Risk structure and management The challenge for us is to place a high volume of trend products at an exceptional cost/benefit ratio at a minimum time to market through the right sales channel. Only thus is it possible to achieve sales and earnings growth in what are in part saturated markets specifically during economically difficult times. A high degree of stability on workflow is necessary in order to minimize the associated risks. We have therefore reduced the cost risks and product risks innate in our sales projects to the absolute minimum. The principles taken are as follows: minimization of stock risks by adhering to the build-to-order principle; reliance on a purchasing network now established for almost 20 years; outsourcing of capital-intense links in the value-added chain such as R&D, production, logistics and POS to partner companies; quality assurance through a multi-stage control system; focus on clients with an A-rating and pronounced investments in after-sales activities.
Consistent adherence to these principles has proven its worth in the course of what are now some 10,000 projects.
A risk management system is permanently in place. It consists of a controlling system, ongoing monitoring of internal controls, and an early warning system for risks. In the framework of the controlling process, costs and earnings structures for the individual projects as well as the total overheads are constantly monitored and controlled. Special attention is paid to abiding by the margin and budget targets as defined by the Companys overall planning. We undertake spot examinations and regular tests of our internal control system in areas such as logistics management, order processing, and service in order to guarantee that internal processes are accurately focused and efficient. The early warning system for risks is based on a balanced scorecard model customized to the Companys special needs. The balanced scorecard is based on a risk tally conducted along the entire value-added chain. Management in the individual areas assess the risks to their section each month in terms of a predefined set of variables. These are aggregated, commented and reported to the Management Board. The latter then uses this information to adjust the strategic and operative targets for the individual organizational units.
Given the strong corporate growth and ongoing internationalization, the goal must be to further optimize the process chain and to advance and broaden the organizational structure at the second management level in both qualitative and quantitative terms. We have taken decisive steps in this regard. The IT and Organization division has been strengthened by employing computing experts experienced in this sector and the MEDION Processing Structure (MPS) project has also been initiated. The goal of MPS is an optimized representation of the entire MEDION Group workflow and the key interfaces to partners in the process chain (manufacturing and logistics) by means of a uniform Group-wide integrated standard applications system. Moreover, the management structures in the areas of Sales, Product Management, Purchasing, Logistics Management as well as commercial sections have all been expanded. In our projects, we cooperate with major international retail companies who field large numbers of units at the POS via specially devised sales campaigns. Thanks to this convincing business model, the loyalty of the customer base and confidence among new clients is fostered. For this reason, together with the expansion in sales and ongoing internationalization, we have also expanded our client base. While in business 1997-8 we booked some 95 percent of sales through five key accounts, in 2000 the figure had fallen to some 75 percent, and by 2001 it was at 69 percent.

Customized Quality * We work together with renowned partners and service providers when realizing our projects: the points marked with an asterisk are handled by third parties.
Our principles are: to provide outstanding product quality, to offer optimal cost/benefit ratio, to market trend products for consumer electronics, to conduct sales campaigns no permanent product range, to make a comprehensive service package available for end consumers.
For us, the challenge is always in managing the entire project and not just the product. MEDION is therefore primarily geared to project work and not to individual products. Project workflow and dimensions are always aligned to our clients' needs. The latter are not always identical the world over and we therefore take care to heed regional particularities. In what follows we will report not only on our products, but also on our clients and the regions where we are active.
Our strengths are: our global procurement network, established over the last 20 or so years, experience in successfully handling more than 10,000 projects, a well-founded after-sales structure, price leadership thanks to high procurement and project volume, our presence in 14 European countries, and our flexibility thanks to our flat organization, swift decision-making channels and overheads

600 1,200 1,800

Sales by division in 2001 (in million)

PC/Multimedia

Desktop PCs Scanners Software
Notebooks Printers Monitors/TFT screens
Entertainment & Household Electronics

Televisions Cameras

Video recorders Video cameras
Stereo systems DVD devices

Household appliances

Communications Technology

Telephones Fax machines

Answering machines Satellite equipment
reduced to the key functions.
The market In the past business year worldwide some 128 million PCs were sold, 6.4 million of them in Germany. In 2001, world unit sales for PCs thus shed some 4.6 percent worldwide, whereby they dwindled 7.3 percent in Germany. In 2002, the trend is expected only to turn around slowly. The market in 2001 was stimulated by contrast by the mobile computing segment1). In the German and key European markets, PC density is in the order of 35 to 50 for each 100 members of the population. In South European countries, the spread is in part actually less than 20 PCs per 100 persons and the development potential there is therefore appreciably greater than, say, in the United States, where the density is 65 PCs per 100 persons2). The assumption is that conditions in Germany and the core European markets will correspond to those in the

We expect above-average increases specifically in mobile computing. M-commerce and the mobile Internet access this relies on should in the mid term significantly drive growth for PDAs4) and Notebooks. Consumers are gradually becoming less brand-name conscious. The so-called smart shopper focuses primarily on the relation between price and product quality and less on brand names and image. Thanks to the outstanding cost/benefit ratios of its products, MEDION will profit especially from these trends. Our performance in 2001 already impressively confirms this.
Upgrading computers (in percent)

CD-ROM drive 10 1999

Source: Lebensmittel Zeitung/Allensbach
Soundcard, active speakers Modem
United States by 2005. The experts suggest that by 2005/2006 the number of PCs worldwide should have almost doubled in the figure for the year 20003).

Scanner

CD writer

DVD drive

percent of the population

20 2000

30 2001
) Source: Gartner/BITKOM ) Source: BITKOM ) Source: German Federal Ministry of Economics and Technology ) PDA = Personal Digital Assistant
The Trends In recent years, the PC has increasingly developed from being merely an electronic typewriter to become a core platform for all digital applications relating to multimedia and consumer electronics. This has led to each new generation of computers not only being more powerful than the predecessors but also offering a growing number of features5). Not only did MEDION discern this trend at an early date, but with its mass marketing drives played a strong part in accelerating it. At an early date, we integrated modems for straightforward Internet access as a standard into our appliances. MEDION PCs have always boasted the respectively most powerful standard graphics cards in order to deliver the necessary muscle for the latest generation of games. With our product offerings, we were also trailblazers in the most recent trend in favor of connectivity, i.e., swiftly and simply linking the PC up to a whole raft of entertainment electronics, as well as the worlds of film and photography.

As regards the specialists, we have started to establish a position among the purchasing manager associations. Alongside the ongoing internationalization of our client base, we will in particular expand existing partnerships and alliances.

Regions

The German market of relevance for us has an annual volume of some 20 billion. The overall European market volume comes to about 80 billion. The United States sees average annual spending on multimedia and consumer electronics of about 100 billion.
Europe The European consumer electronics market remains highly attractive. With annual growth rates of 45 percent, the increases in this segment should be considerably higher than the comparable growth of the GDP21). We wish to exploit this market potential. Only four years ago, we booked less than three percent of our sales outside Germany. We then started systematically increasing this section of total sales. First of all, we accompanied our German clients with international operations into the
MEDION Electronics Ltd., United Kingdom

MEDION France S.A.R.L.

MEDION B.V., Netherlands

MEDION U.S.A., Inc.

MEDION Iberia, S.L.

MEDION Italia S.R.L.

MEDION International Far East Ltd., China
LIFETEC International Ltd., China
Sales support and service No operative business
) Source: Dresdner Kleinwort Wasserstein
French and British markets. In the process, we familiarized ourselves with these markets and on the basis of these insights established sales and service structures there. As a second step, we then approached local retail chains and slowly developed business in the form of trial sales campaigns. Today, we are a recognized partner of major French and British retail corporations, who, moreover, have subsidiaries outside their domestic markets and in part we are already delivering to the latter, too. In this way, we have conquered Europe country by country. It has become evident that our business model, tested and honed on the fiercely competitive German retail market can be superbly applied to other European markets as well.
In order to optimize how we work the market, we have since established subsidiaries in five of the European countries. We plan to further expand this operational network outside Germany in the course of 2002. We maintain sales representative offices in various other markets. In business 2001 we marketed MEDION products in a total of 14 European countries. We assume that in financial 2002 MEDION will book about one quarter of sales in European countries other than Germany.

we have given the figures for calendar year 2000 for the income statement as well as the cash flow statement, deriving them from the quarterly financial statements of MEDION AG for 2000. The comparable figures for the prior year for the balance sheet correspond with those in the audited balance sheet as at Dec. 31, 2000, whereby the balance sheet items are presented in the new format stipulated by Deutsche Brse AG. Uniform accounting and valuation principles were applied on the basis of IAS to the assets and liabilities of the companies included in the consolidated annual financial statements. In the process, compared with the annual financial statements of MEDION AG pension accruals have been entered differently, namely in conformity with IAS 19. Deferred taxes have been charged accordingly for the differences in valuation. The consolidated annual financial statements as at Dec. 31, 2001 have been prepared in thousand euros.
Notes to the Consolidated Annual Financial Statements
2. Scope of consolidation The consolidated annual financial statements as at Dec. 31, 2001 include not only the parent company MEDION AG, Essen, but also the following subsidiaries that are fully consolidated according to the acquisition (book value) method:
First inclusion in the ordinary capital Company and registered office 1. MEDION ELECTRONICS LIMITED, Swindon, United Kingdom (MEDION UK) 2. MEDION FRANCE S.A.R.L., Villaines sous Malicorne, France (MEDION France) 3. MEDION USA, Inc., Delaware, USA (MEDION USA) 4. MEDION Iberia, S.L., Barcelona, Spain (MEDION Iberia) 5. MEDION B.V., Panningen, Netherlands (MEDION NL) 20,000.00 100.0 % founded 2001 as at July 1, 2001 5,000.00 100.0 % founded 2001 as at July 1, 2001 US-$ 100,000.00 100.0 % founded 2001 as at April 1, 2001 150,000.00 100.0 % founded 1998 as at July 1, 1999 200,000.00 100.0 % founded 1998 as at July 1, 2000 as at Dec. 31, 2001 Stake Date of acquisition consolidated annual financial statements
These subsidiaries are all companies exclusively providing sales and service back-up for MEDION AG in their respective countries. The subsidiaries are included in the consolidated financial statements on the basis of the audited company annual financial statements for the business year Jan. 1 Dec. 31, 2001, each of which received an unqualified audit opinion. The financial statements of MEDION USA, MEDION Iberia and MEDION NL were included in the consolidated
financial statements for the first time as at Dec. 31, 2001. Since these companies are all newly founded, this did not impact materially on the individual items in the consolidated annual financial statements. The remaining MEDION AG subsidiaries outside Germany were not included in the consolidated annual financial statements owing to their subordinate significance.

At the General Meeting of May 22, 2001 a resolution was also passed to increase the conditional capital of 1,200,000.00 sub-divided into 1,200,000 unit shares to 2,400,000.00 sub-divided into 2,400,000 unit shares. The conditional capital serves solely to grant conversion rights connected with convertible bonds issued as part of the staff participation program. The new shares participate in profits from the beginning of the business year in which they arise owing to conversion rights being
(15) Shareholders equity The capital increase from own funds resolved at the General Meeting of May 22, 2001 was entered in the Commercial register on July 27, 2001 and thus became legally effective. The capital stock of MEDION AG was increased by conversion of a part sum of 24,000,000.00 from the capital reserve and issuance of a corresponding number of new scrip shares on a one-for-one basis to 48,000,000.00. In August 2001, the capital stock was increased by a further 378,400.00 by drawing on part of the conditional capital when exercising conversion rights for the first convertible bond issued to management and key executives in 1999. The capital stock as at Dec. 31, 2001 was thus sub-divided into 48,378,400 unit shares without a par value and with a pro-rated share of the capital stock of 1.00 each. All shares were fully paid up.
exercised. Owing to conversion rights from the convertible bond issued in 1999 being exercised in August 2001 the conditional capital has been reduced by 378,400.00 to 2,021,600.00. The authorized capital remains unchanged at 5,000,000.00. On the basis of the resolution by the General Meeting of Oct. 31, 2000, the Management Board was authorized to on one or several occasions, subject to the approval of the Supervisory Board, increase the capital by issuing ordinary unit bearer shares no longer exclusively against cash contributions but in future also against contributions in kind and for this purpose to exclude shareholders subscription rights. The Board of Management did not make use of this authorization in the year under review here.
Movements in shareholders equity in the current and the past business year were as follows:
Currency Subscribed capital thousand Status as at Jan. 1, 2001 Changes not impacting on earnings Changes in differences arising from currency conversion Increase in shareholders equity owing to bonds being converted Capital increase from own funds Disbursement to the shareholders for the short business year July 1 - Dec. 31, 2000 Allocation to revenue reserves Group distributable profit Status as at Dec. 31, 48,137,34,75,383 -12,000 34,966 70,078 38,0 -12,70,078 298,24,000 4,863 24,0 5,24,000 Capital reserves thousand 156,226 Revenue reserves thousand 40,417 Distributable profit thousand 14,975 conversion differences thousand 11 Total thousand 235,607

In keeping with section 58, para 2 of the Stock Corporation Act, the Management and Supervisory Boards have allocated 50 percent of MEDION AG net income for the 2001 business year to the revenue reserves.
Currency Subscribed capital thousand Status as at Jan. 1, 2000 Changes not impacting on earnings Changes in differences arising from currency conversion Allocation to revenue reserves Impact of changes in the scope of consolidation Disbursement to shareholders for the business year July 1, 1999 - June 30, 2000 Group distributable profit Status as at Dec. 31, 0 24,0 156,0 40,417 16,566 44,084 14,16,566 44,084 235,31,31,0 24,000 Capital reserves thousand 156,226 Revenue reserves thousand 8,921 Distributable profit thousand 18,967 conversion differences thousand 2 Total thousand 208,116
(16) Sales revenues are generated by the following markets: 2. Notes on the Income Statement The income statement has been compiled in keeping with the cost of production method. In the year under review, the Company was active almost exclusively in one field of business, namely in providing services relating to the sale of products from the areas of PC/multimedia, entertainment and household electronics, as well as communications technology. The Companys product groups fundamentally share the same structure in terms of the sequence of processes involved in the value chain as well as the marketing methods and channels. The organizational structure is therefore strongly geared to handling projects. The structures of risks entailed in projects is more or less identical across the different types of products. Given the uniform form of project workflow, the different projects also exhibit more or less the same earnings structures even in international markets. For this reason, the Company does not see its product groups as separate segments in the sense of IAS 14. As a consequence, segment reporting consists solely of sub-dividing sales by geographical spread and by product group. (17) Other operating income stems essentially from commission income, insurance compensation, accruals written back, license income, and exchange-rate differences. Other operating income in the business year also contained earnings from other accounting periods (writebacks of accruals and items for value impairment) of a total 1,277 thousand (prior year: 2,613 thousand).
PC/Multimedia Entertainment & Household Electronics Communications Technology 2001 million 1,49 2,million 1,43 1,626 Reductions in earnings, shortfalls and guarantees 14 2,1,626 Sales in Germany Sales elsewhere in Europe United States 2001 million 1,10 2,million 1,0 1,638
Sales revenues are generated by the following areas:
(18) Cost of materials contains expenses for purchasing and sub-contracted manufacturing of the merchandise sold in our projects in the areas of multimedia, entertainment and household electronics as well as communications technology, including ancillary purchasing costs. The gross profit margin is 10.3 percent and thus slightly better than in the prior year. (19) Other operating expenses can be sub-divided as follows:

Sales expenses essentially reflect the costs of marketing, commission, outward freight, and packaging as well as other ancillary sales costs. Administrative expenses include costs for consultancy, auditing, communications, ancillary payment transaction costs and other general admin. costs. Operating expenses relate to expenses for rental, repairs and operative requirements. Other expenses include mainly costs for value impairment and compensation for damages. The increase in provisions for guarantees can be
2001 thousand Sales expenses Provisions for guarantees Admin. expenses Operating expenses Other 51,762 17,372 8,637 2,096 1,877 81,744
2000 thousand 36,490 13,561 8,229 1,709 5,795 65,784
attributed to the expansion of business and the general prolongation of the guarantee period. (20) Interest income is made up as follows:
2001 thousand Interest income Interest expense 1,410 5,298 3,888
2000 thousand 1,534 5,149 3,615
Interest income and interest expense are, with the exception of the write-back of a discount of 6 thousand that impacts on expenses, have impacted on payments in the year under review. (21) Taxes on income for the business year consisted of the following:
The following table presents the reconciliation of the tax expenses expected in theory and the actual income tax expense as calculated pursuant to IAS 12.81:
2001 thousand 1. Group income prior to

2000 thousand

2001 thousand MEDION AG Corporation tax incl. solidarity surcharge Trade tax on earnings MEDION UK MEDION France MEDION USA Deferred taxes Income 35 47,315 24,944 22,66 15
income taxes 2. Applicable theoretical tax rate in percent 3. Theoretical tax charge

117,451

87,518

40.36 47,403

49.65 43,453

26.586 16,48 0

4. Differences to foreign and deferred taxes 5. Tax impact of non-deductible operating expenses 6. Actual income tax expense 7. Actual income tax rate in percent 29 47,315 40.43,354 49.129

31 43,354

The uniform theoretical income tax rate of 40.36 percent for 2001 is made up of the trade tax bill of 19 percent,
Owing to the fact that German corporation tax rates have fallen as part of the reform of the German tax system, the tax expenses has risen at a slower rate than the growth in earnings. The tax rate has fallen from 49.54 percent the prior year to 40.29 percent.
the corporation tax levy of 25 percent and the solidarity surcharge of 5.5 percent. In 2000, the split corporation tax rate of 40 percent for re-invested earnings and of 30 percent on disbursed profits applied. On the basis of the Management Boards proposed allocation of the profits a uniform theoretical income tax rate of 49.65 percent arose for MEDION AG in the prior year.
III. Supplementary information
in terms of maturity and size essentially mirrors the underlying purchase transaction. For short-term adjustments

Capital reserves thousand 156,226
Revenue reserves thousand 40,417
Distributable profit thousand 14,955 Total thousand 235,598

4,863 24,000

5,241 0

0 137,089

0 34,75,383
12,000 34,966 69,932 37,921

12,69,932 298,771

The allocation to the revenue reserves is undertaken on the basis of the allocation of the distributable profit by the Management Board of MEDION AG and totals one half of the net income for the 2001 business year.
Pension accruals cover pension commitments to management Board members. They are calculated by actuarial methods assuming an interest rate of six percent. In the past business year a total of 96 thousand was allocated to the pension accruals. No withdrawals or write-backs were made.
Tax accruals are composed as follows: The accrual for guarantees was set up to cover expected
Dec. 31, 2001 thousand Corporation tax incl. solidarity surcharge Trade tax 4,571 7,403 11,974 6,823 5,541 12,364 Dec. 31, 2000 thousand
rectification of faults and credits in line with a lump-sum calculation method depending on the sales made under guarantees. The percentage rates chosen depend on the respective product group. Use of the accrual is made according to specific lump-sum rates based on experience across the respective guarantee period granted (12 to 24 months). The increase in the accrual is attributable to
As at Dec. 31, 2001 MEDION AG held a corporation tax deductible credit not carried on the balance sheet in line with section 37 para. 1 Corporation Tax Act of 6,987 thousand; in the case of future dividend disbursements one sixth of the sum respectively disbursed can be set off against the corporation tax for that year in which the disbursement is distributed. Other accruals take into account all discernible risks and uncertain liabilities. The size of the accruals conforms with expectations in line with commercial circumspection. They have the following composition:

the prolongation of the guarantee period and the expansion of business. All accruals are of a current nature. Since these guarantees are made in the framework of ordinary operative activities, even the portion attributable to a period of more than 12 months shall be considered current.
Dec. 31, 2001 thousand Accruals for guarantees Outstanding purchasing invoices Insurance premiums Remaining holiday entitlements and special one-time payments Other accruals 542 1,049 63,658 42,829 18,031 1,207
Dec. 31, 2000 thousand 34,543 9,557 869

445 1,029 46,443

Liabilities are posted at the amounts actually repayable. The composition, maturities, and collateralization are presented in the following table:
Status as at Dec. 31, 2001 thousand Bonds Liabilities due to banks Trade accounts payable Liabilities due to affiliated companies Other liabilities of which for taxes: of which in the framework of social securitiy agreements: (304) 243,49,204 (48,745) 438 2,974 189,957
of which with a remaining term of up to 1 year thousand 0 1,721 189,years thousand 0 over 5 years thousand 0
Sums collateralized thousand 0 1,4711) 0 2)
Status as at Dec. 31, 2000 thousand 369 11,863 145,593

889 49,204 (48,745)

618 31,137 (30,555)

(304) 241,771

(0) 1,335

(0) 356

(0) 1,471

(418) 189,580

Of which 1,471 thousand secured by liens. The usual retention of title pertains for deliveries of raw materials, auxiliaries and operating materials as well as semi-finished goods and merchandise.
Bonds comprise two convertible bonds totaling 438 thousand which were issued to management and executive staff members as part of a staff participation program. The bond issued in April 2000 had a total value of 216,650.00 as at Dec. 31, 2001; it is sub-divided into 216,650 bearer debentures of 1.00 each, all bearing identical rights. The bond bears four percent annual

interest and in the case of the conversion rights not being exercised is to be repaid at the latest on March 31, 2005 at the nominal value. The convertible bond was launched prior to the scrip issue made in connection with the capital increase from own funds and grants the staff members in question the in principle inalienable right to convert each bond of a nominal 1.00 into two shares. The conversion right can first be exercised on the second
bank trading day after publication of the half-year financial statements for business 2002. The conversion rights expire if notice is given or the employment relationship terminated and the bond shall in this case be repaid in advance of expiry. The conversion price to be paid by staff members when exercising the conversion right shall be aligned to the price of the MEDION equity at the beginning of the exercise period and the performance of the MEDION equity in relation to the MDAX index. In July 2001 a second convertible bond of 221,600.00 was issued to management and key executives. The bond with a nominal value of 1.00 can be converted into two shares, whereby the right can first be exercised on the second bank trading day after publication of the report for the first nine months of 2003. Otherwise the conditions for the convertible bond are analogous to those for the first such bond issued. Since the conversion price and thus the additional payment by staff was not known on Dec. 31, 2001, a reserve has been established pursuant to section 218 sentence 2 Stock Corporation Act of a total of 438,250.00. The conversion rights from the convertible bond floated in business 1999 of a total nominal value originally of 132,425.00 were, to the extent that they were not paid back owing to prior withdrawal from the Company of the staff member holding them, completely exercised in August 2001 by issuing 378,400 new shares.
2. Notes on the Income Statement The income statement has been compiled in keeping with the cost of production method. In the year under review, the Company was active almost exclusively in one field of business, namely in providing services relating to the sale of products from the areas of PC/multimedia, entertainment and household electronics, as well as communications technology. The Company's product and client groups fundamentally share the same structure in terms of the sequence of processes involved in the value chain as well as the marketing methods and channels. The organizational structure is therefore strongly geared to handling projects. The structures of risks entailed in projects is more or less identical across the different types of products. Given the uniform form of project workflow, the different projects also exhibit more or less the same earnings structures even in international markets. For this reason, the Company does not see its product groups as separate segments in the sense of IAS 14. As a consequence, segment reporting consists solely of sub-dividing sales by geographical spread and by product group.

In the year under review, the members of the Supervisory Board received compensation for their work totaling 45,500.00 (July 1 Dec. 31, 2000: 45,500.00). No payments were made to cover expenses in the business year under review. As at Dec. 31, 2001, the members of the Supervisory Board held 8,700 shares, as against 5,600 shares at Dec. 31, 2000 prior to the issue of the scrip shares = 11,200.
7. Proposal by the Board of Management on the allocation of distributable profits for the year The Management and Supervisory Boards of MEDION AG
propose the following allocation of distributable profits: Payment of a dividend of 0.50 per share. The remaining distributable profit shall be carried forward in the revenue reserves.
1. Disbursement to shareholders 2. Allocation to revenue reserves 3. Profit brought forward 4. Distributable profit 24,189,200.00 13,731,779.43 0.00 37,920,979.43
We have duly audited MEDION AG's annual financial statements, including the accounts and the management report for the financial year Jan. 1 Dec. 31, 2001. It is the responsibility of the Board of Management of MEDION AG to draw up the accounts and prepare the annual financial statements and the management report in accordance with the regulations laid out in German commercial law and the supplementary regulations in the Company's statutes. It is our task to provide an opinion on the annual financial statements, the accounts and the management report on the basis of our examination. We have examined the annual financial statements in keeping with section 317 of the German Commercial Code and the principles for due auditing put forward by the Institut der Wirtschaftsprfer in Deutschland e.V. (IDW). The above stipulate that the examination shall be planned and conducted in order to detect fundamental faults and inaccuracies such as would impact substantively on the picture of the Companys assets, financial and earnings position as presented in the management report and in the annual financial statements taking into account the principles of due accounting. When deciding on the audit actions to be taken, a knowledge of the business as well as the economic and legal framework in which the Company operates as well as expected possible faults are borne in mind. As part of the examination, the efficacy of internal controlling as well as documentary proof of the information contained in the
accounts, the annual financial statements and the management report are scrutinized on the basis of random checks. The audit includes an evaluation of the accounting principles applied and the fundamental judgments made by Company management as well as an assessment of the overall presentation of the annual financial statements and the management report. We are of the opinion that our examination provides a sufficiently sound basis for our subsequent evaluation. Our examination led to no objections. In our conviction, in accordance with the principles of due accounting the annual financial statements provide a true and fair view of the assets, financial position and earnings of the Company. The management report gives an accurate impression of the overall position of the Company and fairly presents the risks involved in future developments.