5ContentsU 2 Company profileU 3 The ALNO brandsU 4 Group financial figures year-on-year6 HistoryTo our shareholders8 Letter from the Chief Executive Officer12 Board of Management14 Report of the Supervisory Board20 The ALNO shareSINGLE-ENTITY AND GROUP MANAGEMENT REPORT24 Economic report44 Events after the reporting period48 Risks / opportunities and future perspectives52 Other disclosuresConsolidated financial statements62 Consolidated income statement63 Consolidated statement of comprehensive income64 Consolidated balance sheet65 Consolidated cash flow statement66 Consolidated statement of changes in equity67 Notes to the consolidated financial statements123 Auditor's report124 Declaration by statutory representativesU 5 Publishing dataU 5 Financial calendar 2012
8 To our shareholders | Letter from the Chief Executive OfficerLetter from theChief Executive OfficerThe financial year 2011 was a turbulent year. 2011 was characterized by several decisive changesin our operational business and in the management, including major strategic changes, the appointmentof a complete new Board of Management and moving our headquarters from Düsseldorf backto Pfullendorf. In the light of these facts, the financial year just ended was a year of major challengesfor ALNO AG and indisputably the most difficult in the company's 85-year history.All in all, business by ALNO AG declined in 2011. Despite the considerable upswing experienced bythe German kitchen market in the year just ended, our sales dropped 3.1% to EUR 452.8 million.Domestic sales declined by 2.5% to EUR 326.4 million, while foreign sales revenue dropped 4.7%to EUR 126.4 million. This trend has now been halted.In order to master today's challenges, it is important that the reasons underlying past developmentsbe analysed correctly. Particularly in the Enger plant, production problems in conjunction with theintroduction of a completely new product range led to lower sales in Germany. The situation wascompounded by an inappropriate price policy launched in 2010 with far-reaching consequencesfor the development of sales and gross profit. Winding up no fewer than five subsidiaries abroadand transforming them into marketing units likewise had a negative impact on export business. Thelacking market presence abroad inevitably resulted in lower sales.Lower sales also impacted our operating result (EBIT), which dropped to EUR -10.7 million inthe financial year 2011, due above all to a price structure that was not in conformity with marketdemands. In addition, the company also had to absorb higher material costs for the high-qualityranges and higher prices by its suppliers. This had a corresponding impact on the earnings of ALNOAG. As at 31 December 2011, we reported a consolidated loss of EUR 25.6 million.
10 To our shareholders | Letter from the Chief Executive Officer"A good investor invests in and forthe people who make up the company,not against them."A number of challenges indisputably remain. The new financial year has started out very pleasingly.Where the most important ratios are concerned, we were able to boost sales by 8.9% to EUR 118.5million in the first quarter. EBITDA rose to EUR +2.1 million and the operating result (EBIT) improvedto EUR -1.9 million, which once again proves that we are on the right track to making 2012 theyear in which the trend was reversed. This growth is primarily the result of higher export activity andfurther optimizing the positioning of our four Group brands ALNO, Wellmann, Impuls and Pino.The greatest increase in sales within the ALNO Group has been achieved by the ALNO brand, witha rise of 23.5% over the same period in the previous year. ALNO's pleasing operating trend has alsocontinued in the second quarter of 2012. With business in our core market Germany developingvery well, the situation as regards orders from abroad is also favourable.The signs have consequently been set for ALNO's future: EBITDA is expected to be positive for2012 as a whole. We will continue to improve our profitability in the future, too and consequentlyexpect a further improvement in EBITDA in 2013.These good prospects are based on the all-embracing, award-winning product portfolio of the ALNOGroup and our highly motivated workforce. The continual and successful development of productsmeeting customers' needs will also strengthen our position as innovation leader. The quality andinnovativeness of our kitchens are famous throughout the industry worldwide. So that we can makeour company less dependent on individual regional markets in a highly volatile market environment,we will continue to expand our export business in particular. These efforts, too, are beginning tobear fruit. A subsidiary was founded in the United States at the end of March 2012, followed by theinauguration of an ALNO studio in New York in May.However, a company's positive financial and economic development always goes hand-in-hand witha sustainable corporate culture. For this reason, first steps were taken in 2011 to give ALNO AG anew corporate mission statement. Fair integration of our employees in their working environmentis a fundamental element of this new mission statement. Work and performance are interpreted ascomprehensively human as well as intelligent terms. I am firmly convinced that, in a free and humane
To our shareholders | Board of Management13Max MüllerChief Executive Officer of ALNO AGIPEK DEMIRTASChief Financial OfficerElmar DuffnerChief Operations Officer
14 To our shareholders | Report of the Supervisory BoardReport of the Supervisory BoardHenning GieseckeChairman of the Supervisory BoardIn the year under review, the Supervisory Board of ALNOAktiengesellschaft (ALNO AG) duly exercised the dutiesand responsibilities incumbent upon it in accordance withstatutory regulations, the Articles of Incorporation and therules of procedure. It devoted its attention to the company'sposition, continuously monitoring and advising theBoard of Management in the process.The Board of Management provided the Supervisory Boardwith regular, timely and comprehensive written and oralreports on all aspects of fundamental significance for theGroup. Above all, the Supervisory Board discussed theBoard of Management's reorganization plans, the corporateplanning, ongoing development of business, the company'sstrategic further development, its risk position and its riskmanagement. We were kept abreast of individual developmentsdiverging from the planning by the Board of Manage-ment. The company's strategic orientation was coordinatedwith the Supervisory Board and the Board of Managementreported regularly on the progress made in implementingthe strategy. The Supervisory Board was involved in alldecisions from an early stage onwards.Outside of these meetings, the Chief Executive Officeralso regularly informed the Chairman of the SupervisoryBoard with regard to the company's current position anddevelopment, its risk position and other significant developments.All developments requiring the consent of the SupervisoryBoard in accordance with statutory regulations, theArticles of Incorporation and the rules of procedure werealso considered and decided by the Supervisory Board.It also considered individual transactions of importance.
To our shareholders | Report of the Supervisory Board15In response to enquiries by the Supervisory Board or bythe Chairman of the Supervisory Board, and at variousmeetings, the Board of Management and the auditor alsoreported on any risks affecting the net assets, financialposition and results of operations of the individual ALNOGroup companies, as well as on the action taken to counterthese in 2011. Second-tier management executiveswere also consulted on specific topics.The purpose of the telephone conference on 3 March 2011was to approve the Board of Management's resolutionof the same date defining the total volume of the capitalincrease resumed by the Board of Management on 10February 2011 with the approval of the Supervisory Boardand the resultant amendment required in the Articles ofAssociation. The Supervisory Board approved the resolutionafter considering it in detail.The collaboration between Supervisory Board and Boardof Management was characterized by intensive and opencommunication.Meetings of the Supervisory BoardThe Supervisory Board met on five occasions in the financialyear 2011. Eleven telephone conferences were heldadditionally. The Supervisory Board was also convened totwo extraordinary meetings held in the form of a telephoneconference. All members of the Supervisory Board wereable to attend more than half the meetings.There were no conflicts of interest to be disclosed to theSupervisory Board and with regard to which the shareholders'meeting must be informed.Main aspects considered by the SupervisoryBoard at its meetingsThe Supervisory Board regularly met to discuss the company'scurrent market situation and development, aswell as to consistently check and monitor the company'snet assets, financial position and liquidity, as well as theGroup's strategic orientation.The Board of Management presented its corporate planningfor the financial year 2011 at the Supervisory Boardmeeting on 11 January 2011. After intensive debate andchecking, the Supervisory Board approved the corporateplanning presented for the financial year 2011. In addition,the Supervisory Board was also informed of the progressmade with regard to the financial activities. The Board ofManagement also gave a detailed presentation of the salesdivision.At an extraordinary telephone conference on 6 April 2011,the Supervisory Board cancelled Mr. Jörg Deisel's appointmentas CEO and decided to terminate his service contractwith immediate effect for good cause. It was alsodecided to cancel the appointment of Mr. Michael Paterkaas member of the Board of Management, not to renew hisservice contract and to relieve Mr. Michael Paterka of hisduties. The Supervisory Board also considered the newappointment to the Board of Management proposed bythe Presidial Committee. The Supervisory Board appointedMr. Max Müller as Chief Executive Officer of ALNO AG withimmediate effect. Mr. Christoph Fughe was also appointedmember of the Board of Management with immediateeffect.At the meeting on 14 April 2011, the Supervisory Boardwas informed of the provisional financial statements ofALNO AG as at 31 December 2010, as well as with regardto the provisional consolidated financial statements of theALNO Group as at 31 December 2010. The Board ofManagement reported on the development of businessup to March 2011, as well as on other developments ofimportance. The Board of Management also presented aplan of action to improve performance in the financial year2011. Finally, the statement by PricewaterhouseCoopersconcerning the company's reorganization was also presentedand discussed.The agreement with Mr. Michael Paterka concerning anemployee termination payment was considered at lengthat the Supervisory Board meeting held on 9 May 2011 inthe form of a telephone conference. The resolution proposedby the Presidial Committee was adopted by theSupervisory Board.On 30 May 2011, the Supervisory Board consulted bytelephone to adopt a resolution. The annual financial statementsof ALNO AG as at 31 December 2010 and the
18 To our shareholders | Report of the Supervisory BoardIt decided to present corresponding decision papers to theSupervisory Board for a subsequent vote.At a telephone conference on 9 May 2011, the PresidialCommittee discussed an agreement with Mr. MichaelPaterka concerning an employee termination paymentwhich it then presented to the Supervisory Board for considerationin the immediately following meeting.During a telephone conference on 13 July 2011, the PresidialCommittee discussed Mr. Jörg Artmann's dismissal asCEO with immediate effect. It also considered non-renewalof the service agreement, its termination as a precautionarymeasure and Mr. Jörg Artmann's suspension from duty. TheCommittee also considered Ms. Ipek Demirtas' appointmentas member of the Board of Management of ALNO AG effective14 July 2011. Corresponding proposals were presentedto the Supervisory Board at the immediately following meetingand adopted by the Supervisory Board.After the Annual General Meeting on 14 July 2011, thePresidial Committee was renamed Strategy and PresidialCommittee. The Strategy and Presidial Committee metsix more times in the year under review. The Committee'sconsultations focused on the development of business,the company's liquidity and a plan of action to improveperformance in the financial year 2011.in good time. The statements to be audited and the auditor'sreport were considered in detail at the meeting of theAudit Committee on 11 June 2012. The Supervisory Boardreceived detailed information on the financial statements ofALNO AG and on the consolidated financial statements ofthe ALNO Group at its meeting on 12 June 2012. At bothmeetings, the auditors reported on the main findings of theiraudit, answered the Board's questions and provided anyadditional information required. After detailed considerationand on the basis of its own checks, the Supervisory Boardconcurred with the auditors' findings on the annual andconsolidated financial statements. Following the conclusiveoutcome of its own checks, the Supervisory Board has nocomplaints against either the separate annual financialstatements or the consolidated financial statements. TheSupervisory Board approved the annual financial statementsprepared by the Board of Management and the single-entityand group management report, for the financial year 2011at its telephone conference on 12 June 2012. The annualfinancial statements are thus adopted. The SupervisoryBoard also approved the consolidated financial statementsand Group management report prepared by the Board ofManagement according to International Financial ReportingStandards for the financial year 2011.Report on controlled companiesFinancial statements of the company and theGroupErnst & Young GmbH, Wirtschaftsprüfungsgesellschaft,Ravensburg, audited the 2011 annual financial statementsof ALNO AG according to the rules of the German CommercialCode (HGB), as well as the consolidated financialstatements of ALNO AG according to International FinancialReporting Standards, and the single-entity and groupmanagement report; they consequently met with the fullapproval of the auditors.The auditors confirmed that the Board of Management hasestablished an efficient risk management system in compliancewith the statutory requirements, as well as an internalcontrol system.The statements to be audited and the auditor's reportwere received by all members of the Supervisory BoardThe Board of Management prepared its report on the company'srelations with affiliated companies and presented itto the Supervisory Board together with the auditor's reporton this subject.The auditors issued the following unqualified certificate:"After having duly performed our audit, we confirm that1. the actual information included in the report is correct;2. for the legal transactions indicated in the report the company’sconsideration was not inappropriately high."The auditors attended the Supervisory Board's deliberationson the report concerning relations with affiliated companiesand reported on the essential findings of their audit.The Supervisory Board's checks of both the Board ofManagement's report and the auditor's report did not giverise to any objections; the Supervisory Board concurs withthe auditor's findings. Following the definitive results of the
To our shareholders | Report of the Supervisory Board19Supervisory Board's checks, the Supervisory Board has noobjections to the Board of Management's declaration at theend of the report concerning relations between ALNO AGand affiliated companies.Corporate GovernanceIn the financial year just ended, the Supervisory Board alsoconsidered the further development of corporate governanceprinciples in the ALNO Group, with due regard for theGerman Corporate Governance Code in the version dated26 May 2010.The report of the Board of Management and SupervisoryBoard on corporate governance by ALNO AG can be foundin conjunction with the management declaration on pages52 onwards. On 30 September 2011, the Board of Managementand Supervisory Board published a new declarationof compliance in respect of the recommendations of the"Government Commission on the German Corporate GovernanceCode" as required by Section 161 of the StockCompanies Act (AktG). This declaration can be found onpages 52 onwards in this Annual Report and is permanentlyaccessible to shareholders via the website www.alno.de.Changes in the Board of Management andSupervisory BoardMr. Armin Weiland gave notice in a letter dated 6 June2011 that he would resign his mandate in the SupervisoryBoard of ALNO AG effective from the end of the AnnualGeneral Meeting on 14 July 2011. Mr. Christoph Maasslikewise gave notice in a letter dated 30 May 2011 thathe would resign his mandate in the Supervisory Board ofALNO AG effective from the end of the Annual GeneralMeeting on 14 July 2011. At the Annual General Meeting on14 July 2011, Ms. Ruth Falise-Grauer and Mr. Norbert Orthwere elected to the Supervisory Board as new membersrepresenting the shareholders.The Supervisory Board appointed Mr. Max Müller as ChiefExecutive Officer (CEO) of ALNO AG with immediate effect.Mr. Müller has been chairman of the supervisory board ofComco Holding AG and Starlet Investment AG since 1993.Mr. Christoph Fughe was also appointed member of theBoard for sales and marketing with immediate effect. Beforehis appointment, Mr. Christoph Fughe worked for ALNO AGas Manager Group Sales.At an extraordinary meeting on 13 July 2011, the SupervisoryBoard cancelled the appointment of Mr. Jörg Artmannas member of the Board of Management of ALNO AG withimmediate effect and relieved him of his contractual duties.The Supervisory Board appointed Ms. Ipek Demirtas ChiefFinancial Officer (CFO) effective 14 July 2011.At the Supervisory Board meeting on 14 July 2011, theSupervisory Board appointed Mr. Elmar Duffner as memberof the company's Board of Management effective asfrom commencement of his service for the company. Hisappointment to the Board of Management became effectiveon joining ALNO AG on 1 November 2011.The following changes to the Board of Management tookplace after the end of the year under review: On 17 February2012, the Supervisory Board revoked Mr. ChristophFughe's appointment to the Board of Management of ALNOAG effective 29 February 2012. Mr. Christoph Fughe wasrelieved of his duties as a Board member, but continuedto serve the company as an adviser. Mr. Christoph Fugheretired from the company on 31 May 2012.The Supervisory Board wishes to thank the Board of Managementand all employees of the ALNO Group companiesfor their efforts and great personal commitment in the financialyear 2011.Pfullendorf, 12 June 2012Supervisory BoardThe Supervisory Board thanks the retired members for theirwork and their commitment.At the extraordinary Supervisory Board meeting on 6April 2011, Mr. Jörg Deisel and Mr. Michael Paterka weredismissed from the Board of Management of ALNO AG.Henning GieseckeChairman of the Supervisory Board
To our shareholders | ALNO shares21CAPITALIZATION AND SHAREHOLDER STRUCTUREDirector’s DealingsThe shareholder structure of ALNO AG changed significantly,most recently in conjunction with the capitalization measuresin March 2011. As a result of the capital increase with subscriptionright which was completed on 3 March, 8,698,326new shares were issued in return for cash contributions, yieldinggross proceeds in the amount of EUR 26.1 million for thecompany. The share capital rose by EUR 22,615,647.60 toEUR 67,846,945.40. Shareholders exercising their subscriptionright took up around 700,000 shares; of the remainingroughly eight million new shares, 99.6% were issued to institutionalinvestors and 0.4% to private investors.Free-floated stock increased from 8.8% to over 40% inconjunction with the capital increase. The shares' liquidityincreased strongly as a result.In conjunction with a Standstill and Shareholder Agreementin the financial year 2006, IRE Beteiligungs GmbH grantedKüchen Holding GmbH power of attorney to exercise the votingrights belonging to the shares held by IRE BeteiligungsGmbH at the discretion of Küchen Holding GmbH. Pursuantto Section 22 (1), first sentence, No. 1 of the German SecuritiesTrading Act (WpHG), the voting rights of IRE BeteiligungsGmbH must be ascribed to Bauknecht Hausgeräte GmbH.Pursuant to Section 22 (1), first sentence, No. 1 of the GermanSecurities Trading Act (WpHG), the voting rights of BauknechtHausgeräte GmbH must be ascribed to Whirlpool GreaterChina Inc., Benton Harbor, Michigan / USA.The voting agreement between IRE Beteiligungs GmbH andKüchen Holding GmbH was terminated on 30 January 2012.This was reported by Küchen Holding GmbH on 2 February2012.Shareholder structure of Alno AG |As per 11 June 201241.96% Free floatThe following notifiable share dealings by executives werereported in the financial year 2011, as required by Section15a of the German Securities Trading Act (WpHG):DateNotifyingpersonNumberofsharesType oftransactionVolumein EUR3.3.2011 Armin Weiland 40,000 Purchase 120,0003.3.20112.3.2011Dr. JürgenDiegruber 40,000 Purchase 120,000HenningGiesecke/HB conbetGmbH 50,0002.3.2011 Jörg Deisel 100,0002.3.2011 Jörg Artmann 66,6662.3.2011MichaelPaterka 33,335Purchase/allotmentfrom capitalincrease 150,000Purchase/allotmentfrom capitalincrease 300,000Purchase/allotmentfrom capitalincrease 199,998Purchase/allotmentfrom capitalincrease 100,002There were no transactions after the end of the reportingperiod.Investor RelationsIn addition to the ad-hoc reports required by law, supplementarycorporate news bulletins were also published inorder to provide all capital market participants with timelyand detailed information on current events and developmentswherever possible. The company also publishedregular reports on the development of business, as wellas detailed financial and interim reports on the individualquarters in both German and English.3.90% Erster Privater Investmentclub BörsebiusZentral (GbR)18.81% IRE Beteiligungs GmbH35.33% Küchen Holding GmbH100 % 100 %
22Consolidated financial statements | CHAPTER
Consolidated financial statements | CHAPTER 23SINGLE-ENTITY ANDGROUP MANAGEMENT REPORT24 Economic report44 Events after the reporting period48 Risks / opportunities and future perspectives52 Other disclosures
24 SINGLE-ENTITY AND GROUP MANAGEMENT REPORT | Economic reportSINGLE-ENTITY ANDGROUP MANAGEMENT REPORTof ALNO Aktiengesellschaft, Pfullendorf,for the financial year 2011Economic reportI. Group structure and businessThe ALNO Group develops, builds and sells kitchen furnitureand accessories for the German market and for exportworldwide. The parent company ALNO AG, Pfullendorf,acts as holding company with central administration functionsand operates the production facility in Pfullendorf, aswell as the sales division. The ALNO Group comprises 16active individual companies altogether. In July 2011, thecompany's headquarters moved from Düsseldorf to theformer location in Pfullendorf (Baden-Württemberg).Since the ALNO Group unites four different brands undera single umbrella, the Group can cover all price segmentsfrom the entry level to the premium level. With its brandsALNO, Wellmann, Impuls and Pino, the Group is oneof the biggest manufacturers of kitchen furniture worldwide.The ALNO Group is currently the second largest manufacturerin Germany and ranks fifth in Europe.Each of the four German production facilities has its ownproduct portfolio. Kitchens for the ALNO brand are developedand built in Pfullendorf, while the plant in Enger,North Rhine-Westphalia, produces the Wellmann range.The Impuls and Pino brands are produced in Brilon(North Rhine-Westphalia) and Coswig (Sachsen-Anhalt),respectively.Germany and Western Europe are the most importantsales markets for the ALNO Group. However, the companyalso has more than 6,000 trade partners in 64 countrieswho are served through a centrally managed export salesdepartment. In the United Kingdom and Switzerland,the ALNO Group has own marketing companies whichare combined under the subsidiary ALNO InternationalGmbH with head office in Pfullendorf. The ALNO Group isbecoming more important in Asia, the United States andthe United Arab Emirates. After the end of the period underreview, ALNO AG founded its own US marketing companybased in New York.In spring 2011, it was decided to close the foreign subsidiaryALNO France S.A.R.L. in Cagnes-sur-Mer, France. InNovember 2011, EuroSet Küchentechnik GmbH with itsbase in Enger was renamed ALNO Trading GmbH, alsobased in Enger. The company trades in and sells householdappliances, fitted appliances, accessories and merchandise,but no kitchen furniture.The Dubai location specializes on project business in theGulf region, for which it builds and sells kitchen furniture toregional specifications. 50% of the shares in the regionalcompany ALNO Middle East FZCO, Dubai, United ArabEmirates, are held by ALNO AG, and the other 50% by AlKhayyat Investments LLC, Dubai, United Arab emirates.II. Group managementThe Group's business activities are measured on the basisof sales and value metrics. Within the year, the individualGroup entities are managed on a monthly basis, but alsoon a weekly and daily basis, through continual varianceanalyses to determine any divergence from budgeted figuresand previous year's values in all key operational areas.In addition to ratios measuring the efficiency of sales, production,quality and specific functions, the most importantindividual indicators used at the segment level includecontribution accounting, unit performance accounting andsales figures expressed in numbers of cabinet units. Costcentres and cost categories are monitored and analysedseparately at a higher level of aggregation. The quality ofthe product range and business processes is monitoredand assured by quality management based on DIN EN ISO9001. All production companies in the ALNO Group arecertified companies subject to continuous external auditingby various institutes.
SINGLE-ENTITY AND GROUP MANAGEMENT REPORT | Structure of the ALNO Group25Structure of the ALNO Groupas at 31 December 2011Alno AGZweitmarkenholdingImpuls Pino GmbH Pfullendorf100 %50 %ALNO Middle East FZCODubai (UAE)94 %Impuls Küchen GmbHBrilon6 %100 %ALNO USA Kitchen Cabinets Inc.New Castle/Delaware (USA) (inactive)94 %Pino Küchen GmbHCoswig (Anhalt)6 %100 %ALNO International GmbHPfullendorfCasawell Service GmbHEnger100 %ALNO France S.A.R.L.Cagnes-sur-Mer (F) (in liquidation)100 %0.07 %Gustav Wellmann GmbH & Co. KGEnger99.93 %ALNO (Schweiz) AGEmbrach (CH)100 %94.74 %GVG tielsa Küchen GmbH & Co. KGEnger5.26 %ALNO UK Ltd.Dewsbury (GB)100 %100 %ALNO Trading GmbHEngerWellmann-Polska sp.z.o.o. (PL)(in liquidation)100 %100 %Wellmann Bauteile GmbHEngerTIGNARIS Bet.gesellschaft mbH& Co. Objekt Pfullendorf KGGrünwald100 %MINERVA Grundstücks-VermietungsgesellschaftmbH & Co.Objekt Pfullendorf OHG Grünwald100 %
28 SINGLE-ENTITY AND GROUP MANAGEMENT REPORT | Economic reportAs part of the Home and Office retail association, theBVDM represents the interests of retailers specializing inall aspects of home living.As in the previous years, kitchen furniture makes up thelargest segment in the furniture trade, with 28%, followedby upholstered furniture with 18% of total sales, and bedroomand living room furniture with 12% each. Accordingto the German Furniture Industry Association (VDM), Germanconsumers spent EUR 373 on average per personaltogether for furniture – once again, more than at any othertime in the past ten years.The BVDM expects growth to continue in 2012, albeit at alower rate. According to the BVDM, the German furnitureindustry was in a better position at the beginning of 2012than it had been for a long time. 14German furniture industry salesIndustry sales in 2011 are put at EUR 16.7 billion (+6.4%)by the German Furniture Industry Association (VDM). Witha rise of 11.1% to EUR 4.7 billion, exports rose considerablyfaster than domestic sales, which rose 5.7% to EUR12.1 billion. At the beginning of 2012, the furniture industryemployed a total workforce of around 90,000 men andwomen in 524 firms with more than 50 employees. Thisconsequently meant a 1% increase in the number of jobsin the industry.The VDM is the largest professional association underthe umbrella of the HDH (Hauptverband der DeutschenHolzindustrie und Kunststoffe verarbeitenden Industrie -the central association of the German woodworking andplastics processing industries) which also includes othersectors, from manufacturers of prefabricated houses toparquetry manufacturers.According to the VDM, companies' earnings have comeunder considerable pressure from drastically rising woodprices and higher costs for other materials, as well ashigher payroll costs, despite the generally pleasing situationof the furniture industry._14 BVDM Press Release dated 11.1.2012, HDM/VDM Press Release"Furniture trends 2012: Round forms instead of sharp edges andcorners" dated 11.1.2012The association expects demand to develop less dynamicallyin 2012. Nevertheless, the volume of sales is expectedto increase by over 2% nominally, due to robust domesticsales and a slight upturn in foreign sales. This wouldmean that the German furniture industry's sales wouldhave returned to the level of 2008, the last year beforethe crisis began, when it generated sales in the amountof EUR 17.2 billion.Driven by a robust investment climate among firms, theoffice furniture sector is the most dynamic single branch ofthe furniture industry. Living room furniture and kitchen furniturefollow almost neck-to-neck, with a distinct increaseof 6.2% and 6.0%, respectively.France, Switzerland and Austria were the German furnitureindustry's biggest export markets in 2011. The value ofgoods exported to France rose 14.2% to EUR 1.4 billionfor the year as a whole, while furniture worth EUR 1 billion(+16.4%) was exported to Switzerland and furniture worthEUR 941 million (+6.7%) went to Austria. 15Kitchen furnitureIn the year under review, German kitchen furniture manufacturersgenerated sales in the amount of EUR 4.0 billion– 5.9% more than in 2010. With a rise of 6.7 % to almostEUR 2.6 billion, domestic sales rose even faster thanexport sales, which rose 4.5 % to almost EUR 1.5 billion.According to the German Kitchen Furniture IndustryAssociation (VdDK), whose members comprise roughly56 kitchen furniture manufacturers nationwide, the Germanmanufacturers were able to win a larger share of the foreignmarkets in particular. Of these, China boomed particularly.With sales totalling EUR 63 million and a rise of 68.7%, thePeople's Republic of China now ranks seventh among themost important markets for Germany. France continues tolead the field with a total sales volume of around EUR 326million. Sales in the Netherlands declined to 4.6% in 2011.With a total volume of around EUR 232 million, however,the Netherlands are still are second largest export market.Kitchen exports to Switzerland (EUR 160 million) wereroughly 13.5% higher in 2011 and the country now ranksthird, together with Belgium (also EUR 160 million). Exportsto Austria were 7% higher (ranks fifth / EUR 137 million).They are followed by the United Kingdom, China, Spain,Luxemburg and Italy. The volume of exports to the UnitedKingdom (EUR 88 million) and Spain (EUR 36 million) fellslightly in 2011._15 HDH/VDM Press Release dated 11.1.2012, HDH/VDM informationchart dated 19.1.2012
SINGLE-ENTITY AND GROUP MANAGEMENT REPORT | Economic report29Imports totalled EUR 101.3 million, the main foreign producersbeing Italy, France and Slovakia. At 36.6%, theexport quota fell by 0.4 percentage points in the financialyear 2011.According to the VdDK, the German kitchen furnitureindustry is the most efficient and most productive in theworld. Altogether, the industry's 56 firms with a workforceof more than 50 employees provided jobs for 14,693 menand women, a rise of 2% over the previous year. Growthtriggers from Eastern Europe and Asia also let the VdDKview the current year 2012 with optimism.At EUR 299.1 million, sales by the German kitchen furnitureindustry were 9.5% higher in January of the present financialyear than in the same month last year. In Germany, salesrose 10.7% to EUR 195.1 million in January 2012. Exportsales likewise rose 7.4% to EUR 104 million. Althoughseveral markets are weaker, particularly in Europe but alsooverseas, the Association nevertheless expects growth tocontinue at an only marginally lower rate in 2012. 16Market positionIn the financial year 2011, the ALNO Group's market sharein Germany equalled roughly 14.5% in terms of value and20.9% in terms of the number of kitchens sold. 17 Its shareof the European market equalled 3.7% in the financial year2011. This makes the ALNO Group the second largestmanufacturer of kitchen furniture in Germany and one ofthe top five in Europe. 18V. Marketing and product developmentProductsSeveral new products and cooperation projects were onceagain presented to the general public and the trade in thefinancial year under review. At the start of the year, the newEsprit home kitchens, a cooperation with the lifestyle brandESPRIT, were presented for the first time at the successfulLivingKitchen 2011 exhibition.ALNO MARECUCINA, the "flagship" among ALNO kitchenswhich is now being produced in series, continues toattract considerable attention with its maritime designconcept. This kitchen incorporating various nautical elementshas won several awards and comes in two versions:a freestanding model resembling a yacht in shape and aclassic single-row version.The ALNO brand has also proved its innovative naturein the field of glass kitchens. Since autumn 2011, theALNOSTAR VETRINA and ALNOVETRINA ranges havebeen available in the modern high-gloss colour versions"cashmere" and "purple", while the multifunctional modelsALNOSTAR SATINA and ALNOSATINA are now available inmatt "cashmere". The innovative design of ALNO's glasskitchens is confirmed by the numerous awards won bythe models ALNOSTAR SATINA, ALNOART woodglasand ALNOART pro in recent years. What's more, the topmountedstrip handles and segmented glass doors haveadded two new design elements to the ALNOSATINA andALNOVETRINA glass kitchen segment.At the company exhibition DESIGN-TOUR 2011 in Enger/North Rhine-Westphalia, a new product generationunder the ALNO brand was presented in the form of theALNOSTAR CERA and ALNOCERA lines. These kitchenswith fronts and side panels of ceramic material exemplifythe current trend towards individual, ecologically designed,high-quality products with a robust surface that is not onlyeasy to care for, but also exceedingly resistant to scratchingand abrasion. Absolute food safety, high recyclabilityand UV resistance of the ceramic materials was assuredwhen developing these products._16 HDH Monthly report according to sectors 2011 January - December,VdDK Press Release of March 201217 Gesellschaft für Konsumforschung (GfK), Presentation of kitchens,trade panel, for the ALNO Group, 2010, pp. 47/4818 CSIL, Centre for Industrial Studies, The European Market forKitchen Furniture, May 2010 – R2601, p. 5
30SINGLE-ENTITY AND GROUP MANAGEMENT REPORT | Economic reportA traditional product with a modern interpretation, ALNO-CLASSIC links tradition and modernity. Presented at thecompany exhibition in autumn 2011, the kitchen in countryhousestyle is designed to please all generations andcombines state-of-the-art technology with solid oak andtimeless glass surfaces.The Group's entry-level price segment, the PINO kitchen,was also developed further in the period under review.Since 2011 Pino offers low-cost knock-down kitchensin additional modern colours especially for young peoplewho are increasingly following this trend towards moredaring and fresher colours when furnishing their homes.Together with the trend colours cashmere, pink, red andblue, the high-gloss foil-wrapped design in particular createsfashionable highlights.The Impuls brand has also enlarged its range of colours.Despite this, however, speed remains the focus of attentionfor Impuls. Germany's fastest kitchen is ready for usewithin a few days. This kitchen consequently reflects theincreasing mobility and short-lived character of our society.Since no more than ten working days lie between receivingthe customer's order and installation of the kitchen, thereis no longer any reason for not moving to a new addressat short notice.The new Wellmann range was also launched in the financialyear 2011 and enlarged to include 25 new front colours.In this way, the Wellmann kitchens make for even greaterflexibility when planning a kitchen. As before, Wellmannfocuses on simple, classical modern, individual elegance.ProductionPfullendorfDuring the financial year 2011, the management beganto establish new structures to optimize competences andcosts at the four production facilities in Germany, with theaim of further increasing the real net output ratio and quality.A clear commitment to the Pfullendorf location was a firststep in this direction. By establishing a production line forglass fronts here, the ALNO Group has decisively improvedits manufacturing competence in this sector.Fronts finished with a glass or ceramic surface are producedon this new line. The glass or ceramic panels arecut to size from larger panels on a CNC cutting table,either individually or in series, and subsequently groundand polished together with the substrate. This knowhowand flexibility in producing standard carcase parts(special surface, cutting to size, flexible manufacture ofparts) allows ALNO to meet individual customers' wishesmore effectively; they are also essential for the competentmanufacture of brand-related products.In addition to glass production, the company also investedin a new packaging machine for small items and a newworktop saw for the Pfullendorf plant in 2011. The internalvalue-adding processes for such components as glass,lacquer or ceramic fronts meeting the ALNO brand'sclaim are also to be developed further and expanded atthe Pfullendorf location. A "centre of lacquer competence"for the ALNO Group is to be established at the Pfullendorflocation.EngerA new Wellmann product range based on the new 13centimetre grid size was introduced at the Enger locationat the start of 2011. The ALNO and Wellmann rangesconsequently use the same grid size. For production andlogistics, this changeover posed a considerable challenge,as two product ranges had to be manufactured in parallel.The materials for the old product range were completelyremoved from the production process at the end of 2011/start of 2012. This means that the "old" Wellmann isnow only available for handling complaints. From 2012onwards, production in Enger will concentrate exclusivelyon the new product range. The new grid and gap size usedby Wellmann allows modern kitchens to be plannedfunctionally and ergonomically in future.In the financial year 2011, the company invested in a newCNC drilling and assembly line for order-based productionof kitchen furniture fronts in order to meet with ever higherindividual requirements for the new Wellmann range. Anew automatic drilling and dowelling machine for carcaseelements was also commissioned in summer 2011.Further investments were also made in the final assemblyarea, in the form of a new assembly line for wall units.With all-automatic press-bonding of the carcase partsand robots to fit the wall unit fixtures, this line representsthe latest state-of-the-art and will ensure high-qualitymanufacture. Plinths and wall units have additionally beenpacked in high-quality cartons since the end of 2011/startof 2012.
SINGLE-ENTITY AND GROUP MANAGEMENT REPORT | Economic report31BrilonThe Impuls brand is produced in Brilon, where productionis characterized by very short turnaround times. A newpanel-cutting saw was purchased for worktop productionhere in order to be able to meet future demands. With thissaw, end and depth cuts can be produced on a singlemachine, thus further reducing the time required for cuttingpanels to size. A new drilling machine started operationin the drawer and pull-out assembly line. Innovative linearmotion drives have resulted in considerably shortermachining times.Further optimization measures were successfully broughtto a conclusion in 2011, not only in production and particularlyin picking the fronts, but also in the worktopwarehouse and cabinet assembly. The time-based managementassociated with these measures was brought intoline with the new conditions.The introduction of segmented glass doors was one ofthe highlights of product development. Due to the highlevel of demand, a special press for fronts was designedand commissioned at short notice in order to safeguardproduction.In conjunction with the plant's further modernization, themanagement also invested in a new saw for cutting worktops.This new machine will be commissioned in 2012.A good infrastructure with sufficient opportunities for physicalexpansion and a flexible workforce with many years ofexperience ensure good prospects for further growth byPino Küchen GmbH.The ALNO Group's future plans for the individual productionlocations include further investments in additional machinesto improve performance and quality in worktop and wall unitproduction, as well as in-house logistics.MarketingIn the financial year just ended, the ALNO Group's marketingactivities primarily concentrated on kitchen presentationsat trade fairs and exhibitions. On the one hand, thissatisfied the curiosity of both trade visitors and consumers;at the same time, it also highlighted the feel of the products,for the ALNO design must be touched in order to befully appreciated.CoswigThe Coswig plant primarily builds the Pino brand of kitchensfor the entry-price level. In 2011 too, this lean assemblyplant with low vertical range of manufacture focusedon stabilizing its manufacturing processes and improvingperformance with our trading partners. By streamlining thesupply chain to nationwide service with just a few daysbetween receiving and delivering orders, the plant wasable to meet the demand for exceedingly short deliveryperiods when necessary. The resources required for thispurpose were made available through flexible working timemodels and by enlarging capacity in the manufacturingsector. Productivity was improved with the aid of specificallytargeted optimization measures.The electronic exchange of data (EDI) with both customersand suppliers was further expanded in order to meet thehigh quality standards expected by our partners in thesupply chain.Trade fairs and exhibitions"Design on Stage" was the motto of the ALNO Group'strade fair and exhibition presences in January 2011. TheEsprit home kitchen was presented for the first time at the"LivingKitchen" exhibition in Cologne which is part of theyearly international furniture trade fair "imm cologne". It wasa successful start, with the Esprit kitchen attracting greatinterest among the trade visitors. Our flagship, the ALNOMARECUCINA, also proved highly popular again. Otherproduct highlights included the new ALNOSTAR SATINAon the one hand and the "quick kitchen" from Impuls onthe other.The boating exhibition "boot" opened in Düsseldorf atthe same time. Due to its maritime design, the ALNOMARECUCINA design study was also presented for thefirst time at an unrelated exhibition. The kitchen was wellreceived, as it not only links material aspects – MARE-CUCINA is after all based on the same materials that arealso used in boat building – but also the maritime lifestyleof the "boot" exhibition.
SINGLE-ENTITY AND GROUP MANAGEMENT REPORT | Economic report33ALNO also won another very special distinction in the formof the special platinum award "Favourite brand - selectedby consumers". This mark of quality from the initiative"LifeCare – Better Living" highlights ALNO's consistentproduct performance meeting the consumer's needs.The award is conferred to companies which have wonthe award "Kitchen Innovation of the Year" for at leastsix products.And the ALNO Group also achieved yet another milestone:for the first time, the company landed among the Top 10 inthe competition for the "Best Marketing Company Award2011", with an outstanding 8th place in the category"Large companies over 250 employees". Unlike almostall other marketing awards, the "Best Marketing CompanyAward" – conferred by the management consultants Batten+ Company – is based on the scientific principles ofthe chair for innovative marketing management of BremenUniversity, and not on a jury decision.The ALNO Group won a further distinction in 2012 andhence after the period under review: ALNOSTAR CERAwon the award "Kitchen Innovation of the Year 2012" fromthe initiative "LifeCare – Better Living" during the exhibition"Ambiente 2012" in Frankfurt. ALNOSTAR CERA convincedthe jury with its three millimetre thick ceramic liningcreating outstanding effects on the fronts, worktops andside panels. The kitchen also received the distinction of an"Excellent product". The company also won another awardfor ALNOSTAR CERA in the category "Kitchen furnitureand equipment": the "Golden Award – Best of the Best".The jury was impressed by the functionality, innovation,product benefits, design and sustainability of ALNO's newhigh-end product range.VI. Research and developmentProduct development by the ALNO Group is centrallylocated in Pfullendorf. Development focuses on productinnovations and new applications which are systematicallydeveloped across all product lines for specific targetgroups. In addition, the efficiency of all value-adding processesis continuously optimized. The range of productsand services is continuously revised, leading to regular newfeatures which also enjoy a special market position in somesectors.Since the ALNO brand is to be positioned more clearly inthe upper brand segment in future, the company intends tosystematically develop corresponding product innovationsand new applications based on market requirements andthe consumers' needs. The aim of product development isto develop ALNO as the company's core brand with regularproduct and design innovations and thus demonstrateits superior market position. To this end, the companywill further develop its competence in glass and ceramicmaterials with new fronts, handle options and functionalelements. The ALNO brand is also characterized in particularby lacquer competence. Other projects includethe introduction of handleless kitchens in other ranges,updating the ranges of basic fronts, developing new glassunits and integrating new opening systems and functionalsystems into the standard ranges of the Pino, Impulsand Wellmann brands.VII. Objectives and strategySustainable competitiveness, future-oriented processes,financial stability and profitable growth – these are theobjectives and central tenets of the Group's strategicreorientation.Along with these economic parameters, the ALNO Group'sfuture place in the international kitchen market is anotheraspect of this strategic reorientation. A work processincorporating employees from different hierarchy levels andwith different areas of responsibility was launched internallywithin the Group in 2011 to formulate this qualitativestrategy objective. The team is also tasked with reconcilingthe following sector-related central issues in a single overallconcept.
34SINGLE-ENTITY AND GROUP MANAGEMENT REPORT | Economic reportThe corporate concept of "ALNO – One Company" is morethan just an organizational idea: it also requires contentand a goal. A number of the strategic measures alreadylaunched were successfully continued in the year underreview.The basic parameters remain unchanged:• Adding value – as expressed through profitability, cashflow and return on capitaland• Optimum adaptation of decentralized structures toGroup conceptsThe motto underlying all the ALNO Group's activities is tooffer the best possible quality and the best possible servicefor the customer over the full bandwidth of our productand brand portfolio.Market objectivesOur efforts to reorganize sales are consistently being pursued.The aim is to ensure sales' conformity with the tradingstructures of the kitchen furniture industry. The Groupsupplies retailers of every kind, from kitchen specialiststhrough furniture mass merchandisers to RTA and selfservicefurniture markets. Attention will concentrate morestrongly on the sound value of sales and a clear focus inbrand positioning.These efforts are beginning to bear fruit, especially forthe ALNO brand, as ALNO's share of sales is increasingamong kitchen specialists. This increases the value of theproducts sold and hence the quality of earnings. Othersteps are also being taken to heighten the ALNO brand'spositioning. Among other things, this includes the ideaof defining certain marketing rules for the ALNO brandin future so that it is easier for our customers to give theALNO brand product a clear, uniform profile unrelated tothe marketing partner. Following on from the ALNO brandname, we also intend to become more active in consumermarketing. This will give rise to a new "win-win" situationfor the Group and our customers. ALNO will benefit fromuniform positioning of the product in the market, our customerswill benefit from the brand's recognition which, inturn, will lead to greater interest among consumers.The market positioning of Wellmann, Impuls and Pinoproducts is to be improved in the same way, in accordancewith the respective customer and sales segments.The basic strategic positioning will not be changed. Theremaining overlaps between product families will continueto be reduced further in future.Another objective is to make sales more profitable as awhole. This also includes a more differentiated price structurefor individual product groups. The same also applieswith regard to pricing in so-called "block kitchen business".The quality of earnings in this sector is in some cases inadequateand must be improved accordingly.Clear growth targets also apply for our export markets. Theefforts to restructure our export organization are essentiallycomplete and the first positive effects of these efforts arealready becoming apparent. ALNO consolidated revenuesin the French market, for instance, have risen by more than13%. Particularly in France, a significant further increasein sales and income is expected for 2012 due to our strategicpartnership with sound retail chains and chain storeoperators.Concepts giving the ALNO Group a sustainable share ofgrowth and price levels in the respective markets are currentlybeing developed for the central growth markets, asalready defined in Asia, especially China, but also in NorthAmerica where distribution of the ALNO Group's productsis still inadequate. After the end of the period under review,a subsidiary was set up in the United States in early 2012and negotiations started in China to set up a joint venturewith a local partner.We also intend to step up our presence in the Russian market.Above all, the ALNO brand is to be marketed throughexclusive ALNO stores and a dealer network will be set upfor Impuls to meet the furnishing needs of the Russianmiddle class.The existing subsidiaries will continue to operate in Switzerlandand the United Kingdom. So that they can respondmore effectively to market requirements, however, the subsidiarieswill be given greater organizational independencewith regard to sales activities in their respective markets.The main objective in other countries, especially otherEuropean countries, is to improve customer service andhence permit further growth. It will be developed in accordancewith the growth rates of the respective brands. Theidea is to lay a sound basis for winning further customers.
SINGLE-ENTITY AND GROUP MANAGEMENT REPORT | Economic report35Objectives for productionObjectives for distributionThe introduction of a new Wellmann range in Enger wasone of the main factors influencing the ALNO Group'sperformance in 2011. The enormous technological andorganizational challenge of manufacturing very differentproduct groups in a single plant has been mastered successfully,albeit with more effort than originally planned.At first, it proved difficult to meet the market's high levelof demand, for the new Wellmann product was receivedmore favourably than expected and replaced the formerproduct more quickly than planned.The level of all-round service offered by a manufacturer forthe kitchen as a product is becoming increasingly important.This concerns all areas, from order acquisition tologistics and delivery of the manufactured kitchens. Logisticsin particular is a major cost factor. Both the quality ofthe logistics process and the issue of further cost optimizationare major objectives for the future strategic orientation.A team involving relevant partners has already been set upto improve the ALNO Group's distribution services and toidentify options for an even more sustainable structure.The changeover in production is now complete. As in theother plants, attention in Enger now focuses on continuousoptimization of the production processes. In view ofthe complexities associated with introduction of the newproduct in Enger, there has been no further transfer ofproduction from Pfullendorf to Enger, nor is this planned forthe time being. Optimum utilization of the available productioncapacities will be clarified systematically.A team of plant managers is therefore developing a basicstrategy for the Group as regards the future structure of itsplants. Core issues include the following:• Optimizing Group production capacity in the light ofincreasing fluctuations in the production quantitiesrequired per week and per day.• Defining core production competences for individuallocations, such as component production, also for theALNO Group.• Establishing the vertical range of manufacture for theindividual plants; in Pfullendorf, for example, the verticalrange of manufacture has been increased through thein-house production of glass and ceramic fronts, thusmaking production more flexible and more cost-efficient,as well as improving quality management.Objectives for the administrative sectorOngoing efforts to standardize processes will be continuedin all administrative areas of the ALNO Group, such asaccounting / controlling, IT and Human Resources, as wellas in the holding company's central functions. During theperiod under review, SAP/HCM were introduced throughoutthe Group to standardize payroll accounting and timemanagement at all German locations; these efforts werebrought to a successful conclusion when the system wentonline on 1 January 2012.A major IT project was launched in Pfullendorf in 2011with the aim of introducing SAP to completely replace allmodules in the process chain, from order handling throughsales to process data management, finance and controlling,production, materials management and quality, by2014.Individual locations are increasingly taking over tasks forother locations, too, in order to achieve correspondingoptimizations. Relocating the ALNO holding company fromDüsseldorf and closing down this location completely hasalso helped to reduce administrative expenses and atthe same time led to a sustainable reduction in the costburden.
36SINGLE-ENTITY AND GROUP MANAGEMENT REPORT | Economic reportVIII. Results of operations, net assets andliquidityGeneral development of businessThe income statement for the ALNO Group (according toInternational Financial Reporting Standards) is based onthe nature of expense method.The ALNO Group's negative result in the period underreview was attributable to several factors. In addition tofeeble export business, the introduction of a new Wellmannrange in the Enger plant, an inappropriate pricepolicy launched in 2010 and higher prices for productionmaterial, as well as higher transport costs all contributedto the negative result in the financial year 2011. While salesdeclined in relation to the previous year, Pino was the onlyone of the four Group brands to generate higher sales.Sales and earningsConsolidated revenues totalled EUR 452.8 million in thefinancial year 2011, a drop of 3.1% over the previousyear's total of EUR 467.3 million.Domestic revenue fell 2.5% to EUR 326.4 million. Thisdecline in sales was due, on the one hand, to initial problemsassociated with parallel production of the old andnew Wellmann ranges which, however, have now beensolved. At the same time, an inappropriate price policylaunched in 2010 likewise resulted in lower sales andconsequently to a decline in gross profit.As in the previous year, the development of sales wasalso burdened by export business in 2011. This effectwas intensified by the scheduled liquidation of five foreignsubsidiaries in the previous year and their conversion tomarketing entities. As a result of their temporarily reducedmarketing activity, sales generated outside Germany fellby 4.7% to EUR 126.4 million. The export quota as awhole consequently declined from 28.4% to 27.9%.The following table sets out the key figures for the years2009 to 2011 in relation to the fields of business to becontinued.in '000 EUR 2011 2010 2009Sales revenue 452,810 467,297 493,373Changes in inventories and capitalized goods and services for own account 882 –1,993 –3,724Cost of materials 286,398 271,907 278,654Gross profit 167,294 193,397 210,995Gross profit margin (in % of sales revenue) 36.9 % 41.4 % 42.8 %Other operating income 6,270 7,062 6,460Personnel expenses 98,529 97,900 98,539Other operating expenses 94,169 92,611 102,950Income from reorganization (previous year's expense) –24,338 8,962 –1,306EBITDA 5,204 986 17,272Write-downs 15,902 12,104 40,186Operating result (EBIT) –10,698 –11,118 –22,914Financial result –14,518 –1,060 –16,287Profit/loss before income taxes (EBT) –25,216 –12,178 –39,201
SINGLE-ENTITY AND GROUP MANAGEMENT REPORT | Economic report37Sales revenue in Germany and abroad developed asfollows:YearGermany Change Abroad Change Export ratio Total'000 EUR in '000 EUR in % '000 EUR in '000 EUR in % in % '000 EUR2009 346,103 147,270 29.8 493,3732010 334,620 –11,483 –3.3 132,677 –14,593 –9.9 28.4 467,2972011 326,397 –8,223 –2.5 126,413 –6,264 –4.7 27.9 452,810Foreign sales as a whole developed as follows:YearChangethereof ChangeOther foreign ChangeTotal exports Total EuropeATGcountries'000 EUR '000 EUR in '000 EUR in % '000 EUR in '000 EUR in % '000 EUR in '000 EUR in %2009 147,270 133,512 81,448 13,7582010 132,677 108,089 –25,423 –19.0 27,681 –53,767 –66.0 24,588 10,830 78.72011 126,413 105,456 –2,633 –2.4 25,098 –2,583 –9.3 20,957 –3,631 –14.8Changes in inventories and capitalized goods and servicesfor own account totalled EUR 0.9 million as compared toEUR -2.0 million in the same period in the previous year.Despite the lower sales revenue, the cost of materialsrose from EUR 271.9 million to EUR 286.4 million due tothe higher volume of high-quality ranges sold (especiallyglass), as well as on account of higher prices by suppliers.At 63.1%, the cost of materials in relation to total saleswas consequently well above the previous year's level of58.4%. On a Group basis, gross profit declined from EUR193.4 million to EUR 167.3 million, causing the gross profitmargin to fall from 41.4% to 36.9%. This development wasa combined effect due to different developments in thesubsidiaries. The considerably larger share of the cost ofmaterials for the ALNO brand in relation to total sales hada particularly depressing effect here.Other operating income decreased from EUR 7.1 millionto EUR 6.3 million due, above all, to lower proceeds fromthe reversal of specific valuation allowances, as well as tolower income earned in other periods. Personnel expensesrose from EUR 97.9 million in the previous year to EUR 98.5million in 2011 due mainly to the increase in employeesat the Enger plant. The share of personnel expenses inrelation to total sales consequently rose from 21.1% in theprevious year to 21.7%.Other operating expenses increased from EUR 92.6 millionto EUR 94.2 million due to higher transport costs despitethe decline in sales revenue and above all higher salescommissions resulting from the higher volume of contractbusiness by ALNO UK.The reorganization profit of EUR 24.3 million was essentiallyattributable to the fact that Comco Holding AG, Nidau,Switzerland, took over trade accounts payable by the ALNOGroup in the amount of EUR 25.0 million, for which repaymentwas subsequently waived. The reversal of reorganizationprovisions generated further income in the amount ofEUR 2.1 million. This was offset by consulting expensesassociated with the reorganization in the amount of EUR2.7 million. In the previous year, most of the expenses associatedwith reorganization efforts were attributable to thereduction in jobs at the Pfullendorf plant. The remaining EUR1.5 million were accounted for by the elimination of jobsabroad when winding up five of the eight subsidiaries, aswell as by fees for preparing a reorganization assessment.EBITDA rose from EUR 1.0 million in the previous year toEUR 5.2 million due mainly to the profit from reorganization.This made it possible to realize the forecast made inconjunction with the annual financial statements 2010 thatGroup EBITDA in 2011 would improve over the previousyear.
38SINGLE-ENTITY AND GROUP MANAGEMENT REPORT | Economic reportWrite-downs on intangible assets, property, plant andequipment rose from EUR 12.1 million to EUR 15.9 million.These were attributable on the one hand to the rise ofEUR 1.4 million in amortization and depreciation on boothdesign and installation of display kitchens, as well as to arise of EUR 2.0 million in impairment losses resulting fromthe impairment test pursuant to IAS 36. These will reduceamortization and depreciation in the coming years.In this way, EBIT improved slightly from EUR -11.1 millionin the previous year to EUR -10.7 million now.Financial performance declined considerably, fromEUR -1.1 million in the previous year to EUR -14.5million. Financial income fell significantly from EUR10.4 million to EUR 0.1 million, due to the "Loan waiver,banks (Part 1)" in the amount of EUR 10.0 million inaccordance with the restructuring agreement I of 23 April2010, which had been recognized as income in the previousyear. Financial expenses fell slightly from EUR 11.5million to EUR 11.2 million. The drop of EUR 3.4 millionin investments measured at equity was also due to theunsatisfactory performance of ALNO Middle East FZCOin Dubai, as well as to a waiver in the amount of EUR 1.0million by ALNO AG.EBT consequently fell sharply from EUR -12.2 million in theprevious year to EUR -25.2 million now.Group income consequently declined from EUR -13.1 millionin the previous year to EUR -25.6 million. Earnings pershare fell to EUR -1.04 after EUR -0.78 in the previous year.The following comparison of the first and second sixmonthperiods also provides an insight into the earningssituation in 2011:in '000 EUR Total year 20111.7.2011to 31.12.20111.1.2011to 30.6.2011DifferenceSales revenue 452,810 230,157 222,653 7,504Changes in inventories and capitalised goods and services for own account 882 –979 1,861 –2,840Cost of materials 286,398 145,724 140,674 5,050Gross profit 167,294 83,454 83,840 – 386Gross profit margin 36.9 % 36.3% 37.7%Other operating income 6,270 3,316 2,954 362Personnel expenses 98,529 48,514 50,015 – 1,501Other operating expenses 94,169 49,406 44,763 4,643Result from reorganization – 24,338 – 24,848 510 – 25,358EBITDA 5,204 13,698 – 8,494 22,192Write-downs 15,902 9,010 6,892 2,118Operating result (EBIT) – 10,698 4,688 – 15,386 20,074Financial result – 14,518 – 8,021 – 6,497 – 1,524Profit/loss before income taxes (EBT) – 25,216 – 3,333 – 21,883 18,550This comparison of the two halves of 2011 shows thatsales revenue developed more favourably in the secondhalf of the year. Despite this, however, gross profitremained slightly lower than in the first half of the year.The waiver by Comco Holding AG for repayment of EUR25 million, which is reflected in the result from reorganization,was effected in the second half of the year.
SINGLE-ENTITY AND GROUP MANAGEMENT REPORT | Economic report39Segment performanceImpuls segmentThe earnings situation of the ALNO Group's individualsegments (before consolidation) is outlined below.2011millionEUR2010million EURChange overprev. year,million EURChange overprev. yearin %ALNO segment2011millionEUR2010million EURChange overprev. year,million EURChange overprev. yearin %Net revenue 116.1 121.3 – 5.2 – 4.3Gross profit 40.6 43.6 – 3.0 – 6.9Gr. profit in % 35.0 35.9EBITDA 7.5 10.9 – 3.4 – 31.2Net revenue 98.4 103.8 – 5.4 – 5.2EBIT 4.7 8.1 – 3.4 – 42.0Gross profit 40.4 53.8 – 13.4 – 24.9Gr. profit in % 41.1 51.8EBITDA – 21.7 – 17.3 – 4.4 – 25.4EBIT – 26.8 – 20.2 – 6.6 – 32.7The ALNO segment comprises ALNO AG in Pfullendorfwhich produces brand name kitchens for the upper andmiddle price range at the Pfullendorf location.The volume of sales by ALNO AG was EUR 5.4 millionlower (-5.2%) than in the previous year. This drop in saleswas attributable to an inappropriate price policy launchedin 2010, as well as to streamlining and repositioning theranges within the Group, a process which affected ALNOin particular. Gross profit suffered under the decline in foreignbusiness with its high margins, as well as under theincrease in low-margin intra-Group component business.This effect was further intensified by the higher volume ofsales of higher-quality ranges (especially glass), as it wasnot yet possible to adjust selling prices in line with thesignificantly higher prices demanded by suppliers.The decline in EBITDA from EUR -17.3 million to EUR-21.7 million is essentially due to valuation allowancesfor accounts receivable from affiliated companies in theamount of EUR 27.9 million, which were offset by the waiverby Comco Holding AG for repayment of EUR 25.0 million.Other operating income was EUR 12.6 million or 62.6%higher than in the previous year, due mainly to changes inthe structure of intra-Group set-offs. Personnel expensesremained almost unchanged at the previous year's level.At EUR 77.6 million, other operating expenses were EUR36.2 million or 87.5% higher than in the previous year,due firstly to the aforementioned valuation allowances foraffiliated companies and secondly, to a large extent tochanges in the structure of intra-Group set-offs.The subsidiary Impuls Küchen GmbH in Brilon is positionedin the lower middle price segment and reported lowersales in the amount of EUR 116.1 million, a drop of EUR5.2 million or 4.3%. At the same time, gross profit wasEUR 3.0 million or 6.9% lower, thus reducing the grossprofit margin to 35.0% or 0.9 percentage points belowthe previous year's level. Due to the lower gross profit,EBITDA was down EUR 3.4 million or 31.2% to EUR7.5 million. Personnel expenses remained almostunchanged at the previous year's level. Other operatingexpenses, on the other hand, were 5.2% up at EUR23.4 million as a result of higher sales expenses.Pino segment2011millionEUR2010million EURChange overprevious year,million EURChange overprevious yearin %Net revenue 95.2 93.6 1.6 1.7Gross profit 27.4 29.9 – 2.5 – 8.4Gr. profit in % 28.8 31.9EBITDA 2.9 6.8 – 3.9 – 57.4EBIT 0.7 5.0 – 4.3 – 86.0The Pino segment encompasses Pino Küchen GmbHin Coswig (Anhalt) which produces kitchens in the lowerprice range. In the financial year 2011 Pino posted highersales of EUR 95.2 million, a rise of EUR 1.6 million or1.7%. Gross profit simultaneously dropped 8.4% to EUR27.4 million, due essentially to an increase in applianceblocks by discount furniture stores, which are less profitable.EBITDA on the other hand was EUR 3.9 million lower,dropping from EUR 6.8 million to EUR 2.9 million. This isdue above all to higher sales expenses.
40 SINGLE-ENTITY AND GROUP MANAGEMENT REPORT | Economic reportWellmann segment2011millionEUR2010million EURChange overprev. year,million EURChange overprev. yearin %Net revenue 135.7 137.6 – 1.9 – 1.4Gross profit 51.7 57.7 – 6.0 – 10.4Gr. profit in % 38.1 42.0EBITDA – 12.6 – 1.6 – 11.0
SINGLE-ENTITY AND GROUP MANAGEMENT REPORT | Economic report41Current liabilities rose from EUR 192.5 million to EUR 200.2million, as the takeover of trade accounts payable and thesubsequent waiver by Comco Holding AG for repaymentof EUR 25.0 million was offset by the increase in tradeaccounts payable. After adjustment for the takeover ofaccounts payable to banks already mentioned above andafter adjustment for the waiver of repayment effected inearly 2012, current liabilities were EUR 17.3 million lower,at EUR 175.2 million.Liquidity and financial positionThe net cash flow for operating activities shows a cashoutflow of EUR -3.3 million in the year under review (previousyear: cash inflow of EUR 11.5 million). This considerabledecrease was primarily attributable to the higherconsolidated loss which includes income without impacton the cash flow resulting from the waiver by Comco HoldingAG for repayment of EUR 25.0 million, as well as tolower utilization of the factoring volume, which are bothoffset by higher liabilities. Investment activities resulted in acash outflow of EUR 17.1 million in the year under review,as compared to EUR 14.3 million in the previous year. Thisincrease is essentially attributable to higher investments inbooth design and installation of display kitchens. The EUR17.6 million increase in cash flow for financing activities isprimarily attributable to the capital increase of EUR 26.1million undertaken in 2011. With regard to the measurestaken to assure the company's continuing operation as agoing concern and its liquidity, we refer to the report onevents after the reporting period, as well as to the goingconcern information in section B.1. of the Notes "Basis forpreparation of the financial statements".Development of net debtThe net amount of debt owed by the ALNO Group (otherfinancial liabilities and shareholder loans minus liquidassets) was EUR 24.2 million higher as per 31 December2011 than on the previous year's closing date. It totalledEUR 107.7 million as compared to EUR 83.5 as per 31December 2010. This is due firstly to the waiver by ashareholder for repayment of EUR 25 million in January2012, i.e. after the closing date, and secondly to convertingtrade accounts payable into financial liabilities in theamount of EUR 28.9 million.31.12.2011in '000 EUR31.12.2010in '000 EURChangein '000 EURChangein %Shareholder loans and other financial liabilitiesNon-current 10,482 13,057 – 2,575 – 19.7Current 99,447 73,495 25,952 35.3109,929 86,552 23,377 27.0Minus liquid assets – 2,243 – 3,041 798 26.2107,686 83,511 24,175 28.9Shareholder loans andother financial liabilities31.12.2011in '000 EURWaiver ofrepaymentin '000 EUR6.1.2012in '000 EURAfter adjustment for the waiver of repayment madein early 2012, the net amount of debt owed equalsEUR 82.7 million or EUR 0.8 million less than in the previousyear.Non-current 10,482 10,482Current 99,447 – 25,000 74,447109,929 – 25,000 84,929Minus liquid assets – 2,243 – 2,243107,686 – 25,000 82,686
42SINGLE-ENTITY AND GROUP MANAGEMENT REPORT | Economic reportIX. SINGLE-ENTITY financial statement forALNO AG in accordance with the GermanCommercial Code (HGB)Income statement for ALNO AG in accordance withthe single-entity financial statement pursuant to theGerman Commercial Code (HGB) for 2011in '000 EUR 2011 2010Sales revenue 98,373 103,833Changes in inventories and capitalized goods and services for own account 370 – 2,193Other operating income 32,781 20,507Total operating revenues 131,524 122,147Cost of materials 58,276 48,073Personnel expenses 41,379 41,443Other operating expenses and other taxes 79,689 41,684EBITDA – 47,820 – 9,053Write-downs 5,711 7,310EBIT – 53,531 – 16,363Financial result – 1,776 13,359EBT – 55,307 – 3,004Extraordinary result 24,142 – 11,630Taxes on income 0 11Net loss for the year – 31,165 – 14,623ALNO AG once again had to absorb lower sales in the financialyear 2011. Sales revenue in Germany fell by 3.6%, witha sharper drop of 8.2% in foreign sales. Net proceeds perunit improved slightly, from roughly EUR 208 to EUR 209.The gross profit quota in the single-entity financial statementsof ALNO AG in accordance with the German CommercialCode (HGB) declined significantly in the financial year 2011,dropping 10.5 percentage points to 41.1% (previous year:51.6%). This is due on the one hand to the inappropriateprice policy launched in 2010 and to a disproportionate risein the cost of materials in relation to sales revenue on theother. Gross profit suffered under the decline in foreign businesswith its high margins, as well as under the increase inlow-margin intra-Group component business. This effect wasfurther intensified by the higher volume of sales of higherqualityranges (especially glass), as it was not yet possible toadjust selling prices in line with the significantly higher pricesdemanded by suppliers.Other operating income rose 59.9% to EUR 32.8 million, duemainly to changes in the structure of netting sales expenseswithin the Group. Personnel expenses remained almostunchanged at the previous year's level.Other operating expenses and other taxes increased by EUR38.0 million or 91.2% to EUR 79.7 million, due mainly tovaluation allowances for accounts receivable from affiliatedcompanies in the amount of EUR 27.9 million on the onehand and to changes in the structure of intra-Group set-offs,which in turn are offset by higher other operating income.Financial performance was significantly lower than in the previousyear, with a drop of EUR 15.1 million. In the previousyear, this item included financial income from the waiver bybanks for repayment of a loan in the amount of EUR 10.0million in accordance with the restructuring agreement I of 23April 2010. In addition, write-downs in the amount of EUR 2.8million on the holdings in affiliated companies were requiredin the previous year. Income under profit transfer agreementsdecreased by EUR 7.8 million.
SINGLE-ENTITY AND GROUP MANAGEMENT REPORT | Economic report43The extraordinary result improved by EUR 35.7 million, fromEUR -11.6 million in the previous year to EUR 24.1 million.In the financial year 2011, ALNO AG also receivedextraordinary income in the amount of EUR 25 million fromderecognizing liabilities following a waiver of repayment byComco Holding AG. Consulting expenses in the amount ofEUR 2.7 million were offset by income from the reversal ofreorganization provisions in the amount of EUR 1.9 millionwhich were no longer needed. In the previous year, extraordinaryexpenses resulted in the amount of EUR 7.5 milliondue to cutting back on personnel at the Pfullendorf plant, inthe amount of EUR 0.7 million for consulting in conjunctionwith the company's reorganization, and in the amount ofEUR 0.2 million in conjunction with winding up subsidiaries.The previous year’s transition to accounting in line with theGerman Act to Modernise Accounting Law (BilMoG) additionallyresulted in extraordinary expenses of EUR 3.2 million.The waiver by a shareholder for repayment of EUR 25 millionwhich was agreed for 2011 but only effected in 2012will significantly improve the result reported for 2012 in thesingle-entity financial statements for ALNO AG accordingto the German Commercial Code (HGB).Balance sheet of ALNO AG in accordance withthe single-entity financial statements pursuantto the German Commercial Code (HGB) as at31 December 2011in '000 EUR 31.12.2011 31.12.2010ASSETSFixed assetsIntangible assets 6,384 5,638Property, plant and equipment 15,237 15,373Financial assets 106,482 105,482128,103 126,493Current assetsInventories 9,282 9,104Receivables and other assets 31,126 22,547Cash in hand, bank balances 83 11640,491 31,767Deferred items 416 498Excess of plan assets over pension liabilities 217 154169,227 158,912LIABILITIESShareholders' equitySubscribed capital 67,847 45,231Capital reserve 45,916 42,437Net loss for the year – 87,554 – 56,38926,209 31,279Provisions 29,093 30,118Other liabilities 113,925 97,515169,227 158,912
44 SINGLE-ENTITY AND GROUP MANAGEMENT REPORT | Events after the reporting periodThe increase in intangible assets is essentially due todown-payments associated with a project for introducingan integrated merchandise information system. Property,plant and equipment remained almost unchanged at theprevious year's level.The rise in financial assets is attributable to an increase ofEUR 1.0 million in the capital held in an associated company.Inventories are slightly higher on account of the higherqualityranges. Accounts receivable and other assets haveessentially increased as a result of extending further loansto the company Gustav Wellmann GmbH & Co. KG.The equity ratio has decreased from 19.7% in the previousyear to 15.5%. Shareholders' equity was EUR 5.1 millionlower at EUR 26.2 million. Despite the capital increase ofEUR 26.1 million, this decrease was due to the net loss forthe year in the amount of EUR 31.2 million. The waiver ofrepayment effected by a shareholder on 6 January 2012will lead to an increase of EUR 25.0 million in equity. Whenadjusted accordingly, the shareholders' equity reported inthe single-entity financial statements for ALNO AG withinthe meaning of the German Commercial Code (HGB)amounts to EUR 51.2 million.Total provisions were slightly lower at EUR 29.1 million,a drop of EUR 1.0 million. The increase in liabilities isessentially attributable to higher other financial liabilitiesand higher sums payable to affiliated companies.Events after the reporting periodWaiver of repaymentIn early January 2012, Küchen Holding GmbH, Munich,took over the syndicate banks' loans receivable from theALNO Group (change of creditor from the vantage of ALNOAG) in the amount of EUR 25 million. Küchen HoldingGmbH subsequently waived repayment of the assumedreceivables effective 6 January 2012. This relieves shorttermfinancial liabilities in the amount of EUR 25 millionwithout effect on net income, as Küchen Holding GmbHhas acted in its capacity as shareholder.Termination of the voting agreementThe voting agreement between IRE Beteiligungs GmbH,Stuttgart, and Küchen Holding GmbH, Munich, both ofwhich are major shareholders in ALNO AG, was terminatedon 30 January 2012. Küchen Holding GmbH is thereforeformally no longer majority shareholder of ALNO AG. IREBeteiligungs GmbH, Stuttgart, belongs to the WhirlpoolGroup based in Michigan, USA, through BauknechtHausgeräte GmbH, Stuttgart. In recent years, KüchenHolding GmbH and Bauknecht/Whirlpool have formed acommunity of investors within the shareholder structureof ALNO AG. Through the voting agreement, the votingrights of Bauknecht/Whirlpool in ALNO AG were assignedto Küchen Holding. This made Küchen Holding GmbHthe majority shareholder in ALNO AG. Now, following thereallocation of voting rights, there is no longer a majorityshareholder in ALNO AG. Bauknecht/Whirlpool intend toexercise their voting rights directly in future. Both Bauknecht/Whirlpooland Küchen Holding GmbH continue to seetheir involvement in ALNO AG as a long-term investment.Audience award for the ceramic kitchenALNOSTAR CERAALNO's new ceramic product line won the distinction"Excellent Product" in the consumer competition "KitchenInnovation of the Year 2012" by the LifeCare initiative, aswell as the "Golden Award – Best of the Best" in the category"Kitchen furniture and equipment". The award conferredby the independent LifeCare initiative is a mark ofquality for products meeting consumer needs to a particularlyhigh degree and was given to the ALNOSTAR CERA
SINGLE-ENTITY AND GROUP MANAGEMENT REPORT | Events after the reporting period45kitchen for its functionality, product benefits, innovation,design and sustainability. The award is internationally recognizedand appreciated as a mark of quality on accountof its consumer orientation.Changes in the Board of ManagementSales Director Christoph Fughe retired from the Board ofManagement of ALNO AG by mutual consent on 29 February2012; this was decided by the Supervisory Board at itsmeeting on 17 February 2012. Christoph Fughe becamea member of the Board of Management in April 2011 andwas finally responsible for "Sales Germany" and "SalesAustria". After retiring from the Board of Management,Christoph Fughe continued to serve the company in anadvisory capacity and for special tasks until 31 May 2012.The Board of Management of ALNO AG now once againcomprises three members. The duties have also beenreallocated. In addition to his previous tasks (includingcorporate development, auditing, law and quality management),Max Müller is now also tasked with "purchasing"and "logistics" which formerly belonged to the area forwhich Elmar Duffner is responsible. The areas formerlytasked to Christoph Fughe, namely "Sales Germany" and"Sales Austria", have been assigned to Elmar Duffner,whose responsibilities include production, exports, productdevelopment and marketing / PR).Foundation of a new subsidiary in the USAA new subsidiary was set up in 2012 with the name ALNOUSA Corporation based in New York. Lothar Birkenfeld, akitchen manager with considerable experience of the USmarket, was appointed managing director.Acquisition of an ALNO premium dealer in the UnitedKingdomRuling in the lawsuit against Jörg DeiselThe 2nd court division handling commercial matters atDüsseldorf Regional Court issued a judgement in thelawsuit between ALNO AG and its former Chief ExecutiveOfficer Jörg Deisel on 10 May 2012. This judgementconfirms the legal opinion upheld by ALNO AG, accordingto which the premature renewal of his managementcontract until 2015 is invalid. In a provisional judgement insummary procedure, Düsseldorf Regional Court thereforemerely awarded the plaintiff payment of outstanding salariesand bonuses in the amount of around EUR 400,000for the period between his dismissal without notice in April2011 and expiry of the contract in force at that time (i.e. 30September 2011). However, this judgement is still subjectto appeal.Implementation of a long-term capitalization andfinancial conceptSince late 2011, the Board of Management has beenworking on the implementation of a long-term capitalizationand financial concept. The main pillars of this conceptare the conclusion of a further restructuring agreementby mid-July 2012 at the latest and a capital increase inautumn 2012.This restructuring agreement III will provide for furthercontributions by the main shareholders Küchen HoldingGmbH, Munich, and IRE Beteiligungs GmbH, Stuttgart,as well as by the main banks financing the ALNO Groupand the supplier Bauknecht Hausgeräte GmbH, Stuttgart.Among other things, the contributions by BauknechtHausgeräte GmbH, Stuttgart, also include an extension ofpayment deadlines to ensure that the liquidity of the ALNOGroup remains assured until the restructuring agreementIII and capital increase have been implemented in autumn2012.ALNO UK Ltd., Dewsbury, United Kingdom, acquired theALNO premium dealer Built-In Kitchens Ltd., Sevenoaks,United Kingdom, in April 2012 in conjunction with theexpansion of its export business.Conclusion of the restructuring agreement III will significantlyimprove Group equity and permit full repayment ofthe main banks. Repayment of the banks' financing withthe aid of old and new investors is an essential prerequisitefor the scheduled capital increase, which will be part of therestructuring agreement III.Existing bank loans payable by the ALNO Group will betaken over and repaid by old and new investors in the first
SINGLE-ENTITY AND GROUP MANAGEMENT REPORT | Events after the reporting period47In their statement on liquidity planning up to mid-2013,PwC drew attention to the following points:• Some of the planned but hitherto postponed investmentswill have to be made in the second half of 2012.• The management's short-term liquidity planning showsthat the current agreements reached with suppliers ondeferral of payments and the stand-still agreement concludedwith the banks and another financial partner haveassured the ALNO Group's liquidity until 20 July 2012.• Very different stages have been reached as regardsimplementation and negotiation of the various measurescontained in the capitalization and financial concept. Thisconsequently makes it impossible to assess the feasibilityof all the measures in the concept. However, PwC doesnot consider the measures to be obviously infeasible.• On the basis of the so-called "Adjustment Case", closingall plants for the summer break between mid-Julyand mid-August 2012 indicates that the Group's liquidityis not assured and payments may be halted during thisperiod unless other internal and/or external measures aretaken. The management of ALNO AG is therefore alreadyconducting initial negotiations with a major supplier inorder to improve the company's liquidity.• Subject to the assumptions made and provided that aliquidity buffer of at least EUR 5.0 million is permanentlymaintained, the company's liquidity is assured for theperiod thereafter, i.e. from September 2012 to the endof June 2013.In addition, PwC also drew attention to the following essentialassumptions and risks in the liquidity planning up toJune 2013:• The relationship or situation prevailing with domesticcredit insurers and suppliers is strained. The liquidityplanning is based on the assumption that both will notintroduce terms of payment which are less advantageousfor the company than those at present or planned.The Board of Management of ALNO AG has in the meantimetaken further steps to specify and implement thecapitalization and financial concept in more detail. Amongother things, these include negotiations with the financingbanks over repayment of the existing loans and credit lines,as well as negotiations with new financial partners to obtainfresh funds. The negotiations with shareholders from whommajor restructuring contributions are expected under thecapitalization and financial concept have for the most partbeen concluded.The continuation of business activities by ALNO AG andthe ALNO Group depends on timely implementation of theaforementioned measures in the capitalization and financialconcept as planned, and on whether or not the conditionsand assumptions made in the corporate planning are metor apply as planned. The Board of Management of ALNOAG presumes that the aforementioned measures in thecapitalization and financial concept will be implemented onschedule as planned, and that the conditions and assumptionsmade in the corporate planning will be met or applyas planned.• The financial concept must be implemented without faildespite the risks associated with the feasibility of individualmeasures. At the time of making the statement,investors have only issued declarations of intent whichhave still to be checked in legal and financial terms. Allother measures are under negotiation or in planning.• The possibility that the measures will not be implementedin good time to assure the ALNO Group's further liquidityconstitutes a risk. The most important and majorityof measures must therefore be implemented without failbefore the agreements on deferral of payments and thestand-still agreement expire on 20 July 2012, as considerablyhigher liquidity will be required as from the endof July 2012 due to the plants' summer break and thishigher liquidity cannot be covered without the plannedinflows from the financial concept.
SINGLE-ENTITY AND GROUP MANAGEMENT REPORT | Risks / opportunities and future perspectives49major credit lines be called in for repayment or major masterloan agreements be terminated for cause and become duefor repayment, the ALNO Group would require additionalcapital in the form of third-party capital or shareholders'equity. Moreover, a considerable part of the bank loansdrawn by the ALNO Group are subject to variable interest.Higher interest rates or other disadvantageous changes inthe terms underlying the loans can lead to higher costs forthe ALNO Group's external funding and impair its financialperformance.The intra-Group financial adjustment undertaken in Germanywithin the framework of the cash pooling processreduces the volume of external financing required, thusimproving the financial performance. Through this internalfinancial adjustment, the surplus liquidity of individualGroup companies can be used to internally finance otherGroup companies. Intra-Group cash pooling has beenrestricted since November 2009.Safeguarding the Group's short-term and long-term liquiditysituation is a focal issue for the Board of Managementof ALNO AG. Short-term liquidity is assured until 20 July2012 through a stand-still agreement with the banks,corresponding agreements on payment deadlines withBauknecht Hausgeräte GmbH, Stuttgart, and an agreementon deferral of payments with Comco Holding AG,Nidau, Switzerland. A binding, long-term refinancingconcept must be concluded with all the main stakeholdersbefore then so that the liquidity shortages otherwiseexisting in the current corporate and liquidity planning canbe covered after 21 July 2012. The equity elements of thisrefinancing concept must be decided by the Annual GeneralMeeting in August 2012. With regard to the concept'sessential content and the risks relating to the company'ssurvival, we refer to our statements on events after thereporting period (section "Implementation of the long-termcapitalization and financial concept").The ALNO Group also makes extensive use of factoringas a source of financing. The provision of finance by thefactoring company presupposes the existence of correspondingaccounts receivable. If the ALNO Group hasto satisfy accounts receivable sooner than expected onaccount of changes in the factoring agreements utilizedby the Group, this would put a considerable strain on theALNO Group's liquidity.Default / credit risksIn conjunction with Group receivables management,minimum requirements as regards creditworthiness andmaximum exposure limits have been defined for all businesspartners of the ALNO Group. These are based ona system of specified limits for which compliance is constantlymonitored.In addition, the ALNO Group safeguards its trade receivablesthrough domestic credit insurance which, if an accountreceivable is not paid, will indemnify the loss incurred inthe contractually agreed, prorated amount less a retention.Currency risksAll deliveries to countries outside the eurozone, especiallySwitzerland and the United Kingdom, are associated withcurrency risks. The development of exchange rates ismonitored constantly. There were no forward exchangedeals effective on the closing date. Should new currencyrisks arise in conjunction with ALNO's further internationalexpansion, corresponding hedging options will be exercisedas and when required. Currency risks also exist onthe purchasing side, particularly for metal goods, as theseraw materials are primarily traded in US dollars.Price risksWood, plastics, metal, glass and ceramics are the mostimportant raw materials for ALNO. Changes in the marketprice of these materials can have a corresponding impacton development of the Group's margins.Material pricesIn the first months of 2012, slight and in some cases considerablerises have once again been noted on the LondonMetal Exchange for the metal goods used by ALNO. Theprice of plastics has in some cases risen strongly overthe same period. The price of these materials is expectedto stabilize at a high level, depending on how the globaleconomy develops.Due to the considerably higher price of purchased glassand in order to permit more effective management of theproduction process, it was decided to start an in-sourcingproject for in-house production of glass and ceramicfronts at the Pfullendorf location. Production started inthe fourth quarter 2011.
50 SINGLE-ENTITY AND GROUP MANAGEMENT REPORT | Risks / opportunities and future perspectivesServicesRisks exist in particular with regard to the developmentof transport costs due to the sharp rise in fuel prices andthe foreseeable shortage of carriers' capacity. ALNO isplanning to reorganize its logistics sector in 2012 so thatit can once again operate cost-efficiently and counter therisks arising in conjunction with market developments.Market risksIn the kitchen furniture sector, the ALNO Group operatesin a market characterized by fierce competition. The pressureon margins is increasing constantly due to fiercelycompetitive prices, especially in the lower price segments,and simultaneously squeezing less competitive manufacturersout of the market. The activities of competitors andthe trade could lead to distinctly lower sales revenue andearnings for the ALNO Group.The ALNO Group's customers are primarily retailers, thevast majority of whom belong to purchasing associations.If major purchasing associations were to reduce their ordervolumes, terminate blanket agreements or be compelledto file for insolvency, and if the ALNO Group were unableto win new customers of comparable magnitude or wereunable to obtain a commensurate increase in the volumesordered by existing customers, this would lead to a tangiblereduction in capacity utilization and sales revenue,as well as to the loss of receivables for the ALNO Group.The process of repositioning the ALNO Group brandsmust also be continued and the new sales structure mustbecome more firmly established. These processes alsoentail risks.Germany is the ALNO Group's main market, accountingfor more than 70% of the total sales revenue. Other majormarkets include the United Kingdom, France, Austria,Switzerland, Spain, Italy and the Benelux countries. Thesemarkets have developed differently in the past. ALNOAG presumes that the individual markets will continue todevelop differently in the future too, depending on the influenceof economic factors. For this reason, the ALNO Groupwill step up its sales activities in selected foreign marketsin order to minimize the risks.IT risksA large part of the ALNO Group's production, warehousemanagement and accounting is essentially based on computers.Failure of the computer or production systems couldbring production to a halt and thus lead to a considerablefinancial loss for the company. What's more, ALNO AG hasoutsourced its IT systems almost entirely. Any disruptions inthe contractual relationship governing services throughoutthe IT sector at ALNO AG would impair all work processesin the company's data processing.Strategic risksTo stabilize the net assets, financial position and results ofoperations of the ALNO Group, the company considers itnecessary to take steps to boost efficiency in administrationand sales, to cut costs and ensure profitable growth,in particular by repositioning the brands. These measuresrequire investments and corresponding funds. In the yearunder review, the reorganization concepts were adjusted inthe light of changed market conditions and new prioritieswithin the Group. Instead of standardizing administrationprocesses almost simultaneously throughout the Group,it is now planned to harmonize processes in stages. Thisgradual implementation at different times gives rise to therisk of delays in reducing administration costs.OpportunitiesVolume and value of salesSeries production of the product "Wellmann new" presentedat the company exhibition in 2010 started in 2011.This product was more favourably received by the marketthan originally planned and series production of the product"Wellmann old" was discontinued in summer 2011instead of at year-end as originally planned. Particularlythe new lacquer fronts have been very well received bythe market. For a large number of customers, the logisticsservice was improved together with the change of product,in that the accuracy of delivery schedules was improvedwhen confirming orders. In other words: the so-called"two-week logic" was eliminated in Germany.For the ALNO brand, the upward trend in volume of sales ofthe "glass kitchens", i.e. high-price ranges with glass fronts,has continued. On the basis of this success, a new frontmade from ceramic material was presented at the companyexhibition. This front is resistant to scratching and was verywell received by both trade visitors and customers. Sincethen, the new kitchen has already won several innovationawards. This product will help considerably in strengtheningthe position of the ALNO brand.
52 SINGLE-ENTITY AND GROUP MANAGEMENT REPORT | Other disclosuresThe Board of Management expects a significant improvementin the development of sales and earnings in the newfinancial year 2012. The ALNO Group's sales are expectedto increase in relation to 2011. Business is expected toimprove, particularly in other countries. The management alsoexpects a distinct improvement in EBITDA over the value ofEUR -19.8 million reported for 2011 after adjustment for theextraordinary income from the waiver of repayment of EUR25 million. This appraisal is so far confirmed by the quarterlyfigures published for Q1/2012. From the point of view of theBoard of Management, 2012 will presumably be dominatedby the following issues: The brands' clear positioning is to becontinued consistently. This applies particularly for the brandsALNO and Wellmann. At the same time, production is tobecome more flexible by creating a common technical platformfor the brands Pino and Impuls; this has already beendone for ALNO and Wellmann. Higher sales, especiallyabroad, and further improvements in EBITDA are expectedfor 2013.For the segments ALNO, Impuls and Pino, distinctly highersales and improved EBITDA are expected for 2012 in relationto the value reported for 2011. Sales by the Wellmannsegment are expected to be slightly lower than in 2011, butEBITDA is nevertheless expected to improve strongly in 2012.For 2013, the Board of Management expects higher salesrevenue and a further improvement in EBITDA for each of thesegments ALNO, Impuls, Pino and Wellmann.Other disclosuresI. Declaration on Corporate Governance / Reporton Corporate GovernanceDeclaration on Corporate Governance (Section 289a ofthe German Commercial Code (HGB)) and Report onCorporate GovernanceDeclaration pursuant to Section 161 of the StockCompanies Act (AktG)Corporate governance stands for responsible, transparentand orderly management and control of companies. Thepurpose of the German Corporate Governance Code (hereinafterreferred to as "the Code") is to ensure that the rulesaccepted in Germany for managing and controlling companiesare standardized for national and international investorsand systematically implemented to strengthen confidencein the management of German companies. Section 161 ofthe Stock Companies Act (AktG) obliges listed companiesto declare every year that the company has been, and is,in compliance with the recommendations or to advise ofany recommendations that have not been, or are not being,applied and the reasons for this.The Code was last reviewed and amended by the"Government Commission on the German CorporateGovernance Code" in May 2010. This primarily led tochanges concerning membership of the Board of Managementand Supervisory Board. The Government Commissionon the German Corporate Governance Code reinforces theintention to diversify these bodies and to ensure that womenreceive due consideration.The Board of Management and Supervisory Board of ALNOAG explicitly welcome the Code's recommendations and theirobjectives. Both Boards have once again devoted their attentionto the Code's recommendations and their objectivesand complied with these recommendations with only a fewexceptions. The joint declaration of compliance by the Boardof Management and Supervisory Board is set out below andis also publicly accessible on the Internet at www.alno.de.
SINGLE-ENTITY AND GROUP MANAGEMENT REPORT | Other disclosures53Declaration pursuant to Section 161 of the StockCompanies Act (AktG) by the Board of Managementand Supervisory Board of ALNO AG concerningthe recommendations of the German CorporateGovernance Code:Board of Management and Supervisory Board of ALNO AGdeclare that since the last declaration of compliance on 7October 2010, the company has been, and is, in compliancewith the recommendations of the German CorporateGovernance Code (DCGK) in the version dated 26 May 2010(published on 2 July 2010) with the following exceptions:• The German Corporate Governance Code recommendsD&O insurance with deductible for members of the SupervisoryBoard. ALNO AG continues to believe that a deductibleis not required in view of the Supervisory Board members'responsibility and motivation in discharging their duties.Contrary to the requirements in Section 3.8 of the Code,the D&O insurance in force for members of the SupervisoryBoard of ALNO AG therefore does not include a deductible.• Section 4.2.5 of the Code recommends disclosure ofthe total remuneration received by every member of theBoard of Management in a remuneration report explainingthe system of remuneration within the framework of thereport on Corporate Governance. ALNO AG has prepareda remuneration report. This report is published in the Notesto the Annual Report, as these details constitute mandatoryinformation which must be disclosed in the Notes in accordancewith Section 314 (1) No. 6 of the German CommercialCode (HGB). The remuneration report therefore does notform part of the report on corporate governance. However,the report on corporate governance contains a reference tothe remuneration report in the Notes to the annual financialstatements.• Section 5.3.3 of the Code requires the establishment of anomination committee by the Supervisory Board to proposesuitable candidates whom the Supervisory Board can thenrecommend for election by the Annual General Meeting. Thecompany's Supervisory Board has not set up such a committee,as experience to date has not made it appear necessaryfor the purpose of nominating suitable candidates.objectives should be taken into account in the SupervisoryBoard's nominations to the relevant election committees.Establishment of the objectives and their implementation areto be published in the report on corporate governance. TheSupervisory Board of ALNO AG has already issued a specifictarget in the past as regards the maximum age of its members.At the time of issuing this declaration of compliance,the Supervisory Board is still internally considering which ofthe other specific objectives mentioned in Section 5.4.1 (2)of the Code might, with due regard for the specific situationof ALNO AG, be of relevance for the Supervisory Board'smembership. When this internal analysis is complete, theSupervisory Board will, if necessary, draw up further specificobjectives as regards its membership, in particular withregard to a suitable number of women members. This constitutesa temporary deviation from the recommendation inSection 5.4.1 (2) of the Code. In view of the ongoing internaldiscussion over whether and which specific objectives are tobe defined in addition to the age limit which is still continuingat the time of issuing this declaration of compliance, furtherobjectives cannot be taken into account at present in nominationsfor election. Corresponding notification in the reporton corporate governance is likewise not possible at present.This consequently also constitutes a temporary deviationfrom the recommendation in Section 5.4.1 (3) of the Code.• The members of the Supervisory Board do not receive anyprofit-oriented remuneration (Section 5.4.6 (2) of the Code,first sentence). ALNO AG does not see any need to changethis at present in view of the Supervisory Board's controllingand monitoring function. The remuneration paid by ALNOAG to the members of the Supervisory Board for their personalservices is published in the Notes to the Annual Reportand is therefore not included in the report on corporate governance(Section 5.4.6 (3) of the Code, second sentence).• The consolidated financial statements are not yet publishedwithin 90 days of the end of the financial year and the interimreport is not yet published within 45 days of the end of thereporting period (Section 7.1.2 of the Code, third sentence).It is planned to bring both the consolidated financial statementsand the interim report more into line with the requireddeadlines.• In the version dated 26 May 2010, Section 5.4.1 (2) and(3) of the Code introduces recommendations according towhich the Supervisory Board is required to define specificobjectives with regard to its membership which, with dueregard for the company's specific situation, take account ofits international activities, potential conflicts of interest, anage limit to be defined for the members of the SupervisoryBoard and diversity. In particular, these specific objectivesshould provide for a reasonable number of women. ThesePfullendorf, 30 September 2011Max MüllerFor theBoard of ManagementHenning GieseckeFor theSupervisory Board
54 SINGLE-ENTITY AND GROUP MANAGEMENT REPORT | Other disclosuresRelevant disclosures concerning managementduties and activities which go beyond the statutoryrequirementsMission statement of ALNO AGIt is the declared aim of ALNO AG to undertake all businessdealings in an ethically and legally irreproachable manner.On the basis of its "one company" concept, ALNO AG hasdeveloped a mission statement which sets out the basis of itscorporate culture for employees and partners, represents thecompany's corporate identity and describes the principles forsustainable and socially responsible action.Group guidelines on conduct in business lifeALNO AG has adopted internal Group guidelines defining itsconduct in business life. For all employees of the ALNO Group(including the executive management level and Board of Management),these guidelines not only specify basic behaviouralrequirements, but also define relations with business partnersand third parties, the use of company facilities and the useof data. In addition, the Group guidelines also address suchissues as the environment, occupational safety and health,and the right to make complaints and receive information.Compliance with the Group guidelines on conduct in businesslife is regularly checked in all the Group's companies.This is undertaken in compliance with the respective nationalprocedures and statutory requirements.Transparency and accountingALNO AG prepares regular annual and interim reports, adhocbulletins and press releases for its shareholders and theinterested public, informing them of the company's positionand essential changes in its business operations. The corporateinformation published by the company is also posted onthe company's website and is publicly accessible on www.alno.de.Accounting in accordance with the International FinancialReporting Standards (IFRS) was introduced for the financialyear 2005.Duties and activities of the Board of Management andSupervisory Board; membership, duties and activitiesof their committeesBoard of ManagementOn 31 December 2011, the Board of Management of ALNOAG was made up of four members. The Board of Managementruns the company on its own responsibility. It is boundby the company's interests and committed to sustainablyincreasing the company's enterprise value. The membersof the Board of Management are appointed by the SupervisoryBoard. The precise number of members making up theBoard of Management and, if necessary, its chairman andhis deputy are likewise designated by the Supervisory Board.According to the Articles of Incorporation of ALNO AG, theBoard of Management must draw up rules of procedurein consultation with the Supervisory Board. These rules ofprocedure define management of the business as a wholeand of individual business areas, the allocation of duties,the duties of the Chief Executive Officer, the Board's dutiesas regards informing the Supervisory Board and the mannerin which it deals with conflicts of interest. The Board ofManagement meets regularly at short intervals to discussthe development of business and adopt its resolutions. Inaddition, the Board of Management regularly reports to theSupervisory Board, with timely and comprehensive informationon all aspects of relevance to the company and itsplanning, business development, ongoing projects, risk positionand risk management, and coordinates the company'sstrategic orientation with the Supervisory Board.Supervisory BoardThe Supervisory Board of ALNO AG monitors and advisesthe Board of Management in its running of the company andparticipates in decisions of fundamental importance for thecompany. As required by the German One-third EmployeeRepresentation Act (DrittelbG), the Supervisory Board ofALNO AG comprises six shareholder representatives andthree employee representatives.The Supervisory Board is also required by the Articles ofIncorporation to draw up its own rules of procedure. Thesegovern, in particular, the convocation of meetings, the formationand duties of the committees and the requirements to bemet by the members of the Supervisory Board. The SupervisoryBoard meets at least twice per half-year. The chairmanof the Supervisory Board decides whether the members ofthe Board of Management are to attend its meetings. Meetingsare convened with at least 14 days' notice. The agendatopics and proposed resolutions are communicated togetherwith the invitation. In individual cases, the Supervisory Boardalso adopts resolutions in a written circulating procedure or
SINGLE-ENTITY AND GROUP MANAGEMENT REPORT | Other disclosures55through telephone conferences. The Supervisory Board doesnot include any former members of the company's Board ofManagement.Each member of the Supervisory Board is obliged to discloseany conflicts of interest immediately. Member of the SupervisoryBoard are required to resign their position in the eventof significant and not merely temporary personal conflictinginterests.The chairman of the Supervisory Board remains in regularcontact with the Board of Management and particularly withthe Chief Executive Officer, with whom he consults on thecompany's strategy, business development and risk management.In the report of the Supervisory Board and at the Annual GeneralMeeting, the chairman of the Supervisory Board givesa detailed annual report on the activities of the SupervisoryBoard and its committees.The Supervisory Board has set up the following committees:Presidial Committee and Audit CommitteeUntil 14 July 2011, the Presidial Committee prepared themeetings of the Supervisory Board, monitored the resolutionsadopted, was responsible for the employment contractssigned with members of the Board of Management and theirremuneration, and represented the company in dealings withformer members of the Board of Management, insofar asthis was not the responsibility of the Board of Managementitself. Since 14 July 2011, the Presidial Committee has alsoacquired and discharged further duties in addition to thosementioned above. The Presidial Committee has consequentlyanalysed the company's ongoing business, advised theBoard of Management with regard to the strategic orientationof the ALNO Group and Group companies, verified its implementationand prepared papers on the strategic orientation tobe adopted by the Supervisory Board, insofar as the activityconcerned required the consent of the Supervisory Board.The Presidial Committee has three members:• Mr. Henning Giesecke (chairman)• Mr. Werner Devinck• Dr. Jürgen DiegruberThe Audit Committee is mainly concerned with the preparationof negotiations and resolutions by the Supervisory Boardon matters relating to the company's accounting, risk managementand compliance, the necessary independence ofthe auditors, retaining the auditors, defining the focal pointsof the audit and reaching agreement with the auditors on theirfee for the audit.The Audit Committee has three members:• Mr. Anton Walther (chariman)• Dr. Jürgen Diegruber• Mr. Jörg KespohlFurther information on the members of the Board of Managementand Supervisory Board and on the remuneration paidto the Board of Management can be found in Section J."Supervisory Board and Board of Management" of the Notesto the annual financial statements in this Annual Report.For their activities for the Supervisory Board, the membersof the Supervisory Board received total remuneration in theamount of EUR 230,000 in the financial year 2011. This ismade up as follows:2011 in '000 EURHenning Giesecke(chairman) 45,000Rudolf Wisser(vice-chairman) 30,000Werner Devinck 22,500Dr. Jürgen Diegruber 25,000Anton Walther 25,000Jörg Kespohl 22,500Gerhard Meyer 20,000Ruth Falise-Grauer from 14 July 2011 10,000Nobert Orth from 14 July 2011 10,000Christoph Maass until 14 July 2011 10,000Armin Weiland until 14 July 2011 10,000230,000The fees paid to members of the Supervisory Board fortheir advisory activities are set out in Section J. "SupervisoryBoard and Board of Management" of the Notes to the annualfinancial statements in this Annual Report.As at 31 December 2011 the members of the Supervisory Boardheld a total of 106,666 shares. The members of the Board ofManagement held 545,507 shares on 31 December 2011.Further information on the company's management canbe found in the Articles of Incorporation of ALNO AG, whichare also publicly accessible on the company's website atwww.alno.de.
56 SINGLE-ENTITY AND GROUP MANAGEMENT REPORT | Other disclosuresII. Report pursuant to Sections 289 (4) and 315(4) of the German Commercial Code (HGB)As the ALNO Group's parent, ALNO AG uses an organizedmarket within the meaning of Section 2 (7) of the GermanSecurities Acquisition and Takeover Act (WpÜG) for itsissued voting shares and therefore reports in accordancewith Sections 289 (4) and 315 (4) of the German CommercialCode (HGB).Composition of the subscribed capitalThe subscribed capital totals EUR 67,846,945.40 as at31 December 2011 and is divided into 26,094,979no-par-value shares. The shares are issued as bearershares and fully paid up.Restrictions on voting rights or the transfer ofsharesDirect or indirect equity interestsThe equity interests applicable as at 31 December 2011are summarized below on the basis of the last figuresreported to ALNO AG in accordance with the GermanSecurities Trading Act (WpHG):Affiliated companyShare of votingrightsNotification/publication dateIRE Beteiligungs GmbH,Schorndorf 1) 18.64 % 22.7.2010Bauknecht HausgeräteGmbH, Schorndorf 1), 2) 18.64 % 22.7.2010Whirlpool Greater China Inc.,Benton Harbor, MI/USA 1), 3) 18.64 % 22.7.2010Küchen Holding GmbH,Munich 4) 54.14 % 23.3.2011Milano Investments S.à r.l.,Luxemburg, Luxemburg 5) 54.14 % 29.6.2011Restrictions on voting rights or the transfer of shares exclusivelyconcern a voting commitment, even when associatedwith agreements between shareholders. In conjunction witha Standstill and Shareholder Agreement, IRE BeteiligungsGmbH granted Küchen Holding GmbH an irrevocablepower of attorney to exercise the voting rights associatedwith the shares held by IRE Beteiligungs GmbH at the discretionof Küchen Holding GmbH. This voting agreementwas terminated on 30 January 2012. Further restrictionsare not known to the Board of Management. Each sharegrants one vote in accordance with Article 22 of the Articlesof Incorporation.Holders of shares with special rightsThere are no shares with special rights authorizing control.Type of voting control in the case of employeeholdingsThe Board of Management does not know of any votingcontrol in the event that employees hold a share of thecapital and do not exercise their right of control directly._1 In conjunction with a Standstill and Shareholder Agreement, IREBeteiligungs GmbH granted Küchen Holding GmbH an irrevocablepower of attorney to exercise the voting rights associated with theshares held by IRE Beteiligungs GmbH at the discretion of KüchenHolding GmbH.2 Pursuant to Section 22 (1), first sentence, No. 1 of the German SecuritiesTrading Act (WpHG), the voting rights of IRE Beteiligungs GmbHare ascribed to Bauknecht GmbH.3 Pursuant to Section 22 (1), first sentence, No. 1 of the German SecuritiesTrading Act (WpHG), the voting rights of Bauknecht GmbH areascribed to Whirlpool Greater China Inc.4 Pursuant to Section 22 (1), first sentence, No. 6, of the GermanSecurities Trading Act (WpHG), 18.81% of the voting rights areascribed to Küchen Holding GmbH.5 Of these voting rights, 35.33% are ascribed to Milano InvestmentsS.à.r.l. in accordance with Section 22 (1), first sentence, No.1 of theGerman Securities Trading Act (WpHG) and 18.81% in accordancewith Section 22 (1), first sentence, No. 6, second and third sentences,of the German Securities Trading Act (WpHG).
SINGLE-ENTITY AND GROUP MANAGEMENT REPORT | Other disclosures57Statutory regulations and provisions in the Articles ofIncorporation concerning the appointment and dismissalof members of the Board of Management andamendments to the Articles of IncorporationGroup companies a subscription right to the new sharescommensurate with that accruing after exercising theiroption or conversion rights or following the discharge ofconversion obligations.Members of the Board of Management are appointed anddismissed in accordance with Section 84 of the StockCompanies Act (AktG). Amendments to the Articles ofIncorporation are decided by the Annual General Meetingin accordance with Sections 133 and 179 of the StockCompanies Act (AktG). In Section 12 (2) in combination withSection 12 (1) of the Articles of Incorporation, the AnnualGeneral Meeting has exercised the option pursuant to Section179 (1), second sentence, of the Stock Companies Act(AktG) and authorized the Supervisory Board to undertakechanges which merely concern the version of the Articles ofIncorporation.Power of the Board of Management to issue and buyback sharesBy resolution of the Ordinary General Meeting of ALNO AGon 14 July 2011, the Board of Management was authorizedto increase the company's share capital with the consent ofthe Supervisory Board on one or more occasions by up toEUR 33,923,471.40 by issuing up to 13,047,489 no-par-valueordinary shares in return for cash and/or non-cash contributionsuntil 13 July 2016 (authorized capital 2011). The authorizedcapital was entered in the Register of Companies on17 August 2011.The Board of Management is authorized to undertake thefollowing actions with the consent of the Supervisory Board:• to exclude shareholders' subscription rights for fractionalamounts.• to exclude the shareholders' subscription rights as a wholein order to offer the company's new shares to third partiesin return for non-cash contributions in conjunction withbusiness combinations or the acquisition of companies orparts thereof, as well as with the acquisition of other assets,including loans and other liabilities.• to exclude the shareholders' subscription rights if the cashcapital increase does not exceed 10% of the share capitaland the issuing price is not significantly lower than themarket price of correspondingly endowed shares which arealready listed on the stock market.• to exclude the shareholders' subscription rights if necessaryin order to grant the holders of warrants or the creditors ofconvertible bonds issued by the company or its subordinateAs at 31 December 2011, the authorized capital had notbeen drawn on and consequently still amounted to EUR33,923,471.40.The Annual General Meeting on 14 July 2011 decided ona contingent capital increase. The Board of Managementwas authorized to issue, on one or more occasions until 13July 2016, cum-warrant and/or convertible bonds in a totalnominal amount of up to EUR 100,000,000.00 with a term ofup to 20 years either through the company or through companiesin which the company has a direct or indirect majorityholding ("subordinate Group companies") and to guaranteesuch cum-warrant and/or convertible bonds issued by thecompany's subordinate Group companies. The holders ofcum-warrant and/or convertible bonds must be grantedoption and/or conversion rights for up to 13,047,489 no-parvalueordinary shares in the company with a prorated shareof up to EUR 33,923,471.40 in the company's share capitalin accordance with the respective terms and conditions ofthe cum-warrant and/or convertible bonds ("conditions"). Thiscontingent capital increase may only be realized if option and/or conversion rights are issued and only insofar as the holdersof the warrants or convertible bonds exercise their optionor conversion rights, or insofar as the bond holders withconversion or option obligation also discharge their conversion/ option obligation, and the contingent capital is neededin accordance with the terms and conditions of the cumwarrantor convertible bond. The new shares issued on thebasis of the option or conversion right exercised or throughdischarge of the conversion or option obligation share inprofits as from the beginning of the financial year in whichthey are created. The Board of Management was authorizedto specify further details, with the consent of the SupervisoryBoard, concerning the realization of this contingent capitalincrease (contingent capital 2011). As at 31 December 2011the contingent capital had not been drawn on.By resolution of the Annual General Meeting on 23 June 2010and effective 24 June 2010, the Board of Management wasauthorized to acquire own shares in accordance with Section71 (1), No. 8, of the Stock Companies Act (AktG). Theauthority to acquire shares up to 10% of the share capital onthe balance sheet at the time of the Annual General Meetingremains valid until 22 June 2015.
58 SINGLE-ENTITY AND GROUP MANAGEMENT REPORT | Other disclosuresMajor changes subject to a change of controlfollowing a takeover bidThere were no such agreements as at the closing date.Compensation agreementsCompensation agreements which would apply in theevent of a takeover agreement have not been concludedbetween the company and members of the Board of Managementor employees.• Coordinated planning, reporting, controlling and earlywarning systems and processes are in place throughoutthe Group to ensure all-embracing analysis and managementof risk factors affecting earnings, as well as of risksjeopardizing the company's survival;• Functions are clearly assigned in all areas of the accountingprocess (e.g. financial accounting and controlling);• The computer systems used in accounting are protectedagainst unauthorized access;• Standard software is predominantly used in conjunctionwith the financial systems used;• An adequate internal system of guidelines (includingIII. Essential features of the accountingrelatedinternal control and riskmanagement system pursuant to Sections289 (5) and 315 (2), No. 5, of the GermanCommercial Code (HGB)According to the reasoning of the German Act to ModerniseAccounting Law (BilMoG) which came into force on 29May 2009, the internal system of controls encompassesprinciples, methods and measures to assure the effectivenessand cost-efficiency of accounting, to assure the dueand proper nature of the accounting and to ensure compliancewith the relevant legal regulations. This also includesGroup controlling insofar as it relates to the accounting.As part of the internal system of controls and like the latter,the risk management system in conjunction with theaccounting process refers to processes controlling andmonitoring the accounting, especially in the case of itemsin the commercial account which serve to hedge the company'srisks.Presentation and explanation of the main featuresof the internal system of controls and of the riskmanagement system in conjunction with theaccounting processThe main features of the internal system of controls andrisk management system used by ALNO AG can be describedas follows in conjunction with the (Group) accountingprocess:• The ALNO Group is characterized by a clear organizational,corporate, controlling and monitoring structure;Group-wide risk management guidelines) is in place andis adjusted when necessary;• The departments involved in the accounting processmeet with the quantitative and qualitative requirements;• The complete and correct nature of data in the accountingsystem is regularly verified with the aid of spot checksand plausibility checks, using both manual controls andthe installed software. On the segment level, a risk controlleris established to accompany the risk managementprocess on the segment level and to verify the plausibilityof the data;• For the consolidation, ALNO AG has set up processes toreconcile intra-Group receivables and liabilities, as wellas income and expenses;• External services (e.g. actuaries, experts, etc.) are consultedin the case of essential, complex and discretionaryaccounting issues;• Essential processes relating to the accounting are subjectedto regular analytical checks;• The double-checking principle is consistently applied inall accounting-related processes;• Accounting-related processes are checked by Groupcontrolling;• Among other things, the Supervisory Board alsoaddresses essential issues concerning the accounting,risk management, the audit mandate and its mainaspects.In conjunction with the accounting process, the internalsystem of controls and risk management assists the Boardof Management and Supervisory Board in ensuring compliancewith the statutory regulations.
SINGLE-ENTITY AND GROUP MANAGEMENT REPORT | Other disclosures59IV. Basic principles of the remuneration systempursuant to Sections 289 (2) No. 5 and 315 (2) No. 4of the German Commercial Code (HGB)Total remuneration for the members of the Board of Managementis in compliance with the statutory requirementsof the Stock Companies Act (AktG). The members of theBoard of Management receive a fixed remuneration whichalso includes non-cash elements, especially the provision ofa company car. The fixed elements assure a basic level ofremuneration allowing each member of the Board of Managementto perform his or her duties in accordance with thecompany's well-understood interests and the obligations ofa prudent business person, without becoming dependenton the achievement of merely short-term targets. In addition,their service contracts also include a variable premiumelement which depends on the company's economic performance.Further details including the personal emoluments are setout in the report on remuneration, which can be found in theNotes to the annual financial statements prepared accordingto the German Commercial Code (HGB) and in the Notesaccording to IFRS. The report on remuneration is part of themanagement report.V. Report on controlled companiesThe Board of Management has drawn up the report on relationswith companies affiliated with ALNO AG (report on controlledcompanies) for the financial year 2011 and presentedit to the auditors. The Board of Management declares thatfor all the legal transactions listed in the report on relationswith affiliated companies, the company received a reasonableconsideration for each transaction in accordance with thecircumstances known to the Board at the time of undertakingthe transaction.Pfullendorf, 11 June 2012ALNO AktiengesellschaftBoard of ManagementMAX MüllerChief Executive Officer of ALNO AGIPEK DEMIRTASChief Financial OfficerElmar DuffnerChief Operations Officer
62 Consolidated financial statements | Consolidated income statementConsolidated income statementof ALNO Aktiengesellschaft, Pfullendorf, for the period from 1 January to 31 December 2011in '000 EUR Notes 2011 2010Sales revenue C. 1 452,810 467,297Changes in inventories and capitalized goods and services for own account C. 2 882 – 1,993Other operating income C. 3 6,270 7,062Total operating revenues 459,962 472,366Cost of materials C. 4 286,398 271,907Personnel expenses C. 5 98,529 97,900Other operating expenses C. 6 94,169 92,611Income (expense) due to reorganization (-/+) C. 7 – 24,338 8,962EBITDA 5,204 986Write-downs on intangible assets, property, plant and equipment C. 8 15,902 12,104Operating result – 10,698 – 11,118Result from investments measured at equity D. 4 – 3,351 93Financial income C. 9 72 10,382Financial expenses C. 9 11,239 11,535Financial result – 14,518 – 1,060Profit/loss before income taxes – 25,216 – 12,178Taxes on income (+ = expense / - = income) C. 10 345 906Consolidated loss – 25,561 – 13,084Earnings in EUR per share (diluted and undiluted) P – 1.04 – 0.78
Consolidated financial statements | Consolidated statement of comprehensive income63Consolidated statement of comprehensive incomeof ALNO Aktiengesellschaft, Pfullendorf, for the period from 1 January to 31 December 2011in '000 EUR Notes 2011 2010Consolidated loss – 25,561 – 13,084Currency differences due to currency translation – 19 289Actuarial gains and losses from pension provisions D. 11 – 1.299 – 873Deferred taxes on actuarial gains and losses from pension provisions C. 10 204 169Changes in the value of securities recognized outside profit or loss – 16 0Deferred taxes on the change in value of securities recognized outside profit or loss C. 10 0 0Other consolidated income – 1,130 – 415Consolidated comprehensive income – 26,691 – 13,499
64 Consolidated financial statements | Consolidated statement of financial positionConsolidated balance sheetof ALNO Aktiengesellschaft, Pfullendorf,as at 31 December 2011in '000 EUR Notes 2011 2010ASSETSIntangible assets D. 1 5,989 5,088Property, plant and equipment D. 2 73,490 72,278Financial assets D. 3 3,168 3,431At-equity investments D. 4 871 2,181Financial accounts receivable D. 5 1,319 2,665Deferred tax assets C. 10 0 0Trade accounts receivable D. 6 1,283 636Other assets D. 8 335 319A. Non-current assets 86,455 86,598Inventories D. 7 25,915 28,181Trade accounts receivable D. 6 40,056 32,360Other assets D. 8 4,953 7,511Claims for income tax refunds C. 10 48 7Liquid assets D. 9 2,243 3,041B. Current assets 73,215 71,100Total ASSETS 159,670 157,698LIABILITIESSubscribed capital D. 10. a 67,847 45,231Capital reserve D. 10. b 45,916 42,437Accumulated net income D. 10. c – 187,107 – 157,390A. Shareholders' equity – 73,344 – 69,722Provisions for pensions D. 11 17,999 16,973Deferred tax liabilities C. 10 350 257Other provisions D. 12 3,192 3,773Other financial liabilities D. 14 10,482 13,057Deferred grants and subsidies from public authorities D. 15 756 781Trade accounts payable and other financial liabilities D. 16 60 82B. Non-current liabilities 32,839 34,923Other provisions D. 12 5,627 7,712Shareholder loans D. 13 365 365Other financial liabilities D. 14 99,082 73,130Trade accounts payable and other financial liabilities D. 16 86,824 101,688Other liabilities D. 17 8,269 9,408Income tax liabilities C. 10 8 194C. Current liabilities 200,175 192,497Total LIABILITIES 159,670 157,698
Consolidated financial statements | Consolidated statement of cash flows65Consolidated cash flow statementof ALNO Aktiengesellschaft, Pfullendorf, for the period from 1 January to 31 December 2011in '000 EUR Notes 2011 2010Cash flow from operating activitiesConsolidated loss – 25,561 – 13,084Income taxes 345 906Financial result 14,518 1,060Write-downs on intangible assets, property, plant and equipment 15,902 12,104Income taxes received 7 95Income taxes paid – 282 – 215Loss from the disposal of tangible and intangible assets 472 163Interest received 55 93Interest paid – 10,403 – 10,219Elimination of items without impact on cash flowChange in other provisions, provisions for pensionsand deferred grants and subsidies from public authorities 1,207 5,197Other income / expenditure without impact on cash flow – 24,056 1,639Change in other provisions with impact on cash flow – 5,224 – 4,493Cash flow from operating activitiesbefore change in working capital – 33,020 – 6,754Change in working capitalChange in inventories 2,266 – 3,457Change in trade accounts receivableand other assets – 9,156 11,870Change in other liabilities 36,649 9,881Net cash used in (previous year: provided for)operating activities – 3,261 11,540Cash flow from investment activitiesCash outflows for investment inIntangible assets – 1,937 – 575Property, plant and equipment – 16,660 – 15,220Financial assets – 66 – 152Cash inflows from the disposal ofProperty, plant and equipment 1,214 1,647Financial assets 311 0Net cash used for investment activities – 17,138 – 14,300Cash flow from financing activitiesIssuance of financial liabilities 0 1,500Retirement of financial liabilities – 3,508 – 2,430Change in current accounts and other financial liabilities – 613 – 5,089Cash inflows from capital increases 26,095 10,000Cash outflows for financing costs – 1,923 – 1,493Net cash provided for financing activities 20,051 2,488Change in cash and cash equivalents due to business activities – 348 – 272Cash fund (cash and cash equivalents) at the beginning of the financial year 981 1,258Change in cash and cash equivalents due to exchange rate movements 1 – 5Cash fund (cash and cash equivalents) at the end of the financial year D. 9 634 981
66 Consolidated financial statements | Consolidated statements of changes in equityConsolidated statement of changes in equityof ALNO Aktiengesellschaft, Pfullendorf, for the period from 1 January to 31 December 2011in '000 EURSubscribedcapitalCapitalreserve Accumulated net income Group equityConsolidatedretainedearningsCurrencytranslationreserveOther transa. outs. prof. or lossChange inprovisions forpensionsChange invalue of securitiesNotes D.10. a D.10. b D.10. c D.10. c D.10. c D.10. c1 January 2010 41,124 36,544 – 147,979 – 904 72 11 – 71,132Consolidated loss – 13,084 – 13,084Other consolidated income 289 – 704 0 – 415Consolidated compreh. income – 13,084 289 – 704 0 – 13,499Capital increase 4,107 5,893 10,000Shareholders' waivers ofrepayment 4,909 4,909Withdrawal from capital reserveto offset loss – 4,909 4,909 031 December 2010 45,231 42,437 – 156,154 – 615 – 632 11 – 69,722Consolidated loss – 25,561 – 25,561Other consolidated income – 19 – 1,095 – 16 – 1,130Consolidated compreh. income – 25,561 – 19 – 1,095 – 16 – 26,691Capital increase 22,616 3,479 26,095Transaction costs – 3,026 – 3,02631 December 2011 67,847 45,916 – 184,741 – 634 – 1,727 – 5 – 73,344
Consolidated financial statements | Object of the company67NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTSOF ALNO AKTIENGESELLSCHAFT, PFULLENDORF,FOR THE FINANCIAL YEAR 2011A. Object of the companyALNO Aktiengesellschaft, Pfullendorf (hereinafter simplyreferred to as: "ALNO AG"), a listed stock corporationaccording to German law, and its subsidiaries (hereinaftersimply referred to as the: "ALNO Group"), produce andmarket fitted kitchens for the world market, predominantlyunder the brand names ALNO, Impuls, Pino and Wellmann.We refer to the information in the single-entity andgroup management report with regard to the Group structureand main activities of the ALNO Group. The Group isbased at Heiligenberger Strasse 47 in 88630 Pfullendorf,Germany. The highest parent of ALNO AG is Milano InvestmentsS.à r.l., Esch-sur-Alzette, Luxemburg.B. Accounting policies1. Basis for preparation of the financialstatementsThe 2011 consolidated financial statements of ALNO AGhave been prepared in compliance with the standardsand interpretations of the International Financial ReportingStandards Board (IASB), London, to be applied in the EUand in effect on the closing date. The applicable furtherrequirements of Section 315a of the German CommercialCode have also been taken into account.All figures are stated in thousands of euros ('000 EUR),unless stated otherwise.The consolidated financial statements and Group managementreport which has been combined with the managementreport of ALNO AG were approved by the Boardof Management on 6 June 2012 to be forwarded to theSupervisory Board.The consolidated financial statements are prepared on thebasis of a going concern and are based on the principleof the historical amortized cost of acquisition, constructionor production, except for financial assets which arerecognized at fair value. The balance sheet is presentedusing the classification according to current (short-term)and non-current (long-term) assets and liabilities. All itemswhich do not mature within one year are classified as noncurrentassets or liabilities. Deferred taxes are likewiseposted as non-current assets and liabilities.The prime objective of the Board of Management andall corporate entities is to restore the company's goodfinancial health and to ensure that it is competitive andprofitable in the long term.PricewaterhouseCoopers AG Wirtschaftsprüfungsgesellschaft("PwC") was retained in early 2010 to prepare a reorganizationassessment for the ALNO Group in accordancewith statement IDW S6 of the German Institute of Auditors.In their assessment of 24 June 2010, PwC confirmed theALNO Group's prognosis as a going concern as long asfinancing is assured in accordance with the restructuringagreement I of 23 April 2010 and as long as the requiredmeasures are implemented within the framework of thecorporate planning.In spring 2011, PwC was requested to undertake an updateof their reorganization assessment for the ALNO Group. Inthe updated reorganization assessment of 13 May 2011,PwC found that the ALNO Group is fully financed so far ascould be established at that time and subject to certainconditions, and that there were no changes as regardsthe statements made in the reorganization assessment of24 June 2010. However, PwC did point out that the ALNOGroup's restructuring would take longer than had beenplanned in the previous year.In November 2011, PwC was requested to update theirreorganization assessment for the ALNO Group. Sincethe operational and financial reorganization concept wasstill in the planning stage, PwC was unable to make anystatement in their draft of 9 March 2012 as to the ALNOGroup's ability to be restructured and continued as a goingconcern.On the basis of this mandate, PwC was therefore requestedin late April 2012 to follow up on an existing analysis of
68 Consolidated financial statements | Accounting policiesthe short-term liquidity planning until mid-July 2012 andverify the plausibility of the Group's liquidity planning upto mid-2013.In mid-May 2012, the Board of Management successfullyobtained written, non-binding declarations of intentwith liquidity and financing contributions in the amountof up to EUR 106 million on the basis of its operationaland financial capitalization and financial concept (refer toSection "N. Events after the closing date"). These sumswill predominantly be used to repay accounts payable tobanks in the amount of between EUR 55 million and EUR60 million. The objective of this repayment is essentiallyto release significant collateral which the company canthen use to realize other external financing opportunities.Other financial liabilities in the amount of EUR 14 millionhave additionally been deferred until September 2013. Allthe aforementioned liquidity and financing contributionsare subject to various conditions precedent, including firstand foremost the conclusion of a restructuring agreementIII obligating the major shareholders, suppliers, banks andother investors to make corresponding financial contributions.In addition, the capitalization and financial concept alsostipulates that domestic credit insurers and suppliers mustnot change their terms of payment to the disadvantage ofthe company in relation to the present or planned level.Local financing lines must be maintained as planned. Theexisting factoring framework and the other insignificantcredit lines must remain in effect.On the basis of their so-called "Adjustment Case", PwCconfirmed in their report of 29 May 2012 that the companyis fully financed and Group liquidity assured for theperiod up to July 2013 which was to be assessed for thepurpose of determining the company's continuation as agoing concern.The continuation of business activities by ALNO AG andthe ALNO Group depends on timely implementation of theaforementioned measures in the capitalization and financialconcept as planned, and on whether or not the conditionsand assumptions made in the corporate planning are metor apply as planned. The Board of Management of ALNOAG presumes that the aforementioned measures in thecapitalization and financial concept will be implemented onschedule as planned, and that the conditions and assumptionsmade in the corporate planning will be met or applyas planned.The continuation of business activities by ALNO AG andthe ALNO Group depends on the conditions and assumptionsmentioned above being met or applying as planned.The Board of Management of ALNO AG presumes thatthese conditions and assumptions will be met or applyas planned.2. Change in accounting policiesNew standards to be appliedIt is planned to conclude the restructuring agreement IIIin mid-July 2012. Major parts of this agreement must bedefinitively discharged before the end of July 2012. Furthercontributions must be decided at the Annual General Meetingscheduled for August 2012.The amended standards which became mandatory in 2011and the new or amended interpretations of the IASB havebeen taken into account by the ALNO Group, insofar asthey have been endorsed by the European Union. The followingchanges have been introduced:Due to the legal and financial complexity of the individualfinancial contributions, as well as restrictions with regard totime-limits, implementation of the restructuring agreemententails risks which are not inconsiderable.In their "Plausibility verification of liquidity planning up tomid-2013" dated 29 May 2012, PwC stated that the feasibilityof all the concept's measures cannot be assessed onthe basis of the present stage reached in the negotiations.However, they also state that the measures do not appearto be evidently impossible.• Amendment to IAS 24 – Related Party Disclosures• Improvements to IFRS 2010• Amendment to IAS 32 – Financial Instruments: Presentation• Amendment to IFRIC 14 – Prepayment of Minimum FundingRequirements• IFRIC 19 – Extinguishing Financial Liabilities with EquityInstruments
Consolidated financial statements | Accounting policies69The standards of relevance to the ALNO Group and theirconsequences for the consolidated financial statementsare outlined below.• Amendment to IAS 24 – Related Party DisclosuresThe revised IAS 24 clarifies the definition of related companiesand persons, as well as of the notifiable transaction;in addition, it exempts government-controlled companiesfrom the duty to disclose transactions with the governmentand other companies controlled by the same governmentin certain cases. Both changes are without effect for theconsolidated financial statements of ALNO AG.• Improvements to IFRS 2010:This collection of amendments introduces changes to variousstandards and interpretations. It affects the standardsIFRS 1, IFRS 3, IAS 1, IAS 27, IAS 34, IAS 21 and IFRIC13. Except for the rulings specifically mentioned below,these changes are without effect for the consolidatedfinancial statements:IFRS 3 – Business Combinations: Limits the number ofmeasurement options. In future, shares without a controllinginterest establishing a current right of ownership and, inthe case of liquidation, entitlement to a percentage share ofthe net assets, may be measured either at fair value or onthe basis of the percentage share of current ownership ofthe identifiable net assets of the acquired business. Otherholdings without a controlling interest must be measuredat their fair value on the acquisition date.IFRS 7 – Financial Instruments: Disclosures: The amendmentestablishes that the qualitative disclosures on risksassociated with financial instruments must support andexplain the respective quantitative disclosures. Changesconcerning quantitative disclosures relating to the creditrisk provide for changed disclosures of financial assets withregard to the amount best reflecting the maximum creditrisk. Some of the former disclosure requirements no longerapply in this context.IAS 1 – Presentation of Financial Statements: Analysis ofother performance can be presented either in the consolidatedstatement of changes in equity or in the Notes to theconsolidated financial statements in future.IAS 34 – Interim Financial Reporting: The standard listsadditional events to be reported, but states that the list isnot exhaustive.• IFRIC 19 – Extinguishing Financial Liabilities with EquityInstrumentsThe interpretation establishes that equity instrumentsissued to a creditor to extinguish a financial liability aredeemed to be "consideration paid". The equity instrumentsissued are measured at fair value. If the fair value cannotbe reliably determined, measurement must be based onthe fair value of the extinguished liability. Gains and lossesare immediately recognized as income. This interpretationmust be noted retrospectively and can apply for the ALNOGroup, depending on further restructuring agreements.Published accounting standards that are not yetappliedThe following standard has been amended by the IASB andendorsed by the European Union, but its application is notyet mandatory and it has not been applied prematurely. Theamendment applies for reporting periods beginning on orafter the amendment comes into force.• Amendment to IFRS 7 – Financial Instruments: Disclosures(effective date: 1 July 2011; retrospective)The amendment to IFRS 7 provides for additional disclosureson transactions concerning the transfer of financialassets. Attention focuses particularly on the risks remainingwith the transferring party. Further disclosure requirementsapply for reporting periods towards the end of which a disproportionatelylarge number of transfers are undertaken.First-time application of these amendments will affectthe disclosures in the Notes to the consolidated financialstatements insofar as financial assets are transferred andthe Group retains at least some of the risks and rewardsassociated with ownership of the assets.
70Consolidated financial statements | Accounting policiesThe following new standards and interpretations issued bythe IASB, as well as amendments to existing standards,have not yet been endorsed by the European Union. Theirapplication is not yet mandatory and they are not appliedprematurely on a voluntary basis.• IFRS 9 – Financial Instruments: Classification and measurement(effective date: 1 January 2015; retrospective)• IFRS 10 – Consolidated Financial Statements (effectivedate: 1 January 2013; retrospective)• IFRS 11 – Joint Arrangements (effective date: 1 January2013; retrospective)• IFRS 12 – Disclosure of Interests in Other Entities (effectivedate) 1 January 2013; retrospective)• IFRS 13 – Fair Value Measurement (effective date: 1 January2013; retrospective)• Revised version of IAS 27 – Single-entity FinancialStatements (effective date: 1 January 2013;retrospective)• Revised version of IAS 28 – Investments in Associatesand Joint Ventures (effective date: 1 January 2013;retrospective)• Amendment to IAS 1 – Presentation of FinancialStatements (effective date: 1 July 2012; retrospective)• Revised version of IAS 12 – Income Taxes (effective date:1 January 2012; retrospective)• Amendment to IAS 19 – Employee Benefits (effectivedate: 1 January 2013; retrospective)• Amendment to IFRS 7 and IAS 32 – Financial Instruments:Offsetting Financial Assets and Financial Liabilities(effective date: 1 January 2013 and 1 January 2014;retrospective)• IFRIC 20 – Stripping Costs in the Production Phase ofa Surface Mine (effective date: 1 January 2013; retrospective)• Improvements to IFRS 2011 (effective date: 1 January2013; retrospective)The amendments apply for financial years beginning on orafter the amendments come into force. The standards ofrelevance to the ALNO Group and their consequences forthe consolidated financial statements are outlined below.• IFRS 9 – Financial Instruments: Classification andMeasurement:This standard was issued by the IASB as the first part ofa project fundamentally revising the accounting treatmentof financial instruments and contains new requirementsfor the classification and measurement of financial assetsand liabilities. Financial assets must now either be recognizedat the amortized cost of acquisition or reportedat fair value as income. Equity instruments must alwaysbe recognized at fair value. In the case of new additions,however, fluctuations in the value of equity instruments caninstead be recognized outside profit or loss if preferred. Inthis case, only dividend payments would be recognizedas income. At present, changes in the value of securitiesrecognized at fair value (debt instruments) are recognizedin equity outside profit or loss in the consolidated financialstatements. As a result of the changes introduced by IFRS9, these changes in value will be posted in the incomestatement when IFRS 9 comes into effect. Due to the smallscope of changes in value recognized outside profit or lossto date, application of the new standard will not have anymaterial effect on the consolidated financial statementsof ALNO AG.On 28 October 2010, the IASB published the revisedstandard IFRS 9 which has been extended to includefinancial liabilities. Where possible, all financial liabilitiesare basically to be measured at the amortized cost ofacquisition. Fair value measurement through profit or lossis now only permitted for derivatives which represent aliability for the accounting entity. IFRS 9 will lead to materialchanges above all as regards the fair value option forfinancial liabilities. Since this option is not exercised bythe ALNO Group, application of the new standard is notexpected to have any impact on the consolidated financialstatements of ALNO AG.• IFRS 10, 11 and 12 – New rules on consolidation:With IFRS 10, 11 and 12, the IASB has published threenew standards, as well as two revised standards – IAS 27and 28 – for reporting business combinations.IFRS 10 is the result of the "Consolidation" project and willreplace the consolidation guidelines in IAS 27 and SIC-12.The standards to be applied to IFRS single-entity financialstatements remain unchanged in IAS 27. IFRS 10 focuseson the introduction of a uniform consolidation model for allentities, based on control of the subsidiary by the parent.The concept of control must consequently be applied not
Consolidated financial statements | Accounting policies71only to parent-subsidiary relations based on voting rights,but also to parent-subsidiary relations based on other contractualagreements. The concept of control must thereforebe applied in future to special purpose entities which arecurrently consolidated according to the concept of risksand rewards.IFRS 11 was developed from the "Joint Ventures" projectand will replace IAS 31. Quota consolidation will be abolishedwhen IAS 31 becomes ineffective. Parallel changes interminology and classification must be taken into account,with the result that not all joint ventures which are currentlyincluded in the scope of quota consolidation need bereported at equity in future. The equity method is applied inaccordance with the requirements of IAS 28 incorporatingsubsequent amendments.IFRS 12 combines the revised disclosure requirements ofIAS 27, IFRS 10, IAS 31, IFRS 11 and IAS 28 in a singlestandard,Whether the inclusion of special purpose entities will changeunder the new requirements is currently being investigated.The elimination of quota consolidation for joint ventures willhave no impact on the consolidated financial statements, asthe joint venture is already accounted for using the equitymethod.• IFRS 13 – Fair Value Measurement:The new standard rounds off the project to establish auniform, all-embracing standard for measurement. IFRS13 defines the procedure to be applied for measurementat fair value insofar as fair value measurement (or fair valuedisclosure) is stipulated by another IFRS. IFRS 13 does notspecify what is to be measured at fair value. According tothe new definition of fair value, fair value is characterized asbeing the selling price of an actual or hypothetical transactionbetween any two independent market-players understandard market conditions. The standard is almost allembracing,only IAS 17 and IFRS 2 are excluded. While thescope of these requirements remains almost unchanged forfinancial instruments, it is now defined more comprehensivelyand more precisely for other assets (e.g. investmentproperty, intangible assets, property, plant and equipment).Where financial instruments are concerned, the effect ofmarket and credit risks can now be included in the fair valueof a portfolio on balance, insofar as a relationship betweensuch effects can be proved. The familiar 3-stage fair valuehierarchy must be applied throughout. Two checks mustnow be performed for "declining market activities" (previously"inactive markets), namely (a) whether trade activitieshave declined and (b) whether subsequent transactionsactually undertaken were not in conformity with the market:a price deviating from the market price is only permitted ifboth are affirmed.Due to the small scope of financial assets recognized atfair value, we do not expect any material impact on theconsolidated financial statements.• Amendment to IAS 1 – Presentation of Financial Statements:This amended standard introduces new requirements asregards the presentation and development of other operatingresults. The individual elements making up the otheroperating result must consequently be classified accordingto whether or not they are subsequently reclassifiedin the income statement (so-called recycling process).Compliance with this requirement will result in changedpresentation of the statement of comprehensive incomein future. This will not have any impact on the financialposition and results of operations• Amendment to IAS 19 – Employee Benefits:The revised version of IAS 19 will completely replace theformer standard. The most important change concernsabolition of the corridor method. In future, all changes indefined benefit obligations and the fair value of plan assetsmust be recognized in full in the period in which they arise,with the result that pension provisions are now recognizedin the balance sheet in their full amount. Anothernew requirement concerns the presentation of changes indefined benefit obligations and plan assets in the incomestatement. The change in net liability must be subdividedinto three elements in future. Current service costs andnet interest cost must in future be reported in the incomestatement under personnel expenses and financial resultrespectively. The third element, the so-called remeasurementcomponent, essentially comprises actuarial gainsand losses and must be recognized outside profit or lossunder other operating results. Recognition and measurementof employee termination payments will be affectedby changes to the accounting of termination payments,including a distinction between payments in return forservices rendered and payments in return for terminationof the employment relationship. Disclosure requirementsare also extended by IAS 19. Since actuarial gains andlosses are already recognized in equity, the new accountingrequirements will not have any material impact on thenet assets, financial position and results of operations ofthe ALNO Group. The changed accounting requirements
72Consolidated financial statements | Accounting policiesfor employee termination payments will primarily affect therecognition and measurement of additional sums to top uppre-retirement part-time working arrangements.• Improvements to IFRS 2011:This collection of amendments introduces changes to variousstandards and interpretations. Except for the rulingsspecifically mentioned below, these changes are withouteffect for the consolidated financial statements:IAS 1 – Presentation of Financial Statements: Comparativeinformation: The proposed amendment establishesthat, above and beyond the comparative period for whichdisclosure is mandatory, only individual items of comparativeinformation need be disclosed voluntarily without atthe same time creating an obligation to disclose a completecomparative financial statement. In addition, it alsoestablishes that, when accounting policies are changedretroactively or when balance sheet items are adjustedor reclassified retroactively, the third balance sheet forwhich disclosure is mandatory must always be preparedat the start of the comparative period for which disclosureis mandatory. Notes to this balance sheet are no longermandatory.IAS 32 – Financial Instruments: Presentation: The proposedamendment eliminates the conflict between IAS 32 and IAS12 "Income Taxes" with regard to recognition of the taxconsequences of dividend payments and transaction costsresulting from the issue and retirement of equity instruments.These must be reported in compliance with IAS 12.IAS 34 – Interim Financial Reporting: Segment assets andsegment liabilities need only be disclosed in the interimreport if the disclosure forms the subject of regular reportingto the main decision-making body of the entity. Thisproposed amendment brings the disclosure requirementsof IAS 34 into line with those of IFRS 8 "Operating Segments".3. Consolidation principlesScope of consolidationGroup parent is the company ALNO AG which is enteredin the Register of Companies of Ulm Local Court (HRB727041). As in the previous year and in accordance withthe principles of full consolidation, the consolidated financialstatements as at 31 December 2011 include not onlyALNO AG, but also nine German and three foreign companiesin which ALNO AG directly or indirectly holds up to100% of the share capital.In addition and again as in the previous year, two specialpurpose entities in which ALNO AG exercises financialcontrol over the companies are also fully consolidated aspermitted by IAS 27 in combination with SIC 12. ALNO AGholds 100% of the shares in both companies, but does nothave any voting rights under the partnership agreements.ALNO Middle East FZCO, Dubai/UAE (ALNO Middle East),(50% holding), is included in the consolidated financialstatements according to the equity method.Consolidation policiesAll companies included in the consolidated financial statementsprepare their annual financial statements as per theclosing date of the single-entity financial statements ofALNO AG, i.e. as per the closing date of the consolidatedfinancial statements. The consolidated financial statementsare prepared on the basis of uniform recognition and measurementpolicies in compliance with the IFRS requirementsto be applied in the EU.Capital consolidation is effected in accordance with IFRS3 using the acquisition method. At the time of acquiringcontrol, the subsidiary's new measured assets and liabilities,as well as contingent liabilities insofar as they are notcontingent on a future event, are offset at the fair value ofthe consideration paid for the asset or liability. Contingentpurchase price payments are included in the fair value ofthe consideration to be paid in the expected amount andcarried as liabilities. Subsequent adjustments in contingentpurchase price payments are recognized as profit or loss.Incidental costs associated with the acquisition are carriedas expenses at the time incurred.
Consolidated financial statements | Accounting policies73A remaining asset-side balancing item is recognized asgoodwill. The unimpaired status of capitalized goodwill ischecked within the framework of an impairment test asat the closing date. Negative differences resulting fromcapital consolidation are recognized as income in theconsolidated income statement.Income and expenses and accounts receivable and payablebetween consolidated companies are eliminated,as are provisions. Interim results in the fixed assets andinventories from intra-Group deliveries are eliminated.Deferred taxes are recognized on consolidation measureswith impact on profit or loss. Intra-Group guarantees areeliminated.currency items are translated at the exchange rate on thetransaction date.Exchange losses are set off against exchange gains forpresentation in the consolidated income statement.The following exchange rates are applied for translatingforeign currencies to euros:perEUR 31.12.2011 31.12.2010Averagerate 2011Average rate2010GBP 0.8379 0.8567 0.8682 0.8589CHF 1.2169 1.2466 1.2336 1.3833Entities are no longer included in the consolidated financialstatements when the parent's control ends.4. Summary of main accounting policiesCurrency translationThe consolidated financial statements are prepared ineuros, the functional currency of ALNO AG.The annual financial statements of foreign subsidiariesare translated into euros according to the functional currencyconcept pursuant to IAS 21. Since all consolidatedcompanies pursue their business independently, thefunctional currency is always the currency of the countryconcerned. Assets and liabilities are therefore translatedat the exchange rate on the closing date; items in theconsolidated income statement are translated at the averageexchange rate of the year; equity is recognized athistorical rates. Differences resulting from application ofthe different foreign exchange rates are recognized outsideprofit or loss.Consideration of earningsSales are posted at the date on which risk is transferredfollowing delivery on the basis of the terms of sale, minusreturns, volume and price discounts and value-added tax.Only the product sales resulting from ordinary businessactivities and the associated accessory services are recognizedas sales.Earnings from services rendered are recognized inaccordance with the degree of completion, if the amountof income can be reliably determined and receipt of theeconomic benefit can be expected.Other earnings are realized in accordance with the contractualagreements and on completion of the service.Differences due to currency translation of intra-Groupaccounts receivable and payable in foreign currency, whichare neither scheduled nor expected to be settled withina foreseeable period of time, are recognized in the consolidatedfinancial statements outside profit or loss underthe provision from currency translation in accordance withIAS 21.32.Financial resultThe financial result essentially comprises interest incomefrom cash investments and interest expenses for loans.Interest received and paid is recognized as income at thetime of creation.Monetary assets and liabilities in foreign currency areposted in the single-entity financial statements at theexchange rate on the transaction date and translated atthe closing rate on each closing date. Currency differencesare recognized as income and reported under otheroperating income and expenses. Non-monetary foreignCost of financing is capitalized as part of the cost ofacquisition or production, insofar as it can be assignedto a qualified asset. In all other cases, it is immediatelyrecognized as an expense.
74Consolidated financial statements | Accounting policiesIncome taxesAs required by IAS 12, income tax refunds and liabilities forthe current and prior periods are measured in the expectedamount of the refund from, or payment to, the tax authorities.Amounts are calculated on the basis of the tax ratesand tax laws in force on the balance sheet date.In addition, the deferred income tax reliefs or burdens tobe calculated in compliance with IAS 12 from temporarydifferences between the carrying values recognized in theconsolidated financial statements prepared according toIFRS and their local tax bases, as well as from consolidationmeasures, are recognized as either deferred tax assets ordeferred tax liabilities. Deferred tax assets are additionallyrecognized on tax loss carryforwards if it is sufficientlyprobable that the resultant tax reliefs will actually occurin the future. The soundness of deferred tax assets ontax loss carryforwards is assessed on the basis of the taxplanning for the next four years. Recognition of deferredtax assets also takes account of the existence of temporarydifferences to be taxed in conjunction with the same taxauthorities and the same tax subject.Deferred taxes are calculated on the basis of the tax ratesin force in the various countries at the time of realizationor to be expected with reasonable probability accordingto the present legal situation.Deferred taxes relating to items which are directly recognizedin equity are reported in equity and not in theconsolidated income statement.Turnover taxIncome, expenses, intangible assets and property, plantand equipment are recognized after deduction of turnovertax, insofar as the turnover tax can be collected oris refunded by a tax authority. Accounts receivable andpayable are recognized inclusive of turnover tax. Provisionsare carried as liabilities without considering turnover tax.The amount of turnover tax refunded by, or payable to,a tax authority is reported under other assets and otherliabilities.Intangible assetsPurchased and self-generated intangible assets are capitalizedin compliance with IAS 38 at their acquisition orproduction cost if use of the asset is probably associatedwith future economic benefit and the costs of the assetcan be reliably determined.The cost of production of intangible assets exclusivelycomprises directly attributable costs.The carrying amount of deferred tax assets is checked oneach closing date and reduced to the extent that adequatetaxable income which can at least partly be set off againstthe deferred tax entitlement no longer appears probable.Unrecognized deferred tax entitlements are checked oneach closing date and recognized to the extent that futuretaxable income makes realization of the deferred tax entitlementprobable.Deferred tax assets and liabilities are netted when theconditions have been met for setting off taxes receivableagainst taxes payable.In addition, deferred tax assets and liabilities are not recognizedwhen they result from first-time recognition of goodwillor of an asset or liability associated with a transactionnot relating to a business combination, and when suchfirst-time recognition impacts neither the reported Profit/loss before income taxes nor the taxable income.With regard to the reporting and measurement of goodwill,we refer to the information provided on consolidation policies,as well as to the information in the Section "Impairmenttest for goodwill".Other intangible assets – predominantly software and otherindustrial property rights – are recognized at acquisitioncost and amortized in accordance with their useful life oftwo to ten years.Carrying amounts, useful life and amortization methods arereviewed at the end of each financial year and adjustedif required.Research costs and development costs which cannot becapitalized are recognized as expense items at the timeincurred.
Consolidated financial statements | Accounting policies75An intangible asset is derecognized either on disposal orwhen further use or sale of the asset is not expected toyield any further economic benefit. Gains or losses resultingfrom the disposal of assets are calculated as the differencebetween net proceeds from sale and carrying amountof the asset and recognized as income in the income statementin the period in which the asset is derecognized.Property, plant and equipmentProperty, plant and equipment are measured at acquisitionor production cost in compliance with IAS 16, minusamortization, depreciation and impairment losses.They are written down on a straight-line basis and prorata temporis in accordance with the following estimateduseful economic life:YearsBuildings 25 – 60Machinery, factory and office equipment 2 – 25Computer systems 3 – 7Property, plant or equipment is derecognized either ondisposal or when further use or sale of the asset is notexpected to yield any further economic benefit. Gains orlosses resulting from the disposal of assets are calculatedas the difference between net proceeds from sale and carryingamount of the asset and recognized as income in theincome statement in the period in which the asset isderecognized.Finance leasesALNO AG is lessee of factory and office equipment. Incompliance with IAS 17, economic ownership of the leasedassets must be attributed to the lessee if the latter acquiresall the main risks and rewards associated with the asset(finance lease). All leased assets which are classified asbelonging to a finance lease are capitalized in the consolidatedfinancial statements at the lower of the fair value andpresent value of the lease payments. Leased assets aredepreciated by the straight-line method over the shorterof their useful life or the lease termImpairment testsImpairment test for goodwillGoodwill from business combinations is attributed to thecash generating units benefiting from the combinations.The goodwill ascribed to ALNO AG in previous years in theamount of EUR 2,535 thousand was fully adjusted followingthe impairment test performed in the financial year 2009.The complete remaining goodwill in the ALNO Group inthe amount of EUR 1,483 thousand is attributed to theCASAWELL Group. The CASAWELL Group comprisesGustav Wellmann GmbH & Co. KG and its subsidiaries.The unimpaired status of goodwill is determined on thebasis of impairment tests at year-end and also during theyear if there are any signs of an impairment.When performing impairments tests to IAS 36, the recoverableamount is determined for the cash generating unitconcerned.Carrying amounts, useful life and amortization methods arereviewed at the end of each financial year and adjustedif required.Government grants and subsidies do not lead to a reductionin the cost of acquisition of the relevant assets, butare instead carried as deferred liabilities in compliance withIAS 20.24 and reversed as income over the useful life ofthe subsidized assets.The recoverable amount is the higher of the fair value ofthe cash generating unit minus costs to sell or value in use.The value in use is equal to the present value of futurecash flows expected from continued use of the cash generatingunit and its disposal at the end of its useful life.The value in use is determined in compliance with IAS 36using the discounted cash flow method based on datafrom the authorized corporate planning after correctionfor investment in expansion and planned reorganization.The planning horizon always covers four years. In the caseof the cash generating unit ALNO, the planning horizonwas extended by an additional period, as the first fouryears only displayed negative targets. Cash flows are discountedusing the weighted average capital cost (WACC)for a group of comparable entities, taking into account the
Consolidated financial statements | Accounting policies77EUR 0 thousand) were recognized on intangible assets,property, plant and equipment for the year 2011 (see C.8."Write-downs on intangible assets, property, plant andequipment").As outlined above, the forward-looking assumptions underlyingthe calculations are based on various uncertainestimates. These uncertainties can have a significant effecton the result of the calculations. The effect of differentplanning scenarios on the value in use of the cash generatingunits ALNO AG and CASAWELL is outlined below(referred only to the change in value of the perpetual annuityas value-driving factor).ALNO AG:in '000 EURWACCFree Cash Flow – 2 % – 1 % 0 % 1 % 2 %– 20 % – 11,332 – 16,578 – 20,203 – 22,802 – 24,713– 10 % – 7,729 – 13,691 – 17,827 – 20,808 – 23,0130 % – 4,126 – 10,803 – 15,450 – 18,813 – 21,31410 % – 523 – 7,915 – 13,074 – 16,818 – 19,61420 % 3,080 – 5,027 – 10,697 – 14,824 – 17,914Impairment test for other intangible assets,property, plant and equipmentOther intangible assets, property, plant and equipmentwere scrutinized at the closing date to determine whetherthere were any indications of a possible impairment. Animpairment test in accordance with IAS 36 is performed ifsuch indications are found.Impairment testing involves determining the recoverableamount for each individual asset or, if cash inflows cannotbe allocated to the individual asset, for a cash generatingunit. Cash generating units are defined as being the smallestunits capable of generating cash flows. In the ALNOGroup, these are the individual companies.The recoverable amount is the higher of the fair value ofthe asset or cash generating unit minus costs to sell orvalue in use.An impairment is recognized when the recoverable amountis lower than the carrying amount of the asset or cashgenerating unit. If the reasons for a previously recognizedimpairment loss no longer apply, the impairment loss isreversed provided that the reversal does not cause thecarrying amount to exceed the amortized cost of acquisitionor production.CASAWELL:Reporting of interests in joint venturesin '000 EURWACCFree Cash Flow – 2 % – 1 % 0 % 1 % 2 %– 20 % 89,905 72,297 59,601 50,029 42,566– 10 % 101,261 81,845 67,233 56,493 48,1250 % 112,617 90,673 74,858 62,957 53,68310 % 123,973 99,860 82,495 69,421 59,24220 % 135,329 109,048 90,127 75,884 64,801Interests in joint ventures are included in the consolidatedfinancial statements using the equity method in compliancewith IAS 31.38.Acquisition costs are increased or decreased by the proratedprofit/loss for the year. Disbursements reduce, andcapital increases increase, the carrying amount of the interest.Changes in equity outside profit or loss are likewiserecognized in Group equity on a prorata basis. If thereis any indication of an impairment, an impairment test isperformed in compliance with IAS 36.
Consolidated financial statements | Accounting policies79Provisions for pensionsFinancial liabilitiesThe ALNO Group operates a defined benefit plan for formermembers of the Board of Management and executiveemployees in Germany and abroad.The option of classifying financial liabilities as financialliabilities to be measured at fair value through profit or losswhen recognized for the first time is not exercised.ALNO's benefit plan is a defined benefit plan in compliancewith IAS 19.27 directly obligating the company to payagreed benefits to past and present employees; actuarialrisks and investment risks are basically borne by the company.The provision is calculated using the method of regularlump-sum premiums (Projected Unit Credit Method)defined by IAS 19 insofar as it is not covered by existingplan assets. The interest expense from adding interest isrecognized as a financial expense.Financial liabilities essentially comprise shareholder loans,accounts payable to banks and other financial liabilities.In compliance with IAS 39, all financial liabilities are basicallyaccounted for at their amortized cost of acquisition(financial liabilities measured at cost), which correspondsto the fair value of the consideration received, includingtransaction costs. Current financial liabilities regularly alsoinclude those non-current loans which have a remainingterm of not more than one year.The Group has exercised the option of netting all actuarialgains and losses accruing in the financial year with equityoutside profit or loss.Other provisionsOther provisions are set up in compliance with IAS 37 if acurrent – legal and constructive – obligation towards thirdparties is probable and can lead to a reliably estimatedoutflow of resources. Provision for expenditure is generallynot formed.Measurement is performed in the amount of the best estimateof the expenditure required to settle the obligation onthe balance sheet date. Non-current provisions are recognizedat their settlement value discounted to the balancesheet date in accordance with IAS 37, insofar as the effectis substantial. In the event of discounting, the provision'sincrease due to the passage of time is recognized as afinancial expense.Derivative financial instrumentsIn 2008, ALNO AG acquired derivative financial instrumentsmaturing in August 2010 as a hedge for interest rate risks.These financial derivatives were classified as "held fortrading", as they did not comply with the strict accountingcriteria of IAS 39 for hedging transactions. Changes inthe market value of the financial derivatives are recognizedthrough profit or loss in the financial result.Trade accounts payable and other liabilitiesTrade accounts payable are recognized in the amountinvoiced by the supplier.The deferred liabilities are carried as liabilities in the amountowed, sometimes in the amount estimated, and recognizedunder other liabilities.Liabilities under finance leases are likewise recognizedunder other liabilities and carried at the present value ofthe future leasing instalments. Liabilities are broken downinto current and non-current liabilities in accordance withthe term of the lease. Lease payments are divided intointerest and principal in such a way as to yield a constantrate of interest on the remaining lease payment owed overthe period. The interest portion is expensed under nonoperatingexpenses.
80Consolidated financial statements | Accounting policiesLease payments under operating leases are recognized inthe consolidated income statement as an expense by thestraight-line method over the term of the lease.The other liabilities are shown at their repayment amounts.When assuming a going concern, the assumptions andestimates essentially concern the corporate planning,as well as the occurrence and implementation of variousconditions (see B.1. "Basis for preparation of the financialstatements").A trade account payable or other liability is derecognizedwhen the obligation underlying the liability is discharged,terminated or extinguished. The trade accounts payablewhich were derecognized in 2011 following a waiver ofrepayment are derecognized through profit or loss in theresult from reorganization.The assumptions and estimates made in conjunctionwith impairment testing of the goodwill and fixed assetsessentially concern the forecast cash flows and discountingfactors (see B.4. "Impairment test for goodwill" andC.8. "Write-downs on intangible assets, property, plant andequipment").5. Major discretionary decisions,assumptions and estimatesDiscretionary decisionsThe following discretionary decisions have been made bythe company's management in conjunction with the applicationof recognition and measurement policies:Two leasing companies are consolidated as special purposeentities, as the companies are economically controlledby ALNO AG. The leasing companies concerned have formany years leased buildings required for operations andan associated property on the company site exclusively toALNO AG. Contracts concluded by the lessor in conjunctionwith the leased asset must be approved by ALNOAG. Any resultant payment obligations are charged out toALNO AG in the full amount. ALNO AG will be granted theright to purchase the leased assets on expiry of the lease.Assumptions and estimatesWhen preparing the consolidated financial statements,assumptions and estimates have been made with impacton recognition and the amount of the assets, liabilities,income, expenses and contingent liabilities reported.Further uncertainties exist in conjunction with the capitalizationof future tax reliefs, due to the assumptions madewith regard to the expected date of occurrence and amountof future taxable income in the next four years. Future taxreliefs have also been calculated on the assumption thatthere will be no harmful change of ownership in the futureeliminating the tax loss carryforwards in accordance withSections 8 (4) and 8c of the Corporation Tax Act (KStG)(see C.10. "Income taxes").Assumptions and estimates are also made when determiningthe economic useful life of the fixed assets (see B.4."Intangible assets" and "Property, plant and equipment"),as well as when determining the parameters for calculatingthe provisions for pensions (see D.11. "Provisions for pensions")and pre-retirement part-time working arrangements(see D.12. "Other provisions"). The provision for warrantyclaims has been calculated on the basis of assumptionsand estimates concerning the period of time betweendelivery date and warranty period, as well as on the futurewarranty encumbrances (see D.12. "Other provisions").Valuation allowances on trade accounts receivable arelikewise based on estimates concerning, in particular,the cash inflow expected in the future (see D.6. "Tradeaccounts receivable").All these assumptions and estimates are based on theknowledge currently available at the time of preparing theconsolidated financial statements. Although these assumptionsand estimates are to the best of the management'sknowledge, the actual results may deviate from these.
Consolidated financial statements | Notes to the consolidated income statement81C. Notes to the consolidatedincome statement3. Other operating incomeOther operating income is made up as follows:The consolidated income statement has been preparedaccording to the nature of expense method.1. Sales revenuein '000 EUR 2011 2010Revenue from the sale of goods444,747 458,997Other revenue 8,063 8,300Total 452,810 467,297Other revenue is essentially the result of product-relatedincidental sales to the Group's usual customers or toother third parties, such as the sale of materials that areno longer required. This item additionally includes salesrevenue in the amount of EUR 0 thousand (previous year:EUR 46 thousand) for services rendered.2. Changes in inventories and capitalized goodsand services for own accountin '000 EUR 2011 2010Income from the disposal of assets 31 399Income relating to other periods 2,089 2,460Income from the reversal of specificvaluation allowances 158 792Insurance benefits received 112 82Rental income 580 577Currency gains 312 478Other income 2,988 2,274Total 6,270 7,062Income relating to other periods mainly comprises incomefrom the reversal of provisions, as well as from derecognitionof liabilities. The other income comprises incomefrom social services, refunds from the Federal EmploymentAgency, income from payments received on derecognizedaccounts receivable and grants or subsidies on advertisingcosts.in '000 EUR 2011 2010Changes in inventories 31 – 2,409Other capital. goods and services for own acc. 851 416Total 882 – 1,993Rental income primarily comprises the income received fromletting office premises and business premises to varioustenants at the Bad Salzuflen location. As a rule, the leasescan be terminated with three months' notice effective at theend of a calendar quarter.Currency gains are netted against currency losses inthe amount of EUR 371 thousand (previous year:EUR 707 thousand).
82Consolidated financial statements | Notes to the consolidated income statement4. Cost of materialsin '000 EUR 2011 2010Cost of raw materials and supplies 281,197 267,485Purchased services 5,201 4,422Total 286,398 271,9075. Personnel expensesin '000 EUR 2011 2010Wages and salaries 81,861 81,270Social security costs 16,295 16,384Retirement benefits 373 246Total 98,529 97,9001,806 men and women were employed on average overthe year (previous year: 1,840).Number of employees 2011 2010Industrial employees 1,078 1,077Office employees 728 763Total 1,806 1,840Germany 1,762 1,768Abroad 44 72Social security costs include the employer's contributionsto state pension funds for employees in the amount of EUR7,415 thousand (previous year: EUR 7,459 thousand). Inaddition, wages and salaries include additional sums totop up pre-retirement part-time payments in the amountof EUR 0 thousand (previous year: EUR 64 thousand) andemployee termination payments in the amount of EUR2,643 thousand (previous year: EUR 411 thousand) whichare not associated with the reorganization.In the previous year social security costs included refundsfrom the Federal Employment Agency in the amount ofEUR 191 thousand. The refunds related to the social securityexpenses to be borne by the ALNO Group within thecontext of short-time working in the German companies.They are netted against the corresponding expenses andrecognized.EUR 339 thousand (previous year: EUR 186 thousand)are recognized in the financial year as retirement benefitexpenses on the basis of defined-contribution benefit obligationsassumed by the employer for the company pensionscheme.6. Other operating expensesin '000 EUR 2011 2010Cost of sales 50,453 47,264Administration costs 25,245 25,070Rent and leasing 7,665 7,307Maintenance 6,882 7,095Expenses relating to other periods 284 613Allocation to specific valuationallowances for trade accountsreceivable 1,007 1,935Bad debts 411 998Other taxes 513 714Losses from the disposal of assets 503 562Other expenses 1,206 1,053Total 94,169 92,611Other expenses mainly comprise expenses from theallocation to provisions and deferred liabilities.Development costs which cannot be capitalized have beenrecognized through profit or loss in the amount of EUR1,212 thousand (previous year: EUR 1,232 thousand).
Consolidated financial statements | Notes to the consolidated income statement837. Reorganization income (expense)Due to the unsatisfactory earnings situation of the ALNOGroup, reorganization of the German companies commencedin 2007, followed by the foreign subsidiaries inlate 2008. A comprehensive reorganization concept wasapproved by the Supervisory Board of ALNO AG on 15January 2010. The primary aim of this concept is to sustainablyimprove the Group's earnings and competitiveness.The associated all-embracing structural changesfocus above all on introducing efficient administrativeprocesses and manufacturing structures throughout theGroup.In 2011, reorganization yielded a profit of EUR 24,338thousand (previous year: loss of EUR -8,962 thousand).Other operating expenses in the amount of EUR 2,730thousand (previous year: EUR 4,594 thousand) compriseconsulting expenses. In the previous year, this item alsoincluded an allocation to the provision for the employmentand qualification company at the Pfullendorf location.Personnel expenses in the amount of EUR 9 thousand(previous year: EUR 4,638 thousand) comprise employeetermination payments. Other operating income in theamount of EUR 27,077 thousand (previous year: EUR 270thousand) include EUR 25,000 thousand from derecognitionof trade accounts payable following a waiver ofrepayment. In addition, it also includes income from thereversal of provisions which are no longer needed for theemployment and qualification company at the Pfullendorflocation.in '000 EUR 2011 Reorganization2011 acc.to incomestatementOther operatingincome 33,347 – 27,077 6,270Personnel expenses 98,536 – 9 98,529Other operatingexpenses 69,899 – 2,370 94,169in '000 EUR 2010 Reorganization2010 acc.to incomestatementOther operatingincome 7,332 – 270 7,062Personnel expenses 102,538 – 4,638 97,9008. Write-downs on intangible assets, property,plant and equipmentThese write-downs result from the development of fixedassets.in '000 EUR 2011 2010Intangible assets 967 955Property, plant and equipment 10,632 8,824Amortization and depreciation 11,599 9,779Impairment losses 4,303 2,325Total 15,902 12,104All in all, the following asset groups are affected by impairmentlosses:in '000 EUR 2011 2010Intangible assets 76 9Land and buildings 8 0Technical equipment and machinery 265 0Factory and office equipment 3,954 2,316Total 4,303 2,325With regard to the assets of the cash generating unit ALNOAG (including leasing companies), the fair value minuscosts to sell was applied to the additions in 2011, as newtargets were not available during the year and the negativevalue in use as at 31 December 2010 consequentlyremained valid (see B.4. "Impairment test for goodwill").This resulted in impairment losses and write-downs onproperty, plant and equipment in the amount of EUR3,399 thousand (previous year: EUR 2,293 thousand).The impairment test performed as at 31 December 2011on the basis of the new targets did not yield any furtherimpairment of the remaining goodwill of the CASAWELLGroup (previous year: EUR 0 thousand). For the cashgenerating unit ALNO AG, further impairment losses wererecognized on the other intangible assets in the amount ofEUR 76 thousand (previous year: EUR 0 thousand) and onproperty, plant and equipment in the amount of EUR 820thousand (previous year: EUR 0 thousand).Other operatingexpenses 97,205 – 4,594 92,611
84Consolidated financial statements | Notes to the consolidated income statementImpairment testing also yielded impairment losses andwrite-downs on property, plant and equipment of the foreignsubsidiaries due to the continuing poor prospectiveearnings in the United Kingdom, as well as in the amountof EUR 8 thousand (previous year: EUR 32 thousand)due to closure of the locations in Belgium and Italy in theprevious year.Impairment losses in the amount of EUR 4,295 thousand(previous year: EUR 2,293 thousand) are accounted forby the ALNO segment. The impairment losses for foreignsubsidiaries in the amount of EUR 8 thousand (previousyear: EUR 32 thousand) were posted at Group level.There were no further events or circumstances leading tothe recognition of income or expenses from impairmentlosses on the balance sheet date.10. Income taxesBreakdown of income taxes:in '000 EUR 2011 2010Consolidated statement of changesin equityDeferred taxes directly recognized inequityActuarial losses from pensionprovisions 204 169Income taxes expensed in theconsolidated income statement204 1699. Financial resultInterest expenses from drawing on credit lines and shareholderloans in the amount of EUR 10,184 thousand (previousyear: EUR 9,800 thousand) are posted under financialexpenses. This item also includes interest expenses fromthe interest added to pension provisions and other noncurrentprovisions. In the previous year, financial expensesalso included costs in the amount of EUR 390 thousandfrom the planned capital increase which was ultimatelycancelled, as well as expenses from derivative financialinstruments in the amount of EUR 130 thousand.Financial income includes income from investment in securitiesin the amount of EUR 46 thousand (previous year:EUR 43 thousand); the remainder comprises other interestincome from the interest on financial assets. In the previousyear, this item additionally included the positive effect onearnings from the waiver of repayment in the amount ofEUR 10,000 thousand.in '000 EUR 2011 2010Consolidated income statementActual income tax expense:Deferred income tax expense: 49 258Adjustment of income tax actuallyincurred in the previous year 0 – 12Deferred taxes:Tax loss carryforwards – 135 325Creation and reversal of temporarydifferences 431 335Income taxes expensed in theconsolidated income statement345 906
Consolidated financial statements | Notes to the consolidated income statement85Deferred taxes comprise the following items:in '000 EURCons. statement of financial pos.Consolidated income statement2011 2010 2011 2010Deferred tax liabilitiesProperty, plant and equipment 3,978 3,997 – 19 336Inventories 151 216 – 65 78Accounts receivable and other assets 144 420 – 276 310Other provisions 99 103 – 4 72Other liabilities 9 0 9 0Differences from currency translation 0 0 – 1 – 9Subtotal 4,381 4,736 – 356 787Balance – 4,031 – 4,479 — —350 257 – 356 787Deferred tax assetsIntangible assets 1,481 2,339 – 858 154Property, plant and equipment 4,602 4,421 181 – 716Inventories 0 0 0 – 74Provisions for pensions 1,107 841 – 73 4Other provisions 614 432 182 – 601Other liabilities 81 14 67 14Loss carryforwards 420 285 135 – 325Differences from currency translation 0 0 0 – 1Subtotal 8,305 8,332 – 366 – 1,545Valuation allowance – 4,274 – 3,853 – 286 1,672Subtotal 4,031 4,479 – 652 127Balance – 4,031 – 4,479 — —0 0 – 652 127Deferred tax liabilities 296 660The valuation allowance on deferred tax assets exclusivelycomprises temporary differences in both the year underreview and the previous year.
86Consolidated financial statements | Notes to the consolidated income statementExpected and actual taxes on income arereconciled as follows:in '000 EUR 2011 2010Profit/loss before income taxes – 25,216 – 12,178Expected income taxes – 7,060 – 3,410Effect of different assessment bases / tax rates – 411 68Unrecognized losses in the financial year 7,188 2,565Write-down (previous year: write-up) or non-recognition of deferred tax assets on temporary differences 241 – 1,688Change in deferred tax assets on loss carryforwards – 135 325Non-tax-deductible operating expensesImpairment of goodwill 0 0Other non-tax-deductible operating expenses 721 2,036Taxable shareholders' waiver of repayment 0 1,375Tax effects due to circumstances in prior periods – 111 – 438Other differences – 88 73Actual taxes on income 345 906Income taxes recognized in the consolidated income statement 345 906The effective income tax rate – defined at 28% (previous year:28%) in the ALNO Group – is obtained by applying a corporationtax rate of 15% (previous year: 15%) plus the solidaritysurcharge of 5.5% on corporation tax, as well as weighted tradeincome tax on the result before taxes on income.For this reason, the deferred taxes of the German companies arecalculated with the future income tax rate of 28%.Foreign currency translation yields a change of EUR 1 thousandin deferred tax liabilities.The corporation tax loss carryforwards in Germany for whichdeferred tax assets were not formed amount to EUR 147,939thousand (previous year: EUR 142,450 thousand). UnrecognizedGerman trade tax loss carryforwards total EUR 191,680thousand as at the balance sheet date (previous year: EUR163,988 thousand). Deferred taxes were not capitalized in theamount of EUR 3,578 thousand (previous year: EUR 2,820thousand) for foreign loss carryforwards. Of these, EUR 587thousand (previous year: EUR 0 thousand) can be used for alimited period of time.The interest carried forward on the basis of interest restrictionsin Germany for which deferred tax assets were not formedamounts to EUR 17,429 thousand as at the balance sheet date(previous year: EUR 14,603 thousand).The income tax result recognized has been improved by EUR111 thousand (previous year: EUR 426 thousand) by usingpreviously unrecognized tax loss carryforwards in the amountof EUR 913 thousand (previous year: EUR 2,652 thousand).As in the previous year, deferred tax assets were not formed onloss carryforwards for the tax group of ALNO AG.Deductible temporary differences for which deferred tax assetswere not recognized due to impairment totalled EUR 15,264thousand (previous year: EUR 13,739 thousand).An impairment loss is reversed when a positive taxable incomeis earned for the tax group of ALNO AG in 2012. The amount ofthis reversal depends on the expected tax gains based on thefour-year tax budgeting.Due to the prolonged history of loss, trade tax loss carryforwardsof Gustav Wellmann GmbH & Co. KG, Enger, are only formedon temporary differences to the extent that deferred tax liabilitiesexceed deferred tax assets. This consequently increases thedeferred tax assets recognized on loss carryforwards by EUR135 thousand to EUR 420 thousand (previous year: EUR 285thousand).Tax deferrals in the amount of EUR 1,059 thousand (previousyear: EUR 768 thousands) were not recognized on taxabletemporary differences from interests held in subsidiaries andinterests held in associated companies in the total amount ofEUR 54,109 thousand (previous year: EUR 54,839 thousand),
Consolidated financial statements | Notes to the consolidated statement of financial position87as the time at which the temporary difference is reversed can beinfluenced by the parent company and the temporary differencewill probably not be reversed within the foreseeable future.Income taxes payable amount to EUR 8 thousand (previousyear: EUR 194 thousand), while EUR 48 thousand (previousyear: EUR 7 thousand) can be collected in income tax refunds.D. Notes to the consolidated balance sheet1. Intangible assetsin '000 EURIndustrial property rights andsimilar rightsGoodwillDown-payments andconstruction in progressTotalAccumulated cost of acquisitionTotal as at 1 January 2010 25,470 4,090 1,254 30,814Currency differences 7 0 0 7Additions 314 0 261 575Disposals – 810 0 0 – 810Total as at 31 December 2010 24,981 4,090 1,515 30,586Currency differences 1 0 0 1Additions 144 0 1,793 1,937Transfers 8 0 0 8Disposals – 55 0 0 – 55Total as at 31 December 2011 25,079 4,090 3,308 32,477Accum. deprec. and impairm. lossesTotal as at 1 January 2010 22,730 2,607 0 25,337Currency differences 7 0 0 7AdditionsAmortization 955 0 0 955Impairment losses 9 0 0 9Disposals – 810 0 0 – 810Total as at 31 December 2010 22,891 2,607 0 25,498Currency differences 2 0 0 2AdditionsAmortization 967 0 0 967Impairment losses 76 0 0 76Disposals – 55 0 0 – 55Total as at 31 December 2011 23,881 2,607 0 26,488Carrying amounts31 December 2011 1,198 1,483 3,308 5,98931 December 2010 2,090 1,483 1,515 5,0881 January 2010 2,740 1,483 1,254 5,477
88 Consolidated financial statements | Notes to the consolidated statement of financial position2. Property, plant and equipmentin '000 EURLand and buildingsTechnicalequipment andmachineryOther plant, factoryand office equipmentDown-paymentsand constructionin progressTotalAccumulated cost of acquisitionTotal as at 1 January 2010 118,001 126,729 59,362 3,956 308,048Currency differences 0 0 114 0 114Additions 35 3,065 9,562 2,558 15,220Transfers 0 3,803 19 – 3,822 0Disposals – 4,152 – 4,361 – 7,600 0 – 16,113Total as at 31 December 2010 113,884 129,236 61,457 2,692 307,269Currency differences 0 0 32 0 32Additions 84 1,442 13,065 2,069 16,660Transfers 0 973 0 – 981 – 8Disposals – 93 – 6,773 – 6,052 0 – 12,918Total as at 31 December 2011 113,875 124,878 68,502 3,780 311,035Accum. deprec. and impairm. lossesTotal as at 1 January 2010 69,745 116,802 51,517 0 238,064Currency differences 0 0 90 0 90AdditionsAmortization 1,256 1,785 5,783 0 8,824Impairment losses 0 0 2,316 0 2,316Disposals – 2,889 – 4,324 – 7,090 0 – 14,303Total as at 31 December 2010 68,112 114,263 52,616 0 234,991Currency differences 0 0 27 0 27AdditionsAmortization 1,221 2,146 7,265 0 10,632Impairment losses 8 265 3,954 0 4,227Disposals – 93 – 6,755 – 5,484 0 – 12,332Total as at 31 December 2011 69,248 109,919 58,378 0 237,545Carrying amounts31 December 2011 44,627 14,959 10,124 3,780 73,49031 December 2010 45,772 14,973 8,841 2,692 72,2781 January 2010 48,256 9,927 7,845 3,356 69,984In the previous year, this item included property, plant andequipment from a finance lease. These were already depreciatedin the previous years. The leased assets primarilycomprised information and communications systems,as well as technical equipment on buildings in the otherplants, factory and office equipment. There are no furtherfinance leases in force at 31 December 2011.
Consolidated financial statements | Notes to the consolidated statement of financial position893. Financial assetsAs at 31 December 2011, financial assets totalled EUR3,168 thousand (previous year: EUR 3,431 thousand).The financial assets comprise non-current securities toprotect commitments associated with employees' preretirementpart-time working against insolvency, in theamount of EUR 3,163 (previous year: EUR 3,426 thousand),which were pledged to the employees, as well asinterests in associated companies in the amount of EUR5 thousand (previous year: EUR 5 thousand).4. At-equity investmentsAs at 31 December 2011, ALNO Middle East reported thefollowing assets and liabilities in its balance sheet; theseare attributable to ALNO AG in accordance with its holdingof 50%.The profit of EUR 93 thousand accruing to ALNO AG in2010 increased the carrying amount of the holding in profitand loss. The carrying amount of the associated companyalso increased as a result of currency translation differencesin the amount of EUR 158 thousand, which wererecognized outside profit or loss in the shareholders' equityof ALNO AG.5. Financial accounts receivableNon-current financial accounts receivable comprise loansgranted to ALNO Middle East in the amount of EUR 170thousand (previous year: EUR 2,000 thousand), a securitydeposit for a provider of IT services in the amount of EUR676 thousand (previous year: EUR 665 thousand) andearmarked credit balances with banks in the amount ofEUR 473 thousand (previous year: EUR 0 thousand) forfuture investments.6. Trade accounts receivablein '000 EUR 31.12.2011 31.12.2010Assets 4,085 6,121thereof non-current 942 1,701thereof current 3,143 4,420Liabilities 3,214 3,940thereof non-current 1,354 1,977thereof current 1,860 1,963In 2011, ALNO AG accrued income and expenses in thefollowing amounts:in '000 EUR 2011 2010Income 93 4,462Expenses 2,444 4,369The loss of EUR 2,351 thousand borne by ALNO AG in2011 reduced the carrying amount of the holding as postedin profit and loss. In addition, ALNO AG waived EUR 1,000thousand when a loan receivable was transformed into acapital contribution. The carrying amount of the associatedcompany also increased as a result of currency translationdifferences in the amount of EUR 41 thousand, which wererecognized outside profit or loss in the shareholders' equityof ALNO AG.in '000 EURTotalRemaining term< 1 year 1 to 5 years > 5 years31 December 2011 41,339 40,056 1,283 031 December 2010 32,996 32,360 636 0Sales of accounts receivable by the ALNO Group in theamount of EUR 15,295 thousand (previous year: EUR10,910 thousand) do not meet with the criteria for completederecognition of the receivables. This resulted intrade accounts receivable as at 31 December 2011 with acarrying amount of EUR 596 thousand (previous year: EUR410 thousand). Currency risks and interest risks basicallycontinue to apply as a result of possible belated paymentof the accounts receivable. The accounts payable whichare associated with the transferred and not derecognizedaccounts receivable amount to EUR 810 thousand (previousyear: EUR 536 thousand) and are recognized in otherliabilities.
Consolidated financial statements | Notes to the consolidated statement of financial position919. Liquid assetsLiquid assets comprise the cash in hand and credit balanceswith banks. Non-disposable liquid assets comprisesecurity deposited with banks.As at the balance sheet date, the cash fund (cash and cashequivalents) is made up as follows:in '000 EUR 31.12.2011 31.12.2010Liquid assets 2,243 3,041Not freely disposable liquid assets – 1,609 – 2,060Total 634 98110. Shareholders' equitya. Subscribed capitalThe subscribed capital totals EUR 67,847 thousand asat 31 December 2011 and is divided into 26,094,979(previous year: 17,396,653) no-par-value shares. Theshares are issued as bearer shares and fully paid up. Eachno-par-value share accounts for EUR 2.60 of thesubscribed capital.in '000 EURTotal as at 1 January 2010 41,124Changes in 2010 4,107Total as at 31 December 2010 45,231Changes in 2011 22,616Total as at 31 December 2011 67,847As at 1 January 2010, the subscribed capital totalled EUR41,123,869.80 and was divided into 15,816,873 no-parvalueshares. By resolution of the Board of Managementand with the approval of the Supervisory Board on 9 April2010, it was decided to increase the company's sharecapital in return for cash contributions within the scope ofthe measures adopted by the Ordinary General Meeting ofALNO AG on 26 June 2008. 789,890 no-par-value ordinaryshares were issued, thus increasing the company's sharecapital from EUR 41,123,869.80 to EUR 43,177,583.80.The new shares were issued at a price of EUR 6.33 pershare. The new shares were subscribed and taken up byIRE Beteiligungs GmbH, Stuttgart. The surplus cash contributionin the amount of EUR 2,946,289.70 was allocatedto the capital reserve which subsequently totalled EUR39,490,074.62. The capital increase was entered in theRegister of Companies on 30 April 2010.By resolution of the Board of Management and with theapproval of the Supervisory Board on 17 May 2010, it wasdecided to increase the company's share capital in returnfor cash contributions within the scope of the measuresadopted by the Ordinary General Meeting of ALNO AGon 26 June 2008. 789,890 no-par-value ordinary shareswere issued, thus increasing the company's share capitalfrom EUR 43,177,583.80 to EUR 45,231,297.80. Thenew shares were likewise issued at a price of EUR 6.33per share. The new shares were subscribed and taken upby IRE Beteiligungs GmbH. The surplus cash contributionin the amount of EUR 2,946,289.70 was allocatedto the capital reserve which subsequently totalled EUR42,436,364.32. The capital increase was entered in theRegister of Companies on 16 June 2010.By resolution of the Board of Management and with theapproval of the Supervisory Board on 10 February 2011,it was decided to revive the capital increase from authorizedcapital which had been deferred in November 2010.The capital increase was realized on 3 March 2011 withthe issue of 8,698,326 no-par-value ordinary shares,each corresponding to a share of EUR 2.60 in the sharecapital. The subscription price equalled EUR 3.00. Thisincreased the share capital by EUR 22,615,647.60 toEUR 67,846,945.40. The surplus cash contribution in theamount of EUR 3,479,330.40 was allocated to the capitalreserve which subsequently totalled EUR 45,915,694.72.The capital increase was entered in the Register of Companieson 4 March 2011.The most recent statutory notifications by shareholderspursuant to Section 21 (1) of the German Securities TradingAct (WpHG) and their respective voting shares at thetime of reaching, exceeding or undershooting the reportingthresholds pursuant to Section 21 (1) of the GermanSecurities Trading Act (WpHG) are set out below. Actualvoting shares held at the balance sheet date may differas a result of non-notifiable acquisitions and/or disposals.
92Consolidated financial statements | Notes to the consolidated statement of financial positionIn accordance with Section 21 (1), first sentence, of the GermanSecurities Trading Act (WpHG), Mr. Alexander Nothdurft,Munich, informed us on 31 March 2006 that he no longerholds 5% of the voting shares in ALNO AG and that his holdingequals 3.38% as of 28 March 2006.In accordance with Section 21 (1), first sentence, of the GermanSecurities Trading Act (WpHG), Mr. Oliver Nothdurft,Munich, informed us on 31 March 2006 that he no longerholds 5% of the voting shares in ALNO AG and that his holdingequals 3.24 % as of 28 March 2006.day amounted to 9.70% (1,686,636 votes). Of this holding,9.70% (1,686,636 votes) are ascribed to the companywithin the meaning of Section 22 (1), No. 1, of the GermanSecurities Trading Act (WpHG). The ascribed voting share isheld through the following company under its control with ashareholding of 3% or more in ALNO AG: ABAG AktienmarktBeteiligungs AG.The aforementioned notification was published throughDeutsche Gesellschaft für Ad-hoc-Publizität (DGAP) on 8July 2010.The aforementioned notifications were published in the FrankfurterAllgemeine Zeitung on 5 April 2006.On 10 April 2007 Küchen Holding GmbH, Munich, Germany,and Milano Investments S.à r.l., Luxemburg, Luxemburg,informed us in accordance with Section 21 (1), first sentence,of the German Securities Trading Act (WpHG), thattheir shareholding in ALNO AG reached and exceeded thethreshold of 75% of the voting capital on 26 March 2007.Since then, they have held 75.27% of the voting shares inALNO AG. Of these 75.27% of the voting shares, 23.21%are attributed to Küchen Holding GmbH in accordance withSection 22 (1), first sentence, No. 6, of the German SecuritiesTrading Act (WpHG). Of these 75.27% of the voting shares,52.06 % are attributed to Milano Investments S.à.r.l., Luxemburg,Luxemburg, in accordance with Section 22 (1), firstsentence, No.1 of the German Securities Trading Act (WpHG)and 23.21% in accordance with Section 22 (1), first sentence,No. 6, second and third sentences, of the German SecuritiesTrading Act (WpHG).The aforementioned notification was published in the FrankfurterAllgemeine Zeitung on 14 April 2007 and sent toBloomberg Europe, Reuters, dpa, editorial office dow jonesand dpa afx.In accordance with Section 21 (1) of the German SecuritiesTrading Act (WpHG), the company ABAG AktienmarktBeteiligungs AG, Cologne, Germany, informed us that it nolonger held 10% of the voting shares in ALNO AG, Pfullendorf,Germany, ISIN: DE0007788408, WKN: 778840, on 16June 2010 and that its holding on that day amounted to9.70% (1,686,636 votes).In accordance with Section 21 (1) of the German SecuritiesTrading Act (WpHG), the company Erste Private InvestmentclubBörsebius Zentral (GbR), Cologne, Germany,informed us that it no longer held 10% of the voting sharesin ALNO AG, Pfullendorf, Germany, ISIN: DE0007788408,WKN: 778840, on 16 June 2010 and that its holding on thatIn accordance with Sections 21 (1) and 24 of the GermanSecurities Trading Act (WpHG), the company IRE BeteiligungsGmbH, Stuttgart, Germany, informed us that its holding inALNO AG, Pfullendorf, Germany, ISIN: DE0007788408,WKN: 778840, had exceeded the threshold of 15% on 16June 2010 and totalled 18.64% (3,242,627 votes) on thatdate.In accordance with Sections 21 (1) and 24 of the GermanSecurities Trading Act (WpHG), the company Bauknecht HausgeräteGmbH, Stuttgart, Germany, informed us that its holdingin ALNO AG, Pfullendorf, Germany, ISIN: DE0007788408,WKN: 778840, had exceeded the threshold of 15% on 16June 2010 and totalled 18.64% (3,242,627 votes) on thatdate. The ascribed voting share is held through the followingcompanies under its control, each of which holds 3% or moreof the shares in ALNO AG: IRE Beteiligungs GmbH.In accordance with Sections 21 (1) and 24 of the GermanSecurities Trading Act (WpHG), the company WhirlpoolGreater China Inc., Wilmington, USA, informed usthat its holding in ALNO AG, Pfullendorf, Germany, ISIN:DE0007788408, WKN: 778840, had exceeded the thresholdof 15% on 16 June 2010 and totalled 18.64% (3,242,627votes) on that date. Of this holding, 18.64 % (3,242,627votes) are ascribed to the company within the meaning ofSection 22 (1), first sentence, No. 1, of the German SecuritiesTrading Act (WpHG). The ascribed voting share is heldthrough the following companies under its control, each ofwhich holds 3% or more of the shares in ALNO AG: BauknechtHausgeräte GmbH, IRE Beteiligungs GmbH.The aforementioned notification was published throughDeutsche Gesellschaft für Ad-hoc-Publizität (DGAP) on 23July 2010.In accordance with Section 21 (1) of the German SecuritiesTrading Act (WpHG), the company ICF Kursmakler AG,Frankfurt am Main, Germany, informed us on 4 March 2011that its holding in ALNO AG, Düsseldorf, Germany, had
Consolidated financial statements | Notes to the consolidated statement of financial position93exceeded the threshold of 3%, 5%, 10%, 15%, 20%, 25%,30% on 4 March 2011 and totalled 33.33% (correspondingto 8,698,326 votes) altogether on that date.In accordance with Section 21 (1) of the German SecuritiesTrading Act (WpHG), the company ICF Kursmakler AG,Frankfurt am Main, Germany, informed us on 10 March 2011that its holding in ALNO AG, Düsseldorf, Germany, had fallenbelow the threshold of 30%, 25%, 20%, 15%, 10%, 5%, 3%on 9 March 2011 and totalled 0.00% (corresponding to zerovotes) altogether on that date.Both the aforementioned notifications were published throughDeutsche Gesellschaft für Ad-hoc-Publizität (DGAP) on 10March 2011.date. Financial instruments were not exercised. Of this holding,3.90% (corresponding to 1,016,636 votes) are ascribed to thecompany within the meaning of Section 22 (1), first sentence,No. 1, of the German Securities Trading Act (WpHG). Theascribed voting share is held through the following companyunder its control with a shareholding of 3% or more in ALNOAG: ABAG Aktienmarkt Beteiligungs AG, Cologne.In accordance with Section 21 (1) of the German SecuritiesTrading Act (WpHG), the company ABAG AktienmarktBeteiligungs AG, Cologne, Germany, informed us that itsholding in ALNO AG, Düsseldorf, Germany, had fallen belowthe threshold of 5% on 12 April 2011 and totalled 3.90%(corresponding to 1,016,636 votes) altogether on that date.Financial instruments were not exercised.In accordance with Section 21 (1) of the German SecuritiesTrading Act (WpHG), the company Küchen Holding GmbH,Munich, Germany, informed us that its holding in ALNO AG,Düsseldorf, Germany, had fallen below the thresholds of 75%and 50% on 4 March 2011 and totalled 47.76% (correspondingto 12,462,049 votes) altogether on that date. Of this total,12.43% (3,242,627 votes) are ascribed to it through IREBeteiligungs GmbH in accordance with Section 22 (1), firstsentence, No. 6, second and third sentences, of the GermanSecurities Trading Act (WpHG).In accordance with Section 21 (1) of the German SecuritiesTrading Act (WpHG), the company Milano InvestmentsS.à.r.l., Esch-sur-Alzette, Luxemburg, informed us that itsholding in ALNO AG, Düsseldorf, Germany, had fallen belowthe thresholds of 75% and 50% on 4 March 2011 and totalled47.76% (corresponding to 12,462,049 votes) altogether onthat date. Of this total, 35.33% (corresponding to 9,219,422votes) are ascribed to it through the company Küchen HoldingGmbH in accordance with Section 22 (1), first sentence,No. 1, of the German Securities Trading Act (WpHG), and12.43% (corresponding to 3,242,627 votes) are ascribed toit through IRE Beteiligungs GmbH in accordance with Section22 (1), first sentence, No. 6, second and third sentences, ofthe German Securities Trading Act (WpHG).Both the aforementioned notifications were published throughDeutsche Gesellschaft für Ad-hoc-Publizität (DGAP) on 23March 2011.In accordance with Section 21 (1) of the German SecuritiesTrading Act (WpHG), the company Erste Private InvestmentclubBörsebius Zentral (GbR), Cologne, Germany, informedus that its holding in ALNO AG, Düsseldorf, Germany, hadfallen below the threshold of 5% on 12 April 2011 and totalled3.90% (corresponding to 1,016,636 votes) altogether on thatThe aforementioned notification was published throughDeutsche Gesellschaft für Ad-hoc-Publizität (DGAP) on 20April 2011.In accordance with Section 21 (1) of the German SecuritiesTrading Act (WpHG), the company Milano InvestmentsS.à.r.l., Esch-sur-Alzette, Luxemburg, informed us that itsholding in ALNO AG, Düsseldorf, Germany, had exceededthe threshold of 50% on 9 March 2011 and totalled 54.14%(corresponding to 14,128,716 votes) altogether on that date.Of this total, 35.33% (corresponding to 9,219,422 votes) areascribed to it through the company Küchen Holding GmbH inaccordance with Section 22 (1), first sentence, No. 1, of theGerman Securities Trading Act (WpHG), and 18.81% (correspondingto 4,909,294 votes) are ascribed to it through IREBeteiligungs GmbH in accordance with Section 22 (1), firstsentence, No. 6, second and third sentences, of the GermanSecurities Trading Act (WpHG).The aforementioned notification was published throughDeutsche Gesellschaft für Ad-hoc-Publizität (DGAP) on 29June 2011.In accordance with Section 21 (1) of the German SecuritiesTrading Act (WpHG), the company ABAG Aktienmarkt BeteiligungsAG, Cologne, Germany, informed us on 18 October2011 that its holding in ALNO AG, Pfullendorf, Germany,had fallen below the threshold of 3% on 14 October 2011and totalled 0.00% (corresponding to 0 votes) on that date.Financial instruments were not used in the transaction.The aforementioned notification was published throughDeutsche Gesellschaft für Ad-hoc-Publizität (DGAP) on 20October 2011.
Consolidated financial statements | Notes to the consolidated statement of financial position95By resolution of the Annual General Meeting on 14 July 2011,the Board of Management was authorized to issue, on oneor more occasions until 13 July 2016, cum-warrant and/orconvertible bonds in a total nominal amount of up to EUR100,000,000.00 with a term of up to 20 years either throughthe company or through companies in which the companyhas a direct or indirect majority holding ("subordinate Groupcompanies") and to guarantee such cum-warrant and/or convertiblebonds issued by the company's subordinate Groupcompanies. The holders of cum-warrant and/or convertiblebonds must be granted option and/or conversion rights forup to 13,047,489 no-par-value ordinary shares in the companywith a prorated share of up to EUR 33,923,471.40 in thecompany's share capital in accordance with the respectiveterms and conditions of the cum-warrant and/or convertiblebonds ("conditions").This contingent capital increase may only be realized if optionand/or conversion rights are issued and only insofar as theholders of the warrants or convertible bonds exercise theiroption or conversion rights, or insofar as the holders withconversion or option obligation also discharge their conversion/ option obligation, and the contingent capital is neededin accordance with the terms and conditions of the cumwarrantor convertible bond. The new shares issued on thebasis of the option or conversion right exercised or throughdischarge of the conversion or option obligation share inprofits as from the beginning of the financial year in whichthey are created.The shares can be purchased through the stock exchange orthrough a public offer to buy addressed to all the company'sshareholders, as preferred by the Board of Management.If shares are purchased through the stock exchange, theconsideration paid by the company per share (excludingincidental expenses) must be not more than 10% higher orlower than the stock exchange price quoted for the company'sstock on the XETRA electronic trading platform (oran equivalent subsequent system) when the Frankfurt stockexchange opens for trading on the date of purchase.If they are purchased through a public offer to buy addressedto all the company's shareholders, the purchase price offeredor the limits of the price range offered per share (excludingincidental expenses) must not be more than 20% higher orlower than the average closing price for the company's stockon the XETRA electronic trading platform (or an equivalentsubsequent system) quoted on the Frankfurt stock exchangeon the last three trading days before publication of the offer.The offer can be adjusted if the price deviates significantlyfollowing publication of the offer. In this case, the price will bebased on the corresponding average closing price on the lastthree trading days before publication of the adjusted offer. Thevolume offered can be limited. If the offer is oversubscribed,acceptance must be prorated in accordance with the sharesoffered in each case. Priority may be given to acceptingsmaller numbers of up to 100 of the shares offered for saleper shareholder.The Board of Management was authorized to specify furtherdetails, with the consent of the Supervisory Board, concerningthe realization of this contingent capital increase (contingentcapital 2011).The Board of Management is authorized, with the consent ofthe Supervisory Board, to use the company shares acquiredon the basis of this or a previous authority for the followingpurposes:Acquisition of own sharesBy resolution of the Annual General Meeting on 23 June 2010,the Board of Management was authorized to buy own sharesup to 10% of the share capital existing at the time of adoptingthe resolution, as permitted by Section 71 (1), No. 8, of theStock Companies Act (AktG). This authority can be exercisedin the full amount or part-amounts, on one or more occasionsand in pursuit of one or more objectives by the company orby third parties for account of the company. At no point maythe acquired shares together with other own shares accountfor more than 10% of the share capital. This authorizationbecame effective on 24 June 2010 and remains valid until22 June 2015.The shares may also be sold by other means than through thestock exchange or by offer to all shareholders if they are soldin return for cash payment at a price not significantly lowerthan the stock exchange price quoted for the company'sstock at the time of sale. However, this authority applies subjectto the proviso that the shares sold on the basis of thisauthority do not exceed a prorated amount equal to 10% ofthe share capital, neither at the time of becoming effectivenor at the time of exercising this authority. The maximum limitof 10% is reduced by the prorated amount of share capitalcorresponding to the shares issued within the framework ofa capital increase during the term of this authority for whichsubscription rights are excluded in accordance with Section186 (3), fourth sentence, of the Stock Companies Act (AktG).The maximum limit of 10% is also reduced by the proratedamount of share capital corresponding to the shares issued
96Consolidated financial statements | Notes to the consolidated statement of financial positionor to be issued in order to service bonds with conversion oroption rights, insofar as the bonds have been issued duringthe term of this authority with exclusion of subscription rightsin accordance with Section 186 (3), fourth sentence, of theStock Companies Act (AktG).Shares can be sold in return for non-cash consideration, inparticular in conjunction with business combinations and theacquisition of companies, company parts and holdings incompanies.The shares can be offered to persons employed by the companyor one of its affiliated companies.b. Capital reserveThe capital reserve developed as follows in the year underreview:in '000 EURTotal as at 1 January 2010 36,544Changes in 2010 5,893Total as at 31 December 2010 42,437Changes in 2011 3,479Total as at 31 December 2011 45,916The shares can be used to discharge the company's obligationunder cum-warrant and/or convertible bonds issued orguaranteed by the company in the future.A surplus in the amount of EUR 3,479 thousand resultingfrom the capital increase in 2011 was allocated to thecapital reserve.This authority can be exercised in the full amount or partamounts,on one or more occasions in the pursuit of one ormore objectives. The shareholders' right of subscription tothese own shares is excluded. In addition, the Board of Managementmay, with the consent of the Supervisory Board,exclude the right of subscription for fractional amounts, withthe consent of the Supervisory Board, when own sharesare sold within the context of an offer to all the company'sshareholders. The Board of Management is also authorizedto collect the acquired own shares with the consent of theSupervisory Board without requiring a further resolution ofthe shareholders' meeting.c. Accumulated net incomeWith regard to the development of accumulated net income,we refer to the figures presented in the consolidated statementof changes in equity and the consolidated statementof comprehensive incomeThe accumulated net income includes generated Groupequity, the reserve from currency translation and the othertransactions recognized outside profit or loss.Generated Group equity comprises the accumulatedconsolidated income of the reporting periods, the waiversof repayment given by the shareholders, transactionexpenses and the reserve from remeasurement when IFRSstandards were applied for the first time.The other transactions recognized outside profit or lossconcern actuarial gains and losses from the provisionsfor pensions, changes in the fair value of securities andthe deferred taxes associated with these in each case.The amounts recognized in the financial year 2011 arepresented in the consolidated statement of comprehensiveincome.
Consolidated financial statements | Notes to the consolidated statement of financial position97d. Capital managementGroup equity displays a negative value in the amount ofEUR 73,344 thousand and is made up as follows:in '000 EUR 31.12.2011 31.12.2010Subscribed capital 67,847 45,231Capital reserve 45,916 42,437Accumulated net income – 187,107 – 157,390Total – 73,344 – 69,722Implementation of the restructuring agreement II signedon 7 February 2011 yielded effects totalling EUR 51.1 million(capital increase and waiver of repayment) which haveimproved the Group equity and offset the net loss for theyear. In early January 2012, the waiver of repayment in theamount of EUR 25 million by a major shareholder whichwas originally planned for 2011 led to a further significantimprovement in equity.The ALNO Group's net financial liabilities are as follows:31.12.2011in '000 EUR31.12.2010in '000 EURChangein '000 EURChangein %Shareholder loans and other financial liabilitiesNon-current 10,482 13,057 – 2,575 – 19.7Current 99,447 73,495 25,952 35.3109,929 86,552 23,377 27.0Minus liquid assets – 2,243 – 3,041 – 798 – 26.2Net financial liabilities 107,686 83,511 24,175 28.9Total assets 159,670 157,698 1,972 1.3Net financial liabilities in % of total assets 67.4 53.0Net financial liabilities have increased by EUR 24,175thousand of 28.9% over the previous year as a result oftransforming trade accounts payable into financial liabilitiesin the amount of EUR 28,898 thousand. At the sametime, total trade accounts payable declined by EUR 18,228thousand, due to a waiver of repayment in the amount ofEUR 25,000 thousand and the aforementioned transformation.Since equity decreased by EUR 3,622 thousand, thisconsequently led to a slight rise of EUR 1,972 thousandor 1.3% in total assets as compared to the previous year.The increase in total assets was essentially due to lowerutilization of the factoring volume in relation to the previousyear while gross trade accounts payable remained virtually
98Consolidated financial statements | Notes to the consolidated statement of financial positionunchanged. This was offset by the reduction of EUR 2,266thousand in inventories and the decline of EUR 2,558 thousandin current other assets. Overall, net financial liabilitiesin relation to total assets rose from 53.0% to 67.4%.After adjustment for the waiver of repayment which wasonly realized on 6 January 2012, net financial liabilitieswould have declined from 53.0% to 51.8%, as shownbelow:in '000 EUR 31.12.2011Shareholder loans and otherfinancial liabilitiesWaiver ofrepayment 6.1.2012Non-current 10,482 10,482Current 99,447 – 25,000 74,447109,929 – 25,000 84,929Minus liquid assets – 2,243 – 2,243Net financial liabilities 107,686 – 25,000 82,686Total assets 159,670 159,670Net financial liabilities in % oftotal assets 67.4 51.8The shareholders' equity for ALNO AG presented in thesingle-entity financial statement as at 31 December 2011in accordance with the German Commercial Code (HGB)totals EUR 26,209 thousand (previous year: EUR 31,279thousand). This reduction of EUR 5,070 thousand in equityis due, on the one hand, to the net loss for the year in theamount of EUR 31,165 thousand. This is countered by thecapital increase totalling EUR 26,095 thousand undertakenin the financial year 2011. Shareholders' equity accordingto the German Commercial Code (HGB) has now improvedsignificantly following a shareholder's waiver of repaymentin the amount of EUR 25,000 thousand in early January2012. Changes in equity are monitored by ALNO AG on amonthly basis.11. Provisions for pensionsThe ALNO Group's company pension scheme is essentiallybased on direct, defined-benefit pension commitments.As a rule, pensions are calculated according to theemployee's period of service and pensionable earnings.The aforementioned commitments are measured on thebasis of actuarial assessments. These assessments arebased on the applicable legal, economic and tax conditionsin the country concerned. Valuation parameters werespecifically applied for the countries concerned.Provisions are measured according to the present value ofentitlement (Projected Unit Credit Method) in compliancewith IAS 19, taking into account the future development.A discount rate of 4.8% or 5.4% (previous year: 5.4%)is applied in Germany, which accounts for over 99.8%(previous year: 99.9%) and hence the lion's share of theprovision. The discount rate abroad equals 4.8% (previousyear: 5.4%).In Germany, existing commitments are measured with arise of 0.0% (previous year: 1.0%) in wages and salariesand an average pension trend of 1.0% or 1.5% (previousyear: 1.0% and 1.5%). Higher loans and salaries arenot expected abroad. Pensions abroad are assumed toincrease by 5.0% (previous year: 5.0%) on average. Stafffluctuation is calculated for each specific plant and is set at0.0% (previous year: 0.0% or 1.0%) in Germany. A fluctuationrate of 2.1% (previous year: 3.6%) is expected abroad.Expected earnings from plan assets are calculated with aninterest rate of 4.2% in Germany and 3.4% abroad (previousyear: 4.2% and 3.4%, respectively). The expectedincome from plan assets corresponds to the average returnon non-current investments on which the plan assets arebased. Actual income from plan assets amounted to EUR23 thousand (previous year: EUR 140 thousand).In other countries, the plan assets comprise non-currentinvestments in life insurance; in Germany, the plan assetsare centrally invested through Allianz Global Investors.The plan assets posted in the balance sheet are not usedby the company.
Consolidated financial statements | Notes to the consolidated statement of financial position99The following figures have been recognized in the consolidatedincome statement:in '000 EUR 2011 2010Current service costs 0 31Interest expense 952 1,003Expected return on plan assets – 51 – 43901 991Except for the interest expense, which is posted underfinancial expenses, the expenditures are recognized asretirement benefit expenses.The present value of entitlement is reconciled with thereported provision as follows:in '000 EUR 2011 2010 2009 2008 2007Present value of entitlement, benefit obligationsfinanced from provisions 17,966 16,957 16,061 16,258 16,651Present value of entitlement, fund-financedbenefit obligations 1,339 1,236 1,132 936 1,184Present value of entitlement, direct benefit obligations(DBO) 19,305 18,193 17,193 17,194 17,835Fair value of plan assets – 1,306 – 1,220 – 992 – 888 – 1,083Provision for pensions 17,999 16,973 16,201 16,306 16,752Empirical gains (-) or losses (+) from benefitobligations 164 – 117 429 – 30 38The present value of defined benefit obligations haschanged as follows:in '000 EUR 2011 2010Commitment at the start of eachfinancial year 18,193 17,193Interest expense 952 1,003Current service costs 0 31Pension payments in the period – 1,116 – 1,030Actuarial gains (-) or losses (+) 1,271 970Currency differences 5 26Commitment at the end of eachfinancial year 19,305 18,193
100Consolidated financial statements | Notes to the consolidated statement of financial positionThe fair value of plan assets has developed as follows:in '000 EUR 2011 2010Commitment at the start of eachfinancial year 1,220 992Expected return on plan assets 51 43Employers' contributions 61 70Actuarial gains (-) or losses (+) – 28 97Currency differences 2 18Commitment at the end of eachfinancial year 1,306 1,220Due to compliance with the maximum limit pursuant toIAS 19.58 (b), the actuarial gains and losses include anactuarial loss in the amount of EUR 48 thousand (previousyear: EUR 51 thousand). The change of EUR 3 thousand(previous year: EUR 28 thousand) has been recognized inequity outside profit or loss with other actuarial gains andlosses in the amount of EUR -1,302 thousand (previousyear: EUR -822 thousand) As at the balance sheet date,actuarial losses totalled EUR 2,025 thousand (previousyear: EUR 726 thousand).12. Other provisionsThe provisions for personnel costs essentially compriseprovisions for the pre-retirement part-time workingarrangements customary in Germany. The provision forpre-retirement part-time working encompasses expensesfor wage and salary payments to employees in the off-workphase (settlement backlog) and the additional increasesrequired for the entire remaining duration of pre-retirementpart-time working. It also includes employee terminationpayments in the amount of EUR 209 thousand (previousyear: EUR 194 thousand) in conjunction with pre-retirementpart-time working. A discount rate of 2.5% (previousyear: 3.5%) is taken into account when calculating theprovision. EUR 284 thousand (previous year: EUR 268thousand) are posted under other non-current assets forthe refunds to be expected from the Federal EmploymentAgency in conjunction with rights under the German Acton Pre-retirement Part-time Working (AltTZG).The provision for warranties, damages and contingentlosses encompasses free deliveries on account of faultygoods, missing parts and other defects which are measuredat production cost. At the same time, the provisionalso covers risks in conjunction with claims for damagesby customers and suppliers; these are recognized at theirexpected value. Provisions are also formed for contingentlosses from delivery obligations, for which the unavoidablecosts for discharging the obligation will exceed theexpected economic benefit.in '000 EUR 1.1.2011 Utilization Reversal Transfer Allocation Accr. int. Exchange differ. 31.12.2011Non-current provisionsPersonnel costs 3,454 – 75 – 43 – 612 18 131 0 2,873Storage 319 0 0 0 0 0 0 3193,773 – 75 – 43 – 612 18 131 0 3,192Current provisionsWarranties, damages andcontingent losses 1,523 – 1,043 – 177 0 1,749 0 1 2,053Reorganization 3,697 – 1,610 – 2,077 0 0 0 0 10Cost of financial statementsand tax consulting 362 – 362 0 0 0 0 0 0Personnel costs 1,974 – 948 0 612 1,865 0 0 3,503Taxes 156 – 70 – 25 0 0 0 0 61Total 7,712 – 4,033 – 2,279 612 3,614 0 1 5,627
Consolidated financial statements | Notes to the consolidated statement of financial position101The reorganization provision includes the payments stilloutstanding in conjunction with the employment and qualificationcompany at the Pfullendorf location.The non-current provisions relating to pre-retirement parttimeworking arrangements will for the most part be consumedwithin the next two years. The other non-currentpersonnel provisions and the provision for safe storage willbe consumed within the next ten years.13. Shareholder loansFinancial liabilities in the amount of EUR 365 thousand(previous year: EUR 365 thousand) existed in the financialyear, in the form of loans granted by the shareholders ofALNO AG.14. Other financial liabilitiesThe accounts payable to banks include foreign currencyloans in the amount of GBP 871 thousand (previous year:GBP 792 thousand) and CHF 1,320 thousand (previousyear: CHF 1,600 thousand).The waiver of repayment realized by a shareholder in earlyJanuary 2012 will relieve the current financial liabilities byEUR 25,000 thousand in the following year.The other financial liabilities are primarily due to ComcoHolding AG, Nidau, Switzerland, taking over further tradeaccounts to be paid to Bauknecht Hausgeräte GmbH,Stuttgart, by the ALNO Group.Covenants (loan terms) have been agreed for the loanextended by a subsidiary. These relate to the equity ratioand upper limit for cost allocations charged by the Group.As at the balance sheet date, the agreed loan terms werenot met insofar as the equity ratio was concerned. For thisreason, the loan valued at EUR 1,125 thousand as per 31December 2011 was completely reclassified as a currentfinancial liability.in '000 EUR31.12.2011TotalRemaining term< 1 year 1 to 5 years > 5 yearsAccounts payableto banks 79,757 69,275 5,271 5,211Other financialliabilities 29,807 29,807 0 0Total 109,564 99,082 5,271 5,211in '000 EUR31.12.2010TotalRemaining term< 1 year 1 to 5 years > 5 yearsAccounts payableto banks 80,798 67,741 7,378 5,679Other financialliabilities 5,389 5,389 0 0Total 86,187 73,130 7,378 5,679The accounts payable to banks are secured throughcharges on property and assignment of the right to releaseof free land charge portions, as well as through the transferof machinery and equipment by way of security. Accountspayable to banks are additionally secured through assignmentof the trade accounts receivable from customers, aswell as accounts and right receivable from central regulatoryoffices, by pledging non-capitalized proprietary rights,through the transfer of stocks by way of security, and bypledging the limited partners' shares in Gustav WellmannGmbH & Co. KG, Enger, and the shares held in CasawellService GmbH, Enger, Impuls Küchen GmbH, Brilon, andPino Küchen GmbH, Coswig (Anhalt).As at the balance sheet date, the assets serving ascollateral are posted in the consolidated balance sheetwith the following carrying amounts:In addition to loans which are regularly renewed underblanket agreements with banking institutes, the companyalso has other loans with quarterly, half-yearly or yearlyrepayment of principal.in '000 EUR 31.12.2011 31.12.2010Land and buildings 44,349 45,486Machinery and technical equipment 6,037 6,002Inventories 13,630 14,184Some of the loan agreements specify a variable rate ofinterest, others a fixed rate of interest. The interest ratesessentially lie between 4.1% p.a. and 7.1% p.a. (previousyear: between 4.3% p.a. and 9.0% p.a.).Trade accounts receivable 12,798 14,408
104Consolidated financial statements | Notes to the segment reportsF. Notes to the segmentreportsIn conjunction with segment reporting, the activities ofthe ALNO Group were defined according to businesssegments in compliance with the rules of IFRS 8. Segmentswhich reported to the Board of Management arenot combined. This breakdown is based on the internalmanagement and reporting, and encompasses the segmentsALNO, Wellmann, Impuls, Pino, the foreignsubsidiaries (ATG) and other companies.The ALNO segment comprises ALNO AG in Pfullendorf,which builds brand name kitchens in the upper and middleprice group at the Pfullendorf location; the Wellmannsegment produces kitchens in the middle price groupat the Enger location. The Impuls segment comprisesImpuls Küchen GmbH in Brilon, while the Pino segmentcomprises Pino Küchen GmbH in Coswig (Anhalt); bothproduce kitchens in the lower price range. The foreignsubsidiaries encompass the marketing companies in otherEuropean countries. Two special purpose entities and anintermediate holding company are recognized under othercompanies.The segment reports are based, as a matter of principle,on the same reporting, recognition and measurementpolicies as the consolidated financial statements. Forsegment reporting purposes, the leases of the special purposeentities are always treated as operating leases. Theat-equity investment is recognized at cost. Internal salesreflect the value of sales between Group companies; thesewere effected at market prices.Decisions concerning the allocation of resources andassessment of the reportable segments' performance aremade by the full Board of Management.The segment data are presented below according to fieldsof business:2011According to segments in '000 EUR ALNO Wellmann Impuls Pino ATG OtherConsolidationTotalSales revenueForeign sales 90,415 130,105 112,009 95,183 25,098 0 0 452,810Domestic sales 7,958 5,562 4,084 31 0 1,729 – 19,364 0Total sales 98,373 135,667 116,093 95,214 25,098 1,729 – 19,364 452,810EarningsSegment EBITDA -21,746 – 12,636 7,534 2,891 131 1,570 27,460 5,204Segment EBIT -26,779 – 18,311 4,667 745 – 118 1,483 27,615 – 10,698Segm. Profit/loss before income taxes (EBT) – 33,729 – 21,996 4,332 540 – 350 718 25,269 – 25,216Income taxes 103 – 235 – 60 – 95 – 6 – 73 21 – 345Income for the period – 33,626 – 22,231 4,272 445 – 356 645 25,290 – 25,561Scheduled write-downs 738 5,675 2,867 2,146 93 87 – 7 11,599Impairment losses 4,295 0 0 0 156 0 – 148 4,303Financial income 772 38 799 618 3 0 – 2,158 72Financial expenses 6,722 3,723 1,134 823 235 765 – 2,163 11,239Income from investm. measured at equity – 1,000 0 0 0 0 0 – 2,351 – 3,351Assets and liabilitiesSegment assets 115,138 61,254 39,149 32,155 9,425 63,952 – 161,403 159,670Segment liabilities 147,689 84,145 31,893 27,034 11,014 10,042 – 78,803 233,014At-equity investments 5,000 0 0 0 0 0 – 4,129 871Other segment informationInvestments 6,528 7,217 2,415 2,433 4 0 0 18,597
Consolidated financial statements | Notes to the segment reports1052010According to segments in '000 EUR ALNO Wellmann Impuls Pino ATG OtherConsolidationTotalSales revenueForeign sales 98,331 130,067 117,966 93,252 27,681 0 0 467,297Domestic sales 5,502 7,484 3,299 367 0 1,724 – 18,376 0Total sales 103,833 137,551 121,265 93,619 27,681 1,724 – 18,376 467,297EarningsSegment EBITDA -17,285 -1,580 10,890 6,800 525 1,571 65 986Segment EBIT -20,234 -5,917 8,147 4,961 100 1,484 341 -11,118Segment Profit/loss before income taxess -20,218 -9,694 7,754 4,748 – 315 665 4,882 -12,178Income taxes -124 – 291 – 13 106 – 458 – 73 – 53 – 906Income for the period – 20,342 – 9,985 7,741 4,854 – 773 592 4,829 – 13,084Amortization and depreciation 656 4,337 2,743 1,839 210 87 – 93 9,779Impairment losses 2,293 0 0 0 215 0 – 183 2,325Financial income 10,376 18 775 724 43 0 – 1,554 10,382Financial expenses 10,360 3,795 1,168 937 458 819 – 6,002 11,535Income from investm. measured at equity 0 0 0 0 0 0 93 93Assets and liabilitiesSegment assets 107,917 56,335 38,061 28,165 9,212 64,034 – 146,026 157,698Segment liabilities 134,206 55,312 30,960 23,230 10,020 10,771 – 37,079 227,420At-equity investments 4,000 0 0 0 0 0 – 1,819 2,181Other segment informationInvestments 3,356 6,158 2,978 3,292 11 0 0 15,795Internal sales within the ALNO Group have been eliminatedin the consolidated sales revenue.The consolidation entries posted in the line “Segmentresult before income taxes” are comprised as follows:in '000 EUR 2011 2010Capital consolidation – 808 4,481Debt consolidation 28,114 – 444Other consolidation entries – 2,037 845Total 25,269 4,882The other consolidation entries concern the eliminationof interim results in inventories, the corrections made atGroup level on write-downs in the ATG segment, and theeffect of at-equity measurement on results.The figures presented for amortization, depreciation andimpairment losses in the column Consolidation are theresult of corrections made at Group level on the basis ofimpairment testing in the ATG segment.The consolidation entries posted for financial income andexpenses comprise the elimination of intra-Group interest.In the previous year, they also included the elimination ofintra-Group write-downs on participating interests in theamount of EUR 4,418 thousand.
106 Consolidated financial statements | Management of financial risksThe consolidation entries in conjunction with segmentassets are made up as follows:G. Management of financialrisksin '000 EUR 2011 2010Capital consolidation – 108,443 – 108,367Debt consolidation – 44,314 – 30,718At-equity measurement – 4,129 – 1,819Other consolidation entries – 4,517 – 5,122Total – 161,403 – 146,026The other consolidation entries refer to deferred taxes inthe amount of EUR 4,031 thousand (previous year: EUR4,479 thousand), the elimination of interim results in inventoriesand the impairment losses on fixed assets which areall netted at Group level.The consolidation entries in conjunction with segmentliabilities comprise the elimination of intra-Group liabilitiesand offsetting deferred taxes.Regional sales are determined according to the place ofdelivery. There is no external customer in the ALNO Groupwith whom 10% or more of the total sales revenue isgenerated.Total sales according to regionsin '000 EUR 2011 2010Germany 326,397 334,620Rest of Europe 105,456 108,089Other foreign countries 20,957 24,588Total 452,810 467,2971. Risk management principlesThe basic principles of financial policy are defined annuallyby the Board of Management and monitored by the SupervisoryBoard. Group Treasury is responsible for implementingthe financial policy, as well as for the ongoing riskmanagement. Certain transactions require prior approval bythe Board of Management, which is also regularly informedof the scope and magnitude of the current risk appraisal.Effective management of the market risks is one of the mainTreasury responsibilities. Simulations using various worstcase and market scenarios are performed to assess theimpacts of different conditions in the marketplace.The Group is exposed to financial risks from financialassets and liabilities, as well as from planned transactions.Financial assets, such as trade accounts receivable andliquid assets, are the direct result of operating activities.Financial assets also include securities which serve ashedges for claims from pre-retirement part-time workingarrangements. The financial liabilities primarily comprisebank loans, other financial liabilities and loans on currentaccount, as well as trade accounts payable. The mainpurpose of financial liabilities is to finance the Group's businessoperations.The main risks arising for the Group from the financial assetsand liabilities comprise interest rate risks, liquidity risks, currencyrisks and risk of default.Intangible assets, property, plantand equipment and investmentsmeasured at equity in '000 EUR 2011 2010Due to the Group's low-risk investment strategy, the riskof changes in the fair value of securities (price risk) is nota material risk from a Group vantage.Germany 80,349 79,536Rest of Europe 1 11Total 80,350 79,547
Consolidated financial statements | Management of financial risks1072. Currency risks3. Interest rate risksThe currency risk refers to the risk of changes in the fairvalue or future cash flows of monetary items on accountof fluctuations in exchange rates.The interest rate risk refers to the risk of changes in the fairvalue or future cash flows of financial assets and liabilitieson account of changes in current interest rates.Currency risks basically arise from investments, financingactivities and operating activities which are undertaken ina currency other than the company's functional currency.However, currency risks without impact on the Group'scash flows, e.g. due to translating foreign corporate entities'assets and liabilities into the Group currency, arenever considered in further detail by Group Treasury.The Group is primarily exposed to interest rate risks inthe eurozone. To minimize the effect of fluctuations ininterest rates in these regions, the interest rate risk for netfinancial liabilities made out in euros is managed by ALNOAG. Financial liabilities in foreign currencies only exist to asubordinate extent. There are no financial derivatives as atthe balance sheet date.There was no material risk in the investment sector as atthe balance sheet date.Currency risks in the financing sector arise from bank loansand loans on current account in foreign currencies, aswell as from foreign currency loans which are extended toGroup companies for financing purposes.Financial liabilities and the variable-interest factoring volumehave been taken into account in the following analysisof sensitivity to interest rate movements. Only financialliabilities with variable interest rates have been included inthe analysis. The analysis is also based on the assumptionthat the principal amounts and the ratio of fixed to variableinterest rates remain unchanged.As from 1 January 2010, the German plants basicallyinvoice customers directly in Switzerland and the UnitedKingdom. Invoices are made out in euros. There are consequentlyno major currency risks for the ALNO Group inthe sales sector.The following table shows the effect of changes in the fairvalue of monetary foreign currency items on Group profit/loss before income taxes. There are no effects on equityoutside profit and loss.If the average interest rate were to be increased by 150(previous year: 150) basis points, the result before taxes onincome would decrease by EUR 1,352 thousand (previousyear: EUR 1,451 thousand). A reduction of 150 (previousyear: 150) basis points would lead to an increase of EUR1,352 thousand (previous year: EUR 1,451 thousand) inprofit/loss before income taxes.4. Risk of defaultDevelopment of exchangerateEffect on result in '000 EURIncome (+)/Expense (-)GBP CHF GBP CHF2011 10.0 % 10.0 % 482 81– 10.0 % – 10.0 % – 482 – 812010 10.0 % 10.0 % 248 102– 10.0 % – 10.0 % – 248 – 102The risk of default refers to the risk that a contractual partnerfails to discharge its payment obligations in conjunctionwith financial assets.Accounts receivable in operating business are continuouslymonitored at segment level, i.e. decentralized. Inconjunction with Group receivables management, minimumrequirements as regards creditworthiness and maximumexposure limits are defined for all business partners of theALNO Group. These are based on a system of specifiedlimits for which compliance is constantly monitored. Inaddition, the ALNO Group safeguards its trade receivablesthrough domestic credit insurance which, if an accountreceivable is not paid, will indemnify the loss incurred inthe contractually agreed amount. Specific valuation allowancesare used to take account of the risk of default. Tradereceivables are secured through domestic credit insurance
108Consolidated financial statements | Management of financial risksand the del credere liability of the central regulatory officesin the overall amount of 90% (previous year: 90%). TheALNO Group companies decide in each individual casewhether or not to make use of the credit insurance.In Germany, the kitchens produced by the ALNO Group aresold through furniture stores and specialized kitchen retailers,as well as self-service and RTA stores, most of whichare members of purchasing associations. Around 92%of the kitchen furniture are sold through such purchasingassociations. Due to these market structures, the ALNOGroup is dependent on a small number of customers. Therisk of default by individual key accounts, however, is metthrough domestic credit insurance or del credere liabilityby central regulatory offices.The risk of default for unimpaired financial assets and thedevelopment of specific valuation allowances are summarizedin section D.6. "Trade accounts receivable".5. Liquidity risksThe liquidity risk refers to the risk that the Group is unableto meet its contractual obligations in settling its financialliabilities.ALNO AG acts as financial coordinator for all Groupcompanies in order to ensure that the financing requiredfor the operational business is always adequate and ascost-efficient as possible. The information required for thispurpose is updated on a monthly basis through roll-overfinancial planning with a planning horizon of one year andsubjected to variance analyses.This financial planning is supplemented by daily cash flowdevelopment planning which is constantly reconciled withthe actual payment flows for the German companies.The foreign subsidiaries are updated on a monthly basis.Available liquidity reserves are monitored constantly byALNO AG.The volume of external financing required is reduced bythe intra-Group financial adjustment undertaken in Germanywithin the framework of the cash pooling process, takinginto account statutory regulations also from the point ofview of the subsidiaries, thus improving the Group's nonoperatingresult. Through this internal financial adjustment,the surplus liquidity of individual Group companies can beused to internally finance other Group companies. Cashpooling is controlled manually.Accounts receivable by Wellmann KG, as well as by Impulsand Pino, have in the past been assigned within the scopeof factoring agreements in order to extend the liquiditymargin needed by the ALNO Group. The three companiescan make variable use of total factoring commitments inthe amount of EUR 41,000 thousand. Of this total, EUR23,291 thousand (previous year: EUR 25,002 thousand)were used on average over the year.The table below presents the contractually agreed interestpayments and principal portions of the financial liabilities.All liabilities which were included in the portfolio on theclosing date and for which payments had already beencontractually agreed have been included. The waiver ofrepayment which was contractually agreed with a majorshareholder in 2011 and realized in early January 2012with regard to accounts payable to banks in the amountof EUR 25 million has already been included in the followingcalculation. Budgeted figures for new liabilities inthe future are not included in the calculation. Amounts inforeign currency have been translated at the rate prevailingon the reporting date. Variable interest payments havebeen calculated on the basis of the last interest rates fixedprior to the balance sheet date. Financial liabilities whichcan be repaid at any time are always assigned to theearliest possible time frame. Interest has been calculatedfor 195 days, as financing is assured until 15 July 2012,as at the balance sheet date.in '000 EUROther financial liabilitiesCarrying amount31.12.2011Due in2012 2013 – 2016 2017 or laterAccounts payable to banks 79,757 46,673 7,548 7,726Other financial liabilities 29,807 30,257 0 0Trade accounts payable and other financial liabilities 86,884 86,824 60 0Shareholder loans 365 420 0 0Warranty obligations 0 273 0 0
Consolidated financial statements | Management of financial risks109in '000 EUROther financial liabilitiesCarrying amount31.12.2010Due in2011 2012 – 2015 2016 or laterAccounts payable to banks 80,798 72,840 10,226 8,621Other financial liabilities 5,389 5,739 0 0Trade accounts payable and other financial liabilities 101,770 101,688 82 0Shareholder loans 365 399 0 0Accounts payable under finance leases 49 52 0 0Warranty obligations 0 406 0 0With regard to the measures taken to assure the company'scontinuation as a going concern and to assure itsliquidity, we refer to the information provided in SectionsB.1. "Basis for preparation of the financial statements" andN. "Events after the closing date".6. Other information on financial assets andliabilitiesThe following table presents the carrying amounts andfair values of all financial assets and liabilities recognizedin the Group.in '000 EUR 31.12.2011 31.12.2010Financial assets Carrying amount Fair value Carrying amount Fair valueLiquid assets LaR 2,243 2,243 3,041 3,041Trade accounts receivable LaR 41,339 41,339 32,996 32,996Financial accounts receivable LaR 1,319 1,319 2,665 2,665Securities AfS 3,163 3,163 3,426 3,426Investments in associated companies AfS 5 * 5 *Financial liabilitiesTrade accounts payable FLaC 62,168 62,168 80,396 80,396Other financial liabilities FLaC 24,716 24,716 21,325 21,325Accounts payable under finance leases ** 0 0 49 49Shareholder loans FLaC 365 365 365 365Other financial liabilities FLaC 109,564 109,564 86,187 86,187* Fair value cannot be determined reliably.** Not a category defined by IAS 39.
110Consolidated financial statements | Management of financial risksClassification according to categories within the meaningof IAS 39The following hierarchy is used to measure and recognizethe fair value of financial instruments:in '000 EUR 31.12.2011 31.12.2010CarryingamountFairvalueCarryingamountFairvalueLoans and Receivables(LaR) 44,901 44,901 38,703 38,703Available-for-Sale (AfS)measured at fair value 3,163 3,163 3,426 3,426measured at amortizedcost of acquisition 5 * 5 *Financial Liabilitiesmeasured at cost (FLaC) 196,813 196,813 188,322 188,322* Fair value cannot be determined reliably.The posted securities are recognized at fair value in theirfull amount.Shares held in associated companies are capitalized at theamortized cost of acquisition, as there is no active marketfor these. What's more, the fair value cannot be reliablydetermined in any other way.The carrying amounts of current financial assets and liabilitiescorrespond to their fair value on account of the shortterm to maturity.The carrying amounts of non-current financial assets andliabilities correspond to their fair value on account of theirfair market rates.• Stage 1: Fair values determined with the aid of pricesquoted in active markets.• Stage 2: Fair values determined with the aid of measurementpolicies for which the input factors of significancefor the fair value are based on observable market data.• Stage 3: Fair values determined with the aid of measurementpolicies for which the input factors of significancefor the fair value are not based on observable marketdata.The securities measured at fair value in the ALNO Group,in the amount of EUR 3,163 thousand (previous year:EUR 3,426 thousand) fall under Stage 1 in this hierarchy.This resulted in the following net gains and losses forthe financial assets and liabilities, classified according tocategories:2011in '000 EURInterest ImpairmentOther netgains/lossesTotalLoans andReceivables 26 – 1,007 102 – 879Available-for-Sale(fair value) 0 0 30 30FinancialLiabilitiesmeasured at cost – 10,184 0 25,623 15,4392010in '000 EURInterest ImpairmentOther netgains/lossesTotalLoans andReceivables 143 – 1,935 283 – 1,509Available-for-Sale(fair value) 0 0 43 43FinancialLiabilities Heldfor Trading 0 0 – 130 – 130FinancialLiabilitiesmeasured at cost – 9,800 0 10,520 720
Consolidated financial statements | Contingent liabilities and other financial commitments111Impairment of the "Loans and Receivables" relates tothe allocation to specific valuation allowance for tradeaccounts receivable. The other net gains and lossesinclude income from the receipt of derecognized accountsreceivable and from the reversal of specific valuation allowances,expenses from derecognized accounts receivable,and gains and losses from currency translation.The other net gains and losses recognized in the category"Available-for-Sale – measured at fair value" includeincome from investments in securities and the unrealizedchanges in value recognized in equity.In the previous year, the other net losses in the category"Financial Liabilities Held for Trading" concerned expensesfrom financial derivatives.Income from derecognized liabilities, expenses from measurementof foreign currency loans on the closing date andincome from realized waivers of repayment are recognizedunder the other net gains and losses of "Financial Liabilitiesmeasured at cost".H. Contingent liabilities andother financial commitmentsAs at 31 December 2011 liabilities under warranty agreementsexist in the amount of EUR 273 thousand (previousyear: EUR 406 thousand).Other financial commitments are as follows:2011in '000 EURDue in2012Due in 2013– 2016Due in2017 orlaterTotalAccounts payable underlease arrangements withthird parties 2,811 4,568 1,323 8,702Other contract. arrangem.with third parties 11,381 25,313 10,137 46,831Ongoing investmentprojects 685 0 0 685Supply contracts 2,600 6,000 800 9,400Total 17,477 35,881 12,260 65,6182010in '000 EURDue in2011Due in 2012– 2015Due in2016 orlaterTotalAccounts payable underlease arrangements withthird parties 3,680 5,531 1,204 10,415Other contract. arrangem.with third parties 12,324 31,230 11,596 55,150Ongoing investmentprojects 2,273 0 0 2,273Supply contracts 2,550 1,600 800 4,950Total 20,827 38,361 13,600 72,788Rental and leasing agreements with third parties primarilyconcern leased vehicles and factory and office equipment.The other contractual agreements with third parties concernmaintenance, service and power supply contracts.Ongoing investment projects in the amount of EUR 685thousand (previous year: EUR 2,273 thousand) relateentirely to property, plant and equipment.
112Consolidated financial statements | Related persons and companiesI. Related persons andcompaniesAssociated persons and companies are defined as personsor business entities which can be controlled by thereporting company, insofar as they are not already includedin the consolidated financial statements as consolidatedcompanies, or which can directly or indirectly exercisecontrol over the reporting company.Business relations are as follows:Persons concerned Major shareholders Joint ventures Other related companiesBusiness relationship2011in '000 EUR2010in '000 EUR2011in '000 EUR2010in '000 EUR2011in '000 EUR2010in '000 EURPurchased goods and services 84,725 95,621 0 0 371 0Interest paid 3,188 2,595 0 0 116 0Interest received 0 0 0 101 0 0Other expense 3 7 0 0 3,054 0Other income 0 0 0 0 25,000 0Financial accounts receivable andtrade accounts receivable 0 0 249 2,311 0 0Financial liabilities 389 1,455 0 0 29,009 0Trade accounts payable and otherliabilities 24,992 50,626 0 0 18 0Interest rate6.5% or 9%or Euribor+9%6.5% or 9% orEuribor +9% 3 % 3 %6.5% p.a.plus 3.5% riskpremiumn/aMajor shareholders with whom business relations aredirectly maintained are: Küchen Holding GmbH, Munich(parent company), are IRE Beteiligungs GmbH, Stuttgart,and indirectly: RCG International Opportunities S.à r.l.,Luxemburg, Cognis S.à r.l., Luxemburg, and BauknechtHausgeräte GmbH, Stuttgart.The joint venture concerns ALNO Middle East.The other related companies with which business relationsexist comprise Comco Holding AG, Nidau, Switzerland,Comco Finanz AG, Nidau, Switzerland, Comco ManagementGmbH, Stuttgart,and Max Müller + Partner AG, Biel,Switzerland.The figure reported for purchased goods and servicesessentially relates to the contract for delivery betweenALNO AG and Bauknecht Hausgeräte GmbH, Stuttgart.This contract governs the supply of electrical appliances tothe ALNO Group and was concluded subject to standardmarket conditions. The contract for delivery runs until 30November 2015 and also includes an interest-bearingdelinquency schedule on which interest is charged atcustomary market rates.Küchen Holding GmbH (parent company) charged feestotalling EUR 300 thousand (previous year: EUR 735 thousand)for consulting services within the framework of itsservice contract. EUR 3 thousand (previous year: EUR 207thousand) were additionally charged for further consultingservices and travel expenses of a shareholder of KüchenHolding GmbH.
Consolidated financial statements | Related persons and companies113In the previous year, major shareholders waived repaymentof sums in the amount of EUR 4,909 (including EUR 3,379thousand by the parent company Küchen Holding GmbH).This has been recognized outside profit or loss in the accumulatednet income. A further waiver of repayment wasissued by the parent company Küchen Holding GmbH inthe amount of EUR 25,000 thousand in early January 2012;this waiver will only be recognized as income in 2012. Theloans granted by major shareholders were all granted bythe parent company and run until 31 December 2011.In December 2011, Comco Holding AG, Nidau, Switzerland,took over from Bauknecht Hausgeräte GmbH, Stuttgart,the latter's trade accounts receivable from ALNOAG (change of creditor from the point of view of ALNOAG) in the amount of EUR 25,000 thousand. Due to thesubsequent waiver of repayment by Comco Holding AG,Nidau, Switzerland, at the end of 2011, this yields otherincome from derecognition of trade accounts payable inthe amount of EUR 25,000 thousand. This income is recognizedin the result from reorganization.A customary agency commission in the amount of EUR750 thousand was paid to Comco Holding AG, Nidau,Switzerland, in conjunction with the capital increase.Comco Holding AG, Nidau, Switzerland, received considerationin the amount of EUR 2,000 thousand for preparinga restructuring concept and collecting restructuring contributions.Travel expenses and mobile telephony charges inthe amount of EUR 91 thousand were additionally invoicedby this company. Comco Holding AG, Nidau, Switzerland,and Comco Finanz AG, Nidau, Switzerland, received EUR93 thousand for the provision of personnel. Remunerationof the Supervisory Board of ALNO (Switzerland) AG,Embrach, Switzerland, is accounted for by Comco HoldingAG, Nidau, Switzerland, as a corporate borrowing in theamount of EUR 120 thousand.As at year-end, Comco Holding AG, Nidau, Switzerland,had granted the ALNO Group loans totalling EUR 28,898thousand. These run until 1 April 2012, as at the balancesheet date. Interest in the amount of 6.5% p.a. plus aonce-only risk premium of 3.5% in the amount of EUR 116thousand was additionally due as per 31 December 2011.Business transactions and the emoluments of corporateofficers are listed in Section J.In conjunction with the restructuring of operations, ComcoHolding AG, Nidau, Switzerland, Comco ManagementGmbH, Stuttgart, and Max Müller + Partner AG, Biel,Switzerland, received remuneration totalling EUR 346thousand for consulting services rendered. These consultingservices were invoiced at daily rates customary on themarket. Motor-related expenses in the amount of EUR 25thousand were also charged out to ALNO AG.
114 Consolidated financial statements | Supervisory Board and Board of ManagementJ. Supervisory Board andBoard of ManagementMembers of the Supervisory Board:Shareholder representatives:• Henning Giesecke, Zell (chairman)Managing director of GSW Capital ManagementGmbH, MunichManaging director of HBconbet GmbH, Zell• Werner Devinck, Knokke-Heist, BelgiumVice President European Markets Whirlpool Europes.r.l., Comercio, Italy (since 1 January 2011)Managing director of Bauknecht Hausgeräte GmbH,Stuttgart (as from 29 April 2011)Chairman of the Board of Management of BauknechtHausgeräte GmbH, Stuttgart (until 29 April 2011)• Dr. oec. Jürgen Diegruber, GräfelfingManaging Partner German Capital GmbH, MunichManaging Partner Partners Group AG, Baar-Zug,Switzerland (as from 1 January 2011)• Anton Walther, Sulzbach/TaunusLawyer, chartered accountant, tax consultant• Ruth Falise-Grauer, Geneva, Switzerland(as from 14 July 2011)Freelance industrial and interior designer• Norbert J. Orth, Monaco, Monaco(as from 14 July 2011)Investor• Christoph Maass, Jesteburg (until 14 July 2011)Managing director of Borco-Marken-Import MatthiesenGmbH & Co. KG, Hamburg• Armin Weiland, Berg (until 14 July 2011)Managing Partner German Capital GmbH, MunichManaging Partner Partners Group AG, Baar-Zug,Switzerland (as from 1 January 2011)Employee representatives:• Rudolf Wisser, Messkirch (vice-chairman)Employee in job scheduling at ALNO AG,Pfullendorf• Jörg Kespohl, LöhneCommercial clerk at Gustav Wellmann GmbH & Co.KG, Enger• Gerhard Meyer, BrilonMember of the works council at Impuls Küchen GmbH,BrilonFurther mandates held by members of the SupervisoryBoard in Supervisory Boards and other controlling bodieswithin the meaning of Section 125 (1), fifth sentence, ofthe Stock Companies Act (AktG):• Henning Giesecke, ZellMember of the Supervisory Board, Rothenberger AG,KelkheimChairman of the Supervisory Board, Endurance CapitalAG, MunichVice-chairman of the Supervisory Board, Leifeld MetalSpinning AG, Ahlen (until 29 June 2011)Chairman of the Supervisory Board, Kofler EnergiesAG, Munich (until 20 December 2011)Member of the Administrative Board, Erste Abwicklungsanstalt,DüsseldorfChairman of the Supervisory Board, Valovis Bank,Essen(since 31 December 2011)Member of the Supervisory Board, Yarra InvestmentOY, Helsinki• Werner Devinck, Knokke-Heist, BelgiumMember of the Supervisory Board, Gedelegeerd BestuurderWhirlpool Benelux N.V., Strombeek-Bever, BelgiumMember of the Supervisory Board, Bestuurder WhirlpoolNederland B.V., Breda, NetherlandsManaging director of Whirlpool Austria GmbH, WienerNeudorf, AustriaManaging director of IRE Beteiligungs GmbH, StuttgartMember of the Supervisory Board, Bauknecht AGSwitzerland, Lenzburg, Switzerland
Consolidated financial statements | Supervisory Board and Board of Management115• Dr. oec. Jürgen Diegruber, GräfelfingPresident of the Supervisory Board of CaldergroupSwiss AG, St. Gallen, SwitzerlandDirector of Calder Finco UK Ltd, Chester, UnitedKingdomChairman of the Shareholder Committee, Milano InvestmentsS.à r.L., Esch-sur-Alzette, LuxemburgMember of the Supervisory Board, Leclanché S.A.,Yverdon-les-Bains, Switzerland (until 16 April 2012)Member – Board of Directors, Calder Group Limited,Chester, United KingdomMembers of the Board of Management:• Max Müller, Magglingen/Switzerland (Chief ExecutiveOfficer) (as from 6 April 2011)• Ipek Demirtas, Überlingen (Director Finance, HR, IT)(as from 13 July 2011)• Elmar Duffner, Osnabrück (Director, Export Sales, Production,Purchasing, Logistics, Product Development,Marketing, Communications) (as from 1 November 2011)• Christoph Maass, JesteburgMember of the Supervisory Board of Master ConsultingAG, Frankfurt am Main• Norbert J. Orth, Monaco, MonacoMember – Board of Directors Frieden Ltd, Thun,SwitzerlandVice President Smaragd AG, Thun, Switzerland• Christoph Fughe, Bad Salzuflen (Director Sales Germany)(from 6 April 2011 until 29 February 2012)• Jörg Deisel, Witten (Chief Executive Officer; Sales, Marketingand Development) (until 6 April 2011)• Jörg Artmann, Düsseldorf (Director Finance, HR, IT)(until13 July 2011)• Armin Weiland, BergMember of the Supervisory Board of RES Finco AG,St. Gallen, Switzerland,Member of the Supervisory Board of Leclanché S.A.,Yverdon-les-Bains, SwitzerlandChairman of the Advisory Board of Tarvos InvestmentsGmbH, Munich (until 1 August 2011)Chairman of the Supervisory Board of RES NewCo AG,St. Gallen, SwitzerlandChairman of the Supervisory Board of Energy GroupHolding AG, St. Gallen, SwitzerlandVice President of the Supervisory Board of The EnergyHolding AG, St. Gallen, Switzerland• Michael Paterka, Ravenstein (Director Production,Purchasing, Logistics and Quality) (until 6 April 2011)For their activities for the Supervisory Board, the membersof the Supervisory Board received total remuneration in theamount of EUR 230,000 in the financial year 2011 (previousyear: EUR 268 thousand). The employee representativesadditionally received emoluments in the amount of EUR168 thousand (previous year: EUR 166 thousand) fromtheir employment in the ALNO Group.As in the previous year, members of the Supervisory Boarddid not receive any fees for consulting services. KüchenHolding GmbH charged fees totalling EUR 300 thousand(previous year: EUR 735 thousand) for consulting serviceswithin the framework of its service contract. As at 31December 2011 the members of the Supervisory Boardheld a total of 106,666 (previous year: 1000) no-par-valueshares.
Consolidated financial statements | Supervisory Board and Board of Management117Amount of remuneration paid to the Board ofManagement in 2011The following figures include payments promised or paid toindividual Board members by ALNO AG in conjunction withtheir respective activities as a member of the Board of Management.Total emoluments for the Board of Managementcomprise the sum of all remuneration paid in cash and all noncashbenefits. The latter essentially comprise the provisionof company cars. EUR 1,822 thousand (previous year: EUR2,071 thousand) were expensed altogether in 2011. Of thistotal, the fixed element unrelated to performance accountedfor EUR 1,163 thousand (previous year: EUR 979 thousand)and the performance-related variable element in the natureof a medium-term incentive payment accounted for EUR 659thousand (previous year: EUR 1,092). In 2010, the companypromised the Board members Jörg Deisel, Jörg Artmannand Michael Paterka a bonus following the successful capitalincrease in 2011 ("RE-IPO Bonus") which is payable in threeinstalments in March 2011, January 2012 and January 2013.The variable element comprises the payments made in 2011,the RE-IPO Bonus for 2011 and reversal of the bonus provisionsfor 2010.Substantial commitments to a member of the Boardof Management following premature termination of hisserviceA termination payment was agreed for 2011 with the Boardmember Mr. Michael Paterka in the event of premature terminationof his service contract. The service contract concludedwith Mr. Paterka was terminated prematurely as per 30 April2011 and a termination payment in the amount of EUR 454thousand remitted in lieu of all the remuneration payable hadthe contract remained in force.A liability in the amount of EUR 112 thousand altogether hasbeen expensed for Mr. Artmann for the salary outstandingfrom January to May 2012.Due to the ongoing lawsuit with Mr. Deisel in conjunctionwith his dismissal, a provision in the amount of EUR 1,600thousand as at the balance sheet date has been formedin accordance with the settlement proposed by DüsseldorfRegional Court to cover all expected claims (outstanding salary,bonus, termination payment, etc.) (see N. "Events afterthe closing date").Of the total expensed in 2011, Mr. Deisel received EUR 347thousand (previous year: EUR 1,186 thousand), of which EUR156 thousand (previous year: EUR 438 thousand) comprisedfixed remuneration elements and EUR 191 thousand (previousyear: EUR 748 thousand) comprised variable remunerationelements (thereof EUR 391 thousand RE-IPO Bonus and EUR-200 thousand for 2010 from reversal of the bonus provision).Mr. Artmann received EUR 659 thousand (previous year: EUR493 thousand), of which EUR 276 thousand (previous year:EUR 280 thousand) comprised fixed remuneration elementsand EUR 383 thousand (previous year: EUR 213 thousand)comprised variable remuneration elements (thereof EUR 391thousand RE-IPO Bonus, EUR 42 thousand bonus for 2011and EUR -50 thousand for 2010 from reversal of the bonusprovision). Mr. Paterka received EUR 150 thousand (previousyear: EUR 392 thousand), of which EUR 86 thousand (previousyear: EUR 261 thousand) comprised fixed remunerationelements and EUR 64 thousand (previous year: EUR 131 thousand)comprised variable remuneration elements (thereof EUR131 thousand RE-IPO Bonus and EUR -67 thousand for 2010from reversal of the bonus provision) in 2011.In addition, fixed remuneration in the amount of EUR 309thousand was paid to Mr. Müller, EUR 157 thousand to Mr.Fughe, EUR 115 thousand to Ms. Demirtas and EUR 64thousand to Mr. Duffner. Except in the case of Mr. Duffner(EUR 21 thousand), variable remuneration elements were notpaid to Ms. Demirtas, Mr. Müller and Mr. Fughe in 2011.Remuneration of former members of the Boardof Management of ALNO AG and their survivingdependantsEmoluments paid to former members of the Board of Managementof ALNO AG and their surviving dependants totalledEUR 527 thousand in the financial year 2011 (previous year:EUR 447 thousand). Provisions for pension commitmentsfor former members of the Board of Management and theirsurviving dependants totalled EUR 7,858 thousand in 2011(previous year: EUR 7,515 thousand).Provision for retirement benefitsA defined-contribution retirement benefit arrangementincluding benefits for surviving dependants was agreed forMr. Deisel in October 2010 for the duration of his service tothe company, with benefits becoming due on reaching theage limit of 60 years or on occurrence of disability or death.Prorated contributions totalling EUR 300 thousand (previousyear: EUR 100 thousand) were paid into this scheme for thefinancial year 2011 up to 30 September 2011. Disposal of theaccount prior to occurrence of an event triggering benefitsis excluded as a matter of principle. There are no furtherpension commitments or similar retirement benefit obligationsfor active members of the Board of Management in 2011.
118Consolidated financial statements | Companies utilizing the exemption pursuant to Sections 264 (3) and 264 b of the German Commercial Code (HGB)K. Companies utilizing the exemptionpursuant to Sections 264(3) and 264 b of the GermanCommercial Code (HGB)M. Auditors' feesThe following fees were expensed for the auditors of theconsolidated financial statements:The subsidiaries Impuls Küchen GmbH, Brilon, PinoKüchen GmbH, Coswig (Anhalt), ZweitmarkenholdingImpuls Pino GmbH, Pfullendorf, ALNO International GmbH,Pfullendorf, Gustav Wellmann GmbH & Co. KG, Enger,and the property management company tielsa KüchenGmbH & Co. KG, Enger, have made use of the reliefspursuant to Section 264 (3) and Section 264 b of the GermanCommercial Code (HGB). The consolidated financialstatements and Group management report are publishedin the electronic Federal Gazette.L. Shareholdingsin '000 EUR 2011 2010Audit of financial statements 338 391Other consulting services 97 463Tax consulting services 79 133Other services 4 4Total 518 991The item Audit encompasses fees for the statutory finalaudit of the separate and consolidated financial statementsof ALNO AG as at 31 December 2011, as well asfor checking the report on controlled companies in accordancewith Section 313 of the Stock Companies Act (AktG)for the financial year 2011.Name and head officeShares held in subsidiariesALNO GermanyShare ofcapital in %Other consulting services essentially comprise expensesassociated with preparing a Comfort Letter in conjunctionwith the capital increase originally planned for autumn2010 and then postponed until 2011.Impuls Küchen GmbH, Brilon 100Pino Küchen GmbH, Coswig (Anhalt) 100Zweitmarkenholding Impuls Pino GmbH, Pfullendorf 100Gustav Wellmann GmbH & Co. KG, Enger 100Casawell Service GmbH, Enger 100Tax consulting costs comprise the fees charged for ongoingtax consulting activities.Other services relate to consulting services associated withaccounting.ALNO Trading GmbH, Enger 1 100Grundstücksverwaltungsgesellschafttielsa Küchen GmbH & Co. KG, Enger 100Wellmann Bauteile GmbH, Enger 100ALNO International GmbH, Pfullendorf 100ALNO abroadALNO (Switzerland) AG, Embrach/Switzerland 100ALNO France S.à.r.l., Cagnes-sur-Mèr/France 100ALNO U.K. Ltd, Dewsbury/United Kingdom 100Shares held in joint ventures:ALNO Middle East FZCO, Dubai/UAE 50Special purpose entities:MINERVA Grundstücks-VermietungsgesellschaftmbH & Co. Objekt Pfullendorf OHG, Grünwald 100Tignaris Beteiligungsgesellschaft mbH & Co.Objekt Pfullendorf KG, Grünwald 1001Since 22 November 2011; formerly EuroSet Küchentechnik GmbH, Enger
Consolidated financial statements | Events after the closing date119N. Events after the closing dateWaiver of repaymentIn early January 2012, Küchen Holding GmbH, Munich,took over the syndicate banks' loans receivable from theALNO Group (change of creditor from the vantage of ALNOAG) in the amount of EUR 25 million. Küchen HoldingGmbH subsequently waived repayment of the assumedreceivables effective 6 January 2012. This relieves shorttermfinancial liabilities in the amount of EUR 25 millionwithout effect on net income, as Küchen Holding GmbHhas acted in its capacity as shareholder.Termination of the voting agreementThe voting agreement between IRE Beteiligungs GmbH,Stuttgart, and Küchen Holding GmbH, Munich, both ofwhich are major shareholders in ALNO AG, was terminatedon 30 January 2012. Küchen Holding GmbH is thereforeformally no longer majority shareholder of ALNO AG. IREBeteiligungs GmbH, Stuttgart, belongs to the WhirlpoolGroup based in Michigan, USA, through BauknechtHausgeräte GmbH, Stuttgart. In recent years, KüchenHolding GmbH and Bauknecht/Whirlpool have formed acommunity of investors within the shareholder structureof ALNO AG. Through the voting agreement, the votingrights of Bauknecht/Whirlpool in ALNO AG were assignedto Küchen Holding. This made Küchen Holding GmbHthe majority shareholder in ALNO AG. Now, following thereallocation of voting rights, there is no longer a majorityshareholder in ALNO AG. Bauknecht/Whirlpool intend toexercise their voting rights directly in future. Both Bauknecht/Whirlpooland Küchen Holding GmbH continue to seetheir involvement in ALNO AG as a long-term investment.Changes in the Board of ManagementSales Director Christoph Fughe retired from the Board ofManagement of ALNO AG by mutual consent on 29 February2012; this was decided by the Supervisory Board at itsmeeting on 17 February 2012. Christoph Fughe became amember of the Board of Management in April 2011 and wasfinally responsible for "Sales Germany" and "Sales Austria".After retiring from the Board of Management, ChristophFughe continued to serve the company in an advisorycapacity and for special tasks until 31 May 2012. The Boardof Management of ALNO AG now once again comprisesthree members. The duties have also been reallocated.In addition to his previous tasks (including corporate development,auditing, law and quality management), Max Mülleris now also tasked with "purchasing" and "logistics" whichformerly belonged to the area for which Elmar Duffneris responsible. The areas formerly tasked to ChristophFughe, namely "Sales Germany" and "Sales Austria", havebeen assigned to Elmar Duffner, whose responsibilitiesinclude production, exports, product development andmarketing / PR).Foundation of a new subsidiary in the USAA new subsidiary was set up in 2012 with the name ALNOUSA Corporation based in New York. Lothar Birkenfeld, akitchen manager with considerable experience of the USmarket, was appointed managing director.Acquisition of an ALNO premium dealer in the UnitedKingdomALNO UK Ltd., Dewsbury, United Kingdom, acquired theALNO premium dealer Built-In Kitchens Ltd., Sevenoaks,United Kingdom, in April 2012 in conjunction with theexpansion of its export business.Audience award for the ceramic kitchenALNOSTAR CERAALNO's new ceramic product line won the distinction"Excellent Product" in the consumer competition "KitchenInnovation of the Year 2012" by the LifeCare initiative,as well as the "Golden Award – Best of the Best" in thecategory "Kitchen furniture and equipment". The awardconferred by the independent LifeCare initiative is a markof quality for products meeting consumer needs to a particularlyhigh degree and was given to the ALNOSTARCERA kitchen for its functionality, product benefits, innovation,design and sustainability. The award is internationallyrecognized and appreciated as a mark of quality onaccount of its consumer orientation.Ruling in the lawsuit against Jörg DeiselThe 2nd court division handling commercial mattersat Düsseldorf Regional Court issued a judgement inthe lawsuit between ALNO AG and its former ChiefExecutive Officer Jörg Deisel on 10 May 2012. This judgementconfirms the legal opinion upheld by ALNO AG,according to which the premature renewal of his managementcontract until 2015 is invalid. In a provisionaljudgement in summary procedure, Düsseldorf RegionalCourt therefore merely awarded the plaintiff payment ofoutstanding salaries and bonuses in the amount of aroundEUR 400,000 for the period between his dismissal withoutnotice in April 2011 and expiry of the contract in force atthat time (i.e. 30 September 2011).However, this judgement is still subject to appeal.
120Consolidated financial statements | Events after the closing dateImplementation of a long-term capitalization andfinancial conceptSince late 2011, the Board of Management has been workingon the implementation of a long-term capitalization andfinancial concept. The main pillars of this concept are theconclusion of a further restructuring agreement by mid-July2012 at the latest and a capital increase in autumn 2012.especially in other countries. A funding commitment bythese new banks is scheduled to coincide with the conclusionof restructuring agreement III.The Group's factoring volume is to be further increasedby another EUR 15 million through the sale of accountsreceivable by ALNO AG.This restructuring agreement III will provide for further contributionsby the main shareholders Küchen Holding GmbH,Munich, and IRE Beteiligungs GmbH, Stuttgart, as wellas by the main banks financing the ALNO Group and thesupplier Bauknecht Hausgeräte GmbH, Stuttgart. Amongother things, the contributions by Bauknecht HausgeräteGmbH, Stuttgart, also include an extension of paymentdeadlines to ensure that the liquidity of the ALNO Groupremains assured until the restructuring agreement III andcapital increase have been implemented in autumn 2012.Conclusion of the restructuring agreement III will significantlyimprove Group equity and permit full repayment ofthe main banks. Repayment of the banks' financing withthe aid of old and new investors is an essential prerequisitefor the scheduled capital increase, which will be part of therestructuring agreement III.Existing bank loans payable by the ALNO Group will betaken over and repaid by old and new investors in the firststage of the restructuring agreement III. This stage will inpart be financed through a bond issue by ALNO AG. Inthis way, the existing accounts payable to banks will bereduced to less than 10%.The second stage involves increasing the share capital ofALNO AG and must be decided by the Annual GeneralMeeting in August 2012. This capital increase is to beeffected through both cash and non-cash contributions.The non-cash contribution will take the form of a "debt-toequityswap" in which the loan receivables taken over byold and new investors are paid in, insofar as they are notfinanced through the aforementioned bond. Since the collateralprovided to date will be released through repaymentof the existing sums payable to banks, it can be used totake out new loans in the future, insofar as it is not neededfor issuing the bond.The Board of Management is already conducting specificfinancial talks with banks which have not provided fundingto date. The liquidity provided by these new bank loanswill be used to finance the ALNO Group's planned growth,In addition, the Board of Management is holding out theoption of applying for a guarantee furnished by the Landgovernment of Baden-Württemberg following the conclusionof restructuring agreement III which would open upfurther potential for financing.In mid-May 2012, ALNO AG's Board of Managementobtained written, non-binding declarations of intent fromthe main shareholders, the main supplier Bauknecht HausgeräteGmbH and both old and new investors confirmingtheir support for the long-term capitalization and financingconcept outlined above. These declarations of intent areto be transformed into a binding restructuring agreement IIIby mid-July 2012, together with the planned restructuringcontributions of the main syndicate banks.Update of the original reorganization assessmentof 24 June 2010 by PricewaterhouseCoopersPricewaterhouseCoopers AG Wirtschaftsprüfungsgesellschaft("PwC") was retained in early 2010 to prepare a reorganizationassessment for the ALNO Group in accordancewith statement IDW S6 of the German Institute of Auditors.In their assessment of 24 June 2010, PwC confirmed theALNO Group's prognosis as a going concern as long asfinancing is assured in accordance with the restructuringagreement I of 23 April 2010 and as long as the requiredmeasures are implemented within the framework of thecorporate planning.In spring 2011, PwC was requested to update their reorganizationassessment for the ALNO Group. In the updatedreorganization assessment of 13 May 2011, PwC foundthat the ALNO Group is fully financed so far as could beestablished at that time and subject to certain conditions,and that there were no changes as regards the statementsmade in the reorganization assessment of 24 June2010. However, PwC did point out that the ALNO Group'srestructuring would take longer than had been planned inthe previous year.In November 2011, PwC was mandated to undertake anupdate of their reorganization assessment for the ALNO
Consolidated financial statements | Events after the closing date121Group. Since the operational and financial reorganizationconcept was still in the planning stage, PwC was unableto make any statement in their draft of 9 March 2012 as tothe ALNO Group's ability to be restructured and continuedas a going concern.• Subject to the assumptions made and provided that aliquidity buffer of at least EUR 5.0 million is permanentlymaintained, the company's liquidity is assured for theperiod thereafter, i.e. from September 2012 to the endof June 2013.On the basis of this mandate, PwC was therefore requestedin late April 2012 to follow up on an existing analysis ofthe short-term liquidity planning until mid-July 2012 andverify the plausibility of the Group's liquidity planning upto mid-2013.In their "Plausibility verification of liquidity planning up tomid-2013" dated 29 May 2012, PwC has taken account ofthe risks identified when verifying the plausibility of corporateplanning in their conservative "Adjustment Case" whichalso includes measures from the planned capitalization andfinancial concept (refer to the section on implementation ofthe long-term capitalization and financial concept).In their statement on liquidity planning up to mid-2013,PwC drew attention to the following points:• The management's short-term liquidity planning showsthat the current agreements reached with suppliers ondeferral of payments and the stand-still agreement concludedwith the banks and a another financial partnerhave assured the ALNO Group's liquidity until 20 July2012.• Very different stages have been reached as regardsimplementation and negotiation of the various measurescontained in the capitalization and financial concept. Thisconsequently makes it impossible to assess the feasibilityof all the measures in the concept. However, PwC doesnot consider the measures to be obviously infeasible.In addition, PwC also drew attention to the following essentialassumptions and risks in the liquidity planning up toJune 2013:• The financial concept must be implemented without faildespite the risks associated with the feasibility of individualmeasures. At the time of making the statement,investors have only issued declarations of intent whichhave still to be checked in legal and financial terms. Allother measures are under negotiation or in planning.• The possibility that the measures will not be implementedin good time to assure the ALNO Group's further liquidityconstitutes a risk. The most important and majorityof measures must therefore be implemented without failbefore the agreements on deferral of payments and thestand-still agreement expire on 20 July 2012, as considerablyhigher liquidity will be required as from the endof July 2012 due to the plants' summer break and thishigher liquidity cannot be covered without the plannedinflows from the financial concept.• Some of the planned but hitherto postponed investmentswill have to be made in the second half of 2012.• The relationship or situation prevailing with domesticcredit insurers and suppliers is strained. The liquidityplanning is based on the assumption that both will notintroduce terms of payment which are less advantageousfor the company than those at present or planned.• On the basis of the so-called "Adjustment Case", closingall plants for the summer break between mid-July andmid-August 2012 indicates that the Group's liquidity isnot assured and payments may be halted during thisperiod unless other internal and/or external measures aretaken. The management of ALNO AG is therefore alreadyconducting initial negotiations with a major supplier inorder to improve the company's liquidity.The Board of Management of ALNO AG has in the meantimetaken further steps to specify and implement thecapitalization and financial concept in more detail. Amongother things, these include negotiations with the financingbanks over repayment of the existing loans and credit lines,as well as negotiations with new financial partners to obtainfresh funds. The negotiations with shareholders from whommajor restructuring contributions are expected under thecapitalization and financial concept have for the most partbeen concluded.
122 Consolidated financial statements | Earnings per shareThe continuation of business activities by ALNO AG andthe ALNO Group depends on timely implementation of theaforementioned measures in the capitalization and financialconcept as planned, and on whether or not the conditionsand assumptions made in the corporate planning are metor apply as planned. The Board of Management of ALNOAG presumes that the aforementioned measures in thecapitalization and financial concept will be implemented onschedule as planned, and that the conditions and assumptionsmade in the corporate planning will be met or applyas planned.P. Earnings per shareThe earnings per share are obtained by dividing the netconsolidated income accruing to the shareholders by aweighted number of issued shares. There was no dilutingeffect due to so-called potential shares in either the yearunder review or the previous year.in '000 EUR 2011 2010Consolidated loss – 25,561 – 13,084Third-party shares 0 0O. Declaration of compliancepursuant to Section 161 ofthe Stock Companies Act(AktG)The declaration of compliance with the recommendationsof the "Government Commission on the German CorporateGovernance Code" and Section 161 of the Stock CompaniesAct (AktG) was reviewed and re-issued by the Boardof Management and Supervisory Board on 30 September2011. The declaration is permanently accessible to shareholderson the company's website and reprinted in theGroup management report 2011.In accordance with Section 3.10 of the German CorporateGovernance Code, the Board of Management and SupervisoryBoard of ALNO AG report on the ALNO Group'scorporate governance in the Annual Report for the financialyear ending 31 December 2011. Information on the basicprinciples of the system of remuneration for the Boardof Management can be found in Section K. "SupervisoryBoard and Board of Management".Number of shares in thousands(weighted average) 24,617 16,877Earnings per share in EUR – 1.04 – 0.78Pfullendorf, 11 June 2012ALNO AktiengesellschaftBoard of ManagementMAX MüllerChief Executive Officer of ALNO AGIPEK DEMIRTASChief Financial OfficerElmar DuffnerChief Operations Officer
Consolidated financial statements | Auditor's report123Auditor's reportWe have audited the consolidated financial statementsprepared by ALNO Aktiengesellschaft, Pfullendorf, whichcomprise the income statement, statement of comprehensiveincome, balance sheet, cash flow statement,statement of changes in equity and the notes to theconsolidated financial statements, as well as the Groupmanagement report which has been combined with themanagement report of the company, for the financial yearfrom 1 January to 31 December 2011. The company'sstatutory representatives are responsible for preparing theconsolidated financial statements and Group managementreport in accordance with International FinancialReporting Standards, as adopted by the EU, and theadditional requirements of German commercial law pursuantto Section 315a (1) of the German CommercialCode (HGB). Our responsibility is to express an opinionon these consolidated financial statements based on ouraudit.We conducted our audit in accordance with Section 317 ofthe German Commercial Code (HGB) and German generallyaccepted standards for auditing financial statementspromulgated by the Institut der Wirtschaftsprüfer (Instituteof Public Auditors in Germany) (IDW.) We are thereforerequired to plan and perform the audit in such a way thaterrors and violations significantly affecting presentation ofthe company's net assets, financial position and resultsof operations as conveyed by the consolidated financialstatements in compliance with the applicable accountingstandards and by the Group management report can bedetected with reasonable assurance. Knowledge of theGroup's business activities, its economic and legal environmentand expectations in respect of possible misstatementshave been taken into account when defining theaudit procedures. The effectiveness of the internal controlsystem relevant for accounting and evidence supportingthe disclosures in the consolidated financial statementsand Group management report is primarily assessed onthe basis of spot checks during the audit. The audit alsoincludes evaluating the annual financial statements of thecompanies included in the consolidated financial statements,the defined scope of consolidation, the recognitionand consolidation principles applied and the main accountingestimates made by the Group's statutory representatives,as well as evaluating the overall presentation of theconsolidated financial statements and Group managementreport. We are of the opinion that our audit provides asufficiently sound basis for our evaluation.Our audit has not led to any reservations.In our opinion, based on the findings of our audit, the consolidatedfinancial statements comply with the InternationalFinancial Reporting Standards as adopted by the EU, andthe additional requirements of German commercial lawpursuant to Section 315a (1) of the German CommercialCode (HGB) and give a true and fair view of the Group'snet assets, financial position and results of operations.The Group management report is consistent with theconsolidated financial statements, as a whole provides asuitable view of the Group’s position and suitably presentsthe opportunities and risks of future development.Without restricting this assessment, we must point out that– in contrast to the single-entity financial statement – theconsolidated balance sheet of ALNO Aktiengesellschaftreports negative equity in the amount of EUR 73,344 thousandas a result of accumulated losses. Attention is alsodrawn to the information in the Group management report,which has been combined with the separate managementreport for the company. This report states, in sections "b.Events after the reporting period" and "c. I. Opportunityand risk report", that the ALNO Group's continuation asa going concern depends on the measures outlined inthe Group management report in conjunction with itscapitalization and financial concept be implemented onschedule as planned and that the conditions and assumptionsunderlying the corporate planning be met or applyas planned. In particular, a further restructuring agreementmust be concluded by 20 July 2012 and major partsthereof must be implemented so that the liquidity gapsotherwise existing in the company's current corporate andliquidity planning can be met from 21 July 2012 onwards.Ravensburg, 11 June 2012Ernst & Young GmbHAuditorsNoverPrüsseAuditorAuditor
124 Declaration by the statutory representatives of ALNO AG | Legal noteDeclaration by the statutoryrepresentatives of ALNO AGin compliance with Section 297 (2), fourthsentence, of the German Commercial Code(HGB), concerning the consolidated financialstatements and SINGLE-ENTITY AND GROUPMANAGEMENT REPORT for the financial year 2011:"We confirm that, to the best of our knowledge and onthe basis of the accounting standards to be applied,the consolidated financial statements convey a true andfair picture of the Group's net assets, financial positionand results of operations, and that the Group managementreport presents the development of business andthe Group's position in such as way as to convey a trueand fair picture of actual conditions, and that it sets outthe essential opportunities and risks associated with theGroup's probable development."Pfullendorf, 11 June 2012ALNO AktiengesellschaftBoard of ManagementMAX MüllerChief Executive Officer of ALNO AGLegal noteThis Annual Report contains forward-looking statements.Forward-looking statements are not based on historicalevents and facts. These statements are based on assumptions,forecasts and estimates of future developments bythe Board of Management. The assumptions, forecastsand estimates concerned are based on all the informationcurrently available. However, the actual results may deviatefrom those presently expected if the assumed futuredevelopments underlying the statements and estimates donot materialize. Neither the Board of Management nor thecompany can warrant that the forward-looking statementswill actually materialize. Both the Board of Management andthe company are under no obligation, above and beyondtheir statutory obligations, to update any statements or tobring them into line with future events and developments.Neither in the Federal Republic of Germany nor in anyother country does this Annual Report and the informationcontained in it constitute either an offer to sell or arequest to buy or subscribe to securities held or issuedby ALNO AG. In the United States of America, shares inALNO AG may only be sold or offered after prior registrationor, without such prior registration, on the basis ofan exception to the registration requirement pursuant tothe provisions of the US Securities Act of 1933 as mostrecently amended. ALNO AG does not intend to realize apublic offering of shares in the United States. The AnnualReport of ALNO AG is published in German and English.In the event of discrepancies between the two versions,the German version shall prevail.IPEK DEMIRTASChief Financial OfficerElmar DuffnerChief Operations Officer
Publication data | Financial calendar 2012Publication data Financial calendar 2012PUBLISHERALNO Aktiengesellschaft88630 PfullendorfTel.: +49 7552 21-0Fax: +49 7552 21-3789Email email@example.comLayout and textCorporate Communicationsand Investor Relations Alno AGTel.: +49 7552 21-3316Fax +49 7552 21-773316Email firstname.lastname@example.orgInvestor Relationscometis AG65195 WiesbadenHenryk DeterTel.: +49 611 20 58 55-13Fax: +49 611 20 58 55-66Email email@example.com May 2012Interim report on the 1st quarter 201214 June 2012Publication of the annual financial statements201121 August 2012Annual General Meeting31 August 2012Mid-year financial report 201216 November 2012Interim report on the 3rd quarter 2012DESIGNScheufele Hesse EiglerKommunikationsagentur GmbH60487 Frankfurt am Mainwww.scheufele-online.de
ALNO Aktiengesellschaft88630 PfullendorfTel.: +49 7552 21-0Fax: +49 7552 21-3789Email firstname.lastname@example.org