Annual Report 2008

PVA TePla Annual Report 2008 PVA TePla AG Phone +49 (641) 6 86 90 - 0 Im Westpark 10 -12 Fax +49 (641) 6 86 90 - 800 35435 Wettenberg Email info @pvatepla.com Germany Home www.pvatepla.com

Important consolidated figures at a glance

Consolidated figures

in EUR ‘000 2008 2007 2006

Sales Revenues 168,591 113,704 70,404 Vacuum Systems 45,994 36,946 25,915 Crystal Growing Systems 105,774 60,053 30,934 Plasma Systems 16,822 16,705 13,555 Gross profit 37,735 27,271 18,007 in % sales revenues 22.4 24.0 25.6 R&D expenses 1,790 1,719 1,545 Operating result (EBIT) 15,043 9,977 3,500 in % sales revenues 8.9 8.8 5.0 Consolidated Net income 9,735 6,052 2,109 in % sales revenues 5.8 5.3 3.0 Earnings per share (EPS) in EUR1) 0.46 0.28 0.10 Capital expenditures 11,761 18,934 2,468 Total assets 122,081 108,788 60,271 Equity ratio in % 33.1 28.4 41.0 Employees as of 31.12. 504 422 330 Incoming orders 189,940 145,968 139,484 Order backlog 151,794 137,118 101,058 Book to bill Ratio 1.13 1.28 1.98 Cash Flow from operating activities 8,699 6,759 13,590

1) Circulating shares on average: 21.749.988 Ideas obtain scope

Sales Revenues EBIT Consolidated Net income

in TEur in TEur in TEur

2008 168.591 2008 15.043 2008 9.735 2007 113.704 2007 9.977 2007 6.052 2006 70.404 2006 3.500 2006 2.109 2005 51.444 2005 1.365 2005 1.122 2004 44.201 2004 291 2004 326 Annual Report 2008 2003 38.907 2003 -5.470 2003 -2.868 PVA TePla Annual Report 2008 PVA TePla AG Phone +49 (641) 6 86 90 - 0 Im Westpark 10 -12 Fax +49 (641) 6 86 90 - 800 35435 Wettenberg Email info @pvatepla.com Germany Home www.pvatepla.com

Important consolidated figures at a glance

Consolidated figures

in EUR ‘000 2008 2007 2006

1) Circulating shares on average: 21.749.988 Ideas obtain scope

Sales Revenues EBIT Consolidated Net income

in TEur in TEur in TEur

Divisions 2008 Divisions 2009 Changing Structures Changed requirements

The divisions reflect the structure of the company which has been grown over two decades. In January 2009, the PVA TePla Group was reorganized into three new divisions, “Industrial Sys- tems”, “Semiconductor Systems” and “Solar Systems”. This structure enables customers from different markets to gain a quick and targeted overview of our portfolio.

Vacuum Systems Industrial Systems

The Vacuum Systems Division is the core of the PVA TePla-Group. In that division In the Industrial Systems Division the former Vacuum Systems has been integrated. The heat treatment furnaces for processing high-quality materials at high temperatures ON nitriding systems from our subsidiary PlaTeG joint the group as serving similar markets. are produced: 50 years’ experience, more than 1,000 systems, global market leader for vacuum sintering systems.

Crystal Growing Systems Semiconductor Systems

This division, mainly created by a spin-off from Leybold Systems, is the leading system ON PVA TePla is offering in that division high tech systems for the semiconductor industry, supplier for the semiconductor, photovoltaics and optoeletronical industry. PVA TePla starting with systems for the production of silicon crystals for the semiconductor has all industrial relevant methods of crystal growing, especially for growing mono- and opto-eleletronic industry to systems for plasma treatment in the semiconductor and multicrystalline silicon crystals. assembly. The company also supplies innovative systems for non destructive, ultrasonic quality inspection for high tech materials.

Plasma Systems Solar Systems

After the merger between PVA with Tepla AG in 2002 the Group incorporated the unit ON The Solar Systems Division specializes in the development, engineering of systems for Plasma Systems. In that division systems for surface engineering of material using processing high-quality crystals. PVA TePla AG is able to provide all the major industrially plasma are produced. relevant processes, especially in the area of growing mono- and polycrystalline silicon crystals. Markets can be served according to the technical requirements of the clients. PVA TePla Annual Report 2008 PVA TePla Annual Report 2008

Divisions 2008 Divisions 2009 Changing Structures Changed requirements

Vacuum Systems Industrial Systems

Crystal Growing Systems Semiconductor Systems

Plasma Systems Solar Systems

For nearly two decades, PVA TePla AG has being providing leading companies worldwide with vacuum and high- temperature process systems. With its systems and associated services, PVA TePla enables complex manufacturing processes and technological developments of materials, particularly in the semiconductor, hard metal, electrical/electronic and optical industries as well as in the energy and photovoltaic markets.

Our company provides its customers with customized solutions from a single source. These range from technology development through tailor-made design of production systems right up to after-sales service. We are entering the latest fields of application jointly with our customers – be they next-generation wafers for use in the semiconductor or photovoltaic industries, powder metal technology, new crystals for the optoelectronic industry or further development of high-tech materials, such as metals and ceramics.

In January 2009, the company was reorganized into three new divisions: “Industrial Systems”, “Semiconductor Systems” and “Solar Systems”.

This structure enables customers to gain a quick and targeted overview of our portfolio.

Index

2008 Management and Group Management Report

PVA TePla AG

FOR OUR SHAREHOLDERS 6 Foreword by the Management Board 8 Report of the Supervisory Board 12 Corporate Governance Report 16 Openness and transparency - PVA TePla Shares 20

THE COMPANY 22 The new Headquarter 24 PVA TePla AG 34 Divisions 36

GROUP MANAGEMENT REPORT 42 2008 Management and Group Management Report PVA TePla AG 44

GROUP FINANCIAL STATEMENTS 72 Consolidated Balance sheet 74 Consolidated Income Statement 76 Consolidated Cash Flow Statement 77 Consolidated Statement of Changes in Equity 78 Notes to the Consolidated Financial Statements 79 Consolidated Statement of Changes in Fixed Assets 2008/2007 128 Responsibility Statement 132 Auditor´s Report 133

single-entity 134 FINANCIAL STATEMENTS

Balance sheet 136 Income Statement 138 Notes to the Annual Financial Statements 139 Assets analysis 2008/2007 154 Responsibility Statement 158 Auditor´s Report 159

miscellaneous 160 Glossary 162 History 165 Financial Calendar 166 Imprint 166

March April May

PVA TePla AG`s net income 2007 PVA TePla announces the biggest High growth in sales revenues confirms the challenging forecast. order in company`s history. PVA and earnings in Q1 2008. TePla closes a contract worth EUR 76 million to supply crystal growing systems for the manufacture of monocrystalline silicon crystals with ASi Industries GmbH, Arnstadt, a wholly-owned subsidiary of ersol Solar Energy AG.

LOGO

August September November

Publication of the semi-annual PVA TePla receives an order New structure of divisions. report: Continuing high growth. for floatzone systems from Hoku From January 2009 the group is Materials, a division of Hoku structured in: Scientific, Inc. The order is worth - Industrial Systems roughly EUR 5 million. - Semiconductor Sytems - Solar Systems

May May June

PVA TePla Danmark, Frederikssund, The moving of the production At the Annual General Meeting receives an order from Taiwan. department to Wettenberg is done, the Board of Directors comment on Floatzone systems worth over therefore modern and timely the highly encouraging corporate EUR 5 million will be delivered to production facilities are available. performance of the last year. All the a Taiwanese silicon manufacturer items on the agenda at PVA TePla during 2009. AG‘s Annual General Meeting are passed with a large majority.

November December December

Significant increase in consolidated Major order from an important PVA TePla AG moves into the sales revenues and earnings in the German wafer producing company new headquarter. Therefore the third quarter. worth EUR 5 million, to deliver complete moving of the company is VGF-Systems of the type concluded. Almost 300 employees MultiCrystallizer. are working in the new production facilities and the new headquarter.

FOR OUR SHAREHOLDERS

Foreword by the Management Board 8 Report of the Supervisory Board 12 Corporate Governance Report 16 Openness and transparency - PVA TePla Shares 20

FOR OUR SHAREHOLDERS PVA TePla Annual Report 2008

Foreword by the Management Board Dear shareholders, business partners and colleagues,

The past year was an extremely eventful one for our Company. After relocating our production from Asslar to the new facilities in Wettenberg in the spring, the move to Wettenberg was completed in early December. All of our employees are now enjoying the benefits of a modern, efficient workplace and an attractive working environment. The premises in Wettenberg mean that we are well equipped for the future.

But the relocation of our production and administrative facilities was not the only success story – in economic terms, too, 2008 was the most successful year in the Company’s history. We comfortably achieved our stated revenue and earnings targets:

• Consolidated sales revenues increased to EUR 168.6 million, up around 50% year-on-year. • Operating profit also rose significantly from EUR 10.0 million in the previous year to EUR 15.0 million, with the EBIT margin improving to 8.9% as forecast.

These successes are attributable to the high level of personal commitment on the part of our employees, for which we would like to express our gratitude. Report of the Corporate Supervisory Board Governance Report PVA TePla Shares

Foreword by the Management Board FOR OUR SHAREHOLDERS THE COMPANY

Arnd Bohle Chief Financial Officer Peter Abel Chief Executive Officer MANAGEMENT REPORT

The Company’s strong growth was driven in particular by the Crystal Growing Systems and Vacuum Systems divisions. GROUP

Due to the outstanding order situation and the major orders on hand, the Crystal Growing FINANCIAL STATEMENTS Systems division increased its sales revenues year-on-year from EUR 60.1 million to EUR 105.8 million. Sales revenues in this division were generated in two markets: semiconductors and photovoltaics. We believe that the photovoltaics market will continue to offer the highest growth potential in the near future. Despite the difficult overall environment, we expect the intensive contact we pursue with our customers to result in considerable orders. The specific challenges in this market are also documented by the SINGLE-ENTITY new competence center for industrial crystal growth at our Wettenberg site. The ability FINANCIAL STATEMENTS to operate various types of crystal growing system and the expertise of our employees have considerably expanded our options for the optimization of systems technology and processes, as well as materials testing and training. miscellaneous 10 PVA TePla Annual Report 2008

PVA TePla’s branch in Denmark, which specializes in crystal growing systems using float zone technology, further increased its business volume as in 2007 on the back of the global expansion in polysilicon production capacity. Our subsidiary PVA TePla Analytical Systems, which manufactures instruments for the non-destructive ultrasonic inspection and quality control of materials, not only made a significant contribution to sales revenues but also proved to be an excellent addition to our portfolio.

The Vacuum Systems division generated sales revenues of EUR 46.0 million after EUR 36.9 million in fiscal year 2007, an increase of 25%. As in previous years, the share attributable to exports remained high. Pressure sintering systems for hard metal again accounted for the largest proportion of sales revenues, but we also offer interesting products for a wide range of additional markets, such as systems for cleaning graphite or soldering materials for the electrical industry.

The Plasma Systems division recorded a net loss on the back of sales revenues of EUR 16.8 million; however, the operating loss declined as against the previous year and a positive operating result was achieved in the second half of 2008.

The high order backlog of EUR 152 million at beginning of 2009 gives us grounds for optimism in the current fiscal year. As a result, we are confirming our stated forecasts for fiscal year 2009. However, further changes in economic conditions and their impact on our Company are difficult to predict at present. We are seeing a significant slowdown in individual submarkets such as semiconductors and hard metal; however, demand remains strong in other submarkets (e.g. float zone systems and analysis systems). In 2009, sales opportunities are expected to arise in the solar market in particular as a result of our focus on key customers with the corresponding potential.

One negative note in the otherwise successful economic situation at PVA TePla is the Company’s share price. We are confident that the current level of market capitalization in no way reflects our true enterprise value. Our share price was unable to escape the poor sentiment affecting the stock markets as a whole, and solar stocks in particular. This development is especially disappointing in light of the importance we place on capital Report of the Corporate Supervisory Board Governance Report PVA TePla Shares 11

Foreword by the Management Board

market communications and the significant intensification of our activities in this area over FOR OUR SHAREHOLDERS recent years.

We introduced a new Group structure at the start of the current fiscal year. PVA TePla is now organized into the Industrial Systems, Semiconductor Systems and Solar Systems divisions. This move is intended to afford a sharper product focus in individual markets, as THE COMPANY well as improving operational transparency for the capital markets.

Alongside the change in our organizational structure, we also have a new logo and a new website, all of which serve to document the fresh, future-oriented and global market focus of our Company.

We would like to thank our business partners and, in particular, all of our shareholders for the confidence they have shown in us and the successful cooperation we have enjoyed. MANAGEMENT REPORT GROUP FINANCIAL STATEMENTS

Regards, SINGLE-ENTITY FINANCIAL STATEMENTS

Peter Abel Arnd Bohle - Chief Executive Officer - - Chief Financial Officer - miscellaneous 12 PVA TePla Annual Report 2008

Report of the Supervisory Board on fiscal year 2008

2008 was another very successful fiscal year for PVA TePla AG. Business volume rose for the fifth consecutive year and profitability improved again. Our ambitious goals of increasing sales revenues by around 50% and achieving an EBIT margin of 9% were attained in line with submitted forecasts. In addition, moving the Company headquarters to the newly- built modern production and management buildings in Wettenberg was completed. The Supervisory Board would like to thank all the Company‘s employees for their high level of commitment that made this success possible at all.

The Company‘s new buildings in the new Wettenberg location have significantly larger and more advanced capacities. Production capacities in 2008 and also now are well utilized due to the order level.

Even against the background of the economic environment that has been deteriorating significantly since September 2008 due to the development of the overall situation, PVA TePla AG began fiscal year 2009 with good prospects. The high level of reliable orders largely ensures that the 2009 targets will be reached. As a supplier of pioneering system technology for high-tech materials, PVA TePla is very well positioned in the relevant markets in the long term.

In fiscal year 2008, the Supervisory Board continued to regularly monitor the work of PVA TePla AG’s Management Board and assist it in an advisory capacity. In doing so, the Supervisory Board focused intensely on the PVA TePla strategy and planning as well as its economic and financial situation. The basis for this were detailed reports in both written and oral form. The Management Board regularly, promptly and extensively informed the Supervisory Board of business policies and other essential matters regarding Company management and planning as well as Company strategies, financial development and results of operations, risk management, and other significant events for PVA TePla. Foreword by the Corporate Management Board Governance Report PVA TePla Shares 13

Report of the Supervisory Board

Special attention was paid to processing orders according to plan, especially existing large orders, development in relevant markets, and implementing new construction measures. The Supervisory Board was included in all vital decisions that could affect the Company. The Supervisory Board also received regular monthly reports from the Management Board on the FOR OUR SHAREHOLDERS development of the company’s economic situation. In addition to meetings and reports, the Chairman of the Supervisory Board also had regular talks with the Management Board in order to stay informed of the

current situation. THE COMPANY

Supervisory Board Meetings

Alexander von Witzleben In the course of fiscal year 2008, the Supervisory Chairman of the Supervisory Board Board held a total of four ordinary meetings. In the

first meeting on March 26, 2008 the Management Board provided detailed information to the Supervisory Board regarding the economic situation and the Company’s business divisions for fiscal year 2008. The status of major projects also took significant time in the discussions. The planned sale of UV SYSTEC´s MANAGEMENT REPORT operating business was discussed in detail followed by the approval of a suitable asset deal. The focus of the meeting on March 26, 2008 was on passing and adopting the annual financial statements as of December 31, 2007. The auditors participated in the meeting and commented in detail on the annual financial statements, as well as responding to GROUP questions from the Supervisory Board. In addition to the annual financial statements, the current business situation for the new fiscal year 2008 was also discussed. Moreover, FINANCIAL STATEMENTS the Supervisory Board approved the 2007 annual financial statements, adopting them in accordance with Section 172, sentence 1 of the AktG (German Public Limited Companies Act), and passed the proposed resolutions for the items on the agenda for the 2008 Annual General Meeting.

In the second ordinary Supervisory Board meeting of 2008 on June 19, the Supervisory SINGLE-ENTITY

Board was informed about the business situation up to April 30, 2008 and also received FINANCIAL STATEMENTS an overview of the economic situation in the individual business divisions.

In the meeting on September 23, 2008, business developments in the PVA TePla-Group up to and including August 31, 2008 were discussed and an overview of the forecast miscellaneous 14 PVA TePla Annual Report 2008

business figures to December 31, 2008 was given. The restructuring of the business divisions in PVA TePla was also discussed in detail, and the model for a future business structure prepared by the Management Board was approved. The old Group structure needed to be reworked because of a significant shift in the content and weighting of the business divisions. The “Solar Systems” division in particular has increased in market potential due to the global rise in importance of the photovoltaic industry. In addition, establishing a Competence Center for Crystal Growing Systems was discussed, in which research and development for crystal growing systems can be carried out as well as customer training in crystal growing systems. The Supervisory Board was also informed of the status of the new construction measures.

In the last meeting of 2008 on November 25, 2008, the strategic development of the Company in the upcoming years, the expansion of business divisions and their market potential were all discussed extensively. In addition, the Company planning for 2009 to 2011, proposed by the Management Board, was intensively discussed, reviewed and finally authorized. The status of implementing the new Group structure and thenew corporate design as well as the status of new construction measures and the impending move to Wettenberg were also discussed in detail. All members of the Supervisory Board attended all ordinary and extraordinary meetings in fiscal year 2008. Due to the fact that the Supervisory Board consists of only three people, no committees were formed. All matters that would be handled by committees were dealt with in plenary sessions.

Corporate Governance Compliance with the recommendations of the German Corporate Governance Code is felt by the Supervisory Board to be a matter of special importance. Deviations from this Code have been discussed intensively between the Management Board and the Supervisory Board. The Declaration of Compliance required under Section 161 of the AktG was jointly approved and published by the Management Board and the Supervisory Board at the meeting of the Supervisory Board on November 25, 2008. A copy of the Declaration of Compliance has been published in the section “Corporate Governance Report” in the 2008 Group Annual Report on page 19 as well as on the homepage at www.pvatepla.com. This report also includes the basic structure of the remuneration system for members of the Management Board and the Supervisory Board.

Self-evaluation using a detailed list of questions was continued, thereby examining the efficiency of the Supervisory Board as required by the German Corporate Governance Code. Foreword by the Corporate Management Board Governance Report PVA TePla Shares 15

Report of the Supervisory Board

Annual Financial Statements The auditing company „Ebner Stolz Mönning Bachem GmbH & Co. KG, Wirtschaftsprüfungsgesellschaft Steuerberatungsgesellschaft“ (formerly: „Dr. Ebner, Dr. Stolz und Partner GmbH Wirtschaftsprüfungsgesellschaft Steuerberatungsgesellschaft“), elected by the Annual General Meeting, audited the PVA TePla AG annual financial statements and the consolidated financial statements as well as the management report FOR OUR SHAREHOLDERS for PVA TePla AG and the Group up to December 31, 2008. The auditor found that these consolidated financial statements were prepared in accordance with the International Financial Reporting Standards (IFRS) and reflect a true and fair view of the net assets, financial position and results of operations as well as cash flows in the fiscal year. None of the audits led to any reservations. The financial statements, management reports THE COMPANY and the respective audit reports by the auditor were provided to each member of the Supervisory Board and discussed in detail at the meeting of the Supervisory Board on March 27, 2009. The auditor also reported on the key findings of the audit at this meeting. We carried out an independent inspection of the annual financial statements including the management report and the consolidated financial statements including the Group management report, provided by the Management Board and granted our approval. The annual financial statements of PVA TePla AG are thereby adopted in accordance with MANAGEMENT REPORT Section 172, Sentence 1 of the AktG. We approve the proposal on the appropriation of net profit, under which the net profit for the year under review will be offset against the loss from the previous year and the remaining amount carried forward to new account.

The Supervisory Board will continue to provide the Management Board with constructive GROUP support in its upcoming responsibilities in the current fiscal year. FINANCIAL STATEMENTS

Wettenberg, March 27, 2009

On behalf of the Supervisory Board, SINGLE-ENTITY FINANCIAL STATEMENTS

Alexander von Witzleben - Chairman of the Supervisory Board of PVA TePla AG - miscellaneous 16 PVA TePla Annual Report 2008

Corporate Governance Report

Corporate Governance at PVA TePla AG fulfils all statutory requirements and complies with the recommendations in the Corporate Governance Code except for a few minor deviations as explained in the following Declaration of Compliance.

Shareholders reports, the Supervisory Board Chairman is updated Our shareholders exercise their rights at the Annual during regular meetings with the Management Board. General Meeting. They may exercise their voting rights personally or through a proxy acting in accordance with the shareholder’s instructions. Proxies are nominated by Remuneration Report the Management Board and their names are announced The following report describes the structure and in the letter of invitation to the Annual General Meeting. determination of remuneration for the Management We publish the documents for the invitation to the Board and the Supervisory Board. Annual General Meeting on our website. Remuneration of the Management Board Management Board and Supervisory Board The remuneration of the Management Board members The Management Board of PVA TePla AG determines consists of a non-performance related basic salary, the corporate goals, strategic alignment, corporate other benefits (mainly non-cash benefits from the policy as well as organizational structure of the Group. use of a company car and subsidized contributions to In particular, this includes managing the Group including health insurance) and variable performance-related its financial resources, coordinating and monitoring the components that include both one-time and annually business divisions, planning human resources as well as recurring components in the form of bonuses linked to presenting the Company to the capital market and the the Company’s success. The bonuses are measured as general public. a percentage of the annual net profit of the PVA TePla Group. The details can be found in the notes to the The Management Board informs the Supervisory Board consolidated financial statements. promptly and comprehensively about all relevant plans involving the Company. Transactions and measures Remuneration of the Supervisory Board which require Supervisory Board approval are submitted The remuneration of Supervisory Board members is to the latter in a timely manner. regulated by Article 14 of the Articles of Association of the Company. The Supervisory Board of PVA TePla AG consists of three members who are informed in detail about the In line with this regulation, the remuneration of the financial situation and business development of the Supervisory Board in the 2008 fiscal year was EUR 100 Company at four meetings annually. Regular monthly thousand. In line with the Articles of Association of the reports by the Management Board detailing key financial Company, the Supervisory Board members receive total and performance figures of the Company enable the compensation of 1% of the profit from ordinary activities Supervisory Board to monitor development of the not to exceed total compensation of EUR 100,000. business situation. In addition to Board meetings and Foreword by the Report of the Management Board Supervisory Board PVA TePla Shares 17

Corporate Governance Report

Stock options were not granted to members of the Management Board and the Supervisory Board in fiscal year 2008.

Shareholdings and subscription rights of executive body members FOR OUR SHAREHOLDERS Management Board

Dec. 31, 2008 Dec. 31, 2007 Dec. 31, 2008 Dec. 31, 2007 Subscription Subscription Shares Shares rights rights

Peter Abel (including PA Beteiligungs- 5,616,275 5,616,275 0 0

gesellschaft mbH) THE COMPANY Arnd Bohle 3,000 0 0 0

Supervisory Board

Dec. 31, 2008 Dec. 31, 2007 Dec. 31, 2008 Dec. 31, 2007

Subscription Subscription Shares Shares rights rights

Alexander von Witzleben 0 0 0 0 MANAGEMENT REPORT Dr. Gernot Hebestreit 0 0 0 0 Prof. Dr. Günter Bräuer 0 0 0 0

Directors´ Dealings GROUP

In line with Section 15a of the German Securities Trading Act (WpHG), members of the Management Board and the

Supervisory Board are required to disclose their transactions in PVA TePla AG shares. The following transactions were FINANCIAL STATEMENTS reported to PVA TePla AG over the course of fiscal year 2008:

Type and place Price Total volume Date Name Function of transaction Number (EUR) (EUR)

Oct. 6, 2008 Arnd Bohle Member of a management body Share purchase 1,000 4.45 4,450

Oct. 6, 2008 Arnd Bohle Member of a management body Share purchase 1,000 4.00 4,000 SINGLE-ENTITY

Oct. 16, 2008 Arnd Bohle Member of a management body Share purchase 1,000 3.20 3,200 FINANCIAL STATEMENTS miscellaneous 18 PVA TePla Annual Report 2008

Risk management Audit of annual financial statements PVA TePla AG is a fast-growing company facing The consolidated financial statements of PVA TePla numerous opportunities on the international markets. AG are prepared in line with the International Financial Entrepreneurial activity is simultaneously and inevitably Reporting Standards (IFRS). The single-entity financial associated with risks. The handling of opportunities and statements of PVA TePla AG conform to German risks is managed with an efficient risk management accounting legislation. The auditors are elected at system. the Annual General Meeting in line with statutory requirements. In line with item 7.2.1. of the German Details on the managing of risks faced by our Company Corporate Governance Code, the Supervisory Board are found under item 13 of the group management obtains a statement of independence from the auditor. report in the 2008 Annual Report. For the 2008 fiscal year, the audit of the financial statements was conducted by Ebner Stolz Mönning Bachem Transparency and information GmbH & Co. KG, Wirtschaftsprüfungsgesellschaft The Management Board and Supervisory Board Steuerberatungsgesellschaft. The annual financial of PVA TePla AG attach great importance to the statements were granted an unqualified audit opinion. transparency of corporate decisions. Timely dialog with the shareholders of the Company, the capital market and interested members of the public aim to provide a comprehensive view of our Company. All documents relevant to this objective, in particular quarterly and annual reports, documents for the Annual General Meeting, ad hoc announcements, other press releases, financial calendars, disclosures in line with the Securities Trading Act and information on our divisions are published promptly and regularly and are publicly accessible at our website (www.pvatepla.com). Analysts and institutional investors are also provided with opportunities to inform themselves extensively about the business policies and prospects of our Company during road shows, balance sheet press conferences, analysts´ conferences, regular telephone conferences and one- to-one conversations. The corresponding presentations are also available on the PVA TePla website for those who are interested. Foreword by the Report of the Management Board Supervisory Board PVA TePla Shares 19

Corporate Governance Report

Joint declaration of compliance by the Management Board and the Supervisory Board of PVA TePla AG in line with Section 161 of the German Stock Corporation Act (AktG)

The Management Board and Supervisory Board of PVA TePla AG, domiciled in Asslar, Germany, hereby declare FOR OUR SHAREHOLDERS that the recommendations of the German Corporate Governance Code of the Government Commission in its currently published version dated June 6, 2008 have been and are complied with. The following are deviations from the Code regulations:

1. The German Corporate Governance Code (Item 3.8 THE COMPANY Paragraph 2) recommends including an appropriate deductible for liability insurance concluded by a company for its management board and supervisory board members (so-called directors and officers liability insurance, in short D&O insurance). PVA TePla AG’s D&O insurance policy for the members

of its executive bodies does not include a deductible. However, the members of executive bodies accept the following limited amounts of personal liability towards MANAGEMENT REPORT the Company:

- up to 50% of annual Supervisory Board remuneration for Supervisory Board members - up to 20% of their respective fixed annual remuneration for Management Board members. GROUP

2. Item 5.3 of the Code recommends the Supervisory

Board to form committees. Due to the limited size FINANCIAL STATEMENTS of the Supervisory Board of PVA TePla AG (three members), no committees are formed. The issues for the committees as specified in Item 5.3 are dealt with by the entire Supervisory Board.

Asslar, November 25, 2008 SINGLE-ENTITY

on behalf of the Management Board on behalf of the Supervisory Board FINANCIAL STATEMENTS

Peter Abel Alexander von Witzleben Chief Executive Officer Chairman of the Supervisory Board miscellaneous 20 PVA TePla Annual Report 2008

Openness and transparency - PVA TePla Shares Speaking with our shareholders

Open dialog with our Company’s shareholders is Annual General Meeting especially important to us. In the current difficult The Annual General Meeting took place at Wetzlar’s situation on the financial and capital markets, we are town hall on June 19, 2008. 52% of the capital continuing to communicate with our shareholders as with voting rights was present at the Annual well. The main event of the year for this purpose is General Meeting. All agenda items proposed by the the Annual General Meeting which took place on Management Board and the Supervisory Board were June 19, 2008 at the town hall in Wetzlar, Germany. accepted by the shareholders with a large majority. We also promptly informed institutional investors of our Company’s prospects in telephone conferences Shares in a volatile environment for the publication of the annual and quarterly figures PVA TePla AG shares have also become sucked into the as well as at a large number of conferences and maelstrom of the general negative market sentiment roadshows in Germany and abroad. Several one-on- on the global stock exchanges. This also includes one discussions, normally held with the Management a very negative development of share prices in the Board directly, round off our communications with solar industry. Significant price gains that our shares the capital markets. The focus of the discussions was had achieved in past years were lost again due to this explanations of PVA TePla’s business model and the development. The share price declined from EUR 11.79 resulting specific features of the project business of a on December 28/29, 2007 to EUR 2.92 on December system manufacturer. The key economic figures and 30, 2008, therefore losing 75% in value. It fell further the visibility of the Company’s order situation were in the first two months of 2009. In view of the good also a large part of the discussions. business figures and the overall positive development of the Company, this share price decline since the Relevant presentations on a number of the above- beginning of 2008 is not justifiable and not explainable mentioned events can be seen on our homepage. merely as a result of market sentiment.

Our investors and interested parties will find Our competitors and relevant Prime Standard indices comprehensive information regarding PVA TePla shares such as „Technology All Share“ and „DAXSubs. under Investor Relations on the Company’s website Advanced Industrial Equipment“ also posted comparable at www.pvatepla.com, which was restructured and price declines. redesigned in February 2009. If you wish to talk one- on-one, you can contact Dr. Gert Fisahn, our Investor Relations manager, at +49(0)641/686 90-400 or by email at [email protected]. Foreword by the Report of the Corporate Management Board Supervisory Board Governance Report 21

PVA TePla Shares

Performance of PVA TePla shares January 2007 – February 2009

250

200 FOR OUR SHAREHOLDERS

150

100

JFMAMJJASONDJFMAMJJASONDJF THE COMPANY

2007 2008 2009

PVA TePla AG DAXSubs. Advanced Industrial Equipment Tec All Share

Development of PVA TePla shares MANAGEMENT REPORT Base: Xetra prices

2008 2007

Earnings per share (EPS) EUR +0.46 +0.28 Annual high EUR 11.80 11.94 GROUP Annual low EUR 2.28 4.48 Closing price as of December 30 EUR 2.92 11.79

Performance of PVA TePla shares % -75 154 FINANCIAL STATEMENTS Performance of Technology All Share % -50 22 Performance of DAXSubs. Advanced Industrial Equipment % -52 -2 Number of shares at year-end Million 21.75 21.75 Free float % 74.20 74.20 Market capitalization at year-end Million EUR 63.51 256.43 SINGLE-ENTITY FINANCIAL STATEMENTS

Shareholding structure PA Beteiligungs- Free float gesellschaft

74.2 25.8 miscellaneous

THE COMPANY

The new Headquarter 24 PVA TePla AG 34 Divisions 36

THE COMPANY 24 PVA TePla Annual Report 2008

The new Headquarter New site for developing high-tech high-temperature vacuum process systems

Strong growth requires greater capacities for development and administration

The nucleus of PVA TePla AG originated in 1991 as a flash in the pan, but as a sustainable development. from a management buy-out of the Vacuum Systems Our own market evaluation is therefore in line with all Division for Metallurgy from what is now Pfeiffer forecasts. Because of the increasing fossil fuel shortage, Vacuum Technology AG. After the buy-out, the sustainable sources of energy, such as wind and solar newly formed company initially moved to separate power, will become increasingly important in the premises on the factory site of the former parent future. As one of the leading manufacturers of crystal company in Asslar. Since then, the world of PVA TePla growing systems – a major link in the value chain of the has changed fundamentally. Recently, the group has photovoltaics industry – we are benefiting particularly grown considerably. Need for office capacity and from this trend. production facilities grew too large for the two most important sites in Asslar and Jena and no longer met Therefore, we decided to significantly expand capacity the technical, logistical and even visual demands of in Jena in order to be able to manage serial production modern company management – this was particularly of crystal growing systems for customers in Germany the case in Asslar. Fundamentally new, future-oriented and abroad. By creating two further halls in the existing solutions had to be found. grounds, we converted what was approximately 4,500m2 of floor space in 2006 into 7,500m2 – an increase of 3,000m2 (i.e. two thirds) in just eight months. Jena: Significant expansion of assembly areas The investment volume amounted to approximately and new production logistics for Crystal Growing EUR 5 million. Systems This started at our Jena site in 1999, where we founded This means that we are prepared for further growth: At PVA Vakuum Anlagenbau Jena GmbH. As the name the time of commissioning in mid-2007, approximately indicates, in the past our Vacuum Systems Division 70 people were employed in Jena. At the end of 2008, primarily used that site for production. Because the the number had already reached around 100. But, it was Crystal Growing Systems Division has been expanding not only the production areas that had been expanded significantly since 2006 due to the very good order and the number of employees that had been increased. situation from the semiconductor and photovoltaics There was also the introduction of modern production industries, the decision was made to increasingly convert methods, such as assembly lines and optimized the production capacities in Jena to the production of logistics. By doing this, we have considerably reduced crystal growing systems. the assembly times of typical small series production like that used for crystal growing systems and thus We view the strong growth in demand in this area not increased productivity. PVA TePla AG Divisions 25

The new Headquarter FOR OUR SHAREHOLDERS

Main building including administrative and construction departments THE COMPANY

Competence Center for industrial Service center of PVA Löt- und crystal growth Werkstofftechnik

MANAGEMENT REPORT GROUP FINANCIAL STATEMENTS Area for logistics and workshops

Production facility for vacuum systems SINGLE-ENTITY FINANCIAL STATEMENTS miscellaneous 26 PVA TePla Annual Report 2008

Ideas require scope

The new headquarter of the PVA TePla-Group in Wettenberg: Functions and esthetics consistent with our technological leadership in future markets PVA TePla AG Divisions 27

The new Headquarter FOR OUR SHAREHOLDERS THE COMPANY

MANAGEMENT REPORT GROUP FINANCIAL STATEMENTS SINGLE-ENTITY FINANCIAL STATEMENTS miscellaneous 28 PVA TePla Annual Report 2008

Our service center for brazing and materials technology Wettenberg: New production facilities for Vacuum of our subsidiary PVA Löt- und Werkstofftechnik also Process Systems and Competence Center for gained new premises in Jena. There, a wide range of Crystal Growing material compounds for modern high-performance The overall plan can be divided into production materials, which also comply with the highest quality facilities and administration facilities. It began with standards, are produced for customers using PVA the construction of the production facilities. These are TePla’s vacuum high-temperature brazing technology. primarily used by the Vacuum Systems division. This Business Unit can now also keep up with growing customer demand. It is a building complex with three factory units and office, social and technology rooms and a covered floor space of 11,000m2. The focused planning and execution Largest investment in the company’s history process lasted from March 2007 until April 2008 and Investments in Jena during 2006/07 were in turn clearly was supervised by an experienced general contractor. exceeded by the building activities in Wettenberg. We celebrated the topping-out as early as the end of On the one hand, they were the result of profitable September 2007 and the move to the modern new company growth. On the other hand, they constitute the production facilities was completed as planned in May accommodation prerequisites for continued growth. 2008. The employees who have already moved into the new, well lit premises that also fulfill all technical The most recent building investments, totaling over requirements see a fundamental improvement in the EUR 20 million, represent the largest investment workplace quality. In addition, logistical processes in object in our company’s history. They cover all facilities production have been improved substantially. that were necessary for the relocation of the company headquarters and all units that were located at the previous site in Asslar.

Three modern halls with a utilized area of 11.000m2 form the new production facility in Wettenberg PVA TePla AG Divisions 29

The new Headquarter FOR OUR SHAREHOLDERS THE COMPANY

MANAGEMENT REPORT GROUP FINANCIAL STATEMENTS SINGLE-ENTITY FINANCIAL STATEMENTS

Continuous process optimization reduces costs and expenditure of time

Vaccum sintering systems are among the core competence of PVA TePla miscellaneous 30 PVA TePla Annual Report 2008

The new production facilities enable an improvement of the logistic operations PVA TePla AG Divisions 31

The new Headquarter

Company headquarters relocated from Asslar to Wettenberg As well as relocating the production facilities of the Vacuum Systems division, at beginning of December 2008 the Group headquarters of PVA TePla AG was also relocated to Wettenberg. When searching for a new site for the headquarters, there were several other locations FOR OUR SHAREHOLDERS available in the region, as well as the previous site in Asslar. There are various reasons why we eventually chose Wettenberg, a community north of Giessen, just 25km from Asslar and with a similar population size of 12,000.

Essentially, only a location near to the old one could THE COMPANY be considered because we wanted to lose as few employees as possible due to the distance. Affordable land, competent administrative partners in the community and in the district of Giessen spoke in favor of the new location in Wettenberg.

As well as the location quality, involvement in a science region was also important for the company in order to acquire skilled staff for future company development. MANAGEMENT REPORT The Giessen-Friedberg University of Applied Sciences and both of Central Hesse’s universities, particularly the Justus-Liebig-University, offer this possibility. Just as the old site had good transport links, so does the new site as it is very near to the highway and all major supply lines, which is not necessarily always the case given the GROUP space we required. In total, we initially acquired land with an area of close to 28,000m2. Moreover, there is

still the possibility of expanding further onto neighboring FINANCIAL STATEMENTS plots of land.

Successful interplay between the community and the company Cooperation is also a win-win situation for the Wettenberg community because they were able to SINGLE-ENTITY

attract their first company listed on the stock exchange FINANCIAL STATEMENTS – and a globally operating high-tech company with excellent future and workplace prospects at that. In the Krofdorf-Gleiberg South business park, which has been developed in the last 11 years, we are currently by far the largest employer with some 300 staff. miscellaneous 32 PVA TePla Annual Report 2008

New headquarters – completion of new electricity originate from PVA TePla crystal growing construction project for the time being systems, by the way. Waste heat from the production processes is used to heat the office and production Construction of the separate office building above the rooms. new production facilities began in March 2008. In June, we celebrated the topping-out, and the move from Asslar to Wettenberg took place in December 2008. We take employee involvement seriously In accordance with PVA TePla’s company and Around 150 PVA TePla AG employees are now working management philosophy, the basic concept of the new on a floor space of some 5,000m2. The functionality and buildings was not just left to the construction experts. esthetics of the new administrative buildings were of The Management Board actively contributed to the equal importance during the planning: The main focus planning process and sought specific advice from a was on a clear structuring of all functional units, simple number of employees: As part of a start seminar, in and delicate construction, light and friendly workplaces addition to the construction company, employees from as a result of large windows and architectural freedom all departments discussed the requirements of the of design, meaning that requirements could be also future workplaces. changed at a later date. The workshop began with an intensive review of the Ecological aspects were also taken into account when present building situation. Working in groups, the constructing the building and a photovoltaics system participants identified advantages. However, many was integrated on the roof and façade with an output negative aspects also came to light. Subsequently, of 28 kWp. The solar cells at the façade for generating the participants focused on planning, trends and

All the parties hereto roll The area in the township Many employees and the The construction goes up one`s sleeves for the of Wettenberg offers the Management of the Board forward efficiently through new building best requirements for our take an active part at the competent partners and building project planning and building accurate coordination process PVA TePla AG Divisions 33

The new Headquarter

developments. The desired set-up of the units was the former administrative building, large windows developed together in exact accordance with the to allow in as much daylight as possible, and well company situation – on the one hand to reflect the designed conference rooms to promote and facilitate necessary and desirable information exchange in the communication between the employees. Sport work process, on the other hand to take account of enthusiasts (PVA TePla has a sports club with very the optimum work flows in systems construction. committed members) have their own fitness area Energy aspects, colors, shapes and materials were where they can burn off calories if they have eaten too FOR OUR SHAREHOLDERS also discussed. much during the lunch break. PVA TePla now also has an in-house staff restaurant where employees from Under expert instruction, work groups worked on neighboring companies can eat as well. floor these concepts for production and administration overnight and presented them to the plenum the next With the moves behind us, it must be said that the day. One of these concepts, with the project name cooperation of the employees and the consideration

“Speed”, was expanded upon in the subsequent weeks of numerous suggestions have paid off: The new site THE COMPANY by the engineering company. Finally, the participants and buildings have been accepted very well and have got an idea of the investment needs and the time scale already come through their baptism by fire in day-to- of the project. day running of the company.

Overall, a large number of suggestions and wishes were incorporated into the final buildings. For example, they concerned the atmospheric layout, a fundamental change to the lighting compared with MANAGEMENT REPORT

The new site is Both economic and Esthetically and functionally The administrative characterized particularly ecological factors cause the production facility headquarters is ready for GROUP by an excellent the planning and the and the administrative occupancy infrastucture construction headquarters set new - Ideas obtain scope benchmarks FINANCIAL STATEMENTS SINGLE-ENTITY FINANCIAL STATEMENTS miscellaneous 34 PVA TePla Annual Report 2008

PVA TePla AG Everything changes but there is no difference

Together with its subsidiaries, PVA TePla AG is an internationally established supplier of systems and facilities for producing, treating and refining sophisticated industrial materials.

As a vacuum specialist for high-temperature and production and new fields of technology such as New technologies and broad range of applications from a single source. These range from technology plasma treatment processes, PVA TePla AG is one of production engineering, process engineering, optical PVA TePla is focused on future markets. Synergy development through tailor-made design and the key players in the world market for crystal growing and semiconductor technologies will in future be effects in the development of new systems and construction of production facilities right up to an after- and hard-metal sintering systems, as well as plasma influenced by new materials to an even greater extent processes are key aims, as is the optimized utilization sales service covering all four corners of the globe. systems used for surface activation and ultra-fine than ever before. of production capacities worldwide. Our low level of Jointly with our customers we will use our systems and cleaning. vertical integration affords us the flexibility to adapt facilities to venture into the latest areas of applications The development and production of these innovative capacities in line with market requirements at any – be it next-generation wafers for the semiconductor or With its systems and services, PVA TePla enables and materials will involve successfully mastering complex time. As one of the major systems producers for high- photovoltaic industries, powdered-metal technology, supports the most important manufacturing processes and challenging processes, which must be reproducible temperature vacuum and plasma systems, we exploit new crystals for the optoelectronic industry, fiber- and technological developments of industrial concerns, at all times to ensure that all products manufactured market opportunities and, by collaborating closely with optics for data transmission or the further development primarily in the semiconductor, hard metal, electrical/ in these process systems exhibit the same our customers, have established a role for ourselves as of high-tech materials. electronic and optical industries – as well as in the characteristics. For certain processes, it is frequently pioneers in the development of cutting-edge system forward-looking areas of energy, photovoltaic and necessary to introduce high temperatures on the one technology. environmental technology. hand, while on the other hand ensuring the complete absence of oxygen and other atmospheric gases that The company is composed of three divisions, in order New materials differ from existing materials both in have a negative effect on the production processes to meet the various challenges posed by the market terms of their physical structure as well as their chemical and materials. The business segments in which our and the customers operating within it. composition. They combine the qualities of known facilities and systems are deployed are extremely Market and customer focus materials, for example, the electrical conductivity of innovative and challenging from a technological point We provide our customers with tailor-made solutions metal with the corrosion resistance of plastics. This of view. opens up new areas of application for components that PVA TePla Group hitherto could not be used in conditions where they would be exposed to high temperatures or corrosive PVA TePla AG atmospheres. The task of materials engineering is to tailor the material properties to the respective field of use. This means using materials that are optimized in terms of performance and efficiency. According to assessments by a range of research institutions, the Industrial Semiconductor Solar majority of product and process innovations over the Systems Systems Systems next one to two decades will be based on improved or newly developed materials. Key areas of industrial The new Headquarter Divisions 35

PVA TePla AG

PVA TePla AG Everything changes but there is no difference

Together with its subsidiaries, PVA TePla AG is an internationally established supplier FOR OUR SHAREHOLDERS of systems and facilities for producing, treating and refining sophisticated industrial materials. THE COMPANY

As a vacuum specialist for high-temperature and production and new fields of technology such as New technologies and broad range of applications from a single source. These range from technology plasma treatment processes, PVA TePla AG is one of production engineering, process engineering, optical PVA TePla is focused on future markets. Synergy development through tailor-made design and the key players in the world market for crystal growing and semiconductor technologies will in future be effects in the development of new systems and construction of production facilities right up to an after- and hard-metal sintering systems, as well as plasma influenced by new materials to an even greater extent processes are key aims, as is the optimized utilization sales service covering all four corners of the globe. systems used for surface activation and ultra-fine than ever before. of production capacities worldwide. Our low level of Jointly with our customers we will use our systems and cleaning. vertical integration affords us the flexibility to adapt facilities to venture into the latest areas of applications The development and production of these innovative capacities in line with market requirements at any – be it next-generation wafers for the semiconductor or With its systems and services, PVA TePla enables and materials will involve successfully mastering complex time. As one of the major systems producers for high- photovoltaic industries, powdered-metal technology, MANAGEMENT REPORT supports the most important manufacturing processes and challenging processes, which must be reproducible temperature vacuum and plasma systems, we exploit new crystals for the optoelectronic industry, fiber- and technological developments of industrial concerns, at all times to ensure that all products manufactured market opportunities and, by collaborating closely with optics for data transmission or the further development primarily in the semiconductor, hard metal, electrical/ in these process systems exhibit the same our customers, have established a role for ourselves as of high-tech materials. electronic and optical industries – as well as in the characteristics. For certain processes, it is frequently pioneers in the development of cutting-edge system forward-looking areas of energy, photovoltaic and necessary to introduce high temperatures on the one technology. environmental technology. hand, while on the other hand ensuring the complete GROUP absence of oxygen and other atmospheric gases that The company is composed of three divisions, in order New materials differ from existing materials both in have a negative effect on the production processes to meet the various challenges posed by the market terms of their physical structure as well as their chemical and materials. The business segments in which our and the customers operating within it. FINANCIAL STATEMENTS composition. They combine the qualities of known facilities and systems are deployed are extremely Market and customer focus materials, for example, the electrical conductivity of innovative and challenging from a technological point We provide our customers with tailor-made solutions metal with the corrosion resistance of plastics. This of view. opens up new areas of application for components that PVA TePla Group hitherto could not be used in conditions where they would be exposed to high temperatures or corrosive

PVA TePla AG SINGLE-ENTITY atmospheres. The task of materials engineering is to tailor the material properties to the respective field of FINANCIAL STATEMENTS use. This means using materials that are optimized in terms of performance and efficiency. According to assessments by a range of research institutions, the Industrial Semiconductor Solar majority of product and process innovations over the Systems Systems Systems next one to two decades will be based on improved or newly developed materials. Key areas of industrial miscellaneous 36 PVA TePla Annual Report 2008

Industrial Systems Division Setting up technological benchmarks as a global market leader

The Industrial Systems Division of PVA TePla specializes primarily in the development, construction and marketing of thermic systems and systems for developing, manufacturing and treating high-quality materials at high temperatures.

With almost 50 years’ experience from more than 1,000 systems supplied worldwide, testimonials from big names in the industry and a diversified range of process systems, the Industrial Systems Division of PVA TePla sets technological standards that have seen it grow to become a global market leader in the provision of vacuum and pressure sintering systems. Besides Heat Treatment Systems, Nitriding Systems for surface treatment of tools are also part of the portfolio.

Vacuum systems for the universal application of sintering of metals and many other materials

Furnace with 4 chambers for heat treatment operation on parts such like brazing, annealing etc. in a fully automatic cyclic operation The new Headquarter PVA TePla AG 37

Divisions

Areas of Applications used in automobile and engine production due to its low specific weight and thermal stability.

Conventional materials offer many possibilites for One example application in the area of precision casting optimization. Shaping them with powder-metallurgical technology is the production of turbine blades, which methods enables complex components to be are becoming ever more fuel efficient, quieter and manufactured economically with the minimal use of therefore more ecologically friendly thanks to their FOR OUR SHAREHOLDERS materials and with efficient use of energy resources. ability to function at increasing operating temperatures (reaching above 1,200°C) in stationary gas turbines as Product characteristics are improved and adapted to well as in aircraft turbines. specific industrial needs. The desired characteristics can be achieved by systematically altering the structure Vacuum-based processes are used, for example, in the and purity of the material during thermal treatment treatment and coating of surfaces, for applications in

under vacuum or inert gas conditions. Thermal vacuum metallurgy to melt, alloy and cast metals, and in the THE COMPANY processes are becoming more and more important for production of high-quality materials, such as ceramics high-tech materials and modern materials of the highest and glass. They are also used in bonding processes, such quality, in particular. Depending on requirements, PVA as brazing and diffusion bonding. Vacuum switches for TePla systems can achieve temperatures of up to power plants with high rupturing capacities are bonded 3,000°C under vacuum conditions. in vacuum systems, for example.

The sintering of pre-formed hard-metal components Rising raw material prices and increasing requirements at high temperatures, vacuum conditions and regarding the purity of materials – for example graphite, subsequently under high pressure – for example, for which is used extensively in the crystal growing process MANAGEMENT REPORT the tooling industry – is one of the core competencies of the semiconductor and photovoltaic industries of PVA TePla. If hard-wearing and sturdy tools are – also boost opportunities for new application and required, hard-metal components are used. But other sales opportunities: Graphite can be cleaned up in a processes, such as the PulsPlasma® nitriding process of heat treatment system at up to 2,200°C and therefore our subsidiary PlaTeG, also lead to corrosion- and wear- reused. resistant work pieces – particularly made of steel. GROUP In this Business Unit, the surface treatment of work The PVA TePla systems are also suitable for sintering pieces using PulsPlasma® nitriding for wear protection ceramics, a material that is being increasingly is also used by our subsidiary PlaTeG in Siegen. FINANCIAL STATEMENTS

Consequently, the company’s target industries are extremely diverse and range from materials research, electrical engineering and electronics to machine tools, micromechanics, aerospace, sensor technology, the automotive industry, optics and optoelectronics, surface and coating technology, right up to photovoltaics, the semiconductor industry and energy SINGLE-ENTITY technology. FINANCIAL STATEMENTS miscellaneous 38 PVA TePla Annual Report 2008

Semiconductor Systems Division Setting up benchmarks as a global market leader

In the new Semiconductor Systems Division, all PVA TePla systems are concentrated for customers from the semiconductor industry. The main areas covered here are systems for crystal growing, for plasma applications and for quality control of high-quality materials and semiconductor devices.

Crystal Growing System for the production of high-quality silicon crystals for the semiconductor industry

Ultra-pure silicon crystals for high performance electronics are grown in a floatzone system The new Headquarter PVA TePla AG 39

Divisions

Areas of Applications of the most important and frequently performed steps in the production of semiconductor devices. At the back end of the semiconductor industry, chip packaging is becoming ever more Crystal growing systems for wafer manufacturers important due to the increasingly sophisticated chip packages Rod-shaped silicon monocrystals, also called ingots, are and optimized chip packaging processes that are required by cut into thin disks. Known as wafers in the semiconductor the increases in speed and efficiency of the chips. industry, they are the basic material for semiconductor FOR OUR SHAREHOLDERS production. The manufacture of 300mm silicon ingots, which Wafer thinning must meet the most stringent quality standards, requires The ever increasing storage capacity and processing power reliable crystal growing systems with very sophisticated of semiconductors on an increasingly small area is driving the process technology and a high level of automation. PVA trend for constant reductions in silicon chip thickness. Silicon TePla has been designing and building these kinds of thicknesses of 75μm and below are already commonplace systems for decades now. Also, systems for developing in mass-production processes around the world. Up to 10

the next-but-one generation of crystals and wafers with a of these chips are stacked on top of one another. In order to THE COMPANY diameter of 450mm have already been delivered. Power maximize the stability and processability of this extremely semiconductors in high-performance electronics are thin silicon material, all traces of damage left on their surface playing an increasingly important role in the development of after thinning must be removed. This is achieved at PVA electronic products. For optoelectronic and high-frequency TePla using a unique dry chemical process. This “stress applications, increasing use is being made of compound relief etching” is even used in slightly modified form to thin semiconductors. The gallium arsenide (GaAs) and indium the wafers. This will enable the production of ultra-thin chips phosphide (InP) base materials most frequently used for with a thickness of just 20 μm in future. these applications differ from silicon (Si) in that they have greater electron mobility, thus enabling the construction Analysis and quality control systems MANAGEMENT REPORT of transistors with higher frequencies. These types of PVA TePla offers two system lines for non-destructive quality compound semiconductors are therefore ideally suited for control of materials and devices for the semiconductor use in mobile radio communication (e.g. UMTS network) industry. With ultrasonic-based analytical systems for non- and in fiber-optic networks. Extremely pure silicon crystals destructive material investigation using high frequencies (up produced using the Floatzone process are also needed to 2GHz), quality control for devices from the semiconductor for the capacity expansions in silicon production that are industry and for the optoelectronics industry (e.g. MEMS. GROUP currently being undertaken worldwide. The increasing use LEDs) is made possible by very fine definition. In the of hybrid technology in the automotive industry will also semiconductor and photovoltaics industries, even entire create extra demand for extremely pure crystals. silicon blocks are checked for their flawless quality before FINANCIAL STATEMENTS they are processed any further.Also, a wide range of other Plasma systems for surface engineering applications is possible, for instance, examining the quality In its portfolio, PVA TePla has a series of systems in the of hard-metal devices. The introduction of the 300mm Semiconductor Systems division, in which targeted surface wafer generation has more than doubled the size of the engineering of material surfaces can be performed using wafer surface. However, with an unchanging thickness plasma. In this way, certain characteristics of material this is also accompanied by an increasing risk of breakage surfaces can be altered in a controlled manner. The central along with all the resulting consequences, such as lengthy SINGLE-ENTITY role played by plasma as a key technology, primarily in the production downtimes. When it comes to avoiding wafer FINANCIAL STATEMENTS semiconductor industry, in medical technology and other breakage, early detection of mechanical stresses is a industrial fields, is based on its exceptional characteristics, crucial factor. Moreover, stress interferes with the crystal such as high reactivity when a low level of stress is applied characteristics of silicon and therefore possibly with the to the surface being treated. Plasma treatment enables electrical characteristics of the chips. To this end, PVA TePla a wide range of applications involved in the production of supplies fully automated metrology systems for measuring semiconductors. At the front end of the semiconductor such mechanical stresses in wafers. Using polarized laser

industry, the removal of photoresist masks, referred to as light, these systems make it possible to visualize and miscellaneous ashing, after the etching or ion implantation processes is one quantitatively determine the stress distribution. 40 PVA TePla Annual Report 2008

Solar Systems Division Systems for high-quality Crystals

In the new division Solar Systems systems for processing high quality crystals are produced in addition to a number of other products. PVA TePla AG is able to provide all relevant processes, especially in the area of growing mono- and polycrystalline silicon crystals.

Monocrystalline silicon ingots grown in a crystal grower of the EKZ series

MultiCrystallizer for multicrystalline silicon blocks The new Headquarter PVA TePla AG 41

Divisions

Areas of Applications

The Solar Systems Division primarily builds systems Future photovoltaics for creating extremely high-quality silicon crystals Silicon is extremely important for the photovoltaic and blocks. These crystals are vital components in the industry, a field that is continuing to expand global photovoltaics value chain. In the coming years, rising production capacities for solar modules. State FOR OUR SHAREHOLDERS raw material prices, increasing scarcity of fossil fuel sponsored programs have supported Germany in resources and global warming will spur on the market achieving a leading position on the global solar power for alternative energies. In this field, PVA TePla systems market. Similar programs are also in place in many other dominate the whole range of manufacturing processes European countries. The US photovoltaics market also for growing mono- and polycrystalline silicon crystals. offers great growth potential. With its high rate of solar This thus allows the markets to be served so that radiation over large, sparsely populated areas, the USA

the technological requirements of the customers are is a particularly attractive market for solar energy. Added THE COMPANY fulfilled in an optimal manner. The different types of to this, the programs set up by individual states have systems for the production of mono- and polycrystalline now been replaced by a federal system for advancing crystals ensure the highest level of productivity: solar power. Large percentages of the investments being made can now be claimed back via a tax refund. Cz (Czochralski) – monocrystalline As well as Crystal Growing Systems, the division offers other products for the field of solar power.

FZ (Floatzone) – monocrystalline A newly opened technical center for crystal growth VGF (Vertical Gradient Freeze) – multicrystalline in Wettenberg is equipped with crystal growing MANAGEMENT REPORT systems for growing monocrystalline crystals and a EFG (Edge Defined Film Fed Growth) – MultiCrystallizer for producing multicrystalline silicon multicrystalline blocks. These systems are used for training employees, giving customers tours, training customers and joint The Crystal Growing Systems Division of PVA TePla developments with customers as well as consolidating has a long tradition of growing crystals: Since 1958, the expertise of PVA TePla in the area of crystal growing. GROUP over 600 systems have been installed. Besides the growing systems, further products are being tested and optimized in the technical center, for

example crackers for crushing raw silicon, and feeders FINANCIAL STATEMENTS for recharging raw silicon in crystal growing systems. SINGLE-ENTITY FINANCIAL STATEMENTS miscellaneous

2008 Management and Group Management Report PVA TePla AG

Introduction 44 Reporting Structure 44 Business and General Environment 46 Structural changes within the PVA TePla Group 48 Sales revenues 48 Orders 52 Production 55 Research and development 56 Investments 57 Net assets and financial position 58 Results of operations 61 Growth in workforce 63 Risk Report 63 Mandatory information to be provided by companies quoted on the stock exchange 68 Remuneration Report 69 Supplementary report 69 Outlook 70

Management Report 44 PVA TePla Annual Report 2008

2008 Management and Group Management Report PVA TePla AG, Wettenberg

1. Introduction systems for plastic and steel. Inspection and analysis devices for quality control of manufactured materials This management report describes the business round out the Group’s portfolio. This market will exist as development of PVA TePla AG (the “Company”) and its long as high-tech materials are produced and optimized. subsidiaries (collectively referred to as “PVA TePla” or the “Group”) in fiscal year 2008. The markets served by PVA TePla are characterized by a limited number of suppliers and by global dimensions. PVA TePla operates worldwide as a supplier of systems PVA TePla products are sold in technologically demanding for the production and processing of high-quality materials markets, predominantly in attractive market niches, but including hard metals, metals, semiconductors, ceramics also in such fast-growing markets as photovoltaics. and glass, and provides surface treatment of these materials and a range of plastic surfaces. The production and treatment processes for these types of materials 2. Reporting Structure require complex systems in which stable processes can be carried out under reproducible conditions. For this Due to the increasing degree of integration between PVA reason, these processes typically take place in vacuum TePla Group divisions, an isolated analysis of PVA TePla conditions, in inert gas atmospheres, at high temperatures AG excluding the activities of the subsidiaries provides or using low-pressure plasma. only an incomplete view of the business and financial situation of PVA TePla AG. It was thus again decided PVA TePla supplies vacuum systems for producing and to waive the preparation of a separate management treating high-tech materials and surfaces in vacuum, report for PVA TePla AG for the present reporting year. high-temperature and plasma environments. The global In this combined management and Group management market for these systems involves advanced state-of- report, specific aspects necessary for understanding the the-art materials and surface treatment technologies situation of PVA TePla AG are respectively discussed in including 300mm silicon (Si) wafer technology for separate sections. This integrated management report semiconductors, mono- or poly-crystalline wafers for is also a part of the single-entity financial statements of photovoltaics, structural materials, such as for telescopes PVA TePla AG. The PVA TePla AG consolidated financial in outer space, metal powder production technologies, statements were prepared in accordance with IFRS such as for hard metals, micro-sensor production international accounting principles. The single-entity technologies (MEMS, Micro Electromechanical Systems) financial statements of PVA TePla AG are prepared in and luminous light sources from semi-conductor diodes accordance with the accounting principles applicable (HBLED, High Brightness Light Emitting Diodes), ultra- under German Commercial Code (Handelsgesetzbuch thin wafer production technology, and surface treatment – HGB). 45

Management and Group Management Report

Group business activities and reporting are organized Vacuum Systems, Crystal Growing Systems and until December 31, 2008 into the three divisions Plasma Systems.

Vacuum Crystal Growing Plasma Systems Systems Systems FOR OUR SHAREHOLDERS

PVA TePla AG/ PVA TePla AG/ PVA TePla AG/ Vacuum Systems Division, Crystal Growing Systems Plasma Systems Division, Wettenberg (HQ) Division, Wettenberg (HQ) Feldkirchen THE COMPANY

PVA TePla America Inc., PVA Control GmbH, PVA TePla Danmark, Corona, California, USA Wettenberg Frederikssund, Denmark Plasma Systems GmbH, PVA Löt- und Feldkirchen Werkstofftechnik GmbH, Crystal Growing Systems GmbH, Jena Wettenberg PlaTeG GmbH, Siegen PVA Jena Immobilien GmbH, Xi`an HuaDe CGS Ltd., Jena Xi`an, China

PVA TePla Singapore Pte. Ltd., MANAGEMENT REPORT Singapore

PVA Vakuum Anlagenbau Jena GmbH, Jena

PVA TePla Analytical Systems GmbH, Aalen GROUP

The divisions highlighted in grey were included in the AG single-entity financial statements FINANCIAL STATEMENTS

There was a change in the divisional structure structure will be reflected in reporting for the first time effective January 1, 2009. Since this date, PVA in the first quarter of 2009. TePla has been organized into the divisions Industrial Systems, Semiconductor Systems and Solar Systems. This management report contains forward-looking This move was intended to afford a sharper product statements based on assumptions and estimates SINGLE-ENTITY focus in individual markets and enhance operational made by Company management. While we consider FINANCIAL STATEMENTS transparency for the capital markets. The revised these forward-looking statements to be realistic, no miscellaneous 46 PVA TePla Annual Report 2008

assurance can be offered that these expectations rate and interest rate movements, competing products, will prove correct. Assumptions are subject to risks lack of acceptance of new products/services, and and uncertainties, thus actual results may deviate changes in corporate strategy. Given the economic substantially from forecasts made. Factors potentially backdrop of the financial crisis, there is greater causing such deviations include changes in the uncertainty now than has been the case in previous macroeconomic and business environment, exchange years.

3. Business and General Environment Russian GDP increased in the first half of 2008 at a high rate of 8%. The trade surplus also widened as 3.1. Macroeconomic Environment commodity prices rose sharply. The ensuing drop in Forecasts concerning the global economy are subject the price of commodities on world markets precipitated to major uncertainty. What began in 2007 as trouble in by the economic crisis halted Russia’s economic the US real estate market erupted into a global financial expansion in the fourth quarter of 2008. and economic crisis punctuated by the insolvency filing of investment bank Lehman Brothers on September Japan suffered considerably, along with all other 15, 2008. Economic activity went into steep decline industrialized economies, over the course of 2008. in the fall of 2008, further trend of which is scarcely Real gross domestic product was already lower in the foreseeable at this time. Economic analysts concur second quarter of 2008. Exports, which are similarly at least that the major industrialized economies are important for Japan as for Germany, fell as US demand headed for recession. Over the course of 2009 it will be ebbed, while domestic demand stagnated. seen to what extent newly industrializing and emerging economies will be impacted by the economic crisis. China and India were unable to maintain the Furthermore, the long-term effect of rapidly rising extraordinary high growth rates of previous years in national debt levels among nearly all industrialized 2008. Both countries’ economies slowed significantly. countries in response to the current financial crisis Chinese exports fell substantially on restrained buying poses another significant unknown. from major international partners. Though negative GDP is not projected for 2009, economic growth is In the European Union, economic expansion began expected to slow considerably. running out of steam in early 2008. In the fourth quarter many major economies like Germany saw gross The US economy is in recession, having contracted for domestic product (GDP) shrink substantially. All key two successive quarters. In the fourth quarter of 2008, economic metrics and industrial-sector data indicate the US economy contracted 3.8%. For full-year 2008, that Europe will be mired in a deep recession this year. the US recorded 1.3% GDP growth, significantly lower Economic analysts’ opinions vary as to the length of the than the 2% for last year. The situation represents the downturn, but it appears that the global economy, and most severe economic crisis encountered in the US thus the European Union, is in for a protracted recovery since the 1930s. Consumer spending, the engine of period from the economic and financial crisis. the US economy accounting for two thirds of output, 47

Management and Group Management Report

declined in two successive quarters – for the first the electrical and electronic industry were impacted by time in 20 years – by over 20%. The US economy is this, and the 22% fall in incoming orders in November. expected to experience a lengthy recession. The semiconductor market appears to be hit even 3.2. Sector developments harder by the economic downturn than mechanical The mechanical engineering industry has been in engineering and electronics. Market research a sustained rise since 2004 in Germany. In 2008 organization Gartner said worldwide semiconductor FOR OUR SHAREHOLDERS mechanical engineering production increased sales declined 4.4% in 2008. Comparing the fourth 5.4%. This positive development was due to both quarter of 2007 against the fourth quarter of 2008 exports and lively domestic demand. It is becoming reveals sales were off dramatically, down 24.4%. increasingly clear however that the severe global In view of this drop within a single quarter, market financial crisis is affecting the real economy, albeit watchers have revised sales estimates for 2009 with a delayed impact. The German Machinery and accordingly, projecting an approximate 16% decline for

Plant Manufacturing Association (VDMA) forecasts 2009, ranging up to a 25% drop seen by Gartner in a THE COMPANY a 7% decline in production for 2009. The 40% year- worst-case scenario. on-year drop in orders in December 2008 measured by the VDMA leaves little doubt of a major decline in Many bank and brokerage analysts see stagnation ahead mechanical engineering production in 2009. for the photovoltaics market this year. Earlier positive forecasts will not come true due to various factors. The electrical and electronic industry also saw a The effect of lower solar power subsidies in Spain and noticeable decline in orders similar to mechanical Germany will not be entirely counterbalanced by new engineering. This mainly impacts automotive suppliers: markets in Italy, the Czech Republic, France and the producers of vehicle electrical systems, batteries and US in 2009. Supply contracts will also be renegotiated MANAGEMENT REPORT electronic components. The ifo sentiment barometer because of the financial crisis. Solar module prices for the electronics industry has likewise tracked a rapid will be reduced due to oversupply. The IHW sees a deterioration since mid-2008. Sales revenues declined demand of 4.9 GW where as the production is at 9.2 12% in November 2008, with domestic demand down GW in 2009. significantly more than international. All branches of GROUP FINANCIAL STATEMENTS SINGLE-ENTITY FINANCIAL STATEMENTS miscellaneous 48 PVA TePla Annual Report 2008

4. Structural changes within the 5. Sales revenues PVA TePla Group The PVA TePla Group generated consolidated sales Structural changes have been implemented within the revenues of EUR 168.6 million in fiscal year 2008 PVA TePla Group since the December 31, 2007 annual (previous year: EUR 113.7 million), a roughly 50% statement date. increase in line with estimates. Sales revenues rose steadily quarter for quarter to EUR 47.8 million in the The subsidiaries Krämer Scientific Instruments GmbH, fourth quarter (Q1: EUR 34.6 million, Q2: EUR 39.4 Herborn and SAM TEC GmbH, Aalen (together forming million, Q3: EUR 46.8 million). the KSI-Group), manufacturers of GHz ultrasonic materials analysis and measurement systems, merged Germany accounted for 34% of total sales revenues and reorganized as PVA TePla Analytical Systems (previous year: 38%). This high percentage is primarily GmbH on August 21, 2008. This move was designed attributable to an ersol wafers order (ASi Industries to streamline existing structures and enhance the GmbH) from April 2008 in Crystal Growing Systems brand. Part of Crystal Growing Systems division through division and a significant domestic portion of Vacuum December 31, 2008, this company has been part of the Systems division sales. Asian markets continue to play Semiconductor Systems division since the start of fiscal a major role. The Asian region accounted for 46% of year 2009. sales revenues from foreign markets (previous year 44%). The order to supply crystal growing systems At the end of July 2008, PVA TePla sold in an asset deal to the Siltronic/Samsung joint venture in Singapore the operating business of its subsidiary UV SYSTEC and the Vacuum Systems business again contributed Gesellschaft für UV-Strahler und Systemtechnik mbH, significantly to sales revenues generated in the Jena which has been part of the Vacuum Systems region. The rest of Europe accounted for 18% of sales division. The company’s name was changed to PVA revenues, North America 2%. Jena Immobilien GmbH effective September 19, 2008. Now the business purpose of this subsidiary is the management and leasing of space and real estate Sales revenues by region properties in Jena.

As noted under “2. Structure of Reporting” above, the 1 Group structure changed effective January 1, 2009. 4 Effective January 2009, PVA TePla was reorganized into the divisions Industrial Systems, Semiconductor Systems and Solar Systems. This structure will be reflected in quarterly reporting for the first time in 2009. 3 2

1 4% Germany 2 18% Europe 3 2% North America 4 46% Asia 49

Management and Group Management Report

The section below provides a detailed discussion of end of 2008. Despite having concluded a framework sales revenues generated by the Vacuum Systems, purchase agreement with a new automotive supplier Crystal Growing Systems and Plasma Systems customer in the fourth quarter of 2008, 2009 sales divisions. revenues from this industry will still fall short of the fiscal 2008 level. On the other hand, regenerative Vacuum Systems Division energies sales revenues are potentially set to The Vacuum Systems division posted 25% higher sales accelerate significantly in 2009 to around 15% (vs. 7% FOR OUR SHAREHOLDERS revenues year-on-year, recording EUR 46.0 million in 2008) with the launch of two new serial products. versus EUR 36.9 million for 2007. Vacuum Systems Several new framework purchase agreements were was the Group’s second strongest division in terms of also concluded with key serial customers in 2008, sales revenues, accounting for 27%. including longstanding customers in the laser and general mechanical engineering industries. Framework The systems business again generated the majority of purchasing agreements typically have 6 to 12 month

sales revenues at 82% (previous year: 82%). Service terms, affording LWT highly dependable planning. The THE COMPANY and Contract Processing sales revenues accounted for domestic market is the source of 98% of incoming 18% of total, unchanged versus the previous year. orders.

Exports accounted for 60% of Vacuum Systems sales Crystal Growing Systems Division revenues. Asia and China in particular, continued to Due to an outstanding orders situation with large orders play a key role, generating 45% of sales revenues. The on hand, the Crystal Growing Systems division again

Rest of Europe market accounted for 15% of sales posted higher sales revenues year-on-year of EUR revenues, the German market 40%. 105.8 million (previous year: EUR 60.1 million). The division thus contributed 63% of total sales revenues MANAGEMENT REPORT Hard metals is still by far the most important segment for the PVA TePla Group. Asia (Singapore) and Germany in this division, contributing roughly 60% of systems were the biggest sales revenue-generating regions in sales revenues. Heat treatment furnaces with metallic 2008. heater are another significant source of sales revenues. These are used in the electrical industry, for example Division sales revenues stemmed from the for brazing vacuum switches. semiconductors and photovoltaics markets in 2008. GROUP Two large semiconductor orders booked in 2006 and PVA TePla AG subsidiary PVA Löt- und Werkstofftechnik 2007 were processed. The processing of the two large

GmbH (LWT), a high-temperature brazing and heat orders – from the Siltronic/Samsung joint venture in FINANCIAL STATEMENTS treatment service provider (Contract Processing), Singapore in November 2006 as well as from Siltronic competed successfully in a range of markets in fiscal AG in Freiberg in March 2007 – advanced according year 2008. Alongside general mechanical engineering, to plan in fiscal 2008; these are now mostly complete. by far the most important industry for vacuum No further investment is likely in the near future in metallurgical processing services, the automotive retooling from 200mm to 300mm wafers given the supplier segment generated substantial sales considerable decline in semiconductor sales revenues, revenues, as in 2007. Activities in this industry are and attendant production cuts by semiconductor SINGLE-ENTITY anticipated to decline sharply in 2009 due to both the makers. Wafer producers will however have to FINANCIAL STATEMENTS market itself and a production order running out at the continue with the long-term realignment process miscellaneous 50 PVA TePla Annual Report 2008

around silicon ingot production. As the technology portion of the sales revenues from which were already leader among providers of crystal growing systems, recognized in 2008. PVA TePla will benefit from this development in years ahead. Subsidiary PVA TePla Analytical Systems GmbH, Aalen, part of the Group since October 2007, contributed Two significant photovoltaics orders were processed, EUR 6.0 million of sales revenues. The nondestructive booked in the fourth quarter of 2007. Sales revenues ultrasonic inspection and quality control of materials in 2008 derived primarily from large orders for is a pioneering technology offering three-dimensional monocrystalline ingot pulling systems received from definition relevant to numerous industrial applications. ersol Wafers (ASi Industries GmbH) in November 2007 Analysis devices for the testing of material and and from the Norwegian company REC SiTech AS components are now supplied to leading technological (SiTech), an REC Group subsidiary, in October 2007. companies down the entire semiconductor supply chain, including a silicon ingot producer. Orders to build systems for manufacturing multicrystalline silicon blocks and tubes were another source PVA TePla Analytical Systems GmbH was thus of sales revenues. New products sold to numerous able to consolidate its position as the technology industrial customers around the world in the last two leader among systems manufacturers of in-line years like the MultiCrystallizer, for the production of multi- process controls in fiscal year 2008. OSRAM Opto crystalline silicon blocks, hold further sales revenue- Semiconductors now provides the entire range generating potential over the long term. The division also of frontend and backend process controls using generated sales revenues from EFG (Edge-Defined Film- ultrasonic microscopes from PVA TePla Analytical Fed Growth) systems for making multi-crystalline silicon Systems GmbH. The first fully-automated MEMS tubes in 2008, enhancing the positioning of PVA TePla in (Micro Electro Mechanical Systems) inspection the market for solar crystal growing systems. was installed for a customer and integrated into production. Semiconductor defect analysis systems The PVA TePla Denmark branch posted another sales were sold to a variety of customers in Europe and revenue increase after the one in 2007. The slim rod puller Japan. In the Bio-Medical subsegment, an ultrasonic and analysis systems orders from 2008 will be worked microscope was additionally sold for the analysis of off and delivered to customers in the course of 2009, a intelligent semiconductor implants. 51

Management and Group Management Report

Plasma Systems Division 9.0 million). Industrial/Medical systems totaled EUR The Plasma Systems division generated sales 5,7 million (previous year: EUR 5.3 million). Contract revenues of EUR 16.8 million in 2008 (previous year: Processing and Service generated sales revenues of EUR 16.7 million) thereby contributing 10% to PVA EUR 1.8 million (previous year: EUR 2.4 million). TePla’s total sales revenues. The systems business contributed 89% to the division’s sales revenues; Asia is the most important region, accounting for 51% Contract Processing and Service accounted for 11%. of sales revenues. North America contributed 14% of FOR OUR SHAREHOLDERS The Semiconductors segment accounted for EUR 9.3 sales revenues, Germany 20% and Europe 15%. million in Systems sales revenues (previous year: EUR

Consolidated sales revenues by division in EUR millions THE COMPANY 2006 25.9 30.9 13.6 70.4

2007 36.9 60.1 16.7 113.7

2008 46.0 105.8 16.8 168.6

0 50 100 150 200

Vacuum Systems Crystal Growing Systems Plasma Systems MANAGEMENT REPORT PVA TePla AG reported sales revenues of EUR 118.7 million (previous year: EUR 46.8 million) in its single- entity financial statements. The Vacuum Systems Division generated increased sales revenues of EUR 41.9 million (previous year: EUR 30.4 million). The Crystal Growing Systems Division contributed EUR GROUP 66.3 million (previous year: EUR 6.4 million) to sales revenues. This considerable increase reflects the expected effect of orders from the Siltronic/Samsung FINANCIAL STATEMENTS joint venture and Siltronic AG on divisional sales revenues in 2008. The Crystal Growing Systems Division includes sales revenues from the Danish branch. The Plasma Systems Division posted EUR 10.6 million, exceeding the EUR 10.0 million mark for the previous year. SINGLE-ENTITY FINANCIAL STATEMENTS miscellaneous 52 PVA TePla Annual Report 2008

6. Orders large order was accompanied by a substantial rise in Floatzone system orders. Incoming orders In fiscal year 2008, the Group again improved on the PVA TePla Danmark supplies Floatzone systems previous year’s excellent incoming orders figure, which for the manufacture of high-purity monocrystalline rose from EUR 146.0 million to EUR 189.9 million. This silicon rods for such as high-frequency and high- new record was attributable to the Crystal Growing performance applications in the semiconductors Systems division. industry and very efficient photovoltaic wafers; in 2008 PVA TePla Danmark booked three major orders With a book-to-bill ratio of 1.13 at Group level (previous from the US, Taiwan and Korea for slim rod pullers and year: 1.28), a positive value was again achieved despite analysis systems. The type of system ordered by the the 50% rise in sales revenues, confirming that the customers is for the production of thin silicon rods on Company remains on track for growth. which high-purity polysilicon is deposited in the reactor in subsequent production. The analysis systems The Vacuum Systems division recorded incoming orders additionally delivered allow inspecting the quality and of EUR 43.3 million (previous year: EUR 48.4 million), purity of polysilicon produced by transforming the 23% of total new orders for PVA TePla. Adjusted for material into a monocrystalline structure. The orders the reclassification of the important “MultiCrystallizer” are valued at roughly EUR 5 million each. Additional product range to the Crystal Growing Systems orders were placed for systems for the manufacture of division performed in fiscal 2008 (still part of the silicon tubes using the EFG method. Vacuum Systems division in 2007), incoming orders for other product ranges were actually up year-on- PVA TePla Analytical Systems GmbH, part of the Crystal year. Approximately 60% of orders for systems were Growing Systems division, which makes ultrasonic received from abroad. The Rest of Europe excluding measurement equipment for materials quality control, Germany contributed 30% of total incoming orders, has orders booked for analysis equipment for the Asia roughly 25%. semiconductors, material science and biomedical markets. The lion’s share of Crystal Growing Systems division orders for 2008 stemmed from a large EUR 76 million Crystal Growing Systems division, respectively the order from ersol Wafers (ASi Industries GmbH) in April newly created Solar Systems division, continues to 2008. Incoming orders of EUR 128.6 million were again expect rising demand for PVA TePla´s systems on the higher year-on-year (previous year: EUR 81.3 million), global market. The Group remains strongly positioned accounting for 68% total incoming orders. in the photovoltaics market due to the wide range of PVA TePla technologies offered. The order from ersol Wafers (ASi Industries GmbH), a wholly-owned subsidiary of ersol AG, is for systems for The Plasma Systems division recorded customer pulling monocrystalline silicon crystals. The systems orders amounting to EUR 18.1 million (previous year: are designed for ingot diameters of up to 300mm. EUR 16.3 million). The division thus achieved a share This additional follow-up order from ersol documents of 9% of total incoming orders. Orders were received the successful partner-relationship achieved. This from front-end ashing and back-end chip packaging 53

Management and Group Management Report

of the semiconductor industry in fiscal year 2008. fiscal year 2009, also saw rising incoming orders. In the Customers were seen putting off capital expenditure first quarter the company received an order to produce in the third quarter of 2008 due to the semiconductors the largest PulsPlasma® nitriding system ever made in crisis underway, particularly in the US. EU nations Siegen thus far. The system will be set up in Ulsan, began feeling the negative impact of these delays in the South Korea’s auto industry hub, in the first quarter fourth quarter. The subsidiary PlaTeG GmbH located in of 2009, and will be deployed for the manufacture of Siegen, part of Industrial Systems division starting with large tools involved in automotive production. FOR OUR SHAREHOLDERS

Incoming orders by division in EUR millions

2006 37.1 88.0 14.4 139.5

2007 48.4 81.3 16.3 146.0 THE COMPANY

2008 43.3 128.6 18.1 189.9

0 50 100 150 200

Vacuum Systems Crystal Growing Systems Plasma Systems

PVA TePla AG as a single entity recorded incoming (ASi Industries GmbH) for mono-crystalline silicon orders valued at EUR 167.1 million (previous year: pulling systems. The Danish branch also booked MANAGEMENT REPORT EUR 90.8 million). significantly higher incoming orders, contributing EUR 21.1 million to the Crystal Growing Systems division The Vacuum Systems division recorded EUR 44.8 million, total versus previous year EUR 7.2 million. Orders from just short of the previous year’s figure of EUR 47.4 million. other Group companies are not included in the figures This includes orders of EUR 4.6 million from other Group reported for this division. companies (previous year: EUR 2.0 million). GROUP The Plasma Systems division posted EUR 10.6 million, Crystal Growing Systems division recorded likewise exceeding the previous year of EUR 8.9 million. incoming orders of EUR 111.7 million (previous year: This includes orders of EUR 0.8 million from other FINANCIAL STATEMENTS EUR 34.4 million), up considerably year-on-year. Group companies (previous year: EUR 0.5 million). Incoming orders include an order from ersol Wafers SINGLE-ENTITY FINANCIAL STATEMENTS miscellaneous 54 PVA TePla Annual Report 2008

Order backlog Systems for the solar market. Delivery of existing PVA TePla-Group order backlog is reported here orders will last through the end of 2010. after deducting sales revenues previously recognized applying the percentage of completion method (POC). The Vacuum Systems division recorded order backlog of EUR 25.2 million, lower than the previous year figure On this basis the Group topped the previous year’s of EUR 30.4 million. outstanding figure of EUR 137.1 million, posting a record of EUR 151.8 million at December 31, 2008. The Plasma Systems division recorded orders valued at EUR 4.1 million (previous year: EUR 3.3 million). Due The Crystal Growing Systems division has the largest to the short-term lead times for orders for this division, order backlog, valued at EUR 122.5 million (previous a higher ratio of order backlog, compared to sales, is year: EUR 103.4 million). The high level of order backlog generally not to be expected. evidences the great potential of Crystal Growing

Order backlog by division in EUR millions

2006 18.5 78.8 3.8 101.1

2007 30.4 103.4 3.3 137.1

4.1 2008 25.200 122.5 151.8

0 50 100 150 200

Vacuum Systems Crystal Growing Systems Plasma Systems

PVA TePla AG order backlog – presented individually here as nominal values in accordance with German accounting principles – climbed significantly to EUR 181.6 million (previous year: EUR 134.4 million). The Vacuum Systems division contributed EUR 46.5 million (previous year: EUR 43.8 million) to this figure. Crystal Growing Systems division was accountable for the largest portion, recording order backlog of EUR 133.7 million (previous year: EUR 89.2 million). Plasma Systems division posted EUR 1.4 million for the year (previous year: EUR 1.4 million). 55

Management and Group Management Report

7. Production A major priority for Crystal Growing Systems division was optimizing materials flows and production In fiscal 2008, system production and contract processes to further enhance efficiency at the Jena processing were performed in Germany at the Asslar, site. This is to be accomplished in particular through the Wettenberg, Feldkirchen, Siegen, Herborn, Aalen identification and elimination of inefficient production and Jena locations. The Asslar location was closed in and logistical processes. Personnel capacity utilization May 2008 and production shifted to Wettenberg. The was 100% in 2008 due to strong order flow. The FOR OUR SHAREHOLDERS production locations outside Germany were Corona former measures mentioned resulted in average overall in the USA, Frederikssund in Denmark and Xi’an in capacity utilization of production facilities – including China. production islands, machinery and buildings – of appr. 60%, so reserves are available for further production Vertical integration remained low across all areas. Parts increases. Converting small series assembly of crystal are manufactured in-house only to a minor extent. This growing systems for the photovoltaics market over to

means material costs are relatively high in percentage flow production, along with corresponding logistical THE COMPANY terms, but allows for rapid and flexible adjustment of adaptation and optimization, significantly reduced production capacity as necessary to meet potential completion times. As in the previous year, production changes in demand. space was leased near the Jena-Maua location in 2008, which can continue to be used flexibly given the In the first quarter Vacuum Systems division was capacity situation, or vacated as needed. progressively shifting production from Asslar to

Wettenberg, completing systems under construction The Aalen production location of PVA TePla Analytical in Asslar while starting new ones in Wettenberg. Systems GmbH is becoming increasingly involved in The new Wettenberg location has roughly twice the the production of automated analysis systems, with MANAGEMENT REPORT production space compared to Asslar. Assembly capacity utilization at 75%. capacity more than doubled through optimized logistics and processes in combination with improved At the Feldkirchen Plasma Systems production site, infrastructure such as energy, gas, and water supply. systems are purely assembled involving no parts Metric-based production at the new production sites or component production. Capacity utilization for now allows more transparent progress monitoring of the location is approximately 80%. A personnel GROUP the relevant assembly areas. Converting over to a push consolidation was conducted at the location last year, logistics system has allowed autonomous control and and management responsibility for engineering and enhanced transparency. Because of strong order flow, production was combined. This move streamlines FINANCIAL STATEMENTS the additional production capacity in Wettenberg over processes, eliminating redundancies. Asslar was nearly fully utilized. The production of systems at the Corona location in Average capacity utilization was very high in fiscal the US can potentially be increased further. Capacity year 2008 for the production facilities of PVA Löt- utilization at the PlaTeG GmbH location in Siegen was und Werkstofftechnik GmbH (LWT) in the Contract high. A large order from Asia booked at the start of Processing business field, with some vacuum furnaces 2008 ensured utilization of capacity. SINGLE-ENTITY operating at full capacity, especially at the Wettenberg FINANCIAL STATEMENTS location. Plans for adding further capacity at the Wettenberg location depend on serial production orders from a range of customers potentially to be placed in the course of fiscal year 2009. miscellaneous 56 PVA TePla Annual Report 2008

8. Research and development Crystal Growing Systems Division The costs of research and development in the Group Work continued on the new crystal growing laboratory in the reporting year totaled EUR 1.8 million (previous in Wettenberg. This technical center is now equipped year: EUR 1.7 million). A selection of division R&D with systems for growing mono-crystalline crystals, and activities are presented in the section below. a MultiCrystallizer for producing multi-crystalline silicon blocks. These systems are also used for personnel training, customer demonstrations, customer training Vacuum Systems Division and joint development with customers. Together with In the Vacuum Systems division, R&D is largely the technical center set up in Jena, through these conducted based on paid customer orders; these facilities we have achieved our objective of establishing costs are thus recorded under cost of sales, and one of the world’s leading competence centers for are not reported separately. R&D activity leading to crystal growing systems. This center is involved with innovations and to product optimization is estimated at the further optimization of different Crystal Growing approximately 10% of total design engineering output. Systems for the photovoltaics market, which will increase competitiveness for our customers. The In fiscal year 2008 a concept was developed fora development of a cracker for crushing silicon, orders graphite-heated high-temperature COV vacuum system for which have already been received, in collaboration in collaboration with a customer. An enlarged usable with a Japanese partner was completed during the space of up to 12m3 will allow customers to treat year under review. Granulation and feeder systems much larger components than is currently possible at are also in development in partnership with European temperatures up to 2200°C. This system also provides customers for the manufacturing of silicon granulates. for greater throughput. For another customer, a graphite- heated COV vacuum furnace was started up, for which In the year under review research efforts continued into a special heating system and enhanced controls had ultrasonic measurement and analysis systems. This been developed. These allow for extremely uniform involved for example a new application for industrial temperature distribution in the usable space (less than corrosion research in the field of materials science in 2 Kelvin deviation). Additionally, the very low heating collaboration with Arcelor Mittal. The same activities rates required for the process can be implemented were successfully conducted in St. Petersburg, Russia, with similar precision (e.g. 0.5 K/h). This system is at an institute for structure and binding technology, and used in processing specialized materials for optical in Germany in the field of ceramic coatings. microsystem technology. A software concept was also developed for customers operating multiple vacuum furnaces of the same type at their production sites allowing the networking of system controls to meet heightened stability and data archiving requirements. Customers can select from a range of systems of varying complexity depending on their needs for the optimize operation of anything from one to 50 or more systems. 57

Management and Group Management Report

Plasma Systems Division This Single-Wafer Resist Stripping System utilizes In the Plasma Systems division construction was microwave plasma generated directly in the process completed of the PS 80 Plus Chip Packaging prototype, chamber, and is the first system of its kind built by which was then started up for a leading high brightness PVA TePla. The system’s design ensures high level LED manufacturer as part of a successful market of uniformity and efficiency with micro-electrical launch. The device is utilized in production for high- mechanical systems (MEMS) applications and modern precision cleaning and surface activation by a leading packaging technologies for the semiconductor industry. FOR OUR SHAREHOLDERS maker of high-brightness LEDs. Another focus was Efforts also focused on improving and modernizing a the SIRD A 300 P wafer measurement and analysis product series in this area. The new Microwave Plasma system, which is able to identify even the most Batch System 690 will be replacing the PS 400/660 minimal stress on wafers. This next-generation system predecessor models. The load capacity of the Plasma deploys cutting-edge analysis software that allows for System 690 has been expanded by 50%. The first faster analysis, thus ensuring even greater throughput. system was delivered to a European customer in

The PS 90, used primarily for removing photosensitive October 2008. THE COMPANY resist from wafers, underwent further development.

9. Investments new assembly facilities in Wettenberg in the second

quarter of 2008. In conjunction with the relocation At EUR 11.8 million (previous year: EUR 24.7 million), of the corporate headquarters, the Vacuum Systems the volume of investments in 2008 was considerably subsidiaries in Asslar also shifted production to MANAGEMENT REPORT above the average for the years preceding, though Wettenberg. PVA TePla management moved into the significantly lower than last year’s extremely high level. new offices in Wettenberg in December, marking Total investment was split between expenditure on the end of the transition period when production property, plant and equipment in the amount of EUR 11.6 and management were temporarily geographically million (previous year: EUR 18.4 million) and intangible separated. The new buildings provide modern, efficient assets in the amount of EUR 0.2 million (previous year: facilities for all corporate functions. GROUP EUR 6.3 million). No financial investments were made, as in the previous year. Also on an isolated view the PVA TePla AG investment

in 2008 was above the average for previous years at EUR FINANCIAL STATEMENTS The majority of investment in the fiscal year 2008, EUR 11.0 million, but substantially below the extremely high 9.7 million, went to new construction at the Wettenberg previous-year level of EUR 20.7 million. Investments in location. This involved increasing production space property, plant and equipment totaled EUR 10.9 million by building new assembly halls and office facilities. (previous year: EUR 14.1 million), largely representing These additions were necessary to be able to handle the new facilities built in Wettenberg. Investments in our outstanding order flow and remain competitive. intangible assets totaled EUR 0.1 million (previous year: Vacuum Systems production capacity was doubled at EUR 0.4 million) and those in financial assets totaled SINGLE-ENTITY the Wettenberg location. The production of vacuum EUR 0.0 million (previous year: EUR 6.3 million). FINANCIAL STATEMENTS systems was finally relocated from Asslar to the miscellaneous 58 PVA TePla Annual Report 2008

10. Net assets and financial position The balance sheet shows a slight increase in current liabilities from EUR 49.5 million for 2007 to EUR 51.8 PVA TePla Group million at December 31, 2008. Declines in advance Because of another major increase in business volume payments received on orders from EUR 33.3 million and the associated investments, total assets came to to EUR 23.1 million due to order processing, and in EUR 122.1 million at December 31, 2008, versus the current financial liabilities from EUR 2.3 million to EUR previous year’s EUR 108.8 million. 1,3 million were offset by increases in trade payables, from EUR 4.5 million to EUR 8.0 million, obligations on This increase was chiefly due to the investments construction contracts, from EUR 0.2 million to EUR outlined above for increasing capacity. Property, plant 2.0 million, deferred liabilities, from EUR 5.3 million to and equipment increased from EUR 24.8 million to EUR 7.0 million, tax provisions, from EUR 0.4 million EUR 34.4 million. Land and buildings increased sharply to EUR 1.7 million – the latter due to rising earnings to EUR 29.8 million (previous year: EUR 9.3 million) and the utilization of most tax loss carryforwards – and due to completion of the new buildings in Wettenberg. in other current provisions, from EUR 2.1 million to Advance payments declined accordingly from EUR EUR 6.9 million. This substantial increase in provisions 11.6 million to EUR 0.1 million. mainly reflects rising warranty provisions – especially flat warranty provisions given much higher order billing Intangible assets declined to EUR 10.8 million (EUR – and provisions for additional production costs in 13.0 million). This was principally the result of writing connection with higher business volume. Customer down EUR 2.0 million of Plasma Systems goodwill order delays occurred for some orders, primarily in pursuant to impairment testing. Non-current assets Vacuum Systems, due to the shifting of production. totaled EUR 49.3 million versus EUR 42.9 million for Provisions were allocated for expected penalties the previous year. accruing. The underlying problems have now been resolved; no additional risks are perceived in this area. Current assets rose to EUR 72.8 million (previous year: EUR 65.9 million). This increase mainly reflected Non-current liabilities (including non-current provisions) higher inventories of EUR 17.0 million (previous year: rose year-on-year from EUR 28.4 million to EUR 29.9 12.6 million) in response to rising business volume million. This was due to non-current financial liabilities and large orders on the books. Coming receivables increasing to EUR 17.9 million (previous year: EUR on construction contracts rose to EUR 22.3 million 17.1 million). Retirement pension provisions rose as (previous year: EUR 19.4 million). This was attributable scheduled to EUR 7.4 million (previous year: EUR 7.0 to the processing of large Crystal Growing Systems million). The corresponding pension schemes were orders in accordance with schedule. The total value of taken on from previous companies and contain only current receivables rose to EUR 27.9 million (previous existing commitments. New pension obligations are year: EUR 24.5 million). Trade receivables increased to generally no longer made. Deferred tax liabilities EUR 18.4 million (previous year: EUR 11.1 million) due increased from EUR 3.7 million to the current figure mainly to a high volume of business billed at the end of EUR 4.1 million. This was principally due to of the year. Advance payments declined to EUR 6.6 earlier recognition of sales revenue than under tax million (previous year: 9.2 million); other receivables accounting. declined to EUR 2.8 million (previous year: 4.0 million). Cash and cash equivalents totaled EUR 5.2 million as of the reporting date (previous year: EUR 9.1 million). 59

Management and Group Management Report

Shareholders’ equity increased substantially to EUR Because of the investing activities outlined above, cash 40.4 million (previous year: EUR 30.9 million) on the flow from investing activities came in sharply negative net profit for the year generated. Though total assets at EUR -11.1 million (previous year: EUR -24.4 million). were up, the equity ratio increased from 28.4% one Cash outflows for these investments stemmed mainly year ago to a current 33.1%. from operations. Cash flow from financing activities was EUR -1.4 million (previous year: EUR +14.7 million). The PVA TePla Group’s liquidity situation remained Only EUR 2 million thus far of loans of EUR 10 million FOR OUR SHAREHOLDERS positive throughout fiscal year 2008. At the December granted since January 1, 2008 to finance construction 31, 2008 balance sheet date cash and cash equivalents in Wettenberg has been drawn on. This means totaled EUR 5.2 million (previous year: EUR 9.1 another EUR 7.3 million is available as liquidity reserve. million), offset by current financial liabilities of EUR 1.3 Scheduled long-term loan amortization totaled EUR 1.3 million (previous year: EUR 2.3 million) and non-current million (previous year: EUR 1.1 million). Current financial financial liabilities of EUR 17.9 million (previous year: liabilities declined by EUR 1.0 million (previous year: up

EUR 17.1 million). This led to the Group’s net liquid EUR 0.6 million), and payments of interest totaled EUR THE COMPANY position decreasing to EUR -14.0 million (previous 1.1 million (previous year: EUR 0.5 million). Aggregate year: EUR -10.3 million), due mainly to the financing cash flow (including changes caused by exchange rate of investments. The net positive in the current area, movements) came to EUR -3.9 million (previous year: the maturities of non-current financial liabilities, current EUR -2.9 million). liquidity planning – updated monthly – and credit lines with banks of EUR 17.0 million (previous year: EUR 6.5 PVA TePla AG million) increased considerably in 2008 plus guarantee Despite higher business volume and the associated lines of EUR 107.0 million (previous year: EUR 66.1 investments made, total assets had increased only million) at this time appear to provide PVA TePla slightly as of December 31, 2008 to EUR 79.1 million MANAGEMENT REPORT sufficient financing to execute on further business versus EUR 77.3 million one year ago. expansion as planned. Against the background of the overall favorable order situation, guarantee lines were The biggest changes were in fixed assets due to the once again considerably increased by our bank partners aforementioned investments. The figure for fixed in the past fiscal year. Short-term lines are available in assets amounts to EUR 38.3 million (previous year: full without collateral being provided. EUR 31.6 million). Intangible assets declined slightly GROUP due to scheduled D&A to EUR 1.1 million (previous Cash flow from operating activities was significantly year: EUR 1.3 million). At EUR 25.1 million (previous positive in 2008 at EUR +8.7 million, as in the previous year: EUR 15.0 million), the value for property, plant FINANCIAL STATEMENTS year (EUR +6.8 million). This figure fluctuates heavily and equipment rose primarily because of the new for the Vacuum Systems and Crystal Growing Systems construction measures in Wettenberg. Financial divisions from one reporting date to the next due to assets declined to EUR 12.1 million (previous year the project nature of orders. We receive considerable EUR 15.3 million). This was principally the result of a advance payments at the beginning of a project, which EUR 3.0 million writedown of the carrying value of the for large orders influence net cash flow positively. investment in PVA TePla America Inc. in the Plasma During order project cash flow is negative, whereas Systems division (previous year: 2.4 million). SINGLE-ENTITY near the delivery date the remaining amount due is FINANCIAL STATEMENTS paid, except for a small residual installment. miscellaneous 60 PVA TePla Annual Report 2008

Total inventories came to EUR 1.9 million, up from accounting rules. In particular, the lower interest rate the previous-year figure of EUR 0.8 million. Finished of 4.75% results in more realistic projected burdens. products and goods increased to EUR 1.2 million The corresponding pension schemes were taken on (previous year: EUR 0.6 million). Work in progress rose from previous companies and contain only existing only slightly to EUR 29.2 million (previous year: EUR 28.9 commitments. New pension obligations are generally million). Raw materials, consumables and operating no longer made. supplies increased to EUR 3.8 million (previous year: EUR 2.9 million). The volume of deducted advance Tax provisions rose to EUR 1.2 million (previous year: payments received on orders totaled EUR 34.3 million 0.1 million) on rising earnings and largely depleted tax (previous year: EUR 32.4 million). loss carryforwards from previous years.

Trade receivables increased to EUR 10.0 million The increase in other provisions to EUR 8.9 million (previous year: EUR 5.2 million) on high billing volume. (previous year: EUR 5.3 million) is a result of the System assembly for the Crystal Growing Systems expansion in the volume of business. The significant division of PVA TePla AG is performed by PVA Vakuum year-on-year rise in sales revenues caused a similar Anlagenbau Jena GmbH. As large orders for the division increase in warranty provisions – representing mostly were in processing, advance payments remained at a global allowances. Customer order delays occurred high level, though down significantly year-on-year. for some orders, primarily in Vacuum Systems, due to Accordingly, amounts owed by associates declined the shifting of production. Provisions were allocated substantially to EUR 24.6 million (previous year: EUR for expected penalties accruing. The underlying 33.3 million). problems have now been resolved; no additional risks are perceived in this area. There was additionally an The value of cash and cash equivalents was EUR 2.6 increase in provisions for bonuses due to higher Group million (previous year: EUR 4.3 million). earnings.

The balance sheet shows a significant decrease in Shareholders’ equity increased to EUR 27.5 million due liabilities to EUR 35.7 million (previous year: EUR to the net profit posted for the year (previous year: EUR 45.7 million). This was chiefly the result of a fall in 21.6 million). Because of the only minimal increase net advance payments received to EUR 9.0 million in total assets, the equity ratio increase to a current (previous year: 20.2 million) as large orders on the 34.7% (previous year: 27.9%). In contrast to previous books were processed. The rise in amounts owed to years, a net profit of EUR 3.5 million was posted for the banks to EUR 14.3 million (previous year: EUR 13.0 first time (previous year: net loss of EUR 2.4 million). million) arose primarily from partial disbursements of loans granted to finance investments. Trade payables The current financial and economic crisis and related increased to EUR 3.8 million (previous year: EUR 1.9 general uncertainty concerning future developments million), due to the increased volume of business. make ensuring sufficient liquidity a top priority, thus the Amounts owed to associates decreased from EUR 9.9 Management Board proposes again retaining earnings million to a current EUR 7.5 million. rather than paying out a dividend this year.

Retirement pension provisions rose to EUR 5.9 On December 31, 2008, EUR 2.6 million (previous year: million (previous year: EUR 4.6 million). Unlike in EUR 4.3 million) was the amount available in cash and previous years, rules were applied deviating from tax cash equivalents. Current liquidity planning, updated 61

Management and Group Management Report

monthly, in view of credit lines with banks of EUR 17.0 execute on business expansion plans. Guarantee lines million (previous year: EUR 6.5 million) which increased were once again considerably increased by our bank considerably in 2008, plus guarantee lines of EUR 107.0 partners in the past fiscal year given the favorable order million (previous year: EUR 66.1 million), indicates situation. Short-term lines are available in full without that PVA TePla has sufficient liquidity and financing to collateral being provided. FOR OUR SHAREHOLDERS

11. Results of operations and whether representative commissions are incurred are also relevant to selling and distribution expenses. PVA TePla Group Research and development expenses of EUR 1.8 In fiscal year 2008, PVA TePla once again achieved a million represented only a minimal change (previous significant improvement in net profits. An operating year: EUR 1.7 million). The net figure of other operating

result (EBIT) of EUR 15.0 million (previous year: expenses versus other operating income was EUR THE COMPANY EUR 10.0 million) and consolidated net profit of EUR -2.9 million (previous year: EUR -1.6 million). This figure 9.7 million (previous year: EUR 6.1 million) were reflects a EUR 2.0 million writedown of goodwill by generated. At 8.9%, the EBIT ratio was slightly above the Plasma Systems division. Group operating profit last year’s figure of 8.8%, at the upper end of the thus again increased substantially to EUR 15.0 million 7-9% range forecast. The return on sales likewise (previous year: EUR 10.0 million). improved, to 5.8% from 5.3% for the previous year.

The Crystal Growing Systems division was again the As a result of consolidated sales revenues rising to EUR biggest source of operating profits. Sales revenues 168.6 million (previous year: EUR 113.7 million), gross increased robustly on an excellent order situation, MANAGEMENT REPORT profit improved to EUR 37.7 million (previous year: boosting EBIT accordingly. Vacuum Systems also saw EUR 27.3 million). Gross margin was 22.4%, below substantially rising business volume. Earnings fell short last year’s figure of 24.0%. Narrowing gross margin of last year’s mark, principally due to the relocation was primarily due to one-time costs from relocating of production in spring. Aside from costs directly production in the spring of 2008 in the Vacuum associated with the move, production efficiency was Systems division. These included costs directly also compromised for the duration of the moving GROUP associated with the move, dual space costs incurred process, so that some orders were delayed. The Plasma temporarily at both locations, and lower production Systems division again posted a significant loss. This efficiency due to parallel assembly in Asslar (systems figure reflects a EUR 2.0 million writedown of goodwill FINANCIAL STATEMENTS under construction) and Wettenberg (new orders). by the Plasma Systems division. The operating loss was less than for the previous year however. Progress was Selling and distribution expenses of EUR 9.6 million seen however in that the division posted an operating (previous year: EUR 8.0 million) and administration profit for the second half of the year. expenses of EUR 8.5 million (previous year: EUR 6.0 million) again rose proportionally less than business The net interest position was EUR -0.9 million (previous volume in 2008. A part of this increase was attributable year: EUR -0.0 million). Interest expenses increased SINGLE-ENTITY to the further adjustment of organizational structures significantly however year-on-year due to loans taken out FINANCIAL STATEMENTS to accommodate sharply rising business volume. The to finance investments. The associated company PVA market segments in which orders are being processed MIMtech posted income of EUR 0.3 million, unchanged miscellaneous 62 PVA TePla Annual Report 2008

year-on-year (previous year EUR 0.3 million). Profit passed on to the divisions in 2008, and thus in part on from ordinary activities also improved substantially to to subsidiaries. Segment reporting in the consolidated EUR 14.4 million (previous year EUR 10.3 million). financial statements was adjusted accordingly for the corresponding effects. Net profit for the year of EUR 9.7 million was substantially higher than the previous year’s EUR 6.1 million. Income Research and development expenses increased tax expense of EUR -4.7 million (previous year: EUR -4.2 slightly to EUR 1.0 million (previous year: EUR 0.9 million) consisted of current tax expense of EUR 3.0 million). The largest portion once again stemmed million (previous year: EUR 0.7 million) and deferred from continued development of the Plasma Systems tax expense of EUR 1.7 million (previous year: EUR 3.5 division product range. Other operating income came million). The current tax expense is mainly attributable in at EUR 3.2 million, above the previous year’s figure to provisions for the income taxation of the German (EUR 2.4 million). Other operating expenses, at EUR entities. The year-on-year increase stemmed primarily 5.5 million, were also above the previous year‘s from tax loss carryforwards from previous years having figure (EUR 2.2 million). This increase was primarily been largely depleted. due to higher business volume, the EUR 1.2 million writedown of receivables from PVA TePla America Inc. PVA TePla AG and substantially higher costs for order-related services In fiscal year 2008 the first effects on PVA TePla AG incurred by the subsidiary PVA TePla Singapore Pte. sales revenues were seen from large orders in Crystal Ltd. Profits of EUR 1.4 million distributed by subsidiaries Growing Systems. In particular, these included crystal (previous year: 2.7 million) and from income transfer growing systems orders for 300mm ingots from agreements with in the amount of EUR 9.9 million Siltronic Samsung Wafer Pte. In combination with (previous year: 1.1 million) favorably impacted net rising business volume in Vacuum Systems division, profit for the year. sales revenues more than doubled to EUR 118.7 million (previous year: EUR 46.8 million). Gross profit Due to the continued poor performance of subsidiary likewise rose to EUR 16.1 million (previous year: EUR PVA TePla America Inc., another impairment of EUR 10.8 million). Gross margin narrowed considerably to 3.0 million (previous year: EUR 2.4 million) was taken 13.6% (previous year 23.2%), due chiefly to lower gross on the corresponding carrying value of the investment. margin on Crystal Growing Systems orders relative to An impairment of EUR 0.2 million (previous year: EUR the other divisions. Because Crystal Growing Systems 0.0 million) was likewise recognized on the carrying sales revenue increased as a percentage of total, value of the joint venture Xi´an HuaDe CGS Ltd. due to gross margin narrowed accordingly. Gross margin also an unfavorable business outlook. narrowed for Vacuum Systems due to one-time costs from relocating production in the spring of 2008. Interest expenses totaled EUR 1.0 million (previous year: EUR 0.3 million). Higher interest expenses resulted The increase in selling and distribution expenses to mainly from financing of construction in Wettenberg EUR 6.6 million (previous year: EUR 5.9 million) and and of the KSI-Group acquisition in 2007. administrative expenses to EUR 5.8 million (previous year: EUR 4.6 million) mainly reflected rising business Year-on-year PVA TePla AG recorded substantially volume, but also structural expansion within the Group higher profit from ordinary activities of EUR 8.2 million to accommodate growth. In response to a tax audit (previous year: EUR 1.4 million) and net profit for the central function costs of the parent company were not year of EUR 5.9 million (previous year: EUR 1.3 million). 63

Management and Group Management Report

Return on sales was higher at 5.0% than the previous concerned tax provisions allocated. The significant year’s figure of 2.7%. Income taxes reported of EUR year-on-year increase was due to higher earnings and 2.2 million (previous year: EUR 0.1 million) primarily depletion of tax loss carryforwards from previous years. FOR OUR SHAREHOLDERS

12. Growth in workforce 13. Risk Report

The Group had 504 employees as of the balance As a globally operating technology group, the PVA TePla sheet date (previous year: 422). This approximately Group faces a large number of opportunities and risks 19% growth in the workforce is substantially lower that are inextricably linked with the entrepreneurial

than the 50% increase in sales revenues. The number activities of all divisions. THE COMPANY of Vacuum Systems employees was 239 (previous year: 195). The number of employees in the Crystal The economic environment of the company is Growing Systems division rose from 142 as of the characterized by global markets and the ever-growing 2007 balance sheet date to 180 as of December 31, complexity of technological applications. The risks of 2008. The extremely strong order situation led to negative business and economic developments are workforce increases in both divisions. The number continuously monitored and evaluated by company of Plasma Systems division employees remained management and contained or compensated as unchanged year-on-year at 85. appropriate and to the extent possible. Assessment of risk factors flows into corporate decision-making. MANAGEMENT REPORT A look at the regions shows that the majority of employees by far are employed in Europe, at 467 The primary objective of maintaining efficient and (previous year: 381). At the end of 2008, there were forward-looking risk management is to be able to 20 employees in the US (previous year: 22) and 17 in exploit any opportunities and manage any risks that Asia (previous year: 19). may exist. The identification and assessment of opportunities and risks is a prerequisite to this process. GROUP In fiscal year 2008, the number of apprentices at For this purpose, a risk management manual has the PVA TePla Group increased significantly to 19 been issued to the divisions and provided employees,

(previous year: 13). Six young men and women were containing procedural directives and lists of measures FINANCIAL STATEMENTS being trained in commercial professions and thirteen to be taken. in industrial professions. Efforts also began in 2007 to establish an internal auditing PVA TePla AG employed a workforce of 279 at the system. An auditing firm was hired to perform the end of 2008. The increase over the previous year’s internal audits. The Management and the Supervisory figure of (234 employees) is principally due to the Board adopted a medium-range plan to systematically strength of the business. The number of employees at audit all areas within the PVA TePla-Group. The first SINGLE-ENTITY the Frederikssund, Denmark location was 9 (previous audit focuses were payments to Management Board and FINANCIAL STATEMENTS year: 7). Division Managers, the subsidiary PVA TePla America Inc. miscellaneous 64 PVA TePla Annual Report 2008

and materials management at the Asslar location. No market is also affected by companies being forced to irregularities were identified in the course of auditing, direct major investment and developmental efforts to though areas of organizational improvement were safeguarding their market positions. Risks resulting identified. These are being acted upon promptly and from this situation have been managed by diversifying measures implemented accordingly. into other markets – in particular solar technology – and launching new products. Risks from the markets Risks in the particular niche markets served by PVA The general global economic situation cannot be TePla relate especially to unexpected fluctuations in reliably assessed at this time. The global financial capital investment activity on the part of customers and and economic crisis has plunged major industrialized within specific industries. Risk is reduced by diversifying nations into a recession of unknown duration. The our range of products and services across different corporation is following economic developments sectors including semiconductors, photovoltaics, tool closely; order backlog is sufficient for capacity making and hard metal technology, the production of utilization and sales revenues to remain on target high-quality metals and ceramics, the automotive and with projections into the year 2009. Incoming order aerospace industries, and the electrical and electronic volume is a mixed picture going into 2009. Demand engineering sectors. The effects of cyclical, commonly from the semiconductor industry and certain industrial foreseeable fluctuations in market volume are primarily segments (e.g. hard metals) is weak, while demand for offset by increasing or decreasing outsourcing levels, Floatzone and ultrasonic analysis systems, for example, although unexpectedly high demand can give rise to remains active. Because of the extended negotiations production bottlenecks. The strategy of maintaining a involved in the project business, it is difficult to gauge relatively low level of vertical integration allows rapid the outlook. Looking at the project situation however, response in this regard. The PVA TePla-Group also especially in Solar Systems, we expect targets for provides high-quality contract processing work – such 2009 to be obtained. as plasma treatment, high-vacuum brazing and heat treatment of components – in which greater customer Maintaining a low level of verticality affords a flexible demand has historically been seen in times of generally structure for adjusting capacity as needed in the restrained capital expenditure. event of lower demand. This involves such things as increased assembly depth, reduced reliance on labor The semiconductor business – a key segment for leasing and temporary employees, and the use of the Group – is highly cyclical in nature, and for that flextime working hours models. Potential implications reason involves major opportunities as well as risks. for PVA TePla or our customers are incorporated into The semiconductor industry in recent decades has planning at an early stage. enjoyed average annual growth rates well above those of most old-economy industries, throughout periods Risks from changes in exchange rates of robust growth and recession. In recent years the Despite hedging of exchange rate risks in individual PVA TePla Group has seen major opportunities in transactions, the EUR/USD exchange rate may expanding capacity to accommodate the manufacture continue to move unfavorably, eroding our position vis- of 300mm crystals. The drop in the semiconductors à-vis competitors from this currency zone and exerting market caused by the global financial and economic pricing pressure on our products. This risk is addressed crisis means the sales outlook for these systems has by having local production in the US, and increasing the deteriorated sharply. Despite the crisis however, the level of purchasing within this currency zone. 65

Management and Group Management Report

Risks from technological developments Risks from personnel and capacity issues The risk of losing orders due to a new, unexpected Personnel capacity risk continues to arise primarily technology appearing on the market (horizontal entry) in connection with the recruitment and integration of is monitored worldwide and assessed by continuous skilled management and technical personnel, to the observation of the latest research and development extent suitable personnel cannot be developed within and published studies specific to the various sectors, the Company itself, to replace managers and skilled and by maintaining dialog with key customers and staff leaving the Company, including particularly retiring FOR OUR SHAREHOLDERS research institutes. In addition to ongoing development personnel, and in order to adapt for business growth activities, technological product optimization is further and to the introduction of new technologies. On the supported by the operation of an in-house service whole it has become easier to recruit highly qualified center in which materials are processed for customers. personnel. Contacts are maintained and intensified Here, the Company’s development department stays with various training centers and universities in order abreast of the latest material quality requirements of to find suitable personnel. In recent years however

customers. significant workforce turnover has not been observed. THE COMPANY

The high level of technical complexity of our products The technical complexity of our products, and the and rapid technological advances pose research and standards demanded by our customers give rise development-related risks. Medium and long-term to quality-related risks that can generate increased success is crucially dependent on marketable products warranty-related expenditure. All enterprises in which being developed and generating sufficient revenues PVA TePla AG holds a participating interest of more within appropriate timeframes so as to provide than 50% (excluding PVA TePla Analytical Systems adequate cash flow for the Group’s internal financing. GmbH) have quality management systems certified in accordance with ISO 9001/2000. The maintaining MANAGEMENT REPORT Risks from deliveries of a quality system tailored to each specific Group The probability of being affected by supplier capacity company is supported and monitored by a central bottlenecks has decreased due to the current economic quality department. The concluding of appropriate situation and resulting decline in order activity in the insurance policies to cover various operational risks for industry. Commodity prices (such as for stainless steel all Group companies is also coordinated by a central and copper) are trending downward. The risk of delivery department. GROUP delays and non-delivery is countered by identifying and prescreening additional suppliers in combination closer The risk of our own machines breaking down is of observation of existing suppliers. subordinate importance, as relatively few machine FINANCIAL STATEMENTS tools are used (production primarily involving assembly Dependence on individual suppliers is limited due and commissioning activities), and there are also having multiple qualified suppliers for key components enough suitable machines available from nearby among which deliveries are diversified. subcontractors. Preventive maintenance performed on our own plasma facilities and vacuum-soldering The risk of suppliers defaulting is substantially reduced by plant, as well as a rapid response to machine failure, targeted selection and evaluation of alternative suppliers, are among the measures that can be implemented by SINGLE-ENTITY internationally as well. Care is taken to ensure that all major the Company itself. FINANCIAL STATEMENTS suppliers have adequate quality management systems and third-party liability insurance coverage in place. miscellaneous 66 PVA TePla Annual Report 2008

Risks in connection with IT rate risks) or from financing (e.g. interest rate risks). The risk of IT equipment failures and the threat posed Financial instruments are not used in isolation without by software viruses are reduced through regular and connection to actual business activities. Opportunities appropriate backup, adopting suitable protective and risks in connection with the respective relevant measures against external influences (e.g. up-to-date financial instrument categories are presented below. virus protection systems and firewalls) and maintaining suitable access control systems. Trade receivables: - Liquidity and credit risks involved in financing business Efforts continued in 2008 to modernize IT systems, operations are reduced, in the case of major orders, involving the increased deployment of high-availability by means of customer/supplier financing. In most systems and components with sufficient redundancy. cases a contractual installment payment schedule Major projects in this area in 2008 included a release is negotiated with an average 30% minimum due change for our ERP system and rollout of a PDM upon receipt of the order. Collateral arrangements system to be used with our CAD system, both of which (e.g. letters of credit) are also frequently required to are to run on a new firmwide infrastructure. Additional protect against default on receivables, in combination security and protection measures in connection with with intensive receivables monitoring. new construction in Wettenberg afforded significant - The Group itself however only has to remit advance further IT infrastructure improvements. payments to a few suppliers. In addition, the Group optimizes external cash flow requirements through Risks from tax issues rolling cash flow forecasts for Group companies and The tax audit of all significant Group companies initiated short-term intra-Group loans. The Group has sufficient by the tax authority began in late 2007 for periods up credit lines for short-term financing operations, to and including 2006 is now near conclusion. It was including the expansion of business, and sufficient found in 2007 that real property acquisition tax accruing guarantee lines for providing advance payments through the 2002 merger between TePla AG and the guarantees to customers. In this area, special project PVA Group was still due. Provisions for other taxes lines for large orders may additionally being negotiated were recognized on the 2007 financial statements for with our regular banks to leave existing lines available this purpose. Other findings principally concerned sales for normal business operation and expansion. tax issues. The main issues concerned two complex - These items do not involve significant market risk due export transactions incorrectly reported. Provisions to their short-term/current nature. of EUR 0.3 million were recorded on these financial statements for the anticipated back assessment. Amounts owed by associates: - A loan of USD 200 thousand was granted to the Risks in connection with financial instruments associate PVA MIMtech LLC, Cedar Grove, NJ, USA. Financial instruments arise as part of PVA TePla’s actual - In view of the sound business performance of PVA business activities (e.g. trade receivables and payables). MIMtech LLC, there is no significant credit or liquidity Financial instruments are employed (e.g. loans from risk in this case. banks) or arise (e.g. investment of excess current - The market risk lies in EUR/USD exchange rate liquidity) to finance business activities. Derivative movements. A 10 cent rate change versus the US financial instruments are employed to eliminate or dollar would mean a EUR 9 thousand change in the limit risks from operating activities (e.g. exchange carrying value of the loan. 67

Management and Group Management Report

Other receivables: Other liabilities: - Due to the current nature of the items, there is no - Due to the current nature of the items, there is no significant market risk in this area. significant market risk in this area.

Financial liabilities: Exchange rate hedging: - This item primarily includes bank borrowings to - A large proportion of Group sales revenues, including finance investments. those of PVA TePla AG, are generated in foreign FOR OUR SHAREHOLDERS - These loans are all either at fixed interest rates for markets. The billing of projects is implemented the entire term or hedged accordingly in the case of predominantly in euros, even for non-EU countries. loans with variable nominal interest rates, effectively Otherwise, in each individual case, the hedging rendering them synthetic fixed interest rate loans. of currency risks is assured by means of forward - There is thus no significant market risk from changes exchange contracts. in relevant market interest rates. - Since these are closed positions in relation to the

- A special situation exists in that the loans granted had underlying transaction with matching payment THE COMPANY only been partially drawn upon as of December 31, amounts and deadlines, there is no market risk. 2008 in order to reduce interest expense in view of the Calculations for the underlying transactions are based favorable liquidity situation. Because market interest on the respective hedged forward rates. rates were lower than the interest rates hedged as of - The credit and liquidity risk here lies in the trade the reporting date, provisions of EUR 262 thousand receivables from the underlying transaction. Please were recognized on the PVA TePla AG single-entity refer to the above discussion of this subject.

financial statements (previous year 0). - There is no credit risk since the contract parties Interest rate hedging: have already fully fulfilled their obligations through - Some of the loans to finance new facilities were MANAGEMENT REPORT the disbursement of loan funds, except for granted concluded at variable nominal interest rates and loan amounts not yet been drawn upon for financing the interest rate hedged, effectively making these new construction. In our view no significant credit synthetic fixed interest rate loans. risk exists concerning the potential utilization of the - For more details concerning risks arising from these undisbursed portion of the aforementioned loan financial instruments, please refer to the information amount granted. above on financial liabilities. GROUP - Given to the solid order situation, the positive outlook and the liquidity position/planning forecast, we do not

perceive any relevant liquidity risks from these areas Risks jeopardizing the existence of the Company FINANCIAL STATEMENTS either at this time. There are no identifiable risks potentially jeopardizing the continued existence of the Company and the Group Trade payables: as a going concern. - These are current items almost exclusively invoiced in euros. There is thus no relevant market or credit risk in evidence. - Given the current liquidity position in connection with SINGLE-ENTITY

liquidity planning, there is no liquidity risk in this area. FINANCIAL STATEMENTS miscellaneous 68 PVA TePla Annual Report 2008

14. Mandatory information to be provided - Article 2: The appointment of members of the by companies quoted on the stock Management Board, the revocation of their exchange in accordance with Sections appointment as well as the concluding, the 289 and/or 315 of the HGB [German amendment and the termination of contracts of Commercial Code] employment with members of the Management Board are effected by the Supervisory Board. The As of December 31, 2008, the issued share capital same applies to the appointment of a member of the of PVA TePla AG consisted of 21,749,988 individual Management Board as chairman or as spokesman of shares with a nominal value of EUR 1.00 each. the Management Board. - Article 3: The appointment of a member of the There are no restrictions of voting rights or on the sale/ Management Board ends in every case with the transferability of shares. Likewise, there are no holders completion of his/her 65th year. of specially privileged shares, nor is there control over the voting rights of shareholding employees of the As of December 31, 2008, the Management Board Company. was authorized per Annual General Meeting resolution to issue new shares from authorized capital in the According to disclosures filed with the Company, PA amount of EUR 10,874,994.00 through June 14, Beteiligungsgesellschaft mbH, Wettenberg held 25.2% 2012. The Management Board has no authorization to of voting rights as of December 31, 2008, above the buy back shares of the Company. 10% threshold. No agreements are in place contingent upon a The appointment of PVA TePla AG Management Board change of control via takeover. Likewise there are no members is done in accordance with Section 84 of the compensation agreements in place for Management AktG [German Public Limited Companies Act], and Board members or for employees in such a case. Section 6, Articles 2 and 3 of the PVA TePla AG Articles of Incorporation. The following is established therein: 69

Management and Group Management Report

15. Remuneration Report 16. Supplementary Report

Remuneration paid to Management Board members The PVA TePla divisions were restructured effective totaled an aggregate EUR 1,429 thousand in fiscal year January 1, 2009. The newly organized Industrial 2008. Management Board remuneration packages Systems division encompasses the product range of consist of a basic salary, benefits (mainly the non- the former Vacuum Systems division and systems cash benefit of use of a company car and subsidized made by subsidiary PlaTeG GmbH. The Semiconductor FOR OUR SHAREHOLDERS health insurance premiums) and a performance- Systems division encompasses plasma and crystal related bonus. The bonus is calculated as a percentage growing systems for the semiconductor industry and of net profit for the year posted by the PVA TePla measurement/analysis systems. The newly organized Group, subject to individual contractual caps. In Solar Systems division – reflecting PVA TePla’s addition, a pension commitment to Peter Abel exists increasing involvement in solar, a long-term growth in connection with his former activity at the Company. business – creates a suitable organizational structure

Details of the remuneration paid to the Management for expanding in the markets for crystallization systems THE COMPANY Board members, including a breakdown by individual and other specialized solutions going forward. member, are provided under C.5. of the notes to the 2008 PVA TePla AG annual financial statements, and section 36 of the notes to the consolidated financial statements.

Remuneration paid to members of the Supervisory Board in fiscal year 2008 totaled EUR 100 thousand. In line with the Company Articles of Association, MANAGEMENT REPORT Supervisory Board members receive total annual compensation of 1% of profit from ordinary activities reported on the consolidated income statement, capped at a maximum EUR 100,000. Details concerning remuneration paid to the Supervisory Board members, including a breakdown by individual member, are GROUP provided under C.5. of the notes to the 2008 PVA TePla AG annual financial statements and section 36 of the notes to the consolidated financial statements. FINANCIAL STATEMENTS SINGLE-ENTITY FINANCIAL STATEMENTS miscellaneous 70 PVA TePla Annual Report 2008

17. Outlook For 2009 the PVA TePla Management Board estimates consolidated sales revenue growth in line with the Markets are depressed due to the global financial and previous-year figure, with EBIT margin increasing to economic crisis. The extent and duration of the present a range of 9-11%. This estimate is based upon order recession affecting industrialized nations is unknown. backlog of EUR 151.8 million as at December 31, 2008, Newly industrializing and developing economies are factoring in that a portion thereof will only generate likewise being affected to a considerable extent. recognizable revenues in fiscal year 2010. Because of Though some of these countries may avoid recession, the economic situation, as discussed above, estimates the high growth rates seen in countries like China beyond 2009 cannot be reliably made at this time. will not be sustainable. In view of the recessionary environment, PVA TePla anticipates lower incoming As a single entity, PVA TePla AG sales revenues and orders in fiscal 2009 than in 2008. The high level of earnings are estimated to come in higher year-on-year order backlog, with no orders having been retracted in fiscal year 2009. This estimate is considered reliable as yet, ensures high capacity utilization of production in view of high order backlog for Vacuum Systems facilities in 2009, and on into 2010 given the long-term (now Industrial Systems) and Crystal Growing Systems nature of several orders. (especially in photovoltaics, now part of the new Solar Systems division). Sales revenues from these orders Solar Systems, the division involved in marketing will be recognized either almost entirely (Vacuum crystal growing systems for photovoltaics, will again Systems) or to a large extent (Crystal Growing Systems) this year be in talks concerning a variety of interesting in fiscal year 2009. potential projects. Even if the photovoltaics markets stagnate as predicted by various analysts in recent months, there is general agreement that the medium to long-range outlook for this market is outstanding. PVA TePla furthermore is convinced that our technologically leading crystal growing systems, which afford customers maximum productivity, will continue Wettenberg, March 19, 2009 to gain share in the market. Sales revenues from the PVA TePla AG semiconductor market are in substantial decline at Management Board this time. The cyclical nature of this industry is once again plainly evident. Conversion over to 300mm wafer technology will likely be interrupted for a while, in long- term the technology will continue its advance. The outlook for the hard metals market is equally difficult to assess at this time. The diversification of our Industrial Systems products across a range of markets however may compensate to some extent of falling orders in Peter Abel Arnd Bohle specific areas. Chief Executive Officer Chief Financial Officer 71

Management and Group Management Report FOR OUR SHAREHOLDERS THE COMPANY

MANAGEMENT REPORT GROUP FINANCIAL STATEMENTS

Arnd Bohle Chief Financial Officer SINGLE-ENTITY FINANCIAL STATEMENTS miscellaneous

2008 GROUP FINANCIAL STATEMENTS PVA TEPLA AG

Consolidated Balance Sheet 74 Consolidated Income Statement 76 Consolidated Cash Flow Statement 77 Consolidated Statement of Changes in Equity 78 Notes to the Consolidated Financial Statements 79 Consolidated Statement of Changes in Fixed Assets 2008 128 Consolidated Statement of Changes in Fixed Assets 2007 130 Responsibility Statement 132 Auditor´s Report 133

GROUP FINANCIAL STATEMENTS 74 PVA TePla Annual Report 2008

Consolidated Balance Sheet as at December 31, 2008

in EUR ´000 Notes Dec. 31, 08 Dec. 31, 07 in EUR ´000 Notes Dec. 31, 08 Dec. 31, 07 Assets Liabilities and shareholders´ equity Non-current assets Shareholders´ equity 13 Intangible assets 4 10,777 13,041 Share capital 21,750 21,750 Goodwill 9,465 11,465 Revenue reserves 19,267 9,367 Other intangible assets 1,312 1,576 Other reserves -482 -199 Property, plant and equipment 5 34,427 24,767 Minority interest -175 -10 Land, property rights and buildings, including buildings Total shareholders´ equity 40,360 30,908 29,845 9,275 on third party land

Plant and machinery 2,426 2,498 Non-current liabilities Other plant and equipment, fixtures and fittings 2,082 1,431 Non-current financial liabilities 15 17,874 17,113 Advance payments and assets under construction 74 11,563 Other non-current liabilities 15 11 Investment property 6 497 519 Retirement pension provisions 16 7,403 7,037 Non-current investments 7 719 572 Deferred tax liabilities 25 4,119 3,661 Investments in associates 702 553 Other non-current provisions 17 512 569 Other non-current receivables 17 19 Total non-current liabilities 29,923 28,391 Deferred tax assets 12 2,888 3,982

Total non-current assets 49,308 42,881 Current liabilities Short-term financial liabilities 18 1,253 2,294 Current assets Trade payables 8,001 4,516 Inventories 8 17,023 12,639 Obligations on construction contracts 19 1,978 167 Raw materials and operating supplies 9,821 7,000 Advance payments received on orders 20 23,100 33,342 Work in progress 6,178 4,801 Accruals 21 6,973 5,286 Finished products and goods 1,024 838 Other short-term liabilities 22 1,894 1,315 Coming receivables on construction contracts 9 22,314 19,394 Provisions for taxes 1,745 432 Trade and other receivables 10 27,935 24,477 Other short-term provisions 17 6,854 2,137 Trade receivables 18,388 11,075 Total current liabilities 51,798 49,489 Amounts owed by associates 142 136 Total 122,081 108,788 Payments in advance 6,561 9,235

Other receivables 2,844 4,031 The following notes are an integral part of the Group Financial Statements Tax repayments 303 326 Cash and cash equivalents 11 5,198 9,071 Total current assets 72,773 65,907 Total 122,081 108,788

The following notes are an integral part of the Group Financial Statements Consolidated BalanceSheet The followingnotesareanintegralpartoftheGroupFinancialStatements Total Total currentassets Cash andcashequivalents Tax repayments Other receivables Payments inadvance Amounts owedbyassociates Trade receivables Trade andotherreceivables Coming receivablesonconstructioncontracts Finished productsandgoods Work inprogress Raw materialsandoperatingsupplies Inventories Current assets Total non-current assets Deferred taxassets Other non-currentreceivables Investments inassociates Non-current investments Investment property Advance paymentsandassetsunderconstruction Other plantandequipment,fixturesfittings Plant andmachinery on thirdpartyland Land, propertyrightsandbuildings,includingbuildings Property, plantandequipment Other intangibleassets Goodwill Intangible assets Non-current assets Assets in EUR´000 asatDecember31,2008

Notes 11 10 12 9 8 7 6 5 4 Dec. 31,08 122,081 27,935 22,314 17,023 34,427 72,773 49,308 18,388 29,845 10,777 5,198 2,888 2,844 6,561 1,024 6,178 9,821 2,082 2,426 1,312 9,465 30 142 702 719 497 17 74 Dec. 31,07 108,788 19,394 12,639 13,041 11,075 24,477 11,563 24,767 11,465 65,907 42,881 3,982 9,071 4,031 9,235 4,801 7,000 1,431 2,498 9,275 1,576 326 572 519 136 838 553 19 Balance sheet Consolidated The followingnotesareanintegralpartoftheGroupFinancialStatements Total Total current liabilities Other short-termprovisions Provisions fortaxes Other short-termliabilities Accruals Advance paymentsreceivedonorders Obligations onconstructioncontracts Trade payables Short-term financialliabilities Current liabilities Total non-current liabilities Other non-currentprovisions Deferred taxliabilities Retirement pensionprovisions Other non-currentliabilities Non-current financialliabilities Non-current liabilities Total shareholders´equity Minority interest Other reserves Revenue reserves Share capital Shareholders´ equity Liabilities andshareholders´equity in EUR´000 Income Statement Consolidated Consolidated Cash Flow Statement Consolidated Statement of ChangesinEquity Notes totheConsolidated Notes Financial Statements 25 16 15 13 17 22 21 20 19 18 17 Changes inFixedAssets08/07 Dec. 31,08 Consolidated Statementof 122,081 51,798 29,923 40,360 17,874 19,267 21,750 23,100 4,119 7,403 6,854 1,745 1,894 6,973 1,978 8,001 1,253 -175 -482 512 15 Auditor’s Report Dec. 31,07 108,788 49,489 28,391 30,908 17,113 21,750 33,342 3,661 7,037 9,367 2,137 1,315 5,286 4,516 2,294 -199 432 167 569 -10 11

SINGLE-ENTITY Group miscellaneous FINANCIAL STATEMENTS FINANCIAL STATEMENTS MANAGEMENT REPORT THE COMPANY FOR OUR SHAREHOLDERS Consolidated Consolidated Cash Consolidated Statement Notes to the Consolidated Consolidated Statement of 76 BalancePVA TePla sheet Annual Report 2008 Flow Statement of Changes in Equity Financial Statements Changes in Fixed Assets 08/07 Auditor’s Report

Consolidated Income Statement

Consolidated Income Statement for the year ended December 31, 2008 Consolidated Cash Flow Statement for the year ended December 31, 2008

in EUR ´000 Notes Jan. 01 – Dec. 31, 08 Jan. 01 – Dec. 31, 07 in EUR ´000 Jan. 01 – Dec. 31, 08 Jan. 01 – Dec. 31, 07

Revenue 23 168,591 113,704 Consolidated net profit for the year 9,735 6,052 Cost of sales -130,856 -86,433 Adjustments to the consolidated net profit for the year for reconciliation Gross profit 37,735 27,271 to the cash flow operating activities: Selling and distribution expenses -9,559 -7,996 + Income tax expense 4,699 4,234 General administrative expenses -8,458 -6,025 - Finance revenue -473 -485 Research and development expenses 24 -1,790 -1,719 + Finance costs 1,407 528 Other operating income 2,075 1,089 = Operating profit 15,368 10,329 Other operating expenses - Income tax payments -1,661 -1,514 -of which amortization on goodwill EUR 2,000 thousand -4,960 -2,643 + Amortization and depreciation 4,121 1,674 (2007: EUR 0 thousand) - Share of profits from associates -325 -352 Operating profit (EBIT) 15,043 9,977 -/+ Gains/losses on disposals of non-current assets 158 23 Finance revenue 473 485 +/- Other non-cash expenses (income) 30 -78 Finance costs -1,407 -528 17,691 10,082 Share of profits from associates 325 352 -/+ Increase/decrease in inventories, trade receivables and other assets -10,896 -27,595 Financial result and share of profits from associates -609 309 +/- Increase/decrease in provisions 4,733 512 Net profit before tax 14,434 10,286 +/- Increase/decrease in trade payables and other liabilities -2,829 23,760 Income taxes 25 -4,699 -4,234 = Cash flow from operating activities 8,699 6,759 Consolidated net profit for the year 9,735 6,052

+ Receipts from associates 205 152 of which attributable to: - Payments for the acquisition of consolidated subsidiaries and other business units 0 -6,071 Shareholders of PVA TePla AG 9,900 6,088 + Proceeds from disposals of intangible assets and proberty, plant and equipment 118 6 Minority interest -165 -36 - Acquisition of intangible assets and property, plant and equipment -11,761 -18,934 Consolidated net profit for the year 9,735 6,052 + Interest receipts 296 485 = Cash flow from investing activities -11,142 -24,362 Earnings per share Earnings per share (basic/diluted) in EUR 26 0.46 0.28 Earnings per share (diluted) in EUR 0.46 0.28 + Receipts from issuance of debt and borrowing of loans 4,000 15,700 Average number of share in circulation (basic) 21,749,988 21,749,988 - Payments for redemption of debt and loans -3,286 -1,099 Average number of share in circulation (diluted) 21,749,988 21,749,988 +/- Change in short-term bank liabilities -1,033 591 - Payments of interest -1.115 -528 = Cash flow from financing activities -1,434 14,664

net change in cash and cash equivalents -3,877 -2,939 +/- Effect of exchange rate fluctuations on cash and cash equivalents 4 -67 + Cash and cash equivalents at beginning of he year 9,071 12,077 = Cash and cash equivalents at the end of the year 5,198 9,071 Consolidated IncomeStatement Average number of shareincirculation(diluted) Average number of shareincirculation(basic) Earnings pershare(diluted)inEUR Earnings pershare(basic/diluted)inEUR Earnings pershare Consolidated netprofitfortheyear Minority interest Shareholders ofPVA TePla AG of whichattributableto: Consolidated netprofitfortheyear Income taxes Net profitbeforetax Financial result and share of profits from associates Share ofprofitsfromassociates Finance costs Finance revenue Operating profit(EBIT) - Other operatingexpenses Other operatingincome Research anddevelopmentexpenses General administrativeexpenses Selling anddistributionexpenses Gross profit Cost ofsales Revenue in EUR´000 of whichamortizationongoodwillEUR2,000thousand (2007: EUR0thousand)

fortheyearendedDecember31,2008 Notes 24 23 26 25 Jan. 01–Dec.31,08 21,749,988 21,749,988 -130,856 168,591 14,434 15,043 37,735 -4,699 -1,407 -4,960 -1,790 -8,458 -9,559 9,735 9,735 9,900 2,075 -609 0.46 0.46 -165 325 473 Jan. 01–Dec.31,07 21,749,988 21,749,988 113,704 -86,433 27,271 10,286 -4,234 -2,643 -1,719 -6,025 -7,996 6,052 6,052 6,088 9,977 1,089 -528 0.28 0.28 309 352 485 -36 Consolidated CashFlowStatement Balance sheet Consolidated = Cashandcashequivalentsattheendofyear + Cashandcashequivalentsatbeginningofheyear +/- Effectofexchangeratefluctuationsoncashandequivalents net change in cash and cash equivalents = Cashflowfromfinancingactivities - Paymentsofinterest +/- Changeinshort-termbankliabilities - Paymentsforredemptionofdebtandloans = Cashflowfrominvestingactivities + Interestreceipts - Acquisition of intangible assets and property, plant+ Proceedsand equipment from disposals of intangible assets - and proberty, plant and equipment + Receiptsfromassociates = Cashflowfromoperatingactivities +/- Increase/decreaseintradepayablesandotherliabilities +/- Increase/decreaseinprovisions -/+ Increase/decreaseininventories,tradereceivablesandotherassets +/- Othernon-cashexpenses(income) -/+ Gains/lossesondisposalsofnon-currentassets - Shareofprofitsfromassociates + Amortizationanddepreciation - Incometaxpayments = Operatingprofit + Financecosts - Financerevenue + Incometaxexpense to thecashflowoperatingactivities: Adjustments totheconsolidatednetprofitforyearreconciliation Consolidated netprofitfortheyear in EUR´000 + Receiptsfromissuanceofdebtandborrowingloans Payments for the acquisition of consolidated subsidiaries and other business units Income Statement Consolidated Consolidated Cash Flow Statement Consolidated Statement of ChangesinEquity fortheyearendedDecember31,2008 Notes totheConsolidated Financial Statements

Jan. 01 – Dec. Changes inFixedAssets08/07 Consolidated Statementof -11,142 -11,761 -10,896 15,368 17,691 -1,434 -1,661 -3,877 -1.115 -1,033 -3,286 -2,829 3 5,198 8,699 4,121 1,407 4,699 9,735 9,071 4,000 4,733 1, 0 -325 -473 158 296 118 205 30 4 0 8 Jan. 01–Dec.31,07 Auditor’s Report -24,362 -18,934 -27,595 12,077 14,664 15,700 23,760 10,329 10,082 -1,514 -2,939 -1,099 -6,071 1,674 4,234 6,052 9,071 6,759 -352 -485 -528 528 591 485 152 512 -78 -67 23 6

SINGLE-ENTITY Group miscellaneous FINANCIAL STATEMENTS FINANCIAL STATEMENTS MANAGEMENT REPORT THE COMPANY FOR OUR SHAREHOLDERS Consolidated Consolidated Consolidated Cash Notes to the Consolidated Consolidated Statement of 78 BalancePVA TePla sheet AnnualIncome Report Statement2008 Flow Statement Financial Statements Changes in Fixed Assets 08/07 Auditor’s Report

Consolidated Statement of Changes in Equity

Consolidated Statement of Changes in Equity for the year ended December 31, 2008

Shares issued Other reserves PVA TePla AG, Wettenberg Total Share- Revenue Currency Market Minority holders´ Notes to the Consolidated Financial Statements reserves conversion valuation Total interest equity Number EUR ´000 EUR ´000 EUR ´000 EUR ´000 EUR ´000 EUR ´000 EUR ´000 for the business year 2008

As at January 21,749,988 21,750 3,279 -351 0 24,678 26 24,704 01, 2007 A. General information and basis of tech materials are produced and further developed. PVA Income/expenses presentation TePla’s existing product range has been expanded with recognized -81 233 152 152 the creation of ultra-thin wafers and plasma nitration directly in equity using PulsPlasma®-synthesis and plasma coating. The Net profit for 6,088 6,088 -36 6,052 1. General information product portfolio is further complemented by systems the year for the non-destructive ultrasonic inspection of materials Total income 6,088 -81 233 6,240 -36 6,204 Domicile and legal form of the company and control of quality based on optical technology. As at December 21,749,988 21,750 9,367 -432 233 30,918 -10 30,908 31, 2007 PVA TePla AG is a stock corporation in accordance with German law. The Company is entered in the Commercial PVA TePla’s markets are characterized by a limited Register of the Giessen Local Court under HRB 6845. number of suppliers, their global dimensions and As at January 21,749,988 21,750 9,367 -432 233 30,918 -10 30,908 01, 2008 The registered address of the Company is 35435 technologically advanced market niches. Income/expenses Wettenberg, Germany. recognized -1 -282 -283 -283 With locations in Germany, USA, Denmark, China, and directly in equity Business activities Singapore, PVA TePla maintains business relationships Net profit for 9,900 9,900 -165 9,735 PVA TePla AG and its subsidiaries (“PVA TePla” or the around the world. the year “Group”) operate globally as suppliers of systems for Total income 9,900 -1 -282 9,617 -165 9,452 the production, refinement and processing of high- The fiscal year for PVA TePla AG and its subsidiaries is As at December 21,749,988 21,750 19,267 -433 -49 40,535 -175 40,360 quality materials, such as metals, semiconductors, the calendar year. 31, 2008 ceramics and glass, and for the controlled surface treatment of such materials and the widest range The Group structures its business activities, and hence of plastic surfaces. Such production and treatment its reporting, into three divisions: Vacuum Systems, processes require stable, reproducible conditions. They Crystal Growing Systems and Plasma Systems. therefore mostly take place under vacuum conditions or inert gas atmospheres, at high temperatures and/or General principles and accounting standards with the support of low-pressure plasma. In addition to From fiscal year 2005 onwards, PVA TePla has been this, systems are also produced for the quality control of obliged as a publicly quoted parent company domiciled high-quality materials. in an EU member state to prepare and publish its consolidated financial statements in accordance with PVA TePla is a supplier of vacuum systems that produce International Financial Reporting Standards (IFRSs) and treat high-tech materials and surfaces in a vacuum and section 315a of the Handelsgesetzbuch (HGB – at high temperatures and in plasma. The market for German Commercial Code). The consolidated financial these systems is always associated worldwide with the statements of PVA TePla for the fiscal year from January latest developments in materials and surface treatment 1, 2008 to December 31, 2008 have therefore been technologies, such as 300mm silicon (Si) wafer prepared in accordance with the IFRSs issued by the technology for semi-conductors, mono- or multi-crystal International Accounting Standards Board (IASB) and in Si wafers for photovoltaics, structural materials for space force at the balance sheet date, and with the binding telescopes, production technologies for metal powder, interpretations of the International Financial Reporting e.g. for hard metals, and production technologies for Interpretations Committee (IFRIC). flat-panel screens. This market will exist as long as high- Consolidated Consolidated Consolidated Cash Consolidated Statement Consolidated Statement of Balance sheet Income Statement Flow Statement of Changes in Equity Changes in Fixed Assets 08/07 Auditor’s Report 79

Notes to the Consolidated Financial Statements

Consolidated Statement of Changes in Equity for the year ended December 31, 2008

As at January 21,749,988 21,750 3,279 -351 0 24,678 26 24,704 FOR OUR SHAREHOLDERS 01, 2007 A. General information and basis of tech materials are produced and further developed. PVA Income/expenses presentation TePla’s existing product range has been expanded with recognized -81 233 152 152 the creation of ultra-thin wafers and plasma nitration directly in equity using PulsPlasma®-synthesis and plasma coating. The Net profit for 6,088 6,088 -36 6,052 1. General information product portfolio is further complemented by systems the year for the non-destructive ultrasonic inspection of materials Total income 6,088 -81 233 6,240 -36 6,204

Domicile and legal form of the company and control of quality based on optical technology. THE COMPANY As at December 21,749,988 21,750 9,367 -432 233 30,918 -10 30,908 31, 2007 PVA TePla AG is a stock corporation in accordance with German law. The Company is entered in the Commercial PVA TePla’s markets are characterized by a limited Register of the Giessen Local Court under HRB 6845. number of suppliers, their global dimensions and As at January 21,749,988 21,750 9,367 -432 233 30,918 -10 30,908 01, 2008 The registered address of the Company is 35435 technologically advanced market niches. Income/expenses Wettenberg, Germany. recognized -1 -282 -283 -283 With locations in Germany, USA, Denmark, China, and directly in equity Business activities Singapore, PVA TePla maintains business relationships Net profit for 9,900 9,900 -165 9,735 PVA TePla AG and its subsidiaries (“PVA TePla” or the around the world. the year “Group”) operate globally as suppliers of systems for MANAGEMENT REPORT Total income 9,900 -1 -282 9,617 -165 9,452 the production, refinement and processing of high- The fiscal year for PVA TePla AG and its subsidiaries is As at December 21,749,988 21,750 19,267 -433 -49 40,535 -175 40,360 quality materials, such as metals, semiconductors, the calendar year. 31, 2008 ceramics and glass, and for the controlled surface treatment of such materials and the widest range The Group structures its business activities, and hence of plastic surfaces. Such production and treatment its reporting, into three divisions: Vacuum Systems, processes require stable, reproducible conditions. They Crystal Growing Systems and Plasma Systems. GROUP therefore mostly take place under vacuum conditions or inert gas atmospheres, at high temperatures and/or General principles and accounting standards

with the support of low-pressure plasma. In addition to From fiscal year 2005 onwards, PVA TePla has been FINANCIAL STATEMENTS this, systems are also produced for the quality control of obliged as a publicly quoted parent company domiciled high-quality materials. in an EU member state to prepare and publish its consolidated financial statements in accordance with PVA TePla is a supplier of vacuum systems that produce International Financial Reporting Standards (IFRSs) and treat high-tech materials and surfaces in a vacuum and section 315a of the Handelsgesetzbuch (HGB – at high temperatures and in plasma. The market for German Commercial Code). The consolidated financial these systems is always associated worldwide with the statements of PVA TePla for the fiscal year from January SINGLE-ENTITY

latest developments in materials and surface treatment 1, 2008 to December 31, 2008 have therefore been FINANCIAL STATEMENTS technologies, such as 300mm silicon (Si) wafer prepared in accordance with the IFRSs issued by the technology for semi-conductors, mono- or multi-crystal International Accounting Standards Board (IASB) and in Si wafers for photovoltaics, structural materials for space force at the balance sheet date, and with the binding telescopes, production technologies for metal powder, interpretations of the International Financial Reporting e.g. for hard metals, and production technologies for Interpretations Committee (IFRIC). flat-panel screens. This market will exist as long as high- miscellaneous 80 PVA TePla Annual Report 2008

In addition, the notes to the financial statements contain The income statement has been prepared in accordance The IASB has issued the following standards, IFRS 2 “Share-based Payment – Vesting certain disclosures to meet the requirements of section with the cost of sales method of presentation. interpretations and amendments to existing standards Conditions and Cancellations” 315a (1) of the HGB. In accordance with section 315a that could be relevant for the PVA TePla Group. Those The standard defines the vesting conditions for share- of the HGB in conjunction with section 315 of the HGB, The consolidated financial statements convey a true and regulations that are not yet mandatory have not been based payment and stipulates that all cancellations of the consolidated financial statements under IFRSs have fair view of the net assets, financial position and results applied in advance by PVA TePla: share-based payment plans must be accounted for been supplemented by a Group management report. of operations of PVA TePla. identically, regardless of the party that has cancelled IFRS 1 “First-time Adoption of International them. They must be recognized for the first time in New statements issued by the IASB Financial Reporting Standards” fiscal years beginning on or after January 1, 2009. IFRS The amendment to the standard in May 2008 is intended 2 does not affect PVA TePla’s consolidated financial Adopted by to facilitate the identification of the cost of an investment statements, as the Company does not have any share- Standard/ Applicable the European by first-time adopters of IFRSs. In future, investments based payments. Interpretation from Commission* Relevance may be measured at their historical or notional cost at the date of conversion to IFRSs. IFRS 3 “Business Combinations” IFRS 1 Amendments to First-time Adoption of IFRS Jan. 1, 2009 Yes None This standard contains revised provisions to be applied IFRS 1 First-time Adoption of IFRS – Jul. 1, 2009 No None restructured standard The amended standard also addresses the measurement when accounting for company acquisitions. In addition to IFRS 2 Share-based Payment – Vesting Conditions Jan. 1, 2009 Yes None of investments in the case of the integration of a new the scope and accounting treatment of step acquisitions, and Cancellations parent. If a new parent is formed as part of a restructuring, an option is introduced as to whether the shares of the IFRS 3 Revision/Business Combinations Jul. 1, 2009 No Dependent on any it must measure the cost of its investment in the previous non-controlling shareholder should be measured at fair pending business parent and the carrying amount of its equity interest in value or on the basis of the proportionate net assets. As combinations the previous parent at the restructuring date. a result, any existing goodwill will be disclosed either IFRS 7 Enhancement of Financial Jan. 1, 2009 No Enhanced disclosures in completely or only in accordance with the interest of Instruments Disclosures notes The standard comes into force on January 1, 2009. the majority owner. The standard comes into force IFRS 8 Operating Segments Jan. 1, 2009 Yes Segment reporting The amended standard will not affect the financial on July 1, 2009. We will examine the effects of first- IAS 1 Presentation of Financial Statements – Jan. 1, 2009 Yes Disclosures in notes statements of PVA TePla AG. time application of the amendments on PVA TePla’s revised by IASB and expansion of income statement items consolidated financial statements in the case of any IFRS 1 “First-time Adoption of International pending business combinations. IAS 23 Borrowing Costs Jan. 1, 2009 Yes Dependent on pending investments Financial Reporting Standards” – restructured IAS 27 Consolidated and Separate Jul. 1, 2009 No Not material standard IFRS 7 “Financial Instruments: Disclosures” – Financial Statements Enhancement of Financial Instruments Disclosures IAS 32 Financial Instruments: Presentation Jan. 1, 2009 Yes Not material The IASB has published a restructured version of IFRS 1. The amendments to IFRS 7 require enhanced disclosures IAS 39 Amendments to Financial Instruments: Jul. 1, 2009 No Not material The standard was first issued in June 2003 and has about fair value measurements and liquidity risk. The Recognition and Measurement subsequently been amended frequently. As a result, the amendments to IFRS 7 mean that PVA TePla AG will IAS 39 Amendments to Reclassifications Jul. 1, 2008 No Not material standard became more complex and less clear. be required to make enhanced financial instruments of Financial Assets disclosures. IFRIC 9/ Amendment to Embedded Jun. 30, 2009 No None The newly published version of IFRS 1 retains the IAS 39 Derivatives Assessment substance of the previous version, but within a changed IFRS 7 is required to be applied for fiscal years beginning IFRIC 12 Service Concession Arrangements Jan. 1, 2008 No None structure. It replaces the previous version and is effective on or after January 1, 2009; earlier adoption is permitted. IFRIC 13 Customer Loyalty Programs Jul. 1, 2008 Yes None for entities applying IFRS for the first time for fiscal years The standard has yet to be adopted in EU law. IFRIC 14 Plan Assets – The Limit on a Defined Benefit Jan. 1, 2008 Yes Not material Asset, Minimum Funding Requirements and beginning on or after July 1, 2009. Earlier application is their Interaction permitted. The restructured version does not affect the IFRS 8 “Operating Segments”

IFRIC 15 Agreements for the Construction Jan. 1, 2009 No Dependent on real consolidated financial statements of PVA TePla AG. In November 2006, the IASB issued IFRS 8 “Operating of Real Estate estate sales Segments”, which replaces IAS 14 “Segment IFRIC 16 Hedges of a Net Investment in a Oct. 1, 2008 No Not material Reporting”. IFRS 8 stipulates the reporting by companies Foreign Operation of existing segment information in annual and interim IFRIC 17 Distributions of Non-Cash Assets to Owners Jul. 1, 2009 No None financial statements. Under IFRS 8, operating segments IFRIC 18 Transfers of Assets from Customers Jul. 1, 2009 No None are determined by means of financial information

* As of March 19, 2009 Consolidated Consolidated Consolidated Cash Consolidated Statement Consolidated Statement of Balance sheet Income Statement Flow Statement of Changes in Equity Changes in Fixed Assets 08/07 Auditor’s Report 81

Notes to the Consolidated Financial Statements

This standard contains revised provisions to be applied THE COMPANY IFRS 1 First-time Adoption of IFRS – Jul. 1, 2009 No None restructured standard The amended standard also addresses the measurement when accounting for company acquisitions. In addition to IFRS 2 Share-based Payment – Vesting Conditions Jan. 1, 2009 Yes None of investments in the case of the integration of a new the scope and accounting treatment of step acquisitions, and Cancellations parent. If a new parent is formed as part of a restructuring, an option is introduced as to whether the shares of the IFRS 3 Revision/Business Combinations Jul. 1, 2009 No Dependent on any it must measure the cost of its investment in the previous non-controlling shareholder should be measured at fair pending business parent and the carrying amount of its equity interest in value or on the basis of the proportionate net assets. As combinations the previous parent at the restructuring date. a result, any existing goodwill will be disclosed either

IFRS 7 Enhancement of Financial Jan. 1, 2009 No Enhanced disclosures in completely or only in accordance with the interest of Instruments Disclosures notes The standard comes into force on January 1, 2009. the majority owner. The standard comes into force IFRS 8 Operating Segments Jan. 1, 2009 Yes Segment reporting The amended standard will not affect the financial on July 1, 2009. We will examine the effects of first- MANAGEMENT REPORT IAS 1 Presentation of Financial Statements – Jan. 1, 2009 Yes Disclosures in notes statements of PVA TePla AG. time application of the amendments on PVA TePla’s revised by IASB and expansion of income statement items consolidated financial statements in the case of any IFRS 1 “First-time Adoption of International pending business combinations. IAS 23 Borrowing Costs Jan. 1, 2009 Yes Dependent on pending investments Financial Reporting Standards” – restructured IAS 27 Consolidated and Separate Jul. 1, 2009 No Not material standard IFRS 7 “Financial Instruments: Disclosures” – Financial Statements Enhancement of Financial Instruments Disclosures GROUP IAS 32 Financial Instruments: Presentation Jan. 1, 2009 Yes Not material The IASB has published a restructured version of IFRS 1. The amendments to IFRS 7 require enhanced disclosures IAS 39 Amendments to Financial Instruments: Jul. 1, 2009 No Not material The standard was first issued in June 2003 and has about fair value measurements and liquidity risk. The

Recognition and Measurement subsequently been amended frequently. As a result, the amendments to IFRS 7 mean that PVA TePla AG will FINANCIAL STATEMENTS IAS 39 Amendments to Reclassifications Jul. 1, 2008 No Not material standard became more complex and less clear. be required to make enhanced financial instruments of Financial Assets disclosures. IFRIC 9/ Amendment to Embedded Jun. 30, 2009 No None The newly published version of IFRS 1 retains the IAS 39 Derivatives Assessment substance of the previous version, but within a changed IFRS 7 is required to be applied for fiscal years beginning IFRIC 12 Service Concession Arrangements Jan. 1, 2008 No None structure. It replaces the previous version and is effective on or after January 1, 2009; earlier adoption is permitted. IFRIC 13 Customer Loyalty Programs Jul. 1, 2008 Yes None for entities applying IFRS for the first time for fiscal years The standard has yet to be adopted in EU law.

IFRIC 14 Plan Assets – The Limit on a Defined Benefit Jan. 1, 2008 Yes Not material SINGLE-ENTITY Asset, Minimum Funding Requirements and beginning on or after July 1, 2009. Earlier application is their Interaction permitted. The restructured version does not affect the IFRS 8 “Operating Segments” FINANCIAL STATEMENTS

made available to and evaluated by the chief operating IAS 23 “Borrowing Costs” IAS 39 “Financial Instruments: Recognition and IFRIC 13 “Customer Loyalty Programs” decision-maker, with this information serving as a basis In its introduction to the amendment to IAS 23 in March Measurement” – Amendments to Reclassifications The IFRIC issued IFRIC 13 in June 2007. This for decision-making in terms of resource allocation and 2007, the IASB removed the option for the treatment of Financial Instruments interpretation was introduced in order to address the profit control. A reported segment may consist of one of borrowing costs. In future, borrowing costs that With the amendments to IAS 39, the IASB is attempting presentation of revenues in connection with customer or more operating segments. In order for a reported arise in conjunction with the purchase, construction to create a level playing field with US GAAP in the loyalty programs. IFRIC 13 is required to be applied for segment to consist of more than one operating segment, or production of qualified assets must be recognized area of financial instruments in terms of the ability to fiscal years beginning on or after July 1, 2008. As PVA certain criteria set out in the standard must be met. as a component of cost. We will examine the effects reclassify financial assets. In certain cases, the potential TePla does not have any customer loyalty programs, of adoption of this standard if and when the relevant amendments would permit the reclassification of the application of IFRIC 13 is not expected to affect the IFRS 8 is required to be applied for fiscal years beginning investments arise. financial assets from the “fair value through profit or Company’s consolidated financial statements. on or after January 1, 2009. loss” category. IAS 27 “Consolidated and Separate Financial IFRIC 14 “The Limit on a Defined Benefit Asset, On first-time application by the Group, the standard Statements” Application is required for fiscal years beginning on or Minimum Funding Requirements and their will result in further disclosures in the notes. As the IAS 27 stipulates that, if a parent changes its ownership after July 1, 2008. The amended standard does not Interaction” structure of segment reporting is already largely covered interest in a subsidiary but does not lose control over affect the consolidated financial statements of PVA This interpretation addresses specific details on by the structure of internal financial reporting, no major that subsidiary, these transactions should be accounted TePla AG. accounting for pension schemes in connection with IAS changes are expected as a result of the new standard. for as equity transactions charged directly to equity. 19 and introduces general guidelines for determining The amended standard also regulates the calculation IFRIC 9 and IAS 39 – Amendment to Embedded the upper limit of a pension fund’s surplus that can IAS 1 “Presentation of Financial Statements” of deconsolidation gains/losses and the measurement Derivatives Assessment be recognized as an asset in accordance with IAS In September 2007, the IASB adopted a revised of residual participating interests in former subsidiaries. On March 12, 2009, the IASB clarified the accounting 19. IFRIC 14 stipulates that the employer does not version of IAS 1. This amendment requires additional The provisions of IAS 27 must be applied for fiscal years treatment of embedded derivatives for entities that have to recognize any additional liabilities unless disclosures in the income statement, which comprises beginning on or after July 1, 2009. The application of the make use of the reclassification amendment issued by the contributions to be paid in accordance with the the conventional income statement profit/loss (as a amended IAS 27 is not expected to have a significant the IASB in October 2008. minimum funding requirements cannot be paid back to sub-total) as well as the expenses and income (other effect on the consolidated financial statements. the company. comprehensive income) previously recognized directly The reclassification amendment allows entities to in equity in the statement of changes in equity. IAS 32 “Financial Instruments: Presentation” reclassify particular financial instruments from the The application of IFRIC 14 is not expected to have In February 2008, the IASB amended IAS 32 with “fair value through profit or loss” category in specific a significant effect on the consolidated financial Companies have the option of continuing to prepare a respect to the classification of puttable financial circumstances. The published amendments to IFRIC 9 statements. traditional income statement together with an additional instruments and obligations only arising on liquidation. and IAS 39 clarify that, on reclassification of a financial statement of comprehensive income (SOCI) or a single As a result, certain financial instruments currently asset from the “fair value through profit or loss” IFRIC 15 “Agreements for the Construction of Real presentation comprising both of these statements. meeting the definition of a financial liability must be category, all embedded derivatives must be assessed Estate” reclassified as equity because they represent the lowest and, if necessary, accounted for separately in financial This interpretation provides guidance on accounting The amendment apparently also applies to the terms residual interest in the net assets of the entity. The statements. for real estate sales concluded with the buyer prior to “balance sheet”, “income statement” and “cash amended standard is required to be applied for fiscal completion. IFRIC 15 defines the criteria by which IAS flow statement”, which in future will be described years beginning on or after January 1, 2009. IFRIC 12 “Service Concession Arrangements” 11 and IAS 18 are required to be applied, the date at as “statement of financial position”, “statement of IFRIC 12 was issued by the IASB in November 2006. which the corresponding revenue should be realized and comprehensive income” and “statement of cash flows”. IAS 39 “Financial Instruments: Recognition and The basis of IFRIC 12 is to regulate arrangements in the disclosure requirements in the notes. Corresponding German terms have been proposed; Measurement” which governments or other institutions grant contracts however, there is no obligation to adopt these terms. In July 2008, the IASB published amendments to IAS 39 to for the supply of public services to private operators. IFRIC 15 is required to be applied for fiscal years clarify the application in certain situations of the principles beginning on or after January 1, 2009. This interpretation The standard is required to be applied for fiscal years for determining whether a hedged risk or portions of cash IFRIC 12 is required to be applied for fiscal years is not expected to have an effect on PVA TePla AG’s beginning on or after January 1, 2009, and will result flows may be used to identify an underlying. beginning on or after January 1, 2008. This interpretation consolidated financial statements. in additional disclosures in the consolidated financial is not relevant for PVA TePla AG. statements of PVA TePla AG. The Company has chosen The amendments to IAS 39 relate to fiscal years not to adopt the new names for the components of its beginning on or after July 1, 2009. The IASB enabled financial statements. the reclassification of derivative financial instruments in November 2008 in response to the global financial crisis. Consolidated Consolidated Consolidated Cash Consolidated Statement Consolidated Statement of Balance sheet Income Statement Flow Statement of Changes in Equity Changes in Fixed Assets 08/07 Auditor’s Report 83

Notes to the Consolidated Financial Statements

structure of segment reporting is already largely covered interest in a subsidiary but does not lose control over affect the consolidated financial statements of PVA This interpretation addresses specific details on THE COMPANY by the structure of internal financial reporting, no major that subsidiary, these transactions should be accounted TePla AG. accounting for pension schemes in connection with IAS changes are expected as a result of the new standard. for as equity transactions charged directly to equity. 19 and introduces general guidelines for determining The amended standard also regulates the calculation IFRIC 9 and IAS 39 – Amendment to Embedded the upper limit of a pension fund’s surplus that can IAS 1 “Presentation of Financial Statements” of deconsolidation gains/losses and the measurement Derivatives Assessment be recognized as an asset in accordance with IAS In September 2007, the IASB adopted a revised of residual participating interests in former subsidiaries. On March 12, 2009, the IASB clarified the accounting 19. IFRIC 14 stipulates that the employer does not version of IAS 1. This amendment requires additional The provisions of IAS 27 must be applied for fiscal years treatment of embedded derivatives for entities that have to recognize any additional liabilities unless disclosures in the income statement, which comprises beginning on or after July 1, 2009. The application of the make use of the reclassification amendment issued by the contributions to be paid in accordance with the the conventional income statement profit/loss (as a amended IAS 27 is not expected to have a significant the IASB in October 2008. minimum funding requirements cannot be paid back to sub-total) as well as the expenses and income (other effect on the consolidated financial statements. the company. MANAGEMENT REPORT comprehensive income) previously recognized directly The reclassification amendment allows entities to in equity in the statement of changes in equity. IAS 32 “Financial Instruments: Presentation” reclassify particular financial instruments from the The application of IFRIC 14 is not expected to have In February 2008, the IASB amended IAS 32 with “fair value through profit or loss” category in specific a significant effect on the consolidated financial Companies have the option of continuing to prepare a respect to the classification of puttable financial circumstances. The published amendments to IFRIC 9 statements. traditional income statement together with an additional instruments and obligations only arising on liquidation. and IAS 39 clarify that, on reclassification of a financial statement of comprehensive income (SOCI) or a single As a result, certain financial instruments currently asset from the “fair value through profit or loss” IFRIC 15 “Agreements for the Construction of Real GROUP presentation comprising both of these statements. meeting the definition of a financial liability must be category, all embedded derivatives must be assessed Estate” reclassified as equity because they represent the lowest and, if necessary, accounted for separately in financial This interpretation provides guidance on accounting

The amendment apparently also applies to the terms residual interest in the net assets of the entity. The statements. for real estate sales concluded with the buyer prior to FINANCIAL STATEMENTS “balance sheet”, “income statement” and “cash amended standard is required to be applied for fiscal completion. IFRIC 15 defines the criteria by which IAS flow statement”, which in future will be described years beginning on or after January 1, 2009. IFRIC 12 “Service Concession Arrangements” 11 and IAS 18 are required to be applied, the date at as “statement of financial position”, “statement of IFRIC 12 was issued by the IASB in November 2006. which the corresponding revenue should be realized and comprehensive income” and “statement of cash flows”. IAS 39 “Financial Instruments: Recognition and The basis of IFRIC 12 is to regulate arrangements in the disclosure requirements in the notes. Corresponding German terms have been proposed; Measurement” which governments or other institutions grant contracts however, there is no obligation to adopt these terms. In July 2008, the IASB published amendments to IAS 39 to for the supply of public services to private operators. IFRIC 15 is required to be applied for fiscal years clarify the application in certain situations of the principles beginning on or after January 1, 2009. This interpretation SINGLE-ENTITY

The standard is required to be applied for fiscal years for determining whether a hedged risk or portions of cash IFRIC 12 is required to be applied for fiscal years is not expected to have an effect on PVA TePla AG’s FINANCIAL STATEMENTS beginning on or after January 1, 2009, and will result flows may be used to identify an underlying. beginning on or after January 1, 2008. This interpretation consolidated financial statements. in additional disclosures in the consolidated financial is not relevant for PVA TePla AG. statements of PVA TePla AG. The Company has chosen The amendments to IAS 39 relate to fiscal years not to adopt the new names for the components of its beginning on or after July 1, 2009. The IASB enabled financial statements. the reclassification of derivative financial instruments in November 2008 in response to the global financial crisis. miscellaneous 84 PVA TePla Annual Report 2008

IFRIC 16 “Hedges of a Net Investment in a Foreign IFRIC 18 “Transfers of Assets from Customers” Reporting currency and currency translation between different fiscal years are reported in “Other Operation” The International Financial Reporting Interpretations The consolidated financial statements are prepared reserves” under shareholders’ equity. Translation in IFRIC 16 addresses the hedge accounting of net Committee published IFRIC 18 on January 29, 2009. This in euros (EUR). Currency translation is performed subsequent periods is performed in accordance with investments in foreign operations. The interpretation interpretation provides additional guidance on accounting in accordance with the functional currency concept IAS 21.23. clarifies that only differences between functional for transfers of assets from customers. set out in IAS 21 (The Effects of Changes in Foreign currencies may be hedged. Hedges may cover the Exchange Rates), which focuses on the primary Cumulative exchange differences from the currency entire net assets of the foreign operation or portions IFRIC 18 is particularly relevant for the energy industry. economic environment. The translation of assets and translation of subsidiaries were not set to zero on thereof. It clarifies the requirements of IFRSs for agreements liabilities as well as contingent liabilities and other the transition date (January 1, 2004), but instead are in which an entity receives from a customer an item of financial obligations is performed at the prevailing rate shown as a separate item in consolidated shareholders’ IFRIC 16 is required to be applied for fiscal years property, plant and equipment that the entity must then on the balance sheet date (middle rate). By contrast, equity. beginning on or after October 1, 2008. An entity may use either to connect the customer to a network or to income statement items are translated using average choose to apply the interpretation prospectively or provide the customer with ongoing access to a supply of exchange rates for the fiscal year, while shareholders’ The material exchange rates of countries outside the retrospectively. goods or services. equity is translated at historical rates. Translation euro zone that are included in the consolidated financial differences arising from exchange rate fluctuations statements are as follows: IFRIC 17 “Distributions of Non-Cash Assets to The interpretation is required to be applied for fiscal years Owners” starting on or after July 1, 2009, and is not expected to IFRIC 17 was issued in November 2008. The have an effect on the consolidated financial statements Closing rate on Dec. 31 (EUR = 1): interpretation applies to pro rata distributions of non- of PVA TePla AG. 2008 2007 cash assets with the exception of common control transactions. Dividends should be recognized at fair With the exception of the amendment to segment USA (USD) 1.40944 1.47184 value when they have been authorized and are no reporting in accordance with IFRS 8 and the China (CNY) 9.60615 10.73537 longer at the discretion of the entity. reclassification of the components of the financial Denmark (DKK) 7.45156 7.45656 statements stipulated by IAS 1, the new IFRS Singapore (SGD) 2.03252 2.12785 IFRIC 17 is required to be applied for fiscal years accounting provisions are not expected to have beginning on or after July 1, 2009. PVA TePla AG does a material effect on the consolidated financial not expect IFRIC 17 to have an effect on its consolidated statements. PVA TePla AG generally only implements financial statements. new standards and interpretations at the date on which Average rate for the year (EUR = 1): first-time application is required. 2008 2007

USA (USD) 1.46325 1.36832 China (CNY) 10.14610 10.39933 Denmark (DKK) 7.45545 7.44989 Singapore (SGD) 2.07293 2.06211

As all consolidated subsidiaries are domiciled in countries with no hyperinflation at present, IAS 29 is not applicable. Consolidated Consolidated Consolidated Cash Consolidated Statement Consolidated Statement of Balance sheet Income Statement Flow Statement of Changes in Equity Changes in Fixed Assets 08/07 Auditor’s Report 85

Notes to the Consolidated Financial Statements

differences arising from exchange rate fluctuations statements are as follows: THE COMPANY IFRIC 17 “Distributions of Non-Cash Assets to The interpretation is required to be applied for fiscal years Owners” starting on or after July 1, 2009, and is not expected to IFRIC 17 was issued in November 2008. The have an effect on the consolidated financial statements Closing rate on Dec. 31 (EUR = 1): interpretation applies to pro rata distributions of non- of PVA TePla AG. 2008 2007 cash assets with the exception of common control transactions. Dividends should be recognized at fair With the exception of the amendment to segment

USA (USD) 1.40944 1.47184 value when they have been authorized and are no reporting in accordance with IFRS 8 and the China (CNY) 9.60615 10.73537 longer at the discretion of the entity. reclassification of the components of the financial Denmark (DKK) 7.45156 7.45656 statements stipulated by IAS 1, the new IFRS Singapore (SGD) 2.03252 2.12785 MANAGEMENT REPORT IFRIC 17 is required to be applied for fiscal years accounting provisions are not expected to have beginning on or after July 1, 2009. PVA TePla AG does a material effect on the consolidated financial not expect IFRIC 17 to have an effect on its consolidated statements. PVA TePla AG generally only implements financial statements. new standards and interpretations at the date on which Average rate for the year (EUR = 1): first-time application is required. 2008 2007 GROUP

USA (USD) 1.46325 1.36832

China (CNY) 10.14610 10.39933 FINANCIAL STATEMENTS Denmark (DKK) 7.45545 7.44989 Singapore (SGD) 2.07293 2.06211

As all consolidated subsidiaries are domiciled in countries with no hyperinflation at present, IAS 29 is not applicable. SINGLE-ENTITY FINANCIAL STATEMENTS miscellaneous 86 PVA TePla Annual Report 2008

Estimates and assumptions estimates from experts (e.g. lawyers, rating agencies Vakuum Anlagenbau Service GmbH, Hanau Principles of consolidation The preparation of the consolidated financial and associations) and the results of carefully weighing (shareholding: 100%) is not included in the consolidated The financial statements of the companies included statements requires estimates and assumptions up different scenarios. Changes in the economic financial statements. On April 25, 2003, insolvency in the consolidated financial statements have been to be made by management. These influence the situation that deviate from the assumptions applied proceedings were initiated with respect to the prepared in accordance with IAS 27 (Consolidated and presentation of assets and liabilities, the disclosure of and that lie beyond the control of management may company’s assets. Accordingly, management control Separate Financial Statements) on the basis of uniform contingent liabilities at the balance sheet date, and the result in the actual amounts differing from the original is no longer exercised by PVA TePla. The carrying accounting and valuation principles. presentation of income and expenditure for the year estimates. If the original basis of estimation changes, amounts of the interests in the company were written under review. accounting for the respective balance sheet items will off in previous years. According to information provided Capital consolidation is performed in accordance have an effect on the income statement. by the insolvency administrator on February 4, 2009, with IFRS 3 (Business Combinations), under which In particular, this relates to allowances for bad debts, the the insolvency proceedings are not yet complete. the cost of acquisition of the participating interests degree of completion of customer-specific production Rounding are offset against the fair values of the assets and orders, the amount and likelihood of utilization of The tables and figures used in these notes are based The following changes have occurred since the 2007 liabilities acquired. Any excess of cost over fair value other provisions, the measurement of goodwill and on precisely calculated amounts that are subsequently consolidated financial statements: is recognized as goodwill and subjected to impairment the recognition of deferred tax assets from tax loss rounded to the nearest thousand euro. Accordingly, testing at least once a year. If there is an excess of fair carryforwards. Management bases its judgment of rounding differences within the tables cannot always - Due to the relocation of their production facilities and value over cost, this is recognized in income after the fair these assumptions and estimates on past experience, be avoided. administration, the registered offices of PVA TePla AG values of the assets and liabilities acquired have been and its subsidiaries Crystal Growing Systems GmbH reviewed. If less than 100% of the shares are acquired, and PVA Control GmbH were moved to Wettenberg the historical cost of the participating interest is offset and entered in the commercial register. against the proportionate fair values of the assets and liabilities acquired. Minority interests are recognized in 2. Consolidation All subsidiaries in which PVA TePla holds a majority of the - Following the disposal of the operations of UV SYSTEC shareholders’ equity at the amount of the remaining shareholders’ voting rights (control) are fully consolidated. Gesellschaft für UV-Strahler und Systemtechnik fair values, including profits and losses attributable to Companies included in consolidation mbH, Jena, the company was renamed PVA Jena them. The present consolidated financial statements of PVA The following companies are included in the consolidated Immobilien GmbH; its registered office remained in TePla include its fully consolidated subsidiaries and one financial statements as at December 31, 2008 on a fully Jena. If the percentage shareholding of the parent changes associate carried at equity. consolidated basis: after control is acquired (step acquisition), any difference - As part of the merger of KSI Krämer Scientific is recognized directly in equity. Instruments GmbH, Herborn, and SAM TEC GmbH, Name Registered office Shareholding Aalen, the name of the company was changed to The differences included in the carrying amounts of PVA TePla Analytical Systems GmbH. The company’s investments in associates are offset using the same PVA TePla AG (parent) Wettenberg, Germany 100% registered office is in Aalen. principles, with an adjustment being made where PVA TePla America Inc. Corona/CA, USA 100% necessary to comply with the applicable accounting PVA Jena Immobilien GmbH Jena, Germany 100% Associated enterprises and valuation principles within the Group. Consolidation PVA Vakuum Anlagenbau Jena GmbH Jena, Germany 100% Companies over which the Group has significant is performed using the equity method set out in IAS 28 Crystal Growing Systems GmbH* Wettenberg, Germany 100% influence due to its involvement in financial and business (Investments in Associates). Xi’an HuaDe CGS Ltd. Xi‘an, China 51% policies, but over which it cannot exercise control, PVA Löt- und Werkstofftechnik GmbH Jena, Germany 100% are recognized as associates. Significant influence Intragroup profits and losses, sales revenues, expenses PVA Control GmbH Wettenberg, Germany 100% is generally presumed when the Group directly or and income, as well as receivables and liabilities between Plasma Systems GmbH Feldkirchen, Germany 100% indirectly holds 20% or more of the voting rights. The consolidated companies, are eliminated. If a Group PlaTeG GmbH Siegen, Germany 100% consolidated financial statements also include PVA company enters into transactions with an associate, the PVA TePla Singapore Pte. Ltd. Singapore 100% MIMtech LLC, Cedar Grove/NJ, USA, an associate in resulting profit or loss is eliminated in proportion to the PVA TePla Analytical Systems GmbH Aalen, Germany 100% which PVA TePla AG has a participating interest of 50%. share in the associate held by the Group. As at December 31, 2008, the shareholders’ equity of * The change in the registered office of Crystal Growing Systems GmbH was submitted on December 23, 2008 and entered in the commercial PVA MIMtech LLC amounted to US$1,803 thousand register on February 18, 2009. (EUR 1,279 thousand), while its net income for 2008 totaled US$952 thousand (EUR 651 thousand). Consolidated Consolidated Consolidated Cash Consolidated Statement Consolidated Statement of Balance sheet Income Statement Flow Statement of Changes in Equity Changes in Fixed Assets 08/07 Auditor’s Report 87

Notes to the Consolidated Financial Statements

the recognition of deferred tax assets from tax loss rounded to the nearest thousand euro. Accordingly, testing at least once a year. If there is an excess of fair THE COMPANY carryforwards. Management bases its judgment of rounding differences within the tables cannot always - Due to the relocation of their production facilities and value over cost, this is recognized in income after the fair these assumptions and estimates on past experience, be avoided. administration, the registered offices of PVA TePla AG values of the assets and liabilities acquired have been and its subsidiaries Crystal Growing Systems GmbH reviewed. If less than 100% of the shares are acquired, and PVA Control GmbH were moved to Wettenberg the historical cost of the participating interest is offset and entered in the commercial register. against the proportionate fair values of the assets and liabilities acquired. Minority interests are recognized in

2. Consolidation All subsidiaries in which PVA TePla holds a majority of the - Following the disposal of the operations of UV SYSTEC shareholders’ equity at the amount of the remaining shareholders’ voting rights (control) are fully consolidated. Gesellschaft für UV-Strahler und Systemtechnik fair values, including profits and losses attributable to Companies included in consolidation mbH, Jena, the company was renamed PVA Jena them. MANAGEMENT REPORT The present consolidated financial statements of PVA The following companies are included in the consolidated Immobilien GmbH; its registered office remained in TePla include its fully consolidated subsidiaries and one financial statements as at December 31, 2008 on a fully Jena. If the percentage shareholding of the parent changes associate carried at equity. consolidated basis: after control is acquired (step acquisition), any difference - As part of the merger of KSI Krämer Scientific is recognized directly in equity. Instruments GmbH, Herborn, and SAM TEC GmbH, Name Registered office Shareholding Aalen, the name of the company was changed to The differences included in the carrying amounts of GROUP PVA TePla Analytical Systems GmbH. The company’s investments in associates are offset using the same PVA TePla AG (parent) Wettenberg, Germany 100% registered office is in Aalen. principles, with an adjustment being made where

PVA TePla America Inc. Corona/CA, USA 100% necessary to comply with the applicable accounting FINANCIAL STATEMENTS PVA Jena Immobilien GmbH Jena, Germany 100% Associated enterprises and valuation principles within the Group. Consolidation PVA Vakuum Anlagenbau Jena GmbH Jena, Germany 100% Companies over which the Group has significant is performed using the equity method set out in IAS 28 Crystal Growing Systems GmbH* Wettenberg, Germany 100% influence due to its involvement in financial and business (Investments in Associates). Xi’an HuaDe CGS Ltd. Xi‘an, China 51% policies, but over which it cannot exercise control, PVA Löt- und Werkstofftechnik GmbH Jena, Germany 100% are recognized as associates. Significant influence Intragroup profits and losses, sales revenues, expenses PVA Control GmbH Wettenberg, Germany 100% is generally presumed when the Group directly or and income, as well as receivables and liabilities between Plasma Systems GmbH Feldkirchen, Germany 100% indirectly holds 20% or more of the voting rights. The consolidated companies, are eliminated. If a Group SINGLE-ENTITY

PlaTeG GmbH Siegen, Germany 100% consolidated financial statements also include PVA company enters into transactions with an associate, the FINANCIAL STATEMENTS PVA TePla Singapore Pte. Ltd. Singapore 100% MIMtech LLC, Cedar Grove/NJ, USA, an associate in resulting profit or loss is eliminated in proportion to the PVA TePla Analytical Systems GmbH Aalen, Germany 100% which PVA TePla AG has a participating interest of 50%. share in the associate held by the Group. As at December 31, 2008, the shareholders’ equity of * The change in the registered office of Crystal Growing Systems GmbH was submitted on December 23, 2008 and entered in the commercial PVA MIMtech LLC amounted to US$1,803 thousand register on February 18, 2009. (EUR 1,279 thousand), while its net income for 2008 totaled US$952 thousand (EUR 651 thousand). miscellaneous 88 PVA TePla Annual Report 2008

3. Accounting and valuation principles reviewed annually and, if necessary, adjusted to meet Assets are depreciated on a pro rata basis in the year As in the previous year, there are also two cash- future expectations. of acquisition. Low value assets with a cost of up to generating units in the Plasma Systems division. The Intangible assets EUR 150 are written off in full in the year of acquisition. internal dependence between the allocation groups of Intangible assets primarily consist of goodwill arising Property, plant and equipment Low value assets with a cost of between EUR 150 and the Plasma Systems division within PVA TePla AG and in connection with company acquisitions, which Property, plant and equipment is carried at cost less EUR 1,000 are included in an omnibus account and the subsidiary PVA TePla America Inc. is so great that represents the excess of the purchase price over the cumulative depreciation. Depreciation is recognized depreciated on a straight-line basis over a period of they can only be viewed as a single cash-generating net fair value of the net assets acquired. on a straight-line basis over the expected useful life of five years. unit. The companies are also controlled and managed the asset; in the case of tenants’ fixtures or leasehold as a whole. As in fiscal year 2007, the subsidiary The treatment of company mergers before the transition improvements, this is the duration of the lease, if Depreciation of property, plant and equipment is PlaTeG GmbH is treated as a separate cash-generating date was retained by invoking the exemption option shorter. Investment subsidies and tax-free investment allocated to the functional areas utilizing the respective unit. This breakdown of cash-generating units also under IFRS 1. In accordance with IFRS 1, goodwill grants received are no longer reported in the separate assets. corresponds to the levels at which the related goodwill amounts were transferred to the IFRS opening balance balance sheet item “Deferred investment grants from is monitored and managed. sheet at their carrying amounts in accordance with the public funds”, but instead are deducted from the Impairment and write-downs of intangible assets previous accounting standard, providing the recognition carrying amount of the relevant assets in accordance and property, plant and equipment The recoverable amount of a cash-generating unit is criteria for intangible assets and contingent liabilities with IAS 20.24. The previous year’s figures have been Where the value of items of intangible assets or calculated as its value in use using the discounted were met. Goodwill is not subject to amortization but restated accordingly. Interest on external borrowing is property, plant and equipment calculated using the cash flow method. Using this method, cash flows are instead is tested for impairment at least once a year or not included in cost. Expenditure for maintenance and principles described above is greater than the value discounted on the basis of the adopted medium-term whenever there are indications of impairment and, if repairs is expensed in the period in which it is incurred. attributed to them at the balance sheet date, impairment business plan with a planning horizon of three years necessary, is written down to its lower fair value. The cost of an asset and the related cumulative losses and write-downs are recognized accordingly. and an extrapolation of this plan in line with expected depreciation are derecognized when assets are The fair value to be applied is calculated on the basis market trends. Growth rate estimates are not taken Other intangible assets with limited useful lives scrapped or disposed of, with any book gains or losses of the higher of net proceeds of sale or the present into account in this extrapolation. are carried at cost, reduced by normal straight-line recognized in the income statement under “Other value of the estimated future cash flows from the use amortization from the date on which they are first operating income” or “Other operating expenses”. of the asset. Impairment losses and write-downs are The discount rate is based on the weighted average ready for use. Useful lives of three to eight years (for reported in other operating expenses. cost of capital of PVA TePla AG (WACC approach) and software: three to five years) are applied. Amortization Depreciation is primarily based on the following useful contains a reasonable risk premium. of intangible assets is allocated to the functional lives: In accordance with IFRS 3 (Business Combinations), areas utilizing the assets concerned. Useful lives are the carrying amount of goodwill is reviewed at least Necessary write-downs are identified by comparing annually by way of an impairment test. the carrying amounts of the cash-generating units with the recoverable amounts. Years Goodwill is allocated to cash-generating units in accordance with IAS 36 (Impairment of Assets). In Impairment losses are reversed if the reasons for Buildings 25 - 33 accordance with IAS 36.80 (b), each cash generating their recognition no longer exist. The reversal of an Plant and machinery 3 - 20 unit may not be larger than a segment for the purposes impairment loss is limited to the amortized carrying Other plant and equipment, fixtures and fittings 2 - 14 of segment reporting. amount that would have resulted if no impairment losses had been recognized in the past. Income from There are two cash-generating units within the such reversals is reported in “Other operating income”. Crystal Growing Systems division: the subsidiaries Impairment losses on goodwill may not be reversed. Crystal Growing Systems GmbH (CGS) and PVA TePla Analytical Systems GmbH. Consolidated Consolidated Consolidated Cash Consolidated Statement Consolidated Statement of Balance sheet Income Statement Flow Statement of Changes in Equity Changes in Fixed Assets 08/07 Auditor’s Report 89

Notes to the Consolidated Financial Statements

previous accounting standard, providing the recognition carrying amount of the relevant assets in accordance and property, plant and equipment The recoverable amount of a cash-generating unit is THE COMPANY criteria for intangible assets and contingent liabilities with IAS 20.24. The previous year’s figures have been Where the value of items of intangible assets or calculated as its value in use using the discounted were met. Goodwill is not subject to amortization but restated accordingly. Interest on external borrowing is property, plant and equipment calculated using the cash flow method. Using this method, cash flows are instead is tested for impairment at least once a year or not included in cost. Expenditure for maintenance and principles described above is greater than the value discounted on the basis of the adopted medium-term whenever there are indications of impairment and, if repairs is expensed in the period in which it is incurred. attributed to them at the balance sheet date, impairment business plan with a planning horizon of three years necessary, is written down to its lower fair value. The cost of an asset and the related cumulative losses and write-downs are recognized accordingly. and an extrapolation of this plan in line with expected depreciation are derecognized when assets are The fair value to be applied is calculated on the basis market trends. Growth rate estimates are not taken

Other intangible assets with limited useful lives scrapped or disposed of, with any book gains or losses of the higher of net proceeds of sale or the present into account in this extrapolation. are carried at cost, reduced by normal straight-line recognized in the income statement under “Other value of the estimated future cash flows from the use amortization from the date on which they are first operating income” or “Other operating expenses”. of the asset. Impairment losses and write-downs are The discount rate is based on the weighted average MANAGEMENT REPORT ready for use. Useful lives of three to eight years (for reported in other operating expenses. cost of capital of PVA TePla AG (WACC approach) and software: three to five years) are applied. Amortization Depreciation is primarily based on the following useful contains a reasonable risk premium. of intangible assets is allocated to the functional lives: In accordance with IFRS 3 (Business Combinations), areas utilizing the assets concerned. Useful lives are the carrying amount of goodwill is reviewed at least Necessary write-downs are identified by comparing annually by way of an impairment test. the carrying amounts of the cash-generating units with the recoverable amounts. GROUP Years Goodwill is allocated to cash-generating units in accordance with IAS 36 (Impairment of Assets). In Impairment losses are reversed if the reasons for

Buildings 25 - 33 accordance with IAS 36.80 (b), each cash generating their recognition no longer exist. The reversal of an FINANCIAL STATEMENTS Plant and machinery 3 - 20 unit may not be larger than a segment for the purposes impairment loss is limited to the amortized carrying Other plant and equipment, fixtures and fittings 2 - 14 of segment reporting. amount that would have resulted if no impairment losses had been recognized in the past. Income from There are two cash-generating units within the such reversals is reported in “Other operating income”. Crystal Growing Systems division: the subsidiaries Impairment losses on goodwill may not be reversed. Crystal Growing Systems GmbH (CGS) and PVA TePla Analytical Systems GmbH. SINGLE-ENTITY FINANCIAL STATEMENTS miscellaneous 90 PVA TePla Annual Report 2008

Leasing Derivative financial instruments/Exchange rate Obligations on construction contracts Other provisions In accordance with IAS 17.4 (Leases), all agreements hedging As part of the partial recognition of sales revenues In accordance with IAS 37 (Provisions, Contingent under which the right to use an asset is transferred in Some sales are concluded in foreign currencies. Forward from customer-specific construction contracts based Liabilities and Contingent Assets), provisions for other exchange for payment are deemed to be leases. Rental exchange contracts are generally concluded to hedge on the percentage of completion, any amount due to financial obligations are recognized when a present agreements are therefore also treated as leases. exchange rate risks in these cases. customers for contract work is reported as a liability obligation towards a third party arises from a past in accordance with IAS 11.42. This results from the event, future settlement is probable and the amount PVA TePla is the lessee of property, plant and These cases are represented as fair value hedges. excess of invoiced amounts over the corresponding can be reliably estimated. Non-current provisions with equipment. In fiscal year 2008, as in the previous year, The assets (trade receivables) shown in the balance proportionate revenue. In the same way as for “Coming a remaining term of more than one year are recognized all leases of PVA TePla were treated as operating leases sheet are measured at fair value; the adjustment of the receivables on construction contracts”, these items are at the amount required to settle the obligation, with lease installments expensed as incurred. carrying amount to reflect the fair value is recognized in reported separately in the balance sheet. discounted to the balance sheet date. the income statement as a component of financial result Inventories (net finance revenue or net finance costs). Hedges are Only partial payments that are due on the basis of the The provision for obligations arising from partial Inventories are recognized at the lower of cost in also measured at fair value. If hedging is implemented progress of each individual system, and hence that retirement schemes comprises expenditure on wages accordance with the weighted average cost method completely, the opposing effects on earnings will meet the scope of progress billing, are recognized as and salaries as well as top-up benefits. This provision or net realizable value. In accordance with IAS 2 compensate each other. invoiced amounts. Payments received at the inception is recognized for individual contractual arrangements. (Inventories), cost includes not only directly attributable of the order or partial payments that do not correspond As in previous years, no provision is recognized for costs, but also production and material overheads and A currency option was entered into for an order in to the progress of completion are presented separately potential future beneficiaries. write-downs. Fixed overheads are taken into account the Crystal Growing Systems division. The effect on as advance payments. on the basis of the normal capacity utilization of the earnings is recognized as an exchange gain or loss, and Deferred taxes production facilities. The cost of idle production hence as a component of financial result (net finance Obligations from pension commitments Taxes are deferred in accordance with IAS 12 (Income capacity is recognized in income under “Cost of sales”. revenue or net finance costs). Positive market values Obligations from direct pension commitments are Taxes) for temporary differences arising between the Write-downs are charged on inventories when their are recognized in “Other assets”, while negative market calculated in accordance with IAS 19 (Employee amounts in the consolidated balance sheet and the cost exceeds the expected net realizable value. values are recognized in “Other provisions”. Benefits) using the projected unit credit method, taking tax base of the companies included in consolidation, future salary and pension adjustments into account. as well as on consolidation adjustments and tax loss Coming receivables on construction contracts Derivative financial instruments/Interest rate Actuarial reports are obtained annually for this purpose. carryforwards. Deferred tax assets and liabilities are As part of the partial recognition of sales revenues hedging The service cost for pension beneficiaries is derived also recognized for temporary differences arising from from customer-specific construction contracts based Interest rate hedges were concluded in order to hedge from the scheduled change in provisions for pension company acquisitions, with the exception of temporary on the percentage of completion, any amount due from interest rate risks for the financing of planned investments commitments. Differences between defined pension differences on goodwill. Deferrals are recognized customers for contract work is reported as an asset in new buildings. The positive market value of these obligations and the present value of future and present in the probable amount of the tax charge or relief in in accordance with IAS 11.42. These items are shown instruments is recognized in “Other receivables”. In this pensions at year-end (actuarial gains and losses) are subsequent fiscal years. Tax assets from deferrals are under “Coming receivables on construction contracts”. case, the offsetting entry is reported in equity under allocated to subsequent periods over the average only recognized if it is reasonably certain they will be “Other reserves”. remaining period of service of the beneficiaries and recovered. Receivables recognized in income, providing such gains and losses Receivables are carried at their nominal amount. Deferred investment grants from public funds exceed 10% of total obligations. Tax loss carryforwards are only included in tax deferrals Some items of capital expenditure are supported by to the extent that taxable income sufficient to recover Appropriate bad debt allowances are recognized for trade investment subsidies and tax-free investment grants. Pension obligations in Germany are calculated on the the deferred tax assets is expected to be generated receivables in order to cover possible default risks. In accordance with IAS 20.24, these amounts are basis of the biometric 2005 G mortality tables issued in future. Deferred tax assets are reduced by amounts deducted from the carrying amount of the relevant by Professor Klaus Heubeck. There are no pension that are no longer likely to be utilized for tax purposes. Cash and cash equivalents assets. obligations outside Germany. Write-downs are recognized on deferred tax assets Cash and cash equivalents comprise all freely that are unlikely to be recovered. available liquid funds such as cash in hand and cash Liabilities Accruals in current accounts, as well as other current bank In accordance with IAS 39, liabilities are carried at Accruals are liabilities payable for goods or services Deferred taxes are calculated on the basis of the tax balances available. amortized cost on the balance sheet date, which generally received that are neither paid nor invoiced or formally rates in force or announced in the individual countries corresponds to the amount due on settlement. agreed upon by the supplier at the balance sheet date. at the realization date in accordance with the current This also includes amounts owed to employees. legal situation. Consolidated Consolidated Consolidated Cash Consolidated Statement Consolidated Statement of Balance sheet Income Statement Flow Statement of Changes in Equity Changes in Fixed Assets 08/07 Auditor’s Report 91

Notes to the Consolidated Financial Statements

accordance with the weighted average cost method completely, the opposing effects on earnings will meet the scope of progress billing, are recognized as and salaries as well as top-up benefits. This provision THE COMPANY or net realizable value. In accordance with IAS 2 compensate each other. invoiced amounts. Payments received at the inception is recognized for individual contractual arrangements. (Inventories), cost includes not only directly attributable of the order or partial payments that do not correspond As in previous years, no provision is recognized for costs, but also production and material overheads and A currency option was entered into for an order in to the progress of completion are presented separately potential future beneficiaries. write-downs. Fixed overheads are taken into account the Crystal Growing Systems division. The effect on as advance payments. on the basis of the normal capacity utilization of the earnings is recognized as an exchange gain or loss, and Deferred taxes production facilities. The cost of idle production hence as a component of financial result (net finance Obligations from pension commitments Taxes are deferred in accordance with IAS 12 (Income capacity is recognized in income under “Cost of sales”. revenue or net finance costs). Positive market values Obligations from direct pension commitments are Taxes) for temporary differences arising between the Write-downs are charged on inventories when their are recognized in “Other assets”, while negative market calculated in accordance with IAS 19 (Employee amounts in the consolidated balance sheet and the cost exceeds the expected net realizable value. values are recognized in “Other provisions”. Benefits) using the projected unit credit method, taking tax base of the companies included in consolidation, MANAGEMENT REPORT future salary and pension adjustments into account. as well as on consolidation adjustments and tax loss Coming receivables on construction contracts Derivative financial instruments/Interest rate Actuarial reports are obtained annually for this purpose. carryforwards. Deferred tax assets and liabilities are As part of the partial recognition of sales revenues hedging The service cost for pension beneficiaries is derived also recognized for temporary differences arising from from customer-specific construction contracts based Interest rate hedges were concluded in order to hedge from the scheduled change in provisions for pension company acquisitions, with the exception of temporary on the percentage of completion, any amount due from interest rate risks for the financing of planned investments commitments. Differences between defined pension differences on goodwill. Deferrals are recognized customers for contract work is reported as an asset in new buildings. The positive market value of these obligations and the present value of future and present in the probable amount of the tax charge or relief in GROUP in accordance with IAS 11.42. These items are shown instruments is recognized in “Other receivables”. In this pensions at year-end (actuarial gains and losses) are subsequent fiscal years. Tax assets from deferrals are under “Coming receivables on construction contracts”. case, the offsetting entry is reported in equity under allocated to subsequent periods over the average only recognized if it is reasonably certain they will be

“Other reserves”. remaining period of service of the beneficiaries and recovered. FINANCIAL STATEMENTS Receivables recognized in income, providing such gains and losses Receivables are carried at their nominal amount. Deferred investment grants from public funds exceed 10% of total obligations. Tax loss carryforwards are only included in tax deferrals Some items of capital expenditure are supported by to the extent that taxable income sufficient to recover Appropriate bad debt allowances are recognized for trade investment subsidies and tax-free investment grants. Pension obligations in Germany are calculated on the the deferred tax assets is expected to be generated receivables in order to cover possible default risks. In accordance with IAS 20.24, these amounts are basis of the biometric 2005 G mortality tables issued in future. Deferred tax assets are reduced by amounts deducted from the carrying amount of the relevant by Professor Klaus Heubeck. There are no pension that are no longer likely to be utilized for tax purposes. Cash and cash equivalents assets. obligations outside Germany. Write-downs are recognized on deferred tax assets SINGLE-ENTITY

Cash and cash equivalents comprise all freely that are unlikely to be recovered. FINANCIAL STATEMENTS available liquid funds such as cash in hand and cash Liabilities Accruals in current accounts, as well as other current bank In accordance with IAS 39, liabilities are carried at Accruals are liabilities payable for goods or services Deferred taxes are calculated on the basis of the tax balances available. amortized cost on the balance sheet date, which generally received that are neither paid nor invoiced or formally rates in force or announced in the individual countries corresponds to the amount due on settlement. agreed upon by the supplier at the balance sheet date. at the realization date in accordance with the current This also includes amounts owed to employees. legal situation. miscellaneous 92 PVA TePla Annual Report 2008

Revenue recognition This means that, of the conditions specified in IAS 38 B. Notes on individual balance sheet items Sales revenues are recognized as soon as the goods are (Intangible Assets) for the capitalization of development delivered or the services are performed and the transfer costs, two important criteria are not met. Accordingly, of risk has taken place. All sales revenues are recognized such costs are not capitalized. 4. Intangible assets on the date of delivery or performance, as management regards sundry services and sales arrangements, Research and development expenses are therefore Changes in intangible assets in the fiscal year under such as training, as immaterial to the serviceability of expensed in the period in which they are incurred. review and in the previous year are shown in the its systems. Income from services and repair work is consolidated statement of changes in fixed assets for recognized when the related projects are completed. Interest 2008 and 2007, which is attached as an appendix. Interest and other borrowing costs are expensed in the Income from customer-specific construction contracts period in which they are incurred. The carrying amounts of intangible assets are composed is realized in accordance with IAS 11 (Construction as follows: Contracts) on the basis of the progress of the work Other financial commitments (percentage of completion method), as a reliable A discount rate of 4.5% has been applied in determining in EUR ‘000 Dec. 31, 2008 Dec. 31, 2007 estimate of the outcome of the contract is possible, the present value of other financial obligations. the products to be delivered, the terms of payment and Intangible assets the manner in which the work is to be progressed are Amendments to disclosures Goodwill 9,465 11,465 clearly defined in the contracts, and the fulfillment of The presentation of investment grants and subsidies, Other intangible assets 1,312 1,576 the contractual arrangements by both the purchaser which were previously recognized on a gross basis, are Total 10,777 13,041 and the seller is considered to be probable. The degree now recognized using the net method. Accordingly, of completion is determined as the ratio of the costs investment subsidies and investment grants received incurred at the reporting date to the estimated total are no longer reported as a separate item on the liability costs (cost-to-cost method). Anticipated losses from side of the balance sheet, but instead are deducted The goodwill in the Plasma Systems segment results A discount rate of 13.45% was applied in impairment long-term construction contracts are immediately from the carrying amount of the relevant assets in from the acquisition of the Plasma Systems division in testing in fiscal year 2008. expensed in full. accordance with IAS 20.24. the course of the merger of TePla AG, Feldkirchen and PVA Vakuum-Anlagenbau GmbH, Asslar, in November Based on the results of impairment testing in accordance Warranty provisions are recognized at the balance sheet In addition, provisions for year-end closing and audit 2002 (EUR 3,850 thousand) and the transfer of the with IAS 36, the goodwill from the acquisition of date for realized sales revenues. These provisions are costs and anniversaries are now reported in accruals. Plasma Technik Grün GmbH business to PlaTeG GmbH TePla was written down to the lower value in use in based on estimates and past experience. in 2006 (EUR 50 thousand). the amount of EUR 2,000 thousand. This impairment The previous year’s figures have also been restated as loss is reported in other operating expenses and listed Research and development expenses a result of this change in presentation. The recognized goodwill in the Crystal Growing separately in the income statement. PVA TePla is engaged in high-tech mechanical Systems segment was initially due to the increase in engineering in single unit and small series production. the participating interest in Crystal Growing Systems Write-downs of other intangible assets amounted to The continued development of products is closely linked GmbH in July 2002 (EUR 2,734 thousand). In fiscal year EUR 421 thousand in 2008 and EUR 267 thousand in to research into new procedures and processes and 2007, the acquisition of the KSI Group, Herborn (since 2007 and were primarily reported in the cost of sales. the development of new product features. Activities renamed PVA TePla Analytical Systems GmbH) led to a in these two areas always alternate in the course of further increase in goodwill of EUR 4,831 thousand. a project. Accordingly, the separation of research and development activities, and hence the separation of the respective costs, does not generally offer sufficient information value. Similarly, an estimate of probable benefits is too unreliable in light of the uncertainties in future market trends. Consolidated Consolidated Consolidated Cash Consolidated Statement Consolidated Statement of Balance sheet Income Statement Flow Statement of Changes in Equity Changes in Fixed Assets 08/07 Auditor’s Report 93

Notes to the Consolidated Financial Statements

Revenue recognition This means that, of the conditions specified in IAS 38 B. Notes on individual balance sheet items Sales revenues are recognized as soon as the goods are (Intangible Assets) for the capitalization of development delivered or the services are performed and the transfer costs, two important criteria are not met. Accordingly, of risk has taken place. All sales revenues are recognized such costs are not capitalized. 4. Intangible assets on the date of delivery or performance, as management regards sundry services and sales arrangements, Research and development expenses are therefore Changes in intangible assets in the fiscal year under such as training, as immaterial to the serviceability of expensed in the period in which they are incurred. review and in the previous year are shown in the FOR OUR SHAREHOLDERS its systems. Income from services and repair work is consolidated statement of changes in fixed assets for recognized when the related projects are completed. Interest 2008 and 2007, which is attached as an appendix. Interest and other borrowing costs are expensed in the Income from customer-specific construction contracts period in which they are incurred. The carrying amounts of intangible assets are composed is realized in accordance with IAS 11 (Construction as follows: Contracts) on the basis of the progress of the work Other financial commitments in EUR ‘000 Dec. 31, 2008 Dec. 31, 2007 (percentage of completion method), as a reliable A discount rate of 4.5% has been applied in determining THE COMPANY estimate of the outcome of the contract is possible, the present value of other financial obligations. the products to be delivered, the terms of payment and Intangible assets the manner in which the work is to be progressed are Amendments to disclosures Goodwill 9,465 11,465 clearly defined in the contracts, and the fulfillment of The presentation of investment grants and subsidies, Other intangible assets 1,312 1,576 the contractual arrangements by both the purchaser which were previously recognized on a gross basis, are Total 10,777 13,041 and the seller is considered to be probable. The degree now recognized using the net method. Accordingly, of completion is determined as the ratio of the costs investment subsidies and investment grants received incurred at the reporting date to the estimated total are no longer reported as a separate item on the liability costs (cost-to-cost method). Anticipated losses from side of the balance sheet, but instead are deducted The goodwill in the Plasma Systems segment results A discount rate of 13.45% was applied in impairment MANAGEMENT REPORT long-term construction contracts are immediately from the carrying amount of the relevant assets in from the acquisition of the Plasma Systems division in testing in fiscal year 2008. expensed in full. accordance with IAS 20.24. the course of the merger of TePla AG, Feldkirchen and PVA Vakuum-Anlagenbau GmbH, Asslar, in November Based on the results of impairment testing in accordance Warranty provisions are recognized at the balance sheet In addition, provisions for year-end closing and audit 2002 (EUR 3,850 thousand) and the transfer of the with IAS 36, the goodwill from the acquisition of date for realized sales revenues. These provisions are costs and anniversaries are now reported in accruals. Plasma Technik Grün GmbH business to PlaTeG GmbH TePla was written down to the lower value in use in based on estimates and past experience. in 2006 (EUR 50 thousand). the amount of EUR 2,000 thousand. This impairment GROUP The previous year’s figures have also been restated as loss is reported in other operating expenses and listed Research and development expenses a result of this change in presentation. The recognized goodwill in the Crystal Growing separately in the income statement.

PVA TePla is engaged in high-tech mechanical Systems segment was initially due to the increase in FINANCIAL STATEMENTS engineering in single unit and small series production. the participating interest in Crystal Growing Systems Write-downs of other intangible assets amounted to The continued development of products is closely linked GmbH in July 2002 (EUR 2,734 thousand). In fiscal year EUR 421 thousand in 2008 and EUR 267 thousand in to research into new procedures and processes and 2007, the acquisition of the KSI Group, Herborn (since 2007 and were primarily reported in the cost of sales. the development of new product features. Activities renamed PVA TePla Analytical Systems GmbH) led to a in these two areas always alternate in the course of further increase in goodwill of EUR 4,831 thousand. a project. Accordingly, the separation of research and development activities, and hence the separation of SINGLE-ENTITY the respective costs, does not generally offer sufficient FINANCIAL STATEMENTS information value. Similarly, an estimate of probable benefits is too unreliable in light of the uncertainties in future market trends. miscellaneous 94 PVA TePla Annual Report 2008

5. Property, plant and equipment 6. Investment property not to engage an external surveyor to perform a cost- intensive reassessment of the real estate. Changes in property, plant and equipment in the year Following the capacity expansion at the Jena site, where under review and in the previous year are shown in the new facilities were put in place, continued internal use In the past fiscal year 2008, rental income of EUR 54 consolidated statement of changes in fixed assets for of the facilities in Kahla is no longer foreseeable. These thousand was generated from the real estate (including 2008 and 2007, which is attached as an appendix. facilities have already been leased out to a large extent. the reimbursement of incidental costs). This income is Accordingly, this real estate has been classified as offset by incidental costs and service and maintenance The carrying amounts of property, plant and equipment investment property in accordance with IAS 40 since expenses in the amount of EUR 51 thousand. are composed as follows: fiscal year 2007. The historical cost of the real estate totaled EUR 694 Investment property was measured on the basis of the thousand for the land and buildings. At December 31, in EUR ‘000 Dec. 31, 2008 Dec. 31, 2007 cost of acquisition less depreciation. The fair value of 2008, cumulative depreciation amounted to EUR 197 EUR 499 thousand was calculated using a best estimate thousand. These figures are also presented in the Property, plant and equipment of the achievable rental income in the course of an consolidated statement of changes in fixed assets as of Land, property rights and buildings, including buildings assessment of property yields. At December 31, 2008, December 31, 2008. 29,845 9,275 on third-party land the fair value was higher than the carrying amount of the Plant and machinery 2,426 2,498 real estate, meaning that there were no grounds for the Real estate is depreciated on a straight-line basis over a Other plant and equipment, fixtures and fittings 2,082 1,431 recognition of impairment losses. The Company opted useful life of 25 years. Advance payments and assets under construction 74 11,563 Total 34,427 24,767

The increase in land, property rights and buildings, asset deal of PlaTeG GmbH, ownership of the plasma 7. Non-current investments including buildings on third-party land is primarily due nitration systems installed in the contract processing to new construction measures at the Wettenberg area was assigned as security. The corresponding loan The carrying amounts of non-current investments are location. This was offset by the depreciation of the was valued at EUR 288 thousand at the balance sheet composed as follows: allocated assets. The reduction in advance payments date. and assets under construction is also attributable to the completion of construction measures in Wettenberg. In order to secure the PVA TePla AG loans for the in EUR ‘000 Dec. 31, 2008 Dec. 31, 2007 financing of new facilities in Wettenberg, land has been Depreciation of property, plant and equipment encumbered with a charge in the amount of EUR 18,000 Investments in associates 702 553 amounted to EUR 1,678 thousand in 2008 and EUR thousand. The corresponding loans were measured at Other non-current receivables 17 19 1,396 thousand in 2007. EUR 9,789 thousand at the balance sheet date. Total 719 572

In order to secure the loans advanced to PVA Vakuum In order to finance three brazing furnaces for the Anlagenbau Jena GmbH for the financing of commercial subsidiary PVA Löt- und Werkstofftechnik GmbH, Jena The 50% participating interest in PVA MIMtech LLC is In September 2002, the cost of a 25% investment property, land has been encumbered with a charge in the financed furnaces were assigned as security. The reported in non-current investments under investments amounted to the equivalent of EUR 96 thousand. There the amount of EUR 4,929 thousand. The corresponding residual carrying amount of the three furnaces at the in associates. Recognition is performed using the equity was no difference between the cost of acquisition and loans were measured at EUR 3,059 thousand at the balance sheet date was EUR 1,252 thousand. The method of accounting, under which the participating the equity acquired. With effect from January 1, 2004, balance sheet date. Land charges in the amount of EUR corresponding loans have a remaining unsettled amount interest is initially measured at the amount invested; a further 25% was acquired for the equivalent of EUR 2,401 thousand have been registered in order to secure of EUR 849 thousand. gains or losses arising in subsequent periods are then 104 thousand. The difference between the cost of the corresponding loans of PVA Jena Immobilien offset against the carrying amount of the participating acquisition and the equity acquired, which amounted GmbH. In this case, the corresponding loans were There are no other material restrictions on ownership interest. to the equivalent of EUR 66 thousand, is recognized valued at EUR 1,058 thousand at the balance sheet or title in respect of the property, plant and equipment as goodwill in an auxiliary account and subjected to date. In order to secure the loan for the financing of the reported. an annual impairment test. In 2008, there were no Consolidated Consolidated Consolidated Cash Consolidated Statement Consolidated Statement of Balance sheet Income Statement Flow Statement of Changes in Equity Changes in Fixed Assets 08/07 Auditor’s Report 95

Notes to the Consolidated Financial Statements

Property, plant and equipment of the achievable rental income in the course of an consolidated statement of changes in fixed assets as of THE COMPANY Land, property rights and buildings, including buildings assessment of property yields. At December 31, 2008, December 31, 2008. 29,845 9,275 on third-party land the fair value was higher than the carrying amount of the Plant and machinery 2,426 2,498 real estate, meaning that there were no grounds for the Real estate is depreciated on a straight-line basis over a Other plant and equipment, fixtures and fittings 2,082 1,431 recognition of impairment losses. The Company opted useful life of 25 years. Advance payments and assets under construction 74 11,563 Total 34,427 24,767

The increase in land, property rights and buildings, asset deal of PlaTeG GmbH, ownership of the plasma 7. Non-current investments MANAGEMENT REPORT including buildings on third-party land is primarily due nitration systems installed in the contract processing to new construction measures at the Wettenberg area was assigned as security. The corresponding loan The carrying amounts of non-current investments are location. This was offset by the depreciation of the was valued at EUR 288 thousand at the balance sheet composed as follows: allocated assets. The reduction in advance payments date. and assets under construction is also attributable to the completion of construction measures in Wettenberg. In order to secure the PVA TePla AG loans for the in EUR ‘000 Dec. 31, 2008 Dec. 31, 2007 GROUP financing of new facilities in Wettenberg, land has been Depreciation of property, plant and equipment encumbered with a charge in the amount of EUR 18,000 Investments in associates 702 553 amounted to EUR 1,678 thousand in 2008 and EUR thousand. The corresponding loans were measured at Other non-current receivables 17 19 FINANCIAL STATEMENTS 1,396 thousand in 2007. EUR 9,789 thousand at the balance sheet date. Total 719 572

In order to secure the loans advanced to PVA Vakuum In order to finance three brazing furnaces for the Anlagenbau Jena GmbH for the financing of commercial subsidiary PVA Löt- und Werkstofftechnik GmbH, Jena The 50% participating interest in PVA MIMtech LLC is In September 2002, the cost of a 25% investment property, land has been encumbered with a charge in the financed furnaces were assigned as security. The reported in non-current investments under investments amounted to the equivalent of EUR 96 thousand. There the amount of EUR 4,929 thousand. The corresponding residual carrying amount of the three furnaces at the in associates. Recognition is performed using the equity was no difference between the cost of acquisition and loans were measured at EUR 3,059 thousand at the balance sheet date was EUR 1,252 thousand. The method of accounting, under which the participating the equity acquired. With effect from January 1, 2004, SINGLE-ENTITY balance sheet date. Land charges in the amount of EUR corresponding loans have a remaining unsettled amount interest is initially measured at the amount invested; a further 25% was acquired for the equivalent of EUR FINANCIAL STATEMENTS 2,401 thousand have been registered in order to secure of EUR 849 thousand. gains or losses arising in subsequent periods are then 104 thousand. The difference between the cost of the corresponding loans of PVA Jena Immobilien offset against the carrying amount of the participating acquisition and the equity acquired, which amounted GmbH. In this case, the corresponding loans were There are no other material restrictions on ownership interest. to the equivalent of EUR 66 thousand, is recognized valued at EUR 1,058 thousand at the balance sheet or title in respect of the property, plant and equipment as goodwill in an auxiliary account and subjected to date. In order to secure the loan for the financing of the reported. an annual impairment test. In 2008, there were no miscellaneous 96 PVA TePla Annual Report 2008

for impairment. The share of net profit for 2008 in from associates”. 2008 saw a profit distribution to PVA 9. Coming receivables on construction accordance with the single-entity financial statements TePla America Inc. in the amount of EUR 205 thousand contracts restated to comply with uniform Group accounting (previous year: EUR 152 thousand). policies amounted to EUR 325 thousand (previous year: Contract costs accounted for using the percentage of EUR 352 thousand); in the income statement, the net The financial statements of PVA MIMtech LLC for fiscal completion method and revenue from work in progress profit for the year is included in the item “Share of profits year 2008 contain the following key figures: in the system construction business is as follows:

in EUR ‘000 Dec. 31, 2008 or 2008 Dec. 31, 2007 or 2007 in EUR ‘000 Dec. 31, 2008 Dec. 31, 2007

Sales revenues 6,692 6,182 Capitalized production costs including contract profit 48,293 44,098 Net profit for the year 651 783 for which advance payments received (progress billings) -25,979 -24,704 Assets 1,872 3,366 Total 22,314 19,394 Liabilities 592 2,307 Shareholders’ equity 1,279 1,059 Further advance payments received in the amount of the percentage of completion exceed the contract costs EUR 23,100 (previous year: EUR 33,342 thousand) and incurred plus proportionate profits – are shown under obligations on construction contracts in the amount of “Current liabilities”. Further information can be found EUR 1,978 thousand (previous year: EUR 167 thousand) under note 19 and note 20. 8. Inventories – on contracts where payments received according to

Inventories are composed as follows:

in EUR ‘000 Dec. 31, 2008 Dec. 31, 2007 10. Receivables Raw materials and operating supplies 9,821 7,000 Work in progress 6,178 4,801 Receivables are composed as follows: Finished products and goods 1,024 838 in EUR ‘000 Dec. 31, 2008 Dec. 31, 2007 Total 17,023 12,639

Trade receivables 18,388 11,075 In 2008, inventories were subject to write-downs in the were recognized in order to simulate depreciation over Amounts owed by associates 142 136 amount of EUR 649 thousand (previous year: EUR 760 a useful life of 5 years. Later sales normally generate Payments in advance 6,561 9,235 thousand). There were no reversals of write-downs on proceeds that are significantly higher than the carrying Other receivables 2.844 4,031 inventories (previous year: EUR 128 thousand). Write- amount. In this case, the excess is recognized as a Total 27,935 24,477 downs are primarily attributable to typical write-downs reversal of the corresponding write-down. for non-marketability. In addition, demonstration and leasing models are reserved in the Plasma Systems Other than the reservation of title by suppliers, which Other receivables also include prepaid expenses. Trade division. As these can always be sold at short notice, is customary in the industry, there were no significant receivables consist of the following: they are reported in inventories. Scheduled write-downs charges against inventories at the balance sheet date. in EUR ‘000 Dec. 31, 2008 Dec. 31, 2007

Trade receivables 18,475 11,406 Bad debt allowances -87 -331 Total 18,388 11,075 Consolidated Consolidated Consolidated Cash Consolidated Statement Consolidated Statement of Balance sheet Income Statement Flow Statement of Changes in Equity Changes in Fixed Assets 08/07 Auditor’s Report 97

Notes to the Consolidated Financial Statements

Shareholders’ equity 1,279 1,059 THE COMPANY Further advance payments received in the amount of the percentage of completion exceed the contract costs EUR 23,100 (previous year: EUR 33,342 thousand) and incurred plus proportionate profits – are shown under obligations on construction contracts in the amount of “Current liabilities”. Further information can be found EUR 1,978 thousand (previous year: EUR 167 thousand) under note 19 and note 20. 8. Inventories – on contracts where payments received according to

Inventories are composed as follows: in EUR ‘000 Dec. 31, 2008 Dec. 31, 2007 MANAGEMENT REPORT 10. Receivables Raw materials and operating supplies 9,821 7,000 Work in progress 6,178 4,801 Receivables are composed as follows: Finished products and goods 1,024 838 in EUR ‘000 Dec. 31, 2008 Dec. 31, 2007 Total 17,023 12,639

Trade receivables 18,388 11,075 GROUP In 2008, inventories were subject to write-downs in the were recognized in order to simulate depreciation over Amounts owed by associates 142 136 amount of EUR 649 thousand (previous year: EUR 760 a useful life of 5 years. Later sales normally generate Payments in advance 6,561 9,235 FINANCIAL STATEMENTS thousand). There were no reversals of write-downs on proceeds that are significantly higher than the carrying Other receivables 2.844 4,031 inventories (previous year: EUR 128 thousand). Write- amount. In this case, the excess is recognized as a Total 27,935 24,477 downs are primarily attributable to typical write-downs reversal of the corresponding write-down. for non-marketability. In addition, demonstration and leasing models are reserved in the Plasma Systems Other than the reservation of title by suppliers, which Other receivables also include prepaid expenses. Trade division. As these can always be sold at short notice, is customary in the industry, there were no significant receivables consist of the following: they are reported in inventories. Scheduled write-downs charges against inventories at the balance sheet date. SINGLE-ENTITY

in EUR ‘000 Dec. 31, 2008 Dec. 31, 2007 FINANCIAL STATEMENTS

Trade receivables 18,475 11,406 Bad debt allowances -87 -331 Total 18,388 11,075 miscellaneous 98 PVA TePla Annual Report 2008

In the course of ordinary business, supplier credit 14. Deferred investment grants from public 15. Non-current financial liabilities is granted to a broad range of customers. The funds creditworthiness of customers is regularly reviewed. Non-current financial liabilities of EUR 17,874 thousand Bad debt allowances are recognized to cover potential PVA TePla has received financial incentives from (previous year: EUR 17,113 thousand) are all due to risks. Other receivables are composed as follows: various public authorities under government business banks. development programs, including funding for the in EUR ‘000 Dec. 31, 2008 Dec. 31, 2007 construction of production facilities. These grants are Non-current financial liabilities primarily relate to offset against the assets benefiting. loans for the financing of construction measures in Derivative financial instruments 259 364 Wettenberg and the acquisition of PVA TePla Analytical Receivables from investment incentives 578 1,134 The investment subsidies for new buildings, machinery Systems GmbH (formerly KSI-Group) in fiscal year Value added tax due 1,150 1,178 and other operating and office equipment at the Jena 2007. Accounts payable with debit balances 17 107 location have been granted subject to the condition that Deferred prepayments 80 130 a total of 39 permanent jobs are secured and 9.5 new Other items 760 1,118 permanent jobs are created. In light of the satisfactory Total 2,844 4,031 order situation and the expected order volume in the medium-term, this should not present a problem from a Non-current financial liabilities are composed as current perspective. follows: Derivative financial instruments are carried at market value. other items does not significantly deviate from the Due to their short-term nature, the market value of carrying amounts presented. in EUR ‘000 Dec. 31, 2008 Dec. 31, 2007

Non-current financial liabilities 19,117 18,364 less: portion of non-current financial liabilities -1,243 due in less than one year -1,251 11. Cash and cash equivalents 13. Shareholders’ equity Non-current financial liabilities less current portion 17,874 17,113

Cash and cash equivalents of EUR 5,198 thousand Share capital (previous year: EUR 9,071 thousand) primarily consist As at December 31, 2008, PVA TePla AG had issued The average weighted interest rate for non-current The repayment commitments for these non-current of current bank balances. Cash in hand amounted to 21,749,988 no-par value shares each with a notional financial liabilities was 4.78%. financial liabilities are structured as follows: EUR 10 thousand (previous year: EUR 10 thousand). interest in the share capital of EUR 1.00. Bank balances consist solely of cash in current accounts in EUR ‘000 2008 2007 or term deposit accounts with a maximum term of Contingent and authorized capital 30 days. In order to optimize net interest income, an There was no contingent capital as at December 31, Due: agreement has been made to match the interest on 2008. Up to a month 20 18 the credit balance of current accounts with that of Between 1 and 3 months 175 172 corresponding term deposit investments. The Annual General Meeting of PVA TePla AG on Between 3 and 12 months 1,083 1,095 June 15, 2007 authorized the Management Board to Between 1 and 5 years 8,932 9,152 increase the Company’s share capital with approval More than 5 years 9,315 8,368 12. Deferred tax assets of the Supervisory Board on one or more occasions during the period to June 14, 2012 by a total of up to The difference between the repayment commitments collateral on December 31, 2008 was EUR 32,521 For further details, please see the information under EUR 10,874,994 by issuing 10,874,994 new no-par stated and the residual carrying amounts of the loans thousand. At the balance sheet date, this was higher note 25 “Taxes on income”. value bearer shares against cash and/or non-cash is based on the agreed debt discounts. than the total value of non-current financial liabilities contributions with shareholders’ subscription rights due to the inclusion of the request for collateral for an disapplied to the extent permitted by law. No capital Non-current financial liabilities for the financing of additional approved loan with a total volume of EUR 10 increases from authorized capital were resolved in construction measures are all secured by charges on million for financing construction in Wettenberg. This 2008. the land of the financed assets; in addition, the site in loan was agreed in 2007 and utilized in the amount of Jena is partially secured by the transfer of ownership EUR 2 million in 2008. of machines and facilities. The carrying amount of this Consolidated Consolidated Consolidated Cash Consolidated Statement Consolidated Statement of Balance sheet Income Statement Flow Statement of Changes in Equity Changes in Fixed Assets 08/07 Auditor’s Report 99

Notes to the Consolidated Financial Statements

In the course of ordinary business, supplier credit 14. Deferred investment grants from public 15. Non-current financial liabilities is granted to a broad range of customers. The funds creditworthiness of customers is regularly reviewed. Non-current financial liabilities of EUR 17,874 thousand Bad debt allowances are recognized to cover potential PVA TePla has received financial incentives from (previous year: EUR 17,113 thousand) are all due to risks. Other receivables are composed as follows: various public authorities under government business banks. development programs, including funding for the in EUR ‘000 Dec. 31, 2008 Dec. 31, 2007 construction of production facilities. These grants are Non-current financial liabilities primarily relate to FOR OUR SHAREHOLDERS offset against the assets benefiting. loans for the financing of construction measures in Derivative financial instruments 259 364 Wettenberg and the acquisition of PVA TePla Analytical Receivables from investment incentives 578 1,134 The investment subsidies for new buildings, machinery Systems GmbH (formerly KSI-Group) in fiscal year Value added tax due 1,150 1,178 and other operating and office equipment at the Jena 2007. Accounts payable with debit balances 17 107 location have been granted subject to the condition that Deferred prepayments 80 130 a total of 39 permanent jobs are secured and 9.5 new

Other items 760 1,118 permanent jobs are created. In light of the satisfactory THE COMPANY Total 2,844 4,031 order situation and the expected order volume in the medium-term, this should not present a problem from a Non-current financial liabilities are composed as current perspective. follows: Derivative financial instruments are carried at market value. other items does not significantly deviate from the Due to their short-term nature, the market value of carrying amounts presented. in EUR ‘000 Dec. 31, 2008 Dec. 31, 2007

Non-current financial liabilities 19,117 18,364 less: portion of non-current financial liabilities -1,243 due in less than one year -1,251 MANAGEMENT REPORT 11. Cash and cash equivalents 13. Shareholders’ equity Non-current financial liabilities less current portion 17,874 17,113

30 days. In order to optimize net interest income, an There was no contingent capital as at December 31, Due: FINANCIAL STATEMENTS agreement has been made to match the interest on 2008. Up to a month 20 18 the credit balance of current accounts with that of Between 1 and 3 months 175 172 corresponding term deposit investments. The Annual General Meeting of PVA TePla AG on Between 3 and 12 months 1,083 1,095 June 15, 2007 authorized the Management Board to Between 1 and 5 years 8,932 9,152 increase the Company’s share capital with approval More than 5 years 9,315 8,368 12. Deferred tax assets of the Supervisory Board on one or more occasions during the period to June 14, 2012 by a total of up to The difference between the repayment commitments collateral on December 31, 2008 was EUR 32,521 SINGLE-ENTITY

For further details, please see the information under EUR 10,874,994 by issuing 10,874,994 new no-par stated and the residual carrying amounts of the loans thousand. At the balance sheet date, this was higher FINANCIAL STATEMENTS note 25 “Taxes on income”. value bearer shares against cash and/or non-cash is based on the agreed debt discounts. than the total value of non-current financial liabilities contributions with shareholders’ subscription rights due to the inclusion of the request for collateral for an disapplied to the extent permitted by law. No capital Non-current financial liabilities for the financing of additional approved loan with a total volume of EUR 10 increases from authorized capital were resolved in construction measures are all secured by charges on million for financing construction in Wettenberg. This 2008. the land of the financed assets; in addition, the site in loan was agreed in 2007 and utilized in the amount of Jena is partially secured by the transfer of ownership EUR 2 million in 2008.

of machines and facilities. The carrying amount of this miscellaneous 100 PVA TePla Annual Report 2008

The loan for the financing of investments in machinery unable to provide us with the corresponding information, Biometric parameters have been calculated on the basis Reconciliation of the present value of future pensions to for the subsidiaries PVA Löt- und Werkstofftechnik meaning that we were only able to approximate the of the 2005 G mortality tables issued by Professor Klaus the pension provisions in the balance sheet: GmbH, Jena and PlaTeG GmbH, Siegen is secured actual market values using the present values of the Heubeck. The measurement of pension obligations is through the transfer of ownership of the assets to principal repayments based on the yield curve at the supported by actuarial reports. be financed. The carrying amount of this collateral on balance sheet date plus a risk premium of 1%. This December 31, 2008 was EUR 1,619 thousand. resulted in deviations between the conditions at the in EUR ‘000 Dec. 31, 2008 Dec. 31, 2007 conclusion date and the balance sheet date in the In accordance with IFRS 7, the market values of amount of EUR -351 thousand. Present value of future pensions (= funding status) 6,991 6,558 non-current financial liabilities must be provided. Unrealized actuarial gains and losses 412 479 Unfortunately, as in the previous year, our banks were Total 7,403 7,037

The following amounts are recognized in the income statement: 16. Retirement pension provisions Pension commitments in the form of defined benefit plans are in place for the eligible employees of PVA in EUR ‘000 2008 2007 Basic principles TePla AG, PVA Vakuum Anlagenbau Jena GmbH and In the area of company pension schemes, a distinction Crystal Growing Systems GmbH. The relevant pension Current service cost for services provided by 152 181 is made between defined benefit plans and defined plans were taken over from previous companies employees in the fiscal year contribution plans. In the case of defined benefit plans, in each case and only consist of previous benefit of which: the Company is obliged to pay defined benefits to obligations. New pension obligations are generally no Cost of sales 91 124 active and former employees. longer entered into. Selling and distribution expenses 17 20 General administrative expenses 13 28 In the case of defined contribution plans, the Company Obligations are calculated using the projected unit credit Research and development expenses 3 2 does not enter into any additional obligations other method, under which future obligations are measured Other operating expenses 28 7 than making earmarked contributions. on the basis of the proportionate benefit entitlement

acquired at the balance sheet date. Measurement takes Interest expense 368 328 Defined benefit plans into account assumptions on trends for the relevant of which: Provisions for pension obligations are recognized on factors affecting the amount of benefits. Cost of sales 187 202 the basis of pension plans for commitments to pay Selling and distribution expenses 42 32 retirement, invalidity and dependents’ benefits. The There is no external financing via a pension fund. General administrative expenses 30 78 amount of benefit usually depends on the number Research and development expenses 12 6 of years of service and the salary of the respective In detail, the calculation is based on the following Other operating expenses 97 10 employee. actuarial premises:

Amortization of actuarial gains and losses 0 0 in % Dec. 31, 2008 Dec. 31, 2007 of which: Cost of sales 0 0 Income trend 3.00 3.00 Selling and distribution expenses 0 0 Pension trend 1.00 1.00 General administrative expenses 0 0 Staff turnover 2.50 2.50 Research and development expenses 0 0 Interest rate for active staff 5.70 5.75 Other operating expenses 0 0 Interest rate for pensioners 5.50 5.50

Total 520 509

In the income statement, the interest portion included in pension expense is split between the functional units originating the expense Consolidated Consolidated Consolidated Cash Consolidated Statement Consolidated Statement of Balance sheet Income Statement Flow Statement of Changes in Equity Changes in Fixed Assets 08/07 Auditor’s Report 101

Notes to the Consolidated Financial Statements

The loan for the financing of investments in machinery unable to provide us with the corresponding information, Biometric parameters have been calculated on the basis Reconciliation of the present value of future pensions to for the subsidiaries PVA Löt- und Werkstofftechnik meaning that we were only able to approximate the of the 2005 G mortality tables issued by Professor Klaus the pension provisions in the balance sheet: GmbH, Jena and PlaTeG GmbH, Siegen is secured actual market values using the present values of the Heubeck. The measurement of pension obligations is through the transfer of ownership of the assets to principal repayments based on the yield curve at the supported by actuarial reports. be financed. The carrying amount of this collateral on balance sheet date plus a risk premium of 1%. This December 31, 2008 was EUR 1,619 thousand. resulted in deviations between the conditions at the in EUR ‘000 Dec. 31, 2008 Dec. 31, 2007 conclusion date and the balance sheet date in the FOR OUR SHAREHOLDERS In accordance with IFRS 7, the market values of amount of EUR -351 thousand. Present value of future pensions (= funding status) 6,991 6,558 non-current financial liabilities must be provided. Unrealized actuarial gains and losses 412 479 Unfortunately, as in the previous year, our banks were Total 7,403 7,037

The following amounts are recognized in the income statement:

16. Retirement pension provisions Pension commitments in the form of defined benefit THE COMPANY plans are in place for the eligible employees of PVA in EUR ‘000 2008 2007 Basic principles TePla AG, PVA Vakuum Anlagenbau Jena GmbH and In the area of company pension schemes, a distinction Crystal Growing Systems GmbH. The relevant pension Current service cost for services provided by 152 181 is made between defined benefit plans and defined plans were taken over from previous companies employees in the fiscal year contribution plans. In the case of defined benefit plans, in each case and only consist of previous benefit of which: the Company is obliged to pay defined benefits to obligations. New pension obligations are generally no

Cost of sales 91 124 active and former employees. longer entered into. Selling and distribution expenses 17 20 General administrative expenses 13 28 In the case of defined contribution plans, the Company Obligations are calculated using the projected unit credit

Research and development expenses 3 2 MANAGEMENT REPORT does not enter into any additional obligations other method, under which future obligations are measured Other operating expenses 28 7 than making earmarked contributions. on the basis of the proportionate benefit entitlement acquired at the balance sheet date. Measurement takes Interest expense 368 328 Defined benefit plans into account assumptions on trends for the relevant of which: Provisions for pension obligations are recognized on factors affecting the amount of benefits. Cost of sales 187 202 the basis of pension plans for commitments to pay

Selling and distribution expenses 42 32 GROUP retirement, invalidity and dependents’ benefits. The There is no external financing via a pension fund. General administrative expenses 30 78 amount of benefit usually depends on the number Research and development expenses 12 6 of years of service and the salary of the respective In detail, the calculation is based on the following FINANCIAL STATEMENTS Other operating expenses 97 10 employee. actuarial premises:

Amortization of actuarial gains and losses 0 0 in % Dec. 31, 2008 Dec. 31, 2007 of which: Cost of sales 0 0 Income trend 3.00 3.00 Selling and distribution expenses 0 0 Pension trend 1.00 1.00

General administrative expenses 0 0 SINGLE-ENTITY Staff turnover 2.50 2.50 Research and development expenses 0 0 Interest rate for active staff 5.70 5.75 FINANCIAL STATEMENTS Other operating expenses 0 0 Interest rate for pensioners 5.50 5.50

Total 520 509

In the income statement, the interest portion included in pension expense is split between the functional units originating the expense miscellaneous 102 PVA TePla Annual Report 2008

Changes in recognized provisions for pensions are as 17. Other provisions follows: Changes in other provisions in the amount of EUR 7,366 thousand (previous year: EUR 2,706 thousand) can be in EUR ‘000 2008 2007 broken down as follows:

Pension provisions on Jan. 1 7,037 6,667 Changes in Expenditure on retirement pensions 520 509 the scope of Netted in EUR ‘000 Jan. 1, 2008 consolidation Utilization Release Addition against assets Dec. 31, 2008 Pension payments -154 -139 Pension provisions on Dec. 31 7,403 7,037 Warranty 872 0 249 64 2,995 0 3,554 Part-time- 22 0 11 0 8 0 19 retirement schemes At the balance sheet date, it can be assumed that EUR Impending losses 458 0 163 0 22 11 327 216 thousand (previous year: EUR 169 thousand) will on rentals be fulfilled within the next 12 months and EUR 7,187 Follow-up costs 294 0 230 63 1,755 0 1,756 thousand (previous year: EUR 6,868 thousand) will be Archiving 146 0 0 41 39 0 144 fulfilled at a later date. Penalties 255 0 179 5 540 0 611 Others 659 0 510 29 835 0 955 Changes in the present value of future pensions are as Total 2,706 0 1,342 202 6,194 11 7,366 follows:

in EUR ‘000 2008 2007 Provisions are recognized solely in respect of Other provisions contain long-term components in obligations to third parties where utilization is highly the amount of EUR 512 thousand (previous year: EUR Present value of future pensions on Jan. 1 6,558 7,138 probable. Provisions are measured at the amount of 569 thousand). These primarily relate to provisions for Current service expense for services provided by 152 181 probable utilization. impending losses and archiving. employees in the fiscal year Interest expense 368 328 The long-term component of provisions is shown Pension payments -154 -139 separately in the balance sheet. All other provisions are Actuarial gains and losses 67 -950 short-term in nature. Present value of future pensions on Dec. 31 6,991 6,558

Defined contribution plans The only defined contribution plans of relevance to PVA TePla take the form of the employer’s statutory pension insurance contributions. In fiscal year 2008, the corresponding expenditure amounted to EUR 2,004 thousand (previous year: EUR 1,553 thousand). Consolidated Consolidated Consolidated Cash Consolidated Statement Consolidated Statement of Balance sheet Income Statement Flow Statement of Changes in Equity Changes in Fixed Assets 08/07 Auditor’s Report 103

Notes to the Consolidated Financial Statements

Pension provisions on Jan. 1 7,037 6,667 Changes in Expenditure on retirement pensions 520 509 the scope of Netted

in EUR ‘000 Jan. 1, 2008 consolidation Utilization Release Addition against assets Dec. 31, 2008 FOR OUR SHAREHOLDERS Pension payments -154 -139 Pension provisions on Dec. 31 7,403 7,037 Warranty 872 0 249 64 2,995 0 3,554 Part-time- 22 0 11 0 8 0 19 retirement schemes At the balance sheet date, it can be assumed that EUR Impending losses 458 0 163 0 22 11 327 216 thousand (previous year: EUR 169 thousand) will on rentals be fulfilled within the next 12 months and EUR 7,187 Follow-up costs 294 0 230 63 1,755 0 1,756 THE COMPANY thousand (previous year: EUR 6,868 thousand) will be Archiving 146 0 0 41 39 0 144 fulfilled at a later date. Penalties 255 0 179 5 540 0 611 Others 659 0 510 29 835 0 955 Changes in the present value of future pensions are as Total 2,706 0 1,342 202 6,194 11 7,366 follows: in EUR ‘000 2008 2007 Provisions are recognized solely in respect of Other provisions contain long-term components in obligations to third parties where utilization is highly the amount of EUR 512 thousand (previous year: EUR Present value of future pensions on Jan. 1 6,558 7,138 probable. Provisions are measured at the amount of 569 thousand). These primarily relate to provisions for MANAGEMENT REPORT Current service expense for services provided by 152 181 probable utilization. impending losses and archiving. employees in the fiscal year Interest expense 368 328 The long-term component of provisions is shown Pension payments -154 -139 separately in the balance sheet. All other provisions are Actuarial gains and losses 67 -950 short-term in nature. Present value of future pensions on Dec. 31 6,991 6,558 GROUP

Defined contribution plans FINANCIAL STATEMENTS The only defined contribution plans of relevance to PVA TePla take the form of the employer’s statutory pension insurance contributions. In fiscal year 2008, the corresponding expenditure amounted to EUR 2,004 thousand (previous year: EUR 1,553 thousand). SINGLE-ENTITY FINANCIAL STATEMENTS miscellaneous 104 PVA TePla Annual Report 2008

18. Short-term financial liabilities 21. Accruals

Current financial liabilities are composed as follows: Accruals are liabilities payable for goods or services received that are neither paid nor invoiced or formally in EUR ‘000 Dec. 31, 2008 Dec. 31, 2007 agreed upon by the supplier at the balance sheet date. This also includes amounts owed to employees. Amounts owed to banks on current accounts 10 443 Current loans 0 600 Accruals are composed as follows: Current portion of non-current bank borrowings 1,243 1,251

Total 1,253 2,294 in EUR ‘000 Dec. 31, 2008 Dec. 31, 2007

Obligations to employees 3,189 2,200 The reduction in current loans is primarily attributable All current loans are unsecured. Obligations to suppliers 2,522 2,667 to the repayment of a bank loan extended to the Due to the current nature of these items, their market Other obligations 1,262 419 subsidiary PVA TePla Analytical Systems GmbH prior value does not deviate significantly from the carrying Total 6,973 5,286 to its acquisition. amounts presented.

All amounts reported are current. relates in particular to expected sales allowances in the The year-on-year increase in other obligations is primarily amount of EUR 900 thousand. attributable to the Crystal Growing Systems division and 19. Obligations on construction contracts which is recorded on the basis of the percentage of completion, is presented in the balance sheet as Among other things, the PVA TePla Group manufactures obligations on construction contracts. large-scale systems under customer-specific contracts for which customers make payments in accordance Obligations on construction contracts are composed 22. Other liabilities with the progress of the contract. The negative balance as follows: resulting from sales revenues and progress billing, Of the other liabilities in the amount of EUR 1,909 thousand (previous year: EUR 1,326 thousand), EUR in EUR ‘000 Dec. 31, 2008 Dec. 31, 2007 1,894 thousand (previous year: EUR 1,315 thousand) are current and EUR 15 thousand (previous year: EUR Advance payments received (progress billing) 7,472 2,144 11 thousand) are non-current. Other current liabilities less contract costs incurred (incl. share of profit) -5,494 -1,977 include EUR 980 thousand for taxes (payroll and church Total 1,978 167 tax, value added tax; previous year: EUR 367 thousand) and EUR 2 thousand for social security (previous year: EUR 6 thousand).

20. Advance payments received on orders

The financing of the PVA TePla Group is largely based on the advance payments and interim payments received from customers, particularly in the case of larger contracts. The value of the advance payments received at December 31, 2008 was EUR 23,100 thousand (previous year: EUR 33,342 thousand). Consolidated Consolidated Consolidated Cash Consolidated Statement Consolidated Statement of Balance sheet Income Statement Flow Statement of Changes in Equity Changes in Fixed Assets 08/07 Auditor’s Report 105

Notes to the Consolidated Financial Statements

18. Short-term financial liabilities 21. Accruals

Current financial liabilities are composed as follows: Accruals are liabilities payable for goods or services received that are neither paid nor invoiced or formally in EUR ‘000 Dec. 31, 2008 Dec. 31, 2007 agreed upon by the supplier at the balance sheet date. This also includes amounts owed to employees. Amounts owed to banks on current accounts 10 443 FOR OUR SHAREHOLDERS Current loans 0 600 Accruals are composed as follows: Current portion of non-current bank borrowings 1,243 1,251

Total 1,253 2,294 in EUR ‘000 Dec. 31, 2008 Dec. 31, 2007

Obligations to employees 3,189 2,200 The reduction in current loans is primarily attributable All current loans are unsecured. Obligations to suppliers 2,522 2,667 Other obligations 1,262 419 to the repayment of a bank loan extended to the Due to the current nature of these items, their market THE COMPANY subsidiary PVA TePla Analytical Systems GmbH prior value does not deviate significantly from the carrying Total 6,973 5,286 to its acquisition. amounts presented.

19. Obligations on construction contracts which is recorded on the basis of the percentage of completion, is presented in the balance sheet as Among other things, the PVA TePla Group manufactures obligations on construction contracts. MANAGEMENT REPORT large-scale systems under customer-specific contracts for which customers make payments in accordance Obligations on construction contracts are composed 22. Other liabilities with the progress of the contract. The negative balance as follows: resulting from sales revenues and progress billing, Of the other liabilities in the amount of EUR 1,909 thousand (previous year: EUR 1,326 thousand), EUR in EUR ‘000 Dec. 31, 2008 Dec. 31, 2007 1,894 thousand (previous year: EUR 1,315 thousand) GROUP are current and EUR 15 thousand (previous year: EUR Advance payments received (progress billing) 7,472 2,144 11 thousand) are non-current. Other current liabilities less contract costs incurred (incl. share of profit) -5,494 -1,977 include EUR 980 thousand for taxes (payroll and church FINANCIAL STATEMENTS Total 1,978 167 tax, value added tax; previous year: EUR 367 thousand) and EUR 2 thousand for social security (previous year: EUR 6 thousand).

20. Advance payments received on orders SINGLE-ENTITY

The financing of the PVA TePla Group is largely based FINANCIAL STATEMENTS on the advance payments and interim payments received from customers, particularly in the case of larger contracts. The value of the advance payments received at December 31, 2008 was EUR 23,100 thousand (previous year: EUR 33,342 thousand). miscellaneous 106 PVA TePla Annual Report 2008

C. Notes on individual income are generated from services and by supplying spare 25. Taxes on income Deferred taxes were measured after they had been statement items parts (referred to collectively as after-sales service), incurred using the tax rates stated above or, for as well as providing services for customers in the Since January 1, 2008, we have applied a tax rate companies outside of Germany, the country-specific Company’s own facilities (contract processing, mainly of 29% for companies in Germany based on the tax rates. 23. Sales revenues carried out by PVA Löt- und Werkstofftechnik GmbH Unternehmenssteuerreformgesetz 2008 (German and in the field of plasma treatment by PVA TePla Corporate Tax Reform Act 2008). This includes The actual tax charge is based on probable future tax PVA TePla principally generates its sales revenues America Inc. and PlaTeG GmbH). Sales revenues can corporation tax of 15%, a solidarity surcharge of 5.5% liabilities and repayment claims. through the sale of systems. Additional sales revenues be broken down into these categories as follows: on corporation tax, and trade tax of 13%. Following the relocation from Asslar to Wettenberg, the actual tax rate Taxes on income are broken down as follows: in EUR ‘000 2008 2007 for the German companies has decreased as a result of the lower trade tax assessment rate. Accordingly, a tax Systems 152,176 101,534 rate of 28% has been applied since January 1, 2009. After Sales 12,592 8,815 Contract Processing 3,184 3,165 in EUR ‘000 2008 2007 Others 639 190 Total 168,591 113,704 Taxes on income Actual tax expense -2,997 -706 Current tax expense -2,888 -601 In 2008, growth in sales revenues was mainly due to For customer-specific contracts already initiated by the Prior-period tax charges -109 -105 the systems business. Revenue growth from after- reporting date and reported as future receivables on Deferred tax expense/income -1,702 -3,528 sales was also encouraging, while sales revenues from construction contracts or obligations on construction Credit from tax loss carryforwards -1,028 -1,989 contract processing remained at a high level. contracts, the following sales revenues resulted from Change in allowances against deferred tax -70 -216 the partial realization of sales revenues in accordance Other deferred taxes -605 -1,323 with the percentage of completion method: Taxes on income -4,699 -4,234

in EUR ‘000 2008 2007 Deferred taxes of EUR 115 thousand (previous year: attributable in full to effects recognized in equity for Revenue from customer specific contract production 53,787 46,074 EUR 95 thousand) were recognized directly in equity derivative financial instruments. For which contract costs incurred 43,385 36,181 without affecting the income statement. These are Gains from customer-specific contract production 10,402 9,893

The total revenues from customer-specific contract correspond to the sales revenues of the systems production recognized in the period under review category as set out above.

24. Research and development expenses

In calculating the research and development expenses reported in the income statement in the amount of EUR 1,790 thousand for 2008 and EUR 1,719 thousand for 2007, government grants of EUR 73 thousand and EUR 65 thousand respectively were deducted. Consolidated Consolidated Consolidated Cash Consolidated Statement Consolidated Statement of Balance sheet Income Statement Flow Statement of Changes in Equity Changes in Fixed Assets 08/07 Auditor’s Report 107

Notes to the Consolidated Financial Statements

Contract Processing 3,184 3,165 THE COMPANY Others 639 190 Total 168,591 113,704 Taxes on income Actual tax expense -2,997 -706 Current tax expense -2,888 -601 In 2008, growth in sales revenues was mainly due to For customer-specific contracts already initiated by the Prior-period tax charges -109 -105 the systems business. Revenue growth from after- reporting date and reported as future receivables on Deferred tax expense/income -1,702 -3,528 sales was also encouraging, while sales revenues from construction contracts or obligations on construction Credit from tax loss carryforwards -1,028 -1,989 contract processing remained at a high level. contracts, the following sales revenues resulted from Change in allowances against deferred tax -70 -216 the partial realization of sales revenues in accordance Other deferred taxes -605 -1,323 MANAGEMENT REPORT with the percentage of completion method: Taxes on income -4,699 -4,234 in EUR ‘000 2008 2007 Deferred taxes of EUR 115 thousand (previous year: attributable in full to effects recognized in equity for Revenue from customer specific contract production 53,787 46,074 EUR 95 thousand) were recognized directly in equity derivative financial instruments. For which contract costs incurred 43,385 36,181 without affecting the income statement. These are GROUP Gains from customer-specific contract production 10,402 9,893

The total revenues from customer-specific contract correspond to the sales revenues of the systems FINANCIAL STATEMENTS production recognized in the period under review category as set out above.

24. Research and development expenses SINGLE-ENTITY

In calculating the research and development expenses FINANCIAL STATEMENTS reported in the income statement in the amount of EUR 1,790 thousand for 2008 and EUR 1,719 thousand for 2007, government grants of EUR 73 thousand and EUR 65 thousand respectively were deducted. miscellaneous 108 PVA TePla Annual Report 2008

The following table shows the reconciliation of At the prior-year balance sheet date, the German At the subsidiary Plasma Systems GmbH, Feldkirchen, expected and actual tax expense: companies had tax loss carryforwards that were deferred tax assets from tax loss carryforwards were expected to be realized in the amount of EUR 5,124 not recognized as the previous operating activities of 2008 2007 thousand for corporation tax and EUR 5,810 thousand this company were discontinued and no new operating EUR ‘000 in % EUR ‘000 in % for trade tax. These were largely utilized in the year activities have been assumed at present. As such, under review. At December 31, 2008, the German the realizability of these deferred tax assets is not Profit from ordinary activities 14,434 10,286 companies had tax loss carryforwards that were currently considered to be sufficiently high to justify Expected tax expense/income -4,186 -29 -3,908 -38 expected to be realized in the amount of EUR 800 their capitalization. Changes in tax rates 142 1 -46 0 thousand. The resulting future tax relief available to Differences in tax rates for foreign companies 64 0 -28 0 German companies was recognized in full as an asset, The expected future development of the subsidiary Tax portion of permanent differences and temporary as the tax loss carryforwards are expected to be utilized PlaTeG GmbH, Siegen, has been assessed as positive. -565 -4 77 1 differences for which no deferred taxes have been recognized over the coming years. The recognized deferred tax assets of EUR 225 Prior-period current income tax -109 -1 -105 -1 thousand are considered to be recoverable in spite of Non-recognition of tax losses -9 0 -129 -1 At the time of preparation of this Annual Report, the the company’s losses in fiscal years 2006 to 2008. The Change in allowances -70 0 -87 -1 results of the external tax audits of German companies settlement of a major order in Asia is expected to make Other effects 34 0 -7 0 for the assessment periods 2001 to 2006 that were a positive contribution to income. Actual tax expense/income -4,699 -33 -4,234 -41 completed as of the balance sheet date were only available in the form of the minutes of the closing The tax loss carryforwards of PVA TePla America Inc. discussions; however, the tax assessments established (US$ 4.3 million for federal tax; US$ 2.4 million for Deferred taxes from differences in tax rates for foreign by these audits primarily relate to reclassifications state tax) will gradually lapse from 2020 (federal tax) companies are due to the fact that PVA TePla-Group between periods. It was established that the tax and 2011 (state tax) unless utilized prior to this date. companies outside Germany are subject to different loss carryforwards of the predecessor company of Despite developments in fiscal years 2005 to 2008, tax rates than companies in Germany. Deferred taxes PVA TePla AG from the time prior to the merger had the recognized deferred tax assets in the amount of relate to: definitely expired due to the problems relating to the EUR 868 thousand are considered to be recoverable shell company acquisition. These tax loss carryforwards on the basis of current earnings forecasts, with the Dec. 31, 2008 Dec. 31, 2007 in the amount of EUR 6,250 for corporation tax and expansion of sales and marketing activities in particular Deferred Deferred Deferred Deferred EUR 2,470 for trade tax were already excluded from providing evidence of positive development over recent tax assets tax liabilities tax assets tax liabilities the measurement of deferred taxes from tax loss months. carryforwards in previous years. Fixed assets 354 188 194 466 Inventories 996 29 961 70 Receivables and obligations on construction contracts 0 2,939 0 2,930 Receivables 3 277 0 116 Tax loss carryforwards (gross) 1,163 0 2,276 0 Deferred investment grants from public funds 0 0 100 0 Pension Provisions 309 0 385 0 Other provisions 132 686 151 71 Others 1 0 2 8 Total 2,958 4,119 4,069 3,661

Allowances on tax loss carryforwards and reversals -70 0 -87 0 of prior-year allowances Total 2,888 4,119 3,982 3,661 Balance of deferred tax 1,231 321 Consolidated Consolidated Consolidated Cash Consolidated Statement Consolidated Statement of Balance sheet Income Statement Flow Statement of Changes in Equity Changes in Fixed Assets 08/07 Auditor’s Report 109

Notes to the Consolidated Financial Statements

The following table shows the reconciliation of At the prior-year balance sheet date, the German At the subsidiary Plasma Systems GmbH, Feldkirchen, expected and actual tax expense: companies had tax loss carryforwards that were deferred tax assets from tax loss carryforwards were expected to be realized in the amount of EUR 5,124 not recognized as the previous operating activities of 2008 2007 thousand for corporation tax and EUR 5,810 thousand this company were discontinued and no new operating EUR ‘000 in % EUR ‘000 in % for trade tax. These were largely utilized in the year activities have been assumed at present. As such, under review. At December 31, 2008, the German the realizability of these deferred tax assets is not Profit from ordinary activities 14,434 10,286 companies had tax loss carryforwards that were currently considered to be sufficiently high to justify FOR OUR SHAREHOLDERS Expected tax expense/income -4,186 -29 -3,908 -38 expected to be realized in the amount of EUR 800 their capitalization. Changes in tax rates 142 1 -46 0 thousand. The resulting future tax relief available to Differences in tax rates for foreign companies 64 0 -28 0 German companies was recognized in full as an asset, The expected future development of the subsidiary Tax portion of permanent differences and temporary as the tax loss carryforwards are expected to be utilized PlaTeG GmbH, Siegen, has been assessed as positive. -565 -4 77 1 differences for which no deferred taxes have been recognized over the coming years. The recognized deferred tax assets of EUR 225 Prior-period current income tax -109 -1 -105 -1 thousand are considered to be recoverable in spite of Non-recognition of tax losses -9 0 -129 -1 At the time of preparation of this Annual Report, the the company’s losses in fiscal years 2006 to 2008. The THE COMPANY Change in allowances -70 0 -87 -1 results of the external tax audits of German companies settlement of a major order in Asia is expected to make Other effects 34 0 -7 0 for the assessment periods 2001 to 2006 that were a positive contribution to income. Actual tax expense/income -4,699 -33 -4,234 -41 completed as of the balance sheet date were only available in the form of the minutes of the closing The tax loss carryforwards of PVA TePla America Inc. discussions; however, the tax assessments established (US$ 4.3 million for federal tax; US$ 2.4 million for Deferred taxes from differences in tax rates for foreign by these audits primarily relate to reclassifications state tax) will gradually lapse from 2020 (federal tax) companies are due to the fact that PVA TePla-Group between periods. It was established that the tax and 2011 (state tax) unless utilized prior to this date. companies outside Germany are subject to different loss carryforwards of the predecessor company of Despite developments in fiscal years 2005 to 2008, tax rates than companies in Germany. Deferred taxes PVA TePla AG from the time prior to the merger had the recognized deferred tax assets in the amount of MANAGEMENT REPORT relate to: definitely expired due to the problems relating to the EUR 868 thousand are considered to be recoverable shell company acquisition. These tax loss carryforwards on the basis of current earnings forecasts, with the Dec. 31, 2008 Dec. 31, 2007 in the amount of EUR 6,250 for corporation tax and expansion of sales and marketing activities in particular Deferred Deferred Deferred Deferred EUR 2,470 for trade tax were already excluded from providing evidence of positive development over recent tax assets tax liabilities tax assets tax liabilities the measurement of deferred taxes from tax loss months. carryforwards in previous years. Fixed assets 354 188 194 466 GROUP Inventories 996 29 961 70

Receivables and obligations on construction contracts 0 2,939 0 2,930 FINANCIAL STATEMENTS Receivables 3 277 0 116 Tax loss carryforwards (gross) 1,163 0 2,276 0 Deferred investment grants from public funds 0 0 100 0 Pension Provisions 309 0 385 0 Other provisions 132 686 151 71 Others 1 0 2 8

Total 2,958 4,119 4,069 3,661 SINGLE-ENTITY FINANCIAL STATEMENTS

Allowances on tax loss carryforwards and reversals -70 0 -87 0 of prior-year allowances Total 2,888 4,119 3,982 3,661 Balance of deferred tax 1,231 321 miscellaneous 110 PVA TePla Annual Report 2008

26. Earnings per share Earnings per share are calculated by dividing net profit D. Notes to the cash flow statement and The primary objective of PVA TePla’s capital by the weighted average number of shares outstanding on capital management management is to ensure the financial flexibility Consolidated net profit for the year after minority during the year. required to reach the defined growth and yield targets, interests amounted to EUR 9,900 thousand (previous The cash flow statement has been prepared using thereby enabling growth in the Company’s value. The year: EUR 6,088 thousand). As in the previous year, Calculation of earnings per share for 2007 and 2008: the indirect method in accordance with IAS 7.20. The contents of capital management cover shareholders’ an average of 21,749,988 no-par value shares were in cash and cash equivalents in the cash flow statement equity and the external borrowing necessary to finance circulation in fiscal year 2008. correspond to the balance sheet item of the same the Company’s operations. The key indicator for capital name. management is the equity ratio. Actual management 2008 2007 is performed by optimizing yields and setting limits on No dividends were paid to shareholders or minority the commitment of funds. Further objectives of capital Numerator interests in the year under review or the previous year. management include ensuring the Group’s liquidity Consolidated net profit for the year after 9,900 6,088 by agreeing appropriate and sufficient credit lines and minority interests (EUR ‘000) Business transactions not affecting cash and cash maintaining the current ratio of advance payments, Denominator equivalents have not been included in the cash flow as well as optimizing the financial result in order to Weighted number of shares outstanding – basic 21,749,988 21,749,988 statement. improve yields. Earnings per share (EUR) 0.46 0.28 Payments for investments in intangible assets and Accordingly, PVA TePla’s capital management covers At the balance sheet date, no stock options were PVA TePla AG shares. Accordingly, this means there property, plant and equipment were all made from the following items: issued to employees and members of the Management were no dilutive effects on earnings per share as of cash and cash equivalents. and Supervisory Boards entitling them to purchase December 31, 2008.

in EUR ‘000 Dec. 31, 2008 Dec. 31, 2007

Shareholders’ equity 40,360 30,908 27. Profit appropriation/net retained profits and Supervisory Board proposed that the net retained Current and non-current financial liabilities 19,127 19,407 profits be carried forward to new account. Due to the Advance payments received 23,100 33,342 The single-entity financial statements of PVA TePla positive result, there were no withdrawals from the Total amount 82,587 83,657 AG (under HGB) show a net profit for the year of share premium or retained earnings. Accordingly, the Total assets 122,081 108,788 EUR 5,903 thousand and net retained profits of EUR resulting net retained profits of EUR 3,534 thousand Equity ratio 33.1% 28.4% 3,534 thousand as of December 31, 2008. These net at December 31, 2008 will be carried forward to new retained profits represent the distributable amount in account. accordance with IAS 1.76(v). The Management Board The increase in the total is primarily due to the growth. At the same time, the equity ratio increased to growth in the business volume and the investments 33.1% (previous year: 28.4%) as a result of the strong and associated financing necessary to achieve this results. Consolidated Consolidated Consolidated Cash Consolidated Statement Consolidated Statement of Balance sheet Income Statement Flow Statement of Changes in Equity Changes in Fixed Assets 08/07 Auditor’s Report 111

Notes to the Consolidated Financial Statements

26. Earnings per share Earnings per share are calculated by dividing net profit D. Notes to the cash flow statement and The primary objective of PVA TePla’s capital by the weighted average number of shares outstanding on capital management management is to ensure the financial flexibility Consolidated net profit for the year after minority during the year. required to reach the defined growth and yield targets, interests amounted to EUR 9,900 thousand (previous The cash flow statement has been prepared using thereby enabling growth in the Company’s value. The year: EUR 6,088 thousand). As in the previous year, Calculation of earnings per share for 2007 and 2008: the indirect method in accordance with IAS 7.20. The contents of capital management cover shareholders’ an average of 21,749,988 no-par value shares were in cash and cash equivalents in the cash flow statement equity and the external borrowing necessary to finance circulation in fiscal year 2008. correspond to the balance sheet item of the same the Company’s operations. The key indicator for capital FOR OUR SHAREHOLDERS name. management is the equity ratio. Actual management 2008 2007 is performed by optimizing yields and setting limits on No dividends were paid to shareholders or minority the commitment of funds. Further objectives of capital Numerator interests in the year under review or the previous year. management include ensuring the Group’s liquidity Consolidated net profit for the year after 9,900 6,088 by agreeing appropriate and sufficient credit lines and minority interests (EUR ‘000) Business transactions not affecting cash and cash maintaining the current ratio of advance payments, Denominator

equivalents have not been included in the cash flow as well as optimizing the financial result in order to THE COMPANY Weighted number of shares outstanding – basic 21,749,988 21,749,988 statement. improve yields. Earnings per share (EUR) 0.46 0.28 Payments for investments in intangible assets and Accordingly, PVA TePla’s capital management covers At the balance sheet date, no stock options were PVA TePla AG shares. Accordingly, this means there property, plant and equipment were all made from the following items: issued to employees and members of the Management were no dilutive effects on earnings per share as of cash and cash equivalents. and Supervisory Boards entitling them to purchase December 31, 2008.

in EUR ‘000 Dec. 31, 2008 Dec. 31, 2007 MANAGEMENT REPORT Shareholders’ equity 40,360 30,908 27. Profit appropriation/net retained profits and Supervisory Board proposed that the net retained Current and non-current financial liabilities 19,127 19,407 profits be carried forward to new account. Due to the Advance payments received 23,100 33,342 The single-entity financial statements of PVA TePla positive result, there were no withdrawals from the Total amount 82,587 83,657 AG (under HGB) show a net profit for the year of share premium or retained earnings. Accordingly, the Total assets 122,081 108,788 EUR 5,903 thousand and net retained profits of EUR resulting net retained profits of EUR 3,534 thousand Equity ratio 33.1% 28.4% GROUP 3,534 thousand as of December 31, 2008. These net at December 31, 2008 will be carried forward to new retained profits represent the distributable amount in account. accordance with IAS 1.76(v). The Management Board The increase in the total is primarily due to the growth. At the same time, the equity ratio increased to FINANCIAL STATEMENTS growth in the business volume and the investments 33.1% (previous year: 28.4%) as a result of the strong and associated financing necessary to achieve this results. SINGLE-ENTITY FINANCIAL STATEMENTS miscellaneous 112 PVA TePla Annual Report 2008

E. Additional disclosures division within PVA TePla AG is engaged in systems services for its products. PVA MIMtech LLC, which plastic surfaces. PlaTeG GmbH also provides services using the Czochralski process for silicon crystals for is included in the consolidated financial statements at for plasma nitration and coating at its own facilities in the semi-conductor and solar industry, as well as VGF equity, is assigned in full to this division. PlaTeG GmbH Siegen. 28. Segment reporting systems for the production of multi-crystalline silicon produces systems for plasma nitration (primarily for ingots for the solar industry. The subsidiary Crystal hardening and corrosion protection for steel products) Breakdown by division and primary structure of The internal management of the PVA TePla Group until Growing Systems GmbH (CGS) focuses on systems and plasma coating (the application of wear-resistant segmental reporting: December 31, 2008 corresponds to its organization using the Czochralski process for silicon. The product or decorative coating), as well as the activation of into three divisions: Vacuum Systems, Crystal Growing range also includes systems using other processes for Systems and Plasma Systems. For reporting periods the solar industry (EFG process) and optical crystals 2008 2007 beginning on or after January 1, 2009, internal and compound semi-conductors (VGF process). The External sales Internal sales External sales Internal sales management and segment reporting will be based on product range of the PVA TePla AG branch in Denmark Segment revenues (in EUR ‘000) revenues revenues revenues revenues the new Group structure. includes crystal growing systems based on the float zone process. In addition to high-performance electronic Vacuum Systems 45,994 6,654 36,946 3,717 The allocation of the individual companies and activities systems for the semi-conductor industry, demand for Crystal Growing Systems 105,774 -1,939 60,053 781 to the various divisions is set out in section 2 of the slim rod pullers and analysis systems for polysilicon Plasma Systems 16,822 703 16,705 1 management report. Opportunities and risks as well production also increased in 2008. The joint venture Consolidated revenues 168,591 5,418 113,704 4,499 as the success of the Company are mainly determined in China (Xi’an HuaDe CGS Ltd.) produces systems for by differences between individual products and the growing mono-crystalline solar silicon for the Chinese market segments they serve. The primary structure market. All sections of the Crystal Growing Systems Operating profit by segment (in EUR ‘000) 2008 2007 for segment reporting in accordance with IAS 14 division also provide after-sales services for their (Segment Reporting) therefore follows this divisional respective products. PVA TePla Analytical Systems Vacuum Systems 2,032 3,732 structure and classifies each of the above divisions as GmbH focuses on systems for the non-destructive Crystal Growing Systems 15,342 7,085 a separate segment. quality control of components and materials using Plasma Systems -2,464 -961 ultrasonic microscopy. These systems are used in the Consolidation 133 121 Accordingly, a geographical breakdown forms the semi-conductor industry for checking components, as Consolidated operating profit 15,043 9,977 secondary structure of our segment reporting, which well as in other industrial areas and research institutes. is based on the following regions: Germany, Europe The option to inspect complete 300mm silicon ingots (excluding Germany), North America, Asia and other is a particularly interesting and impressive addition to To date, segment assets and liabilities have been and interest-bearing assets and liabilities were also territories. the relevant crystal growing systems. presented net of deferred tax assets and liabilities. deducted from segment assets and liabilities. The At the reporting date December 31, 2008, current prior-year figures have been restated accordingly. The Vacuum Systems division is engaged in the The Plasma Systems division develops, produces and tax assets and provisions, investments in associates development, production and marketing of systems distributes equipment for the plasma treatment (in and facilities for treating materials and workpieces rarefied, ionized gas) of workpieces and materials. under vacuum conditions, high temperatures (up to The main focus is on cleaning and surface activation Segment assets (in EUR ‘000) Dec. 31, 2008 Dec. 31, 2007 3,000°C) and, in some cases, high pressure (up to processes for the semi-conductor and manufacturing 100 bar). The main products are sintering and pressure industries and for healthcare, as well as systems for Vacuum Systems 60,585 46,117 sintering furnaces, as well as systems for soldering and the production and treatment of ultra-thin wafers. In Crystal Growing Systems 56,534 52,321 heat treatment. Maintenance and servicing for these addition, laser wafer measuring systems are made Plasma Systems 21,026 22,765 products are also provided. The subsidiary PVA Löt- for the semi-conductor industry. The Corona (CA, Less intersegment assets -16,064 -12,415 und Werkstofftechnik GmbH (LWT) offers customers USA) site also provides contract processing services Total segment assets 122,081 108,788 the treatment of workpieces and materials in high- for plasma treatment in industry and medicine. The temperature vacuum facilities (contract processing). Marlton (NJ, USA) site, also a provider of contract processing, was closed at the end of fiscal year 2008 The Crystal Growing Systems division develops, in order to cut costs. The corresponding capacities produces and markets systems for growing semi- and orders were successfully moved to Corona. The conductor crystals. The Crystal Growing Systems Plasma Systems division also provides after-sales Consolidated Consolidated Consolidated Cash Consolidated Statement Consolidated Statement of Balance sheet Income Statement Flow Statement of Changes in Equity Changes in Fixed Assets 08/07 Auditor’s Report 113

Notes to the Consolidated Financial Statements

The allocation of the individual companies and activities systems for the semi-conductor industry, demand for THE COMPANY to the various divisions is set out in section 2 of the slim rod pullers and analysis systems for polysilicon Plasma Systems 16,822 703 16,705 1 management report. Opportunities and risks as well production also increased in 2008. The joint venture Consolidated revenues 168,591 5,418 113,704 4,499 as the success of the Company are mainly determined in China (Xi’an HuaDe CGS Ltd.) produces systems for by differences between individual products and the growing mono-crystalline solar silicon for the Chinese market segments they serve. The primary structure market. All sections of the Crystal Growing Systems Operating profit by segment (in EUR ‘000) 2008 2007 for segment reporting in accordance with IAS 14 division also provide after-sales services for their

(Segment Reporting) therefore follows this divisional respective products. PVA TePla Analytical Systems Vacuum Systems 2,032 3,732 structure and classifies each of the above divisions as GmbH focuses on systems for the non-destructive Crystal Growing Systems 15,342 7,085 a separate segment. quality control of components and materials using Plasma Systems -2,464 -961 MANAGEMENT REPORT ultrasonic microscopy. These systems are used in the Consolidation 133 121 Accordingly, a geographical breakdown forms the semi-conductor industry for checking components, as Consolidated operating profit 15,043 9,977 secondary structure of our segment reporting, which well as in other industrial areas and research institutes. is based on the following regions: Germany, Europe The option to inspect complete 300mm silicon ingots (excluding Germany), North America, Asia and other is a particularly interesting and impressive addition to To date, segment assets and liabilities have been and interest-bearing assets and liabilities were also territories. the relevant crystal growing systems. presented net of deferred tax assets and liabilities. deducted from segment assets and liabilities. The GROUP At the reporting date December 31, 2008, current prior-year figures have been restated accordingly. The Vacuum Systems division is engaged in the The Plasma Systems division develops, produces and tax assets and provisions, investments in associates development, production and marketing of systems distributes equipment for the plasma treatment (in FINANCIAL STATEMENTS and facilities for treating materials and workpieces rarefied, ionized gas) of workpieces and materials. under vacuum conditions, high temperatures (up to The main focus is on cleaning and surface activation Segment assets (in EUR ‘000) Dec. 31, 2008 Dec. 31, 2007 3,000°C) and, in some cases, high pressure (up to processes for the semi-conductor and manufacturing 100 bar). The main products are sintering and pressure industries and for healthcare, as well as systems for Vacuum Systems 60,585 46,117 sintering furnaces, as well as systems for soldering and the production and treatment of ultra-thin wafers. In Crystal Growing Systems 56,534 52,321 heat treatment. Maintenance and servicing for these addition, laser wafer measuring systems are made Plasma Systems 21,026 22,765 products are also provided. The subsidiary PVA Löt- for the semi-conductor industry. The Corona (CA, Less intersegment assets -16,064 -12,415 SINGLE-ENTITY und Werkstofftechnik GmbH (LWT) offers customers USA) site also provides contract processing services Total segment assets 122,081 108,788 FINANCIAL STATEMENTS the treatment of workpieces and materials in high- for plasma treatment in industry and medicine. The temperature vacuum facilities (contract processing). Marlton (NJ, USA) site, also a provider of contract processing, was closed at the end of fiscal year 2008 The Crystal Growing Systems division develops, in order to cut costs. The corresponding capacities produces and markets systems for growing semi- and orders were successfully moved to Corona. The conductor crystals. The Crystal Growing Systems Plasma Systems division also provides after-sales miscellaneous 114 PVA TePla Annual Report 2008

Segment liabilities (EUR ‘000) Dec. 31, 2008 Dec. 31, 2007 Assets by region (EUR ‘000) Dec. 31, 2008 Dec. 31, 2007

Vacuum Systems 34,963 30,919 Germany 124,777 112,412 Crystal Growing Systems 36,002 40,258 Europe (excluding Germany) 5,373 1,465 Plasma Systems 9,081 9,503 North America 6,408 5,736 Less intersegment assets 1,675 -2,800 Asia 1,587 1,590 Total segment liabilities 81,721 77,880 Unallocable components/consolidation -16,064 -12,415 Consolidated assets 122,081 108,788

Segment investments (EUR ‘000) 2008 2007 Investments by region (EUR ‘000) 2008 2007 Vacuum Systems 10,984 15,954 Crystal Growing Systems 598 8,612 Germany 11,680 24,627 Plasma Systems 179 91 Europe (excluding Germany) 45 14 Group investments 11,761 24,657 North America 26 11 Asia 10 4 Currency effects 0 1 Segment depreciation and amortization (EUR ‘000) 2008 2007 Consolidated investments 11,761 24,657

Vacuum Systems 888 537 As a matter of principle, transactions involving Crystal Growing Systems 813 537 intersegment sales and revenues are conducted at Plasma Systems (normal) 420 600 arm’s length conditions. Plasma Systems (goodwill impairment) 2,000 0 Consolidated depreciation and amortization 4,121 1,674

Other non-cash segment expenses were not incurred Breakdown by region and secondary structure of 29. Financial instruments and finance-oriented activities. Selected derivative to a significant extent. segmental reporting: instruments are employed to hedge market price This section contains a summary presentation of the risks, depending on the assessment of the respective Sales revenues by sales regions (EUR ‘000) 2008 2007 Group’s financial instruments and derivative financial risk. Derivative financial instruments are used solely instruments. Details of the individual categories of as hedging instruments, meaning that they are not Germany 59,708 42,914 financial instruments are provided in the notes on employed for trading or other speculative purposes. Europe (excluding Germany) 30,517 14,320 the respective balance sheet and income statement The basic details of the financial policy are established North America 2,796 3,344 items. annually by the Management Board and monitored by Asia 77,346 50,636 the Supervisory Board. The CFO is directly responsible Others 146 2,500 Principles of the risk management system for the implementation of the financial policy and Consolidation -1,922 -10 In addition to default risk and liquidity risk, the ongoing risk management. Consolidated revenues 168,591 113,704 Company’s assets, liabilities and planned transactions are subject to risks from changes in exchange rates and interest rates. The aim of financial risk management As in the previous year, the strongest growth was Samsung Wafers. The Vacuum Systems division also is to minimize these risks through ongoing operating generated in Asia and is primarily attributable to the enjoyed a high business volume. Furthermore, the Crystal Growing Systems division and the settlement level of business expanded in the Europe and Germany of the large order with the Singapore-based Siltronic sales regions. Consolidated Consolidated Consolidated Cash Consolidated Statement Consolidated Statement of Balance sheet Income Statement Flow Statement of Changes in Equity Changes in Fixed Assets 08/07 Auditor’s Report 115

Notes to the Consolidated Financial Statements

Segment liabilities (EUR ‘000) Dec. 31, 2008 Dec. 31, 2007 Assets by region (EUR ‘000) Dec. 31, 2008 Dec. 31, 2007

Segment investments (EUR ‘000) 2008 2007 Investments by region (EUR ‘000) 2008 2007 Vacuum Systems 10,984 15,954 Crystal Growing Systems 598 8,612 Germany 11,680 24,627 Europe (excluding Germany) 45 14

Plasma Systems 179 91 THE COMPANY Group investments 11,761 24,657 North America 26 11 Asia 10 4 Currency effects 0 1 Segment depreciation and amortization (EUR ‘000) 2008 2007 Consolidated investments 11,761 24,657

Vacuum Systems 888 537 As a matter of principle, transactions involving

Crystal Growing Systems 813 537 intersegment sales and revenues are conducted at Plasma Systems (normal) 420 600 arm’s length conditions. Plasma Systems (goodwill impairment) 2,000 0 MANAGEMENT REPORT Consolidated depreciation and amortization 4,121 1,674

Germany 59,708 42,914 financial instruments are provided in the notes on employed for trading or other speculative purposes. FINANCIAL STATEMENTS Europe (excluding Germany) 30,517 14,320 the respective balance sheet and income statement The basic details of the financial policy are established North America 2,796 3,344 items. annually by the Management Board and monitored by Asia 77,346 50,636 the Supervisory Board. The CFO is directly responsible Others 146 2,500 Principles of the risk management system for the implementation of the financial policy and Consolidation -1,922 -10 In addition to default risk and liquidity risk, the ongoing risk management. Consolidated revenues 168,591 113,704 Company’s assets, liabilities and planned transactions are subject to risks from changes in exchange rates and SINGLE-ENTITY

interest rates. The aim of financial risk management FINANCIAL STATEMENTS As in the previous year, the strongest growth was Samsung Wafers. The Vacuum Systems division also is to minimize these risks through ongoing operating generated in Asia and is primarily attributable to the enjoyed a high business volume. Furthermore, the Crystal Growing Systems division and the settlement level of business expanded in the Europe and Germany of the large order with the Singapore-based Siltronic sales regions. miscellaneous 116 PVA TePla Annual Report 2008

in EUR ‘000 Fair value Amortized cost Fair value Amortized cost Fair value Credit risk entered into in order to hedge the US dollar payments 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007 The Company is exposed to counterparty default risk as on a delivery in the Plasma Systems division. The a result of its operating activities and certain financing maturity of these forward exchange contracts was fixed

Non-current activities. to correspond to the timing of the expected payments. assets The contract was concluded at a forward rate of 1.4549 Investment In its operating business, accounts receivable are US$/EUR. 0 0 497 519 0 0 0 0 0 0 property monitored on a decentralized, ongoing basis. Default Non-current 0 0 719 572 0 0 0 0 0 0 risks are taken into account through specific valuation The forward exchange contract is measured at market financial assets allowances and flat-rate specific valuation allowances. value on the basis of the forward rate at the balance Current assets sheet date for the remaining term of the contract. Coming For more information on the composition of receivables Based on an exchange rate of 1.40944 US$/EUR on receivables on 0 0 0 0 0 0 0 0 22,314 19,394 and the valuation allowances recognized, see note 10. December 31, 2008 the forward exchange contracts construction contracts Valuation allowances are recognized in the amount of have a total fair value of EUR -11 thousand. Trade receivables the expected defaults on receivables. 0 0 18,388 11,075 0 0 0 0 0 0 and assets Forward exchange contracts with an open volume of Other Liquidity risk EUR 1,293 thousand or US$ 1,692 thousand have been receivables and 259 364 9,590 13,325 0 0 0 0 0 0 Revolving liquidity planning is performed in order to entered into in order to hedge the US dollar payments assets ensure the Company’s solvency and financial flexibility on deliveries in the Vacuum Systems division. The Cash and cash 0 0 5,198 9,071 0 0 0 0 0 0 at all times. maturity of these forward exchange contracts was equivallents fixed to correspond to the timing of the expected Non-current To the extent necessary, a liquidity reserve is held in the payments. The transactions were concluded at forward liabilities form of credit facilities and, if required, in cash. rates of 1.3368 US$/EUR for a volume of US$ 94 Non-current 0 0 0 0 0 0 17,874 17,113 0 0 financial liabilities thousand, 1.3068 US$/EUR for a volume of US$ 1,410 Current For more information on the maturities of the individual thousand, and 1.3063 US$/EUR for a volume of US$ liabilities financial liabilities, see the disclosures on the relevant 188 thousand. Short-term balance sheet items. 0 0 0 0 0 0 1,253 2,294 0 0 financial liabilities These forward exchange contracts are also measured Trade payables 0 0 0 0 0 0 8,001 4,516 0 0 Market risk at market value on the basis of the forward rate at

Other liabilities 0 0 0 0 0 0 35,690 40,542 0 0 With regard to market price risk, the Company is the balance sheet date for the remaining term of the exposed to currency risk, interest rate risk and other contracts. Based on an exchange rate of 1.40944 US$/ Net finance price risks. EUR at December 31, 2008 the forward exchange costs/net -105 89 798 837 0 0 -1,407 -528 0 0 finance revenue contracts have a total fair value of EUR 81 thousand. Currency risks The Company’s currency risk primarily results from A total of four forward exchange contracts with an open its operating activities, financing measures and volume of EUR 2,949 thousand or US$ 4,134 thousand investments. Foreign currency risks with a significant have been entered into in order to hedge the US dollar impact on the Group’s cash flow are hedged. payments on deliveries in the Crystal Growing Systems division. The maturity of these forward exchange Foreign currency risks from operations primarily arise contracts was fixed to correspond to the timing of when planned transactions are settled in a currency the expected payments. These forward exchange Consolidated Consolidated Consolidated Cash Consolidated Statement Consolidated Statement of Balance sheet Income Statement Flow Statement of Changes in Equity Changes in Fixed Assets 08/07 Auditor’s Report 117

Notes to the Consolidated Financial Statements

Categories of financial instruments With the exception of financial liabilities carried at other than the functional currency (EUR). These planned The financial instruments held by the Group are allocated to the following categories: amortized cost, the carrying amounts in the other transactions relate in particular to expected future sales categories largely correspond to the respective market revenues invoiced in US dollars. Financial assets and values. No separate comparison of carrying amounts liabilities carried at Extended loans and market values is provided. Forward exchange contracts with an open volume of fair value though and receivables Assets held profit/loss extended for sale Financial liabilities PoC receivables EUR 250 thousand or US$ 363 thousand have been Credit risk entered into in order to hedge the US dollar payments in EUR ‘000 Fair value Amortized cost Fair value Amortized cost Fair value FOR OUR SHAREHOLDERS 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007 The Company is exposed to counterparty default risk as on a delivery in the Plasma Systems division. The a result of its operating activities and certain financing maturity of these forward exchange contracts was fixed

Non-current THE COMPANY 0 0 719 572 0 0 0 0 0 0 risks are taken into account through specific valuation The forward exchange contract is measured at market financial assets allowances and flat-rate specific valuation allowances. value on the basis of the forward rate at the balance Current assets sheet date for the remaining term of the contract. Coming For more information on the composition of receivables Based on an exchange rate of 1.40944 US$/EUR on receivables on 0 0 0 0 0 0 0 0 22,314 19,394 and the valuation allowances recognized, see note 10. December 31, 2008 the forward exchange contracts construction contracts Valuation allowances are recognized in the amount of have a total fair value of EUR -11 thousand. the expected defaults on receivables. Trade receivables 0 0 18,388 11,075 0 0 0 0 0 0 and assets Forward exchange contracts with an open volume of Other Liquidity risk EUR 1,293 thousand or US$ 1,692 thousand have been receivables and 259 364 9,590 13,325 0 0 0 0 0 0 Revolving liquidity planning is performed in order to entered into in order to hedge the US dollar payments MANAGEMENT REPORT assets ensure the Company’s solvency and financial flexibility on deliveries in the Vacuum Systems division. The Cash and cash 0 0 5,198 9,071 0 0 0 0 0 0 at all times. maturity of these forward exchange contracts was equivallents fixed to correspond to the timing of the expected Non-current To the extent necessary, a liquidity reserve is held in the payments. The transactions were concluded at forward liabilities form of credit facilities and, if required, in cash. rates of 1.3368 US$/EUR for a volume of US$ 94 Non-current 0 0 0 0 0 0 17,874 17,113 0 0 thousand, 1.3068 US$/EUR for a volume of US$ 1,410

financial liabilities GROUP Current For more information on the maturities of the individual thousand, and 1.3063 US$/EUR for a volume of US$ liabilities financial liabilities, see the disclosures on the relevant 188 thousand.

Short-term balance sheet items. FINANCIAL STATEMENTS 0 0 0 0 0 0 1,253 2,294 0 0 financial liabilities These forward exchange contracts are also measured Trade payables 0 0 0 0 0 0 8,001 4,516 0 0 Market risk at market value on the basis of the forward rate at

The Company’s currency risk primarily results from A total of four forward exchange contracts with an open FINANCIAL STATEMENTS its operating activities, financing measures and volume of EUR 2,949 thousand or US$ 4,134 thousand investments. Foreign currency risks with a significant have been entered into in order to hedge the US dollar impact on the Group’s cash flow are hedged. payments on deliveries in the Crystal Growing Systems division. The maturity of these forward exchange Foreign currency risks from operations primarily arise contracts was fixed to correspond to the timing of when planned transactions are settled in a currency the expected payments. These forward exchange miscellaneous 118 PVA TePla Annual Report 2008

were also carried at their market value at the balance If the euro had increased (decreased) by 10% against the market value of these instruments was EUR -331 Other price risks sheet date. The contracts have a fair value of EUR -24 the other relevant currencies for the Company as of thousand (previous year: EUR 328 thousand). This As part of the description of market risks, IFRS 7 also thousand. December 31, 2008, other reserves in equity would amount is reported in other provisions (previous year: requires disclosures on how hypothetical changes have been EUR 9 thousand lower (higher) (December other receivables). The offsetting entries for the market in other price risk variables would affect the prices of A currency option has been entered into for an order 31, 2007: EUR 56 thousand lower (higher)). values and the corresponding deferred taxes are financial instruments. In particular, these risk variables in the Crystal Growing Systems division at a forward recognized directly in equity under other reserves. include quoted prices and indices. currency rate of 1.56 US$/EUR. The option has a volume Interest rate hedging of EUR 641 thousand or US$ 1,000 thousand. Due to The Company is mainly subject to interest rate risk in As only 20% of the maximum principal amount for the At December 31, 2008 and December 31, 2007, the the low level of the USD/EUR exchange rate at present, the euro zone. Taking the existing and planned debt financing of the new building at the Wettenberg site had Company did not hold any financial instruments that the option has not yet been utilized. structure into account, the Company employs interest been utilized as of December 31, 2008, the excess of were subject to other price risks to a material extent. rate derivatives (interest rate swaps) in order to the interest hedge was recognized in net finance costs A total of four forward exchange contracts with an open counteract interest rate risks. at its proportionate fair value (EUR -262 thousand). volume of EUR 937 thousand/JPY 136,950 thousand were entered into in order to hedge payment obligations In accordance with IFRS 7, interest rate risks are in Japanese Yen (JPY) for material orders in the Crystal presented using sensitivity analyses. These represent Growing Systems division. The maturity of the individual the effects of changes in market interest rates for hedges was fixed to correspond to the timing of the interest payments, interest income and expenses, 30. Leasing on the capacity situation, this space may continue to expected payments. other earnings components and, where applicable, be used in addition to the Company’s own assembly shareholders’ equity. PVA TePla generally only acts as a lessee and not as a facilities in order to provide it with flexibility in proces- The forward exchange contracts are measured at market lessor. The leasing arrangements entered into by PVA sing orders on hand or, alternatively, the lease may be value on the basis of the forward rate at the balance sheet As the Company has fixed interest rate agreements for TePla are all classified as operating leases. There are terminated. date for the remaining term of the contracts. Based on its non-current primary financial instruments or variable two main groups of leasing arrangements: an exchange rate of 127.419 JPY/EUR at December 31, interest rate agreements that are hedged via cash flow PVA TePla America Inc. operates its business from ren- 2008 the forward exchange contracts have a total fair hedges and its financial liabilities are recognized at Renting of buildings ted premises in Corona, California. The monthly rent is value of EUR 148 thousand. amortized cost, only financial derivatives have an impact PVA TePla has rented premises for production and ad- US$ 22 thousand; part of the site has been subleased to on other reserves in equity. Effects on profit/loss from ministration from third parties at its sites in Asslar (un- a third party since September 2003. PVA TePla Ameri- Accordingly, currency risks due to foreign currency any changes in interest rates affecting the portion of non- til November 2008), Berlin, Feldkirchen, Siegen, Jena, ca Inc.’s premises at Marlton, New Jersey, which were invoices are mainly hedged by forward exchange fixed-interest current financial liabilities in the amount of Herborn, Aalen, Frederikssund (Denmark), Beijing (Chi- rented for US$ 4 thousand per month, were closed as contracts, meaning that changes in exchange rates from EUR 9 thousand (previous year: EUR 1,043 thousand) na), Xi’an (China) and Singapore. In 2008, the month- of October 31, 2008 in order to cut costs. The monthly foreign currency transactions have no effect on profit/ are negligible in terms of their amount and maturity. ly rent was EUR 48 thousand at the Feldkirchen site, rent in Manchester/New Hampshire, USA, was US$ 1 loss or shareholders’ equity. EUR 41 thousand at the Asslar site, EUR 19 thousand thousand. This site was also closed for cost reasons Sensitivity analyses in accordance with IFRS 7 were at the Jena site, EUR 15 thousand at the Siegen site, with effect from January 31, 2009. Interest income and expenses from financial instruments performed for financial derivatives (swaps) not forming EUR 3 thousand at the Berlin site, EUR 2 thousand at at the German companies are recognized in the functional part of an effective hedge. If the market interest rate at the Herborn site, EUR 2 thousand at the Aalen site, The relevant rental agreements are standard agree- currency (EUR). This means that foreign currency risks December 31, 2008 had been 100 bp higher, earnings EUR 6 thousand at the Frederikssund site, EUR 1 thousand ments for the rental of commercial premises. In 2008, can only arise from the financial instruments and assets would have increased by EUR 412 thousand. Conversely, at the Beijing site and EUR 1 thousand at the Xi’an site. a total of EUR 2,154 thousand was paid under these ag- held by the individual companies outside Germany that if the market interest rate at December 31, 2008 had As in the previous year, additional production space reements. The minimum commitments for the coming would be taken directly to currency reserves in equity. been 100 bp lower, earnings would have decreased by was rented near the Jena location in 2008. Depending years comprise the following amounts: For this reason, only an equity-based sensitivity analysis EUR 457 thousand. is performed. Interest rate hedges with a total volume of EUR 10,747 If the euro had increased (decreased) by 10% against thousand (previous year: EUR 11,600 thousand) were the US dollar as of December 31, 2008, other reserves entered into in order to hedge the interest rate risk for in equity would have been EUR 35 thousand lower the financing of investments in new buildings at the (higher) (December 31, 2007: EUR 63 thousand lower Wettenberg and Jena sites. At December 31, 2008, (higher)). Consolidated Consolidated Consolidated Cash Consolidated Statement Consolidated Statement of Balance sheet Income Statement Flow Statement of Changes in Equity Changes in Fixed Assets 08/07 Auditor’s Report 119

Notes to the Consolidated Financial Statements

were entered into in order to hedge payment obligations In accordance with IFRS 7, interest rate risks are THE COMPANY in Japanese Yen (JPY) for material orders in the Crystal presented using sensitivity analyses. These represent Growing Systems division. The maturity of the individual the effects of changes in market interest rates for hedges was fixed to correspond to the timing of the interest payments, interest income and expenses, 30. Leasing on the capacity situation, this space may continue to expected payments. other earnings components and, where applicable, be used in addition to the Company’s own assembly shareholders’ equity. PVA TePla generally only acts as a lessee and not as a facilities in order to provide it with flexibility in proces- The forward exchange contracts are measured at market lessor. The leasing arrangements entered into by PVA sing orders on hand or, alternatively, the lease may be value on the basis of the forward rate at the balance sheet As the Company has fixed interest rate agreements for TePla are all classified as operating leases. There are terminated. date for the remaining term of the contracts. Based on its non-current primary financial instruments or variable two main groups of leasing arrangements: an exchange rate of 127.419 JPY/EUR at December 31, interest rate agreements that are hedged via cash flow PVA TePla America Inc. operates its business from ren- MANAGEMENT REPORT 2008 the forward exchange contracts have a total fair hedges and its financial liabilities are recognized at Renting of buildings ted premises in Corona, California. The monthly rent is value of EUR 148 thousand. amortized cost, only financial derivatives have an impact PVA TePla has rented premises for production and ad- US$ 22 thousand; part of the site has been subleased to on other reserves in equity. Effects on profit/loss from ministration from third parties at its sites in Asslar (un- a third party since September 2003. PVA TePla Ameri- Accordingly, currency risks due to foreign currency any changes in interest rates affecting the portion of non- til November 2008), Berlin, Feldkirchen, Siegen, Jena, ca Inc.’s premises at Marlton, New Jersey, which were invoices are mainly hedged by forward exchange fixed-interest current financial liabilities in the amount of Herborn, Aalen, Frederikssund (Denmark), Beijing (Chi- rented for US$ 4 thousand per month, were closed as contracts, meaning that changes in exchange rates from EUR 9 thousand (previous year: EUR 1,043 thousand) na), Xi’an (China) and Singapore. In 2008, the month- of October 31, 2008 in order to cut costs. The monthly GROUP foreign currency transactions have no effect on profit/ are negligible in terms of their amount and maturity. ly rent was EUR 48 thousand at the Feldkirchen site, rent in Manchester/New Hampshire, USA, was US$ 1 loss or shareholders’ equity. EUR 41 thousand at the Asslar site, EUR 19 thousand thousand. This site was also closed for cost reasons

Sensitivity analyses in accordance with IFRS 7 were at the Jena site, EUR 15 thousand at the Siegen site, with effect from January 31, 2009. FINANCIAL STATEMENTS Interest income and expenses from financial instruments performed for financial derivatives (swaps) not forming EUR 3 thousand at the Berlin site, EUR 2 thousand at at the German companies are recognized in the functional part of an effective hedge. If the market interest rate at the Herborn site, EUR 2 thousand at the Aalen site, The relevant rental agreements are standard agree- currency (EUR). This means that foreign currency risks December 31, 2008 had been 100 bp higher, earnings EUR 6 thousand at the Frederikssund site, EUR 1 thousand ments for the rental of commercial premises. In 2008, can only arise from the financial instruments and assets would have increased by EUR 412 thousand. Conversely, at the Beijing site and EUR 1 thousand at the Xi’an site. a total of EUR 2,154 thousand was paid under these ag- held by the individual companies outside Germany that if the market interest rate at December 31, 2008 had As in the previous year, additional production space reements. The minimum commitments for the coming would be taken directly to currency reserves in equity. been 100 bp lower, earnings would have decreased by was rented near the Jena location in 2008. Depending years comprise the following amounts: For this reason, only an equity-based sensitivity analysis EUR 457 thousand. SINGLE-ENTITY is performed. FINANCIAL STATEMENTS Interest rate hedges with a total volume of EUR 10,747 If the euro had increased (decreased) by 10% against thousand (previous year: EUR 11,600 thousand) were the US dollar as of December 31, 2008, other reserves entered into in order to hedge the interest rate risk for in equity would have been EUR 35 thousand lower the financing of investments in new buildings at the (higher) (December 31, 2007: EUR 63 thousand lower Wettenberg and Jena sites. At December 31, 2008, (higher)). miscellaneous 120 PVA TePla Annual Report 2008

Remaining terms (EUR ‘000) Payments Present value 31. Other financial commitments

Up to 1 year 1,532 1,466 Commitments from current agreements: Between 1 and 5 years 1,546 1,398 Commitments under rental and lease agreements are Total commitments from master purchase agreements More than 5 years 0 0 discussed above (see note 30). can be broken down as follows:

Remaining terms (EUR ‘000) Payments Present value Subleasing buildings rise to revenue of EUR 158 thousand in 2008. Income PVA TePla has subleased part of its rented space at the from subleasing over the coming years can be broken Up to 1 year 10,873 10,405 site in Corona, California. In addition, its own building down as follows: Between 1 and 5 years 5,226 4,784 in Kahla is partially subleased. These agreements gave More than 5 years 0 0

Remaining terms (EUR ‘000) Payments Present value Total commitments from other agreements (e.g. servicing agreements, security services) can be broken Up to 1 year 161 154 down as follows: Between 1 and 5 years 99 91 More than 5 years 0 0 Remaining terms (EUR ‘000) Payments Present value

Up to 1 year 733 702 Leasing of vehicles directors. Above and beyond this, fleet vehicles are used Between 1 and 5 years 272 245 PVA TePla AG restricts the number of company vehicles for business travel. Since 2004, new vehicles have been More than 5 years 13 10 to an absolute minimum. As a matter of principle, cars leased. In 2008, expenditure of EUR 152 thousand was for private use are only provided to members of the incurred for such leases. The minimum commitments Management Board, heads of division and managing for the coming years comprise the following amounts:

Remaining terms (EUR ‘000) Payments Present value 32. Cost of materials

Up to 1 year 151 144 The cost of sales for fiscal years 2008 and 2007 Between 1 and 5 years 190 170 contains expenditure on materials as follows: More than 5 years 5 4

in EUR ‘000 2008 2007 Other leases of EUR 225 thousand was incurred for such leases. Cost of raw materials, consumables and supplies and of goods In addition to the aforementioned leases, the Company The minimum commitments for the coming years 93,973 58,943 purchased and held for resale has other leases of minor importance, generally for comprise the following amounts: operating and office equipment. In 2008, expenditure Cost of purchased services 10,283 3,841 Total cost of materials 104,256 62,784

Remaining terms (EUR ‘000) Payments Present value

Up to 1 year 403 386 Accordingly, the materials ratio (cost of materials to of sales revenues generated by the Crystal Growing Between 1 and 5 years 943 827 total sales revenues) amounted to 61.8% in fiscal year Systems division with an even higher percentage of More than 5 years 0 0 2008, compared with 55.2% in the previous year. The purchased components. main reason for this change is the higher proportion The increase in future lease expenditure primarily relates to office equipment for the new administrative building in Wettenberg. Consolidated Consolidated Consolidated Cash Consolidated Statement Consolidated Statement of Balance sheet Income Statement Flow Statement of Changes in Equity Changes in Fixed Assets 08/07 Auditor’s Report 121

Notes to the Consolidated Financial Statements

Remaining terms (EUR ‘000) Payments Present value 31. Other financial commitments

Remaining terms (EUR ‘000) Payments Present value FOR OUR SHAREHOLDERS Subleasing buildings rise to revenue of EUR 158 thousand in 2008. Income PVA TePla has subleased part of its rented space at the from subleasing over the coming years can be broken Up to 1 year 10,873 10,405 site in Corona, California. In addition, its own building down as follows: Between 1 and 5 years 5,226 4,784 in Kahla is partially subleased. These agreements gave More than 5 years 0 0

Remaining terms (EUR ‘000) Payments Present value Total commitments from other agreements (e.g.

servicing agreements, security services) can be broken THE COMPANY Up to 1 year 161 154 down as follows: Between 1 and 5 years 99 91 More than 5 years 0 0 Remaining terms (EUR ‘000) Payments Present value

Up to 1 year 733 702 Leasing of vehicles directors. Above and beyond this, fleet vehicles are used Between 1 and 5 years 272 245

PVA TePla AG restricts the number of company vehicles for business travel. Since 2004, new vehicles have been More than 5 years 13 10 to an absolute minimum. As a matter of principle, cars leased. In 2008, expenditure of EUR 152 thousand was for private use are only provided to members of the incurred for such leases. The minimum commitments MANAGEMENT REPORT Management Board, heads of division and managing for the coming years comprise the following amounts:

Remaining terms (EUR ‘000) Payments Present value 32. Cost of materials

Up to 1 year 151 144 The cost of sales for fiscal years 2008 and 2007 Between 1 and 5 years 190 170 contains expenditure on materials as follows: GROUP More than 5 years 5 4

in EUR ‘000 2008 2007 FINANCIAL STATEMENTS Other leases of EUR 225 thousand was incurred for such leases. Cost of raw materials, consumables and supplies and of goods In addition to the aforementioned leases, the Company The minimum commitments for the coming years 93,973 58,943 purchased and held for resale has other leases of minor importance, generally for comprise the following amounts: operating and office equipment. In 2008, expenditure Cost of purchased services 10,283 3,841 Total cost of materials 104,256 62,784

Remaining terms (EUR ‘000) Payments Present value SINGLE-ENTITY

Up to 1 year 403 386 Accordingly, the materials ratio (cost of materials to of sales revenues generated by the Crystal Growing FINANCIAL STATEMENTS Between 1 and 5 years 943 827 total sales revenues) amounted to 61.8% in fiscal year Systems division with an even higher percentage of More than 5 years 0 0 2008, compared with 55.2% in the previous year. The purchased components. main reason for this change is the higher proportion The increase in future lease expenditure primarily relates to office equipment for the new administrative building in Wettenberg. miscellaneous 122 PVA TePla Annual Report 2008

33. Personnel expenses 36. Executive bodies of the Company

Personnel expenses for fiscal years 2008 and 2007 are Management Board: composed as follows: In fiscal year 2008, the Management Board of PVA TePla AG consisted of the following persons: in EUR ‘000 2008 2007 Peter Abel, Wettenberg (Chairman/CEO) Arnd Bohle, Bochum (CFO) Wages and salaries 27,881 20,411 Engineer Business graduate Social charges 5,212 3,323 Expenditure on retirement pensions 637 698 Managing director of the following Group companies: Managing director of the following Group companies: Total personnel expenses 33,730 24,432 • Crystal Growing Systems GmbH, Wettenberg • Crystal Growing Systems GmbH, Wettenberg • PVA Jena Immobilien GmbH, Jena • PlaTeG GmbH, Siegen The ratio of personnel expenses to sales revenues thus The Group had a total of 504 employees at year-end • Plasma Systems GmbH, Feldkirchen amounted to 20.0% in fiscal year 2008, compared with (previous year: 422) and an average of 491 employees • PVA TePla Analytical Systems GmbH, Aalen Mr. Bohle is not a member of any supervisory bodies. 21.5% in the previous year. The economies of scale for the year as a whole (previous year: 384). generated as a result of the strong growth in the busi- and of the following non-Group companies: The total remuneration paid to the members of the ness volume were a key factor in this development. The average number of employees by function develo- • Messtechnik Wetzlar GmbH, Wetzlar Management Board in fiscal year 2008 was EUR However, the increased percentage of sales revenues ped as follows compared with the previous year: (until June 30, 2008) 1,429 thousand (previous year: EUR 701 thousand). generated by the Crystal Growing Systems division and • PA Beteiligungsgesellschaft mbH, Wettenberg Management Board remuneration consists of a basic its low level of vertical integration compared with the salary, other benefits (primarily the non-cash benefit of other divisions also had an impact. Member of the following supervisory bodies: the use of a company car and subsidized contributions • PVA TePla America Inc., Corona, USA (Director) to health insurance) and a performance-related bonus. Number of employees by function (average for the year) 2008 2007 • Xi’an HuaDe CGS Ltd., Xi’an, China The bonus is measured as a percentage of the annual (Chairman of the Supervisory Board) net profit of the PVA TePla Group. On this basis, the Administration 61 47 • ScheBo Biotech AG, Giessen members of the Management Board received the Sales 50 43 (Chairman of the Supervisory Board) following remuneration in fiscal year 2008: Engineering, research and development 97 86 • OPTOTEC GmbH, Wettenberg Production and service 283 208 (Chairman of the Advisory Board) Total number of employees 491 384 • 3D Präzisionstechnik AG, Asslar (Chairman of the Supervisory Board)

in EUR ‘000 Salary Other benefits Bonus Total

34. Depreciation and amortization 35. Risk management Peter Abel 240 13 800 1,053 Arnd Bohle 180 8 188 376 Depreciation and amortization are discussed in the The current risks and opportunities and PVA TePla’s disclosures on non-current assets (see notes 4 and 5). risk management system are presented in detail in the The bonuses presented above contain amounts paid in The remuneration shown consists entirely of short- management report. Please refer to section 13 of the 2008 for fiscal year 2007 less the amounts contained term pay due to members of the Management Board. management report for more information. in the provision recognized in fiscal year 2007, as well Employer contributions to pension insurance are not as the provision recognized in 2008 for fiscal year paid. Long-term benefits only exist in relation to the 2008. The bonus payment for Mr. Abel includes a pension entitlements for Mr. Abel from the time prior non-recurring component in the amount of EUR 500 to the formation of PVA TePla AG. These have been thousand. taken into account in the measurement of pension provisions. The present value of these entitlements at December 31, 2008 was EUR 395 thousand (previous year: EUR 363 thousand). Consolidated Consolidated Consolidated Cash Consolidated Statement Consolidated Statement of Balance sheet Income Statement Flow Statement of Changes in Equity Changes in Fixed Assets 08/07 Auditor’s Report 123

Notes to the Consolidated Financial Statements

33. Personnel expenses 36. Executive bodies of the Company

amounted to 20.0% in fiscal year 2008, compared with (previous year: 422) and an average of 491 employees • PVA TePla Analytical Systems GmbH, Aalen Mr. Bohle is not a member of any supervisory bodies. THE COMPANY 21.5% in the previous year. The economies of scale for the year as a whole (previous year: 384). generated as a result of the strong growth in the busi- and of the following non-Group companies: The total remuneration paid to the members of the ness volume were a key factor in this development. The average number of employees by function develo- • Messtechnik Wetzlar GmbH, Wetzlar Management Board in fiscal year 2008 was EUR However, the increased percentage of sales revenues ped as follows compared with the previous year: (until June 30, 2008) 1,429 thousand (previous year: EUR 701 thousand). generated by the Crystal Growing Systems division and • PA Beteiligungsgesellschaft mbH, Wettenberg Management Board remuneration consists of a basic its low level of vertical integration compared with the salary, other benefits (primarily the non-cash benefit of other divisions also had an impact. Member of the following supervisory bodies: the use of a company car and subsidized contributions • PVA TePla America Inc., Corona, USA (Director) to health insurance) and a performance-related bonus. Number of employees by function (average for the year) 2008 2007 • Xi’an HuaDe CGS Ltd., Xi’an, China The bonus is measured as a percentage of the annual MANAGEMENT REPORT (Chairman of the Supervisory Board) net profit of the PVA TePla Group. On this basis, the Administration 61 47 • ScheBo Biotech AG, Giessen members of the Management Board received the Sales 50 43 (Chairman of the Supervisory Board) following remuneration in fiscal year 2008: Engineering, research and development 97 86 • OPTOTEC GmbH, Wettenberg Production and service 283 208 (Chairman of the Advisory Board) Total number of employees 491 384 • 3D Präzisionstechnik AG, Asslar GROUP (Chairman of the Supervisory Board)

in EUR ‘000 Salary Other benefits Bonus Total FINANCIAL STATEMENTS

as the provision recognized in 2008 for fiscal year paid. Long-term benefits only exist in relation to the FINANCIAL STATEMENTS 2008. The bonus payment for Mr. Abel includes a pension entitlements for Mr. Abel from the time prior non-recurring component in the amount of EUR 500 to the formation of PVA TePla AG. These have been thousand. taken into account in the measurement of pension provisions. The present value of these entitlements at December 31, 2008 was EUR 395 thousand (previous year: EUR 363 thousand). miscellaneous 124 PVA TePla Annual Report 2008

Fixed remuneration Variable remuneration No share options were granted to members of Dr. Peter Friedemann, Königsbrunn in EUR ‘000 2008 2008 the Management Board in fiscal year 2008. There (Deputy Chairman until June 19, 2008) are no financial commitments to members of the Spokesman for the German Association for the Alexander von Witzleben (Chairman) 10 40 Management Board in the event of the termination of Protection of Small Shareholders (SdK), Munich Prof. Dr. Günter Bräuer 5 20 their employment or a change in the constitution of the Dr. Gernot Hebestreit (since June 19, 2008) 3 11 shareholder majority. No membership of other supervisory bodies. Dr. Peter Friedemann (until June 19, 2008) 2 9 Total 20 80 The Company has pension commitments to former Dr. Gernot Hebestreit, Leverkusen members of the Management Board with present (Supervisory Board member since June 19, 2008) values of EUR 887 thousand (previous year: EUR 884 Managing Partner of Susat & Partner OHG thousand). In 2008, pensions of EUR 61 thousand (Wirtschaftsprüfungsgesellschaft), Cologne This total remuneration is divided between the the Supervisory Board during the fiscal year receive (previous year: EUR 59 thousand) were paid to former Managing Director of Grant Thornton GmbH, Hamburg members of the Supervisory Board in such a way pro rata remuneration for their period of service. members of the Management Board. Chairman of the Managing Board of Association for that the Chairman of the Supervisory Board receives Corporate Growth Rhein-Ruhr e.V., Cologne double the amount paid to each regular member of the D&O insurance has been taken out to cover the liability There were no payments for termination of employment Supervisory Board. The Chairman of the Supervisory of the members of executive bodies under civil law. or share-based payments. Member of the following other supervisory bodies: Board receives minimum annual remuneration of In fiscal year 2008, a premium of EUR 17 thousand • Comvis AG, Düsseldorf (Deputy Chairman of the EUR 10 thousand, while each regular member of (previous year: EUR 17 thousand) was paid for this Supervisory Board: Supervisory Board) the Supervisory Board receives minimum annual insurance In fiscal year 2008, the Supervisory Board of PVA TePla • Grant Thornton International Ltd., London, UK remuneration of EUR 5 thousand. Members who leave AG consisted of: (member of the Board of Governors)

Alexander von Witzleben, Weimar Prof. Dr. Günter Bräuer, Cremlingen (Chairman) Director of the Fraunhofer Institute for Laminate and Feintool International Holding AG, Lyss (President of Surface Engineering, Braunschweig, and Managing 37. Related parties 15 thousand (previous year: EUR 87 thousand). The the Administrative Board; since January 1, 2009) Director of the Institute for Surface Technology of TU Two categories of business transactions with related balance of outstanding receivables and liabilities at the Member of the Managing Board of Franz Haniel & Cie. Braunschweig parties are relevant for the PVA TePla Group: transactions balance sheet date was zero (previous year: zero) and GmbH, Duisburg (until December 31, 2008) with companies in which executive officers of PVA EUR 52 thousand (previous year: EUR 47 thousand) Member of the following other supervisory bodies: TePla AG have significant shareholdings or over which respectively. Member of the following other supervisory bodies: • PEP Photonos European Photovoltaics AG, Mainz they exercise significant influence, and relationships • Analytik Jena AG, Jena (Chairman of the Supervisory (member of the Supervisory Board since May 1, 2008) with the associated company PVA MIMtech LLC, Relationships with associated companies Board until April 4, 2008) • AMG Coating Technologies GmbH, Hanau Cedar Grove/NJ, USA. Between PVA TePla AG and the associated company • Caverion GmbH, Stuttgart (Chairman of the Advisory (member of the Advisory Board since June 1, 2008) PVA MIMtech LLC, Cedar Grove/NJ, USA exists only Board until December 31, 2008) Relationships with executive officers a very low internal performance allocation. In fiscal • VERBIO AG, Zörbig (Deputy Chairman of the The remuneration of the members of the Supervisory The ordinary business activities of the PVA TePla Group year 2008, the value of purchases from PVA MIMtech Supervisory Board) Board amounted to EUR 100 thousand in fiscal year involve the exchange of services with companies in LLC was zero (previous year: zero), while the value of • TAKKT AG, Stuttgart (Deputy Chairman of the 2008 (previous year: EUR 40 thousand). In accordance which the Chief Executive Officer of PVA TePla AG sales was zero (previous year EUR 1 thousand). As in Supervisory Board) with the Articles of Association, the members of the holds shares or over which he exercises significant the previous year, there were no trade receivables or • Feintool International Holding AG, Lyss (Vice Supervisory Board receive remuneration of 1% of influence. All transactions are conducted at arm’s payables in the year under review. In addition, external President of the Administrative Board until December the Company’s profit from ordinary activities up to a length conditions. borrowing for PVA MIMtech LLC is partly provided via 31, 2008) maximum of EUR 100 thousand. the PVA TePla Group. This gave rise to receivables of • Kaefer Isoliertechnik GmbH & Co. KG, Bremen In fiscal year 2008, the value of purchases from these EUR 142 thousand at the balance sheet date (previous (Member of the Advisory Board) companies totaled EUR 966 thousand (previous year: year: EUR 136 thousand). EUR 2,202 thousand) and the value of sales was EUR Consolidated Consolidated Consolidated Cash Consolidated Statement Consolidated Statement of Balance sheet Income Statement Flow Statement of Changes in Equity Changes in Fixed Assets 08/07 Auditor’s Report 125

Notes to the Consolidated Financial Statements

Total 20 80 FOR OUR SHAREHOLDERS The Company has pension commitments to former Dr. Gernot Hebestreit, Leverkusen members of the Management Board with present (Supervisory Board member since June 19, 2008) values of EUR 887 thousand (previous year: EUR 884 Managing Partner of Susat & Partner OHG thousand). In 2008, pensions of EUR 61 thousand (Wirtschaftsprüfungsgesellschaft), Cologne This total remuneration is divided between the the Supervisory Board during the fiscal year receive (previous year: EUR 59 thousand) were paid to former Managing Director of Grant Thornton GmbH, Hamburg members of the Supervisory Board in such a way pro rata remuneration for their period of service. members of the Management Board. Chairman of the Managing Board of Association for that the Chairman of the Supervisory Board receives

Corporate Growth Rhein-Ruhr e.V., Cologne double the amount paid to each regular member of the D&O insurance has been taken out to cover the liability THE COMPANY There were no payments for termination of employment Supervisory Board. The Chairman of the Supervisory of the members of executive bodies under civil law. or share-based payments. Member of the following other supervisory bodies: Board receives minimum annual remuneration of In fiscal year 2008, a premium of EUR 17 thousand • Comvis AG, Düsseldorf (Deputy Chairman of the EUR 10 thousand, while each regular member of (previous year: EUR 17 thousand) was paid for this Supervisory Board: Supervisory Board) the Supervisory Board receives minimum annual insurance In fiscal year 2008, the Supervisory Board of PVA TePla • Grant Thornton International Ltd., London, UK remuneration of EUR 5 thousand. Members who leave AG consisted of: (member of the Board of Governors)

Alexander von Witzleben, Weimar Prof. Dr. Günter Bräuer, Cremlingen (Chairman) Director of the Fraunhofer Institute for Laminate and MANAGEMENT REPORT Feintool International Holding AG, Lyss (President of Surface Engineering, Braunschweig, and Managing 37. Related parties 15 thousand (previous year: EUR 87 thousand). The the Administrative Board; since January 1, 2009) Director of the Institute for Surface Technology of TU Two categories of business transactions with related balance of outstanding receivables and liabilities at the Member of the Managing Board of Franz Haniel & Cie. Braunschweig parties are relevant for the PVA TePla Group: transactions balance sheet date was zero (previous year: zero) and GmbH, Duisburg (until December 31, 2008) with companies in which executive officers of PVA EUR 52 thousand (previous year: EUR 47 thousand) Member of the following other supervisory bodies: TePla AG have significant shareholdings or over which respectively. Member of the following other supervisory bodies: • PEP Photonos European Photovoltaics AG, Mainz they exercise significant influence, and relationships GROUP • Analytik Jena AG, Jena (Chairman of the Supervisory (member of the Supervisory Board since May 1, 2008) with the associated company PVA MIMtech LLC, Relationships with associated companies Board until April 4, 2008) • AMG Coating Technologies GmbH, Hanau Cedar Grove/NJ, USA. Between PVA TePla AG and the associated company

• Caverion GmbH, Stuttgart (Chairman of the Advisory (member of the Advisory Board since June 1, 2008) PVA MIMtech LLC, Cedar Grove/NJ, USA exists only FINANCIAL STATEMENTS Board until December 31, 2008) Relationships with executive officers a very low internal performance allocation. In fiscal • VERBIO AG, Zörbig (Deputy Chairman of the The remuneration of the members of the Supervisory The ordinary business activities of the PVA TePla Group year 2008, the value of purchases from PVA MIMtech Supervisory Board) Board amounted to EUR 100 thousand in fiscal year involve the exchange of services with companies in LLC was zero (previous year: zero), while the value of • TAKKT AG, Stuttgart (Deputy Chairman of the 2008 (previous year: EUR 40 thousand). In accordance which the Chief Executive Officer of PVA TePla AG sales was zero (previous year EUR 1 thousand). As in Supervisory Board) with the Articles of Association, the members of the holds shares or over which he exercises significant the previous year, there were no trade receivables or • Feintool International Holding AG, Lyss (Vice Supervisory Board receive remuneration of 1% of influence. All transactions are conducted at arm’s payables in the year under review. In addition, external President of the Administrative Board until December the Company’s profit from ordinary activities up to a length conditions. borrowing for PVA MIMtech LLC is partly provided via SINGLE-ENTITY

31, 2008) maximum of EUR 100 thousand. the PVA TePla Group. This gave rise to receivables of FINANCIAL STATEMENTS • Kaefer Isoliertechnik GmbH & Co. KG, Bremen In fiscal year 2008, the value of purchases from these EUR 142 thousand at the balance sheet date (previous (Member of the Advisory Board) companies totaled EUR 966 thousand (previous year: year: EUR 136 thousand). EUR 2,202 thousand) and the value of sales was EUR miscellaneous 126 PVA TePla Annual Report 2008

38. Audit fees (Article 314 of the HGB) 41. Additional disclosures

The auditors’ fees recognized in 2008 for PVA TePla The following companies included in the consolidated AG and the other companies of the PVA TePla Group financial statements of PVA TePla AG have utilized the amounted to: exemption option provided by section 264 (3) HGB: - PVA Vakuum Anlagenbau Jena GmbH in EUR ‘000 - PVA Jena Immobilien GmbH - PVA Löt- und Werkstofftechnik GmbH Audit of financial statements 210 - PVA Control GmbH Other assurance or valuation services 0 Tax advisory services 0 Other services 0 42. Authorization of the financial statements for publication

On March 19, 2009, the Management Board of PVA 39. Declaration on corporate governance in On August 21, 2007, Deutsche Bank AG, Frankfurt am TePla AG authorized the present consolidated financial accordance with Article 161 of the AktG Main, notified us in accordance with sections 21 (1) statements for fiscal year 2008 to be released to the and 24 WpHG in conjunction with section 32 (2) of the Supervisory Board. This represents the authorization The declaration of compliance with the German Investmentgesetz (InvG – German Investment Act) that for publication described in IAS 10.6. Corporate Governance Code as required by section 161 the share of the voting rights in PVA TePla AG, Asslar, of the Aktiengesetz (AktG – German Stock Corporation held by its subsidiary DWS Investment GmbH, Frankfurt Act) was again submitted by the Management Board am Main, exceeded the threshold of 5% on August 20, and the Supervisory Board in the course of the fiscal 2007 and now amounted to 5.01%. This is equivalent to 43. Significant post-balance sheet events year. 1,089,749 voting rights. Since the start of fiscal year 2009, there have been no This declaration forms part of the separate corporate On October 29, 2007, Mr. Wilhelm Hofmann, Germany, significant changes in the Company’s situation or the governance report and is permanently accessible notified us in accordance with section 21 (1) WpHG that industry in which it operates, nor are any major changes to shareholders on the Company’s website his share of the voting rights in PVA TePla AG, Asslar, planned in the structure, administration or legal form of (www.pvatepla.com) along with the declarations for had fallen below the threshold of 5% on October 23, the Group or its personnel. previous fiscal years. 2007 and now amounted to 4.64%. This is equivalent to 1,010,086 voting rights. Wettenberg, March 19, 2009

As of December 31, 2007, PA Beteiligungsgesellschaft, PVA TePla AG 40. Disclosures under Article 160 (1) No. 8 based in Wettenberg and belonging to Mr. Abel, held a of the AktG participating interest in the Company of more than 25%.

Mr. Peter Abel, Wettenberg, notified us in accordance with articles 21 (1) and 22 (1) no. 1 and no. 2 of the Wertpapierhandelsgesetz (WpHG – German Securities Trading Act) that his share of the voting rights in our Company exceeded the threshold of 25% on November 5, 2002 and now amounted to 29.99%, of which 29.32% was allocable to him in accordance with section 22 (1) no. Peter Abel Arnd Bohle 1 and no. 2 WpHG. Chief Executive Officer Chief Financial Officer Consolidated Consolidated Consolidated Cash Consolidated Statement Consolidated Statement of Balance sheet Income Statement Flow Statement of Changes in Equity Changes in Fixed Assets 08/07 Auditor’s Report 127

Notes to the Consolidated Financial Statements

38. Audit fees (Article 314 of the HGB) 41. Additional disclosures

The auditors’ fees recognized in 2008 for PVA TePla The following companies included in the consolidated AG and the other companies of the PVA TePla Group financial statements of PVA TePla AG have utilized the amounted to: exemption option provided by section 264 (3) HGB: - PVA Vakuum Anlagenbau Jena GmbH in EUR ‘000 - PVA Jena Immobilien GmbH FOR OUR SHAREHOLDERS - PVA Löt- und Werkstofftechnik GmbH Audit of financial statements 210 - PVA Control GmbH Other assurance or valuation services 0 Tax advisory services 0 Other services 0 42. Authorization of the financial statements

for publication THE COMPANY

Corporate Governance Code as required by section 161 the share of the voting rights in PVA TePla AG, Asslar, of the Aktiengesetz (AktG – German Stock Corporation held by its subsidiary DWS Investment GmbH, Frankfurt Act) was again submitted by the Management Board am Main, exceeded the threshold of 5% on August 20, MANAGEMENT REPORT and the Supervisory Board in the course of the fiscal 2007 and now amounted to 5.01%. This is equivalent to 43. Significant post-balance sheet events year. 1,089,749 voting rights. Since the start of fiscal year 2009, there have been no This declaration forms part of the separate corporate On October 29, 2007, Mr. Wilhelm Hofmann, Germany, significant changes in the Company’s situation or the governance report and is permanently accessible notified us in accordance with section 21 (1) WpHG that industry in which it operates, nor are any major changes to shareholders on the Company’s website his share of the voting rights in PVA TePla AG, Asslar, planned in the structure, administration or legal form of GROUP (www.pvatepla.com) along with the declarations for had fallen below the threshold of 5% on October 23, the Group or its personnel. previous fiscal years. 2007 and now amounted to 4.64%. This is equivalent to

1,010,086 voting rights. Wettenberg, March 19, 2009 FINANCIAL STATEMENTS

Mr. Peter Abel, Wettenberg, notified us in accordance with articles 21 (1) and 22 (1) no. 1 and no. 2 of the SINGLE-ENTITY

Wertpapierhandelsgesetz (WpHG – German Securities FINANCIAL STATEMENTS Trading Act) that his share of the voting rights in our Company exceeded the threshold of 25% on November 5, 2002 and now amounted to 29.99%, of which 29.32% was allocable to him in accordance with section 22 (1) no. Peter Abel Arnd Bohle 1 and no. 2 WpHG. Chief Executive Officer Chief Financial Officer miscellaneous 128 PVA TePla Annual Report 2008

Consolidated Statement of Changes in Fixed Assets for the years ended December 31, 2008

Acquisition and manufacturing costs Accumulated amortization and depreciation Residual carrying values

Acquisitions Additions Transfers Disposals Exchange Balance Balance Additions Transfers Disposals Write-ups Exchange Balance in EUR ‘000 Jan. 01, 08 2008 2008 2008 2008 differences Dec. 31, 08 Jan. 1, 08 2008 2008 2008 2008 differences Dec. 31, 08 Dec. 31, 08 Dec. 31, 07

Intangible assets 1. Goodwill 12,465 0 0 0 0 0 12,465 1,000 2,000 0 0 0 0 3,000 9,465 11,465 2. Other intangible assets 4,442 0 156 0 274 0 4,324 2,866 421 0 275 0 0 3,012 1,312 1,576 Total 16,907 0 156 0 274 0 16,789 3,866 2,421 0 275 0 0 6,012 10,777 13,041

Property, plant and equipment 1. Land, property rights and buildings, including buildings 11,009 0 9,627 11,541 25 15 32,167 1,734 583 0 7 0 12 2,322 29,845 9,275 on third party land 2. Plant and machinery 5,266 0 349 0 597 54 5,072 2,768 402 0 573 0 49 2,646 2,426 2,498 3. Other plant and equipment, 4,237 0 1,555 0 1,665 4 4,131 2,806 693 0 1,453 0 3 2,049 2,082 1,431 fixtures und fittings 4. Advance payments and 11,563 0 74 -11,541 22 0 74 0 0 0 0 0 0 0 74 11,563 assets under construction Total 32,075 0 11,605 0 2,309 73 41,444 7,308 1,678 0 2,033 0 64 7,017 34,427 24,767

Investment property 694 0 0 0 0 0 694 175 22 0 0 0 0 197 497 519 Total 49,676 0 11,761 0 2,583 73 58,927 11,349 4,121 0 2,308 0 64 13,226 45,701 38,327 for theyearsendedDecember31,2008 Consolidated StatementofChangesinFixedAssets 1. Property, plant and equipment Total 2. Otherintangibleassets 1. Goodwill Intangible assets in EUR‘000 2. Plantandmachinery Total Investment property Total 3. 4. Land, propertyrightsand on thirdpartyland buildings, includingbuildings assets underconstruction fixtures undfittings Other plantandequipment, Advance paymentsand Jan. 01, 08 16,907 12,465 11,009 32,075 11,563 49,676 4,442 4,237 5,266 694 Acquisition and manufacturing costs Acquisitions 2008 0 0 0 0 0 0 0 0 0 0 Additions 11,761 11,605 9,627 1,555 2008 349 156 156 74 0 0

Transfers -11,541 11,541 2008 0 0 0 0 0 0 0 0 Disposals 1,665 2,583 2,309 2008 274 274 597 25 22 0 0 differences Exchange 54 15 73 73 0 0 0 0 0 4 Dec. 31, 08 Balance 16,789 12,465 32,167 58,927 41,444 4,324 4,131 5,072 694 74 Balance sheet Consolidated Jan. 1,08 Balance 11,349 3,866 2,866 1,000 2,806 2,768 1,734 7,308 175 0 Income Statement Additions Consolidated 2,421 2,000 4,121 1,678 2008 421 693 402 583 22 0 Accumulated amortization and depreciation Consolidated Cash Flow Statement Transfers 2008 0 0 0 0 0 0 0 0 0 0 Disposals Consolidated Statement of ChangesinEquity 2,308 2,033 1,453 2008 573 275 275 7 0 0 0 Write-ups 2008 Notes totheConsolidated Financial Statements 0 0 0 0 0 0 0 0 0 0 differences Exchange 12 49 64 64 0 0 0 3 0 0 Changes inFixedAssets08/07 Dec. 31, 08 Consolidated Statementof Balance 13,226 2,322 6,012 3,012 3,000 2,646 7,017 2,049 197 0 Dec. 31, 08 Residual carrying values 10,777 29,845 45,701 34,427 1,312 9,465 2,426 2,082 497 74 Auditor’s Report Dec. 31, 07 13,041 11,465 38,327 24,767 11,563 9,275 1,576 2,498 1,431 519 129

SINGLE-ENTITY Group miscellaneous FINANCIAL STATEMENTS FINANCIAL STATEMENTS MANAGEMENT REPORT THE COMPANY FOR OUR SHAREHOLDERS 130 PVA TePla Annual Report 2008

Consolidated Statement of Changes in Fixed Assets for the years ended December 31, 2007

Acquisition and manufacturing costs Accumulated amortization and depreciation Residual carrying values

Acquisitions Additions Transfers Disposals Exchange Balance Balance Additions Transfers Disposals Write-ups Exchange Balance in EUR ‘000 Jan. 01, 07 2007 2007 2007 2007 differences Dec. 31, 07 Jan. 1, 07 2007 2007 2007 2007 differences Dec. 31, 07 Dec. 31, 07 Dec. 31, 06

Intangible assets 1. Goodwill 7,634 4,831 0 0 0 0 12,465 1,000 0 0 0 0 0 1,000 11,465 6,634

2. Other intangible assets 3,072 735 728 0 93 0 4,442 2,688 267 0 89 0 0 2,866 1,576 384

Total 10,706 5,566 728 0 93 0 16,907 3,688 267 0 89 0 0 3,866 13,041 7,018

Property, plant and equipment 1. Land, property rights and buildings, including buildings 6,163 0 4,942 -52 2 -42 11,009 1,549 376 -164 0 0 -26 1,734 9,275 4,614 on third party land 2. Plant and machinery 5,077 58 823 0 545 -147 5,266 3,005 433 0 546 0 -124 2,768 2,498 2,072 3. Other plant and equipment, 4,046 99 900 0 793 -15 4,237 2,999 587 0 768 0 -13 2,806 1,431 1,047 fixtures und fittings 4. Advance payments and 664 0 11,541 -642 0 0 11,563 0 0 0 0 0 0 0 11,563 664 assets under construction Total 15,950 157 18,206 -694 1,340 -204 32,075 7,553 1,396 -164 1,314 0 -163 7,308 24,767 8,397

Investment property 0 0 0 694 0 0 694 0 11 164 0 0 0 175 519 0 Total 26,656 5,723 18,934 -1 1,433 -204 49,676 11,241 1,674 0 1,403 0 -163 11,349 38,327 15,416 1. Property, plant and equipment Total 2. Otherintangibleassets 1. Goodwill Intangible assets in EUR‘000 2. Plantandmachinery Total Investment property Total 3. 4. Land, propertyrightsand on thirdpartyland buildings, includingbuildings assets underconstruction fixtures undfittings Other plantandequipment, Advance paymentsand Jan. 01, 07 10,706 15,950 26,656 6,163 3,072 7,634 4,046 5,077 664 0 Acquisition and manufacturing costs Acquisitions 5,566 4,831 5,723 2007 735 157 99 58 0 0 0 Additions 18,934 18,206 11,541 4,942 2007 823 728 728 900 0 0 Transfers 2007 -694 -642 694 -52 -1 0 0 0 0 0 Disposals 1,433 1,340 2007 793 545 93 93 0 2 0 0 differences Exchange -204 -204 -147 -42 -15 0 0 0 0 0 Dec. 31, 07 Balance 16,907 12,465 11,009 49,676 32,075 11,563 4,442 4,237 5,266 694 Balance sheet Consolidated Jan. 1,07 Balance 11,241 3,688 2,688 1,000 2,999 3,005 1,549 7,553 0 0 Income Statement Additions Consolidated 1,674 1,396 2007 267 267 587 433 376 11 0 0 Accumulated amortization and depreciation Consolidated Cash Flow Statement Transfers 2007 -164 -164 164 0 0 0 0 0 0 0 Disposals Consolidated Statement of ChangesinEquity 1,403 1,314 2007 546 768 89 89 0 0 0 0 Write-ups 2007 Notes totheConsolidated Financial Statements 0 0 0 0 0 0 0 0 0 0 differences Exchange -163 -163 -124 -13 -26 0 0 0 0 0 Changes inFixedAssets08/07 Dec. 31, 07 Consolidated Statementof Balance 11,349 3,866 2,866 1,000 2,768 1,734 7,308 2,806 175 0 Dec. 31, 07 Residual carrying values 13,041 11,465 38,327 24,767 11,563 1,576 2,498 9,275 1,431 519 Auditor’s Report Dec. 31, 06 15,416 7,018 6,634 2,072 4,614 1,047 8,397 384 664 0 13

SINGLE-ENTITY Group miscellaneous FINANCIAL STATEMENTS FINANCIAL STATEMENTS MANAGEMENT REPORT THE COMPANY FOR OUR SHAREHOLDERS 132 PVA TePla Annual Report 2008

Responsibility Statement

„To the best of our knowledge we assure that in accordance with the applicable reporting principles, the Consolidated Financial Statements give a true and fair view of the net assets, financial position and profit or loss of the Group, and the Group Management Report – which has been combined with the Management Report of PVA TePla AG – gives a true and fair view of the development and performance of the business and the position of the Group, together with a description of the principle opportunities and risks associated with the expected development of the group.”

Wettenberg, March 19, 2009

Peter Abel Arnd Bohle Chief Executive Officer Chief Financial Officer management and group management report areconsolidatedthe examinedfinancial statements combined the and disclosures evidence supporting the in the andsystem The effectiveness of the accounting-related internaltaken intocontrol account in the determinationGroup and ofexpectations audit as to procedures.possible misstatements are activitiesandthe economic andlegal environment ofthe reasonablewith business assurance. the Knowledge of combined the management in and group and management framework report are detected reporting financial applicable the with accordance statements in financial consolidated the in operations of results and position financial assets, net the presentation of the affecting misstatements materially that such audit the perform and plan we that require standards Those Germany). Auditors Public in Institute ofWirtschaftsprüfer der – (IDW Institut the by promulgated statements financial of audit the for standards accepted generallyGerman and HGB 317 section with accordance instatements consolidated financial the of audit our conducted We management report based on our audit. group management combined and thestatements and consolidated financial the on opinion an express to is of the Company’s legal representatives. Our responsibility responsibility the German Commercial is – Code) (HGB Handelsgesetzbuch the of (1) 315a section pursuant to additional requirements commercialthe German law of report in accordance with IFRSs as adopted by the andEUthecombined and management andgroup management preparationThe consolidatedtheof financial statements forthe fiscal year from January 1 to December 31, 2008. management group reportcombined management and to the consolidated financial statements, togetherchanges with in equity, the the cash flow statement and the notes incomebalance statement, sheet, the statement the of preparedTePlaPVAbyWettenberg, AG, comprising the consolidated financial the audited statements have We Auditor’s Report Balance sheet Cosolidated Income Statement Cosolidated Cosolidated Cash Flow Statement Cosolidated Statement of ChangesinEquity significant representatives, legal estimates the by made and used principles consolidation and accounting the determinationentitiesincludedofconsolidation,be into statements of those entities included in consolidation, financial annual includes assessing audit the the The audit. the of framework the within basis test a onprimarily development. andsuitably presents the opportunities and risks of future providessuitablea understanding ofthe Group’s position with the consolidated financial statementsmanagement and, as and a group whole, management report is consistent requirements. combined these accordance The with in financial position operations results Groupand the of of assets,netfairthetrueandviewofgiveaand HGB (1) 315a section to pursuant law commercial German of additional requirements the and EU the by adopted as IFRSs with comply statements financial consolidated the audit, our findings of the on opinion, based our In Our audit has not led to any reservations. that our audit provides a reasonable basis for our opinion.management combined and group management the report. We believe and statements the financial consolidated of presentation overall the evaluating as well as German PublicAuditor Wirtschaftsprüfer Marcus Grzanna Steuerberatungsgesellschaft Wirtschaftsprüfungsgesellschaft Ebner StolzMönningBachemGmbH&Co.KG Frankfurt/Main, March20,2009

Notes totheConsolidated Financial Statements Changes inFixedAssets08/07 Consolidated Statementof German PublicAuditor Wirtschaftsprüfer Thomas Klemm Auditor’s Report 133

SINGLE-ENTITY Group miscellaneous FINANCIAL STATEMENTS FINANCIAL STATEMENTS MANAGEMENT REPORT THE COMPANY FOR OUR SHAREHOLDERS

2008 SINGLE-ENTITY ANNUAL FINANCIAL STATEMENTS PVA TEPLA AG

Balance Sheet 136 Income Statement 138 Notes to the Annual Financial Statements 139 Assets analysis of the year 2008 154 Assets analysis of the year 2007 156 Responsibility Statement 158 Auditor´s Report 159

SINGLE-ENTITY FINANCIAL STATEMENTS 136 PVA TePla Annual Report 2008

PVA TePla AG, Wettenberg Balance Sheet as at December 31, 2008

in EUR Dec. 31, 08 Dec. 31, 07 Assets A. Non-current assets I. Intangible assets 1,063,073.92 1,321,024.56 Concessions, industrial property rights, similar rights and assets, 1,063,073.92 1,321,024.56 and licences to such rights and assets II. Property, plant and equipment 25,103,688.12 14,993,980.48 1. Land, property rights and buildings, including buildings 23,528,341.89 2,712,997.94 on third party land 2. Plant and machinery 268,255.76 193,858.39 3. Other plant and equipment, fixtures und fittings 1,232,690.47 546,351.37 4. Advance payments and assets under construction 74,400.00 11,540,772.78 III. Financial assets 12,112,221.92 15,311,821.92 Shares in affiliated companies 12,112,221.92 15,311,821.92 Total non-current assets 38,278,983.96 31,626,826.96

B. Current assets I. Inventories 1,853,222.07 771,328.75 1. Raw materials and operating supplies 3,781,690.37 2,927,319.06 2. Work in progress 29,241,359.73 28,854,155.73 3. Finished products and goods 1,232,028.34 603,260.92 4. Advance payments 1,853,222.07 771,328.75 less advance payments received on orders -34,255,078.44 -32,384,735.71 II. Receivables and other assets 36,095,711.05 40,147,584.28 1. Trade receivables 9,952,481.69 5,184,833.20 2. Receivables from affiliated companies 24,555,629.57 33,262,122.62 3. Other assets 1,587,599.79 1,700,628.46 III. Cash and cash equivalents 2,567,229.04 4,342,549.44 Total current assets 40,516,162.16 45,261,462.47

C. Prepaid expenses 347,388.91 384,745.13

Total 79,142,535.03 77,273,034.56 Notes to the Annual Income Statement Financial Statements Assets analysis 08/07 Auditor’s Report 137

Balance Sheet

PVA TePla AG, Wettenberg Balance Sheet as at December 31, 2008

in EUR Dec. 31, 08 Dec. 31, 07 Liabilities and shareholders‘ equity A. Shareholders‘ equity I. Share Capital 21,749,988.00 21,749,988.00 II. Capital reserves 2,174,998.80 2,174,998.80 III. Retained Earnings 3,533,955.29 -2,368,904.54 FOR OUR SHAREHOLDERS Total shareholders‘ equity 27,458,942.09 21,556,082.26

B. Non-current liablities 1. Provisions for pensions and similar obligations 5,876,973.00 4,640,251.00 2. Provisions for taxes 1,238,907.81 95,415.86 3. Other provisions 8,916,993.17 5,320,503.57

Total non-current liablities 16,032,873.98 10,056,170.43 THE COMPANY

C. Current liabilities 1. Bank loans and overdrafts 14,296,885.50 13,026,097.06 2. Advance payments received on orders 9,005,588.80 20,160,147.11 3. Trade payables 3,829,008.65 1,907,915.78 4. Payables to affiliated companies 7,479,535.81 9,850,959.40

5. Other liabilities 1,039,700.20 715,662.52 Total current liabilities 35,650,718.96 45,660,781.87 MANAGEMENT REPORT Total 79,142,535.03 77,273,034.56 GROUP FINANCIAL STATEMENTS SINGLE-ENTITY FINANCIAL STATEMENTS miscellaneous Notes to the Annual 138 BalancePVA TePla sheet Annual Report 2008 Financial Statements Assets analysis 08/07 Auditor’s Report

Income Statement

PVA TePla AG, Wettenberg Income Statement January 1 - December 31, 2008

in EUR Jan. 01 - Dec. 31, 08 Jan. 01 - Dec. 31, 07

1. Revenue 118,742,215.15 46,769,478.82 2. Cost of Sales -102,625,437.31 -35,928,594.48 3. Gross profit 16,116,777.84 10,840,884.34 4. Selling and distribution expenses -6,557,701.02 -5,859,674.09 5. General administrative expenses -5,827,504.88 -4,640,782.52 6. Research and development expenses -997,211.29 -921,064.70 7. Other operating income 3,197,353.64 2,377,322.97 8. Other operating expenses -5,536,278.96 -2,168,813.80 9. Income from participating interests - of which from affiliated companies EUR 1,434,512.37 1,434,512.37 2,749,476.61 (previous year EUR 2,749,476.61) 10. Profit and loss transfer agreement 9,898,024.79 1,105,629.96 11. Other interest and similar income - of which from affiliated companies EUR 432,335,02 608,351.99 582,868.16 (previous year EUR 351,716.45) 12. Depreciation of financial assets -3,199,600.00 -2,370,000.00 13. Interest and similar expenses - of which from affiliated companies EUR -165,508,34 -965,118.11 -252,583.18 (previous year EUR -37,666.67) 14. Net profit before tax 8,171,606.37 1,443,263.75 15. Income taxes -2,181,443.52 -52,049.70 16. Other taxes -87,303.02 -139,035.18 17. Net profit for the year 5,902,859.83 1,252,178.87 18. Loss brought forward from the previous year -2,368,904.54 -19,944,909.50 19. Transfer from capital reserve 0.00 15,710,275.83 20. Transfer from revenue reserves 0.00 613,550.26 from other reserves 21. Retained earnings (previous year retained losses) 3,533,955.29 -2,368,904.54 Balance Sheet Income Statement Assets analysis 08/07 Auditor’s Report 139

Notes to the Annual Financial Statements

Notes to the Annual Financial Statements of PVA TePla AG, Wettenberg, for the Financial Year 2008 FOR OUR SHAREHOLDERS

A. General Information and Explanatory 3. Accounting Policies Notes Intangible fixed assets and property, plant and equipment are recognized at acquisition and manufacturing costs 1. General Information that are to be capitalized for tax purposes, less normal

straight-line depreciation and amortization. The useful THE COMPANY The annual financial statements of PVA TePla AG were life of intangible assets, plant and machinery and fixtures prepared according to the regulations of the 3rd Book and fittings is 3 - 15 years. The useful life of buildings is of the Handelsgesetzbuch (HGB - German Commercial recognized at 25 to 33 years. Leasehold improvements Code) (Sections 238 et seq. of the HGB). In particular, are depreciated across the shorter contract term if compliance with the supplementary regulations for applicable. corporations (Sections 264 et seq. of the HGB) was required. In addition, compliance with the regulations Moveable assets are depreciated in the year of of the Aktiengesetz (AktG - German Stock Corporation acquisition on a time-apportioned basis. Low-value Act) was required. assets with an acquisition value of up to EUR 150 are MANAGEMENT REPORT depreciated in full in the year of acquisition. Low-value Regarding the income statement, the cost of sales assets with an acquisition value of over EUR 150 and method was applied in accordance with Section 275 under EUR 1,000 are subject to straight-line depreciation (3) of the HGB. via a collective item over a 5-year period.

As a publicly listed stock corporation, PVA TePla AG In the event of permanent impairment, intangible fixed GROUP is a large corporation according to Section 267 (3) assets and property, plant and equipment are subject sentence 2 of the HGB. to special write-downs at the lower of cost or market

value. FINANCIAL STATEMENTS

2. Changes in Presentation Shares in affiliated companies are capitalized at acquisition cost. In the case of participating interests There are no changes in presentation compared with that are likely to generate a permanent capital loss, the the previous year. lower of cost or market value is recognized. Regarding shares in affiliated companies, two write-downs were carried out on the balance sheet date at the lower of SINGLE-ENTITY

cost or market value in the year under review. FINANCIAL STATEMENTS

Inventories are recognized at acquisition or manufacturing costs, unless a lower value is required according to Section 253 (3) of the HGB. miscellaneous 140 PVA TePla Annual Report 2008

Raw materials and operating supplies are valued using In line with Section 253 (1) HGB, provisions have the principle of lower of cost or market value at weighted been recognized at the level of the amounts deemed average cost prices. The carrying amount of finished necessary according to prudent business judgment. products and work in progress contains the cost of materials at acquisition cost, the direct labor incurred, Provisions for pension obligations were valued on the special direct costs of production and appropriate basis of an actuarial calculation taking into account portions of material and production overheads. Section 6a of the German Income Tax Act and with application of a discount rate of 4.75% as well as the For all inventories, inventory risks arising from storage 2005G mortality tables issued by Prof. Klaus Heubeck. duration, reduced usability, lower reproduction costs, Provisions for anniversaries are valued actuarially at net decreased replacement costs or non cost-covering present value on the basis of an interest rate of 5.5%. selling prices must be appropriately taken into account The provision for obligations arising from the part- by means of itemized deductions. time pre-retirement scheme comprises expenditure on wages and salaries as well as top-up benefits. This Advance payments made are shown exclusive of value provision is set up in respect of individual contractual ar- added tax. Advance payments received on orders are rangements. As in previous years, no provision is made carried at the principal amount. for potential future qualifiers.

Receivables, other assets, cash and cash equivalents Liabilities are measured at the repayment amount. and prepaid expenses are recognized at the principal amount. Receivables and liabilities in a foreign currency have been recognized at the exchange rate on the date of the Discounts shown in prepaid expenses are written transaction or at less favorable selling or bid rates on the down on a straight-line basis over the fixed-interest balance sheet date. During the financial year, receivables period of the corresponding loans. and liabilities were entered in foreign currency at the respective official middle rate of the transaction date. Appropriate specific and global valuation allowances against trade receivables are set up to cover possible The valuation and accounting methods are unchanged risks of default. from the previous year.

Balance Sheet Income Statement Assets analysis 08/07 Auditor’s Report 141

Notes to the Annual Financial Statements

B. Information and Explanatory Notes on The breakdown of receivables from affiliated companies Items in the Balance Sheet and Income is as follows: EUR 13,911 thousand from advance Statement payments made for inventories (2007: EUR 23,727 thou-sand), EUR 7,645 thousand (2007: EUR 1,819 thousand) from trade receivables and EUR 3,000 1. Details on Items in the Balance Sheet thousand (2007: EUR 7,716 thousand) from other assets. FOR OUR SHAREHOLDERS Non-current assets The development of the individual non-current asset Receivables from affiliated companies contained items items is set out in the assets analysis (cf. annex to the totaling EUR 0 thousand (2007: EUR 1,072 thousand) notes to the financial statements). that legally only arise after the balance sheet date.

Current assets Prepaid expenses include discounts of EUR 315

The remaining terms of receivables and other assets thousand (2007: EUR 337 thousand). THE COMPANY amounted to less than one year.

Shareholders‘ equity

Net profit Transfer from

in EUR ‘000 Jan. 1, 08 for the year reserves Dec. 31, 08

Share capital 21,750 21,750

Capital reserves 2,175 2,175 MANAGEMENT REPORT Revenue reserves 0 0 Unappropriated retained -2,369 5,903 3,534 losses/earnings Total 21,556 5,903 0 27,459 GROUP The ordinary share capital is divided into 21,749,988 The shareholders‘ meeting of PVA TePla AG on June no par value bearer shares, each share representing 15, 2007, authorized the Management Board to

EUR 1.00 of the ordinary share capital. All shares in the increase - with the approval of the Supervisory Board - FINANCIAL STATEMENTS company are fully paid up. the company‘s ordinary share capital on one or more occasions by June 14, 2012 by up to EUR 10,874,994 There was no contingent capital as at December 31, in total by issuing up to 10,874,994 new bearer shares 2008. against contributions in cash or in kind, and thereby to exclude shareholders from subscribing, insofar as this is legally permissible. No capital increases from this authorized capital were resolved in 2008. SINGLE-ENTITY FINANCIAL STATEMENTS miscellaneous 142 PVA TePla Annual Report 2008

Provisions Provisions for taxes include provisions for deferred tax liabilities of EUR 0 thousand (2007: EUR 16 thousand).

Other provisions developed as follows:

in EUR ‘000 Jan. 1, 08 Utilization Release Addition Dec. 31, 08

Year-end closing and audit 268 256 12 303 303 Archiving 153 32 41 84 164 Overtime/flexible work time 263 263 0 310 310 Vacation 582 582 0 645 645 Employer‘s liability ins. assoc. 92 90 2 97 97 Anniversaries 81 0 0 12 93 Bonus/special payment 425 425 0 1,235 1,235 Commissions 425 425 0 376 376 ERA structural fund 212 0 0 0 212 Insurances 91 91 0 172 172 Outstanding invoices 1,117 1,092 0 893 918 Revenue deductions 0 0 0 900 900 Warranty 541 86 0 1,271 1,726 Penalties 179 75 104 766 766 Impending losses on rentals 492 163 0 22 351 Real estate transfer tax act /tax audit 136 0 0 95 231 Others 264 237 10 401 418 Total 5,321 3,817 169 7,582 8,917

Other provisions include provisions of EUR 16 Provisions for impending losses on rentals contain thousand (2007: EUR 68 thousand) for the part-time long-term components of EUR 188 thousand (2007: pre-retirement agreement signed with one employee EUR 329 thousand). Other provisions contain long- and the provision for an interest hedge (EUR 262 term components of EUR 211 thousand (2007: EUR thousand, 2007: EUR 0 thousand) in accordance with 196 thousand). All other provisions are short-term. the explanatory notes in C. 4 of these disclosures.

Balance Sheet Income Statement Assets analysis 08/07 Auditor’s Report 143

Notes to the Annual Financial Statements

Accounts payable The residual maturities and the security of accounts payable are set out in detail in the maturity structure of accounts payable below:

Residual maturity Total Secured by

in EUR ‘000 up to 1 y. 1 - 5 y. over 5 y. FOR OUR SHAREHOLDERS

1. Liabilities to banks 429 1,684 12,184 14,297 s.b. 2. Advance payments received 9,005 0 0 9,005 on orders generally 3. Trade payables 3,829 0 0 3,829 reservation of ownership

4. Payables to affiliated companies 7,480 0 0 7,480 THE COMPANY 5. Other liabilities 1,040 0 0 1,040 Total 21,783 1,684 12,184 35,651

Advance payments received on orders deduced from payables, and EUR 4,902 thousand (2007: EUR 4,071 inventories on the assets side amounting to EUR thousand) results from other payables. 34,255 thousand (2007: EUR 32,385 thousand) have a residual maturity of up to one year. Other liabilities include tax liabilities of EUR 501 MANAGEMENT REPORT thousand (2007: EUR 198 thousand) as well as social Liabilities to banks are secured by charges on land to security obligations of EUR 2 thousand (previous year: the amount of EUR 18,000 thousand. EUR 1 thousand).

EUR 2,577 thousand (2007: EUR 5,780 thousand) of payables to affiliated companies result from trade GROUP FINANCIAL STATEMENTS SINGLE-ENTITY FINANCIAL STATEMENTS miscellaneous 144 PVA TePla Annual Report 2008

2. Information on Income Statement Items

The revenue breakdown by individual region and segment is as follows:

Region EUR ‘000

Germany 22,863 Europe (excluding Germany) 7,408 North America 1,196 Asia 87,131 Others 144 Total 118,742

Division EUR ‘000

Vacuum Systems 41,876 Crystal Growing Systems 66,268 Plasma Systems 10,598 Total 118,742

Cost of materials

EUR ‘000

Cost of raw materials, operating supplies and goods purchased 81,901 Cost of purchased services 3,759

Personnel expenses

EUR ‘000

Wages and salaries 17.321 Social security costs as well as post-employment of which in respect of old age pensions 3,803 EUR 1,386 thousand (2007: EUR 537 thousand)

Expenses and income in relation to previous accounting periods Other prior-period expenses of EUR 202 thousand Prior-period income of EUR 377 thousand was accrued contain other taxes (EUR 87 thousand), income in the year under review. This chiefly includes income taxes (EUR 108 thousand) as well as other operating from reversal of provisions, derecognition of liabilities expenses (EUR 7 thousand). and reversal of specific valuation allowances. No other significant prior-period expenses were incurred.

Balance Sheet Income Statement Assets analysis 08/07 Auditor’s Report 145

Notes to the Annual Financial Statements

C. Supplementary Information

1. Equity Investments

As at the balance sheet date, the company had an equity investment of at least 20% in the following enterprises: FOR OUR SHAREHOLDERS

Corporate Shareholders‘ equity Net income/loss Name domicile Capital stake Dec. 31, 08 2008 EUR ‘000 EUR 000 Corona/CA, PVA TePla America Inc. 100% 2,833 -236 USA Jena, PVA Jena Immobilien GmbH 100% 3,172 **) 0 Germany THE COMPANY Wettenberg, Crystal Growing Systems GmbH 100% 2,232 359 Germany***** Xi´an, Xi´an HuaDe CGS Ltd. 51% *) -352 -337 China Jena, PVA Löt- und Werkstofftechnik GmbH 100% 25 **) 0 Germany Wettenberg, PVA Control GmbH 100% 100 **) 0 Germany Hanau, Vakuum-Anlagen Service GmbH 100% s.b. s.b.

Germany MANAGEMENT REPORT Jena, PVA Vakuum Anlagenbau Jena GmbH 100% ***) 233 **) 0 Germany Cedar Grove/ PVA MIMtech LLC 50% ****) 1,279 651 NJ, USA Feldkirchen, Plasma Systems GmbH 100% -358 -31 Germany Siegen, GROUP PlaTeG GmbH 100% -525 -560 Germany

PVA TePla Singapore Pte. Ltd. Singapore 100% 446 433 FINANCIAL STATEMENTS

Aalen, PVA TePla Analytical Systems GmbH 100% 1.490 1.178 Germany

*) Equity investment purchased in 2004 by ****) Indirect equity investment via PVA TePla SINGLE-ENTITY

Crystal Growing Systems GmbH as a trustee America Inc. (associated) FINANCIAL STATEMENTS for PVA TePla AG. Recognized at PVA TePla AG *****) A change of corporate domicile of Crystal as the trustee Growing Systems GmbH was applied for **) On the basis of a profit transfer agreement on December 23, 2008 and entered in ***) Indirect equity investment via PVA Jena the commercial register on February 18, Immobilien GmbH 2009. miscellaneous 146 PVA TePla Annual Report 2008

The equity interest in Vakuum-Anlagenbau Service and its subsidiaries Crystal Growing Systems GmbH GmbH (100.00%, after deduction of treasury shares) and PVA Control GmbH have also been moved to was fully written off in 2002. Due to impending Wettenberg and entered in the commercial register. insolvency and overindebtedness, insolvency In this respect, a change of corporate domicile of proceedings were initiated for the assets of the Crystal Growing Systems GmbH was applied for on company on April 25, 2003. As at December 31, 2002, December 23, 2008 and entered in the commercial the shareholders‘ equity of the company totaled EUR register on February 18, 2009. -448 thousand, and earnings for the financial year 2002 amounted to EUR -630 thousand. - After the sale of the business operations of UV SYSTEC Gesellschaft für UV-Strahler und Systemtechnik According to a notification from the liquidator dated mbH, Jena, the company was renamed as PVA Jena February 4, 2009, insolvency proceedings are still in Immobilien GmbH, based in Jena. progress. - As part of the merger between KSI Krämer Scientific The following changes have taken place compared Instruments GmbH, Herborn, and SAM TEC GmbH, with the 2007 annual financial statements: Aalen, the name of the company was changed to - Following the relocation of production and PVA TePla Analytical Systems GmbH. The company‘s administration, the registered offices of PVA TePla AG registered office is in Aalen.

2. Personnel

PVA TePla AG had a total of 279 employees at year- end (previous year: 234) and on average for the year, the company had 268 employees (2007: 216). The average number of employees by function has changed compared to the previous year as follows:

Staff number by function (yearly average) 2008 2007

Administration 35 24 Sales 28 26 Engineering, research and development 52 46 Production and service 153 120 Total employees 268 216

Balance Sheet Income Statement Assets analysis 08/07 Auditor’s Report 147

Notes to the Annual Financial Statements

3. Contingencies and Other Financial As part of the financing of the construction of an Commitments assembly area of PVA Jena Immobilien GmbH at the Jena location, PVA TePla AG has assumed joint and Contingent Liabilities to Affiliated Companies several liability for the loan of EUR 1,000 thousand The subsidiary PlaTeG GmbH has taken out a loan of taken out to finance this investment. The loan must be EUR 600 thousand for financing in the context of the repaid over 10 years in equal half-yearly installments purchase and transfer agreement on the acquisition of and is also secured by charges on land. The carrying FOR OUR SHAREHOLDERS the business of Plasma Technik Grün GmbH. This loan amount of the loan as at December 31, 2008 was EUR has a term of 5 years with payment by installments. 800 thousand. The carrying amount of the loan as at December 31, 2008 was EUR 288 thousand. To secure this loan, The subsidiary PVA Löt- und Werkstofftechnik GmbH PVA TePla AG has provided an absolute fixed-liability (LWT) has taken out various loans, each one to finance a guarantee. brazing furnace. This initially involves a investment loan

of EUR 429 thousand that is repayable by March 2013. THE COMPANY As part of the financing of the construction of The loan is partly secured by transfer of ownership an assembly area of the subsidiary PVA Vakuum of the invested equipment and by charges on land. Anlagenbau Jena GmbH at the Jena location, PVA PVA TePla AG has submitted letters of comfort to the TePla AG has assumed joint and several liability for bank for this loan and has entered into a repurchase the loan of EUR 1,600 thousand taken out to finance obligation for the equipment financed by this loan. The this investment. The loan must be repaid over 10 years carrying amount of the loan as at December 31, 2008 in equal quarterly installments and is also secured by was EUR 241 thousand. charges on land. The carrying amount of the loan as at December 31, 2008 was EUR 1,080 thousand. Furthermore, LWT has taken out a investment loan of MANAGEMENT REPORT EUR 509 thousand that is repayable by July 2013 as As part of the financing of further construction of well as another investment loan of EUR 640 thousand an assembly area of the subsidiary PVA Vakuum that is repayable by October 2015. These two loans are Anlagenbau Jena GmbH at the Jena location, PVA secured by absolute guarantees of PVA TePla AG. The TePla AG has assumed joint and several liability for the total carrying amount of the two loans as at December loan of EUR 2,000 thousand taken out to finance this 31, 2008 was EUR 608 thousand. GROUP investment. The loan must be repaid over 10 years in equal half-yearly installments and is also secured by As part of the liquidity management of the PVA TePla charges on land. The carrying amount of the loan as at Group, the credit lines are generally agreed uniformly FINANCIAL STATEMENTS December 31, 2008 was EUR 1,600 thousand. for the Group on the basis of a credit rating of the Group, which is also uniform. The loan commitment is then The subsidiary PVA Jena Immobilien GmbH has taken made to PVA TePla AG with the additional possibility out a investment loan of EUR 332 thousand. The loan of utilization for subsidiaries on a case-by-case basis. is repayable by December 2022 and partly secured In these cases, assumption of joint and several liability by charges on land. PVA TePla AG has submitted a by PVA TePla AG is generally required for utilization by letter of comfort to the bank for this loan. The carrying the subsidiaries. SINGLE-ENTITY amount of the loan as at December 31, 2008 was EUR FINANCIAL STATEMENTS 258 thousand. miscellaneous 148 PVA TePla Annual Report 2008

In the context of this procedure, PVA TePla AG assumed GmbH, Jena, PVA Löt- und Werkstofftechnik GmbH, the following liability as at December 31, 2008: Jena, PVA Control GmbH, Wettenberg, PVA Jena Immobilien GmbH, Jena and PlaTeG GmbH, Siegen, - Joint and several liability for utilization of a guarantee with a maximum amount of EUR 25,000 thousand. facility by Crystal Growing Systems GmbH (CGS), The actual utilization of this facility by CGS, PVA Wettenberg, with a maximum amount of EUR 7,500 Vakuum Anlagenbau Jena and PlaTeG as at December thousand. The actual utilization of this facility by CGS 31, 2008 totaled EUR 1,897 thousand. as at December 31, 2008 amounted to EUR 2,260 thousand. As at the balance sheet date, there were control and - Joint and several liability for utilization of a guarantee profit transfer agreements in place in relation to the facility by Crystal Growing Systems GmbH (CGS), equity holdings PVA Löt- und Werkstofftechnik GmbH, Wettenberg, with a maximum amount of EUR 22,000 Jena, PVA Control GmbH, Wettenberg, and PVA Jena thousand. The actual utilization of this facility by CGS Immobilien GmbH. as at December 31, 2008 amounted to EUR 1,161 thousand. A breakdown of other financial commitments of the - Joint and several liability for utilization of an additional company arising from rental or lease agreements and guarantee facility by Crystal Growing Systems GmbH more long-term agreements in procurement in relation (CGS), Wettenberg, PVA Vakuum Anlagenbau Jena to their residual term is set out below:

Residual terms

in EUR ‘000

Up to one year 2,245 Between 1 and 5 years 1,982 More than 5 years 2

Balance Sheet Income Statement Assets analysis 08/07 Auditor’s Report 149

Notes to the Annual Financial Statements

4. Derivative Financial Instruments A currency option transaction with a volume of EUR 641 thousand or USD 1,000 thousand was concluded Exchange Rate Hedging for an order of the Crystal Growing Systems segment. In some cases, sales of assets are concluded in foreign As things stand, the option will not be taken up due to currency. As a rule, forward exchange contracts are the low USD/EUR exchange. As no further risks arise entered into to hedge exchange rate risks in these from this transaction, it has not been recorded in the cases. balance sheet. FOR OUR SHAREHOLDERS

As at December 31, 2008, 8 forward exchange Interest Hedges contracts for 4 customer orders with a total value of To hedge the interest risk for the financing of the EUR 4,561 were open. The terms coincide with the investment in new buildings at the Wettenberg payment schedules of the underlying transactions. location, two interest hedges with a volume of EUR The fair value of the forward exchange contracts 4.833 million were concluded. The volume and term

amounts to EUR 46 thousand and arises from the of these hedging transactions are consistent with the THE COMPANY difference in the valuation of these contracts at the corresponding loans. As at December 31, 2008, the forward currency rate on the balance sheet date for the fair value of both hedging transactions was EUR -328 respective remaining term of the contract compared thousand (2007: 266). This value was calculated on with the concluded forward currency rate. The the basis of a fair value measurement. underlying and hedging transactions have not been recorded in the balance sheet, as the transactions are As only 20% of the maximum loan amount underlying in a hedging relationship and form a micro hedge. the interest hedge was utilized as at December 31, 2008, a provision for expected losses at the level of the pro rata fair value (EUR 262 thousand) was set up MANAGEMENT REPORT for the portion above and beyond this. GROUP FINANCIAL STATEMENTS SINGLE-ENTITY FINANCIAL STATEMENTS miscellaneous 150 PVA TePla Annual Report 2008

5. Executive Bodies - Arnd Bohle, Bochum (CFO) Business graduate The Executive Board consists of: Managing Director of the following Group companies: - Peter Abel, Wettenberg (Chairman/CEO) • Crystal Growing Systems GmbH, Wettenberg Engineer • PlaTeG GmbH, Siegen

Managing Director of the following Group companies: No membership of supervisory bodies. • Crystal Growing Systems GmbH, Wettenberg The total remuneration of members of the executive • PVA Jena Immobilien GmbH, Jena-Maua board in the financial year 2008 amounted to EUR 1,429 • Plasma Systems GmbH, Feldkirchen thousand. The remuneration of Management Board • PVA TePla Analytical Systems GmbH, Aalen members consists of a basic salary, other benefits (primarily monetary benefit from the use of a company And of the following non-Group companies: car and subsidies for health insurance premiums) and • Meßtechnik Wetzlar GmbH, Wetzlar until June 30, 2008 a performance-based bonus. The bonus is measured • PA Beteiligungsgesellschaft mbH, Wettenberg as a percentage of the net profit of the PVA TePla Group. On this basis, members of the executive board Member of the following supervisory bodies: received the following remu-neration in the financial • PVA TePla America Inc., Corona, USA (Director) year 2008: • Xi‘an HuaDe CGS Ltd., Xi‘an, China (Chairman of the Supervisory Board) • ScheBo Biotech AG, Giessen (Chairman of the Supervisory Board) • OPTOTEC GmbH, Wettenberg (Chairman of the Advisory Board) • 3D Präzisionstechnik AG, Asslar (Chairman of the Supervisory Board)

Remuneration in 2008

Other in EUR ‘000 Salary remuneration Bonuses Total

Peter Abel 240 13 800 1,053 Arnd Bohle 180 8 188 376

The amounts shown for bonuses contain amounts paid in 2008 for the financial year 2007 and reduced by amounts disclosed in the provision set up in the financial year 2007. On top of that comes the provision set up in 2008 for the financial year 2008. The bonus payment for Mr. Abel in 2008 includes a one-off component of EUR 500 thousand.

Balance Sheet Income Statement Assets analysis 08/07 Auditor’s Report 151

Notes to the Annual Financial Statements

In addition, Peter Abel has a pension entitlement Dr. Peter Friedemann, Königsbrunn arising from his previous work at the company. As at (Deputy Chairman until June 19, 2008) December 31, 2008, there was a provision of EUR 397 Spokesman for the German association for the protection thousand for this. of small shareholders (SdK), Munich

No share options were granted to members of the No further membership of supervisory bodies. executive board in the financial year 2008. There are FOR OUR SHAREHOLDERS no benefits in the event of a change in the constitution Dr. Gernot Hebestreit, Leverkusen (member of the of the shareholder majority. Supervisory Board from June 19, 2008) Managing Partner of Susat & Partner OHG (auditors), EUR 61 thousand was paid to former members of the Cologne. management board as pensions in 2008. As at the Director at Grant Thornton GmbH, Hamburg balance sheet date, there was a provision of EUR 950 Chairman of the Executive Board of the Association for

thousand for these pension obligations. Corporate Growth Rhein-Ruhr e.V., Cologne THE COMPANY

The members of the Supervisory Board are: Other membership of supervisory bodies: • Comvis AG, Düsseldorf (Deputy Chairman of the Alexander von Witzleben, Weimar (Chairman) Supervisory Board) Feintool International Holding AG, Lyss (President of • Grant Thornton International Ltd., London, UK the Administration Board) from January 1, 2009 (member of the Board of Governors)

Member of the Executive Board of Franz Haniel & Cie. GmbH, Duisburg (until December 31, 2008) Prof. Dr. Günter Bräuer, Cremlingen MANAGEMENT REPORT Other membership of supervisory bodies: Director of the Fraunhofer Institute for Laminate and • Analytik Jena AG , Jena (Chairman of the Supervisory Surface Engineering, Braunschweig, and Managing Board) until April 4, 2008 Director of the Institute for Surface Engineering (IOT) • Caverion GmbH, Stuttgart (Chairman of the Advisory at the Technical University of Braunschweig Board) until December 31, 2008 • VERBIO AG, Zörbig (Deputy Chairman of the Other membership of supervisory bodies: GROUP Supervisory Board) • PEP Photonos European Photovoltaics, Mainz • TAKKT AG, Stuttgart (Deputy Chairman of the (member of the Supervisory Board from May 1, 2008)

Supervisory Board) • AMG Coating Technologies GmbH, Hanau (member FINANCIAL STATEMENTS • Feintool International Holding AG, Lyss (Vice of the Advisory Board from June 1, 2008) President of the Administration Board) until December 31, 2008 • Kaefer Isoliertechnik GmbH & Co. KG, Bremen (member of the Advisory Board) SINGLE-ENTITY FINANCIAL STATEMENTS miscellaneous 152 PVA TePla Annual Report 2008

Remuneration of the Supervisory Board EUR 10 thousand and each ordinary member receives In line with the Articles of Association, the members of a sum of EUR 5 thousand. If any member leaves the the Supervisory Board receive remuneration of 1% of Supervisory Board during the course of the year, they the net profit from ordinary activities, but no more than receive pro rata remuneration. EUR 100 thousand. This total remuneration is allocated to the Supervisory Board members in such a way that On this basis, the Supervisory Board received the Chairman of the Supervisory Board receives double remuneration of EUR 100 thousand in 2008 (2007: the amount of an ordinary Supervisory Board member. EUR 40 thousand), broken down as follows: As minimum remuneration for each financial year, the Chairman of the Supervisory Board receives a sum of

Jan. 01 - Dec. 31, 08 Jan. 01 - Dec. 31, 08 in EUR ‘000 Fixed remuneration Variable remuneration

Alexander von Witzleben 10 40 Prof. Dr. Günter Bräuer 5 20 Dr. Gernot Hebestreit (ab 19.06.2008) 3 11 Dr. Peter Friedemann (bis 19.06.2008) 2 9 Total 20 80

D&O insurance has been taken out to cover the 8. Disclosures under Section 160 (1) No. 8 liabilities of members of executive bodies under civil of the AktG law. In the financial year 2008, a premium of EUR 17 thousand (2007: EUR 17 thousand) was paid for this Mr. Peter Abel, Wettenberg has notified us under insurance. Section 21 (1) and Section 22 (1) no. 1.1 and 1.2 of the German Securities Trading Act that his share of the voting rights in our company on November 5, 2002 6. Audit Fees exceeded the threshold of 25% and now amounts to 29.99%. Of that, 29.32% of the voting rights under Audit fees recognized in the financial year amounted to Section 22 (1) no. 1 and 2 of the German Securities a) Audit of the financial statements EUR 135 thousand Trading Act are allocated to him. b) Other certification and valuations EUR 0 thousand c) Tax advisory services EUR 0 thousand Deutsche Bank AG, Frankfurt, Germany, notified us on d) Other services EUR 0 thousand August 21, 2007 under Section 21 (1) and Section 24 of the German Securities Trading Act in conjunction with Section 32 (2) of the German Investment Act 7. Declaration of Compliance that its subsidiary DWS Investment GmbH, Frankfurt, Germany, exceeded the threshold of 5% of the voting The declaration of compliance with the German rights in PVA TePla AG, Wettenberg, Germany on Corporate Governance Code by the Executive Board August 20, 2007 and now holds a 5.01% share of the and Supervisory Board, as required by Section 161 of voting rights. This is equal to 1,089,749 voting rights. the Aktiengesetz (AktG - German Stock Corporation Act), was issued and published to shareholders. Mr. Wilhelm Hofmann, Germany, notified us on October 29, 2007 under Section 21 (1) of the German Securities Trading Act that his share of the voting rights

Balance Sheet Income Statement Assets analysis 08/07 Auditor’s Report 153

Notes to the Annual Financial Statements

in PVA TePla AG, Wettenberg, Germany fell below the threshold of 5% of the voting rights on October 23, 2007 and now holds a 4.64% share of the voting rights. This is equal to 1,010,086 voting rights.

As at December 31, 2007, PA Beteiligungsgesellschaft, based in Wettenberg and belonging to Mr. Abel, FOR OUR SHAREHOLDERS had a participating interest of more than 25% in the company.

9. Consolidated Financial Statements

PVA TePla AG prepares consolidated financial THE COMPANY statements in accordance with IFRS as per Article 4 of Regulation (EC) no. 1606/2002 of the European Parliaments and of the Council dated July 19, 2002 on the application of international accounting standards (OJ EC no. L 243 p. 1) in conjunction with Section 315a (1) HGB, in which the affiliated companies mentioned in Section B. 1. Financial Assets are included. The consolidated financial statements are published in the electronic version of the German Federal Gazette. MANAGEMENT REPORT

10. Profit Appropriation/Retained Losses

The annual financial statements of PVA TePla AG show a net profit for the year of EUR 5,902,859.83 thousand GROUP as at December 31, 2008. EUR 3,533,955.29 is left over after offsetting against the loss brought forward from the previous year. The Executive Board and FINANCIAL STATEMENTS Supervisory Board recommend carrying forward the remaining retained earnings of EUR 3,533,955.29 thousand to the next accounting period.

Wettenberg, March 19, 2009 PVA TePla AG SINGLE-ENTITY FINANCIAL STATEMENTS

Peter Abel Arnd Bohle Chief Executive Officer Chief Financial Officer miscellaneous 154 PVA TePla Annual Report 2008

PVA TePla AG, Wettenberg Assets analysis for the year 2008

Acquisition and manufacturing costs Accumulated amortization and depreciation Book values Balance Additions Transfers Disposals Balance Balance Additions Transfers Balance in EUR Jan. 01, 08 2008 2008 2008 Dec. 31, 08 Jan. 01, 08 2008 2008 Dec. 31, 08 Dec. 31, 08 Dec. 31, 07

I. Intangible assets Concessions, industrial property rights, similar rights and assets, 3,030,856.36 116,836.31 0.00 258,353.82 2,889,338.85 1,709,831.80 374,785.45 258,352.32 1,826,264.93 1,063,073.92 1,321,024.56 and licences in such rights and assets Total 3,030,856.36 116,836.31 0.00 258,353.82 2,889,338.85 1,709,831.80 374,785.45 258,352.32 1,826,264.93 1,063,073.92 1,321,024.56

II. Property, plant and equipment 1. Land, property rights and buildings, including buildings 3,359,776.66 9,553,862.83 11,540,772.78 0.00 24,454,412.27 646,778.72 279,291.66 0.00 926,070.38 23,528,341.89 2,712,997.94 on third party land 2. Plant and machinery 1,750,306.42 136,825.77 0.00 520,385.35 1,366,746.84 1,556,448.03 50,915.59 508,872.54 1,098,491.08 268,255.76 193,858.39 3. Other plant and equipment, 3,462,353.08 1,107,215.21 0.00 1,215,467.89 3,354,100.40 2,916,001.71 377,442.02 1,172,033.80 2,121,409.93 1,232,690.47 546,351.37 fixtures and fittings 4. Advance payments and assets 11,540,772.78 74,400.00 -11,540,772.78 0.00 74,400.00 0.00 0.00 0.00 0.00 74,400.00 11,540,772.78 under construction Total 20,113,208.94 10,827,303.81 0.00 1,735,853.24 29,249,659.51 5,119,228.46 707,649.27 1,680,906.34 4,145,971.39 25,103,688.12 14,993,980.48

III. Financial assets Shares in affiliated companies 22,870,721.92 0.00 0.00 0.00 22,870,721.92 7,558,900.00 3,199,600.00 0.00 10,758,500.00 12,112,221.92 15,311,821.92 Total 22,870,721.92 0.00 0.00 0.00 22,870,721.92 7,558,900.00 3,199,600.00 0.00 10,758,500.00 12,112,221.92 15,311,821.92 Notes to the Annual Balance Sheet Income Statement Financial Statements Auditor’s Report 155

Assets analysis 08/07

I. Intangible assets Concessions, industrial property rights, similar rights and assets, FOR OUR SHAREHOLDERS 3,030,856.36 116,836.31 0.00 258,353.82 2,889,338.85 1,709,831.80 374,785.45 258,352.32 1,826,264.93 1,063,073.92 1,321,024.56 and licences in such rights and assets Total 3,030,856.36 116,836.31 0.00 258,353.82 2,889,338.85 1,709,831.80 374,785.45 258,352.32 1,826,264.93 1,063,073.92 1,321,024.56

II. Property, plant and equipment 1. Land, property rights and buildings, including buildings 3,359,776.66 9,553,862.83 11,540,772.78 0.00 24,454,412.27 646,778.72 279,291.66 0.00 926,070.38 23,528,341.89 2,712,997.94 THE COMPANY on third party land 2. Plant and machinery 1,750,306.42 136,825.77 0.00 520,385.35 1,366,746.84 1,556,448.03 50,915.59 508,872.54 1,098,491.08 268,255.76 193,858.39 3. Other plant and equipment, 3,462,353.08 1,107,215.21 0.00 1,215,467.89 3,354,100.40 2,916,001.71 377,442.02 1,172,033.80 2,121,409.93 1,232,690.47 546,351.37 fixtures and fittings 4. Advance payments and assets 11,540,772.78 74,400.00 -11,540,772.78 0.00 74,400.00 0.00 0.00 0.00 0.00 74,400.00 11,540,772.78 under construction Total 20,113,208.94 10,827,303.81 0.00 1,735,853.24 29,249,659.51 5,119,228.46 707,649.27 1,680,906.34 4,145,971.39 25,103,688.12 14,993,980.48

III. Financial assets MANAGEMENT REPORT Shares in affiliated companies 22,870,721.92 0.00 0.00 0.00 22,870,721.92 7,558,900.00 3,199,600.00 0.00 10,758,500.00 12,112,221.92 15,311,821.92 Total 22,870,721.92 0.00 0.00 0.00 22,870,721.92 7,558,900.00 3,199,600.00 0.00 10,758,500.00 12,112,221.92 15,311,821.92 GROUP FINANCIAL STATEMENTS SINGLE-ENTITY FINANCIAL STATEMENTS miscellaneous 156 PVA TePla Annual Report 2008

PVA TePla AG, Wettenberg Assets analysis for the year 2007

Acquisition and manufacturing costs Accumulated amortization and depreciation Book values Balance Additions Transfers Disposals Balance Balance Additions Transfers Balance in EUR Jan. 01, 07 2007 2007 2007 Dec. 31, 07 Jan. 01, 07 2007 2007 Dec. 31, 07 Dec. 31, 07 Dec. 31, 06

I. Intangible assets Concessions, industrial property rights, similar rights and assets, 2.721.199,63 379,605.08 0.00 69,948.35 3,030,856.36 1,390,330.78 388,325.42 68,824.40 1,709,831.80 1,321,024.56 1,330,868.85 and licences in such rights and assets Total 2,721,199.63 379,605.08 0.00 69,948.35 3,030,856.36 1,390,330.78 388,325.42 68,824.40 1,709,831.80 1,321,024.56 1,330,868.85

II. Property, plant and equipment 1. Land, property rights and buildings, including buildings 1,363,397.56 1,996,379.10 0.00 0.00 3,359,776,66 563,613.72 83,165.00 0.00 646,778.72 2,712,997.94 799,783.84 on third party land 2. Plant and machinery 2,002,193.59 121,277.08 0.00 373,164.25 1,750,306.42 1,874,144.14 55,459.34 373,155.45 1,556,448.03 193,858.39 128,049.45 3. Other plant and equipment, 3,541,898.10 408,766.47 0.00 488,311.49 3,462,353.08 3,154,523.18 248,706.65 487,228.12 2,916,001.71 546,351.37 387,374.92 fixtures and fittings 4. Advance payments and assets 0.00 11,540,772.78 0.00 0.00 11,540,772.78 0.00 0.00 0.00 0.00 11,540,772.78 0.00 under construction Total 6,907,489.25 14,067,195.43 0.00 861,475.74 20,113,208.94 5,592,281.04 387,330.99 860,383.57 5,119,228.46 14,993,980.48 1,315,208.21

III. Financial assets Shares in affiliated companies 16,596,116.59 6,274,605.33 0.00 0.00 22,870,721.92 5,188,900.00 2,370,000.00 0.00 7,558,900.00 15,311,821.92 11,407,216.59 Total 16,596,116.59 6,274,605.33 0.00 0.00 22,870,721.92 5,188,900.00 2,370,000.00 0.00 7,558,900.00 15,311,821.92 11,407,216.59 Notes to the Annual Balance Sheet Income Statement Financial Statements Auditor’s Report 157

Assets analysis 08/07

Acquisition and manufacturing costs Accumulated amortization and depreciation Book values Balance Additions Transfers Disposals Balance Balance Additions Transfers Balance in EUR Jan. 01, 07 2007 2007 2007 Dec. 31, 07 Jan. 01, 07 2007 2007 Dec. 31, 07 Dec. 31, 07 Dec. 31, 06

I. Intangible assets Concessions, industrial property rights, similar rights and assets, FOR OUR SHAREHOLDERS 2.721.199,63 379,605.08 0.00 69,948.35 3,030,856.36 1,390,330.78 388,325.42 68,824.40 1,709,831.80 1,321,024.56 1,330,868.85 and licences in such rights and assets Total 2,721,199.63 379,605.08 0.00 69,948.35 3,030,856.36 1,390,330.78 388,325.42 68,824.40 1,709,831.80 1,321,024.56 1,330,868.85

II. Property, plant and equipment 1. Land, property rights and buildings, including buildings 1,363,397.56 1,996,379.10 0.00 0.00 3,359,776,66 563,613.72 83,165.00 0.00 646,778.72 2,712,997.94 799,783.84 THE COMPANY on third party land 2. Plant and machinery 2,002,193.59 121,277.08 0.00 373,164.25 1,750,306.42 1,874,144.14 55,459.34 373,155.45 1,556,448.03 193,858.39 128,049.45 3. Other plant and equipment, 3,541,898.10 408,766.47 0.00 488,311.49 3,462,353.08 3,154,523.18 248,706.65 487,228.12 2,916,001.71 546,351.37 387,374.92 fixtures and fittings 4. Advance payments and assets 0.00 11,540,772.78 0.00 0.00 11,540,772.78 0.00 0.00 0.00 0.00 11,540,772.78 0.00 under construction Total 6,907,489.25 14,067,195.43 0.00 861,475.74 20,113,208.94 5,592,281.04 387,330.99 860,383.57 5,119,228.46 14,993,980.48 1,315,208.21

III. Financial assets MANAGEMENT REPORT Shares in affiliated companies 16,596,116.59 6,274,605.33 0.00 0.00 22,870,721.92 5,188,900.00 2,370,000.00 0.00 7,558,900.00 15,311,821.92 11,407,216.59 Total 16,596,116.59 6,274,605.33 0.00 0.00 22,870,721.92 5,188,900.00 2,370,000.00 0.00 7,558,900.00 15,311,821.92 11,407,216.59 GROUP FINANCIAL STATEMENTS SINGLE-ENTITY FINANCIAL STATEMENTS miscellaneous 158 PVA TePla Annual Report 2008

Responsibility Statement

„To the best of our knowledge we assure that in accordance with the applicable reporting principles the financial accounts for year ended December 31, 2008 give a true and fair view of the net assets, financial position and profit or loss of the company, and the combined Management Report and the consolidated Management Report give a true and fair view of the development and performance together with a description of the principle opportunities and risks associated with the expected development of the group.“

Wettenberg, March 19, 2009

Peter Abel Arnd Bohle Chief Executive Officer Chief Financial Officer Notes to the Annual Balance Sheet Income Statement Financial Statements Assets analysis 08/07 159

Auditor’s Report

We have audited the annual financial statements pre- principles used and significant estimates made by the pared by PVA TePla AG, Wettenberg, comprising the legal representatives, as well as evaluating the over- FOR OUR SHAREHOLDERS balance sheet, the income statement and the notes to all presentation of the annual financial statements and the financial statements, together with the bookkee- the combined management and group management ping system and the combined management and group report. We believe that our audit provides a reasonable management report for the fiscal year from January 1 basis for our opinion. to December 31, 2008. The maintenance of the books and records and the preparation of the annual financial Our audit has not led to any reservations.

statements and the combined management and group THE COMPANY management report in accordance with the Handelsge- In our opinion, based on the findings of our audit, the setzbuch (HGB – German Commercial Code) and the annual financial statements are consistent with the sta- supplementary requirements of the Articles of Associ- tutory provisions and the supplementary requirements ation are the responsibility of the Company’s legal rep- of the Articles of Association and give a true and fair resentatives. Our responsibility is to express an opinion view of the net assets, financial position and results of on the annual financial statements, together with the operations of the Company in accordance with German bookkeeping system, and the combined management principles of proper accounting. The combined ma- and group management report based on our audit. nagement and group management report is consistent with the annual financial statements and, as a whole, MANAGEMENT REPORT We conducted our audit of the annual financial state- provides a suitable understanding of the Company’s po- ments in accordance with section 317 HGB and Ger- sition and suitably presents the opportunities and risks man generally accepted standards for the audit of fi- of future development. nancial statements promulgated by the Institut der Wirtschaftsprüfer (IDW – Institute of Public Auditors in Germany). Those standards require that we plan and Frankfurt/Main, March 20, 2009 GROUP perform the audit such that misstatements materially affecting the presentation of the net assets, financial position and results of operations in the annual financial Ebner Stolz Mönning Bachem GmbH & Co. KG FINANCIAL STATEMENTS statements in accordance with German principles of Wirtschaftsprüfungsgesellschaft proper accounting and in the combined management Steuerberatungsgesellschaft and group management report are detected with reasonable assurance. Knowledge of the business activities and the economic and legal environment of the Company and expectations as to possible misstatements are taken into account in the determination of SINGLE-ENTITY the audit procedures. The effectiveness of the accoun- FINANCIAL STATEMENTS ting-related internal control system and the evidence supporting the disclosures in the bookkeeping system, the annual financial statements and the combined management and group management report are exami- Marcus Grzanna Thomas Klemm ned primarily on a test basis within the framework of Wirtschaftsprüfer Wirtschaftsprüfer the audit. The audit includes assessing the accounting German Public Auditor German Public Auditor miscellaneous

miscellaneous

Glossary 162 History 165 Financial Calendar 166 Imprint 166

miscellaneous 162 PVA TePla Annual Report 2008

Glossary Technical Terms

Ashing Flat panel display (FPD) Metrology Pre-assembly Chemical transfer of photo-resist masks onto wafers A flat screen, normally consisting of a liquid crystal Measuring technology for testing adherence to Located between the front end and back end, this display (LCD) using a lamp as a light source parameters in the manufacture of semiconductor process thins wafers down to the desired thickness Back end chips while retaining their original strength and, after placing Process sequence for further processing of the Photo mask them on a saw tooth frame, dices them into chips semiconductor chips structured on the front of Photo masks are projection templates mainly used in Microwave plasma mechanically or using lasers wafers in front end processing following wafer dicing photolithography for semiconductors Gas consisting of charged and uncharged particles in a in pre-assembly (cf.) and includes electrical testing, highly reactive state, created at low pressures (0.1-10 RF plasma attachment of brackets, soldering of connections and Front End mbar) with microwave power feed Plasma energized using electromagnetic waves in the the fitting of components into a casing Sequence of chemical-physical processes for radio frequency range (10-30 MHz) manufacturing the microstructures of semiconductor Surface activation Batch ashing chips on the front side of silicon substrates (wafers) Chemical change in a plastic surface to facilitate or Sintering Transfer of photo-resist onto several wafers at the ranging from a blank silicon wafer up to wafers with improve subsequent process steps Hardening powdered mass under pressure, vacuum same time in the process chamber complete circuits and high temperature conditions to create, for example, PDM-Systems tungsten tools Bonding Joining These systems are used to support the Gluing Permanently combining at least two components productmanagement by saving and managing product Wafer specific data and documents Basic material for chip production, usually made of CAD-Systems Tungsten carbide silicon. Is processed further in the form of this discs CAD (Computer Aided Design) software is used to Metal powder, normally consisting of tungsten Plasma and used as the substrate for integrated circuits develop blueprints for the construction (90-94%) and cobalt (6-10%) as a binding agent, Plasma is described as the fourth aggregation state which is sintered under pressure, vacuum and high of material and is a partially ionized gas. Phenomena Chip packaging temperature conditions to produce high-strength, low- such as lightening, a comet‘s trail or polar lights are Packing of semiconductor boards wearing and dense materials examples of plasmas that occur in nature. Technically, plasma is created by exciting gases using electrical CMOS Hot isostatic fields. Plasma is extremely interesting on account of Complementary metal oxide semiconductor. CMOS Under high temperature and pressure its physical and chemical properties as highly excited technology is primarily used for integrated circuits particles and radicals are generated. These can trigger MEMS chemical reactions that are not possible under normal Elastomers Micro-electro-mechanical system are a combination conditions Elastomers are plastics with a fixed form that can of mechanical parts, such as sensors, and electronic however be molded elastically circuits on a substrate or chip

ERP-Systems Metal injection molding (MIM) ERP (Enterprise Resource Planning) software supports MIM is a procedure for forming complex, geometric the resource planning of a company structural parts which combines the advantages of plastic injection molding with the material properties of hard metals History Financial Calender Imprint 163

Glossary

Glossary Technical Terms

Ashing Flat panel display (FPD) Metrology Pre-assembly FOR OUR SHAREHOLDERS Chemical transfer of photo-resist masks onto wafers A flat screen, normally consisting of a liquid crystal Measuring technology for testing adherence to Located between the front end and back end, this display (LCD) using a lamp as a light source parameters in the manufacture of semiconductor process thins wafers down to the desired thickness Back end chips while retaining their original strength and, after placing Process sequence for further processing of the Photo mask them on a saw tooth frame, dices them into chips semiconductor chips structured on the front of Photo masks are projection templates mainly used in Microwave plasma mechanically or using lasers wafers in front end processing following wafer dicing photolithography for semiconductors Gas consisting of charged and uncharged particles in a

in pre-assembly (cf.) and includes electrical testing, highly reactive state, created at low pressures (0.1-10 RF plasma THE COMPANY attachment of brackets, soldering of connections and Front End mbar) with microwave power feed Plasma energized using electromagnetic waves in the the fitting of components into a casing Sequence of chemical-physical processes for radio frequency range (10-30 MHz) manufacturing the microstructures of semiconductor Surface activation Batch ashing chips on the front side of silicon substrates (wafers) Chemical change in a plastic surface to facilitate or Sintering Transfer of photo-resist onto several wafers at the ranging from a blank silicon wafer up to wafers with improve subsequent process steps Hardening powdered mass under pressure, vacuum same time in the process chamber complete circuits and high temperature conditions to create, for example,

PDM-Systems tungsten tools Bonding Joining These systems are used to support the Gluing Permanently combining at least two components productmanagement by saving and managing product Wafer MANAGEMENT REPORT specific data and documents Basic material for chip production, usually made of CAD-Systems Tungsten carbide silicon. Is processed further in the form of this discs CAD (Computer Aided Design) software is used to Metal powder, normally consisting of tungsten Plasma and used as the substrate for integrated circuits develop blueprints for the construction (90-94%) and cobalt (6-10%) as a binding agent, Plasma is described as the fourth aggregation state which is sintered under pressure, vacuum and high of material and is a partially ionized gas. Phenomena Chip packaging temperature conditions to produce high-strength, low- such as lightening, a comet‘s trail or polar lights are GROUP Packing of semiconductor boards wearing and dense materials examples of plasmas that occur in nature. Technically, plasma is created by exciting gases using electrical

CMOS Hot isostatic fields. Plasma is extremely interesting on account of FINANCIAL STATEMENTS Complementary metal oxide semiconductor. CMOS Under high temperature and pressure its physical and chemical properties as highly excited technology is primarily used for integrated circuits particles and radicals are generated. These can trigger MEMS chemical reactions that are not possible under normal Elastomers Micro-electro-mechanical system are a combination conditions Elastomers are plastics with a fixed form that can of mechanical parts, such as sensors, and electronic however be molded elastically circuits on a substrate or chip SINGLE-ENTITY

ERP-Systems Metal injection molding (MIM) FINANCIAL STATEMENTS ERP (Enterprise Resource Planning) software supports MIM is a procedure for forming complex, geometric the resource planning of a company structural parts which combines the advantages of plastic injection molding with the material properties of hard metals miscellaneous 164 PVA TePla Annual Report 2008

Glossary The PVA TePla History

1991 2004 Management buy-out of vacuum systems for metallurgy Shareholdings in PVA MIMtech LLC increased to 50% and establishment of PVA-Pfeiffer Vakuum Anlagenbau Definitons of financial terms GmbH (later: PVA Vakuum Anlagenbau GmbH) Acquisition of the Floatzone Crystal Growing division and key figures of the Danish Haldor Topsoe Group. Name changed to PVA TePla Danmark Book-to-bill ratio Order backlog 1999 Ratio of incoming order volume and sales revenue The order backlog figure stated in the consolidated Establishment of PVA Vakuum Anlagenbau Jena GmbH Establishment of Xi‘an HuaDe CGS Ltd., a joint venture during a period. A book-to-bill ratio greater than one financial statements pursuant to IFRS is the nominal with the Technical University in Xi‘an (TUX) indicates that a company can expect sales growth value of orders on hand, minus the revenue already Establishment of CGS GmbH in a spin-off from Leybold recognised according to the percentage of completition Systems 2005 EBIT margin (POC) method Opening of a service and sales office in Beijing Operating profit (EBIT) expressed as a percentage of IPO of TePla AG on the Frankfurt Stock Exchange sales revenue during a period Return on sales Complete takeover of the CGS by the PVA TePla AG Consolidated net income expressed as a percentage of Equity ratio sales revenue in a period 2000 Shareholders’ equity expressed as a percentage of the Establishment of the Vacuum brazing and thermal 2006 balance sheet total treatment centre in Asslar and Jena. Takeover of the business of Asyntis GmbH and Plasma General definitions Free cash flow Establishment of the US branch PVA USA Corp. Operative cash flow minus payments for investments Gross domestic product 2007 in tangible and intangible assets. The free cash flow GDP is defined as the market value of all new goods Establishment of the subsidiary PVA TePla Singapore is therefore an indicator of the amount of liquid assets and services produced within a country by domestic 2001 freely available to the company during a period and foreign companies and individuals. It is one of the Merger of TePla Inc. and MetroLine to form TePla Complete take over of the KSI Group, specialized on the keyindicators for the economic strength ao a country America Inc. production of systems for the non-destructive ultrasonic Gross margin inspection of high tech materials; subsequent change Gross profit expressed as a percentage of sales revenue of name to PVA TePla Analytical Systems GmbH during a period 2002 PVA and TePla merge to form PVA TePla AG 2008 Operating profit/loss (EBIT) PVA TePla abandones its headquarter and production The operating profit/loss (EBIT: Earnings Before Minority interest in PVA MIMtech LLC, New Jersey, site in Asslar and moves to Wettenberg/Giessen Interests and Taxes) is the key management accounting USA; acquisition of the assets of Elnik Systems, USA variable used in the PVA TePla Group. We consider this performance figure to be the most important indicator of 2009 the operative earnings power of a company. It is equal to 2003 The divisions of the company are restructured. The new the net income for the year before deduction of interest, Merger of PVA USA and TePla America to form PVA division are now: Industrial Systems, Semiconductor income tax, and without income from associated TePla America Inc. Systems and Solar Systems companies and minority interest

Operative cash flow The opartive cash flow (cash flow operatig activities) Shows the change in liquid assets during a period as a result of operating activities Glossary Financial Calender Imprint 165

History

Glossary The PVA TePla History

recognised according to the percentage of completition Systems 2005 THE COMPANY EBIT margin (POC) method Opening of a service and sales office in Beijing Operating profit (EBIT) expressed as a percentage of IPO of TePla AG on the Frankfurt Stock Exchange sales revenue during a period Return on sales Complete takeover of the CGS by the PVA TePla AG Consolidated net income expressed as a percentage of Equity ratio sales revenue in a period 2000 Shareholders’ equity expressed as a percentage of the Establishment of the Vacuum brazing and thermal 2006 balance sheet total treatment centre in Asslar and Jena. Takeover of the business of Asyntis GmbH and Plasma General definitions Free cash flow Establishment of the US branch PVA USA Corp. MANAGEMENT REPORT Operative cash flow minus payments for investments Gross domestic product 2007 in tangible and intangible assets. The free cash flow GDP is defined as the market value of all new goods Establishment of the subsidiary PVA TePla Singapore is therefore an indicator of the amount of liquid assets and services produced within a country by domestic 2001 freely available to the company during a period and foreign companies and individuals. It is one of the Merger of TePla Inc. and MetroLine to form TePla Complete take over of the KSI Group, specialized on the keyindicators for the economic strength ao a country America Inc. production of systems for the non-destructive ultrasonic Gross margin inspection of high tech materials; subsequent change GROUP Gross profit expressed as a percentage of sales revenue of name to PVA TePla Analytical Systems GmbH during a period 2002

PVA and TePla merge to form PVA TePla AG 2008 FINANCIAL STATEMENTS Operating profit/loss (EBIT) PVA TePla abandones its headquarter and production The operating profit/loss (EBIT: Earnings Before Minority interest in PVA MIMtech LLC, New Jersey, site in Asslar and moves to Wettenberg/Giessen Interests and Taxes) is the key management accounting USA; acquisition of the assets of Elnik Systems, USA variable used in the PVA TePla Group. We consider this performance figure to be the most important indicator of 2009 the operative earnings power of a company. It is equal to 2003 The divisions of the company are restructured. The new the net income for the year before deduction of interest, Merger of PVA USA and TePla America to form PVA division are now: Industrial Systems, Semiconductor SINGLE-ENTITY income tax, and without income from associated TePla America Inc. Systems and Solar Systems FINANCIAL STATEMENTS companies and minority interest

Operative cash flow The opartive cash flow (cash flow operatig activities) Shows the change in liquid assets during a period as a result of operating activities miscellaneous 166 PVA TePla Annual Report 2008

Financial Calendar

April 02, 2009 Press conference and analysts‘ meeting May 13, 2009 Publication of the Q1 Report

June 29, 2009 Annual Shareholders‘ Meeting August 14, 2009 Publication of the Q2 Report

November 06, 2009 Publication of the Q3 Report

November 09-11, 2009 German Equity Forum

Imprint

PVA TePla AG Im Westpark 10 – 12 35435 Wettenberg Germany

Phone +49 (0)641 / 6 86 90 -0 Layout/Print Contigo Finance GmbH Fax +49 (0)641 / 6 86 90 -800 Westhafenplatz 1 eMail [email protected] 60327 Frankfurt Internet www.pvatepla.com Germany www.contigo-finance.de Investor Relations Dr. Gert Fisahn Phone +49 (0)641 / 6 86 90 -400 Photos: Jürgen Jeibmann Photographik eMail [email protected] Naumburger Straße 28 04229 Leipzig Published by PVA TePla AG Germany Concept/Text PVA TePla AG on page: 6,22,26/27,29, Languages German/English 30/31,37,41,42,72,134,160 PVA TePla Annual Report 2008 PVA TePla AG Phone +49 (641) 6 86 90 - 0 Im Westpark 10 -12 Fax +49 (641) 6 86 90 - 800 35435 Wettenberg Email info @pvatepla.com Germany Home www.pvatepla.com

Important consolidated figures at a glance

Consolidated figures

in EUR ‘000 2008 2007 2006

1) Circulating shares on average: 21.749.988 Ideas obtain scope

Sales Revenues EBIT Consolidated Net income

in TEur in TEur in TEur