€¦ · CENTROTEC Sustainable AG Am Patbergschen Dorn 9 D-59929 Brilon Phone +49(0)2961-96631 -111...

CENTROTEC Sustainable AGAm Patbergschen Dorn 9D-59929 BrilonPhone +49 (0) 2961-96 631 - 111Fax +49 (0) 2961-96 631- [email protected]

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1 000 kWhis the average amount of energy radiated by thesun on every square metre of the earth’s surfacein a year – the equivalent energy yield of about100 litres of oil. The amount of radiant energy coming from the sun is many thousand times the world’s entire energy consumption. The technologically, economically and ecologically feasible potential for tapping it still exceeds global energy demand several times over.

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CENTROTEC The European Energy Saving Company

Annual Report 2009World of Systems

10-01692_1_CT_GB09_Umschlag_GB.qxd:Layout 1 14.04.2010 11:34 Uhr Seite 1

Revenue[in EUR million]

CAGR +26 % p. a.

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010(e)

7498 116 135 153

467

480- 500

396 406

476

EBITDA[in EUR million]

CAGR +17 % p. a.

EBIT[in EUR million]

CAGR +15 % p. a.

EPS*[in EUR]

Gearing[Net interest bearing debt/equity]

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010(e)

13.4 15.619.4

23.2 23.0

46.6

30.3

43.648.8

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010(e)

9.3 9.7

13.2

18.3 17.7

29.030-32

12.5

27.6

32.2

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010(e)

0.360.27

0.530.65 0.70**

1.10-1.201.13

1.21.3

1.4

0.9

0.5

1.1 1.1

0.90.7

* Earnings per share, undilluted

** After elimination of gains from transactions with minorities. Figures incl. special factors for 2005: EUR 1.13, for 2006: EUR 0.88

*** Excluding results from shareholdings

CAGR Compound Annual Growth Rate (2001-2009)

Five-Year Comparison

Changes2005 2006 2007 2008 2009 2008 to 2009

[EUR ‘000] [EUR ‘000] [EUR ‘000] [EUR ‘000] [EUR ‘000] [Percent]

Total revenue (reported) 152,912 396,311 406,417 476,081 466,613 (2.0 %)

Climate Systems 39,594 110,024 274,111 319,308 309,524 (3.1 %)

Gas Flue Systems 70,202 80,310 96,359 118,822 128,111 7.8 %

Medical Technology & Engineering Plastics 26,454 33,793 35,947 37,951 28,978 (23.6 %)

Solar Systems **** 16,662 172,184 0 0 0 0 %

Earnings

EBITDA 22,963 30,325 43,622 48,808 46,641 (4.4 %)

EBIT 17,698 12,525 27,552 32,171 29,037 (9.7 %)

EBIT yield (in %) 11.6 3.2 6.8 6.8 6.2

EBT 22,477 16,851 18,463 25,785 12,727 (50.6 %)

EAT 17,953 15,298 16,501 18,635 5,216 (72.0 %)

EPS (in EUR; basic) ***2.26 ***1.76 1.01 1.13 0.33 (70.8 %)

Balance sheet structure 31/12

Balance shett total 215,572 483,078 361,773 378,384 379,646 0.3 %

Shareholders’ equity 102,673 146,313 109,066 127,804 132,674 3.8 %

Equity ratio (%) 47.6 30.3 30.1 33.8 34.9

Property, plant and equipment 41,766 102,979 94,128 94,702 91,252 (3,6 %)

Intangible assets 24,977 58,827 37,427 36,571 37,542 2.2 %

Goodwill 55,310 118,867 60,482 60,911 60,914 0.0 %

Net financial liabilities 46,328 159,316 121,778 114,101 86,451 (24.2 %)

Net working capital 31,793 86,216 54,497 65,124 53,642 (17.6 %)

Cash flow statement

Cash flow I (EAT & depreciation/amortisation) 23,218 33,097 32,571 35,272 22,820 (35.3 %)

Cash flow from operating activities 6,716 5,633 32,666 24,847 45,060 81.4 %

Cash flow from investing activities (1,334) (96,293) (19,097) (17,928) (18,006) (0.4 %)

Employees 31/12

Total (in FTE) 1,124 2,745 2,390 2,605 2,614 0.3 %

Shares

Number of shares** 7,955 8,134 16,427 16,525 16,610

Year-high quotation* ***30.58 ***35.36 18.36 16.14 10.80

Year-low quotation* ***19.85 ***22.44 11.00 6.85 6.05

Year-end quotation* ***25.06 ***24.00 13.85 10.60 9.44

* Quotation in EUR

** Weighted average shares outstanding (basic; in thousand)

*** Before conversion of share price with factor 2 due to issue of bonus shares

**** Since 2007 not fully consolidated stake in CENTROSOLAR Group AG

48-50

0.80**

1.01

2001 2002 2003 2004 2005 2006 2007 2008 2009

Imprint

TextCENTROTEC Sustainable AG

ConceptMetaCom, HanauGeorg BiekehörJens Gloger

Design/productionMetaCom, HanauJens GlogerSabine WendlerViktor Diebold

PrintingDruckerei Braun & Sohn, MaintalPrinted on heaven 42 absolute whitesoft matt coated from IGEPA,manufactured from raw materials from environmentally sound forestry and other controlled origins.

PhotosCENTROTEC GroupImage agencies

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Share price[in EUR]

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

2.13

18.24

3.24

IPO price



CAGR +26 % p. a.

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010(e)

7498 116 135 153

467

480- 500

396 406

476


CAGR +17 % p. a.


CAGR +15 % p. a.

EPS*[in EUR]


2001 2002 2003 2004 2005 2006 2007 2008 2009 2010(e)

13.4 15.619.4

23.2 23.0

46.6

30.3

43.648.8

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010(e)

9.3 9.7

13.2

18.3 17.7

29.030-32

12.5

27.6

32.2

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010(e)

0.360.27

0.530.65 0.70**

1.10-1.201.13

1.21.3

1.4

0.9

0.5

1.1 1.1

0.90.7






Changes2005 2006 2007 2008 2009 2008 to 2009



Climate Systems 39,594 110,024 274,111 319,308 309,524 (3.1 %)

Gas Flue Systems 70,202 80,310 96,359 118,822 128,111 7.8 %


Solar Systems **** 16,662 172,184 0 0 0 0 %

Earnings

EBITDA 22,963 30,325 43,622 48,808 46,641 (4.4 %)

EBIT 17,698 12,525 27,552 32,171 29,037 (9.7 %)

EBIT yield (in %) 11.6 3.2 6.8 6.8 6.2

EBT 22,477 16,851 18,463 25,785 12,727 (50.6 %)

EAT 17,953 15,298 16,501 18,635 5,216 (72.0 %)

EPS (in EUR; basic) ***2.26 ***1.76 1.01 1.13 0.33 (70.8 %)




Equity ratio (%) 47.6 30.3 30.1 33.8 34.9



Goodwill 55,310 118,867 60,482 60,911 60,914 0.0 %



Cash flow statement




Employees 31/12

Total (in FTE) 1,124 2,745 2,390 2,605 2,614 0.3 %

Shares

Number of shares** 7,955 8,134 16,427 16,525 16,610




* Quotation in EUR




48-50

0.80**

1.01

2001 2002 2003 2004 2005 2006 2007 2008 2009

Imprint






Five

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<

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Share price[in EUR]

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

2.13

18.24

3.24

IPO price



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Heading towards a solar age – with integrated systems for energy efficiency and the use of renewable energies

Biomass heating systems

Heat pumps

Solar cooling

Energy roof

Solar thermal

Gas flue systems

Renewable energies

Energy efficiency

Condensing boiler systems

Controlled ventilation systems

Gas-solar centre

Passive-house compact systems

Combined heat and power plants

Climate control solutions with heat recovery

10-01692_1_CT_GB09_Image_GB.qxd:1_CT_GB_09_D 14.04.2010 11:42 Uhr Seite 1

Grafik/Organigramm

Medical Technology &Engineering Plastics100 %

CENTROSOLAR Group AG26 %

Gas Flue Systems100 %

Climate Systems100 %

Ubbink B.V. Doesburg, NL

Ubbink N.V. Gentbrugge, BE

Ubbink S.A.S La Chapelle sur Erdre, FR

Ubbink UK Ltd. Brackley, GB

Ubbink East Africa Ltd.Naivasha, KE

Centrotherm Systemtechnik GmbH Brilon, DE

Centrotherm Eco SystemsLLC, Albany, US

Centrotherm Gas Flue Technologies Italy S.R.L. Verona, IT

Centrotec J I Asia Pte. Ltd.Singapur, SG

Centrotec Composites GmbH Brilon, DE

Bond-Laminates GmbH(25 %) Brilon, DE

Brink Climate Systems B.V. Staphorst, NL

Ned Air B.V.Ijsselmuiden, NL

EnEV-Air GmbH Ahaus, DE

Wolf GmbH Mainburg, DE

Wolf France S.A.S.Massy, FR

Wolf Iberica S.A. Madrid, ES

Wolf Technika Grzewcza Sp.z.o.o. Warschau, PL

Wolf Heating UK Ltd.Northwich, GB

Wolf Klimaattechniek B.V.Kampen, NL

Kuntschar + Schlüter GmbHWolfhagen, DE

medimondi AGFulda, DE

Möller Medical GmbHFulda, DE

bricon agDietikon, CH

Centroplast Engineering Plastics GmbHMarsberg, DE

Rolf Schmidt Industriplast A/SKolding, DK

Centrosolar AGHamburg / Paderborn / Durach, DE

Centrosolar Sonnenstromfabrik GmbHWismar, DE

Renusol GmbHCologne, DE

Centrosolar Glas GmbH & Co. KGFürth, DE

Solarsquare AGBern, CH

Company StructureCENTROTEC Sustainable AG


4 Letter to Shareholders8 Report of the Supervisory Board

12 Corporate Governance Report15 Responsibility Statement15 Declaration pursuant to

Section 289 (a)16 Remuneration Report

20 Strategy, structure and steering21 Economic conditions23 Development of heating and

energy-saving technology market28 Business performance with revenue

and earnings trend29 Climate Systems34 Gas Flue Systems37 Medical Technology &

Engineering Plastics 40 Principal investment –

CENTROSOLAR Group AG46 Net worth, financial position and

financial performance49 Shares53 Personnel55 Research and development56 Capital expenditure57 Sustainability and environment59 Risk report66 Other particulars68 Report on post-balance sheet

date events68 Outlook71 General statement on the expected

development of the group

76 Statement of Financial Position77 Consolidated Income Statement78 Statement of Comprehensive

Income79 Statement of Cash Flows80 Statement of Movements

in Equity82 Segment Report84 Financial Statements 2009

133 Independent Auditors’ Report134 Financial calendar135 Imprint

Company& Management

04

GroupManagementReport

20

ConsolidatedFinancialStatements

76

>


Dr. Gert-Jan Huisman Dr. Gert-Jan Huisman (born 1968)is a Doctor of Business Manage-ment and has been Chief Execu-tive Officer (CEO) of CENTROTECSustainable AG since 2002. Hehas many years of managementexperience in Germany and theNetherlands, including as SeniorConsultant and Project Managerat McKinsey. He is SupervisoryBoard Chairman of CENTROSOLAR Group AG.

Anton Hans Anton Hans (born 1965), management expert, has beenChief Financial Officer (CFO) ofCENTROTEC Sustainable AGsince January 2008. He alsoserves as Finance Director ofBrink Climate Systems B.V.. Prior to joining CENTROTEC,Anton Hans worked for Ernst &Young as Senior Consultant inthe Financial Reporting area, focusing on IFRS.

Alfred GaffalAlfred Gaffal (born 1947), business manager, has beenmember of the ManagementBoard with responsibility for theClimate Systems segment sinceJanuary 2007. For many years Mr. Gaffal has been Managing Director of Wolf GmbH, whichwas acquired in 2006.

Dr. Christoph Traxler Dr. Christoph Traxler (born 1968)has been Management Boardmember with responsibility for the Medical Technology & Engineering Plastics segmentsince 2004. He was previously a Project Manager at McKinsey.Dr. Traxler’s background is inTheoretical Physics.

4 Letter to Shareholders


Letter to Shareholders

Letter to Shareholders 5

Dear Shareholders,

The world witnessed two important milestone events in 2009. Economically, 2009 was dominated by the repercussions of the international financial crisis, with the market environment the most difficult for decades. Ecologically, the failure to agree on measures for global climate protection was described by many as one of the defining moments in human history. Both spheres also had an influence on CENTROTEC in the past year.

Economically, the CENTROTEC Group performed very well despite the difficult wider context of the globaleconomy. The revenue forecast made at the start of the year of EUR 455 to 480 million was met in full,with revenue of EUR 467 million only marginally below the record level of the previous year. The businessperformance in the individual segments was nevertheless very mixed. In the largest segment, ClimateSystems, the financial crisis mainly affected exports and project business. On the other hand business in the core markets – and in Germany in particular – made positive progress thanks to a large number ofnew products and the acquisition of new customers, producing increased market shares. With renovationbusiness remaining steady, the Gas Flue Systems segment succeeded in increasing its revenue to a levelhigher than that forecast at the start of the year, even though new construction activity throughout Europeremained low. In addition to new product launches and new customers in the existing business areas ofgas flue and air ducting systems, the area of solar mounting and integrated solar systems contributedparticularly to this development, with its successful expansion easily compensating for falls in revenue inother areas of business. The two strategic segments of the CENTROTEC Group combined (Climate Systemsand Gas Flue Systems) achieved exactly the same level of revenue as in the previous year. In the MedicalTechnology & Engineering Plastics segment the peripheral business area of Engineering Plastics, theproducts of which are used predominantly in mechanical and plant engineering, were worst affected bythe financial crisis, with revenue down by more than 50 %; on the other hand the core business area ofMedical Technology continued to make positive progress. Thanks to the management’s swift, decisive action, the specialist engineering plastics companies were nevertheless rapidly stabilised, with the resultthat this area will emerge from the crisis much stronger.

The operating result (EBIT) forecast of EUR 27 to 32 million was likewise comprehensively met. EBIT ofEUR 29 million was only slightly down on the record figure of the previous year. Alongside an easing ofcommodity and procurement prices, this was mainly thanks to the group-wide earnings improvement programmes being assertively maintained and the systematic measures to steady business that was disrupted in isolated peripheral areas by the cyclical upheaval.

The innovative product range of efficient system solutions for energy saving and climate protection pro-vided the bedrock for the successful development of CENTROTEC Sustainable AG in a crisis-ridden 2009.Customers rely on solutions provided by the CENTROTEC Group for many projects where maximum effi-ciency and reliability matter. Deutsche Bank is a case in point; it has pioneered standards of sustainabilityin the energy-led refurbishment of its twin-tower head offices in Frankfurt, where it has installed Wolf air-handling units, for example. Thanks to their very efficient heat recovery performance, the 55 units play apivotal role in helping the bank to achieve its internal target of cutting energy consumption and CO2 emis-sions by over 50 %. Another example is a pilot project in the United Arab Emirates, in the Emirate of AbuDhabi, which is promoting the development of sustainable, forward-looking concepts in urban planning. A system of 560 solar collectors is being installed there to cover the hot water requirements of a 5-starhotel complex in a resource-conserving and therefore also CO2-free manner.


These specimen projects illustrate the competitiveness and efficiency of energy-saving solutions currentlyavailable from the CENTROTEC Group. With a view to continuing to extend the applications of ultra-effi-cient energy-saving solutions for buildings, we are continually working on refining our product range. A whole array of innovations were consequently successfully launched in 2009. They include a non-cen-tral ventilation system with heat recovery for schools, a new generation of control systems for the KG Toprange of air-handling units, a compact gas-solar centre, optimised solar calorifier sys tems and an innova-tive air ducting system for controlled domestic ventilation. And CENTROTEC continues to work on innova-tive energy-saving solutions for buildings in 2010. It will for instance shortly be launching a pioneeringenergy roof system that integrates photovoltaic and solar thermal collectors plus matching dummy mod-ules into an overall concept of uniform appearance. This innovative product combines two previously independent systems for generating power and heat from the sun’s energy into a visually appealing singlesystem that can be integrated tastefully into architecturally high-quality buildings. CENTROTEC is alsopromoting a similar process of convergence between different system landscapes in the area of heatingand ventilation technology, where an integrated system for heating, hot water and controlled domesticventilation tapping into solar thermal is already available in the form of the passive-house compact sys-tem. The integration of the previously distinct system landscapes of heating, climate control and ventila-tion, with the inclusion of renewable energies, is thus a strategic priority of our development activities. By coordinating the performance of the various system components and using intelligent control engineer-ing to energise them, the efficiency of the overall system can be appreciably enhanced, enabling the desired interior climate to be achieved both more economically and more sustainably.

6 Letter to Shareholders


Based on the market position already achieved, and supported by these innovations, CENTROTEC cancontinue to look to the future with confidence. Although the effects of the financial and economic crisiswill not yet have been overcome entirely in 2010, and although we again expect to have to deal with diffi-cult market conditions particularly in the new construction sector and in the project business area, thefundamental framework for our core business remains positive. The debates at the Climate Change Conference in Copenhagen highlighted the urgent need to act in order to protect the climate, but alsoshowed that worldwide consensus will only be reached through long, drawn-out negotiations. Whateverthe traits of any international agreement on climate protection may be, technologies for energy efficiencyand renewable energies play a key role in solving the problem of climate change. In the long term, thistrend will lead us into a solar age in which energy will be generated exclusively from solar sources andconverted and used with efficient systems. Precisely that is at the very heart of our business. Throughour innovative system solutions, we already supply a comprehensive range of technology for energy con-servation and climate protection in buildings. Thanks to our strong market position and power of innova-tion, CENTROTEC will therefore continue to profit from this unstoppable trend – to the benefit of ourshareholders, customers, suppliers and employees, and ultimately also to the benefit of sustainable waysof using energy.

With best wishes,

Dr. Gert-Jan Huisman[Chief Executive Officer]

Letter to Shareholders 7


8 Report of the Supervisory Board

Dear shareholders,

The Supervisory Board of CENTROTEC Sustainable AG performed the tasks resting upon it in accordance with

the law, the articles of incorporation and the rules of internal procedure during the 2009 financial year, in regu-

larly advising the Management Board on the running of the company and monitoring its activities.

The 2009 business performance and results of the companies comprising the CENTROTEC Group were very good

for a year in which their markets experienced extreme economic difficulties. CENTROTEC consequently once

more demonstrated the aptness of its strategic emphasis on energy-saving solutions for buildings and the ef-

fectiveness of implementing it. The strong positioning of the brands, products and sales organisation, especially

in relation to the competition, was further reinforced. The CENTROTEC product range already comprises a com-

prehensive selection of highly efficient system solutions for increased energy savings and improved climate pro-

tection in buildings. Thanks to their systematic market emphasis and innovative prowess, the companies of the

CENTROTEC Group again extended this range in 2009 by adding a large number of new products and system

solutions. Further products are in the development phase and will be appearing on the market over the next few

months. Equally, the international market presence will be further increased and new, promising international

markets will be tapped. This business expansion will be promoted by the continuing optimisation of internal

processes and procedures, to bring them in line with the level of growth achieved. This will enable CENTROTEC

to continue expanding its strong position in the global future market for integrated system solutions for build-

ings to realise energy savings and protect the climate. The Supervisory Board expressly supports and endorses

this strategy, so that CENTROTEC will remain a sustainable and reliable partner for shareholders, customers,

suppliers and employees over the longer term.

The Supervisory Board held a total of four meetings in the 2009 financial year. In regular reports on the business

position, the Supervisory Board was informed in detail and in a timely manner by the Management Board of the

current business progress of the company, including above all the development in its revenue, orders, financial

performance and financial position, along with the company’s discernible opportunities and risks of future devel-

opment. The Consolidated Financial Statements and group management report, annual financial statements and

management report of the group parent, half-yearly and quarterly financial reports were discussed by the Super-

visory Board with the Board of Management prior to their publication. Decisions of the Management Board re-

quiring approval were examined and discussed at length by the Supervisory Board prior to their approval.

Supervisory Board meetings during 2009 were held on March 19, June 6, September 23 and November 25. All

Supervisory Board members attended all meetings and took part in resolutions by written circular in person.

The members of the Supervisory Board furthermore discussed forthcoming projects and matters of substantive

importance with the Management Board and with other management employees of the company outside the

context of their regular meetings, in face-to-face discussions and by means of telephone conferences. Written re-

ports were furthermore submitted on specific projects and issues. The Management Board always satisfied the

information and reporting requirements laid down by the Supervisory Board in every respect. As the Supervisory

Board has only three members, no committees were formed. All matters were discussed by the full board.

The topics discussed at the Supervisory Board meetings comprised fundamental and strategic matters concern-

ing the holding company, segments and individual companies, but also individual matters of major importance

and with far-reaching consequences from the viewpoint of the group. The individual matters discussed comprised:

> The strategic direction and business policy of the group, the segments and the group companies

> General business performance and financial reports to be published

> Consequences of the financial crisis and how to address the associated risks

> Acquisitions in progress and in preparation, as well as possible options for acquisitions

> Major or strategically significant investment decisions

> Various topics concerning the operating companies and the progress of important areas of business

> Strategic, operating and financial risks as well as risk management

Report of the Supervisory Board


Report of the Supervisory Board 9

> Matters of financing

> The corporate culture and social issues

> Response to changes to the Corporate Governance Code

> Changes to regulatory and negotiable instruments law

> Remuneration structures of the Management Board and management

employees

> The efficiency of the Supervisory Board’s own activities

> The selection and monitoring of the independent auditor

The Supervisory Board and Management Board again discussed corporate governance within the company at

length during the year under review and jointly issued the Declaration of Compliance on the German Corporate

Governance Code in accordance with Section 161 of German Stock Corporation Law, and made it permanently

available to the shareholders on the company’s website.

By way of implementing new statutory requirements, the Supervisory Board considered the remuneration

system for the Management Board in the latter’s absence.

The accounts, annual financial statements, management report, consolidated financial statements and group

management report at 31.12.09 have been examined by the auditors PricewaterhouseCoopers AG Wirtschafts-

prüfungsgesellschaft, Essen, who have given their unqualified certification thereof. The above documents and the

proposal by the Management Board on the appropriation of the accumulated profit were made available to each

member of the Supervisory Board in a timely manner.

The statements were discussed at length with the auditors at the Supervisory Board meeting on March 18, 2010,

when the auditors reported on the principal findings of their audit. The Supervisory Board has considered at

length the disclosures made in the management report and group management report. Reference is therefore

made to the corresponding comments in the management report and group management report, which the

Supervisory Board has examined and accepted.

The Supervisory Board has examined the annual financial statements, management report and consolidated

financial statements, including group management report, as prepared by the Management Board, together with

the dependence report drawn up by the Management Board as a precautionary measure. The examination by

the Supervisory Board has revealed no cause for objection. The annual financial statements of the group parent

and the consolidated financial statements at December 31, 2009 were approved by the Supervisory Board at

April 9, 2010. The annual financial statements of the group parent issued by the Management Board were con-

sequently granted the unqualified approval of the Supervisory Board, and are thus established pursuant to

Section 172 (1) of German Stock Corporation Law. The proposal by the Management Board on the appropriation

of the accumulated profit was approved by the Supervisory Board.

The Supervisory Board expects that the company will continue to enhance its performance in highly promising

areas of activity, and that it will generate a good return on investment in the interests of its shareholders.

The employees of the CENTROTEC Group, who have made a major contribution to the success of the company

through their considerable dedication, expertise and creativity, deserve our particular thanks.

Brilon, April 2010

The Supervisory Board

Guido A. Krass[Supervisory Board Chairman]


10 Company & Management

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Company & Management 11

Condensing boiler technology:Supremely energy-efficient, using up to99 % of the primary energy present in the fossil fuels gas and oil.

1 Condensing boiler technology (oil or gas) for space heating and hot water

2 Mixer circulating pump

Plastic gas flue systems:Condensing boiler systems use the heatof condensation of the water vapour inthe waste gas, thus drawing extra energyfrom the flue gas | Plastic gas flue systems are corrosion-resistant, environ-mentally compatible, flexible to install,easy to fit and durable.

3 Plastic gas flue system4 Fresh air5 Chimney

Controlled domestic ventilation:Regulates the exchange of air, particularlyin highly insulated buildings, to maintain ahealthy interior climate | Recovers up to95 % of heat in the air when ventilating,thus saving on heating.

6 Controlled domestic ventilation (95 % heat recovery)

7 Sound absorber for whisper mode8 Flat ventilation system with reduced

installation height9 Incoming air

10 Outgoing air


Corporate governance has been a central component of CENTROTEC Sustainable AG’s corporate philos-ophy for many years. The Supervisory Board and Management Board have considered the Code at length in each amended version and incorporated the recommendations into their actions. As a result, CENTROTEC Sustainable AG complies in all key respects with the recommendations of the German Corporate Governance Code as amended most recently on June 16, 2009 and with the previously validversion of the Code dated June 6, 2008. The Declaration of Compliance below indicates and clarifies thedepartures.

Management and governance structure In keeping with German Stock Corporation Law, CENTROTEC Sustainable AG has a two-tier managementand governance structure that comprises a four-member Management Board (at the reporting date of December 31, 2009) and, as laid down in its articles of incorporation, a three-member Supervisory Board.The Management Board and Supervisory Board work together closely in the interests of the company.The Management Board coordinates both the strategic direction and principal transactions with the Supervisory Board.

In accordance with the rules of internal procedure of CENTROTEC Sustainable AG, the ManagementBoard is independently responsible for the running of the company and conducts its business. In doingso, it focuses on achieving a lasting improvement in the value of the company. It is bound by the law, theprovisions of the articles of incorporation and the rules of internal procedure for the Management Boardand Supervisory Board, as well as by the resolutions of the Shareholders’ Meeting. The ManagementBoard informs the Supervisory Board regularly and promptly of all relevant topics concerning the strategyand its implementation, the targets, the company’s current performance and the risks facing it.

The Supervisory Board monitors and advises the Management Board. It specifies the duties of the Man-agement Board to report and inform. The Supervisory Board issues and amends the rules of internal procedure for the Management Board. It in addition appoints and dismisses the members of the Manage-ment Board. It may appoint a Chair of the Management Board. In accordance with the rules of internalprocedure for the Supervisory Board, at least two meetings of the Supervisory Board are held each year.In the 2009 financial year, four meetings of the Supervisory Board took place. The members of the Super-visory Board are appointed until the Shareholders’ Meeting that gives discharge for the fourth financialyear after the start of their term of office. The financial year in which the term of office commences isdiscounted.

Shareholders and Shareholders’ MeetingThe shareholders exercise their rights through the Shareholders’ Meeting and make use of their votingrights there. Each share carries one vote. Every shareholder is entitled to take part in the Shareholders’Meeting. The Shareholders’ Meeting takes decisions concerning in essence the appropriation of profits,discharge of the Management Board and Supervisory Board, the articles of incorporation and amend-ments thereto, key entrepreneurial measures, and measures that change the capital such as the issuanceof new shares, the acquisition of treasury stock and the conditional capital. The participants of the Share-holders’ Meeting elect the Supervisory Board members and determine their remuneration.

Remuneration system of the Management Board and Supervisory BoardThe Supervisory Board is responsible for determining the remuneration of the Management Board, includ-ing the principal contractual features. The remuneration system of the Management Board and SupervisoryBoard is presented in detail in the remuneration report, which forms part of this report.

12 Corporate Governance Report

Corporate Governance Report


Third-party financial loss insurance (D&O cover) has been taken out for the company’s Management Boardand Supervisory Board members, incorporating an appropriate excess. The managing directors and admin-istrative board members of subsidiaries are included in this cover.

TransparencyCENTROTEC Sustainable AG has acted openly and responsibly ever since its establishment, and thereforedid so before the company pledged to observe the Corporate Governance Code. The overriding objectiveof CENTROTEC’s corporate communication is to provide prompt, continuous, comprehensive and consis-tent infor mation to all target groups and to maintain a relationship with its shareholders that is characterisedby transparency. In addition to financial data, the financial calendar listing all key dates for CENTROTECSustainable AG, ad hoc information and press releases as well as a yearly document in compliance withSection 10 of German Securities Prospectus Law (WpPG), the latest developments regarding the Corpo-rate Governance Code and notifiable securities transactions (directors’ dealings) pursuant to Section 15aof German Securities Trading Law (WpHG) as well as changes in the principal investments and in theoverall voting rights pursuant to Sections 26 and 26a of German WpHG are published on the CENTROTEChomepage, following disclosure to the German Financial Supervisory Authority and the stock market. Allthe above information is immediately published on the company’s homepage and older information is alsomade publicly available, above and beyond the statutory requirements.

Article 6.6 of the Corporate Governance Code and Section 15a of German Securities Trading Law stipu-late the obligation to report immediately acquisition and sale transactions (in excess of EUR 5 thousandp. a.) by Management Board and Supervisory Board members or by other persons performing managementtasks who regularly have access to inside information about the company. Those persons are fundamen-tally held on a list of insiders at CENTROTEC Sustainable AG and, where they fall under the obligation tosupply notice, are obliged to notify the company immediately of the transactions described in the abovesections. CENTROTEC Sustainable AG has passed on all such transactions to the German Financial Su-pervisory Authority without delay and published them on its homepage. The current holdings of sharesand options by the members of corporate bodies are likewise documented there.

Legal transactions with companies in which members of the Supervisory Board and management hold ormight hold an interest were also conducted in the financial year. As presented in detail in the Declarationof Compliance, these did not give rise to any conflict of interests.

As in previous years, a dependence report was issued by the Management Board. The concluding remarkfrom the dependence report reads: “Pursuant to Section 312 (3) of German Stock Corporation Law, wedeclare that, on the basis of the circumstances known to us at the time when legal transactions with affil-iated companies were conducted or measures taken or forborne, our company received adequate consid-eration for each legal transaction and was not placed at a disadvantage by the implementation orforbearance of the measure.”

Financial reporting and auditing of financial statementsThe Consolidated Financial Statements are prepared by the Management Board, audited by the independ-ent auditors and ratified by the Supervisory Board. The Consolidated Financial Statements and interim reports are prepared in accordance with the International Financial Reporting Standards (IFRS) as appli-cable within the EU, and published in both German and English.

Corporate Governance Report 13


Declaration of ComplianceThe Management Board and Supervisory Board of CENTROTEC Sustainable AG declare that the recom-mendations of the “Government Commission on the German Corporate Governance Code” in the versiondated June 6, 2008 and subsequently in the version dated June 18, 2009 are and have been compliedwith since the last Declaration of Conformity, dated December 2008, with the exceptions stated below.

1) Article 4.2.3 of the Code recommends that the remuneration of the Management Board should com-prise a variable as well as a fixed component. The variable component is, among other things, intended tobe performance-related, have a long-term incentivising effect and possess a risk character. The Codequotes stock options schemes as an example. CENTROTEC Sustainable AG has been operating a stockoptions scheme, applicable not only to Management Board members but also to executive staff and otheremployees, since 1999. We believe that the scheme reflects the spirit of the Code, but we draw attentionto two aspects which might be interpreted as a departure from it.

The Code recommends reference to comparative parameters. The stock options scheme envisages a per-formance target based on the absolute increase in the share price. This form was chosen in order to pro-vide an incentive for success in absolute rather than relative terms. The Code in addition recommendsthat the variable remuneration be capped. In the case of the options, this was realised through allowingtheir exercise only within a limited time frame (for the first time two years after issuance, for the last timeseven years after issuance). Options received as a result of the attainment of targets are not retrospec-tively withdrawn by the company, nor the parameters governing them altered. In addition to the aforemen-tioned share price target, the exercising of the options is moreover linked to further internal performancetargets in order to preserve a demanding but equitable form of variable remuneration.

2) The German Company Law (AktG) along with the Code, Section 3.8., requires that a D&O insurance formembers of the management board includes a deductable own risk of at least ten percent of the damageup to a minimum of one-point-five times the fixed annual salary of the board member insured. The Coderecommends the same arrangement for D&O insurances for members of the supervisory board. Follow-ing a review of the existing insurances the relevant deductable own risk will be agreed with the manage-ment board members and the supervisory board members within the time limitations set by law.

3) Article 5.3 of the Code recommends the formation of committees on the Supervisory Board. Theseshall, however, be dependent on the specific circumstances of the company and the number of membersof the Supervisory Board. Our Supervisory Board consists of three members, who consider all mattersconcerning the company jointly. Consequently, we do not regard the creation of committees to be appro-priate in our case. We believe that our view is compatible with the Code, but supply this information as aprecautionary measure by way of clarification.

4) Article 5.4.2 of the Code recommends that the Supervisory Board includes an adequate number ofmembers who – in the board’s own opinion – are deemed to be independent. A member is to be regardedas independent if it has no business or personal relations with the company or with its Management

14 Declaration of Compliance


Board that might constitute a conflict of interests. In its own opinion, our Supervisory Board includes anadequate number of independent members. Although Supervisory Board members do have business relations with the company, this does not constitute a conflict of interests.

Brilon, December 2009On behalf of the Management Board On behalf of the Supervisory Board

Dr. Gert-Jan Huisman Guido A Krass[Chairman] [Chairman]

Responsibility Statement

Responsibility Statement pursuant to Section 297 (2) fourth sentence andSection 315 (1) sixth sentence of German Commercial Code

To the best of our knowledge, and in accordance with the applicable reporting principles for financial re-porting, the consolidated financial statements give a true and fair view of the assets, liabilities, financialposition and profit or loss of the group, and the management report of the group includes a fair review ofthe development and performance of the business and the position of the group, together with a descrip-tion of the principal opportunities and risks associated with the expected development of the group.

Brilon, March 24, 2010

Dr. Gert-Jan HuismanAnton HansAlfred GaffalDr. Christoph Traxler

Corporate Governance Declaration pursuant to Section 289 (a) of German Commercial Code

The declaration is available on the website of CENTROTEC Sustainable AG. To access it, please use of thefollowing link http://www.centrotec.de/en/investor-relations/corporate-governance/statement.html

Responsibility Statement 15


Remuneration Report of the Management Board and Supervisory BoardThe remuneration report of CENTROTEC Sustainable AG is based on the requirements of the InternationalFinancial Reporting Standards (IFRS) and German Commercial Code (HGB) while also incorporating therecommendations of the German Corporate Governance Code. The report contains disclosures that aremade in the Notes to the Consolidated Financial Statements and Management Report in accordance withthe above standards. It therefore forms a part of the audited Consolidated Financial Statements. Thematters explained in this report are therefore not presented additionally in the management report andNotes to the Consolidated Financial Statements.

Remuneration of the Management Board The remuneration system for the Management Board including the key contractual elements is agreed by the Supervisory Board and regularly examined. The monetary remuneration of the members of theManagement Board comprises a non-performance-related fixed salary and a performance-related remu-neration component. In addition to this there are retirement benefits, other pledges and fringe benefits.The level of the remuneration of the Management Board members reflects the size as well as the eco-nomic and financial position of the company. Task areas, experience and attainment of targets by theManagement Board members are moreover taken into account in determining their remuneration.

The Management Board of CENTROTEC Sustainable AG comprised four members in the 2009 financial year.

The non-performance-related Management Board remuneration is paid in the form of a fixed monthlysalary. In the 2009 financial year these fixed salaries, including the employer’s social contributions onthem, amounted to EUR 1,043 thousand (previous year EUR 1,334 thousand).

In individual cases a monetary bonus is granted; its granting and level are dependent on the attainmentof certain targets specified at the start of the financial year. Bonuses amounted to EUR 162 thousand inthe 2009 financial year (previous year EUR 151 thousand). The greater portion of the variable remunera-tion is granted in the form of stock options via the stock options scheme. It is dependent on the attain-ment of certain targets based on the specific performance of the company, as well as individual targets.Depending on attainment of the targets, the Management Board members receive a certain number ofstock options, which have a long-term incentivising effect in view of their vesting period of at least twoyears and the threshold requirements for their exercising. The rules on the stock options scheme and thenumber of options that Management Board members are able to exercise are shown in detail in the Notesto the Consolidated Financial Statements in this Annual Report. In the year under review of 2009, theManagement Board was offered the prospect of a maximum total of 125,000 options (previous year131,250 options). Each of these options entitles the beneficiary to purchase one CENTROTEC share at anexercise price of EUR 8.30 (previous year EUR 11.70), provided certain conditions are met. The maximumnumber of all exercisable options was used as the calculation basis for determining the personnel expensepursuant to IFRS 2. The value of the stock options received in 2009 has been determined using a binomi-nal model in accordance with the rules in IFRS 2 “Share-based Payments” and totals EUR 428 thousand(previous year EUR 304 thousand).

The third category of remuneration for Management Board members comprises miscellaneous remunera-tion that is made substantially in the form of contributions towards pension schemes, the use of companycars, and insurance premiums, with a total cost of EUR 119 thousand (previous year EUR 152 thousand).No other fringe benefits are provided.

The remuneration of the Management Board of CENTROTEC fundamentally does not include pension con-tributions for Management Board members. German management board members are able to use the

16 Remuneration Report


company agreement on company pension schemes. Like all other employees, they then make tax-advan-taged contributions from their gross salary. In the Netherlands, as for all employees there, payments aremade into an industry-specific fund, which guarantees an additional retirement pension on top of thestate pension. The employee contributes 40 % and the employer the remaining 60 %. The pension entitle-ment for one Management Board member was topped up over and above the specified ceiling. This iscustomary for other employees, too.

The total remuneration for active and no longer active members of the Management Board of CENTROTECSustainable AG in the 2009 financial year amounted to EUR 1,752 thousand (previous year EUR 1,941thousand). The remuneration of the individual Management Board members, broken down into non-performance-related and performance-related components, components with a long-term incentivisingeffect and miscellaneous remuneration, is shown in the following table in thousand euros:

Management Board member Non-per- Perform- Components Other Total Totalformance ance-related with a long- benefits3,4 remuner- remuner-

dependent component4 term incenti- ation, 2009 ation, 2008component1,4 vising effect2

Active members of corporate bodies

Dr. Gert-Jan Huisman 360 1 167 45 573 498

Anton Hans 120 1 83 35 239 187

Alfred Gaffal 277 160 89 7 533 531

Dr. Christoph Traxler 286 0 82 4 372 345

Pieter van der Poel (until December 23, 2008) 0 0 0 0 0 247

Martin Beijer (until April 1, 2008) 0 0 0 0 0 82

Retired members 0 0 7 28 35 51

Total 1,043 162 428 119 1,752 1,941

1 Incl. employer’s social contributions 2 Valued options

3 Expense for pensions, company cars and others 4 Short-term component

Remuneration of the Supervisory BoardThe remuneration of the Supervisory Board is regulated by Section 18 of the articles of incorporation ofCENTROTEC Sustainable AG. This specifies that, in addition to reimbursement of their out-of-pocket ex-penses, the members of the Supervisory Board receive a fixed annual remuneration that was determinedby the Shareholders’ Meeting on June 1, 2005. It amounts to EUR 12 thousand per member of the Super-visory Board for each full year of service. The Chairman receives double and the Deputy Chairman oneand a half times the amount due to a member of the Supervisory Board. This remuneration of membersof the Supervisory Board of CENTROTEC Sustainable AG amounted to EUR 54 thousand in the past financial year (previous year EUR 54 thousand). There were in addition other expenses amounting to EUR 2 thousand (previous year EUR 1 thousand). The statutory level of sales tax due on this remunerationis furthermore paid by the company to the extent that it is billed by a Supervisory Board member. No sep-arate remuneration is paid for service on committees, because the three-member Supervisory Board ofCENTROTEC Sustainable AG does not form separate sub-committees in view of its size. In accordancewith the articles of incorporation, each member of the Supervisory Board receives remuneration amount-ing to 0.1 % of the dividend payable for a given financial year; as in previous years, however, no dividendswere distributed in the 2009 financial year.

Remuneration Report 17



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Solar cooling:Solar cooling uses solar thermal energyor waste heat to generate refrigeration forcooling and air conditioning purposes |The input-output ratio of primary energyused is therefore between a factor of 2and 5 higher than for electrically poweredcompression refrigeration systems. Withseveral million such systems in use world-wide, it represents considerable energy-saving potential.

1 Absorption refrigerating unit2 Cooled ceiling element

Solar energy:Solar collectors convert solar irradiationinto heat and electricity | A solar thermalsystem can meet up to 60 % of annualenergy requirements for hot water, whileproviding backup for the heating system |Solar power will be able to compete withelectricity generated from fossil fuels within a few years’ time – but does notgenerate any climate-harming CO2 emis-sions | Integrating solar thermal and photovoltaic systems into a single roofconcept makes the roof of a house acomprehensive power plant without being architecturally obtrusive.

3 Integrated energy roof system witha) Solar thermal,b) Photovoltaic,c) Dummy modules

4 Heat accumulator5 Solar circulating pump6 Mixer circulating pump7 Underfloor heating8 Photovoltaic power to grid


Two core segments Climate Systems and Gas Flue Systems

Group Management Report

Bearing in mind the wider economic environment, the CENTROTEC Group – hereinafter also referred toas CENTROTEC – enjoyed a good 2009 financial year, characterised by increased market shares andlaunches of a large number of innovative system solutions for energy efficiency and the use of renewableenergies in buildings. All the same, CENTROTEC was of course unable to remain entirely immune to over-all economic developments, which saw the bitterest recession in the global economy since the SecondWorld War. The fall in revenue compared with the record-breaking year 2008 was nevertheless restrictedto two percent and the group succeeded in increasing its market shares in its key markets. It achievedthis through the market success of a wide range of efficient system solutions, but first and foremost high-efficiency condensing boiler technology for gas and oil, solar thermal, climate control with and withoutheat recovery, and combined heat and power units. Particularly in the case of condensing boiler and ven-tilation technology, these successes were largely thanks to the new solutions launched in the course of2009. The area of solar mounting and integrated solar systems, already well established in the market-place, moreover enjoyed growing market shares. The area of combined heat and power units, which com-pleted its first full year as part of the group in 2009, also made good progress, contributing towards thehealthy consolidated earnings. These achievements, particularly in the German market, almost entirelycompensated for weak performances in the previously very high-growth countries of the former CIS, inproject business and in certain peripheral areas of the group.

With its existing portfolio of integrated systems for energy efficiency and the use of renewable energies inbuildings, allied to the innovative prowess of the group companies, CENTROTEC enjoys a strong marketposition. On this basis the CENTROTEC Group is already operating highly successfully on what will be oneof the world’s biggest growth markets in the medium to long term; it also expects to see the company’sabove-average development continue. The robust progress of the relevant markets in the past year pro-vides ample evidence that these market expectations are realistic, for all the continuing global difficultiesin the financial world and the real economy, as well as uncertainty about the general direction of the globaleconomy. With more and more countries creating framework conditions that are conducive to solutionsthat promote energy efficiency and use renewable energies, along with a growing awareness worldwide ofthe importance of saving energy and protecting the climate, the development of these specific marketscan to some extent disconnect itself from the general economic trend and generate its own considerablemomentum.

Strategy, structure and steering

Based on the rapid development of the markets for energy efficiency and the use of renewable energiesin buildings, the CENTROTEC Group has likewise accomplished systematic horizontal and vertical growthin recent years. Since the 1998 IPO it has consistently pursued a buy-and-build strategy, thanks to whichboth its product range and manufacturing penetration have been extended. The group’s prompt identifi-cation of and considered response to current developments in the various market segments has enabledit to build up a sound financial and earnings basis over a number of years, providing it with a springboardto the further expansion of its technology portfolio and market position.

The CENTROTEC Group comprises three segments; the core segments of the group, generating the bulkof its revenue, are the Climate Systems and Gas Flue Systems segments; they provide solutions involvingheating, ventilation and climate control technology on the one hand, and gas flue systems for various typesof heating on the other. The third segment of the group, Medical Technology & Engineering Plastics, whichis also the smallest by revenue, develops, manufactures and sells medical technology products and engi-neering plastics. CENTROTEC in addition has an interest of 26.16 % in the listed company CENTROSOLARGroup AG, which specialises in photovoltaics and was hived off from the former fourth segment of the

20 Group Management Report

Stable performance against difficult backdrop

Favourable environment forenergy-saving solutions


group, Solar Systems. The group’s regional emphasis is on Germany and the Netherlands. Most of thegroup companies are based in those two countries, as is the overwhelming proportion of its research anddevelopment, manufacturing and administrative operations. The group moreover still generates aroundtwo-thirds of its consolidated revenue in these core countries, though the successful group-wide interna-tional expansion strategy has been bringing that share down in recent years, with the exception of 2009;the trend is expected to continue in future years, too.

It is a key aspect of the CENTROTEC corporate philosophy to grant the individual operating units entre-preneurial freedom because that is how they can respond to the market swiftly, innovatively and in a waythat best serves regionally varying requirements. The ability to assume independent responsibility is more-over hugely motivating for employees, resulting in greater job satisfaction and correspondingly lower em-ployee turnover. Using this entrepreneurial liberty as the starting point, cooperation between the individualgroup companies both across and within segments will be further stepped up in order to optimise existingcustomer relations and access new customer groups, speed up logistics processes, develop joint productconcepts and realise synergies in purchasing and sales. The group-wide planning and budgeting systemthat is updated in-year is additionally regularly adjusted to reflect changing requirements so that depar-tures from the targets and changes in the general parameters can be identified early on in tandem withthe risk management system, and appropriate corrective action taken. This, along with the ongoing effi-ciency improvement and cost-cutting programmes, plays a pivotal role in ensuring that the CENTROTECGroup is consistently successful in its rapidly changing target markets.

Economic conditions

Economic environmentDespite growing signs of an economic recovery in the latter part of the year, 2009 goes down in economichistory as the year bringing the deepest recession since the Second World War. For the first time in over60 years, real gross domestic product (GDP) worldwide contracted by 2.1 %, having grown by 3.3 % in theprevious year and by an average of almost 5 % in the years prior to that. A worldwide rise in GDP of 2.6 %and 3.3 % is forecast for 2010 and 2011, meaning that the global economy will therefore not regain thelevel prior to the outbreak of the crisis until 2011. The national economies of the European Union sufferedan average fall in real GDP of 4.1 % in 2009. Except for Poland, economic output fell in every single one ofthese countries. The smaller EU states that have in the past enjoyed high growth rates were affected par-ticularly badly, above all the Baltic states and almost all recently acceded Eastern European countries, aswell as Ireland and Greece, with their record budget deficits. Outside the EU, of those national marketsthat are particularly relevant for CENTROTEC Russia and Ukraine suffered a sharp contraction in eco-nomic output. On the other hand the downturn in the established Northern/Western European nationaleconomies was mostly below the average fall in GDP. All member states of the EU and all other economi-cally significant countries worldwide are forecast to post a better economic performance in 2010 and2011 than in 2009. Nevertheless, even if the forecast growth rates are achieved, economic output inthose countries will still take until 2011 to get back to the level prior to the economic crisis.

The development in national economic output in the two core countries of the CENTROTEC Group, Germanyand the Netherlands, is similar. Both countries enjoyed substantial growth in their respective nationaleconomies in 2006 and 2007, before the reversal in the second half of 2008, culminating in the deep re-cession of 2009. This downturn reached minus 4.5 % in the Netherlands in 2009 (previous year plus 2.0%) and minus 5.0 % in Germany (previous year plus 1.3 %), in both cases rather higher than the average forthe EU. For 2010 and 2011 both countries are forecast to achieve moderate GDP growth in the region ofthe EU average (0.7 % in 2010 and 1.6 % in 2011) of 1.2 % and 1.7 % for Germany, and 0.3 % and 1.6 % for

Group Management Report 21

Market-led activities of group companies

Worldwide downturn in economicoutput in 2009

Slight recovery in 2010 expected


the Netherlands. The 2009 inflation rate in the Netherlands and Germany, as indeed throughout the EU,was clearly below the levels of the previous years (2.2 % and 2.8 %) at well below one percent. However,the inflation rate is expected to rise again in 2010 and 2011 among other reasons because of expectedenergy price rises. In general, an inflation rate of around one percent is forecast for 2010 for both the EUand for the two core countries of the CENTROTEC Group.

Energy prices play a key role in both the development of the inflation rate and the business performanceof the CENTROTEC core segments Climate Systems and Gas Flue Systems. The price of a barrel of crudeoil in USD serves as the guide price. Most prices for other types of energy follow it, tracking its movementeither directly or after a time lag. In 2009 the average price of a barrel of crude oil was around USD 62and therefore well down on the record annual average price of USD 91 in 2008. After a decade in whichthe price of crude oil increased seven-fold, this represents a price correction at a high level. It is generallybeyond dispute that the price level will rise again considerably as worldwide oil production reaches maxi-mum level in the medium term, coupled with a rise in demand. In the short term, a price rise to aroundUSD 80 per barrel was observed in the second half of 2009 up until the end of that year. The price there-fore doubled by year-end compared with the start of the year. In the first two months of the current year,the average price of crude oil of around USD 80 per barrel was already almost one-third up on the aver-age for 2009. The substantial jump in the price of crude oil over the past two years illustrates how it isdifficult to predict in the short term due to speculation on crude oil and the associated short-term natureof their effects. However, this does not fundamentally alter the certainty that energy prices will rise con-siderably in the medium to long term due to the long history of disproportionately low growth in theworld’s verified crude oil reserves and – for all the efforts to promote energy efficiency – the further risein demand, especially from the emerging economic powers led by China and India. If, moreover, theprice-restraining effect of a weak US dollar on European crude oil imports over the past few years shouldweaken, an added rise in energy prices is to be expected.


development of gross domestic product[Change in relation to previous year in percent]

2008 Source: Interim forecast, January 2010, European Commission2009[e] 2010[f] 2011[f]

EU Germany Spain France Italy Netherlands UK USA

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Renewed rise in oil price following on from crisis-induced fall


This trend towards rising energy costs also has consequences for the construction industry, which is rele-vant to CENTROTEC’s core business. The general trend in overall construction volume has been stagnantto downward for a number of years, particularly in the German and Dutch construction markets, above all in the new housing sector. However, the overall market volume for renovation and especially energy-efficient refurbishment of building stock both in Germany and throughout Europe is steadily growingthanks to the long-term rises in energy prices and the growing pressure to act on energy conservationand climate change. In Germany, for instance, 70 % of heating installation business is now for existingbuildings. Furthermore, the investment volume per system is fundamentally steadily rising, and with it theproportion of the overall construction budget spent on energy technology in both new and renovatedbuildings, confirming the growth potential of the industry.

Development of heating and energy-saving technology market

Market structureThere are a large number of regional markets with many different market operators in the field of heating,climate control and ventilation technology. The overall market can be subdivided both regionally and byproduct, the main reason being the country-specific factors that stem from varying climatic conditions andregulatory requirements. Notwithstanding these differences, all markets exhibit a fundamental trend to-wards greater energy efficiency and convenience in the product concepts that they favour. Furthermore,growing standardisation of the regulatory requirements, particularly within the EU, can be observed. Thereis also a trend that previously separate products in the areas of heating, ventilation, climate control andsolar energy are converting into combined concepts. These coordinated, centrally controlled integratedsystems are absolutely essential if low-energy or passive houses and other similar, increasingly popularenergy-efficient designs are to operate efficiently, and it is becoming ever more common for them to becombined with systems that use renewable energies.

The consolidation of the European heating technology market prompted by these market developments isprogressing only slowly and has not yet produced a clear global market leader. For instance, there are stillaround 250 heating technology manufacturers in Europe, as well as over 100 specialist suppliers of sys-tems using renewable energies. Nevertheless, there have been clear signs in recent years that the largeheating technology suppliers are moving towards becoming one-stop suppliers of all areas of heating, climate control, ventilation and solar technology. The pioneers of this development included most notablythe group subsidiary Wolf, which already kicked off a new trend back in 2002 when it became the firstheating technology supplier to supply the heating industry with energy-saving systems and integrated sys-tem technology. The Wolf Group remains one of the leaders for integrated system solutions that save energy, thanks to its combination of expertise in heating and solar technology with climate control andventilation technology.

The leading heating technology suppliers are extending their product portfolios on the one hand by in-creasing their own expertise and on the other hand by increasingly making technology-led acquisitions.The major European manufacturers are in addition broadening their regional sales markets, in particulartapping into the Asian and North American growth markets. The leading players in the industry, with


Growing importance of renovation market

Trend towards integration of heating, ventilation, climate control and renewable energies

German manufacturers at thevanguard of European heatingtechnology market


Backlog of demand in Germanheating technology market

German manufacturers traditionally dominating the field in Europe, have the necessary resources to handlethese developments most successfully. Alongside the CENTROTEC Group with its main brand Wolf, thereare the German competitors Bosch Thermotechnik, Vaillant, Viessmann and Weishaupt, the Italian compa-nies MTS Group, Riello and Ferroli, the Dutch Remeha-Baxi Group and the French competitor Atlantic.

Market development and market outlookThe market for heating technology developed very positively in 2009 despite the generally difficult stateof the global economy, though there were marked regional and product-specific variations to this devel-opment. Reflecting the general trend in the construction sector, renovation and replacement businesswas particularly significant.

The German heating technology market enjoyed a slight year-on-year rise in unit sales of about 3 %, with638,000 heat-generating systems sold in 2009. The sharp downturn in sales of combustion systems andthe further spread of modern condensing systems continued; the latter now account for over 60 % of themarket volume. The volume of the market for heat pumps and biomass heating systems contracted by adouble-digit rate in 2009. The same was true of the proportion of investment projects incorporating renewable energies, which fell from 45 % to around one-third. The solar thermal sector was also affected,with the sales volume falling from around 2.1 million square metres in 2008 to about 1.58 million squaremetres. Amid this market environment, the CENTROTEC companies nevertheless succeeded in further in-creasing their own market shares. This market development is to be considered in the context of a stillseriously outdated installed base. In Germany, the energy efficiency of over three-quarters of heat-gener-ating systems is inadequate and only 13 % of systems use renewable energies. Considering that buildingsare responsible for around 40 % of primary energy consumption and that about 85 % of that energy is usedfor space heating and water heating, it is clear that there is an enormous amount of ground to be madeup, but also substantial energy-saving potential in the renewal of heating systems. Bearing in mind theneed for climate protection, the renewal rate for heating systems moreover needs to be at least doubledfrom currently 3 % per year if the German government is to achieve its climate protection targets for 2020.




Efficient condensing boiler technology continues to makeheadway

In contrast to the slight growth enjoyed by the German market, the volume of other European markets forheating technology fell, in some cases considerably, in 2009. As well as the very sharp reversals in EasternEuropean markets, established Western European markets such as the UK, France and Italy likewise wit-nessed a contraction in the overall market volume ranging from 7 % to almost 20 %. It should be empha-sised that condensing boiler technology, which has been steadily increasing its market share acrossEurope for many years, was unaffected by these reversals or affected only to a much lesser degree. Nev-ertheless, it should be noted that there is considerable variation in the market penetration rates achievedfor this most efficient heating technology for gas and oil. Market penetration has long been the highest in the United Kingdom, at almost 100 % of newly installed systems, due to statutory requirements. Highrates often well above 50 % are also now achieved in Germany and other Northern and Western Europeancountries. On the other hand there is still a long way to go in most Southern and Eastern European nationalmarkets, though they have been delivering high growth rates for some years now. The same applies to thesolar thermal market in most European countries, which enjoyed further market growth in 2009 despitesales being muted by falling energy prices.

For 2010 and beyond a fundamentally positive development, but with variation from country to country, is expected for the overall European market for heating technology, including solar thermal. The generaltrend towards the increased adoption of efficient condensing boiler technology and the use of renewableenergies will gather momentum in anticipation of energy price increases and more concerted efforts toprotect the climate, fuelling marked growth in the relevant segments of the heating technology market.The falling figures for the new construction market will be overcompensated by a steadily growing reno-vation market and the rising proportion of total building investment being spent on heating technology,providing the basis for this medium to long-term market growth.



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Heat pumps:These use the low-temperature energygenerated by the sun and present in theair, ground and ground water | With mini-mal input of electrical primary energy todrive a compressor, they generate suffi-cient heat to cover hot water and heatingrequirements all the year round | With aninput of one kWh of electricity, heat pumpsgenerate 3.5 to 4.7 kWh of heating energy,thus cutting CO2 emissions by up to 50 %.

1 Heat pump2 Earth probes3 Intermediate calorifier

Biomass heating:Biomass stores the sun’s energy while atthe same time drawing climate-harmingCO2 from the atmosphere | When biomassis burned, only the same amount of CO2

is released into the atmosphere as the ve-getable matter had previously absorbed |In conjunction with sustainable wood resources management, the cycle is thuskept climate-neutral | Today’s biomasssystems have to meet very tough standardsof waste-gas and particulate matter emissions.

4 Biomass boiler5 Pellet store6 Stainless steel gas flue system


Earnings depressed by non-recurring effects fromCENTROSOLAR investment


Stable corporate performanceand increased market shares

Core segments overall on parwith previous year's record level

Business performance with revenue and earnings trend

Key figures at a glanceFollowing the record figures of the previous year, the CENTROTEC Group achieved a positive performancein the past 2009 financial year, amid a difficult general economic environment; it increased its marketshares and the revenue and earnings performance overall was stable, though with some variation betweenthe individual segments and markets. There were no material changes to the group in the period underreview compared with 2008.

In the 2009 financial year CENTROTEC generated consolidated revenue of EUR 466.6 million, and there-fore only 2.0 % less than in the previous year (EUR 476.1 million). The combined revenue of the two coresegments of the group, Climate Systems and Gas Flue Systems, remained unchanged, whereas the figurefor the Medical Technology & Engineering Plastics segment fell sharply. Revenue for the Climate Systemssegment, which is the largest in the group by revenue, was 3.1 % down on the prior-year figure at EUR309.5 million. In the Gas Flue Systems segment, revenue rose a further 7.8 % on the previous record levelfrom 2008 to reach EUR 128.1 million. On the other hand, there was a 23.6 % slump in revenue to EUR29.0 million for the smallest segment, Medical Technology & Engineering Plastics, which experienced avery sharp downturn in revenue specifically in the peripheral areas of engineering plastics for non-med-ical applications. The collapse of business in the mechanical and plant engineering sector and its result-ing extreme weakness lay behind this. In summary, despite all the difficulties experienced by the widereconomy and general uncertainty about future developments, consolidated revenue entirely met the revenue forecast of EUR 455 to 480 million made at the start of 2009.

The same is true of the operating forecast made at the same time, which envisaged a figure of EUR 43 to48 million for EBITDA and EUR 27 to 32 million for EBIT. EBITDA for the CENTROTEC Group reached EUR 46.6 million in 2009 and EBIT totalled EUR 29.0 million. These figures were consequently respectivelyonly 4.4 % and 9.7 % down on the record figures of the previous year. However, the negative non-recurringeffects from the first half of 2009 for the investment subsidiary CENTROSOLAR Group AG meant that the investment result was deeply negative, and despite the substantial improvement in net interest thisprompted a 50.6 % deterioration in earnings before tax (EBT) to EUR 12.7 million. This effect, togetherwith the temporarily slightly elevated effective tax rate, pushed earnings after tax (EUR) down by 72.0 %

400

300

200

100

0

revenue by segment for 2006 to 2009 compared with revenue forecast for 2009[in EUR million]

80.3110.0

33.8

274.1

35.9

2006 2007 2008 2009 2009(e)

96.4

319.3

38.0

118.8

29.0

128.1

309.5

307 –

320

33 –

37

113 –

123

Medical Technology & Engineering Plastics Gas Flue Systems Climate Systems


to EUR 5.2 million. With an average basic of 16,609,906 shares outstanding, the basic earnings per sharefigure (EPS) for 2009 is EUR 0.33. At operating level, i.e. excluding the effects of the CENTROSOLAR investment, the figure of EUR 0.93 was likewise fully in line with the forecast for earnings per share ofEUR 0.85 to 1.10.

Climate Systems

Market environment and business developmentThe markets for heating, climate control and ventilation technology that are of relevance for the ClimateSystems segment developed according to very distinct patterns in 2009. Over the year as a whole, theGerman heating market for instance performed very stably and achieved year-on-year growth of aroundthree percent. On the other hand, a large number of international markets suffered reversals, in somecases of considerable magnitude. Certain markets that had enjoyed extremely strong growth in previousyears such as Russia and other Eastern European countries, but also Italy and the United Kingdom, expe-rienced a very sharp reduction in market volume. The market for climate control and ventilation technol-ogy, especially for commercial projects throughout the whole of 2009, was noticeably weaker than in the previous year in both the home markets Germany and the Netherlands, and also internationally. Thefalling number of new buildings in the residential property sector throughout Europe and the sharp de-cline in commercial construction activity in 2009 were only offset to a minor extent by the economicstimulus programmes introduced in many countries, among other reasons because these programmestook effect later than expected and will therefore not reach their full scope until 2010. The downturn innew construction activity observed in 2009 reinforces the existing long-term trend towards steady growthin the renovation market both for heating technology and, increasingly, for climate control and ventilationtechnology.

Against this backdrop, the revenue of EUR 309.5 million posted by the group companies in the ClimateSystems segment (previous year EUR 319.3 million) produced increased market shares in the target mar-kets of the companies in the segment and was just 3.1 % down on the record figure of the previous year,and moreover clearly within the revenue bandwidth of EUR 307 to 320 million forecast for 2009. Thegross profit ratio ((aggregate operating performance – cost of purchased materials) / aggregate operat-ing performance x 100) was consequently increased to 51.2 % (previous year 49.2 %). Nevertheless, earn-ings before interest and taxes (EBIT) of EUR 19.5 million (previous year EUR 21.8 million) were 10.3 % downon the prior-year figure. This slightly overproportional drop in earnings compared with the revenue per-formance was above all due to delayed effects of negotiated pay increases from 2008 and investment inincreased personnel capacities for sales, but also to development activities and the associated rise inpersonnel expenses, and led to an EBIT margin of 6.3 % (previous year 6.8 %).


Growth in Germany, weak areasin project business

2005 39.6

2006 110.0

2007 274.1

2008 319.3

2009 309.5

revenue trend climate systems [in EUR million]


Mixed performance on international markets

The 1,753 full-time equivalent (FTE) posts filled in the Climate Systems segment at December 31, 2009(previous year 1,764) represent around two-thirds of the total posts within the CENTROTEC Group, re-flecting the pre-eminent importance of this segment for the group as a whole. There were notionally1,738 full-time equivalent posts (previous year 1,746) filled at the segment’s companies on average overthe year. When considering this decrease, it should moreover be noted that the annual average contains25 employees of Kuntschar + Schlüter who were included in the employee figures for the first full year in 2009. Due to the delayed effect of negotiated pay increases from 2008 and the further expansion ofthe international sales network, personnel expenses rose by 5.1 % to EUR 89.1 million (previous year EUR 84.8 million) and, in conjunction with the slightly lower revenue for the segment, pushed up the personnel expenses ratio year on year from 26.6 % to 28.9 %. It should nevertheless be borne in mindthat the positive effects of the substantial reduction in temporary workers within the companies in thesegment is reflected in the cost of purchased materials rather than in personnel expenses, for accountingreasons.

Principal developments in the past financial yearThe past financial year was dominated by starkly contrasting market developments in both the ClimateSystems segment and the second core segment of Gas Flue Systems. For example, the three percentgrowth in the German heating market was the aggregate effect of a renewed substantial rise in condens-ing boiler technology and a decline in the market volume for combustion systems, heat pumps and bio-mass systems. In addition, the German market for solar heating witnessed a fall in sales of one quarter in the past financial year, after market volume had virtually doubled in 2008 and reached a correspondingrecord level. The total area of around 1.6 million square metres of solar thermal systems installed in Ger-many in 2009 means it is nevertheless still the second-highest figure ever recorded.

Alongside the German heating market’s heterogeneous performance, which is still satisfactory consider-ing the general economic situation, the performance of international markets was distinctly mixed. Thesituation in the markets of the former CIS states proved consistently difficult in 2009, with abrupt col-lapses in these markets last year following on from markedly high growth rates in the preceding years.Project business, which is particularly significant in those countries, was affected very badly by the dete-rioration in access to financing and a great many projects were postponed or spread out over longer periods as a result. Yet this sharp reversal was in little or no evidence in other regional markets. Sales inAustria, Spain and Poland, which are important markets for the segment, for instance remained steady.Various promising projects were furthermore acquired in the Arab world and have in some cases alreadybeen completed. These contrasting trends are attributable to the widely differing conditions in the indi-vidual regional markets, such as varying climatic conditions, traditionally diverse developments in con-struction engineering and nationally specific subsidy schemes and regulations. One general trend never-theless observed in all countries was a downturn in new construction activity, in both the housing sectorand for commercial property in Europe. The pattern of recent years of growing market penetration forcondensing boiler technology continued throughout Europe in 2009, though the pace of progress variedfrom country to country, as did the penetration levels already achieved.

The CENTROTEC companies in the Climate Systems and Gas Flue Systems segments anticipated thistrend early, and their comprehensive, innovative, multiple-award-winning product range sets standards inthe pioneering of ultra-efficient condensing boiler systems. Further new condensing boiler systems madea successful market entry in 2009, paving the way for a performance outstripping the industry averagealongside the systems already established on the market. One example of such a product appearing onthe market in 2009 is the oil-fired condensing boiler COB-40 from Wolf, which adds an even higher-per-


Economic crisis impacts projectbusiness

Trend towards efficient heatingtechnology continues

Product innovations addresstrend towards integrated systems


formance unit to the much-acclaimed product range in this product group and already made a substantialrevenue contribution in the first few months after its launch. The new CSZ-300 gas-solar centre from Wolfin addition picked up on the trend towards integrated system solutions that combine the use of fossilfuels with highly efficient condensing boiler technology and renewable energies. Following on from theirmarket launch in Germany, both products will also be launched on international markets because theirhigh energy efficiency and user-friendly operation, together with the ease and speed with which they canbe installed, are key advantages for those markets, too.

On the back of record sales in 2008, the renewable energies sector again showed a fundamentally positivedevelopment for the companies in the segment in 2009. Market shares for solar thermal grew throughoutthe entire year, and specifically Wolf succeeded in cementing its position among Europe’s biggest play-ers. That growth in market shares progressed steadily throughout all of 2009, with the overall market inthe first few months of the year gaining even further on the record levels of the previous year. Marketgrowth slowed as the year progressed due to the sharply higher basis in the previous year and significantlylower energy prices, resulting in a clear downturn in the market by the end of the year. In the Germanmarket, for example, the proportion of newly installed heating systems incorporating renewable energiesfell to around one-third by the end of the year, compared with around 45 % in the previous year. The full-year view revealed that the German solar heating market shed around one-quarter of its volume in 2009.Although CENTROTEC was unable to resist this trend altogether, it saw its market shares rise consider-ably by virtue of the fact that there was only a moderate fall in its own revenue. Market shares for bio-mass heating systems were likewise increased in 2009. The same applied to the area of combined heatand power units, which clearly improved its market position in 2009 and exceeded the targets for 2009even though the financial and economic crisis rendered access to financing more difficult.

Alongside the efficient system solutions for heating technology, there were other innovations in the areasof climate control and ventilation technology in 2009. In particular these included climate control andventilation systems, especially with heat recovery, that are specially tailored to various different areas ofapplication. They are becoming increasingly indispensable for modern, energy-efficient buildings, specifi-cally low-energy and passive-house designs. Thanks to their long-established market lead, the CENTROTECcompanies in the Climate Systems segment possess extensive experience in the development, produc-tion and sale of these system solutions. These components also feature in the new Brink system that isparticularly suited to use in passive houses. This compact passive-house system ventilates, heats andproduces hot water. It uses controlled domestic ventilation with heat recovery, a highly efficient condens-ing boiler system and a solar thermal system with integral tank. Through this integration of previously in-dependently-running individual systems, based on intelligent control engineering, CENTROTEC addressesthe trend towards user-friendly, energy-efficient integrated systems. Another example of integrated sys-tems for heating and cooling with heat recovery is the use of Ned Air appliances in the futuristic Dutchdesigner zero-emissions “Eco Iglo” houses, which are benchmarks of energy self-sufficient, modern living.As well as these newly developed products, system solutions already on the market such as Wolf’s KGTop series have been further optimised, with an extended range of functions (hygiene, cooling and controltechnology) opening up new application areas. For all these extended features and performance gains,however, the priority has always been to keep these appliances straightforward to use and very energy-efficient, coupled with superb build quality and maximum versatility. The fact that Wolf’s climate controland ventilation expertise has been selected for national and international major projects such as thecomprehensive refurbishment of Deutsche Bank’s striking twin towers in Frankfurt into the most environ-ment-friendly tower block in Europe serves to confirm the outstanding market position that CENTROTECcompanies enjoy both in this market segment and others.


Pioneering reference projects

Increase of market shares in allproduct areas


Innovative solutions targeting thegrowing renovation market

The latter example provides further evidence of the growing significance of the renovation market for cli-mate control and ventilation technology, too. In order to make the most of a market that – in contrast tonew construction – is steadily expanding, very high flexibility in the installation and connection optionsthat the system solutions afford is absolutely essential. Moreover, the increasing statutory requirementsfor heating, climate control and ventilation technology in both the new construction and the renovationmarket, along with their occasionally considerable regional variation, need to be taken into account. Forexample, the growing demand registered in the renovation market for ventilation in increasingly well-insu-lated homes has been addressed by developing a portfolio of non-central ventilation systems with heatrecovery for retrofitting. In response to rising requirements over and above that, CENTROTEC’s companiesare gradually expanding their consciously market-led sales activities and optimising their own productportfolio in response to feedback from the market. The tally of over 11,000 people, mostly fitters and architects, who attended the Wolf Group’s training courses at its own training facilities during 2009 is evidence of this customer proximity.

This general trend towards the integration of different systems across the entire building services engi-neering sector was also exploited particularly usefully by several group companies, with their concerteddrive leading to the development of the new “Low Profile” air distribution system for controlled domesticventilation. This system was developed into an innovative, highly versatile, space-saving air distributionsystem in 2009 in tandem with companies from the second core segment, Gas Flue Systems, and broughtonto the market. Thanks to its versatility of use and the varying ways in which the market and customerscan be accessed, this system is sold by several group companies in both core segments.

To exploit the cross-company development, manufacturing and sales expertise in these ever more sophis-ticated system solutions, the Climate Systems segment also systematically worked on optimising all oper-ational processes in 2009, as well as investing in essential property, plant and equipment. Underpinningthe increased flexibility that this has produced and the ability to respond faster to customer enquiries, theworking capital of the individual companies has also been reduced, thus lowering the financing costs.

Strategic direction and outlookWith 2009 having turned out well for the Climate Systems segment, for all the problems the wider economyhas been experiencing, the current financial year is likewise fundamentally expected to develop well.Among other things, this positive outlook is based on the successful performance of the past year leadingto increased shares of all target markets, successful launches of innovative system solutions, and furtheroptimised internal processes and cost items. The underlying market conditions are in addition expectedto improve along with anticipated further rises in energy prices, tougher regulatory requirements world-wide that necessitate energy-efficient building designs and the related availability of subsidies to promotethese, as well as growing readiness to take definite action to combat climate change. For the innovative,market-led companies of the CENTROTEC Group, more specifically in the Climate Systems segment,these long-term trends provide a sound basis for sustained profitable growth in the global market of thefuture for energy-saving systems.

The CENTROTEC companies are already well positioned to maximise the market potential of this generaltrend towards energy saving, comfort and climate protection, but continue to work concertedly on exploit-ing further scope for improvements. The highly efficient, certified, multiple-award-winning oil and gascondensing boiler systems will be further optimised, and additional systems will join the product range inorder to profit overproportionally from the growing market penetration of this technology internationally.Wolf’s condensing boiler systems furthermore increasingly serve as the basis for integrated system solu-


Energy saving systems a marketof the future


tions such as the compact gas condensing-boiler solar centre and other possible combinations under theumbrella of the Wolf solar heating concept. Condensing boiler technology aside, the trend towards com-prehensive systems integrating a variety of functions will continue and will necessitate increasingly com-plex, well-coordinated control engineering.

As in a modern car, where functions such as heating, ventilation and air conditioning are controlled in auser-friendly way via a central system, in future customers will also increasingly expect buildings to be fitted with easy-to-use system that respond rapidly to individual requirements and operate ideally withoutneeding any maintenance. The companies in the Climate Systems segment possess the necessary expert-ise and technological solutions to meet these demands, as well as control engineering that is capable ofcombining heating, ventilation and climate control functions and renewable energy systems efficiently.Particularly by using a shared control system with a standard operating principle to integrate and operatethe various system components for heating, ventilation and climate control, the Wolf Group leads the wayin the entire heating technology sector. Specifically this area of technology will be a priority field for inno-vations and technological advances. Partnerships between the companies and segments and within thegroup will continue to be promoted in order to step up this technological integration and bring the exist-ing components even closer together.

Another key technology within the group strategy of integrated energy-saving systems is co-generation,which was introduced into the group in 2008 by the Wolf subsidiary Kuntschar + Schlüter. The non-cen-tral generation of power and heat, preferably from renewable fuels, enjoys considerable market potentialinternationally thanks to an input-output ratio for primary energy use that is well over 30 % higher, and italso attracts subsidies in many countries. Non-central power generation moreover provides greater inde-pendence of supply networks and allows a more flexible response to short-term fluctuations in supply anddemand. Thanks to the very good start enjoyed by this line of business in 2009, the current level of ordersin hand and the sales opportunities emerging on international markets, this technology area will makevery positive progress in the short to medium term. By being part of the Wolf Group, it will also be able toaccess new markets as well as steadily develop its technology and optimise how it functions in tandemwith other technologies.

Within the area of renewable energies, the use of ambient heat by heat pump systems is becoming in-creasingly significant. This product area had previously been served with OEM items from a partner com-pany. In response to the growing importance of heat pump systems, the Wolf Group has developed itsown range of heat pumps comprising air/water and brine/water heat pumps spanning a performancerange of 6 to 16 kW heating output. The primary development objective, alongside ease of installationand user friendliness, was good energy efficiency. With a coefficient of performance (COP) of 4.7 forbrine/water heat pumps and 3.8 for air/water heat pumps, the ready-developed systems achieve thehighest figures in their field of competitors. The full range of heat pump systems, which can likewise beintegrated efficiently with other systems thanks to the cross-system control engineering, will appear onthe market from the second quarter of 2010. This newly developed, highly efficient comprehensive rangeof heat pumps will make it possible to serve this increasingly important segment of the heating technol-ogy market even more accurately. Based on the existing market position and sales strength, this productarea too can look forward to increasing market shares and revenue potential.

Another priority area in the highest-revenue segment will continue to be the further development of sys-tems using solar energy, which succeeded in increasing their market shares in 2009 amid a market thatcontracted from the previous year’s record level. Along with the anticipated rebound in prices for fossil


Trend towards integrated systems addressed early on

Positive business performancefor efficient co-generation

Newly developed complete rangeof heat pumps

Still huge market potential forsolar thermal


Additions to product range address growing significance of renovation business

fuels, which were at a relatively low average level over the year as a whole, solar thermal continues tooffer considerable market potential internationally in the medium and long term. The market environmentis in addition fundamentally benefiting from the fact that more and more countries, and to some extentspecific municipalities, are introducing statutory requirements on the binding use of renewable energiesor indirect stipulations imposing a ceiling on maximum permissible primary energy consumption. Anothernew development that will benefit from this general situation is the integrated energy roof system, cre-ated in partnership with the Gas Flue Systems segment, which paves the way for using photovoltaic andsolar thermal modules with a standard appearance and will be added to the solar systems product rangefrom 2010.

In addition, there are initial signs of a market recovery in Russia and the other CIS states, which were distinctly weak in 2009. If this development continues, they will offer substantial growth potential from as early as 2010, given the low prior-year basis. The same is true of business in the Arab world, where initial revenue was generated by interesting reference projects in 2009.

These market developments, the market position of the segment’s companies and their demonstrable in-novativeness and economic efficiency, even at a time when the economy as a whole is struggling, providethe basis for this segment’s positive future development. For 2010, CENTROTEC is aiming for revenue ofEUR 320 to 330 million for the Climate Systems segment and therefore up on the previous year’s level. Themedium-term target for organic growth remains 8 to 10 %. Despite initial signs of the economy stabilising,in view of the current widespread uncertainty particularly in the new construction market, the segment is only expected to achieve a slightly better operating margin than in the previous year. In the mediumterm, however, based on continuing market growth and increasingly optimised internal processes, an EBITmargin of 8 to 9 % is the target.

Gas Flue Systems

Market environment and business developmentIn the 2009 financial year the European market for heating technology, which has hitherto been servedmainly by the companies in the Gas Flue Systems segment, was distinctly lacking in consistency. On theone hand CENTROTEC was able to benefit from the trend of recent years towards efficient gas and oil-fired condensing boiler technology, but on the other hand it faced widespread uncertainty among cus-tomers as to which way the economy as a whole was heading, particularly in the first half of the year. Ontop of this, new construction business was difficult in a number of countries, though that state of affairsin turn contrasted with the steadily rising market share of renovation business. Especially in the secondhalf of the year, new products for ventilation applications and business for technical roof products suchas solar mounting systems and integrated photovoltaic systems likewise fuelled revenue growth.

In the context of these underlying conditions, the 7.8 % rise in revenue for the segment to EUR 128.1 million(previous year EUR 118.8 million), more than meeting the revenue forecast of EUR 113 to 123 million madeat the start of the year, serves to emphasise the healthy market position of the CENTROTEC companies inthis segment. The gross profit ratio for 2009 as a whole in the Gas Flue Systems segment edged up to46.6 %, compared with 44.8 % in the previous year. Thanks to the healthy rise in revenue and the grossprofit margin, EBIT was increased by a substantial 42.8 % to EUR 10.5 million (previous year EUR 7.4 mil-lion). The EBIT margin thus reached 8.2 %, well up on the prior-year figure of 6.2 % as forecast.



The Gas Flue Systems segment employed 566 full-time equivalents (FTE) at the end of 2009, an increaseof 47 on the position one year earlier. The rise in the employee total stems mainly from increased produc-tion capacity and the expansion of the international sales network. As an average for the year, the numberof full-time equivalents increased by 42 to 541 (previous year 499). Personnel expenses in absolute termsrose by 10.0 % to produce a personnel expenses ratio of 19.4 % (previous year 18.7 %).

Principal developments in the past financial yearDue to the financial crisis spilling over into the real economy, there was likewise considerable uncertaintyamong all heating technology market operators at the start of 2009. The CENTROTEC companies in theGas Flue Systems segment felt the full impact of this restraint among major industrial and trade customersat the start of the year. The reduction of customer inventories and, particularly at the start of the year, the downturn in the number of new building throughout Europe and delays to construction projects dueto the comparatively long winter meant that revenue was well down in the first half of the year. Neverthe-less, intensive activities throughout to develop and launch new products and ongoing efforts to optimiseall operational processes paved the way for a considerably healthier revenue and earnings performancein the second half.

Right at the start of 2009, for instance, the German-Dutch companies in the segment secured the first licence for a plastic gas flue system in the Netherlands, thus successfully launching a CENTROTEC con-cept that was already well established in Germany. The second half of the year saw the completion of development and market launch of an ultra-compact oval air ducting system. This air ducting system, de-signed for use in the fast-growing area of controlled domestic ventilation, is already revealing its hugemarket potential just a few months down the line and is also sold by the sister companies in the ClimateSystems segment. Business for technical roof products such as solar mounting systems and integratedphotovoltaic systems via existing sales channels and with existing customer groups moreover progressedwell. Another example of the flexibility and regional market proximity of CENTROTEC companies was thechimney renovation system developed jointly with Gaz de France for the French market; it allows severalcondensing boilers to be retrofitted to a single gas flue. This CENTROTEC system picks up on two of themajor trends in the international heating technology market: condensing boilers and renovation.

The latter product solution also plays a key role in the extremely healthy business performance of the GasFlue Systems segment in France. After a jump in revenue of more than 25 % in 2009 the French market,alongside the equally rapidly growing German market, is now the most significant national market. Thisdevelopment of increased market share in both markets has more than compensated for the downturn in


Positive business performancethanks to innovative productsand optimised processes

revenue trend gas flue systems [in EUR million]

2005 70.2

2006 80.3

2007 96.4

2008 118.8

2009 128.1

Innovative new products targeting renovation market

International expansion continues


revenue in markets weakened by the economic crisis, such as the UK, Poland, Italy and the USA. In cer-tain other markets, the acquisition of new customers has offset market contraction due to the cyclicaldownturn. Despite these regionally varying market conditions, to a large extent caused by the economiccrisis, the group companies in this segment have stepped up their sales activities further both nationallyand internationally. The acquisition of further leading European boiler manufacturers as customers for ourgas flue systems confirms the success of this strategy of expansion and opens the gateway to new futurerevenue potential.

Alongside the higher revenue, the marked fall in average materials purchase prices since their peak levelin mid-2008 has contributed to the significant improvement in the segment’s earnings, though theseprices have been edging up again since mid-2009. Thanks to the optimisation of procurement, logisticsand production processes at both national and company level, this price development has been used togood effect, as the rise in the gross profit ratio by almost two percentage points to 46.6 % demonstrates.This increased efficiency and the substantially higher revenue have also more than compensated for therise in the personnel expenses ratio to 19.4 % (previous year 18.7 %). The uniform ERP system rolled outthroughout all companies in the Gas Flue Systems segment from the start of 2010 will help to further optimise processes and further increase the scope for joint procurement, as well as improving flexibilityand customer service. This blanket optimisation of processes and the organisation is of fundamental importance to offering a competitive range of innovative system solutions. Without neglecting regionalspecifics, the companies in the segment moreover worked to streamline and expand the product range in 2009 in order to exploit synergies between the individual companies and be in a position to present acoordinated, broader range of products in the various different markets.

Strategic direction and outlookThe Gas Flue Systems segment will continue to place the focus on gas flue systems for heating, climatecontrol and ventilation technology. The major areas of activity remain condensing boiler technology for gasand oil-fired heating systems, together with air ducting systems for controlled domestic ventilation andclimate control for buildings. The markets of Eastern Europe continue to offer considerable potential, asdoes Southern Europe in the medium term, with their comparatively low penetration rates for ultra-efficientcondensing boiler technology. This will become increasingly widespread there as energy prices rise againin the medium term and those countries likewise become increasingly aware of the need for climate pro-tection. These estimates are fundamentally unaffected by the economic crisis, which hit such countriesparticularly hard in 2009. The same applies to the North American and Southern European markets,where energy-saving condensing boiler technology equally has considerable ground to make up. Along-side energy prices, climate conservation is a key factor behind the further spread of efficient technologiesthat use limited resources of fossil fuels.

In the Western European markets where condensing boiler technology has already made further inroads,air ducting systems for climate control and ventilation in buildings are becoming increasingly importantfor CENTROTEC’s companies. Like condensing boiler technology, aspects of economy and environmentalacceptability are again to the fore. Designs that are increasingly moving in the direction of passive-housetechnology in particular need intelligent air ducting concepts in order to guarantee the exchange of air. Thefurther spread of these building designs has been for instance enshrined in law in France, and they will be-come binding from 2020 at the latest. Efforts to save energy and protect the climate fundamentally reston a broad consensus and more and more countries are correspondingly extending and stabilising theirsubsidisation and regulatory policies. This provides both end customers and manufacturers with the plan-ning certainty they have long been calling for so that they can now implement cost-cutting, climate-pre-serving measures for both new buildings and modernisation projects.


Considerable potential for condensing boiler technology inEastern and Southern Europe

Internal processes optimised by joint IT platform

Innovative, convenient air ducting systems meeting the requirements of energy-savingdesigns



Integrated energy roof system forsolar thermal and PV

Crisisdriven fall in revenue for Engineering Plastics

Alongside gas flue and air ducting systems, the area of technical roof products is set to become increas-ingly important. Solar mounting and integrated photovoltaic systems offer the biggest revenue potentialhere. The systems sold using existing sales channels and customer groups already made a growing rev-enue contribution in the second half of 2008. One such pioneering innovation that generated consider-able market interest when first unveiled at the end of 2009 is an integrated energy roof system. Thissystem integrates solar thermal collectors, photovoltaic and dummy modules into a visually uniform roofsurface that also incorporates chimneys and other roof elements. This system solution aimed at the upperprice segment both ensures that solar energy is used efficiently for heating and power generation, andmeets the aesthetic requirements of modern architecture. The know-how of the specialist for technicalroof products Ubbink and the solar expert Wolf was tapped for the development of this integral systemsolution, and certain components are also supplied by the equity investment CENTROSOLAR. As exempli-fied by this pioneering product development, cross-segment collaboration between the individual compa-nies is being stepped up in order to make the most of and build on expertise in the spheres ofdevelopment, manufacturing, procurement and market access.

Based on the successful 2009 financial year and the innovative new products brought onto the market, thenew customers acquired and its further optimised internal processes, CENTROTEC expects the Gas FlueSystems segment to post revenue of EUR 130 to 140 million for 2010. It anticipates that the Gas FlueSystems segment will achieve organic revenue growth of 10 to 12 % in the future. In the current financialyear, the operating result (EBIT) should show an increase on the prior-year figure, based on a marginroughly the same as one year earlier. The medium-term target is to return to double-digit EBIT margins forthe Gas Flue Systems segment.

Medical Technology & Engineering Plastics

Market environment and business developmentThe financial and economic crisis has considerably affected medimondi AG, the parent company of theMedical Technology & Engineering Plastics segment, in 2009. While the medical technology market servedby the Medical Technology area was only marginally affected by the crisis, revenue for products madefrom engineering plastics that are not used in the medical or pharmaceutical areas temporarily slumpedby more than one-third due to the recession. Despite prompt action in the form of capacity adjustmentsto this area starting in November 2008, the segment reported its first ever loss. Nevertheless, the com-panies in the segment used the crisis as an opportunity to adjust e.g. the cost base of the individual com-panies in the short term to the current market structure and thus to create a sound footing for regainingthe segment’s pattern of profitable growth of recent years in the future. The instrument of short-time wasfor instance applied consistently above all at the German manufacturing company Centroplast from Janu-ary 1, 2009 onward. Both plastics companies were restructured with permanent personnel adjustments,with the emphasis on equipping the companies to respond swiftly to an improvement in the market envi-ronment such that they are able to return to profitability with just weak revenue growth, but will be in aposition to meet demand if more rapid growth occurs.

Revenue for the Medical Technology & Engineering Plastics segment fell by 23.6 % in 2009 to EUR 29.0million (previous year EUR 38.0 million). Thanks to further optimised purchasing terms and a change inthe product mix, the gross profit ratio improved to 70.7 % (previous year 64.4 %), partly compensating for the below-average fall in personnel expenses following the sharp drop in revenue. EBTIDA conse-quently fell to EUR 1.5 million (previous year EUR 5.0 million) and EBIT amounted to EUR -1.0 million (previous year EUR 3.0 million). The EBIT margin thus turned negative at -3.4 % (previous year 7.9 %).


Strong market position for branded and OEM medical technology business

The companies of the medimondi Group which make up this segment employed 294 full-time equivalents(FTE) at the end of 2009, a decrease of 28 on the position one year earlier. All the personnel cutbacksoccurred in the Engineering Plastics area and were necessitated by the prompt measures taken here tobring it in line with the difficult prevailing situation in the market as a whole. Alongside this direct adjust-ment, short-time was used throughout the whole of 2009 as another tool for adjusting capacity. At year-end, short-time had reduced personnel capacity by a notional 23 posts (full-time equivalents) (previousyear 0 FTEs). As an average for the year, the number of full-time equivalents fell by 16 to 313 (previousyear 329). Including short-time, there was a decrease of 31 FTEs to 298. Personnel expenses were downby 9.5 % as a result of restructuring measures in response to the crisis, but the lower revenue level resultedin a personnel expenses ratio of 47.1 % (previous year 36.4 %) for the segment

Principal developments in the past financial yearThe past financial year of 2009 presented the Medical Technology & Engineering Plastics segment withextremely tough challenges, specifically in the area of Engineering Plastics. The key customers in thisarea in the highly export-dependent mechanical and plant engineering sector responded to the global recession in the real economy by drastically cutting back stock reach from autumn 2008 on. As the yearprogressed, the fall in revenue of well over 30 % in these target sectors resulted in further substantialdownturns in revenue for companies that supply semi-finished products in the engineering plastics sector.

This contrasts with the steady development of the Medical Technology area, which further consolidatedits brand business in 2009 and accessed previously untapped national markets through newly recruiteddistribution partners. Contracts were signed with distributors for the product LiquoGuard® in Brazil, NewZealand, Australia, Ukraine and Belarus in 2009, and distributors were also appointed for the product Seriflex in Greece and Saudi Arabia. In the further expanded area of brand business, the development ofa special cooling pump was completed and preparations were made for its market launch. Significantprogress was also made on the development of a high-frequency ablation (HFA) system. Following thepattern of the long-established LiquoGuard® and Liposat units, both products combine an active medicaldevice with a sterile consumable, reinforcing loyalty to the Möller Medical brand and promoting long-termbusiness relationships.

As well as this brand business, well-established OEM business serves as a second mainstay within theMedical Technology area of the segment. The market position as the manufacturer of HPLC hardware andliquid handling systems was boosted by production quality that is better than the market average, with allthe advantages that this brings the client. Additional refinements to customer products were initiated inthis area in 2009, producing further competitive advantages in the medium term.

The sharp revenue downturn in the past financial year for those engineering plastics that were not suppliedto customers in the medical technology or pharmaceutical areas resulted in a shift in the product mix


Business performance in MedicalTechnology area remains positive

revenue trend medical technology & engineering plastics [in EUR million]

2005 26.5

2006 33.8

2007 35.9

2008 38.0

2009 29.0



Steady growth rates for medimondi markets

Accessing new international markets

within the segment. The changed product mix, but also the full exploitation of falling materials purchaseprices through optimised purchasing, produced a substantial improvement of 6.3 percentage points in thegross profit ratio. The simultaneous rise in the personnel expenses ratio to 47.1 % (previous year 36.4 %)is attributable to the revenue downturn in 2009. Even the prompt measures to adjust capacity were un-able to compensate fully for this effect. In addition, the significantly lower costs of temporary workers in2009 are reported under the cost of purchased materials, and not personnel expenses, thus only partlyreflecting the effectiveness of the swift, systematic adjustments made.

Strategic direction and outlookDespite the unsatisfactory business performance in 2009, the development of the Medical Technology &Engineering Plastics segment remains focused on sustained organic growth. This will be supported by thescope for acquisitions, which are more likely be available at an attractive price in the current economicenvironment; the medium-term objective thus remains to hive off medimondi AG as a separate entity.

In the course of this process, the emphasis of medimondi’s development activities will be on its own prod-ucts for the medical technology market, which has performed relatively stably in recent years because theproducts used in that area have been required for medical services that cannot be postponed and arepaid for by health insurance schemes. The medical technology products manufactured on behalf of cus-tomers are likewise sold in the long-term growth market for healthcare, and assure a substantial basiclevel of capacity utilisation as well as good access to an attractive market. Bank Vontobel, for example,has forecast average annual growth of more than 10 % over the next few years for the market for spinalimplants for which the medimondi companies supply several innovative products.

In 2010 the focus of international sales activities will be on the Arab world; to that end it attended theleading exhibition in that region, Arab Health, in January.

These fundamentally positive growth prospects for the medical technology market, ongoing internationalexpansion of the sales network and the development area’s continued ability to come up with efficientproduct innovations mean the future prospects of the segment are bright. Following the recent capacityadjustments, the Engineering Plastics area will also contribute to the expected positive development ofthe segment, albeit probably to a lesser extent. Despite all the uncertainty in the wider economy, espe-cially given its impact on this segment, CENTROTEC expects moderate organic revenue growth to EUR 30to 32 million in the 2010 financial year, with an earnings margin in the low single-digit range. In the mediumterm, annual organic revenue growth is expected to climb above 10 % and the EBIT margin reach a highsingle-digit or low double-digit level.

revenue by segment[in EUR million]

2005 26.5 70.2 39.6

2006 33.8 80.3 110.0

2007 35.9 96.4 274.1

2008 38.0 118.8 319.3

2009 29.0 128.1 309.5

2010(e) 30–32 130–140 320–330



Very good business performancein second half

Principal investment – CENTROSOLAR Group AG

As in previous years, the participating interest in CENTROSOLAR Group AG – hereinafter referred to asCENTROSOLAR – represents the most significant investment of the CENTROTEC Group that is not com-prehensively consolidated. The ownership interest in CENTROSOLAR fell from 30.76 % at December 31,2008 to 26.16 % at December 31, 2009 following a capital increase effected by CENTROSOLAR Group AGin the fourth quarter of 2009. For this capital increase, which was aimed exclusively at existing sharehold-ers, the capital stock of the company was increased from EUR 14,533,309 to EUR 20,333,309, against acash contribution of EUR 5,800,000 with effect from November 17, 2009. For this measure, the existingshareholders were offered new shares at a price of EUR 3.45 per share. Demand among the existingshareholders was so high that no private placement of shares took place. The gross issuing proceeds ofaround EUR 20 million accrued by CENTROSOLAR Group AG from the capital increase are to be used toreduce its net debt and finance its further growth, in particular through the expansion of Solar IntegratedSystems business outside Germany as well as business for anti-reflective coated solar glass. This capitalincrease produces a dilution loss of EUR 2.2 million for CENTROTEC, which is recognised by CENTROTECin the Income Statement. Further information on this subject is supplied in the Notes to the ConsolidatedFinancial Statements on pages 109.

As in previous years, when fundamentally considering the participating interest in CENTROSOLAR itshould be borne in mind that CENTROTEC carries it as an equity investment and the operating results forCENTROSOLAR are not reflected in the corresponding items of the Income Statement. The same is trueof the key balance sheet figures, except for investments and shareholders’ equity. The trading prices ofCENTROTEC shares do, however, reflect these figures and therefore distort any comparison of key figuresif this fact is not taken into account.

CENTROSOLAR posted revenue of EUR 308.7 million in the 2009 financial year despite a decidedly mixedperformance by the market for the photovoltaic industry, with price falls in excess of 30 % compared withthe average figures for the previous year and the almost complete collapse of business in Spain. Followingan extremely healthy business performance in the second half of the year, consolidated revenue wastherefore only 7.2 % down on the prior-year figure of EUR 332.6 million and well up on the most recentforecast of EUR 280 to 290 million. All earnings figures for 2009 contain substantial non-recurring effectswhich limit the scope for comparison with the corresponding prior-year figures. Within the operating re-sults, these substantially comprise the market-price-driven value adjustments to inventories of EUR 7.8million required mainly in the first half of the past financial year, and the losses incurred through the sell-


Capital increase successfully placed


ing-off of old stock valued too highly. Nevertheless, CENTROSOLAR was able to return to profitability bythe second half of the year by taking prompt action to improve operations and thanks to its flexible pur-chasing terms; based on the very good sales situation, it achieved a clearly positive operating result. Al-though EBITDA of EUR 13.6 million (previous year EUR 21.4 million) and EBIT of EUR 6.9 million (previousyear EUR 12.0 million) for 2009 as a whole was down on the prior-year figures, in the latter two quartersit showed a substantial improvement on the figures for 2008. However the losses of EUR 26.7 millionarising from the complete withdrawal from the Portuguese joint venture with the bankrupt Qimonda AGmid-way through the year, with only a limited aggregate impact on liquidity, produced earnings before tax(EBT) of EUR -25.4 million (previous year 5.4 million). After tax (EAT), the result was therefore negative atEUR -29.7 million (previous year EUR 4.4 million). In line with the CENTROTEC Group’s 26.16 % interest inthe capital stock of CENTROSOLAR Group AG, a corresponding proportion of this result amounting toEUR -10.0 million is allocable to it (previous year EUR 2.2 million). This figure includes a one-off earningscontribution (dilutive effect) of EUR -2.2 million from the capital increase effected by CENTROSOLAR inthe fourth quarter of 2009. Overall, CENTROTEC’s earnings per share figure for 2009 is reduced by EUR0.60 by the CENTROSOLAR investment result that was diminished by non-recurring effects having only apartial aggregate impact on liquidity.

In 2009, CENTROSOLAR laid the foundations for the company’s medium to long-term successful develop-ment by taking various drastic decisions which adversely affected earnings in the short term, but to whichthere was ultimately no alternative. The clear beneficial impact on sales and earnings by as early as thesecond half of 2009 confirms that these strategic decisions were the right ones; the extreme develop-ments in the photovoltaic market since the second half of 2008, which has always traditionally been sus-ceptible to high fluctuation, forced this move. More difficult access to financing, specifically of majorprojects, in the wake of the financial and economic crisis and the sharp concurrent rise in production capacity led to a noticeable buildup of inventories, which coincided with an unprecedentedly sharp fall in module prices. The resulting value adjustments to inventories prompted a highly negative operating result in the first half. Particularly the material purchase price reductions that CENTROSOLAR has beenable to realise very rapidly and extensively thanks to its traditionally flexible purchasing strategy, coupledwith a far-reaching cost optimisation programme, then paved the way for a business performance wellabove the market average in the second half of the year; this then cancelled out the non-recurring effectsof the first half to a large degree. The long-standing flexible purchasing strategy proved to be a particularadvantage over most competitors during this phase of generally deteriorating prices, enabling the com-pany to get back into profit earlier and more sustainably as well as helping it to increase its marketshares.


Competitive advantages of flexible purchasing strategy

Nonrecurring effects in first halfproduce negative overall result


The fundamental decision to focus particularly on the market for roof systems within the Solar IntegratedSystems segment, together with its corresponding impact on operating business, was endorsed by thatmarket segment’s healthy performance compared with the market for open-site systems. In light of thepreferential subsidies available for this type of system in France, Germany and Italy, for instance, thisbusiness area continues to offer good prospects for the future. The same applies to the burgeoning areaof business for special solar components such as mounting systems and specially coated anti-reflectiveglass. These products are developed and manufactured in Germany, then sold worldwide, by the companiesthat make up the Solar Key Components segment. They, too, made stable contributions to CENTROSOLAR’searnings in 2009.

With regard to the development of regional markets, there was marked revenue growth in France, Beneluxand the USA in the past financial year. Sales in the German mark were equally very good in 2009, espe-cially in the second half of the year. This development, which coincided with the collapse of the Spanishmarket that had delivered extremely steep growth in preceding years, meant that the export share of con-solidated revenue in 2009 showed a temporary dip to 49 % (previous year 57 %). Strong growth in interna-tional business particularly in France and in the USA, which is destined to become the biggest market in the world, will nevertheless mean the export share will pick up again shortly. The companies of theCENTROSOLAR Group will moreover be able to build on a growing sales structure with strong local rootsin Western Europe. Having already set up this area-wide micro network of sales outlets very early on andintroduced a comprehensive range of services and products for fitters and wholesalers, CENTROSOLARhas now overcome a difficult barrier to market entry in the area of roof business, where much dependson good quality and service.


Good revenue performance inFrance, Benelux, USA and Germany


The strategic decisions taken and the operational measures implemented in 2009 provide a sound basisfor the continuing successful development of the Group. This assessment of the CENTROSOLAR Manage-ment Board holds true even amid lingering uncertainty as to the general state of the economy, and specifi-cally the regulatory changes for the photovoltaic industry that have been announced in Germany.

For 2010 CENTROSOLAR expects a slightly atypical seasonal pattern to the photovoltaic industry, whichwill also reflect the business performance of CENTROSOLAR to a slightly lesser degree. High demand forroof systems in Germany prior to the reduction in the feed-in tariff will thus produce an exceptionally goodfirst half. In the third quarter, by contrast, a sharp downturn in demand from Germany is expected. Theprospect of a further reduction in the tariff from 2011 will then once again fuel demand, leading to a typi-cally strong fourth quarter.

Despite the debate surrounding the consequences of reduced feed-in tariffs for the photovoltaic industryin Germany, CENTROSOLAR is confident about the prospects for the current financial year. The system-atic implementation of the optimisation programme in the past financial year, the flexible purchasingarrangements, the focus on roof systems and the gradual international diversification of our business arethe main factors that already led to record revenue and earnings in the second half of the past year. Inthe current financial year, the already high export ratio will rise sharply thanks to CENTROSOLAR’s strongcompetitive position in France and its growing business success in Italy, the USA, Benelux and Spain, and thus lessen the effects of the difficult market situation in Germany. With revenue growth of 10 to 20 % and an EBIT operating result of EUR 14 to 16 million, the previous year’s figures should therefore be bettered. For 2011, CENTROSOLAR expects to see a continuation in growth particularly outside Germany. Because CENTROSOLAR is already growing successfully in various international markets, acontinuation in the profitable growth trend for the company as a whole is moreover reasonably assuredbeyond 2010.


Atypical seasonal business pattern expected in 2010



>30%


12

3

4

5

6

6

6


Combined heat and power plant/biogas:Co-generation or combined heat andpower (CHP) plants produce both powerand heat at the point of use | Combinedheat and power plants consequently saveover one-third of the primary energy used compared with generating heat andpower separately | Biogas-powered combined heat and power plants maintain a sustainable materials cyclewithout generating CO2 emissions.

1 Combined heat and power plant2 Generated power supplied to grid3 Heat4 Gas flue system

Climate control solutions with heat recovery:Ultra-efficient climate control solutionswith air volume outputs of up to 100,000 m3/h create a healthy interiorclimate | Through heat recovery, they significantly help to save energy and cutheating energy requirements and CO2

emissions | Climate control solutions can be configured to project-specific requirements according to a modularprinciple | Intelligent control technologymaintains optimum performance in alloperating situations.

5 Climate control solution with heat recovery

6 Air ducting systems



Reduced working capital

Net worth, financial position and financial performance

There were no material changes in consolidation in 2009 compared with the previous year. Nor are thereany structural changes of material significance in the balance sheet of the CENTROTEC Group at Decem-ber 31, 2009 compared with the balance sheet date of the previous year.

Net worth As in the previous year, the only slight changes in the CENTROTEC Consolidated Balance Sheet over 2009as a whole are attributable to the highly seasonal pattern of CENTROTEC’s core business. There were onlyminor changes compared with the balance sheet date for 2008.

The balance sheet total of the CENTROTEC Group contracted by a marginal 0.3 % or EUR 1.3 million com-pared with the 2008 balance sheet date, to EUR 379.6 million at December 31, 2009. The most substan-tial absolute changes on the assets side of the balance sheet are within cash and cash equivalents, whichgrew by EUR 12.4 million in the course of the year to EUR 35.4 million at the balance sheet date. On theother hand the equity investments fell by EUR 6.9 million to a current EUR 23.7 million following the lossesprimarily of a non-operating nature of the investment subsidiary CENTROSOLAR in the first half of 2009.The inventories and trade receivables were furthermore reduced by EUR 2.8 million and EUR 2.0 millionrespectively thanks to further optimised working capital management, to EUR 57.0 million and EUR 58.7million. The figure for property, plant and equipment was down EUR 3.5 million on the previous year atEUR 91.3 million due to increased depreciation on the high capital expenditure of previous years, coupledwith the slight reduction in capital expenditure to EUR 12.4 million (previous year EUR 13.9 million). On theother hand, intangible assets rose by EUR 0.8 million to EUR 37.5 million. Investment in a cross-companyERP project in the Gas Flue Systems segment accounts for the bulk of the increased total of EUR 5.5 mil-lion invested in this area.

Goodwill Inventories

Intangible assets Trade receivables

Property, plant and equipment Cash and cash equivalents

Equity investments Other

Equity

Financial liabilities

Other liabilities

assets[in EUR million]

equity and liabilities[in EUR million]

2008 2009 2008 2009

378.4 379.6 378.4 379.6

22.911.9

60.7

59.930.6

94.7

36.8

60.9

35.4

15.1

58.7

57.023.7

91.3

37.5

60.9 127.8 132.7

137.0 121.8

113.6 125.2


Thanks to the net income for the period of EUR 5.2 million, the shareholders’ equity of the CENTROTECGroup rose to EUR 132.7 million in 2009. This 3.8 % rise pushed the equity ratio up to 34.9 % (previousyear 33.8 %). The increase in issued capital from EUR 16.6 million to EUR 16.7 million is attributable tothe exercising of 134,146 stock options during the past year, under the group-wide stock options scheme,by members of corporate bodies and employees of the CENTROTEC Group. For each of these shares, one euro was paid into the issued capital and the balance of the exercise price into the paid-in capital aspremium.

Financial positionIn addition to the above changes to shareholders’ equity, the fall in financial liabilities of EUR 15.2 millionor 11.1 % to EUR 121.8 million represents the biggest change on the equity and liabilities side of the Con-solidated Balance Sheet. Including the substantially increased cash and cash equivalents in the calcula-tion, net financial liabilities were actually brought down by EUR 27.7 million or 24.2 % to EUR 86.5 million.Net financial liabilities have therefore been virtually halved compared with the record level of 2006 follow-ing the takeover of Wolf. Because the long-term refinancing of the group was moreover secured as earlyas 2008, CENTROTEC has considerable flexibility to continue actively determining its corporate develop-ment. Thanks to the cash and cash equivalents of EUR 35.4 million available within the group at Decem-ber 31, 2009 as well as unutilised credit lines, CENTROTEC has adequate liquidity reserves. The groupand its individual companies therefore have a variety of options at their disposal for maintaining and ex-panding business operations and strategically developing the group.

Despite the slightly lower earnings for 2009, the significantly lower financial liabilities produced a lowerdynamic gearing ratio (financial liabilities / EBITDA) of 2.6, compared with 2.8 in the previous year. Theother balance sheet ratios of current assets to current liabilities and non-current assets to non-current liabilities likewise remained unchanged, at 1.6 and 1.5 respectively. Conversely, net working capital (cur-rent assets less cash and cash equivalents, less current non-interest-bearing liabilities) for the group wassuccessfully reduced from EUR 65.1 million at the end of 2008 to EUR 53.6 million at the reporting dateof December 31, 2009 thanks to further optimised procurement, logistics and production processes atboth segment and group level. Further optimisation of the working capital will continue to be the basis forthe profitable development of the CENTROTEC Group. Corresponding additional measures, to some ex-tent across segments and companies, are again being implemented in 2010 in the form of various proj-ects in the purchasing, production, logistics and sales areas.

Financial performance CENTROTEC held its revenue and earnings situation stable in 2009 at virtually the record level of the pre-vious year, despite an economic environment characterised by the deepest crisis for many decades. Onlyin the peripheral area of Engineering Plastics was there any significant percentage drop in revenue; it was,however, of lesser consequence in absolute terms for the group as a whole. Consolidated revenue of EUR 466.6 million was thus only 2.0 % below the record level (EUR 476.1 million) of 2008 thanks to thecore segments Climate Systems and Gas Flue Systems posting revenue on a par with the previous year.

Earnings before interest, tax, depreciation and amortisation (EBITDA) of EUR 46.6 million were only mar-ginally down on the previous year (EUR 48.8 million). This means that EBITDA fell by 4.4 % despite a 1.8 %percentage points improvement in the gross profit ratio to 51.3 %. The cost of purchased materials ratiocorrespondingly fell to 48.7 % (previous year 50.5 %), substantially thanks to further optimised procure-


Rise in equity ratio

Net financial liabilities again sub-stantially reduced

Revenue almost matches previous year’s record level

Operating result only slightlydown on record level of 2008


ment and logistics processes at company, segment and group level, which made it possible to capitaliseon the worldwide fall in raw material prices over the year as a whole. Cutbacks in temporary workers alsolowered the cost of purchased materials ratio. Alongside the effects of the slightly lower revenue, thishelped to compensate for the higher personnel expenses ratio of 27.4 % (previous year 25.5 %) driven bythe negotiated pay increases agreed in 2008. The EBITDA margin as a proportion of revenue of 10.0 %therefore almost reached the level of the previous year (10.3 %). Due to the EUR 1.0 million rise in depre-ciation and amortisation, the operating result (earnings before interest and tax, EBIT) thus amounted toEUR 29.0 million (previous year EUR 32.2 million). The EBIT margin was consequently 6.2 % in 2009,compared with 6.8 % one year earlier.

The interest result for the CENTROTEC Group improved by EUR 2.1 million to EUR -6.5 million thanks tosignificantly reduced financial liabilities and the optimisation specifically of interest rates and terms. Theinvestment result deteriorated sharply to EUR -10.0 million (previous year EUR 2.2 million) due to pre-dominantly non-operating effects at the investment subsidiary CENTROSOLAR Group AG in the first halfof 2009, and in particular the withdrawal from the Portuguese joint venture with the now defunct QimondaAG. These two opposite effects combined to produce a fall in earnings before tax (EBT) to EUR 12.7 mil-lion (previous year EUR 25.8 million). A temporarily slightly elevated effective tax rate of 33.3 % (previousyear 30.3 %) due only on the pre-tax profit after elimination of the investment result produces earningsafter tax (EAT) of EUR 5.2 million (previous year EUR 18.6 million). If the investment result had remainedunchanged from the previous year’s level, the fall in EAT would have been EUR 1.4 million and thereforeless than eight percent.

The figure for CENTROTEC earnings after tax purely from operations, after elimination of the effect of theCENTROSOLAR investment, produces basic earnings per share (EPS) of EUR 0.93 (previous year EUR 1.13)


Non-operating non-recurring effects reduce EBT and EAT

ebit[in EUR million]

2005 17.7

2006 12.5/operative 23–24

2007 27.6

2008 32.2

2009 29.0

net income[in EUR million]

*Excluding results from shareholdings

2005 18.0

2006 15.3

2007 16.5

2008 18.6

2009 5.2/operative 15.2*


for an average total of 16,609,906 shares outstanding. The forecast EPS target of EUR 0.85 – 1.10 wastherefore achieved in full. Taking into account the negative influence of the CENTROSOLAR investment onEPS amounting to EUR -0.60, the actual reported EPS figure for CENTROTEC is EUR 0.33.

The Supervisory Board and Management Board of CENTROTEC Sustainable AG again propose to theShareholders’ Meeting that no dividend be distributed for the 2009 financial year, as in previous years.Following the successful practice established in recent years, the consolidated net income achieved inthe past financial year is to be invested in further profitable organic growth that will be underpinned byacquisitions. For further details, please refer to the “Investments” section on page 56 .

The cash flow from operating activities showed a year-on-year rise of more than two-thirds in 2009, reach-ing EUR 45.1 million (previous year EUR 24.8 million). Alongside the substantially reduced interest pay-ments, active working capital management was the main factor behind this increase. The cash flow frominvesting activities amounted to EUR -18.0 million in 2009, compared with EUR 17.9 million in the previ-ous year. When comparing this with prior-year figures, it should be noted that whereas previous years hadrepeatedly been affected by non-recurring effects from acquisitions, these were absent in 2009. Directinvestment in property, plant and equipment and intangible assets was slightly up on the prior-year levelin 2009. The cash flow from financing activities of EUR -11.7 million was well down on the prior-year figure of EUR -4.0 million due to a further rise in net repayments. The overall rise in financial resources of EUR 15.3 million in 2009 was much sharper than in the previous year (EUR 2.9 million).

Shares

The market contextWhereas this section focused on the global financial crisis one year ago, in the case of 2009 it is nownecessary to talk of the global financial and economic crisis. In contrast to the previous year, however,the consequences of this crisis were not reflected in the percentage performance of share prices onstock markets worldwide. All globally significant stock markets saw rising share prices in 2009, but interms of the absolute levels of indices they were still well below the peak levels of 2007. This is becauseshare prices continued to tumble until March 2009, resulting in a correspondingly low base level. All relevant stock markets have made positive progress since March 2009 and have therefore achieved pricegains ranging from almost ten to over 50 % over the year as a whole. The best performers were the tech-nology markets, which were also the hardest hit in the previous year.

The focus of investors during the past year was therefore emphatically on long-term prospects and theshort-term problems in the real economy worldwide were consequently largely set aside. It is currentlyvery difficult to say whether or not these relatively ambitious expectations of the future that are built intoshare prices will actually be fulfilled or whether a disappointing performance by the real economy couldprompt a renewed drop in share prices.

Share price performanceCompared with the positive development in relevant indices in 2009, the CENTROTEC trading price didnot perform satisfactorily because the shares only started to move slowly but surely upwards followingpublication of the first-half figures for 2009. This rather hesitant recovery in the trading price meant that


Sharp rise in operating cash flow

Stock markets stage recovery in 2009

CENTROTEC share price performance fails to match SDAX


the ground lost at the start of the year was not fully regained and the year-end price of EUR 9.44 reflecteda loss of around ten percent on the 2008 year-end price of EUR 10.60. The share price was at its mostvolatile in the first quarter of the year under review, with both the year-high of EUR 10.80 at the start ofJanuary and the year-low of EUR 6.05 in mid-March falling within this period. The slight downward move-ment in the CENTROTEC trading price contrasts with a 25 % gain in the SDAX, in which the shares havebeen listed since September 2008. 2009 thus saw the shares surrender some of the head start in per-formance that they had enjoyed over the benchmark index in previous years.

Compared with the issue price of EUR 3.24 in 1998, based on the 2009 year-end price of EUR 9.44 CENTROTEC shares have nevertheless achieved an average annual price gain of around ten percent overthe past eleven years. On this basis, the price/earnings ratio for 2010 is less than eight, and consolidatedrevenue exceeds the market capitalisation of CENTROTEC three-fold.

After the period under review the price of CENTROTEC shares rose to approx. EUR 12 by mid-March 2010,thus making up some of the ground it had lost during 2009.

Share statisticsCENTROTEC shares have been listed in the SDAX of Deutsche Börse since September 2008. The shares,with the identification codes WKN 540 750 and ISIN DE0005407506 and the stock exchange code CEV,are also listed in the Prime All Share and various DAX sub-indices. After reaching the specified ten-yeardeadline for withdrawal from the GEX, CENTROTEC shares were admitted to the newly created DAXPLUSFamily Index at the start of 2010. For further information on CENTROTEC shares, please visit theDeutsche Börse website at http://deutsche-boerse.com.


Price/earnings ratio below 8 in 2010

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

share price[in EUR]

15

10

5

IPO-Price 3.24

CENTROTEC Sustainable AG SDAX


The capital stock of CENTROTEC Sustainable AG at December 31, 2009 amounted to EUR 16,716,262, divided into 16,716,262 no-par-value bearer ordinary shares carrying full voting rights, each representingan arithmetical nominal value of EUR 1. Capital stock was EUR 134,146 higher than at the 2008 reportingdate and the number of shares outstanding rose correspondingly by 134,146. This change is exclusivelyattributable to the exercising of stock options by employees and members of the company’s corporatebodies, who had been granted these options as remuneration components with a long-term incentivisingeffect. All options exercised in 2009 are from tranches that would lapse in 2010 if not already exercised.

As indeed since the IPO in 1998, the family of Supervisory Board Chairman Guido A. Krass is the princi-pal shareholder of CENTROTEC with a holding of more than 50 %. Various specialised investment enter-prises in addition have holdings of a single-digit percentage. In the course of 2009 share transactionswith CENTROTEC shares which triggered reporting thresholds pursuant to Section 26 (1) of German Se-curities Trading Law were conducted by UBS Equity Fund Management Company S.A., Luxembourg, andIMPAX Group plc, London. For the exact details of these reports, please refer to the Section I of theNotes, under “Other particulars”, or the latest information can always be found on the CENTROTEC web-site (www.centrotec.de, under the menu item Investor Relations/Share/Disclosures acc. Sec. 26 WpHG).CENTROTEC Sustainable AG moreover held an unchanged number of 12,080 treasury shares at Decem-ber 31, 2009 compared with the previous year. These treasury shares do not carry any voting rights at thecompany’s Shareholders’ Meeting. All other shares outstanding are not subject to any restrictions withregard to voting rights and transferability.

The trading volumes of CENTROTEC shares reflected the general weakness of stock markets in 2009,with clearly lower trading volumes everywhere. In the whole of 2009, only 5.4 million of its shares repre-senting a total volume of EUR 45 million were traded at German stock exchanges. This represents a halv-ing of the trading volume and a fall of around one-third in the unit total compared with the previous year.The average daily trading volume at all German stock exchanges therefore amounted to slightly more than EUR 200,000, or some 24,000 shares. XETRA trading at Deutsche Börse in Frankfurt again accountedfor the lion’s share of trading activities. Nevertheless, this percentage has steadily fallen in the past twoyears, to some degree as a result of wide-ranging activities to boost the appeal of floor-based trading,particularly of shares below the DAX and MDAX.


Lower trading volume

2005* 2006* 2007 2008 2009

Total shares at Dec 31, thousand 8,032 8,204 16,493 16,582 16,716

Capital stock at Dec 31, EUR 8,032 8,204 16,493 16,582 16,716

Market capitalisation at Dec 31, EUR million 201.3 196.9 228.3 175.8 157.8

Year-end price, EUR 25.06 24.00 13.85 10.60 9.44

Year-low, EUR 19.85 22.44 11.00 6.85 6.05

Year-high, EUR 30.58 35.36 18.36 16.14 10.80

XETRA trading volume, average in thousands 22.8 19.1 43.4 27.9 17.2

Earnings per share, EUR 2.26 1.76 1.01 1.13 0.33**

Price-to-earnings ratio at Dec 31 11.1 13.6 13.7 9.4 28.6***

* Figures before issuance of 1:1 bonus shares in July 2007** Excluding the investment result EUR 0.93*** Excluding the investment result 10.2


Investor relationsAs in previous years, CENTROTEC maintained an open, responsive, reliable dialogue with all partners inthe financial market throughout a difficult year for the financial world and the real economy, via its Man-agement Board and Investor Relations department. This included providing a detailed qualitative andquantitative forecast for the full financial year at the start of 2009, for all the prevailing uncertainties, andregular in-year statements on that forecast. CENTROTEC will adhere to the tradition of open-handed fore-casting that it has practised since going public, and will continue to regard the statutorily required trans-parency guidelines associated with IFRS financial reporting and the German Corporate Governance Codemerely as a minimum standard for its own communication. CENTROTEC will continue to focus on the re-quirements of its target audience with regard to its choice of means of communication and keep refiningits approach, while always striving for a reasonable balance of costs and benefits.

A further rise in interest in CENTROTEC Sustainable AG was registered in 2009 based on the large num-ber of contacts established at roadshows, in telephone and video conferences, at the Shareholders’Meeting or over the internet. Interested parties and shareholders were particularly impressed by the group’ssuccessful implementation of its buy-and-build strategy since the IPO, as well as its technological innova-tiveness. A whole decade of positive results and the sound balance sheet structure were other aspectsthat met with a positive reception. There were consequently no decisive changes in the shareholderstructure to report in 2009, despite the difficult situation on the financial market. If this considerable in-terest in the only listed European group to specialise in energy efficiency and renewable energies did notyet translate into higher demand for CENTROTEC shares in 2009, it was partly because extensive groupsof investors fundamentally adopted a wait-and-see attitude and also due to uncertainty about the short-term fortunes of the market as well as the situation at the investment subsidiary CENTROSOLAR GroupAG. On the other hand, the fundamentally positive outlook for the renewable energies and energy effi-ciency sector was never in doubt. The strengthened market position in the principal markets in 2009 isalso being well-received, as is the resurgent success of the investment subsidiary CENTROSOLAR GroupAG since the second half of 2009.

Based on the healthy real economic prospects for CENTROTEC, these developments and the growing trendof the past few years towards more and more investments in companies in the sustainability market meanthat the outlook for CENTROTEC shares is likewise bright. In order to incorporate third-party views, we makereference to the following companies, which regularly conduct analyses of CENTROTEC Sustainable AG.


Forecast given early on in 2009

Only listed group in Europe tofocus on energy efficiency andrenewable energies in buildings

CoverageBerenbergCommerzbankHSBC

M.M. WarburgSal. OppenheimSolventis

Merrill Lynch


Personnel

Considerable individual responsibility and enterprise were again expected of the CENTROTEC Group’s work-force of more than 2,700 in 2009, because these are the basis for the CENTROTEC Group’s successfulstrategy of non-central structures and entrepreneurial liberty. The positive results achieved by both thegroup and the individual companies in an exceptionally difficult global economic environment serve to underline the effectiveness of this strategy and pave the way for the group’s continuing positive develop-ment. It will remain as important as ever to keep sight of the overriding corporate objectives if customersare to be kept supplied with innovative, high-quality, competitive, energy-efficient systems for heating, climate control and ventilation. The considerable individual liberty granted in the past for operating deci-sions is combined with continually updated target systems at individual, company, segment and grouplevel, to assure the lasting success of the CENTROTEC Group. These target systems are underpinned by individual remuneration arrangements, the variable components of which are increasingly linked toagreed targets; they represent a significantly growing proportion of overall remuneration along with risingindividual responsibility.

To ensure that the group has sufficient well-qualified employees to cover its future requirements, extensivefurther training measures were implemented at the various group companies in 2009. In keeping with thenon-central structure of the CENTROTEC group, the individual companies are responsible for tailoring suchtraining to their own requirements, though joint projects spanning several companies within the individualoperating segments are also becoming increasingly common. The measures carried out concentratemainly on training and advancement directly designed to safeguard the success of the company, but incertain cases also include further-reaching measures focusing primarily on the personal development of employees. In recent years, for example, employees have been offered extensive health-promotingmeasures via external partners; these arrangements have enjoyed growing take-up rates. The biggestCENTROTEC subsidiary, Wolf GmbH in Mainburg, is a case in point, with over 80 % of employees takingpart in a wide variety of training courses in 2009.

This active training and advancement strategy that is based on the good business prospects of the CENTROTEC Group is also reflected in the number of apprentices, which has bucked the general eco-nomic trend in remaining constant throughout the group. At Wolf GmbH alone, for instance, there werealmost 90 young people receiving training in 12 vocations as at the end of 2009. This form of vocationaltraining in conjunction with various types of school and other institutions gives both Wolf and the othergroup companies a sound basis for recruiting the skilled people they will need as they continue to expand.Other internal measures carried out in the company’s own training workshops, additional languagecourses, special awards for exceptional results in training and many other arrangements complete therange of such activities and ensure that the apprentices of the various group companies continue toachieve outstanding results.


Over 2,700 employees throughout CENTROTEC Group

Good training and advancementas basis for future success


The CENTROTEC Group did need to adjust capacity in certain more peripheral areas in the 2009 financialyear in response to the difficult market conditions brought on by the worldwide recession. However, theseadjustments were almost exclusively handled by using the existing flexible working hours models, cuttingback on the use of temporary workers and, to a minor extent, introducing short-time. As a result, therewere marginal reductions in the core workforce only in certain peripheral areas. By contrast, the coreareas of the group that focus on heating, climate control and ventilation technology as well as the solarbusiness area if anything needed to recruit personnel in order to maintain their successful strategy ofcontinuing regional expansion based on pioneering new products. At the end of 2009, the CENTROTECGroup therefore employed 2,744 people, 40 more than at the end of the previous financial year. Expressedas full time equivalents (FTE) the figure is 2,614, of whom 24 exclusively in the Engineering Plastics areawere still on short-time at the end of the year. As an average for 2009, the group employed 2,696 people(previous year 2,670) or 2,592 FTEs (previous year 2,574). The number of full-time equivalents takes intoaccount the introduction of short-time predominantly in the Medical Technology & Engineering Plasticssegment, specifically within the Engineering Plastics area. When comparing the year-on-year averages, it should moreover be noted that the employee figures for 2009 include the employees of Kuntschar +Schlüter GmbH for the full year, but the 2008 figures only for the final two months. As well as the employ-ees of these fully consolidated CENTROTEC companies the formerly fully consolidated group subsidiaryCENTROSOLAR Group AG, in which CENTROTEC still holds a 26.16 % interest, had over 1,000 employeesat the end of the year. As in previous years, most CENTROTEC employees were based in Germany and the Netherlands, where the main production locations are to be found. Nor has there been any majorshift in this ratio because in parallel with the growing number of people employed internationally, mainlyin the sales area, there has been a steady rise in development and production capacity in the core coun-tries. For the group as a whole, the proportion of industrial workers at December 31, 2009 was over 55 %(previous year 54 %), with office staff consequently representing just under 45 %.

Personnel expenses for 2009 for the overall group edged up by EUR 5.2 million to EUR 127.1 million. Thisrise is largely due to the delayed effect of negotiated pay increases from 2008 in many areas of the groupand employee totals that were still higher than one year earlier in the first half of the year. Because con-solidated revenue fell slightly compared with the previous year, the personnel expenses ratio of 27.4 %was up on the prior-year figure of 25.5 %. The personnel expenses ratio was nevertheless cut significantlyagain in the last two quarters of the past year thanks to the prompt capacity adjustment measures andthe significant rise in revenue particularly in the final quarter. The personnel expenses moreover do notreflect the positive effects of the reduced number of temporary workers, who for accounting purposesare reported as a cost of purchased services within the cost of purchased materials.



employees by segment[FTE/Full Time Equivalent on 31/12]

2008 322 519 1,764 2,605

2009 294 566 1,753 2,614


As in previous years, CENTROTEC again used the fact of its listing as a public company to offer the group’semployees, managers and Management Board members the prospect of a total of 215,000 stock optionsas variable remuneration components in 2009. Depending on the attainment of individual or corporatetargets, these prospective options may become genuine options. Following a vesting period these optionsmay then be used to purchase CENTROTEC shares, which are paid from the conditional capitals approvedby the Shareholders’ Meeting, at a fixed price. In 2009, 134,146 (previous year 89,120) of such optionsgranted in previous years were exercised at an average price of EUR 2.28 (previous year EUR 5.15) bymembers of corporate bodies and employees of the CENTROTEC Group. The same number of new sharesin the company arose.

Research and development

As in previous years, CENTROTEC’s research and development activities again made the most of a funda-mentally non-central group structure in 2009. The market proximity offered by this structure and the associated ability to respond swiftly to new requirements from both market operators and regulators haveproved to be highly beneficial in recent years. CENTROTEC thus secured increased market shares in all its key markets in 2009, despite the acute economic difficulties being experienced generally. This wasachieved in particular thanks to new or reengineered products and systems, which are described in greaterdetail for example in the report from page 29 on.

As well as these company and location-specific development activities, there is a rising number of cross-company partnerships within the CENTROTEC Group. For instance, the biggest CENTROTEC companies in the Gas Flue Systems segment have forged an in-depth, international partnership for the developmentand market launch of solar integrated systems. By way of another example, the Gas Flue System seg-ment’s new air distribution system with innovative pipes of reduced installation height were developed inclose consultation with companies in the Climate Systems segment, because the latter are the ones withaccess to the customers. Partnerships between the group companies that fundamentally operate as inde-pendent entities are moreover promoted not just within the group, but also with external partners such ascustomers, suppliers, universities and other research establishments. The company also participates inappropriate specialist panels and committees, particularly internationally, in an effort to contribute con-structively towards successful research and development work focusing on future market requirements.

New or refined products and systems safeguard the future growth of CENTROTEC companies and againmade a major contribution to consolidated revenue in 2009. Individual products from the areas of heating,climate control and ventilation technology are often combined into integrated systems so that ease of installation, efficiency and comfort can be boosted to the customer’s advantage thanks to intelligent,user-friendly control functions and precise coordination of the individual systems. The main focus of R&Dactivities is on refining tried-and-tested technologies efficiently in line with what the market wants, as wellas finding new ways of integrating them.

Despite the generally difficult economic situation, CENTROTEC again maintained its R&D activities group-wide at almost the record level of the previous year in 2009. Expenditure for this area thus amounted toEUR 7.1 million in the past financial year, compared with EUR 7.4 million in 2008. This slight fall, coupled


Development work on an innovative range of products and services continues

Groupwide research and development partnerships

Efficient systems integrated intoinnovative solutions


with the simultaneous slight drop in consolidated revenue, meant that the R&D ratio for 2009 represented1.5 % of revenue, down from 1.6 % in 2008. It serves as evidence of CENTROTEC’s determination andability to continue actively shaping the global growth market for energy efficiency and climate protectionin the building sector with its own innovative portfolio of highly efficient system solutions.

Capital expenditure

CENTROTEC invested EUR 17.9 million (previous year EUR 17.6 million) in intangible assets and property,plant and equipment in the 2009 financial year, representing a rise of 2.0 %. Its global capital expenditurefor 2009 does not include any acquisition-led spending, which amounted to EUR 0.6 million in the previ-ous year. As in previous years, the priority area for capital expenditure was property, plant and equipment,with a total of EUR 12.4 million (previous year EUR 14.0) invested in the preservation and selective expan-sion of the group’s operating capacity. There was also capital expenditure amounting to EUR 5.5 million(previous year EUR 2.9 million) on intangible assets. The fact that global capital expenditure still exceedsdepreciation and amortisation of EUR 17.6 million (previous year EUR 16.6 million) despite the furthertightening of internal approval procedures in response to the general economic situation clearly reflectsCENTROTEC’s commitment to innovation and investment in an attractive and competitive product range.

The biggest single investment by the group was the launching of a cross-company ERP system in the GasFlue Systems segment, which was one major reason for the significant rise in capital expenditure on in-tangible assets to EUR 5.5 million in 2009. Capital expenditure on property, plant and equipment againfocused mainly on optimisation of the production facilities and increased capacity in the core segmentsClimate Systems and Gas Flue Systems at the Mainburg, Doesburg and Brilon locations. The spendingpriority at Doesburg was research and development of solar integrated systems, particularly for the newlylaunched energy roof system, and at Brilon the focus was on production capacity for the new ventilationduct system. Meanwhile land was acquired at the headquarters of Wolf GmbH in Mainburg, thus meetinga fundamental requirement for the further expansion of that location. Other investment projects includedthe development of and then the manufacturing capacities for solutions in the areas of condensing boilertechnology, solar thermal, and also internal developments of a complete range of heat pumps, climatetechnology, and particularly the control technology for and compatibility of the various system solutions.In the third segment Medical Technology & Engineering Plastics, construction work on the new, logicallyoptimised development, production and administration centre began at the main location in Fulda in the second half of 2009. This project accounted for the bulk of the segment’s capital expenditure of EUR 2.1 million (previous year EUR 3.2 million). Capital expenditure for the highest-revenue segment,


Investment outlay remains highthroughout difficult period

investments[in EUR million]


2008 3.2 6.9 6.9

2009 2.1 9.3 6.5


Climate Systems, amounted to EUR 6.5 million in the 2009 financial year (previous year EUR 6.9 million).Due to the launch of the new ERP system, capital expenditure for the Gas Flue Systems segment in 2009was significantly up on the 2008 level at EUR 9.3 million (previous year 6.9 million).

Sustainability and environment

Since changing its name from CENTROTEC Hochleistungskunststoffe AG to CENTROTEC Sustainable AGin 2004, the CENTROTEC Group has also outwardly expressed the corporate objective of sustainability inits name. By definition, sustainability means satisfying the needs of the present generation without en-dangering the scope for future generations to satisfy their needs. It is a perpetual aim of the company’smanagement to infuse this broad concept with life. A corporate policy dedicated to sustainability for example includes a product range with lasting customer appeal, environmentally compatible operatingprocesses, and social responsibility towards the company’s own employees as well as its customers, suppliers and all other groups associated with the company, alongside general social responsibility in so-ciety in general. CENTROTEC strives to uphold these aims both in its strategic decisions and in its day-to-day business.

The most significant contribution to sustainable economic activity involves offering resource-conservingproduct ideas that enhance energy efficiency and provide access to renewable energies in buildings atreasonable prices. For example, modern condensing boiler technologies, highly efficient climate controlsolutions and innovative ventilation systems with and without heat recovery all help to use fossil energyresources very efficiently. Systems exploiting solar energy and combined heat and power units runningon sewage gas or biogas generate heat and power entirely without using any fossil fuels at all, avoidingthe CO2 emissions that such fuels would generate. These systems will increasingly converge in the future,making the buildings of the future energy self-sufficient and CO2-neutral.

CENTROTEC likewise heeds the objectives of sustainable economic activity in its internal processes. Thevarious group companies have already implemented a wide range of measures over the past few years toreduce the consumption of fossil fuels. Examples include the use of ultramodern heating and climate con-trol technology, particularly in spacious production halls, energy-saving lighting and compressed air sup-plies, and the use of solar thermal and co-generation at the Mainburg location. All investments achieveshort payback periods, even with energy prices at their moderate current level, and thus makes a positivecontribution towards consolidated earnings in the medium term. Meanwhile these measures help to saveconsiderable amounts of climate-harming greenhouse gases within the company’s own sphere of influence.

In future, CENTROTEC will be even more open about its own progress in avoiding CO2 emissions and willrecord and publish details of the emissions by the individual group companies using an internationallyrecognised process. Following its pilot launch at a Dutch subsidiary in the first half of 2010, this processwill gradually be rolled out at all other group companies and is to be adopted by a large number of themin the course of 2010. In order to realise corresponding progress in the avoidance of CO2, much more rigorous low-energy building standards have been imposed throughout the group. From 2010 on, all newbuildings in the CENTROTEC Group now have to achieve CO2 neutrality for the building itself and its tech-nical installations, as well as fulfil practicality and cost-effectiveness targets. These specifications are


Energyefficient solutions reduceCO2 emissions

Internal specifications on CO2

neutrality of buildings and technical installations


enforced as early on as the planning phase through an overall energy concept, taking account of all en-ergy types (heat, cooling, power etc.), the architectural requirements and the structure of the building.Within the overall concept, the architecture and the energy requirements are coordinated so as to opti-mise the passive and active use of solar energy and keep cooling requirements or heat losses to a mini-mum. To further minimise the level of heating and cooling required, the building shell is constructed atleast to low-energy standards, but ideally to passive-house standards, in harmony with the technical in-stallations concept. To reduce the amount of energy used for generating heat and cooling, heat recoverysolutions and ultra-efficient cooling systems in particular are used, as well as combined heat and powerunits for co-generation, preferably running on biogas. Renewable energies are moreover used as a matterof course for heating and hot water, and the highest efficiency standards are mandatory for consumers of electricity in the administrative and production buildings. The use of solar power from our own photo-voltaic systems to supply technical installations ensures that new CENTROTEC buildings are CO2-neutral.These measures enable CENTROTEC to combine economy with sustainability in its own buildings.

As well as these central aspects of environmental protection, sustainability includes assuming social re-sponsibility. The operating environment, and specifically the way it interfaces with employees, is a keyarea of sustainable social action. The principal aspects were already dealt with in the “Personnel” sectionfrom page 53. Typical examples are the extensive training and advancement measures organised independ-ently by the various CENTROTEC companies, including courses that look further than narrowly definedoperational requirements, a large number of effective measures to avoid industrial accidents, efforts to create working conditions that are as family-friendly as possible, and voluntary employer’s contribu-tions to employees’ pension schemes. The success of these measures is reflected in the outstanding examination results achieved by certain apprentices, the low number of industrial accidents and low em-ployee turnover. This aspect of sustainable action paves the way for consistently sound growth for theCENTROTEC Group, underpinned by well-qualified, motivated employees, and proves that sustainable action ultimately promotes economic success in the medium to long term, even if the extent of its benefitis difficult to quantify here. As well as assuming responsibility internally, the CENTROTEC companiesdemonstrate social responsibility outside their own sphere of activity through their support for charities,the arts and sport. In 2009 CENTROTEC Sustainable AG, as the group parent, for instance supported along-established school project in Ecuador and, with the aid of its investment subsidiary CENTROSOLAR,a project in Burkina Faso to give a village not on the grid its own power supply that operates using off-gridsolar modules. The Dutch-Kenyan joint venture launched by Ubbink to manufacture small solar modulesfor individual use constitutes a form of development aid as well as having a business component, and istherefore being subsidised by the Dutch government. This project involves supplying fragments of poly-crystalline solar cells, e.g. from CENTROSOLAR, to an established African partner operating a productionplant near Nairobi, which uses them to make solar modules for the local market as a low-cost energysource e. g. for cooling, communication and information. These applications can make a major contribu-tion to the sustained economic development of the region, for instance by enabling communication throughsolar-powered charging points for mobile phones.

To harmonise the various initiatives to conserve resources, protect the environment and promote sustain-ability within the CENTROTEC Group and also enshrine further-reaching shared values throughout the organisation, a group-wide process on values and visions was launched in 2009. All companies in theCENTROTEC Group in essence share the same vision and are committed to the same values, but there


Sustainability also entails responsibility for people withinand outside the group


are naturally varying nuances, interpretations and priorities in a non-centrally organised group of compa-nies. The process that has now been kicked off seeks to identify a common core of values and visions thatunderlies all the current activities and projects, in order to implant it even more deeply in the organisationand in day-to-day processes. As well as the Management Board, the Managing Directors and managers ofthe group companies are all contributing to this process to ensure that both the process of defining a setof shared values and its outcome will be widely accepted throughout the whole organisation.

Risk report

The CENTROTEC Group has focused on the topic of sustainability. The spotlight of the group’s activities is on the development, manufacturing and sale of system solutions for the energy-efficient heating, venti-lation and climate control of buildings, making use of renewable energies. CENTROTEC’s activities thuscontribute towards improving the environment and exploit the market opportunities arising in this area.These market opportunities are created through accessing new markets or penetrating existing marketswith established, improved and new innovative product solutions from such areas as condensing boilertechnology, solar technology and building climate control. Integrated systems that require expertise inseveral of the above product areas are also becoming increasingly prevalent. CENTROTEC’s objective isto exploit fully the opportunities that present themselves in this context, both through organic growth andthrough an active acquisitions strategy, while nevertheless guaranteeing the highest possible degree ofstability and risk limitation. The latter means in particular that it rigorously applies a strict set of criteriawhen selecting and analysing takeover options and financing and integrating acquisitions. For this strat-egy, CENTROTEC relies on the one hand on the extensive experience and market knowledge of its groupand segment management, and on the other hand on systematically monitoring and steering the risksthat this business model entails.

To monitor and control the various risk areas, CENTROTEC implements a group-wide risk management sys-tem that is constantly being refined and assessed for effectiveness. This requires all significant companiesin the group to submit regular reports on the nature, likelihood and potential impact of identified risks, inaccordance with the existing guidelines. Operating business is moreover closely monitored by the respec-tive members of the Management Board. With this as the basis, it is possible to initiate an early responsewithin the risk management system and involve various escalation hierarchies right up to the ManagementBoard and Supervisory Board in good time, depending on the potential value of the risk, in order to avoidor hedge risks.

Risk areas

Risks from the economic environment and the industryThe business performance of CENTROTEC, too, is fundamentally dependent on the wider conditions in itseconomic environment and on general cyclical developments, especially in Europe. With regard to its in-dustry context, CENTROTEC operates in extensive areas of building investment, which performed weaklyin the 2009 financial year in European markets, among other reasons as a result of major impact that thefinancial crisis had on the real economy. In the areas of new housing construction and especially com-mercial construction the revenue figures for the construction industry were well down. By contrast, thearea of public sector construction showed a steady performance in the past financial year, largely as a re-


Capitalising on opportunities –monitoring risks

Groupwide risk management system

Declining building activity butgrowing focus on energy-savingsolutions


sult of the economic stimulus programmes introduced in almost all countries, the effects of which shouldcontinue into 2010. Activity in the sphere of building investment also serves as an important indicator forCENTROTEC, though business was latterly increasingly able to detach itself from the general trend in theconstruction industry by focusing on energy-saving solutions, of which the public is becoming increas-ingly aware. Irrespective of increasingly short-term cyclical fluctuations, CENTROTEC energy-saving solu-tions are achieving lasting appeal for both new buildings and also to a growing extent for the retrofit andrenovation market as well as for municipal projects. This effect can be attributed to long-term growth in building refurbishment for energy efficiency as a proportion of the overall market and the increased priority given to energy-saving solutions in each construction project.

Statutory framework conditions and public subsidies nevertheless continue to have an influence. For in-stance a scaling-back of subsidies if the general conditions otherwise remain unchanged could lead tofalling revenue or slower revenue growth. With climate protection remaining as pre-eminent a concern asever, along with the rebound in energy prices since mid-2009 and the medium to long-term expectationsof substantially higher levels, plus growing efforts to achieve greater energy independence, CENTROTECdoes not expect any fundamental reduction in the measures and subsidies to promote energy-focusedbuilding refurbishment. Other European countries, but also other parts of the world, are increasingly adopt-ing many of the measures already practised in Germany, involving increasingly stringent requirements orhigher levels of subsidies. The awareness of and pressure on each individual to actively cut their energycosts, and help the environment in the process, will moreover continue to rise and provide a useful basisfor maintaining the market’s positive development. The failure of the Copenhagen Climate Change Con-ference to agree yet on joint aims and measures will increase the pressure on both each individual andwhole countries to act.

Corporate strategy risksGrowth through acquisitions is a key aspect of CENTROTEC’s strategy. The high growth of recent financialyears in itself harbours risks. One key challenge is to adapt the internal organisation and processes swiftlyto the new, larger entity each time and to integrate the acquired or newly established, predominantly for-eign businesses into the corporate structure. If ties between new entities and the existing group are tooweak, a loss of transparency and control can ensue. Forcing the corporate culture onto new entities cancause employees to lose their ability to identify with products and companies, and thus ultimately lead to a weakening of the market position and thus of the market value. CENTROTEC therefore strives tostrike a balance between control and entrepreneurial freedom at its group companies. The dovetailing ofacquired or newly established entities with the group is promoted by an overarching integration projectand continually monitored until the entity is finally fully integrated into the group-wide mechanisms ofcontrol and steering. The structure of the group as a whole is continually scrutinised for potential for improvements that are implemented by reorganisation projects in the individual segments in order to establish a workable basis for the continuing sustained development of the group.

Until now, the focus of business has been on core European countries. The greater portion of revenue isgenerated in the eurozone. This emphasis gives rise to limited exposure to risks from changes in foreignexchange rates. Business outside the eurozone and in other countries outside Europe will moreover be-come increasingly important. The aim here is to establish a broader basis for sales and thus reduce depend-


Growing regulatory requirementsthroughout Europe and furthersubsidies

Adapting efficiently to corporategrowth


ence on the German and Dutch markets. The manageable risks from possible exchange rate movementsare hedged selectively within the group by means of appropriate instruments. A growing internationalspread furthermore entails wide-ranging risks arising e.g. from changing political and legal circumstances,transport and processing risks, and cultural differences. For its further expansion, CENTROTEC relies inparticular on strong local partners with extensive market expertise and knowledge of their local context.By aligning the interests of the partners involved and regularly revisiting and examining risk positions inthe context of risk management, the market opportunities that arise are thus continually optimised, whilerisks are at the same time monitored and limited.

Risks from operating businessCENTROTEC addresses the potential risks in the operating sphere of the group’s individual companiesthrough extensive, ongoing measures.

Reliable deliveries, in particular for supplies procured internationally, are assured on the one hand throughclose technical cooperation with important suppliers and on the other hand by maintaining at least twosources of supplies in each case. Rising procurement prices constitute another potential risk at the pro-curement end. Depending on the segment and product area, this risk is controlled by methods such asshoring up long-term supplier relations and corresponding price agreements, and by continually observ-ing the market and optimising procurement sources. At present, procurement prices are however relativelylow compared with the record levels of mid-2008, following the steady rise in prices over the past fewyears, because there has been a marked fall in procurement prices ever since. Although prices picked upagain from mid-2009, on average for that year procurement prices were still between one-quarter andone-third down on the record levels of 2008, depending on the commodity in question. In line with a general stabilisation of the economic situation, a further rise in procurement prices is expected for thecurrent financial year, without prices returning to the levels of 2008. The risks in this sphere therefore appear to be manageable.

Potential risks within the production or service areas of the group companies are addressed by means ofinternal guidelines drawn up at the level of the individual companies, and certification to internationalquality standards such as ISO 9001, ISO 14001 and ISO TS 16949. However, in line with CENTROTEC’sstrategy and as a reflection of their broad operational leeway, the individual group companies always usethe most rigorous quality standards in their specific sectors as the benchmark To safeguard product qual-ity and minimise the associated risks, quality-critical components of CENTROTEC products are subjectedto comprehensive quality checks both during the entire production process and in the end products. Themethods and systems used to this end are examined and regularly updated in line with the latest standards.The risk of accidents and plant breakdowns is countered by providing suitable training for customers andemployees, and implementing accident prevention regulations and task instructions. The risk of break-downs of production plant is countered by preventive maintenance and ongoing monitoring of the operat-ing parameters. Plant itself is insured against potential forms of loss in line with its value.

The development of innovative products fundamentally entails the risk that the desired outcome may notbe achieved despite the expending of considerable resources. To minimise this fundamental developmentrisk, intensive exchanges and peer reviews of product development activities take place between the indi-


Systematic management of procurement prices

Double sourcing


vidual group companies, as does very intensive market analysis. The internationally broad-based sales organisation is also increasingly called upon to contribute its market knowledge. This helps to identify off-target developments at an early stage and keeps the focus of product development work on the market.All capital investments and development projects are in addition evaluated intensively and promptly in thecontext of group-wide development activities, looking at the overall portfolio and the individual opportuni-ties and risks involved.

At the sales end, there is the potential risk of the loss of important customer relations, in particular withkey accounts. Dependence on individual customers is fundamentally reduced by focusing predominantlyon products for end users. CENTROTEC for instance has no individual customer accounting for more than4 % of total consolidated revenue. The loss of contact for instance with a wholesale or key account cannevertheless have a palpable influence on revenue and earnings. This risk of dependence is countered byactive management of customer relations and diversification of the sales channels in the various markets.These tasks involve continually monitoring the sales channels in the individual segments and countries for scope for expansion in line with the strategy. The dependence of revenue on individual customers hasfurthermore fallen along with past growth.

A further risk in the sales sphere stems from the increasing pressure on the prices of CENTROTEC prod-ucts, in particular from existing or new competitors. CENTROTEC believes it is in a strong position in itsvarious segments thanks to its existing technological lead and the market position it has already achieved.The product portfolio is moreover regularly scrutinised for potential for innovations that will safeguard andextend its competitive position. Although there exists an overall risk of price pressure on CENTROTECproducts, positions have been achieved and mechanisms set up to keep this area of risk under control.

The customary insurance cover has been taken out to minimise the general risks from operating business.This includes in essence business interruption, business liability, legal protection, business and property,credit sale, loss of earnings and serial losses insurance, as well as D&O cover for Management Boardmembers, managing directors and non-executive directors. There is in addition special property insurancecover (damage by the elements) for warehouses.

Personnel risksThere fundamentally exists the potential risk of losing managers and employees in key positions, with acorresponding impact on the company. This risk is lower than in previous years in view of the current eco-nomic development. CENTROTEC addresses this potential risk on the one hand by adopting a sensitiveapproach to the integration of newly acquired entities (see “Corporate strategy risks”) and on the otherhand by diversifying its personnel base as part of developing the group organisation as a whole. The fur-ther development and regular training of employees in their respective specialist areas are promoted, andthe independent initiative of employees to develop and implement new approaches and methods is encour-aged. As a result, CENTROTEC is able to offer its employees long-term perspectives for development andthus helps to minimise fluctuation in key positions by giving its employees a high level of job satisfaction.CENTROTEC furthermore enables Management Board members, managers and employees in key posi-tions to share financially in the group’s long-term growth prospects through the group-wide stock optionsscheme, boosting loyalty to the group by means of such a long-term incentive system.


Broad customer base

Insurance cover for residual risks

Instruments for holding onto employees long-term


Information technology risksIn the domain of information technology, the possibility cannot fundamentally be excluded that problemswill arise with existing systems or future extensions to existing systems, such as introductions of newsoftware releases, or that system failures will hamper business operations. The customary precautionsand security measures in the IT sector are adopted to limit these risks. The appropriateness of the secu-rity measures in information technology is regularly checked and the systems and processes in useadapted to changing requirements if necessary. A cautious migration approach is furthermore adoptedfor the integration of new business units, to avoid major risks to business operations for instance as a result of incompatibility between systems or inadequate reflection of specific business features. However,the operating units are increasingly integrated at systems level in line with their business requirements. A topical example is the roll-out of a joint ERP system in all companies of the Gas Flue Systems segmentfrom 2009; this launch has progressed without any major difficulties to date.

Financial risksFinancial risks for CENTROTEC result largely from the use of borrowed capital for financing its growth,and in particular its acquisitions. The opportunities successfully seized in the past to generate high,steadily rising earnings in this way go hand in hand with the potential risk of falling or even lost earnings,with the corresponding financial consequences. In the financing of external growth, CENTROTEC limitsthe risk it bears on a local basis to the entities in question (ring-fenced financing) and subjects the cur-rent and future profitability of all corporate entities to comprehensive profit and earnings controlling. Deviations are thus rapidly identified and any corrective measures needed can be implemented promptlyand thoroughly. For financing, the interest rate risks for the mostly variable-rate loans are hedged pre-dominantly by means of interest rate derivatives. In the past, CENTROTEC has in addition paid off finan-cial liabilities on schedule in order to minimise the resulting financial burdens and maintain sufficientfinancial leeway.

CENTROTEC responded early on to the potential risk of more limited access to financing via the bankingsector following the financial crisis and, at the end of 2007, started to restructure loans for the Gas FlueSystems and Climate Systems segments that were nearing their term. The overall solution found back in2008 secured the short and long-term financing of the group for the next few years. Together with thesubstantial reduction in financial liabilities over the past three years, there are consequently adequate reserves to keep pursuing the development of the group under our own momentum, with additional lee-way for seizing any external options that might present themselves.

For more detailed information on the financial situation of the CENTROTEC Group, we refer to the Notesto the Consolidated Financial Statements from page 83.

Miscellaneous risksThe supplying and sale of products, plant and services may expose the CENTROTEC Group and its individ-ual companies to legal risks due to the possibility of deliveries not as per agreement, product liability claims,product defects, quality problems, breaches of intellectual property or the failure to comply with fiscalregulations. Despite a comprehensive quality management activities and corresponding regularly opti-mised organisational structures, such risks cannot be ruled out altogether. To guard against this exposure,


Refinement of the IT platform

Financing restructured early on


warranty provisions of the customary extent for our business operations are created and correspondingproduct liability insurance cover taken out, based on figures from experience of failures and correspon-ding warranties for potential customer claims, and reflecting potential accountability. All customer com-plaints are moreover systematically checked and processed, then investigated with a view to identifyingscope for internal optimisation.

There are currently no cases of litigation pending that could entail significant financial obligations, includ-ing ones which could threaten it as a going concern.

Directors’ assessment of the risk situationThe assessment of the risk situation of CENTROTEC is based on ongoing risk management, for which thecompany management discusses the status of risks and their possible impact and approves any neces-sary corrective measures, as well as ensuring that the operating units are closely monitored by the appro-priate Management Board members. The fundamental risks to CENTROTEC’s business include a greatmany external risks which the company is unable to influence directly, but the probability and potentialimpact of which is analysed regularly. There are in addition potential risks attributable to internal factors,for which the management has created instruments and methods in order to identify them early on andimplement measures to prevent or curb their effect.

The risks mentioned here do, however, go hand in hand with numerous opportunities, which are describedin greater detail in the outlook and the reports on the segments. As matters stand the management re-gards the opportunities and risks profile as balanced. The recession experienced by the global economyin 2009 likewise made the general conditions governing CENTROTEC’s areas of business more problem-atic. Particularly the peripheral area of Engineering Plastics and project business, together with certaininternational markets, were considerably affected as a result. The detailed current and anticipated futureimpact on the individual areas of business has been described at length in the segment reports. Even ifthe current overall economic situation now looks rather more positive than at the start of 2009, the eco-nomic environment will remain difficult in 2010 and there will be considerable uncertainty surrounding future developments. As repeatedly demonstrated in the past, CENTROTEC enjoys a high degree of flexi-bility in its cost structure and cash flow, enabling it to respond proactively to changing market dynamics.The options available to it include using the flexibility that exists within its production capacity by hiringtemporary workers and applying flexible working hours models, as well as continually reassessing andadapting investment spending in order to increase capacity and access to new markets in response todemand. As in the past, CENTROTEC will closely examine the attractive acquisition options that havearisen in the difficult economic environment, and will consider and assess such propositions specificallyin terms of their viability in the current rapidly changing economic climate. The group’s ongoing earningsimprovement programmes will moreover focus on optimising materials and commodities procurement


Balanced opportunities and risks profile


costs in order to continue profiting from the reduced prices on commodity markets and actively confrontpossible price rises.

Disclosures on the internal control and risk management system for financial reporting purposes, pursuant to Section 289 (5) of German Commercial CodeThe internal control and risk management system for financial reporting by the CENTROTEC Group aimsto identify potential internal sources of error and to limit or eliminate the risks arising from them. In addition to optimising internal processes and procedures, it above all encompasses the entire financialreporting of the CENTROTEC Group.

One core function of financial reporting is to steer the group as a whole. Target and deviation analysesare conducted on the basis of the budget and mid-range planning approved by the supervisory bodies.Regular forecasts are made to monitor the risks to ongoing business operations.

CENTROTEC’s financial statements are based on a group-wide reporting system. This constitutes the basisfor a standardised data reporting process throughout the group. The companies’ accounting functionsare organised non-centrally but are harmonised by means of a group-wide accounting manual that regu-lates how accounting standards are to be applied in group-wide financial reporting.

The information obtained within a narrow time frame from this comprehensive reporting system providesthe basis for active, prompt group steering. The holding of regular Management Board and SupervisoryBoard meetings and the close support provided for managing directors by the respective ManagementBoard members guarantee that the information obtained in reporting is suitably evaluated, leading to appropriate measures as necessary. Together with the provisions of the articles of incorporation and theindividual rules of internal procedure for the Supervisory Board, Management Board and managing direc-tors, this portfolio of reporting and analytical measures creates a coherent, effective overall system. Theefficiency and effectiveness of this system are examined by the Management Board at regular intervals,and the system is then revised as necessary.

The group’s Legal department helps to draft or cross-checks all materially significant contracts of groupcompanies.

The auditors of the individual companies, sub-groups and Consolidated Financial Statements examine the internal system of control for financial reporting purposes to the extent that is necessary based onthe audit standards and chosen audit strategy, and report on their findings to the Supervisory Board.Suggested improvements are taken up by the Management Board and management with the aim of continually developing and improving the system.


Internal control and risk management system continuallybeing optimised


Other particulars

Provisions on the appointment and dismissal of the members of the Management Board and on changesto the articles of incorporation The Management Board of the company is appointed and dismissed by the Supervisory Board, which isalso responsible for nominating a member of the Management Board as Management Board Chairman.The Shareholders’ Meeting resolves amendments to the articles of incorporation. The resolutions of theShareholders’ Meeting require a simple majority of votes cast and, if a majority of shares is required, asimple majority of shares, unless a greater majority or further requirements are stated in law. The sameapplies to amendments to the articles of incorporation.

Authorisation of the Management Board to issue or buy back shares

Share buy-backPursuant to the resolution of the Shareholders’ Meeting of June 9, 2009 the company was authorised untilDecember 8, 2010 to acquire treasury stock which, together with existing treasury stock, represents upto 10 % of the capital stock at the time of the authorisation taking effect. The price for the acquisition ofthese shares may not be more than 10 % higher or more than 10 % lower than the closing price in XETRAtrading on the Frankfurt Stock Exchange (or in a successor system) for shares of the same class and features on the ten trading days preceding the acquisition. The Management Board is authorised to offerall or some of the shares thus acquired to third parties in (part) payment of the acquisition of companiesor investments in companies, excluding the shareholders’ right of subscription. The Management Board is furthermore authorised to retire the company’s treasury stock without the need for a further resolutionto be adopted by the Shareholders’ Meeting. Retirement may be restricted to part of the purchasedshares.

Approved capitalBy the shareholders’ resolution of May 24, 2007, the Management Board is authorised, with the approvalof the Supervisory Board, to increase the company’s capital stock on one or more occasions by up toEUR 8,212,082 (approved capital) up until May 23, 2012 through the issue of new no par value bearershares in return for cash or non-cash contributions. The Management Board was also authorised, with theapproval of the Supervisory Board, to specify the details of the share issue and, in defined conditions, toexclude the subscription right (a) for residual amounts, (b) for capital increases for cash if the issuingprice of the new shares does not significantly undercut the market price of the shares of the same classand features already listed at the time when the issuing price is finally fixed by the Management Board, inkeeping with Sections 203 (1) and (2), and 186 (3), fourth sentence of German Stock Corporation Law,(c) for capital increases for contributions in kind for the granting of shares for the purpose of acquiring(including indirectly) companies, parts of companies or interests in companies or assets of other compa-nies, and (d) for issuance to employees of the company.

Conditional capitalBy resolution of the Shareholders’ Meeting of May 28, 2002 the capital stock is conditionally increased(Conditional Capital I). Conditional Capital I amounted to EUR 175,292 at December 31, 2009, dividedinto 175,292 no par value shares. The Management Board was authorised to issue warrants for subscrip-



tion to new bearer shares in the company from this Conditional Capital I until December 31, 2004, on oneor more occasions. Employees, managing directors and Management Board members of the companyand of its affiliated companies pursuant to Section 17 of German Stock Corporation Law are entitled tosubscribe. New shares are created where the options are exercised. These bear full voting rights and paydividends from the beginning of the financial year in which the options are exercised.

By resolution of the Shareholders’ Meeting on June 1, 2005 the capital stock was conditionally increasedby a further EUR 548,814, divided into 548,814 no par value shares (Conditional Capital II). At December31, 2009, Conditional Capital II amounted to EUR 526,804 divided into 526,804 no par value shares. TheManagement Board is authorised to issue warrants for subscription to new bearer shares in the companyfrom this Conditional Capital II until December 31, 2011, on one or more occasions. Employees, managingdirectors and Management Board members of the company and of its affiliated companies pursuant toSection 17 of German Stock Corporation Law are entitled to subscribe. New shares are created wherethe options are exercised. These bear full voting rights and pay dividends from the beginning of the finan-cial year in which the options are exercised.

By resolution of the Shareholders’ Meeting on May 29, 2008 the capital stock is conditionally increasedby a further EUR 756,000, divided into 756,000 no par value shares (Conditional Capital III). At Decem-ber 31, 2009, Conditional Capital III amounted to EUR 756,000, divided into 756,000 no par value shares.The Management Board is authorised to issue warrants for subscription to new bearer shares in the com-pany from this Conditional Capital III until December 31, 2014, on one or more occasions. Employees,managing directors and Management Board members of the company and of its affiliated companies asdefined by Section 17 of German Stock Corporation Law are entitled to subscribe. New shares are cre-ated where the options are exercised. These bear full voting rights and pay dividends from the beginningof the financial year in which the options are exercised.

For further disclosures on the company’s equity, please see the Notes to the Consolidated FinancialStatements.

Remuneration reportThe basic features of the system of remuneration as well as particulars of the group remuneration of indi-vidual Management Board and Supervisory Board members are summarised in the remuneration report(from page 16 onwards) for the 2009 financial year. It takes account of the provisions of German Com-mercial Code and of the principles of the Corporate Governance Code. The remuneration report, whichincludes the particulars of the remuneration of the corporate bodies, is published in the section dedicatedto the Corporate Governance Report and is to be regarded as part of this management report, as a resultof which it is not presented separately here.

Rendering of accounts Some of the particulars provided in the management report, including statements on anticipated revenues,earnings and capital expenditures, as well as potential changes in the framework conditions of marketsand of the financial position, contain future-related statements. These have been formulated on the basisof expectations and estimates by the Management Board with regard to future occurrences that could affect the group. Such future-related statements are intrinsically open to risks, uncertainties, exceptions



and other factors that could result in the actual revenues and earnings of CENTROTEC, significantly departing from or falling short of those explicitly indicated or implicitly assumed or described in thesestatements.

In the rendering of the accounts, the potential for leeway in measurements in the Consolidated FinancialStatements was analysed, assessed and handled in such a way as to present figures that the Manage-ment Board believes are as fair and reliable as possible. Open, timely and continual communication withthe capital market moreover forms part of CENTROTEC’s philosophy, which the rendering of accountssatisfies.

Report on post-balance sheet date events

No further significant events occurred at and after the balance sheet date, or only to the extent that hasalready been indicated or is already evident from the remarks in the group management report.

Outlook

While 2009 turned out to be a difficult world for the global economy, as expected, with the deepest reces-sion for decades, there are initial signs of an economic recovery in 2010. Following a downturn of morethan 2 % worldwide in real gross domestic product (GDP) in the past year, global GDP growth of 2.6 % and3.3 % are forecast for 2010 and 2011 respectively. In the market area of the European Union, which is ofparticular significance for CENTROTEC, GDP growth of 0.7 % and 1.6 % are forecast for 2010 and 2011 respectively, in contrast to a drop of around 4 % in 2009.

In a global economic situation that is likely to stabilise again, the market for energy efficiency and the useof renewable energies is forecast to be of pre-eminent significance for the further development of theglobal economy. Against a backdrop of a renewed upswing in energy prices in the medium to long term,the sparing use of energy will become a major concern both economically and ecologically because ofthe finite nature of fossil fuels and the ever more obvious consequences of global climate change. Thisfact has already been acknowledged for a number of years in both the legislative direction and subsidisa-tion policies of almost all industrial nations. The building sector is of particular significance in this respect;in Germany, for instance, it accounts for around 40 % of total primary energy consumption and also offersthe greatest potential for savings.

To respond to the challenges and economic opportunities that this situation presents, CENTROTEC hasappropriate solutions in the form of an innovative, highly efficient product portfolio covering the areas ofheating, ventilation and climate technology, along with the use of renewable energies. With the help ofthis gradually evolving product range, the group companies have steadily increased their shares of thecore markets over the past few years and strengthened the position of CENTROTEC as the only listed European comprehensive supplier of renewable energies and energy-saving solutions for buildings. In2009, for example, it launched various new products including a non-central ventilation system with heatrecovery for schools, a new generation of control systems for the KG Top range of air-handling units, thecompact gas-solar centre, optimised solar calorifier sys tems, an innovative air ducting system for con-


Slight overall economic recoveryexpected

Outstanding importance of energy efficiency and renewable energies

Innovative new product ideasprovide opportunities for growth


trolled domestic ventilation, and a passive-house compact appliance. An integrated energy roof systemfor the combined use of solar thermal and photovoltaic systems, a comprehensive range of heat pumpsand other products will moreover shortly be appearing on the market. In addition, CENTROTEC is increas-ingly working on a user-friendly, efficient way to combine previously separate systems, such as ventilationsystems with heat recovery combined with efficient condensing boilers and solar thermal.

Various high-profile reference customers serve to confirm the expertise of CENTROTEC’s companies intheir core business area of energy-efficient building services engineering and the use of renewable ener-gies. Deutsche Bank, for example, decided to use Wolf products in making the famous twin towers of its Frankfurt head office state of the art in terms of energy use. Other typical major projects recently realised with the help of energy-efficient building services engineering have been completed e. g. at MANSE, on a luxury hotel in the Gulf and in 2009 European Capital of Culture, Linz. References from manyother renowned companies, federations, clubs and associations that have used CENTROTEC expertise in new buildings or for energy-led refurbishment also reflect the strong market position of the group com-panies.

For the 2010 financial year, CENTROTEC believes the core segments Climate Systems and Gas Flue Sys-tems will receive a significant boost from the marked rebound in energy prices since mid-2009; this development will become particularly pertinent for those deciding whether to install systems that use renewable energies and cutting-edge heating technology, and also in light of the continuing debate aboutwhat needs to be done to protect the global climate. Even if the Copenhagen Climate Change Conferencedid not bring forth any tangible results, awareness of the need to act rapidly and decisively in order totackle climate change has grown worldwide. Crucial components in successfully mastering this problem willbe the efficient use of energy resources currently available, and the tapping of new, preferably renewableenergy sources. The predominantly national-scale activities that have hitherto been initiated increasinglyaffect the building sector, which accounts for a major portion of worldwide primary energy consumption.The general direction of these statutory requirements and state subsidy schemes is fundamentally aboutusing existing but ultimately finite fossil fuel resources as efficiently as possible until the technology forusing the infinite potential of the sun’s power is available and widespread in all its various forms.

To ensure that CENTROTEC is able to build on its technologically outstanding position in this area, EUR 17.9 million was invested in property, plant and equipment and intangible assets in 2009. The basison which the CENTROTEC Group plans to achieve a target investment volume of a similar magnitude in2010 is its sound financing, which already provides adequate leeway for seizing short-term options to expand the group further, in keeping with the long-standing, successful buy-and-build strategy. With netfinancial liabilities reduced by EUR 27.7 million to EUR 86.5 million in 2009, and therefore by more thanthe forecast level, CENTROTEC is planning a further reduction from business operations of around EUR 10 million for the current financial year. The even greater financial leeway that this action is creatingwill increase CENTROTEC’s excellent scope for exploiting additional external options to push forward withits strategy of growth.

For the 2010 financial year currently in progress, based on the above expectations and estimates, CENTROTEC forecasts revenue growth to EUR 480 to 500 million and an operating result (EBIT) of


Global climate protection callsfor swift adoption of energy-efficient technologies

Sound financing of CENTROTECGroup paves way for strengthening market position

Continuing growth in 2010

CENTROTEC solutions play keyrole in pioneering constructionprojects


EUR 30 to 32 million. Earnings per share (EPS) should receive a boost not just from the consistentlyhealthy CENTROTEC result, but also from the investment result’s return to comfortably positive territorysince the second half of 2009, with this indicator expected to reach EUR 1.10 to 1.20. As in previousyears, CENTROTEC again plans to plough the profit generated in 2009 back into the business and to in-vest in further corporate growth. For 2011, despite all the uncertainties involved in forecasting so farahead, CENTROTEC expects a continuation in the organic growth in revenue and earnings that is alreadyin evidence in 2010. In the medium term the CENTROTEC Group expects organic revenue growth ofaround 10 %, coupled with an increased EBIT margin in the high double-digit range.

In light of the strong market position achieved in a global growth market, and given the profitable revenueachieved even amid the difficult conditions of a global economic crisis in 2009, CENTROTEC thus expectsprofitable growth to continue in 2010 and beyond.

The main driving forces behind the continuing positive business performance are:> The long-term rise in energy prices due to limited resources and rising worldwide consumption,> The growing pressure to act swiftly and decisively on climate change in order to hold its negative

consequences in check,> Tougher statutory requirements throughout Europe for the energy efficiency of buildings,> The strong market position of the group companies thanks to their established, innovative,

energy-efficient solutions for buildings,> The impressive development expertise that is behind the recent and forthcoming market launches of

very many new, technologically pioneering products,> Further investment in product development and innovations,> Competitive advantages thanks to anticipating accurately the trend towards the integration of various

solutions for heating, ventilation and climate control technology, and involving renewable energies,into user-friendly overall systems,

> Exploiting further synergies within the CENTROTEC Group in operational and strategic areas.


Positive framework conditions forcompany's further development


General statement on the expected development of the group

The very good business performance in 2009 in the context of the global economic crisis has again en-dorsed the corporate strategy chosen. CENTROTEC companies address the growing demand worldwidefor energy efficiency and the use of renewable energies in buildings through the system solutions theysupply. The product range of heating, ventilation and ventilation technology that has received multipleawards from independent bodies is continually being optimised and extended with customer-oriented de-velopments. The organisation, with efficient, continually optimised production capacities, cost-orientedprocurement arrangements and a well-positioned, internationally focused sales service, is run with a closeeye to profitability and market developments, and is constantly evolving. On this basis, CENTROTEC regardsitself as enjoying a strong position to increase its market shares in the global growth market for energy efficiency and renewable energy technology in buildings yet further in the long term, maintaining the posi-tive development in revenue and earnings equally in the long term.

There are currently growing signs of an upswing in economic activity, but it is unlikely that the improvedsituation in 2010 will be sufficient to correct the sharp downturn in the economy that was precipitated bythe crisis. Nevertheless, on the strength of a good performance in a difficult wider economic context, thevery good market position in the industry of the future for integrated system solutions for energy savingand climate protection in buildings, and a wealth of new, innovative products in the areas of heating, cli-mate control and ventilation technology, CENTROTEC is very well equipped to tackle the challenges withwhich the economy will continue to be confronted in 2010 and 2011 and expects that the outlook for thegrowth market for energy conservation and climate protection will remain positive.

CENTROTEC therefore believes that the business performance for the group as a whole will be positive in2010 and beyond, even allowing for the uncertain overall economic picture and the occasionally contrast-ing business fortunes of individual segments and markets.


Prospects remain bright ingrowth market for energy conservation and climate protection


ways of saving energy

Innovative energy-saving solutions from CENTROTEC group companies deliver maximum energy efficiency and economy in projects worldwide.

Deutsche Bank, Germany ARS Electronica Center, Austria




Observatory, Chile O2 World, Germany

ADNEC, United Arab Emirates Kremlin, Russia

German parliament, Germany Viertel Zwei, Austria


Financial Statements 2009


Basic data forthe group

Financialfigures

Notes on components of the consolidatedfinancial statements

Other particulars

>

84 A. Basic data for the group

85 B. Standards applied

90 C. Consolidation methods and principles

91 D. Foreign currency translation

92 E. Accounting policies

99 F. Financial risk management

102 G. Particulars of the consolidated companies

76 Statement of Financial Position

77 Consolidated Income Statement

78 Statement of Comprehensive Income

79 Statement of Cash Flows

80 Statement of Movements in Equity

82 Segment Report

104 H. Notes on components of the consolidated financial statements

104 Goodwill [1]106 Intangible assets [2]108 Property, plant and

equipment [3]109 Investments accounted for

using the equity method, invest-ments and loans originated by the enterprise [4]

110 Supplementary disclosures on financial instruments [5]

111 Other assets [6]112 Deferred tax assets and

tax liabilities [7]113 Inventories [8]114 Trade receivables [9]114 Cash and cash equivalents [10]114 Shareholders’ equity [11]117 Pension provisions [12]120 Provisions [13]120 Financial liabilities [14]123 Other liabilities [15]124 Other income [16]124 Cost of purchased materials

and services as well as change in inventories [17]

124 Personnel expenses and total employees [18]

125 Other expenses [19]125 Interest income and

expense [20]125 Income tax expense [21]126 Minority interests [22]126 Earnings per share [23]127 Segment report and

revenues [24]128 Statement of Cash Flows [25]

129 I. Other particulars

129 Contingent liabilities and miscellaneous particulars [1]

129 Significant events occurring after the balance sheet date [2]

129 Related party disclosures [3]132 Corporate Governance Code [4]132 Independent auditors’ fees [5]132 Date and authorisation for

issue of the financial statements [6]

133 Independent Auditors’ Report


76 Financial Statements

Statement of Financial PositionAssetsin EUR thousand [Notes] 31/12/2009 31/12/2008

Non-current assets

Goodwill 1 60,914 60,911

Intangible assets 2 37,542 36,751

Property, plant and equipment 3 91,252 94,702

Financial investments accounted for using the equtiy method 4 23,699 30,587

Loans and investments 4, 5 715 587

Other assets 5, 6 1,531 1,037

Deferred tax assets 7 3,827 1,992

219,480 226,567

Current assets

Inventories 8 57,024 59,867

Trade receivables 5, 9 58,723 60,729

Income tax receivable 769 578

Cash and cash equivalents 5, 10 35,356 22,927

Other assets 5, 6 8,294 7,716

160,166 151,817

Assets 379,646 378,384

Equity and Liabilitiesin EUR thousand [Notes] 31/12/2009 31/12/2008

Shareholders’ equity 11

Share capital 16,716 16,582

Capital reserves 25,302 25,068

Treasury stock (112) (112)

Retained earnings and profit carryforward 85,577 67,719

Profit attributable to shareholders of CENTROTEC Sustainable AG 5,400 18,622

132,883 127,879

Minority interest presented within equity (209) (75)

132,674 127,804

Non-current liabilities

Pension provisions 12 22,253 21,625

Other provisions 13 11,396 9,710

Financial liabilities 5, 14 90,080 105,490

Other liabilities 5, 15 3,621 1,218

Deferred tax liabilities 7 16,727 17,233

144,077 155,276

Current liabilities

Other provisions 13 1,708 1,697

Income tax payable 6,042 5,597

Financial liabilities 5, 14 31,727 31,538

Trade payables 5 31,402 26,891

Other liabilities 5, 15 32,016 29,581

102,895 95,304

Equity and Liabilities 379,646 378,384



Consolidated Income Statement

01/01/2009 01/01/2008in EUR thousand [Notes] 31/12/2009 31/12/2008

Revenues 24 466,613 476,081

Other income 16 8,794 6,799

Changes in inventories of finished goods and work in progress 17 (3,400) 1,657

Production for own fixed assets capitalised 2, 3 3,666 2,630

Cost of purchased materials and services 17 (225,575) (241,020)

Personnel expenses 18 (127,142) (121,967)

Other expenses 19 (76,315) (75,372)

EBITDA 46,641 48,808

Depreciation and amortisation 2, 3 (17,604) (16,637)

Operating income (EBIT) 29,037 32,171

Interest income 20 735 952

Interest expense 20 (7,225) (9,538)

Result from equity investments 4 (9,820) 2,200

Result before income taxes (EBT) 12,727 25,785

Income taxes 21 (7,511) (7,150)

Net income (EAT) 5,216 18,635

Profit or loss attributable to minority interest 22 (184) 13

Profit attributable to shareholders of CENTROTEC Sustainable AG 5,400 18,622

EPS (Earnings per share in EUR)

Earnings per share (basic) 23 0.33 1.13

Earnings per share (diluted) 23 0.32 1.11

Weighted average shares outstanding (in units; basic) 11, 23 16,609,906 16,525,414

Weighted average shares outstanding (in units; diluted) 11, 23 16,701,590 16,755,043



Statement of Comprehensive Income



Exchange rate differences on translation 85 44

Derivative financial instruments (1,925) (989)

Income tax relating to components of other comprehensive income 7 453 195

Other Comprehensive income, net of tax (1,387) (750)

Total comprehensive income 3,829 17,885

Attributable to:

Minority interest (183) 20

Shareholders of CENTROTEC Sustainable AG 4,012 17,865



Statement of Cash Flows


Net income before interest and taxes (EBIT) 29,037 32,171

Depreciation 2, 3 17,604 16,637

Gain/loss on disposal of fixed assets (184) 226

Other non-cash items (953) (933)

Increase/decrease in provisions 2,325 1,792

Increase/decreasein inventories, trade receivables and other assets thatcannot be allocated to investing or financing activities 3,586 (6,706)

Increase/decreasein trade payables and other liabilities thatcannot be allocated to investing or financing activities 5,063 (3,259)

Interest paid (5,894) (7,547)

Income taxes paid (5,524) (7,534)

Cash flow from operating activities 25 45,060 24,847

Acquisition of share in participations less net of cashacquired and outstanding earn outs to be paid 0 (1,344)

Purchase of property, plant and equipment/intangible assets/investments/financial assets loans receivable 2, 3, 4 (21,110) (16,987)

Proceeds from disposal of property, plant and equipment/intangible assets/investments/financial assets/loans receivable 3,104 403

Cash flow from investing activities 25 (18,006) (17,928)

Proceeds from issuance of shares 11 305 459

Proceeds from financial liabilities 6,410 51,086

Repayment of financial liabilities (18,454) (55,547)

Cash flow from financing activities 25 (11,739) (4,002)

Change in financial resources 25 15,315 2,917

Financial resources at the beginning of the financial year 4,401 1,484

Financial resources at the end of the financial year 25 19,716 4,401



Statement of Movements in Equity

Stock DeferredShare Capital Treasury option tax

in EUR thousand [Note 11] capital reserve Stock reserve reserve

January 1, 2009 16,582 25,068 (112) 1,452 210

Transfer to revenue reserves

Change from the exercise of options 134 171

Stock option plan 63 624

Comprehensive income 453

Other changes

Dezember 31, 2009 16,716 25,302 (112) 2,076 663

January 1, 2008 16,493 24,642 (112) 1,058 15

Transfer to revenue reserves

Change from the exercise of options 89 370

Stock option plan 56 394

Comprehensive income 195

Other changes

Dezember 31, 2008 16,582 25,068 (112) 1,452 210



Currency Sum other Profit Totaltranslation Fair value Retained retained attributable to capital to Minority

differences in adjustment of earnings and earnings shareholders shareholders interestshareholders’ financial profit carry- and profit of CENTROTEC of CENTROTEC presented Consolidated

equity instruments forward forward Sustainable AG Sustainable AG within equity equity

(321) (390) 66,768 67,719 18,622 127,879 (75) 127,804

18,622 18,622 (18,622)

305 305

624 687 687

84 (1,925) (1,388) 5,400 4,012 (183) 3,829

49 49

(237) (2,315) 85,390 85,577 5,400 132,883 (209) 132,674

(358) 599 50,146 51,460 16,622 109,105 (39) 109,066

16,622 16,622 (16,622)

459 459

394 450 450

37 (989) (757) 18,622 17,865 20 17,885

(56) (56)

(321) (390) 66,768 67,719 18,622 127,879 (75) 127,804



Segment Report

Segment Structure Climate Systemsin EUR thousandIncome statement [Note 24] 2009 2008

Revenue from third parties 309,524 319,308

Revenue from other segments 413 270

Changes in inventories of finished goods and work in progress (1,245) (1,235)

Cost of purchased materials (150,612) (161,602)

Personnel expenses (89,084) (84,769)

Other expenses and income (38,861) (40,005)

EBITDA 30,135 31,967

Depreciation and amortisation (10,598) (10,179)

Segment result (EBIT) 19,537 21,788

Interest income 480 652

Interest expense (3,694) (5,909)

Result from equity investments 0 0

EBT 16,323 16,531

Income taxes (4,702) (4,615)


Profit or loss attributable to minority interest (2) (2)

Profit attributable to shareholders CENTROTEC Sustainable AG 11,623 11,918

Balance sheet key figures

Assets* 218,569 219,456

Financial investments accounted for using the equtiy method 0 0

Loans and financial assets available for sale 715 587

Entitlement to income tax rebates**

Liabilities 69,162 63,763

Financial liabilities

Income tax payable**

Investments

Total investments in property, plant, equipment and intangible assets*** 6,489 7,479

European Regional Structure euro countries

in EUR thousand 2009 2008

Revenue from third parties 409,728 401,192

thereof in Germany 241,464 236,020

Assets**** 361,409 359,474

thereof in Germany 233,783 208,220

Total investments in property, plant, equipment and intangible assets*** 17,262 16,014

* Excl. financial investments accounted for using the equity method, loans and financial assets available for sale and entitlement to income tax rebates **

** Including deferred tax

*** Incl. goodwill and figures out of business combinations (previous year incl. EUR 105 thousand loans and investments)

**** Excl. entitlement to income tax rebates**



Medical Technology &Gas Flue Systems Engineering Plastics Consolidation Total

2009 2008 2009 2008 2009 2008 2009 2008

128,111 118,822 28,978 37,951 0 0 466,613 476,081

840 549 488 813 (1,741) (1,632) 0 0

(813) 1,449 (1,342) 1,443 0 0 (3,400) 1,657

(68,407) (66,734) (8,232) (14,316) 1,676 1,632 (225,575) (241,020)

(24,822) (22,568) (13,236) (14,630) 0 0 (127,142) (121,967)

(19,811) (19,705) (5,183) (6,233) 0 0 (63,855) (65,943)

15,098 11,813 1,473 5,028 (65) 0 46,641 48,808

(4,554) (4,431) (2,452) (2,027) 0 0 (17,604) (16,637)

10,544 7,382 (979) 3,001 (65) 0 29,037 32,171

366 257 39 41 (150) 2 735 952

(2,918) (2,726) (763) (903) 150 0 (7,225) (9,538)

(9,820) 2,200 0 0 0 0 (9,820) 2,200

(1,828) 7,113 (1,703) 2,139 (65) 2 12,727 25,785

(3,162) (1,782) 336 (677) 17 (76) (7,511) (7,150)

(4,990) 5,331 (1,367) 1,462 (48) (74) 5,216 18,635

(182) 15 (45) 24 45 (24) (184) 13

(4,808) 5,316 (1,322) 1,438 (93) (50) 5,400 18,622

98,937 90,776 33,191 34,408 (61) 0 350,636 344,640

23,699 30,587 0 0 0 0 23,699 30,587

0 0 0 0 0 0 715 587

4,596 2,570

28,374 21,968 4,860 4,991 0 0 102,396 90,722

121,807 137,028

22,769 22,830

9,305 6,877 2,081 3,249 0 0 17,875 17,605

Europeannon-euro countries Rest of world Consolidation Total

2009 2008 2009 2008 2009 2008 2009 2008

47,439 64,944 9,446 9,945 0 0 466,613 476,081

241,464 236,020

14,431 16,545 651 787 -1,441 -992 375,050 375,814

233,783 208,220

587 1,473 26 118 0 0 17,875 17,605



Basic data for the group

The CENTROTEC Group – hereinafter also referred to as CENTROTEC– is an international group with subsidiaries in twelve Europeancountries and two Asian countries, as well as one subsidiary in theUSA, annual revenue of EUR 467 million (previous year EUR 476 mil-lion) and 2,589 employees worldwide (full time equivalents) (previ-ous year 2,605 FTE). The focus of activities of CENTROTEC is thedevelopment, production and sale of the following product areas:> Heating systems and in particular condensing-boiler

technology for gas, oil and biomass as the energy source, together with solar thermal systems

> Gas flue systems for heating systems, made predominantlyfrom plastic components,

> Technical roof systems,> Ventilation systems with heat recovery,> Climate control systems,> Heat pumps,> Combined heat and power units, in particular fuelled by biogas

and sewage gas,> Medical technology components and equipment,> Plastic semi-finished products and prefabricated products, and > Indirectly via the equity interest in the CENTROSOLAR Group,

turnkey photovoltaic systems and solar modules, mountingsystems and components for solar power systems. Also components for solar power systems such as securing andcovering concepts.

As well as the existing businesses, the CENTROTEC Group definesits business purpose as creating and acquiring new business areasand companies in which energy-saving products are developed

and sold, and/or the expertise of which lies in the domain of medical technology products, innovative plastic-based products or gas flue and ventilation systems.

CENTROTEC Sustainable AG has been listed on the Frankfurt StockExchange as a public limited liability company since December 8,1998. Many of the companies included in the Consolidated Finan-cial Statements nevertheless go back further. The group parent,CENTROTEC Sustainable AG, Brilon, Germany, is listed in thePrime Standard in the SDAX index under the codes CEV, WKN540750 and ISIN DE0005407506. CENTROTEC Sustainable AG is entered on the Commercial Register of the Local Court of Arnsberg, Germany, under the number HRB 2161. That group par-ent’s registered offices are located at Am Patbergschen Dorn 9,59929 Brilon, Germany. CENTROTEC Sustainable AG is not part of a superordinate group, and is the ultimate parent company ofthe group presented in these Notes and Consolidated FinancialStatements. Further financial and corporate information on CENTROTEC is available from the above address, or on the home-page www.centrotec.de.

The financial year of CENTROTEC corresponds to the calendaryear. The income statement therefore covers the period from January 1 to December 31, 2009 and has been prepared using the nature of expenditure method. The Consolidated FinancialStatements have been prepared in euros; unless otherwise indicated, the amounts quoted refer to thousand euros (EUR thousand). For mathematical reasons, there may be round-ing differences of +/- one unit.

CENTROTEC Sustainable AGNotes to the Consolidated Financial Statements for the financial year 2009

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Standards applied

The Consolidated Financial Statements at December 31, 2009 havebeen prepared in accordance with the “International FinancialReporting Standards” (IFRS) issued by the International Account-ing Standards Board (IASB), as applicable within the EuropeanUnion (EU), taking account of Section 315a (1) of German Com-mercial Code. All IFRS standards, the application of which ismandatory for the financial year from January 1, 2009, have beenapplied. The Consolidated Financial Statements have been pre-pared on the basis of historical cost, with the restriction that thefinancial assets and financial liabilities have been recognised atfair value through profit and loss.

CENTROTEC Sustainable AG, as the parent company of the CENTROTEC Group, is required to prepare annual financial state-ments in accordance with the requirements of German Commer-cial Code.

Accounting standards applied for the first time

The accounting standards have been revised and published by theIASB. They wholly or partly replace earlier versions of these stan-dards or constitute new standards. CENTROTEC has applied thefollowing IFRS in full for the first time or applied the correspond-ingly revised standards in agreement with the corresponding transitional provisions and – insofar as necessary – adjusted thecomparative figures for 2008 in agreement with the new account-ing standards:

Amendments to IAS 1 Presentation of Financial Statements

Amendments to IAS 23 Borrowing Costs

Amendments to IAS 27/IFRS 1 Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate

Amendments to IAS 32/IAS 1 Puttable Instruments and Obligations Arising on Liquidation

Amendments to IFRS 2 Share-based Payments: Vesting Conditions and Cancellations

Amendments to IFRS 7 Improved Disclosures on Financial Instruments

IFRS 8 Operating Segments

Amendments to IFRIC 9/IAS 39 Embedded Derivatives

IFRIC 13 Customer Loyalty Programmes

IFRIC 14/IAS 19 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction

All the standards and interpretations listed have been adoptedinto European law by the European Union. In addition, severalminor amendments made to various standards under the annualIFRS improvement process (“Improvements to IFRSs”) are to beapplied from January 1, 2009.

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The first-time application of the amended standards had no mate-rial impact on the recognition and measurement policies of thegroup. The following amendments are already applicable from the2009 financial year and could not be described in the previousyear’s report, as they were only published after preparation of thefinancial statements.

Amendments to IFRS 7The amendments require enhanced disclosures about fair valuemeasurement of financial instruments and liquidity risks. In partic-ular, a three-tier hierarchy for the disclosures at fair value is intro-duced, on which the scope of additional disclosure obligationsdepends. Upon first-time application of the amendments, no prior-year comparative disclosures are necessary under the additionaldisclosure obligations.

Amendments to IFRIC 9/IAS 39In the amended standard the IASB clarifies that the reassessmentof embedded derivatives is also mandatory upon the reclassifica-tion of financial assets out of the category “measured at fair valuethrough profit and loss“ because the structured project did notpreviously need to investigate the existence of embedded deriva-tives to be separated because of measurement at fair value throughprofit and loss. For the assessment, the conditions at the timewhen the enterprise first became a party to a contract for the fi-nancial instrument or made a change in the terms of the contractthat significantly modifies the cash flows are authoritative. If thisassessment reveals the need for separate accounting of the deriv-ative, but if separate measurement of the derivative is not possiblebecause its fair value cannot be reliably determined, the entirestructured instrument must remain in the category “measured atfair value through profit and loss”.

Accounting standards applicable from the 2010 financial year or later

The following standards and interpretations issued by the IASBhave been adopted into European law by the EU:

IAS 27 (revised)/IFRS 3 (revised) Consolidated and Separate Financial Statements/Business Combinations

Amendments to IAS 32 Classification of Rights Issues

Supplements to IAS 39 Eligible Hedged Items

IFRS 1 (revised) First-time Adoption of International Financial Reporting Standards

IFRIC 15 Agreements for the Construction of Real Estate

IFRIC 16 Hedges of a Net Investment in a Foreign Operation

IFRIC 17 Distributions of Non-cash Assets to Owners

IFRIC 18 Transfer of Assets from Customers

IAS 27 (revised)/IFRS 3 (revised)In January 2008 the IASB issued a revised version of IFRS 3 andan amended version of IAS 27. While the application of acquisitionaccounting for business combinations is reconsidered in IFRS 3,IAS 27 mainly relates to changes in accounting for minority inter-ests and the loss of control of a subsidiary. Under IFRS 3, the acquiring enterprise can elect to measure any minority interest ona transaction-by-transaction basis, either at fair value as of the acquisition date or at its proportionate interest in the fair value ofthe identifiable assets and liabilities of the acquired enterprise.When an enterprise is acquired in successive stages, the identifi-able assets and liabilities of the acquired enterprise are recog-nised at fair value when control is obtained. A gain or loss isrecognised in profit or loss for the difference between the fairvalue of the previously held equity interest in the acquired enter-prise and its carrying amount. IAS 27 also requires the effects ofall transactions with minority interests to be recorded in equity ifthere is no change in control. On the other hand, transactions resulting in a loss of control cause a gain or loss to be recognisedin profit or loss. The gain or loss includes a remeasurement to fairvalue of any retained equity interest in the investee. In addition,IFRS 3 specifies that all items of consideration transferred in a



business combination are measured and recognised at fair value,including contingent consideration, as of the acquisition date.Transaction costs incurred by the acquiring enterprise in connec-tion with the business combination do not form part of the cost ofthe transaction but are expensed as incurred unless they relate tothe issuance of debt or equity securities, in which case they areaccounted for under IAS 39. IFRS 3 and IAS 27 are effective forbusiness combinations in financial years beginning on or after July 1, 2009. Early application is permitted provided that bothstandards are applied together. Its application for the first time isnot expected to have any material impact on the net worth, finan-cial position and financial performance of the group.

Amendments to IAS 32In October 2009 the IASB published the amendments to IAS 32.The amendments relate to the classification of rights issues, op-tions and warrants with an exercise price denominated in foreigncurrency. Presentation within equity is now called for, irrespectiveof the currency in which the exercise price is denominated. Theamendment is to be applied from the start of the first financialyear beginning after January 31, 2010. The application of theamended standard for the first time will not have any impact onthe net worth, financial position and financial performance of thegroup.

Supplements to IAS 39 In July 2008 the IASB published supplements to IAS 39 FinancialInstruments: Recognition and Measurement – Eligible HedgedItems, in order to clarify two questions concerning hedge account-ing: the designation of inflation as a hedged risk, and the designa-tion of a one-sided risk in a hedged item. The amendments to IAS 39 are effective for accounting periods beginning on or afterJuly 1, 2009. Earlier application is permitted, subject to the regula-tion first being endorsed by the European Commission in the caseof enterprises in the EU. Its application for the first time is not expected to have any material impact on the net worth, financialposition and financial performance of the group.

IFRS 1 (revised) The IASB has issued a restructured version of IFRS 1 First-timeAdoption of International Financial Reporting Standards. In 2007the Board decided to amend IFRS 1 as part of the Annual Improve-ments Process project in order to make it easier for readers to understand and organise it in a way that makes future changeseasier to incorporate. The version of IFRS 1 that has now beenpublished retains the content of the preceding version in a differ-ent structure. It replaces the preceding version and takes effectfor companies applying IFRS for the first time for financial yearsbeginning on or after January 1, 2010.

IFRIC 15The IASB published IFRIC 15 Agreements for the Construction ofReal Estate in July 2008. The aim of the interpretation is to achieveuniform accounting by companies that develop real estate andwhich, in that capacity, sell units such as apartments or houses“off plan” – that is, before construction is complete. IFRIC 15 defines criteria according to which accounting comes under thescope of either IAS 11 Construction Contracts or IAS 18 Revenue.The interpretation is to be applied for financial years beginning onor after December 31, 2009. Its application for the first time is notexpected to have any material impact on the net worth, financialposition and financial performance of the group.

IFRIC 16In July 2008 the IASB published IFRIC 16 Hedges of a Net Invest-ment in a Foreign Operation. The purpose of the interpretation isto clarify two issues arising in connection with the two standardsIAS 21 The Effects of Changes in Foreign Exchange Rates and IAS 39 Financial Instruments: Recognition and Measurement, inconnection with the accounting of hedges of foreign currency riskswithin an enterprise and its foreign business operations. IFRIC 16clarifies what is to be regarded as a risk from the hedging of a netinvestment in a foreign business operation, and where the hedgeto minimise this risk may be held within the group. The interpreta-tion is to be applied for financial years beginning on or after June30, 2009. The application of IFRIC 17 is not expected to have any



material impact on the net worth, financial position and financialperformance of the group.

IFRIC 17In November 2008 the IASB published IFRIC 17 Distributions ofNon-cash Assets to Owners. IFRIC 17 deals with issues such ashow an enterprise should measure other assets as payments thatit transfers to the shareholders by way of profit distribution. A divi-dend payable should be recognised if the dividend is authorised bythe relevant corporate bodies and is no longer at the discretion ofthe enterprise. This dividend payable should be measured at the fairvalue of the net assets to be distributed. The difference betweenthe dividend payable and the carrying amount of the net assets tobe distributed should be recognised in profit or loss. Additional dis-closures should moreover be made if the net assets being held fordistribution to owners meet the definition of a discontinued opera-tion. IFRIC 17 is effective for financial years beginning on or afterOctober 31, 2009. The application of IFRIC 17 is not expected tohave any material impact on the net worth, financial position andfinancial performance of the group.

IFRIC 18In January 2009 the IASB published IFRIC 18 Transfer of Assetsfrom Customers, which provides additional information on the accounting of the transfer of an asset by a customer. The IASBconsiders IFRIC 18 to be of particular relevance for the energysector. It clarifies the requirements of IFRSs for agreements inwhich an enterprise receives from a customer an item of property,plant and equipment that the enterprise must then use either toconnect the customer to a network or to provide the customerwith ongoing access to a supply of goods or services. It likewisedeals with those cases where an enterprise receives payments onthe condition that these be used to acquire or construct one ofthe above assets. IFRIC 18 is to be applied prospectively to trans-fers of assets from customers received on or after October 31,

2009. The application of IFRIC 18 is not expected to have any material impact on the net worth, financial position and financialperformance of the group.

In addition, one amendment was made to IFRS 5 under the annualIFRS improvement process (“Improvements to IFRSs”) and is to beapplied from July 1, 2009. The amendment concerned the defini-tion of discontinued operations and the introduction of additionaldisclosures.

The following standards and interpretations issued by the IASBhad not yet been adopted into European law by the EU as at December 31, 2009:

IAS 24 (revised) Related Party Disclosures

Amendment to IFRS 1 (revised) Additional Exemptions for First-time Adopters

Amendments to IFRS 2 Group Cash-Settled Share-Based Payment Transactions

IFRS 9 Financial Instruments

Amendments to IFRIC 14 Prepayment of a Minimum Funding Requirement

IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments

IAS 24 (revised)The IASB issued a revised version of IAS 24, Related Party Disclo-sures, on November 4, 2009. The amendment to IAS 24 in particu-lar fundamentally revised the definition of related parties, andamended the definition of the transactions to be disclosed. Anothermajor priority of the revision is moreover the introduction of a sim-plified requirement for government-related entities. The revised ver-



sion of the standard takes effect for financial years beginning on orafter January 1, 2011. The new rules are to be applied retrospec-tively. Earlier application is permitted, and there is scope for ap-plying solely the exemption clause for government-related entities.

Amendment to IFRS 1 (revised)The IASB issued amendments to IFRS 1, First-time Adoption of International Financial Reporting Standards, on July 23, 2009. Thisintroduces additional exceptions to the fundamentally binding retro-spective application of all standards and interpretations that areapplicable until the reporting date of the first IFRS financial state-ments. These concern entities in the oil and gas industry whichused the full cost method under their previous accounting stan-dards at the time of changing to IFRS, as well as entities applyingIFRS for the first time who are using the transitional provisions ofIFRIC 4, Determining Whether an Arrangement Contains a Lease.The amendment to IFRS 1 is to be applied for financial years be-ginning on or after January 1, 2010.

Amendments to IFRS 2In June 2009 the IASB issued amendments to IFRS 2 which clarifyaccounting for group cash-settled share-based payment transac-tions. The amendments are to be applied from January 1, 2010.The application of the amended standard for the first time will nothave any impact on the net worth, financial position and financialperformance of the group.

IFRS 9IFRS 9 now envisages only two categories into which financial as-sets are to be classified upon initial recognition: measurement atfair value, or measurement at amortised cost. Measurement atamortised cost requires the scheduled holding of the financialasset to collect the contractual cash flows, as well as contractualterms of the financial asset that give rise on specified dates tocash flows that are solely payments of principal and interest on

the principal outstanding. Financial instruments that do not satisfythese requirements are to be measured at fair value. The categori-sation made upon initial recognition may only be revised in subse-quent periods if the business model under which the asset is heldhas changed. The standard envisages retrospective application toall existing financial assets, with the circumstances at the date ofinitial application determining categorisation according to the newrules. Various transitional rules have moreover simplified matters.The rules must be applied from January 1, 2013. It remains to beexamined whether this will affect the net worth, financial positionand financial performance of the group.

Amendments to IFRIC 14The IASB published an amendment to IFRIC 14 in November 2009.According to this amendment entities that are subject to minimumfunding requirements may report the advantage from prepaymentsin order to fulfil minimum funding requirements as an asset. Theamendment is to be applied from January 1, 2011. Its applicationfor the first time will not have any impact on the net worth, finan-cial position and financial performance of the group.

IFRIC 19The IASB published IFRIC 19 in November 2009. The interpretationdeals with the accounting of the full or partial extinguishing of financial liabilities through the issuance of own equity instruments.The interpretation deals exclusively with accounting by the debtor,i.e. the issuer of the equity instruments. IFRIC 19 is to be appliedfor financial years beginning on or after July 1, 2010. Its applica-tion for the first time will not have any impact on the net worth, financial position and financial performance of the group.

In addition, several minor amendments made to various standardsunder the annual IFRS improvement process (“Improvements toIFRSs”) are to be applied from the start of the first financial yearafter July 1, 2009 or January 1, 2010.



Consolidation methods and principles

Consolidation methods

The balance sheet date of the companies included in the Consoli-dated Financial Statements is December 31, 2009. The local financial statements of the domestic and foreign subsidiaries in-cluded in consolidation have been prepared according to uniformrecognition and measurement principles corresponding to thoseof the parent company, and adjusted, i.e. pursuant to IAS 27 andIAS 31.

Unless indicated to the contrary, the consolidation methods appliedin these accounts have remained unchanged from the previousyear. In connection with the more detailed classification of noteson the items Other provisions, Liabilities, Receivables and Otheroperating income/expenses, the prior-year figures have been ad-justed to reflect the method of allocation for 2009.

a_SubsidiariesSubsidiaries are included in the Consolidated Financial Statementsin accordance with the rules on comprehensive consolidation, in-sofar as controlling influence that constitutes control over the finan-cial and business policy of the subsidiary is exercised by the group.Controlling influence is assumed to apply where a share of morethan 50 % of the shareholders’ equity with voting rights is held, andwhere over half the voting rights are at the company’s disposal.Potential voting rights that can be exercised or converted at thereporting date are taken into account. Where the group may deter-mine the financial and business policy of a company even if it doesnot directly hold a majority of voting rights, the company in ques-tion is likewise included in consolidation. The date of first or lastinclusion in the Consolidated Financial Statements within the con-text of full consolidation is fundamentally based on the date onwhich controlling influence is acquired or lost.

Business combinations are reported according to the purchasemethod. For this purpose, all assets and liabilities as well as con-tingent liabilities of the acquired company in existence at the timeof acquisition are measured at fair value, irrespective of the exis-tence of minority interests. The cost of acquisition, including thetransaction costs directly allocable to the acquisition, is offsetagainst the corresponding acquirer’s interest in the acquiree’s netequity at the time of initial inclusion in the Consolidated FinancialStatements. The difference in amount between the cost of acqui-sition and the pro rata net equity is initially allocated to the assets,liabilities and contingent liabilities where its fair value differs fromthe carrying amount at the time of first-time consolidation. Thedeferred tax effects resulting from a business combination arelikewise taken into account. Any remaining balance in the cost of acquisition over the fair value measurement of the net assets

acquired is reported as goodwill. This is then tested for impairmenton an annual basis and, if necessary, written down to the lowervalue determined. Shares in the equity of subsidiaries that are notallocable to the group parent are reported as minority interests.Where the cost of acquisition falls below the fair value measure-ment of the net assets acquired, the remaining difference is recog-nised in the income statement.

Intra-group transactions, balances, revenues, expenses and earn-ings, gains, losses as well as accounts receivable and payable between consolidated companies have been eliminated. For con-solidation measures with an effect on income, the effects on in-come taxes are accounted for and deferred taxes are recognised.Any intercompany profits from trade are eliminated on a pro ratabasis if the companies concerned had not left the group as of thebalance sheet date. In each case the data of the company manag-ing the inventory has been taken as the basis here.

b_Joint venturesInvestments in joint ventures are reported in the Consolidated Financial Statements in accordance with the rules on proportion-ate consolidation. The Consolidated Balance Sheet contains thegroup’s share of the assets and liabilities of the joint venture. TheConsolidated Income Statement contains the group’s share of theincome and expenditure of the joint venture. All assets, liabilities,income and expenditure of the joint venture are recognised pro-portionately under the respective items of the Consolidated Finan-cial Statements. Unrealised gains from transactions between thegroup and its joint ventures are eliminated in proportion to theownership interest; unrealised losses are likewise eliminated pro-portionately.

c_Associated companiesInvestments in associated companies are included in the Consoli-dated Financial Statements by the equity method if the ownershipinterest is between 20 % and 50 % or if the group exercises con-siderable influence, but no control, by another means. Under theequity method, shares in associated companies are measured ini-tially at cost. The carrying amount is increased or decreased torecognise the investor’s profit share of the investee’s earnings forthe period after the date of acquisition. The share also includesgoodwill arisen at the time of acquisition. The investment is thentested for impairment and, if impairment is established, writtendown to the lower value determined.

Unrealised gains from business transactions between the groupand its associated companies are eliminated in proportion to thecompany’s ownership interest; unrealised losses are likewise elim-inated proportionally, unless the value of the transferred asset has

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been diminished. Where the group’s share of the loss of an asso-ciated company exceeds the carrying amount of its investment, thegroup does not record any further losses, unless it has assumed liabilities on behalf of the associated company or made paymentsfor obligations of the associated company.

d_Miscellaneous investments Investments over which the CENTROTEC Group exercises no con-trol or no significant influence and where its ownership interest is generally not in excess of 20 % are recognised as available-for-salefinancial assets. Moreover, certain economically insignificant in-vestments are likewise classified as financial assets available forsale.

e_Transactions under common control A business combination of companies under common control con-stitutes a merger in which ultimately all merging companies arecontrolled by the same party or parties both before and after themerger, and where this control is not merely temporary in nature.Business combinations of companies under common control arenot recorded according to the purchase method of IFRS presentedabove. Business combinations of this category are recognised bymeans of a rollover of the carrying amount, whereby – irrespectiveof the existence of minority interests – the carrying amounts arerolled over at the time of inclusion of the companies thus included.No exposure of undisclosed reserves and encumbrances occurs.This rollover comprises the stated amounts of the assets, liabilitiesand contingent liabilities included in the Consolidated FinancialStatements. A difference between the rolled-over carrying amountsof the investment and the pro rata equity capital, as the reportednet assets of the subsidiary, is netted income-neutrally within equity. Instead of any existing goodwill being netted against equitycomponents at first-time consolidation, it is likewise rolled overwith the carrying amounts.

f_Transactions with minorities Where transactions with minorities take place, the reporting com-pany fundamentally has the option of recognising such transactionsin an entirely income-neutral manner – resulting in direct recogni-tion of the effects within equity – or of recognising the income ef-fects in the income statement. The CENTROTEC Group exercisesthis option to the extent that the income effects from transactionswith minorities are treated in the same way as transactions withparties outside the group and reflected in the income statement.Purchases of minority interests result in goodwill amounting to thedifference between the cost of acquisition and the pro rata carry-ing amount of the subsidiary’s net assets already recognised inthe consolidated accounts.

Foreign currency translation

The Consolidated Financial Statements are prepared in euros (EUR),as this is the functional currency of CENTROTEC Sustainable AG.

As part of the consolidation process, the financial statements offoreign group companies are translated into EUR where they havebeen prepared in a different currency. Assets and liabilities aretranslated at closing rates, and expense and income items aretranslated at average exchange rates for the period under review.Any currency translation differences from this translation into thegroup reporting currency are recognised within equity with no effect on income. In the event of the disposal of business opera-tions, translation differences hitherto recognised income-neutrallywithin equity are recognised within income. Where necessary,shareholders’ equity is translated at historical rates. Goodwill hav-ing arisen from business combinations as well as adjustments ofstated amounts to fair values are attributed to the respective units,reassessed in their currency and, if necessary, translated at theexchange rates valid at the reporting date. None of the companiesincluded in the Consolidated Financial Statements is based in ahyperinflationary economy.

The following table shows the exchange rates used for these ac-counts:

Foreign currency translation

Rate at reporting date Average rateISO code 31/12/2009 31/12/2008 2009 2008

GBP 0.8881 0.9525 0.8909 0.7963

DKK 7.4418 7.4506 7.4462 7.4559

CHF 1.4836 1.4850 1.5100 1.5874

PLN 4.1045 4.1535 4.3276 3.5121

USD 1.4406 1.3917 1.3948 1.4708

SGD 2.0194 2.0040 2.0241 2.0762

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any transaction costs. They are subsequently measured at amor-tised cost using the effective interest rate method and taking account of any impairment necessary.

Financial assets at fair value through profit or loss and available-for-sale financial assets are generally recognised at fair value both initially and upon subsequent measurement. In the case of avail-able-for-sale financial assets, gains or losses from subsequentmeasurement (except for impairment losses) are reported income-neutrally in a separate item under equity (revaluation surplus) untilthe financial asset is derecognised. When the financial asset is sold,the accumulated measurement result reported in the revaluationsurplus is liquidated and recognised in the income statement. Inthe event of impairment, the revaluation surplus is adjusted by theimpairment and the surplus amount reflected in the income state-ment. Reversals are performed income-neutrally in the case of equity instruments, but otherwise with an effect on income. If thefair value of equity instruments that have been categorised asavailable-for-sale financial assets cannot be reliably determined,they are measured at cost. No reversals are performed in this instance.

Reductions for impairment are applied if, following recognition ofthe financial asset upon its receipt, there is objective evidence ofimpairment that affects the anticipated future cash flows from thefinancial instrument. The amount of the impairment loss is the difference between the carrying amount and the present value ofthe anticipated cash flows. In the case of trade receivables, thecarrying amount is adjusted by means of an impairment account.In all other cases, the carrying amounts are reduced directly.

The categories loans and receivables and available-for-sale finan-cial assets are of relevance for the CENTROTEC Group. Derivativesare moreover designated as effective hedging instruments for hedgeaccounting (hedging derivatives).

The loans and receivables category comprises substantially loans,cash and cash equivalents, and trade receivables. The available-for-sale financial assets include investments and securities.

Accounting of hedging relationships

Derivative financial instruments are fundamentally used within thegroup for hedging the interest and exchange rate risks resultingfrom operating activities, financial transactions and investments,and are designated as cash flow hedges. Initial and subsequentmeasurement are at the fair value. The measurement result is bro-ken down into an effective and an ineffective portion. The effec-tive portion is recognised income-neutrally under a separate itemwithin equity. The ineffective portion of the measurement result,on the other hand, is recognised in the income statement. The


Accounting policies

Financial instruments

A financial instrument is any contract that gives rise to both a financial asset at one enterprise and a financial liability or equityinstrument at another enterprise. The balance sheet includes bothprimary and derivative financial instruments. The settlement dateis decisive for the initial recognition of a financial instrument. Onlyin the case of derivative financial instruments is the contract datedecisive. A financial instrument is derecognised if the rights to pay-ments from the financial instrument have expired or been trans-ferred in full and the group has in essence transferred all risks andrewards associated with its title.

Classification of financial assets

When reported for the first time, a financial asset is fundamentallyto be classified in one of the following categories:> Loans and receivables,> Held-to-maturity investments,> Financial assets at fair value through profit or loss,

distinguishing between those that are held for trading andthose that have been designated as belonging to this category upon initial recognition,

> Available-for-sale financial assets.

The classification depends on the respective purpose for whichthe financial assets have been acquired. The management deter-mines the classification of financial assets upon recognition forthe first time and re-examines the classification at each reportingdate.

Loans and receivables include non-derivative financial assets thathave determinable cash flows and are not traded on an activemarket. If there is the intention to hold investments with a matu-rity date (e. g. bonds) that are traded on an active market untilmaturity, they can be categorised as held-to-maturity investments.Financial assets held for trading are to be allocated to the cate-gory “financial assets at fair value through profit or loss”. Finan-cial instruments are allocated to the category “available-for-salefinancial assets” if they are designated as such or if allocation toanother category is not possible.

Derivates are fundamentally to be classified as financial assetsheld for trading unless they have been designated as an effectivehedging instrument for hedge accounting (hedging derivatives).The latter do not fall into any of the above four categories.

Measurement of financial assets

Loans and receivables as well as held-to-maturity investments aremeasured at fair value upon initial recognition, taking account of

E_



accumulated measurement results within equity are liquidated withan income effect if the hedged item starts to affect income.

Classification of financial liabilities

Financial liabilities are to be classified as belonging to one of thefollowing categories upon initial recognition:> Financial liabilities at fair value through profit or loss,

distinguishing between those that are held for trading andthose that have been designated as belonging to this category upon initial recognition,

> Financial liabilities not recognised at fair value.

As with financial assets, the classification here again depends onthe respective purpose. If a liability is held for trading, it is to beallocated to the category “financial liabilities at fair value throughprofit or loss”. All other financial liabilities are to be classified as“liabilities not recognised at fair value”.

Derivates are fundamentally considered as financial liabilities heldfor trading unless they have been designated as an effective hedg-ing instrument for hedge accounting (hedging derivatives). The latter do not fall into either of the above two categories.

Measurement of financial liabilities

Financial liabilities at fair value through profit or loss are measuredboth initially and subsequently at fair value. Financial liabilities notrecognised at fair value are measured at fair value, including dis-counts, upon initial recognition, taking account of any transactioncosts. They are subsequently measured at amortised cost usingthe effective interest rate method.

Essentially only the liabilities not recognised at fair value are ofrelevance for the CENTROTEC Group. Derivatives are designatedas effective hedging instruments for hedge accounting (hedgingderivatives).

The liabilities not recognised at fair value mainly originate fromtrade liabilities and from the financing of the group.

Determination of the fair values of financial instruments

An enterprise is to classify fair value measurements using a fairvalue hierarchy that reflects the significance of the inputs used inmaking the measurements. This hierarchy comprises three levels:a) the prices quoted in active markets for identical assets or liabilities (and adopted unchanged) (Level 1); b) inputs other thanquoted prices included within Level 1 that are observable for the asset or liability, either directly (i. e. as prices) or indirectly

(i. e. derived from prices) (Level 2); and c) inputs for the asset orliability that are not based on observable market data (non-ob-servable inputs) (Level 3).

The fair values carried in the balance sheet generally correspondto the market prices of the financial assets and liabilities (Level 1).If no market prices are available, they are calculated with the aidof accepted valuation models (Level 2). In the CENTROTEC Group,securities that are measured at market prices come under Level 1.The financial derivatives for which the fair value is determined withthe aid of the DCF method come under Level 2. The relevant mar-ket prices, interest rates and interest rate volatilities observed at thebalance sheet dates and obtained from accepted external sourcesserve as the input parameters for this method. There are no otherfinancial instruments that are carried at fair value.

Recognition and measurement principles

a_Property, plant and equipment is stated at cost lessaccumulated regular depreciation occasioned by use, pursuant to IAS 16. Subsequent costs are capitalised where these are asso-ciated with future economic benefit that can reliably be measured.Self-created plant includes shares of overheads in addition to theproduction-related direct costs. Depreciation is charged accordingto the straight-line method. If necessary, a reduction for impair-ment is recognised for property, plant and equipment down to therecoverable amount. All expenses arising in conjunction with themaintenance of property, plant and equipment are recorded in theincome statement for the period in which they are incurred.

b_Intangible assets: Acquired brand rights, customer bases,software and licences are capitalised at cost and amortised in ac-cordance with their anticipated useful lives. In the same way, soft-ware developments and other development work that can becapitalised at cost are capitalised at cost and likewise amortisedin accordance with their respective anticipated useful lives. Intan-gible assets also comprising brand names identified upon the acquisition of a company are amortised in accordance with theunderlying expectations and not amortised on a regular basis inthe event of unlimited use (∞, but not infinitely). The customerbases acquired in connection with business combinations areamortised on the basis of anticipated use, shrinkage rates andmargins, correspondingly to the anticipated economic benefits.Profitable supply agreements are amortised on the basis of theunderlying terms of the agreements, corresponding to the anti-cipated economic benefits. According to IAS 38, developmentcosts are to be capitalised as “intangible assets” insofar as cer-tain criteria stated are met cumulatively. Capitalisation takes placeif it is likely that the development activities will lead to a futureeconomic benefit which will cover the development costs in addi-tion to the normal costs. Capitalised development costs are amor-



tised on a straight-line basis once a marketable status is achieved.No development costs that represented expense in previous peri-ods are capitalised in later periods. Research costs are not capi-talised. All expenses arising in conjunction with the maintenanceand upkeep of intangible assets are recorded in the income state-ment in the period in which they are incurred.

Useful lives serving as the basis for depreciation and amortisation by the straight-line method for property, plant and equipment and intangible assets

Years

Goodwill, as well as individual brand rights ∞

Brand rights, licences and customer bases 3 – 40

Patents/technologies 3 – 15

Capitalised development costs 5 – 25

Buildings 10 – 50

Technical equipment and machinery 3 – 20

Fixtures and office equipment 3 – 15

Software and software developments 3 – 5

In respect of a) and b) Impairment of non-monetary assetssuch as property, plant and equipment and intangible assets:Assets that are subject to depreciation and amortisation are ex-amined for impairment if corresponding occurrences or changesin circumstances indicate that the carrying amount may possiblyno longer be realisable. Assets that have an indeterminate usefullife, such as goodwill, are tested annually for impairment unless in-dications are detected earlier that impairment may have occurred.The amount by which the carrying amount exceeds the recover-able amount is recognised as an impairment loss. The recoverableamount is the higher of the fair value of the asset less the costs ofdisposal, and the value in use. For the impairment test, assets arecombined at the lowest level for which independent cash flowscan be identified (cash generating units). For the determination ofthe value in use, forecast cash flows are discounted at the WACC(weighted average cost of capital) at the balance sheet date. Non-financial assets (apart from goodwill) where the carrying amounthas been reduced for impairment are in subsequent years exam-ined for a recovery in value to the recoverable amount, but to nomore than the scheduled values, i.e. without impairment loss. Thereversal of impairment losses recognised in previous periods isrecognised within income immediately.

c_Investment subsidies and grants from the governmentfor depreciable assets are distinguished on the assets side of the

Consolidated Financial Statements. Performance-related grantswhich either compensate for corresponding expenses or constituteincome at the time they are claimed but are not associated withcurrent or future expenses are recognised as income.

d_Borrowing costs are capitalised pursuant to IAS 23 pro-vided they are in connection with the production, constructionand acquisition of qualifying assets that necessarily take a sub-stantial period of time to get ready for their intended use or sale.The CENTROTEC Group fundamentally defines a qualifying assetas such if it takes more than one year to bring to its intendedstate.

e_Non-current investments: Investments comprise invest-ments in associated companies, non-associated companies (invest-ments), other loans originated by the enterprise, and securities.Investments in associated companies are recognised using theequity method. The other non-consolidated investments as well assecurities are allocated to the category “Available-for-sale financialassets” and loans originated by the enterprise to the category“Loans and receivables”.

f_Goodwill is the excess of the cost of an investment or of assets over the market value of the acquiree’s assets (on a timeproportion basis) less liabilities. Goodwill is recognised as an assetincluded in the carrying amounts of the investment at the time ofacquisition of an associated company. It is allocated to the cashgenerating unit or group of cash generating units where it is as-sumed that they will benefit from the merger. A cash generatingunit is the smallest identifiable group of assets that generates cashinflows that are largely independent of other groups of assets. The cash generating unit does not necessarily correspond to dis-tinctions made under company law. Cash generating units are determined at the lowest possible level at which monitoring is per-formed, and are never greater than a segment. Allocation is madeon the basis of economic features. Gains and losses from the dis-posal of a company comprise the carrying amount of the goodwillthat is allocated to the company being disposed of.

Goodwill is assessed for impairment (value in use) once a year bymeans of an impairment test, irrespective of whether or not thereis evidence of impairment. If necessary, an impairment loss is ap-plied. Goodwill is recognised at cost, less accumulated impairment.Goodwill still amortised for historical reasons has been shown netsince 2004. If the reasons for a reduction for impairment appliedto an asset on the basis of an impairment test have wholly orpartly ceased to exist in a subsequent period, that impairment isnot reversed accordingly. The useful life of goodwill is uncertain.



g_Inventories are measured at the lower of cost or net realis-able value. Raw materials and supplies are valued at the averagecost. Work in progress, finished goods and merchandise aremeasured at average values or on the basis of cost, using theFIFO method. The cost of conversion for work in progress and finished goods consists of direct costs of materials, direct labour,other direct costs as well as appropriate shares of production-related indirect materials and indirect labour which have arisen asa result of bringing the inventories to their current location andcurrent state. It is determined on the basis of normal capacity util-isation. Appropriate discounts are performed for sales-relatedrisks. The net realisable value constitutes the estimated sellingprice in the ordinary course of business less the estimated costsof completion and sale yet to be incurred.

Customer-specific construction contracts are recognised applyingthe percentage of completion method. Contract costs are recog-nised when they arise. Contract revenue is only recognised to theextent that costs are recoverable. If the outcome of a constructioncontract can be determined reliably and it is probable that thecontract will be profitable, the contract revenue is recognised overthe duration of the contract. If it is probable that total contractcosts will exceed total contract revenue, the expected loss isrecognised as an expense immediately. The stage of completioncorresponds to the percentage of the contract costs incurred bythe balance sheet date compared with the expected total costs ofa contract. All ongoing construction contracts with balances duefrom customers are reported under assets, unpaid partial invoicesare shown under trade receivables, and contracts with balancesdue to customers are shown under liabilities.

h_Trade receivables and other non-derivative financial assets are considered to be current assets providedtheir maturity date is no more than twelve months from the bal-ance sheet date. They are allocated to the category “Loans andreceivables” and are recognised at amortised cost. Appropriateimpairment has been recognised for identified risks, as indicatedby experience.

i_Deferred tax relates to tax deferrals resulting from temporallydiverging stated amounts between the balance sheet prepared inaccordance with IFRS and the tax balance sheets of the individualcompanies, as well as from consolidation processes. The deferredtax assets also include tax rebate claims resulting from the antici-pated use of existing loss carryforwards in subsequent years andwhich are to be realised with reasonable certainty. Deferred tax isdetermined on the basis of the tax rates which are likely to applyin the individual countries at the time of reversal of the departures.

It is furthermore based on current legislation and ordinances. Deferred tax assets and liabilities are not discounted. Deferred taxresulting from temporary differences in connection with acquisi-tions is reported unless differences cannot be reversed within aforeseeable time frame or the timing of the reversal can be con-trolled by the company. Deferred tax is fundamentally classified asnon-current on the balance sheet.

j_Cash and cash equivalents comprise cash on hand, demand deposits, and deposits with a maturity of up to 3 months.Amounts owed to banks repayable on demand form an integralpart of the group’s cash management. For the purpose of thecash flow statement, they are therefore included in the financialresources alongside cash and cash equivalents with a maturity of three months. These amounts owed to banks and due at anytime are shown in the balance sheet as debt.

k_Securities held for the purpose of investing liquid funds andnot intended to be retained on a long-term basis are measured atfair value. Their anticipated date of realisation is in the next twelvemonths. Interest and dividends received from these securities arerecognised as income. Gains and losses from the disposal ofthese securities are included in the income statement.

l_Prepaid expenses include expenditures that relate to ex-pense for future periods. They are contained in the item Other current assets.

m_The pension provisions are created for defined benefitpension obligations to management and other employees, and cal-culated on the basis of the present value of future commitmentspursuant to IAS 19 using the projected unit credit method, takinginto account future pay and pension increases and the mortalitytables currently available. A variety of pension plans exist within thegroup. In the case of existing plan assets, the present value deter-mined is reduced by their fair value and adjusted to reflect as yetunrecognised actuarial gains and unrecognised past service cost.Actuarial gains and losses are taken into account where they ex-ceed 10 % of the extent of the liability or value of the asset. Theseare indicated by experience adjustments and changes to actuarialassumptions. The amount in excess of this corridor is booked toor against income over the period of the average remaining work-ing lives of the active workforce. Unrecognised past service costis recognised immediately as an expense unless it is to be distrib-uted on a straight-line basis until a benefit becomes vested.

In many countries in which CENTROTEC employees are engaged,there exists a contribution-based statutory basic pension scheme



that pays out a pension on the basis of income and contributionsmade. In the case of defined contribution plans, fixed amounts arepaid to funds outside the group. In paying the contributions topublic pension schemes, CENTROTEC has no further benefit obli-gations. In addition, individual employees in the group have takenout policies with private insurance companies which are subsidisedin certain respects on the basis of company agreements. Apartfrom the personnel expenses for subsidies that are included inemployee benefit costs, the group has no further benefit obliga-tions. This applies in particular if a fund outside the group doesnot maintain sufficient assets to settle the claims made against itfrom current and previous financial years.

n_Other provisions are created for all present obligations atthe balance sheet date resulting from previous business transac-tions or past occurrences, where the amount and due date are uncertain. These provisions are stated at the present value of themost likely, reliably estimable amount of settlement and are notnetted against revenue and gains. The likelihood of the cash out-flow must be more than 50 % (“more likely than not” criterion).Provisions are created only where a legal or factual obligation tothird parties exists and the level of the provisions could be reliablydetermined. In the event of a wide range of obligations of a similarnature resulting for instance from statutory warranty obligations,they shall be determined on the basis of this group of obligations.Provisions may in certain circumstances be recognised as a liabil-ity if the likelihood of an isolated obligation materialising within theunderlying overall group is slight.

The provision for warranties should likewise be created for rework-ing free of charge, substitute deliveries, price reductions or com-pensation payments for nonfulfilment. It may be based on statutoryobligations or on an independent warranty commitment. Withinthe CENTROTEC Group, as well as individual provisions, generalprovision should be created if a warranty claim must be expectedon the basis of past events. The flat rate is to be determined in-dependently by each group company on the basis of past experi-ence.

o_Trade payables and financial liabilities are allocatedto the category “Liabilities not recognised at fair value”. Liabilitiesfrom loans are classified as current if they are repayable withinthe next twelve months.

p_Leases where all opportunities and risks are allocable insubstance to the group are classified as finance leases. They aremeasured at the fair value of the asset at the start of the leaseterm or at the lower cash value of the future leasing instalments.Every lease payment is divided up into a capital and an interestportion. Leases where significant portions of the opportunities

and risks rests with the lessor are classified as operating lease obligations.

q_Deferred income records revenues before the balancesheet date representing income for future periods. It is containedin the item Other current assets.

r_Shareholders’ equity: The issued capital (capital stock)comprises all no par value shares issued by CENTROTEC Sustain-able AG. These are reported as shareholders’ equity. Each individ-ual share represents a pro rata amount of the capital stock of EUR 1.

The change in the additional paid-in capital is attributable to thepremiums from the issuance of shares through the stock optionscheme. Transaction costs incurred directly in connection with theissuing of new shareholders’ equity are recognised as a deductionfrom equity including all associated income tax benefits. If a groupcompany acquires treasury stock, the costs including ancillarycosts and potential income tax effects are deducted from theshareholder’s share of equity in the treasury stock reserve untilthe treasury stock has been withdrawn from circulation, reissuedor sold. In the event of the reissue or sale of treasury stock, thepurchase prices received, including all associated transaction costsand income tax benefits, are recognised in the shareholder’s shareof equity.

Other reserves and profit carryforward essentially comprise theprofit carryforward as well as the values of changes from currencytranslation recognised with no income effect, and changes in in-terest rate hedging instruments and securities.

The minority interests comprise the equity portions allocable tominority interests, including shares of profits and losses, as wellas possible amounts allocable to these from currency translation.

s_Share-based forms of payment: CENTROTEC uses share-based forms of payment counterbalanced by equity instruments.Stock options are granted to employees, members of the manage-ment and Management Board members on the basis of a stockoption scheme. Their recognition and measurement are based onthe provisions of IFRS 2. Under IFRS 2, share-based forms of pay-ment are to be reported at the fair value of the consideration re-ceived. As the fair value of the consideration received cannot beestimated reliably, CENTROTEC calculates the changes to share-holders’ equity indirectly, using the fair value of the stock optionsgranted. In the absence of market prices, this fair value is deter-mined with the aid of a binominal model. This model estimates theprice that could be achieved between knowledgeable, willing par-ties in an arm’s length transaction for the stock options concerned



at the relevant measurement date. All factors and assumptionsthat market players would take into consideration in determiningthe price and that are specified by IFRS are observed. Insofar asapplicable, it is assumed when determining the factors and as-sumptions on which the calculation is based that historical valuesand developments will likewise apply to future developments andcan serve as a point of reference or starting point for calculationparameters. Changes to the value of the option as a result of sub-sequent shifts in the parameters have no influence on the expenseto be recognised, as only the issue value of the option is decisive.

The expense from share-based forms of payment is distributedover the vesting period by the straight-line method as a personnelexpense and recognised in the additional paid-in capital for stockoptions until the option is exercised or lapses. Changes after theend of the vesting period have no effect on income and are onlyrecognised within shareholders’ equity. If there are tax effectsfrom share-based forms of payment, the tax effects are shown asa proportion of the personnel expense recognised under tax ex-pense. The excess shares are deferred within equity via deferredtax assets as a surplus amount and recognised directly within equity in a separate reserve for deferred tax.

Income accrued by the company at the time of exercise of stockoptions, less direct expenses, is allocated to the issued capitaland the premium to the additional paid-in capital. Option-relatedreserves created are moreover allocated pro rata to the additionalpaid-in capital for the consideration received and for their tax effects. Cash flows from tax effects for share-based forms of pay-ment are recorded in the cash flow statement as allocations to theadditional paid-in capital as soon as the cash flow from the relevanttax return has been settled with the tax authorities.

t_Revenue recognition: Revenue in particular reflects thefair value of the consideration received or still to be received fordeliveries and services in the normal course of business. It is realised if it is probable that the economic benefits associatedwith the transaction will flow to the group and the amount of therevenue can be measured reliably and has proceeded from itspayment. Revenue is recognised net of VAT and discounts, andafter elimination of intra-group transactions, when delivery hastaken place and transfer of risks and rewards has been com-pleted. Revenue for services is recorded in the period in which the service was rendered.

u_Financing costs such as interest are recognised as incomeor expense time-proportionally and on an accrual basis that re-flects the terms of the asset or liability, using the effective interestrate method. Provided borrowing costs are in connection with theproduction, construction and acquisition of qualifying assets that

necessarily take a substantial period of time to get ready for theirintended use or sale, they are capitalised pursuant to IAS 23.

v_Dividends such as dividend revenue from investments andshareholders’ entitlements to dividend payments are recognisedas payments when the right to receive payment arises.

Segment reporting

The operating segments are reported on in a way that correspondsto internal reporting to the principal decision-makers. The principaldecision-maker is responsible for decisions regarding the alloca-tion of resources to the operating segments and for examiningtheir profitability. Three Management Board members have beendesignated the principal decision-makers, with each member exer-cising control over one of the following three segments: 1_“Climate Systems”: in this segment, heating, ventilation andclimate control systems together with systems for using renew-able energies for detached and semi-detached houses as well asfor utility buildings such as public amenities, schools etc. are de-veloped, produced and sold. The main focus of the product rangeis on a high degree of energy-saving and on interlinking heating,ventilation and climate control systems. In this market segment,CENTROTEC is among the leading companies in Europe.2_“Gas Flue Systems”: here, gas flue systems for diverse applications as well as technical roof products are developed, pro-duced and marketed. The emphasis of these systems is on plasticgas flue systems for condensing boiler systems. In this segment,CENTROTEC is one of the leading companies in Europe. It alsoproduces assemblies made from hot-shaped materials in smallproduction runs.3_“Medical Technology & Engineering Plastics”: thissegment develops, manufactures and sells medical technologyand diagnostic articles and instruments. This segment also com-prises the manufacture and sale of semi-finished plastic products,prefabricated products and assemblies for small series in varioussectors, but predominantly in medical technology.

Segment reporting is based on the same accounting policies asfor the other sections of the Consolidated Financial Statements.Income and expenditure are directly attributable to the segmentson the basis of source or origin. The data is taken from the ac-counting systems of the companies that are allocated to the re-spective segments.

Critical assumptions and estimates

All assumptions, whether classified as critical or not, may influencethe reported net worth or financial performance of the CENTROTECGroup as well as the representation of contingent receivables and



liabilities. Assumptions are made continually and are based onpast experience and/or other factors. These include expectationsregarding the likelihood of events occurring, formed in the prevail-ing circumstances. Estimates relate to affairs that are highly un-certain at the time of recognition or up until the preparation of thefinancial statements. They also include alternative assumptionsthat could have been used in the current period, or the potentialchanges to assumptions from one period to the next, with a poten-tially significant impact on the net worth, financial position and financial performance of the CENTROTEC Group. Changes to esti-mates, i.e. differences between actual values or more recent esti-mates and past estimates, are taken into account from the time amore accurate insight is gained. The following notes expand onthe other presentations in the Consolidated Financial Statements,which refer to assumptions, uncertainties and contingencies.

Significant assumptions and estimates which entail uncertaintyand are associated with risks were made in the areas of the con-solidated companies, non-current assets, impairment of invento-ries and trade receivables, contingent purchase price liabilitiesand provisions.

Non-current assets have either limited or unlimited useful lives.Changes in intended uses, technologies, maintenance intervalsand changes in the general economic contexts or sectors in whichCENTROTEC is active may result in the recoverable amounts ofthese assets changing. CENTROTEC therefore examines the usefullives on a regular basis to assimilate the carrying amounts withthe realisable benefit by way of reductions for impairment. In spiteof every effort to determine appropriate useful lives, certain situa-tions may arise where the value of a non-current asset or group ofassets is reduced and thus the economic value is below the carry-

ing amount. As impairment occurs only sporadically, rarely for in-dividual capital goods and not at all for entire classes, it is notpossible to estimate these costs precisely as early as the prepara-tion of the financial statements. Such costs are therefore reportedonly when the corresponding information is known. No generalsensitivity analysis for all useful lives is performed.

For acquisitions, assumptions and estimates have an influence onthe purchase price allocation process. Assumptions relate in par-ticular to levels of goodwill as well as intangible assets and liabili-ties, and also in respect of their useful lives with the result that theresidual goodwill changes. In the context of business combinations,intangible assets (e. g. patents, customer relationships or supplieragreements) are identified and are subject to estimates in respectof several criteria (quantities, margins, useful lives, discountingrates).

Other estimates that are of significance are in respect of assessingreductions for impairment of goodwill when forecasting the avail-ability of future financial resources and discount rates. Particularlyfor new business operations, the uncertainty of forecasts is greaterthan where operations have been in existence for longer.

Goodwill and brands with an uncertain useful life are subjected toan annual impairment test. A sensitivity analysis yielding the fol-lowing results is moreover performed: if the estimates of the un-derlying free cash flow had been 10 % lower, there would havebeen no reduction in goodwill. If the interest rate serving as thebasis for discounting of the cash flows had been 100 base pointshigher, this would likewise not have led to any reduction. Even anegative change in both key parameters concurrently would nothave led to any need for impairment.



Where contingent purchase price liabilities cannot be determinedprecisely, they are determined on the basis of the accounting poli-cies applicable to provisions and measured at their most probablevalue.

CENTROTEC grants various warranties for products. Basic war-ranties are recognised at the amount of the estimated expenses.Furthermore, costs for the repair or replacement of faulty prod-ucts for an individual customer or for specific customer groupsmay arise in the course of normal business. In the event of substi-tution campaigns occurring, even though they are extremely rare,a special provision is formed to cover the anticipated individualcosts. As exchange campaigns occur sporadically and rarely, it isnot possible to estimate these costs precisely as early as the timeof sale. Such expenses are therefore recognised only when thecorresponding information is known. In determining provisions forguarantees, various assumptions which affect the level of theseprovisions are made. Changes in productivity, materials and per-sonnel costs as well as quality improvement programmes have aninfluence on these estimates. The appropriateness of the provisionsrecorded is tested on a quarterly basis.

The group is subject to the tax regimes of various countries. Esti-mates that are of significance are required in the creation of taxprovisions and deferred tax items. Transactions and calculationswithin the normal course of business are subject to various uncer-tainties with regard to fiscal effects and recognition. The correspon-ding accounting policies are applied in the creation of provisionsfor potential liabilities that may arise as a result of future field taxinvestigations of past transactions. In cases where the final taxcalculations deviate from the assumptions originally reported, theeffects are taken into account in the income statement.

Financial risk management

1_Financial risk factors

Financial risk management objectives and policies

The CENTROTEC Group operates internationally. In view of the va-riety of its activities, the group is exposed to a large number of financial risks. We take risk to mean unexpected occurrences andpossible developments that adversely affect the attainment of settargets and expected progress. Risks that have a material effecton the net worth, financial position and financial performance areof relevance. The group’s risk management system analyses vari-ous risks and attempts to minimise negative effects on the financialposition of the group. Risk management is practised in the financedepartments on the basis of existing guidelines. Risk managersidentify, measure, assess and support the steering of potentialsources of risks.

In measuring and controlling significant individual risks, the groupdistinguishes between credit, market and liquidity risks.

Credit risk

We take credit risk to mean the risk of a loss following the default-ing or deterioration in creditworthiness of a business partner. Themaximum credit risk corresponds to the aggregate of the carryingamounts of financial assets in the balance sheet which are recog-nised net of reductions for impairment, plus these same reductionsfor impairment. Trade receivables exist mainly in respect of cus-tomers in Germany and the Netherlands.

Reductions for impairment of trade receivables are applied accord-ing to uniform rules and cover all discernible creditworthiness risks.Portfolio reductions for impairment were created for losses thathave materialised but not yet been identified. For further disclo-sures on the reductions for impairment and the maturities structureof receivables, we refer to the disclosures on trade receivables.

Credit risks regarding accounts receivable are in essence limitedby the application of credit approvals, limits and monitoring proce-dures. The level of a credit limit reflects the creditworthiness of acounterparty and the typical size of the transaction volume with thatcounterparty. The assessment of creditworthiness is based on theone hand on information from external credit reporting agenciesand on the other hand on internally acquired values indicated byexperience in dealing with the counterparty in question.

With regard to receivables that are neither overdue nor impaired,there is no evidence at the reporting date that the debtors will notmeet their commitments from these receivables.

As a result of the large number of customers in various customergroups and their international structure, the credit risk of trade receivables is diversified. CENTROTEC has no significant concen-tration of credit risk with any single customer. The largest cus-tomer in the group accounts for less than 4 % of revenue (previousyear 4 %).

F_



Liquidity risk

We take the liquidity risk in the narrower sense to mean the risk ofbeing unable to meet current or future payment commitments oronly being able to meet them on unfavourable terms. The groupgenerates financial resources predominantly through its businessoperations. The liquidity risk is controlled by maintaining adequate

Market risk

We take the market risk to mean the risk of a loss that may ariseas a result of a change in market parameters that have a bearingon measurement (exchange rate, interest rate, price).

The market risks from currency translation within CENTROTEC arelimited, as the transactions take place principally in eurozonecountries. However, a growing portion of business activities is tak-ing place in European countries outside the eurozone, particularlyEastern Europe, but the markets outside Europe are also coming

Liquidity analysis (including forecast on interest payments)

Total Of which Of which Of which Of which outstanding maturity less than maturity maturity maturity more

in EUR ‘000 amount 1 year 1 to 2 years 3 to 5 years than 5 years

2008 196,479 76,797 21,469 75,844 22,369

2009 181,279 81,028 20,503 60,753 18,995

Liquidity analysis for derivatives concluded

Total Of which Of which Of which Of which outstanding maturity less than maturity maturity maturity more

in EUR ‘000 amount 1 year 1 to 2 years 3 to 5 years than 5 years

2008 1,373 316 303 630 124

2009 5,255 1,593 1,262 2,143 257

Currency sensitivity

Rate Sensitivity Rate Sensitivityin EUR ‘000 Rate at if EUR gains if EUR gains if EUR loses if EUR losesCurrency reporting date 10 % in value 10 % in value 10 % in value 10 % in value

CHF 1.4836 1.63 70 1.34 (87)

DKK 7.4418 8.19 168 6.70 (204)

GBP 0.8881 0.98 120 0.80 (142)

PLN 4.1045 4.51 (115) 3.69 142

USD 1.4406 1.58 (54) 1.30 68

SGD 2.0194 2.22 (4) 1.82 5

Total 185 (218)

There are moreover the following anticipated outflows of liquidityfrom the derivatives concluded:

levels of cash and unutilised credit lines with banks. All contrac-tual loan arrangements are continuously monitored. The followingtable shows the contractually agreed, undiscounted cash flowsfrom financial instruments. Variable interest payments were statedat the rates determined at the reporting date. Foreign currencyamounts were translated using the spot rate at the reporting date.

increasingly into focus. This geographical expansion gives rise tolimited, manageable exposure to market risks from changes in interest and exchange rates. The group therefore uses instrumentsfor hedging foreign currency risks only selectively.

If the euro had gained 10 % in value against the principal foreigncurrencies for CENTROTEC at December 31, 2009, earnings would have been higher by EUR 185 thousand (previous year EUR 272 thousand). If the euro had lost 10 % in value, earningswould have been reduced by EUR 218 thousand (previous yearEUR 300 thousand).



If the euro had gained 10 % in value at December 31, 2009, share-holders’ equity would have been EUR 402 thousand (previous yearEUR 779 thousand) higher or, if the euro had lost 10 % in value,EUR 487 thousand (previous year EUR 878 thousand) lower. Thedetermination of currency sensitivities took account of all signifi-cant financial instruments where the currency of the contract isnot the same as the functional currency of the CENTROTEC Group.The calculations do not contain currency translation risks, nor deferred and actual taxes.

The market risks from interest rate changes stem predominantlyfrom rate-sensitive financial assets and liabilities where interestrate changes result in changes in the anticipated cash flows. Tohedge against adverse interest rate movements, interest rate caps and interest swaps have been concluded in order to hedgeagainst the cash flow risks of loans with variable interest rates;they can be designated cash flow hedges in accordance with IAS 39. For further particulars of the hedging instruments used,please refer to the disclosures on the derivative financial instru-ments.

If market interest rates had been 100 base points higher or lowerat December 31, 2009, earnings would have been EUR 407 thou-sand (previous year EUR 624 thousand) lower or EUR 462 thou-sand (previous year EUR 407 thousand) higher. Shareholders’ equitywould correspondingly have been EUR 1,110 thousand (previousyear EUR 91 thousand) higher or EUR 845 thousand (previous yearEUR 1,424 thousand) lower at December 31, 2009.

All significant variable-interest receivables and liabilities from primary financial instruments of the CENTROTEC Group as well as cash flows from derivative financial instruments were takeninto account in determining the sensitivity of earnings to interestrates. Equity sensitivity was calculated on the basis of hypotheti-cal changes in the market value of the derivatives designated ashedges.

Other risks affecting the prices of financial instruments exist forthe CENTROTEC Group above all in the form of market prices.

However, at the balance sheet date there were no significant in-vestments in listed companies that were not consolidated or ac-counted for by the equity method. The near-money market fundsreported under securities are not exposed to any significant fluctuations in value.

Operating risks

Through its operating activities, the group is exposed to marketprice risks in the form of commodity price risks. These may have a negative effect on the net worth, financial position and financialperformance. CENTROTEC assesses these risks on a regular basisby monitoring changes in key indicators as well as market informa-tion. These market price risks are controlled predominantly viaroutine business operations and financing activities.

Credit risks on the procurement side are limited in the case ofCENTROTEC. There are a great many suppliers for many raw materials and supplies. In critical areas of procurement, at leasttwo sources of supply exist in every case.

2_Capital risk management

The group’s aims with regard to capital management are to main-tain the company as a going concern, in order to protect the inter-ests and expectations of our shareholders, employees and otherstakeholders. Another aim is to maintain an optimum capital struc-ture in order to reduce the capital costs and control the risks,building in a premium for maintaining financial flexibility. To min-imise risks, a financing structure is being established in which the financing of the individual parts of the group is ring-fenced. It is necessary to ensure that both internal and external growthprospects and opportunities can be realised by the company atany time.

Potential measures for influencing the capital structure may con-cern both equity (e. g. ploughback) and debt (e. g. through theraising/repayment of loans). The target equity ratio should notnormally be below 20 %.

Figures in EUR ‘000 31/12/2009 31/12/2008 31/12/2007

Shareholders’ equity 132,674 127,804 109,066

Long-term debt 144,077 155,276 152,350

Short-term debt 102,895 95,304 100,357

Balance sheet total 379,646 378,384 361,773

Equity ratio 34.9 % 33.8 % 30.1 %

Debt ratio 65.1 % 66.2 % 69.9 %



Particulars of the consolidated companies

Consolidated companies

All direct and indirect subsidiaries of the parent company and groupparent are included in the Consolidated Financial Statements of

CENTROTEC. The following companies, which simultaneously constitute the CENTROTEC Group, were consolidated within CENTROTEC Sustainable AG at December 31, 2009:

G_

Company

Place and country Share of Currency Founded/of incorporation capital Issued capital (ISO code) acquired

Fully consolidated

CENTROTEC Sustainable AG Brilon, DE - 16,716,262.00 EUR *17/07/1998

Climate Systems segment

Brink Climate Systems B.V. Staphorst, NL 100 % 20,004.00 EUR 02/01/2002

Deveko B.V. Deventer, NL 100 % 18,152.00 EUR 02/01/2002

Golu B.V. Soest, NL 100 % 18,152.00 EUR 02/01/2002

Kempair B.V. Eindhoven, NL 100 % 18,152.00 EUR 02/01/2002

Ned Air Holding B.V. IJsselmuiden, NL 100 % 54,454.00 EUR 05/06/2003

Ned Air B.V. IJsselmuiden, NL 100 % 54,454.00 EUR 05/06/2003

Ned Air UK Ltd. Manchester, UK 100 % 150.00 GBP 02/10/2006

Ned Air Austria GmbH Höchst, AT 100 % 35,000.00 EUR 16/10/2006

Ned Air France S.A.S. Helfrantzkirch, FR 100 % 40,000.00 EUR 12/11/2007

Ned Air Polska Sp.z.o.o Katowice, PL 100 % 50,000.00 PLN 19/03/2008

EnEV-Air GmbH Ahaus, DE 98.80 % 450,000.00 EUR 29/11/2005

Innosource Holding B.V. Sassenheim, NL 100 % 38,500.00 EUR 08/09/2005

Innosource B.V. Sassenheim, NL 100 % 18,000.00 EUR 08/09/2005

Soundscape B.V. Sassenheim, NL 100 % 18,000.00 EUR 08/09/2005

Centrotec Energy Solutions B.V. Staphorst, NL 100 % 18,000.00 EUR 08/09/2005

Stiller Wonen B.V. Amstelveen, NL 100 % 18,151.00 EUR 08/09/2005

Brink-Innosource GmbH Freudenberg, DE 100 % 25,000.00 EUR 08/09/2005

Wolf Holding GmbH Mainburg, DE 100 % 25,000.00 EUR 22/09/2006

Wolf GmbH Mainburg, DE 100 % 20,000,000.00 EUR 05/10/2006

Wolf France S.A.S. Massy, FR 100 % 40,000.00 EUR 05/10/2006

Wolf Iberica S.A. Madrid, ES 100 % 781,316.00 EUR 05/10/2006

Wolf Technika Grzewcza Sp.z.o.o. Warsaw, PL 100 % 2,564,000.00 PLN 05/10/2006

Wolf Heating UK Ltd. Northwich, UK 100 % 150,000.00 GBP 05/10/2006

Kuntschar & Schlüter GmbH Wolfhagen, DE 100 % 25,000.00 EUR 01/11/2008

Wolf Klimaattechniek B.V. Kampen, NL 100 % 150,000.00 EUR 05/10/2006



Company

Place and country Share of Currency Founded/of incorporation capital Issued capital (ISO code) acquired

Gas Flue Systems segment

Ubbink B.V. Doesburg, NL 100 % 46,286.00 EUR 21/12/1999

Ubbink N.V./S.A. Gentbrugge, BE 100 % 592,117.48 EUR 21/12/1999

Ubbink UK Ltd. Brackley, UK 100 % 35,000.00 GBP 21/12/1999

Ubbink France S.A.S. La Chapelle sur Erdre, FR 100 % 310,000.00 EUR 21/12/1999

KORRI*BAT S.A.R.L. La Chapelle sur Erdre, FR 100 % 1,000.00 EUR 07/03/2006

Centrotherm Systemtechnik GmbH Brilon, DE 100 % 102,258.38 EUR 15/12/1993

Centrotherm Gas Flue Technologies Italy S.R.L. Verona, IT 100 % 119,000.00 EUR 19/10/2000

Centrotherm Eco Systems, LLC Albany, USA 65.5 % 200,000.00 USD 22/04/2009

Centrotec JI Asia Pte. Ltd. Singapore, SG 57.50 % 170,000.00 SGD 23/04/2003

Centrotec JIT Bintan PT Bintan, ID 57.50 % 615,484,000.00 IDR 01/01/2004

Centrotec Composites GmbH Brilon, DE 100 % 27,000.00 EUR 01/08/1990

Centrotec International GmbH Brilon, DE 100 % 25,000.00 EUR 18/12/2002

Centrotec Energy Solutions GmbH Brilon, DE 100 % 25,000.00 EUR 23/07/2008

Medical Technology & Engineering Plastics segment

medimondi AG Fulda, DE 100 % 10,640,000.00 EUR *16/10/2006

Möller GmbH Fulda, DE 100 % 60,000.00 EUR 28/08/2003

Möller Medical GmbH Fulda, DE 100 % 1,400,000.00 EUR 28/08/2003

medimondi AG Dietikon, CH 100 % 100,000.00 CHF 06/11/2006

bricon ag Dietikon, CH 100 % 2,000,000.00 CHF 12/09/2007

Centroplast Engineering Plastics GmbH Marsberg, DE 100 % 250,000.00 EUR 01/08/1990

Rolf Schmidt Industriplast A/S Kolding, DK 100 % 3,000,000.00 DKK 16/03/2001

Centroplast UK Ltd. Stafford, UK 100 % 100,000.00 GBP 03/06/2005

Centroplast Solar GmbH Marsberg, DE 100 % 25,000.00 EUR 14/07/2008

Companies consolidated using the equity method

Bond Laminates GmbH Brilon, DE 24.95 % 93,800.00 EUR 21/11/2000

CENTROSOLAR Group AG Munich, DE 26.16 % 20,333,309.00 EUR 12/08/2005

Companies recognised as available-for-sale financial assets (non-consolidated companies)

Wolf Klimatechnik S.a.r.l.** Junglinster, LU 100 % 14,874.00 EUR 05/10/2006

Elco Klöckner Wärme- und Solartechnik GmbH** Leobersdorf, AT 100 % 254,355.00 EUR 05/10/2006

Ubbink East Africa Ltd.** Nairobi, Kenya 60 % 100,000.00 KES 17/09/2009

* Date of creation by modifying conversion** Insignificant, therefore not comprehensively consolidated



Changes in the group

Additions to consolidated companies

Centrotherm Eco Systems, LLCCentrotherm Eco Systems, LLC was established with effect fromApril 22, 2009 and included in consolidation. Centrotherm EcoSystems, LLC is fully consolidated and allocated to the Gas FlueSystems segment.

Ubbink East Africa Ltd.Ubbink East Africa Ltd. was established with effect from Septem-ber 17, 2009. The company has not yet started any business operations and is therefore not fully consolidated.

Changes within the group

Wolf Klimaattechniek B.V.Wolf Klimaattechniek B.V. has no longer been reported as an avail-able-for-sale financial asset since January 1, 2009 and is compre-hensively consolidated following the commencement of businessoperations. The company is allocated to the Climate Systems seg-ment. Its place of incorporation has moreover been transferredfrom Vlaardingen, NL to Kampen, NL.

medimondi AG, Fuldamedimondi AG transferred its place of incorporation from Munichto Fulda in the 2009 financial year.

Notes on components of the consolidated financial statements

1 Goodwill

The classification and movements of goodwill are shown in the following schedule:

Goodwill

in EUR ‘000

2008

Accumulated cost Jan 1 62,746

Additions for first-time consolidation 3

Additions 347

Exchange differences 79

Disposals 0

Deconsolidation 0

Accumulated cost Dec 31 63,175

Accumulated impairment Jan 1 (2,264)

Additions 0

Other changes 0

Accumulated impairment Dec 31 (2,264)

Net carrying amount 31/12/2007 60,482


2009

Accumulated cost Jan 1 63,175

Additions for first-time consolidation 0

Additions 0

Exchange differences 3

Disposals 0

Deconsolidation 0

Accumulated cost Dec 31 63,178

Accumulated impairment Jan 1 (2,264)

Additions 0

Other changes 0

Accumulated impairment Dec 31 (2,264)



H_



The goodwill totalling EUR 60,911 thousand reported at December31, 2008 rose by an amount of EUR 3 thousand in the 2009 finan-cial year to EUR 60,914 thousand. This was attributable exclusivelyto income-neutral exchange differences.

In view of the many organisational and economic interdependen-cies within the CENTROTEC Group, from 2009 the impairment testis only carried out for four cash generating units. These four cashgenerating units constitute the organisational structure of thegroup (management approach). The impairment test was per-formed on the basis of value in use. The calculations were basedon a cash flow oriented model. The calculations are based on theapproved plans for the years 2010 to 2014. A perpetual pension isin addition calculated on the basis of the fifth year of the planningperiod. The perpetual pension was assumed to have a growth rateof 1.0 %. The discount rate was formed from the weighted costs ofborrowed capital and equity capital, with the equity capital costsderived using CAPM. Depending on the cash generating unit, thediscount rate before tax ranges between 8.17 % and 8.67 %.

The impairment tests revealed no need for impairment of goodwillin either the 2009 financial year or in the comparative period 2008.

The following table shows the distribution of goodwill between thecash generating units:

Cash generating unit 31/12/2009 31/12/2008

Wolf Group 19,788 19,788

Brink Group 24,839 24,839

Ubbink Group 11,110 11,110

medimondi Group 5,177 5,174

Total 60,914 60,911

The breakdown by operating segment is as follows:

Allocation of goodwill to segments

Climate Systems Gas Flue Systems Medical Techno logy Total& Enginee ring Plastics

In EUR ‘000 2009 2008 2009 2008 2009 2008 2009 2008

euro countries 44,627 44,627 8,142 8,142 2,749 2,749 55,518 55,518

European non-euro countries - - 2,968 2,968 2,428 2,425 5,396 5,393

Total 44,627 44,627 11,110 11,110 5,177 5,174 60,914 60,911



2 Intangible assets

The classification and movements of intangible assets are shownin the following schedule:

Intangible assets

Industrial Capitalised Assets Totalrights and development in course of intangible

in EUR ‘000 similar rights Software costs construction assets

2008

Accumulated cost Jan 1 17,613 5,980 22,856 0 46,449

Additions for first-time consolidation 0 0 232 0 232

Additions 79 729 2,129 0 2,937

Disposals from deconsolidation 0 0 0 0 0

Disposals 0 (16) (204) 0 (220)

Reclasses 0 285 206 0 491

Exchange differences (2) (36) 12 0 (26)

Accumulated cost Dec 31 17,690 6,942 25,231 0 49,863

Accumulated amortisation Jan 1 (1,063) (4,136) (3,823) 0 (9,022)


Additions (348) (867) (2,931) 0 (4,146)


Disposals 0 5 18 0 23

Reclasses 0 0 0 0 0

Exchange differences (8) 34 7 0 33

Accumulated amortisation Dec 31 (1,419) (4,964) (6,729) 0 (13,112)

Net carrying amount 31/12/2007 16,550 1,844 19,033 0 37,427


2009

Accumulated cost Jan 1 17,690 6,942 25,231 0 49,863


Additions 80 467 1,635 4,107 6,289

Disposals (50) (896) 0 0 (946)

Reclasses 0 (33) (174) 0 (207)

Exchange differences 1 10 0 0 11

Accumulated cost Dec 31 17,721 6,490 26,692 4,107 55,010

Accumulated amortisation Jan 1 (1,419) (4,964) (6,729) 0 (13,112)


Additions (363) (885) (4,039) 0 (5,287)

Impairment 0 0 0 0 0

Disposals 50 894 0 0 944

Reclasses 0 0 0 0 0

Exchange differences (3) (9) (1) 0 (13)

Accumulated amortisation Dec 31 (1,735) (4,964) (10,769) 0 (17,468)


Net carrying amount 31/12/2009 15,986 1,526 15,923 4,107 37,542



EUR 5,286 thousand of this total (previous year EUR 4,877 thou-sand) served as security for bank loans at the reporting date.

The industrial rights and similar rights include the “Wolf” brand(EUR 11.5 million). The Wolf brand has no specified useful life be-cause we have secured the exclusive right to use the “Wolf” brandunder trademark rights; its useful life is therefore indefinite from a legal perspective. Equally when the economic perspective is takenas the assessment basis, we are unable to make any estimate ofhow long the company and therefore the “Wolf” brand will exist.As a result, following an analysis of all relevant factors we are un-able to state any foreseeable limit to the period over which theasset is expected to generate net cash inflows for the enterprise.No amortisation takes place in view of the indefinite useful life.The Wolf brand is therefore subjected to a yearly impairment test,which has hitherto revealed no need for write-down. Capitaliseddevelopment costs also include around EUR 9.9 million in carryingamounts from the acquisition of Wolf that were capitalised duringpurchase price allocation and relate to technologies and develop-ment projects. The addition under assets in course of constructionrelates principally to investment in a cross-company ERP projectin the Gas Flue Systems segment.

Expenses for predominantly internal research and development inthe financial year amounted to EUR 7,097 thousand (previous yearEUR 7,455 thousand). Development activities focused mainly onheating systems, plastic gas flue components, technical roof prod-ucts, ventilation, climate control and solar systems, coating tech-niques and applications, medical technology equipment, andsoftware developments. The results of these efforts can be usedfor a variety of customers. Development expenditures amountingto EUR 1,635 thousand (previous year EUR 2,129 thousand) werecapitalised in the year under review, as future benefit in the formof cash flows and additional profit from new products can be pre-dicted with adequate certainty. These include development proj-ects approaching market readiness, and in particular componentsof roof, ventilation and heating systems, as well as medical tech-nology and diagnostic systems. In addition, there was continuingresearch work aimed at better understanding and controlling thegas and air flow in plastic systems better, as well as the impact ofheat, water and air on plastic materials and components.



3 Property, plant and equipment

The classification and movements of property, plant and equip-ment are shown in the following schedule:

Property, plant and equipment

Furniture,Technical fixtures Assets Total property,

Land equipment and office in course plant andin EUR ‘000 and buildings and machinery equipment of construction equipment

2008

Accumulated cost Jan 1 73,378 64,802 29,867 1,881 169,928


Additions 2,722 4,015 3,914 3,294 13,945


Disposals (52) (1,133) (1,884) (110) (3,179)

Reclasses 64 968 776 (2,299) (491)



Accumulated depreciation Jan 1 (16,603) (44,150) (15,047) 0 (75,800)


Additions (3,275) (4,152) (5,064) 0 (12,491)


Disposals 2 1,105 1,623 0 2,730

Reclasses 4 51 (55) 0 0


Write-ups 0 0 0 0 0

Accumulated depreciation Dec 31 (19,866) (47,083) (18,472) 0 (85,421)



2009

Accumulated cost Jan 1 76,105 68,632 32,620 2,766 180,123


Additions 1,807 4,597 2,789 2,393 11,586


Disposals (4,923) (5,423) (3,653) (11) (14,010)

Reclasses 4 2,211 459 (2,467) 207



Accumulated depreciation Jan 1 (19,866) (47,083) (18,472) 0 (85,421)


Additions (3,243) (4,551) (4,523) 0 (12,317)


Disposals 2,398 5,246 3,438 0 11,082

Reclasses (168) (94) 262 0 0


Write-ups 0 0 0 0 0

Accumulated depreciation Dec 31 (20,880) (46,503) (19,317) 0 (86,700)





Land and buildings comprise mainly the production and officebuildings in Brilon (Germany), Mainburg (Germany), Doesburg(Netherlands), Staphorst (Netherlands), Kampen (Netherlands), La Chapelle sur Erdre (France), Fulda (Germany), Marsberg (Ger-many) and Kolding (Denmark).

Technical equipment and machinery at the production plants wasextended and technologically upgraded. Other furniture, fixturesand office equipment consists of various items in production,warehouses and administration. The fixed assets include assets to the value of EUR 346 thousand (previous year EUR 537 thou-sand) reported in the context of finance leases. The bulk of thesecomprises technical equipment and machinery amounting to EUR 233 thousand (previous year EUR 346 thousand) and otherfurniture, fixtures and office equipment amounting to EUR 97thousand (previous year EUR 161 thousand). Software in additionaccounted for EUR 16 thousand (previous year EUR 30 thousand).EUR 65,604 thousand of property, plant and equipment served as security for bank loans at the reporting date (previous year EUR 60,772 thousand).

The assets in course of construction at the reporting date consistmainly of technical plant and machinery supplied to the productionplants but not yet technically accepted.

Disposals and reclasses of technical plant and machinery as wellas other furniture, fixtures and office equipment are moreover inconnection with the commissioning of locations or plants or otherorganisational measures carried out.

4 Investments accounted for using the equity method, investments and loans originated by the enterprise

These assets comprise investments accounted for using the eq-uity method, other investments that are not included in consolida-tion, loans originated by the enterprise, and securities.

The investments at year-end still show the investments reportedat cost for the sake of simplicity, for reasons of minority.

Investments recognised using the equity method

in EUR ‘000 31/12/2009 31/12/2008

At Jan 1 30,587 28,387

Share of losses (9,972) 0

Share of gains 152 2,200

Share of purchase 2,932 0

Close of Dec 31 23,699 30,587

The share of losses reflects not only the pro rata loss of the invest-ment CENTROSOLAR accounted for using the equity method, but also a loss due to the dilution of ownership interest following a capital increase. The ownership interest fell from 30.76 % to26.16 %. The fair value of CENTROSOLAR Group AG, which isbased on the closing price of EUR 4.37 on December 31, 2009and the number of shares, is EUR 23.3 million. This is EUR 0.6million down on the reported carrying amount of the equity invest-ment of EUR 22.7 million. However the share price has fallen further since the start of 2010, with the result that the reportedcarrying amount was undercut. Nevertheless, CENTROTEC seesno reason for impairment because the value in use determined by means of an impairment test is well above the fair value andcarrying amount of the equity investment. The equity investmentis therefore rolled over at its carrying amount.

Investments recognised using the equity method

CENTROSOLAR CENTROSOLARGroup consol. Group consol. Bond Laminates Bond Laminates

in EUR ‘000 31/12/2009 31/12/2008 31/12/2009 31/12/2008

Ownership interest in % 26.16 30.76 24.95 24.95

Fixed assets 90,715 98,493 2,413 2,619

Current assets 92,642 123,181 3,541 3,166

Total liabilities 104,481 131,628 4,768 5,184

Revenue 308,704 332,604 7,741 9,281

Profit/loss for the year (29,705) 4,335 610 131

Employee total of CENTROSOLAR Group

2009 2008Average At reporting date Average At reporting date

FTE 919 1,019 676 809

Individuals 958 1,071 680 836

Of which employed at companies included pro rata:

FTE 12 13 6 10

Individuals 13 13 6 10


Financial assets

At amortised cost At acqui- At fair value Stated Totalsition cost amount acc.

to IAS 17

Available- Available-Liabilities not for-sale for-sale

recognised Loans and financial financial Financialin EUR ‘000 at fair value receivables instruments instruments derivatives

Balance sheet item at December 31, 2009 Carrying Carrying Carrying Carrying Carrying Carrying Carrying Fair valueamount amount amount amount amount amount amount

Loans originated by the enterprise 80 80 80

Investments 0 0 n/a

Securities 635 635 635

Cash and cash equivalents 35,356 35,356 35,356

Trade receivables 58,723 58,723 58,723

Derivatives 319 319 319

Miscellaneous financial assets 3,817 3,817 3,817

Total financial assets, December 31, 2009 0 97,976 0 635 319 0 98,930 98,930

Trade payables 31,402 31,402 31,402

Financial liabilities excl. finance leases 121,519 121,519 125,638

Finance lease liabilities 288 288 288

Derivatives 2,899 2,899 2,899

Miscellaneous financial liabilities 13,097 13,097 13,097

Total financial liabilities, December 31, 2009 166,018 0 0 0 2,899 288 169,205 173,324

Balance sheet item at December 31, 2008 Carrying Carrying Carrying Carrying Carrying Carrying Carrying Fair valueamount amount amount amount amount amount amount

Loans originated by the enterprise 166 166 166

Investments 41 41 n/a

Securities 380 380 380

Cash and cash equivalents 22,927 22,927 22,927

Trade receivables 60,729 60,729 60,729


Miscellaneous financial assets 4,498 4,498 4,498

Total financial assets, December 31, 2008 0 88,320 41 380 622 0 89,363 89,322

Trade payables 26,891 26,891 26,891

Financial liabilities excl. finance leases 136,491 136,491 139,409

Finance lease liabilities 537 537 537


Miscellaneous financial liabilities 13,029 13,029 13,029

Total financial liabilities, December 31, 2008 176,411 0 0 0 946 537 177,894 180,812


At the reporting date, the employee totals quoted for the CENTROSOLAR Group include 222 FTE (previous year 144 FTE)who are employed on a temporary basis on behalf of the group.The average for the year was 169 FTE (previous year 154 FTE).Bond Laminates GmbH employs around 48 individuals (previousyear around 45).

5 Supplementary disclosures on financial instruments

Measurement categories and fair values of financialassets and liabilities

The following tables show the carrying amounts of financial assetsand liabilities according to measurement category, as well as theirfair values:



The category of loans originated by the enterprise includes long-term loans that are measured at amortised cost. The fair value ofthe loans corresponds approximately to the carrying amount.

Interests in companies not included in consolidation and not accounted for by the equity method are summarised in the invest-ments category. These are exclusively non-listed corporate enter-prises. The investments are measured at acquisition cost as nopublicly listed market prices exist and the fair value cannot be reli-ably determined due to the uncertainty of future cash flows. Thefair value could only be reliably determined through specific salesnegotiations.

The carrying amounts of the assets in the securities category correspond to the respective market prices.

The assets in the categories cash and cash equivalents, trade receivables and miscellaneous assets have predominantly shortmaturity dates, with the result that their carrying amounts at thebalance sheet date correspond to the fair values.

The categories derivative assets and liabilities in hedge accountinginclude exclusively hedging instruments designated as cash flowhedges, which are recognised at their fair value.

The categories trade payables and miscellaneous financial liabili-ties fundamentally contain liabilities with regularly short maturities.The carrying amounts therefore correspond to the fair values.

The categories financial liabilities excluding finance leases and finance lease liabilities contain liabilities predominantly with matu-rities of more than one year. The fair values are determined by discounting the cash flows associated with the liabilities, takingaccount of the current interest rate parameters. The individualcreditworthiness ratings within the group are taken into account in the form of market creditworthiness and liquidity spreads whendetermining the present value.

Net gains or losses from financial instruments bymeasurement category

The following table shows the net gains or losses on financial in-struments taken into account in the income statement, by meas-urement category. Interest, currency translation, impairment,reversals and results from disposals were taken into account indetermining the net results.

Liabilities Available-forLoans and not recognised -sale financial

in EUR ‘000 receivables at fair value instruments Total

2008 (778) (9,538) 71 (10,245)

2009 175 (8,161) 0 (7,986)

Disclosures on derivative financial instruments

The group uses derivative financial instruments such as interestrate swaps and caps for hedging interest rate risks. Cash flowhedges were designated in the period under review. The fair valueof all hedging instruments at the 2009 balance sheet date wasEUR 319 thousand (previous year EUR 622 thousand) reportedunder other assets, and EUR 2,899 thousand (previous year EUR946 thousand) reported under other liabilities.

During 2009, net unrealised losses from the measurement of de-rivatives amounting to EUR 1,925 thousand (previous year EUR989 thousand) were measured income-neutrally within equity. Thefuture cash flows hedged by means of cash flow hedges will prob-ably fall due in the next five to six years.

6 Other assets

The following table shows a breakdown of other assets. The pre-paid expenses largely comprise insurance premiums and serviceexpenses.

Other assets

in EUR ‘000 31/12/2009 31/12/2008

Other non-current assets

Derivative assets 44 224

Miscellaneous non-current 1,487 813

Total non-current 1,531 1,037

Other current assets

Payments on account for inventories 49 169

Derivative assets 275 398

Miscellaneous financial assets 3,817 4,498

Receivables from VAT 2,705 1,133

Prepaid expenses 1,448 1,518

Total current 8,294 7,716



7 Deferred tax assets and tax liabilities

Pursuant to IAS 12 the deferred tax assets and deferred tax liabili-ties are calculated on the temporary difference between thestated amounts of assets and liabilities in the IFRS balance sheetand the tax balance sheet, and also from tax loss carryforwards.These differences in the stated amounts result among other

things from adjustments to stated amounts in the context of busi-ness combinations. The net values shown represent the nettedvalues of deferred tax assets and deferred tax liabilities of a groupcompany in respect of a taxation authority.

The deferred tax assets result principally from loss carryforwardsand pension accruals, and are comprised as follows:

The deferred tax assets from loss carryforwards are comprised asfollows:

Tax loss carryforwards

in EUR ‘000 31/12/2009 31/12/2008

Loss carryforwards 20,227 15,713

Deferred tax assets from loss carryforwards 5,843 4,651

Reductions for impairment (3,809) (3,326)

Total deferred tax assets from loss carryforwards (net) 2,034 1,325

Of the deferred tax assets on loss carryforwards, EUR 5,159 thou-sand (previous year EUR 1,927 thousand) relate to companieswhich also posted a loss in the current year. The deferred tax as-sets in question were examined on the basis of earnings forecastsand by means of longer-range plans in the event of the loss-mak-ing situation continuing.

Except for an amount of EUR 2,757 thousand, the loss carryfor-wards can be carried forward indefinitely. Of the losses for whichcarryforward is restricted, EUR 1,117 thousand expire in over fiveyears, EUR 1,411 thousand expire within five years, EUR 104within four years and EUR 124 thousand in up to three years.

The composition of deferred tax liabilities is as follows:

Deferred tax assets on temporary differences and tax loss carryforwards

in EUR ‘000 Gross After netting31/12/2009 31/12/2008 31/12/2009 31/12/2008

Reversal expected within 12 months 3,826 3,550 524 360

Reversal expected after more than 12 months 2,897 2,033 3,303 1,632

Total 6,723 5,583 3,827 1,992

Deferred tax liabilities

in EUR ‘000 Gross After netting31/12/2009 31/12/2008 31/12/2009 31/12/2008

Reversal expected within 12 months 6,437 6,975 3,798 3,995

Reversal expected after more than 12 months 13,187 13,849 12,929 13,238

Total 19,624 20,824 16,727 17,233



Development in deferred tax

in EUR ‘000 31/12/2009 31/12/2008

Recognition of deferred tax (balance) (12,900) (15,241)

Difference year on year 2,341 302

of which:

Recognised in income statement 1,888 107

Netted against shareholders’ equity (incl. exchange differences) 453 195

8 Inventories

The first of the following tables provides a breakdown of the entirecarrying amount of inventories. Where the cost price of invento-ries is higher than their market or fair value, the table shows thecarrying amount of these inventories after reductions for impair-ment. The second table shows inventories according to category.

Inventories

in EUR ‘000 31/12/2009 31/12/2008

Inventories at historical cost 18,186 27,719

Inventories at net realisable value:

Original value at historical cost 44,537 36,993

Provision for obsolescence (5,699) (4,845)

Carrying amount after depreciation 38,838 32,148

Total 57,024 59,867

Inventories by category

in EUR ‘000 31/12/2009 31/12/2008

Raw materials and supplies 21,879 23,263

Work in progress (goods) 7,906 9,326

Finished goods and merchandise 27,239 27,278

Total 57,024 59,867

Of which serving as security for loans/credit lines 36,632 41,334

A balance of EUR 854 thousand (previous year EUR 1,445 thou-sand) in expenses for depreciation was booked to the incomestatement during the reporting period due to obsolescence.

The composition of deferred tax assets and deferred tax liabilitiesby balance sheet item is as follows:

Deferred tax

in EUR ‘000 2009 2008

Deferred tax assets

Intangible assets 20 50

Property, plant and equipment 364 283

Inventories 426 287

Trade receivables 10 20

Pension provisions 1,712 1,749

Other provisions 1,062 848

Other liabilities 161 147

Miscellaneous 934 874

Tax loss carryforwards 2,034 1,325

6,723 5,583

Deferred tax liabilities

Intangible assets 9,238 9,362

Property, plant and equipment 8,624 9,144

Inventories 431 614

Other provisions 0 6

Other liabilities 1,086 1,127


19,624 20,824

Of the deferred tax assets and deferred tax liabilities, EUR 453thousand (previous year EUR 210) were netted directly with equity.Exchange differences represent EUR (44) thousand of this amount(previous year EUR 90 thousand), and interest rate derivativesEUR 497 thousand (previous year EUR 120).

Deferred tax balance sheet items

in EUR ‘000 31/12/2009 31/12/2008

Deferred tax assets 3,827 1,992

Deferred tax liabilities (16,727) (17,233)

Balance (12,900) (15,241)

of which: From netting against shareholders’ equity (663) (210)


Adequate impairment for losses on receivables has been appliedon a case by case basis to cover identified risks. Where there wasno objective evidence of impairment in individual cases, specificallowances for collectively assessed financial assets were formed.The table shows the changes in impairment:

31/12/2009 31/12/2008

Impairment at the start of thefinancial year 2,605 2,662

Income-effective changes in impairmentduring the period under review 1,023 528

Derecognition of receivables (525) (308)

Payments received and recovery in value of receivables originally written off (395) (181)

Currency translation effects 12 (96)

Impairment at end of financial year 2,720 2,605


9 Trade receivables

Trade receivables

in EUR ‘000 31/12/2009 31/12/2008

Receivables (0 < 90 days) 56,510 58,000

Receivables overdue > 90 < 180 days 1,683 1,951

Receivables overdue > 180 < 360 days 941 856

Receivables overdue > 360 days 1,072 1,086

Receivables from equity investments 1,237 1,441

Trade receivables prior to impairment 61,443 63,334

Reductions for impairment (2,720) (2,605)

Trade receivables after impairment 58,723 60,729

Of which billed in

EUR 56,476 57,574

USD 1,025 908

GBP 1,276 1,517

DEK 627 961

CHF 116 162

PLN 1,820 1,973

Other currencies 103 239

Total 61,443 63,334

Of which serving as security for loans/credit lines 25,774 30,896

10 Cash and cash equivalents

Cash and cash equivalents

in EUR ‘000 31/12/2009 31/12/2008

Cash in hand 25 27

Cash in banks 35,331 22,900

Total 35,356 22,927

11 Shareholders’ equity

GeneralThe issued capital of the company amounted to EUR 16,716,262at December 31, 2009 (at December 31, 2008: EUR 16,582,116).It is divided into 16,716,262 no par value shares with a notionalvalue of EUR 1.00 per share. The capital stock is fully paid in. Withadditional paid-in capital of EUR 25,302 thousand, other retainedearnings of EUR 85,577 thousand and net income of EUR 5,400thousand, the group had shareholders’ equity allocable to the share-

Supplementary information on impairment

Trade receivables Trade receivablesin EUR ‘000 prior to impairment Impairment after impairment

Receivables (0 < 90 days) 56,510 (1,384) 55,126

Receivables overdue > 90 < 180 days 1,683 (532) 1,151

Receivables overdue > 180 < 360 days 941 (195) 746

Receivables overdue > 360 days 1,072 (609) 463

Receivables from equity investments 1,237 0 1,237

Total 61,443 (2,720) 58,723



holders of CENTROTEC Sustainable AG of EUR 132,883 thousand(previous year EUR 127,879 thousand) at December 31, 2009.Shareholders’ equity rose as a result of the consolidated net in-come and the capital increases from payments received fromthe exercising of stock options in 2009, resulting in an increase in the issued capital and the additional paid-in capital from thepremiums paid in.

Development of number of shares

in thousand 2009 2008

Total, January 1 16,582 16,493

Addition of shares issued through the exercising of options 134 89

Total, December 31 16,716 16,582

Proposal for the distribution of accumulated profitAccording to German commercial and stock corporation require-ments, the annual financial statements of the group parent CENTROTEC Sustainable AG constitute the basis for the appropri-ation of profit for the 2009 financial year. A distributable dividendtherefore depends, among other things, on the retained earningsreported by that company in the separate financial statements atDecember 31, 2009. It is proposed to carry forward the net lossof EUR 2,096 thousand reported there and the retained earningsof EUR 21,778 thousand for new account.

Treasury stockA total of 12,080 treasury shares were held at December 31, 2009.These shares represent less than 0.1 % of capital stock. Theseshares were held at the parent as treasury shares as at the report-ing date for the annual financial statements. No treasury stockwas acquired or sold during the financial year.

Pursuant to the resolution of the Shareholders’ Meeting of June 9,2009 the company was authorised until December 8, 2010 to acquire treasury stock which, together with existing treasury stock,represents up to 10 percent of the capital stock at the time of theauthorisation taking effect. The price for the acquisition of theseshares may not be more than 10 % higher or more than 10 % lowerthan the closing price in XETRA trading on the Frankfurt Stock Exchange (or in an equivalent successor system) for shares of thesame class and features on the ten trading days preceding the acquisition. The Management Board is authorised to offer all orsome of the shares thus acquired to third parties in (part) paymentof the acquisition of companies or investments in companies, ex-cluding the shareholders’ right of subscription. The ManagementBoard is furthermore authorised to retire the company’s treasurystock without the need for a further resolution to be adopted bythe Shareholders’ Meeting. Retirement may be restricted to partof the purchased shares.

Approved capitalPursuant to the resolution of the Shareholders’ Meeting on May 24,2007 the Management Board is, with the approval of the Supervi-sory Board, authorised to increase the capital stock on one or more

occasions by up to EUR 8,212,082 (in words: eight million twohundred and twelve thousand and eighty two euros) by May 23,2012 in return for cash and/or contributions in kind through theissuance of new no par value bearer shares (Approved Capital).The Management Board is, with the approval of the SupervisoryBoard, authorised to exclude the shareholders’ statutory subscrip-tion right in the following instances:> For residual amounts,> If the capital increase is for cash and the issuing price of the

new shares does not significantly undercut the market price ofthe shares of the same class and features already listed at thetime when the issuing price is finally fixed by the ManagementBoard, in keeping with Sections 203 (1) and (2), and 186 (3),fourth sentence of German Stock Corporation Law; this autho-risation is given with the provison that neither at the time of thisauthorisation becoming effective nor at the time of exercisingof this authorisation may the total of ten percent of the capitalstock be exceeded by the total (i) of the shares which are is-sued on the basis of the aforesaid authorisation, excluding thesubscription right, and of the shares which are issued afterthis authorisation takes effect on the basis of another authori-sation, valid at the time of this authorisation becoming effec-tive, or a substitute authorisation of the former, to utilise anamount of approved capital pursuant to Section 186 (3) fourthsentence of German Stock Corporation Law, excluding sub-scription rights; (ii) of those shares which may be subscribedto on the basis of the convertible or warrant-linked bonds andwhich are issued after this authorisation becomes effective,utilising an authorisation resolved at the time of this authorisa-tion becoming effective, or a substitute authorisation of theformer, pursuant to Section 186 (3) fourth sentence of Ger-man Stock Corporation Law, excluding subscription rights; and(iii) of the treasury stock sold, insofar as that sale after this au-thorisation becomes effective, on the basis of an authorisationvalid at the time of this authorisation becoming effective, or asubstitute authorisation of the former, is for cash by a meansother than via the stock exchange or through an offer to allshareholders,

> For capital increases for contributions in kind for the grantingof shares for the purpose of acquiring (including indirectly)companies, parts of companies or investments in companiesor assets of other companies,

> For issuing to employees of the company.

The Management Board is furthermore authorised, with the ap-proval of the Supervisory Board, to specify the further details ofthe effecting of capital increases from approved capital.

Conditional capital and share-based payments

Conditional Capital IBy resolution of the Shareholders’ Meeting of May 28, 2002 thecapital stock is conditionally increased (Conditional Capital I). TheManagement Board was authorised to issue warrants for subscrip-tion to new bearer shares in the company until December 31, 2004,on one or more occasions. Employees, managing directors andManagement Board members of the company and of its affiliated



companies pursuant to Section 17 of German Stock CorporationLaw are entitled to subscribe. New shares are created where theoptions are exercised. These pay dividends from the beginning ofthe financial year in which the options are exercised. As a result ofthe exercising of option rights, Conditional Capital II at December31, 2009 fell to EUR 175,292, divided into 175,292 no par valueshares.

Conditional Capital IIBy resolution of the Shareholders’ Meeting of June 1, 2005 thecapital stock is conditionally increased further (Conditional CapitalII). The Management Board is authorised to issue warrants forsubscription to new bearer shares in the company until December31, 2011, on one or more occasions. Employees, managing direc-tors and Management Board members of the company and of itsaffiliated companies pursuant to Section 17 of German Stock Corporation Law are entitled to subscribe. New shares are cre-ated where the options are exercised. These pay dividends fromthe beginning of the financial year in which the options are exer-cised. Conditional Capital II at December 31, 2009 amounted toEUR 526,804, divided into 526,804 no par value shares (previousyear 526,804 EUR, divided into 526,804 no par value shares).

Conditional Capital IIIBy resolution of the Shareholders’ Meeting on May 29, 2008 thecapital stock is conditionally increased by a further EUR 756,000,divided into 756,000 no par value shares (Conditional Capital III).The Management Board is authorised to issue warrants for sub-scription to new bearer shares in the company on one or more occasions, until December 31, 2014. Employees of CENTROTECSustainable AG as well as employees of affiliated companies asdefined by Section 17 of German Stock Corporation Law are enti-tled to subscribe. The managing directors/Management Boardmembers of the above companies are furthermore entitled to subscribe. New shares are created where the options are exercised.These pay dividends from the beginning of the financial year inwhich the options are exercised. Conditional Capital III at Decem-ber 31, 2009 amounted to EUR 756,000, divided into 756,000 nopar value shares (previous year 756,000 EUR, divided into756,000 no par value shares).

Share-based paymentCENTROTEC uses share-based payment transactions counterbal-anced by equity instruments. The share-based payment agree-ments are based on corresponding resolutions by Shareholders’Meetings. There accordingly existed conditional capital totallingEUR 1,458,096 at the reporting date of December 31, 2009 (pre-vious year EUR 1,592,242), divided into a total of 1,458,096 (pre-vious year 1,592,242) no par value shares. The Management Boardis authorised to issue stock options for subscription to new bearershares in the company until December 31, 2014 (on one or moreoccasions); the Supervisory Board decides on their granting toManagement Board members. Employees, managing directorsand Management Board members of the company and of its affili-

ated companies pursuant to Section 17 of German Stock Corpora-tion Law are entitled to subscribe, on the basis of individual stockoption agreements.

Granting of the stock options is linked to the fulfilment of individualperformance targets. Employees, managing directors and Manage-ment Board members must achieve individually agreed targets. Attainment of targets leads to the granting of the stock options.The vesting period until the earliest possible time the options maybe exercised is two years from the date of issue of the option. Thissimultaneously necessitates a two-year period of service, so thatthe option does not lapse. The maximum term of the options isseven years from the time of their granting.

Exercise of options is moreover tied to the fulfilment of marketconditions. They may accordingly only be exercised if the marketprice on the day on which the options may first be exercised or ata later time during the term of the options has risen by 30 % onthe strike price. Exercise is moreover permitted only during certainperiods of the year. These exercise periods run from the third tothe eighth stock market trading day following the day on which annual and quarterly results are announced, and following the dayon which it is announced that annual press conferences have beenheld. New shares are created at the time an option is exercised.The new shares pay dividends from the beginning of the financialyear in which the options are exercised. The strike price per share(subscription price) to be paid upon exercising of the options iscurrently 90 % of the average closing price in XETRA trading on theFrankfurt Stock Exchange (or in an equivalent successor system),calculated from the prices on the 30 trading days – for ConditionalCapital I – or on the 10 trading days – for Conditional Capital II andConditional Capital III – preceding the day of issue of the option,but at least one euro.

The weighted average fair value of the options issued in 2009 isEUR 3.39 (previous year EUR 4.70). The options were measuredwith the aid of a binominal model. The model took the parametersdescribed below as the basis: The issue date of the 2009 trancheis February 5, 2009 (2008 tranche: June 23, 2008) and the exer-cise price is EUR 8.30 (previous year EUR 11.70). As in the previ-ous year, no dividend is expected. The risk-free interest rate is3.15 % (previous year 4.64 %) and is based on risk-free investmentalternatives in Germany of a comparable term. The normalisedvolatility of CENTROTEC shares, based on the historical daily volatil-ity of CENTROTEC shares, was assumed to be 33.75 % p. a. for2009 (previous year 33.07 %). Volatility describes the intensity offluctuation in the share price around its mean value over a fixedperiod.

Levels of target attainment and fluctuation rates among optionholders were moreover taken into account when determining theunderlying option totals. As soon as the exact number of vestedoptions in a tranche is determined, the anticipated option figuresare adjusted to bring them in line with options that have become



vested. As the consideration received is in essence not consid-ered for purposes of recognition as assets, it is recognised overallas an expense. A personnel expense amounting to EUR 687 thou-sand arose in the 2009 financial year from the stock optionsschemes described here (previous year: EUR 435 thousand). Afurther personnel expense of EUR 498 thousand is expected in

2010 from the stock options schemes outstanding at December31, 2009. The weighted average share price for the financial yearis EUR 7.88 (previous year EUR 14.87).

The following table shows the stock option tranches with the num-ber of options that may still be exercised:

Stock option tranches

Exercise Date Options OptionsDate of issue price of expiry at end 2009 at end 2008 Change

Granted 2002 10/04/2002 5.00 09/04/2009 0 12,436 (12,436)

Granted 2003 15/04/2003 2.00 14/04/2010 16,218 137,930 (121,712)

Granted 2004 13/01/2004 4.35 12/01/2011 137,090 137,090 0

Granted 2005 01/06/2005 9.85 31/05/2012 133,150 133,150 0

Granted 2006 13/09/2006 10.60 12/09/2013 126,040 126,040 0

Granted 2007 08/01/2007 11.10 07/01/2014 222,173 222,173 0

Granted 2008 23/06/2008 11.70 22/06/2015 181,326 228,000 (46,674)

Granted 2009 05/02/2009 8.30 04/02/2016 *209,000 - 209,000

Total 1,024,997 996,819 28,178

* attainment of targets not yet established

IFRS 2 was applied to the tranches granted from 2003. The fol-lowing table indicates additions and disposals of options outstand-

ing, together with the average exercise prices of movements andreporting-date totals.

Total options

2009 2008Units/price in EUR Options Avg. exercise price Options Avg. exercise price

Start of year 996,819 8.50 927,966 7.84

Granted 209,000 8.30 228,000 11.70

Exercised (134,146) 2.28 (89,120) 5.15

Expired (46,676) 11.70 (70,027) 11.08

End of year 1,024,997 9.13 996,819 8.50

of which exercisable 634,671 9.05 546,646 6.57

Minority interests

This item includes the shareholders’ equity attributable to the minority interests of EUR (209) thousand (previous year EUR (75)thousand).

12 Pension provisions

Employees’ entitlements to defined benefit plans are based onstatutory or contractual arrangements and direct commitments.The pension liabilities in Germany stem to a substantial degree from

benefit obligations based on contractual arrangements. These con-stitute defined benefit commitments by German companies, basedsubstantially on benefit arrangements of the Essen Federation andon guidelines on the granting of company pensions and a definedbenefit scheme. The obligations comprise the payment of retire-ment benefits, payable upon reaching pensionable age. The levelof the payments depends in essence on the number of years’service completed and the pensionable salary prior to the start of benefit payments. The benefit obligations based on these con-tractual arrangements relate principally to the existing obligationsof one domestic company. The plans based on statutory arrange-


Discounting has been based on an interest rate in line with a match-ing average interest rate for high quality corporate bonds. Valuesfor statutorily due termination payments upon taking retirementare also included.

Retirement benefit payments

in EUR ‘000 31/12/2009 31/12/2008

Fund-financed obligations 3,221 2,736

Fair value of plan assets (3,012) (2,519)

Subtotal 209 217

Present value of non-fund-financed obligations 19,617 16,370

Unrecognised actuarial gains 2,427 5,038

Pension provisions reported 22,253 21,625

Development in external plan assets

in EUR ‘000 2009 2008

Plan assets at January 1 2,519 2,251

Expected return on plan assets 132 116

Actuarial gains and losses 185 (128)

Exchange differences 2 68

Contributions by employer 169 151

Contributions by plan participants 102 114

Payments made (97) (53)

Plan assets at December 31 3,012 2,519

The “expected return on plan assets” is based on an assumedlong-term return of between 3.4 % and 5.4 %. This takes accountof the asset structure, maturities and reinvestment opportunitiesat the balance sheet date.


ments largely consist of benefit obligations for a limited number ofmanagement employees in the Netherlands, who will receive life-long retirement benefit payments from the time their employed relationship ceases as a result of reaching pensionable age. Inother countries, there exist commitments to a minor extent.

Retirement benefits in Germany are financed exclusively by meansof pension provisions. The benefit obligations in the Netherlandsare financed mainly by means of external pension funds.

The accrual for pension plans recognised in the balance sheetcorresponds to the present value of the share of retirement bene-

fits earned at the balance sheet date, taking account of future in-creases (defined benefit obligation, DBO) less the fair value at thebalance sheet date of the external plan assets, after adjustmentfor accumulated, unrecognised actuarial gains and losses and un-recognised past service cost.

The pension provisions were calculated using the projected unitcredit method pursuant to IAS 19, which also takes account of an-ticipated pay and retirement benefit increases. The extent of theprovisions has been calculated using actuarial methods and thelatest mortality tables (Germany: G. Heubeck 2005; Switzerland:BVG 2005; Netherlands: “Collectief 1993”).

Key actuarial assumptions

2009 2008in % Germany Switzerland Netherlands Germany Switzerland Netherlands

Pensionable age (years) 63 65 65 63 65 65

Discount rate 5.30 3.25 5.40 6.25 3.25 6.40

Assumed salary increases 2.50 2.00 2.00 2.50 2.00 2.00

Assumed pension increases 1.00 0.70 3.00 1.00 0.75 3.00

Employee turnover 2.00 2.00 2.97 2.00 2.00 2.20

Expected return on plan assets 2.75 3.40 5.40 2.75 3.50 6.40



Composition of plan assets

in EUR ‘000 at December 31 2009 2008

Equity instruments 62 131

Debt instruments 710 544

Land and buildings 89 80

Other plan assets 2,151 1,764

Total plan assets 3,012 2,519

The total plan assets include own financial instruments amountingto EUR 247 thousand.

The pension commitments developed as follows:

Development in present value of defined benefit obligation

in EUR ‘000 2009 2008

At start of financial year 19,106 19,898

Current service cost 519 517

Interest expense 1,155 1,064

Contributions by plan participants 102 114

Exchange differences 1 79

Actuarial gains and losses 2,560 (2,027)

Payments made (605) (539)

At end of the financial year 22,838 19,106

Pension cost

in EUR ‘000 2009 2008

Current service cost 519 517

Interest expense 1,155 1,064

Expected return on plan assets (132) (116)

Actuarial gains recognised in the current year (226) (108)

Total 1,316 1,357

The current service cost and the actuarial gains are shown underpension cost, whereas the interest expense and the expected re-turn on plan assets are reported within net interest. The actual return on plan assets amounted to EUR 2 thousand. For the 2010financial year, payments into the plan of EUR 230 thousand andfrom the plan of EUR 599 thousand are expected.

Over the past four years the financing status, comprising the pres-ent value of all retirement benefits and the fair value of the planassets, has changed as follows:

Development in defined benefit obligations and plan assets

December 31 in EUR ‘000 2009 2008 2007 2006 2005

Present value of the defined benefit obligation 22,838 19,106 19,898 22,273 3,108

Fair value of external plan assets 3,012 2,519 2,251 1,558 1,575

Financing status 19,826 16,587 17,647 20,715 1,533

Sensitivity analysis on pension provisionsThe calculations of pension provisions can be influenced substan-tially by the discount rate applied. We have therefore in addition

calculated the pension provisions with a 0.5 % higher discountingrate. This would therefore reduce the carrying amount of the de-fined benefit obligations by EUR 1,656 thousand.


or works councils. The personnel-related provisions moreover in-clude provisions for long-service payments made after employ-ment by the company for a specified number of years. Provisionse. g. for impending losses and agency commission outstandingthat will largely be used next year are recognised as a liability inthe other provisions.

14 Financial liabilities

The following table shows bank liabilities and other loans, brokendown according to real estate loans, general credit facilities andother loans.


13 Provisions

The following table shows the movements in provisions in the yearunder review:

A distinction between short-term and long-term provisions wasmade on the balance sheet, based on the estimated timing of theiruse. The provisions for warranty obligations are calculated for eachtype of revenue according to values indicted by experience, as wellas for specific individual cases. The warranty obligations were cre-ated for general and individual warranty risks on the basis of vari-ous warranty factors. The warranty periods generally last between2 and 6 years, possibly varying upwards for goodwill reasons.

The personnel-related provisions largely relate to adjustmentmeasures agreed and were calculated on the basis of court settle-ment proposals or settlement formulas agreed with individuals

Provisions

Warranty Claims and Other personnel- Miscellaneousin EUR ‘000 obligations legal proceedings related costs provisions Total

01/01/2008 6,973 1,092 861 1,251 10,177

Added 5,631 132 863 1,267 7,893

Used (4,404) (51) (247) (1,028) (5,730)

Reversed (762) (43) (111) (21) (937)

Exchange differences (1) 4 0 1 4

31/12/2008 7,437 1,134 1,366 1,470 11,407

Of which use expected <1 year 484 136 14 1,063 1,697

01/01/2009 7,437 1,134 1,366 1,470 11,407

Added 2,727 495 865 1,252 5,339

Used (823) (72) (422) (1,048) (2,365)

Reversed (702) (110) (329) (141) (1,282)


31/12/2009 8,639 1,447 1,480 1,538 13,104

Of which use expected <1 year 282 266 0 1,160 1,708



Carrying amounts of liabilities denominated in the followingcurrencies

in EUR ‘000 31/12/2009 31/12/2008

EUR 118,109 133,245

DKK 2,387 2,392

CHF 1,311 1,391

Total 121,807 137,028

In the case of the real estate loans, the fixed interest rates in theindividual loan agreements expire at various times between 2010and 2021, with the result that the risk is adequately diversified.The same applies to the other loans, where the fixed interest ratesexpire between 2010 and 2020. The fair value of the financial debtthat was determined by discounting future cash flows is approx.EUR 4.1 million (previous year approx. EUR 2.9 million) above thecarrying amounts.

The following table indicates the level of securities furnished:

Securities for liabilities to credit institutions

in EUR ‘000 31/12/2009 31/12/2008

Property, plant and equipment 65,604 60,772

Intangible assets 5,286 4,877

Inventories 36,632 41,334

Receivables 25,774 30,896

Other assets/Cash and cash equivalents 21,816 8,831

Total 155,112 146,710

Securities for liabilities to credit institutions in 2009

Interest pledged

Möller GmbH 100 %

Möller Medical GmbH 100 %

Brink Climate Systems B.V. 100 %

Ned Air Holding B.V. 100 %

Ubbink UK Ltd. 100 %

Ubbink France S.A.S. 100 %

Ubbink N.V./S.A. 100 %

Innosource Holding B.V. 100 %

Centrotherm Systemtechnik GmbH 90 %

Security was furnished on the customary commercial terms forlending.

Liabilities maturities schedule

Total Of which Of which Of whichin EUR ‘000 outstanding maturity less maturity maturity more Interest31/12/2008 amount than 1 year 1 to 5 years than 5 years rate spread

Real estate loans 6,930 940 3,826 2,164 3.4 - 6.3 %

Other loans 111,035 11,910 81,094 18,031 3.4 - 8.1 %

General credit facilities 18,526 18,526 0 0 3.3 - 8.5 %

Financial liabilities excluding leases 136,491 31,376 84,920 20,195

Finance leases 537 162 375 0

Total 137,028 31,538 85,295 20,195

31/12/2009

Real estate loans 7,239 1,025 3,669 2,545 3.4 - 6.3 %

Other loans 98,640 14,938 68,928 14,774 2.0 - 6.8 %

General credit facilities 15,640 15,640 0 0 1.6 - 8.5 %

Financial liabilities excluding leases 121,519 31,603 72,597 17,319

Finance leases 288 124 164 0

Total 121,807 31,727 72,761 17,319


The full fair value of a derivative hedging instrument is classified asa non-current asset/liability provided the maturity of the hedgedinstrument exceeds 12 months; it is otherwise classified as a current asset/liability.

The ineffective portion of cash flow hedges recognised in the income statement amounts to EUR 0 thousand (previous year EUR 0 thousand).

Interest rate hedging instrumentsAt December 31, 2009 the fixed interest rates for interest rateswaps varied between 2.59 and 4.40 % (previous year 3.83 and4.47 %), for caps between 4.25 and 5.00 % (previous year 3.50and 5.00 %), the interest rate floor is 2.75 % (previous year 2.75 %)and the interest rate collar is 3.25 % (previous year 3.25 %). Thegains and losses from interest rate hedging instruments recog-nised within equity (reserve for cash flow hedges) are continuallyrecognised through profit and loss until the bank loans have beenrepaid.

Forward contractsHedged foreign-currency transactions with a high probability ofoccurrence are expected to occur at various points within the next

twelve months. Gains and losses on future contracts in foreigncurrency at December 31, 2009 that are recognised in the hedg-ing reserve within equity are recognised in the income statementin the period in which the hedged, planned transaction has an ef-fect on the income statement. This normally occurs in the twelvemonths following the balance sheet date.

Finance leasesLeasing arrangements are entered into only to a limited extent. Thedecision on whether to finance an investment measure by bankloan or by lease agreement is reached on a case-by-case basisand depends primarily on the prevailing terms available at thetime of deciding. The majority of finance lease agreements pur-suant to IAS 17 (Finance Leases) incorporate a purchase option ata price of either EUR nil or well below the anticipated marketvalue. It is therefore to be expected that the assets in question willpass into the ownership of the CENTROTEC Group at the end ofthe lease’s term. The following table shows the capital lease obli-gations with corresponding discounted and nominal leasing instal-ments including the interest component, broken down accordingto the term and category of the leased articles.


Financial derivativesFinancial derivatives have been concluded to hedge the interestrate risk. The hedging instruments used include caps and swaps.

Forward contracts to hedge against exchange rate fluctuation werealso concluded in the period under review. They comprise cashflow hedges. The following table shows the contracts concluded:

2009 2008Financial derivatives Contract volume Total assets Total liabilities Total assets Total liabilities

Interest rate swaps 58,131 0 2,763 0 879

Caps 20,000 44 0 224 0

Floors 3,000 0 66 0 31

Collars 1,800 0 70 0 36

Forward contracts 2,707 275 0 398 0

Total 319 2,899 622 946

of which short-term 275 0 398 0

Finance leases

Of which Of which Of whichmaturity less maturity maturity more

in EUR ‘000 Total than 1 year 1 to 5 years than 5 years

31/12/2008

Minimum lease payments 593 180 413 0

Of which interest portion 56 18 38 0

Present values 537 162 375 0

31/12/2009

Minimum lease payments 322 140 182 0

Of which interest portion 34 16 18 0

Present values 288 124 164 0



The following table shows the non-capitalised operational leasingobligations at the balance sheet date, with the corresponding leaseinstalments broken down by maturity or minimum remaining term.

The operating leases result mainly from lease arrangements with aterm of between 1 and 5 years for passenger cars that are usedprincipally by our field service employees. We in addition have ten-ancy agreements for buildings in Mainburg and Staphorst. No pur-chase option exists.

15 Other liabilities

The following summary shows the movement in other liabilities,which rose by EUR 2,435 thousand from EUR 29,581 thousand toEUR 32,016 thousand in the 2009 financial year. The followingtable shows the breakdown line by line:

Other current liabilities

in EUR ‘000 31/12/2009 31/12/2008

Other non-current liabilities

Financial derivatives 2,899 946

Miscellaneous non-current financial liabilities 232 190

Miscellaneous non-current non-financial liabilities 490 82

Total non-current 3,621 1,218

Other current liabilities

Taxation and social premiums 3,053 2,957

Vacation and overtime 3,910 3,867

VAT 2,389 1,368

Advances received 255 421

Partial retirement 2,329 1,726

Employee remuneration 7,215 6,403

Non-financial commitments 19,151 16,742

Interest deferrals 573 650

Outstanding invoices 3,912 4,674

Bonus payments to customers 4,003 3,370

Credits outstanding 773 742

Miscellaneous liabilities 3,604 3,403

Miscellaneous financial liabilities 12,865 12,839

Total current 32,016 29,581

The actuarially determined obligations for partial retirement werediscounted at 5.5 % (previous year 5.5 %) and recognised as a liability at their present value. The liabilities, which relate to cur-rent partial retirement obligations, were netted against assetsfrom securities amounting to EUR 1,782 thousand (previous yearEUR 1,974 thousand). The securities were acquired via a trustee-ship in order to fulfil statutory requirements in respect of statutoryinsolvency insurance for partial retirement obligations enteredinto. The miscellaneous other current liabilities include liabilitiesfor pledges and audit costs, among other things.

Operational leasing

Of which Of which Of whichmaturity less maturity maturity more

in EUR ‘000 Total than 1 year 1 to 5 years than 5 years

31/12/2008

Minimum lease payments 8,095 2,369 4,881 845

Of which interest portion 1,631 58 841 732

Present values 6,464 2,311 4,040 113

31/12/2009

Minimum lease payments 8,997 2,503 5,699 795

Of which interest portion 1,049 104 465 480

Present values 7,948 2,399 5,234 315



16 Other income

The breakdown of other income is as follows:

Other income

in EUR ‘000 2009 2008

Costs passed on/costs refunded 1,327 773

Liquidation/reversal of reductions for impairment on receivables 395 364

Reversal of provisions 1,437 937

Government grants 1,115 691

Sales proceeds from the disposal of fixed assets 277 68

Insurance and other compensation 288 327

Foreign exchange gains 195 180

Income from tenancy agreements 657 605

Other 3,103 2,854

Total 8,794 6,799

The compensation comprises payments from insurers and othercompensation received or claimed. The reversal of provisions in-cludes both the reversals in the provisions schedule amounting toEUR 1,282 thousand and the reversal of pension provisions to-talling EUR 155 thousand.

Government grants

in EUR ‘000 2009 2008

Personnel-related 914 512


Total 1,115 691

The government grants consist mainly of reimbursements from theFederal Employment Agency for employees in partial retirement.Conditions that were attached to these payments have been ful-filled as at the balance sheet date.

17 Cost of purchased materials and services as well as change in inventories

Cost of purchased materials

in EUR ‘000 2009 2008

Cost of purchased materials 217,587 231,466

Cost of purchased services 8,748 10,471

Supplier discounts (760) (917)

Total 225,575 241,020

Change in inventories of finished goods and work in progress 3,400 (1,657)

Adjusted cost of purchased materials 228,975 239,363

As well as the cost of materials, the change in inventories includespersonnel expense and other expense components. However, thecost of materials component is generally the largest single item.

18 Personnel expenses and total employees

Personnel expenses

in EUR ‘000 2009 2008

Wages and salaries 104,840 100,994

Social insurance 13,841 12,354

Expenses for defined benefit plans 293 409

Expenses for defined contribution plans 7,481 7,775

Share-based payment 687 435

Total 127,142 121,967

of which

Restructuring expense 0 0

Personnel expenses ratio 27.4 % 25.5 %

Total employees

2009 2008Average At reporting date Average At reporting date

FTE (taking into account short-time in 2009) 2,574 2,589 2,574 2,605

Individuals 2,696 2,744 2,670 2,704



19 Other expenses

Other expenses rose by EUR 0.9 million in the 2009 financial year,from EUR 75.4 million to EUR 76.3 million.

Other expenses are broken down as follows:

Other expenses

in EUR ‘000 2009 2008

Promotional costs 7,944 8,774

Outward freight 13,402 14,181

Sales commissions 3,554 4,154

Energy 4,053 3,885

Packaging 989 1,052

Waste disposal 358 399

Rent for buildings 2,826 2,312

Leasing/other rent 490 425

Maintenance costs 3,208 3,422

IT expenses 1,828 1,748

Communication 1,343 1,372

Legal and consultancy costs 2,547 2,896

Other personnel expenses 1,882 2,003

Patent protection 426 424

Travel expenses and fleet 9,093 9,231

Insurance 1,756 1,444

Exchange rate losses 106 2,291

General running costs 1,629 1,839

Guarantee expenses 6,166 4,612

Other administrative costs 995 949

Research and development expenditure 687 539

Other taxes 748 669

Losses from the disposal of assets 93 294

Membership fees (e.g. Chamber of Commerce) 268 314

Investor relations 185 123

Building services 264 184

Bad debt losses and impairment 1,023 711

Miscellaneous 8,452 5,125

Total 76,315 75,372

20 Interest income and expense

Interest income and expense is broken down as follows:

Net interest

in EUR ‘000 2009 2008

Interest income 735 952

Interest expense on loans (5,687) (8,350)

Other interest expense (1,538) (1,188)

Total (6,490) (8,586)

of which

Retirement benefit obligations 1,023 948

The total interest income and total interest expense for financialassets and financial liabilities that are not measured at fair valuethrough profit or loss amount to EUR -5,179 thousand (previousyear EUR -7,537 thousand).

21 Income tax expense

Income tax expense is composed as follows:

Income tax expense

in EUR ‘000 2009 2008

Actual income tax expense for the current financial year 9,666 9,485

Actual income tax expense for previous financial years (267) (2,228)

Deferred tax (1,888) (107)

Total 7,511 7,150

Deferred tax income developed as follows:

2009 2008

From temporary differences (1,179) 303

From loss carryforwards (709) (410)

Deferred tax income (1,888) (107)

The relationship between actual tax expense and anticipated taxexpense is as follows:



Reconciliation of actual tax expense with anticipated tax expense

in EUR ‘000 2009 2008

Result before income taxes (EBT) 12,727 25,785

Less result from investments recognised using the equity method 9,820 (2,200)

Adjusted result before income taxes 22,547 23,585

Anticipated tax expense (on basis of respective company tax rates) (6,372) (6,647)

Anticipated tax rate: 28.3 % (previous year: 28.2 %)

Adjustments to anticipated tax expense

Effect of non-deductible expenses and tax-exempt income (435) (581)

Tax effects from loss carryforwards (544) (325)

Effect from changes in tax rates (44) 27

Adjustments for earlier financial years (actual income tax expense and deferred tax) (116) 376

Tax expense according to income statement (7,511) (7,150)

Effective tax rate (in %) 33.3 30.3

The increase in the effective tax rate to 33.3 % is mainly the resultof the rise in the impairment on loss carryforwards necessitated in2009 and the lower need for adjustments for previous financialyears (compared with the previous year).

No deferred tax was recognised for undistributed profits of sub-sidiaries because these profits are not subject to tax or areploughed back indefinitely. In certain countries, including Ger-many, the assessment basis is instead increased in the context of a profit distribution.

22 Minority interests

The other shareholders of CENTROTEC are entitled to a share ofgains and losses, as stated separately under minority interests. Thenet loss shares amount to EUR 184 thousand at the reporting date(previous year net profit share EUR 13 thousand). These compriseprofit shares amounting to EUR 0 thousand (previous year EUR 15thousand) and loss shares amounting to EUR 184 thousand (previ-ous year EUR 2 thousand).

23 Earnings per share

The earnings per share (basic) and the diluted earnings per shareare illustrated in the following table. The basic earnings per shareare calculated on the basis of the profit or loss for the period at-tributable to the shareholders of CENTROTEC Sustainable AG inrelation to the weighted number of shares issued throughout theyear, less treasury stock (12,080 shares).

Earnings per share

31/12/2009 31/12/2008

Consolidated net income of shareholders in EUR ‘000 5,400 18,622

Weighted average ordinary shares issued, ‘000 16,610 16,525

Basic earnings per share in EUR 0.33 1.13

The diluted figure includes potential shares from stock options inthe number of shares to be taken into account, over and abovethe number of shares in the basic figure. The diluted earnings pershare are based on the assumption that all stock options grantedthrough stock option schemes that could be exercised if the bal-ance sheet date were the end of the contingency period had actu-ally been exercised. Due to the fact that the exercising of stockoptions is tied to the fulfilment of individual and corporate targets,it is expected that only a smaller number of options than the maxi-mum number granted will be exercised. The dilutive effect is cal-culated on the assumption that the issue of shares on the basis ofpotential exercise of options is made at fair value, being the aver-age quoted price of the shares during the financial year in ques-tion. The number of dilutive options thus determined is treated asan issue of ordinary shares for no consideration. Such ordinaryshares generate no proceeds and have no effect on the net profitattributable to ordinary shares outstanding. Such shares are dilu-tive and are consequently added to the number of ordinary sharesoutstanding in the computation of diluted earnings per share.

Diluted earnings per share

31/12/2009 31/12/2008

Consolidated net income of shareholders in EUR ‘000 5,400 18,622

Weighted average ordinary shares issued, ‘000 16,610 16,525

Assumed exercise of stock options granted (weighted average), ‘000 92 230

Weighted average diluted ordinary shares issued, ‘000 16,702 16,755

Diluted earnings per share in EUR 0.32 1.11



24 Segment report and revenues

The CENTROTEC Group has identified three reportable segments,which are organised and run largely independently in accordancewith the type of products and services they offer: Climate Systems,Gas Flue Systems, and Medical Technology & Engineering Plastics.The three segments are distinguished essentially by their productranges. The Climate Systems segment encompasses extensiveproducts portfolios of equipment for heating, ventilation and cool-ing in order to maintain a healthy home climate in every interior.One particular focal area is integrated systems incorporating com-ponents that use renewable energies. The Gas Flue Systems seg-ment manufactures and sells plastic and metal gas flue systems.The product range is rounded off by almost 1,000 components forgas flue systems engineering and innovative roof product. Finally,the smallest segment Medical Technology & Engineering Plasticsdevelops and sells its own and OEM products from the sphere ofmedical technology systems and comprehensive solutions, spinalimplants and semi-finished products, prefabricated parts and as-semblies made from engineering plastics for medical technologyand plant engineering, all from a single source. One ManagementBoard member is responsible for each segment. Mr Gaffal is re-sponsible for Climate Systems, Dr. Huisman for Gas Flue Systemsand Dr. Traxler for Medical Technology and Engineering Plastics.The subsidiaries are allocated to one of the three segments in linewith their product range and the management responsible for them,and consolidated accordingly. Details of which fully consolidatedcompanies in the Consolidated Financial Statements are allocatedto which individual segments are indicated in the presentation ofthe consolidated companies.

The revenues relate principally to deliveries of goods. They are reported net of VAT, returns, discounts and price reductions. The “Gas Flue Systems” segment also includes the figures forCENTROTEC Sustainable AG and CENTROSOLAR (equity invest-ment). Inter-segmental business is priced according to the arm’slength principle. Pricing is comparable to third party transactionsless cost items (in particular distribution costs), which do notoccur in inter-segmental transactions. Income and expenditureare allocated directly to the individual companies within the indi-

vidual segments. The segment expenses and income also includeallocations of expenses for the holding company.

Inter-segmental relationships, i. e. relationships and transactionsbetween the individual segments, are eliminated from the consoli-dation column. This simultaneously reconciles the figures withthose in the Consolidated Financial Statements.

The depreciation and amortisation for the segments represent theloss of value by the segments’ long-term assets, the investments,and the respective additions to the fixed assets and intangible as-sets for the segments.

The segment assets include the fixed assets and current assetsfor each segment. Entitlements to income tax rebates and de-ferred tax assets capitalised are not included.

Reconciliation of assets

Total assets 350,636

Financial investments accounted for using the equity method 23,699

Loans and available-for-sale financial assets 715

Entitlements to income tax rebates 4,596

Total (Assets): 379,646

The segment liabilities include the operating liabilities and provi-sions for each segment. Income tax liabilities, deferred tax liabili-ties and financial debt are not included.

Reconciliation of liabilities

Total liabilities 102,396

Financial debt 121,807

Income tax payable 22,769

Shareholders’ equity 132,674

Total (Equtiy and liabilities): 379,646



25 Statement of Cash Flows

The Consolidated Cash Flow Statement shows how the group’scash and cash equivalents changed in the course of the financialyear under review as a result of cash inflows and outflows. A dis-tinction is made between cash flows from operating activities onthe one hand and cash flows from investing and financing activi-ties on the other. The cash flows from operating activities are determined according to the indirect method, by adjusting theearnings before interest and taxes for non-cash items, changes in working capital (receivables and other assets, inventories and liabilities) and all changes that are allocable to investing and financ-ing activities to produce the cash flow from operating activities. By contrast, the interest result and the income taxes paid arebased on actual cash flows. The financial resources consist al-most exclusively of demand deposits and the availment of currentaccounts with commercial banks. The financial resources arecomposed as follows:

Breakdown of financial resources

in EUR ‘000 31/12/2009 31/12/2008

Cash in hand 25 26

Cash in banks 35,331 22,901

Bank overdrafts (15,640) (18,526)

(included in “Short-term borrowings” item)

Total 19,716 4,401

The cash flow from operating activities showed a year-on-year riseof more than two-thirds in 2009, reaching EUR 45.1 million (previ-ous year EUR 24.8 million). Alongside the substantially reduced in-terest payments, active working capital management was themain factor behind this increase. The cash flow from investing ac-tivities amounted to EUR -18.0 million in 2009, compared withEUR -17.9 million in the previous year. The cash flow from financingactivities of EUR -11.7 million was well down on the prior-year fig-

ure of EUR -4.0 million due to a renewed rise in net repayments.The overall rise in financial resources of EUR 15.3 million in 2009was much sharper than in the previous year (EUR 2.9 million).

Financing streams

in EUR ‘000 2009 2008

Financial resources raised 6,410 51,086

Financial resources repaid (18,454) (55,547)

Change in financial debt (12,044) (4,461)

Interest payment streams

in EUR ‘000 2009 2008

Interest income 834 1,081

Interest expense (6,728) (8,628)

Net interest payment streams (5,894) (7,547)

Cash inflow from asset disposals

in EUR ‘000 2009 2008

Net residual carrying amounts 3,288 629

Gain/loss on asset disposals (184) (226)

Proceeds from asset disposals 3,104 403

Short-term credit facilities to secure constant liquidity have beenarranged with several credit institutions that are independent ofeach other. At the balance sheet date, the available borrowing facilities from current account, guarantee/surety or discount linesand from a free credit facility included amounts to EUR 27.3 million(previous year EUR 18.5 million).

Substantial non-cash transactions result from the change in deferred taxes and the issuance of stock options.



Other particulars

1_Contingent liabilities and miscellaneous particulars

The customary warranty obligations are assumed, for which provi-sions have been formed where claims are probable. In the contextof its ordinary business activities, the company moreover regularlyenters into contingent liabilities from guarantees, cheques and billsof exchange, among other things. Furthermore, contingent liabilitiesmay arise from areas of the group in which there exist statutoryarrangements on partial retirement but for which no provisionshave been recognised, as it is unlikely that employees in those areaswill call upon the existing statutory arrangements. Provisions wereformed for areas in which the probability of use is greater than 50 %. At December 31, 2009 there in addition exists a legal trans-action which may lead to a liability amounting to EUR 2 millionthrough the conditions precedent materialising.

CENTROTEC Sustainable AG releases its designated sponsor, CloseBrother Seydler Bank AG, from liability in connection with its spon-soring activities, subject to this liability not resulting from grossnegligence or intent on the part of the designated sponsor.

Overall, it is assumed that over and above the situations describedhere, no substantial liabilities arose as a result of the contingent liabilities during the audit period, or only to the extent evident inthese Notes.

Further changes

Supplementary notice pursuant to Section 26 (1) of GermanSecurities Trading Law (WpHG):UBS Equity Fund Management Company S.A., Luxembourg, Lux-embourg, notified us on October 28, 2009 pursuant to Section 21(1) of German Securities Trading Law that its share of voting rightsin CENTROTEC Sustainable AG, Brilon, Germany, ISIN:DE0005407506, WKN: 540750, exceeded the threshold of 3 % ofvoting rights on October 22, 2009 and was 3.22 % on that date(equivalent to 536,881 voting rights).

IMPAX Group plc, London, UK, notified us on May 14, 2009 pur-suant to Section 21 (1) of German Securities Trading Law that itsshare of voting rights in CENTROTEC Sustainable AG, Brilon, Ger-many, ISIN: DE0005407506, WKN: 540750, fell below the thresh-old of 5 % of voting rights on April 9, 2009 and was 4.99 % on thatdate (equivalent to 827944 voting rights). 4.99 % of the voting rights(equivalent to 827,944 voting rights) are allocable to the companypursuant to Section 22 (1), first sentence, item 6, second sen-tence of German Securities Trading Law.

IMPAX Group plc, London, UK, notified us on May 14, 2009 pur-suant to Section 21 (1) of German Securities Trading Law that itsshare of voting rights in CENTROTEC Sustainable AG, Brilon, Ger-many, ISIN: DE0005407506, WKN: 540750, exceeded the thresh-old of 5 % of voting rights on April 3, 2009 and was 5.06 % on thatdate (equivalent to 838,561 voting rights). 5.06 % of the voting

rights (equivalent to 838,561 voting rights) are allocable to thecompany pursuant to Section 22 (1), first sentence, item 6, second sentence of German Securities Trading Law.

IMPAX Group plc, London, UK, notified us on May 11, 2009 pur-suant to Section 21 (1) of German Securities Trading Law that itsshare of voting rights in CENTROTEC Sustainable AG, Brilon,Deutschland, ISIN: DE0005407506, WKN: 540750 fell below thethreshold of 3 % of voting rights on April 15, 2009 as a result of aletter of independence for IMPAX Group AG and its subsidiariesand was 0.0 % on that date (equivalent to 0 voting rights).

IMPAX ASSET MANAGEMENT LIMITED, 37-43 Sackville Street,London W1S 3EH, United Kingdom, notified us on April 15, 2009pursuant to Section 21 (1) of German Securities Trading Law thatits share of voting rights in CENTROTEC Sustainable AG, Brilon,Germany, ISIN: DE0005407506, WKN: 540750, fell below thethreshold of 5 % of voting rights on April 9, 2009 and was 4.99%on that date (equivalent to 827,944 voting rights). 4.99 % of thevoting rights (equivalent to 827,944 voting rights) are allocable tothe company pursuant to Section 22 (1), first sentence, item 1 ofGerman Securities Trading Law.

IMPAX ASSET MANAGEMENT LIMITED, 37-43 Sacksville Street,London W1S 3EH, UK, notified us on April 15, 2009 pursuant toSection 21 (1) of German Securities Trading Law that its share ofvoting rights in CENTROTEC Sustainable AG, Brilon, Germany,ISIN: DE0005407506, WKN: 540750, exceeded the threshold of 5 % of voting rights on April 3, 2009 and was 5.06 % on that date(equivalent to 838561 voting rights). 5.06 % of the voting rights(equivalent to 838,561 voting rights) are allocable to the companypursuant to Section 22 (1), first sentence, item 1 of German Secu-rities Trading Law.

2_Significant events occurring after the balance sheet date

No further significant events have occurred at and after the bal-ance sheet date, or only to the extent that they are already repre-sented as such or evident from the remarks in the groupmanagement report.

3_Related party disclosures

Parties are considered to be related if one party has the ability tocontrol the other party or exercise significant influence over the other party’s financial and operating decisions. Pursuant toIAS 24, the members of the Management Board and SupervisoryBoard, close members of their families as well as subsidiaries that are not fully consolidated and equity investments can funda-mentally be considered to be related parties in the case of theCENTROTEC Group. Related parties were not involved in any large,atypical or unusual transactions of the CENTROTEC Group.

I_



Legal transactions with Management Board members and Supervisory Board members (including of listed subsidiariesand affiliated companies)In the event of work remunerated separately, the SupervisoryBoard regularly checks that services rendered on an ad hoc basisby Supervisory Board members involve substantially more thanthat which can normally be expected from a Supervisory Boardmember within the context of their Supervisory Board duties.

The Chairman of the Supervisory Board (Guido A. Krass) holds aparticipating interest in Pari Holding GmbH, Munich (“PH”). PHmight therefore be classified as a “related party”, even though theManagement Board does not believe that control actually existsbetween the parties. Other companies of the Pari Group couldlikewise be classified as “related parties”, for example Pari CapitalAG. As in the previous year, PH performed no services on behalfof CENTROTEC in the financial year.

Dr. Heiss is also a member of the Supervisory Board of CENTROSOLAR Group AG and has concluded a consultancyagreement with it. The framework consultancy agreement en-visages ad hoc consultancy by Dr. Heiss on legal questions arisingin the course of business operations, as well as on special ques-tions. An appropriate remuneration per hour of his services, plusstatutory VAT, is to be paid as consideration. As in the previousyear, Dr. Heiss did not charge any fees for legal consultancy in the financial year. As a member of the Supervisory Board of CENTROSOLAR Group AG, Dr. Heiss received remuneration of EUR 15 thousand (previous year EUR 15 thousand).

As Chairman of the Supervisory Board of CENTROSOLAR GroupAG, Dr. Huisman received remuneration of EUR 20 thousand (previous year EUR 20 thousand).

Legal transactions with the CENTROSOLAR GroupCENTROTEC Sustainable AG passes on management charges tothe CENTROSOLAR Group in essence for operational manage-ment services performed by employees and the management ofCENTROTEC Sustainable AG. These charges are fundamentallypassed on to all subsidiaries of CENTROTEC Sustainable AG and,in the case of the company, relate to such services as consultancyon accounting matters, strategy, legal question, projects, commu-nication and IT. A total amount of EUR 138 thousand (previous year114 thousand) was charged for these by CENTROTEC SustainableAG in the 2009 financial year.

In August 2005 Ubbink B.V., CENTROTEC and Renusol GmbH con-cluded a production agreement. In it, Renusol GmbH commissionsUbbink B.V. exclusively with the production of the module mount-ing systems “ConSole” and “InterSole”. Ubbink B.V. has acquiredthe expertise and the corresponding patents for the modulemounting systems “ConSole” and “InterSole” in the context of theshareholder agreement with Econcern B.V., Ecoventures B.V. andEcostream B.V. The production agreement has been concluded fora fixed term of five years and is thereafter automatically extendedfor one further year if neither party terminates it. The goods sup-

plied by Ubbink B.V. to Renusol are billed as arm’s length transac-tions. Cost accounting factors that are comparable to those ap-plied in third party transactions are used. Cost savings to reflectthe more straightforward communication and processing are gen-erally built into the pricing structure. In the 2009 financial year,the total amount charged for supplies of goods was EUR 9,884thousand (previous year EUR 9,430 thousand).

Ubbink B.V. in addition rebilled CENTROSOLAR Group AG coststotalling EUR 328 thousand (previous year EUR 20 thousand) inthe 2009 financial year and in return CENTROSOLAR Group AGrebilled Ubbink B.V. costs incurred totalling EUR 377 thousand.

CENTROSOLAR in addition supplied Ubbink B.V. and its subsidiarieswith solar modules to the value of EUR 8,872 thousand in arm’slength transactions in the 2009 financial year.

Centrosolar Glas GmbH & Co. KG sold goods to the value of EUR 1,254 thousand (previous year EUR 1,373 thousand) to WolfGmbH in arm’s length transactions during the 2009 financial year.

The group’s total receivables from CENTROSOLAR Group AGamounted to EUR 1,237 thousand (previous year EUR 1,441 thou-sand) at December 31, 2009. This compared with liabilities of EUR 1,253 thousand (previous year EUR 0 thousand) at the bal-ance sheet date.

Other legal transactions with persons who could potentiallybe regarded as related partiesThe private company Immobilien GbR Wülbeck could possibly bequantified as a related party, as Dr. Huisman (Chairman of theManagement Board of CENTROTEC Sustainable AG), Dr. Kirsch(Chairman of the Management Board of CENTROSOLAR GroupAG) and Mr. Wülbeck (Managing Director of Centrotherm System -technik GmbH and of Centrotec Composites GmbH) hold an inter-est in it. The private company erected an industrial building whichis used by Bond Laminates GmbH for appropriate consideration.CENTROTEC holds a 24.95 % interest in Bond Laminates GmbH.

Sauerland Solar Fund GmbH & Co. KG (SSF) could in addition beclassified as a related party. The company is a closed-end fund ofwhich only senior employees and Management Board members ofthe CENTROTEC Group are members. CENTROTEC Sustainable AGhas concluded a service contract with SSF KG.

Relations between the parent company and the subsidiariesThe activities of CENTROTEC Sustainable AG focus essentially onperforming strategic and financial holding functions for the opera-tive affiliated companies, on advising and supporting them for in-dividual projects, and on providing services on behalf of groupcompanies in the areas of accounts, taxes, payroll accounting and data processing. CENTROTEC in addition steers the group finances, coordinates investor relations and provides support forprojects at the subsidiaries, including particularly mergers and acquisitions activities.



Total remuneration of the Management Board The total remuneration of the Management Board members (in-cluding retired members), including the value-assessed options issued in 2009, was EUR 1,752 thousand (previous year EUR 1,941 thousand). The total remuneration comprises non-performance-related and performance-related components andalso includes social contributions and fringe benefits such ascompany cars and pension commitments. The total amount also

Remuneration of the Supervisory BoardThe remuneration of the Supervisory Board amounts to EUR 54thousand (previous year EUR 54 thousand). There were in additionother expenses amounting to EUR 2 thousand (previous year EUR1 thousand).

Management Board member Non-per- Componentsformance- Performance with a long-term Total Totaldependent related incentivising Other remuneration remuneration

component1,4 components4 effect2 remuneration3,4 2009 2008

Members of corporate bodies

Dr. Gert-Jan Huisman 360 1 167 45 573 498

Anton Hans 120 1 83 35 239 187

Alfred Gaffal 277 160 89 7 533 531

Dr. Christoph Traxler 286 0 82 4 372 345

Pieter van der Poel (until December 23, 2008) 0 0 0 0 0 247

Martin Beijer (until April 1, 2008) 0 0 0 0 0 82

Retired members 0 0 7 28 35 51

Total 1,043 162 428 119 1,752 1,941

1 Incl. employer’s social contributions2 Valued options3 Expense for pensions, company cars and other4 Current component

includes the expense incurred in 2009 for options granted, whichhave a theoretical value of EUR 428 thousand (previous year EUR 304 thousand). The remuneration of the Management Boardis shown according to member in a separate remuneration report,in keeping with the criteria of the Corporate Governance Code.The remuneration of each individual Management Board memberis shown in the following table:

Directors’ holdings The following table shows directors’ holdings at the balance sheetdate.

31/12/2009 31/12/2008

Management Board Shares (total) Options (total) Shares (total) Options (total)

Dr. Gert-Jan Huisman 78,704 225,023 65,264 187,037

Anton Hans 0 53,593 0 31,000

Alfred Gaffal 7,000 117,931 7,000 92,931

Dr. Christoph Traxler 5,140 159,456 3,175 137,330

Supervisory Board

Guido A Krass 2,400,000 0 2,400,000 0

Dr. Bernhard Heiss 45,550 0 10,000 0

Christian C. Pochtler 0 0 0 0

CENTROTEC

Ordinary shares 16,716,262 0 16,582,116 0

Treasury stock 12,080 0 12,080 0



The stock options have been issued on the same terms and condi-tions as to the other employees.

Management Board and Supervisory BoardMembers of the Management Board: Dr. Gert-Jan Huisman, Nijkerk, Netherlands, merchant (Chairman)Anton Hans, Apeldoorn, Netherlands, merchant Alfred Gaffal, Mainburg, Germany, merchant Dr. Christoph Traxler, Fulda, Germany, physicist

Members of the Supervisory Board:Guido A Krass, Zurich, Switzerland, entrepreneur (Chairman)Dr. Bernhard Heiss, Munich, Germany, entrepreneurChristian C. Pochtler, MA, Vienna, Austria, entrepreneur

The following members of the Management and Supervisory Boardsalso hold other non-executive directorships as defined in Section125 (1), third sentence of German Stock Corporation Law:

Guido A Krass PACT Technologies AG, Munich, GermanyWolf GmbH, Mainburg, Germany medimondi AG, Fulda, Germany (Chairman)

Dr. Bernhard Heiss Trailer International GmbH, Pullach, Germany (Chairman) Langenscheidt KG, Munich (Deputy Chairman of Advisory Board)Altium Capital AG, Munich, Germany CENTROSOLAR Group AG, Munich, Germany

Christian C. Denzel AG, Vienna, AustriaPochtler, MA PP Capital AG, Vienna, Austria (Chairman)

Dr. Gert-Jan Huisman CENTROSOLAR Group AG, Munich, Germany (Chairman)

Anton Hans medimondi AG, Fulda

Alfred Gaffal Wolf Iberica S.A., Madrid, Spain (President of Board of Directors)Wolf France S.A.S., Massy, France (Member of Board of Directors)

Dr. Christoph Traxler Rolf Schmidt Industriplast A/S, Kolding, Denmark (Chairman)bricon ag, Dietikon, Switzerland (President of Board of Directors)

4_Corporate Governance Code

Pursuant to Section 161 of German Stock Corporation Law, theManagement Board and Supervisory Board of a company listed onthe stock exchange are obliged to declare once a year whetherand to what extent the code has been and is complied with.

The Management Board and Supervisory Board of CENTROTECSustainable AG have declared the extent to which the recommen-dations of the Government Commission on the German CorporateGovernance Code are complied with by the respective companies.The regularly submitted declarations and explanations are perma-nently available on the website of CENTROTEC Sustainable AG.We moreover make reference to the comments elsewhere in thisAnnual Report.

5_Independent auditors’ fees

The auditors of CENTROTEC are PricewaterhouseCoopers AG. Theamounts shown below do not contain the fees for other auditorsof group subsidiaries.

Expenses for auditor PwC

in EUR ‘000 2009 2008

Expenses for auditing of the financial statements 401 368

Other certification or consultancy services 0 21

Tax consultancy services 0 3

Other services 0 0

Total expenses 401 392

6_Date and authorisation for issue of the financial statements

The financial statements were approved by the ManagementBoard and authorised as a whole for issue on March 24, 2010.

Once approved and ratified by the corporate bodies and followingtheir publication, these financial statements may only be amendedto the extent that is permissible by law.

Brilon, March 24, 2010

Dr. Gert-Jan Huisman, Chairman

Anton Hans

Alfred Gaffal

Dr. Christoph Traxler



Independent Auditors’ Report

We have audited the consolidated financial statements prepared byCentrotec Sustainable AG, Brilon - comprising the statement of financial position, the income statement, the statement of com-prehensive income, the statement of movements in equity, thestatement of cash flows and the notes - for the financial year fromJanuary 1 to December 31, 2009. The preparation of the consoli-dated financial statements and group management report in ac-cordance with IFRS, as adopted by the EU, and the additionalrequirements of German commercial law pursuant to Section315a (1) of German Commercial Code, is the responsibility of thecompany’s Management Board. Our responsibility is to express anopinion on the consolidated financial statements and group man-agement report based on our audit.

We conducted our audit of the consolidated financial statementsin accordance with Section 317 of German Commercial Code andGerman generally accepted standards for the audit of financialstatements promulgated by the Institute of Public Auditors in Ger-many (IDW). Those standards require that we plan and performthe audit such that misstatements materially affecting the presen-tation of the net assets, financial position and financial perform-ance in the consolidated financial statements in accordance withthe applicable financial reporting framework and in the groupmanagement report are detected with reasonable assurance.Knowledge of the business activities and the economic and legalenvironment of the group and expectations as to possible mis-statements are taken into account in the determination of auditprocedures. The effectiveness of the accounting-related internalcontrol system and the evidence supporting the disclosures in theconsolidated financial statements and the group management re-

port are examined primarily on a test basis within the framework ofthe audit. The audit includes assessing the annual financial state-ments of those entities included in consolidation, the determina-tion of the entities to be included in consolidation, the accountingand consolidation principles used and significant estimates madeby the Management Board, as well as evaluating the overall presen-tation of the consolidated financial statements and the group man-agement report. We believe that our audit provides a reasonablebasis for our opinion.

Our audit has not led to any reservations.

In our opinion, based on the findings of our audit, the consolidatedfinancial statements comply with the IFRS as adopted by the EU,and the additional requirements of German commercial law pur-suant to Section 315a (1) of German Commercial Code, and give atrue and fair view of the net assets, financial position and resultsof operations of the group in accordance with these requirements.The group management report is consistent with the consolidatedfinancial statements and as a whole provides a suitable view ofthe group’s position and suitably presents the opportunities andrisks of future development.

Essen, April 7, 2010

PricewaterhouseCoopersAktiengesellschaftWirtschaftsprüfungsgesellschaft

Ben Buitung ppa. Matthias Schwarze-Gerland(German Public Auditor) (German Public Auditor)


134 Financial calendar

Financial calendar 2010March 25 DFVA Analysts and Press Conference/Publication of Annual Report 2009

Frankfurt/MainMay 12 Publication of Quarterly Report 01/2010May 20 Annual Shareholders’ Meeting

BrilonAugust 12 Publication of Quarterly Report 02/2010November 11 Publication of Quarterly Report 03/2010November 22 – 24 German Equity Forum

Frankfurt/Main



CAGR +26 % p. a.

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010(e)

7498 116 135 153

467

480- 500

396 406

476


CAGR +17 % p. a.


CAGR +15 % p. a.

EPS*[in EUR]


2001 2002 2003 2004 2005 2006 2007 2008 2009 2010(e)

13.4 15.619.4

23.2 23.0

46.6

30.3

43.648.8

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010(e)

9.3 9.7

13.2

18.3 17.7

29.030-32

12.5

27.6

32.2

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010(e)

0.360.27

0.530.65 0.70**

1.10-1.201.13

1.21.3

1.4

0.9

0.5

1.1 1.1

0.90.7






Changes2005 2006 2007 2008 2009 2008 to 2009



Climate Systems 39,594 110,024 274,111 319,308 309,524 (3.1 %)

Gas Flue Systems 70,202 80,310 96,359 118,822 128,111 7.8 %


Solar Systems **** 16,662 172,184 0 0 0 0 %

Earnings

EBITDA 22,963 30,325 43,622 48,808 46,641 (4.4 %)

EBIT 17,698 12,525 27,552 32,171 29,037 (9.7 %)

EBIT yield (in %) 11.6 3.2 6.8 6.8 6.2

EBT 22,477 16,851 18,463 25,785 12,727 (50.6 %)

EAT 17,953 15,298 16,501 18,635 5,216 (72.0 %)

EPS (in EUR; basic) ***2.26 ***1.76 1.01 1.13 0.33 (70.8 %)




Equity ratio (%) 47.6 30.3 30.1 33.8 34.9



Goodwill 55,310 118,867 60,482 60,911 60,914 0.0 %



Cash flow statement




Employees 31/12

Total (in FTE) 1,124 2,745 2,390 2,605 2,614 0.3 %

Shares

Number of shares** 7,955 8,134 16,427 16,525 16,610




* Quotation in EUR




48-50

0.80**

1.01

2001 2002 2003 2004 2005 2006 2007 2008 2009

Imprint






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Share price[in EUR]

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

2.13

18.24

3.24

IPO price



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