Centrotec Annual Report 2012

Annual Report 2012 Less Energy – More Comfort!

Modern man spends most of his waking hours indoors. A development that is being acce-lerated by the growing international trend towards urbanisation. 2008 marked the point in human history where, for the first time, more people in the world lived in cities than in the countryside. Meanwhile standards of living and, as a result, comfort requirements are steadily rising.

One consequence is that energy consumption for heating, climate control and ventilation in buildings is on the increase. In industrial societies, buildings account for about 40 % of final energy consumption and about one-third of CO

2 emissions.

Meanwhile buildings — more so than any other individual sector such as industry, transport and power generation — are the biggest area of potential in the world for saving energy and cutting greenhouse gas emissions.

Saving energy and resources in the building sector while responding to growing demands for comfort poses an enormous challenge to our society over the next few decades.

But there is no alternative: today’s buildings must become more like the tra-ditional dwellings of our ancestors in terms of their ecological footprint. But without forgoing comfort and convenience. The technological solutions and systems to accomplish this already exist and are market-tested.

The CENTROTEC companies have focused on energy conservation and climate protection in buildings, with their comprehensive range of innovative system solutions. But we are not content to rest on our laurels! We are unstinting in our efforts to improve the energy efficiency of our products, while improving comfort, simplicity and well-being for the user. To that end, CENTROTEC brings together the diverse skills of its subsidiaries in the sphere of heating, climate control and ventilation technology as well as renewable energy solutions in refining its innovative product portfolio.

Our goal: Less Energy – More Comfort!

Gearing[Net interest bearing debt/equity]

* Earnings per share, basic

** After elimination of gains from transactions with minorities. Figures incl. non-recurring effects for 2005: EUR 1.13, for 2006: EUR 0.88

*** Excluding the investment result

CAGR Compound annual growth rate (2003 – 2012)

Share price [in EUR]

Revenue [in EUR million]

CAGR 19 % p. a.

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

116 135 153

396 406

476 467

538480

EBITDA [in EUR million]

CAGR 13 % p. a.

EBIT [in EUR million]

CAGR 12 % p. a.

EPS* [in EUR]

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

19.423.2 23.0

30.3

43.648.8

54.6

46.946.6

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

13.2

18.3 17.7

12.5

27.6

32.236.2

29.0

24.8

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

0.530.65 0.70**

0.80**

(0.55)

1.011.13

1.54

0.93***

0.33

0.9

0.5

1.1 1.1

0.9

0.7

0.4 0.4

1.4

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

53455.2

35.2

0.2

1.31

March

3.24

24.25

IPO-Price

2.13

1998 2000 2002 2004 2006 2008 2010 2013

Five

-Yea

r C

ompa

rison

Key

Fig

ures

at a

Gla

nce

<

Five-Year Comparison

* Quotation in EUR

** Weighted average shares outstanding (basic; in thousand)

2008 2009 2010 2011 2012

Changes

2012 zu 2011

[EUR ’000] [EUR ’000] [EUR ’000] [EUR ’000] [EUR ’000] [Percent]

Total revenue (reported) 476,081 466,613 479,650 537,841 533,781 (0.8)

Climate Systems 319,308 309,524 331,769 381,782 391,838 2.6

Gas Flue Systems 118,822 128,111 112,835 116,347 102,569 (11.8)

Medical Technology & Engineering Plastics 37,951 28,978 35,046 39,712 39,374 (0.9)

Earnings

EBITDA 48,808 46,641 54,582 46,898 55,214 17.7

EBIT 32,171 29,037 36,158 24,770 35,231 42.2

EBIT yield (in %) 6.8 6.2 7.5 4.6 6.6

EBT 25,785 12,727 34,541 (404) 32,095

EAT 18,635 5,216 25,572 (9,401) 22,292

EPS (in EUR; basic) 1.13 0.33 1.54 (0.55) 1.31

Balance sheet structure 31/12/

Balance sheet total 378,384 379,646 399,561 425,690 418,167 (1.8)

Shareholders‘ equity 127,804 132,674 160,816 157,453 178,069 13.1

Equity ratio (%) 33.8 34.9 40.2 37.0 42.6

Property, plant and equipment 94,702 91,252 91,946 95,180 95,677 0.5

Intangible assets 36,571 37,542 39,265 46,765 45,044 (3.7)

Goodwill 60,911 60,914 61,074 69,738 69,991 0.4

Net financial liabilities 114,101 86,451 71,123 60,113 27,495 (54.3)

Net working capital 65,124 53,642 57,572 56,030 55,178 (1.5)

Cash flow statement

Cash flow I (EAT & depreciation/amortisation) 35,272 22,820 43,996 12,727 42,275

Cash flow from operating activities 24,847 45,025 35,840 41,843 38,370 (8.3)

Cash flow from investing activities (17,928) (18,006) (22,077) (28,875) (4,187) (85.5)

Employees 31/12/

Total (in FTE) 2,605 2,614 2,663 2,906 2,937 1.1

Shares

Number of shares** 16,525 16,610 16,750 17,164 17,289

Highest quotation* 16.14 10.80 17.50 24.25 14.35

Lowest quotation* 6.85 6.05 9.15 10.61 10.75

Year-end quotation* 10.60 9.44 16.00 11.28 13.47

Europe&CentralAsia

Sub-SaharanAfrica

SouthAsia

MiddleEast&NorthAfrica

America EastAsia&Pacific

1billion 300million 100million 50million 10million

PopulationRegions of the World

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ana

dvan

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leve

lofd

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opm

ent

0.20.1

12

11

10

8

9

7

6

5

4

3

2

1

0

0.3 0.4 0.5 0.6 0.7 0.8 0.9

10

9

8

7

6

5

4

3

2

1

0 0 0,1 0,2 0,3 0,4 0,5 0,6 0,7 0,8 0,9

Human development index >

Ecol

ogic

al fo

otpr

int [

hect

ares

wor

ldw

ide

per c

apita

] >

Sustainablezone:advancedlevelofdevelopmentinharmonywiththeglobalbiosphere

Lowlevelofdevelopmentbutconsumptionofresourceswithintheplanet’scapacitylimits

Consumptionofresourcespercapitaexceedstheaveragecapacityoftheglobalbiosphere

Brazil

Russia

India

China

Germany

Spain

Netherlands

France

United States of America

Australia

Japan

Kenia

The global challenge:Technology is the way, sustainability is the goal

Averagebiologicalresourcesavailableworldwidepercapita

Integrity For CENTROTEC, integrity means a

consistently fair, transparent, honest and incorruptible way of behaving, both for the

enterprise and for the individual.

For us, that means we have to say what we think, and do what we say!

Social responsibility CENTROTEC bears social responsibil-ity both for its employees and for its wider corporate environment. It is important for us to regard employees as human beings, not merely as a re-source, and to address their individual needs as effectively as possible.

Entrepreneurial action For every employee, entrepreneurial action means treating the company as if it were his or her own, and demonstrating the responsibility and foresight that that would entail. This offers opportunities for both the company and the individual.

Sustainable action This means meeting today’s needs without endangering the scope of future generations to do likewise. The way energy is used and the consequences of its use are of key importance for a sustainable society. To achieve that goal, CENTROTEC supplies affordable solutions for saving energy and putting renewable energies to a wide range of uses in buildings.

Core Values

Social Responsibilty

Entrepreneurial Action

Sustainab

le A

ctio

n

CENTROTEC promotes this entrepreneurial spirit by granting its em-ployees and subsidiaries the maximum possible freedom of scope.

In developing, manufacturing and selling our solutions, we strive for the highest possible standards of resource efficiency and sustainability. For each individual, this action begins with a sense of personal responsibil-ity towards the wider community.

In addressing the corporate environ-ment, CENTROTEC operates ethically and responsibly, and furthermore shows independent initiative in promoting living conditions and social cohesion within its direct sphere of influence (good corporate citizenship).

Company & Management 4 Letter to Shareholders

8 The Management Board

10 Report of the Supervisory Board

16 Corporate Governance Report

19 Responsibility Statement

20 Remuneration Report of the Manage-

ment Board and Supervisory Board

22 Shares

Group Management Report 28 Structure, strategy and steering

29 Economic conditions

29 Economic environment

32 Development of heating and

energy-saving technology market

36 Business performance with revenue

and earnings trend

36 Key figures at a glance

38 Climate Systems

41 Gas Flue Systems

43 Medical Technology &

Engineering Plastics

45 Principal investments

48 Net worth

49 Financial position

50 Financial performance

51 Employees

52 Research and development

53 Investment

54 Sustainability

56 Risk report

56 Risk areas

62 Directors’ assessment of the

risk situation

64 Other particulars

66 Report on post-balance sheet

date events

67 Outlook

69 General statement on the expected

development of the group

Consolidated Statement of Financial Position 74 Consolidated Statement of

Financial Position

75 Consolidated Income Statement

76 Consolidated Statement of

Comprehensive Income


Cash Flows


Changes in Equity

80 Consolidated Segment Reporting

84 Financial Statements

132 Independent Auditors’ Report

132 Financial Calendar133 Imprint

In the medium to long term, energy-saving solutions and renewable energies in buildings will emerge as the big global growth markets. With a sharper focus on its core skills in the sphere of heating, climate control and ventilation tech-nology, a modern product portfolio, competitive sales

"

4 Letter to Shareholders

"

structures, steadily optimised corporate processes and a sound financial basis that has received a further boost in recent months from the disposal of investments, CENTROTEC is excellently placed yet again to benefit over the odds from this development over the next few years — as the result achieved in a difficult environment in 2012 amply demonstrates. Dr. Gert-Jan Huisman

Letter to Shareholders 5

Against this backdrop, the CENTROTEC companies in the Gas Flue Systems and Medical Technology & Engineering Plastics segments also had to handle the extensive restructuring measures initiated at the end of 2011. Nevertheless the market position achieved, the current sta-tus of internal processes and not least the latest financial ratios reveal how well we rose to these challenges as a whole. However the CENTROTEC Group was not left unscathed by this difficult wider context, as witnessed by the consolidated revenue, which fell short of the original expectations. It is therefore all the more satisfying that the earnings figures achieved in 2012 were bettered only marginally by the

Letter to ShareholdersDearShareholders, The companies of the CENTROTEC Group again overcame major challenges in the 2012 financial year. As in the previous year, international markets of key importance to the group remained at historic low levels, for the most part contracting yet further during the period under review. In the still stable German market, quite substantial incentive schemes were first announced, then postponed, then ultimately shelved alto-gether. This, along with regulatory changes in other markets, was very unsettling for our customers. As well as these already problematic developments, the euro crisis further destabilised the group’s core European markets.

6 Letter to Shareholders

records established in 2010. Despite the slight year-on-year drop in revenue, this result is proof of our success, which has been built mainly on our steadily improved operating processes, increased sales ac-tivities and efforts to restructure our portfolio.

Consolidated revenue for 2012 came to EUR 533.8 million, which contrary to the figure originally forecast was slightly down on the prior-year total of EUR 537.8 million. On the other hand the operating result (EBIT) of EUR 35.2 million showed a 42.2 % improvement on the previous year (EUR 24.8 million) and was thus fully in line with the expectations that had been firmed up part way through the year. The positive investment result, which was boosted by the disposals of the minority interests in Bond-Laminates GmbH and CENTROSOLAR Group AG, meant the good operating performance also filtered through into earnings per share (EPS). The figure achieved of EUR 1.31 is not a far cry from the all-time high from 2010. This is a significant improvement on the prior-year figure of EUR -0.55, which had had to absorb non-recurring effects for the investments. Disregarding the investment result, EPS in the period under review came to EUR 1.17 (previous year EUR 0.57), again only slightly below the record figure of EUR 1.27 from 2010. In future, the earnings ratios will be influenced only marginally by the investment result, and at operating level will moreover benefit from the restructuring measures that will only start to achieve their full effect in the current financial year.

To maintain the CENTROTEC success story, with its long-term horizon, we have focused on the global growth market for energy efficiency and renewable energy solutions in buildings. The companies of the CENTROTEC Group stand for efficient technology for heating, ventilating and climate control in buildings. These are technologies that ought to be enjoying much bigger priority than is currently the case, espe-cially in Germany since its sea change in energy policy in 2011. So what has actually happened, and what are the hard facts? In 2010 the German government approved the energy concept, under which Germany signed up to an 80 % reduction in CO2 emissions by 2050. Because buildings account for over one-third of Germany’s CO2 emissions and about 40 % of final energy consumption, it merely made sense for the German government to draw up a timetable for building refurbishment up until 2050 as part of the energy concept. The aim of this timetable was and is to cut primary energy consumption in the building sector by 80 % by 2050 and to reduce heat requirements by 20 % by 2020. The building sector’s decisive role in the attainment of the climate protection targets was thus recognised. The drawback is that there has been no consistency in implementing the necessary measures. The current debate in the political and public arenas on the sea change in energy policy is now limited to virtually nothing more than the expansion of the energy grid and the incentivising of photovoltaics. Decisions are being called for and substantial public funding is being unlocked. Significant though these areas may be, however, their importance is distinctly overstated and in the same measure the undisputed potential of the heating market remains fallow. This is all the more regrettable in that substantial potential for energy savings and avoiding CO2 emissions can be tapped much more cheaply in the building sector than in those areas that are being discussed at much greater length. In particular the occasionally conflicting interests of central govern-ment and the federal states, but also a looming general election, mean that no fundamental decisions are evidently possible at present. Yet the bottom line is that long-overdue measures are merely being post-poned, assuming the declared emissions targets are not to be abandoned altogether. On top of the emis-sions targets, high energy prices are proving a considerable burden for industry and consumers alike, and are moreover causing growing dependence on energy imported from often politically unstable regions. To change this, in future it will be absolutely vital to systematically tap the huge potential of efficient building technology.

Letter to Shareholders 7

CENTROTEC is excellently placed to continue participating successfully in this globally significant market and to outperform the market’s own growth. Its product range covers the entire breadth of market-led system solutions for the areas of heating, ventilation and climate control technology, as well as solar thermal, biomass, heat pump technology and co-generation, both for new buildings and in particular for the renovation market. The innovative portfolio of solutions is being continually refined and extended in line with market requirements. Further expansion of the sales and service network, which involves close cooperation with the trade, is increasingly paying dividends as reflected in the growing market shares captured in recent years. Furthermore, the successes of internal improvement processes are evident in the current financial ratios, but also in a wide variety of awards and accreditations that bear testimony to the standards now achieved.

We nevertheless expect that like last year, the conditions for the 2013 financial year that is now under way will be challenging. The overall economic situation in Europe and the level of construction activity, which is particularly relevant for CENTROTEC’s core business, will probably not see growth in Southern and Western Europe. A fundamentally more positive environment is expected for the core market Germany. In most other countries, the contraction of the market that has been happening for a number of years should slow down, or the tide may be turned. Renovation business will again grow in significance in 2013. In addition, building services engineering’s share of the overall construction volume will reveal an upward trend and thus be able to compensate at least in part for the flat new-build figures throughout Europe. The future is also expected to bring a fundamental rise in already high energy prices, on top of the steep increases of recent years. Together with the growing regulatory requirements throughout Europe regarding the energy efficiency of buildings, this will be an important driver of CENTROTEC’s core business. In the product sphere, the current financial year and beyond will bring further convergence of individual, efficient partial solutions into complete systems, increasingly featuring renewables. But these system solutions will only enjoy market success if they are easy for engineers to install and convenient for consumers to use. CENTROTEC has long placed such considerations at the very heart of its product development activities and is currently also picking up on the trend towards flexible control using mobile terminal devices.

With our comprehensive portfolio of innovative, efficient, user-friendly energy-saving solutions, the fur-ther improved market position achieved in 2012 and our effective sales force, CENTROTEC will continue to enjoy an above-average share of the global growth market for energy efficiency in buildings — to the benefit of our shareholders, customers, suppliers, employees, and, thanks to our efficient products, to the benefit of the environment.

With best wishes,

Dr Gert-Jan Huisman [Chief Executive Officer]

Dr Gert-Jan Huisman

Dr Gert-Jan Huisman (Chairman, born 1968), Doctor of Business Management, has been Chief Executive Officer of CENTROTEC Sustainable AG since 2002. A Dutch national, he has held management positions in Germany for many years, including as branch manager of a bank. He in addition worked at McKinsey & Company for several years as Senior Consultant and Project Manager.

Dr Christoph Traxler

Dr Christoph Traxler (born 1968) has been Management Board member with re-sponsibility for the Medical Technology & Engineering Plastics segment since 2004. He was previously a Project Manager at McKinsey. Dr Traxler’s background is in Theoretical Physics.

Anton Hans

Anton Hans (born 1965), management expert, has been Chief Financial Officer (CFO) of CENTROTEC Sustainable AG since January 2008. He also serves as Finance Director of Brink Climate Systems B.V. Prior to joining CENTROTEC, Anton Hans worked for Ernst & Young as Senior Consultant on Financial Reporting, focusing on IFRS.

8 The Management Board

The Management Board 9

CENTROTEC TheManagementBoard


Guido A Krass, [Chairman]

Guido A Krass (born 1957), industrial lawyer and entrepreneur, has been focusing on high-growth mid-cap companies since 1986. As the founder and a major shareholder of CENTROTEC, he is closely involved in strategic and personnel management matters. He is able to draw on a worldwide network of contacts for developing new business ideas and identifying acquisition options.

Report of the Supervisory Board 11

Report of the Supervisory BoardDearShareholders, The Supervisory Board of CENTROTEC Sustainable AG performed the tasks resting upon it in accordance with the law, the articles of incorporation and the rules of internal procedure during the 2012 financial year, in regularly advising the Management Board on the running of the company and monitoring its activities.

For CENTROTEC, the 2012 financial year was one of consolidation and of focusing further on its own skills. As well as the continuing restruc-turing of operations in the Gas Flue Systems segment, this involved the disposal of non-strategic investments in CENTROSOLAR Group AG and Bond-Laminates GmbH. CENTROTEC has thus halted or disposed of all activities and investments in the photovoltaics sector, and is now focusing entirely on business in energy-efficient heating, climate control and ventilation technology; its regional focus is Europe, though it continues to pursue opportunities for growth in emerging international markets, such as Russia, the United States and the Middle East.

With this strategy, the CENTROTEC Group achieved an overall healthy result in 2012 in a challenging environment in most European markets, and after the previous year’s losses caused by special write-downs it has now restored its business to profitability.

Over the coming years, too, CENTROTEC will maintain this focus on further profitable growth based on existing skills, innovations, building on its existing market position and accessing new markets. The Supervisory Board supports and advises the Management Board in connection with such moves and critically scrutinises any such plans, while demonstrating the necessary receptiveness to new developments.

The Supervisory Board held a total of four regular meetings in the 2012 financial year. In regular reports on the business position, the Super-visory Board was informed in detail and in a timely manner by the Management Board of the current business progress of the company, including above all the development in its revenue, orders, financial performance and financial position, along with the company’s discernible


opportunities and risks of future development. Annual, half-yearly and quarterly financial reports were discussed by the Supervisory Board with the Board of Management prior to their publication. Decisions of the Management Board requiring approval were examined and discussed at length by the Supervisory Board prior to their approval. Supervisory Board meetings during 2012 were held on March 21, May 22, September 25 and December 11. All Supervisory Board members attended all meetings in person.

Outside the context of their regular meetings, too, the members of the Supervisory Board discussed forthcoming projects and matters of substantive importance with the Management Board and manage-ment employees of the company in face-to-face discussions and by means of telephone conferences. Written reports were furthermore submitted on specific projects and issues. The Management Board always satisfied the information and reporting requirements laid down by the Supervisory Board in every respect. As the Supervisory Board has only three members, no committees were formed. All matters were discussed by the full board.

In the 2012 financial year there were again no conflicts of interest among Management Board and Super-visory Board members that are to be disclosed to the Supervisory Board without delay and of which the Shareholders’ Meeting is to be informed.

The topics discussed at the Supervisory Board meetings comprised fundamental and strategic matters concerning the holding company, segments and individual companies, and in particular the further expansion of markets and technologies, but also individual matters of major importance and with far-reaching consequences from the viewpoint of the group. The individual matters discussed comprised:> The strategic direction and business policy of the group, the segments and the group companies> General business performance and financial reports to be published> Acquisitions in progress and in preparation, as well as possible options for acquisitions> Major or strategically highly significant investment decisions> Various topics concerning the operating companies and the progress of important areas of business> The risk position, in particular strategic, operating and financial risks as well as risk management> The financial reporting process and internal system of control> Matters of financing> IT and information security> Observance of the Corporate Governance Code> The corporate culture and social issues> Changes to regulatory and negotiable instruments law> Remuneration structures of the Management Board and management employees> The efficiency of the Supervisory Board’s own activities

The Supervisory Board and Management Board discussed corporate governance within the company at length during the year under review and jointly issued an updated Declaration of Compliance on the German Corporate Governance Code in accordance with Section 161 of the German Stock Corporation Act, and made it permanently available to the shareholders on the company’s website. The Management Board reports on corporate governance simultaneously on behalf of the Supervisory Board, in accord-ance with Article 3.10. of the German Corporate Governance Code. That report is published together with the declaration on corporate governance in the Annual Report and also on the company’s website. Other

Report of the Supervisory Board 13

topics of detailed consultations included issuing the audit mandate to the auditors following their election by the Shareholders’ Meeting, monitoring their independence as well as the services provided by them, and determining their fee.

The accounts, annual financial statements, management report, consolidated financial statements and group management report at December 31, 2012 have been examined by the auditors Pricewater-houseCoopers AG Wirtschaftsprüfungsgesellschaft, Essen, who have given their unqualified certification thereof. The above documents and the proposal by the Management Board on the appropriation of the accumulated profit were made available to each member of the Supervisory Board in a timely manner. These were discussed at length with the auditors at the Supervisory Board meeting on March 20, 2012, when the auditors reported on the principal findings of their audit. The auditors of the accounts further-more established that the Management Board has set up a suitable internal system of control and risk management system.

The Supervisory Board has considered at length the disclosures made in the management report and group management report. Reference is therefore made to the corresponding comments in the manage-ment report and group management report, which the Supervisory Board has examined and supports.

The Supervisory Board has examined the annual financial statements, the management report and the consolidated financial statements, including group management report, as prepared by the Management Board, together with the dependence report drawn up by the Management Board as a precautionary measure. The examination by the Supervisory Board has revealed no cause for objection. The annual financial statements of the group parent and the consolidated financial statements at December 31, 2012 were approved by the Supervisory Board. The annual financial statements of the group parent issued by the Management Board are hereby established. The proposal by the Management Board on the appro-priation of the accumulated profit was approved by the Supervisory Board.

The Supervisory Board expects that CENTROTEC Sustainable AG will further consolidate and extend its position in the worldwide growth market for energy-saving building technology, and achieve a good return on investment, in the interests of its shareholders.

Particular thanks are due to the employees of the CENTROTEC Group, who have made a major contribu-tion to the success of the company through their considerable dedication, expertise and creativity.

Best wishes,

Guido A Krass [Supervisory Board Chairman]

On behalf of the Supervisory Board, Brilon, March 2013

14 Condensing boiler technology

Fire. Heating. Condensing boiler technology. Modern oil and gas-fired condensing boilers unlock the thermal energy present in the flue gas through condensation, thus deriving maximum benefit from the fossil fuels used. Innovative, robust gas flue systems for the renovation sector are a requirement for using energy-efficient condensing boiler technology in the building stock, which offers the most scope for reducing primary energy consumption and therefore CO2 emissions.

Condensing boiler technology 15

Condensing gas flue systems:The innovative plastic gas flue sys-tems from Centrotherm/Ubbink are noted for their environmental compatibility, corrosion resistance and durability. They are moreover versatile to use and easy to install, especially in renovation projects.

Wolf ComfortLine condensing boiler range: The newly developed range of gas and oil-fired condensing boilers combines maximum energy effici-ency with low power consumption, ease of installation and a compre-hensive, convenient control and operation system.

Corporate governance has been a central component of CENTROTEC Sustainable AG’s corporate philoso-phy for many years. The Supervisory Board and Management Board have considered the Code at length in each amended version and incorporated the recommendations into their actions. As a result, CEN-TROTEC Sustainable AG complies in all key respects with the recommendations of the German Corporate Governance Code as amended most recently on May 15, 2012 and with the previously valid version of the Code dated May 26, 2010. The Declaration of Compliance below indicates and clarifies the departures.

Management and governance structure In keeping with the German Stock Corporation Act, CENTROTEC Sustainable AG has a two-tier manage-ment and governance structure that comprises a three-member Management Board (at the reporting date of December 31, 2012) and, as laid down in its articles of incorporation, a three-member Supervi-sory Board. The Management Board and Supervisory Board work together closely in the interests of the company. The Management Board coordinates both the strategic direction and principal transactions with the Supervisory Board.

The Management Board is independently responsible for the running of the company and conducts its business. In doing so, it focuses on achieving a lasting improvement in the value of the company. It is bound by the law, the provisions of the articles of incorporation and the rules of internal procedure for the Management Board, as well as by the resolutions of the Shareholders’ Meeting. The Management Board informs the Supervisory Board regularly and promptly of all relevant topics concerning the strategy and its implementation, the targets, the company’s current performance, the opportunities and risks, and risk management.

The Supervisory Board monitors and advises the Management Board. It specifies the duties of the Man-agement Board to report and inform. The Supervisory Board issues and amends the rules of internal procedure for the Management Board. It in addition appoints and dismisses the members of the Manage-ment Board. It may appoint a Chair of the Management Board. It regularly monitors the effectiveness of the internal control and risk management system, as well as the auditing of the financial statements. The members of the Supervisory Board are appointed until the Shareholders’ Meeting that gives discharge for the fourth financial year after the start of their term of office. The financial year in which the term of office commences is discounted.

Supervisory Board Taking account of the company’s specific situation, the Supervisory Board has identified specific targets in respect of its composition, such as an age limit, the appropriate participation of members with inter-national experience and efforts to ensure that women participate adequately. The Supervisory Board is moreover to include an adequate number of independent members. The composition of the Supervisory Board is in line with these targets. The Supervisory Board will take account of these targets when propos-ing candidates to the electoral bodies, and in particular the Shareholders’ Meeting.

Shareholders and Shareholders’ MeetingThe shareholders exercise their rights through the Shareholders’ Meeting and make use of their voting rights there. Each share carries one vote. Every shareholder is entitled to take part in the Shareholders’ Meeting. The Shareholders’ Meeting takes decisions concerning in essence the appropriation of profits, discharge of the Management Board and Supervisory Board, the articles of incorporation and amend-ments thereto, key entrepreneurial measures, and measures that change the capital such as the issuance of new shares, the acquisition of treasury stock and the conditional capital. The participants of the Share-holders’ Meeting elect the Supervisory Board members and determine their remuneration.

16 Corporate Governance Report

Corporate Governance Report

Corporate Governance Report 17

Remuneration system of the Management Board and Supervisory BoardThe Supervisory Board is responsible for determining the remuneration of the Management Board, includ-ing the principal contractual features. The remuneration system of the Management Board and Supervi-sory Board is presented in detail in the remuneration report, which forms part of this report.

Third-party financial loss insurance (D&O cover) has been taken out for the company’s Management Board and Supervisory Board members, incorporating an appropriate excess for the Management Board members in accordance with the statutory provisions. An appropriate excess has also been agreed for the members of the Supervisory Board, in agreement with the Corporate Governance Code. The managing directors and administrative board members of subsidiaries are included in this D&O cover.

TransparencyCENTROTEC Sustainable AG has acted openly and responsibly ever since its establishment, and was therefore doing so before the company pledged to observe the Corporate Governance Code. The overriding objective of CENTROTEC’s corporate communication is to provide prompt, continuous, comprehensive and consistent infor mation to all target groups and to maintain a relationship with its shareholders that is characterised by transparency. In addition to financial data, the financial calendar listing all key dates for CENTROTEC Sustainable AG, ad hoc information and press releases as well as a yearly document in compliance with Section 10 of the German Securities Prospectus Act (WpPG), the latest developments regarding the Corporate Governance Code and notifiable securities transactions (directors’ dealings) pursuant to Section 15a of the German Securities Trading Act (WpHG) as well as changes in the principal investments and in the overall voting rights pursuant to Sections 26 and 26a of German WpHG are published on the CENTROTEC homepage, following disclosure to the German Finan-cial Supervisory Authority and the stock market. All the above information is immediately published on the company’s homepage and older information is also made publicly available, above and beyond the statutory requirements.

Section 15a of the German Securities Trading Act stipulates the obligation to report immediately acquisi-tion and sale transactions involving shares of CENTROTEC (in excess of EUR 5 thousand p.a.) by Manage-ment Board and Supervisory Board members or by related parties. Those parties are obliged to notify the company and the Federal Financial Supervisory Authority (BaFin) immediately of the transactions described in this section. CENTROTEC Sustainable AG has passed on notices of all such transactions re-ported to it to BaFin without delay and published them on its homepage.

Legal transactions with companies in which members of the Supervisory Board and management hold or might hold an interest were also conducted in the financial year. As presented in detail in the Declaration of Compliance, these did not give rise to any conflict of interests.

The mandates held by the Management Board and Supervisory Board members on statutorily constituted supervisory boards or similar regulatory bodies are listed on page 130.

As in previous years, a dependence report was issued by the Management Board as a precautionary measure. We refer to the contents of the dependence report for details.

At December 31, 2012 the current members of the Management Board held a total of 62,981 (previous year 35,704) shares. At that date the members of the Supervisory Board held 2,477,340 (previous year 2,445,550) shares.

The current holdings of shares and options by the Management Board and Supervisory Board are docu-mented on the homepage and are updated continuously.

Financial reporting and auditing of financial statementsThe Consolidated Financial Statements are prepared by the Management Board, audited by the inde-pendent auditors and ratified by the Supervisory Board. The Consolidated Financial Statements and interim reports are prepared in accordance with the International Financial Reporting Standards (IFRS) as applicable within the EU, and published in both German and English.

The continuous, systematic management of entrepreneurial opportunities and risks is part of corporate governance for CENTROTEC. The Management Board reports regularly to the Supervisory Board on the latest developments in material risks within the group. This process helps to identify risks promptly and to manage them. The Management Board and Supervisory Board therefore regularly monitor the effective-ness of the financial reporting process and the internal control and risk management system.

Declaration by the Management Board and Supervisory Board of CENTROTEC Sustainable AG, Brilon, on the German Corporate Governance Code (Section 161 of German Stock Corporation Act)

BackgroundOn February 26, 2002 the “Government Commission on the German Corporate Governance Code” first presented a code of practice for listed companies. This Code was last updated on May 15, 2012.

Pursuant to Section 161 of the German Stock Corporation Act, the Management Board and Supervisory Board of a company listed on the stock exchange are obliged to declare once a year whether and to what extent the code has been and is complied with:

Declaration of ComplianceThe Management Board and Supervisory Board of CENTROTEC Sustainable AG declare that the recom-mendations of the “Government Commission on the German Corporate Governance Code” in the version dated May 26, 2010 and subsequently in the version dated May 15, 2012 are and have been complied with since the last Declaration of Conformity, dated December 2011, with the exceptions stated below.

1) Article 4.2.3 of the Code recommends that the remuneration of the Management Board should com-prise a variable as well as a fixed component. The variable component is, among other things, intended to be performance-related, have a multi-year basis of assessment and possess a risk character. The Code quotes stock options schemes, for example. CENTROTEC Sustainable AG has been operating a stock op-tions scheme, applicable not only to Management Board members but also to executive staff and other employees, since 1999. We believe that the scheme reflects the spirit of the Code, but we draw attention to two aspects which might be interpreted as a departure from it.

The Code recommends reference to comparative parameters. The stock options scheme envisages a performance target based on the absolute increase in the share price. This form was chosen in order to provide an incentive for success in absolute rather than relative terms. In addition a cap on the variable remuneration is recommended. In the case of the options, this was realised through allowing their exer-cise only within a limited time frame (for the last time seven years after issuance). Options received as a result of the attainment of targets are not retrospectively withdrawn by the company, nor the parameters governing them altered. In addition to the aforementioned share price target, the exercising of the op-tions is moreover linked to further internal performance targets in order to preserve a demanding but equitable form of variable remuneration.

18 Declaration of Compliance

Responsibility Statement 19

2) Article 5.3 of the Code recommends the formation of committees on the Supervisory Board. These shall, however, be dependent on the specific circumstances of the company and the number of mem-bers of the Supervisory Board. Our Supervisory Board consists of three members, who consider all matters concerning the company jointly. Consequently, we do not regard the creation of committees to be appropriate in our case. We believe that our view is compatible with the Code, but supply this infor-mation as a precautionary measure by way of clarification.

3) Article 5.4.2 of the Code recommends that the Supervisory Board includes an adequate number of members who — in the board’s own opinion — are deemed to be independent. A member is to be re-garded as independent if they have no business or personal relations with the company, its corporate bodies, a controlling shareholder or an affiliated company that could constitute a substantial and not merely temporary conflict of interests. In its own opinion, our Supervisory Board includes an adequate number of independent members. Although Supervisory Board members do have business relations with the company, this does not constitute a conflict of interests.

Brilon, December 2012 On behalf of the Management Board: On behalf of the Supervisory Board:

Dr Gert-Jan Huisman Guido A Krass [Chairman] [Chairman]

Responsibility Statement pursuant to Section 297 (2) fourth sentence and Section 315 (1) sixth sentence of German Commercial Code

To the best of our knowledge, and in accordance with the applicable reporting principles for financial reporting, the consolidated financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the group, and the management report of the group includes a fair review of the development and performance of the business and the position of the group, together with a description of the principal opportunities and risks associated with the expected development of the group.

Brilon, March 20, 2013

Dr Gert-Jan Huisman Anton Hans Dr Christoph Traxler

Section 289aLink to CENTROTEC homepage:http://www.centrotec.de/en/investor-relations/corporate-governance/statement.html

Remuneration Report of the Management Board and Supervisory BoardThe remuneration report of CENTROTEC Sustainable AG is based on the requirements of the International Financial Reporting Standards (IFRS) and German Commercial Code (HGB) while also incorporating the recommendations of the German Corporate Governance Code. The report contains disclosures that be-long to the Notes to the Annual or Consolidated Financial Statements and management report or group management report in accordance with the applicable standards. It is thus an annex to the management report or group management report. The matters explained in this report are therefore not presented ad-ditionally in the group management report and Notes to the Consolidated Financial Statements.

Remuneration of the Management Board The remuneration system for the Management Board including the key contractual elements is agreed by the Supervisory Board and regularly examined. The remuneration of the members of the Manage-ment Board comprises a non-performance-related fixed salary and a performance-related remuneration component. In addition to this there are retirement benefits, other pledges and fringe benefits. The level of the remuneration of the Management Board members reflects the size as well as the economic and financial position of the company, together with how typical the remuneration is when measured against its peer companies. Task areas, personal performance and experience as well as attainment of targets by the Management Board members are moreover taken into account in determining their remuneration. The remuneration system thus sets long-term behavioural incentives and focuses on sustainable develop-ment of the company.

The Management Board of CENTROTEC Sustainable AG comprised three members in the 2012 financial year.

The non-performance-related Management Board remuneration is paid in the form of a fixed monthly salary. In the 2012 financial year these fixed salaries, including the employer’s social contributions on them, amounted to EUR 833 thousand (previous year EUR 1,050 thousand).

In individual cases a monetary bonus is granted; its granting and level are dependent on the attainment of certain targets specified at the start of the financial year. No such bonus is paid for the 2012 financial year. In the previous year, the amount paid out was EUR 41 thousand.

The greater portion of the variable remuneration with long-term behavioural incentives is granted in the form of stock options via the CENTROTEC stock options scheme. It is dependent on the attainment of certain targets based on the specific performance of the company, as well as individual targets. Depend-ing on attainment of the targets, the Management Board members receive a certain number of stock op-tions, which have a long-term incentivising effect in view of the statutory vesting period and the threshold requirements for their exercising. The rules on the stock options scheme and the number of options that Management Board members are able to exercise are shown in detail in the Notes to the Consolidated Financial Statements. In the year under review of 2012, the Management Board was offered the pros-pect of a maximum total of 116,000 options (previous year 152,250 options for Management Board and Supervisory Board). Each of these options entitles the beneficiary to purchase one CENTROTEC share at an exercise price of EUR 12.10 (previous year EUR 15.80), provided certain conditions are met. The maxi-mum number of all exercisable options was used as the calculation basis for determining the personnel expense pursuant to IFRS 2. The value of the stock options received in 2012 has been determined using a binominal model in accordance with the rules in IFRS 2 “Share-based Payments” and totals EUR 167 thousand (previous year EUR 506 thousand).

The third category of remuneration for Management Board members comprises miscellaneous remunera-tion that is made substantially in the form of contributions towards pension schemes, the use of company cars, and insurance premiums, with a total cost of EUR 129 thousand (previous year EUR 173 thousand). No other fringe benefits are provided.

20 Remuneration Report

Remuneration Report 21

The remuneration of the Management Board of CENTROTEC fundamentally does not include pension contributions for Management Board members. German Management Board members are able to use the company agreement on company pension schemes. Like all other employees, they then make tax-advantaged contributions from their gross salary. In the Netherlands, as for all employees there, payments are made into an industry-specific fund, which guarantees an additional retirement pension on top of the state pension. The employee contributes 40 % and the employer the remaining 60 %. The pension entitlement for one Management Board member was topped up over and above the specified ceiling. This is customary for other employees, too.

The total remuneration for active and retired members of the Management Board of CENTROTEC Sustainable AG in the 2012 financial year amounted to EUR 1,129 thousand (previous year EUR 1,770 thousand). The remuneration of the individual Management Board members, broken down into non-performance-related and performance-related components, components with a long-term incentivising effect and miscellaneous remuneration, is shown in the following table in thousand euros: Management Board member Non-

perfor-mance- related

component1,4

Performance-related

components4

Componentswith a

long-term incentivi-

sing effect2

Otherbenefits3,4

Totalremunera-

tion2012

Totalremunera-

tion2011

Members of corporate bodies

Dr Gert-Jan Huisman 399 0 82 38 519 639

Anton Hans 144 0 41 35 220 260

Dr Christoph Traxler 290 0 40 4 334 374

Jacko van der Stege (until December 8, 2011)

0 212

Alfred Gaffal (until March 31, 2011) 0 223

Retired members 0 0 4 52 56 62

Total 833 0 167 129 1,129 1,770

1 Incl. employer’s social contributions 2 Valued options (max.)

3 Expense for pensions, company cars and other 4 Short-term component

Remuneration of the Supervisory BoardThe remuneration of the Supervisory Board is regulated by Section 18 of the articles of incorporation of CENTROTEC Sustainable AG. This specifies that, in addition to reimbursement of their out-of-pocket ex-penses, the members of the Supervisory Board receive a fixed annual remuneration that was determined by the Shareholders’ Meeting on May 20, 2010, and also a variable, performance-related remuneration. The fixed remuneration amounts to EUR 24 thousand per member of the Supervisory Board for each full year of service. The Chairman receives double and the Deputy Chairman one and a half times the amount due to a member of the Supervisory Board. This remuneration of members of the Supervisory Board of CENTROTEC Sustainable AG amounted to EUR 108 thousand in the past financial year (previous year EUR 108 thousand). In addition other expenses amounting to EUR 2 thousand (previous year EUR 1 thousand) were claimed, in particular for travel. The statutory level of sales tax due on this remunera-tion is furthermore paid by the company to the extent that it is billed by a Supervisory Board member. No separate remuneration is paid for service on committees, because the three-member Supervisory Board of CENTROTEC Sustainable AG does not form separate sub-committees in view of its size. By way of variable and performance-related remuneration, in accordance with the articles of incorporation, each member of the Supervisory Board receives remuneration amounting to 0.1 % of the dividend payable for a given financial year. For the 2012 financial year, this amounted to EUR 8 thousand (previous year EUR 8 thousand) following the distribution of a dividend for the first time.

The market environment2012 was by and large a good year on all major stock markets worldwide. Moreover, following the rever-sals of the previous year, all German indices enjoyed significant gains in 2012. In the first quarter of 2012 the key German index DAX advanced by around 1,000 points from 6,000 to over 7,000. Fear of a euro crisis and a weakening of the economy then became the dominant sentiment. This brought German stock markets under considerable pressure. By the end of the second quarter the DAX had surrendered all the gains achieved in a strong start to the year. Share prices then stabilised following the announcement by ECB President Mario Draghi that the European Central Bank would be prepared to buy unlimited amounts of bonds of crisis-hit eurozone governments if need be. Even if there was lingering uncertainty surround-ing the sovereign debt crisis (among other things because of Greece’s second debt buyback and the fis-cal cliff in the USA), stock markets rose sharply in the second half. At the end of the year the DAX was up more than 25 %, the highest gain in any year since 2003.

The other German indices such as the SDAX (up 17 %), in which CENTROTEC shares are listed, and the MDAX (up 31 %) and TecDAX (up 18 %) likewise rose considerably over 2012 and in most cases more than made good the previous year’s losses. There was a similar situation for leading international indices such as the EURO STOXX (up 11 %) and the Nikkei (up 23 %). On the other hand US stock markets, which had actually finished 2011 up slightly, performed more weakly in the period under review but still achieved growth overall.

Share price performanceThe trading price of CENTROTEC shares climbed by around 20 % over the 2012 financial year, from EUR 11.27 at the end of 2011 to EUR 13.47 on December 31, 2012, and therefore slightly more steeply than the SDAX itself. The year-low of EUR 10.75 came at the start of January. From then on, the trading price rose until the EUR 14 threshold was crossed at the end of February. After falling back to around EUR 12 in mid-May, followed by a recovery and a renewed retreat to just over EUR 11 by the start of August, the publication of the first-half figures and then the announcement of the successful disposal of the minority interests fuelled a rise to the year-high of EUR 14.35 in mid-September. The trading price then remained within the bandwidth of EUR 13 to 14 until the end of the year. All prices quoted in this section refer to end-of-day prices in XETRA trading at Deutsche Börse.

After the period under review there was a renewed substantial rise in the trading price to over EUR 16. Once again, the development in the benchmark index SDAX was surpassed. Compared with the issue price of EUR 3.24 from 1998, the level of more than EUR 16 reached at the end of February 2013 repre-sents a five-fold rise in the price. This corresponds to an average annual gain in value of more than 12 % for each of the 14 years on the stock market. The equivalent growth in the SDAX over the same period was only half the CENTROTEC growth rate, at slightly over 6 %.

Share statisticsSince the initial public offering in 1998 the shares of CENTROTEC Sustainable AG have been listed under securities identification number WKN 540 750, the international number ISIN DE0005407506 and the stock exchange code CEV. The shares have also been listed in the SDAX of Deutsche Börse since Sep-tember 2008. Furthermore, the shares are listed in the Prime All Share and other subindices of the Ger-man Share Index (DAX).

The capital stock of CENTROTEC Sustainable AG at December 31, 2012 amounted to EUR 17,307,466, divided into 17,307,466 no par value bearer ordinary shares carrying full voting rights, each representing an arithmetical nominal share of EUR 1 of the capital stock. Compared with the position at December 31, 2011 the capital stock rose by EUR 15,646. The number of CENTROTEC shares outstanding likewise rose

22 Shares

Shares

Shares 23

correspondingly by 15,646. This change is exclusively attributable to the exercising of stock options by employees of the CENTROTEC Group, who had been granted these options in the past as remuneration components with a long-term incentivising effect. Stock options were again granted or the possibility of them being granted was offered in the period under review. For further particulars, please refer to Section 10 of the Notes, under “Shareholder’s equity”.

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

share price since ipo[in EUR]

25

20

10

5

CENTROTECSustainableAG SDAX

IPO-Price3.24

January March May July September November December

share price 2012[in EUR]

CENTROTECSustainableAG SDAX

14

13

12

11

24 Shares

2008 2009 2010 2011 2012

Total shares at Dec 31, thousand 16,582 16,716 16,962 17,292 17,307

Capital stock at Dec 31, EUR 16,582 16,716 16,962 17,292 17,307

Market capitalisation at Dec 31, EUR million 175.8 157.8 271.4 195.1 233.1

Year-end price, EUR 10.60 9.44 16.00 11.28 13.47

Year-low, EUR 6.85 6.05 9.15 10.61 10.75

Year-high, EUR 16.14 10.80 17.50 24.25 14.35

Daily trading vol. XETRA average in thousand 27.9 17.2 29.6 44.1 26.2

Earnings per share, EUR 1.13 0.33 1.54 (0.55) 1.31

Price-to-earnings ratio at Dec 31 9.4 28.6 10.4 Earnings negative 10.4

The Management Board of CENTROTEC Sustainable AG, with the consent of the Supervisory Board, will propose to the Shareholders’ Meeting on June 4, 2013 that as in the previous year a dividend be distrib-uted for the 2012 financial year, in this case of EUR 0.15 per dividend-bearing no par value share. This move is designed to allow the shareholders to share directly in the group’s fundamentally positive devel-opment. However in keeping with the successful past practice, the bulk of the group’s available profits will continue to be invested in further organic, acquisition-led growth.

Since the IPO in 1998 the family of Supervisory Board Chairman Guido A Krass has remained the princi-pal shareholder of CENTROTEC with a holding of more than 50 %. Over and above that, the company has no indication that there are other shareholders with a percentage holding running into double figures. Several notices that investors’ holdings had exceeded or fallen below the reporting thresholds pursuant to Section 26 (1) of German Securities Trading Act were received in 2012. In every case the thresholds in question were 3 % and 5 %. Detailed information on this topic is permanently available on the website of CENTROTEC Sustainable AG (www.centrotec.de under the menu item Investor Relations/Share/Dis-closures S. 26 (1) WpHG). Information on changes in the voting rights held is also provided in the Notes, under “Other particulars”. CENTROTEC Sustainable AG moreover held an unchanged number of 12,080 treasury shares at the balance sheet date of December 31, 2012. These treasury shares do not carry any voting rights at the company’s Shareholders’ Meeting. All other shares outstanding are not subject to any restrictions with regard to transferability and voting rights.

The trading volume of CENTROTEC shares on all German stock exchanges fell to 6.8 million units traded in 2012 (previous year 12.9 million), reversing the rise of recent years. The trading volume in euros fell to EUR 99.4 million, in part because of the lower average price for the year (previous year EUR 236.4 mil-lion). The daily trading volume thus averaged just under 30,000 (previous year around 50,000), of which over 26,000 (previous year 44,000) were in XETRA trading. The share traded in XETRA thus edged up to 88 % (previous year 87 %). The trading volume is in line with that of comparable SDAX companies, but tra-ditionally fluctuates more than major stocks do.

Investor RelationsSince its IPO in 1998, CENTROTEC has maintained open, prompt and reliable communication with inter-ested financial market participants in an effort to underpin a healthy long-term price performance and do justice to the confidence that investors have shown in the company. The transparency guidelines required by law, such as the German Securities Trading Act, the German Stock Corporation Act, the additional post-admission obligations of Deutsche Börse and the national and international accounting standards including IFRS (International Financial Reporting Standard) and the German Commercial Code, as well as the rules of the Corporate Governance Code, represent a minimum standard that has become steadily more demanding in recent years. Over and above these standards, IR communication work will continue to reflect very strongly the needs of the target audiences and is also open to using new chan-nels, provided it brings corresponding benefits for the interested parties.

In 2012 CENTROTEC made direct contact with various financial market participants at a large number of roadshows, in telephone and video conferences and also at the Shareholders’ Meeting. The Investor Relations area moreover posted the latest information on the homepage of the group website, and was available throughout to handle enquiries by phone, correspondence or electronic means. The interest shown by the various target groups along these various channels and the further substantial rise in the trading volume of CENTROTEC shares are proof of the confidence that is fundamentally shown in the CENTROTEC Group thanks to its long-term approach and IR work. Nor has this fundamentally positive perception of CENTROTEC been significantly undermined by the ever swifter pace of global changes and the abrupt fluctuations in the business performance that are the result, along with the related risk of forecasting errors. However, CENTROTEC analyses its past experience of such developments very carefully in order to learn for the future. The still universally positive ratings of CENTROTEC’s prospects are reflected in the studies carried out by the following analysts, whose opinions are posted in the IR section of the group homepage shortly after disclosure.

Shares 25

CoverageBerenbergBHF-BankHSBC

KempenM.M. WarburgMontega

Solventis

26 Ventilation technology

Air. Heat recovery. Ventilation technology.Controlled home ventilation combines high internal air quality with maximum energy efficiency. The heat recovered from the air exchange process reduces energy losses in highly insulated buildings by up to two-thirds. This boosts living comfort and saves an amount of energy equiva-lent to several hundred litres of heating oil per year.

Ventilation technology 27

Brink passive-house appliance:The passive-house compact system integrates controlled home ventilation with heat recovery, solar thermal and a condensing boiler system into a single appli-ance — quick and cost-effective to install.

Brink Advance: Non-central heat recovery ventilation technology with CO2 monitoring offers the same advan-tages when retrofitted as part of the energy-focused modernisation of buildings.

Ubbink Air Excellent: The innovative air distribution system with low installed dimen-sions for hygienic air distribution throughout the entire building.

Brink Renovent Excellent:A central ventilation system that recovers up to 95 % of the heat, with very energy-efficient fans and convenient control technology, is the state of the art in new buildings.

The CENTROTEC Group — hereinafter also referred to as CENTROTEC — is Europe’s only listed full-service supplier of energy-saving solutions and renewable energy in buildings. The product range spans mainly system solutions for the areas of heating, ventilation and climate control technology, as well as solar ther-mal, biomass, heat pump technology and co-generation, both for new buildings and for the increasingly relevant renovation market.

In the 2012 financial year, the companies of the CENTROTEC Group had to cope with a predominantly difficult market environment, especially outside Germany. In the core market Germany, growth proved to be robust but lost momentum as the year progressed. Most other European markets reached an unprecedentedly weak level of economic dynamism. Especially in the new-build sector, this pushed construction activity in many important CENTROTEC markets down to a historic low level.

2 Structure, strategy and steering

Through its subsidiaries, the CENTROTEC Group is active mainly in the markets for energy efficiency and renewable energy in buildings. Since going public in 1998, the business volume has steadily been expanded profitably through a combination of organic growth and strategic acquisitions. This develop-ment has been based on the creation of a comprehensive, user-friendly, highly efficient product portfolio featuring solutions for heating, ventilation and climate control, plus renewable energy solutions for build-ings. Together with the steadily expanded international presence and corresponding sales structures, this forms the basis of a long-term group strategy that will continue to focus on giving the individual group companies ample entrepreneurial leeway.

The CENTROTEC Group’s business activities are divided into three segments, of which the largest in rev-enue terms, Climate Systems, along with Gas Flue Systems, makes up the core business area for energy-saving solutions and renewable energy in buildings. The third segment Medical Technology & Engineering Plastics, which is the smallest by revenue, develops, produces and sells medical technology solutions and high-performance plastics.

The main source of revenue for CENTROTEC is traditionally Germany and the Netherlands, where around two-thirds (previous year 65 %) of consolidated revenue was generated in 2012. These core countries are also home to all production locations. Other major sales markets are France, followed some way behind by Belgium, Austria, Spain, Poland, the UK and Russia. In addition to further expanding the market posi-tion in Germany, which has been significantly reinforced in recent years, the focus of the group strategy is on penetrating the chosen international markets and on the measured development of new markets. In that respect future acquisitions that will round off the portfolio technologically or accelerate market access are both conceivable and financially viable. For a comprehensive overview of the structure of the group, please refer to the Notes section on page 102.

CENTROTEC’s corporate philosophy is fundamentally based on granting considerable entrepreneurial freedom to the individual operating units as well as to employees and managers. This enables the operat-ing subsidiaries to respond to their respective markets swiftly, innovatively and in a market-led manner. This entrepreneurial leeway moreover motivates employees, helps them to identify with their specific company and ultimately leads to lower employee turnover and sickness rates. Collaboration between the individual group companies is moreover being promoted across the segments in order to develop prod-uct solutions across all companies, make greater use of existing customer relations, open up or develop

28 Group Management Report

Group Management Report

markets more effectively, optimise logistics processes and realise synergies in the purchasing and sales areas. The group-wide planning and budgeting system is also regularly adjusted to reflect changing re-quirements so that departures from the targets and changes in the general parameters can be identified early on in tandem with the risk management system, and appropriate corrective action taken. Further-more, the ongoing programmes to improve efficiency and cut costs play a fundamental part in making the organisation and processes fit for the challenges presented by target markets that are changing ever more rapidly.

3 Economic conditions

3.1 Economic environment

The world economy’s growth measured in terms of global gross domestic product (GDP) was 3.3 % in 2012, down on the prior-year figure of 3.7 %. Compared with the 5.0 % growth achieved in 2010, global growth had thus halved. The figure therefore also clearly missed the forecast of over three percent for 2012. Specifically the unstable state of the economy in Europe and China’s slower economic growth placed a considerable burden on the global economy. Challenges such as the sovereign debt crisis, the banking sector’s instability and the uncertainty surrounding the general direction of the economy are cur-rently driving down consumer spending in Europe, necessitating public spending cuts and undermining the fundamental propensity to invest. The economic performance of the United States, too, remains weak and is a far cry from the high growth rates of the 1990s. These developments, along with other country-specific factors, are influencing all major regions of the world and also weakening growth in emerging industrial nations. 2012 thus brought a marked slowdown in growth in Russia, China and India compared with the previous year. The EU experienced a contraction in economic output of 0.3 %, the second such reversal since the dramatic slump of 2009, in contrast to the growth rates of 2.1 % and 1.5 % in the two previous years. The biggest falls in percentage terms occurred in the countries of Southern and Western

Group Management Report 29

1.5

0.1

-0.3

0.5

3.0

0.70.4

-1.4

-0.9

0.9 0.9

2.2

1.8 1.9

0.20.10.0

1.7

-1.0

-2.4

0.4

2011 Source: Eurostat, March 20132012[e] 2013[f]

EU27 Germany Spain France Italy Netherlands GB USA

2014[f]

-1.4

development in gross domestic product[Year-on-year change in percent]

1.6

2.0

0.8

1.2

0.81.1

1.9

1.0

-0.6

2.6

Europe. Of the major nations, Italy saw its economic output contract most sharply. However Spain, the Netherlands and the UK also saw their already weak economic output lose ground. France moreover merely flatlined. Only the Baltic states and again Poland succeeded in achieving significant growth. Germany, too, enjoyed slight GDP growth of 0.7 % (previous year 3.0 %).

For the 2013 financial year, growth is expected to be slightly up on last year. The same applies to the EU region, for which mild growth is expected for 2013 following the slight contraction in 2012. Almost all European countries are anticipated to achieve slightly better, albeit still negative, growth rates in 2013. According to current forecasts, growth rates should improve further in 2014, while remaining low. Germa-ny’s GDP growth is expected to achieve not quite one percent in the current financial year, rising to two percent in 2014. The Netherlands and also France enjoy above-average significance for CENTROTEC and will probably deliver GDP growth in both 2013 and 2014, while not quite matching Germany’s low rates. However a common trait to all these forecasts is the fundamentally greater, widespread uncertainty com-pared with previous years.

In considering the wider economic context to CENTROTEC’s core business — energy-efficient heating, climate control and ventilation solutions and the use of renewable energy solutions in buildings — energy prices, construction activity, climate protection aspects and regulatory measures are particularly relevant. Rising energy prices plus regulatory requirements and a growing awareness of how the use of fossil fuels affects our climate are promoting the readiness to increase the energy efficiency of buildings. As this is having a much more marked impact on building stock than on the new build market, the relevance of new construction activity is steadily declining. All the same, the latter figures are readily available and thus remain a good indicator of developments in the construction sector. As in the previous year, new construction activity throughout Europe fundamentally remained at a historically low level, with Spain for example experiencing a further sharp deterioration in the course of the year. Among the national mar-kets traditionally of importance to CENTROTEC, the Dutch market in particular but also the Spanish and French markets proved to be especially difficult in 2012. In Germany, on the other hand, the construction sector’s performance was fundamentally positive, with the 6 % increase in building permits in housing construction one notable example of the steady upward trend dating back to 2009. The total of around 240,000 building permits for housing issued in Germany in 2012 represents a rise of one-third compared with the lows of 2008 and 2009. Nevertheless a comparison with the 1990s, when up to 700,000 hous-ing units were built annually, highlights the fundamentally low level of new housing construction over the past ten years.

The price trend for fossil fuels was less consistent in 2012 than in previous years. Although the oil price did not reach new all-time highs, the average for the year was well up on previous record levels. The an-nual average price of more than USD 107 per barrel represented a further rise compared with the previ-ous record figure of USD 105 from 2011, and led to average heating oil prices over the year of more than EUR 0.90 per litre in Germany. Compared with 2002, end user prices for heating oil in Germany have thus almost trebled within a decade. In the case of heating oil, unlike electricity for example, this develop-ment in prices is attributable almost exclusively to drastically higher import prices. Taxes and duties on heating oil have changed only marginally in recent years and represent only a relatively small component of the price. This state-influenced block of costs thus influences the price only to a minor degree com-


pared with vehicle fuel prices, which consist very substantially of taxes and duties; as a result, the devel-opment in world market prices has a very high impact on end user prices. Furthermore, the weakening of the euro in 2012 compared with previous years has likewise contributed to the price rises for heating oil. Developments have been rather more differentiated in the case of natural gas. Prices that were previ-ously closely tied to the crude oil price increased more slowly because that link has been loosening in certain respects for some time now, and the global supply of gas has risen faster than demand as a result of the ecologically very controversial extraction of gas from unconventional sources. In North America, where unconventional gas reserves are being exploited to a greater extent, the price actually fell in real terms. However this development had very little impact on gas prices for European consumers, with the result that they were again exposed to further price rises in the period under review, even if the increases were lower than for heating oil.

Despite all the short-term fluctuations that we repeatedly see, substantially higher prices can be ex-pected for all fossil fuels in the medium to long term. The main cause of this development is the continu-ing rise in energy consumption worldwide, especially in emerging economies experiencing high growth. Growing energy efficiency and the increased use of renewables have not yet been sufficient to compen-sate for this trend. All the same, such efforts are increasing significantly worldwide. In many places ap-propriate regulatory changes reflect state-backed efforts to accelerate the trend towards greater energy efficiency and autonomy of supply. Also, more and more people in a growing number of countries are coming to realise that economic development needs to be uncoupled from the consumption of fossil energy from both an ecological and an economic viewpoint. Soaring energy prices, the dependence of entire national economies on producing countries often plagued by instability and the growing environ-mental consequences are key reasons for this fundamental rethink. Globally speaking, the age of cheap fossil energy is drawing to a close. The price for the continued unharnessed use of these conventional energy forms will rise dramatically in future worldwide, whether driven by direct or indirect costs.


oil price development since 1960[US$/barrel]

Source: Tecson

100

90

80

70

60

50

40

30

20

10

0

“2011EUsovereigndebtcrisis”

“BankingCrisis”2008

hurricaneKatrina2005

economicsuccessstartingin2000

SecondGulfWar1990

2.oilcrisis1979

1.oilcrisis1973

1960 1970 1975 1980 1985 1990 1995 2000 2005 2010 2012

3.2 Development of heating and energy-saving technology market

In Europe, the market for heating, climate control and ventilation technology is made up of a large num-ber of individual markets, often with highly diverging requirements, as a result of sharply differing climatic conditions and regulatory constraints. The visible impact of the European Union’s efforts to introduce uniform standards in this area, too, is producing assimilation between the individual national market con-ditions. All markets are fundamentally seeing a marked trend towards greater energy efficiency and in-creased comfort. As a result, the integration of previously often separate systems for heating, ventilation, climate control and solar energy use into comprehensive, all-encompassing systems continues. These coordinated, centrally controlled integrated systems are essential if low-energy or passive houses and other similar, increasingly popular energy-efficient designs are to function efficiently. It is becoming ever more common for them to be combined with systems that use renewable energies, hot water tanks and ventilation systems with heat recovery. The control technology is increasingly emerging as the means of bracketing together the individual system components into a single, integrated system. Following the con-vergence both of heating, ventilation and climate control technology with each other and with renewable energies overall, increasingly integrated systems suppliers will necessarily take shape. The consolidation of the European heating technology market that is expected as a result of these market developments continues to progress slowly and has not yet produced a clear global market leader. The most significant occurrence in the period under review was the takeover of the Swiss Schulthess Group by the Swedish Nibe Group. The European market still features than 200 heating technology manufacturers as well as at least half as many manufacturers of systems for the use of renewable energies in buildings. The trend towards full-liners that has been observed for some years continued in 2012, with more and more players broadening their product range. At the same time the activities of market operators in the sphere of pho-tovoltaics were scaled back, or they increasingly shifted their focus to how photovoltaics can be exploited in the wider sense. In respect of the growing convergence of component systems, the CENTROTEC subsidiary Wolf occupied a pioneering role in the German heating technology industry, having focused on integrated energy-saving concepts as long ago as 2002. The Wolf Group remains one of the leaders for integrated system solutions that save energy in buildings, by virtue of combining expertise in handling various heating systems and solar thermal technology with climate control and ventilation technology.

The big heating technology suppliers are developing into full-liners mainly by building up their own exper-tise, but also regularly by making technology-led acquisitions. The industry focus is furthermore on com-panies internationally diversifying their sales markets, where they have traditionally concentrated on the home market Germany and usually also Europe, by turning their attention to the growth markets of Asia and America. However a strong international presence meant that the industry’s companies suffered a drop in export revenue in 2012 as a result of the significant contraction of markets in almost all European countries apart from Germany. It is nevertheless expected that the industry’s major players, which have the resources to absorb such developments, will adhere to their strategy of expanding internationally. They include the CENTROTEC Group, with its core brand Wolf, as well as other German companies such as Bosch Thermotechnik, Viessmann, Vaillant and Weishaupt. Then there are other European players such as the Dutch BDR Therma, France’s Atlantic, and Ferroli, Riello and Ariston from Italy as well as Nibe from Sweden.


As the previous year showed, the 2012 financial year was again fundamentally a difficult one for all com-panies. Consistently identifiable trends again included energy efficiency, comfort and condensing boiler technology, as well as the steadily growing significance of the renovation market. These trends were fun-damentally in evidence in all European markets, but some considerable differences in the performance of the various regional markets were again in evidence. There were distinct national peculiarities as a result of varying regulatory requirements, strong regional variation in the market players, varying climatic condi-tions and, last but not least, the general economic situation of each country.

The German heating market developed positively for the second year in a row, with growth of around 3.5 %. With slightly more than 650,000 heat-generating systems sold, this was still a far cry from the record fig-ures of the 1990s and the early 21st century, when annual sales of heat-generating systems in Germany typically approached one million units. Nevertheless, the German market’s performance is easily the most healthy in the whole of Europe, with the volume in almost all other markets falling, in some cases significantly. In some countries, e.g. those in Southern Europe affected by the crisis, this downturn led to record lows given the already severely reduced base.

Within Europe, the market for climate control technology likewise put in its best performance in Ger-many and achieved growth there in 2012, whereas it retreated in most other European countries. A common trait of the various regional markets was again high pressure on prices, particularly for project business. To a slightly lesser extent the same was true of the ventilation market. That market likewise performed much better in Germany than for example in CENTROTEC’s second core country, the Neth-erlands, where housing construction contracted for the fourth year in a row. There was a fundamentally brighter picture for heat recovery ventilation solutions, which are increasingly becoming standard in the new-build sector thanks to the ever better insulated shells of new buildings, but are also becoming more popular in energy-focused building modernisation projects. By virtue of these systems’ gener-ally rising market penetration, this market area is growing faster than would be expected based simply on new-build figures. Because such measures in the areas of climate control and ventilation involve greater complexity, they nevertheless represent a lower share of the renovation market than heating systems.

In the long run, the market for heating, climate control and ventilation technology continues to offer very bright growth prospects because energy efficiency is becoming ever more relevant for cost and environ-mental protection reasons; comfort, too, is becoming increasingly important for residential buildings in all markets. The long-term trends here include the more widespread use of renewable energies and the convergence of individual components into all-in, centrally controlled system solutions. Then there is the growing share of renovation business, which may more than compensate for the possible contraction of the new-build sector. Specifically in the renovation sector, there is considerable market potential for energy-efficient heating technology solutions particularly in Germany because of the persisting invest-ment backlog. In the short term, however, market developments are far less stable and in some cases are prone to marked fluctuations, as could be observed in 2012. These are currently still being caused by the difficult and incalculable general economic situation, which is further aggravated by unnecessarily frequent and regionally highly diverse changes in the regulatory framework.


34 Climate control technology

Fresh air. Energy efficiency. Climate control technology.Central climate control technologies provide a healthy interior climate in a wide variety of environments — office buildings, event complexes, sports stadiums and clinics. Heat recovery, energy-efficient fans and components and intelligent control technology achieve high energy efficiency, low CO2 emissions and low running costs.

Climate control technology 35

Ned Air EveryLine climate control range:Specialised heat recovery solutions aim for maximum energy efficiency and achieve an excellent perfor-mance in terms of the total cost of ownership (TCO).

Wolf KG-Top air-handling units: Ultra-efficient climate control solutions with air volume outputs of up to 100,000 m3/h can be configured to project-specific requirements according to a modular principle.

4 Business performance with revenue and earnings trend

4.1 Key figures at a glance

The CENTROTEC Group achieved the forecast result in the 2012 financial year in a difficult overall and industry-specific economic environment, despite extensive restructuring measures. That achievement yet again underlines its strong position in one of the most significant global markets of the future. All segments played a part in achieving this result, albeit to varying degrees; the differences in the business performance from one region to another became even more pronounced than in previous years. Overall, CENTROTEC’s priority for fiscal 2012 involved focusing even more strongly on its core business, on the one hand as a result of restructuring its portfolio in the Gas Flue Systems segment and on the other hand through the disposal of non-strategic holdings.

Unless otherwise indicated, all the following financial ratios refer to the financial year of the CENTROTEC Group, which corresponds to the 2012 calendar year. The financial ratios are quoted in million euros (EUR million). However, the percentages have been calculated throughout on the basis of the amounts given in thousand euros (EUR ’000) in the Consolidated Financial Statements. For mathematical reasons, there may be rounding differences of +/- one unit.

CENTROTEC posted consolidated revenue of EUR 533.8 million in the 2012 financial year. This was down from the prior-year figure of EUR 537.8 million to some extent because of the restructuring of the product portfolio but also as a result of the weak performance in certain European markets. This decrease of a mere 0.8 % was slightly short of the company’s own expectations, whereas it achieved its earnings target. The development in total revenue is again the net effect of a variety of developments in the individual segments. For example the core segment Climate Systems improved by 2.6 % on the record revenue of the previous year of EUR 381.8 million, taking it to yet another all-time high of EUR 391.8 million. Thus, the forecast of “growth above the market average” made at the start of the year was comprehensively


400

300

200

100

0

revenue by segment for 2009 to 2012[in EUR million]

2009 2010 2011 2012

309.5

29.0

128.1

35.0

112.8

331.8

39.7

116.3

381.8

MedicalTechnology&EngineeringPlastics GasFlueSystems ClimateSystems

391.8

39.4

102.6

achieved. On the other hand revenue for the Gas Flue Systems segment in 2012 declined by 11.8 % to EUR 102.6 million (previous year EUR 116.3 million) in an extremely difficult market environment and as a consequence of the portfolio restructuring started in late 2011. The aim at the start of the year was to stabilise revenue at the prior-year level. The smallest segment Medical Technology & Engineering Plastics almost equalled the previous year’s record revenue (EUR 39.7 million). With revenue reaching EUR 39.4 million (down 0.9 %), as indicated part way through the year the figure for the period under review was slightly down on the prior-year figure and fell short of the target, which envisaged slight revenue growth. In contrast to revenue, earnings fully achieved the forecast which was upped during the year to EUR 35-40 million, with EBIT of EUR 35.2 million coming close to the record achieved in 2010.

The sharply higher gross profit ratio (= aggregate operating performance — cost of purchased materials)/aggregate operating performance x 100) of 51.2 % (previous year 49.2 %) following the restructuring of the portfolio, the ongoing optimisation of corporate processes and substantially lower materials purchase prices is the basis for significantly better earnings figures at all levels compared with the previous year. EBITDA thus rose by 17.7 % to EUR 55.2 million (previous year EUR 46.9 million) and was consequently even better than the previous record from 2010. EBIT of EUR 35.2 million was 42.2 % above the prior-year figure of EUR 24.8 million. The operating results in the period under review already began to reveal the benefits of this refocusing in 2012, whereas in the previous year they had still been affected adversely by the measures taken. A further slight reduction in the interest burden and a positive net investment result of EUR 2.4 million as a result of the disposals of the investments in CENTROSOLAR Group AG and Bond-Laminates GmbH produced earnings before tax (EBT) of EUR 32.1 million. This contrasts with the prior-year figure of EUR -0.4 million, which was undermined by an investment loss including special write-downs of EUR 19.3 million. The return to normal of the effective tax rate then led to earnings after tax (EAT) of EUR 22.3 million. In the previous year, earnings after tax had been negative (EUR -9.4 million) for the first time in the history of the group as a result of the non-recurring effects mentioned above. Earn-ings per share (EPS) for 2012, calculated on the basis of an average of 17.3 million shares outstanding, reached EUR 1.31 in 2012 in a turnaround from EUR -0.55 in the previous year.


150

100

50

0

quarterly revenue development 2008 – 2012[in EUR million]

Q1 Q2 Q3 Q4

100 97 103112 113

106115

122133 127 132

144129

137130

160

2008 2009 2010 2011 2012

124 123

142 145

4.2 Climate Systems

4.2.1 Business performanceThe Climate Systems segment maintained its healthy performance of recent years in the 2012 financial year, amid a difficult environment. In a consistently very weak market environment everywhere except in Germany, revenue was up 2.6 % on the prior-year figure of EUR 381.8 million. The total achieved of EUR 391.8 million was the highest ever revenue for the segment, which was thus the source of a much higher proportion of consolidated revenue of well over 70 %. As forecast, this revenue for the year paved the way for profitable revenue growth above the market average, with German business of the core brand Wolf a major contributor here. The ventilation specialist Brink moreover put in a solid performance overall, again underpinned by healthy business in Germany. On the other hand, many foreign companies in the segment experienced occasionally sharp drops in their revenue.

This revenue base made substantially higher earnings possible. Within the continuous improvement pro-grammes, the easing of commodity prices provided an opportunity to increase the gross profit ratio to 49.7 % (previous year 48.4 %). Despite this good basis, EBIT decreased by a slight 1.7 % to EUR 27.8 million (previous year EUR 28.3 million) due to higher depreciation and amortisation as a result of the high invest-ment spending of previous years. The EBIT margin thus slipped to 7.1 %, from 7.4 % in the previous year.

In 2012 the Climate Systems segment employed 1,996 calculated full-time equivalents (FTE) (previous year 1,872) as an average for the year. At year-end, the FTE total was 2,003 (previous year 1,954). The increase is attributable to a moderate increase in capacity, along with comprehensive consolidation of the subsidi-ary Dreyer & Bosse for a first full financial year following its acquisition in 2011. Personnel expenses in-creased to EUR 106.7 million (previous year EUR 97.7 million) as a result of the higher employee total and the negotiated pay increases that took effect during the year. This represents an above-average rise com-pared with revenue growth and led to a higher personnel expenses ratio of 27.4 % (previous year 25.7 %).

4.2.2 Principal developments in the past financial yearThe Climate Systems segment, easily the largest in the CENTROTEC Group, again put in a positive per-formance in 2012. The evidence is there in its renewed profitable growth, increased market shares in key markets and the innovative, comprehensive and steadily optimised product portfolio.

As in previous years, the energy price again had a considerable bearing on the segment‘s performance in 2012. After the extremely steep rise in crude oil prices from USD 40 to over USD 120 per barrel between mid-2009 and early 2012, prices settled at around USD 105 in the second half of the year. However as an average for the year they were again at the record level of USD 107 (previous year USD 105). Gas prices for individual customers also continued to rise in all markets of relevance for CENTROTEC. For all


revenue development climate systems [in EUR million]

2008 319.3

2009 309.5

2010 331.8

2011 381.8

2012 391.8

the debate, especially in Europe, about the ecologically and economically controversial exploitation of un-conventional gas reserves, there is no sign of a fundamental reversal in the gas price trend in Europe for private end users. Alongside this record price level, growing pressure to act on climate change is bolster-ing a fundamental readiness to invest in efficient building services engineering. However the uncertainty about Germany’s future economic development and the big macroeconomic challenges currently facing many European countries undermined this fundamentally growing willingness to some extent. Specifically in Germany, there was also considerable uncertainty about state-funded financial incentives for renova-tion projects in particular. This mood was exacerbated by inconstant and often contradictory govern-ment policies, resulting in the postponement of long-overdue energy-focused modernisation measures in the hope that a better deal would ultimately turn up. The existing renovation backlog for Germany’s obsolete heating systems thus became even more acute. A clear policy has now been put in place with a programme to promote energy-focused modernisation involving increased investment grants and better access to low-interest loans.

In this heterogeneous market environment, the Climate Systems segment achieved the biggest growth rates in the period under review, especially in the German market, which grew by 5 %. The market posi-tion was strengthened amid a more intensive competitive environment in the German heating market as a result of the weak state of international markets. Export markets were down, in some cases sharply so, with Switzerland, Austria, the Baltic states and Poland the only exceptions. This is also reflected in the revenue figures of the individual national CENTROTEC companies, despite their relative strength. The biggest falls in the market and in revenue were in Spain and France. In the field of ventilation and climate control technology, international business in specific witnessed a large number of postponed projects and also some cancellations, with the result that the business volume as a whole was slightly down on the previous year. On the other hand there was significant growth for heat recovery ventilation systems both at home and abroad. Overall, the export ratio to markets outside Germany for the entire Climate Systems segment fell to 32.2 % (previous year 33.0 %). The profitable growth achieved in the segment in 2012 in generally very difficult market conditions nevertheless demonstrates the strength of the core brand Wolf, with its innovative system solutions for heating, climate control and ventilation.

Segment-wide, corporate processes underwent further optimisation and streamlining during the period under review. Activities in those countries in crisis were adjusted to reflect the prevailing market con-ditions, but were consistently maintained at a level that promotes long-term customer retention and improves our position to secure renewed growth once market conditions improve. In the production area, various awards reflected the advanced level of internal processes and the generally good position held. These included the “Factory of the Year” title awarded by management consultants A.T. Kearney and the trade publication “Produktion” for the Wolf Group’s climate control production operations and the “Excellence in eSolutions 2012” award made to Wolf GmbH by the German Association of Materials Management, Purchasing and Logistics (BME) in the period under review in recognition of its exceptional achievements and improved performance in the logistics area.

In the heating technology product area, gas condensing boiler systems and heat pumps enjoyed the highest growth rates in 2012. The long-term trend towards gas condensing boiler systems and the use of renewables held up both in the market as a whole and at CENTROTEC companies. That said, sales of solar thermal, which had enjoyed especially strong growth in 2011, declined slightly in line with the mar-ket. In the area of climate control technology, there was a cautiously positive development overall despite certain markets proving very difficult. The latest systems in the KG-Top range, equipped with additional features, were well received by the market. Sales of innovative ventilation systems, often in conjunction


with heat recovery and as part of a package with the ventilation components developed by the Gas Flue Systems segment, brought in higher revenue in all key European markets. Within co-generation systems, however, biogas CHPs performed more weakly in 2012. The unsettling of the domestic market by the regulatory position led to weaker demand for these products. Alongside bright prospects for export busi-ness, the German market is nevertheless expected to recover in the medium term. There were more extensive technical refinements to the oil and gas-fired condensing boiler systems in 2012, to address aspects of efficiency and operating convenience. The Dutch ventilation expert Brink moreover unveiled a new, easy-to-operate control module for its market-leading heat recovery ventilation systems. There were also developments in the area of comprehensive but user-friendly system control as well as more deeply integrated systems.

4.2.3 Strategic direction and outlookThe Climate Systems segment, together with the Gas Flue Systems segment, represents the strategic core of business. A very good market position has been built up in recent years through the comprehen-sive and innovative portfolio of solutions and the steadily expanded sales structures, and CENTROTEC is now in a position to profit from worldwide growth in efficient heating, climate control and ventilation technology as well as renewable energy solutions for buildings. CENTROTEC’s companies are continu-ally working on expanding and refining this product range, with the main emphasis on efficiency and user convenience. Two examples of this approach are the new, easy-to-operate control module for the market-leading ventilation systems with heat recovery that the Dutch subsidiary Brink unveiled at the end of 2012, and the enthalpy heat exchanger for stabilising humidity, available from 2013. The same applies to the new and refined products of the core brand Wolf in the areas of condensing boiler technology and heat pumps, and the additional functions introduced for climate control technology.

The further rise expected in the medium to long term in the already high prices of fossil fuels, the need for action on climate change and the convergence of one-off solutions into user-friendly, energy-efficient overall systems for buildings will remain the dominant trends in the markets that are of relevance for CENTROTEC. Financial incentives from the state will dwindle in significance in view of the pressures on public finances. The expectation is rather that market developments will be influenced more by a regula-tory framework, e.g. the German Energy Saving Order (EnEV), that is adjusted regularly in line with tech-nical advances. CENTROTEC’s member companies are continually monitoring the relevant developments very closely and also contributing actively to the political decision-making processes through the relevant federations and committees. The purpose of all its activities remains actively to create value added for all parties, hand in hand with its trade partners and taking account of end customer needs. On this basis, the market position will be actively extended both in the markets already being addressed and in new ones, too.

To that end, in close consultation with its sales force and customers, CENTROTEC will continually update and add to its innovative portfolio of solutions for comfortable, efficient heating, climate control and ventilation in buildings. This strategy continues to be underpinned by the system principle, which in our case means finding an intelligent way of integrating individual components from heating, climate control and ventilation technology and the use of renewables wherever it is technically feasible and economically helpful to do so. There is still considerable potential for condensing boiler technology, which continues to spread in all markets. The CENTROTEC Group develops, manufactures and supplies a comprehensive range of equipment and systems in this area, comprising oil and gas condensing boilers, calorifiers and control systems plus matching gas flue systems. Condensing boiler technology exemplifies how expertise from the two core segments Climate Systems and Gas Flue Systems can be combined. As well as using


fossil fuels efficiently, the product range includes systems that make use of renewables, for example the self-developed range of heat pumps, which is already making a significant contribution towards growth thanks to market-leading efficiency ratings. The equally good medium-term market outlook for co-gener-ation both in Germany and internationally will lead to further synergies as a result of increased collabora-tion in the sales area. Solar thermal, too, will return to a course of growth over the medium term. In the area of home ventilation systems specifically with heat recovery, greater market penetration has compen-sated for the low new-build figures of recent years in many markets. Product innovations in this area and especially the growing focus on the renovation market make further growth likely over the next few years. In addition, the greater significance of renovation business will further reduce dependence on the latterly very fragile new-build market. For climate control business, too, the focus for the gradually evolving sys-tem solutions is on maximum flexibility in planning and installation, ease of control and maximum energy efficiency. Together with modular selectable features, the CENTROTEC companies are offering pioneering solutions for this attractive market segment that optimally reflect what the market wants.

For the current financial year and beyond, CENTROTEC is planning to step up its international sales and product development activities in the Climate Systems segment in order to further reinforce and stabilise the segment’s positive development. Including for these activities and for the expansion and modernisation of capacities, investment spending was increased by 50.0 % in the past financial year to EUR 12.9 million (previous year EUR 8.6 million). The Climate Systems segment is expected to maintain revenue growth at above the market average in 2013 and to increase its EBIT margin further in the me-dium term.

4.3 Gas Flue Systems

4.3.1 Market environment and business developmentThe performance indicators for the Gas Flue Systems segment for the 2012 financial year already provide some initial evidence of what has been achieved through the refocusing drive launched in the previous year and completed in the year under review. The decline in revenue and the increased non-recurring expenditure resulting from the termination of peripheral activities contrast with sound progress for core business involving gas flue and air ducting technology, along with components for sustainable building. These measures, implemented in a weak market environment, along with the further optimisation of all corporate processes, were sufficient to reverse the earnings trend in the period under review despite the generally difficult market conditions.

The companies that make up the second CENTROTEC core segment achieved revenue of EUR 102.6 mil-lion in 2012 (previous year EUR 116.3 million). The 11.8 % fall in revenue is substantially attributable to the termination of peripheral activities, for example in the field of photovoltaics and a number of specialised products for buildings. Due to the extremely difficult market environment, the stabilisation of revenue was thus not quite achieved as forecast and the segment’s share of consolidated revenue slipped to just below one-fifth. Nevertheless, the target of a positive profit contribution was achieved, in an initial indi-cation that the restructuring measures are working. The improvement in the gross profit ratio to 49.0 % (previous year 45.1 %) is driven mainly by the adjustment of the product range and the optimised operat-ing processes, which are reflected specifically in substantially lower working capital and the fundamen-tally lower materials purchase prices over the year as a whole. However the restructuring of the portfolio limits the scope for a meaningful year-on-year comparison of the gross profit ratio. The positive basic trend is also reflected in the EUR 4.3 million rise in EBIT (previous year EUR -3.2 million), which includes a loss on business in the UK that has now been adjusted at operating level for subsequent years.


The organisational changes have also had an impact on employee totals. As an average for the year, there were 612 full-time equivalents (FTE) at the companies in this segment in the period under review. This was 19 FTE or 3.1 % fewer than in the previous year (631 FTE). At year-end, the FTE total was 569 (previous year 640). This change stemmed mainly from the restructuring measures at the Dutch subsidiary Ubbink and its subsidiary in the UK. Personnel costs were reduced significantly as a result. Despite collectively agreed pay increases mainly taking effect in the course of 2012 and as a result of one-off expenditure for restructuring measures, personnel expenses came to EUR 28.8 million and were thus down just slightly on the previous year’s level (EUR 29.1 million). Significant components of the cost-cutting measures will only achieve their full impact on earnings in the course of the current financial year and thus bring the person-nel expenses ratio back down, following its rise to 26.4 % in 2012 (previous year 24.0 %).

4.3.2 Principal developments in the past financial yearAlongside the efforts to restructure, most sales markets proved to be decidedly challenging in the 2012 financial year. Only the German market achieved a fundamentally positive development, with renewed growth in construction investment taking it back up to a healthy level compared with the time prior to the economic crisis of 2008 and 2009. By contrast many international markets, especially the Netherlands, France, Spain and Italy, were in a very weak state of health and for the most part operated at unprec-edentedly low levels. Despite the already very low starting position, these markets contracted in some cases by as much as 20 %.

The focus of the measures implemented since the end of 2011 was on optimising the product range, fur-ther slimming down the administration side in the Netherlands and at the British subsidiary, and expand-ing business in North America. Furthermore, development and sales expertise in the core areas of gas flue and air ducting technology and in components for ecological building was built up further. This in-volved pooling expertise residing in various different areas and companies, for example in logistics, which have been undergoing optimisation segment-wide for a number of years, and in combining the Climate Systems segment’s ventilation systems with air ducting components and accessories from the Gas Flue Systems segment. Despite these difficult conditions, the sales basis underwent further strategic expan-sion in certain areas in 2012 with an eye to future growth potential.

4.3.3 Strategic direction and outlookFor the 2013 financial year and beyond, CENTROTEC regards itself as well-positioned with its solutions for the core area of gas flue and air ducting technology along with components for sustainable building; on the back of tangible initial successes following the consolidation measures of 2012, it expects to return to a path of steady profitable growth. The worldwide trend towards efficient condensing boiler technology and the growing significance of home ventilation will underpin this progress. As a result, the companies


revenue development gas flue systems [in EUR million]

2008 118.8

2009 128.1

2010 112.8

2011 116.3

2012 102.6

of the Gas Flue Systems segment will be able to capture larger portions of the total construction cost of individual projects and thus increase their potential market volume even at a time when construction activity is flat. Furthermore, in the medium term construction activity throughout almost all of Europe is expected to recover from the sharp downturn of recent years following the financial and economic crisis. Outside Europe, CENTROTEC expects to continue reaping the rewards of international expansion espe-cially in North America in recent years, and to achieve further rises in revenue. The success in the Ameri-cas of European heating technology suppliers with which CENTROTEC is already collaborating in Europe provides a good starting position.

On this basis, and bolstered by investment spending of EUR 3.5 million (previous year EUR 6.7 million) mainly for the further optimisation of the operating infrastructure, 2013 is expected to bring stable rev-enue and rising profit margins for the Gas Flue Systems segment. In the medium term, this segment will again target steady revenue growth and profit margins in the high single digits.

4.4 Medical Technology & Engineering Plastics

4.4.1 Market environment and business developmentThe Medical Technology & Engineering Plastics segment developed positively in the 2012 financial year and its revenue of EUR 39.4 million almost matched the high prior-year total (EUR 39.7 million). The slight revenue growth targeted at the start of last year was not quite achieved due to the rather more subdued development of the cyclically sensitive Engineering Plastics business area compared with a strong previ-ous year. There was consequently a slight fall of 0.8 % in revenue for the segment. The revenue of CENTROTEC’s smallest segment, which is not considered part of its core business, thus came to less than one-twelfth of consolidated revenue.

However the positive development in the 2012 result for the segment confirms how successfully the cor-porate processes have been optimised, with the previous year’s pooling of medical technology operations at the Fulda site already playing a major part here. In a turnaround from the reversals of previous years due to the restructuring of the portfolio, EBIT reached EUR 3.1 million (previous year EUR -0.3 million) and thus exceeded the previous record from 2008. The EBIT margin of 7.9 % for the 2012 financial year thus approached the target of a high single-digit rate once more, having been a negative -0.6 % in the previous year. The restructuring of the portfolio and the lower materials purchase prices over the full year pushed the purchased materials ratio down to 37.2 % (previous year 38.0 %). Conversely the gross profit ratio, which often fluctuates in view of the heterogeneous product portfolio, climbed to 62.8 % (previous year 62.0 %). At the end of the 2012 financial year the companies of the Medical Technology & Engineer-ing Plastics segment employed 365 full-time equivalents (FTE) (previous year 313). The average for the year climbed to 337, up from 315 in the previous year. This increase and the impact of the previous year’s wage and salary increases on the full year meant personnel expenses climbed to EUR 15.6 million (previ-ous year EUR 15.1 million). The personnel expenses ratio consequently increased to 37.2 % (previous year 36.8 %).

4.4.2 Principal developments in the past financial yearThe companies of the segment maintained their positive operating performance of recent years in 2012 and underlined the strong position held by both areas of the segment by posting revenue and earnings on a par with the previous record-breaking year of 2008. The past few years have seen the Medical Technol-ogy area in particular establish the basis for successfully promoting its profitable growth in the global medical technology market thanks to the systematic expansion of the product range and the optimisation


of its sales structure, along with the pooling of development, production and administrative processes at the modern facilities in Fulda. The cyclically sensitive area of Engineering Plastics, too, reaped benefits from the further optimised structures even if revenue was slightly down on the very strong previous year. The processes that had been streamlined and optimised in the crisis years of 2008/2009 are paving the way for profitable development in this second business area of the Medical Technology & Engineering Plastics segment, notwithstanding the difficult, fluctuating context.

In the period under review, the focus for Medical Technology remained on brand business with its own products in the areas of aesthetic medicine, blood transfusion and neurosurgery. It develops, makes and sells technically sophisticated, comprehensive solutions mainly in the areas of vibration-assisted liposuc-tion, automatic, modern blood blending weighers with integral data capture, and systems for monitoring and controlling the liquor pressure in spinal and brain surgery. For vascular surgery, it has for example introduced an optimised liquor drainage system with improved features to maximise drainage reliability, enhance patient comfort, reduce treatment costs and aid patient mobility. This advanced system should unlock extra market potential for the established product line. Other traditional focal areas among the products in this segment are biopsy needles and medical technology systems developed and manufac-tured to specific customer requests. The engineering plastics developed and manufactured in the second area of the segment have now found use in a large number of industries — including the automotive, food and electrical engineering industries, as well as in medical technology and mechanical engineering — and were again increasingly able to substitute other materials such as glass and metal in the period under review. In order to continue tapping into this long-term trend, the production conditions at the German location were further optimised in the past financial year and the basic fabric that allows capacity to be increased at short notice was put in place.

4.4.3 Strategic direction and outlookAll operational areas of the Medical Technology & Engineering Plastics segment were optimised, laying the foundations for a continuing positive business performance in medical technology as a global market of the future. The improvements to its fabric and organisation simultaneously increased flexibility and increased the scope of both segments to operate successfully in swiftly changing markets. The products are successfully established on the market and new developments and advanced versions are being systematically promoted with a strong market focus. The Engineering Plastics area, too, now has a very flexible structure, enabling it to respond much better to cyclical changes in the market than was the case


revenue development medical technology & engineering plastics [in EUR million]

2008 38.0

2009 29.0

2010 35.0

2011 39.7

2012 39.4

before the financial and economic crisis of 2008 and 2009. Together with the anticipated good develop-ment of medical technology business, which is much less cyclically exposed, this means the future pros-pects of the CENTROTEC Group’s smallest segment remain excellent.

To improve the basis for further organic growth, EUR 3.7 million (previous year EUR 6.1 million) was in-vested in the segment in 2012. On this basis, revenue growth is again expected for 2013. The EBIT margin should be in line with the previous year, assuming market conditions remain broadly stable. The medium-term goal remains to secure organic revenue growth in the high single-digit figures, with an EBIT margin back up at the level of before the financial and economic crisis.

4.5 Principal investments

The scope of non-fully consolidated investments was substantially reduced in the 2012 financial year through the disposals of the 24.95 % interest in Bond-Laminates GmbH in September and the 26.14 % interest in CENTROSOLAR Group AG at the start of October; since then, the only remaining investment has been the 38.00 % interest in Industrial Solar GmbH.

The financial ratios for the period under review show an investment result of EUR +2.4 million (previous year EUR -19.3 million). This reported amount is the total of the operating results of the investments and the proceeds from the sale of investments realised in the period under review.

Industrial Solar GmbH is a supplier of innovative Fresnel collectors for the solar thermal generation of process heat and refrigeration for industrial applications. The company, which was spun off from the Fraunhofer Institute, is a technological leader in the solar generation of process heat and refrigeration but is still in the start-up phase. The growing significance of energy prices and protecting the climate in industrial processes means there is considerable growth potential in markets worldwide for the solutions offered by Industrial Solar.

For further information on the investment holdings of the CENTROTEC Group, please refer to the Notes section, page 102 onwards.


2008 38.0 118.8 319.3

2009 29.0 128.1 309.5

2010 35.0 112.8 331.8

2011 39.7 116.3 381.8

2012 39.4 102.6 391.8

revenue by segment[in EUR million]


46 Heat pumps

Earth. Environmental energy. Heat pumps. The environmental energy stored in the air and ground ultimately comes from the sun’s rays. Heat pumps use this renewable energy source to generate heating energy and hot water, with minimal input of electrical primary energy needed for driving a compressor.

Heat pumps 47

Brine/water heat pumps:High-efficiency heat pumps made by Wolf, with a wide performance range of 6—16 kW and a COP (coefficient of performance) of up to 4.7, are quiet-running, easy to install and operate, and generate up to 80 % of thermal energy from free environmental energy.

Wolf air/water heat pumps: Wolf’s high-efficiency heat pumps with outputs of 8—14 kW and a COP (coefficient of performance) of up to 3.8 are quiet-running, easy to install and operate, and generate up to 80 % of thermal energy from free environmental energy.

5 Net worth, financial position and financial performance

Compared with the previous year, the group of consolidated companies underwent a significant change in the 2012 financial year following two disposals of investments in associated companies recognised using the equity method. This should be taken into account when comparing the Consolidated Financial State-ments at December 31, 2012 with the prior-year version.

5.1 Net worth

The changes within the balance sheet for the year under review compared with 2011 stemmed mainly from activities to optimise processes and focus on core business, and also from the changes brought about by the appropriation of profit.

The balance sheet total at December 31, 2012 fell by 1.8 % to EUR 418.2 million (previous year EUR 425.7 million). On the assets side the principal changes concerned the EUR 10.0 million reduction in associated companies recognised using the equity method, prompted by the disposal of associated companies, and the reduction in inventories and trade receivables by EUR 5.0 million and EUR 8.6 million respectively through the optimisation of working capital. These decreases were accompanied by a rise in cash and cash equiva-lents of EUR 13.5 million, and in miscellaneous other assets of EUR 4.2 million. On the assets side overall, there was a decrease in non-current assets to EUR 215.7 million (previous year EUR 227.6 million); on the other hand current assets grew slightly to EUR 202.4 million (previous year EUR 198.0 million).

The main changes on the equity and liabilities side concerned the increase in equity. This increase was overwhelmingly down to ploughback and amounted to EUR 20.6 million or 13.1 %. At December 31, 2012 the CENTROTEC Group thus had equity of EUR 178.1 million (previous year EUR 157.5 million). This represented an equity ratio of 42.6 % (previous year 37.0 %), the second-highest level since the IPO.

For further disclosures on the company’s equity, please see the Notes to the Consolidated Financial Statements.


Equity

Financialliabilities

Otherliabilities

equity and liabilities[in EUR million]

2011 2012

425.7 418.2157.5

108.3

159.9

178.1

89.1

151.0

Goodwill Inventories

Intangibleassets Tradereceivables

Property,plantandequipment Cashandcashequivalents

Equityinvestment Other

assets[in EUR million]

2011 2012

425.7 418.269.7 70.0

45.0

95.7

1.569.8

55.1

19.5

61.6

46.8

95.2

11.574.8

15.8

48.1

63.7

5.2 Financial position

Another major change on the equity and liabilities side of CENTROTEC’s balance sheet is the marked reduction in non-current borrowings by more than one-third. This line item was reduced by EUR 22.9 mil-lion to now EUR 43.7 million (previous year EUR 66.6 million), and despite a slight increase of EUR 3.7 million in current borrowings the global borrowings of the CENTROTEC Group decreased to EUR 89.1 mil-lion (previous year EUR 108.3 million). Taking account of cash and cash equivalents, net borrowings were reduced to EUR 27.5 million (previous year EUR 60.1 million), the lowest level since 2001, even though the balance sheet total has increased six-fold over that period. Based on the cash and cash equivalents of EUR 61.6 million available at December 31, 2012 (previous year EUR 48.1 million) and the unutilised credit lines available, the CENTROTEC Group and its individual companies continue to have ample liquid-ity to actively shape their future.

By virtue of the good financial performance and sound balance sheet structure, there was a further year-on-year improvement in key financial ratios. For instance the reduction in net working capital, from EUR 56.0 million to EUR 55.2 million at the balance sheet date, reflected a slightly higher rate of decrease — 1.5 % — than the decline in revenue. There was a further improvement in all debt ratios, and the balance sheet ratios were again optimised. Examples include the dynamic gearing ratio (borrowings/EBITDA), which fell from 2.3 to 1.6, and the surplus of current assets over current liabilities, which increased from a factor of 1.5 to 1.6. Within the non-current category, this ratio even reached 2.0 at the end of 2012 (previous year 1.7). The CENTROTEC balance sheet structure at the year-end reporting date thus affords a wide range of options for the development of the group.

The cash flow from operating activities reached EUR 38.4 million in the 2012 financial year, down 8.3 % on the prior-year total of EUR 41.8 million. This decrease, despite the substantially higher operating re-sult, was mainly attributable to much lower depreciation and amortisation of EUR 20.0 million compared with the previous year’s elevated EUR 24.5 million, along with the reduction in trade payables in 2012 fol-lowing the previous year’s increase. The negative cash flow from investing activities of EUR -4.2 million in 2012 was a substantial improvement on the prior-year EUR -28.9 million. The main non-recurring effects here are the cash proceeds of EUR 13.8 million (previous year EUR 0.0 million) from the disposals of in-vestments — in the main CENTROSOLAR and Bond-Laminates — and the reduction in cash payments for the acquisition of investments to EUR 0 (previous year EUR -7.8 million). With capital repayments (EUR -18.2 million) and the dividend (EUR -1.7 million) remaining virtually constant, the negative cash flow from financing activities fell thanks to the increased proceeds of EUR 9.4 million (previous year EUR


ebit[in EUR million]

2008 32.2

2009 29.0

2010 36.2

2011 24.8

2012 35.2

4.2 million) from the raising of borrowings. This increase also more than compensated for the fall in cash proceeds from the issuance of treasury stock to EUR 0.1 million (previous year EUR 3.3 million). Overall, the financial resources of the CENTROTEC Group at December 31, 2012 were up EUR 23.8 million on the previous year at EUR 49.3 million.

5.3 Financial performance

CENTROTEC saw its financial performance develop positively in the 2012 financial year. Though revenue was down by a marginal 0.8 % at EUR 533.8 million compared with the prior-year total of EUR 537.8 mil-lion, all earnings ratios improved substantially.

The clear improvement in the gross profit ratio to 51.2 % (previous year 49.2 %), together with the reduced other expenses, paved the way for a 17.7 % increase in earnings before interest, tax, depreciation and am-ortisation to EUR 55.2 million (previous year EUR 46.9 million). The EBITDA margin consequently climbed from 8.7 % in 2011 to 10.3 % in 2012. On the other hand the higher personnel expenses worked against the fundamentally positive development in profit. The personnel expenses ratio in the year under review came to 28.3 %, compared with 26.5 % in the previous year. A reduction in depreciation and amortisation to EUR 20.0 million from the previous year’s high level as a result of non-recurring effects (EUR 22.1 mil-lion) led to an operating result (EBIT = earnings before interest and tax) of EUR 35.2 million. This 42.2 % improvement on the previous year led to an EBIT margin of 6.6 % at group level (previous year 4.6 %).

Earnings before tax (EBT) rose thanks to the steady improvement in the interest result and the positive result from investments accounted for using the equity method to EUR 32.1 million. This contrasted with EUR -0.4 million in the previous year, among other things due to a highly negative investment result. With the effective tax rate largely returning to normal at 33.0 %, earnings after tax (EAT) were ultimately EUR 22.3 million (previous year EUR -9.4 million). On the basis of an average of 17,288,796 (previous year 17,164,344) shares outstanding over the course of the year, earnings per share (EPS) are therefore EUR 1.31 (previous year EUR -0.55).


15

10

5

0

quarterly ebit development 2008 – 2012[in million EUR]

Q1 Q2 Q3 Q4

2008 2009 2010 2011 2012

3.5

1.4

5.14.0 4.1

6.4

4.6 5.04.2 4.9

13.012.5

14.4

4.2

14.9

9.310.6

11.612.4

11.4

13.2

oper

atio

nal

In recognition of this sound basis, the Supervisory Board and Management Board of CENTROTEC Sustain-able AG will propose to the Shareholders’ Meeting that an increased dividend of EUR 0.15 (previous year EUR 0.10) per dividend-bearing no par value share be distributed for the 2012 financial year. However in keeping with the successful past practice the bulk of the group’s available profit, which grew consider-ably in the period under review, will continue to be invested in further organic and acquisition-led growth. Please refer to the “Investments” section from page 53 on for further information. The Supervisory Board will nevertheless continue to discuss critically the level and fundamental principle of a dividend with the Management Board, and put its conclusion to the vote at the Shareholders’ Meeting.

6 Employees

The total of now more than 3,000 employees worldwide reflects the progress that the CENTROTEC Group has made in recent years, but these employees have also made a huge contribution in this respect through their dedication. Keeping them motivated and encouraging them further is the basic principle of our cor-porate philosophy, which gives the individual employee considerable latitude. This approach is substanti-ated by the guidelines, which advocate social responsibility, entrepreneurial action and sustainable action coupled with absolute integrity. This fundamentally high level of freedom given to the operating units and individual employees is flanked by a group-wide system of targets and, specifically at management level, forms an important part of the performance-based management, pay and incentives system of the Group and its member companies.

The active, above-average prioritising of further training and the fact that now almost 6 % of the work-force are trainees and apprentices reflect the efforts being undertaken to create future resources of well-qualified, motivated employees as a vital condition of future corporate growth. In addition, the group treats it as a major priority to reconcile working and family life. The disproportionately sharp rise in the number of female employees, who now account for almost one-fifth of the total even in the manufactur-ing units, and the growing number of working hours models tailored to individual requirements reflect the importance attached to employee satisfaction in the CENTROTEC Group. The group manufacturing units’ consistently low proportion of temporary workers when considered against manufacturing industry as a whole, at around 5 %, likewise demonstrates the efforts being made to put the group guidelines into practice and to demonstrate social responsibility. A common feature of all these measures is the desire to safeguard the company’s successful development through a long-term personnel policy.


net income (eat)[in EUR million]

2008 18.6

2009 5.2

2010 25.6

2011 (9.4)

2012 22.3


A total of 3,055 people (previous year 3,015 people) were employed in the comprehensively consolidated companies of the CENTROTEC Group at December 31, 2012. This represented 2,937 full-time equivalents (FTE) (previous year 2,906). This increase is attributable to the expanded capacity in the Climate Systems and Medical Technology & Engineering Plastics segments. When considering the average for the year, it should also be taken into account that the subsidiary Dreyer & Bosse was acquired in the second half of 2011 and was thus included in the figures for a first full financial year in 2012. These increases were partly offset by a marked decrease in employee numbers in the Gas Flue Systems segment as a result of the restructuring measures.

One major change from previous years was that the disposals of investments meant there remained only a small number of employees at companies accounted for using the equity method at the end of the 2012 financial year (previous year 1,110 FTE).

Personnel expenses for the CENTROTEC Group came to EUR 151.0 million in the 2012 financial year (previous year EUR 141.9 million), an increase of 6.5 %. As a result of this, together with the slight fall in revenue compared with 2011, the personnel expenses ratio rose to 28.3 % (previous year 26.5 %). This increase in personnel expenses was caused mainly by the negotiated pay increases taking effect in the period under review, the impact of the refocusing drive approved at the end of 2011 and the gradual ex-pansion of the sales force.

7 Research and development

The Research and Development (R&D) area enjoys a high profile at CENTROTEC, is organised non-centrally in line with the corporate philosophy and is therefore based at the individual production loca-tions. This keeps it closely meshed with business operations in each area. However the R&D area, too, is increasingly collaborating across the individual group companies, reflecting the growing convergence of the individual product solutions. The fundamentally non-central structure ensures that the specific needs of customers remain the focus of R&D activities within the group’s priority of product development, and that changing requirements or new regulatory restrictions can be swiftly and optimally implemented. It remains a key concern of R&D work to gradually improve the energy efficiency and operating conveni-ence of the component systems that are increasingly merging into all-purpose systems spanning the areas of heating, ventilation, climate control and renewable energy solutions for buildings. The develop-ment projects taken forward in close consultation with the Sales area address calls from the individual national companies to improve their market positions through a flexible product policy, in markets that are in some cases widely different and undergoing rapid change.

2008 322 519 1,764 2,605

2009 294 566 1,753 2,614

2010 303 620 1,740 2,663

2011 313 640 1,954 2,906

2012 365 569 2,003 2,937

employees by segment[FTE/Full Time Equivalent on 31/12]


In the period under review the technological refinement of the already very extensive product portfolio took priority over the introduction of new technologies to the range. The refinement of Wolf’s condens-ing boiler technology was one particularly important area of work, which will culminate in a new product generation during the current financial year. A further-improved air handling unit certified to very strict criteria was added to the energy-efficient KG-Top range with the development and market launch of the KG-Top eco. At the Dutch ventilation specialist Brink, the spotlight in 2012 was on the development of an especially user-friendly control module for the market-leading heat recovery ventilation systems. A sec-ond major project in this area was the development of an enthalpy heat exchanger for stabilising humidity in ventilated rooms, due for launch from 2013. In the Gas Flue Systems segment, the focus was on opti-mising the core products in the areas of gas flue and air ducting technology and sustainable building. In the Medical Technology & Engineering Plastics segment, the launch of a comprehensive range of biopsy needles under our own brand brought a key development project to a successful conclusion in 2012.

The 2012 financial year saw the CENTROTEC Group spend a total of EUR 7.3 million (previous year EUR 6.9 million) on R&D activities, which have traditionally been narrowly defined. This increase in absolute terms pushed up the R&D ratio to 1.4 %, from 1.3 % in the previous year.

8 Investment

The capital expenditure of CENTROTEC companies again remained constant in the 2012 financial year at EUR 20.0 million in total. However the previous year’s figure of EUR 21.5 million was not quite matched because investment in the Medical Technology & Engineering Plastics segment in particular was scaled back to normal levels following a one-off increase in the previous year for construction measures, and the level of investment spending in the Gas Flue Systems segment was adjusted following its restructuring. In contrast to the previous year, there was also no acquisition-driven capital expenditure in the 2012 finan-cial year over and above that listed here, which is not acquisition-driven.

At an industrial enterprise such as CENTROTEC, property, plant and equipment traditionally accounts for the bulk of investment. This category amounted to EUR 15.0 group-wide in the period under review, and was therefore a slight 2.1 % down on the prior-year figure of EUR 15.3 million. Investment in intangible assets in 2012 of EUR 5.1 million was 17.9 % down on the previous year’s EUR 6.2 million. The core seg-ment Climate Systems accounts for the lion’s share of the group’s total investment volume, or EUR 12.9 million (previous year EUR 8.6 million). As well as the ongoing investment in maintaining and increasing capacity at all of the segment’s companies but with the emphasis on Wolf, investment in the period was increased by outlay for the future new building of the Dutch subsidiary Brink. Investment for the Gas Flue Systems segment totalled EUR 3.5 million (previous year EUR 6.7 million) in 2012. One priority was investment in the further optimisation of all operating processes at the repositioned Dutch subsidiary Ub-bink. In the smallest segment Medical Technology & Engineering Plastics, the investment volume was well down on the previous year’s total of EUR 6.1 million, which had been inflated by the extensive building work at the main location Fulda, and returned to the average level of earlier years at EUR 3.7 million. The investment priorities here were to create extra capacity at and modernise the German location for engi-neering plastics, and to further optimise medical technology capacity.

The aim of the investment decisions taken by the companies of the CENTROTEC Group is fundamentally to preserve and consolidate a sound, competitive basis of modern, highly efficient development, produc-tion, logistics, sales and administrative units even at a time of widespread economic difficulties, while at the same time nurturing expertise in key areas. CENTROTEC will use this as a springboard to continue


pursuing the strategy of parallel organic and acquisition-led growth, methodically allocating the necessary resources for the further development of the group following an in-depth assessment of the opportunities and risks.

9 Sustainability

The very name of CENTROTEC Sustainable AG provides a pointer to the sustainability of its product port-folio, but also encompasses its own commitment to sustainable action. CENTROTEC has now produced a record of the quality of this action for the second time in a Sustainability Report for 2011, published in the period under review and containing comprehensive data on environmental, corporate and social aspects.

The CENTROTEC Sustainability Report focuses on CO2 emissions. The responsible use of energy and significantly reducing greenhouse gas emissions are a — if not the — key challenge for the 21st cen-tury. Without a climate in which humankind can thrive on this planet, all other efforts to promote e.g. social justice, peace or liberty will pale into insignificance if the very basis of our livelihood is pulled away from beneath us. It is therefore absolutely imperative to use fossil fuels efficiently and to turn to renewables, because they do not produce emissions. The international public has latterly lost sight of this fundamental fact, and this has reduced the pressure on decision-makers to push through the necessary measures and caused precious time to be lost. This has further increased the need to take appropriate action and will necessitate a major effort in a variety of areas in the medium term, at least. In the short term, the focus will be mainly on measures that produce a high saving at low outlay. The building sector, which bafflingly has been virtually disregarded in the past, offers appropriate potential for reducing energy consumption and pollutant emissions. This sector accounts for around 40 % of Germany’s entire energy consumption and is therefore more significant for example than the transport sector, which receives much greater public attention. The very diverse, efficient, user-friendly system solutions in the CENTROTEC product range offer an economical way of saving substantial amounts of fossil fuels and therefore reducing climate-harming pollutant emissions from heating, climate control and ventilation systems in buildings. This approach also reduces dependence on other parts of the world that may be unstable, and safeguards jobs based back home.

In addition to reducing the emissions of its products while in use by the customer, CENTROTEC has taken a raft of measures to reduce its own emissions. Thus, group-wide CO2 emissions in 2011 fell both in absolute terms and actually by a double-digit rate relative to revenue, despite the substantial revenue


2008 3.2 6.9 6.9 17.0

2009 2.1 9.3 6.5 17.9

2010 3.9 10.5 7.2 21.6

2011 6.1 6.7 8.6 21.5

2012 3.7 3.5 12.9 20.0

investments[in EUR million]


growth. Improvements were also achieved in other areas of sustainability. These improvements are the net result of many individual measures, often carried out at a non-central level in keeping with the group philosophy.

One group-wide measure involves the adoption of a video conferencing system at over 25 locations to date, and on a large number of individual computers. The use of video conferences has helped to limit and reduce the volume of travel that would otherwise rise significantly, in line with continuing business growth. As well as the benefits for business administration, such as the working time saved, a faster decision-making process and the travel expenses avoided, there is also a major saving in CO2 emissions. The quest for greater efficiency can thus also produce environmental benefits. A reduced volume of travel would furthermore bring positives by enabling employees to achieve a better work-life balance of occupational and family commitments.

Workshops presenting measures for reducing carbon emissions were also held at all the group’s produc-tion locations in 2011. As well as the energy-saving measures that are often needed purely to save costs, such as the modernisation of lighting, heating and ventilation systems and the use of energy-efficient production facilities, the switch to “green” power, i.e. electricity from renewable sources, has enabled us to pick “low-hanging fruit” — that is to say, make the most of measures that require very little input but offer huge potential for cutting carbon emissions. Over the past two years, three of the eleven production locations have now switched to this form of electricity and another three have firm plans to do so. How-ever the most significant area in terms of cutting carbon emissions is the materials we use. Alongside business administration considerations such as costs, availability and customer acceptability, the topic of sustainability opens up another dimension that needs to be heeded in every sourcing decision because of the potential environmental impact of using various different materials. In future we will fundamentally seek an even more exhaustive dialogue between the group companies in an effort to build on the positive findings of the first workshop.

With regard to the group guideline on social responsibility, alongside the wide-ranging non-central activi-ties of the group companies, some of which go back many years, CENTROTEC is involved in a project through which we tackle our corporate responsibility on the global stage in a very special way — the construction of East Africa’s first solar plant in Kenya. This involvement seeks to build up a fundamentally sustainable area of business that will provide employment for people in the region, while also boosting the local economy in a sustainable way. In early 2011 Ubbink East Africa Ltd., which was established in 2010, became the first company to start making solar modules locally for the East African market. In ad-dition to high-quality products that are tailored to local requirements, we make a particular effort to meet high international standards of employment and environmental protection there. This project is not only economically viable; production locally in East Africa also enables CENTROTEC to offer ecologically ben-eficial products that guarantee future-proof, decent jobs that provide a high standard of training for the local population.

By actively addressing the subject area of sustainability, especially in the context of collecting data for and compiling our own Sustainability Report, an issue that is vital for us all if we are to preserve the very basis of our livelihood is put centre-stage in the minds of our employees; each and every one of them is then enabled and motivated to assess decisions in terms of their sustainable impact. Sustainability will become an increasingly important component of business success for companies, not least because it


also provides them with an opportunity to set themselves apart from and above their competitors. CENTROTEC has responded to this trend at a very early stage, in particular by focusing its product range on energy efficiency in buildings.

Further information on the topic of “sustainability“ within the CENTROTEC Group can be found on its homepage at http://www.centrotec.de/en/sustainability-innovation/sustainability-report.html.

10 Risk report

The CENTROTEC Group has systematically focused on the topic of “sustainability”. The spotlight of the group’s activities in this domain is on the development, manufacturing and sale of system solutions for the energy-efficient heating, ventilation and climate control of buildings, making use of renewable ener-gies. CENTROTEC’s activities thus promote the responsible use of energy, help the environment and exploit the market opportunities arising in this area. These market opportunities are created through accessing new markets or penetrating existing markets with established, improved and new innova-tive product solutions. Core areas are condensing boiler technology, solar thermal and building climate control; integrated systems that require expertise in several different product areas are also becoming increasingly prevalent. The group has been increasingly focusing on its core areas since the end of 2011. CENTROTEC’s objective is to exploit fully the opportunities that present themselves in this context, both through organic growth and through an active acquisitions strategy, while nevertheless guaranteeing the highest possible degree of stability and risk limitation. The latter means in particular that it rigorously ap-plies a strict set of criteria when selecting and analysing takeover options and financing and integrating acquisitions, but is also systematically disposing of non-strategic divisions when the conditions are right. For this strategy, CENTROTEC relies on the one hand on the extensive experience and market knowledge of its group and segment management, and on the other hand on systematically monitoring and steering the risks that this business model entails.

To monitor and control the various risk areas, CENTROTEC implements a group-wide risk management system that is constantly being refined and assessed for effectiveness. This requires all significant com-panies in the group to submit regular reports on the nature, likelihood and potential impact of identified risks, in accordance with the existing guidelines. Operating business is moreover closely monitored by the respective members of the Management Board. With this as the basis, it is possible to initiate an early response within the risk management system and involve various escalation hierarchies right up to the Management Board and Supervisory Board in good time, depending on the potential value of the risk, in order to avoid or hedge risks.

10.1 Risk areas

10.1.1 Risks from the economic environment and the industryThe business performance of CENTROTEC, too, is fundamentally dependent on the wider economic envi-ronment and on general cyclical developments, especially in Europe. With regard to its industry context, CENTROTEC operates in the area of building investment in the broader sense; this had broadly stabilised at a low level in the previous year but the 2012 financial year brought a further contraction in Europe, the group’s main sales region, with Germany the only exception. The already low level of construction activity


experienced a further marked downturn in all areas mainly in the Southern European countries most af-fected by the euro crisis, but also in most Western European countries. By contrast, in Germany housing construction in particular was again buoyant. However commercial construction, in particular publicly funded activities, performed more weakly in 2012 in Germany, too, as was the case in almost all other European countries. Activity in the sphere of building investment serves as an important indicator for CENTROTEC. However, business was latterly able to detach itself to some extent from the general trend in the construction industry by focusing on energy-saving solutions, of which the public is becoming in-creasingly aware. Irrespective of increasingly short-term cyclical fluctuations, CENTROTEC energy-saving solutions are achieving lasting appeal for both new buildings and particularly for the retrofit and renova-tion market as well as for municipal projects. This effect can be attributed to long-term growth in energy-efficient building modernisation as a proportion of the overall market, together with the increased priority given to energy-saving solutions in each construction project.

Statutory framework conditions and public subsidies nevertheless continue to have an influence. For instance a scaling-back of subsidies if the general conditions otherwise remain unchanged could lead to falling revenue or slower revenue growth. A large number of changes were made at various points throughout the year, causing considerable uncertainty among end customers. Nevertheless, with cli-mate protection remaining as pressing a concern as ever, along with the further rise in energy prices probably to substantially higher levels in the medium to long-term, and as a result of growing efforts to promote energy independence, CENTROTEC does not expect any change in the fundamental frame-work for energy-focused building refurbishment. Other European countries, but also other parts of the world, are increasingly adopting many of the measures already practised in Germany, involving increas-ingly stringent requirements or higher levels of subsidies. Specifically in the area of subsidies, however, the financial crisis could prompt certain countries to freeze financial aid or suspend state measures to promote construction activity and protect the climate. Above and beyond these state incentives and directives, there will be growing awareness of and pressure on each individual to actively cut their energy costs while helping the environment, providing a useful basis for maintaining the market’s posi-tive development. The failure of the recent years’ climate change conferences, most recently in Doha, to agree yet on far-reaching joint aims and measures will increase the pressure on both individuals and entire countries to act.

The development in prices for fossil fuels moreover has a major influence on readiness to invest in ef-ficient heating, ventilation and climate technology and the use of renewable energies. The high price level now reached and the further rise specifically in oil, gas and coal prices expected in the medium to long term nevertheless offer more opportunities than risks. As well as the price arguments, the question of independence from suppliers is a factor that should not be underestimated for those considering switch-ing to renewable energies and making savings through energy efficiency. The current debate surrounding the exploitation of unconventional fossil fuels, and specifically the natural gas that is bound up in various types of rock, is to some degree throwing previous assumptions on the resources of fossil energy re-serves and their projected price movements open to question, but has so far focused merely on technical availability and the extent of these resources. The direct and indirect impact on the environment of this form of exploitation, facilitating the continuing unharnessed use of fossil energy, is still going largely un-heeded in most current studies and would substantially reduce the profitability of this form of energy if it were given suitable weight. In the prevailing conditions, however, the increased use of unconventional gas


could take the edge off price rises for fossil fuels in the short term and thereby reduce the economic ne-cessity of modernising systems or using renewables. Notwithstanding the short-term economic benefits, the increased use of such energy sources could seriously aggravate the problem of climate change and will need to be suitably addressed through policy decisions and regulations.

10.1.2 Corporate strategy risksGrowth through acquisitions is one aspect of CENTROTEC’s strategy. The high organic growth of recent financial years in itself harbours risks. One key challenge is to adapt the internal organisation and pro-cesses swiftly to the new, larger entity each time and to integrate the acquired or newly established, predominantly foreign businesses into the corporate structure. If ties between new entities and the exist-ing group are too weak, a loss of transparency and control can ensue. Forcing the corporate culture onto new entities can cause employees to lose their ability to identify with products and companies, ultimately leading to a weakening of the market position and thus of the market value. CENTROTEC therefore strives for a balance between control and entrepreneurial freedom at its group companies. The dovetailing of acquired or newly established entities with the group is promoted by an overarching integration manage-ment approach and continually monitored until the entity is finally fully integrated into the group-wide mechanisms of control and steering. The structure of the group as a whole is continually scrutinised for potential for improvements that are implemented by reorganisation projects in the individual segments, in order to establish a workable basis for the continuing sustained development of the group. This potential reorganisation fundamentally also includes the option of disposing of entities that no longer come within the strategic focus, though the conditions for such disposals are considered very carefully.

Until now, the focus of business has been on core European countries, specifically in Western Europe. The overwhelming proportion of revenue is generated in the eurozone. This emphasis gives rise to limited exposure to risks from changes in foreign exchange rates. Business outside the eurozone and in other countries outside Europe will also become increasingly important. The aim here is to establish a broader basis for sales and thus reduce dependence on the German and Dutch markets. The previously manage-able risks from possible exchange rate movements are hedged selectively within the group by means of appropriate instruments. The fundamental risk of a devaluation of the euro nevertheless goes hand in hand with increased opportunities for exports to countries outside the eurozone. On the other hand an appreciation in the value of the euro could harm the sales prospects of the group’s products, which are made predominantly in the eurozone. In this respect the goal is to reduce the risk by spreading sales markets more widely through internationalisation.

A growing international spread furthermore entails wide-ranging risks arising e.g. from changing political and legal frameworks, transport and processing risks, and cultural differences. For its further expansion, CENTROTEC relies in particular on strong local partners with extensive market and logistics expertise and knowledge of their local context. By aligning the interests of the partners involved and regularly revisiting and examining risk positions in the context of risk management, the market opportunities that arise are thus kept under control and risk minimisation is gradually optimised.


10.1.3 Risks from operating businessCENTROTEC addresses the potential risks in the operating sphere of the group’s individual companies through extensive, ongoing measures.

Reliable deliveries, in particular for supplies procured internationally, are assured on the one hand through close technical cooperation with important suppliers and on the other hand by maintaining at least two sources of supplies in each case. Rising procurement prices constitute another potential risk at the procurement end. Depending on the segment and product area, this risk is controlled by methods such as shoring up long-term supplier relations and corresponding price agreements, and by continually observing the market and optimising procurement sources. Price developments in commodity and supply markets are being actively monitored; at the same time potential for compensating for price increases is being identified through the group-wide profitability improvement programmes and suitable improve-ments implemented.

Potential risks within the production or service areas of the group companies are addressed by means of internal guidelines drawn up at the level of the individual companies, and certification to international quality standards such as ISO 9001, ISO 14001 and ISO TS 16949. However, in line with CENTROTEC’s strategy and as a reflection of their broad operational leeway, the individual group companies always take the most rigorous quality standards in their specific sectors as the benchmark. To safeguard prod-uct quality and minimise the associated risks, quality-critical components of CENTROTEC products are subjected to comprehensive quality checks both during the entire production process and in the end products. The methods and systems used to this end are examined and regularly updated in line with cur-rent standards. The risk of accidents and plant breakdowns is countered by providing suitable training for customers and employees, and implementing accident prevention regulations and task instructions. The risk of production plant breakdowns is addressed by preventive maintenance and ongoing monitoring of the operating parameters. Plant itself is insured against potential forms of loss in line with its value.

The development of innovative products fundamentally entails the risk that the desired outcome may not be achieved despite the expending of considerable resources. To minimise this fundamental development risk, intensive exchanges and peer reviews of product development activities take place between the indi-vidual group companies, as does very intensive market analysis. The internationally growing sales organi-sation is also increasingly called upon to contribute its market knowledge. This helps to identify off-target developments at an early stage and gives top priority to market-led product development work. All capital investments and development projects are in addition evaluated intensively and promptly in the context of group-wide development activities, looking at the overall portfolio and the individual opportunities and risks involved.

At the sales end, there is the potential risk of the loss of important customer relations, in particular with key accounts. Dependence on individual customers is fundamentally reduced by focusing predominantly on products for end users. For example CENTROTEC’s biggest customer accounted for around 3 % of con-


solidated revenue, with all other customers well below that figure. At the level of the group companies, this threshold is nevertheless exceeded in exceptional cases. The loss of contact for instance with a wholesale or key account fundamentally always has a palpable impact on revenue and earnings for both the group and the group company. This risk of dependence is countered by active management of customer relations and by diversifying the sales channels in the various markets. These tasks involve continually monitoring the sales channels in the individual segments and countries for scope for expansion in line with the strat-egy. Revenue dependence on individual customers has furthermore fallen along with the growth already realised, and will continue to decline hand in hand with the future growth that is being targeted.

There is a further risk in the sales sphere from the growing pressure on the prices of CENTROTEC prod-ucts, in particular from existing or new competitors. CENTROTEC believes it is in a strong position in its various segments thanks to its existing technological lead and the market position it has already achieved. The product portfolio is moreover regularly scrutinised for potential for innovations that will safeguard and extend its competitive position. Although there exists an overall risk of price pressure on CENTROTEC products, positions have been achieved and mechanisms set up to keep this area of risk under control.

The customary insurance cover has been taken out to minimise the general risks from operating busi-ness. This includes in essence business interruption, business liability, legal protection, business and property, credit sale, loss of earnings and serial losses insurance, as well as D&O cover for Management Board members, managing directors and non-executive directors. There is in addition special property insurance cover (damage by the elements) for warehouses.

10.1.4 Personnel risksThere is fundamentally the potential risk of losing managers and employees in key positions, which would correspondingly have consequences for the company. CENTROTEC addresses this potential risk on the one hand by adopting a sensitive approach to the integration of newly acquired entities (see “Corporate strategy risks”) and on the other hand by diversifying its personnel base as part of developing the group organisation as a whole. The further development and regular training of employees in their individual specialist areas are supported, and employees are encouraged to show independent initiative in develop-ing and implementing new approaches and methods. As a result, CENTROTEC is able to offer its employ-ees long-term perspectives for development and thus helps to minimise fluctuation in key positions by giving its employees a high level of job satisfaction. These are important measures for guarding against a general future risk of shortages of specialists; this risk is also specifically addressed through training measures for young people that are tailored to the needs of the individual group companies. CENTROTEC furthermore enables Management Board members, managers and employees in key positions to share fi-nancially in the group’s long-term growth prospects through the group-wide stock options scheme, boost-ing loyalty to the group by means of such a long-term incentive system.


In addition, specifically at times of general economic buoyancy there is the risk of excessive rises in costs in the personnel area as a result of high wage and salary increases. This risk is countered by active per-sonnel costs management and trust-based partnership between the workforce and the management in a spirit of mutuality. The consequences of potentially high pay settlements are also cushioned by further revenue rises and the ongoing optimisation of processes throughout the group, but may fundamentally lead to greater pressure on earnings.

10.1.5 Information technology risks In the domain of information technology, it is fundamentally impossible to exclude the possibility that problems will arise with existing systems or future extensions to existing systems, such as introductions of new software releases, or that system failures will hamper business operations. The customary precau-tions and security measures in the IT sector are adopted to limit these risks. The appropriateness of the security measures in information technology is regularly checked and the systems and processes in use adapted to changing requirements if necessary. In addition, a cautious migration approach is adopted for the integration of new business units to avoid major risks to business operations, for instance as a result of incompatibility between systems or inadequate reflection of specific business features. Furthermore, the number of systems used throughout the group is progressively being reduced to avoid possible errors or incompatibility and further optimise systems maintenance.

However, the operating units are increasingly integrated at systems level in line with their business re-quirements. A topical example is the roll-out of a joint ERP system in all companies of the Gas Flue Sys-tems segment since 2009; the focus in 2012 was on the further optimisation of joint processes and on widening the synergy potential.

10.1.6 Financial risksFinancial risks for CENTROTEC result largely from the use of borrowed capital for financing its growth, and especially its acquisitions. The opportunities successfully taken in the past to generate high, steadily rising earnings in this way go hand in hand with the potential risk of falling or even lost earnings, with the corresponding financial consequences. In the financing of external growth, CENTROTEC limits the risk it bears by fundamentally restricting this locally to the entities in question (ring-fenced financing) and con-ducts comprehensive profit and earnings controlling on the current and future profitability of all corpo-rate entities and compliance with the relevant financial ratios. Deviations are thus rapidly identified and any corrective measures needed can be implemented promptly and thoroughly. For financing, the interest rate risks for mostly variable-rate loans are hedged predominantly by means of interest rate derivatives. In the past, CENTROTEC has in addition paid back borrowings according to schedule in order to minimise the resulting financial burdens and maintain sufficient financial leeway.


CENTROTEC responded swiftly to the potential risk of more limited access to financing from the bank-ing sector following the financial crisis, and in 2008 realised an overall concept to safeguard the group’s long-term financing for the next few years. Adjustments to financing are made as required within the individual groups, in line with the needs arising from those groups’ business operations and the funding requirements. Together with the substantial reduction in borrowings over the past few years, there are consequently adequate reserves to keep pursuing the development of the group under our own momen-tum, with additional leeway for seizing any external options that might present themselves.

For more detailed information on the financial situation of the CENTROTEC Group, we refer to the Notes to the Consolidated Financial Statements from page 73.

10.1.7 Miscellaneous risksThe supplying and selling of products, plant and services may expose the CENTROTEC Group and its individual companies to legal risks due to the possibility of deliveries not being as per agreement, and as a result of product liability claims, product defects, quality problems, breaches of intellectual property or the failure to comply with fiscal regulations. Despite comprehensive quality management activities and the corresponding regularly optimised organisational structures, such risks cannot be ruled out alto-gether. To guard against this exposure, warranty provisions are created to the customary extent for our business operations and corresponding product liability insurance cover is taken out, based on figures from experience of failures and corresponding warranties for potential customer claims, and to reflect po-tential accountability. All customer complaints are moreover systematically checked and processed, then investigated with a view to identifying scope for internal optimisation.

There are currently no cases of litigation pending that could entail significant financial obligations, includ-ing ones which could threaten the enterprise as a going concern.

CENTROTEC has a sound knowledge of acquisition and divestment matters, and in conducting such activ-ities examines all processes due diligence; nevertheless, such transactions always harbour certain risks, for which the group does however make provision. For example, appropriate provisions were created for any risks arising from the disposals of investments in 2012.

10.2 Directors’ assessment of the risk situation

The assessment of the risk situation of the CENTROTEC Group is based on ongoing risk management, for which the company management discusses the status of risks and their possible impact and approves any necessary corrective measures, as well as ensuring that the operating units are closely monitored by the appropriate Management Board members. The fundamental risks to business include a great many external risks which the company is unable to influence directly, but the probability and potential impact of which are analysed regularly. There are in addition potential risks attributable to internal factors, for which the management has created instruments and methods so that they can be identified early on and measures to prevent or curb their effect implemented.


The risks mentioned here do, however, go hand in hand with numerous opportunities, which are de-scribed in greater detail in the outlook and the reports on the segments. As matters stand the manage-ment regards the opportunities and risks profile as balanced, with no risks to the company as a going concern. In 2012, the core areas of the group made positive progress and peripheral activities that were experiencing problems were terminated. The detailed current and anticipated future developments in the individual areas of business are described at length in the segment reports. The overall economic situation in Germany was fundamentally stable in 2012, though the economic environment in almost all other sales markets was in some cases much more difficult. Economic activity is expected to weaken both globally and nationally in 2013. This could push important sales markets into recession and keep others in that state. Germany remains easily the most important market for CENTROTEC, and while growth rates there are likewise expected to decline from an excellent level compared with elsewhere in Europe over the past few years, there will probably still be positive growth. The recession could remain limited to individual countries, or spread throughout an entire region. In this environment, forecasting future devel-opments is very difficult. At the start of the 2013 financial year the direction of the economy as a whole is not foreseeable because of the unresolved euro crisis and the many economic challenges that exist worldwide, nor can the consequences for the markets addressed by CENTROTEC be predicted. All in all, however, even if certain sales markets experience an economic slowdown, the unabated rise in energy consumption means the significance of energy conservation and climate protection in the form of innova-tive system solutions in buildings is likely to continue rising worldwide. In order to seize the opportunities that arise from this situation, CENTROTEC has a broad-based market position and an innovative product range. Moreover, as repeatedly demonstrated in the past, the group companies are capable of rising to the challenges presented by an increasingly difficult market through the flexibility that their cost structure and cash flow gives them. The options available to the group include using the flexibility that exists within its production capacity to hire temporary workers and apply flexible working hours models, as well as continually reassessing and adapting investment spending in order to increase capacity and access to new markets in response to demand. As in the past, CENTROTEC will very carefully examine the acquisi-tion options that continue to be available, and will assess such propositions specifically in terms of their viability in the current rapidly changing economic climate. The group’s ongoing profitability improvement programmes will moreover focus on optimising materials and commodities procurement costs in order to actively confront the currently rather elevated prices along with future price rises.

10.3 Disclosures on the internal control and risk management system for financial reporting purposes, pursuant to Section 289 (5) of German Commercial Code

The internal control and risk management system for financial reporting by the CENTROTEC Group aims to identify potential internal sources of error and to limit or eliminate the risks arising from them. In ad-dition to optimising internal processes and procedures, it above all encompasses the entire financial reporting of the CENTROTEC Group. One core function of financial reporting is to steer the group as a whole. Target and deviation analyses are conducted on the basis of the budget and mid-range planning approved by the supervisory bodies. Regular forecasts are made to monitor the changing framework for ongoing business operations.



CENTROTEC’s financial statements are based on a group-wide reporting system. This constitutes the basis for a standardised data reporting process throughout the group. The operating companies’ ac-counting functions are organised non-centrally but are harmonised by means of a group-wide accounting manual that regulates how accounting standards are to be applied in group-wide financial reporting.

The information obtained within a narrow time frame from this comprehensive reporting system provides the basis for active, prompt group steering. The holding of regular Management Board and Supervisory Board meetings and the close support provided for managing directors by the respective Management Board members guarantee that the information obtained in reporting is suitably evaluated, leading to appropriate measures as necessary. Together with the provisions in the articles of incorporation and the individual rules of internal procedure for the Supervisory Board, Management Board and managing direc-tors, this portfolio of reporting and analytical measures creates a coherently functioning overall system. The system’s efficiency and effectiveness are examined by the Management Board at regular intervals, and the system is then revised or widened as necessary.

The group’s Legal department helps to draft or cross-checks all materially significant contracts of group companies.

The auditors of the individual companies, sub-groups and Consolidated Financial Statements examine the internal system of control for financial reporting purposes to the extent that is necessary based on the audit standards and chosen audit strategy, and report on their findings to the Supervisory Board. Sug-gested improvements are taken up by the Management Board and management in order to continually develop and improve the system.

11 Other particulars

11.1 Provisions on the appointment and dismissal of the members of the Management Board and on changes to the articles of incorporation

The Management Board of the company is appointed and dismissed by the Supervisory Board (§§ 84, 85 AktG), which is also responsible for nominating a member of the Management Board as Manage-ment Board Chairman. The Shareholders’ Meeting resolves amendments to the articles of incorporation. The resolutions of the Shareholders’ Meeting require a simple majority of votes cast and, if a majority of shares is required, a simple majority of shares, unless a greater majority or further requirements are stated in law. The same applies to amendments to the articles of incorporation (§§ 179 to 181 AktG).

11.2 Authorisation of the Management Board to issue or buy back shares

11.2.1 Share buy-backPursuant to the resolution of the Shareholders’ Meeting of May 20, 2010 the company is authorised until May 19, 2015 to acquire treasury stock which, together with existing treasury stock, represents up to ten percent of the capital stock at the time of the authorisation taking effect. The price for the acquisition of these shares may not be more than 10 % higher or more than 10 % lower than the closing price in Xetra trading on the Frankfurt Stock Exchange (or in a successor system) for shares of the same class and features on the ten trading days preceding the acquisition. The Management Board has been authorised

to offer all or some of the shares thus acquired to third parties in (part) payment of the acquisition of companies or investments in companies, excluding the shareholders’ right of subscription. The Manage-ment Board has furthermore been authorised to retire the company’s treasury stock without the need for a further resolution to be adopted by the Shareholders’ Meeting. Retirement may be restricted to part of the purchased shares.

11.2.2 Approved capitalBy the shareholders’ resolution of May 22, 2012, the Management Board is authorised, with the consent of the Supervisory Board, to increase the company’s capital stock on one or more occasions by up to EUR 3,000,000 (Approved Capital 2012) up until May 21, 2017 through the issue of new no par value bearer shares in return for cash or non-cash contributions. The Management Board was also authorised, with the consent of the Supervisory Board, to specify the details of the share issue and, in defined condi-tions, to exclude the subscription right (a) for residual amounts, (b) for capital increases for cash if the issuing price of the new shares does not significantly undercut the market price of the shares of the same class and features already listed at the time when the issuing price is finally fixed by the Management Board, in keeping with Section 186 (3), fourth sentence of German Stock Corporation Act, (c) for capital increases for contributions in kind for the granting of shares for the purpose of acquiring (including indi-rectly) companies, parts of companies or interests in companies or assets of other companies, and (d) for issuance to employees of the company.

11.2.3 Conditional capitalConditional Capital I can no longer be exercised due to expiry.

Conditional Capital I therefore remained unchanged at December 31, 2012 and amounts to EUR 21,984, divided into 21,984 no par value shares (previous year EUR 21,984, divided into 21,984 no par value shares).

By resolution of the Shareholders’ Meeting of June 1, 2005 the capital stock is conditionally increased further (Conditional Capital II). The Management Board was authorised to issue warrants for subscription to new bearer shares in the company until December 31, 2011, on one or more occasions. Employees, managing directors and Management Board members of the company and of its affiliated companies pursuant to Section 17 of the German Stock Corporation Act are entitled to subscribe. New shares are created where the options are exercised. These pay dividends from the beginning of the financial year in which the options are exercised. Conditional Capital II at December 31, 2012 amounted to EUR 242,924, divided into 242,924 no par value shares (previous year 244,084 EUR, divided into 244,084 no par value shares).

By resolution of the Shareholders’ Meeting on May 29, 2008 the capital stock is conditionally increased by a further EUR 756,000, divided into 756,000 no par value shares (Conditional Capital III). The Man-agement Board is authorised to issue warrants for subscription to new bearer shares in the company on one or more occasions, until December 31, 2014. Employees of CENTROTEC Sustainable AG as well as employees of affiliated companies as defined by Section 17 of German Stock Corporation Act are entitled to subscribe. The managing directors or Management Board members of the above companies are furthermore entitled to subscribe. New shares are created where the options are exercised. These pay dividends from the beginning of the financial year in which the options are exercised. Conditional


Capital III at December 31, 2012 amounted to EUR 601,984, divided into 601,984 no par value shares (previous year 616,470 EUR, divided into 616,470 no par value shares).

No other disclosures pursuant to Section 315 (4) of German Commercial Code are required.

11.3 Remuneration report

The basic features of the system of remuneration as well as particulars of the group remuneration of in-dividual Management Board and Supervisory Board members are summarised in the remuneration report for the 2012 financial year. It takes account of the provisions of German Commercial Code and of the principles of the Corporate Governance Code. The remuneration report, which includes the particulars of the remuneration of the corporate bodies, is published in the section dedicated to the Corporate Govern-ance Report and is to be regarded as part of this management report; for that reason it is not presented separately or repeated here.

11.4 Rendering of accounts

Some of the particulars provided in the management report, including statements on anticipated rev-enues, earnings and capital expenditures, as well as potential changes in the framework conditions of markets and of the financial position, contain forward-looking statements. These have been formulated on the basis of expectations and estimates by the Management Board with regard to future occurrences that could affect the group. Such future-related statements are intrinsically open to risks, uncertainties, exceptions and other factors that could result in the actual revenues and earnings of CENTROTEC signifi-cantly departing from or falling short of those explicitly indicated or implicitly assumed or described in these statements.

In the rendering of the accounts, the potential for leeway in measurements in the Consolidated Financial Statements was analysed, assessed and handled in such a way as to present figures that the Management Board believes are as fair and reliable as possible. Open, timely and continual communication with the capi-tal market moreover forms part of CENTROTEC’s philosophy, which the rendering of accounts satisfies.

12 Report on post-balance sheet date events

The takeover agreement for the Macedonia-based company Holmak D.O.O.E.L., established in 2005, was concluded in February 2013 by CENTROTEC. This aside, there were no significant events at and after the balance sheet date.


13 Outlook

Over recent years CENTROTEC has significantly extended its overall position in the market for heating, climate control and ventilation solutions along with renewable energy solutions for buildings. The healthy results achieved in a very difficult overall economic environment in 2012 from a European perspective — with the markets that are of interest to CENTROTEC contracting by up to 20 % — supply evidence of this. The revenue and earnings achieved against this backdrop bear testimony to the good overall business performance of CENTROTEC and the strong market position achieved by its principal group companies with their efficient, innovative and user-friendly system solutions. Moreover, the fact that earnings re-turned almost to the record level of 2010 serves to endorse the restructuring measures kicked off in the previous year in the Gas Flue Systems and Medical Technology & Engineering Plastics segments, and the associated decision to focus on core business areas.

The EBIT figure of EUR 35.2 million achieved in 2012, despite revenue falling slightly short of expecta-tions, reflects the significant year-on-year improvement in the operating result, up from EUR 24.8 million in 2011; this improvement had already been forecast at the start of the year and took on firmer contours as the year progressed. On this basis, earnings after tax were also increased, correspondingly leading to earnings per share of EUR 1.31. This is a significant improvement on the prior-year figure of EUR -0.55, which reflected the negative investment result. Compared with the highest previous EPS, which was achieved in 2010 and included a much higher, positive investment result, the adjusted 2012 EPS figure is almost as high. In addition, the group’s operational base underwent further improvements in the period under review in the form of extensive forward-looking investment coupled with a further reduction in net borrowings. As a result, CENTROTEC will remain in a position to build on its fundamentally good market position through organic growth, as well as to seize external opportunities to widen the group’s position strategically.

As the already sound finances have improved still further and business operations have made positive progress, the Supervisory Board and Management Board of CENTROTEC Sustainable AG will again make a proposal to the Shareholders’ Meeting on the distribution of a dividend for the 2012 financial year. In a reflection of the further improvement in profit and finances, an increase in the dividend to EUR 0.15 per dividend-bearing share is pro-posed so that shareholders continue to benefit directly from the group‘s positive development.

In order to continue operating successfully in the global growth market for energy-saving and renewable energy solutions for buildings, the ongoing profitability improvement programmes will maintain their focus on optimising manufacturing and materials costs. They will actively address the price increases affecting materials and maximise the scope for leverage, which is particularly high in that area.


Based on the position achieved, the CENTROTEC Group expects to see revenue growth and a higher operating result for the 2013 financial year. Now that the financial result will no longer be exposed to the major fluctuations of recent years following the disposals of the major investments, the improvement in the operating result will also filter through directly into earnings per share.

The basis for the long-term positive business performance of the CENTROTEC Group is as in previous years and essentially comprises the following:> The long-term rise in energy prices due to limited resources and rising worldwide consumption,> The growing pressure to act swiftly, decisively and comprehensively on climate change in order to hold its negative consequences in check,> Tougher statutory requirements throughout Europe for the energy efficiency of buildings,> The strong market position of the group companies with their established, innovative, energy-efficient solutions for buildings,> The impressive development expertise that is behind the recent and forthcoming market launches of very many new, technologically pioneering products,> The continuing high level of investment in product development and innovations,> Competitive advantages thanks to anticipating accurately the trend towards integrating various solutions for heating, ventilation and climate control technology, as well as the use of renewable energies into integrated system solutions,> Exploiting further synergies within the CENTROTEC Group in operational and strategic areas,> A further improvement to the already sound finances, which provide ample entrepreneurial scope.


14 General statement on the expected development of the group

The continuing very mixed but latterly predominantly weak performance of the markets that are of rele-vance for CENTROTEC and the restructuring measures that were necessary meant the group again faced major challenges in 2012. These were addressed promptly at operating level and did not interfere with the very sound progress achieved by the core business. Furthermore, the drive to restructure and refocus certain areas of the Gas Flue Systems and Medical Technology & Engineering Plastics segments already began to yield initial benefits during the period under review. This laid the foundations for a positive long-term development in business and profit in the corporate areas concerned. Overall, CENTROTEC believes it is well-positioned to achieve this in the international growth market for energy efficiency and renewable energy solutions for buildings, thanks to an extensive portfolio of market-led system solutions, its steadily optimised corporate processes and its customer-focused, internationally expanded sales organisation. On this basis, over the next few years too CENTROTEC will be able to profit by more than the norm from the global megatrend of energy conservation and climate protection, thanks to its integrated system solu-tions for heating, climate control and ventilation technology plus renewable energy solutions for buildings.

Even taking into account the very considerable uncertainties that still surround the overall economic situation, these developments provide a sound basis for maintaining the group’s long-term positive de-velopment which dates back to the IPO in 1998. CENTROTEC thus expects the group as a whole to enjoy profitable revenue growth in 2013. In the medium to long term, too (2014 and beyond), the further devel-opment of the CENTROTEC Group is therefore rated as distinctly positive.


70 Solar thermal

Sun. Renewable energy. Solar thermal. Innovative solar thermal systems use the power of the sun to heat water, provide heating backup and for industrial processes. In this way, the annual energy demand for hot water to supply the home can be reduced by up to 60 %. Concentrating collectors are a cheap, CO2-neutral way to supply process heat for industrial applications such as process steam, solar cooling and power generation.

Solar thermal 71

Industrial Solar Fresnel collector:Industrial Solar’s Fresnel collector produces process heat of up to 400°C and is especially suitable for on-roof installation in the industrial sphere because of its high area usage and low wind load.

Solar calorifier and control: A highly insulated calorifier and an intelligent control system are at the heart of an arrangement that integrates thermal solar energy into modern heating systems.

Wolf solar thermal flat collectors: High-efficiency solar collectors with an innovative absorber and effective insulation trap thermal solar energy, especially in the spring and autumn.

Financial Statements2012

Consolidated Financial Statements 74 Consolidated Statement of Financial Position

75 Consolidated Income Statement

76 Consolidated Statement of Comprehensive Income

77 Consolidated Statement of Cash Flows

78 Consolidated Statement of Changes in Equity

80 Consolidated Segment Reporting

Basic data for the group 84 A. Basic data for the group

85 B. Standards applied

89 C. Consolidation methods

91 D. Foreign currency translation

91 E. Accounting policies

97 F. Financial risk management

100 G. Critical assumptions and estimates

101 H. Segment reporting

101 I. Particulars of the consolidated companies

Explanatory notes on components of the consolidated financial statements 104 J. Explanatory notes on components of the consolidated financial statements 104 Goodwill [1]

106 Intangible assets [2]

108 Property, plant and equipment [3]

109 Investments accounted for using

the equity method, investments

and loans originated by the

enterprise [4]

110 Other assets [5]

110 Deferred tax assets and

tax liabilities [6]

112 Inventories [7]

112 Trade receivables [8]

113 Cash and cash equivalents [9]

113 Shareholders’ equity [10]

116 Pension provisions [11]

118 Provisions [12]

118 Borrowings [13]

120 Other liabilities [14]

121 Supplementary disclosures on

financial instruments [15]

123 Other income [16]

123 Cost of purchased materials and

services as well as change in

inventories [17]

123 Personnel expenses and

total employees [18]

124 Other expenses [19]

124 Interest income and expense [20]

124 Result from equity

investments [21]

124 Income tax [22]

125 Non-controlling interest [23]

125 Earnings per share [24]

126 Segment report and

revenues [25]

127 Cash flow statement [26]

Other particulars 128 K. Other particulars

128 Contingent liabilities and

miscellaneous particulars [1]

128 Significant events occurring after

the balance sheet date [2]

128 Related party disclosures [3]

131 Corporate Governance Code [4]

131 Independent auditors’ fees [5]

131 Date and approval of the financial

statements [6]

132 Independent Auditors’ Report


Assetsin EUR thousand [Notes] 31/12/2012 31/12/2011

Non-current assets

Goodwill 1 69,991 69,738

Intangible assets 2 45,044 46,765

Property, plant and equipment 3 95,677 95,180

Financial investments accountend for using the equity method 4 1,485 11,458

Loans and investments 4, 15 849 1,433

Other financial assets 5, 15 9 206

Other assets 5 1,153 1,156

Deferred tax assets 6 1,540 1,711

215,748 227,647

Current assets

Inventories 7 69,816 74,837

Trade Receivables 8, 15 55,147 63,740

Income tax receivable 1,555 2,400

Cash and cash equivalents 9, 15 61,644 48,146

Other financial assets 5, 15 5,293 4,156

Other assets 5 8,964 4,764

202,419 198,043

Assets 418,167 425,690

Equity and Liabilitiesin EUR thousand [Notes] 31/12/2012 31/12/2011

Shareholders’ equity 10

Share Capital 17,307 17,292

Capital reserves 31,032 30,866

Treasury stock (112) (112)

Retained earnings and profit carryforward 105,518 116,401

Profit attributable to shareholders of CENTROTEC Sustainable AG 22,715 (9,376)

176,460 155,071

Non-controlling interests presented within equity 1,609 2,382

178,069 157,453

Non-current liabilities

Pension provisions 11 24,173 23,485

Other provisions 12 16,755 14,493

Financial liabilities 13, 15 43,725 66,592

Other financial liabilities 14, 15 9,279 11,358

Other liabilities 14 340 376

Deferred tax liabilities 6 14,815 16,399

109,087 132,703

Current liabilities

Other provisions 12 3,662 3,076

Income tax payable 5,767 6,082

Financial liabilities 13, 15 45,414 41,667

Trade liabilities 15 36,868 41,879

Other financial liabilities 14, 15 9,969 11,032

Other liabilities 14 29,331 31,798

131,011 135,534

Equity and Liabilities 418,167 425,690

Financial Statements 75

Consolidated Income Statement

Consolidated Statement of Financial Position

in EUR thousand [Notes]01/01/2012 31/12/2012

01/01/201131/12/2011

Revenues 25 533,781 537,841

Other income 16 11,914 9,644

Changes in inventories of finished goods and work in progress 17 (186) (1,811)

Production for own fixed assets capitalised 3,702 3,284

Cost of purchased materials and services 17 (260,222) (272,339)

Personnel expenses 18 (151,040) (141,878)

Other expenses 19 (82,735) (87,843)

EBITDA 55,214 46,898

Depreciation and amortisation 2, 3 (19,983) (22,128)

Operating income (EBIT) 35,231 24,770

Interest income 20 378 289

Interest expense 20 (5,947) (6,161)

Result from equity investments 21 2,433 (19,302)

Result before income taxes (EBT) 32,095 (404)

Income taxes 22 (9,803) (8,997)

Net income (EAT) 22,292 (9,401)

Profit or loss attributable to non controlling interest 23 (423) (25)

Profit or loss attributable to shareholders of CENTROTEC Sustainable AG 22,715 (9,376)

EPS (Earnings per share in EUR)

Earnings per share (basic) 24 1.31 (0.55)

Earnings per share (diluted) 24 1.30 (0.54)

Weighted average shares outstanding (in thousand units; basic) 10, 24 17,289 17,164

Weighted average shares outstanding (in thousand units; diluted) 10, 24 17,507 17,410


Consolidated Statement of Comprehensive Income


01/01/201131/12/2011

Net income (EAT) 22,292 (9,401)

Exchange Rate differences on translation (351) (71)

Derivative financial instruments 455 797

Income tax relating to components of other comprehensive income 6 (55) (153)

Other comprehensive income, net of tax 49 573

Attributable to:

Non controlling interest (19) (20)

Shareholders of CENTROTEC Sustainable AG 68 593

Total comprehensive income 22,341 (8,828)

Attributable to:

Non controlling interest (442) (45)

Shareholders of CENTROTEC Sustainable AG 22,783 (8,783)


Consolidated Statement of Cash Flows


01/01/201131/12/2011

Net income before interest and taxes (EBIT) 35,231 24,770

Depreciation and amortisation 2, 3 19,983 24,461

Gain/loss on disposal of fixed assets 29 197

Other non-cash items (1,364) 456

Increase/decrease in provisions 2,945 3,555

Increase/decrease in inventories, trade receivables and other assets that cannot be allocated to investing or financing activities 6,462 (942)

Increase/decrease in trade payables and other liabilities that cannot be allocated to invest-ing or financing activities (9,377) 6,498

Interest received 236 668

Interest paid (5,478) (5,884)

Income tax paid (10,297) (11,936)

Cash flow from operating activities 26 38,370 41,843

Acquisition of shares in participations less net of cash aquired 0 (7,780)

Purchase of property, plant and equipment/intangible assets/investments/ finanical assets/loans receivable 2, 3, 4 (19,707) (22,537)

Proceeds from disposal of property, plant and equipment/intangilbe assets/ loans receivable 1,712 1,442

Proceeds from disposals of investments 13,808 0

Cash flow from investing activities 26 (4,187) (28,875)

Proceeds from issuance of shares 10 132 3,309

Proceeds from financial liabilities 9,357 4,193

Repayment of financial liabilities (18,244) (17,842)

Dividend payment (1,728) (1,695)

Cash flow from financing activities 26 (10,483) (12,035)

Change in financial resources* 23,700 933

Foreign currency exchange gain/ loss of the financial resources 65 (14)

Financial resources at the beginning of the financial year 25,530 24,611

Financial resources at the end of the financial year 26 49,295 25,530

* Cash and cash equivalents deducted of credits current account


Consolidated Statement of Changes in Equity

in EUR thousand [Note 10]Share

CapitalCapitalreserve

Treasurystock

Stock optionreserve

Income tax relating

to components of other

comprehensive income

Exchange Rate differences on

translation

Derivative financial

instruments

Retainedearnings and

profit/losscarryforward

Sum otherretained

earnings andprofit/loss

carryforward

Profit attributable to shareholders of

CENTROTEC Sustainable AG

Total capital to shareholders of


Non controlling interest presented

within equityConsolidated

equity

January 1, 2012 17,292 30,866 (112) 2,604 387 (86) (1,347) 114,843 116,401 (9,376) 155,071 2,382 157,453

Transfer to revenue reserves (9,376) (9,376) 9,376

Change from exercise of options 15 117 132 132

Stock option plan 49 153 153 202 202

Dividend payment (1,728) (1,728) (1,728) (1,728)

Net income (EAT) 22,715 22,715 (423) 22,292

Other comprehensive income, net of tax (55) (332) 455 68 68 (19) 49

Total comprehensive income (55) (332) 455 68 22,715 22,783 (442) 22,341

Other changes (331) (331)

December 31, 2012 17,307 31,032 (112) 2,757 332 (418) (892) 103,739 105,518 22,715 176,460 1,609 178,069

January 1, 2011 16,962 27,014 (112) 2,481 540 (35) (2,144) 90,790 91,632 25,748 161,244 (428) 160,816

Transfer to revenue reserves 25,748 25,748 (25,748)

Change from exercise of options 330 2,979 3,309 3,309



Net income (EAT) (9,376) (9,376) (25) (9,401)


Total comprehensive income (153) (51) 797 593 (9,376) (8,783) (45) (8,828)

Other changes 2,855 2,855

December 31, 2011 17,292 30,866 (112) 2,604 387 (86) (1,347) 114,843 116,401 (9,376) 155,071 2,382 157,453


in EUR thousand [Note 10]Share

CapitalCapitalreserve

Treasurystock

Stock optionreserve

Income tax relating

to components of other

comprehensive income

Exchange Rate differences on

translation

Derivative financial

instruments

Retainedearnings and

profit/losscarryforward

Sum otherretained

earnings andprofit/loss

carryforward

Profit attributable to shareholders of


Total capital to shareholders of


Non controlling interest presented

within equityConsolidated

equity

January 1, 2012 17,292 30,866 (112) 2,604 387 (86) (1,347) 114,843 116,401 (9,376) 155,071 2,382 157,453

Transfer to revenue reserves (9,376) (9,376) 9,376

Change from exercise of options 15 117 132 132



Net income (EAT) 22,715 22,715 (423) 22,292


Total comprehensive income (55) (332) 455 68 22,715 22,783 (442) 22,341

Other changes (331) (331)

December 31, 2012 17,307 31,032 (112) 2,757 332 (418) (892) 103,739 105,518 22,715 176,460 1,609 178,069

January 1, 2011 16,962 27,014 (112) 2,481 540 (35) (2,144) 90,790 91,632 25,748 161,244 (428) 160,816

Transfer to revenue reserves 25,748 25,748 (25,748)

Change from exercise of options 330 2,979 3,309 3,309



Net income (EAT) (9,376) (9,376) (25) (9,401)


Total comprehensive income (153) (51) 797 593 (9,376) (8,783) (45) (8,828)

Other changes 2,855 2,855

December 31, 2011 17,292 30,866 (112) 2,604 387 (86) (1,347) 114,843 116,401 (9,376) 155,071 2,382 157,453


Consolidated Segment Reporting

Climate Systems Gas Flue SystemsMedical Technology & Engineering Plastics Consolidation Total

Segment Structure

in EUR thousandIncome Statement [Note 25]

01/01/2012 31/12/2012

01/01/201131/12/2011

01/01/2012 31/12/2012

01/01/201131/12/2011

01/01/2012 31/12/2012

01/01/201131/12/2011

01/01/2012 31/12/2012

01/01/201131/12/2011

01/01/2012 31/12/2012

01/01/201131/12/2011

Revenue from third parties 391,838 381,782 102,569 116,347 39,374 39,712 0 0 533,781 537,841

Revenue from other segments 1,147 1,025 5,671 4,912 196 291 (7,014) (6,228) 0 0

Changes in inventories of finished goods and work in progress (3,366) (2,886) 910 66 2,270 1,009 0 0 (186) (1,811)

Cost of purchased materials (195,954) (196,227) (55,654) (66,632) (15,581) (15,603) 6,967 6,123 (260,222) (272,339)

Personnel expenses (106,668) (97,690) (28,802) (29,092) (15,570) (15,096) 0 0 (151,040) (141,878)

Other expenses and income (46,002) (45,714) (15,832) (20,950) (5,285) (8,251) 0 0 (67,119) (74,915)

EBITDA 40,995 40,290 8,862 4,651 5,404 2,062 (47) (105) 55,214 46,898

Depreciation and amortisation (13,160) (11,975) (4,514) (7,841) (2,309) (2,312) 0 0 (19,983) (22,128)

Segment result (EBIT) 27,835 28,315 4,348 (3,190) 3,095 (250) (47) (105) 35,231 24,770

Interest income 324 248 396 629 38 9 (380) (597) 378 289

Interest expense (3,185) (3,243) (2,320) (2,572) (822) (943) 380 597 (5,947) (6,161)

Result from equity investments (923) (208) 3,356 (19,094) 0 0 0 0 2,433 (19,302)

EBT 24,051 25,112 5,780 (24,227) 2,311 (1,184) (47) (105) 32,095 (404)

Income taxes (9,803) (8,997)

Net income (EAT) 22,292 (9,401)

Profit or loss attributable to non controlling interest (423) (25)

Profit or loss attributable to shareholders CENTROTEC Sustainable AG 22,715 (9,376)

Balance sheet key figures

Assets* 275,482 270,156 95,070 99,827 42,343 38,813 (157) (108) 412,738 408,688

Financial investments accounted for using the equity method 1,485 2,408 0 9,050 0 0 0 0 1,485 11,458

Loans and investmens 849 1,421 0 12 0 0 0 0 849 1,433

Entitlement to income tax rebates** 3,095 4,111

Liabilities 103,162 103,840 20,715 26,529 6,500 7,128 0 0 130,377 137,497

Financial liabilities 89,139 108,259

Income tax payable** 20,582 22,481

Investments

Total investments in property, plant, equipment and intangible assets*** 13,356 31,711 3,461 7,120 3,719 6,145 0 0 20,536 44,976

European euro countries

European non-euro countries Rest of world Consolidation Total

Regional Structure

in EUR thousand 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011


thereof Germany 299,453 292,454 299,453 292,454

Assets**** 399,015 397,318 14,392 22,833 3,274 3,356 (1,609) (1,928) 415,072 421,579

thereof Germany 286,545 275,259 286,545 275,259

Total investments in property, plant, equipment and intangible assets*** 19,929 43,803 398 712 209 461 0 0 20,536 44,976

* Excl. financial investments accounted for using the equity method, loans and investments as well as entitlement to income tax rebates **

** Including deferred tax

*** Incl. goodwill and figures out of business combinations

**** Excl. entitlement of income tax rebates**


Climate Systems Gas Flue SystemsMedical Technology & Engineering Plastics Consolidation Total

Segment Structure

in EUR thousandIncome Statement [Note 25]

01/01/2012 31/12/2012

01/01/201131/12/2011

01/01/2012 31/12/2012

01/01/201131/12/2011

01/01/2012 31/12/2012

01/01/201131/12/2011

01/01/2012 31/12/2012

01/01/201131/12/2011

01/01/2012 31/12/2012

01/01/201131/12/2011


Revenue from other segments 1,147 1,025 5,671 4,912 196 291 (7,014) (6,228) 0 0

Changes in inventories of finished goods and work in progress (3,366) (2,886) 910 66 2,270 1,009 0 0 (186) (1,811)

Cost of purchased materials (195,954) (196,227) (55,654) (66,632) (15,581) (15,603) 6,967 6,123 (260,222) (272,339)

Personnel expenses (106,668) (97,690) (28,802) (29,092) (15,570) (15,096) 0 0 (151,040) (141,878)

Other expenses and income (46,002) (45,714) (15,832) (20,950) (5,285) (8,251) 0 0 (67,119) (74,915)

EBITDA 40,995 40,290 8,862 4,651 5,404 2,062 (47) (105) 55,214 46,898

Depreciation and amortisation (13,160) (11,975) (4,514) (7,841) (2,309) (2,312) 0 0 (19,983) (22,128)

Segment result (EBIT) 27,835 28,315 4,348 (3,190) 3,095 (250) (47) (105) 35,231 24,770

Interest income 324 248 396 629 38 9 (380) (597) 378 289

Interest expense (3,185) (3,243) (2,320) (2,572) (822) (943) 380 597 (5,947) (6,161)

Result from equity investments (923) (208) 3,356 (19,094) 0 0 0 0 2,433 (19,302)

EBT 24,051 25,112 5,780 (24,227) 2,311 (1,184) (47) (105) 32,095 (404)

Income taxes (9,803) (8,997)

Net income (EAT) 22,292 (9,401)

Profit or loss attributable to non controlling interest (423) (25)

Profit or loss attributable to shareholders CENTROTEC Sustainable AG 22,715 (9,376)

Balance sheet key figures

Assets* 275,482 270,156 95,070 99,827 42,343 38,813 (157) (108) 412,738 408,688

Financial investments accounted for using the equity method 1,485 2,408 0 9,050 0 0 0 0 1,485 11,458

Loans and investmens 849 1,421 0 12 0 0 0 0 849 1,433

Entitlement to income tax rebates** 3,095 4,111

Liabilities 103,162 103,840 20,715 26,529 6,500 7,128 0 0 130,377 137,497

Financial liabilities 89,139 108,259

Income tax payable** 20,582 22,481

Investments

Total investments in property, plant, equipment and intangible assets*** 13,356 31,711 3,461 7,120 3,719 6,145 0 0 20,536 44,976

European euro countries

European non-euro countries Rest of world Consolidation Total

Regional Structure

in EUR thousand 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011


thereof Germany 299,453 292,454 299,453 292,454

Assets**** 399,015 397,318 14,392 22,833 3,274 3,356 (1,609) (1,928) 415,072 421,579

thereof Germany 286,545 275,259 286,545 275,259

Total investments in property, plant, equipment and intangible assets*** 19,929 43,803 398 712 209 461 0 0 20,536 44,976

* Excl. financial investments accounted for using the equity method, loans and investments as well as entitlement to income tax rebates **

** Including deferred tax

*** Incl. goodwill and figures out of business combinations

**** Excl. entitlement of income tax rebates**

82 Combined heat and power units

Biomass. CO2-neutral energy. Combined heat and power units. Biomass stores the sun’s energy while at the same time drawing climate-harming CO2 from the atmosphere. When energy from biomass is used, only the same amount of CO2 is released into the atmosphere as has previously been absorbed by the vegetable matter, keeping the cycle climate-neutral. By using the co-generation principle, combined heat and power (CHP) plants produce both power and heat at the point of use, and consequently cut primary energy consump-tion by over one-third compared with generating them separately.

Combined heat and power units 83

Biogas purification and treatment:Dreyer & Bosse biogas purification and biogas treatment systems for feeding biomethane into the natu-ral gas grid cover the entire value chain of biogas energy recovery.

Biogas combined heat and power units: CHP systems made by Kuntschar & Schlüter and Dreyer & Bosse range in performance up to 1.2 MW and run on a broad spectrum of fuels such as biogas, sewage gas and natural gas.

Wolf biomass heating systems: Modern biomass heating systems are easy to operate, have automatic control and often incorporate fully automatic replenishment. They comply with strict controls on waste-gas and particulate emissions and are therefore a timely, future-proof alternative to fossil-fuel heating systems.

84 FinancialStatements

Basicdataforthegroup

TheCENTROTECGroup—hereinafteralsoreferredtoasCENTROTEC—isaninternationalgroupwithsubsidiariesinthir-teenEuropeancountries,twoAsiancountries,oneAfricancoun-tryandonesubsidiaryintheUSA,postingannualrevenueofEUR534million(previousyearEUR538million)and2,937employeesworldwide(fulltimeequivalents)(previousyear2,906FTE).ThefocusofCENTROTEC’sactivitiesisthedevelopment,productionandsaleofthefollowingproductareas:>Heatingsystemsandinparticularcondensingboilertechnol-

ogyforgas,oilandbiomassastheenergysource,togetherwithsolarthermalsystems

>Gasfluesystemsforheatingsystems,madepredominantly fromplasticcomponents>Technicalroofsystems>Ventilationsystemswithandwithoutheatrecovery>Climatecontrolsystems>Heatpumps>Combinedheatandpowerunits,inparticularfuelledby biogasandsewagegas>Medicaltechnologycomponentsandequipment,and>Plasticsemi-finishedproductsandprefabricatedproducts.

Aswellastheexistingbusinesses,theCENTROTECGroupdefinesitsbusinesspurposeascreatingandacquiringnewbusinessareasandcompaniesinwhichenergy-savingproductsaredevel-opedandsold,and/ortheexpertiseofwhichliesinthedomainofmedicaltechnologyproducts,innovativeplastic-basedproductsorgasflueandventilationsystems.

CENTROTECSustainableAGhasbeenlistedontheFrankfurtStockExchangeasapubliclimitedliabilitycompanysinceDecem-ber8,1998.ManyofthecompaniesincludedintheConsolidatedFinancialStatementsneverthelessgobackfurther.Thegroupparent,CENTROTECSustainableAG,Brilon,Germany,islistedinthePrimeStandardintheSDAXindexunderthecodesCEV,WKN540750andISINDE0005407506.CENTROTECSustainableAGisenteredontheCommercialRegisteroftheLocalCourtofArns-berg,Germany,underthenumberHRB2161.Thatgroupparent’sregisteredofficesarelocatedatAmPatbergschenDorn9,59929Brilon,Germany.CENTROTECSustainableAGisnotpartofasuperordinategroup,andistheultimateparentcompanyofthegrouppresentedintheseNotesandConsolidatedFinancialStatements.FurtherfinancialandcorporateinformationonCENTROTECisavailablefromtheaboveaddress,oronthehome-pagewww.centrotec.de.

ThefinancialyearofCENTROTECcorrespondstothecalendaryear.TheincomestatementthereforecoverstheperiodfromJanuary1toDecember31,2012andhasbeenpreparedusingthenatureofexpendituremethod.TheConsolidatedFinancialStatementshavebeenpreparedineuros;unlessotherwiseindicated,theamountsquotedrefertothousandeuros(EURthousand).Formathematicalreasons,theremayberoundingdifferencesof+/-oneunit.

CENTROTEC Sustainable AGNotes to the Consolidated Financial Statementsfor the financial year 2012

A_

FinancialStatements 85

Standardsapplied

TheConsolidatedFinancialStatementsatDecember31,2012havebeenpreparedinaccordancewiththe“InternationalFi-nancialReportingStandards”(IFRS)issuedbytheInternationalAccountingStandardsBoard(IASB),asapplicablewithintheEuropeanUnion(EU),takingaccountofSection315a(1)ofGer-manCommercialCode.AllIFRSstandards,theapplicationofwhichismandatoryforthefinancialyearfromJanuary1,2012,havebeenapplied.

CENTROTECSustainableAG,astheparentcompanyoftheCEN-TROTECGroup,isrequiredtoprepareannualfinancialstatementsinaccordancewiththerequirementsofGermanCommercialCode.

Accounting standards applied for the first time

TheaccountingstandardshavebeenrevisedandpublishedbytheIASB.Theywhollyorpartlyreplaceearlierversionsofthesestand-ards/interpretationsorconstitutenewstandards/interpretations.CENTROTEChasappliedthefollowingIFRSinfullforthefirsttimeorappliedthecorrespondinglyrevisedstandardsinagreementwiththecorrespondingtransitionalprovisionsand—insofarasnecessary—adjustedthecomparativefiguresfor2011inagree-mentwiththenewaccountingstandards:

AmendmenttoIFRS7 TransferofFinancialAssets

AllthestandardsandinterpretationslistedhavebeenadoptedintoEuropeanlawbytheEuropeanUnion.

TheapplicationofthenewstandardsandinterpretationsforthefirsttimehadnoimpactontheConsolidatedFinancialStatementsofthecompanyinthe2012financialyear.

Accounting standards applicable from the 2013 financial year or later

ThefollowingstandardsandinterpretationsissuedbytheIASBhavebeenadoptedintoEuropeanlawbytheEU.Noneofthestandardstobeappliedfromthe2013financialyearorlaterwasappliedearly.

AmendmenttoIAS1 PresentationofFinancialStatements;

PresentationofMattersinOther

ComprehensiveIncome

AmendmenttoIAS12 DeferredTax:RecoveryofUnderlyingAssets

IAS19(revised) EmployeeBenefits

IAS27(revised) SeparateFinancialStatements

IAS28(revised) InvestmentsinAssociatesand

JointVentures

AmendmentstoIAS32 FinancialInstruments:Disclosures—Offset-

tingFinancialAssetsandFinancialLiabilities

B_

AmendmenttoIFRS1 First-timeAdoption—SevereHyperinflation

andRemovalofFixedDatesforFirst-time

Adopters

AmendmentstoIFRS7 FinancialInstruments:Disclosures—Offset-

tingFinancialAssetsandFinancialLiabilities

IFRS10 ConsolidatedFinancialStatements

IFRS11 JointArrangements

IFRS12 DisclosureofInterestsinOtherEntities

IFRS13 FairValueMeasurement

IFRIC20 AccountingforStrippingCostsinthe

ProductionPhase—clarificationofscope

Amendment to IAS 1Inaccordancewiththeamendments,enterprisesmustdistinguishtheitemsshownunderothercomprehensiveincome(OCI)intotwocategories–dependingonwhetherornottheywillbeac-countedforinfutureviatheincomestatement(recycling).Itemsthatarenotrecycled,suchasrevaluationgainsfromproperty,plantandequipment,aretobepresentedseparatelyfromitemsthatwillberecycledinthefuture,suchasdeferredgainsorlossesfromthehedgingofstreamsofpayment.Iftheitemsinothercomprehensiveincomearepresentedbeforetax,enterprisesmuststatethecorrespondingtaxamountseparatelyaccordingtothetwocategories.ThetermusedinIAS1forthestatementofrecognisedincomeandexpensewaschangedto“profitorloss(income)statementandothercomprehensiveincome”.However,accordingtoIAS1othertermsremainpermissible.RetrospectiveapplicationoftheamendmentismandatoryforreportingyearsbeginningonorafterJuly1,2012.Earlierapplicationispermis-sible.Theirapplicationforthefirsttimewillnothaveanymaterialimpactonthenetworth,financialpositionandfinancialperfor-manceofthegroup.

Amendments to IAS 12Theamendmentintroducesabindingderogatingprovisionaccord-ingtowhichincertaincasesanexceptionismadetothebasicprincipleofIAS12.51,accordingtowhichexceptiondeferredtaxesaretobemeasuredwiththeanticipatedtaxconsequencesoftheexpectedmannerofrecoveryoftheunderlyingasset(ordebt).Thisnewarrangementisprincipallyofsignificanceforcoun-trieswheretheuseanddisposalofassetsaretaxeddifferently.Inspecificitisenvisagedthatdeferredtaxassetsandliabilitiesoninvestmentpropertiesmeasuredatfairvalue,intangibleassetsandproperty,plantandequipment(applyingthefairvaluemodelpursuanttoIAS40ortherevaluationmodelwithinthemeaningofIAS16andIAS38)aswellassuchassetsreportedforthefirsttimewithinthecontextofacorporateacquisition—providedthesearetobereportedatfairvalueincludingforthepurposeofsubsequentmeasurement—aretobemeasuredonthebasisof

thefiscalconsequencesofasale,unlessthepartypreparingtheaccountsfurnishesclearevidencethatitwillrealisethecarryingamountoftheassetfullythroughuse.

IAS 19 (revised)TheprincipalchangestoIAS19arethefollowing:

>> Recognition of actuarial gains and lossesActuarialgainsandlossesarerenamedasrevaluationsandaretoberecognisedimmediatelyinothercomprehensivein-come.The“corridorapproach”previouslyusedandimmediaterecognitionthroughprofitandlossarenolongerpermissible.

>> Recognition of past service cost/curtailmentUnderthecurrentrulesofIAS19,thepastservicecostistoberecognisedovertheperioduntilthebenefitsbecomevested.Ontheotherhand,underthenewrulesitisrecog-nisedintheperiodinwhichtheunderlyingcurtailmenttakesplace,inotherwordsitisnolongerspread.

>> Measurement of the pension costInfuture,theannualcostforapensionplaninvolvingplanassetswillincludethenetinterestexpense/income.Thiswillbedeterminedbyadifferentapproachthaninthepast.Forexampleunderthenewrulesinterestisappliedtothedefinedbenefitnetassetsordefinedbenefitnetliabilities.Becauseasingleinterestrateisusedtodeterminedtheinterestonthisnetamount,the“interestexpense”and“expectedreturnonplanassets”previouslydeterminedseparatelyarenowreplaced.Thedefinitionoftheinterestratethatistobeusedindeterminingthenetinterestexpense/incomeremainsunchangedfromtheinterestratethatistobeusedunderthepreviousrulesfordiscountingtheextentoftheliability.

>> Presentation of the income statementAsaresultoftherequirementalwaystorecogniseactuarialgainsandlossesinOCI,thisitemintheincomestatementwillinfuturebedeletedforenterprisesthathavepreviouslyap-pliedthecorridorapproach.Underthenewrulesthedefinedbenefitcostintheincomestatementcomprises“currentser-vicecost”,“pastservicecost,settlementsandcurtailments”andthe“netfinancingexpenseorincome”.

>> Disclosure requirementsInfuturethecharacteristicsofthepensionplans,theamountsrecognisedinthefinancialstatements,aswellastherisksfromdefinedbenefitplans,plansformorethanoneemployerandtheeffectswhichthedefinedbenefitplansmayhaveontheenterprise’scashflow,aretobepresented.

>> Distinction between “short-term” and “other long-term benefits”

Thecriteriafordistinguishingbetweenshort-termandlong-termbenefitsinIAS19differfromthoseinIAS1.Theclassifi-cationofacommitmentpursuanttoIAS19isbasedonwhenthepaymentisexpected,butnotonwhenitmaybecalledinattheearliest.



>> Treatment of costs and taxes from pension plans for employees

Taxesfrompensionplansare–dependingontheirnature–toberecognisedeitherunderthereturnontheplanassetsorinthecalculationofcommitmentsfromdefinedbenefitplans.Administrativecostsfromtheinvestmentofplanas-setsaretoberecognisedaspartofthereturnontheplanassets.Othercostsfortheadministrationofapensionplanaretoberecognisedintheperiodinwhichtheyareincurred.Thisshouldreducethedifferencesthatariseincurrentpractice.

>> Termination benefitsAliabilityforaterminationbenefitisrecognisediftheenter-prisecannolongerwithdrawitsoffertopaysuchabenefitorifcostsarerecognisedforarestructuringwithwhichtermina-tionisassociated.Asaresultofthis,inadeparturefromthecurrentrulesvoluntaryterminationbenefitsmayberecog-nisedatalaterpoint.

TheamendmentstakeeffectforaccountingperiodsforafinancialyearbeginningonorafterJanuary1,2013.Theirapplicationforthefirsttimewillhaveanimpactonthenetworth,financialposi-tionandfinancialperformanceofthegroupbecauseCENTROTEChaspreviouslyappliedthecorridorapproach.

IAS 27 (revised)IAS27ConsolidatedandSeparateFinancialStatementsisre-namedSeparateFinancialStatements;infuturethestandardwillonlyprovideguidanceonseparatefinancialstatements.Theexistingguidelinesforseparatefinancialstatementsremainunchanged.TherulesmustbeappliedfromJanuary1,2013.Ap-plicationforthefirsttimewillhavenoeffectonthenetworth,financialpositionandfinancialperformance.

IAS 28 (revised)ThebindingapplicationoftheequitymethodforjointventureswillinfuturebeinaccordancewiththerequirementsofIAS28,whichpreviouslydealtexclusivelywithassociatesandthescopeofwhichhasnowbeenextendedtoincludetheaccountingofjointventures.AdditionalamendmentstoIAS28nowspecifyforthefirsttimethatifthepartialdisposalofanassociateorjointven-tureisplanned,theportionthatisheldforsaleistobeaccountedforinaccordancewithIFRS5,providedtheclassificationcriteriaaremet.TherulesmustbeappliedfromJanuary1,2013.Applica-tionforthefirsttimewillhavenoeffectonthenetworth,financialpositionandfinancialperformance.

Amendments to IAS 32InDecember2011theIASBmadeamendmentstoimprovethedisclosuresontheoffsettingoffinancialassetsandfinancialli-abilities.TheamendmentsaretobeappliedforfinancialyearsbeginningonorafterJanuary1,2014.Applicationforthefirst

timewillhavenoeffectonthenetworth,financialpositionandfinancialperformance.

Amendment to IFRS 1Theamendmentintroducesanadditionalexemptionruleforcom-paniesthatwereexposedtoseverehyperinflation.TheexemptionruleallowsthemeasurementofvariousassetsandliabilitiesatfairvalueandtheuseofthisfairvalueintheplaceofhistoricalcostintheIFRSopeningbalancesheet.Afurtheramendmentarisesfromtheeliminationoffixeddatesofapplication,i.e.IFRS1wasamendedtoeliminatereferencestofixedreportingdatesforaderogatingprovisionandexemptionruleaffectingbothfinancialassetsandfinancialliabilities.Applicationforthefirsttimewillhavenoeffectonthenetworth,financialpositionandfinancialperformance.

Amendments to IFRS 7InDecember2011theIASBmadeamendmentstoimprovethedisclosuresontheoffsettingoffinancialassetsandfinancialliabilities.TheamendmentsaretobeappliedforfinancialyearsbeginningonorafterJanuary1,2013andforinterimreportingperiodsbeginningwithinthesereportingperiods.Applicationforthefirsttimewillhavenoeffectonthenetworth,financialposi-tionandfinancialperformance.

IFRS 10IFRS10replacestheguidelinesoncontrolandconsolidationinIAS27,ConsolidatedandSeparateFinancialStatementsandSIC12,“Consolidation–SpecialPurposeEntities”.IAS27isrenamed“SeparateFinancialStatements”;infuturethestandardwillonlyprovideguidanceonseparatefinancialstatements.IFRS10changesthedefinitionof“control”toapplythesamecriteriatoallenterprisesindeterminingwhethercontrolexists.Thecoreprinciplethatconsolidatedfinancialstatementspresenttheparentanditssubsidiariesasasingleentityremainsunchanged,asdotheconsolidationmethods.TherulesmustbeappliedfromJanuary1,2013.Applicationforthefirsttimewillhavenoeffectonthenetworth,financialpositionandfinancialperformance.

IFRS 11AsaresultofthenewIFRS,therearenowtwotypesofjointar-rangements:jointoperations,andjointventures.Thepreviousoptionofproportionateconsolidationforjointventureshasbeenabolished.Partnercompaniesofajointventuremustapplytheequitymethodforaccounting.Infuture,enterprisesparticipatinginjointoperationswillhavetoapplyrulesthatarecomparabletothecurrentaccountingprovisionsforjointassetsorjointopera-tions.TherulesmustbeappliedfromJanuary1,2013.Applicationforthefirsttimewillhavenoeffectonthenetworth,financialpositionandfinancialperformance.


IFRS 12IFRS12specifiesthedisclosuresrequiredforenterprisesthatpreparetheiraccountsinaccordancewiththetwonewstandardsIFRS10ConsolidatedFinancialStatementsandIFRS11JointAr-rangements.ThestandardreplacesthedisclosurerequirementscurrentlycontainedinIAS28InvestmentsinAssociatesTherulesmustbeappliedfromJanuary1,2013.Applicationforthefirsttimewillhavenoeffectonthenetworth,financialpositionandfinancialperformance.However,therewillprobablybehigherdis-closurerequirementsforassociates.

IFRS 13IFRS13describeshowthefairvalueistobedeterminedandbroadensthedisclosuresaboutfairvalue.Thestandarddoesnotcontainanyrulesonwhenfairvalueistobeapplied.TherulesmustbeappliedfromJanuary1,2013.Applicationforthefirsttimewillhavenoeffectonthenetworth,financialpositionandfinancialperformance.

IFRIC 20IFRIC20concernsonlystrippingcostsduringtheproductionphaseofasurfacemine.Theinterpretationiseffectiveforfinan-cialyearsbeginningonorafterJanuary1,2013.Earlierapplicationispermissible.Applicationforthefirsttimewillhavenoeffectonthenetworth,financialpositionandfinancialperformance.

ThefollowingstandardsandinterpretationsissuedbytheIASBhadnotyetbeenadoptedintoEuropeanlawbytheEUasatDecember31,2012:

AmendmentstoIFRS1 GovernmentLoans

IFRS9 FinancialInstruments:Classification

andMeasurement

AmendmentstoIFRS9 MandatoryEffectiveDateand

andIFRS7 TransitionDisclosures

AmendmentstoIFRS10, TransitionGuidance

IFRS11andIFRS12 inIFRS10

AmendmentstoIFRS10, InvestmentEntities

IFRS12andIAS27

Improvementsto Annualimprovements(2009-2011cycle)

IFRSs2009-2011 arisingfromthemattersdiscussed

inthiscycle

Amendments to IFRS 1IFRS1wasamendedtogiveIFRSfirst-timeusersthesamesimpli-ficationsinrespectofaccountingforgovernmentloansasexistingusers.TheamendmentiseffectiveforfinancialyearsbeginningonorafterJanuary1,2013.Earlierapplicationispermissible.Applicationforthefirsttimewillhavenoeffectonthenetworth,financialpositionandfinancialperformance.

IFRS 9IFRS9nowenvisagesonlytwocategoriesintowhichfinancialassetsaretobeclassifieduponinitialrecognition:measurementatfairvalue,andmeasurementatamortisedcost.Measurementatamortisedcostrequiresthescheduledholdingofthefinancialassetforthepurposeofcollectingthecontractualcashflows,andthecontractualtermsofthefinancialassetgiveriseonspecifieddatestocashflowsthataresolelypaymentsofprincipalandinter-estontheprincipaloutstanding.Financialinstrumentsthatdonotsatisfytheserequirementsaretobemeasuredatfairvalue.Thecategorisationmadeuponinitialrecognitionmayonlyberevisedinsubsequentperiodsifthebusinessmodelunderwhichtheassetisheldhaschanged.Thestandardenvisagesretrospectiveapplicationtoallexistingfinancialassets,withthecircumstancesatthedateofinitialapplicationdeterminingcategorisationac-cordingtothenewrules.Varioustransitionalruleshavemoreoversimplifiedmatters.TherulesmustbeappliedfromJanuary1,2015.Itremainstobeexaminedwhetherthiswillaffectthenetworth,financialpositionandfinancialperformanceofthegroup.

Amendments to IFRS 9 and IFRS 7TheamendmentwaspublishedbytheIASBinDecember2011.Alongwiththeamendment,themandatoryeffectivedateforIFRS9isspecifiedasJanuary1,2015.Inaddition,theexemptionprovi-sionsoncomparativefiguresandrelateddisclosuresinIFRS7werechanged.Itremainstobeexaminedwhetherthiswillaffectthenetworth,financialpositionandfinancialperformanceofthegroup.

Amendments to IFRS 10, IFRS 11 and IFRS 12TheamendmentstoIFRS10firstandforemostinvolveeditorialclarificationsoftheprocedurefortheretroactiverestatementofcomparativeperiodsifanenterpriseshouldarriveatadifferentdecisiononthegroupofconsolidatedcompaniesunderIFRS10towhenIAS17andSIC12areapplied.Allchangesarisingaretobepostedretroactivelyintherevenuereserveatthestartofthe


Consolidationmethods

ThebalancesheetdateofthecompaniesincludedintheConsoli-datedFinancialStatementsisDecember31,2012.Thelocalfinan-cialstatementsofthedomesticandforeignsubsidiariesincludedinconsolidationhavebeenpreparedaccordingtouniformrecog-nitionandmeasurementprinciplescorrespondingtothoseoftheparentcompany,andadjusted,i.e.pursuanttoIAS27.

Unlessindicatedtothecontrary,theconsolidationmethodsap-pliedintheseaccountshaveremainedunchangedfromtheprevi-ousyear.InconnectionwiththemoredetailedclassificationofnotesontheitemsOtherprovisions,Liabilities,ReceivablesandOtheroperatingincome/expenses,theprior-yearfigureshavebeenadjustedtoreflectthemethodofallocationfor2012.

a_SubsidiariesSubsidiariesareincludedintheConsolidatedFinancialState-mentsinaccordancewiththerulesoncomprehensiveconsolida-tion,insofarascontrollinginfluencethatconstitutescontroloverthefinancialandbusinesspolicyofthesubsidiaryisexercisedbythegroup.Controllinginfluenceisassumedtoapplywhereashareofmorethan50%oftheshareholders’equitywithvotingrightsisheld,andwhereoverhalfthevotingrightsareatthecom-pany’sdisposal.Potentialvotingrightsthatcanbeexercisedorconvertedatthereportingdatearetakenintoaccount.Wherethegroupmaydeterminethefinancialandbusinesspolicyofacom-panyevenifitdoesnotdirectlyholdamajorityofvotingrights,thecompanyinquestionislikewiseincludedinconsolidation.ThedateoffirstorlastinclusionintheConsolidatedFinancialState-mentswithinthecontextoffullconsolidationisfundamentallybasedonthedateonwhichcontrollinginfluenceisachievedorlost.

Businesscombinationsarereportedaccordingtothepurchasemethod.Forthispurpose,allassetsandliabilitiesaswellascontingentliabilitiesoftheacquiredcompanyinexistenceatthetimeofacquisitionaremeasuredatfairvalue,irrespectiveoftheexistenceofminorityinterests.Foreachcorporateacquisition,CENTROTECdecidesonacasebycasebasiswhetherthenon-controllinginterestsintheacquiredenterprisearemeasuredatfairvalueorbasedontheproportionofnetassetsheldintheacquiredenterprise.Theoptionofmeasuringminorityinterestsatfairvalueisnotcurrentlyexercised.Minorityinterestsarethusmeasuredonthebasisoftheproportionalnetassetsallocabletothem,withoutgoodwillfortheportionallocabletominorityinter-

C_firstcomparativeperiod.Furthermore,additionalsimplificationsaregrantedinallthreestandards.InlinewithIFRS10,IFRS11andIFRS12,theamendmentstakeeffectforreportingperiodsbeginningonorafterJanuary1,2013.Voluntaryearlyapplicationispermitted.Applicationforthefirsttimewillhavenoeffectonthenetworth,financialpositionandfinancialperformance.

Amendments to IFRS 10, IFRS 12 and IAS 27TheIASBpublishedthestatementonInvestmentEntitiesonOcto-ber31,2012.Theaimofthisprojectwastodevelopanexceptionforqualifyinginvestmententities(suchasfundsandunittrusts)fromtheregulationtoconsolidatesubsidiaries.Instead,theseassetsshouldbereportedatfairvalue.Theamendmentiseffec-tiveforfinancialyearsbeginningonorafterJanuary1,2014.Ap-plicationforthefirsttimewillhavenomaterialimpactonthenetworth,financialpositionandfinancialperformance.

Improvements to IFRSs 2009-2011TheInternationalAccountingStandardsBoard(IASB)haspub-lishedthefinalamendmentsundertheannualimprovements(2009-2011cycle)resultingfromthemattersdiscussedinthiscycle.Basicallyfivestandards(IFRS1,IAS1,IAS16,IAS32andIAS34)areaffectedbytheseamendments,whichresultinconsequentialamendmentstootherstandards.TheamendmentsapplyforreportingperiodsbeginningonorafterJanuary1,2013,thoughearlierapplicationispermitted.Applicationforthefirsttimewillhavenomaterialimpactonthenetworth,financialposi-tionandfinancialperformance.


taxesareaccountedforanddeferredtaxesarerecognised.Anyintercompanyprofitsfromtradeareeliminatedonaproratabasisifthecompaniesconcernedhadnotleftthegroupasatthebal-ancesheetdate.Ineachcasethedataofthecompanymanagingtheinventoryhasbeentakenasthebasishere.

b_Associated companiesInvestmentsinassociatedcompaniesareincludedintheCon-solidatedFinancialStatementsbytheequitymethodiftheownershipinterestisbetween20%and50%orifthegroupexercisesconsiderableinfluence,butnocontrol,byanothermeans.Undertheequitymethod,sharesinassociatedcom-paniesaremeasuredinitiallyatcost.Thecarryingamountisincreasedordecreasedtorecognisetheinvestor’sprofitshareoftheinvestee’searningsfortheperiodafterthedateofac-quisition.Thesharealsoincludesgoodwillarisenatthedateofacquisition.Ateachbalancesheetdatetheinvestmentisthentestedforimpairmentand,ifimpairmentisestablished,writtendowntothelowervaluedetermined.

Unrealisedgainsfrombusinesstransactionsbetweenthegroupanditsassociatedcompaniesareeliminatedinproportiontothecompany’sownershipinterest;unrealisedlossesarelikewiseeliminatedproportionally,unlessthevalueofthetransferredassethasbeendiminished.Wherethegroup’sshareofthelossofanassociatedcompanyexceedsthecarryingamountofitsinvest-ment,thegroupdoesnotrecordanyfurtherlosses,unlessithasassumedliabilitiesonbehalfoftheassociatedcompanyormadepaymentsforobligationsoftheassociatedcompany.

c_Miscellaneous investmentsInvestmentsoverwhichtheCENTROTECGroupexercisesnocon-trolornosignificantinfluenceandwhereitsownershipinterestisgenerallynotinexcessof20%arerecognisedasavailable-for-salefinancialassets.Moreover,certaineconomicallyinsignificantinvestmentsarelikewiseclassifiedasfinancialassetsavailableforsale.

ests.Thecostofacquisitionisoffsetagainstthecorrespondingproportionofequityheldinthesubsidiaryatthetimeofinitialin-clusionintheConsolidatedFinancialStatements.Thetransactioncostsdirectlyallocabletotheacquisitionareoffsetimmediatelythroughprofitandloss.Thedifferenceinamountbetweenthecostofacquisitionandtheproratanetequityisinitiallyallocatedtotheassets,liabilitiesandcontingentliabilitieswhereitsfairvaluediffersfromthecarryingamountatthetimeoffirst-timeconsolidation.Thedeferredtaxeffectsresultingfromabusinesscombinationarelikewisetakenintoaccount.Anyremainingbal-anceinthecostofacquisitionoverthefairvaluemeasurementofthenetassetsacquiredisreportedasgoodwill.Thisisthentestedforimpairmentatleastonceayearand,ifnecessary,writtendowntothelowervaluedetermined.Sharesintheequityofsub-sidiariesthatarenotallocabletothegroupparentarereportedwithinequityasanon-controllinginterest.Wherethecostofac-quisitionfallsbelowthefairvaluemeasurementofthenetassetsacquired,theremainingdifferenceisrecognisedintheincomestatement.

Whereacquisitionsoccuroveraperiodoftime,theinterestsalreadyheldaremeasuredatfairvalueatthedateofacquisition.ThedifferencebetweenthecarryingamountandthefairvalueisrecognisedintheConsolidatedIncomeStatement.

Conditionalpurchasepricecomponentsareincludedinthede-terminationofthepurchasepriceattheirfairvalueatthetimeoftheacquisitionindependentlyoftheirprobabilityofoccurrence.Theconditionalpurchasepricecomponentsmaybebothequityinstrumentsandfinancialliabilities.Dependingoncategory,changesinthefairvaluearetakenintoaccountuponsubsequentmeasurement.

Intra-grouptransactions,balances,revenues,expensesandearn-ings,gains,lossesaswellasaccountsreceivableandpayablebetweenconsolidatedcompaniesareeliminated.Forconsolida-tionmeasureswithaneffectonincome,theeffectsonincome


Foreigncurrency translation

TheConsolidatedFinancialStatementsarepreparedineuros(EUR),asthisisthefunctionalcurrencyofCENTROTECSustainableAG.

Aspartoftheconsolidationprocess,thefinancialstatementsofforeigngroupcompaniesaretranslatedintoEURwheretheyhavebeenpreparedinadifferentcurrency.Assetsandliabilitiesaretranslatedatclosingrates,andexpenseandincomeitemsaretranslatedataverageexchangeratesfortheperiodunderreview.Anycurrencytranslationdifferencesfromthistranslationintothegroupreportingcurrencyarerecognisedwithinequitywithnoeffectonincome.Intheeventofthedisposalofbusinessopera-tions,translationdifferenceshithertorecognisedincome-neutrallywithinequityarerecognisedwithinincome.Wherenecessary,shareholders’equityistranslatedathistoricalrates.Goodwillhavingarisenfrombusinesscombinationsaswellasadjustmentsofvaluationstofairvaluesareattributedtotherespectiveunits,reassessedintheircurrencyand,ifnecessary,translatedattheexchangeratesvalidatthereportingdate.NoneofthecompaniesincludedintheConsolidatedFinancialStatementsisbasedinahyperinflationaryeconomy.

Thefollowingtableshowstheexchangeratesusedfortheseaccounts:

Foreign currency translation

Rate at reporting date Average rateISO code 31/12/2012 31/12/2011 2012 2011

GBP 0.8161 0.8353 0.8109 0.8679

DKK 7.4610 7.4342 7.4437 7.4506

CHF 1.2072 1.2156 1.2053 1.2326

PLN 4.0740 4.4580 4.1847 4.1206

USD 1.3194 1.2939 1.2848 1.3920

SGD 1.6111 1.6819 1.6055 1.7489

KES 114.1920 111.9720 109.4384 124.2938

RUB 40.3295 41.7650 39.9262 40.8846

D_ Accountingpolicies

a_GoodwillGoodwillistheexcessofthecostofaninvestmentorofassetsoverthemarketvalueoftheacquiree’sassets(onatimepropor-tionbasis)lessliabilitiesandcontingentliabilities.Goodwillisrecognisedasanassetincludedinthecarryingamountsoftheinvestmentatthetimeofacquisitionofanenterprise.Itisal-locatedtothecashgeneratingunitorgroupofcashgeneratingunitswhereitisassumedthattheywillbenefitfromthemerger.Acashgeneratingunitisthesmallestidentifiablegroupofassetsthatgeneratescashinflowsthatarelargelyindependentofothergroupsofassets.Thecashgeneratingunitdoesnotnecessarilycorrespondtodistinctionsmadeundercompanylaw.Cashgen-eratingunitsaredeterminedatthelowestpossiblelevelatwhichmonitoringisperformed,andarenevergreaterthanasegment.Allocationismadeonthebasisofeconomicfeatures.Gainsandlossesfromthedisposalofacompanycomprisethecarryingamountofthegoodwillthatisallocatedtothecompanybeingdisposedof.

Goodwillisassessedforimpairment(valueinuse)onceayearbymeansofanimpairmenttest,irrespectiveofwhetherornotthereisevidenceofimpairment.Ifnecessary,animpairmentlossisapplied.Goodwillisrecognisedatcost,lessaccumulatedimpair-ment.Ifthereasonsforareductionforimpairmentappliedtoanassetonthebasisofanimpairmenttesthavewhollyorpartlyceasedtoexistinasubsequentperiod,thatimpairmentisnotreversedaccordingly.

b_Property, plant and equipmentProperty,plantandequipmentisstatedpursanttoIAS16atcostlessaccumulatedregulardepreciationoccasionedbyuseandimpairment.Subsequentcostsarecapitalisedwheretheseareas-sociatedwithfutureeconomicbenefitthatcanreliablybemeas-ured.Self-createdplantincludessharesofoverheadsinadditiontotheproduction-relateddirectcosts.Providedborrowingcostsareinconnectionwiththeproduction,constructionandacquisi-tionofqualifyingassetsthatnecessarilytakeasubstantialperiodoftimetogetreadyfortheirintendeduseorsale,theyarecapital-

E_


isedaspartofthecostoftheassetpursuanttoIAS23.Deprecia-tionisappliedaccordingtothestraight-linemethod.Ifnecessary,areductionforimpairmentisrecognisedforproperty,plantandequipmentdowntotherecoverableamount.Allexpensesaris-inginconjunctionwiththemaintenanceofproperty,plantandequipmentarerecordedintheincomestatementfortheperiodinwhichtheyareincurred.

Useful lives serving as the basis for depreciation and amortisation by the straight-line method for property, plant and equipment:

Years

Buildings 10-50

Technicalequipmentandmachinery 3-20

Fixturesandofficeequipment 3-15

c_Intangible assetsIntangibleassets:acquiredbrandrights,customerbases,softwareandlicencesarecapitalisedatcostandamortisedinaccordancewiththeiranticipatedusefullives.Inthesameway,softwarede-velopmentsandotherdevelopmentworkarecapitalisedatcostandlikewiseamortisedinaccordancewiththeirrespectiveantici-patedusefullives,providedthefollowingcriteriaaremet:>Completionoftheintangibleassetistechnicallyfeasibleto theextentthatitcanbeusedorsold.>Themanagementintendstocompletetheintangibleasset anduseorsellit.>Thecapabilityexiststouseorselltheintangibleasset.>Itcanbedemonstratedthattheintangibleassetwillprobably yieldfutureeconomicbenefits.>Adequatetechnical,financialandotherresourcesare availabletocompletethedevelopmentandtouseor selltheintangibleasset.>Theexpenditureattributabletotheintangibleassetduring itsdevelopmentcanbemeasuredreliably.Developmentcoststhatdonotmeettheabovecriteriaaswellasresearchcostsarerecogniseddirectlyasexpense.

Intangibleassetsalsocomprisingbrandnamesidentifiedupontheacquisitionofacompanyareamortisedinaccordancewiththeunderlyingexpectationsandnotamortisedonaregularbasisintheeventofunlimiteduse(∞,butnotinfinitely).Thecustomerbasesacquiredinconnectionwithbusinesscombinationsareamortisedonthebasisofanticipateduse,shrinkageratesand

margins,correspondinglytotheanticipatedeconomicbenefits.Profitablesupplyagreementsareamortisedonthebasisoftheunderlyingtermsoftheagreements,correspondingtothean-ticipatedeconomicbenefits.AccordingtoIAS38,developmentcostsaretobecapitalisedasintangibleassetsinsofarascertaincriteriastatedaremetcumulatively.Allexpensesarisingincon-junctionwiththemaintenanceandupkeepofintangibleassetsarerecordedintheincomestatementintheperiodinwhichtheyareincurred.

Useful lives serving as the basis for depreciation and amortisation by the straight-line method for intangible assets:

Years

Brandrights,licencesandcustomerbases 3-20

Patents/technologies 3-25

Softwareandsoftwaredevelopments 3-10

Capitaliseddevelopmentcosts 5-10

Theusefuleconomiclifeofthesoftwarewasoriginallydeterminedas5years.HowevertheusefullifeoftheERPLNInforsoftwarewasincreasedfrom5to10yearsinthe2012financialyearbecausethescopeoftheprojecthassincebeenincreasedsev-eraltimes.Thismeansthatmoreandmorecompaniesareabletoaccessthekernel.UbbinkUKLtd.,CentroplastEngineeringPlasticsGmbH,CENTROTECSustainableAG,CentrotecCompos-itesGmbH,BrinkClimateSystemsB.V.andanumberofminorcompanieswilljointhemin2013.Experiencewiththepredeces-sorsystemBaanIVrevealsthatthecustomaryusefullifeofERPsystemscaneasilyreach10yearsormore.ThemanagementoftheUbbinkGroup(untilnowtheprincipaluser)andtheManage-mentBoardofCENTROTECSustainableAGarethereforeoftheopinionthat10yearsisappropriateasthecustomaryusefullife.ThecumulativeeffectofthischangeinestimateisEUR0.7millionforthe2012financialyearandsubsequentyears.

Impairment of non-monetary assets such as property, plant and equipment and intangible assets: Assetsthataresubjecttodepreciationandamortisationaretestedforimpairmentifcorrespondingoccurrencesorchangesincircumstancesindicatethatthecarryingamountmaypossiblynolongerberealisable.Assetsthathaveanindeterminateusefullife,suchasgoodwill,aretestedannuallyforimpairmentunlessindica-tionsaredetectedearlierthatimpairmentmayhaveoccurred.The


amountbywhichthecarryingamountexceedstherecoverableamountisrecognisedasanimpairmentloss.Therecoverableamountisthehigherofthefairvalueoftheassetlessthecostsofdisposal,orthevalueinuse.Fortheimpairmenttest,assetsarecombinedatthelowestlevelforwhichindependentcashflowscanbeidentified(cashgeneratingunits).Forthedeterminationofthevalueinuse,forecastcashflowsarediscountedattheWACC(weightedaveragecostofcapital)atthebalancesheetdate.Non-financialassets(apartfromgoodwill)wherethecarryingamounthasbeenreducedforimpairmentareinsubsequentyearsexam-inedforarecoveryinvaluetotherecoverableamount,buttonomorethanthescheduledvalues,i.e.withoutimpairmentloss.Thereversalofimpairmentlossesrecognisedinpreviousperiodsisrecognisedwithinincomeimmediately.

d_Associated companies accounted for using the equity method, loans originated by the enterprise and investmentsThebalancesheetitemscompriseinvestmentsinassociatedcompanies,non-associatedcompanies(investments),otherloansoriginatedbytheenterprise,andsecurities.Investmentsinas-sociatedcompaniesarerecognisedusingtheequitymethod.Theothernon-consolidatedinvestmentsaswellassecuritiesareallocatedtothecategory“Available-for-salefinancialassets”andloansoriginatedbytheenterprisetothecategory“Loansandreceivables”.

e_InventoriesInventoriesaremeasuredatthelowerofcostornetrealisablevalue.Rawmaterialsandsuppliesarevaluedattheaveragecost.Workinprogress,finishedgoodsandmerchandisearemeasuredataveragevaluesoronthebasisofcost,usingtheFIFOmethod.Thecostofconversionforworkinprogressandfinishedgoodsconsistsofdirectcostsofmaterials,directlabour,otherdirectcostsaswellasappropriatesharesofproduction-relatedindirectmaterialsandindirectlabourwhichhavearisenasaresultofbringingtheinventoriestotheircurrentlocationandcurrentstate.Itisdeterminedonthebasisofnormalcapacityutilisation.Ap-propriatediscountsareperformedforsales-relatedrisks.Thenetrealisablevalueconstitutestheestimatedsellingpriceintheor-dinarycourseofbusinesslesstheestimatedcostsofcompletionandsaleyettobeincurred.

f_Trade receivablesTradereceivablesandothernon-derivativefinancialassetsareconsideredtobecurrentassetsprovidedtheirmaturitydateis

nomorethantwelvemonthsfromthebalancesheetdate.Theyareallocatedtothecategory“Loansandreceivables”andarerecognisedatamortisedcost.Appropriateimpairmenthasbeenrecognisedforidentifiedrisks,asindicatedbyexperience.

g_Deferred taxDeferredtaxrelatestotaxdeferralsresultingfromtemporallydivergingstatedamountsbetweenthebalancesheetpreparedinaccordancewithIFRSandthetaxbalancesheetsoftheindi-vidualcompanies,aswellasfromconsolidationprocesses.Thedeferredtaxassetsalsoincludetaxrebateclaimsresultingfromtheanticipateduseofexistinglosscarryforwardsinsubsequentyearsandwhicharetoberealisedwithreasonablecertainty.Deferredtaxisdeterminedonthebasisofthetaxrateswhicharelikelytoapplyintheindividualcountriesatthetimeofreversalofthedepartures.Itisfurthermorebasedoncurrentlegislationandordinances.Deferredtaxassetsandliabilitiesarenotdiscounted.Deferredtaxresultingfromtemporarydifferencesinconnectionwithinvestmentsinsubsidiariesandassociatedcompaniesisre-portedunlessdifferencescannotbereversedwithinaforeseeabletimeframeorthetimingofthereversalcanbecontrolledbythecompany.Deferredtaxisfundamentallyclassifiedasnon-currentonthebalancesheet.

Thetaxexpensefortheperiodcomprisescurrentanddeferredtax.Taxisreportedintheincomestatement,unlessitreferstoitemsthathavebeenrecogniseddirectlywithinequityorwithintheotherresult.Inthatinstance,thetaxislikewiserecognisedwithinequityorwithintheotherresult.Thecurrenttaxexpenseiscalculatedusingthetaxregulationsapplicableatthebalancesheetdate(orbeingintroducedshortly)ofthecountriesinwhichthecompanyanditssubsidiariesareactiveandgeneratetaxableincome.Themanagementexaminestaxdeclarationsregularly,aboveallinrespectofmattersthatareopentointerpretation,andifappropriatecreatesprovisionsbasedontheamountsthatareexpectedtobepayabletothetaxauthorities.

h_Cash and cash equivalentsCashandcashequivalentscomprisecashonhand,demanddeposits,anddepositswithamaturityofuptothreemonths.Amountsowedtobanksrepayableondemandformanintegralpartofthegroup’scashmanagement.Forthepurposeofthecashflowstatement,theyarethereforeincludedinthefinancialresourcesalongsidecashandcashequivalentswithamaturityofthreemonths.Theseamountsowedtobanksanddueatanytimeareshownonthebalancesheetasshort-termborrowings.


i_Shareholders’ equityTheissuedcapital(capitalstock)comprisesallnoparvaluesharesissuedbyCENTROTECSustainableAG.Thesearereportedasshareholders’equity.EachindividualsharerepresentsaprorataamountofthecapitalstockofEUR1.

Thechangeintheadditionalpaid-incapitalisattributabletothepremiumsfromtheissuanceofsharesthroughthestockoptionscheme.Transactioncostsincurreddirectlyinconnectionwiththeissuingofnewshareholders’equityarerecognisedasade-ductionfromequityincludingallassociatedincometaxbenefits.Ifagroupcompanyacquirestreasurystock,thecostsincludingancillarycostsandpotentialincometaxeffectsaredeductedfromtheshareholders’shareofequityinthetreasurystockreserveuntilthetreasurystockhasbeenwithdrawnfromcirculation,reis-suedorsold.Intheeventofthereissueorsaleoftreasurystock,thepurchasepricesreceived,includingallassociatedtransactioncostsandincometaxbenefits,arerecognisedinthesharehold-er’sshareofequity.

Otherreservesandprofitcarryforwardessentiallycomprisetheprofitcarryforwardaswellasthevaluesofchangesfromcurrencytranslationrecognisedwithnoincomeeffect,andchangesinin-terestratehedginginstruments,currencyderivativesandreservesforstockoptions.

Thenon-controllinginterestscomprisetheequityportionsal-locabletonon-controllinginterests,includingsharesofprofitsandlosses,aswellaspossibleamountsallocabletothesefromcurrencytranslation.

j_Share-based forms of paymentCENTROTECusesshare-basedformsofpaymentcounterbalancedbyequityinstruments.Stockoptionsaregrantedtoemployees,membersofthemanagementandManagementBoardmembersonthebasisofastockoptionscheme.TheirrecognitionandmeasurementarebasedontheprovisionsofIFRS2.UnderIFRS2,share-basedformsofpaymentaretobereportedatthefairvalueoftheconsiderationreceived.Asthefairvalueofthecon-siderationreceivedcannotbeestimatedreliably,CENTROTECcalculatesthechangestoshareholders’equityindirectly,usingthefairvalueofthestockoptionsgranted.Intheabsenceofmar-ketprices,thisfairvalueisdeterminedwiththeaidofabinominalmodel.Thismodelestimatesthepricethatcouldbeachievedbetweenknowledgeable,willingpartiesinanarm’slengthtransac-tionforthestockoptionsconcernedattherelevantmeasurementdate.AllfactorsandassumptionsthatmarketplayerswouldtakeintoconsiderationindeterminingthepriceandthatarespecifiedbyIFRSareobserved.Insofarasapplicable,itisassumedwhen

determiningthefactorsandassumptionsonwhichthecalcula-tionisbasedthathistoricalvaluesanddevelopmentswilllikewiseapplytofuturedevelopmentsandcanserveasapointofrefer-enceorstartingpointforcalculationparameters.Thevalueofanoptionisdeterminedonaonce-onlybasisatthetimeitisgranted.Subsequentchangestotheparametersaredisregarded.

Theexpensefromshare-basedformsofpaymentisdistributedoverthevestingperiodbythestraight-linemethodasapersonnelexpenseandrecognisedintheadditionalpaid-incapitalforstockoptionsuntiltheoptionisexercisedorlapses.Changesaftertheendofthevestingperiodhavenoeffectonincomeandareonlyrecognisedwithinshareholders’equity.Iftherearetaxeffectsfromshare-basedformsofpayment,thetaxeffectsareshownasaproportionofthepersonnelexpenserecognisedundertaxex-pense.Theexcesssharesaredeferredwithinequityviadeferredtaxassetsasasurplusamountandrecogniseddirectlywithinequityinaseparatereservefordeferredtax.

Incomeaccruedbythecompanyatthetimeofexerciseofstockoptions,lessdirectexpenses,isallocatedtotheissuedcapitalandthepremiumtotheadditionalpaid-incapital.Option-relatedreservescreatedaremoreoverallocatedproratatothead-ditionalpaid-incapitalfortheconsiderationreceivedandfortheirtaxeffects.Cashflowsfromtaxeffectsforshare-basedformsofpaymentarerecordedinthecashflowstatementasallocationstotheadditionalpaid-incapitalassoonasthecashflowfromtherelevanttaxreturnhasbeensettledwiththetaxauthorities.

k_Pension provisionsThepensionprovisionsarecreatedfordefinedbenefitpensionobligationstomanagementandotheremployees,andcalculatedonthebasisofthepresentvalueoffuturecommitmentspursu-anttoIAS19usingtheprojectedunitcreditmethod,takingintoaccountfuturepayandpensionincreasesandthemortalitytablescurrentlyavailable.Avarietyofpensionplansexistwithinthegroup.Inthecaseofexistingplanassets,thepresentvaluedeterminedisreducedbytheirfairvalueandadjustedtoreflectasyetunrecognisedactuarialgainsandunrecognisedpastservicecost.Actuarialgainsandlossesaretakenintoaccountwheretheyexceed10%oftheextentoftheliabilityorvalueoftheasset.Theseareindicatedbyexperienceadjustmentsandchangestoactuarialassumptions.Theamountinexcessofthiscorridorisbookedtooragainstincomeovertheperiodoftheaveragere-mainingworkinglivesoftheactiveworkforce.Pastservicecostisrecognisedimmediatelyasanexpenseunlessitistobedistrib-utedonastraight-linebasisuntilabenefitbecomesvested.ThecorridormethodcannolongerbeusedfromJanuary1,2013,so


allchangesaretoberecognisedincome-neutrallywithintheotherresultinfuture.Inotherwords,ifCENTROTEChadalreadyappliedthemodifiedIAS19atDecember31,2012,thepensionprovisionswouldhaveincreasedbyEUR5.2millionandequitywouldhavedecreasedbyEUR5.2millionasaresultofincome-neutralpost-ingtotheotherresult.

InmanycountriesinwhichCENTROTECemployeesareengaged,thereexistsacontribution-basedstatutorybasicpensionschemethatpaysoutapensiononthebasisofincomeandcontributionsmade.Inthecaseofdefinedcontributionplans,fixedamountsarepaidtofundsoutsidethegroup.Inpayingthecontributionstopublicpensionschemes,CENTROTEChasnofurtherbenefitobli-gations.Inaddition,individualemployeesinthegrouphavetakenoutpolicieswithprivateinsurancecompanieswhicharesubsi-disedincertainrespectsonthebasisofcompanyagreements.Apartfromthepersonnelexpensesforsubsidiesthatareincludedinemployeebenefitcosts,thegrouphasnofurtherbenefitobliga-tions.Thisappliesinparticularifafundoutsidethegroupdoesnotmaintainsufficientassetstosettletheclaimsmadeagainstitfromcurrentandpreviousfinancialyears.

l_Other provisionsOtherprovisionsarecreatedforallpresentobligationsatthebalancesheetdateresultingfrompreviousbusinesstransac-tionsorpastoccurrences,wheretheamountandduedateareuncertain.Theseaccrualsandprovisionsarestatedatthepresentvalueofthemostlikely,reliablyestimableamountofsettlementandarenotnettedagainstrevenueandgains.Thelikelihoodofthecashoutflowmustbemorethan50%(“morelikelythannot”criterion).Provisionsarecreatedonlywherealegalorfactualobligationtothirdpartiesexistsandtheleveloftheprovisionscouldbereliablydetermined.Intheeventofawiderangeofobligationsofasimilarnatureresultingforin-stancefromstatutorywarrantyobligations,theyaredeterminedonthebasisofthisgroupofobligations.Provisionsmayincer-taincircumstancesberecognisedasaliabilityifthelikelihoodofanisolatedobligationmaterialisingwithintheunderlyingoverallgroupisslight.

Theprovisionforwarrantiesshouldlikewisebecreatedforre-workingfreeofcharge,substitutedeliveries,pricereductionsorcompensationpaymentsfornonfulfilment.Itmaybebasedonstatutoryobligationsoronanindependentwarrantycommitment.WithintheCENTROTECGroup,aswellasindividualprovisions,generalprovisionshouldbecreatedifawarrantyclaimmustbeexpectedonthebasisofpastevents.Theflatrateistobedeter-minedindependentlybyeachgroupcompanyonthebasisofpastexperience.

m_Borrowings and trade payablesBorrowingsandtradepayablesareallocatedtothecategory“Financialliabilitiesmeasuredatamortisedcost”.Liabilitiesfromloansareclassifiedascurrentiftheyarerepayablewithinthenexttwelvemonths.

n_LeasesLeaseswhereallopportunitiesandrisksareallocableinsub-stancetothegroupareclassifiedasfinanceleases.Theyaremeasuredatthefairvalueoftheassetatthestartoftheleasetermoratthelowercashvalueofthefutureleasinginstalments.Everyleasepaymentisdividedupintoacapitalandaninterestportion.Leaseswheresignificantportionsoftheopportunitiesandrisksrestwiththelessorareclassifiedasoperatingleaseobligations.Leasepaymentsunderanoperatingleasearerec-ognisedasanexpenseonastraight-linebasisoverthetermofthelease.

o_Financial instrumentsAfinancialinstrumentisanycontractthatgivesrisetobothafinancialassetatoneenterpriseandafinancialliabilityorequityinstrumentatanotherenterprise.Thebalancesheetincludesbothprimaryandderivativefinancialinstruments.Thesettlementdateisdecisivefortheinitialrecognitionofafinancialinstrument.Onlyinthecaseofderivativefinancialinstrumentsisthetradedatedecisive.Afinancialinstrumentisderecognisediftherightstopaymentsfromthefinancialinstrumenthaveexpiredorbeentransferredinfullandthegrouphasinessencetransferredallrisksandrewardsassociatedwithitstitle.

Classification of financial assets

Whenreportedforthefirsttime,afinancialassetisfundamen-tallytobeclassifiedinoneofthefollowingcategories:loansandreceivables,held-to-maturityinvestments,financialassetsatfairvaluethroughprofitorloss,distinguishingbetweenthosethatareheldfortradingandthosethathavebeendesignatedasbelongingtothiscategoryuponinitialrecognition,available-for-salefinancialassets.

Theclassificationdependsontherespectivepurposeforwhichthefinancialassetshavebeenacquired.Themanagementdeterminestheclassificationoffinancialassetsuponrecognitionforthefirsttimeandre-examinestheclassificationateachreportingdate.

Loansandreceivablesincludenon-derivativefinancialassetsthathavedeterminablecashflowsandarenottradedonanac-tivemarket.Ifthereistheintentiontoholdinvestmentswithamaturitydate(e.g.bonds)thataretradedonanactivemarket


untilmaturity,theycanbecategorisedasheld-to-maturityinvest-ments.Financialassetsheldfortradingaretobeallocatedtothecategory“Financialassetsatfairvaluethroughprofitorloss”.Financialinstrumentsareallocatedtothecategory“Available-for-salefinancialassets”iftheyaredesignatedassuchorifallocationtoanothercategoryisnotpossible.

Derivatesarefundamentallytobeclassifiedasfinancialassetsheldfortradingunlesstheyaredesignatedasaneffectivehedginginstrumentforhedgeaccounting(hedgingderivatives).Thelatterdonotfallintoanyoftheabovefourcategories.

Measurement of financial assets

Loansandreceivablesaswellasheld-to-maturityinvestmentsaremeasuredatfairvalueuponinitialrecognition,takingaccountofanytransactioncosts.Theyaresubsequentlymeasuredatam-ortisedcostusingtheeffectiveinterestratemethodandtakingaccountofanyimpairmentnecessary.

Financialassetsatfairvaluethroughprofitorlossandavailable-for-salefinancialassetsaregenerallyrecognisedatfairvaluebothinitiallyanduponsubsequentmeasurement.Inthecaseofavailable-for-salefinancialassets,gainsorlossesfromsubse-quentmeasurement(exceptforimpairmentlosses)arereportedincome-neutrallyinaseparateitemunderequity(revaluationsur-plus)untilthefinancialassetisderecognised.Whenthefinancialassetissold,theaccumulatedmeasurementresultreportedintherevaluationsurplusisliquidatedandrecognisedintheincomestatement.Intheeventofimpairment,therevaluationsurplusisadjustedbytheimpairmentandthesurplusamountreflectedintheincomestatement.Reversalsareperformedincome-neutrallyinthecaseofequityinstruments,butotherwisewithaneffectonincome.Ifthefairvalueofequityinstrumentsthathavebeencategorisedasavailable-for-salefinancialassetscannotbereli-ablydetermined,theyaremeasuredatcost.Noreversalsareperformedinthisinstance.

Reductionsforimpairmentareappliedif,followingrecognitionofthefinancialassetuponitsreceipt,thereisobjectiveevidenceofimpairmentthataffectstheanticipatedfuturecashflowsfromthefinancialinstrument.Theamountoftheimpairmentlossisthedif-ferencebetweenthecarryingamountandthepresentvalueoftheanticipatedcashflows.Inthecaseoftradereceivables,thecarry-ingamountisadjustedbymeansofanimpairmentaccount.Inallothercases,thecarryingamountsarereduceddirectly.

Thecategoriesloansandreceivablesandavailable-for-salefinan-cialassetsareofrelevancefortheCENTROTECGroup.Deriva-tivesaremoreoverdesignatedaseffectivehedginginstrumentsforhedgeaccounting(hedgingderivatives).

Theloansandreceivablescategorycomprisessubstantiallyloans,cashandcashequivalents,andtradereceivables.Theavailable-for-salefinancialassetsincludeinvestmentsandsecurities.

Accounting of hedging relationships

Derivativefinancialinstrumentsarefundamentallyusedwithinthegroupforhedgingtheinterestandexchangeraterisksresultingfromoperatingactivities,financialtransactionsandinvestments,andaredesignatedascashflowhedges.Initialandsubsequentmeasurementareatthefairvalue.Themeasurementresultisbro-kendownintoaneffectiveandanineffectiveportion.Theeffec-tiveportionisrecognisedincome-neutrallyunderaseparateitemwithinequity.Theineffectiveportionofthemeasurementresult,ontheotherhand,isrecognisedintheincomestatement.Theac-cumulatedmeasurementresultswithinequityareliquidatedwithanincomeeffectifthehedgeditemstartstoaffectincome.

Classification of financial liabilities

Financialliabilitiesaretobeclassifiedasbelongingtooneofthefollowingcategoriesuponinitialrecognition:financialliabilitiesatfairvaluethroughprofitorloss,distinguishingbetweenthosethatareheldfortradingandthosethathavebeendesignatedasbe-longingtothiscategoryuponinitialrecognition,financialliabilitiesmeasuredatamortisedcost.

Aswithfinancialassets,theclassificationhereagaindependsontherespectivepurpose.Ifaliabilityisheldfortrading,itistobeallocatedtothecategory“Financialliabilitiesatfairvaluethroughprofitorloss”.Allotherfinancialliabilitiesaretobeclassifiedas“Financialliabilitiesrecognisedatamortisedcost”.

Derivativesarefundamentallyconsideredasfinancialliabilitiesheldfortradingunlesstheyhavebeendesignatedasaneffectivehedginginstrumentforhedgeaccounting(hedgingderivatives).Thelatterdonotfallintoeitheroftheabovetwocategories.

Measurement of financial liabilities

Financialliabilitiesatfairvaluethroughprofitorlossaremeas-uredbothinitiallyandsubsequentlyatfairvalue.Financialli-abilitiesmeasuredatamortisedcostaremeasuredatfairvalue,includingdiscounts,uponinitialrecognition,takingaccountofanytransactioncosts.Theyaresubsequentlymeasuredatamortisedcostusingtheeffectiveinterestratemethod.

EssentiallythefinancialliabilitiesmeasuredatamortisedcostareofrelevancefortheCENTROTECGroup.Derivativesaredes-ignatedaseffectivehedginginstrumentsforhedgeaccounting(hedgingderivatives).


Thefinancialliabilitiesmeasuredatamortisedcostmainlyorigi-natefromtradepayablesandfromthefinancingofthegroup.

Determination of the fair values of financial instruments

Anenterpriseistoclassifyfairvaluemeasurementsusingafairvaluehierarchythatreflectsthesignificanceoftheinputsusedinmakingthemeasurements.Thishierarchycomprisesthreelevels:a)thepricesquotedinactivemarketsforidenticalassetsorli-abilities(andadoptedunchanged)(Level1);b)inputsotherthanquotedpricesincludedwithinLevel1thatareobservablefortheassetorliability,eitherdirectly(i.e.asprices)orindirectly(i.e.de-rivedfromprices)(Level2);andc)inputsfortheassetorliabilitythatarenotbasedonobservablemarketdata(non-observableinputs)(Level3).

Thefairvaluescarriedonthebalancesheetgenerallycorrespondtothemarketpricesofthefinancialassetsandliabilities(Level1).Ifnomarketpricesareavailable,theyarecalculatedwiththeaidofacceptedvaluationmodels(Level2).IntheCENTROTECGroup,securitiesthataremeasuredatmarketpricescomeunderLevel1.ThefinancialderivativesforwhichthefairvalueisdeterminedwiththeaidoftheDCFmethodcomeunderLevel2.Therelevantmarketprices,interestratesandinterestratevolatilitiesobservedatthebalancesheetdatesandobtainedfromacceptedexternalsourcesserveastheinputparametersforthismethod.Therearenootherfinancialinstrumentsthatarecarriedatfairvalue.

p_Revenue recognitionRevenueinparticularreflectsthefairvalueoftheconsiderationreceivedorstilltobereceivedfordeliveriesandservicesinthenormalcourseofbusiness.Itisrealisedifitisprobablethattheeconomicbenefitsassociatedwiththetransactionwillflowtothegroupandtheamountoftherevenuecanbemeasuredreliablyandhasproceededfromitspayment.RevenueisrecognisednetofVATanddiscounts,andaftereliminationofintra-grouptrans-actions,whendeliveryhastakenplaceandtransferofrisksandrewardshasbeencompleted.Revenueforservicesisrecordedintheperiodinwhichtheservicewasrendered.

q_Financing costsFinancingcostssuchasinterestarerecognisedasincomeorexpensetime-proportionallyandonanaccrualbasisthatreflectsthetermsoftheassetorliability,usingtheeffectiveinterestratemethod.

r_Dividends Dividendssuchasdividendrevenuefrominvestmentsandshare-holders’entitlementstodividendpaymentsarerecognisedaspay-mentswhentherighttoreceivepaymentarises.

Financialriskmanagement

a_Financial risk factors

Financial risk management objectives and policies

TheCENTROTECGroupoperatesinternationally.Inviewofthevarietyofitsactivities,thegroupisexposedtoalargenumberoffinancialrisks.Wetakerisktomeanunexpectedoccurrencesandpossibledevelopmentsthatadverselyaffecttheattainmentofsettargetsandexpectedprogress.Risksthathaveamate-rialinfluenceonthenetworth,financialpositionandfinancialperformanceareofrelevance.Thegroup’sriskmanagementsystemanalysesvariousrisksandattemptstominimisenegativeeffectsonthefinancialpositionofthegroup.Riskmanagementispractisedinthefinancedepartmentsonthebasisofexistingguidelines.Riskmanagersidentify,measure,assessandsupportthesteeringofpotentialsourcesofrisks.

Inmeasuringandcontrollingsignificantindividualrisks,thegroupdistinguishesbetweencredit,marketandliquidityrisks.

Credit risk

Wetakecreditrisktomeantheriskofalossfollowingthedefault-ingordeteriorationincreditworthinessofabusinesspartner.Themaximumcreditriskcorrespondstotheaggregateofthecarryingamountsoffinancialassetsonthebalancesheetwhicharerec-ognisednetofreductionsforimpairment,plusthesesamereduc-tionsforimpairment.TradereceivablesexistmainlyinrespectofcustomersinGermanyandtheNetherlands.

Impairmentoftradereceivablesisappliedaccordingtouniformrulesandcoversalldiscerniblecreditworthinessrisks.Portfolioimpairmentwascreatedforlossesthathavematerialisedbutnotyetbeenidentified.Forfurtherdisclosuresonimpairmentandthematuritiesstructureofreceivables,werefertothedisclosuresontradereceivables.

Creditrisksregardingaccountsreceivableareinessencelimitedbytheapplicationofcreditapprovals,creditinsurance,creditlim-itsandmonitoringprocedures.Thelevelofacreditlimitreflectsthecreditworthinessofacounterpartyandthetypicalsizeofthetransactionvolumewiththatcounterparty.Theassessmentofcreditworthinessisbasedontheonehandoninformationfromexternalcreditreportingagenciesandontheotherhandoninter-nallyacquiredpastexperienceindealingwiththecounterpartyinquestion.Withregardtoreceivablesthatareneitheroverduenorimpaired,thereisnoevidenceatthereportingdatethatthedebt-orswillnotmeettheircommitmentsfromthesereceivables.

Asaresultofthelargenumberofcustomersinvariouscustomergroupsandtheirinternationalstructureandtheapplicationofcreditinsurance,thecreditriskoftradereceivablesisdiversified.CENTROTEChasnosignificantconcentrationofcreditriskwithanysinglecustomer.Thelargestcustomerinthegroupaccountsforaround3%ofrevenue(previousyeararound3%).

F_


Liquidity risk

Wetaketheliquidityriskinthenarrowersensetomeantheriskofbeingunabletomeetcurrentorfuturepaymentcommit-mentsoronlybeingabletomeetthemonunfavourableterms.Thegroupgeneratesfinancialresourcespredominantlythroughitsbusinessoperations.Theliquidityriskiscontrolledbymain-

tainingadequatelevelsofcashandunutilisedcreditlineswithbanks.Allcontractualloanarrangementsarecontinuouslymoni-tored.Thefollowingtableshowsthecontractuallyagreed,undis-countedcashflowsfromfinancialinstruments.Variableinterestpaymentswerestatedattheratesdeterminedatthereportingdate.Foreigncurrencyamountsweretranslatedusingthespotrateatthereportingdate.

Therearemoreoverthefollowinganticipatedoutflowsofliquidityfromthederivativesconcluded:

Market risk

Wetakethemarketrisktomeantheriskofalossthatmayariseasaresultofachangeinmarketparametersthathaveabearingonmeasurement(exchangerate,interestrate,price).

ThemarketrisksfromcurrencytranslationwithinCENTROTECarelimited,asthetransactionstakeplaceprincipallyineurozonecountries.However,agrowingportionofbusinessactivitiesistak-ingplaceinEuropeancountriesoutsidetheeurozone,particularlyEasternEurope,butthemarketsoutsideEuropearealsocoming

Liquidity analysis (including forecast on interest payments)

Of which Total Of which Of which Of which maturity outstanding maturity less maturity maturity over in EUR ’000 amount than 1 year 1 to 2 years 2 to 5 years 5 years

2011 181,911 97,251 47,495 25,183 11,982

2012 150,777 94,141 24,256 24,134 8,246

Of which Total Of which Of which Of which maturity outstanding maturity less maturity maturity over in EUR ’000 amount than 1 year 1 to 2 years 2 to 5 years 5 years

2011 1,675 844 620 152 59

2012 1,459 988 227 180 64

increasinglyintofocus.Thisgeographicalexpansiongivesrisetolimited,manageableexposuretomarketrisksfromchangesinin-terestandexchangerates.Thegroupthereforeusesinstrumentsforhedgingforeigncurrencyrisksonlyselectively.

Iftheeurohadgained10%invalueagainsttheprincipalforeigncurrenciesforCENTROTECatDecember31,2012,earningswouldhavebeenhigherbyEUR2thousand(previousyearEUR457thousandlower).Iftheeurohadlost10%invalue,earningswouldhavebeenlowerbyEUR5thousand(previousyearEUR521higher).

Currency sensitivity

Sensitivity if Rate if Sensitivity ifin EUR ’000 Rate at Rate if EUR gains EUR gains EUR loses EUR losesCurrency reporting date 10 % in value 10 % in value 10 % in value 10 % in value

GBP 0.8161 0.90 (22) 0.73 26

DKK 7.4610 8.21 77 6.71 (94)

CHF 1.2072 1.33 2 1.09 (3)

PLN 4.0740 4.48 (157) 3.67 193

USD 1.3194 1.45 52 1.19 (64)

SGD 1.6111 1.77 1 1.45 (2)

KES 114.192 125.61 49 102.77 (61)

Total 2 (5)


Iftheeurohadgained10%invalueatDecember31,2012,shareholders’equitywouldhavebeenEUR207thousandhigher(previousyearEUR237thousandlower)or,ifithadlost10%invalue,EUR252thousandlower(previousyearEUR236thou-sandhigher).Thedeterminationofcurrencysensitivitiestookaccountofallsignificantfinancialinstrumentswherethecur-rencyofthecontractisnotthesameasthefunctionalcurrencyoftheCENTROTECGroup.Thecalculationsdonotcontaincur-rencytranslationrisks,nordeferredandactualtaxes.

Themarketrisksfrominterestratechangesstempredominantlyfromrate-sensitivefinancialassetsandliabilitiesaswellascashandcashequivalentswhereinterestratechangesresultinchangesintheanticipatedcashflows.Tohedgeagainstadverseinterestratemovements,interestratecapsandinterestswapshavebeenconcludedinordertohedgeagainstthecashflowrisksofloanswithvariableinterestrates;theycanbedesignatedcashflowhedgesinaccordancewithIAS39.Forfurtherparticularsofthehedginginstrumentsused,pleaserefertothedisclosuresonthederivativefinancialinstruments.

Ifmarketinterestrateshadbeen100basepointshigherorloweratDecember31,2012,earningswouldhavebeenEUR131thou-sand(previousyearEUR25thousand)lowerorEUR303thousand(previousyearEUR181thousand)higher.Shareholders’equitywouldcorrespondinglyhavebeenEUR391thousand(previousyearEUR788thousand)higherorEUR102thousand(previousyearEUR624thousand)loweratDecember31,2012.

Allsignificantvariable-interestreceivablesandliabilitiesfrompri-maryfinancialinstrumentsoftheCENTROTECGroupaswellascashflowsfromderivativefinancialinstrumentsweretakenintoac-countindeterminingthesensitivityofearningstointerestrates.Eq-uitysensitivitywascalculatedonthebasisofhypotheticalchangesinthemarketvalueofthederivativesdesignatedashedges.

OtherrisksaffectingthepricesoffinancialinstrumentsexistfortheCENTROTECGroupaboveallintheformofmarketprices.

However,atthebalancesheetdatetherewerenosignificantinvestmentsinlistedcompaniesthatwerenotconsolidatedoraccountedforbytheequitymethod.Thenear-moneymarketfundsreportedundersecuritiesarenotexposedtoanysignificantfluctuationsinvalue.

Operating risks

Throughitsoperatingactivities,thegroupisexposedtomarketpricerisksintheformofcommoditypricerisks.Thesemayhaveanegativeeffectonthenetworth,financialpositionandfinancialperformance.CENTROTECassessestheserisksonaregularbasisbymonitoringchangesinkeyindicatorsaswellasmarketinforma-tion.Thesemarketpricerisksarecontrolledpredominantlyviaroutinebusinessoperationsandfinancingactivities.

CreditrisksontheprocurementsidearelimitedinthecaseofCENTROTEC.Thereareagreatmanysuppliersformanyrawma-terialsandsupplies.Incriticalareasofprocurement,atleasttwosourcesofsupplyexistinvirtuallyeverycase.

b_Capital risk management

Thegroup’saimswithregardtocapitalmanagementaretomaintainthecompanyasagoingconcern,inordertoprotecttheinterestsandexpectationsofourshareholders,employeesandotherstakeholders.Anotheraimistomaintainanoptimumcapitalstructureinordertoreducethecapitalcostsandcontroltherisks,buildinginapremiumformaintainingfinancialflexibility.Tominimiserisks,afinancingstructureisbeingestablishedinwhichthefinancingoftheindividualpartsofthegroupisring-fenced.Itisnecessarytoensurethatbothinternalandexternalgrowthprospectsandopportunitiescanberealisedbypartsofthegroupatanytime.Potentialmeasuresforinfluencingthecapitalstructuremayconcernbothequity(e.g.ploughback)anddebt(e.g.throughtheraising/repaymentofloans).Thetargetequityratioshouldnotnormallybebelow20%.

Figures in EUR ’000 31/12/2012 31/12/2011 31/12/2010 31/12/2009 31/12/2008

Shareholders’equity 178,069 157,453 160,816 132,674 127,804

Long-termdebt 109,087 132,703 131,178 144,077 155,276

Short-termdebt 131,011 135,534 107,567 102,895 95,304

Balancesheettotal 418,167 425,690 399,561 379,646 378,384

Equityratio 42.6% 37.0% 40.2% 34.9% 33.8%

Debtratio 57.4% 63.0% 59.8% 65.1% 66.2%


Criticalassumptionsand estimates

Allassumptions,whetherclassifiedascriticalornot,mayinflu-encethereportednetworthorfinancialperformanceoftheCENTROTECGroupaswellastherepresentationofcontingentreceivablesandliabilities.Assumptionsaremadecontinuallyandarebasedonpastexperienceand/orotherfactors.Theseincludeexpectationsregardingthelikelihoodofeventsoccurring,formedintheprevailingcircumstances.Estimatesrelatetoaffairsthatarehighlyuncertainatthetimeofrecognitionorupuntiltheprepa-rationofthefinancialstatementsTheyalsoincludealternativeassumptionsthatcouldhavebeenusedinthecurrentperiod,orthepotentialchangestoassumptionsfromoneperiodtothenext,withapotentiallysignificantimpactonthenetworth,financialpositionandfinancialperformanceoftheCENTROTECGroup.Changestoestimates,i.e.differencesbetweenactualvaluesormorerecentestimatesandpastestimates,aretakenintoaccountfromthetimeamoreaccurateinsightisgained.ThefollowingnotesexpandontheotherpresentationsintheConsolidatedFinancialStatements,whichrefertoassumptions,uncertaintiesandcontingencies.

Significantassumptionsandestimateswhichentailuncertaintyandareassociatedwithrisksweremadeintheareasofnon-currentassets,impairmentofinventoriesandtradereceivables,contingentpurchasepriceliabilitiesandprovisions.

Non-currentassetshaveeitherlimitedorunlimitedusefullives.Changesinintendeduses,technologies,maintenanceintervalsandchangesinthegeneraleconomiccontextsorsectorsinwhichCENTROTECisactivemayresultintherecoverableamountsoftheseassetschanging.CENTROTECthereforeexaminestheusefullivesonaregularbasistoassimilatethecarryingamountswiththerealisablebenefitbywayofreductionsforimpairment.Inspiteofeveryefforttodetermineappropriateusefullives,certainsitua-tionsmayarisewherethevalueofanon-currentassetorgroupofassetsisreducedandthustheeconomicvalueisbelowthecar-ryingamount.Asimpairmentoccursonlysporadically,rarelyforindividualcapitalgoodsandnotatallforentireclasses,itisnotpossibletoestimatethesecostspreciselyasearlyastheprepara-tionofthefinancialstatements.Suchcostsarethereforereportedonlywhenthecorrespondinginformationisknown.Nogeneralsensitivityanalysisforallusefullivesisperformed.

Foracquisitions,assumptionsandestimateshaveaninfluenceonthepurchasepriceallocationprocess.Assumptionsrelateinparticulartolevelsofgoodwillaswellasintangibleassetsandliabilities,andalsoinrespectoftheirusefulliveswiththeresultthattheresidualgoodwillchanges.Inthecontextofbusinesscombinations,intangibleassets(e.g.patents,customerrelation-shipsorsupplieragreements)areidentifiedandaresubjecttoestimatesinrespectofseveralcriteria(quantities,margins,usefullives,discountingrates).

G_Otherestimatesthatareofsignificanceareinrespectofassess-ingreductionsforimpairmentofgoodwillwhenforecastingtheavailabilityoffuturefinancialresourcesanddiscountrates.Partic-ularlyfornewbusinessoperations,theuncertaintyofforecastsisgreaterthanwhereoperationshavebeeninexistenceforlonger.

Goodwillandbrandswithanuncertainusefullifearesubjectedtoanannualimpairmenttest.Asensitivityanalysisyieldingthefollow-ingresultsismoreoverperformed:iftheestimatesoftheunderly-ingfreecashflowhadbeen10%lower,therewouldhavebeennoreductioningoodwill.Iftheinterestrateservingasthebasisfordiscountingofthecashflowshadbeen100basepointshigher,thiswouldlikewisenothaveledtoanyreductioningoodwill.

Conditionalpurchasepricecomponentsareincludedinthede-terminationofthepurchasepriceattheirfairvalueatthetimeoftheacquisitionindependentlyoftheirprobabilityofoccurrence.Theconditionalpurchasepricecomponentsmaybebothequityinstrumentsandfinancialliabilities.Dependingoncategory,changesinthefairvaluearetakenintoaccountuponsubsequentmeasurement.

CENTROTECgrantsvariouswarrantiesforproducts.Basicwar-rantiesarerecognisedattheamountoftheestimatedexpenses,takingaccountofhistoricaldata.Furthermore,costsfortherepairorreplacementoffaultyproductsforanindividualcustomerorforspecificcustomergroupsmayariseinthecourseofnormalbusiness.Intheeventofsubstitutioncampaignsoccurring,eventhoughtheyareextremelyrare,aspecialprovisionisformedtocovertheanticipatedindividualcosts.Asexchangecampaignsoccursporadicallyandrarely,itisnotpossibletoestimatethesecostspreciselyasearlyasthetimeofsale.Suchexpensesarethereforerecognisedonlywhenthecorrespondinginformationisknown.Indeterminingprovisionsforguarantees,variousassump-tionswhichaffecttheleveloftheseprovisionsaremade.Changesinproductivity,materialsandpersonnelcostsaswellasqualityimprovementprogrammeshaveaninfluenceontheseestimates.Theappropriatenessoftheprovisionsrecordedistestedonaquarterlybasis.

Thegroupissubjecttothetaxregimesofvariouscountries.Estimatesthatareofsignificancearerequiredinthecreationoftaxprovisionsanddeferredtaxitems.Transactionsandcalcula-tionswithinthenormalcourseofbusinessaresubjecttovariousuncertaintieswithregardtofiscaleffectsandrecognition.Thecorrespondingaccountingpoliciesareappliedinthecreationofprovisionsforpotentialliabilitiesthatmayariseasaresultoffuturefieldtaxinvestigationsofpasttransactions.Incaseswherethefinaltaxcalculationsdeviatefromtheassumptionsoriginallyreported,theeffectsaretakenintoaccountintheincomestatement.


Segmentreporting

Theoperatingsegmentsarereportedoninawaythatcorre-spondstointernalreportingtotheprincipaldecision-makers.Theprincipaldecision-makerisresponsiblefordecisionsre-gardingtheallocationofresourcestotheoperatingsegmentsandforexaminingtheirprofitability.ThreeManagementBoardmembershavebeendesignatedtheprincipaldecision-makers,witheachmemberexercisingcontroloveroneofthefollowingthreesegments:1_„Climate Systems“:inthissegment,heating,ventilationandclimatecontrolsystemstogetherwithsystemsforusingrenewableenergiesfordetachedandsemi-detachedhousesaswellasforutilitybuildingssuchaspublicamenities,schoolsetc.aredeveloped,producedandsold.Themainfocusoftheproductrangeisonahighdegreeofenergy-savingandoninterlinkingheating,ventilationandclimatecontrolsystems.Inthismarketsegment,CENTROTECisamongtheleadingcompaniesinEurope.2_„Gas Flue Systems“:here,gasfluesystemsfordiverseapplicationsaswellastechnicalroofproductsaredeveloped,pro-ducedandmarketed.Theemphasisofthesesystemsisonplasticgasfluesystemsforcondensingboilersystems.Inthissegment,CENTROTECisoneoftheleadingcompaniesinEurope.Italsoproducesassembliesmadefromhot-shapedmaterialsinsmallproductionruns.3_„Medical Technology & Engineering Plastics“:thissegmentdevelops,manufacturesandsellsmedicaltechnologyanddiagnosticarticlesandinstruments.Thissegmentalsocom-prisesthemanufactureandsaleofsemi-finishedplasticproducts,prefabricatedproductsandassembliesforsmallseriesinvarioussectors,butpredominantlyinmedicaltechnology.

SegmentreportingisbasedonthesameaccountingpoliciesasfortheothersectionsoftheConsolidatedFinancialStatements.Incomeandexpenditurearedirectlyattributabletotheseg-mentsonthebasisofsourceororigin.Thedataistakenfromtheaccountingsystemsofthecompaniesthatareallocatedtotherespectivesegments.

H_ I_ Particularsofthe consolidatedcompanies

AlldirectandindirectsubsidiariesoftheparentcompanyandgroupparentareincludedintheConsolidatedFinancialState-mentsofCENTROTEC.Thefollowingcompanies,whichsimulta-neouslyconstitutetheCENTROTECGroup,wereconsolidatedwithinCENTROTECSustainableAGatDecember31,2012:


Company

Place and country Share of Subscribed Currency Founded/ of incorporation capital capital (ISO code) acquired

Fully consolidated

CENTROTECSustainableAG Brilon,DE - 17,307,466.00 EUR *17/07/1998

Climate Systems segment

BrinkClimateSystemsB.V. Staphorst,NL 100% 20,004.00 EUR 02/01/2002

DevekoB.V. Deventer,NL 100% 18,152.00 EUR 02/01/2002

GoluB.V. Soest,NL 100% 18,152.00 EUR 02/01/2002

KempairB.V. Eindhoven,NL 100% 18,152.00 EUR 02/01/2002

BrinkClimateSystemsIrelandLtd. Dublin,IE 100% 100.00 EUR 10/05/2010

NedAirHoldingB.V. Ijsselmuiden,NL 100% 54,454.00 EUR 05/06/2003

NedAirB.V. Ijsselmuiden,NL 100% 54,454.00 EUR 05/06/2003

NedAirUKLtd. Manchester,UK 100% 150.00 GBP 02/10/2006

NedAirPolskaSp.z.o.o. Katowice,PL 100% 50,000.00 PLN 19/03/2008

InnosourceHoldingB.V. Sassenheim,NL 100% 38,500.00 EUR 08/09/2005

InnosourceB.V. Sassenheim,NL 100% 18,000.00 EUR 08/09/2005

SoundscapeB.V. Sassenheim,NL 100% 18,000.00 EUR 08/09/2005

CentrotecEnergySolutionsB.V. Staphorst,NL 100% 18,000.00 EUR 08/09/2005

CentrotecEnergySolutionsNederlandB.V. Staphorst,NL 100% 18,000.00 EUR 19/11/2010

StillerWonenB.V. Amstelveen,NL 100% 18,151.00 EUR 08/09/2005

BrinkClimateSystemsDeutschlandGmbH Ahaus,DE 98.9% 450,000.00 EUR 29/11/2005

WolfHoldingGmbH Mainburg,DE 100% 25,000.00 EUR 22/09/2006

WolfGmbH Mainburg,DE 100% 20,000,000.00 EUR 05/10/2006

WolfFranceS.A.S. Massy,FR 100% 1,040,000.00 EUR 05/10/2006

WolfIbericaS.A. Madrid,ES 100% 1,181,316.00 EUR 05/10/2006

WolfTechnikaGrzewczaSp.z.o.o. Warsaw,PL 100% 2,564,000.00 PLN 05/10/2006

WolfHeatingUKLtd. Northwich,UK 100% 150,000.00 GBP 05/10/2006

Kuntschar&SchlüterGmbH Wolfhagen,DE 100% 250,000.00 EUR 01/11/2008

Dreyer&BosseKraftwerkeGmbH Gorleben,DE 80% 500,000.00 EUR 09/08/2011

WolfSustainableAG Zurich,CH 100% 100,000.00 CHF 24/06/2011

OOOWolfEnergiesparsysteme Moscow,RU 100% 3,200,000.00 RUB 25/11/2011

WolfKlimaatechniekB.V. Kampen,NL 100% 150,000.00 EUR 05/10/2006

CentrotecEnergySolutionsGmbH Brilon,DE 100% 25,000.00 EUR 23/07/2008

Gas Flue Systems segment

UbbinkB.V. Doesburg,NL 100% 46,286.00 EUR 21/12/1999

UbbinkN.V./S.A. Gentbrugge,BE 100% 592,117.48 EUR 21/12/1999

UbbinkUKLtd. Brackley,UK 100% 35,000.00 GBP 21/12/1999

UbbinkFranceS.A.S. LaChapellesurErdre,FR 100% 310,000.00 EUR 21/12/1999

UbbinkEastAfricaLtd. Naivasha,Kenya 60% 1,000.00 KES 17/09/2009

CentrothermSystemtechnikGmbH Brilon,DE 100% 108,360.00 EUR 15/12/1993

CentrothermGasFlueTechnologiesItalyS.R.L. Verona,I 100% 119,000.00 EUR 19/10/2000

CentrothermEcoSystems,LLC Albany,USA 65% 200,000.00 USD 22/04/2009

UbbinkDeutschlandGmbH Brilon,DE 100% 25,000.00 EUR 14/07/2008

CentrotecJIAsiaPte.Ltd. Singapore,SG 57.5% 170,000.00 SGD 23/04/2003

CentrotecJITBintanPT Bintan,ID 57.5% 615,484,000.00 IDR 01/01/2004

CentrotecCompositesGmbH Brilon,DE 100% 27,000.00 EUR 01/08/1990

CentrotecInternationalGmbH Brilon,DE 100% 25,000.00 EUR 18/12/2002


Theshareholders’equityandearningsofthenon-fullyconsoli-datedcompanieswereasfollowsatDecember31,2012:

The60%interestinSolar23GmbH,Ulm,wasdisposedofinJuly2012.ThatcompanyisconsequentlynolongerfullyconsolidatedsinceAugust2012.

Likewisethe24.95%interestinBond-LaminatesGmbH,Brilon,whichwaspreviouslyaccountedforusingtheequitymethod,wassoldinSeptember2012.

Company

Place and country Share of Subscribed Currency Founded/ of incorporation capital capital (ISO code) acquired

Medical Technology & Engineering Plastics segment

medimondiAG Fulda,DE 100% 11,640,000.00 EUR *16/10/2006

MöllerGmbH Fulda,DE 100% 60,000.00 EUR 28/08/2003

MöllerMedicalGmbH Fulda,DE 100% 1,400,000.00 EUR 28/08/2003

medimondiAG Dietikon,CH 100% 100,000.00 CHF 06/11/2006

CentroplastEngineeringPlasticsGmbH Marsberg,DE 100% 250,000.00 EUR 01/08/1990

RolfSchmidtIndustriplastA/S Kolding,DK 100% 3,000,000.00 DKK 16/03/2001

CentroplastUKLtd. Stafford,UK 100% 100,000.00 GBP 03/06/2005

Companies consolidated using the equity method

IndustrialSolarGmbH Freiburg,DE 38% 161,290.00 EUR 25/08/2011

Companies recognised as available-for-sale financial assets (non-consolidated companies)**

WolfKlimatechnikS.a.r.l. Junglinster,L 100% 14,874.00 EUR 05/10/2006

ElcoKlöcknerWärme-undSolartechnikGmbH(inliquidation) Leobersdorf,A 100% 254,355.00 EUR 05/10/2006

GoodisonThirtyNineLtd. Naivasha,Kenya 60% 100,000.00 KES 17/05/2010

CentroGulfLimited AbuDhabi,UAE 20% 500,000.00 AED 07/07/2010

HostroGmbH(inliquidation) Wegscheid,DE 4% 25,000.00 EUR 04/07/2010

MöllerMedicalSpineAG(inliquidation) Dietikon,CH 100% - CHF 12/09/2007

NedAirFranceS.A.S.(inliquidation) Helfrantzkirch,F 100% - EUR 12/11/2007

The26.14%holdinginthelistedcompanyCENTROSOLARGroupAG,withregisteredofficeinMunich,wasdisposedofinanoff-exchangetransactiononOctober3,2012.

Furthermore,thecompanyBrinkClimateSystemsLtd.,Ireland,hashandedoveritsoperationstoUbbinkUKLtd.

Non-fully consolidated companies

Shareholders’ equity Earnings

WolfKlimatechnikS.a.r.l. EUR26thousand EUR(2)thousand

ElcoKlöcknerWärme-undSolartechnikGmbH(inliquidation)*** EUR(235)thousand EUR(4)thousand

GoodisonThirtyNineLtd. - -

CentroGulfLimited AED(1,663)thousand AED(1,698)thousand

HostroGmbH(inliquidation)*** EUR(127)thousand EUR(152)thousand

MöllerMedicalSpineAG(inliquidation) - -

NedAirFranceS.A.S.(inliquidation) - -

*Dateofcreationbymodifyingconversion**Insignificant,thereforenotcomprehensivelyconsolidated***Acc.topreviousyear


J_ Explanatorynoteson componentsoftheconsolidated financialstatements

1 Goodwill

Theclassificationandmovementsofgoodwillareshowninthefollowingschedule:

in EUR ’000

2011

AccumulatedcostJan1 63,338

Exchangedifferences 32

Additions 9,696

Disposals (2)

Deconsolidation (1,063)

AccumulatedcostDec31 72,001

AccumulatedimpairmentJan1 (2,264)

Exchangedifferences 0

Additions 0

Disposals 1

AccumulatedimpairmentDec31 (2,263)

Net carrying amount 31/12/2010 61,074


2012

AccumulatedcostJan1 72,001

Exchangedifferences (2)

Additions 489

Disposals 0

Deconsolidation (228)

AccumulatedcostDec31 72,260

AccumulatedimpairmentJan1 (2,263)

Exchangedifferences (6)

Additions 0

Disposals 0

AccumulatedimpairmentDec31 (2,269)



ThegoodwilltotallingEUR69,738thousandreportedatDecem-ber31,2011rosebyanamountofEUR253thousandinthe2012financialyeartoEUR69,991thousand.Thisismainlyfromthead-ditionofthecompanyDreyer&BosseGmbH,Gorleben.Thepur-chasepricewasincreasedbasedonnewfindings.Thisresultedinadditionalgoodwill.

TherearefourdistinctcashgeneratingunitsintheCENTROTECGroup.Thesefourcashgeneratingunitsconstitutetheorgani-sationalstructureofthegroup(managementapproach).Theimpairmenttestwasperformedonthebasisofvalueinuse.Thecalculationswerebasedonacashfloworientedmodel.Thecal-culationsarebasedontheapprovedplansfortheyears2013to2017.Aperpetualpensionisinadditioncalculatedonthebasisofthefifthyearoftheplanningperiod.Theperpetualpensionwasassumedtohaveagrowthrateof1.0%(previousyear1.0%).Thediscountratewasformedfromtheweightedcostsofborrowedcapitalandequitycapital,withtheequitycapitalcostsderivedusingCAPM.Dependingonthecashgeneratingunit,thediscountratebeforetaxrangesbetween6.62%and8.68%(previousyear7.03%and8.43%).

Theimpairmenttestsrevealednoneedforimpairmentofgoodwillineitherthe2012financialyearorinthecomparativeperiod2011.

Thefollowingtableshowsthedistributionofgoodwillbetweenthecashgeneratingunits:


Cash generating unit

31/12/2012 31/12/2011

WolfGroup 29,745 29,256

BrinkGroup 24,839 24,839

UbbinkGroup 11,109 11,339

medimondiGroup 4,298 4,304

Total 69,991 69,738

Thebreakdownbyoperatingsegmentisasfollows:

Allocation of goodwill to segments

Climate Systems Gas Flue Systems Medical Technology Total & Enginee ring Plasticsin EUR ’000 2012 2011 2012 2011 2012 2011 2012 2011

eurocountries 54,584 54,095 8,141 8,371 2,748 2,748 65,473 65,214

Europeannon-eurocountries - - 2,968 2,968 1,550 1,556 4,518 4,524

Total 54,584 54,095 11,109 11,339 4,298 4,304 69,991 69,738


Industrial Capitalised Assets Total rights and development in course intangiblein EUR ’000 similar rights Software costs of construction assets

2011

AccumulatedcostJan1 18,016 10,580 31,248 1,440 61,284

Exchangedifferences 2 2 23 0 27

Additions 386 1,643 1,865 2,267 6,161

Reclasses 15 165 278 (303) 155

Disposals 0 (22) 0 (127) (149)

Acquisitions 5,253 43 5,097 0 10,393

Deconsolidation (27) (14) (1,009) 0 (1,050)

AccumulatedcostDec31 23,645 12,397 37,502 3,277 76,821

AccumulatedimpairmentJan1 (2,358) (5,971) (13,690) 0 (22,019)

Exchangedifferences (1) (3) (13) 0 (17)

Additions (574) (1,581) (4,570) 0 (6,725)

Impairment (294) (13) (1,163) 0 (1,470)

Reclasses 0 0 0 0 0

Disposals 0 5 0 0 5

Acquisitions (3) (34) 0 0 (37)

Deconsolidation 6 11 190 0 207

AccumulatedimpairmentDec31 (3,224) (7,586) (19,246) 0 (30,056)

Net carrying amount 31/12/2010 15,658 4,609 17,558 1,440 39,265


2012


Exchangedifferences (1) 8 0 1 8

Additions 107 848 997 3,107 5,059

Reclasses (44) 533 870 (1,137) 222

Disposals (13) (138) (1,024) (26) (1,201)

Acquisitions 0 0 0 0 0

Deconsolidation (5) (10) 0 0 (15)



Exchangedifferences 1 (7) 0 0 (6)

Additions (1,099) (1,159) (4,616) 0 (6,874)

Impairment 0 0 0 0 0

Reclasses 13 (13) 0 0 0

Disposals 7 138 933 0 1,078






2 Intangible assets

Theclassificationandmovementsofintangibleassetsareshowninthefollowingschedule:


EUR6,499thousandofthistotal(previousyearEUR8,065thou-sand)servedassecurityforbankloansatthereportingdate.

Theindustrialrightsandsimilarrightsincludethe“Wolf”brand(EUR11.5million).TheWolfbrandhasnospecifiedusefullifebe-causewehavesecuredtheexclusiverighttousethe“Wolf”brandundertrademarkrights;itsusefullifeisthereforeindefinitefromalegalperspective.Equallywhentheeconomicperspectiveistakenastheassessmentbasis,weareunabletomakeanyestimateofhowlongthecompanyandthereforethe“Wolf”brandwillexist.Asaresult,followingananalysisofallrelevantfactorsweareunabletostateanyforeseeablelimittotheperiodoverwhichtheassetisexpectedtogeneratenetcashinflowsfortheenterprise.Noamortisationtakesplaceinviewoftheindefiniteusefullife.TheWolfbrandisthereforesubjectedtoayearlyimpairmenttest,

whichhashithertorevealednoneedforwrite-down.Theparam-etersusedforthiscorrespondtotheparametersfortheimpair-menttestofgoodwillinNote1.CapitaliseddevelopmentcostsalsoincludearoundEUR5.9millionincarryingamountsfromtheacquisitionofWolfthatwerecapitalisedduringpurchasepriceal-locationandrelatetotechnologiesanddevelopmentprojects.

ExpensesforpredominantlyinternalresearchanddevelopmentinthefinancialyearamountedtoEUR7,289thousand(previousyearEUR6,887thousand).Developmentactivitiesfocusedmainlyonheatingsystems,plasticgasfluecomponents,technicalroofproducts,ventilation,climatecontrolandsolarsystems,coatingtechniquesandapplications,medicaltechnologyequipment,andsoftwaredevelopments.Theresultsoftheseeffortscanbeusedforavarietyofcustomers.


Technical Furniture, Assets Total property, Land and equipment fixtures and in course of plant andin EUR ’000 buildings and machinery office equipment construction equipment

2011


Exchangedifferences (1) 25 (13) 0 11

Additions 1,893 5,179 3,902 4,336 15,310

Reclasses 3,295 988 433 (4,871) (155)

Disposals (383) (2,864) (1,649) (142) (5,038)

Acquisitions 2,416 153 2,149 4 4,722

Deconsolidation 0 (24) (1,163) 0 (1,187)



Exchangedifferences (2) (21) (16) 0 (39)

Additions (3,681) (5,237) (4,119) 0 (13,037)

Impairment 0 (629) (267) 0 (896)

Reclasses (1) 109 (108) 0 0

Disposals 203 2,037 1,465 0 3,705

Acquisitions (313) (23) (932) 0 (1,268)

Deconsolidation 0 19 1,087 0 1,106




2012


Exchangedifferences (3) 8 46 (8) 43

Additions 3,619 2,329 3,824 5,216 14,988

Reclasses 1,576 737 599 (3,134) (222)

Disposals (40) (2,975) (3,682) (304) (7,001)


Deconsolidation (47) (54) (335) 0 (436)



Exchangedifferences 1 (7) (21) 0 (27)

Additions (3,596) (4,749) (4,764) 0 (13,109)

Impairment 0 0 0 0 0

Reclasses 0 0 0 0 0

Disposals 39 2,549 3,369 0 5,957






3 Property, plant and equipment

Theclassificationandmovementsofproperty,plantandequip-mentareshowninthefollowingschedule:


LandandbuildingscomprisemainlytheproductionandofficebuildingsinBrilon(Germany),Mainburg(Germany),Doesburg(Netherlands),Kampen(Netherlands),LaChapellesurErdre(France),Fulda(Germany),Marsberg(Germany),Gorleben(Ger-many)andKolding(Denmark).TheadditionofEUR3,619thou-sandmainlyrelatestothepurchaseofnewundevelopedsitesattheStaphorstlocation(Netherlands).

Technicalequipmentandmachineryattheproductionplantswasextendedandtechnologicallyupgraded.Otherfurniture,fixturesandofficeequipmentconsistsofvariousitemsinproduction,warehousesandadministration.ThefixedassetsincludeassetstothevalueofEUR1,161thousand(previousyearEUR1,781thou-sand)reportedinthecontextoffinanceleases.ThebulkofthesecomprisestechnicalequipmentandmachineryamountingtoEUR680thousand(previousyearEUR1,747thousand)andotherfur-niture,fixturesandofficeequipmentamountingtoEUR274thou-sand(previousyearEUR34thousand).EUR50,463thousandofproperty,plantandequipmentservedassecurityforbankloansatthereportingdate(previousyearEUR45,710thousand).ThereinadditionexistcommitmentsamountingtoEUR3,114thousandforproperty,plantandequipment.

Theassetsincourseofconstructionconsistmainlyofanewextru-sionhallunderconstructionatthesiteofCentroplastEngineering

PlasticsGmbH,Marsberg,aswellastechnicalplantandmachinerysuppliedtotheproductionplantsatthereportingdatebutnotyettechnicallyaccepted.

Disposalsandreclassesoftechnicalplantandmachineryaswellasotherfurniture,fixturesandofficeequipmentaremoreoverinconnectionwiththecommissioningoflocationsorplantsorotherorganisationalmeasurescarriedout.

4 Investments accounted for using the equitymethod, investments and loans originated bythe enterprise

Theseassetscompriseinvestmentsaccountedforusingtheequitymethod,otherinvestmentsthatarenotincludedinconsolidation,loansoriginatedbytheenterprise,andsecurities.

Theinvestmentsatyear-endstillshowtheinvestmentsreportedatcostforthesakeofsimplicity,forreasonsofminority.

Associated companies accounted for using the equity method

in EUR ’000 31/12/2012 31/12/2011

AtJan1 11,458 28,144

Shareoflosses (7,349) (19,638)

Shareofgains 0 336

Shareofpurchase 0 2,616

Disposalthroughsale (2,624) 0

Close of Dec 31 1,485 11,458

InSeptember2012the24.95%holdinginBond-LaminatesGmbHwassoldtoLANXESSDeutschlandGmbH,afully-ownedsubsidi-aryofLANXESSAG,aspartofa100%saleofthecompany.Indisposingoftheminorityinterestthatithadheldsince2000,CENTROTEChasmadeprogresswithitsstrategyoffocusingonitscorebusinessofenergy-efficientheating,climateandventilationtechnologyaswellasrenewableenergysolutionsinbuildingsandgasfluesystemsforcondensingboilers.

Inaddition,the26.14%holdinginthelistedcompanyCENTROSOLARGroupAG,withregisteredofficeinMunich,wasdisposedofinanoff-exchangetransactiononOctober3,2012.TheproceedsofthesaleofthisholdingamounttoEUR6.3million,andthereforeexceedthecarryingamountoftheinvestment,whichwasaccountedforusingtheequitymethod.

Companies accounted for using the equity method

in EUR ’000 Industrial Solar GmbHAt Dec 31 2012 2011

Ownershipinterestin% 38.00 38.00

Fixedassets 88 46

Currentassets 1,966 2,298

Liabilities 476 310

Revenue 741 59

Profit/lossfortheyear (456) (549)

5 Other assets

Thefollowingtableshowsabreakdownofotherassets.Thepre-paidexpenseslargelycompriseinsurancepremiumsandserviceexpenses.

Other assets

in EUR ’000 31/12/2012 31/12/2011

Other non-current assets

Derivativeassets 0 0

Miscellaneousfinancialassets 9 206

Other financial assets 9 206

Prepaidexpenses 19 112

Otherassets 1,134 1,044

Other assets 1,153 1,156

Other current assets

Derivativeassets 61 0

Miscellaneousfinancialassets 5,232 4,156

Other financial assets 5,293 4,156

Paymentsonaccountforinventories 220 135

ReceivablesfromVAT 5,339 2,339

Prepaidexpenses 2,150 1,916

Otherassets 1,255 374

Other assets 8,964 4,764

Themiscellaneousfinancialassetsalsoincludee.g.receivablesfrominsuranceandsuppliersinrespectofbonuses.

6 Deferred tax assets and tax liabilities

PursuanttoIAS12thedeferredtaxassetsanddeferredtaxli-abilitiesarecalculatedonthetemporarydifferencebetweenthestatedamountsofassetsandliabilitiesintheIFRSbalancesheetandthetaxbalancesheet,andalsofromtaxlosscarryforwards.Thesedifferencesinthestatedamountsresultamongotherthingsfromadjustmentstostatedamountsinthecontextofbusi-nesscombinations.Thenetvaluesshownrepresentthenettedvaluesofdeferredtaxassetsanddeferredtaxliabilitiesofagroupcompanyinrespectofataxationauthority.

Thedeferredtaxassetsresultprincipallyfromotherprovisionsandpensionprovisions,andarecomprisedasfollows:

Deferred tax assets on temporary differences and tax loss carryforwards

Gross After netting

In EUR ’000 31/12/2012 31/12/2011 31/12/2012 31/12/2011

Reversalexpectedwithin12months 4,596 4,334 811 841

Reversalexpectedaftermorethan12months 1,363 1,413 729 870

Total 5,959 5,747 1,540 1,711

Thedeferredtaxassetsfromlosscarryforwardsarecomprisedasfollows:

Tax loss carryforwards

in EUR ’000 31/12/2012 31/12/2011

Losscarryforwards 26,988 19,638

Deferredtaxassetsfromlosscarryforwards 6,903 5,457

Reductionsforimpairment (6,399) (5,034)

Deferred tax assets from loss carryforwards (net) 504 423

Ofthedeferredtaxassetsonlosscarryforwards,EUR4,424thousand(previousyearEUR2,781thousand)relatetocompanieswhichalsopostedalossinthecurrentyear.Thedeferredtaxas-setsinquestionwereexaminedonthebasisofearningsforecastsandbymeansoflonger-rangeplansintheeventoftheloss-mak-ingsituationcontinuing.

ExceptforanamountofEUR4,560thousand,thelosscarryfor-wardscanbecarriedforwardindefinitely.Ofthelossesforwhichcarryforwardisrestricted,EUR2,944thousandexpireinoverfiveyears,EUR336thousandwithinfiveyears,EUR964thousandwithinfouryearsandEUR37thousandwithinthreeyears,EUR150thousandwithintwoyearsandEUR129thousandwithinoneyear.



Thecompositionofdeferredtaxliabilitiesisasfollows:

Deferred tax liabilities on temporary differences

Gross After netting

In EUR ’000 31/12/2012 31/12/2011 31/12/2012 31/12/2011

Reversalexpectedwithin12months 5,155 5,760 1,702 2,654

Reversalexpectedaftermorethan12months 14,078 14,676 13,113 13,746

Total 19,233 20,436 14,815 16,400

Thecompositionofdeferredtaxassetsanddeferredtaxliabilitiesbybalancesheetitemisasfollows:

Deferred tax liabilities

in EUR ’000 2012 2011

Deferred tax assets (gross)

Intangibleassets 371 367

Property,plantandequipment 441 215

Inventories 440 592

Pensionprovisions 1,677 1,676

Otherprovisions 1,386 1,105

Otherliabilities 283 334

Other 857 1,035

Taxlosscarryforwards 504 423

5,959 5,747

Deferred tax liabilities (gross)

Intangibleassets 10,726 11,435

Property,plantandequipment 7,738 7,935

Inventories 439 428

Otherprovisions 0 11

Otherliabilities 2 318

Other 328 309

19,233 20,436

Ofthedeferredtaxassetsanddeferredtaxliabilities,EUR(56)thousand(previousyearEUR(153)thousand(balance))werenetteddirectlywithequity.ExchangedifferencesrepresentEUR62thousandofthisamount(previousyearEUR70thousand),andinterestratederivativesEUR(118)thousand(previousyearEUR(222)thousand).

Deferred tax balance sheet items

in EUR ’000 31/12/2012 31/12/2011

Deferredtaxassets 1,540 1,711

Deferredtaxliabilities (14,815) (16,400)

Balance (13,275) (14,689)

ofwhich:fromnettingagainstshareholders’equity (331) (388)

Development in deferred tax

in EUR ’000 31/12/2012 31/12/2011

Recognitionofdeferredtax(balance) (13,275) (14,689)

Differenceyearonyear (1,414) (3,109)

ofwhich:

Throughprofitandloss 1,470 183

Nettedagainstshareholders’equity (incl.exchangedifferences) (56) (153)

Acquisition(PPA)notthroughprofitandloss (0) (3,139)

Nodeferredtaxliabilitieswererecognisedontemporarydiffer-encesresultingfromsharesinsubsidiaries(outsidebasisdiffer-ences)amountingtoEUR6,687thousand(previousyear:EUR5,580thousand),becausethesedifferenceswillprobablynotbereversedintheforeseeablefuture.


7 Inventories

Thefirstofthefollowingtablesprovidesabreakdownoftheentirecarryingamountofinventories.Wherethecostpriceofinvento-riesishigherthantheirmarketorfairvalue,thetableshowsthecarryingamountoftheseinventoriesafterreductionsforimpair-ment.Thesecondtableshowsinventoriesaccordingtocategory.

Inventories

In EUR ’000 31/12/2012 31/12/2011

Inventoriesathistoricalcost 27,300 37,944

Inventoriesatnetrealisablevalue:

Originalvalueathistoricalcost 49,453 43,635

Provisionforobsolescence (6,937) (6,742)

Carryingamountafterdepreciation 42,516 36,893

Total 69,816 74,837

Inventories by category

in EUR ’000 31/12/2012 31/12/2011

Rawmaterialsandsupplies 26,428 27,805

Workinprogress 15,257 17,757

Finishedgoodsandmerchandise 28,131 29,275

Total 69,816 74,837

Ofwhichservingassecurity forloans/creditlines 38,176 46,269

Thereductionsforimpairmentandreversalofreductionsforim-pairmentduetorestrictedrealisabilityproduceanetexpenseofEUR195thousand(previousyearofEUR1,748thousand)intheincomestatement.

8 Trade receivables

Trade receivables

in EUR ’000 31/12/2012 31/12/2011

Receivables(0<90days) 53,794 61,779

Receivablesoverdue>90<180days 1,189 1,627

Receivablesoverdue>180<360days 1,505 2,211

Receivablesoverdue>360days 3,230 2,921

Receivablesfromequityinvestments 2 353

Trade receivables prior to impairment 59,720 68,891

Reductionsforimpairment (4,573) (5,151)

Trade receivables after impairment 55,147 63,740

Ofwhichbilledin

EUR 53,664 55,166

USD 1,448 1,195

GBP 1,755 9,549

DKK 776 761

PLN 1,979 2,143

Othercurrencies 98 77

Total 59,720 68,891

Ofwhichservingassecurity forloans/creditlines 29,112 24,615

Adequateimpairmentforlossesonreceivableshasbeenappliedonacasebycasebasistocoveridentifiedrisks.Wheretherewasnoobjectiveevidenceofimpairmentinindividualcases,specificallowancesforcollectivelyassessedfinancialassetswereformed.Thetableshowsthechangesinimpairment:

in EUR ’000 31/12/2012 31/12/2011

Impairmentatthestartofthefinancialyear 5,151 3,494

Income-effectivechangesinimpairmentduringtheperiodunderreview 1,306 2,263

Acquisitions 0 45

Derecognitionofreceivables/deconsolidation (1,562) (377)

Paymentsreceivedandrecoveryinvalueofreceivablesoriginallywrittenoff (337) (273)

Currencytranslationeffects 15 (1)

Impairment at end of financial year 4,573 5,151


Supplementary information on impairment:

Trade receivables Trade receivables prior to afterin EUR ’000 impairment Impairment impairment

Receivables(0<90days) 53,794 (1,207) 52,587

Receivablesoverdue>90<180days 1,189 (782) 407

Receivablesoverdue>180<360days 1,505 (283) 1,222

Receivablesoverdue>360days 3,230 (2,301) 929

Receivablesfromequityinvestments 2 0 2

Total 59,720 (4,573) 55,147

Thecreditqualityoffinancialassetsthatareneitheroverduenorimpairedisdeterminedonthebasisofpastexperienceofdefaultratesamongourbusinesspartners.Thecreditqualityisthereforeclassifiedasgood.

9 Cash and cash equivalents

Cash and cash equivalents

in EUR ’000 31/12/2012 31/12/2011

Cashinhand 46 44

Cashandcashequivalents 61,598 48,102

Total 61,644 48,146

10 Shareholders’ equity

GeneralTheissuedcapitalofthecompanyamountedtoEUR17,307,466atDecember31,2012(atDecember31,2011:EUR17,291,820).Itisdividedinto17,307,466noparvalueshareswithanotionalvalueofEUR1.00pershare.Thecapitalstockisfullypaidin.Withadditionalpaid-incapitalofEUR31,032thousand,otherretainedearningsofEUR105,518thousandandnetincomeofEUR22,715thousand,thegrouphadshareholders’equityallocabletotheshareholdersofCENTROTECSustainableAGofEUR176,460thousand(previousyearEUR155,071thousand)atDecember31,2012.Shareholders’equitywasreducedbythedividendofEUR0.10persharedistributedin2012.Conversely,theissuedcapitalandtheadditionalpaid-incapitalwereincreasedbypaymentsreceivedfromtheexercisingofstockoptionsin2012andbythenetincomefortheyear.

Development in number of shares

in EUR ’000 2012 2011

Total,January1 17,292 16,962

Additionthroughtheexercisingofoptions 15 330

Total, December 31 17,307 17,292

Proposal for the distribution of accumulated profitAccordingtoGermancommercialandstockcorporationrequire-ments,theannualfinancialstatementsofthegroupparentCENTROTECSustainableAGconstitutethebasisfortheappropri-ationofprofitforthe2012financialyear.Adistributabledividendthereforedepends,amongotherthings,ontheprofitavailablefordistributionreportedbythatcompanyintheseparatefinancialstatementsatDecember31,2012.ThenetincomefortheyearreportedthereisEUR8,843thousandandthereportedretainedearningsEUR27,063thousand.TheSupervisoryBoardandMan-agementBoardofCENTROTECSustainableAGwillproposetotheShareholders’MeetingthatadividendofEUR0.15perdividend-bearingnoparvaluesharebedistributedforthe2012financialyear.Thebalanceoftheprofitavailablefordistributionisagaintobecarriedforwardfornewaccount.

Treasury stockAtotalof12,080treasuryshareswereheldatDecember31,2012.Thesesharesrepresentlessthan0.1%ofcapitalstock.Theseshareswereheldattheparentastreasurysharesatthereportingdatefortheannualfinancialstatements.Notreasurystockwasacquiredorsoldduringthefinancialyear.

PursuanttotheresolutionoftheShareholders’MeetingofMay20,2010thecompanyisauthoriseduntilMay19,2015toac-quiretreasurystockwhich,togetherwithexistingtreasurystock,representsupto10percentofthecapitalstockatthetimeoftheauthorisationtakingeffect.Thepricefortheacquisitionofthesesharesmaynotbemorethan10%higherormorethan10%lowerthantheclosingpriceinXetratradingontheFrank-furtStockExchange(orinanequivalentsuccessorsystem)forsharesofthesameclassandfeaturesonthetentradingdaysprecedingtheacquisition.TheManagementBoardisauthorisedtoofferallorsomeofthesharesthusacquiredtothirdpartiesin(part)paymentoftheacquisitionofcompaniesorinvestmentsincompanies,excludingtheshareholders’rightofsubscription.TheManagementBoardisfurthermoreauthorisedtoretirethecompany’streasurystockwithouttheneedforafurtherresolutiontobeadoptedbytheShareholders’Meeting.Retirementmayberestrictedtopartofthepurchasedshares.


Approved capitalPursuanttotheresolutionoftheShareholders’MeetingonMay22,2012theManagementBoardis,withtheconsentoftheSupervisoryBoard,authorisedtoincreasethecapitalstockononeormoreoccasionsbyuptoEUR3,000,000(inwords:threemillioneuros)byMay21,2017inreturnforcashand/orcontri-butionsinkindthroughtheissuanceofnewnoparvaluebearershares(ApprovedCapital).

Thenewsharesarefundamentallytobeofferedtothesharehold-ersforsubscription;theymayalsobeacceptedbybanksorenter-priseswithinthemeaningofSection186(5)firstsentenceoftheGermanStockCorporationAct(AktG)withtheobligationtoofferthemforsubscriptiontotheshareholders.

TheManagementBoardis,withtheconsentoftheSupervisoryBoard,authorisedtoexcludetheshareholders’statutorysubscrip-tionrightinthefollowinginstances:>Forresidualamounts,>Ifthecapitalincreaseisforcashandtheissuingpriceofthe

newsharesdoesnotsignificantlyundercutthemarketpriceofthesharesofthecompanyalreadylistedatthetimewhentheissuingpriceisfinallyfixedbytheManagementBoardandthenumberofnewsharesasaproportionofthecapitalstockissuedexcludingthesubscriptionrightpursuanttoSection186(3),fourthsentenceoftheGermanStockCorporationActdoesnotexceedthelimitof10%ofthecapitalstockofthecompany;neitheratthetimeofthisauthorisationbecomingeffectivenoratthetimeofexercisingofthislimitingauthorisa-tionshallthosesharesbeincluded(i)thatareissuedduringthetermofthisauthorisation,excludingthesubscriptionrightindirectoranalogousapplicationofSection186(3)fourthsentenceoftheGermanStockCorporationAct,(ii)thatwereorareyettobeissuedtoservicedebtinstruments(includ-ingparticipatingbonds)withconversionoroptionrightsoraconversionobligation,providedthedebtinstrumentorpartici-patingbondswereissuedduringthetermofthisauthorisationinanalogousapplicationofSection186(3)fourthsentenceoftheGermanStockCorporationAct,excludingsubscriptionrights;and(iii)thataretreasurystocksold,ifandinsofarasthatsaletookplaceforcashduringthetermofthisauthorisa-tiononthebasisofanauthorisationvalidatthetimeofthisauthorisationbecomingeffectiveoranauthorisationtakingitsplace,byothermeansthanviathestockexchangeorthroughanoffertoallshareholders;

>Foracapitalincreaseforcontributionsinkindforthepurposeofacquiring(includingindirectly)companies,partsofcompa-nies,investmentsinothercompaniesorotherassets;

>Forissuancetoemployeesofthecompanyorofdomesticandinternationalaffiliatedcompanies(Section202(4)oftheGer-manStockCorporationAct).

TheBoardofManagementis,withtheconsentoftheSupervisoryBoard,authorisedtospecifythefurthercontentoftherightscar-riedbythesharesandtheconditionsoftheshareissue.

Conditional capital and share-based payments

Conditional Capital IConditionalCapitalIcannolongerbeexercisedduetoexpiry.ConditionalCapitalIthereforeremainedunchangedatDecember31,2012andamountstoEUR21,984,dividedinto21,984noparvalueshares(previousyearEUR21,984,dividedinto21,984noparvalueshares).

Conditional Capital IIByresolutionoftheShareholders’MeetingofJune1,2005thecapitalstockisconditionallyincreasedfurther(ConditionalCapi-talII).TheManagementBoardisauthorisedtoissuewarrantsforsubscriptiontonewbearersharesinthecompanyuntilDecember31,2011,ononeormoreoccasions.Employees,managingdirec-torsandManagementBoardmembersofthecompanyandofitsaffiliatedcompaniespursuanttoSection17oftheGermanStockCorporationActareentitledtosubscribe.Newsharesarecreatedwheretheoptionsareexercised.Thesepaydividendsfromthebeginningofthefinancialyearinwhichtheoptionsareexercised.ConditionalCapitalIIatDecember31,2012amountedtoEUR242,924,dividedinto242,924noparvalueshares(previousyear244,084EUR,dividedinto244,084noparvalueshares).

Conditional Capital IIIByresolutionoftheShareholders’MeetingonMay29,2008thecapitalstockisconditionallyincreasedbyafurtherEUR756,000,dividedinto756,000noparvalueshares(ConditionalCapitalIII).TheManagementBoardisauthorisedtoissuewarrantsforsub-scriptiontonewbearersharesinthecompanyuntilDecember31,2014,ononeormoreoccasions.EmployeesofCENTROTECSustainableAGaswellasemployeesofaffiliatedcompaniesasdefinedbySection17ofGermanStockCorporationActareen-titledtosubscribe.Themanagingdirectors/ManagementBoardmembersoftheabovecompaniesarefurthermoreentitledtosub-scribe.Newsharesarecreatedwheretheoptionsareexercised.Thesepaydividendsfromthebeginningofthefinancialyearinwhichtheoptionsareexercised.ConditionalCapitalIIIatDecem-ber31,2012amountedtoEUR601,984,dividedinto601,984noparvalueshares(previousyear616,470EUR,dividedinto616,470noparvalueshares).

Share-based paymentCENTROTECusesshare-basedpaymenttransactionscounterbal-ancedbyequityinstruments.Theshare-basedpaymentagree-mentsarebasedoncorrespondingresolutionsbyShareholders’Meetings.ThereaccordinglyexistconditionalcapitaltotallingEUR844,908atthereportingdateofDecember31,2012(previousyearEUR860,554),dividedintoatotalof844,908(previousyear860,554)noparvalueshares.TheManagementBoardisauthor-isedtoissuestockoptionsforsubscriptiontonewbearersharesinthecompanyuntilDecember31,2014(ononeormoreocca-sions);theSupervisoryBoarddecidesontheirgrantingtoMan-agementBoardmembers.Employees,managingdirectorsandManagementBoardmembersofthecompanyandofitsaffiliated


companiespursuanttoSection17oftheGermanStockCorpora-tionActareentitledtosubscribe,onthebasisofindividualstockoptionagreements.

Grantingofthestockoptionsislinkedtothefulfilmentofindi-vidualperformancetargets.Employees,managingdirectorsandManagementBoardmembersmustachieveindividuallyagreedtargets.Attainmentoftargetsleadstothegrantingofthestockoptions.Thevestingperioduntiltheearliestpossibletimetheoptionsmaybeexercisedistwoyearsfromthedateofissueoftheoption.Thissimultaneouslynecessitatesatwo-yearperiodofservice,sothattheoptiondoesnotlapse.Themaximumtermoftheoptionsissevenyearsfromthetimeoftheirgranting.

Exerciseofoptionsismoreovertiedtothefulfilmentofmarketconditions.Theymayaccordinglyonlybeexercisedifthemarketpriceonthedayonwhichtheoptionsmayfirstbeexercisedoratalatertimeduringthetermoftheoptionshasrisenby30%ontheexerciseprice.Exerciseismoreoverpermittedonlyduringcertainperiodsoftheyear.Theseexerciseperiodsrunfromthethirdtotheeighthstockmarkettradingdayfollowingthedayonwhichannualandquarterlyresultsareannounced,andfollowingthedayonwhichitisannouncedthatannualpressconferenceshavebeenheld.Newsharesarecreatedatthetimeanoptionisexercised.Thenewsharespaydividendsfromthebeginningofthefinancialyearinwhichtheoptionsareexercised.Theexercisepricepershare(subscriptionprice)tobepaiduponexercisingoftheoptionsiscurrently90%oftheaverageclosingpriceinXetratradingontheFrankfurtStockExchange(orinanequivalentsuc-cessorsystem),calculatedfromthepricesonthe30tradingdays–forConditionalCapitalI–oronthe10tradingdays–forCondi-tionalCapitalIIandConditionalCapitalIII–precedingthedayofissueoftheoption,butatleastoneeuro.

Theweightedaveragefairvalueoftheoptionsissuedin2012isEUR4.04(previousyearEUR6.41).Theoptionsweremeasuredwiththeaidofabinominalmodel.Themodeltooktheparametersdescribedbelowasthebasis:

Theissuedateofthe2012trancheisMarch21,2012(2011tranche:January24,2011)andtheexercisepriceisEUR12.10(previousyearEUR15.80).Therisk-freeinterestrateis1.61%(previousyear2.86%)andisbasedonrisk-freeinvestmentalter-nativesinGermanyofacomparableterm.TheweightedaveragesharepriceofthestockoptionsgrantedintheperiodunderreviewisEUR13.17(previousyearEUR19.00).ThenormalisedvolatilityofCENTROTECshares,basedonthehistoricaldailyvolatilityofCENTROTECshares,wasassumedtobe33.46%p.a.for2012(previousyear33.38%).Volatilitydescribestheintensityoffluctua-tioninthesharepricearounditsmeanvalueoverafixedperiod.

Levelsoftargetattainmentandfluctuationratesamongoptionholdersweremoreovertakenintoaccountwhendeterminingtheunderlyingoptiontotals.Assoonastheexactnumberofvestedoptionsinatrancheisdetermined,theanticipatedoptionfiguresareadjustedtobringtheminlinewithoptionsthathavebecomevested.Astheconsiderationreceivedisinessencenotconsid-eredforpurposesofrecognitionasassets,itisrecognisedoverallasanexpense.ApersonnelexpenseamountingtoEUR201thousandaroseinthe2012financialyearfromthestockoptionsschemesdescribedhere(previousyear:EUR997thousand).TheweightedaveragesharepriceofthestockoptionsexercisedinthefinancialyearisEUR13.63(previousyearEUR20.96).

Thefollowingtableshowsthestockoptiontrancheswiththenum-berofoptionsthatmaystillbeexercised:

Stock option tranches

Date of Exercise Date of Options at Options at issue price** expiry end 2012 end 2011 Changes

Granted2005 01/06/2005 9.75 31/05/2012 0 5,760 (5,760)

Granted2006 13/09/2006 10.40 12/09/2013 87,950 88,550 (600)

Granted2007 08/01/2007 10.90 07/01/2014 101,249 101,769 (520)

Granted2008 23/06/2008 11.50 22/06/2015 114,743 114,911 (168)

Granted2009 05/02/2009 8.10 04/02/2016 82,169 82,259 (90)

Granted2010 11/01/2010 8.30 10/01/2017 177,961 192,597 (14,636)

Granted2011 24/01/2011 15.60 23/01/2018 106,589 231,100* (124,511)

Granted2012 21/03/2012 12.00 20/03/2019 116,000* 116,000

Total 786,661 816,946 (30,285)

* Attainmentoftargetsnotyetestablished** AsaresultofdividendpaymentsofEUR0.10ineachoftheyears2011and2012,theexercisepricefellbyEUR0.20foralltranchesuptoandincluding2011,andbyEUR0.10 forthe2012tranche.


Thefollowingtableindicatesadditionsanddisposalsofoptionsoutstanding,togetherwiththeaverageexercisepricesofmove-mentsandreporting-datetotals:

Total options

2012 2011 Units/price in EUR Options Avg. exercise price Options Avg. exercise price

Start of year 816,946 11.02 938,108 9.55

Granted 116,000 12.00 255,000 15.70

Exercised (15,646) 8.46 (329,859) 10.03

Expiredorforfeited (130,639) 15.33 (46,303) 12.07

End of year 786,661 10.40 816,946 11.02

ofwhichexercisable 564,072 9.72 393,249 10.46

Non-controlling interestThisitemincludestheshareholders’equityattributabletothemi-norityinterestsofEUR1,609thousand(previousyearEUR2,382thousand).

11 Pension provisions

Employees’entitlementstodefinedbenefitplansarebasedonstatutoryorcontractualarrangementsanddirectcommitments.ThepensionliabilitiesinGermanystemtoasubstantialdegreefrombenefitobligationsbasedoncontractualarrangements.TheseconstitutedefinedbenefitcommitmentsbyGermancom-panies,basedsubstantiallyonbenefitarrangementsoftheEssenFederationandonguidelinesonthegrantingofcompanypen-sionsandadefinedbenefitscheme.Theobligationscomprisethepaymentofretirementbenefits,payableuponreachingpension-ableage.Thelevelofthepaymentsdependsinessenceonthenumberofyears’servicecompletedandthepensionablesalarypriortothestartofbenefitpayments.Thebenefitobligationsbasedonthesecontractualarrangementsrelateprincipallytotheexistingobligationsofonedomesticcompany.TheplansbasedonstatutoryarrangementslargelyconsistofbenefitobligationsforalimitednumberofmanagementemployeesintheNetherlands,

whowillreceivelife-longretirementbenefitpaymentsfromthetimetheiremployedrelationshipceasesasaresultofreachingpensionableage.Inothercountries,thereexistcommitmentstoaminorextent.

RetirementbenefitsinGermanyarefinancedexclusivelybymeansofpensionprovisions.ThebenefitobligationsintheNetherlandsarefinancedmainlybymeansofexternalpensionfunds.

Theaccrualforpensionplansrecognisedinthebalancesheetcorrespondstothepresentvalueoftheshareofretirementben-efitsearnedatthebalancesheetdate,takingaccountoffutureincreases(definedbenefitobligation,DBO)lessthefairvalueatthebalancesheetdateoftheexternalplanassets,afteradjust-mentforaccumulated,unrecognisedactuarialgainsandlossesandunrecognisedpastservicecost.

ThepensionprovisionswerecalculatedusingtheprojectedunitcreditmethodpursuanttoIAS19,whichalsotakesaccountofanticipatedpayandretirementbenefitincreases.Theextentoftheaccrualhasbeencalculatedusingactuarialmethodsandthelatestmortalitytables(Germany:G.Heubeck2005;Netherlands:“Collectief1993”).

Key actuarial assumptions

2012 2011in % Germany Netherlands Germany Netherlands

Pensionableage(years) 63 65 63 65

Discountingrate 3.50 3.90 4.70 5.10

Assumedsalaryincreases 2.50 2.00 2.50 2.00

Assumedpensionincrease 1.00 3.00 1.00 3.00

Employeeturnover 2.00 2.97 2.00 2.97

Expectedreturnonplanassets 2.75 3.90 2.75 5.10


Discountinghasbeenbasedonaninterestrateinlinewithamatchingaverageinterestrateforhighqualitycorporatebonds.Valuesforstatutorilydueterminationpaymentsupontakingretirementarealsoincluded.

Retirement benefit payments

in EUR ’000 31/12/2012 31/12/2011

Fund-financedobligations 3,002 2,941

Fairvalueofplanassets (3,020) (2,998)

Subtotal (18) (57)

Presentvalueofnon-fund-financedobligations 29,106 23,257

Unrecognisedactuarialgains (4,915) 285

Pension provisions reported 24,173 23,485

*Inthe2012financialyearthisincludestheeffectoftheupperlimitofEUR32thousand(previousyearEUR30thousand)pursuanttoIAS19.58Bthathasnotyetbeenrecognisedinthebalancesheet.

Development in external plan assets

in EUR ’000 2012 2011

PlanassetsatJanuary1 2,998 3,994

Deconsolidation 0 (1,020)

Expectedreturnonplanassets 8 7

Actuarialgainsandlosses 2 3

Exchangedifferences 0 0

Contributionsbyemployer 20 22

Contributionsbyplanparticipants 0 0

Paymentsmade (8) (8)

Plan assets at December 31 3,020 2,998

The“expectedreturnonplanassets”isbasedonanassumedlong-termreturnofbetween2.75%and3.9%.Thistakesaccountoftheassetstructure,maturitiesandreinvestmentopportunitiesatthebalancesheetdate.

Composition of plan assets

in EUR ’000 at December 31 2012 2011

Equityinstruments 0 0

Debtinstruments 0 0

Landandbuildings 0 0

Otherplanassets 3,020 2,998

Total plan assets 3,020 2,998

ThetotalplanassetsincludeownfinancialinstrumentsamountingtoEUR315thousand(previousyearEUR293thousand).

Thepensioncommitmentsdevelopedasfollows:

Development in present value of defined benefit obligation

in EUR ’000 2012 2011

Atstartoffinancialyear 26,199 25,054

Deconsolidation 0 (1,159)

Currentservicecost 395 381

Interestexpense 1,084 1,062

Contributionsbyplanparticipants 0 0

Exchangedifferences 0 0

Actuarialgainsandlosses 5,200 1,550

Paymentsmade (770) (689)

At end of the financial year 32,108 26,199

Pension cost

in EUR ’000 2012 2011

Currentservicecost 395 381

Interestexpense 1,084 1,062

Expectedreturnonplanassets (8) (7)

Actuarialgainsrecognisedinthecurrentyear (1) (1)

Total 1,470 1,435

Thecurrentservicecostandtheactuarialgainsareshownunderpensioncost,whereastheinterestexpenseandtheexpectedreturnonplanassetsarereportedwithinnetinterest.TheactualreturnonplanassetsamountedtoEUR10thousand.Forthe2013financialyear,paymentsintotheplanofEUR52thousandandfromtheplanofEUR805thousandareexpected.

Inrecentyearsthefinancingstatus,comprisingthepresentvalueofallretirementbenefitsandthefairvalueoftheplanassets,haschangedasfollows:


Development in defined benefit obligations and plan assets

Dec 31 in EUR ’000 2012 2011 2010 2009 2008

Presentvalueofthedefinedbenefitobligation 32,108 26,199 25,054 22,838 19,106

Fairvalueofexternalplanassets 3,020 2,998 3,994 3,012 2,519

Financing status 29,088 23,201 21,060 19,826 16,587

Experienceadjustmentstoplandebts 178 (3) (89) 173 1

Experienceadjustmentstoplanassets (2) 0 3 3 0

Sensitivity analysis on pension provisionsThecalculationsofpensionprovisionscanbeinfluencedsubstan-tiallybythediscountrateapplied.Wehavethereforeinadditioncalculatedthepensionprovisionswitha1.0%higherdiscountingrate.Thiswouldthereforereducethecarryingamountofthede-finedbenefitobligationsbyEUR4,681thousand.

Provisions

Claims and Warranty and legal Personnel- Miscellaneous in EUR ’000 obligations proceedings related costs provisions Total

01/01/2012 11,799 1,110 2,223 2,437 17,569

Added 8,846 105 1,903 2,829 13,683

Used (7,359) (126) (722) (753) (8,960)

Reversed (370) (112) (644) (703) (1,829)

Exchangedifferences 0 0 0 15 15

Compounding 0 0 0 0 0


Deconsolidation (5) 0 0 (56) (61)

31/12/2012 12,911 977 2,760 3,769 20,417

Ofwhichuseexpected<1year 262 0 50 3,350 3,662

12 Provisions

Thefollowingtableshowsthemovementsinprovisionsintheyearunderreview:

Adistinctionbetweenshort-termandlong-termprovisionswasmadeonthebalancesheet,basedontheestimatedtimingoftheiruse.Theprovisionsforwarrantyobligationsarecalculatedforeachtypeofrevenueaccordingtovaluesindictedbyexperi-ence,aswellasforspecificindividualcases.Thewarrantyobliga-tionswerecreatedforgeneralandindividualwarrantyrisksonthebasisofvariouswarrantyfactors.Thewarrantyperiodsgenerallylastbetween2and6years,possiblyvaryingupwardsforgoodwillreasons.Theoutflowofresourcesforclaimsandcourtprocessesisexpectedwithinthenext1to3years.Thepersonnel-relatedprovisionslargelyrelatetoadjustmentmeasuresagreedandwerecalculatedonthebasisofcourtsettlementproposalsorsettlementformulasagreedwithindividualsorworkscouncils.Thepersonnel-relatedprovisionsmoreoverincludeprovisionsfor

long-servicepaymentsmadeafteremploymentbythecompanyforaspecifiednumberofyears.Provisionse.g.forimpendinglossesandagencycommissionoutstandingthatwilllargelybeusednextyeararerecognisedasaliabilityintheotheraccrualsandprovisions.

13 Borrowings

Thefollowingtableshowsbankliabilitiesandotherloans,brokendownaccordingtorealestateloans,generalcreditfacilitiesandotherloans.


Carrying amounts of liabilities denominated in the following currencies

in EUR ’000 31/12/2012 31/12/2011

EUR 86,992 105,610

DKK 1,341 1,787

KES 546 572

USD 186 189

PLN 74 101

Total 89,139 108,259

Inthecaseoftherealestateloans,thefixedinterestratesintheindividualloanagreementsexpireatvarioustimesbetween2013and2021,withtheresultthattheriskisadequatelydiversified.Thesameappliestotheotherloans,wherethefixedinterestratesexpirebetween2013and2022.Thefairvalueofthefinancialdebtthatwasdeterminedbydiscountingfuturecashflowsisapprox.EUR4.3million(previousyearapprox.EUR4.7million)abovethecarryingamounts.

Thefollowingtablesindicatethelevelofsecuritiesfurnished:

Borrowings maturities schedule

Total Of which Of which Of which outstanding maturity less maturity maturity more Interestin EUR ’000 amount than 1 year 1 to 5 years than 5 years rate spread

31/12/2011

Realestateloans 11,842 1,179 5,010 5,653 2.1–5.9%

Otherloans 71,766 17,399 50,804 3,563 0.9–5.9%

Generalcreditfacilities 22,616 22,616 0 0 1.5–5.9%

Borrowings excluding leases 106,224 41,194 55,814 9,216

Financeleases 2,035 473 1,562 0

Total 108,259 41,667 57,376 9,216

31/12/2012

Realestateloans 11,406 1,292 4,355 5,759 1.8–8.4%

Otherloans 63,597 31,368 30,459 1,770 0.9–5.5%

Generalcreditfacilities 12,349 12,349 0 0 0.9–8.5%

Borrowings excluding leases 87,352 45,009 34,814 7,529

Financeleases 1,787 405 1,382 0

Total 89,139 45,414 36,196 7,529

Security for liabilities to credit institutions

in EUR ’000 31/12/2012 31/12/2011

Property,plantandequipment 50,463 45,710

Intangibleassets 6,499 8,065

Inventories 38,176 46,269

Receivables 29,112 24,615

Otherassets 34,642 24,209

Total 158,892 148,868

Pledged interest in companies

Ownership interest

BrinkClimateSystemsB.V. 100%

NedAirHoldingB.V. 100%

UbbinkUKLtd. 100%

UbbinkFranceS.A.S. 100%

UbbinkN.V./S.A. 100%

InnosourceHoldingB.V. 100%

CentrothermSystemtechnikGmbH 85%


Securitywasfurnishedonthecustomarycommercialtermsforlending.

Finance leasesLeasingarrangementsareenteredintoonlytoalimitedextent.Thedecisiononwhethertofinanceaninvestmentmeasurebybankloanorbyleaseagreementisreachedonacase-by-casebasisanddependsprimarilyontheprevailingtermsavailableatthetimeofdeciding.Themajorityoffinanceleaseagreements

pursuanttoIAS17(FinanceLeases)incorporateapurchaseoptionatapriceofeitherEURnilorwellbelowtheanticipatedmarketvalue.ItisthereforetobeexpectedthattheassetsinquestionwillpassintotheownershipoftheCENTROTECGroupattheendofthelease’sterm.Thefollowingtableshowsthecapitalleaseobligationswithcorrespondingdiscountedandnominalleasinginstalmentsincludingtheinterestcomponent,brokendownaccordingtoterm.

Finance leases

Of which Of which Of which maturity less maturity maturity morein EUR ’000 Total than 1 year 1 to 5 years than 5 years

31/12/2011

Minimumleasepayments 2,174 521 1,653 0

Ofwhichinterestportion 139 48 91 0

Present values 2,035 473 1,562 0

31/12/2012

Minimumleasepayments 1,880 441 1,439 0


Present value 1,787 405 1,382 0

14 Other liabilities

Thefollowingtableshowsthebreakdownlinebyline:

in EUR ’000 31/12/2012 31/12/2011

Other non-current liabilities

Purchasepriceliability 7,584 9,282

Derivativeliabilities 1,556 1,922

Miscellaneousfinancialliabilities 139 154

Other financial liabilities 9,279 11,358

Miscellaneousliabilities 340 376

Other liabilities 340 376

Other current liabilities

Interestdeferrals 581 506

Outstandinginvoices 2,457 2,944

Bonuspaymentstocustomers 4,138 4,623

Creditsoutstanding 827 627

Miscellaneousfinancialliabilities 1,966 2,332

Other financial liabilities 9,969 11,032

Taxationandsocialpremiums 2,987 3,395

Vacationandovertime 5,941 5,859

VAT 2,783 2,697

Advancesreceived 4,902 9,064

Partialretirement 2,452 2,704

Employeeremuneration 8,309 6,285

Miscellaneousliabilities 1,957 1,794

Other liabilities 29,331 31,798

Theactuariallydeterminedobligationsforpartialretirementwerediscountedat3.74%andrecognisedasaliabilityattheirpresentvalue.Theliabilities,whichrelatetocurrentpartialretirementobligations,werenettedagainstassetsfromsecuritiesamount-ingtoEUR761thousand(previousyearEUR1,116thousand).Thesecuritieswereacquiredviaatrusteeshipinordertofulfilstatu-toryrequirementsinrespectofstatutoryinsolvencyinsuranceforpartialretirementobligationsenteredinto.Thegreaterportionofderivativefinancialinstrumentsisdueinthenextfiveyears.


15 Supplementary disclosures onfinancial instruments

Thefollowingtablesshowthecarryingamountsoffinancialassetsandliabilitiesaccordingtomeasurementcategory,aswellastheirfairvalues:

Financial assets and liabilities

At amortised cost At At fair value Stated Total acquisition amount acc. cost to IAS 17

Derivative financial Liabilities Available- Available- instruments recognised at Loans for-sale for-sale used for amortised and financial financial hedgingin EUR ’000 cost receivables instruments instruments purposes

Balance sheet item at December 31, 2011 Carrying Carrying Carrying Carrying Carrying Carrying Carrying Fair

amount amount amount amount amount amount amount value

Loansoriginatedbytheenterprise 80 80 80

Investments 52 52 52

Securities 1,301 1,301 1,301

Cashandcashequivalents 48,146 48,146 48,146

Tradereceivables 63,740 63,740 63,740

Derivativefinancialinstruments 0 0

Miscellaneousfinancialassets 4,362 4,362 4,362

Total financial assets, December 31, 2011 0 116,328 52 1,301 0 0 117,681 117,681

Borrowingsexcludingfinanceleases 106,224 106,224 110,894

Financeleases 2,035 2,035 2,035

Tradepayables 41,879 41,879 41,879

Derivativefinancialinstruments 2,025 2,025 2,025

Miscellaneousfinancialliabilities 20,365 20,365 20,365

Total financial liabilities, December 31, 2011 168,468 0 0 0 2,025 2,035 172,528 177,198

Balance sheet item at December 31, 2012

Loansoriginatedbytheenterprise 81 81 81

Investments 40 40 40

Securities 728 728 728

Cashandcashequivalents 61,644 61,644 61,644

Tradereceivables 55,147 55,147 55,147

Derivativefinancialinstruments 61 61 61

Miscellaneousfinancialassets 5,241 5,241 5,241

Total financial assets, December 31, 2012 0 122,113 40 728 61 0 122,942 122,942

Borrowingsexcludingfinanceleases 87,352 87,352 91,655

Financeleases 1,787 1,787 1,787

Tradepayables 36,868 36,868 36,868

Derivativefinancialinstruments 1,556 1,556 1,556

Miscellaneousfinancialliabilities 17,692 17,692 17,692

Total financial liabilities, December 31, 2012 141,912 0 0 0 1,556 1,787 145,255 149,558


Thecategoryofloansoriginatedbytheenterpriseincludeslong-termloansthataremeasuredatamortisedcost.Thefairvalueoftheloanscorrespondsapproximatelytothecarryingamount.

Interestsincompaniesnotincludedinconsolidationandnotaccountedforbytheequitymethodaresummarisedinthein-vestmentscategory.Theseareexclusivelynon-listedcorporateenterprises.Theinvestmentsaremeasuredatacquisitioncostasnopubliclylistedmarketpricesexistandthefairvaluecannotbereliablydeterminedduetotheuncertaintyoffuturecashflows.Thefairvaluecouldonlybereliablydeterminedthroughspecificsalesnegotiations.

Thecarryingamountsoftheassetsinthesecuritiescategorycorrespondtotherespectivemarketprices.

Theassetsinthecategoriescashandcashequivalents,tradereceivablesandmiscellaneousassetshavepredominantlyshortmaturitydates,withtheresultthattheircarryingamountsatthebalancesheetdatecorrespondtothefairvalues.

Thecategoriesderivativeassetsandliabilitiesinhedgeaccount-ingincludeexclusivelyhedginginstrumentsdesignatedascashflowhedges,whicharerecognisedattheirfairvalue.

Thecategoriestradepayablesandmiscellaneousfinancialliabilitiesfundamentallycontainliabilitieswithregularlyshortmaturities.Thecarryingamountsthereforecorrespondtothefairvalues.

Thecategoriesborrowingsexcludingfinanceleasesandfinanceleaseliabilitiescontainliabilitiespredominantlywithmaturitiesofmorethanoneyear.Thefairvaluesaredeterminedbydiscountingthecashflowsassociatedwiththeliabilities,takingaccountofthecurrentinterestrateparameters.Theindividualcreditworthi-nessratingswithinthegrouparetakenintoaccountintheformofmarketcreditworthinessandliquidityspreadswhendeterminingthepresentvalue.

Net gains or losses from financial instruments by measurement categoryThefollowingtableshowsthenetgainsorlossesonfinancialin-strumentstakenintoaccountintheincomestatement,bymeas-urementcategory.Interest,currencytranslation,impairment,reversalsandresultsfromdisposalsweretakenintoaccountindeterminingthenetresults.

Financial liabilities Available-for-sale Loans and measured at financial in EUR ’000 receivables amortised cost instruments Total

2011 (1,662) (7,465) 0 (9,127)

2012 268 (7,499) 0 (7,231)

Derivative financial instrumentsThegroupusesderivativefinancialinstrumentssuchasinter-estrateswapsandcapsforhedginginterestraterisks.Forwardcontractstohedgeagainstexchangeratefluctuationwerealso

concludedintheperiodunderreview.Theycomprisecashflowhedges.Thefollowingtableshowsthecontractsconcluded.

in EUR ’000 2012 2011Financial derivatives Contract volume Total assets Liabilities Total assets Liabilities

Interestrateswaps 51,565 0 1,556 0 1,927

Caps 5,500 0 0 0 0

Collars 0 0 0 0 39

Forwardcontracts 2,274 61 0 0 59

Total 59,339 61 1,556 0 2,025

ofwhichshort-term 61 0 0 103


Thefullfairvalueofaderivativehedginginstrumentisclassifiedasanon-currentasset/liabilityprovideditsmaturityexceeds12months;itisotherwiseclassifiedasacurrentasset/liability.

TheineffectiveportionofcashflowhedgesrecognisedintheincomestatementamountstoEUR167thousand(previousyearEUR280thousand).During2012,netunrealisedlossesfromthemeasurementofderivativesamountingtoEUR455thousand(previousyearEUR797thousand)weremeasuredincome-neutrallywithinequity.EUR169thousandfromtheotherresultwasrecognisedintheincomestatement.

Interest rate hedging instrumentsAtDecember31,2012thefixedinterestratesforinterestrateswapsvariedbetween1.39and4.40%(previousyear1.86and4.40%),andthecapwas4.25%(previousyear4.25%).Thegainsandlossesfrominterestratehedginginstrumentsrecognisedwithinequity(reserveforcashflowhedges)arecontinuallyrec-ognisedthroughprofitandlossuntilthebankloanshavebeenrepaid(Note13).

Forward contractsHedgedforeign-currencytransactionswithahighprobabilityofoccurrenceareexpectedtooccuratvariouspointswithinthenexttwelvemonths.GainsandlossesonfuturecontractsinforeigncurrencyatDecember31,2012thatarerecognisedinthehedg-ingreservewithinequityarerecognisedintheincomestatementintheperiodinwhichthehedged,plannedtransactionhasanef-fectontheincomestatement.Thisnormallyoccursinthetwelvemonthsfollowingthebalancesheetdate.

16 Other income

Thebreakdownofotherincomeisasfollows:

in EUR ’000 2012 2011

Reversalofprovisions 1,885 2,254

Costspassedon/costsrefunded 877 1,170

Governmentgrants 1,030 1,058

Liquidation/reversalofreductionsforimpairmentonreceivables 1,218 322

Foreignexchangegains 1,239 214

Insuranceandothercompensation 580 214

Salesproceedsfromthedisposaloffixedassets 106 119

Other 4,979 4,293

Total 11,914 9,644

Thecompensationcomprisespaymentsfrominsurersandothercompensationreceivedorclaimed.

Government grants

in EUR ’000 2012 2011

Personnel-related 660 711

Other 370 347

Total 1,030 1,058

ThegovernmentgrantsconsistmainlyofreimbursementsfromtheFederalEmploymentAgencyforemployeesinpartialretire-ment.Conditionsthatwereattachedtothesepaymentshavebeenfulfilledatthebalancesheetdate.

17 Cost of purchased materials and services aswell as change in inventories

Cost of purchased materials

in EUR ’000 2012 2011

Costofpurchasedmaterials 252,192 264,296

Costofpurchasedservices 8,874 8,914

Supplierdiscounts (844) (871)

Total 260,222 272,339

Changeininventoriesoffinishedgoodsandworkinprogress 186 1,811

Adjustedcostofpurchasedmaterials 260,408 274,150

Aswellasthecostofpurchasedmaterials,thechangeininvento-riesincludespersonnelexpenseandotherexpensecomponents.However,thecostofpurchasedmaterialscomponentisgenerallythelargestsingleitem.

18 Personnel expenses and total employees

Personnel expenses

in EUR ’000 2012 2011

Wagesandsalaries 124,962 117,062

Socialinsurance 13,747 12,873

Expensesfordefinedbenefitplans 394 380

Expensesfordefinedcontributionplans 11,736 10,566

Share-basedpayment 201 997

Total 151,040 141,878

Personnelexpensesratio 28.3% 26.4%


19 Other expenses

OtherexpensesfellbyEUR5.1millioninthe2012financialyear,fromEUR87.8milliontoEUR82.7million.

Otherexpensesarebrokendownasfollows:

Other expenses

in EUR ’000 2012 2011

Outwardfreight 14,645 14,539

Travelexpensesandfleet 11,982 11,510

Promotionalcosts 10,441 9,803

Guaranteeexpenses 5,631 6,819

Energy 4,478 4,385

Maintenancecosts 3,569 4,026

Legalandconsultancycosts 3,720 3,783

Salescommissions 2,938 3,180

Rentforbuildings 2,546 3,021

Otherpersonnelexpenses 2,515 2,617

ITexpenses 2,877 2,528

Generalrunningcosts 1,907 1,960

Baddebtlossesandimpairment 2,284 1,921

Communication 1,442 1,534

Insurance 1,146 1,508

Otheradministrativecosts 916 1,050

Othertaxes 776 819

Leasing/otherrent 590 618

Exchangeratelosses 87 593

Researchanddevelopmentexpenditure 699 561

Packaging 725 500

Patentprotection 351 452

Buildingservices 283 449

Membershipfees(e.g.ChamberofCommerce) 460 402

Wastedisposal 345 326

Lossesfromthedisposalofassets 135 316

Investorrelations 207 204

Other 5,040 8,419

Total 82,735 87,843

Total employees

2012 2011 Average At reporting date Average At reporting date

Individuals 3,058 3,055 2,936 3,015

FTE(takingaccountofshort-time) 2,945 2,937 2,819 2,906

ofwhichofficestaff 1,556 1,559 1,481 1,522

ofwhichindustrialworkers 1,389 1,378 1,338 1,384

20 Interest income and expenseInterestincomeandexpenseisbrokendownasfollows:

in EUR ’000 2012 2011

Interestincome 378 289

Interestexpenseonloans (4,199) (4,830)

Otherinterestexpense (1,748) (1,331)

Total (5,569) (5,872)

ofwhichRetirementbenefitobligations 1,076 1,055

ThetotalinterestincomeandtotalinterestexpenseforfinancialassetsandfinancialliabilitiesthatarenotmeasuredatfairvaluethroughprofitorlossamounttoEUR(3,858)thousand(previousyearEUR(4,588)thousand).

21 Result from equity investments

TheresultfromequityinvestmentscomprisestheshareofthelossesofcompaniesaccountedforusingtheequitymethodamountingtoEUR(7,349)thousand,andincomefromthesaleofinvestmentstotallingEUR9,782thousand.

22 Income tax

Incometaxiscomposedasfollows:

in EUR ’000 2012 2011

Actualincometaxexpenseforthecurrentfinancialyear 11,338 9,497

Actualincometaxexpenseforpreviousfinancialyears (65) (317)

Deferredtaxforthecurrentfinancialyear (1,986) (535)

Deferredtaxforpriorperiods 515 352

Total 9,802 8,997

Deferredtaxincomedevelopedasfollows:

in EUR ’000 2012 2011

Fromtemporarydifferences 1,389 1,729

Fromlosscarryforwards 81 (1,546)

Deferred tax income 1,470 183


Therelationshipbetweenactualtaxexpenseandanticipatedtaxexpenseisasfollows:

Reconcilation of actual expense with anticipated tax expense

in EUR ’000 2012 2011

Resultbeforeincometaxes(EBT) 32,096 (404)

Lessresultfrominvestmentsrecognisedusingtheequitymethod (2,953) 19,302

Adjustedresultbeforeincometaxes 29,143 18,898

Anticipated tax expense (onbasisofrespectivecompanytaxrates) (8,690) (5,306)

Anticipatedtaxrate(in%) 29.8 28.1

Adjustments to anticipated tax expense

Effectofnon-deductibleexpensesandtax-exemptincome (54) (836)

Taxeffectsfromlosscarryforwards (869) (2,619)

Effectfromchangesintaxrates 89 (45)

Adjustmentsforearlierfinancialyears(actualincometaxexpenseanddeferredtax) (278) (191)

Tax expense according to income statement (9,802) (8,997)

Effectivetaxrate(in%) 33.7 47.6

ThereportedtaxexpenseofEUR9.8million(previousyear:EUR9.0million)differsbyEUR1.1million(previousyear:EUR3.6mil-lion)fromtheanticipatedtaxexpenseofEUR8.7million(previousyear:EUR5.3million)thatisobtainedifaweightedanticipatedaveragetaxrateisappliedtoEBT.Thisaverageratewasdeter-minedonthebasisoftherespectivelocalcorporationtaxratesandwas29.8%in2012(previousyear:28.1%).Theeffectivetaxrateis33.7%(previousyear:47.6%).Thechangeisattributabletoanon-recurringeffectfromthedeconsolidationofonesubsidiaryinthepreviousyear(EUR0.9million).

23 Non-controlling interest

AshareofgainsandlossesisduetotheothershareholdersofCENTROTEC,asstatedseparatelyundernon-controllinginter-ests.ThenetlosssharesamounttoEUR423thousandatthereportingdate(previousyearnetlossshareEUR25thousand).ThesecompriseprofitsharesamountingtoEUR58thousand(previousyearEUR329thousand)andlosssharesamountingtoEUR481thousand(previousyearEUR354thousand).

24 Earnings per share

Theearningspershare(basic)andthedilutedearningspershareareillustratedinthefollowingtable.Thebasicearningspersharearecalculatedonthebasisoftheprofitorlossfortheperiodat-tributabletotheshareholdersofCENTROTECSustainableAGinrelationtotheweightednumberofsharesissuedthroughouttheyear,lesstreasurystock(12,080shares).

Basic earnings per share

31/12/2012 31/12/2011

Consolidatednetincome(netloss)ofshareholdersinEUR’000 22,715 (9,376)

Weightedaverageordinarysharesissued,’000 17,289 17,164

Basic earnings per share in EUR 1.31 (0.55)

Thedilutedfigureincludespotentialsharesfromstockoptionsinthenumberofsharestobetakenintoaccount,overandabovethenumberofsharesinthebasicfigure.Thedilutedearningspersharearebasedontheassumptionthatallstockoptionsgrantedthroughstockoptionschemesthatcouldbeexercisedifthebal-ancesheetdateweretheendofthecontingencyperiodhadactu-allybeenexercised.Duetothefactthattheexercisingofstockoptionsistiedtothefulfilmentofindividualandcorporatetargets,itisexpectedthatonlyasmallernumberofoptionsthanthemaximumnumbergrantedwillbeexercised.Thedilutiveeffectiscalculatedontheassumptionthattheissueofsharesonthebasisofpotentialexerciseofoptionsismadeatfairvalue,beingtheav-eragequotedpriceofthesharesduringthefinancialyearinques-tion.Thenumberofdilutiveoptionsthusdeterminedistreatedasanissueofordinarysharesfornoconsideration.Suchordinarysharesgeneratenoproceedsandhavenoeffectonthenetprofitattributabletoordinarysharesoutstanding.Suchsharesaredilu-tiveandareconsequentlyaddedtothenumberofordinarysharesoutstandinginthecomputationofdilutedearningspershare.

Diluted earnings per share

31/12/2012 31/12/2011

Consolidatednetincome(netloss)ofshareholdersinEUR’000 22,715 (9,376)

Weightedaverageordinarysharesissued,’000 17,289 17,164

Assumedexerciseofstockoptionsgranted(weightedaverage),’000 218 246

Weightedaveragedilutedordinarysharesissued,’000 17,507 17,410

Diluted earnings per share in EUR 1.30 (0.54)


25 Segment report and revenues

TheCENTROTECGrouphasidentifiedthreereportableseg-ments,whichareorganisedandrunlargelyindependentlyinaccordancewiththetypeofproductsandservicestheyoffer:ClimateSystems,GasFlueSystems,andMedicalTechnology&EngineeringPlastics.Thethreesegmentsaredistinguishedes-sentiallybytheirproductranges.TheClimateSystemssegmentencompassesextensiveproductsportfoliosofequipmentforheating,ventilationandcoolinginordertomaintainahealthyhomeclimateineveryinterior.Oneparticularfocalareaisintegratedsystemsincorporatingsolutionsthatuserenewableenergies.TheGasFlueSystemssegmentmanufacturesandsellsplasticandmetalgasfluesystems.Theproductrangeisroundedoffbyalmost1,000componentsforgasfluesystemsengineeringandinnovativeroofproducts.Finally,thesmallestsegmentMedicalTechnology&EngineeringPlasticsdevelopsandsellsitsownandOEMproductsfromthesphereofmedicaltechnologysystemsandcomprehensivesolutions,spinalim-plantsandsemi-finishedproducts,prefabricatedpartsandas-sembliesmadefromengineeringplasticsformedicaltechnologyandplantengineering,allfromasinglesource.OneManage-mentBoardmemberisresponsibleforeachsegment.DrHuis-manisresponsibleforClimateSystemsandGasFlueSystems,andDrTraxlerforMedicalTechnology&EngineeringPlastics.Thesubsidiariesareallocatedtooneofthethreesegmentsinlinewiththeirproductrangeandthemanagementresponsibleforthem,andconsolidatedaccordingly.DetailsofwhichfullyconsolidatedcompaniesintheConsolidatedFinancialState-mentsareallocatedtowhichindividualsegmentsareindicatedinthepresentationoftheconsolidatedcompanies.

Therevenuesrelateprincipallytodeliveriesofgoods.TheyarereportednetofVAT,returns,discountsandpricereductions.The“GasFlueSystems”segmentalsoincludesthefiguresforCENTROTECSustainableAG.Inter-segmentalbusinessispricedaccordingtothearm’slengthprinciple.Pricingiscomparabletothirdpartytransactionslesscostitems(inparticulardistribu-tioncosts),whichdonotoccurininter-segmentaltransactions.Incomeandexpenditureareallocateddirectlytotheindividualcompanieswithintheindividualsegments.Thesegmentexpensesandincomealsoincludeallocationsofexpensesfortheholdingcompany.

Inter-segmentalrelationships,i.e.relationshipsandtransactionsbetweentheindividualsegments,areeliminatedfromthecon-solidationcolumn.ThissimultaneouslyreconcilesthefigureswiththoseintheConsolidatedFinancialStatements.

Thedepreciationandamortisationforthesegmentsrepresentthelossofvaluebythesegments’long-termassets,theinvestments,andtherespectiveadditionstothefixedassetsandintangibleas-setsforthesegments.

Thesegmentassetsincludethefixedassetsandcurrentassetsforeachsegment.Entitlementstoincometaxrebatesandde-ferredtaxassetscapitalisedarenotincluded.

Reconciliation of assets

in EUR ’000 2012 2011

Totalassets 412,738 408,688

Associatedcompaniesaccountedforusingtheequitymethod 1,485 11,458

Loansoriginatedbytheenterpriseandinvestments 849 1,433

Entitlementstoincometaxrebates 3,095 4,111

Total (ASSETS): 418,167 425,690

Thesegmentliabilitiesincludetheoperatingliabilitiesandpro-visionsforeachsegment.Incometaxliabilities,deferredtaxliabilitiesandfinancialdebtarenotincluded.

Reconciliation of liabilities

in EUR ’000 2012 2011

Liabilities 130,377 137,497

Borrowings 89,139 108,259

Incometaxespayable 20,582 22,481

Shareholders’equity 178,069 157,453

Total (EQUITY AND LIABILITIES): 418,167 425,690


26 Cash flow statement

TheConsolidatedCashFlowStatementshowshowthegroup’scashandcashequivalentschangedinthecourseofthefinancialyearunderreviewasaresultofcashinflowsandoutflows.Adistinctionismadebetweencashflowsfromoperatingactivitiesontheonehandandcashflowsfrominvestingandfinancingactivitiesontheother.Thecashflowsfromoperatingactivitiesaredeterminedaccordingtotheindirectmethod,byadjustingtheearningsbeforeinterestandtaxesfornon-cashitems,changesinworkingcapital(receivablesandotherassets,inventoriesandliabilities)andallchangesthatareallocabletoinvestingandfinancingactivitiestoproducethecashflowfromoperatingactivi-ties.Bycontrast,theinterestresultandtheincometaxespaidarebasedonactualcashflows.Thefinancialresourcesconsistalmostexclusivelyofdemanddepositsandtheavailmentofcur-rentaccountswithcommercialbanks.Thefinancialresourcesarecomposedasfollows:

Breakdown of financial resources

in EUR ’000 31/12/2012 31/12/2011

Cashinhand 46 44

Cashandcashequivalents 61,598 48,102

Bankoverdrafts (12,349) (22,616)

(includedin“Short-termborrowings”item)

Total 49,295 25,530

ThecashflowfromoperatingactivitiesreachedEUR38.4mil-lioninthe2012financialyear,down8.3%ontheprior-yeartotalofEUR41.8million.Thisdecrease,despitethesubstantiallyhigheroperatingresult,wasmainlyattributabletomuchlowerdepreciationandamortisationofEUR20.0millioncomparedwiththepreviousyear’selevatedEUR24.5million,alongwiththereductionintradepayablesin2012followingthepreviousyear’sincrease.ThenegativecashflowfrominvestingactivitiesofEUR-4.2millionin2012wasasubstantialimprovementontheprior-yearEUR-28.9million.Themainnon-recurringef-

fectsherearethecashproceedsofEUR13.8million(previousyearEUR0.0million)fromthedisposalsofinvestments–inthemainCENTROSOLARandBondLaminates–andthereductionincashpaymentsfortheacquisitionofinvestmentstoEUR0million(previousyearEUR-7.8million).Withcapitalrepayments(EUR-18.2million)andthedividend(EUR-1.7million)remainingvirtuallyconstant,thenegativecashflowfromfinancingactivi-tiesfellthankstotheincreasedproceedsofEUR9.4million(previousyearEUR4.2million)fromtheraisingofborrowings.ThisincreasealsomorethancompensatedforthefallincashproceedsfromtheissuanceoftreasurystocktoEUR0.1million(previousyearEUR3.3million).Overall,thefinancialresourcesoftheCENTROTECGroupatDecember31,2012wereupEUR23.8milliononthepreviousyearatEUR49.3million.

Financing streams

in EUR ’000 2012 2011

Financialresourcesraised 9,357 4,193

Financialresourcesrepaid (18,244) (17,842)

Change in borrowings (8,887) (13,649)

Cash inflow from asset disposals

in EUR ’000 2012 2011

Netresidualcarryingamounts 1,741 1,639

Gain/lossonassetdisposals (29) (197)

Proceeds from asset disposals 1,712 1,442

Short-termcreditfacilitiestosecureconstantliquidityhavebeenarrangedwithseveralcreditinstitutionsthatareindependentofeachother.Atthebalancesheetdate,theavailableborrowingfacilitiesfromcurrentaccount,guarantee/suretyordiscountlinesandfromafreecreditfacilityincludedamountstoEUR28.6mil-lion(previousyearEUR27.5million).

Substantialnon-cashtransactionsresultfromthechangeindeferredtaxesandtheissuanceofstockoptions.


K_ Otherparticulars

1_Contingent liabilities and miscellaneous particulars

Thecustomarywarrantyobligationsareassumed,forwhichprovisionshavebeenformedwhereclaimsareprobable.Inthecontextofitsordinarybusinessactivities,thecompanymore-overregularlyentersintocontingentliabilitiesfromguarantees,chequesandbillsofexchange,amongotherthings.Further-more,contingentliabilitiesmayarisefromareasofthegroupinwhichthereexiststatutoryarrangementsonpartialretirementbutforwhichnoprovisionshavebeenrecognised,asitisun-likelythatemployeesinthoseareaswillcallupontheexisting

statutoryarrangements.Provisionswereformedforareasinwhichtheprobabilityofuseisgreaterthan50%.

Overall,itisassumedthatoverandabovethesituationsde-scribedhere,nosubstantialliabilitiesaroseasaresultofthecontingentliabilitiesduringtheperiodunderreview,oronlytotheextentevidentintheseNotes.

Thefollowingtableshowsthenon-capitalisedoperationalleas-ingobligationsatthebalancesheetdate,withthecorrespond-ingleaseinstalmentsbrokendownbymaturityorminimumremainingterm.

Operational leasing

Of which maturity Of which maturity Of which maturityin EUR ’000 Total less than 1 year 1 to 5 years over 5 years

31/12/2011

Minimumleasepayments 9,269 2,455 5,843 971

Ofwhichinterestportion 1,030 78 701 251

Present values 8,239 2,377 5,142 720

31/12/2012

Minimumleasepayments 10,380 2,206 7,268 906


Present values 9,935 2,156 6,924 855

Theoperatingleasesresultmainlyfromleasearrangementswithatermofbetweenoneandfiveyearsforpassengercarsthatareusedprincipallybyourfieldserviceemployees.WeinadditionhavetenancyagreementsforbuildingsinMainburgandStaphorst.Nopurchaseoptionexists.

2_Significant events occurring after the balance sheet date

ThetakeoveragreementfortheMacedonia-basedcompanyHol-makD.O.O.E.L.,establishedin2005,wasconcludedinFebruary2013byCENTROTEC.Thisaside,therewerenosignificanteventsatandafterthebalancesheetdate.

3_Related party disclosures

Partiesareconsideredtoberelatedifonepartyhastheabilitytocontroltheotherpartyorexercisesignificantinfluenceovertheotherparty’sfinancialandoperatingdecisions.PursuanttoIAS24,themembersoftheManagementBoardandSupervisoryBoard,closemembersoftheirfamiliesaswellassubsidiaries

thatarenotfullyconsolidatedandequityinvestmentscanfun-damentallybeconsideredtoberelatedpartiesinthecaseoftheCENTROTECGroup.Relatedpartieswerenotinvolvedinanylarge,atypicalorunusualtransactionsoftheCENTROTECGroup.

Legal transactions with Management Board members and Supervisory Board membersIntheeventofworkremuneratedseparately,theSupervisoryBoardregularlychecksthatservicesrenderedonanadhocbasisbySupervisoryBoardmembersinvolvesubstantiallymorethanthatwhichcannormallybeexpectedfromaSupervisoryBoardmemberwithinthecontextoftheirSupervisoryBoardduties.

TheChairmanoftheSupervisoryBoard(GuidoA.Krass)holdsaparticipatinginterestinPariHoldingGmbH,Munich(“PH”).PHmightthereforebeclassifiedasa“relatedparty”,eventhoughtheManagementBoarddoesnotbelievethatcontrolactuallyexistsbetweentheparties.OthercompaniesofthePariGroupcouldlikewisebeclassifiedas“relatedparties”,forexamplePariCapitalAG.CostsofEUR114thousand(previousyearEUR116thousand)forconsultancyserviceswereincurredinthefinancialyear.


Other legal transactions with persons who could potentially be regarded as related parties:TheprivatecompaniesImmobilienGbRWülbeckandSolarGbRWülbeckcouldpossiblybequantifiedasrelatedparties,asDrHuisman(ChairmanoftheManagementBoardofCENTROTECSustainableAG),DrKirsch(ChairmanoftheManagementBoardofCENTROSOLARGroupAG)andMrWülbeck(ManagingDirectorofCentrothermSystemtechnikGmbHandofCentrotecCompos-itesGmbH)holdaninterestinthem.ImmobilienGbRWülbeckerectedanindustrialbuildingwhichisusedbyBondLaminatesGmbHforappropriateconsideration.SolarGbRWülbeckoperatesphotovoltaicsystemsontheroofsofCentrothermSystemtechnikGmbHandBondLaminatesGmbH.

Furthermore,SauerlandSolarFundGmbH&Co.KG(SSF)couldbeclassifiedasarelatedparty.Thecompanyisaclosed-endfundofwhichonlysenioremployeesandManagementBoardmembersoftheCENTROTECGrouparemembers.CENTROTECSustainableAGhasconcludedaservicecontractwithSSFKG.

Relations between the parent company and the subsidiariesTheactivitiesofCENTROTECSustainableAGfocusessentiallyonperformingstrategicandfinancialholdingfunctionsfortheopera-

tiveaffiliatedcompanies,onadvisingandsupportingthemforindividualprojects,andonprovidingservicesonbehalfofgroupcompaniesintheareasofaccounts,taxes,payrollaccountinganddataprocessing.CENTROTECinadditionsteersthegroupfinances,coordinatesinvestorrelationsandprovidessupportforprojectsatthesubsidiaries,includingparticularlymergersandacquisitionsactivities.

Total remuneration of the Management Board ThetotalremunerationoftheManagementBoardmembers(in-cludingretiredmembers),includingthevalue-assessedoptionsissuedin2012,wasEUR1,129thousand(previousyearEUR1,770thousand).Thetotalremunerationcomprisesnon-performance-relatedandperformance-relatedcomponentsandalsoincludessocialcontributionsandfringebenefitssuchascompanycarsandpensioncommitments.Thetotalamountalsoincludestheex-penseincurredin2012foroptionsgranted,whichhaveatheoreti-calvalueofEUR167thousand(previousyearEUR506thousand).TheremunerationoftheManagementBoardisshownaccordingtomemberinaseparateremunerationreport,inkeepingwiththecriteriaoftheCorporateGovernanceCode.TheremunerationofeachindividualManagementBoardmemberisshowninthefol-lowingtable:

Management Board Non- members performance- Performance- Components with Total Total related related a long-term in- remuneration remuneration component1,4 component4 centivising effect2 Other benefits3,4 2012 2011

DrGert-JanHuisman 399 0 82 38 519 639

AntonHans 144 0 41 35 220 260

DrChristophTraxler 290 0 40 4 334 374

AlfredGaffal(untilMarch31,2011) 0 223

JackovanderStege(untilDecember8,2011) 0 212

Retiredmembers 0 0 4 52 56 62

Total 833 0 167 129 1,129 1,770

1Incl.employer’ssocialcontributions2Valuedoptions3Expenseforpensions,companycarsandother4Currentcomponent


Remuneration of the Supervisory BoardThefixedremunerationtotalledEUR108thousand(previousyearEUR108thousand).Inadditionotherexpensesamount-ingtoEUR2thousand(previousyearEUR1thousand)wereclaimed,inparticularfortravel;thedistributionofthedividendmeantthevariableremunerationcomponentcametoEUR8thousand.Thetotalwasdistributedasfollows:MrKrassEUR52

thousand,DrHeissEUR39thousandandMrPochtlerEUR27thousand.

Directors’ holdings Thefollowingtableshowsdirectors’holdingsatthebalancesheetdate

Thestockoptionshavebeenissuedonthesametermsandcon-ditionsastotheotheremployees.

Management Board and Supervisory Board

MembersoftheManagementBoard:DrGert-JanHuisman,Nijkerk,Netherlands,merchant(Chairman)SinceMay2002ManagementBoardChairman,sinceApril2011BoardMemberforClimateSystemsandsinceDecember2011BoardMemberforGasFlueSystems

AntonHans,Apeldoorn,Netherlands,merchantSinceJanuary2008FinanceDirectorandsinceMay2007FinanceDirectorofBrinkClimateSystemsB.V.

DrChristophTraxler,Fulda,Germany,physicistSinceApril2004BoardMemberforMedicalTechnology&EngineeringPlastics

Members of the Supervisory Board:GuidoAKrass,Oberwil-Lieli,Switzerland,entrepreneur(Chairman)DrBernhardHeiss,Munich,Germany,lawyerChristianCPochtler,MA,Vienna,Austria,entrepreneur

ThefollowingmembersoftheManagementandSupervisoryBoardsalsoholdothernon-executivedirectorshipsasdefinedinSection125(1),thirdsentenceoftheGermanStockCorpora-tionAct:GuidoAKrass WolfGmbH,Mainburg,Germany medimondiAG,Fulda,Germany (Chairman) CENTROSOLARGroupAG,Munich, Germany(Chairman)

DrBernhardHeiss AltiumCapitalAG,Munich,Germany CENTROSOLARGroupAG,Munich, Germany LangenscheidtKG,Munich,Germany (DeputyChairmanofAdvisoryBoard)

ChristianC DenzelAG,Vienna,AustriaPochtler,MA PPCapitalAG,Vienna,Austria(Chairman)

DrGert-JanHuisman H.W.vanDorpBeheermaatschappijB.V., Zoetermeer,Netherlands

AntonHans medimondiAG,Fulda,Germany M.A.L.S.HoldingB.V.,Houten, Netherlands

DrChristophTraxler RolfSchmidtIndustriplastA/S,Kolding, Denmark(Chairman)

31/12/2012 31/12/2011Management Board Shares (total) Options (total) Shares (total) Options (total)

DrGert-JanHuisman 62,981 277,834 35,704 258,976

AntonHans 0 86,517 0 76,221

DrChristophTraxler 0 139,926 0 134,126

Supervisory Board

GuidoAKrass 2,400,000 0 2,400,000 0

DrBernhardHeiss 77,340 0 45,550 0

ChristianCPochtler 0 0 0 0

CENTROTEC

Ordinaryshares 17,307,466 0 17,291,820 0

Treasurystock 12,080 0 12,080 0


4_Corporate Governance Code

PursuanttoSection161oftheGermanStockCorporationAct,theManagementBoardandSupervisoryBoardofacompanylistedonthestockexchangeareobligedtodeclareonceayearwhetherandtowhatextentthecodehasbeenandiscompliedwith.

TheManagementBoardandSupervisoryBoardofCENTROTECSustainableAGhavedeclaredtheextenttowhichtherecommen-dationsoftheGovernmentCommissionontheGermanCorporateGovernanceCodearecompliedwithbytherespectivecompanies.TheregularlysubmitteddeclarationsandexplanationsarepubliclyavailableonthewebsiteofCENTROTECSustainableAGatwww.centrotec.com.

5_Independent auditors’ fees

TheauditorsofCENTROTECarePricewaterhouseCoopersAG,Germany.Theamountsshownbelowdonotcontainthefeesforotherindependentauditorsofgroupsubsidiaries,nordotheycon-taintheamountsforinternationalsubsidiariesofthegroup.

in EUR ’000 2012 2011

Auditingservicesforthefinancialstatements 313 353

Othercertificationservices 0 0

Taxconsultancyservices 0 0

Otherservices 111 87

Total expenses 424 440

6_Date and approval of the financial statements

ThefinancialstatementswereapprovedbytheManagementBoardandauthorisedasawholeforissueonMarch20,2013.

Onceapprovedandratifiedbythecorporatebodiesandfollowingtheirpublication,thesefinancialstatementsmayonlybeamendedtotheextentthatispermissiblebylaw.

Brilon,March20,2013

DrGert-JanHuisman,Chairman

AntonHans

DrChristophTraxler


Financial Calendar 2013

March 27 AnalystsMeeting/Publicationof2012accounts FrankfurtamMainMay 14 PublicationofQ12013QuarterlyReportJune 4 AnnualGeneralMeetingofShareholders BrilonAugust 13 PublicationofQ22013QuarterlyReportNovember 12 PublicationofQ32013QuarterlyReportNovember 11 – 13 GermanEquityForum FrankfurtamMain

Independent Auditors’ Report

WehaveauditedtheconsolidatedfinancialstatementspreparedbyCentrotecSustainableAG,Brilon—comprisingthestatementoffinancialposition,theincomestatement,thestatementofcomprehensiveincome,thestatementofmovementsinequity,thecashflowstatementandthenotes—forthefinancialyearfromJanuary1toDecember31,2012.ThepreparationoftheconsolidatedfinancialstatementsandgroupmanagementreportinaccordancewithIFRS,asadoptedbytheEU,andtheadditionalrequirementsofGermancommerciallawpursuanttoSection315a(1)ofGermanCommercialCode,istheresponsibilityofthecompany’sManagementBoard.Ourresponsibilityistoexpressanopinionontheconsolidatedfinancialstatementsandgroupman-agementreportbasedonouraudit.

WeconductedourauditoftheconsolidatedfinancialstatementsinaccordancewithSection317ofGermanCommercialCodeandGermangenerallyacceptedstandardsfortheauditoffinancialstatementspromulgatedbytheInstituteofPublicAuditorsinGermany(IDW).Thosestandardsrequirethatweplanandper-formtheauditsuchthatmisstatementsmateriallyaffectingthepresentationofthenetassets,financialpositionandfinancialper-formanceintheconsolidatedfinancialstatementsinaccordancewiththeapplicablefinancialreportingframeworkandinthegroupmanagementreportaredetectedwithreasonableassurance.Knowledgeofthebusinessactivitiesandtheeconomicandlegalenvironmentofthegroupandexpectationsastopossiblemis-statementsaretakenintoaccountinthedeterminationofauditprocedures.Theeffectivenessoftheaccounting-relatedinternalcontrolsystemandtheevidencesupportingthedisclosuresintheconsolidatedfinancialstatementsandthegroupmanage-

mentreportareexaminedprimarilyonatestbasiswithintheframeworkoftheaudit.Theauditincludesassessingtheannualfinancialstatementsofthoseentitiesincludedinconsolidation,thedeterminationoftheentitiestobeincludedinconsolidation,theaccountingandconsolidationprinciplesusedandsignificantestimatesmadebytheManagementBoard,aswellasevaluatingtheoverallpresentationoftheconsolidatedfinancialstatementsandthegroupmanagementreport.Webelievethatourauditpro-videsareasonablebasisforouropinion.

Ouraudithasnotledtoanyreservations.

Inouropinion,basedonthefindingsofouraudit,theconsolidatedfinancialstatementscomplywiththeIFRSasadoptedbytheEU,andtheadditionalrequirementsofGermancommerciallawpursu-anttoSection315a(1)ofGermanCommercialCode,andgiveatrueandfairviewofthenetassets,financialpositionandresultsofoperationsofthegroupinaccordancewiththeserequirements.Thegroupmanagementreportisconsistentwiththeconsolidatedfinancialstatementsandasawholeprovidesasuitableviewofthegroup’spositionandsuitablypresentstheopportunitiesandrisksoffuturedevelopment.

Essen,March20,2013

PricewaterhouseCoopersAktiengesellschaftWirtschaftsprüfungsgesellschaft

BenBuiting ppa.MatthiasSchwarze-Gerland(GermanPublicAuditor) (GermanPublicAuditor)

Imprint

TextCENTROTEC Sustainable AG

ConceptCENTROTECMetaCom, HanauGeorg BiekehörJens Gloger

Design/ProductionMetaCom, HanauJens GlogerViktor Diebold

PrintingHinckel-Druck GmbH, Wertheim/MainPrinted on heaven 42 absolute whitesoft matt coated from IGEPA,manufactured from raw materials from environmentally sound forestry and other controlled origins.

PhotosCENTROTEC-GruppeImage agencies

CENTROTEC Sustainable AG Am Patbergschen Dorn 9 D-59929 Brilon Tel. +49 (0) 2961-96 631 - 111 Fax +49 (0) 2961-96 631- 100 [email protected] www.centrotec.de

Centrotec Annual Report 2012

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