100 % FUTURE - ALNO

alno.com

100 % FUTURE - ALNO

100 % FUTURE

2010 ANNUAL REPORT


THE ALNO GROUP AT A GLANCE

REVENUE IN EUR MILL.

REVENUE 2010 AT HOME AND ABROAD

2010

2009

2008

467.3

493.4

511.2

28.4 % Abroad 71.6 % Germany

2007

602.2

EBITDA IN EUR MILL.

EBIT BEFORE RESTRUCTURING ITEMS IN EUR MILL.

2010

+ 1.0

2010

– 2.2

2009

+ 17.3

2009

– 24.2

2008

+ 19.3

2008

+ 0.2

2007

– 26.4

2007

– 23.4


GROUP FINANCIAL FIGURES

YEAR-ON-YEAR

Group financial figures (IFRS) 2010 2009 2008 2007

Consolidated income statement

Revenues EUR mill. 467.297 493.373 511.204 602.218

Total operating revenues EUR mill. 472.366 496.109 525.443 608.395

EBITDA before restructuring items EUR mill. 9.948 15.966 20.401 0.348

EBIT before restructuring items EUR mill. – 2.156 – 24.220 0.214 – 23.434

EBT before restructuring items EUR mill. – 3.216 – 40.507 – 13.829 – 34.891

Restructuring profit/loss EUR mill. – 8.962 1.306 – 1.135 – 26.069

EBT EUR mill. – 12.178 – 39.201 – 14.964 – 60.960

Consolidated net profit/loss EUR mill. – 13.084 – 38.964 – 22.638 – 60.720

Earnings per share (diluted and basic) EUR – 0.78 – 2.46 – 1.44 – 5.09

Consolidated balance sheet

Non-current assets EUR mill. 86.598 85.295 109.921 125.440

Investments in property, plant and equipment EUR mill. 15.220 15.117 10.585 15.566

Cash and cash equivalents EUR mill. 3.041 2.857 3.174 4.215

Equity EUR mill. – 69.722 – 71.132 – 36.964 – 14.375

Subscribed capital EUR mill. 45.231 41.124 41.124 41.124

Total assets EUR mill. 157.698 165.026 198.243 228.199

Consolidated cash flow statement

Cash flow from operating activities EUR mill. 11.540 21.210 – 17.108 – 2.144

Cash flow from investing activities EUR mill. – 14.300 – 15.967 – 10.581 – 14.849

Cash flow from financing activities EUR mill. 2.488 – 5.303 27.003 15.265

Net change in cash and cash equivalents EUR mill. – 0.272 – 0.060 – 0.686 – 1.728

Employees

Employees as of December 31 1,787 1,900 1,853 2,314

Year-average number of employees 1,840 1,885 2,010 2,428

Personnel expenses EUR mill. 97.900 98.539 102.871 120.232

Personnel expenses per employee on a year-average basis EUR tousand 53.21 52.28 51.18 49.52

Revenue per employee on a year-average basis EUR tousand 253.97 261.74 254.33 248.03


COMPANY PROFILE

Development, production and marketing of kitchen furniture,

sale of electrical appliances and accessories

Second-largest manufacturer of fitted kitchens in Germany, fourth-largest in Europe

Traditional, well-established German company with around 1800 employees; founded in 1927

Four internationally recognized Group brands for all price segments:

ALNO, WELLMANN, IMPULS and PINO

Quality, design and innovation as the drivers of excellent value for money;

high customer benefit, and value creation

Four production sites in Germany (Brilon, Enger, Coswig, Pfullendorf),

plus three subsidiaries abroad

Customer base: primarily resellers from the flat-pack furniture and self-service

market segments, furniture stores, kitchen specialists, real estate developers

More than 7,000 sales partners in 64 countries: 75 purchasing

associations plus independent dealers

Highest brand awareness and affinity among kitchen furniture manufacturers in Germany (78 %)


3

100 % FUTURE


2010 Annual Report


ALNO HAS SET ITSELF MAJOR OBJECTIVES. THE

COMPANY IS TO BECOME MORE PROFITABLE

AND MORE COMPETITIVE. INITIAL POSITIVE INTERIM

RESULTS REFLECT THAT THE COMPANY IS ON

COURSE.


5

CONTENTS

TO THE SHAREHOLDERS

08 The Managing Board

09 Report of the Supervisory Board

14 Information about the shares

008

SpeciAL: 1OO % FutuRE

20 ALNO brands

22 100 % Passion – ALNO Marecucina

28 1OO % Expertise – Esprit Home series

34 1OO % Clarity – ALNO‘s restructuring

018

SINGLE-ENTITY AND GROup MANAGEMENT REPORT

42 Economic and business report

64 Report on events after the balance sheet date

68 Report on opportunities and risks / Forecast report

74 Other information

040

CONSOLIDATED ANNUAL FINANciAL STATEMENTS

86 Consolidated income statement

87 Consolidated statement of comprehensive income

88 Consolidated balance sheet

89 Consolidated cash flow statement

90 Statement of changes in consolidated equity

91 Notes to the consolidated financial statements

084

154 AUDIT OpiNION

155 RESPONSIBILITY STATEMENT

157 Imprint


6

HISTORY

1960 1969

1927 1957 1958

FORMATION

GROWTH

FORMATION

1927

A carpentry workshop is established by Albert Nothdurft in

Wangen near Göppingen

1957

Production starts at Pfullendorf, Baden-Württemberg

1958

The original carpentry workshop evolves to become

Alno Möbelwerke GmbH & Co. KG (a 51 % interest is

held by AEG Group between 1970 and 1982)

GROWTH

1960

Strong growth spurt until 1970: sales rise from

EUR 2.5 billion to EUR 35.2 million within ten years

Number of employees increased from 95

to 677 over this period

1969

Start of the establishment of foreign subsidiaries:

1969 ALNO France S.à.r.l.

1970 N.V. ALNO (Belgium)

1972 ALNO Italia S.p.A. und ALNO Iberica, S.A.

1974 ALNO (Schweiz) AG (Switzerland)

1980 ALNO UK Ltd.

1984 ALNO Nederland (Netherlands)

1990

Introduction of multi-brand strategy

Founding of Impuls Küchen GmbH in Brilon

(North Rhine-Westphalia)

1992

Founding of ALNO Austria

1994

Founding of pino Küchen GmbH in Klieken (Saxony-Anhalt)


7

2007 2009 2010 2011

1995 2000 2002 2003 2004 2005

1990 1992 1994

CONSOLIDATION

RESTRUCTURING

CONSOLIDATION

1995

IPO opens the company to the capital markets

2000

Raimund Denk becomes Chief Executive Officer of ALNO AG

2002

Dr. Frank Gebert becomes Chief Executive Officer of ALNO AG

2003

Merger with the Casawell Service Group

(Wellmann, Geba, Wellpac)

Takeover of Gustav Wellmann KG

Sale of ALNO‘s non-kitchen business interests

Focus on core business

RESTRUCTURING

2007

Dr. Georg Kellinghusen becomes Chief Executive Officer

of ALNO AG

Küchen Holding GmbH becomes major shareholder

Restructuring starts

2009

Jörg Deisel becomes Chief Executive Officer of ALNO AG

Distinguished as one of Germany‘s „Superbrands

2009/2010“

2010

Launch of the „ALNO 2013“ future concept

2011

Max Müller becomes Chief Executive Officer of ALNO AG

2004

Realignment of the Casawell Group

Sale of Casawell‘s non-kitchen business interests

2005

Founding of ALNO Middle East and opening

of a production site in Dubai


8

THE MANAGING BOARD

The Managing Board of ALNO AG underwent a change on April 6, 2011.

Max MüLLER

Managing Board Chairman/Chief Executive Officer

Appointed since April 6, 2011

Along with his activity as ALNO Chief Executive Officer, Max Müller is president

of the board of directors of two Swiss investment companies, Comco Holding

AG and Starlet Investment AG. He was previously Chairman of the management

of Adler Bekleidungswerke AG & Co. KG. He restored the ailing company

to profitability, and turned it into one of the most profitable member companies

of the ASKO Group.

JöRG ARTMANN

Managing Board member responsible for Central Areas

Appointed since June 1, 2009

Jörg Artmann is the Managing Board member responsible for Finance, Personnel

and IT. In his previous position he was active as Finance & Administration

Director at Bauknecht Hausgeräte GmbH since 2004. Artmann commenced

his career at Mars GmbH. Among other posts he held at Mars, he was CFO for

Iberia, and CFO for Scandinavia.

CHRISTOPH FUGHE

Managing Board member responsible for Sales

Appointed since June 4, 2011

Before being appointed to the Managing Board, Christoph Fughe was Head of

Sales at ALNO AG. He has been responsible for global sales of the four brands

of ALNO, WELLMANN, IMPULS and PINO since May 2009. He had previously

held the position of Head of Sales at Häcker Küchen GmbH & Co. KG. Here, he

was responsible for creating new sales channels, and doubled the company’s

revenue over this period.


9

REPORT OF THE SUPERVISORY BOARD

In fiscal year 2010 the Supervisory Board of ALNO Aktiengesellschaft (ALNO AG) scrupulously performed

its functions and duties as required by law, the articles of incorporation and its procedural

rules. During the course of these activities it dealt, in detail, with the situation of the company and

constantly advised and supervised the Managing Board.

The co-operation between the Supervisory Board and the Managing Board was characterised by

intensive and open dialogue.

The Managing Board provided the Supervisory Board with regular, up-to-the-minute and comprehensive

information in written and verbal reports on all issues which were of fundamental importance

for the company. There were in-depth discussions, in particular, on the restructuring efforts

of the Managing Board, corporate planning, current business trends, strategic development, the

risk situation and risk management. Discrepancies between the actual course of business and

forecasts were identified and explained in detail by the Managing Board. The Managing Board

co-ordinated the company’s strategic orientation with the Supervisory Board, and reported on the

status of implementation of the strategy in regular intervals. When taking resolutions, the Supervisory

Board was always involved at an early stage.

The Chairman of the Supervisory Board also received regular information from the Managing Board

Chairman on current developments in the company’s business, its risk management and key transactions.

The Supervisory Board reviewed and took decisions on all transactions for which approval by the

Supervisory Board was required by law, the articles of incorporation or its procedural rules. In addition,

key individual business transactions were discussed. Moreover, the Supervisory Board or the

Chairman of the Supervisory Board in 2010 received information upon request from the Managing

Board and the auditor in various discussion meetings, on any risks for the individual companies’

net assets, financial positions and results of operations, and discussed the measures put in place.

SUPERVISORY BOARD MEETINGS

In the reporting year, 2010, the Supervisory Board held five face-to-face meetings, as well as five

telephone conferences. Additional resolutions were passed by circulation of voting papers. One

member of the Supervisory Board attended less than half of the meetings.

Conflicts of interest, which would require disclosure to the Supervisory Board and the handling of

which would need to be reported to the General Meeting, did not arise.


10

KEY ISSUES DISCUSSED IN PLENARY MEETINGS OF THE SUPERVISORY BOARD

The Supervisory Board’s regular discussions focused on the current market situation and market

trends, the consistent review and monitoring of the company’s asset, financial and liquidity position,

as well as the Group’s strategic orientation.

The Managing Board presented the company targets for fiscal year 2010 at a Supervisory Board

meeting on January 15, 2010. Furthermore, the medium-term targets until 2013, based on the

ALNO 2013” concept, were presented and explained to the Supervisory Board. After an in-depth

discussion and review, the Supervisory Board approved the targets presented for fiscal year 2010

and the “ALNO 2013” concept.

The current status of the “ALNO 2013” concept was discussed at the meeting held on March 17, 2010.

The current stage of the financing process also formed part of the discussions.

On April 27, 2010, the Supervisory Board met with the auditors of Ernst & Young GmbH, Wirtschaftsprüfungsgesellschaft,

Ravensburg, to discuss the consolidated financial statements of the

ALNO Group as at December 31, 2009, and, in particular, the annual financial statements of ALNO

AG as at December 31, 2009, as well as a number of balance sheet items. All of the documents

for the annual financial statements were audited to ensure compliance with the law, the articles of

incorporation and their designated purpose. The Managing Board and auditors answered all of the

questions in detail and to the Supervisory Board’s satisfaction. In addition, the audit committee

reported on the results of its review and proposed that the annual financial statements of ALNO

AG and the consolidated financial statements of the ALNO Group be approved as prepared and

presented. Subsequently, the Supervisory Board approved the annual financial statements and the

consolidated financial statements of ALNO AG. The annual financial statements were thus adopted.

At the recommendation of the audit committee, Ernst & Young GmbH, Wirtschaftsprüfungsgesellschaft,

Ravensburg, was instructed to audit the annual financial statements for fiscal year 2010.

The report of the Supervisory Board and the joint corporate governance report were discussed

and approved. The Managing Board reported on the business performance as at March 2010

and key business events. The meeting also centred around the presentation of the restructuring

report prepared by PricewaterhouseCoopers AG Witschaftsprüfungsgesellschaft, as well as the

recapitalization agreement negotiated with all of the financing partners on the basis of this report.

In a telephone conference on May 5, 2010, it was agreed that the agenda for the General Meeting,

including the proposed resolutions, be approved by circulation of voting papers. The agenda for

the General Meeting 2010 was approved on May 6, 2010.

A new Chairman of the Supervisory Board was appointed in a meeting immediately following the General

Meeting on June 23, 2010, as the ongoing status proceedings had made it necessary to call elect

a new Supervisory Board. The Supervisory Board elected Mr. Henning Giesecke as Chairman of the

Supervisory Board of ALNO AG. As part of the reconstitution of the Supervisory Board, both the rules of

procedure of the Supervisory Board concerning the formation of committees and the rules of procedure

of the Managing Board concerning reservation of consent by the Supervisory Board were revised and

approved by the Supervisory Board. In addition, the members sitting on the various committees were

newly elected. Moreover, the Managing Board reported on the business performance of ALNO AG as

at May 2010 and on the current status of the financing process. Finally, the employment contracts of

Chairman of the Board Jörg Deisel and Management Board member Michael Paterka were extended.


11

During the Supervisory Board meeting on October 14, 2010, the Managing Board discussed the

financial statements for the first half of 2010 with the Supervisory Board and reported on the current

business performance. This meeting focused the status of the financing process.

During a telephone conference on November 3, 2010, the Supervisory Board approved the resolution

of the Managing Board to defer the company’s capital increase commenced on October 20, 2010.

The reason for this deferment was that two key potential investors were to be given the opportunity

to participate in the capital increase at a later time.

ACTIVITIES OF THE COMMITTEES

In order to perform its duties efficiently, the Supervisory Board formed a number of different committees.

Up to the General Meeting of June 23, 2010, these were the audit committee, the HR

committee and the mediation committee. Subsequent to the General Meeting, an audit committee

and a general committee were formed.

The audit committee met on April 26, 2010. This meeting focused on discussing the annual financial

statements and management report, as well as the consolidated financial statements and the

contractual relationship with the auditor (including fees). Special consideration was given to the

findings of the reorganization report by PricewaterhouseCoopers. In this connection the audit committee

discussed the reorganization agreement concluded with the financing partners in detail. In

addition, the members of the audit committee agreed on specific aspects of the accounting process,

the preparation of the annual financial statements, the management report and the financial

report for the first half of the year by e-mail or telephone.

The mediation committee, the HR committee and the general committee did not convene during

fiscal year 2010.

ANNUAL AND CONSOLIDATED FINANCIAL STATEMENTS

Ernst & Young GmbH, Wirtschaftsprüfungsgesellschaft, Ravensburg, audited ALNO AG’s annual

financial statements (HGB), ALNO AG’s consolidated financial statements (IFRS) and the management

report, which was combined with the Group management report, and issued these with an

unqualified audit opinion.

The auditor confirmed that the Managing Board had set up an efficient risk management system in

line with statutory requirements, as well as an internal control system.

The documents to be audited and the auditor’s report were presented to all members of the

Supervisory Board in good time. In its meeting on April 14, 2011, the Supervisory Board was

informed in detail of the preliminary annual financial statements and the preliminary consolidated

financial statements. The documents to be audited and the auditor’s report were discussed in

detail both during the audit committee meeting on May 30, 2011 and in a telephone conference

of the Supervisory Board on May 30, 2011. In both of these meetings, the auditor reported on the

key findings of the audit and was available to answer questions and provide additional information.

After a thorough discussion and based on its own review, the Supervisory Board concurred

with the results of the audit of the annual financial statements and the consolidated financial


12

statements. Having concluded its review, the Supervisory Board did not have any objections to

the annual financial statements or the consolidated financial statements. In a telephone conference

May 30, 2011 the Supervisory Board expressly approved the annual financial statements

and management report, which was combined with the group management report, for fiscal year

2010, as prepared by the Managing Board. The annual financial statements are thus adopted. The

Supervisory Board also approved the IFRS consolidated financial statements and Group management

report as prepared by the Managing Board for fiscal year 2010.

DEPENDENT COMPANY REPORT

The Managing Board has submitted its report on the company’s relationships with affiliated companies

to the Supervisory Board together with the corresponding report prepared by the auditors.

The auditor issued the following unqualified opinion:

“Based on our audit and assessment in accordance with professional standards, we confirm that

1. The factual statements made in this report are correct,

2. The payments made by the company in connection with the legal transactions described in

this report were not unreasonably high.”

The auditor participated in the Supervisory Board’s discussion of the report on relationships with

affiliated companies and presented the key results of the audit.

The Supervisory Board’s review of the report by the Managing Board and the audit report did not

give any grounds for objection; the Supervisory Board concurred with the results of the audit. The

Supervisory Board did not raise any objections to the Managing Board’s declaration at the end of

the report on ALNO AG’s relationships with affiliated companies according to the final results of its

review.

CORPORATE GOVERNANCE

The Supervisory Board also discussed the further developments in corporate governance in fiscal

year 2010, paying particular attention to the changes made to the Corporate Governance Code

in the amendment of May 26, 2010. In application of the new requirements on Managing Board

member’s fees and the relevant recommendations in the Code, the Supervisory Board deliberated

on the remuneration system for the Managing Board and reviewed whether Board emoluments were

reasonable. No Managing Board members were present during these discussions. Furthermore, the

Supervisory Board determined that, in its opinion, it had a sufficient number of independent members,

as well as one independent member with professional knowledge of accounting and auditing.


13

The Managing and Supervisory Boards reported on ALNO AG’s corporate governance as part of the

corporate governance declaration on pages 74 ff. The Managing and Supervisory Boards of ALNO

AG issued a new declaration of conformity with the recommendations of the German Corporate

Governance Code Government Commission pursuant to Section 161 of the Aktiengesetz (AktG -

German Public Limited Companies Act) on October 7, 2010. This declaration is printed on pages

74 ff of the annual report and is permanently accessible to shareholders at www.alno.ag.

CHANGES TO THE MANAGING AND SUPERVISORY BOARDS

Due to the fact that the number of employees at ALNO AG has fallen to below 2,000 and continues

to remain at this level, the Managing Board in January 2010 initiated status proceedings in accordance

with Section 97 of the German Stock Corporation Act (AktG). These were completed with

the conclusion of the Ordinary General Meeting of ALNO AG on June 23, 2010. Upon completion

of these proceedings, the Supervisory Board will be constituted in accordance with the provisions

of the German One-Third Employee Representation Act (“Drittel beteiligungsgesetz”), rather than

consisting of equal numbers of representatives, as has been the case until now. As part of the

amendment of the articles of incorporation to comply with the One-Third Employee Representation

Act, the number of Supervisory Board members was reduced from twelve to nine. As a result of

the status proceedings, the existing Supervisory Board was dissolved at the end of the Ordinary

General Meeting on June 23, 2010. Therefore new shareholders’ representatives were elected at

the General Meeting on June 23, 2010. The following shareholders’ representatives continue to

sit on the Supervisory Board: Mr. Werner Devinck, Dr. oec. Jürgen Diegruber, Mr. Christoph Maaß,

Mr. Anton Walther and Mr. Armin Weiland. Henning Giesecke was newly elected to the Supervisory

Board and succeeds Hans-Peter Haase, who did not stand for re-election for age reasons.

Supervisory Board members Mr. Rudolf Wisser, Mr. Jörg Kespohl and Mr. Gerhard Meyer are the

employees’ representatives. Messrs. Hans-Peter Haase, Andreas Bilz, Michael Föst and Ralph

Ossiander left the Supervisory Board of ALNO AG effective June 23, 2010.

The Supervisory Board would like to thank its former members for their work and commitment, and,

in particular, Mr. Hans-Peter Haase particularly for his work as Chairman of the Supervisory Board.

The Supervisory Board also wishes to thank the Managing Board and all employees of the ALNO

Group’s companies for their hard work and personal dedication in fiscal year 2010.

Düsseldorf, May 30, 2011

On behalf of the Supervisory Board

Henning Giesecke

Supervisory Board Chairman


14

THE ALNO SHARE

ALNO (FRANKFURT) 04.01.10 – 31.12.10

5.5

5.0

4.5

4.0

3.5

3.0

2.5

Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec.

The ALNO share largely decoupled from the overall German equity market in 2010. After the “ALNO

2013” future concept had been officially launched at the start of the year, the share price reported

significant gains during the spring, reaching its high for the year (on an intraday basis) of EUR 6.15

on March 31, 2010. The stock then relinquished some of its gains through to June. A slight upturn

commenced at the start of the third quarter before the onset of a longer-lasting downtrend from

September. The share nevertheless ended 2010 with a marked year-on-year price appreciation:

the closing price on December 30, 2010, the last trading day of the year, was EUR 3.00. This

represents a 22.0% share price increase over the course of the year, and is equivalent to a market

capitalization of EUR 52.2 million.

ALNO AG mandated ICF Kursmakler AG as Designated Sponsor in July 2010 in order to improve

the share’s tradability, and thereby also make it more attractive for investors in the future. The aim

is to thereby improve the share’s liquidity in ongoing Xetra trading through the placing of additional

manual bids and offers. This measure has already had a positive effect over recent months, with

computer trading turnover (Xetra) already significantly above that on the Frankfurt Stock Exchange

by the end of the year. After a total of 189,545 shares were traded in January 2010 (Frankfurt), the

number of shares traded in December 2010 was 413,419 (Xetra and Frankfurt).


15

KEY DATA (DECEMBER 31, 2010):

German Securities Identification Number (WKN) 778 840

ISIN DE 0007788408

Ticker symbol

Transparency level (market segment)

Stock exchanges

Type of shares

ANO

General Standard (Regulated Market)

Regulated Market: Frankfurt (General Standard), Stuttgart,

OTC: Berlin, Munich, Düsseldorf

Ordinary no par value bearer shares (no par shares)

Initial listing July 27, 1995

Share capital as of December 31, 2010 45,231,297.80

Share capital as of April 15, 2011 67,846,945.40

Number of shares as of December 31, 2010 17,396,653

Number of shares as of April 15, 2011 26,094,979

SHARE PERFORMANCE DATA

Closing price December 31, 2009 EUR 2.46

CLOSING pRICE DECEMBER 31, 2010 EUR 3.00

Percentage chANGE + 22.0 %

Year high* EUR 6.15

Year low* EUR 2.45

* Basis: Frankfurt Stock Exchange intraday prices

SUCCESSFUL CAPITAL MEASURES AS PART OF “ALNO 2013”

The placing of two capital increases in the first half of 2010 resulted in an increase in the share

capital from previously EUR 41,123,869.80 to EUR 45,231,297.80. This generated EUR 10.0 million

of proceeds for ALNO AG. The General Shareholders’ Meeting of June 23, 2010 also authorized

the Managing Board increase the company’s share capital until June 22, 2015, with the Supervisory

Board’s assent, once or on several occasions, by a total of up to EUR 22,615,647.60.

On this basis, a further capital increase from authorized capital against cash contributions was approved

on October 14, 2010 as part of the restructuring agreement. In this context, the share capital was to be

increased by up to EUR 22,615,647.60 to up to EUR 67,846,945.40 through issuing up to 8,698,306

new shares. The subscription price was fixed at EUR 3.00. This capital increase was launched on

October 20, but temporarily postponed in November in order to enable significant potential investors to

participate in the capital increase. The capital increase was subsequently resumed in February 2011.

Investors and shareholders had already submitted subscription guarantees of EUR 20 million as of this

date - from the company’s perspective, an indication of major confidence in the work that had already

been performed as part of “ALNO 2013”. The capital increase was fully concluded on March 3, 2011,

and the entire authorized capital was placed with investors. Gross issue proceeds of EUR 26.1 million


16

accrued to ALNO AG as a consequence. The restructuring agreement that had been concluded

with the consortium banks, existing shareholders and investors in April 2010 was modified and

supplemented in parallel. This resulted in a further EUR 50 million of immediate relief for the Group

balance sheet as of December 31, 2011. Managing Board members confirmed their confidence in

the company by acquiring a total of 200,000 new shares as part of the capital increase.

With the complete conclusion of the capital increase, the free float has expanded from previously

8.8 % to over 30 %, which has made the share significantly more attractive for investors who

value trading liquidity.

ALNO AG’s SHAREHOLDER STRUCTURE HAS CORRESPONDINGLY CHANGED AS FOLLOWS:

* on the basis of voting rights announcements

as of March 9, 2011

** on the basis of voting rights announcements

as of April 19, 2011

SHAREHOLDER STRUCTURE OF ALNO AG AS OF DECEMBER 31, 2010

8.77 % Free float

9.69 % ABAG Aktienmarkt Beteiligungs AG

18.64 % IRE Beteiligungs GmbH

100 %

62.90 % Küchen Holding GmbH

SHAREHOLDER STRUCTURE OF ALNO AG AS OF APRIL 15, 2011

3.90 % ABAG Aktienmarkt Beteiligungs AG**

18.81 % IRE Beteiligungs GmbH*

35.33 % Küchen Holding GmbH*

100 %

41.96 % Free float*

DIRECTOR’s DEALINGS

In 2010, there were no mandatory announcements of share transactions conducted by managerial

persons pursuant to Section 15a of the German Securities Trading Act (WpHG). The following

transactions were realized after the end of the period under review:


17

DATE PERSON SUBMITTING NUMBER OF SHARES TRANSACTION VOLUMEN IN EUR

3/3/2011 Armin Weiland 40,000 Purchase 120,000

3/3/2011 Dr. Jürgen Diegruber 40,000 Purchase 120,000

2/3/2011 Henning Giesecke/

HB conbet GmbH

50,000 Purchase/allocation

from capital increase

150,000

2/3/2011 Jörg Deisel 100,000 Purchase/allocation

from capital increase

2/3/2011 Jörg Artmann 66,666 Purchase/allocation

from capital increase

2/3/2011 Michael Paterka 33,335 Purchase/allocation

from capital increase

300,000

199,998

100,002

INVESTOR RELATIONS

ALNO AG has set itself the objective of providing all market participants with the highest degree

of transparency in order to thereby make a contribution to re-establishing the ALNO share as an

interesting investment. The company worked intensively on implementing related planned measures

in 2010. In addition to regular contact with investors, analysts and the financial media, a second

research house, Vara Research, was mandated to prepare equity studies on the company along with

Hauck & Aufhäuser. ALNO also mandated ICF Kursmakler AG as a Designated Sponsor, which has

already fed through to a significant improvement in the shares’ tradability on the Xetra trading system.

The Managing Board conducted roadshows in a total of 14 cities in six countries in order to present

ALNO AG’s business model and future prospects to investors as part of the recent capital increase.

Along with statutorily requisite ad hoc announcements, explanatory and supplementary corporate

news announcements were also published in order to inform all capital market participants as

rapidly and in as much detail as possible about current events and trends. The company also

published detailed quarterly financial reports in English. ALNO AG plans to continue and intensify

these measures during the new business year. In addition, the company intends to participate

actively at capital market conferences in order to present the company’s business model and future

potential to interested investors.

2011 FINANCIAL CALENDAR

May 30, 2011

Q1 2011 quarterly report

July 14, 2011

2011 Shareholders’ General Meeting

August 31, 2011

2011 half-yearly report

18. November 2011

Q3 2011 quarterly report


19

1OO % FUTURE

20 ALNO brands

22 Special: 1OO % Future

1OO % PASSION

1OO % EXPERTISE

1OO % CLARITY


20

ALNO BRANDS

1OO % ALNO AG

ALNO COMBINES FOUR PROMINENT AND

INDEPENDENT BRANDS UNDER ONE

ROOF. EACH OF THEM SUCCESSFULLY

ADDRESSES VERY DIFFERENT CUSTOM-

ERS. KITCHENS FOR ALL AGE GROUPS

AND UNUSUAL IDEAS – TOGETHER, THEY

CREATE 100 % ALNO.


21

ALNO

ALNO is the Group‘s premium brand. It has stood for

the highest quality, excellent design, and outstanding

service for more than 80 years. Tailored designs are

offered in all areas. Our customers value outstanding

craftsmanship, and a kitchen that corresponds exactly

with their wishes.

wellmann

WELLMANN represents variety and innovation within

the Group. These kitchens are distinguished by loving,

and sometimes also extravagant design, as well

as a host of high-quality details. The most recent example

is the ESPRIT Home Kitchen design produced

by WELLMANN. This brand addresses customers in

the mid price segment.

IMPULS

IMPULS is the brand for kitchens in the low to medium

price segment. It stands for modern furnishings featuring

individual designs at attractive prices. IMPULS

offers a rapid delivery service providing customers with

complete kitchens within ten days.

PINO

PINO is the ALNO Group‘s entry-level brand. It offers

a fresh, modern and uncomplicated product range.

PINO is primarily addressed to younger people for

whom modernity and value for money are important.

PINO kitchens are also distinguished by strong and

fresh trend colors.


22

1OO%

PASSION

COOKING MAY BE A CALLING. YOU CAN COOK

WITH LOVE AND DEVOTION IN AN ALNO

MARECUCINA KITCHEN – AND WITHOUT

COMPROMISES. HIGH-QUALIT Y MATERIALS

COMBINED WITH AN EXPERIENCE OF MEDI-

TERRANEAN FLAIR AND LUXURY: THIS IS THE

ALNO MARECUCINA.


23

100 % Design – We embody a passion for design

and quality with our ALNO Marecucina


24

1OO%

DESIGN


27

WHAT EVERYONE DREAMS OF

Try and picture this: A house on the sea – you stand in the kitchen and look out at the beautiful vista

with its dunes and waves. This idealistic vision appeals to us all. In such an atmosphere, it becomes

easy to cook with passion. With its soft, rounded shapes and Mediterranean flair, the „Marecucina“

would be the perfect fit in such an environment – but not just there!

The design, which resonates with that ideal lifestyle while remaining truly innovative, started with a

vague idea. Others carried it along, convinced that the idea had a future. ALNO is fortunate to have

people who are ready and willing to risk being different, who think outside the box and go beyond

the norms. With this mindset, they develop products that exceed expectations. Simply put: Their

development team does a great job.

In developing the Marecucina, ALNO involved the professionals at Blum practically right from the

start. We soon realized just how important this was: After approving the basic form, it was clear

that unique, innovative solutions would be called for in overcoming the challenges posed by such

a design. This kitchen was to set new standards. The round contours along the entire length of the

„ship“ presented us with some considerable technical challenges. This shape of course impacted

how fittings, drawers and other details were implemented. Addtionally, the fronts and doors were

considerably wider and heavier than those used in normal kitchens and some of these also needed

to be rounded. Even hinges and drawers had to be adapted to the design.

We often met with the product development team from ALNO during the implementation phase, which

spanned the course of several months. At these meetings we discussed progress, possible improvements

and exchanged new ideas with each other. It was easy to see that ALNO wasn‘t treating us merely

as a supplier, but rather as a strategic partner. They showed great trust in our ability to implement the

specified innovations in a quality manner. That is a good feeling – one that intensifies the relationship.

The Marecucina kitchen is a niche product, and will no doubt remain one, if for no other reason than

the fact that it wouldn‘t fit in most apartment kitchens. But as far as the ALNO name and its image

as a highly innovative kitchen provider are concerned, the Marecucina will likely have a much greater

impact. It connects at an emotional level and has a high recognition value, while offering that special

touch of luxury. And that is exactly what all of us want: Products that allow us to realize our dreams.

The presentation of the Marecucina at the furniture trade shows connected with visitors on this level.

With the booth background portraying an image of the sea, visitors couldn’t help but be drawn into

the kitchen’s nautical world.


HUBERT SCHWARz

Managing Director

Blum GmbH Deutschland

gets easily excited

when speaking about

the „Marecucina“ design

concept – after all, there‘s

a little Blum in there.

As a long-standing and

key ALNO supplier, the

Blum team was involved

in the development of

this design at a very

early stage. With about

EUR 1.1 billion in revenue,

Blum is the market leader

in hinges, pull-out systems

and folding systems and

a main supplier of ALNO‘s

fittings.

We have worked very closely with ALNO for about 17 years and have often cooperated with the

company on various innovations throughout this period. We hold ALNO in high regard, especially its

reliability – always meeting or exceeding its end of the deal, even if these were only confirmed by a

handshake. The spoken word is highly valued at this long-standing and accomplished company. And

you gain the same impression from the employees that work there as well – they go the extra mile

for their company, because of its trust in them. It is good to see a product that everyone is proud to

stand behind, a product that was realized in spite of difficulties and setbacks, through the energy and

willpower of people who constantly sought new solutions and spared no efforts in implementing them.


28

1OO%

E XPERTI

COOKING IS A LIFESTYLE AESTHETIC. KITCHENS

THAT EXPRESS MODERN AND INDIVIDUAL LIFE-

STYLES – THIS IS WHAT ALNO‘S ESPRIT HOME

KITCHENS ARE ABOUT: CLEAR FORMS, A SENSE

OF LIGHTNESS, AND LOVING DETAILS IN WHICH

EVERYONE CAN EXPRESS THEIR PERSONAL

LIFESTYLE CHOICES.


29

SE

100 % Lifestyle – Into the future with ESPRIT


30

1OO%

LIFESTYLE


33

WE SHARE THE SAME VISION OF

PEOPLE’S LIFESTYLE AESTHETICS

“I think we’re all familiar with the situation where, at a party, everyone always ends up in the kitchen

– talking, laughing, being happy. The centre of friendship, hospitality and fun seems to be located

somewhere here between the stove and the fridge. And it’s precisely here where we wish to meet

lifestyle-oriented customers’ individual aesthetics – with a kitchen design that corresponds exactly

with their personal lifestyle feeling.

That’s why, every year, we develop five different contemporary lifestyle themes. Everyone should be

able to see themselves and their lives reflected in one of these themes: whether trendy and fresh,

classic and elegant, strikingly eccentric, or simple and minimalist. The idea is to let this design flow

into the overall interior layout, and to create a uniform look for our customers’ entire living space.

After all, the kitchen forms a central point in our lives.

ALNO understood Esprit’s design language very well, and implemented the basic idea behind this

lifestyle concept very rapidly and with great accuracy. It consists of a kitchen comprising individual

modules that can be freely structured. It goes into the finest detail, and reflects high design

standards. And also a lot of individual things that are instantly recognizable as part of Esprit Home

Kitchens. The side walls and bases feature a high-quality wood appearance, which sets them off

clearly from the body parts of the individual cabinets. This generates an overall feeling of lightness,

which is exactly what we wanted to achieve. We soon agreed that the Esprit lifestyle comes to life

in these kitchens.


URSULA BUCK

Executive Director Licenses

at Esprit

Esprit entered into a licensing

partnership with ALNO for

the Esprit Home Series last

year. ALNO‘s first Esprit Home

Kitchen was presented at the

Living Kitchen International

furniture trade fair in Cologne

in early 2011.

Together with ALNO, we immediately had a specific vision of how a kitchen should appear for

a modern public that is aware of fashion and trends. “Fashion meets kitchen” was our declared

objective. And that’s what we fully achieved. All of the kitchen furniture items that ALNO developed

for us are coordinated individually and perfectly to the other products from the Esprit Home Series.

Before we decided on a licensing partner, it was important to us that not only the design, but also

the quality, should be right. This applies to everything the kitchens are made of: they must be

designed with functionality in mind, surfaces must be practical in terms of texture and durability,

and the individual components must be produced from very good materials. The appearance of

the wood, the elegant chrome edges, or the striking glass wall coverings behind the working areas

– these are the things that are immediately perceptible when standing in an Esprit kitchen for the

first time – and these are precisely the things that make ALNO’s Esprit Home Kitchens high-quality

products. This is what you can see, feel and experience. And not least, this is why our decision was

in favor of ALNO. There are few companies that offer such a high-quality blend of design and quality.

Since we already offered kitchen articles and accessories, the time had come for us to also adapt

kitchen furniture to the design world. With ALNO, we have found the perfect concept and the

optimal partner for the Esprit Home Kitchen world. For us, the year 2011 represented the ideal start.


34

1OO%

CLARITY

LAST YEAR BROUGHT ABOUT MANY CHANGES

TO THE GROUP. ABOVE ALL, MORE EFFECTIVE

STRUCTURES, AND MORE UNIFIED WORKING

PROCESSES. OLD HABITS WERE BROKEN, AND

NEW WAYS OF THINKING EMBARKED ON. WE

WILL NOW MAKE THE MOST OF THIS MOMENTUM.


35

100 % Synergy – We have already taken the

first step towards high-quality customer care


36

1OO%

SYNERGY


37

WE HAVE TAKEN THE FIRST

step towards higher

quality customer care

A lot has changed over the space of the last year. The changes that we set in motion with the

restructuring will affect us all: in production, administration, sales and product development. Structures

that had been in place for decades were dissolved, people who had previously not known

each other entered into dialogue, and thought processes were initiated that have partially led to

surprising results and processes.

Today, the dialogue is no longer about problems relating to a single location that require solving,

but rather about the joint development of Group-wide solutions with the help of cross-location

teams. In doing so, we have successfully awakened the ALNO team spirit by increasingly bringing

people into closer contact with one another. This has allowed working processes to be compared,

and unified solutions to be found, thereby allowing these factors to work together in many places.

Cultural change that affects us all has arrived, and many of our customers and suppliers have also

seen significant evidence of this for some time now.

With our shift from an organization entailing four locations operating in parallel, albeit separately,

towards a Group-oriented functional structure, it was in part quite simple innovations that have

brought about major changes: for example, the unified Group profile towards the external world that

we have meanwhile implemented – nobody in Enger or Brilon now answers the telephone with “Müller,

Gustav Wellmann GmbH & Co. KG” or “Schmidt, Impuls Küchen GmbH”. Instead, the caller now

always speaks with an “ALNO” staff member. Callers no longer interact with separate sales contacts

for each brand, but instead have one personal contact who covers all our brands, and who is there

to provide technical expertise and advice. ALNO has acquired a personal face as a consequence.


HANSJöRG ROLLSHAUSEN

Head of Group Controlling

Hansjörg Rollshausen has

been on the ALNO Group

staff since 2009. He has

been active as head of Group

Controlling since 2010, and in

this function has carried joint

responsibility for the realization

of the measures planned

as part of the „ALNO 2013“

future concept.

Earlier than we planned, we were successful in partially orientating our customer care on a crossbrand

basis, thereby providing our customers with higher quality service. We have also achieved

the objective of positioning the ALNO product brand in a qualitatively higher kitchen segment. The

associated and clearer separation of all four Group brands from each other, and precise positioning

in certain sales channels, is important both for addressing customers, and for brand recognition

value, and consequently comprises a significant success factor.

To this we have added newly launched and cross-location managerial responsibilities. The four

hermetically separated locations of four companies competing with each other no longer exist.

We have brought the organization to life, and created uniform standards, and a new awareness for

interaction within the Group. Cooperation among the teams has already generated many suggestions

for improvement. The implementation of these suggestions is feeding through to good results.

A further example: just a few months ago, the four locations were operating quite different methods

for order processing, debtor management, and complaints processing. Unification, and the possibility

that has thereby been created to examine a customer’s credit lines in one step across all our brands

has already reduced our receivables default risk, and significantly cut the backlog of open payments.


38

The development and introduction of the new WELLMANN program was also an enormous achievement

on the part of the entire workforce, even if not all aspects of this program ran smoothly from

the start. We nevertheless needed to modify the entire product construction logic, which was a

major technical challenge for our staff. In overall terms, however, this important project was implemented

much more rapidly than planned, since market demand for these new kitchen models is

very good. Today, we are already realizing 85 % of our sales with the new WELLMANN models, and

only 15 % with the old models. We were not aiming to reach this level until autumn 2011.

The possibility of entering into cooperation with ESPRIT also represented a great additional business

opportunity for us. ESPRIT home kitchens are located exactly between the ALNO and WELLMANN

brands in terms of price and equipment. The decision that these kitchens were to be manufactured

at Pfullendorf was wonderful news for the employees at this location. In addition, the expansion of

components production at this location represented greater job security for its staff, especially given

the general volume decline in the production of the ALNO brand.

I am very proud of the many important milestones that we have already achieved in terms of the

restructuring of the Group, and I look forward to the implementation of the many tasks that still lie

ahead of us, and on which we will continue to work intensively in order to firmly return the ALNO

Group to a sound and successful growth path.

Integration of Alno,

Wellmann, Impuls and Pino

Uniform standards for

four companies

A sense of working together

within the Group

Companies no longer competing

with each other


39

1OO

PERCENT

EFFICIENCY

ESPRIT-

HOme-KITCHens

ALNO cooperation with

Esprit production

in Pfullendorf

ALNO

Wellmann

PROGRam

Today‘s portfolio

consists mainly

of new models

Wellmann

Impuls

85 %

sales

ALNO aG

Pino


41

SINGLE-ENTITY AND

GROUP MANAGEMENT REPORT

42 Economic and business report

64 Report on events after the balance sheet date

68 Report on opportunities and risks / Forecast report

74 Other information


42

GROUP MANAGEMENT REPORT

OF ALNO AKTIENGESELLSCHAFT, PFULLENDORF,

FOR THE 2010 FINANCIAL YEAR

A. ECONOMIC AND BUSINESS REPORT

I. GROUP STRUCTURE AND BUSINESS ACTIVITIES

The ALNO Group develops, produces and sells kitchen furniture and accessories for the German

market and export. The Group parent company is ALNO AG, which exercises holding company and

central administration functions, as well as operating the Pfullendorf location and the export area.

The ALNO Group’s main administrative headquarters is located in Düsseldorf. The ALNO Group

owns a total of five production locations, four of which are located in Germany, and one in Dubai

(United Arab Emirates).

The Group’s most important current sales markets are in Germany and Western Europe. The company

has a centrally managed export sales operation for this purpose, and also operates a global

base of trading partners. As of the December 31, 2010 reporting date, ALNO AG maintains sales

companies in three European states for export market processing, which are aggregated under

ALNO International GmbH (“ALNO International”).

With its ALNO, WELLMANN, IMPULS and PINO brands, which are tailored to meet the requirements

of different price segments, the ALNO Group is one of the world’s largest kitchen furniture

manufacturers. It is the second largest kitchen furniture producer in Germany, and is one of the

top five in Europe.

The company’s furniture production was restructured as part of the “ALNO 2013” future concept:

previously, each of the four German locations (Pfullendorf, Brilon, Enger, and Coswig) produced its

own kitchen brand. In future, the focus at Pfullendorf will be on selected specialty product ranges

(high-gloss finish kitchens, for example). High-volume series production is now located at Enger.

Final production for the IMPULS and PINO brands remains at the Brilon and Coswig (Anhalt) sites.

At the Dubai location, kitchen furniture is produced and sold especially for local project business in

the Gulf region. The shares in the company located there, ALNO Middle East FZCO, Dubai, United

Arab Emirates (“ALNO Middle East”), are 50 % held by ALNO AG and 50% held by Al Khayyat

Investments LLC, Dubai, United Arab Emirates.

As part of the “ALNO 2013” future concept, five of the previously eight ALNO Group foreign subsidiaries

were converted in the 2010 fiscal year into pure sales units, and liquidated. ALNO Austria

Möbelvertriebsgesellschaft mbH, Wiener Neudorf, Austria, ALNO N.V., Deinze, Belgium, ALNO

Iberica S.A., Madrid, Spain, ALNO Nederland B.V., Dongen, Netherlands, and ALNO Italia S.r.l.,

Florence, Italy were liquidated during the course of the 2010 fiscal year.


43

STRUCTURE OF THE ALNO GROUP

AS OF DECEMBER 31, 2010

ALNO AG

Zweitmarkenholding

Impuls Pino GmbH Pfullendorf

100 %

50 %

ALNO Middle East FZCO

Dubai (VAE)

94 %

Impuls Küchen GmbH

Brilon

6 %

100 %

ALNO USA Kitchen Cabinets Inc.

New Castle/Delaware (USA) (ruhend)

94 %

pino Küchen GmbH

Coswig (Anhalt)

6 %

100 %

ALNO International GmbH

Pfullendorf

Casawell Service GmbH

Enger

100 %

ALNO France S.A.R.L.

Cagnes-Sur-Mer (F)

100 %

0.07 %

Gustav Wellmann GmbH & Co. KG

Enger

99,93 %

ALNO (Schweiz) AG

Embrach (CH)

100 %

94.74 %

GVG tielsa Küchen GmbH & Co. KG

Enger

5,26 %

ALNO UK Ltd.

Dewsbury (GB)

100 %

100 %

EuroSet Küchentechnik GmbH

Enger

Wellmann-Polska sp.z.o.o. (PL)

(in Liquidation)

100 %

100 %

Wellmann Bauteile GmbH

Enger

TIGNARIS Bet.gesellschaft mbH

& Co. Objekt Pfullendorf KG

Grünwald

100 %

MINERVA Grundstücks-Vermietungsgesellschaft

mbH & Co.

Objekt Pfullendorf OHG Grünwald

100 %


44

II. GROUP STEERING

The Group is managed using key sales and value-creation figures. The individual Group divisions are

managed on a monthly, weekly and daily basis over the course of a year through continuous analyses

of deviations from budgeted figures and previous year’s figures in all key operating areas. Along with

key figures relating to sales, production quality, and function-specific efficiency management, the

most important individual indicators that are deployed at segment level are profit and loss, sales

per item, and sales figures for cabinet unit figures. Cost centers and cost types are monitored and

analyzed separately at a higher aggregation level. Quality management based on the DIN EN ISO

9001 standard accompanies and secures the quality of the product range and business processes.

All of the ALNO Group production companies are certified companies that are subjected to continuous

external reviews by different institutions.

III. EMPLOYEES

As of the December 31, 2010 reporting date, the ALNO Group employed 1,787 staff members

(excluding the three Management Board members), as well as 96 trainees. The previous year’s staff

numbers comprised 1,900 individuals, plus 95 trainees. Of these, 1,176 individuals were employed

in production (previous year: 1,225), and 136 were employed in administration (previous year: 146).

A total of 354 individuals worked in marketing and sales (previous year: 401), and 121 in other areas

(previous year: 128).

As of the end of the reporting period, employees were distributed among the individual sites as

follows: Pfullendorf 698 (previous year: 783), Enger 583 (previous year: 559), Brilon 248 (previous

year: 256), Coswig 206 (previous year: 199), and 52 in foreign subsidiaries (previous year: 103).

As part of “ALNO 2013”, the personnel base at the Pfullendorf site was reduced by a total of

151 employees, with full effect partially from January 1, 2011 In this context, 129 termination

agreements were concluded, and the affected staff were initially taken on by an Employment and

Qualification Company. As of the year-end, 45 individuals left the Employment and Qualification

Company because they had found new positions. A further 22 jobs were discontinued due to free

posts not being filled, or to the suspension of new appointments at the Pfullendorf site. The costs

for all measures amounted to approximately EUR 7.5 million.


45

GROUP EMPLOYEES

DIVIDED BY FUNCTIONS AS OF DECEMBER 31, 2010

121

OTHER AREAS

136

ADMINISTRATION

354

MARKETING/

SALES

1.176

PRODUCTION

1.787

TOTAL


46

IV. MARKET AND COMPETITIVE ENVIRONMENT

Economic environment

In all markets of relevance for the ALNO Group, the 2010 fiscal year was characterized by significant

indications of economic recovery following the global economic crisis. Gross domestic product (GDP)

in Germany grew by 3.6 % year-on-year in 2010 (2009: – 4.7 %). This represents the highest annual

growth rate since German reunification. Exports were up by 14.2 % at the same time. 1 Eurozone

(EU 27) GDP increased by 1.8 %, according to Eurostat. In the markets that are of particular importance

for the ALNO Group outside Germany, Austria reported a further fall in GDP of 2.0 %, following the

previous decrease in 2009, and the UK saw GDP drop by 1.8 %. 2 Switzerland reported growth of 2.6 %.

The International Monetary Fund (IMF) anticipates that German economic output will be up by 2.2 %

in 2011. The IMF expects the Eurozone to grow by 1.5 %, and that the global economy will report

4.4 % GDP growth. 3 It nevertheless remains to be seen how the catastrophe in Japan, and political

changes in North Africa, will impact macroeconomic trends.

As far as consumers’ spending and investment behavior is concerned, trends in labor market data,

building investments, and consumer prices, are of significance in the kitchen sector. Favorable labor

market prospects boosted private consumer spending in 2010, which was up by 2.4 %. This had

particular effects on the furniture market, since this is a so-called “postponable” market: depending

on end-customers’ personal financial situations, the purchase of such consumer durables is either

realized or postponed.

In addition, an historically low level of interest rates in 2010 contributed to the first resumption of

growth in residential construction investments for years. With price-adjusted growth of 4.4 %, the

recovery was also stronger than that in construction investments overall. There was a 1.2 % decline

compared with 2008 in the 2009 crisis year. 4 On the basis of its future construction estimates, the

Munich-based Ifo Institute expects that the number of completed residential properties will undergo

a significant increase by 2015 due to the recovering economy, replacement requirements in some

regions, and favorable construction loans. 5

COMPLETED RESIDENTIAL PROPERTIES IN GERMANY 2000 – 2015

1,000 units | Source: Federal Office of Statistics, ifo construction estimates

240

200

160

1+2 family homes

120

80

Single-storey dwellings

40

2001 2003 2005 2007 2009 2011 2013 2015

1 Federal Office of Statistics: Press

release No. 061, February 15, 2011

2 Federal Office of Statistics 2010

3 International Monetary Fund, World

Economic Outlook, January 25, 2011

4 Federal Office of Statistics, Press

release No. 22, January 19, 2011

5 HDH/VDM, Wirtschaft Kompakt,

Edition 1, January 2011

A purchasing power study for Germany that was conducted by “GfK Geomarketing” arrives at an

equally positive conclusion for 2011. This study forecast the purchasing power will grow by EUR 499

per head of the population, from EUR 19,185 in 2010, to an average of EUR 19,684 in 2011 This

trend is attributed to the rapid overcoming of the financial crisis, and to higher wage expectations.

In the GfK’s opinion, the inflation trend is one factor that might affect forecast purchasing power.

Higher contributions, for example to health insurance, are also anticipated for many in 2011. As a

consequence, total purchasing power in Germany amounts to EUR 1,610.2 billion for 2011, according

to the GfK’s estimates. This figure stood at EUR 1,550.2 billion in 2010.


47

Furniture wholesaling/retailing

With 0.1 % growth in 2010, retail furniture sales recovered slightly from the previous year’s 0.7 %

decline. The Federal Association of German Furniture, Kitchen and Installation Specialist Traders

(Bundesverband des Deutschen Möbel-, Küchen- und Einrichtungsfachhandels [“BVDM”]) reported

that the uptrend was significantly detectable since the summer. Consumers spent EUR 29.7 billion

(including VAT) on furniture and kitchens, according to provisional figures. 6

Furniture production

Furniture with a value of EUR 15.6 billion was produced in Germany in 2010, according to data

published by the Federal Office of Statistics. This represents a 2.2 % increase compared with the 2009

crisis year, when furniture production was down by more than 12 %. Of the total value of furniture

produced in 2010, 29.3 % was attributable to seating furniture, and 29.1 % to other furniture, which

includes, among other items, wooden furniture for bedrooms, dining rooms, and living rooms, as well

as metal and plastic furniture. A further 22.5 % was attributable to kitchen furniture made of wood.

The Association of German Furniture Industries (Verband der Deutschen Möbelindustrie [“VDM”])

describes a similar situation. As of March 2001, the VDM was confident that the furniture industry

was on a slow but constant uptrend following the crisis. According to the VDM, German companies

were well positioned as the result of investments, rationalization measures, and modernization

measures that have been implemented over the previous ten years. The fact that there were almost

no insolvencies in the sector, and that job cuts were moderate, reflected this. 7 In overall terms, there

were more than 92,000 employees (– 3.2 % year-on-year) in more than 1,040 operations (consisting

of more than 20 employees) in the furniture industry at the start of 2011. 8

Kitchen furniture

Germany is largest production location for kitchen furniture in Europe, with respect to both kitchens

sold and production. The German Kitchen Furniture Industry Association (VdDK) reported that sales

by the German kitchen industry had increased by 1.6 % in 2010 to reach EUR 3.8 billion. In Germany,

year-on-year growth amounted to 1.1 % to a total of EUR 2.4 billion. Growth abroad stood at 2.5 %,

to an amount of almost EUR 1.4 billion. The export ratio was approximately 37 %, according to the

VdDK. In this context, it was particularly the second half of the year that reflected a positive trend. For

instance, Asia reported an almost full recovery, and there was an uptrend to report in both Eastern

Europe and France. The sector continued to report weakness, however, in the Netherlands, Spain

and the USA, because these markets have been particularly affected by the bursting of real estate

market bubbles.

Due to positive economic trends, the association takes a confident view of sector trends for 2011,

and anticipates that the German kitchen furniture industry will report sales growth of 3 %. Trends in

materials prices might nevertheless feed through to cost increases.

There were 56 kitchen furniture manufacturers in Germany in 2010 with 50 and more employees

(previous year: 57). Together, these companies employed 14,412 staff, 2.4 % fewer than in 2009. 9

6 BVDM, press release

Januar 11, 2011

7 HDH/VDM, Wirtschaft Kompakt,

Edition 1, January 2011

8 HDH/VDM, press release

January 13, 2010

Market positioning

The ALNO Group’s market share in Germany amounted to approximately 15.6 % in the 2010 fiscal

year, when measured in terms of the value of kitchen furniture sold, and to approximately 22.6 %

when measured in terms of the volume of kitchen furniture sold. 10 The market share in Europe stood

at approximately 4.0 % in the 2009 fiscal year. 11 As a consequence, the ALNO Group is the second

largest kitchen manufacturer in Germany, and one of the top five in its sector in Europe.

9 HDH, Monatsbericht nach Fachzweigen

2010, January 12, 2010

10 Gesellschaft für Konsumforschung,

presentation for the kitchen trading

panel for the ALNO Group, 2010,

pages 47-48

11 CSIL, Centre for Industrial Studies,

The European Market for Kitchen

Furniture, May 2010 – R2601, page 5


48

V. PRODUCTS AND PRODUCTION

The ALNO Group develops, produces and sells high-quality products in the kitchen-related residential

environment. As part of “ALNO 2013”, a start was been made in the 2010 fiscal year to unify product

and production standards, and to improve production capacity utilization. The aim is to reduce

product and production complexity, and to improve cost structures through economies of scale in

purchasing and logistics.

Products

Important successes were achieved as part of “ALNO 2013” in the 2010 fiscal year. The number

of colors and fronts within the Group underwent further significant streamlining: ALNO reduced the

number of fronts to 238 across the four brands (2009: 268).

At the same time, ALNO AG presented numerous new and innovative products and concepts. For

example, the new WELLMANN product range was presented for the first time at the Eurocucina

(Milan) international kitchen furniture trade fair in April 2010. Compared with the old product range,

this product range is differentiated by its new construction, and the newly introduced vertical grid

based on the ALNO brand construction platform. The vertical grid offers a more orderly and a more

optically appealing joint alignment. For wholesalers and retailers, the adapted cupboard/vertical grid

also offers the advantage that the kitchen is easier to plan.

The Marecucina maritime design study, which is in the shape of a ship’s hull, and which was also

presented for the first time at Eurocucina, received a lot of attention from the media and consumers.

This concept stylefully combines elements such as sails, masts, ships’ storage areas, walnut surfaces

and decorative chrome inlays into the overall design. The rounded forms of the lower cupboards and

working surfaces are reminiscent of an elegant boat’s pantry, bridging the gap between vacations

and the everyday. The positive reactions prompted ALNO to further develop the Marecucina from a

design study to readiness for series production by the autumn. The Marecucina was then presented

in three variants at our annual in-house trade fair (ALNO Design Tour): a freestanding version, a

so-called L-form, and a classic row solution.

A modernized ALNO product range was also presented at the “ALNO Design Tour” in autumn 2010,

allowing expertise in glass kitchens for the premium segment to be deepened further.

In September 2010, ALNO announced a total of five new programs (ALNODUR, ALNOFINE,

ALNOVETRINA, ALNOSATINA and ALNOART Stoneglas) in 17 front designs for 2011. There were

also numerous expansions of existing programs. A total of eight new models, including ALNOPLAN,

ALNOLOOK and ALNOSILK, have been expanded with 12 front designs, and are available both

with matt glass, as well as with high gloss, and foil-coated.

The new WELLMANN product range forms the basis for a licensing agreement that was concluded

in the year under review with ESPRIT INTERNATIONAL Ltd. (“ESPRIT”). As a consequence, ALNO

AG has been a licensing partner of ESPRIT, and exclusive partner for the kitchens area, since

September 2010. ESPRIT-specific product attributes under the name “ESPRIT home” kitchens are

marketed on the basis of the WELLMANN kitchens brand in this context. The first kitchen of this

type was presented in January 2011 at the “Living Kitchen” International Kitchen Show in Cologne.

Significance events also included the comprehensive geographic launch of the 10-day kitchen from

the IMPULS product brand. After the successful realization of a six-month pilot operation with selected

customers, IMPULS kitchens have been available across the whole of Germany as so-called rapid

delivery kitchens since September 2010. This has allowed the ALNO Group to respond to changes

in customer requirements, and it is of the view that it can significantly improve service for customers.


49

The ALNOSTAR SATINA, which became known as a “2011 trend study”, transferred to series

production in May 2010, and is now available in four color designs (earth brown, white, magnolia

white, and platinum blue). A particularity of this model is that the furniture fronts are completely

structured in a velvety special-security glass. Its surface is etched to give rise to a transparent satin

finish with a depth effect that is typical of glass.

Production

A technically and administratively more streamlined manufacturing structure should help the ALNO

Group to engage on a level playing field with its competitors in the future. Numerous measures

were implemented in the past fiscal year in order to achieve this objective: given the strategy of

using identical components, a uniform construction platform for the production of the ALNO and

WELLMANN brands was developed, among other measures. The launch of a new product for the

WELLMANN brand, which is planned as part of this, commenced on schedule in October 2010,

and supports the repositioning of the Group rounds that has been launched.

The focus at the Pfullendorf site was on adjusting the factory’s structure and capacities to the

utilization situation. The aggregation of similar product families allowed processes to be optimized,

and cost-savings were realized, including on energy, through a switch from two shifts to one shift.

At the same time, the goods acceptance function was centralized within the assembly plant.

The plant at Enger received a new production line for fronts processing to prepare for the new

WELLMANN kitchen generation that is now manufactured there. At Brilon, the rapid delivery kitchen

was implemented as part of everyday production, and throughput times for cabinet production were

tangibly reduced.

The company also plans future investments in machines at its production sites to boost the performance

and quality of the production of working surfaces and upper cabinets, as well as in in-house logistics.

VI. MARKETING AND SALES

Marketing

The ALNO Group reported an 80 %% year-on-year increase in show kitchen placings at its in-house

trade fair. The by far largest proportion of show kitchens was placed through the kitchen specialists

sales channel. As a consequence, the trade fair represents a good overall signal that the aim has

been achieved of repositioning ALNO and WELLMANN in line with their target groups.

Market surveys confirm that ALNO is on the right path

A survey entitled “ALNO Strategy Check”, which was conducted in August 2010 across the whole

of Germany by the Düsseldorf-based sector information service “markt intern” (specialist furniture

wholesaling/retailing), also shows that the measures implemented as part of “ALNO 2013” were

already taking effect at that time. In overall terms, 77.1 % of survey participants assessed the

restructuring strategy as good (45.7 %), or even as very good (31.4 %). A total of 52.9 % felt that

the new strategy was also being put into daily practice (35.3 % felt that there was no change). Only

11.8 % responded that they had not yet detected the strategy change in daily contact. The overall

assessment of the perception on the market also improved. In response to the questions “How did

you assess ALNO previously” And “How do you assess ALNO today”, the respondents awarded

an average school grade of 2.4 for “today” (on a scale of 1 to 6, with ‘1’ signifying ‘excellent’ and ‘6’

indicating a ‘fail’). By way of comparison, the study generated a school grade of 2.7 for “previously”,

in other words, before the launch of “ALNO 2013”.


50

A study that ALNO AG mandated in September 2010 from the tns emnid opinion research institute

also showed that the company is on the right path with its brand strategy: this survey entailed

conducting telephone questionnaires of 1,005 individuals with net household incomes of at least

EUR 2,500 (this represents the buyer segment for kitchens from the ALNO product brand). The

survey’s aim was to generate data about the motivations and criteria that are applied when kitchens

are purchased, in order to avoid relying on “subjective opinions”. Of the individuals surveyed, 76 %

mentioned “quality/value”, and 64 % cited “design”, as important or very important criteria when

deciding to purchase a kitchen. “Durability” (97 %) and “functionality” (95 %) also topped the list of

priorities. From ALNO’s perspective, the ALNO product brand has long stood for high quality and

first-class design, which also implies “durability” and “functionality”.

Sales

Kitchens manufactured by the ALNO Group are primarily sold in Germany to furniture and specialist

kitchen wholesalers/retailers, as well as self-service and cash-and-carry markets, which are predominantly

organized into purchasing associations. Around 84 % of kitchen furniture is sold through

such purchasing associations. Independent dealers also operate for the company. In overall terms,

ALNO works together with more than 7,000 sales partners in 64 countries.

In order to secure market shares, and expand them in the future, the sales reorientation particularly

includes strengthening the “Kitchen specialists/kitchen studios” sales channel for the ALNO and

WELLMANN brands. The company also aims to improve sales quality through refraining from entering

into low-margin business. To this end, a new pricing policy for the ALNO brand was successfully

implemented in the 2010 fiscal year, which allowed some strategically important major customers

to be re-acquired.

The sales organization in Germany had already been reorganized over the course of 2009 in order

to achieve the objective of more clearly positioning Group brands in the future, and of dismantling

the competition among sales teams that had prevailed until then. For this reason, and for the first

time in the 2010 fiscal year, employees were no longer allocated to individual brands, but to their

relevant strengths in line with the different sales channels.

Sales abroad are to be boosted once the restructuring measures there have been concluded. This

will entail strengthening the sales function, and trading partners will be given better service and

training. ALNO AG achieved an important sales success in China in September 2010. From there,

the company received a further major order to equip a residential estate in Shanghai with a total of

631 kitchens from the classic ALNOTERM program. Delivery ran to schedule in December 2010.


51

Design and innovation awards

Over the past few months (and partially after the end of the reporting period), ALNO AG won further

important awards for some of the innovative and successful products that it presented in 2010: for

example, ALNO received the “interior innovation award 2011” for the Marecucina concept study.

This is awarded by the German Design Council (Rat für Formgebung) at the Cologne International

Furniture Trade Fair. It is one of the highest design prizes within the German interior design sector.

This kitchen, which also generated a great deal of international attention, was also awarded the title

“Kitchen Innovation of 2011”, by the LifeCare consumer initiative.

ALNOSTAR SATINA, whose fronts are produced entirely from satin-finished glass, also received

this award. In May 2010, this kitchen had already received the sought-after “red dot design award”

from Essen for its innovative quality, functionality and production quality, and the “iF product design

award 2010” presented by the Designforum.

Consumers from the LifeCare initiative also awarded ALNO its “Consumers’ favorite brand” seal

of quality in its highest “Platinum” category – this time for the ALNOSTAR SATINA and ALNO

Marecucina products. This underscored how ALNO’s products reflect consistent consumerorientation.

Companies only receive this prize if they have been distinguished with the “Kitchen

Innovation of the Year” award for at least six products.

Following the end of the fiscal year, in January 2011, ALNO showed further new kitchen models

from its 2011 collection at the “Living Kitchen” kitchen trade fair in Cologne, along with the ESPRIT

home kitchens.

VII. RESEARCH AND DEVELOPMENT

The ALNO Group operates its central product development from its Pfullendorf site. Development

focuses on product and application innovations that are developed systematically and on a specific

target group basis above and beyond all product lines. All value-creation processes are also subject

to continuous efficiency optimization. The range of products and services is continuously reviewed,

and includes regular innovations, which, in some areas, comprise unique selling propositions on

the market.

In line with its aim of positioning ALNO as a premium brand, the company aims in the future to

develop products and application innovations systematically from market requirements and endcustomer

needs. Product development is aimed at supplying ALNO, as the company’s core brand,

with constant product and design innovations, thereby demonstrating its superior market position.

To this end, the company will further expand its expertise in the glass materials group, and in the

case of metallic varnishes. The ALNO brand is particularly distinguished by its expertise in varnish

technology. Further projects include the introduction of the handleless kitchen program in the mid

price segments, the updating of the basic front program, the re-development of structural elements,

and the expansion of the new opening and functional systems into the standard product range of

the PINO, IMPULS and WELLMANN brands.

A total of 325 property rights have been filed for the ALNO Group in Germany and abroad, or

have already been registered. Of this number, 298 comprise brands, 23 comprise design patents,

3 comprise patents, and 1 comprise registered designs.


52

VIII. TARGETS AND STRATEGY

The primary objective of the Managing Board and of all corporate units is to restore the company

to financial health, competitiveness and sustainable profitability. The ALNO AG Supervisory

Board approved the extensive “ALNO 2013” future concept in January 2010. This future concept

is intended to structure administrative processes and production structures more efficiently. The

reorientation of the brand and sales strategy is also targeted at strengthening the international impact

of all Group brands. In parallel, synergies are to be exploited, and the complexity of products and

production is to be reduced.

In this context, “ALNO 2013” should not only be regarded as a concept for fundamental restructuring,

but also as the basis for a paradigm shift.

Under the central “ALNO – One Company” mission statement, the desired cultural change can be

characterized particularly by the following aspects:

• Value-creating factors will be of central significance. Quality will be given priority over quantity in

this context. Performance-based measures comprise absolute and relative profitability, cash flow,

and return on capital.

• Priority is given to Group interests ahead of the interests of the company’s individual locations. With

the reorganization of Group structures that has already occurred, a shift is to be made away from

site-related corporate functions towards cross-Group and customer-oriented process thinking.

Individual corporate functions will be centralized along the value chain. This is particularly intended

to exploit Group synergies, and to efficiently structure and position the overall organization.

Targets and measures:

IMPROVING THE EARNINGS POSITION AND ENHANCING MARKET SHARES IN GERMANY

In order to achieve this objective, the Group will need to refrain from entering into low-profitability

or unprofitable business in the future. In addition, the company will also focus on boosting its

gross profit margin, which is to be attained through improved furniture quality and more efficient

purchasing, in particular. A marketing and sales campaign with a clear focus on sales channels and

customer groups, which is realized through a reorganization of the sales organization under one

operational management for all brands and products, and which has already been implemented,

also supports this objective. Synergies are to be exploited to a greater extent, and processes are to

undergo continuous improvement, in order to realize the planned enhancement of the gross profit

margin. Product and production complexity is to be reduced at the same time. Fixed costs are also

to be lowered, and financial stability is to be strengthened.

REORIENTATION AND STRENGTHENING OF THE SALES FUNCTION, AND

STRENGTHENING OF THE EXPORT BUSINESS

The sales function has already been restructured to reflect customer groups and products in order

to position the Group brands more clearly. As a consequence, kitchens from the ALNO brand

will be sold exclusively through furniture retailers, kitchen specialists and real estate developers.

WELLMANN is oriented to delivering the mid-segment in these channels. The IMPULS and PINO

brands will be placed in the lower segments of the retail furniture trade and the flat-pack furniture

business, with PINO positioned as an entry-price brand. IMPULS will also be deployed in project

business. The foreign subsidiaries have already been partially liquidated or restructured into sales

units, and switched to direct invoicing. This will relocate the administrative tasks of the export

function to Germany. The sales function abroad is also to be strengthened by the servicing and

training of trading partners. Among other measures in this context, working groups have been set

up to strengthen sales, and the product portfolio has been adjusted to reflect local customer and

market requirements. New growth markets for the ALNO Group will also need to be tapped, and


53

existing joint ventures will need to be continued, or to be newly founded. The company also plans

to expand its project business. The ALNO Group aims to significantly boost its export share in the

medium term, from the current level of around 30 %.

IMPROVEMENT OF THE BALANCE SHEET STRUCTURE

The complete restructuring of the balance sheet structure of the ALNO Group also forms part of

the “ALNO 2013” concept. Activities planned as part of this include various financing and capital

measures as part of the restructuring agreement concluded with the financing partners on April 23,

2010 (“Restructuring Agreement I”). The ALNO Group’s balance sheet structure already underwent

a significant improvement as the result of new factoring agreements in March 2010. The capital

increase that was successfully concluded after the end of the reporting period, and the conclusion of

a further restructuring agreement (“Restructuring Agreement II”) on February 9, 2011 will also exert

a positive impact on consolidated equity of around EUR 70 million. In the medium term, the ALNO

Group is aiming for an equity ratio that is typical for its sector. The company also retains its objective

of significantly reducing its working capital.

PROCESS OPTIMISATIONS

In order to exploit Group synergies, the location-oriented organization has already been replaced by

a central organization split according to functional areas. This is aimed at eliminating internal Group

rivalries, reducing overlaps in sales and administrative functions, and at establishing incentive and

management systems. These also include uniform order reporting and handling processes, as well

as a unified IT system landscape. A Group-wide resource planning system (ERP system) is also to

be introduced. This is also aimed at a strong orientation towards customer requirements.

In order to tap cost potentials, and to concentrate capital expenditure on efficient production

locations, mass production will be relocated from the Pfullendorf location to Enger. Predominantly

selected specialty product ranges and series entailing low volumes are to be produced at the

Pfullendorf plant in the future. The construction platform has also been unified for the ALNO and

WELLMANN brands. Series production of the new WELLMANN product currently occurs at the

Enger site on the basis of a uniform construction platform with ALNO. Some of the land and buildings

at the Pfullendorf site are to be transferred to alternative utilization due to the partial relocation

of manufacturing. This means that parts will be rented or sold. Some land and buildings that were

not required for operational purposes were already sold in 2010. Besides this, there are no specific

plans for further disposals.

The number of employees within the ALNO Group is to be reduced further by the end of 2013.

Some of the related requisite measures have already been implemented, and mainly affected the

Pfullendorf site. Future personnel adjustments will be focused on the administrative area, and will

affect all current locations, albeit to different extents.

In overall terms, the company anticipates significant synergy effects from the adjustments to the

group structures and processes, and on the basis of optimized operating procedures, and consequently

also a more favorable cost structure.

Beyond 2013, the company’s Managing Board takes the view that particularly the following factors

are of central significance for the corporate strategy: The company aims to exploit global growth

opportunities beyond Europe. The ALNO Group will place a major focus on Asia. The Group will also

endeavor to enter the global project business market in order to also gradually tap the retail business

in selected countries as part of the next step. Above and beyond this, the company is also planning

to grow further as part of potential consolidation trends in the European furniture industry, insofar as

the Managing Board regards this as strategically and commercially expedient at the relevant time.


54

IX. FINANCIAL POSITION AND RESULTS OF OPERATIONS OF THE ALNO GROUP

General business trends

The income statement of the ALNO Group (on IFRS basis) is presented according to the nature of

expense method. All of the figures for the 2010 fiscal year refer to the continuing operations.

Business during the period under review was characterized by the further advance of the implementation

of the “ALNO 2013” future concept. Although there was a decline in revenue compared with

the previous year, the positive trend continued for two of the total of four Group brands – IMPULS

and PINO. Among other things, the IMPULS brand benefited over the course of the year from the

market launch of the rapid delivery kitchen. This decline was particularly due to the company’s

conscious decision to refrain from entering into low-margin revenues as part of “ALNO 2013” and

as part of the realization of a new pricing policy.

Revenue and earnings

The following table shows the key figures for the continuing operations for 2008 to 2010.

In EUR thousand FY 2010 FY 2009 FY 2008

Revenues 467,297 493,373 511,204

Changes in inventories and own work capitalized – 1,993 – 3,724 113

Cost of materials 271,907 278,654 290,079

Gross profit 193,397 210,995 221,238

Gross profit (as % of revenue) 41.4 % 42.8 % 43.3 %

Other operating income 7,062 6,460 14,126

Personnel expenses 97,900 98,539 102,871

Other operating expenses 92,611 102,950 112,092

EBITDA before restructuring items 9,948 15,966 20,401

Depreciation/amortization/impairment losses 12,104 40,186 20,187

Operating results (EBIT) before restructuring items – 2,156 – 24,220 214

Financial result – 1,060 – 16,287 – 14,043

Earnings before income taxes (EBT) and

before restructuring items – 3,216 – 40,507 – 13,829

Restructuring profit/loss – 8,962 1,306 – 1,135

Profit/loss before income taxes (EBT) – 12,178 – 39,201 – 14,964

Consolidated revenues amounted to EUR 467.3 million in the 2010 fiscal year, representing a 5.3 %

decline compared with EUR 493.4 million in the previous year.

Domestic revenues were down by around 3.3 % to EUR 334.6 million. As part of repositioning and

product range streamlining, the management also consciously refrained from entering into low-margin

revenues in the first half of 2010 in order to boost profitability. This effect was also still evident in

the third quarter since agreements on higher prices that the company entered into with important

major customers did not take effect until August. The first positive effects arising from the new price

structures are anticipated in the second quarter of 2011. Particularly in the fourth quarter of 2010,

there were also negative effects from start-up problems for the new WELLMANN product range at

the Enger site.


55

As in the previous year, export business put the brakes on sales growth in 2010 due to the continued

real estate crisis in Southern Europe and the UK. This situation was worsened by the liquidation of five

foreign subsidiaries, which occurred to schedule as part of “ALNO 2013”. These foreign subsidiaries

were converted into sales units. As a result of the lower sales activities that arose as a consequence

of this, revenue outside Germany fell by 9.9 % to EUR 132.7 million. The overall export ratio decreased

correspondingly from 29.8 % to 28.4 %.

Revenues both in Germany and abroad reported the following trends:

Year

Germany Change Abroad Change Export ratio Total

* * in % * * in %

*

2008 339,122 172,082 33.7 % 511,204

2009 346,103 6,981 2.1 % 147,270 – 24,812 – 14.4 % 29.8 % 493,373

2010 334,620 – 11,483 – 3.3 % 132,677 – 14,593 – 9.9 % 28.4 % 467,297

* in EUR thousend

The foreign business is divided as follows:

Year

Total Total Change

Of which Change

Rest of Change

exports Europe

foreign

World

* * * in % subsidiaries * in % * in %

2008 172,082 154,592 108,813 17,490

2009 147,270 133,512 – 21,080 – 13.6 % 81,448 – 27,365 – 25.1 % 13,758 – 3,732 – 21.3 %

2010 132,677 108,089 – 25,423 – 19.0 % 27,681 – 53,767 – 66.0 % 24,588 10,830 78.7 %

* in EUR thousend

Changes in inventories and own work capitalized amounted to EUR – 2.0 million, compared with

EUR – 3.7 million in the prior-year period.

The cost of materials declined from EUR 278.7 million to EUR 271.9 million. At 58.4 %, the cost

of materials ratio was above the previous year’s level of 56.9 %. Gross profit fell from EUR 211.0

million to EUR 193.4 million on a consolidated basis, which resulted in a lower gross profit margin of

41.4 %, following 42.8 %. This was due to a mix of different effects from the subsidiaries. A particular

burden was felt from the revenue losses for the ALNO brand, which carries the highest gross margin.

Other operating income was up from EUR 6.5 million to EUR 7.1 million, which was mainly due to

higher income from asset disposals, and higher income from the de-recognition of liabilities. There

was little change in the personnel expense, which stood at EUR 97.9 million compared with EUR 98.5

million in the previous year. The personnel expense ratio was up from 20.1 % in the previous year to

21.1 % as a consequence. This was due to the assumption of 63 employees from the former Group

company GEBA Möbelwerke GmbH by Wellmann Bauteile GmbH as of November 1, 2009. The

effects from the workforce reduction at Pfullendorf that was carried out in the second half of 2010

will not exert its full impact until 2011, when it will consequently lead to a lower personnel expense.

The marked decline in other operating expenses from EUR 103.0 million to EUR 92.6 million is due

to the volume decline, the related lower logistics and assembly costs, and lower administrative

and marketing expenses in 2010. There was also a reduction in costs for consultants and external

service-providers.

EBITDA before restructuring measures fell due to the lower absolute level of gross profit, which was

down from EUR 16.0 million in the previous year to EUR 9.9 million as part of the sales decline.


56

Amortization of intangible assets, and depreciation of property, plant and equipment, fell from

EUR 40.2 million to EUR 12.1 million. As in the previous year, this mainly reflected impairment charges

of around EUR 24 million, which were necessitated by IAS 36 impairment tests. The correspondingly

lower basis for 2010 resulted in lower scheduled depreciation/amortization charges, which will

continue to be felt over the coming years. Impairment charges of only EUR 2.3 million were incurred

in the 2010 fiscal year as part of impairment tests.

In terms of EBIT before restructuring items, this allowed a significant increase from EUR – 24.2

million in the previous year to EUR – 2.2 million. As a consequence, the company achieved the

forecast that the Managing Board issued on April 30, 2010 of improving the operating result before

restructuring costs.

There was a significant year-on-year improvement in the financial result from EUR – 16.3 million to

EUR – 1.1 million. In this context, financial income improved significantly from EUR 0.1 million to EUR

10.4 million, while financing expenses fell in parallel from EUR 16.5 million to EUR 11.5 million. The

increase in financial income resulted mainly from the earnings-effective reporting of the “Banks’ Loan

Waiver (Part 1)” of EUR 10.0 million pursuant to the Restructuring Agreement of April 23, 2010, since

the company was successful in implementing the suspensive conditions arising from the restructuring

agreement for this portion of the banking waiver. The marked decline in financial expenses is

attributable to lower interest charges negotiated as part of this restructuring agreement. This item

was also affected in the previous year by interest payments arising from several shareholder loans,

expenses arising from the planned capital increase that was finally postponed, and expenses arising

from derivative financial instruments.

This fed through to a marked increase in EBT before restructuring measures from EUR – 40.5 million

in the previous year to EUR – 3.2 million.

At EUR 7.5 million, most of the restructuring charges were attributable to the workforce reduction at

the Pfullendorf site. The remaining EUR 1.5 million was distributed among job cuts abroad as part of

the liquidation of five of the eight subsidiaries, and to costs for the preparation of the restructuring

survey. A positive result of EUR 1.3 million was reported in the previous year in connection with the

partial release of restructuring provisions formed in previous years for the professional qualification

companies.

As a consequence, EBT underwent a marked year-on-year increase improvement from EUR – 39.2

million to EUR – 12.2 million.

The consolidated result from continuing activities rose year-on-year from EUR – 39.4 million to

EUR – 13.1 million. The Group net loss for the year underwent a significant improvement from

EUR – 39.0 million in the previous year to EUR -13.1 million as a consequence.

This is equivalent to earnings per share on the continuing operations of EUR – 0.78, compared with

EUR – 2.46 on the previous year.

The following comparison of the first and second halves of the fiscal year provides an insight into

the 2010 earnings position:


57

In EUR thousand FY 2010

30/6/2010

to 31/12/2010

1/1/2010

to 30/6/2010

Semi-annual

change

Revenues 467,297 233,571 233,726 – 155

Changes in inventories and

own work capitalized – 1,993 – 1,374 – 619 – 755

Cost of materials 271,907 136,837 135,070 – 1,767

Gross profit 193,397 95,360 98,037 – 2,677

Gross profit margin 41.4 % 40.8 % 41.9 %

Other operating income 7,062 2,305 4,757 – 2,452

Personnel expenses 97,900 46,910 50,990 4,080

Other operating expenses 92,611 48,276 44,335 – 3,941

EBITDA before restructuring items 9,948 2,479 7,469 – 4,990

Depreciation/amortization/impairment losses 12,104 6,143 5,961 – 182

EBIT before restructuring items – 2,156 – 3,664 1,508 – 5,172

Financial result – 1,060 2,042 – 3,102 5,144

EBT before restructuring items – 3,216 – 1,622 – 1,594 – 28

Restructuring profit/loss – 8,962 – 8,993 31 – 9,024

EBT – 12,178 – 10,615 – 1,563 – 9,052

A comparison of the two half-years of 2010 shows that revenue in the second half of the year was

approximately at the level of the first six months. Earnings were down, by contrast, which was due

to several special factors over the July to December 2010 period. For instance, revenue fell short

of the company’s expectations, particularly in the third quarter, due to customer responses to the

new pricing policy for the ALNO brand, which had a negative impact on earnings. The second half

year, in particular, was also affected by the production switch to the new WELLMANN product range.

Segment results

The following section presents the earnings positions of the individual segments of the ALNO Group

(before consolidation).

ALNO SEGMENT

31/12/2010

EUR mill.

31/12/2009

EUR mill.

Change y-o-y

EUR mill.

Change y-o-y

in percent

Net revenue 103.8 134.4 – 30.6 – 22.8 %

Gross profit 53.8 66.8 – 13.0 – 19.5 %

Gross profit as % 51.8 % 49.7 %

EBITDA – 17.3 2.7 – 20.0 > – 100.0 %

EBIT – 20.2 – 19.9 – 0.3 – 1.5 %

The ALNO segment comprises ALNO AG in Düsseldorf, which produces branded kitchens in the

upper and middle price segments at the Pfullendorf site.


58

Revenue volumes for ALNO AG fell by EUR 30.6 million year-on-year, or by – 22.8 %. Along with

weak export business, the revenue decline was due to product range streamlining and repositioning

within the Group, which affected ALNO the most. The company’s conscious refraining from entering

into low-margin revenues with the aim of sustainably improving profitability also contributed to this.

A positive consequence of this measure was that the gross profit margin increased from 49.7 % to

51.8 %, reflecting a 2.1 percentage point improvement.

The decline in EBITDA from EUR 2.7 million to EUR – 17.3 million is due, firstly, to the lower level of

gross profit in absolute terms, which in turn reflected the EUR 13.0 million revenue fall, and, secondly,

to restructuring expenses of EUR 7.5 million for the workforce reduction at Pfullendorf. Other operating

income stood at EUR 4.9 million, or 19.5 % below the previous year’s level. Personnel expenses

were down by EUR 1.2 million, or 2.8 %, to EUR 41.3 million. At EUR 41.4 million, other operating

expenses were EUR 4.5 million, or 9.8 %, below the previous year’s level.

IMPULS SEGMENT

31/12/2010

EUR mill.

31/12/2009

EUR mill.

Changes y-o-y

EUR mill.

Changes y-o-y

in percent

Net revenue 121.3 109.7 11.6 10.6 %

Gross profit 43.6 39.2 4.4 11.2 %

Gross profit as % 35.9 % 35.7 %

EBITDA 10.9 8.9 2.0 22.5 %

EBIT 8.1 6.0 2.1 35.0 %

The Impuls Küchen GmbH subsidiary, which is based at Brilon, reported significant 20 % revenue

growth of EUR 11.6 million to EUR 121.3 million. At the same time, gross profit was up by EUR

4.4 million, or 11.2 %, as a consequence of which the gross profit margin stood at 35.9 %. Thanks

to the improved gross profit, EBITDA increased by EUR 2.0 million, or 22.5 %, to reach EUR 10.9

million. This was also supported by the 10.7 % fall in personnel expenses to EUR 12.7 million. Other

operating expenses, rose by 15.3 % to EUR 22.2 million, by contrast, due to higher consulting costs,

and a higher level of cost transfers within the Group.

PINO SEGMENT

31/12/2010

EUR mill.

31/12/2009

EUR mill.

Changes y-o-y

EUR mill.

Changes y-o-y

in percent

Net revenue 93.6 90.6 3.0 3.3 %

Gross profit 29.9 29.3 0.6 2.1 %

Gross profit as % 31.9 % 32.3 %

EBITDA 6.8 8.1 – 1.3 – 16.0 %

EBIT 5.0 6.3 – 1.3 – 20.6 %

The PINO segment comprises pino Küchen GmbH, Coswig (Anhalt), which produces kitchens in

the lower price segment. PINO reported revenue growth of EUR 3.0 million, or 3.3 %, to EUR 93.6

million in the 2010 fiscal year. At the same time, gross profit was up by 2.1 % to EUR 29.9 million.

EBITDA declined by EUR 1.3 million, from EUR 8.1 million to EUR 6.8 million, by contrast. This is

primarily due to the marked increase in other operating expenses that was accompanied by a fall

in other operating income.


59

WELLMANN SEGMENT

31/12/2010

EUR mill.

31/12/2009

EUR mill.

Changes y-o-y

EUR mill.

Changes y-o-y

in percent

Net revenue 137.6 136.5 1.1 0.8 %

Gross profit 57.7 57.5 0.2 0.3 %

Gross profit as % 42.0 % 42.1 %

EBITDA – 1.6 11.8 – 13.4 < – 100 %

EBIT – 5.9 7.4 – 13.3 < – 100 %

The WELLMANN segment, which primarily comprises Gustav Wellmann GmbH & Co. KG, produces

kitchens in the medium price segment. The company reported EUR 1.1 million of revenue growth,

or 0.8 %, to EUR 137.6 million. With a 0.3 % increase in gross profit to EUR 57.7 million, the gross

profit margin of 42 % was held at approximately the previous year’s level. The significant decline in

EBITDA and EBIT is particularly attributable to the EUR 8.9 million reduction in the extraordinary

result, which was characterized in the previous year by extraordinary income arising from the

receivables waiver on the part of ALNO AG, as well as from income arising from the release of

provisions for the social plan and litigation risks. The personnel expense also increased by EUR 3.7

million to EUR 30.0 million due to the transfer of 63 employees from GEBA, and to the start of the

reduction in the workforce at the Enger site. There was a slight increase in other operating expenses

compared with the prior-year period.

FOREIGN SUBSIDIARIES SEGMENT

In the 2010 fiscal year, the Foreign Subsidiaries Segment was characterized by the liquidation of

five foreign subsidiaries. There now remain only three. For this reason, revenue fell from EUR 81.4

million in the previous year to currently just EUR 27.7 million. There was a parallel fall in EBITDA of

EUR 2.2 million, from EUR 2.7 million in the previous year to EUR 0.5 million.

Net assets

There was little change in the ALNO Group’s total assets, which fell from EUR 165.0 million as of

December 31, 2009, to EUR 157.7 million as of December 31, 2010.

On the assets side of the balance sheet, non-current assets underwent a slight increase to EUR 86.6

million, compared with EUR 85.3 million as of December 31, 2009. Property, plant and equipment

was up from EUR 70.0 million to EUR 72.3 million, primarily due to the investments that were made

in the production facilities at the Enger site.

Current assets fell from EUR 79.7 million to EUR 71.1 million, which is mainly due to the factoring

at two subsidiaries that was introduced at the start of the fiscal year, and improved receivables

management at the Group. Trade receivables fell from EUR 46.5 million to EUR 32.4 million as a

consequence. There was a countervailing and significant increase in inventories from EUR 24.7

million to EUR 28.2 million. This was mainly connected with the start of series production for the

new WELLMANN product range. Kitchens from both the old and the new model were produced

during a transitional phase. This effect will discontinue in 2011.

On the equity and liabilities side of the balance sheet, and due to the two capital increases during

the period under review, subscribed capital was up from EUR 41.1 million to EUR 45.2 million,

and the capital reserve was topped up from EUR 36.5 million to EUR 42.4 million. Consolidated

equity stood at EUR – 69.7 million, compared with EUR – 71.1 million as of December 31, 2009.

One of the most important objectives of the “ALNO 2013” future concept is a sustainable increase

in equity within the next few years. An important step on this path was achieved after the end of


60

the period under review with the successful placing of the capital increase, and the conclusion of

a further restructuring agreement (please see “B. Report on events after the balance sheet date”).

Non-current liabilities amounted to EUR 34.9 million as of the end of 2010, compared with EUR 36.8

million. Pension provisions rose from EUR 16.2 million to EUR 17.0 million due to general interest-rate

adjustments. Other non-current financial liabilities, which primarily include bank borrowings, fell from

EUR 14.1 million as of December 31, 2009 to EUR 13.1 million.

Current liabilities, by contrast, were reduced from EUR 199.4 million to EUR 192.5 million. Among

other factors, this was due to a loan waiver on the part of the four consortium banks in an amount of

EUR 10.0 million. Other financing liabilities fell in this connection from EUR 87.4 million to EUR 73.1

million. The largest item in this context reflects bank borrowings of EUR 67.7 million (previous year:

EUR 80.3 million). Current trade payables and other liabilities increased from EUR 102.0 million to

EUR 111.1 million due to the greater utilization of supplier loans over the course of 2010.

Liquidity and financial position

Cash flow from operating activities amounted to EUR 11.5 million in 2010, compared with EUR 21.2

million in the previous year. This was particularly due to the lower balance on interest payments,

and the financial result.

Net funds of EUR 14.3 million were deployed for investments (previous year: EUR 16.0 million),

which were almost fully attributable to investments in property, plant and equipment.

Cash flow from financing activities stood at EUR 2.5 million (previous year: EUR – 5.3 million). This

item is mainly composed of inflows from capital increases (EUR 10.0 million), and from the drawing

down of financial liabilities (EUR 1.5 million). This was offset by the redemption of financial liabilities

(EUR – 7.5 million), and outgoing payments for financing costs (EUR – 1.5 million).

CHANGES IN NET DEBT

There was a further decrease in the net debt at the ALNO Group (other financial liabilities and

shareholder loans less cash and cash equivalents) as of December 31, 2010 compared with the

previous year’s reporting date due to the successful realization of the two capital increases. Net

debt stood at EUR 83.5 million, compared with EUR 104.4 million at the end of the 2009 fiscal

year. There will be a further significant reduction in net debt in 2011 with the recent restructuring

package that was agreed following the end of 2010.

31/12/2010

In EUR

31/12/2009

In EUR

Change in

EUR thousand

Change in

percent

Shareholder loans and other financial liabilities

non-current 13,057 14,129 – 1,072 – 7.6

current 73,495 93,122 – 19,627 – 21.1

86,552 107,251 – 20,699 – 19.3

Less cash and cash equivalents – 3,041 – 2,857 – 184 – 6.4

83,511 104,394 – 20,883 – 20.0


61

X. SINGLE-ENTITY FINANCIAL STATEMENTS FOR ALNO AG ON THE BASIS

OF THE GERMAN COMMERCIAL CODE (HGB)

ALNO AG’s single-entity income statement (HGB) for 2010

In EUR thousand 2010 2009

Revenues 103,833 134,444

Changes in inventories and own work capitalized – 2,193 – 2,140

Other operating income 20,507 24,928

Total operating revenue 122,147 157,232

Cost of materials 48,073 65,374

Personnel expenses 41,443 43,531

Other operating expenses and other taxes 41,684 44,748

131,200 153,653

EBITDA – 9,053 3,579

Depreciation/amortization/impairment losses 7,310 6,788

EBIT – 16,363 – 3,209

Financial result 13,359 – 6,002

EBT – 3,004 – 9,211

Extraordinary result – 11,630 – 704

Taxes on income 11 0

Net loss for the year – 14,623 – 9,915

ALNO AG was obliged to absorb a revenue decline in the 2010 fiscal year. Although revenues in

Germany were down by 29.7 %, the revenue decline abroad was more moderate, at 5.6 %. By

contrast, net revenue per cabinet was increased from around EUR 193 to EUR 208, due to the

company’s decision to refrain from entering into low-margin sales.

In the single-entity financial statements of ALNO AG prepared on the basis of the German Commercial

Code (HGB), the gross profit margin in the 2010 fiscal year increased by 1.8 percentage

points to 51.6 % (previous year: 49.8 %), and reflects the further significant improvement in sales

quality also at ALNO AG. This is primarily due to the disproportionate fall in the cost of materials

compared with revenues.

The personnel expense was reduced by EUR 2.1 million, or by 4.8 %, to EUR 41.4 million (previous

year: EUR 43.5 million) primarily due to the workforce reduction measures that were started in the

year under review, and which will not exert their full impact until 2011.

Other operating expenses and other taxes fell by EUR 3.1 million, or 6.8 %, to EUR 41.7 million. Revenue-dependent

sales expenses fell in line with the revenue decline, and were offset by significantly

higher expenses for trade fairs and exhibitions. There was a significant reduction in administrative

expenses, which is mainly due to lower consultancy costs, and lower costs for external services.

Other operating income reduced by EUR 4.4 million, or 17.7 %, to EUR 20.5 million in the year under

review. Although there was higher income due to costs transferred within the Group, the previous

year’s figure contains significantly higher income from the reversal of specific valuation allowances

(+ EUR 10.9 million), particularly relating to Gustav Wellmann GmbH & Co. KG.


62

There was a significant, EUR 19.4 million, year-on-year improvement in the financial result. This

increase in financial income resulted mainly from the earnings-effective reporting of the “Banks’ Loan

Waiver (Part)” of EUR 10.0 million pursuant to the Restructuring Agreement of April 23, 2010, since

the company was successful in implementing the suspensive conditions arising from this restructuring

agreement for this portion of the banking waiver. The marked decline in interest expenses is attributable

to lower interest charges negotiated as part of this restructuring agreement. This item was also

affected in the previous year by interest payments arising from several shareholder loans, expenses

arising from the planned capital increase that was finally postponed, and expenses arising from

derivative financial instruments. Impairment losses of EUR 2.8 million will also apply to participating

interests in associated companies (previously: EUR 7.6 million). There was a EUR 3.7 million improvement

in the net balance of income and expenses arising from profit-and-loss transfer agreements.

The extraordinary result deteriorated by EUR 10.9 million year-on-year, which is attributable to workforce

reduction expenses of EUR 7.5 million at the Pfullendorf site, consultancy costs of EUR 0.7

million connected with the restructuring, and EUR 0.2 million of expenses incurred as part of the

liquidation of subsidiaries. In addition, the transition to the German Accounting Law Modernization

Act (“BilMoG”) as of January 1, 2010 resulted in an extremely charge of EUR 3.2 million.

ALNO AG’s single-entity balance sheet (HGB) as of December 31, 2010

In EUR thousand 31/12/2010 31/12/2009

ASSETS

Non-current assets

Intangible assets 5,638 5,516

Property, plant and equipment 15,373 19,305

Non-current financial assets 105,482 108,282

126,493 133,103

Current assets

Inventories 9,104 9,882

Receivables and other assets 22,547 20,447

Securities 0 2,008

Cash in hand and bank balances 116 2

31,767 32,339

Prepayments and accrued income 498 391

Assets-side differential amount 154 0

158,912 165,833

EQUITY AND LIABILITIES

Equity

Subscribed capital 45,231 41,242

Capital reserve 42,437 36,544

Accumulated deficit – 56,389 – 46,675

31,279 30,993

Provisions 30,118 27,239

Liabilities 97,515 107,601

158,912 165,833


63

The slight increase in intangible assets results primarily from additions arising from the purchase of

customer bases from foreign subsidiaries.

The decline in property, plant and equipment is due to lower investment volumes compared with

depreciation, and sales of land and buildings in the year under review.

The fall in financial assets arises from the EUR 2.8 million impairment loss applied to the carrying

amount of the participating interest in ALNO International GmbH.

The slight fall in inventories is attributable to the lower level of business activities, and to the working

capital measures that were implemented.

Receivables and other assets were up by EUR 2.1 million, primarily due to higher VAT receivables.

The equity ratio increased from 18.7 % to 19.7 % year-on-year. There was a EUR 0.3 million increase

in equity to EUR 31.3 million. The EUR 14.6 million net loss for the year is offset by a EUR 10.0

million capital increase, and a EUR 4.9 million waiver by a shareholder of a mezzanine loan.

Provisions increased by EUR 2.9 million to EUR 13.1 million, which is predominantly attributable

to the revaluation of the pension provision and other provisions as part of the German Accounting

Law Modernization Act (BilMoG).

The fall in liabilities is mainly due to lower bank borrowings due to the banking waiver.


64

B. REPORT ON EVENTS AFTER THE

BALANCE SHEET DATE

Restructuring Agreement II and successful conclusion of the capital increase that was

launched in 2010

On February 9, 2011, the company, the consortium banks, Küchen Holding GmbH, Munich, IRE

Beteiligungs GmbH, Stuttgart, Bauknecht Hausgeräte GmbH, Stuttgart, and Starlet Investment AG,

Nidau/Switzerland, concluded a further restructuring agreement that supplements the agreement

was concluded in April 2010. In this connection, all parties committed themselves to restructuring

contributions that are to reach a total minimum level of EUR 70 million over the course of 2011.

Consolidated equity will undergo a sharp improvement once the measures that have been regulated

in the new restructuring agreements have been successfully implemented.

Investors and shareholders issued subscription guarantees totaling EUR 20.0 million when the

capital increase, which was postponed in November 2010, was resumed. This rights issue from

authorized capital was resumed in February 2011, and was successfully concluded on March 3,

2011. A total of 8,698,326 new no par value ordinary bearer shares (no par shares), each with a

nominal amount in the share capital of EUR 2.60, were issued. The issue price was EUR 3.00. As

a consequence, the company generated total gross issue proceeds of EUR 26.1 million, and the

share capital increased by EUR 22,615,647.60 to EUR 67,846,945.40. The capital increase was

entered in the commercial register on March 4, 2011.

Starlet Investment AG has obligated itself to relieve the ALNO Group of trade payables due to

Bauknecht Hausgeräte GmbH, and to associate companies of Bauknecht Hausgeräte GmbH, to

an amount of at least EUR 25.0 million. With respect to a partial amount of EUR 12.5 million, this

is to occur by May 31, 2011, by way of a waiver, or by depositing the receivables as a non-cash

capital contribution into the capital reserve of ALNO AG. With regard to a further partial amount of

EUR 12.5 million, this is to occur through contributing these receivables as part of a capital increase

against non-cash capital contributions, to the extent that this partial amount is of value. The obligation

is subject to the suspensive condition that the capital increase is performed successfully with

gross issue proceeds of at least EUR 20.0 million, and that the capital increase is entered in the

commercial register by May 30, 2011; and, with regard to the further partial amount that is to be

contributed as part of a capital increase against non-cash capital contributions, additionally under

the suspensive condition that ALNO AG, IRE Beteiligungs GmbH and Küchen Holding GmbH satisfy

certain co-operation obligations relating to the realization and performance of the capital increase

against non-cash capital contributions (in particular, through corresponding exercising of voting

rights at the Shareholders’ General Meeting), as well as with regard to the contribution of the partial

amount of receivables. If, and to the extent, that the contribution of the further partial amount of EUR

12.5 million has not occurred by December 31, 2011, Starlet Investment AG has obligated itself to

waive these receivables for the company and its associated companies by way of deposit into the

company’s capital reserve at the latest by, and with effect of, December 31, 2011, unless the capital

increase against non-cash capital contributions fails to occur due to an infringement on the part of

ALNO AG, IRE Beteiligungs GmbH and Küchen Holding GmbH against their co-operation duties.

Under the suspensive conditions that the capital increase is successfully performed with gross issue

proceeds of at least EUR 20.0 million, and that the capital increase is entered in the commercial

register by May 30, 2011, as well as the relieving of the ALNO Group from trade payables of at

least EUR 25.0 million by Starlet Investment AG, ALNO AG and Bauknecht Hausgeräte GmbH have

agreed to reduce the existing overdraft facility to zero. The consortium banks have agreed to this

reduction.

Küchen Holding GmbH has obligated itself to relieve the ALNO Group of loan liabilities to the

consortium banks in an amount of EUR 25.0 million. In the first step, and at the option of Küchen

Holding GmbH, this relief is to occur either by way of purchase of receivables with full discharge of


65

the debtor, or through other agreements that lead to the same economic result for the consortium

banks. In the instance of the purchase of the receivables, Küchen Holding GmbH intends in a second

step to contribute the valuable portion of the receivables acquired from the consortium banks as

a non-cash capital contribution to the company as part of a capital increase against non-cash

capital contributions by December 31, 2011. The obligation on the part of Küchen Holding GmbH

is subject to the suspensive conditions that the capital increase is successfully performed with gross

issue proceeds of at least EUR 20.0 million, that the capital increase is entered in the commercial

register by May 30, 2011, that the ALNO Group is relieved of trade payables by Starlet Investment

AG, and that certain co-operation duties are satisfied by ALNO AG, IRE Beteiligungs GmbH and

Starlet Investment AG with regard to the realization and performance of the capital increase against

non-cash capital contributions (in particular, through corresponding exercising of voting rights at the

Shareholders’ General Meeting), as well as with regard to the contribution loan receivables. If, and

to the extent that, the contribution of the loan receivables has not occurred by December 2011,

31, Starlet Investment AG has obligated itself to waive these receivables for the company and its

associated companies by way of deposit into the company’s capital reserve at the latest by, and

with effect of, December 2011, unless the capital increase against non-cash capital contributions

fails to occur due to an infringement on the part of ALNO AG, IRE Beteiligungs GmbH and Küchen

Holding GmbH against their co-operation duties.

The consortium banks have obligated themselves to conclude the agreements with Küchen Holding

GmbH that are requisite for the relieving of the ALNO Group of loan receivables. This obligation is

subject to the suspensive conditions that the capital increase is performed successfully with gross

issue proceeds of at least EUR 20.0 million, that the capital increase is entered in the commercial

register by May 30, 2011, and that the ALNO Group is released from the aforementioned trade

payables by Starlet Investment AG. The consortium banks have also declared their waiver of the

debtor warrant as granted by ALNO AG as part of Restructuring Agreement I. This waiver is subject

to the suspensive condition that the capital increase is performed with gross issue proceeds of

at least EUR 20.0 million, and that it is entered in the commercial register by May 30, 2011. The

second waiver of EUR 10.0 million arising from Restructuring Agreement I that was concluded

on April 23, 2010 was cancelled as part of this agreement under the suspensive condition that

the capital increase is performed with gross issue proceeds of at least EUR 20.0 million, that the

capital increase is entered in the commercial register by May 30, 2011, and that the ALNO Group

is relieved of trade payables in an amount of at least EUR 25.0 million by Starlet Investment AG. A

further extension of the loan terms until December 31, 2010 will be examined in a favorable light

under further terms whereby a restructuring survey to be compiled by Pricewaterhouse Coopers AG

Wirtschaftsprüfungsgesellschaft for ALNO AG issues a positive forecast relating to the company’s

continued existence, and that the capital increase is entered in the commercial register by May 30,

2011. Under these terms, the consortium banks will also support ALNO AG in its application for a

federal state guarantee.

Finally, and as part of the Restructuring Agreement II, the company obligates itself, at corresponding

written request by Küchen Holding GmbH, which must be submitted to the company by December

31, 2011, to issue convertible bonds from conditional capital under exclusion of subscription rights

for the company shareholders to majority shareholders in Küchen Holding GmbH or to third parties

to be nominated by Küchen Holding GmbH. When converted, these convertible bonds will entitle to

the subscription of shares to a level of up to 10% of the company’s share capital. Küchen Holding

GmbH has obligated itself to pledge that these convertible bonds will be subscribed for.

ALNO AG has obligated itself to the consortium banks to solicit the support of professional consultants

for its further restructuring.

The restructuring agreements presented above are regarded as an integral component of the Group

restructuring, and consequently as an elementary basis for the further realization of the planned

restructuring measures.


66

Production of ESPRIT home kitchens in Pfullendorf

On April 4, 2011, the company’s management also announced that the ESPRIT home kitchens

would be produced at the Pfullendorf site. Renovation of the roof and further investments in Plant 1

are connected with the planned expansion of components production for Group supply. In order to

neutrally structure start-up costs, the Works Council has declared that the workforce is prepared to

make a contribution to the investments through the waiving of hours worked. Far-reaching flexibility

in terms of personnel capacity and working hours was also negotiated in Pfullendorf. The site is to

sustainably improve its competitiveness as a result of these measures. The decision to produce the

ESPRIT home kitchens in Pfullendorf fits into the “ALNO 2013” strategy to manufacture specialty

ranges, exclusive products and series entailing small unit volumes there in the future, since the

ESPRIT home kitchens fall into both categories.

Changes to the Managing Board

At its meeting held on April 6, 2011, the Supervisory Board of ALNO AG reached a decision

concerning a new Managing Board team. Max Müller was unanimously appointed to be the new

Managing Board Chairman (CEO) with immediate effect. His future departmental responsibilities

include Marketing, Development, Production, Purchasing, Logistics and Quality. Christoph Fughe

became the new Managing Board member responsible for the Sales area. He was previously Head

of Sales for ALNO AG. Jörg Artmann remains the Managing Board member responsible for Finance

(CFO), Personnel and IT. Jörg Deisel (who as CEO was previously responsible for Sales, Marketing

and Development) and Michael Paterka (who was the Managing Board member responsible for

Production, Purchasing, Logistics and Quality) have left the company.

Expansion of factoring volumes

With an agreement dated December 8/28, 2010, the ALNO Group increased its previous factoring

volume with GE Capital Bank AG from EUR 20 million to EUR 45 million with effect as of January 1,

2011. In addition to the existing subsidiaries Impuls Küchen GmbH and pino Küchen GmbH, the

factoring arrangement now additionally includes Gustav Wellmann GmbH & Co. KG. The three

companies can utilize the factoring volumes on a variable basis up to the maximum amount of

EUR 45 million.

On April 5, 2011, ALNO AG signed a further factoring agreement with GE Capital Bank AG, whereby

ALNO AG trade receivables are to be sold in an amount of EUR 15 million. The contract has yet to

be signed by GE Capital Bank AG, since certain terms have yet to be satisfied. Once this agreement

has been successfully concluded, the ALNO Group will increase its previous factoring volumes with

GE Capital Bank AG from EUR 45 million to EUR 60 million. The four companies should then also be

able to utilize the factoring volumes on a variable basis up to the maximum amount of EUR 60 million.

Liquidation of ALNO France

A resolution was passed in spring 2011 to close the foreign subsidiary ALNO France S.á r.l.,

Cagnes-sur-Mer, France.


67

Extension of the original restructuring survey of June 24, 2010

by Pricewaterhouse Coopers

At the start of 2010, Pricewaterhouse Coopers AG Wirtschaftsprüfungsgesellschaft (“PwC”) was

engaged to prepare a restructuring survey for the ALNO Group according to the standard IDW S6

of the Institut der Wirtschaftsprüfer. In its restructuring survey dated June 24, 2010, PwC issued the

ALNO Group with a positive forecast for a going concern, to the extent that financing is secured in line

with the Restructuring Agreement I of April 23, 2010, and that the pending activities in the company’s

forecast are implemented.

In spring 2011, PwC was mandated to produce an update of the restructuring statement for the ALNO

Group. In its (draft) updated restructuring survey of May 13, 2011, PwC arrives at the conclusion that,

from today’s perspective, the ALNO Group remains completely financed under certain preconditions,

and that no change arises relating to the restructuring statement as presented in the restructuring

survey of June 24, 2010. PwC nevertheless points out that the restructuring of the ALNO Group will

require more time than was planned in the previous year.

PwC notes that the liquidity position appears to be secured only under the following terms, and on

the basis of the following assumptions, including with the liquidity-effective financial measures of

the Restructuring Agreement II (in particular, the capital increase), which have already been realized:

• The corporate planning that has been adjusted by PwC, including the defined effects arising from

potentials, must be achieved. This requires that the measures planned by the Managing Board are

implemented stringently.

• Commercial credit insurers and suppliers must not implement negative changes to their payment

terms compared with the current status, and/or compared with the planned level.

• Local financing lines must be maintained in line with the planning.

• Existing credit lines must be available beyond December 31, 2011.

• The existing EUR 45 million factoring facility, and the additionally planned EUR 15 million factoring

facility, must be available beyond February 28, 2012.

• The financing shortfalls apparent in the August 2011 planning, as well as in the first quarter of 2012,

must be met by appropriate measures (e.g. granting of supplier loans, drawing down of a new loan

backed by a federal state, the issuing of a bond, or further internal measures to secure liquidity).

The continuation of corporate activities on the part of ALNO AG and/or on the part of the ALNO Group

depend on the aforementioned terms and assumptions occurring as planned, or being applicable as

planned. The Managing Board of ALNO AG assumes that these terms and assumptions will occur as

planned, or will be applicable as planned.


68

c. REPORT ON OPPORTUNITIES

AND RISKS / FORECAST REPORT

I. RISK AND FORECAST REPORT

RISK REPORT

Risk management system

In order to implement and secure its business transactions, the ALNO Group has developed procedures

and formed committees that allow the Managing Board to identify going-concern risks for the

company at an early juncture. Risks are identified, evaluated, managed and monitored in the ALNO

Group based on a system that is implemented Group-wide to identify and monitor risks at an early

stage. Dealing with risks successfully is based on the objective of balancing return and risk. From

2009, the risk management system placed all of the risk-bearing decisions in the entire Group on

a uniform quality platform, thus making them transparent and verifiable for the management team

and the affected employees.

Risk management is based on risk controlling at the operating level, strategic controlling for shareholdings,

and an internal monitoring system for the early recognition of going-concern risks. Operating

risk controlling comprises constantly updated risk information. The Managing Board receives

constant information thanks to an end-to-end reporting system, and also receives corresponding

ad hoc information if required. Strategic controlling for participating interests takes into account the

risks and opportunities based on analyses of the market and competition, which form the basis for

management decisions. In addition, the controlling for participating interests also monitors whether

business targets are achieved, and manages the Group’s companies using uniform key performance

indicators. As a result, this system creates the foundations for early recognition of risks, and the

implementation of measures to minimise risks.

In 2007, additional controlling bodies were put in place that report on restructuring projects, and their

impacts on earnings and risks at regular intervals, as a rule, once per month. Within the Group, it

must be possible to recognise risks from redundancies, inefficiencies or bottlenecks in the operating

process. The activities then put in place must be performed in view of their impact on the company’s

most important partners, its customers. ALNO AG hedges its trade receivables, in particular, using

credit insurance, and its integrated Group receivables management system ensures appropriate

control of liquidity in line with customer needs and security considerations. Liquidity controlling, managed

on a Group basis, monitors cash flow developments, and, at the same time, provides relevant

parameters for rapid management decisions. In order to hedge against insolvency risk arising from

partial retirement obligations, ALNO AG has invested in securities in a corresponding amount. These

were measured in the consolidated financial statements at market values on the balance sheet date.


69

Financial risks

The ALNO Group utilises forecasting and management tools that recognise liquidity risks at an early

stage in order to hedge against financial risks. ALNO AG essentially acts as financial coordinator for

all Group companies so as to ensure the most advantageous and permanently adequate cover of

financing needs for business operations. The necessary information potential is updated monthly, and

is subjected to a divergence analysis within the framework of rolling financial planning. This financial

forecast, with its one-year horizon, is supplemented by a daily cash flow development forecast that is

continuously reconciled with actual cash flows. The ALNO Group continuously monitors the liquidity

reserves on hand.

A considerable portion of the credit lines that have been granted to the ALNO Group are currently

made available on an “until further notice” basis, and can consequently be called due at any time.

Most of the ALNO Group’s master credit agreements may be cancelled without notice if, among

other things, a significant deterioration occurs, or threatens to occur, to the economic circumstances

of the ALNO Group or to the value of a collateral item, thereby jeopardising the repayment of the

loans. Should significant credit lines be called due, or were key master credit agreements to be

cancelled on an extraordinary basis and be called due for repayment, the ALNO Group would be

forced to raise additional capital in the form of debt or equity. In addition, a significant portion of the

bank loans utilised by the ALNO Group carries variable interest rates. Rising interest rates, or other

disadvantageous modifications to the terms of the loans, could result in the debt utilised by the ALNO

Group becoming more expensive, resulting in a greater burden on the financial result.

The intra-Group financial equalisation carried out in Germany within the framework of cash pooling

leads to a reduction in the volume of external financing with a positive effect on the Group’s net

interest. The internal financial equalisation ensures the use of liquidity surpluses of individual Group

companies for the internal financing of other Group companies. The intra-Group cash pooling was

reduced from November 2009.

As part of the Group’s receivables management, minimum creditworthiness requirements, as well

as upper exposure limits, are laid down for all ALNO Group business partners. The basis in this

context is a prescribed limits system, compliance with which is continuously monitored. In addition,

the ALNO Group secures trade receivables with commercial credit insurance, which reimburses the

loss incurred up to the contractually agreed proportional amount in the event of a receivables default

subject to a deductible.

Liquidity risks

The primary focus for the 2011 and 2012 fiscal years remains on securing the Group’s liquidity

position. From as early as 2009, the Managing Board of ALNO AG started to develop a concept to

secure its liquidity and future. The extensive restructuring measures arising from this concept, and

which were already partially in the implementation stage in spring 2011, are described in detail under

B. “Report on events after the balance sheet date”. From the perspective of the Managing Board of

ALNO AG, the long-term liquidity requirements of the ALNO Group will only be partially satisfied with

the successful implementation of the Restructuring Agreement II of February 9, 2011. The liquidity

shortfalls in August 2011 and in the first quarter of 2010 that are contained in the current corporate

and liquidity planning need to be closed by measures yet to be implemented by the Managing Board

(e.g. issuing a bond, a federal state guarantee, or similar).

The ALNO Group also utilises factoring as a financing source to a significant extent. The provision of

the financing by the factoring companies presupposes the existence of corresponding receivables.

Should the ALNO Group be required to satisfy receivables on a shorter term basis than expected

due to modifications to the factoring agreements that it utilises, the ALNO Group’s liquidity would

face a significant burden.


70

Exchange rate risks

Currency exchange-rate risks exist with regard to deliveries to countries outside the Eurozone,

particularly deliveries to Switzerland and the United Kingdom. Currency exchange-rate trends are

subject to constant monitoring. There were no forward currency transactions in place as of the

balance sheet date. ALNO will implement exchange rate hedging measures if new currency risks

arise as part of the further international expansion.

Price risks

The most important commodities for ALNO are wood, plastics and metal. Price changes for these

materials on the market could exert a corresponding impact on the Group’s margin trends.

Materials prices

The market for wood and metal products was confronted with significant price increases in the 2011

fiscal year. The current situation on commodities markets means that a reduction in materials prices

cannot be expected until the final quarter of 2011 at the earliest. In line with this trend, high fuel

prices lead to the expectation that distribution costs will increase above budget. Further bundling

of transported items is indispensable as a countermeasure.

Services

A significant increase in fuel prices is feeding through to particular risks in terms of transportation

cost trends. ALNO has bundled and streamlined its freight consignments in order to counter this.

Market risks

The ALNO Group operates in the kitchen furniture sector, a market that is characterised by intense

competition. Tough price competition on the part of providers, particularly in the lower price ranges,

is resulting in ever greater margin pressure, and is crowding out less competitive manufacturers

at the same time. Activities on the part of competitors and wholesalers/retailers could significantly

reduce the revenues and earnings level of the ALNO Group.

The ALNO Group’s customers are primarily resellers, most of whom are organised into purchasing

associations. If important purchasing associations were to reduce their ordering volumes, cancel

master agreements, be required to file for bankruptcy, and if the ALNO Group proved unable to

acquire new customers to a comparable extent, or if existing customers proved unable to increase

their ordering volumes to the same extent, this might result in a marked decline in capacity utilisation

and revenues, and lead to receivables defaults for the ALNO Group.

In addition, the repositioning of the ALNO Group brand world that was launched in the previous

year, and the new sales structure that has already been set up, must be further established. This

also carries risks.

Germany is the ALNO Group’s primary sales market, and accounts for an approximately 70 % share

of total revenues. The United Kingdom, France, Austria, Switzerland, Spain, Italy and the Benelux

countries are additional notable sales markets. These markets have reported different growth rates

in the past. Particularly markets abroad, such as the Spanish market, have been subject to negative

influences. ALNO AG assumes that individual markets will continue to report different growth rates

in the future, and remain dependent on economic influences.


71

IT risks

A large part of the production, inventory administration, and accounting system of the ALNO Group

is operated primarily on the basis of IT systems. A breakdown of the IT or production systems

could result in a production standstill, thereby leading to significant financial losses for the company.

ALNO AG has also outsourced almost all of its IT systems. Should disruptions occur to the contractual

relationship relating to the rendering of services in ALNO AG’s entire IT area, this would have a

detrimental effect on all of the working processes of the company’s data-processing.

Corporate strategy risks

With its “ALNO 2013” future concept, the ALNO Group has started a concept that includes multilevelled

changes within the Group. In order to identify all risks at an early stage that might arise from

this concept, ALNO commissioned a restructuring survey from PwC in 2010 that was extended in

2011 on the basis of corporate planning for the years 2011 to 2014 (please refer to B. “Report on

events after the balance sheet date”).

In order to stabilise the net assets, financial position and net assets of the ALNO Group, the

company’s assessment is that, as part of the “ALNO 2013” future concept, among other things

measures are required to boost efficiency in the administrative and sales area, to reduce costs, and

to ensure profitable growth, particularly through the repositioning of the brands. These measures

require investments and corresponding funds. An IT project that serves to unify the IT structure to

support a centralised financing organisation is currently considerably behind schedule. In particular,

this may lead to delays in the centralisation of administrative structures. Further funds might need to

be raised if the measures can only be implemented with a time delay, or with greater than intended

investments, or should the targeted measures fail to have the anticipated success and intended

effect.

REPORT ON OPPORTUNITIES

Shipments and sales

Further market potentials exist with respect to the WELLMANN brand already for the current fiscal

year.

The “Esprit Kitchens” model series has not been included in the medium-term planning with respect

to potential sales. The number of “Esprit licensing agreements” that have been concluded is already

ahead of the planned volume.

The Group will publish a so-called “ALNO performance commitment” at its in-house trade fair in

2011. In this performance commitment, all customers are given binding commitments concerning

important service parameters (e.g. processing periods for complaints, registration of new customers,

response following receipt of orders) - relating to the Group, but also on a differentiated basis

according to the individual brands. This will allow ALNO to achieve a new distribution quality on

the market that offers sales opportunities. As an example, a communication process logistics has

been newly tested for Spain, which is resulting in sustained customer satisfaction and more stable

logistics processes.

In 2010, ALNO successfully established its “rapid delivery service” for the IMPULS brand, in other

words, with rising sales and earnings. No competitor has launched a comparable offering on the

market to date. By contrast with competitors, experts from different industrial sectors have been

brought together within the ALNO management team over the last 24 months. This allows experience

from other industries to be integrated into kitchen manufacturing and marketing. Analogously

to the “rapid delivery service” topic, an Internet-based online ordering opportunity is to be created

together with one customer for the PINO Brand (“PINO Online”), that enables the ordering and


72

invoicing process to be fully automated. From ALNO’s perspective, this activity represents a prior

step to tapping two market segments that have previously not been addressed by German kitchen

manufacturers: firstly, a general process standardisation in the takeout and large-area sales channels

within Germany, which allows, along with the “block kitchen” topic, other parameters, such

as minimum volumes, logistics deadlines etc, to be established analogously to the market for a

self-assembly furniture. Secondly - and this is the strategic objective – it allows an entry to be made

into the self-assembly furniture market with “the proper kitchens”.

Marketing

Responsibility for the show kitchen process is allocated to the “Marketing” area at ALNO. Competitors

in Germany work predominantly with their own assembly teams. With the exception of a very small

“supervisory team”, ALNO has completely outsourced its show kitchen assembly. In the case of

in-sourcing, it is assumed that the complaints ratio will fall for show kitchens since the Group’s own

personnel create their own kitchens with a higher level of specialist expertise.

Purchasing

Regular make-or-buy analyses are systematically performed, as is the case with components manufacturing.

Along with the minimisation of risk relating to supplier price increases, this generates the

opportunity for cost reductions.

Logistics

As part of its “ALNO 2013” project, the Group is planning to establish logistics expertise to a

greater extent as an in-house capability. This relates to materials planning know-how. From today’s

perspective, it is to be assumed that this will also be connected with cost reductions.

Production

Corresponding in-sourcing topics from the “Purchasing” area should be mentioned in this context.

The reactivation of components production at Pfullendorf opens up further potentials for the

additional in-sourcing of carcass components. It also gives the Group the opportunity to “shift”

production volumes between plants.

Quality

Error costs are to be further reduced above and beyond the planned volume. The opportunity exists

at ALNO to reduce the complaints ratio, and consequently corresponding costs, through quality

improvement projects with wholesalers/retailers, or further training of the sales force. The same

applies for a consistent quality audits at suppliers, with the possibility of a more targeted regression.


73

II. FORECAST REPORT

In all markets of relevance for the ALNO Group, the 2010 fiscal year was characterised by a

significant indications of economic recovery following the global economic crisis. In parallel, and as

part of the current restructuring, the reorganisation of the Group, the creation of standard technical

platforms across the Group, and the production switched to the new WELLMANN product range,

comprise factors that had a particular impact on sales and earnings trends.

From the Managing Board’s perspective, good preconditions for a positive corporate trend in the

new financial year were created on the basis of the milestones achieved as part of “ALNO 2013”:

for instance, the new pricing policy for the ALNO brand was successfully transferred to new agreements,

and start-up difficulties connected with the launch of the new WELLMANN products have

meanwhile been addressed. With the restructuring of the foreign subsidiaries that has almost been

concluded in the meantime, the ALNO Group can also re-intensify its sales activities abroad.

For 2011, the management anticipates that EBITDA will undergo a further improvement compared

with the reported 2010 figure. Revenue should be at least at the level of 2010. From the perspective

of the Managing Board, 2011 will be prospectively characterised by the following topics: Higher

investments are planned in the administrative/IT area, but also in the factories. The Group restructuring

will also be continued as planned. Among other aspects, this also means that we will continue to

consistently and clearly position our brands. This particularly concerns the ALNO and WELLMANN

brands. At the same time, production flexibility is to be further increased by introducing a joint technical

platform for the PINO and IMPULS brands, as is already the case with ALNO and WELLMANN.

In addition, we plan to implement further capital measures as agreed in the Restructuring Agreement

II. A slight increase in revenue and a further improvement in EBITDA is expected for 2012.

For the ALNO segment, a slight revenue decline, and a slightly improved EBITDA, is expected for

2011, compared with 2010. For 2012, the Managing Board anticipates that revenue will increase

to the 2010 level, and a further improvement in EBITDA. For the WELLMANN, IMPULS and PINO

segments, a slight increase in revenue is expected in each case for the subsequent two years, and

EBITDA lying slightly above the 2010 level.

From the company’s perspective, the precondition for this is that kitchen furniture market is not about

to confront a double-digit fall in sales, and that revenue trends within the Group can be stabilised

at the level of the fiscal year elapsed.


74

d. OTHER INFORMATION

I. CORPORATE MANAGEMENT STATEMENT / CORPORATE GOVERNANCE REPORT

Corporate Governance Declaration (Section 289a of the German Commercial Code [HGB])

and Corporate Governance Report

DECLARATION WITHIN THE MEANING OF SECTION 161 OF THE GERMAN STOCK CORPORATION ACT (AKTG)

Corporate Governance means the responsible, transparent and well-ordered management and controlling

of companies. The German Corporate Governance Code (hereinafter: Code) aims to standardize

and systemize the implementation of the rules for company management and control that apply in

Germany for German and international investors, to thereby reinforce trust in the management of

German companies. According to Section 161 of the German Stock Corporation Act (AktG), listed companies

undertake to issue an annual declaration as to whether they have met, or will meet, the Code’s

recommendations, or which recommendations were not applied, or will not be applied, and why not.

In May 2010, the Code underwent its annual review and adjustments by the Government Commission

German Corporate Governance Code. There were primarily changes to the composition of

management and supervisory boards. The Government Commission German Corporate Governance

Code is strengthening efforts to introduce diversity into the structure of governing bodies, and to

achieve an appropriate inclusion of women.

The Managing and Supervisory boards of ALNO AG expressly greet the Code’s recommendations,

and the objectives that are being thereby pursued. Both boards continued to concern themselves

intensively with the Code’s recommendations and their implementation this year, and have complied

with the recommendations apart from a few exceptions. The joint declaration of conformity by the

Managing and Supervisory boards is reproduced below, and has been published online at www.alno.ag.

DECLARATION BY THE MANAGING AND SUPERVISORY BOARDS OF ALNO AG ON THE RECOMMENDATIONS

OF THE GERMAN CORPORATE GOVERNANCE CODE WITHIN THE MEANING OF SECTION 161 OF THE GERMAN

STOCK CORPORATION ACT (AKTG)

The Managing and Supervisory boards of ALNO AG state that between the last declaration of

compliance on December 1, 2009 and July 1, 2010, the recommendations of the German Corporate

Governance Code in the version of June 18, 2009 (published on August 5, 2009), and from July 2,

2010, the recommendations of the German Corporate Governance Code in the version of May 26,

2010 (published on July 2, 2010), were, and are, complied with, with the following exceptions:

• The General Meeting, together with the convening documents, is not convened using electronic

means, since the company regards convening of the General Meeting as not yet practicable using

electronic means (Code Item 2.3.2).

• The German Corporate Governance Code recommends a deductible for the D&O insurance for

supervisory board members. ALNO AG remains of the view that the deductible is not required with

regard to the responsibility and motivation of the members of the Supervisory Board when performing

their duties. By way of divergence from Item 3.8 of the Code, the existing D&O insurance policy

for members of ALNO AG’s Supervisory Board does not include a deductible as a consequence.

• Item 4.2.3 (4) of the Code recommends that, when entering into employment contracts with managing

board members, payments made to a managing board member who steps down early from

managing board activities without an important reason, should not exceed the value of two years of

remuneration including ancillary benefits (settlement cap), and should not remunerate more than the

residual term of the employment contract. The employment contracts for ALNO AG Managing Board

members contain no settlement cap, and have not contained such a provision, including since when

the respective recommendation in the Code was adopted in 2008. The company does not regard


75

agreeing a settlement cap as requisite. Rather, it is convinced that the Supervisory Board will act in the

company’s interest when a Managing Board member leaves the company, and that it will not grant an

inappropriate settlement. A divergence from Item 4.2.3 (4) of the Code is notified for this reason. To this

extent, ALNO AG’s declarations of compliance from the years 2008 and 2009 have been amended.

• A remuneration report (Code Item 4.2.5 (1) Sentence 1) was prepared. This is published in the

notes to the consolidated financial statements in the annual report, since it relates to compulsory

information in the notes to the consolidated financial statements within the meaning of Section 314

(1) No. 6 of the German Commercial Code (HGB). For this reason, the remuneration report does

not form part of the corporate governance report. The corporate governance report nevertheless

refers to the remuneration report in the notes to the consolidated financial statements.

• According to Item 5.3.3 of the Code, the supervisory board should form a nomination committee

that proposes appropriate candidates to the supervisory board for its election proposals to the

general meeting. The company’s Supervisory Board has not formed such a committee since,

according to the experience it has gained to date, it does not regard this as necessary in order to

propose appropriate candidates.

• With the new version of the Code of May 26, 2010, new recommendations were introduced into

Item 5.4.1 (2) and (3) of the Code, whereby the supervisory board should state specific targets

for its composition, which, when taking into account its specific corporate situation, reflect the

company’s international activity, potential conflicts of interest, a fixed age limit for supervisory board

members, and diversity. These specific targets should include the appropriate involvement of women,

in particular. Supervisory board proposals to the relevant elective bodies should take these targets

into account. The objectives and the status of implementation should be published in the corporate

governance report. The Supervisory Board of ALNO AG has already in the past provided a specific

target relating to the maximum age of its members. As of the date of the issuing of this declaration of

compliance, the Supervisory Board is still conducting an internal examination of which further specific

targets mentioned in Item 5.4.1 (2) of the Code are important for the composition of the Supervisory

Board given ALNO AG’s specific situation. Following the conclusion of this internal analysis, the

Supervisory Board may formulate further specific objectives for its composition – particularly relating

to an appropriate involvement of women. To this extent, provisional divergence from Item 5.4.1 (2)

of the Code is declared. With regard to the internal discussion that is still ongoing at the time when

this declaration of compliance is issued, as to whether and which objectives above and beyond the

age limit should be determined, no further targets can yet be taken into consideration in any election

proposals. It is also not yet possible to make a corresponding report in the Corporate Governance

Report. For this reason, provisional divergence from Item 5.4.1 (3) of the Code is also declared.

• The Supervisory Board members receive no performance-related remuneration (Code Item 5.4.6

(2) Sentence 1). ALNO AG believes there is no current necessity to change this in view of the

Supervisory Board’s controlling and monitoring function. The remuneration paid by ALNO AG to

the Supervisory Board members for services personally rendered is published in the notes to the

consolidated financial statements in the annual report, and is consequently not included in the

Corporate Governance Report (Code Item 5.4.6 (3) Sentence 2).

• The consolidated financial statements are not yet published within 90 days after the end of the

fiscal year, and the interim reports are not yet published within 45 days of the end of the period

under review (Code Item 7.1.2 Sentence 3). The company intends to bring its consolidated financial

statements and interim reporting more into line with these periods.

Düsseldorf, October 7, 2010

For the Managing Board

For the Supervisory Board

Max Müller

Henning Giesecke


76

RELEVANT INFORMATION ON CORPORATE GOVERNANCE PRACTICES THAT ARE APPLIED

ABOVE AND BEYOND LEGAL REQUIREMENTS

ALNO AG’s approach

ALNO AG’s commitment is to conduct all of its business in a way that is ethically and legally irreproachable.

ALNO AG has built its “one group concept” on an approach that introduces employees and

partners to the essence of the company’s culture, represents the company’s identity, and describes

the principles of sustainable and socially responsible activity.

Corporate policy on a code of business conduct

ALNO AG has approved an internal corporate policy on a code of business conduct. As well as

basic behavioral requirements, this document governs how to deal with business partners and third

parties, with company equipment, and with information. It is applicable for all employees in the ALNO

Group, including executives and the Managing Board. The corporate policy also covers issues such

as the environment, occupational health and safety, and the right to lodge complaints, and obtain

information. Checks are regularly conducted at all companies within the Group to ensure that the

Group’s code of business conduct is being adhered to. These checks are performed in conformity

with the relevant national procedures and legal provisions.

Transparency and accounting

In annual and interim reports, ad hoc disclosures, and press releases, ALNO AG regularly informs

its shareholders and interested members of the public about its position, and significant commercial

changes within the company. The corporate information published by the company can also be

accessed on the company’s website at www.alno.ag.

The company’s accounting system migrated to International Financial Reporting Standards (IFRS)

with effect from fiscal 2005.

DESCRIPTION OF HOW THE MANAGING AND SUPERVISORY BOARDS OPERATE, AND THE

COMPOSITION AND OPERATION OF THEIR COMMITTEES

The Managing Board

The Managing Board of ALNO AG currently consists of three members, and manages the company

at its own responsibility. In doing so, it is bound to pursue the company’s interests, and is obligated

to sustainably enhance the company’s value. The Supervisory Board appoints the members of the

Managing Board. The Supervisory Board also determines the precise number of Managing Board

members, and also appoints its Chairperson and his or her Deputy, if required.

Pursuant to ALNO AG’s Articles of Incorporation, the Managing Board has prepared internal rules

of procedure with the approval of the Supervisory Board. These govern, in particular, the management

of the company as a whole, and of the individual companies, distribution of the divisions, the

Chairperson’s responsibilities, disclosure obligations to the Supervisory Board, and how to deal with

conflicts of interest. The Managing Board regularly convenes meetings to discuss the course of

business, and to pass resolutions. In addition, the Managing Board reports to the Supervisory Board

on a regular basis, and in a timely and comprehensive fashion on all issues relevant to the company

relating to planning, business growth, ongoing projects, the risk situation and risk management,

and coordinates the company’s strategic direction with the Supervisory Board.


77

The Supervisory Board

ALNO AG’s Supervisory Board monitors and counsels the Managing Board in its management of

the company, and is involved in making decisions of fundamental importance to the company. The

Supervisory Board of ALNO AG was equally represented with six shareholder representatives and

six employee representatives until the General Meeting on June 23, 2010. As part of the status

procedure pursuant to Section 2010 of the German Stock Corporation Act (AktG), which was

launched by the company’s Managing Board in January 2010, the Supervisory Board was reduced

to nine members, and has consisted of six shareholder representatives and three employee representatives

since the General Meeting on June 23, 2010, pursuant to the provisions of the One-Third

Participation Act.

In line with the Articles of Incorporation, the Supervisory Board has also prepared its own internal

rules of procedure. These rules govern, in particular, the convening of meetings, the formation of

committees and the tasks assigned to them, and the necessary prerequisites for Supervisory Board

members. The Supervisory Board meets at least twice every six months. The Supervisory Board

Chairperson decides whether the Managing Board members are to participate in the meetings. The

meetings are convened at least two weeks in advance. The invitation to the meetings announces

the agenda, and communicates the proposed resolutions. In individual cases, the Supervisory

Board exercises the option to pass resolutions in writing or by telephone. No former member of the

company’s Managing Board is a member of the Supervisory Board.

Each member of the Supervisory Board is obliged to disclose any conflicts of interest without delay.

Any significant and non-temporary conflicts of interest arising for a Supervisory Board member will

result in the termination of that member’s mandate.

The Chairperson of the Supervisory Board is in regular contact with the Managing Board, and, in

particular, with the Chairperson of the Managing Board, and advises him or her on the company’s

strategy, business development and risk management.

Each year, in the Supervisory Board’s report and at the company’s General Meeting, the Supervisory

Board Chairperson discusses the activities of the Supervisory Board and its committees in detail.

Until the General Meeting on June 23, 2010, the Supervisory Board had formed three committees,

an audit committee, an HR committee and a conciliation committee, pursuant to Section 27 (3) in

combination with Section 31 (3) of the German Codetermination Act (MitbestG). Since the General

Meeting, the Supervisory Board has formed the following committees: an audit committee and a

presidential committee.

The HR committee consisted of three members, and prepared decisions relating to the staffing of

the Managing Board, and agreements with the Managing Board members. It also planned long-term

succession with the Managing Board.

THE HR COMMITTEE CONSISTED OF THE FOLLOWING MEMBERS:

• Mr. Hans-Peter Haase (Chairman)

• Dr. Jürgen Diegruber

• Mr. Michael Föst

The presidential committee has performed the tasks of the HR committee since the General Meeting

of June 23, 2010. The presidential committee also prepares for the Supervisory Board meetings,

supervises the resolutions that have been passed, and represents the company to former Management

Board members, to the extent that such representation is not the responsibility of the Managing Board.


78

THE PRESIDENTIAL COMMITTEE CONSISTS OF THE FOLLOWING THREE MEMBERS:

• Mr. Henning Giesecke (Chairman)

• Mr. Werner Devinck

• Dr. Jürgen Diegruber

The audit committee deals, in particular, with the preparation of negotiations and resolutions of the

Supervisory Board in relation to questions of accounting, risk management and compliance, the

required independence of the auditor, the issuing of the audit assignment to the auditor, the determination

of the main areas on which the audit should focus, and the fees agreed with the auditor. The audit

committee consisted of six members until the General Meeting of June 23, 2010. The audit committee

has consisted of three members since this General Meeting.

THE AUDIT COMMITTEE CONSISTED OF THE FOLLOWING MEMBERS UNTIL THE GENERAL MEETING::

• Mr. Anton Walther (Chairman)

• Dr. Jürgen Diegruber

• Mr. Hans-Peter Haase

• Mr. Jörg Kespohl

• Mr. Christoph Maaß

• Mr. Ralph Ossiander

THE AUDIT COMMITTEE HAS CONSISTED OF THE FOLLOWING MEMBERS SINCE THE GENERAL

MEETING:

• Mr. Anton Walther

• Dr. Jürgen Diegruber

• Mr. Jörg Kespohl

In addition, the company had a conciliation committee comprising four members on the basis of

parity pursuant to Section 31 (3) of the German Codetermination Act (MitbestG). This committee

was tasked with submitting a proposal to the Supervisory Board for the appointment or withdrawal

of a Managing Board member, if the required two-thirds majority had not been reached at a previous

resolution. Since the Codetermination Act is no longer applicable since the number of long-term

employees has fallen below 2,000, a conciliation committee was no longer formed after the General

Meeting of June 23, 2010.

THE CONCILIATION COMMITTEE CONSISTED OF THE FOLLOWING MEMBERS:

• Mr. Hans-Peter Haase (Chairman)

• Mr. Rudolf Wisser

• Dr. Jürgen Diegruber

• Mr. Gerhard Meyer


79

Further details on the members of the Managing and Supervisory boards, and on the remuneration

paid to the Managing Board, are provided in this annual report in the notes to the consolidated

financial statements under point K.

The Supervisory Board members received payments of In EUR thousand 268,333 for their activities

in fiscal 2010. This remuneration breaks down as follows:

2010 in

EUR thousand

Mr. Henning Giesecke (Chairman) from June 23, 2010 22.500

Hans-Peter Haase (Chairman) until June 23, 2010 26.250

Rudolf Wisser (Deputy Chairman) 31.250

Werner Devinck 21.250

Dr. Jürgen Diegruber 26.250

Christoph Maaß 21.250

Anton Walther 25.000

Armin Weiland 20.000

Jörg Kespohl 22.500

Gerhard Meyer

until June 23, 2010 and

again from August 26, 2010 19.583

Andreas Bilz until June 23, 2010 10.000

Michael Föst until June 23, 2010 11.250

Ralph Ossiander until June 23, 2010 11.250

268.333

The payment of fees to members of the Supervisory Board for consulting activities are presented in

this annual report in the notes on the consolidated financial statements under point K.

The Supervisory Board members held no shares as of December 31, 2010. The Managing Board

members held 55,643 shares as of December 31, 2010.

Further details on corporate governance can also be found in the Articles of Incorporation of

ALNO AG, which are publicly available on the company’s website at www.alno.ag.

II. REPORTING PURSUANT TO SECTIONS 289 (4) AND 315 (4) OF THE GERMAN COMMERCIAL CODE (HGB)

As the parent company of the ALNO Group, ALNO AG utilizes an organized market in the meaning of Section

2 (7) of the German Securities and Takeover Act (WpÜG) as the result of its issued voting shares, and

consequently reports pursuant to Sections 289 (4) and 315 (4) of the German Commercial Code (HGB).

COMPOSITION OF THE SUBSCRIBED CAPITAL

As of December 31, 2010, the subscribed capital amounts to EUR 45,231,297.80, and is split into

17,396,653 ordinary shares. The shares are issued as bearer shares, and are fully paid in.

RESTRICTIONS AFFECTING VOTING RIGHTS OR THE TRANSFER OF SHARES

Restrictions affecting voting rights or the transfer of shares, including those arising from agreements

between shareholders, relate exclusively to a binding of voting rights. As part of a standstill and

shareholder agreement, IRE Beteiligungs GmbH has granted an irrevocable authorization to Küchen

Holding GmbH to exercise voting rights arising from shares held by IRE Beteiligungs GmbH at the

discretion of Küchen Holding GmbH. The Managing Board is aware of no further restrictions besides

this. Each share grants one vote, pursuant to Section 22 of the Articles of Incorporation.


80

DIRECT OR INDIRECT INTERESTS IN THE SHARE CAPITAL

Notifications made to ALNO AG pursuant to the German Securities Trading Act (WpHG) results in

the following overview of shareholdings as of December 31, 2010 (on the basis of German Securities

Trading Act notifications made most recently to ALNO AG):

1 As part of a standstill and shareholder

agreement, IRE Beteiligungs

GmbH has granted an irrevocable

authorization to Küchen Holding

GmbH to exercise voting rights

arising from shares held by IRE

Beteiligungs GmbH at the discretion

of Küchen Holding GmbH.

2 These voting rights are attributable

in their entirety to IRE Beteiligungs

GmbH pursuant to Section 22 (1)

Sentence 1 No. 1 of the German

Securities Trading Act (WpHG).

3 The voting rights of Bauknecht

GmbH are attributable in their

entirety to Whirlpool Greater China

Inc. pursuant to Section 22 (1)

Sentence 1 No. 1 of the German

Securities Trading Act (WpHG).

4 Of these voting rights, 18.64 % are

to be attributed to Küchen Holding

GmbH pursuant to Section 22 (1)

Sentence 1 No. 6 of the German

Securities Trading Act (WpHG).

5 Of these voting rights, 56.63 %

are attributed to Milano Investments

S.à r.l. pursuant to Section

22 (1) Sentence 1 No. 1 of the

German Securities Trading Act

(WpHG), and 18.64 % pursuant to

Section 22 (1) Sentence 1 No. 6,

Sentences 2 and 3 of the German

Securities Trading Act (WpHG).

Company holding the interest Share of voting rights Date when interest commenced

IRE Beteiligungs GmbH, Schorndorf 1) 18.64 % 22/07/2010

Bauknecht Hausgeräte GmbH, Schorndorf 1), 2) 18.64 % 22/07/2010

Whirlpool Greater China Inc., Benton Harbor, MI/USA 1), 3) 18.64 % 22/07/2010

Küchen Holding GmbH, Munich 4) 75.27 % 10/04/2007

Milano Investments S.à r.l., Luxembourg, Luxembourg 5) 75.27 % 10/04/2007

HOLDERS OF SHARES WITH SPECIAL RIGHTS

There are no shares with special rights lending control authorizations.

TYPE OF VOTING RIGHT CONTROL IN THE INSTANCE OF EMPLOYEE INTERESTS

The Managing Board is unaware of any voting right control for the instance that employees hold an

interest in the share capital, and do not directly exercise their controlling rights.

STATUTORY REGULATIONS AND PROVISIONS OF THE ARTICLES OF INCORPORATION CON-

CERNING THE NOMINATION AND WITHDRAWAL FROM OFFICE OF MANAGING BOARD MEMBERS,

AND CONCERNING AMENDMENTS TO THE ARTICLES OF INCORPORATION

Managing Board members are appointed and withdrawn from office pursuant to Section 84 of the

German Stock Corporation Act (AktG). The General Meeting implements amendments to the Articles

of Incorporation pursuant to Sections 133 and 179 of the German Stock Corporation Act (AktG).

The General Meeting has utilized the option granted by Section 179 (1) Sentence 2 of the German

Stock Corporation Act (AktG) in Section 12 (2) in combination with Section 12 (1) of the Articles of

Incorporation, to transfer the authority to the Supervisory Board to implement amendments that

affects only the wording of the Articles of Incorporation.

MANAGING BOARD AUTHORISATIONS TO ISSUE AND REPURCHASE SHARES

By way of a resolution of the Ordinary Shareholders’ General Meeting of ALNO AG of June 23, 2010,

the Managing Board, with the Supervisory Board’s assent, was authorized by way of amendment

to the Articles of Incorporation to increase the company’s issued share capital until June 23, 2010

by up to an amount totaling EUR 22,615,647.60 through issuing new ordinary shares against cash

and/or non-cash capital contributions, either wholly or in partial amounts, and either once or on

several occasions. This resolution was entered in the commercial register on August 31, 2010.


81

The Managing Board is authorized, with the Supervisory Board’s assent

• to exclude shareholders’ subscription rights for fractional amounts.

• to totally exclude shareholders’ subscription rights in order to offer the new shares in the company

to third parties against non-cash capital contributions as part of business combinations or to acquire

companies or parts of companies, and other assets including loan liabilities and other liabilities.

• to exclude shareholders’ subscription rights if the capital increase against cash does not exceed

10 % of the share capital, and the issue price is not significantly less than the stock market price

of the shares of equal class that are already listed.

• to exclude shareholders’ subscription rights to the extent that it is necessary to grant bearers of

option rights or creditors of convertible bonds that are issued by the company or its subordinate

Group companies subscription rights to new shares to the extent that they would be entitled

following the exercise of option or conversion rights, or satisfaction of conversion obligations.

The authorized capital has not been utilized as of December 31, 2010, and consequently continued

to amount to EUR 22,615,647.60.

The Ordinary General Meeting of June 23, 2010 passed a resolution to approve a conditional

capital increase. The Managing Board was authorized until June 22, 2015, to issue once or on

several occasions by the company or by companies in the direct or indirect majority ownership

of the company (Group companies) convertible and/or warrant bonds with a total value of up to

EUR 100,000,000.00 with a term of up to 20 years (debentures), and to take over the guarantee

for such debentures issued by subordinate Group companies, and to grant the bearers of bonds

or bond creditors warrant and/or conversion rights to a total of up to 8,698,326 ordinary shares in

the company with a proportionate amount of the issued share capital of up to EUR 22,615,647.60

according to the more detailed specifics of the relevant terms of the bond. The conditional capital

increase is to be implemented only to the extent that the warrants and/or conversion rights from

the warrant and/or convertible bonds are utilized, or the conversion obligations from the bonds are

fulfilled, and to the extent that a cash compensation cannot be granted, or treasury shares used, to

fulfill the obligation. The Management Board is authorized to determine the further specifics relating

to the performance of the conditional capital increase (Conditional Capital 2010). The conditional

capital was entered in the commercial register on August 31, 2010.

By way of resolution of the General Meeting of ALNO AG of July 29, 2009, the Managing Board was

authorized to acquire treasury shares up to 10 % of the issued share capital entered in the balance

sheet as of the date of the General Meeting pursuant to Section 71 (8) No. 8 of the German Stock

Corporation Act (AktG). This authorization was valid until January 29, 2011. The existing authorization

of the Managing Board was cancelled by way of a resolution of the General Meeting of June

23, 2010, and with effect as of the elapse of the day of the General Meeting. By way of resolution

of the General Meeting of June 23, 2010, and with effect as of June 24, 2010, the Managing Board

was authorized to acquire treasury shares pursuant to Section 24 (1) No. 8 of the German Stock

Corporation Act (AktG). The authorization to acquire treasury shares up to 10 % of the issued share

capital entered in the balance sheet as of the date of the General Meeting is valid until June 22, 2015.

SIGNIFICANT AGREEMENTS THAT ARE SUBJECT TO A CHANGE OF CONTROL FOLLOWING A

TAKEOVER OFFER

There were no such agreements as of the balance sheet date.

COMPENSATION AGREEMENTS

The company has entered into no agreements with Managing Board members or employees for

the instance of a takeover offer.


82

III. KEY CHARACTERISTICS OF THE ACCOUNTING-RELATED INTERNAL CONTROLLING AND

RISK MANAGEMENT SYSTEM PURSUANT TO SECTIONS 289 (5) AND 315 (2) NO. 5 OF THE GER-

MAN COMMERCIAL CODE (HGB)

According to the reasons given for the German Accounting Law Modernization Act (BilMoG) that

came into force on May 29, 2009, the internal controlling system comprises the principles, procedures

and measures to ensure the effectiveness and economic efficiency of the accounting system,

proper accounting approaches, and compliance with the relevant legal regulations. This also includes

the Group controlling function to the extent that it relates to accounting. As is the case with the

latter, and as part of the internal controlling system, the risk management system with respect to

the accounting process relates to controlling and supervisory processes for accounting, particularly

in the case of trade law balance sheet items that report the company’s risk hedging measures.

PRESENTATION AND EXPLANATION OF THE KEY CHARACTERISTICS OF THE INTERNAL CONTROLLING

SYSTEM AND RISK MANAGEMENT SYSTEM WITH RESPECT TO THE ACCOUNTING PROCESS

The key characteristics of ALNO AG’s internal controlling system and risk management system with

respect to the (Group) accounting process can be described as follows:

• The ALNO Group is distinguished by clear organizational, corporate, and controlling and supervisory

structures.

• The company operates planning, reporting, controlling and early warning systems and processes

across the Group to ensure comprehensive analysis and steering of earnings-relevant risk factors

and going-concern risks.

• The functions in all areas of the accounting process (e.g. financial accounting and controlling) are

clearly allocated.

• The IT systems deployed in the accounting function are protected against unauthorized access.

• Recourse is predominantly made to standard software in the area of the financial systems utilized.

• An adequate system of internal guidelines (consisting of risk management and guidelines that are

valid across the Group, among other items) has been set up, and can be adjusted as required.

• The departments that are involved in the accounting process comply with quantitative and qualitative

requirements.

• The completeness and correctness of accounting data are regularly checked using random samples

and plausibility checks, as well as through individual controls and the software that is deployed.

A risk controller has been installed at all segmental levels who manages the risk management

process at the segment level, and to subject stated to plausibility checks.

• For the purpose of consolidation, ALNO AG has established processes to intra-Group receivables

and liabilities, and income and expenses.

• Recourse is made to external services (e.g. actuaries, valuation surveyors etc) for significant

complex balance sheet questions that are subject to discretionary assessment.

• Significant processes that are relevant to accounting are subject to regular analytical checks.

• The “two sets of eyes” principle is applied consistently to all accounting-relevant processes.

• The Group controlling function checks accounting-relevant processes.

• Among other matters, the Supervisory Board concerns itself with significant questions relating to

accounting, risk management, the audit mandate and its focal points.


83

The internal controlling and risk management system relating to the accounting processes, whose

key characteristics were described above, ensures that business matters are reported, prepared

and assessed correctly in balance sheet terms, and are transferred on this basis to the external

accounting. The clear organizational, corporate, and controlling and supervisory structures, and the

sufficient equipping of the accounting function in terms of both personnel and materials, create the

basis that allows the areas involved to work efficiently on the accounts. Clear legal and companyinternal

rules and guidelines ensure that the accounting process is standardized and proper. The

clearly defined checking mechanisms within the areas that are involved in accounting, checks by

the controlling function, and early risk identification by the risk management function, ensure that

accounting is both free of errors and coherent.

ALNO AG’s internal controlling and risk management system ensures that accounting at ALNO AG

and that all companies included in the consolidated financial statements occurs on a standardized

basis, and complies with statutory and legal requirements, as well as internal guidelines. In particular,

the standard Group risk management system, which fully complies with statutory requirements,

has the task of identifying risks at the right time, of measuring them, and of communicating them

appropriately. This allows appropriate, relevant and reliable information to the provided promptly to

the recipients of the reports.

IV. BASIC ASPECTS OF THE REMUNERATION SYSTEM PURSUANT TO SECTIONS 289 (2) NO. 5

AND 315 (2) NO. 4 OF THE GERMAN COMMERCIAL CODE (HGB)

The total remuneration of Managing Board members complies with the statutory requirements of the

German Stock Corporation Act (AktG). Managing Board members received fix compensation, which

also includes benefits in kind, particularly the provision of company cars. The fixed components

ensure basic compensation that allows Managing Board members to orientate their official duties to

the well-understood interests of the company, and to the duties of a proper businessman, without

depending on purely short-term profit targets. Employment contracts also include variable special

compensation that depends on the company’s financial results.

The remuneration report, which is included in the notes to the single-entity annual financial statements

according to the German Commercial Code (HGB), and in the notes to the IFRS consolidated

financial statements, includes more details, including individualized compensation. The remuneration

report forms part of the management report.

V. REPORT ON DEPENDENT COMPANIES

The Managing Board has prepared the report concerning relations between ALNO AG and associated

companies (report on dependent companies) for the 2010 fiscal year, and has presented it to

the auditor. The Managing Board declares that, in the case of legal transactions listed in the report

concerning relations with associated companies, the company received an appropriate consideration

for each legal transaction according to the circumstances that were known at the time when the

legal transactions were performed.

Düsseldorf, May 30, 2011

ALNO Aktiengesellschaft

The Managing Board


85

CONSOLIDATED FINANCIAL STATEMENT

86 Consolidated income statement

87 Consolidated statement of comprehensive income

88 Consolidated balance sheet

89 Consolidated cash flow statement

90 Statement of changes in consolidated equity

91 Notes to the consolidated financial statements


86

CONSOLIDATED INCOME STATEMENT

FOR THE PERIOD FROM JANUARY 1 TO DECEMBER 31, 2010, ACCORDING TO IFRS

In EUR thousand Notes 2010 2009

Continuing operations

Revenues C. 1 467,297 493,373

Changes in inventories and own work capitalized C. 2 – 1,993 – 3,724

Other operating income C. 3 7,062 6,460

Total operating revenue 472,366 496,109

Cost of materials C. 4 271,907 278,654

Personnel expenses C. 5 97,900 98,539

Other operating expenses C. 6 92,611 102,950

Restructuring charge (income) (+/–) C. 7 8,962 – 1,306

EBITDA 986 17,272

Amortization of intangible assets and depreciation of property, plant and equipment C. 8 12,104 40,186

Operating result – 11,118 – 22,914

Profit/loss from investments accounted for using the equity method D. 4 93 109

Financial income C. 9 10,382 138

Financial expenses C. 9 11,535 16,534

Financial result – 1,060 – 16,287

Profit/loss before income taxes – 12,178 – 39,201

Taxes on income (+ = expense/ – = income) C. 10 906 170

Profit/loss from continuing operations – 13,084 – 39,371

Discontinued operations

Profit/loss from discontinued operations E 0 407

Group net loss for the year – 13,084 – 38,964

Earnings in EUR per share (diluted and basic) Q – 0.78 – 2.46

Of which profit/loss from continuing operations

in EUR per share (diluted and basic) Q – 0.78 – 2.49


87

CONSOLIDATED STATEMENT OF

COMPREHENSIVE INCOME

FOR THE PERIOD FROM JANUARY 1 TO DECEMBER 31, 2010, ACCORDING TO IFRS

In EUR thousand Notes 2010 2009

adjusted (B.4.)

Group net loss for the year – 13,084 – 38,964

Change in difference from currency translation 289 – 2

Actuarial gains and losses from provisions for pensions D. 11 – 873 – 45

Deferred taxes on actuarial gains and losses from provisions for pensions C. 10 169 – 26

Changes in the value of securities taken directly to equity 0 – 6

Deferred taxes on actuarial gains and losses from provisions for pensions C. 10 0 2

Other comprehensive income – 415 – 77

Total comprehensive income – 13,499 – 39,041


88

CONSOLIDATED BALANCE SHEET

AS OF DECEMBER 31, 2010, ACCORDING TO IFRS

In EUR thousand Notes 2010 2009

ASSETS

Intangible assets D. 1 5,088 5,477

Property, plant and equipment D. 2 72,278 69,984

Non-current financial assets D. 3 3,431 3,279

Investments accounted for using the equity method D. 4 2,181 1,930

Financing receivables D. 5 2,665 2,656

Deferred tax assets C. 10 0 296

Trade receivables D. 6 636 1,086

Other assets D. 8 319 587

A. Non-current assets 86,598 85,295

Inventories D. 7 28,181 24,724

Trade receivables D. 6 32,360 46,548

Other assets D. 8 7,511 5,500

Income tax refund entitlements C. 10 7 102

Cash and cash equivalents D. 9 3,041 2,857

B. Current assets 71,100 79,731

Total ASSETS 157,698 165,026

EqUITy AND LIABILITIES

Subscribed capital D. 10. a 45,231 41,124

Capital reserve D. 10. b 42,437 36,544

Accumulated other comprehensive income D. 10. c – 157,390 – 148,800

A. Equity – 69,722 – 71,132

Pension provisions D. 11 16,973 16,201

Deferred tax liabilities C. 10 257 52

Other provisions D. 12 3,773 5,457

Other financial liabilities D. 14 13,057 14,129

Deferred government grants D. 15 781 807

Trade payables and other liabilities D. 16 82 152

B. Non-current liabilities 34,923 36,798

Other provisions D. 12 7,712 4,021

Shareholder loans D. 13 365 5,735

Other financial liabilities D. 14 73,130 87,387

Trade payables and other liabilities D. 16 111,096 102,044

Liabilities for income taxes C. 10 194 173

C. Current liabilities 192,497 199,360

Total EqUITy AND LIABILITIES 157,698 165,026


89

CONSOLIDATED CASH FLOW STATEMENT

FOR THE PERIOD FROM JANUARY 1 TO DECEMBER 31, 2010, ACCORDING TO IFRS

In EUR thousand Notes 2010 2009

Cash flow from operating activities

Group net loss for the year – 13,084 – 38,964

Income taxes 906 170

Financial result 1,060 16,287

Amortization of intangible assets and depreciation of property, plant and equipment 12,104 40,186

Income taxes received 95 393

Income taxes paid – 215 – 92

Gain/loss from disposal of property, plant and equipment, and intangible assets 163 565

Interest received 93 96

Interest paid – 10,219 – 12,758

Elimination of non-cash items

Change in other provisions, provisions for pensions and deferred government grants 5,197 – 151

Other non-cash income/expenses 1,639 2,833

Net change in other provisions – 4,493 – 4,262

Cash flow from operating activities before changes in working capital – 6,754 4,303

Change in working capital

Change in inventories – 3,457 6,436

Change in trade receivables and other assets 11,870 – 2,273

Change in trade payables and other liabilities 9, 881 12,744

Net cash used in operating activities 11,540 21,210

Cash flow from investment activities

Payments for investments in

Intangible assets – 575 – 994

Property, plant and equipment – 15,220 – 15,117

Financial assets – 152 0

Proceeds from the disposal of property, plant and equipment 1,647 144

Net cash used in investing activities – 14,300 – 15,967

Cash flow from financing activities

Proceeds from financial liabilities

Shareholder loans 0 4,458

Third parties 1,500 0

Proceeds from capital increases 10,000 0

Payments for financing costs – 1,493 – 1,558

Repayment of financial liabilities – 7,519 – 8,203

Net cash received from (previous year: used in) financing activities 2,488 – 5,303

Net change in cash and cash equivalents – 272 – 60

Cash and cash equivalents at the start of the period 1,258 1,319

Exchange-rate-related changes in cash and cash equivalents – 5 – 1

Cash and cash equivalents at the end of the period D. 9 981 1,258


90

STATEMENT OF CHANGES

IN CONSOLIDATED EQUITY

FOR THE PERIOD FROM JANUARY 1 TO DECEMBER 31, 2010, ACCORDING TO IFRS

Subscribed

capital

Capital

reserve

Accumulated other comprehensive income

Consolidated

equity

In EUR thousand

Adjusted (B.4.)

Consolidated

retained

earnings

Currency

translation

reserve

Other transactions taken

directly to equity

Change in

pension

provisions

Change

in value

of securities

Notes D.10 a D.10 b D.10 c D.10 c D.10 c D.10 c

January 1, 2009 41,124 36,544 – 113,888 – 902 143 15 – 36,964

Group net loss for the year – 38,964 – 38,964

Other comprehensive

income – 2 – 71 – 4 – 77

Total comprehensive income – 38,964 – 2 – 71 – 4 – 39,041

Deferred tax on IPO costs – 127 – 127

Waiver of receivables

by shareholders 5,000 5,000

Withdrawal from capital reserve

to compensate for losses – 5,000 5,000 0

December 31, 2009 41,124 36,544 – 147,979 – 904 72 11 – 71,132

Group net loss for the year – 13,084 – 13,084

Other comprehensive

income 289 – 704 0 – 415

Total comprehensive income – 13,084 289 – 704 0 – 13,499

Capital Increase 4,107 5,893 10,000

Waiver of receivables

by shareholders 4,909 4,909

Withdrawal from capital reserve

to compensate for losses – 4,909 4,909 0

December 31, 2010 45,231 42,437 – 156,154 – 615 – 632 11 – 69,722


91

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS

OF ALNO AKTIENGESELLSCHAFT, PFULLENDORF,

FOR THE 2010 FISCAL YEAR

A. COMPANY PURPOSE

ALNO Aktiengesellschaft, Düsseldorf (hereinafter referred to as “ALNO AG”), a listed company under

German law, and its subsidiaries (hereinafter referred to as the “Group”) produce and sell fitted

kitchens for the global market, mostly under the ALNO, IMPULS, PINO and WELLMANN brands.

Please refer to our remarks in the parent company and Group management reports for information

about the ALNO Group’s group structure and principal activities. The Group has its registered office

at Peter-Müller-Strasse 14/14a, 40468 Düsseldorf, Germany. ALNO AG’s ultimate parent company

is Milano Investments S.à r.l., Esch-sur-Alzette, Luxembourg.

B. ACCOUNTING METHODS

1. PRINCIPLES FOR THE PREPARATION OF THE FINANCIAL STATEMENTS

The consolidated financial statements of ALNO AG for 2010 are in line with the standards and

interpretations of the International Financial Reporting Standards Board (IASB), London, which are

effective on the balance sheet date, and which are to be applied in the EU, and the supplementary

provisions pursuant to Section 315a of the German Commercial Code (HGB).

All amounts are stated in thousands of euros unless there is a note to the contrary.

The consolidated financial statements and Group management report, with which the Management

report for ALNO AG is combined, were released by the Managing Board to be passed on to the

Supervisory Board on May 27, 2011.

On the assumption of a going concern, the consolidated financial statements were prepared on the

basis of amortized cost, with the exception of financial assets, which require measurement at fair value.

The primary objective of the Managing Board and of all corporate units is to restore the company

to financial health, competitiveness and sustainable profitability. The ALNO AG Supervisory

Board approved the extensive “ALNO 2013” future concept in January 2010. This future concept

is intended to structure administrative processes and production structures more efficiently. The

reorientation of the brand and sales strategy is also targeted at strengthening the international impact

of all Group brands. In parallel, synergies are to be exploited, and the complexity of products and

production is to be reduced.

At the start of 2010, Pricewaterhouse Coopers AG Wirtschaftsprüfungsgesellschaft (“PwC”) was

engaged to prepare a restructuring survey for the ALNO Group according to the standard IDW S6

of the Institut der Wirtschaftsprüfer. In its restructuring survey dated June 24, 2010, PwC issued

the ALNO Group with a positive forecast for a going concern, to the extent that financing is secured

in line with the Restructuring Agreement I of April 23, 2010, and that the pending activities in the

company’s forecast are implemented.


92

In spring 2011, PwC was mandated to produce a continuation of the restructuring statement for

the ALNO Group. In its (draft) updated restructuring a survey of May 13, 2011, PwC arrives at the

conclusion that, from today’s perspective, the ALNO Group remains completely financed under certain

preconditions, and that no change arises relating to the restructuring statement as presented in the

restructuring survey of June 24, 2010. PwC nevertheless points out that the restructuring of the ALNO

Group will require more time than was planned in the previous year.

PwC notes that the liquidity position appears to be secured only under the following terms, and on

the basis of the following assumptions, including with the liquidity-effective financial measures of the

Restructuring Agreement II (in particular, the capital increase), which have already been realized:

• The corporate planning that has been adjusted by PwC, including the defined effects arising from

potentials, must be achieved. This requires that the measures planned by the Managing Board are

implemented stringently.

• Commercial credit insurers and suppliers must not implement negative changes to their payment

terms compared with the current status, and/or compared with the planned level.

• Local financing lines must be maintained in line with the planning.

• Existing credit lines must be available beyond December 31, 2011.

• The existing EUR 45 million factoring facility, and the additionally planned EUR 15 million factoring

facility, must be available beyond February 28, 2012.

• The financing shortfalls apparent in the August 2011 planning, as well as in the first quarter of 2012,

must be met by appropriate measures (e.g. granting of supplier loans, drawing down of a new loan

backed by a federal state, the issuing of a bond, or further internal measures to secure liquidity).

The continuation of corporate activities on the part of ALNO AG and/or on the part of the ALNO Group

depend on the aforementioned terms and assumptions occurring as planned, or being applicable as

planned. The Managing Board of ALNO AG assumes that these terms and assumptions will occur as

planned, or will be applicable as planned.


93

2. AMENDMENTS TO ACCOUNTING METHODS

Newly applicable standards

The ALNO Group observed the amended or new standards and interpretations from the IASB, for

which application is mandatory in 2010 to the extent that these had been adopted by the EU. In

detail, these were:

• Amendments to IFRS 2 – Share-based Payment

• Amendments to IFRS 3 – Business Combinations

• Amendments to IFRS 5 as part of improvements of IFRS 2008

• Amendments to IAS 27 – Consolidated and Separate Financial Statements

• Amendments to IAS 39 – Financial Instruments: Recognition and Measurement

• IFRIC 12 – Service Concession Arrangements

• IFRIC 15 – Agreements for the Construction of Real Estate

• IFRIC 16 – Hedging of a Net Investment in a Foreign Operation

• IFRIC 17 – Distribution of Non-cash Assets to Owners

• IFRIC 18 – Transfers of Assets from Customers

• Improvements to IFRS 2009

The following section details the provisions which are relevant to the ALNO Group, and their impacts

on the consolidated financial statements.

• Amendments to IFRS 3 – Business Combinations:

This standard was subject to extensive revision as part of the convergence project (IASB and FASB).

The key changes relate particularly to the introduction of an option when measuring non-controlling

(minority) interests between reporting proportional identifiable net assets (the so-called purchased

goodwill method), and the so-called full goodwill method, whereby the entire goodwill of the acquired

company is reported, including the portion attributable to minority (non-controlling) interests. Incidental

purchase costs are to be expensed immediately in the future. Further notable changes include

the re-measurement of existing participating interests through profit or loss when control is obtained

for the first time (step acquisitions), and the mandatory recognition of any consideration attached

to the occurrence of future events. The accounting treatment of assets and liabilities resulting from

business combinations before the first-time application of the new standard has not resulted in any

changes to the consolidated financial statements on the basis of prospective application.

• Amendments to IAS 27 – Consolidated and Separate Financial Statements:

The changes result from the joint project by IASB and FASB to revise the accounting standards

that apply to business combinations. The changes primarily relate to accounting for non-controlling

interests (minority interests) that will participate in their full amount in future in the Group’s losses,

and transactions which lead to a loss of control at a subsidiary, and for which the impact is to be

recognized in income in future. Remaining interests are to be measured at fair value. The effects of

the sale of participating interests which do not lead to a loss of control are, in contrast, to be taken

directly to equity. First-time compliance has resulted in no changes to ALNO AG’s consolidated

financial statements.


94

• Improvements to IFRSs 2009:

Improvements to IFRSs 2009 relate to a group of standards reflecting modifications to various

standards and interpretations. With the exception of regulations that are referred to separately

below, the ALNO Group is assuming that these amendments will continue to have no effect on its

consolidated financial statements in the future:

IFRS 8 – Operating Segments: The disclosure of assets is now only required if used in standard

reporting. Assets form part of regular reporting at the ALNO Group, and will consequently continue

to be listed in segment reporting.

IAS 7 – Cash Flow Statements: This clarifies that expenses may only be classified as investment

expenditure if they result in the recognition of an asset in the balance sheet.

IAS 17 – Leases: The special guidelines for the classification of land leases were abolished. The

general guidelines will apply in the future.

IAS 36 – Impairment of Assets: This clarifies that a cash generating unit to which goodwill is allocated

as part of a business combination may not be larger than an operating segment in the meaning of

IFRS 8. Any aggregation of individual operating segments permitted under IFRS 8 to form a reportable

segment is consequently not a permissible level at which goodwill can be tested for impairment.

Published standards that do not yet require mandatory application

The IASB also issued or amended the following standards and interpretations, which were adopted

by the European Union but whose application is not yet mandatory, and will not be applied voluntarily

ahead of time. They are to be used for reporting periods that start on or after the date they come

into effect.

• Amendments to IAS 24 – Related Party Disclosures (comes into effect on: January 1, 2011)

• Amendments to IAS 32 – Financial Instruments: Presentation (comes into effect on: February 1, 2010)

• Improvements to IFRSs 2010 (comes into effect on: January 1, 2011; exception: amendments to

IAS 21, 27, 28 and 31, as well as IFRS 3, which come into effect already on July 1, 2010)

• Amendments to IFRIC 14 – Prepayments of a Minimum Funding Requirement (comes into effect

on: January 1, 2011)

• IFRIC 19 – Extinguishing Financial Liabilities with Equity Instruments (comes into effect on: July 1, 2010)

The following section details the provisions which are relevant to the ALNO Group, and their impacts

on the consolidated financial statements.

• Amendments to IAS 24 – Related Party Disclosures:

Changes to IAS 24 have led to a change in the definition of related parties. In addition, governmentrelated

entities have been exempted from the requirement to provide information on transactions with

the government and other entities over which the same government has control. Both amendments

have no effect on the consolidated financial statements of ALNO AG.


95

• Improvements to IFRSs 2010:

These improvements to IFRSs relate to a group of standards reflecting modifications to various

standards and interpretations. With the exception of regulations that are referred to separately

below, the ALNO Group is assuming that these amendments will have no effect on its consolidated

financial statements:

IFRS 3 – Business Combinations: The number of measurement options is to be reduced. With regard

to components of non-controlling interests, which evidence a current ownership right, and entail

a claim to a percentage portion of net assets in the instance of liquidation, future measurement is

permissible either at fair value, or on the basis of the percentage share of the current ownership

right to the identifiable net assets of the acquired company. Other components of non-controlling

interests are to be measured at fair value calculated as of the acquisition date.

IFRS 7 – Financial Instruments: Disclosures: This standard clarifies that qualitative disclosures relating

to risks connected with financial instruments should support and clarify the respective quantitative

disclosures. Amendments to quantitative credit risk information envisage new disclosures for financial

assets relating to the amount that best reflects maximum credit risk. Disclosures that have been

required to date lapse in this connection.

IAS 1 – Presentation of Financial Statements: The analysis of other comprehensive income can be

presented in the future either in the statement of consolidated changes in equity, or in the notes to

the consolidated financial statements.

IAS 34 – Interim Financial Reporting: Events requiring mandatory reporting were supplemented in

the standard whereby it was clarified that the list is not conclusive.

IFRIC 19 – Extinguishing Financial Liabilities with Equity Instruments: This interpretation clarifies

that equity instruments issued to a creditor to extinguish a financial liability are to be classified as

consideration paid. The issued equity instruments are to be measured at fair value. If this fair value

cannot be measured reliably, measurement must be based on the fair value of the extinguished

liability. Gains and losses are to be recognized immediately through profit or loss. This interpretation

is to be complied with prospectively, and may be applied within the ALNO Group depending on

further restructuring agreements.

The following standards that were newly issued by the IASB, as well as the following amendments

to existing standards, have not yet been adopted by the European Union. They do not yet require

mandatory application, and have also not been voluntarily applied ahead of time.

• IFRS 9 – Financial Instruments: Classification and Measurement (comes into effect on: January 1, 2013)

• IFRS 10 – Consolidated Financial Statements (comes into effect on: January 1, 2013)

• IFRS 11 – Joint Arrangements (comes into effect on: January 1, 2013)

• IFRS 12 – Disclosure of Interests in Other Entities (comes into effect on: January 1, 2013)

• IFRS 13 – Fair Value Measurement (comes into effect on: January 1, 2013)

• Amendment to IFRS 7 – Financial Instruments: Disclosures (comes into effect on: July 1, 2011):

• An amendment to IAS 12: Deferred Tax (comes into effect on January 1, 2012)

The amendments must be applied for fiscal years commencing on or after the date when they come

into force. The following section details the provisions which are relevant to the ALNO Group, and

their impacts on the consolidated financial statements.


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• IFRS 9 – Financial Instruments: Classification and Measurement:

The IASB prepared this standard as the first part of the project to extensively rework accounting for

financial instruments. It includes new regulations for the classification and measurement of financial

assets and liabilities. This stipulates that financial assets are either to be carried at amortized cost

or recognized at fair value through profit or loss. Equity instruments must always be carried at fair

value. When they are acquired, however, there is the option to recognize fluctuations in the value

of equity instruments under equity. In this case, only dividend income is recognized through profit

or loss. At present, the consolidated financial statements take changes in the value of securities

carried at fair value (debt instruments) directly to equity. As a result of changes from IFRS 9, these

changes in value will have to be recognized through profit or loss after IFRS 9 has come into effect.

Due to the minor extent of the changes in value previously taken directly to equity, application of

the new standard will not have a material impact on ALNO AG’s consolidated financial statements.

On October 28, 2010, the IASB published IFRS 9 expanded to include financial liabilities. The basic

model entails as far as possible measuring all financial liabilities at amortized cost. Measurement

at fair value through profit or loss is now envisaged only for derivatives evidencing liabilities on the

part of the accounting company. IFRS 9 gives rise to significant changes particularly in the area of

the fair value option for financial liabilities. Since the ALNO Group does not exercise this option, the

application of the new standard is not anticipated to have any impact on ALNO AG’s consolidated

financial statements.

• IFRS 10, 11 and 12 – New regulations relating to consolidation:

On May 12, 2011, the IASB published three new standards with IFRS 10, 11 and 12, and to revise

standards with IAS 27 and 28, relating to the accounting treatment of corporate combinations,

which are applicable from 2013.

IFRS 10 is the result of the “Consolidation” project, and will replace the consolidation principles

in IAS 27 and SIC-12. IAS 27 continues to contain the regulations applicable to separate financial

statements. IFRS 10 focuses on the introduction of a standard consolidation model for all companies

that are based on control of subsidiaries by the parent company. As a consequence, the concept of

control is applicable both to parent-subsidiary relationships based on voting rights, and to parentsubsidiary

relationships resulting from other contractual agreements. As a result, the concept of

control is to be applied in the future to special purpose entities that are currently consolidated

according to the so-called risk and reward concept.

IFRS 11 results from the “Joint Ventures” project, and will replace IAS 31. Proportional consolidation

will be discontinued with the cancellation of the IAS 31. Parallel modifications to terminology

and classification are to be taken into account, as a consequence of which not all joint ventures

currently consolidated on a proportional basis are to be accounted for using the equity method

in the future. The equity method is applied using the IAS 28 regulations adjusted to reflect the

subsequent modifications.

IFRS 12 aggregates the revised disclosure requirements for IAS 27 and IFRS 10, IAS 31 and IFRS 11,

and IAS 28, into one standard.

It is currently being investigated whether the inclusion of special purpose entities changes as a result

of the new regulations. The discontinuation of proportional consolidation for joint ventures will have

no effects on the consolidated financial statements, sent joint ventures are already including using

the at-equity method.


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• IFRS 13 – Fair Value Measurement:

This new standard concludes the project to create a uniform and comprehensive measurement

standard. IFRS 13 regulates how fair value is to be measured to the extent that another IFRS

prescribes fair value measurement (or fair value disclosure). IFRS 13 does not regulate what is to

be measured at fair value. A new fair value definition is applicable that characterizes the fair value

as the disposal price of an actual or hypothetical transaction between any given independent

market participants under normal market conditions. This standard is almost comprehensively

applicable. Only IAS 17 and IFRS 2 are excluded. While the scope of these regulations is almost

unchanged for financial instruments, other items such as investment property, intangible assets,

and property, plant and equipment, are now regulated more comprehensively and more precisely.

As far as financial instruments are concerned, market and credit risk effects can now be included

in fair value at the netted level of a portfolio if their connection is demonstrable. The three-level fair

value hierarchy that is already well known is to be applied comprehensively. In the case of “declining

market activities” (previously “inactive markets”), two examination steps are now to be performed.

In other words, to determine whether (a) trading activities have diminished, and (b) whether actual

transactions were not in line with the market – the market price may only be diverged from if both

of these factors are given.

The changes relating to the consolidated financial statements are currently being investigated.

• Amendment to IFRS 7 – Financial Instruments: Disclosures

This amendment to IFRS 7 envisages additional disclosures for transactions that entail a transfer

of financial assets. These particularly focus on residual risks remaining with the transferring party.

Further-reaching disclosure requirements also arise for reporting periods at the end of which a

disproportionately high number of transfers occur. The first-time application of these amendments

will result in effects on disclosures in the notes to the consolidated financial statements to the extent

that financial assets are transferred, and the risks and opportunities connected with the ownership

of these assets remain at least partially within the Group.

3. CONSOLIDATION PRINCIPLES

Consolidated group

The ultimate group company is ALNO AG, which is entered in the commercial register of the

Düssel dorf Local Court (HRB 64224). The consolidated financial statements of ALNO AG as of

December 31, 2010, include ALNO AG and eleven German and three (previous year: eight) foreign

companies according to the principles of full consolidation. ALNO AG either directly or indirectly

holds a 100 % interest in these companies, with the exception of the special purpose entities.

Five foreign companies were liquidated in 2010. ALNO Austria Möbelvertriebsgesellschaft m.b.H.,

Wiener Neudorf / Austria was liquidated on July 28, 2010. ALNO IBERICA S.A., Madrid / Spain,

was liquidated on September 20, 2010, and ALNO NEDERLAND B.V., Dongen / Netherlands was

liquidated on September 30, 2010. The subsidiary ALNO BELGE N.V., Deinze / Belgium was liquidated

on December 9, 2010, and the subsidiary ALNO ITALIA s.r.l., Florence/Italy was liquidated on

December 27, 2010. The intention is that the foreign markets affected will now be supplied directly

by the German production companies. These companies’ income and expenses were included in the

consolidated income statement until the date when they were liquidated. The expected costs were

also fully reported, particularly those for the release of personnel. There were no deconsolidation

gains / losses.

According to IAS 27 in combination with SIC 12, two special purpose entities are fully consolidated.

This is unchanged year-on-year. ALNO AG enjoys economic control of these enterprises.

ALNO Middle East FZCO, Dubai, UAE, (ALNO Middle East), (equity interest: 50 %) is included in the

consolidated financial statements using the equity method.


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Consolidation methods

All of the companies included in the consolidated financial statements prepare their annual financial

statements on the same balance sheet date as ALNO AG’s single-entity financial statements. This

is consequently the balance sheet date for the consolidated financial statements. The consolidated

financial statements are prepared based on uniform accounting of valuation methods (IFRS), as

applicable in the EU.

Capital is consolidated using the acquisition method pursuant to IFRS 3. On the date when control

is obtained, the remeasured assets and liabilities of the subsidiary, as well as its contingent liabilities

– to the extent that they do not depend on future events – are netted with the fair value of the

consideration rendered for the shares. Contingent purchase price payments are included at their

expected amount in the fair value of the consideration rendered, and are recognized on the equity

and liabilities side of the balance sheet. Subsequent adjustments of contingent purchase price

payments are recognized through profit or loss. Incidental costs incurred as part of the purchase

are expensed on the date when they arise.

Any remaining positive difference is carried as goodwill. Capitalized goodwill is tested for impairment

on the balance sheet date. Any negative differences resulting during capital consolidation are

recognized in income.

Income and expenses, and receivables, liabilities and provisions between consolidated companies

are eliminated. Inter-company profits or losses in non-current assets and inventories arising from

intra-Group deliveries are eliminated. Deferred taxes are recognized on consolidation entries with

an effect on profit or loss. Intra-Group guarantees are eliminated.

Subsidiaries are no longer included in the consolidated financial statements as soon as the parent

loses control over the subsidiary.

Currency translation

The consolidated financial statements are prepared in euros, the functional currency of ALNO AG.

The financial statements of the foreign subsidiaries are translated to euros using the functional currency

concept (IAS 21). Since all of the companies included conduct their business independently,

the respective national currency is generally the functional currency. As a consequence, assets

and liabilities are translated at the closing rate on the balance sheet date; items in the consolidated

income statement are translated using average annual exchange rates; equity is recorded at historical

exchange rates. Differences resulting from the use of different exchange rates are taken directly

to equity.

Any currency translation differences that may arise from intra-Group receivables and liabilities

denominated in foreign currencies, for which settlement is neither planned nor likely within a foreseeable

period, are taken directly to the currency translation reserve in equity in the consolidated

financial statements in accordance with IAS 21.32.

Monetary assets and liabilities denominated in foreign currencies in the single-entity financial statements

are recognized with the rate applying on the transaction date, and are translated at the rate

applying on the reporting date on each reporting date. Exchange-rate differences are recognized in

income, and carried under other operating income and expenses. Non-monetary items denominated

in foreign currencies are translated at the exchange rate on the transaction date.


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Exchange rate gains and losses are netted in the consolidated income statement.

The following exchange rates to the euro were used:

je EUR 31/12/2010 31/12/2009 Average exchange rate 2010 Average exchange rate 2009

GBP 0.8567 0.8999 0.8589 0.8917

CHF 1.2466 1.4876 1.3833 1.5102

4.SUMMARY OF SIGNIFICANT ACCOUNTING METHODS

Revenue recognition

Revenues are booked on the date on which risks are transferred after delivery, based on the conditions

of sale less returns, discounts, rebates and VAT. Only the product sales resulting from ordinary

business activities and the associated ancillary services are reported as revenues.

Income from services rendered is recorded in line with their percentage of completion if the amount

of income can be reliably determined, and it is likely that there will be an inflow of economic benefit.

Other income is recognized in line with the contractual agreements, or after a service has been

realized.

Financial result

The net financial result includes, in particular, interest income from cash investments, and interest

expenses on loans.

Interest income is recognized on the date on which it arises.

Financing costs are capitalized as part of cost if they can be attributed to a qualified asset. They

are otherwise expensed immediately.

Income taxes

Income tax assets and liabilities for the current and prior periods are measured at the amount

expected to be recovered from, or paid to, the tax authorities (IAS 12). Calculation of the amount

is based on tax rates and tax laws applying as of the reporting date.

“In addition, the deferred tax charges or refunds identified under IAS 12 arising from temporary

differences between the IFRS carrying amounts in the consolidated financial statement and the

local tax base, and from consolidation, are carried as either deferred tax assets or deferred tax

liabilities.” In addition, deferred tax assets may be carried for tax loss carryforwards if it is sufficiently

likely that the resultant tax reductions will actually occur in the future. The tax forecast for the next

four years is used to assess the impairment of deferred tax assets for tax loss carryforwards. The

policy continues to be applied that, when recognizing deferred tax assets, consideration is given

to assessing whether taxable temporary differences, which relate to the same tax authority and

same tax subject.

Deferred taxes are calculated on the basis of the tax rates that apply, or are expected with sufficient

certainty to apply, at the time of realization in the individual countries.


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The carrying amount of deferred tax assets is reviewed at every reporting date, and reduced to the

extent to which it is no longer likely that an adequate taxable profit will be available against which

the deferred tax asset can at least be partially offset. Deferred tax assets that are not recognized

on the balance sheet are reviewed at every reporting date, and recognized to the extent to which

it has become likely that a future taxable profit will enable the deferred tax asset to be realized.

Deferred tax assets and liabilities are netted if the conditions for netting tax liabilities with tax

receivables apply.

In addition, no deferred tax assets and liabilities are recognized if they result from the initial recognition

of goodwill, an asset, or a liability, as part of a business transaction that is not a business

combination, and if this initial recognition impacts neither the accounting result before income taxes

nor taxable earnings.

Deferred taxes relating to items posted directly to equity are recognized in equity, and not in the

income statement.

Value added tax

Income, expenses, intangible assets, and property, plant and equipment are recorded after VAT has

been deducted, to the extent that VAT is recoverable from a tax authority. Receivables and liabilities

are recognized including VAT. Provisions are carried without taking VAT into account.

The amount of VAT to be refunded by a tax authority, or which is to be paid to a tax authority, is

carried under other assets or liabilities.

Intangible assets

Acquired and internally generated intangible assets are capitalized at cost according to IAS 38 if it

is likely that their use will result in future economic benefits, and if it is possible to reliably estimate

the costs of the asset.

The cost of intangible assets solely comprises directly allocable costs.

With regard to the accounting for, and measurement of, goodwill, please refer to our comments on

consolidation methods, and the information in the section “Impairment testing for goodwill”.

Other intangible assets, mostly software and other industrial property rights, are carried at cost, and

are subjected to amortization over a useful life of between two and ten years.

Research costs and non-capitalized development costs are carried as expenses on the date on

which they arise.

Intangible assets are either derecognized on disposal, or at the date when economic benefit is no

longer expected from the continued use or sale of the asset. The gains or losses resulting from

the disposal of the asset are calculated as the difference between the net realizable value and the

carrying amount of the asset, and are recognized in income in the consolidated income statement

in the period in which the asset is derecognized.


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Property, plant and equipment

Property, plant and equipment is measured at cost less depreciation and impairment losses within

the meaning of IAS 16.

Straight-line, pro rata depreciation is used, based on the following estimated useful lives:

Years

Buildings 25 – 60

Machines, operating and office equipment 2 – 25

Computer hardware 3 – 7

Property, plant and equipment is either derecognized on disposal, or at the date where no economic

benefit is any longer expected from the continued use or sale of the asset. The gains or losses

resulting from the disposal of the asset are calculated as the difference between the net realizable

value and the carrying amount of the asset, and are recognized in income in the consolidated income

statement in the period in which the asset is derecognized.

The assets’ residual values, useful lives and depreciation methods are reviewed at the end of each

fiscal year, and modified where necessary.

Investment grants and subsidies received do not reduce the costs of the relevant assets, but are

deferred as liabilities within the meaning of IAS 20.24, and are reversed to income over the useful

lives of the subsidized assets.

Finance leases

ALNO AG leases office and operating equipment. Economic ownership of the leased items is to

be allocated to the lessee in line with IAS 17 if this party bears all the major opportunities and risks

associated with the item (finance lease). All leased assets that qualify as finance leases are capitalized

in the consolidated financial statements at their market value, or the present value of the lease

installments, whichever is lower. These are depreciated over their useful lives or the term of the lease

agreement, whichever is shorter.

Impairment tests

IMPAIRMENT TESTING FOR GOODwILL

Goodwill from business combinations is allocated to the cash generating units that obtain the

benefits from the combination. The EUR 2,535 thousand of goodwill allocated to ALNO AG in

previous years was fully written off due to the impairment test that was conducted in the 2009 fiscal

year. The EUR 1.483 thousand of goodwill remaining within the ALNO Group is attributed entirely

to the CASAWELL Group. The CASAWELL Group comprises Gustav Wellmann GmbH & Co. KG

and its subsidiaries.

Goodwill impairment tests are conducted at the end of each fiscal year, as well as during the fiscal

year if there are any indications that value impairment has occurred.

The recoverable amount for the respective cash generating unit is calculated in order to perform

the impairment test according to IAS 36.

The recoverable amount is the higher of the fair value of the cash generating unit less costs to sell,

and the asset’s value in use.


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Value in use is the present value of estimated cash flows that are expected from the continued use

of a cash generating unit, and its disposal at the end of its useful life. Value in use is calculated

according to IAS 36 using the discounted cash flow method based on data from the current

approved company forecast, and corrected to reflect expansion investments and planned restructuring

measures. The forecasting horizon in this respect is four years. The discounting of cash flows

entails the use of a weighted average cost of capital (WACC), taking into account the risk-free

interest rate, a market risk premium (multiplied by the beta factor), a growth discount applied to

the perpetual return, borrowing costs, and capital structure. In so doing, the forecast for the cash

flows is based on the results of the individual Group companies calculated in a detailed forecasting

process, supported by empirical values and external economic data.

The calculation of fair value less costs of self is performed on the basis of expert surveys, or on the

basis of the best possible in-house estimates of realistically expected sales prices.

An impairment loss is reported if the recoverable amount is less than the carrying amount of the

cash generating unit. Goodwill impairments are not reversed pursuant to IAS 36.

The corporate planning is essentially based on the following assumptions:

At ALNO AG (including property leasing companies), a change in revenue of –9.6 % to 17.0 % per

annum was assumed. The following rates of change were also imputed: between – 17.4 % and 5.8 %

per annum for shipment volumes in Germany, and of between – 5.8 % and 10.0 % per annum for

shipment volumes abroad; price adjustments of between 1.2 % and 8.8 % per annum in Germany,

and price adjustments between – 3.0 % and 6.7 % per annum for price adjustments abroad. In

terms of purchasing prices, material costs were imputed to increase by 11.7 % per cabinet in 2011,

and by between – 1.3 % and 11.6 % per annum per cabinet from 2012. In terms of personnel cost

planning, an annual decline of between – 0.4 % and – 7.3 % per annum was assumed on the basis

of the declining number of employees.

A change in revenue of between – 1.3 % and 19.2 % per annum was assumed at the CASAWELL

Group. The following rates of change were also imputed: between – 10.1 % and 15.9 % per annum

for shipment volumes in Germany, and of between 7.4 % and 12.6 % per annum for shipment

volumes abroad; price adjustments of between 2.0 % and 4.9 % per annum in Germany, and price

adjustments between 2.1 % and 11.4 % per annum for price adjustments abroad. In terms of

purchasing prices, a change in material costs per cabinet of between – 2.9 % and 6.3 % per annum

was imputed from 2011. In terms of personnel cost planning, an annual change of between – 4.6 %

and 4.2 % per annum was assumed on the basis of a slight decline in the number of employees.

Security discounts of 10 % to 20 % have been applied to the free cash flows calculated as part of

the forecasting process.

Based on these cash flow forecasts, the value in use of the cash generating units has been determined

based on costs of capital before income taxes of 7.83 % (previous year: 8.37 %) for ALNO AG, and

10.66 % (previous year: 11.65 %) for the CASAWELL Group. The following factors were also included

in the calculation for the 2010 fiscal year: a risk-free interest rate of 3.25 % (previous year: 4.25 %),

a market risk premium of 5.0 % (previous year: 5.0 %), and a beta factor of 1.10 (previous year:

0.89), which was derived from the average of comparable companies. The cost of debt borrowing

before income taxes, which was derived from the average of comparable companies, amounted to

5.67 % (previous year: 5.78 %). A 28.0 % tax rate was applied to the pre-tax observation (previous

year: 28.0 %). The equity to debt ratio is 83 % to 17 % in line with the average capital structure of

comparable companies.

A 1 % growth rate is assumed for cash flows subsequent to the end of the four-year planning horizon.

This growth rate corresponds to the long-term average growth rate for the kitchen furniture industry.


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Overview of the cash generating units:

In EUR thousand ALNO CASAWELL

Carrying amount 9,483 22,553

Value in use – 8,384 80,740

The recoverable amount for ALNO AG and the CASAWELL Group was calculated based on value in

use. Fair value less costs to sell was used in the previous year for the ALNO AG assets due to their

negative value in use. Along with impairment losses applied to ALNO AG’s goodwill in an amount

of EUR 2,535 thousand, this also resulted in additional impairment losses applied to intangible

assets and property, plant and equipment (please refer to C.8. “Amortization of intangible assets

and depreciation of property, plant and equipment”). This basis also resulted in the application of

further impairment losses applied in 2010 to 2010 additions in an amount of EUR 2,325 thousand,

since the new planning figures for the impairment test were not available until spring 2011. Despite

negative value in use, no further impairment losses were necessitated for 2010, however, on the

basis of the impairment tests conducted as of December 31, 2010 as part of the preparation of the

financial statements.

As shown above, the forward-looking assumptions on which the calculations are based are subject

to various estimation uncertainties. These uncertainties may exert a significant impact on the calculations’

results. The following section explains how the values in use of the ALNO AG and CASAWELL

cash generating units change given scenarios that diverge from planning (relating only to a change

in the level of the perpetual return as the value-driving factor).

ALNO AG:

In EUR thousand

WACC

Free cash flow – 2 % – 1 % 0 % 1 % 2 %

– 20 % – 7,156 – 9,661 – 11,522 – 12,959 – 14,103

– 10 % – 5,032 – 7,850 – 9,943 – 11,560 – 12,847

0 % – 2,908 – 6,038 – 8,384 – 10,162 – 11,591

10 % – 784 – 4,227 – 6,786 – 8,763 – 10,335

20 % 1,341 – 2,416 – 5,208 – 7,364 – 9,079

CASAWELL:

In EUR thousand

WACC

Free cash flow – 2 % – 1 % 0 % 1 % 2 %

– 20 % 86,601 74,677 65,815 58,971 53,526

– 10 % 96,715 83,300 73,331 65,631 59,506

0 % 106,829 91,923 80,740 72,291 65,485

10 % 116,943 100,546 88,362 78,951 71,464

20 % 127,057 109,169 95,877 85,612 77,444

IMPAIRMENT TEST FOR MISCELLANEOUS INTANGIBLE ASSETS AND PROPERTY, PLANT AND

eqUIPMENT

Miscellaneous intangible assets and property, plant and equipment are tested for indicators of

possible impairment on the balance sheet date. An impairment test within the meaning of IAS 36

is implemented if there are any such indicators.


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In order to perform the impairment test, the recoverable amount for the individual asset is identified,

or, if no cash inflows can be allocated to the individual asset, the recoverable amount is identified for

the cash generating unit. Cash generating units are defined as the smallest units that independently

generate cash inflows. These are the individual companies within the ALNO Group.

The recoverable amount is the higher of the fair value of the cash generating unit or asset less costs

to sell, and the value in use of the cash generating unit or asset.

An impairment loss is reported if the recoverable amount is less than the carrying amount of the

cash generating unit or asset.

If the reason for previous impairment no longer applies, the impairment loss is reversed, to a

maximum, however, of amortized cost.

Accounting for interests in joint ventures

Interests in joint ventures are included in the consolidated financial statements using the equity

method pursuant to IAS 31.38.

The acquisition costs are increased or reduced by the proportionate profit / loss for the year. Distributions

reduce, and capital increases increase, the carrying amount of the participation. Changes

in equity are also recorded proportionately under consolidated equity. If there are any indicators

of impairment, an impairment test within the meaning of IAS 36 is implemented. There were no

indicators of impairment within the meaning of IAS 36 on the balance sheet date.

Inventories

Raw materials, consumables and supplies, and merchandise are generally measured pursuant

to IAS 2 at average purchase costs including ancillary purchase costs, or at net realizable value,

whichever is lower.

Work in progress and finished goods/services are measured at a cost pursuant to IAS 2, however,

at maximum at the net realizable value. Production costs comprise all costs directly allocable to the

production process as well as reasonable portions of the production-related overheads.

Net realizable value is the estimated selling price in the ordinary course of business less the estimated

costs of completion, and estimated necessary selling costs.

Financial and other assets

Financial assets comprise, in particular, cash and cash equivalents, securities, and trade accounts

receivable.

No use was made of the option to recognize financial assets as financial assets at fair value through

profit or loss on first-time recognition.

Pursuant to IAS 39, trade receivables are classified as “loans and receivables” originated by the

company, and are recognized at amortized cost using the effective interest method. Appropriate

individual value allowances are applied to the doubtful receivables in the amount of the difference

between the carrying amount of the asset and the present value of the expected future cash flows.

Individual write-downs are recorded in a value allowance account. If the value allowance is lower in

subsequent periods, the value allowance is reversed to amortized cost at maximum. Value allowances

and reversals are recognized in income in the consolidated income statement. Receivables

are derecognized if they cannot be collected.


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Securities and participating interests in investees are classified as “available-for-sale” financial assets.

They are generally measured at fair value after initial recognition.

In the case of securities, fair value corresponds to the market price. Gains and losses from fair

value changes are taken directly to equity until the financial asset has been disposed of, or until

impairment is ascertained. In the instance of impairment, the accumulated net loss is removed from

equity, and recognized in profit or loss.

Participating interests in investees are measured at cost, since there is no active market, and their

fair values cannot be reliably calculated since there are no company forecasts. Any indicators of

impairment are recognized in income.

Financial assets are generally recognized on their settlement date.

Financial assets are derecognized if the contractual rights to cash inflows from the asset have

expired, or if all risks and opportunities have essentially been transferred. They are also derecognized

on their settlement date.

Financial assets are also derecognized if their transfer results in neither the significant opportunities

and risks connected with their ownership being transferred to the acquirer, nor being retained, and

where the power of disposal over the financial assets has transferred to the acquirer. The rights and

obligations arising or remaining as the result of this transfer are reported separately as assets or

liabilities. If, by contrast, the power of disposal over the transferred financial assets remains with the

ALNO Group, the assets that have been sold continue to be reported to the level of the continuing

commitment. At the same time, a related liability is reported among other liabilities. Differences

between the recognized assets and liabilities are reported in the financial result.

Other assets are carried at cost, and cash and cash equivalents are recognized at nominal value.

Pension provisions

The ALNO Group operates a defined benefit pension plan for former members of its Managing

Board, and its executives in Germany and abroad.

ALNO’s pension plan is a defined benefit plan within the meaning of IAS 19.27, and includes a direct

commitment by the company to provide agreed benefits to current and former employees; actuarial

risks and investment risks are essentially borne by the company. The provision is calculated using

the Projected Unit Credit Method according to IAS 19 to the extent that it is not covered by existing

plan assets. Interest expenses are carried under financial expenses.

The Group uses the option of taking all actuarial gains and losses that occur during the fiscal year

directly to equity.

Other provisions

Other provisions are formed within the meaning of IAS 37 if a current – legal and constructive – obligation

to third parties is likely that can lead to an outflow of resources that can be reliably estimated.

Provisions for expenses are generally not formed.

Provisions are measured in the amount of the best possible estimate of the expense that is required

to fulfill the obligation on the balance sheet date. Non-current provisions are carried at their fulfillment

amount, and discounted to the balance sheet date, according to IAS 37, to the extent that the effect

is material. In the event of discounting, the increase in the provision caused by the passage of time

is carried under financial expenses.


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Financial liabilities

No use is made of the option to recognize financial liabilities as financial liabilities at fair value through

profit or loss on first-time recognition.

Financial liabilities mostly comprise shareholder loans and liabilities to banks. All financial liabilities

within the meaning of IAS 39 are generally carried at amortized cost (financial liabilities measured

at cost), which corresponds to the fair value of the consideration received including transaction

costs. Current financial liabilities also generally include the portion of non-current loans for which

the remaining term is less than one year.

Financial liabilities which the loan providers have waived are derecognized through profit or loss

within the financial result. A new financial liability arises if a debtor warrant was agreed for these

liabilities, and the occurrence of the condition is likely. In this case, the liability is recognized at its

discounted nominal value, and discounted over its term.

Derivative financial instruments

In 2008, ALNO AG concluded derivative financial instrument transactions with a term until August

2010 to hedge itself against the risk of changes in interest rates. The derivative financial instruments

required classification as held-for-trading since they do not meet the stringent accounting criteria

for hedge transactions according to IAS 39. Changes to the market value of the derivative financial

instruments are reported in the financial result in the income statement.

Trade payables and other liabilities

Trade payables are carried at the amount invoiced by the supplier.

Accruals are carried at the amount owed, which is estimated in some cases, and are carried under

other liabilities.

Liabilities from finance leases are also carried under other liabilities at the present value of the future

lease payments. These are classified as current and non-current liabilities in line with the term of the

lease agreement. Lease payments are broken down into interest payments and redemptions of the

remaining liability so that there is a constant interest rate on the remaining lease liabilities over the

period. The interest portion is recognized in income under financial expenses.

Lease payments for operating leases are carried as expenses in the consolidated income statement

over the period of the lease on a straight-line basis.

Miscellaneous other liabilities are carried at their repayment amount.

Trade payables and other liabilities are derecognized if the underlying obligation is satisfied, has

been terminated, or has expired.

Correction to the consolidated statement of comprehensive income and consolidated

statement of changes in equity

In the previous year, and the valuation adjustment to deferred tax assets relating to IPO costs of

EUR 127 thousand was presented as part of consolidated other comprehensive income in the

consolidated statement of total comprehensive income, although the item is closely connected with

owner transactions, and should consequently be reported separately in the consolidated statement

of changes in equity. The previous year’s presentation was corrected. This change of presentation

increased consolidated other comprehensive income by EUR – 127 thousand, from EUR – 204

thousand to EUR – 77 thousand. This increased 2009 consolidated total comprehensive income

from EUR – 39,168 thousand to EUR – 39,041 thousand.


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5. KEY DISCRETIONARY DECISIONS, ASSUMPTIONS AND ESTIMATES

Discretionary decisions

The management took the following discretionary decisions when applying the accounting and

valuation methods:

Two leasing companies are consolidated as special purpose entities since ALNO AG has economic

control of these companies. These are leasing companies, which solely rent the buildings and

associated land on the company property to ALNO AG, and which have been doing so for several

years. Agreements that the lessor concludes in connection with the leased items are subject to

approval by ALNO AG. Any resulting payment obligations are cross-charged in full to ALNO AG.

ALNO AG enjoys the right to purchase the leased objects after the expiry of the rental agreement.

Estimates and assumptions

Assumptions have been made and estimates used in the preparation of the consolidated financial

statements that impact the disclosure and amount of the assets and liabilities, income and expenses,

and contingent liabilities carried in the statements.

When testing goodwill and non-current assets for impairment, the assumptions made and estimates

used mainly relate to the cash flow forecasts and the discount factors (please refer to B.4. “Impairment

testing for goodwill” and C.8. “Amortization of intangible assets and depreciation of property,

plant and equipment”).

There are further uncertainties in connection with the capitalization of future tax refunds, where

assumptions were made regarding the date on which they are expected to occur, and the amount

of the future taxable income over the next four years. In addition, future tax relief was calculated

based on the assumption that there will be no detrimental change in the shareholder situation that

could lead to a removal of losses carried forward within the meaning of Sections 8 Paragraph 4

and 8c of the German Corporate Income Tax Act (KStG) (please refer to C.10. “Income taxes”).

Assumptions and estimates also made when determining economic useful lives for non-current assets

(please refer to B.4. “Intangible assets” and “Property, plant and equipment”), and when determining

the parameters to calculate pension provisions (please refer to D.11. “Pension provisions”) and

partial retirement (please refer to D.12. “Other provisions”). The provision for warranties is subject

to assumptions and estimates that relate to the period of time between the date of delivery and

the period of warranty, and the future warranty charges (please refer to D.12. “Other provisions”).

Value allowances applied to trade receivables are also subject to estimates that relate in particular

to anticipated future cash inflow (please refer to D.6. “Trade receivables”).

These estimates and assumptions are based on premisses that reflect the knowledge available on

the date when the consolidated financial statements are prepared. Although these assumptions

and estimates have been made to the best of the management’s knowledge, the actual results

may differ.


108

C. NOTES TO THE CONSOLIDATED

INCOME STATEMENT

The consolidated income statement has been prepared using the nature of expense method.

1. REVENUES

In EUR thousand 2010 2009

Income from the sale of goods 458,997 481,799

Other revenues 8,300 11,574

Total 467,297 493,373

Other revenues mostly stem from incidental product-related sales to the Group’s regular customers

or other third parties, such as the sale of materials that are no longer required. They also include

EUR 46 thousand (previous year: EUR 458 thousand) of revenues from services provided.

2. CHANGES IN INVENTORIES AND OWN WORK CAPITALIZED

In EUR thousand 2010 2009

Changes in inventories – 2,409 – 4,247

Other own work capitalized 416 523

Total – 1,993 – 3,724

3. OTHER OPERATING INCOME

Other operating income is composed as follows:

In EUR thousand 2010 2009

Income from the disposal of assets 399 89

Prior-period income 2,460 2,432

Income from reversal of individual value allowances 792 694

Income from insurance payments 82 74

Rental and lease income 577 775

Currency translation gains 478 409

Other income 2,274 1,987

Total 7,062 6,460

Prior-period income mostly includes income from the reversal of provisions and the derecognition of

liabilities. Other income comprises income from social facilities, refunds from the Federal Labor Agency,

income from payments received for derecognized receivables, and advertising costs subsidies.

Currency translation losses were netted with currency translation gains in the amount of EUR 707

thousand (previous year: EUR 280 thousand).


109

4. COST OF MATERIALS

In EUR thousand 2010 2009

Cost of raw materials and consumables used 267,485 274,140

Cost of purchased services 4,422 4,514

Total 271,907 278,654

5. PERSONNEL EXPENSES

In EUR thousand 2010 2009

Wages and salaries 81,270 81,735

Social security contributions 16,384 16,498

Retirement benefits 246 306

Total 97,900 98,539

The company employed an average of 1,840 staff during the year (previous year: 1,885):

Number of employees 2010 2009

Hourly-paid employees 1,077 1,086

Salaried employees 763 799

Total 1,840 1,885

Germany 1,768 1,774

Abroad 72 111

Social security contributions include employer contributions to government pension insurance schemes

for employees in the amount of EUR 7,459 thousand (previous year: EUR 7,467 thousand). Wages and

salaries also include top-up amounts under the German Partial Retirement Act of EUR 64 thousand

(previous year: EUR 331 thousand), compensation for pensions discounts of EUR 0 thousand (previous

year: EUR 3 thousand), and other compensation (unconnected with the restructuring) of EUR 411

thousand (previous year: EUR 1,164 thousand).

Social security contributions include refunds from the Federal Labor Agency of EUR 121 thousand

(previous year: EUR 121 thousand). These refunds were made for the social security expenses to

be borne by the ALNO Group as part of short-time working at the Group’s German companies.

They are netted with the respective expenses.

As a result of defined contribution benefit obligations received, an amount of EUR 186 thousand

was carried under retirement benefit expenses for the company pension scheme (previous year:

EUR 237 thousand).


110

6. OTHER OPERATING EXPENSES

In EUR thousand 2010 2009

Sales expenses 47,264 50,704

Administrative expenses 25,070 31,207

Rent and leasing 7,307 7,358

Maintenance costs 7,095 7,460

Prior-period expenses 613 491

Addition to individual value allowances for trade accounts receivable 1,935 2,728

Bad debts 998 858

Other taxes 714 693

Losses on the disposal of assets 562 654

Other expenses 1,053 797

Total 92,611 102,950

Other expenses mostly include expenses from additions to provisions and accruals.

Non-capitalized development costs were recognized in income in the amount of EUR 1,232 thousand

(previous year: EUR 1,105 thousand).

7. RESTRUCTURING CHARGE (INCOME)

As a result of the ALNO Group’s unsatisfactory results of operations, the company started to restructure

its German companies in 2007, and its foreign companies at the end of 2008. The ALNO AG

Supervisory Board approved the “ALNO 2013” future concept on January 15, 2010. A key aim of

this program is to sustainably improve Group profitability and competitiveness. The introduction of

efficient administrative processes and manufacturing structures across the entire Group forms the

focus of the related comprehensive structural modifications.

A restructuring profit/loss of EUR – 8960 thousand was generated in 2010 (previous year: EUR 1306

thousand). The other operating expenses of EUR 4,594 thousand (previous year: EUR 933 thousand)

relate to consultancy costs, and the addition to the provision for the Employment and Qualification

Company at the Pfullendorf location. The personnel expenses of EUR 4638 thousand comprise settlement

payments (previous year: EUR 386 thousand). The income of EUR 270 thousand (previous year:

EUR 2,625 thousand) was generated from the release of provisions that are no longer required for the

Employment and Qualification Company at the Enger site.

In EUR thousand 2010 Restructuring

2010 According to the

income statement

Other operating income 7,332 – 270 7,062

Personnel expenses 102,538 – 4,638 97,900

Other operating expenses 97,205 – 4,594 92,611

In EUR thousand 2009 Restructuring

2009 According to the

income statement

Other operating income 9,085 – 2,625 6,460

Personnel expenses 98,925 – 386 98,539

Other operating expenses 103,883 – 933 102,950


111

8. AMORTIZATION OF INTANGIBLE ASSETS AND DEPRECIATION OF PROPERTY,

PLANT AND EQUIPMENT

The composition of the amortization/depreciation can be seen in the statement of changes in noncurrent

assets.

In EUR thousand 2010 2009

Intangible assets 955 1,870

Property, plant and equipment 8,824 14,331

Depreciation and amortization 9,779 16,201

Impairment losses 2,325 23,985

Total 12,104 40,186

In total, the following groups of assets are affected by impairment losses:

In EUR thousand 2010 2009

Goodwill 0 2,535

Other intangible assets 9 988

Land and buildings 0 9,167

Technical plant and machinery 0 6,275

Operating and office equipment 2,316 5,020

Total 2,325 23,985

With regard to the assets of the ALNO AG cash generating unit (including the leasing companies),

fair value less costs to sell was still applied for the 2010 additions since there were no planning

figures during the year, and consequently the negative value in use of December 31, 2009 was still

applicable (please refer to B.4. “Impairment testing for goodwill”). This generated an impairment

loss of EUR 0 thousand for other intangible assets (previous year: EUR 969 thousand), and an

impairment loss of EUR 2,293 thousand for property, plant and equipment (previous year: EUR

20,378 thousand). The impairment test implemented as of December 31, 2010 on the basis of the

new planning figures resulted in no goodwill impairment requirement (previous year: EUR 2,535

thousand). In addition, no further impairment charges were required for the other assets of the

ALNO AG cash generating unit.

The impairment tests that were implemented also resulted in the application of impairment losses to

intangible assets and property, plant and equipment at the foreign subsidiaries due to the continued

poor earnings prospects in the United Kingdom, and the closure of the locations in Belgium and

Italy, of EUR 32 thousand (previous year: EUR 103 thousand).

Of the impairment losses, EUR 2,293 thousand (previous year: EUR 15,954 thousand) is attributable

to the ALNO segment, and EUR 0 thousand (previous year: EUR 5 thousand) to property companies

contained in the Other segment. The impairment losses of EUR 32 thousand at the foreign

subsidiaries (previous year: EUR 103 thousand) were booked at Group level, and are consequently

reported separately in the consolidation column. In addition, the previous year’s consolidation

column contained a goodwill impairment loss of EUR 2,535 thousand.

There were no further events or circumstances which led to impairment losses or write-ups being

recognized as of the balance sheet date.


112

9. FINANCIAL RESULT

Financial expenses include interest expenses from the utilization of credit lines and shareholder loans

totaling EUR 9,800 thousand (previous year: EUR 12,790 thousand), and expenses arising from derivative

financial instruments totaling EUR 130 thousand (previous year: EUR 1,200 thousand). They also

include interest expenses arising from the unwinding of the discount on pension provisions, and from

finance leases. The expenses connected with the planned but ultimately postponed capital increase

of EUR 390 thousand was also included in the financial result (previous year: EUR 1,558 thousand).

Along with the positive earnings effect from the declared receivables waiver in an amount of EUR

10,000 thousand (previous year: EUR 0 thousand), financial income includes income from securities

and investments of EUR 43 thousand (previous year: EUR 54 thousand); the remaining financial

income results from other interest income arising from interest on financial assets.

10. INCOME TAXES

Breakdown of income taxes:

In EUR thousand 2010 2009

Consolidated income statement

Actual income tax expense:

Current income tax expense 258 201

Adjustments of current income taxes incurred

in the previous year Income taxes – 12 6

Deferred taxes:

Tax loss carryforwards 325 1,566

Origination and reversal of temporary differences 335 – 1,603

Income tax expense reported in the

consolidated income statement 906 170

In EUR thousand 2010 2009

Statement of changes in consolidated equity

Deferred taxes taken directly in equity:

Actuarial losses for pension provisions 169 – 26

IPO costs 0 – 127

Available-for-sale securities 0 2

Income taxes recorded under equity 169 – 151


113

Deferred taxes comprise the following items:

In EUR thousand

Consolidated balance sheet Consolidated income statement

2010 2009 2010 2009

Deferred tax liabilities

Property, plant and equipment 3,997 3,661 336 – 1,905

Inventories 216 138 78 – 98

Receivables and other assets 420 110 310 – 1

Miscellaneous provisions 103 31 72 0

Currency translation differences 0 – 1 – 9 – 1

Netting – 4,479 – 3,887 — —

257 52 787 – 2,005

Deferred tax assets

Intangible assets 2,158 1,896 262 – 966

Property, plant and equipment 848 0 848 1,222

Inventories 0 74 – 74 54

Pension provisions 742 569 4 121

Other provisions 432 1,033 – 601 – 152

Other liabilities 14 0 14 124

Tax loss carryforwards 285 610 – 325 1,566

Currency translation difference 0 1 – 1 – 1

Netting – 4,479 – 3,887 — —

0 296 127 1,968

Deferred tax expense (previous year: tax income) 660 – 37

The reconciliation between expected and actual income taxes is as follows:

In EUR thousand 2010 2009

Profit/loss before income taxes on continuing operations – 12,178 – 39,201

Profit/loss before income taxes on discontinued operations 0 407

Profit/loss before income taxes – 12,178 – 38,794

Expected income taxes – 3,410 – 10,862

Impact of different basis for measurement/tax rates 68 – 99

Losses from the fiscal year not considered 1,864 1,449

Revaluation (previous year: devaluation) or non-recognition of

deferred assets on temporary differences – 1,688 4,980

Change in deferred tax assets on loss carryforwards 325 1,566

Non-tax-deductible operating expenses

Goodwill impairment 0 710

Other non-tax-deductible operating expenses 2,737 2,878

Taxable shareholders’ receivables waiver 1,375 0

Tax impact due to prior-period issues – 438 – 444

Other differences 73 – 8

Current income taxes 906 170

Taxes on income reported in the consolidated income statement 906 170

Income taxes due to discontinued operations 0 0


114

The effective income tax rate – defined as 28 % in the ALNO Group (previous year: 28 %) – is derived

from the application of a corporation tax rate of 15 % (previous year: 15 %) plus the solidarity surcharge

of 5.5 % on the corporation tax, and a weighted trade tax on earnings before income taxes.

For this reason, the deferred taxes for the German companies were calculated using future income

tax charges of 28 %.

The foreign currency translation generated a EUR – 9 thousand change in the deferred tax liabilities,

and a EUR 1 thousand change in deferred tax assets.

The corporation tax loss carryforwards in Germany for which no deferred tax assets were formed

amounted to EUR 142,450 thousand (previous year: EUR 143,310 thousand). The German trade tax

loss carryforwards not taken into account amounted to EUR 163,988 thousand as of the balance

sheet date (previous year: EUR 164,628 thousand). No deferred taxes were capitalized for foreign

tax loss carryforwards in an amount of EUR 2,820 thousand (previous year: EUR 3,628 thousand).

This amount, EUR 0 thousand (previous year: EUR 2,714 thousand) can be used for a limited period.

The interest carried forward as a result of the German earnings-stripping rule, for which no deferred

tax assets were formed, totaled EUR 14,603 thousand as of the balance sheet date (previous year:

EUR 12,755 thousand).

The disclosed income tax earnings improved by EUR 426 thousand (previous year: EUR 450 thousand)

as a result of the utilization of previously unconsidered tax loss carryforwards of EUR 2,652

thousand (previous year: EUR 2,414 thousand).

Deferred tax assets on loss carryforwards were reduced by EUR 246 thousand (previous year:

EUR 1,435 thousand) to EUR 0 thousand (previous year: EUR 246 thousand) for the pooling of

tax interests for ALNO AG during the fiscal year. Deferred tax assets on loss carryforwards were

formed in the previous year only in the amount by which deferred tax liabilities exceeded deferred

tax assets from temporary differences.

The deductible temporary differences for which no deferred tax assets were recognized due to a

lack of value retention amounted to EUR 13,739 thousand (previous year: EUR 19,768 thousand).

A write-up will be performed if positive taxable income is achieved in 2011 within the ALNO AG

pooling of tax interests. The amount of the write-up depends on the anticipated taxable profits

based on the four-year tax forecast.

As a result of a longer-standing history of losses, the trade tax loss carryforwards for Gustav

Wellmann GmbH & Co. KG, Enger, are formed only in the amount by which deferred tax liabilities

exceed deferred tax assets from temporary differences. To this extent, deferred tax assets on loss

carryforwards were increased by EUR 96 thousand to EUR 285 thousand (previous year: EUR 189

thousand).

At one foreign company, deferred tax assets on loss carryforwards were increased by EUR 175

thousand to EUR 0 thousand.

Tax deferrals of EUR 768 thousand (previous year: EUR 747 thousand) were not applied to taxable

temporary differences arising from interests in subsidiaries in an amount of EUR 54,839 thousand

(previous year: EUR 53,384 thousand), since the parent company cannot influence the temporal

progression of the release of the temporary difference, and it is likely that the temporary difference

will not be released within the foreseeable future.

Liabilities from income taxes amounted to EUR 194 thousand (previous year: EUR 173 thousand),

and receivables from income tax refund claims totaled EUR 7 thousand (previous year: EUR 102

thousand).


115

D. NOTES TO THE CONSOLIDATED

BALANCE SHEET

1. INTANGIBLE ASSETS

In EUR thousand

Industrial

property rights,

and similar rights

and assets

Goodwill

Prepayments

and assets under

construction

Total

Accumulated acquisition costs

Balance at January 1, 2009 25,766 4,090 755 30,611

Additions 495 0 499 994

Disposals – 791 0 0 – 791

Balance at December 31, 2009 25,470 4,090 1,254 30,814

Currency translation 7 0 0 7

Additions 314 0 261 575

Disposals – 810 0 0 – 810

Balance at December 31, 2010 24,981 4,090 1,515 30,586

Accumulated amortization/

impairment losses

Balance at January 1, 2009 20,663 72 0 20,735

Additions

Amortization 1,870 0 0 1,870

Impairment losses 988 2,535 0 3,523

Disposals – 791 0 0 – 791

Balance at December 31, 2009 22,730 2,607 0 25,337

Currency translation 7 0 0 7

Additions

Amortization 955 0 0 955

Impairment 9 0 0 9

Disposals – 810 0 0 – 810

Balance at December 31, 2010 22,891 2,607 0 25,498

Carrying amounts

December 31, 2010 2,090 1,483 1,515 5,088

December 31, 2009 2,740 1,483 1,254 5,477

January 1, 2009 5,103 4,018 755 9,876


116

2. PROPERTY, PLANT AND EQUIPMENT

In EUR thousand

Real property,

equivalent

rights and

buildings

Technical

plant and

machinery

Other equipment,

operating

and office

equipment

Prepayments

and assets

under construction

Total

Accumulated acquisition costs

Balance at January 1, 2009 117,996 130,189 62,928 429 311,542

Currency translation 0 0 74 0 74

Additions 43 1,214 9,918 3,942 15,117

Transfers 0 415 0 – 415 0

Disposals – 38 – 5,089 – 13,558 0 – 18,685

Balance at December 31, 2009 118,001 126,729 59,362 3,956 308,048

Currency translation 0 0 114 0 114

Additions 35 3,065 9,562 2,558 15,220

Transfers 0 3,803 19 – 3,822 0

Disposals – 4,152 – 4,361 – 7,600 0 – 16,113

Balance at December 31, 2010 113,884 129,236 61,457 2,692 307,269

Accumulated amortization/

impairment losses

Balance at January 1, 2009 59,092 112,387 49,732 0 221,211

Currency translation 0 0 36 0 36

Additions

Depreciation 1,517 3,038 9,776 0 14,331

Impairment losses 9,167 6,275 5,020 0 20,462

Disposals – 31 – 4,898 – 13,047 0 – 17,976

Balance at December 31, 2009 69,745 116,802 51,517 0 238,064

Currency translation 0 0 90 0 90

Additions

Depreciation 1,256 1,785 5,783 0 8,824

Impairment losses 0 0 2,316 0 2,316

Disposals – 2,889 – 4,324 – 7,090 0 – 14,303

Balance at December 31, 2010 68,112 114,263 52,616 0 234,991

Carrying amounts

December 31, 2010 45,772 14,973 8,841 2,692 72,278

December 31, 2009 48,256 9,927 7,845 3,956 69,984

January 1, 2009 58,904 17,802 13,196 429 90,331

Property, plant and equipment that is available to the Group as part of a financing lease was written

off in the previous year. The leased assets were mostly information and communication equipment,

as well as operating fittings in buildings within other plant, operating and office equipment.


117

3. FINANCIAL ASSETS

As of December 31, 2010, financial assets totaled EUR 3,431 thousand (previous year: EUR 3,279

thousand).

Financial assets include investment securities to protect partial retirement obligations against insolvency

in the amount of EUR 3,426 thousand (previous year: EUR 3,274 thousand), which were

pledged to employees, and participating interests in associated companies of EUR 5 thousand

(previous year: EUR 5 thousand).

4. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

As of December 31, 2010, ALNO Middle East reported the following assets and liabilities in its

balance sheet, which are attributable to ALNO AG in line with its 50 % equity interest.

In EUR thousand 31/12/2010 31/12/2009

Assets 6,121 5,017

of which non-current 1,701 1,063

of which current 4,420 3,954

Liabilities 3,940 3,087

of which non-current 1,977 1,826

of which current 1,963 1,261

Income and expenses were attributable to ALNO AG in the following amounts in 2010:

In EUR thousand 2010 2009

Income 4,462 3,816

Expenses 4,369 3,636

The earnings of EUR 93 thousand attributable to ALNO AG in 2010 increased the carrying value

of the equity investment through profit or loss. In addition, the carrying amount of the participating

interest in the company increased due to currency translation differences in an amount of EUR 158

thousand, which was taken directly to the equity of ALNO AG.

The earnings attributable to ALNO AG of EUR 180 thousand in 2009 were netted with the negative

net assets in the amount of EUR 71 thousand in a side ledger. The surplus of EUR 109 thousand

increased the carrying amount of the participating interest, and is recognized in income. In addition,

the carrying amount of the participating interest in the company increased due to currency translation

differences in an amount of EUR 20 thousand, which was taken directly to the equity of ALNO AG.

5. FINANCING RECEIVABLES

Non-current financial receivables mainly include loans granted to ALNO Middle East of EUR 2,000

thousand (previous year: EUR 2,000 thousand).


118

6. TRADE ACCOUNTS RECEIVABLE

In EUR thousand

Total

Residual term

Up to one year 1 to 5 years More than 5 years

December 31, 2010 32,996 32,360 636 0

December 31, 2009 47,634 46,548 1,086 0

Receivables sales on the part of the ALNO Group in an amount of EUR 10,910 thousand (previous

year: EUR 0 thousand) do not satisfy the criteria for a complete derecognition of the receivables. As

of December 31, 2010, this resulted in a carrying amount of trade receivables of EUR 410 thousand

(previous year: EUR 0 thousand). The chief risks consist of foreign currency risks and interest-rate

risks arising from potentially delayed settlement of the receivables. The liabilities connected with

the transferred and non-de-recognized receivables amount to EUR 536 thousand (previous year:

EUR 0 thousand), and are included among other liabilities.

The term structure of trade receivables was as follows as of the balance sheet date:

Unimpaired and overdue in the following

periods

In EUR thousand

Carrying

amount

Neither overdue

nor impaired

Less than 30

days

Between

30 and

365 days

More than

365 days

December 31, 2010 32,996 23,050 3,076 4,632 108

December 31, 2009 47,634 37,717 4,307 3,524 172

The impaired receivables had a gross value of EUR 10,789 thousand (previous year: EUR 11,731

thousand).

Impairments to trade receivables changed as follows:

In EUR thousand 2010 2009

January 1 9,817 8,352

Currency translation differences 59 30

Amount utilized 2,360 599

Reversal 792 694

Addition 1,935 2,728

December 31 8,659 9,817

With regard to the unimpaired trade receivables, there were no indicators on the balance sheet date

that the debtors would be unable to fulfill their payment obligations.

7. INVENTORIES

In EUR thousand 31/12/2010 31/12/2009

Raw materials, consumables and supplies 19,364 14,292

Work in progress 2,897 4,353

Finished goods and merchandise 6,078 6,202

Prepayments received – 158 – 123

Total 28,181 24,724

The impairments applied to inventories increased by EUR 158 thousand, from EUR 1,929 thousand

in the previous year to EUR 2,087 thousand in 2010 (previous year: reduction of EUR 399 thousand).


119

8. OTHER CURRENT ASSETS

In EUR thousand

Total

Residual term

Up to one year 1 to 5 years More than 5 years

31, Dezember 2010 7,830 7,511 319 0

31. Dezember 2009 6,087 5,500 587 0

Other current assets primarily contain claims to VAT refunds, receivables from the sale of a piece of

land and from employees, and prepaid expenses. This item as of December 31, 2010 also includes

the costs of EUR 1103 thousand incurred for the IPO that was implemented in March 2011.

Other non-current assets primarily comprise receivables for partial retirement due from the Federal

Labor Agency.

Impairments to other assets changed as follows:

In EUR thousand 2010 2009

January 1 112 0

Currency translation differences 1 0

Amount utilized 0 0

Reversal 10 0

Addition 26 112

December 31 129 112

The impaired other assets had a gross amount of EUR 208 thousand (previous year: EUR 112

thousand).

The unimpaired receivables include no overdue items.

9. CASH AND CASH EQUIVALENTS

Cash and cash equivalents comprise cash on hand and bank balances. Cash and cash equivalents

that are not freely available comprise bank deposits as security.

Cash and cash equivalents are composed as follows as of the balance sheet date:

In EUR thousand 31/12/2010 31/12/2009

Cash and cash equivalents 3,041 2,857

Cash and cash equivalents not freely available – 2,060 – 1,599

Total 981 1,258


120

10. EQUITY

a. Subscribed capital

As of December 31, 2010, the subscribed capital amounts to EUR 45,231 thousand, and is split

into 17,396,653 ordinary shares. The shares are issued as bearer shares, and are fully paid in. Each

ordinary share has a notional share in the subscribed capital of EUR 2.60.

In EUR thousand

Balance at January 1, 2009 41,124

Changes 2009 0

Balance at December 31, 2009 41,124

Changes 2010 4,107

Balance at December 31, 2010 45,231

On April 9, 2010, the Managing Board, with the assent of the Supervisory Board, passed a resolution

to increase the company’s issued share capital against cash as part of the capital measures approved

by the Ordinary Shareholders’ General Meeting of ALNO AG on July 26, 2008. The company’s share

capital of EUR 41,123,869.80 was increased to EUR 43,177,583.80 through issuing 789,890 ordinary

shares. The new shares were issued at EUR 6.33 per share. IRE Beteiligungs GmbH subscribed

for and acquired the new shares. The excess amount of the non-cash capital contribution of EUR

2,946,289.70 was added to the capital reserve, after which the capital reserve amounted to EUR

39,490,074.62. The capital increase was entered in the commercial register on March 30, 2010.

On May 17, 2010, the Managing Board, with the assent of the Supervisory Board, passed a resolution

to increase the company’s issued share capital against cash as part of the capital measures approved

by the Ordinary Shareholders’ General Meeting of ALNO AG on July 26, 2008. The company’s share

capital of EUR 43,177,583.80 was increased to EUR 45,231,297.80 through issuing 789,890 ordinary

shares. The new shares were also issued at EUR 6.33 per share. IRE Beteiligungs GmbH, Stuttgart,

subscribed for and acquired the new shares. The excess amount of the non-cash capital contribution

of EUR 2,946,289.70 was added to the capital reserve, after which the capital reserve amounted to

EUR 42,436,364.32. The capital increase was entered in the commercial register on June 16, 2010.

On February 10, 2011, a resolution was passed by the Managing Board, with Supervisory Board

assent, to resume the capital increase from authorized capital that had been postponed in November

2010. The capital increase was implemented on March 3, 2011 through issuing 8,698,326 ordinary

shares each with a notional share in the share capital of EUR 2.60. The issue price was EUR 3.00.

As a consequence, the share capital increased by EUR 22,615,647.60 to EUR 67,846,945.40. The

excess amount of the non-cash capital contribution of EUR 3,479,330.40 was added to the capital

reserve, after which the capital reserve amounted to EUR 45,915,694.72. The capital increase was

entered in the commercial register on March 4, 2011.

Below we present the respective current mandatory shareholder announcements pursuant to Section

21 (1) of the German Securities Trading Act (WpHG), and the proportionate voting rights on the

date when the proportionate voting rights reached, exceeded or fell below the reporting thresholds

pursuant to Section 21 (1) of the German Securities Trading Act (WpHG). The actual percentage

of voting rights on the balance sheet date may differ as a result of acquisitions or sales that do not

have a reporting requirement.

On March 31, 2006, Mr. Alexander Nothdurft, Munich, notified us pursuant to Section 21 (1) Sentence

1 of the German Securities Trading Act (WpHG) that his percentage of voting rights in the

ALNO AG fell below the threshold of 5 % on March 28, 2006, and amounted to 3.38 % as of this date.

On March 31, 2006, Mr. Oliver Nothdurft, Munich, notified us pursuant to Section 21 (1) Sentence

1 of the German Securities Trading Act (WpHG) that his percentage of voting rights in the ALNO AG

fell below the threshold of 5 % on March 28, 2006, and amounted to 3.24 % as of this date.

The above announcements were published in the Frankfurter Allgemeine Zeitung on April 5, 2006.


121

On April 10, 2007, Küchen Holding GmbH, Munich, Germany, and Milano Investments S.à r.l., Luxembourg,

Luxembourg, notified us pursuant to Section 21 (1) Sentence 1 of the German Securities Trading

Act (WpHG) that their voting right share in ALNO AG had reached and exceeded the 75 % voting right

threshold on March 26, 2007. Since that date, their voting right share in ALNO AG amounted to 75.27 %.

Of the 75.27 % of the voting rights, 23.21 % are to be attributed to Küchen Holding GmbH pursuant to

Section 22 (1) Sentence 1 Number 6 of the German Securities Trading Act (WpHG). Of the 75.27 % of the

voting rights, 52.06 % are attributed to Milano Investments S.à r.l., Luxembourg, Luxembourg, pursuant to

Section 22 (1) Sentence 1 Number 6 of the German Securities Trading Act (WpHG), and 23.21 % pursuant

to Section 22 (1) Sentence 1 Number 6, Sentences 2 and 3 of the German Securities Trading Act (WpHG).

The above announcement was published on April 14, 2007 in the Frankfurter Allgemeine Zeitung,

and sent to Bloomberg Europe, Reuters, dpa, Redaktion dow jones and dpa afx.

On October 22, 2009, Erste Private Investmentclub Börsebius Zentral (GbR), Cologne, Germany,

exceeded the 5 % and 10 % voting right thresholds in ALNO AG, Pfullendorf, Germany. The voting

right share of the Erste Private Investmentclub Börsebius Zentral (GbR), Cologne, Germany,

amounted to 10.66 % as of this date. This corresponds to 1,686,636 voting rights.

The above announcement was published on November 3, 2009 via the Deutsche Gesellschaft für

Ad-hoc-Publizität (DGAP).

On December 15, 2009, ABAG Aktienmarkt Beteiligungs AG, Cologne, Germany, with its voting

right share in ALNO AG, Pfullendorf, Germany, exceeded the 3 %, 5 % and 10 % thresholds, and

held 10.66 % as of this date. This corresponds to 1,686,636 shares.

The above announcement was published on January 8, 2010 via the Deutsche Gesellschaft für

Ad-hoc-Publizität (DGAP).

Bauknecht Hausgeräte GmbH, Stuttgart, Germany, on behalf of and at the order of Whirlpool Greater

China Inc., Benton Harbor, Michigan/USA, notified the following to us pursuant to Sections 21 (1), 22 (1),

22 (1) Sentence 1 Number 1, 24 of the German Securities Trading Act (WpHG), and for IRE Beteiligungs

GmbH, Stuttgart, Germany, pursuant to Sections 24, 21 (1) of the German Securities Trading Act (WpHG):

On December 15, 2009, IRE Beteiligungs GmbH with its voting right share in ALNO AG, Pfullendorf, Germany,

fell below the 15 % threshold, and held 12.41 % as of this date. This corresponds to 1,962,844 shares.

On December 15, 2009, Bauknecht Hausgeräte GmbH, Stuttgart, Germany, with its voting right

share in ALNO AG, Pfullendorf, Germany, fell below the 15 % threshold, and held 12.41 % as of this

date. This corresponds to 1,962,844 shares. These voting rights are attributable in their entirety

to Bauknecht Hausgeräte GmbH pursuant to Section 22 (1) Sentence 1 Number 1 of the German

Securities Trading Act (WpHG). The chain of controlled companies is called: IRE Beteiligungs GmbH.

On December 15, 2009, Whirlpool Greater China Inc., Benton Harbor, Michigan, USA, with its voting

right share in ALNO AG, Pfullendorf, Germany, fell below the 15 % threshold, and held 12.41 % as of

this date. This corresponds to 1,962,844 shares. These voting rights are attributable in their entirety

to Whirlpool Greater China Inc. pursuant to Section 22 (1) Sentence 1 Number 1 of the German

Securities Trading Act (WpHG). The chain of controlled companies is called: Bauknecht Hausgeräte

GmbH and IRE Beteiligungs GmbH.

The above announcement was published on January 8, 2010 via the Deutsche Gesellschaft für

Ad-hoc-Publizität (DGAP).

On December 18, 2009, ABAG Aktienmarkt Beteiligungs AG, Cologne, Germany, notified as pursuant to

Section 27a (1) of the German Securities Trading Act (WpHG) that its percentage of voting rights in ALNO

AG, Pfullendorf, Germany, ISIN: DE000778840, had exceeded the threshold of 10 %, and amounted to

10.66 % as of this date. This investment serves to implement strategic objectives, particularly its positioning

as a strategic investor. The party that is required to make notification does not intend to acquire further


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voting rights through purchase or in another manner within the next twelve months. The party that is

required to make notification is not endeavoring to exert influence on the composition of the issuer’s Managing

or Supervisory boards. The party that is required to make notification is not striving for a significant

modification to the company’s capital structure, especially with respect to the relationship between equity

and debt financing, and its dividend policy. The funds derive from the party’s own resources.

The above announcement was published on January 8, 2010 via the Deutsche Gesellschaft für

Ad-hoc-Publizität (DGAP).

IRE Beteiligungs GmbH notified us pursuant to Sections 21 (1), 24 of the German Securities

Trading Act (WpHG) that its percentage of voting rights in ALNO AG, Pfullendorf, Germany, ISIN:

DE0007788408, WKN: 778840, exceeded the threshold of 15 % on April 30, 2010, and amounted

to 16.58 % as of this date (2,752,737 voting rights).

Bauknecht Hausgeräte GmbH, Stuttgart, Germany, notified us pursuant to Sections 21 (1), 24 of the German

Securities Trading Act (WpHG) that its percentage of voting rights in ALNO AG, Pfullendorf, Germany,

ISIN: DE0007788408, WKN: 778840, exceeded the threshold of 15 % on April 30, 2010, and amounted

to 16.58 % as of this date (2,752,737 voting rights). Of these voting rights, 16.58 % (2,752,737 voting

rights) are to be attributed to it pursuant to Section 22 (1) Number 1 of the German Securities Trading

Act ( WpHG). Attributed voting rights in this context are held via the following companies that it controls,

whose percentage voting rights in ALNO AG to 3 % in each case or more: IRE Beteiligungs GmbH.

Whirlpool Greater China Inc., Benton Harbor, Michigan, USA, notified us pursuant to Sections 21

(1), 24 of the German Securities Trading Act (WpHG) that its percentage of voting rights in ALNO

AG, Pfullendorf, Germany, ISIN: DE0007788408, WKN: 778840, exceeded the threshold of 15 %

on April 30, 2010, and amounted to 16.58 % as of this date (2,752,737 voting rights). Of these

voting rights, 16.58 % (2,752,737 voting rights) are to be attributed to it pursuant to Section 22 (1)

Sentence 1 Number 1 of the German Securities Trading Act ( WpHG). Attributed voting rights in

this context are held via the following companies that it controls, whose percentage voting rights

in ALNO AG to 3 % in each case or more: Bauknecht Hausgeräte GmbH, IRE Beteiligungs GmbH.

The above announcement was published on May 21, 2010 via the Deutsche Gesellschaft für Adhoc-Publizität

(DGAP).

On May 31, 2010, IRE Beteiligungs GmbH, Stuttgart, Germany, informed us pursuant to Sections

21 (1), 24 of the German Securities Trading Act (WpHG), that its percentage of voting rights in ALNO

AG, Pfullendorf, Germany, ISIN: DE0007788408, WKN: 778840, fell below the threshold of 15 % on

May 20, 2010, and amounted to 14.77 % (2,452,737 voting rights) as of this date.

On May 31, 2010, Bauknecht Hausgeräte GmbH, Stuttgart, Germany, informed us pursuant to

Sections 21 (1), 24 of the German Securities Trading Act (WpHG), that its percentage of voting rights

in ALNO AG, Pfullendorf, Germany, ISIN: DE0007788408, WKN: 778840, fell below the threshold of

15 % on May 20, 2010, and amounted to 14.77 % (2,452,737 voting rights) as of this date. Of these

voting rights, 14.77 % (2,452,737 voting rights) are to be attributed to it pursuant to Section 22 (1)

Number 1 of the German Securities Trading Act ( WpHG). Attributed voting rights in this context

are held via the following companies that it controls, whose percentage voting rights in ALNO AG

to 3 % in each case or more: IRE Beteiligungs GmbH.

On May 31, 2010, Whirlpool Greater China Inc., Benton Harbor, Michigan, USA, informed us pursuant

to Sections 21 (1), 24 of the German Securities Trading Act (WpHG), that its percentage of voting rights

in ALNO AG, Pfullendorf, Germany, ISIN: DE0007788408, WKN: 778840, fell below the threshold of

15 % on May 20, 2010, and amounted to 14.77 % (2,452,737 voting rights) as of this date. Of these

voting rights, 14.77 % (2,452,737 voting rights) are to be attributed to it pursuant to Section 22 (1)

Sentence 1 Number 1 of the German Securities Trading Act ( WpHG). Attributed voting rights in this

context are held via the following companies that it controls, whose percentage voting rights in ALNO

AG to 3 % in each case or more: Bauknecht Hausgeräte GmbH, IRE Beteiligungs GmbH.

The above announcement was published on May 31, 2010 via the Deutsche Gesellschaft für Adhoc-Publizität

(DGAP).


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ABAG Aktienmarkt Beteiligungs AG, Cologne, Germany, notified us pursuant to Section 21 (1) of the

German Securities Trading Act (WpHG) that its percentage of voting rights in ALNO AG, Pfullendorf,

Germany, ISIN: DE0007788408, WKN: 778840, fell below the threshold of 10 % on June 16, 2010,

and amounted to 9.70 % (1,686,636 voting rights) as of this date.

Erste Private Investmentclub Börsebius Zentral (GbR), Cologne, Germany, notified us pursuant to

Section 21 (1) of the German Securities Trading Act (WpHG) that its percentage of voting rights in

ALNO AG, Pfullendorf, Germany, ISIN: DE0007788408, WKN: 778840, fell below the threshold of

10 % on June 16, 2010, and amounted to 9.70 % (1,686,636 voting rights) as of this date. Of these

voting rights, 9.70 % (1,686,636 voting rights) are to be attributed to it pursuant to Section 22 (1)

Number 1 of the German Securities Trading Act ( WpHG). Attributed voting rights in this context

are held via the following companies that it controls, whose percentage voting rights in ALNO AG

to 3 % in each case or more: ABAG Aktienmarkt Beteiligungs AG.

The above announcement was published on July 8, 2010 via the Deutsche Gesellschaft für Adhoc-Publizität

(DGAP).

On July 22, 2010, IRE Beteiligungs GmbH, Stuttgart, Germany, informed us pursuant to Sections 21

(1), 24 of the German Securities Trading Act (WpHG), that its percentage of voting rights in ALNO

AG, Pfullendorf, Germany, ISIN: DE0007788408, WKN: 778840, exceeded the threshold of 15 %

on June 16, 2010, and amounted to 18.64 % (3,242,627 voting rights) as of this date.

On July 22, 2010, Bauknecht Hausgeräte GmbH, Stuttgart, Germany, informed us pursuant to

Sections 21 (1), 24 of the German Securities Trading Act (WpHG), that its percentage of voting

rights in ALNO AG, Pfullendorf, Germany, ISIN: DE 0007788408, WKN: 778840, exceeded the

threshold of 15 % on June 16, 2010, and amounted to 18.64 % (3,242,627 voting rights) as of this

date. Attributed voting rights in this context are held via the following companies that it controls,

whose percentage voting rights in ALNO AG to 3 % in each case or more: IRE Beteiligungs GmbH.

On July 22, 2010, Whirlpool Greater China Inc., Wilmington, USA, informed us pursuant to Sections

21 (1), 24 of the German Securities Trading Act (WpHG), that its percentage of voting rights in ALNO

AG, Pfullendorf, Germany, ISIN: DE0007788408, WKN: 778840, exceeded the threshold of 15 %

on June 16, 2010, and amounted to 18.64 % (3,242,627 voting rights) as of this date. Of these

voting rights, 18.64 % (3,242,627 voting rights) are to be attributed to it pursuant to Section 22 (1)

Sentence 1 Number 1 of the German Securities Trading Act ( WpHG). Attributed voting rights in

this context are held via the following companies that it controls, whose percentage voting rights

in ALNO AG to 3 % in each case or more: Bauknecht Hausgeräte GmbH, IRE Beteiligungs GmbH.

The above announcement was published on July 23, 2010 via the Deutsche Gesellschaft für Adhoc-Publizität

(DGAP).

Authorized capital

By way of a resolution of the Ordinary Shareholders’ General Meeting of ALNO AG of June 26, 2008,

the Managing Board, with the Supervisory Board’s assent, was authorized by way of bylaw amendment

to increase the company’s issued share capital until June 26, 2013 by up to an amount totaling

EUR 20,561,933.60 through issuing new ordinary shares in exchange for cash and/or non-cash

capital contributions, either wholly or in partial amounts, and either once or on several occasions.

This resolution was entered in the commercial register on August 27, 2008.

By way of resolution of the Managing Board, and with the assent of the Supervisory Board, of

April 9, 2010 and May 17, 2010, the share capital was increased by EUR 4,107,428.00 to EUR

45,231,297.80 through issuing 789,890 new ordinary shares against cash in each instance. The

authorized capital still amounts to EUR 16,454,505.60 following this partial utilization.

By way of a resolution of the Ordinary Shareholders’ General Meeting of ALNO AG on June 23,

2010, the previous authorized capital was cancelled, and replaced by a new authorized capital.

The Managing Board was authorized, with Supervisory Board’s assent, to increase the company’s

share capital until June 22, 2015, once or on several occasions, by up to EUR 22,615,647.60


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through issuing up to 8,698,326 ordinary shares against cash contributions or non-cash capital

contributions (Authorized Capital 2010). The authorized capital was entered in the commercial

register on August 31, 2010.

Shareholders are entitled to statutory subscription rights. The new shares may also be underwritten

by a bank or several banks with the obligation to offer them to shareholders for subscription (indirect

subscription right).

The Managing Board is authorized, with the Supervisory Board’s assent

• to exclude shareholders’ subscription rights for fractional amounts.

• to totally exclude shareholders’ subscription rights in order to offer the new shares in the company

to third parties against non-cash capital contributions as part of business combinations or to

acquire companies or parts of companies, and other assets including loan liabilities and other

liabilities.

• to exclude shareholders’ subscription rights if the capital increase against cash does not exceed

10% of the share capital, and the issue price is not significantly less than the stock market price

of the shares of equal class that are already listed.

• to exclude shareholders’ subscription rights to the extent that it is necessary to grant bearers of

option rights or creditors of convertible bonds that are issued by the company or its subordinate

Group companies subscription rights to new shares to the extent that they would be entitled

following the exercise of option or conversion rights, or satisfaction of conversion obligations.

On February 10, 2011, a resolution was passed by the Managing Board, with Supervisory Board

assent, to resume the capital increase from authorized capital that had been postponed in November

2010. The capital increase was implemented on March 3, 2011 through issuing 8,698,326 ordinary

shares each with a notional share in the share capital of EUR 2.60. The issue price was EUR 3.00.

As a consequence, the share capital increased by EUR 22,615,647.60 to EUR 67,846,945.40. The

company’s authorized capital was thereby fully placed as part of the offering. The capital increase

was entered in the commercial register on March 4, 2011.

Conditional capital

The Ordinary Shareholders’ General Meeting of July 26, 2007 passed a resolution to approve a

conditional capital increase. The Managing Board was authorized until July 25, 2012, to issue once

or on several occasions by the company or by companies in the direct or indirect majority ownership

of the company (Group companies) options and/or convertible debentures with a total value of up

to EUR 100,000,000.00 with a term of up to 20 years (debentures), and to take over the guarantee

for such debentures issued by subordinate Group companies, and to grant the bearers or creditors

of debentures option and/or conversion rights to a total of up to 5,761,049 ordinary shares in the

company with a proportionate amount of the issued share capital of up to EUR 14,978,727.40

according to the more detailed specifics of the relevant terms of the debenture. The conditional

capital increase is only be performed to the extent that option or conversion rights arising from the

debentures are utilized, respectively conversion obligations arising from the debentures are satisfied,

and to the extent that no cash settlement is granted, or treasury shares are utilized to service them.

The Management Board is authorized to determine the further specifics relating to the performance

of the conditional capital increase (Conditional Capital 2007/I). The conditional capital was entered

in the commercial register on September 21, 2007.

The Ordinary General Shareholders’ Meeting of ALNO AG on June 23, 2010, cancelled the authorization

that was approved by the General Shareholders’ Meeting of July 26, 2007 to issue bonds with

warrants and/or convertible bonds, as well as the Conditional Capital 2007/I.


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According to the wording of the resolution, the Managing Board was authorized until June 22, 2015

to issue bonds with warrants and/or convertible bonds with a total nominal amount of up to EUR

100,000,000.00 with a term of up to 20 years, once or on several occasions, by the company,

or companies in the direct or indirect majority ownership of the company (“subordinate Group

companies”), and to guarantee such bonds with warrants and/or convertible bonds issued by the

company’s subordinate Group companies. The bearers or creditors of bonds with warrants and/or

convertible bonds are to be granted option and/or conversion rights to a total of up to 8,698,326

ordinary no par value shares in the company with a notional amount in the issued share capital of up

to EUR 22,615,647.60 according to the more detailed specifics of the relevant terms of the bonds

with warrants and/or convertible bonds (“terms”).

The conditional capital increase is to be implemented only to the extent that the warrants and/or

conversion rights from the warrants and/or convertible bonds are utilized, or the conversion obligations

from the bonds are fulfilled, and to the extent that a cash compensation cannot be granted,

or treasury shares used, to fulfill the obligation. The Managing Board is authorized to determine the

further specifics relating to the performance of the conditional capital increase (Conditional Capital

2010). The conditional capital was entered in the commercial register on August 31, 2010.

Acquisition of treasury shares

By way of resolution of the Shareholders’ General Meeting July 29, 2009, the Managing Board

was authorized to acquire treasury shares pursuant to Section 71 Paragraph 1 Number 8 of the

German Stock Corporation Act (AktG). The authorization to acquire treasury shares up to 10 % of

the issued share capital entered in the balance sheet as of the date of the Shareholders’ General

Meeting was valid until January 29, 2011.

By way of a resolution of ALNO AG’s General Shareholders’ Meeting of June 23, 2010, the existing

authorization to acquire and utilize treasury shares was cancelled. According to the wording of the

resolution of June 23, 2010, the Managing Board was authorized to acquire treasury shares up to

10 % of the share capital existing at the date of the resolution pursuant to Section 71 (1) Number 8

of the German Stock Corporation Act (AktG). The authorization may be exercised either wholly or

in partial amounts, once or on several occasions, in the pursuit of one or several purposes by the

company, or by third parties on the company’s behalf. The acquired shares, together with other

treasury shares, may at no time exceed 10 % of the issued share capital. The authorization came

into effect on June 24, 2010, and is valid until June 22, 2015.

Shares are acquired at the Managing Board’s election either through the stock market or by means

of a public purchase offer addressed to all of the company’s shareholders.

If the purchase is implemented via the stock market, the consideration paid by the company for

each share (excluding incidental purchase costs) may be neither more than 10 % more, nor more

than 10 % less, than the company’s stock market share price calculated on the stock market trading

day at the opening auction on the XETRA electronic trading system (or a comparable successor

system) of the Frankfurt Stock Exchange.

If the purchase is implemented through a public purchase offer to all of the company shareholders,

the offered purchase price, or the threshold limits of the purchase price range, per share (excluding

incidental purchase costs) may be neither more than 20 % more, nor more than 20 % less, then

the average closing price of the company’s shares on the XETRA electronic trading system (or a

comparable successor system) of the Frankfurt Stock Exchange on the last three stock market

trading days before the publication of the offer. The offer can be adjusted if significant price fluctuations

arise after the publication of the offer. In this instance, reference is made to the corresponding

average closing price on the last three stock market trading days before the publication of the

adjustment. The volume of the offer can be limited. If the offer is oversubscribed, acceptance must

be on the basis of the ratio of the respective shares offered. Provision can be made for a preferential

acceptance to purchase offered shares in small unit volumes of up to 100 shares per shareholder.


126

The Managing Board is authorized, with the Supervisory Board’s assent, to utilize the company’s

shares, which are acquired on the basis of this authorization or on the basis of an authorization that

was issued at an earlier time, for the following purposes:

The shares may also be sold in another manner than through the stock market or by offer to all

shareholders, if the shares are sold in return for cash payment at a price that is not significantly less

than the company’s stock market price at the time of disposal. This authorization applies only to the

extent, however, that shares sold on the basis of this authorization may not exceed a proportional

amount equivalent to a total of 10 % of the share capital, neither on the date when this authorization

becomes effective, nor on the date when this authorization is exercised. The maximum 10 % limit

reduces by the proportional amount of the share capital attributable to those shares that are issued

during the duration of this authorization as part of a capital increase under exclusion of subscription

rights pursuant to Section 186 (3) Sentence 4 of the German Stock Corporation Act (AktG). The

10 % maximum limit is also reduced by the proportional amount of the share capital attributable to

those shares that were issued to service bonds with conversion or option rights, or which are to

be issued, to the extent that the bonds were issued during the period of this authorization under

exclusion of subscription rights in corresponding application of Section 186 (3) Sentence 4 of the

German Stock Corporation Act (AktG).

The shares may be sold in return for non-cash payment, particularly also in connection with the

business combinations, and the acquisition of companies, parts of companies, and participating

interests in companies.

The shares may be offered for purchase to individuals who are employed by the company or by its

associated companies.

The shares may be utilized to satisfy the company’s obligation arising from bonds with warrants

and/or convertible bonds that are issued or guaranteed by it in the future.

The authorization may be exercised either wholly or in partial amounts, once or on several occasions,

and in the pursuit of one or several purposes by the company. Shareholders’ subscription rights

to these treasury shares are excluded to this extent. Above and beyond this, the Managing Board,

with Supervisory Board assent, may exclude subscription rights for fractional amounts when selling

treasury shares as part of an offer to all of the company’s shareholders.

The Managing Board is also authorized to withdraw and cancel the acquired treasury shares, with

the Supervisory Board’s assent, and without a further resolution being required to be passed by

the Shareholders’ General Meeting.

b. Capital reserve

The capital reserve changed as follows during the year under review:

In EUR thousand

Balance at January 1, 2009 36,544

Changes 2009 0

Balance at December 31, 2009 36,544

Changes 2010 5,893

Balance at December 31, 2010 42,437

As part of the capital increases in 2010, surplus amounts of EUR 5,893 thousand were added to

the capital reserve.


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c. Accumulated other comprehensive income

With regard to the changes in accumulated other comprehensive income, please refer to the statement of

changes in consolidated equity, and the consolidated statement of comprehensive income.

Accumulated other comprehensive income includes consolidated retained earnings, the IPO costs taken

directly to equity, the currency translation reserve, and other transactions taken directly to equity.

Consolidated retained earnings include the accumulated consolidated earnings for the reporting period,

IPO costs taken directly to equity, and the reserve arising from re-measurements applied as of the date of

first-time application of IFRS. The receivables waiver of EUR 4,909 thousand (previous year: EUR 5,000

thousand) that was issued by the shareholders was also carried under this item in the year under review.

The other transactions taken directly to equity relate to the actuarial gains and losses from the pension

provisions, changes in the fair value of securities, and the respective associated deferred taxes. The

amounts reported in 2010 are presented in the consolidated statement of comprehensive income.

d. Capital management

The Group has negative consolidated equity of EUR 69,722 thousand, which is composed as follows:

In EUR thousand 31/12/2010 31/12/2009

Subscribed capital 45,231 41,124

Capital reserve 42,437 36,544

Accumulated other comprehensive income – 157,390 – 148,800

Total – 69,722 – 71,132

The restructuring agreement was signed on February 7, 2011 includes significant equity enhancement

measures of approximately EUR 80.0 million, which are described in detail in Section O.

“Events after the balance sheet date”.

This measure aims at a significant improvement in consolidated equity.

The ALNO Group’s net financial debt increased by EUR 16,137 thousand in the fiscal year, and is

as follows:

31/12/2010 in

EUR thousand

31/12/2009 in

EUR thousand

Change in

EUR thousand

Change in

percent

Shareholder loans and other financial liabilities

non-current 13,057 14,129 – 1,072 – 7.6

current 73,495 93,122 – 19,627 – 21.1

86,552 107,251 – 20,699 – 19.3

Less cash and cash equivalents – 3,041 – 2,857 184 6.4

Net financial debt 83,511 104,394 – 20,883 – 20.0

Total assets 157,698 165,026 – 7,328 – 4.4

Net financial debt as % of total assets 53.0 % 63.3 %

Net financial debt fell by EUR 20,883 thousand year-on-year, or 20.0 %. This is mainly due to receivables

waivers by shareholders in an amount of EUR 4,909 thousand and by the financing banks in an amount

of EUR 10,000 thousand, as well as to the cash inflows of EUR 10,000 thousand from the capital

increases performed in the 2010 fiscal year that were used to redeem debt. This decline is offset by

an increase in trade payables of EUR 7,921 thousand, as a consequence of which total assets fell


128

by EUR 7,320 thousand year-on-year, or 4.4 %. The decline in total assets was mainly due to lower

trade receivables in a year-on-year comparison. This also reflects the factoring that was introduced at

two subsidiaries. In overall terms, net financial debt relative to total assets fell from 63.3 % to 53.0 %.

ALNO AG’s equity in its single-entity (German Commercial Code/HGB) financial statements as of

December 31, 2010 amounted to EUR 31,279 thousand (previous year: EUR 30,993 thousand). The

increase in equity of EUR 286 thousand is due to the shareholders’ receivables waivers in an amount of

EUR 4,909 thousand, and the total of EUR 10,000 thousand of capital increases implemented in 2010,

which is offset by the net loss for the year. ALNO AG monitors changes in its equity on a monthly basis.

11. PENSION PROVISIONS

The ALNO Group’s employee pension scheme essentially rests on defined benefit pension commitments.

As a rule, period of service and pensionable compensation are the determinants of the

calculation of pensions. The commitments mentioned are measured on the basis of expert actuarial

opinions. The legal, economic and fiscal circumstances in the country concerned form the basis for

the opinions. The measurement parameters are consequently country-specific.

The provisions are valued according to the projected unit credit method pursuant to IAS 19, taking

future developments into account. In Germany, which, at over 99.9 % (previous year: 99.2 %),

constitutes the major part of the provision, a discounting rate of 5.4 % (previous year: 6.0 %) is used

as a base. Abroad, the discounting rate is 5.4 % (previous year: 5.8 %).

Existing commitments are measured in Germany with an increase in wages and salaries of 1.0 %

(previous year: 1.0 %), and an average increase in pensions of 1.0 % and 1.5 % respectively (previous

year: 1.0 % and 1.5 % respectively). No increase in wages and salaries is assumed abroad. The

average pension increase abroad is assumed to be 5,0 % (previous year: 5,0 %). Staff turnover is

ascertained on a company-by-company basis, and is calculated in Germany at 0.0 % and 1.0 %

respectively (previous year: 0.0 % and 1.0 % respectively). A staff turnover rate of 3.6 % is assumed

abroad (previous year: 3.6 %).

The expected return on plan assets is calculated with an interest rate of 4.2 % in Germany and 3.4 %

abroad (previous year: 4.5 % and 3.4 % respectively). The expected return on plan assets corresponds

to the average yield on the long-term investments on which the plan assets are based. There was

actual income on plan assets of EUR 140 thousand (previous year: expense of EUR 18 thousand).

Plan assets abroad are invested in the form of long-term life insurance; investment in plan assets in

Germany is handled centrally by Allianz Global Investors. The plan assets reported in the balance

sheet are not used by the company itself.

The following amounts were recognized in the consolidated income statement:

In EUR thousand 2010 2009

Current service costs 31 22

Interest expense 1,003 961

Expected return on plan assets – 43 – 41

991 942


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Apart from the interest expense, which is reported under financial expenses, the expenses are

recognized under expenses for retirement benefits.

In EUR thousand 2010 2009 2008 2007 2006

Defined benefit obligation financed by provisions 16,957 16,061 16,258 16,651 18,793

Defined benefit obligation financed by funds 1,236 1,132 936 1,184 1,369

Defined benefit obligation (DBO) 18,193 17,193 17,194 17,835 20,162

Fair value of plan assets – 1,220 – 992 – 888 – 1,083 – 1,112

Pension provision 16,973 16,201 16,306 16,752 19,050

Experience gains (–) or losses (+) – 117 429 – 30 38 – 200

The changes in the present value of the defined benefit obligations are as follows:

In EUR thousand 2010 2009

Obligation at the start of the fiscal year concerned 17,193 17,194

Interest expense 1,003 961

Current service costs 31 22

Pension payments during the period – 1,030 – 1,028

Actuarial gains (–) or losses (+) 970 9

Currency translation 26 35

Obligation at the end of the relevant fiscal year 18,193 17,193

The changes in the fair value of the plan assets are as follows:

In EUR thousand 2010 2009

Plan assets at the start of the relevant fiscal year 992 888

Expected return on plan assets 43 41

Employer contributions 70 67

Actuarial gains (+) or losses (-) 97 – 36

Currency translation 18 32

Plan assets at the end of the relevant fiscal year 1,220 992

The actuarial gains and losses include an actuarial loss of EUR 51 thousand (previous year: EUR 79

thousand) owing to the observation of the upper limit pursuant to IAS 19.58 (b). The change was reported

directly under equity with other actuarial gains and losses in an amount of EUR – 822 thousand. Actuarial

losses amounted to EUR – 726 thousand as of the balance sheet date (previous year: actuarial gain of

EUR 147 thousand).


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12. OTHER PROVISIONS

In EUR thousand 1.1.2010 Utilization Reversal Transfer Addition

Currency

difference 31/12/2010

Non-current

provisions

Personnel expenses 5,061 – 321 – 44 – 1,873 631 0 3,454

Legal retention

requirements 396 0 – 80 0 3 0 319

Current

provisions

5,457 – 321 – 124 – 1,873 634 0 3,773

Guarantees, damage

compensation, and

pending losses 1,542 – 1,036 – 183 0 1,190 10 1,523

Restructuring 351 – 81 – 270 0 3,697 0 3,697

Financial statement and

tax consultancy costs 380 – 364 – 16 0 359 3 362

Personnel expenses 1,658 – 1,595 – 50 1,873 88 0 1,974

Taxes 90 – 66 0 0 131 1 156

Total 4,021 – 3,142 – 519 1,873 5,465 14 7,712

The provisions for personnel expenses primarily consist of provisions for partial retirement arrangements

customary in Germany. The provision for partial retirement comprises expenses for wages

and salary payments to staff members in their release phase (fulfillment arrears), and additional

top-up amounts for the entire residual duration of partial retirement. In addition, severance payments

within the framework of partial retirement amounting to EUR 194 thousand (previous year: EUR

275 thousand) are included. Calculation of the provision takes into account a discounting rate of

3.5 % (previous year: 2.3 %). An amount of EUR 268 thousand (previous year: EUR 555 thousand) is

reported under other non-current assets for the anticipated refunds from the Federal Labor Agency

in respect of entitlements under the Partial Retirement Act.

The provision for guarantees, compensation for damage, and anticipated losses includes free-ofcharge

deliveries owing to faulty goods, missing parts, and other defects, which are measured at

their manufacturing cost in production. Furthermore, the provision covers risks in connection with

claims for compensation for damages from customers and suppliers, which are recognized at the

level of the anticipated recourse. In addition, provisions are recognized for anticipated losses on

delivery commitments for which the unavoidable costs of their performance exceed the expected

economic benefit.

The restructuring provision includes expenses for severance pay and layoff salaries that are still

anticipated, as well as payments as part of the employment and qualification company that are still

outstanding.

The non-current provisions relating to partial retirement agreement will be consumed mainly within

the next two years. The other non-current personnel provisions and the retention provision will be

consumed within the next ten years.


131

13. SHAREHOLDER LOANS

During the fiscal year, there were financial liabilities of EUR 365 thousand (previous year: EUR 5,375

thousand), which were granted by shareholders of ALNO AG.

14. OTHER FINANCIAL LIABILITIES

In EUR thousand

31/12/2010

Total

Residual term

Up to one year 1 to 5 years More than 5 years

Liabilities to banks 80,798 67,741 7,378 5,679

Miscellaneous financial liabilities 5,389 5,389 0 0

Total 86,187 73,130 7,378 5,679

In EUR thousand

31/12/2009

Total

Total

Residual term

Up to one year 1 to 5 years More than 5 years

Liabilities to banks 94,456 80,327 7,808 6,321

Derivative financial instruments 1,015 1,015 0 0

Miscellaneous financial liabilities 6,045 6,045 0 0

Total 101,516 87,387 7,808 6,321

Apart from loans that are regularly prolonged under master agreement with banks, there are loans

on which monthly, quarterly, semi-annual or annual repayments are made.

Some of the loan agreements carry variable rates of interest, and some carry fixed rates of interest.

The interest rates vary mainly between 4.3 % p.a. and 9.0 % p.a. (previous year: between 4.5 %

p.a. and 9.5 % p.a.).

Liabilities to banks include foreign-currency loans amounting to GBP 792 thousand (previous year:

GBP 634 thousand) and CHF 1,600 thousand (previous year: CHF 1,925 thousand).

The miscellaneous financial liabilities essentially result from supplier factoring.

Covenants were agreed for one subsidiary’s loan. These relate to the equity ratio, and the upper

limit for calculated Group cost transfers. The agreed covenants had not been breached as of the

balance sheet date.

The liabilities to banks are secured by mortgages and assignment of entitlements to the restitution

of free portions of mortgages, and by the assignment of machines and technical plant as security.

Furthermore, the liabilities to banks are secured by the assignment of receivables and claims from the

supply of goods and services to customers, and from central claims settling agencies, by the pledging

of non-capitalized brand name rights, the assignment of stocks of goods, as well as the pledging of the

limited partnership interests in Gustav Wellmann GmbH & Co. KG, Enger, and the shares in Casawell

Service GmbH, Enger, Impuls Küchen GmbH, Brilon, and pino Küchen GmbH, Coswig (Anhalt).

As of the balance sheet date, the assets provided as collateral were reported in the consolidated

balance sheet with the following carrying amounts:

In EUR thousand 31/12/2010 31/12/2009

Land and buildings 45,486 47,861

Technical plant and machinery 6,002 4,907

Inventories 14,184 14,349

Trade accounts receivable 14,408 26,996


132

15. DEFERRED GOVERNMENT GRANTS

The deferred government grants amounting to EUR 781 thousand (previous year: EUR 807 thousand)

include investment subsidies for a subsidiary in the new federal states. In the fiscal year, EUR 26

thousand (previous year: EUR 36 thousand) was released to profit or loss.

16. TRADE PAYABLES AND OTHER LIABILITIES

In EUR thousand

31/12/2010

Total

Residual term

Up to one year 1 to 5 years More than 5 years

Trade payables 80,396 80,396 0 0

Other liabilities 30,782 30,700 82 0

of which customer bonuses 15,952 15,952 0 0

of which personnel 7,249 7,249 0 0

of which invoices outstanding 2,716 2,716 0 0

of which other taxes 1,426 1,426 0 0

of which relating to social security 315 315 0 0

of which finance leases 49 49 0 0

Total 111,178 111,096 82 0

In EUR thousand

31/12/2009

Total

Residual term

Up to one year 1 to 5 years More than 5 years

Trade payables 72,475 72,475 0 0

Other liabilities 29,721 29,569 152 0

of which customer bonuses 13,916 13,916 0 0

of which personnel 6,106 6,106 0 0

of which invoices outstanding 2,882 2,882 0 0

of which other taxes 2,375 2,375 0 0

of which relating to social security 276 276 0 0

of which finance leases 172 123 49 0

Total 102,196 102,044 152 0

The liabilities for finance leasing are as follows:

31/12/2010

In EUR thousand

Maturity

Up to one year 1 to 5 years More than 5 years

Nominal lease payments 52 0 0

Discounting – 3 0 0

Present values 49 0 0

31/12/2009

In EUR thousand

Maturity

Up to one year 1 to 5 years More than 5 years

Nominal lease payments 132 52 0

Discounting – 9 – 3 0

Present values 123 49 0


133

E. DISCONTINUED OPERATIONS

In fiscal 2007, the profit/loss of GEBA Möbelwerke GmbH, Löhne, (GEBA), which was sold in April

2007, and the profit/loss arising from the deconsolidation of the company, were reported separately

from the profit/loss from continuing operations in the consolidated income statement. In the 2009

fiscal year, a settlement agreement was reached with the purchasers at that time, which led to the

release of the provision for legal costs amounting to EUR 407 thousand, which was recognized in

2007 in the profit/loss from discontinued operations. For this reason, the income from the release

was also reported in the profit/loss from discontinued operations in the previous year.

F. NOTES TO THE CONSOLIDATED

CASH FLOW STATEMENT

GENERAL INFORMATION

In accordance with IAS 7 (Cash Flow Statements), the consolidated cash flow statement shows how

the Group’s cash and cash equivalents have changed due to cash flows from operating, investing

and financing activities, as well as due to fluctuations in exchange rates over the course of the year

under review.

The composition of cash and cash equivalents as of the relevant fiscal year-end can be seen under D.9.

RESULTS

In the case of net cash and cash equivalents employed for operating activities, there was a cash

inflow of EUR 11,540 thousand in the year under review (previous year: EUR 21,210 thousand).

The decline of EUR 9,670 thousand results primarily from a reduction in cash flow from operating

activities before working capital changes. This worsened by EUR 11,057 thousand, from EUR 4,303

thousand to EUR – 6,754 thousand. After a working capital reduction of EUR 16,907 thousand in the

previous year, a further reduction of EUR 18,294 thousand was achieved in 2010. The introduction

of factoring at two subsidiaries exerted a particularly positive impact in this context. This allowed

a significant reduction in capital tied up in trade accounts receivable. These fell by EUR 14,638

thousand year-on-year.

In terms of investing activities, there was a cash outflow of EUR 14,300 thousand in the year under

review, compared with EUR 15,967 thousand in the previous year. The decline results primarily from

the reported cash outflows arising from the sale of various pieces of land at the Pfullendorf location.

The EUR 7,791 thousand increase in cash flow from financing activities to EUR 2,488 thousand

arises especially from the cash inflows of EUR 10,000 thousand from the two capital increases that

were implemented in 2010. The cash outflows for the capital increase that was performed in 2011

were also reported in cash flow from financing activities.


134

G. NOTES ON SEGMENT REPORTING

Within the framework of segment reporting, the ALNO Group’s activities are classified by operating

segments in accordance with the rules of IFRS 8. Segments that are reported to the Managing

Board are not summarized. This classification is orientated towards internal steering and reporting,

and comprises the ALNO, Wellmann, Impuls, pino, Foreign Subsidiaries, and Other Companies

segments.

The ALNO segment includes ALNO AG in Düsseldorf, which produces brand-name kitchens in the

upper and middle price segments at the Pfullendorf site, whereas the Wellman segment contains

kitchens in the middle price segment, which are manufactured at the Enger location. The Impuls

segment comprises Impuls Küchen GmbH in Brilon, and the pino segment pino Küchen GmbH in

Coswig (Anhalt); both produce kitchens in the lower price segment. The sales companies in other

European countries are aggregated under Foreign Subsidiaries. Two property companies and one

intermediate holding company are reported under Other Companies.

The segment information is based on the same reporting, accounting and valuation methods as the

consolidated financial statements. Internal revenues indicate the level of revenues between Group

companies; these were performed at market prices.

The plenary Managing Board is the decision-maker with regards to the allocation of resources and

the assessment of the profitability of the reporting segments.

The segment information by operating segments is as follows:

2010

By segment in EUR thousand

ALNO

WELL-

MANN IMPULS PINO ATG Other FS Total

Revenues

External revenues 98,331 130,067 117,966 93,252 27,681 0 0 467,297

Internal revenues 5,502 7,484 3,299 367 0 1,724 – 18,376 0

Total revenues 103,833 137,551 121,265 93,619 27,681 1,724 – 18,376 467,297

Result

Segment result before income taxes (EBT) – 20,218 – 9,694 7,754 4,748 – 315 665 4,882 – 12,178

Taxes on income – 124 – 291 – 13 106 – 458 – 73 – 53 – 906

Net profit/loss for the period – 20,342 – 9,985 7,741 4,854 – 773 592 4,829 – 13,084

Depreciation/amortization 656 4,337 2,743 1,839 210 87 – 93 9,779

Impairment losses 2,293 0 0 0 215 0 – 183 2,325

Financial income 10,376 18 775 724 43 0 – 1,554 10,382

Financial expenses 10,360 3,795 1,168 937 458 819 – 6,002 11,535

Profit/loss from investments accounted

for using the equity method 0 0 0 0 0 0 93 93

Assets and liabilities

Segment assets 107,917 56,335 38,061 28,165 9,212 64,034 – 146,026 157,698

Segment liabilities 134,206 55,312 30,960 23,230 10,020 10,771 – 37,079 227,420

Investments accounted for using

the equity method 4,000 0 0 0 0 0 – 1,819 2,181

Segment information

Investments 3,356 6,158 2,978 3,292 11 0 0 15,795


135

2009

By segment in EUR thousand

ALNO

WELL-

MANN IMPULS PINO ATG Other FS Total

Revenues

External revenues 103,258 122,089 99,947 86,631 81,448 0 0 493,373

Internal revenues 31,186 14,451 9,732 3,955 17 1,715 – 61,056 0

Total revenues 134,444 136,540 109,679 90,586 81,465 1,715 – 61,056 493,373

Result

Segment result before income taxes (EBT) – 37,759 617 5,516 6,350 1,457 – 4,969 – 10,413 – 39,201

Taxes on income 665 – 26 136 – 44 – 237 – 632 – 32 – 170

Profit/loss on discontinued operations 407

Net profit/loss for the period – 37,094 591 5,652 6,306 1,220 – 5,601 – 10,445 – 38,964

Depreciation/amortization 6,672 4,431 2,913 1,796 309 265 – 185 16,201

Impairment losses 15,954 0 0 0 0 5,393 2,638 23,985

Financial income 2,672 32 1,027 1,366 122 0 – 5,081 138

Financial expenses 20,506 6,788 1,505 1,275 685 869 – 15,094 16,534

Profit/loss from investments accounted

for using the equity method 0 0 0 0 0 0 109 109

Assets and liabilities

Segment assets 104,690 50,917 40,061 30,825 17,690 64,112 – 143,269 165,026

Segment liabilities 138,173 42,623 32,920 25,727 18,456 11,444 – 33,185 236,158

Investments accounted for using

the equity method 4,000 0 0 0 0 0 – 2,070 1,930

Segment information

Investments 5,029 6,415 2,782 1,767 143 0 – 25 16,111

The consolidated revenues eliminate internal revenues within the ALNO Group.

The consolidation entries in the “Segment profit/loss before income taxes” line are composed as

follows:

In EUR thousand 2010 2009

Equity consolidation 4,481 7,341

Consolidation of liabilities – 444 – 18,170

Other consolidation entries 845 416

Total 4,882 – 10,413

The other consolidation entries relate to the elimination of intra-Group inventories, impairment losses

applied at Group level, and the earnings effect arising from at-equity measurement.

The figures in the consolidation column for depreciation/amortization and impairment losses arise

from impairment losses applied at Group level. In addition, the previous year’s impairment losses

included goodwill impairment losses of EUR 2,535 thousand.


136

The consolidation entries in the area of financial income and expenses comprise the elimination

of intra-Group interest payments, and the elimination of intra-Group impairment losses applied to

participating interests in an amount of EUR 4,418 thousand (previous year: EUR 9,952 thousand).

The consolidation entries in the segment assets area are composed as follows:

2010 2009

Equity consolidation – 108,367 – 110,770

Consolidation of liabilities – 30,718 – 26,174

At equity measurement – 1,819 – 2,070

Other consolidation entries – 5,122 – 4,255

Total – 146,026 – 143,269

Other consolidation entries relate to the netting of deferred taxes applied at Group level in an

amount of EUR 4479 thousand (previous year: EUR 3887 thousand), the elimination of intra-Group

inventories, and impairment losses applied to non-current assets.

The consolidation entries in the segment liabilities area are composed of the elimination of intra-

Group liabilities, and the netting of deferred taxes.

Regional revenues are calculated on the basis of the delivery location. The ALNO Group has no

external customer that generates 10 % or more of total revenue.

Total revenues by region in EUR thousand 2010 2009

Germany 334,620 346,103

Rest of Europe 108,089 133,512

Rest of the World 24,588 13,758

Total 467,297 493,373

Intangible assets, property, plant and equipment,

and investments measured at equity in EUR thousand 2010 2009

Germany 79,536 77,269

Rest of Europe 11 122

Total 79,547 77,391


137

H. MANAGEMENT OF FINANCIAL RISKS

1. RISK MANAGEMENT PRINCIPLES

The essential features of financial policy are laid down annually by the Managing Board, and monitored

by the Supervisory Board. Group Treasury is responsible for implementing financial policy, and

also for day-to-day risk management. Certain transactions require the approval of the Managing

Board, which is, moreover, kept regularly informed about the extent and amount of the current risk

assessment. Group Treasury regards the effective management of market risk as one of its main

responsibilities. In order to be able to assess the effects of different conditions on the market,

simulation calculations are performed using various worst-case and market scenarios.

The Group is exposed to financial risks arising from financial assets and liabilities, and also from

forecast transactions. Financial assets such as trade receivables, and cash and cash equivalents,

result directly from day-to-day business activities. Furthermore, financial assets include the securities

that serve to secure partial retirement entitlements. Financial liabilities particularly include bank

loans and current account overdrafts, as well as trade payables. The main purpose of the financial

liabilities is to finance the Group’s business operations.

The Group’s main risks arising from financial assets and liabilities include interest-rate fluctuations

risks, and also liquidity, foreign currency, and default risks.

The risk of changes in the fair value of securities (price risk) does not represent a material risk from

the Group’s point of view, owing to the low-risk investment strategy.

2. CURRENCY RISKS

Currency risk describes the risk that the fair value or future cash flows of monetary items may be

affected by exchange rate fluctuations.

Currency risks generally arise from investments, financing measures, and operations undertaken in

a currency other than the company’s functional currency. By contrast, the Group Treasury function

generally does not closely follow foreign currency risks that do not affect the Group’s cash flows,

for example, arising from the translation of the assets and liabilities of foreign company units to the

Group’s currency.

There was no major risk in the investment area as of the balance sheet date.

Foreign currency risks in the financing area arise from bank loans and current account overdrafts

denominated in foreign currencies, as well as loans in foreign currency which have been granted

to finance Group companies.

With effect as of January 1, 2010, the plants based in Germany mainly supply and invoice customers

in Switzerland and the United Kingdom directly. Invoices are prepared in euros. For this reason, the

ALNO Group sales area incurs no significant currency risks.


138

The following table shows the sensitivity of the Group’s earnings before income taxes to changes

in the fair value of monetary foreign currency items. There are no effects impacting equity directly.

Rate changes

Effect on earnings in EUR thousand

Income (+) / expense (–)

GBP CHF GBP CHF

2010 + 10.0 % + 10.0 % + 248 + 102

– 10.0 % – 10.0 % – 248 – 102

2009 + 10.0 % + 10.0 % + 220 + 168

– 10.0 % – 10.0 % – 220 – 168

3. INTEREST-RATE FLUCTUATION RISKS

Interest-rate fluctuation risk is the risk that the fair value or future cash flows of financial assets and

liabilities might fluctuate owing to changes in interest rates on the market. The Group is subject

to interest-rate fluctuations primarily in the Eurozone. In order to minimize the effects of interestrate

fluctuations in these areas, ALNO AG manages the interest-rate risk for net financial liabilities

denominated in euros. Financial liabilities in foreign currency exist only to a minor extent. In 2008,

derivative financial instruments with a nominal volume of EUR 50,000 thousand and a term until

August 2010 were executed to hedge against interest-rate fluctuations risks. There were no longer

any derivative financial instruments as of the balance sheet date.

In the following interest-rate sensitivity analysis, only those financial liabilities are taken into account

that carry variable interest. The sensitivity analysis was prepared on the assumption that the level of

the financial liabilities, and also the relationship between fixed and variable interest, remain constant.

If the market interest-rate level as of December 31, 2010 had been 150 basis points (previous year:

100 basis points) higher (lower), the Group net income/loss, and consequently also its equity, would

have been EUR 1,451 thousand (previous year: EUR 539 thousand) lower (higher).

4. DEFAULT RISKS

Default risk is the risk that contractual partners in the area of financial assets might fail to meet their

payment obligations.

In business operations, outstanding accounts are continuously monitored by area, in other words,

on a decentralized basis. As part of the Group’s receivables management, minimum creditworthiness

requirements, as well as upper exposure limits, are laid down for all ALNO Group business

partners. The basis in this context is a prescribed limits system, compliance with which is continuously

monitored. In addition, the ALNO Group secures trade receivables with commercial credit

insurance, which reimburses the loss incurred up to the contractually agreed amount in the event

of a receivables default. Default risks are accounted for by means of individual value allowances.

Trade receivables are secured by commercial credit insurers, and by the del credere liability of the

central claims settling agencies with an overall ratio of 90 % (previous year: 90 %). Companies within

the ALNO Group decide on a specific case basis whether credit insurance is to be utilized.


139

Kitchens manufactured by the ALNO Group are primarily sold in Germany to furniture and specialist

kitchen wholesalers/retailers, as well as self-service and cash-and-carry markets, which are predominantly

organized into purchasing associations. Around 84 of kitchen furniture is sold via such

purchasing associations. Due to these market structures, the ALNO Group depends on a limited

number of customers. The default risk of individual large customers, however, is met by commercial

credit insurance or the del credere liability of the central claims settling agencies.

The maximum default risk is expressed by the carrying amounts of the financial assets recognized

in the balance sheet.

An overview of the default risk for unimpaired financial assets, and changes in specific valuation

allowances, is presented under item D.6. “Trade accounts receivable”.

5. LIQUIDITY RISKS

Liquidity risk refers to the risk that the Group might encounter difficulties with the contractual settlement

of its financial liabilities.

ALNO AG acts as financial coordinator for all Group companies so as to ensure the most advantageous

and permanently adequate cover of financing needs for business operations. The necessary

information potential is updated monthly, and is subjected to a divergence analysis within the

framework of rolling financial planning with a one-year planning horizon.

This financial forecast is supplemented by daily cash flow development forecast for the domestic

companies that is continuously reconciled with actual cash flows. The foreign companies are

updated monthly. ALNO AG continuously monitors the liquidity reserves on hand.

The intra-Group financial equalization carried out in Germany within the framework of cash pooling,

which takes into consideration statutory regulations from the subsidiaries’ perspective, leads

to a reduction in the volume of external financing with a positive effect on the Group’s net interest

result. The internal financial equalization ensures the use of liquidity surpluses of individual Group

companies for the internal financing of other Group companies. Cash pooling is managed on a

manual basis.

Receivables of Wellmann KG in a value of up to EUR 26,000 thousand, and of Impuls and pino in

a value of up to a total of EUR 20,000 thousand were also assigned in the past as part of factoring

agreements, in order to expand the requisite scope for liquidity maneuver for the ALNO Group. As

the result of the introduction of reverse factoring in 2007, payment target extensions to suppliers

were realized with a financing effect of up to EUR 3,600 thousand.

The contractually agreed interest and redemption payments of financial liabilities are presented in the

following table. All liabilities outstanding as of the balance sheet date, and for which payments were

contractually agreed, are included. Budget figures for future new liabilities are not included. Amounts

denominated in foreign currencies were in each case translated at the closing rate. The variable

interest payments were calculated on the basis of the last interest rates fixed before the balance

sheet date. Financial liabilities repayable on demand are always assigned to the earliest time frame.


140

In EUR thousand

Other financial liabilities

Carrying amount

31/12/2010

Due in

2011 2012 – 2015 2016 et seq.

Liabilities to banks 80,798 72,840 10,226 8,621

Miscellaneous financial liabilities 5,389 5,739 0 0

Trade payables 80,396 82,054 0 0

Shareholder loans 365 399 0 0

Loans under finance leases 49 52 0 0

In EUR thousand

Other financial liabilities

Carrying amount

31/12/2009

Due in

2010 2011 – 2014 2015 et seq.

Liabilities to banks 94,456 87,002 11,878 9,738

Miscellaneous financial liabilities 6,045 6,514 0 0

Derivative financial instruments 1,015 1,015 0 0

Trade payables 72,475 74,770 0 0

Shareholder loans 5,735 6,250 0 0

Loans under finance leases 172 132 52 0

With regard to the measures to secure the company’s continued existence and liquidity, please refer

to the remarks in the sections B.1. “Principles for the preparation of the financial statements” and O.

“Events after the balance sheet date”.

6. OTHER NOTES CONCERNING FINANCIAL ASSETS AND LIABILITIES

Fair value

The following table shows the carrying amounts and fair values of all financial assets and liabilities

recognized in the Group.

In EUR thousand 31/12/2010 31/12/2009

Financial assets Carrying amount Fair value Carrying amount Fair value

Cash and cash equivalents LaR 3,041 3,041 2,857 2,857

Trade receivables LaR 32,996 32,996 47,634 47,634

Financial receivables LaR 2,665 2,665 2,656 2,656

Securities AfS 3,426 3,426 3,274 3,274

Shares in investee companies AfS 5 * 5 *

Financial liabilities

Trade payables FLaC 80,396 80,396 72,475 72,475

Other liabilities

invoices outstanding FLaC 2,716 2,716 2,882 2,882

customer quantity rebates FLaC 15,952 15,952 13,916 13,916

Liabilities under finance leases ** 49 49 172 172

Shareholder loans FLaC 365 365 5,735 5,735

Derivative financial instruments FLHfT 0 0 1,015 1,015

Other financial liabilities FLaC 86,187 86,187 100,501 100,501

* Fair value cannot be measured reliably.

** Not a measurement category within the meaning of IAS 39.


141

Aggregated by measurement category as per IAS 39

In EUR thousand 31/12/2010 31/12/2009

Carrying amount Fair value Carrying amount Fair value

Loans and Receivables (LaR) 38,702 38,702 53,147 53,147

Available-for-Sale (AfS)

measured at fair value 3,426 3,426 3,274 3,274

measured at amortized cost 5 * 5 *

Financial liabilities held for trading (FLHfT) 0 0 1,015 1,015

Financial liabilities measured at cost (FLaC) 185,616 185,616 195,509 195,509

* Fair value cannot be measured reliably.

The reported securities are recognized entirely at market value.

The shares in investee companies are recognized at amortized cost since there is no active market

for them. Their fair value can also not be measured reliably in any other manner.

The carrying amounts of the current financial assets and liabilities correspond to their fair values

owing to their short terms.

The carrying amounts of the long-term financial assets and liabilities correspond to their fair values

owing to their interest rates being in line with the market.

The derivative financial instruments reported in the previous year were recognized entirely at fair

value. The calculation was performed on the basis of discounted future cash flows applying the

Black & Scholes method. This entailed utilizing market interest rates and volatilities applicable for

the residual duration of the financial instruments.

The following hierarchy is applied in order to determine and report the fair value of financial instruments:

• Level 1: Fair value is determined with the aid of prices quoted in active markets.

• Level 2: Fair values determined with the aid of measurement methods under which the input factors

relevant to fair value are based on observable market data.

• Level 3: Fair values determined with the aid of measurement methods under which the input factors

relevant to fair value are not based on observable market data.

Securities in an amount of EUR 3,426 thousand (previous year: EUR 3,274 thousand) that are measured

at fair value within the ALNO Group fall under Level 1, and derivative financial instruments in an amount

of EUR 0 thousand (previous year: EUR 1,015 thousand) fall under Level 2.

The following net gains and losses – by valuation category – arose on financial assets and liabilities:

2010 In EUR thousand Interest Impairment

Other net

gains/losses

Total

Loans and receivables 143 – 1,935 – 195 – 1,987

Available-for-sale (fair value) 0 0 43 43

Financial liabilities held for trading 0 0 – 130 – 130

Financial liabilities measured at cost – 9,800 0 10,520 720

2009 In EUR thousand Interest Impairment

Other net

gains/losses

Total

Loans and receivables 84 – 2,728 – 76 – 2,720

Available-for-sale (fair value) 0 0 48 48

Financial liabilities held for trading 0 0 – 1,200 – 1,200

Financial liabilities measured at cost – 12,790 0 674 – 12,116


142

The impairments on “loans and receivables” relate to the allocation to individual value allowances

on trade receivables. Other net gains and losses include income from the collection of receivables

written off, and from the reversal of individual value allowances, as well as expenses of writing off

receivables.

The other net gains and losses reported in the category “available-for-sale – measured at fair value”

include income from securities investments, and the unrealized value changes recognized in equity.

The other net losses in the “financial liabilities held-for-trading” category relate to the expenses

arising from derivative financial instruments.

Other net gains and losses from “financial liabilities measured cost” include income from derecognized

liabilities, the income from the declared receivables waiver including debtor warrant, and the

expense arising from the reporting date measurement of foreign currency loans.

I. CONTINGENCIES AND OTHER

FINANCIAL OBLIGATIONS

As of December 31, 2010, there are liabilities under guarantee agreements amounting to EUR 406

thousand (previous year: EUR 339 thousand).

The EUR 10,000 thousand loan waiver by the consortium banks includes a debtor warrant whereby

the liabilities are reactivated depending on the achievement of a given key quantity as of December

31, 2013. On the basis of current planning, it is not anticipated that this key quantity will be achieved.

There will also be a full waiver of the liability if the conditions mentioned under Point O. occur. The

last condition was satisfied on March 4, 2011.

Other financial obligations exist at the following levels:

In EUR thousand

Due in

2011

Due in

2012 – 2015

Due in

2016 and later Total

Rental and lease contracts

with third parties 3,680 5,531 1,204 10,415

Other contracts with third parties 12,324 31,230 11,596 55,150

Investment projects in progress 2,273 0 0 2,273

Supply contracts 2,550 1,600 800 4,950

Total 20,827 38,361 13,600 72,788

The investment projects in progress amounting to EUR 2,273 thousand relate in full to property,

plant and equipment.


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J. RELATED PARTIES

Insofar as they are not already included in the consolidated financial statements as consolidated

entities, persons or companies which can be controlled by the reporting entity, or which are able

indirectly or directly to exercise control over the reporting entity, are deemed to be related parties.

In detail, these are the following business relationships:

Group of persons Major shareholders Joint ventures

Business relationships

2010

In EUR thousand

2009

In EUR thousand

2010

In EUR thousand

2009

In EUR thousand

Procurement of goods and services 95,621 86,723 0 0

Interest expense 2,595 3,419 0 0

Interest income 0 0 101 0

Other expenses 7 19 0 0

Financial and trade receivables 0 0 2,311 2,100

Financial liabilities 1,455 6,198 0 0

Trade payables and other liabilities 50,626 49,288 0 0

Interest rate

6.5 % or 9 %

or Euribor + 9 %

3.5 % or 9 %

or Euribor + 9 % 3 % 0 %

Major shareholders with whom business relationships exist comprise (directly) Küchen Holding

GmbH, Munich, and IRE Beteiligungs GmbH, Stuttgart, and (indirectly) RCG International Opportunities

S.à r.l., Luxembourg, Cognis S.à r.l., Luxembourg, and Bauknecht Hausgeräte GmbH,

Stuttgart.

The joint venture relates to ALNO Middle East.

The amount for procured goods and services essentially relates to ALNO AG’s supply contract with

Bauknecht Hausgeräte GmbH, Stuttgart. This contract regulates the supply of electrical appliances

to the ALNO Group, and was concluded on conditions customary on the market. The supply

agreement has a term until November 30, 2015, and contains an interest-bearing overdraft facility.

As part of the service agreement with Küchen Holding GmbH, this company invoiced a total of

EUR 735 thousand for consultancy activities (previous year: EUR 315 thousand). In addition, EUR

207 thousand was invoiced for further consulting services and travel costs of a partner of Küchen

Holding GmbH (previous year: EUR 209 thousand).

Major shareholders declared a receivables waiver of EUR 4,909 thousand in the year under review

(previous year: EUR 5,000 thousand). This was reported directly to equity under accumulated

consolidated earnings.

The loans granted by major shareholders have a term until December 31, 2011.

Business transactions and compensation relating to members of executive bodies are listed in

section L.


144

K. SUPERVISORY BOARD AND

MANAGING BOARD

The SUPERVISORY BOARD consists of:

Shareholder representatives:

• Hans-Peter Haase, Neubiberg (Chairman) (until June 23, 2010)

Managing Director of Küchen Holding GmbH, Munich

• Henning Giesecke, Zell (Chairman) (from June 23, 2010)

Managing Director of GSW Capital Management GmbH, Munich, and

Managing Director of HBconbet GmbH, Zell

• Werner Devinck, Knokke-Heist, Belgium

General Manager of Bauknecht Hausgeräte GmbH, Stuttgart

• Dr. oec. Jürgen Diegruber, Gräfelfing

Managing Partner of German Capital GmbH, Munich

• Christoph Maaß, Jesteburg

General Manager of Borco-Marken-Import Matthiesen GmbH & Co. KG, Hamburg

• Anton Walther, Sulzbach/Taunus

Lawyer, auditor, tax consultant

• Armin Weiland, Berg

Managing Partner of German Capital GmbH, Munich

Employee representatives:

• Rudolf Wisser, Messkirch (Deputy Chairman)

Seconded Works Council member at ALNO AG, Düsseldorf

• Andreas Bilz, Minden (until June 23, 2010)

Trade Union Secretary at IG-Metall, Minden

• Michael Föst, Balingen (until June 23, 2010)

2 nd authorized representative/treasurer at IG Metall Albstadt

• Jörg Kespohl, Löhne

Commercial employee at Gustav Wellmann GmbH & Co. KG, Enger

• Gerhard Meyer, Brilon (until June 23, 2010, and again from August 26, 2010)

Works Council member at Impuls Küchen GmbH, Brilon

• Ralph Ossiander, Greifenberg (until June 23, 2010)

Head of Group Quality at ALNO AG, Düsseldorf


145

Further mandates exercised by Supervisory Board members in supervisory boards and other controlling

bodies in the meaning of Section 125 Paragraph 1 Clause 5 of the German Stock Corporation Act

(AktG) include:

• Hans-Peter Haase, Neubiberg

Managing Director of Alphaptose GmbH, Eutin (pro bono)

Managing Board member of Facionic AG, Cologne (pro bono)

• Henning Giesecke, Zell

Supervisory Board member of Rothenberger AG, Kelkheim

Deputy Supervisory Board Chairman at Endurance Capital AG, Munich

Deputy Supervisory Board Chairman at Leifeld Metal Spinning AG, Ahlen (from October 25, 2010)

Supervisory Board member at Kofler Energies AG, Munich (from November 30, 2010)

Administrative Board member at Erste Abwicklungsanstalt, Düsseldorf (from May 1, 2010)

Supervisory Board member at Ikaalisten Kylpnla OY, Helsinki (from December 17, 2010)

• Werner Devinck, Knokke-Heist, Belgium

Supervisory Board member at Bestuurder Whirlpool Benelux N.V., Strombeek-Bever, Belgium

Supervisory Board member at Bestuurder Whirlpool Nederland B.V., Breda, Netherlands

General Manager of Whirlpool Austria GmbH, Wiener Neudorf, Austria

General Manager of IRE Beteiligungs GmbH, Stuttgart

Administrative Board member of Bauknecht AG Schweiz, Lenzburg, Switzerland

• Dr. oec. Jürgen Diegruber, Gräfelfing

President of the Board of Directors at Caldergroup Swiss AG, St. Gallen, Switzerland,

and Director at Calder Finco UK Ltd, Chester, United Kingdom

Chairman of the Shareholder Committee, Milano Investments S.á r.L., Esch-sur-Alzette, Luxembourg

Member of the Board of Directors at Leclanché S. A., Yverdon-les-Bains, Switzerland

Member of the Board of Directors, Calder Group Limited, Chester, UK

• Christoph Maaß, Jesteburg

Supervisory Board member at Master Consulting AG, Frankfurt am Main

• Armin Weiland, Berg

Member of the Board of Directors at RES Finco AG, St. Gallen, Switzerland

Member of the Board of Directors at Leclanché S. A., Yverdon-les-Bains, Switzerland

Advisory Board member at Tarvos Investments GmbH, Munich

Chairman of the Board of Directors at RES NewCo AG, St. Gallen, Switzerland

Chairman of the Board of Directors at Energy Group Holding AG, St. Gallen, Switzerland

President of the Board of Directors at The Energy Holding AG, St. Gallen, Switzerland

Mr. Gerhard Meyer, employee representative on the Supervisory Board, was appointed by way of an

order of the Ulm Local Court of August 26, 2010.

The Supervisory Board members received payments of EUR 268 thousand for their activities in the

2010 fiscal year (previous year: EUR 310 thousand).

No fees were paid to Supervisory Board members for consultancy activities, as in the previous year.

As part of the service agreement with Küchen Holding GmbH, this company invoiced a total of

EUR 735 thousand for consultancy activities (previous year: EUR 315 thousand). The Supervisory

Board members held no shares as of December 31, 2010 (previous year: 1,000 shares).


146

THE MANAGING BOARD MEMBERS COMPRISE:

• Max Müller, Magglingen/Switzerland (Managing Board Chairman/CEO; responsible for Marketing,

Development, Production, Purchasing, Logistics and Quality) (from April 6, 2011)

• Jörg Artmann, Düsseldorf (Managing Board member responsible for Finance/CFO, Personnel, IT)

• Christoph Fughe, Bad Salzuflen (Managing Board member responsible for Sales, from April 6, 2011)

• Jörg Deisel, Witten (Managing Board Chairman/CEO; responsible for Sales, Marketing and Development)

(until April 6, 2011)

• Michael Paterka, Ravenstein (Managing Board member responsible for Purchasing, Logistics and

Quality) (until April 6, 2011)

The Managing Board members held 55,643 ordinary shares as of the balance sheet date (previous

year: 55,643).

COMPENSATION REPORT

Responsibility, objectives and structure of Managing Board compensation

The Supervisory Board transferred responsibility for determining the structure and level of ALNO AG

Managing Board compensation to the presidential committee, which, for its part, regularly informs

the Supervisory Board about its resolutions, and seeks approvals from the plenary board as required.

The Supervisory Board also holds consultations concerning the structure of the Managing Board

compensation system, and reviews it regularly.

The aim of the Managing Board compensation system is to appropriately remunerate Managing Board

members according to their area of activity and responsibility, and to thereby clearly and directly take

into account both joint and personal Managing Board performance, and corporate performance,

through a high degree of variability.

To this end, the compensation system includes individual fixed basic salaries, and variable compensation

components with medium- and long-term incentive effect and risk character. This structure, its

individual components, and the total compensation are reviewed every year in order to safeguard the

competitiveness and appropriateness of Managing Board compensation.

As a consequence, 2010 Managing Board compensation was composed of the following components

that are presented in detail below.

The fixed basic salary including non-cash compensation, which is paid out in 12 monthly installments,

is based on the area of responsibility of the relevant Managing Board member.

The variable compensation component, which is based on the company’s medium- and long-term

value trend, generally reflects the consolidated EBIT margin and consolidated free cash flow, as well

as individually agreed targets.

Level of Managing Board compensation in 2010

The following information includes payments that were pledged or granted to individual Managing Board

members of ALNO AG with respect to their activity as Managing Board members. Total Managing Board

compensation is calculated by adding cash payments together with monetary benefits arising from noncash

compensation. The latter primarily comprises the provision of company cars. A total of EUR 2,071

thousand was reported as expenditure in 2010 (previous year: EUR 1,148 thousand). Of this amount, EUR

979 thousand (previous year: EUR 948 thousand) was attributable to fixed compensation components, in

other words, compensation components that were unrelated to performance, and EUR 1,092 thousand


147

(previous year: EUR 209 thousand) to variable, performance-related compensation components with

medium- and long-term incentive effect. The variable compensation relates exclusively to 2010, including

extraordinary variable compensation of EUR 725 thousand, which was granted in April 2010.

Of the total expenses for 2010, EUR 1,186 thousand is attributable to Mr. Deisel (previous year: EUR

534 thousand), of which EUR 438 thousand (previous year: EUR 379 thousand) comprises fixed compensation

components, and EUR 748 thousand (previous year: EUR 155 thousand) comprises variable

compensation components (of which extraordinary: EUR 548 thousand). An amount of EUR 493 thousand

is attributable to Mr. Artmann (previous year: EUR 170 thousand), of which EUR 280 thousand (previous

year: EUR 163 thousand) comprises fixed compensation components, and EUR 213 thousand (previous

year: EUR 7 thousand) comprises variable compensation components (of which extraordinary: EUR

113 thousand). An amount of EUR 392 thousand is attributable to Mr. Paterka (previous year: EUR 299

thousand), of which EUR 261 thousand (previous year: EUR 261 thousand) comprises fixed compensation

components, and EUR 131 thousand (previous year: EUR 47 thousand) comprises variable compensation

components (of which extraordinary: EUR 64 thousand).

Pension plans

From October 1, 2010, a defined contribution pension plan for Mr. Deisel and his surviving dependents

was agreed for the event of entitlement (reaching the 60-year age limit, invalidity or death) for the duration

of his employment by the company, for which a total amount of EUR 400 thousand is paid annually. A

proportional amount of EUR 100 thousand was paid for this plan for the 2010 fiscal year. The amount

is paid proportionally along with monthly salary payments to Mr. Deisel’s separate pension account. As

a matter of principle, it is impossible for him to exert control over the pension account before the onset

of entitlement. There are otherwise no obligations arising from pension commitments or similar pension

regulations for the Managing Board members active during 2010.

Key commitments to one Managing Board member given early discontinuation of his activity

There are no arrangements to pay settlement fees to Managing Board members if they discontinue their

activities before the end of their employment contracts.

Payments to former Managing Board members of ALNO AG and their surviving dependents

Payments paid to former ALNO AG Managing Board members and their surviving dependents amounted

to EUR 447 thousand during the fiscal year (previous year: EUR 445 thousand). Provisions were formed

for a total of EUR 7,515 thousand (previous year: EUR 7,011 thousand) for pension obligations to former

Managing Board members and their surviving dependents.

Employee equity compensation plan

On October 22, 2007, the company set up an employee equity compensation plan (virtual stock option

program) with a term until October 21, 2009, which has been extended until October 21, 2010, as part

of which Managing Board members and leading ALNO Group employees may receive cash incentive

payments in addition to their compensation. A number of external consultants who had been working

on a long-term basis for ALNO AG were also included in the incentive program. Receipt of the incentive

payment depends on program participants making their own investments, and on the performance of

the company’s share price. The program expired as of October 21, 2010, as a consequence of which

no liability for the employee equity compensation plan was recognized as of the balance sheet date.

As of December 31, 2010, the Managing Board held a total of 44,643 shares from this employee equity

compensation plan, of which Mr. Paterka held 44,643 (previous year: 44,643). Incentive payments have

not been rendered from this plan, however.

Apart from the employee equity compensation plan, no other stock options have been issued to the

Managing and Supervisory boards.


148

L. EXEMPTION FROM DISCLOSURE

REQUIREMENTS

The subsidiaries Impuls Küchen GmbH, Brilon, pino Küchen GmbH, Coswig (Anhalt), Zweitmarkenholding

Impuls Pino GmbH, Pfullendorf, ALNO International GmbH, Pfullendorf, Gustav Wellmann

GmbH & Co. KG, Enger, and Grundstücksverwaltungsgesellschaft tielsa Küchen GmbH & Co. KG,

Enger, are exempt from disclosure requirements in accordance with Section 264 (3) and Section

264 b of the German Commercial Code (HGB). The consolidated financial statements and the Group

management report are published in the electronic Federal Gazette (Bundesanzeiger).

M. SHAREHOLDINGS

Name and registered office Share of capital as %

INTERESTS IN SUBSIDIARIES

ALNO in Germany

Impuls Küchen GmbH, Brilon 100

pino Küchen GmbH, Coswig (Anhalt) 100

Zweitmarkenholding Impuls Pino GmbH, Pfullendorf 100

Gustav Wellmann GmbH & Co. KG, Enger 100

Casawell Service GmbH, Enger 100

EuroSet Küchentechnik GmbH, Enger 100

Grundstücksverwaltungsgesellschaft tielsa Küchen GmbH & Co. KG, Enger 100

Wellmann Bauteile GmbH, Enger 100

ALNO International GmbH, Pfullendorf 100

ALNO abroad

ALNO (Schweiz) AG, Embrach/Switzerland 100

ALNO France S.à.r.l., Cagnes-sur-Mèr/France 100

ALNO U.K. Ltd, Dewsbury/United Kingdom 100

INTERESTS IN JOINT vENTURES

ALNO Middle East FZCO, Dubai/UAE 50

SPECIAL-PURPOSE ENTITIES:

MINERVA Grundstücks-Vermietungsgesellschaft mbH & Co. Objekt Pfullendorf OHG, Grünwald 0

Tignaris Beteiligungsgesellschaft mbH & Co. Objekt Pfullendorf KG, Grünwald 0

N. AUDITORS’ FEES

The following expenses were incurred for the audit of the consolidated financial statements:

In EUR thousand 2010 2009

Audit 391 397

Other certification services 463 114

Tax consultancy services 133 49

Other services 4 10

Total 991 570


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The item relating to auditing services for the financial statements includes fees for the legally mandatory

auditing of the single-entity and consolidated financial statements of ALNO AG as of December 31,

2010, and for the auditing of the dependent company report pursuant to Section 313 of the German

Stock Corporation Act (AktG) for the 2010 fiscal year.

The “other certification services” primarily include expenses for the preparation of a letter of comfort

as part of the capital increase that was planned in autumn 2010, but which was eventually postponed

until 2011.

Tax consultancy services include costs for current tax consulting.

Other services relate to accountancy consultancy services.

O. EVENTS AFTER THE BALANCE SHEET

DATE

RESTRUCTURING AGREEMENT II AND SUCCESSFUL CONCLUSION OF THE CAPITAL

INCREASE THAT WAS LAUNCHED IN 2010

On February 9, 2011, the company, the consortium banks, Küchen Holding GmbH, Munich, IRE

Beteiligungs GmbH, Stuttgart, Bauknecht Hausgeräte GmbH, Stuttgart, and Starlet Investment AG,

Nidau/Switzerland, concluded a further restructuring agreement that supplements the agreement

was concluded in April 2010. In this connection, all parties committed themselves to restructuring

contributions that are to reach a total minimum level of EUR 70 million over the course of 2011.

Consolidated equity will undergo a sharp improvement once the measures that have been regulated

in the new restructuring agreements have been successfully implemented.

Investors and shareholders issued subscription guarantees totaling EUR 20.0 million when the capital

increase, which was postponed in November 2010, was resumed. This rights issue from authorized

capital was resumed in February 2011, and was successfully concluded on March 3, 2011. A total

of 8,698,326 new no par value ordinary bearer shares (no par shares), each with a nominal amount

in the share capital of EUR 2.60, were issued. The issue price was EUR 3.00. As a consequence, the

company generated total gross issue proceeds of EUR 26.1 million, and the share capital increased

by EUR 22,615,647.60 to EUR 67,846,945.40. The capital increase was entered in the commercial

register on March 4, 2011.

Starlet Investment AG has obligated itself to relieve the ALNO Group of trade payables due to

Bauknecht Hausgeräte GmbH, and to associate companies of Bauknecht Hausgeräte GmbH, to

an amount of at least EUR 25.0 million. With respect to a partial amount of EUR 12.5 million, this

is to occur by May 31, 2011, by way of a waiver, or by depositing the receivables as a non-cash

capital contribution into the capital reserve of ALNO AG. With regard to a further partial amount of

EUR 12.5 million, this is to occur through contributing these receivables as part of a capital increase

against non-cash capital contributions, to the extent that this partial amount is of value. The obligation

is subject to the suspensive condition that the capital increase is performed successfully with

gross issue proceeds of at least EUR 20.0 million, and that the capital increase is entered in the

commercial registere by May 30, 2011; and, with regard to the further partial amount that is to be

contributed as part of a capital increase against non-cash capital contributions, additionally under

the suspensive condition that ALNO AG, IRE Beteiligungs GmbH and Küchen Holding GmbH satisfy

certain co-operation obligations relating to the coming into existence and performance of the capital

increase against non-cash capital contributions (in particular, through corresponding exercising of

voting rights at the Shareholders’ General Meeting), as well as with regard to the contribution of

the partial amount of receivables. If, and to the extent, that the contribution of the further partial

amount of EUR 12.5 million has not occurred by December 31, 2011, Starlet Investment AG has

obligated itself to waive these receivables for the company and its associated companies by way

of deposit into the company’s capital reserve at the latest by, and with effect of, December 31,


150

2011, unless the capital increase against non-cash capital contributions fails to occur due to an

infringement on the part of ALNO AG, IRE Beteiligungs GmbH and Küchen Holding GmbH against

their co-operation duties.

Under the suspensive conditions that the capital increase is successfully performed with gross issue

proceeds of at least EUR 20.0 million, and that the capital increase is entered in the commercial

register by May 30, 2011, and that the ALNO Group is relieved of trade payables of at least EUR

25.0 million by Starlet Investment AG, ALNO AG and Bauknecht Hausgeräte GmbH have agreed to

reduce the existing overdraft facility to zero. The consortium banks have agreed to this reduction.

Küchen Holding GmbH has obligated itself to relieve the ALNO Group of loan liabilities to the

consortium banks in an amount of EUR 25.0 million. In the first step, and at the option of Küchen

Holding GmbH, this relief is to occur either by way of purchase of receivables with full discharge of

the debtor, or through other agreements that lead to the same economic result for the consortium

banks. In the instance of the purchase of the receivables, Küchen Holding GmbH intends in a second

step to contribute the valuable portion of the receivables acquired from the consortium banks as

a non-cash capital contribution to the company as part of a capital increase against non-cash

capital contributions by December 31, 2011. The obligation on the part of Küchen Holding GmbH

is subject to the suspensive conditions that the capital increase is successfully performed with gross

issue proceeds of at least EUR 20.0 million, that the capital increase is entered in the commercial

register by May 30, 2011, that the ALNO Group is relieved of trade payables by Starlet Investment

AG, and that certain co-operation duties are satisfied by ALNO AG, IRE Beteiligungs GmbH and

Starlet Investment AG with regard to the realization and performance of the capital increase against

non-cash capital contributions (in particular, through corresponding exercising of voting rights at the

Shareholders’ General Meeting), as well as with regard to the contribution loan receivables. If, and

to the extent that, the contribution of the loan receivables has not occurred by December 2011,

31, Starlet Investment AG has obligated itself to waive these receivables for the company and its

associated companies by way of deposit into the company’s capital reserve at the latest by, and

with effect of, December 2011, unless the capital increase against non-cash capital contributions

fails to occur due to an infringement on the part of ALNO AG, IRE Beteiligungs GmbH and Küchen

Holding GmbH against their co-operation duties.

The consortium banks have obligated themselves to conclude the agreements with Küchen Holding

GmbH that are requisite for the relieving of the ALNO Group of loan receivables. This obligation is

subject to the suspensive conditions that the capital increase is performed successfully with gross

issue proceeds of at least EUR 20.0 million, that the capital increase is entered in the commercial

register by May 30, 2011, and that the ALNO Group is relived of the aforementioned trade payables

by Starlet Investment AG. The consortium banks have also declared their waiver of the debtor

warrant as granted by ALNO AG as part of Restructuring Agreement I. This waiver is subject to the

suspensive condition that the capital increase is performed with gross issue proceeds of at least EUR

20.0 million, and that it is entered in the commercial register by May 30, 2011. The second waiver

of EUR 10.0 million arising from Restructuring Agreement I that was concluded on April 23, 2010

was cancelled as part of this agreement under the suspensive condition that the capital increase is

performed with gross issue proceeds of at least EUR 20.0 million, that the capital increase is entered

in the commercial register by May 30, 2011, and that the ALNO Group is relieved of trade payables

in an amount of at least EUR 25.0 million by Starlet Investment AG. A further extension of the loan

terms until December 31, 2010 will be examined in a favorable light under further terms whereby a

restructuring survey to be compiled by Pricewaterhouse Coopers AG Wirtschaftsprüfungsgesellschaft

for ALNO AG issues a positive forecast relating to the company’s continued existence, and

that the capital increase is entered in the commercial register by May 30, 2011. Under these terms,

the consortium banks will also support ALNO AG in its application for a federal state guarantee.

Finally, and as part of the Restructuring Agreement II, the company obligates itself, at corresponding

written request by Küchen Holding GmbH, which must be submitted to the company by December

31, 2011, to issue convertible bonds from conditional capital under exclusion of subscription rights

for the company shareholders to majority shareholders in Küchen Holding GmbH or to third parties


151

to be nominated by Küchen Holding GmbH. When converted, these convertible bonds will entitle to

the subscription of shares to a level of up to 10 % of the company’s share capital. Küchen Holding

GmbH has obligated itself to pledge that these convertible bonds will be subscribed for.

ALNO AG has obligated itself to the consortium banks to solicit the support of professional consultants

for its further restructuring.

The restructuring agreements presented above are regarded as an integral component of the Group

restructuring, and consequently as an elementary basis for the further realization of the planned

restructuring measures.

PRODUCTION OF ESPRIT HOME KITCHENS IN PFULLENDORF

On April 4, 2011, the company’s management also announced that the ESPRIT home kitchens

would be produced at the Pfullendorf site. Renovation of the roof and further investments in Plant 1

are connected with the planned expansion of components production for Group supply. In order to

neutrally structure start-up costs, the Works Council has declared that the workforce is prepared to

make a contribution to the investments through the waiving of hours worked. Far-reaching flexibility

in terms of personnel capacity and working hours was also negotiated in Pfullendorf. The site is to

sustainably improve its competitiveness as a result of these measures. The decision to produce the

ESPRIT home kitchens in Pfullendorf fits into the “ALNO 2013” strategy to manufacture specialty

ranges, exclusive products and series entailing small unit volumes there in the future, since the

ESPRIT home kitchens fall into both categories.

CHANGES TO THE MANAGING BOARD

At its meeting held on April 6, 2011, the Supervisory Board of ALNO AG reached a decision

concerning a new Managing Board team. Max Müller was unanimously appointed to be the new

Managing Board Chairman (CEO) with immediate effect. His future departmental responsibilities

include Marketing, Development, Production, Purchasing, Logistics and Quality. Christoph Fughe

became the new Managing Board member responsible for the Sales area. He was previously Head

of Sales for ALNO AG. Jörg Artmann remains the Managing Board member responsible for Finance

(CFO), Personnel and IT. Jörg Deisel (who as CEO was previously responsible for Sales, Marketing

and Development) and Michael Paterka (who was the Managing Board member responsible for

Production, Purchasing, Logistics and Quality) have left the company.

EXPANSION OF FACTORING VOLUMES

With an agreement dated December 8/28, 2010, the ALNO Group increased its previous factoring

volume with from EUR 20 million to EUR 45 million with effect as of January 1, 2011. In addition to

the existing subsidiaries Impuls Küchen GmbH and pino Küchen GmbH, the factoring arrangement

now additionally includes Gustav Wellmann GmbH & Co. KG. The three companies can utilize the

factoring volumes on a variable basis up to the maximum amount of EUR 45 million.

On April 5, 2011, ALNO AG signed a further factoring agreement with GE Capital Bank AG, whereby

ALNO AG trade receivables are to be sold in an amount of EUR 15 million. The contract has yet to

be signed by GE Capital Bank AG, since certain terms have yet to be satisfied. Once this agreement

has been successfully concluded, the ALNO Group will increase its previous factoring volumes with

GE Capital Bank AG from EUR 45 million to EUR 60 million. The four companies should then also be

able to utilize the factoring volumes on a variable basis up to the maximum amount of EUR 60 million.

LIQUIDATION OF ALNO FRANCE

A resolution was passed in spring 2011 to close the foreign subsidiary ALNO France S.á r.l.,

Cagnes-sur-Mer, France.


152

UPDATING OF THE ORIGINAL RESTRUCTURING SURVEY OF JUNE 24, 2010

BY PRICEWATERHOUSECOOPERS

At the start of 2010, Pricewaterhouse Coopers AG Wirtschaftsprüfungsgesellschaft (“PwC”) was

engaged to prepare a restructuring survey for the ALNO Group according to the standard IDW S6

of the Institut der Wirtschaftsprüfer. In its restructuring survey dated June 24, 2010, PwC issued

the ALNO Group with a positive forecast for a going concern, to the extent that financing is secured

in line with the Restructuring Agreement I of April 23, 2010, and that the pending activities in the

company’s forecast are implemented.

In spring 2011, PwC was mandated to produce an update of the restructuring statement for the

ALNO Group. In its (draft) updated restructuring a survey of May 13, 2011, PwC arrives at the

conclusion that, from today’s perspective, the ALNO Group remains completely financed under

certain preconditions, and that no change arises relating to the restructuring statement as presented

in the restructuring survey of June 24, 2010. PwC nevertheless points out that the restructuring of

the ALNO Group will require more time than was planned in the previous year.

PwC notes that the liquidity position appears to be secured only under the following terms, and on

the basis of the following assumptions, including with the liquidity-effective financial measures of

the Restructuring Agreement II (in particular, the capital increase), which have already been realized:

• The corporate planning that has been adjusted by PwC, including the defined effects arising from

potentials, must be achieved. This requires that the measures planned by the Managing Board

are implemented stringently.

• Commercial credit insurers and suppliers must not implement negative changes to their payment

terms compared with the current status, and/or compared with the planned level.

• Local financing lines must be maintained in line with the planning.

• Existing credit lines must be available beyond December 31, 2011.

• The existing EUR 45 million factoring facility, and the additionally planned EUR 15 million factoring

facility, must be available beyond February 28, 2012.

• The financing shortfalls apparent in the August 2011 planning, as well as in the first quarter of 2012,

must be met by appropriate measures (e.g. granting of supplier loans, drawing down of a new loan

backed by a federal state, the issuing of a bond, or further internal measures to secure liquidity).

The continuation of corporate activities on the part of ALNO AG and/or on the part of the ALNO

Group depend on the aforementioned terms and assumptions occurring as planned, or being

applicable as planned. The Managing Board of ALNO AG assumes that these terms and assumptions

will occur as planned, or will be applicable as planned.


153

P. DECLARATION OF CONFORMITY PURSU-

ANT TO SECTION 161 OF THE GERMAN

STOCK CORPORATION ACT (AKTG)

On October 7, 2010, the Managing and Supervisory boards reviewed and reissued the declaration

relating to the recommendations of the “Government Commission German Corporate Governance

Code” pursuant to Section 161 of the German Stock Corporation Act (AktG). The declaration is

permanently available to shareholders on the company’s website, and is reproduced in the 2010

Group management report.

The Managing and Supervisory boards reported on corporate governance within the ALNO Group

in the annual report for the fiscal year as of December 31, 2010, in accordance with Figure 3.10 of

the German Corporate Governance Code. Information regarding the compensation of the Managing

Board is available in section L. “Supervisory Board and Managing Board”.

Q. EARNINGS PER SHARE

Earnings per share are calculated by dividing the consolidated net profit for the year accruing to the

shareholders by the weighted number of shares issued. There was no dilution resulting from “potential

shares”, neither in the year under review nor in the previous year.

In EUR thousand 2010 2009

Profit/loss from continuing operations – 13,084 – 39,371

Profit/loss from discontinued operations 0 407

Group net loss for the year – 13,084 – 38,964

Minority interests 0 0

Number of shares issued in thousands (weighted average) 16,877 15,817

Earnings per share on continuing operations in EUR – 0.78 – 2.49

Earnings per share for the discontinued operations in EUR 0.00 0.03

Earnings per share in EUR – 0.78 – 2.46

Düsseldorf, May 30, 2011

ALNO Aktiengesellschaft

The Managing Board


154

AUDIT OPINION

We have audited the consolidated financial statements prepared by ALNO Aktiengesellschaft, Düsseldorf,

comprising the consolidated income statement, consolidated statement of comprehensive income,

consolidated balance sheet, consolidated cash flow statement, consolidated statement of changes in

equity, and the notes to the consolidated financial statements, together with the group management

report, which has been combined with the management report of the company, for the fiscal year

from January 1 to December 31, 2010. The preparation of the consolidated financial statements and

the group management report in accordance with IFRSs as adopted by the EU, and the additional

requirements of German commercial law pursuant to Section 315a (1) HGB [“Handelsgesetzbuch”:

German Commercial Code] is the responsibility of the Company’s management. Our responsibility is

to express an opinion on the consolidated financial statements and on the group management report

based on our audit.

We conducted our audit of the consolidated financial statements in accordance with Section 317

HGB [“Handelsgesetzbuch”: German Commercial Code] and German generally accepted standards

for the audit of financial statements promulgated by the Institut der Wirtschaftsprüfer (Institute of Public

Auditors in Germany [IDW]). Those standards require that we plan and perform the audit such that

misstatements materially affecting the presentation of the net assets, financial position and results of

operations in the consolidated financial statements in accordance with the applicable financial reporting

framework and in the group management report are detected with reasonable assurance. Knowledge

of the business activities and the economic and legal environment of the Group and expectations as to

possible misstatements are taken into account in the determination of audit procedures. The effectiveness

of the accounting-related internal control system and the evidence supporting the disclosures in

the consolidated financial statements and the group management report are examined primarily on a test

basis within the framework of the audit. The audit includes assessing the annual financial statements of

those entities included in consolidation, the determination of entities to be included in consolidation, the

accounting and consolidation principles used and significant estimates made by management, as well as

evaluating the overall presentation of the consolidated financial statements and the group management

report. We believe that our audit provides a reasonable basis for our opinion.

Our audit has not led to any reservations.

In our opinion, based on the findings of our audit, the consolidated financial statements comply with IFRSs

as adopted by the EU and the additional requirements of German commercial law pursuant to Section

315a (1)HGB [“Handelsgesetzbuch”: German Commercial Code], and give a true and fair view of the net

assets, financial position and results of operations of the Group in accordance with these requirements.

The group management report is consistent with the consolidated financial statements and as a whole

provides a suitable view of the Group’s position and suitably presents the opportunities and risks relating

to future development.


155

Without qualifying this opinion, we refer to the fact that negative equity of EUR 69,722 thousand

is recorded in the consolidated balance sheet of ALNO Aktiengesellschaft – in contrast to the

separate financial statements – due to losses incurred. In addition, we refer to the discussions in

the group management report, which has been combined with the company’s management report.

Section “b. Report on events after the balance sheet date” states that the ALNO Group’s ability to

continue as a going concern depends on whether the listed conditions and assumptions – reaching

budgeted targets, maintaining or extending financing at current terms, closing anticipated financing

gaps – materialize or apply as planned.

Ravensburg, May 30, 2011

Ernst & Young GmbH

Wirtschaftsprüfungsgesellschaft

Nover

Wirtschaftsprüfer

(German Public Auditor)

Prüsse

Wirtschaftsprüfer

(German Public Auditor)

RESPONSIBILITY STATEMENT

OF ALNO AG PURSUANT TO SECTION 297 (2) CLAUSE 4 OF THE GERMAN COMMERCIAL

CODE (HGB) RELATING TO THE CONSOLIDATED FINANCIAL STATEMENTS AND SINGLE-

ENTITY AND GROUP MANAGEMENT REPORTS FOR THE 2010 FISCAL YEAR:

To the best of our knowledge, and in accordance with the applicable accounting principles for

interim reporting, the consolidated financial statements give a true and fair view of the assets,

financial position and profit or loss of the Group, and the interim Group management report

includes a fair review of the development and performance of the business and the position of

the Group, together with a description of the principal opportunities and risks associated with the

expected development of the Group.

Düsseldorf, May 30, 2011

ALNO Aktiengesellschaft

The Managing Board


156

156

LEGAL NOTE

This annual report contains forward-looking statements. Forward-looking statements

are statements that do not relate to historical events and facts. These

statements are based on assumptions, forecasts and estimates of future developments

by the Managing Board. These assumptions, forecasts and estimates

were generated on the basis of all information available at the current time. If

the assumptions relating to future trends on which these statements and estimates

are based do not occur, actual events may diverge from those currently

anticipated. Neither the Managing Board nor the company can vouch that the

forward-looking statements will actually occur. Beyond their statutory obligations,

the Managing Board and the company assume no obligation to update

any statements, or to adjust them to reflect future events and developments.

This annual report and the information that it contains represent neither an offer

to sell, nor a solicitation to purchase or to subscribe for, ALNO AG securities

either in the Federal Republic of Germany or in any other country. ALNO AG

shares may be sold or offered for purchase in the United States of America

only after prior registration, or without prior registration only on the basis of an

exemption from the registration requirement according to the US Securities Act

of 1933 in its current valid version. ALNO AG does not intend to implement a

public offering of shares in the United States. The ALNO AG annual report is

published in both German and English. The German version is definitive in the

instance of any differences.

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