MBB SE — Annual Report 2012

Apr 16, 2013

Annual Report 2012 MBB Industries AG . Berlin

MBB		Industries	in	figures
-----	--	------------	----	---------

Geschäftsjahr	2009	2010	2011	2012	Δ 2012 /
					2011
	IFRS	IFRS	IFRS	IFRS
	fortgeführter	fortgeführter	fortgeführter
	Bereich	Bereich	Bereich
Ergebniszahlen	T€	T€	T€	T€	%
Umsatzerlöse	80,630	99,940	109,627	204,876	86.9
Betriebsleistung	80,406	100,066	109,761	205,641	87.4
Gesamtleistung	86,721	104,553	113,543	211,934	86.7
Materialaufwand	-56,027	-70,351	-71,406	-134,562	88.4
Personalaufwand	-15,867	-20,300	-23,536	-41,412	76.0
EBITDA	7,930	-3,157	9,240	24,315	163.1
EBITDA-Marge	9.9%	-3.2%	8.4%	11.8%	40.5
EBIT	4,979	-7,015	5,673	19,439	242.7
EBIT-Marge	6.2%	-7.0%	5.2%	9.5%	82.7
EBT	4,045	-7,961	4,599	17,896	289.1
EBT-Marge	5.0%	-8.0%	4.2%	8.7%	107.1
Ergebnis des fortge
führten Geschäftsbereichs	3,667	-7,415	3,297	13,439	307.6
Ergebnis des aufge
gebenen Geschäftsbereichs	-121	571	39	0
Konzernergebnis nach
Minderheiten	3,546	-6,844	3,336	13,439	302.8
Anzahl Aktien	6,600,000	6,600,000	6,600,000	6,600,000
EPS in € *	0.54	-1.04	0.51	2.08
Dividende in T€	3,300	2,178	2,841	3,228	13.6
Dividende pro Aktie in € **	0.50	0.33	0.44	0.50	13.6

Bilanzzahlen	31.12.2009	31.12.2010	31.12.2011	31.12.2012
	T€	T€	T€	T€	%
Langfristige Vermögenswerte	41,865	39,445	37,232	46,573	25.1
Kurzfristige Vermögenswerte	60,074	52,304	48,565	102,079	110.2
Darin enthaltene liquide Mittel***	35,314	33,147	30,278	45,234	49.4
Gezeichnetes Kapital	6,600	6,600	6,600	6,456	-2.2
Sonstiges Eigenkapital	48,986	10,833	39,100	50,955	30.3
Eigenkapital insgesamt	55,586	17,433	45,700	57,411	25.6
Eigenkapitalquote	54.5%	51.7%	53.3%	38.6%	-27.6
Langfristige Schulden	22,157	22,632	21,987	37,733	71.6
Kurzfristige Schulden	24,196	21,684	18,110	53,508	195.5
Bilanzsumme	101,939	91,749	85,797	148,652	73.3
Nettofinanzschulden
(net debt (-) / net cash (+)) ***	10,725	14,846	13,654	31,464	130.4
Mitarbeiter	31.12.2009	31.12.2010	31.12.2011	31.12.2012	%
	1,122	665	714	998	39.8%

* Based on the average number of shares in circulation at the publication date.

** Based on the number of shares in circulation at the publication date.

*** This figure includes physical gold stocks.

Contents

MBB Industries in figures	1
Contents	3
Welcome Note from the Managing Board	5
Report of the Supervisory Board	6
Management Report and Group Management Report	8
Business and economic conditions	8
Net assets, financial position and results of operations	13
Remuneration report	15
Report on opportunities	16
Risk report	16
Principles of the risk management system and the accounting-related internal control system	17
Declaration on corporate governance	17
Disclosures in accordance with sections 289 (4) and 315 (4) HGB	19
Report on post-balance sheet date events	21
Report on expected developments	21
Summary of the dependent company report in accordance with section 312 AktG	22
MBB Industries AG Abridged Annual Financial Statements for 2012	23
IFRS Consolidated Financial Statements for 2012	24
Notes to the Consolidated Financial Statements for 2012	30
I. Methods and principles	30
II. Notes to the consolidated balance sheet	42
III. Notes to the statement of comprehensive income	52
IV. Segment reporting	55
V. Notes to the consolidated cash flow statement	59
VI. Objectives and methods of financial risk management	59
VII. Other required information	60
List of shareholdings as at 31 December 2012	65
Auditor's report	66
Financial Calendar	67
Contact	67
Legal notice	67

Welcome Note from the Managing Board

Dear Shareholders,

In the 2012 financial year, our Company, MBB, impressively confirmed its long-term growth trend with record levels of revenue and earnings. This development can be attributed to our extremely wellpositioned portfolio of companies, some of which we have held for more than ten years, and the acquisition of MBB Fertigungstechnik at the start of the year. However, our success is even more down to the commitment of our 1,000 employees, who work tirelessly around the world for the interests of the MBB Group. As shareholders and managers of the Company, we would like to take this opportunity to express our gratitude to them.

Revenue of €205 million – the highest figure in MBB's history – was generated at six companies. None of the companies had lower revenue than in the previous year, and all of them made a positive contribution to the record earnings of €13.4 million. The smallest company, OBO, is on course to double its revenue since 2009. Hanke remained the company with the highest margins in 2012. CT Formpolster again generated positive earnings. Delignit is growing and has almost reduced its debt completely thanks to a strong cash flow, DTS is continuing its expansion in the consolidating IT market and generating revenues well in excess of €30 million, and – last but not least – MBB Fertigungstechnik has welcomed its new shareholder with a record year in terms of revenue and earnings.

We want this development to continue. As such, we are investing in our subsidiaries and looking to acquire additional new companies. The investment in a new paper machine in Poland and the formation of a subsidiary of MBB Fertigungstechnik in China will contribute to organic growth from 2014 onwards. Between 2005 and 2012, MBB increased its revenue more than fivefold, from €37 million to €205 million – and this is just one indicator for value growth that is and will remain our main focus.

MBB also performed impressively on the stock market in 2012, with the share price rising by more than 150%. This made us one of the fastest-growing Prime Standard stocks, and the capital markets have paid even greater attention to us since our market capitalization exceeded €100 million. In order to ensure that this remains the case, we are intensifying our road show activities and our participation in capital market conferences.

Our dividend of 50 cents per share is another new record. This means that we have increased our dividend once again, albeit not to the same extent as our earnings growth. Why? Our aim is to establish a long-term dividend policy that means we do not have to reduce the amount distributed in weaker years while allowing us to increase it in good years. Our first task is to ensure the attractiveness of your investment by generating further growth. Our dividend policy is an important consideration, but a secondary consideration all the same.

With its listing in the Prime Standard, MBB ensures unique access to globally successful German SMEs ("German Mittelstand"). Majority family ownership ensures the freedom to shape MBB's development in a long-term and sustainable manner. This is underlined by Gert-Maria Freimuth's move to the Supervisory Board, which means that the Managing Board and the Supervisory Board will both be headed by the Company's founders. We are delighted that you are accompanying MBB as shareholders and hence expressing your confidence in us. We will work hard to ensure that you are rewarded with similarly successful financial years and reliable business development in future.

Yours faithfully

Dr. Christof Nesemeier Gert-Maria Freimuth

Report of the Supervisory Board

In the year under review, the Supervisory Board ensured that it was continuously informed about the business and strategic development of the Company and advised and monitored the Managing Board in accordance with the tasks and responsibilities required of it by law, the Articles of Association and the provisions of the German Corporate Governance Code. The Supervisory Board was informed about the strategy, business policy and planning, the risk situation and the net assets, financial position and results of operations of MBB Industries AG and the MBB Group at all times.

This took place in personal discussions between the Chairman of the Supervisory Board and the members of the Managing Board, through the regular information provided by the Managing Board on the course of business, and at the Supervisory Board meetings held on 26 March, 18 June, 25 September and 30 November 2012, which were attended by all of the members of the Supervisory Board and Managing Board of the Company. The Supervisory Board meeting on 25 September was held at the premises of the subsidiary MBB Fertigungstechnik GmbH in Beelen in order to allow the Supervisory Board to obtain a detailed insight into the business activities of this portfolio company, which was acquired in the year under review.

At the individual meetings, the Supervisory Board analysed the Company's current business development together with the Managing Board and discussed its strategic focus. To the extent that individual transactions required the approval of the Supervisory Board under the provisions of law or the Articles of Association, the Supervisory Board examined these transactions and resolved whether to grant approval. Topics discussed included the economic situation of MBB Industries AG and the individual subsidiaries.

In particular, the Supervisory Board and the Managing Board intensively discussed the acquisition of CLAAS Fertigungstechnik GmbH (now trading as MBB Fertigungstechnik GmbH) and its integration into the MBB Group, as well as investment activities and existing macroeconomic risks. This meant that the Supervisory Board was involved in all major decisions.

The Supervisory Board also resolved to extend the term of office of the Managing Board members Dr. Christof Nesemeier and Gert-Maria Freimuth for the period from 1 July 2012 to 30 June 2015. On 14 February 2013, however, Gert-Maria Freimuth informed the Managing Board and the Supervisory Board of his desire to step down from the Managing Board with effect from the 2013 Annual General Meeting, following 17 years as a manager and member of the Managing Board, and to move to the Supervisory Board, where he will seek to be elected as Chairman. The Supervisory Board and Managing Board expressed their unanimous support for the changes in their composition and intend to implement these changes at the Annual General Meeting.

The Supervisory Board also addressed the topics of corporate governance and the German Corporate Governance Code. In the year under review, the Supervisory Board and Managing Board took the measures required to ensure broad compliance with the Code. The small number of exceptions are presented and explained in the declaration in accordance with section 161 of the German Stock Corporation Act (AktG), which was submitted by the Supervisory Board in conjunction with the Managing Board. This declaration is published as part of the Annual Report and on the Company's website at www.mbb.com.

The Supervisory Board consists of three people. Its composition was unchanged in the year under review. The Supervisory Board considers the number of members to be adequate in light of the size of the Company. For the same reason, the formation of committees is considered to be inappropriate, and the Supervisory Board again refrained from doing so in the 2012 financial year.

The Supervisory Board properly commissioned the auditor appointed by the Annual General Meeting, Verhülsdonk & Partner GmbH Wirtschaftsprüfungsgesellschaft Steuerberatungsgesellschaft, Düsseldorf, with the audit of the single-entity and consolidated financial statements for the 2012 financial year. The auditor submitted a declaration of independence to the Supervisory Board in accordance with section 7.2.1 of the German Corporate Governance Code. This declaration confirms that there are no business, financial or other relationships between the auditor and its executive bodies and head auditors on the one hand, and the Company and the members of its executive bodies on the other hand, that could give rise to doubt as to its independence.

The annual financial statements of MBB Industries AG for the year ended 31 December 2012 and the joint management report for MBB Industries AG and the MBB Group prepared in accordance with the German Commercial Code (HGB) and the consolidated financial statements for the year ended 31 December 2012 prepared in accordance with the International Financial Reporting Standards (IFRS) were audited by the auditor elected by the Annual General Meeting and commissioned by the Chairman of the Supervisory Board, Verhülsdonk & Partner GmbH Wirtschaftsprüfungsgesellschaft Steuerberatungsgesellschaft, Düsseldorf, and issued with an unqualified audit opinion on 20 March 2013.

The report by the Managing Board of MBB Industries AG on relationships with dependent companies in accordance with section 312 AktG (dependent company report) was also audited by Verhülsdonk & Partner GmbH Wirtschaftsprüfungsgesellschaft Steuerberatungsgesellschaft, Düsseldorf, and issued with the following unqualified audit opinion on 20 March 2013:

"Our audit did not give rise to any objections against the report. We hereby issue the following audit opinion in accordance with section 313 (3) AktG:

Following the completion of our audit in accordance with professional standards, we confirm that

• 1. the factual statements made in the report are correct,
• 1. the Company's compensation with respect to the transactions listed in the report was not inappropriately high or disadvantages were compensated, and
• 1. there are no circumstances that would justify a materially different opinion of the measures listed in the report than that held by the Managing Board."

The Supervisory Board examined the single-entity financial statements prepared by the Managing Board, the joint management report for MBB Industries AG and the MBB Group, the proposal on the appropriation of net profit, the consolidated financial statements and the dependent company report in accordance with section 312 AktG and discussed them personally with the auditor at the meeting on 20 March 2013. All of the Supervisory Board's questions were answered in full by the auditor. The Supervisory Board received the audit report in good time before the meeting. Following the completion of its examination, the Supervisory Board did not raise any objections to the single-entity financial statements, the management report, the dependent company report or the consolidated financial statements. The single-entity and consolidated financial statements were approved by the Supervisory Board on 20 March 2013, meaning that the annual financial statements of MBB Industries AG have been adopted.

The Supervisory Board shares the opinion of the Managing Board as expressed in the joint management and Group management report. The Supervisory Board approves the proposal by the Managing Board on the appropriation of net profit.

The Supervisory Board would like to thank the Managing Board, the management teams of the portfolio companies and all of the employees of the MBB Group for their high level of commitment and the good results achieved in the past financial year.

Berlin, 20 March 2013 The Supervisory Board

Dr. Peter Niggemann Chairman

Management Report and Group Management Report

MBB Industries AG (hereinafter also "MBB-AG") is a family-owned, medium-sized corporation that forms the MBB Industries Group (hereinafter also the "MBB Group") together with its portfolio companies. The single-entity financial statements of MBB-AG are prepared in accordance with the provisions of the German Commercial Code (HGB), while the consolidated financial statements are prepared in accordance with the International Financial Reporting Standards (IFRS).

Since 31 March 2012, MBB Fertigungstechnik GmbH, formerly CLAAS Fertigungstechnik GmbH, has strengthened the MBB Group and has made a significant contribution to consolidated revenue and consolidated net profit since this date.

In 2012, the MBB Group reported consolidated revenue of €204.9 million after €109.6 million in 2011. This represents the highest level of consolidated revenue in the Group's history. The MBB Group and its portfolio companies generated a consolidated net profit of €13.4 million in 2012 compared with €3.3 million in the previous year.

The MBB Group reported net cash (cash and short-term/long-term securities less liabilities to banks) of €31.5 million as of 31 December 2012; this figure includes physical gold holdings in the amount of €2.2 million. Despite the payment of a dividend, the buy back of treasury shares, the acquisition of MBB Fertigungstechnik GmbH and the net investments in the Group's portfolio, total liquidity including gold amounted to €45.2 million as of 31 December 2012.

In 2012, a dividend in the amount of €2.8 million (€0.44 per share) was distributed for the 2011 financial year. In addition, a total of 144,201 treasury shares were repurchased at the start of the year at an average price of €6.9347 per share; the volume of the share buy-back totalled €1.0 million. The MBB Group's equity increased to €57.4 million, resulting in an equity ratio of 38.6%. This figure was lower than in the previous year as the acquisition of MBB Fertigungstechnik GmbH (formerly CLAAS Fertigungstechnik GmbH) led to a significant increase in total assets.

For 2013, MBB is forecasting higher revenue and a similar operating result to 2012.

Business and economic conditions

Strategic orientation

MBB-AG is an industrial holding company with a focus on small and medium-sized enterprises (SMEs) in Germany ("German Mittelstand"). The Company generates organic growth through the development of its Group companies and the majority acquisition of industrial SMEs with revenue in excess of €10 million. Unresolved succession, financing issues and corporate carve-outs represent ideal investment opportunities for MBB-AG.

The aim of each acquisition is to sustainably increase the value of the respective portfolio company. In addition to capital, MBB-AG provides its portfolio companies with access to excellent management expertise and its committed and highly qualified team and network. These factors shape the success of the MBB companies and ensure an attractive return on capital employed for shareholders.

Market development

The Company primarily operates on the German market. Nevertheless, the Company has an international presence and experience thanks to its foreign portfolio companies and its global market activities. The extensive range of companies available for sale in Germany means that MBB-AG will continue to concentrate on this market in future.

The improvement in the economy and economic conditions as a result of fiscal and monetary policy measures, particularly on the part of countries and national banks in developed economies, have led to a significant increase in confidence, a higher propensity to invest and improved sentiment among households and companies in recent months. Commercial banks have also become increasingly willing and able to finance company acquisitions due to the sustained low level of interest rates and the expansive provision of liquidity by the central banks. At the same time, increased demand means greater competition, and hence rising prices for companies.

The economic upturn is making a significant contribution to the solid development of the MBB Group's portfolio companies, and hence of the Group as a whole. For Germany, the OECD is forecasting GDP growth of 0.6% in 2013 and 1.9% in 2014, accompanied by comparatively low unemployment of 5.5% and 5.6% respectively. Growth of 1.4% and 2.3% is forecast for all OECD nations collectively. 1 In the 2012 financial year, German industrial SMEs enjoyed an encouraging improvement in operating business performance following the slump that was triggered by the financial and economic crisis, with the positive revenue and profit development seen in previous years continuing unabated. Projected growth rates, economic climate measurements and forecast corporate profits also suggest that economic development will remain positive in the longer term. These trends can be reflected in the performance of the MBB Group companies. At the same time, the situation in the euro zone in particular continues to be characterised by latent fragility, and the potential for abrupt changes due to uncertain political factors remains in place.

The situation on the commodities markets is presenting significant challenges for the management of our portfolio companies. We are continuing to forecast a high level of volatility in these markets; in our case, this primarily relates to wood, cellulose and petrochemical raw materials. Price rises on the commodities markets have been abrupt in some cases and have occasionally been accompanied by shortages. Passing these developments onto customers is a considerable challenge that is subject to a certain time delay and often not achieved in full.

In the automotive industry, which is relevant to the Group following the acquisition of MBB Fertigungstechnik GmbH, Asia is becoming an increasingly important market. As a logical consequence, the company is currently endeavouring to establish a local subsidiary in order to ensure proximity to sales markets and customers. While sales of cars in Europe are declining, China saw growth of 7.1% in 2012. According to the International Organisation of Motor Vehicle Manufacturers, the number of vehicles sold in China was 5.2 million higher than in 2009, corresponding to an increase of 50.0%. 2

In the relevant sales markets for the MBB Group, we expect to see constant demand for polyurethane boards and tissue products, as well as a continued high level of demand for capital goods and loading area equipment in the automotive industry. We also expect to see constant demand for the foam business of CT Formpolster. All in all, we can say that portfolio diversification is protecting the MBB Group from turbulence in individual markets, while positive developments on the sales markets are more than offsetting the rise in commodities prices. As a result, the MBB Group is benefiting significantly from the overall market development.

The extent and speed of exchange rate fluctuations between the euro and the currencies that are relevant for the MBB Group, namely the US dollar, the pound sterling and the Polish zloty, will remain significant and will therefore continue to present considerable challenges for the MBB Group's financial management in 2013.

The MBB Group counteracts developments on the financial markets with a conservative financing structure that is currently characterized by a net cash position and a high level of liquidity. This allows us to conduct company acquisitions independently at all times, as well as ensuring that we are largely shielded from the impact of expected interest rate rises. Excess liquidity is temporarily invested in demand deposits, short-term bonds with good credit ratings and physical gold, as well as equities to a limited extend – but only when they meet the same criteria as MBB-AG applies to the acquisition of German Mittelstand companies.

Market position

MBB-AG has been operating successfully in the German Mittelstand investment market for more than 15 years. We can now offer references for almost every conceivable type of SME acquisition, ranging from former owners and group shareholders, management, employee representatives and unions, banks as well as core customers and suppliers. Thanks to its experience, its network, its portfolio of companies and its stock exchange listing, MBB-AG is one of the leading industrial holding companies for German SMEs with revenue in excess of €10 million. This market position has improved further as public awareness of the Company has increased.

With the acquisition of MBB Fertigungstechnik GmbH (formerly CLAAS Fertigungstechnik GmbH) in particular, MBB-AG has overcome a threshold enabling its business model even further.

The individual MBB companies are established SMEs and are characterised by a solid asset position and sustainable growth. Companies such as MBB Fertigungstechnik, Hanke and Delignit are leaders in their respective markets.

¹ cf.: http://www.oecd.org (Accessed in march 2013)

² cf.: http://oica.net (Accessed in march 2013)

Stock exchange listing

One element of the aforementioned strategic development was the IPO of MBB-AG in 2006 and its admission to the Prime Standard in 2008. The 73.5% stake in MBB-AG held by the Managing Board as of 31 December 2012, prior to the share buy-back discussed later in this management report, serves to ensure sustainable Company development with a medium-sized, entrepreneurial focus.

Portfolio companies

MBB-AG had a total of six active direct portfolio companies at the end of the 2012 financial year. As these portfolio companies themselves each have subsidiaries and sub-subsidiaries, the consolidated group as of 31 December 2012 consisted of MBB-AG and a total of 15 companies and three investments accounted for using the equity method. The following section lists these companies according to their ownership structure, including the respective equity interest and the type of consolidation:

• Delignit AG (76,08 %)
• Hausmann Verwaltung GmbH (100 %)
• Blomberger Holzindustrie B. Hausmann GmbH & Co. KG (100 %)
• S.C. Cildro Plywood Srl. (49 % at equity)
• S.C. Cildro S.A. (42,9 % at equity)
• S.C. Cildro Service Srl. (100 % at equity)
• Hanke Tissue Sp. z o.o. (100 %)
• CT Formpolster GmbH (100 %)
• OBO Modulan GmbH (100 %)
• OBO-Werke Verwaltungsgesellschaft mbH (100 %)
• OBO-Werke GmbH & Co. KG (100 %)
• OBO-Industrieanlagen GmbH (100 %)
• DTS IT AG (80 %)
• DTS Systeme GmbH (100 %)
• ICSmedia GmbH (100 %)
• eld datentechnik GmbH (100 %)
• MBB Fertigungstechnik Beelen GmbH (100 %)
• MBB Fertigungstechnik GmbH (100 %)

DTS Beteiligungen Verwaltungs GmbH was merged into eld datentechnik GmbH with economic effect from 1 January 2012.

On 9 March 2012, MBB Industries AG, via Jade 1414. GmbH, acquired all of the shares of CLAAS Fertigungstechnik GmbH, Beelen, from CLAAS KGaA mbH, including dividend rights from 1 January 2012, at a purchase price of €13.3 million subject to conditions precedent. Following the fulfilment of the conditions precedent listed in the sale and purchase agreement, the closing of the transaction occurred on 31 March 2012. Jade 1414. GmbH was renamed MBB Fertigungstechnik Beelen GmbH on 15 March 2012. The purchase price was paid in full in the year under review, with €10 million paid in April and the remaining amount paid in December.

On 9 March 2012, MBB Fertigungstechnik Beelen GmbH, formerly Jade 1414. GmbH, acquired the business premises plus buildings of CLAAS Fertigungstechnik GmbH from CLAAS KGaA mbH. The purchase price of €7.7 million was initially financed by the seller. In December 2012, MBB Fertigungstechnik Beelen GmbH settled the remaining liability to CLAAS KGaA mbH in full. Refinancing took the form of a ten-year bank loan on the land and the building at 2.85%, which was not drawn down until January 2013.

In May 2012, CLAAS Fertigungstechnik GmbH was renamed MBB Fertigungstechnik GmbH. The renaming was entered in the commercial register on 29 May 2012.

Segments

The individual segments in which MBB Group companies are active have different focal points in terms of their business activities. These are described in brief in the following section. Detailed information on the individual subsidiaries is not published in order to prevent the possibility of adverse effects on their business activities.

Revenue-distribution by segment 2012 in € million

The following segments are reported:

Technical Applications

This segment contains those portfolio companies whose business model reflects customer-specific requirements to a large extent and where the expertise and consulting sold along with the product constitute a significant portion of the work performed.

Since 31 March 2012, MBB Fertigungstechnik GmbH has strengthened the Technical Applications segment. MBB Fertigungstechnik GmbH is a leading international plant engineering company for welding and assembly systems for the automotive industry. It also provides services for tool manufacturing, innovative transport technologies for exact positioning and inline measuring systems. Other industries include general industry and clean technology. The assembly technology unit develops customer-specific systems for processing individual components or modules into finished products or several complex assemblies. It specialises in assembled camshafts, steering systems, drive shafts and clean technology. Expertise in the connection technology unit ranges from conventional thermal welding and cold metal transfer (CMT) for lightweight construction with a focus on chassis components (axles), cross-car beams and clean technology through to the production of heavy components and transport vehicles (MC drive). In addition to its welding and assembly services, MBB Fertigungstechnik GmbH develops and produces project-specific special machinery for welding systems and production lines that customers cannot acquire elsewhere on the market and that are unique in terms of their form and specifications.

Since joining the MBB Group, MBB Fertigungstechnik GmbH has contributed €86.2 million to consolidated revenue, corresponding to a share of 42.0%.

The Delignit Group, which was formed more than 200 years ago, develops and manufactures ecological materials and system solutions primarily based on hardwood. It is a recognised development and project partner and series supplier for technology industries such as the automotive and aviation sectors, as well as security technology. The products have special technical properties and are used in built-in systems for commercial vehicles, fire-safe building facilities and innovative materials handling technology, among other things. The Delignit material is generally based on beech wood and is carbonneutral in its lifecycle, making it ecologically superior to non-regenerative materials such as plastic or steel. Delignit's activities with wood-based materials accounted for 16.4% of the MBB Group's revenue in the 2012 financial year compared with 27.5% in the previous year. The Delignit Group's external revenue increased by 11.5%, from €30.2 million in 2011 to €33.6 million in 2012.

Industrial Production

The Industrial Production segment contains all portfolio companies whose strengths are concentrated on the industrial manufacture of their products and whose products are relatively standardised. Accordingly, this segment contains the portfolio companies Hanke, CT Formpolster and OBO.

Hanke produces tissue mother rolls, napkins, handkerchiefs, toilet paper and kitchen rolls. Operating under the brand name of "aha", the company has a strong competitive position in the Eastern Europe consumer product market. Hanke also produces white and coloured tissue paper for various private labels in Europe. These activities are concentrated around the company Hanke Tissue Sp. z o.o., Kostrzyn, Poland, which was acquired by MBB-AG in 2006.

Since being acquired by MBB-AG, Hanke has made substantial investments in its machinery and buildings, allowing it to record continuous growth and expand its market position to become the most profitable company in the MBB Group in relative terms. This expansion will continue over the coming years in the form of an investment programme with a volume of €10 million that was approved in summer 2011.

With external revenue of €22.2 million (2011: €21.8 million), Hanke accounted for 10.8% (2011: 19.9%) of the Group's total revenue.

CT Formpolster GmbH manufactures flexible polyether foams. The company's service portfolio extends from material and product development and foam production through to order picking and JIT delivery. The product range not only includes standard foams but also highly elastic, flame-retardant, antistatic and intensely coloured products, as well as products containing biomass. CT Formpolster GmbH's products are used as mattress and seating cores in the furniture, caravan and office sectors in particular. It also sells foam blocks to processing companies.

With external revenue of €18.5 million (2011: €18.4 million), CT Formpolster accounted for 9.0% (2011: 16.7%) of the Group's total revenue.

OBO is a global provider of polyurethane hard foam boards for tooling applications. With a market share of around 8%, it is one of the five leading providers in the industry. OBO has been part of the MBB Group since 2003. In particular, it supplies the model making industry, as well as automobile manufacturers, foundries and other processing companies directly.

In 2012, the portfolio company contributed 5.5% to the MBB Group's total revenue (2011: 9.0%). External revenue amounted to €11.2 million in the 2012 financial year, up 13.7% on the previous year (2011: €9.8 million).

Trade & Services

Trade & Services comprises the DTS Group, which consists of companies that provide specialist services or engage in retail business. The DTS Group is focused on cloud IT services. A dedicated data centre at its head office in Herford allows it to offer a wide range of traditional systems house services, such as the consulting, design, procurement, implementation and operation of IT environments, which are combined with IAAS, PAAS and SAAS cloud solutions with a focus on IT security.

The parent company DTS Systeme GmbH was formed in 1983 and is headquartered in Herford with additional offices in Bochum, Bremen, Berlin and Hanover. ICSmedia GmbH, Münster, was acquired in August 2010. ICSmedia GmbH has its own data centre and works in close cooperation with DTS Systeme GmbH to offer state-of-the-art, high-quality cloud computing solutions and high-end consulting services.

Since October 2011 eld datentechnik GmbH, Fellbach, a Germany-wide IT distributor specialising in IP access and storage technology, has been part of the DTS Group. This means that eld datentechnik GmbH provides vertical expansion for the service range of the other DTS subsidiaries.

In 2012, the DTS Group contributed €32.7 million to the MBB Group's revenue (2011: €28.2 million), corresponding to a share of 15.9% (2011: 25.6%).

Employees

MBB-AG had a total of eight employees in 2012; this figure includes the Managing Board. While the members of management have service agreements with MBB-AG, the Company also had one salaried employee in the area of office management and one in Group accounting in 2012. Since October 2012, the MBB team has also included an analyst and a lawyer.

The aim of the management of MBB-AG is to ensure the sustainable performance of the MBB Group. The four-man management team has worked together for more than 15 years and held more than 75% of the share capital of MBB-AG cumulatively as of 31 December 2012. Appropriate fixed remuneration is supplemented by performance-based variable components each with an upper limit. There are no severance or pension agreements.

The MBB Group had an average of 921 employees in the 2012 financial year compared with an average of 700 in the previous year.

As of 31 December 2012 (2011), the MBB Group had a total of 998 employees (previous year: 714) in the following segments:

Technical Applications: 486 employees (previous year: 207)

Industrial Production: 382 employees (previous year: 385)

Trade & Services: 130 employees (previous year: 122)

The number of employees by country as of 31 December 2012 (2011) was as follows:

747 employees in Germany (previous year: 459)

251 employees in Poland (previous year: 255)

Headcount by segment as at 31 Dec 2012

MBB considers supporting and challenging of employees to be a key factor in its success. The management and senior employees of the portfolio companies, who have a major influence on the success of their business activities, receive variable remuneration components that are also dependent on the results achieved and the value growth of the companies.

The number of employees at the companies forming part of the Group in 2012 will increase in the 2013 financial year due to the growing business volume, although developments may vary across the individual portfolio companies due to capacity considerations. MBB's subsidiaries have a history of providing training. They had a total of 57 trainees in the German dual system as of 31 December 2012. The proportion of employees with university degrees has increased significantly in particular since MBB Fertigungstechnik GmbH has been part of the Group. In order to achieve its planned growth, the MBB Group permanently strives to improve the quality of its workforce through training and further education. Qualified employees are also being targeted externally to a greater extent at present.

Net assets, financial position and results of operations

MBB-AG and the MBB Group can look back on a successful and highly profitable 2012 financial year. The business activities of the Group companies improved, while orders on hand and incoming orders look set to continue this development in the 2013 financial year. In addition to the first-time full-year consolidation of MBB Fertigungstechnik GmbH, this means that there are strong foundations for further revenue growth in 2013.

The continued high level of cash and cash equivalents serves to boost the attractiveness of MBB's business model and will allow future acquisitions to be conducted independently and without the need for external finance. The steady value appreciation over recent years – which is reflected, among other things, in the development of equity from €15.5 million in 2005 to €57.4 million in 2012 and the turnaround from net debt of €13.8 million in 2005 to net cash of €31.5 million in 2012 – underlines the sustainable success of our business model and the high quality of our investments. This means that the MBB Group can be expected to continue to make new acquisitions with a view to achieving value growth.

The following section discusses MBB-AG and the MBB Group in greater detail.

MBB-AG

MBB-AG generated revenue of €1.0 million from the performance of management services for Group companies in 2012 (previous year: €0.5 million). Together with revenue from third parties and other operating income, this resulted in total operating revenue of €2.3 million (previous year: €2.7 million).

This was offset by expenses for purchased services in the amount of €1.1 million (previous year: €0.9 million), which related to the remuneration paid to the management of MBB-AG.

After staff costs and overheads, earnings before interest, taxes, depreciation and amortisation and income from securities totalled €-0.1 million (previous year: €0.5 million).

MBB-AG also generated investment income of €0.8 million, income from securities in the amount of €0.3 million, and interest and other income totalling €0.4 million. After depreciation and amortisation expense of €0.1 million, interest expense of €0.2 million and tax income of €0.1 million, this resulted in a net profit for the year of €1.2 million (previous year: €1.1 million).

As in the previous years, a dividend was distributed in the 2012 financial year. This amounted to €0.44 per share or €2.8 million in total. In addition, a total of 144,201 shares were repurchased via the stock exchange at an average price of €6.9347 per share as part of a share buy-back programme in 2012. The total volume of the share buy-back was €1.0 million. As a result, the equity of MBB-AG declined to €36.9 million at year-end (previous year: €39.5 million), while the equity ratio remained consistently high at 87.1%. Including investment securities and physical gold holdings, MBB-AG had cash and cash equivalents of €12.1 million at the end of the financial year, and hence following the acquisition of MBB Fertigungstechnik GmbH (previous year: €25.3 million). Net cash and cash equivalents fell to €8.3 million (previous year: €21.4 million). Unrealised gains on physical gold holdings and securities are not included in this presentation of the financial position and results of operations.

MBB Group

The consolidated financial statements for the year ended 31 December 2012 were prepared in accordance with the International Financial Reporting Standards (IFRS) as required to be applied in the European Union.

The consolidated revenue of the MBB Group amounted to €204.9 million in the 2012 financial year after €109.6 million in the previous year. At the same time, total operating revenue increased from €113.5 million in 2011 to €211.9 million in 2012. Other operating income in the amount of €4.6 million includes income from the reversal of provisions, income from the sale of shares, income from exchange differences and other income. The reversal of the bargain purchase in the amount of €1.7 million from the first-time consolidation of MBB Fertigungstechnik GmbH is reported separately under other income.

The ratio of the cost of materials to total operating revenue increased slightly, from 65.1% to 65.4%. By contrast, staff costs amounted to 21.4% of total operating revenue in 2011 after 20.1% in 2012. This was due to the low level of vertical integration at MBB Fertigungstechnik GmbH compared with the other portfolio companies.

EBITDA (earnings before interest, taxes, depreciation and amortisation) amounted to €24.3 million, up significantly on the prior-year figure of €9.2 million.

At €4.9 million, depreciation and amortisation was considerably higher than in the previous year (€3.6 million). In 2012, investments in non-current assets totalled €12.7 million after €2.8 million in the previous year.

The MBB Group reported EBIT (earnings before interest and taxes) of €19.4 million in the past financial year, up significantly on the prior-year figure of €5.7 million.

Adjusted for a financial result of €-1.5 million, EBT (earnings before taxes) amounted to €17.9 million (previous year: €4.6 million) or 8.7% (previous year: 4.2%) of total operating revenue.

Income tax amounted to €3.8 million, while other taxes totalled €0.2 million.

The consolidated net profit after minority interests of €13.4 million was also up on the prior-year figure of €3.3 million.

This contributed towards the equity of €57.4 million reported in the consolidated balance sheet as of 31 December 2012 (previous year: €45.7 million), meaning that the MBB Group had an equity ratio of 38.6% based on total assets of €148.7 million (previous year: 53.3%). Accordingly, the Managing Board is of the opinion that the MBB Group continues to enjoy a solid equity base even after the significant increase in total assets due to the first-time consolidation of MBB Fertigungstechnik GmbH.

As of 31 December 2012, the MBB Group had financial liabilities in the amount of €13.8 million (previous year: €16.6 million) and cash, short-term and long-term securities and physical gold (€2.2 million) totalling €45.2 million (previous year: €30.3 million). Net cash and cash equivalents (cash, short-term and long-term securities and physical gold less liabilities to banks) increased significantly to €31.5 million after €13.7 million in the previous year. Despite the dividend payment of €2.8 million, investments in non-current assets and the acquisition of new portfolio companies and the expansion of existing portfolio companies, this development was made possible by the Group's strong operating cash flow, as well as the level of liquidity that is inherent to MBB Fertigungstechnik GmbH's business model to a certain extent. In the opinion of the Managing Board, this means that the MBB Group currently has adequate scope in terms of financing its business activities.

Hedging

Intragroup transactions are usually conducted in euro. As the portfolio companies are independently responsible for hedging any extraordinary foreign-currency items, there have been no significant unhedged items at Group level to date. As such, the MBB Group has not yet been required to perform active exchange rate hedging at Group level. However, monitoring at Group level serves to ensure timely intervention as necessary.

Remuneration report

The remuneration of the Managing Board is composed of a fixed and a variable component. The members of the Managing Board are also reimbursed for documented expenses. D&O insurance, which has included a deductible since the new Managing Board contracts came into force on 1 July 2012, and accident insurance have also been concluded. No additional benefits (e.g. retirement benefits, direct benefits, severance payments) have been agreed. Similarly, there are no agreements governing the early or regular termination of a member's Managing Board mandate in the event of a change of control at the Company.

For the 2012 financial year, the management of MBB-AG is entitled to variable remuneration totalling 9.0% of the amount by which the equity of MBB-AG at the end of the financial year (final value) exceeds the equity at the start of the financial year (initial value). For the purpose of this bonus system, equity comprises the items set out in section 266 (3 A) HGB. The calculation of the initial value and final value is based on the latest audited annual financial statements with the following modifications:

Assets with a stock exchange price are recognised at this price; this does not apply to shares in companies in which the Company holds more than 5% of the voting rights. Dividend distributions and repayments of equity are added to the final value, while contributions to equity are deducted. If the basis of calculation is negative in one or more financial years, the resulting negative amount is carried forward to the subsequent financial years and offset against future positive amounts until the negative amounts carried forward have been eliminated. Members of the Managing Board shall not be entitled to receive further variable remuneration until these negative amounts have been eliminated.

The bonus payable to the members of the Managing Board is limited to 5% of the aforementioned final value. Any amount in excess of this 5% limit is carried forward to the next financial year and either distributed, carried forward again if the 5% limit is exceeded once more, or offset against corresponding losses.

The members of the Supervisory Board receive a meeting attendance fee. The Chairman of the Supervisory Board receives double this amount and the Deputy Chairman of the Supervisory Board receives one and a half times this amount plus the reimbursement of any expenses. D&O insurance with no deductible has also been concluded for the members of the Supervisory Board. In accordance with a resolution by the Annual General Meeting on 30 June 2010, the Supervisory Board has also received variable remuneration totalling 1% of the aforementioned increase in equity since the 2010 financial year. The total of the variable remuneration and the attendance fees for all Supervisory Board members may not exceed €100,000.00 per full financial year. The aforementioned commitments to pay variable remuneration to the members of the Managing Board and the Supervisory Board resulted in a claim for variable remuneration for 2012.

A detailed description of the remuneration system and a breakdown of the remuneration paid to the Managing Board and the Supervisory Board can be found in the notes to the consolidated financial statements.

Report on opportunities

In the opinion of the Managing Board, the MBB Group has the following opportunities for the future:

• The strong investing activities of the Group companies offer opportunities for further profitable growth.
• The sustained high number of SMEs available for sale offers opportunities for acquisitions that will add value to the Group.
• Investing in and increasing the value of small and medium-sized industrial companies allows aboveaverage returns to be generated if successful.
• MBB's profitable development over a number of years serves to increase its attractiveness as a shareholder, borrower or business partner and will boost MBB's importance as a holding company for industrial SMEs in Germany.
• The experience and network of the current management team offers a strong starting position for the continued growth of the MBB Group.
• The diversification of the MBB Group will cushion the potential impact to the Group as a whole as a result of changes in the demand situation in individual markets.
• The expansion of MBB-AG's international activities, particularly through the planned formation of a new subsidiary of MBB Fertigungstechnik GmbH in China, will lead to greater proximity to the customer, and hence greater opportunities for growth.

Risk report

The large number of opportunities described above and the current situation suggest that the MBB Group will enjoy successful development in the medium term. However, the MBB Group is also exposed to the following risks:

• Individual portfolio companies could be particularly hard hit by an economic crisis.
• The refinancing of individual portfolio companies or new acquisitions could be unsuccessful.
• A further sustained economic downturn could lead to falling revenue and/or earnings at MBB-AG's existing portfolio companies.
• The international focus of MBB-AG's activities could lead to investments in portfolio companies in territories that are exposed to country-specific risks. In particular, the planned formation of a new subsidiary of MBB Fertigungstechnik GmbH in China could lead to specific associated risks, such as the risk of start-up losses.
• Since the acquisition of MBB Fertigungstechnik GmbH, project business is being conducted in the area of plant engineering once again, which could lead to specific project risks and increased earnings volatility.
• Despite comprehensive risk management, the Group companies are exposed to the general risks associated with their business activities. For example, the manufacturing companies within the Group in particular could be liable for warranty cases, environmental pollution or production downtime.
• MBB-AG could be exposed to risks arising from sale and purchase agreement warranties, while its portfolio companies could be exposed to product liability or other statutory liability risks.

The purchase price expectations of potential sellers could limit the number of attractive investment opportunities, and hence the Group's growth.

Principles of the risk management system and the accounting-related internal control system

The MBB Group has established a risk management system to address the aforementioned risks. Measures are initiated at an early stage in order to prevent the Company from being disadvantaged. This system includes:

• Integrated portfolio company controlling that uses daily controlling (DAC) and monthly business controlling (BUC) to continuously compare target, actual and forecast data at the level of the portfolio companies and MBB-AG.
• Project controlling (PUC), which defines, develops and tracks the implementation of optimisation measures within the Group and at each individual company.
• Regular management meetings within MBB-AG (MIC) and with the management of the respective portfolio companies (RAP).
• Structured Mergers & Acquisitions tools that are used to organise the proposal and acquisition process and test it for success (MAC) and the continuous expansion of the MBB network to M&A advisors and potential sellers.
• Central Group monitoring (LOC) of material contractual risks and legal disputes by the management and qualified law firms as necessary.

The internal control system is an integral component of MBB's risk management. Its primary objectives are to ensure that all transactions are accurately reflected in reporting and to prevent deviations from internal or external provisions. In terms of external accounting, this means that the conformity of the financial statements with the applicable regulations must be guaranteed. Accordingly, the structure of the internal control system and the risk management system reflects that of the reporting entities. MBB Group companies are subject to uniform accounting policies such as an accounting manual, compliance with which is monitored on a permanent basis. External specialists are commissioned on a case-by-case basis to control individual accounting risks, e.g. in connection with actuarial valuations.

Declaration on corporate governance

In this declaration, the Managing Board – including on behalf of the Supervisory Board – reports on corporate governance in accordance with section 3.10 of the German Corporate Governance Code and section 289a of the German Commercial Code (HGB). This declaration on corporate governance in accordance with section 298 HGB must include:

• 1. The declaration in accordance with section 161 of the German Stock Corporation Act (AktG);
• 1. The corporate governance report;
• 1. Relevant information on corporate governance practices going beyond the statutory requirements and details of where they are publicly accessible;
• 1. A description of the procedures of the Managing Board and the Supervisory Board and the composition and procedures of their committees; if this information is publicly available on the Company's website, reference may be made to this fact.

Re 1: Declaration in accordance with section 161 AktG

On 20 March 2013, the Managing Board and Supervisory Board submitted the latest declaration of conformity in accordance with section 161 AktG as of the date on which this management report was prepared. It reads as follows:

"The Managing Board and Supervisory Board of MBB Industries AG submitted the last declaration of conformity in accordance with section 161 AktG on 26 March 2012 and complied with this declaration of conformity with the exceptions stated therein. The following declaration updates this declaration of conformity and relates to the German Corporate Governance Code (hereinafter also the "Code") in the version dated 15 May 2012.

The Managing Board and Supervisory Board of MBB Industries AG hereby confirm that they comply with the recommendations of the Government Commission on the German Corporate Governance Code with the following exceptions:

Section 3.8: D&O insurance: The D&O insurance policy for the members of the Supervisory Board does not provide for a deductible. We are confident that our executive bodies and employees exercise their duties with the greatest care and diligence. In light of the relatively low level of fixed remunera- tion paid to the members of the Supervisory Board, we do not consider a deductible for the Supervisory Board to be appropriate. The deductible for members of the Managing Board was implemented in the new Managing Board contracts that came into force on 1 July 2012.

• Section 4.2.1: Composition of the Managing Board: The Supervisory Board is of the opinion that the size and management structure of the Company mean that it can also be managed by a sole member of the Managing Board.
• Section 5.1.2: Composition of the Managing Board: When filling positions on the Managing Board of MBB Industries AG, the Supervisory Board observes the requirements of the German Stock Corporation Act by ensuring that candidates have the skills, knowledge and experience that are required for the work of the Managing Board. By contrast, while the Supervisory Board expressly welcomes diversity, it considers criteria such as a candidate's gender to be secondary.
• Section 5.3: Supervisory Board committees: As the Supervisory Board of MBB Industries AG consists of three members, no committees can be formed. We consider the number of Supervisory Board members to be adequate in light of the size and importance of the Company.
• Section 5.4.1: An age limit is not specified for the members of the Supervisory Board. In light of the age of the Supervisory Board members and their remaining term of office, we do not believe there to be any reason to introduce such a limit.
• Section 5.4.4: Chairmanship of the Supervisory Board: The Supervisory Board is of the opinion that the election of the Chairman of the Supervisory Board is entirely a matter for the Supervisory Board.
• Section 7.1.2: Publications: The consolidated financial statements and interim financial reports are published in accordance with the statutory periods and those imposed by Deutsche Börse for the Prime Standard. As an industrial holding company with a focus on majority interests in small and medium-sized industrial companies, MBB Industries is required to consolidate a number of individual companies as well as regularly performing first-time consolidation and deconsolidation. As such, compliance with the periods proposed by the German Corporate Governance Code would lead to significantly increased expense for the Company."

Re 2: Corporate governance report

Directors' shareholdings

The shareholdings of the members of the Managing Board and the Supervisory Board are shown in the notes to the consolidated financial statements under section 10.1 of II. Notes to the consolidated balance sheet.

Composition of the Supervisory Board

The members of the Supervisory Board must, as a whole, boast practical experience in the area of company management, industry expertise, and business and legal knowledge. The Supervisory Board fulfils this objective in its current composition.

Share buy-back programme

The share buy-back programme conducted between 12 January 2012 and 10 February 2012 is presented in the notes to the consolidated financial statements under section 10.1 of II. Notes to the consolidated balance sheet.

Auditor

The Annual General Meeting of MBB Industries AG elected Verhülsdonk & Partner Wirtschaftsprüfungsgesellschaft Steuerberatungsgesellschaft mbH, Düsseldorf, as the auditor of the financial statements of MBB Industries AG. At no point were there any business, financial, personal or other relationships between the auditor and its executive bodies and head auditors on the one hand, and MBB Industries AG and the members of its executive bodies on the other hand, that could give rise to doubts as to the independence of the auditor. Verhülsdonk & Partner also advises the Company on tax issues. The Supervisory Board of MBB Industries AG issues the audit engagement to, and agrees the corresponding fees with, the auditor elected by the Annual General Meeting. When issuing the audit engagement, the Supervisory Board and the auditor also agree on the reporting obligations set out in the German Corporate Governance Code.

The auditor participates in the discussions of the Supervisory Board on the single-entity and consolidated financial statements and reports on the key findings of its audit.

Stock option plan/securities-oriented incentive systems

As in the previous year, no stock option plan or securities-oriented incentive systems were agreed in 2012.

Re 3: Information on corporate governance practices

The Managing Board of MBB-AG complies with the applicable laws. There are no codified and publicly accessible corporate governance practices above and beyond these requirements. The Managing Board will examine the extent to which the future codification and publication of Group-wide regulations might be useful and reasonable.

Re 4: Procedures of the Managing Board and Supervisory Board

As a stock corporation under German law, the Company has a dual management and control structure.

The members of the Managing Board are appointed by the Supervisory Board and are responsible for managing the Group. The responsibilities of the Managing Board are allocated as follows: The Chairman of the Managing Board, Dr. Christof Nesemeier, is responsible for Strategy, Portfolio Company Management, Investor Relations and Finance. The Deputy Chairman of the Managing Board, Gert-Maria Freimuth, is responsible for Mergers & Acquisitions, IT, Legal, and Corporate Identity. Two further members of the management team are responsible for the areas of Finance as well as IT and Processes. The members of the Managing Board are each appointed until 30 June 2015.

The Supervisory Board of MBB-AG consists of Dr. Peter Niggemann (Chairman), Dr. Jan C. Heitmüller (Deputy Chairman) and Dr. Matthias Rumpelhardt. The Supervisory Board in its current composition was re-elected by the Annual General Meeting on 7 July 2011 until the end of the Ordinary General Meeting resolving the approval of the actions of the members of the Supervisory Board for the fourth financial year after the start of their term of office; this means that new elections to the Supervisory Board will be held at the Annual General Meeting in 2016. The MBB Group does not have a right of codetermination, meaning that all of the members of the Supervisory Board are shareholder representatives. The Supervisory Board advises the Managing Board and monitors its management of the Group.

The individual portfolio companies each have independent operational management teams, some of which hold shares in the portfolio companies; however, MBB-AG strives to ensure that its equity interest in each portfolio company does not fall below 75.1% where possible. The management teams of MBB-AG and the portfolio companies work in close cooperation on the development of the respective companies.

In light of the number of members of each body, neither the Managing Board nor the Supervisory Board formed any committees in the year under review.

Disclosures in accordance with sections 289 (4) and 315 (4) HGB

In accordance with sections 289 and 315 HGB, the management report must contain the following disclosures:

Composition of subscribed capital

The share capital reported in the balance sheet as of 31 December 2011 in the amount of €6,600,000.00 consists of 6,600,000 no-par value bearer shares and is fully paid-in. Each share grants the bearer one vote at the Annual General Meeting.

Restrictions on voting rights or the transfer of shares

The 144,201 treasury shares acquired as part of the share buy-back programme in 2012 do not have voting rights in accordance with section 71b of the German Stock Corporation Act.

Direct or indirect equity interests exceeding 10% of the voting rights

Direct or indirect equity interests exceeding 10% of the voting rights are presented in the notes to the consolidated financial statements under section 10.1 of II. Notes to the consolidated balance sheet.

Bearers of shares conferring special rights

No shares conferring special rights have been issued.

Nature of control of voting rights in the case of employee participation

There are no corresponding employee participation schemes.

Statutory provisions and Articles of Association on the appointment and dismissal of members of the Managing Board and on amendments to the Articles of Association

Members of the Managing Board are appointed and dismissed in accordance with sections 84 f. AktG. Article 6 of the Articles of Association governs the appointment and dismissal of members of the Managing Board as follows: "The Managing Board consists of one or more persons. The Supervisory Board is responsible for determining the number of members of the Managing Board and for their appointment, the conclusion of their employment contracts and the revocation of their appointment. If the Managing Board consists of more than one person, the Supervisory Board may appoint a member of the Managing Board as the Chairman or Spokesman and another member of the Managing Board as the Deputy Chairman or Deputy Spokesman."

In accordance with section 179 (1) AktG, all amendments to the Articles of Association require a corresponding resolution by the Annual General Meeting. In accordance with Article 24 of the Articles of Association, amendments to the Articles of Association require a simple majority of the votes cast at the Annual General Meeting, to the extent that this is permitted by law; abstentions do not count as votes cast.

Article 11 (2) of the Articles of Association also states: "The Supervisory Board is authorised to make amendments to the Articles of Association that relate solely to their wording. In particular, the Supervisory Board is authorised to amend the wording of the Articles of Association in the event of the full or partial implementation of an increase in the share capital from Authorised Capital I (Article 4 (4) of the Articles of the Association) or after the expiry of the authorisation period in order to reflect the extent to which any capital increase from Authorised Capital I has been implemented."

Powers of the Managing Board with particular reference to the ability to issue or buy back shares

The Annual General Meeting on 30 June 2010 authorised the Managing Board, with the approval of the Supervisory Board, to increase the share capital of the Company on one or more occasions up to and including 29 June 2015 by a total of up to €3,300,000.00 in exchange for cash and/or non -cash contributions by issuing new no-par value bearer shares (Authorised Capital 2010). The Managing Board is authorised, with the approval of the Supervisory Board, to disapply shareholders' statutory subscription rights in the following cases:

• to eliminate fractions,
• if a cash capital increase is implemented, the proportionate amount of the share capital attributable to the new shares for which shareholders' subscription rights are disapplied does not exceed 10% of the share capital at the date on which the new shares are issued, and the issue price of the new shares is not significantly lower than the quoted price for the listed shares of the same class and with the same conditions at the date on which the final issue price is fixed by the Managing Board within the meaning of sections 203 (1) and (2) and 186 (3) sentence 4 AktG; this upper limit for the disapplication of shareholders' subscription rights shall include the proportionate interest in the share capital of any shares already issued from Authorised Capital 2010 since 1 July 2010 or that have been available for subscription under the terms of options or conversion rights issued since 1 July 2010 or conversion obligations substantiated since that date, to the extent that shareholders' subscription rights were disapplied in accordance with or within the meaning of section 186 (3) sentence 4 AktG when the relevant authorised capital was utilised or the relevant convertible bonds and/or bonds with warrants were issued; the upper limit shall also include the proportionate interest in the share capital attributable to treasury shares purchased by the Company on the basis of an authorisation in accordance with section 71 (1) no. 8 AktG since 1 July 2010 and sold to third parties in exchange for cash with shareholders' subscription rights disapplied, unless the shares were sold via the stock exchange or under the terms of a public offering to shareholders;
• where it is necessary to grant shareholders' subscription rights to the holders of options or conversion rights arising from convertible bonds or bonds with warrants such as they would be entitled to as shareholders after exercising their options or conversion rights or conversion obligations; and
• in the case of a non-cash capital increase, to grant shares for the purpose of acquiring companies, parts of companies or equity interests in companies.
• The Managing Board is authorised, with the approval of the Supervisory Board, to determine the further details of the implementation of capital increases from Authorised Capital 2010.
• The Company was also authorised to purchase and sell treasury shares corresponding to up to 10% of the share capital in accordance with section 71 (1) no. 8 AktG in the period from 1 July 2010 to 29 June 2015. Rescinding this resolution, the Annual General Meeting on 18 June 2012 resolved to authorise the Company to purchase and sell treasury shares corresponding to up to 10% of the share capital in accordance with section 71 (1) no. 8 AktG in the period from 1 July 2012 to 29 June 2017. This amount includes the notional interest in the share capital attributable to shares issued from authorised capital after 1 July 2012 with shareholders' subscription rights disapplied in accordance with section 186 (3) sentence 4 AktG or that have been available for subscription under the terms of option or conversion rights or obligations arising from convertible bonds and/or bonds with warrants since that date, to the extent that shareholders' subscription rights were disapplied in accordance with section 186 (3) sentence 4 AktG when the relevant instruments were issued.

This authorisation may be exercised in part or in full, on one or more occasions until the upper limit is reached, and for one or more purposes. It may not be exercised for the purpose of trading in treasury shares.

The treasury shares must be purchased via the stock exchange. The purchase price for one share may not exceed or fall below the share price of the Company in the opening auction in Xetra trading (or a comparable successor system of the Frankfurt Stock Exchange) on the purchase date by more than 10%.

The Managing Board is authorised, with the approval of the Supervisory Board, to offer the treasury shares purchased in accordance with the above authorisation to third parties, either in part or in full, in order to acquire companies and/or equity interests in companies with the shareholders' subscription rights relating to these treasury shares disapplied and/or to withdraw the purchased shares, either in part or in full, without this requiring a separate resolution by the Annual General Meeting. The price at which the shares are sold to third parties may not exceed or fall below the average share price of the Company in the midday auction in Xetra trading (or a comparable successor system of the Frankfurt Stock Exchange) on the three trading days prior to the acquisition of the company or equity interest by more than 5%.

On 30 June 2010, the Managing Board was also authorised – subject to the approval of the Supervisory Board – to issue bearer and/or registered convertible bonds and/or bonds with warrants with a total volume of up to €66,000,000.00 and a maximum term of 10 years in the period until 29 June 2015. The Company's share capital is increased contingently by up to €3,300,000.00 (Contingent Capital 2010). The purpose of this contingent capital increase is to issue shares to the creditors of convertible bonds or bonds with warrants. The contingent capital increase may only be implemented to the extent that the creditors have exercised their conversion right or are subject to a conversion obligation.

On 11 January 2012, MBB Industries AG resolved to utilise the authorisation granted by the Annual General Meeting on 30 June 2010 to purchase treasury shares in accordance with section 71 (1) no. 8 AktG and to conduct a share buy-back programme in the period from 12 January to 10 February 2012.

Material agreements subject to the condition of a change of control as a result of a takeover bid

There are no such agreements.

Compensation agreements with members of the Managing Board or employees for the event of a takeover bid

There are no such compensation agreements.

Report on post-balance sheet date events

On 14 February 2013, Gert-Maria Freimuth, member of the Managing Board and majority shareholder of MBB Industries AG, informed the Company of his desire to step down from the Managing Board with effect from the 2013 Annual General Meeting, following 17 years as an executive and member of the Managing Board, and to move to the Supervisory Board. The Supervisory Board and Managing Board expressed their unanimous support for the changes in their composition and intend to implement these changes at the 2013 Annual General Meeting. In future, the management team of MBB Industries will continue to consist of the Chief Executive Officer, Dr. Christof Nesemeier, and three additional members.

Report on expected developments

We see our results for the 2012 financial year as providing solid foundations for the future development of the MBB Group. Providing that the economy continues on its current path, the Managing Board is forecasting rising revenue in its existing investment portfolio and positive earnings on the whole in the 2013 and 2014 financial years. The MBB Group is set to grow significantly on the back of the investments resolved for 2013 and 2014.

The Managing Board considers the Group's equity and liquidity situation to be important factors in allowing it to grow in the current market environment, both organically and by acquiring new portfolio companies, while ensuring that it is in a position to act at all times and even in the event of new global crises.

Summary of the dependent company report in accordance with section 312 AktG

In the case of the transactions and measures contained in the dependent company report, the Company received appropriate consideration for each transaction and was not disadvantaged by the implementation or omission of any measures on the basis of the circumstances known to us at the time the transactions were executed or the measures were implemented or omitted.

Berlin, 20 March 2013

Dr. Christof Nesemeier Gert-Maria Freimuth Chairman of the Managing Board Member of the Managing Board

Gewinn- und Verlustrechnung (HGB)	2012	2011
	T€	T€
Umsatzerlöse	1,505	1,685
Sonstige betriebliche Erträge	835	1,012
Aufwendungen für bezogene Leistungen	1,136	891
Personalaufwand	189	184
Abschreibungen auf immaterielle Vermögensgegenstände
und Sachanlagen	50	33
Sonstige betriebliche Aufwendungen	1,156	1,168
Erträge aus Beteiligungen	752	843
Erträge aus anderen Wertpapieren und Ausleihungen
des Finanzanlagevermögens	286	205
Sonstige Zinsen und ähnliche Erträge	412	591
Abschreibungen auf Finanzanlagen und Wertpapiere
des Umlaufvermögens	4	335
Zinsen und ähnliche Aufwendungen	165	132
Ergebnis der gewöhnlichen Geschäftstätigkeit	1,090	1,593
Steuern vom Einkommen und vom Ertrag	-96	397
Sonstige Steuern	3	48
Jahresüberschuss	1,183	1,148
Gewinnvortrag aus dem Vorjahr	14,024	15,717
Kauf eigener Anteile	-856	0
Bilanzgewinn	14,351	16,865

MBB Industries AG Abridged Annual Financial Statements for 2012

Appropriation of earnings

The net profit of €1,182,392.17, together with the profit carried forward of €14,024,359.86 and less the excess over the par value of treasury shares acquired, is reported as unappropriated surplus.

As in previous years, the Managing Board and Supervisory Board will propose to the Annual General Meeting the payment of a dividend. This dividend will amount to €3,227,899.50 or €0.50 per share (based on the number of shares in circulation at the publication date).

Bilanz (HGB)	31.12.2012	31.12.2011
Aktiva	geprüft	geprüft
	T€	T€
Immaterielle Vermögensgegenstände	142	62
Sachanlagen	89	104
Finanzanlagen	33,658	24,848
Anlagevermögen	33,889	25,014
Forderungen und sonstige Vermögensgegenstände	1,992	2,243
Wertpapiere	3,639	6,804
Kassenbestand und Guthaben bei Kreditinstituten	2,804	11,466
Umlaufvermögen	8,435	20,513
Rechnungsabgrenzungsposten	13	1
Summe Aktiva	42,337	45,528
Passiva	T€	T€
Eigenkapital	36,860	39,518
Rückstellungen	1,086	1,054
Verbindlichkeiten	4,391	4,956
Summe Passiva	42,337	45,528

IFRS-Konzern-Gesamtergebnisrechnung	Anhang	01.01.-	01.01.-
		31.12.2012	31.12.2011
		T€	T€
Umsatzerlöse	III.1.	204,876	109,627
Erhöhung (+) / Verminderung (-) des Bestands
an unfertigen und fertigen Erzeugnissen		765	134
Betriebsleistung		205,641	109,761
Auflösung passivischer Unterschiedsbetrag
aus der Kapitalkonsolidierung	I.1.3.	1,737	0
Erträge aus Entkonsolidierungen		0	475
Übrige betriebliche Erträge	III.2.	4,556	3,307
Gesamtleistung		211,934	113,543
Aufwendungen für Roh-, Hilfs- und Betriebsstoffe		-110,116	-52,364
Aufwendungen für bezogene Leistungen		-24,446	-19,042
Materialaufwand		-134,562	-71,406
Löhne und Gehälter		-31,931	-19,451
Soziale Abgaben und Aufwendungen
für Altersversorgung und für Unterstützung		-9,481	-4,085
Personalaufwand		-41,412	-23,536
Sonstige betriebliche Aufwendungen	III.3.	-11,645	-9,361
Ergebnis vor Zinsen, Steuern und Abschreibungen
(EBITDA)		24,315	9,240
Abschreibungen	II.1.	-4,876	-3,567
Ergebnis vor Zinsen und Steuern (EBIT)		19,439	5,673
Abschreibungen Wertpapiere	II.8.	-15	-346
Sonstige Zinsen und ähnliche Erträge	III.4.	542	601
Zinsen und ähnliche Aufwendungen	III.5.	-2,070	-1,329
Finanzergebnis		-1,543	-1,074
Ergebnis vor Steuern (EBT)		17,896	4,599
Steuern vom Einkommen und vom Ertrag	III.6.	-3,831	-990
Sonstige Steuern	III.6.	-216	-146
Periodenergebnis		13,849	3,463
Ergebnisanteil Minderheiten (fortgeführter Bereich)		-410	-166
Ergebnis aus fortgeführten Geschäftsbereichen		13,439	3,297
Ergebnis aus aufgegebenen Geschäftsbereichen		0	39
Konzernjahresüberschuss		13,439	3,336
Ergebnis je Aktie (in €)	III.7.	2.08	0.51

IFRS Consolidated Financial Statements for 2012

IFRS-Konzern-Gesamtergebnisrechnung	Anhang	01.01.-	01.01.-
		31.12.2012	31.12.2011
		T€	T€
Konzernergebnis		13,439	3,336
Ergebnisanteil Minderheiten		410	166
Periodenergebnis		13,849	3,502
Im Eigenkapital erfasste Veränderungen
aus der Währungsumrechnung	II.10.4	658	-796
Nettogewinn (+) / -verlust (-) aus der Neubewertung
von finanziellen Vermögenswerten
der Kategorie "zur Veräußerung verfügbar"	II.10.4	1,045	-48
Veränderung aus Erwerb Unterbeteiligung		0	-2,000
Sonstiges Ergebnis nach Ertragsteuern		1,703	-2,844
Gesamtergebnis der Berichtsperiode		15,552	658
Davon entfallen auf
- Gesellschafter des Mutterunternehmens		15,263	1,278
- Nicht-kontrollierende Gesellschafter		289	-620

Bilanz	Anhang	31.12.2012	31.12.2011
Aktiva (IFRS)		geprüft	geprüft
		T€	T€
Langfristiges Vermögen
Konzessionen, gewerbliche Schutzrechte und ähnliche Rechte
und Werte	II.3.	3,038	2,209
Firmenwert	II.2.	1,816	1,816
Geleistete Anzahlungen		84	242
Immaterielle Vermögenswerte		4,938	4,267
Grundstücke und Bauten
einschließlich der Bauten auf fremden Grundstücken	II.4.	22,275	14,700
Technische Anlagen und Maschinen	II.4.	7,644	8,581
Andere Anlagen, Betriebs- und Geschäftsausstattung	II.4.	3,297	2,394
Geleistete Anzahlungen und Anlagen im Bau	II.4.	2,392	482
Sachanlagen		35,608	26,157
Anteile an assoziierten Unternehmen		0	0
Wertpapiere des Anlagevermögens	II.8.	4,932	5,477
Sonstige Ausleihungen		162	275
Finanzanlagen		5,094	5,752
Aktive latente Steuern	II.9.	933	1,056
		46,573	37,232
Kurzfristiges Vermögen
Roh-, Hilfs- und Betriebsstoffe	II.5.	4,907	4,052
Unfertige Erzeugnisse	II.5.	2,905	2,178
Fertige Erzeugnisse	II.5.	7,082	7,106
Geleistete Anzahlungen		3,468	0
Vorräte		18,362	13,336
Forderungen aus Lieferungen und Leistungen	II.6.	17,588	7,751
Forderungen aus Auftragsfertigung	II.6.	22,721	0
Forderungen gegen assoziierte Unternehmen		115	90
Sonstige kurzfristige Vermögenswerte	II.7.	2,991	2,587
Forderungen aus Lieferungen und Leistungen
und sonstige kurzfristige Vermögenswerte		43,415	10,428
Gold und Rohstoffe	II.8.	2,245	2,121
Wertpapiere	II.8.	8,188	7,037
Zur Veräußerung verfügbare finanzielle Vermögenswerte		10,433	9,158
Kasse	V.	10	8
Bankguthaben	V.	29,859	15,635
Kassenbestand, Guthaben bei Kreditinstituten		29,869	15,643
		102,079	48,565
Summe Aktiva		148,652	85,797

Bilanz	Anhang	31.12.2012	31.12.2011
Passiva (IFRS)		geprüft	geprüft
		T€	T€
Eigenkapital
Gezeichnetes Kapital	II.10.1	6,456	6,600
Kapitalrücklage	II.10.2	14,395	15,251
Gesetzliche Rücklage	II.10.3	61	61
Gewinnrücklagen	II.10.4	34,164	21,742
Minderheitenanteile	II.10.	2,335	2,046
		57,411	45,700
Langfristige Schulden
Verbindlichkeiten gegenüber Kreditinstituten	II.12.	11,224	13,050
Sonstige Verbindlichkeiten	II.13.	732	829
Rückstellungen für Pensionen	II.11.	18,173	4,836
Sonstige Rückstellungen	II.14.1	4,153	581
Passive latente Steuern	II.9.	3,451	2,691
		37,733	21,987
Kurzfristige Schulden
Verbindlichkeiten gegenüber Kreditinstituten	II.12.	2,116	3,574
Erhaltene Anzahlungen	II.12.	12,305	20
Verbindlichkeiten aus Lieferungen und Leistungen	II.12.	10,957	7,972
Sonstige Verbindlichkeiten	II.13.	4,864	3,734
Rückstellungen mit Verbindlichkeitscharakter	II.14.1	11,225	2,148
Steuerrückstellungen	II.14.2	3,421	362
Sonstige Rückstellungen	II.14.1	8,620	300
		53,508	18,110
Summe Passiva		148,652	85,797

Konzern-Kapitalflussrechnung	01.01.-	01.01.-
	31.12.2012	31.12.2011
	T€	T€
1. Cashflow aus betrieblicher Tätigkeit
Ergebnis vor Steuern und Zinsen (EBIT)	19,439	5,673
Berichtigungen um zahlungsunwirksame Vorgänge:
Abschreibungen auf Gegenstände des Anlagevermögens	4,876	3,567
Zunahme (+) / Abnahme (-) der Rückstellungen	3,228	-909
Ertrag (-) / Verlust (+) aus der Entkonsolidierung	0	-475
Ertrag aus der Erstkonsolidierung	-1,737	0
Verluste (+) / Gewinne (-) aus Anlageabgängen	-186	0
Sonstige zahlungsunwirksame Aufwendungen / Erträge	300	-2
	6,481	2,181
Veränderung des Working Capital:
Zunahme (-) / Abnahme (+) der Vorräte, der Forderungen aus
Lieferungen und Leistungen sowie anderer Aktiva	-1,904	-1,442
Abnahme (-) / Zunahme (+) der Verbindlichkeiten aus Lieferungen und
Leistungen sowie anderer Passiva	-3,392	1,018
	-5,296	-424
Gezahlte Ertragsteuern	-1,267	-928
Erhaltene Zinsen	542	601
	-725	-327
Cashflow aus betrieblicher Tätigkeit	19,899	7,103
2. Cashflow aus der Investitionstätigkeit
Investitionen (-) / Desinvestitionen (+) immaterielles Anlagevermögen	-612	-314
Investitionen (-) / Desinvestitionen (+) Sachanlagevermögen	-12,715	-2,095
Investitionen (-) / Desinvestitionen (+) Finanzanlagevermögen	113	88
Investitionen (-) / Desinvestitionen (+) in zur Veräußerung gehaltene
Finanzanlagen und Wertpapiere	330	474
Einnahmen aus Sachanlageabgängen	186	0
Erwerb Unterbeteiligung	0	-2,640
Verkauf (+)/ Erwerb (-) von konsolidierten Unternehmen	-13,328	513
Cashflow aus der Investitionstätigkeit	-26,026	-3,974
3. Cashflow aus der Finanzierungstätigkeit
Gewinnausschüttung an Gesellschafter	-2,841	-2,178
Erwerb eigener Anteile	-1,000	0
Auszahlungen für die Tilgung von Finanzkrediten	-3,284	-1,588
Zinsauszahlungen	-1,606	-1,328
Cashflow aus der Finanzierungstätigkeit	-8,731	-5,094
Finanzmittelfonds am Ende der Periode
Zahlungswirksame Veränderung des Finanzmittelfonds
(Zwischensumme 1-3)	-14,858	-1,965
Auswirkungen von Wechselkursänderungen (nicht zahlungswirksam)	39	-36
Änderungen des Konsolidierungskreises	29,045	0
Finanzmittelfonds zu Beginn der Berichtsperiode	15,643	17,644
Finanzmittelfonds am Ende der Periode	29,869	15,643
Zusammensetzung des Finanzmittelfonds
Kasse	10	8
Guthaben bei Kreditinstituten	29,859	15,635
Überleitung zum Liquiditätsbestand am 31.12.	2012	2011
Finanzmittelfonds am Ende der Periode	29,869	15,643
Gold	2,245	2,121
Wertpapiere	13,120	12,514
Liquiditätsbestand am 31.12.	45,234	30,278

Konzerneigenkapitalveränderungsrechnung
					Gewinnrücklagen
	Gezeichnetes Kapital	Kapital rücklage	Gesetzliche Rücklage	Währungs umrechnungs differenz	Zum Verkauf zur Verfügung stehende finanzielle Vermögens werte	Erwirt schaftetes Konzern Eigen kapital	Anteil der Aktionäre der MBB AG	Minder heiten anteile	Konzern Eigen kapital
	T€	T€	T€	T€	T€	T€	T€	T€	T€
01.01.2011	6,600	15,251	61	218	605	21.819*	44,554	2,368	46,922
Gezahlte Dividenden	0	0	0	0	0	-2,178	-2,178	0	-2,178
Zwischensumme	6,600	15,251	61	218	605	19,641	42,376	2,368	44,744
Direkt im Eigenkapital erfasste Beträge	0	0	0	0	-48	0	-48	0	-48
Währungsumrechnungsdifferenz	0	0	0	-1,035	0	0	-1,035	239	-796
Konzernergebnis	0	0	0	0	0	3,336	3,336	166	3,502
Veränderung aus Erwerb Unterbeteiligung	0	0	0	0	0	-975	-975	-1,025	-2,000
Konzerngesamtergebnis (Total Comprehensive Income)	0	0	0	-1,035	-48	2,361	1,278	-620	658
Minderheiten DTS IT AG	0	0	0	0	0	0	0	440	440
Veränderung aus der Entkonsolidierung	0	0	0	0	0	0	0	-142	-142
31.12.2011	6,600	15,251	61	-817	557	22,002	43,654	2,046	45,700
Gezahlte Dividenden	0	0	0	0	0	-2,841	-2,841	0	-2,841
Zwischensumme	6,600	15,251	61	-817	557	19,161	40,813	2,046	42,859
Direkt im Eigenkapital erfasste Beträge	0	0	0	0	1,045	0	1,045	0	1,045
Währungsumrechnungsdifferenz	0	0	0	779	0	0	779	-121	658
Konzernergebnis	0	0	0	0	0	13,439	13,439	410	13,849
Konzerngesamtergebnis (Total Comprehensive Income)	0	0	0	779	1,045	13,439	15,263	289	15,552
Erwerb eigener Anteile	-144	-856	0	0	0	0	-1,000	0	-1,000
31.12.2012	6,456	14,395	61	-38	1,602	32,600	55,076	2,335	57,411

* Adjustment of Deferred Taxes in 2010

Notes to the Consolidated Financial Statements for 2012

I. Methods and principles

1. Basic accounting information

1.1 Information on the Company

MBB Industries AG (hereinafter referred to as "MBB" or "MBB-AG") is headquartered at Joachimstaler Straße 34, 10719 Berlin, Germany. It is entered in the commercial register of the Berlin-Charlottenburg District Court under HRB 97470. MBB Industries AG has been listed in the Prime Standard of the Frankfurt Stock Exchange since 20 June 2008 under German securities identification number A0ETBQ. It is the parent company of the MBB Group.

MBB Industries AG is a family-owned, medium-sized group that has expanded continuously since its formation through organic growth and company acquisitions. The business model focuses on the sustainable value growth of the individual companies and the Group as a whole.

The consolidated financial statements of MBB Industries AG for the 2012 financial year are expected to be approved by the Supervisory Board of MBB Industries AG on 20 March 2013 and published on 15 April 2013.

1.2 Accounting policies

Due to its admission to the regulated market, MBB Industries AG prepares its consolidated financial statements in accordance with IFRS. The consolidated financial statements for the year ended 31 December 2012 are prepared in accordance with the International Financial Reporting Standards (IFRS) of the International Accounting Standards Board (IASB) as adopted by the EU and applicable at the reporting date. The term "IFRS" also includes the International Accounting Standards (IAS) still applicable, the International Financial Reporting Standards (IFRS) and the interpretations of the Standing Interpretations Committee (SIC) and of the International Financial Reporting Interpretations Committee (IFRIC). The consolidated financial statements are supplemented by a Group management report in accordance with section 315 HGB and additional disclosures in accordance with section 315a HGB.

Application of new and amended standards

The following IAS/IFRS/IFRIC are required to be applied for the first time in the 2012 financial year. Unless stated otherwise, they have limited or no effect on the consolidated financial statements of MBB Industries AG:

Regelung	Bezeichnung	Auswirkungen
IFRS 7	Angaben - Übertragung finanzieller Vermögenswertes	gering
IAS 12	Realisierung der zugrundeliegenden Vermögenswerte	gering
IFRS 1	Hyperinflation und fester Umstellungszeitpunkt	keine

The following newly issued standards, standards endorsed in 2012 or amended standards or interpretations that were not yet mandatory were not applied early in these consolidated financial statements. Where amendments affect MBB, their future effect on the consolidated financial statements is still being examined.

Page	31
------	----

IFRS	Title	Issued	Effective date	Endorsement	Expected effects
IFRS 13	Fair Value Measurement	May 12, 2011	Jan 1, 2013	Dec 11, 2012	Enhanced disclosures
IFRS 7	Disclosure - Offsetting Financial Assets and Financial Liabilities	Dec 16, 2011	Jan 1, 2013	Dec 13, 2012	Enhanced disclosures
IFRS 10	Consolidated Financial Statements	May 12, 2011	Jan 1, 2013	Dec 11, 2012	No material effects
IFRS 11	Joint Arrangements	May 12, 2011	Jan 1, 2013	Dec 11, 2012	No material effects
IFRS 12	Disclosure of Interests in Other Entities	May 12, 2011	Jan 1, 2013	Dec 11, 2012	Enhanced disclosures
IAS 19	Employee Benefits	Jun 16, 2011	Jan 1, 2013	Jun 5, 2012	Changes in presentation and notes
	Annual Improvements 2012	May 17, 2011	Jan 1, 2013	no	Minor effects
IAS 32	Offsetting Financial Assets and Financial Liabilities	Dec 16, 2011	Jan 1, 2014	Dec 13, 2012	No material effects
IFRS 9	Financial Instruments - Classification and Measurement	Oct 28, 2010	Jan 1, 2015	no	Accounting of certain fair value changes
IFRS 1	Government Loans	Mar 13, 2012	Jan 1, 2013	no	No material effects
IFRS 9	Financial Instruments - Mandatory Effective Date	Dec 16, 2011	Jan 1, 2015	no	Is under examination
IFRIC 20	Stripping Costs	Oct 31, 2011	Jan 1, 2013	Dec 11, 2012	None
IFRIC 20	Presentation of Other Comprehensive Income	Oct 31, 2011	Jan 1, 2013	Dec 11, 2012	None
IAS 27	Seperate Financial Statements	May 12, 2011	Jan 1, 2013	Dec 11, 2012	No material effects
IAS 28	Investments in Associates	May 12, 2011	Jan 1, 2013	Dec 11, 2012	None

1.3 Company law changes and structural changes in 2012

On 9 March 2012, MBB Industries AG, via Jade 1414. GmbH, acquired all of the shares of CLAAS Fertigungstechnik GmbH, Beelen, from CLAAS KGaA mbH, including dividend rights from 1 January 2012, at a purchase price of €13.3 million subject to conditions precedent. Following the fulfilment of the conditions precedent listed in the sale and purchase agreement, the closing of the transaction occurred on 31 March 2012.

CLAAS Fertigungstechnik GmbH is a leading international plant engineering company with a focus on production technology for the automotive industry and other sectors. The company has traded as MBB Fertigungstechnik GmbH since 29 May 2012 and strengthens the Technical Applications segment.

The following assets and liabilities were assumed as at the acquisition date:

Vermögenswerte und Schulden
CLAAS Fertigungstechnik GmbH	T€
Kurzfristige Vermögenswerte
Kasse und Bankguthaben	29,045
Forderungen und sonstige Vermögenswerte	33,363
Vorräte	2,746
Langfristige Vermögenswerte
Immaterielle Vermögenswerte	645
Sachanlagen	1,026
Kurzfristige Verbindlichkeiten
Verbindlichkeiten aus Lieferungen und Leistungen	1,673
Sonstige Verbindlichkeiten	11,036
Erhaltene Anzahlungen	14,394
Rückstellungen	4,236
Langfristige Verbindlichkeiten
Pensionsrückstellungen	13,497
Passive latente Steuern	737
Sonstige Rückstellungen	6,215
Vermögen	15,037

The receivables shown are measured at fair value and primarily relate to receivables from construction contracts in the amount of €23.1 million and trade receivables in the amount of €7.9 million. Of the cash and cash equivalents reported at the acquisition date, €8.7 million were pledged as collateral for guarantee credits with banks and insurance companies. As at 31 December 2012, the collateral pledged for guarantee credits amounted to €10.0 million.

Since the acquisition date, MBB Fertigungstechnik GmbH has contributed €86.2 million to consolidated revenue and €6.8 million to consolidated net profit. If the acquisition had taken place at the start of the year, the Group would have reported revenue of €225.5 million and consolidated net profit of €14.2 million.

The purchase price was paid in full as of 31 December 2012. Transaction costs of €92 thousand have been expensed and are included in the other operating expenses in the consolidated statement of comprehensive income and as cash flow from operating activities in the consolidated statement of cash flow.

The purchase price of €13.3 million resulted from a negotiation process between the buyer and the seller that took into account a range of aspects, including uncertainty concerning customer acceptance of the renaming of the company, the outcome of contracts to be awarded in the short term, and the structure of the management. These risks, which it was not possible to recognise on the balance sheet and which could have led to expenses for the Company following the acquisition, were taken into account in the purchase price, meaning that the purchase price is slightly lower than the value of the net assets acquired. This means that capital consolidation resulted in a bargain purchase of €1.7 million, which MBB reported as other income following a renewed evaluation of the assets acquired and liabilities assumed.

On 9 March 2012, MBB Fertigungstechnik Beelen GmbH, formerly Jade 1414. GmbH, acquired the business premises plus buildings of CLAAS Fertigungstechnik GmbH from CLAAS KGaA mbH. The purchase price of €7.7 million was initially financed by the seller. In December 2012, MBB Fertigungstechnik Beelen GmbH settled the remaining liability to CLAAS KGaA mbH in full. Refinancing took the form of a ten-year bank loan on the land and the building at 2.85%, which was not drawn down until January 2013.

DTS Beteiligungen Verwaltungs GmbH, which was acquired by eld datentechnik GmbH on 1 December 2011, was merged into eld datentechnik GmbH with economic effect from 1 January 2012.

2. Scope of consolidation

In addition to the parent company MBB Industries AG, the companies listed below are included in the consolidated financial statements. The ownership interests are calculated by multiplying the number of shares held in the respective company. The companies listed in bold hold direct or indirect interests in the companies below them.

Einbezogene Unternehmen	Beteiligungs
Name und Sitz der Gesellschaft	quote in %
Verbundene Unternehmen (Vollkonsolidierung)
OBO Modulan GmbH, Stadthagen, Deutschland	100.00
OBO-Werke Verwaltungsgesellschaft mbH, Stadthagen, Deutschland	100.00
OBO-Werke GmbH & Co. KG, Stadthagen, Deutschland	100.00
OBO-Industrieanlagen GmbH, Stadthagen, Deutschland	100.00
Delignit AG, Blomberg, Deutschland	76.08
Hausmann Verwaltungsgesellschaft mbH, Blomberg, Deutschland	76.08
Blomberger Holzindustrie B. Hausmann GmbH & Co. KG, Blomberg, Deutschland	76.08
MBB Fertigungstechnik Beelen GmbH, Berlin, Deutschland	100.00
MBB Fertigungstechnik GmbH, Beelen, Deutschland	100.00
Hanke Tissue Sp. z o.o., Küstrin, Polen	100.00
DTS IT AG, Herford, Deutschland	80.00
DTS Systeme GmbH, Herford, Deutschland	80.00
ICSmedia GmbH, Münster, Deutschland	80.00
eld datentechnik GmbH, Fellbach, Deutschland	80.00
CT Formpolster GmbH, Löhne, Deutschland	100.00

The following table shows the portfolio companies that were not fully consolidated.

	Beteiligungs
Name und Sitz der Gesellschaft	quote in %
Assoziierte Unternehmen
S.C. Cildro Plywood Srl., Drobeta Turnu Severin, Rumänien	49.00
S.C. Cildro S.A., Drobeta Turnu Severin, Rumänien	42.90
S.C. Cildro Service Srl., Drobeta Turnu Severin, Rumänien	42.90

The list of shareholdings is provided as an annex to these notes.

3. Principles of consolidation

The consolidated financial statements comprise the financial statements of MBB Industries AG and its subsidiaries as at 31 December of each financial year. The financial statements of the subsidiaries are prepared using uniform accounting policies at the same balance sheet date as the financial statements of the parent company.

The reporting date for all subsidiaries included in the consolidated financial statements is 31 December of the relevant financial year.

3.1 Subsidiaries

Capital consolidation is performed using the purchase method, under which the acquisition cost of the acquired shares is offset against the proportion of the acquired subsidiary's equity attributable to the parent company at the acquisition date. All identifiable assets, liabilities and contingent liabilities are recognised at fair value and included in the consolidated balance sheet. If the acquisition cost exceeds the fair value of the net assets attributable to the Group, the difference is capitalised as goodwill.

If the fair value of the net assets attributable to the Group is higher than the acquisition cost of the shares, this results in a bargain purchase. If this bargain purchase remains after another review of the purchase price allocation and/or determination of the fair value of the acquired assets, liabilities and contingent liabilities, it must be recognised in income immediately. The proportion of the subsidiary's assets, liabilities and contingent liabilities attributable to minority interests is also recognised at fair value. However, only goodwill that is attributable to the Group is reported. Receivables and liabilities between the consolidated companies are offset against each other. This also applies to intragroup transactions and to intragroup revenues, income and expenses. Accordingly, the earnings of the subsidiaries acquired or disposed of during the financial year are included in the consolidated statement of comprehensive income from the date the acquisition becomes effective or until the disposal date respectively.

3.2 Associates

Companies in which MBB holds an interest in the share capital of between 20.0% and 50.0% and over which MBB exercises a significant influence are classified as associated companies. Significant influence describes the power to participate in the financial and operating policy decisions of the company in which the interest is held. Associated companies are included in the consolidated financial statements using the equity method. Under this method, the pro rata profits and losses of the associated company are added to or deducted from the balance sheet measurement of the holding. The amount of the loss allocation is essentially limited to the amount of the acquisition cost of the associated company. If the portfolio company reports a loss after its carrying amount has been reduced to a pro mem value of €1, these losses are recorded in an auxiliary account.

For acquisitions of associated companies, the purchase method is applied in the same way. Associated companies that were acquired or disposed of during the financial year are included in the consolidated financial statements from the acquisition date or until the disposal date respectively.

4. Presentation of accounting policies

4.1 General

With the exception of the remeasurement of certain financial instruments, the consolidated financial statements were prepared using the historical cost method. Historical cost is generally based on the fair value of the consideration paid in exchange for the asset.

The balance sheet was structured according to current and non-current assets and liabilities. The statement of comprehensive income is prepared in line with the nature of expense method for calculating the consolidated net profit for the period.

4.2 Reporting currency

The consolidated financial statements are prepared in euro, as the majority of Group transactions are conducted in this currency. Unless stated otherwise, all figures are rounded up or down to thousands of euro (€ thousand) in line with standard commercial practice. The amounts are stated in euro (€), thousands of euro (€ thousand) and millions of euro (€ million).

4.3 Currency translation

Each company within the Group determines its own functional currency. The items included in the financial statements of the respective company are measured using this functional currency. Foreign currency transactions are then translated into the functional currency at the spot exchange rate on the date of the transaction.

Foreign currency monetary assets and liabilities are translated into the functional currency at each reporting date using the closing rate. All exchange differences are recognised in income.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.

Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rate at the date when the fair value was determined.

The assets and liabilities of the foreign operations are translated into euro at the closing rate. Income and expenses are translated at the average exchange rate for the financial year. The resulting exchange differences are recognised as a separate component of equity.

Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of assets and liabilities resulting from the acquisition of that foreign operation are translated at the closing rate.

2012 Stichtagskurs 31.12. 2012 Durchschnittskurs 2012 Polnischer Zloty (PLN) 4.0882 4.1852 2011 Stichtagskurs 31.12. 2011 Durchschnittskurs 2011 Polnischer Zloty (PLN) 4.4168 4.1190

The following exchange rates were applied (for €1.00):

4.4 Intangible assets

Intangible assets not acquired as part of a business combination are initially carried at cost. The cost of an intangible asset acquired in a business acquisition corresponds to its fair value at the acquisition date.

Intangible assets are recognised when it is probable that the future economic benefits that are attributable to the asset will be received by the enterprise and the cost of the asset can be measured reliably.

Costs for research activities are charged as expenses in the period in which they are incurred.

Development costs are capitalised as internally generated intangible assets if all of the following criteria are met:

• Completion of the project is technically feasible.
• The Company intends and is able to complete the intangible asset and to use or sell it.
• It is assumed that the intangible asset is likely to generate a future economic benefit.
• In addition, the Group has the technical, financial and other resources to complete the development work and it is possible to reliably determine the expenses directly attributable to the project.

If these criteria are not met, the development costs are expensed in the period in which they are incurred.

For the purposes of subsequent measurement, intangible assets are recognised at cost less accumulated amortisation and accumulated impairment losses (reported under amortisation). Intangible assets (excluding goodwill) are amortised on a straight-line basis over their estimated useful life. The amortisation period and amortisation method are reviewed at the end of each financial year.

Apart from goodwill, the Group does not have any intangible assets with indefinite useful lives.

The cost of acquisition of new software is capitalised and treated as an intangible asset unless it forms an integral part of the associated hardware. Software is amortised on a straight-line basis over a period of up to three years.

Patents are amortised over a useful life of 10 years.

Costs incurred in order to restore or maintain the future economic benefits that the Company had originally expected are recognised as an expense.

Gains and losses from the disposal of intangible assets are determined as the differential value between the net disposal proceeds and the carrying amount of the asset and recognised in income in the period in which the asset is disposed of.

4.5 Goodwill

Goodwill from business combinations is the residual amount of the surplus of the cost of the business combination over the Group's share in the fair value of the identifiable assets, liabilities and contingent liabilities of the company acquired.

Goodwill is not amortised but instead is tested for impairment at least once a year in accordance with IAS 36. For the purposes of impairment testing, the goodwill acquired in the business combination is allocated to the cash-generating units (CGUs) of the Group that benefit from the combination starting from the acquisition date.

Goodwill is then written down if the recoverable amount of a cash-generating unit is lower than its carrying amount. Once recognised, impairment losses on goodwill are not reversed in future periods.

If a subsidiary is sold, the amount of the goodwill attributable to the subsidiary is taken into account in calculating the gain on disposal.

4.6 Property, plant and equipment

Property, plant and equipment are recognised at cost less accumulated depreciation and accumulated impairment losses. The cost of an item of property, plant and equipment consists of the purchase price and other non-refundable purchase taxes incurred in connection with the purchase as well as all directly attributable costs incurred to bring the asset to its location and to bring it to working condition for its intended use. Subsequent expenditure, such as servicing and maintenance costs, that is incurred after the non-current asset is put into operation is expensed in the period in which it is incurred. If it is likely that expenditure will lead to additional future economic benefits to the Company in excess of the originally assessed earnings power of the existing asset, the expenditure is capitalised as additional acquisition cost.

Assets newly identified in the course of acquisitions are measured at the fair value (market value) calculated at the acquisition date, which is then depreciated over the subsequent periods.

Depreciation is calculated on a straight-line basis over the expected useful economic life, assuming a residual value of €0.00. The following estimated useful lives are used for the individual asset groups:

Buildings and exterior installations:	10 to 25 years
Technical equipment and machinery:	10 to 12 years
Computer hardware:	3 years
Other office equipment:	5 to 13 years

Land is not depreciated.

The useful life, the depreciation method for property, plant and equipment and the residual values are reviewed periodically.

If items of property, plant and equipment are disposed of or scrapped, the corresponding acquisition cost and the accumulated depreciation is derecognised. Any realised gain or loss from the disposal is reported in the statement of comprehensive income. The profit or loss resulting from the sale of an item of property, plant and equipment is determined as the difference between the proceeds from the sale and the carrying amount of the asset and is recognised in income.

4.7 Leases

Determining whether an arrangement is or contains a lease is based on the economic content of the arrangement and requires an assessment of whether the fulfilment of the contractual arrangement is dependent on the use of a specific asset or assets and whether the arrangement conveys a right to use the asset.

Assets from finance leases, most of which transfer to the Group all risks and rewards of ownership of the transferred asset, are capitalised at the beginning of the lease term at the fair value of the lease asset or, if lower, at the present value of the minimum lease payments. The assets are depreciated.

Lease payments are divided into their components of finance costs and repayment of the lease liability in that the residual carrying amount of the lease liability bears a constant rate of interest. The remaining lease payment obligations at the balance sheet date are reported separately in the balance sheet according to their maturities. Lease payments for operating leases are expensed in the income statement over the term of the lease.

The Group does not act as a lessor.

4.8 Borrowing costs

Borrowing costs are expensed in the period in which they are incurred, unless they are incurred for the acquisition, construction or manufacture of qualifying assets. In this case, the borrowing costs are added to the cost of these assets. MBB neither acquired nor produced qualifying assets in the year under review.

4.9 Impairment of non-financial assets

Non-financial assets are tested for impairment when facts or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For impairment testing, the recoverable amount of the asset or the cash-generating unit (CGU) must be determined. The recoverable amount is the higher of the fair value less costs to sell and the value in use. The fair value less costs to sell is defined as the price obtainable from the sale of an asset or CGU between knowledgeable, willing and independent parties less costs of disposal. The value in use of an asset or CGU is determined by the present value of an estimated anticipated cash flow on the basis of its current use. If the recoverable amount falls below the carrying amount, an impairment loss in the amount of the difference is immediately recognised in income.

An adjustment in income of an impairment recognised as an expense in previous years is carried out for an asset (except for goodwill) if there are indications that the impairment no longer exists or may have decreased. The reversal is recorded in the income statement as income. However, the value increase (or reduction in the impairment) of an asset is recognised only to the extent that it does not exceed the carrying amount that would have resulted if no impairment loss had been recognised in the previous years (taking into account depreciation effects).

4.10 Financial investments and other financial assets

Financial assets as defined in IAS 39 are classified either as financial assets at fair value through profit or loss, as loans and receivables, as held-to-maturity investments or as available-for-sale investments. Financial assets are measured at fair value on initial recognition.

The designation of financial assets to the measurement categories depends on their nature and intended use and takes place on initial recognition. Where permitted and necessary, reclassifications are made at the end of the financial year.

As at 31 December 2012, the Group had sufficient loans and receivables and available-for-sale financial assets.

All purchases or sales of financial assets under market conditions are recognised on the day of trading, i.e. the day on which the Group entered into a commitment to purchase or sell the asset. Purchases and sales under market conditions are such transactions in financial assets that stipulate the delivery of the assets within a period determined by market regulations or market conventions.

Extended loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. These assets are measured at amortised cost using the effective interest method. Gains and losses are recognised in profit and loss when the loans and receivables are derecognised or impaired and through the amortisation process.

Available-for-sale financial assets are non-derivative financial assets that are classified as available for sale and do not belong in one of the other three categories. Available-for-sale securities are reported under non-current assets if they are not expected to be sold within a year of addition.

After initial recognition, held-for-sale financial assets are measured at fair value, with gains or losses recognised in a separate item of equity. On the date when the financial investment is derecognised or when an impairment on the financial investment is ascertained, the accumulated gain or loss previously recognised in equity is recognised in the income statement. The fair value of investments traded on organised markets is calculated by reference to the buying rate quoted on the stock exchange on the balance sheet date. Market values were available for the available-for-sale financial assets reported by the Group as at 31 December 2012 and 2011.

Financial assets are tested for impairment at each balance sheet date. If, in the case of financial assets recognised at amortised cost, it is likely that the Company will not be able to recover all amounts of loans, receivables or held-to-maturity investments that are due under the contractual conditions, an impairment loss or valuation allowance is recognised in income on the receivables. The impairment loss is defined as the difference between the carrying amount of the asset and the present value of the expected future cash flows measured using the effective interest method. The carrying amount of the asset is reduced using an allowance account. The impairment loss is recognised as an expense. Impairment losses previously recognised as expenses are adjusted in income if the subsequent partial reversal (or reduction) of the impairment can objectively be attributed to an event occurring after the original impairment. However, a reversal is recognised only to the extent that it does not exceed the amount of the amortised cost that would have resulted if no impairment loss had been recognised. The financial asset is derecognised if it is classified as uncollectible.

As in the previous year, the carrying amounts of the financial assets and liabilities essentially correspond to their fair values.

4.11 Inventories

Inventories are recognised at the lower of cost or net realisable value (less costs necessary to make the sale). Raw materials, consumables, supplies and purchased goods are measured at cost using the average price method or, if lower, at their market prices on the balance sheet date. The cost of finished goods and work in progress, in addition to the cost of materials used in construction, labour and pro rata material and production overheads, is taken into account assuming normal capacity utilisation. Appropriate valuation allowances were recognised for inventory risks from storage periods and reduced usability.

4.12 Cash and cash equivalents

Cash and cash equivalents shown in the balance sheet comprise cash in hand, bank balances and short-term deposits with an original term of less than three months.

Cash and cash equivalents in the consolidated cash flow statement are delimited in accordance with the above definition.

4.13 Financial liabilities

Loans are measured at fair value on initial recognition, including the transaction costs directly associated with taking out the loans. They are not designated as at fair value through profit or loss.

After initial recognition, interest-bearing loans are measured at amortised cost using the effective interest method, with interest expense recognised in profit or loss in line with the effective interest method.

Gains and losses are recognised in profit or loss when the liabilities are derecognised and where such gains and losses result from amortisation.

Liabilities from finance leases are expensed at the present value of the minimum lease payments.

Current financial liabilities are recognised at their repayment or settlement amount.

Financial liabilities are derecognised when the Group's corresponding obligations have been settled, cancelled or have expired.

4.14 Provisions

Provisions are reported when the Group has a current (legal or constructive) obligation due to a past event, it is probable that fulfilment of the obligation will lead to an outflow of resources embodying economic benefits, and the amount of the obligation can be reliably estimated. If the Group expects at least a partial refund of a provision recognised as a liability, the refund is recognised as a separate asset provided the receipt of the refund is virtually certain. The expense from forming the provision is reported in the income statement less the refund.

Provisions are reviewed at each balance sheet date and adjusted to the current best estimate. The amount of the provision corresponds to the present value of the expenses expected to be required to fulfil the obligation if the related interest effect is material. The increase in the provision over time is recognised as interest expense.

Provisions with the nature of a liability are recognised for obligations for which an exchange of services has taken place and the amount of the consideration is established with sufficient certainty. Provisions with the nature of a liability are reported under liabilities.

4.15 Pensions and other post-employment benefits

The pension obligations calculated at the level of the individual subsidiaries are measured in accordance with IAS 19. Payments for defined contribution pension plans are expensed. In the case of defined benefit pension plans, the obligation is recognised as a pension provision in the balance sheet. These pension commitments are regarded as defined benefit plan commitments and are therefore measured actuarially using the projected unit credit method.

Actuarial gains or losses are recognised immediately in the income statement.

4.16 Revenue recognition

Revenue is recognised when it is probable that Group will obtain the economic benefits and the amount of the revenue can be reliably determined. Revenue is measured at the fair value of the consideration received or to be received less discounts and rebates granted and value-added tax or other levies. In addition, revenue recognition also requires fulfilment of the recognition criteria listed below.

a) Sale of goods and products, performance of services

Revenue is recognised when the significant risks and rewards of ownership of the goods and products sold have been transferred to the buyer. This generally takes place when the goods and products are delivered or accepted by the end customer. Revenue from service transactions is recognised only when it is sufficiently probable that the economic benefits associated with the transaction will flow to the Group. It is recognised in the accounting period in which the services in question are performed.

b) Contract manufacturing for plant engineering

Following the acquisition of MBB Fertigungstechnik GmbH, formerly CLAAS Fertigungstechnik GmbH, the PoC (percentage of completion) method described in IAS 11 has been applied again for contract manufacturing since 31 March 2012. Under this method, when the outcome of a construction contract can be estimated reliably, the contract revenue and contract costs associated with this construction contract are recognised by reference to the degree of completion of the contract activity at the balance sheet date. The degree of completion is calculated as the ratio of the contract costs incurred up until the balance sheet date to the total estimated contract costs as at the balance sheet date (cost-to-cost method). Construction contracts accounted for using the PoC method are recognised as receivables from construction contracts in the amount of the contract costs incurred up until the balance sheet date plus the proportionate profit resulting from the degree of completion. Changes to contracts, additional amounts invoiced and incentive payments are recognised to the extent that a binding agreement has been concluded with the customer. If the result of a construction contract cannot be reliably estimated, the probable revenue is recognised up to a maximum of the costs incurred. Contract costs are recognised in the period in which they are incurred. If it is foreseeable that the total contract costs will exceed the contract revenue, the expected losses are expensed immediately.

c) Interest revenue

Interest revenue is recognised when the interest arises (using the effective interest rate, i.e. the calculatory interest rate at which estimated future cash inflows are discounted to the net carrying amount of the financial asset over the expected term of the financial instrument).

d) Dividends

Revenue is recognised when the legal right to payment arises.

4.17 Taxes

a) Current income taxes

Current tax assets and liabilities for the current period and earlier periods are measured at the amount of the refund expected to be received from the tax authority or the payment expected to be made to it. The calculation is based on tax rates and tax laws applicable at the balance sheet date.

b) Deferred taxes

Deferred taxes are recognised using the liability method for temporary differences at the balance sheet date between the carrying amount of an asset or liability in the balance sheet and its tax base.

Deferred tax liabilities are recognised for all taxable temporary differences with the exception of deferred tax liabilities from the initial recognition of goodwill or of an asset or liability from a transaction that does not constitute a business combination and, as at the transaction date, influences neither the accounting profit before taxes nor the taxable profit.

Deferred tax assets are recognised for all deductible temporary differences and unused tax credits to the extent that it is probable that taxable income will be available against which the deductible temporary differences and unused tax loss carryforwards and tax credits can be applied, with the exception of deferred tax assets from deductible temporary differences resulting from the initial recognition of an asset or liability from a transaction that does not constitute a business combination and, as at the transaction date, influences neither the accounting profit before taxes nor the taxable profit.

At individual companies, deferred tax assets and liabilities are offset to the extent that they can be allocated to future charges or reductions of the same taxable entity with respect to the same tax authority.

The carrying amount of deferred tax assets is tested on every balance sheet date and reduced to the extent that it is no longer probable that a sufficient taxable result will be available against which the deferred tax asset can be at least partly utilised. Unrecognised deferred tax assets are tested on every balance sheet date and recognised to the extent that it has become probable that taxable result in the future will allow the realisation of deferred tax assets.

Deferred tax assets and liabilities are measured at the tax rates which are expected to apply in the periods in which an asset is realised or a liability is settled. This is based on the tax rates and tax laws applicable at the balance sheet date. Future changes in the tax rates must be taken into account at the balance sheet date if the material conditions for validity in a legislative process are fulfilled.

Deferred taxes are reported as tax income or tax expense in the statement of comprehensive income unless they relate to items reported directly in equity, in which case the deferred taxes are also reported in equity. Deferred taxes and tax liabilities are offset against each other if the Group has a legally enforceable right to set off tax assets against tax liabilities and they relate to income taxes of the same taxable entity levied by the same tax authorities.

4.18 Contingent liabilities and contingent assets

Contingent liabilities are either potential obligations that could lead to an outflow of resources but whose existence will be determined by the occurrence or non-occurrence of one or more future events, or current obligations that do not fulfil the criteria for recognition as a liability. They are disclosed separately in the notes unless the probability of an outflow of resources embodying economic benefits is low. In the year under review, there were no contingent liabilities apart from guarantees and other commitments.

In the context of business combinations, contingent liabilities are recognised in accordance with IFRS 3.23 if their fair value can be reliably determined.

Contingent assets are not recognised in the financial statements, but are disclosed in the notes when receipt of economic benefits is probable.

4.19 Government grants

Government grants are recognised as profit or loss on a systematic basis in the periods in which the related expenses are recognised and where it is sufficiently certain that the conditions imposed in connection with the grants will be fulfilled.

The grants received are reported as deferred income on the balance sheet disclosed under liabilities.

Tax credits that are dependent on investments are recognised and deducted accordingly when the respective conditions are met.

5. Material judgements, estimates and assumptions

For the preparation of the consolidated financial statements in accordance with IFRS, estimates and assumptions must occasionally be made. These influence the amounts of assets, liabilities and financial obligations determined as at the balance sheet date and the presentation of expenses and income. The actual amounts may differ from these estimates.

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date resulting in a considerable risk that a major adjustment to the carrying amounts of assets and liabilities will be required within the next financial year are explained below.

a) Impairment of non-financial assets

At each balance sheet date, the Group determines whether there are indications of impairment of nonfinancial assets. Goodwill with an indefinite useful life is tested for impairment at least once a year and when there are indications of impairment. Other non-financial assets are tested for impairment when there are indications that the carrying amount is higher than the recoverable amount. To estimate the value in use, the management measures the expected future cash flows of the asset or cash-generating unit and selects an appropriate discount rate to determine the present value of these cash flows.

b) Pensions and other post-employment benefits

The expense from defined benefit plans post-employment is determined using actuarial calculations. The actuarial calculation is based on assumptions regarding discount rates, future increases in wages and salaries, mortality and future pension increases. In line with the long-term orientation of these plans, such estimates are subject to significant uncertainty.

c) Provisions

Other provisions are recognised and measured on the basis of an assessment of the probability of a future outflow of benefits, using values based on experience and circumstances known at the balance sheet date. The actual obligation may differ from the amounts set aside as provisions.

d) Deferred tax assets

Deferred tax assets are recognised for all unused tax loss carryforwards and for temporary differences to the extent that it is probable that taxable income will be available for this, meaning that the loss carryforwards can actually be used. In calculating the amount of deferred tax assets, the management must make judgements with regard to the expected timing and amount of future taxable income and the future tax planning strategies.

e) Recognition of contract revenue

Some of MBB Fertigungstechnik GmbH's transactions take the form of construction contracts that are recognised using the percentage-of-completion method, meaning that revenue is recognised in accordance with the degree of completion of the respective contract. This method requires that the degree of completion be estimated. Depending on the method applied in determining the degree of completion, the material estimates may relate to the total contract costs, the costs to be incurred until completion, the total contract revenue, the contract risks and other judgements. The estimates are continuously reviewed by the Company's management and adjusted as necessary.

II. Notes to the consolidated balance sheet

1. Non-current assets

The development of intangible assets and property, plant and equipment is shown in the following statement of changes in non-current assets.

1.1 Statement of changes in non-current assets of the MBB Group as at 31 December 2012

		Gesamte An schaffungs und Herstellungs kosten	Zugänge des Geschäfts jahres	Zugänge aus Erst konsoli dierung	Um buchung	Abgänge aus Entkonsoli dierung (zu Brutto buchwerten)	Abgänge des Geschäfts jahres	Währungs kurs differenzen	Abschreibun gen in ihrer gesamten Höhe	Buchwert am Ende des Geschäfts jahres	Buchwert am Ende des Vorjahres	Abschreibun gen des Geschäfts jahres	Abgänge Abschreibun gen	Währungs kurs differenzen
	31.12.2012	T€	T€	T€	T€	T€	T€	T€	T€	T€	T€	T€	T€	T€
I.	Immaterielle
	Vermögenswerte
	1. Konzessionen, gewerbliche
	Schutzrechte und ähnliche
	Rechte und Werte	4,301	537	645	230	0	0	12	2,687	3,038	2,209	586	0	9
	2. Firmenwert	3,643	0	0	0	0	0	0	1,827	1,816	1,816	0	0	0
	3. Geleistete Anzahlungen	242	72	0	-230	0	0	0	0	84	242	0	0	0
		8,186	609	645	0	0	0	12	4,514	4,938	4,267	586	0	9
	II. Sachanlagen
	1. Grundstücke und Bauten
	einschließlich der
	Bauten auf fremden
	Grundstücken	21,838	8,024	0	19	0	0	480	8,086	22,275	14,700	840	0	108
	2. Technische Anlagen
	und Maschinen	27,394	353	109	503	0	0	885	21,601	7,643	8,581	2,120	0	668
	3. Andere Anlagen,
	Betriebs- und
	Geschäftsausstattung	11,183	1,267	900	63	0	36	43	10,122	3,298	2,394	1,330	35	38
	4. Geleistete Anzahlungen
	und Anlagen im Bau	482	2,464	18	-585	0	17	30	0	2,392	482	0	0	0
		60,897	12,108	1,027	0	0	53	1,438	39,809	35,608	26,157	4,290	35	814
	Gesamt	69,083	12,717	1,672	0	0	53	1,450	44,323	40,546	30,424	4,876	35	823

		Gesamte An schaffungs und Herstellungs	Zugänge des Geschäfts jahres	Zugänge aus Erst konsoli dierung	Um buchung	Abgänge aus Entkonsoli dierung (zu Brutto	Abgänge des Geschäfts jahres	Währungs kurs differenzen	Abschreibun gen in ihrer gesamten Höhe	Buchwert am Ende des Geschäfts jahres	Buchwert am Ende des Vorjahres	Abschreibun gen des Geschäfts jahres	Abgänge Abschreibun gen	Währungs kurs differenzen
	31.12.2011	kosten T€	T€	T€	T€	buchwerten) T€	T€	T€	T€	T€	T€	T€	T€	T€
I.	Immaterielle
	Vermögenswerte
	1. Konzessionen, gewerbliche
	Schutzrechte und ähnliche
	Rechte und Werte	3,585	125	600	14	14	0	-9	2,092	2,209	1,756	276	5	-8
	2. Firmenwert	3,643	0	0	0	0	0	0	1,827	1,816	1,816	0	0	0
	3. Geleistete Anzahlungen	36	206	0	0	0	0	0	0	242	36	0	0	0
		7,264	331	600	14	14	0	-9	3,919	4,267	3,608	276	5	-8
	II. Sachanlagen
	1. Grundstücke und Bauten
	einschließlich der
	Bauten auf fremden
	Grundstücken	21,890	20	0	472	0	0	-544	7,138	14,700	15,239	583	0	-96
	2. Technische Anlagen
	und Maschinen	27,648	156	0	990	0	338	-1,062	18,813	8,581	9,524	1,967	312	-966
	3. Andere Anlagen,
	Betriebs- und
	Geschäftsausstattung	10,549	804	40	93	54	101	-148	8,789	2,394	2,323	741	136	-42
	4. Geleistete Anzahlungen
	und Anlagen im Bau	935	1,550	0	-1,569	0	152	-282	0	482	935	0	0	0
		61,022	2,530	40	-14	54	591	-2,036	34,740	26,157	28,021	3,291	448	-1,104
	Gesamt	68,286	2,861	640	0	68	591	-2,045	38,659	30,424	31,629	3,567	453	-1,112

1.2 Statement of changes in non-current assets of the MBB Group as at 31 December 2011

2. Goodwill

The goodwill reported as at the balance sheet date results from the acquisition of Hanke Tissue Sp. Z o.o., Kostrzyn, Poland (Industrial Production segment) and the DTS Group (Trade & Services segment).

The goodwill of the cash-generating units (CGUs) was tested for impairment; however, this did not identify the need to recognise any impairment losses.

The impairment tests to determine the recoverable amount were based on the value in use of the CGUs, which was calculated using forecast revenue based on a five-year plan. The calculation of the budget figures took into account current and future probabilities, the expected economic development and other circumstances. For the standard year (perpetuals), the budget figures from the previous planning year were used. An interest rate of 12% was applied as the discount rate (as in the previous year). As a cautionary measure, possible growth in the standard year was not taken into account.

The impairment tests did not lead to any impairment in the cash-generating units. In the view of the Managing Board, the changes in the basic assumptions that are reasonably conceivable would not result in the respective carrying amount exceeding the recoverable amount of the respective CGU.

3. Intangible assets

With regard to the development of intangible assets, please refer to the presentation in the statement of changes in non-current assets. Among other things, intangible assets include development costs capitalised in the 2010 financial year in the amount of €401 thousand, which are amortised over a period of ten years. Capitalised development costs of €321 thousand were reported at the balance sheet date (previous year: €361 thousand), meaning that amortisation in the year under review amounted to €40.1 thousand (previous year: €40.1 thousand).

4. Property, plant and equipment

With regard to the development of property, plant and equipment, please refer to the presentation in the statement of changes in non-current assets.

5. Inventories

	31.12.2012	31.12.2011
	T€	T€
Roh-, Hilfs- und Betriebsstoffe	4,907	4,052
Unfertige Erzeugnisse	2,905	2,178
Fertige Erzeugnisse	7,082	7,106
Geleistete Anzahlungen	3,468	0
Buchwert zum 31.12.	18,362	13,336

Impairment losses of €14 thousand were recognised on raw materials and supplies during the reporting period (previous year: €616 thousand). Reversals of impairment losses on inventories amounted to €34 thousand (previous year: 0).

6. Trade receivables

	31.12.2012	31.12.2011
	T€	T€
Forderungen aus Lieferungen und Leistungen	19,248	8,156
abzüglich Einzelwertberichtigungen	-1,660	-405
Buchwert zum 31.12.	17,588	7,751

The trade receivables shown are allocated to the loans and receivables category and measured at amortised cost.

The trade receivables are all due within one year. The trade receivables are subject to specific valuation allowances where required. Indications of impairment include unpaid cash receipts and information on changes in customers' creditworthiness. Due to the broad customer base, there is no significant concentration of credit risk.

Receivables from construction contracts recognised in accordance with the PoC method are composed as follows:

	31.12.2012	31.12.2011
	T€	T€
Zum Bilanzstichtag angefallene Auftragskosten
zuzüglich (abzüglich) erfasster Gewinne (Verluste)	86,172	0
Teilabrechnungen	63,451	0
Saldo
aktivisch: Forderungen aus Auftragsfertigung	22,721	0
passivisch: Verbindlichkeiten aus Fertigungsaufträgen	0	0

7. Other current assets

Other assets with maturities within one year break down as follows:

	31.12.2012	31.12.2011
	T€	T€
Forderungen aus Steuern	894	811
Forderungen aus Factoring	654	609
Darlehensforderungen	611	524
Übrige sonstige Vermögenswerte	599	508
Transitorische Rechnungsabgrenzungsposten	233	135
Buchwert zum 31.12.	2,991	2,587

8. Available-for-sale financial assets

The available-for-sale financial assets of the MBB Group comprise physical gold reserves and securities. The value of the physical gold reserves was €2,245 thousand (previous year: €2,121 thousand). The increase of €124 thousand is due to fair value measurement.

Of the available-for-sale securities, shares and bonds totalling €13,210 thousand (previous year: €12,514 thousand), €4,932 thousand (previous year: €5,477 thousand) were reported under non-current assets and €8,188 thousand (previous year: €7,037 thousand) under current assets. In the year under review, write-downs were recognised on shares in the amount of €0 thousand (previous year: €138 thousand) and bonds in the amount of €15 thousand (previous year: €208 thousand). This was offset by income from securities in the amount of €1,013 thousand (previous year: €305 thousand), which is reported in other operating income.

9. Deferred taxes

The volume of deferred tax assets and liabilities from temporary differences as at 31 December 2012 and 2011 was as follows:

	31.12.2012	31.12.2011
	T€	T€
Latente Steuerforderungen	933	1,056
Latente Steuerschulden	-3,451	-2,691
Summe	-2,518	-1,635
	31.12.2012	31.12.2011
	T€	T€
Temporäre Differenzen aus:
Immateriellen Vermögenswerten	90	120
Ungenutzten steuerlichen Verlusten	329	488
Pensionsrückstellung	470	390
Rückstellungen	44	58
Latente Steuerforderungen	933	1,056
	31.12.2012	31.12.2011
	T€	T€
Temporäre Differenzen aus:
Immateriellen Vermögenswerten	96	108
Sachanlagen	2,655	2,538
Forderungen	770	18
Rückstellungen	-70	27
Latente Steuerschulden	3,451	2,691

The deferred tax assets of €511 thousand on tax loss carryforwards for Blomberger Holzindustrie in 2010 have been corrected in accordance with IAS 8, as the tax loss carryforwards should have been allocated to the shareholders rather than the company. The adjustment to deferred taxes for 2010 was recognised against the retained profits brought forward from 2010.

10. Equity

With regard to the development of equity, please refer to the separate annex to these notes entitled "Statement of changes in consolidated equity for 2012".

10.1 Share capital

MBB's share capital amounts to €6,600,000.00 and is fully paid-in. It is divided into 6,600,000 no-par value bearer shares.

In the 2006 financial year, the share capital was increased by €4,838,000.00 as a result of a capital increase from capital reserves and by another €1,600,000.00 through the issue of new shares, resulting in a total increase from €162,000.00 to €6,600,000.00.

By resolution of the Annual General Meeting on 30 June 2010, the Managing Board was authorised – subject to the approval of the Supervisory Board – to increase the Company's share capital on one or more occasions by a total of up to €3,300,000.00 in the period until 29 June 2015 by issuing new nopar value bearer shares in exchange for cash and/or non-cash contributions (Authorised Capital 2010). The Company was also authorised to purchase and sell treasury shares corresponding to up to 10% of the share capital in the period from 1 July 2010 to 29 June 2015.

The Managing Board was also authorised – subject to the approval of the Supervisory Board – to issue bearer and/or registered convertible bonds and/or bonds with warrants with a total volume of up to €66,000,000.00 and a maximum term of 10 years in the period until 29 June 2015.

The Company's share capital may be increased contingently by up to €3,300,000.00 (Contingent Capital 2010). The purpose of this contingent capital increase is to issue shares to the creditors of convertible bonds or bonds with warrants that can be issued until 29 June 2015 in accordance with the above authorisation. The contingent capital increase may only be implemented to the extent that the creditors have exercised their conversion right or are subject to a conversion obligation.

On 11 January 2012, MBB Industries AG resolved to utilise the authorisation granted by the Annual General Meeting on 30 June 2010 to purchase treasury shares in accordance with section 71 (1) no. 8 AktG. As part of a share buy-back programme running from 12 January 2012 to 10 February 2012, MBB Industries AG purchased 144,201 treasury shares, corresponding to 2.18% of the share capital, on the stock exchange via a bank at an average price of €6.9347, giving a total purchase price of €999,996.67.

In accordance with section 71b AktG, the Company has no rights arising from treasury shares, and in particular no dividend or voting rights, meaning that the number of shares with actual voting and dividend rights has decreased to 6,455,799. In accordance with section 21 ff.

The individual shareholdings were as follows:

	31.12.2012		31.12.2011
	in Stück	in %	in Stück	in %
MBB Capital Management GmbH	2,425,500	36.750	2,425,500	36.750
MBB Capital GmbH	2,425,500	36.750	2,425,500	36.750
Eigene Anteile	144,201	2.185	0	0.000
Tolea GmbH	121,769	1.845	130,200	1.973
Dacapo 2 GmbH	60,000	0.909	60,000	0.909
Dr. Peter Niggemann	30,000	0.455	30,000	0.455
Dr. Jan C. Heitmüller	10,000	0.152	10,000	0.152
Dr. Matthias Rumpelhardt	2,000	0.030	2,000	0.030
Freefloat	1,381,030	20.924	1,516,800	22.982
Gesamt	6,600,000	100.000	6,600,000	100.000

100 % der Anteile an der Tolea GmbH werden von Herrn Anton Breitkopf gehalten.

100 % der Anteile an der Dacapo 2 GmbH werden über eine weitere Gesellschaft von Herrn Dr. Matthias Rumpelhardt gehalten.

The shares of MBB Capital Management GmbH and MBB Capital GmbH are held in full by MBB Capital Group GmbH, in which Gert-Maria Freimuth and Dr. Christof Nesemeier each hold a 50% interest.

In accordance with section 21 ff. WpHG, the treasury shares held by the Company are allocable to the majority shareholder. MBB Capital Group GmbH, Gert-Maria Freimuth and Dr. Christof Nesemeier informed the Company on 13 February 2012 that, including these treasury shares, they now each held 75.68% of the voting rights.

The Annual General Meeting on 18 June 2012 resolved to rescind the resolution on the purchase and sale of treasury shares that was passed by the Annual General Meeting on 30 June 2010 and authorised the Managing Board to purchase and sell treasury shares corresponding to up to 10% of the share capital in the period from 1 July 2012 to 29 June 2017. This authorisation may be exercised in part or in full, on one or more occasions until the upper limit is reached, and for one or more purposes. It may not be exercised for the purpose of trading in treasury shares.

10.2 Capital reserves

Capital reserves amounted to €14,395 thousand (previous year: €15,251 thousand). They resulted from the premium received by the Company from the issue of new shares in 2006. The reduction of €856 thousand in the 2012 financial year contains the difference between the par value of the treasury shares acquired as part of the share buy-back programme and the cost of their acquisition.

10.3 Legal reserves

5% of the parent company's net profit for 2006 was transferred to the legal reserves.

10.4 Retained earnings

Difference in equity due to currency conversion

The difference in equity due to currency conversion results from conversion in line with the modified closing rate method.

The difference arises from the conversion of items of the income statements of subsidiaries that prepared their accounts in a foreign currency at the average rate and conversion of the balance sheet items at the closing rate on the one hand, and the conversion of the equity of the respective subsidiaries at the historical rate on first-time consolidation on the other hand.

Reserves for available-for-sale financial assets

The reserves for available-for-sale financial assets result from cumulative gains or losses from the remeasurement of available-for-sale financial assets. These are recognised in the statement of comprehensive income under other income.

Reserves for generated consolidated equity

This item comprises the gains generated by the Group less distributed profits. On 18 June 2012, a dividend of €0.44 per share (€2.8 million in total) was paid out to the shareholders.

11. Provisions for pensions and similar obligations

Due to the business model of MBB Industries AG, employees' claims to post-employment benefits are not governed at Group level. Regulations on pensions are determined at the level of the individual subsidiaries, resulting in different works agreements. What all pension obligations have in common is that the claim arises even if there is also a claim to the statutory pension. Pension obligations relate to Blomberger Holzindustrie B. Hausmann GmbH & Co.KG, CT Formpolster GmbH and MBB Fertigungstechnik GmbH. The pension agreements are closed, meaning that no further occupational pension agreements are concluded for new appointments.

	31.12.2012	31.12.2011
	T€	T€
Pensionsrückstellungen zum Beginn des Geschäftsjahres	4,836	5,164
Änderung Konsolidierungskreis	13,497	-225
Inanspruchnahme	-778	-452
Zuführung zu Rückstellungen (service cost)	126	62
Zuführung zu Rückstellungen (interest cost)	252	238
Versicherungsmathematische Gewinne / Verluste	249	58
Pensionsrückstellungen am Ende des Geschäftsjahres	18,182	4,845
- Planvermögen	9	9
Bilanzansatz	18,173	4,836

The following actuarial assumptions were used as the basis:

	2012	2011
Rechnungszins	3,30 - 3,80 %	4,80 - 5,40 %
Gehaltstrend	2,00 - 3,00 %	2,00 %
Rententrend	1,00 - 2,00 %	1,00 - 2,00 %
Fluktuation	0,00 - 5,00 %	0,00 - 5,00 %

The post-employment benefit plans are unfunded. The liabilities correspond to the obligation (DBO).

	31.12. 2012	31.12. 2011
	T€	T€
Zuführung zu Rückstellungen (service cost)	-126	-62
Zuführung zu Rückstellungen (interest cost)	-252	-238
Versicherungsmathematische Gewinne / Verluste	-249	-58
Total	-627	-358

The amounts recognized in the profit and loss account income and expenses are as follows:

The expected pension payments from the pension plans for 2013 amount to €0.6 million.

12. Liabilities

Liabilities have the following maturities:

	bis zu 1 Jahr	mehr als 1 und bis zu 5 Jahren	über 5 Jahre	Gesamt
31.12.2012	T€	T€	T€	T€
Verbindlichkeiten gegenüber Kreditinstituten	2,116	9,969	1,255	13,340
Verbindlichkeiten aus Lieferungen und Leistungen	10,957	0	0	10,957
Sonstige Verbindlichkeiten	4,864	732	0	5,596
Rückstellungen mit Verbindlichkeitscharakter	11,225	0	0	11,225
Erhaltene Anzahlungen	12,305	0	0	12,305
Stand 31.12.2012	41,467	10,701	1,255	53,423

	bis zu 1 Jahr	mehr als 1 und bis zu 5 Jahren	über 5 Jahre	Gesamt
31.12.2011	T€	T€	T€	T€
Verbindlichkeiten gegenüber Kreditinstituten	3,574	12,419	631	16,624
Verbindlichkeiten aus Lieferungen und Leistungen	7,972	0	0	7,972
Sonstige Verbindlichkeiten	3,734	829	0	4,563
Rückstellungen mit Verbindlichkeitscharakter	2,148	0	0	2,148
Erhaltene Anzahlungen	20	0	0	20
Stand 31.12.2011	17,448	13,248	631	31,327

Liabilities to banks have both fixed and floating interest rates of between 2.53% and 8.75% (previous year: between 3.62% and 9.0%).

Land and buildings, technical equipment, machinery, inventories and receivables were pledged as collateral. The carrying amount of the pledged assets amounted to €28,333 thousand as at the reporting date (previous year: €19,616 thousand).

13. Other liabilities

Other liabilities are composed as follows:

	31.12.2012	31.12.2011
	T€	T€
Kurzfristig
Löhne und Gehälter	964	534
Lohnsteuer	696	359
Kreditorische Debitoren	646	159
Boni	406	121
Umsatzsteuer	256	726
Sozialversicherung	278	188
Leasingverbindlichkeiten	196	140
Erhaltener Investitionszuschuss	93	205
Steuerverbindlichkeiten	0	946
Übrige	1,329	356
	4,864	3,734
Langfristig
Unterstützungskasse	270	281
Leasingverbindlichkeiten	234	230
Erhaltener Investitionszuschuss	228	318
	732	829
Total	5,596	4,563

14. Provisions

14.1 Other provisions

Other non-current and current provisions are composed as follows:

	31.12. 2011	Erstkon soli dierung	Verbrauch	Auflösung	Zuführung	31.12. 2012
	T€	T€	T€	T€	T€	T€
Langfristige Rückstellungen
Prozessrisiken	0	1,915	29	0	57	1,943
Altersteilzeit	345	1,436	781	0	232	1,232
Rückstellung für Vertragsrisiken	300	810	0	600	0	510
Jubiläen	136	164	8	0	76	368
Übrige	100	0	0	0	0	100
	881	4,325	818	600	365	4,153
Kurzfristige Rückstellungen
Nachlaufende Kosten	0	3,864	1,890	769	4,783	5,988
Ausstehende Rechnungen	168	1,886	1,197	2	4,930	5,785
Gewährleistung	0	2,749	866	659	1,408	2,632
Personalkosten	521	1,588	1,036	128	1,553	2,498
Variables Gehalt und Provisionen	127	739	863	2	1,152	1,153
Urlaub	271	725	579	0	565	982
Jahresabschluss- und Prüfungskosten	183	19	170	11	280	301
Berufsgenossenschaft	63	0	59	3	92	93
Gleitzeit	14	0	14	0	24	24
Altersteilzeit	125	0	125	0	0	0
Übrige	676	36	473	46	196	389
	2,148	11,606	7,272	1,620	14,983	19,845
	3,029	15,931	8,090	2,220	15,348	23,998

The provision for subsequent costs relates to various projects at MBB Fertigungstechnik GmbH that are already complete and for which the final invoice has been invoiced, but which are still subject to costs for follow-up work and fault remediation.

The outflow of economic resources for current provisions is expected in the following year.

14.2 Tax provisions

Tax provisions are broken down as follows:

	31.12.2012	31.12.2011
	T€	T€
Körperschaftsteuer	1,757	210
Gewerbesteuer	1,664	152
Buchwert zum 31.12.	3,421	362

15. Lease and rental obligations

15.1 Operating leases and rent

	31.12.2012	31.12.2011
	T€	T€
Zum Bilanzstichtag hat der Konzern offene Verpflichtungen aus
unkündbaren Operating-Leasingverhältnissen, die wie folgt fällig sind:
Bis zu einem Jahr	1,295	159
Mehr als ein Jahr und bis zu fünf Jahren	376	271
Über fünf Jahre	0	0
	1,671	430
Zum Bilanzstichtag hat der Konzern offene Verpflichtungen aus
Mietverhältnissen, die wie folgt fällig sind:
Bis zu einem Jahr	2,098	999
Mehr als ein Jahr und bis zu fünf Jahren	3,395	2,417
Über fünf Jahre	1,253	1,764
	6,746	5,180
Aufwendungen im Berichtsjahr aus Operating Lease und Miete	1,927	1,633

The minimum lease payments from operating leases primarily relate to the use of cars. The leases are entered into with an average term of 36 months.

15.2 Finance leases

The following assets are utilised under finance leases:

	2012	2011
	T€	T€
Technische Anlagen und Maschinen
Anschaffungskosten 01.01.	3,886	3,816
Zugänge	149	70
Abgänge	-160
Anschaffungskosten 31.12.	3,875	3,886
Abschreibungen 01.01.	-2,431	-2,276
Abschreibungen lfd. Jahr	-262	-155
Abgänge Abschreibungen	0	0
Abschreibungen 31.12.	-2,693	-2,431
Buchwert zum 31.12.	1,182	1,455
Geschäfts- und Betriebsausstattung
Anschaffungskosten 01.01.	321	521
Zugänge	0	0
Abgänge	-107	-200
Anschaffungskosten 31.12.	214	321
Abschreibungen 01.01.	-89	-239
Abschreibungen lfd. Jahr	-33	-50
Abgänge Abschreibungen	0	200
Abschreibungen 31.12.	-122	-89
Buchwert zum 31.12.	92	232

The future minimum lease payments for the finance leases described above are broken down as follows:

	bis zu 1 Jahr T€	Zwischen 1 und 5 Jahren T€	Mehr als 5 Jahre T€
Leasingzahlungen	228	301	0
Abzinsungsbeträge	32	67	0
Barwerte	196	234	0

III. Notes to the statement of comprehensive income

1. Revenue

Revenue amounted to €204.9 million in the 2012 financial year (previous year: €109.6 million). Revenue of €86.2 million is attributable to the application of the PoC method at MBB Fertigungstechnik GmbH. The contributions of MBB Fertigungstechnik GmbH are recognised in the relevant figures from the acquisition date.

Revenue development is discussed in the management report. Segment reporting for revenues is structured primarily by business segment and secondly by geographic segment.

2. Other operating income

	2012	2011
	T€	T€
Erträge aus
Wertpapieren	1,013	305
der Auflösung von Rückstellungen	949	1,298
Währungskursgewinnen	453	110
Ergänzungsvereinbarung	419	0
der Auflösung von Investitionszuschüssen	277	276
der Auflösung von Wertberichtigungen auf Forderungen	228	13
Verkäufen Anlagevermögen	168	134
Versicherungsentschädigungen / Entschädigungen	163	39
anderen Perioden	139	0
anderen aktivierten Eigenleistungen	32	0
Vermietung	4	53
Weiterberechnung an aufgegebene Geschäftsbereiche	0	125
Übrige	711	954
Summe	4,556	3,307

3. Other operating expenses

	2012	2011
	T€	T€
Instandhaltungsaufwendungen	2,708	1,725
Miete, Pachten, Leasing	1,927	1,633
Sonstige Dienstleistungen	1,389	902
Reisekosten / KFZ-Kosten	1,144	902
Recht und Beratung	970	1,003
Nebenkosten Geldverkehr	754	248
Versicherungen	507	319
Werbekosten	493	278
Forderungsverluste und Wertberichtigungen auf Forderungen	431	207
Telefon, Porto, Datenfernübertragung	341	237
Aufwand aus Wertpapier-Geschäften	236	347
Gebühren und Beiträge	206	264
Aus- und Weiterbildung	174	116
Bürobedarf	159	39
Aufwand aus dem Abgang von Anlagevermögen	2	98
Übrige	204	1,043
Summe	11,645	9,361

4. Finance income

	2012	2011
	T€	T€
Sonstige Zinsen und ähnliche Erträge aus Wertpapier-Geschäften	488	405
Sonstige Zinsen und ähnliche Erträge	45	17
Bankzinsen	9	179
Summe	542	601

1. Finance costs

	2012	2011
	T€	T€
Bankzinsen	1,032	1,087
Sonstige Zinsen und ähnliche Aufwendungen	1,026	21
Zinsaufwand aus Finanzierungsleasing	12	221
Summe	2,070	1,329

6. Taxes

Details on deferred tax assets and liabilities can be found under I.4.17 b) "Deferred taxes". In recognising deferred taxes, an income tax rate of 30% is applied as the basis for German subsidiaries, while the future local tax rate is applied for foreign subsidiaries.

The reconciliation of income tax expense and the accounting net profit multiplied by the Group's applicable tax rate for the 2012 and 2011 financial years is as follows:

	2012	2011
	T€	T€
Gewerbesteuer	1,946	405
Körperschaftsteuer	1,731	425
Latente Steuern	154	160
Übriger Steueraufwand	216	146
Summe	4,047	1,136
	2012	2011
	T€	T€
Konzernergebnis vor Ertragsteuern und Minderheiten	17,896	4,599
Steuern vom Einkommen und Ertrag	3,831	990
Tatsächliche Steuerquote	21.4%	21.5%
	2012	2011
	T€	T€
Ergebnis der gewöhnlichen Geschäftstätigkeit	17,896	4,599
Sonstige Steuern	-216	-146
Anzuwendender (gesetzlicher) Steuersatz	30.0%	30.0%
Erwarteter Steuerertrag/-aufwand	5,304	1,336
Differenzen aus ausländischen Steuersätzen und
steuerlichen Sonderprogrammen	-651	-439
Steuerlich unwirksame Erträge
aus dem Verkauf von Wertpapieren	-238	-143
Erträge aus der Kapitalkonsolidierung	-521	0
Sonstige Steuereffekte	-63	236

The special tax scheme relates to the taxation of Hanke Tissue Sp. z o.o in the Kostrzyn Special Economic Zone in Poland. Tax exemption in the Special Economic Zone is subject to new investment activity by the company. A certain amount of investment expenditure must be made and a certain number of new jobs must be created. The level of tax exemption depends on the value of the respective company's investment expenditure and the two-year employment costs incurred by the company for the employees used in connection with these investments. The limit for government assistance (including tax exemption) is calculated as a percentage of the investment expenditure. This investment-related tax exemption is recognised as a deduction from the relevant tax liability. In 2012, the effect of investmentrelated tax exemption amounted to €342 thousand (previous year: €313 thousand).

7. Earnings per share

Earnings per share are calculated by dividing the net profit attributable to the holders of shares in the parent company by the weighted average number of shares in circulation during the year.

	2012	2011
	T€	T€
Den Inhabern von Stammaktien des Mutterunternehmens
zuzurechnendes Ergebnis	13,439,439	3,335,939
Gewichtete durchschnittliche Anzahl von Stammaktien zur
Berechnung des Ergebnisses je Aktie	6,466,057	6,600,000
Ergebnis je Aktie (in €)	2.08	0.5

IV. Segment reporting

1. Information by segment

Segment reporting was prepared using IFRS 8 (Operating Segments), under which operating segments are defined as the components of an entity for which discrete financial information is available and under which the segment's operating results are reviewed regularly by the segment's chief operating decision maker to allocate resources to the segment and assess its performance.

MBB's management divides the segments internally as follows:

Technical Applications

This segment contains those portfolio companies whose business model reflects customer-specific requirements to a large extent and where the expertise and consulting sold along with the product constitute a significant portion of the work performed.

Since 31 March 2012, MBB Fertigungstechnik GmbH has strengthened the Technical Applications segment. MBB Fertigungstechnik GmbH is a leading international plant engineering company for welding and assembly systems for the automotive industry. It also provides services for tool manufacturing, innovative transport technologies for exact positioning and inline measuring systems. Other industries include general industry and clean technology. The assembly technology unit develops customer-specific systems for processing individual components or modules into finished products or several complex assemblies. It specialises in assembled camshafts, steering systems, drive shafts and clean technology. Expertise in the connection technology unit ranges from conventional thermal welding and cold metal transfer (CMT) for lightweight construction with a focus on chassis components (axles), cross-car beams and clean technology through to the production of heavy components and transport vehicles (MC drive). In addition to its welding and assembly services, MBB Fertigungstechnik GmbH develops and produces project-specific special machinery for welding systems and production lines that customers cannot acquire elsewhere on the market and that are unique in terms of their form and specifications.

The Delignit Group, which was formed more than 200 years ago, develops and manufactures ecological materials and system solutions primarily based on hardwood. It is a recognised development and project partner and series supplier for technology industries such as the automotive and aviation sectors, as well as security technology. The products have special technical properties and are used in built-in systems for commercial vehicles, fire-safe building facilities and innovative materials handling technology, among other things. The Delignit material is generally based on beech wood and is lifecycle carbon-neutral, making it ecologically superior to non-regenerative materials such as plastic or steel.

Industrial Production

The Industrial Production segment contains all portfolio companies whose strengths are concentrated on the industrial manufacture of their products and whose products are relatively standardised. Accordingly, this segment contains the portfolio companies Hanke, CT Formpolster and OBO.

The most important company in this segment is Hanke Tissue Sp. z o.o., Kostrzyn, Poland, which was acquired by MBB-AG in 2006. Hanke produces tissue mother rolls, napkins, handkerchiefs, toilet paper and kitchen rolls. Operating under the brand name of "aha", the company has a strong competitive position in the Eastern Europe consumer product market. Hanke also produces white and coloured tissue paper for various private labels in Europe.

Since being acquired by MBB-AG, Hanke has made substantial investments in its machinery and buildings, allowing it to record continuous growth and expand its market position to become the most profitable company in the MBB Group in relative terms. This expansion will continue over the coming years in the form of an investment programme with a volume of €10 million that was approved in summer 2011.

CT Formpolster GmbH manufactures flexible polyether foams. The company's service portfolio extends from material and product development and foam production through to order picking and JIT delivery. The product range not only includes standard foams but also highly elastic, flame-retardant, antistatic and intensely coloured products, as well as products containing biomass. CT Formpolster GmbH's products are used as mattress and seating cores in the furniture, caravan and office sectors in particular. It also sells foam blocks to processing companies.

OBO is a global provider of polyurethane hard foam boards for tooling applications. With a market share of around 8%, it is one of the five leading providers in the industry. OBO has been part of the MBB Group since 2003. In particular, it supplies the model making industry, as well as automobile manufacturers, foundries and other processing companies directly.

Trade & Services

Trade & Services comprises the DTS Group, which consists of companies that provide specialist services or engage in retail business. The DTS Group is focused on cloud IT services. A dedicated data centre at its head office in Herford allows it to offer a wide range of traditional systems house services, such as the consulting, design, procurement, implementation and operation of IT environments, which are combined with IAAS, PAAS and SAAS cloud solutions with a focus on IT security.

The parent house DTS Systeme GmbH was formed in 1983 and is headquartered in Herford with additional offices in Bochum, Bremen, Berlin and Hanover. ICSmedia GmbH, Münster, was acquired in August 2010. ICSmedia GmbH has its own data centre and works in close cooperation with DTS Systeme GmbH to offer state-of-the-art, high-quality cloud computing solutions and high-end consulting services.

Since October 2011 eld datentechnik GmbH, Fellbach, a Germany-wide IT distributor specialising in IP access and storage technology, has been part of the DTS Group. This means that eld datentechnik GmbH provides vertical expansion for the service range of the other DTS subsidiaries.

Segment results

The accounting policies applied in segment reporting correspond to the accounting policies described in point I. 4. The segment result is based on the EBIT of the individual segments, as this is the basis on which the segments are managed. Transfer pricing between the operating segments is calculated on an arm's length basis.

01.01. - 31.12.2012	Technische	Industrie-	Handel &	Überleitung	Konzern
	Applikatio-	produktion	Dienstleis
	nen		tung
	T€	T€	T€	T€	T€
Umsatzerlöse Dritte	119,799	51,921	32,657	499	204,876
Andere Segmente	510	213	126	-849	0
Summe Umsatzerlöse	120,309	52,134	32,783	-350	204,876
Ergebnis (EBIT)	15,852	3,180	361	46	19,439
Abschreibungen	1,492	2,382	948	54	4,876
Investitionen	9,315	2,405	1,013
Anteile an assoziierten
Unternehmen*	0	0	0
Vermögenswerte des Segments	61,617	29,549	7,879
Schulden des Segments	57,252	8,271	4,187

The following reportable segment information for the individual Group relates to continuing operations.

* The shares of the Romanian Companies are reported in the Technical Applications segment.

01.01. - 31.12.2011	Technische	Industrie-	Handel &	Überleitung	Konzern
	Applikatio-	produktion	Dienstleis
	nen		tung
	T€	T€	T€	T€	T€
Umsatzerlöse Dritte	30,155	50,067	28,199	1,206	109,627
Andere Segmente	478	279	20	-777	0
Summe Umsatzerlöse	30,633	50,346	28,219	429	109,627
Ergebnis (EBIT)	1,375	2,302	939	1,057	5,673
Abschreibungen	692	2,105	734	36	3,567
Investitionen	47	2,058	638
Anteile an assoziierten
Unternehmen*	0	0	0
Vermögenswerte des Segments	13,577	28,853	8,560
Schulden des Segments	5,341	1,933	3,430

Segment liabilities do not include any deferred tax liabilities, provisions for taxes, lease liabilities or liabilities to banks.

Reconciliation of EBIT to net profit for the year	2012	2011
	€ thou	€ thou
Total EBIT of the segments	19.439	5.673
Net finance costs	-1.543	-1.074
EBT	17.896	4.599
Taxes on income	-3.831	-990
Other taxes	-216	-146
PAT (profit after tax)	13.849	3.463
Non Controlling Interests	-410	-166
Profit or loss from continuing operations	13.439	3.297
Profit or loss from discontinued operations	0	39
Net profit for the period	13.439	3.336
Reconciliation of segment assets to assets	2012	2011
	€ thou	€ thou
Technical Applications segment	61.617	13.577
Industrial Production segment	29.549	28.853
Trade & Services segment	7.879	8.560
Total segment assets	99.045	50.990
Deferred tax assets	933	1.056
Current funds	40.302	24.801
Financial assets	4.932	5.477
Other assets	3.440	3.473
Total assets	148.652	85.797
Reconciliation of segment liabilities to equity and liabilities	2012	2011
	€ thou	€ thou
Technical Applications segment	57.252	5.341
Industrial Production segment	8.271	1.933
Trade & Services segment	4.187	3.430
Total segment liabilities	69.710	10.704
Consolidated equity	57.411	45.700
Deferred tax liabilities	3.451	2.691
Tax provision	3.421	362
Liabilities to banks	13.340	16.624
Leasing liabilities	430	370
Other equity and liabilities	889	9.346
Total equity and liabilities	148.652	85.797

2. Information by region

2.1 Revenue from external customers

	2012	2011
	€ thou	€ thou
Europe	179.832	104.578
North America	9.362	3.020
Miscellaneous	15.682	2.029
Total	204.876	109.627

2.2 Non-current assets

The MBB Group's non-current assets are located exclusively in Europe.

V. Notes to the consolidated cash flow statement

The cash flow statement was prepared in accordance with IAS 7. The cash flows in the cash flow statement are presented separately broken down into "Operating activities", "Investing activities" and "Financing activities", with the total of the cash flows of these three sub-areas being identical to the change in cash and cash equivalents.

The cash flow statement was prepared using the indirect method.

As at 31 December 2012, €10.0 million of the cash and cash equivalents reported is pledged as collateral for guarantee credits, the remaining part is not subject to third-party restrictions. The Group made no payments for extraordinary transactions. Payments for income taxes and interest are reported separately.

VI. Objectives and methods of financial risk management

1. Financial assets and financial liabilities

The Group's existing financial liabilities primarily include current and non-current liabilities to banks, current trade payables and other current and non-current liabilities. The Group's financial assets are mainly cash, gold reserves, securities and trade receivables. The carrying amount of the financial assets less impairment losses reported in the consolidated financial statements represents the maximum exposure to credit risk; this totalled €62,821 thousand in the year under review (previous year: €38,029 thousand). Business relationships are entered into with creditworthy contractual partners only. Available financial information and trading records are used to assess their creditworthiness, especially for major customers. Trade receivables exist for a number of customers spread over various industries and regions. Ongoing credit assessments of the financial level of the receivables are performed. Payment terms of 30 days without deduction are usually granted. No valuation allowances were made for trade receivables that were overdue at the balance sheet date if no material changes in the customer's creditworthiness were determined and it is assumed that the outstanding amount will be paid.

For details of the maturities of financial liabilities, see II.12. "Liabilities" and II.13 "Other liabilities".

The valuation of the financial assets and liabilities of the MBB Group is presented under I.4.10 "Financial investments and other financial assets" and I.4.13 "Financial liabilities" and in the discussion of the Group's general accounting principles.

The Group uses the fair value option for securities and for physical gold reserves classified as available for sale. The Group had no financial liabilities at fair value through profit or loss at either this reporting date or the last reporting date. Derivatives and hedging transactions were not entered into. There were no reclassifications in 2012 or 2011.

2. Capital risk management

The Group manages its capital (equity plus liabilities less cash) with the aim of achieving its financial goals while simultaneously optimising its finance costs by way of financial flexibility. In this respect, the overall strategy is the same as in the previous year.

The management reviews the capital structure at least once every half-year. The cost of capital, the collateral provided, open lines of credit and available credit facilities are reviewed.

The capital structure in the year under review is as follows:

	31.12.2012	31.12.2011
Eigenkapital in T€	57,411	45,700
- in % vom Gesamtkapital	38.6%	53.3%
Schulden in T€	91,241	40,097
- in % vom Gesamtkapital	61.4%	46.7%
Kurzfristige Schulden in T€	53,508	18,110
- in % vom Gesamtkapital	36.0%	21.1%
Langfristige Schulden in T€	37,733	21,987
- in % vom Gesamtkapital	25.4%	25.6%
Nettoverschuldungsgrad*	-0.5	0.2

* calculated as the ratio of liabilities less cash and cash equivalents, securities and physical gold reserves to equity

3. Management of financial risks

Financial risk is monitored centrally by the management. The individual financial risks are reviewed at least four times per year.

The material Group risks arising from financial instruments include liquidity risks and credit risks. Business relationships are entered into solely with creditworthy contractual partners.

Assessments from independent rating agencies, other financial information and trading records are used to assess creditworthiness, especially of major customers. In addition, receivables are monitored on an ongoing basis to ensure that the MBB Group is not exposed to major credit risks. The maximum default risk is limited to the respective carrying amounts of the assets reported in the balance sheet.

The Group manages liquidity risks by holding appropriate reserves, monitoring and maintaining loan agreements and planning and coordinating cash inflows and outflows.

4. Market risks

Market risks may result from changes in exchange rates (exchange rate risks) or interest rates (interest rate risks). Due to the estimation of exchange rate risks, no foreign exchange contracts were entered into for the Group as at 31 December 2012. The Group invoices mainly in euro or the respective local currency, thereby avoiding exchange rate risks.

The Group is exposed to interest rate risks as a result of taking up financing at variable interest rates. The MBB Group manages these risks by maintaining an appropriate ratio between fixed and variable interest rate agreements. There is no hedging involving derivatives (e.g. interest rate swaps or interest rate futures). At the reporting date, the Group had liabilities with variable interest rates in the amount of €8,182 thousand. If, all other things being equal and supposing corresponding average indebtedness, interest rates had been two percentage points higher (lower), pre-tax earnings would have been €163.4 thousand lower (higher).

5. Fair value risk

The financial instruments of the MBB Group that are not carried at fair value are primarily cash, trade receivables, other current assets, liabilities to banks, trade payables and other liabilities. The carrying amount of cash is extremely close to its fair value on account of the short terms of these financial instruments. In the case of receivables and liabilities with normal credit conditions, the carrying amount based on historical cost is also extremely close to fair value.

VII. Other required information

1. Members of the Managing Board

MBB's Managing Board had the following members in the 2012 financial year:

Dr. Christof Nesemeier, Diplom-Kaufmann, Chairman of the Managing Board (Areas: Strategy, Finance, Investor Relations and Portfoilio Management)

Gert-Maria Freimuth, Diplom-Kaufmann, member of the Managing Board (Areas: Mergers & Acquisitions, Legal, IT and Corporate Identity)

Dr. Christof Nesemeier is the Chairman of the Supervisory Board of Delignit AG, the Chairman of the Supervisory Board of bmp Beteiligungsmanagement AG and the Deputy Chairman of the Supervisory Board of InVision Software AG. Gert-Maria Freimuth is the Chairman of the Supervisory Board of DTS IT AG, the Deputy Chairman of the Supervisory Board of Delignit AG and the Chairman of the Supervisory Board of United Labels AG.

2. Supervisory Board

MBB's Supervisory Board had the following members in the 2012 financial year:

• Dr. Peter Niggemann, Chairman of the Supervisory Board
• Dr. Jan C. Heitmüller, Deputy Chairman of the Supervisory Board
• Dr. Matthias Rumpelhardt, member of the Supervisory Board

Dr. Matthias Rumpelhardt is also the Deputy Chairman of the Supervisory Board of RIB Software AG, Stuttgart.

On 7 July 2011, the entire Supervisory Board was re-elected for a further five-year term.

3. Compensation paid to the members of the executive bodies

a) Managing Board

The compensation of the Managing Board consists of a fixed and a variable component. The Managing Board is also reimbursed for expenses upon presentation of receipts. D&O insurance with a deductible and accident insurance have also been concluded. No additional benefits (e.g. retirement benefits, direct benefits, severance payments) have been agreed. Similarly, there are no agreements governing the early or regular termination of a member's Managing Board mandate in the event of a change of control at the Company.

In the 2012 financial year, the amounts expensed for fixed compensation were:

• Dr. Christof Nesemeier, contractual partner of MBB Capital Management GmbH, €267,000.00
• Gert-Maria Freimuth, contractual partner of MBB Capital GmbH, €243,000.00

By resolution of the Supervisory Board on 21 December 2009, senior management as a whole receives additional variable compensation of 9% of the amount by which the equity of MBB Industries AG at the end of each financial year (final value) exceeds the equity at the beginning of the financial year (starting value) starting from the 2010 financial year. In each case, equity comprises the items set out in section 266 (3 A) HGB. The calculation is based on the latest audited annual financial statements with the following modifications: Assets with a stock exchange price are recognised at this price; this does not apply to shares in companies in which the Company holds more than 5% of the voting rights. Dividend distributions during the year and repayments of equity must be added to this final value, whilst additions to the equity must be subtracted from it. If the basis of calculation is negative in one or more financial years, the resulting negative amount is carried forward to the subsequent financial years and offset against future positive amounts until the negative amounts carried forward have been eliminated. Members of the Managing Board shall not be entitled to receive further variable remuneration until these negative amounts have been eliminated. At an absolute level, the variable compensation is limited to 5% of the respective final value. This meant that the Managing Board and senior management were entitled to variable remuneration of €351,732.14 for 2012. Of this amount, Dr. Christof Nesemeier received €116,071.61 and Mr Gert-Maria Freimuth received €80,898.39.

Managing Board members Dr. Nesemeier and Mr Freimuth each received personal Supervisory Board remuneration from Delignit AG for 2012 in the amount of €20,000.00 and €15,000.00 respectively.

b) Supervisory Board

Members of the Supervisory Board received fixed compensation totalling €18,000 in the 2012 financial year. The fixed compensation was distributed to the individual members as follows:

• Chairman, Dr. Peter Niggemann, €8,000.00
• Deputy Chairman, Dr. Jan C. Heitmüller, €6,000.00
• Member, Dr. Matthias Rumpelhardt, €4,000.00

In accordance with the resolution by the Annual General Meeting on 30 June 2010, the Supervisory Board as a whole receives additional variable compensation of 1% of the amount by which the equity of MBB Industries AG at the end of each financial year (end value) exceeds the equity at the beginning of the financial year (starting value) starting from the 2010 financial year. In each case, equity comprises the items set out in section 266 (3 A) HGB. The calculation is based on the latest audited annual financial statements with the following modifications: Assets with a stock exchange price are recognised at this price; this does not apply to shares in companies in which the Company holds more than 5% of the voting rights. Dividend distributions during the year and repayments of equity must be added to this final value, whilst additions to the equity must be subtracted from it. If the basis of calculation is negative in one or more financial years, the resulting negative amount is carried forward to the subsequent financial years and offset against future positive amounts until the negative amounts carried forward have been eliminated. Members of the Managing Board shall not be entitled to receive further variable remuneration until these negative amounts have been eliminated. However, the total of variable compensation plus meeting attendance fees for all Supervisory Board members must not exceed €100,000 per full financial year. The Supervisory Board received variable compensation of €39,081.34 in 2012. The Chairman of the Supervisory Board received 40% of this amount, while the other two members each received 30%.

4. Related party transactions

Related parties are considered to be those enterprises and persons with the ability to control the MBB Group or exercise significant influence over its financial and operating decisions.

4.1 Related persons

a) Managing Board and Supervisory Board

Please refer to the information on the compensation paid to the members of the executive bodies for further details. Other than the compensation mentioned above, the members of the executive bodies have not entered into any other transactions with the MBB Group.

b) Notification of transactions in accordance with section 15a WpHG

Persons with management duties, especially the members of the Managing Board and the Supervisory Board of MBB Industries AG, and their related parties in accordance with section 15a WpHG are obliged to disclose their transactions involving shares of MBB Industries AG or related financial instruments. Notifications of relevant transactions in 2012 are published on our website at www.mbb.com.

4.2 Related companies

Subsidiaries are considered to be related companies irrespective of whether they are included in the consolidated financial statements or not. Transactions between the Company and its subsidiaries are eliminated in the consolidation and are not shown in this notes and are of subordinate significance and typical of the industry. Related companies are also considered to be those companies described as associated with the aforementioned related persons. Over the course of the year, Group companies conducted the following transactions with related companies and persons that do not belong to the Group:

MBB Capital Group GmbH, Münster, has an indirect interest in MBB via its wholly-owned subsidiaries MBB Capital Management GmbH, Berlin, and MBB Capital GmbH, Münster.

In accordance with the master agreements dated 30 December 2009 and 26 March 2012, MBB Capital Management GmbH, Berlin, is compensated by MBB Industries AG every month for Dr. Christof Nesemeier's Managing Board activities. In accordance with the master agreements dated 30 December 2009 and 26 March 2012, MBB Capital GmbH, Münster, is compensated by MBB Industries AG every month for Gert-Maria Freimuth's Managing Board activities.

Please refer to the above information for the amounts of the variable and fixed remuneration

5. Employees

The average number of employees in continuing operations in the 2012 and 2011 financial years are broken down as follows.

	2012	2011
Durchschnittliche Mitarbeiter	Köpfe	Köpfe
Technische Applikationen	419	189
Industrieproduktion	379	378
Handel und Dienstleistung	123	133
Summe	921	700

	31.12. 2012	31.12. 2011
Zum Stichtag	Köpfe	Köpfe
Technische Applikationen	486	207
Industrieproduktion	382	385
Handel und Dienstleistung	130	122
Summe	998	714

6. Auditor's fees

The auditor's fees recognised in the 2012 financial year are broken down as follows:

	2012
	T€
Abschlussprüfungsleistungen	174.0
Steuerberatungsleistungen	12.0
Summe	186.0

7. Events after the balance sheet date

On 14 February 2013, Gert-Maria Freimuth, member of the Managing Board and majority shareholder of MBB Industries AG, informed the Company of his desire to step down from the Managing Board with effect from the 2013 Annual General Meeting, following 17 years as an executive and member of the Managing Board, and to move to the Supervisory Board. The Supervisory Board and Managing Board expressed their unanimous support for the changes in their composition and intend to implement these changes at the 2013 Annual General Meeting. In future, the management of MBB Industries AG will continue to consist of the Chairman of the Managing Board, Dr. Christof Nesemeier, and three additional members.

8. Other financial obligations

Please refer to II.15.1 "Operating leases and rent" for information on other financial obligations.

9. Contingent liabilities

There is a sub-participation relationship (in the form of phantom shares) with the managing directors of the Polish company Hanke Tissue Sp. z o.o., Kostrzyn, Poland. The sub-participant is entitled to 3% of the company's net profit and of any proceeds on disposal or dissolution.

MBB Industries AG has submitted an absolute guarantee totalling €350 thousand to the acquirer to hedge any warranty risks in connection with the disposal of a second-tier subsidiary. In accordance with the agreement, the guarantee was reduced to €75 thousand as at 31 December 2008. The remaining amount expires 60 months from the transfer date. The Managing Board does not expect the guarantee to be utilised.

10. Declaration in accordance with section 161 AktG

As a listed stock corporation in accordance with section 161 AktG, MBB Industries AG is required to submit a declaration on the extent to which the recommendations contained in the Corporate Governance Code of the German Government Commission have been complied with. The Managing Board and the Supervisory Board submitted the latest version of this declaration on 20 March 2013. It can be viewed on the Company's website at www.mbb.com.

11. Responsibility statement

To the best of our knowledge, and in accordance with the generally accepted principles of proper Group financial reporting, the consolidated financial statements give a true and fair view of the net assets, financial position and results of operations of the Group, and the Group management report includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal opportunities and risks associated with the expected development of the Group for the remaining months of the financial year.

Berlin, 20 March 2013

Dr. Christof Nesemeier Gert-Maria Freimuth Chairman of the Managing Board Member of the Managing Board

List of shareholdings as at 31 December 2012

	Registered	Share of	Currency	Equity	Earnings
Entity	Office	capital		thou NC	thou NC
Delignit AG	Blomberg	76,08%	EUR	9.183	294
Blomberger Holzindustrie
B. Hausmann GmbH & Co. KG	Blomberg	100,00%	EUR	-1.122	559
Cildro Plywood Srl.	Drobeta Turnu Severin	49,00%	RON	13.785	-1.645
Cildro S.A.	Drobeta Turnu Severin	42,90%	RON	27.081	-3.222
Cildro Service Srl.	Drobeta Turnu Severin	100,00%	RON	-1.078	228
Hausmann Verwaltung GmbH	Blomberg	100,00%	EUR	102	1
OBO Modulan GmbH	Stadthagen	100,00%	EUR	134	-3
OBO-Werke GmbH & Co. KG	Stadthagen	100,00%	EUR	1.216	155
OBO-Industrieanlagen GmbH	Stadthagen	100,00%	EUR	228	37
OBO-Werke Verwaltungs GmbH	Stadthagen	100,00%	EUR	35	1
Hanke Tissue Sp. z o.o.	Küstrin	100,00%	PLN	34.884	6.839
DTS IT AG	Herford	80,00%	EUR	1.818	-383
DTS Systeme GmbH	Herford	100,00%	EUR	1.098	396
ICSmedia GmbH	Münster	100,00%	EUR	450	44
eld datentechnik GmbH	Fellbach	100,00%	EUR	637	12
CT Formpolster GmbH	Löhne	100,00%	EUR	754	-185
MBB Fertigungstechnik Beelen GmbH	Berlin	100,00%	EUR	10.082	57
MBB Fertigungstechnik GmbH	Beelen	100,00%	EUR	24.561	6.771

Auditor's report

"We have audited the IFRS consolidated financial statements prepared by MBB Industries AG – consisting of the consolidated balance sheet, the consolidated statement of comprehensive income, the consolidated statement of changes in equity, the consolidated cash flow statement, consolidated segment reporting and the notes to the consolidated financial statements, as well as the summarised management report and Group management report – for the financial year from 1 January 2012 to 31 December 2012. The preparation of the consolidated financial statements and the summarised management report and Group management report in accordance with the IFRS as required to be applied in the EU and the additional provisions in accordance with section 315a (1) of the German Commercial Code (HGB) is the responsibility of the Managing Board of MBB Industries AG Our responsibility is to express an opinion on the consolidated financial statements and the summarised management report and Group management report based on our audit.

We conducted our audit of the consolidated financial statements in accordance with section 317 HGB and the German generally accepted standards for the audit of financial statements promulgated by the Institut der Wirtschaftsprüfer (IDW). Those standards require that we plan and perform the audit such that misstatements materially affecting the presentation of the net asset s, financial position and results of operations in the consolidated financial statements and the summarised management report and Group management report are detected with reasonable assurance. Knowledge of the business activities and the economic and legal environment of the Group and expectations as to possible misstatements are taken into account in the determination of audit procedures. The effectiveness of the accounting-related internal control system and the evidence supporting the disclosures in the consolidated financial statements and the summarised management report and the Group management report are examined primarily on a test basis within the framework of the audit. The audit includes assessing the financial statements of the entities included in the consolidated financial statements, the determination of entities to be included in the consolidation, the accounting and consolidation principles used and significant estimates made by the management, as well as evaluating the overall presentation of the consolidated financial statements and the summarized management and Group management report. We believe that our audit provides a reasonable basis for our opinion.

Our audit has not led to any reservations.

In our opinion, based on the findings of our audit, the consolidated financial statements comply with the IFRS as adopted by the EU and the additional requirements of German commercial law in accordance with section 315 (1) HGB and give a true and fair view of the net assets, financial position and results of operations of the Group in accordance with these requirements. The summarised management report and Group management report is consistent with the consolidated financial statements and, as a whole, provides a suitable view of the Group's position and suitably presents the opportunities and risks of future development."

Düsseldorf, 20 March 2013

Verhülsdonk & Partner GmbH Wirtschaftsprüfungsgesellschaft Steuerberatungsgesellschaft

signed signed Grote Weyers Wirtschaftsprüfer Wirtschaftsprüfer

Financial Calendar

Quarterly Report Q1/2013

31 May 2013

Annual General Meeting 2013

17 June 2013, 10:00 a.m. at Ludwig Erhard Haus, Fasanenstraße 85, 10623 Berlin, Germany

Half-Yearly Report 2013

30 August 2013

Analysts' Conference German Equity Forum Frankfurt/Main

11-13 November 2013

Quarterly Report Q3/2013 29 November 2013

End of the financial year 31 December 2013

Contact

MBB Industries AG Joachimstaler Strasse 34 10719 Berlin, Germany Tel.: +49 (0)30- 844 15 330 Fax: +49 (0)30- 844 15 333 www.mbb.com anfrage@mbb.com

Legal notice

© MBB Industries AG Joachimstaler Strasse 34 10719 Berlin, Germany

Cover photo: Andreas Rose Printing: CeWe COLOR AG & CO. OHG, www.anders-drucken.com

MBB Industries AG . Joachimstaler Straße 34 . 10719 Berlin, Germany . www.mbb.com