HANIEL ANNUAL REPORT 2012haniel.unternehmensberichte.net/haniel/annual/2012/...We accelerated the...

VALUES DRIVE CHANGE

HANIELANNUALREPORT2012

WE

HANIEL IS A SUCCESSFUL INTERNATIONAL GROUP OF COMPANIES WITH FIVE DIVI-SIONS WHICH OPERATE INDEPENDENTLY FROM ONE ANOTHER ON THE MARKETS. THE HOLDING COMPANY, FRANZ HANIEL & CIE. SHAPES THE PORTFOLIO AND IS RESPONSIBLE FOR THE STRATEGIC MAN-AGEMENT OF THE GROUP. IN ADDITION, IT SETS OUT THE GUIDELINES FOR CROSS-DIVISIONAL HUMAN RESOURCES ACTIVI-TIES. HANIEL IS GUIDED BY THE GENERAL PRINCIPLES OF GOOD CORPORATE GOV-ERNANCE. WWW.HANIEL.COM

As of 7 March 2013

THE HANIEL GROUP

CWS-boco ranks among the leading interna-tional service providers of washroom hygiene products, dust control mats and textile ser-vices. CWS-boco is located in 17 European countries as well as in a subsidiary in China. Depending on the sector they operate in, CWS-boco’s customers are provided with inno-vative, sustainable solutions tailored to their specifi c needs. The CWS offering comprises a large number of modern hygiene systems and products, including the well known towel, soap and fragrance dispensers, as well as innovative dust control solutions. The boco product port-folio ranges from industrially launderable work and business wear through customer-specifi c corporate fashion collections to protective and safety clothing. www.cws-boco.com

ELG is one of the world’s leading specialists in trading and recycling raw materials, in par-ticular for the stainless steel industry. The product range primarily comprises stainless steel and superalloys. The customers receive the material in exactly the composition they need for further processing – just in time and in accordance with the highest quality standards. With more than 40 locations in North America, Europe, Asia and Australia, ELG operates a global network. On-site representatives ensure fast and personalised service. www.elg.de

TAKKT is the market-leading B2B direct market-ing specialist for business equipment in Europe and North America. Its two divisions, TAKKT EUROPE and TAKKT AMERICA, have operations in more than 25 countries and offer a com-bined assortment of more than 200,000 items from hundreds of suppliers. Customers thus obtain all of the equipment they need for their businesses from a single source. Thanks to a sophisticated logistics system, the majority of the offered goods are on their way to the cus-tomer within 24 hours. www.takkt.com

WHOLLY-OWNED INVESTMENT

EUR million 2011 2012

Revenue 748 757

Operating profi t 41 58

Annual average number of employees (headcount) 7,816 7,643

WHOLLY-OWNED INVESTMENT


Revenue 2,721 2,364



MA JORIT Y INVESTMENT OF 70.44%


Revenue 852 940



Celesio is a leading international trading com-pany and provider of logistics and services in the pharmaceutical and healthcare sectors, ensuring optimal supplies and care for patients’ acute and preventive needs. Celesio delivers daily proof of its performance along the value chain in 16 countries. Through about 2,200 own and 4,500 partner and brand partner pharma-cies, Celesio serves over 2 million customers a day. Celesio’s 136 branches supply roughly 65,000 pharmacies and hospitals with upwards of 130,000 medicines. www.celesio.com

METRO GROUP is among the premier inter-national merchandisers. It is headed by the Holding Company, METRO AG, in which Haniel directly or indirectly holds 30.01 per cent of the voting shares. The operating business of METRO GROUP is divided into four sales divisions, which act autonomously in the markets: Metro Cash & Carry, Real, Media-Saturn and Galeria Kaufhof. These sales divisions are represented at more than 2,200 locations in 32 countries in Europe, Asia and Africa. There is also METRO PROPERTIES, which manages METRO GROUP’S real estate assets. www.metrogroup.de

MA JORIT Y INVESTMENT OF 50.01%


Revenue 22,153 22,271



MINORIT Y INVESTMENT OF 30.01%


Haniel investment result 329 -1,523

SUMMARY OF THE CONSOLIDATED FINANCIAL STATEMENTS

EUR million 2011* 2012 Change See page

Revenue and profi ts

Revenue 26,473 26,331 -1% 37

Operating profi t 400 496 +24% 37

Profi t before taxes 463 -1,483 <-100% 38

Profi t after taxes 236 -1,896 <-100% 38

Cash fl ow

Haniel cash fl ow 436 440 +1% 38

Cash fl ow from operating activities 813 519 -36% 38

Capital expenditure 469 740 +58% 39

Dividend of Franz Haniel & Cie. GmbH 60 50 -17% 124

Statement of fi nancial position

Total assets 16,706 14,416 -14% 39

Equity 6,347 4,500 -29% 39

Debt/equity ratio (in per cent) 38% 31%-7 percentage

points 39

Net fi nancial liabilities 4,855 4,860 +0% 39

Employees

Annual average number of employees (headcount) 57,828 56,480 -2% 55

HANIEL KEY FIGURES

* Prior-year fi gures adjusted in accordance with IFRS 5; see the explanations in the notes to the consolidated fi nancial statements on page 92 f.

REVENUE REMAINS STEADY. IM-PROVED OPERATING PROFIT. HANIEL HOLDING COMPANY ACCEL-ERATED DEBT REDUCTION. ELG SEES WEAK BUSINESS ENVIRON-MENT. TAKKT GROWS THROUGH ACQUISITIONS. REPOSITIONING OF CWS-BOCO YIELDS ADDITIONAL RE-WARDS. PORTFOLIO MEASURES IM-PACT CELESIO AND METRO. METRO INVESTMENT DEVALUED.

STRATEGIC REALIGNMENT MAKES PROGRESS.

LETTER FROM THE CHAIRMAN

Dear Sir or Madam,

When I took over as Chairman of Haniel last August I joined a com-pany that faced great challenges. The analyses at the time showed that action was needed on both the Holding Company and divisional levels; however, many of the changes had already been initiated. The CWS-boco division was working towards the next stage of its repositioning project, as was METRO GROUP. Celesio was prepar-ing the divestment of interests in companies, while TAKKT had just made an important acquisition and ELG was expediting the expansion of new business models. Lest we forget, Haniel Hold-ing Company had newly restructured its tasks so that it could also contribute to the Group’s long-term value enhancement as a “value developer”.

A full-scale inventory control and numerous on-site discussions at the various divisions confirm the strategic path taken. The changes initiated are the right ones and they continue to remain crucial to the success of the Company. For that reason the Managing Board, even under new leadership, is tackling the pending tasks with full force.

First, Franz Haniel GmbH’s debt burden is being reduced to ensure that the Company is able to operate again – the quicker the better. Second, it is important to further develop the existing divisions, albeit within reason so as not to jeopardise the consolidation of the Group. These two tasks have the top priority. In the medium-term the focus will again be further developing the Haniel portfolio over-all with the goal of sustainable value enhancement.

A LOOK BACK ON FINANCIAL YEAR 2012The strategic realignment set in motion at the Group continued to gain momentum. At CWS-boco, the Future Focus repositioning project continues to proceed according to plan and profits were boosted considerably. ELG’s core stainless steel business (which is also dependent on the economy) felt the effects of the low com-modity prices. In contrast, the business with processed superal-loys developed positively and progress was also made with the recycling of carbon fibres. Although the two business areas are still in their early stages, both show the way into the future.

HANIEL ANNUAL REPORT 2012

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The business performances of our exchange-listed divisions were also rather inconsistent. In acquiring Ratioform, a direct marketing supplier for packaging, and GPA, a direct marketing specialist for display articles in the US, TAKKT sensibly expanded its portfolio. In addition, a programme by the name of DYNAMIC was launched with the goal of establishing the multi-channel approach at all TAKKT companies in order to improve customer outreach. The year for Celesio was characterised by the strategic realignment. For exam-ple, Movianto, Pharmexx and the mail-order pharmacy DocMorris were sold. At the same time, Celesio is strengthening its core businesses of wholesale and pharmacies, with the latter in par-ticular being enhanced by a new, Europe-wide pharmacy concept. METRO GROUP continues to operate in a difficult business environ-ment. However, the Group also saw important changes in 2012. For example, the division severed its ties with the Cash & Carry busi-ness in the United Kingdom and signed an agreement to sell Real in Poland, Russia, Romania, and Ukraine.

We accelerated the debt reducing measures on the level of the Haniel Holding Company. In line with these measures, the invest-ment in Celesio AG was reduced to 50.01 per cent. In addition, we also announced our decision to reduce our equity investment in Metro AG – and we put this decision into action. Our current interest of 30.01 per cent has enabled us to maintain our strategic influence over Metro, as well as over Celesio. Both companies remain anchor investments in our portfolio.

The year in terms of the operating business for the entire Haniel Group was rather satisfactory. However, profit before taxes was considerably lower compared to the previous year. This is primarily attributable to our Metro investment: its adjusted carrying amount accounts for the fundamental business planning, which assumes a weaker business development for the METRO Group in the future. The associated significant book losses are unavoidable – but Haniel nevertheless maintains solid financial statements.

ADVANCING CHANGEThe motto for 2013 is clear: At Haniel we have to finish what we started and systematically conclude the strategic realignment. We will also face challenges in the current financial year: The macro-economic indicators do not leave much room for optimism. Unemployment is rising, the German purchasing managers’ index (Einkaufsmanagerindex), which is significant for us, does not indi-cate a sustained recovery, and no one currently knows how long the phase of low interest rates will last.

In an economic environment such as this, we must act particularly prudently and simultaneously with a high degree of purpose. Espe-cially given the fact that although we saw individual divisions make headway for companies, these were nonetheless undermined by the weakening global economy. It is exactly for this reason that the Company must adapt to the changing conditions and seize the rel-evant trends as quickly as possible. This change is about pragmatic necessity and strategic prudence.

I am confident that our adjustments will succeed, because change, so to speak, is in Haniel’s genes – it is the DNA of the Company. All one needs to do to see this is to look at the Company’s beginnings two centuries ago: Franz Haniel worked hard for 13 years to mine valuable bituminous coal from great depths in the Ruhr region. Ulti-mately he succeeded in transforming a small, colonial commodi-ties trading business in Ruhrort into a leading industrial company. Skilled business managers later revamped the portfolio once again, pulling out of the mining industry in the 1970s to instead invest in trade and services. That, too, was a pragmatic adjustment in response to a changing world.

It is this willingness to make business changes that I am witness-ing throughout the Haniel Group even today, from the management team to our employees as well as in our shareholders’ bodies and the Supervisory Board. I would like to thank all of you for the high degree of support you have shown the Managing Board to date. Even if the coming year is sure to still include several challenges for Haniel, we are looking forward to our continued collaboration and are confident that together we will succeed in getting Haniel back on track to sustainable, prosperous growth.

Duisburg, 7 March 2013

Stephan GemkowChairman of the Managing Board

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CONTENTS

58CONSOLIDATED FINANCIAL STATEMENTS

62 STATEMENT OF FINANCIAL POSITION

64 INCOME STATEMENT

65 STATEMENT OF COMPREHENSIVE INCOME

66 STATEMENT OF CHANGES IN EQUITY

67 STATEMENT OF CASH FLOWS

68 SEGMENT REPORTING

70 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

70 GENERAL BASIS OF PRESENTATION

80 NOTES TO THE STATEMENT OF FINANCIAL POSITION

102 NOTES TO THE INCOME STATEMENT

106 OTHER NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

8GROUP

8HIGHLIGHTS 2012

10VALUES DRIVE CHANGE

34GROUP REPORT OF THE

MANAGING BOARD

49SUPPLEMENTARY REPORT

50OPPORTUNITIES AND RISKS

55EMPLOYEES

56OUTLOOK

37BUSINESS REVIEW

37HANIEL GROUP

40HOLDING COMPANY: FRANZ HANIEL & CIE.

41CWS-BOCO

42ELG

44TAKKT

45CELESIO

47METRO GROUP

24THE MANAGING BOARD

26REPORT OF THE SUPERVISORY BOARD

28THE SUPERVISORY BOARD

29CORPORATE GOVERNANCE

31CORPORATE RESPONSIBILITY

130 RESPONSIBILITY STATEMENT

131 AUDITORS’ REPORT

132 GLOSSARY

136 CONTACT

138 IMPRINT

HIGHLIGHTS2012

In May, the Haniel Shareholders’ Meeting passed a significant amendment in the Supervisory Board: For the first time, the board would open a shareholder seat to an external member who is neither a repre-sentative of the family nor of Haniel. Prof. Henning Kagermann, the former spokes-man for the Executive Board of SAP AG, was chosen to fill the seat. Prof. Kagermann, an experienced executive, has lent his expertise to the Supervisory Board since 27 November 2012.

On 7 March, CWS-boco unveiled its intel-ligent CWS Washroom Information Service (WIS). Dispensers with this system alert facility managers by radio transmission when cloth towel rolls are nearly used up, for example. In addition, CWS-boco offers long-time reports providing information on the use of rolls or user frequency.

In late June, CWS-boco opened a high-tech laundry in Neuss, Germany, which is particularly resource-efficient. For exam-ple, textiles are generally washed in a lower temperature range at an average of 55°C – without negatively impacting qual-ity. An IT system monitors and records the water and energy consumption of the entire laundry in real-time. In the new laun-dry, up to 32,000 articles of workwear are cleaned by approximately 180 employees every day. An additional high-tech laundry is opened in Riga, Latvia, in September.

In September, CWS-boco added two elec-tric vehicles to its service fleet. As part of the Dortmund research project entitled “ELMO – Elektromobile Urbane Wirtschafts-verkehre” (Electromobile Urban Transport), the vehicles will be on the road in Bochum and Solingen over the next five years. The objective of the field tests, which are being funded by the German Federal Min-istry of Transport, is to assess whether electric motors are well suited for delivery transport.

In June, ELG brought a photovoltaic power plant online in Duisburg. The plant boasts over 10,000 m2 of utilised roof area and a peak output of 924 kW, making it one of the five largest plants in Duisburg. ELG will use the plant to cover more than a third of its energy requirements for the company’s offices while also reducing CO2 emissions by up to 750 tons per year.

In September, ELG Utica Alloys combined its superalloy recycling operations at a new U.S. location in Herkimer, New York. Scrap pieces and shavings of the valuable materials – which are used in air plane tur-bines, for instance – can be processed in the extensively modernised plant. The new location puts ELG in a position to increase efficiency and quality in this growing field.

Stephan Gemkow became the new Chairman of the Executive Board and Chief Human Resources Officer of Franz Haniel & Cie. GmbH on 1 August. Over the past 20 years, Gemkow held various management positions in the Luft-hansa Group, most recently, spending six years as a member of the Executive Board responsible for finances and, starting in 2009, for the subsidiaries Cargo, Technik, LSG Sky Chefs and Systems as well.

In late November, Haniel passed an exten-sive packet of measures to reduce debt and also took the first step towards achiev-ing this – the holdings in Celesio AG were reduced from 54.64 per cent to 50.01 per cent, thus generating revenue of approxi-mately EUR 100 million. Additionally, Haniel announced that the Metro holding would be reduced to 30.01 per cent. Both holdings remain anchor investments in the Haniel portfolio.


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HANIEL CWS-BOC0 ELG

With effect from 1 April TAKKT acquired the company GPA, the leading B2B direct mar-keting supplier for display products in the USA. The acquisition strengthened TAKKT’s U.S. portfolio and dramatically expanded its e-commerce competence. GPA gener-ates some 80 per cent of its revenue online.

In May, TAKKT presented a sustainability report entitled “Well on our way”, based initially on the standards from the Global Reporting Initiative (GRI). The report is based on the sustainability management programme, which has been a permanent corporate objective at TAKKT since 2011. The programme bundled all CR activities in the division and organised them system-atically; it also defined environmental, eco-nomic and social action areas.

Effective as at 1 July, TAKKT acquired Ger-many’s leading multi-channel mail-order vendor for packaging solutions: Ratioform, headquartered in Pliening, Germany, near Munich. In doing so, TAKKT responded to the increasing significance of online sales, which have led to rising demand for trans-port packaging.

On 26 April, Celesio announced the acqui-sition of the remaining 49.9 per cent share of Panpharma, a Brazilian pharmaceutical wholesale company. Celesio thus intends to play a larger role in Brazil’s growth going forward. Originally, a full acquisition was to be completed by 2015.

In July, Celesio sold Pharmexx, a personnel and marketing service provider, as part of the strategic realignment focussing on the core businesses – wholesale and pharma-cies. In August, both the wholesale and pharmacy businesses in the Czech Repub-lic and Movianto, a logistics company, fol-lowed. The mail-order pharmacy DocMorris was sold in November; additionally, Celesio announced the sale of its Irish pharmaceu-tical wholesale subsidiary.

Also as part of the strategic realignment, Celesio presented its concept for a new European pharmacy network in December. The plan comprises three main elements: Firstly, opening about 2,200 Celesio-owned pharmacies across Europe under the brand name “Lloyds”; secondly, a new pharmacy paradigm with innovative ser-vice models, high-quality products and state-of-the-art technologies; and thirdly, a model for cooperating with independent pharmacies in Europe.

On 16 January, Media Markt began multi-channel sales and now offers even more flexibility for shoppers in Germany; for instance, customers can order electronics online at www.mediamarkt.com and pick them up from a near-by location the same day. Customers can also purchase services such as the installation of electronic both online and in stores.

On 30 May, METRO GROUP announced the sale of the Cash & Carry business in the U.K. to Booker Group Plc., a leading whole-sale grocery vendor in the U.K. In exchange, METRO GROUP received a 9.99 per cent shareholding in Booker paid out at that time and a cash payment of GBP 15.8 million.

On 30 November, METRO GROUP signed a sales agreement exceeding EUR 1.1 bil-lion for Real in eastern Europe. In doing so, METRO GROUP brought into focus Real’s business in Germany and the vibrant growth of the Cash & Carry business in eastern Europe.

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TAKKT CELESIO METRO GROUP

VALUES DRIVE

As so many times before in the Company’s more than 255-year history, Haniel is cur-rently undergoing profound changes. Firmly entrenched principles lead the way through these dynamic times and ensure that we main-tain our balance: the Haniel values. They out-line the requirements we set for ourselves.

CHANGE

WE THINK IN GENERATIONS

01/

We think in generations

Our history as a family-owned company that has been successful for centuries shapes our long-term thoughts and actions.

Franz Haniel (1779 – 1868), the grandson of the Com-pany’s founder, was the embodiment of the “honour-able businessman” and an enduring role model. With great foresight he invested in advanced business areas while having the presence of mind to combine business acumen with community spirit. At the same time, he was about respecting the achievements of past generations while taking responsibility for future generations. It is in this spirit that we feel beholden to the Haniel family and will fulfil their mission.

THE TR ANSFORMATION OF VALUES

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WE CREATE VALUE

02/


15

We create value

Our sustained value-enhancing corporate governance ensures our economic success – which both obliges and enables us to create social value.

Our shared duty is to increase the value of the Com-pany – through a value-oriented management style, by actively structuring our portfolio and by focusing on emerging markets worldwide. Our long-term economic success always takes precedence over short-term gains.

03/WE ASSUME RESPONSI-BILITY


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We assume responsibility

It is our task to harmonise economic, ecological and social objectives.

We believe that we have a responsibility towards the society in which we work and live, which is why we take the public good into consideration in every business decision we make. The goal is balancing economic, eco-logical and social objectives: “people, planet, profit”. This is also what we require of our divisions, business partners and service providers.

WE ACT IN AN ENTRE-PRENEURIAL MANNER

04/


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We act in an entrepreneurial manner

We stand out at all corporate levels by acting in a forward-looking manner with a pronounced desire to shape change.

Every employee at Haniel is encouraged to act in an entrepreneurial manner – regardless of his or her posi-tion in the Company. This goes hand-in-hand with the opportunity and responsibility to voice one’s own opin-ion, to provide constructive criticism and to be assertive and take the initiative when working on projects. We are convinced that everyone in the Company acting as an entrepreneur leads to well thought out and responsible decisions at all levels, and thus everyone’s success.

WE SHAPE CHANGE

05/


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We shape change

We see change as an opportunity for sustained growth – but instead of allowing ourselves to be led by events, we actively shape markets.

We are constantly learning and making improvements, a process we support by effectively managing the new knowledge we acquire. Our employees are forward-thinking, open to new ideas and identify new devel-opments and trends early. We invest in the business areas of the future, confidently strike out on new paths and, when necessary, choose unconventional solu-tions. We flexibly adapt our processes and structures to the changing conditions while always maintaining our eyes on long-term value enhancement.

WE SUPPORT OUR STAFF

06/


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We support our staff

To enable our staff to contribute their creativity and skills to corporate success in the best possible man-ner, we call for and promote these by means of trusting dialogue.

It is people who, through their commitment, creativity and expertise, advance our Company. By allowing our staff great creative leeway and providing them with a work environment that optimally fosters individual effort and teamwork, we enable our staff to contribute their skills to corporate success in the best possible manner. Moreover, we support our employees in harmo-nising their careers with their individual personal lives.

THE MANAGING BOARD

DR FLORIAN FUNCKBorn 1971

Dr Florian Funck has been a member of the Haniel Managing Board since 1 September 2011. He is responsible for Corporate General Services, Corporate Controlling, Strategic Planning & Account-ing, Corporate Finance and Corporate Tax. As a doctor of business administration he began his career at Haniel Holding in 1999. ln June 2004, he was appointed to the TAKKT Managing Board in Stuttgart, where he was responsible for Controlling and Finance. Funck is a member of the Supervisory Boards of Celesio AG, Metro AG, and TAKKT AG.

STEPHAN GEMKOWCHAIRMAN OF THE MANAGING BOARDBorn 1960

Stephan Gemkow has been Chairman of the Haniel Managing Board and Chief Human Resources Officer since 1 August 2012. He is responsible not only for overall strategy, but also for Corporate Development/M&A, Human Resources, Corporate Legal, Internal Audit, Shareholders + Sustainability and Corporate Communica-tions. After spending the first years of his career as a management consultant for BDO Deutsche Warentreuhand AG, the business graduate has held various management positions at the Lufthansa Group since 1990, most recently spending six years as a member of the Executive Board responsible for finances and, since 2009, for Aviation Services as well. Gemkow is Chairman of the Supervi-sory Board of Celesio AG and TAKKT AG and sits on the Supervisory Board of Evonik Industries AG as well as on the Boards of Directors of the Amadeus IT Group and JetBlue Airways Corporation. He is also a member of the Commission of Exchange Experts.

HANIEL’S MANAGING BOARD IS COMPOSED OF TWO MEMBERS WHOSE RESPONSIBILITIES ARE CLEARLY DEFINED. NEVERTHELESS, THEY WORK CLOSELY TOGETHER AND MANAGE THE COMPANY AS A TEAM.


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As of 7 March 2013

REPORT OF THE SUPERVISORY BOARD

Dear Sir or Madam,

The family-owned company Haniel initiated and implemented im-portant changes in the previous year. The Supervisory Board ad-vised the Managing Board in this regard during four ordinary and six extraordinary meetings. Specifically, for example, these meetings concerned Celesio’s sale of Movianto, Pharmexx and the mail-order pharmacy DocMorris or TAKKT’s acquisition of Ratioform, a service provider for packaging solutions. Furthermore, in an extraordinary meeting on 26 November 2012 the Supervisory Board approved an extensive packet of measures to reduce the Holding Company’s debt burden, which included lowering the Celesio investment to 50.01 per cent and also provided for reducing the investment in Metro AG by 4.23 percentage points, without diminishing the stra-tegic significance of either investment.

CHANGES TO THE MANAGING BOARD AND SUPERVISORY BOARDIn addition to new course settings pertaining to Franz Haniel & Cie. GmbH’s investments, an important personnel decision was made in the previous year: In an extraordinary meeting on 27 April 2012,

the Supervisory Board appointed Stephan Gemkow to succeed Prof. Jürgen Kluge as the new Chairman of the Supervisory Board as at 1 August. The Company has gained an outstanding businessman in Mr Gemkow who, with his experience in managing portfolio compa-nies and his financial background, is an ideal match for Haniel and the tasks that lie ahead. We would like to thank Prof. Kluge for the valuable contributions he made to our group of companies.

As at 30 April 2012, Prof. Klaus Trützschler stepped down from the Managing Board for age reasons. He used his excellent business expertise to steer the Company through difficult phases during the past eleven years. We thank Prof. Trützschler for being proficient, his willingness to always compromise, and working in a construc-tive manner.

The Supervisory Board also underwent personnel changes: Chris-tian Graf von Dürckheim stepped down from the Supervisory Board as at the Shareholders’ Meeting on 28 April 2012. He had been a member of the Supervisory Board since 1988. In addition to ex-pertly advising the Company while always maintaining an eye on the future, he made significant contributions to establishing the Haniel art collection. Prof. Kay Windthorst assumed Mr Graf von Drückheim’s seat. Prof. Windthorst, a university professor of public law and family companies law, has been a member of Franz Haniel & Cie. GmbH’s Advisory Board since 2003.

On 15 November 2012, Jürgen Libbert vacated his seat. He had been a member of the Supervisory Board since 1983 and Deputy Chairman since 1988. His contributions to the development of the family-owned company were always crucial and positive. He was also a strong proponent of the idea of including external members on the Supervisory Board of Franz Haniel & Cie. GmbH in addition to representatives of the family. The family’s decision to open a share-holder seat on the Supervisory Board to an external member – nei-ther a representative from the family nor Haniel – culminated with the appointment of Prof. Henning Kagermann. As the former spokes-man for the Executive Board of SAP AG, he has proven to be excellent addition to our Supervisory Board since 27 November 2012.

TRUSTING DIALOGUEAs in years past, the cooperation between the Supervisory Board and the Managing Board was characterised by an atmosphere of great openness and mutual trust. The Managing Board informed us regularly about the status of the Haniel Holding Company and the Group as a whole – also with regard to important individual events. In accordance with my duty as Chairman of the Supervisory Board of Franz Haniel & Cie. GmbH, beyond the normal meetings, I am also in regular contact with the entire Managing Board and primarily with the Chairman. We discussed important business and strategic issues affecting the group.

The Supervisory Board continually and carefully monitored the group of companies’ management and business development based on regular written and oral reports of the Managing Board. We examined in depth all the decisions requiring our consent.


26

The Audit Committee held four meetings in the 2012 reporting pe-riod. It monitored the accounting process and the effectiveness of the internal control system, the risk management system, the Internal Auditing office, and the compliance system. Moreover, the committee examined and confirmed the independence of the au-ditor of the financial statements, and resolved, in its meeting on 16 March 2012, to recommend to the Shareholders’ Meeting to re-appoint the previous auditor.

ANNUAL SEPARATE AND CONSOLIDATED FINANCIAL STATEMENTS APPROVEDPricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprüfungs-gesellschaft, Essen, audited the annual financial statements of Franz Haniel & Cie. GmbH and the Report of the Managing Board for the 2012 financial year. The auditors confirmed that the annual fi-nancial statements and Report of the Managing Board comply with legal provisions and the Company’s articles of association. The au-ditors issued an unqualified auditors’ report on the annual financial statements and the Report of the Managing Board. The auditors also issued an unqualified auditors’ report on the consolidated fi-nancial statements and the Group Report of the Managing Board. The auditors participated in the Supervisory Board’s meeting on the financial statements and at all meetings of the Audit Commit-tee. Furthermore, the Supervisory Board again engaged the audi-tors to evaluate the Haniel Group’s early risk identification system. This voluntary examination was conducted in accordance with sec-tion 317 (4) of the German Commercial Code (Handelsgesetzbuch, “HGB”). The auditors verified the suitability of the system to detect early any risks endangering the going concern assumption.

The Managing Board submitted the consolidated financial statements, the Group Report of the Managing Board and the Group auditors’ report for 2012 to the Supervisory Board for its examination. Following an in-depth examination, the Supervisory Board approved the consolidated financial statements and the Group Report of the Managing Board. The Supervisory Board also approved the annual financial statements of Franz Haniel & Cie. GmbH and the Managing Board’s profit appropria-tion proposal. The annual financial statements are thereby adopted and the consolidated financial statements approved.

GRATITUDE FOR A JOB WELL DONEOn behalf of the Supervisory Board, I thank the members of the Man-aging Board and all the employees of the Haniel Group for their serious commitment in the past year. We decided on and implemented impor-tant changes and, thanks to the great dedication of each and every-one in the Company, Haniel is well prepared to face future challenges.

Duisburg, 4 April 2013

Franz M. HanielChairman of the Supervisory Board

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THE SUPERVISORY BOARD

OUR SUPERVISORY BOARD IS COMPOSED OF EIGHT SHAREHOLDER REPRESENTATIVES AND EIGHT EMPLOYEE REPRESENTATIVES. THE CHAIRMANSHIP HAS ALWAYS BEEN HELD BY A FAMILY MEMBER. THE SUPERVISORY BOARD IN PARTICULAR ENSURES THAT THE DEVELOPMENT OF THE GROUP OF COMPANIES IS IN ACCORDANCE WITH ITS TRADITIONAL VALUES.

FRANZ M. HANIELCHAIRMANGraduate engineer

GERD HERZBERGDEPUTY CHAIRMANTrade union secretary

JÜRGEN LIBBERTDEPUTY CHAIRMANuntil 15 November 2012Attorney

DR GEORG F. BAURDEPUTY CHAIRMANsince 14 December 2012Businessman

CHRISTOPH BÖNINGERGraduate designer

BARON WOLF V. BUCHHOLTZGraduate businessman

HEIDE DETMARCommercial employee

CHRISTIAN V. DÜRCKHEIMuntil 28 April 2012Graduate businessman

HARALD FÄRBERHuman resources director

BERND HERGENRÖTHERElectrician

PROF. HENNING K AGERMANNsince 27 November 2012Graduate physicist

K AY RICHARD L ANDWERSBanker

HERBERT NARRPharmaceuticals manager

IRINA PANKEWITZTextile cleaner

DR MICHAEL SCHÄDLICHManaging director

UWE SCHMAHLTechnician

HANS WETTENGLTrade union secretary

PROF. K AY WINDTHORSTsince 28 April 2012University Professor


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CORPORATE GOVERNANCE

Distinct responsibility structures and cooperation based on partnership: These are the principles that distinguish corporate governance at Haniel. One essential element is the strict separation of corporate management and control, in line with the requirements for exchange-listed companies. Both sides engage in trusting dialogue, which is also how the Company communicates with its partners on the financial market.

FREE FROM CONFLICTS OF INTERESTOne characteristic sets Haniel apart from many other family-owned companies: Since the start of the 20th century, managers from out-side the family are responsible for the corporate governance. No family members work in the Haniel Group. Entrepreneurial decisions can be made free from familial obligations. The family attaches importance to sustainable growth and value enhancement. The steps to be taken along the way are at the discretion of the Manag-ing Board, which confers with the shareholders’ boards. The basic structure of corporate governance at Haniel thus adheres to the standards set out in the German law governing stock corporations.

The more than 650 shareholders are organised in the Shareholders’ Meeting. It convenes once a year and elects from its members for five years each time the Family Advisory Board – the link between the family and the Company. The Advisory Board consists of up to 30 family members, eight to ten of whom then form the “Small Circle”. Eight members of the “Small Circle” are delegated by the Sharehold-ers’ Meeting as representatives of ownership to the Supervisory Board, where they participate in determining the principles of busi-ness policy and exercise an influence on corporate strategy. In 2012 an important change was implemented and the decision made to now also include external members on the Supervisory Board as well as the “Small Circle”. You can find out more in the Report of the Super-visory Board beginning on page 26. As before, the chairmanship of the Supervisory Board has always been held by a family member. This monitoring body comprises an equal number of representatives of ownership and of labour. Together they appoint and dismiss mem-bers of the Managing Board, monitor their work and support them in an advisory capacity. Four members of the Supervisory Board form the Audit Committee. This committee monitors the accounting pro-cess and the effectiveness of the internal control system, the risk management system, the Internal Auditing office, and the compli-ance system. Moreover, the committee examines and confirms the independence of the auditors of the financial statements. Details of the work of the Supervisory Board in the 2012 financial year are con-tained in its report (beginning on page 26).

BINDING PRINCIPLES OF CONDUCTThe Haniel Holding Company itself, as well as through its divisions, is active in many different economic and social systems, and thus encounters differing cultural and national standards as well as legal regulations. It is precisely this that makes it essential that all employees at every level of the Company share the same values of

openness and integrity. Essential components of the Haniel culture are the principles of legality, incorruptibility and fair competition. For example, the code of conduct sets out the principles of conduct for employees of the Holding Company, so that they neither offer nor accept favours, they reject all forms of discrimination, and they disclose any conflicts of interest between their business and pri-vate affairs. Such principles of conduct are in place Group-wide. Fur-thermore, all divisions have a compliance officer who acts as a con-tact person for all employees and who helps to resolve grievances.

EASY ACCESS TO INFORMATIONFor Haniel as a family-owned company, a solid shareholders’ equity basis plays an important role. Additionally, borrowed capital is also an element of our financing strategy. To gain the trust of potential investors and to maintain the appreciation of its current investors, Haniel focuses on transparency and fairness in its financial commu-nication: Every capital market participant, including banks, inves-tors and analysts, are provided with the same information needed to assess the Company’s performance. This also applies to the provid-ers of equity. The corporate website represents a broad information platform where, among other things, the corporate group’s portfolio and strategy are elucidated. Haniel also publishes its annual and half year financial reports there, as well as the latest press releases. In addition, presentations, information on the investment strategy and additional separate and consolidated subgroup financial state-ments can be accessed online under the “Creditor Relations” head-ing. A financial calendar contains early announcements of impor-tant events for the Holding Company and the divisions. Moreover, Haniel publicly declares how the Holding Company is rated by the credit rating agencies Standard & Poor’s and Moody’s. Haniel sub-mits itself to these external rating processes voluntarily in order to be able to use all the available financing options. For Haniel, trans-parent and fair financial communication is inseparably connected with continuity. The company informs its partners at regular inter-vals and in a consistent manner about current developments. Thus, financial reports are always published in the customary place and in the customary form in order to make it easier for the reader to find and analyse the information. Haniel draws attention to any devia-tions from the preceding years.

DIALOGUE WITH INVESTORSHaniel’s financial market partners can contact the staff of the Cor-porate Finance and Corporate Development/M&A departments directly. After the company’s financials press conference, Haniel issues invitations to an Investor or Analyst Call. The Managing Board is closely involved in the dialogue with the financial community. For example, the CFO travels at least once a year to Europe’s most important financial markets in order to maintain direct contact with investors. He is accompanied by a team from Corporate Finance.

29

CORPORATE GOVERNANCEGROUP ORGANISATION

HANIEL ANNUAL REPORT 2012 / CORPOR ATE GOVERNANCE

30

SHAREHOLDERS’ MEETINGmore than 650 family members

elects elect 8 employee representativesdelegates 8 shareholder representatives

FAMILY

ADVISORY BOARD30 members (including 8 – 10 “Small Circle” members)

FAMILY

SUPERVISORY BOARD

DIVISIONS

16 members

FAMILY/COMPANY

appoints/dismisses/supervises/advises

about 56,000 employees*

EMPLOYEESCOMPANY

MANAGING BOARD OF THE HOLDING COMPANY2 members

COMPANY

responsible for

* annual average (headcount); see the explanations on page 55.

CORPORATE RESPONSIBILITY

Haniel strives to be an exemplary family-owned com-pany in the area of corporate responsibility (CR). A key point plan defined in 2012 lays out what this means for a strategic holding company such as Franz Haniel & Cie. GmbH. In addition to integrating corporate responsibility into the normal management processes between the Holding Company and the divisions, the key point plan provides for a Group-wide CR programme that structures existing activities and coordinates new ones.

Corporate responsibility has a long history at Haniel: Reflecting the core values shared by the family and the Company, the concept that economic success must also create social value has held true for the past 257 years. The Haniel values for acting with corporate responsibility follow the principles of the “honourable business-man”. You can find out more beginning on page 10.

Corporate responsibility is a logical consequence of the Haniel canon of values. As the Holding Company, Franz Haniel & Cie. GmbH will therefore provide the necessary impulses and be the sparring partner in the strategic CR dialogue with the divisions, will organise the exchange of information and knowledge within the Group, and will coordinate Group-wide CR activities.

IDENTIF YING OPPORTUNITIES, SETTING OBJECTIVES, TAKING ACTIONA CR management approach specifically tailored to the Group was developed in 2012. First, Haniel combines various business models, sizes of companies and levels of investment under one roof. Second, given the decentralised structure of the Group, the divisions are responsible for the operating business themselves. In line with the subsidiary principle, the Holding Company’s new CR management approach includes a Haniel programme that lays out the substan-tive focal points for the entire Group. Each company implements this programme in its own CR strategy. In 2013, these focal points will be defined as Haniel action areas. Accordingly, the Haniel Man-aging Board together with the management teams of the divisions will set individual objectives and measures for the first time in 2013 and then on a regular basis going forward. In this way, the Holding Company will ensure that its holdings continuously review the envi-ronmental and societal impacts of their business activities and vice versa. Consequently, corporate responsibility thus makes not only economic, but also ecological and social value contributions.

ESTABLISHED AT THE HIGHEST LEVELS OF MANAGEMENTOver the past two years, the Haniel Sustainability Council has established a common CR concept at the highest levels of man-agement: The needs of people, the environment, and the Company must be harmonised such that future generations will have at least the same opportunities as their forefathers do today. Haniel orients its business model according to this aspiration that every-thing be “grandchildable”. Since corporate responsibility must be an integrated component of normal management processes, the

Sustainability Council was formed at the end of 2012 as part of the CEO meeting. The Managing Board of Haniel regularly invites the managing directors and/or managing boards of its holdings to par-ticipate in these meetings. These meetings discuss how corporate responsibility can be implemented as a specific aspect of the busi-ness operations and beyond. Corporate responsibility was already on the agenda at a November 2012 meeting: The Company’s top executives approved the aforementioned cornerstones of the Haniel CR strategy. At the same time, responsibility for corporate responsibility on the Haniel Managing Board was transferred from Dr. Florian Funck to Chairman Stephan Gemkow.

Going forward, a network of experts consisting of the individuals responsible for CR at every division and the Holding Company will meet regularly to ensure that collaboration on the Group level is increased and that information and knowledge is exchanged on departmental levels. Under the auspices of the Shareholders + Sustainability department at the Holding Company, the “CR Round Table” will first establish the Haniel action areas and then continu-ally advance the Haniel CR programme.

COMPREHENSIVE VIEW OF RESPONSIBILIT Y AT DIVISIONSAs a specialist for rental washroom hygiene products, dust control mats and textile services, CWS-boco is committed to protecting the environment and acting in a socially responsible manner, which is why corporate responsibility is so firmly entrenched in its corpo-rate policy. Its CR activities are continually refined from a strate-gic standpoint and culminated in 2012 with the CWS brand’s first CR report, which the company published in accordance with the guidelines of the Global Reporting Initiative (GRI) for the Benelux countries. The Company subsequently transferred the knowledge gained to a global CR project tasked with setting the guidelines of the Group’s sustainability strategy and publishing the first CR report for both brands in 2013. CWS-boco is increasing its focus on the social and ecological conditions along the supply chain: In addi-tion to developing its own code of conduct for suppliers, the subsid-iary CWS-boco Supply Chain Management GmbH is a member of the Business Social Compliance Initiative (BSCI) which sets minimum social standards in the global supply chain.

ELG harmonised its economic and ecological objectives: Even the business model of the company, which processes raw materials for the stainless steel industry, helps safeguard and conserve natural resources. High quality standards and the use of state-of-the-art technology in recycling processes are another plus – this helps ELG save energy and reduces environmental pollution. Stainless steel producers achieve the same effect if they use recycled materials instead of primary raw materials, thus allowing the companies to reduce their CO2 emissions considerably.

TAKKT set the goal of becoming a role model in terms of sustainabil-ity for the B2B direct marketing specialist business by 2016. The UN Global Compact’s ten principles in the areas of human rights, labour, the environment and anti-corruption forms the framework. Discussions with TAKKT’s stakeholders led to the establishment of

31

six action areas: procurement, marketing, logistics, resources & climate, employees, and the company. Specific measures, figures and objectives were formulated for each action area and will become fixed, long-term components of the TAKKT organisation as part of the SCORE (“Sustainable Corporate Responsibility”) programme. The B2B direct marketing specialist presented its sustainability strategy for the first time in its 2012 sustainability report entitled “Well on our way”. The report was prepared in accordance with the international standards of the Global Reporting Initiative (GRI) and given a “C+” grade under the GRI ranking. As a member of the Carbon Disclosure Project (CDP), TAKKT has provided annual reports on its management of greenhouse gas emissions since 2006. It was hon-oured as the German company that had made the greatest progress in its environmental impact reports at the 2012 CDP annual confer-ence. More information on CR activities can be found in the Sustain-ability Report at www.takkt.de/nachhaltigskeitsberichte.html.

Celesio contributes to an effective, secure and affordable provision of pharmaceuticals and healthcare products and services that are available at all times. For that reason, the retail, logistics and ser-vice company places people’s health at the centre of its business activities. Therefore, acting with corporate responsibility is an established facet of the company’s identity, ever since its found-ing 177 years ago. Nowadays, CR at Celesio is adapting a voluntary contribution to long-term development that extends beyond the statutory requirements. Examples of this include voluntary com-mitments such as the code of conduct, the Code of Responsible Conduct for Business, “Diversity Charter” or environmental guide-lines. Central responsibility for CR was created in the Celesio Hold-ing Company. A Sustainability Council acts as an internal planning, managing, and supervisory body and advises the Managing Board in all CR issues. Celesio reports on these activities in its annual report, at www.celesio.com, and in special publications. A separate CR report is planned for the end of 2013.

As a global retail company with operations in locations in Europe, Asia and Africa, METRO GROUP plays an important role in the lives of many people. Today, the Group has 280,000 employees at 2,200 locations in approximately 180 countries. The Group is a trusted partner for numerous suppliers and customers with whom it is in touch with every day. Therefore, taking responsibility at METRO GROUP means offering safe and high-quality products, promoting fair and humane working conditions along the supply chain, and continually verify-ing that resources are being conserved. Ensuring a comprehen-sive approach is the goal of the sustainability management. This is reflected in the action areas “Supply Chain & Products”, “Energy and Resource Management”, “Employees and Social” as well as “Social Policy and Stakeholder Dialogue”. Information on projects and objec-tives can be found in the Sustainability Report, which is published regularly, and online at www.metrogroup.de/nachhaltigkeit.

FOCUS ON EMPLOYEESSupporting our employees is key to ensuring the long-term success of the Company. As responsible employers the divisions and the Holding Company are committed to the health of their employees,

for example. CWS-boco and Celesio sponsored “health events” dur-ing which employees could receive comprehensive health infor-mation and preventative check-ups. TAKKT approved its “akktiv” concept to provide corporate preventative healthcare. The Haniel Holding Company regularly provides free preventative check-ups to ensure that its employees remain healthy, and also promotes exercise programmes such as fitness courses and back therapy or yoga sessions to help employees balance their everyday work.

The companies in the Haniel Group offer their employees many differ-ent ways to help balance their professional and family lives. Depend-ing on which division an employee works in, an employee may, after consulting his or her supervisor, work from home or have a telework-ing job. Furthermore, to a certain extent employees caring for chil-dren not yet required to attend school receive financial aid. Haniel employees are also availed family consultation services to help them maintain a healthy balance between their professional and personal lives, especially if they are going through a difficult phase in their lives. A financial aid fund also provides support if an employee or a family member falls into financial hardship at no fault of their own.

Corporate responsibility at Haniel also means making employees aware of how they themselves can help protect resources and the environment. The Green Car Policy, which the Haniel Managing Board approved in 2012 and went into effect at the Holding Com-pany in 2013, is one such instrument. In addition to introducing CO2 emission standards for various vehicle classes, the new guidelines provide alternatives to company cars by offering an annual ticket for the Deutsche Bahn or by subsidising the employees’ personal pension plans, for example. To help reduce fuel consumption and in turn greenhouse gas emissions, the divisions also placed environ-mentally-friendly regulations on company cars.

LOOKING FORWARDFor many years now, Haniel has shared the success of the Com-pany with its employees. Through various participation models or employee share programmes, employees participate in the long-term value creation of the listed divisions. This rewards the important work that the employees contribute to the success of the company.

Employees secure the future of a company. Therefore, Haniel purposefully singles out skilled professionals and senior staff and grooms them for higher positions. This depends solely on the employee’s performance, regardless of his or her gender, age or nationality. Together with their supervisors, the employees’ iden-tify their personal strengths and targets during regular perfor-mance assessment meetings. In these discussions, they agree on measures such as attending seminars or workshops offered for various disciplines by the Haniel Academy. This also includes devel-opment programmes specifically tailored to prepare up-and-com-ing talents, senior mid-level management staff and top executives from the Group for future tasks. The three programmes offered under the “Haniel Leadership Curriculum” are specifically designed to prepare participants for the challenges they will face at the vari-ous stages of their careers.

HANIEL ANNUAL REPORT 2012 / CORPOR ATE RESPONSIBILIT Y

32

In order to position itself as an attractive employer in the long-term, Haniel regularly reaches out to the senior staff of tomorrow. What career goals is “Generation Y” pursuing? What influences gradu-ates when they choose their professional careers? These were some of the questions that Haniel posed to approximately 1,000 engineering and economics students in a 2012 Europe-wide study. The results of the study: Internships and trainee programmes are popular entry-level options with companies because they provide a first-hand and genuine impression of the potential employer. Accordingly, the divisions and the Holding Company are purpose-fully expanding the number of entry-level positions they offer. School and university graduates can complete dual vocational training and trainee programmes with the Haniel Group. University students can take internships in various speciality areas. As certi-fied by the seal of quality from the “Fair Company” initiative, these programmes treat their interns fairly and pay them an appropriate stipend. More than 20 trainee tracks and dual vocational training programmes open the door for entry-level positions with the group of companies. In total, in 2012 there were 207 trainees at the Hold-ing Company and fully consolidated divisions in Germany.

Haniel supports outstanding talents during their university stud-ies as well. In addition to awarding scholarships, the Haniel Hold-ing Company also promotes interns with the “Student Development Programme” as a way to retain them with the Haniel Group in the long-term. Practical workshops allow the students to build on their theoretical knowledge and provide them with the opportunity to intern in Germany or abroad. This allows students to network pro-fessionally with employees from the Haniel Group early on.

CORPORATE CITIZEN SETS IMPULSESIn line with the Haniel values, the Holding Company and the divi-sions are also active beyond their core businesses, namely in areas where they can use their expertise to generate real added value. Traditionally, the Holding Company views itself as a corporate citi-zen in its home city. It assists local initiatives in Duisburg by provid-ing them with monetary, reputational, infrastructural and intellec-tual resources. These activities focus both on funding education, especially for socially disadvantaged children and adolescents, and on further developing the city, especially the Ruhrort port dis-trict, into a popular residential and thriving commercial zone. To achieve this, Haniel often provides the necessary impulses. For example, after the Company successfully launched the “Education as an opportunity” project in Duisburg in 2010 together with the Teach First Deutschland, Chancenwerk and Ashoka Deutschland non-profit organisations, the Haniel Foundation took over respon-sibility for advancing the project in January 2013.

Detailed information on Haniel Holding Company’s diverse CR activi-ties and its divisions along and outside of the supply chain is availa-ble at www.haniel.com under “Responsibility”. The first Group-wide CR report in accordance with the GRI standards is planned for 2014.

33

GROUP REPORT OF THE MANAGING BOARD

49SUPPLEMENTARY REPORT

50OPPORTUNITIES AND RISKS

55EMPLOYEES

56OUTLOOK

37BUSINESS REVIEW

37HANIEL GROUP

40HOLDING COMPANY: FRANZ HANIEL & CIE.

41CWS-BOCO

42ELG

44TAKKT

45CELESIO

47METRO GROUP

REVENUE BY COUNTRYEUR 26.3 BILLION

FRANCE 25%

GERMANY 19%

UNITED KINGDOM 19%

OTHER COUNTRIES 37%

HANIEL GROUP

Continuing macroeconomic uncertainties, in particular in Europe, affected the Haniel Group’s business develop-ment in 2012. However, revenue remained stable at EUR 26,331 million.* CWS-boco, TAKKT and Celesio generated revenue growth, while ELG saw declining revenue due to significantly lower commodities prices. The operat-ing profit rose from EUR 400 million to EUR 496 million. This improvement is attributable primarily to the Celesio division, which recorded lower one-off expenses for its strategic realignment. By contrast, the Haniel Group’s profit before taxes in 2012 was clearly negative at EUR -1,483 million, following EUR 463 million in the previous year. This massive decline is attributable above all to the write-down of the Metro investment, which encum-bered investment result. The Haniel Group’s profit after taxes in the financial year 2012 was EUR -1,896 million. This also includes the profit from discontinued opera-tions, which were impacted by the strategic realign-ment of Celesio: The sale of the businesses of Movianto, Pharmexx and DocMorris mail-order pharmacy resulted in a loss on disposal.

MACROECONOMIC ENVIRONMENT WEAKER DURING THE COURSE OF THE YEARThe overall development of the global economy was restrained in 2012. Growth of global gross domestic product fell from 3.8 per cent in 2011 to 3.2 per cent. The weak upturn in the USA was unable to compensate for the recessive tendencies in the euro zone and the significantly slackened growth rates in growth markets such as China. General macroeconomic conditions were marked by extreme uncertainty, above all due to sovereign debt crises in southern Europe and speculation about a possible breakup of the euro zone.

Development varied widely during the course of the year in the indi-vidual economic areas. While no clear trend was visible in the USA, which closed the year with economic growth of 2.2 per cent, growth in China increased during the year, but at 7.8 per cent was unable to match the previous year’s figure. Development in the euro zone ran counter to this, with the continuing consolidation of government budgets, in particular in the southern European countries, having increasingly negative impacts on economic growth and consumer demand. This negative trend strengthened in the second half of the year, resulting in an overall year-on-year decrease in economic growth of 0.6 per cent in the euro zone. A positive highlight was Ger-many, whose economy grew by 0.7 per cent, even though this was far weaker than in the previous year.

REVENUE REMAINS STEADYThe Haniel Group’s revenue of EUR 26,331 million was at the previ-ous year’s level of EUR 26,473 million. TAKKT’s acquisitions of GPA and Ratioform in 2012 made a positive contribution to this, as did

the full-year consolidation of the company Oncoprod, which had been acquired in the previous year by Celesio. Adjusted for company acquisitions and disposals as well as currency translation effects, revenue at the Haniel Group declined by 3 per cent. The reduction in revenue is attributable primarily to the development in the ELG division. While ELG succeeded in holding output tonnage stable, the quoted price of nickel – the most valuable element in stainless steel scrap – remained in a weak economic environment significantly below the prices quoted in the prior-year. Celesio posted lower rev-enues, in particular for patented medicines. Moreover, savings in healthcare spending of many European countries had an impact. Adjusted for company acquisitions and disposals as well as currency translation effects, Celesio reported only a slight decline in revenue, thanks above all to the positive performance of the pharmacy busi-ness. TAKKT also announced lower sales adjusted for company acquisitions and disposals as well as currency translation effects. The positive business development at TAKKT AMERICA partially com-pensated for a decline in revenue in the European market caused by the unfavourable economic conditions. In contrast, CWS-boco achieved a slight increase in revenue adjusted for currency transla-tion effects. This was due in part to further improvements in service to existing customers and optimised service quality management as well as a positive development of the new customer business.

OPERATING PROFIT IMPROVEDThe Haniel Group’s operating profit of EUR 496 million was sig-nificantly above the previous year’s figure of EUR 400 million. This increase is primarily attributable to higher earnings from Celesio – resulting from lower one-off expenses for the strategic realignment than in the previous year. In contrast, earnings at ELG were significantly below the previous year in a business environ-ment that continued to be intensely competitive. On the other hand, TAKKT succeeded in increasing operating profit. The positive contributions to earnings from acquired companies as well as the positive business situation at TAKKT AMERICA compensated for the economy-driven decrease at TAKKT EUROPE. CWS-boco also

* Prior-year fi gures have been adjusted in the Management Report in accordance with IFRS.

37

26,473 26,331

-1%REVENUE

2011 2012

EUR million

400 496

+24%OPERATING PROFIT

2011 2012

EUR million

2012 – primarily at Celesio and the Haniel Holding Company. The Celesio division incurred higher interest expenses in connection with the acquisition of the remaining shares in the Brazilian whole-saler Panpharma. At the Haniel Holding Company, outstanding bonds were repurchased for more than the principal amount to improve the maturity structure, which resulted in increased interest expenses. In addition, the rating agencies lowered the rating of the Haniel Hold-ing Company, resulting in increase in interest expenses because of higher interest payments on the bonds issued in the event of a rating downgrade. Other net financial income also deteriorated in 2012. This was attributable in particular to impairment losses on long-term receivables of the Haniel Holding Company.

DISPOSAL LOSSES AT CELESIO NEGATIVELY AFFECT PROFIT AFTER TA XESProfit after taxes from continuing operations was significantly lower year-on-year at EUR -1,637 million. Despite the decrease in profit after taxes, the tax expense was EUR 154 million, and on par with the previous year since the impairment loss from the Metro investment did not reduce taxes.

Profit from discontinued operations included disposal losses amounting to a total of EUR 252 million. These resulted from the sale of the business activities of Movianto, Pharmexx and the Doc-Morris mail-order pharmacy in the course of Celesio’s strategic rea-lignment. In the previous year, this figure included a EUR 72 million impairment loss on goodwill relating to Pharmexx.

Overall, the Haniel Group’s profit after taxes in the 2012 financial year of EUR -1,896 million was thus significantly below the previous year’s profit of EUR 236 million.

HANIEL CASH FLOW STABLEAt EUR 440 million, Haniel cash flow, which is used as an internal control instrument, remained at the same level as in the previous year with an amount of EUR 436 million despite the significantly lower profit after taxes. This is due to the fact that the impairment loss from the Metro investment and the disposal losses at Celesio, which weighed on profit after taxes, were non-cash expenses. On the other hand, cash flow from operating activities, which, in addi-tion to Haniel cash flow, mainly includes the change in net current assets*, fell from EUR 813 million in the previous year to EUR 519

had a positive business development and a higher operating profit noticeably. In addition to higher revenues, the increase is also attributable to operational improvements from the Focus Future repositioning project. One-off expenses were also lower in 2012 than in the previous year.

WRITE-DOWN NEGATIVELY IMPACTS PROFIT BEFORE TA XESThe profit before taxes in the financial year 2012 was EUR -1,483 million and thus significantly below the previous year’s figure of EUR 463 million. In addition to the operating profit, it includes the investment result and the results from financing activities.

The investment result comprises primarily the result of the METRO GROUP attributable to Haniel. The METRO GROUP increased revenue slightly in spite of increasingly deteriorating market conditions in southern Europe. Operating profit fell nonetheless – due in part to one-off expenses for portfolio and restructuring measures. The improved net financial income of the METRO GROUP offset this development to some extent. The tax expense was only slightly lower than in the previous year.

Haniel’s earnings contribution recognised from the Metro invest-ment was EUR -1,523 million in 2012. The amount for the previous year was EUR 329 million. The clear decline had causes in addition to the METRO GROUP’s lower operating profit: First, the decision to dispose of 4.23 per cent of the voting shares in METRO GROUP required an impairment loss of EUR 345 million on the expected disposal proceeds. Second, the impairment test for the remaining Metro investment resulted 2012 in an impairment loss of EUR 1,149 million. And third, it should be noted that, in addition to the invest-ment result of the METRO GROUP, the sale of real estate belonging to Metro’s founding shareholders increased Haniel’s result by EUR 172 million in the previous year.

In addition to the investment result from the Metro investment, Haniel generated as in the previous year income from two invest-ment funds, in which Haniel had invested in recent years.

The result from financing activities declined to EUR -471 million, fol-lowing EUR -310 million in the previous year. The result from financ-ing activities is composed of the finance costs and other net finan-cial income. Finance costs in particular were significantly higher in

HANIEL ANNUAL REPORT 2012 / GROUP REPORT OF THE MANAGING BOARD / HANIEL GROUP

38

PROFIT BEFORE TA XESEUR million

PROFIT AFTER TA XESEUR million

463 -1,483

<-100%

2011 2012

236 -1,896

<-100%

2011 2012

HANIEL CASH FLOWEUR million

CAPITAL EXPENDITUREEUR million

436 440

+1%

2011 2012

469 740

+58%

2011 2012

* Net current assets mainly comprise trade receivables and inventories, less trade payables.

million in financial year 2012. This was due to the fact that net cur-rent assets were lower at the end of the previous year. Trade paya-bles at the Celesio division, which were unusually high at the end of the previous year, were a primary cause of this development. The low net current assets in 2011 resulted in a comparatively high cash flow from operating activities in the previous year.

CAPITAL EXPENDITURE INCREASEDCash flow from investing activities amounted to EUR -341 million in 2012, down from EUR -261 million in the previous year. Cash flow from investing activities represents the net outlays for capital expenditure and proceeds from divesting activities.

Capital expenditure for property, plant and equipment, intangible assets and other non-current assets, as well as for company acqui-sitions, amounted to EUR 740 million in the financial year ended. This included the acquisitions of Ratioform and GPA by TAKKT and the acquisition of the remaining shares in the Brazilian wholesaler Panpharma by Celesio. Capital expenditure amounted to a total of EUR 469 million in the previous year. That amount included com-pany acquisitions only to a limited extent.

Proceeds from divestments were EUR 399 million, compared to just EUR 208 million in the previous year. In the financial year, that amount mainly comprised proceeds from disposals by Celesio, pri-marily for Movianto, Pharmexx, the DocMorris mail-order pharmacy as well as wholesale and pharmacy operations in the Czech Repub-lic. Proceeds received by the Haniel Holding Company in the previ-ous year included the partial repayment of non-current receivables, repayments from two investment funds and proceeds from the dis-posal of real estate held by the founding shareholders of Metro.

Cash flow from financing activities includes payments to partners and shareholders for dividends, totalling EUR 89 million. Payments in the previous year amounted to EUR 115 million.

EQUIT Y RATIO FALLENThe Haniel Group’s balance sheet structure changed considerably between the previous year and 31 December 2012. Total assets decreased from EUR 16,706 million to EUR 14,416 million. This was due to the impairment loss recognised for the Metro investment as well as disposals of assets in the course of company divestments at Celesio. Equity fell from EUR 6,347 million to EUR 4,500 million due to the negative profit after taxes. Accordingly, the equity ratio fell from 38 per cent to 31 per cent. The Group’s balance sheet structure thus remains solid. Net financial debt, that is financial liabilities less cash and cash equivalents, remained stable at EUR 4,860 million. While net financial liabilities fell for the Haniel Holding Company, they increased at TAKKT as a result of company acqui-sitions. The composition of financial liabilities changed during the financial year. The issue of euro-denominated bonds by Celesio and the Haniel Holding Company, as well as the issue of promissory notes at CWS-boco, ELG and TAKKT, led to a broader financing base and the repayment of bank loans.


Haniel cash fl ow 436 440

Cash fl ow from operating activities 813 519

Cash fl ow from investing activities -261 -341

Cash fl ow from fi nancing activities -308 -82

39

CONSOLIDATED STATEMENT OF FINANCIAL POSITIONEQUIT Y AND LIABILIT Y STRUCTUREEUR million

ASSET STRUCTUREEUR million

16,706 14,416

-14%

2011 2012

31%

31%

38%

Current liabilities32%

Non-current liabilities37%

Equity31%

16,706 14,416

-14%

2011 2012

37%

63%

Current assets44%

Non-current assets56%

HANIEL ANNUAL REPORT 2012 / GROUP REPORT OF THE MANAGING BOARD

40

HOLDING COMPANY FRANZ HANIEL & CIE.

* Incl. the Holding Company’s fi nancing companies. You can fi nd the fi nancial statements of the Franz Haniel & Cie. subgroup under “Creditor Relations” at www.haniel.com.

The Haniel Holding Company* sees itself as a long-term value developer. That is the sense in which it structures a portfolio with sustainable business models and han-dles the strategic leadership of the Haniel Group.

DEBT REDUCTION ACCELERATEDHaniel has had a new chairman of the Managing Board, Stephan Gemkow, since 1 August 2012. Together with the Supervisory Board, the Managing Board tackled in 2012 the most important current task – debt reduction. A comprehensive action plan was resolved in order to reduce net financial debt at the Holding Com-pany level below EUR 2.0 billion: As a first action, the Haniel Holding Company reduced its holding in Celesio AG at the end of November from 54.64 per cent to 50.01 per cent and announced the reduction of the holding in METRO AG from 34.24 per cent to 30.01 per cent of voting shares. Both divisions will remain anchor investments in the Haniel portfolio. In addition, Haniel initiated the disposal of its shares in two investment funds. These actions will contribute to reducing the Holding Company’s debt – without giving up strategic influence on one of the divisions. The net financial debt of the Hold-ing Company has already been reduced from EUR 2,412 million to EUR 2,212 million by the end of the financial year.

The debt reduction is aimed at making the Haniel Holding Company capable of acting again and providing a more balanced structure to the business portfolio. In the long-term, Haniel aims to achieve a balanced mixture of smaller and larger divisions – with a regional presence in line with global economic output.

FINANCING ON TWO PILL ARSThe principal source of financing for the Haniel Holding Company is the equity provided for the long-term by the shareholders – the Haniel family. The second financing pillar is debt financing through bank loans and the capital market. The Haniel Holding Company again expanded its bond portfolio in 2012. At the beginning of February the company placed an additional bond with a nominal volume of EUR 400 million and a maturity of six years – and that very successfully: The issue was oversubscribed several times so that only some of the investors’ desires could be satisfied. At the same time, Haniel repurchased a nominal share of EUR 216 million in outstanding bonds maturing in October 2014. Together, the two transactions helped to considerably extend and smooth the matu-rity profile for the Group’s debt financing.

RATING DOWNGRADEDThe debt reduction in progress will contribute to Haniel again reach-ing an investment grade rating in the mid-term and thus improving financing terms. The rating agencies recently reduced their ratings of the Haniel Holding Company to BB and Ba2, respectively – both with a stable outlook. This happened primarily due to the signifi-cant decline in the share price of METRO AG. The decisions of the rating agencies were primarily taken on the basis of the market value gearing, i.e., the ratio of net financial liabilities to the market value of the investment portfolio. After deducting the net financial

liabilities of the Holding Company, the market value of the invest-ment portfolio as at 31 December 2012 amounted to EUR 3,153 mil-lion, compared with EUR 3,740 million as at 31 December 2011. The market value is the total of the valuations of the business divisions and other assets. The valuation is performed on the basis of three-month average prices for the listed divisions and on the basis of market multiples for the other divisions.

“ROLE OF THE HOLDING COMPANY” PROJECT CONCLUDED In order to better live up to its vision of itself as a value developer going forward, the Holding Company had already begun restructur-ing its responsibilities and duties in 2010. This project was con-cluded during the first half of 2012 so that the Holding Company is now well positioned to master the growing challenges of the future.

The operating profit of the Haniel Holding Company was higher than that of 2011. As in the previous year, provisions were estab-lished for damages in connection with sand-lime bricks that were produced in former Haniel building materials plants using lime sub-stitutes and which are being settled by Haniel on a goodwill basis.

WHOLLY-OWNED INVES TMENT

41

The CWS-boco division continued to benefit from posi-tive outcomes from the Focus Future repositioning pro-ject in 2012, in particular in the core German and Swiss markets. Revenue increased by 1 per cent to EUR 757 million. CWS-boco’s operating profit increased by EUR 17 million to EUR 58 million. The reasons included higher revenues, in particular operational improvements trig-gered by the repositioning project and lower one-off expenses.

SLIGHT GROWTH IN REVENUE THROUGH IMPROVED SERVICESCWS-boco’s core business is it rental service for workwear, wash-room hygiene products and dust control mats. Changes in the economic climate influence business performance after a time lag due to long-term customer agreements. The uncertainty in the economic climate in Europe has therefore had only a minor impact on CWS-boco’s business to date. Rather, the division posted posi-tive growth in new customer business. It also succeeded in further reducing cancellation rates in the workwear division. This positive development is attributable in particular to sales-oriented initia-tives from the repositioning project, which resulted in improved support for existing customers and optimised service quality management. While the cancellation rates in the dust control mats division were near the previous year’s level, the washroom hygiene division posted a slight increase. This is attributable to the stream-lining of the customer portfolio, in particular in Italy.

The textile services division, which comprises mainly the rental service for workwear, drove revenue growth. Business from dust control mats also grew, while revenue in the washroom hygiene division was on par with the previous year. Overall, revenue in the rental business increased by 2 per cent year-on-year. Economic losses were posted in the trade business, which CWS-boco oper-ates as a supplement to its rental business. Typical trading goods

CWS-BOCO

are consumables, such as soap, disinfectant and paper, but also washroom hygiene products and workwear. Revenue was 4 per cent lower here than in the previous year.

Overall, CWS-boco’s revenue was up by 1 per cent to EUR 757 mil-lion – also adjusted for currency translation effects.

OPERATING PROFIT INCREASED SIGNIFICANTLYCWS-boco’s operating profit improved year-on-year, from EUR 41 million to EUR 58 million. In the previous year, the results were impacted by impairment losses on goodwill in Ireland and Italy. Adjusted for these and additional one-off expenses from the Focus Future repositioning project, CWS-boco exceeded the previous year’s operating profit by EUR 8 million. In addition to the slightly higher revenues, this positive development was driven primarily by operational cost savings from the repositioning project – in par-ticular in the core German and Swiss markets.

FOCUS FUTURE IMPLEMENTATION PROCEEDING AS PL ANNEDThe Focus Future repositioning project was launched in 2010. It is aimed at increasing customer satisfaction and optimising pro-cesses and cost structures with a view to safeguarding the divi-sion’s long-term future. In 2012, CWS-boco continued to focus on implementing the defined measures. The primary focus of these measures was placed on optimising the sales function, customer support, procurement and the laundry network, as well as imple-menting quality and efficiency enhancement programmes in the operating business and logistics organisation. After two years, the repositioning project is within the performance benchmarks expected by 2012.

REVENUEEUR million

REVENUEby division in %

748 757

+1%

2011 2012 2012

Washroom hygiene/mats 50

Textile services50

EMPLOYEESAnnual average (headcount)

OPERATING PROFITEUR million

7,816 7,643

-2%

2011 2012

41 58

+41%

2011 2012

HANIEL ANNUAL REPORT 2012 / GROUP REPORT OF THE MANAGING BOARD / WHOLLY-OWNED INVES TMENT

42

ELG

The continuing uncertainty with respect to macro-economic development had a significant impact on the stainless steel industry in 2012. In the second half of the year, this led to a considerable weakening in production of stainless steel and hence also to lower demand by stainless steel mills for stainless steel scrap. Nonethe-less, ELG was able to hold its output tonnage of stainless steel scrap stable at 1.3 million tonnes overall. However, price quotes for nickel remain significantly below the previous year’s values. ELG’s revenue therefore declined year-on-year by 13 per cent to EUR 2,364 million. The operating profit of EUR 53 million was significantly below the previous year’s EUR 81 million in a business climate that remains intensely competitive.

SLIGHT GROWTH IN STAINLESS STEEL PRODUCTIONELG is a global supplier of raw materials, especially for the stainless steel industry. The volume of stainless steel production and the associated demand for raw materials therefore play a decisive role in shaping the division’s success. The global stainless steel indus-try had a promising start to 2012: demand for stainless steel pro-duction increased while stainless steel mill inventories were low. This led to high quantities of stainless steel production in the first months of the year. However, production of stainless steel mills fell sharply during the rest of the year with declining customer orders. The last months in the financial year in particular were below expectations. In turn, this had a negative impact on demand for stainless steel scrap. Global production of stainless steel in 2012 likely totalled 32.4 million tonnes, slightly above the previous year.

COMMODITIES PRICES FALL SHARPLYNickel is the most valuable element of the stainless steel scrap pro-cessed by ELG, which is why the price that the division can obtain

for its products is largely dependent on current nickel prices. The demand for nickel also increased due to the rising production of stainless steel at the beginning of the year. However, uncertain-ties with respect to the economic development of many European countries resulted in declining demand for nickel during the rest of the year. Following a high in the beginning of February, nickel prices declined steadily to a low of less than USD 16,000 per tonne at mid-year. At year’s end, the price of nickel was USD 17,000 per tonne. At approximately USD 17,500 per tonne, the average nickel price was 23 per cent lower than the previous year’s average.

Chrome and iron are also significant components in stainless steel scrap. Prices for chrome and iron fell during the course of 2012.

REVENUE AND OPERATING PROFIT DOWN YEAR-ON-YEARELG experienced strong demand in the first few months of 2012. However, demand weakened considerably during the rest of the year. In this difficult market environment, ELG’s output tonnage of 1.3 mil-lion tonnes of stainless steel scrap was at the previous year’s level. Economic uncertainties and the difficult earnings situation of stain-less steel producers worldwide increased the pressure on commodi-ties prices considerably however during the course of the year. ELG’s revenue declined therefore by 13 per cent. Due to a low availability of stainless steel scrap, the purchase prices at which ELG buys the scrap declined less than commensurately. This resulted in stronger pressure on margins, which ELG countered with a selective procure-ment and sales policy. ELG realised growth rates in output tonnage in its business with high-alloy, nickel-containing scrap and titanium scrap – referred to as superalloys. The earnings contribution contin-ued to develop positively with declining commodity prices for nickel and titanium. Overall, the division’s operating profit of EUR 53 million was significantly below the previous year’s EUR 81 million.

RECYCLING OF SUPERALLOYS AND CARBON FIBRES EXPANDEDELG implemented additional measures in the field of superalloys during the course of 2012 in order to expand capacity and increase

REVENUEEUR million

REVENUEby sales region in %

2,721 2,364

-13%

2011 2012 2012

Europe54

Asia20

Americas26



1,068 1,098

+3%

2011 2012

81 53

-35%

2011 2012

43

efficiency and quality. For example, recycling activities in the USA were combined at a new location in New York State. In England and France, ELG invested in facilities for processing superalloy scrap.

Additionally, ELG continued the integration of ELG Carbon Fibre Ltd. The company, acquired in 2011, recycles carbon fibres, which arise during production of modern aircraft or wind turbines for example. Production processes were automated and capacities expanded in this still very young business model in 2012 which, as planned, has not yet generated any profits. One particular focus was on prod-uct development: In addition to milled carbon fibres, pellets will be offered in future.

TAKKT

TAKKT benefited from regional diversification and acqui-sitions in 2012. Overall, TAKKT generated revenue of EUR 940 million. This corresponds to a year-on-year increase of 10 per cent. This growth is attributable to the acqui-sitions of Ratioform and GPA made during the financial year as well as to positive currency translation effects. Adjusted for these effects, revenue declined. The posi-tive business performance at TAKKT AMERICA com-pensated partially for the decline in revenue at TAKKT EUROPE caused by the challenging economic situation. Operating profit increased by 8 per cent to EUR 112 mil-lion due to the corporate acquisitions.

TAKKT EUROPE: ACQUISITION COMPENSATES FOR DECLINE IN REVENUETAKKT EUROPE achieved revenue growth of 2 per cent to EUR 515 million. This slight increase is attributable to the acquisition of Ratioform. Ratioform is Germany’s leading multi-channel mail-order firm for packaging solutions and is being run as Packaging Solutions Group, the third group in TAKKT EUROPE in addition to the Business Equipment Group and the Office Equipment Group. Adjusted for the acquisition of Ratioform and currency translation effects, revenue declined by 8 per cent, due to the difficult eco-nomic conditions in Europe, which affected the groups in differ-ing ways.

In the Business Equipment Group, the unfavourable economic con-ditions, in particular in southern and western Europe, caused sig-nificant revenue declines. At the Office Equipment Group, in addi-tion to the weak economic situation, the strategic realignment led to declining revenues. The new Packaging Solutions Group better maintained its position, thanks to intensive sales activities and a product line less dependent on the economy.

HANIEL ANNUAL REPORT 2012 / GROUP REPORT OF THE MANAGING BOARD / MA JORIT Y INVES TMENT

44

TAKKT AMERICA REMAINS ON EXPANSION COURSETAKKT AMERICA increased revenue in 2012 by 23 per cent to EUR 425 million. One reason for the strong growth is the acquisition of GPA. GPA, a B2B mail-order firm for display articles, allowed TAKKT to extend its previous product portfolio and expand its e-commerce expertise. Even adjusted for the acquisition of GPA and currency translation effects, TAKKT AMERICA’s 4 per cent increase in rev-enue represents solid growth. The business again benefited from the broad diversification of its customer and product portfolio as well as from a slightly improved economic environment. The reve-nue growth in the Office Equipment Group was especially encourag-ing. The Specialties Group increased its revenue significantly, even adjusted for the acquisition of GPA, whereas the Plant Equipment Group posted a decline in revenue.

OPERATING PROFIT IMPROVES FROM ACQUISITIONS TAKKT improved its operating profit year-on-year by 8 per cent to EUR 112 million. This was due to the positive contributions to earn-ings from the acquisition of Ratioform and GPA. While the challeng-ing economic conditions resulted in lower earnings contribution from TAKKT EUROPE, this was partially offset by the positive devel-opment at TAKKT AMERICA.

FURTHER EXPANSION OF MULTI-CHANNEL ACTIVITIESTAKKT strives for a balanced relationship between various sales channels in order to address customers individually as needed: by catalogue, on the Internet, telephonically and via field service employees. TAKKT launched a project called DYNAMIC in 2012 in order to anchor this approach throughout the group. This pro-gramme is intended to further advance the development of TAKKT into a multi-channel company. A component of the programme is the further expansion of e-commerce activities. These activi-ties have again shown above-average development: The share of e-commerce revenue to total revenue expanded during the 2012 financial year from 21 per cent in the previous year to 26 per cent.



2,003 2,340

+17%

2011 2012

104 112

+8%

2011 2012

REVENUEEUR million


852 940

+10%

2011 2012 2012

TAKKT EUROPE55

TAKKT AMERICA45

MA JORIT Y INVES TMENT

45

Celesio’s strategic realignment stood in the focus of financial year 2012. Revenue increased by 1 per cent to EUR 22,271 million. Adjusted for company acquisitions and disposals as well as currency translation effects, Celesio posted a 2 per cent decline in revenue. This decline is attributable in particular to lower revenue for patented medicines and savings in healthcare spending of many European countries. The operating profit rose from EUR 302 million to EUR 342 million. However, in the previous year, higher non-recurring expenses – largely in connection with the Operational Excellence Pro-gram – had weighed on the result. Adjusted for one-off expenses, the operating profit was slightly higher year-on-year. Declining earnings in the wholesale business were compensated by the positive business develop-ment of the pharmacies and by cost savings achieved under the Operational Excellence Program. As part of the strategic realignment, the Movianto, Pharmexx and DocMorris mail-order pharmacy divisions and additional activities were sold off. These disposals resulted in sub-stantial disposal losses.

FOUNDATION L AID FOR STRATEGIC REALIGNMENTThe measures implemented under the Operational Excellence Program – designed to enhance efficiency and competitiveness – already made a contribution to improved results in 2012. Program components are the group-wide bundling of procurement activi-ties, strengthening the market position in Sweden, optimising the logistics network and reducing administrative costs. Also in 2012, Celesio’s organisational structure was modified with a view to dove-tailing the wholesale and pharmacy activities to a greater degree. Moreover, as part of the Company’s strategic realignment Celesio

CELESIO

decided to sell off entities which no longer fit with its core business. This decision affected the businesses of Movianto, Pharmexx and DocMorris mail-order pharmacy. The disposals of these units was successfully completed during financial year 2012. In addition, Celesio pulled out of the Czech market for strategic reasons, selling off its wholesale and pharmacy activities there. Moreover, whole-sale activities in Ireland were disposed of. The final completion of this transaction is still subject to approval by the Irish antitrust authorities.

SOLID BUSINESS DEVELOPMENT IN PATIENT AND CONSUMER SOLUTIONSRevenue in the Patient and Consumer Solutions division, which includes the pharmacy business, increased by 5 per cent to EUR 3,463 million – adjusted for company acquisitions and disposals as well as currency translation effects, revenue was on par with the previous year. Revenue for the UK pharmacy chain Lloyds-pharmacy declined, particularly for prescription medicines. The reason for this decline is that a host of strong-selling medications have lost their patent protection and can now be substituted with cheaper generics. The reduction of the pharmacy portfolio also led to declining revenue. However, Lloydspharmacy performed well, on the whole. This is attributable to the higher gross margin for generics and savings achieved under the measures of the Opera-tional Excellence Program. Business was also encouraging in the International Retail division, which comprises the pharmacies from the remaining European countries – performance was particularly solid due to higher revenue for non-prescription medicines in Swe-den and Norway.

As of 31 December 2012, Celesio had 2,177 retail pharmacies in six countries and thus operated 103 fewer pharmacies than on 31 December of the previous year. A large part of this decline is attributable to the sale of the Czech pharmacies.

DIFFICULT MARKET ENVIRONMENT FOR PHARMACY SOLUTIONS Revenue at the Pharmacy Solutions division, which includes whole-sale activities, amounted to EUR 18,808 million in the financial year just ended. Thus, revenue was on par with the previous year. Adjusted for company acquisitions and disposals as well as cur-rency translation effects, revenue fell by 2 per cent. Given that a host of strong-selling medications have lost their patent protec-tion, Celesio recorded a significant decline in revenue, primarily in the wholesale business in the UK. In addition, savings in healthcare spending of many European countries had a negative impact on the wholesale business. For instance, a margin system introduced by the French government weighed down wholesale business in France. By contrast, the wholesale business in Germany performed encouragingly.

In Brazil, Celesio acquired the remaining 49.9 per cent shares in the wholesaler Panpharma in 2012. Panpharma’s profit was eroded by a delay in adjusting to changing framework conditions and reduced order volumes from a major customer. This development was par-tially offset by the fact that the Brazilian wholesaler for specialty

REVENUEEUR million


22,153 22,271

+1%

2011 2012 2012

Patient and Consumer Solutions16

Pharmacy Solutions84

HANIEL ANNUAL REPORT 2012 / GROUP REPORT OF THE MANAGING BOARD / CELESIO / MA JORIT Y INVES TMENT

46

pharmaceuticals, Oncoprod, which had been acquired in the previ-ous year, was consolidated for the entire year. The business devel-opment in Slovenia was negatively impacted in 2012 by increasing competition; this made it necessary to recognise an impairment loss on goodwill.

OPERATING PROFIT IMPROVEDCelesio increased its operating profit from EUR 302 million to EUR 342 million. The operating profit was reduced in 2012 by one-off expenses in the amount of EUR 44 million for restructuring meas-ures in connection with the Operational Excellence Program. In addition, the disposal of the wholesale business in Ireland and the activities in the Czech Republic reduced earnings by EUR 17 million. Moreover, impairment losses on goodwill, particularly in relation to the Slovenian wholesale activities, reduced earnings by EUR 21 mil-lion. During the previous year, restructuring expenses and impair-ment losses on goodwill and other intangible assets amounted to a total of EUR 119 million. Adjusted for these one-off expenses, the operating profit increased slightly to EUR 424 million. Declining earnings in the wholesale business were compensated by the posi-tive business development of the pharmacies and by cost savings achieved under the Operational Excellence Program.

DISPOSAL LOSSES REDUCE PROFIT FROM DISCONTINUED OPERATIONSAs part of its strategic realignment, Celesio sold the businesses of Movianto, Pharmexx and DocMorris mail-order pharmacy. Disposal losses totalling EUR 252 million, which are reported under profit from discontinued operations, were incurred in connection with the sale. Already in the previous year, a EUR 72 million impairment loss on goodwill was recognised for Pharmexx.

STRATEGIC PROJECTS KICKED OFFIn 2012, Celesio pushed forward with strategic projects aimed at increasing future earnings. One key component is a new concept for a European pharmacy network. Celesio presented its fundamentals

at the opening of the first newly redesigned pilot pharmacies in the UK and Italy. The concept will be tested at the company’s own pilot pharmacies in 2013, and is slated to be introduced throughout Europe beginning in 2014. As part of the concept, Celesio’s phar-macies will gradually be re-branded under the Lloyds name. Celesio intends to offer the new concept to affiliated pharmacies as well. A further strategic project is aimed at realising increased earnings by offering new services and enhanced efficiency throughout the entire value-added chain for pharmaceuticals distribution.

46,669 45,166

-3%EMPLOYEES

2011 2012

Annual average (headcount)

302 342

+13%OPERATING PROFIT

2011 2012

EUR million

MINORIT Y INVES TMENT

47

The METRO GROUP pushed forward with its strategic realignment in 2012 in a difficult environment. Despite increasingly deteriorating market conditions in south-ern Europe, revenue increased by 1 per cent to EUR 66,739 million. By contrast, operating profit fell from EUR 2,113 million in the previous year to EUR 1,391 mil-lion – also a consequence of one-off expenses for portfo-lio and restructuring measures. In 2012, Haniel recorded a EUR -1,523 million investment result from the Metro investment. In the previous year, the investment result amounted to EUR 329 million. The negative investment result was due primarily to an adjustment of the valua-tion regarding the Metro investment.

STRATEGIC REALIGNMENT FURTHER ADVANCEDAs part of the strategic realignment, the METRO GROUP’s sales divi-sions implemented several measures designed to continuously enhance attractiveness for customers and thereby to build up their competitive standing. These measures include expanding supply and multi-channel activities, improving product ranges and pric-ing, and further strengthening own brands. In addition, the cost-reduction initiatives continued to be implemented consistently. In the course of the realignment, the METRO GROUP has also further optimised its portfolio. For instance, the Metro Cash & Carry activi-ties in the United Kingdom were sold off and the sale of Real’s east-ern European business was initiated. Moreover, the METRO GROUP decided to discontinue its involvement with Media-Saturn in China at the conclusion of the two-year testing phase.

HIGHER REVENUE FOR METRO CASH & CARRY AND MEDIA-SATURNDespite increasingly deteriorating market conditions in southern Europe, the METRO GROUP recorded a 1 per cent increase in revenue in 2012 to EUR 66,739 million – adjusted for currency translation effects, growth also amounted to 1 per cent. While the disposals of the Metro Cash & Carry business in the United Kingdom in 2012 and Saturn France in the previous year had a negative effect on rev-enue, the international expansion again contributed to the revenue growth: During the financial year, the METRO GROUP opened 97 new locations in 17 countries.

Metro Cash & Carry’s revenue, adjusted for currency translation effects, increased in 2012 by 1 per cent. Business in eastern Europe and Asia developed particularly positively. In these regions the focus of expansion was placed by the sales division. In Germany, revenue for financial year 2012 fell primarily as a result of the optimisation of the portfolio of locations at the end of 2011, as well as weaker business in the nonfood category. In western Europe, the sale of business activities in the United Kingdom and the difficult economic environment in southern Europe resulted in declining revenue.

Adjusted for currency translation effects, Real generated revenue at the same level as the previous year. This is also true for Germany

METRO GROUP

despite branch closures. A positive revenue trend and increased demand in the food category was recorded there. Revenue growth in eastern Europe was hampered by continuing consumer reticence in Poland and Romania. Nonetheless, revenue was on par with the previous year, adjusted for currency translation effects. In Novem-ber 2012, Real’s eastern European business was sold off. The sale is still to be approved by the responsible antitrust authorities, and is expected to be finalised in 2013.

Media-Saturn again confirmed its leading market position in Europe in 2012 and pushed forward with its expansion of the multi-channel business. The sales division increased revenue, adjusted for cur-rency translation effects, by 2 per cent despite the persistently difficult economic conditions. The rapid expansion and the acquisi-tion of Redcoon have contributed to this. Revenue increased in Ger-many. The encouraging revenue trend is attributable to improve-ments in the pricing position, which have made Media-Saturn’s stationary business more attractive. The consequent expansion of the web presence and increased demand for consumer electronics in the course of the European 2012 Football Championship made a positive contribution to this. By contrast, business in the western Europe region was considerably weighed down. This development – together with the sale of the French Saturn electronics stores in the previous year – led to declining revenue in this region. By contrast, eastern Europe recorded solid growth rates.

On the whole, revenue for Galeria Kaufhof declined slightly. In Germany, the consumer electronics segment has now been com-pletely discontinued in all stores in favour of higher-margin prod-ucts such as accessories, apparel and footwear. The clothing range developed extremely positively during the year under review.

OPERATING PROFIT DOWNThe METRO GROUP’s operating profit in 2012 amounted to EUR 1,391 million, down from EUR 2,113 million in the same period of the previous year. The reason for this decline were one-off expenses

HANIEL INVESTMENT RESULTEUR million

329 -1,523

<-100%

2011 2012

48

incurred mainly in relation to portfolio and restructuring measures. Adjusted for these one-off expenses, the operating profit declined from EUR 2,372 million to EUR 1,976 million. This decrease is due primarily to the difficult market environment in southern Europe and parts of eastern Europe, as well as to selective price cuts.

EARNINGS CONTRIBUTION FOR HANIEL MASSIVELY REDUCED DUE TO IMPAIRMENT LOSSESThe noticeable drop in the METRO GROUP’ operating profit had pro-portionate negative impact on the investment result the Haniel Group derives from the METRO GROUP. The improved net financial income of the METRO GROUP offset this development to some extent. The tax expense was only slightly lower than in the previ-ous year.

Haniel’s earnings contribution from the Metro investment fell from EUR 329 million in the previous year to EUR -1,523 million in 2012. The clear decline had causes in addition to the METRO GROUP’s lower operating profit: For instance, the decision to dispose of 4.23 per cent of the voting shares in METRO GROUP required an impairment loss of EUR 345 million on the expected disposal proceeds. In addition, the impairment test for the remaining Metro investment resulted 2012 in an impairment loss of EUR 1,149 million. This was due primarily to the fact that the underlying corporate planning assumed a weaker future business development for the METRO GROUP. Moreover, it should be noted that, in addition to the invest-ment result of the METRO GROUP, the sale of real estate belonging to Metro’s founding shareholders increased Haniel’s result by EUR 172 million in the previous year.

HANIEL ANNUAL REPORT 2012 / GROUP REPORT OF THE MANAGING BOARD / ME TRO GROUP / MINORIT Y INVES TMENT

49

SUPPLEMENTARY REPORT

Franz Haniel & Cie. GmbH has continued to implement the package of measures announced at the end of November aimed at reducing debt. The disposal of shares of one investment fund was concluded in January 2013 and the disposal of 4.23 per cent of voting shares in METRO AG was completed in February 2013. The disposals gener-ated proceeds amounting to a total of EUR 383 million. An agree-ment concerning the sale of a portion of the second investment fund was entered into. The cash inflows from these sales were used to reduce financial debt. In this context, Franz Haniel & Cie. GmbH issued a public tender offer in February 2013 to repurchase the euro benchmark bond maturing in 2014. As a result, bonds with a principal amount of EUR 284 million were repurchased.

The Celesio division entered into a syndicated loan agreement for EUR 500 million in February 2013. This syndicated credit facility has a term until February 2018 and replaces the expired syndi-cated loan for EUR 600 million.

Also in February, the ELG division acquired 100 per cent of shares in ABS Industrial Resources Limited in the UK, as well as its subsidiar-ies. ABS operates recycling plants in particular for superalloys in the UK, the USA and South Africa.

No further reportable events took place after the reporting date.


50

expansion. In the long-term, Haniel seeks to distribute its business activities in a balanced relationship to each region’s share of eco-nomic activity.

Growing demand for healthcare services: Celesio has a strong mar-ket position and years of experience in the pharmaceutical busi-ness. Given a global population that is growing and becoming older, growing demand for healthcare services and pharmaceuticals can be expected in the future. Celesio wishes to continue to ben-efit from this trend and supply the market cost-efficiently. In the course of the strategic realignment initiated in 2011, the focus will lie on further developing the core businesses wholesale and phar-macies going forward. Celesio plans to generate increased earn-ings by establishing a European pharmacy network. In addition, further earnings contributions will be realised by offering new ser-vices and enhanced efficiency throughout the entire value-added chain for pharmaceuticals distribution.

Expansion of multi-channel activities: The performance of the mail-order business was encouraging. Continuing digitalisation gives rise to growth opportunities through the consistent enhance-ment of the METRO GROUP’s retail and wholesale business and of TAKKT’s mail-order business into a multi-channel business. These growth opportunities at the METRO GROUP reside in the dovetail-ing of the stationary business with the e-commerce activities. The METRO GROUP creates a true added value for the customer on this basis. TAKKT, the mail-order specialist, plans first and foremost to strengthen further distribution channels such as telemarketing, e-commerce and the field service. The expansion of e-commerce activities comprises both web shops and e-procurement systems. In this way, TAKKT offers customers the option of simplifying their procurement processes and thus reducing costs.

Increasing demand for raw materials: ELG’s core business is the trading and processing of primary and secondary raw materials for the stainless steel market sector. Growth opportunities for ELG result from increasing global demand for stainless steel products that is anticipated over the medium- and long-terms. In addition, the superalloys sector will continue to gain in significance. In this sector, ELG prepares very high-grade secondary raw materials, pri-marily titanium and high-alloy stainless steel scraps. These prod-ucts find uses in, for example, the aerospace industry and energy generation. ELG gained additional growth potential in 2011 with the acquisition of ELG Carbon Fibre Ltd. This new company gives ELG a sustainable ecological concept for recycling carbon fibres. ELG is planning to expand this innovative business model systematically.

Sustainability as a competitive factor: The acceptance of corpo-rate responsibility has a long tradition in the Haniel Group. It is expressed in its striving to create not only economic but also eco-logical and social value with its business activities. That this repre-sents not a contradiction, but an opportunity to open up potential for growth, is shown by the CWS-boco division. By the division con-tinually reviewing and employing alternative drive train technolo-gies for its logistics fleet and increasingly introducing water-saving

OPPORTUNITIES AND RISKS

Entrepreneurial risks are usually counterbalanced by opportunities, which must be exploited. At the same time, possible risks to business development must be recognised early, analysed in detail, and reduced to an economically reasonable dimension.

EXPLOITING OPPORTUNITIES TO INCREASE VALUEIn the Haniel Group, opportunities are identified by continually observing markets. The decentralised organisational and manage-ment structure puts the Holding Company and the divisions in a position to recognise early on trends and demands as they appear in the often fragmented markets we serve. In addition, information on markets, trends and competitors is systematically collected and analysed.

Opportunity management is closely integrated into the process of strategy development. Entrepreneurial options are systematically evaluated and initiatives are developed for using these options to increase value as part of strategic planning. In the next step, strategic initiatives specified in detail in operational planning and action plans are derived from those plans.

The strategy and its implementation are discussed in depth by the members of the Haniel Managing Board with the management of the divisions in regularly scheduled management meetings. Over and above that, the Holding Company’s portfolio strategy is con-tinuously reassessed. To that end, the Managing Board engages in regular dialogue with the Supervisory Board.

OPTIONS FOR FUTURE GROWTHThe Haniel Group enjoys a large number of options for entrepre-neurial action. The Holding Company and divisions continually search for those possibilities that secure sustainable and profit-able growth. This search starts with trends that are of global sig-nificance. The opportunities identified in the Group are listed below.

Optimising the business portfolio: Haniel continually reviews the strategic alignment of its portfolio. As a result of this, Haniel has identified business models that can make a value contribution to the economic success of the Group in the coming decades and that are in harmony with ecological and social values. On the basis of global megatrends, investment opportunities are systematically identified, analysed and evaluated. Based on this, the portfolio will be further developed by business acquisitions and disposals that sustainably enhance value creation while always maintaining a solid financing structure.

International expansion: The Haniel Group is widely represented in western Europe and enjoys a strong position there with its various business models. Haniel sees opportunities for further growth – be it by way of founding or acquiring businesses – in the dynamically growing economies of the world. The divisions are already active in various ways in eastern Europe, and will further expand their pres-ence there. In Asia and America too, Haniel is driving forward its

51

laundry processes, the company not only reduces its emissions and protects natural resources, but also cuts costs. By using cloth towel rolls instead of paper towels, CWS-boco’s customers not only have a long-term solution and economic handling of resources, they also reduce their waste disposal costs. With service offerings and processes that are oriented towards sustainability, CWS-boco is clearly contrasting itself from its competitors in the market and is profiting from the growing demand in this market segment. You can find detailed information on the subject of sustainability in the Haniel Group in the “Corporate Responsibility” section starting on page 31.

SYSTEMATIC RISK MANAGEMENTThe objective of the risk management system at Haniel is a for-ward-looking evaluation of risks with respect to the overriding corporate objectives of value creation, growth and liquidity. The purpose is to anticipate those risks that negatively impact stra-tegic and operating initiatives and hence the realisation of value and growth potentials or that endanger having adequate liquidity available at all times. Haniel’s risk management system is based on an integration concept that comprises multiple risk management components that are embedded in the central management and control systems.

The organisational structure for risk management is defined throughout the Group. At the level of the fully consolidated divi-sions, the controlling or internal auditing departments coordinate risk identification and are responsible for risk assessment as part of corporate planning. Identified risks throughout the Group are discussed by the Risk Management Committee with the participa-tion of the Managing Board, and any need for additional action to manage risk is examined. Furthermore, there is also a Risk Manage-ment Committee at the Holding Company level in which the Man-aging Board and the heads of all corporate and staff departments are represented. This body serves above all to foster a cross-dis-ciplinary exchange of information on the risks faced by the Holding Company. The Risk Management Officer at the Holding Company level coordinates the risk identification process across all divisions and is responsible for further developing the early risk identifica-tion system.

The significant risks are identified in connection with the strate-gic and operational planning, and systematically assessed with regard to their probability of occurrence and the amount of dam-age. The identified risks are discussed in the planning meetings by the Managing Board of the Holding Company and management of the divisions. The risks are subsequently discussed in greater detail in the Risk Management Committee. In addition to this risk survey, a risk inventory is taken at the Holding Company level. The results are discussed by the Risk Management Committee. The Haniel Group risk report is prepared based on the divisions’ risk reports and the Holding Company’s risk inventory. The members of the Managing Board discuss the findings and inform the Audit Committee of the Group’s overall risk situation and about signifi-cant individual risks.

The reporting and management of financial risks comprises cur-rency, interest rate and liquidity risks, as well as risks from deriva-tive financial instruments. The objective is to avoid or limit finan-cial risks. To that end, the Managing Board has formulated general principles for financial risk management. These are prescribed in binding guidelines for the treasury departments of the Holding Company and the divisions. The management of financial risks is explained in detail in the notes to the consolidated financial state-ments starting on page 70.

As part of their interim reporting, the divisions submit not only key financial figures but also company-specific non-financial fig-ures and data to the Holding Company so that undesirable devel-opments are detected in good time. This reporting is expanded to include risks that exceed defined thresholds.

An additional element of risk management is the ongoing collection and analysis of information on markets, trends and competitors.

Investment controlling comprises annual budgeting as well as the regular review of the capital spent. Capital spending projects are assessed using uniform discounted cash flow (DCF) calculations. Minimum risk-equivalent rates of return are specified for each divi-sion and each strategic business unit.

The internal control system is designed to ensure that existing regulations for risk reduction are adhered to at all levels within the Group. This is intended to ensure the functionality and cost-effectiveness of business processes and to thwart impairment of assets. The internal control system is implemented in the Hold-ing Company and divisions according to their specific business models, and incorporates both process-integrated and process-independent control measures. It covers all significant business processes including the accounting process.

The Internal Auditing departments in the divisions and the Holding Company are integrated into the risk management system. They monitor the processes within the companies of the Haniel Group, in particular from the perspectives of operating performance, cost-effectiveness and adherence to statutory regulations and internal guidelines. These efforts also include monitoring the implementa-tion and effectiveness of the risk management system, including the internal control system. In its risk-based audit plan, Internal Auditing also takes account of the information from the risk survey and examines significant risk issues where necessary.

Corporate bylaws and regulations derived from them ensure that the elements of the risk management system are adhered to and applied in the intended manner in the Haniel Group as allowed by law. Codes of conduct for the Holding Company and the divisions supplement these regulations. They set forth the basic principles of conduct for employees, based on practised value concepts.

The effectiveness of the risk management system is monitored regularly and improvements are introduced where necessary.

52

In 2012 the auditors were again commissioned by the Supervisory Board to subject the Group’s early risk identification system to a voluntary audit analogously to § 317 (4) of the German Commercial Code (Handelsgesetzbuch, “HGB”). The auditor verified the suitabil-ity of this system.

CLEARLY DEFINED RISK FIELDSA prerequisite of systematic risk management is that risks are identified in a timely fashion. Only in this way is it possible to take rapid and effective countermeasures. The significant risks for the Haniel Group are listed below.

Corporate strategy: Corporate strategy risks can arise above all from the erroneous assessment of future market developments. Haniel counters this risk through intensive observation of the mar-kets and the competitors and by way of regular strategy discus-sions between the Managing Board and the management teams of the divisions. In addition, the diversified portfolio of business fields helps to mitigate the effects of adverse developments in individual sectors.

Business acquisitions and disposals: To exclude the risks associ-ated with corporate transactions to the greatest extent possible, investments and divestitures are carefully examined before their conclusion and are evaluated using uniform DCF rate of return cal-culations. An acquired company is subsequently integrated into the Haniel Group on the basis of detailed timetables and action plans as well as clearly defined responsibilities. If, despite all dili-gence, the objectives envisaged with an acquisition are not or only partially attained, impairment losses on goodwill and other assets may be necessary. In order to counter risks from corporate trans-actions, the success of previously executed business acquisitions is reviewed on a regular basis.

Human resources: The corporate success of the Haniel Group is dependent largely on the expertise and commitment of its employ-ees. Executives must exhibit the necessary competence, experi-ence and personality in order to make correct decisions in the sense of a value-driven and long-term development of their departments. Well-trained specialist staff are necessary for optimally supporting executive decision making. That is why the Group strives to recruit qualified staff and to foster their loyalty to the company. Haniel invests in the continuing education of its employees. Its internal Haniel Academy offers specialists and managers from the Group individual seminars and modular programmes on core entrepre-neurial processes and key areas as well as areas of expertise. The programmes in the “Haniel Leadership Curriculum” prepare emerg-ing management talent, experienced executives and top managers for future challenges and management tasks. Detailed information on training and continuing education at Haniel can be found in the “Corporate Responsibility” section beginning on page 31.

Financing: In addition to equity, financing requirements for the oper-ating business are secured in the Haniel Group primarily through debt capital. When outside financing is used, the company seeks

to diversify its financing instruments and its circle of investors in order to be able to respond flexibly to developments on the capital markets and in the banking sector. The Holding Company and divi-sions have obtained binding pledges for bilateral lines of credit that have only been drawn upon to a limited extent, and as yet unused syndicated loans. These are augmented by regularly updated capi-tal market programmes at the Holding Company, such as the “Debt Issuance Programme”. When financing with borrowed capital, it is of benefit that the Holding Company and its divisions, as established and reliable partners, enjoy a high degree of trust from banks and other investors. Haniel is thus able to ensure the continuation of the operating business, even if economic conditions cause declines in incoming payments from business activities.

Exchange rates and interest rates: Changes in currency rates and interest rates could have adverse effects on consolidated net income. In regard to interest rate changes, the Haniel Group dif-ferentiates between changes in the market interest rate and the change in the margin that must be paid in addition to the market rate. The Group uses a variety of hedging instruments to limit the risks from fluctuations in market interest rates and currency exchange rates. These are explained in detail in the notes to the consolidated financial statements starting on page 70. The Holding Company and divisions use long-term credit agreements and bonds in order to limit the volatility of interest margins. The margin for bor-rowed capital at Haniel also depends on the Holding Company’s rat-ing. This is based primarily on the market value gearing, that is, the ratio between net financial liabilities and the market value of the investment portfolio.

Overall economic development: The demand for the divisions’ ser-vices and products is also influenced by overall economic devel-opments. However, the extent of this dependency varies, and its effects in the fully consolidated divisions may be delayed. While a weakening economy affects Celesio to a relatively small degree, at ELG and TAKKT it is directly reflected in the development of the busi-ness. The impact of a negative economic development also makes itself felt at CWS-boco but with a delay due to the long-term nature of contracts in its core rental service business. The diversification of the Haniel business portfolio and its presence in various regions can mitigate the effects of economic fluctuations. A strong market position, comprehensive product and service offerings, and the heterogeneous customer base also contribute to risk mitigation.

Government regulation of the pharmaceuticals market: The phar-maceuticals market, in which Celesio is involved, has always been subject to government intervention. This affects not only the legal framework of the markets but in particular the remuneration sys-tems for service providers. The ageing population and the associ-ated increase in demand for medical and pharmaceutical services as well as drugs are resulting in rising expenditures in the health-care sector. Many governments are therefore seeking to limit these higher expenditures by regulating prices. Increasing government deficits and lower cash inflows in the governmental healthcare sys-tems create the risk of further intensification of this development.

HANIEL ANNUAL REPORT 2012 / GROUP REPORT OF THE MANAGING BOARD / OPPORTUNITIES AND RISKS

53

Governmental intervention in the healthcare sector has impaired Celesio’s business development and earning performance and could also have a negative impact in future. Impairments of good-will could also be necessary. Celesio operates a permanent cost management system aimed at compensating for burdens from governmental regulation. This will be supported using a multi-year Operational Excellence Program, which Celesio launched in 2011 to increase competitiveness. Program components are the Group-wide bundling of procurement activities, strengthening the market position in Sweden, optimising the logistics network, and reducing administrative costs. In addition, Celesio is diversifying its regional activities and intends to participate in the growth of less regulated healthcare markets.

Commodities prices: The price of nickel has a considerable impact on business developments at the ELG division; that price is affected in turn by economic developments in the industry. Price hedges using derivative financial instruments stabilise business develop-ment at ELG, as does the broad geographic distribution of commod-ity flows in both procurement and distribution.

Bad debts: Given the nature of the sector in which it operates, ELG in particular delivers its products to a small number of very large customers. In some instances this can lead to extensive receiva-bles per customer. In order to limit the risks resulting from non-payment, ELG has a comprehensive receivables management sys-tem, as far as possible systematically obtains default insurance to cover this risk and sells accounts receivables within the context of forfaiting programmes.

Information technology: Well-functioning IT systems tailored to corporate strategy represent a necessary precondition for the Haniel Group’s operating activities and administrative depart-ments. Insufficient customisability and speed of IT systems entail significant competitive disadvantages when strategic require-ments change. Haniel Holding and the divisions therefore review their IT strategy regularly. In addition, the ongoing use of IT sys-tems entails the risk of an outage. Professionally organised IT oper-ations prevent such system problems. This includes Haniel Holding and the divisions having emergency systems available and regular backups of relevant data.

Investments: In particular, Haniel has a major investment in the METRO GROUP, one of the world’s leading retailing companies. Fac-tors that exert an unfavourable influence on the consolidated profit of METRO AG could also have a negative effect on the Haniel Group’s investment result or the carrying amount of the investment. The risks to the METRO GROUP reside in macroeconomic development as well as an erroneous assessment of markets for international expansion. In addition, changes in consumption patterns and customer expectations of retailers could negatively impact the business development of the METRO GROUP if it is not success-ful in reacting early to such changes. The same applies also for the increasing competitive pressure through pure online sellers. Overall, the risks to which the company is exposed are mitigated

by intensive observation of trends and the market and competitive environment as well as by the METRO GROUP’s diversification of its product lines and regional activities.

Litigation: Neither Franz Haniel & Cie. GmbH nor any of its current subsidiaries are involved in ongoing or currently foreseeable litiga-tion that could have a significant impact on the Group’s assets or financial position or performance.

NO RISKS ENDANGERING THE GOING CONCERN ASSUMPTIONNeither risks endangering the going concern assumption nor any noteworthy future risks beyond the normal entrepreneurial risk are discernible.

CONTROLLED ACCOUNTING PROCESSESThe Haniel Group applies an internal control and risk management system to its accounting processes. The purpose is to ensure that its financial reporting is reliable and that the risk of misstatements in the external and internal Group Reports is minimised. Misstate-ments are most likely to originate from complex transactions or consolidation procedures, mass transactions, the materiality of individual items of the financial statements, the use of discretion and estimates, unauthorised access to IT systems, and inade-quately trained employees. Regular checks are performed to deter-mine the extent to which these factors can jeopardise the integrity of the consolidated financial statements.

In order to counter potential risks, the Haniel Group installed an internal control system that seeks to ensure the reliability and propriety of the financial reporting processes, compliance with the relevant statutory and internal regulations, and the efficiency and effectiveness of procedures. However, even an appropriate and functional internal control system cannot guarantee that all risks will be identified and avoided. The Haniel Group’s internal control system is based on the COSO publication “Internal Control Inte-grated Framework”. COSO is the Committee of Sponsoring Organiza-tions of the Treadway Commission.

The existing risk and control structure is systematically recorded and documented. For this purpose, the most important risk fields are regularly updated and checked on the basis of clearly defined qualitative and quantitative materiality criteria. In the event of changed or newly emerged accounting-related risks or identified control weaknesses, it is the divisions’ responsibility, in coordina-tion with Corporate Accounting, to implement appropriate control measures at the earliest possible opportunity. The effectiveness of the defined controls is checked and documented at regular intervals by means of self-assessment on the part of the controlling officers or their supervisors. Responsibility for establishing and supervising the internal control system lies with the Managing Board. In addi-tion, the Audit Committee monitors the system’s effectiveness.

The Haniel Group is distinguished by its transparent and decentral-ised management and corporate structure. The local accounting processes are managed by the divisions, each of which prepares

HANIEL ANNUAL REPORT 2012 / GROUP REPORT OF THE MANAGING BOARD / OPPORTUNITIES AND RISKS

54

its own subgroup financial statements. The management of the entities included in the subgroups controls and monitors the risks concerning the operational accounting processes. The Group com-panies are responsible for compliance with the guidelines and pro-cedures that apply throughout the Group. They are also answerable for the proper and timely flow of their accounting processes. They are supported in that respect by Corporate Accounting.

Corporate Accounting prepares the consolidated financial state-ments and the Group Report of the Managing Board. The relevance of ongoing developments of the IFRS standards and other applica-ble statutory provisions and their impact on the consolidated finan-cial statements and/or the Group Report of the Managing Board is continuously assessed. The Managing Board and Group companies are informed, as necessary, of any consequences on consolidated reporting. Financial reporting is governed by accounting guide-lines applicable throughout the Group, a uniform Group chart of accounts, and a financial statements calendar applicable through-out the Group. The accounting guidelines are updated annually, paying due regard to relevant changes in the law. There are bind-ing provisions and uniform instruments for complex issues, such as goodwill impairment testing and the measurement of deferred taxes. Outside experts are brought in if required, for example, to measure pension obligations or to prepare expert opinions on the purchase price allocation for acquisitions.

The Haniel Group’s formal analysis and reporting process seeks to ensure that the information contained in the published annual report is reliable and complete. Corporate Accounting performs analytical checks in order to identify potential errors in consoli-dated reporting. The checks are documented and reviewed accord-ing to the principle of dual control. A detailed timetable and fixed responsibilities apply for the preparation of accounts.

Standardised and centrally managed IT systems are used to pre-pare the consolidated financial statements. This applies to con-solidation at all stages of the Haniel Group and to the process of preparing the notes to the financial statements. The closing pro-cess is supported by numerous validations. The IT systems used in the accounting department are protected against unauthorised access. Separations of functions and change management sys-tems are installed.

As an important element of internal process monitoring that is independent of the relevant processes, the Internal Auditing departments are responsible for systematically auditing and inde-pendently assessing the internal control systems.

As part of the audit of the consolidated annual financial state-ments, external auditors report on their material audit findings and any weaknesses in the internal control system relating to all of the entities included in the financial statements.

55

The year 2012 saw many business activities of the Haniel Group undertake strategic realignment measures and portfolio measures. Against this background, the employee headcount fell by 2 per cent from an average of 57,828 to 56,480 people. This was due in particular to Celesio’s disposals of Movianto, Pharmexx and Doc-Morris mail-order pharmacy businesses. In the Haniel Group’s continuing operations, the number of employ-ees fell primarily due to the sale of Celesio activities in the Czech Republic. The acquisitions at TAKKT and the full-year consolidation of companies acquired at ELG and Celesio in the previous year had a counter-effect. Over-all, the number of employees in continuing operations fell on average from 50,684 to 50,609.

EMPLOYEE HEADCOUNT ADJUSTED IN LINE WITH BUSINESS DEVELOPMENTThe employee headcount at the Celesio division’s continuing opera-tions fell from an average of 39,525 to 39,295 due to the sale of the wholesale and pharmacy businesses in the Czech Republic. The reduction in number of employees was mitigated by the full-year consolidation of Oncoprod, the Brazilian wholesaler acquired in the second half of 2011. At CWS-boco, there was a slight reduction in employee figures during the course of the year in connection with the Focus Future repositioning project for optimising operational and logistics processes. CWS-boco employed an average of 7,643 people at the end of the year, as compared to 7,816 in the previ-ous year. In the ELG division, the number of employees increased slightly from 1,068 to 1,098. The increase resulted essentially from the full-year consolidation of ELG Carbon Fibre Ltd. acquired by ELG in the course of entering the carbon fibre recycling segment. At TAKKT as well, development in employee headcount was charac-terised during the course of the year by strategic acquisitions. The acquisition of GPA in the USA and Ratioform in Germany resulted in an increase in the number of employees from 2,003 to 2,340.

The international alignment of the Haniel Group is also reflected in the regional distribution of employees: Overall, 84 per cent of employees worked outside of Germany at the end of the year.

DEVELOP TALENT, PROMOTE DIVERSIT YWith its strategic positioning as a “value developer”, Haniel set a goal of buying investments and developing further entrepreneuri-ally. To be able to do so, the Group depends on sufficiently qualified managers and new staff with management potential. The system-atic review, development and positioning of talent remains there-fore a central topic of human resources management. In addition, it is necessary to promote diversity. For example, at 63 per cent, the percentage of women in the workforce is already comparatively high and shall be increased further – in particular in management. In 2012, Celesio appointed a woman to join its Managing Board, and a woman was appointed to join ELG’s management.

EMPLOYEES

50,684 50,609

-0%

EMPLOYEES

2011 2012

Continuing operations

57,828 56,480

-2%

EMPLOYEES

2011 2012

Annual average (headcount) Annual average (headcount)

The 2012 financial year was marked by strategic rea-lignments and portfolio measures, in particular at Celesio and the METRO GROUP. The initiatives launched will be consistently continued in 2013. Haniel’s Manag-ing Board expects positive stimuli for business develop-ment. However, these expectations are accompanied by uncertainties from the macroeconomic environment.

MACROECONOMIC ENVIRONMENTThe International Monetary Fund (IMF) is forecasting 3.5 per cent growth in global gross domestic product for 2013, slightly higher than the 3.2 per cent for 2012. They also expect increasing momen-tum during the course of the year. For subsequent years, economic growth is assumed to be even stronger than in the years 2012 and 2013.

Despite this overall slightly more positive outlook, the IMF contin-ues to assume that the individual economic areas will develop very differently. For example, following -0.6 per cent decline in 2012, the euro zone may again shrink slightly by -0.2 per cent in 2013 before returning to growth. This is primarily attributable to the southern European countries, which are particularly impacted by the sover-eign debt crisis. Forecasted at 0.6 per cent, growth in Germany will be slightly below the previous year’s level of 0.7 per cent and con-tinues to be based on a high share of exports and a slight increase in domestic consumption. However, continued above-average growth in Germany cannot fully compensate for the negative trend in the southern European countries, but only mitigate it.

In contrast to the euro zone, significantly stronger economic growth of 2.0 per cent is expected for the USA in 2013, following a 2.2 per cent increase in the previous year. However, the IMF forecasts a return to accelerated growth starting in 2014. The larger Asian economies may again strengthen the global economy in 2013. For example, the IMF expects China to experience slightly higher eco-nomic growth of 8.2 per cent – compared to 7.8 per cent in the previ-ous year – with growth trending upward in subsequent years.

In the opinion of the Haniel Managing Board, economic forecasts remain fraught with a great deal of uncertainty because there are a number of risks that may stand in the way of a sustainable eco-nomic recovery. In particular, if the sovereign debt crisis worsens, this can significantly impair the economic climate and consumer confidence.

DEVELOPMENT OF THE DIVISIONSEconomic conditions also determine the business development of the Haniel Group; however, the extent varies widely at the divisions.

Business development at CWS-boco will be determined in addition to the economic development to a considerable extent by the con-tinued success of the Focus Future repositioning project. For 2013, positive effects are expected from actions already conducted as

well as additional initiatives from the repositioning project. At the forefront here is the optimisation of locations and processes in operations and logistics. There are also plans to expand the volume of customer contracts further through targeted initiatives in cus-tomer service as well as a continuous strengthening of distribution also by using a new training concept.

For 2013, CWS-boco expects revenue growth of 2 to 3 per cent adjusted for currency translation effects. A significant increase in operating profit of at least 10 per cent is expected as a result of the increasingly positive effects from the Focus Future project.

Based on current estimates, the ELG division assumes that world-wide production of stainless steel will be slightly higher in 2013 than in the previous year – despite the uncertainties in the macroeconomic environment. Therefore a moderate increase in output tonnage in the low single-digit percentage range is forecasted. Commodities prices for nickel, chrome and iron should move at 2012’s relatively low level on an annual average. Additionally, ELG expects a low availability of scrap metals again for 2013, so overall, an intensely competitive business climate is to be assumed. Based on these assumptions the division expects 2013 revenue and operating profit to increase in the low single-digit percentage range. As development on the commodi-ties markets is very volatile, ELG’s revenue and operating profit may also deviate significantly from this forecast however.

As part of its growth strategy, ELG intends to strengthen its market and competitive position in Europe and America further. The focus in Asia continues to be on expanding procurement activities. With respect to sales quantities, ELG plans to further strengthen exist-ing trade relations.

Economic development in Europe and America will have a consid-erable influence on business development at TAKKT. For 2013, TAKKT assumes a revenue increase of 7 to 9 per cent adjusted for currency translation effects. Of that, about 6 percentage points is from GPA and Ratioform, acquired companies whose full-year sales will be included for the first time in 2013. A slightly higher operating profit than in 2012 is expected for 2013.

TAKKT will continue to pursue its growth initiatives consistently in 2013. For example, there are plans to expand existing brands into new regional markets and to open up additional customer groups using new distribution approaches. Also, new products and services will open opportunities for growth with existing and new customers.

Celesio intends to continue pursuing its strategic realignment in 2013. Celesio expects positive stimuli for business development from the initiatives already implemented from the Operational Excellence Program as well as from the stronger dovetailing of the pharmacies and wholesale business through the remodelled organ-isational structure. Based on experience, economic development has a comparatively low direct influence on Celesio’s business. However, additional savings in the healthcare sector due to the high debt levels in national budgets could have a negative impact


56

OUTLOOK

57

on Celesio’s business development. The wholesale and pharma-cies business may develop differently in the individual countries because they will be affected by governmental measures in dif-ferent degrees and the respective markets vary in their competi-tive pressure. Adjusted for currency translation effects, overall Celesio expects a slight decline in revenue due to the missing sales from disposed activities. With regard to operating profit, Celesio assumes that the positive contributions to earnings from the imple-mented initiatives will compensate for possible burdens from gov-ernmental measures. Celesio therefore expects operating income of EUR 445 million to EUR 475 million for the 2013 financial year.

For 2013, the METRO GROUP assumes moderate revenue growth, adjusted for company acquisitions and disposals as well as cur-rency translation effects, despite the continuing macroeconomic uncertainties. The METRO GROUP expects positive stimuli for busi-ness development from the initiatives launched in the sales divi-sions. For 2013 the group plans to further advance international expansion with an emphasis on the growth regions of Eastern Europe and Asia. Distribution formats and channels will continue to be developed further, in particular the expansion of the multi-chan-nel business. Additionally, the METRO GROUP continues to focus on efficient structures and strict cost control. For 2013, an oper-ating profit before one-off expenses at the previous year’s level is expected. At Haniel, a noticeably higher investment result from the Metro investment is assumed for 2013 as 2012 was encumbered primarily by the write-down of the Metro investment.

OUTLOOK FOR THE GROUPFor the Group, the Haniel Managing Board expects slightly declining revenue in the 2013 financial year due to the business disposals at Celesio. In contrast, a moderate increase in operating profit is expected – also adjusted for one-off expenses for the restructur-ing and portfolio measures, which lowered Celesio’s operating profit in 2012. Both the result from financing activities and invest-ment result from the Metro investment are anticipated to improve significantly in 2013. This is attributable to the fact that one-off expenses at the 2012 level are no longer expected. The Haniel Managing Board therefore expects a considerably higher, positive profit before taxes for the 2013 financial year.

A slight increase in capital expenditures for property, plant and equipment, intangible and other non-current assets in the Haniel Group is foreseen for 2013. However, debt must first be further reduced in order to be able to make major acquisitions in new busi-ness fields at the Haniel Holding level.

Should the Haniel Group have to cope with economic setbacks how-ever, sharply declining revenue and a declining operating profit compared to 2012 must be expected. By contrast, the profit before taxes should exceed the previous year’s level even in that event.

For 2014, the Haniel Managing Board expects growth in revenue and profit – provided that there are no burdens from the economic environment.

CONSOLIDATED FINANCIAL STATEMENTS

62STATEMENT OF

FINANCIAL POSITION

64INCOME STATEMENT

65STATEMENT OF

COMPREHENSIVE INCOME

66STATEMENT OF

CHANGES IN EQUITY

67STATEMENT OF CASH FLOWS

68SEGMENT REPORTING

70NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

70 GENERAL BASIS OF PRESENTATION

80 NOTES TO THE STATEMENT OF FINANCIAL POSITION

102 NOTES TO THE INCOME STATEMENT

106 OTHER NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

TOTAL ASSETSEUR 14.4 BILLION

ASSET STRUCTURE

NON-CURRENT ASSETS56%

CURRENT ASSETS 44%

EQUITY AND LIABILITY STRUCTURE

EQUITY31%

NON-CURRENT LIABILITIES 37%

CURRENT LIABILITIES 32%

HANIEL ANNUAL REPORT 2012 / CONSOLIDATED FINANCIAL S TATEMENTS

62

HANIEL GROUP STATEMENT OF FINANCIAL POSITION

ASSETS

EUR million Note 31 Dec. 2012 31 Dec. 2011

Property, plant and equipment 1 1,031 1,104

Intangible assets 2 3,394 3,464

Investments accounted for at equity 3 2,720 4,631

Financial assets 4 824 1,060

Other non-current assets 5 98 41

Income tax assets 2 3

Deferred taxes 6 60 183

Non-current assets 8,129 10,486

Inventories 7 2,094 2,260

Trade receivables 8 2,500 2,937

Receivables from investments and other current assets 9 469 461

Financial assets 10 37 20

Income tax assets 92 81

Cash and cash equivalents 11 560 459

Assets held for sale 12 535 2

Current assets 6,287 6,220

Total assets 14,416 16,706

63

EQUIT Y AND LIABILITIES

EUR million Note 31 Dec. 2012 31 Dec. 2011

Equity of shareholders of Franz Haniel & Cie. GmbH 3,208 5,065

Non-controlling interests 1,292 1,282

Equity 13 4,500 6,347

Financial liabilities 14 4,670 4,322

Pension provisions 15 309 290

Other non-current provisions 16 182 185

Other non-current liabilities 17 65 129

Deferred taxes 6 137 244

Non-current liabilities 5,363 5,170

Financial liabilities 14 750 992

Current provisions 16 269 288

Trade payables and similar liabilities 18 2,470 2,955

Income tax liabilities 69 85

Other current liabilities 19 922 869

Liabilities held for sale 12 73 0

Current liabilities 4,553 5,189

Total equity and liabilities 14,416 16,706


64

HANIEL GROUP INCOME STATEMENT

EUR million Note 2012 2011*

Revenue 20 26,331 26,473

Changes in inventories of fi nished goods and work in progress 2 5

Gross revenue 26,333 26,478

Cost of materials 22,615 22,866

Gross profi t 3,718 3,612

Other operating income 21 271 275

Total operating income 3,989 3,887

Personnel expenses 22 1,726 1,688

Other operating expenses 23 1,426 1,432

837 767

Depreciation and amortisation 320 318

Impairment of goodwill 21 49


Result from investments accounted for at equity -1,520 331

Other investment result 24 12 42

Finance costs 25 471 368

Other net fi nancial income 26 0 58

Net fi nancial income -1,979 63

Profi t before taxes -1,483 463

Income tax expenses 27 154 156

Profi t after taxes from continuing operations -1,637 307

Profi t after taxes from discontinued operations 28 -259 -71

Profi t after taxes -1,896 236

of which attributable to non-controlling interests -52 26

of which attributable to shareholders of Franz Haniel & Cie. GmbH -1,844 210


65

HANIEL GROUP STATEMENT OF COMPREHENSIVE INCOME

EUR million Note 2012 2011


Other comprehensive income

Income and expenses recognised in equity from remeasurement of derivative fi nancial instruments -34 -55

Reversals recognised in profi t or loss 45 37

Remeasurement of derivative fi nancial instruments 11 -18

Income and expenses recognised in equity from remeasurement of fi nancial instruments available for sale -7 42

Reversals recognised in profi t or loss -11 -38

Remeasurement of fi nancial assets available for sale -18 4

Income and expenses recognised in equity from foreign currency translation -15 10


Currency translation effects -11 10

Income and expenses recognised in equity from changes recognised directly in equity of investments accounted for at equity 33 -45


Other comprehensive income from investments accounted for at equity 51 -45

Deferred taxes on remeasurement of derivative fi nancial instruments -3 0

Deferred taxes on remeasurement of fi nancial assets available for sale 12 -1

Deferred taxes on other comprehensive income 9 -1

Total other comprehensive income 42 -50


of which attributable to shareholders of Franz Haniel & Cie. GmbH 49 -51

Comprehensive income 13 -1,854 186


of which attributable to shareholders of Franz Haniel & Cie. GmbH -1,795 159


66

HANIEL GROUP STATEMENT OF CHANGES IN EQUITY

CHANGES IN 2012

EUR million Subscribed capital

Capital reserve

Accumulated other

comprehensive income

Retained earnings

Treasury shares

Equity of shareholders

of Franz Haniel & Cie. GmbH

Non-controlling interests

Equity

As at 1 Jan. 2012 1,000 678 -291 3,683 -5 5,065 1,282 6,347

Dividends -50 -50 -39 -89

Changes in the scope of consolidation 0 0

Changes in shares in companies already consolidated 7 -19 -12 108 96

Capital measures 0 0

Changes in treasury shares 0 0

Comprehensive income 49 -1,844 -1,795 -59 -1,854

As at 31 Dec. 2012 1,000 678 -235 1,770 -5 3,208 1,292 4,500

CHANGES IN 2011

EUR million Subscribed capital

Capital reserve

Accumulated other

comprehensive income

Retained earnings

Treasury shares

Equity of shareholders

of Franz Haniel & Cie. GmbH

Non-controlling interests

Equity

As at 1 Jan. 2011 1,000 678 -240 3,510 0 4,948 1,269 6,217

Dividends -60 -60 -50 -110

Changes in the scope of consolidation 0 19 19

Changes in shares in companies already consolidated 1 1 -2 -1

Capital measures 22 22 19 41

Changes in treasury shares -5 -5 -5

Comprehensive income -51 210 159 27 186

As at 31 Dec. 2011 1,000 678 -291 3,683 -5 5,065 1,282 6,347

For further explanatory comments concerning equity, see number 13 in the notes.

67

HANIEL GROUP STATEMENT OF CASH FLOWS

The cash flow includes dividend income in the amount of EUR 125 million (previous year: EUR 101 million), interest income of EUR 36 million (previous year: EUR 28 million) and interest expenses of EUR 290 million (previous year: EUR 327 million). Income tax payments amounted to EUR 166 million (previous year: EUR 178 million).

EUR million Note 2012 2011


Depreciation and amortisation, impairment losses and reversals on non-current assets 683 462

Change in pension provisions and other non-current provisions 24 48

Income/expenses from changes in deferred taxes 17 -13

Non-cash income/expenses and dividends of investments accounted for at equity 1,641 -233

Gains/losses from the disposal of non-current assets and consolidated companies and from remeasurement for changes in shares -29 -64

Haniel cash fl ow 440 436

Other non-cash income and expenses 177 91

Change in inventories, receivables and similar assets 42 71

Change in other current non-interest-bearing liabilities, current provisions and similar liabilities -140 215

Cash fl ow from operating activities 519 813

Proceeds from the disposal of property, plant and equipment, intangible assets and other non-current assets 182 205

Payments for investments in property, plant and equipment, intangible assets and other non-current assets -277 -426

Proceeds from the disposal of consolidated companies and other business units 217 3

Payments for acquisitions of consolidated companies and other business units -463 -43

Cash fl ow from investing activities -341 -261

Proceeds from contributions to equity 0 0

Payments to shareholders -89 -115

Payments from changes in shares in companies already consolidated 94 -1

Proceeds from issuance of fi nancial liabilities 3,260 3,135

Repayments of fi nancial liabilities -3,347 -3,327

Cash fl ow from fi nancing activities -82 -308

Cash and cash equivalents at the beginning of the period 459 211

Increase/decrease in cash and cash equivalents 96 244

Non-cash increase/decrease in cash and cash equivalents 5 4

Cash and cash equivalents at the end of the period 31 560 459

HANIEL GROUP SEGMENT REPORTING

HANIEL ANNUAL REPORT 2012 / CONSOLIDATED FINANCIAL S TATEMENTS / NOTES TO THE CONSOLIDATED FINANCIAL S TATEMENTS

68

2012 BY DIVISION

EUR million Celesio CWS-boco ELG TAKKT Other Con solidation Continuing operations

Discontinued operations

Segment revenue from external customers 22,271 756 2,364 940 26,331 663

Segment revenue from trans-actions with other segments 1 -1 0

Revenue 22,271 757 2,364 940 0 -1 26,331 663

Depreciation and amortisation of segment assets 135 124 14 22 4 299 4

Operating profi t 342 58 53 112 -43 -26 496 0

Result from investments accounted for at equity 3 -1,523 -1,520 -2

Finance costs 171 21 23 12 251 -7 471 1

Other net fi nancial income 14 1 4 -12 -7 0 1

Profi t before taxes 193 38 33 100 -1,701 -146 -1,483 -2

Material non-cash income (+) and expenses (-) other than depreciation and amortisation -197 -10 -16 -12 -1,659 -1,894 -259

Total assets 7,912 725 849 951 5,358 -1,409 14,386 30

of which carrying amount of investments accounted for at equity 77 2,643 2,720

of which goodwill 2,213 271 86 538 3,108

Financial liabilities 2,086 314 464 331 2,249 -24 5,420 0

Recognised investments in non-current segment assets 144 102 21 328 50 -16 629 16

Average number of employees (headcount) 39,295 7,643 1,098 2,340 233 50,609 5,871

2012 BY REGION

EUR million Germany France United Kingdom Norway USA Other countries Total


Segment revenue from exter-nal customers, by location of company 5,098 6,713 4,900 1,178 1,002 7,440 26,331

Non-current intangible assets and property, plant and equipment 1,090 204 1,696 206 327 902 4,425


Segment revenue from exter-nal customers, by location of company 88 62 49 464 663

Non-current intangible assets and property, plant and equipment 0

See number 33 in the notes for a description of the segments.

69

2011 BY DIVISION*

EUR million Celesio CWS-boco ELG TAKKT Other Con solidation Continuing operations


Segment revenue from external customers 22,153 747 2,721 852 26,473 873

Segment revenue from trans-actions with other segments 1 -1 0

Revenue 22,153 748 2,721 852 0 -1 26,473 873

Depreciation and amortisation of segment assets 125 122 13 16 3 279 18

Operating profi t 302 41 81 104 -128 0 400 -70

Result from investments accounted for at equity 2 329 331 -4

Finance costs 157 20 21 9 169 -8 368

Other net fi nancial income 24 1 -2 43 -8 58 1

Profi t before taxes 177 22 60 96 253 -145 463 -73

Material non-cash income (+) and expenses (-) other than depreciation and amortisation -142 -30 -17 -12 253 52 -77

Total assets 8,133 743 803 645 7,095 -1,434 15,985 721

of which carrying amount of investments accounted for at equity 80 4,549 4,629 2

of which goodwill 2,204 270 85 323 2,882 212

Financial liabilities 2,068 328 408 96 2,421 -11 5,310 4

Recognised investments in non-current segment assets 269 124 48 11 281 -13 720 37

Average number of employees (headcount) 39,525 7,816 1,068 2,003 272 50,684 7,144

2011 BY REGION*

EUR million Germany France United Kingdom Norway USA Other countries Total


Segment revenue from exter-nal customers, by location of company 5,040 6,856 5,018 1,069 1,027 7,463 26,473

Non-current intangible assets and property, plant and equipment 920 212 1,664 199 260 976 4,231


Segment revenue from exter-nal customers, by location of company 109 126 71 567 873

Non-current intangible assets and property, plant and equipment 83 6 74 174 337

See number 33 in the notes for a description of the segments.


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSA. GENERAL BASIS OF PRESENTATION


70

ACCOUNTING PRINCIPLES

The consolidated financial statements of Franz Haniel & Cie. GmbH, Duisburg, for the year ended 31 December 2012 have been prepared in accordance with the mandatory International Financial Reporting Standards (IFRSs) in effect on the reporting date and adopted by the Commission of the European Union, and in accordance with the supplementary requirements applicable under Section 315a (1) HGB (Han-delsgesetzbuch – German Commercial Code). These consolidated financial statements were prepared by the Managing Board on 7 March 2013. They were approved by the Supervisory Board at their meeting on 4 April 2013.

The reporting currency is the euro; all figures are shown in EUR million. In rare cases, this can give rise to rounding differences. For enhanced transparency of presentation, certain items in the statement of financial position and the income statement have been combined. These are explained in the notes. In accordance with IAS 1, the statement of financial position has been classified into non-current and current items. The income statement has been prepared using the nature of expense method.

NEW ACCOUNTING STANDARDS AND INTERPRETATIONS

“Amendments to IFRS 7 (2010): Disclosures – Transfers of Financial Assets”, which was revised by the IASB (International Accounting Stand-ards Board) and adopted by the European Commission of the European Union was required to be applied for the first time beginning in financial year 2012. The first-time application of this standard does not have any material impact on the presentation of the Haniel Group’s assets, liabilities, financial position and profit or loss in the financial year.

The IASB and the IFRS Interpretations Committee (IFRS IC) have issued new or revised rules whose application is not mandatory for the Haniel Group until financial year 2013 or later. For these standards to be applicable, the required endorsement by the Commission of the European Union is still pending in some cases. The relevant Standards and Interpretations are:

IFRS 9 (2009): “Financial Instruments”

IFRS 10 (2011): “Consolidated Financial Statements”

IFRS 11 (2011): “Joint Arrangements”

IFRS 12 (2011): “Disclosure of Interests in Other Entities”

IFRS 13 (2011): “Fair Value Measurement”

IAS 19 revised (2011): “Employee Benefi ts”

IAS 27 revised (2011): “Separate Financial Statements”

IAS 28 revised (2011): “Investments in Associates and Joint Ventures”

Amendments to IFRS 1 (2010): “Severe Hyperinfl ation and Removal of Fixed Dates for First-time Adopters”

Amendments to IFRS 1 (2012): “Government Loans”

Amendments to IFRS 7 (2011): “Disclosures – Offsetting Financial Assets and Financial Liabilities”

Amendments to IFRS 9 and IFRS 7 (2011): “Mandatory Effective Date and Transition Disclosures”

Amendments to IFRS 10, IFRS 11 and IFRS 12 (2012): “Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests in Other Entities: Transition Guidance”

Amendments to IFRS 10, IFRS 12 and IAS 27 (2012): “Investment Entities”

Amendments to IAS 1 (2011): “Presentation of Items of Other Comprehensive Income”

Amendments to IAS 12 (2010): “Deferred Tax – Recovery of Underlying Assets”

Amendments to IAS 32 (2011): “Offsetting Financial Assets and Financial Liabilities”

Annual Improvements to IFRSs 2009-2011 Cycle (2012)

IFRIC 20 (2011): “Stripping Costs in the Production Phase of a Surface Mine”

71

The option of early application of standards already issued was not exercised. Based on current expectations, with the exception of IAS 19 revised (2011), early application of the standards already adopted by the Commission of the European Union would have had no material effects on presentation of the assets, liabilities, financial position and profit or loss in the 2012 financial year. Early application of IAS 19 revised (2011) would have resulted in an increase in pension provisions in the 2012 financial year and a corresponding decrease in equity (taking deferred taxes into account) in particular due to the elimination of the corridor approach used to date in the Haniel Group for the recognition of actuarial gains and losses. The actuarial gains and losses that have to be recognised in the future and that are the basis for the retrospective adjustment of the pension provision as from the financial year 2013 onwards are shown in number 15.

CONSOLIDATION PRINCIPLES

Subsidiaries directly or indirectly controlled by Franz Haniel & Cie. GmbH in accordance with IAS 27 are fully consolidated in the consolidated financial statements. Jointly controlled entities as defined by IAS 31 and associated companies as defined by IAS 28 are accounted for at equity.

The reporting date for the separate financial statements of all consolidated subsidiaries is identical with the date for the consolidated finan-cial statements, namely 31 December 2012. The separate financial statements of the domestic and foreign subsidiaries consolidated are prepared according to uniform accounting policies.

Acquisitions are accounted for using the acquisition method on the basis of the fair values at the date control was obtained (IFRS 3). The portion of the consideration that was transferred in expectation of future positive cash flows from the acquisition and that cannot be allo-cated to identified or identifiable assets as part of their remeasurement to fair value is reported as goodwill under intangible assets. The full goodwill method was not applied. Non-controlling interests are measured at the proportionate fair value of the identifiable net assets.

In accordance with IFRS 3, goodwill is not amortised. Depending on the outcome of an annual or, if there are indications of impairment, interim impairment test, the goodwill is written down if necessary to the lower recoverable amount, which is equal to the higher of the value in use and the fair value less costs to sell. Any goodwill impairment loss is recognised in profit or loss.

Transactions that change the ownership interest in a subsidiary without resulting in a loss of control are accounted for as equity transac-tions. Transactions that result in a loss of control are recognised in profit or loss as a gain or loss on disposal. If shares continue to be held after the loss of control, the remaining equity interest is measured at fair value. Any difference between the existing carrying amount of those shares and their fair value is included in the gain or loss on disposal.

Intragroup profits and losses, sales, expenses and income as well as receivables and payables between companies included in the consoli-dated financial statements are eliminated. Intercompany profits and losses contained in non-current assets and inventories from intra-group transactions are eliminated to the extent that they are not of minor significance.


72

Accordingly, in addition to Franz Haniel & Cie. GmbH a total of 548 subsidiaries were included in the consolidated financial statements as at 31 December 2012. Of that figure, 387 companies belong to the Celesio division, 32 to CWS-boco, 43 to ELG and 80 to TAKKT. Six subsidiaries are allocated to the Other segment.

FOREIGN CURRENCY TR ANSL ATION

Business transactions in foreign currency are translated into the functional currency in the separate financial statements by applying the spot rate prevailing at the time of the transaction. Gains and losses arising from the settlement of such transactions and from the transla-tion of foreign currency monetary assets and liabilities as at the reporting date are recognised in profit or loss.

Franz Haniel & Cie. GmbH’s reporting currency is the euro. The foreign currency amounts indicated in the financial statements of companies outside the euro zone that are included in the consolidated financial statements are translated using the concept of the functional currency in accordance with IAS 21. Given that all subsidiaries operate as financially, economically and organisationally independent entities, their respective local currency is the functional currency. The assets and liabilities of companies outside the euro zone are translated at the closing rate, while their income statement items are translated at average annual exchange rates. Goodwill resulting from the acquisition of foreign companies is assigned to the acquired company and translated at the closing rate. All resulting exchange differences are recognised in other comprehensive income. The exchange rates that are most relevant for Haniel’s consolidated financial statements are:

SCOPE OF CONSOLIDATION

Besides Franz Haniel & Cie. GmbH, 684 domestic and foreign companies were included in full in the consolidated financial statements as at 31 December 2011. In the financial year, the number of subsidiaries changed as follows:

2012 2011

Euro Average exchange rate

Closing rate Average exchange rate

Closing rate

Brazilian real 2.5007 2.7036 2.3240 2.4159

UK pound sterling 0.8105 0.8161 0.8676 0.8353

Danish krone 7.4437 7.4610 7.4506 7.4342

Norwegian krone 7.4732 7.3483 7.7927 7.7540

Swedish krona 8.6989 8.5820 9.0278 8.9120

Swiss franc 1.2053 1.2072 1.2300 1.2156

Czech koruna 25.1445 25.1510 24.5812 25.7870

US dollar 1.2839 1.3194 1.3904 1.2939

Additions due to acquisition of shares or initially obtaining control 13

Additions due to new company formation 6

Disposals due to sale of shares or loss of control 71

Disposals due to mergers or liquidation 84

73

ACCOUNTING POLICIES

The consolidated financial statements are generally prepared based on historical cost. A material exception to that are the (derivative) financial instruments measured at fair value.

Property, plant and equipment (tangible assets) are recognised at cost less depreciation and, if applicable, impairment losses. If the rea-sons for an impairment loss no longer exist, appropriate reversals are recognised provided that the resulting carrying amount does not exceed the depreciated cost of the asset. The cost of internally generated property, plant and equipment includes direct costs as well as directly attributable overheads. Allocable borrowing costs are recognised in the cost of qualifying assets.

Property, plant and equipment, with the exception of land, are depreciated over their estimated useful lives using the straight-line method. Depreciation is based on the following useful lives, which are identical to those applied in the previous year:

Buildings 5 to 50 years

Technical equipment and machinery 2 to 15 years

Operating and offi ce equipment 2 to 15 years

If, in the context of lease transactions, the Haniel Group, as a lessee, bears all material risks and rewards and is thus regarded as the benefi-cial owner, the requirements for finance leases under IAS 17 are met. In these cases, the relevant assets are capitalised at the lower of their fair value or the present value of the minimum lease payments, and depreciated on a straight-line basis over the shorter of their useful life or the term of the lease. The present value of the payment obligations resulting from the future lease instalments is recognised under current and non-current financial liabilities. Call options exist at the end of the basic term of the lease, in line with general market terms, for most buildings, technical equipment and machinery, and operating and office equipment leased under finance lease agreements.

In addition to the finance leases, the Haniel Group has entered into lease agreements under which the lessor remains the beneficial owner of the leased assets (operating lease). Lease payments are recognised in profit or loss. The lease agreements contain common rental and pre-emption provisions for the respective items leased.

Purchased intangible assets are recognised at cost less amortisation and, if applicable, impairment losses. Intangible assets are generally amortised over their contractual or estimated useful lives using the straight-line method. Licences and similar rights are amortised over a period of 2 to 20 years. With the exception of goodwill, brand names and works of art with an indefinite life, all useful lives are definite. An indefinite useful life is attributable to the Company’s intention to continue using the relevant assets. Internally generated intangible assets from which the Group is likely to benefit in future, and which can be measured reliably, are stated at their cost of production. The cost of production includes all costs directly attributable to the development process as well as appropriate portions of the attributable overheads. Attributable borrowing costs for qualifying assets are included. Research and development costs are treated as current costs if the require-ments for capitalisation of development costs under IAS 38 are not met.


74

Weighted average cost of capital before taxes

%

Expected future company growth

(perpetual annuity)

%

Goodwill as at 31 Dec. 2012

EUR million

Celesio 8.3 to 14.4 2.0 to 3.4 2,213

of which Patient and Consumer Solutions 8.3 to 12.7 2.0 1,632

of which Pharmacy Solutions 8.6 to 14.4 2.0 to 3.4 521

CWS-boco 9.0 to 12.5 0.0 to 1.5 271

ELG 12.5 to 14.7 0.0 to 4.5 86

TAKKT 8.4 to 10.2 2.0 538

In accordance with IAS 36, the carrying value of goodwill is tested for impairment annually and upon the occurrence of triggering events, on the basis of cash-generating units or groups of units. Depending on the division Haniel performs the regular impairment tests during the third or fourth quarter of each year. As at the reporting date, there were a total of 42 cash-generating units within the Haniel Group (previous year: 41). The change essentially resulted from disposals of companies and modified reporting and management structures in the Celesio division as well as from an acquisition in the TAKKT division. In the context of the impairment test, the carrying amounts of the individual or groups of cash-generating units are compared with their recoverable amount, which is equivalent to the higher of the value in use and the fair value less costs to sell, determined in a second step if necessary. The fair value is the best estimate of the amount that an independent third party would pay for the (groups of) cash-generating units on the reporting date. Any disposal costs that would be incurred according to best estimate are deducted.

The value in use is measured based on detailed plans of the future cash flows, on the basis of the cash flows before interest and taxes, less maintenance and replacement investments and a perpetual annuity for the years after the detailed planning period. In each case, the detailed plans are based on five-year financial plans adopted by the management and used for internal purposes as well. The underlying sales growth and the operating profit margin constitute material planning assumptions. The detailed plans are formulated according to past developments and projected market trends. The perpetual annuity is calculated based on expected average market growth, while factoring in expected future company growth. The cash flows thus determined are discounted at a rate reflecting the weighted average cost of capital before taxes, determined individually for each cash-generating unit or group of cash-generating units, to determine the value in use of the cash-generating unit.

If the recoverable amount is lower than the carrying amount of the individual cash-generating unit or group of cash-generating units, an impairment loss is recognised in profit or loss with respect to goodwill and, if applicable, the remaining assets.

The table below summarises the parameters applied by the Haniel Group to determine the values in use in the context of the regular impair-ment tests for each segment.

In addition to goodwill, the Haniel Group also has EUR 61 million (previous year: EUR 116 million) in intangible assets with indefinite useful lives. These relate predominantly to brand names acquired through business combinations. They are subject to impairment testing at the level of the cash-generating units.

Compared with the total carrying amount of goodwill of EUR 3,108 million (previous year: EUR 3,094 million), only the Lloydspharmacy cash-generating unit in the Celesio division has significant goodwill in the Haniel Group, in the amount of EUR 1,263 million (previous year: EUR 1,235 million) as at 31 December 2012. The weighted average cost of capital before taxes of the Lloydspharmacy unit is 8.6 per cent (previous year: 9.7 per cent). As in the previous year, 2.0 per cent was applied as the growth rate for determining the perpetual annuity.

75

In addition to the regular impairment tests previously described, extraordinary tests were necessary during the financial year. These con-cerned the Celesio division because Celesio AG’s market capitalisation on the quarterly closing dates was below the carrying amount of the Celesio division’s recognised net assets and therefore there was an indication of a possible impairment pursuant to IAS 36.12. In addition, the initial classification of assets as held for sale is an indication for a possible impairment of the assets concerned in accordance with IAS 36.12.

An impairment of goodwill totalling EUR 21 million was recognised pursuant to IAS 36 in the Celesio division as a result of the regular and extraordinary impairment tests during the financial year based on the calculated value in use. In the previous year, impairments of goodwill and other intangible assets with an indefinite life were recognised in the amount of EUR 116 million in the Celesio division and in the amount of EUR 12 million in the CWS-boco division. Of that amount, EUR 72 million was on units classified as discontinued operations during the financial year.

The goodwill impairments for the financial year were attributed to the following cash-generating units, based on the following material plan-ning assumptions:

Goodwill impairment

EUR million


2012

%


2011

%


(perpetual annuity)2012

%


(perpetual annuity)2011

%

Celesio

Wholesale Slovenia 20 11.4 10.2 2.0 2.0

Other Pharmacy Solutions 1 9.2 10.1 2.0 2.5

In Slovenia, the impairment resulted from intensified competition in a declining market. As a result of this, the expectations regarding future business development were revised during the financial year. The goodwill in the Other Pharmacy Solutions unit had to be written down as a result of reduced expectations with regard to the future business outlook.

The evidence for recoverability at all cash-generating units is based on the value in use. The values in use as determined in the course of the regular impairment tests were checked for plausibility using scenarios relating to key assumptions. With the exception of Wholesale Slovenia, no hypothetical need for an impairment loss resulted from these analyses, whether due to a 1.0 percentage points increase in weighted average cost of capital before taxes, as deemed feasible by the management, or due to a 0.5 percentage points decrease in the growth rates after the detailed planning period.

As Celesio AG’s market capitalisation as at 31 December 2012 was still below the carrying amount of the Celesio division’s recognised net assets, further scenarios relating to key assumptions were analysed with respect to those cash-generating units which were of material significance due to their operating performance, low excess of value in use over their carrying amounts in prior impairment tests or the amount of goodwill allocated to them. With the exception of Wholesale Slovenia, no hypothetical need for an impairment loss resulted from these analyses, whether due to a 1.0 percentage points increase in weighted average cost of capital, as deemed feasible by the manage-ment as at 31 December 2012, or due to a 0.5 percentage points decrease in the growth rates after the detailed planning period. For Whole-sale Slovenia, due to the goodwill impairment recognised as a result of regular impairment testing, any deterioration in the key assumptions will result in further adjustments.

Associates and jointly controlled entities are accounted for using the equity method as defined in IAS 28 and IAS 31 respectively. Based on the acquisition cost of the shares in associates and jointly controlled entities at the date of acquisition, the carrying amount of the invest-ments is increased or decreased by Haniel’s share of the post-acquisition profits or losses of the investment and other equity changes in the investment. Goodwill included in the carrying amount and determined according to the full consolidation principles is not amortised. An impairment test is conducted if there is objective evidence of a possible impairment of the total carrying amount of the investment.


76

Alongside loans, the financial assets primarily include investments and securities. Loans are initially recognised at fair value plus transac-tion costs and subsequently measured at amortised cost by applying the effective interest rate method.

With regard to investments and securities, a distinction is made between those that are available for sale, those held at fair value through profit or loss, and those that are held to maturity. The classification is determined at the date of acquisition and reviewed as at each report-ing date. Regular way sales and purchases of financial assets of all categories are recognised as at the settlement date.

Available for sale financial assets are initially recognised at fair value plus transaction costs and subsequently shown at their respec-tive market values on the reporting date. The resulting unrealised gains and losses are recognised in other comprehensive income, taking deferred taxes into account. If no active market is available and a fair value cannot be reliably measured, the assets are shown at cost. If there is objective evidence that assets may be impaired, they are written down through profit or loss. If the reasons for the impairment no longer exist, appropriate fair value adjustments are made. In the case of equity instruments, these reversals are recognised in other com-prehensive income; in the case of debt instruments, they are recognised in profit or loss, provided that the conditions of IAS 39 are fulfilled. If these assets are sold, the cumulative gain or loss previously recognised in other comprehensive income is reversed to profit or loss.

Financial assets held at fair value through profit or loss are shown at their fair value prevailing on the reporting date. Any transaction costs are recognised in profit or loss upon posting. Fluctuations in the fair value are directly reflected in the income statement.

Financial assets classified as held to maturity are initially recognised at fair value plus transaction costs and subsequently measured at amortised cost using the effective interest rate method. If there is objective evidence that assets are impaired, they are written down to the lower present value, based on the original effective interest rate.

Inventories are stated at cost in general. In addition to the direct material and production costs, production-related portions of the required material and production overheads, as well as depreciation of property, plant and equipment attributable to production, and amortisation of intangible assets are included. Borrowing costs are not taken into account. If acquisition or production costs exceed the net realisable value at the end of the reporting period, inventories are written down to the net realisable value. Depending on the specific circumstances of each division, different inventory cost formulas are applied. Normally, the costs of inventories are assigned by using a weighted average or a first-in, first-out (FIFO) cost formula. The retail method and standard cost method are also applied.

Trade receivables, receivables from investments and other current assets are, in the case of loans and receivables, initially recognised at fair value plus transaction costs and subsequently measured at amortised cost. Valuation allowances are determined to take into account existing risks.

Tax assets and tax liabilities are measured at the amount expected to be reimbursed from or paid to the tax authorities.

Derivative financial instruments, such as forward contracts, options and swaps, are generally used for hedging purposes to minimise exchange rate, interest rate and other market price risks arising from the operating business and/or from the associated financing requirements.

77

Regular way sales and purchases of financial instruments are recorded on the settlement date. Under IAS 39, all derivative financial instru-ments must be recognised at their fair values, irrespective of the purpose or intention for which they were concluded. Changes in the fair values of derivative financial instruments to which hedge accounting applies are reported either in the income statement (fair value hedge) or, in the case of a cash flow hedge, in other comprehensive income, taking deferred taxes into account.

Derivatives used to hedge items in the statement of financial position are referred to as fair value hedges. The gains and losses from the fair value measurement of the derivatives and the underlying hedged items are recognised in profit or loss. Derivatives used to hedge against future cash flow risks from existing or planned transactions are referred to as cash flow hedges. The changes in the fair values of derivative financial instruments attributable to the effective portion of the hedge are initially reported in other comprehensive income. A transfer to the income statement is made at the time the hedged item impacts profit and loss. The changes in the fair values of the derivative financial instruments attributable to the ineffective portion of the hedge are immediately recognised in the income statement. In cases where hedge accounting is not applied, the changes in the fair value of derivative financial instruments are immediately recognised in profit or loss.

Non-current assets and groups of assets are classified as held for sale if their carrying amounts are mainly derived from their potential sale and not from their ongoing use. This condition is deemed to be fulfilled if, among other things, the sale is highly probable, the asset or the group of assets is available for immediate sale and the sale is expected to be completed within one year starting from the time of the classification.

Assets and groups of assets classified as held for sale are no longer depreciated as of the reclassification date but measured at the lower of the carrying amount and the fair value less costs to sell. Assets and groups of assets and their respective liabilities (disposal groups) held for sale are shown separately from other assets and liabilities in the statement of financial position, each as a separate current item. If the disposal group comprises a material business segment or operation, the profit or loss from discontinued operations is also reported separately in the income statement. The profit or loss from discontinued operations after taxes comprises the result of the measurement described above, the operation’s current earnings and the gain or loss on disposal. The previous year’s income statement is adjusted accordingly.

Deferred tax assets and liabilities are recognised for temporary differences between the values in the tax balance sheets of the individual companies and the carrying amounts in the consolidated statement of financial position – with the exception of goodwill that is not deduct-ible for tax purposes – as well as for tax loss carryforwards. Deferred tax assets for tax loss carryforwards are recognised only if their realisation is reasonably certain. Deferred taxes are determined on the basis of the tax rates that will be in effect in future under current legislation. Deferred taxes are offset in the manner prescribed under IAS 12.


78

In accordance with IAS 19, provisions for pensions and similar obligations are determined using the actuarial projected unit credit method. In addition to biometric calculation principles, this method primarily takes into account the current long-term capital market interest rate as well as current assumptions about future increases in salaries and pensions. Actuarial gains and losses are reflected in profit or loss only if they are outside a range of 10 per cent of either the present value of the defined benefit obligation, or the fair value of the plan assets, whichever is higher (corridor approach). The amount in excess of that range is amortised over the average remaining working lives of the employees participating in that plan. The interest portion contained in pension expenses and the expected return on the plan assets are shown in the finance costs.

With the exception of provisions for personnel calculated according to IAS 19, all other provisions are recognised on the basis of IAS 37 if there is a present legal or constructive obligation as a result of past business transactions or events. The outflow of resources embodying economic benefits required to settle the obligation must be probable, and it must be possible to estimate the amount reliably. Provisions with a maturity of more than one year are discounted at market interest rates that are in line with the risk and the period until settlement.

Liabilities, with the exception of derivative financial instruments and financial liabilities held for trading, are initially recognised at fair value plus transaction costs and subsequently measured at amortised cost, using the effective interest rate method. Liabilities under finance leases are recognised in the amount of the present value of the future lease payments, taking into account the interest rate that was used as the basis at the time the lease was signed, as well as the repayments on principal made in the meantime.

Portions of assets and liabilities originally recognised as non-current with a remaining maturity of less than one year are generally reported under current items in the statement of financial position.

Revenue comprises revenues from the sale of products and services less discounts and rebates. Revenues are realised at the time owner-ship and risks are transferred to the customer. Provisions are established to account for customers’ return rights. If amounts are collected as an agent for third parties, such amounts are not revenues because they do not represent an inflow of economic benefits for Haniel. Only the compensation for brokering the business is accounted for as revenue in such transactions.

Other operating income is recognised if the economic benefits are probable and the amount can be reliably determined.

Dividends are recognised when a legal right to receive payment is established. Interest income and interest expenses not requiring capitali-sation pursuant to IAS 23 are recognised in the proper period using the effective interest method.

In accordance with IAS 20, government grants are recognised at fair value only if there is reasonable assurance that the company will comply with the conditions attaching to them and that the grants will be received. Grants received as compensation for expenses are rec-ognised as income in the same period in which such expenses are incurred. Grants received for the acquisition or production of assets are deferred as a general rule.

79

The consolidated financial statements are prepared on the basis of certain assumptions and estimates which have an effect on the amount and presentation of the reported assets, liabilities, income, expenses and contingent liabilities. The assumptions and estimates primarily concern the items set forth below.

Goodwill arises in the course of business combinations. All identifiable assets, liabilities and contingent liabilities are recognised at fair value upon first-time consolidation. The recognised fair values represent key estimates. If intangible assets are identified, the fair value is determined by appropriate valuation methods depending on the type of asset. These valuations are closely related to the management’s assumptions concerning the future development of the assets and the applied discount rates.

In addition to the determination of fair values of the assets, liabilities and contingent liabilities acquired, the valuation of contingent con-sideration for business combinations is based on estimates and assumptions made by the management regarding the future development of the acquired entity. If the actual development of the entity in the future deviates from the expected development, this may affect the amount of contingent consideration.

Impairment tests of goodwill, other intangible assets with indefinite useful lives and investments are based on forward-looking assump-tions. Paying due regard to past developments and assumptions concerning the future development of markets, the test is performed on the basis of a five-year planning period. The key assumptions when assessing impairment are estimated growth rates after the detailed planning period, weighted average cost of capital and tax rates. Further key planning assumptions relate to the future development of revenue, the gross margin and the operating profit margin. The premises above and the underlying calculation model can significantly influ-ence the individual values and ultimately the amount of a possible impairment.

In the case of trade receivables and the other receivables reported under financial assets, valuation allowances on doubtful debts rely to a large extent on estimates and assessments made on the basis of the relevant customer’s or contracting party’s creditworthiness, the cur-rent economic developments and the analysis of historical losses on bad debts on a portfolio basis. Actual cash inflows may deviate from the carrying amounts recognised in respect of the receivables.

The key assumptions and estimates for the measurement of provisions, especially those for pensions, real estate, litigations, pending losses, those related to business combinations and disposals and restructuring measures, concern the probability of the provisions being used, the amount of the obligation and, in the case of non-current provisions, the interest rates applied. In addition, pension obligations under defined benefit plans are subject to actuarial assumptions regarding future wage and salary increases, benefit increases, mortality rates, employee turnover and expected return on plan assets. The actual development, and hence actual expenses incurred in the future, may deviate from the expected development and the recognised provisions.

Deferred tax assets and liabilities are measured on the basis of assumptions and estimates made by management. In addition to the inter-pretation of the tax regulations applicable to the taxable entity concerned, the key factor in the calculation of deferred tax assets in respect of temporary differences and tax loss carryforwards is an assessment of the likelihood that adequate taxable income will be generated in future or that appropriate tax strategies for utilising tax loss carryforwards will be implemented.

All assumptions and estimates are based on the circumstances prevailing on the reporting date. Future events and changes in general cir-cumstances often give rise to differences between the actual amounts and the estimates. This applies in particular to financial obligations that cannot be measured because their existence, amount and timing of occurrence are uncertain. In case of differences, the assumptions and, if necessary, the carrying amounts of the assets and liabilities affected are adjusted accordingly.

At the time the consolidated financial statements were prepared, there was no indication of any material changes affecting the underlying assumptions and estimates.


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B. NOTES TO THE STATEMENT OF FINANCIAL POSITION

1 PROPERT Y, PL ANT AND EQUIPMENT

EUR million Land, buildings and similar assets

Technical equipment and

machinery

Operating and offi ce equipment

Prepayments and assets under

construction

Total

Cost

As at 1 Jan. 2012 1,134 586 1,005 32 2,757

Foreign exchange rate adjustments 6 4 13 23

Additions to scope of consolidation 29 7 1 37

Additions 23 31 141 24 219

Reclassifi cations 11 15 5 -31 0

Disposals 65 73 158 11 307

As at 31 Dec. 2012 1,138 563 1,013 15 2,729

Accumulated depreciation

As at 1 Jan. 2012 558 413 682 0 1,653


Additions 0

Depreciation 46 36 159 241

Impairments 3 1 3 7

Reversals of impairment losses 0

Reclassifi cations 0

Disposals 30 43 143 216

As at 31 Dec. 2012 579 409 710 0 1,698

Net carrying amounts

As at 31 Dec. 2012 559 154 303 15 1,031

As at 1 Jan. 2012 576 173 323 32 1,104

Property, plant and equipment includes assets totalling EUR 71 million (previous year: EUR 51 million) recognised based on finance leases. Of this amount, EUR 62 million (previous year: EUR 41 million) relate to land, buildings and similar assets and EUR 9 million (previous year: EUR 10 million) to operating and office equipment. Non-cash investments in property, plant and equipment (finance leases) amounted to EUR 2 million (previous year: EUR 7 million).

Of the disposals during the financial year, EUR 164 million resulted from the reclassification of assets in the Celesio division and the Other segment as held for sale.

The EUR 7 million in impairments in the financial year is essentially attributable to closures of pharmacies and branches in the Celesio division as well as to closures of laundries in the CWS-boco division. In the previous year impairments were essentially attributable to real estate in the Other segment (EUR 11 million) and to pharmacy closings in the Celesio division (EUR 8 million).

81

EUR million Land, buildings and similar assets

Technical equipment and

machinery

Operating and offi ce equipment

Prepayments and assets under

construction

Total

Cost

As at 1 Jan. 2011 1,110 573 937 16 2,636


Additions to scope of consolidation 2 2 4

Additions 31 40 182 32 285

Reclassifi cations 13 7 -6 -14 0

Disposals 26 41 118 2 187

As at 31 Dec. 2011 1,134 586 1,005 32 2,757


As at 1 Jan. 2011 515 410 626 0 1,551


Additions 5 5

Depreciation 43 37 158 238

Impairments 15 2 4 21


Reclassifi cations 3 1 -4 0

Disposals 19 41 114 174

As at 31 Dec. 2011 558 413 682 0 1,653


As at 31 Dec. 2011 576 173 323 32 1,104

As at 1 Jan. 2011 595 163 311 16 1,085

As in the previous year, legally and economically owned property, plant and equipment were not subject to any restrictions on title. Prop-erty, plant and equipment in the amount of EUR 56 million (previous year: EUR 64 million) are pledged as collateral for own liabilities. Pur-chase commitments for property, plant and equipment amounted to EUR 8 million (previous year: EUR 6 million).

The TAKKT division received a government grant of EUR 1 million during the financial year for the installation of a photovoltaic system on the roof of a warehouse. The CWS-boco division received government grants totalling EUR 2 million in the previous year for the construction of a new laundry in Poland.


82

2 INTANGIBLE ASSETS

EUR million Goodwill Licences and similar rights

Other intangible assets

Prepayments Total

Cost

As at 1 Jan. 2012 3,645 545 249 65 4,504

Foreign exchange rate adjustments 33 -5 1 29


Additions 229 18 1 25 273

Reclassifi cations 39 -3 -36 0

Disposals 354 74 95 7 530

As at 31 Dec. 2012 3,553 571 170 48 4,342


As at 1 Jan. 2012 551 388 95 6 1,040

Foreign exchange rate adjustments 2 -3 -1

Additions 0

Depreciation 49 13 62

Impairments 21 7 7 35


Reclassifi cations 1 -1 0

Disposals 127 33 28 188

As at 31 Dec. 2012 445 414 76 13 948


As at 31 Dec. 2012 3,108 157 94 35 3,394

As at 1 Jan. 2012 3,094 157 154 59 3,464

The addition to goodwill during the financial year resulted essentially from business combinations in the Celesio and TAKKT divisions. The addition in the previous year resulted from the reversal of EUR 69 million in goodwill of the DocMorris mail-order pharmacy. This figure had previously been reported as held for sale. Business combinations in the financial year are explained under number 31.

The impairments of EUR 21 million on goodwill during the financial year concern the Celesio division. Of the impairments in the previous year, EUR 109 million were attributable to the Celesio division and EUR 12 million to the CWS-boco division.

The additions to licences and similar rights, other intangible assets and prepayments during the financial year resulted essentially from acquisitions and software. In the previous year these additions were essentially related to business combinations and software and the reclassification of assets of the DocMorris mail-order pharmacy.

83

EUR million Goodwill Licences and similar rights

Other intangible assets

Prepayments Total

Cost

As at 1 Jan. 2011 3,471 458 242 25 4,196

Foreign exchange rate adjustments 45 4 -1 48


Additions 130 60 3 53 246

Reclassifi cations 11 -11 0

Disposals 1 5 1 2 9

As at 31 Dec. 2011 3,645 545 249 65 4,504


As at 1 Jan. 2011 430 328 72 1 831

Foreign exchange rate adjustments 3 3

Additions 12 1 13

Depreciation 45 14 59

Impairments 121 5 8 5 139



Disposals 5 5

As at 31 Dec. 2011 551 388 95 6 1,040


As at 31 Dec. 2011 3,094 157 154 59 3,464

As at 1 Jan. 2011 3,041 130 170 24 3,365

The impairments on licenses and similar rights as well as on prepayments in the financial year are essentially attributable to the Celesio division and concern software. Impairment losses relating to licences and similar rights, other intangible assets and prepayments during the previous financial year were recognised primarily in the Celesio division and related to brand names in Wholesale Denmark as well as software and usage rights which were no longer required.

Of the disposals in intangible assets, EUR 524 million are attributable to the reclassification of assets of the Celesio division as held for sale.

Other intangible assets include assets with indefinite useful lives totalling EUR 61 million (previous year: EUR 116 million). These relate predominantly to brand names acquired through business combinations.

As in the previous year, legally and economically owned intangible assets were not subject to any restrictions on title. No intangible assets have been pledged as collateral for own liabilities.

Purchase commitments for intangible assets existed in the amount of EUR 4 million (previous year: EUR 17 million).

3 INVESTMENTS ACCOUNTED FOR AT EQUIT Y


As at 1 Jan. 4,631 4,649

Additions 1 10

Changes in equity interest recognised in profi t or loss -28 326

Profi t distribution -119 -94

Changes in equity interest recognised in other comprehensive income 52 -45

Impairments -1,494

Reclassifi cation as assets held for sale -288

Disposals and transfers -35 -215

As at 31 Dec. 2,720 4,631

Investments accounted for at equity mainly comprise the Metro investment of EUR 2,643 million by Franz Haniel & Cie. GmbH (previous year: EUR 4,549 million).

Haniel and Schmidt-Ruthenbeck, two of Metro’s founding shareholders, increased their stakes in METRO AG in 2007. As at the reporting date, Haniel directly and indirectly held 34.0 per cent of the capital and 34.2 per cent of the voting rights in METRO AG. Schmidt-Ruthenbeck directly and indirectly holds 15.8 per cent of the voting rights. As at the reporting date, Haniel and Schmidt-Ruthenbeck held contractually pooled voting rights of 50.01 per cent. By way of contractual arrangements, Haniel exerts a significant influence on METRO AG.

At the end of November 2012, Haniel announced it would reduce its share of voting rights in METRO AG by 4.23 per cent to 30.01 per cent. The corresponding common shares of METRO AG are measured separately as at the reporting date and presented as held for sale. Prior to the reclassification, an impairment of EUR 345 million was recognised in the result from investments accounted for at equity.

In the course of the announced disposal Haniel took out a securities lending of 7.0 million common shares of METRO AG. As at the end of the reporting period, 4.9 million of the borrowed common shares had been sold on the stock exchange. The return obligation on the borrowed shares already sold is recognised as an other current liability of EUR 102 million. The securities lending was secured by 7.0 million common shares of METRO AG held by Haniel. The securities lending and securitisation were reversed in Q1 2013.

The impairment test on the investment is performed as a general rule by applying the same model and relevant parameters that are used to test the impairment of goodwill. The impairment test, based on planning of future cash flows, a weighted average cost of capital before taxes of 9.9 per cent (previous year: 8.8 per cent) and a future company growth rate of 0.5 per cent (previous year: 1.5 per cent) indicated a need to adjust the remaining carrying amount of the investment accounted for at equity by EUR 1,149 million. This was primarily caused by the fact that the underlying corporate planning assumed a weaker future business development for the METRO GROUP.

The earnings contribution of the Metro investment, including the impairments of EUR 1,494 million, was EUR -1,523 million (previous year: EUR 329 million).

84


In 2012, METRO AG reported consolidated earnings attributable to the shareholders of METRO AG of EUR 3 million (previous year: EUR 631 million) and revenue of EUR 66,739 million (previous year: EUR 65,926 million). METRO AG’s consolidated statement of financial position for the year ended 31 December 2012 reported non-current assets in the amount of EUR 17,287 million (previous year: EUR 18,822 million), current assets in the amount of EUR 17,479 million (previous year: EUR 15,165 million), non-current liabilities in the amount of EUR 8,593 million (previous year: EUR 8,085 million), current liabilities in the amount of EUR 20,072 million (previous year: EUR 19,465 million), and equity attributable to shareholders of EUR 6,024 million (previous year: EUR 6,364 million). The stock market value of Haniel’s 34.0 per cent interest in METRO AG as at the reporting date amounted to EUR 2,331 million (previous year: EUR 3,130 million), valued at a stock price of EUR 21.00 per share (previous year: EUR 28.20 per share).

Apart from the Metro investment, the investments accounted for at equity include the investment in Brocacef Holding N.V., an associate in the Celesio division. Although Brocacef Holding N.V.’s reporting date is 31 January, its earnings for the period from 1 January to 31 December 2012 are included in the consolidated financial statements.

As of the reporting date, the total share in the profit after taxes of all investments accounted for at equity attributable to Haniel, except for the Metro investment, including the depreciation of assets remeasured during the purchase price allocation, was EUR 3 million (previous year: EUR -2 million). The carrying amount of these investments accounted for at equity totalled EUR 77 million (previous year: EUR 82 million). These companies generated revenue of EUR 1,446 million (previous year: EUR 1,247 million) during the financial year, as well as a profit after taxes of EUR 6 million (previous year: EUR 9 million). Non-current assets amounted to EUR 240 million (previous year: EUR 228 million) and current assets amounted to EUR 255 million (previous year: EUR 306 million). The total liabilities consisted of EUR 60 million (previous year: EUR 87 million) in non-current liabilities and EUR 192 million (previous year: EUR 219 million) in current liabilities.

85

4 FINANCIAL ASSETS

EUR million Financial assets available for sale

Loans to investments

Other Total

Cost

As at 1 Jan. 2012 241 573 259 1,073

Foreign exchange rate adjustments -1 -1

Additions to scope of consolidation 0

Additions 8 11 32 51

Changes in fair value -7 -7

Reclassifi cations -19 -19

Disposals 172 16 14 202

As at 31 Dec. 2012 70 568 257 895


As at 1 Jan. 2012 9 0 4 13

Foreign exchange rate adjustments 0

Depreciation 0

Impairments 62 62



Disposals 4 4

As at 31 Dec. 2012 5 0 66 71


As at 31 Dec. 2012 65 568 191 824

As at 1 Jan. 2012 232 573 255 1,060

86

The addition to the financial assets available for sale resulted from additional investments in investment funds in the Other segment in the amount of EUR 4 million (previous year: EUR 42 million) and minority investments by the Celesio division totalling EUR 4 million (previous year: EUR 4 million).

The disposal in financial assets available for sale resulted essentially from the reclassification of two investment funds in the Other seg-ment as held for sale. In the previous year, the disposal resulted in particular from repayments of these investment funds.


EUR million Financial assets available for sale

Loans to investments

Other Total

Cost

As at 1 Jan. 2011 219 414 289 922

Foreign exchange rate adjustments -1 -1

Additions to scope of consolidation 11 11

Additions 46 209 40 295

Changes in fair value 42 42

Reclassifi cations -1 -13 -14

Disposals 66 49 67 182

As at 31 Dec. 2011 241 573 259 1,073


As at 1 Jan. 2011 8 0 4 12


Depreciation 0

Impairments 1 1



Disposals 0

As at 31 Dec. 2011 9 0 4 13


As at 31 Dec. 2011 232 573 255 1,060

As at 1 Jan. 2011 211 414 285 910

87

The financial assets available for sale category includes securities and investments in the amount of EUR 59 million (previous year: EUR 56 million) that are recognised at amortised cost. These were primarily investments in non-listed companies. It is not possible to reliably determine the fair value of these investments for lack of an active market.

As in the previous year, the addition to loans to investments is attributable primarily to the Metro investment.

The addition to other is essentially attributable to the Celesio division as well as to the compounding of two long-term receivables in the Other segment, as in the previous year. As at the reporting date, these receivables were impaired pursuant to IAS 39.63 based on the future cash flows. The impairments were recognised in other net financial income.

5 OTHER NON-CURRENT ASSETS

The other non-current assets item consists primarily of non-current value added tax receivables and reimbursement claims against previ-ous shareholders from business combinations in the Celesio division and net plan assets from individual pension plans.

6 DEFERRED TA XES

Deferred taxes are calculated using the respective local tax rates. Changes in tax rates that were enacted up until the reporting date have already been taken into account. The income tax rates applied in the relevant countries varied between 10.0 per cent and 39.0 per cent (previous year: 10.0 per cent and 40.9 per cent).

The following deferred tax assets and liabilities exist for temporary differences in the individual items of the statement of financial position, and for tax loss carryforwards:

These contain deferred taxes on derivative financial instruments and financial assets available for sale amounting to EUR 14 million (previ-ous year: EUR 5 million), which were recognised in other comprehensive income. As at the reporting date, deferred taxes amounted to EUR 15 million (previous year: EUR 20 million) in relation to two convertible bonds issued by Celesio.

Deferred tax assets included EUR 17 million (previous year: EUR 27 million) for companies that were making losses in the financial year or the previous year. These items are recognised as future taxable profits are expected for these companies.

Trade tax loss carryforwards of EUR 1,047 million (previous year: EUR 934 million) and unused corporate tax and similar foreign loss car-ryforwards of EUR 888 million (previous year: EUR 703 million) exist in the Haniel Group, for which no deferred tax assets were recognised in the statement of financial position, given that the realisation of the deferred tax assets is not deemed to be sufficiently certain from today’s point of view. Of these tax loss carryforwards, EUR 50 million (previous year: EUR 31 million) expire within five years and additional EUR 15 million (previous year: EUR 4 million) within 15 years.

In accordance with IAS 12, no deferred tax liabilities are reported for retained earnings of subsidiaries if it is probable that the temporary dif-ferences will not be reversed in the foreseeable future. A future profit distribution or a sale of the investments would result in tax liabilities of EUR 11 million (previous year: EUR 13 million). As in the previous year, no deferred taxes exist for temporary differences between the tax base of investments accounted for at equity and their carrying amounts in the consolidated financial statements.

88

31 Dec. 2012 31 Dec. 2011

EUR million Deferred tax assets

Deferred tax liabilities

Deferred tax assets

Deferred tax liabilities

Property, plant and equipment 15 78 14 69

Intangible assets 34 183 24 203

Miscellaneous non-current assets 2 45 8 46

Current assets 37 21 37 27

Non-current fi nancial liabilities 27 8 15 3

Non-current provisions 32 2 47 3

Current provisions 22 14 1

Other current liabilities 34 2 35 4

Derivative fi nancial instruments 27 8 34 5

Tax loss carryforwards 40 72

Less offsetting 210 210 117 117

60 137 183 244


The inventories include EUR 250 million (previous year: EUR 161 million) that were written down to the net realisable value. Write-downs in the amount of EUR 39 million (previous year: EUR 34 million) were made during the financial year. Reversals of write-downs during the financial year totalled EUR 22 million (previous year: EUR 18 million). As in the previous year, these related primarily to the Celesio division and resulted from the disposal of previously impaired items of inventory.

In addition to industry-standard restrictions on title, EUR 100 million in inventories were pledged as collateral for pending tax litigations in the Celesio division (previous year: EUR 105 million).

8 TR ADE RECEIVABLES

The trade receivables of EUR 2,500 million as at the reporting date (previous year: EUR 2,937 million) do not include any receivables that were sold to a factoring agent through existing contractual agreements. In the previous year, they included EUR 4 million in receivables of the ELG division, for which the default and interest rate risk was not fully transferred so the receivables continued to be recognised. Liabili-ties to the factoring agent were recognised in the same amount. As at the reporting date, the Celesio division had trade receivables in the amount of EUR 26 million (previous year: EUR 25 million) pledged as collateral for own liabilities.

The table below illustrates the changes in valuation allowances for trade receivables:

The valuation allowances contain individual and portfolio-based allowances. Once a bad debt is confirmed, the valuation allowance is uti-lised. Subsequent cash inflows in respect of written-off receivables are recognised in profit or loss. The additions to valuation allowances are reported under other operating expenses. Reversals of valuation allowances are reported under other operating income.

89

7 INVENTORIES

EUR million 31 Dec. 2012 31 Dec. 2011

Raw materials and production supplies 12 12

Work and services in progress 1 1

Finished goods and merchandise 2,079 2,247

Prepayments 2

2,094 2,260


As at 1 Jan. 106 121

Additions 36 31

Utilisations 10 27

Reversals 15 19

Foreign currency, changes in the scope of consolidation and other changes -10

As at 31 Dec. 107 106

As at the reporting date, the trade receivables that are past due, but not impaired are structured as follows:

90


Carrying amount of past due, but not impaired receivables 199 330

Thereof past due for

< 3 months 156 274

3 to 6 months 19 29

> 6 to 12 months 12 16

> 12 months 12 11

9 RECEIVABLES FROM INVESTMENTS AND OTHER CURRENT ASSETS


Receivables from investments 33 27

Other current assets 436 434

469 461

With regard to the receivables that are past due, but not impaired, there is no indication that the debtors will not discharge their payment obligations. The same applies for receivables which are neither past due nor impaired.

The other current assets item includes value added tax receivables and other tax assets in the amount of EUR 148 million (previous year: EUR 122 million), prepaid expenses in the amount of EUR 46 million (previous year: EUR 56 million) and bonuses and discount claims against suppliers totalling EUR 41 million (previous year: EUR 44 million).

The table below illustrates the changes in valuation allowances for receivables from investments and other current assets:

The valuation allowances contain individual and portfolio-based allowances. The additions to valuation allowances are reported under other operating expenses. Reversals are reported under other operating income.


As at 1 Jan. 26 15

Additions 7 14

Utilisations 5 2

Reversals 8 1

As at 31 Dec. 20 26


As at the reporting date, receivables from investments and the other receivables in the other current assets that are past due, but not impaired are structured as follows:

With regard to the receivables that are past due, but not impaired, there is no indication that the debtors will not discharge their payment obligations. The same applies for receivables which are neither past due nor impaired.

The derivative financial instruments serve to hedge interest rate, exchange rate and other price risks. Derivative financial instruments are described in detail under number 29.

Bank balances comprise short-term deposits with a maturity of up to three months.

91


Carrying amount of past due, but not impaired receivables 20 48

Thereof past due for

< 3 months 16 40

3 to 6 months 3 6

> 6 to 12 months 1 1

> 12 months 1

10 FINANCIAL ASSETS


Derivative fi nancial instruments 15 8

Securities and current fi nancial assets 22 12

37 20

11 CASH AND CASH EQUIVALENTS


Bank balances 553 454

Cash on hand and cheques 7 5

560 459

92

12 ASSETS AND LIABILITIES HELD FOR SALE

As part of a strategic realignment and in the course of portfolio optimisation measures at the Celesio division, it was decided at the end of March 2012 to dispose of the Manufacturer Solutions sub-segment including the Logistics Solutions (Movianto, excl. logistics activities in Austria) and Marketing Solutions (Pharmexx) activities, as well as the DocMorris mail-order pharmacy and the associated brand name. The relevant units have been reported under discontinued operations since this decision was made. Accordingly, the income and expenses in connection with the affected units are also presented retrospectively for the previous period in profit after taxes from discontinued opera-tions, which is explained in more detail in number 28.

Upon subsequent measurement of the discontinued operations in accordance with IFRS 5 at the lower fair value less costs to sell, impair-ment losses totalling EUR 255 million were recognised that are presented in profit after taxes from discontinued operations. The impair-ments primarily concerned intangible assets. Additionally, property, plant and equipment as well as EUR 8 million in inventories were writ-ten down.

With the exception of Movianto Ireland, all units classified as discontinued operations were sold during the financial year. The assets and liabilities of Movianto Ireland are still presented as held for sale as at the reporting date. The sale of this unit is expected to be completed during the first half of 2013.

The aforementioned resolution also included the portfolio decision that Celesio withdraws from the Czech market for strategic reasons as well and consequently sells the wholesale and pharmacy activities there. Moreover, Celesio’s wholesale activities in Ireland are also slated for sale. The assets in question and the attendant liabilities have been classified as held for sale (disposal groups) since that time.

The subsequent measurement of disposal groups in accordance with IFRS 5 at the lower fair value less costs to sell resulted in a need to recognise an impairment loss of EUR 25 million, of which EUR 18 million is attributable to the wholesale activities in Ireland. The impair-ments, which are recognised as other operating expenses, related to intangible assets as well as to property, plant and equipment and in the amount of EUR 14 million to inventories.

The Czech wholesale and pharmacy activities were sold during the financial year. A disposal of the Irish wholesale activities is expected in the first half of 2013.

In addition to the disposal groups, real estate in the Celesio division was classified as held for sale in the financial year. The disposal of this real estate is expected to be completed during the 2013 financial year.

The assets of the trading activities in Denmark in the ELG division were classified as held for sale during the financial year. The sale was completed in the third quarter of the financial year.

The TAKKT division acquired a previously leased real estate during the financial year in order to sell it to another investor and re-lease it. The real estate was presented as held for sale during the financial year. The sale of the real estate was completed in the fourth quarter of the financial year.


93

The Managing Board and Supervisory Board of Franz Haniel & Cie. GmbH resolved a comprehensive action plan at the end of November 2012 to reduce net financial debt. As part of these actions, the sale of common shares of METRO AG explained in number 3 was initiated, which was concluded in the first quarter of 2013. In addition, Haniel initiated the disposal of its shares in two investment funds as well as of a real estate, which are presented as held for sale as at the reporting date based on purchase offers. These measures are expected to be completed during the first half of 2013.

As at 31 December 2011, one real estate in the Celesio division was reported as held for sale. The real estate was sold during the financial year.

The table below shows the main groups of assets and liabilities classified as held for sale:

EUR million Non-current assets and disposal groups


31 Dec. 2012 31 Dec. 2011

Assets

Property, plant and equipment 9 9 2

Intangible assets 0

Investments accounted for at equity 288 288

Financial assets 141 141

Inventories 18 7 25

Trade receivables 38 18 56

Cash and cash equivalents 1 1

Other assets 10 5 15

505 30 535 2

Liabilities

Financial liabilities 0

Trade payables 29 34 63

Other liabilities 9 1 10

38 35 73 0

94

13 EQUIT Y

As at 31 December 2012, the subscribed capital of Franz Haniel & Cie. GmbH remained unchanged at EUR 1,000 million. All shares are fully paid-in and held either directly or indirectly by the Haniel family.

Changes in equity are shown in the statement of changes in equity on page 66.

No treasury shares were acquired during the financial year (previous year: shares with a total nominal amount of EUR 1 million).

The non-controlling interests in the equity of consolidated subsidiaries relate primarily to Celesio AG and TAKKT AG. Haniel reduced its hold-ing in Celesio AG by 4.63 per cent to 50.01 per cent during the financial year. Haniel received consideration in the amount of EUR 98 million for the shares in Celesio AG sold. The transaction increased the carrying amount of the non-controlling interests by EUR 109 million. The difference between the consideration received and the carrying amount attributable to the shares sold was recognised in the equity attrib-utable to the shareholders of Franz Haniel & Cie. GmbH.

Within the Celesio and ELG divisions, non-controlling interests of fully consolidated subsidiaries were acquired for a purchase price of EUR 2 million during the financial year. The carrying amounts of the non-controlling interests amounted to EUR 1 million. This resulted in a EUR 1 million decrease in retained earnings attributable to the shareholders of Franz Haniel & Cie. GmbH. During the previous year, non-controlling interests in fully consolidated subsidiaries within the Celesio division were acquired for a purchase price in the amount of EUR 1 million.

In the previous year, Celesio issued a convertible bond with an aggregate principal amount of EUR 350 million. The conversion rights, less pro rata transaction costs and deferred tax charge, increased equity by EUR 41 million. In the Haniel consolidated financial statements, EUR 22 million were attributed to the shareholders of Franz Haniel & Cie. GmbH and EUR 19 million to the non-controlling interests.

The total amount of accumulated other comprehensive income changed as follows:

The accumulated other comprehensive income presented contains a total amount of EUR 17 million (previous year: EUR 0 million) that is attributable to assets and liabilities held for sale.

EUR million Derivative fi nancial

instruments

Financial assets

available for sale

Deferred taxes

Currency translation

effects

Share of other comprehensive

income of investments

accounted for at equity

Total of which attributable to

non-controlling interests

of which attributable to

shareholders of Franz Haniel &

Cie. GmbH

As at 1 Jan. 2011 -49 35 6 -178 -137 -323 -83 -240

Changes in shares in companies already consolidated 0

Other comprehensive income -17 4 -1 9 -45 -50 1 -51

of which currency translation effects 1 9 10 2 8

As at 31 Dec. 2011/1 Jan. 2012 -66 39 5 -169 -182 -373 -82 -291

Changes in shares in companies already consolidated 0 -7 7

Other comprehensive income 10 -18 9 -10 51 42 -7 49

of which currency translation effects -1 -10 -11 -8 -3

As at 31 Dec. 2012 -56 21 14 -179 -131 -331 -96 -235


95

CAPITAL MANAGEMENT

The overriding aim of the Haniel Group’s capital management is to safeguard financial flexibility, provide scope for value-enhancing invest-ments, and maintain sound ratios in the statement of financial position. The Group seeks to achieve investment-grade credit ratings.

The Group manages its capital by monitoring its equity ratio, gearing and interest cover ratio.

In addition, investment projects are assessed using uniform DCF methods; risk-appropriate minimum rates of return are specified for each division and each strategic business unit.

14 CURRENT AND NON-CURRENT FINANCIAL LIABILITIES

Financial liabilities comprise the interest-bearing obligations of the Haniel Group that existed as at the respective reporting dates. The dif-ferent types and maturities of the current and non-current financial liabilities are shown in the table below:

The maturities of the liabilities due to banks correspond to the respective financing commitments.


Equity 4,500 6,347

/ Total assets 14,416 16,706

Equity ratio (in %) 31.2 38.0

(Financial liabilities 5,420 5,314

- Cash and cash equivalents) 560 459

/ Equity 4,500 6,347

Gearing 1.1 0.8

(Operating profi t 496 400

+ Result from investments accounted for at equity -1,520 331

+ Other investment result) 12 42

/ (Finance costs 471 368

- Other net fi nancial income) 0 58

Interest cover ratio -2.1 2.5

31 Dec. 2012 31 Dec. 2011

EUR million Up to 1 year 1 to 5 years

More than 5 years

Total Up to 1 year 1 to 5 years

More than 5 years

Total

Liabilities due to banks 392 534 150 1,076 465 843 166 1,474

Bonds, commercial paper and other securitised debt 225 3,059 700 3,984 362 1,815 1,290 3,467

Liabilities to investments 2 2 9 9

Liabilities to shareholders 67 85 1 153 130 44 174

Lease liabilities 8 19 31 58 8 18 12 38

Other fi nancial liabilities 56 46 45 147 18 33 101 152

750 3,743 927 5,420 992 2,753 1,569 5,314

of which subordinated 142 120 43 305 137 90 99 326

96

The decrease in liabilities due to banks and the increase in securitised debt as compared to the previous year were due primarily to the issue of an additional euro bond by Franz Haniel & Cie. GmbH, with an aggregate principal amount of EUR 400 million, as well as a euro bond by Celesio with an aggregate principal amount of EUR 350 million. In addition, the TAKKT, ELG and CWS-boco divisions issued promissory note loans with an aggregate principal amount of EUR 269 million.

The bonds, commercial paper and other securitised debt item chiefly comprises the euro bonds issued by Franz Haniel & Cie. GmbH and Celesio, in the amount of EUR 2,526 million (previous year: EUR 1,957 million), promissory note loans of EUR 724 million (previous year: EUR 689 million), and the liability component of the Celesio convertible bonds in the amount of EUR 636 million (previous year: EUR 619 million).

Liabilities to shareholders relate primarily to shareholders of Franz Haniel & Cie. GmbH.

Future finance lease payments and their present values are shown in the table below:

31 Dec. 2012 31 Dec. 2011

EUR million Up to 1 year 1 to 5 years

More than 5 years

Total Up to 1 year 1 to 5 years

More than 5 years

Total

Minimum lease payments 11 27 43 81 10 21 13 44

Less interest portion 3 8 12 23 2 3 1 6

Present value 8 19 31 58 8 18 12 38

Financial liabilities include subordinated liabilities in the amount of EUR 305 million (previous year: EUR 326 million). The subordinated financial liabilities are subordinate to all other liabilities. The individual subordinated financial liabilities are shown in the table below:

As in previous years, Franz Haniel & Cie. GmbH offered the executives of the Haniel Group the opportunity to subscribe to Haniel Perfor-mance Bonds. The bonds bear interest corresponding to the return on total capital of the Haniel Group before taxes, plus a subordination premium of 3 percentage points. The maturities range from 5 to 10 years.


Shareholder loans 152 173

Loans of the Haniel Foundation 36 34

Haniel Zerobonds and Zinsbonds 23 27

Haniel Performance Bonds 39 38

Hybrid bond 27 24

Other fi nancial liabilities 28 30

Total 305 326


97

15 PENSION PROVISIONS

Pension provisions are recognised for obligations arising from current pensions as well as from commitments under old-age, disability and survivors’ pension plans. The pension expenses paid by the Group vary from country to country, depending on the respective legal, tax and economic circumstances. The Haniel Group’s company pension schemes comprise both defined contribution plans and defined benefit plans. Where the defined contribution plans are concerned, no other obligations exist in addition to the payment of the contributions. The contributions are shown under personnel expenses and amounted to EUR 16 million (previous year: EUR 17 million).

The carrying amounts of pension provisions under defined benefit plans are determined according to the projected unit credit method using actuarial principles. The following parameters were taken as the basis for the German companies, which account for the bulk of the pension provisions:

These parameters are adapted for foreign companies to reflect the specific circumstances. The discount rate for these companies ranges from 1.7 per cent to 5.0 per cent (previous year: 2.4 to 5.5 per cent). The derivation of the yields on senior, fixed interest bonds for deter-mining the discount rate was adjusted during the financial year to match the changed capital market conditions. For Norway, this also included taking into account the recommendations of the Norwegian Accounting Standards Board with regard to the bonds to be used. A range of 0.0 per cent to 3.8 per cent (previous year: 0.0 to 3.8 per cent) was assumed for the salary trend and, as in the previous year, a range of 0.0 per cent to 3.0 per cent for the pension trend. The expected return on plan assets ranges from 3.0 per cent to 5.2 per cent (previous year: 3.0 to 6.2 per cent).

Pension provisions are presented in the following items of the statement of financial position:

% 31 Dec. 2012 31 Dec. 2011

Discount rate 3.7 5.2

Salary trend 2.8 2.8

Pension trend 1.9 1.9


Pension provisions 309 290

Other non-current assets 23 16

Net pension provisions 286 274

Net pension provisions are derived as follows:


Present value of defi ned benefi t obligations (funded) 776 697

Less fair value of plan assets 563 521

Present value of defi ned benefi t obligations (unfunded) 366 282

Unrecognised actuarial gains and losses -308 -184

Unrecognised past service cost -15

Net pension provisions 286 274

The present value of defined benefit obligations developed as follows in the financial year:


Present value of defi ned benefi t obligations as at 1 Jan. 979 934


Changes in the scope of consolidation and other changes -12

Current service cost 31 30

Interest cost 41 42

Actuarial gains and losses 140 8

Employees’ fund contributions 3 3

Less pension payments 46 43

Past service cost -18 2

Other reimbursement claims, plan curtailments and plan settlements -1 -9

Present value of defi ned benefi t obligations as at 31 Dec. 1,142 979

The plan assets developed as follows:

Employer contributions to the fund are expected to be EUR 33 million in the coming financial year.

The table below shows the plan asset portfolio structure as at the reporting date:

The plan assets do not contain any own financial instruments of the Haniel Group or any assets used by the Haniel Group.

The fair value of the plan assets as at the reporting date factors in the expected return on plan assets. The amount of the expected return is based on historical and anticipated average returns in the relevant investment categories, which are benchmarked against the expecta-tions of independent sources.


Fair value of plan assets as at 1 Jan. 521 485


Changes in the scope of consolidation and other changes -16

Expected return on plan assets 28 28

Actuarial gains and losses 8 -18

Employer’s fund contributions 33 42

Employees’ fund contributions 3 3

Less pension payments from fund assets 30 29

Less plan settlements 1 1

Fair value of plan assets as at 31 Dec. 563 521


Equities 77 83

Fixed-income securities 337 342

Real estate 31 23

Other assets 118 73

Fair value of plan assets 563 521

98


99

The actual return on plan assets can differ from the expected return if the capital markets and other markets do not develop as anticipated. The table below compares the expected and actual return on the plan assets, as well as gains and losses arising from adjustments made based on prior experience in the last five years:

EUR million 2012 2011 2010 2009 2008

Expected return on plan assets 28 28 27 24 28

Actual return on plan assets 36 10 40 31 -26

Adjustments made to plan assets based on prior experience 8 -18 13 7 -54

Adjustments made to net present value of defi ned benefi t obligations based on prior experience 1 -1 4 6 -8

Net pension provisions developed as follows:

Pension expenses comprise the following components:

On the income statement for the financial year, personnel expenses included EUR 36 million (previous year: EUR 30 million), and the finance costs (interest expense less expected return on plan assets) included EUR 13 million (previous year: EUR 14 million) relating to pension expenses.

The present value of the defined benefit obligations, plan assets and funding status developed as follows in the previous five years:


Net pension provisions as at 1 Jan. 274 284


Changes in the scope of consolidation and other changes 11

Pension expenses 49 44

Less pension payments and fund allocations 49 56

Net pension provisions as at 31 Dec. 286 274


Current service cost 31 30

Interest cost 41 42

Less expected return on plan assets 28 28

Amortisation of actuarial gains and losses 8 6

Other reimbursement claims, plan curtailments and plan settlements -8

Past service cost -3 2

Pension expenses 49 44

EUR million 31 Dec. 2012 31 Dec. 2011 31 Dec. 2010 31 Dec. 2009 31 Dec. 2008

Present value of defi ned benefi t obligations (unfunded) 366 282 277 267 233

Present value of defi ned benefi t obligations (funded) 776 697 657 591 493

Less fair value of plan assets 563 521 485 432 368

Funding status 579 458 449 426 358

16 CURRENT AND OTHER NON-CURRENT PROVISIONS

EUR million 1 Jan. 2012 Foreign ex change

rate adjustments

Changes in the scope of

consolidation

Reclassi-fi cation

Interest effect

Additions Reversals Utilisations 31 Dec. 2012

Provisions for personnel 48 1 -9 1 14 -2 -6 47

Provisions for removal 10 1 11

Miscellaneous non-current provisions 127 -4 4 4 17 -21 -3 124

Other non-current provisions 185 -4 1 -5 5 32 -23 -9 182

Provisions for personnel 106 -3 87 -10 -93 87

Provisions for litigation 3 1 4 7 -1 -4 10

Provisions for warranties 4 -1 3

Provisions for restructuring 54 1 1 40 -13 -41 42

Miscellaneous current provisions 121 -2 -1 -14 59 -9 -27 127

Current provisions 288 -1 0 -12 0 193 -33 -166 269

Non-current provisions for personnel comprise in particular obligations for anniversaries and partial retirement schemes. Current provi-sions for personnel include bonuses, obligations under social plans and termination benefits. Provisions for personnel contain provisions for legal risks in connection with business combinations in the Celesio division.

Provisions for removal usually result from the construction and redesign (improvements and reconstruction) of land and buildings, whose removal will be necessary in future because of contractual, constructive or legal obligations. The present value of expected expenses is immediately recognised as a liability and initially corresponds to an appropriate increase in the acquisition cost of the relevant tangible asset.

Current provisions for restructuring include all estimated costs for the restructuring of selected companies and/or business units on the basis of a restructuring plan adopted by the responsible management. The addition to and utilisation of the provisions for restructuring relate primarily to measures enacted under the Celesio division’s Operational Excellence Program.

In the financial year miscellaneous non-current and current provisions contain provisions relating to business combinations and disposals in the amount of EUR 96 million (previous year: EUR 101 million) and provisions amounting to EUR 83 million (previous year: EUR 63 million) for damages in connection with sand-lime bricks that were produced in former Haniel building materials plants using lime substitutes and which are being settled by Haniel on a goodwill basis. There are also provisions for real estate liabilities in the amount of EUR 27 million (previous year: EUR 25 million), for expected losses from existing contractual relationships amounting to EUR 4 million (previous year: EUR 4 million), and for a large number of other items.

The reclassifications include provisions that were classified as held for sale during the financial year.

100


101

The accrued expenses include periodic expenses for interest, holiday leave not yet taken, rebates, bonuses and invoices in transit.

Derivative financial instruments are described in detail under number 29.

Miscellaneous current liabilities also include deferred income of EUR 7 million (previous year: EUR 9 million) and liabilities in connection with business combinations and the acquisition of interests in companies amounting to EUR 1 million (previous year: EUR 69 million).

17 OTHER NON-CURRENT LIABILITIES

Other non-current liabilities include non-interest-bearing liabilities relating primarily to business combinations and the acquisition of inter-ests in companies.

The other non-current provisions are expected to be utilised as follows:

31 Dec. 2012 31 Dec. 2011

EUR million Up to 2 years

2 to 5 years

More than 5 years

Total Up to 2 years

2 to 5 years

More than 5 years

Total

Provisions for personnel 13 17 17 47 13 15 20 48

Provisions for removal 11 11 10 10

Miscellaneous non-current provisions 28 87 9 124 32 81 14 127

41 104 37 182 45 96 44 185

18 TR ADE PAYABLES AND SIMIL AR LIABILITIES


Trade payables 2,378 2,872

Prepayments received on account of orders 92 83

2,470 2,955

19 OTHER CURRENT LIABILITIES


Liabilities for other taxes 133 109

Liabilities for payroll and social security 81 101

Accrued expenses 451 431


Miscellaneous current liabilities 139 112

922 869

C. NOTES TO THE INCOME STATEMENT

20 RE VENUE


Trade sales 25,351 25,554

Service sales 980 919

26,331 26,473

21 OTHER OPER ATING INCOME


Income from disposals of non-current assets 16 29

Reversals of valuation allowances on doubtful receivables 23 21

Rental and similar income 14 14

Miscellaneous operating income 218 211

271 275

22 PERSONNEL EXPENSES


Wages and salaries 1,409 1,386

Social security 254 245

Expenses for pensions and other benefi ts 74 68

Reversals of provisions for personnel expenses -11 -11

1,726 1,688

A breakdown of revenue by division and country is provided in the segment reporting on pages 68 and 69.

Minimum incoming payments for operating leases in the coming years amount to:

Among other things, the miscellaneous operating income includes subsidies for advertising expenses and similar income in the amount of EUR 77 million (previous year: EUR 75 million), as well as income from services in conjunction with data surveys in the amount of EUR 18 million (previous year: EUR 17 million). As in the previous year, there were no reversals of impairment losses recognised in respect of items of property, plant and equipment or intangible assets. The total contingent rental income recognised during the financial year was EUR 3 million (previous year: EUR 2 million).

A breakdown of employees by division is contained in the segment reporting on pages 68 and 69.

102


2012 2011

EUR million Up to 1 year

1 to 5 years

More than 5 years

Total Up to 1 year

1 to 5 years

More than 5 years

Total

Operating leases 5 2 7 10 21 9 40

103

23 OTHER OPER ATING EXPENSES


Valuation allowances on and write-offs of receivables 51 53

Losses from disposals of non-current assets 1 6

Impairments on disposal groups 25

Reversals of provisions -43 -17

Other operating taxes 39 36

Rental and operating lease expenses 207 193

Repairs and maintenance 64 63

Sales freight 155 146

Legal and consulting costs 65 68

IT services 147 137

Personnel leasing 71 75

Miscellaneous operating, administrative and sales expenses 644 672

1,426 1,432

Minimum outgoing payments for operating leases in the coming years amount to:

These are offset by minimum incoming lease payments from subletting arrangements amounting to EUR 43 million (previous year: EUR 23 million).

Miscellaneous operating, administrative and sales expenses comprise numerous operating expenses, including for energy, insurance, advertising, representation, catalogue production and restructuring.

Research and development costs amounted to EUR 8 million (previous year: EUR 10 million) and are reported under miscellaneous operat-ing, administrative and sales expenses. These costs relate primarily to the Celesio division and include software development costs that do not fulfil the conditions for recognition as an asset in accordance with IAS 38.

2012 2011

EUR million Up to 1 year

1 to 5 years

More than 5 years

Total Up to 1 year

1 to 5 years

More than 5 years

Total

Operating leases 155 405 502 1,062 182 475 611 1,268

25 FINANCE COSTS


Interest and similar expenses 450 351

Interest expenses for pension and other provisions 18 15

Interest expenses under fi nance leases 3 2

471 368

26 OTHER NET FINANCIAL INCOME


Interest and similar income 56 50

Miscellaneous fi nancial income -56 8

0 58

27 INCOME TA X EXPENSES


Current taxes 142 167

Deferred taxes 12 -11

154 156

The interest and similar expenses in the financial year include expenses from a bond redemption above the principal amount in the Other segment as well as from the early termination of cash flow hedges as a result of the elimination of hedged items. In addition, an increase in the carrying amounts of the euro benchmark bonds was recognised during the financial year in accordance with IAS 39.AG8 as a result of the rating adjustment of Haniel.

Changes in the fair value of (derivative) financial instruments recognised in profit and loss amounted to EUR 7 million in the financial year (previous year: EUR -9 million) and are included in miscellaneous financial income.

The net exchange differences amounted to EUR -5 million in the financial year (previous year: EUR 22 million). They are recognised in the miscellaneous financial income in the amount of EUR -6 million (previous year: EUR 22 million), and in the other operating expenses in the amount of EUR 1 million (previous year: EUR 0 million).

In the previous year, a valuation allowance of EUR 4 million on a receivable in the ELG division was included in other net financial income.

The current taxes include prior period tax income totalling EUR 2 million (previous year: EUR 0 million).

Deferred tax assets on tax loss carryforwards in the amount of EUR 14 million were reversed to expenses in the financial year (previous year: income of EUR 15 million). EUR 15 million in write-downs on deferred tax assets (previous year: EUR 4 million) were partially offset by EUR 3 million in reversals of write-downs (previous year: EUR 4 million).

24 OTHER INVESTMENT RESULT


Income from fi nancial assets available for sale 12 43

Impairments of fi nancial assets available for sale -1

12 42

Income from financial assets available for sale was related primarily to investment funds in the Other segment.

104


105


Profi t before taxes -1,483 463

Expected effective income tax rate 30.7% 30.7%

Expected tax expense -455 142

Deviation due to varying foreign tax rates -11 -5

Tax portion for tax-exempt income -21 -10

Tax portion for non-deductible expenses 89 61

Non-recognition, write-downs and utilisation of tax loss carryforwards 43 43

Result from investments accounted for at equity 467 -55

Effect of non-tax-deductible goodwill impairments 4 12

Prior-period taxes 10 -4

Other tax effects 28 -28

Reported tax expense 154 156

Reported income tax rate - 33.7%

The following table shows a reconciliation between the reported and the expected tax expense:

For German companies the expected tax expense includes corporate income tax, the solidarity surcharge and trade tax.

28 PROFIT AF TER TA XES FROM DISCONTINUED OPER ATIONS

In addition to the current income and expenses of EUR -7 million (previous year: EUR -71 million) relating to the Movianto, Pharmexx and DocMorris mail-order pharmacy (including its associated brand name) units classified as discontinued operations during the financial year, the profit from discontinued operations in the financial year includes impairments from subsequent measurement of the affected units in accordance with IFRS 5 as well as losses on the disposal of the units totalling EUR 252 million (previous year: EUR 0 million).

Profit from discontinued operations consisted of the following:

DocMorris mail-order pharmacy Pharmexx Movianto Total

EUR million 2012 2011 2012 2011 2012 2011 2012 2011

Revenue 299 327 104 203 260 343 663 873

Cost of materials 252 272 2 6 141 180 395 458

Gross profi t 47 55 102 197 119 163 268 415

Amortisation 1 6 1 76 2 9 4 91

Operating profi t 0 3 -2 -75 2 2 0 -70

Profi t before taxes -2 0 -2 -75 2 2 -2 -73

Income tax expenses -1 3 2 -1 5 -2

Profi t after taxes -2 1 -5 -75 0 3 -7 -71

Revaluation and disposal gains/losses before taxes -146 -41 -65 -252 0

Income taxes on revaluation and disposal gains/losses 0 0

Revaluation and disposal gains/losses after taxes -146 0 -41 0 -65 0 -252 0

Profi t after taxes from discon-tinued operations according to income statement -148 1 -46 -75 -65 3 -259 -71

D. OTHER NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

29 FINANCIAL RISK MANAGEMENT

In the context of its operating activities, the Haniel Group is exposed to financial risks. These primarily include liquidity risks, default risks, risks resulting from changes in interest and exchange rates, and price fluctuations in the commodity markets. The purpose of financial risk management is to reduce the extent of these financial risks.

The Managing Board lays down the basic guidelines for financial risk management and determines the general procedures to be followed for hedging financial risks. The holding companies of the fully consolidated divisions have their own treasury departments, which identify, analyse and assess the financial risks before initiating preventive or mitigating measures. The central treasury department advises the subsidiaries and, in addition to its own hedging transactions, enters into hedges on their behalf as well. All hedges relate to an underlying hedged item. No derivative financial instruments are used for speculative purposes.

For financing purposes, Haniel uses a variety of financing instruments in keeping with industry and commercial practice and subject to cus-tomary contractual provisions. No special financial risks arise from this practice. The adjustment of Haniel’s rating to BB and Ba2, respec-tively, during the financial year resulted in an increase in the interest rate for interest periods following the adjustment of 125 basis points for the euro benchmark bonds issued in 2009 and 2010 by Franz Haniel & Cie. GmbH with an outstanding principle amount totalling EUR 1,256 million at the end of the reporting period. If the rating should again increase in the future to BB+ and Ba1, the interest rate would be reduced to the original rate effective for subsequent interest periods. The contractual conditions governing the euro bond issued in Febru-ary 2012 by Franz Haniel & Cie. GmbH with a total outstanding principle amount of EUR 400 million provide for an interest rate increase of 125 basis points if Haniel’s rating falls below BB or Ba2.

LIQUIDIT Y RISK

Liquidity risk is the risk of being unable to guarantee the Haniel Group’s solvency at all times. Liquidity risk is managed by financial planning measures taken by the fully consolidated divisions’ holding companies to ensure that the necessary resources are available to fund the operating business and investments. The financing requirement is determined according to the financial plans of the subsidiaries and the Holding Company. In order to cover the financing requirement, the Holding Company has at its disposal committed, unutilised credit facili-ties as well as a commercial paper programme and a “Debt Issuance Programme”. The liquidity risk is also managed within the fully consoli-dated divisions, which also have their own unutilised bilateral short- and long-term credit facilities. The Haniel Group seeks as a general rule to maintain an appropriate reserve of available credit facilities.

106


107

DEFAULT RISK

The default or credit risk is the risk of the Haniel Group’s contractual partners not fulfilling their obligations. Haniel is exposed to a default risk both in its operating business and in connection with financial instruments.

According to an internal risk assessment, the default risks arising from loans to investments and other reported under non-current financial assets can be summarised as follows:

In view of the Haniel Group’s diverse activities and the large number of existing customer relationships, entailing mostly minor individual receivables, a concentration of default risks does not arise from trade receivables or from receivables from investments and other current assets; from the Group’s perspective, the credit risk is not significant. In addition, if necessary significant individual trade receivables are hedged to the extent possible through default insurance, property liens or similar instruments. Additionally, the Celesio division was granted collateral with regard to a reimbursement claim against previous shareholders from a business combination recognised under other non-current assets or receivables from investments and other current assets.

The maximum default risk arising from (derivative) financial instruments is equal to the carrying amounts or positive market values of the derivative contracts entered into. Given that money transactions and derivative financial instruments are entered into as a general rule with banks with good credit standings, these risks are deemed to be low. There is no discernible concentration of default risks from busi-ness relations with individual debtors or debtor groups.

In addition to the carrying amounts of the (derivative) financial instruments with positive market values recognised in the statement of finan-cial position, the maximum default risk of the Haniel Group also includes the nominal amount of the financial guarantees issued. Financial guarantee contracts with a total nominal amount of EUR 143 million had been issued as at the reporting date (previous year: EUR 246 million).

INTEREST R ATE RISK

Interest rate risk is the risk of profit or loss being negatively affected by fluctuating market interest rates. The interest rate risk is limited with derivative financial instruments, chiefly interest rate swaps and caps. Decisions on the use of derivative financial instruments are made on the basis of the planned indebtedness and interest rate expectations. The interest rate hedging strategy is reviewed and new targets are defined at regular intervals. The Haniel Group generally seeks to maintain an appropriate hedged interest rate position.


Low credit risk 548 553

Medium credit risk 211 275

Total 759 828

The following interest rate sensitivity analysis illustrates the hypothetical effects on profit before taxes and equity, had the prevailing mar-ket interest rates changed on the reporting date. It is based on the assumptions that the figures as at the reporting date are representative for the whole year, and that the supposed change in market interest rates could have occurred on the reporting date.

A hypothetical increase (decrease) in the euro market interest rates by 1.0 percentage points would have raised (reduced) profit before taxes by EUR 9 (6) million (previous year: decrease by EUR 1 million or increase by EUR 1 million). 1.0 percentage points higher (lower) mar-ket interest rates on 31 December 2012 would also have increased (decreased) equity by EUR 13 (9) million (previous year: EUR 23 (25) million).

A hypothetical increase (decrease) in the USD market interest rates by 1.0 percentage points would have raised (reduced) profit before taxes by EUR 1 (1) million (previous year: decrease by EUR 2 million or increase by EUR 2 million). 1.0 percentage points higher (lower) mar-ket interest rates on 31 December 2012 would also have increased (decreased) equity by EUR 6 (5) million (previous year: EUR 6 (6) million).

Given a hypothetical increase (decrease) in the GBP market interest rates of 1.0 percentage points, the profit before taxes would be unchanged (unchanged) (previous year: unchanged (unchanged)). 1.0 percentage points higher (lower) market interest rates on 31 Decem-ber 2012 would also have increased (decreased) equity by EUR 8 (8) million (previous year: EUR 10 (10) million).

EXCHANGE R ATE RISK

Exchange rate risks arise from investments and financing measures undertaken in foreign currencies, and from the operating business in connection with buying and selling merchandise and services in foreign currencies. Forward currency contracts and currency swaps are the primary instruments used to hedge against exchange rate risks. The majority of exchange rate risks originate from changes in the EUR-USD and EUR-GBP rates.

Micro-hedges are the principal instruments used to hedge exchange rate risks. These entail the direct hedging of an underlying transac-tion with a currency derivative. Currency derivatives are also used to hedge forecast transactions in foreign currencies. In this case, the currency derivative (or a combination of several derivatives) that best reflects the probability of occurrence and timing of the forecast transaction is selected.

An exchange rate sensitivity analysis illustrates the theoretical effects on profit before taxes and equity of changes in the exchange rates of the currencies that are significant for the Haniel Group. The exchange rate sensitivity analysis is based on the non-derivative and deriva-tive financial instruments held by the Group companies in non-functional currencies on the reporting date. It assumes that the exchange rates change by an indicated percentage rate on the reporting date. Movements over time and actual observed changes in other market parameters are disregarded.

The Haniel Group has concentrated some of its medium- and long-term borrowing with the financing companies located in Germany and the Netherlands. Depending on the borrowing requirements of the individual Group companies, the financing companies also obtain loans in currencies other than the euro for disbursement within the Group. Since these loans are not taken out in the company’s functional currency, IFRS 7.40 requires that they are taken into account when measuring the exchange rate risk, even though such a risk does not exist from the perspective of the Group as a whole.

A hypothetical increase (decrease) in the USD-EUR exchange rate by 10 per cent would have raised (reduced) the profit before taxes by EUR 27 (27) million (previous year: EUR 31 (31) million). A 10 per cent higher (lower) USD-EUR rate as at 31 December 2012 would in addition have increased (decreased) equity by EUR 1 (1) million (previous year: EUR 1 (1) million).

A hypothetical increase (decrease) in the GBP-EUR exchange rate by 10 per cent would have raised (reduced) the profit before taxes by EUR 81 (81) million (previous year: EUR 68 (69) million). A 10 per cent higher (lower) GBP-EUR rate on 31 December 2012 would also have increased (decreased) equity by EUR 1 (1) million (previous year: EUR 1 (1) million).

108


109

OTHER PRICE RISKS

These price risks concern the risks arising from fluctuating commodity prices, especially the price of nickel. The ELG division hedges com-modity price risks by entering into hedge transactions (nickel futures).

The sensitivities are measured, taking into account the effect on profit or loss of value changes in the (derivative) financial instruments, disregarding the compensating value changes in the hedged items.

A hypothetical increase (decrease) in the nickel price by USD 2,000 per tonne (previous year: USD 2,670 per tonne) (financial year: 12 per cent; previous year: 14 per cent of the spot nickel price as at the reporting date) would have reduced (raised) profit before taxes by EUR 17 (17) million (previous year: EUR 21 (21) million). The assumed change in the nickel price corresponds to the initial margin established by the London Metal Exchange. This is the amount that must be deposited as margin when entering into a contract.

HEDGE ACCOUNTING

The Haniel Group enters into hedging transactions for the purpose of hedging both the fair values of certain assets or liabilities and future cash flows. This also includes currency hedges of planned sales and purchases of merchandise and services, and of investments and divestments.

In accordance with IAS 39, all derivatives entered into by the Haniel Group are initially recognised in the statement of financial position at cost, corresponding to fair value, and are subsequently measured at their market value as at the reporting date. When accounting for hedges, the hedge accounting rules are applied whenever this is possible and makes sense. Under the hedge accounting rules, a derivative is classified either as a hedging instrument in a cash flow hedge if it is used to hedge future cash flows, as a hedging instrument in a fair value hedge if it is used to hedge the fair values of certain assets and liabilities, or as a hedging instrument in a hedge of a net investment in a foreign operation if it is used to hedge an investment recognised in a foreign currency.

Currency derivatives used to hedge existing items of the statement of financial position are usually not subjected to formal hedge account-ing. The changes in the fair values of these derivatives, which, from an economic point of view, represent effective hedges in the context of the Group strategy, are recognised in profit or loss. Those changes are generally matched by opposite changes in the fair values of the hedged items.

The fair values of the derivatives are determined using capital market data as at the reporting date, as well as suitable valuation methods. Where interest rates are required for determining the fair value, the relevant market interest rates for the remaining term of the derivatives are used.

CASH FLOW HEDGES – INTEREST R ATE HEDGING

The Haniel Group obtains finance largely by way of long-term bilateral credit facilities, bonds and promissory note loans. The bilateral credit facilities are generally utilised on a revolving basis with a short-term fixed-rate period. By entering into derivative financial instrument transactions, Haniel hedges against rising market interest rates and thus against future increases in interest expenses. The table below illustrates, by currency, the financial years in which the cash flows hedged as at 31 December 2012 are expected to occur:

The expected hedged interest expenses originate from floating-rate liabilities with a nominal volume in the amount of EUR 483 million, USD 190 million, GBP 155 million, and DKK 120 million (Danish krone).

The table below illustrates, by currency, the financial years in which the cash flows hedged as at 31 December 2011 were expected to occur:

The expected hedged interest expenses originated from floating-rate liabilities with a nominal volume in the amount of EUR 645 million, USD 130 million, GBP 225 million, and DKK 120 million.

CASH FLOW HEDGES – CURRENCY HEDGING

The Haniel Group enters into forward exchange contracts to hedge euro-denominated payments. The designated hedged items are highly probable payments denominated in various foreign currencies.

The designated underlying transactions as at 31 December 2012 amounted to EUR 36 million. They mature in the amount of EUR 14 million in Q1 2013, in the amount of EUR 13 million in Q2 2013, in the amount of EUR 8 million in Q3 2013, and in the amount of EUR 1 million in Q4 2013.

The designated underlying transactions as at 31 December 2011 amounted to EUR 47 million. They matured in the amount of EUR 14 million in Q1 2012, EUR 12 million in Q2 2012, EUR 9 million in Q3 2012, EUR 3 million in Q4 2012, and EUR 9 million in 2013.

in millions Cash fl ows 2013 Cash fl ows 2014 Cash fl ows from 2015 to 2017

Cash fl ows from 2018 to 2022

Cash fl ows from 2023 onwards

Euro 1 1 1 1

USD 1 1 1 1

GBP 1 1 2

DKK

in millions Cash fl ows 2012 Cash fl ows 2013 Cash fl ows from 2014 to 2016



Euro 10 9 18 3

USD 1 1 2 2

GBP 3 2 5 2

DKK 1

110


111

In connection with cash flow hedges, losses of EUR 34 million were recognised in other comprehensive income for the financial year (previ-ous year: EUR 55 million). Losses of EUR 46 million (previous year: EUR 36 million) were transferred from other comprehensive income to finance costs and gains in the amount of EUR 1 million (previous year: losses of EUR 1 million) were transferred to other operating expenses. Of this amount, EUR 21 million were recognised in finance costs in the financial year (previous year: EUR 8 million) because previously exist-ing hedges were revoked upon the disposal of the hedged items.

As in the previous year, there were no ineffective portions of the cash flow hedges.

FAIR VALUE HEDGE

As in the previous year, fair value hedge accounting was not applied in the financial year.

HEDGE OF A NET INVESTMENT IN A FOREIGN OPER ATION

Non-derivative financial liabilities denominated in foreign currency are used to hedge the net investment in a foreign operation. As in the previous year, there were no significant ineffective portions of the net investment hedges.

In compliance with the hedging strategy pursued by Haniel, the total derivative financial instruments position is composed as follows:

31 Dec. 2012 31 Dec. 2011

EUR million Fair value of which cash fl ow hedges

Fair value of which cash fl ow hedges

Assets

Interest rate instruments

Currency instruments 10 7 2

Other derivative fi nancial instruments 5 1

15 0 8 2

Liabilities

Interest rate instruments 113 84 104 96

Currency instruments 3 9 1

Other derivative fi nancial instruments 2 3

118 84 116 97

The table below shows the contractually agreed, undiscounted payments of interest and principal over time of the non-derivative financial liabilities and derivative liabilities and financial guarantee contracts existing as at 31 December 2012:

In accordance with IFRS 7, the cash flows relating to liabilities from business combinations include only the contingent consideration paya-ble in relation to business combinations implemented beginning in financial year 2010. In addition to the amounts presented in accordance with IFRS 7, future expected outgoing payments in connection with business combinations that took place before 1 January 2010 also exist.

For the financial guarantee contracts, the disclosure is made not on the basis of the estimated probable amount, but in the amount of the agreed maximum guarantee at the earliest possible date.

EUR million Cash fl ows 2013 Cash fl ows 2014 Cash fl ows from 2015 to 2017



Non-derivative fi nancial liabilities and fi nancial guarantee contracts

Liabilities due to banks -407 -203 -368 -148 -6

Bonds, commercial paper and other securitised debt -417 -1,577 -1,990 -784

Liabilities to investments -2

Liabilities to shareholders -71 -36 -62 -1

Lease liabilities -11 -9 -18 -21 -22

Other fi nancial liabilities -58 -13 -41 -42 -14

Liabilities from business combinations -7 -53

Trade payables -2,378

Financial guarantee contracts -85 -14 -24 -14 -6

-3,429 -1,859 -2,556 -1,010 -48

Derivative liabilities

Hedge accounting

Derivatives (net settled) -24 -20 -45 -9

Derivatives (gross settled) infl ows 7

Derivatives (gross settled) outfl ows -7

-24 -20 -45 -9 0

Without hedge accounting

Derivatives (net settled) -11 -10 -11



-14 -10 -11 0 0

-38 -30 -56 -9 0

112


113

The contractually agreed, undiscounted payments of interest and principal over time of the non-derivative financial liabilities and derivative liabilities and financial guarantee contracts that existed as at 31 December 2011 were as follows:

The repayments of principle are classified by the earliest period in which the creditors may demand repayment.

EUR million Cash fl ows 2012 Cash fl ows 2013 Cash fl ows from 2014 to 2016



Non-derivative fi nancial liabilities and fi nancial guarantee contracts

Liabilities due to banks -502 -304 -561 -192 -11

Bonds, commercial paper and other securitised debt -551 -387 -1,896 -1,419

Liabilities to investments -9

Liabilities to shareholders -138 -18 -30

Lease liabilities -10 -7 -14 -13

Other fi nancial liabilities -24 -16 -37 -122 -38

Liabilities from business combinations -1 -1 -11

Trade payables -2,872

Financial guarantee contracts -151 -26 -38 -22 -9

-4,258 -759 -2,587 -1,768 -58

Derivative liabilities

Hedge accounting

Derivatives (net settled) -25 -21 -48 -19



-26 -21 -48 -19 0

Without hedge accounting

Derivatives (net settled) -5 -2 -2

Derivatives (gross settled) infl ows 575 1

Derivatives (gross settled) outfl ows -583 -2

-13 -3 -2 0 0

-39 -24 -50 -19 0

IAS 39 CATEGORISATION OF FINANCIAL INSTRUMENTSASSETS

EUR million Carrying amounts as at

31 Dec. 2012

Financial assets measured at fair

value through profi t or loss

Financial assets held for trading

Loans and receivables

Financial assets available

for sale

No IAS 39 category

Outside the scope of IFRS 7

Fair values

Financial assets available for sale 65 65 65

Loans to investments 568 568 636

Other 191 191 191

Non-current fi nancial assets 824 0 0 759 65 0 0 892

Other non-current assets 98 0 0 0 0 54 44 98

Trade receivables 2,500 0 0 2,500 0 0 0 2,500

Receivables from investments 33 33 33

Other current assets 436 238 4 194 436

Receivables from investments and other current assets 469 0 0 271 0 4 194 469

Derivative fi nancial instruments 15 15 15

Securities and current fi nancial assets 22 22 22

Current fi nancial assets 37 0 15 22 0 0 0 37

Cash and cash equivalents 560 0 0 560 0 0 0 560

Assets held for sale 535 0 0 57 141 0 337 535

114


115


31 Dec. 2011

Financial assets measured at fair

value through profi t or loss

Financial assets held for trading

Loans and receivables

Financial assets available

for sale

No IAS 39 category


Fair values


Loans to investments 573 573 623

Other 255 255 379

Non-current fi nancial assets 1,060 0 0 828 232 0 0 1,234

Other non-current assets 41 0 0 0 0 0 41 41

Trade receivables 2,937 0 0 2,937 0 0 0 2,937

Receivables from investments 27 27 27

Other current assets 434 256 178 434

Receivables from investments and other current assets 461 0 0 283 0 0 178 461


Securities and current fi nancial assets 12 12 12

Current fi nancial assets 20 0 6 12 0 2 0 20

Cash and cash equivalents 459 0 0 459 0 0 0 459

Assets held for sale 2 0 0 0 0 0 2 2

The fair value of financial instruments traded in an active market is based on the quoted market price on the reporting date. The fair value of financial instruments that are not traded in an active market is measured by applying valuation methods, in particular the DCF method. Expected future cash flows from the financial instruments are discounted using interest rates with matching maturities.

The trade receivables, receivables from investments and other current assets, current financial assets and cash and cash equivalents have predominantly short maturities. The carrying amounts on the reporting date therefore correspond to the fair values.

LIABILITIES


31 Dec. 2012

Financial liabilities held

for trading

Other fi nancial liabilities

No IAS 39 category


Fair values

Liabilities due to banks 684 684 697

Bonds, commercial paper and other securitised debt 3,759 3,759 4,047

Liabilities to shareholders 86 86 102

Lease liabilities 50 50 50

Other fi nancial liabilities 91 91 125

Non-current fi nancial liabilities 4,670 0 4,620 50 0 5,021

Other non-current liabilities 65 0 42 21 2 65


Bonds, commercial paper and other securitised debt 225 225 226

Liabilities to investments 2 2 2




Current fi nancial liabilities 750 0 742 8 0 751

Trade payables and similar liabilities 2,470 0 2,378 0 92 2,470

Liabilities for other taxes 133 133 133

Liabilities for payroll and social security 81 81 81

Accrued expenses 451 100 351 451


Miscellaneous current liabilities 139 102 29 8 139

Other current liabilities 922 136 129 84 573 922

Liabilities held for sale 73 0 63 0 10 73

116


117


31 Dec. 2011

Financial liabilities held

for trading

Other fi nancial liabilities

No IAS 39 category


Fair values

Liabilities due to banks 1,009 1,009 1,019

Bonds, commercial paper and other securitised debt 3,105 3,105 3,180




Non-current fi nancial liabilities 4,322 0 4,292 30 0 4,439

Other non-current liabilities 129 0 9 11 109 129


Bonds, commercial paper and other securitised debt 362 362 365

Liabilities to investments 9 9 9




Current fi nancial liabilities 992 0 984 8 0 995

Trade payables and similar liabilities 2,955 0 2,872 0 83 2,955

Liabilities for other taxes 109 109 109

Liabilities for payroll and social security 101 101 101

Accrued expenses 431 76 355 431


Miscellaneous current liabilities 112 34 1 77 112

Other current liabilities 869 19 110 98 642 869

In view of the short maturities, the fair values of the current financial liabilities, trade payables and similar liabilities and other current liabili-ties generally correspond to the carrying amounts.

The table below shows the financial instruments recognised at fair value in the financial year by measurement level:

Level 1: Listed or market price on an active marketLevel 2: Fair values, determined on the basis of valuation techniques, for which directly observable market inputs existLevel 3: Fair values, determined on the basis of valuation techniques, for which no directly observable market inputs exist

The table below shows the financial instruments recognised at fair value in the previous financial year by measurement level described above:

No transfers between Levels 1 and 2 took place either during the financial year or the previous year.

EUR million Total 31 Dec. 2012

Level 1 Level 2 Level 3

Assets



Assets held for sale 141 141

Liabilities


Liabilities from business combinations 21 21

EUR million Total 31 Dec. 2011

Level 1 Level 2 Level 3

Assets

Financial assets available for sale 176 5 1 170


Liabilities


Liabilities from business combinations 12 12

118


119

The table below provides a detailed overview of the financial instruments in Level 3, without contingent consideration reported as liabilities from business combinations; changes in this item are presented separately under number 31. As in the previous year, the Level 3 financial instruments are investment funds in the Other segment whose fair value was determined using earnings multiples. The investment funds previously presented under financial assets available for sale were reclassified during the financial year as held for sale in accordance with IFRS 5.

The net gains or losses recognised in the income statement arising from the IAS 39 categories consist of the following elements:

The net gain or loss on financial assets and liabilities held for trading includes gains and losses from fair value changes, as well as interest expenses and income arising from these financial instruments. The net gain or loss on financial assets available for sale includes in par-ticular income and expenses from investment funds in the Other segment recognised in profit or loss. The net gain or loss from loans and receivables consists primarily of interest income and impairments and reversals of impairments on these financial instruments. The net gain or loss from other financial liabilities consists primarily of interest expenses and exchange differences arising from the measurement of non-operating liabilities denominated in foreign currency.

Changes in the fair value of financial assets available for sale in the amount of EUR -7 million (previous year: EUR 42 million) were recognised in other comprehensive income during the financial year. Amounts arising from fair value changes totalling EUR 11 million (previous year: EUR 38 million) were transferred from other comprehensive income to the other investment result.


As at 1 Jan. 170 150


Change in the scope of consolidation 0 0

Additions 4 42

Impairments 0 0

Reversals of impairment losses 0 0

Fair value changes recognised in other comprehensive income -7 42

Fair value changes recognised in profi t or loss 0 0

Disposals 26 64

Transfers into Level 3 0 0

Transfers out of Level 3 0 0

As at 31 Dec. 141 170

Fair value changes during the fi nancial year recognised in profi t or loss contained in closing balance 0 0


Financial assets measured at fair value through profi t or loss

Financial assets and liabilities held for trading 18 20

Financial assets available for sale 12 42

Loans and receivables -39 11

Other fi nancial liabilities -371 -298

-380 -225

30 CONTINGENT LIABILITIES


Liabilities from bills of exchange 2 6

Liabilities from

guarantees 685 822

miscellaneous contingent liabilities 10 5

697 833

Liabilities from guarantees relate primarily to Celesio and the Other segment. Certain provisions were also recognised in connection with these matters. These are recognised under the relevant item. The liabilities from guarantees include financial guarantee contracts within the meaning of IAS 39 in the amount of EUR 143 million (previous year: EUR 246 million).

As in the previous year, no contingent receivables from pending transactions exist as at the reporting date.

31 BUSINESS COMBINATIONS AND DISPOSALS OF CONSOLIDATED COMPANIES

In the financial year, Haniel obtained control of 7 companies or groups of companies. 5 of these companies or groups of companies were acquired in the Celesio division, 2 companies or groups of companies in the TAKKT division, and one company in the ELG division. Control was obtained over a total of 13 individual firms through 7 share deals, and over one business unit through an asset deal. Haniel acquired a 100 per cent interest in each of the companies.

In accordance with IFRS 3 and IAS 27, increases in ownership interest in subsidiaries are not included in this section.

During the period, the acquired companies and groups of companies contributed EUR 84 million to revenue and EUR 1 million to profit after taxes. If each of the entities had been acquired with effect from the beginning of the financial year, they would have contributed EUR 146 million to revenue and EUR 3 million to profit after taxes.

The consideration transferred for the acquisitions amounted to EUR 257 million. Taking into account the acquired entities’ cash and cash equivalents of EUR 6 million, as well as other non-cash components of EUR 46 million in the financial year, the total cash amount for the business acquisitions was EUR 205 million. No company shares were issued as part of the consideration transferred. In the context of acquisitions achieved in stages, the non-cash components included the fair values of the investments previously accounted for at equity, which amounted to EUR 1 million. The revaluation of interests in investments previously accounted for at equity had an insignificant impact on profit or loss, which was recognised in other operating expenses.

Interest and similar expenses included EUR 353 million from financial liabilities not measured at fair value during the financial year (previ-ous year: EUR 306 million). Interest and similar income included interest income from financial assets not measured at fair value through profit or loss amounting to EUR 56 million in the financial year (previous year: EUR 50 million).

120


121

The transaction costs incurred in connection with the business combinations in the amount of EUR 1 million were recognised in the income statement as other operating expenses.

In the context of some business combinations, contingent consideration was agreed. At the relevant acquisition dates, these were recog-nised as liabilities with fair values of EUR 13 million in total. The future development of these contingent considerations depend on whether certain revenue or earnings targets are met. Currently, the likely potential payments range between EUR 0 million and EUR 17 million (trans-lated at closing rates as at the reporting date).

The assets and liabilities acquired in the context of the business combinations are comprised as follows:

The fair value of the acquired receivables was EUR 12 million. This corresponds to the gross contractual amount. The fair value of the acquired receivables includes trade receivables in the amount of EUR 8 million.

Acquired entities were consolidated on the basis of provisional figures in the previous year. If applicable, the final figures are restated within one year in compliance with IFRS 3.45 et seq. No significant changes were made in respect of the acquisitions that took place in 2011.

First-time consolidation gave rise to goodwill in the total amount of EUR 220 million. The full goodwill method was not applied. The recog-nised goodwill primarily represents the future prospects accompanying the acquisitions and the expertise of the workforce acquired. EUR 64 million of the recognised goodwill is tax deductible.

Fair values

EUR million Ratioform Other acquisitions Total

Assets

Property, plant and equipment 36 1 37

Intangible assets 55 11 66

Deferred taxes

Inventories 7 6 13

Trade receivables 7 1 8

Other assets 8 3 11

113 22 135

Liabilities

Financial liabilities 68 68

Deferred taxes 15 15

Trade payables 3 1 4

Other liabilities 8 3 11

94 4 98

From the Haniel Group’s perspective, of the companies and groups of companies acquired, the acquisition of Ratioform in the TAKKT divi-sion classifies as significant. With effect from 1 July 2012, the TAKKT division acquired Ratioform Holding GmbH, a B2B direct marketing company for packaging solutions and its subsidiaries in order to strengthen its European portfolio.

During the period Ratioform contributed EUR 43 million to revenues and EUR 2 million to profit after taxes. If Ratioform had been acquired with effect from the beginning of the financial year, it would have contributed EUR 85 million to revenue and EUR 3 million to profit after taxes.

The consideration transferred for the acquisition of 100 per cent of the shares in Ratioform was EUR 172 million. Taking into account the acquired entities’ cash and cash equivalents of EUR 5 million, the total cash amount for the acquisition is EUR 167 million. No company shares were issued as part of the consideration transferred. Contingent consideration of up to EUR 4 million at the beginning of 2016 was stipulated as part of the acquisition provided certain revenue and margin targets are attained. There is no current expectation that the con-tingent payments will become due. Transaction costs in the amount of EUR 1 million were recognised in other operating expenses.

The first-time consolidation of Ratioform resulted in goodwill in the amount of EUR 153 million, which is not tax deductible.

Upon the acquisition of Ratioform, a reimbursement claim for contractually defined risks from the periods prior to the acquisition was stipulated with the previous shareholders. As at the reporting date, a claim in the amount of EUR 1 million is included in the receivables from investments and other current assets.

Contingent consideration recognised as a liability from business combinations taking place after 1 January 2010 developed as follows:

The fair value of contingent consideration is usually determined on the basis of an earnings multiple, taking into account long-term business planning. Overall, there were no material changes in this figure in 2012.

EUR million

As at 1 Jan. 12

Additions 13

Settlements 5


Interest effect 1

Revaluations -1

As at 31 Dec. 21

122


123

In the financial year, 7 companies or groups of companies, consisting of 71 individual firms were sold or deconsolidated, as were an addi-tional 36 business units of the Celesio division as part of a portfolio adjustment. This includes 62 individual firms of the Celesio division. This relates to the discontinued operations Movianto, Pharmexx and the DocMorris mail-order pharmacy, as well as the disposed-of activities in the Czech Republic (see number 12). The total assets and liabilities disposed of through disposals or deconsolidations are comprised as follows:

The consideration received for the disposals was EUR 329 million. Taking into account the disposed entities’ cash and cash equivalents of EUR 51 million, as well as paid transaction costs and other non-cash components of EUR 61 million in total in the financial year, the total cash amount for the disposals was EUR 217 million.

Taking into account impairments in the amount of EUR 252 million and transaction costs, the net result from the disposals is EUR -237 mil-lion and is included in the other operating income, other operating expenses and in profit from discontinued operations.

EUR million Carrying amounts

Assets

Property, plant and equipment 62

Intangible assets 76

Deferred taxes 5

Inventories 58

Trade receivables 282

Other assets 140

623

Liabilities

Financial liabilities 5

Deferred taxes 5

Trade payables 233

Other liabilities 97

340

32 NOTES TO THE STATEMENT OF CASH FLOWS

The statement of cash flows shows the changes in the Haniel Group’s cash and cash equivalents in the course of the financial year resulting from cash inflows and outflows. The statement of cash flows is divided into cash flow from operating, investing and financing activities. The cash and cash equivalents reported at the reporting date are the total of cash on hand, bank balances with a maturity of up to three months, and cheques, and are identical with the cash and cash equivalents reported in the statement of financial position.

The cash flow from operating activities is determined indirectly on the basis of the profit after taxes and essentially contains sales-related payments, dividends from investments accounted for at equity as well as interest paid and received. Haniel’s internal cash earnings indica-tor used for management purposes, Haniel cash flow, is shown as a separate line item. Haniel cash flow is the profit after taxes, adjusted for all material non-cash income and expenses, and non-recurring, non-operating income and expenses, plus other cash components.

The cash flow from investing activities includes payments for purchases and disposals of individual assets as well as for consolidated com-panies and other business units. This includes EUR 253 million in the financial year for the early exercise of options in the Celesio division for the purchase of the previously outstanding 49.9 per cent of the shares in Panpharma. Due to the terms and conditions for exercising the options, Panpharma had already been fully included in the consolidated financial statements since 2009.

The cash flow from financing activities comprises payments in connection with shareholder transactions as well as financial liabilities. The shareholder transactions essentially include payments to shareholders and payments from changes in shares in companies already consolidated. The payments to shareholders comprise dividend payments to shareholders of Franz Haniel & Cie. GmbH in the amount of EUR 50 million (previous year: EUR 60 million) and additional payments in the previous year for the purchase of treasury shares in the amount of EUR 5 million.

The cash flow from financing activities also includes the cash changes in financial liabilities. In the financial year, proceeds from issuance of financial liabilities contain the incoming amounts from the euro bond issued by Franz Haniel & Cie. GmbH in February 2012 in the aggregate principle amount of EUR 400 million, incoming payments from the euro bond issued by Celesio in the aggregate principal amount of EUR 350 million and the proceeds from the promissory note loans issued by TAKKT, ELG and CWS-boco in the aggregate principal amount of EUR 269 million, in each case net of transaction costs. In the previous year, these incoming payments contained the convertible bond issued by Celesio with an aggregate principal amount of EUR 350 million, less the related transaction costs of EUR 3 million.

The statement of cash flows contained the following cash flows which were attributable to discontinued operations:


Cash fl ow from operating activities -11 -19

Cash fl ow from investing activities 131 -35

Cash fl ow from fi nancing activities 0 -3

124


33 NOTES TO SEGMENT REPORTING

In the segment reporting, the reportable segments are the four fully consolidated divisions together with the Other segment. The segments are defined using the management approach, taking internal monitoring and reporting, as well as the organisational structure, into account.

The same accounting standards are used for segment reporting and for the consolidated financial statements. In the reported segment assets goodwill is allocated to the relevant division. Transactions between the divisions take place on an arm’s length basis. The finan-cial liabilities encompass the non-current and current financial liabilities contained in the statement of financial position. The sum of this amount and the other liabilities recognised in the statement of financial position is the Group’s total liabilities.

Celesio is a pharmaceutical wholesale company and operator of pharmacies, and provides services to the pharmaceutical market. It sup-plies pharmacies with all the products they typically sell. Celesio ranks among the leading pharmacy operators in Europe.

In order to provide a clearer picture of the Celesio segment, the table below contains additional information on the sub-segments Patient and Consumer Solutions and Pharmacy Solutions. The prior period information was adjusted in connection with the reclassifications as discontinued operations made during the financial year in accordance with IFRS 5:

CWS-boco is a leading service provider of washroom hygiene products and textile services in Europe. CWS specialises in washroom prod-ucts and dust control mats. The boco brand offers rental workwear.

ELG’s core business is the trading and recycling of primary and secondary raw materials, essentially for the stainless steel industry.

TAKKT is the leading B2B direct marketing specialist for business equipment in Europe and North America.

The principal constituents of the Other segment are the activities of the Holding Company, its financing companies and the Metro investment.

125

2012 2011

EUR million Patient and Consumer

Solutions

Pharmacy Solutions

Patient and Consumer

Solutions

Pharmacy Solutions

Segment revenue from external customers 3,463 18,808 3,295 18,858

Depreciation and amortisation of segment assets 63 60 57 59

Operating profi t 189 252 104 308

Material non-cash income (+) and expenses (-) other than depreciation and amortisation -5 -83 -10 -104

Recognised investments in non-current segment assets 68 68 104 148

Annual average number of employees (headcount) 22,862 16,135 22,725 16,484

34 REL ATED-PART Y DISCLOSURES

The significant related parties of the Haniel Group are associates and jointly controlled entities including their subsidiaries.

As at 31 December 2012, loan receivables from associates and jointly controlled entities existed in the amount of EUR 548 million (previ-ous year: EUR 553 million). In the financial year, Haniel generated interest income from loans to associates and jointly controlled entities in the amount of EUR 22 million (previous year: EUR 20 million). Sales attributable to business with associates and jointly controlled entities totalled EUR 30 million (previous year: EUR 34 million). Expenses in connection with transactions with associates and jointly controlled entities amounted to EUR 2 million (previous year: EUR 2 million). As at the end of the reporting period, trade receivables from and payables to associates and jointly controlled entities amounted to EUR 5 million and EUR 0 million, respectively (previous year: EUR 1 million and EUR 2 million, respectively). All business relations with associates and jointly controlled entities are governed by contracts and conducted at prices and conditions that would equally have been agreed with third parties.

Related persons are key management personnel. Within the Haniel Group, this includes the members of the Supervisory Board of Franz Haniel & Cie. GmbH and the members of the top-tier executive group. The top-tier executive group comprises the members of the Managing Board of the Holding Company as well as the Managing Board members or Managing Directors of the holding companies of the fully consoli-dated divisions.

As in the previous year, some of the liabilities to shareholders indicated under number 14 are liabilities to members of the Supervisory Board. Some of the bonds, commercial paper and other securitised debt that are likewise indicated under number 14 are held by key man-agement personnel.

Franz Haniel & Cie. GmbH offered the executives of the Haniel Group the opportunity to subscribe to Haniel Performance Bonds. The bonds bear interest corresponding to the return on total capital of the Haniel Group before taxes, plus a subordination premium of 3 percentage points. The maturities range from 5 to 10 years. Members of the top-tier executive group subscribed to bonds in the amount of EUR 0 mil-lion in the financial year (previous year: EUR 1 million). As at the reporting date, Haniel had liabilities in the amount of EUR 9 million from the bonds subscribed to by this group of persons, as in the previous year.

The companies of the Haniel Group have not otherwise entered into reportable transactions with key management personnel. This also applies to close relatives of this group of persons.

In some cases, key management personnel are members of executive or supervisory bodies of other companies with which the Haniel Group engages in regular business relations. All transactions with these companies are conducted at arm’s length.

In the current financial year, the members of the top-tier executive group received compensation amounting to EUR 23 million (previous year: EUR 40 million). Of this total, an amount of EUR 13 million (previous year: EUR 20 million) was attributable to short-term employee benefits, EUR 2 million (previous year: EUR 2 million) to post-employment benefits, and EUR 4 million (previous year: EUR 17 million) to termination benefits. Additionally, this group of persons was granted share-based compensation of EUR 4 million (previous year: EUR 1 mil-lion). The share-based component of the compensation package is described in greater detail below. As at the reporting date, the present value of the defined benefit obligation of members of the top-tier executive group amounted to EUR 15 million (previous year: EUR 13 mil-lion). The members of the Supervisory Board of Franz Haniel & Cie. GmbH received total remuneration of EUR 1 million, as in the previous year. In addition, employee representatives to the Supervisory Board who work for the Haniel Group received salaries in line with the market.

126


127

SHARE-BASED COMPENSATION SERVING AS LONG-TERM INCENTIVE

For members of the top-tier executive group, the performance compensation comprises performance cash plans as a variable component. These plans are oriented on the value growth of Haniel or of the respective fully-consolidated divisions and therefore on the sustainability of the Haniel Group’s success.

The performance cash plans granted during the financial year have a term of three to four years. The actual payment from these plans is limited in amount and is done in cash depending on target achievement and the fulfilment of stipulated requirements at the end of the term.

Target achievement is essentially measured based on the development of value-based performance indicators, and at the fully-consoli-dated exchange-listed divisions, on the stock price development in the corresponding period as well.

The performance cash plans are classified and accounted for as cash-settled share-based payments according to IFRS 2. The payment amount is measured at the fair value of the liability taking into account the contractual terms and conditions. At the fully-consolidated exchange-listed divisions, a binomial option pricing model is used to determine the share price-based component. Material measurement assumptions here concern the risk-free interest rate and the applied volatilities based on historical observable data. The liability is remeas-ured at each reporting date and at the date of settlement. Any changes in fair value are recognised in profit or loss.

The total expense from the performance cash plans was EUR 4 million (previous year: EUR 1 million). A liability of EUR 7 million has been recognised for the performance cash plans (previous year: EUR 2 million).

35 DISCLOSURES REQUIRED UNDER NATIONAL LEGISL ATION

COMPENSATION PAID TO THE COMPANY ’S EXECUTIVE BODIES IN ACCORDANCE WITH SECTION 314 (1) NO. 6 OF THE GERMAN COMMERCIAL CODE

The total remuneration of the Supervisory Board was EUR 0.6 million (previous year: EUR 1.0 million); that of the Advisory Board was EUR 0.2 million, as in the previous year. The total remuneration of the Managing Board amounted to EUR 3.5 million (previous year: EUR 5.0 mil-lion). The remuneration of former members of these bodies and of their survivors was EUR 2.0 million, as in the previous year. Pension provisions amounting to EUR 24.6 million (previous year: EUR 21.8 million) were recognised for the former members of the above bodies and their survivors.

DECL AR ATION ACCORDING TO SECTION 161 OF THE GERMAN STOCK CORPOR ATION ACT (AKTG), ISSUED BY THE LISTED COMPANIES INCLUDED IN THE CONSOLIDATED FINANCIAL

STATEMENTS ACCORDING TO SECTION 314 (1) NO. 8 OF THE GERMAN COMMERCIAL CODE

The following listed companies are included in the consolidated financial statements: Celesio AG and TAKKT AG (fully consolidated) as well as METRO AG (accounted for at equity). Each of these companies has issued the declaration prescribed by Section 161 of the German Stock Corporation Act. These declarations have been made public on the companies’ individual websites (www.celesio.com; www.takkt.com; www.metrogroup.de).

AUDITOR’S FEE PURSUANT TO SECTION 314 (1) NO. 9 OF THE GERMAN COMMERCIAL CODE

The fee paid to the group auditors, PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprüfungsgesellschaft, Germany, for Franz Haniel & Cie. GmbH and its subsidiaries amounted to EUR 1.1 million in the financial year (previous year: EUR 1.0 million). This total fee comprises services in connection with auditing financial statements in the amount of EUR 0.9 million (previous year: EUR 0.8 million) and other services in the amount of EUR 0.1 million (previous year: EUR 0.1 million). In the financial year, the auditors of the consolidated financial statements performed tax consulting services in the amount of EUR 0.1 million, as in the previous year.

DISCLOSURE OF SHAREHOLDINGS PURSUANT TO SECTION 313 (2) AND (3) OF THE GERMAN COMMERCIAL CODE

The full list of shareholdings of Franz Haniel & Cie. GmbH and the Haniel Group, which forms a part of these notes to the consolidated finan-cial statements, is published in the electronic Federal Gazette (elektronischer Bundesanzeiger) and on the www.haniel.com website. The shareholdings of Celesio AG, TAKKT AG and METRO AG are indicated in the individual companies’ annual reports and/or on their websites (www.celesio.com; www.takkt.de; www.metrogroup.de).

NUMBER OF EMPLOYEES PURSUANT TO SECTION 314 (1) NO. 4 OF THE GERMAN COMMERCIAL CODE

The number of employees in the Haniel Group, averaged from quarterly figures, was 56,480 (previous year: 57,828) based on a head-count, and 45,101 (previous year: 46,688) on a full-time basis. The employees of discontinued operations were included only up to the disposal when calculating the average annual figures during the financial year. A breakdown of employees by division is contained in the segment reporting on pages 68 and 69. The number attributable there to the discontinued operations corresponds to the average number of employees in the affected companies during the financial year up to the disposal.

EXEMPTION ACCORDING TO SECTION 264 (3) AND SECTION 264B OF THE GERMAN COMMERCIAL CODE

The following companies are exempt from the obligation to publish their annual financial statements pursuant to Section 264 (3) of the Ger-man Commercial Code:

- Haniel Finance Deutschland GmbH, Duisburg- CWS-boco International GmbH, Duisburg- Eurodress GmbH, Lauterbach- CWS-boco Welker GmbH, Bremen- CWS-boco Deutschland GmbH, Hamburg- Verwaltungsgesellschaft CWS-boco Healthcare mbH, Hamburg- ELG Haniel GmbH, Duisburg- Eisenlegierungen Handelsgesellschaft mbH, Duisburg- Westerwälder Eisen-Rohstoffhandels GmbH, Steinbach- ELG Haniel Trading GmbH, Duisburg- ELG Utica Alloys International GmbH, Duisburg- ELG Carbon Fibre International GmbH, Duisburg

CWS-boco Healthcare GmbH & Co. KG, Warburg, is exempt from the obligation to publish its annual financial statements pursuant to Sec-tions 264a and 264b of the German Commercial Code.

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36 E VENTS AF TER THE REPORTING DATE

Franz Haniel & Cie. GmbH has continued to implement the measures announced at the end of November aimed at reducing net financial debt. The disposal of shares of one investment fund was concluded in January 2013 and the disposal of 4.23 per cent of voting shares in METRO AG was completed in February 2013. The disposals generated proceeds amounting to a total of EUR 383 million. An agreement con-cerning the sale of a portion of the second investment fund was entered into in February.

In February 2013, Franz Haniel & Cie. GmbH issued a public tender offer for the euro benchmark bond maturing in 2014. As a result, bonds with a principal amount of EUR 284 million were repurchased.

In February 2013, Celesio entered into a syndicated loan agreement for EUR 500 million. This syndicated credit facility has a term until February 2018 and replaces the expired syndicated loan for EUR 600 million.

With effect from 28 February 2013, the ELG division acquired 100 per cent of shares in ABS Industrial Resources Ltd. in the UK, as well as its subsidiaries. ABS operates recycling plants in particular for superalloys in the UK, the USA and South Africa. Due to the short period of time between the date of preparation of the consolidated financial statements and the acquisition date, no detailed information as to the future inclusion in the consolidated financial statements was available.

No further reportable events took place after the reporting date.

37 PROFIT APPROPRIATION PROPOSAL OF FR ANZ HANIEL & CIE. GMBH

After deducting appropriate write-downs and recognising adequate valuation allowances and provisions, the net loss for the year reported in the annual financial statements of Franz Haniel & Cie. GmbH, prepared in accordance with the German Commercial Code, amounts to EUR 956 million.

The Managing Board proposes not paying any dividend for the financial year and that the net loss for the year be carried forward to a new account.


The Managing Board

FunckGemkow


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RESPONSIBILITY STATEMENT

To the best of our knowledge, and in accordance with the applicable accounting principles, the consolidated financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group, and the Group Report of the Managing Board includes a fair view of the development and performance of the business and the position of the Group, together with a description of the principal opportunities and risks associated with the expected development of the Group.


The Managing Board

FunckGemkow

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AUDITORS’ REPORT

We have audited the consolidated financial statements prepared by Franz Haniel & Cie. GmbH, Duisburg, comprising the statement of finan-cial position, income statement, statement of comprehensive income, statement of changes in equity, statement of cash flows and notes, together with the Group Report of the Managing Board for the financial year from 1 January to 31 December 2012. The preparation of the consolidated financial statements and the Group Report of the Managing Board in accordance with the International Financial Reporting Standards (IFRS), as adopted by the EU, and the additional requirements of German commercial law pursuant to Section 315a (1) HGB (Han-delsgesetzbuch – German Commercial Code), are the responsibility of the Company’s Managing Board. Our responsibility is to express an opinion on the consolidated financial statements and on the Group Report of the Managing Board based on our audit.

We conducted our audit of the consolidated financial statements in accordance with Section 317 HGB and German generally accepted standards for the audit of financial statements promulgated by the Institut der Wirtschaftsprüfer (IDW – Institute of Public Auditors in Ger-many). Those standards require that we plan and perform the audit such that misstatements materially affecting the presentation of the assets, liabilities, financial position, and profit or loss in the consolidated financial statements in conformity with the applicable financial reporting framework and in the management report are detected with reasonable assurance. Knowledge of the business activities and the economic and legal environment of the Group and expectations as to possible misstatements are taken into account in the determination of audit procedures. The effectiveness of the accounting-related internal control system and the evidence supporting the disclosures in the consolidated financial statements and the Group Report of the Managing Board are examined primarily on a test basis within the framework of the audit. The audit includes assessing the annual financial statements of those entities included in consolidation, the determination of the entities to be included in consolidation, the accounting and consolidation principles used and significant estimates made by the Com-pany’s Managing Board, as well as evaluating the overall presentation of the consolidated financial statements and the Group Report of the Managing Board. We believe that our audit provides a reasonable basis for our opinion.

Our audit has not led to any reservations.

In our opinion based on the findings of our audit the consolidated financial statements comply with the IFRSs as adopted by the EU, the addi-tional requirements of German commercial law pursuant to Section 315a Paragraph 1 HGB and give a true and fair view of the net assets, financial position and results of operations of the Group in accordance with these requirements. The Group Report of the Managing Board is consistent with the consolidated financial statements and as a whole provides a suitable view of the Group’s position and suitably presents the opportunities and risks of future development.

Essen, 7 March 2013

PricewaterhouseCoopers AktiengesellschaftWirtschaftsprüfungsgesellschaft

WinkeljohannWirtschaftsprüfer (German Public Auditor)

WienandsWirtschaftsprüfer (German Public Auditor)

GLOSSARY

Corporate governance Rules, statutes, directives and recommendations pertain-ing to how a company is managed and controlled. The principles of corporate gov-ernance at Haniel are described in greater detail in the corporate governance report on pages 29 to 30.

DDebt Issuance Programme An annually renewed prospectus listed by a European stock market for the issue of medium-term bonds at any time.

Deferred taxes Differences between the requirements under tax law and the accounting and measurement regulations according to IFRS give rise to variances in the amounts recognised for assets and lia-bilities. Consequently, the tax burden antic-ipated on the basis of the profit reported in the consolidated financial statements differs from the actual amount payable. To allow a corresponding tax expense to be posted in the income statement, the effects of these deviations are counterbal-anced by deferrals.

Derivative A contract that is dependent on another asset (underlying asset). The

fair value of derivative financial instru-ments can therefore be derived from mar-ket values of traditional underlying assets, such as stocks and commodities, or from market prices, such as interest rates and exchange rates. Derivatives exist in a range of different forms, such as options, futures, interest rate caps and swaps. In the context of Haniel’s financial manage-ment, derivatives are used to hedge risk.

Divisions Various business activities and investments in the Haniel portfolio.

EEarly risk identification system System-atic reporting measures designed to detect adverse, risk-entailing developments in good time with the help of financial and non-financial company-specific indicators and factors. The early risk identification system forms part of risk management.

Equity method A method for measuring investments in companies over whose business and financial policy Haniel can exert a significant influence or of which it has joint control. In this connection, the carrying amount of the investment is determined by the change in the propor-tionate interest in the investment’s equity. Thus, the carrying amount is increased or decreased by the investor’s share in the investment’s profit or loss for the period. Distributions received from the invest-ment reduce the carrying amount of the investment.

Equity ratio A capital management indica-tor within the Haniel Group which is calcu-lated by dividing recognised equity by total assets.

FFair value A measurement approach based on market prices in accordance with

IFRS.

Financial liabilities The total non-current and current financial liabilities presented in the consolidated statement of financial position.

Free cash flow This indicates the cash flows from operating activities that were not used for capital expenditures. At Haniel, the free cash flow is the balance of the cash flow from operating activities and the cash flow from investing activities.

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CCash flow Balance of cash receipts and cash payments in a reporting period. A measure of a company’s financial and earn-ing power. For example, operating cash flow indicates how much of the recognised net profit for the period is reflected in cash inflows from operating activities. This cash flow can be used to finance capital expen-ditures, repay liabilities or pay dividends.

Commercial paper Special instruments (money market paper), usually discount bonds, issued in order to finance short-term credit needs. As a rule, the issuer requires an excellent rating in order to place and deal in papers of this kind.

Compliance A key element of corporate governance. It denotes the observance of relevant laws and internal guidelines.

Consolidation In the consolidated finan-cial statements, the Group, comprising several legally independent companies, is depicted as if it were a single business. Consolidation consists of bookkeeping techniques that eliminate all intra-Group transactions. It eliminates the double counting of intra-Group transactions when consolidated financial statements are being prepared from the data contained in the annual financial statements of the indi-vidual Group companies.

Convertible bond An interest-bearing cor-porate bond that carries a conversion right for a specified number of shares in the company. Because of this option, convert-ible bonds have a lower interest rate than non-convertibles.


Full consolidation Procedure for including subsidiaries in the consolidated financial statements if they are under the parent company’s control on the basis of a voting right majority or other means of influence. The subsidiary’s individual assets and liabilities are included in the consolidated statement of financial position.

GGearing A capital management indicator within the Haniel Group which is calculated by dividing the net financial liabilities by the recognised equity.

Goodwill An intangible asset, the amount by which the expenditure for a business combination exceeds the total fair value of the assets and liabilities acquired (pur-chase price > acquired net assets). Essen-tially, it represents the favourable future prospects accompanying the acquisition of the combined business and the exper-tise of the assembled workforce.

Goodwill impairment If goodwill is rec-ognised in the course of an acquisition, its carrying value must be tested at least once a year for indication of impairment. This involves carrying out an impairment test. If the anticipated future cash flows from sales and other income and expenses asso-ciated with the takeover are lower than the carrying value of goodwill at the time of the impairment test, the goodwill must be writ-ten down accordingly ( impairment).

Gross profit Difference between sales and the cost of the goods sold.

HHaniel cash flow An internal indicator at Haniel that comprises the profit after taxes, adjusted for all material non-cash income and expenditure, and non-recur-ring, non-operating income and expenses, plus other cash components. In detail, the profit after taxes is adjusted for non-cash depreciation, amortisation, impair-ment losses and reversals on non-current assets, the change in pension provisions and other non-current provisions, the income and expenses from changes in deferred taxes, the non-cash income and expenses and dividends from investments accounted for at equity, and the gains and losses from the disposal of non-current assets and consolidated companies and from remeasurement for changes in own-ership interests.

Hedging A strategy for managing interest and foreign exchange rate and other mar-ket price risks by means of derivatives (derivative financial instruments), which limit the risks associated with the underly-ing transactions.

HGB Handelsgesetzbuch (German Commer-cial Code). Legal basis for the annual financial statements (separate financial statements) of all companies registered in Germany. This is relevant to German corporations in con-nection with profit distribution.

IIAS – International Accounting Standard(s) Financial reporting standard(s) within the

IFRS international regulatory frame-work.

IASB – International Accounting Standards Board An independent, international body which approves and continuously devel-ops the International Financial Reporting Standards ( IFRS).

IFRS – International Financial Reporting Standard(s) An international regulatory framework of accounting standards and interpretations which are developed by the

IASB (International Accounting Stand-ards Board) and ratified by the European Commission. These accounting standards are intended to ensure the internation-ally comparable preparation of accounts.

Publicly traded companies registered in the EU are required to prepare their con-solidated financial statements according to the provisions of IFRS.

Impairment An asset is impaired when its carrying amount exceeds the recoverable amount.

Income statement A calculation of all income and expenses within a period based on sales. Items deducted from rev-enue include personnel expenses, cost of materials and depreciation expense; other income, such as interest income, is added. The balance of the income and expenses recognised here provides the result for the period (profit after taxes).

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HANIEL ANNUAL REPORT 2012 / GLOS S ARY

NNet financial liabilities The total non-current and current financial liabilities recognised in the consolidated statement of financial position less cash and cash equivalents.

OOperating profit This measure of earnings shows the profit contribution made in the period by the operating business, that is to say from the purchase and sale of goods and the provision of services, after deduct-ing the associated expenses. The amount recognised in the income statement is the result before the profit/loss from investments and discontinued operations, interest and income tax expense.

PPublicly traded companies Enterprises that have issued securities, e.g. shares or bonds, which are publicly listed and traded (on a stock exchange).

Purchase price allocation (PPA) In the case of a business combination, the values at which the acquired company’s assets and liabilities are recorded in the acquiring com-pany’s statement of financial position. The acquired assets and liabilities are meas-ured at fair value. If the purchase price exceeds the net assets acquired, good-will arises. The entire purchase price is thus allocated to the individual items of the statement of financial position.

RRating A credit score given to companies or financial instruments by agencies or banks.

Result from investments accounted for at equity Includes the portion of the net profit for the period attributable to Haniel which is generated by companies measured in the consolidated financial statements according to the equity method.

Risk management Systematic procedures for identifying and assessing potential risks for the Group, and for deciding on, implementing and monitoring measures to avoid risks and/or reduce their possible negative impact.

SScope of consolidation The companies included in the consolidated financial statements.

Statement of cash flows The statement of cash flows is used to determine and depict cash inflows and outflows. It shows the cash that is generated and expended in a period ( cash flow).

Strategic business unit (SBU) The organi-sational level below division. The strategic business units can be structured accord-ing to various criteria, e.g. regions or prod-uct groups. The strategic business units are frequently depicted in internal control-ling and planning processes for analysis purposes, in order to illuminate trends in the divisions.

Interest cover ratio A capital management indicator within the Haniel Group that is derived as a quotient from certain items of the income statement. The sum of the

operating profit, result from invest-ments accounted for at equity and other investment result is divided by the sum of the finance costs and other net financial income. This indicator states how many times the interest to be paid to lenders and financial investors is covered by earnings from the operating business and invest-ments.

Interest rate cap A derivative financial instrument with a guaranteed upper interest limit that is acquired in return for payment of a premium. If the interest rate rises above this limit, the buyer receives the difference from the seller of the interest rate cap.

Internal control system (ICS) System-atic control measures for monitoring whether existing rules for reducing risks are being observed. This is to guarantee the functionality and cost-effectiveness of business processes and counteract any impairment of assets. It covers all material business processes, including accounting. The purpose of the accounting-related ICS is to ensure that financial reporting is reli-able and that the risk of misstatements in the external and internal Group Reports is minimised.

MMarket value Certain items in the statement of financial position are measured on the reporting date with a value that is realisable on a market, for example the stock market.

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Sustainability The model of sustain-able development pursues the objective of engaging in business activity to create not only economic value, but also ecological and social benefits, without undermining the development opportunities of future gen-erations (corporate responsibility – CR). The issue of sustainability is discussed in further detail in the section on corporate responsibility beginning on page 31.

Swap An agreement between two parties to exchange commodity or cash flows in the future. In an interest rate swap, inter-est payments are exchanged for an agreed principal amount on the basis of different interest rates. Thus, floating interest rates can be exchanged with fixed interest rates, for example.

WWACC Abbreviation for weighted average cost of capital. It represents the return demanded by providers of capital in rela-tion to the capital invested in the company. It is defined as the weighted average cost of equity and debt; the cost of the equity component corresponds to the return expectations of shareholders, taking into account business model-specific risks, and the cost of the debt component reflects Haniel’s long-term financing conditions.

CONTACT

Franz Haniel & Cie. GmbHFranz-Haniel-Platz 147119 DuisburgGermanyTelephone +49 203 806 - [email protected]

CWS-boco International GmbHFranz-Haniel-Platz 6 – 847119 DuisburgGermanyTelephone +49 203 806 - [email protected]

ELG Haniel GmbHKremerskamp 1647138 DuisburgGermanyTelephone +49 203 4501 - [email protected]

TAKKT AGPresselstrasse 1270191 StuttgartGermanyTelephone +49 711 3465 - [email protected]

Celesio AGNeckartalstrasse 15570376 StuttgartGermanyTelephone +49 711 5001 - [email protected]

METRO AG Schlüterstrasse 140235 DüsseldorfGermanyTelephone +49 211 6886 - [email protected]

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PUBLISHED BY

Concept and designBWKD, Cologne

PhotographyJochen Manz Fotografie, Cologne (page 4, 25)Hartmut Nägele, Düsseldorf (page 26)

EditingThomas Krause, Krefeld

ProductionDruckpartner, Essen

Responsible for the content Franz Haniel & Cie. GmbHFranz-Haniel-Platz 147119 DuisburgGermanyTelephone +49 203 [email protected]

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Printed with a zero carbon footprint on recycled paper made entirely from waste paper. A small contribution towards a better environment.

This Annual Report is published in German and English. Both versions can be viewed online or downloaded at www.haniel.com. The German version is controlling. The separate finan-cial statements of Franz Haniel & Cie. GmbH are published in the electronic Federal Gazette (Bundesanzeiger). They are also available on request from Franz Haniel & Cie. GmbH. All statements in this brochure with regard to occupations and target groups apply, always and irrespective of the formulation, to both male and female persons.

04/13 – d/4,000 – e/200

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