Reliability in Innovation - Kontron

1 Reliability in Innovation 2012 Kontron Group Annual Report in fi guresSales Growth 2001 - 2012in Mio. EUR20122011 Results of operations and profi tability dataRevenuesMio. (adjusted for special items)4 Mio. (adjusted for special items)4% incomeMio. per sheetBalance sheet totalMio. ratio% debtMio. FlowCash fl ow from operating activitiesMio. of personnel (December, 31)2,2083,057 Revenues per employeeEUR247,715192,8591 EBITDA is defined as EBIT before depreciation and The margins pertain to revenues EBIT is defined as earnings before financial income and The special items in 2011 comprise non-recurrent costs in connection with the disposal of production capacities in Malaysia.

2 The special items in 2012 include in particular write-downs of goodwill, invento-ries, SAP software and development projects capitalized as well as restructuring costs, severance pay-ments and consultancy fees in connection with "Shape". More information is available on page GROUP ANNUAL REPORT TO THE SHAREHOLDERS GROUP MANAGEMENT REPORT FINANCIAL STATEMENT FURTHER INFORMATIONF inancial Calendar for 2013 ImprintContactInvestor RelationsGaby MoldanTel.: + 49 (0) 8165 / 77 212 Fax: + 49 (0) 8165 / 77 AGOskar-von-Miller-Str. 185386 Eching/M nchenGermanyTel.: + 49 (0) 8165 / 77 0 Fax: + 49 (0) 8165 / 77 Concept and EditingBetter Orange IR & HV AG, M and ProductionWerbung & Media Huber, onFSC-certifi ed images, fotolia, gettyimages , istockphoto , thinkstock Arrow Electronics EmbeddedBombardier TransportationHeidelberger Druckmaschinen AGIntel Kodiak NetworksKontron AGLeica Biosystems GmbHRow 44 Skidata AGSoci t R gionale Wallonne du TransportThales Syst me A roport sMarch 21, 2013 Annual Results Press Conference and publication of the annual report 2012 April 24, 2013 Publishing of the Q1/2013 Quarterly ReportJune 05, 2013 Shareholders' General Meeting 2013, FreisingJuly 24.

3 2013 Publishing of Q2/2013 Quarterly ReportOctober 24, 2013 Publishing of Q3/2013 Quarterly ReportWe will publish any changes to dates in good time at You can also use this link to view our annual report and quarterly reports on the respective dates when they are Annual Report was released on March 21, 2013 and is available in German and English. In the event of doubt, the German version shall Annual Report includes forward-looking statements that are based on assumptions and estimates made by the Management Board on future developments. Although we believe that the aforementioned assumptions and estimates are realistic and pertinent, they are subject to certain risks and uncertain-ties that may lead to actual future results deviating signifi cantly from the assumptions and estimates.

4 Factors that may result in deviations include, among other things, changes in the macroeconomic environment or in the business, economic and competitive situation, exchange rate and interest rate fl uctuations and changes in the corporate strategy. We undertake no guarantee that the future develop-ment and actual results achieved in the future will conform to the assumptions and estimates made in this Annual Report. The assumptions and estimates in this report are not annual report was produced on a carbon-neutral basis. CO2 burdens incurred by the production were fully compensated by the support of a climate protection project of natureOffi | DE-248-045933print productionU2 - 027TO THE SHAREHOLDERS4 ContentsReliability in InnovationGROUP MANAGEMENT REPORTTO THE SHAREHOLDERS Business and Economic EnvironmentBusiness situationNon-fi nancial performance Indicators Reports on events subsequent to the balance sheet dateForecast031052074081082 ContentsForeword by the Management BoardInterview with the CEO & CFOThe Kontron Share004006014017 IMPROVING PERFORMANCEGUARANTEEING RELIABILITYDELIVERING FLEXIBILITYBENEFITING FROM VARIETY0080210650685 Kontron GROUP

5 ANNUAL REPORT TO THE SHAREHOLDERS GROUP MANAGEMENT REPORT FINANCIAL STATEMENT FURTHER INFORMATIONFINANCIAL STATEMENTFURTHER INFORMATIONC onsolidated Statement of IncomeConsolidated Statement of Comprehensive IncomeConsolidated Cash Flow StatementConsolidated Statement of Financial PositionShareholders EquityConsolidated Statement of AssetsNotes to the Consolidated Financial StatementsAudit Opinion Responsibility Statement106107108109111113116198 199 Report of the Supervisory BoardGlossaryKontron worldwideAddressesMulti-Year OverviewKontron in fi guresFinancial Calendar Imprint210215218220222U2U3 CREATING SPACEDEVELOPING SOLUTIONSREACHING CUSTOMERSACTING ON SHARED CONCERNS2002040930986 Reliability in innovationWe will continue to apply ourselves to developing innovative solutions for our customers in the future with enthusiasm and elan, and sustainably develop the company.

6 Exciting challenges are awaiting us!Rolf SchwirzChief Executive Offi cer7 Kontron GROUP ANNUAL REPORT TO THE SHAREHOLDERS GROUP MANAGEMENT REPORT FINANCIAL STATEMENT FURTHER INFORMATIONL adies and Gentlemen and our Shareholders,The year 2012 was a diffi cult one for Kontron in a challenging environment. Ongoing discussions about stability in the eurozone and the unresolved debt situation in Europe and in the USA caused uncertainty about the future developments of the economy. Order volumes from the public sector so important for our business and increasingly from industry as well were impacted. This situation is compounded by fi ercer competition.

7 As a result, the revenues mix has changed in comparison with the preceding years, and the gross margin fell by a good 4 %.The development of the key fi gures in the reporting year is fi rst and foremost a refl ection of the continued sound fi nancial basis for the growth of our company in the dynamic market environment for embedded computer technology. At the same time, however, operating performance was unsatisfactory in 2012. Kontron fell far short of its original guidance. What does this mean in fi gures? Revenues stood at EUR million ( %) and earnings before interest and tax (EBIT), includingspecial items of EUR million, posted EUR million.

8 Our starting position for the future is nonetheless very prom-ising. Our equity ratio stands at %, operating cash fl ow of EUR million is clearly in the black, and the net cash position amounts to EUR million. The fi rst measures of our "Shape" optimization program were adopted in 2012. Sharpening our business model, stepping up customer focus and global activities and enhancing the effi ciency of our organization and processes are key objectives. We will be concentrating on strengthening our development competence in selected global business units. This will allow technologies once developed to be used in similar application environments more swiftly and with less outlay.

9 In addi-tion, we plan to reinforce our presence in a number of regional growth markets, in China for example. Here, for instance, we intend to expand the local development capacities we already have as well as to build up special product lines that cater more specifi cally to the needs of customers in this country. In future, we aim to focus on selected areas of value creation, and emphasize our strengths as a solution provider. This is the reason why we disposed of activities in 2012 that were not suited to our core business. These measures included the sale of our production site for standard components in Malaysia at the start of 2012, and the disposal of our AP Parpro aircraft component manufacturing in Mexico in the summer of 2012, as well as of our Czech holding Merz at the end of 2012.

10 The % share price performance downturn in 2012 was just as disappointing us as it was for our shareholders. However, we view the uptrend in the Kontron share price since December 2012 as an indication that we are on the right track with our "Shape" optimization program. Consequently, the year 2013 will be a year of change and transformation during which a newly-focused Kontron will at minimum be returned to the profi t level seen in recent years in the medium term. Challenging tasks for which we are well equipped lie ahead of us. On behalf of the entire Management Board, I would like to thank our business partners and investors for the trust they have placed in us.