Westag AG — Annual Report 2016

Mar 30, 2017

FINANCIAL REPORT 2016

CORPORATE STRUCTURE

Divisions	Surfaces/Elements
Products/Functions	Formwork panels Vehicle panels Industry floors Stage floors Sandwich panels	High pressure laminates (HPL) Kitchen worktops Window sills Interior construction products Solid surface material Polymer glass
Sales focus	Timber traders Construction industry Automotive industry Wagon building Plant engineering	Timber traders DIY stores Interior construction Furniture industry
Export focus	Europe
Sales	€ 98.4 million
Export share	28.6%
Locations	Rheda-Wiedenbrück	Rheda-Wiedenbrück/Wadersloh

Our formwork panels provide the right solution for all applications – from technically demanding concrete surfaces to flawless fair-faced concrete surfaces.

Our Surfaces/Elements Division offers diverse solutions for interior construction – from coating materials and compound elements to prefabricated worktops, washbasin elements and window sills.

Doors/Frames		Headquarters
	Technical/high-performance doors/frames	Controlling
	Fire/smoke protection	IT
	Acoustic door sets		Human Resources
	Burglar-resistant systems	Accounting
	Living space doors/frames	Legal
Lattice walls
Special doors		Purchasing
			Technical services
			Marketing communications
		Shipping
			Cogeneration plant
Timber traders			Internal customers
	Builders' merchants	Utilities
DIY stores
	Builders' hardware distributors
Dry liners
Europe
€ 127.0 million		€ 7.6 million
17.4%
	Rheda-Wiedenbrück		Rheda-Wiedenbrück

As a full-range supplier of design-oriented living space doors and technically demanding functional doors, we offer a multi-faceted, diverse product range for all residential and commercial/public requirements.

WESTAG & GETALIT AG AT A GLANCE

	2016 1)	2015 1)	2014	2013	2012
Sales (in € '000)	233,019	226,698	223,111	224,160	227,401
Change over the previous year in percent	2.8%	1.6%	- 0.5%	- 1.4%	0.1%
Export sales (in € '000)	50,170	47,046	44,740	46,158	48,851
Change over the previous year in percent	6.6%	5.2%	- 3.1%	- 5.5%	0.3%
Export share	21.5%	20.8%	20.1%	20.6%	21.5%
Investments (in € '000) 2)	8,002	12,319	15,914	12,416	10,521
Change over the previous year in percent	- 35.0%	- 22.6%	28.2%	18.0%	- 4.9%
Depreciation (in € '000)	10,071	10,506	9,988	10,066	9,746
Change over the previous year in percent	- 4.1%	5.2%	- 0.8%	3.3%	4.5%
Cost of materials ratio	47.8%	48.7%	49.1%	48.7%	50.5%
Staff cost ratio	32.2%	31.9%	31.8%	31.4%	30.5%
Number of employees as of December 31 3)	1,308	1,304	1,301	1,284	1,287
Change over the previous year in percent	0.3%	0.2%	1.3%	- 0.2%	0.4%
EBITDA (in € '000)	19,964	18,358	18,549	18,852	20,080
Change over the previous year in percent	8.7%	- 1.0%	- 1.6%	- 6.1%	- 3.8%
EBIT (in € '000)	9,893	7,852	8,561	8,786	10,334
Change over the previous year in percent	26.0%	- 8.3%	- 2.6%	- 15.0%	- 10.5%
EBT (earnings before tax. in € '000)	10,542	8,602	8,858	9,111	10,766
Change over the previous year in percent	22,6%	- 2.9%	- 2.8%	- 15.4%	- 8.5%
Net profit (in € '000)	7,584	6,334	6,377	6,437	7,465
Change over the previous year in percent	19.7%	- 0.7%	- 0.9%	- 13.8%	- 9.1%
Return on sales before taxes	4.5%	3.8%	4.0%	4.1%	4.7%
ROCE	9.0%	6.9%	7.6%	8.2%	9.3%
Operating cash flow (in € '000)	19,235	16,622	16,612	22,905	17,392
Change over the previous year in percent	15.7%	0.1%	- 27.5%	31.7%	77.0%
Equity ratio	65.7%	67.9%	66.8%	68.2%	69.2%
Return on equity	7.0%	5.9%	6.1%	6.0%	7.1%
Number of shares 4)	5,720,000	5,720,000	5,720,000	5,720,000	5,720,000
Earnings per ordinary share (EPS. in €)	1.38	1.14	1.15	1.16	1.35
Change over the previous year in percent	21.1%	- 0.9%	- 0.9%	- 14.1%	- 8.8%
Earnings per preference share (EPS. in €)	1.44	1.20	1.21	1.22	1.41
Change over the previous year in percent	20.0%	- 0.8%	- 0.8%	- 13.5%	- 8.4%
Book value per share (in €) 5)	20.12	19.93	19.29	19.79	19.51
Change over the previous year in percent	1.0%	3.3%	- 2.5%	1.4%	- 1.1%
Dividend per ordinary share (in €) 6)	0.94	0.74	0.94	0.94	0.94
Change over the previous year in percent	27.0%	- 21.3%	0.0%	0.0%	0.0%
Dividend per preference share (in €) 6)	1.00	0.80	1.00	1.00	1.00
Change over the previous year in percent	25.0%	- 20.0%	0.0%	0.0%	0.0%

1) The figures for 2016 and 2015 are for the first time presented at Group-wide level

2) Including intangible assets

3) Including trainees

4) 50% ordinary shares and 50% preference shares each (2,860,000 shares each)

5) The book value per share is calculated taking into account the portfolio of own shares

6) For 2016 subject to the resolution of the Annual General Meeting on June 27, 2017

CONTENTS 2

Letter to Shareholders

5	Supervisory Board Report
10	The Group
10	Management Board
11	Westag & Getalit AG
12	Surfaces/Elements Division
16	Doors/Frames Division
20	Investor Relations
22	Employees
24	Combined Management Report
49	Consolidated and Separate Financial Statements
50	Consolidated Balance Sheet
52	Consolidated Statement of Comprehensive Income
53	Consolidated Cash Flow Statement
54	Consolidated Statement of Changes in Equity
55	Consolidated notes
90	Auditors' Report (IFRS)
92	Balance Sheet of Westag & Getalit AG (HGB)
94	Profit and Loss Account of Westag & Getalit AG (HGB)
95	Auditors' Report (HGB)

LETTER TO SHAREHOLDERS

Dear readers, dear shareholders,

Our annual report for 2016, which, following the foundation of our Russian distribution company, is the first to contain consolidated financial statements, looks back on a year full of events and developments. This applies not only to the fragile macroeconomic environment but also to Westag & Getalit AG.

The world economy was exposed to a variety of different influences in the past year. The existing exchange rate uncertainty and the stabilisation of oil prices at a low level painted a rather mixed macroeconomic picture. Uncertainties existed also within Europe. This was illustrated, among other things, by "Brexit", which hardly anybody had expected up to the vote by the British population. The referendum result was primarily reflected in the global financial markets, whereas its impact on the real economy in Europe is not fully predictable yet.

The uncertainties within the monetary union have been mitigated by the measures taken by the European Central Bank (ECB) as part of its low-interest policy. In March 2016, the ECB for the first time lowered its key interest rate to 0.0% while at the same time expanding its multi-billion asset purchase programme. The central bank thus continued its policy of supporting the eurozone economy with cheap money to stimulate consumer spending.

The German economy performed slightly better than the EU average. Compared to the previous year, growth in the gross domestic product accelerated by 0.2 percentage points to 1.9% in 2016. This increase was mainly attributable to higher consumer spending and increased public and commercial investments. As a result, the German construction sector also reported positive revenue growth at the end of the year. According to the Confederation of the German Construction Industry, sales revenues of the German construction sector rose by 6.3% in the past year; this growth rate was 3 percentage points higher than the original forecast issued at the beginning of the year.

The positive economic trend was also reflected in the business performance of Westag & Getalit AG, whose sales revenues climbed 2.8% to € 233.0 million in 2016. In view of the weaker economic trend in other European countries, the 6.6% increase in our export sales is particularly gratifying.

Due to strong demand from the housing construction sector, sales revenues in the Doors/ Frames Division showed a positive trend and amounted to € 127.0 million in fiscal 2016. Sales revenues in the Surfaces/Elements Division remained largely unchanged from the previous year at € 98.4 million. Nevertheless, we are still not fully satisfied with the sales performance of the two Divisions, especially in Germany.

On balance, the increase in Westag & Getalit AG's sales revenues had a positive effect on the company's earnings in fiscal 2016. At € 10.5 million, consolidated earnings before taxes clearly exceeded the prior year level. As a result, consolidated net profit for the year also improved to € 7.6 million in 2016.

The improved results are essentially due to the reorganisation of our distribution activities, which was initiated in the previous year, especially in the export segment, as well as to improved cost structures. We will continue this strategy to prepare Westag & Getalit AG for the challenges that lie ahead of us. The above-mentioned distribution company in Russia also is part of this strategy.

Because of the positive earnings trend, we will return to our old dividend strength this year. Based on earnings per share of € 1.44 per preference share and of € 1.38 per ordinary share, the Management Board and the Supervisory Board will propose a dividend of € 1.00 per preference share and of € 0.94 per ordinary share for the fiscal year 2016 at the Annual General Meeting on June 27, 2017. This would result in an above-average yield of close to 5% in terms of the 2016 closing prices.

The investments in our plants play an important role in taking our company forward also in the future. In 2016, investments focused on the expansion of our frames production facility within the door manufacturing plant. We also made investments in the optimisation of existing technical machinery and operational processes.

Against the background of these investments and the strategic measures we have initiated, we are generally optimistic about the further development of Westag & Getalit AG in the fiscal year 2017. Our optimistic expectations are supported, among other things, by the generally positive forecasts for the construction sector in Germany. At the same time, however, this optimism is somewhat mitigated by the market conditions that may influence us in the coming months, e.g. rising commodity prices and the implementation of Brexit.

In spite of the modest start to the year 2017, our objective is to achieve a moderate increase in sales revenues over the course of the year based on our market positioning as well as our investments and distribution efforts. Depending on our main expense items, we aim for earnings for the full year 2017 to more or less stay at the prior year level.

Our thanks for the positive performance in the past fiscal year primarily go to our staff. Only with their dedicated work and their great commitment will we be able to successfully take Westag & Getalit AG forward in the future.

Rheda-Wiedenbrück, March 15, 2017

The Management Board

REPORT OF THE SUPERVISORY BOARD

Klaus Pampel Chairman of the Supervisory Board

Dear Readers,

Benefiting from the favourable economic environment, the economic situation of Westag & Getalit AG showed a positive trend in the past fiscal year 2016. Consolidated sales revenues increased by 2.8% to € 233.0 million, with export sales rising at a disproportionate rate to € 50.2 million. While the Doors/Frames Division recorded a strong increase in sales revenues, sales revenues in the Surfaces/Elements Division were only slightly higher than in the previous year. Consolidated net profit for the year increased primarily because of intensified distribution activities and improved cost structures and climbed from € 6.3 million in the previous year to € 7.6 million.

As in the previous years, the Supervisory Board performed the tasks imposed on it by law, the statutes, the German Corporate Governance Code and the rules of procedure in the fiscal year 2016. In particular, the Supervisory Board monitored the Management Board's management activities and regularly advised it on managing the company. The Management Board fulfilled its information duties and provided us with regular, timely and comprehensive information on the sales and earnings trend, the company's financial situation, the state of the investments as well as on important individual events and measures. For this purpose, we received monthly income statements as well as detailed oral and written reports. These reports as well as strategic issues were explained to us in greater detail at the Supervisory Board meetings. At all of these meetings we discussed the current business trend, the latest plans as well as suitable strategies for the future with the Management Board. All material transactions requiring the approval of the Supervisory Board were discussed in detail and the respective resolutions were adopted. In the course of the year, the Chairman of the Supervisory Board obtained regular information on important business transactions and current developments from the Management Board.

There were no indications of conflicts of interest on the part of the members of the Management Board and the Supervisory Board that would have had to be disclosed to the Supervisory Board.

Meetings of the Supervisory Board

The Supervisory Board held four ordinary meetings and one extraordinary meeting in the fiscal year 2016. All meetings – save for of the extraordinary meeting on August 30, 2016 – were attended by all Supervisory Board members and by all members of the Management Board and by a representative of our auditors. The Supervisory Board meetings were characterised by open, factual and constructive talks.

The main items on the agenda of the Supervisory Board meeting on March 29, 2016 were the audit and the approval of the company's financial statements for the year ended December 31, 2015 as well as the resolution on the Management Board's profit appropriation proposal for the fiscal year 2015. Following the Management Board's report on current business developments, various measures to increase the efficiency and the results were discussed.

On May 3, 2016, we approved the purchase of own shares based on the resolution adopted by the Annual General Meeting on August 18, 2015 by way of a written vote. At the meeting on June 30, 2016, we discussed the sales and earnings performance of the individual divisions. In particular, we asked the Management Board to report on the current state of the distribution projects launched in the previous year as well as the measures initiated to optimise the cost structure. The company's plant managers presented their respective tasks, the different production processes as well as the challenges faced by the individual plants. As far as investments were concerned, we primarily addressed the existing capacity bottlenecks and the investments to be made in this respect. We also obtained information on the market situation for Westag & Getalit AG's products in Russia and approved the Management Board's proposal to establish a distribution company in the country. Finally, we adopted the agenda for the Annual General Meeting on August 23, 2016.

At the Supervisory Board meeting held after the Annual General Meeting on August 23, 2016, Mr Pampel was elected Chairman and Mr Holzinger, the former Chairman of the body, was elected Vice Chairman of the Supervisory Board. The composition of the three Supervisory Board committees remained unchanged; Mr Heite, Mr Holzinger and Mr Pampel were elected chairmen of the Audit Committee, the Human Resources Committee and the Appointments and Compensation Committee, respectively. We also addressed statutory amendments, especially regarding the commissioning of the auditor. The material amendments were explained to us and we discussed the aspects that are relevant for the company. In addition, we discussed the business trend in the two divisions as well as the possibilities to further increase our domestic and international sales revenues.

The main item on the agenda of the extraordinary Supervisory Board meeting on August 30, 2016 was the further expansion of the production facilities of the Doors/Frames Division, which had become necessary for capacity-related reasons. The responsible Management Board member, Mr Beckers, outlined the sales trend in this Division, the existing capacity bottlenecks as well as the planned investments. Following thorough discussion, the Supervisory Board approved the proposed multi-year investments in the expansion of the finishing lines in a total amount of approx. € 12.5 million.

At the Supervisory Board meeting on December 15, 2016, we discussed the sales and earnings performance in the first ten months of the fiscal year. The meeting primarily focused on the Management Board's presentation of the corporate strategy and the resulting medium-term plans and budgets. Following thorough discussion with the Management Board, we approved the plans and budgets. We also approved the capital expenditure budget for 2017 explained by the Management Board. Other topics addressed at the meeting included the need to prepare consolidated financial statements because of the foundation of the Russian subsidiary and the resulting expansion of the audit assignment for the auditor, the continuation of the purchase of own shares until December 31, 2017, the efficiency review of the Supervisory Board and the new declaration of conformity pursuant to section 161 AktG, which was issued together with the Management Board.

Work of the committees

The members of the Audit Committee held two meetings in the past fiscal year. At the meeting on March 29, 2016, the Audit Committee focused on the financial statements for the year 2015. At the meeting on December 15, 2016, the Audit Committee discussed the focal points for the 2016 financial statements with a representative of the auditors. We also discussed the new version of the declaration of conformity pursuant to section 161 AktG and performed the required regular efficiency review of the Supervisory Board. In compliance with the recommendations of the German Corporate Governance Code, the interim report and the quarterly reports of the year 2016 were discussed with the Management Board at telephone conferences before being released for publication.

The Human Resources Committee held one meeting in the fiscal year on December 15, 2016, which focused on the continued trusting cooperation between the Supervisory Board and the Management Board.

The Appointments and Compensation Committee also met on December 15, 2016 and addressed the election of the new Supervisory Board at the next Annual General Meeting. We are pleased that Mr Heite and Dr. Schönbeck were again willing to stand for election.

Separate and consolidated financial statements

The Management Board has prepared the separate financial statements for FY 2016 in accordance with the provisions of the German Commercial Code (HGB) and the consolidated financial statements for FY 2016 to International Financial Reporting Standards (IFRS). In addition, a combined Management Report was prepared.

The separate and the consolidated financial statements as well as the combined Management Report were audited by Peters & Partner GmbH Wirtschaftsprüfungsgesellschaft Steuerberatungsgesellschaft, Hannover, which was elected auditor by the Annual General Meeting on August 23, 2016 and subsequently commissioned by the Audit Committee.

Unqualified audit opinions were issued for the separate financial statements to HGB and the consolidated financial statements to IFRS as well as for the combined Management Report. We received the financial statements and the auditor's audit reports as well as the Corporate Governance Report, the compensation report and the Management Board's profit appropriation proposal in good time prior to the annual accounts meeting of the Supervisory Board. They were discussed in detail at the Supervisory Board's annual accounts meeting on March 29, 2017, which was attended by a representative of the auditors. The latter reported on the main results of the audit of the separate and the consolidated financial statements and the combined consolidated Management Report. We were also informed of the audit of the company's internal control and risk management system, which led to no objections. We have taken note of and approved the audit reports.

We reviewed the separate and the consolidated financial statements and the combined Management Report. We agree with the result of the auditors' audit based on our own findings and endorse the separate and the consolidated financial statements and the combined Management Report prepared by the Management Board. The financial statements have thus been approved. We also approved the corporate governance declaration. We concurred with the Management Board's profit appropriation proposal following our own review.

The Supervisory Board also reviewed the related party disclosures of the Management Board. This review and the review of the auditors' report led to no objections. The report of the auditors contains the following audit certificate:

"Based on our duly performed audit and assessment, we confirm that the information provided in the report is accurate."

Due to the final result of our audit, we raise no objections against the Management Board's related party disclosures.

The Supervisory Board would like to thank the members of the Management Board and all employees for their commitment and their achievements in the past fiscal year.

Rheda-Wiedenbrück, March 29, 2017

The Supervisory Board Klaus Pampel Chairman

Members of the Supervisory Board

Klaus Pampel, Meerbusch Businessman Chairman (since Aug. 23, 2016; Vice Chairman until Aug. 23, 2016)

Jürgen Heite, Meerbusch Managing Director of Thyssen'sche Handelsgesellschaft m.b.H., Mülheim an der Ruhr

Heinz-Georg Großerohde*, Rheda-Wiedenbrück Printer

Pedro Holzinger, Rheda-Wiedenbrück Businessman Vice Chairman (since Aug. 23, 2016; Chairman until Aug. 23, 2016)

Dr. Joachim Schönbeck, Krefeld Member of the Management Board of Andritz AG, Graz

Dietmar Lewe*, Rietberg Industrial Timber Processing Master 9

* employee representative

Wilhelm Beckers

Graduate process engineer 55

Chairman of the Management Board Head of the Doors/Frames Division Herzebrock-Clarholz

Christopher Stenzel

Graduate Businessman 50 Chief Financial Officer Gütersloh

Franz David

Businessman

51 Management Board member Head of the Surfaces/Elements Division Bad Waldliesborn

Innovative thinking and a strong customer focus characterise the way Westag & Getalit AG does business. This approach has made the company the German market leader in plastic-coated doors and frames as well as a leading supplier of worktops. Westag & Getalit AG offers a broad product portfolio that caters to the specific challenges of its diverse output markets and will support its evolution going forward. The company's innovatively redesigned website serves the same purpose.

The manufacture of surfaces and the finishing of wooden materials using a wide range of different coatings are the core competency of Westag & Getalit. The resulting product portfolio ranges from laminates to modern solid surface materials, from concrete formwork panels to ready-to-install products such as doors and frames, worktops and window sills. Ever since the company was established in 1901, its customers have relied on its expertise as one of Europe's leading manufacturers of wooden and plastic products. Today, Westag & Getalit is a well-established supplier of building and interior construction products for a wide variety of different uses.

The company's products are manufactured and marketed by two divisions, namely Surfaces/Elements and Doors/Frames. Named after the products they make, each of the divisions has its own production department and its own, independent sales organisation. In addition, there is a Central Division providing various services for the operating units. This corporate structure ensures that the different customer groups are addressed and served in accordance with their respective requirements at all times. Industrial customers and retailers/wholesalers are among the company's key customers. Retailers/ wholesalers deliver Westag & Getalit AG's products directly to the manufacturers and, in some cases, to the construction site. The corporate structure has thus proven to be a stabilising factor for the company's business activity, as this diversification helps to offset industry fluctuations.

More than 1,300 motivated employees, who are committed to taking the company forward, work at the two locations in Rheda-Wiedenbrück and Wadersloh. In the past fiscal year sales revenues of € 233.0 million were generated.

FUNCTION AND DESIGN | THE SURFACES/ELEMENTS DIVISION

The product portfolio of the Surfaces/Elements Division is characterised by designoriented trends and great technical expertise. Our two plants manufacture various solutions for interior construction projects. The offering ranges from coating materials such as the GetaLit laminate and the GetaCore solid surface material to ready-to-install products such as cut-to-size kitchen worktops and backwall systems as well as window sills. The product portfolio also includes floor panels for industrial applications and the manufacturing of utility vehicles as well as formwork panels for the realisation of high-quality fair-faced concrete surfaces.

All products rely on our surfacing expertise as our core competence. Key factors include our targeted approach to the individual output markets, the high level of vertical integration as well as our exceedingly flexible production.

We constantly adjust our product range to current market requirements. The multifaceted collections of the GetaCore solid surface material and the GetaLit high-pressure laminate cater to both decorative and technical trends. Examples include antibacterial laminates as well as a wide range of fire protection products meeting the demands of the public and commercial sectors. The result are products which combine design and technology in perfect harmony for a wide variety of different uses meeting nearly all customer requirements.

Kay-Henrik von der Heide, Sales Manager D|A|CH Surfaces/Elements: "Our new sales approach for specialist retailers and industrial customers means that we respond to the constantly changing and growing demands made on our products. We jointly develop solutions for different output markets and uses together with our

SOLUTIONS FOR THE INDUSTRIAL SECTOR

Trend-oriented diversity and practice-oriented product solutions

The demand for high-quality interior construction materials is subject to constant change. This applies to both the decorative requirements to be fulfilled by the materials and their technical properties. The diverse range of products offered by our Surfaces/Elements Division ideally meets these challenges. The Division supplies its customers with bespoke material solutions for specific purposes and requirements.

When it comes to building solid relationships with sales partners in different lines of industry, keeping a look on their customers' individual requirements plays an important role. Based on the purpose for which a product is to be used, its properties vary considerably. We constantly communicate with our customers to match the properties of our products to their specific requirements, thus delivering customised solutions.

Just like the decorative aspects, the technical demands made on the materials are becoming increasingly complex. On the one hand, our Surfaces/Elements Division responds to these challenges by constantly monitoring colour and interior design trends, which are reflected in new decor and surface collections for the GetaLit laminates and the GetaCore solid surface material. On the other hand, the Division develops specific product solutions to meet the constantly growing technical demands made by the public and commercial interior construction sector. These product solutions include flame-retardant sheet materials complying with fire protection requirements in interior construction projects as well as anti-bacterial laminates, which are in particularly high demand in hygienically sensitive areas.

Mondo, our new matt surface, is suitable for small-radius edges. Manufacturers use it, among other things, as a front surface for knob-free kitchen cabinets.

Thanks to its slim looks and elegant surface, the new aluminium-coated, stainless-steel-style compact panel adds a high-quality touch to any kitchen.

The focus of all our products is on the customer benefit. In a constant dialogue with our industrial and trade partners, our products are matched to the respective requirements of the purposes for which they are used and refined on an ongoing basis. This is underlined, in particular, by our intensified targeting of industrial customers in the kitchen and furniture industries. By closely matching its products to actual customer requirements, the Division ensures that we develop the right products for – and with – our customers.

One recent example is the development of an aluminium-coated, stainless-steel-style compact panel used as a worktop in highquality kitchens. The product requirements were defined in cooperation with our industrial partners and realised in the development process. The product combines a slim and lean appearance with an elegant surface that is extremely resistant to fingerprints. This new development responds to the continued trend towards thin worktops while at the same time offering the ideal preconditions for use in the kitchen thanks to its special sealed surface.

15

PARTNERSHIP AND EXPERTISE | THE DOORS/FRAMES DIVISION

As a leading manufacturer of interior doors, our Doors/Frames Division offers its customers diverse solutions for a wide variety of different uses. The Division operates as a full-range supplier and provides a large portfolio from standard residential doors to highly complex functional doors for public and semi-public uses. In combination with the wide range of different surfaces – from plastic-coated and painted doors to veneered doors – customers can choose from many possible combinations.

Our company produced its first doors already back in 1937. Today, Westag & Getalit AG is the German market leader in plastic-coated doors and frames. This segment comprises the DekoRit, PortaLit and GetaLit brands and offers the right solution for any application – from the basic housing construction sector to the more complex public and semi-public applications (e.g. hotels, schools and office buildings), which make particularly high demands on the doors and frames used.

The extremely wide range of solutions provides the basis for a very fruitful cooperation with our retail partners. The Division also offers comprehensive advisory and other services designed to drive shared growth with our trade partners. Never losing sight of future industry developments, the Doors/Frames Division pro-actively accepts the challenges of the markets, thus offering a clearly structured portfolio of doors and frames.

Holger Jacke, Sales Manager Doors/Frames "We focus on growing together with our industrial and trade partners. Our high-quality product solutions are specifically designed to meet the demands made by the

17

CLEAR STRUCTURES

A shared focus on actual market needs

A successful cooperation in a spirit of partnership requires a high degree of flexibility and transparency. When it comes to mastering the day-to-day business, products and services must be immediately available and easy to understand. The Doors/ Frames Division has adjusted itself to these requirements, which it impressively demonstrated at the BAU 2017 trade fair in Munich.

Under the motto "Klare Strukturen" (Clear Structures), the company presented itself to its retail and trade partners at the BAU 2017 trade fair in Munich. The Division exhibited its new decors and surfaces, all of which are matched to the latest interior construction trends. The exhibit also included new sliding doors as well as a selection of special-purpose doors.

The Division thus focuses on customers' main requirements. Its clearly structured portfolio always has the right product solutions, which can also be combined with each other. One example is the consistent availability of door and frame decors across all products and surface textures. This allows planners to combine identically styled doors from difference surface texture categories in line with their budget and usage requirements.

The Doors/Frames Division also responds to the changing information requirements of the market. To ensure the best possible communication, the Division continuously monitors the demands made by its customers in day-to-day business. The Division's modern online offerings include a special

At BAU 2017, the Doors/Frames Divisions also presented additions to its programme such as the new grooves for Westaline doors.

Professional segment, which provides up-todate information and many other services, e.g. key product details as well as special tools such as a dimensional calculation programme. This makes the day-to-day business easier for the customer – especially where very complex door elements are concerned – and facilitates the ordering process.

With its diverse offerings, the Doors/Frames Division clearly focuses on the key demands made by an increasingly complex market. Its customers benefit from a clearly structured product range and a high degree of transparency for their day-to-day business.

To our Shareholders The Group

Many online tools such as the "Mass+" dimensional calculation programme make everyday work easier for the customer.

INVESTOR RELATIONS

Continuous communication makes the company's performance transparent to the capital markets.

	2016	2015	2014	2013	2012
Total number of shares 2)	5,720,000	5,720,000	5,720,000	5,720,000	5,720,000
Portfolio of own shares	340,827	310,828	310,828	310,828	310,828
Book value per share (in €) 1)	20.12	19.93	19.29	19.79	19.51
Ordinary share information
Number of ordinary shares 2)	2,860,000	2,860,000	2,860,000	2,860,000	2,860,000
Highest price (in €)	20.20	20.75	22.00	20.00	19.20
Lowest price (in €)	17.20	17.88	17.35	15.95	15.91
Year-end price (in €)	19.90	19.51	18.50	17.31	16.50
Net profit per share (in €) 1)	1.38	1.14	1.15	1.16	1.35
Dividend per share (in €) 3)	0.94	0.74	0.94	0.94	0.94
Dividend yield (in %) 4)	4.7	3.8	5.1	5.4	5.7
PER 1)	14.4	17.1	16.1	14.9	12.2
Preference share information
Number of preference shares 2)	2,860,000	2,860,000	2,860,000	2,860,000	2,860,000
Portfolio of own shares	340,827	310,828	310,828	310,828	310,828
Highest price (in €)	20.86	20.70	21.80	19.70	19.80
Lowest price (in €)	17.03	18.19	17.30	15.62	15.62
Year-end price (in €)	20.48	20.20	18.45	17.40	15.62
Net profit per share (in €) 1)	1.44	1.20	1.21	1.22	1.41
Dividend per share (in €) 3)	1.00	0.80	1.00	1.00	1.00
Dividend yield (in %) 4)	4.9	4.0	5.4	5.8	6.4
PER 1)	14.2	16.8	15.3	14.3	11.1

1) The figures for 2016 and 2015 are for the first time presented at Group-wide level

2) diluted and basic

3) for 2016 subject to the AGM resolution on June 27, 2017

4) based on XETRA year-end prices

Capital market developments

Political changes clearly influenced the stock markets in 2016. At the beginning of the year, weaker economic data from China already caused unrest at the stock exchanges. Concern about the world economy sent the DAX and other leading indices falling sharply. As a consequence, Germany's benchmark index hit an annual low of 8,753 points in February 2016. In March 2016, the European Central Bank's interest rate cut led to an upward trend in share prices, before the unexpected Brexit vote again caused high volatility in the market in summer. Following a year-end rally, the DAX nevertheless closed the year almost 6.9% higher.

Both share types of Westag & Getalit AG were much more stable over the course of the year than the general stock market sentiment. On balance, the preference shares gained 1.4% and the ordinary shares gained 2.0% in the course of the year.

Investor relations

In the context of many different investor relations activities, Westag & Getalit AG provided its shareholders and all other stakeholders with detailed information in 2016. Examples include the annual accounts press conference in Rheda-Wiedenbrück on April 28, 2016 as well as the Annual General Meeting on March 23, 2016, which was again attended by over 300 shareholders. The past year again saw us participate in a capital market conference in Frankfurt, where we presented our company to analysts and institutional investors. Throughout the year, we provided timely reports on all topics relating to the company and its economic performance.

Dividend

The Management Board and the Supervisory Board will propose a dividend of € 1.00 for the preference shares and of € 0.94 for the ordinary shares to the Annual General Meeting on June 27, 2017. In view of the improved result for the year, the company will thus resume its previous dividend policy and continues to offer an above-average dividend yield – based on year-end prices – of 4.7% for the ordinary shares and of 4.9% for the preference shares.

Vocational trainer Norbert Stiens offers young colleagues many valuable insights for their future careers.

Employee training as an investment in the future

More than 1,300 employees make Westag & Getalit AG one of the largest employers at its two locations in Rheda-Wiedenbrück and Wadersloh. On the one hand, this entails great social responsibility. On the other hand, we are challenged to win new employees and to further enhance the qualifications of the workforce. For many years, the company has therefore attached great importance to training young people. This is not least reflected in the fact that we are currently expanding the training workshop at our main plant in Rheda-Wiedenbrück.

Every year, more than 20 apprentices and trainees successfully complete their vocational training in different trades and professions at Westag & Getalit AG. The aim is to offer as many trainees and apprentices as possible a career start and to qualify them for a future position in the company. We cover a wide range of different professions – from commercial employees to timber mechanics to warehouse logisticians. Apart from practical work, which familiarises the trainees and apprentices with day-to-day industrial processes, the theoretical part of the vocational training also plays an important role. To live up to these demands also in the future, the company invested in the further expansion of its training workshop in the fiscal year 2016.

Apart from the spatial and technical expansion of the workshop, we also created a new area for theoretical training. In the training workshop, the trainers provide their young colleagues with many useful experiences that are required for their future careers. This way, the company improves the practice-oriented training, which is combined with the complex operational processes and thus ensures a high standard of quality.

By doing so, the company underlines the great importance it has traditionally attached to training young people while at the same time meeting the demands of a qualified training atmosphere. Thanks to these efforts, many long-serving employees today hold responsible positions at Westag & Getalit AG. This approach is also designed to meet the emerging demographic challenge by creating structures which will ensure that vacant positions can be filled with qualified personnel also in the future.

EMPLOYEES

Human resources management

Motivated and highly qualified employees are key to the company's success. Effective human resources management therefore means winning talented people, developing them on an ongoing basis and retaining them in the long term. An instrument used in this context are dual study courses for career starters. Moreover, the company has intensified its activities for recruiting suitable trainees and apprentices, e.g. by participating in job information events. Extensive further training measures are offered for the ongoing training of our employees. These are very much appreciated by the workforce and thus help to ensure that Westag & Getalit AG stays competitive.

Personnel information

At 1,308, the number of employees remained almost unchanged in the fiscal year (previous year: 1304). 1,116 of them worked at our plant in Rheda-Wiedenbrück, while 192 were employed in Wadersloh. The table below shows further personnel information.

Personnel Information	31.12.2016	31.12.2015
Headcount	1,308	1,304
thereof
blue-collar workers	864	864
white-collar workers	377	377
trainees/apprentices	63	63
men	1,148	1,148
women	156	156
in Wiedenbrück	1,108	1,108
in Wadersloh	196	196
Average age	45	45
Average service life (years)	18	18

COMBINED MANAGEMENT REPORT

FUNDAMENTALS OF THE GROUP

Business model

Westag & Getalit AG is a manufacturer of wooden and plastic products operating across Europe. As a surface specialist, the company produces not only laminating materials but also a wide range of elements and ready-to-install products such as doors and frames as well as kitchen worktops and window sills. The company's main products are complemented by diverse customised solutions tailored to the specific requirements profiles of the customers. These include technical floor panels for industrial applications. The products are manufactured exclusively at the company's two German locations in Rheda-Wiedenbrück and Wadersloh using state-of-the-art technology. The products manufactured by the two operating divisions – Surfaces/Elements and Doors/Frames – serve numerous markets and industries. The two divisions are supported by the Central Division, where company-wide tasks such as controlling, human resources and accounting as well as IT services are pooled.

Corporate structure

Westag & Getalit AG is headquartered in Rheda-Wiedenbrück, where it also maintains a production plant. The company also has a branch plant in Wadersloh, some 15 kilometres from the headquarters. The Russian distribution company, OOO Westag & Getalit, Moscow, has been a wholly owned subsidiary of Westag & Getalit AG since its foundation in October 2016 and started operations in 2017. Its purpose is to clearly strengthen the sale of the company's products in the Russian market going forward.

Following the foundation of this subsidiary, Westag & Getalit AG has prepared its first consolidated financial statements including the corresponding figures for the previous year. The charts below therefore show the figures for 2015 and 2016 on a consolidated basis.

Controlling system

Westag & Getalit AG operates a detailed SAP-based controlling system which forms the basis for all important decisions taken at divisional and corporate level. The Management Board essentially controls the Group on the basis of a reporting system which outlines and explains the companies' results in detail on a monthly basis. Sales revenues and earnings are the key performance indicators analysed by the Board. These reports are complemented at Management Board level by more detailed evaluations and performance indicators from the fields of distribution, production, purchasing, human resources and financing.

The related analyses also form the basis for the Management Board's regular reports to the Supervisory Board.

ECONOMIC REPORT

Macroeconomic and sectoral environment

In 2016, the economy as a whole was influenced by many different political and monetary factors. Towards the end of the year, the outcome of the US elections caused uncertainty in the individual economic regions of the world. The central banks and their expansionary monetary policies also continued to influence the world economy, although the measures taken by the two largest central banks, the European Central Bank (ECB) and the US Federal Reserve System (FED) pointed in different directions for the first time again in 2016. The FED slightly raised US interest rates in the past year, while the ECB cut interest rates for the eurozone to 0.0% and continued its multi-billion asset purchase programme. Apart from the above, the year 2016 was also marked by declining economic growth in China and its effects on the European economic area. Meanwhile, the economy was supported by the fact that oil prices stayed at a low level.

Britain's Brexit vote led to uncertainty for the European economy. At this stage, it is unclear what impact the UK's exit from the EU will have on economic growth in the industrialised countries and on people's spending behaviour.

The German economy showed a robust trend in 2016. At 1.9%, growth in the gross domestic product was slightly higher than in 2016 but exceeded the EU-wide average by only 0.1 percentage points. The growth in the German economy was due, among other things, to public spending in conjunction with the influx of immigrants. Private consumption continued to increase as a result of the low interest rates. This primarily had an impact on construction spending.

Despite various global political influences, the German economy showed a robust trend in 2016

As a result, sales revenues in the construction industry picked up in 2016, with the building construction sector showing a better trend than the structural engineering sector. The strong housing construction segment was again the main driver in the past year; between January and October 2016, this segment recorded an 8.9% increase in sales revenues. By contrast, the commercial and public construction segments posted much lower growth rates of 2.1% and 4.8%, respectively.

Business in 2016

Consolidated sales revenues increased by 2.8% to € 233.0 million in 2016

Westag & Getalit AG also benefited from these positive framework conditions in fiscal 2016, when consolidated sales revenues increased by 2.8% to € 233.0 million (previous year: € 226.7 million). While business was successful for the better part of the year, the sales revenues of Westag & Getalit AG slowed down somewhat towards the end of the year due to moderate autumn sales. Sales revenues in 2016 thus met the forecast issued at the beginning of the year, according to which revenues were expected to grow moderately.

* Total sales revenues include revenues generated by the cogeneration unit (2016: € 7.4 million; previous year € 7.4 million) and other sales revenues of our Central Division (2016: € 0.2 million; previous year € 0.2 million), which are not shown separately in the chart.

Exports

Export sales increased by disproportionate 6.6%

Growing by 6.6% to € 50.2 million, export sales showed a particularly positive trend in 2016 (previous year. € 47.1 million). Export revenues thus improved at a disproportionate rate and reflect the intensified distribution efforts in foreign markets. The export share climbed from 20.8% to 21.5%

million in 2016 (previous year: € 26.6 million).

share improved to 17.4% (previous year: 17.0%).

At € 98.4 million, sales revenues of the Surfaces/Elements Division remained almost unchanged from the previous year's € 98.2 million. While we were not satisfied with the sales trend in Germany, our distribution efforts helped boost the Division's export revenues by 5.6% to € 28.1

Sales revenues of the Surfaces/Elements Division remained almost unchanged from the previous year

The Doors/Frames Division increased its sales revenues by 5% to € 127.0 million

Situation of the Group

Surfaces/Elements

Doors/Frames

Results of operation

Consolidated earnings before taxes amounted to € 10.5 million in 2016, up 22.6% on the previous year's € 8.6 million. Both operating divisions were able to grow their earnings.

Benefiting from the good framework conditions, especially in the housing construction sector, the Doors/Frames Division notably improved its sales revenues in the past fiscal year. Sales revenues picked up by 5.0% to € 127.0 million in 2016 (previous year: € 120.9 million). The Division's sales revenues outside Germany also showed a positive trend, with export sales climbing 7.8% to € 22.1 million (previous year: € 20.5 million). The export

The positive earnings trend is primarily attributable to the increase in sales revenues and the improved cost structures. Where the increase in sales revenues is concerned, Westag & Getalit AG benefited not only from the good economic environment but above all from the optimisation of its distribution structures initiated in the previous year and the selective investments in foreign markets. The improved cost structures are reflected in various expense items.

The cost of materials as a percentage of sales declined to 47.8% in 2016 (previous year: 48.7%) due to improved purchasing processes and partly declining commodity prices. By contrast, personnel expenses as a percentage of sales picked up moderately to 32.2% (previous year: 31.9%). This was due to wage and salary increases, individual reorganisation measures and the performance-linked increase in employees' variable compensation components. Due to declining capital expenditures, depreciation/amortisation declined from € 10.5 million in 2015 to € 10.1 million in 2016. Other operating expenses picked up moderately from € 27.1 million in the previous year to € 27.3 million in 2016. While expenses for freight, consulting services and returns picked up, insurance, advertising and maintenance expenses declined. As a result, the share of other operating expenses in consolidated sales revenues remained almost unchanged from the previous year at 11.7%.

Consolidated earnings before taxes increased to € 10.5 million

27

As in the previous year, the fact that the company generates its own energy also had a positive impact on the bottom line after deduction of the corresponding expenses.

Financial position

Cash and cash equivalents picked up by € 7.1 million to € 23.9 million as of December 31, 2016. On the one hand, this rise was due to the € 2.6 million increase in operating cash flow. On the other hand, the € 4.3 million reduction in fixed asset investments as well as the increased cash flow from financing activities had a positive effect on the company's liquidity.

As in the past, Westag & Getalit AG has no liabilities to banks.

Net worth position

Balance sheet structure

Total assets increased to € 164.7 million in 2016

The Group's total assets increased to € 164.7 million as at December 31, 2016 (previous year: € 158.9 million). While the value of fixed assets declined due to the fact that depreciation and amortisation were lower than capital expenditures, current assets increased from € 79.3 million to € 85.8 million. With inventories and receivables remaining almost constant, cash and cash equivalents climbed from € 16.8 million to € 23.9 million.

On the liabilities side, the Group's equity capital remained almost unchanged at € 108.7 million (previous year: € 108.2 million). The equity ratio thus stood at 65.7% as at December 31, 2016 (previous year: 67.9%). Due to an interest-related increase in pension obligations, long-term debt capital rose from € 24.2 million to € 27.9 million. Short-term debt capital increased by € 1.7 million to € 28.6 million primarily due to the fact that customers' bonus claims were higher than in the previous year for reporting date-related reasons.

Investments of € 8.0 million were made in 2016

Capital expenditure

Investments in intangible assets and property, plant and equipment amounted to € 8.0 million in the past fiscal year (previous year: € 12.3 million). Total capital expenditures thus remained below the originally planned amount due to the concentration on important large-scale projects as well as some time delays. Capital expenditures contrasted with depreciation/amortisation in the amount of € 10.1 million in 2016 (previous year: € 10.5 million).

As utilisation remained high, investments primarily focused on capacity expansion in the Doors/Frames Division. These included the completion of a new frames production line in the third quarter of 2016. Investments in the Surfaces/Elements Division mainly focused on optimising operational processes and the existing technical equipment. The investments have laid the basis on which the company will be able to benefit from the positive conditions in Germany and abroad also in the future.

Capital expenditure and depreciation € million

Associates/investments

Besides the newly established Russian subsidiary, Westag & Getalit AG has held a 49% share in AKP Carat-Arbeitsplatten GmbH, Meiningen/ Thuringia, since 2006. The company is a specialist for cut-to-size worktops made from a wide range of different materials – from HPL and solid surface materials to natural stone and solid wood. It supplies showroom kitchens and large furniture chains throughout Germany. In 2016, the company and its subsidiaries generated sales revenues of € 19.2 million (previous year: € 18.7 million). Net profit for the year declined from € 1.5 million in 2015 to € 1.3 million in 2016. A dividend totalling € 0.7 million was distributed for the year 2015, in which we participated in accordance with our share in the company.

Westag & Getalit AG's shares in AKP Carat-Arbeitsplatten GmbH are accounted for in the consolidated financial statements of Westag & Getalit AG using the equity method.

Current assets

In spite of the increased total output, inventories and trade receivables remained almost unchanged from the previous year at € 33.8 million and € 26.5 million, respectively.

Portfolio of own shares

As of December 31, 2016, Westag & Getalit AG held 340,827 own shares (previous year: 310,828 shares). All of these shares are preference shares. Pursuant to a resolution adopted by the Annual General Meeting on August 18, 2015, the company is authorised to repurchase more own shares until and including August 17, 2020. As announced on May 3, 2016, the Management Board has resumed the repurchase programme and extended it to the year 2017 with the consent of the Supervisory Board granted on December 15, 2016. In accordance with IFRS, the value of own shares is recognised in equity.

Non-current liabilities

Pension provisions climbed from € 22.9 million to € 26.5 million. Besides an interest-related addition in the amount of € 3.4 million (previous year: € -2.2 million), which was recognised in equity, there was an increase by € 0.2 million (previous year: € 0.2 million) that was recognised in profit/loss.

Net assets, financial position and results of operations of Westag & Getalit AG (HGB)

Given that the newly established subsidiary of Westag & Getalit AG, OOO Westag & Getalit, Moscow, started operations only in 2017, the key statements on the situation of the Group in 2016 equally apply also to Westag & Getalit AG. The tables below show the composition as well as the changes in net assets, financial position and results of operations of Westag & Getalit AG pursuant to HGB.

Financial position Assets	Dec. 31, 2016 € '000	Dec. 31, 2015 € '000	Change € '000
Intangible assets and property, plant and equipment	72,719	74,874	- 2,155
Financial assets	1,507	1,230	277
Current assets	74,226	76,104	- 1,878
Inventory	33,832	34,566	- 734
Accounts receivable and other assets	27,922	27,896	26
Bank deposits	23,651	16,835	6,816
Current assets	85,405	79,297	6,108
Prepaid expenses	103	42	61
Total assets	159,734	155,443	4,291

Liabilities	Dec. 31, 2016 € '000	Dec. 31, 2015 € '000	Change € '000
Subscribed capital	13,771	13,847	- 76
Reserves	85,704	85,630	74
Accumulated profit	11,768	10,685	1,083
Equity	111,243	110,162	1,081
Special item with an equity portion	163	309	- 146
Pension provisions	18,398	16,797	1,601
Other provisions	18,121	15,331	2,790
Provisions	36,519	32,128	4,391
Liabilities	11,809	12,844	- 1,035
Total liabilities	159,734	155,443	4,291

Results of operations	2016 € '000	2015 € '000	Change € '000
Sales revenues	233,018	226,698	6,320
Change in finished goods, inventories and work in process	- 805	122	- 927
Other own work capitalised	244	309	- 65
	232,457	227,129	5,328
Other operating income	1,595	1,502	93
Cost of materials	- 111,307	- 110,338	- 969
Personnel expenses	- 73,979	- 73,271	- 708
Depreciation/amortisation	- 10,071	- 10,506	435
Other operating expenses	- 29,084	- 27,306	- 1,778
Income from equity investments	366	333	33
Other interest and income	26	21	5
Interest and similar expenses	- 707	- 746	39
Taxes on income	- 3,182	- 2,187	- 995
Earnings after taxes	6,114	4,631	1,483
Other taxes	- 286	- 278	- 8
Net profit	5,828	4,353	1,475

Financial and non-financial performance indicators of the Group

Sales revenues and earnings are the key performance indicators used to control the Group. Capital expenditure, receivables and inventories, which are described above to analyse the situation, are less significant but important side aspects. Non-financial performance indicators such as human resources, product development as well as environmental and energy management help to better understand the overall performance.

Value added

Net value added increased to € 85.9 million in 2016

On the input side, net value added was up by 5.7% to € 85.9 million (previous year: € 81.3 million). The increase is primarily due to the fact that total output improved from € 227.1 million to € 232.5 million in 2016. The cost of materials moved in sync with total output and rose moderately from € 110.3 million to € 111.3 million. Depreciation of fixed assets declined to € 10.1 million.

The share of the value added that is attributable to the Group's workforce amounted to € 75.1 million (previous year: € 72.4 million). The share attributable to shareholders in the form of the dividend payment increased to € 5.2 million. Due to the higher net profit, both the amount that is retained in the company and the amount that is paid out to the government in the form of taxes increased.

Employees

The headcount remained almost unchanged at 1,308 As of December 31, 2016, the Group employed a total of 1,308 people, four more than on the prior year reporting date. The total number includes 61 trainees/apprentices (previous year: 63). In 2016, trainees and apprentices thus represented 4.7% of the workforce. At 18 years, the average service life of our employees remained unchanged in 2016.

To cover peak requirements in production, we again hired external workers in the past year. As of December 31, 2016, their number totalled 66 (previous year: 59). Permanent employment contracts were signed with 12 external workers in 2016.

Product development

We place a focus on the ongoing further development of our products. In this context, we concentrate not only on the decorative aspects of the surface finishes but also on the technical aspects of the materials. Great importance is also attached to the development of new functions and product improvements which make our doors and frames easier to install. Suitable product development initiatives are also pushed ahead in the context of our intensified distribution efforts aimed at industrial customers.

Environmental management

The Group is committed to always striking the right balance between economic success, environmental protection and corporate social responsibility. Our environmental management activities essentially focus on the sparing use of the different resources, the ecological design of our production processes as well as the environmental compatibility of our products.

This is not least reflected in the long life of our high-quality products. Another aspect is the "Blauer Engel" badge used to label our doors and frames as environmentally sound and non-hazardous to human health. Before this badge is awarded, aspects such as production, use, recycling and disposal as well as consumer information are examined thoroughly. Apart from this badge, many of our worktops and wall profiles additionally bear the eco label of eco-Institut Germany GmbH. Our sustainability efforts are not least reflected in the fact that we use FSC® and PEFC™ certified raw materials.

The sustainable use of raw materials also makes an important contribution to environmental protection. Apart from the sparing use made of raw materials for manufacturing purposes, our cogeneration plant uses wood waste from the production process to produce steam for the manufacture of our products and to operate the heating system in Rheda-Wiedenbrück. The cogeneration plant also produces electricity, which is fed into the public grid. Various measures aimed at reducing the use of fossil fuels are taken also at our Wadersloh plant. We aim to find alternative uses for production waste that cannot be used by our plants. In this context, we were able to find takers for some waste materials from the production process in 2016.

Apart from using the different raw materials sparingly in our production plants, we have been committed to further cutting our energy consumption in the past years. To improve our energy efficiency, we use an energy management system certified to DIN EN ISO 50001:2011, which continuously identifies and exploits potential for energy savings.

POST BALANCE SHEET EVENTS

No events that require reporting occurred in 2017.

FORECAST, OPPORTUNITY AND RISK REPORT

Forecast

Economic trend

The economic environment is generally positive but also includes downside risks

In spite of the volatile economic trend described above, the future economic environment is generally expected to be positive.

As far as the world economy is concerned, issues such as China's economic growth, the new US policy and the oil price trend may influence the markets. Within Europe, the main focus will be on the UK's Brexit and the policy of the European Central Bank, whose latest measures have stimulated consumption in the European economic area.

The economic trend in Germany has so far painted a generally positive picture. This is not least reflected in the performance of the construction sector. Taking into account the positive environment, it is safe to assume that construction spending will continue to increase in 2017. The Confederation of the German Construction Industry ("Hauptverband der Deutschen Bauindustrie") and the Central Association of the German Construction Sector ("Zentralverband des Deutschen Baugewerbes") project 5.0% revenue growth for the construction industry, which will again be supported primarily by the housing construction sector. Moreover, both organisations expect a more positive trend for the public and commercial building construction sectors in 2017.

Moderate revenue growth and earnings at prior year level projected for 2017

Outlook for the Group

In view of the above-mentioned forecasts for the German construction industry, which has the biggest influence on our Doors/Frames Division, we generally expect a positive market environment for 2017. Our positive revenue projections are additionally based on the ongoing expansion of our distribution activities in the Surfaces/Elements Division.

The performance of the increasingly important export markets will again be influenced by the prevailing uncertainties in 2017. In the coming months, the ECB's low-interest policy and the implications of Brexit will primarily influence the economies in our European neighbouring countries.

Against this background, it is difficult to issue a precise forecast for our business performance abroad. On balance, however, the fact that our product portfolio is tailored to the specific requirements of the individual markets makes us confident that we will be able to expand our export activities assuming a benign economic environment.

To master the challenges of the markets, we will continue our investment strategy in the future. We have planned investments of approx. € 16.0 million for 2017. In view of the current and anticipated demand, the main focus will be on expanding the capacity of our Doors/Frames Division. This essentially comprises a multi-year investment in the expansion of the finishing lines. The additionally planned investments in the optimisation of the operational processes and the technical equipment of the Surfaces/Elements Division will help maintain the high technical standards of our plants.

The positive turnaround in earnings in 2016 was essentially influenced by the good economic environment and the improved cost structures, not least in the materials segment. Based on the assumption that the economic environment remains favourable, our objective is to achieve a moderate increase in sales revenues in both divisions over the course of the year in spite of the modest start to the year 2017. Depending on our main expense items, we aim for earnings for the full year 2017 to more or less stay at the prior year level.

Opportunity Report

Westag & Getalit AG pursues a value-oriented company philosophy, which entails numerous opportunities for the Group. As one of the leading manufacturers of wooden and plastic products, we operate, and are well positioned, in an industry characterised by constant innovation.

A solid foundation

Our activities generally focus on healthy and organic long-term growth. The solid balance sheet, which is characterised by an equity ratio of about 66% and good liquidity, provides safety and room for the future growth of the Group. Moreover, it enables us to respond at relatively short notice to market-related changes.

Independence

Our independence plays an important role for our development. A diversified product portfolio and our presence in different markets reduce our exposure to the developments in individual markets. The fact that we have no bank liabilities makes us financially independent. The installation of our own energy generation plants and their ongoing expansion allow us to cover most of the electricity and heat requirements of our production facilities.

Modern production technology

The high technological standard of our plants depends on continuous investments. To increase our productivity and our flexibility we therefore expand our facilities on an ongoing basis. A key aspect in this context is our commitment to supplying all our products in batch sizes as small as "one" within a short delivery time. As customers' demand becomes increasingly individualised, this will open up new opportunities for our company.

Market-compliant corporate structure

The operational independence of the two segments ensures that our distribution and development activities are tailored to the respective market. At the same time, the Central Division pools cross-divisional functions and thus forms a service unit for all producing segments of the company.

Product diversity

Thanks to our highly diversified product portfolio and customer structure, we are able to respond flexibly to fluctuations in demand.

Swift order processing

Reliability, punctuality and short delivery times are but three success factors which we can realise in a cost-optimised manner and in accordance with our customers' wishes thanks to our sophisticated internal and external logistic processes. Proven processes allow us to respond quickly to market-related changes and to serve customers' demands.

High level of vertical integration

Thanks to the high level of vertical integration of our product segments, we are highly responsive to newly emerging market needs. Our relatively short time to market allows us to respond swiftly to new trends and product inquiries, without being directly dependent on third parties.

Economic opportunities

A continued positive trend in construction activity, especially in the public and commercial building construction sector, will open up good opportunities for growing sales revenues thanks to our diverse product portfolio and our distribution activities. We see special potential in our export markets.

Risk report

Preliminary remark

Our business activity – like any corporate activity – entails risks. Risks may also be caused by external factors. Many risks can be eliminated with the help of an appropriate approach, others can be mitigated, with the help of insurance or other measures, to such an extent that they remain manageable. The task of our risk management and controlling system is to identify risks at an early stage, to assess them and to take appropriate counter-measures. Risks are assessed primarily with a view to the probability of occurrence and the amount of the potential damage. The type and amount of each risk determine which measures are taken and which internal bodies are informed.

The right organisation, effective rules and regulations and a systematic reporting process ensure that the Management Board is informed of risks in a timely manner and can take counter-measures at an early stage. The Management Board regularly informs the Supervisory Board about existing material risks and their trends. Risks that are of major importance for the economic performance of the Group are finally evaluated and the measures to be taken to manage them are agreed with the Supervisory Board.

In the context of the audit for 2016, the auditor checked the early risk identification system of Westag & Getalit AG for compliance with the German Stock Corporation Act and stated that the system used complies with all relevant statutory requirements. The relevant risks to which the Group is exposed as well as the respective risk management measures are presented below.

We are of the opinion that the risks presented here do not jeopardise the Group, neither on their own or collectively. For further details of these risks, see the table below.

Individual risk	Probability of occurrence	Potential financial impact	Year-on-year change
Economic risks	possible	major	à
Sales risks	possible	major	à
Default risks	possible	moderate	à
Procurement risks	possible	major	à
Operational risks	possible	major	à
Personnel risks	possible	moderate	ä
Financial and exchange rate risks	unlikely	moderate	à

Risk summary

ä increased à unchanged

Economic risks

Due to our product and customer structure, we are very much dependent on economic activity in the construction and kitchen furniture sector as well as in the DIY store sector. We therefore monitor and analyse the respective economic and industry trends on an ongoing basis. Our flexible working hour schemes enable us to respond in an appropriate manner to short-term fluctuations in sales and to significantly reduce negative effects on earnings. Moreover, we have a healthy financial and liquidity structure to cope with potential declines in economic activity in the above sectors.

Sales risks

Sales risks are of fundamental importance in our line of business. They essentially depend on economic activity in our output markets, our products and the competitive situation. Due to the fact that our divisions partly operate in different markets, we achieve a certain degree of diversification and are less exposed to trends in individual markets than our competitors. Nevertheless, economic trends, the market position of our retail partners, customer acceptance of our products and the appropriate pricing of our products play an important role. We therefore aim to mitigate these risks through the diversification of both our product portfolio and our output markets to increasingly reduce our exposure to individual market segments and the economic trend in individual countries.

Default risks

Default risks may arise whenever contractual partners do not fulfil their contractual obligations at all or on time. The main reasons for this include a deteriorating cash position and bankruptcies. We mitigate this risk with the help of a very effective internal receivables management system as well as trade credit insurance protecting our major accounts receivable. In individual cases, we have receivables covered by corresponding guarantees.

Procurement risks

Our procurement risks have increased significantly over the past years, primarily because of reduced production capacities for certain intermediate products as well as a shortage of certified wood types. Moreover, we have to cope with price increases by our suppliers.

To mitigate the risk of insufficient supplies of raw materials of the required quality we are constantly reviewing our suppliers under our supplier assessment system and continue to expand our supplier network and to increasingly shift the focus of our procurement activities to international markets. However, growing demand and restrictive laws result in an increasing shortage of wood. In view of the strong market position of individual providers of certain raw materials, we only have limited options to address rising raw materials prices. Therefore, it is extremely important to identify imminent price rises quickly and to adapt our sales prices in a timely and appropriate manner. To reduce the risk of unexpected specification

changes and defects in intermediate products and raw materials, we rely on corresponding contractual regulations, checks of incoming goods and regular production-related tests. Where our energy supply is concerned, we have, for several years, taken advantage of the possibility to secure prices and quantities for natural gas and electricity under longer-term agreements. This opens up additional opportunities to buy these forms of energy at favourable prices but also entails a risk of an incorrect market and price assessment. We mitigate this risk by closely monitoring the market, consulting experts, making successive purchases and spreading the quantities over different periods.

Operational risks

A major operational challenge is to manufacture products meeting the required quality standards at a competitive cost structure. We are constantly working to improve our production processes and to develop new procedures, which are implemented if they are found to be feasible. Our machines and equipment are kept up-to-date through regular maintenance, repairs and modernisations. In addition, we have taken out appropriate insurance cover against damage by natural forces and the breakdown of especially critical machines. These measures are supported by fire protection and other precautionary measures as well as our quality management system, which has been certified to DIN ISO 9001. Information technology has constantly gained in importance in recent years. Redundant hardware and network components and a modern infrastructure guarantee maximum system availability and the necessary security for our data. In addition, data losses, system downtimes and unauthorised access are made virtually impossible by a well-trained team and appropriate data protection measures.

Personnel risks

The individual skills, professional expertise and the commitment of our employees make a key contribution to the success of our company. Consequently, potential risks for us include the loss of specialised and executive staff as well as a lack of suitable job applicants. Effective human resources management, which is aimed at constantly training our employees and winning new competent people, and effective employee motivation activities are therefore of major importance for us. To mitigate the risks arising from a loss of knowledge and experience resulting from older employees leaving our company, we organise appropriate qualification enhancement measures for younger staff and early succession planning. In view of the anticipated demographic developments, we have stepped up our external efforts to ensure that young talent become aware of Westag & Getalit AG as an attractive employer at an early stage. This has been reflected, for instance, in internships, bachelor's and master's theses and increased cooperation with universities and colleges.

Financial and foreign exchange risks regarding the use of financial instruments

In view of our high equity ratio of about 66% and the available liquidity, we currently see no financing risks. To mitigate the effects of potential changes in exchange rates outside the EU, we invoice almost exclusively in euros. As a general rule, only our UK sales in the local currency are hedged by foreign exchange transactions. On the procurement side, raw material purchases on a US dollar basis are hedged by acquiring the respective US dollar amounts.

INTERNAL CONTROL AND RISK MANAGEMENT SYSTEM FOR THE ACCOUNTING PROCESS

Our internal control and risk management system for the accounting process is guided by the aim of ensuring proper accounting and the compliance of our financial statements and reports with applicable rules and regulations.

The Group's accounting processes are clearly structured with regard to the individual responsibilities. The functions of the two departments primarily involved in the accounting process, Finance and Accounting as well as Controlling, are strictly separated with regard to the preparation of the accounts. An SAP-based, planning-driven information system is our main risk management instrument, which allows us to identify deviations in all our key performance indicators and initiate counter-measures at an early stage. On this basis, all members of the management are involved in the process of avoiding and minimising risks.

The accounting process is based on the SAP platform including a consistent reporting system as well as standardised IT-based processes. All employees involved in the accounting process have the required knowledge and experience. The four-eye principle is applied to all material accounting-relevant processes. The systems used are protected against unauthorised access. Access authorisations are granted on the basis of functions. Appropriate controls have been implemented for all accounting-relevant processes, taking into account the principle of a separation of functions. Besides automatic controls of the IT systems, analytical tests and manual examinations of individual transactions are carried out. New regulations and amended accounting rules are analysed for their impact in a timely manner and implemented swiftly if required.

Expert opinions on pension and tax matters are obtained from external service providers.

The clear definition of responsibilities, a clear organisational structure and appropriate control mechanisms as well as competent personnel and equipment ensure the efficiency of the accounting process. The existing controls help to largely avoid mistakes and detect and correct them, if required.

COMPENSATION OF THE MANAGEMENT BOARD AND THE SUPERVISORY BOARD

The compensation principles and structures are designed in such a way that they provide sufficient incentives to increase the company's profits in a sustainable manner. The details of the compensation of the Management Board members are contractually agreed with each individual member by the Supervisory Board based on a proposal by the Appointments and Compensation Committee. The monetary compensation components are comprised of fixed and variable components. The fixed components are based on the tasks of the respective Board member. The variable components for the Board members responsible for the production divisions depend, on the one hand, on the annual profit of the respective division and, on the other hand, on the annual profit of the company. The variable compensation component received by the Management Board member in charge of the Central Division is based on the company's annual profit. The company's annual profit is its earnings before corporate income taxes less any loss carried forward from the previous year and the amounts to be allocated to open reserves by law and the statutes.

In order to create incentives for a high annual profit, the profit shares increase disproportionately if certain profit levels are exceeded. The percentage of total compensation accounted for by variable components varies with the realised annual profit. In addition, the variable compensation is subject to a sustainability factor. This means that a Management Board member is eligible to only a partial amount of the variable compensation for a fiscal year. Whether the Management Board member also receives all or part of the remaining variable compensation depends on whether or not the company's earnings growth continues in the two following years. This is meant to provide an incentive for a sustainable positive earnings performance.

The Supervisory Board has reserved the right to cap the variable compensation in response to extraordinary, unpredictable developments. In addition, all Management Board contracts contain caps for the variable and the total compensation. The fixed compensation component is paid out monthly on a pro-rata basis, while the variable component is paid out annually in the form of a partial payment made during the year with the balance being paid following the adoption of the financial statements for the previous fiscal year. It has additionally been agreed that the compensation will be paid for a limited time in the event of a Management Board member's inability to work, provided that the member is not responsible for his/her inability to work. In addition, the members of the Management Board receive non-monetary and other benefits, which primarily include the use of a company car. D&O insurance and accident insurance has been taken out for the members of the Management Board, whose premiums are paid by the company. A pension agreement has been signed with the Chairman of the Management Board.

The company has not concluded any agreements with the members of the Management Board about the granting of shares in the company, share options or similar forms of compensation. The Supervisory Board has reviewed the Management Board compensation and its components and arrived at the conclusion that the compensation structure is in line with the compensation paid by peer companies as well as with the compensation structure within the company and is sufficiently attractive to incentivise good performance on a sustained basis.

The compensation of the members of the Supervisory Board is governed by section 12 of the company's statutes. According to these provisions, the members of the Supervisory Board receive a fixed annual compensation, which is payable after the end of the fiscal year and amounts to € 12,000 for each member; the Chairman receives twice this amount, while the Vice Chairman receives 1.5 times this amount. Each Supervisory Board member additionally receives annual compensation of € 2,500 per committee membership. No special compensation is granted for the chairmanship of a Supervisory Board committee. In addition, the expenses incurred by the Supervisory Board members in the performance of their tasks are reimbursed. D&O insurance has been taken out for the members of the Supervisory Board.

TAKEOVER-RELEVANT INFORMATION

The share capital of Westag & Getalit AG amounts to € 14,643,200. It is divided into 5,720,000 no-par bearer shares, of which 2,860,000 are ordinary shares and 2,860,000 are preference shares. Each share represents € 2.56 of the share capital.

The rights and duties associated with the shares are governed by the German Stock Corporation Act. According to the company's statutes, preference shareholders receive a preferred dividend of € 0.12 per preference share out of the accumulated profit. If the distributable accumulated profit is not sufficient to pay out a dividend of € 0.12 per preference share, the deficit must be paid, without interest, out of the accumulated profit generated during the subsequent years in such a way that the older deficits are paid before the newer ones and the preferred amounts payable for the year out of the same year's profit are paid subsequent to the repayment of all deficits. Subsequent to the distribution of a dividend of € 0.12 per ordinary share, the preference shareholders receive an extra dividend, which may not be paid retroactively, of € 0.06. Both preference and ordinary shareholders participate in a further distribution in the proportion of their prorate shares in the capital stock. The company reserves the right to issue further preference shares which, with respect to a distribution of profit or of company assets, are either of equal rank or take priority over the

existing non-voting preference shares. The preference shares carry no voting rights, except for the cases provided for in sections 140 and 141 of the German Stock Corporation Act. In addition, the preference shares grant the rights that arise to each shareholder from the share.

The company held 340,827 preference shares on December 31, 2016. No membership rights arise to the company from these shares. Gethalia Foundation c/o Prokurationsanstalt, Vaduz, Liechtenstein, holds 2,159,300 voting ordinary shares in the company. These shares represent 75.5% of the voting rights.

The members of the Management Board of Westag & Getalit AG are appointed and dismissed in accordance with sections 84 and 85 of the German Stock Corporation Act (AktG) in conjunction with section 4 of the statutes. Amendments to the company's statutes are subject to sections 133 and 179 of the German Stock Corporation Act (AktG).

The company was authorised by the Annual General Meeting on August 18, 2015 to acquire, sell and possibly redeem ordinary and/or preference shares in the company in an amount of up to 10% of the share capital by August 17, 2020 pursuant to the provisions of section 71 para. 1 No. 8 of the German Stock Corporation Act (AktG).

Circumstances that go beyond the above and must be disclosed pursuant to sections 289 para. 4, 315 para. 4 of the German Commercial Code (HGB) do not exist or are not known.

RELATIONSHIPS WITH AFFILIATED COMPANIES

According to a notification dated December 23, 2013, 75.5% of the voting rights in our company are attributable to Gethalia Foundation headquartered in Vaduz, Liechtenstein.

For clarification with regard to relationships with affiliated companies, we point out that no transactions were conducted between Westag & Getalit AG, OOO Westag & Getalit, Moscow and Gethalia Foundation. The respective report required under section 312 of the German Stock Corporation Act (AktG) concludes with the following declaration: "Transactions which are subject to reporting requirements did not take place."

CORPORATE GOVERNANCE DECLARATION

The corporate governance declaration including the Corporate Governance Report to be issued pursuant to sections 289a, 315 para. 5 of the German Commercial Code (HGB) can be found at www.westag-getalit.com/unternehmensfuehrung.

RESPONSIBILITY STATEMENT

To the best of our knowledge, and in accordance with the applicable reporting principles, the consolidated financial statements and the separate financial statements give a true and fair view of the net assets, financial position and results of operations of the Group and Westag & Getalit AG, and the combined Management Report includes a fair review of the development and performance of the business and the position of the Group and Westag & Getalit AG, together with a description of the principal opportunities and risks associated with the expected development of the Group and Westag & Getalit AG, respectively.

Rheda-Wiedenbrück, February 17, 2017 Westag & Getalit Aktiengesellschaft The Management Board

Wilhelm Beckers Franz David Christopher Stenzel

CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS

• 50 Consolidated Balance Sheet
• 52 Consolidated Statement of Comprehensive Income
• 53 Consolidated Cash Flow Statement
• 54 Consolidated Statement of Changes in Equity
• 55 Consolidated notes
• 90 Auditors' Report (IFRS)
• 92 Balance Sheet of Westag & Getalit AG (HGB)
• 94 Profit and Loss Account of Westag & Getalit AG (HGB)
• 95 Auditors' Report (HGB)

CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2016

	Assets	Notes	December 31, 2016 in € '000	December 31, 2015 in € '000	January 1, 2015 in € '000
	A. Non-current assets
I.	Intangible assets	13
	Software, licences and other industrial property rights		1,005	1,044	930
	II. Property, plant and equipment	13
	Land and leasehold rights and buildings		22,680	23,361	22,453
	Technical equipment and machinery		32,553	30,311	31,443
	Other fixtures and fittings, plant and office equipment		15,198	14,244	13,003
	Advance payments and assets under construction		1,306	5,914	5,261
			71,737	73,830	72,160
	III. Financial assets	13
	Shares in associated companies		2,731	2,473	2,073
	Other loans		0	30	70
			2,731	2,503	2,143
			75,473	77,377	75,233
	IV. Deferred taxes	13	3,411	2,154	2,499
			78,884	79,531	77,732
	B. Current assets
I.	Inventories	14
	Raw materials and supplies		17,204	17,012	16,514
	Work in progress		3,726	3,775	3,703
	Finished goods and merchandise		12,902	13,779	13,948
			33,832	34,566	34,165
	II. Receivables and other assets	14
	Trade receivables		26,525	26,336	24,713
	Receivables from associated companies		13	22	0
	Other assets		1,118	788	1,494
	Income tax receivables		399	792	1,598
			28,055	27,938	27,805
	III. Cash and cash equivalents	14
	Cash at banks or on hand		23,891	16,835	17,316
			85,778	79,339	79,286
	Total assets		164,662	158,870	157,018

Due to the first-time preparation of consolidated financial statements for the year ended December 31, 2016, the opening amounts of the previous year are stated additionally pursuant to IFRS 1.

	Liabilities Notes		December 31, 2016 in € '000	December 31, 2015 in € '000	January 1, 2015 in € '000
	A. Equity capital
I.	Called-up share capital	15
	Ordinary shares		7,322	7,322	7,322
	Preference shares		7,322	7,322	7,322
			14,644	14,644	14,644
	II. Capital reserve	15	24,399	24,399	24,399
	III. Revenue reserves	15	61,511	60,911	60,711
	IV. Accumulated profit	15	7,676	7,850	5,438
			108,230	107,804	105,192
	B. Non-current liabilities	16
	Provisions for pensions and similar obligations		26,499	22,891	24,882
	Other non-current provisions		1,356	1,304	1,443
			27,855	24,195	26,325
	C. Current liabilities	17
	Trade payables		6,714	7,602	7,973
	Other current liabilities		20,753	18,361	16,917
	Current provisions		526	506	611
	Income tax liabilities		584	402	0
			28,577	26,871	25,501
	Total equity and liabilities		164,662	158,870	157,018

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED DECEMBER 31, 2016

	Notes	2016 in € '000	2015 in € '000
Sales	1	233,019	226,698
Changes in inventories of finished goods and work in progress	2	- 805	122
Other own work capitalised	3	244	309
		232,458	227,129
Other operating income	4	1,468	1,329
Cost of materials	5	- 111,307	- 110,338
Personnel expenses	6	- 75,059	- 72,377
Depreciation of intangible fixed assets and property, plant and equipment	7	- 10,071	- 10,506
Other operating expenses	8	- 27,310	- 27,107
Other taxes	9	- 286	- 278
Operating result		9,893	7,852
Financial result	10	25	16
Income from associated companies		624	734
Earnings before income taxes		10,542	8,602
Taxes on income	11	- 2,958	- 2,268
Consolidated net profit		7,584	6,334
Items not reclassified to profit or loss:
Actuarial gains/losses on defined benefit plans		- 3,444	2,166
Deferred taxes on actuarial gains/losses on defined benefit plans		1,033	- 650
Sum total of income and expenses directly recognised in equity		- 2,411	1,516
Consolidated comprehensive income		5,173	7,850
	Notes	2016	2015
Earnings per share
Consolidated net profit in € '000		7,584	6,334
Average holdings of ordinary shares		2,860,000	2,860,000
Average holdings of preference shares		2,539,197	2,549,172
Net profit attributable to ordinary shares in € '000		3,937	3,268
Net profit attributable to preference shares in € '000		3,647	3,066
Earnings per ordinary share in €	12	1.38	1.14
Earnings per preference share in €	12	1.44	1.20
Dividend per ordinary share in € (2016: proposal)		0.94	0.74
Dividend per preference share in € (2016: proposal)		1.00	0.80

Earnings per share as defined in IAS 33 are calculated for both ordinary and preference shares by dividing the consolidated net profit attributable to the respective share type by the average number of shares of the respective type. Accordingly, net profit for the year must be divided into the different share types taking into account the higher dividend for the preference shares. Diluted earnings are equivalent to earnings per share.

CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2016

The cash flow statement shows the origin and use of cash flows in the fiscal years 2016 and 2015. A distinction is made between cash flows from operating activities as well as from investment and financing activities using the indirect method. Cash and cash equivalents shown in the cash flow statement comprise all cash and cash equivalents recognised in the balance sheet with the exception of time deposits with a term of more than three months in the amount of € 4,810 thousand (previous year: € 0 thousand).

	2016 in € '000	2015 in € '000
EBIT	9,893	7.852
Income tax payments	- 3,000	- 1,166
Depreciation and amortisation of fixed assets	10,071	10,506
Result from asset retirements	- 95	- 35
Change in current assets	626	- 1,539
Change in debt capital	1,740	1,004
Cash flow from operating activities	19,235	16,622
Investment in property, plant and equipment and intangible assets	- 8,002	- 12,319
Change in financial assets	30	40
Change in time deposits	- 4,810	0
Income from associated companies	366	333
Income from asset retirements	159	63
Cash flow from investment activities	- 12,257	- 11,883
Interest income	16	22
Interest expenses	- 1	- 5
Purchase of own shares	- 602	0
Dividend payments	- 4,145	- 5,237
Cash flow from financing activities	- 4,732	- 5,220
Change in cash and cash equivalents	2,246	- 481
Cash and cash equivalents as of January 1	16,835	17,316
Cash and cash equivalents as of December 31	19,081	16,835

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED DECEMBER 31, 2016

in € '000	Subscribed capital	Capital reserve	Revenue reserve	Accumulated profit	Total
January 1, 2015	14,644	24,399	60,711	5,438	105,192
Dividend				- 5,237	- 5,237
Consolidated net profit				6,334	6,334
Addition in accordance with section 58 (2) AktG			200	- 200	0
Actuarial gains/losses				2,165	2,165
Deferred taxes on actuarial gains/ losses				- 650	- 650
December 31, 2015	14,644	24,399	60,911	7,850	107,804
January 1, 2016	14,644	24,399	60,911	7,850	107,804
Dividend				- 4,145	- 4,145
Consolidated net profit				7,584	7,584
Purchase of own shares				- 602	- 602
Addition in accordance with section 58 (2) AktG			600	- 600	0
Actuarial gains/losses				- 3,444	- 3,444
Deferred taxes on actuarial gains/ losses				1,033	1,033
December 31, 2016	14,644	24,399	61,511	7,676	108,230

CONSOLIDATED NOTES

General information

Westag & Getalit AG is a manufacturer of wood and plastics products based in Rheda-Wiedenbrück, Westphalia. The stock corporation has been entered in the Commercial Register of Gütersloh under number HRB 5565.

Westag & Getalit AG is listed in the Prime Standard of the Frankfurt Stock Exchange and the official market of the Düsseldorf Stock Exchange. The company has prepared the present consolidated financial statements as a first-time adopter.

The consolidated financial statements of Westag & Getalit AG, Rheda-Wiedenbrück, were prepared in euros in accordance with International Financial Reporting Standards (IFRS), such as they are applicable in the European Union (EU), as well as to the complementary provisions of section 315a of the German Commercial Code (HGB). The fiscal year corresponds to the calendar year and ended on December 31, 2016. The consolidated financial statements will be published on the Internet on March 30, 2017.

The euro is the functional currency of Westag & Getalit AG, whereas the rouble is the functional currency of the subsidiary, OOO Westag & Getalit, Moscow, Russian Federation.

The following amended standards had to be applied in the EU for the first time as of the beginning of the fiscal year 2016:

Standard	Titel/Inhalt
Miscellaneous	Annual Improvements to IFRS 2010-2012:
	Clarifications regarding IFRS 2, IFRS 3, IFRS 8, IFRS 13, IAS 16, IAS
	38, IAS 24
IFRS 11	Accounting for acquisitions of interests in joint operations
IAS 1	Presentation of Financial Statements: Disclosure Initiative
IAS 16/ IAS 38	Clarification regarding Acceptable Methods of Depreciation and
	Amortisation
IAS 16/ IAS 41	Agriculture: Bearer Plants
IAS 19	Defined Benefit Plans – Employee Contributions
IAS 27	Equity Method in Separate Financial Statements
IAS 28/ IFRS 10/ IFRS 12	Investment Entities: Applying the Consolidation Exception
Miscellaneous	Annual Improvements to IFRS 2012-2014: Clarifications regarding
	IAS 19, IAS 34, IFRS 5, IFRS 7

The amendments to the standards and the new interpretation had no impact on the consolidated financial statements of Westag & Getalit AG.

The following standards and amendments to existing standards as well as interpretations, which have been issued but are not mandatory yet, are not applied early by Westag & Getalit AG:

Standard/	Title	Effective from
Interpretation
IFRS 10/ IAS 28	Sale or Contribution of Assets of an Investor in or to
	its Associate or Joint Venture	postponed*
IFRS 14	Regulatory Deferral Accounts	Feb. 1, 2016*
IAS 7	Statement of Cash Flows: Disclosure Initiative	Jan. 1, 2017*
IAS 12	Recognition of Deferred Tax Assets for Unrealised Tax Losses	Jan. 1, 2017*
IFRS 9	Financial Instruments (replaces the provisions in IAS 39 on
	the recognition and measurement of Financial Instruments)	Jan. 1, 2018
IFRS 15	Revenue from Contracts with Customers	Jan. 1, 2018
IFRS 2	Classification and Measurement of Share-based Forms of
	Payment	Jan. 1, 2018*
IFRS 15	Clarifications	Jan. 1, 2018*
IFRS 4	Application of IFRS 9 together with IFRS 4	Jan. 1, 2018*
Miscellaneous	Annual Improvement of IFRS (cycle 2014-2016):
	Clarifications regarding IFRS 1, IAS 28, IFRS 12	Feb. 1, 2017/
IAS 40	Transfers of Investment Property	Jan. 1, 2018*
IFRIC 22	Foreign Currency Transactions and Advance Consideration	Jan. 1, 2018*
IFRS 16	Leases (replaces IAS 17 and related interpretations)	Jan. 1, 2019*

* not yet endorsed by the EU Commission

Based on a preliminary assessment, Westag & Getalit AG assumes that the application of the standards and/or amendments that become effective as of the following year will have no material effects on the Group's net assets, financial position and results of operations. The effects of the standards and amendments that become effective as of a later date, especially IFRS 15 and IFRS 16, are still being examined.

The consolidated statement of comprehensive income comprises income generated and the expenses incurred in the period, the balance of which represents the consolidated net profit. It also comprises other comprehensive income, which is the balance of income and expenses directly recognised in equity. The expenditure type of presentation was used for the consolidated statement of comprehensive income.

A distinction between current and non-current assets and liabilities is made in the consolidated balance sheet. Assets and liabilities due within one year are classified as current.

Besides the consolidated statement of comprehensive income, the consolidated balance sheet and the consolidated cash flow statement, the notes include a consolidated statement of changes in equity as well as a segment report.

To increase the relevance of the information provided, individual items are combined in the consolidated statement of comprehensive income as well as in the consolidated balance sheet and are explained in the consolidated notes.

Consolidation principles

The consolidated financial statements comprise Westag & Getalit AG as well as its only subsidiary.

Method

Additions were consolidated using the revaluation method. The entities initially included in the basis of consolidation on this basis are included in the basis of consolidation as of the time of their foundation.

As a general rule, all intercompany profits, intra-group revenues, expenses and income as well as all receivables and liabilities between the consolidated entities are eliminated.

Basis of consolidation

The following entities are included in the consolidated financial statements as subsidiaries of Westag & Getalit AG, Rheda-Wiedenbrück:

	Capital share
OOO Westag & Getalit, Moscow, Russian Federation	100%

As OOO Westag & Getalit is a newly established company, consolidation essentially required the company's capital to be offset against the recognised value of the investment.

Equity consolidation

The following associated company, over which Westag & Getalit AG has material influence, is consolidated using the equity method pursuant to IFRS.

	Shareholding
AKP Carat-Arbeitsplatten GmbH, Meiningen ("AKP")	49%

This investment therefore is to be consolidated using the equity method.

January 1, 2006 has been chosen as the relevant date for determining the value and goodwill. This is the effective date at which the shares in AKP Carat-Arbeitsplatten GmbH were acquired. Profits accumulated in the meantime were counted towards the accumulated profit on a prorated basis.

The initial equity consolidation of the shares resulted in the following differences in the consolidated balance sheet as at January 1, 2015 compared to the former valuation in the commercial balance sheet:

	in € '000
Acquired pro-rated equity	778
Acquired goodwill	422
Investment value stated in the commercial balance sheet	1,200
Retained profits of the fiscal years 2006 - 2014	873
Total	2,073

Currency translation

The balance sheets of financial statements in foreign currency are translated at the mean spot exchange rate as of the balance sheet date. The income statements are translated at the average exchange rate. Any difference in the result is recognised in other operating expenses/income.

Key accounting and valuation principles

The following accounting and valuation principles were applied:

Realisation of earnings and expenses

Sales revenues and other operating income are recognised as soon as ownership or risk passes to the customer or at the time when a service is performed. Sales revenues are shown less cash discounts, discounts, price reductions and bonuses.

Changes in inventories of work in progress still in the production process on the balance sheet date are reported at their pro-rata production costs.

Operating expenses are recognised in profit/loss at the time of the use of the respective product or service.

Guarantee expenses are included in conjunction with the realisation of the respective sales revenues. Interest income and interest expenses are recognised on an accrual basis using the effective rate method.

Foreign currency transactions are translated into euros and recorded at the current rate of exchange. Any translation differences are recognised in other operating income or other operating expenses.

Non-current assets

Purchased intangible assets are recognised at cost. They are depreciated over their estimated useful economic lives of 3 to 8 years using the straight-line method.

Intangible assets as well as property, plant and equipment are written off for impairment if and when the "recoverable amount" of the asset has fallen below the carrying amount. The "recoverable amount" is the higher of the net realisable value and the present value of the anticipated cash flow from the asset.

Property, plant and equipment

Property, plant and equipment are recognised and measured at their acquisition or production costs less scheduled depreciation over their useful lives unless they are subject to non-scheduled depreciation. The straight-line method is used for depreciation over the useful lives.

The useful life of factory, business, residential and other buildings is mostly 25 to 50 years, of technical equipment and machinery up to 15 years and of other fixtures and fittings, plant and office equipment 3 to 10 years. The periods of depreciation and useful lives are reviewed annually.

In addition to the cost of materials, measured at cost, the production costs of self-constructed assets comprise production labour as well as pro-rata production overhead costs including depreciation. Financing costs are not recognised.

Financial assets

Financial assets include shares in associated companies, as well as interest-bearing loans held to maturity. The previous year's interest-bearing loans were measured at cost or at their lower fair values. With regard to the measurement of shares in associated companies, please refer to the information on equity consolidation.

Deferred taxes

Deferred taxes are determined for temporary differences between the carrying amounts and the tax valuations of assets and liabilities. Deferred taxes are based on a tax rate of 30%. The company has elected to offset deferred tax assets against deferred tax liabilities.

Current assets

Inventories

As a general rule, raw materials and supplies as well as merchandise are valued at their average acquisition costs. Work in progress and finished goods are shown at their production costs. Production costs comprise all costs directly attributable to the production process as well as appropriate portions of the production-related overhead costs. Financing costs are not included in the acquisition and production costs.

Inventory risks resulting from obsolescence, reduction in quality and other reduced usability are taken into account by means of adequate depreciation. Lower values on the balance sheet date due to reduced proceeds on disposal are shown accordingly.

Receivables and other assets

Receivables and other assets are valued at their acquisition costs. Discernible risks are taken into account by means of adequate value adjustments. The general credit risk is taken into account by means of a general valuation allowance based on past experience.

Existing receivables in foreign currencies are valued at the mean rate on the balance sheet date. Non-interest-bearing receivables including income tax claims from the corporate income tax benefit with a remaining term of more than one year are discounted based on public-sector bonds with comparable remaining terms.

Cash and cash equivalents

Means of payment are shown at their depreciated acquisition costs. Foreign currency assets are valued at the mean rate on the balance sheet date.

Pension provisions

Pension provisions include obligations under a pension scheme for the company's employees. The provisions are calculated based on salary-independent monthly old-age and disability pension payments per full year of staff membership in the company. In addition, there are individual pension commitments which comprise benefit claims as fixed amounts.

Provisions are set up for obligations under rights to future pension payments and current pension payments to active and former employees and their surviving dependants. The company's pension schemes have been closed; new employees are not entitled to company pensions.

Provisions for pensions from defined benefit plans are valued using the projected unit credit method. This method takes into account not only the pensions and vested rights to future pension payments known on the balance sheet date but also careful estimates of future increases in pensions and salaries. The calculation is based on actuarial expert opinions relying on certain biometric assumptions.

The expected mortality, disability and staff turnover rates are based on the Prof. Dr. Klaus Heubeck 2005 (G) tables. The provisions were calculated on the basis of the new retirement ages stipulated by the German Pension Reform Act. In deviation from the above, the retirement age of some individual pension commitments is the completion of the 65th year of age. The discount factor is based on the current yield of high-quality corporate bonds. Actuarial gains and losses are fully and directly recognised in equity.

Other provisions

Provisions are set up to the extent that there are current obligations from past events to third parties which are likely to result in a future outflow of resources that can be reliably estimated.

Provisions for guarantee claims are set up on the basis of past or estimated future claims. Other provisions are also taken into account for all discernible risks and uncertain obligations in the amount of their probable occurrence. The amounts shown are a best possible estimate of the funds required to meet the obligations existing on the balance sheet date.

Provisions for obligations which are unlikely to burden resources already in the following year are set up in an amount equalling the present value of the expected outflow of resources. The discount rate used is based on market rates as of the balance sheet date. The valuation of provisions is reviewed on each balance sheet date.

Liabilities

Upon initial recognition, liabilities are recognised at cost. In the following years, all liabilities are recognised at amortised cost.

All foreign currency liabilities are valued at the mean rate on the balance sheet date.

Trade payables as well as other current liabilities are liabilities with a term of no more than twelve months.

Derivatives

In accordance with an internal directive, derivative financial instruments are exclusively used in isolated cases to hedge interest rate and exchange rate risks on the basis of a hedging policy defined by the Management Board and agreed with the Supervisory Board. These financial derivatives are initially recognised at the fair value, usually at cost, and subsequently measured at their fair value. If the financial derivatives used are effective hedges in the context of a hedging relationship, fluctuations in the fair value have no impact on the result for the period during the term of the derivative.

Estimates and evaluations by the management

When preparing the financial statements, it is necessary to make certain assumptions and estimates, which have an effect on the amount and the recognition of assets and liabilities, income and expenses and contingent liabilities in the fiscal year. If the actual development deviates from the assumptions, the actual amounts may deviate from the originally expected estimates.

Inventories and provisions for guarantee claims are the assets and liabilities in the financial statements which are most strongly affected by this risk over a 12-month horizon. The depreciation parameters for inventories and the assessment of the required provisions for guarantee claims are based on historical values and future assumptions. All relevant post balance-sheet circumstances known at the time of the preparation of the financial statements were taken into account.

NOTES TO THE CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

A breakdown of sales revenues by geographic markets is shown below:

1. Sales revenues

	2016 in € '000	2015 in € '000
Sales revenues
Domestic	182.849	179.652
Abroad	50.170	47.046
Total	233,019	226,698

Increase/decrease in inventories of finished goods and work in progress - 805 122 Total - 805 122

Wages 244 309

2016 in € '000

2015 in € '000

2. Increase/decrease in inventories of finished goods and work in progress

Other own work capitalised

3.

	2016 in € '000	2015 in € '000
Own work capitalised - wages	244	309

4. Other operating income

	2016 in € '000	2015 in € '000
Other operating income
Income unrelated to accounting period	293	499
Compensation in kind	345	325
Insurance refund s	572	220
Foreign currency income	101	167
Other income	157	118
Total	1,468	1,329

5. Cost of materials

	2016 in € '000	2015 in € '000
Cost of materials
Raw materials and supplies	85,946	86,369
Merchandise	18,175	16,466
Cost of services	7,186	7,503
Total	111,307	110,338

6.

Personnel expenses

	2016 in € '000	2015 in € '000
Personnel expenses
Wages and salaries	62,136	59,717
Social security contributions	10,942	10,649
Expenses for pension costs and other benefits	997	1,023
Other social expenditure	984	988
Total	75,059	72,377

The table below shows the average annual headcount:

	2016	2015
Number of staff (excl. trainees)
Employees	374	378
Industrial employees	875	865
Total	1,249	1,243

7. Depreciation and amortisation of fixed assets

	2016 in € '000	2015 in € '000
Depreciation and amortisation of fixed assets
Intangible assets	537	468
Property, plant and equipment	9,534	10,038
Total	10,071	10,506

8. Other operating expenses

	2016 in € '000	2015 in € '000
Other operating expenses
Freight out	10,775	10,652
External cost of repair and maintenance	4,673	4,919
External production labour and overhead	3,614	3,606
Insurance, contributions and fees	1,360	1,542
Advertising and trade fair expenses	1,294	1,490
Legal and consulting fees	1,195	913
Travel and mileage allowance	606	524
Postage, office supplies and telephone	503	472
Other personnel expenses	445	597
Rent, lease, leasing costs	435	445
Car costs	420	437
Other expenditure	1,990	1,510
Total	27,310	27,107

Other expenditure includes expenditures unrelated to the accounting period in the amount of € 713 thousand (previous year: € 117 thousand) and losses from foreign currency translation in the amount of € 93 thousand (previous year: € 32 thousand).

	2016 in € '000	2015 in € '000
Other taxes	286	278
Total	286	278

Other taxes mainly comprise real property tax and vehicle license tax.

	2016 in € '000	2015 in € '000
Financial and investment result
Interest income	26	20
Income from long-term financial investments	0	1
Income from associated companies	624	734
Interest expenses	- 1	- 5
Total	649	750

Income from associated companies relates to the pro-rated profits from the investment in AKP Carat-Arbeitsplatten GmbH. It includes cash dividends of the associated company in the amount of € 0.4 million (previous year: € 0.3 million).

10. Financial and investment result

9.

Other taxes

11. Taxes on income

	2016 in € '000	%*)	2015 in € '000	%*)
Taxes on income
Expected tax expenditure	3,162	30.0	2,581	30.0
Adjustments for prior years	- 64	- 0.6	1	0.0
Offsetting of foreign losses	- 27	- 0.3	- 58	- 0.7
Tax-free income from investments	- 187	- 1.8	- 220	- 2.6
Other tax effects	74	0.7	- 36	- 0.4
Total	2,958	28.0	2,268	26.3
*) of earnings before income taxes in an amount of	10,542		8,602

The above tax rates were estimated on the basis of the applicable tax rates. A corporate income tax rate of 15% plus a solidarity surcharge of 5.5% was assumed. Trade tax is based on local assessment rates of 403% for Rheda-Wiedenbrück and 428% for Wadersloh.

Tax expenses are comprised as follows:

	2016 in € '000	2015 in € '000
Actual tax expenses	3,175	2,573
Deferred taxes resulting from the creation and reversal of temporary differences
Provisions for pensions	17	- 35
Non-current provisions for personnel	- 9	- 10
Special item with an equity portion	- 44	- 52
Value adjustment of fixed assets	- 181	- 208
Total	2,958	2,268

Deferred taxes were calculated on the basis of a tax rate of 30%.

12. Earnings per share

	2016	2015
Earnings per share
Consolidated net profit in € '000	7,584	6,334
Average holdings of ordinary shares	2,860,000	2,860,000
Average holdings of preference shares	2,539,197	2,549,172
Earnings per ordinary share in €	1.38	1.14
Earnings per preference share in €	1.44	1.20
Ordinary shares entitled to dividend	2,860,000	2,860,000
Preference shares entitled to dividend	2,519,173	2,549,172
Dividend per ordinary share in € (2016: proposal)	0.94	0.74
Dividend per preference share in € (2016: proposal)	1.00	0.80

NOTES TO THE CONSOLIDATED BALANCE SHEET

13. Non-current assets

13.1 Intangible assets, property, plant and equipment and financial assets

The breakdown of the non-current asset items summarised in the balance sheet and their changes in fiscal 2016 have been recorded in the respective notes to the balance sheet.

Tangible assets are encumbered with land charges in an amount of € 6,800 thousand. No actual drawing existed on December 31, 2016.

100% of the shares in the newly established subsidiary, OOO Westag & Getalit, Moscow, Russian Federation, were held for the first time as at December 31, 2016. The nominal capital of the subsidiary amounts to the equivalent of € 326 thousand, while its equity capital totalled € 298 thousand as at December 31, 2016. Start-up losses resulted in a net loss for the year of € 28 thousand.

As of the balance sheet date, Westag & Getalit AG also held 49.0% of the shares in AKP Carat-Arbeitsplatten GmbH (AKP), Meiningen, which is an associated company. AKP has a nominal capital of € 65 thousand (previous year: € 65 thousand). The company's equity capital amounted to € 4,713 thousand (previous year: € 4,187 thousand). A net profit of € 1,273 thousand (previous year: € 1,497 thousand) was generated in 2016. Total assets amounted to € 7,784 thousand as of the balance sheet date (previous year: € 7,393 thousand). Consequently, debt capital amounted to € 3,071 thousand (previous year: € 3,206 thousand).

DEVELOPMENT OF NON-CURRENT INTANGIBLE ASSETS, PROPERTY, PLANT AND EQUIPMENT AND FINANCIAL ASSETS

(in € '000)	Intangible assets	Property, plant and equipment
	Software, licenses and other industrial property rights	Land and leasehold rights and buildings	Plant and machinery	Other fixtures and fittings, tools and equipment
Acquisition and production costs
January 1, 2015	3,669	61,157	125,438	84,988
Additions	582	1,785	612	3,528
Disposals	423	0	770	1,392
Reclassifications	0	479	3,324	1,356
December 31, 2015	3,828	63,421	128,604	88,480
Additions	498	679	2,363	3,371
Disposals	21	276	218	1,668
Reclassifications	0	4	4,393	1,302
December 31, 2016	4,305	63,828	135,142	91,485
Accumulated depreciation
January 1, 2015	2,739	38,704	93,995	71,985
Additions	468	1,356	5,068	3,614
Disposals	423	0	770	1,363
December 31, 2015	2,784	40,060	98,293	74,236
Additions	537	1,364	4,514	3,656
Disposals	21	276	218	1,605
December 31, 2016	3,300	41,148	102,589	76,287
Carrying amounts
December 31, 2015	1,044	23,361	30,311	14,244
December 31, 2016	1,005	22,680	32,553	15,198

		Financial assets			Fixed assets
Advance payments and assets under construction	Total	Shares in associated companies	Other loans	Total	Total
5,261	276,844	2,073	70	2,143	282,656
5,812	11,737	733	0	733	13,052
0	2,162	333	40	373	2,958
- 5,159	0	0	0	0	0
5,914	286,419	2,473	30	2,503	292,750
1,091	7,504	624	0	624	8,626
0	2,162	366	30	396	2,579
- 5,699	0	0	0	0	0
1,306	291,761	2,731	0	2,731	298,797
0	204,684	0	0	0	207,423
0	10,038	0	0	0	10,506
0	2,133	0	0	0	2,556
0	212,589	0	0	0	215,373
0	9,534	0	0	0	10,071
0	2,099	0	0	0	2,120
0	220,024	0	0	0	223,324
5,914	73,830	2,473	30	2,503	77,377
1,306	71,737	2,731	0	2,731	75,473

To our Shareholders The Group

13.2 Deferred tax assets

	Dec. 31, 2016 in € '000	Dec. 31, 2015 in € '000
Deferred tax assets
Provisions	4,322	3,298
Special item with an equity portion	- 49	- 93
Fixed assets	- 870	- 1,051
Miscellaneous from consolidation entries	8	0
Total	3,411	2,154

As of the reporting date, deferred tax liabilities of € 919 thousand (previous year: € 1,144 thousand) were offset against deferred tax assets of € 4,330 thousand (previous year: € 3,298 thousand).

14. Current assets 14.1 Inventories

	Dec. 31, 2016 in € '000	Dec. 31, 2015 in € '000
Inventories
Raw materials and supplies	17,204	17,012
Work in progress	3,726	3,775
Finished goods and merchandise	12,902	13,779
Total	33,832	34,566

In the fiscal year, inventories were written down and recognised in profit/loss in an amount of € 927 thousand (previous year: € 978 thousand). No impairments made in earlier years were revalued to historical cost in the fiscal year. No inventories were transferred as security by Westag & Getalit AG.

Dec. 31, 2016 in € '000 Dec. 31, 2015 in € '000 Receivables and other assets Trade receivables 26,525 26,336 Receivables from associated companies 13 22 Other assets 1,118 788 Income tax receivables 399 792 Total 28,055 27,938

14.2 Receivables and other assets

	Dec. 31, 2016 in € '000	Dec. 31, 2015 in € '000
Trade receivables
Carrying amount	26,525	26,336
thereof not impaired as of the balance sheet date and due for
less than 30 days	1,234	1,487
more than 30 days and less than 60 days	300	140
more than 60 days	243	314

The table below shows the changes in valuation allowances to cover a possible risk of default:

	2016 in € '000	2015 in € '000
Valuation allowances
As of January 1	1,420	1,293
Addition	25	130
Use/Reversal	0	- 3
As of December 31	1,445	1,420

Losses of receivables totalled € 10 thousand in the fiscal year (previous year: € 57 thousand). The products shipped by the company are subject to retention of ownership.

Receivables from associated companies result from the business relationships with AKP Carat-Arbeitsplatten GmbH and its subsidiary, WAV Carat-Arbeitsplatten GmbH. Westag & Getalit AG has a direct and indirect influence on these companies. In fiscal 2016, goods in an amount of € 945 thousand (previous year: € 1,026 thousand) were supplied to these companies and no goods were purchased from them as in the previous year.

Other assets are composed as follows:

	Dec. 31, 2016 in € '000	Dec. 31, 2015 in € '000
Other assets
Suppliers with debit balances	513	424
Energy tax refunds	130	88
Receivables from supplier bonuses	209	143
Other	266	133
Total	1,118	788

Income tax receivables include claims under corporate income tax benefits in an amount of € 399 thousand (previous year: € 792 thousand). These claims are discounted at a rate of 0.0% (previous year: 0.3%) and paid out in equal instalments of € 399 thousand over a period of 10 years starting 2008.

	Dec. 31, 2016 in € '000	Dec. 31, 2015 in € '000
Cash and cash equivalents
Current account balances	12,319	6,635
Time deposit and money market account balances	11,572	10,200
Total	23,891	16,835

As in the previous year, the company had unused cash credit lines totalling € 5.0 million; bank guarantees totalling € 3.8 million were not used as of the balance sheet date. No securities or bank balances were pledged or assigned as of the balance sheet date.

	Anzahl	Dec. 31, 2016 in € '000	Dec. 31, 2015 in € '000
Subscribed share capital (bearer shares)
Ordinary shares	2,860,000	7,322	7,322
Preference shares	2,860,000	7,322	7,322
Total	5,720,000	14,644	14,644

The aim of our capital management efforts is to generate an appropriate return on equity employed on the basis of the existing good equity ratio. In accordance with the provisions of the German Stock Corporation Act (AktG) and the statutes, net profits generated are allocated to reserves or distributed to the shareholders in the form of a dividend.

Changes in equity are shown in the enclosed consolidated statement of changes in equity.

All of the company's shares are registered for trade and officially quoted at the Düsseldorf and Frankfurt stock exchanges. The ordinary shares are full voting shares, while the preference shares are non-voting. Preference shareholders receive a preferred dividend of € 0.12 per preference share out of the accumulated profit. If the distributable accumulated profit is not sufficient to pay out a dividend of € 0.12 per preference share, the deficit must be paid, without interest, out of the accumulated profit generated during the subsequent years in such a way that the older deficits are paid before the newer ones and the preferred amounts payable for the year out of the same year's profit are paid subsequent to the repayment of all deficits.

Cash and cash equivalents

14.3

15. Equity capital 15.1 Subscribed share capital

Subsequent to the distribution of a dividend of € 0.12 per ordinary share, the preference shareholders receive an extra dividend, which may not be paid retroactively, of € 0.06. Both preference and ordinary shareholders participate in a further distribution in the proportion of their prorate shares in the capital stock. The company reserves the right to issue further preference shares which, with respect to a distribution of profit or of company assets, are of equal rank over the existing non-voting preference shares.

We also state the following with regard to the capital and the statutes:

Gethalia Foundation c/o Prokurationsanstalt, Vaduz, Liechtenstein, has held 2,159,300 voting ordinary shares in the company since December 2013, when it took over the voting interests from Syntalit AG, Zug, Switzerland, a subsidiary of Gethalia Foundation. These shares represent 75.5% of the voting rights. No other direct or indirect shareholdings that exceed 10% of the voting rights were reported to the company or are known to the Management Board.

Shares with special rights that grant controlling powers do not exist. To the company's knowledge, employees only hold preference shares in the company.

The members of the company's Management Board are appointed and dismissed by the Supervisory Board in accordance with section 84 of the German Stock Corporation Act (AktG).

Pursuant to section 179 of the German Stock Corporation Act (AktG), amendments to the statutes require a majority of at least three quarters of the share capital represented at the Annual General Meeting. The statutes do not include any provisions that deviate from this clause.

Based on a resolution adopted by the ordinary Annual General Meeting of August 18, 2015, the Management Board is authorised to repurchase own shares as defined in section 71 para. 1 No. 8 of the German Stock Corporation Act (AktG) until August 17, 2020.

No agreements exist which come under the condition of a change of control due to a takeover bid. Compensation agreements have not been concluded with the members of the Management Board or employees in the event of a takeover bid.

15.2 Capital reserve

	Dec. 31, 2016 in € '000	Dec. 31, 2015 in € '000
Capital reserve	24,399	24,399
Total	24,399	24,399

The capital reserve mainly consists of the premiums of earlier capital increases.

15.3 Revenue reserves

15.4

Accumulated profit

	Dec. 31, 2016 in € '000	Dec. 31, 2015 in € '000
Revenue reserves
Legal reserves	596	596
Other revenue reserves	60,915	60,315
Total	61,511	60,911

Revenue reserves contain the past results of Westag & Getalit AG to the extent they have not been distributed. They also include negative changes in equity with no impact on profit or loss, which result from the adoption of IFRS.

In fiscal 2016, an amount of € 600 thousand (previous year: € 200 thousand) was allocated to the revenue reserves in accordance with section 58 para. 2 of the German Stock Corporation Act (AktG).

	2016 in € '000	2015 in € '000
Accumulated profit
As of January 1	7,850	5,438
Dividend payout	- 4,145	- 5,237
Purchase of own shares	- 602	0
Consolidated net profit	7,584	6,334
Other comprehensive income	- 2,411	1,515
Addition in accordance with section 58 para. 2 AktG	- 600	- 200
As of December 31	7,676	7,850

Own shares (340,827; previous year: 310,828) in an amount of € 4,446 thousand (previous year: € 3,844 thousand) held on the balance sheet date were netted with the accumulated profit without any impact on the operating result.

Other comprehensive income comprises income and expenses directly recognised in equity and represents actuarial gains/losses from defined benefit pension plans in the amount of € - 3,444 thousand (previous year: € 2,166 thousand) taking into account deferred taxes of € 1,033 thousand (previous year: € - 650 thousand).

16. Non-current liabilities 16.1 Pension provisions

	2016 in € '000	2015 in € '000
Pension provisions
As of January 1	22,891	24,882
Current expenditure	1,002	997
Current pension payments	- 838	- 822
Change in actuarial gains/losses	3,444	- 2,166
As of December 31	26,499	22,891

The present value of the benefit obligations is not fund-financed.

Breakdown of the benefit obligation:

	Dec. 31, 2016 in € '000	%
Active employees	13,318	50.2
Retired employees with vested entitlements	845	3.2
Pension recipients	12,336	46.6
Total	26,499	100.0

The consolidated statement of comprehensive income for the fiscal year includes the following expenses for pension obligations as personnel expenses:

	2016 in € '000	2015 in € '000
Current service cost	418	483
Interest expenses	584	514
Total	1,002	997

The amount of provisions is calculated using actuarial methods based on the following assumptions:

	2016 in € '000	2015 in € '000
As of January 1	7,730	9,896
Changes in financial accounting assumptions	3,489	- 2,110
Experience adjustments	- 45	- 56
As of December 31	11,174	7,730

The changes in actuarial gains/losses are shown in the consolidated statement of comprehensive income as other comprehensive income in the sum total of income and expenses directly recognised in equity.

The amount of provisions is calculated using actuarial methods based on the following assumptions:

	Dec. 31, 2016 in %	Dec. 31, 2015 in %
Discount factor (p.a.)	1.80	2.60
Anticipated income growth (p.a.)	–	–
Rate of pension progression (p.a.)	2.00	2.00

A change in the above assumptions used to calculate the pension provisions as of the balance sheet date would have the following effects on the obligation:

		Effects in € '000	Effects in € '000
Biometric accounting assumptions
Change in life expectancy	used	- 1 year	+ 1 year
	RT 2005 G	- 826	842
Financial accounting assumptions
Change in the discount factor	used	- 100 bps	+ 100 bps
	1.80%	5,636	- 4,250
Change in the pension trend	used	- 25 bps	+ 25 bps
	2.00%	- 840	882

We intend to continue financing the pension obligations via provisions and to make the pension payments from the company's operating cash flow. Investing free cash flow in the company should secure adequate interest income on the capital employed in the medium and long term to cover uncovered pension risks.

We project service costs and interest expenses of € 971 thousand for the fiscal year 2017. The maturity profile from the benefit obligations for future fiscal years is:

To our Shareholders | The Group | Combined Management Report | Consolidated and Separate Financial Statements 77 » Consolidated Notes

2017	2018	2019	2020	2021	2022–2026
in € '000	in € '000	in € '000	in € '000	in € '000	in € '000
854	851	841	840	847	4.428

The pension obligations have a weighted average maturity of 18.9 years (previous year: 17.7).

in € '000	Provisions for personnel	Other provisions	Non-current provisions Total
As of January 1, 2015	527	916	1,443
Use	63	420	483
Reversal	0	0	0
Addition	80	264	344
As of December 31, 2015	544	760	1,304
As of January 1, 2016	544	760	1,304
Use	63	445	508
Reversal	0	0	0
Addition	85	475	560
As of December 31, 2016	566	790	1,356

Other provisions essentially include the non-current portion of the provisions for complaints and guarantees as well as the provisions for anniversary benefits. The current portion of the anniversary provisions amounts to € 60 thousand (previous year: € 57 thousand).

Dec. 31, 2016 in € '000 Dec. 31, 2015 in € '000 Trade payables 6,714 7,602 Total 6,714 7,602

All trade payables are current liabilities, which are subject to the usual retention of ownership of the suppliers. Trade payables are due within one year and non-interest-bearing.

17. Current liabilities 17.1 Trade payables

16.2

Other non-current provisions

17.2 Other current liabilities

	Dec. 31, 2016 in € '000	Dec. 31, 2015 in € '000
Other current liabilities
Bonuses due to customers	10,665	9,520
Liabilities to employees	4,881	4,806
Income tax on wages and salaries	1,555	1,480
Other tax liabilities	1,120	980
Insurance payments	0	163
Debtors classed as creditors	213	129
Advance payments received	95	73
Others	2,224	1,210
Total	20,753	18,361

Other current liabilities in the amount of € 0 thousand (previous year: € 32 thousand) have a remaining term of more than one year; all other current liabilities are due within one year and non-interest-bearing.

	Guarantee obligations in € '000
As of January 1, 2015	611
Use	281
Reversal	0
Addition	176
As of December 31, 2015	506
As of January 1, 2016	506
Use	297
Reversal	0
Addition	317
As of December 31, 2016	526

The provision was established for the temporary use of guarantee obligations.

	Dec. 31, 2016 in € '000	Dec. 31, 2015 in € '000
Income tax liabilities	584	402
Total	584	402

Income tax liabilities comprise the charges from the tax calculations for the fiscal year 2016 as well as unsettled prior year amounts.

17.3 Current provisions

17.4

Income tax liabilities

ADDITIONAL NOTES TO THE CONSOLIDATED BALANCE SHEET

18. Additional notes 18.1 Additional disclosures on financial instruments

As of the balance sheet date, Westag & Getalit AG exclusively held original financial instruments. On the assets side, they relate to financial assets and primarily comprise other loans, receivables and other assets as well as liquid funds and are recognised at amortised cost in accordance with the respective classification ("held-to-maturity loans" or "loans and receivables"). On the liabilities side, financial instruments relate to financial liabilities measured at amortised cost (trade payables, other current liabilities). The original financial instruments held by the company are stated in the balance sheet; the amount of the financial assets is equivalent to the maximum default risk.

For information on the changes in valuation allowances and maturities, please refer to the explanations provided under the balance sheet item "Receivables and other assets".

For cash and cash equivalents and other short-term original financial instruments, the carrying amounts represent an adequate approximation of the fair values.

Net interest income from financial assets amounted to € 25 thousand (previous year: € 16 thousand).

Westag & Getalit AG is exposed to moderate financial and currency risks related to purchases and sales in foreign currency. These risks are mitigated in individual cases and on a small scale through the use of exchange rate hedges, while keeping an eye on anticipated exchange rate trends. In the fiscal year 2016, only sales in the UK in local currency were hedged by foreign exchange transactions in the course of the year, while the exchange rate risk on the purchasing side in US dollars was mitigated by the simultaneous acquisition of US dollars.

As of the balance sheet date, the Group had the following assets and liabilities in foreign currencies:

Dec. 31, 2016 in € '000	Dec. 31, 2015 in € '000
256	271
35	0
170	324
1,407	300
240	0
23	84
7	0

In addition, the following amounts were handled in foreign currencies:

	2016 in € '000	2015 in € '000
Sales revenues (GBP)	2,064	1,766
Cost of materials (USD)	2,014	2,627

In view of the foreign currency business volume, the company currently believes that changes in exchange rates will have no significant impact on the result for the period. In order to eliminate default risks, we have taken out insurance cover for most of our accounts receivable.

As of the balance sheet date, derivative financial instruments to hedge future payments existed in the form of short-term USD forward purchases and purchase options in the amount of \$ 1,200 thousand (previous year: \$ 2,150 thousand) and of short-term GBP forward sales in the amount of £ 1,800 thousand (previous year: £ 400 thousand). The derivative financial instruments have a fair value of € 11 thousand (previous year: € 69 thousand).

18.2 Segment reporting

The company is divided into the Surfaces/Elements Division, the Doors/Frames Division and the central division, which provides general services and supplies energy. The divisions form the basis for the internal reports used by management to steer the company (management approach). Services provided between the divisions are charged at transfer prices. Miscellaneous income and expense items essentially comprise other operating income, the cost of materials, personnel expenses and other operating expenses.

	Surfaces/ Elements in € '000	Doors/ Frames in € '000	Central division in € '000	Total in € '000
Fiscal year 2016
Sales revenues with external parties	98,427	127,018	7,574	233,019
Sales revenues with other segments	3,287	- 18,105	14,818	0
Sales revenues	101,714	108,913	22,392	233,019
Depreciation/amortisation	- 3,738	- 3,843	- 2,490	- 10,071
Income from associated companies	624	0	0	624
Net interest income	0	0	25	25
Miscellaneous income and expense items	- 96,039	- 97,089	- 19,927	- 213,055
EBT	2,561	7,981	0	10,542
Taxes on income	719	2,239	0	2,958
Net profit	1,842	5,742	0	7,584

	Surfaces/ Elements in € '000	Doors/ Frames in € '000	Central division in € '000	Total in € '000
Fiscal year 2015
Sales revenues with external parties	98,248	120,919	7,531	226,698
Sales revenues with other segments	3,688	- 17,116	13,428	0
Sales revenues	101,936	103,803	20,959	226,698
Depreciation/amortisation	- 4,004	- 4,005	- 2,497	-10,506
Income from associated companies	734	0	0	734
Net interest income	0	0	16	16
Miscellaneous income and expense items	- 97,276	- 92,586	- 18,478	- 208,340
EBT	1,390	7,212	0	8,602
Taxes on income	367	1,901	0	2,268
Net profit	1,023	5,311	0	6,334

Segment assets include all operating assets used by a segment, in particular non-current assets, inventories, receivables as well as cash and cash equivalents. Segment liabilities comprise all operating liabilities and consist primarily of liabilities and provisions. Segment investments include all investments in non-current operating assets.

	Surfaces/ Elements in € '000	Doors/ Frames in € '000	Central division in € '000	Total in € '000
December 31, 2016
Segment assets	67,045	71,141	26,476	164,662
thereof shares in associated companies	2,731	0	0	2,731
Segment liabilities	20,076	17,726	18,630	56,432
Net assets	46,969	53,415	7,846	108,230
Segment investments	1,949	4,447	1,606	8,002

	Surfaces/ Elements	Doors/ Frames	Central division	Total
	in € '000	in € '000	in € '000	in € '000
December 31, 2015
Segment assets	66,998	67,434	24,438	158,870
thereof shares in associated companies	2,473	0	0	2,473
Segment liabilities	19,104	17,573	14,389	51,066
Net assets	47,894	49,861	10,049	107,804
Segment investments	2,015	8,983	1,321	12,319

The breakdown into segments is largely based on the respective shares in total sales, unless a direct allocation is possible.

The following additional information is provided at regional level:

	2016 in € '000	2015 in € '000
By regions
Germany	182,849	179,652
Outside Germany	50,170	47,046
Total	233,019	226,698

No export country accounts for more than 10% of total sales revenues.

To our Shareholders | The Group | Combined Management Report | Consolidated and Separate Financial Statements 83 » Consolidated Notes

18.3 Other financial obligations

	Dec. 31, 2016 in € '000	Dec. 31, 2015 in € '000
Other financial obligations
Purchase commitments	833	6,962
Electricity purchase contracts	1,094	537
Gas purchase contracts	1,937	770
Rental and lease contracts	503	548
Other financial obligations	118	95
Total	4,485	8,912

Payments in an amount of € 1,954 thousand (previous year: € 8,468 thousand) will have to be made under the existing obligations in the next 12 months. The rental and lease contracts include an "Erbbaurecht" (leasehold) with a remaining term of 57 years in an amount of € 186 thousand (previous year: € 186 thousand), which is discounted at a rate of 5%.

Related parties as defined in IAS 24 are:

• Gethalia Foundation
• Management Board of Westag & Getalit AG
• Supervisory Board of Westag & Getalit AG
• OOO Westag & Getalit, Moscow, Russian Federation
• AKP Carat-Arbeitsplatten GmbH (associated company)

According to a notification from Syntalit AG, Zug, Switzerland, and Gethalia Foundation, Vaduz, Liechtenstein, dated December 18, 2006, Syntalit AG's voting interest in our company amounted to 75.5%. These voting rights were attributable to Gethalia Foundation pursuant to section 22 para. 1 sentence 1 No. 1 of the German Securities Trading Act (WpHG). In a letter dated December 23, 2013, the two companies informed us that the 75.5% of the ordinary shares and, hence, the voting interests in Westag & Getalit AG were transferred to Gethalia Foundation on December 23, 2013. In a letter dated January 16, 2014, Syntalit AG additionally informed us that its voting interest in Westag & Getalit AG has amounted to 0.0% since the transfer on December 23, 2013. Since then, we have received no further notifications of a reportable change in shareholdings.

With regard to our relationships with affiliated companies, we would like to point out that no transactions were conducted between Gethalia Foundation on the one hand and our company as well as our subsidiary, OOO Westag & Getalit , on the other hand. The respective report required under section 312 of the German Stock Corporation Act (AktG) concludes with the following declaration: "Transactions which are subject to reporting requirements did not take place."

With regard to the compensation of the Management Board and the Supervisory Board as well as the relationships with AKP Carat-Arbeitsplatten GmbH and the latter's subsidiaries, please refer to note 14.2 "Receivables and other assets" and note 18.6 "Management Board and Supervisory Board compensation".

18.5 Bodies of the company

MANAGEMENT BOARD

Wilhelm Beckers

Herzebrock-Clarholz Graduate process engineer Chairman of the Management Board Head of the Doors/Frames Division

Christopher Stenzel

Gütersloh Graduate Businessman Chief Financial Officer

Franz David

Bad Waldliesborn Businessman Member of the Management Board Head of the Surfaces/Elements Division

SUPERVISORY BOARD

Klaus Pampel

Meerbusch Businessman Chairman (since Aug. 23, 2016; Vice Chairman until Aug. 23, 2016)

Jürgen Heite

Meerbusch Managing Director of Thyssen'sche Handelsgesellschaft m.b.H., Mülheim an der Ruhr

Heinz-Georg Großerohde*

Rheda-Wiedenbrück Printer

* Employee representative

Pedro Holzinger

Rheda-Wiedenbrück Businessman Vice Chairman (since Aug. 23, 2016; Chairman until Aug. 23, 2016)

Dr. Joachim Schönbeck Krefeld Graduate engineer Member of the Management Board of Andritz AG, Graz

Dietmar Lewe* Rietberg Timber Processing Master Chairman of the works council

As of December 31, 2016, Dr. Joachim Schönbeck was a member of the Supervisory Board of the following companies: Jaybee Eng. (Holdings) Pty. Ltd., Australia; ANDRITZ Pty. Ltd., Australia; ANDRITZ Paper Machinery Ltd., Canada; ANDRITZ AB, Sweden; ANDRITZ Inc., USA.

To our Shareholders | The Group | Combined Management Report | Consolidated and Separate Financial Statements 85 » Consolidated Notes

18.6 Management Board and Supervisory Board compensation

	2016 in € '000	2015 in € '000
Total Supervisory Board compensation	120	120
Total Management Board compensation	1,031	977
Total compensation received by former Management Board members and their surviving dependants	389	559
Pension provisions for former Management Board members and their surviving dependants as well as for active Management Board members	5,842	5,554
Service cost for the Management Board included in pension provisions	18	16
Consulting services (Supervisory Board members)	105	60

No advances, loans, guarantees or warranties are granted to members of the Supervisory Board and the Management Board.

At the Annual General Meeting on August 18, 2015, a majority of over three quarters of the capital represented decided that the information on the Management Board compensation pursuant to section 285 No. 9a sentence 5-8 HGB and sections 315a para. 1, 314 para. 1 No. 6 sentence 5-8 HGB for the fiscal years 2015 to 2019 need not be disclosed.

19. Corporate Governance Code

Westag & Getalit AG has issued the Declaration of Conformity regarding the recommendations made by the Government Commission on the German Corporate Governance Code that is required under section 161 of the German Stock Corporation Act (AktG) and has given shareholders access to this declaration via the Internet.

20. Total fee charged by the auditors for the

The total fee charged by the auditors for the fiscal year breaks down as follows:

fiscal year		2016 in € '000	2015 in € '000
	Auditors' fee
	Audit	119	112
	Tax consulting services	42	38
	Other services	33	33
	Total	194	183

Expenses amounted to € 24 thousand (previous year: € 24 thousand).

21. Reconciliations

to IFRS 1 21.1 Equity reconciliation HGB- IFRS

	Dec. 31, 2016 in € '000	Dec. 31, 2015 in € '000	Jan. 1, 2015 in € '000
Equity reconciliation HGB
Equity according to HGB	111,243	110,162	111,047
Deferred taxes	3,403	2,154	2,884
Special item with an equity portion	163	309	482
Provisions for pensions	- 8,101	- 6,094	- 10,093
Equity according to IFRS separate financial statements	106,708	106,531	104,320
Inclusion of OOO Westag & Getalit	- 8	0	0
Equity valuation of AKP Carat-Arbeitsplatten GmbH
Pro-rated retained profits in prev. year	1,273	872	872
Pro-rated profit in fiscal year	257	401	0
Equity according to IFRS consolidated financial statements	108,230	107,804	105,192

21.2 Net profit reconciliation HGB- IFRS

	Dec. 31, 2016 in € '000	Dec. 31, 2015 in € '000
Net profit reconciliation HGB-IFRS
Net profit according to HGB	5,828	4,353
Other operating income	- 146	- 173
Personnel expenses	- 1,057	894
Interest pension provisions	706	740
Other operating expenses	1,787	199
Taxes on income	217	- 80
Net profit according to IFRS	7,335	5,933
Inclusion of OOO Westag & Getalit	- 8	0
Equity valuation of AKP Carat-Arbeitsplatten GmbH	257	401
Consolidated net profit	7,584	6,334

22. Events after the balance sheet date

No events affecting the net assets, financial position and results of operations occurred after the balance sheet date.

23. Proposal regarding the appropriation of the accumulated The 2016 accumulated profit according to HGB amounts to € 11,768 thousand and is composed as follows:

profit		Dec. 31, 2016 in € '000
	Net profit 2016	5,828
	Retained earnings brought forward	6,540
	Allocation to other revenue reserves in accordance with section 58 (2) AktG	- 600
	Accumulated profit	11,768

We submit to the Annual General Meeting the following proposal regarding the appropriation of the accumulated profit:

	Dec. 31, 2016 in € '000
Distribution of a dividend of € 0.94 per ordinary share	2,689
Distribution of a dividend of € 1.00 per preference share	2,519
	5,208
Residual profit to be brought forward to new account	6,560
Accumulated profit	11,768

Ordinary shares consist of 2,860,000 no par shares and preference shares consist of 2,519,173 no par shares.

For the proposal regarding the appropriation of the accumulated profit, the number of own shares held at the time of preparation of the balance sheet (340,827 share certificates) was deducted from the total number of preference shares.

24. Responsibility Statement

To the best of our knowledge, and in accordance with applicable accounting principles, the consolidated and the separate financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group and of Westag & Getalit AG while the combined Management Report provides a true and fair view of the course of business including the business result and the situation of the Group and of Westag & Getalit AG and describes the material risks and opportunities of the anticipated development of the Group and of Westag & Getalit AG.

Rheda-Wiedenbrück, February 17, 2017 Westag & Getalit Aktiengesellschaft The Management Board

Wilhelm Beckers Franz David Christopher Stenzel

AUDITORS' REPORT (IFRS)

We have audited the consolidated financial statements – comprising the balance sheet, statement of comprehensive income, statement of changes in equity, cash flow statement and the notes – and the consolidated Management Report prepared by Westag & Getalit Aktiengesellschaft, Rheda-Wiedenbrück, for the fiscal year from January 1 to December 31, 2016. The preparation of the consolidated financial statements and the consolidated Management Report in accordance with IFRS as adopted by the EU and the supplementary provisions of German Commercial Law required to be applied under section 315a para. 1 of the German Commercial Code (HGB) and the supplementary provisions of the company's statutes is the responsibility of the company's management. Our responsibility is to express an opinion on the consolidated financial statements and the consolidated Management Report based on our audit.

We conducted our audit of the consolidated financial statements in accordance with section 317 of the German Commercial Code (HGB) and German generally accepted audit standards for the audit of financial statements promulgated by the "Institut der Wirtschaftsprüfer in Deutschland e.V." (IDW). Those standards require that we plan and perform the audit in such a way that misstatements materially affecting the presentation of the net assets, financial position, and results of operation in the consolidated financial statements in accordance with the applicable financial reporting standards and in the consolidated 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 consolidated Management Report are examined primarily on a test basis as part of the audit. The audit includes an evaluation of the financial statements of the consolidated entities, the basis of consolidation defined, the accounting and consolidation principles applied and the significant estimates made by the management, as well as an evaluation of the overall presentation of the consolidated financial statements and the consolidated Management Report. We believe that our audit provides a reasonable basis for our opinion.

On the basis of the knowledge we have gained during the audit, the consolidated financial statements comply with IFRS as adopted in the EU and the supplementary provisions of German commercial law to be applied in accordance with section 315a para. 1 of the German Commercial Code (HGB) as well as the supplementary provisions of the company's statutes 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 consolidated Management Report is consistent with the consolidated financial statements, complies with legal provisions, provides an appropriate view of the Group's position and appropriately presents the opportunities and risks of future development.

Hannover, February 24, 2017

Peters & Partner GmbH Wirtschaftsprüfungsgesellschaft Steuerberatungsgesellschaft

Michael Peters Auditor

BALANCE SHEET OF WESTAG & GETALIT AG (HGB)

Assets		December 31, 2016 in € '000	December 31, 2015 in € '000
	A. Fixed assets
I.	Intangible assets
	Purchased software, licenses and other industrial property rights	1,005	1,044
II.	Tangible assets
	Land and leasehold rights and buildings, including buildings on third-party land	22,680	23,361
	Plant and machinery	32,553	30,311
	Other fixtures and fittings, tools and equipment	15,175	14,244
	Payments on account and tangible assets in course of construction	1,306	5,914
		71,714	73,830
	III. Financial assets
	Shares in affiliated companies	307	0
	Equity investments	1,200	1,200
	Other loans	0	30
		1,507	1,230
		74,226	76,104
B.	Current assets
I.	Inventories
	Raw materials and supplies	17,204	17,012
	Work in progress	3,726	3,775
	Finished goods and merchandise	12,902	13,779
		33,832	34,566
II.	Receivables and other assets
	Trade receivables	26,525	26,336
	Receivables from associated companies	13	22
	Other assets	1,384	1,538
		27,922	27,896
	III. Cheques, cash on hand and cash in other bank accounts	23,651	16,835
		85,405	79,297
C.	Prepaid expenses	103	42
Total assets		159,734	155,443

Liabilities		December 31, 2016 in € '000	December 31, 2015 in € '000
	A. Equity capital
I.	Subscribed capital
	Ordinary shares	7,322	7,322
	Preference shares
	Subscribed capital	7,322	7,322
	Own shares	- 873	- 797
		6,449	6,525
		13,771	13,847
II.	Capital reserve	24,367	24,367
	III. Revenue reserves
	Legal reserve	596	596
	Other revenue reserves	60,741	60,667
		61,337	61,263
	IV. Accumulated profit	11,768	10,685
		111,243	110,162
B.	Special item with an equity portion	163	309
C.	Provisions
	Provisions for pensions and similar obligations	18,398	16,797
	Provisions for taxation	584	402
	Other provisions	17,537	14,929
		36,519	32,128
	D. Liabilities
	Advances from customers	95	72
	Accounts payable	6,707	7,602
	Other liabilities	5,007	5,170
		11,809	12,844
Total liabilities		159,734	155,443

PROFIT AND LOSS ACCOUNT OF WESTAG & GETALIT AG (HGB)

	2016 in € '000	2015 in € '000
Sales revenues	233,018	226,698
Change in finished goods, inventories and work in progress	- 805	122
Other own work capitalised	244	309
	232,457	227,129
Other operating income	1,595	1.502
Cost of materials
Cost of raw materials, consumables and supplies, and of purchased materials	- 104,121	- 102,835
Cost of purchased services	- 7,186	- 7.503
	- 111,307	- 110,338
Personnel expenses
Wages and salaries	- 62,118	- 59,716
Social security and other pension costs	- 11,861	- 13,555
	- 73,979	- 73,271
Depreciation of intangible fixed assets and tangible assets	- 10,071	- 10,506
Other operating expenses	- 29,084	- 27,306
Income from equity investments	366	333
Income from other investments and long-term loans	0	1
Other interest and income	26	20
Interest and similar expenses	- 707	- 746
Taxes on income	- 3,182	- 2,187
Earnings after taxes	6,114	4,631
Other taxes	- 286	- 278
Net profit	5,828	4,353
Retained earnings brought forward	6,540	6,532
Transfer to other revenue reserves	- 600	- 200
Accumulated profit	11,768	10,685

The presentation of sales revenues and other operating income has changed as a result of the redefinition of the two items under the "Bilanzrichtlinie-Umsetzungsgesetz" (BilRUG - German Accounting Directive Implementation Act). The prior year figures have been adjusted accordingly. As a result, sales revenues for 2015 are € 1,347 thousand higher and other operating income is € 1,347 thousand lower than originally stated.

AUDITORS' REPORT (HGB)

Peters & Partner GmbH, Wirtschaftsprüfungsgesellschaft, Steuerberatungsgesellschaft, Hannover, have issued an unqualified audit certificate for the full financial statements to HGB of Westag & Getalit AG for the period ended December 31, 2016, which comprise the balance sheet, profit and loss account, notes, cash flow statement and statement of changes in equity, as well as the combined Management Report for the fiscal year 2016.

Through-dyed GetaLit Unicolor laminates allow apparently seamless edges to be realised in all areas of interior design.

The technical floor panels are matched to the specific requirements of the industrial construction sector and are delivered ready for installation.

Thanks to the wide variety of different decors, the modern residential doors with strip aperture blend in well with nearly any interior design style.

FINANCIAL CALENDAR*

March 30, 2017	Publication of the Financial Report 2016 on our website
May 04, 2017	Annual accounts press conference in Rheda-Wiedenbrück
May 10, 2017	Interim report on the first three months of 2017
May 10, 2017	Presentation of Westag & Getalit AG at the DVFA Spring Conference
	in Frankfurt a. M.
June 27, 2017	Annual General Meeting (AGM) of Shareholders
	in Rheda-Wiedenbrück
August 10, 2017	Interim report on the first six months of 2017
November 10, 2017	Interim report on the first nine months of 2017

* For updates refer to: www.westag-getalit.com/financial-calendar

Editorial information

Published by: Westag & Getalit AG Hellweg 15 33378 Rheda-Wiedenbrück Germany Phone +49 5242 17-0 Fax +49 5242 17-75000

Edited by: Investor Relations ir@westag-getalit.com

ISSN 1610-6776

Photos by: Westag & Getalit AG Page 19: Modern office webdesign mockup File: #123717136 | @ bramgino – fotolia.de Page 20: Bull and bear with laptop and pen File: #37013181 | @ seewhatmitchsee – fotolia.de

Contact details of the divisions

Surfaces/Elements

Phone +49 5242 17-1000 Fax +49 5242 17-710000

Phone +49 5242 17-3000 Fax +49 5242 17-73000

Doors/Frames

Phone +49 5242 17-2000 Fax +49 5242 17-72000

Westag & Getalit AG Postfach 26 29 | 33375 Rheda-Wiedenbrück | Germany Phone +49 5242 17-0 | Fax +49 5242 17-75000 www.westag-getalit.com | ir@westag-getalit.com