Every day counts - Deutsche Beteiligungs AG

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LADIES AND GENTLEMEN, DEAR SHAREHOLDERS: 4 This past financial year, the investment team of Deutsche Beteiligungs AG proved its calibre in a number of fields. We succeeded in profitably selling three investments from the portfolio, realizing returns far in excess of those achieved on respective capital markets. Furthermore, we contracted three mangement buyouts in 2003 – impressive proof of our leadership position in Germany’s buyout business. Another highlight: the successful completion of our fund-raising campaign. Investors are apt to entrust their capital to those investment firms capable of creating and realizing value and, in addition, those able to access attractive investment opportunities. A large part of the total capital that investors committed to management buyouts in Germany in the mid-market segment in 2002/2003 was channeled to our new DBAG Fund IV co-investment fund. Despite the improvement of nearly 19 million euros, however, the consolidated result is not in keeping with our expectations. With consolidated net income at 3.1 million euros, we have returned to the profit zone. However, the consolidated net income does not offset the loss carried forward from the previous year. We will therefore recommend not disbursing cash dividends this year. Our intention is to strengthen the Company’s financial base. Portfolio companies’ performance differs Our portfolio is diversified: investments are disseminated across different sectors of the economy and geographic regions. This mitigates risk exposure when a cyclical downturn is particularly pronounced in an industry or economic region. In 2002, German portfolio companies were among the investments hit by the slowdown in the economy, necessitating a modification of their valuation. In 2002/2003, however, valuation adjustments were exclusively performed on investments in the United States, thereby impacting the otherwise good income position achieved through realizations this year. Corrections to the valuation of investments in the portfolio amounted to 16.8 million euros. These largely relate to one fund investment and three direct investments. The past year was a year of slow growth, particularly in the United States, which weighed heavily on our American portfolio companies. A number of them even had to cope with shrinking markets; these enterprises may have improved their market positions, but have, nevertheless, forfeited earnings power for the time being. The valuation adjustments performed this year contain scope for the future. We expect that the enterprises concerned will master the challenges and return to substantially increased growth when the economy revitalizes. We feel confident that we will then be able to reverse these valuation modifications in part or completely – as was done on four portfolio investments this past financial year. Shares outperform the Dax The price movement of our shares mirrors the positive assessment by capital market players for private equity in general, and for Deutsche Beteiligungs AG in particular. With growth rates expected to rise, market observers feel that the current economic situation creates good opportunities for investments at attractive terms. The new investments of the past financial year demonstrate our ability to access such opportunities.
Changes to the Board of Management Helmut Irle will be leaving the Board of Management of Deutsche Beteiligungs AG on the best of terms and by mutual agreement at the end of January 2004. The Supervisory Board has appointed Senior Vice Presidents André Mangin and Dr. Rolf Scheffels to the Board of Management, effective January 1, 2004. The Board of Management of Deutsche Beteiligungs AG will thus consist of Wilken Freiherr von Hodenberg (Spokesman), Torsten Grede, Reinhard Löffler, André Mangin, and Dr. Rolf Scheffels. Outlook In the coming months, we plan to utilize the investment opportunities available in the market. We are currently investigating a number of attractive potential investments. The favorable position we have in the market constitutes a major competitive advantage in making new transactions – as the investments of this past financial year demonstrate. The past three financial years have shown that capital markets have a considerable impact on our line of business. Our profitable realizations are proof of our ability to exit investments independent of the stock exchange. We feel confident that Deutsche Beteiligungs AG will continue its pattern of progress this current year. Our investee businesses have exhibited resilience in a difficult economic environment, and the Company is well placed for future investing activity, drawing on a national and international network and a track record of nearly 40 years in private equity. We are convinced that the more favorable economic outlook and our entrepreneurial commitment to our portfolio companies will be reflected in a rise in the fair value of our shares and in higher share prices. January 2004 (Wilken Frhr. von Hodenberg) (Torsten Grede) (Reinhard Löffler) (André Mangin) (Dr. Rolf Scheffels) Deutsche Beteiligungs AG · Annual Report 2002/2003 Letter from the Board of Management 5
Page 1 and 2: Annual Report 2002/2003 Every day c
Page 3 and 4: Deutsche Beteiligungs AG · Annual
Page 7: Wilken Freiherr von Hodenberg born
Page 11 and 12: November 1, 2002 to December 31, 20
Page 13 and 14: Shares of Deutsche Beteiligungs AG:
Page 15 and 16: Weak dollar curtails valuation rese
Page 17 and 18: Pro-active investor relations Deuts
Page 19 and 20: Prospects for our shares Capital ma
Page 21 and 22: For instance, the special accountin
Page 23 and 24: DEUTSCHE BETEILIGUNGS AG - MARKET P
Page 25 and 26: This performance is founded on six
Page 27 and 28: We build on an established network
Page 29 and 30: Platform for growth - Opportunities
Page 31 and 32: OUR PORTFOLIO - GOOD CROSS SECTION
Page 33 and 34: Volume November 1, 2002 € 313.1 m
Page 37 and 38: MANAGEMENT BUYOUTS - PARTNERSHIPS F
Page 45 and 46: Hochtemperatur Engineering GmbH Mai
Page 47 and 48: EXPANSION FINANCING - REACHING FOR
Page 49 and 50: Bauer AG Schrobenhausen Deutsche Be
Page 51 and 52: Hucke AG Lübbecke (through Bowa Be
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Page 55 and 56: INTERNATIONAL BUYOUT FUNDS - BALANC
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Unternehmens Invest AG Vienna Deuts
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PORTFOLIO - BALANCED ACROSS INDUSTR
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Industrial profile of portfolio bal
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MANAGEMENT’S REPORT I. Market dev
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Investments during the year under r
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IV. 5. Appropriation of the distrib
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Our support for the development of
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IX. Events subsequent to the closin
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Liabilities and shareholders’ equ
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Deutsche Beteiligungs AG · Annual
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D. Accounting policies Deutsche Bet
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AUDITORS’ REPORT We have audited
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The financial statements of Deutsch
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Statutory offices Comparable office
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Statutory offices Comparable office
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MBO Multiples method Official Marke
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FIVE-YEAR FINANCIAL SUMMARY in mill
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Every day counts - Deutsche Beteiligungs AG

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