Ar-2011-2012

ANNUAL REPORT 2O11_ 2O12

2 Content

004 At a Glance 008 Letter to the Shareholders 010 Share 014 Group Management Report 014 Business and General Conditions 023 Results of Operations 024 Financial Position 026 Net Assets 027 Overall Statement on the Economic Situation 028 Research & Development 031 Environment 032 Personnel 034 Supplementary Report 035 Disclosures pursuant to Section 315 (4) HGB 036 Risk Report 040 Risk Management with Regard to the Accounting Process 042 Risk Management with Regard to Financial Instruments 044 Compensation Report 046 Forecast Report 050 Corporate Governance Report 053 Disclosures on Applied Corporate Governance Practices 056 Statement of the Supervisory Board 061 Consolidated Financial Statements 062 Auditor's Report 064 Statement of the Company's Management 065 Income Statement 066 Balance Sheet 068 Statement of Changes in Equity 069 Cash Flow Statement 070 Notes 071 General Information 085 Notes to the Income Statement 091 Notes to the Balance Sheet 110 Other Disclosures 126 Financial Calendar

3 At a Glance Products and Applications

Drying equipment for the printing industry About two thirds of printed matter worldwide is produced using the

offset printing process. Hönle supplies UV drying systems for this market as well as for the booming digital inkjet printing segment. UV technology offers excellent printing quality and a significantly improved environmental and energy performance compared to conventional drying processes. Alternatively, Hönle also offers

infrared and thermal air drying systems.

Drying of coatings

Hönle develops innovative UV drying systems for painting, coating and finishing web-shaped substrates and 3D objects. This results in scratch- and impact-resistant end products, such as light-scattering screens for the automotive industry,

casings and flat screens used in the IT industry, and also furniture veneers and high-quality packaging for the cosmetics industry.

Surface disinfection In less than half a second, micro-organisms are killed on a reliable basis through UVC radiation, which represents an effective and

environmentally friendly form of disinfection. Major application fields of UV disinfection systems include the food and beverages industry.

Sun simulation and lighting technology Artificial sunlight accelerates the products' ageing process under laboratory conditions. The radiation sources used by Hönle emit a continuous light spectrum that closely simulates natural sunlight. Lighting systems are developed in the lighting technology segment for TV, trade fairs, research and other purposes.

Adhesives

In the industrial manufacturing industry, adhesives are presently replacing many conventional bonding techniques, such as soldering and welding. This has led to a broad range of applications in the electronics, glass processing, medical technology, construction, and optics segments as well as in many other areas.

Equipment for curing adhesives

The Hönle Group has advanced to become a unique global systems supplier for UV bonding technology with its Panacol high-tech adhesives and casting compounds. The product range comprises high-performance UV and innovative

LED-UV curing equipment.

UV lamps Low-pressure lamps are used in the disinfection of water and air in an environmentally friendly and cost-efficient manner.

Medium-pressure lamps are employed in the drying of inks, paints and coatings as well as for other applications. They are used for our own systems and equipment and by many other manufacturers.

Quartz glass

Quartz glass tubing is not only required in the production of our own UV lamps; high-quality quartz glass is also an indispensable com- ponent that is employed in the most varied processes by the semiconductor and automotive industries as well as in the treatment of water.

5 At a Glance Business Development

HÖNLE GROUP 2011/2012 2010/2011 Change

Income Statement T € T € in % Revenue 72,092 67,878 6.2 EBITDA 10,664 12,751 -16.4 Operating Result/EBIT 8,309 11,280 -26.3 EBT 7,712 10,771 -28.4 Consolidated net income for the year 5,490 7,499 -26.8

Cash Flow Operating cash flow 1) 7,235 12,601 -42.6

Balance Sheet 2) Non-current assets 33,864 18,632 81.8 Current assets 40,476 37,119 9.0 Shareholders' equity 44,484 38,204 16.4 Non-current liabilities 12,640 4,307 193.5 Current liabilities 17,216 13,240 30.0 Total assets 74,340 55,751 33.3 Capital ratio in % 59.8 68.5 -12.7

Staff at the end of the financial year 473 363 30.3

Share Earnings per share 0.93 1.30 -28.5 Dividend 0.50 3) 0.50 0.0 Number of shares 5,512,930 5,512,930 0.0

DR. HÖNLE AG 2011/2012 2010/2011 Change

Income Statement T € T € in % Revenue 27,643 31,917 -13.4 Operating result /EBIT 3,929 5,979 -34.3 Result from ordinary activities 5,459 7,221 -24.4 Net income for the year 4,334 5,507 21.3 Earnings per share 0.80 1.04 -23.1

1) Cash from current business activities 2) as of 30.09.2012 and 30.09.2011 3) Supervisory Board and Management Board recommendation

Revenue (in T€)

11/12 72.092 10/11 67.878 09/10 54.624 08/09 44.985 07/08 48.744 06/07 26.246 05/06 23.693 04/05 22.822 03/04 22.418 02/03 17.723 01/02 13.285 00/01 17.456 99/00 14.243

Operating result/EBIT (in T€)

11/12 8.309 10/11 11.280 09/10 5.548 08/09 -3.938 07/08 5.630 06/07 4.339 05/06 3.426 04/05 3.427 03/04 2.879 02/03 2.005 01/02 -1.419 00/01 2.904 99/00 2.367

Staff

11/12 473 10/11 363 09/10 276 08/09 253 07/08 302 06/07 135 05/06 125 04/05 117 03/04 120 02/03 100 01/02 96 00/01 90 99/00 68

The Hönle Group features among the best small to medium-sized German companies (SMEs)

Norbert Haimerl Heiko Runge Director of Finance and Human Resources Director of Sales and Technology

Dear Shareholders and Business Friends,

The Hönle Group was again distinguished as one of the best small to medium-sized German companies. Coming in 14th among the "TOP 100 of the Small to Medium-Sized Companies", we once again ranked among the top slots this year. The study does not evaluate the companies' short-term development, but rather their sustained development over several years. To score in this category requires top performance on a permanent basis. Companies that are successful over the long-term are distinguished from weaker companies by success factors, such as international focus, innovative power, service strength, a fine brand image, management continuity, and strategic determination. According to the author of the study, the Munich Strategy Group, "the success of the TOP 100 companies is not due to chance”, since the companies are characterised by courage and thinking over the longer term.

We view the award as an incentive to continue to focus our activities on increasing the corporate value on a sustained basis. In the process, we also endeavour to fulfil the Company’s social responsibility vis à vis employees, customers, suppliers and investors. Our aim is to stabilise and expand our market position in the core business segments and to extend our supply chain wherever this seems practical.

In the past financial year, this objective was particularly pursued through the acquisition of the Raesch Group. The manufacturer of glass tubing supplies the lamp industry as well as other industries: Its products are required by the semiconductor industry in the manufacture of integrated circuits and by the automotive industry in the manufacture of camshafts. The products are also used in the environmentally friendly treatment of water by means of UV radiation. As a result of acquisition of the Raesch Group, we succeeded in significantly increasing our supply chain in the lamp technology segment and considerably enhancing our technical know-how regarding the manufacture of quartz glass.

Hönle Group's sales revenues increased to a total of € 72 million in the previous financial year, which is mainly attributable to the latest acquisition. In contrast, the insolvency of our large customer (Manro- land AG), in November 2011, and the reluctance to invest in the run-up to the Drupa trade fair had a negative impact on our business development. Due to the fact that we promptly took systematic counter-measures, we succeeded in limiting the impact of the above and were thus in able to generate an operating result of € 8 million.

Our objective in the new financial year will be to successfully complete the integration of the Raesch Group, to improve productivity in the manufacturing segment and to expand the product range. The focus is on significantly expanding the sales activities under a new management in order to increase the company's market share in the quartz glass segment. In addition, cost reductions are expected

9 from synergies, in particular from the transfer of manufacturing stages from Aladin GmbH and UV- Technik Speziallampen GmbH to Raesch Malta Ltd.

Furthermore, the restructuring of UV-Technik Speziallampen GmbH is expected to provide positive effects for our sales and earnings development. New sales markets, such as the markets for the sterilisation of ballast water and for IR lamps, are to be opened up and are expected to contribute to an improvement in the company's performance.

We will continue to develop new, high-performance products in the adhesives segment. This includes industrial adhesives for smart phones and smart cards, which will already contribute to a significant rise in sales and earnings in the current financial year. The medical technology segment, which is an interesting sales market, will be further expanded through investments in sales activities. We also aim to tap the American market for the Panacol Group's adhesives to a greater extent.

The business relationship with the major customer, manroland sheetfed, stabilised in the 'Equipment and Systems' segment. We trust that the new investor aligned the company in a future-oriented manner and that the hitherto positive business relationship will continue. We thus expect positive sales and earnings development at Eltosch GmbH.

Furthermore, we project positive business development in this business segment, in particular in the Asian economic area. Following the successful integration of Mitronic GmbH into Dr. Hönle AG, we foresee rising sales in the current financial year, in particular in the market for sunlight simulation systems. A new managing director and reinforcement of the sales team at Mitronic GmbH will significantly contribute to the sales development. We will continue to develop the already successful product series for the drying of adhesives, inks and coatings in the LED technology segment. In particular, UV-LED arrays are to be manufactured in- house by Hönle in the future.

In addition to strictly organic growth, we will continue to focus on acquisitions in the future with a view to the further development of the Group's structure. Both the adhesives and systems segments are to be further strengthened through acquisitions. We would be pleased to have you continue to accompany us on this course of business in the future also.

Norbert Haimerl Heiko Runge Management Board Management Board

10 Share

Slight increase in the course of the year Analyses Starting with a stock price of € 9.45, the Hönle As in the past, M.M. Warburg continuously stock price initially declined perceptibly at the analysed the Dr. Hönle AG share in this year beginning of the past financial year, after it had also. The Düsseldorf-based WZG Bank com- experienced a slight increase prior to that. This menced its research on the Hönle share for the development reflects the impact of Manroland first time. Both banks repeatedly issued "buy" AG's insolvency at the 2011 year-end. Owing to recommendations. the acquisition of the Raesch Group, the Hoenle stock price climbed to an interim peak of € 12.40 Shareholder structure in February. However, the stock price eased As a result of the acquisition of the Raesch significantly again in the context of the general Group at the beginning of the year 2012, shares market weakness. amounting to 4.26 % of the nominal capital, While the underlying Technology All Share Index which was held by Hönle AG itself, became rose by more than 25 % in the course of the privately owned. The Company thus holds only year, the Hönle stock price closed at € 9.85 as of 0.02% of the shares at present. 30 September 2012, which reflects an only As far as the Company is aware, institutional modest gain of 4.2 %. The weaker performance investors, each with equity participations of less of the stock price compared to the overall market than 3 % in Dr. Hönle AG, held 17.62 % of the was attributable to the negative impact of Manro- shares as at 30 September 2012. In addition, the land's insolvency and the reluctance to invest in Company was aware of the following sharehold- the run-up to the Drupa trade fair. Following the ers with equity holdings exceeding the reporting end of the financial year, the stock price picked threshold: up and stood at € 11.74 by the end of Decem- Dr. Hans-Joachim Vits: 6.41 % ber. Frithjof Raesch: 4.26 % The share's trading volume came to an average Prof. Dr. Karl Hönle: 4.03 % of T€ 148 per trade date. The trading volume for Loys Sicav: 3.12 % the entire year amounted to almost € 40 million. The Hönle Group's market value amounted to Annual General Meeting € 54.3 million as at the end of the financial year. About 200 shareholders accepted the invitation to attend the Annual General Meeting held in Munich in March. The great majority agreed with all agenda items and voted for paying a dividend of € 0.50 per share, among other things.

11 Hönle Share Chart

12,5 €

12,0 €

11,5 €

11,0 €

10,5 €

10,0 €

9,5 €

9,0 €

8,5 €

Dr. Hönle AG Technology All Share (indexiert)

Shareholder Structure as at 30 September 2012

Supervisory Board & Management Board 11.2%

Frithijof Raesch 4,3%

Other Loys Sicav 61.0% 3,1%

Pro Beam AG & Co. KGaA 2.7%

Other institutional investors < 3% 17.6%

12 All voting results are published on the Com- Particularly subjects pertaining to the acquisition pany's website. The next Annual General Meet- of the Raesch Group and the impact of Manro- ing will be held on 14 March 2013 in Munich. land's insolvency on the Hönle Group were The Management Board and the Supervisory discussed in detail in the past financial year. All Board will again propose to the Annual General press releases, ad hoc notifications, information Meeting that a dividend of € 0.50 per share be pertaining to the share and Annual General paid to the shareholders. Meeting as well as quarterly and annual reports are available on the Company's website. Investor Relations Dr. Hönle AG was present at several road shows Contact: and conferences in the past financial year and Dr. Hönle AG received a lot of positive feedback. In addition, Peter Weinert Dr. Hönle AG's Management Board and investor Lochhamer Schlag 1, 82166 Gräfelfing relations managers engaged in comprehensive Phone: +49 (89) 85608/-173 individual conversations with institutional and E-mail: [email protected] private investors as well as with numerous Internet: www.hoenle.de/ir-welcome interested persons in order to meet the market's information requirements.

Hönle Share Data

Price at the Beginning of the Financial Year in € 9.45 Price at the End of the Financial Year in € 9.85 Peak Price € 12.40 as at 27.02.2012 Lowest Price € 8.58 as at 25.11.2011 Trading Volume in Shares 3,706,679 (PY: 5,999,153) Trading Volume in € 37,965,001 (PY: 62,818,467) Number of Shares on 30.09.2012 5,512,930 Market Capitalisation on 30.09.2012 54,302,360 Earnings per Share in € 0.93 Dividend per Share in € 1 0.50 Securities Identification Number 515710 ISIN DE0005157101 Stock Exchange Symbol HNL Transparency Level Prime Standard of Deutsche Börse (German Stock Exchange) Index Affiliation: Technology All Share DE0008468943 Prime All Share DE0007203325 DAXsubsector Advanced Industrial Equipment DE0007203895 DAXsubsector All Advanced Industrial Equipment DE000A0SM817 DAXsector Industrial DE0009660282 DAXsector All Industrial DE000A0SM7R8 CDAX DE0008469602 1Management Board and Supervisory Board proposal respecting the 2011/2012 financial year

13 Dr. Hönle AG Group Management Report for the 2011/2012 Financial Year

Business Operations and General adhesives and plastics, for disinfecting surfaces Conditions and for sunlight simulation. The 'Glass and Lamps' segment comprises quartz glass tubing Group Structure for the lamp, semiconductor and automotive Dr. Hönle AG is a listed technology company industries as well as lamps for water disinfection with head office in Gräfelfing, near Munich. The and the drying of coatings and adhesives. The Hönle Group is one of the leading worldwide 'Adhesives' segment encompasses industrial providers in the UV technology core sector. The adhesives for a broad range of applications Group's three business segments comprise among others in the electronics, medical tech- 'Equipment and Systems', 'Glass and Lamps' as nology, optics and glass processing segments, well as 'Adhesives'. The equipment and systems among others. Dr. Hönle AG holds interests in are used for drying inks and coatings, for curing several domestic and foreign companies:

Name (in alphabetical sequence) Head Office

Segment: Equipment and Systems Eltosch America Inc. Batavia, Chicago, USA Eltosch Torsten Schmidt GmbH Hamburg, Germany Honle Spain S.A.U. Gavà, Barcelona, Spain Honle UV France S.à.r.l. Bron, Lyon, France Honle UV (UK) Ltd. Luton, Great Britain Mitronic GmbH Gräfelfing, Munich, Germany PrintConcept GmbH Kohlberg, Germany PrintDesign Engineering GmbH 1,2 Kohlberg, Germany Solitec GmbH 2 Gräfelfing, Munich, Germany

Segment: Glass and Lamps Aladin GmbH Gräfelfing, Munich, Germany Raesch Quarz (Germany) GmbH Langewiesen, Germany Raesch Quarz (Malta) Ltd. Mosta, Malta UV-Technik Speziallampen GmbH Wümbach, Germany

Segment: Adhesives Agita Holding AG Regensdorf, Zurich, Switzerland Domino S.à.r.l. Gennevilliers, Paris, France Eleco Produits E.F.D. Gennevilliers, Paris, France Hoenle UV Technology (Shanghai) Trading Ltd. Shanghai, China Metamorphic Materials Inc. 1,2 Winsted, USA Panacol AG Regensdorf, Zurich, Switzerland Panacol Elosol GmbH Steinbach, Ts., Germany Tangent Industries Inc. 1,2 Winsted, USA

1 minority shareholding; 2 not consolidated

14 Hönle Group: Worldwide Locations The Hönle Group is represented at about 50 locations in more than 20 countries. Abroad, Hönle has its own sites in those countries that are of key importance to its operating business. Furthermore, the Company has established a network of cooperation partners. In recent years, the importance of sales markets/areas outside Europe has grown significantly.

Equipment and Systems Adhesives Glass and Lamps

15 Management System risks and opportunities management, and regu- The Company’s entrepreneurial activities are lar reporting to the Supervisory Board. aimed at achieving sustained growth of the The operational objective of Hönle’s manage- company value. In the process, Hönle also ment is to increase the Company's sales reve- endeavours to fulfil its social responsibility vis à nues and net income on a sustained basis. vis employees, customers, suppliers and inves- Great emphasis is also placed on increasing the tors. Hönle aims at stabilising and expanding its Hönle Group’s operational cash flow. In addition market position in its core business segments to corporate performance, the operative margins and focuses, in particular, on customer-specific serve as important financial indicators for review- systems solutions in this context. We view ing profitability. Therefore, Hönle continually ourselves as a partner of the industrial sector. monitors the development of revenues and cost/income ratios and compares these with its The Group's internal management system internal planning. consists mainly of regular Management Board The most important control parameters of the meetings, a monthly business development past financial year and the respective changes analysis, strategic corporate planning, the plan- (compared to the previous year), are presented ning of investments, personnel and acquisitions, in the following table:

Control Parameters 2011/2012 2010/2011 Change Revenue T€ 72,092 T€ 67,878 6.2 % EBIT T€ 8,309 T€ 11,280 -26.3 % Consolidated Net Income/Loss for the Year T€ 5,490 T€ 7,499 -26.8 %

This management report provides more detailed Outlook. It also provides information about information on the individual control parameters, measures that are planned with regard to the in particular in the sections: Course of Business, further development of the control parameters. Results of Operations, Financial Position and

16 Market Development Course of Business The global economy weakened perceptibly in Sales revenues generated by the Hönle Group the course of 2012. The euro zone debt crisis were up 6.2 % on the previous year, which is continued to weigh on global development in the particularly due to the initial inclusion of Raesch past year. At the turn of the year 2011/2012, the Quarz (Germany) GmbH, Langewiesen, and mood among companies and consumers im- Raesch Quarz (Malta) Ltd., Malta, in the consoli- proved initially in most regions, while global dated financial statements. In total, sales reve- production picked up at the same time. The nues climbed to T€ 72,092. Owing to manroland strains caused by the government debt crisis, in AG's insolvency and buying resistance observed particular in the European economic area, and in the run-up to the Drupa trade fair, sales gen- uncertainties respecting fiscal policy have sub- erated in the printing segment were below the sided somewhat. previous year's level. In addition, value adjust- However, the brightening perspectives at the ments in the amount of € 1.1 million recorded in turn of the year were of a short-term nature only. the first quarter on receivables from the insolvent The economy at mid-year was characterised by manroland AG contributed to a decrease in the a phase of subdued economic expansion. The operating result (EBIT) from T€ 11,280 in the euro crisis and uncertainty respecting the stabil- 2010/2011 financial year to T€ 8,309 in the ity of the global financial system continued to 2011/2012 financial year. weigh on the global economy. In all, the economic growth rate has decreased since the 2011 Business Development according to year-end. According to the Institute for the World Segment Economy, the global gross domestic product As at 1 January 2012, the Hönle Group's busi- recorded the lowest growth rate since 2009. ness segments were reorganised as follows: The euro zone even found itself in a recession in 'Equipment and Systems', 'Adhesives' and 2012. The debt crisis in several European coun- 'Glass and Lamps'. tries led to a great degree of uncertainty among companies and consumers and thus impacted Business development of the 'Equipment and negatively on the economic development in Systems' segment in the 2011/2012 financial Europe. Germany was also unable to decouple year was largely influenced by the repercussions itself from this environment and the economic of manroland AG's insolvency. manroland AG expansion started to falter. Uncertainties re- filed for the opening of insolvency proceedings in specting the unsolved debt crisis and the future November 2011. Consequently, the Hönle Group economic policy in the euro zone also affected recorded value adjustments amounting to € 1.1 the German economy. million (net) on all receivables from manroland AG in the first quarter of 2011/2012. As from the second quarter, manroland's limited business activity led to declining sales in the sheetfed offset printing segment.

Production of quartz glass tubes at Raesch Quarz Germany As early as the first quarter of the 2011/2012 Hönle Group's business development was also financial year, Dr. Hönle AG initiated all meas- influenced by a reluctance to invest in the run-up ures necessary to keep the impact of the printing to the largest print trade fair, Drupa. Fewer UV machine manufacturer’s insolvency on Hönle drying units were ordered and delivered in the Group’s sales and earnings development as low offset and digital printing segments than in the as possible. To this end, Hönle adjusted the staff prior year’s period. The mood at the Drupa trade level to the reduced order volume. The number fair was nevertheless largely assessed as good of Hönle Group's staff was scaled back by 13 %. by market participants and companies participat- Personnel-related savings were reflected in the ing in the trade fair were satisfied with the course profit and loss account as from February. of the fair. As a consequence of the Drupa trade fair, Hönle Group's sales generated in the offset In February 2012, a new investor (Langley and digital printing applications segments rose Holdings plc.) was found for manroland AG's again in the fourth quarter. sheetfed offset division at the Offenbach production site. Langley Holdings plc. can provide the Mitronic GmbH, which has been part of the company, which now operates under the name Hönle Group since July 2011, was fundamentally of manroland Sheetfed GmbH, with a long-term restructured with a view to optimising business perspective. processes and in order to improve sales and It is nevertheless expected that sales revenues earnings power on a sustained basis. In March generated from business with the manroland 2012, Mitronic GmbH relocated its head office sheetfed Group will decrease in the future. Hönle from Wolfratshausen to the Hönle Group's projects a positive earnings contribution from headquarters at Gräfelfing, near Munich. The business with manroland sheetfed in the coming number of Mitronic GmbH staff was reduced by years. The negative earnings effects from man- approximately 70 % in this context. At the same roland's insolvency thus largely impact only on time, Dr. Hönle AG took over the production, the 2011/2012 financial year. In all, Hönle development and administration units. The weathered manroland's insolvency well and, objective is to further increase Mitronic's sales in through its restructuring measures, laid the basis the sunlight simulation and daylight lamps seg- for achieving a future earnings level in the sheet- ments, and to achieve a positive result as from fed offset printing segment (at which the restruc- the next financial year. turing measures were largely aimed) that is similar to that achieved in the previous year. Sales revenues generated in the 'Glass and Lamps' segment were higher than in the previous year, which is mainly due to the initial inclusion of the Raesch Group in the consolidated financial statements.

19 The management structure of UV-Technik The Raesch Group acquisition results in syner- Speziallampen GmbH was enlarged with a view gies in a number of segments. Aladin GmbH and to expanding business activities and opening up UV-Technik Speziallampen GmbH use quartz new markets. A new technology manager and a glass tubing from the Raesch Group for the new sales manager reinforce the management manufacture of UV medium-pressure and low- team. The existing business premises were pressure lamps. The manufacturing stages of reconstructed in order to optimise workflows. the two companies can be transferred to the Investments in new production facilities will Raesch Group in the future. As a consequence, further improve the company's productivity in the production processes are made more efficient future. and, at the same time, more cost effective. Ultimately, positive effects are also expected to With effect from 1 January 2012, Dr. Hönle AG arise from use of the Hönle Group sales network acquired 80 % of the shares in Raesch Quarz in conjunction with the Raesch Group sales (Germany) GmbH, Langewiesen, and in Raesch network. Raesch Quarz (Malta) Ltd. reported Quarz (Malta) Ltd., Malta. The corporate group, encouraging business development. However, with around 150 employees, manufactures the difficult environment in the photovoltaics and tubing and semi-finished goods made of quartz semiconductor markets had a dampening effect glass. Its customers come from various on Raesch Quarz (Germany) GmbH's business branches of industry, in particular from the development. The Management Board expects lighting, semiconductor, automotive supplier and that both segments will experience a recovery in water treatment industries. the 2012/2013 financial year. In addition, sales capacities will be increased perceptibly. By taking over the Raesch Group, Hönle further expands its competence as a photonics special- The 'Adhesives' segment reported positive ist while, at the same time, continuing its strat- development. Adjusted for consumer goods egy of generating increased sales in the short- adhesives, the Hönle Group sold more adhe- lived business assets segment, in addition to the sives than in the previous year. Hönle registered equipment and system business. As a result of increased demand in the consumer electronics acquisition of the Raesch Group, Hönle extends segment. Sales picked up noticeably in the the share of recurring sales and, at the same smart phone segment, in particular. At the same time, taps a business field that offers good time, Hönle invested in personnel-related expan- growth potential. In particular the Asian eco- sion, in particular in the development, application nomic area, where the Raesch Group generates engineering and sales segments, in order to a large proportion of its foreign sales revenues, prepare for future growth. offers good development opportunities for the products of the quartz glass specialist in the future.

20 Hönle is strategically well positioned in the three adjusted sales of the previous year (prior-year segments: 'Equipment and Systems', 'Glass and sales revenues of T€ 17,694, less sales reve- Lamps' and 'Adhesives'. In recent years, Hönle nues generated in the 'Consumer Goods Adhe- has successively expanded the 'Glass and sives' segment with a sales volume of approxi- Lamps' and 'Adhesives' business segments mately € 3.0 million). Sales revenues in the through investments and corporate acquisitions. 'Glass and Lamps' segment jumped from This led to greater independence from the print- T€ 7,847 in the previous year to T€ 18,110 in the ing industry and to the opening of new sales 2011/2012 financial year, which is due, in par- markets with high sales potential. ticular, to the consolidation of the Raesch Group. Last year, Hönle focused on the successful structural alignment of all companies in the Business Development according to Region Hönle Group, in particular of the Raesch Group, Hönle Group's sales revenues generated in which was acquired in 2012, and of UV-Technik Germany climbed from T€ 29,303 in the previous Speziallampen GmbH and Mitronic GmbH. year to T€ 29,779 in the financial year under Hönle thus created the preconditions for growth review. Sales revenues generated in Europe in existing and new markets and for significantly outside Germany fell from T€ 22,543 to increasing the proportion of short-lived economic T€ 19,124. The decrease is due, in particular, to assets in consolidated sales through expansion the licensing of the consumer goods adhesives of the 'Glass and Lamps' segment. segment, which primarily concerns the French market. Sales revenues achieved in the sales The Hönle Group generated 53.2 % of its total markets outside Europe increased from sales in the 'Equipment and Systems' segment T€ 16,031 in the previous year to T€ 23,187 in where sales revenues dropped from T€ 42,337 the financial year under review. in the previous year to T€ 38,336 in the financial Hönle thus achieved 41.3 % (PY: 43.2 %) of its year under review. As already mentioned, the sales revenues in Germany, 26.5 % (PY: decrease is attributable to a reluctance to invest 33.2 %) in Europe outside Germany, and 32.2 % in the run-up to the Drupa trade fair and to (PY: 23.6 %) outside the European Union. The manroland AG's insolvency. marked change in the share of regional sales is In mid-2011, Hönle licensed out the marketing of due to both the Hönle Group's stronger presence its 'Consumer Goods Adhesives' segment, which in the Asian economic area and the newly ac- generates annual sales of approximately € 3 quired Raesch Group. The Raesch Group has a million, and thus concentrated on its core com- good dealer network in Asia and earns a signifi- petency in the business with industrial clients. cant share of its sales revenues in that region. Sales in the 'Adhesives' business segment stood at T€ 15,646, which reflects an increase over the

21 Sales Development according to Company Segment (in T€)

45.000

40.000

35.000

30.000

25.000 2010/2011 20.000 2011/2012

15.000

10.000

5.000

0 equipment / systems glass / lamps adhesives

Sales Development according to Region (in T€)

35.000

30.000

25.000

20.000 2010/2011 15.000 2011/2012

10.000

5.000

0 Germany EU ROW

22 Results of Operations value adjustments recorded on receivables from In the past financial year, the Hönle Group gener- manroland AG in the amount of T€ 1,131. The ated sales revenues in the amount of T€ 72,092. restrained purchasing behaviour observed in the In the previous year, sales revenues amounted to run-up to the Drupa trade fair, a decline in sales T€ 67,878. and the value adjustment associated with man- Other operating income in the amount of roland's insolvency impacted negatively on the T€ 2,748 (PY: T€ 4,782) includes license income operating result (EBIT), which amounted to T€ of T€ 720 (PY: T€ 810), which was generated in 8,309 (PY: T€ 11,280). the third quarter. The Hönle Group succeeded in Earnings before tax (EBT) amounted to T€ 7,712 further improving purchasing conditions and in and were down from T€ 10,771 in the previous increasing the share of in-house production. This year, while consolidated net income came to T€ led to a lower cost of materials ratio (37.0 %), 5,490, after being T€ 7,499 in the previous year. which is also due to a change in the product mix. This corresponds to earnings per share of € 0.93 In the previous year, the cost of materials ratio (PY: € 1.30). came to 40.8 %. The personnel expense ratio rose from 29.7 % to 31.5 %, while the ratio of The EBIT margin thus dropped from 16.6 % in other operating expenses climbed from 17.9 % the previous year to 11.5 %. Net return on sales to 20.5 %. Other operating expenses of declined from 11.0 % to 7.6 %. T€ 14,854 (PY: T€ 12,241) include individual

Earnings Development In T€ 2011/2012 2010/2011 Change Revenue 72,092 67,878 6.2 % Gross profit 48,286 45,337 6.5 % Operating result (EBIT) 8,309 11,280 -26.3 % Earnings before taxes (EBT) 7,712 10,771 -28.4 % Consolidated net income/loss for the year 5,490 7,499 -26.8 % Earnings per share in € 0.93 1.30 -28.5 %

23 Financial Position purchase price payment of T€ 4,863 for the The operating cash flow of T€ 7,235 is mainly acquisition of 80 % of the shares in Raesch due to net income for the year before taxes in Quarz (Germany) GmbH, Langewiesen, and the amount of T€ 7.712. The individual value Raesch Quarz (Malta) Ltd., Mosta, Malta. Pay- adjustment recorded on receivables from manro- ments totalling T€ 2.232 concerned the acquisi- land AG in the amount of T€ 1,131 largely con- tion of property, plant and equipment and intan- tributed to a T€ 2,300 decrease in trade ac- gible assets. In particular, these payments were counts receivables. The rise in inventories by T€ made for technical equipment, business equip- 1,412, the T€ 3,250 decline in trade accounts ment and leasehold improvements to business payable and the decrease in other liabilities by premises. T€ 1,798 led to cash outflows in the financial year 2011/2012. The cash flow from financing activity amounted The cash flow from operating activity came to to T€ -1,876 (PY: T€ -2,382) and is attributable T€ 3,624 (PY: T€ 10,196) after payment of to a bank loan that was taken out in the amount interest amounting to T€ 468 and income taxes of T€ 3,000 used for financing the Raesch Group amounting to T€ 3.143. acquisition, the repayment of loans amounting to T€ 2,120 and a dividend distribution of T€ 2,756. The cash flow from investing activity in the amount of T€ -5,763 (PY: T€ -2.108) mainly In all, liquid assets thus decreased by T€ 3,542 relates to the cash portion of the first rate of the to T€ 9,321 in the past financial year.

Liquidity Development In T€ 2011/2012 2010/2011 Change Cash from current activities 7,235 T€ 12,601 T€ -42.6 % Cash flow from investing activity -5,763 T€ -2,108 T€ -173.4 % Cash flow from financing activity -1,506 T€ -2,382 T€ -36.8 % Change in liquid assets -3,542 T€ 6,120 T€ -157.9 %

25 Production of UV-lamps at Aladin Net Assets other non-current liabilities in the amount of The purchase of the Raesch Group led to signifi- T€ 3,387. A bank loan of T€ 3,000 for financing cant changes in the Hönle Group's balance the first purchase price instalment already paid sheet structure: Goodwill increased by T€ 7,754 was stated under the item, 'current liabilities to to T€ 15,502 in the course of the corporate banks and current portion of non-current loans in acquisition. Intangible assets rose by T€ 1,220 to the amount of T€ 600 and under the item, 'non- T€ 3,079, while property, plant and equipment current loans (less current portion)' in the increased by T€ 6,070 to T€ 13,110. Additions to amount of T€ 2,100. In all, non-current liabilities property, plant and equipment of the Raesch rose from T€ 4,307 to T€ 12.640, while current Group include real estate and equipment and liabilities increased from T€ 13,240 to T€ 17,216. machines, such as melting furnaces for quartz In particular, as a result of the financing of the glass production. In all, non-current assets rose purchase price instalment and the bank liabilities from T€ 18,632 to T€ 33,864. of the Raesch Group, the balance sheet item, As a result of the acquisition, inventories in- 'current liabilities to banks and current portion of creased by T€ 3,918 to T€ 16,579 and other non-current loans', jumped from T€ 234 to current assets by T€ 999 to T€ 1,994 at the time T€ 1,751. of the corporate acquisition. Liquid assets were down T€ 3,542 to T€ 9,321, since, among other Total assets climbed from T€ 55,751 as at the things, a portion of the purchase price was beginning of the financial year to T€ 74,340 as at settled by means of liquid assets. A further 30 September 2012. portion of the purchase price was paid for with With an equity capital ratio of 59.86 %, Hönle treasury stock. The purchase price instalments, Group financing continues to be on very solid which are due in March 2013 and in March 2014, ground, despite the recent acquisition. respectively, were reported under other current liabilities in the amount of T€ 3,495, and under

Balance Sheet In T€ 30.09.2012 30.09.2011 Change Non-current assets 33,864 18,632 81.8 % Current assets 40,476 37,119 9.0 % Shareholders' equity 44,484 38,204 16.4 % Non-current liabilities 12,640 4,307 193.5 % Current liabilities 17,216 13,240 30.0 % Balance sheet total 74,340 55,751 33.3 %

26 Overall Statement on the Economic Situation The global economy is currently experiencing a period of marked weakness. This not only concerns the industrialised countries, but also impacts negatively on the emerging markets. In all, the expansion of the global economy declined perceptibly when compared to the previous year. This was exacerbated by the insolvency of the big end-customer, manroland AG, and the restrained purchasing behaviour observed during the run-up to the Drupa trade fair, which impacted negatively on the Hönle Group's business development. While sales (€ 72.1 million) generated in the reporting year exceeded the previous year's sales due to the Raesch Group acquisition, in particular, earnings were down from the previous year’s level. The operating result (EBT), dropped 28.4 % to € 7.7 million. With liquid assets of € 9.3 million and additional existing credit facilities, the Hönle Group continues to be solidly financed. Liabilities to banks amount to € 5.4 million. As a result of its strong market position in several growth segments, the Group is well positioned with respect to its further business development. The paramount corporate objective is to increase corporate value over the long-term through profitable and sustainable growth. The earnings level is to be extended significantly in the new financial year.

27 Research & Development In February 2012, Hönle presented product In the 2011/2012 financial year, the focus of innovations for the wide-format inkjet printing R&D activities was on new, high-performance segment at the Fespa trade fair. The products products that are energy-efficient, and on indi- ranged from high-end UV drying systems to vidual, customised solutions. The extensive innovative UV LED systems. The latter includes exchange of experiences with customers is an the LED Powerline, which has already become important prerequisite for the development of firmly established on the market. products that are tailored to the markets' re- By means of its recently developed jetCURE quirements. In addition, technical colleges and equipment series, Hönle underscores its position research institutions were important external as the global market leader for UV drying sys- partners in the realisation of new projects. The tems in the wide-format inkjet printing segment. most important R&D activities in the past finan- These high-performance UV dryers permit cial year are presented in the following: excellent drying even at high speeds, which thus leads to significantly enhanced printing quality. Supported by BASF SE and Solex GmbH, Dr jetCURE devices are equipped with dichroic Hönle AG offered - for the first time - a series of reflectors for temperature-sensitive materials seminars relating to UV curing in 2011. The and are available with lamp spectra to suit the positive response of the participants largely specific ink. The length of the devices can be contributed to the fact that Hönle decided to adjusted to the printing process. The drying continue the seminar series in the past financial process is significantly improved through use of year. the electronic power supply unit (EPS) devel- More than 130 participants from the most varied oped by Hönle. The EPS technology reduces the professional groups came to the Hönle head energy used for operating the UV drying system office in Gräfelfing, near Munich, in recent or for increasing the drying speed, which is even months to attend the LED workshops and basic more important to most users. UV seminars. The attendee list ranged from UV beginners to engineers and technicians with In May 2012, the Hönle Group presented its many years of experience in the UV sector latest innovations at the Drupa, which is the through to employees of OEMs and chemical world's largest print trade fair. Although fewer suppliers. The seminars on "UV curing with visitors attended the trade fair in Düsseldorf than LEDs" were structured in accordance with the four years ago, they demonstrated genuine key issues, chemistry, printing, coating and interest and a great willingness to invest. While adhesives, and were thus perfectly aligned to the number of customer contacts was lower, the the interests of the respective groups of partici- quality of those contacts was assessed as pants. significantly higher than in the past. In addition to the Group's world-wide, firmly established UV, thermal air and infrared drying systems, innovative new developments, in

29 Electrically conductive adhesives by Panacol particular, were met with great interest. This The order-independent research and develop- applied, for example, to the new Eltosch IR/HA ment expenses incurred by the Hönle Group drying system, Eco Power Dry, which was increased from T€ 821 in the previous year to awarded a BG certificate (issued by the employ- T€ 1,034 in the financial year under review. In ers’ liability insurance) for an "energy-minimised this period, the number of staff employed in the printing process/DGUV (German social insur- R&D department increased from 50 to 54 as at ance) test." Another innovation was the expan- the end of the respective financial years. This sion of the established Hönle PureUV LED means that 11.4 % of Hönle’s staff was em- series, which makes LED-based drying interest- ployed in the Research and Development de- ing for printing applications also. The equipment partments. series for digital printing applications was met with particularly great interest. With this series, Hönle was again able to confirm its leading position in the UV drying systems segment for wide-format inkjet printing.

The LOPE-C trade fair took place in Munich for the first time in June 2012. The leading trade fair in the field of printed electronics reflected the entire supply chain - from chemistry to printing - of this future technology. At this fair, the Hönle Group presented innovative systems solutions for the manufacture of printed electronics. Pana- col's high-tech adhesives have been used in electronics production for many years now. Panacol also offers an array of innovative products for the printed electronics segment. Even in a hardened state, Elecolit® adhesives can be bent and crumpled, and are thus also ideally suited for flexible circuits.

30 Environmental Aspects obsolete. No ominous, health-impairing disinfec- UV technology constitutes the Hönle Group's tion by-products are formed, and aesthetic core business. UV drying systems are employed characteristics, such as taste, odour and colour in all kinds of printing and coating applications. of the foodstuff are not impaired. In general, the environmental compatibility of UV drying processes is clearly superior to that of Hönle UV lamps are also used in the sterilising conventional thermal drying processes. The of drinking water and for disinfecting waste superior energy performance of modern UV water. The ultraviolet rays purify the water and drying systems when compared to conventional reach very high germ elimination rates in the infrared and hot air drying systems speaks in process. The use of chemicals can be minimised favour of their utilisation. In addition, the high or even completely avoided. For example, micro- quality and scratch resistance of the paints and organisms are killed in an environmentally- varnishes also help to reduce the repair work friendly way without chemicals at the drainage that is necessary due to mechanical stress and system of sewage treatment plants. By using UV strain. technology, the bodies of water are protected and their self-cleaning properties are preserved. The use of UV technology makes it possible to significantly reduce the amount of solvents that Industrial adhesives represent another business are harmful to the environment. The German segment of the Hönle Group. In addition to Solvent Ordinance (BlmSchV) limits the emis- common adhesives, the product range also sion of volatile organic compounds (VOC). The includes UV and light curing adhesives. With use of UV inks and paints represents a possibil- these adhesives, the drying process takes place ity to comply with that Directive. The process without the emission of solvents. The adhesives aimed at a further reduction of emissions as react to radiation, the molecules interconnect promulgated in the VOC and National Emission and cure in seconds - and no solvents are used. Ceilings Directive, for example, is continuing at UV and light curing adhesives are thus very cross-national level. For this reason, the oppor- environmental-friendly. tunities for further proliferation of UV technology in the printing, paints and lacquers and coating segments are promising in the near future.

Surface disinfection represents another business segment of the Hönle Group. UV disinfection, for example, has been successfully employed in the global food industry for decades. UV disinfection offers numerous advantages over chemical disinfection methods. For example, it renders the transport, storage and disposal of chemicals

31 Staff AG and at Eltosch Torsten Schmidt GmbH. In the spring of 2012, Hönle acquired Raesch Against the backdrop of the stabilisation of Quarz (Germany) GmbH and Raesch Quarz manroland and the associated increase in in- (Malta) Ltd.. At the time of the acquisition, 141 coming orders, Hönle again recruited new em- persons were employed at the two sites in ployees in the course of 2012. The number of Germany and in Malta. staff employed by the Hönle Group rose from 363 to 473 as at the end of the respective finan- In early 2012, the Hönle Group adjusted its staff cial years. Hönle Group’s staff of 473 includes level to the changed order situation as a result of 46 part-time employees, which corresponds to manroland AG's insolvency. The number of staff 9.7 % of its total staff. The employees were thus initially decreased, in particular at Dr. Hönle engaged in the following functional areas:

Functional Areas 30.09.2012 30.09.2011 Change Sales 78 65 20.0 % Research & Development 54 50 8.0 % Production, Service 229 154 48.7 % Logistics 50 40 25.0 % Administration 62 54 14.8 % Total 473 363 30.3 %

Average 2011/2012 2010/2011 Change Sales 72 67 7.5 % Research & Development 53 46 15.2 % Production, Service 212 131 61.8 % Logistics 45 36 25.0 % Administration 60 49 22.4 % Total 442 329 34.3 %

Personnel expenses rose from T€ 20,345 to ment. Among other things, this is attributable to T€ 22,768 in the past financial year. The in- a decline in profit-sharing bonuses and commis- crease in personnel expenses is below- sion payments. Personnel expenses were struc- proportionate relative to the employee develop- tured as follows:

Personnel Expenses In T€ 2011/2012 2010/2011 Change Wages and salaries 18,947 16,812 12.7 % Social security and pension costs 3,821 3,533 8.2 % Total 22,768 20,345 11.9 %

Sun simulation equipment by 33Mitronic Hönle invests in occupational training with a view important supplier, Grafix has access to leading to covering the future demand for qualified manufacturers of offset and digital printing personnel: At the end of the financial year, the machines worldwide. In addition, Grafix offers Group employed 26 trainees (PY: 29). The solutions for other sectors of industry, such as Hönle Group is presently providing training for the glass, plastics and pharmaceutical indus- industrial clerks, design draughtsmen, chemical tries. laboratory assistants, IT administrators, market- The company was founded in 1947 in Stuttgart ing communication assistants, warehouse logis- and in 2000 expanded by a second production tics specialists and others. Hönle also offers site in Unterlüß. With about 100 employees trainees and undergraduates the possibility to Grafix 2012 is expected to generate sales of gain a deeper insight into how technology com- approximately € 9 million. On 15 October 2012 panies operate. With a view to ensuring a high Grafix GmbH requested the opening of the qualification level among its employees, Hönle preliminary insolvency proceedings. regularly invests in employee qualification and training measures. Dr. Hönle AG assumes that the successor company of Grafix GmbH will contribute in fiscal Supplementary Report year 2012/2013 to the positive result of the On 21 December 2012, Blitz 12-319 GmbH, Hönle Group. Gräfelfing, a fully-owned (100%) subsidiary of Dr. Hönle AG signed a purchase agreement stipulating the acquisition of all significant assets of Grafix GmbH and PLATSCH GmbH & Co. KG (asset deal) after the creditors’ committee of Grafix GmbH had accepted the binding offer of Blitz 12-319 GmbH dated 14 December 2012. The acquired assets include the entire activity of the insolvent Grafix GmbH including parts of non-current and current assets and business premises at Unterlüß (Celle) location.

34 Disclosures pursuant to Section 315 peated issuance of new, no-par bearer shares (4) HGB by up to 2,750,000 shares by 22 March 2015. Moreover, the Annual General Meeting held on The disclosures required pursuant to Section 23 March 2010 authorised the Company to 315 (4) HGB are presented below as at 30 purchase - in the interest of its shareholders - up September 2012. to 551,293 of its own shares by 31 December

2014. Re No. 1: The nominal capital of Dr. Hönle AG reported as of the financial year-end amounted Re No. 8: In the event of a change of ownership to € 5,512,930; it is split into 5,512,930 no-par at Dr. Hönle AG, the Management Board is bearer shares. Each share of stock carries one entitled to resign from office. voting right. Shares carrying special rights do not exist. Further details regarding the nominal Re No. 9: In the event of a change of ownership capital are provided in the Notes to this Annual at Dr. Hönle AG, the Management Board is Report in the chapter: Shareholders' Equity. entitled to receive a severance payment.

Re No. 3: Pursuant to Section 21 (1) WpHG, Further details pertaining to Section 315 (4) Nos. shareholders must report significant participating 8 and 9 HGB are provided in the remuneration interests in listed companies. Dr. Hönle AG is report presented below. not aware of any shareholders with participating interests in Dr. Hönle AG of more than 10 %. Statement on Corporate Governance Re No. 6: The Supervisory Board appoints the The statement on corporate governance to be Dr. Hönle AG Management Board for a maxi- submitted pursuant to Section 289a HGB is mum term of office of five years. Each amend- included in the Corporate Governance Report. It ment to the Company’s Articles of Incorporation is also available at www.hoenle.de. requires a resolution by the Shareholders’ Meet- ing.

Re No. 7: In the future also, the Management Board and Supervisory Board are to be enabled to utilize authorised capital for the acquisition of companies, company shareholdings and other economic assets, and for strengthening the Company's equity capital. To this end, the An- nual General Meeting held on 23 March 2010 authorised the Management Board, with the approval of the Supervisory Board, to increase the nominal capital through the single or re-

35 Opportunities and Risk Report risks. All responsibilities, principles and proce- Dr. Hönle AG’s risk policy is aligned to the dural approaches are documented in a risk entrepreneurial objectives of sustained growth management manual and all risk reports are and improvement of the Company’s performance recorded on standardised forms (risk documen- with a view to increasing the corporate value. In tation). order to achieve these objectives, opportunities and risks are to be recognised and evaluated at From the current perspective, the Hönle Group is an early stage and, through the introduction of exposed to the following internal and external suitable measures, any possible negative impact opportunities and risks: is to be limited and threats to the Company’s existence as a going concern avoided. Market Development The global economy is currently experiencing a Dr. Hönle AG established a formalised risk marked period of weakness. In particular, con- management system for monitoring risks. The siderable risks arise from the debt crisis prevail- principles documented in a risk manual define ing in several countries. Several major central the procedures for dealing with risks. In consid- banks are presently pursuing an expansive eration of the amount of potential damage, the monetary policy with a view to making the debt probability of the occurrence of losses, and also crisis less obvious. The future prospects thus in view of the opportunities arising for the Com- largely depend on the development of the gov- pany, decisions are made as to whether the ernment debt crisis - in particular in the euro respective risks are to be avoided, reduced, zone - and the associated impact on consump- transferred or accepted. tion. A cooling of the economy would have an impact on the Hönle Group's sales and earnings In the past financial year, risk reports were sent development. Hönle addresses this risk by to the risk manager as required (risk identifica- continuously monitoring the market in order to tion). All risks were evaluated within the scope of enable the Company to react swiftly to current a predefined scale for the evaluation of potential economic developments. In contrast, a possible losses and the probability of occurrence (risk economic recovery would have a positive impact evaluation). Necessary measures were defined on business development. and initiated as required (risk management). In addition, risk discussions were held with the Further market risks arise from changing under- responsible risk managers at quarterly intervals; lying data, such as data pertaining to raw mate- the risk situation was analysed and measures rials. Depending on the changing market situa- were monitored (risk controlling). The Dr. Hönle tion, significant price fluctuations may affect AG Management Board is informed of the Com- purchase prices for the required raw materials or pany’s current risk situation at regular intervals for energy supply. After a careful assessment and is promptly notified when defined risk based on a cost-benefit analysis, the Hönle thresholds are reached concerning individual

36 Group decided not to implement special hedging thus far demonstrated good payment behaviour. measures against commodity price risks. Hönle adapts the payment conditions to customers’ credit standing as required. Operational Development manroland AG filed for the opening of insolvency Theoretically, there is a risk that the introduction proceedings in November 2011. In February of new products or technologies could render the 2012, a new, sound investor (Langley Holdings Company's existing products no longer market- plc.), was found for manroland AG's sheetfed able. The Hönle Group's success thus depends offset division at the Offenbach production site. on its ability to promptly recognise market devel- manroland AG now operates under the name of opments and to continuously develop and offer manroland sheetfed. In the future, the Hönle new products. At the same time, a technological Group expects an overall lower sales level, change also offers an opportunity to open up which is expected to be generated from business new sales markets with innovative products. In with manroland sheetfed. Consequently, the cost the past, the Hönle Group already succeeded structure was adjusted to the new framework several times in recognising market develop- conditions. The manroland sheetfed Group has ments at an early state and using them to the good opportunities for long-term, successful Company's advantage. business development, which must, nevertheless, also be monitored critically in the future. As is the case with other companies, the Hönle Group is also subject to IT-related risks. The loss of key customers could lead to a de- IT systems form the basis for almost all opera- cline in revenues. Hönle addresses this risk tional procedures and processes. Structures through intensive monitoring of its key customers were established with a view to protecting the and ongoing examination of their financial per- business processes from IT risks. These struc- formance. Customer satisfaction in regard to key tures are intended to prevent possible dam- accounts is continually monitored. In addition, age/losses and ensure high process security. expansion of the customer base into economi- The redundant design of the IT systems is of cally unrelated target industries leads to an crucial importance in this context. The opera- improved risk structure. By contrast, successful tional solutions concerning access control, cooperation with key customers forms a good protection systems, failure management and basis for further expansion of business activities data backup ensure the high availability of the and for continued growth with strong partners in EDP-related technical infrastructure. the future also. Hönle competes for skilled staff and executive The fact that some customers might delay pay- staff. In particular the market for skilled workers ment or will be unable to fulfil their payment and engineers is subject to tough competition. obligations in the future cannot be ruled out. The attractiveness of an employer plays a crucial However, the customers of Dr. Hönle AG have role in applicants’ decision-making process.

37 Hönle thus places great emphasis on a good used in this context for hedging against interest working environment, targeted advanced training risks. In all, the interest risk is presently of sub- measures and internal training, offers promising ordinate relevance to the Hönle Group. career prospects, and cooperates closely with selected technical universities. Hönle counter- acts the risk of possibly losing staff members who have significant know-how by means of a deputisation principle, which ensures information-sharing and the retention of professional know-how in the Company. In all, Hönle is well equipped to deal with the increasing competition in the job market for specialists and executives.

Financial Development Financial risks include risks associated with financial losses due to fluctuating economic data, such as data pertaining to exchange and interest rates. Such risks can have a negative impact on the Company's net assets, financial position and results of operations. It can be assumed that rising euro exchange rates could adversely impact on Hönle’s export business. However, since sales are generally invoiced in euro, Hönle does not engage in any currency hedging transactions. Hönle addresses the exchange rate fluctuations which affect regional price structures through continuous market monitoring and through product or price adjustments, as required. On the other hand, a depreciating euro might offer competitive advantages to the Company outside the EU with a resulting positive impact on the results of operations. An interest rate risk arises from changes in interest rates. Dr. Hönle AG took out a loan with a variable interest rate for financing the acquisition of shares in the Raesch Group. A derivative financial instrument (interest rate swap) was

38 Overall Assessment of the Opportunities and Risk Situation Hönle offers a broad range of high-performance products in various industries and in diverse application fields and has a solid financial foot- ing. An economic downturn represents a sub- stantial risk from the current perspective. It may be assumed that such an economic downturn would also impact negatively on the Hönle Group's business development. Currently, however, there are no discernible risks that could jeopardise the Company’s continuation as a going concern now or in the future. Economic opportunities arise from the opening up of new growth markets and areas of application for the Hönle Group. Despite a deceleration of the growth rate in China, for example, the growth rates in many Asian countries continue to be comparatively high. The expansion of sales activities - whether via own companies or via local sales partners - is to open up new sales markets for the Hönle Group. New areas of application, for example in the water sterilisation segment, are to be continuously tapped in the coming years.

39 Internal Control and Risk Manage- Moreover, risks are monitored and measures to ment System with regard to the Ac- be initiated are regularly discussed during meetings held by all departments of Dr. Hönle AG as counting Process part of risk management. Reporting to the Man- Disclosures pursuant to Section 315 (2) No. 5 agement Board takes place promptly in this HGB are presented in the following. context also. The risk management system and the internal Hönle also uses a specifically designed manual control system deal with the monitoring of ac- for the adequate implementation of the internal counting processes, among other things. In risk management guidelines. The contents of the addition to the identification and assessment of manual include rules of conduct for the identifi- risks that impair the adequate preparation of cation, analysis, assessment, monitoring and financial statements, taking suitable measures to documentation of risks. avert such risks is mandatory.

Strategic corporate planning, internal reporting The most important prerequisites for proper and the internal control system are inseparable accounting include an adequate merchandise components of the risk management system. management system, in-depth staff training (for Strategic corporate planning is aimed at identify- example, in the event of new, statutory regula- ing future opportunities and risks. Internal report- tions being introduced), the determination of ing serves as an information system that pro- responsibilities, functional segregation with vides information about existing risks. The respect to the accounting system, and controlled internal control system is constantly used for access at IT system level. Dr. Hönle AG imple- identifying risks, initiating corresponding meas- mented an ERP and accounting system that ures and for monitoring their implementation and enables appropriate accounting. In addition, the effectiveness. The internal control system also Hönle Group established a uniform, Group-wide encompasses Dr. Hönle AG's accounting proc- ERP system that ensures reliable and prompt ess. The controlling department is responsible financial accounting. Newly founded or acquired for the analysis of the accounting process. companies are integrated into the existing ERP Accounting-related reporting to the Management system as quickly as possible. In this context, Board takes place regularly and in a timely Dr. Hönle AG centrally performs the accounting fashion. The reporting includes relevant financial function as service provider for all companies of indicators and comprises a detailed comparison the Hönle Group. The accounting process is of the actual figures with the plan figures. based on the principle of dual control. In addi-

tion, the information in the financial statements is subjected to predefined release processes. When the financial statements are prepared, the figures are analysed and the content-related composition and changes are verified.

40 In order to exclude a possible threat to data security to the greatest possible extent, Hönle constantly endeavours to review and, if necessary, improve preventive measures in the IT segment. Regular updates and enhancements to the system as well as the observance of internal security guidelines by our employees are a matter of course. Firewall systems and access control respecting the operating system and applications provide protection against unauthor- ised access, destruction, and misuse. The design of the IT system contributes to the prompt and adequate recording of all information that is relevant to the accounting process and ensures the greatest possible security through- out the Group.

41 Risk Management with regard to Fi- Liquidity Risk nancial Instruments The liquidity risk could become relevant to the Hönle Group in the event that current or future Disclosures pursuant to Section 315 (2) No. 2 payments cannot be made due to the unavail- HGB are presented in the following. ability of sufficient cash and cash equivalents. Within the scope of its capacity as the controlling The Company's solvency is constantly ensured Group company, Dr. Hönle AG monitors, coordi- through long-term financial planning spanning nates, and manages the Hönle Group's financial several years and by regular liquidity planning. activities. Ensuring that sufficient liquidity reserves are available is of utmost priority in this Market Risk context. Moreover, great emphasis is placed on The market risk concerns the risk associated achieving optimised profitability while, at the with financial losses due to fluctuating market same time, minimising risks. prices (e.g. with regard to raw materials, ex-

change rates, interest rates and stock prices). Default Risk The currency risk, interest rate risk and com- In principle, the default risk that arises when modity price risk are particularly relevant to the contracting partners are in arrears with pay- Hönle Group. Such risks can have a negative ments constitutes a potential financial threat with impact on the Company's net assets, financial respect to trade settlements. Hönle reviews the position and results of operations. credit standing of its business partners, while The currency risk comprises risks arising from placing special focus on key accounts. The exchange rate fluctuations that could have an continuous monitoring of business transactions impact on the competitiveness of Hönle Group's ensures a low default risk. products. Since the Hönle Group settles the

major portion of its transactions in euros, ex- The achievement of the targets of the invest- change rate risks arising from the clearing of ments held by Hönle is important in view of the trade receivables from customers are largely existing risk exposure of Dr. Hönle AG. This avoided. affects the book values of the investments and the loans and receivables towards the associ- The interest rate risk arises from changes in ated companies. If the targets of the investments interest rates. In this financial year, Dr. Hönle AG can not be reached or in response to the further entered into a contract for a derivative financial development of the necessary measures can not instrument (which is clearly used for hedging be implemented in time, the existing amounts purposes) for the first time. A derivative financial are to be checked out regarding a write-down instrument (interest rate swap) was used for requirement. hedging against interest risks. Dr. Hönle AG is

not exposed to a risk that must be reported in the balance sheet, since any possible negative fair values of the financial instruments are con-

42 trasted to the positive developments of the associated underlying transaction (hedged item). The "hypothetical derivative method" is used for the valuation of the hedging instrument. The efficiency rate of the hedging instrument corresponds to 100%. The underlying transaction to be hedged concerns a variable interest-bearing bank loan, which serves to finance the acquisition of 80% of the business shares in Raesch Quarz (Germany) GmbH and in Raesch Quarz (Malta) Ltd.

Depending on the changing market situation, significant price fluctuations may affect purchase prices for the required raw materials or for energy supply. Following a careful assessment based on a cost-benefit analysis, the Hönle Group decided not to implement special hedging measures against currency and commodity price risks. From a current perspective, the existing and expected market risks do not represent a threat to the Hönle Group's continued existence as a going concern. However, favourable market development provides opportunities with respect to a positive impact on the Company's net assets, financial position and results of operations.

43 Remuneration Report (BetrAVG). Additional annual pension compo- Remuneration of Management Board nents were and are acquired as from the period The remuneration structure is geared to sus- starting 01.01.2012. The amount of pension tained corporate development. Monetary remu- components acquired in a given financial year is neration includes fixed and variable compo- derived from the pension expenses that are nents. The criteria used in evaluating the suit- converted into pension instalments using age- ability of remuneration are as follows: The tasks dependent conversion factors. The pension of the respective Management Board member, expenses correspond to a fixed percentage rate personal performance, the economic situation, of the annual fixed remuneration (excluding profit earnings, and future outlook of the Company, sharing bonus). The designated benefit types standard practice in the industry and the Com- are old age pension (from the age of 60), disabil- pany’s general remuneration structure. The ity pension and survivors' pension (for widows, Supervisory Board regularly reviews the struc- widowers, partners and orphans). The amount of ture and amount of the remuneration for Man- the reduced earning capacity and old age pen- agement Board members. sions corresponds to the total of the vested The Company reports pension commitments rights components and the pension components concerning of the Management Board members, acquired up to the time when a pension falls Mr. Haimerl and Mr. Runge. As at 31.12.2011, due. The widow's/widower's and partner's pen- the Management Board agreements were ex- sion corresponds to 60% of the disability or old tended for another five years until 31.12.2017, age pension to which there was an entitlement and the fixed amount commitments applicable at the time of death or which was paid out at the until then were redefined. Owing to the new time of death. The orphan's pension amounts to regulation, vested rights components were 12% of the mentioned pension entitlement for determined from the fixed amount commitments half-orphans and 20% for orphans. Employers’ pursuant to the principles defined under Section pension liability insurances were concluded with 2 (1) of the German Company Pension Act a view to covering the pension commitments.

Fixed Remuneration (not based on performance) In T€ Salary Other Remuneration Total 11/12 10/11 11/12 10/11 11/12 10/11 Norbert Haimerl 211 211 21 20 232 231 Heiko Runge 211 211 11 11 222 222 Total 422 421 32 31 454 453

Performance-Based Compensation In T€ Profit Sharing Bonuses 11/12 10/11 Norbert Haimerl 154 225 Heiko Runge 154 225 Total 308 450

44 Pensions In T€ Pension Expenses pursuant to IAS 19 2011/2012 2010/2011 Norbert Haimerl 107 31 Heiko Runge 94 26 Total 201 57

Pensions In T€ Present Value of Defined Benefit Obligations As at 30.09.2012 As at 30.09.2011 Norbert Haimerl 494 231 Heiko Runge 460 210 Total 954 441

In addition, benefits amounting to T€ 12 were man Securities Purchase and Takeover Act paid to surviving dependents of former Man- (WpÜG). In the event of resignation, the respec- agement Board members. tive Management Board member is entitled to a severance payment in the amount of two annual Payments upon Termination of Management gross salaries (including performance-based Board Activity compensation), up to a maximum of T€ 400. The Supervisory Board appoints the Dr. Hönle Calculation of the annual gross salary is based AG Management Board for a maximum term of on the average gross salary for the past three office of five years. In the event of a change of financial years prior to leaving the Company. control at Dr. Hönle AG, Management Board members are entitled to terminate their Board of Compensation of Supervisory Board Management Service Agreement within a period Members of three months after obtaining knowledge of the The compensation is comprised exclusively of change of control with a three-month notice fixed remuneration, which is based on the re- period and to resign from office at that time. A spective tasks and responsibilities of the Super- change of control is defined as any direct or visory Board members. No further remuneration, indirect assumption of control over Dr. Hönle AG e.g. for consulting or intermediary services, is by a third party within the meaning of the Ger- granted.

Compensation of Supervisory Board Members In T€ Total 2011/2012 2010/2011 Dr. Hans-Joachim Vits 32 32 Prof. Dr. Karl Hönle 24 24 Eckhard Pergande 16 16 Total 72 72

45 Forecast Report sessed the current business situation as less Market Outlook positive than in the previous month, the eco- The global economy is in a phase of compara- nomic climate indicator was still clearly above its tively weak growth. Further development de- long-term average. Recently, the expectations pends fundamentally on the further course of the respecting further development were scaled euro crisis and the associated impact on de- back. The slightly negative trend also continued mand and financial markets. Based on the with respect to the outlook for the export busi- assumption that the tensions in the financial ness. markets should gradually diminish, the pace of expansion of the global economy will probably Outlook for the Hönle Group pick up again in the course of next year. The forecast concerning future business development largely depends on the economic devel- According to an assessment of the International opment of the global economy. Planning in- Monetary Fund (IMF), the recession prevailing in cludes all individual companies of the Hönle the euro zone will be overcome in the coming Group that were consolidated in the 2011/2012 year. However, economic recovery in Europe will financial year. remain very low (0.2 %). The economy in the industrialised countries will gain only little mo- Segment: Glass and Lamps mentum, since there are considerable dampen- The Hönle Group systematically continues its ing effects emanating from the fiscal policy and strategy of tapping promising business segments in view of the fact that the private sector is still either by establishing the respective business endeavouring to reduce its gearing ratio in many field on its own or by acquiring companies. As a countries. result of the Raesch Group acquisition, Hönle also tapped an interesting market with a man- It is to be expected that the financing conditions ageable number of competitors in 2012. The in Germany, which are presently extremely Raesch Group has a broad, high-quality product favourable for investors, will increasingly reveal portfolio in the quartz glass tubing segment and their expansive effects in 2013. However, strong for components made from quartz glass. Com- investment activities - which accompany typical pared to the competitors, the Raesch Group's recoveries - are not forecast since there is a lack market share is low. In the coming years, the of confidence that the economic policy pursued market share is to be increased via investments will solve the government debt crisis on a sus- in the expansion of production capacities and tained basis. Thus, economic expansion in through optimisation of production processes in Germany will be subdued in the period ahead. conjunction with the expansion of sales capacities. According to the Ifo Institute, the German busi- The Raesch Group acquisition also results in ness climate in manufacturing has cooled down. synergies in a number of segments at the Hönle Even though the surveyed entrepreneurs as- Group. Aladin GmbH and UV-Technik Spezial-

46 lampen GmbH use quartz glass tubing from the Segment: Equipment and Systems Raesch Group for the manufacture of UV me- Following manroland AG's insolvency and its dium-pressure and low-pressure lamps. Manu- acquisition by the Langley Group, the Hönle facturing stages of the two companies can be Group expects stable business development in transferred to the Raesch Group in the future. As the sheetfed offset printing segment over the a consequence, production processes are made coming years. Owing to the new cost structure, more efficient and, at the same time, more cost Hönle nevertheless foresees that the earnings effective. Finally, positive effects are also ex- contributions to be achieved at Group level in pected to arise from use of the Hönle Group the course of the current financial year will be at sales network in conjunction with the Raesch approximately the level reached before the Group sales network. In addition, investments in insolvency. The Management Board plans stable the expansion of sales capacities, in particular at business development with manroland sheetfed the Raesch Group, are to create a basis for the for the coming years. planned increase in sales. Hönle projects also a stable business in the digital printing segment for the 2012/2013 finan- The already completed restructuring measures cial year. The objective is to gain new customers at UV-Technik Speziallampen GmbH enable a in the digital and inkjet printing segment and, in more efficient design of production processes. In this way, to expand the market share. The digital addition, production capacities were increased printing segment is a very interesting sales perceptibly. In recent years, UV-Technik Spezial- market for Dr. Hönle AG, since it offers advan- lampen GmbH tapped a new business field in tages over conventional printing procedures as the water sterilisation segment. Initial sales well as good growth potential over the next revenues were already generated in the financial years. year under review. This new business field is to significantly contribute to positive corporate A focal point at Dr. Hönle AG will be the intensi- development in the future. fication of development activities. New employees are to be recruited to expand the existing team, further develop the ultraviolet and infrared systems, and to ready new equipment for the market. In addition to the LED technology, the focus in this context will also be on electronic power supply units and on control engineering, among other things.

The integration of Mitronic GmbH is being pushed ahead further. The relocation of production and development activities to Dr. Hönle AG ensures the products' high quality level. Intensi-

47 fied sales activities are aimed at opening up new Overall Assessment of Future Business sales opportunities in the lighting technology and Development sunlight simulation segments. Hönle projects an The investment volume for expansion of the increase in positive earnings contributions at Hönle Group's business activities is expected to Mitronic GmbH in the coming financial years. range between € 1 million to € 1.5 million in each of the next two financial years. Segment: Adhesives Provided that the economic framework condi- Hönle forecasts positive business development tions remain unchanged, the Management in the 'Adhesives' segment for the 2012/2013 Board aims at achieving sales revenues of € 85 financial year as rising sales are to be expected million and an operating result of € 12 million for in the smart phones and smart card segment, in the Hönle Group in financial year 2012/2013. particular. Moreover, business activities in the Assuming that the general economic conditions medical technology segment will already be remain unchanged, the Management Board significantly expanded in the current financial expects further increases in sales and operating year. results for financial year 2013/2014. Thereby a The Panacol Group is investing in the sales, moderate growth of almost all companies of the development and application engineering divi- Hönle Group is expected. While the Panacol sions with a view to opening up new sales mar- group is expected to contribute significantly to kets for industrial adhesives and expanding the increase in turnover of the corporate group existing ones. In this context, the Panacol Group already in the financial year 2012/2013, the is increasingly expanding its expertise in new Raesch group is expected to have a positive application fields through the recruitment of sales trend as from the fiscal year 2013/2014. proven experts. The company will also expand Overall the forecast shows, that the Hönle Group its sales network in order to open up markets with its three business segments equipment, with high growth potential. In this context, China glass and adhesives is both profitable, as well as and North America will be significant growth well positioned for the further development. markets in the coming years. In recent years, Hönle systematically developed from a systems manufacturer into a corporate group that generates a major portion of its sales revenues from short-lived business assets. Hönle is represented in markets that also offer great potential for further growth. The Hönle Group thus perceives good opportunities to exceed the sales threshold of € 100 million in the next three years.

48 In addition to strictly organic growth, the acquisition of companies will also play an important role in the expansion of the Hönle Group's business activities.

Gräfelfing, 28 January 2013

Norbert Haimerl Heiko Runge Board of Management Board of Management

Future-Oriented Statements The management report contains statements made and information provided by Dr. Hönle AG that relate to future time periods. The future-oriented statements represent assessments that were made on the basis of information available at the time when this report was prepared. Should the assumptions underlying the forecasts prove to be incorrect or should risks, such as those mentioned in the risk report, materialise, actual developments and results may deviate from current expectations. The Company assumes no obligation to update the statements contained in this management report, with the exception of publishing such updates as required by statutory provisions.

49 Corporate Governance Statement

Statement pursuant to Section 161 German Corporate Governance Code. The AktG on the observance of recom- "Government Commission on the German Corporate Governance Code" reviewed the mendations concerning the German Code and applied some changes. The Com- Corporate Governance Code by Dr. pany’s past, present, and expected future prac- Hönle AG as at 20 December 2012 tices deviate from the recommendations of the The German Corporate Governance Code German Corporate Governance Code as presents essential statutory regulations govern- amended on 15 May 2012 with respect to the ing the management and supervision of German following points: listed companies and includes internationally and nationally recognised standards concerning Composition of the Management Board corporate governance. The German Corporate The German Corporate Governance Code Governance Code defines three different stan- recommends that the Management Board shall dards, namely regulations that describe current have a chairman or a spokesman (section 4.2.1, statutory law as well as recommendations and sentence 1). At present, the Management Board suggestions of the government commission. of Dr. Hönle AG is comprised of two persons. The distribution of business and cooperation Under currently valid statutory law, corporations within the Management Board is governed, are obliged to act in compliance with the legal among other things, by the rules of internal provisions defined in the German Corporate procedure. Dr. Hönle AG does not have a Man- Governance Code. Companies may deviate from agement Board chairman or a Management the recommendations but are required to dis- Board spokesman. Both Management Board close such deviations each year. In accordance members have been working together closely with Section 161 AktG [German Stock Corpora- and successfully for years under this structure. tion Act], the Management Board and the Su- Dr. Hönle AG does not deem it practical to pervisory Board of German listed companies are change the Management Board structure. required to issue annual statements concerning observance of the recommendations of the Structure of Executive Compensation government commission. Deviations from the The German Corporate Governance Code suggestions of the German Corporate Govern- recommends that remuneration of the Board ance Code need not be disclosed. Even though should include fixed and variable components. the Code is - in many cases - mainly directed at Thereby it is to be made sure, that the variable large companies, Dr. Hönle AG complies to a remuneration components are principally based large extent with the recommendations of the on a multi-year assessment (section 4.2.3 para.

50 2). The Supervisory Board of Dr. Hönle AG does of the annual gross salary is based on the aver- not believe that a multi-year basis of assessment age annual gross salaries paid for the past three increases the quality of the activity of the Board. financial years prior to leaving the company. Dr. The Management Board members of Dr. Hönle Hönle AG is of the opinion that it would not be AG therefore receive fiscal year-related variable, reasonable to change the calculation base for in height limited remuneration components. determining the severance payment applicable to Management Board members. Payments to a Management Board Member in the Event of Premature Termination of Board Formation of Supervisory Board Committees Activity The German Corporate Governance Code In accordance with German Corporate Govern- recommends that the Supervisory Board shall ance Code recommendations, when concluding form committees with sufficient expertise, in Management Board contracts, care shall be particular an audit committee (section 5.3). At taken to ensure that payments - including fringe present the Dr. Hönle AG Supervisory Board benefits - made to a Management Board mem- consists of three members. Decision-making ber upon premature termination of his contract committees must also consist of three members. do not exceed the value of two years’ compen- Owing to the size of the Dr. Hönle AG Supervi- sation (severance payment cap), and compen- sory Board, no committees are formed at pre- sate for no more than the remaining term of the sent. contract. The severance payment cap shall be calculated on the basis of the total compensation Composition of the Supervisory Board for the past full financial year and, if appropriate, The German Corporate Governance Code also the expected total compensation for the provides specific recommendations regarding current financial year (section 4.2.3, para. 4). the composition of the Supervisory Board. For The Supervisory Board appoints the Dr. Hönle example, the Code recommends that age limits AG Management Board for a maximum term of shall be specified for members of the Supervi- office of five years. In the event of premature sory Board and that an appropriate degree of termination of Management Board activity, the female representation be stipulated. (section Management Board contracts provide for con- 5.4.1, para. 2 et seqq.). Moreover, the objectives tinuation of Management Board compensation regarding the composition of the Supervisory up to the end of the contract term. Should a Board shall be specified and the status of im- Management Board member leave the company plementation is to be published in the Corporate due to a change in the ownership structure Governance Report (section 5.4.1, para. 3). The (change of control), the respective Management Dr. Hönle AG Supervisory Board consists of Board member is entitled to a severance pay- three members. Dr. Hönle AG is of the opinion ment in the amount of two annual gross salaries that personal qualifications and individual ability (including performance-based compensation), should be the determining factors regarding the up to a maximum amount of T€ 400. Calculation composition of the Supervisory Board and not

51 age or gender. Dr. Hönle AG regards such a days after the financial year-end (section 7.1.2, limitation as being an inappropriate limitation of sentence 4). As in the past, Dr. Hönle AG will, in the shareholders’ right to elect Supervisory the future also, publish preliminary figures for the Board members. Consequently, Dr. Hönle AG financial year within a period of ninety days. will not publish the objectives of the new compo- However, in accordance with the Stock Ex- sition of the Supervisory Board nor the status of change Directive regarding Prime Standard implementation in the Corporate Governance Securities of the Frankfurt Stock Exchange, the Report. Annual Report is published within four months after the end of the reporting period. The half- Accounting yearly and quarterly financial reports are pub- The German Corporate Governance Code lished within two months after the end of the recommends that, prior to publication, half-yearly reporting year, in accordance with the Stock and quarterly financial reports shall be discussed Exchange Directive on Prime Standard Securi- with the Management Board by the Supervisory ties of the Frankfurt Stock Exchange. The short- Board or its Audit Committee (section 7.1.2, ening of the publication dates would increase sentence 2). Within the scope of an efficient administrative expenses to an inappropriate publishing process, Dr. Hönle AG has already extent. The publication dates will thus remained published interim reports in the past without unchanged until further notice. extensive preliminary discussions with the Su- pervisory Board, and the company intends to Securities Holdings of Corporate Bodies continue this practice in the future also. Further- The German Corporate Governance Code more, the German Corporate Governance Code recommends that disclosures be made concern- recommends that the consolidated financial ing ownership of company shares or related statements shall be publicly accessible within a financial instruments by Management Board and period of ninety days after the financial year-end, Supervisory Board members (section 6.6). Dr. and the interim report within a period of forty-five Hönle AG discloses the ownership of shares or related financial instruments as follows:

Securities Holdings as at 30 September 2012 Number of Shares as a percentage of shares nominal capital Board of Management Norbert Haimerl 25,000 0.45 Heiko Runge 16,100 0.29 Supervisory Board Dr. Hans-Joachim Vits 353,444 6.41 Prof. Dr. Karl Hönle 222,000 4.03 Eckhard Pergande 3,200 0.06 Total 618,844 11.23 Number of shares overall 5,512,930 100.00

52 Disclosures on Applied Corporate changes in general circumstances. The risk Governance Practices report includes further information on risk management.

Executive Bodies Duties and Activities of the Supervisory The Company's executive bodies are the Board Board of Management, the Supervisory Board, and the The Supervisory Board monitors and advises the Annual General Meeting. The competencies of Management Board with respect to the man- those bodies are governed in the German Stock agement of the Company's business activities. Corporation Act (AktG), the Company's Articles To this end, the Supervisory Board is promptly of Incorporation, and in the Rules of Internal and properly involved in all decisions of funda- Procedure for the Management Board and mental importance to the Company. The Board Supervisory Board. of Management regularly and promptly informs

the Supervisory Board in detail on the course of Duties and Activities of the Management business, results of operations, financial posi- Board tion, the employment situation, and on the The Management Board manages the Company Company's planning and intended projects. The on its own authority in accordance with applica- Board of Management regularly provides written ble laws, the Company's Articles of Incorpora- reports to the Supervisory Board with a view to tion, and the Board's Rules of Internal Proce- preparing for Board meetings. Following careful dure, and by taking the resolutions of the Gen- examinations and consultations, the Supervisory eral Annual Meeting into account. The Manage- Board passes resolutions, as required. Further ment Board represents the Company vis-a-vis details on the activities of the Supervisory Board third parties. The Company is managed via are presented in the report of the Supervisory regular strategic discussions at Management Board. A recommendation is made in the Corpo- Board level and by including the managers of rate Governance Code that qualified committees the business segments. The Management Board be formed which are to be comprised of at least is informed about the development of significant three members. Since Dr. Hönle AG's Supervi- key indicators of Dr. Hönle AG and its subsidiar- sory Board also consists of three members, no ies on a monthly basis. Further information on committees are being formed at present. corporate governance can be found in this management report under the heading "Man- agement System.” The Management Board is required to take suitable measures to identify developments that could threaten the Com- pany's continued existence as a going concern at an early state. This includes establishing a monitoring system, in particular. This system is continuously being enhanced and adjusted to

53 Annual General Meeting Heiko Runge Shareholders exercise their rights at the Annual Graduate Engineer (48) General Meeting and decide on fundamental Responsible for Sales and Technology issues that concern Dr. Hönle AG by exercising Heiko Runge completed his physical technology their voting rights. Each share of stock carries studies at the Wedel University for Applied one voting right. All important documents that Science with a diploma in engineering [Dipl. Ing. are required for decision-making are also made (FH)]. He began his career in 1990 as product accessible to the shareholders on Dr. Hönle manager for marketing at Eltosch Torsten AG's website in good time before the Annual Schmidt GmbH. Three years later, he changed General Meeting. jobs to work for Dr. Hönle AG. Here, his first (► www.hoenle.de/ir-hauptversammlung) position was as sales manager, and he was Shareholders may exercise their voting rights by appointed to the Management Board with effect proxy via an authorised person of their choice or from 1 January 2000. through a representative appointed by Dr. Hönle AG who acts upon instruction of the shareholder. Supervisory Board Following the Annual General Meeting, the Dr. Hans-Joachim Vits attendance and voting results are published on Lawyer the Company's website. Supervisory Board Chairman Hans-Joachim Vits headed the commercial Board of Management management of Robert Bosch Espanola S.A., Norbert Haimerl Madrid, for five years before he entered the MBA (50) services of Schwelmer Eisenwerk, Schwelm, a Responsible for Finances and family-owned, small to medium-sized company, Human Resources as managing partner for twelve years. After the Norbert Haimerl completed his business man- partition of the families of the Eisenwerk Group, agement studies at the Regensburg University he joined an asset management firm and worked for Applied Science with a diploma in business as a lawyer for a commercial law firm in Düssel- management. [Dipl.-Betriebswirt (FH)]. He dorf. He fulfilled numerous voluntary functions in commenced his career in 1990 as assistant to an honorary capacity, inter alia, as a member of the management of Schiessl GmbH & Co. KG. the National Board of the St. John Ambulance During the years from 1992 to 1996, he worked Brigade (Johanniter-Unfall-Hilfe). He also held for MAN Roland Vertrieb Bayern GmbH as a various supervisory offices such as Supervisory management assistant. In 1996 he changed jobs Board Chairman of IVECO Magirus Brand- to take up a position as commercial manager schutztechnik AG, and as a Supervisory Board with Dr. Hönle AG, and was appointed to the member of Salzgitter Maschinenbau AG, Management Board with effect from 1 January Gothaer Versicherungsgruppe and Sintermetall- 2000. werk Krebsöge GmbH.

54 Prof. Dr. Karl Hönle Eckhard Pergande Physicist Banker Vice Chairman of the Supervisory Board Supervisory Board Karl Hönle is an emeritus professor at the Mu- From 1980 to 1990, Eckhard Pergande was nich University of Applied Science. There, he Chairman of the Management Board of held the Chair in technical optics and laser Münchner Bank e.G.. Thereafter he became technology and was an authorised representa- Chairman of the Management Board of Lager- tive for the transfer of technology and for the land AG until 2002. During that time, he fulfilled trade fair participation of Bavarian applied sci- various voluntary functions for professional ences universities. He was also engaged in local associations at federal level in an honorary government politics in Dachau for twenty years. capacity. As member of the Panel, he headed the Lab for Lighting Technology [Labor für Lichttech- nik(GbR)] and is a member of the Technical Standards Committee for Lighting Technology at the German Institute for Standardization (DIN). In addition, Prof. Hönle is managing director of Dr. Hönle Medizintechnik GmbH.

Report of the Supervisory Board

Dr. Hans-Joachim Vits Supervisory Board Chairman

Dear Shareholders,

The Hönle Group's sales revenues climbed to € 72 million in the financial year under review. The increase in sales revenues is largely due to the acquisition of the Raesch Group. The quartz glass specialist is opening up new sales markets for us, in particular in the Asian economic area, which is characterised by strong growth. Raesch also offers synergies respecting our lamps manufacturing process. A negative impact was exerted by the insolvency of a large customer and the reluctance to invest in the run-up to the Drupa trade fair. As we promptly implemented counter- measures, however, we succeeded in preventing a major drop in earnings. Our main objective in the new financial year will be on successfully completing the integration of the Raesch Group and on raising the new company's competitiveness and market presence.

We have duly performed our legal and statutory duties and monitored and provided advice to our Company’s Management Board in the past financial year. The collaboration between the Management Board and Supervisory Board was characterised by an open atmosphere and trusting cooperation. We were involved in all decisions of fundamental importance to the Company. This particularly concerned the measures taken following Manroland's insolvency and the acquisition of the Raesch Group.

For the purpose of preparing Board meetings, the Management Board provided us with current and detailed information on the course of business. Moreover, we were also promptly informed verbally or in writing about special occurrences on an ad hoc basis. The Management Board and the Supervisory Board held six meetings in the reporting year. All Board members were present at those meetings. On the basis of comprehensive reports prepared by the Management Board and subsequent consulting, we dealt, inter alia, with the course of business, the assets and financial position, corporate planning and risk management. Following extensive discussions and to the extent required by law, the Company’s articles of incorporation or a Supervisory Board resolution, we approved the proposals submitted by the Management Board. We satisfied ourselves as to the correctness and appropriateness of the work performed by the Man- agement Board.

57 Focal Points of the Consultations At the meeting held on 20 October 2011, we received a report on the Hönle Group's business development, which also included detailed figures concerning the Group's individual companies. The possible purchase of the Raesch Group was also discussed at the Supervisory Board meeting. In the context of this meeting, we reached the conclusion that the Management Board should continue the initiated acquisition process and obtain the required information for performing a final assessment concerning the acquisition of the Raesch Group.

The Supervisory Board held another meeting on 25 November 2011. After the business development was dealt with in detail, the Management Board provided us with the preliminary planning for the 2011/2012 financial year. Since Manroland AG filed insolvency proceedings shortly before the Super- visory Board meeting, we discussed the insolvency's impact on the Hönle Group's business development in detail with the Management Board. In this context, the Management Board pointed out that drastic measures would have to be initiated in the short-term in order to limit the repercussions of the insolvency. Another agenda item was again the possible acquisition of the Raesch Group. After dis- cussing the impact of Manroland's insolvency on the results of operations and liquidity position, the Management Board and Supervisory Board decided to continue the acquisition process and begin to analyse the companies in detail. We also resolved to adjust the pension commitments respecting the Dr. Hönle AG Management Board members.

At the meeting held on 11 January 2012, the Management Board presented us with the audited annual financial statements of Dr. Hönle AG and with the audited consolidated financial statements as at 30 September 2011. In addition, the Management Board reported about the profitability of the Com- pany, subsidiaries and equity investments, in particular with respect to the profitability of equity capital pursuant to Section 90 (1) Item 2 AktG. Following in-depth discussions about the annual financial statements with the annual auditor and the Management Board, we approved the financial statements. We determined the agenda and resolution proposals concerning the Annual General Meeting on 22 March 2012 at the same meeting. The Management Board and the Supervisory Board decided to propose to the Annual General Meeting that a dividend in the amount of € 0.50 per dividend-entitled no-par value share be paid out to the shareholders from Dr. Hönle AG's unappropriated retained earnings of € 9,511,312.68 concerning the 2010/2011 financial year. Subsequently, the Management Board reported on the current business situation of Dr. Hönle AG and on its equity investments, and afterwards on their expected further development in the 2011/2012 financial year. Another agenda item was the prolongation of the term of office of the Management Board members. We resolved to prolong the terms of office of the Management Board members Heiko Runge and Norbert Haimerl for another five years until 31 December 2017. Finally, we issued a Decla- ration of Compliance with the Corporate Governance Code pursuant to Section 161 of the German Stock Corporation Act (AktG), which had been coordinated with the Management Board in advance.

The key issue discussed at the Supervisory Board held on 13 February 2012 was the acquisition of the Raesch Group. We approved the acquisition of 80% of the business shares in Raesch Quarz (Germany) GmbH, with registered head office in Langewiesen and in Raesch Quarz (Malta) Ltd., with registered head office on Malta. We also approved an options agreement concerning put and call options for the acquisition of the remaining 20% of the business shares in the two companies. Subse- quently, the Management Board provided us with a detailed update respecting its current knowledge on Manroland AG's insolvency. The Management Board also informed us about the current business development of the Hönle Group and reported on the projected further development.

The business development in the first quarter was discussed at the Supervisory Board meeting held on 21 March 2012. In this context, the Management Board elaborated on the sales and earnings development of the individual companies and of the Group and informed us about the impact of Man- roland AG's insolvency on the Hönle Group's earnings. Thereafter, the Management Board provided an outlook on the expected development of the general economic conditions and of the Hönle Group. Finally, we agreed to take out a loan in the amount of € 3 million, which serves to finance the first purchase price instalment for the acquisition of the shares in the Raesch Group.

On 24 July 2012 we held the last meeting for the 2011/2012 financial year. Initially, the Management Board reported in detail on the current results of operations of the individual companies and of the Group. In this context, the Management Board informed us in detail about the business development of Raesch Quarz (Germany) GmbH and reported on the negative development in the semiconductor and photovoltaics markets that caused the company's sales development and which was subject to our planning. The Management Board explained which measures are being implemented (such as the expansion of sales capacities) in order to improve the results of operations of Raesch Quarz (Ger- many) GmbH. The discussions also focused on the opening up of new business segments, which are to provide new growth opportunities to the Hönle Group in the future.

Corporate Governance The "Government Commission on the German Corporate Governance Code" revised the Code on responsible corporate governance and published it in the version dated 15 May 2012. The Supervisory Board came to an agreement with the Management Board on implementation of the recommendations and suggestions of the Code and issued a joint statement as required under Section 161 AktG. The statement was included in the Annual Report and published on the Internet, thus making it permanently available to the shareholders. The composition of Dr. Hönle AG Management Board and Supervisory Board remained unchanged.

59 Annual Financial Statements and Consolidated Financial Statements The Annual General Meeting held on 22 March 2012 appointed BDO AWT GmbH, Wirtschaftsprüfungsgesellschaft, Munich, as annual auditor for the 2011/2012 financial year. BDO AWT GmbH Wirtschaftsprüfungsgesellschaft, Munich, audited the annual financial statements as at 30 September 2012 and the management report of Dr. Hönle AG as well as the consolidated financial statements and group management report, and issued an unqualified auditors’ opinion in each case.

At the Supervisory Board meeting held on 31 January 2013, the annual auditor informed us in detail about the audit report. The annual auditor reported about significant findings of the audit of the annual financial statements and the management report as well as with regard to the consolidated financial statements and the group management report and provided supplementary information about the past financial year. In this context, the auditor discussed the net assets, financial position and results of operation of the stock corporation and the Group, in particular.

The Management Board and Supervisory Board decided to propose to the Annual General Meeting of 14 March 2013 that Dr. Hönle AG's unappropriated retained earnings in the total amount of € 11,089,003.74 be used to pay out a dividend in the amount of € 0.50 per dividend-entitled no-par value share, and that the remaining amount be carried forward to the new accounting period.

The audit results were approved by the Supervisory Board. We also examined the annual financial statements, the management report, the consolidated financial statements, and the group management report. There being no objections, the Supervisory Board approved the financial statements. The annual financial statements and the consolidated financial statements were thus endorsed.

We wish to thank the Management Board members and all employees of the Hönle Group for their commitment during the 2011/2012 financial year. They contributed to a successful year despite general conditions that were not always favourable.

Gräfelfing, 31 January 2013

Dr. Hans-Joachim Vits Supervisory Board Chairman

Consolidated Financial Statement

056 Auditor's Report 058 Statement of the Company’s Management 059 Consolidated Income Statement 060 Consolidated Statement of Financial Position 062 Statement of Changes in Equity 063 Consolidated Cash Flow Statement 064 Notes 071 General Information 085 Notes to the Consolidated Income Statement 091 Notes to the Consolidated Balance Sheet 110 Other Disclosures

61 Auditor's Report

We have audited the consolidated financial the business activities and the economic and statements prepared by the Dr. Hönle AG, com- legal environment of the Group and expectations prising the balance sheet, the income statement, as to possible misstatements are taken into total comprehensive income, statement of account in the determination of audit procedures. changes in equity, cash flow statement and the The effectiveness of the accounting-related notes to the consolidated financial statements, internal control system and the evidence sup- together with the group management report for porting the disclosures in the consolidated finan- the business year from 1 October 2011 to cial statements and the group management 30 September 2012. The preparation of the report are examined primarily on a test basis consolidated financial statements and the group within the framework of the audit. management report in accordance with IFRSs as adopted by the EU, and the additional require- The audit includes assessing the annual financial ments of German commercial law pursuant to statements of those entities included in consoli- § 315a subpar. 1 HGB and supplementary dation, the determination of entities to be in- provisions of the shareholder agreement of cluded in consolidation, the accounting and incorporation are the responsibility of the board consolidation principles used and significant of management. Our responsibility is to express estimates made by management, as well as an opinion on the consolidated financial state- evaluating the overall presentation of the con- ments and on the group management report solidated financial statements and the group based on our audit. management report. We believe that our audit provides a reasonable basis for our opinion. We conducted our audit of the consolidated financial statements in accordance with § 317 Our audit has not led to any reservations. HGB and German generally accepted standards for the audit of financial statements promulgated In our opinion, based on the findings of our audit, by the Institute of Public Auditors in Germany the consolidated financial statements comply (IDW). Those standards require that we plan and with IFRSs as adopted by the EU, the additional perform the audit such that misstatements mate- requirements of German commercial law pursu- rially affecting the presentation of the net assets, ant to § 315a subpar. 1 HGB and supplementary financial position and results of operations in the provisions of the shareholder agreement of consolidated financial statements in accordance incorporation and give a true and fair view of the with the applicable financial reporting framework net assets, financial position and results of and in the group management report are de- operations of the Group in accordance with these tected with reasonable assurance. Knowledge of requirements. The group management report is

62 consistent with the consolidated financial statements and as a whole provides a suitable view of the Group's position and suitably presents the opportunities and risks of future development.

Munich, 31 January 2013

BDO AWT GmbH Auditing Company

ppa. C. Henning ppa. S. Spitaler Auditor Auditor

63 Statement of the Company’s Management

We affirm that, to the best of our knowledge, the consolidated financial statements give a true and fair view of the net assets, financial position and results of operations of the Group in accordance with generally accepted accounting principles.

The group management report provides a suitable understanding of the course of business including the business results and the Group’s position and suitably presents the opportunities and risks of future development.

Gräfelfing, 28 January 2013

Dr. Hönle AG

Heiko Runge Norbert Haimerl Management Board Management Board

64 Consolidated Income Statement for the period 1 October 2011 until 30 September 2012 according to IFRS

01.10.2011 - 01.10.2010 - 30.09.2012 30.09.2011 Notes in T€ in T€

Revenue (6) 72,092 67,878 Changes in inventories of finished goods and work in progress 241 667 Other operating income (7) 2,748 4,782 Cost of purchased materials and services (8) 26,795 27,990 Personnel expenses (9) 22,768 20,345 Depreciation and amortization including goodwill (10) 2,355 1,471 Other operating expenses (11) 14,854 12,241

Operating result/EBIT 8,309 11,280

Profit/loss from investments accounted for at equity (12) -19 8 Interest income (13) 64 60 Interest expense (14) 642 577 Financial result -597 -509 Earnings before tax and non-controlling interest/EBT 7,712 10,771

Income tax (15) 2,222 3,272

Consolidated net income 5,490 7,499

Share in earnings attributable to non-controlling interest (16) 450 620 Share in earnings attributable to Dr. Hönle AG shareholders 5,040 6,879

Earnings per share (basic) in € (19) 0.93 1.30 Earnings per share (diluted) in € (19) 0.93 1.30

Consolidated Total Comprehensive Income for the period 1 October 2011 until 30 September 2012 according IFRS 01.10.2011 - 01.10.2010 - 31.12.2012 31.12.2011 in T€ in T€

Consolidated net income 5,490 7,499 Other comprehensive income: Positions that may be subsequently reclassified to profit or loss - Valuation of investments due to IAS 39 not effecting net income 0 262 - Currency differences 52 421 - Income tax effects 0 0 Other comprehensive income after tax 52 683 Total comprehensive income for the period 5,542 8,182 Thereof account for: - Share in earnings attributable to non-controlling interest 450 620 - Share in earnings attributable to Dr. Hönle AG shareholders 5,092 7,562

65 Consolidated Statement of Financial Position as of 30 September 2012 according IFRS

A S S E T S 30.09.2012 30.09.2011 Notes in T€ in T€

LONG-TERM ASSETS Goodwill (20) 15,502 7,748 Intangible assets (20) 3,079 1,859 Property, plant and equipment (20) 13,110 7,040 Investments accounted for at equity (22) 195 128 Financial assets (20) 32 218 Other non-current assets (21) 727 618 Deferred taxes (23) 1,219 1,021

Total non-current assets 33,864 18,632

CURRENT ASSETS Inventories (24) 16,579 12,661 Trade accounts receivable (25) 12,050 10,396 Receivables towards companies, in which interests are hold (26) 93 0 Other current assets (27) 1,994 995 Tax refund claims (28) 439 204 Liquid assets (29) 9,321 12,863

Total current assets 40,476 37,119

TOTAL ASSETS 74,340 55,751

LIABILITIES AND SHAREHOLDERS´ EQUITY 30.09.2012 30.09.2011 Notes in T€ in T€

SHAREHOLDERS´ EQUITY (30) Subscribed capital 5,513 5,513 Own shares -8 -1,833 Additional paid-in capital (capital reserves) 16,855 16,212 Retained earnings 18,818 16,482

Equity attributable to Dr. Hönle AG's shareholders 41,178 36,374

Non-controlling interest 3,306 1,830

Total Shareholders´ Equity 44,484 38,204

NON-CURRENT DEBTS Non-current loans (less current portion) (31) 3,664 1,409 Non-current portion of finance lease obligation (32) 27 31 Other non-current liabilities (33) 4,797 0 Pension accruals (34) 1,932 1,834 Accrued public investment grants 572 0 Deferred taxes (23) 1,648 1,033

Non-current liabilities 12,640 4,307

CURRENT LIABILITIES Trade accounts payable (35) 3,483 3,260 Advance payments received (38) 434 946 Current portion of finance lease obligation (32) 43 87 Current loans towards banks and current portion of non-current loans (39) 1,751 234 Other current liabilities (40) 8,320 5,173 Other accruals (41) 1,761 1,665 Tax accruals (42) 1,424 1,875

Total current liabilities 17,216 13,240

TOTAL LIABILITIES AND SHAREHOLDERS´ EQUITY 74,340 55,751

67 Consolidated Statement of Changes in Equity for the period 1 October 2011 until 30 September 2012 according IFRS

Retained earnings Eq u i t y Addi- Special Cur- Equity attribu- Non- sub- tional item ency table to Dr. controll- scribed own paid-in legal revalu- differ- Hönle AG's ing capital shares capital reserve ation ences shareholders interest Total in T€ in T€ in T€ in T€ in T€ in T€ in T€ in T€ in T€

As at 01/10/2010 5,513 -2,531 16,325 9,796 -262 1,025 29,866 903 30,769

Consolidated net income 6,879 6,879 620 7,499 Other operating result 262 421 683 683 6,879 262 421 7,562 620 8,182

Sale of own shares 698 698 698 Purchase of additional paid in capital due to purchase of non-controlling interest -113 -113 -113 Dividend distribution -1,576 -1,576 -65 -1,641 Currency differences -10 -10 -10 Change of non-controlling interest due to acquisitions -53 -53 372 319

As at 30/09/2011 5,513 -1,833 16,212 15,036 0 1,446 36,374 1,830 38,204

As at 01/10/2011 5,513 -1,833 16,212 15,036 0 1,446 36,374 1,830 38,204

Consolidated net income 5,040 5,040 450 5,490 Other operating result 52 52 54 5,040 52 5,092 450 5,542

Sale of own shares 1,825 1,825 1,825 Purchase of additional paid in capital due to purchase of non-controlling interest 643 643 643 Dividend distribution -2,756 -2,756 -2,756 Decided not flowed out dividend 0 -517 -517 Change of non-controlling interest due to acquisitions 0 1,543 1,543

As at 30/09/2012 5,513 -8 16,855 17,320 0 1,498 41,178 3,306 44,484

The Statement of Changes in Equity is explained in the notes (30).

68 Consolidated Cash Flow Statement for the period 1 October 2011 until 30 September 2012 according to IFRS

01.10.2011- 01.10.2010- 30.09.2012 30.09.2011 in T€ in T€ Cash flows from operating activities: Net income for the year before non-controlling interest and taxes 7,712 10,771 Adjustments for: Depreciation of fixed assets 2,355 1,471 Profit/loss due to retirement of fixed assets 24 0 Financial income -45 -67 Interest expenses 629 315 Other non-cash expenses/income 1,637 353 Operating result before changes to net current assets 12,312 12,843 Increase/decrease in accruals -142 -138 Increase/decrease of trade accounts receivable 2,300 -1,445 Increase/decrease of other assets 69 251 Changes in qualifying insurance policy -88 -97 Increase/decrease in inventories -1,412 -994 Increase/decrease in trade accounts payable -3,250 530 Increase/decrease in advance payments received -756 51 Increase/decrease in other liabilities -1,798 1,600 Cash from continuing business activities 7,235 12,601 Interest paid -468 -315 Income tax paid -3,143 -2,090 Net cash from operating activities 3,624 10,196 Cash flows from investing activities: Payments received from the sale of fixed assets 0 3 Purchases of company shares 0 -668 Payments for the purchase of investments accounted for at equity -79 -120 Purchase of property, plant and equipment and intangible assets -2,232 -1,583 Changes in financial assets 180 -5 Changes due to acquisitions -3,674 -22 Changes due to sale of separation of corporate companies 0 157 Payments for non-current receivables -21 71 Payments received from interest 55 52 Payments received from dividends 8 7 Net cash used for investing activities -5,763 -2,108 Cash flows from financing activities: Payments received from loans and non-current liabilities to banks 3,000 0 Payments relating to loans and liabilities to banks -1,750 -806 Dividends paid -2,756 -1,576 Net cash from financing activities -1,506 -2,382 Currency differences 18 194 Exchange rate differences of liquid assets 85 220 Net increase/decrease in cash -3,542 6,120

Cash at the beginning of the reporting period 12,863 6,743

Cash at the end of the reporting period 9,321 12,863

The cash flow statement is explained in the notes (48).

Notes to the IFRS Consolidated Financial Statements of Dr. Hönle Aktiengesellschaft Gräfelfing for Financial Year 2011/2012

70 GENERAL INFORMATION

1. Accounting Basis

Dr. Hönle AG is a stock listed corporation. It is registered with the Commercial Register of the Mu- nich (Germany) local court under HR B No. 127507. The Company’s head office is located at Gräfelf- ing near Munich, Germany.

Dr. Hönle AG is among the leading suppliers worldwide of industrial UV technology. Together with its subsidiaries, the Group sells UV radiation systems, UV lamps, and UV adhesives and casting compounds for industrial applications.

The present consolidated financial statements of Dr. Hönle AG and its subsidiaries have been prepared in accordance with Section 315a HGB [German Commercial Code] (“Consolidated financial statements in accordance with international accounting standards”), in conformity with the International Financial Reporting Standards (IFRS) and the pertaining interpretations of the International Accounting Standards Board (IASB) to be applied pursuant to Directive No. 1606/2002 of the European Parlia- ment and the European Council governing the application of international accounting standards within the EU.

The consolidated financial statements include the balance sheet, the income statement, the statement of income and accumulated earnings, the statement of changes in shareholders’ equity, the cash flow statement and the notes to the financial statements (Notes).

The financial year of Dr. Hönle AG and its consolidated subsidiaries covers the period from 1 October to 30 September, with the exception of the subsidiary Hoenle UV Technology (Shanghai) Trading Ltd., China.

The present consolidated financial statements were prepared in full compliance with relevant IFRS standards as approved by the EU, and therefore present a true and fair view of the Hönle Group’s net assets, financial condition and results of operations and cash flows.

The consolidated financial statements are prepared in euro currency. Unless otherwise stated, the amounts quoted are shown as T€ (thousand euros). The consolidated financial statements are generally based on historical purchase and production costs, unless stated otherwise under section 5. Accounting and Valuation Methods.

The consolidated financial statements are prepared on the basis of the going concern assumption. The Dr. Hönle AG Management Board prepared the consolidated financial statements on 28 January 2013.

2. Estimates and Assumptions

Preparation of the consolidated financial statements requires estimates and assumptions that have impacted on the amounts shown and on related disclosures. As a consequence, some leeway is provided for management in the preparation of the consolidated financial statements, which is exercised to the best of management’s knowledge. However, actual results may deviate from these estimates and assumptions.

71 The most significant future-related assumptions and other significant sources of uncertainties concerning estimation as at the reporting date, which involve a considerable risk of major adjustments to the book values of assets and debts becoming necessary within the next financial year are listed in the respective explanations of the individual items. Estimates and assessments within the Hönle Group relate, to a large extent, to assessing the value of goodwill (cf. paragraph 20), the value of pension accruals (cf. paragraph 34), other accruals (cf. paragraph 40), and the determination of deferred taxes (cf. paragraph 23).

3. Consolidation

Consolidated Group

The consolidated financial statements as of 30 September 2012 include the parent company, Dr. Hönle AG, and the following subsidiaries: Partici- Held Via pation Quota Participation Reporting quota Name Head Office year Prior year

Direct participations: (1) Aladin GmbH, Gräfelfing, Munich Germany 60.00% 60.00% (2) Honle UV France S.à.r.l., Bron, Lyon France 100.00% 100.00% (3) Honle UV (UK) Ltd., Luton England 100.00% 100.00% (4) Honle Spain S.A.U., Olesa de Bonesvalls, Barcelona Spain 100.00% 100.00% (5) PrintConcept UV-Systeme GmbH, Kohlberg Germany 100.00% 100.00% (6) Eltosch Torsten Schmidt GmbH, Hamburg Germany 100.00% 100.00% (7) Agita Holding AG, Regensdorf, Zurich Switzerland 100.00% 100.00% (8) UV-Technik Speziallampen GmbH Germany 51.00% 51.00 % (9) Mitronic GmbH Germany 51.00% 51.00 % (10) Hoenle UV Technology Shanghai Ltd. China 100.00% 100.00 % (11) Raesch Quarz (Germany) GmbH, Lange- wiesen Germany 80.00%0.00% (12) Raesch Quarz (Malta) Ltd., Mosta Malta 80.00% 0.00%

Indirect participations: (13) Panacol AG, Regensdorf, Zurich Switzerland 100.00% 100.00% (7) (14) Panacol-Elosol GmbH, Stein- (11) bach/Frankfurt/M.. Germany 100.00% 100.00% (15) Eleco Produits EFD, SAS, Paris France 99.96% 99.96% (11) (16) Domino S.à.r.l., Paris France 100.00% 100.00% (13)

(17) Eltosch America Inc., Batavia, Illinois, USA 100.00% 100.00% (6)

Associated companies: (18) Tangent Industries, Winsted USA 26.00% 26.00% (13) (19) Metamorphic Materials Inc. Winsted USA 30.00% 0.00% (13)

The participation quotas for all direct and indirect participations also represent the voting rights quota.

The above-mentioned companies listed under direct and indirect participations are fully consolidated due to the existing possibility of control through the majority of voting rights. Control is achieved when the parent company is in a position to determine a company’s financial and business policy in order to derive benefits from the company’s activities.

72 Associated companies pursuant to IAS 28 are accounted for using the equity method. An associated company is a company on which the Group can exert influence through involvement in the financial and business policy without, however, exerting control over the company. Decisive influence is assumed when the parent company holds at least 20 % of voting rights (associated company).

The business shares of PrintDesign Engineering GmbH - with registered head office in Kohlberg, Germany - in the amount of 20% of nominal capital are disclosed in the consolidated financial statements under the balance sheet item: “Financial assets”. They are not consolidated as Dr. Hönle AG does not exert decisive control over the company. The equity investment is classified as “available- for-sale financial asset”. Net income for the year generated by PrintDesign Engineering GmbH amounts to T€ 43 (PY: T€ 3) and equity capital amounts to T€ 66 (PY: T€ 23).

The companies included in the consolidated group saw the following changes in comparison with the previous year:

The business combination with Raesch Quarz (Germany) GmbH, Langewiesen, and Raesch Quarz (Malta) Ltd., Mosta, Malta (hereinafter: "Raesch Group"), took place in the second quarter of 2011/2012 as described below. With effect from 1 January 2012, Dr. Hönle AG acquired 80 % of the shares and voting rights in each of the companies. The acquisition date (1 January 2012) is the date when control over the acquired company is transferred to the acquirer, i.e., when the latter has the possibility to determine the financial and business policy of the acquired enterprise. The Raesch Group is included in the consolidated group as of 1 January 2012. By signing the purchase agreement, Dr. Hönle AG acquired call options for the acquisition of further shares in the Raesch Group. The options can be exercised at fair value for the first time from 1 October 2015 onwards. The purchase agreement also provides for put options to the benefit of the seller that can be exercised at fair value from 1 October 2014 for the first time.

The quartz glass tubing is manufactured in Germany (Raesch Quarz (Germany) GmbH, Lange- wiesen). The quartz glass tubing is further processed in Malta by means of semi-automatic manufacturing processes. Raesch has a high degree of manufacturing competence in both the production of quartz tubing as well as in the further processing of quartz glass tubes. Quartz glass of the highest degree of purity is produced at both locations by a staff of approximately 150. The Raesch Group generated consolidated sales revenues of € 17 million and an annual result (earnings before interest and tax, EBIT) of approximately € 3.4 million in the 2011 financial year.

The Raesch Group acquisition results in synergies in a number of segments, which was the decisive reason for the acquisition. Aladin GmbH and UV-Technik Speziallampen GmbH use quartz glass tubing from the Raesch Group to manufacture UV medium-pressure and low-pressure lamps. Syn- ergies result from transferring the manufacturing stages of the two companies to the Raesch Group. As a consequence, production processes can be made more efficient and, at the same time, more cost effective. Positive effects are also expected to arise from use of the Hönle Group sales network in conjunction with the Raesch Group sales network.

The Raesch Group has been included in the consolidated financial statements of Dr. Hönle AG since 1 January 2012. The acquisition costs (fair value) of the acquired shares total T€ 13,930 as at the acquisition date. The purchase price is settled by transferring 235,000 of Dr. Hönle AG's own shares (treasury stock) and through cash payments during the period from February 2012 to March 2014. The fair value of the transferred shares amounted to T€ 2,209 and was calculated using the stock exchange price (XETRA trading platform) applicable as at the acquisition date. The fair value of the purchase price liability entered into as at the acquisition dated amounts to T€ 11,722. Thereof, T€ 4,863 was paid in cash to date and the shares have been transferred.

73 The fair values of the acquired assets and debts transferred as of the acquisition date as well as the respective book values immediately before the business combination are as follows:

Book values Fair value in T€ in T€ Non-current assets Intangible assets 7 1,720 Property, plant and equipment 5,553 5,814 Current assets Inventories 3,102 3,102 Trade accounts receivable 3,339 3,339 Other assets 447 447 Cash and cash equivalents 1,189 1,189 Deferred tax assets 26 86 Debts Accruals 472 472 Trade accounts payable 1,958 1,958 Financial liabilities 3,653 3,653 Other debts 1,414 1,384 Deferred tax liabilities 90 510 Net assets 6,076 7,720 Non-controlling interests -1,544 Acquired net assets 6,176

The valuation of identified customer relationships and the order backlog concerning intangible assets is based on the residual value.

Acquired trade accounts receivable amount to T€ 3,339 and include value adjustments of T€ 58. Acquired cash amounted to T€ 1,189, which, overall, resulted in an outflow of cash of T€ 3,674. The juxtaposition of the purchase price and acquired assets and transferred debts resulted in goodwill of T€ 7,754. Expected synergies in the areas of development, production and sales are the main factors that contributed to the recording of goodwill. The consolidated net income for the current period includes a profit generated by the Raesch Group in the amount of T€ 759. EBIT came to T€ 998 in the same period. Consolidated net income would have been higher by T€ 777 if the business combination had already taken place as at 1 October 2011. Consolidated sales increased by T€ 9,032 due to the acquisition of the Raesch Group. Had the business combination already taken place on 1 October 2011, the Group's consolidated sales would have been higher by T€ 4,716 in comparison with the sales revenue actually achieved. Metamorphic Materials Inc., with registered head office in North Granby, USA, was founded in the second quarter of the 2011/2012 financial year. Panacol AG holds a 30 % stake in Metamorphic Materials Inc., USA. The investment in Metamorphic Materials Inc., USA was established on 18 January 2012. Metamorphic Materials, Inc. USA is classified as an associated company and is accounted for using the equity method in accordance with IAS 28. The financial year is to begin on 1 October and to end on 30 September of the following year. The book value of the investment accounted for at equity on the basis of acquisition costs and prorated results corresponds to the fair value, as no other information is available.

74 Consolidation Methods

Business combinations are accounted for using the acquisition method. Credit differences between acquisition costs and the company’s prorated revalued equity capital are reported as goodwill in the balance sheet. Debit differences are released and included in the operating result following another examination. Differences resulting from the acquisition of non-controlling interests are set off directly in equity capital.

Non-controlling interests are valued at the prorated fair value of the acquired assets and transferred debts. Following initial recognition, profits and losses are allocated without any limitations in accordance with the proportionate investment share, and this may result in a negative balance with respect to non-controlling interests.

All intra-Group business transactions, balances, and intra-Group results are fully eliminated within the scope of consolidation.

Currency Translation The functional currency and the reporting currency of Dr. Hönle AG and most of its European subsidiaries is the euro (€).

The functional currency for the independent subsidiaries in England and Switzerland is the British pound (GBP), or the Swiss franc (CHF), respectively. The functional currency for the independent US subsidiary is the US dollar (USD) and for the independent Chinese subsidiary the Chinese renminbi (RMB). Assets and debts are translated at the rates applicable at the balance sheet date; equity capital, by contrast, is stated at historical rates.

The resulting currency differences were recorded with neutral effect on profit or loss in equity capital and in the statement of comprehensive income. Changes concerning this special item are reflected in the statement of changes in shareholders’ equity (Appendix 3). Income statement items are translated at the average rate during the financial year.

Reporting date rate Average rate 30/09/2012 30/09/2011 2011/2012 2010/2011 in € in € in € in € 1 British pound GBP 1.2531 1.1539 1.2528 1.1475 1 Swiss franc CHF 0.8182 0.8123 0.8272 0.7971 1 US dollar USD 0.7734 0.7406 0.7779 0.7149 1 Chinese renminbi RMB 0.1231 0.1159 0.1230 0.1096

As a general rule, receivables and liabilities denominated in foreign currencies are valued at the mean rate of exchange as at the balance sheet date in accordance with IAS 21. The resulting translation differences are recorded as exchange rate gains or exchange rate expenses in the profit and loss account. No hedging transactions were concluded to hedge against currency risks.

4. Newly Published Accounting Provisions

The following new or revised IASB or IFRIC standards were to be applied for the first time in financial year 2011/2012. The comparative figures were adjusted as required.

- IFRS 7: "Financial Instruments: Disclosures“ Amendment respecting enhancement of disclosures relating to the transfer of financial assets (effective date: 1 July 2011). The amendment serves to report further disclosures on the type of assets transferred and pertaining opportunities and risks. The change only affects the data and has no effect on the position of net assets, financials and results of operations of the group.

75 - Adjustment, IAS 24 "Related Party Disclosures” The adjustments mainly concern the revised definition of related parties (effective date: 1 January 2011). First-time application had no impacts on the presentation of the consolidated financial statements. Moreover, the following regulations that have not yet been approved by the European Union were adopted by the IASB or IFRIC, respectively. Early application of these regulations is not possible:

- IFRS 1: "First-time Adoption of International Financial Reporting Standards" Changes relating to government loans received at a below market rate of interest. (Effective date: 1 January 2013). The impact on the financial statements of the Hönle Group is being reviewed. In May 2012, IASB published its fourth volume of "Improvements to IFRSs" within the context of the "Annual Improvements Process" project. As a result of this, minor amendments are applied to five standards. The amendments apply to financial years beginning on or after 1 January 2013. Earlier application is permitted. At present, the Group does not assume that the amendments, provided that they are adopted by the EU in this form, will impact on the presentation of financial statements.

- IFRS 7: "Financial Instruments: Disclosures“ Amendment respecting the offsetting of financial liabilities and financial assets (effective date: 1 January 2013, postponed to 1 January 2015). The amendment serves in the reporting of further disclosures regarding the type of assets transferred and the pertaining opportunities and risks. The impact on the financial statements of the Hönle Group is being reviewed.

- IFRS 9 "Financial Instruments" Classification and measurement of financial assets (effective date: 1 January 2013, postponed). The basic idea respecting this standard is to measure financial assets either on the basis of the acquisition cost model or at fair value. The standard is to replace IAS 39 completely. The impact on the financial statements of the Hönle Group is being reviewed.

- IFRS 10 “Consolidated Financial Statements”. The standard defines and describes the principle of control and determines control as the basis for consolidation (effective date: 1 January 2013). There will also be amendments concerning investment companies (effective date of the amendments concerning investment companies: 1 January 2014). The impact on the financial statements of the Hönle Group is being reviewed.

- IFRS 11 "Joint Arrangements” (effective date: 1 January 2013). The core principle of this standard is that a party to a joint arrangement determines the type of joint arrangement in which it is involved by assessing its rights and obligations arising under that joint arrangement and corre- spondingly accounts for those rights and obligations. The impact on the financial statements of the Hönle Group is being reviewed.

- IFRS 12 “Disclosure of Interests in other Entities“(effective date of the duty to disclosure information on interests in other companies and of the amendments to the transitional regulations: 1 January 2013, and effective date of the amendments concerning investment companies: 1 Janu- ary 2014). The standard is aimed at assessing the nature of an interest in subsidiaries, associated companies, joint ventures or non-consolidated structured entities and the pertaining risks, and at disclosing the impact of these interests on the net assets, financial position and results of operations. The impact on the financial statements of the Hönle Group is being reviewed.

- IFRS 13 “Fair Value Measurement” (effective date: 1 January 2013). The term – fair value – is defined and explained in this standard. With only a few exceptions, the new standard applies to all fair value measurements. The impact on the financial statements of the Hönle Group is being reviewed.

76 - IAS 12: “Deferred Taxes: Recovery of Underlying Assets“ (effective date: 1 January 2012). This amendment includes the rebuttable presumption that the carrying amount (book value) will generally be recovered through sale. The impact on the financial statements of the Hönle Group is being reviewed.

- IAS 19: ”Employee Benefits“ – Amendments as results of the projects on employee benefits and post-employment benefits (effective date: 1 January 2013). Among other things, the amendments are aimed at discontinuing the “corridor method”. Instead, all impacts of re-measurement are to be recorded in other comprehensive income. First-time application will impact on the Group.

- IAS 27 (amended 2011) only contains rules respecting separate financial statements as a result of the publication of the new IFRS 10. The amendments take effect from financial years starting on or after 1 January 2013 or 1 January 2014, respectively.

- IAS 28 “Investments in Associates“ (effective date: 1 January 2013). The amendments are aimed at defining the accounting for investments in associated companies and to issue regulations governing application of the equity method if investments in associated companies are accounted for. The impact on the financial statements of the Hönle Group is being reviewed.

- Adjustment, IAS 32 "Financial Instruments: Presentation Amendment respecting the offsetting of financial assets and financial liabilities. These amendments merely represent a clarification of the former offsetting regulations (effective date: 1 January 2014). The impact on the consolidated financial statements is being reviewed.

5. Accounting and Valuation Methods

The balance sheet, the income statement and the statement of comprehensive income of companies included in the consolidated financial statements were prepared in a uniform manner using the parent company’s accounting policies presented below:

Goodwill

Goodwill is not subject to scheduled amortisation but is reviewed with regard to impairment at least once a year. A review is also carried out in the case of triggering events that indicate a possible impairment in value. Goodwill is stated at acquisition costs net of accumulated amortisation from impairments.

The goodwill impairment test is carried out at the level of cash generating units which represent the lowest level at which the goodwill is monitored for purposes of internal corporate management.

For purposes of the impairment test, the goodwill acquired within the scope of a business combination is allocated to the cash generating unit which is expected to profit from the synergies of the business combination. If the carrying amount of the entity to which the goodwill is allocated is higher than its recoverable amount, the goodwill allocated to the cash-generating unit is amortised accordingly due to value impairment. The achievable amount is the higher of the two amounts from fair value less sales costs and the usage value of the unit.

The usage value is determined using the discounted cash flow method. In so doing, future expected cash flows from the most recent management planning are used as a basis, extrapolated on the basis of long-term growth rates and margin development assumptions and discounted with the capital costs of the unit to be measured.

No reinstatements of the original values of amortised goodwill are recorded in future periods if the achievable amount exceeds the book value of the cash generating unit or the group of cash generating units to which the goodwill is allocated.

77 For details on the assumptions used in impairment tests, please see paragraph 20.

Intangible Assets

Acquired intangible assets are stated at cost in accordance with IAS 38 and are amortised over their expected useful lives using the straight line method.

The useful lives are allocated as follows:

Brand names 15 years Customer base and other rights 1 to 20 years Software 1 to 10 years Licenses 8 to 10 years Copyrights, patents and other commercial property rights 7 years Formulas, secret procedures, models, designs and prototypes 10 years

Property, Plant and Equipment

Property, plant and equipment are measured at acquisition or manufacturing costs net of accumulated depreciation in accordance with IAS 16. Depreciable fixed assets are written down according to schedule using the straight line method of depreciation.

Depending on the respective asset, the following useful lives are applied:

Buildings 10 to 50 years Technical equipment and machines 1 to 19 years Operating and business equipment 1 to 23 years

The item “Buildings” includes leasehold improvements. Scheduled depreciation of leasehold improvements is defined according to the expected useful life.

Maintenance expenses are treated as expense for the period.

Financial Assets

The categorisation of financial assets is based on the following categories: - Assets measured at fair value through profit or loss - Held-to-maturity financial assets - Financial assets available for sale - Loans and receivables

The assets are allocated to a specific category upon addition, depending on the type and purpose of the financial asset.

Shares in affiliated companies are allocated to the financial assets available for sale category. As an exception, they are stated at acquisition costs as no active market exists for these shares and reliable determination of the fair values would require unreasonable efforts.

Shares are classified as “available-for-sale financial assets.” After initial recording they are measured at the fair value that results from the stock market price as at the reporting date. Profits or losses arising from the present value adjustment are recorded under equity capital and the comprehensive income with neutral effect on earnings in accordance with IAS 39. At the time the financial assets are derecognised or permanent impairment in value respecting the financial investment is determined, the accumulated profit or loss previously recorded in equity capital is recognised in the income statement.

78 Current receivables are allocated to the Loans and Receivables category. They are measured at amortised acquisition costs net of impairments, if any.

Recognisable risks are accounted for by recording adequate impairments in value.

As a general rule, regular purchases and sales of financial assets are stated as at the settlement date.

Derecognition

A financial asset (or a portion of a financial asset or a portion of a group of similar financial assets) is derecognised when one of the following prerequisites is met: - The contractual rights to the receipt of cash flows from a financial asset have expired - The Group transferred the contractual rights to receive the cash flows of a financial asset to a third party or assumed a contractual obligation to immediately pay the cash flow to a third party within the scope of an agreement that meets the requirements stipulated under IAS 39.19 (so-called pass-through agreement), and, in doing so, either (a) transferred substantially all the risks and awards of ownership of the financial asset or (b) neither transferred nor retained substantially all risks and awards of the ownership of the financial asset, but transferred control of the asset.

When the Group transfers the contractual rights to cash flows of an asset or enters into a pass- through agreement, it measures whether and if so to what extent the risks and rewards remain with the Group. If the Group neither transfers nor retains substantially all risks and rewards of the financial asset, and if it does not transfer control over the asset, the Group states the asset at the amount of the respective ongoing commitment. In this case, the Group also recognises a pertaining liability. The transferred asset and the associated liability are measured in such a way that the rights and obligations retained by the Group are accounted for.

If the form of the ongoing commitment guarantees the asset transferred, the amount of the ongoing commitment corresponds to the lower of the original carrying amount of the asset or the maximum amount of the consideration received, which the Group might have to repay.

Participations Accounted for Using the Equity Method

Associated companies are accounted for using the equity method and disclosed in the balance sheet under “Participations accounted for using the equity method”. A company on which the Group exerts a decisive influence without, however, being able to control the company alone or jointly, qualifies as an associated company. IAS 28.6 assumes that a participation of more than 20% of the voting shares indicates a significant influence.

Deferred Taxes

The liability method stipulated in IAS 12 is used to determine deferred taxes. In principle, this in- volves creating deferred tax assets and deferred tax liabilities for all temporary valuation differences between the values applied according to IFRS and the tax values of balance sheet items. Deferred tax assets were taken into account only where it is expected that taxable profits will be available in the future. Deductible temporary differences, unused tax losses as well as unused tax credit notes can be set off against these profits.

The tax rates applicable with respect to the German companies differ due to differing trade tax factors at the individual sites.

Deferred taxes are measured using the tax rate that is expected to be valid for the period in which the asset is realised or the liability is settled.

79 Inventories

In general, raw materials and supplies are stated at acquisition cost in accordance with IAS 2. Acquisition costs are determined using the weighted average cost method. Finished goods and work in progress are recorded at manufacturing costs, which also contain, in addition to directly allocable costs, fixed and variable manufacturing and material overheads.

The cost of debt is charged to expenditure at the full amount since direct allocation to qualified assets is not possible.

Slow-moving items are written down at the lower of acquisition or manufacturing costs and the net realisable value. The net realisable value represents the estimated sales proceeds that are achievable in the normal course of business, net of estimated manufacturing and selling costs.

Receivables and Other Assets

Trade receivables are allocated as financial assets to the category “Loans and Receivables”. They are stated at depreciated acquisition costs since payments are fixed and determinable and no active market exists. Doubtful receivables and receivables involving recognisable risks are subject to adequate value adjustments. Bad debts are written off.

Other receivables and other assets are stated at nominal value or at the lower present value as of the effective date.

Foreign currency receivables are translated at reporting date rates in accordance with IAS 21.

Non-current receivables were not discounted since interest rates are based on general market terms and, with respect to the repurchase value of employers’ pension liability insurance concerning employees’ pension claims, the amount shown in the balance sheet corresponds to the present value of the receivable as of the balance sheet date.

Liquid Assets

Cash on hand and bank balances are stated at nominal value. Credit balances denominated in foreign currencies are translated at the mean spot exchange rate applicable as of the balance sheet date.

Leasing

The determination as to whether an agreement contains a lease relationship is made on the basis of the economic content of the agreement at the date when the agreement is concluded. It also requires an assessment of whether performance of the contractual agreement depends on the utilisation of a certain asset or assets and whether the agreement grants a right to use that asset, even if this right is not explicitly stipulated in the agreement.

In accordance with the transitional provisions of IFRIC 4, 1 January 2005 has been determined as the date for the conclusion of lease agreements that were concluded prior to 1 January 2005.

80 Finance leases where substantially all risks and awards associated with the ownership of the leased asset are transferred to the Group lead to capitalisation of the leased asset at the beginning of the lease term. The leased asset is stated at the lower of fair value or present value of the minimum lease payments. Lease payments are allocated to financing expenses and the repayment portion of the residual debt such that a constant interest rate results for the remaining lease liability over the lease term. Financing expenses are reported under financial income in the income statement.

Leased assets are written down over the respective asset's useful life. If the transfer of ownership to the Group is not sufficiently certain at the end of the lease term, the leased asset is fully written off over the period of its expected useful life or, if shorter, over the term of the lease.

Lease payments concerning operating leases are recognised in the income statement as expenses for operating leases over the term of the lease using the straight-line method.

Own Shares (Treasury Stock)

Acquired own shares are deducted from equity capital as a special item at the amount of the acquisition costs pursuant to IAS 32.33. Only insignificant transaction costs were incurred.

Liabilities

Initial recognition and measurement Financial liabilities in terms of IAS 39 are classified as financial liabilities that are measured at fair value through profit or loss, or as loans or derivatives that were designated as hedging instrument and which are effective as such. The Group determines the classification of financial liabilities upon initial recognition.

In the event of initial recognition, all financial liabilities are measured at fair value. In the case of loans, directly allocable transaction costs are included in measurement.

The Group's financial liabilities include trade accounts payable and other liabilities, overdraft facilities, loans, financial guarantees, and derivative financial instruments.

Financial liabilities are stated in the balance sheet at amortised acquisition costs using the effective interest rate method. They primarily include trade accounts payable and loans received.

Current liabilities are generally recorded at the respective settlement or repayment amount. Non- current other liabilities are reported in the balance sheet at the respective present value or, if interest-bearing, at the respective repayable amounts.

Amortised acquisition costs of current liabilities generally correspond to the nominal amount or the repayment amount.

Current liabilities also include liabilities to employees arising from profit-sharing bonuses and other bonuses, Christmas bonuses, holidays not taken and flexi-time surpluses.

Current liabilities are translated at reporting date rates in accordance with IAS 21.

81 Derecognition A financial liability is derecognised if the obligation underlying the liability has been met, annulled or has expired. If an existing financial liability is replaced with another financial liability of the same lender with substantially different contractual terms and conditions, or if the terms and conditions of an existing liability are subject to significant changes, the replacement or change is treated as derecognition of the original liability and recognition of a new liability. The difference between the respective carrying amounts is reported in profit/loss.

Derivative Financial Instruments

Hedge Accounting Initial recognition and subsequent measurement The Group uses derivative financial instruments, such as interest rate swaps, to hedge against interest rate risks. These derivative financial instruments are stated at present value at the date of contract conclusion and are remeasured at fair value in the subsequent periods. Derivative financial instruments are recognised as financial assets if their present values are positive and as financial liabilities if their present values are negative.

Gains and losses from changes in the fair value of derivatives are immediately reported in profit/loss, with the exception of the effective portion of a cash flow hedge which is stated under "Other comprehensive income."

Hedging instruments are classified as follows for hedge accounting purposes:

- As a fair value hedge if the hedge relates to the risk of a change in the fair value of a recognised asset or a recognised liability or an unrecognised firm commitment,

- As a cash flow hedge if the hedge relates to the risk of cash flow fluctuations that can be allocated to the risk associated with a recognised asset, a recognised liability or the risk of a highly probable future transaction or the currency risk of an unrecognised firm commitment,

- As a hedge of a net investment in a foreign operation.

The Hönle Group exclusively uses hedging instruments to hedge cash flows. When a hedge is entered into, both the hedging relationship and the Group's risk management objectives and strategies with respect to the hedge are formally established and documented. The documentation contains the designation of the hedging instrument, the underlying transaction or the hedged transaction, the nature of the hedged risk, and a description of how the enterprise determines the effectiveness of changes in the fair value of the hedging instrument in compensating for the risk from changes in the cash flows of the hedged underlying transaction, which can be ascribed to the hedged risk. Such hedge relationships are deemed to be highly effective in compensating for risks arising from changes in cash flows. They are continuously evaluated to determine if they were actually highly effective during the entire reporting period for which the hedge relationship has been defined.

Hedging transactions that satisfy the strict criteria for hedge accounting are reported as follows:

82 Cash Flow Hedges The effective portion of the gain or loss attributable to a hedging instrument is recognised in the reserves for hedging cash flows under "Other comprehensive income", while the ineffective portion is immediately reported in profit/loss under "Other operating expenses."

The Hönle Group uses interest rate swaps for hedging against interest rate risks associated with financial liabilities. For further information, please see paragraph 42. The amounts recognised under Other comprehensive income are reclassified and reported in the income statement in the period in which the hedged transaction impacts on the period result, e.g., when hedged financial income or expenses are recognised or when an expected sale is carried out. If a hedge results in the recognition of a non-financial asset or a non-financial liability, the amounts reported under Other comprehensive income become part of acquisition costs at the acquisition date of the non-financial asset or non-financial liability.

If an expected transaction or a firm commitment is no longer expected to materialise, the accumulated gains and losses previously recognised in equity are reclassified to the income statement. If the hedging instrument expires or is sold, terminated, or exercised and the hedging instrument is not replaced or rolled over to another hedging instrument, or if the criteria for hedge accounting are no longer met, the accumulated gains and losses continue to be recognised under Other comprehensive until the expected transaction or firm commitment impacts on profit or loss.

Classification as current and non-current Derivative financial instruments that are not designated as hedging instruments and which are not effective as such, are classified as current or non-current, or are divided into a current and a non- current portion on the basis of an assessment of the facts and circumstances (i.e. the underlying contractual cash flows).

- If the Group has a derivative for a period of more than twelve months after the balance sheet date in its portfolio for hedging purposes (and does not state the derivative as a hedge relationship), the derivative is classified as non-current (or is divided into a current and a non- current portion) in accordance with the classification of the underlying item. - Embedded derivatives that are not closely associated with the host contract are classified in accordance with the cash flows of the host contract. - Derivative financial instruments that were designated as hedging instruments and are effective as such, are classified in line with the classification of the underlying transaction. The derivative financial instrument is split into a current and a non-current portion only when a reliable allocation is possible.

Synthesising of generally separate agreements: Insofar as agreements concerning underlying transaction (hedged item) and hedging transaction are only separated on the basis of a formal perspective, but represent an economic unit, the business transaction is recognised using the substance over form format. The formally separate agreements are synthesised.

83 Accruals

The actuarial determination of pension accruals due to defined benefit plans is based on the projected unit credit method concerning employee benefits as defined in IAS 19. This method takes future expected salary and pension increases into account, in addition to the pensions and acquired pension entitlements known at the balance sheet date. Actuarial gains and losses are recognised using the corridor method in accordance with IAS 19.92.

Other accruals are reported in accordance with IAS 37 if a current legal or factual obligation exists as a result of a past event, if the outflow of resources with economic benefit concerning the settlement of this obligation is likely, and if the amount of the obligation can be assessed reliably. Other accruals take all recognisable risks into account. They are stated on the basis of their most probable amounts.

Government grants Government grants pursuant to IAS 20 are only recognised when there is reasonable assurance that the conditions associated with them will be complied with and that the grants will be actually received. Grants earmarked for the purchase or manufacture of non-current assets (asset value- based grants) are stated using the gross method ("deferred income") at the initial recognition and are released and recognised in the income statement on a scheduled basis over the assets' useful lives. In accordance with IAS 20.02, grants for expenses or losses already incurred or that serve as imme- diate financial support without pertaining expenses in the future are recognised as income in the period in which the corresponding claim arises.

Liabilities from income taxes include obligations arising from current income taxes.

Sales Realisation

Sales are realised after conclusion of purchase contracts upon delivery of the goods concerned (pas- sage of risk), and after conclusion of contracts for work upon acceptance by the ordering party. Sales from services are realised upon provision of the respective services.

Sales revenues are reported net of VAT, sales reductions and credit notes.

Cost of Debt

Borrowing costs are recorded and reflected in the income statement as they accrue unless they are allocable to a qualifying asset in accordance with IAS 21.

84 NOTES TO THE CONSOLIDATED INCOME STATEMENT

The consolidated income statement was prepared in accordance with the total cost method.

6. Revenues

Sales revenues include sales revenue from the sale of goods in the amount of T€ 69,999 (PY: T€ 65,643) and service revenue in the amount of T€ 2,093 (PY: T€ 2,235).

The amount of T€ 3 (PY: T€ 5) relates to sales revenue from services provided to Dr. Hönle Medizin- technik GmbH at regular market conditions.

7. Other Operating Income

2011/2012 2010/2011 T€ T€

License income 748 810 Release of accruals 323 295 Income from exchange rate differences 269 209 Increases in asset values reinsurance (employers' pension liability insurance) 150 91 Off-period income 143 156 Subsidies/investment grants 300 529 Other 815 2,692

2,748 4,782

Income reported under the item "Other" mainly relates to income from the sale of non-current assets (T€ 221).

Income from subsidies / investment grants results from the grant notifications concerning the research projects that are associated with the corresponding expenses.

Currency differences from foreign currency translation in the amount of T€ 269 (PY: T€ 209) are disclosed as currency gains under the item “Other“.

8. Cost of Purchased Materials and Services

2011/2012 2010/2011 T€ T€

Cost of raw materials and supplies and of purchased merchandise 26,239 27,343 Cost of purchased services 556 647

26,795 27,990

85 9. Personnel Expenses

2011/2012 2010/2011 T€ T€

Wages and salaries 18,947 16,812 Social security and pension costs 3,821 3,533

22,768 20,345

10. Depreciation/Amortisation of Property, Plant and Equipment and of Intangible Assets

The structure of depreciation/ amortisation of property, plant and equipment and of intangible assets is presented in the Schedule of Fixed Assets (cf. paragraph 20).

The annual impairment tests did not lead to a need for non-scheduled goodwill amortization in financial years 2011/2012 and 2010/2011. Further details concerning impairment tests are provided in the comments on non-current assets (paragraph 20).

11. Other Operating Expenses

Other operating expenses are classified as follows:

2011/2012 2010/2011 T€ T€

Cost of office space 2,854 2,429 Insurance, membership fees and charges 822 431 Maintenance and repair 729 227 Vehicle costs 980 895 Advertising and representation 997 490 Travel expenses 1,070 1,081 Shipment, goods delivery, packaging 2,348 2,312 Postage, telephone 410 384 Office supplies, technical literature 114 114 Consulting, bookkeeping, year-end closing costs and costs of being public 1,204 879 Individual value adjustment 1,167 196 Other costs 2,159 2,803

14,854 12,241

Expenses from operating lease agreements amounted to T€ 593 (PY: T€ 511) in the 2011/2012 financial year; of this amount, T€ 444 (PY: T€ 419) are attributable to vehicles and T€ 149 (PY: T€ 92) to machines and business- and operating equipment.

Currency differences from foreign currency translation in the amount of T€ 220 (PY: T€ 344) are disclosed as currency losses under “Other costs."

The expenses for Supervisory Board compensation in the amount of T€ 72 are disclosed under “Other costs."

86 12. Income/Loss from Participations Accounted for Using the Equity Method

In the 2011/2012 financial year, this item includes the prorated result of T€ -21 concerning the investment in Metamorphic Materials Inc., Winsted, USA, which was for the first time recognised using the equity method owing to the acquisition of new shares, and the existing investment in Tangent Indus- tries Inc., Winsted, USA, which was stated at T€ 2 (PY: T€ 8) in the balance sheet. For more information, please see paragraph 22 "Participations Accounted for Using the Equity Method."

13. Interest Income 2011/2012 2010/2011 T€ T€

Income from non-current financial investments 8 7 Other interest and similar income 56 53

64 60

Income from financial assets and other securities in the amount of T€ 8 (PY: T€ 7) results primarily from distribution pay-outs concerning the Dr. Hönle AG securities account, which were fully sold in the 2011/2012 financial year.

Interest and similar income include the amount of T€ 56 (PY: T€ 53) which relates to interest from bank credit balances and deposits.

Interest income in the amount of T€ 11 (PY: T€ 10) relates to loan receivables vis à vis Dr. Hönle Medizintechnik GmbH.

14. Interest Expenses

The item includes interest expenses in the amount of T€ 165 (PY: T€ 54) which concern the Group’s non-current loan liabilities.

Within the context of the Raesch Group acquisition it was contractually agreed that the second purchase price payment of T€ 3,634 will be due on 31 March 2013 and the third purchase price payment of T€ 3,634 on 31 March 2014. The future purchase price obligations were discounted. Interest expenses from compounding as at the balance sheet date amount to a total of T€ 187.

The interest portion for finance leasing agreements included in interest expenses amounts to T€ 3 (PY: T€ 10).

Interest expenses also include the amount of T€ 11 (PY: T€ 11) which is attributable to the pension claim reported on the liabilities side respecting the surviving dependents of former managing directors.

87 15. Taxes on Income

Current and deferred tax expenses and income are structured as follows:

2011/2012 2010/2011 T€ T€

Current tax expense and income: Current income tax expense for the period 2,152 2,999 Expenses/income relating to off-period income taxes 0 0

2,152 2,999 Deferred tax expense and income: from a change in fixed assets -55 -16 from a change in current assets -14 -20 from a change in accruals 164 63 from a change in liabilities 12 55 from a change in losses carried forward -66 266 from a change in the deferred tax rate 0 -6 from consolidation effects 28 -81 from value adjustments on losses carried forward 0 0 from currency differences 1 12

70 273

Total tax expense 2,222 3,272

The following overview represents the transition between the tax expense which would notionally result when applying the current German tax rate of 24.58 % of the Group parent (corporation tax, solidarity surcharge, trade tax), and the actual tax expense in the consolidated financial statements:

2011/2012 2010/2011 T€ T€

Earnings before income taxes 7,712 10,771 Theoretical tax rate as a % 24.58 24.58 Computed tax expense 1,895 2,647

Changes in the computed tax expenses relative to actual tax expense due to: - setting off deferred taxes against tax losses carried forward -216 -246 - deviating tax assessment base 176 522 - off-period effects -36 -7 - deviating local tax rates 26 308 - tax rate changes 0 1 - other 0 47

Actual tax expense 2,222 3,272 Effective Group tax rate as a % 28.81 30.37

The list below reflects the tax rates applicable in the respective countries used for the calculation of deferred taxes:

88 When calculating deferred taxes, the following tax rates were applied:

- Group companies in Germany: 24.58 % to 32.28% (PY: 24.58 % to 32.28 %) - Group companies in the UK: 28 % (PY: 28 %) - Group companies in France: 33 1/3 % (PY: 33 1/3 %) - Group companies in Spain: 30 % (PY: 30 %) - Group companies in Switzerland: 26.1 % (PY: 26.1 %) - Group companies in the US: 38.82 % (PY: 38.82 %) - Group companies in China: 25.0 % (PY: 25.0 %) - Group companies in Malta: 19.0%

16. Profit/Loss Share Attributable to Non-Controlling Interests

Non-controlling interests in the result for the financial year consist of the following:

2011/2012 2010/2011 T€ T€

Profit shares: Aladin GmbH 116 164 PrintConcept GmbH 0 16 Eleco Produits EFD SAS 0 0 UV-Technik Speziallampen GmbH 245 316 Mitronic GmbH 0 132 Raesch Quarz (Malta) Ltd. 254 0

Loss shares: Honle Spain S.A.U. 0 -8 Mitronic GmbH -19 0 Raesch Quarz (Germany) GmbH -146 0

450 620

17. Off-Period Expenses and Income

The item “Other operating income” includes off-period income in the amount of T€ 143 (PY: T€ 156) and T€ 323 (PY: T€ 295) from the release of accruals.

The item “Other operating expenses” includes off-period expense in the amount of T€ 91 (PY: T€ 146).

18. Research and Development Costs

Research and development costs are recorded as expense as they accrue. Development costs are not capitalised since the Hönle Group does not meet the capitalisation requirements defined in IAS 38 “Intangible Assets.” The preparation process cannot be split up into a research and development phase in the Hönle Group, mainly due to the fact that, in structural terms, the activities aimed at production and product improvements are strictly iterative in nature. This means that the activities do not relate to clearly definable new products or production processes but rather to gradual and ongoing improvements of generally the same production procedures and processes. Basically, the products and production processes remain unchanged. Consequently, it is not possible to determine the development costs separately within the scope of cost calculation. .

Expenses for order-independent research and development recorded during the reporting period amounted to T€ 1,034 (PY: T€ 821).

19. Earnings per Share

In accordance with IAS 33, earnings per share are determined by dividing the profit shares that are attributable to Dr. Hönle AG shareholders by the weighted average number of shares in circulation during the period.

The weighted average portfolio of own shares (treasury stock) as at the balance sheet date (5,415,922 shares of stock), is taken into account in the undiluted earnings per share as well as in the diluted earnings per share.

2011/2012 2010/2011

Portion attributable to Dr. Hönle AG shareholders in T€ 5,040 6,879 Weighted average of ordinary shares in circulation during the period (Undiluted) 5,415,922 5,276,854 ______Weighted average of ordinary shares in circulation during the period (Diluted) 5,415,922 5,276,854 ______Undiluted earnings per share in € 0.93 1.30 Diluted earnings per share in € 0.93 1.30

90 NOTES TO THE CONSOLIDATED BALANCE SHEET

20. Non-Current Assets

Non-current assets include the following balance sheet items: - Goodwill - Intangible assets - Property, Plant and Equipment - Participations measured at equity - Financial assets

The development of acquisition costs, accumulated amortisation/depreciation, value adjustments neutral in their effect on profits, and the book values of non-current assets are shown in the Sched- ule of Consolidated Fixed Assets.

Schedule of Consolidated Fixed Assets of Dr. Hönle AG For the period from 1 October 2011 to 30 September 2012

Purchase and manufacturing costs Accumulated depreciation Depre- Change Cur- Change Cur- Re- Re- ciation scope of- rency scope of- rency- valu- valu- Book Book for the As at consoli- Addi- Dis- Trans- pari- As at As at consoli- Addi- Dis- pari- As at ation ation value value financial 01/10/11 dation tions posals fer ty 30/09/12 01/10/11 dation tions posals ty 30/09/12 30/09/12 30/9/11 30/09/12 30/9/11 year T€ T€ T€ T€ T€ T€ T€ T€ T€ T€ T€ T€ T€ T€ T€ T€ T€ T€

GOODWILL 7,776 7,754 0 0 0 0 15,530 28 0 0 0 0 28 0 0 15,502 7,748 0

INTANGIBLE ASSETS

Brand names 129 0 0 0 0 0 129 31 0 0 3 0 28 0 0 101 98 0

Customer base and other rights 1,155 0 0 0 0 0 1,155 521 0 110 0 0 631 0 0 524 634 110

Computer software 1,796 35 185 28 60 0 2,048 1,603 28 183 28 0 1,786 0 0 262 193 183

Licenses and Franchise agreements 68 1,714 1 0 -60 0 1,723 54 0 279 0 0 333 0 0 1,390 14 279

Patents and other industrial property rights 810 0 0 0 0 0 810 247 0 43 0 0 290 0 0 520 563 43

Procedures, models,, drafts and prototypes 770 0 0 0 0 0 770 413 0 75 0 0 488 0 0 282 357 75

4,728 1,749 186 28 0 0 6,635 2,869 28 690 31 0 3,556 0 0 3,079 1,859 690

TANGIBLE ASSETS

Land and buildings 3,561 2,636 142 0 386 0 6,725 611 1,030 164 0 0 1,805 0 0 4,920 2,950 164

technical equipment and machines 5,235 10,519 453 57 10 0 16,160 3,414 6,974 827 35 0 11,180 0 0 4,980 1,821 827

Other equipment, factory and office equipment 6,842 1,547 908 260 0 4 9,041 4,635 931 674 246 1 5,995 0 0 3,046 2,207 674

Payments on account 62 0 543 45 -396 0 164 0 0 0 0 0 0 0 0 164 62 0

15,700 14,702 2,046 362 0 4 32,090 8,660 8,935 1,665 281 1 18,980 0 0 13,110 7,040 1,665 INVESTMENTS ACCOUNTED FOR AT EQUITY 128 0 -60 0 129 -2 195 0 0 0 0 0 0 0 0 195 128 0

FINANCIAL ASSETS

Shares in associated companies 27 0 0 2 0 0 25 0 0 0 0 0 0 0 0 25 27 0

Long term investments 543 0 0 543 0 0 0 359 0 0 359 0 0 0 0 0 184 0

Investments/other loans 7 0 0 0 0 0 7 0 0 0 0 0 0 0 0 7 7 0

577 0 0 545 0 0 32 359 0 0 359 0 0 0 0 32 218 0

28,909 24,205 2,172 935 129 2 54,482 11,916 8,963 2,355 671 1 22,564 0 0 31,918 16,993 2,355

91 Schedule of Consolidated Fixed Assets of Dr. Hönle AG for the period from 1 October 2010 to 30 September 2011

Purchase and manufacturing costs Accumulated depreciation Depre- Change Cur- Change Cur- Re- Re- ciation scope of- rency scope of- rency- valu- valu- Book Book for the As at consoli- Addi- Dis- Trans- pari- As at As at consoli- Addi- Dis- pari- As at ation ation value value financial 01/10/10 dation tions posals fer ty 30/09/11 01/10/10 dation tions posals ty 30/09/11 30/09/11 30/9/10 30/09/11 30/9/10 year T€ T€ T€ T€ T€ T€ T€ T€ T€ T€ T€ T€ T€ T€ T€ T€ T€ T€

GOODWILL 6,955 0 824 3 0 0 7,776 28 0 0 0 0 28 0 0 7,748 6,927 0

INTANGIBLE ASSETS

Brand names 127 0 129 127 0 0 129 22 0 9 0 0 31 0 0 98 105 9

Customer base and other rights 909 246 0 0 0 0 1,155 285 0 236 0 0 521 0 0 634 624 236

Computer software 1,525 83 188 0 0 0 1,796 1,292 66 246 1 0 1,603 0 0 193 233 246

Licenses and Franchise agreements 32 44 0 8 0 0 68 20 38 3 7 0 54 0 0 14 12 3

Patents and other industrial property rights 591 241 0 22 0 0 810 191 23 33 0 0 247 0 0 563 400 33

Procedures, models,, drafts and prototypes 770 0 0 0 0 0 770 398 0 15 0 0 413 0 0 357 372 15

3,954 614 317 157 0 0 4,728 2,208 127 542 8 0 2,869 0 0 1,859 1,746 542

TANGIBLE ASSETS

Land and buildings 2,776 160 625 0 0 0 3,561 496 29 86 0 0 611 0 0 2,950 2,280 86 technical equipment and machines 3,941 1,207 302 223 8 0 5,235 2,294 1,031 286 197 0 3,414 0 0 1,821 1,647 286

Other equipment, factory and office equipment 5,437 1,329 508 435 0 3 6,842 3,360 1,027 557 309 0 4,635 0 0 2,207 2,077 557

Payments on account 23 43 24 20 -8 0 62 0 0 0 0 0 0 0 0 62 23 0

12,177 2,739 1,459 678 0 3 15,700 6,150 2,087 929 506 0 8,660 0 0 7,040 6,027 929

INVESTMENTS ACCOUNTED FOR AT EQUITY 0 0 120 0 0 0 120 0 0 0 0 0 0 0 0 120 0 0

FINANCIAL ASSETS

Shares in associated companies 26 1 0 0 0 0 27 0 0 0 0 0 0 0 0 27 26 0

Long term investments 543 0 0 0 0 0 543 63 0 296 0 0 359 0 -262 184 218 296

Investments/other loans 5 1 1 0 0 0 7 0 0 0 0 0 0 0 0 7 5 0

574 2 1 0 0 0 577 63 0 296 0 0 359 0 -262 218 249 296

23,660 3,355 2,721 838 0 3 28,901 8,449 2,214 1,767 514 0 11,916 0 -262 16,985 14,949 1,767

92 Goodwill

Goodwill values from business combinations are allocated to those cash-generating units that draw benefit from the combinations, irrespective of whether other assets or debts of the acquiring company have already been allocated to these units. Each unit or group of units to which goodwill has been allocated (a) is to represent the lowest level within the Group where the goodwill is monitored for internal management purposes, and (b) may not be larger than a business segment in terms of IFRS 8. The Dr. Hönle Group accounted for goodwill in the amount of T€ 15,502 (PY T€ 7,748). The goodwill values were allocated to cash-generating units which concern the UV equipment and systems and glass and lamps business segments. Goodwill is allocated as follows.

T€ Dr. Hönle AG 4,962 Eltosch Torsten Schmidt GmbH 1,731 PrintConcept GmbH 460 UV-Technik Speziallampen GmbH 367 Mitronic GmbH 228 Raesch Quarz (Germany) GmbH 2,714 Raesch Quarz (Malta) Ltd. 5,040 15,502

The above mentioned companies represent business segments in accordance with IFRS 8.5.

Hönle tests the goodwill for impairment at least once a year in accordance with the procedure presented under paragraph 5.

In the 2011/2012 financial year, manroland, which is the Hönle Group's largest customer, filed for the opening of insolvency proceedings on 25 November 2011. This was assessed as an indication for a possible impairment of goodwill of the cash-generating units concerned, namely Dr. Hönle AG and Eltosch Torsten Schmidt GmbH, and a non-scheduled impairment test was performed. The impairment test was thus performed on the basis of preliminary planning while assuming a worst-case scenario that accounts for the possible impact from the discontinuation of manroland's business operations. The significant assumptions in this context were that equipment revenues with the largest customer, manroland, are no longer generated but that it would be possible to slightly increase the equipment revenues generated with other printing machine manufacturers. Moreover, a minor decline in service and spare part revenues in comparison with the 2010/2011 financial year is expected due to the existing machine basis on the market. It was also assumed that significant cost reductions could particularly be achieved from a reduction in the staff level. The future personnel-related cost structure was determined on the basis of detailed personnel planning. Staff redundancies were realised as early as at the end of 2011. In this worst-case scenario, too, the recoverable amounts were higher than the book values of the cash-generating units, Dr. Hönle AG and Eltosch Torsten Schmidt GmbH, and no impairment loss was determined.

The recoverable amount for these cash-generating units is determined in order to perform an impairment test pursuant to IAS 36. The achievable amount for cash-generating units was determined on the basis of the usage value.

The usage value is the present value of future cash flows that are expected from continued use of the cash-generating units and their disposal at the end of their useful life. The usage value is determined using the discounted cash flow method on the basis of current corporate planning data in accordance with IAS 36. The planning horizon is five years. A weighted average capital cost rate (WACC) is used to discount the cash flows. The cash flow projection is based on the profits/losses of the individual Group companies which are determined within the scope of a detailed planning process using internal historical values and external economic data. Planning is based, in particular, on assumptions concerning sales development,

93 and on sales prices as well as purchase prices for materials and primary products. The assumptions take cost-reducing measures already taken as well as replacement investments into account. An average annual sales increase of between 1.17 % and 13.37 % is assumed in the planning period for the respective companies.

Following the five-year planning horizon, growth rates of 1 % are assumed for subsequent cash flows. The growth rates are not higher than the long-term industry growth in the sectors of industry in which the cash-generating units operate.

The usage values of cash-generating units were determined on the basis of these cash flow projections using segment-specific capital cost rates before income taxes of between 9.56 % and 10.82 % (PY: 9.65 % to 9.91 %).

The impairment test carried out did not indicate a need for downward adjustment, as the recoverable amounts exceed the carrying amounts of cash-generating units significantly.

In the calculation of use values assumptions are included, that are subject to uncertainties. This relates to the gross profit margins, the discount rates and the growth rates, which is set to extrapolate cash flow projections beyond the detailed planning period.

Gross profit margins are calculated based on the obtained values of the last two fiscal years prior to the start of the detailed planning period.

The discount rates represent the current market assessment of the risks attributable to the cash- generating units. The determine of the discount rate bases on the average weighted cost of capital (WACC). The average weighted cost of capital account both the equity and debt capital. The cost of equity derive from the expected return on the equity shareholders of the group. The cost of debt base on the interest-bearing liabilities for which the Group has to provide repayments. The segment-specific risk is incorporated by the use of individual beta factors. The beta factors are calculated annually on the basis of publicly available market data.

The estimation of growth rates based on the expected general inflation.

Intangible Assets

Within the scope of business acquisitions in financial years 2007/2008, 2010/2011 and in this financial year, brands, customer bases, and also manufacturing technology were acquired and capitalised in non-current assets as intangible assets.

The item also includes externally acquired development services and subsequent acquisition costs concerning ERP software.

Intangible assets with limited useful lives are stated at cost and are amortised over a period of between 1 and 15 years, depending on their estimated useful life using the straight line method. Intan- gible assets with unlimited useful lives are reviewed with regard to impairment at annual intervals.

Property, Plant and Equipment

Property, plant and equipment items subject to wear and tear are stated at cost and subsequently measured using the acquisition cost model. Property, plant and equipment items are depreciated according to schedule over their respective expected useful lives.

- Land and Buildings

This item includes the Aladin GmbH business premises which were acquired by Dr. Hönle AG in financial year 2004/2005. The building is allocated to two significant, identifiable components for purposes of determining its useful life. The building section for operational use is depreciated ac-

94 cording to schedule over 33.33 years. The building section used for residential purposes is depreciated according to schedule over 50 years. In order to provide collateral for the real estate loan, a first mortgage of T€ 800 was taken out in favour of the lender (cf. paragraph 31).

Furthermore, the business premises of UV-Technik Speziallampen GmbH, which were acquired in financial year 2010/2011 are reported under Land and Buildings. The building is used for operational purposes only and is depreciated on schedule over a period of 33.33 years.

The business premises of Raesch Quarz (Germany) GmbH, which were acquired in the current 2011/2012 financial year, are also reported under this item. The building is used for operational purposes only and is depreciated on schedule over a period of 33.33 years. The production facilities are depreciated over a period of 25 years.

The business premises of Domino S.à.r.l., which were accounted for in the balance sheet within the framework of a finance lease agreement, were reported in the previous year. The term of the finance lease agreement ended in June 2012. Domino S.à.r.l. exercised the purchase option vis-à-vis the lessor and acquired the building for a symbolic value. The acquisition costs, including incidental acquisition costs, amounted to T€ 47. The book value amounts to T€ 670 (PY: T€ 695) as at 30 September 2012. The building is depreciated straight line over a useful life of 33.33 years.

- Technical Equipment and Machines

The assets disclosed under this item are depreciated over their useful lives of between 1 to 19 years applying the straight line method.

The assets under technical equipment and machines include a machine that was purchased within the scope of a finance lease agreement. The book value of the equipment amounts to T€ 15 as of 30 September 2012 (PY: T€ 17). A corresponding finance lease liability was reported on the liabilities side (cf. paragraph 32). Due to the existing lease relationships, availability of the equipment is limited.

- Operating and Business Equipment

Assets shown under this item are depreciated over their regular useful lives of between 1 to 23 years applying the straight-line method of depreciation.

The operating and business equipment includes vehicles and equipment which were acquired within the framework of finance lease agreements. The assets’ book values amounted to T€ 88 as of 30 September 2012 (PY: T€ 33). Corresponding finance lease liabilities are reported on the liabilities side (cf. paragraph 32). According to the present plans, the agreed-upon buy options at the end of the contract term are to be exercised.

Financial Assets

This item includes shares in affiliated companies in the amount of T€ 32 which mainly relate to the 100% investment in Solitec GmbH and the 20% investment in PrintDesign Engineering GmbH. Solitec GmbH is not included in the consolidated group due to its insignificance for the Group. Print- Design Engineering GmbH is not consolidated, since no decisive influence or joint control can be exercised. In the previous year, financial assets included the item "long-term investments", which relate exclusively to shares of international corporations. The securities were sold in full in the third quarter of 2011/2012.

The prorated changes in the fair values of these shares until their sale and the release were reported in profit or loss, since there was a permanent impairment in the 2010/2011 financial year and in view of the fact that the adjustment of the fair values was also recognised in profit or loss.

95 21. Other Non-Current Assets

30/09/2012 30/09/2011 T€ T€

Loans 61 41 Asset values, employers' pension liability insurance 652 564 Other 14 13

727 618

In the previous year, the item "Loans" included the non-current portion of a loan granted to Dr. Hönle Medizintechnik GmbH. In the 2011/2012 financial year, this portion was reclassified as "Other current assets" at a residual book value of T€ 41.

A short-term loan extended to Dr. Hönle Medizintechnik GmbH in the previous year (reported under current assets in the prior year) was converted into an annuity loan in the current financial year. Collateral for the annuity loan is provided by Prof. Dr. Hönle in the form of an absolute guaranty at a corresponding amount. The residual book value of the loan amounts to T€ 92 as at 30 September 2012. The non-current portion reported in this context amounts to T€ 61 (PY: T€ 0); the current portion of T€ 31 (PY: T€ 100) is disclosed under the item “Other current assets” (cf. paragraph 27).

The two loans extended to Dr. Hönle Medizintechnik GmbH bear interest rates of 6.0 % and 6.5 %, respectively, and are due to expire on 30 June 2013 and 31 July 2015, respectively. The annual annuity for the loans amounts to T€ 38 and T€ 36, respectively.

22. Participations Accounted for Using the Equity Method

This item includes the balance sheet recognition of the investments in Metamorphic Materials Inc. and in Tangent Industries Inc., which were accounted for using the equity method. The book value of the investments accounted for using the equity method amounts to T€ 195 (PY: T€ 128) as at 30 September 2012. The figures are based on the most recent available financial statements without adjustment to the shares held by Dr. Hönle AG. The figures stated relate to the short financial year until 30 September 2012. The figures are stated in T$ before adjustment to the level of the Dr. Hönle AG investment:

Metamorphic Materials, Inc.

Last fin. statements Sales Result Non-current and current assets Debts 30/09/2012 T$ 21 T$ -92 T$ 124 T$ 116

Tangent Industries, Inc.

Last fin. statements Sales Result Non-current and current assets Debts 30/09/2012 T$ 1,450 T$ 12 T$ 608 T$ 285

96 23. Deferred Tax Assets and Deferred Tax Liabilities

Tax deferrals recorded are to be allocated to the following balance sheet items or issues:

30/09/2012 30/09/2011 Asset Liability Asset Liability T€ T€ T€ T€

Non-current assets 74 252 33 266 Current assets 20 24 -3 22 Accruals 76 372 80 150 Liabilities -52 -3 -47 -50 Tax losses carried forward 927 0 862 0 Consolidation effect 93 1,026 96 645

Total before netting and set-off 1,242 1,671 1,021 1,033 Netting of deferred tax assets/liabilities -23 -23 0 0

Total 1,219 1,648 1,021 1,033

In accordance with IAS 12, deferred tax assets can be capitalised to account for unused tax losses carried forward to the extent that future taxable income is likely to be available against which the unused tax losses can be offset. Value estimates are based on annual planning from which predic- tions concerning the use of tax losses in the future can be derived. The amounts posted are only losses that can be used within the period of five years according to planning.

The companies Eltosch Torsten Schmidt GmbH, Honle Spain S.A.U., Mitronic GmbH and Raesch Quarz (Germany) GmbH reported tax losses carried forward as at 30 September 2012. The hitherto unused losses carried forward by Eltosch Torsten Schmidt GmbH, Honle Spain S.A.U., Mitronic GmbH and Raesch Quarz (Germany) GmbH were fully set off against deferred tax assets.

The shares in Eltosch Torsten Schmidt GmbH were acquired by Dr. Hönle AG in financial year 2007/2008. The corporation tax loss carried forward as at the acquisition date amounted to T€ 4,726 and a trade tax loss was carried forward in the amount of T€ 4,581. The losses carried forward prior to the share acquisition were saved from forfeiture only through the restructuring clause of Section 8c KStG. In January 2011, the EU Commission decided that the restructuring clause introduced by the Federal Government violates EU Subsidy law. The federal government has filed suit against the decision of the EU Commission. The Management Board nevertheless continues to assume that the losses carried forward prior to the acquisition are no longer offsettable. Consequently, deferred tax assets were only recorded for Eltosch Torsten Schmidt GmbH’s losses carried forward incurred after 15 May 2008 (acquisition date).

97 24. Inventories

Inventories are structured as follows: 30/09/2012 30/09/2011 T€ T€

Raw materials and supplies, incl. descriptive material (at acquisition costs) 10,763 9,315 less depreciation 1,176 1,888

9,587 7,427 Unfinished goods and services (at acquisition or manufacturing costs) 165 292 less depreciation 0 24

165 268 Finished goods and merchandise (at acquisition or manufacturing costs) 7,394 6,130 less depreciation 646 1,334

6,748 4,796 Advance payments made 79 170

16,579 12,661

The book value of inventories disclosed at the respective net realisable value (fair value) amounts to T€ 2,123 (PY: T€ 4,144). In the 2011/2012 reporting period, inventories in the amount of T€ 26,402 (PY: T€ 27,499) were booked under cost of materials and T€ 271 (PY: income of T€ 118) were reported as expenses reflect- ing a depreciation of inventories. The inventories disclosed are subject to retention of title only as is usual within the scope of purchase contracts.

25. Trade Accounts Receivable

Trade accounts receivable are broken down as follows:

30/09/2012 30/09/2011 T€ T€

Total trade receivables 13,847 11,140 less value adjustments 1,797 744

12,050 10,396

The fair values of trade accounts receivable correspond to the book values. Value adjustments concern receivables which most probably cannot be collected. The residual term of trade accounts receivable is less than one year.

As of the balance sheet date, a receivable from Dr. Hönle Medizintechnik GmbH was recorded in the amount of T€ 0 (PY: T€ 2).

98 Value adjustments concerning trade accounts receivable developed as follows:

2011/2012 2010/2011 T€ T€

As at 1 October 744 553 Change in consolidated group 60 240 - Utilisation -64 -113 - Release (without utilisation) -212 -176 - Addition 1,269 240 - Currency differences 0 0

As at 30 September 1,797 744

The addition to the value adjustment in financial year 2011/2012 mainly results from the value adjustments concerning trade accounts receivable in the amount of € 1.1 million from manroland AG. The latter filed a petition for the instigation of preliminary insolvency proceedings in November 2011.

26. Receivables from Companies in which an Investment is Held

This item includes trade accounts receivable and other receivables from equity investments in the amount of T€ 93. The item mainly consists of loan receivables vis à vis Metamorphic Materials Inc. in the amount of T€ 78 (PY: T€ 0).

27. Other Current Assets

30/09/2012 30/09/2011 T€ T€

Prepaid expenses 294 278 Other current assets 1,700 717

1,994 995

The item “Prepaid expenses” consists of the following:

30/09/2012 30/09/2011 T€ T€

Insurance 58 55 Maintenance agreements 11 26 Trade fairs 40 51 Other 185 146

294 278

99 Other current assets are structured as follows:

30/09/2012 30/09/2011 T€ T€

Receivables from related parties 73 179 VAT 349 121 Current portion of loans 0 3 Receivables from investment grants 822 116 Receivables from employees 37 62 Other 419 236

1,700 717

The disclosed book values correspond to fair values. The residual term is less than one year.

The receivables due from a Supervisory Board member in the amount of T€ 29 as reported in the previous year were fully repaid.

The current repayment proportion of the annuity loan extended to Dr. Hönle Medizintechnik GmbH amounts to T€ 42 (PY: T€ 49). Another loan amounting to T€ 100 was extended to Dr. K. Hönle Medizintechnik GmbH in the previous year. The loan bears an interest rate of 6.0 % and was converted into an annuity loan in this financial year. The current repayment proportion amount to T€ 31 as at 30 September 2012. The non-current portion is included in the item “Other non-current assets” (cf. paragraph 21). Collateral respecting the loans extended is provided in the form of an absolute guaranty at the corresponding amount by Prof. Dr. Hönle.

The item “Other“ relates to creditors with debit balances in the amount of T€ 61.

Disclosed other assets are not subject to ownership restrictions or restraints on disposal.

28. Tax Refund Claims

Tax refund claims consist of the following: 30/09/2012 30/09/2011 T€ T€

Dr. Hönle AG 168 60 Honle UV France S.à.r.l. 0 23 PrintConcept GmbH 97 62 Eltosch Torsten Schmidt GmbH 45 57 Panacol AG 0 1 Agita Holding AG 0 1 Aladin GmbH 33 0 Raesch Quarz (Germany) GmbH 96 0

439 204

The tax refund claims include receivables of T€ 97 (PY: T€ 111) from capitalisation of a claim for payment of a corporation tax credit pursuant to Section 37 KStG n.v. concerning Dr. Hönle AG, Eltosch Torsten Schmidt GmbH and Raesch Quarz (Germany) GmbH.

100 29. Liquid Assets

Liquid assets include cheques, cash in hand and bank balances. This item also represents cash and cash equivalents relevant to the cash flow statement within the meaning of IAS 7.

Bank credit balances are held with various banks at annual interest rates of approximately 0.1 % to 1.8 %.

30. Shareholders' Equity

Equity Capital Management

In addition to achieving adequate interest on the equity capital utilised, the Hönle Group aims at keeping the equity capital ratio and pertaining liquidity reserves at a continuously high level to enable further growth and to increase the corporate value.

With respect to changes in equity capital in financial year 2011/2012 reference is made to the State- ment of Changes in Equity.

Subscribed Capital

The subscribed capital (share capital) amounts to € 5,512,930. Accordingly, one share of stock grants a computational share of € 1.00 in corporate capital. The no par shares of stock are made out to the bearer.

As of 30 September 2012, shares issued and in circulation were as follows:

30/09/2012 30/09/2011 Shares of stock Shares of stock

Number of shares issued 5,512,930 5,512,930 less own shares 1,076 236,076

Shares in circulation 5,511,854 5,276,854

Own Shares (Treasury Stock)

The previous years’ Annual General Meetings have authorized Dr. Hönle AG to acquire up to 10% of the respective nominal capital pursuant to Section 71 (1) No. 8 AktG.

At the Annual General Meeting held on 23 March 2010, a resolution was passed to again authorise Dr. Hönle AG to acquire treasury stock up to a total of 10 % of the share capital of € 5,512,930 up to 22 March 2015 pursuant to Section 71 (1) No. 8, AktG. The Company may not use the authorisation to trade in own shares. Dr. Hönle AG did not make use of the authorisation in financial year 2011/2012.

In previous years, the Company acquired shares or issued shares in the current financial year with a view to purchasing additional subsidiaries as follows:

101 Financial year As at Change As at 30/09/2011 30/09/2012 Shares of stock Shares of stock T€

Number of treasury shares 236,076 -235,000 1,076 Acquisition costs (T€) 1,833 -1,825 8 Average acquisition costs per share (€) 7.77 7.77 7.77

In accordance with IAS 32, own shares are deducted from equity and disclosed as a separate item at acquisition costs of T€ 8. The average price of all treasury stock held amounts to € 7.77. The market price of treasury stock amounts to T€ 11 (PY: T€ 2,231) as at 30 September 2012. The stock exchange price amounted to € 9.85 as at the balance sheet date.

Pursuant to Section 71b AktG, Dr. Hönle AG is not entitled to any rights arising from own shares; in particular, these shares do not entitle to dividends.

Additional paid-in Capital

Additional paid-in capital includes mainly the premiums from the capital increase in the context of the stock flotation in financial year 2000/2001. The reduction in the additional paid-in capital in the amount of T€ 264 results from the valuation difference of own shares that were used for the acquisition of Raesch Quarz (Germany) GmbH.

Nature and purpose of reserves

Legal Reserve

The legal reserve was set up in accordance with Section 150 AktG [German Stock Corporation Act].

Revaluation reserve

In this reserve in the prior year changes in fair value of available for sale financial assets were acquired.

Reserve for exchange differences

The reserve for exchange differences is used to record exchange differences arising from the translation of foreign operations.

Proposed dividend

Due to the positive business development, the Dr. Hönle AG Management Board and Supervisory Board propose to the Annual General Meeting 2013 that a dividend amounting to € 0.50 per share be paid out for financial year 2011/2012, which translates into the amount of T€ 2,756.

Authorised Capital 2010

In accordance with a resolution passed by the Annual General meeting on 23 March 2010, the Management Board was authorised, with the approval of the Supervisory Board, to increase the share capital by up to T€ 2,750 through one or several issues of new, no-par shares (ordinary shares), made out to the bearer, by 22 March 2015, in exchange for cash contributions and/or contributions in kind. With the approval of the Supervisory Board, the Management Board is authorised to wholly or partly exclude shareholders’ subscription rights in certain instances.

102 Non-controlling Interests

The non-controlling interests are structured as follows:

30/09/2012 30/09/2011 T€ T€

Aladin GmbH 1,022 906 Eleco Produits EFD SAS 1 1 UV-Technik Speziallampen GmbH 996 749 Mitronic GmbH 154 174 Raesch Quarz (Germany) GmbH 833 0 Raesch Quarz (Malta) Ltd. 300 0

3,306 1,830

When recognising subsidiaries’ profits/losses that are attributable to non-controlling interests, the netting with losses incurred by the respective companies and not yet taken over from previous years was taken into account.

31. Non-Current Loans (less Current Portion)

This item includes the long-term portion of the bank loan amounting to T€ 541 (PY: T€ 588), which was used to finance the acquisition of the Aladin GmbH company building. The residual book value of the loan amounts to T€ 588 (PY: T€ 635) as at the balance sheet date. The loan is due to expire in 2025, and is repaid in 34 semi-annual instalments starting from September 2008. The interest rate is 3.90%. Collateral covering the full amount was provided in favour of the lender in the form of a first mortgage.

The item also includes the non-current portion of the bank loan of Mitronic GmbH in the amount of T€ 342, which was taken out to repay a hidden participation of Bayerische Beteiligungsgesellschaft BayBG. The residual book value of the loan amounts to T€ 389 (PY: T€ 457) as at 30 September 2012. The loan is repaid on the basis of monthly instalments of T€ 5. The interest rate is 4.45 % and is fixed until 30 April 2016. Collateral is provided in the form of a guarantee (limited in amount) issued by Dr. Hönle AG.

A bank loan in the amount of T€ 3,000 was taken out in the second quarter of 2011/2012 for the partial financing the Raesch Group acquisition. The residual book value of the loan amounts to T€ 2,700 as at 30 September 2012. The annuity loan is repaid in quarterly instalments of T€ 150. The interest rate is fixed for a rollover period of three months at each rollover date. The agreed interest rate is determined on the basis of the EURIBOR (European Interbank Offered Rate) applicable for the corresponding term on the trade date, plus a nominal spread of 1.80 %. It is fixed until 31 March 2017 (which corresponds to the term of the loan). The PAYER interest rate swap concluded in this context in the nominal amount of T€ 3,000 serves as hedging transaction. The IRS has a term of five years (from 30 March 2012 to 31 March 2017) and results in an effective fixed interest rate of 3.18 %. No collateral was provided. The non-current portion of the bank loan amounts to: T€ 2,100. The current portion is reported under the item "current bank liabilities and current portion of non- current loans."

The generally separated contracts are treated as a fixed-interest loan in accordance with their economic content. They were combined due to the consistency of all parameters and the identity of the contracting parties of the underlying and hedging transaction.

103 32. Non-Current and Current Finance Lease Obligations

Finance lease obligations include the present values of minimum lease instalments for machines and vehicles. The portions that fall due within one year are disclosed in the balance sheet as current lease obligations. The present values of minimum lease instalments due after one year are reflected under non-current finance lease obligations.

The liabilities arising from the finance lease relationship have developed as follows:

As at 30/09/2012 Residual term of up Residual term of Residual term of more to 1 year between one and five than five years years T€ T€ T€

Present value of minimum lease payment 43 27 0 Interest portion (included in present value) 2 1 0

As at 30/09/2011 Residual term of up to Residual term of Residual term of more 1 year between one and five than five years years T€ T€ T€

Present value of minimum lease payment 90 31 0 Interest portion (included in present value) 5 2 0

33. Other Non-Current Liabilities

This item mainly includes the non-current portion of discounted purchase price liabilities arising from the Raesch Group acquisition in the amount of T€ 3,469. It is due for payment in March 2014.

Other non-current liabilities also include loan liabilities in the amount of T€ 1,328 (PY: T€ 0) that are due to a non-controlling shareholder. The development was as follows:

Loan amount Interest rate Term Repayment p.a. Book value in T€ in T€ in T€

450 4.00 % 30/03/2017 100 450 878 4.00 % 31/03/2015 400 878

34. Pension Accruals

Pension accruals are set up to cover pension plans respecting old age, invalidity, and surviving dependents’ benefit plans commitments.

Pension accruals concerning defined benefit plans are determined in accordance with IAS 19 applying the projected unit credit method; i.e., future commitments are calculated on the basis of prorated pension benefits accrued as of the balance sheet date. Trend assumptions concerning the relevant parameters that have an impact on future commitments are taken into account. This relates, in particular, to fluctuation, future salary trends and the respective applicable interest rate. Pension accruals concern pension commitments to employees of Group companies in Germany and

104 to employees of the French subsidiaries.

Benefits concerning surviving dependents of former managing directors are included in pension accruals at the amount of T€ 145 (PY: T€ 180).

Pension obligations were as follows as at the balance sheet date:

30/09/2012 30/09/2011 T€ T€

Present value of pension obligation at the beginning of the year 2,416 2,464 Service expense 105 114 Interest expense 120 105 Past service expense 150 0 Actuarial gains (-) losses (+) not recorded in the balance sheet 1,064 -289 Payments fund assets 0 -6 Pension payments -34 -33 Business hive-off 0 -8 Other 0 69

Present value of pension obligation at year-end 3,821 2,416

The Company assumes that the pension obligation amounting to T€ 3,788 will be met after more than 12 months.

Actuarial gains or losses arise from inventory changes and deviations of actual trends (e.g. income- or interest increases) relative to calculation assumptions

The following actuarial assumptions are used for determining the balance sheet value of the pension obligation:

01/10/2012 01/10/2011 01/10/2010

Discounting rate 3.30% 5.00% 4.25% Income from fund assets 3.30% 3.50% 3.50% Growth rate of pension payments 2.00% 2.00% 2.00-3.00%

The following overview reflects the development of present values of the pension obligation and the fair values of the plan assets over the last five balance sheet days:

30/09/2012 30/09/2011 30/09/2010 30/09/2009 30/09/2008 T€ T€ T€ T€ T€

Present value of pension commitment as at balance sheet date 3,821 2,416 2,464 1,926 1,656 Fair values of plan assets 574 321 43 31 31

Plan – short cover: 3,247 2,095 2,421 1,895 1,625

The reported pension obligations are covered by plan assets in the amount of T€ 574 (PY: T€ 321).

105 30/09/2012 30/09/2011 T€ T€

Fair value of plan assets at the beginning of the year 321 43 Actual income from plan assets -11 3 Contributions paid by employer 247 55 Benefits paid 0 -6 Other 17 226

Fair value of plan assets at the end of the year 574 321

The expected total income arising from plan assets is calculated on the basis of the market prices prevailing at the time for the period during which the obligation is paid. The market prices are reflected in the basic assumptions.

The expected development of plan assets for financial year 2012/2013 is as follows:

30/09/2013 T€

Fair value of plan assets at the beginning of 12/13 574 Actual income from plan assets 23 Contributions paid by employers 247

Fair value of plan assets at the end of the year 12/13 844

The income statement for the financial year includes the following pension obligation expenses:

2011/2012 2010/2011 T€ T€

Current service expense 105 114 Interest expense 120 105 Income from plan assets -16 -3 Past service expense 150 0 Non-recorded actuarial (gains) losses 13 42 Other 0 -185

372 73

Of the interest expenses, T€ 11 (PY: T€ 11) are attributable to pension benefits concerning surviving dependents of former managing directors.

106 Movements within the balance sheet item “Pension accruals” were as follows in the reporting year:

30/09/2012 30/09/2011 T€ T€

Value of the pension accrual at the beginning of the financial year 1,834 1,853 Pension expense 372 73 Contributions paid -247 -55 Payments / pension payments -34 -33 Plan assets 7 -23 Transfer payments 0 19

Value of the pension accrual at year-end 1,932 1,834

The actuarial losses of T€ 1,135 (PY: gains: T€ -289) that were not reported as at 30 September 2012 due to application of the corridor method, mainly reflect the change in the discounting rate.

35. Deferred Public Investment Grants

2011/2012 2010/2011 T€ T€ As at: 1 October 2011 0 0 Applied for in the financial year 618 0 Recognised through profit/loss 46 0 As at: 30 September 2012 572 0

The public grants relate largely to the acquisition of a building, melting furnaces and annealing furnaces of Raesch Quarz (Germany) GmbH. Prospective all conditions linked to these grants were fulfilled, based on current knowledge not other possible uncertainties have arisen.

36. Trade Accounts Payable

Trade accounts payable are stated at the repayable amount. The book value of trade accounts payable as at the balance sheet date is T€ 3,483 (PY: T€ 3,260). Given the short payment periods concerning these liabilities, the book value is in line with the fair value of the liabilities.

37. Advance Payments Received

Advance payments received on account of orders relate to payments from customers for services not yet provided by the Company. The amounts are shown net and do not include VAT.

38. Current Bank Liabilities and Current Portion of Non-Current Loans

Liabilities to banks are stated at the respective repayable amounts.

Current liabilities to banks amounted to T€ 1,751 (PY: T€ 234) at the end of the reporting period. This item mainly relates to the loan in the amount of T€ 600 taken out to finance the Raesch Group acquisition, a KfW loan of the Raesch Group (T€ 250) and a short-term credit facility of T€ 380.

The current account credit lines granted by banks totalled T€ 3,652 (PY: T€ 3,268) as at 30 Septem- ber 2012. If utilized, they would be subject to regular market interest rates. Of the total, the amount of

107 T€ 1,051 is utilised on the basis of credits by way of guaranty.

39. Other Current Liabilities

30/09/2012 30/09/2011 T€ T€

Wage tax and VAT 566 687 Social security contributions 372 235 Profit sharing bonus and other bonuses 1,205 1,872 Christmas bonus 675 664 Holidays not taken 441 458 Flexi-time surpluses 234 296 Other personnel-related liabilities 244 370 Purchase price obligations 3,213 0 Liabilities to shareholders 518 0 Other 852 591

8,320 5,173

Liabilities concerning profit sharing bonuses and other bonuses relate to variable remuneration components and profit sharing bonuses vis à vis the management boards, managing directors and employees of individual consolidated group companies.

Christmas bonus liabilities were set up to account for appropriate Christmas allowance allocation (10/12).

Liabilities for holidays not taken were determined on a pro rata temporis basis due to the deviating financial year.

The liabilities respecting flexi-time surpluses relate to employees' overtime account credits.

Liabilities for Supervisory Board compensation amount to T€ 72 (PY: T€ 72).

108 40. Other Accruals

Other accruals developed as follows:

Change As at Consoli- Foreign As at 01/10/ dated Currency 30/09/ 2011 group Utilisation Release Additions effects 2012 T€ T€ T€ T€ T€ T€ T€

Contractual obligations vis à vis third parties: Warranties and guaranties 502 18 292 117 266 0 377 Renovation costs 85 8 0 0 41 1 135 Invoices outstanding 1,063 225 1,161 126 1,251 -3 1,249 Other 15 0 15 0 0 0 0

Total 1,665 251 1,468 243 1,558 -2 1,761

Accruals for warranties and guaranties relate to warranties provided with or without a legal obligation to do so, and to the cost of reworking as a result of returns. The accrual is calculated at between 0.5 % and 2 % of the risk-prone revenue. The percentage rate is derived from historical values.

An accrual for invoices outstanding was recorded for invoices received during the new financial year and relating to the reporting period. In addition, the item includes the expected cost of preparation and audit of the annual financial statements of consolidated companies and the consolidated financial statements, including publication. The amounts stated are based on agreed-upon supply conditions and arrangements.

The expected outflow of cash concerning these accruals is as follows:

30/09/2012 30/09/2011 as a % as a %

In the following year 92 95 In the following 2 - 5 years 3 1 In the following 6 - 10 years 5 4

100 100

The expected cash outflow in the following 2 to 10 years relates primarily to renovation costs respecting the rented buildings up to the end of the contract term.

41. Liabilities from Income Taxes

Liabilities from income taxes were stated at the amount of expected actual payment obligations concerning income taxes for both the financial year and previous years.

109 42. Derivative Financial Instruments

Dr. Hönle AG took out a bank loan in the amount of T€ 3,000 in the 2011/2012 financial year. The loan has a term of five years (from 30 March 2012 to 31 March 2017). The interest rate is fixed for a rollover period of three months at each rollover date. The agreed interest rate is determined on EURIBOR basis (European Interbank Offered Rate) applicable for the respective term on the trade date, plus a nominal spread of 1.80 %. It is fixed until 31 March 2017 (which corresponds to the maturity of the loan). The PAYER interest rate swap concluded in this context in the nominal amount of T€ 3,000 serves as hedging transaction. The IRS has a term of five years (from 30 March 2012 to 31 March 2017) and results in an effective fixed interest rate of 3.18 %. The generally separated contracts (loan agreement and interest rate swap) are treated as a fixed- interest loan in accordance with their economic content. They were combined due to the consistency of all parameters and the identity of the contracting parties of the underlying and hedging transaction.

OTHER DISCLOSURES

43. Contingent Liabilities

In addition to existing liabilities which are covered by accruals, no significant obligations currently exist that may occur as a consequence of future uncontrollable events.

No guaranties were extended to parties outside the Group.

44. Contingent Receivables

There are no contingent receivables as defined under IAS 37.

45. Other Financial Obligations

Other financial obligations of the Group are as follows:

Annual Total obligation obligation 30/09/2012 30/09/2011 30/09/2012 30/09/2011 T€ T€ T€ T€

Equipment lease agreements 36 373 107 702 Room rental contracts 1,838 1,639 13,527 14,463

1,874 2,012 13,634 15,165

110 46. Management of Financial Risks

Risk Management Principles

Within the scope of its operative activities, the Dr. Hönle Group is exposed to risks that are also dealt with in the Risk Report section of the Management Report.

Dr. Hönle AG has introduced a formalised risk management system in order to monitor risks. The governing principles are documented in a manual. In measuring the probability of a damage occurring and the probability of a damage amount (and taking into account any potential opportunities for the Group), a decision is made as to whether the pertaining risk is to be avoided, reduced, transferred or accepted. The risk situations are analysed and counter measures are defined and taken whenever necessary. The Dr. Hönle AG Management Board is informed at regular intervals about the Group’s current risk situation and is also informed immediately if new risks become apparent.

A derivative financial instrument was utilised as at the balance sheet date in order to limit financial risks (interest rate risk) within the Hönle Group (cf. paragraph 42).

Significant risks associated with financial assets and debts are allocated to liquidity, credit, and market risks.

Liquidity Risks

Basically, liquidity risks relate to the risk that the Hönle Group might not be in a position to comply with the obligations that result from financial liabilities.

One of the Hönle Group’s management targets is a sustained increase in the operative cash flow. In this context, the liquidity situation is monitored thoroughly on an on-going basis. The Dr. Hönle AG Management Board is informed at weekly intervals about the Group’s liquidity situation. In particular, utilisation of the cash pooling account by Hönle Group subsidiaries is monitored and Management is informed about this on a weekly basis by the Accounting Department. Moreover, all account balances of Hönle Group’s bank accounts are reported in detail to the management. The Group monitors the risk associated with possible liquidity bottlenecks on an ongoing basis and assesses the liquidity development of all companies of the Hönle Group, based on the liquidity status in combination with the earnings forecast and intended financial and investment transactions.

According to our current planning, no liquidity bottlenecks are recognisable within the Hönle Group at present.

The following tables reflect the contractually agreed interest and repayments concerning all liabilities:

111 As at 30/09/2012 Residual term of Residual term of Residual term of up between one more than five to 1 year and five years years Total amount Repay- Inter- Repay- Repay- Inter- Repay- Interest ment est ment Interest ment est ment T€ T€ T€ T€ T€ T€ T€ T€

Liabilities to banks 149 1,751 301 3,072 68 592 518 5,415

Trade accounts payable 0 3,483 0 0 0 0 0 3,483

Other financial obligations 1 12,7160 5.410 0 0 1 14,126 Total 150 13,950301 8,482 68 592 519 23,024

As at 30/09/2011 Residual term of Residual term of Residual term of up between one more than five to 1 year and five years years Total amount Repay- Inter- Repay- Repay- Inter- Repay- Interest ment est ment Interest ment est ment T€ T€ T€ T€ T€ T€ T€ T€

Liabilities to banks 68 234 197 623 103 786 368 1,643

Trade accounts payable 0 3,260 0 0 0 0 0 3,260

Other financial obligations 5 4,6324 40 0 0 9 4,672 Total 73 8,126201 663 103 786 377 9,575

Credit Risks

The credit risk refers to the default risk concerning financial assets.

The Accounting and Sales/Marketing departments assess the customer receivables default risk at regular intervals. Outstanding receivables from customers are monitored, in particular, by analysing the age structure lists with respect to the maturity of outstanding receivables. Supplies to key account customers, in particular customers from abroad, are generally covered by letters of credit or other hedging instruments. The age structure list indicated that T€ 2,220 were due in less than 90 days as at 30 September 2012, which corresponds to 18 % of the total amount of receivables outstanding. T€ 448 (3.6 %) and T€ 425 (3.4 %) were due in 90 to 180 days, or more than 180 days. The amount of value adjustment requirements is analysed individually for all customers at monthly intervals. The Dr. Hönle Group Management is informed at monthly intervals about the age structure statistics of open receivables respecting all customers with special attention being paid to customer receivables involving amounts of more than T€ 10 where the maturity date is exceeded by more than 90 days.

The financial performance of key account customers is monitored permanently by external service providers or information that arises from the customers’ payment pattern. In addition, market information is used in the assessment of customers’ ability to comply with their payment obligations. The risk involved in larger-sale contracts, in particular, is hedged on the basis of credit information and instal-

112 ment plans. As a general rule, credit information is obtained with respect to new customers or a change in customers’ payment pattern.

The Group assesses the risk concentration with respect to trade receivables as low. This assessment is supported by the fact that Hönle Group customers are allocated to three different segments (“Sys- tems/Equipment”, “Adhesives” and “Glass/Lamps”). Furthermore, the customers are located around the globe and are active in various sectors of industry and largely independent markets, in particular in the “Adhesives” and “Glass/Lamps” segments.

The book values of financial assets represent the maximum default risk in the event that contracting partners should fail to meet their payment obligations.

In the event that internal indices such as delayed payments or external information (indicating serious financial difficulties of the contracting party) become apparent in the Group, respective value adjustments are recorded.

The age structure of non-value-adjusted trade accounts receivables is as follows:

Age structure of overdue receivables (As at: 30/09/2012) Thereof, not Thereof overdue but not value-adjusted Net yet due < 90 days 90 to 180 days >180 T€ T€ T€ T€ T€ Trade accounts receivable (net of individual value adjustments) 12,269 9,176 2,220 448 425

Age structure of overdue receivables (As at: 30/09/2011) Thereof, not Thereof overdue but not value-adjusted Net yet due < 90 days 90 to 180 days >180 T€ T€ T€ T€ T€ Trade accounts receivable (net of individual value adjustments) 10,605 8,048 1,662 549 346

The Hönle Group assumes recoverability of all non-value adjusted trade accounts receivable.

The other assets do not include any overdue items.

Risk concentrations arise when several business partners are engaged in similar activities in the same region or when, due to their economic features, their ability to meet their contractual obligations is impaired in the event of changes in the economic or political situation. In order to avoid disproportion- ately high risk concentrations, the “Adhesives” segment and the “Glass/Lamps” segment, in particular, are being expanded in addition to the “Equipment/Systems” segment. Identified default concentrations are continuously monitored and controlled. Selected hedging transactions are used within the Group with a view to avoiding risks at the level of individual business relationships.

113 Market Risks

The market risk is split up into the currency and the interest rate risk.

Currency Risks The Hönle Group is exposed to currency risks in as much as purchases are, in part, made in foreign currencies and re-sales are not made in the respective foreign currencies to the same extent.

Risks resulting from fluctuations in foreign currency receivables, liabilities, and from pending contracts and accrued and deferred items are largely associated with foreign currency transactions in US dol- lars, Swiss francs, British pounds and Chinese renminbi.

As at the balance sheet date, no rate hedging measures are taken with respect to these foreign currency positions.

If the euro had been stronger by 10 % relative to the Swiss franc, this would have led to a reduction in the consolidated result by T€ 266 (PY: improvement by T€ 2). A weakening of the euro in comparison with the Swiss franc would have led to an improvement in the consolidated result by T€ 325 (PY: improvement by T€ 3).

If, relative to the British pound, the euro had been stronger by 10%, the consolidated result would have improved by T€ 7 (PY: T€ 9). A weakening of the euro in comparison with the British pound would have led to a reduction in the consolidated result by T€ 8 (PY: T€ 11).

If the euro had been stronger by 10% relative to the US Dollar, this would have improved the consolidated result by T€ 34 (PY: T€ 23) whereas a 10 % weakening would have contributed to a decline in the consolidated result in the amount of T€ 42 (PY: T€ 29).

If the euro had been stronger by 10 % relative to the Chinese renminbi, this would have deteriorated the consolidated result by T€ 7 (PY: T€ 8). A weakening of the euro in comparison with the Chinese renminbi would have led to an improvement of the consolidated result by T€ 9 (PY: T€ 9).

Interest Rate Risks Interest rate risks are associated with variable interest-bearing financial instruments vis à vis banks.

In the 2011/2012 financial year, a derivative financial instrument was used for the first time to hedge against the interest rate risks to which the Hönle Group is exposed to. All loans recorded as at the balance sheet date (with the exception of the loan newly taken out in financial year 2011/12 for financing the acquisition of the Raesch Group) are subject to fixed interest agreements. The loans are measured at amortised acquisition costs using the effective interest rate method. Consequently, a change in market interest rates does not impact on measurement. Current overdrafts and credit balances on current accounts bear variable interest rates. If an average 2 % increase in the interest level respecting current account loans were to be assumed, the additional interest expense would amount to T€ 8, assuming that the average negative balance on current accounts corresponds to the value of T€ 380 at the end of the 2011/2012 financial year. According to current information, market price changes concerning these financial instruments would not addition- ally impact significantly on the results of the Hönle Group.

114 Other Disclosures regarding Financial Assets and Debts

The following table provides an overview of the transition of financial assets and debts included in the balance sheet items pursuant to the IAS 39 categories as well as impairment losses recorded in the respective financial year under profit or loss, net profits/losses as well as the total interest expense and income.

Loans and Financial assets Carried-over receivables available acquisition Book values as of 30/09/2012 for sale costs T€ T€ T€

Participations measured at equity 0 0 195 Other financial assets 0 32 0 Other non-current assets 75 0 0 Trade accounts receivable 12,050 0 0 Other current assets 1,080 0 0 Liquid Assets 9,321 0 0

Non-current financial liabilities 0 0 5,019 Current financial liabilities 0 0 14,241 Trade accounts payable 0 0 3,664

Total 22,526 32 23,119

Amount of impairments recorded under profit or loss -1,026 -12 0

Net profit / loss -1,132 0 0

Total interest expense 0 0 -540 Total interest income 56 0 0

The net loss of T€ 1.132 relates to the value adjustment of receivables from manroland AG. The company filed a petition respecting the opening of preliminary insolvency proceedings in November 2011.

115 Loans and Financial assets Carried-over receivables available acquisition Book values as of 30/09/2011 for sale costs T€ T€ T€

Participations measured at equity 0 0 128 Other financial assets 0 215 0 Other non-current assets 41 0 0 Trade accounts receivable 10,396 0 0 Other current assets 685 0 0 Liquid assets 12,863 0 0

Non-current financial liabilities 0 0 1,435 Current financial liabilities 0 0 4,880 Trade accounts payable 0 0 3,260

Total 23,985 215 9,703

Amount of impairments recorded under profit or loss 91 -291 0

Net profit / loss 0 0 0

Total interest expense 0 0 -244 Total interest income 52 0 0

The following table shows the market values and book values of financial assets and financial liabilities that are recorded at fair values upon initial recognition and which are subsequently stated at acquisition costs using the effective interest rate method:

30/09/2012 30/09/2011

Market Book Market Book

value value value value

T€ T€ T€ T€

Other non-current assets 75 75 41 41 Trade accounts receivable 12,050 12,050 10,396 10,396 Other current assets 1,080 1,080 685 685 Liquid assets 9,321 9,321 12,863 12,863

Non-current financial liabilities 5,019 5,019 1,435 1,435 Current financial liabilities 14,241 14,241 4,880 4,880 Trade accounts payable 3,664 3,664 3,260 3,260

116 The book values of financial assets (trade accounts receivable, other current assets and liquid assets) correspond to market values. The book values of financial liabilities (current financial liabilities and trade accounts payable) correspond to market values. All items are due within one year.

Other non-current assets include fixed-interest bearing receivables. Market values are determined in consideration of interest rates, corresponding impairment of value, and individual criteria. Book values correspond to market values as at the 30 September 2012 balance sheet date. Non-current financial liabilities include fixed-interest bearing and variable liabilities and leasing liabilities. The valuation of non-current financial liabilities at market values is based on the discounting of future cash flows over the contract term of the respective financial instruments.

Financial assets and financial liabilities measured at market value were not allocated to the other levels of the fair value hierarchy (2nd and 3rd level) in financial year 2011/2012.

47. Consolidated Cash Flow Statement

The cash flow statement shows the changes in the Group’s cash and cash equivalents during the financial year which resulted from an inflow and outflow of funds. In accordance with IAS 7 (Cash Flow Statements), cash flows are split into operating, investing, and financing activities. The cash and cash equivalents under review encompass the liquid assets disclosed in the balance sheet.

Additions to/disposals of cash and cash equivalents are presented using the indirect determination method.

Cash from operating activities amounted to T€ 7,235 (PY: T€ 12,601). It resulted from the consolidated net income for the year before non-controlling interests and taxes of T€ 7,712 (PY: T€ 10.771) and largely from adjustments relating to non-cash effects in the amount of T€ 4,600 and changes in net working capital. The position of other non-cash expenses and income mainly includes value adjustments of receivables from manroland AG and write-downs concerning slow moving items kept in the inventory.

Cash used for investing activity mainly results from the acquisition of the subsidiaries, Raesch Quarz (Germany) GmbH and Raesch Quarz (Malta) Ltd. in the amount of T€ 3,674 (PY: T€ 22). The amount includes the net inflow of cash, which consists of the cash portion of the first purchase price instalment, which was paid in cash for the acquisition of Raesch Quarz (Germany) GmbH (T€ 1,932) and Raesch Quarz (Malta) Ltd.) (T€ 2,931), net of acquired cash and cash equivalents (T€ 143 for Raesch Quarz (Germany) GmbH, and T€ 1,046 for Raesch Quarz (Malta) Ltd.).

The amounts of assets and debts, which are allocated to main groups with respect to the Raesch Group acquisition are presented in summarised form under paragraph 3: Consolidation.

Investments in property, plant and equipment and in intangible assets also led to an outflow of cash in the amount of T€ 2,232 (PY: T€ 1,583). Within the scope of financing activity, a dividend in the amount of T€ 2,756 (PY: T€ 1,576) was distributed for financial year 2010/2011. Cash used for financing activity mainly related to the raising of a bank loan in the amount of T€ 3,000 and the repayment of liabilities to banks and leasing liabilities in the amount of T€ 1,750 (PY: 806).

Overall, liquid assets declined from T€ 12,863 to T€ 9,321 in financial year 2011/2012.

117 48. Segment Reporting

Segment reporting was prepared in conformity with IFRS 8.

At the Hönle Group, the parent company’s Management Board is responsible for allocating resources and for assessing the segment’s earnings power. The relevant segments were identified using the management approach in accordance with the Management Board’s management information system.

Due to the size of the newly acquired Raesch Group, new business segments had to be defined as from the second quarter of the 2011/2012 financial year.

The following business segments were defined: - Equipment and Systems - Adhesives - Glass and Lamps. The "Equipment and Systems" segment encompasses the development, production and sale of equipment and systems. The "Adhesives" segment comprises the development, production and sale of adhesives. The "Glass and Lamps" segment includes the development, production and sale of tubing and semi- finished goods made of quartz glass as well as the manufacture of UV medium-pressure and low- pressure lamps.

In the context of the redefinition of the "Glass and Lamps" segment, whether the previous allocation of the non-reportable segments (according to quantitative criteria) would have to be changed was examined, since a higher degree of comparability of business activities (IFRS 8.12 and 8.14) with the new segment has resulted. As part of extended segment reporting, the sub-segments, Aladin GmbH and UV-Technik Spezial- lampen GmbH were no longer allocated to the combined "Equipment and Systems" segment but were allocated to the new "Glass and Lamps" segment. This allocation increases the informative value of segment reporting as comparability of the economic features of these two companies in terms of products, customers and sales/marketing with the Raesch Group companies is improved relative to the previous comparison with the other companies of the "Equipment and Systems" segment. Prior-year figures were adjusted accordingly.

Other activities and other segments were not defined. Segmentation is based on the data provided by the accounting departments of the included legal entities.

The segment reporting accounting principles generally correspond to the accounting and valuation methods applied at the Hönle Group, as described in Appendix 5, Item 5.

118 Equipment/ Ad- Glass/ Total Elimi- Consoli- Systems hesives Lamps tions dated 2011/2012 2011/2012 2011/2012 2011/2012 2011/2012 2011/2012

Sales revenues: External customers 38,336 15.647 18.109 72.092 0 72.092 Revenues with other business units 465 169 944 1.578 -1.578 0

Total sales 38,801 15,816 19,053 73,670 -1.578 72.092 NET EARNINGS: Segment result (operating result) 4,594 1,983 2,183 8,760 -451 8.309 Includes significant income and expense items: - Value adjustment of receivables 1,157 44 22 1,223 0 1,223 - Other income / license income 1,005 76 224 1,305 0 1,305 Interest income 153 63 63 279 -222 57 Interest expenses 503 93 298 894 -263 631 Participations measured at equity -19 -19 Income from securities 8 8 Write-downs on securities 12 12

Earnings before taxes and non-controlling interests 7,712

Income taxes 1,043 580 529 2,152 0 2,152 Deferred taxes 197 -1 -154 42 28 70

Earnings before non-controlling interests 5,490

OTHER INFORMATION: Segment assets: 35,400 13,760 22,396 71,556 172 71,728

Non-allocated assets: Participations measured at equity 195 195 Financial assets 32 32 Non-current receivables 727 727 Tax refund claims 439 439 Deferred tax assets 1,219 1,219

Consolidated assets 74,340

Segment debt 26,733 4,803 10,184 41,720 -18,595 23,125 Deferred tax liabilities 1,648 1,648 Income tax liabilities 1,424 1,424 Long-term loans 3,659 3,659

Consolidated liabilities (current and non-current) 29,856 Investments: 805 454 974 2,233 0 2,233 Segment write downs 840 366 1,143 2,349 0 2,349 Non-cash expenses of the segment 196 35 251 482 0 482

119 Equipment/ Ad- Glass/ Total Elimi- Consoli- Systems hesives Lamps nations dated 2011/2012 2011/2012 2011/2012 2011/2012 2011/2012 2011/12

Sales revenues: External customers 42,337 17,694 7,847 67,878 67,878 Revenues with other business units 510 15 1,034 1,559 -1,559 0

Total sales 42,847 17,709 8,881 69,437 -1,559 67,878 NET EARNINGS: Segment result (operating result) 7,924 2,140 1,527 11,591 -310 11,280 Includes significant income and expense items: - Value adjustment of receivables 290 55 60 405 0 405 - Other income / license income 1,587 306 165 2,058 -127 1,931 Interest income 378 46 2 426 -374 52 Interest expenses 437 142 94 673 -394 279 Participations measured at equity 8 8 Income from securities 7 7 Write-downs on securities 298 298

Earnings before taxes and non-controlling interests 10,771 Income taxes 1,990 639 370 2,999 0 2,999 Deferred taxes 256 79 20 355 -82 273

Earnings before non-controlling interests 7,499 OTHER INFORMATION: Segment assets: 35,449 15,854 6,351 57,654 -4.092 53.562 Non-allocated assets: Participations measured at equity 128 128 Financial assets 218 218 Non-current receivables 618 618 Tax refund claims 204 204 Deferred tax assets 1,021 1,021

Consolidated assets 55.751

Segment debt 17,628 6,988 1,773 26,389 -13,280 13,109 Deferred tax liabilities 1,033 1,033 Income tax liabilities 1,875 1,875 Long-term loans 1,527 1,527

Consolidated liabilities (current and non-current) 17,544 Investments: 631 131 786 1,583 0 1,583 Segment write downs 929 317 225 1,471 0 1,471 Non-cash expenses of the segment 252 47 8 307 0 307

120 Geographical Information

Sales revenues generated with external customers are allocated according to the customers‘ location.

Regional allocation of sales revenues is as follows:

2011/2012 2010/2011 in T€ in T€ Total revenues 72,092 67,878 Germany 24,700 29,303 Other countries 47,392 38,575 thereof, France: 8,380 10,792

In financial year 2011/2012, revenue in the amount of T€ 8,380 (PY: T€ 10,792) was earned in France, which corresponds to a share of 11.6 % (PY: 15.9 %) in total revenues.

Non-current assets are allocated as follows:

Germany: T€ 25,009 (PY: T€ 15,257) Other countries: T€ 6,686 (PY: T€ 1,393)

Segment assets are defined as the sum total of intangible assets, property, plant and equipment, inventories, current receivables and liquid assets. Segment debt comprises non-current and current liabilities. Non-cash segment expenses take changes in pension accruals and changes in other accruals into account.

Transfer prices relating to intercompany services and supplies including the pertaining calculation basis are based on the same terms and conditions as those applied for third parties. In this respect no changes have been recorded in comparison with previous years.

49. Related Party Disclosures

Related parties within the meaning of IAS 24 are named below.

In accordance with IAS 24, a party is related to an entity if it is controlled by the reporting company or can have a significant influence over the company, such as - the members of the Management Board or Supervisory Board of Dr. Hönle AG - associated companies - non-consolidated subsidiaries.

With respect to disclosures relating to the Board of Management and the Supervisory Board, reference is made to our comments in paragraph 50.

Regarding the reportable business relationships, reference is made to our comments on individual balance sheet and income statement items. Costs are passed on mainly between Solitec GmbH and Dr. Hönle AG within the scope of advertising. The respective amounts are immaterial with respect to the results of operations, however.

- Controlled companies not included in the consolidated financial statements due to insignificance

Solitec Gesellschaft für technischen Produktvertrieb mbH, Gräfelfing

121 - Companies under significant influence of a Supervisory Board of the Group:

Dr. Hönle Medizintechnik GmbH, Kaufering

Collateral for the loans extended by Dr. Hönle AG to Dr. Hönle Medizintechnik GmbH is provided in the form of an absolute guaranty at the corresponding amount issued by Prof. Dr. Hönle.

The residual book value of the annuity loan amounts to T€ 41 (PY: T€ 91) as at 30 September 2012. The non-current portion amounts to T€ 0 (PY: T€ 41); the current portion of T€ 41 (PY: T€ 49) is disclosed under the item “Other current assets” (cf. paragraphs 21 and 26). The loan is interest-bearing at a rate of 6.5 % and is due to expire on 30 June 2013. The annuity for the loan amounts to T€ 5 for the remaining years. Interest income in the amount of T€ 5 (PY: T€ 8) is attributable to the loan granted to Dr. Hönle Medizintechnik GmbH.

In the 2010/2011 financial year another loan amounting to T€ 100 was extended to Dr. Hönle Medi- zintechnik GmbH which was converted into an annuity loan in the 2011/2012 financial year. The book value of the loan amounts to T€ 92 as at 30 September 2012. The loan is repaid on the basis of agreed annuities of T€ 36 per year. The loan matures on 31 July 2015. Interest income of T€ 2 results from the agreed-upon interest rate of 6.0 %.