ANNUAL REPORT 2010/11 - Schumag AG

ANNUAL REPORT2010/11precise by tradition

SCHUMAGOVERVIEW30-09-2011*30-09-2010*30-09-2009*30-09-200830-09-2007Orders received EUR Mill. 62 53 18 126 156Percentage of foreign orders % 59 67 54 68 74Sales EUR Mill. 59 45 34 131 141Percentage of foreign sales % 61 65 60 73 71Total operating performance EUR Mill. 6446 35 135 145Income from operations EUR Mill. 2 -6 -17 8 10before depreciation (EBITDA)Income from operations (EBIT) EUR Mill. -1 -15 -21 4 6Income before taxes (EBT) EUR Mill. -2 -16 -30 3 5Property, plant and equipment EUR Mill. 21 21 27 37 40Shareholders' equity EUR Mill. 13 1428 44 41Investments in property, EUR Mill. 2 2 2 2 3plant and equipmentDepreciation of property, EUR Mill. 2 8 4 4 4plant and equipmentCash-flow from current EUR Mill. -2 -11 -17 15 2operating activitiesPersonnel expenses, in million EUR EUR Mill. 26 2428 53 53Number of employees 644 585 668 1.151 1.144*Continuing OperationsDue to the disposal of essential parts of the mechanical engineering division the figures as per 30-09-2009are shown for continuing operations. These figures are comparable with the previous years´s figures only to a limited degree.As per 30-09-2009 the complete shareholders´ equity was allocated to the continuing operations.precise by tradition

CONTENTSLETTER TO THE SHAREHOLDERS 2REPORT OF THE SUPERVISORY BOARD 4REPORT OF CORPORATE GOVERNANCE 8DECLARATION OF COMPLIANCE WITH THEGERMAN CORPORATE GOVERNANCE CODE 11GROUP MANAGEMENT REPORT 14Economic Environment 14Course of Business 15Earnings Position 21Financial Position 22Assets Situation 24Overall Statement on the Business Situation 27Research and Development 27Steering System 28Risk Report 28Subsequent Events 33Opportunities and Outlook 34This Annual Report 2010/11 is a translation ofthe original Schumag Geschäftsbericht 2010/11prepared in the German language. Please note, thatonly the German original version is definitive andrecognized as authentic. The English translationis provided for convinience only. The Companydisclaims responsibility for any misunderstandingor misinterpretation due to this translation. In caseof any inconsistency or divergence in the Englishtranslation, the German original version shallprevail.TABLE OF CONTENTS AND CONSOLIDATEDFINANCIAL STATEMENTS 37Consolidated Balance Sheet 38Consolidated Income Statement 39Consolidated Statement of Comprehensive Income 40Consolidated Statement of Changes in Equity 40Consolidated Cash-Flow Statement 41Notes to Consolidated Financial Statements 42RESPONSIBILITY STATEMENT 107INDEPENDENT AUIDITORS' REPORT 108SCHUMAG AG

2 Letter to the ShareholdersLETTER TOTHE SHAREHOLDERSDear Shareholders,Fiscal year 2010/11 has once again been a verydifficult year for our company. Although the globaleconomy recovered from the global financial crisisin 2010 and in spite of a moderate economicrecovery in 2011 we have fallen far short of ourown objectives to realize profitable growth.The increase of the total operating performancecompared to 2009/10 by EUR 17.6 million to EUR64.5 million is due to the clear sales increase of24 % in the division of precision engineering. Incomingorders increased by 13 % compared to theprevious year. The improved business climate in thecommercial vehicles industry contributed essentiallyto this development.The group result before tax amounting to EUR -2.2million has improved compared to the previousyear by EUR 13.9 million. This change is due to theclear operative improvement in the core business.The company has so far not been able to get out ofthis crisis situation. We will reach our objective tosecure profitable growth in future if we continuewith the approach taken in the last few months.For this purpose we have defined a sustainableprogramme of measures.1. Focus on core competenciesThe attempt to open up new markets in the area ofrenewable energies is to be regarded as failed. Allactivities in this area have been stopped. We gaveup our participation in the joint venture "SchumagGreen Energy GmbH & Co. KG".2. ReorganizationWe intend to tighten our portfolio, to change ordiscontinue loss fields and less profitable articlesso that these no longer have a permanent effecton our result. Furthermore we have to reduceinternal costs and optimize buying. Our projectmanagement must essentially increase theproductivity and quality of our work in order tomeet the consistently high requirements of ourcustomers.In the area of sales we intend to position ourselvesin a way that we are closer to our customers andwill thereby be able to profit more quickly fromchanges in the market. In addition, we are makingefforts to reduce our high dependency on theautomotive industry and to drive forward thetransition from a component manufacturer to asystem/sub-system supplier. However, to exploitthe existing business opportunities we are stillmissing the necessary funds.3. LiquidityDue to the well-known problem connected withthe ownership structure we have so far not beenable to proceed to an ordered financing of operatingassets. To relieve the liquidity situation wecarried out an extensive sale-and-lease-back transactionwith regard to our machinery. In addition, aloan as well as an overdraft facility currentlyamounting to a total of EUR 1.4 million are availableto us. The company is also forced to enter intoshort-time financing contracts. These activities inthe area of factoring have clearly increased comparedto the previous year. In view of the problemconnected with the ownership structure and theassociated risk situation credit grantors requestadditional charges and securities to a not insubstantialextent.For a further relief of the financial situation ofSchumag AG it is therefore necessary to driveforward further changes on the basis of theadjusted ownership structure.

SCHUMAG AG 3Date for the general meetingContrary to the planning in the last calendar yearthe general meeting of Schumag AG as well asindividual dates for legal reporting commitmentshad to be postponed several times. Due to theabove mentioned problems with financing and themaintenance of the company's liquidity as well asthe clarification of the depreciation requirementsassociated with Schumag BR Energy GmbH repeateddiscussions have taken place with the persons incharge of this company as well as the auditors ofSchumag AG und Schumag BR Energy GmbH. Thisled to considerable delays in the completion of theannual financial statements. A necessary consequenceof this delay was also the postponement ofthe general meeting of Schumag AG to July of thisyear for which I kindly request you to accept ourapologies and hope you will understand.With respect for you, our shareholders, and withregard to statutory regulations it is also necessaryto address those matters which are extremelyunpleasant but which are honest and beneficial tothe company. I kindly request you to continue toplace your faith and confidence in our companysince, at the core, we are a strong company. Andthis is what we want to remain for you, dear shareholders,as well as for our customers and employees.At this point our special thanks go to our employeesas well as to their representatives in the relevantcommittees who stand by their company in a notso easy situation.Aachen, May 2013The Board of Executive DirectorsDr. Johannes Ohlinger

4 Report of the Supervisory BoardReport of theSupervisory BoardDear Shareholders,In fiscal year 2010/11 Schumag profited from thegeneral recovery of the global economy after thefinancial and economic crisis. Nevertheless we lookback on a difficult fiscal year again. Especially thedifficult liquidity situation complicated targetorientedentrepreneurial activity.The measures for capacity adjustment and costreduction taken by the Board of Executive Directorshave so far not been fully effective. The expectedimprovement of the overall situation has not set in.Furthermore, an attempt was made to get establishedin the business segment of regenerative energies.In the year under review changes in the compositionof the shareholder representatives on the SupervisoryBoard were once again recorded; the continuousmonitoring of the management by the Board ofExecutive Directors was nevertheless fully ensured.Overview of the activities of theSupervisory BoardDuring the past fiscal year the Supervisory Boardexercised the duties for which it is responsible accordingto the law, the articles of association and therules of internal procedure. We regularly advisedthe Board of Executive Directors with regard to themanagement of the company and supervised itsactivities. The standards for our supervision were inparticular the lawfulness, correctness, purposefulnessand efficiency of the management by the Board ofExecutive Directors as well as the effectiveness ofthe risk management. The Supervisory Board wasdirectly involved in decisions of essential significancefor the company. The Board of Executive Directorsinformed us on a regular basis, both in writing andverbally, in a timely and comprehensive mannerabout the liquidity development and financial situation,the corporate planning (namely investment,personnel and financial planning), business development,strategic development as well as the currentsituation of the company and the Group, the risksituation and risk management. Based on the reportswe have intensively looked into the situation anddevelopment of the company and the Group as wellas the business transactions in fiscal year 2010/11.Where the course of business deviated from theplans these deviations were explained to us indetail. The strategic alignment of the company wascoordinated with us by the Board of ExecutiveDirectors. Transactions of essential significanceto the company were discussed by us in detail onthe basis of the reports of the Board of ExecutiveDirectors. We reviewed the reports presented to usfor plausibility and discussed them with the Boardwhere necessary. In addition, we requested supplementaryinformation from the Board of ExecutiveDirectors.After thorough examination, the Supervisory Boardgave its consent to the resolutions proposed by theBoard of Executive Directors.MeetingsA total of five meetings of the Supervisory Boardtook place in fiscal year 2010/11. The dates areindicated below:❚ December 7, 2010❚ February 9, 2011❚ April 11, 2011❚ May 13, 2011❚ June 30, 2011If necessary, the Supervisory Board also passedresolutions by written consent in lieu of a meeting.Apart from the meetings of the Supervisory Boardthe Chairman of the Supervisory Board and hisdeputy also had regular contact with the Board ofExecutive Directors and informed themselves aboutthe current business development and essentialtransactions as well as the strategic businessalignment.Focal topics of the Supervisory Boardmeetings in fiscal year 2010/11The activities of the Supervisory Board in the reportingyear 2010/11 included, apart from the currentmonitoring of the business development and planning,also particular measures which required theconsent of the Supervisory Board as well as themeasures for the stabilization and improvement ofthe financing of the company and the Group.

SCHUMAG AG 5At the first meeting of the fiscal year, i.e. at themeeting on December 7, 2010, we mainly dealt withthe key economic data and the liquidity situation ofthe company. Furthermore the Board of ExecutiveDirectors explained the status of the new businesssegment of "regenerative energies". Another itemon the agenda was the new board contract ofMr. Walpert. Further activities at this meeting werethe election of the audit committee as well as thepassing of a resolution concerning the declarationof compliance according to the German CorporateGovernance Code.The main topic at the meeting on February 9, 2011was the planned joint venture in connection withthe new business segment of "renewable energies".The Supervisory Board adopted a positive attitudewith regard to the formation of this joint venture.In addition, the Supervisory Board dealt with thecompany presentation as well as a simulator projectof Schumag BR Energy GmbH. The Board of Directorswas furthermore authorized to review a take-overbid for a Polish company operating in the area ofvalves and fittings production.The annual financial statements and consolidatedstatements of 2009/10, the report of the SupervisoryBoard for fiscal year 2009/10 as well as the agendafor the general meeting 2011 were the main topicsdealt with at the meeting on April 11, 2011.However, a final resolution was not passed here.The report on Corporate Governance for fiscal year2009/10 was unanimously adopted. Another pointof emphasis was once again the formation of thejoint venture associated with the new businesssegment of "renewable energies". After a discussionof the presented contract drafts the SupervisoryBoard consented to the formation of the joint venture.The Supervisory Board was furthermore informedabout the key economic data and discussed thestatus of the lawsuit of Schumag AG with theformer board member, Mr. Kudrus.The items discussed at the meeting on May 13,2011 were once again the 2009/10 annual financialstatements and consolidated statements includingthe management report as well as the Groupmanagement report, the report of the SupervisoryBoard 2009/10 as well as the agenda for the generalmeeting 2011. It was decided, however, to passthe final resolution by written consent in lieu of ameeting and/or at the next meeting of the SupervisoryBoard. Due to the election of the newemployee representatives on the Supervisory Boardto which Mr. Marbaise and Mr. Milion were onceagain elected a new deputy chairman of the SupervisoryBoard also had to be elected. The SupervisoryBoard unanimously elected Mr. Marbaise as itsdeputy chairman. Furthermore the Supervisory Boarddealt with the financial situation of the company.One of the topics of discussion at the meeting onJune 30, 2011 was a financing concept introducedby the Board of Executive Directors. The SupervisoryBoard authorized the Board of Executive Directorsto conclude the financing. In this connection the

6 Report of the Supervisory BoardSupervisory Board also gave its consent to theconclusion of a collective bargaining agreement forthe securing of the location involving an increase ofthe weekly working hours to 37.5 hours. Furthertopics were the key economic data, the report of therisk manager as well as the report of the SupervisoryBoard about the project trip to PEMEX, Mexico.CommitteesFor an efficient exercise of its duties the SupervisoryBoard formed a personnel committee and as well asan audit committee.In the period under review the personnel committeeconsisted of the following persons: Mr. FrankJokisch, Mr. Peter Koschel and Mr. Ralf Marbaise.Current members are Mr. Ekkehard Brzoska,Mr. Ralf Marbaise and Mr. Jürgen Milion.At the meeting of the Supervisory Board onDecember 7, 2010 a new audit committee wasestablished. In the reporting period during whichMr. Frank Jokisch, Mr. Jürgen Milion and Mr. PeterMünch (until May 13, 2011) were its members thecommittee reviewed for the first time the documentationof the annual financial statements for fiscalyear 2009/10 in advance of the balance sheetmeetings and recommended the approval of thefinancial statements. The audit committee currentlyconsists of the members Mr. Hans-Georg Kierdorf,Mr. Ralf Marbaise and Mr. Jürgen Milion.Corporate Governance andDeclaration of ComplianceIn fiscal year 2010/11 the Supervisory Board onceagain regularly dealt with the subject of CorporateGovernance of the company. The current declarationof compliance of April 2013 was approved by theSupervisory Board and this declaration of compliancewas released for inspection by the Board of ExecutiveDirectors in accordance with the 2nd sentence of§ 161 of the German Stock Corporation Act. Thedeclaration of compliance has been published on thewebsite of the company. Schumag Aktiengesellschaftlargely complies with the recommendations of theGerman Corporate Governance Code in the versionof May 15, 2012.The report on Corporate Governancefor fiscal year 2010/11 to which reference is madehere was discussed at the meeting on April 19, 2013and decided by the Supervisory Board.Annual and ConsolidatedFinancial StatementsThe final annual and consolidated financialstatements as of September 30, 2011 preparedby the Board of Executive Directors and presentedto the Supervisory Board on May 15, 2013, themanagement reports for the stock corporationand for the Group for fiscal year 2010/11 (eachincluding the explanatory report according to§ 289 (4) and/or § 315 (4) of the German CommercialCode) as well as the accounting and therisk management system were approved by BDOAG Wirtschaftsprüfungsgesellschaft, Düsseldorf,which had been elected as auditors at thegeneral meeting and were provided with theirunqualified audit certificate. Furthermore theauditors determined that the Board of ExecutiveDirectors had taken all suitable measures whichit was obligated to take according to § 91 (2) of theGerman Stock Corporation Act. It has in particularestablished an adequate information and monitoringsystem which meets the requirements ofthe company and appears to be useful accordingto its concept and actual handling to detect ingood time developments which threaten theexistence of the company.The annual and consolidated financial statementsprepared by the Board of Executive Directors (Dr.Johannes Ohlinger appointed as of September 1,2012), the management and Group managementreport as well as the corresponding audit reportsof the auditors were presented to all members ofthe Supervisory Board. The focus of the audit wasplaced in particular on the examination of properaccounting, the efficiency of the internal controlsystem as well as the forecasts contained in therespective reports. Early in April 2013 the SupervisoryBoard received a first reading copy of theauditor's audit report on the annual financialstatement and the management report. At thebalance sheet meeting of the Supervisory Boardon April 19, 2013 as well as at the meeting of theaudit committee on April 19, 2013 the auditorexplained in detail the content of his expected

SCHUMAG AG 7audit report on the annual financial statementsof Schumag Aktiengesellschaft and presented theessential results of his audit of the annual andconsolidated financial statements as well as themanagement reports. On this occasion the SupervisoryBoard discussed and considered the presenteddocuments and reports with the auditor and with theBoard of Executive Directors. Early in May 2013 areading copy of the auditor's report on the Groupfinancial statements and Group management reportwas made available to us. In the middle of May 2013the final audit reports were available and distributedto all members of the Supervisory Board. Comparedwith the reading copies which had been made availablein advance no essential changes had been made.At the final adopting balance sheet meeting whichtook place in the form of a conference call the auditorwas available to answer any further questions. Theitems dealt with during the discussions with theauditor and the Board of Executive Directors werein particular individual questions concerning balancesheet values and valuation according to the goingconcern approach as well as the main audit pointsand the internal control system.The report of the auditor met with the approval ofthe Supervisory Board. The final result of the SupervisoryBoard's own examination which had beenprepared by its own audit committee fully correspondsto the auditor's result. The Supervisory Boarddoes not see any reason to raise objections to thepresented annual financial statements and reports.At its meeting on May 16, 2013 the SupervisoryBoard approved the annual financial statements aswell as the consolidated financial statements ofSchumag Aktiengesellschaft for fiscal year 2010/11.The annual financial statements of Schumag Aktiengesellschafthave therefore been adopted in accordancewith § 172 of the German Stock CorporationAct.Election of Supervisory Board and Board ofExecutive Directors in fiscal year 2010/11During the reporting period Mr. Peter Münchceased to be member of the Supervisory Boardon May 13, 2011 and Mr. Alexander von Ungern-Sternberg on May 31, 2011. In their stead,Mr. Hans-Georg Kierdorf and Mr. Matthias Osinski ,as representatives of the shareholders, wereappointed as members of the Supervisory Boardby a decision of the Aachen District Court ofOctober 31, 2011.At the general meeting on December 21, 2011Mr. Ekkehard Brzoska, Mr. Frank Jokisch, Mr.Hans-Georg Kierdorf and Dr. Johannes Ohlingerwere voted in as members of the SupervisoryBoard. Mr. Peter Koschel as well as Mr. MatthiasOsinski ceased to be members at the same time.Mr. Frank Jokisch resigned as member of theSupervisory Board as of August 23, 2012 and thechairman of the Supervisory Board, Dr. JohannesOhlinger, resigned as of August 31, 2012.In fiscal year 2010/11 Mr. Steffen Walpertcontinued to be sole director of the company.The Supervisory Board revoked the appointmentof Mr. Steffen Walpert as member of the Boardof Executive Directors effective as of August 31,2012. Dr. Johannes Ohlinger was appointed asthe new director by the Supervisory Boardeffective as of September 1, 2012.The Supervisory Board would in particular liketo thank all employees as well as the employeerepresentatives for their once again highlycommitted service as well as their cooperationin the interest of Schumag Aktiengesellschaft.Aachen, May 16, 2013The Supervisory BoardRalf MarbaiseChairman of the Supervisory Board

8 Report of Corporate GovernanceREPORT OFCORPORATE GOVERNANCECorporate Governance at SchumagThe Board of Executive Directors and the SupervisoryBoard of Schumag declare their support forgood Corporate Governance inside and outside theGroup. The general legal conditions of CorporateGovernance are laid down in the German stockcorporation law. In addition to this, the firstGerman Corporate Governance Code formulatedby a government commission in February 2002has been amended by standard principles for allGerman companies quoted on the stock exchange.The German Corporate Governance Code is revisedby the government commission at regular intervalsand also adjusted to international developments.The joint Declaration of Compliance publishedaccording to § 161 of the German Stock CorporationAct once again documents that we comply withthe recommendations of the updated GermanCorporate Governance Code (in the version ofMay 15, 2012) with just a few exceptions. Wheredeviations have occurred, reasons and/or explanationsare provided for these. The last Declaration ofCompliance of April 2013 is provided as anannex to this report. The declaration is publishedon the homepage of the company in the sectionof Investor Relations/Corporate Governance where,in accordance with item 3.10 of the Code, the outof-dateDeclarations of Compliance of the last fiveyears are also available.General MeetingAfter an invitation had been sent in due form andwithin the specified time the general meeting forfiscal year 2009/10 took place at our offices inAachen on December 21, 2011.In accordance with the German CorporateGovernance Code the reports and documentsrequired by law were not only displayed forinspection and sent to the shareholders at theirrequest but were also published on the homepageof Schumag AG along with the agenda.The resolutions on the items of the agenda ofthe general meeting and/or the respective votingresults were published on our homepage withinseven days of the meeting according to § 130 (6)of the German Stock Corporation Act.Based on the resolution passed at the generalmeeting on March 9, 2006 the individualised totalemoluments of the individual members of theBoard of Executive Directors were again not disclosedfor fiscal year 2009/10 (so-called opting out).The total emoluments of the Board of ExecutiveDirectors are shown below.Management and Control StructureAccording to the German Stock Corporation ActSchumag AG has a dual management and controlstructure with the organs of a Board of ExecutiveDirectors and a Supervisory Board.In fiscal year 2010/11 the Board of ExecutiveDirectors consisted of the members indicatedbelow who jointly managed the company in compliancewith the articles of association. With regardto the medium-sized structure of Schumag – inparticular after the sale of the mechanical engineeringdivision and the personnel adjustment in precisionengineering – the Board of Executive Directorsconsisted of only one person in fiscal year 2010/11.The Supervisory Board supervises the managementof the Board of Executive Directors. It consists ofsix members. According to the One-Third ParticipationAct two thirds of the members are shareholdersand one third are employees. The election of theshareholders represented in the Supervisory Boardtakes place at the general meeting. This election alsotook place at the general meeting on December 21,2011. By a resolution of the general meeting thefollowing persons were elected as representativesof the shareholders (in alphabetic order):Mr. Ekkehard Brzoska, Mr. Frank Jokisch, Mr. GeorgKierdorf as well as Dr. Johannes Ohlinger. At thesubsequent meeting of the Supervisory Board onJanuary 3, 2012 Dr. Ohlinger was elected aschairman of the Supervisory Board and Mr. RalfMarbaise as his deputy. The representatives of theemployees are elected according to the provisionsof the One-Third Participation ActThe cooperation of these organs is ruled by thearticles of the company decided by the generalmeeting, the rules of internal procedure of theSupervisory Board and of the Board of ExecutiveDirectors and by the decisions of these organs

SCHUMAG AG 9within the scope of the relevant legal provisions.This also includes determinations about the factsto be reported by the Board of Executive Directorsto the Supervisory Board and the extent of reportingas well as the type of transactions of the Boardof Executive Directors which require the consent ofthe Supervisory Board.Board of Executive DirectorsIn fiscal year 2010/11 the Board of ExecutiveDirectors of Schumag AG consisted of thefollowing member:Name Function Entry RetirementSteffen Walpert Sole director of the Board June 4, 2010 –At the end of the fiscal year, i.e. as of September30, 2011, Mr. Steffen Walpert was the only directorof Schumag Aktiengesellschaft.The remuneration of the Board of ExecutiveDirectors for fiscal year 2010/11 is shown in theoverview below:The emoluments of the Board of Executive Directorsinclude the fixed remuneration payable on a monthlybasis and variable remuneration components.Name Fixed remuneration Variable remuneration RemunerationEUR EUR EURSteffen Walpert 467,000.00 68,890.00 535,890.00Total 467,000.00 68,890.00 535,890.00Supervisory BoardThe report of the Supervisory Board included inthe Annual Report 2010/11 describes the focus ofactivities and the committees formed by theBoard. The members of the Supervisory Board infiscal year 2010/11 as well as their individualremuneration determined by the articles areshown in the following table:Name Compensation Out-of-pocket TotalexpensesEUR EUR EURFrank Jokisch 7,158.09 0.00 7,158.09Peter Koschel (Chairman) 14,316.18 58,878.45 73,194.63Ralf Marbaise (Deputy chairman) 10,737.14 1,076.03 11,813.17Jürgen Milion 7,158.09 1,076.03 8,234.12Peter Münch 4,434.04 0.00 4,434.04Alexander von Ungern-Sternberg 4,772.06 1,375.29 6,147.35Total 48,575.60 62,405.80 110,981.40

10 Report of Corporate GovernanceNo emoluments were paid in the past fiscal year tomembers of the Supervisory Board for personallyrendered services.TransparencyInformation to the shareholders of Schumag AGand to the public is not only provided in the formof the statutory publications and via the legallyrequired communication channels. We use inparticular the homepage of the company(www.schumag.de) where a wide range ofinformation about Schumag AG is published.On this site all ad-hoc messages and the publicationsof notices about voting right shares receivedby us as well as reportable securities transactions,the respective financial reports of the company aswell as a finance calendar with all essential datesare also available under "Investor Relations". Theannual document according to § 10 of the GermanSecurities Prospectus Act which provides an overviewof the essential publications of the companyin the preceding twelve months is also available onthis site.The Annual Report 2010/11 is also available inEnglish on our homepage.Risk Management, Accounting, AuditingAt Schumag AG a risk management system for theearly detection of essential risks is in place. It isdescribed in more detail in the Group ManagementReport.For fiscal year 2010/11 the Supervisory Boardsinstructed the auditors BDO AG Wirtschaftsprüfungsgesellschaft,Düsseldorf who had been chosen bythe general meeting. The Supervisory Board hadconvinced itself beforehand of the independenceof the auditors.Aachen, April 2013Schumag AktiengesellschaftFor the Supervisory BoardRalf Marbaise(Chairman)The Board of Executive DirectorsDr. Johannes OhlingerIn fiscal year 2010/11 the accounting for theSchumag companies included in the consolidatedfinancial statements was for the sixth time effectedaccording to the International Financial ReportingStandards (IFRS). The annual financial statementsof Schumag AG for fiscal year 2010/11 wereprepared and continue to be prepared accordingto the provisions of the German Commercial Code(HGB) in the version of the German AccountingLaw Modernization Act (BilMoG) which enteredinto force on May 29, 2009.

SCHUMAG AG 11DECLARATION OF COMPLIANCEWITH THE GERMANCORPORATE GOVERNANCE CODEThe Board of Executive Directors and the SupervisoryBoard of a German joint-stock company whichis listed on the stock exchange are requiredaccording to § 161 of the Stock Corporation Act todeclare once a year whether or not the companyhas complied and continues to comply with theGerman Corporate Governance Code or whichrecommendations of the Code were or are notfollowed and why not.We declare according to § 161 of the German StockCorporation Act that since the last Declaration ofCompliance of March 2013 Schumag Aktiengesellschafthas largely complied with the recommendationsof the German Corporate Governance Code("Code") in the version of May 15, 2012 and that itwill continue to do so with the following exceptions.According to item 2.3.3 of the Code the companyshall facilitate the personal exercising of shareholders'voting rights and shall support the shareholdersin particular with postal voting. This is notpracticed at Schumag because the articles of associationdo not provide for this voting procedure.According to item 3.8 (2) of the Code a deductibleof at least 10 % of the damage up to at least 1 1/2times the amount of the fixed annual remunerationof the board member should be agreed whentaking out a D&O liability insurance for the Boardof Executive Directors. According to item 3.8 (3) acorresponding deductible should be agreed in aD&O liability insurance for the Supervisory Board.A deductible for the Supervisory Board, as it isusual practice with the majority of German companies,has so far not been agreed at Schumag andwill not be agreed in future because the companyholds the view that the agreement of such adeductible would have no behaviour-controllingeffect on the members of the Supervisory Boardnor would it be suitable for motivation purposes.

12 Declaration of ComplianceAccording to the 1 st sentence of item 4.2.1 of theCode the Board of Executive Directors should consistof several persons and have one chairman orspokesman. With regard to the fact that Schumaghas the organizational structure of a medium-sizedcompany the Executive Board consists of one person.In view of the difficult economic situation of thecompany this is also indicated for cost reasonsalone.According to item 4.2.3 (6) of the Code thechairman of the Supervisory Board is to inform thegeneral meeting about the basic elements of theemolument system and its changes. This has notbeen done and will not be done in future becausethe basic elements of the emolument system havealready been described in detail in the report onemoluments included in the management report.According to item 5.3.3 of the Code the SupervisoryBoard is supposed to form a nomination committeewhich consists exclusively of representatives ofthe shareholders and proposes suitable candidatesto the Supervisory Board for its election recommendationsto the general meeting. This has notbeen done in the past and is not considered tobe done in future because the resolutions of theSupervisory Board on proposals for the electionof Supervisory Board members by the generalmeeting only requires the majority of the votesof the four shareholders represented in theSupervisory Board anyway as stipulated in the4 th sentence of § 124 (3) of the German StockCorporation Act.According to item 5.4.1 (2) the Supervisory Boardshall indicate concrete goals for its compositionwhich, among other things, are to take diversityinto consideration; according to the 2 nd sentence ofitem 5.4.1 (3) the goals and the status of theirimplementation are to be published in the reporton Corporate Governance. The Supervisory Boardof the company intends to deal with this subject indetail at the next meetings and to implement itaccordingly; a declaration to this effect can thereforenot be issued before this. An age limit formembers of the Supervisory Board in terms of item5.4.1 (2) of the Code will also not be determined infuture. The Supervisory Board's election recommendationsof members of the Supervisory Board to beelected by the general meeting are always and willcontinue to be geared to the personal aptitude andefficiency of the suggested person in the individualcase.According to item 5.4.1 (4) to (6) of the Code theSupervisory Board shall, in its election recommendationto the general meeting (for the election ofshareholders to the Supervisory Board), disclosethe personal and business relations of each candidatewith the enterprise, the executive bodies ofthe company and with a shareholder holding amaterial interest in the company (i.e. directly orindirectly holding more than 10 % of the votingshares), and this recommendation to discloseshould be limited to those circumstance which, inthe appraisal of the Supervisory Board, a shareholderjudging objectively would consider relevant to hiselection decision. This recommendation is not compliedwith because in the opinion of the Board ofExecutive Directors and the Supervisory Board thecontents and extent of the requirements laid downin the Code have not been sufficiently determinedin this respect. In order to ensure the desired legalsecurity of the election of Supervisory Board membersthe company exclusively follows statutorydisclosure requirements with regard to its recommendationsto the general meeting of candidatesto be elected to the Supervisory Board. In addition,it discloses relations with related parties in theannual report in accordance with statutoryrequirements.According to the 3 rd sentence of item 5.4.3 thenames of the candidates proposed to take thechair of the Supervisory Board are to be disclosedto the shareholders. The names of the candidatesproposed to take the chair of the Supervisory Boardare not and will also in future not be disclosedbecause the Supervisory Board does not considerit practicable to vote at the general meeting for oragainst a candidate with regard to a potential officeas chairman in the elections to the SupervisoryBoard.

SCHUMAG AG 13According to the 3 rd sentence of item 5.4.6 (1) ofthe Code and the 1 st sentence of (2) the emolumentsof the Supervisory Board shall take thechairmanship as well as the membership in committeesinto consideration and shall furthermore,apart from a fixed remuneration, also include aperformance-oriented remuneration. The articlesof association of Schumag only provide for fixedremuneration components without taking thechairmanship and/or the membership in committeesinto consideration. This ruling is to be maintained forthe time being with regard to the organizationalstructure of the company.According to the 1 st sentence of item 5.5.3 of theCode the Supervisory Board should provide informationin its report to the general meeting aboutconflicts of interest which have occurred and howthey were treated. As before, Schumag does notfollow this recommendation and will not do so infuture and will, as a rule, give priority to the principleof confidentiality of the deliberations of theSupervisory Board (see also the 2 nd sentence of§ 116 of the German Stock Corporation Act anditem 3.5 of the Code).According to the 4 th sentence of item 7.1.2 of theCode the consolidated financial statements shouldbe available to the public within 90 days of theend of the fiscal year and the interim reportswithin 45 days of the end of the reporting period.This recommendation has not been and will not befollowed for organizational reasons but thecompany continues to aim at a timely publication.Aachen, April 2013Schumag AktiengesellschaftThe Supervisory BoardThe Board of Executive Directors

14Group management reportGROUP MANAGEMENT REPORT❚ ECONOMICENVIRONMENTIn 2010 the recovery of the global economy fromthe global financial crisis slowed down. In spiteof this, a rise of the worldwide gross domesticproduct by 4.8 % was recorded for the total year.In view of the high budget deficits in many countriesthe monetary and financial measures takento stimulate economic activity in the industrialcountries lost their effect. A moderate recoveryof economic activity continued in 2011. This wasaccompanied by rising prices in the raw materialmarkets and the consequences of the earthquakein Japan. From the 3rd quarter of 2011 globalproduction clearly increased again at a rate ofincrease of more than 4 %.In the period under review Germany was one ofthe industrial countries who faced the crisis withparticular success. Especially due to a strongdomestic demand the gross domestic productincreased by 2.0 % until the end of the 3 rd quarter2011. The situation in the labour market wascharacterized by an all-time record in employmentrates. The inflation rate of 2 % was classed as highin Germany, price drivers were the energy and foodmarkets.Important markets for Schumag are the commercialvehicles market as well as medical technology.In 2011 the German manufacturers of commercialvehicles recorded a 24 % increase in productioncompared to the previous year. This was clearlyhigher than the European growth rate of 15 %.Global production even decreased by 1 %. Thelargest impact was caused here by the weakeningof the Asian commercial vehicles market. Thepressure on the automotive industry remainedunchanged at a high level. There is an unchangedtendency of establishing a supplier base in theEuropean and non-European region.The German medical technology industry grew byalmost 7 % in 2011 which was largely due to therise in foreign sales by almost 11%.

SCHUMAG AG 15❚ COURSE OF BUSINESSKey data 30-09-2011 30-09-2010 ChangeEUR Mill. % EUR Mill. % EUR Mill. %Order receivedPrecision engineering 58.7 95 51.9 98 6.8 13Plant engineering 3.0 5 0.9 2 2.1 >10061.7 100 52.8 100 8.9 17SalesPrecision engineering 55.4 94 44.6 99 10.8 24Plant engineering 3.8 6 0.1 0 3.7 >100Mechanical engineering 0.0 0 0.3 1 -0.3 -10059.2 100 45.0 100 14.2 32Orders on handPrecision engineering 32.7 100 29.4 97 3.3 11Plant engineering 0.0 0 0.8 3 -0.8 -10032.7 100 30.2 100 2.5 8Precision engineeringPrecision engineering represents the core area ofthe company. During 180 years of company historySchumag has developed into an enterprise whoseknow-how is trendsetting in many technologies.The recovery which had started in fiscal year2009/10 continued in the year under review.Incoming orders were increased by 13 %. Salesrose by 24 % with a relatively stable course ofbusiness during the year. We take this as a signthat the effects of the backlog demand from theglobal economic crisis did not have any furtheressential effect on the buying behaviour of ourcustomers in fiscal year 2010/11. Sales in theexisting business settled down at a level whichroughly corresponds to that of pre-crisis years.In addition, we added a small volume of newproducts to our manufacturing range. However,the permanent establishment of new products aswell as the resulting sales increases can often bemeasured only after 10 to 20 months.In spite of the 24 % increase in sales over the previousyear the total number of employees in theprecision engineering division was reduced by 4 %from October 2010 to September 2011. In thisconnection, the stability as well as the sustainabilityof our growth in sales enabled us to increase thenumber of employees with permanent contractsby 10 % during the year whereas the number ofexternal staff (temporary agency workers) wasclearly reduced by 49 %.To secure the location, an agreement was reachedbetween the parties to the wage agreement in July2011 to introduce a 37.5-hour week without wageadjustment which will be effective from August 1,2011 until July 31, 2013.

16 Group management reportAfter investments amounting to EUR 0.5 million in2010/11 the date of completion of construction ofa new production hall in a size of 5,000 m 2 startedin fiscal year 2009/10 was rescheduled in order tosafeguard liquidity. The planned move of parts of theprecision engineering production to this hall and theconnected optimization of production processes hastherefore not yet been accomplished.In fiscal year 2010/11 the pre-financing requiredfor the extension of our production facilities facedour company with a great challenge. Financing wassecured by various measures such as the extensionof the factoring business, the sale-and-lease-backtransaction relating to our machinery as well asthe receipt of a cash credit amounting to EUR 1.0million.GmbH was not realized, however, because theconnected concepts for this turned out to be notrealizable due to the recent change in the generalpolitical conditions for this branch as well as themarket development.Financing of plant engineering continues to beeffected exclusively via the parent company. Inaddition, a consulting company was instructed inOctober 2010 to work out financing options in theRussian banking market – especially for the financingof projects in the conventional division ofplant engineering. The contract has expired in themeantime and due to missing customer orders acontinuation of these consulting services is nolonger regarded as conducive to our goals.Plant engineeringThe business segment of plant engineering hasso far not measured up to our expectations.Our anticipation of a lengthy development of ourentry in the Eastern European markets has confirmeditself. Although our subsidiary Schumag BR EnergyGmbH successfully established numerous businesscontacts and placed project offers no significanttransactions have come about so far. In 2010/11Schumag BR Energy GmbH was able to realizesales in the conventional area amounting to EUR0.9 million.In the area of regenerative energies Schumagachieved sales of EUR 2.9 million, thereof EUR 2.8million being allotted to the trading business. Themarket entry into the photovoltaics business plannedfor fiscal year 2011/12 via the joint ventureSchumag Green Energy GmbH & Co. KG which wasformed in April 2011 together with Max Walk &Willy Lehmann Kraftfahrzeuge-Landmaschinen

SCHUMAG AG 17Compensation ReportThe compensation report outlines the principlesapplied for the fixing of the remuneration of theBoard of Executive Directors and the SupervisoryBoard of Schumag AG.According to the bylaws of the Supervisory Boardits personnel committee is in charge of the fixingof the remuneration of the Board of ExecutiveDirectors. For this purpose it takes the size andstructure of the company as a basis with considerationof the economic and financial situation ofSchumag AG as well as the remuneration paid atcomparable companies. For special performancethe personnel committee may grant bonuses aspart of the variable share of the remuneration.The remuneration of the Board of Executive Directorsis composed of fixed and variable shares. The fixedremuneration is paid as a monthly salary. The variableremuneration depends on the Group's operativeincome before tax. Payment is usually effected in themonth in which the Supervisory Board approves theconsolidated annual financial statements.Integral parts of the remuneration of the Boardof Executive Directors are also the direct pensioncommitments. These are individually agreed withthe members of the Board of Executive Directors.No further benefits are promised in case of terminationof the office as member of the Board ofExecutive Directors. However, severance paymentsmay result from an individually agreed terminationagreement.According to the recommendations of theGerman Corporate Governance Code severance paymentsare limited to two annual salaries.According to the resolution of the general meetingof March 9, 2006 in previous year the individualizeddetails on all emoluments of the members of theBoard of Executive Directors as required by § 314(1), no. 6, letter a), sentences 5 to 8 of the GermanCommercial Code in the version of the Act on theAppropriateness of Executive Board Compensationwere not disclosed as allowed by § 314 (2), sentence2 in conjunction with § 286 (5) of the GermanCommercial Code. The emoluments of the Boardof Executive Directors for fiscal year 2010/11 onlyincluded the compensation for Mr. Walpert.The remuneration of the Board of ExecutiveDirectors is shown in the overview below:2010/11 2009/10EUREURFixed remuneration 467,000.00 409,491.02Variable remuneration 68,890.00 50,000.00Remuneration of the Board ofExecutive Directors (total) 535,890.00 459,491.02

18 Group management reportPension commitments to members of the Board ofExecutive Directors as of September 30, 2011amount to EUR 203,891.00 (previous year EUR 0.00)according to IFRS.Payments to former members of the Board ofExecutive Directors or their survivors amounted toEUR 929,973.02 (previous year EUR 628,993.76).Pension commitments to former members of theBoard of Executive Directors and their survivorsamount to EUR 7,881,102.00 (previous year EUR8,935,850.00) according to IFRS.According to § 14 of the Articles each member of theSupervisory Board is entitled to a compensation ofEUR 7,158.09 per fiscal year which is payable upontermination of the fiscal year. The chairman receivestwice this amount, his deputy 1.5 times the amount.The compensation is granted in proportion to theterm of office of the respective member of theSupervisory Board. In addition, the members of theSupervisory Board are entitled to reimbursement ofexpenses incurred in connection with the exercise oftheir office.The remuneration of the Supervisory Board is shownin the overview below:2010/11 2009/10Out-of-pocketOut-of-pocketCompensation expenses Total Compensation expenses TotalEUREUREUR EUREUREURHeinz-Peter Heinen 0.00 615.60 615.60 6,144.03 7,098.10 13,242.13Frank Jokisch 7,158.09 0.00 7,158.09 994.18 0.00 994.18Peter Koschel 14,316.18 58,878.45 73,194.63 11,234.23 62,896.11 74,130.34Ralf Marbaise 10,737.14 1,076.03 11,813.17 7,655.18 1,255.44 8,910.62Jürgen Milion 7,158.09 1,076.03 8,234.12 7,158.09 299.33 7,457.42Peter Münch 4,434.04 0.00 4,434.04 994.18 0.00 994.18Dr. Frank Nikolaus 0.00 0.00 0.00 6,163.91 500.00 6,663.91Dr. Johannes Ohlinger 0.00 0.00 0.00 12,288.05 3,550.79 15,838.84Alexander von Ungern-Sternberg 4,772.06 1,375.29 6,147.35 994.18 0.00 994.1848,575.60 63,021.40 111,597.00 53,626.03 75,599.77 129,225.80The members of the Supervisory Board and of theBoard of Executive Directors are listed in Note 27of the Annex.

20 Group management reportStock Corporation Act) – possibly with authorizationto exclude the subscription right (§ 203 (2),sentence 2 in conjunction with § 186 (3) of theGerman Stock Corporation act) –, the regular orsimplified reduction of capital (§ 222 (1), sentence2 and/or § 229 (3) of the German Stock CorporationAct) or a change in the legal form (§§ 233 (2) and/or§ 240 (1) of the Law Regulating Transformation ofCompanies). The Supervisory Board is authorizedaccording to § 12 of the Articles to effect changesto the Articles which refer only to the wording.In the event of a takeover bid directed towardsshares issued by the company which are admittedto the trade in an organized market the generalstatutory duties and powers exist for the Board ofExecutive Directors. If a takeover bid was received,the Board of Executive Directors and the SupervisoryBoard would have to make and publish a statementon the takeover bid in accordance with § 27of the German Securities Acquisition and TakeoverAct to put the shareholders in a position to decideon the bid with knowledge of the state of affairs.According to § 33 of the German Securities Acquisitionand Takeover Act the Board of Executive Directorswould furthermore not be allowed after theannouncement of a takeover bid to undertake anyacts outside the ordinary business which mightprevent the success of the bid unless it was authorizedto do so by the general meeting or unlessthe Supervisory Board had given its consent to thisor unless the search for a competitive bid wasconcerned. The decisions of the Board of ExecutiveDirectors and of the Supervisory Board are to begeared to the benefit of the company, its employeesand shareholders. The Articles did not include anyarrangements in the sense of § 33a to § 33c ofthe German Securities Acquisition and TakeoverAct (European Prohibition on Frustrating Action,European Breakthrough Rule, Reservation ofReciprocity) as of the balance sheet date.Relations with affiliated companiesAn action continues to be pending to determinethe owner of the shares to be assigned to thevoting right share amounting to 79.2 % reportedby Enprovalve P. Koschel UnternehmensberatungLtd. The shares have been deposited with theKrefeld District Court since September 2009 (filenumber 85 HL 148/09). On October 2, 2012 ajudgement was passed by the Krefeld RegionalCourt according to which the release of the3,168,136 deposited shares to Enprovalve P.Koschel Unternehmensberatung Ltd. is to begranted. Two of the defendants appealed againstthis judgement within the specified time. Accordingto information from Enprovalve P. Koschel UnternehmensberatungLtd. the parties have in themeantime reached an agreement out of court. Theshares are to be released to Enprovalve P. KoschelUnternehmensberatung Ltd. For this block ofshares no voting rights were exercised in fiscalyear 2010/11 so that we had to presume that thedependency assumption in terms of § 17 (2) of theGerman Stock Corporation Act has been refuted atleast for fiscal year 2010/11.Therefore it was not necessary for this fiscal yearto prepare a report on relations with affiliatedcompanies in accordance with § 312 of the GermanStock Corporation Act. For this reason the declarationaccording to § 312 (3) of the Stock CorporationAct is not provided.Irrespective of the duty to prepare a report onrelations with affiliated companies according to§ 312 of the Stock Corporation Act we point tothe fact that Schumag AG carried out transactionswith its own subsidiaries in fiscal year 2010/11for which adequate consideration was received.We are not aware of any measures taken oromitted to the disadvantage of the company.Declaration on the management of thecompany according to § 289a of the GermanCommercial CodeThe declaration on the management of the companyis published on our website (www.schumag.de)under Investor Relations/Corporate Governance.

SCHUMAG AG 21❚ EARNINGS POSITION2010/11 2009/10 ChangeEUR Mill. % EUR Mill. % EUR Mill. %Sales 59.2 92 45.0 96 +14.2 +32Total operating performance 64.5 100 46.9 100 +17.6 +38Cost of materials 23.9 37 16.3 35 +7.6 +47Personnel expenses 25.9 40 24.2 52 +1.7 +7Depreciation/Amortization 2.8 4 8.4 18 -5.6 -67Other expenses 12.5 19 13.0 28 -0.5 -4Financial result -1.6 -2 -1.1 -2 -0.5 -45Income before taxes -2.2 -3 -16.1 -34 +13.9 +86Material and personnelThe increase in the cost of materials in relation tothe total operating performance is mainly due tothe plant engineering division. During the marketentry phase for regenerative energies sales wererealized in this division through a 100 % purchaseof materials at a low contribution margin. Due tothe increased business volume the average numberof temporary workers, the cost of whom are statedwithin the cost of materials, was increased from76 to 139 workers. In contrast to this, the averagenumber of our regular workforce remained relativelyconstant at 606 employees compared to 593 in theprevious year. The share of personnel costs in thetotal operating performance was therefore clearlyreduced by 12 percentage points. It is to be takeninto account here that the previous year had beenburdened by the necessary provision of personnelfor the processing of the business volume whichhad considerably increased not until the secondhalf of the fiscal year.ResultAlthough the result before taxes clearly improvedcompared to the previous year by EUR 13.9 millionit continued to remain negative at EUR -2.2 million.The improvement is in particular due to the factthat the total of material and personnel expenseswas reduced from 87 % to 77 % at a 38 % increasein the total operating performance. Within thescope of the agreement to introduce a 37.5-hourweek without wage adjustment we were furthermoreable to release the remaining commitmentarising from the ERA adjustment fund amountingto EUR 0.8 million. The new business segment ofregenerative energies, however, caused a negativecontribution to operating income amounting to EUR-1.6 million. The result was furthermore burdenedby non-scheduled depreciation (EUR 0.4 million)associated with the introduction of SAP and withthe test station for the planned but not realizedinverter business. The overheads of the companycontinue to be at a high level due to the costof financing (sale-and-lease-back of machinery,factoring) as well as due to the expenses resultingfrom the quotation on the stock exchange.In the core area of precision engineering theresult before taxes was clearly further reducedby EUR 14.1 million. At an amount of EUR +0.3million (previous year EUR -13.8 million) the resultis slightly positive again for the first time sincefiscal year 2005/06.

22 Group management reportThe result of the segment of plant engineeringamounted to EUR -2.5 million (previous year EUR-2.1 million). The negative result is in particulardue to the costs associated with the businesssegment of "regenerative energies" (EUR 1.6 million)as well as the expenses for the market entryof Schumag BR Energy GmbH (EUR 0.8 million).The result of other segments amounts to EUR 0.0million (previous year EUR +0.1 million).Non-financial performance indicatorsA special feature of the employees of Schumag istheir identification with the company and theircommitment to its targets. The structure of theworkforce is characterized by the high qualificationof employees. This is our basis to achieve the highquality of our products which leads to our strongposition in the market, especially in the division ofprecision engineering.Our performance spectrum goes far beyond themanufacture of precision and standard parts.Due to our special know-how we are in a positionto offer specific production processes to ourcustomers. This is also the source of our excellentexperience of many years in the area of equipmentconstruction.production halls in Aachen available for the constructionof a photovoltaics system with an outputof 1.4 megawatts which generates emission-freepower.❚ FINANCIAL POSITIONThe financial management of the Schumann Groupis centrally organized at Schumag AG and coversall Group companies. All cash-flow-orientedaspects of the business activities are taken intoconsideration in this connection.The aim is to secure sufficient liquidity and to reducefinancial risks arising from changes in exchangerates, interest rates and raw material prices.In fiscal year 2010/11 the financial situation continuedto be very strained. The required funds wereprocured by the use of factoring, by the sale-andlease-backtransaction concerning our machineryas well as the receipt of a working capital credit.We were always in a position to meet our financialobligations.A decisive factor for the sustained development ofour company is our close contact to customers andour comprehensive knowledge of the correspondingtarget markets. According to our philosophy, abasic prerequisite for success is to identify technicaldevelopments and to offer comprehensive solutionson a timely basis.Environmental and climate protection have beendefined as an important corporate goal. The introductionand integration of an environmentalmanagement system according to ISO 14001:2004+ Cor 1:2009 which was already started in 2007was successfully completed in November 2011.New investments are checked for environmentalcompatibility. In addition, we made the roofs of our

SCHUMAG AG 23Group Cash-Flow Statement 2010/11 2009/10 Change(short presentation) EUR Mill. EUR Mill. EUR Mill.Net income (without extraordinary items) -1.0 -15.2 +14.2Depreciation/Amortization 2.8 8.4 -5.6Change in net current assets -2.9 1.5 -4.4Change in other items -0.3 -1.0 +0.7Outgoing payments for social compensation plan -0.2 -4.6 +4.4Cash-flow from operating activities -1.6 -10.9 +9.3Expenses for intangible assets and property. plant and equipment -2.0 -3.1 +1.1Proceeds from the disposal of property. plant and equipment 0.1 0.0 +0.1Cash-inflow from the sale of mechanical engineering 0.0 11.5 -11.5Cash-flow from investing activity -1.9 8.4 -10.3Outgoing payments to company owners for the purchase of own shares 0.0 -2.0 +2.0Raising of financial liabilities 5.4 1.0 +4.4Redemption of financial obligations -2.4 0.0 -2.4Cash-flow from financing activity 3.0 -1.0 +4.0Effects on cash and cash equivalents affecting liquidity -0.5 -3.5 +3.0Cash and cash equivalents at the start of the reporting period 1.6 5.1 -3.5Cash and cash equivalents at the end of the reporting period 1.1 1.6 -0.5Cash and cash equivalents correspond to theliquid funds shown in the balance sheet.The cash-flow from current operations hascontinued to clearly improve by EUR 9.3 millioncompared with the previous year. This is in particulardue to the cash effect from the improved operatingresult (EUR +14.2 million). The cash effect fromfactoring amounted to EUR 2.0 million.The cash-flow from investing activity was no longeraffected by the extraordinary cash effect from thesale of the mechanical engineering division (EUR+11.5 million) as it had been the case in the previousyear. Net expenses for investments decreasedfrom EUR 3.1 million to EUR 1.9 million. They includein particular the expenses for plants and equipmentfor the precision engineering division (EUR 0.8 million)as well as for the new hall (EUR 0.5 million).Within the scope of our financing activity proceedsamounting to EUR 4.2 million were generated bythe sale-and-lease-back transaction concerning ourmachinery. In addition, a working capital creditamounting to EUR 1.0 million was obtained, anda loan amounting to EUR 0.2 million was grantedby the joint venture partner Max Walk & WillyLehmann Kraftfahrzeuge-Landmaschinen GmbH.The loan amounting to EUR 1.0 million received inAugust 2010 in anticipation of the sale-and-leasebacktransaction was repaid in December 2010.From December 2010 further expenses wereincurred in connection with the sale-and-leasebacktransaction amounting to EUR 1.4 million sothat the cash effect from the sale-and-lease-backamounted to a total of EUR 1.8 million in fiscalyear 2010/11. Liabilities to banks amounted toEUR 1.0 million as of September 30, 2011.Cash and cash equivalents of Schumag decreasedby a total of EUR -0.5 million to EUR 1.1 million.

24 Group management report❚ ASSETS SITUATIONASSETS30-09-2011 30-09-2010 ChangeEUR Mill. % EUR Mill. % EUR Mill. %Long-term assetsIntangible assets and property,plant and equipment 21.4 41 21.7 43 -0.3 -1Real estate property held as a financial investment 4.2 8 4.3 8 -0.1 -2Deferred taxes 0.8 2 0.2 0 +0.6 > 100Other assets 1.3 3 1.2 2 +0.1 +8Short-term assets27.7 53 27.4 54 +0.3 +1Inventories 13.8 27 12.0 24 +1.8 +15Trade accounts receivable 6.8 13 6.4 13 +0.4 +6Other assets 2.6 5 3.3 7 -0.7 -21Liquid funds 1.1 2 1.6 3 -0.5 -31SHAREHOLDERS' EQUITY AND LIABILITIES24.3 47 23.3 46 +1.0 +452.0 100 50.7 100 +1.3 +3Shareholders' equity 13.4 26 13.5 27 -0.1 0Long-term liabilitiesPension provisions 17.7 34 19.5 38 -1.8 -9Deferred taxes 1.7 3 2.0 4 -0.3 -15Other provisions and liabilities 5.3 10 3.8 7 +1.5 +39Short-term liabilities24.7 47 25.3 50 -0.6 -2Provisions and accrued liabilities 1.3 3 0.9 2 +0.4 +44Trade accounts payable 5.6 11 3.1 6 +2.5 +81Other liabilities 7.0 13 7.9 16 -0.9 -1113.9 27 11.9 23 +2.0 +1752.0 100 50.7 100 +1.3 +3

SCHUMAG AG 25Intangible assets and property, plant and equipmentdecreased only slightly by EUR 0.3 million at adepreciation volume of EUR 2.8 million. Investmentsamounting to a total of EUR 2.5 millionmainly referred to new plants and equipment forthe core division of precision engineering (EUR0.8 million) as well as the construction of a newproduction hall (EUR 0.5 million).To optimize our financing structure, off-balancesheetforms of financing in the form of leasingcontracts have been used since fiscal year2004/05. As of September 30, 2011 the leasingcontracts had a total volume of EUR 1.3 million(previous year EUR 2.6 million) at a term of usually48 to 54 months.Due to the heavily increased business volume thebuild-up of inventories referred in particular tothe finished goods stock of precision engineering(EUR +1.1 million).The effect arising from the change of actuarialassumptions with regard to pension accruals whichis directly set off against shareholders' equitywithout affecting net income amounts to EUR-1.5 million.Trade accounts payable increased in particular dueto the clearly increased business volume as well asthe reduction of cash discounts.The remaining accruals and liabilities increased bya total of EUR 1.0 million. This is in particular dueto the increase of financial liabilities (EUR +3.1million). A contrary effect was in particular causedby consumption and by the release of the commitmentarising from the ERA adjustment fund(EUR -1.5 million).Although receivables amounting to EUR 4.9 million(previous year 2.6 million) were sold to a factoringcompany as of September 30, 2011, our tradereceivables slightly increased by EUR 0.4 milliondue to the heavily increased sales volume in precisionengineering.The shareholders' equity of the Schumag Groupremained almost constant at EUR 13.4 million.The result-related reduction (EUR -1.0 million) wascompensated by the offsetting of actuarial gainsand losses arising from the valuation of pensionaccruals in accordance with IAS 19 (EUR +1.0 million).The capital ratio slightly decreased from 27 %to 26 %.

26 Group management report

SCHUMAG AG 27❚ OVERALL STATEMENTON THE BUSINESS SITUATIONKey data 2010/11 2009/10 Change% % %Profitability of sales -1.6 -33.7 32.1Profitability of shareholders' equity -7.2 -112.2 >100ROI -1.1 -29.5 28.4ROCE -1.5 -38.3 36.8Working Capital (EUR million) 13.1 13.2 -0.1The expected improvement of the result situationof Schumag for the year under review has basicallymaterialized. The result before taxes of fiscal year2010/11 improved by EUR 13.9 million comparedto the previous year. It is to be taken into accounthere that the result is burdened by special effectsamounting to a total of EUR -4.2 million.In spite of the clearly negative earnings position inthe last few fiscal years the company has a capitalratio of 26 %.The positive development in 2010/11 basicallyresulted from the recovery of sales. In our corearea of precision engineering sales have nowarrived at about 87 % of the pre-crisis level. Thecontribution margins achieved have slightlyincreased compared with the previous year.A major part of the earnings effect results from theclear reduction of the rate of personnel expensesfrom 52 % to 40 %. During the crisis we expresslydecided to do without personnel cuts to a largeextent. Without this measures the sales growth infiscal year 2010/11 would have probably been lesssuccessful. Due to our efficient cost managementwe furthermore succeeded to a large extent inkeeping overheads at a constant level.The development of the assets situation can beregarded as almost constant compared withprevious years. Financial balance existed at alltimes.To sum up, we can state that the earnings situationhas improved but still continues to be unsatisfactory.The economic situation currently continues to bestrained, but we consistently work on a continuousimprovement in all areas of the company.❚ RESEARCH AND DEVELOPMENTResearch activities have so far been of minorsignificance in our branch but will be morerelevant in future due to market requirements.The focus of development at Schumag is on thecore area of precision engineering and concentrateson the automation and rationalization of seriesprocesses and on the creation of new productionprocesses.QualityIn the precision engineering division the analyticaltools for online process monitoring and for representationof the quality and productivity status arecontinuously developed. The daily evaluations aswell as the control loops observed have led to animproved quality awareness among the employeesas well as to an increase in productivity.

28 Group management reportAt our modern measuring centre the measuringroom and test equipment have been combined.The entire measuring centre is fully air-conditioned.We have thereby created the conditions to recordwith our measuring equipment the ever increasingaccuracies required by the market.This applies not only to the tests carried out duringproduction (especially form and position) but alsoin the area of the manufacture and calibration ofmeasuring and test equipment.The annual system analysis of the existing qualitysystem according to ISO 9001:2008 and ISO TS16949:2009 was successfully carried out inNovember 2010 and was confirmed by certificates.In November 2011 the introduction and integrationof an environmental management system accordingto ISO 14001:2004 + Cor 1:2009 was also successfullycompleted with a certifying audit.The Romanian subsidiary Schumag Romania S.R.L.has also been successfully re-certified according toISO 9001:2008 since May 2010.❚ STEERING SYSTEMSchumag AG has a steering system in place in orderto be able to react adequately and in due time tochanges of the market, the environment and ofinternal conditions.Reporting and flow of information are essentialelements of the steering system. Based on thissystem the Board of Executive Directors ispermanently informed about relevant key figures.Deviations from the target can be directlyidentified and discussed as soon as possible.An important control variable is the so-called"key figure of added value" (added value per hourworked). This key figure is an indicator for theproductivity of manufacturing in the core area ofprecision engineering. Insufficient capacity utilizationor technical problems are identified by thiskey figure.Another central control variable is EBIT. This keyfigure facilitates a comparison of the operating profitof individual months and a comparison amongdivisions.❚ RISK REPORTFeatures of the internal control and riskmanagement systemThe group-wide internal control and risk managementsystem of Schumag is an integrated systemwhich supports management decisions for thesafeguarding of the efficiency and profitability ofbusiness activities, for the early identification ofrisks, for the adequacy and reliability of internaland external accounting and for compliance withthe legal regulations which are relevant to thecompany.The risk management system is composed of alarge number of components which are embeddedin the operational and organizational structureof the company. The reliability of the system isensured by the establishment of guidelines as wellas by the permanent monitoring of processes. Byincorporation of the risk management system inthe reporting system as well as regular communicationbetween decision-makers an early detectionof risks and the corresponding countermeasuresare facilitated.Our risk management manual describes the processof risk prevention. The systematic approach torisk management creates an awareness towardsan open dealing with risk-relevant data andtheir clear documentation and forms the basisfor entrepreneurial decisions, for the quality ofplanning, the efficiency of reporting on controllingand the optimum use of company resources.

SCHUMAG AG 29Our department heads and area managers are incharge of the identification of risks, their assessmentand control as well as their communication.Coordination is up to our risk manager.The aim is to point out early the different types ofrisks to the persons in charge at as many hierarchylevels of the company as possible and to use therisk defence and control instruments developedwithin the scope of our risk management in duetime.The business processes are subject to controlswhich are to make risks controllable. The measuresand rules e.g. refer to instructions for the separationof duties, signing regulations, restriction ofsigning authorization for payments to a smallnumber of persons (four-eyes principle), measuresfor IT security.Apart from this, our control and risk managementsystem is assessed within the scope of the audit ofthe annual financial statements in so far as this issignificant for the provision of an accurate pictureof the assets, financial and earnings position ofSchumag.This risk report analyses and describes the essentialrisks of Schumag AG and its subsidiaries to bemonitored which were identifiable until the endof the period under review.Sales market risksSchumag mainly operates in the markets forcommercial vehicles and medical technology. Salesmarket risks occur in different forms here. Whilethe demand in the medical technology marketremains at a relatively constant level the commercialvehicles sector is decisively influenced by theoverall situation in the global economy.As far as our dependency on the automotiveindustry is concerned we see a concentrationof risks here.years a market entry success can be expected onlyafter a period of up to five years, and since theconditions for access to this market have changedwe are no longer able to guarantee the success ofthe funds invested so far in an amount of currentlyEUR 5.8 million.As in previous years the contract award of international,dollar-based projects was impaired by theEUR/USD exchange rate relation.It is a typical feature of sales market risks that theyhave a decisive influence on the assets, financialand earnings position of the company. The salessituation in 2010/11 developed towards the precrisislevel. We respond to the still existing risks arisingfrom the uncertain global economic developmentby the extension of our international market presencein the commercial vehicles supply sector. Inaddition, we develop new sales strategies to achievegrowth in the non-automotive area. Based on ourcontinued diversification we expect to curtail salesmarket risks.Due to the uncertainties with regard to futureeffects of the financial, economic and nationaldebt crisis there are no consistent forecasts forthe development of domestic and foreign demand.Our corporate planning for the core area of precisionengineering is therefore carried out carefully.For fiscal year 2012/13 we expect a decline in salescompared with the previous year by approx. 10 %while for 2013/14 a moderate sales growth ofapprox. 5 % is anticipated again. There is still a riskof sales-market-based losses due to external factorssuch as the economic and financial crisisor the realignment of customer buying behaviour.In addition, discussions with our major customersshowed that in future the question of ownership willhave an essential impact on our sales situation.In the market of plant and component constructionon which our subsidiary Schumag BR EnergyGmbH has put the main emphasis in the last three

30 Group management reportThe order situation as of the end of December2012 does not correspond to our initial expectationsso that our planning has been adjustedaccordingly. The risk of a further sales reductioncontinuous to exist latently.Financial risksThe company is faced with a variety of financialrisks and opportunities. These can be identifiedboth in the operative business and in financingissues.A financial imbalance may in the most unfavourablecase lead to insolvency. The cause of this maybe insufficient internal financing and/or failure toobtain the required external financing.Financial risks in the operative area are basicallycaused by fluctuations in interest rates, currenciesand in the purchase prices for raw materials andother materials. Due to short-term money investmentswithin the scope of the liquidity reserveduring the course of the year there are no essentialrisks caused by changes in interest rates. To preventexchange rate risks arising from high-volumetransactions concluded in foreign currency theseare at the same time secured by hedging.Short-term liquidity risks arising from fluctuationsin payment flows are identified early by a rollingliquidity planning system. To control default risksSchumag pursues a consistent accounts receivablemanagement. By the use of actual factoring a majorshare of the default risk – which is attenuated by thecredit standing of our customers – is transferred tothe factoring company.We observe the development of our financial situationon the basis of short, medium and long-termforecasts. Information about this is provided on acurrent basis within the scope of the reporting of ourrisk manager. Due to the small volume of availableliquidity essential revenue reductions and/or costincreases may lead to a disturbance of the financialbalance.

SCHUMAG AG 31Since August 2010 we have implemented factoringand in December 2010 we carried out an extensivesale-and-lease-back transaction with regard to ourmachinery. In addition, we received a workingcapital credit in July 2011 and a current accountcredit line in April 2012, each amounting to EUR1.0 million. With these measures we maintainedour financial balance. However, our liquidity situationcontinues to be strained. In the event of adeterioration of the order situation and thus alsoof the financial situation there is a risk due to ouruncertain ownership issue, that the required additionalexternal financing may not be available indue time.Other risksProcurement risksProcurement market risks are basically divided intoschedule, quantity and price risks. Especially in thesteel processing industry there has been a situationfor several years that the emerging markets exertconsiderable influence on the above mentionedrisks due to their demand behaviour. A particularfeature of the company's risk profile results fromthe fact that a large number of raw materials (inparticular special alloys) can be exclusively procuredfrom only one or very few manufacturers.Difficulties with raw material supplies experiencedin the recent past were largely prevented in fiscalyear 2010/11. The raw material suppliers haveincreased their production capacities again. Intotal, moderate price increases have resulted.These are due to the increased demand fromemerging markets as well as the worldwide risein raw material prices.It is hardly possible to quantify the procurementrisks because these are in the end determined bythe fact whether or not a promised production canbe carried out according to the requirements interms of quantity, quality, price and delivery date.In the past fiscal year production orders werelargely processed according to schedule. Theincrease of the total operating performanceamounting to more than EUR 18 million wasmanaged on the procurement side without anysignificant problems. Due to our customer structureit is hardly possible to derive long-term requirementplans for our procurement.The risk structure as well as the different formsof risks have not considerably changed comparedto the previous year. Framework contracts withsuppliers are increasingly concluded which alsoaim at the procurement of the required materialson a just-in-time basis. This results in both chances(less capital being tied up) and risks (increaseddependency on suppliers).By means of long-term purchasing contracts andactive inventories management we continue tocounteract price increases and risks relating toscheduled delivery dates. Based on the specificationsof our customers we purchase our rawmaterials to a considerable extent from certainsuppliers. This does not lead to any dependencies onindividual suppliers which threaten the continuedexistence of the company.There is an increasing tendency that our customersenter into direct price negotiations with our rawmaterial suppliers. This results in a reduction ofrisks with regard to uncontrolled price increases.Apart from this, a trend can be identified thatour purchase orders concentrate on less and lesssuppliers. The resulting bundling effect leads toclearly increased ordering volumes in individualcases which are difficult to cover by a trade creditinsurance which again leads to shorter timesallowed for payment with our suppliers.In other conditions, price risks will gain in importance.It is up to the risk management in the procurementarea to manage this, e.g. by adequate hedging transactionsor by an improved communication betweenbuying and sales.

32 Group management reportInfrastructure risksIT risks have an increasing strategic significancedue to the progressing automation in administrationas well as in production. Planning, control aswell as communication without functioning ITsystems are hardly conceivable nowadays. A totalfailure of IT systems will in the worst case lead toan entire standstill of operations and could thereforethreaten our existence.The introduction of the company-wide ERP softwareSAP to replace the old systems which wasinterrupted in spring 2010 will be continued inpartial areas in fiscal year 2012/13. The long interruptioncauses the risk that implementation costswill be higher than initially planned.To cover the event of IT failure an emergency andcontingency programme has already been workedout in the past. To prevent unauthorized dataaccess, firewall systems and virus scanners areused.The risk structure has largely remained unchangedcompared to the previous year. By the gradualabolishment of the old systems we hope to achievea clear reduction of this form of risk.valuation of these risks is effected in an appropriatemanner on the basis of the assessments made byour legal advisors.We currently assess risks arising from court proceedingsas low.Other risksIn fiscal year 2010/11 operational capacity limitswere sometimes reached. Some of the new investmentsin modern machines currently have to bepostponed because of the tight liquidity situation.The proceedings for the reclassification of localwater protection zones which have been going onfor several years and threaten Schumag withextensive requirements in connection with newinvestments and with regard to the use of existingindustrial areas were still not finalized during thereporting period.Tax risks in connection with former fiscal unitieshave become statute-barred.Appropriate provisions are set up for risks arisingfrom field tax audits.The current and future challenge is to provideadditional rationalization potential by informationtechnology and at the same time to master thenecessary adjustments in terms of security as wellas financially.Risks arising from court proceedingsRisks arising from court proceedings include thoserisks which, due to completed or expected courtproceedings, may have effects on the assets,financial and earnings position of the company.Risks resulting from completed proceedings havebeen comprehensively taken into consideration inthe provision for risks from court proceedings. The

SCHUMAG AG 33❚ SUBSEQUENT EVENTSSafeguarding of liquidityIn October 2011 agreements were signed for thefurther extension of factoring business in order tofinance our growth.The special collective agreement of July 2011 forthe safeguarding of our location concluded betweenthe parties to the wage agreement concerning theintroduction of a 37.5-hour week without wageadjustment with a term from August 1, 2011 toJuly 31, 2013 was terminated on the part of theemployee representatives in December 2011 byextraordinary notice of cancellation. However, theparties to the wage agreement already reacheda new collective agreement in March 2012 withretroactive effect as of January 2012 which reinstatesthe conditions of the prior agreement. In October2012 an adjustment was made to the collectiveagreement by which further arrangements for thesafeguarding of our location which go beyond theprevious arrangements entered into force for theperiod from October 1, 2012 to September 30,2013.In April 2012 we were granted a current accountcredit line amounting to EUR 1.0 million for thefinancing of our sales growth. This was prolongedin December 2012 until the end of June 2013.Changes in the organs of the companyBy a decision of the Aachen District Court ofOctober 31, 2011 Mr. Hans-Georg Kierdorf and Mr.Matthias Osinski were appointed as members ofthe Supervisory Board.At the general meeting on December 21, 2011Dr. Johannes Ohlinger and Mr. Ekkehard Brzoskawere elected as new members to the SupervisoryBoard. Mr. Peter Koschel as well as Mr. MatthiasOsinski retired at the same time.Mr. Frank Jokisch resigned as a member of theSupervisory Board as of August 23, 2012. TheSupervisory Board decided at the meeting onAugust 23, 2012 to revoke the appointment ofMr. Steffen Walpert as member of the Board ofExecutive Directors effective as of August 31, 2012.The Chairman of the Supervisory Board, Dr. JohannesOhlinger, resigned as a member of the SupervisoryBoard on August 31, 2012 and was appointed as amember of the Board of Executive Directors by theSupervisory Board effective as of September 1,2012.OtherDue to the short-term change in the general conditionsin this branch and due to the dramatic marketdevelopments we were unable to accomplish theentry into the photovoltaics business which hadbeen planned for fiscal year 2011/12. Thereforethe cooperation with Max Walk & Willy LehmannKraftfahrzeuge-Landmaschinen GmbH which hadbeen entered in April 2011 was terminated. Thereforein June 2012 Schumag AG ceased to be alimited partner of the joint venture "SchumagGreen Energy GmbH & Co. KG" retrospectively asof March 31, 2012. The joint venture was dissolveddue to the limited partners' differences in opinionabout the business policy.On October 2, 2012 a judgement was passed bythe Krefeld Regional Court to grant the releaseof the 3,168,136 deposited shares to EnprovalveP. Koschel Unternehmensberatung Ltd. Two of thedefendants appealed against this judgementwithin the specified time. According to informationfrom Enprovalve P. Koschel UnternehmensberatungLtd. the parties have in the meantime reached anagreement out of court.The shares are to be releasedto Enprovalve P. Koschel UnternehmensberatungLtd.In other respects there were no events of particularsignificance after the balance sheet date.

34 Group management report❚ OPPORTUNITIES ANDOUTLOOKPrecision engineeringAfter we had been able in 2010/11 to achieve aclear increase in sales as compared to the previousyear to EUR 55 million we even increased it againin fiscal year 2011/12 to EUR 57 million. In ourcorporate planning for 2012/13 we currently assumea decline to EUR 53 million whereas for fiscal year2013/14 we are anticipating a moderate growthto EUR 56 million again. The current situation ofincoming orders reflects the general economicdeterioration within the automotive sector. Wesee our growth potential in the extension of newproduct lines and in the development of new salesmarkets.An essential share of our production in precisionengineering will continue to be expected in thearea of component manufacture for internalcombustion engines. In our estimation this keytechnology will set the tone at least for one moregeneration. The permanently rising need forsavings as well as the coupling with alternativepower generation technologies lead to a continuouslyincreasing complexity of customer requirements.We are capable of facing this challenge becausewe see a competitive and technology advantage inmany of the products manufactured by us. We willalso use these advantages for the extension of ouroffered range. This is also the subject of permanentdiscussions with our customers.Furthermore, our many years of experience allowus to offer equipment designs to our customers(in terms of ideal solutions). We will also in futureprovide options to manufacture sophisticatedhigh-tech components.Within the scope of our corporate philosophy wedeal with various process developments, also outsidethe automotive sector. In addition, we intendto enforce further process developments by anextension and intensification of our internaltraining activities.Due to the technological unique selling propositionof our precision engineering division we expectonly minor fluctuations in our order receipt andsales forecast.The crisis in the German photovoltaics marketwhich was largely caused by political decisionscaught us flat-footed. We were therefore unableto maintain our strategy to develop parts andcomponents for photovoltaics systems at ourprecision engineering division. Discussions heldin the public about the future of the compensationpaid for electricity fed into the grid lead touncertainties and have caused severe slumps insales at national level. For this reason the developmentof Schumag products in this area will notbe pursued for the time being due to incalculablerisks.The structure of our offered range will be consistentlyenhanced. Our customers are increasingly advisedon production technology and this cooperation leadsto a technical improvement of the manufacturedcomponents.We aim at a permanent extension of ourproduction basis in order to meet the continuouslyincreasing requirements of our customers. 180years of experience in precision engineering areproof of our flexibility.

SCHUMAG AG 35Plant engineeringOur subsidiary Schumag BR Energy GmbH has sofar been unable to generate any significant salesfrom the variety of initial business contacts. This isnot surprising considering the fact that in the plantengineering business it usually takes several yearsbefore concrete business contracts are concluded.However, numerous requests for offers, declarationsof intention and framework agreementsprove that potential opportunities do exist. Ifthese can be realized, orders may be receivedin the areas of pipeline equipment and energycomponents.We cannot rule out, however, that the furthermarket exploration will be obstructed by currentlyunforeseeable events and that our efforts may fail.The establishment of the additional segment of"regenerative energies" in which, apart from theproject planning of large photovoltaics systems bythe joint venture, also function and safety tests ofinverters planned by Schumag AG has been cancelleddue to the above mentioned developments.Overall forecastNotwithstanding all improvements in its core areathe company continues to be in a difficult situation.In spite of its strong position in the marketdue to its technological unique selling propositionin the area of low manufacturing tolerances and itsconsiderable reputation in the market the companyhas so far not been able to reach its targets.

36 Group management reportIn times where politics and markets changespontaneously and where the general conditionsare subject to actionistic change, our approachestowards business extension and diversificationhave turned out to be hardly realizable. Thereforeour move towards a "green Schumag" has beenstopped.The economic and financial success of the entireplant engineering segment remains uncertain foran indefinite period.The financial resources of our company representan essential problem area. The risk could be clearlyreduced here if a clarification was obtained withinthe short term with regard to the strategic investorand/or financial investor.The clarification of this question also seems to bemore and more a prerequisite for being able tomaintain large customers and to further extendbusiness with them.RemarkThis Group Management Report includes detailsand forecasts which refer to the future developmentof Schumag. The forecasts reflect estimationsmade on the basis of all information available tous at this time. If the assumptions on which theforecasts are based fail to materialize or if the risksoccur which we mentioned in the risk report, theactual results may deviate from the currentlyexpected results.Aachen, April 12, 2013Schumag AktiengesellschaftThe Board of Executive DirectorsDr. Johannes OhlingerFor fiscal year 2011/12 we assume a negativeresult in total. As far as the two subsequent fiscalyears are concerned we expect an improvementof the situation taking the most probable scenarioas a basis. This improvement is to be achieved bya large number of cost reductions both in the areaof personnel costs and in the area of materialcosts. After a still slightly negative result in 2012/13we plan to reach the profit zone again in fiscal year2013/14.The liquidity situation currently continues to bestrained but can be kept stable at a low level dueto our strict liquidity management. A relief of theliquidity situation is expected from the second halfof fiscal year 2012/13 provided that the marketdoes not fall any further.

SCHUMAG AG 37FORSCHUNGUNDENTWICKLUNGSCHUMAG AGTABLE OF CONTENTSCONSOLIDATED FINANCIALSTATEMENTSCONSOLIDATED BALANCE SHEET 38CONSOLIDATED INCOME STATEMENT 39CONSOLIDATED STATEMENT OFCOMPREHENSIVE INCOME 40CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 40CONSOLIDATED CASH-FLOW STATEMENT 41NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 421. Information on the company 422. Accounting standards 423. Acquisitions 554. Divestitures and discontinued operations 555. Reporting by segment 596. Other operating income 627. Personnel expenses 628. Other operating expenses 639. Financial result 6510. Taxes 6611. Earnings per share 6912. Intangible assets 7013. Property, plant and equipment 7114. Investment property 7315. Financial assets 7416. Inventories 7417. Receivables and other assets 7518. Liquid funds 7619. Shareholders' equity 7720. Pension provisions 7921. Other provisionsn 8222. Liabilities 8323. Other financial commitments 8624. Financial instruments 8725. Leasing 8926. Related parties 9227. Compensation of the Board of ExecutiveDirectors and the Supervisory Board 9428. Services of the auditor 9529. Details of existing shareholdings 9630. List of shareholdings 10631. Declaration according to § 161 of theGerman Stock Corporation Act 10632. Additional information on the groupcash-flow statement 106

38Consolidated financial statementsCONSOLIDATED BALANCE SHEETExplained in Notes 30-09-2011 30-09-2010 01-10-2009TEURTEUR TEURASSETSLong-term assetsIntangible assets (12) 766 1,072 473Property, plant and equipment (13) 20,539 20,666 26,521Investment Property (14) 4,224 4,297 4,372Financial assets (15) 15 0 0Other long-term assets (17) 1,271 1,161 306Deferred tax assets (10) 831 206 26227,646 27,402 31,934Short-term assetsInventories (16) 13,796 12,041 19,860Trade accounts receivable (17) 6,802 6,442 13,060Other short-term assets (17) 2,582 3,216 11,856Liquid funds (18) 1,147 1,569 5,11624,327 23,268 49,892Total assets 51,973 50,670 81,826SHAREHOLDERS' EQUITY AND LIABILITIESShareholders' equity (19)Capital subscribed 10,226 10,226 10,226Capital surplus 15,893 15,893 15,893Generated shareholders' equity -12,687 -12,592 3,433Treasury stock 0 0 -2,40013,432 13,527 27,152Long-term liabilitiesPension provisions (20) 17,718 19,448 18,559Other long-term provisions (21) 0 93 426Deferred taxes (10) 1,720 1,995 3,463Financial debt (22) 2,992 0 0Other long-term liabilities (22) 2,241 3,679 6,82624,671 25,215 29,274Short-term liabilitiesShort-term provisions (21) 1,350 885 5,054Tax liabilities (10) 179 0 125Financial debt (22) 1,080 1,000 0Trade accounts payable (22) 5,567 3,083 3,030Other short-term liabilities (22) 5,694 6,960 17,19113,870 11,928 25,400Total shareholders' equity and liabilities 51,973 50,670 81,826

SCHUMAG AG 39CONSOLIDATEDINCOME STATEMENTExplained in Notes 2010/11 2009/10TEURTEURSales (5) 59,179 44,757Changes in inventories 1,431 -2,266Other own work capitalized 114 2Other operating income (6) 3,761 3,476Total operating performance 64,485 45,969Cost of materials 23,874 15,437Personnel expenses (7) 25,830 24,181Depreciation/Amortization (12-14) 2,847 8,425Other operating expenses (8) 12,513 12,570Income from operations -579 -14,644Financial result (9) -1,643 -1,146Income before taxes -2,222 -15,790Taxes (10) -1,258 -937Result after tax relatet to continuing operations -964 -14,853Result after tax relatet to discontinuing operations (4) 0 -326Net income -964 -15,179Earnings per share (EUR) (11) -0.29 -4.06thereof for continuing operations (EUR) -0.29 -3.97thereof for discontinuing operations (EUR) 0.00 -0.09both non-diluted and diluted

40Consolidated financial statementsCONSOLIDATED STATEMENTOF COMPREHENSIVE INCOMEExplained in Notes 2010/11 2009/10TEURTEURNet loss -964 -15,179Currency translation (19) -15 -35Actuarial profits/losses from defined benefit plans (20) 1,461 -1,455Deferred taxes (10) -459 4571,002 -998Profits/losses resulting from asset ceiling (20) -118 187Other comprehensive expenses 869 -846Total comprehensive expenses -95 -16,025CONSOLIDATED STATEMENTOF CHANGES IN EQUITYGenerated shareholders´ equitySubscribed Capital Currency Retained Group Treasury Sharecapitalreserves translation earnings accumulated stock holdersdeficitequityTEURTEUR TEURTEUR TEURTEURTEURBalance as of 1-10-2010 10,226 15,893 60 8,118 -20,770 0 13,527Net loss 0 0 0 0 -964 0 -964Other comprehensive expenses 0 0 -15 884 0 0 869Total comprehensive expenses 0 0 -15 884 -964 0 -95Balance as of 30-9-2011 10,226 15,893 45 9,002 -21,734 0 13,432Balance as of 30-09-2009 10,226 15,893 95 9,387 -5,591 -2,400 27,610Adjustment 0 0 0 -458 0 0 -458Balance as of 01-10-2009 10,226 15,893 95 8,929 -5,591 -2,400 27,152Net loss 0 0 0 0 -15,179 0 -15,179Other comprehensive expenses 0 0 -35 -811 0 0 -846Total comprehensive expenses 0 0 -35 -811 -15,179 0 -16,025Other changes 0 0 0 0 0 2,400 2,400Balance as of 30-9-2010 10,226 15,893 60 8,118 -20,770 0 13,527The Consolidated Statement of Changes in Equity is discussed in detail in note 19 of the Consilidated Financial Statements.

SCHUMAG AG 41CONSOLIDATEDCASH-FLOW STATEMENTExplained in Notes 2010/11 2009/10TEURTEURNet income -964 -15,179Depreciation & amortization of intangible assets and property, plant & equipment 2,847 8,425Changes in pension provisions -387 -379Other expenses/income affecting payment -12 -654Result from disposals of long-term assets 60 10Changes in deferred taxes -1,359 -955Changes in inventories -1,755 2,891Changes in trade receivables -527 -1,012Changes in other assets -169 -1,081Changes in trade payables 2,484 816Changes in other payables and provisions -1,625 842Payments related to extrordinary items (social compensation plan) -150 -4,597Cash-flow from operating activities -1,557 -10,873Payments related to intangible assets -69 -737Payments related to property, plant and equipment -1,934 -2,388Payments related to financial assets -15 0Proceeds from the disposal of property, plant and equipment 78 1Cash receipts related to extrordinary items(sale of Mechanical Engineering) (4) 0 11,466Cash-flow from investing activities -1,940 8,342Repayment to owners of the companyfor acquisition of own shares (32) 0 -2,001Acceptance of financial liabilities 5,433 1,000Repayment of financial liabilities -2,361 0Cash-flow from financing activities 3,072 -1,001Net changes in cash and cash equivalents -425 -3,532Changes in cash and cash equivalents due to foreign exchange rate movements 3 -15Cash and cash equivalents at the beginning of the period under review 1,569 5,116Cash and cash equivalents at the end of the period under review 1,147 1,569Outgoing payments for interests 686 107Incoming payments from interests 12 13Outgoing payments for taxes on income 11 114Incoming payments from taxes on income 343 176The Consolidated Cash-Flow Statement is discussed in detail in note 32 of the Consolidated Financial Statements.

42 Notes to Consolidated Financial StatementsNOTES TO CONSOLIDATEDFINANCIAL STATEMENTS❚ 1. INFORMATION ONTHE COMPANYSchumag Aktiengesellschaft is a listed corporationwith registered office in Aachen which is registeredat the Aachen District Court under registrationnumber HRB 3189. The fiscal year includes theperiod from October 1 of a year to September 30of the following year. The consolidated financialstatements for the fiscal year from October 1, 2010to September 30, 2011 were released for publicationon April 12, 2013 by a resolution of the Board ofExecutive Directors.❚ 2. ACCOUNTING STANDARDS2.1 BasesThe consolidated financial statements of SchumagAG were prepared according to the regulations ofthe International Financial Reporting Standards(IFRS) applicable on the balance sheet date andadditionally according to the commercial rulesapplicable according to § 315a (1) of the GermanCommercial Code. In this connection all mandatoryIFRS and interpretations of the International FinancialReporting Interpretations Committee (IFRIC) whichhave been recognized by the European Union wereapplied. According to our expectations the IFRSwhich have so far not been recognized by theEuropean Union will not have any essential effectson the consolidated financial statements. Thefinancial statements are prepared on the basis ofhistorical cost. In application of IAS 1 the balancesheet is divided into non-current and current assetsand liabilities. Current assets and liabilities arethose which are due and payable within one year.According to IAS 12 deferred taxes are shown asnon-current assets and liabilities. The income statementis structured according to the total-expenditureformat. The currency of the financial statementsis the Euro, all amounts are indicated inthousand euros (TEUR) according to commercialrounding unless they are shown differently. Deviationsfrom the non-rounded amounts may result.To improve clarity individual items of the incomestatement and of the balance sheet are combinedand separately explained in the Notes. To providecomparability the amounts of the previous year arereclassified, if necessary.In previous years the plan assets were erroneouslystated at the current value of the underlying insuranceinstead of the fair value. The previous years'values have been adjusted accordingly. The adjustmentshad the following effects on the consolidatedbalance sheet for fiscal years 2008/09 and2009/10:Balance sheet items 30-09-2010 30-09-2009TEURTEUR TEURTEURadjusted previously adjusted previouslyRetained earnings 8,118 8,389 8,929 9,387Generated capital -12,592 -12,321 3,433 3,891Shareholders' equity 13,527 13,798 27,152 27,610Pension accruals 19,448 19,177 18,559 18,101Long-term borrowed capital 25,215 24,944 29,274 28,816

SCHUMAG AG 43The adjustments had no effects on the operatingresult.For fiscal year 2009/10 the effects arising fromasset ceiling furthermore had effects on thefollowing items shown in the consolidated statementof comprehensive income as well as the consolidatedstatement of changes in equity:2009/10TEURTEURadjusted previouslyOther result after taxes -846 -1,033Total result after taxes -16,025 -16,212The effects arising from the adjustments of planassets as well as the non-financed pension obligationare as follows:30-09-2010 30-09-2009 30-09-2008TEURTEURTEURFair value of plan assets (adjusted) 686 446 505Fair value of plan assets (previously) 957 904 749Pension accruals (adjusted) 19,448 18,559 18,563Pension accruals (previously) 19,177 18,101 18,3192.2 ConsolidationIn addition to Schumag AG all subsidiaries areincluded in the consolidated financial statements.The newly formed joint venture Schumag GreenEnergy GmbH & Co. KG of which Schumag AGholds a 49 % limited partner's share as of September30, 2011 is not included in the consolidationbecause of negligibleness. The subsidiaries areconsolidated from the date on which control isobtained until the date on which control ends. Inconnection with first-time capital consolidation theacquisition cost of the participating interests areset off against the current values of the acquiredassets and liabilities including contingencies. Aremaining difference on the assets side is shownas goodwill. A remaining difference on the liabilitiesside is booked as income after reexamination.Assets and liabilities of the included companieswhich are transferred to the consolidated financialstatements are subject to the below mentioneduniform accounting and valuation methods unifomlybased on the asumption of the going concernprinciple.All relations within the Group as well as interimresults from trade between the included companiesare fully eliminated within the scope of consolidation.The companies included in the consolidatedfinancial statements are individually stated in Note30. The annual financial statements of Schumag BREnergy GmbH were prepared as of the balancesheet date of the parent company. For SchumagRomania S.R.L. interim financial statements wereavailable.

44 Notes to Consolidated Financial Statements2.3 Accounting and valuation methods2.3.1 Foreign currency translation:The functional currency of Schumag AG and of thedomestic Group companies is the Euro. Transactionsin foreign currency are recorded at theexchange rate which is effective at the time ofposting of the transaction. Assets and liabilities inforeign currency are valued at the exchange rateseffective on the balance sheet date. Translation differencesarising in this connection are recordedwith effect on net income.business as measured by their business operations,their transactions and their payment flows. Translationto the Euro Group currency takes placeaccording to the closing rate method: Balancesheet items are translated to euros at the exchangerates effective on the balance sheet date, expensesand income are translated to euros at monthlyaverage exchange rates. The resulting translationdifferences are shown without effect on net incomein a separate item under shareholders' equity.The foreign Group companies prepare their annualfinancial statements in their respective nationalcurrency in which they predominantly transactThe exchange rates of the foreign currencies in the Group have developed as follows:Current rate on balance sh. dateAverage rate1 EUR = 30-09-2011 30-09-2010 2010/11 2009/10Romania RON 4.32 4.27 4.23 4.22

SCHUMAG AG 452.3.2 Revenue recognition: Revenue recognition:Revenues are always recorded if it is likelythat the economic benefit will go to the Groupand that the amount of this benefit can be reliablydetermined. Revenues from goods sales arerecognized upon shipment of the products andgoods to customers if the transfer of risks to thebuyer can be assumed on the basis of variousindicators relating to the order. In this connectionprovisions for potential discounts or other pricereductions are recorded. Potential risks arisingfrom complaints about products and goods anddue to warranty are deferred. Revenues fromservices are recorded as soon as the service hasbeen rendered. Income from interest is recognizedpro rata temporis according to the outstandingreceivables as of the balance sheet date and theinterest rates to be applied according to theeffective interest method. Rental income fromoperating leases, in particular in connection withthe property held as a financial investment, arerecorded for the term of the corresponding leases.Revenues from long-term constructioncontracts as well as income under licenseagreements from the sale or granting of licencesto technologies do not accrue any more since thesale of the mechanical engineering division.

46Notes to Consolidated Financial Statements2.3.3 Borrowing costs: Borrowing costs whichcan be directly assigned to the acquisition,construction or manufacture of qualifying assetsare capitalized as part of the acquisition and/orproduction cost of the respective asset. Qualifyingassets are assets which require a considerable periodof time to be turned into the intended condition inwhich they are ready for use or ready for sale. Suchborrowing costs have so far not occurred. All otherborrowing costs are recorded with effect on netincome in the period of their incurrence.2.3.4 Earnings per share: The calculation ofearnings per share is based on the Group resultafter tax and the weighted number of commonshares issued on average. No dilution effectsresulted in the shown reporting period.2.3.5 Government grants: Government grantsare recorded only if it is sufficiently certain that theconnected conditions are met and that the grantswill be provided. Investment subsidies for theacquisition or construction of property, plant andequipment reduce the acquisition or productioncost of the respective assets. In subsequent periodsa corresponding reduction of scheduled depreciationwill therefore be effected. Other governmentgrants or government assistance are set up asdeferred income and recognized as income overthe underlying period or the expected life of therespective asset.2.3.6 Intangible assets: Intangible assets withan indefinite useful life do not exist at the company.Intangible assets with a limited useful life arevalued at cost less regularly scheduled straight-linedepreciation (amortization method). The useful lifeis determined based on the period of the underlyingcontract and on the expected use of the intangibleasset. Development cost is not capitalized andis recorded with effect on net income in the periodin which it has accrued. At the Schumag Group nodivision of the creation process into a research anda development phase can be effected. The mainreason for this is that the activities for the improvementof production and of the products are exclusivelyof an iterative nature. This means that theactivities are not based on clearly definable newproducts or production processes but that gradualand current improvements of always the sameproducts and production processes are concerned.The products made and the production processesbasically remain unchanged. It is therefore notpossible from a cost accounting point of view todetermine development cost on an accrual basis.Goodwill is not stated here either.Useful life of intangible assets 2010/11 2009/10Years YearsProduct rights, licences 5 5Software 5 5

SCHUMAG AG 472.3.7 Property, plant and equipment: Property,plant and equipment are valued at acquisition orproduction cost less accumulated depreciation. Theproduction cost of self-constructed plants includebeside direct costs, appropriate allocations ofmaterial and manufacturing overheads and anappropriate share of general administrative costsfor those areas involved in the construction of theplants. Borrowing costs have so far not been capitalizedbecause the manufacture of self-constructedplants and equipment does usually not require anysignificant period of time. The cost of general overhaulsis capitalized with the plant provided thatthe criteria for capitalization are fulfilled. Currentmaintenance and repair costs are immediatelyexpensed with effect on net income. As a matterof principle, property, plant and equipment arewritten off only upon their disposal from the Groupor if no more economic benefits are expected fromthe continued use or sale of the asset.Property, plant and equipment which are subjectto wear and tear are depreciated on a scheduledstraight-line basis over their useful life. The followinguseful lives are taken as a basis here:Useful life of property, plant & equipment 2010/11 2009/10Years YearsBuildings 7 - 50 7 - 50lndustrial plants and machinery 4 - 20 4 - 20Working and office equipment 3 - 23 3 - 232.3.8 Real property held as a financialinvestment: Real properties held as a financialinvestment include land and buildings held toobtain rental income and not for the company'sown production. At Schumag AG parts of the landand buildings held at the company's headquartersin Aachen are rented out and held as a financialinvestment. Initial measurement at the time oftransfer is carried out according to IAS 16.5. Theland included in the real properties held as afinancial investment is shown in the balance sheetat the fair value. The valuation of the includedbuildings takes place at acquisition or productioncost less scheduled depreciation over the usefullife. The fair value of the real property is providedin Note 14.Useful life of real property held as a financial investment 2010/11 2009/10Years YearsBuildings 10 - 40 10 - 402.3.9 Financial assets: Financial assets arevalued at acquisition cost.

48 Notes to Consolidated Financial Statements2.3.10 Decreases in value: The book values ofintangible assets, of property, plant and equipmentand of the real property held as a financial investmentare reviewed as of each balance sheet date.If there are signs for a decrease in value, animpairment test will be carried out. Non-scheduleddepreciation will be effected if the recoverableamount is lower than the book value. If the reasonsfor the decrease in value no longer exist, the correspondingwrite-up will be effected (see Note 2.4.5).2.3.11 Leasing: Leasing contracts are classifiedas either financing or operating leases.Leasing agreements in which the Schumag Groupacting as a lessee bears all essential chances andrisks connected with the ownership of an asset aretreated as finance leases. Assets used within afinance lease are recorded at the lower of the fairvalue of the leased property or the present value ofthe minimum lease payments; depreciation thentakes place over the estimated useful life or theshorter period of the lease. All other leasing agreementsin which the Schumag Group acts as a lesseeare classed as operating leases. In this casethe leasing payments to be made are expensedon a straight-line basis over the term of the lease.Leasing agreements in which the Group is thelessor and in which it does not transfer all essentialchances and risks connected with the title to anasset to the lessee are classed as operating leases.The leased asset remains on the Group balancesheet and is subject to scheduled depreciation.Revenue recognition of the leasing paymentsreceived is effected on a straight-line basis overthe term of the lease.

SCHUMAG AG 492.3.12 Taxes: Actual tax refund claims and taxliabilities for the current period and earlier periodsare assessed at the amount in which a refund fromthe tax office and/or a payment to the tax office isexpected. The calculation of actual taxes is effectedon the basis of the tax rates and tax laws effectiveas of the balance sheet date in those countrieswhere the Schumag Group earns taxable income.Deferred taxes are recorded for temporary differencesbetween the values assigned in the IFRS andtax balance sheet of the consolidated companiesand for consolidation processes and tax losscarryforwards. Deferred tax assets are set up in theamount of the expected tax burden and/or taxrelief of the subsequent fiscal years. The underlyingtax rates are indicated in Note 10. Deferred taxassets are only included when it is sufficientlyprobable that the tax reduction will be realized.Deferred tax assets and deferred tax liabilities areoffset if they relate to income taxes levied by thesame tax authority.2.3.13 Inventories: Inventories are carried atacquisition cost or production cost. If the marketprices and/or fair values based on the net realizablevalues are lower, these will be stated. The netrealizable value corresponds to the sales proceedsrealizable in normal transaction less costs to sellwhich can be directly allocated to the respectiveasset. Acquisition and production costs are determinedon the basis of the first-in-first-out method(Fifo). Production costs include, in addition todirect costs, an appropriate allocation of overheadcost of material and production using normal utilizationof the production plants provided that suchcosts are incurred in connection with the productionprocess. General administration costs are alsoincluded provided that they relate to the productionprocess. Financing costs are not included inproduction costs.as well as gains and losses from asset ceiling areset off as other results against retained earningswithout affecting income and are shown in theconsolidated statement of comprehensive incomeof the Group. Pension commitments in Germanyare determined with consideration of biometricaccounting principles according to the mortalitytables "Richttafeln 2005 G" published by KlausHeubeck.2.3.15 Other provisions: Other provisions areset up when there is a present obligation as aresult of a past event and when there is a probableoutflow of resources whose amount can be reliablyestimated. The amount of the provision is theprobable amount required to settle the obligation.Provisions are established for certain environmentalmeasures and risks if the measures are necessary asa result of current legal or regulatory obligationsand if the measures do not lead to the capitalizationof assets. The probable amount to settle long-termobligations is discounted if the effect of discountingis material. In this case, valuation of theprovision is done at present value. Interest effectsare shown in the financial result.2.3.14 Pension provisions: Pension provisionsare determined by means of actuarial calculationsbased on the projected unit credit method withconsideration of expected future compensationand pension adjustments. Actuarial gains or losses

50 Notes to Consolidated Financial Statements2.3.16 Financial instruments: Financial instrumentsare contracts which give rise to a financialasset in one entity and to a financial liability orequity instrument in another entity. The balancingof financial instruments in connection with aregular-way purchase or sale is effected as of thedate of performance, i.e. the date on which theasset is delivered.Financial assets at Schumag are composed ofcredits granted and receivables as well as liquidfunds. First-time recognition of a financial asset iseffected at the fair value plus transaction costs.Transaction costs incurred in connection with thepurchase of financial assets valued at fair valuewith effect on net income are directly recordedwith effect on net income. Subsequent valuation iseffected according to the assignment of the financialassets to one of the following categories under IAS39 which are subject to different valuation principles:❚❚❚❚❚Financial assets valued at fair value witheffect on net income*Financial assets held to maturity*Loans and receivablesFinancial assets available for sale*Effective derivatives as hedging instruments** currently not relevant at the Schumag GroupIn the category of "loans and receivables" the tradeaccounts receivable, other financial receivablesincluded in the assets as well as liquid funds arerecorded at the Schumag Group. They are valued atamortized cost.at the original effective interest rate of the financialasset. If the reasons for the previous valuationadjustment no longer exist, the corresponding writeupsare effected by an adjustment of the valuationadjustment account, but not in excess of amortizedcost.Financial assets are written off if the contractualrights to payments arising from the financial assetsno longer exist, if the receivables are classed as noncollectibleand if all securities have been utilized orif financial assets are transferred with all essentialrisks and chances. If a written-off receivable is laterclassed as collectible again because of an eventwhich occurs after the write-off, the correspondingamount is recognized as income. An objective signof a decrease in value are temporary delays ofpayments which are not even eliminated after ademand for payment to the debtor or which existdue to a legal dispute.Financial liabilities at Schumag relate to financialdebts, trade accounts payable and other financialliabilities included in Other Liabilities. Financialliabilities are assigned to the following categories:❚❚Financial liabilities valued at fair value witheffect on net incomeFinancial liabilities valued at amortized costIf objective signs point to a substantial decrease inthe value of financial assets, an examination takesplace to determine if the carrying value exceeds thepresent value of the future cash-flows. If this is thecase, a valuation allowance amounting to thedifference in value is made using a valuation adjustmentaccount, and the loss due to the decrease invalue is recorded with effect on net income. Thepresent value of the future cash-flows is discounted

SCHUMAG AG 51First-time recognition of the financial liability iseffected at the fair value of the consideration receivedand/or at the value of the means of paymentreceived less any transaction costs incurred. Subsequentvaluation is effected at amortized cost for thecategory "Financial liabilities valued at amortizedcost", otherwise they are valued at the fair value.Financial liabilities are written off if the contractualliabilities have been paid, cancelled or expired.The amortized cost of a financial asset or of a financialliability is the amount at which a financial assetor a financial liability was valued at the first recording,less any redemption and any non-scheduleddepreciation for decreases in value or uncollectibleaccounts as well as plus or less the accumulateddistribution of any difference between the originalamount and the amount repayable upon maturity(premium), which is distributed over the term of thefinancial asset or the financial liability using theeffective interest method.For short-term receivables and liabilities the amortizedcost always corresponds to the nominalamount and/or the repayment amount. The fairvalues shown in the balance sheet usually correspondto the market prices of the financial assetsand liabilities. If no fair values are directly available,these are calculated using recognized valuationmethods and current market parameters. The fairvalue option is not used at the Schumag Group.Derivative financial instruments are shown attheir current value. The control of financial risks (inparticular currency risks) by using derivative financialinstruments is described in Note 24.

52 Notes to Consolidated Financial Statements2.4 Essential discretionary decisions,estimates and assumptionsIn the preparation of the consolidated financialstatements the Board of Executive Directors usesdiscretionary decisions, estimates and assumptionsthat affect the reported amount of income, expenses,assets and debts as well as the contingenciesshown in the consolidated financial statements.The uncertainty connected with these assumptionsand estimates may lead to results, however,which, in future periods, call for considerableadjustments of the carrying value of the assets ordebts concerned. The assumptions made as of thebalance sheet date are of particular significancewith regard to the following items:2.4.1 Operating lease relationships – Groupas lessor: Schumag has concluded a leasingcontract for the industrial letting of real property.An analysis of the contractual terms and conditionsshowed that all relevant chances and risksconnected with the ownership of the properties letremain with the Group. The contract is thereforeshown in the balance sheet as an operating leaseso that the let property is recorded under realproperty held as a financial investment in accordancewith IAS 40.2.4.2 Taxes: Uncertainties exist with regard tothe amount and the time of accrual of future taxableprofits. If the actual results deviate from theassumptions made and/or from future changes ofsuch assumptions, it may be necessary to adjustthe already recorded tax revenue and tax expenses.Based on reasonable estimates Schumag sets upprovisions for potential effects of field tax audits.The amount of such provisions is based on variousfactors such as e.g. the experience from earlierfield tax audits and different interpretations of thetax regulations by the taxable company and thetax authority in charge.Deferred tax assets are also stated for tax losscarryforwards. Their realization depends on thefuture taxable profits of the respective companyand on the tax regulations. If there are doubtsabout the realization of tax loss carryforwards,the corresponding valuation allowances are madefor the deferred tax assets. Due to the uncertaintyconcerning the time of change in significant shareownership there is great uncertainty about theamount of tax loss carryforwards which are utilizablein Germany in future in view of the regulations onthe use of tax loss carryforwards in the event ofa change of share owners. Therefore a valuationallowance has been made for the determineddeferred tax assets.2.4.3 Pension provisions: The present valueof pension obligations is determined by means ofactuarial calculations. In this connection the actuarialvaluation is effected on the basis of variousassumptions. This also includes the determinationof the discount rates as well as estimates of thefuture development of wages and salaries as wellas annuities. Due to the complexity of the valuation,the underlying assumptions and their long-termcharacter a defined benefit pension obligationreacts extremely sensitive to changes in theseassumptions. The assumptions made by Schumagwhich are reviewed as of each balance sheet dateare stated in Note 20.2.4.4 Other provisions: Other provisions alsocover risks resulting from legal disputes and proceedings.In order to determine the amount of theprovisions, the facts relating to each case, the sizeof the claim, claims awarded in similar cases andindependent expert advice are considered alongwith assumptions regarding the probability of asuccessful claim and the range of possible claims.The actual costs can deviate from these estimates.

SCHUMAG AG 532.4.5 Non-scheduled depreciation (impairments):It is to be determined as of each balancesheet date whether or not there are signs for apotential decrease in the value of intangible assetsand of property, plant and equipment and in thevalue of real property held as a financial investment.In addition, the Group determines as of eachbalance sheet date if there are signs for a de-creasein the value of financial assets.In the impairment tests to be carried out in thepresence of signs for decreases in value the balancesheet carrying values of the assets are comparedwith the recoverable amounts of the assets. Therecoverable amount is the higher of the net realizablevalue and the value in use of the asset. Thevalue in use is determined for each individual assetand corresponds to the cash value of the expectedcash flow. If no recoverable amount can be determinedat the level of the individual asset, thedetermination will be effected for cash generatingunits to which the corresponding asset is assigned.For the definition of the cash generating units thesegments are used (see Note 5). For the determinationof the value in use a pre-tax interest rate correspondingto market conditions is used. The determinationsare based on budget calculations andforecasts by the management which usually comprisea planning period of three years and includeassumptions for short to medium-term marketdevelopments. Cash flow forecasts which exceedthe detailed planning period are calculated on thebasis of suitable growth rates.The estimate of the cash flows and the assumptionsare based on the information available as ofthe respective balance sheet date and may deviatefrom actual developments. Assumptions and estimatesrefer, among other things, to expectedproceeds from product sales, to the profitability ofthe asset, to the discount rate as well as to materialand energy prices.A previously recorded impairment loss is reversedonly if, since the inclusion of the last impairmentloss, a change has resulted in the assumptionsused to determine the recoverable amount. Thewrite-up is limited to the effect that the carryingvalue of an asset must not exceed its recoverableamount nor the carrying value which would haveresulted after consideration of scheduled depreciationif no impairment loss had been recorded forthe asset in previous years.

54 Notes to Consolidated Financial Statements2.5 Effects of new as well as changedaccounting standards2.5.1 First-time application of IFRSand IFRICFor fiscal year 2010/11 the following IFRS andIFRIC were used for the first time;Amendment to IAS 32 "Classification of RightsIssues” was published on October 8, 2009, includedinto EU law on December 23, 2009 and is to beapplied for the first time to fiscal years starting onor after February 1, 2010. This change of IAS 32clarifies how certain stock subscription rights areto be shown in the balance sheet if the issuedinstruments are not stated in the functional currencyof the issuer. If such instruments are offered on apro rata basis to the current owners at a fixedamount, they should be classified as equity instrumentseven if the rights issue price is stated in a currencyother than the functional currency of the issuer.The second collective standard of Improvementsto IFRSs was published in April 2009, included inEU law on March 23, 2010 and its application ismandatory for fiscal years starting on or afterJanuary 1, 2010. Most of the changes are clarificationsor corrections of the existing IFRS and/orchanges resulting from the modifications previouslymade to the IFRS. The changes to IFRS 8, IAS 17,IAS 36 and IAS 39 include changes of the existingrequirements or additional guidelines for theimplementation of these requirements.Amendments to IFRS 2 "Group Cash-settledShare-based Payment Transactions" was publishedon June 18, 2009, included in EU law on March 23,2010 and its application is mandatory for fiscalyears starting on or after January 1, 2010. Thechange of IFRS 2 clarifies the accounting methodfor share-based payment transactions where asupplier of goods or services is paid in cash andwhere another company of the Group is obligatedto provide the cash settlement.Amendment to IFRS 1 "First-time Adoption” wasincluded in EU law on July 23, 2010 and is to beapplied for the first time to fiscal years startingon or after July 1, 2010. The change refers to thetransitional rules of IFRIC 19 "ExtinguishingFinancial Liabilities with Equity Instruments".The first-time application of the indicated standardsand interpretations has no essential effectson the consolidated financial statements.2.5.2 IFRS and IFRIC so far not consideredThe effects of the IFRS and IFRIC standards so farnot applied in fiscal year 2010/11 and/or notrecognized by the European Union on the consolidatedfinancial statements of Schumag were examined.Schumag assumes that the application of thenew standards and/or the changed standards mentionedbelow as well as their interpretations –unless indicated otherwise – will have no essentialeffects on the consolidated financial statements:Amendments to IFRS 1 "Additional Exemptionsfor First-time Adopters” was included in EU law onJune 23, 2010 and is to be applied for the first timeto fiscal years starting on or after January 1, 2011.Amendments to IFRS 1 "Limited Exemption fromComparative” and IFRS 7 "Disclosures for First-Time Adopters” were included in EU law on June30, 2010 and are to be applied for the first time tofiscal years starting on or after January 1, 2011.Revised IAS 24 "Related Party Disclosures" andAmendment to IFRIC 14 "Prepayments of aMinimum Funding Requirement” were included inEU law on July 19, 2009 and are to be applied forthe first time to fiscal years starting on or afterJanuary 1, 2011.Improvements to IFRSs (AIP 2010) were includedin EU law on February 18, 2011 and are to beapplied for the first time to fiscal years starting onor after January 1, 2011.Amendments to IFRS 7 "Financial Instruments:Disclosures Transfers of Financial Assets"was included in EU law on November 22, 2011and is to be applied for the first time to fiscalyears starting on or after January 1, 2011.Amendments to IAS 1 "Presentation of Itemsof Other Comprehensive Income” was included inEU law on June 5, 2012 and is to be applied for thefirst time to fiscal years starting on or after July 1,2012.Amendments to IAS 19 "Employee Benefits"was included in EU law on June 5, 2012 and is tobe applied for the first time to fiscal years startingon or after January 1, 2013.

SCHUMAG AG 55IFRS 10 "Consolidated Financial Statements" wasincluded in EU law on December 11, 2012 and is tobe applied for the first time to fiscal years startingon or after January 1, 2014.IFRS 11 "Joint Arrangements" was included in EUlaw on December 11, 2012 and is to be applied forthe first time to fiscal years starting on or afterJanuary 1, 2014.IFRS 12 "Disclosures of Interests in Other Entities"was included in EU law on December 11, 2012 andis to be applied for the first time to fiscal yearsstarting on or after January 1, 2014.IFRS 13 "Fair Value Measurement" was includedin EU law on December 11, 2012 and is to beapplied for the first time to fiscal years startingon or after January 1, 2013.IAS 27 "Separate Financial Statements" wasincluded in EU law on December 11, 2012 andis to be applied for the first time to fiscal yearsstarting on or after January 1, 2014.IAS 28 "Investments in Associates and JointVentures" was included in EU law on December 11,2012 and is to be applied for the first time to fiscalyears starting on or after January 1, 2014.Amendments to IAS 12 "Deferred tax: Recoveryof Underlying Assets” was included in EU law onDecember 11, 2012. The regulation enters intoforce on the third day after its publication in theofficial gazette of the European Union. Publicationin the official gazette took place on December 29,2012.Amendments to IFRS 1 "Severe Hyperinflationand Removal of Fixed Dates for First Time Adopters”was included in EU law on December 11, 2012. Theregulation enters into force on the third day afterits publication in the official gazette of the EuropeanUnion. Publication in the official gazette took placeon December 29, 2012.Amendments to IFRS 7 "Disclosures – OffsettingFinancial Assets and Financial Liabilities" wasincluded in EU law on December 13, 2012 and is tobe applied for the first time to fiscal years startingon or after January 1, 2013.Amendments to IAS 32 "Offsetting FinancialAssets and Financial Liabilities" was included inEU law on December 13, 2012 and is to be appliedfor the first time to fiscal years starting on or afterJanuary 1, 2014.IFRIC 20 "Stripping Costs in the ProductionPhase of Surface Mine" was included in EU lawon December 11, 2012 and is to be applied forthe first time to fiscal years starting on or afterJanuary 1, 2013.❚ 3. ACQUISITIONSIn fiscal year 2010/11 no company acquisitionstook place. The newly formed joint ventureSchumag Green Energy GmbH & Co. KG in whichSchumag AG holds 49 % of the limited partner'sshares as of September 30, 2011 is shown atacquisition cost. Currently no acquisitions areplanned.❚ 4. DIVESTITURES ANDDISCONTINUED OPERATIONSIn fiscal year 2008/09 the essential part of themechanical engineering division was sold to SMSMeer GmbH, Mönchengladbach.By another sales contract of December 15, 2009the orders still available at that time as well as theremaining assets of the mechanical engineeringdivision were also sold to SMS Schumag effectiveas of November 30, 2009.

56Notes to Consolidated Financial StatementsIn fiscal year 2009/10 the divestiture as of therespective date of disposal affected the assetsand liabilities as follows:Assets and debts transferred 2009/10TEURInventories 9,762Accounts trade receivable 3,914Other provisions -4,262Other liabilities -5,614Net assets 3,800The divestiture had the following effects on theearnings position of the Group:2009/10TEURProceeds from the disposal (cash and cash equivalents) 7,500Net assets -3,800Set off payments received for trade accounts receivable -3,427Income (before tax) from the disposal 273

SCHUMAG AG 57

58 Notes to Consolidated Financial StatementsDiscontinued operationIn the income statement of the previous year theitems have been adjusted by the correspondingamounts of the division and the result after tax ofthis division has been separately shown.The earnings and financial position of the discontinuedoperation corresponding to the segment of"mechanical engineering" (see also Note 5) wasas follows in the previous year:Statement of income 2009/10TEURSales 265Changes in inventories 360Other operating income 334Total operating performance 959Cost of materials 827Personnel expenses 4Depreciation/Amortization 0Other operating expenses 443Income from operations -315Financial result -11Result related to extraordinary items 0Income before taxes -326Taxes 0Income after taxes of discontinued operations -326Consolidatet Cash-flow statement (abbreviated) 2009/10Cash-flow from operating activities 0Cash-flow from investing activities 11,466Change in cash and cash equivalents with effecton liquidity of the discontinued operations 11,466Change in cash and cash equivalents related toconsolidated entity, valuation and exchange rates -11,467Cash and cash equivalents at the beginning of the period under review 1Cash and cash equivalents at the end of the period under review 0TEUR

SCHUMAG AG 59In the previous year the disposal of the discontinuedoperation led to the following cash-flows:2009/10Proceeds from the disposal 7,500Cash inflow/outflow with the hedgingof required gurantee lines 5,653Payments in connection with the subsequent adjustmentof the balance sheet drawn up as of the relevant data -943Other payments -744Net payment from the disposal 11,466TEUR❚ 5. REPORTING BY SEGMENTFor corporate control purposes the Group is organizedin segments according to products. Servicesare of secondary significance. The allocation ofassets and depreciation to the segments is effectedaccording to the economic power. Assets which areshared by the segments are assigned according totheir prorata use. Due to the internal organizationaland reporting structure the following segmentsresult according to IFRS 8:The segment of precision engineering produceshigh-precision automotive parts, components forprecision measuring and indicating equipment,precision axles for a wide range of householdappliances, components for medical and opticalequipment, standard precision parts for injectionmoulding and pressure die-casting as well asprecision parts in small lot sizes manufacturedaccording to the customers' drawings.In the segment of plant engineering the productionof components for the energy sector takesplace, in particular for oil and gas supply systemsas well as for power plants and nuclear powerstations.The segment of mechanical engineering produceddrawing plants for the production of pipesand sections of steel, brass, aluminium and copper,bright steel plants for bars and rings as well asgrinding plants for bars. Since Schumag AG didnot sell the mechanical engineering orders onhand as of November 30, 2008, the internal controland reporting of the company were continued tobe effected separately for this segment until andincluding fiscal year 2009/10. The segment ofmechanical engineering falls at the same time intothe category of "discontinued operations" accordingto IFRS 5. In the reporting for this year themechanical engineering division is for the last timerecorded as a segment of the company for comparativepurposes.Business activities which cannot be assigned toany other segment are shown under Othersegments. These currently include the activitiesassociated with the real property held as afinancial investment (see Note 14).

60Notes to Consolidated Financial StatementsSegments Precision Systems Mechanical Other Group2010/11 (TEUR) engineering engineering engineering SegmentsNet sales 55,381 3,798 0 0 59,179EBITDA 4,070 -1,991 0 144 2,223EBIT 1,479 -2,174 0 71 -624EBT 267 -2,460 0 -29 -2,222Capital expenditures 2,344 168 0 0 2,512Depreciation/Amortization 2,591 183 0 73 2,847Average number of employees 604 2 0 0 606Segments Precision Systems Mechanical Other Group2009/10 (TEUR) engineering engineering engineering SegmentsNet sales 44,659 98 265 0 45,022EBITDA -4,400 -2,074 -315 255 -6,534EBIT -12,746 -2,078 -315 180 -14,959EBT -13,755 -2,115 -326 80 -16,116Capital expenditures 3,119 5 0 0 3,124Depreciation/Amortization 8,346 4 0 75 8,425Average number of employees 592 1 0 0 593

SCHUMAG AG 61In fiscal year 2010/11 more than 10 % of Groupsales were realized with two customers of thesegment of precision engineering.Customer sales amounted to TEUR 9,687 (previousyear TEUR 7,229) and TEUR 7,860 (previous yearTEUR 8,451).Information on geographical regions:Segments by regionsReg. office of the company Germany Foreign countries Group2010/11 2009/10 2010/11 2009/10 2010/11 2009/10TEURTEUR TEURTEUR TEURTEURSales 58,725 44,549 454 473 59,179 45,022Sales before consolidation 59,007 44,831 4,506 2,979 63,513 47,810EBITDA 3,724 -4,886 -1,501 -1,648 2,223 -6,534EBIT 1,027 -13,146 -1,651 -1,813 -624 -14,959EBT -619 -14,251 -1,603 -1,865 -2,222 -16,116Capital expenditures 2,301 3,096 211 28 2,512 3,124Depreciation/Amortization 2,697 8,260 150 165 2,847 8,425Average number of employees 502 499 104 94 606 593Breakdown of net sales by regionsLocation 2010/11 2009/10TEUR% TEUR%Germany 23,016 38.9 15,867 35.2Other EU countries 12,159 20.6 7,891 17.5Remaining European countries 586 1.0 383 0.9North America 18,641 31.5 17,790 39.5Latin America 26 0.0 39 0.1Asia 4,751 8.0 3,052 6.859,179 100.0 45,022 100.0

62Notes to Consolidated Financial Statements❚ 6. OTHER OPERATING INCOME2010/11 2009/10TEUR TEURRental income 1,625 1,332Income from delation of liabilities from the accounts 848 405Subsidies from the German Fed. Empl. Agency(part-time employment prior to retirement) 299 42Foreign currency gains 243 339Income from refund of costs 233 487Income from the reversal of provisions 113 291Subsidies from the German Empl. Agency(compensation for short-time work) 0 274Other 400 3063,761 3,476Rental income includes in particular income fromthe letting to SMS Schumag of the real propertyheld as a financial investment.Income from the write-off of liabilities refersin particular to the release of the remaining commitmentarising from the ERA adjustment fund.Income from refund of costs mainly refers toservices rendered to SMS Schumag at the locationof Aachen.Other income includes income from the retransferof valuation allowances, income from surrendervalue, as well as a large number of other items.Foreign currency gains include gains fromforeign currency items as well as from the valuationof receivables and payables in foreign currencyat the exchange rate effective on the balance sheetdate.❚ 7. PERSONNEL EXPENSES2010/11 2009/10TEURTEURWages and salaries 21,214 19,833Social security contributions andretirement benefit expenses and welfare benefits 4,616 4,348thereof retirement benefit expenses 358 15525,830 24,181

SCHUMAG AG 63Average number of employees2010/11 2009/10Hourly workers 479 462Salaried employees 103 103Apprentices 24 28606 593❚ 8. OTHER OPERATING EXPENSES2010/11 2009/10TEUR TEURConsulting fees 2,433 3,387Leasing and rental costs 1,679 1,595Maintenance 1,661 1,599Allowance for accounts receivable and other assets 1,012 13Factoring 847 135Other services purchased 585 768Insurance costs 458 531IT costs 407 402Foreign currency losses 309 362Travel expenses 293 214Expenses for the start-up of business 0 600Other 2,829 2,96412,513 12,570

64 Notes to Consolidated Financial StatementsThe decrease in consulting fees is largely dueto the fact that compared with the previous yearmanagement consulting costs were incurred onlyto a very small extent.Valuation allowances for accounts receivableand other assets mainly include valuation allowancesassociated with the segment of regenerativeenergies. This includes a valuation allowance foraccounts receivable from the joint venture SchumagGreen Energy GmbH & Co. KG amounting to TEUR484. Accounts receivable arising from the prefinancingof the joint venture were revalued dueto the dissolution of the joint venture because ofdifferences in opinion of the limited partnersconcerning the business policy. The impairment lossaffects the segment of plant engineering with anamount of TEUR 734 (previous year TEUR 0) and thesegment of precision engineering with TEUR 278(previous year TEUR 13).Other services purchased refer in particular totemporary staff in the technical administration area,security services as well as hardening servicesrendered for Schumag Romania.Foreign currency losses include losses fromforeign currency items as well as from the valuationof receivables and liabilities in foreign currency atthe closing rate effective on the balance sheet date.In the previous year expenses for the start-upof business referred to the costs for the start-upof business operations for the segment of plantengineering which were to be reported as expenditureaccording to IFRS.Other expenses include further administration andselling expenses not related to certain contracts.

SCHUMAG AG 65❚ 9. FINANCIAL RESULT2010/11 2009/10TEUR TEUROther interest and similar income 23 13Interest and similar expenses -1,666 -1,159Financial result -1,643 -1,146Interest and similar expenses include financingcosts for pension commitments amounting to TEUR859 (previous year 1.016) (see also Note 20).Total interest income as well as total interestexpense for financial assets or liabilities which arenot valued with effect on income at the fair valuebreak down as follows:2010/11 2009/10TEUR TEURTotal interest incomefrom operations to be continued 12 13from discontinued operations 0 012 13Total interest expensefrom operations to be continued 593 176from discontinued operations 0 2593 178

66Notes to Consolidated Financial Statements❚ 10. TAXESEffective from January 1, 2008 a corporate incometax of 15 % and thereon a solidarity surcharge of5.5 % is uniformly levied on distributed and retainedearnings. In addition to corporate income tax, incomegenerated in Germany is subject to trade incometax. This varies as a function of the municipalityin which the company is located. The rate forSchumag AG as well as for Schumag BR EnergyGmbH amounts to 15.575 %, so that for bothcompanies deferred taxes are included at 31.4 %(previous year 31.4 %).Income generated by foreign Group companiesis taxed at the income tax rates applicable in therespective countries of domicile. For foreign Groupcompanies, deferred taxes are calculated using thefollowing tax rates applicable in the individualcountries of domicile:2010/11 2009/10% %Romania 16 16Taxes from continued operations shown in the Groupincome statement break down as follows:Actual tax on income2010/11 2009/10TEURTEURSchumag AG 99 17Foreign subsidiaries 0 399 20thereof for previous years 99 14Deferred taxes due to accrual and/orreversal of temporary differencesTax expenses 597 1,603Tax income -1,954 -2,560-1,357 -957Taxes shown in the Group statementof income -1,258 -957

SCHUMAG AG 67The direct set-off of actuarial profits or lossesagainst revenue reserves results in deferred taxesdirectly recorded under equity amounting to TEUR-459 (previous year TEUR 457).Deferred taxes result from the following temporarydifferences between the valuation of assets andliabilities according to IFRS and for tax purposes:Deferred tax expense Deferred tax revenue2010/11 2009/10 2010/11 2009/10TEURTEUR TEURTEURIntangible assets 0 0 -605 0Property, plant and equipment 424 41 -81 -1,026Inventories and accounts receivable 35 1,438 -294 -1,432Pension provisions 2 30 0 0Other provisions and liabilities 123 94 -974 -99Other 13 0 0 -3597 1,603 -1,954 -2,560Deferred tax assets Deferred tax liabilities30-09-2011 30-09-2010 30-09-2011 30-09-2010TEURTEUR TEURTEURIntangible assets 605 0 0 0Property, plant and equipment 98 142 4,350 4,062Inventories and accounts receivable 347 64 39 4Pension provisions 1,018 1,479 0 0Other provisions and liabilities 1,460 608 0 0Tax loss carryforwards 5,922 10,307 0 0Other 0 0 28 16Valuation allowance for deferred taxes -5,922 -10,307 0 0thereof tax loss carryforwards -5,922 -10,307 0 0Gross value 3,528 2,293 4,417 4,082Netting -2,697 -2,087 -2,697 -2,087Balance sheet value 831 206 1,720 1,995The assessment of the probability of reversal ofthe differences in valuation and the use of tax losscarryforwards are decisive for the assessment ofthe value of the deferred tax assets. This dependson the accrual of future taxable profits during theperiods in which valuation differences are reversedand tax loss carryforwards can be claimed. Theoption to use tax loss carryforwards is cancelledin the event of a change in shareholders. Based onexperience and the expected development of taxableincome, it is assumed that the advantages ofdeferred tax assets can be realized.In Germany tax losses may be carried forwardindefinitely but can be set off against generatedincome only to a limited extent. Essential foreign

68Notes to Consolidated Financial Statementstax loss carryforwards do not exist. For domestictax loss carryforwards of TEUR 18.860 (previousyear TEUR 32.826) valuation allowances wereprovided as of September 30, 2011.Tax reconciliationThe tax expense resulting from the application ofthe tax rate of Schumag AG of 31.4 % (previousyear 31.4 %) can be reconciled to the reported taxas follows:2010/11 2009/10TEUR TEURNet income before tax from operations to be continued -2,222 -15,790Net income before tax from discontinued operations 0 -326Group income before tax -2,222 -16,116Expected tax expense (tax rate of Schumag AG) -698 -5,061Tax effects from non-deductible expenses and tax-exempt income -1,455 28Tax effect from deviating foreign tax rates -57 32Deferred taxes due to accrual and/or reversal of temporary differences -741 78Deferred taxes due to tax loss carryforwards so far not taken into account -814 -1,979Valuation allowance for deferred taxes for tax loss carryforwards 814 1,979Deferred taxes not stated 1,654 3,966Non-periodic effects 99 14Other tax effects -60 6Reported tax -1,258 -937thereof reported in the Group Income Statement -1,258 -937thereof to be attributed to the discontinued operation 0 0-1,258 -937Tax rate 56.6% 5.8%Tax liabilities30-09-2011 30-09-2010TEUR TEURTax provisions 0 78Taxes due 179 0Short-term tax liabilities 277 291456 369Tax liabilities comprise tax provisions as well ascurrent tax liabilities and short-tem tax liabilities.Tax provisions concern potential liability claims inthe previous year from former fiscal unities. Thesewere reversed because they have become statutebarred.Tax liabilities only concern the assessedincome tax, tax liabilities, especially wage tax andVAT for the month of September.

SCHUMAG AG 69❚ 11. EARNINGS PER SHARE2010/11 2009/10Group income after taxes (in TEUR) -964 -15,179Weighted number of shares issued on average 4,000,000 3,736,973Earnings per share according to IFRS (in EUR) -0.24 -4.06thereof from operations to be continued (EUR) -0.24 -3.97thereof from discontinued operations (EUR) 0.00 -0.09There were no dilution effects.The share buyback programme as well as the saleof own shares (see Note 19) only had effects in theprevious year on the weighted number of sharesissued on average.Shares in circulation 2009/10Status September 30, 2009 3,719,807Shares tendered until October 5, 2009* -53,333Sale of own shares on July 16, 2010 +333,526Status September 30, 2010 4,000,000Number of shares issued on average weighted exact to the day 3,736,973*End of share buyback programme

70Notes to Consolidated Financial Statements❚ 12. INTANGIBLE ASSETSDevelopment 2010/11SoftwareTEURAcquisition costsBalance as of 01-10-2010 1,379Exchange differences 0Additions 69Disposals 11Balance as of 30-09-2011 1,437AmortizationBalance as of 01-10-2010 307Exchange differences 0Additions scheduled 151Additions non-scheduled 222Disposals 9Balance as of 30-09-2011 671Net book value as of 30-09-2011 766Development 2009/10SoftwareTEURAcquisition costsBalance as of 01-10-2009 691Exchange differences 0Additions 737Disposals 49Balance as of 30-09-2010 1,379AmortizationBalance as of 01-10-2009 218Exchange differences 0Additions 138Disposals 49Balance as of 30-09-2010 307Net book value as of 30-09-2010 1,072Goodwill as well as self-constructed intangibleassets have so far not been shown in the balancesheet.The stated non-scheduled depreciation refers tothe division of precision engineering and is includedin the item of depreciation in the consolidatedincome statement.

SCHUMAG AG 71❚ 13. PROPERTY, PLANT AND EQUIPMENTDevelopment 2010/11Acquisition costsAdvanceMachinery Factory and payments andLand and technical office construction inand buildings equipment equipment progress TotalTEURTEURTEURTEURTEURBalance as of 01-10-2010 13,192 21,769 7,123 2,065 44,149Exchange differences -18 -1 -5 0 -24Additions 0 1,462 291 675 2,428Disposals 115 233 251 0 599Transfers 0 6 0 -6 0Balance as of 30-09-2011 13,059 23,003 7,158 2,734 45,954DepreciationBalance as of 01-10-2010 2,095 17,134 4,254 0 23,483Exchange differences -3 -1 -3 0 -7Additions scheduled 337 1,180 728 0 2,245Additions non-scheduled 0 0 0 156 156Disposals 115 136 211 0 462Transfers 0 0 0 0 0Balance as of 30-09-2011 2,314 18,177 4,768 156 25,415Net book value as of 30-09-2011 10,745 4,826 2,390 2,578 20,539

72Notes to Consolidated Financial StatementsDevelopment 2009/10Acquisition costsAdvanceMachinery Factory and payments andLand and technical office construction inand buildings equipment equipment progress TotalTEURTEURTEURTEURTEURBalance as of 01-10-2009 13,207 21,753 6,896 31 41,887Exchange differences -19 -1 -6 0 -26Additions 4 18 328 2,037 2,387Disposals 0 4 95 0 99Transfers 0 3 0 -3 0Balance as of 30-09-2010 13,192 21,769 7,123 2,065 44,149DepreciationBalance as of 01-10-2009 1,760 10,177 3,429 0 15,366Exchange differences -2 -1 -4 0 -7Additions scheduled 337 1,906 802 0 3,045Additions non-scheduled 0 5,055 112 0 5,167Disposals 0 3 85 0 88Transfers 0 0 0 0 0Balance as of 30-09-2010 2,095 17,134 4,254 0 23,483Net book value as of 30-09-2010 11,097 4,635 2,869 2,065 20,666Property, plant and equipment include 13 leasedproduction machines (previous year: 1) for theprecision engineering division the beneficialownership of which is to be assigned to theGroup as the lessee. The corresponding liabilitiesfrom financing leases are explained in Note 25.Property, plant and equipment of the precisionengineering division sold in December 2010 withinthe scope of a sale-and-lease-back transaction, inparticular production machines, are continued to bestated under property, plant and equipment becausein this case again the beneficial ownership is to beassigned to the Group as the lessee. The correspondingliabilities from financing leases are explainedin Note 22.The non-scheduled depreciation shown for fiscal year2010/11 refers to the segment of plant engineering.Based on contractual agreements concerning property,plant and equipment sold within the scopeof the sale-and-lease-back transaction at a bookvalue of TEUR 2,845 individual plants were recordedat their net realizable value (recoverable amount)with value-increasing effect as of September 30,2010. The required non-scheduled depreciationamounted to TEUR 5,167. The non-scheduleddepreciation is included in the item of depreciationof the consolidated income statement.

SCHUMAG AG 73❚ 14. INVESTMENT PROPERTYDevelopment 2010/11TEURAcquisition costBalance as of 01-10-2010 4,804Additions 0Disposals 0Transfers 0Balance as of 30-09-2011 4,804Amortization & DepreciationBalance as of 01-10-2010 507Additions 73Disposals 0Transfers 0Balance as of 30-09-2011 580Net book value as of 30-09-2011 4,224Development 2009/10TEURAcquisition costBalance as of 01-10-2009 4,804Additions 0Disposals 0Transfers 0Balance as of 30-09-2010 4,804Amortization & DepreciationBalance as of 01-10-2009 432Additions 75Disposals 0Transfers 0Balance as of 30-09-2010 507Net book value as of 30-09-2010 4,297

74Notes to Consolidated Financial StatementsThe real property held as a financial investmentstems from a change of use of company realproperty in fiscal year 2008/09. Based on anexpert opinion dated November 8, 2012 a totalfair value amounting to TEUR 4,599 was determinedwhich takes the pro rata land use in relation tothe built-upon area into account. The values of theunderlying expert opinion have been determinedby an officially appointed and sworn expert usingthe income approach and assuming an interestrate of 8.25 %.The letting of the property results in rental incomeamounting to TEUR 1,321 (previous year TEUR1,144) as well as directly attributable operatingexpenses of TEUR 725 (previous year 536) (seealso Note 25).❚ 15. FINANCIAL ASSETSThe financial assets include only the investmentbook value of Schumag AG in the joint ventureSchumag Green Energy GmbH & Co. KG.❚ 16. INVENTORIES30-09-2011 30-09-2010TEUR TEURRaw materials and factory supplies 2,218 1,876Work in progress 6,565 6,089Finished goods and merchandise 5,009 4,039Advance payments 4 3713,796 12,041As of the balance sheet date all inventories at thelocation of Aachen amounting to a total of TEUR11,328 had been pledged as security within thescope of a transfer of storage ownership by wayof security.

SCHUMAG AG 75❚ 17. RECEIVABLES AND OTHER ASSETSTrade receivables include valuation allowancesamounting to TEUR 299 (previous year TEUR 150).Other assets include valuation allowances amountingto TEUR 697 (previous year TEUR 0).As of the balance sheet date, trade receivables are as follows:Book valuenot declined in valve, but overdueneither overdue overdue overdue overdue overdue overduedeclined up to 31 to 60 61 to 90 91 to 180 181 to 360 more thannor overdue 30 days days days days days 360 daysTEURTEURTEURTEURTEURTEURTEURTEUR30-09-2011 6,802 5,537 763 75 262 165 0 030-09-2010 6,442 5,450 888 91 13 0 0 0Other assets30-09-2011 30-09-2010thereofthereofshort-termshort-termTEURTEUR TEUR TEURReceivables against participations 82 82 0 0Deferred items 265 218 407 347Other assets 3,506 2,282 3,970 2,8693,853 2,582 4,377 3,216Composition ofother assets:30-09-2011 30-09-2010TEUR TEURAsset values reinsurance cover 648 682Security deposits 933 1,003Receivables due from factoring company 815 532Amounts due from employees 310 283Pledged cash in banks 225 248Tax refund claims 142 759Other 433 4633,506 3,970

76 Notes to Consolidated Financial StatementsAsset values from reinsurance coverdo not represent qualified insurance policiesaccording to the terms of IAS 19.Security deposits refer in particular toliabilities from leasing contracts.Receivables due from factoring companyare based on sold receivables amounting toTEUR 4,912 (previous year 2,604). A landcharge amounting to TEUR 3,000 as well asinventories amounting to TEUR 11,328 havebeen provided as security for the factoringcompany within the scope of a securitypooling agreement.Tax refund claims include refund claimsreferring to income tax amounting to TEUR 47(previous year TEUR 377).❚ 18. LIQUID FUNDSIn the item of liquid funds only bank balancesand cash balances are shown.Bank balances bear interest at variable interestrates for money at call.Pledged cash in banks serves to secureindividual bank guarantees.

SCHUMAG AG 77❚ 19. SHAREHOLDERS' EQUITYSubscribed capitalThe share capital of Schumag AG amounts toEUR 10,225,837.62 and is divided into 4,000,000individual share certificates. The shares are payableto bearer.Capital reserveThe capital reserve of Schumag AG includespremiums from capital increases.sheet date is recorded separately in equity ascurrency translation and is shown as affectingnet income only upon the disposal of a company.Retained earnings include an unchanged legalreserve amounting to EUR 511,291.88 as ofSeptember 30, 2011.The offsetting of actuarial profits and lossesagainst retained earnings developed as follows:Generated shareholders' equityThe difference between the historical exchangerates at the time of acquisition and the rate usedto translate equity of a company as of the balance2010/11 2009/10TEURTEURBalance as of Oct. 1 -231 768Actuarial gains/losses withdefined benefit pension obligations 1,461 -1,455Deferred taxes -459 457Change 1,002 -999Balance as of Sept. 30 771 -231Own sharesThe Board of Executive Directors was authorizedby a resolution of the general meeting of April 15,2008 until October 14, 2009 in accordance with§ 71 (1) No. 8 and (2) to (4) of the Stock CorporationAct and with the consent of the SupervisoryBoard to effect one or several purchases of ownshares of the company up to a total of 10 % of itscapital stock and to use these own shares to theexclusion of the legal subscription right of theshareholders where appropriate. No more than10 % of the capital stock may be allotted at anyone time to the purchased shares together withother own shares held by the company or ownshares which are to be attributed to it accordingto §§ 71a et seq. of the German Stock CorporationAct.On the basis of this authorization the Board ofExecutive Directors offered on September 17, 2009to buy back a total of 400,000 shares at a price ofEUR 6.00. Within the scope of this offer a total of333,526 shares were purchased (share in the capitalstock: 8.34 %) at a price of EUR 2,001,156.00.

78Notes to Consolidated Financial StatementsIn fiscal year 2009/10 the following shareswere purchased in this connection:Period of purchase Number of shares Share in the capital stock Purchase price% EUREUR01-10-2009 – 05-10-2009 53,333 1.33 136,343.65 319,998.00With consideration of the requirements of theauthorization decided by the general meeting ofApril 15, 2008 the own shares purchased withinthe scope of the share buy-back programme weresold again on July 16, 2010 with the consent of theSupervisory Board. For the partial fulfilment ofthe claims raised by the workforce of SchumagAG on the basis of the so-called ERA adjustmentfund the shares were sold to a third party namedby the works council in coordination with theemployees.Disposal on Number of shares Share in the capital stock Disposal price% EUREUR16-07-2010 333,526 8.34 852,645.68 2,084,537.50Due to the sale of own shares the shares incirculation increased again to 4,000,000 sharesas of September 30, 2010.

SCHUMAG AG 79Capital managementThe most important aims of the capital managementof Schumag AG are to secure the continued existenceof the company, to obtain a reasonable minimuminterest on the capital employed, to obtain a highrating of its credit standing and to create sufficientliquidity reserves. With consideration of all interestedparties involved (shareholders, employeesand other stakeholders) these aims are to beachieved in particular by a reduction of the costof capital, an optimization of the capital structureand the use of an effective risk management.In the past fiscal year as well as during the periodof preparation of the financial statements thecapital management continued to concentrate onthe maintenance of the required liquidity. This wasin particular accomplished by the sale of assets.In addition, we are looking for further financingoptions and discuss a large number of differentforms of financing which are to secure the continuedneed for capital.The economic equity currently corresponds to thebalance sheet equity. As of September 30, 2011the capital ratio decreased, in particular due to theresult, from 27 % to 26 %. In the previous year thedisposal of own shares resulted in a change in thecapital structure.❚ 20. PENSION PROVISIONSIn addition to government pension schemes, theemployees of Schumag AG who joined the companybefore January 1, 1994 are entitled to benefits basedon the company pension benefit plan of January 1,1994. Benefits depend on years of service. In addition,special pension commitments exist for currentand former members of the Board of ExecutiveDirectors. Company pension commitments arefinanced by pension provisions. The valuation usingthe projected unit credit method according to IAS 19was carried out under the following assumptions:Assumptions used to determine the defined benefit obligation(weighted average)30-09-2011 30-09-2010% %Interest rate 5.40 4.70Projected pension increase 1.50 1.50The projected increase of wages and salaries is notreported due to the pension regulations. Sicknesscosts of employees are not stated.

80Notes to Consolidated Financial StatementsDevelopment of the definedbenefit obligation2010/11 2009/10TEUR TEURDefined benefit obligation as of Oct. 1 20,134 19,005Current service cost 64 52Past service cost 204 0Interest expense 859 1,016Pension benefits paid -1,404 -1,394Actuarial gains/losses -1,461 1,455Defined benefit obligation as of Sept. 30 18,396 20,134Since the introduction of the offsetting of actuarialgains or losses against retained earnings accordingto IAS 19.93A actuarial gains amounting to a totalof TEUR 1,124 (previous year losses of TEUR 336)were recorded under other results, not takingdeferred taxes into account.The issue of a comfort letter in favour of theemployees transferred to SMS Schumag withinthe disposal of the mechanical engineering divisionwith regard to the transferred pension claimsresults in contingent liabilities for Schumag AG.We regard the probability of implementation ofthe comfort letter as low due to the current creditstanding of the purchaser of the mechanical engineeringdivision. We are currently unable to identifyany signs that would call for a different assessment.The future pension entitlements partly comparewith assets from insurance policies which – inso far as these are classed as qualified insurancepolicies according to IAS 19 – are shown aspension assets (plan assets).Development of plan assets/of the non-financed pension obligation2010/11 2009/10 2008/09 2007/08 2006/07TEURTEURTEURTEURTEURFair value of plan assets on Oct. 1 686 446 505 69 54Expected return on plan assets 48 30 22 -10 -8Employer's contributions 62 23 133 690 23Effects from asset ceiling -118 187 -214 -244 0Fair value of planassets on Sept. 30 678 686 446 505 69Presented value of future pensionentitlements as of Sept. 30 18,396 20,134 19,005 19,068 20,142Pension provisions 17,718 19,448 18,559 18,563 20,073

SCHUMAG AG 81Financing of plan assets exists only for specialcovenants. In the next fiscal year the employer'scontributions to plan assets for existing contractsare expected to amount to TEUR 69.Payments expected to be made for fiscal year2011/12 resulting from pension obligations as ofSeptember 30, 2011 amount to TEUR 1,414.Expected earnings from plan assets amountto TEUR 88.Composition of expenses forpension benefits2010/11 2009/10TEURTEURCurrent service cost 64 52Expenses arising from commitments from past service 204 0Expenses for defined benefit plans chargedto income from operations 268 52Interest expense 859 1,016Expected earnings from plan assets -48 -30Expenses for defined benefit plans chargedto financial result 811 986Expenses for pension benefits 1,079 1,038

82Notes to Consolidated Financial Statements❚ 21. OTHER PROVISIONSProvisions for Provisions for legal Provisions for Other Totalorders commitments taxesTEURTEURTEURTEURTEURBalance as of 01-10-2010 666 50 78 184 978Additions 976 0 0 323 1,299Utilization 666 39 0 129 834Reversals 0 0 78 15 93Balance as of 30-09-2011 976 11 0 363 1,350thereof short-term 976 11 0 363 1,350thereof long-term 0 0 0 0 0Provisions for orders comprise contingent lossesand warranties. Valuation is effected on the basis ofempirical values.Provisions for legal commitments include theexpected costs for the proceedings at the conciliationboard versus Schumag AG and others whichwere terminated due to a decision of the CologneRegional Court of September 1, 2008 which hasin the meantime become final and absolute, anddue to the fact that the immediate complaint ofa petitioner was rejected by a decision of theDüsseldorf Regional Appeal Court of September 29,2010.Provisions for taxes referred to potential liabilitiesarising from former fiscal unities. These werereversed in fiscal year 2010/11 because of statutorylimitation.Other provisions include in particular provisions forannual financial statement cost.

SCHUMAG AG 83❚ 22. LIABILITIESFinancial liabilities30-09-2011 30-09-2010thereofthereofshort-termshort-termTEURTEUR TEUR TEURLiabilities to banks 950 200 0 0Liabilities from financing leases 2,875 633 0 0Other loans 247 247 1,000 1,0004,072 1,080 1,000 1,000Liabilities to banks include a fixed interestbearing amortizing loan in a nominal amount ofTEUR 1,000 at an interest rate of 10 % p.a. Aland charge amounting to TEUR 3,000 as well asinventories worth TEUR 11,328 were provided assecurity within the scope of a security poolingagreement.Liabilities from financing leases30-09-2011Less than 1 year 1 to 5 years More than 5 years TotalTEURTEUR TEURTEURMininum leasing rate 979 2,690 0 3,669Interest share 346 448 0 794Leasing liability 633 2,242 0 2,875Liabilities from financing leases result fromthe sale-and-lease-back transaction carried out inDecember 2010 with regard to sold property, plantand equipment of the precision engineering division(see Note 13). Schumag is no longer the legal ownerof this property, plant and equipment. The liabilitiesfrom financing leases are secured by a land chargeamounting to TEUR 1,000.GmbH. The loan was repaid on January 20, 2012.The interest rate amounted to 6 % p.a. As ofSeptember 30, 2010 a loan existed which had beengranted in anticipation of the sale-and-lease-backtransaction and which was repaid on December 20,2010. The interest rate amounted to 8 % p.a. A landcharge amounting to TEUR 1,500 had been providedas security.Other loans as of September 30, 2011 include aloan granted by the joint venture partner Max Walk& Willy Lehmann Kraftfahrzeuge-Landmaschinen

84 Notes to Consolidated Financial StatementsMaturities of financial liabilities30-09-2011 30-09-2010TEUR TEURLess than 1 year 1,080 1,0001 to 5 years 2,992 0More than 5 years 0 04,072 1,000All other liabilities are without interest.Other liabilities are composed as follows:As in the previous year, all trade accountspayable fall due within a period of up to one year.30-09-2011 30-09-2010thereofthereofshort-termshort-termTEURTEUR TEUR TEURAdvance payments received 20 20 231 231Tax liabilities 277 277 291 291Liabilities to personnel 4,224 3,009 6,598 4,390Liabilities within the scope of social security 595 595 137 74Accruals/Deferrals 1,083 500 1,583 500Other 1,736 1,293 1,799 1,4747,935 5,694 10,639 6,960In Note 10 reference is made to tax liabilities.Liabilities to personnel mainly include personnelcosts for commitments under the pre-retirementpart-time scheme, residual obligations arising fromthe social compensation plan as well as yearend,anniversary and holiday bonuses.The liabilities arising from the pre-retirement parttimecompensation scheme are secured by a bankguarantee in the amount of the statutory obligation.As of September 30, 2011 guarantee credit linespromised with binding effect were available toSchumag AG in an amount of TEUR 1,500(previous year TEUR 1,523). The utilization of thiscredit line amounted to TEUR 1,439 (previous yearTEUR 1,462). To secure the granted guaranteecredit lines pledged bank balances amounting toTEUR 225 (previous year TEUR 248) serve assecurity.Deferred income only includes future rentalincome.Other liabilities include in particular liabilitiesunder leasing contracts (TEUR 804) and pensioncommitments (TEUR 353).

SCHUMAG AG 85Maturities of other liabilities30-09-2011Less than 1 year 1 to 5 years More than 5 years TotalTEURTEUR TEURTEURAdvance payments received 20 0 0 20Tax liabilities 277 0 0 277Liabilities to personnel 3,009 1,215 0 4,224Liabilities within the scopeof social security 595 0 0 595Accruals/Deferrals 500 583 0 1,083Other 1,293 443 0 1,7365,694 2,241 0 7,93530-09-2010Less than 1 year 1 to 5 years More than 5 years TotalTEURTEUR TEURTEURAdvance payments received 231 0 0 231Tax liabilities 291 0 0 291Liabilities to personnel 4,390 2,088 120 6,598Liabilities within the scopeof social security 74 63 0 137Accruals/Deferrals 500 1,083 0 1,583Other 1,474 325 0 1,7996,960 3,559 120 10,639The aims and methods of financial riskmanagement are described in Note 24.

86 Notes to Consolidated Financial Statements❚ 23. OTHER FINANCIAL COMMITMENTS30-09-2011 30-09-2010TEUR TEURCommitments from long-term rental and leasing contracts 1,288 2,235Commitments relating to maintenance and service 883 515Commitments relating to gas supplies 230 404Commitments relating to power supplies 76 150Commitments arising from orders already placed for investments 38 1,0772,515 4,381The other financial commitments are statedat nominal values.The commitments from long-term rental andleasing contracts have the following maturities:30-09-2011 30-09-2010TEURTEURLess than 1 year 740 1,2461 to 5 years 548 989More than 5 years 0 01,288 2,235Commitments arising from operating leasingagreements are described in Note 25.

SCHUMAG AG 87❚ 24. FINANCIAL INSTRUMENTSBook values by categoryBook value Loans and Financial liabilities30-09-2011 receivables recognised atfair valueTEURTEUR TEURTrade accounts receivable 6,802 6,802 –Other financial receivables 3,840 3,840 –Liquid funds 1,147 1,147 –Financial assets 11,789 11,789 –Financial liabilities 1,197 – 1,197Trade accounts payable 5,567 – 5,567Other financial liabilities 6,834 – 6,834Financial liabilities 13,598 – 13,598Book value Loans and Financial liabilities30-09-2010 receivables recognised atfair valueTEURTEURTrade accounts receivable 6,442 6,442 –Other financial receivables 3,248 3,248 –Liquid funds 1,569 1,569 –Financial assets 11,259 11,259 –Trade accounts payable 3,083 – 3,083Other financial liabilities 11,117 – 11,117Financial liabilities 14,200 – 14,200TEURThe fair value of the financial instrumentscorresponds to the book value.Net gains and losses arising from financial instruments2010/11 2009/10TEURTEURLoans and receivables -732 335Financial liabilities recognised at fair value 464 -58-268 277

88 Notes to Consolidated Financial StatementsThe net result from the category of "Loans andreceivables" essentially includes valuationallowances for receivables from companies inwhich the company has a participating interestand other assets as well as exchange gainsand losses arising from receivables in foreigncurrencies.The net result of the category of "Financialliabilities valued at amortized cost" in particularincludes income from the release of liabilities aswell as exchange gains and losses arising fromaccounts payable in foreign currencies.Derivative financial instrumentsThe derivative financial instruments used withinthe Group are covering transactions used inindividual cases to control the risks arising fromcurrency fluctuations of individual receivables.No derivative financial instruments were shownin the balance sheet as of the current and theprevious year's balance sheet date.Foreign currency risk: Changes in foreignexchange rates can lead to a decline in the valueof financial instruments. Foreign currency risksare especially prevalent in accounts payable andreceivable that are not denominated in the localcurrency of the Schumag companies, or in futureforeign currency transactions. To hedge exchangerate risks foreign exchange forward contracts areused in individual cases. Commodities futures andfinancial derivatives are not used.Default risk: This risk exists if the contractingparties do not fulfil their contractual obligations.The book value of all financial assets representsthe maximum default risk of Schumag. Due to theglobal activities and the customer structure ofSchumag as well as the use of real factoring, thereis no significant concentration of default risk.Liquidity risks: The solvency of the SchumagGroup as well as its liquidity supply are monitoredby a continuously adjusted liquidity planningscheme.Financial risk managementThe essential financial liabilities used by the Group –except for derivative financial instruments – includefinancial liabilities, trade accounts payable andother liabilities. The main purpose of these financialliabilities is the financing of the business activities ofthe Group. The Group disposes of trade accountsreceivable and other assets as well as meansof payment directly resulting from its businessactivity.The Group is exposed to currency, default andliquidity risks. It is up to the Group management tocontrol these risks. Within the scope of corporateplanning the management is permanently informedabout potential and actual financial risks.

SCHUMAG AG 89❚ 25. LEASINGFinancing lease – Schumag as a lesseeProperty, plant and equipment include 13machines (previous year 1) which constituteeconomic ownership within the scope of financingleasing. The net book value amounts to TEUR 871(previous years 407), acquisition cost amounts toTEUR 1,259 (previous year TEUR 580).Liabilities from financing leases30-09-2011Less than 1 year 1 to 5 years More than 5 years TotalTEURTEUR TEURTEURMinimum leasing instalment 519 330 0 849Interest portion 33 12 0 45Leasing liability 486 318 0 80430-09-2010Less than 1 year 1 to 5 years More than 5 years TotalTEURTEUR TEURTEURMinimum leasing instalment 150 340 0 490Interest portion 31 31 0 62Leasing liability 119 309 0 428Financing lease –Schumag as a lessorSchumag does not appear as a lessor withinthe scope of financing leases.Operating lease – Schumag as a lesseeOperating leases in which Schumag is the lesseelargely include the renting of production machineryfor the precision engineering division. The contractterm is usually 48 to 54 months. Extension optionsexist for most of the leasing agreements, conditionalleasing payments are not planned.

90 Notes to Consolidated Financial StatementsThe obligations resulting from non-cancellableoperating leases are due and payable as follows:30-09-2011Less than 1 year 1 to 5 years More than 5 years TotalTEURTEUR TEURTEURNominal value of minimum leasing payments 707 543 0 1,25030-09-2010Less than 1 year 1 to 5 years More than 5 years TotalTEURTEUR TEURTEURNominal value of minimum leasing payments 1,211 989 0 2,200In the income from operations of fiscal year2010/11 minimum leasing payments amountingto TEUR 1,419 (previous year TEUR 1,601) wererecorded as expense.Operating lease –Schumag as a lessorWithin the scope of operating leases Schumagessentially lets the real property held as a financialinvestment. Schumag AG received an advance rentpayment for this from SMS Schumag amounting toTEUR 2,500 which is deferred on a straight-linebasis for a period of 5 years as from December 1,2008. The fixed rental period amounts to a totalof 10 years.The future minimum leasing payments arisingfrom non-cancellable operating leases fall due asfollows:30-09-2011Less than 1 year 1 to 5 years More than 5 years TotalTEURTEUR TEURTEURNominal value of minimum leasing payments 20 1,701 1,301 3,02230-09-2010Less than 1 year 1 to 5 years More than 5 years TotalTEURTEUR TEURTEURNominal value of minimum leasing payments 120 1,121 1,901 3,142

SCHUMAG AG 91

92 Notes to Consolidated Financial Statements❚ 26. RELATED PARTIESRelated parties of Schumag AG (not includingorgan members of the indicated companies as wellas further companies associated with these) for theperiods under review are stated below:ShareholdersConstruct Holding GmbH i.I.(previously Schumag Holding GmbH i.I.)Babcock Capital A.E.Senta Ltd.Andreas KazinakisEnprovalve P. Koschel Unternehmensberatung Ltd.(Birmingham/GB)Denise RibaroffConcordia Advisors (Bermuda) Ltd.Concordia Advisors (UK) II LimitedConcordia Advisors LLPBalanced Strategies Fund LimitedConcordia MAC 29 Ltd.Concordia Partners, LPConcordia Institutional Multi-Strategy Ltd.Concordia Offshore Management Ltd.Concordia Global Equity Relative Value Fund, LPConyers Dill & Pearman LimitedMaster Multi-Product Holdings II LimitedCodan Trust Company LimitedEuro-IB Ltd.Alexander von Ungern-SternbergNorbert ThelenMembers of different organsSupervisory Board Schumag AGBoard of Executive Directors Schumag AGOthersAdcon GmbHEffizienza GmbHEnprovalve P. Koschel Unternehmensberatung Ltd. (Düsseldorf)Gerhardt ConsultPandomus AGSteffen WalpertVictum Beteiligungs AGAs far as the shareholders are concerned referenceis made to the information on voting rights heldwhich is provided in Note 29.The members of the different organs are listed inNote 27.In fiscal year 2009/10 Victum Beteiligungs AG,Cologne, held 100 % of the shares in AdconGmbH, Cologne. Mr. Steffen Walpert wasManaging Director of Adcon GmbH until June2010. Shares in Victum Beteiligungs AG are heldby the former Supervisory Board Members PeterKoschel (via Enprovalve P. Koschel UnternehmensberatungLtd.) and Heinz Peter Heinen as well asthe former member of the Board of ExecutiveDirectors, Nicolaus Heinen.

SCHUMAG AG 93The following transactions were effected withrelated companies and persons:Business relations 2010/11Shareholders Members of the Othersdifferent organsTEURTEURTEURExchange of goods and services 0 0 30Remuneration of members of different organs 0 647 0Accounts receivable and outstanding advance payments 0 166 0Business relations 2009/10Shareholders Members of the Othersdifferent organsTEURTEURTEURExchange of goods and services 8 0 1,344Remuneration of members of different organs 0 589 0Accounts receivable and outstanding advance payments 0 193 0Pricing in the exchange of goods and services tookplace in line with market conditions. Informationon the compensation of the members of the differentorgans is provided in the compensation reportwithin the management report.In September 2010 the member of the Board ofExecutive Directors, Steffen Walpert, was granted aloan of TEUR 160 in compliance with § 89 of theGerman Stock Corporation Act. The term of theloan was until July 1, 2012 and it became due andpayable for repayment in one amount on this date.Unscheduled repayments were allowed. The interestrate amounted to 6 % p.a., interest is payablemonthly as of the last day of the month. Claimsarising from the contract of service of Mr. Walpertserved as security. In the year under review anunscheduled repayment of TEUR 17 was madeand as of September 30, 2011 the remaining loanamounted to TEUR 143. Furthermore Mr. Walpertwas granted a short-term payment on accountamounting to TEUR 20 as well as travel expenseadvances amounting to a total of TEUR 3. Sincethe loan had not been repaid at the time ofpreparation of the financial statements a 100 %valuation allowance was made for it.

94 Notes to Consolidated Financial Statements❚ 27. COMPENSATION OF THE BOARD OF EXECUTIVE DIRECTORSAND THE SUPERVISORY BOARD2010/11 2009/10EUR EURCompensation of the Board of Executive Directors 535,890.00 459,491.02thereof fixed compensation 467,000.00 409,491.02thereof variable compensation 68,890.00 50,000.00Remuneration of the Supervisory Board 111,597.00 129,225.80thereof fixed compensation 48,575.60 53,626.03thereof variable compensation 63,021.40 75,599.77According to the 2 nd sentence of § 314 (2) inconjunction with § 286 (5) of the German CommercialCode the individualized details on all emolumentsof the members of the Board of ExecutiveDirectors as required in § 314 (1), No. 6, letter a),sentences 5 to 8 of the German Commercial Codein the version of the Act on the Appropriatenessof Executive Board Compensation were not disclosedin the previous year as decided by the generalmeeting of March 9, 2006. The emoluments of theBoard of Executive Directors for fiscal year 2010/11only included the compensation for Mr. Walpert.As of September 30, 2011 pension accruals formembers of the Board of Executive Directorsaccording to IFRS amounted to EUR 203,891.00(previous year EUR 0.00).Payments to former members of the Board ofExecutive Directors or their survivors amounted toEUR 929,973.02 (previous year EUR 628,993.76).For pension commitments to former membersof the Board of Executive Directors and theirsurvivors an amount of EUR 7,881,102.00 (previousyear EUR 8,935,850.00) has been set aside.The members of the Supervisory Board and of theBoard of Executive Directors of Schumag AG andtheir memberships in other control panels arelisted below:Supervisory BoardRalf Marbaise, Eynatten/BelgiumDeputy ChairmanMachine fitterChairman of the Works Council ofSchumag Aktiengesellschaft, Aachenno further membershipsEkkehard Brzoska, Düren (from December 21, 2011)Chief Executive Officer of Z&J Technologies GmbH,DürenFurther membershipsZJ High Temerature Equipment (Shanghai) Co. Ltd.,Shanghai/China (member of the Supervisory Board)Zimmermann & Jansen SA (Pty) Ltd., Vanderbijlpark/SouthAfrica (member of the SupervisoryBoard)Hans-Georg Kierdorf, Adliswil/Switzerland(from October 31, 2011)Management ConsultantFurther membershipsKierdorf Immobilien- und Vermögensverwaltungs-GmbH, Köln (member of the Advisory Board)Jürgen Milion, AlsdorfIndustrial Master Craftsmanno further membershipsFrank Jokisch, Meerbusch (until August 23, 2012)Managing Director of EFFIZIENZA GmbH, Düsseldorfno further memberships

SCHUMAG AG 95Peter Koschel, Berlin (until December 21, 2011)Chairman (until December 21, 2011)Graduate EngineerFurther membershipsChemar Rurociagi ˛ Sp. z.o.o., Kielce/Poland (memberof the Supervisory Board, until September 2010)Victum Beteiligungs AG, Cologne (member of theSupervisory Board, until April 2011)Peter Münch, Cologne (until May 13, 2011)Member of the Board of Pandomus AG, Cologneno further membershipsDr. Johannes Ohlinger, Zweibrücken/Pfalz(from December 21, 2011 until August 31, 2012)Chairman (from January 3, 2012 until August 31,2012)Graduate EconomistFurther membershipsHerz Jesu Missionare, Homburg/Saar (Member ofthe Board of Trustees of the Foundation)Alexander von Ungern-Sternberg,London/Great Britain (until May 31, 2011)Director of Euro-IB Limited, London/Great BritainFurther membershipsWorldwide Investors Portfolio SICAV,Luxembourg/Luxembourg (member of theadministrative board)Board of Executive DirectorsDr. Johannes Ohlinger, Zweibrücken/Pfalz(from September 1, 2012)Graduate EconomistFurther membershipsHerz Jesu Missionare, Homburg/Saar (Member ofthe Board of Trustees of the Foundation)Steffen Walpert, Cologne (until August 31, 2012)no membershipsMatthias Osinski, München(ab 31. Oktober 2011 bis 21. Dezember 2011)Tax consultantFurther membershipsBayern Treuhand Consulting AG, München(AR-Mitglied)Euracontact Consulting AG, München (AR-Vorsitzender)❚ 28. SERVICES OF THE AUDITORThe following fees for the services rendered byBDO AG, Düsseldorf, were recorded as expense bySchumag AG:2010/11 2009/10TEUR TEURAnual audit 227 308Tax consultancy services 13 14Other services 11 24251 346

96 Notes to Consolidated Financial Statements❚ 29. DETAILS OF EXISTINGSHAREHOLDINGSSchumag Beteiligungsgesellschaft mbH, Berlin,Germany, informed our company on April 11, 2008in accordance with § 21 (1) of the German SecuritiesTrading Act that its share in the voting rights inSchumag AG, Nerscheider Weg 170, 52076 Aachen,exceeded the threshold of 75 % of the votingrights on April 8, 2008 and that they amount to81.15 % of the voting rights of Schumag AG onthis date (3,246,139 voting rights).Babcock Capital A.E. (in formation), Athens, Greece,informed our company on April 11, 2008 in accordancewith § 21 (1) of the German SecuritiesTrading Act that its share in the voting rights inSchumag AG, Nerscheider Weg 170, 52076 Aachen,exceeded the threshold of 75 % of the votingrights on April 8, 2008 and that they amount to81.15 % of the voting rights of Schumag AG onthis date (3,246,139 voting rights), that the aforementionedvoting rights are attributed to BabcockCapital A.E. (in formation) in accordance with § 22(1), sentence 1, no. 1 of the German SecuritiesTrading Act and that Babcock Capital A.E. (information)holds the voting rights attributed according to§ 22 (1), sentence 1, no. 1 of the German SecuritiesTrading Act via Schumag BeteiligungsgesellschaftmbH, Berlin, Germany, a company controlled by itwhose share in the voting rights in Schumag AGamounts to more than 3 %.Senta Ltd., Nikosia, Cypress informed our companyon April 11, 2008 in accordance with § 21 (1) ofthe German Securities Trading Act that its share inthe voting rights in Schumag AG, Nerscheider Weg170, 52076 Aachen, exceeded the threshold of75 % of the voting rights on April 8, 2008 and thatthey amount to 81.15 % of the voting rights ofSchumag AG on this date (3,246,139 votingrights), that the aforementioned voting rights areattributed to Senta Ltd. in accordance with § 22 (1)sentence 1, no. 1 of the German SecuritiesTrading Act and that Senta holds the voting rightsattributed according to § 22 (1), sentence 1, no. 1of the German Securities Trading Act via thefollowing companies controlled by it whose votingrights in Schumag AG each amount to more than 3 %:Babcock Capital A.E. (in formation), Athens, Greece,Schumag Beteiligungsgesellschaft mbH, Berlin,Germany.Mr. Andreas Kazinakis, Germany, informed ourcompany on April 11, 2008 in accordance with§ 21 (1) of the German Securities Trading Act thathis share in the voting rights in Schumag AG,Nerscheider Weg 170, 52076 Aachen, exceeded thethreshold of 75 % of the voting rights on April 8,2008 and that they amount to 81.15 % of thevoting rights of Schumag AG on this date(3,246,139 voting rights), that the aforementionedvoting rights are attributed to Mr. Andreas Kazinakisin accordance with § 22 (1), sentence 1, no. 1of the German Securities Trading Act and that Mr.Andreas Kazinakis holds the voting rights attributedaccording to § 22 (1), sentence 1, no. 1 of theGerman Securities Trading Act via the followingcompanies controlled by him whose voting rightsin Schumag AG each amount to more than 3 %:Senta Ltd., Nikosia, Cypress,Babcock Capital A.E. (in formation), Athens, Greece,Schumag Beteiligungsgesellschaft mbH, Berlin,Germany.Enprovalve P. Koschel Unternehmensberatung Ltd.,Birmingham, United Kingdom, informed our companyaccording to § 21 (1) of the German SecuritiesTrading Act that its share in the voting rights inSchumag AG, Nerscheider Weg 170, 52076 Aachen,on January 7, 2009 exceeded the thresholds of 3 %,5 %, 10 %, 15 %, 20 %, 25 %, 30 %, 50 % and75 % of the voting rights and that on this day itamounts to 79.2 % of the voting rights (3,168,136voting rights).Mrs. Denise Ribaroff, Bermuda, informed our companyon October 15, 2009 in accordance with § 21(1), sentence 1 of the German Securities TradingAct that her share in the voting rights in SchumagAktiengesellschaft, Nerscheider Weg 170, 52076Aachen, Germany, fell below the thresholds of10 % and 5 % on October 8, 2009 and that itamounts to 3.52 % on this date (140,810 votingrights) and that thereof 3.52 % (140,810 voting

SCHUMAG AG 97rights) are to be attributed to her according to § 22(1), sentence 1, no. 6 in conjunction with sentence2 of the German Securities Trading Act.Concordia Advisors (Bermuda) Ltd., Hamilton,Bermuda, informed our company on October 15,2009 in accordance with § 21 (1), sentence 1 ofthe German Securities Trading Act that its share inthe voting rights in Schumag Aktiengesellschaft,Nerscheider Weg 170, 52076 Aachen, Germany,fell below the thresholds of 10 % and 5 % onOctober 8, 2009 and that it amounts to 3.52 % onthis date (140,810 voting rights) and that thereof3.52 % (140,810 voting rights) are to be attributedto it according to § 22 (1), sentence 1, no. 6 inconjunction with sentence 2 of the GermanSecurities Trading Act.Concordia Advisors (UK) II Limited, London, UnitedKingdom, informed our company on October 15,2009 in accordance with § 21 (1), sentence 1 ofthe German Securities Trading Act that its share inthe voting rights in Schumag Aktiengesellschaft,Nerscheider Weg 170, D-52076 Aachen, Germany,fell below the thresholds of 10 % and 5 % onOctober 8, 2009 and that it amounts to 3.52 % onthis date (140,810 voting rights) and that thereof3.52 % (140,810 voting rights) are to be attributedto it according to § 22 (1), sentence 1, no. 6 in conjunctionwith sentence 2 of the German SecuritiesTrading Act.Concordia Advisors LLP, London, United Kingdom,informed our company on October 19, 2009 inaccordance with § 21 (1), sentence 1 of the GermanSecurities Trading Act that its share in thevoting rights in Schumag Aktiengesellschaft, NerscheiderWeg 170, D-52076 Aachen, Germany, fellbelow the thresholds of 10 % and 5 % on October8, 2009 and that it amounts to 3.52 % on this date(140,810 voting rights) and that thereof 3.52 %(140,810 voting rights) are to be attributed toit according to § 22 (1), sentence 1, no. 6 of theGerman Securities Trading Act.Balanced Strategies Fund Limited, Hamilton,Bermuda, informed our company in accordancewith § 21 (1), sentence 1 of the German SecuritiesTrading Act that its share in the voting rights inSchumag Aktiengesellschaft, Nerscheider Weg 170,52076 Aachen, Germany, exceeded the thresholdsof 3 %, 5 % and 10 % on August 10, 2010 andthat it amounts to 13.81 % (552,339 voting rights)on this date and that thereof 11.52 % (460,609voting rights) are to be attributed to it accordingto § 22 (2) of the German Securities Trading Actand that voting rights are attributed to it from thefollowing shareholder whose voting right share inSchumag Aktiengesellschaft amounts to 3 % ormore: Mr. Norbert Thelen, Germany.Concordia MAC 29 Ltd., George Town, GrandCayman, Cayman Islands, informed our companyin accordance with § 21 (1), sentence 1 of theGerman Securities Trading Act that its share inthe voting rights in Schumag Aktiengesellschaft,Nerscheider Weg 170, 52076 Aachen, Germany,fell below the thresholds of 3 %, 5 % and 10 % onAugust 10, 2010 and that it amounts to 13.81 %(552,339 voting rights) on this date and that thereof13.62 % (544,699 voting rights) are to be attributedto it according to § 22 (2) of the German SecuritiesTrading Act and that voting rights are attributedto it from the following shareholder whose votingright share in Schumag Aktiengesellschaft amountsto 3 % or more: Mr. Norbert Thelen, Germany.Concordia Partners, LP, Hamilton, Bermuda, informedour company in accordance with § 21 (1),sentence 1 of the German Securities Trading Actthat its share in the voting rights in SchumagAktiengesellschaft, Nerscheider Weg 170, 52076Aachen, Germany, exceeded the thresholds of 3 %,5 % and 10 % on August 10, 2010 and that itamounts to 13.81 % (552,339 voting rights) onthis date, that thereof 13.59 % (543,689 votingrights) are to be attributed to it according to § 22(2) of the German Securities Trading Act and thatvoting rights are attributed to it from the followingshareholder whose voting right share in SchumagAktiengesellschaft amounts to 3 % or more:Mr. Norbert Thelen, Germany.

98 Notes to Consolidated Financial StatementsConcordia Institutional Multi-Strategy Ltd.,Hamilton, Bermuda, informed our company inaccordance with § 21 (1), sentence 1 of theGerman Securities Trading Act that its share inthe voting rights in Schumag Aktiengesellschaft,Nerscheider Weg 170, 52076 Aachen, Germany,exceeded the thresholds of 3 %, 5 % and 10 % onAugust 10, 2010 and that it amounts to 13.81 %(552,339 voting rights) on this date and thatthereof 13.54 % (541,479 voting rights) are tobe attributed to it according to § 22 (2) of theGerman Securities Trading Act and that votingrights are attributed to it from the followingshareholder whose voting right share in SchumagAktiengesellschaft amounts to 3 % or more:Mr. Norbert Thelen, Germany.Concordia Global Equity Relative Value Fund, LP,Hamilton, Bermuda, informed our company inaccordance with § 21 (1), sentence 1 of the GermanSecurities Trading Act that its share in the votingrights in Schumag Aktiengesellschaft, NerscheiderWeg 170, 52076 Aachen, Germany, exceeded thethresholds of 3 %, 5 % and 10 % on August 10,2010 and that it amounts to 13.81 % (552,339voting rights) on this date, that thereof 13.26 %(530,409 voting rights) are to be attributed to itaccording to § 22 (2) of the German SecuritiesTrading Act and that voting rights are attributedto it from the following shareholder whose votingright share in Schumag Aktiengesellschaft amountsto 3 % or more: Mr. Norbert Thelen, Germany.Conyers Dill & Pearman Limited, Hamilton, Bermuda,informed our company in accordance with § 21 (1),sentence 1 of the German Securities Trading Actthat its share in the voting rights in SchumagAktiengesellschaft, Nerscheider Weg 170, 52076Aachen, Germany, exceeded the thresholds of 3 %,5 % and 10 % on August 10, 2010 and that itamounts to 13.81 % (552,339 voting rights) onthis date and that thereof 2.29 % (91,730 votingrights) are to be attributed to it according to § 22(1), sentence 1, no. 1 of the German SecuritiesTrading Act and that thereof 11.52 % (460,609voting rights) are to be attributed to it accordingto § 22 (2) of the German Securities Trading Actand that voting rights are attributed to it from thefollowing shareholder whose voting right share inSchumag Aktiengesellschaft amounts to 3 % ormore: Mr. Norbert Thelen, Germany.Master Multi-Product Holdings II Limited, Hamilton,Bermuda, informed our company in accordancewith § 21 (1), sentence 1 of the German SecuritiesTrading Act that its share in the voting rights inSchumag Aktiengesellschaft, Nerscheider Weg 170,52076 Aachen, Germany, exceeded the thresholdsof 3 %, 5 % and 10 % on August 10, 2010 andthat it amounts to 13.81 % (552,339 voting rights)on this date and that thereof 2.29 % (91,730voting rights) are to be attributed to it according to§ 22 (1), sentence 1, no. 1 of the German SecuritiesTrading Act and that thereof 11.52 % (460,609voting rights) are to be attributed to it accordingto § 22 (2) of the German Securities Trading Actand that voting rights are attributed to it from thefollowing shareholder whose voting right share inSchumag Aktiengesellschaft amounts to 3 % ormore: Mr. Norbert Thelen, Germany.Codan Trust Company Limited, Hamilton, Bermuda,informed our company in accordance with § 21 (1),sentence 1 of the German Securities Trading Actthat its share in the voting rights in SchumagAktiengesellschaft, Nerscheider Weg 170, 52076Aachen, Germany, exceeded the thresholds of 3 %,5 % and 10 % on August 10, 2010 and that itamounts to 13.81 % (552,339 voting rights) onthis date, that thereof 2.29 % (91,730 votingrights) are to be attributed to it according to § 22(1), sentence 1, no. 1 of the German SecuritiesTrading Act, that thereof 11.52 % (460,609 votingrights) are to be attributed to it according to § 22(2) of the German Securities Trading Act and that inthis connection voting rights are attributed to itfrom the following shareholder whose voting rightshare in Schumag Aktiengesellschaft amounts to3 % or more: Mr. Norbert Thelen, Germany.

SCHUMAG AG 99Euro-IB Ltd., London, England, informed our companyin accordance with § 21 (1), sentence 1 of theGerman Securities Trading Act that its share inthe voting rights in Schumag Aktiengesellschaft,Nerscheider Weg 170, 52076 Aachen, Germany,exceeded the thresholds of 3 %, 5 % and 10 % onAugust 10, 2010 and that it amounts to 13.81 %(552,339 voting rights) on this date and thatthereof 11.86 % (474,336 voting rights) are to beattributed to it according to § 22 (2) of the GermanSecurities Trading Act and that in this connectionvoting rights are attributed to it from the followingshareholder whose voting right share in SchumagAktiengesellschaft amounts to 3 % or more:Mr. Norbert Thelen, Germany.Mr. Alexander von Ungern-Sternberg, England,informed our company in accordance with § 21 (1),sentence 1 of the German Securities Trading Actthat his share in the voting rights in SchumagAktiengesellschaft, Nerscheider Weg 170, 52076Aachen, Germany, exceeded the thresholds of 3 %,5 % and 10 % on August 10, 2010 and that itamounts to 13.81 % (552,339 voting rights) onthis date and that thereof 1.95 % (78,003 votingrights) are to be attributed to him according to§ 22 (1), sentence 1, no. 1 of the German SecuritiesTrading Act, that thereof 11.86 % (474,336 votingrights) are to be attributed to him according to§ 22 (2) of the German Securities Trading Act andthat voting rights are attributed to him from thefollowing shareholder whose voting right share inSchumag Aktiengesellschaft amounts to 3 % ormore: Mr. Norbert Thelen, Germany.Mr. Norbert Thelen, Germany, informed our companyin accordance with § 21 (1), sentence 1 of theGerman Securities Trading Act that his share in thevoting rights of Schumag Aktiengesellschaft,Nerscheider Weg 170, 52076 Aachen, Germanyexceeded the threshold of 10 % on August 10,2010 and amounts to 13.81 % (552,339 votingrights) on this date and that thereof 5.47 %(218,813 voting rights) are to be attributed tohim according to § 22 (2) of the German SecuritiesTrading Act.

100 Notes to Consolidated Financial StatementsOn October 2, 2012 a judgement was pronouncedby the Krefeld Regional Court according to whichthe release of 3,168.136 deposited shares toEnprovalve P. Koschel Unternehmensberatung Ltd.is to be allowed. Two of the defendants lodgedan appeal against this judgement in due time.According to information of Enprovalve P. KoschelUnternehmensberatung Ltd. the parties have in themeantime reached an extrajudicial agreement. Theshares are to be released to Enprovalve P. KoschelUnternehmensberatung Ltd.Information on voting rights after thebalance sheet dateInformation from Balanced Strategies FundLimited, Hamilton, Bermuda1) Balanced Strategies Fund Limited, Hamilton,Bermuda, informed our company in accordancewith § 21 (1), sentence 1 of the German SecuritiesTrading Act that its share in the voting rights ofSchumag Aktiengesellschaft, Nerscheider Weg 170,52076 Aachen, Germany exceeded the threshold of3 % on July 16, 2010 and that it amounts to 3.56 %on this date (142,545 voting rights).2) Correction of the publication of informationon voting rights of August 17, 2010Balanced Strategies Fund Limited, Hamilton,Bermuda, informed our company in accordancewith § 21 (1), sentence 1 of the German SecuritiesTrading Act that its shares in the voting rights ofSchumag Aktiengesellschaft, Nerscheider Weg 170,52076 Aachen, Germany, exceeded the thresholdsof 5 %, 10 % and 15 % on August 10, 2010 andthat it amounts to 15.76 % on this date (630,342voting rights), that thereof 12.20 % (487,797voting rights) are to be attributed to it according to§ 22 (2) of the German Secutities Trading Act andthat in this connection voting rights are attributedto it from the following shareholder whose votingright share in Schumag Aktiengesellschaft amountsto 3 % or more: Mr. Norbert Thelen, Germany.3) Balanced Strategies Fund Limited, Hamilton,Bermuda, informed our company in accordancewith § 21 (1), sentence 1 of the German SecuritiesTrading Act that its share in the voting rights ofSchumag Aktiengesellschaft, Nerscheider Weg 170,52076 Aachen, Germany, fell below the thresholdsof 5 %, 10 % and 15 % on October 1, 2011 andthat it amounts to 3.56 % (142,545 voting rights)on this date.Information from Concordia MAC 29 Ltd.,George Town, Grand Cayman, CaymanIslands1) Correction of the publication of informationon voting rights of August 17, 2010Concordia MAC 29 Ltd., George Town, GrandCayman, Cayman Islands, informed our company inaccordance with § 21 (1), sentence 1 of the GermanSecurities Trading Act that its share in the votingrights of Schumag Aktiengesellschaft, NerscheiderWeg 170, 52076 Aachen, Germany, exceeded thethresholds of 3 %, 5 %, 10 % and 15 % on August10, 2010 and that it amounts to 15.76 % on thisdate (630,342 voting rights), that thereof 15.46 %(618,470 voting rights) are to be attributed to itaccording to § 22 (2) of the German SecuritiesTrading Act and that in this connection votingrights are attributed to it from the followingshareholders whose voting right share in SchumagAktiengesellschaft amounts to 3 % or more:Mr. Norbert Thelen and Balanced Strategies FundLimited2) Concordia MAC 29 Ltd., George Town, GrandCayman, Cayman Islands, informed our company inaccordance with § 21 (1), sentence 1 of the GermanSecurities Trading Act that its share in thevoting rights of Schumag Aktiengesellschaft,Nerscheider Weg 170, 52076 Aachen, Germany, fellbelow the thresholds of 3 %, 5 %, 10 % and 15 %on October 1, 2011 and that it amounts to 0.30 %(11,872 voting rights) on this date.Information from Concordia Partners, LP,Hamilton, Bermuda1) Correction of the publication of informationon voting rights of August 17, 2010Concordia Partners, LP, Hamilton, Bermuda, informedour company in accordance with § 21 (1),sentence 1 of the German Securities Trading Actthat its share in the voting rights of SchumagAktiengesellschaft, Nerscheider Weg 170, 52076

SCHUMAG AG 101Aachen, Germany, exceeded the thresholds of 3 %,5 %, 10 % and 15 % on August 10, 2010 and thatit amounts to 15.76 % on this date (630,342voting rights), that thereof 15.42 % (616,900voting rights) are to be attributed to it according to§ 22 (2) of the German Securities Trading Act andthat in this connection voting rights are attributedto it from the following shareholders whose votingright share in Schumag Aktiengesellschaft amountsto 3 % or more: Mr. Norbert Thelen, Germany, andBalanced Strategies Fund Limited2) Concordia Partners, LP, Hamilton, Bermuda,informed our company in accordance with § 21 (1),sentence 1 of the German Securities Trading Actthat its share in the voting rights of SchumagAktiengesellschaft, Nerscheider Weg 170, 52076Aachen, Germany fell below the thresholds of 3 %,5 %, 10 % and 15 % on October 1, 2011 and thatit amounts to 0.34 % (13,442 voting rights) on thisdate.Information from Concordia InstitutionalMulti-Strategy Ltd., Hamilton, Bermuda1) Correction of the publication of informationon voting rights of August 17, 2010Concordia Institutional Multi-Strategy Ltd.,Hamilton, Bermuda, informed our company inaccordance with § 21 (1), sentence 1 of theGerman Securities Trading Act that its share inthe voting rights of Schumag Aktiengesellschaft,Nerscheider Weg 170, 52076 Aachen, Germany,exceeded the thresholds of 3 %, 5 %, 10 % and15 % on August 10, 2010 and that it amounts to15.76 % on this date (630,342 voting rights), thatthereof 15.34 % (613,466 voting rights) are to beattributed to it according to § 22 (2) of the GermanSecurities Trading Act and that in this connectionvoting rights are attributed to it from the followingshareholders whose voting right share in SchumagAktiengesellschaft amounts to 3 % or more:Mr. Norbert Thelen, Germany, and Balanced StrategiesFund Limited2) Concordia Institutional Multi-Strategy Ltd.,Hamilton, Bermuda, informed our company inaccordance with § 21 (1), sentence 1 of theGerman Securities Trading Act that its share in thevoting rights of Schumag Aktiengesellschaft, NerscheiderWeg 170, 52076 Aachen, Germany, fellbelow the thresholds of 3 %, 5 %, 10 % and 15 %on October 1, 2011 and that it amounts to 0.42 %(16,876 voting rights) on this date.Information from Concordia Global EquityRelative Value Fund, LP, Hamilton, Bermuda1) Correction of the publication of informationon voting rights of August 17, 2010Concordia Global Equity Relative Value Fund, LP,Hamilton, Bermuda, informed our company inaccordance with § 21 (1), sentence 1 of the GermanSecurities Trading Act that its share in the votingrights of Schumag Aktiengesellschaft, NerscheiderWeg 170, 52076 Aachen, Germany, exceeded thethresholds of 3 %, 5 %, 10 % and 15 % on August10, 2010 and that it amounts to 15.76 % on thisdate (630,342 voting rights), that thereof 14.91 %(596,264 voting rights) are to be attributed to itaccording to § 22 (2) of the German SecuritiesTrading Act and that in this connection votingrights are attributed to it from the followingshareholders whose voting right share inSchumag Aktiengesellschaft amounts to 3 % ormore: Mr. Norbert Thelen, Germany, and BalancedStrategies Fund Limited2) Concordia Global Equity Relative Value Fund, LP,Hamilton, Bermuda, informed our company inaccordance with § 21 (1), sentence 1 of the GermanSecurities Trading Act that its share in the votingrights of Schumag Aktiengesellschaft, NerscheiderWeg 170, 52076 Aachen, Germany, fell below thethresholds of 3 %, 5 %, 10 % and 15 % onOctober 1, 2011 and that it amounts to 0.85 %on this date (34,078 voting rights) on this date.Information from Concordia OffshoreManagement Limited, Hamilton, Bermuda1) Concordia Offshore Management Limited,Hamilton, Bermuda, informed our company inaccordance with § 21 (1), sentence 1 of the GermanSecurities Trading Act that its share in the votingrights of Schumag Aktiengesellschaft, NerscheiderWeg 170, 52076 Aachen, Germany, exceeded the

102 Notes to Consolidated Financial Statementsthresholds of 3 %, 5 %, 10 % and 15 % on August10, 2010 and that it amounts to 15.76 % on thisdate (630,342 voting rights), that thereof 0.42 %(16,876 voting rights) are to be attributed to itaccording to § 22 (1), sentence 1, no. 1 of theGerman Securities Trading Act and thereof 15.34 %(613,466 voting rights) are to be attributed to itaccording to § 22 (2) of the German SecuritiesTrading Act and that in this connection votingrights are attributed to it from the following shareholderswhose voting right share in SchumagAktiengesellschaft amounts to 3 % or more: Mr.Norbert Thelen and Balanced Strategies Fund Limited2) Concordia Offshore Management Limited,Hamilton, Bermuda, informed our company inaccordance with § 21 (1), sentence 1 of the GermanSecurities Trading Act that its share in the votingrights of Schumag Aktiengesellschaft, NerscheiderWeg 170, 52076 Aachen, Germany, fell belowthe thresholds of 3 %, 5 %, 10 % and 15 % onOctober 1, 2011 and that it amounts to 0.42 % onthis date (16,876 voting rights) on this date andthat thereof 0.42% (16,876 voting rights) are to beattributed to it according to § 22 (1), sentence 1,no. 1 of the German Securities Trading Act.Information from Concordia Advisors(Bermuda) Ltd., Hamilton, BermudaConcordia Advisors (Bermuda) Ltd., Hamilton,Bermuda, informed our company in accordancewith §21 (1), sentence 1 of the German SecuritiesTrading Act that its share in the voting rights ofSchumag Aktiengesellschaft, Nerscheider Weg 170,52076 Aachen, Germany, exceeded the thresholdof 5 % on July 16, 2010 and that it amounts to5.47 % on this date (218,813 voting rights), andthat thereof 5.47 % (218,813 voting rights) are tobe attributed to it according to §22 (1), sentence 1,no. 6 of the German Securities Trading Act and thatin this connection voting rights are attributed to itfrom the following shareholders whose votingright share in Schumag Aktiengesellschaft amountsto 3 % or more: Balanced Strategies Fund LimitedInformation from Concordia Advisors (UK)II Ltd., London, United KingdomConcordia Advisors (UK) II Ltd., London, UnitedKingdom, informed our company in accordancewith § 21 (1), sentence 1 of the German SecuritiesTrading Act that its share in the voting rights ofSchumag Aktiengesellschaft, Nerscheider Weg 170,52076 Aachen, Germany, exceeded the thresholdof 5 % on July 16, 2010 and that it amounts to5.47 % on this date (218,813 voting rights) andthat thereof 5.47 % (218,813 voting rights) are tobe attributed to it according to § 22 (1), sentence 1,no. 6 of the German Securities Trading Act and thatin this connection voting rights are attributed to itfrom the following shareholders whose votingright share in Schumag Aktiengesellschaft amountsto 3 % or more: Balanced Strategies Fund LimitedInformation from Concordia Advisors LLP,London, United KingdomConcordia Advisors LLP, London, United Kingdom,informed our company in accordance with § 21 (1)sentence 1 of the German Securities Trading Actthat its share in the voting rights of SchumagAktiengesellschaft, Nerscheider Weg 170, 52076Aachen, Germany, exceeded the threshold 5 % onJuly 16, 2010 and that it amounts to 5.47 % onthis date (218,813 voting rights) and that thereof5.47 % (218,813 voting rights) are to be attributedto it according to § 22 (1), sentence 1, no. 6 ofthe German Securities Trading Act and that in thisconnection voting rights are attributed to it fromthe following shareholder whose voting right sharein Schumag Aktiengesellschaft amounts to 3 % ormore: Balanced Strategies Fund LimitedInformation from Euro IB, London, UnitedKingdom1) Correction of the publication of informationon voting rights of August 17, 2010Euro-IB Ltd., London, United Kingdom, informedour company in accordance with § 21 (1) of theGerman Securities Trading Act that its share inthe voting rights of Schumag Aktiengesellschaft,Nerscheider Weg 170, 52076 Aachen, Germany,exceeded the thresholds of 3 %, 5 %, 10 % and15 % on August 10, 2010 and that it amounts to15.76 % on this date (630,342 voting rights) and

SCHUMAG AG 103that thereof 13.81 % (552,339 voting rights) are tobe attributed to it according to § 22 (2) of the GermanSecurities Trading Act and that in this connectionvoting rights are attributed to it from the followingshareholders whose voting right share in SchumagAktiengesellschaft amounts to 3 % or more:Mr. Norbert Thelen and Balanced Strategies FundLimited2) Euro-IB Ltd., London, United Kingdom, informedour company in accordance with § 21 (1) of theGerman Securities Trading Act that its share inthe voting rights of Schumag Aktiengesellschaft,Nerscheider Weg 170, 52076 Aachen, Germany, fellbelow the thresholds of 3 %, 5 %, 10 % and 15 %on October 1, 2011 and that it amounts to 1.95 %(78,003 voting rights) on this date.Information from Mr. Alexander vonUngern-Sternberg, United Kingdom1) Correction of the publication of informationon voting rights of August 17, 2010Mr. Alexander von Ungern-Sternberg, United Kingdom,informed our company in accordance with§ 21 (1) of the German Securities Trading Act thathis share in the voting rights of Schumag Aktiengesellschaft,Nerscheider Weg 170, 52076 Aachen,Germany, exceeded the thresholds of 3 %, 5 %, 10 %and 15 % on August 10, 2010 and that it amountsto 15.76 % (630,342 voting rights) on this date,that thereof 1.95 % (78,003 voting rights) are tobe attributed to him according to § 22 (1), sentence1, no. 1 of the German Securities Trading Act, thatthereof 13.81 % (552,339 voting rights) are to beattributed to him according to § 22 (2) of theGerman Securities Trading Act and that in this connectionvoting rights are attributed to him from thefollowing shareholders whose share in the votingrights in Schumag Aktiengesellschaft amount to3 % or more: Mr. Norbert Thelen and BalancedStrategies Fund Limited2) Mr. Alexander von Ungern-Sternberg, UnitedKingdom, informed our company in accordancewith § 21 (1), of the German Securities Trading Actthat his share in the voting rights of SchumagAktiengesellschaft, Nerscheider Weg 170, 52076Aachen, Germany, fell below the thresholds of3 %, 5 %, 10 % and 15 % on October 1, 2011 andthat it amounts to 1.95 % on this date (78,003voting rights) and that thereof 1.95 % (78,003voting rights) are to be attributed to him accordingto § 22 (1), sentence 1, no. 1 of the German SecuritiesTrading Act.Information from Master Multi-ProductHoldings II Limited, Hamilton, Bermuda1) Master Multi-Product Holdings II Limited, Hamilton,Bermuda, informed our company in accordancewith § 21 (1), sentence 1 of the German SecuritiesTrading Act that its share in the voting rights ofSchumag Aktiengesellschaft, Nerscheider Weg 170,52076 Aachen, Germany, exceeded the thresholdof 3 % on July 16, 2010 and that it amounts to3.86 % on this date (154,417 voting rights), thatthereof 3.86 % (154,417 voting rights) are to beattributed to it according to § 22 (1), sentence 1,no. 1 of the German Securities Trading Act and thatthese voting rights are held via the following controlledcompanies whose attributed share in thevoting rights in Schumag AG amounts to 3 % ormore: Balanced Strategies Fund Limited2) Correction of the publication of informationon voting rights of August 17, 2010Master Multi-Product Holdings II Limited, Hamilton,Bermuda, informed our company in accordancewith § 21 (1), sentence 1 of the German SecuritiesTrading Act that its share in the voting rights ofSchumag Aktiengesellschaft, Nerscheider Weg 170,52076 Aachen, Germany, exceeded the thresholdsof 5 %, 10 % and 15 % on August 10, 2010 andthat it amounts to 15.76 % on this date (630,342voting rights), that thereof 15.76 % (630,342voting rights) are to be attributed to it according to§ 22 (2) of the German Securities Trading Actand that in this connection the voting rights of thefollowing shareholders are attributed to it whoseshare in the voting rights in Schumag Aktiengesellschaftamounts to 3 % or more:Mr. Norbert Thelen, GermanyBalanced Strategies Fund Limited

104 Notes to Consolidated Financial Statements3.86 % (154,417 voting rights) of these votingrights are also to be attributed to it according to§ 22 (1), sentence 1, no. 1 of the German SecuritiesTrading Act which are held via the followingcontrolled company whose share in the votingrights in Schumag AG amounts to 3 % or more:Balanced Strategies Fund Limited3) Master Multi-Product Holdings II Limited, Hamilton,Bermuda, informed our company in accordancewith § 21 (1), sentence 1 of the German SecuritiesTrading Act that its share in the voting rights ofSchumag Aktiengesellschaft, Nerscheider Weg 170,52076 Aachen, Germany, fell below the thresholdsof 5 %, 10 % and 15 % on October 1, 2011 andthat it amounts to 3.86 % on this date (154,417voting rights), that thereof 3.86 % (154,417 votingrights) are to be attributed to it according to § 22(1), sentence 1, no. 1 of the German SecuritiesTrading Act and that these voting rights are heldvia the following controlled companies whoseshare in the voting rights in Schumag AG amountsto 3 % or more: Balanced Strategies Fund LimitedInformation from Codan Trust CompanyLimited, Hamilton, Bermuda1) Codan Trust Company Limited, Hamilton, Bermuda,informed our company in accordance with § 21(1), sentence 1 of the German Securities TradingAct that its share in the voting rights of SchumagAktiengesellschaft, Nerscheider Weg 170, 52076Aachen, Germany, exceeded the threshold of 3 %on July 16, 2010 and that it amounts to 3.86 % onthis date (154,417 voting rights) and that thereof3.86 % (154,417 voting rights) are to be attributedto it according to § 22 (1), sentence 1, no. 1 of theGerman Securities Trading Act and that thesevoting rights are held via the following controlledcompanies whose attributed share in the votingrights in der Schumag AG amounts to 3 % or more:Master Multi-Product Holdings II LimitedBalanced Strategies Fund Limited2) Correction of the publication of informationon voting rights of August 17, 2010Codan Trust Company Limited, Hamilton, Bermuda,informed our company in accordance with § 21 (1),sentence 1 of the German Securities Trading Actthat its share in the voting rights of SchumagAktiengesellschaft, Nerscheider Weg 170, 52076Aachen, Germany, exceeded the thresholds of 5 %,10 % and 15 % on August 10, 2010 and that itamounts to 15.76 % on this date (630,342 votingrights), that thereof 15.76 % (630,342 votingrights) are to be attributed to it according to § 22(2) of the German Securities Trading Act and thatin this connection voting rights of the followingshareholders are attributed to it whose share inthe voting rights of Schumag Aktiengesellschaftamounts to 3 % or more:Mr. Norbert Thelen, GermanyBalanced Strategies Fund Limited3.86 % (154,417 voting rights) of these votingrights are also to be attributed to it according to§ 22 (1), sentence 1, no. 1 of the German SecuritiesTrading Act which are held via the followingcontrolled companies whose share in the votingrights of Schumag AG amounts to 3 % or more:Master Multi-Product Holdings II LimitedBalanced Strategies Fund Limited3) Codan Trust Company Limited, Hamilton, Bermuda,informed our company in accordance with § 21(1), sentence 1 of the German Securities TradingAct that its share in the voting rights of SchumagAktiengesellschaft, Nerscheider Weg 170, 52076Aachen, Germany, fell below the thresholds of 5 %,10 % and 15 % on October 1, 2011 and that itamounts to 3.86 % on this date (154,417 votingrights), that thereof 3.86 % (154,417 voting rights)are to be attributed to it according to § 22 (1),sentence 1, no. 1 of the German Securities TradingAct and that these voting rights are held via thefollowing controlled companies whose share in thevoting rights of Schumag AG amounts to 3 % ormore:Master Multi-Product Holdings II LimitedBalanced Strategies Fund LimitedInformation from Conyers Dill & PearmanLimited, Hamilton, Bermuda1) Conyers Dill & Pearman Limited, Hamilton,Bermuda, informed our company in accordancewith § 21 (1), sentence 1 of the German SecuritiesTrading Act that its share in the voting rights of

SCHUMAG AG 105Schumag Aktiengesellschaft, Nerscheider Weg 170,52076 Aachen, Germany, exceeded the thresholdof 3 % on July 16, 2010 and that it amounts to3.86 % on this date (154,417 voting rights), thatthereof 3.86 % (154,417 voting rights) are to beattributed to it according to § 22 (1), sentence 1,no. 1 of the German Securities Trading Act and thatthese voting rights are held via the following controlledcompanies whose attributed share in thevoting rights of Schumag AG amounts to 3 % ormore:Codan Trust Company LimitedMaster Multi-Product Holdings II LimitedBalanced Strategies Fund Limited2) Correction of the publication of informationon voting rights of August 17, 2010Conyers Dill & Pearman Limited, Hamilton, Bermuda,informed our company in accordance with § 21 (1),sentence 1 of the German Securities Trading Actthat its share in the voting rights of SchumagAktiengesellschaft, Nerscheider Weg 170, 52076Aachen, Germany, exceeded the thresholds of 5 %,10 % and 15 % on August 10, 2010 and that itamounts to 15.76 % on this date (630,342 votingrights), that thereof 15.76 % (630,342 votingrights) are to be attributed to it according to § 22(2) of the German Securities Trading Act and thatin this connection voting rights of the followingshareholders are attributed to it whose share inthe voting rights of Schumag Aktiengesellschaftamounts to 3 % or more:Mr. Norbert Thelen, GermanyBalanced Strategies Fund Limited3.86 % (154,417 voting rights) of these votingrights are also to be attributed to it according to§ 22 (1), sentence 1, no. 1 of the German SecuritiesTrading Act which are held via the following controlledcompanies whose share in the voting rightsof Schumag AG amounts to 3 % or more:Codan Trust Company LimitedMaster Multi-Product Holdings II LimitedBalanced Strategies Fund LimitedTrading Act that its share in the voting rights ofSchumag Aktiengesellschaft, Nerscheider Weg 170,52076 Aachen, Germany, fell below the thresholdsof 5 %, 10 % and 15 % on October 1, 2011 andthat it amounts to 3.86 % on this date (154,417voting rights), that thereof 3.86 % (154,417 votingrights) are to be attributed to it according to § 22(1), sentence 1, no. 1 of the German SecuritiesTrading Act and that these voting rights are heldvia the following controlled companies whoseshare in the voting rights of Schumag AG amountsto 3 % or more:Codan Trust Company LimitedMaster Multi-Product Holdings II LimitedBalanced Strategies Fund LimitedInformation from Mr. Norbert Thelen,Germany1) Correction of the publication of informationon voting rights of August 17, 2010Mr. Norbert Thelen, Germany, informed our companyin accordance with § 21 (1), sentence 1 of theGerman Securities Trading Act that his share inthe voting rights of Schumag Aktiengesellschaft,Nerscheider Weg 170, 52076 Aachen, Germany,exceeded the thresholds of 10 % and 15 % onAugust 10, 2010 and that it amounts to 15.76 %on this date (630,342 voting rights), that thereof7.42 % (296,816 voting rights) are to be attributedto him according to § 22 (2) of the German SecuritiesTrading Act and that in this connection votingrights of the following shareholders are attributedto him whose share in the voting rights ofSchumag Aktiengesellschaft amounts to 3 % ormore: Balanced Strategies Fund Limited2) Mr. Norbert Thelen, Germany, informed our companyin accordance with § 21 (1), sentence 1 of theGerman Securities Trading Act that his share in thevoting rights of Schumag Aktiengesellschaft, NerscheiderWeg 170, 52076 Aachen, Germany, fellbelow the thresholds of 10 % and 15 % on October1, 2011 and that it amounts to 8.34 % on this date(333,526 voting rights).3) Conyers Dill & Pearman Limited, Hamilton,Bermuda, informed our company in accordancewith § 21 (1), sentence 1 of the German Securities

106Notes to Consolidated Financial Statements❚ 30. LIST OF SHAREHOLDINGSCompany and registered office Schumag AG Nominal Shareholders' Net income 1)capital Equity 1)Share in %TEURTEURSubsidiaries fully included in consolidationSchumag BR Energy GmbH, Aachen 100 TEUR 100 0 -1.840Schumag Romania S.R.L.,Timisoara, Chisoda/Rumänien 100 TRON 9.560 1.090 2) 2)340Other investments not included in consolidationAixmotec GmbH i.L., Aachen 50 TEUR50 without business operations1)acc. to the respective national law2)Balance sheet date 31-12-2011❚ 31. DECLARATION ACCORDING TO§ 161 OF THE GERMAN STOCKCORPORATION ACTIn December 2011 the Board of Executive Directorsand the Supervisory Board of Schumag AG issuedthe Declaration of Compliance concerning theGerman Corporate Governance Code according to§ 161 of the German Stock Corporation Act andmade it permanently available to the public on theInternet at www.schumag.de.❚ 32. ADDITIONAL INFORMATION ONTHE GROUP CASH-FLOW STATEMENTCash and cash equivalents correspond to the liquidfunds shown in the balance sheet.As in the previous year no non-cash investmentactivities were carried out in fiscal year 2010/11.raised by the employees of Schumag AG on thebasis of the so-called ERA adjustment fund.Further details on the Group cash flow statementare included in the section on the financial situationin the Group Management Report.Aachen, April 12, 2013Schumag AktiengesellschaftThe Board of Executive DirectorsDr. Johannes OhlingerNon-cash financing activities in fiscal year 2009/10include the surrender of own shares amounting toTEUR 2.001 for the partial fulfilment of claims

SCHUMAG AG 107RESPONSIBILITYSTATEMENTTo the best of our knowledge, and in accordancewith the applicable reporting principles, theconsolidated financial statements give a true andfair view of the assets, liabilities, financial positionand profit and loss of the Group, and the Groupmanagement report includes a fair review of thedevelopment and performance of the businessand the position of the Group, together with adescription of the principal opportunities and risksassociated with the expected development of theGroup.Aachen, April 12, 2013Schumag AktiengesellschaftThe Board of Executive DirectorsDr. Johannes Ohlinger

108 Independent Auditors' ReportINDEPENDENTAUDITORS' REPORTWe have audited the consolidated financial statementsprepared by the Schumag Aktiengesellschaft,Aachen, comprising the statement of financialposition, the statement of comprehensive income,statement of cash flows and the notes to theconsolidated financial statements, together with thegroup management report for the business year fromOctober 1, 2010 to September 30, 2011. The preparationof the consolidated financial statements and thegroup management report in accordance with IFRSsas adopted by the EU, and the additional requirementsof German commercial law pursuant to sec.315a para. 1 HGB are the responsibility of the parentcompany’s management. Our responsibility is toexpress an opinion on the consolidated financialstatements and on the group management reportbased on our audit.We conducted our audit of the consolidated financialstatements in accordance with sec. 317 HGBand German generally accepted standards for theaudit of financial statements promulgated by theInstitut der Wirtschaftsprüfer [Institute of PublicAuditors in Germany] (IDW). Those standardsrequire that we plan and perform the audit suchthat misstatements materially affecting the presentationof the net assets, financial position andresults of operations in the consolidated financialstatements in accor-dance with the applicablefinancial reporting framework and in the groupmanagement report are detected with reasonableassurance. Knowledge of the business activities andthe economic and legal environment of the groupand expectations as to possible misstatements aretaken into account in the determination of audit procedures.The effectiveness of the accounting-relatedinternal control system and the evidence supportingthe disclosures in the consolidated financial statementsand the group management report are examinedprimarily on a test basis within the frameworkof the audit. The audit includes assessing the annualfinancial statements of those entities included inconsolidation, the determination of entities to beincluded in consolidation, the accounting andconsolidation principles used and significant estimatesmade by management, as well as evaluatingthe overall presentation of the consolidated financialstatements and the group management report. Webelieve that our audit provides a reasonable basisfor our opinion.Our audit has not led to any reservations.In our opinion, based on the findings of our audit,the consolidated financial statements comply withIFRSs as adopted by the EU, the additional requirementsof German commercial law pursuant to sec.315a para. 1 HGB and give a true and fair view ofthe net assets, financial position and results ofoperations of the group in accordance with theserequirements. The group management report isconsistent with the consolidated financial statementsand as a whole provides a suitable viewof the group’s position and suitably presents theopportunities and risks of future development.Düsseldorf, May 2, 2013BDO AGWirtschaftsprüfungsgesellschaftEckmannGerman Public AuditorBerndtGerman Public Auditor

EXCERPTFROM THERANGE OFPRODUCTSEditorSCHUMAG AktiengesellschaftNerscheider Weg 170,D-52076 AachenCoordinationKarola Schindler, AachenConception/DesignHerbert Titz, AachenParticipationZahra AissaouiPhotoFoto Böhm, StolbergCarl Brunn, AachenOffsetprintingVereinte Druckwerke GmbHDruckerei Emhart, AachenPRECISION ENGINEERINGAutomotive subsuppliedpartsPrecision measuring andindicating instrumentsHousehold appliancesMedical technologyPrecision standardparts for plastic injectionmoulding and diecastingDrawing-compliantprecison partsin small batchesSYSTEM ENGINEERINGConventionalengineering systemsHigh-precision components forModern diesel injection systems,components for passenger cars,trucks and stationary motors(e.g. pump-jet or common rail systems)Air mixing and petrol injection systemsServo-steering and servo-brakesAutomatic transmissionHydraulic high-pressure pumpsPressure reducing valves formobile hydraulic systemsVariable cam controlElektric motor shafts(fuel pumps, servomotors, etc.)Components for electricity, gas andwater meters, etc.Precision axes for a wide range of householdappliances (e.g. kitchen machines, electrictoothbrushes)Components for medical and optical devices(e.g. microscopes, optical measuring devices,medication)Ejector pins and ejector sleevesSprue bushings and sprue puller bushingsGuide bolts and guide bushesCentering unitsParts for hotrunner systemsHydraulic pistons and pressure relief valvesShafts, axes and core pins formechanical engineeringPistons, valve inserts and valve rods forhydraulic systemsSpecial parts made to drawingsComponents for power applications withhigher technical requirements (for example:pipelines, power plants and for gas and oilapplications , simulation equipment)precise by tradition

precise by traditionSCHUMAG AktiengesellschaftP.O.B. 52 02 64· D-52086 AachenNerscheider Weg 170 · D-52076 AachenTelephone Switchboard +49.24 08.12-0Fax Switchboard +49.24 08.12-218Managing Board +49.24 08.12-211Precision Parts +49.24 08.12-277Standard Parts +49.24 08.12-285E-Mail Precision Parts pt-sales@schumag.deStandard Parts nt-sales@schumag.deInternet www.schumag.deSchumag BR Energy GmbHNerscheider Weg 170 · D-52076 AachenTelephone +49.24 08.12-593Fax +49.24 08.12-594E-Mail info@schumag-br-energy.deRomaniaSchumag Romania S.R.L.Loc. Chisoda DN 59 Km 8 + 550 m stânga307221 Chisoda/TimisTelephone +40.2 56.27 39 66Fax +40.2 56.27 39 62E-Mail s.ro@schumag.ro