ANNUAL REPORT 201210 YEARS

BAVARIA Industriekapital AGBavariaring 2480336 Munich

Tel: +49 (0) 89 7 29 89 67 -0Fax: + 49 (0) 89 7 29 89 67 -10E-Mail: info@baikap.deInternet: www.baikap.de B

AVA

RIA

Indu

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kapi

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Group Key Figures(in EUR millions) 2003 2004 2005

GROUP

Profit and loss

Group turnover n/a n/a 132.5

EBIT (before dissolution of negative goodwill) n/a n/a -7.0

Group net result n/a n/a 8.5

Balance sheet

Equity n/a n/a 18.1

Equity ratio in % of total assets n/a n/a 18.1%

Total assets n/a n/a 100.0

Net. working capital n/a n/a 16.2

Cash flow

from current operations n/a n/a -1.6

from capital expenditures n/a n/a 2.0

from financing n/a n/a 0.7

TOP HOLDING COMPANY

Profit and loss

Turnover 0.0 0.4 1.0

EBIT 0.0 0.0 2.5

Net. result 0.0 0.0 2.1

Balance sheet

Equity 0.1 0.1 4.2

Equity ratio in % of total assets 23.7% 14.1% 89.4%

Total assets 0.3 0.6 4.7

Cash flow

from current operations 0.2 0.3 -0.7

from capital expenditures -0.3 -0.1 -0.1

from financing 0.0 0.0 2.0

TOTAL OF OPERATING PORTFOLIO COMPANIES

Profit and loss

Turnover n/a n/a 132.5

EBIT n/a n/a -14.2

Net. result n/a n/a -13.3

Cash flow

from current operations n/a n/a -0.9

from capital expenditures n/a n/a 2.1

from financing n/a n/a -1.3

2006 2007 2008 2009 2010 2011 2012

332.6 409.7 485.4 403.6 638.4 749.9 686.4

18.0 15.4 20.4 -34.2 -6.7 8.9 29.0

31.5 5.2 23.2 3.6 -0.8 2.4 55.7

61.2 58.6 58.5 43.5 34.1 28.6 84.4

26.3% 21.1% 18.2% 12.7% 7.6% 8.9% 23.6%

232.4 277.4 321.7 342.1 448.5 323.3 357.3

53.3 66.8 74.4 68.0 109.4 81.0 85.8

15.5 -4.8 38.2 16.6 -22.4 15.6 41.1

-0.7 9.7 -13.2 -3.7 -33.9 -17.7 -34.8

9.7 -11.2 -20.3 -12.7 35.4 -3.6 -1.9

2.0 3.1 3.7 4.5 4.9 3.8 4.1

13.7 22.9 13.6 7.6 5.2 6.2 11.9

13.8 23.2 13.9 8.2 5.1 6.9 11.0

28.8 45.4 37.5 26.0 21.1 25.4 34.5

92.6% 94.4% 93.5% 72.6% 66.1% 85.3% 88.7%

31.1 48.1 40.1 35.8 31.9 29.8 38.9

9.2 3.8 13.7 6.9 6.5 4.7 1.3

-2.1 12.3 5.1 -0.1 0.2 -9.0 2.1

10.8 -8.5 -21.4 -20.2 -8.2 -2.5 -1.9

332.6 409.7 485.4 403.6 638.4 749.9 686.4

11.9 5.8 2.4 -26.7 -1.9 -17.6 26.4

6.0 -13.4 -7.7 -36.0 -0.1 -40.6 5.1

6.3 -8.6 24.5 9.7 -28.9 10.9 39.8

1.4 -2.6 -18.3 -3.6 -34.1 -8.7 -36.9

-1.1 -2.7 1.1 7.5 43.6 -1.1 0.0

-42,5-30,9

Group Cash and cash equivalents(in EUR millions)

current portfolio companiessold portfolio companies(in EUR millions)

Deal Size

300

250

200

150

100

50

0

K+S Group

Ham

baH

erin

g

Nee

f IT

Alm

a

P&C

R+E

SteeltechSwissTexWinterthur

ALMECincl. Rifometal

Teksid Group(Cléon, Poitou)

SwissTex FranceElfotec GroupOSNY

Xenterio

FARAL Hunsfos

tech-FORM

Austria Druckguss

INASA Foil GroupTriStone Group

20052004 2006 2007 2008 2009 2010 2011 2012

2011 2012

45,6 44

Cash and cash equivalents(not including treasury stock)Cash in banksFinancial liabilities

Payments from shareholdersDisbursements to Shareholders

Content 6 Letter to the Shareholders11 Introduction of the Organs12 Report of the Supervisory Board15 BAVARIA – The Share

16 Group Management Report

17 I. General Environment and Operations17 1. Overall Economic Environment and Market17 2. The BAVARIA Business Model17 3. Performance of the Company19 II. Shareholding Portfolio19 1. Serial Production/Automotive20 2. Plant Engineering & Construction21 3. Business Services22 III. Asset,FinancialandProfitPositionoftheGroup24 IV. Interdependencies24 V. SignificantEventsaftertheReportingDate24 VI. Future Risks and Opportunities26 VII. General Forecast

29 Consolidated Financial Statements

31 ConsolidatedProfitandLossAccountfor201232 Consolidated Balance Sheet as of 31 December 201234 Consolidated Statement of Changes in Equity35 Consolidated Statement of Cash Flows

36 Notes to the Consolidated Financial Statements

37 I. BAVARIAIndustriekapitalAG–CompanyProfile37 II. Scope of Consolidation40 III. Reporting Date for the Consolidated Group Annual Report40 IV. Consolidation Principles42 V. Accounting and Valuation Methods44 VI. Notes to the Balance Sheet58 VII.NotestotheConsolidatedProfit&LossStatement60 VIII. Reporting by Segment64 IX. Miscellaneous Information66 X. Schedule of Shareholdings

69 Audit Opinion of the Statutory Auditor

70 List of Abbreviations71 Imprint

L&E

CARBODY Group

GRISET

Technology Luminaires

Porta

lex

Alum

inio

vosla

3,113,1

-65,0

14,0

Payments Disbursements

Payments/disbursements shareholderscumulatively since 2004 (in EUR millions)

6 7

Dear shareholders and business associates,

BAVARIA Industriekapital AG was established in 2003. This provides us with an opportunity, in addition toreportingonfinancialyear2012,tolookbackon10yearsofoperatingactivitiesandtoexaminethesustainability of our business philosophy in greater detail.

We increased earnings significantly in financial year 2012. Consolidated earnings amounted toEUR 55.7 million (previous year: EUR 2.4 million), the net earnings from investments – adjus-ted for the write-down of the negative goodwill and the deconsolidation revenues – amounted to EUR 5.1 million (prior year: EUR -40.6 million). At EUR 11.6 million (prior year: EUR 2.4 million), series production achieved the main contribution to earnings, plant construction achieved a small positive contribution of EUR 0.5 million (prior year: EUR -25.9 million), while the Business Services segment achieved a loss of EUR -7.0 million (prior year: EUR -17.1 million).

Net liquidity (cash and cash equivalents minus bank liabilities including factoring of receivables) amoun-ted to EUR 13.1 million at the end of 2012 (prior year: EUR 3.1 million).

We invested EUR 31.7 million in 2012 – this equates to an investment ratio of 4.6% of consolidated sa-les of EUR 686.4 million. A dividend was not paid in 2012. By contrast, EUR 1.9 million was again spent buying back shares during the year. As long as the market capitalisation of BAVARIA Industriekapital AG remains below our estimate of its intrinsic value, we anticipate the continuation of buying back shares instead of paying a dividend. Our equity (including “bad-will” as a consequence of corporate acquisitions below book value) amounted to 32.5% in the Group and 88.6% in the holding company in 2012.

Series production remains our most successful area of business. Of the consolidated sales of EUR 686.4 million, EUR 476.6 million and consequently 68.1% was attributable to this area in 2012. SalesandnetearningsinSeries/Automotivehavedevelopedasfollowsinthelastfiveyears:

(in EUR millions) Serial Production/Automotive

Sales Net income Return on Sales

2008 327.9 -1.7 -0.5%2009 259.3 -34.7 -13.4%2010 345.4 1.1 0.3%2011 480.6 2.4 0.5%2012 467.6 11.6 2.5%

By contrast, the trend in sales and earnings in our engineering portfolio was more disappointing in the lastfiveyears:

(in EUR millions) Plant Engineering & Construction

Sales Net income Return on Sales

2008 73.9 1.2 1.6%2009 48.1 -0.3 -0.6%2010 90.1 1.9 2.1%2011 124.3 -25.9 -20.8%2012 44.8 0.5 1.0%

The proportion of project business sales in consolidated sales only amounted to 6.5% in 2012.

The trend in sales and earnings in Business Services gives few grounds for optimism:

(in EUR millions) Business Services

Sales Net income Return on Sales

2008 83.2 -7.2 -8.6%2009 96.2 -1.0 -1.1%2010 202.9 -3.0 -1.5%2011 145.0 -17.1 -11.8%2012 174.0 -7.0 -4.0%

In the early years, lack of capital (the company was established with a share capital of EUR 50,000) meant that we only acquired loss-making companies at symbolic purchase prices and consequently built up our capital stock successfully. The two capital increases at the end of 2005/beginning of 2006 totallingEUR14millionwerenotnecessaryfromafinancialperspective:inthethreesubsequentyears,shareholders received EUR 65 million alone in the form of dividends and share buybacks. The recent trend in earnings in Business Services shows that the purchase of companies at no charge does not generate income that would justify the substantial management expenditure. At any rate not outside our series production. One reason for this may be found in the fact that industrial markets have trended sideways if anything since the crisis in the fourth quarter of 2008 and price pressure has increased sig-nificantlyinmanysectors.

Earnings in the holding company

If the earnings in the holding company in the last ten years are considered, no clear trend is discernible:

Holding

(in EUR millions) 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Net results 0.0 0.0 2.1 13.8 23.2 13.9 8.2 5.1 6.9 11.0

Netearningsfluctuatedsignificantlybecauseoftherevenuesfromthesaleofinvestments,write-downson investments and the sales crisis.

Earnings from operating investments

By contrast, net earnings from investments (excluding the negative goodwill) have risen in recent years:

Portfolio companies

(in EUR millions) 2005 2006 2007 2008 2009 2010 2011 2012

Net results -13.3 6.0 -13.4 -7.7 -36.0 -0.1 -40.6 5.1

The loss-making companies led to a loss usually being reported in net terms in the early years, the annualsurpluswasalsopositiveinnettermsin2012forthefirsttimesince2006.

Letter to the Shareholders Letter to the Shareholders

8 9

Netearningsfellsharplyinthefinancialcrisisbuthaverisensignificantlysincethen.TriStoneandtheK+S Group were the most important sources of earnings in 2012:

TriStone

The purchase price for the TriStone Group, which was acquired from Trelleborg in June 2009, amounted tosomeEUR35millionincludingtheBAVARIAloantostrengthenthecompany’sequity–partofwhichintheformofanearn-outlinkedtocertainconditions(whichwehavenotfulfilledsofar).Atfirstglance,we certainly paid a great deal at the time and offered predominantly for the potential to increase the Group’searnings.NetearningsoftheTriStoneGrouphavedevelopedasfollowssincethen:

(in EUR millions) TriStone

Sales Return on Sales

2010 79.7 -3.7%2011 179.8 -0.8%2012 168.7 1.5%

(before reversal of negative goodwill)

It is notable that earnings in 2012 are depressed by the construction of two new plants in Mexico and China, which will – it is hoped – lead to a higher contribution to earnings in subsequent years. At all events, incoming orders in 2011 (EUR 69.2 million) and 2012 (67.7 million) support this hope.

We have concluded from this that, in line with our core competence, we shall continue to invest in com-panieswiththepotentialforimprovement,albeitincreasinglyinprofitablecompaniesinsectorswiththepotential to increase sales in future.

K+S Group

InFebruary2013,wesignedacontract tosell theprofitableK+SGroup.Asexpected, thesalewascompleted in March 2013. The amount of the net sales proceeds will lead to our also investing in listed companies to a limited extent. Since our purchase in 2006, the net earnings and return on sales of the K+S Group have developed as follows:

(in EUR millions) Kienle + Spiess Group

Sales Return on Sales

2007 237.3 3.1%2008 219.3 3.5%2009 143.2 -7.9%2010 182.0 5.3%2011 231.0 5.1%2012 199.4 6.3%

Itisclearthatweincreasedthereturnonsales-withtheexceptionofthecrisis-riven2009–significantly.We spent a long time considering whether we should sell or continue to draw regular dividends. For us, thedecisivefactorbehindthedecisiontosellwastheGroup’slackofsalesgrowthandtheconsiderationthat growth in other markets would be associated with very substantial investment (approximately three times as much as for the TriStone Group).

Whenwereflectonthefoundationstonesofoursuccessandcontemplateourpreviouserrorscritically,the following picture emerges:

A key factor for our success are the selection and monitoring of the management teams at individual companiesbasedonasystemoffinancial indicators,which-derivedfromtheToyotaManufacturingSystem - links operating indicators with the improvement in earnings (e.g. the reduction in the scrap quo-ta leads to savings on materials procurement and consequently to an improvement in the gross margin). Over the course of time, we have developed a better instinct for who and what will generate earnings andwhetherthemanagementmakessufficientuseofitsroomformanoeuvre.

However, as is always the case when acquiring investments, the actual art lies in making the right purchase. In principle, in our transactions we attach value to the protecting of our downside, i.e. to ensu-ringthatwecannotloseanymoney-inaccordancewiththemotto:„protectyourdownside,theupsidetakes care of itself“. We also follow a strict due diligence process, document all answers and, in princi-ple, carry out the examination ourselves to exploit the few moments of truth, which sellers usually grant us (e.g. in the form of meetings with the management team). In addition, we pursue current earnings and incoming orders intently to question every deviation and, if necessary, use them as an argument to reduce the purchase price. It is striking that too much is paid for many companies and transactions frequently jeopardise the parent company.

We try to follow the following basic principles to avoid paying a too high purchase price:

We only buy at a discount to fair value. If, for example, leading automotive manufacturers aretradedforeighttimesnetearningsonthestockmarket,thisroughlyequatestofivetimesEBITDA and six times EBIT – an average discount of 33% compared with other listed compa-nies.Whetherthisequatestothereal“fairvalue”,thisnaturallydependsonone’sownassess-mentofthepotentialtoincreaseprofits.We do not negotiate over the purchase price internally and escalate it in the process but con-centrate on talking to the seller. The art does not lie in concluding a deal at all costs but in negotiating a good one.Eachearn-outoreachseller’sloan,whichstillhastobepaid,evenifitisonlylinkedtoapositiveperformance, reduces the enterprise value. This equates to the sum of positive and negative scenarios regarding future performance. Therefore, if the upside is restricted, the balance of all possible disbursement scenarios is reduced and consequently the enterprise value as well.

Unfortunately, however, errors do occur in acquisitions. When we examine the reasons, we have often underestimated the need for working capital, wrongly assessed the order position and overlooked the amountofequitythatwouldbesufficient.Wewerenotalwayssufficientlycriticaltowardssellers.Andof course we have also made mistakes and thrown good money after bad. And we have given certain guarantees that it would have been better for us not to have given. 2011 was a sharp setback for us in this respect. We had to write down almost EUR 17 million then, which we have lost in three transactions (one of these was an inherited burden from 2004). The model of buying undervalued companies is a game involving probabilities, meaning that errors are also possible in future. However, we must ensure that we never wager the company and accept that it is better to make ten small bets than one large one.

The majority of BAVARIA Industriekapital AG is family owned and consequently adopts a long-term focus in its investments. We supported the “Deutschland rundet auf” foundation with EUR 50,000 in 2012. The foundation supports the rounding up of monetary amounts at retail points of sale, the pro-ceedsofwhichsupportvariouschildren’sfoundationsinGermany.Thefounder,MrChristianVater,isaprime example of socially committed entrepreneurship in Germany.

We should like to thank all 5,106 employees for their work. We assure our shareholders and business associatesthatweareconfidentinourassessmentofthefuturedevelopmentofBAVARIAIndustrie-kapital AG.

Letter to the Shareholders Letter to the Shareholders

10 11

In particular, the development potential of our existing investments gives us grounds for optimism. This is also true of the opportunities to acquire new investments on attractive terms, meaning that we have alreadyconcludedanothertakeoverinFranceinthefirstquarterof2013.

We would like to express our thanks for the trust you have shown in us. We remain open to suggestions and proposals for improvement or pointers towards new transactions.

Yours sincerely

Reimar Scholz Harald Ender Executive Board Chairman Director Operations

Introduction of the OrgansExecutive Board

Reimar Scholz (CEO)Dipl.-Kfm., MBA (INSEAD, Fontainebleau)

Reimar Scholz is the CEO and founder of BAVARIA Industriekapital AG. Reimar Scholz, born 1965, has worked in various senior management positions at General Electric in the United States and England. AfterthathewasmanagingdirectoroftwoITcompanies.Oneofthem,ArticonIntegralisAG,wasfloa-ted on the stock market by him and turned into the European market leader for IT services as a result of additional acquisitions.

Harald Ender (COO)Dipl.-Ing., Dipl.-Kfm.

Harald Ender, born 1952, is the COO for BAVARIA Industriekapital AG. After completing his studies at RWTH-Aachen in 1978, Harald Ender has almost exclusively worked within the automotive supplier in-dustry, serving as CEO, COO, vice-president and president in the last 23 years. He was responsible for reorganizing and restructuring several companies, utilizing Lean Management methods.

Supervisory Board

Oliver Schmidt Dipl.-Kfm.,Financial Investor, DüsseldorfChairman of the Supervisory Board

Other proxies:Supervisory Board of Foris AG, BonnVice Chairman of the Supervisory Board of TOKUGAWA Corporation, AachenChairman of the Supervisory Board of Marcus Sühling AG, Köln

Hans-Peter LindlbauerFreelance Attorney, MunichVice Chairman of the Supervisory Board

Wanching AngFinancial Investor, MunichMember of the Supervisory Board

Letter to the Shareholders Introduction of the Organs

12 13

Report by the Supervisory Board

Infinancialyear2012,theSupervisoryBoarddulyfulfilleddischargedthetasksincumbentuponitaccor-ding to the law, the Articles of Association and the Rules of Procedure and monitored and advised the Management Board on the management of the Company on an ongoing basis.

The Management Board reported to the Supervisory Board on a regular basis, both verbally and in writing, promptly and comprehensively on corporate planning, strategy and the course of business, the position of the Group including the risk situation, risk management and compliance. The Chairman of the Supervisory Board also regularly discussed the current development of the business situation and major transactions with the Management Board outside meetings of the Supervisory Board.

Transactions requiring approval are presented to the Supervisory Board in line with the Rules of Proce-dure for the Management Board, discussed by it and authorised by it.

The working relationship between the newly elected Supervisory Board and the Management Board was characterised by constructive dialogue and by mutual trust.

1. Meetings of the Supervisory Board and focal points of the discussions in the Super- visory Board

Intotal,fifteenmeetingsoftheSupervisoryBoardtookplaceinthereportingperiod,ofwhichsix actual meetings on 29 February, 12 March, 28 March (balance sheet meeting), 25 May, 28 September, 11 December 2012 (budget meeting) and nine meetings in the form of a conference call on 3, 8, 14, 18, 22, 23 and 29 May, 6 June and 17 July 2012.

If necessary, the Supervisory Board adopted resolutions by circulating the relevant documents. Resolutions submitted by the Management Board were approved after examining an extensive amount of documents and intensive discussions with the Management Board. There were no Supervisory Board committees in the reporting period. All members of the Supervisory Board participated in all the meetings.

DiscussionsfocusedonthetrendinsalesandearningsintheGroupcompanies,thefinancialposition of the Company and its investment companies, strategic projects such as acquisition projects and the planned sale of investments, risk management and the risk situation as well as sub judice disputes between executive bodies regarding the sale of a former investment and le-gal disputes resulting from operating business. The remuneration system of the members of the Management Board was partly revised and the schedule of responsibilities for the Management Board was updated.

2. Annualandconsolidatedfinancialstatements,audit

The auditor RP Richter GmbH Wirtschaftsprüfungsgesellschaft, Munich, elected by the Annual Shareholder Meeting on 25 May 2012 and commissioned by the Supervisory Board has au-dited theannualfinancialstatementsofBAVARIA IndustriekapitalAG forfinancialyear2012submitted by the Management Board and prepared in accordance with the provisions of the GermanCommercialCode,theconsolidatedfinancialstatementsoftheBAVARIAGroup,themanagement report of BAVARIA Industriekapital AG and the consolidated management report oftheBAVARIAGroupincludingthebookkeepingandhasapprovedthemwithoutqualification.In relation to the report on related parties submitted by the Management Board, the auditor has confirmed inaccordancewithSection312of theAktG (dependentcompany report) that theactual disclosures in the report are correct and that the Company did not pay an inappropriate figureforthelegaltransactionslistedinthereport.

TheSupervisoryBoardreceivedtheannualfinancialstatementsofBAVARIAIndustriekapitalAGandtheconsolidatedfinancialstatementsoftheBAVARIAGroupaswellasthemanage-mentreportsofBAVARIAIndustriekapitalAGandtheBAVARIAGroupwiththeauditor’sreportfor BAVARIA Industriekapital AG and the BAVARIA Group, the dependent company report and theproposal for useof the retainedprofitofBAVARIA IndustriekapitalAG ingood timeanddiscussedthem.Theannualfinancialstatements,managementreports,dependentcompanyreportandtheauditor’sauditreportwerepresentedtoallmembersoftheSupervisoryBoard.In its balance sheet meeting on 28 March 2013, the Supervisory Board led in-depth discussions of pending questions. The auditors took part in the meeting, reported on key results of the audit and answered supplementary questions and requests for information posed by the Supervisory Board.Accordingtotheauditor’sreport,therewerenomaterialweaknessesintheinternalcon-trol and risk management system in relation to the accounting process. Neither were there any circumstances that could lead to the inference of any bias on the part of the auditor.

Followingtheconclusivefindingsofitsownaudit,theSupervisoryBoardraisednoobjectionsto theauditedannual financial statementsand thedependent company report including theclosingstatementbytheManagementBoard.TheSupervisoryBoardapprovedtheannualfi-nancial statements of BAVARIA Industriekapital AG prepared by the Management Board and the consolidatedfinancialstatementsoftheBAVARIAGrouptogetherwiththemanagementreportsofBAVARIAIndustriekapitalAGandtheBAVARIAGroup.Theannualfinancialstatementsaretherefore adopted. Following its own audit, the Supervisory Board seconded the proposal by theManagementBoardtotheAnnualShareholderMeetingfortheuseoftheretainedprofitofBAVARIA Industriekapital AG.

3. Corporate Governance

The Supervisory Board and Management Board have discussed the recommendations and proposals of the German Corporate Governance Code and voluntarily submitted a Declaration of Compliance with the recommendations of the Government Commission on the German Cor-porate Governance Code. The Declaration of Compliance with an explanation of the deviations fromtherecommendationsisreproducedontheCompany’swebsite.

The Supervisory Board as a body consisting of three persons has opted not to create commit-tees.TheSupervisoryBoardhasreviewedtheefficiencyofitsworkonanongoingbasisandhasimplementedmeasurestoimproveitsworkduringthefinancialyear.

PossibleconflictsofinterestrelatingtothemembersoftheManagementBoardandtheSupervi-sory Board, which must be disclosed to the Supervisory Board without delay or about which the Annual Shareholder Meeting must be informed, did not arise in the reporting year. The consul-ting activity of the chambers of Dr Matthias Heisse and of Hans-Peter Lindlbauer was each time approved by the Supervisory Board in advance with the member of the Supervisory Board in question abstaining from the vote.

4. Membership of the Management Board and Supervisory Board

The membership of the Management Board was unchanged in the reporting year. The appoint-mentofHaraldEndertotheCompany’sManagementBoardwasextendedbytwoyearsuntil31 December 2014.

The termofofficeofallmembersof theSupervisoryBoardendedat theendof theAnnualShareholder Meeting on 25 May 2012. At this Annual Shareholder Meeting, Ms Wanching Ang, Hans-PeterLindlbauerandOliverSchmidtwereelectedtotheSupervisoryBoardforthefirsttime. The body elected Oliver Schmidt as Chairman and Hans-Peter Lindlbauer as his deputy at the constituent meeting of the Supervisory Board.

Report by the Supervisory Board Report by the Supervisory Board

14 15

5. Thanks

The Supervisory Board would like to express its great appreciation of and gratitude for their energetic commitment and their performance in financial year 2012 to themembers of theManagement Board, the employees of BAVARIA Industriekapital AG and the managements of the investments and their employees.

Munich, 17 April 2013

Oliver SchmidtChairman of the Supervisory Board

The ShareBy resolution of the Board dated 28 March 2013, the share capital was reduced by collection of 431,937 treasurysharestoEUR5,962,563.00.Thecapitalstockatthebeginningoffiscalyear2012amountedto EUR 6,394,500.00.

Infiscalyear2012,159,784sharesworthEUR1.92millionwererepurchased.Thenumberoftreasuryshares amounted to 153,214 pieces of AG and thus 2.56% of the share capital.

Number of shares 5,962,563 sharesType of shares Individual bearer sharesAuthorised capital EUR 5,962,563.00Voting rights Each share confers one voting rightWKN 260555ISIN DE0002605557Stock exchange code B8AStock exchange segment Entry StandardFiscal Year Equivalent to the calender yearAccounting presentation As per German Commercial Code (HGB)Designated Sponsor Close Brothers Seydler Bank AGAnnouncement Bundesanzeiger (Federal Gazette)Top share price in 2012 (15.02.2012) EUR 13.40Lowest share price in 2012 (11.07.2012) EUR 10.63Closing price (28.12.2012) EUR 12.40Market capitalisation (28.12.2012) EUR 72.0 Mil.Earnings Holding per share EUR1.90(forfiscalyear2012)Dividend per share EUR0.00(forfiscalyear2012)

Report by the Supervisory Board The Share

16 17

GROuP MANAGEMENT REPORT

I. General Environment and Operations

1. Overall Economic Environment and Market

Industrial growth in the Eurozone was negative in 2012, at -0.4%.

Growth in Germany slowed to an annualised average rate of 0.9% in 2012, as opposed to 3.1% in the prior year (source: International Monetary Fund).

2. The BAVARIA Business Model

BAVARIA‘sbusinessmodelencompassestheacquisition,restructuring,reorganisationandhol-ding of investee companies. In the course of our restructuring measures, we deploy our own team from the holding company as well as interim managers who actively support the investee company‘smanagementteam.

Our acquisition criteria, which we review on an ongoing basis, are currently as follows:

− Targetindustries:manufacturing/processingorindustrialservices,− Turnover:atleastEUR50million,− Modeofinvestment:acquisitionofamajoritystake,preferably100%,− Thetargetcompanymusthavediscernibleturnaroundpotential.

3. Performance of the Company

BAVARIA Industriekapital AG is the parent company of the BAVARIA Group, and is directly or indirectlyinvolvedinalloftheGroup‘sbusinessactivities.Inthe2012financialyear,BAVARIAIndustriekapitalAGderiveditsfinancingentirelyfromitsownequitycapital(asintheprioryear).Duringthereportingyear,theCompany‘sequitycapitalincreasedfromEUR25.4millionintheprior year to EUR 34.5 million as at 31 December 2012.

Group Management Report Group Management Report - General Enviroment and Operations

18 19

A key benchmark we can use to measure our performance is the net change in BAVARIA Industriekapi-talAG‘snetcash.Thisissummarisedinthetablebelow:

NetchangeinBAVARIAIndustriekapitalAG‘sfinancialresourcesfundin2012(inEURmillions)

Cash flow from operating activities 2012 2011

Net Income 11.0 6.9

Depreciation on financial investments 0.1 0.3

Change in accruals 0.0 -6.6

Decrease/Increase in accounts receivable, other assets and prepaid expenses not attributable to investing or financing activities

-0.6 3.9

Increase in accounts receivable inter company -9.1

Increase / Decrease in accounts payable and other liabilities that are not attributable to investing or financing activities

0.1 0.2

1.3 4.7

Cash flow from investment activities

Cash inflow from disposals of financial assets 2.1 0.1

Cash outflow from investments in financial assets -0.1 -2.9

Reclassification of receivables in working capital loans to other loans 0 -6.2

2.1 -9.0

Cash flow from financing activities

Dividend payments 0 0

Cash outflow to shareholders due to the repurchase of treasury stock -1.9 -2.5

-1.9 -2.5

Net change in cash and cash equivalents 1.5 -6.8

Cash and cash equivalents at beginning of year 2.5 9.3

Cash and cash equivalents at end of year 4.0 2.5

The net cash comprises cash and cash equivalents as well as short-term securities included in current assets, with the exception of own shares.

Thecashinflowintotheholdingcompanyin2012totalledEUR1.3million.TherepaymentofloansfromaffiliatedcompaniesledtoaninflowofEUR2.1milliontotheholdingcompany,whileEUR1.9millionwas paid out for share repurchases, resulting in a net increase in liquidity of EUR 1.5 million.

Development of the shareholding portfolio

Atotaloffivecompanieswereacquiredin2012,whilethreeweredeconsolidated.

Dividend distributions and share repurchases by BAVARIA Industriekapital AG

By resolution of the General Shareholder Meeting on 25 May 2012, no dividends were paid out for the 2011financialyear.Thetotalnumberofownsharesheldasat31December2012was153,214.TheCompany acquired 143,214 shares at an average price of EUR 11.91. The closing price at the end of the year was EUR 12.40.

II. Shareholding Portfolio

The main driver of results in 2012, as in the previous year, was the Serial Production/Automotive seg-ment,withanetprofitofEUR38.0million;withadjustmentsfornegativegoodwillofEUR26.4million,netoperatingprofitwasEUR11.6million.

1. Serial Production/Automotive

In 2012, the Serial Production/Automotive segment achieved turnover of EUR 467.6 million (prior year: EUR 480.6 million), roughly 68% (prior year: 64%) of the turnover of the BAVARIA Group as a whole. NetprofitrosefromEUR2.4milliontoEUR11.6millioninthesameperiod.

Industry trends

Thedevelopmentofthemarketwasverypositiveinthefirstquarterof2012inparticular,althoughitslowed considerably later in the year. The market has stabilised at a much lower level since the fourth quarter.

Segment turnover and result

Twonewinvesteecompanieswereacquiredinthefinancialyear:CARBODYS.A.S.,Witry-les-Reims(29 February 2012) and vosla GmbH, Plauen (3 September 2012). These two companies contributed a totalofEUR53.1milliontoturnoverandEUR-0.7milliontonetoperatingprofitin2012.Excludingthecontributionfromthesetwocompanies,netoperatingprofitfor2012amountedtoEUR12.3million,anincrease of 413.1% compared with the previous year.

The two largest investee companies, the K+S Group and the TriStone Group, contributed EUR 368.1 milliontoturnoverandEUR16.1milliontonetoperatingprofitin2012.ThesetwocompaniestogetherhadtotalnetliquidityofEUR-1.9million,i.e.theyhadvirtuallynofinancialliabilitiesinnetterms.

Additionalkeydatarelevanttothesegment‘sperformanceanddetailsonthedeconsolidationscanbefound in the Notes to the Consolidated Group Annual Report.

Investments, depreciation/amortisation, personnel development

Thecompanies investedaroundEUR22.3million (prioryear:EUR20.0million) in the lastfinancialyear.Thisonceagainsignificantlyexceededdepreciation/amortisation,whichtotalledEUR16.6million(prior year: EUR 17.5 million). All investments were carefully reviewed and appraised with a critical eye. TriStone continued to grow by opening an additional production site in China. The performance of the productionsitethatwasopenedinMexicointhepreviousyearwashighlysatisfactory.Management‘stimingwasfortunate,aswewereabletobenefitstronglyfromthemarketrecoveryintheUSA.

Asat the reportingdate, the segment‘sworkforce comprised4,313persons (prior year: 3,744), theincrease being mainly due to the consolidation of the CARBODY Group and vosla GmbH.

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20 21

Outlook for 2013 and beyond

In the current year, we decided to sell the K+S Group in order to reduce our concentration of risk. Expansion here would also involve considerably greater expenditure than for the TriStone Group. De-mand in the Automotive segment remains highly critical in Europe, with impetus for growth coming only from increased exports abroad and market share increasing only due to increased sales activities.

Ourexpectationswerelargelyfulfilledwithregardto2012.

Portfolio companies

As at 31 December 2012, the Serial Production/Automotive segment comprised the following six inves-tee companies:

Name Products Customers Turnoverin EUR

millions

Sites Employees

K+S Group Stator and rotor packages for drives and energy gene-ration

Industry 199.4 4 1,146

TriStone Solutions for engine cooling, turbo charging and air intake Automotive 168.7 10 2,006

CARBODY Sealing and safety solutions Automotive 38.1 4 439

tech-FORM Pulleys, torsional-vibration dampers and components Automotive 17.9 1 180

Austria Druckguss Die-cast components Automotive 28.4 1 199

vosla Light sources Automotive, transport

15.1 1 343

Total 467.6 21 4,313

2. Plant Engineering & Construction

In 2012, the Plant Engineering & Construction segment achieved turnover of EUR 44.8 million (prior year: EUR 124.3 million), roughly 7% (prior year: 17%) of the turnover of the BAVARIA Group as a who-le.Netprofitfor2012wasEUR0.5million(prioryear:EUR-25.9million).Therewerenoadditionsordisposalsinthe2012financialyear.

Industry trends

Growth in the plant construction and engineering sector was lower in 2012 than in the previous year.

Segment turnover and result

ThenetprofitoftheGermaninvesteecompaniesL&EGmbH,HeringAGandR+EAutomationstechnikGmbH fell year-on-year from EUR 1.0 million to EUR 0.5 million. This has already had consequences for management.

Investments, depreciation/amortisation, personnel development

Plant Engineering & Construction is typically not very investment-intensive. On the balance sheet, the accumulationofworkinprogressplaysamuchmoreimportantrolethaninvestmentsinfixedassets,

which tend to be limited. Thus, investments in this segment totalled only EUR 0.5 million, while depreci-ation/amortisation amounted to EUR 0.4 million.

The number of employees remained virtually unchanged at 252 (prior year: 251).

Outlook for 2013 and beyond

We sold R+E Automationstechnik GmbH to a Chinese manufacturer early in 2013.

Ourexpectationswerelargelyfulfilledwithregardto2012.

Portfolio companies

As at 31 December 2012, the Plant Engineering & Construction segment comprised the following com-panies:

Name Products Customers Turnoverin EUR millions

Sites Employees

Hering Tube bundle heat exchangers Industry 8.6 1 84

Langbein & Engelbracht Facilities for automation, surface and paper technology

Industry and automotive

33.0 3 137

R+E Assembly facilities and peripheral equipment Industry 3.2 1 31

Total 44.8 5 252

3. Business Services

In 2012, the Business Services segment achieved turnover of EUR 174.0 million (prior year: EUR 145.0 million), 25% (prior year: 19%) of the turnover of the BAVARIA Group as a whole. The net loss was reduced from EUR -17.1 million to EUR -7.0 million. Three new companies were acquired: GRISET S.A.S. (February 2012), Technology Luminaires S.A.S. (March 2012) and Portalex Aluminio S.A. (September 2012). Without these acquisitions, turnover would have totalled EUR 62.1 million and the net result EUR -28.5 million.

Industry trends

ItisdifficulttomakeageneralstatementaboutindustrytrendsaffectingtheBusinessServicessegment,duetothesector‘sheterogeneouscomposition.Basicallyspeaking,however,theenvironmentwasmar-ked by considerable cost pressure, which the portfolio companies were able to pass on to customers to only a limited degree, given the differing competitive situations prevailing on the procurement and sales markets.

Segment turnover and result

The companies of the INASA Group were deconsolidated in 2012. These companies accounted for 36% ofturnoverand14%ofprofitswithinthesegmentin2012(includingproceedsfromdeconsolidation).

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22 23

Investments, depreciation/amortisation, personnel development

Investment in 2012 amounted to EUR 6.2 million (prior year: EUR 5.2 million).

The average number of employees for the year increased from 292 to 532, mainly due to initial conso-lidations within the segment.

Outlook for 2013 and beyond

The main challenge for the Business Services segment is gaining new customers. As these companies naturallyhaveahighproportionoffixedcosts,theirprofitabilityrisesandfallsdependingontheextentto which capacity is utilised at plants. Utilisation of capacity is generally inadequate, owing to excess capacity in these sectors.

Ourexpectationsforthissegmentwerenotfulfilledwithregardto2012.

Portfolio companies

As at 31 December 2012, the Business Services segment comprised the following three companies:

Name Products Customers Turnoverin EUR millions

Sites Employees

GRISET Copper and aluminium tapes Industry 78.5 1 203

Technology Luminaires Lights Construction industry

26.1 1 173

Portalex Extruded aluminum profiles Construction- industry

7.3 1 156

Total 111.9 3 532

INASA S.A. was deconsolidated in 2012 and is currently in liquidation. It is not yet clear whether a posi-tive gain on disposal can be expected.

III. Asset,FinancialandProfitPositionoftheGroup

Balance sheet ratios

Asat31December2012,theBAVARIAGroup‘sbalancesheettotalamountedtoEUR357.3million,a year-on-year increase of 10.5%. This change was mainly attributable to the deconsolidations of the reporting year.

Asset side of the balance sheet

Das Fixed assets amounted to EUR 115.1 million (prior year: EUR 106.0 million), thus accounting for approximately 32.2% of the balance sheet total (prior year: 32.8%). Of this, 92.8% (EUR 106.8 million) were tangible assets, compared with 90.3% (EUR 95.7 million) in the prior year.

Current assets – excluding liquid funds – amounted to EUR 196.6 million or 55.0% of the balance sheet total (prior year: EUR 170.6 million, or 52.8%). This includes inventories of EUR 86.9 million (prior year: EUR 69.9 million).

This increase was mainly attributable to changes in the scope of consolidation. Liquid resources (exclu-ding securities) amounted to EUR 44.0 million (prior year: EUR 45.6 million) as at 31 December 2012.

Liability side of the balance sheet

TheGroup‘sequitycapital(includingvariancesfromcapitalconsolidation)rosefromEUR91.2milliontoEUR116.0million.Asaresult,theconsolidatedGroup‘seconomicequityratioincreasedslightlyto32.5% (prior year: 28.2%). The variances on the liability side of the balance sheet represent future re-venues accruing to money-losing subsidiaries that have not yet been recognised as income for reasons of prudence.

Provisions increased from EUR 98.4 million in the prior year to EUR 100.3 million. Of this, pension pro-visions amounted to EUR 59.8 million (prior year: EUR 56.1 million) as at 31 December 2012.

Liabilities increased from EUR 131.5 million in the prior year to EUR 138.3 million. This was due mainly totheyear‘sinitialconsolidations.

Financing was primarily obtained externally, along with internal lending within the Group.

Fordetailedexplanationsof thecashflowstatementaswellasemployeestatisticsof theBAVARIAGroup, please see the Notes.

Revenues and earnings

In the 2012 financial year, the turnover of theBAVARIAGroup dropped to EUR 686.4million fromEUR 749.9 million in the prior year. The main contributions to turnover came from the K+S Group with EUR 199.4 million and from the TriStone Group with EUR 168.7 million. The investee companies de-consolidated during the year contributed turnover of EUR 62.1 million up to the date of deconsolidation.

The effective date of deconsolidation of an investee company is the date on which control over the companyislostduetoitssaleorinsolvency.TheturnoverandresultofaninvesteecompanyflowintotheconsolidatedannualfinancialstatementsoftheBAVARIAGroupuntilsuchtimeasdeconsolidationtakes place, and are therefore recognised on a pro-rata basis only.

The 2012 annual Group surplus amounted to EUR 55.7 million, compared with EUR 2.4 million in the prioryear.Inbothreportingperiods,theGroupsurpluswasinfluencedbythefollowingsignificantcon-solidation effects:

(in EuR millions) 2012 2011Negative variances from capital consolidation (negative goodwill) 50.9 17.0Income from deconsolidation 10.1 33.5Amortisation of goodwill -1.5 -1.7Gains/Losses from debt consolidation 0.3 0

59.8 48.8

Please see the Notes for a comprehensive overview of positive and negative variances derived from capital consolidation and from deconsolidation.

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24 25

IV. InterdependenciesBAVARIA Industriekapital AG is majority-owned by AS Beteiligungen und Vermögensverwaltungs GmbH. Wehavethereforeprepareda“ReportonRelationshipswithAffiliatedCompanies”,asrequiredunder§ 312 of the German Stock Corporation Act (AktG). This report concludes with the following statement: “In summary we hereby declare that, to the best of our knowledge at the time at which the legal transac-tionswereundertaken,BAVARIA IndustriekapitalAGand its subsidiaries receivedadequate (arm’s-length) consideration in return for each legal transaction”.

V. SignificantEventsaftertheReportingDateBAVARIA Industriekapital AG sold its holding in R+E Automationstechnik GmbH in early 2013. In an agreement signed on 15 February 2013, BAVARIA Industriekapital AG sold the Kienle + Spiess Group.

BAVARIAIndustriekapitalAGacquiredSIDESS.A.S.,aFrenchmanufactureroffireenginesbasedinSaint-Nazaire, on 5 March 2013.

VI. Future Risks and OpportunitiesThe future business performance of the BAVARIA Group is subject to risks and opportunities closely as-sociatedwiththeGroup‘sbusinessmodel.TheBAVARIAGroup‘sriskmanagementisgearedtowardsminimising risks while evaluating potential earnings and the risks they entail. As a rule, we do not con-cludeprofit-transferagreementsandwegrantfewsuretiesorguaranteesinfavourofoursubsidiaries.Thus,anylossesorwrite-downsbyindividualsubsidiariesdonotgenerallyhaveanegativefinancialimpact at the level of the holding company. In order to promptly anticipate a potential crisis at any of its investee companies, BAVARIA collects and analyses a wide range of key data from its subsidiaries on a monthly basis.

Risks and opportunities of company acquisitions

Whenitcomestoidentifyingandacquiringturnaroundcompanies,BAVARIA‘sspecialisedacquisitionteam can draw on many years of experience as well as an extensive support network. Thus, BAVARIA is optimally positioned to exploit a wealth of entrepreneurial opportunities. Admittedly, the attractiveness of investing in “companies with turnaround potential” makes this a highly competitive market sector. Howe-ver,BAVARIA‘scredibilityasanexperiencedandsuccessfulrestructuringexpertgivesusacompetitiveedge over our rivals, many of whom are less versed in the legalities and other technical ins and outs of this niche business.

In the context of a failed company acquisition, a French subsidiary was sued for damages in March 2011. However, the Executive Board is currently working on the assumption that the lawsuit will not give risetoanysignificantrisks.

Risks and opportunities of restructuring distressed companies

In isolated cases, BAVARIA may acquire a stake in a company whose restructuring proves to be more challenging than originally assumed. In such a case, we cannot rule out the possibility that the acquired companymayultimatelybecomeinsolvent,duetoitsdifficultinitialsituationand/oraquickacquisitiondecision by BAVARIA. If restructuring proves to be unsuccessful, there is always the risk that the capital and effort invested – particularly the purchase price paid and any residual claims – may be lost.

Fluctuations in price and volumes on capital and commodity markets can also have a negative impact on theassets,financesandearningsofthevariousBAVARIAGroupcompanies.BAVARIAcounterssuchrisks on a case-by-case basis by continually monitoring a number of indicators so that early action can be taken. Moreover, the BAVARIA Executive Board maintains close contact with the managers of each investee company, receives a monthly report from each company and, in many cases, is represented on thecompany‘sSupervisoryBoardand/oradvisorycommittee.Nonetheless,thisdoesnotexcludethepossibility that its management information system may fail to deliver required information, fail to deliver it in time, or deliver erroneous information, and that this will cause the wrong decisions to be taken.

Although the shareholdings of the BAVARIA Group run a wide gamut of industries, thus ensuring risk diversification,unfavourablebusinesscyclescanexertanegativeimpactontheassets,financesandearnings of the Group.

Default risk at the level of BAVARIA Industriekapital AG

OneofthecornerstonesofBAVARIA‘sinvestmentstrategyistolimittheriskoflossasfaraspossiblebymeans of contractual provisions and safeguards. For instance, the Group generally refrains from conclu-dinginternalprofit-transferagreements.Asinthepast,theExecutiveBoardofBAVARIAwillalsoavoidassuming contingent liabilities towards subsidiaries, only in exceptional cases and even then only to a very limited extent. The main risk faced by BAVARIA involves quantifying the time and expense required to rehabilitate a given investee company. Insofar as this estimate is inaccurate, there is the corollary risk that the investee company may become insolvent. This risk is monitored on an ongoing basis.

Personnel risk

The successful acquisition, rehabilitation and resale of companies require a great deal of technical expertise and managerial experience. To implement its business model, BAVARIA must ensure that it hassufficientlyqualifiedpersonnelatitsdisposal.Duetoourproventrackrecord,wegenerallyrecei-veasurfeitofapplicationsfromhighlyqualifiedcandidatesforadvertisedjobvacancies.BAVARIAisan attractive employer thanks to its careful and selective personnel recruiting process, the substantial independence that it grants its on-site restructuring managers, and its competitive, performance-based compensation package. That only the most competent managers are deployed is one of the key suc-cessfactorsofBAVARIA‘sbusinessmodel.

Other personnel risks at the level of BAVARIA Industriekapital AG are those associated with dependen-ce on individual managers. BAVARIA Industriekapital AG is constantly expanding its management team to offset these risks.

Financing, interest rate and currency risks

BAVARIA‘smanagementconsidersthatthefutureperformanceoftheGroupdependstoasubstantialextentonrisksassociatedwithcurrencies,interestratesandfinancing,sincethesecanexertasignifi-cantinfluenceontheGroup‘sassets,financesandearnings.

The companies of the BAVARIA Group are becoming increasingly active outside the Eurozone in terms ofbothdistributionandsourcing.Thus,currency-exchangerisksaretobeclassifiedassignificant.Thecompanies of the BAVARIA Group counter this risk on a case-by-case basis by means of hedging via appropriate futures/option contracts. However, the Group absolutely steers clear of speculative transac-tions.

Giventhecontinuedreluctanceofcredit institutionsto lend,refinancingmayprovedifficult for indivi-dual investeecompanies.The risksof interest-ratehikesordelayedcreditflowscan thereforehavesignificanteffectsonthefinancialpositionofagiveninvesteecompany,thusalsoindirectlyimpactingBAVARIA IndustriekapitalAG.Rising interest rates increasean investee company‘s financing costs,which can in turn have a negative effect on its restructuring, ability to pay dividends and resale potential.

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26 27

Tax-related risks

We continually monitor the tax-related risks that the BAVARIA business model gives rise to. Due to the fact that income from shareholdings held by capital investment companies is generally tax-exempt, BAVARIA has a low tax rate. The foregoing is based on the assumption that § 8b of the German Corpo-rate Tax Act (KStG) is applicable to BAVARIA.

Risk management system

The BAVARIA Executive Board has instituted an early-warning system to identify developments that may endanger the existence of the Company. A corresponding risk report is updated once every six months. Subsidiaries are not included in this formal risk management system.

Miscellaneous information

BAVARIA Industriekapital AG is suing one current and one former member of the Executive Board for damages.

VII. General Forecast

Macroeconomic outlook

The IMF predicts growth of 0.6% in 2013 in its forecast for the German economy.

For the global economy, the IMF forecasts growth of 2.9% in 2013. The fund anticipates global growth of 3.5% next year. The economy in the Eurozone is expected to contract by up to 0.2% in 2013 – which would mean that it would not yet have fully recovered from the depression of 2012 – while growth of 1.0% is forecast for 2014.

BAVARIA Industriekapital AG

The future success of BAVARIA Industriekapital AG is not only dependent on the performance of its existingportfolioofcompanies,butisalsostronglyinfluencedbyitscompanyacquisitionsandsales.Onthe strength of its present portfolio, BAVARIA Industriekapital AG was able to begin the year 2013 on a positive note. For a discussion of the outlook for individual portfolio segments, please see the “Sharehol-ding portfolio” section of this report.

We expect demand to pick up slightly in 2013 compared with last year, driven by a gradual recovery fromtheeurodebtcrisis.Thus,ourfocuswillcontinuetobeontheefficienthandlingandexecutionofcustomer orders. At the same time, we see opportunities to gain additional market share, for example by developing new customer segments. Nonetheless, all investment decisions are reviewed very ca-refullyandapprovedonlyiftheypromisebenefitsintheforeseeablefuture.Wearenotabletoexcludeincreased risks of litigation.

Although our industry is becoming more and more competitive, new acquisitions are likely to continue tobeanimportantsourceofBAVARIA‘sgrowth,especiallyintheGerman-speakingpartsofEurope,owingtoBAVARIA‘sreputationanditstrackrecordofsuccessfullyrestructuredcompanies.Thus,wewill continue to strive for three to four new acquisitions per year in 2012 and beyond, insofar as we can findcompaniesthatarerealisticallyvalued.Inselectingouracquisitiontargets,wewilltendtofavourhigh quality and a relatively large size.

Besides focusing on our traditional core business of taking over companies with potential for impro-vement (EBIT margin below 3%), we also intend to grow by ramping up our expansion of existing inves-tee companies by means of “add-on” acquisitions. Western Europe remains an important and attractive growth market for BAVARIA.

We have won the acceptance and cooperation of unions and works councils even when it comes to difficultissuesofpersonnelcutbacks.This,alongwithstockexchangelisting,willallowustotakead-vantage of increased buying opportunities in the future.

As we see it, BAVARIA continues to be in a position to maintain its existing portfolio of investee compa-niesoverthemediumtolongterm.Atpresent,however,itisdifficulttopredictwhenthenextprofitablecompany sell-offs can be realised.

Giventhesebackgroundconditions,itisimpossibletomakeadefiniteforecastoftheBAVARIAGroup‘sfuture turnover and earnings. On the strength of our existing portfolio, the Executive Board expects this year and the coming years to be successful ones for BAVARIA Industriekapital AG, in terms of both ear-nings and equity capital growth. All the prerequisites for this are in place.

Munich, 15 April 2013

Reimar Scholz Harald EnderExecutive Board Chairman Director Operations

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28 29Sites of the BAVARIA Industriekapital AG

CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Financial Statements

30 31

ConsolidatedProfitandLossAccountfor2012

(in EUR) 31.12.2012 31.12.2011

1. Sales 686,374,953.27 749,934,533.54

2. Increase or reduction of inventories in finished and non-finished products

-3,725,200.18 -538,809.15

3. Other own work capitalised 918,212.91 1,341,745.01

683,567,966.00 750,737,469.40

4. Other operating income 73,136,208.47 73,923,740.69

5. Cost of materials

a) Raw materials, supplies and merchandise for resale -342,498,922.21 -437,039,041.66

b) Purchased services -45,875,372.96 -45,254,064.41

-388,374,295.17 -482,293,106.07

6. Personnel costs

a) Wages and salaries -137,105,896.93 -144,506,406.69

b) Social insurance and other social charges and benefits -35,687,749.15 -35,448,741.21

-172,793,646.08 -179,955,147.90

7. Depreciation -26,851,399.69 -22,646,341.58

a) on intangible and tangible fixed assets -25,334,162.42 -20,953,205.58

b) on group level -1,517,237.27 -1,693,136.00

8. Other operating expenses -88,828,171.82 -115,339,719.93

9. Other interest and similar income 423,250.67 360,807.08

10. Interest and similar expenses -8,196,110.31 -8,279,874.71

11. Depreciation on marketable securities -508,095.70 -5,820.47

12. Profit on ordinary operations 71,575,706.37 16,502,006.51

13. Extraordinary income 2,981,678.46 688,338.81

14. Extraordinary expenses -7,272,555.69 -7,959,136.89

15. Extraordinary result -4,290,877.23 -7,270,798.08

16. Tax on income and earnings -9,118,722.13 -5,503,045.16

17. Other taxes -2,509,710.15 -1,293,598.35

18. Total taxes -11,628,432.28 -6,796,643.51

19. Net income 55,656,396.86 2,434,564.92

20. Net profit carried forward from previous year 15,024,361.11 15,230,225.85

21. Appropriation to the reserve restricted in relation to treasury stock -143,214.00 -188,139.00

22. Income from open dismissal of the principal amount of own shares 143,214.00 188,139.00

23. Purchases of treasury stock -1,915,817.62 -2,517,530.33

24. Profit relating to other shareholder -102,817.48 -122,899.33

25. Consolidated profit 68,662,122.87 15,024,361.11

Consolidated Financial Statements Consolidated Financial Statements - Consolidated Profit and Loss Account for 2012

32 33

Consolidated Balance Sheet as of 31 December 2012

Assets (in EUR) 31.12.2012 31.12.2011

A. FIXED ASSETS

I. Intangible fixed assets

1. Patents, trademarks, licenses and similar rights 2,117,724.13 1,334,316.25

2. Goodwill 5,508,068.57 7,025,959.67

3. Advance payments 351,412.16 27,671

7,977,204.86 8,387,946.92

II. Property, plant & equipment

1. Land, leasehold rights and buildings incl. buildings on leased land 50,381,768.79 40,334,783.76

2. Machinery and equipment 47,726,022.88 43,794,107.12

3. Other equipment, plant and office equipment 4,881,149.47 4,668,149.72

4. Advance payments and construction-in-progress 3,764,085.09 6,869,347.65

106,753,026.23 95,666,388.25

III. Financial fixed assets

1. Shareholding in affiliated companies 9.00 9.00

2. Investments 92,172.66 1,993,037.61

3. Long-term securities 1,229.74 229.74

4. Other loans 264,000.00 0.00

357,411.40 1,993,276.35

115,087,642.49 106,047,611.52

B. CURRENT ASSETS

I. Inventories

1. Raw materials and supplies 28,903,226.57 22,427,782.21

2. Work-in-progress 31,882,563.3 28,196,216.87

3. Finished products and merchandise 23,025,145.55 17,829,460.11

4. Advanced payments 3,077,902.27 1,474,700.34

86,888,837.69 69,928,159.53

II. Account receivables and other assets

1. Receivables from trade 80,705,613.74 75,163,016.72

2. Other assets 25,685,870.89 24,850,858.51

106,391,484.63 100,013,875.23

III. Marketable securities

1. Other marketable securities 3,367,035.78 661,409.36

3,367,035.78 661,409.36

IV. Cash and cash equivalents 44,007,019.69 45,568,830.11

240,654,377.79 216,172,274.23

C. PREPAID EXPENSES 1,542,024.41 1,117,883.74

357,284,044.69 323,337,769.49

Equity and Liabilities (in EUR) 31.12.2012 31.12.2011

A. Equity

I. Issued capital 5,809,349.00 5,969,133.00

1. Subscribed capital 6,234,716.00 6,394,500.00

2. Nominal value of treasury stock -425,367.00 -425,367.00

II. Capital reserve 9,037,437.00 8,605,500.00

III. Revenue reserves 158,714.00 430,867.00

1. Legal reserve 5,500.00 5,500.00

2. Reserve for treasury stock 153,214.00 425,367.00

IV. Consolidated profit 68,662,122.87 15,024,361.11

V. Offsetting item for holdings of other shareholders 1,881,831.95 1,073,161.73

VI. Difference from currency translation -1,130,252.84 -2,461,329.00

84,419,201.98 28,641,693.84

B. DIFFERENCE FROM CONSOLIDATION OF CAPITAL 31,606,670.69 62,578,603.49

C. ACCRUALS

1. Accruals for pensions and similar commitments 59,788,201.46 56,142,858.42

2. Tax reserve 5,102,939.65 6,829,310.88

3. Other accurals 35,372,029.55 35,475,736.15

100,263,170.66 98,447,905.45

D. LIABILITIES

1. Debt due to banks 30,909,372.06 42,485,056.03

2. Advanced payments received on orders 12,744,143.36 8,909,791.90

3. Trade payables 71,172,360.49 61,130,389.95

4. Other liabilities 23,486,654.98 18,928,418.29

138,312,530.89 131,453,656.17

E. DEFERRED INCOME 1,335,561.60 1,487,246.01

F. DEFERRED TAXES 1,346,908.87 728,664.53

357,284,044.69 323,337,769.49

Consolidated Financial Statements - Consolidated Balance Sheet Consolidated Financial Statements - Consolidated Balance Sheet

34 35

Consolidated Statement of Changes in Equity

(in EUR thousands) Share numbers in circulation

Subscribed capital

Capital reserve

Earned surplus

Difference from

currency translation

Offsetting item for

holdings of other

shareholders

Consolida-ted profit

Group equity

31 December 2010 6,394,500 6,157 8,605 243 2,549 1,365 15,230 34,149

Net income 2011 2,435 2.435

Appropriation to the reserve restricted in relation to treasury stock

188 188

Purchases of treasury stock -188 -2,518 -2,706

Foreign currency differences -5,010 -5,010

Shares of other partners -292 -123 -415

31 December 2011 6,394,500 5,969 8,605 431 -2,461 1,073 15,024 28,641

Net income 2012 55,656 55,656

Income from open setting of the principal amount treasury shares

143 143

Expenses from loss of open settling of the nominal value of treasury shares

-431,937 -432 -432

Appropriation to the reserve restricted in relation to treasury stock

160 -143 17

Reversal of the reserve for own shares -432 432 0

Transfer to capital reserve according to § 237 para 5 AktG

432 -432 0

Income from capital reduction 432 432

Purchases of treasury stock -160 -1,916 -2,076

Foreign currency differences 1,331 1,331

Shares of other partners 809 -102 707

31 December 2012 5,962,563 5,809 9,037 159 -1,130 1,882 68,662 84,419

Consolidated Statement of Cash Flows

(in EUR thousands) 2012 2011

Consolidated net income ahead of extraordinary items 59,947 9,705

Earnings proportions of minority shareholders without payment-effective portions 809 -292

Depreciation on fixed assets 26,852 22,633

Gains and losses on sales of fixed assets -29 252

Changes in accruals -6,213 -10,930

Dissolution of differences from the capital consolidation -50,866 -17,759

Losses from the final consolidation of group companies -10,055 -31,592

Other payment-ineffective changes 712 -63

Brutto Cash flow 21,157 -28,046

Change in inventories -3,236 15,036

Change in receivables, other assets and rest of the assets 9,613 14,474

Change in liabilities and rest of total equities & liabilities 13,584 14,149

Cash flow from current operations 41,118 15,613

Payments for capital expenditure into the fixed assets -27,323 -24,700

Currency differences in fixed assets 2,275 2,323

Inflows from disposals of items of intangible and tangible fixed assets 3,506 6,648

Outflows for acquisition of group companies -12,890 0

Outflows for capital expenditure into the financial assets -348 -1,985

Cash flow from capital expenditure activities -34,780 -17,714

Payments for the purchase of own shares -1,916 -2,518

Pledging of cash and cash equivalents 0 -3,900

Outflows for the repayment of financial liabilities 4 2,796

Cash flow from financing activities -1,912 -3,622

Payment-effective change of the cash and cash equivalents 4,426 -5,723

Net funds addition from change in scope of consolidation -713 -5,033

Currency differences 1,331 -2,788

Cash and cash equivalents at start of the period 42,330 55,874

Cash and cash equivalents as of 31 December 2012 47,374 42,330

Composition of cash and cash equivalents 31.12.2012 31.12.2011

Cash-in-hand, balances with banks 44,007 45,569

Less cash at bank as deposit 0 -3,900

Short-term marketable securities 3,367 661

47,374 42,330

Consolidated Financial Statements - Consolidated Statement of Changes in Equity Consolidated Financial Statements - Consolidated Statement of Cash Flows

36 37

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

I. BAVARIAIndustriekapitalAG–CompanyProfileBAVARIA Industriekapital AG was established on 3 April 2002. The Company has its legal domicile in Munich, Germany, and has been registered in the commercial register of the Munich District Court since 8August 2002 (SectionB:No. 143 858).The initial public offering of theCompany‘s shares(ISIN DE0002605557) was made on 26 January 2006 in the Entry Standard (Open Market) segment of the Frankfurt Stock Exchange.

BAVARIAisanindustrialholdingcompanythatacquiresdistressedfirmsandbooststheirperformancethrough active management. BAVARIA pursues three objectives: cutting costs, developing new sources ofturnoverandprotectingjobswhereverpossible.Itreliesontheinitiativeoftheinvesteecompany‘sworkforce to boost innovation and avoid all forms of waste, such as reject rates or unnecessary down timeduringproduction.Onlycompaniesthatareprofitableoverthelongtermoffersecureworkplaces.To boost performance, BAVARIA works with its in-house team of specialists, who are on hand to support theinvesteecompany‘smanagement.

II. Scope of ConsolidationBesidesBAVARIAastheparentcompany,theconsolidatedannualfinancialstatementsincludethoseaffiliatesinwhichBAVARIAisdirectlyorindirectlyholdsamajorityofthevotingrightsand/oroverwhichit otherwise exercises control, unless special exclusion criteria apply. ThecompaniesincludedinBAVARIA‘sConsolidatedGroupAnnualReportarelistedseparatelyinthe“Schedule of Shareholdings” in the Notes.

A total of 17 companies were not included in the consolidation, by exercising the option in accordance with § 296 Para. 1 and 2 HGB.

Thefollowingcompanieswerenotincludedintheconsolidatedannualfinancialstatementsastheywereof secondary importance in accordance with § 296 Para. 2 HGB:

CARBODY Otomotiv Izolasyon Sistemleri Ticaret Limited Sirketi, Istanbul, Turkey CARBODY Deutschland GmbH, Munich

Thefollowingcompanieswerenotincludedintheconsolidatedannualfinancialstatementsinaccordan-cewith§296Para.1No.1HGBbecausetheyhavefiledforinsolvencyorbecauseinsolvencyprocee-dings have already been started regarding their assets:

SwissTex Winterthur AG, Winterthur, Switzerland Elfotec AG, Mönchaltdorf, Switzerland (in liquidation) Elfotec Ltd., Annacotty, Ireland (in liquidation) Fonderie Aluminium de Cléon S.A.S., Cléon, France Xenterio GmbH, Offenburg FARAL S.p.A., Modena, Italy FARAL France S.A.S., Carmaux, France Hunsfos Fabrikker A.S., Vennesla, Norway OSNY Pharma S.A.S., Osny, France OSNY Pharma Holding S.A.S., Osny, France SwissTex France S.A.S., Valence, France Inasa Foil Sabiñánigo S.L. (prev.: Laminados Sabiñánigo S.L.),

Sabiñánigo, Huesca, Spain INASA Foil S.A., Irurtzun (near Pamplona), Spain

Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements - Company Profile, Scope of Consolidation

38 39

Since insolvency proceedings were started concerning the assets of INASA Foil S.A., BAVARIA has been restricted in exercising its rights in relation to the assets of Inasa Foil GmbH (formerly baikap Holding 080309 GmbH), Munich. This company was therefore not included in the consolidated annual financialstatements,inaccordancewiththeoptionunder§296Para.1No.1HGB.

CARBODY Czech Republic s.r.o., Mladá Boleslav, Czech Republic, was not included in the consoli-datedannualfinancialstatementsinaccordancewiththeoptionunder§296Para.1No.2HGB,asitwould not have been possible to obtain the information required for the preparation of the consolidated annualfinancialstatementswithoutdelays.

The following companies

Bavaria Luminaires Holding S.A.S., Nanterre, France Technology Luminaires S.A.S., Nevers Cedex, France CARBODY S.A.S., Witry-les-Reims, France vosla GmbH, Plauen Portalex Aluminio S.A., Cacém, Portugal

wereconsolidatedforthefirsttimeinthereportingyear.

The companies were fully consolidated in accordance with the revaluation method from the time of initial consolidation.

BAVARIA‘sscopeofconsolidationissubjecttocontinualchange,sothatacomparisonofitsconsolida-ted group annual reports over time is only possible to a limited extent. In particular, due to the differing business activities of the various investee companies included, the interrelationships among the indivi-dualitemsofBAVARIA‘sConsolidatedGroupBalanceSheetandProfit&LossStatementaremarkedbycontinualfluctuations. Thechangesinthescopeofconsolidationsincetheconsolidatedannualfinancialstatementsasat31December 2011 are as follows:

INASA Foil S.A., Inasa Foil Sabiñaningo S.L. and Inasa Foil GmbH were deconsolidated as of 31 December 2012, as it became clear during the year that BAVARIA was unlikely to regain control of these companies.

The operations of GRISET S.A.S. and 100% of shares in GRISET Malaysia SDN.BHD were acquired with effect from 1 February 2012.

The newly acquired Technology Luminaires S.A.S. was consolidated for the first time on 5 March 2012.

Another new acquisition, CARBODY S.A.S., was consolidated for the first time on 29 February 2012.

Two newly acquired companies, vosla GmbH and Portalex Aluminio S.A., were consolidated for thefirsttimeon3September2012.

The key data for the aforementioned initial consolidations and deconsolidations are shown below:

(in EUR thousands) Inasa Foil GmbH

Inasa Sabi S.L.

INASA Foil S.A.

TechLum S.A.S.

GRISET S.A.S.

CARBODY S.A.S.

voslaGmbH

PortalexS.A

Fixed Assets 0 1,006 9,184 643 707 11,333 3,799 7,372

Working capital 60 11,085 8,342 5,857 3,116 16,949 6,475 16,977

- thereof liquid funds 25 1,436 3,120 0 106 -28 25 3,821

60 12,091 17,526 6,500 3,823 28,282 10,274 24,349

Equity 21 -3,659 -6,416 123 100 12,266 5,025 16,609

Accruals 2 1,244 8,818 3,241 1,839 6,347 2,471 2,395

Liabilities 37 14,506 15,124 3,136 1,884 9,669 2,778 5,345

- thereof to banks 0 1,467 10,113 0 254 0 2,778 0

60 12,091 17,526 6,500 3,823 28,282 10,274 24,349

Sales 2012 228 37,946 26,087 26,058 78,481 38,148 15,055 7,312

Loss 2012 -4 -532 -15,316 412 14,107 -1,710 295 -1,343

Notes to the Consolidated Financial Statements - Scope of Consolidation Notes to the Consolidated Financial Statements - Scope of Consolidation

40 41

III. Reporting Date for the Consolidated Group Annual ReportThekeyreportingdatefortheconsolidatedannualfinancialstatementsisthatoftheparentCompany,BAVARIA Industriekapital AG (31 December 2012). ThefinancialyearofeachoperatingsubsidiaryisthatoftheparentCompany.Theconsolidatedannualfinancialstatementstakeintoaccountallfactswithafinancialimpactonthesubsidiariesinsofarastheyhave occurred up to the key reporting date.

IV. Consolidation PrinciplesPrinciplesoffinancialreporting

TheannualfinancialstatementsofBAVARIAIndustriekapitalAGasat31December2012wereprepa-red in compliance with the German Commercial Code (HGB) and the German Stock Corporation Act (AktG).

The annual reports of the individual subsidiaries were prepared pursuant to the guidelines of §§ 238 et seq. HGB, and specifically comply with the stipulations for incorporated companies setforth under §§ 264 et seq. HGB, as well as with the provisions of the German Stock Corporation Act.

Theseconsolidatedannualfinancialstatementswerepreparedpursuantto§§290etseq.HGB.

SomeoftheitemswhosedisclosureontheBalanceSheetand/orProfit&LossStatementarerequiredby law have been presented in summary form. The respective itemisations and explanations can be found in the Notes.

Owingtochangesinthescopeofconsolidation,comparisonwiththepreviousyear’sfiguresispossibleonly to a limited extent.

TheGroupProfit&LossStatementwaspreparedusingthetotalcostmethod.

Consolidation methods

Method of capital consolidation

For acquisitions up to 31 December 2009:

§ 301, Para. 1, Sent. 2, No. 1 HGB, former version, provides for alternative methods of capital conso-lidationforthepurposesoffinancialreportinginsofarasagivenacquisitionwascarriedoutuptoandincluding 31 December 2009. Accordingly, the Company opted to use the book value method, and thus recorded its shareholdings in the various consolidated companies at acquisition value (as per § 301, Para. 2 HGB).

For acquisitions on or after 1 January 2010:

Capital consolidation is performed using the revaluation method (§ 301, Para. 1 HGB), namely in such awaythat thefinancialconsiderationpaid toacquireacompany(acquisitioncosts) isoffsetagainstitsacquired,identifiedassetsandassumeddebts,accruals/deferralsandextraordinaryitems.Eachofthese items is stated at its value at the time of acquisition.

Resulting debit variances that could not be otherwise allocated were capitalised on the Group Balance Sheetandamortisedoverausefullifeoffiveyears.Creditvariancesarerecognisedasliabilitiesinac-cordance with § 309 Para. 2 HGB and are reversed in income if applicable.

Credit variances resulting from capital consolidation are stated separately on the Group Balance Sheet betweenequitycapitalandexternalcapital(debt)inaccordancewiththeirspecificcharacter.

Other consolidation procedures

Thefollowingsubsidiary-specificitemswereeliminatedinthecourseofconsolidation:receivables,lia-bilities, turnover, other expenses, other revenues, interest income and associated expenses, as well as interimGroupresults.Allsignificantconsolidationprocedureswithaneffectonincomearesubjectedtotax accrual and/or deferral, insofar as the variance in taxes payable is expected to be offset in subse-quentfinancialyears.

Notes to the Consolidated Financial Statements-Reporting Date for the Cons. Group Annual Report, Consolidation Principles Notes to the Consolidated Financial Statements - Consolidation Principles

42 43

V. Accounting and Valuation MethodsIIn the reporting year, as well as in the prior year, due allowance was made for the relevant provisions of the German Commercial Code (HGB), as amended by the Accounting Law Modernisation Act (BilMoG).

Asinthepreviousyear,theconsolidatedannualfinancialstatementswerepreparedinaccordancewiththe accounting and valuation principles set forth below:

As a rule, valuations were made under the assumption that investee company operations would be con-tinued (going concern principle) pursuant to § 252 Para. 1 No. 2 HGB. The break-up values were used when valuing INASA Foil S.A..

Intangible assets that have been purchased against payment are capitalised at acquisition costs minus scheduledamortisationonastraight-linebasis.Asarule,theirusefullifeisassumedtobethree-fiveyears. Company goodwill purchased against consideration is calculated by netting out acquisition costs against the value of individual company assets, minus the debts at the time they are assumed. As of 1 January2010,companygoodwillisgenerallysubjecttoregularamortisationoverfiveyears(previously:10 years).

Tangible assets are capitalised at acquisition cost and are depreciated on a straight-line basis over their useful life. Economic assets with a net worth of up to EUR 150 are fully depreciated in the year of acquisition. Financial assets are valued at acquisition cost or at their fair market value (if lower) as at the reporting date. Reversals of impairment losses pursuant to the value recovery principle are performed up to amortised cost, insofar as the reasons for a long-term value impairment no longer apply. Financial assets are valued at acquisition cost or at their fair market value (if lower).

Inventories are valued at acquisition/manufacturing cost or at their fair market value (if lower), while allowing for reasonable general administrative costs.

Receivables and other assets are reported at face value minus a one-off allowance for general default risk. Doubtful receivables are subject to depreciation on an individual basis. Receivables denominated in foreign currencies are generally valued using the mean spot exchange rate as at the reporting date, insofar as the remaining maturity is shorter than 12 months.

If the remaining maturity is longer than 12 months, valuation is performed at acquisition cost, minus any unscheduled depreciation, if applicable.

Securities are valued at acquisition cost or at their fair market value, if lower.

Liquid assets are reported at face value. Amounts denominated in foreign currencies are valued at the mean spot exchange rate as at the reporting date.

Pension provisions have been formed on the basis of contractually binding pension claims. The future amountsneededtocoverbenefitobligationsarisingfrompensionguaranteeswerevaluedusingbio-metric probabilities on the basis of the net present value of future pension entitlements (projected unit creditmethod).Expectedincreasesinwages/salariesandpensionbenefitsweretakenintoaccountinthecalculationofthenetpresentvalueofvestedfuturepensionbenefits.

The actuarial valuation of future pension obligations is based on a discount rate of 5.00% to 5.06%, depending on the remaining terms of the individual obligations. Insofar as it was not possible to assume aspecificremainingterm,theinterestrateusedwastheonepublishedbytheGermanBundesbankforremaining terms of 15 years (pursuant to § 253 Para. 2 Sent. 2 HGB). An interest rate of 1.5% - 2.5% per annumwasusedtoreflectfuturewage/salaryincreases.Themortalitystatisticsappliedwerederivedfrom the actuarial tables published by Dr Klaus Heubeck (2005G) or, in the case of foreign subsidiaries, themortalitytablesprovidedbythestatisticalofficesofthecountriesinquestion.

Tax provisions and other provisionsareformedtoreflectthefullamountoffuturepaymentsdueinaccordancewithcustomaryprofessionalduediligence,whiletakingintoaccountallidentifiablerisksanduncertain obligations. Other provisions are formed in order to include appropriate and adequate individu-alallowancestocoverallidentifiablerisksfromuncertainobligationsandpotentiallossesfrompendingtransactions,whilealsoallowingforanyforeseeableprice/costincreases.Significantprovisionswitharemaining term of more than one year are discounted with an interest based on the term-appropriate, averagemarketinterestrate(basedonthepastsevenfinancialyears),ascalculatedandpublishedbythe German Bundesbank. Tax provisions are calculated under the assumption that § 8b of the German Corporate Tax Act (KStG) is applicable to BAVARIA Industriekapital AG.

Liabilities are reported at their repayment amount as at the reporting date. Liabilities denominated in foreign currencies and having a remaining term of less than one year are generally valued using the mean spot exchange rate as at the reporting date. If they have a remaining term of more than one year, this applies only insofar as the conversion results in a higher amount.

The application of commercial law on the one hand and tax law on the other may give rise to differing valuations for assets, debts and accruals/deferrals, as well as for carryforwards of losses and/or inte-rest that are eligible for consideration. Any such differences in valuation are reported as a deferred tax liability, insofar as they give rise to a foreseeable net tax liability in future financial years.Differences that give rise to net tax savings are not reported as deferred tax assets pursuant to § 274 Para. 1 Sent. 2 HGB.

Currency conversions

Financial assets, receivables, other assets, securities, liquid assets, provisions, financial obligationsand other liabilities as well as guarantees and other commitments denominated in foreign currency are generallyvaluedusingthemeanspotexchangerateonthereportingdate.Thevaluesoffixedassetsand inventories acquired with foreign currency are generally stated using the mean spot exchange rate as at the transaction date.

The functional currency used by BAVARIA Industriekapital AG as the Group parent is the euro (EUR).

Insofar as the annual reports of individual subsidiaries are denominated in foreign currencies, all amounts are restated using the functional currency method.

All balance sheet items of the foreign companies included in the consolidated Group were converted into EUR using the mean spot exchange rate on the reporting date, with the exception of equity capital (subscribedcapital,reserves,profit/losscarriedforward),whichwasrestatedusinghistoricalexchangerates.Variancesinequitycapitalduetocurrencyconversions(i.e.becauseofyear-by-yearfluctuationsin exchange rates) were posted under “equity capital variances from currency conversions”, with no effect on income.

Revenues and expenses were restated using the average annual exchange rate. The annual result from therestatedProfit&LossStatementwastransferredtothebalancesheetandthevariancewaspostedunder “equity capital variances from currency conversions” without affecting income.

Cash Flow Statement

Thefinancialresourcesfundconsistsofcashbalances,bankdeposits/creditsandshort-termsecuritiesforming part of current assets (working capital).

Notes to the Consolidated Financial Statements - Accounting and Valuation Methods Notes to the Consolidated Financial Statements - Accounting and Valuation Methods

44 45

VI. Notes to the Balance SheetSchedule of Fixed Assets

Thedevelopmentoffixedassetsisshownbelow:

Acquisition and manufacturing costs

(EUR thousands) 01.01.2012 Additions Disposals Reclassi-fications

Currency translations

Changes in scope of consolida-

tion

31.12.2012

I. IIntangible assets

1. Patents, trademarks, licenses & similar rights

4,349 1,987 575 1 80 -264 5,578

2. Goodwill 18,954 9 16 0 0 0 18,947

3. Prepayments on account 28 324 0 0 0 0 351

23,331 2,320 590 1 80 -264 24,877

II. Fixed assets

1. Land and buildings 54,058 4,026 172 181 1,305 6,386 65,784

2. Technical plant and machinery

82,038 16,675 3,305 1,241 2,328 -5,895 93,082

3. Other equipment, office and plant furnishings

11,123 2,547 1,549 69 118 -1,578 10,731

4. Advance payments/ construction in progress

6,883 1,755 3,239 -1,492 86 -576 3,418

154,102 25,003 8,264 -1 3,837 -1,663 173,014

III. Financial investments

1. Shareholding in affiliated companies

0 0 0 0 0 0 0

2. Investments 1,993 83 0 0 0 -1,984 92

3. Long-term securities 0 1 0 0 0 -0 1

4. Other loans 0 264 0 0 0 0 264

1,993 348 0 0 0 -1,984 357

179,426 27,670 8,854 0 3,917 -3,910 198,247

Depreciation Book values

(EUR thousands) 01.01.2012 Additions Disposals Reclassi-fications

Currency translations

Changes in scope

of consoli-dation

31.12.2012

31.12.2012

31.12.2011

I. Intangible assets

1. Patents, trademarks, licenses & similar rights

3,014 898 495 0 43 0 3,460 2,118 1,334

2. Goodwill 11,928 1,517 6 0 0 0 13,439 5,508 7,026

3. Prepayments on account 0 0 0 0 0 0 0 351 28

14,942 2,415 501 0 43 0 16,899 7,977 8,388

II. Fixed assets

1. Land and buildings 13,723 3,240 0 0 194 -1,755 15,402 50,382 40,335

2. Technical plant and machinery

38,244 19,452 3,010 0 1,519 -10,849 45,356 47,726 43,794

3. Other equipment, office and plant furnishings

6,455 1,745 1,507 0 3 -847 5,849 4,881 4,668

4. Advance payments/ construction in progress

14 0 360 0 0 0 -346 3,764 6,869

58,436 24,437 4,877 0 1,716 -13,451 66,262 106,754 95,666

III. Financial investments

1. Shareholding in affiliated companies

0 0 0 0 0 0 0 0 0

2. Investments 0 0 0 0 0 0 0 92 1,993

3. Long-term securities 0 0 0 0 0 0 0 1 0

4. Other loans 0 0 0 0 0 0 0 264 0

0 0 0 0 0 0 0 357 1,993

73,378 26,852 5,377 0 1,759 -13,451 83,161 115,088 106,047

Notes to the Consolidated Financial Statements - Notes to the Balance Sheet Notes to the Consolidated Financial Statements - Notes to the Balance Sheet

46 47

Intangible assets

Goodwillchangedasfollowsduringthefinancialyear:

2012 2011

Increase Decrease Groupchange

Amortised Bookvalue Increase Decrease Groupchange

Amortised Bookvalue

9 16 0 1,511 5,508 891 688 0 1,693 7,026

TheGroup‘sconsolidatedgoodwillasat31December2012wasattributablemainlytocompaniesoftheK+S Group (EUR 3,385,000) and the TriStone Group (EUR 1,763,000). The remaining average amorti-sationperiodforconsolidatedgoodwillisroughlyfiveyears.

A useful life of 10 years is applied to goodwill acquired before 1 January 2010. This 10-year useful life, which exceeds the 5-year period for goodwill pursuant to § 314 Para. 1 No. 20 HGB, is based on the planned, long-term holding horizons of the respective companies.

Anexpectedusefullifeoffiveyearsisappliedtogoodwillacquiredafter1January2010.

Theusefullifeofindustrialpropertyrightsandlicencesisthreetofiveyears.Usefullifehasbeende-termined on the basis of the expected period of actual use. All intangible assets are amortised on a straight-line basis.

Tangible assets

Theusefullifeisthreeto10yearsforfixturesandfurnishingsandeightto20yearsfortechnicalequip-ment and machinery, depending on their commercial use. Buildings are depreciated based on an eco-nomic useful life of 25 to 50 years. Financial assets

Theitem“shareholdingsinaffiliatedcompanies”includesnon-consolidatedholdingsvaluedatacquisi-tion price minus any necessary markdowns to fair value.

Geographic distribution

Thegeographicdistributionoffixedassetsisasfollows:

31.12.2012 (EUR thousands) Germany EuropeanUnion

Europe (non-EU)

Asia Total

Intangible assets 2,196 5,728 0 53 7,977

Tangible assets 24,394 82,347 0 12 106,753

Financial assets 9 348 0 0 357

26,599 88,423 0 65 115,087

31.12.2011 (EUR thousands) Germany EuropeanUnion

Europe (non-EU)

Asia Total

Intangible assets 2,118 6,196 0 75 8,389

Tangible assets 18,747 76,899 0 20 95,666

Financial assets 9 1,984 0 0 1,993

20,874 85,078 0 95 106,048

Current assets (working capital)(Not including securities, cash balances or bank deposits/credits)

(EUR thousands) 31.12.2012 31.12.2011

Raw materials and supplies 28,903 22,428

Work in progress 31,883 28,196

Finished goods and merchandise 23,025 17,829

Payments on account 3,078 1,475

Trade receivables 80,706 75,163

Other assets 25,686 24,851

193,281 169,942

“Other assets” includes EUR 13,343,000 in receivables from the tax authorities.

“Trade receivables” includes accounts receivable in the amount of EUR 934,000 with a remaining term of more than one year. “Other assets” includes assets with a remaining term of more than one year totalling EUR 1,213,000.

Notes to the Consolidated Financial Statements - Notes to the Balance Sheet Notes to the Consolidated Financial Statements - Notes to the Balance Sheet

48 49

Equity capital

During the reporting year, equity capital increased by EUR 55,777,000 to EUR 84,419,000.

(in EUR thousands) 31.12.2012 31.12.2011

Subscribed capital 5,809 5,969

Capital reserve 9,037 8,605

Retained earnings 159 431

Variance from currency translations -1,130 -2,461

Adjustment for minority shareholders 1,882 1,073

Group balance sheet profit 68,662 15,025

Equity capital 84,419 28,642

TheGroupbalancesheetprofitofEUR68,662,000includesprofitscarriedforwardfromtheprioryearin the amount of EUR 15,024,000.

1. Subscribed capital

The share capital amounts to EUR 5,962,563.00. It has been fully paid in and consists of 5,962,563 no-par shares with a calculated nominal value of EUR 1.00 per share.

Contingent capital amounts to EUR 49,500.00.

Own shares are stated at calculated nominal value separately from subscribed capital. These own sha-res have been acquired on the basis of authorisations pursuant to § 71 Para. 1 No. 8 of the German StockCorporationAct(AktG).TheCompanydoesnotderiveanyrightsfromtheseownshares;inpar-ticular, they do not carry any dividend rights.

a) Own shares

By resolution of the General Shareholder Meeting on 11 June 2010, the Company was empowered, pursuant to § 71 Para. 1 No. 8 of the German Stock Corporation Act (AktG), to acquire own shares worth up to 10% of the total share capital (as at the date of acquisition of said shares), at any time until 10 June 2015. This right may be exercised in whole or in part, and in this case more than once. The previous authorisation to purchase own shares pursuant to the General Shareholder Meeting of 29 May 2009 was thereby superseded.

As the authorisation granted by the General Shareholder Meeting of 11 June 2010 had (almost) been exhausted and 431,937 of the 441,937 repurchased shares had since been withdrawn, the Compa-ny was authorised by resolution of the General Shareholder Meeting on 25 May 2012, pursuant to § 71 Para. 1 No. 8 AktG, to acquire own shares worth up to 10% of the total share capital as at the date on which the resolution was passed, at any time until 24 May 2017. This right may be exercised in whole or in part, and in this case more than once, for one or several purposes. The previous authorisation to purchase own shares pursuant to the General Shareholder Meeting of 11 June 2010 has thereby been superseded.

The shares acquired on the basis of this authorisation, together with other shares in the Company that the Company has already acquired or still holds, or that are attributable to it in accordance with §§71dand71eAktG,maynotatanytimeaccountformorethan10%oftheCompany’ssharecapital.

The Executive Board was empowered to use Company shares acquired pursuant to the above authori-sation, with the consent of the Supervisory Board, for all legally permissible purposes, particularly for the following:

They may be used to introduce Company shares to foreign stock exchanges on which they are not yet listed. Thesharesmaybesold inexchangefornon-cashbenefitsandinparticularmaybeoffered

or granted to third parties in connection with company mergers or acquisitions of companies, parts of companies or shareholdings therein, including an increase in existing shareholdings. They may be offered for purchase to persons who are, or have been, employed by the Com- pany or its affiliateswithin themeaning of §§ 15 et seq. of theGermanStockCorporation Act (AktG), or granted/transferred to such persons with a blocking period of not less than one year. If shares are offered to persons as part of a stock option programme, a blocking period of four years applies. They may be withdrawn from circulation without their withdrawal requiring a further resolution of theGeneralShareholderMeeting.Thesesharesmayalsoberetiredviaasimplifiedprocedure (without a reduction of equity capital) by adjusting the pro-rata nominal amount of the remaining no-parsharesintheCompany‘sequitycapital.Theretirementofsharesmayalsobelimitedto a portion of the Company shares acquired. The right to retire shares pursuant to the authorisa- tion may be exercised more than once. They may also – observing the principle of equal treatment (§ 53a AktG) – be resold via the

stock exchange, an institution similar to a stock exchange or a trading platform, by means of a public purchase offer aimed at all shareholders in the Company or a public request to submit offers for sale aimed at all shareholders in the Company.

As at 31 December 2012, the Company has made the following share repurchases:

On the basis of the authorisation granted by the General Shareholder Meeting on 20 June 2008, a total of 150,986 own shares (of which 139,458 shares were acquired in 2008). On the basis of the authorisation granted by the General Shareholder Meeting on 29 May 2009,

a total of 70,150 own shares (of which 27,260 shares were acquired under a repurchase offer pursuant to the authorisation granted by the General Shareholder Meeting on 29 May 2009). On the basis of the authorisation granted by the General Shareholder Meeting on 11 June 2010,

a total of 220,801 own shares (of which 16,092 shares were acquired in 2010 and 188,139 in 2011). Of the total of 441,937 own shares acquired, 431,937 were withdrawn in connection with the

agreed capital reduction in April 2012. On the basis of the authorisation granted by the General Shareholder Meeting on 25 May 2012,

a total of 143,214 own shares.#

These repurchased shares amount to a total of EUR 153,214 or 2.6% of equity capital.

Share repurchases in 2012 based on the General Shareholder Meeting of 11 June 2010

Date Repurchased shares (units)

Share of equity capital (in %)

Average price Total market price (in EUR)

Cumulative no. of shares

Cumulative share of equity capital

Jan 12 0 0.00 0.00 0.00 0 0.00%

Feb 12 13,570 0.21 12.87 174,587.05 13,570 0.21%

Mar 12 3,000 0.05 13.00 39,000.00 16,570 0.26%

Notes to the Consolidated Financial Statements - Notes to the Balance Sheet Notes to the Consolidated Financial Statements - Notes to the Balance Sheet

50 51

Share repurchases in 2012 based on the General Shareholder Meeting of 25 May 2012

Date Repurchased shares (units)

Share of equity capital (in %)

Average price Total market price (in EUR)

Cumulative no. of shares

Cumulative share of equity capital

Jun 12 26,365 0.44 12.33 324,993.45 26,365 0.44%

Jul 12 24,867 0.42 11.31 281,146.30 51,232 0.86%

Aug 12 37,100 0.62 11.32 419,955.86 88,332 1.48%

Oct 12 9,750 0.16 12.27 119,669.55 98,082 1.64%

Dec 12 45,132 0.76 12.33 556,465.41 143,214 2.40%

b) Authorised capital

Authorised capital (2008/I)

By resolution of the General Shareholder Meeting of 20 June 2008, the Executive Board is authorised (subject to Supervisory Board approval) to increase equity capital by up to EUR 2,094,750.00 through one or more issues of shares (Authorised Capital 2008/I) in return for cash and/or in-kind contributions at any time until 19 June 2013.

Theshareholders’subscriptionrightsmaybesuspendedinsofarasanyofthefollowingapply:

Theissuepriceisnotsignificantlybelowtheconcurrentlydeterminedstock-exchangepriceof the shares, and the equity increase resulting from cash contributions does not exceed 10% of equity capital. Equity capital is to be increased by in-kind contributions for acquisition of companies. Suspensionoftheshareholders’subscriptionrightsisrequiredinordertoexerciseconvertible bondrights,convertibleprofit-sharingrightsoroptions. Suspensionofshareholders’subscriptionrightsisrequiredtosmoothfractionalamounts.

Authorised capital (2012/I)

The Executive Board was authorised by resolution of the General Shareholder Meeting of 25 May 2012 (subject to Supervisory Board approval) to increase equity capital by up to EUR 886,531 through one or more issues of up to 886,531 new no-par bearer shares in return for cash or in-kind contributions, up to 24 May 2017 (Authorised Capital 2012).

Theshareholders’subscriptionrightsmaybesuspendedinsofarasanyofthefollowingapply:

The issuepriceof thenewsharesdoesnot fallsignificantlybelowthestockmarketpriceof Company shares on the date on which the issue price is determined and the equity increase resulting from cash contributions does not exceed 10% of equity capital, either on the date on which this authorisation comes into effect or on the date on which it is exercised. Shares that have been or are to be issued in order to service bonds with warrants or convertible bonds shall count towards these shares if the bonds have been issued pursuant to § 186 Para. 3 Sent. 4 AktG, with suspension of subscription rights. Furthermore, the sale of own shares shall count towards the limit of 10% of equity capital if the sale takes place on the basis of an authorisation to sell own shares with suspension of subscription rights that is valid at the time the authorised capitalcomesintoeffect; If the equity capital is to be increased by means of a capital increase in exchange for contribu-

tions in kind, for the purpose of acquiring companies, parts of companies or shareholdings in companies in exchange for the transfer of shares in the Company, provided that this is in the Company’sbestinterests;

Ifitisnecessaryinordertograntholdersofconvertiblebonds,convertibleprofit-sharingrights and options issued by the Company a subscription right for new shares to the same extent to which they would be entitled after exercising their conversion option or option right, to protect againstdilution;or

Suspensionofshareholders’subscriptionrightsisrequiredtosmoothfractionalamounts.

c) Contingent capital

Contingent Capital 2006/I – convertible bonds for members of the Supervisory Board

At the recommendation of the Executive Board and Supervisory Board, the General Shareholder Mee-tingof5September2006agreed toacontingent increase in theCompany‘sequitycapitalofup toEUR 49,500.00 through the issue of up to 49,500 no-par bearer shares (Contingent Capital 2006/I). This contingent capital increase was to be implemented only insofar as the associated convertible bonds were issued and the embedded options to convert said bonds to no-par shares were exercised. The shareholders‘statutorysubscriptionrightsweredisapplied.

In December 2006, convertible bonds in the amount of EUR 49,500.00 were issued to the members of theCompany‘sSupervisoryBoardataminimumissueamountofEUR0.33perbondandacalculatednominal value of EUR 1.00 per bond. The members of the Supervisory Board exercised their subscrip-tionrightsfullyandallconvertiblebondswereofficiallyissuedasat31December2006inaccordancewith the conversion conditions set forth on that date. As per said conditions, the conversion price was set at EUR 21.70 per bond.

Each convertible bond contained an embedded option allowing its conversion into a single individual shareintheCompany.Theconvertiblebondsmaturedafterfiveyearson31December2011.Noneofthe Supervisory Board members exercised their conversion rights. The cancellation of Contingent Capital 2006/I has not yet been entered in the commercial register.

2. Capital reserve

As at the reporting date, the capital reserve amounted to EUR 9,037,437.00. The capital reserve was increased by EUR 431,937.00 in accordance with § 237 Para. 5 AktG in the reporting year.

3. Reserve due to own shares

Inordernottoincreasethedistributablebalancesheetprofitwithrespecttoownsharesandinorderto make due provision for creditor protection, a new “reserve due to own shares” was formed in the reporting year.

The “reserve due to own shares” changed as follows during the reporting year:

(in EUR thousands)

Reserve due to own shares as of 31 December 2011 425

Inclusion of own shares acquired in prior years, pursuant to BilMoG (stated at nominal value) 143

Formation of a „reserve due to own shares“ for own shares acquired during the current fiscal year (stated at nominal value) -415

Reserve due to own shares as of 31 December 2012 153

Notes to the Consolidated Financial Statements - Notes to the Balance Sheet Notes to the Consolidated Financial Statements - Notes to the Balance Sheet

52 53

Variance arising from capital consolidation

The credit variance from capital consolidation (negative goodwill) shown as at the reporting date will be reversed in income in subsequent years in accordance with its origin.

Inthe2011and2012financialyears,thisitemchangedasfollows:

2012 2011

Increase Reversal Decon-solidation

Bookvalue Increase Reversal Decon-solidation

Bookvalue

19,894 50,866 0 31,607 0 17,319 10,403 62,579 A credit variance from capital consolidation (negative goodwill) arises when a company is acquired at a price below the book value of its equity capital (as per the balance sheet). The credit variance (negative goodwill) is reversed in the Consolidated Group Annual Report and applied towards income in accor-dance with the progress of restructuring and rehabilitation of the investee company, insofar as additional other expenses or losses are still expected.

Insofar as the negative goodwill is not associated with expected future expenses or losses, it is reversed in income as follows:

a) The portion of the negative goodwill that does not exceed the current market value of the acquired non-monetary assets of the investee company is recognised in regular instalments based on the (weighted) average remaining useful life of the depreciable assets acquired.

b) The portion of the negative goodwill that exceeds the current market value of the acquired non-monetary assets of the investee company is recognised as income at the time of initial consolidation.

ThereversalofnegativegoodwillisreflectedintheConsolidatedGroupProfit&LossStatementunder“other operating income”.

The increases in negative goodwill resulted mainly from initial consolidations.

Provisions

(in EUR thousands) 31.12.2012 31.12.2011

Pension provisions 59,788 56,143

Tax provisions 5,103 6,829

Other provisions 35,372 35,476

100,263 98,448

Pension provisions

As at the reporting date, the amount needed to cover pension obligations amounted to EUR 59,788,000 (prior year: EUR 56,143,000).

Other provisions

Other provisions consisted mainly of personnel-related obligations (EUR 22,381,000), litigation risks (EUR 1,701,000), outstanding invoices (EUR 4,530,000), warranty obligations (EUR 1,623,000), main-tenance foregone (EUR 80,000) as well as restructuring measures (EUR 320,000).

Liabilities

(in EUR thousands) 31.12.2012 31.12.2011

Liabilities to banks 30,909 42,485

Advance payments received for orders 12,744 8,910

Trade liabilities 71,172 61,130

Other liabilities 23,487 18,928

138,312 131,453

The term structure of liabilities is summarised below:

31.12.2012 (in EUR thousands) < 1 year 1-5 years > 5 years Total

Liabilities to banks 26,987 1,801 2,121 30,909

Advance payments received for orders 12,061 683 0 12,744

Trade liabilities 66,210 4,962 0 71,172

Other liabilities 19,203 4,010 274 23,487

124,461 11,456 2,395 138,312

Liens on real property in the aggregate amount of EUR 5.0 million were granted to various secured third parties. These served mainly as sureties for loans and lines of credit, which, however, had not been tapped as at the reporting date.

31.12.2011 (in EUR thousands) < 1 year 1-5 years > 5 years Total

Verbindlichkeiten gegenüber Kreditinstituten 34,962 5,268 2,255 42,485

Erhaltene Anzahlungen auf Bestellungen 8,910 0 0 8,910

Verbindlichkeiten aus Lieferungen und Leistungen 61,128 2 0 61,130

Sonstige Verbindlichkeiten 18,477 27 424 18,928

123,477 5,297 2,679 131,453

Deferred tax liabilities

Deferred tax liabilities are reported at the consolidated Group level based on a tax rate of 30%. The respectivedeferredtaxliabilitiesoftheCompany‘ssubsidiarieswerecalculatedbasedonthetaxrateexpected to apply in each case. Deferred tax liabilities result mainly from variances arising from the valuation of inventories and tangible assets for tax purposes.

Differences arise here mainly at GRISET and within the TriStone Group.

Notes to the Consolidated Financial Statements - Notes to the Balance Sheet Notes to the Consolidated Financial Statements - Notes to the Balance Sheet

54 55

Contingencies and commitments

Perpetual guarantee in favour of Banco Bilbao

Under an agreement dated 15 December 2009, BAVARIA Industriekapital AG assumed a perpetual guarantee in favour of Banco Bilbao Vizcaya Agentaria S.A., Huesca, Spain, to cover the obligations of Inasa Foil Sabiñánigo S.L., Sabiñánigo, Huesca, Spain, up to a maximum amount of EUR 174,000.

Perpetual guarantee in favour of Commerzbank

Under an agreement dated 1 January 2011, BAVARIA Industriekapital AG assumed a perpetual, directly enforceable guarantee in favour of Commerzbank (formerly Dresdner Bank) to cover the obligations of R+E Automationstechnik GmbH in connection with a credit facility for EUR 300,000.

Perpetual guarantee in favour of CIC (Credit Industriel et Commercial)

Under an agreement dated 7 July 2011, BAVARIA Industriekapital AG pledged a bank account with a credit balance of EUR 350,000 in favour of Credit Industriel et Commercial S.A., Paris, France, in order to secure the obligations of tech-Form S.A.S. arising out of a loan agreement with CIC.

Perpetual guarantee in favour of CA (Credit Agricole Nord de France)

Under an agreement dated 7 July 2011, BAVARIA Industriekapital AG pledged an additional bank ac-count with a credit balance of EUR 150,000 in favour of Credit Agricole Nord de France, Cedex, France, in order to secure all obligations of tech-Form S.A.S. arising out of a loan agreement with CA in connec-tionwiththefinancingofatech-FormS.A.S.project.

Perpetual guarantee in favour of CIC Lyonnaise de Banque

Under agreements dated 14 June 2011, BAVARIA Industriekapital AG granted CIC Lyonnaise de Ban-que, Valence, France, a perpetual guarantee covering the obligations of SwissTex France S.A.S., Valence, France, up to a maximum amount of EUR 2,500,000. Of this sum, EUR 1,442,000 was utilised in 2012. The remaining claim under the guarantee expired in 2012 due to the payment of the amount that was utilised.

Perpetual guarantee in favour of BNP Paribas Arc Alpin Entreprises

Under agreements dated 14 June 2011, BAVARIA Industriekapital AG granted BNP Paribas Arc Al-pin Entreprises, Montbonnot, France, an additional perpetual guarantee to cover the obligations of SwissTex France S.A.S., Valence, France, up to a maximum amount of EUR 2,500,000. A payment of EUR 716,000 from this was ordered in a court judgment in 2012. The remaining claim under the guaran-tee expired in 2012 due to the payment of the amount that was utilised.

Limited temporary guarantee in favour of RLB Oberösterreich AG

BAVARIA Industriekapital AG has granted a temporary guarantee until 30 April 2013 in the amount of EUR300,000tosecureafinancinglineunderafactoringagreementconcludedbetweenRaiffeisenlan-desbank Oberösterreich AG and Austria Druckguss GmbH & Co. KG. The guarantee is limited to the extent that BAVARIA Industriekapital AG acts as a guarantor only for defaults on assigned receivables from two customers.

Contingencies and commitments of investee companies

As well as the above contingencies and commitments of BAVARIA Industriekapital AG, there are also contingencies and commitments at the level of Group companies. The TriStone Group provided guaran-tees of EUR 31,200 for its energy supply as at 31 December 2012.

Letter of comfort provided by Kienle + Spiess GmbH to subsidiaries

Kienle + Spiess GmbH issued letters of comfort to its subsidiaries on 31 December 2012.

BAVARIA Industriekapital AG enters into obligations and commitments only after a careful evaluation of risks and generally only in connection with its own business operations and/or the operations of its affiliatesandinvesteecompanies.Onthebasisofanongoingevaluationoftheriskspertainingtotheguarantees and commitments undertaken, and after duly allowing for all information available as of this writing, BAVARIA Industriekapital AG is currently working on the assumption that the obligations under-lying theaforesaidguaranteesandcommitmentscanbeproperly fulfilledby therespectiveprincipaldebtors. BAVARIA Industriekapital AG thus considers that there is only a low probability that an adverse claim will be made in connection with any of the aforesaid guarantees and commitments.

Financial obligations

Totalfinancialobligationsarisingfrompurchasecommitmentsandlong-termrental/leasingagreementswithfixeddurationsamountedtoEUR17,942,000(prioryear:EUR17,102,000).

Thetermstructureofthesefinancialobligationscanbesummarisedasfollows:

(in EUR thousands) 31.12.2012 31.12.2011

Term

< 1 year 13,108 14,062

1-5 years 4,097 2,159

> 5 years 737 881

Total 17,942 17,102

EUR11,816,000ofthesefinancialobligationsisattributabletopurchasecommitmentsarisingfromtheorder backlogs of Group companies (prior year: EUR 13,658,000).

Purchase price clauses in company purchase agreements may give rise to payment obligations totalling uptoEUR10,000,000inthenextfiveyears,dependingonwhethercertainfinancialkeyfiguresareachieved.

Other sureties

Warranty and down-payment guarantees were issued in an aggregate amount of EUR 9,657,000 (prior year: EUR 30,926,000).

Notes to the Consolidated Financial Statements - Notes to the Balance Sheet Notes to the Consolidated Financial Statements - Notes to the Balance Sheet

56 57

Auditors‘fees

During the reporting year, the following fees were paid to public auditors for audits, consultations and other services:

2012

Total domestic Of which:Group auditors

(in EUR thousands)

Fee for audit of the 2012 financial statements 842 129

Fee for other audits in 2012 107 15

Fee for tax consulting in 2012 174 0

Fee for other auditor servises in 2012 676 0

Total 1,799 144

2011

Total domestic Of which:Group auditors

(in EUR thousands)

Fee for audit of the 2011 financial statements 162 126

Fee for other audits in 2011 0 13

Fee for tax consulting in 2011 92 0

Fee for other auditor servises in 2011 7 0

Total 261 139

Transactions not appearing on the balance sheet

Factoring

Sevensubsidiaries in theBAVARIAGroupusefactoringasafinancingtool.Thetotalscopeofsuchfactoring amounts to roughly EUR 85 million. Some of these factoring agreements involve real open factoring, whereby the factoring partner assumes the entire default risk, but thereby excludes certain customers, avoids cumulative risks by means of quotas, and assumes receivables on a pro-rata basis only. The other agreements involve “unreal factoring”, whereby the default risk continues to be borne by the customer. However, the associated default risk for BAVARIA remains limited because factoring is used mainly by our investee companies in the automotive industry.

Theobjectiveandbenefitoffactoringistobringaboutimprovementintheliquidityandriskpositionofthe company in question. On the negative side, the costs associated with factoring must be charged against revenues. Another potential disadvantage is the disclosure of receivable sell-offs in the context ofopenfactoring,sincecustomersgenerallysettletheirliabilitiesdirectlywiththefactoringfirm.

Sale-and-leaseback transactions

ThreesubsidiariesoftheBAVARIAGroupusesale-and-leasebacktransactionsasafinancingtool.

Long-term lease agreements are in place for one building, IT equipment, software and production faci-lities.Theresultingtotalobligationisincludedin“otherfinancialobligations”,insofarasithasnotother-wise been taken into account on the balance sheet.

Theobjectiveandbenefitofsale-and-leaseback transactions is theprocurementof liquid funds, i.e.positivecashflowsforthecompanyinquestion.Theassociatedrisksmainlyinvolvetheleasinginstal-ments that the company commits to paying.

Financial derivatives not reported at market value

In thecourseof theirworldwidebusiness, investmentandfinancingactivities, thecompaniesof theBAVARIAGrouparespecificallyexposedtorisks fromfluctuatingexchangerates, interest ratesandcommodityprices.Theseriskscanbehedgedand/oreliminatedbymeansoffinancialderivatives. Inordertohedgeagainstrisksarisingfromfluctuationsinthevalueofassets,liabilities,pendingbusi-ness and anticipated transactions denominated in foreign currencies, the companies of the BAVARIA Groupmakeuseoffinancialderivatives,albeittoarestrictedextent.Thefinancialinstrumentsemployedconsist mainly of forward transactions.

The existing portfolio of financial derivatives is being held exclusively for hedging purposes.As at31 December 2012, one Group company held currency forwards in the amount of EUR 1.8 million and currency options with a nominal value of EUR 11,000 maturing in 2014. The market value of the forward transactions was positive at EUR 46,800 based on changes in the forward exchange rates.

Notes to the Consolidated Financial Statements - Notes to the Balance Sheet Notes to the Consolidated Financial Statements - Notes to the Balance Sheet

58 59

VII. NotestotheConsolidatedProfit&LossStatementSales revenues

Turnover from the initial consolidation and deconsolidation of companies is only recognised on a pro-ra-ta basis (starting with the initial consolidation date and/or ending on the deconsolidation date).

The sales revenues of the BAVARIA Group can be broken down by sales region:

(in EUR thousands) 2012 2011

European Union (except Germany) 371,373 359,777

Germany 234,491 260,180

Europe, other 18,484 23,344

America 19,757 12,931

Asia 38,676 7,352

Africa 1,387 2,400

Other 2,207 83,951

686,375 749,935

Other operating revenues

Other operating revenues can be broken down as follows:

(in EUR thousands) 2012 2011

Gains from the reversal of negative goodwill 50,866 16,997

Gains from currency translations 4,202 10,283

Gains from the reversal fo provisions 3,638 8,296

Gains from value adjustments 240 1,246

Gains from abatement of liabilities 26 -89

Revenues from subsidies 439 551

Gains from insurance reimbursements 87 156

Gains from the disposal of fixed assets 95 -78

Revenues from lease/rental agreements 157 142

Gains from debt consolidation 195 -22

Gains from deconsolidation of shareholdings in affiliated companies 10,055 33,536

Other 3,136 2,905

73,136 73,924

Gains from the reversal of negative goodwill result from the TriStone Group, as a future loss is no longer anticipated, and from regular reversal of negative goodwill in accordance with the progress of ongoing restructuring at the remaining investee companies.

Materials expense

In the 2012 financial year, materials expense amounted to EUR 388,374,000 (prior year:EUR 482,293,000).

Personnel expenses

Personnel expense changed as follows year-on-year:

(in EUR thousands) 2012 2011

Wages and salaries 137,106 144,506

Social contributions and pension costs, of which:EUR 1.342.000 for pensions (prior year: EUR 1.627.000 )

35,688 35,449

172,794 179,955

Depreciation/amortisation

Therewasnounscheduleddepreciation/amortisationduringthefinancialyear.

Other operating expenses

(in EUR thousands) 2012 2011

Packing and freight 14,842 17,909

Repair and maintenance 13,159 13,986

Third-party services, insurance and premiums 7,534 13,048

Losses from currency translation 4,033 11,738

Rentals and leasing 5,135 6,975

IT expence 5,438 5,101

Travel and lodging 3,441 5,244

Administrative costs 4,039 3,760

Costs of temporary personnel 4,908 3,698

Losses from deconsolidation 0 1,944

Comissions 617 4,004

Attorney/notary fees and court costs 3,017 3,111

Miscellaneous personnel costs 3,148 2,119

Management consulting costs 3,603 1,388

Allocations to provisions for litigation risks 1 3,007

Warranties and guarantees 598 3,264

Advertising 635 1,065

value adjustments 4,699 1,825

Bad reseivables 561 638

Losses from debt consolidation 13 35

Miscellaneous 9,409 11,482

88,828 115,340

Other operating expenses totalled EUR 9,409,000 and included operating expenses incurred at the level of individual subsidiaries. These relate, for example, to accounting and auditing costs, personnel recruitment expenses, Supervisory Board and advisory committee compensation, etc.

Notes to the Consolidated Financial Statements - Notes to the Consolidated Profit & Loss Statement Notes to the Consolidated Financial Statements - Notes to the Consolidated Profit & Loss Statement

60 61

Plant Engineering & Construction

The “Plant Engineering & Construction” business segment comprises all companies involved in the constructionandengineeringofplantandmachinery,specifically:

In 2012: Hering, the L&E Group and R+E. In 2011: Hering, the L&E Group, the SwissTex Group (deconsolidated as of

31 December 2011) and R+E.

Business Services

The “Business Services” segment comprises all operating companies that cannot be allocated to any of the above business segments:

In 2012: GRISET, Technology Luminaires, Portalex Aluminio, Inasa Sabiñánigo (deconsolida- ted in the fourth quarter) and INASA Foil (deconsolidated in the fourth quarter). In 2011: Xenterio (deconsolidated in the third quarter), Hunsfos (deconsolidated in the third

quarter), Inasa Sabiñánigo and INASA Foil.

The “Others” segmentmainly consists of theBAVARIAGroup‘s non-operating holdings and interimholdings.

The after-tax surplus for each business segment is reported as the “segment result”. Transactions bet-weenthevarioussegmentsarepricedaccordingtothe“arm‘s-lengthprinciple”.

The following Segment Report was prepared in accordance with German Financial Reporting Guideline DRS 3:

31.12.2012 (in EUR thousands) Serial Production/Automotive

Plant Engineering

& Construction

Business Services

Others Consoli-dation

Group

Sales

with external third parties 467,577 44,784 173,991 4,109 -4,086 686,375

with group companies 0 0 0 -4,086 4,086 0

Profit and Loss Statement

Segment net income 11,552 463 -6,995 -10,284 60,921 55,656

Financial result included therein 4,908 125 2,185 1,490 -427 8,281

Taxes included therein 8,261 226 1,375 1,766 0 11,628

Extraordinary result included therein 646 6 3,629 10 0 4,291

EBIT 25,367 820 194 -7,018 60,494 79,857

depreciation included therein 16,635 435 9,681 101 0 26,851

EBITDA 42,002 1,255 10,619 -6,917 60,494 106,708

other non-cash items (incl. Extraordinary) -2,545 -81 -5,407 413 -60,921 -68,541

Income/loss from holdings in consolidated companies 0 0 0 0 0 0

Balance Sheet

Total assets 243,432 22,386 71,196 40,874 -20,603 357,284

Investments in fixed assets 22,290 462 6,189 2,761 0 31,701

Provision, accruals and liabilities 175,575 16,472 32,306 31,281 -14,376 241,258

Liquid funds (without short term securities) 22,693 2,797 12,249 6,269 0 44,007

Financial liabilities third party 20,490 1,979 8,440 0 0 30,909

Net. liquidity 2,203 818 3,808 6,269 0 13,098

Employees 4,313 252 532 9 0 5,106

Net interest income

(in EUR thousands) 2012 2011

Interest income and similar revenue, of which:from affiliated companies EUR 0 (previous year EUR 13,000)

423 361

Interest expense and similar costs, of which:to affiliated companies EUR 0 (previous year EUR 0)

-8,196 -8,280

-7,773 -7,919

Interest expenses in 2012 were attributable mainly to the TriStone Group and the GRISET Group.

Extraordinary income/expense

Extraordinary income in the amount of EUR 2,982,000 resulted mainly from the difference between the purchase price of receivables acquired in connection with acquisitions and the payments received. Extraordinary expenses in the amount of EUR 7,273,000 mainly included expenses for severance pay-ments at INASA.

Taxesonincome/profits

Incometaxexpensesincludebothtaxespayabledirectlyonincome/profitsaswellasdeferredtaxes.

Prior-period income and expenses

“Other operating revenues” includes EUR 3.9 million (prior year: EUR 9.5 million) in revenues from outside the reporting period. These involve the reversal of provisions as well as changes to value ad-justments.

“Other operating expenses” includes EUR 4.7 million (prior year: EUR 1.8 million) in expenses from outside the reporting period. These relate to value adjustments, mainly at INASA.

VIII. Reporting by Segment

Serial Production/Automotive

The “Serial Production/Automotive” business segment comprises all companies that are active in the se-rialmanufactureofcomponents,orthatareactiveatleastinpart,asautomotivesuppliers,specifically:

In 2012: the K+S Group, tech-FORM, ADG, the TriStone Group, CARBODY and vosla. In 2011: the K+S Group, tech-FORM, ADG and the TriStone Group, the FARAL Group,

whereby the FARAL companies were deconsolidated as of 30 September 2011 and 31 December 2011.

Notes to the Consolidated Financial Statements - Notes to the Consolidated Profit & Loss Statement , Reporting by Segment Notes to the Consolidated Financial Statements - Reporting by Segment

62 63

31.12.2011 (in EUR thousands) Serial Production/Automotive

Plant Engineering &

Construction

Business Services

Others Consoli-dation

Group

Sales

with external third parties 480,628 124,300 145,007 0 0 749,935

with group companies 0 23 0 3,925 -3,948 0

Profit and Loss Statement

Segment net income 2,381 -25,886 -17,052 -576 43,568 2,435

Financial result included therein 5,747 756 1,930 -514 0 7,919

Taxes included therein 6,167 824 302 -492 -5 6,797

Extraordinary result included therein 349 3,874 3,046 3 0 7,271

EBIT 14,644 -20,431 -11,774 -1,579 43,563 24,422

depreciation included therein 17,542 832 3,902 4,454 -4,084 22,646

EBITDA 32,186 -19,599 -7,872 2,785 39,479 47,068

other non-cash items (incl. Extraordinary) -1,761 3,369 -3,752 8,525 -54,521 -48,140

Income/loss from holdings in consolidated companies 0 0 0 13,559 -13,559 0

Balance Sheet

Total assets 225,649 31,128 57,891 23,834 -15,164 323,338

Investments in fixed assets 19,966 1,104 5,211 296 108 26,685

Provision, accruals and liabilities 181,472 17,405 39,218 5,833 -11,810 232,118

Liquid funds (without short term securities) 21,086 3,482 12,168 8,832 0 45,568

Financial liabilities third party 28,483 727 13,257 18 0 42,485

Net. liquidity 7,397 2,755 -1,089 8,814 0 3,083

Employees 3,744 251 292 10 0 4,297

The stated number of employees was valid as at 31 December 2012 and 31 December 2011.

ArrivingattheconsolidatedGroupfigures

2012 segment results

Gains from deconsolidation (EUR 10.1 million) and the reversal of negative goodwill (EUR 50.9 million) were allocated in full to the consolidated column.

Other non-cash items 2012

Non-cash items essentially involved the above gains from deconsolidation and the reversal of negative goodwill. A further EUR 7.3 million was allocated to this segment, mainly due to expenses for severance payments at INASA.

Segment assets and debts in 2012

Receivables and liabilities and the corresponding consolidation entries have been allocated to the seg-ments where possible. In 2012, the assets of the business segments were attributable almost entirely to Germany and the rest of the European Union. For a regional breakdown of assets, please see our notes ontheCompany’sScheduleofFixedAssets.

2011 segment results

The 2011 consolidated column contains the following main items: gains from deconsolidation (EUR 33.1 million), reversal of negative goodwill (EUR 15.6 million), elimination of value adjustments between segments (EUR 7.8 million), elimination of dividend payouts between segments (EUR -13.6 million), as wellasamortisationofgoodwill,insofarasitisnotallocatedtoaspecificsegment(EUR-0.9million).

Depreciation/amortisation/write-downs in 2011

The 2011 consolidated column contains the elimination of write-downs on financial assets(EUR -4.1 million).

Other non-cash items 2011

The 2011 consolidated column includes the following salient non-cash items: reversal of negative good-will (EUR 15.6 million), gains from deconsolidation (EUR 33.1 million) as well as the elimination of value adjustmentsandwrite-downsonfinancial assets (EUR7.9million).Also includedare,amongotherthings, increases and/or reversals of value adjustments as well as provision reversals, insofar as these items arose at the individual company level.

Segment assets and debts in 2011

In terms of segment assets/debts items, the 2011 consolidated column mainly includes the elimination of receivables and liabilities between segments. In 2011, the assets of the business segments were attributable almost entirely to Germany and the rest of the European Union. For a regional breakdown ofassets,pleaseseeournotesontheCompany’sScheduleofFixedAssets.

Notes to the Consolidated Financial Statements - Reporting by Segment Notes to the Consolidated Financial Statements - Reporting by Segment

64 65

IX. Miscellaneous Information

Executive Board and Supervisory Board

Executive Board

Reimar Scholz, Degree in Business Administration (Dipl.-Kfm), Gauting, Germany, Head of Acquisitions (Executive Board Chairman)

Harald Ender, Degrees in Engineering and Business Administration (Dipl.-Ing., Dipl.-Kfm), Landsberg, Germany, Head of Operations (Director Operations)

Insofar as only one Executive Board Member has been appointed, he/she is entitled to act as sole re-presentative of the Company. If more than one have been appointed, any two Executive Board Members may jointly represent the company. Reimar Scholz is entitled to act as sole representative.

Harald Ender is entitled to represent the company in tandem with another Executive Board Member or a fully authorised agent (proxy holder).

The Executive Board members have been released from the restrictions of § 181 of the German Civil Code (BGB).

Supervisory Board

Supervisory Board up to 25 May 2012:

Dr. Matthias Heisse, attorney at law, residing in Munich (Chairman) Dr. Gernot Eisinger, businessman, residing in Munich (Deputy Chairman) Dr. Harald Linné, businessman, residing in Munich.

The following new Supervisory Board was appointed at the General Shareholder Meeting on 25 May 2012:

MrOliverSchmidt,financialinvestor,residinginDüsseldorf(Chairman) Mr Hans-Peter Lindlbauer, attorney at law, residing in Munich (Deputy Chairman) MsWanchingAng,financialinvestor,residinginGauting

Total remuneration of the Supervisory Board and Executive Board as well as former members of these bodies Total remuneration of Supervisory Board Members amounted to EUR 41,000 (prior year: EUR 40,000), of which EUR 15,000 was paid to former Supervisory Board Members (prior year: EUR 0).

Duringthereportingyear,theCompanypaidfeesofEUR9,000(prioryear:EUR0)tothelawfirmljhLindlbauer Rechtsanwälte, of which Mr Lindlbauer is a partner. This occurred in the context of a separa-te consulting agreement pursuant to § 114 of the German Stock Corporation Act (AktG).

During the reporting year, the Company paid fees of EUR 33,000 (prior year: EUR 64,000) to the law firmHeisseKursaweEversheds,ofwhichDrHeisseisapartner.Thisoccurredinthecontextofasepa-rate consulting agreement pursuant to § 114 of the German Stock Corporation Act (AktG).

Total remuneration received by Executive Board Members in 2012 amounted to EUR 812,000 (prior year: EUR 1,144,000).

Employees

The total workforce of the companies included in the scope of consolidation as at 31 December 2012 numbered an average of 5,106 persons during the year (prior year: 4,297 employees).

TheBAVARIAGroup‘sworkforcedevelopedasfollows:

2012 2011

Industrial workers 2,856 2,899

Employees 2,116 1,313

Trainees 134 85

5,106 4,297

Relationshipswithaffiliatedpersons/entities

BAVARIAhascustomarybusinessdealingswithaffiliatedbutnotconsolidatedsubsidiaries.Thetransac-tions with these companies are negligible in scope, arise in the course of normal operations and are performedunderarm‘s-lengthconditions.

Moreover,noneofthecompaniesoftheGrouphasengagedinanysignificantbusinesstransactionswithmembersofBAVARIA‘sExecutiveBoardorSupervisoryBoard,orwithpersonsbelongingtotheirrespective families.

Notes to the Consolidated Financial Statements - Miscellaneous Information Notes to the Consolidated Financial Statements - Miscellaneous Information

66 67

X. Schedule of Shareholdings

All numbers in local currency (1,000s) Currency Share of equityin %

Equity Net income Exchange rate

direct indirect

Group parent company

BAVARIA Industriekapital AG, München 34,481 10,968

Schedule of shareholdings

Executive Consulting AG, Munich (1) EUR 100.00 38 0

Hering Wärmetauscher Holding AG, Munich (1) EUR 75.00 46 -1

Hering AG, Gunzenhausen (2) EUR 71.06 2,130 961

Nevira Vermögensverwaltung AG, Munich (in liquidation)

(4), (6) EUR 78.00 -316 -75

BAVARIA Maschinenbau Holding II AG, Munich (1) EUR 98.75 1,020 947

Langbein & Engelbracht GmbH, Bochum (2) EUR 92.83 6,633 1,033

Langbein & Engelbracht Industrial Eng.&. Co., Shanghai, China (2) CNY 92.83 -6,030 -677 0.11978

Verwaltungsgesellschaft 0906 GmbH, Munich (1) EUR 100.00 47 7

Blitz 05-316 GmbH & Co. KG, Munich (1) EUR 100.00 55 14,291

R+E Automationstechnik GmbH, Fellbach-Schmiden (2) EUR 100.00 56 122

Kienle + Spiess GmbH, Sachsenheim (2) EUR 99.74 19,480 12,807

Kienle + Spiess Hungary Kft, Tokod, Hungary (2) HUF 99.74 2,119 203 0.00343

Wardstorm Ltd., Ellesmere Port, UK (2) GBP 99.74 6,522 -592 1.22196

Sankey Laminations Ltd., Ellesmere Port, UK (2) GBP 99.74 7,520 1,541 1.22196

G.L. Scott & Co. Ltd., Ellesmere Port, UK (2) GBP 99.74 0 0 1.22196

Bavariaring 0906 GmbH, Munich (1) EUR 100.00 87 82

SwissTex Winterthur AG, Winterthur, Switzerland (5), (12) CHF 100.00 2,262 231 0.82799

Bavaria Chemicals GmbH, Munich (1) EUR 75.00 20 -1

Elfotec AG, Mönchaltdorf, Switzerland (in liquidation) (5), (6) CHF 75.00 - - 0.82799

Elfotec Ltd., Annacotty, Ireland (in liquidation) (5), (6) EUR 75.00 - -

baikap Holding 010607 GmbH, Munich (1) EUR 100.00 -876 -8

baikap Holding 020607 GmbH, Gräfelfing (1) EUR 100.00 -8 -3

EMS Holding Bavaria GmbH, Gräfelfing (1) EUR 100.00 -256 -5

Pharma Holding Bavaria GmbH, Munich (1) EUR 100.00 9 -2

Bavaria France Holding SAS , Neuilly sur Seine, France (prev. Fonderies Aluminium de France S.A.S.)

(2) EUR 100.00 2,811 1,019

Fonderie Aluminium de Cléon SAS, Cléon, France (5), (6) EUR 100.00 - -

Fonderie d‘Ingrandes, Neuilly sur Seine, France (prev. Fonderie du Poitou Aluminium S.A.S.)

(2) EUR 100.00 833 -317

Xenterio GmbH, Offenburg (5), (13) EUR 100.00 - -

FARAL S.p.A., Modena, Italy (5), (6) EUR 100.00 - -

K+S Holding GmbH & Co. KG, Munich (1) EUR 94.80 1 664

Kienle + Spiess Logisztikai, Tokod, Hungary (2) (11) HUF 99.74 -135 -77 0.00343

FARAL France SAS, Carmaux, France (5), (6) EUR 100.00 - -

Hunsfos Fabrikker AS, Vennesla, Norway (5), (13) NOK 100.00 - -

Die-Cast Holding Bavaria GmbH, Munich (1) EUR 100.00 33 8

baikap Holding 061108 GmbH, Munich (1) EUR 100.00 21 -1

baikap Holding 070309 GmbH, Munich (1) EUR 100.00 -37 -48

Inasa Foil GmbH (prev. baikap Holding 080309 GmbH), Munich (7), (8) EUR 100.00 13 -9

OSNY Pharma SAS, Osny, France (5), (6) EUR 100.00 - -

OSNY Pharma Holding SAS, Osny, France (5), (6) EUR 100.00 - -

tech-FORM SAS, Auxi-Le-Château, France (2) EUR 100.00 1,593 -86

Austria Druckguss GmbH & Co KG, Gleisdorf, Austria (2) EUR 100.00 -504 -2,182

All numbers in local currency (1,000s) Currency Share of equityin %

Equity Net income Exchange rate

direct indirect

Austria Druckguss GmbH, Gleisdorf, Austria (7) EUR 100.00 20 1

baikap Holding 090709 GmbH, Munich (1) EUR 100.00 21 -1

Bavaria Purchasing Group GmbH (prev. baikap Holding 100709 GmbH), Munich

(1) EUR 100.00 48 1

Inasa Foil Sabiñánigo S.L. (prev. Laminados Sabiñánigo S.L.), Sabiñánigo, Huesca, Spain

(2), (7) EUR 100.00 -2,765 -8,523

INASA Foil S.A., Irurtzun bei Pamplona, Spain (2), (7) EUR 100.00 23 -3

L&E America Environmental Technologies LLC, Kaukauna, Wisconsin, USA

(10)USD 74.26 -113 -79 0.75654

baikap Holding 110510 GmbH, Munich (1) EUR 100.00 -2,270 -46

baikap Holding 120510 GmbH, Munich (1) EUR 100.00 -1,525 -555

SwissTex France SAS, Valence, France (5), (6) EUR 100.00 - -

TriStone Flowtech Holding SAS, Carquefou, France (2) EUR 100.00 -2,154 -600

TriStone Flowtech Slovakia spol Sro, Nová Bana, Slovakia (2) EUR 100.00 4,429 -1,464

TriStone Flowtech Poland Sp zoo, Walbrzych, Poland (2) PLN 100.00 61,109 15,487 0.24517

TriStone Flowtech France SAS,Carquefou, France (2) EUR 100.00 -4,976 -3,623

TriStone Flowtech Czech Republic s.r.o, Hrádek nad Nisou, Czech Republic

(2) CZK 100.00 232 26 0.03978

TriStone Flowtech Istanbul Otomotive SVTLS, Çerkezköy, Turkey (2) TRY 100.00 10,076 4,378 0.42225

TriStone Flowtech Italy SpA, Cirié, Italy (2) EUR 100.00 10,339 900

TriStone Flowtech Germany GmbH, Frankfurt am Main (2) EUR 100.00 283 177

TriStone Flowtech Spain SAU, Tarazona, Spain (2) EUR 100.00 -477 -1,467

TriStone Flowtech Solutions SNC, Carquefou, France (2) EUR 100.00 -1,024 -264

TriStone Flowtech China Ltd. (9) CNY 100.00 - -

TriStone Flowtech Mexico S. de R.L. de C.V. (2) USD 100.00 -13,525 -13,528 0.75654

baikap Holding 130810 GmbH, Munich (1) EUR 100.00 11 -12

baikap Holding 140810 GmbH, Munich (1) EUR 100.00 32 9

baikap Holding 150911 GmbH, Munich (1) EUR 100.00 60 -1

baikap Holding 160911 GmbH, Munich (1) EUR 100.00 23 -1

GRISET SAS (Bavaria France Metals SAS), Villers Saint-Paul, France

(8) EUR 100.00 -50 -90

GRISET Malaysia SDN.BHD, Melaka, Malaysia (3) EUR 100.00 - -

Bavaria Luminaires Holding S.A.S., Nanterre, France

(3) EUR 100.00 - -

Technology Luminaires S.A.S., Nevers Cedex, France (3) EUR 100.00 - -

CARBODY S.A.S., Witry-les-Reims, France (3) EUR 100.00 - -

CARBODY Czech Republic s.r.o., Mlada Boleslav, Czech Republic

(5), (9) CZK 100.00 - - 0.03978

CARBODY Otomotiv Izolasyon Sistemleri Ticaret Limited Sirketi, Istanbul, Turkey

(5), (9) TRY 100.00 - -

CARBODY Deutschland GmbH, Munich (5), (9) EUR 100.00 - -

vosla GmbH, Plauen (3) EUR 100.00 - -

Portalex Aluminio S.A., Cacém, Portugal (3) EUR 100.00 - -

Portalex France S.A.S., Neuilly-sur-Seine, France (5), (9) EUR 100.00 - -

baikap Holding 170812 GmbH, Munich (1) EUR 100.00 23 -2

baikap Holding 180812 GmbH, Munich (1) EUR 100.00 23 -2

(1) Unaudited annual report for 31 Dec 2012 pursuant to German Commercial Code (HGB). (2) Audited annual report for 31 Dec 2011 pursuant to local accounting principles. (3) First consolidation in 2012(4) Audited annual report for 31 Dec 2008 pursuant to German Commercial Code (HGB). (5) Not consolidated pursuant to § 296 of the German Commercial Code (HGB).

(6) Company is in liquidation.(7) Company was deconsolidated as of 31 Dec 2012.(8) Unaudited annual report for 31 Dec 2011 pursuant to local accounting principles.(9) Newlyestablishedin2012;anannualreportisnotyetavailable(10) Unaudited annual report for 31 Dec 2011 pursuant to US-GAAP.(11) Company was merged in 2012. (12) Company is under Swiss debt-restructuring moratorium.(13) Company is in insolvency.

Notes to the Consolidated Financial Statements - Schedule of Shareholdings Notes to the Consolidated Financial Statements - Schedule of Shareholdings

68 69

Audit Opinion of the Statutory AuditorWehaveauditedtheconsolidatedannualfinancialstatementspreparedbyBAVARIAIndustriekapitalAG, Munich, comprising the consolidated balance sheet, consolidated income statement, consolidated cashflowstatement,consolidatedstatementofchangesinshareholders‘equityandthenotestotheconsolidatedannual financial statements, togetherwith theconsolidatedmanagement report for thefinancialyearof1January2012to31December2012.

Thepreparationoftheconsolidatedannualfinancialstatementsandtheconsolidatedmanagementre-port in accordance with the provisions of German commercial law and the supplementary provisions of thearticlesaretheresponsibilityofthecompany’slegalrepresentatives.Ourresponsibilityistoexpressanopinionontheconsolidatedannualfinancialstatementsandtheconsolidatedmanagementreportbased on our audit.

WeconductedourauditoftheconsolidatedannualfinancialstatementsinaccordancewithArticle317HGBandGermangenerallyacceptedstandardsfortheauditoffinancialstatementspromulgatedbythe Institut der Wirtschaftsprüfer (Institute of Public Auditors in Germany, IDW). Those standards require that we plan and perform the audit such that misstatements materially affecting the presentation of the netassets,financialpositionandresultsofoperationsintheconsolidatedannualfinancialstatementsandinaccordancewiththeapplicablefinancialreportingframeworkandintheconsolidatedmanage-ment report are detectedwith reasonable assurance. Knowledge of theGroup’s business activitiesand the economic and legal environment and expectations as to possible misstatements are taken into accountinthedeterminationofauditprocedures.TheeffectivenessoftheGroup’saccounting-relatedinternalcontrolsystemandtheevidencesupportingthedisclosuresintheconsolidatedannualfinancialstatements and consolidated management report are examined primarily on a test basis within the fra-mework of the audit.

Theauditincludesassessingtheannualfinancialstatementsoftheentitiesincludedinconsolidation,the determination of entities to be included in consolidation, the accounting and consolidation principles usedandsignificantestimatesmadebymanagement,aswellasevaluatingtheoverallpresentationoftheconsolidatedannualfinancialstatementsandtheconsolidatedmanagementreport.Webelievethatour audit provides a reasonable basis for our opinion.

Our audit has not led to any reservations.

Inouropinion,basedonfindingsofouraudit,theconsolidatedannualfinancialstatementscomplywiththe relevant legal provisions and the supplementary provisions of the articles and give a true and fair viewoftheGroup‘snetassets,financialpositionandresultsofoperationsinaccordancewithGermanprinciples of adequate and orderly accounting. The consolidated management report is consistent with theconsolidatedannualfinancialstatementsandasawholeprovidesasuitableviewoftheGroup’sposition and suitably presents the opportunities and risks of future development.

Theaboveauditor’sopinionmayonlybeusedinconnectionwithauditreport.Anyuseoutofcontextofourauditreportrequiresouragreementinadvance.Publicationorpropagationoftheannualfinancialstatements and management report in any form other than the audited version (including translation in otherlanguages)requiresouragreementourauditor’sopinionisquotedorifourauditisreferredto.Weparticularly refer to Article 328 HGB.

Munich, 16 April 2013

RP RICHTER GmbH, Wirtschaftsprüfungsgesellschaft

Martin Costa Frank StahlWirtschaftsprüfer [German Public Auditor] Wirtschaftsprüfer[German Public Auditor]

ExternalaffiliationsoftheGroup

BAVARIA is included in the consolidated group annual report of AS Beteiligungen und Vermögensver-waltungsGmbH(formerlyASVermögensverwaltungsGmbH),Gräfelfing,Germany.ThisConsolidatedGroup Annual Report is published in the Electronic Federal Gazette (elektronischer Bundesanzeiger), where it may be inspected online.

Profitdistribution/recommendeddividend

In 2012, the General Shareholder Meeting resolved that BAVARIA would not pay a dividend for the year.

At the upcoming General Shareholder Meeting, the Executive Board and Supervisory Board of BAVARIA Industriekapital AG will recommend that the Company‘s balance sheet profit ofEUR19,475,796.43becarriedforwardinfull,toallowfortheCompany‘sincreasedinvestmentactivities.

Munich, 15 April 2013

Reimar Scholz Harald EnderExecutive Board Chairman Director Operations

Notes to the Consolidated Financial Statements - Schedule of Shareholdings Notes to the Consolidated Financial Statements - Audit Opinion of the Statutory Auditor

70 71

List of Abbreviations

ADG Austria Druckguss GmbH & Co. KG, Gleisdorf, AustriaAktG German Stock Corporation ActBAVARIA BAVARIA Industriekapital AG, MunichBilMoG Accounting Law Modernisation ActCARBODY CARBODY S.A.S., Witry les Reims, FranceDRS German Financial Reporting GuidelinesEGHGB Introductory Act to the German Commercial CodeFARAL France FARAL France S.A.S., Carmaux, FranceFARAL Italy FARAL S.p.A., Modena, ItalyFDI Fonderie d´Ingrandes (prev. FDPA Fonderie du Poitou Aluminium S.A.S.), Ingrandes sur Vienne, FranceGeo L. Scott Geo L. Scott & Co. Ltd., Ellesmere Port, UKGRISET GRISET S.A.S., Villers Saint-Paul, FranceGRISET Malaysia GRISET Malaysia SDN.BHD, Melaka, MalaysiaHering Hering AG, GunzenhausenHGB German Commercial CodeHGB a. F. German Commercial Code former versionHR Commercial Register Hunsfos Hunsfos Fabrikker AS, Vennesla, NorwayIDW Institut der Wirtschaftsprüfer in Germnay e.V., DüsseldorfINASA INASA Foil S.A., Irurtzun, SpainInasa Sabiñánigo Inasa Foil Sabiñánigo S.L. (prev. Laminados Sabiñánigo S.L.), Sabiñánigo, Huesca, SpainKStG German Corporate Tax ActK+S Kienle + Spiess GmbH, SachsenheimK+S Hungary Kienle + Spiess Hungary Ipari kft., Tokod, HungaryK+S Logistik Kienle + Spiess Ungarn Logisztikai, Tokod, HungaryL&E Langbein & Engelbracht GmbH, BochumL&E USA L&E America Environmental Technologies LLC, Kaukauna, Wisconsin, USAL&E Shanghai Langbein & Engelbracht Industrial Eng. & Co., Shanghai, China OSNY Pharma OSNY Pharma S.A.S., Osny, FranceOSNY Holding OSNY Pharma Holding S.A.S., Osny, FrancePortalex Portalex Alumínio S.A., Cacém, PortugalR+E R+E Automationstechnik GmbH, Fellbach-SchmidenSankey Sankey Laminations Ltd., Ellesmere Port, UKSwissTex SwissTex Winterthur AG, Winterthur, SwitzerlandSwissTex France SwissTex France S.A.S., Valence, Francetech-FORM tech-FORM S.A.S., Auxi-le-Château, FranceTechnology Luminaires Technology Luminaires S.A.S., Nevers Cedex, FranceTEUR Thousand EURTriStone Germany TriStone Flowtech Germany GmbH, Frankfurt on the MainTriStone France TriStone Flowtech France S.A.S., Carquefou, FranceTriStone Holding TriStone Flowtech Holding S.A.S., Carquefou, FranceTriStone Italy TriStone Flowtech Italy S.p.A., Cirié, ItalyTriStone Poland TriStone Flowtech Poland Sp. zo. o., Walbrzych, PolandTriStone Slovakia TriStone Flowtech Slovakia spol S.r.o., Nová Bana, SlovakiaTriStone Solution France TriStone Flowtech Solution SNC, Carquefou, FranceTriStone Spain TriStone Flowtech Spain S.A., Tarazona, SpainTriStone Czech Republic TriStone Flowtech Czech Republic s.r.o., Hrádek nad Nisou, Czech RepublicTriStone Turkey TriStone Flowtech Istanbul Otomotiv Sanayi ve Ticaret Limited Sirketi, Cerkezköy, Turkey vosla vosla GmbH, PlauenWardstorm Wardstorm Ltd., Ellesmere Port, UKXenterio Xenterio GmbH, Offenburg

List of Abbreviations

ImprintIssuerBAVARIA Industriekapital AGBavariaring 2480336 Munich

Tel.: +49 (0)89 72 98 967 0Fax: +49 (0)89 72 98 967 10info@baikap.dewww.baikap.de

Editorial BoardBAVARIA Industriekapital AGAlla BorodaenkoManager Consolidationalla.borodaenko@baikap.de

Imprint

ANNUAL REPORT 201210 YEARS

BAVARIA Industriekapital AGBavariaring 2480336 Munich

Tel: +49 (0) 89 7 29 89 67 -0Fax: + 49 (0) 89 7 29 89 67 -10E-Mail: info@baikap.deInternet: www.baikap.de B

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