0
Liabilities
Derivative financial instruments (with no hedging relationships) 1.6 1.6
Net results by measurementcategory in 2014
From subsequent measurement
Frominterest
At fairvalue
Translation
adjustment
Impair-ment
Fromdisposals Net result
€ million € million € million € million € million € million
Loans and receivables (LaR) 4.4 13.6 -2.6 15.4
Available-for-sale financialassets (AfS) 16.7 16.7
Financial instruments held fortrading (FAHft and FLHfT) -10.1 -10.1
Financial liabilities measuredat amortised cost (FLAC) -5.6 -5.6
Total -1.2 6.6 13.6 -2.6 16.4
63 Consolidated Financial Statements for 2014
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Derivative financial instruments
The face value of a derivative nancial instrument is the buying or
selling price or the contract value of the underlying transaction. The
table below lists the face values and fair values (i.e. the carrying
amounts) of derivative nancial instruments and indicates their
relative maturities:
Net results by measurementcategory in 2013
From subsequent measurement
Frominterest
zumFair Value
Translation
adjustment
Impair-ment
Fromdisposals Net result
€ million € million € million € million € million € million
Loans and receivables (LaR) 4.4 -1.0 -2.1 1.3
Available-for-sale financialassets (AfS) -2.2 0.1 -2.1
Financial instruments held fortrading (FAHft and FLHfT) 1.3 1.3
Financial liabilities measuredat amortised cost (FLAC) -6.4 -6.4
Total 2.0 -0.9 -1.0 -2.1 0.1 5.9
€ million
Nominalamount
Market valuewith a term to settlement of
Totalup to
one year
betweenone and five
years
31 Dec. 2014
Foreign exchange contract assets 30.7 1.4 0.5 0.9
Foreign exchange contract liabilities 73.2 7.9 7.9
Commodity future contract liabilities 3.6 0.2 0.2
31 Dec. 2013
Foreign exchange contract assets 144.9 5.0 5.0
Foreign exchange contract liabilities 6.3 0.1 0.1
Commodity future contract liabilities 15.6 1.4 1.4
Consolidated Financial Statements for 2014 64
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The fair values relative to the face values of these derivative
nancial instruments take no account of contrary developments
in the value of underlying transactions. Nor do they necessarily
reect the amounts that will be realised in future at current market
conditions.
Government grants
Government grants totalling €0.3 million (previous year: €0.7 million)
were received from the Federal Employment Agency (Bundesagentur
für Arbeit). In addition, government (investment) grants totalling
€6.1 million were recognised as property, plant and equipment
(previous year: €2.9 million).
Related party transactions
In accordance with IAS 24, parties (individuals or companies) who
control or are controlled by the ZFLS Group must be disclosed
insofar as they are not already identied as a Group company in
the consolidated nancial statements of ZF Lenksysteme GmbH.
Control is deemed to exist where a shareholder possesses over half
of the voting rights or is authorised by the articles of association or
by contractual agreements to control the management’s nancial
and operating policy decisions.
In addition, IAS 24 requires disclosure of transactions with parties,
including close family members and intermediary companies, who
exercise signicant inuence over nancial and operating policy
decisions. Signicant inuence over the nancial and operating
policy decisions of the ZFLS Group can be exercised by a party who
owns 20 % or more of the shares in ZF Lenksysteme GmbH, who
is a member of the Management Board or the Supervisory Board
of ZF Lenksysteme GmbH, or who lls any other key management
position.
Accordingly, Robert Bosch GmbH and its subsidiaries and ZF
Friedrichshafen AG and its subsidiaries are classed as related
parties to ZF Lenksysteme GmbH.
All transactions with related parties can be classed as ordinary opera-
ting activities between the companies concerned and are conducted
at customary market rates. Deliveries and services purchased from
related parties consist primarily of supplies used in production,
and of development, nancial and sales services. Transactions of
sale in respect of related parties consist primarily of product deli-
veries.The following table shows the extent of the relations:
Total emoluments to the Management Board and Supervisory
Board
Emoluments paid to current members of the Management Board
totalled €2,831,000 in scal 2014 (previous year: €1,702,000).
Pension commitments generated expenses of €72,000 (previous
year: €51,000). Compensation paid to former members of the
Management Board totalled €337,000 (previous year: €324,000).
Pension provisions for former members of the Management Board
and their surviving dependants came to €6,592,000 (previous
year: €5,437,000).
Emoluments of €29,000 were paid to the Supervisory Board for
scal 2014 (previous year: €30,000).
In the period under review, companies in the ZFLS Group engaged
in no other transactions requiring disclosure with members of the
Management Board or the Supervisory Board of ZF Lenksysteme
GmbH, or with companies on whose management or supervisory
bodies these individuals are represented. Nor was there any enga-
gement in such transactions with close family members of these
individuals.
€ million2014 / 31
Dec. 20142013 / 31
Dec. 2013
Sales 283.6 228.9
Deliveries and servicesreceived 646.2 648.1
Receivables 36.9 33.4Liabilities 92.2 68.7
65 Consolidated Financial Statements for 2014
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Disclosures under Section 313 Para. 2 (No. 1 sentence 2) of the
German Commercial Code (HGB)
Owing to immateriality the following companies have not been
included in the consolidated nancial statements:
Auditor’s fees and services
The fees charged by Ernst & Young GmbH Wirtschaftsprüfungsge-
sellschaft for its audit of the ZF Lenksysteme GmbH (consolidated
and separate) nancial statements and of the nancial statements
of the subsidiary ZF Lenksysteme Nacam GmbH amounted to
€255,000 (previous year: €241,000). Ernst & Young received
€459,000 (previous year: €330,000) for tax consultancy services
for transferred employees.
Personnel
An average of 13,732 people were employed by the ZFLS Group in
scal 2014 (previous year: 13,118). Of these, 6,568 (previous year:
6,373) were employed directly and 7,164 (previous year: 6,745)
were employed indirectly
Corporate headquarters
ZF Lenksysteme GmbH is headquartered at Richard-Bullinger-
Strasse 77 in Schwäbisch Gmünd, Germany.
Supervisory Board
Wolf-Henning Scheider - Chairman -
Managing Director, Robert Bosch GmbH (G40)
Dr. Sebastian Biedenkopf
Director, Corporate Legal Department, Robert Bosch GmbH
Jürgen Holeksa (until 30 January 2015)
Member of the Board of Management for Personnel and Service
Companies, ZF Friedrichshafen AG
Torsten Kurz (from 31 January 2015)
Manager Corporate Controlling,
Planning and Mergers & Acquisitions, Robert Bosch GmbH
Dr. Friederike Lindner (from 31 January 2015)
Head of Main Department, Central Purchasing and Logistics,
Robert Bosch GmbH
Werner Müller
Member of the Diesel Systems Division, Robert Bosch GmbH
Dr. Konstantin Sauer (until 30 January 2015)
Member of the Board of Management for Finance,
Controlling, IT, Process Management, ZF Friedrichshafen AG
Dr. Uwe Schirmer (from 31 January 2015)
Head of Central Department for Human Resources,
Robert Bosch GmbH
Dr. Stefan Sommer (until 30 January 2015)
Chief Executive Ocer, ZF Friedrichshafen AG
Frank Iwer - Vice Chairman -
Secretary of the IG Metall trade union,
Regional Manager Baden-Württemberg
Vincenzo Basile
Chairman of the Works Council, ZF Lenksysteme GmbH,
Bietigheim plant
Company nameand domicile
Nominalcapital
Equitystake in %
Integrated ManagementConsulting GmbH,Schwäbisch Gmünd
100,000EUR 100
Consolidated Financial Statements for 2014 66
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Harald Brenner
Chairman of the Works Council, ZF Lenksysteme GmbH,
Schwäbisch Gmünd plant
Werner Kottmann
Business Manager, Passenger Car Steering Systems Business Unit,
ZF Lenksysteme GmbH, Schwäbisch Gmünd plant
Martin Rott
Works Council, ZF Lenksysteme GmbH, Schwäbisch Gmünd plant
Heinz Wellnitz
Works Council, ZF Lenksysteme GmbH, Schwäbisch Gmünd plant
Management Board
Christian Sobottka - Chairman - (from 1 January 2015)
Strategy / Business Development, Sales,
Corporate Communications
Dr. Peter Ottenbruch - Chairman - (until 31 December 2014)
Quality, Market, Corporate Strategy, International Coordination,
Human Resources, Corporate Communications, Aftermarket
Dr. Hanns Bernd Ketteler (from 1 January 2015)
Production, Quality, Commercial Vehicle Steering Systems
Business Unit, Plant
Dr. Hans F. Collenberg (until 31 December 2014)
Research and Development, Commercial Vehicle Steering Systems
Business Unit, Passenger Car Steering Columns
Dr. Marcus Parche
Research and Development, Passenger Car Steering Systems
Business Unit, Passenger Car Steering Columns
Dr. Henning Wagner
Finance, Purchasing, Director of Industrial Relations,
Information Technology, Legal, Compliance
Events after the balance sheet date
Eective 30 January 2015, Robert Bosch GmbH acquired the 50 %
share interest in ZFLS from ZF Friedrichshafen AG. As of this date
Robert Bosch GmbH has been the sole shareholder of ZFLS. This
resulted in the following changes in the membership of the Super-
visory Board and the Management Board:
Mr Holeksa, Dr. Sauer and Dr. Sommer resigned from the Super-
visory Board on 30 January 2015 . Dr. Lindner, Mr Kurz and Dr.
Schirmer were elected to the Supervisory Board of ZF Lenksysteme
GmbH eective 31 January 2015 for the remaining period of o ce
of the Supervisory Board.
Dr. Ottenbruch and Dr. Collenberg resigned from their positions on
the Management Board on 31 December 2014. On 1 January 2015,
Mr Sobottka was appointed Chairman of the Management Board
and Dr. Ketteler was appointed as a member of the Management
Board of ZF Lenksysteme GmbH.
Schwäbisch Gmünd, 13 February 2015
ZF Lenksysteme GmbH
Christian Sobottka Dr. Hanns Bernd Ketteler
Dr. Marcus Parche Dr. Henning Wagner
67
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AUDIT OPINION
We have audited the consolidated nancial statements of ZF Lenk-
systeme GmbH, Schwäbisch Gmünd – consisting of the consolida-
ted income statement, consolidated statement of comprehensive
income, consolidated balance sheet, consolidated cash ow state-
ment, consolidated statement of changes in equity and notes to the
consolidated nancial statements – and the consolidated management
report for the scal year from 1 January to 31 December 2014. The
task of preparing the consolidated nancial statements and the
management report in compliance with International Financial
Reporting Standards (IFRS) in the form applicable within the EU
and in compliance with the provisions of Section 315a Paragraph
1 HGB (“Handelsgesetzbuch”: German Commercial Code) is the
responsibility of the legally authorised representatives of the company.
Our responsibility is to express an opinion on the consolidated
nancial statements and management report based on our audit.
Pursuant to Section 317 HGB, we conducted our audit in accordance
with generally accepted auditing standards drawn up by the
Institut der Wirtschaftsprüfer (IDW [Institute of Public Auditors
in Germany]), which require that we plan and perform the audit in
such a way as to obtain reasonable assurance about whether, in line
with the applicable nancial reporting standards, the consolidated
nancial statements and the management report are free of material
misstatement and statutory infringements with regard to the assets,
nancial and earnings position of the Group. When determining
how to conduct the audit, due consideration is given to an under-
standing of the Group’s business activities, of the economic and
legal context in which it operates and of the likelihood of errors
occurring. Such an audit involves assessing the eectiveness of the
internal system of accounting controls and examining documentary
evidence of the amounts disclosed in the consolidated nancial
statements and the management report; these assessments are
made primarily on the basis of spot checks.
Our audit further included an appraisal of the individual sets of
nancial statements for the companies subsumed in the consoli-
dated Group statements, an examination of the delimitation of the
consolidated Group, an assessment of the accounting policies and
principles of consolidation applied, and an evaluation of signicant
estimates made by the Group‘s legal representatives and of the
overall presentation of both the consolidated nancial statements
and the management report. We believe that our audit provides a
reasonable basis for the opinion expressed below.
Our audit has not led to any objections.
On the basis of the insights gained through our audit, it is our
opinion that the consolidated nancial statements comply with
International Financial Reporting Standards (IFRS) in the form
applicable within the EU and with the provisions of the German
Commercial Code (HGB) pursuant to Section 315a Paragraph 1
HGB, and that the consolidated nancial statements give a fair
view of the assets, nancial and earnings position of the consoli-
dated Group in accordance with these standards. The consolidated
management report is consistent with the consolidated nancial
statements and presents a fair view of the position of the Group as
a whole, dealing adequately with potential opportunities and risks
in respect of its future development.
Stuttgart, 13 February 2015
Ernst & Young GmbH
Wirtschaftsprüfungsgesellschaft
Nover PentzAuditor Auditor
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Published by
Robert Bosch Automotive Steering GmbH
Richard-Bullinger-Straße 77
73525 Schwäbisch Gmünd
Telefon: +49 (0)7171 31 - 0
Fax: +49 (0)7171 31 - 32 22
Contacts
Manuela Geppert
Andreas Ziegele
Concept, Design & Illustration
kemnitzmares GmbH, Stuttgart
www.kemnitzmares.de
Printing
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www.digitaldruck-deutschland.de
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