Value. Development. Annual Report 2009

Transcription

1 Value. Development. Annual Report 2009

2 Vision Mission Sophisticated customers in Europe and in selected global metropolises see Loewe as the leading premium brand in home entertainment systems. We attract our customers with products whose aesthetic appeal is timeless, with exclusive individuality, sensible technology and easy operation. Brief profile of Loewe AG Outstanding design, innovative technology and superior quality are features of all products sold under the Loewe premium brand. Technological highlights include: home entertainment systems with high-resolution picture quality, an integrated hard disk recorder and a digital TV receiver. The Company was founded in Berlin in Today, Loewe is a listed Group with approximately 1,000 employees. In fiscal 2009, Loewe achieved sales of EUR 324 million and EBIT of EUR 13.5 million. Loewe produces and distributes televisions, Blu-ray players, DVD recorders, audio components as well as multi-room solutions.

3 Key Figures (IFRS) The Loewe Group in Numbers EUR million Sales EBIT Net income/loss Earnings per share (EUR) Dividends per share (EUR) 0.25 * Non-current assets Shareholders equity Net bank liabilities Factoring Capital expenditure Depreciation and amortization Free cash flow Development costs Interest expense, net Number of employees 1,042 1, ,063 1,245 * Proposal to the Annual Shareholders Meeting on May 20, 2010

4 Key Figures

5 Perfection the Measure of all Things.

6

7 Contents Letter to Shareholders 5 Our Company 13 The Loewe Premium Strategy 14 Loewe in the Capital Market 15 Our Responsibility 27 Report of the Supervisory Board of Loewe AG 28 Corporate Governance 32 Corporate Social Responsibility 36 Management Report 43 Economic Situation 44 European Market for LCD TVs 45 Key Performance Indicators 48 Financial Performance 49 Report on Assets and Financial Position 53 Development and Production 61 Number of Employees 62 Opportunities and Risks of Future Development 69 Outlook 76 Consolidated Financial Statements, Notes 83 Consolidated Income Statement 84 Consolidated Balance Sheet 85 Consolidated Cash Flow Statement 86 Statement of Changes in Equity 87 Notes to the Consolidated Financial Statements 88 Corporate Bodies and Offices Held 133 Responsibility Statement 138 Independent Auditor s Report 139 Service 145 Glossary 146 Financial Calendar 147 Publications 148 Contacts 149 Publication Credits 149

8 Gerhard Schaas Engineer, Chief Technology Officer Frieder C. Löhrer Engineer, Chief Executive Officer Oliver Seidl Graduate in business administration, Chief Financial Officer

9 Dear Shareholders, In a demanding fiscal year 2009, your Company has successfully maintained its position in the market and continues to be profitable. Nonetheless, we did not achieve everything that we had planned for the past year. While the development of business was very satisfactory in Germany, our most important market, the persisting difficult economic conditions in parts of Europe in particular severely strained our export business. This applies primarily to our important markets in Spain and the Netherlands. Despite the clearly lower sales and production volume than in 2008 and the ongoing expenses for the premium positioning, Loewe succeeded in generating a positive EBIT of EUR 13.5 million in 2009, compared to EUR 28.5 million in Loewe thus exceeded its EBIT forecast of October 27, 2009 of about EUR 12 million. The positive contribution to earnings was caused primarily by the marketing of our innovative home entertainment systems at more consistently stable prices than the competition. The sustained high share of largescreen TV sets in sales, more favorable procurement costs and the relatively strong sales in Germany also supported earnings. Due to the positive earnings contribution in 2009, we have decided to propose to the Annual Shareholder s Meeting on May 20, 2010 to pay a dividend of EUR 0.25 per bearer share. Loewe Group sales declined by 13 % from EUR 374 million to approximately EUR 324 million in the reporting period. As mentioned, business development in the different markets showed divergent trends. In our key market, Germany, we were able to maintain the high sales level of the previous year in entertainment electronics. Export sales of EUR 131 million reflected a decline of EUR 43.4 million. It is specifically in this area that the negative repercussions of the financial crisis have severely strained Loewe s business development, especially in Spain and the Netherlands. In those countries, the propensity to purchase durable goods was significantly below the level for Germany in This is also reflected in the especially negative market trend for LDC TVs in terms of value. Letter to Shareholders

10 The highlight of the 2009 financial year was once again the International Consumer Electronics Fair (IFA) in Berlin. With the motto Home Entertainment in Perfection, we presented innovative home entertainment solutions to visitors, including retailers from within and outside of Germany as well as national and international media representatives. All of our innovations represent minimalist design, intelligent technology and exclusive individuality a perfect combination in home entertainment. The new Loewe Reference home cinema system was the center of attention. The high-definition LCD set with an impressive 52 inch screen diagonal, 200Hz technology and overall depth of only 60 millimeters, the ultra-thin electrostatic speakers, and the Mediacenter introduced as the central switch-point for digital home entertainment once again set standards for technology and design. Of course, we have set ambitious goals for the current fiscal year Especially in light of the continued uncertain economic conditions, Loewe s primary task will be to continue to enhance the brand s premium character while at the same time increasing our Company s international orientation, in order to attain profitable growth. But what does that mean in concrete terms? We will continue to expand our position in the key European markets by continuously upgrading the points of sale in particular in Italy, France, the United Kingdom and Spain. This is where we currently see the greatest potential. Furthermore, we will continue to present the Loewe brand in a unique and uniform fashion wherever customers come into contact with it. Another crucial factor for Loewe s success is to expand the close and trusting cooperation with qualified retailers. Together with our retailers, we will approach customers in the best possible way with customer relation concepts suitable for Loewe. The better we know our customers and their individual needs, the more specific will be our service to them. Moreover, Loewe will continue its product offensive in the current year with the launch of large-screen, high-definition LCD TVs with LED backlighting. In the future, the product portfolio will be even more closely tailored to the international product requirements of the core markets. Loewe will continuously enhance its home entertainment systems line in 2010 adding new innovative speaker and multi-room solutions Loewe AG

11 Despite the negative impact of the financial crisis on the European economies, the conditions for Loewe remain favorable. The heightened brand awareness of consumers, new LCD TVs with LED backlighting, the high replacement demand due to the dynamic spread of digitalization in conjunction with high-definition television (HDTV) and the FIFA World Cup 2010 in South Africa are having a positive impact on demand. The Company expects sales to grow moderately in the current 2010 fiscal year. Loewe s innovative home entertainment solutions put it in a very good position for repeating its high level of sales in Germany in Profitable double-digit growth in sales will be realized in the other key European markets. As a premium brand, Loewe will continue to focus systematically on results with cost discipline and value-based marketing and expects EBIT for 2010 as a whole to remain at the level of the previous year. Moreover, Loewe s sound capital structure and wide-ranging financing agreements put the Company in an optimal position for the future. Sincerely yours, Frieder C. Löhrer Chief Executive Officer of Loewe AG Letter to Shareholders

12 Light. Form Loewe AG

13 Loewe Reference

14 Home Entertainment in Perfection. If perfection means reaching the summit, then that s what Loewe has done with its Reference home entertainment center. Design, technology, and craftsmanship redefine the realm of what is possible. The Loewe Reference stands out like a sculpture. Everything you need for total home entertainment is already built in. Intuitive operation is your guarantee for pure enjoyment. The electrostatic loudspeakers alone are visual masterpieces. Slender, slightly inclined, to echo the form of the television, they fill the room with clear, opulent sound. Leading with new ideas: it s how Loewe paces the market in high-quality LCD televisions Loewe AG

15 Loewe Reference

16 Loewe AG

17 Our Company Loewe premium strategy ensures lasting success Cooperation with retailers further expanded Moderate rise of Loewe stock in difficult market environment Loewe well established in the SDAX Analyst coverage continues at a high level Contents The Loewe Premium Strategy 14 Loewe in the Capital Market 15 Our Company

18 The Loewe Premium Strategy Value-based management ensures lasting success Our daily work is rooted in Loewe brand values In past years, we have consistently pursued our vision of making Loewe the most significant international premium brand for home entertainment systems. And our success confirms this strategy: We inspire our customers with products that are characterized by timeless elegance, the most advanced technology, and intuitive use. The Loewe premium brand is based on minimalist design, meaningful innovation and exclusive individuality. Loewe creates a fascinating world of brand experience that finds its source in attractive and individual products but also includes essential attributes like brand communication and premium service. Our customers should be able to experience the brand clearly and authentically in all areas. Loewe has achieved a strong brand position in the premium segment in Europe. This successful development is accompanied by growing expectations of all stakeholders, including customers, shareholders, employees and the public as described in the quadrangle of interests on page 36. We see the task of value-based management as bringing disparate interests into balance. We feel this is the only way to achieve profitable and sustained growth. In light of the continued uncertain economic conditions in Europe, Loewe s primary task in future years will be to continue to enhance the brand s premium character while at the same time increasing the Company s international orientation, in order to attain profitable growth. In the medium term, Loewe wants to play the prominent role in the premium segment in the core European markets that we already occupy in Germany, Austria and Switzerland as well as the Benelux countries. The Loewe Fit for Future program aims to enhance Loewe s competitiveness Due to the difficult market conditions in 2009, for premium providers in particular, we made additional efforts toward achieving our goals beginning in the third quarter. These efforts especially find expression in the Loewe Fit for Future program which is directed toward sustainably enhancing Loewe s ability to compete in product creation and innovation, a comprehensive market approach and cost efficiency. The program already began to bear fruit last year. In response, we will establish Loewe Fit for Future as a continuous improvement process as part of our value-based corporate management. International growth Loewe is continuing to pursue a clear strategy and will expand our company s position in the key European markets by continuously upgrading the points of sale in particular in Italy, France, the United Kingdom and Spain. We currently see the greatest potential in these markets. We will continue to consistently present the Loewe brand in a unique and uniform fashion wherever customers come into contact with it. Moreover, Loewe will in the future take greater advantage of opportunities in the international hotel business to enthuse discriminating hotel guests about the brand and also open up additional sales potential. Close cooperation with retailers will be further expanded Loewe intensifies its presence among retailers Another crucial factor for Loewe s success is the close and trusting cooperation with qualified retailers in Europe. Loewe will go one step further and expand premium marketing jointly with its retail partners. In doing so, we will combine two objectives: enhancing the brand-appropriate presentation at the point of sale and also rooting it in the market situation in order to approach customers even more actively. To that end, Loewe will intensify its presence in galleries, Partner-Plus dealers and partners Loewe AG

19 We would like to approach customers in the best possible way with customer relation concepts suitable for Loewe. In the future, both retailers and Loewe itself will make greater efforts to meet customers needs. The better we know the customers and their individual needs and systematically maintain this information in a database, the more individualized will be our service to them. As a premium brand, Loewe has a strategically critical potential for development in this area, as our target group in particular expects a personal approach and excellent service. In the past fiscal year, we began the pilot phase of our optimized customer relationship marketing. Emanating from Germany and Austria, it was introduced in all relevant Loewe markets in early Despite the negative impact of the economic and financial crisis on the European economies, the conditions for Loewe remain favorable. The heightened brand awareness of consumers, new LCD TVs with LED backlighting, the high replacement demand due to the dynamic spread of digitalization in conjunction with high-definition television (HDTV) and the FIFA World Cup 2010 in South Africa are having a positive impact on demand in the current fiscal year. Loewe systematically pursues the course of combining exceptional product designs with the most advanced technology. FIFA World Cup in South Africa increases demand The market launch of the Loewe Reference design audio-video systems and Individual Mediacenter will more than ever before make Loewe into the system provider that already today takes into account the future requirements of a networked household. New technologies like 3D TV and 3D Blu-ray player and even more individual operating concepts will offer Loewe attractive growth opportunities that will last beyond the current fiscal year. But for all of that, Loewe will continue to focus on premium-based, value-oriented marketing of its top-quality home cinema solutions in the future. This could limit the Company s growth in sales; however, it will support the premium character and sustained profitability of the Loewe brand. Loewe in the Capital Market In fiscal 2009, Loewe successfully maintained its position in a persistently difficult market environment and surpassed its own EBIT forecast through the value-based marketing of its innovative home entertainment solutions. Sales, however, were substantially impacted by the negative consequences of the global financial and economic crisis, with exports being particularly hit. In addition to the general corporate strategy, Loewe s capital market communications in 2009 remained focused on the continued high quality of earnings in the face of significant sales declines in the most important export markets. Another focus was differentiation from other market participants. Capital market communications focus on high quality of earnings in the face of sales declines Moderate rise of Loewe stock in difficult market environment The repercussions of the global financial and economic crisis dominated the equity markets at the beginning of the 2009, with global indices continuing the negative trend of Alarming economic data remained the dominant theme in the equity markets. In January of 2009, German industry reported the most dramatic decline since reunification with a drop in new orders of 27.2 % for November Exports in the fourth quarter of 2008 declined at a level last seen in At the beginning of the reporting season, large U.S. corporations released disappointing earnings figures and a pessimistic outlook for the year as a whole. The subsequent edginess of market participants led to a continued decline in prices and persistent high volatility. Our Company

20 Key data for Loewe stock ISIN-Code DE WKN Frankfurt Stock Exchange LOE Reuters XETRA trading LOEG.DE Frankfurt Stock Exchange LOEG.F Bloomberg XETRA trading LOE GY Frankfurt Stock Exchange LOE GF Although Loewe was no exception to the general market trend, Loewe stock achieved a turnaround significantly earlier than the general market. The key figures for fiscal 2008 announced at the end of January, which again exceeded the already higher forecasts, marked a turning point of the price trend. We quickly left the January low of EUR 5.80 behind us and began a sustained recovery. The global capital markets saw a gradual recovery throughout the first quarter with the most positive signs being in the financial sector. Citigroup s announcement in March of astoundingly good results for the first two months of 2009 was the signal that the market turnaround had been accomplished; other financial institutions followed up with good results. The G20 states instituted economic stimulus programs rising into the billions. Increases in new orders, rising construction investments and improving economic outlooks bolstered the burgeoning hopeful expectation at the beginning of the second quarter and contributed significantly to the recovery of the international stock markets. The announcement of the record profit for fiscal 2008 and the prospect of a dividend twice as high as in the previous year reawakened investors interest in our Company and another round of price increases pleased the shareholders. Investor insecurity and the continued absence of complete confidence in German second-tier stocks was reflected in the omnipresent volatility of the capital markets. Consistent with the general market, Loewe stock recovered steadily but continued to be plagued by severe price fluctuations. Purchases by dividend-oriented investors raised the price to a preliminary high for the year of EUR 9.85 in advance of the Annual Shareholders Meeting. Recession anxieties negatively influence the markets at mid-year Nascent recession anxieties based on revised economic expectations of the IWF and the OECD as well as the decisions of the G8 states to reduce budget deficits had a negative influence on the markets at mid-year. Global indices resumed their decline again. Shortly after, higher than expected first-half results of several U.S. blue chips and the improvement of early indicators for industrial production in the U.S. again pushed stock prices upwards. Positive statements by Ben Bernanke, Chairman of the United States Federal Reserve Bank, regarding a bottoming out, also underscored the end of the recession and led global equity markets to new highs. Against this backdrop, Loewe stock reached its high for the year of EUR Loewe AG

21 The persistently difficult economic conditions in large parts of Europe in particular had significantly strained Loewe s export business up to this point in time. Loewe management took this development into account in the announcement of the figures for the first nine months at the end of October by revising the sales guidance for the fiscal year as a whole and substantiating the EBIT guidance. Loewe stock was severely battered in significantly higher trading volume. The support provided by the 200 day moving average, which is an important indicator for technical analysis, proved to be sustainable and stopped the price decline at EUR Loewe stock subsequently tended to move sideways in volatile trading. Negative reports such as the bankruptcy of the CIT Group, the largest U.S. financier of mid-sized companies, and the troubled government-owned holding company Dubai World still produced volatility at times; however, the growing optimism of market participants prevailed. Strong business results of several large caps and encouraging economic data from the German IFO Institute reinforced this trend, which was bolstered further by promising data on German industrial production. As a result, stocks rallied at year-end. The DAX closed 2009 at 5,957 points, gaining 23.8 %, a level that most market participants would have considered impossible at the beginning of the year. The aggressive provision of liquidity and loans for banks and business as well as the economic stimulus programs ultimately succeeded in preventing the feared market collapse. Provision of liquidity and loans prevents market collapse Loewe stock also closed the trading year on a positive note. After the severe fluctuations over the course of the entire year, our stock closed the year at EUR 9, recovering from its lows by more than 55 %. On an annual basis, Loewe stock posted a moderate gain of 4.5 %. Loewe stock performance from December 30, 2008 to December 30, 2009 indexed against SDAX (Frankfurt), Loewe AG, SDAX Loewe established in the SDAX Since being reinstated in the German selection index SDAX on December 22, 2008, our stock has proven to be relatively robust compared to many SDAX stocks. Loewe stock again became firmly established in the SDAX in fiscal Loewe has continuously met the stringent criteria of Deutsche Börse with regard to market capitalization and trading volume since mid The ongoing presence in the SDAX permanently brings our stock to the attention of potential investors within and outside Germany, as well as index-focused analysts and the public. Our Company

22 Stable and broad shareholder structure All items on agenda passed with only a few opposing votes In the eleventh year after the initial public offering, the shareholder structure of Loewe AG continues to be marked by a free float of 55.8 % of the share capital. Approximately 15,000 securities accounts with Loewe shares were registered for the Annual Shareholders Meeting at Alte Kongresshalle in Munich on May 26, 2009, and all seven items on the agenda were adopted with only a few opposing votes. A total of 230 Loewe shareholders and guests attended the Annual Shareholders Meeting. Since the last capital increase in 2005, Sharp Corporation, Osaka, Japan, continues to hold its 28.8 % stake in the Company, with Loewe corporate bodies, management members and their families holding another 15.4 %. In addition, the London financial investor EQMC Fund (EQMC) has held 10.1 % of the share capital of Loewe since June EQMC is a longer term investor and plans to support Loewe in the execution of its premium strategy. Accordingly, the financial investor is a part of the stable and broad shareholder structure of Loewe and will participate in the future development of the Company. Shareholder structure of Loewe AG % % % Free float Sharp Corporation, Japan Members of the Supervisory and Executive Boards and their families Loewe received no reports of shareholdings of 3 % or more in fiscal year The percentage of Loewe shares held by institutional investors from within and outside of Germany increased slightly, compared to the previous year, in the wake of ten successful roadshows at the most important financial centers in Europe Loewe AG

23 Key figures for Loewe stock Year-end closing price Xetra (EUR) Annual high Xetra (EUR) Annual low Xetra (EUR) Average daily trading volume (Xetra + Frankfurt) 15,781 26,030 37,907 53,303 28,741 Number of shares as of December 31 13,009,229 13,009,229 13,009,229 13,009,229 13,009,229 Market capitalization on December 31 (EUR million) Earnings per share (EUR) Dividend per share (EUR) 0.25 * * Proposal to the Annual Shareholders Meeting on May 20, 2010 Source: Bloomberg Investor relations activities Our investor relations activities are chiefly aimed at continuously increasing the confidence of our shareholders and investors as well as the interested public through transparent and dialog-based communication. Furthermore, we strive to maintain and expand the existing coverage of Loewe stock by prominent banks, thus nurturing investor interest. Comprehensible, transparent and timely information builds trust In addition to the annual DVFA analysts conference at the close of the year and the Loewe Investors Conference at the IFA International Consumer Electronics Fair in Berlin, conference calls were held as usual in English for analysts and financial journalists in connection with the 1st and 3rd quarter interim reporting and the six months financial report. Furthermore, Loewe was represented at capital market conferences in Frankfurt and London. Our presence in the European capital market has been increased even further in the past fiscal year. We presented our equity story at ten international roadshows in more than 60 individual conversations with fund managers. In addition, management participated in personal discussions with analysts, institutional investors as well as business and financial journalists at Loewe s headquarters in Kronach, Germany. The Annual Shareholders Meeting on May 26, 2009 in Munich was the most important investor relations event for the Company s private shareholders. As in the years before, details of the Annual Shareholders Meeting were available for download for several weeks after the meeting on Loewe s website, Our web pages offer current information, details about Loewe stock, investor relations events, analysts estimates and presentations as well as a separate service area. Our Company

24 IR events 2010 February 5, 2010 Roadshow Zurich March 25, 2010 DVFA Analysts Conference Frankfurt March 26, 2010 Roadshow Frankfurt April 2010 Roadshow Milan May 5, st quarter 2010 Kronach May 12, 2010 Small & Mid Cap Symposium London May 20, 2010 Annual Shareholders Meeting Munich June 2010 Roadshow Geneva August 4, st half 2010 Kronach August 9, 2010 Roadshow Frankfurt August 10, 2010 Roadshow Paris September 6, 2010 Investors Day at IFA Berlin September 17, 2010 Roadshow Munich October 6, 2010 Roadshow Vienna November 3, st 3rd quarter 2010 Kronach November 9 10, 2010 Roadshow Scandinavia November 22 24, 2010 German Equity Forum 2010 Frankfurt December 2010 Roadshow London Excellent capital market communication Loewe No. 2 in the SDAX Excellent investor relations work Loewe achieved an outstanding 2nd place in the category SDAX in the German Capital Investor Relations Preis. The screening performed in 2009 focused on the quality of investor relations work. Inquiries were made with almost 400 analysts and fund managers in roughly 300 financial institutions within and outside of Germany. The German business magazine Capital and the German Association for Financial Analysis and Asset Management (DVFA) annually award the prominent Capital Investor Relations Preis to companies for particularly prudent and credible communication with private and institutional investors. Moreover, the Loewe 2008 annual report was awarded the red dot award for communication design. An international jury on behalf of the Design Zentrum Nordrhein-Westfalen paid tribute to the high design quality of this primary instrument of capital market communication. In addition, the 2008 annual report received the respected if communication design award 2009 in the category print media Loewe AG

25 Analyst coverage continues at a high level A large number of analysts again closely observed and comprehensively evaluated Loewe during the past fiscal year. The following table lists banks that regularly prepare research reports on Loewe and also provide information concerning significant key points of the analysts assessment and lists them by name (last revised: February 10, 2010): Name Date Sales EBIT EPS Target Price Rating LBBW, S. Wittwer Feb 4, HOLD DZ Bank, A. Rautenberg Feb 4, BUY Goldman Sachs, R. Dreyer Jan 29, BUY equinet, I. Faust Jan 27, BUY Sal. Oppenheim, Dr. A. Gronski Jan 26, NEUTRAL HSBC, T. Britsch Jan 27, NEUTRAL Average Trading volume lower Compared to the previous year, the number of shares traded in the SDAX was down by more than onehalf in While almost 1.4 billion shares were traded in 2008, the number for 2009 was only 644 million. Trading volume of Loewe stock followed this market trend; however, the reduction was not as severe as in the SDAX as a whole. In the fiscal year 2009, an average number of almost 16,000 shares was traded per day, fewer than in the same period of Loewe stock is traded on all German stock exchanges and on the XETRA electronic trading platform. As in previous years, the transaction levels are highest on XETRA and the Frankfurt Stock Exchange. Dividend A resolution will be proposed to the Annual Shareholders Meeting to be held at Alte Kongresshalle in Munich on May 20, 2010 that a dividend be paid for fiscal 2009 in the amount of EUR 0.25 per share. Loewe s IR team Loewe AG Industriestrasse Kronach Germany Phone: + 49 (0) Axel Gentzsch + 49 (0) Anja Fröba Fax: + 49 (0) [email protected] Internet: Our Company

26 Choice. Possibilities Loewe AG

27 Loewe Individual

28 Loewe AG

29 One of a Kind. Having taste means making choices: deciding for some things but also deciding against other things. Deciding for quality, taste, functionality. Deciding against frivolousness, excessive ornamentation, redundancy. Every one of Loewe s customers has individual expectations and individual tastes. Our customers are one of a kind and they like to express that uniqueness through their clothes, their furniture, and their home entertainment. The Loewe Individual permits self expression, affording nearly one million possible variations. That means that each Individual home entertainment system is also one of a kind just like its owner. And the housing, just six centimeters deep, complements today s decors. Loewe Individual

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31 Our Responsibility Dedication to the German Corporate Governance Code All recommendations implemented with one exception Loewe code of conduct defined and communicated Value-based management as a permanent responsibility Contents Report of the Supervisory Board of Loewe AG 28 Corporate Governance 32 Corporate Social Responsibility 36 Our Responsibility

32 Dr. Rainer Hecker Chairman of the Supervisory Board Report of the Supervisory Board of Loewe AG Dear Shareholders, In a persistently difficult market environment, the Loewe Group successfully asserted its position in the market in fiscal 2009, while unfortunately not reaching its significantly higher sales targets. The negative consequences of the global financial and economic crisis have had a substantial impact on Loewe s export business. This applies in particular to the important Spanish and Dutch markets. Despite the significantly lower sales and production volume and continued expenses for the premium positioning of thre Loewe brand, Loewe again generated a positive contribution to earnings and surpassed its own EBIT forecast in In exercising the responsibilities incumbent upon it in accordance with statutory regulations and the Company s articles of association, as well as the principles of the German Corporate Governance Code, the Supervisory Board continuously oversaw the management of the Company and the Group, provided advice on basic policy issues and discussed all significant business transactions with it. The Executive Board informed the Supervisory Board regularly, promptly and comprehensively concerning all decisions of central importance to the further development of the Company. Significant subjects of discussion were the development of business, the earnings and financial position, the human resources situation as well as corporate planning, capital expenditure projects and risk management. The primary themes in particular included the Loewe premium strategy, the 2008 financial statements, the development of business in 2009, the budget for fiscal 2010 and the amendments of the German Act on the Appropriateness of Executive Board Remuneration (VorstAG). Between the board meetings, the Chairman of the Supervisory Board regularly exchanged information with the Executive Board, in particular regarding business strategy, corporate planning as well as important single events such as the appointment of senior executives Loewe AG

33 The Supervisory Board devoted special attention to the majority acquisition by Loewe AG of the nonlisted multimedia company MacroSystem Digital Video AG. The acquisition was the subject of two meetings of the Supervisory Board. The Supervisory Board gave support and encouragement to this process and saw the majority acquisition as a good opportunity for Loewe to further strengthen its development competence and gain additional expertise in multimedia networking. The Supervisory Board is supported in the effective performance of its responsibilities by three committees: the personnel committee, the audit committee and the nominating committee. Please refer to page 133 et seq. of the Notes to the Consolidated Financial Statements for a detailed summary of the composition and competencies of the Supervisory Board, and of the three committees. In fiscal 2009, the Supervisory Board continued its intensive review of the development of the Corporate Governance Principles. All recommendations of the German Corporate Governance Code issued by the Government Commission and most recently updated on June 18, 2009 will be fully implemented except for sub-section (4) sentence 1 of the Code. On November 27, 2009 the Executive Board and Supervisory Board published the new Declaration of Conformity which is included in the joint Corporate Governance Report on page 32 et seq. During the period under review, the Supervisory Board met four times, and the audit committee also met four times. The current position and the anticipated business development of the Loewe Group and its subsidiaries were discussed in each meeting of the Supervisory Board. In addition, the Supervisory Board always discussed in detail the Executive Board s reports and delivered its vote on this basis. All members of the Supervisory Board participated in all the Supervisory Board meetings except for the meeting on December 10, The member of the Supervisory Board who was absent from this meeting was provided information by the Executive Board separately and in a timely manner. In preparation for the Supervisory Board s financial statements meeting, the audit committee in its meeting of March 10, 2009 primarily reviewed the process and the accounting documents of Loewe AG and the Loewe Group as of December 31, The order of events, essential findings and the results of the audit were discussed with the auditor. According to the conclusive result of its own review, the audit committee approved the presented accounting documents. In addition, the Executive Board described the current state of risk management in the Loewe Group. Current changes in risk assessment were presented and discussed in detail. The meeting on March 19, 2009 focused on the presentation, discussion and review of the financial statements and management report of Loewe AG as well as the consolidated financial statements and the Group management report for the year ended December 31, The auditors were also present at this meeting to report on the course of the audit and were available to answer additional questions by the Supervisory Board. The Supervisory Board approved the accounting documents and thus adopted the financial statements for the year ended December 31, Furthermore, the Supervisory Board adopted the recommendation for the agenda of the Annual Shareholders Meeting held in Munich on May 26, Prior to the Annual Shareholders Meeting on the same day, the Supervisory Board meeting on May 26, 2009 focused on day-to-day reporting by the Executive Board as well as the state of risk management in the Loewe Group. On the same date, the status quo in risk assessment was again presented and explained. Our Responsibility

34 The meeting of the audit committee on September 17, 2009 focused on the numerous changes to legal provisions. In particular the need for action arising for Loewe from the new German Accounting Law Modernization Act (BilMoG) as well as the changes to the German Corporate Governance Code were discussed in detail and appropriate actions were defined. The immediately following Supervisory Board meeting focused on the results of the International Consumer Electronics Fair in Berlin and the key points of the Loewe Strategy Based on the expected market and price trend in the strategy period, the discussion focused on the revised and updated Loewe Balanced Scorecard as a comprehensive control instrument as well as the financial targets. This meeting also included the presentation and discussion of the amendments to the Corporate Governance Code and the German Accounting Law Modernization Act, which had been brought up earlier in the audit committee meeting, and the recommended actions were adopted. The Supervisory Board Meeting on December 10, 2009 focused on ongoing reporting, and the detailed discussion and adoption of the budget for It takes into account the improved economic environment in which the LCD TV market will continue to grow in Europe in the next few years, due in particular to the high replacement demand and increasing ownership of more than one set. Among other things, the Supervisory Board also discussed the planning premises and the utilization of the sales potential in connection with the expanded programming in high-definition television and the FIFA World Cup 2010 in South Africa. In light of this, Loewe anticipates moderate growth in sales for all of fiscal year As a premium brand, Loewe will continue to focus systematically on results with cost discipline and value-based marketing. The annual financial statements of Loewe AG for the year ended December 31, 2009 and the management report for fiscal 2009 were prepared in accordance with the principles of the German Commercial Code and the German Stock Corporation Act. Pursuant to Section 315a of the German Commercial Code, the consolidated financial statements were prepared in accordance with the International Financial Reporting Standards (IFRS) and supplemented by a Group management report pursuant to Section 315 of the German Commercial Code. The auditor appointed by the Shareholders Meeting on May 26, 2009 has reviewed these documents. The auditor issued an unqualified audit opinion on the annual financial statements and management report of Loewe AG and the consolidated financial statements and Group management report. In its meeting of March 11, 2010, the audit committee of the Supervisory Board analyzed and reviewed the accounting documents of Loewe AG and the Loewe Group as of December 31, The order of events, essential findings and the results of the audit were also discussed with the auditor. The audit committee approved the accounting documents presented based on the conclusive results of its own review. In addition to questions concerning the audit, the audit committee also reviewed matters relating to the internal control system and internal auditing. The financial statements and management report of Loewe AG for the year ended December 31, 2009, the consolidated financial statements and Group management report for the year ended December 31, 2009 as well as the reports of the auditor were presented to all members of the Supervisory Board in due time. During the financial statements meeting of March 18, 2010, the financial statements were discussed in detail following a report by the Executive Board and the auditor. The auditor reported the most important results of the audit and that the internal control and risk management system has no significant weaknesses. The audit committee chairman also presented information on the committee s activities and the results of its review. The Supervisory Board reviewed and approved the financial statements of Loewe AG for the year ended December 31, 2009 and the associated management report as Loewe AG

35 well as the proposed appropriation of profits. The financial statements of Loewe AG for the year ended December 31, 2009 prepared by the Executive Board have thus been adopted. Furthermore, the Supervisory Board adopted the recommendation for the agenda of the Annual Shareholders Meeting to be held in Munich on May 20, In connection with the proposal for the appointment of the auditor for fiscal 2010, the Supervisory Board relied on the recommendation of the audit committee. The Supervisory Board agrees with the Executive Board s proposal to distribute a dividend in the amount of EUR 0.25 per bearer share from the unappropriated retained earnings of EUR 6,252, Pursuant to sections 289 (4) and 315 (4) of the German Commercial Code, Loewe must make disclosures concerning its rules on public offerings, the purchase of securities and company takeovers. In the year under review, the Supervisory Board saw no reason to address questions of a takeover of Loewe or to disclose any specific information under the Takeover Bids Directive Implementation Act (ÜbernRUmsG). The Supervisory Board wishes to thank the Executive Board, the employees and the employee representatives of Loewe for their great dedication in a challenging fiscal year The Supervisory Board is convinced that Loewe s very solid capital structure and its clear premium strategy in an improved economic environment will bring the Company much closer to achieving its goal of becoming the most significant international premium brand for home entertainment systems in the current fiscal year. Kronach, March 18, 2010 Dr. Rainer Hecker Chairman of the Supervisory Board Our Responsibility

36 Corporate Governance Conscientious and transparent management Loewe is an independent company with a clear brand strategy. Even in 2009, which was a challenging financial year because of the financial and economic crisis, our attractive and individual home entertainment solutions enabled us to further consolidate our current brand position in Europe. Loewe is now considered one of the leading made in Germany premium brands in consumer electronics. We attract our customers with products whose aesthetic appeal is timeless, with exclusive individuality, sensible technology and easy operation. In doing so, Loewe consistently follows the most exacting standards. The corporate bodies of Loewe AG pursue the same high standards and sense an obligation to conscientious, transparent and sustained creation of value in managing the company. Value-based management as an ongoing process Loewe understands value-based management to be an ongoing process. Our objective is to balance the interests of employees, shareholders, customers and the public. Only on this basis is sustained and long-term growth of the Company s value possible. All strategic decisions have been based on this concept for many years. With this in mind, we have been publishing the principles of cooperation based on trust between the Executive Board and the Supervisory Board since our 2001 annual report. Good corporate governance is of prominent importance for Loewe AG. For that reason, we support the German Corporate Governance Code issued by the Government Commission and most recently updated on June 18, 2009, and as in the previous year, we will implement all recommendations with only one exception. The current declaration of conformity and all previous versions are available for download on Loewe s website. Declaration of Conformity Loewe continues to fully conform to the recommendations of the German Corporate Governance Code with one exception Our principles continue to conform to the recommendations of the Code with one exception. On November 27, 2009, the Executive Board and Supervisory Board issued their declaration of conformity pursuant to Section 161 of the German Stock Corporation Act. The following declaration of conformity was made permanently available to the shareholders at the proper time on the Company s web pages at under Investor Relations: The Executive Board and Supervisory Board of Loewe AG hereby issue the following declaration of conformity in accordance with Section 161 of the German Stock Corporation Act regarding the recommendations of the Government Commission of the German Corporate Governance Code: 1. Loewe AG will continue to comply with the recommendations of the German Corporate Governance Code as amended on June 18, 2009, published in the electronic Federal Gazette on August 5, 2009, with the following exception: In concluding or renewing Executive Board contracts with members of the Executive Board currently in office, no severance payment cap will be agreed for the protection of established rights and for the prevention of unequal treatment of members of the Executive Board (sub-section (4) sentence 1 of the Code). 2. Loewe AG has complied with the recommendations of the German Corporate Governance Code as amended on June 6, 2008, published in the electronic Federal Gazette on August 8, 2008 since its last declaration of conformity of November 28, 2008 except for the recommendation set forth in sub-section (4) sentence 1 (severance payment cap in concluding Executive Board contracts) Loewe AG

37 Remuneration of the Executive Board of Loewe AG Loewe AG complies with the recommendations of the German Corporate Governance Code to disclose the remuneration for the Executive Board and the Supervisory Board individualized and broken down into fixed and variable components. The members of the Executive Board of Loewe AG are simultaneously managing directors of Loewe Opta GmbH. The remuneration of the Company s Executive Board for fiscal year 2009 totaled EUR 1,971,360 (2008: EUR 2,694,626). No separate remuneration was paid for the GmbH activity. The amount of the incentive compensation for the Executive Board is based on the targets defined by the personnel committee of the Supervisory Board for the fiscal year in question. In addition to strategic goals, these targets primarily include economic figures of the Loewe Group. The Chairman of the Supervisory Board provided a detailed presentation of the remuneration policy principles and structure in the 2009 Shareholders Meeting and such a presentation is also planned for the next Shareholders Meeting on May 20, See page 135 of the Notes for comprehensive information on the individual remuneration of the Executive Board. Remuneration of the Executive Board and the Supervisory Board is published individually An age limit of 65 years generally applies to the three members of the Executive Board. Directors & officers insurance exists. A deductible has been stipulated to be a component of the fixed annual remuneration of each member of the Executive Board. Remuneration of the Supervisory Board of Loewe AG In conformity with sub-section of the German Corporate Governance Code, Loewe reports the compensation of the Supervisory Board individually and subdivided according to components. The remuneration of the Supervisory Board is governed by the relevant provisions of the Articles of Incorporation, the currently valid version dated June 5, 2009 which was adopted by shareholders in the 2009 Shareholders Meeting. The annual fixed remuneration for each member of the Supervisory Board is EUR 15,000; the variable remuneration is performance-related and depends on net income. Each member of the Supervisory Board receives an additional EUR 15,000 if Group earnings per share reach EUR If earnings are lower or higher, the variable component is reduced or increased proportionally. This fixed and variable remuneration is doubled for the Chairman of the Supervisory Board, and the Deputy Chairman receives one and one-half times that amount. The total remuneration of the Supervisory Board for fiscal 2009 came to EUR 154,482 (2008: EUR 200,667). See page 134 of the Notes for detailed information on the individual remuneration of the Supervisory Board. The members of the Supervisory Board performed no consulting and mediation services or other services during the year under review. For that reason, no remuneration was granted in excess of the aforementioned components. Directors & officers insurance also exists for the Supervisory Board. An appropriate deductible geared to the Supervisory Board incentive compensation has been stipulated. Avoidance of conflicts of interest Both the members of the Executive Board and the members of the Supervisory Board are bound by the best interests of the enterprise Loewe and may not pursue personal interests in their decisions. Members may not, in connection with their work, demand or accept from third parties payments or other advantages for themselves or for any other person or grant third parties unlawful advantages. The members of the Executive Board shall disclose such transactions or sideline activities to the Supervisory Board without delay and they require the approval of the Supervisory Board. The Supervisory Board shall inform the Annual Shareholders Meeting of any conflicts of interest which have occurred together with their treatment. No such conflicts of interests have occurred with members of the Executive Board or the Supervisory Board in the period under review. Our Responsibility

38 Directors dealings Pursuant to Section 15a of the German Securities Trading Act, members of the Executive Board and of the Supervisory Board as well as persons in close association with them must disclose the purchase and the sale of the Company s shares if the value of the transactions equals or exceeds EUR 5,000 in a calendar year. No transactions were reported to Loewe between November 28, 2008 and December 31, Generally, Loewe promptly reports the details concerning these transactions and displays them permanently at under Investor Relations. It also properly informs the German Federal Financial Supervisory Authority (BaFin). Shareholdings of the Executive Board and Supervisory Board As of December 31, 2009, the Executive Board held 158,458 (2008: 158,476) shares in Loewe AG; all three members of the Executive Board hold Loewe shares. No options exist. One member of the Supervisory Board directly holds 550,000 Loewe shares (2008: 550,000). Compliance at Loewe New code of conduct drawn up and communicated throughout the Company As one of the leading brands in consumer electronics, sustainable economic, ecological and social action is an indispensable element of the corporate culture for Loewe. To meet the standards of a premium brand, we must exhibit perfect ethical conduct in our internal cooperation and in interaction with persons from the outside. This behavior includes compliance with laws, regulations and guidelines as well as obligations. Furthermore, Loewe drew up its own code of conduct in fiscal year 2009 and communicated it throughout the Company as a means to improve compliance standards. Based on the fundamental value of integrity, all requirements for the conduct of employees are described in detail in the code. In addition to compliance with all relevant laws, relations with business partners, the avoidance of conflicts of interest, the handling of information and insider rules as well as compliance with environmental protection and safety provisions are of particular importance for us. Transparent and fair reporting The requirement of making the same information available to our shareholders, financial analysts, shareholder associations, media and the interested public in both German and English regularly and simultaneously is of prominent importance for Loewe corporate communications. During the fiscal year, we provide information to the capital market in the six months financial report and by means of the corresponding interim reports for the first and third quarters. Furthermore, Loewe also announces its information in press conferences and analysts conferences and uses the Internet as an information platform. Following the principle of fair disclosure, we treat all shareholders and significant target groups equally and promptly publish information on important new situations. Concomitant with regular reporting, we use ad hoc notifications to provide information promptly concerning circumstances that are not public knowledge that, if disclosed, would be capable of influencing the Loewe share price considerably Loewe AG

39 Responsible handling of risks Good corporate governance also includes responsible and consistent handling of business risks. By clearly defining risk areas, Loewe is able to systematically identify, evaluate and document existing individual risks. At the same time, the system models their impacts on the Company s financial position and performance. The risk management system is an integral component of Loewe s entire planning, controlling, and reporting process. Transparent reporting makes it possible to detect discrepancies in key data at an early stage, thereby enabling management to identify risks earlier, control them and initiate measures for their timely elimination. See page 69 et seq. in the Risk Report section of the Group Management Report for further details. Systematic identification, assessment and documentation of existing individual risks Further information on corporate governance at Loewe Additional information concerning the cooperation of the Supervisory Board and Executive Board, the activity of the Supervisory Board and its three committees as well as the accounting and audit can be found in the Report of the Supervisory Board. Extensive information concerning offices held by the members of the Supervisory Board and Executive Board of Loewe AG can be found on page 136 et seq. of the Notes to the Consolidated Financial Statements in the section Corporate Bodies/Offices Held. Loewe also publishes current company developments on the website Annual financial statements, interim reports, the financial calendar, press releases, ad hoc notifications and reportable securities transactions can be found there. Kronach, March 18, 2010 For the Executive Board For the Supervisory Board Frieder C. Löhrer Chief Executive Officer Dr. Rainer Hecker Chairman of the Supervisory Board Our Responsibility

40 Corporate Social Responsibility Value-based management is the central basis of all strategic decisions. Value-based management is an important responsibility for Loewe. Our objective is to establish a balance between the interests of shareholders, employees, customers and the public as the only basis for sustained, long-term growth in company value. All strategic decisions have been based on this concept for many years. Acting in this quadrangle of interests really means acting in a businesslike, responsible manner, and we follow this guiding principle for the relations with all of our stakeholders. Quadrangle of interests of Loewe AG Shareholders Employees Corporate Social Responsibility Customers Public Only a few years ago, in a difficult time for Loewe, our shareholders the first group in the quadrangle of interests were forced to do without their dividends. In this way they made an equally substantial contribution to overcoming the crisis as our employees. Shareholders justifiably expect long-term growth in the value of their investments and reasonable interest on the capital invested. In this complex network of relationships, open and transparent communication is a must. Our employees the second group in the quadrangle of interests expect high involvement in obtaining and developing job positions. They expect participative management that recognizes responsibility jointly, adjusts to demographic change in good time, offers older employees a future within the Company and stimulates excitement in younger persons about working for the Company. They expect Loewe AG

41 their Company to be oriented to the needs of the family, for example by offering flexible working hours models, and they see the realization of their professional and private goals as a substantial challenge not only for each individual but also for the Company. An above-average share of trainees, active connections with schools, colleges and universities, and career planning for older employees are equally important to us. Loewe customers the third group in the quadrangle of interests receive outstanding products with award-winning design that consistently achieve convincing top marks in tests. The magazine video Home Vision, for example, has awarded our product line Loewe Reference the distinction outstanding. As in prior years, we received numerous design awards in 2009 as well. Journalists chose the Loewe Reference Mediacenter as the innovation of IFA 2009 and the Loewe Reference television as the best design accomplishment. Loewe products are attractive because they offer added value for the customer. Responsibility to the public the fourth group in the quadrangle of interests at Loewe translates for instance into Loewe being a committed sponsor of the competition Jugend forscht (a German youth science competition) in the region surrounding our Company s headquarters. We are also committed to art and culture and are active promoting the economy and attractiveness of our region. At Loewe s initiative, the Italian sculptor Fabrizio Plessi created for the city of Kronach an internationally acclaimed video sculpture called Waterfire the first of its kind to continuously stand in the open air. We are also active in sports. Loewe s sponsorship of an indoor football tournament is already in its 14th year. Twenty company teams vie for the Loewe Cup. We are guided by the awareness that the region lives from the strength of its economy but the economy also lives from the attractiveness of the region. It is our aim that all of these four interest groups benefit from the results of our work. We are convinced that the Company result will grow on a sustained basis if the interests of all of our stakeholders are taken into account. Value-based management focuses on the adequate distribution of the Company s profits, and at the same time it is also a crucial prerequisite for sound, sustained and profitable growth. Value-based decision making always has a personal component as well and always means taking personal responsibility, setting standards and acting as a role model. People determine the corporate culture and are a deciding factor for the quality of the Company s values. Does a climate of trust and personal respect prevail? Is every employee, are the shareholders, the customers, the public well informed concerning important questions of the Company s development? Is every employee accepted and supported as an individual or as a team member? Successful companies support and foster their employees personal development. That is the way we do business. Our Responsibility

42 Net. Work Loewe AG

43 Loewe Connect

44 Loewe AG

45 Focal Point in a Digital World. In today s information society, more and more people want to be able to use any kind of medium flexibly to communicate via multiple channels. Loewe brings it all together. Loewe Connect turns a television into the focal point of a digital world. Its interface allows complete integration into a home network. The TV screen can display photos and films from networked computers while music from the hard drive plays through the loudspeakers. It s the ideal system for people who want to experience tomorrow today. Over five million Internet-compatible televisions are expected to be in use in German households by 2010 and Loewe intends to be both a pioneer and pacemaker in this field. Loewe Connect

46

47 Management Report Slowly improving economic situation Market for LCD TVs continues to grow Sales at EUR million fall short of expectations Positive EBIT of EUR 13.5 million Solid capital structure and stable financing Moderate growth in sales projected for 2010 Continued systematic focus on results Contents Economic situation 44 European market for LCD TVs 45 Key Performance Indicators 48 Financial performance 49 Report on assets and financial position 53 Development and production 61 Number of employees 62 Opportunities and risks of future development 69 Outlook 76 Management Report

48 Management Report Economic situation is improving but a self-sustaining upturn is not yet in sight Fiscal policy measures improve economic situation in the eurozone The global turbulence resulting from the financial and economic crisis calmed significantly in recent quarters, pointing to an end of the worldwide recession. After four negative quarters, the economy in the United States returned to growth in mid Economic output in the eurozone also recovered slightly in the summer months of Fiscal policy measures in particular noticeably improved the economic situation. However, a self-sustaining upturn is still not in sight for the next few quarters. The higher unemployment level in Germany and Europe as well as an increasing rate of inflation could have a negative impact on private consumption. The financial and economic crisis led to a rapid shrinking of the eurozone economy in Gross domestic product (GDP) declined by 4.0 % in the eurozone states in the past fiscal year, preceded by minor growth of 0.6 % in Still, the trend was quite diverse in the individual countries of the eurozone. While Germany and France noticed the first signs of an economic recovery as early as in spring 2009, the economies of Spain and Greece continue to decline. In general, the majority of the member states climbed their way out of the recession in the third quarter of Accordingly, the GDP of the currency area could expand with a growth rate of 1.1 % in The inflation rate of only 0.3 % in 2009 was clearly below the high level of 3.3 % in the year before. Inflation in the eurozone should not exceed about 1.2 % in the current year on an annual average. Modest economic recovery in Germany as well After the deep slump in the winter months of 2008/2009, the German economy is continuing its slight upward trend. Economic output grew by 0.7 % year-on-year in the third quarter of 2009 in particular; the most robust rise since early Nonetheless, on an annual basis, Germany had to absorb a record GDP decline of 5.0 %. Supported by clearly more positive contributions to growth from foreign trade and an upturn of corporate investment, a continued economic recovery and GDP growth of 1.2 % is estimated for the current year. The annual inflation rate of only 0.2 % was slightly below the European average in 2009 and will gradually increase to 1.1 % in the current year as the economic recovery proceeds Loewe AG

49 Moderate growth of the European market for LCD TVs Compared to the previous year, the European consumer electronics market declined by 5 % to EUR 30.1 billion in The market segments DVD players and stereo systems declined most heavily, by 17 % and 5 %, respectively. The most significant product group within the European consumer electronics market continued to be television; however sales in this product group also declined by 2 % year-on-year. This decline in sales was mainly the result of a 20 % drop in plasma TVs. After a very positive 2008, sales of LCD TVs were again up by 3 % in European consumer electronics market EUR billion ± in % * TV DVD players Hi-Fi systems Subtotal Audio, video games, etc Total * The percentage amounts are based on the unrounded market figures (Source: GfK, European market). The market trend in televisions is particularly important for Loewe because television represents the highest percentage of sales volume. Loewe committed itself to LCD TV at an early stage; in the meantime, it has become the dominant TV technology in Europe, representing 88 % of total TV sales. Television market in Europe by technology EUR billion TV market in Europe ± in % * CRT LCD Plasma TV market in Europe * The percentage amounts are based on the unrounded market figures (Source: GfK, European market). Management Report

50 Continued growth of the LCD TV market in 2009 Dynamic market growth in large-screen LCD TVs LCD sets continued to evidence the highest growth in sales revenue and volume in million LCD sets were sold in 2009, 27 % more than in In the most important 32 inch screen size segment, sales in Europe increased by a significant 27 % to approximately 11.9 million sets. Sales of largescreen LCD TVs 37 inches and larger, which are highly significant for Loewe, showed very dynamic growth, rising from approximately 7.6 million units in 2008 to approximately 9.4 million in The percentage of sales of LCD sets 37 inches and larger in the LCD TV total market expanded to just under 47 % in 2009 compared to 45 % in Due to the strong price declines in the individual screen size categories, the average price per LCD television at EUR 530 was approximately 19 % lower than the previous year s level despite the sustained trend to large-screen and more well featured sets. The average price for a 32 inch set came to only EUR 523 in 2009, down from EUR 667 in This reflects a decrease of 22 %. Plasma technology is becoming increasingly less important and primarily maintains its market share through aggressive pricing by manufacturers, which also has a negative impact on the LCD TV market. 2.9 million plasma TVs were sold in 2009, reflecting an increase in sales volume of 3 % which is in contrast with a 20 % decline in sales revenue. The average price for a plasma set declined by 22 % from EUR 1,083 in 2008 to only EUR 846 in Markets for LCD TVs decline in Spain and the Netherlands In fiscal 2009, the growth in value of the European LCD TV market exceeded the previous year s already high value by 3 %. Broken down by country, the development showed disparities, with the strongest growth being recorded in Italy (+ 22 %), Germany (+ 11 %), Austria (+ 6 %), France (+ 5 %) and Belgium (+ 3 %). In the Netherlands ( 13 %) and Spain ( 2 %), the markets for LCD sets declined, due in particular to the financial and economic crisis. In Sweden ( 11 %) and the United Kingdom ( 9 %), exchange rate effects of the local currency in relation to the euro had a negative impact on the markets. LCD TV market in Europe (by country) EUR million ± in % Germany 4, , United Kingdom 3, , France 3, , Italy 2, , Spain 1, , Netherlands 1, , Belgium Switzerland Sweden Austria Total Europe 19, , (Source: GfK, European market) Loewe AG

51 In Germany, the price per LCD set declined by 13 % to EUR 699 in 2009, but nonetheless it still clearly exceeded the European average price of EUR 530 by about 32 %. Prices in Belgium, the Netherlands, Austria and France also exceeded the European average, in some cases significantly. The highest price of EUR 791 continues to be seen in Switzerland where demand has been constant for very high-end and well featured flat-panel display sets for years. In contrast, only EUR 401 is paid in the United Kingdom due to exchange rates. The average price in Italy is EUR 442, this being accounted for by the higher percentage of small-picture sets and intense price competition. Loewe s market share in terms of value across all TV technologies among European retailers was 3.7 %, a slight decline from the 2008 figure of 3.8 %. Loewe s market share for LCD TVs declined by 0.2 percentage points to 4.2 % in In Switzerland, with its high price level, Loewe significantly expanded its market share by 1.7 % to 8.0 %; in France, we increased it slightly by 0.1 % to 1.9 %. In Austria, our market share declined slightly by 0.4 % to 6.8 %; the declines were more pronounced in the Netherlands, Belgium and Spain. The market share decline in Germany from 10.1 % to 9.7 % is mainly due to the fact that we kept prices relatively stable in our most important market to avoid a negative impact on income and deliberately passed up increases in sales volume. Loewe market share for LCD TV at 4.2 % in Europe Loewe share of the qualified retail LCD TV market in Europe (by country) in % ± in % Germany United Kingdom France Italy Spain Netherlands Belgium Switzerland Sweden Austria Europe (Source: GfK, European market) The European market for speakers Especially in Germany, Loewe significantly influenced the market for speakers in the years 2008 and As early as 2008, Loewe clearly increased its market share and at 10.2 %, it became the second most important brand based on sales revenue in the overall market. In 2009 we expanded our market share to 10.4 % and reinforced our second-place position. It was primarily Loewe s individual speaker products that made this very positive development possible. In addition to Germany, we also achieved a strong market share in the Netherlands, Belgium and France. The planned introduction of the Mediacenter in the second quarter of 2010 should have an especially positive effect on Loewe s position in the stereo segment. Market share for speakers climbs to 10.4 % in Germany Management Report

52 Key Performance Indicators Positive earnings despite losses in sales Sales down by 13 % to EUR 324 million At EUR 324 million, sales of the Loewe Group in fiscal year 2009 were 13 % lower than the 2008 figure of EUR 374 million. Business development in the different markets continued to exhibit divergent trends. In its key German market, Loewe was able to maintain the high sales level of the previous year in entertainment electronics. Export sales of EUR 131 million reflected a decline of EUR 43.4 million. Nonetheless, highly profitable large-screen TVs with a screen diagonal of 37 inches and larger accounted for 58 % of the Company s total sales as they did in the previous year. The negative consequences of the global financial and economic crisis have had a substantial adverse impact on Loewe s export business. This applies primarily to the important Spanish and Dutch markets. Compared to the previous year, sales in these two countries alone declined most sharply in fiscal year Compared to the rest of Europe, the financial and economic crisis impacted Spain and the Netherlands especially severely. The propensity to purchase durable goods was thus significantly below the level for Germany in This is also reflected in the especially negative market trend for LCD TVs. Positive EBIT of EUR 13.5 million Loewe countered the substantial price decline in all key segments with a discriminating product mix, value-based marketing and a consistently stable pricing policy. With the gross margin at a high level, it was therefore possible to achieve positive EBIT of EUR 13.5 million in 2009, although it fell short of the record figure of the previous year by EUR 15.0 million or 53 %. Key figures EUR million ± in % Sales EBIT Net income Capital expenditure Employees (annual average) 1,042 1, As a result, net income declined by EUR 10.9 million to EUR 8.0 million. Despite the further expansion of the high-quality distribution, capital expenditure was reduced by EUR 4.9 million to EUR 19.0 million and was thus EUR 1.3 million lower than depreciation and amortization. On an annual average, the number of employees increased by 35 compared to Loewe AG

53 Financial performance Significant decline in sales Sales in all four quarters of the fiscal year were lower than the figures a year earlier. The difficult economic conditions prompted many of our dealers to change their ordering behavior at the beginning of the fiscal year, leading to a significant reduction of retail inventories. Moreover, the first half of 2008 was strongly favored by positive stimuli from the UEFA 2008 European Football Championship, initial inventory effects and the production of high-end electronic modules for automotive and consumer electronics products. These effects were no longer present in the first half of The sales of LCD TVs in the first two quarters were considerably below the level achieved a year earlier. The only increase was in sales of LCD TVs in the 42 inch screen size category, on which the launch of the Art SL at year-end 2008 had a positive impact. In contrast, the decline for audio/dvd was more moderate. Overall, Loewe recorded a 20 % decline in sales in the first half. Sales in the third and fourth quarters were also lower than in the third and fourth quarters of Sales of LCD sets were down while audio/dvd showed moderate growth. Despite the successful launch of the new Art SL product family and upgrades of nearly the entire product line to include highdefinition televisions (Full-HD) and the continued positive business trend in audio/dvd, definite buying restraint became noticeable after the middle of the year. For that reason, a number of targeted sales campaigns were initiated in the second half in particular. For the entire year, sales of LCD flat-panel sets by the Loewe Group declined by 13 % to EUR million. As a percentage of total sales of LCD TVs, sales of highly profitable large-screen TVs with screen diagonals of 37 inches and larger, at 58 %, stayed nearly constant throughout This is proof of the sustained trend in the direction of larger displays. However, the majority of sales continued to be generated with 32 inch LCD sets in Loewe has a strong position in this segment with a large number of models. Percentage of highly profitable large-screen TVs is unchanged Sales structure by product area EUR million ± in % TV Audio/DVD ± 0 Other Total sales Management Report

54 Sales of audio/dvd at the same level as in 2008 The attractive range of audio components for home cinema solutions had a positive impact on sales of audio/dvd. The innovative products such as AudioVision, Multiroom Receiver and speakers had particularly positive effects. Sales of this product group were at the same level as in Primarily as the result of the expiration of a supply agreement and the significant decline in demand from the automotive sector, other sales such as technical support and accessories as well as the supply of electronic components decreased by 25 % to EUR 20.0 million in In its key German market, Loewe was able to maintain the high level of sales of the previous year in entertainment electronics in fiscal Primarily due to the loss of sales of electronic components for a German customer, sales in Germany dropped slightly; export sales declined by 25 %. The foreign share of Loewe s total sales revenue decreased from 46.6 % to 40.4 %. Business development in the export markets exhibited divergent trends, with the largest declines occurring in the key markets of Spain and the Netherlands. Sales structure by region EUR million ± in % Germany Benelux countries Spain France Italy Austria Switzerland United Kingdom Other European countries Europe (incl. Germany) CIS Australia Other non-european countries Countries outside Europe Total sales Loewe AG

55 Sales in Germany declined by 3 %. In the LCD TV segment, Loewe s retail market share was 9.7 %, reflecting a decline of 0.4 percentage points. Loewe deliberately did not increase volume on a temporary basis in order to avoid a negative impact on income. In the Benelux countries, Italy, France, Austria and the United Kingdom, subsidiaries perform sales and service for Loewe; this service is provided by external distribution partners in countries outside of Germany. In the Benelux countries and in the Netherlands in particular, Loewe recorded a 19 % decline in sales in 2009 to EUR 38.7 million. Development of business in Italy was partially influenced by aggressive competitor pricing. Loewe s sales of EUR 15.7 million were down 11 % year-on-year. Sales at Loewe France were also down by 11 % in 2009 to EUR 17.4 million. Loewe Austria also fell short of the 2008 figure by 9 % and achieved sales of EUR 13.4 million. Since May 2007, our subsidiary Loewe UK Ltd. has been responsible for sales activities in the United Kingdom. Activities focused on building up an adequate dealer and distribution network to safeguard sustained growth. In fiscal year 2009, the Company generated EUR 6.3 million in sales. In the other countries, Loewe products are marketed by external distribution partners. Loewe s most important export market without a company-owned sales company is Spain. Sales in Spain declined by 51 % to EUR 18.3 million. The sales revenues result from deliveries of televisions and other entertainment electronic products through our distribution partner. Principal causes for the negative business development are the repercussions of the global financial and economic crisis. Compared with other European countries, these factors had a particularly severe impact in Spain. Despite its comparatively small size, the Swiss market is attractive for high-end products. Loewe continues to be well positioned in Switzerland, where sales declined by only 8 % to EUR 9.8 million. Significant decline in earnings in 2009 At EUR 13.5 million in 2009, EBIT fell short of the previous year s high figure by EUR 15.0 million, or 53 %. The consistently stable pricing policy and the value-based marketing of Loewe products contributed in particular to strengthening the earnings situation. Compared with the competition, the selling prices of the Loewe product line have remained largely stable. Only in the lower price segments were moderate price adjustments implemented as compared to the same period of the previous year. A discriminating product mix of TV sets and audio/dvd, and the strong domestic business also supported the positive earnings trend. Lower procurement costs due to the weakness of the US dollar also had a positive impact. This made it possible to hold the gross margin at 29.2 %, nearly at the 2008 level of 29.9 %. Positive EBIT of EUR 13.5 million through valuebased marketing Due to significantly lower sales, Loewe achieved EBIT of only EUR 1.4 million in the first two quarters of 2009, falling short of the 2008 figure by EUR 12.8 million. The third quarter closed with EBIT of EUR 3.2 million, also signifying a clear year-on-year decline in earnings. Despite declining sales in the fourth quarter, a further optimization of the product mix and cost saving measures made it possible for the earnings of EUR 8.9 million to exceed the high fourth quarter 2008 amount of EUR 8.0 million by EUR 0.9 million. Management Report

56 Reduced cost of sales Nearly stable margins as a result of lower procurement costs and a further optimized cost structure In the year under review, the cost of sales declined by 12.6 % compared to the year before due to the reduced sales and production volume. This decline increased the cost-of-sales ratio only slightly from 70.1 % to 70.8 % in The primary causes for the stable development were continued low procurement costs favored by the weakness of the U.S. dollar, increased efficiency in production and the generally optimized cost structure. The gross margin declined overall from EUR million in 2008 to EUR 94.5 million in As a percentage of sales, the gross margin declined slightly from 29.9 % in 2008 to 29.2 %, a reduction of only 0.7 percentage points. Selling expenses Selling expenses declined in 2009 by EUR 1.9 million to EUR 74.0 million. While vigorous efforts at further expanding the brand position which were associated with correspondingly high expenses for communications and the expansion of retail shop-in-shop systems were continued, specific measures to cut costs had an impact. As a percentage of sales, the selling expenses rose from 20.3 % in 2008 to 22.8 % in Administrative expenses Administrative expenses declined year-on-year by EUR 0.8 million to EUR 8.7 million. As a percentage of sales, administrative expenses were nearly at the level of the previous year at 2.7 %. Other operating income, net At EUR 1.7 million in 2009, the balance of other operating income and expenses fell short of the previous year s figure by EUR 0.6 million. Other operating income in the amount of EUR 6.5 million was approximately EUR 2.4 million lower than in The primary reason was the elimination of cost reimbursements for development services. Other operating expenses, which to a great degree correspond to other operating income, dropped by EUR 1.8 million to EUR 4.8 million in Net interest expense Net interest expense (balance of interest income and interest expenses) in 2009 came to EUR 1.8 million, thus declining by EUR 0.8 million compared to the year before. The reduction is mainly due to the lower interest rates for the investment of overnight money and term investments Loewe AG

57 Report on assets and financial position Capital expenditure reduced Capital expenditure and depreciation/amortization EUR million Capital expenditure Depreciation/ amortization Capital expenditure Depreciation/ amortization Intangible assets Property, plant and equipment Financial assets Total Capital expenditure declined by EUR 4.9 million to EUR 19.0 million year-on-year. Investment in property, plant, and equipment focused on tools for new products, presentation systems for retailers, streamlining measures in production and on intangible assets with capitalized development costs. The primary cause for the approximately EUR 2.3 million increase in property, plant and equipment in 2008 was the commissioning of the new automated production line where large-screen TV sets with screens diagonals from 42 to 65 inches can be efficiently produced. The reduction in capital expenditure affected all areas having no product, distribution or brand relevance. Investments in new products, presentation systems for retailers and streamlining measures Depreciation and amortization in the amount of EUR 20.3 million in 2009 was at the 2008 level. Balance sheet ratios improved Despite the dividend distribution totaling EUR 6.5 million, the equity ratio rose from 36.9 % to 38.0 %. At EUR 89.0 million, the equity of the Loewe Group, including minority interests, was nearly at the 2008 level. Total assets declined by EUR 8.8 million to EUR million. Equity ratio increases from 36.9 % to 38.0 % Management Report

58 Non-current assets reduced The decline in non-current assets resulted for the most part from the reduction in property, plant and equipment and deferred taxes which declined primarily due to the utilization of tax loss carryforwards. This compensated for the increase in miscellaneous non-current assets. Non-current assets EUR million ± in % Property, plant and equipment Deferred tax assets Other non-current assets Total non-current assets as a percentage of total assets Property, plant, and equipment includes land and buildings, production facilities, and other factory and office equipment predominantly located in Kronach. The reduction is primarily attributable to the lower capital expenditure. The intangible assets included in the miscellaneous non-current assets chiefly relate to development costs for new products to be recognized in accordance with IAS 38. Lower current assets Inventories were slightly lower than in the year before. Sales in the fourth quarter of 2009, which were lower year on year, had an impact on the EUR 3.5 million reduction in trade accounts receivable. Miscellaneous current financial assets also declined. Current assets EUR million ± in % Inventories Trade accounts receivable after factoring Other current financial assets Total current assets as a percentage of total assets Loewe AG

59 Inventories reduced Prudent inventory management caused inventories to decline by 1 % year-on-year to EUR 50.5 million in Inventories of finished goods remained at the 2008 level; overall factory inventories declined slightly. Service inventories were slightly higher than in Increased focus on inventory management Composition of inventories EUR million ± in % Raw materials and supplies Work in progress Finished goods and merchandise ± 0 Total as a percentage of total assets Inventories are concentrated in the central warehouse in Germany because Loewe Opta Benelux is the only foreign company to maintain its own freight warehouse. Lower trade accounts receivable Adjusted for a minor amount of factoring, trade accounts receivable dropped by 4 % year on year to EUR 85.3 million. The reduction is primarily due to the lower sales volume in the fourth quarter of 2009 compared to the fourth quarter of Trade accounts receivable EUR million ± in % Trade accounts receivable before factoring Factoring Total trade accounts receivable as a percentage of total assets The minimal utilization of factoring in the amount of EUR 0.1 million in 2008 was due to temporal posting differences. Management Report

60 Solid equity base As of December 31, 2009, shareholders equity including minority interests was EUR 89.0 million and was nearly at the same level as in The equity-to-assets ratio improved from 36.9 % to 38.0 %. Non-current liabilities reduced The lower amount of non-current liabilities year-on-year resulted primarily from reduced non-current financial liabilities with almost no change in provisions. Non-current liabilities EUR million ± in % Pension provisions Other non-current provisions Non-current financial liabilities Total non-current liabilities as a percentage of total assets The decline in non-current financial liabilities relates to scheduled repayments and a special repayment of a long-term loan. Decrease in current liabilities Current liabilities EUR million ± in % Trade accounts payable Other current provisions Other current liabilities Total current liabilities as a percentage of total assets The reduction in trade accounts payable is primarily due to the lower production volume than in the year before. The decline in other current provisions was primarily the result of reduced retailer bonuses due to the lower sales. In addition to higher taxes and social security charges due, the increase in other current liabilities relates to the change in the fair value of financial derivatives Loewe AG

61 Stable financing Net bank balances EUR million ± in % Cash and cash equivalents Long-term liabilities to banks Short-term liabilities to banks Net bank balances Use of factoring The net bank balance of the Loewe Group improved by EUR 1.2 million from EUR 33.9 million as of December 31, 2008 to EUR 35.1 million as of the 2009 closing date. With no change in the high level of cash and cash equivalents, long-term bank debts were reduced by a special repayment. The possibilities for factoring were hardly utilized at year-end Net bank balances rise to EUR 35.1 million Since 2007, the syndicate agreement in the amount of EUR 50 million has been available until mid with improved conditions. The factoring agreement of EUR 35 million which has existed since year-end 2003 will expire in mid The solid capital structure and financing agreements will support Loewe s growth targets in the years to come. Solid capital structure and stable financing Positive free cash flow Free cash flow declined year-on-year by EUR 32.1 million to EUR 7.8 million. The deciding factor was the lower earnings and the reduced financing effect from the change in net current assets compared to the year before. Key figures of the consolidated cash flow statement EUR million ± Cash flow before changes in net current assets Change in net current assets not incl. factoring Net cash used for investing activities Total free cash flow Management Report

62 The chief causes for the increase in net current assets were the reduced non-interest bearing liabilities in the form of trade liabilities and current provisions. Current assets, net EUR million ± Inventories Trade accounts receivable not incl. factoring Other assets * Trade accounts payable Other provisions Other current liabilities * Total net current assets * excluding income taxes and derivatives Overall statement on financial position and financial performance In fiscal year 2009, the Loewe Group maintained its position in a persistently difficult economic environment while, however, not reaching its higher sales targets. The repercussions of the global financial and economic crisis were the primary cause of the negative export performance. Despite the significantly lower sales and production volume and continued expenses for the premium positioning, Loewe again generated a positive contribution to earnings and surpassed its own EBIT forecast of October 27, Moreover, the Company succeeded in preserving its outstanding equity base and even increased the equity ratio. Together with this further improvement of the financial base, the Loewe Group is very well positioned to successfully meet the risks existing in the overall economy. Marketing and sales All marketing and sales activities in fiscal year 2009 were focused on further solidifying Loewe s very good brand positioning in Europe. In particular, the presentation at the point of sale and communication were constantly refined, thus ensuring extremely effective and brand-adequate sales support Loewe AG

63 Qualitative expansion of distribution To further improve the quality of Loewe distribution and attract additional distribution partners as Loewe gallery operators, Loewe held international retailer conferences in March and April Retailers from the United Kingdom, Italy and Switzerland were invited to Kronach and to visit existing Loewe galleries in Nuremberg, Augsburg and Munich. Loewe systematically continued the international expansion of its distribution throughout A total of 52 galleries were opened worldwide in fiscal year This brought the number of Loewe top distribution points within and outside of Germany to a total of 216 galleries. After five galleries in 2008, six additional galleries were opened in 2009 in the key United Kingdom market. Loewe now has eleven galleries in the United Kingdom to reinforce its brand presence on a lasting basis. In the fourth quarter, Loewe also celebrated the opening of its first gallery in Spain, the Loewe Gallery Serrano in Madrid. 52 galleries opened in 2009 Targeted communication Loewe communication was targeted at supporting the Loewe markets in fiscal year Coordinated measures were introduced to further upgrade and expand the position of the premium brand. Loewe initiated the New for Old marketing promotion in March This focused campaign included a four page title jacket of the German magazine TV Digital as well as ads in a number of trade magazines. Prominent advertising appeared on a number online portals, and for the first time, Loewe spots were shown every Saturday during the Bundesliga broadcast on Sky. The campaign was optimally linked with retailers. The subsidiaries also offered large-scale promotions. As a result, visits to the Loewe website increased from an average of about 4,000 to almost 7,000 per day. This resulted in the acquisition of many addresses of interested persons who play a key role in Loewe s efforts to gain new customers. Retailers responded positively to the New for Old marketing promotion. Because of its great success, the promotion was extended for two additional months until August 31, 2009 in Germany and Austria. The peak event of the third quarter was the market launch of the Loewe Reference system. The Reference provides Loewe a position in the luxury segment for the first time. An exclusive campaign was started in advance of the market launch. Among other things, the measures directed to end customers included a high-quality and appealing presentation of the Loewe Reference on the Loewe website including an opportunity to register interest, a media campaign with ads in specific target group magazines and journals as well as editorial comments in trade journals. Comprehensive training was provided for retailers. This training enables our partners to perfect their individual sales pitches to the end customer and offer optimal service in the future. The fourth quarter highlight began in mid-november 2009 as the Loewe Brand Loyalty Campaign. Under this marketing promotion, an end customer could gain a price advantage of up to EUR 500 for trading in an old set to purchase a new Loewe LCD device. In addition to a media campaign and a direct mail offer to around 120,000 existing customers, extensive online activities were carried out in Germany. The communication via the Loewe website generated almost 10,000 contacts daily. Because of the great significance of the online activities, all Loewe websites were upgraded in Management Report

64 Impressive trade show appearance Loewe Reference home entertainment system sets standards at IFA Loewe presented the brand in its most pure form at the 2009 International Consumer Electronics Fair (IFA) in Berlin. The launch of the Loewe Reference system at the IFA was the ultimate showstopper. This Loewe system is setting new standards: Outstanding design through exclusive and high-quality materials A perfect picture from the 52 inch television, full HD panel and 200Hz LCD technology with an overall depth of only 60 millimeters Optimum sound through unique technology in the slim electrostatic speakers and the Reference Sound subwoofer Maximum ease of use with the new Assist Media remote control with OLED display and perfect access to exclusive content and multiroom applications through the Reference Mediacenter With the motto Home Entertainment in Perfection, Loewe showed other product highlights in addition to Reference, including the expansion of the Art product line to include the color version highgloss white. Another product introduction was the new Loewe MediaNetwork 2.0 which is integrated in the television set. The software update opens up new Internet applications for flat TVs with the current Mediaplayer. It enables Web-TV downloads, access to thousands of Internet video podcasts and countless YouTube videos. It is just as convenient to listen to audio books and radio plays as to play personally customizable streaming radio programs. Loewe also introduced MovieVision DR+, a portable video archive for storing and archiving videos in HDTV quality, which is still unique to the market. The new Loewe Internetradio iphone app can be used worldwide while traveling to add international radio stations to personal favorites. Loewe presented the Individual rack system for the first time at the IFA. As a mounting solution, the rack systems are optimally matched to Loewe TV sets and devices and form the ideal complement to the home cinema system. With its partner GIRA, Loewe introduced the innovative possibilities of a modern home network. The Loewe Home Cinema system is an example of an integrated home network. In audio as well, Loewe presented top-notch innovations at the IFA. The AudioVision sound system and BluTech Vision Interactive are an ideal complement to the product portfolio. The new BluRay player has very fast loading times and the new network connection enables the user to download additional content for the inserted film, for example trailers and documentation. Loewe continues to gain market share in audio both in Germany and the rest of Europe. Loewe s market share for speakers reached a new high of 14.2 % in Germany in September 2009 and 5.2 % in the rest of Europe. In Germany, Loewe is thus at second place in Europe and 6th place among the top ten speaker brands. Despite the difficult economic conditions, customer traffic at IFA was at the level of the previous year; order volume was even slightly higher. Besides the addition in the first half of 2009 of new technologies and more screen size categories to the product lines Connect, Individual and Art, the Xelos SL 32 and SL 37 expanded the Art product line to include an attractive entry-level category in the final quarter. It was also possible to ship the Art SL 32, 37 and 42 inch LCD sets in the new high-gloss white color scheme just in time for the Christmas shopping season Loewe AG

65 Awards Loewe was awarded the most prestigious prize of the German exhibition industry, the gold ADAM 2009 in the category XXL (exhibition stands larger than 1,500 square meters). FAMAB, the Association for Direct Business Communications, together with the FAMAB Exhibition forum and the Forum Design und Architektur awarded Loewe the prize for its presentation at the IFA Loewe wins prestigious first prize of the German exhibition industry Loewe TV sets also ranked very well in 2009 in current test reports by trade journals and online journals. For example, Stiftung Warentest and the testing staffs of the leading magazines Video HomeVision and audiovision again honored Loewe products because of outstanding test results. Loewe received the most positive test reports for the Art SL, one of the Company s highest selling products. In addition to the TV sets, the Loewe Blu-ray player BluTechVision Interactive and the portable video archive Loewe MovieVision DR+ received outstanding test ratings. Customer Relationship Management (CRM) Loewe began the introduction of the CRM system in December 2009 in Germany with 20 pilot retailers. Through dialogue with the end customers, the goal of Loewe CRM is to learn even more about their needs and preferences and bring all corporate activities in line with them. At the same time, CRM provides Loewe optimum control of the interfaces with both retailers and consumers. Since the CRM project was initiated in 2008, key processes have been improved and made more effective. In the future, Loewe s customer contact will become even more international and multilingual. Responsibilities will become even more dialogue-based and regularly occurring marketing campaigns will provide them important stimulus. The simplicity and intuitive interaction of the Loewe CRM system offers the greatest benefit for retailers. The introductory training of the first pilot retailers has already brought Loewe positive feedback about the new system. In addition to the complete roll-out of the CRM system in Germany, the next project steps also involve preparation for the introduction on an international level. Development and production The key event for production at the beginning of 2009 was the official dedication ceremony and commissioning of the new final assembly line with numerous guests from the political and economic spheres in attendance. The most prominent speaker was Bavarian Economics Minister Martin Zeil. The new production line takes ergonomic requirements for the production of the most advanced flat-panel displays with a screen diagonal of up to 65 inches into account to a maximum degree, thus enabling significantly more flexible and efficient production. New modular production line dedicated The new Reference System was the star of Loewe s exhibition stand at the International Consumer Electronics Fair (IFA) in Berlin. The focus was on the 200Hz television with a 52 inch screen diagonal and ultra-flat electrostatic speakers. The most striking features of Reference are excellent workmanship and top-quality materials. It offers perfect sound and excellent picture quality. The start of full production of Reference on the new final assembly line once again proved that the newly implemented concept can produce large-screen LCD televisions efficiently. During the IFA 2009, Loewe s exhibition stand offered visitors from the retail sector new information about current technology projects. The 3D television with a picture frequency of 200Hz and a screen that can be easily switched between three-dimensional and two-dimensional image reproduction attracted particularly great interest. Management Report

66 Work on the new electronics platform for slim TVs with LED backlighting was pushed forward. The AV series a first short run order in production has already been built. The new platform will not only make it possible to design even thinner sets, it will also lead to new highly promising applications such as TV applications with an Internet connection. The CI Plus system is becoming established as a new module-based decryption system. Sets equipped with this system are expected to have a very high level of data security. With that in mind, Loewe has developed a new electronic platform. To offer end customers the best solution in the market, all new Loewe TVs have now been switched over to this chassis. Significant steps in the area of system competence were taken with the introduction of the BluTechVision Interactive Blu-ray player and the AudioVision audio-video system. And Loewe has now introduced Assist Media, a learning remote control that can not only control the entire product portfolio but also contains a database for the control of set-top boxes from leading manufacturers. The remote also controls the new Multiroom Receiver via a bidirectional transmission path. Assist Media shows all information of the Multiroom Receiver, including cover art images, on an OLED display. Mediacenter secures competitive advantage in multiroom sector An external development partner was unfortunately not able to complete the extensive product development of the Loewe Mediacenter, the intelligent media center for the top-quality home cinema system, in Nonetheless, all work is on schedule for a launch in the second quarter of In addition to its multiroom system, the Mediacenter also enables Loewe to provide a design-oriented audio-video player and audio server. Despite the delayed product launch, this unique system will signify a significant competitive advantage in multiroom networking. Predevelopment started work on the VAMOS (supply efficiency through assistive, modular technologies in need-based scenarios) project with the partners SOPHIA (consortium leader), University of Nuremberg, University of Erlangen and LAP Consult. This project s goal is to provide technical assistive devices and infrastructure for elderly persons with health challenges to enable them to remain in their own homes for as long as possible. As part of the project, Loewe is developing a television set that can be used to download patient data from home and make image communication possible with the care giving facility. Number of employees slightly higher Loewe employed 1,042 people on an annual average, most of them at the Company s headquarters in Kronach. The average number of employees increased by 35 persons over the average for The reinforcements in marketing, sales and development were necessary to support the continued product launches and advance Loewe s brand presence Loewe AG

67 The proportion of trainees in the entire workforce at Kronach continued to develop positively. On an annual average, 8 % of the workforce completed in-house training. Employees by division Annual average ± Marketing, sales, service, quality Development Production Administration and services Trainees Other (permanently absent, part-time retirement) Total employees 1,042 1, Compared to the previous year, the average workforce in the foreign subsidiaries was increased slightly by three persons to 99 employees to enhance the sales capability. Employees by country Annual average ± Germany Benelux countries ± 0 France ± 0 Italy ± 0 Austria UK Total employees 1,042 1, Strategic expansion of employee development The demographic change now occurring demands a strategy-oriented human resources policy and forward-looking personnel marketing activities to identify and retain qualified employees over the long term. For that reason, Loewe stayed on course in 2009 and further strengthened its position in the labor market. Areas of focus included close cooperation with universities for the development of technical qualifications, increased networking activities between schools and business as well as participation in selected career fairs and university projects such as the Bavarian Elite Academy and Campus of Excellence. Strategy-oriented human resources policy for identifying and retaining qualified employees Management Report

68 Another fundamental priority is the support and qualification of the existing active workforce. This includes the systematic continuation of the Strategic Competency Management project, the optimization and expansion of company health management in the form of various measures to support sports and health activities in the Company with the participation of regional clubs and institutions as well as activities to avoid improper stresses at the workstation. Support of families is becoming increasingly more important as a location factor. For that reason, we carried out various workshops, installed new task-force groups and supported the local Family Alliance as part of a family-conscious human resources policy. In addition, a health care and occupation coordinator position was established. Flexible working hours and corresponding human resources requirements planning undergird the support of families within the Company. Loewe will have a presentation on the planned Upper Franconian Family Portal in the Internet and thereby score points in the competition for the best employees. Additional priorities were established for the continuous upgrading of qualifications or continuing and advanced training. Notable examples include expansion of the Company-wide language training courses and activities for improving intercultural skills as a contribution to the increased internationalization. Furthermore, software training programs for development, quality and metrology in close cooperation with the University of Hof remain of additional importance. An in-service trainee program for new employees was also begun. Called Integrated Employee Development, it includes themes such as brand positioning, project management and presentation techniques as well as cross-departmental activities. This trainee program was continued in Furthermore, multi-faceted executive staff training makes a contribution toward meeting the requirements of change in business. A high level of innovative expertise is the essential pillar of our success. To create the conditions for this on a sustained basis, Loewe is participating in a three-year joint project of the German government and the European Union. Spearheaded by the University of Bamberg, and with the participation of Loewe and other companies, the project entitled Values-based and flexible opportunities for human resource management to preserve and expand a culture of transformational innovation will pursue the goal of developing and evaluating human resource management measures. On an individual and team-based level, a culture of trust and innovativeness will be supported equally under scientific guidance. With full involvement of employees, tailored solutions will be implemented, which are intended to open up additional innovation potential and refine the corporate culture. In doing this, Loewe is once again taking into account the challenges of demographic change. The joint pay framework agreement (ERA) for industrial workers and salaried employees was introduced as scheduled on January 1, It is worth mentioning that Loewe engaged in multi-employer bargaining in the design of the new collective agreement package and agreement was always reached on the plant level. This made an arbitration commission unnecessary. To reduce personnel costs, use was made of the option of flexibilizing collective agreements by delaying the second step of the rate increase for seven months from May 1, 2009 to December 1, This arrangement also applied to non-tariff employees. Of particular importance are the flexible measures for adjusting production capacity to the varying market demand over the course of the year. While the early months were characterized by a reduction of working hours in the form of unpaid blocks of days and a reasonable number of short working days, it became necessary in the fourth quarter to secure the higher production volume through a temporary conversion of part-time to full-time work and hiring of temporary employees Loewe AG

69 Sustained environmental orientation and quality management Continuous reduction of the environmental impact of all corporate activities is an essential goal at Loewe. For that reason, we expect and promote environmental awareness and personal responsibility among all our employees. Beyond the legal requirements, Loewe participates in Umweltpakt Bayern, a Bavarian government and industry initiative committed to continuous improvement of the environment, and has certified its environmental management system under DIN ISO and its quality management under DIN ISO Loewe has been a member of QuB (Quality Association of Environmentally Conscious Companies) since August 2008, thus reaffirming management s commitment to sustainability. Loewe employs specific annual safety and environmental improvement measures to actively increase its energy efficiency. Great progress made in increasing energy efficiency Several of the most important activities in this area are: Installation of a new central compressed air plant with heat recovery to significantly reduce energy expenses Thermal insulation of buildings to reduce the consumption of energy for heating Installation of lighting controlled by outside light in production to reduce costs for electricity Initiation of a Low Temperature Soldering project to reduce energy consumption in production In-house workshops with outside energy consultants to discuss and implement more extensive energy saving potentials Loewe s involvement in committees of the German Electrical and Electronic Manufacturers Association (ZVEI) (national) and Digital Europe (European) prepares it extremely well to implement the EU s environmental directives. In collaboration with Philips and Sharp, Loewe established the manufacturers cooperative arrangement ProReturn back in February Its objective is to fulfill obligations arising from the Act Governing the Sale, Return and Environmentally Sound Disposal of Electrical and Electronic Equipment (ElectroG) of March 23, 2005 in a more efficient manner both in terms of economics and the environment. By year-end 2009, Loewe had taken back approximately 7,700 tons of used equipment and disposed of them in accordance with environmental standards. Another focal point in the development of technically high quality and environmentally safe products was the early implementation of the Restriction of Hazardous Substances Directive (RoHS). Of course, Loewe uses no halogen-containing flame retardants in circuit boards and in plastic parts. Even in the design and development stage of all products, it is considered very important for them to contain no pollutants and be recycled as easily as possible. The REACH Ordinance of June 2008 (Registration, Evaluation, Approval and Restriction of Chemical Substances) governs among other things the handling of particularly hazardous substances. Based on its environmental policy, Loewe strives not to use such substances. Great progress was achieved in making Loewe products more energy efficient. Standby consumption has been significantly reduced to less than one watt. Operating consumption was also reduced through the use of a light sensor that measures ambient brightness and adjusts the backlighting of the screen accordingly. Compared to conventional sets, the possible savings are %. The integration of additional functions such as the hard disk recorder or various DVB tuners also makes it possible for the Loewe TVs to save electricity compared to comparable single components. Not to be disregarded is the lower use of materials, which contributes to the protection of our environment s resources. Management Report

70 As part of waste minimization, suppliers are involved at an early stage in order to select suitable packaging. In this connection, a standard for reusable packaging has gone into effect with several suppliers. Loewe has underscored its efforts to actively support new environmental technologies by installing an emergency power system based on fuel-cell technology in October In the area of quality management, after the positive recertification in 2007, Loewe passed the second follow-up audit in 2009 without exceptions, confirming Loewe s target-based and process-oriented quality management. The standard has been substantially revised for the recertification in 2010 according to the new DIN EN ISO 9001:2008, stating the stringent inclusion of external partners which act as Loewe s extended workbench. Concrete program created for improving efficiency and product and service quality Thematic priorities in 2009 remained the continuous improvement of product and process quality (CIP). This Continuous Improvement Process included 33 technical CIP groups, into which all departments are integrated, with the thematic priorities of product quality (production quality and field quality), and process quality of the value-added processes such as product creation, series production and service. In 2009, the measures initiated in the CIP groups were integrated in processes and workflows and thus implemented into routine operations. The Loewe Fit for Future program which was created in 2009 primarily serves to improve efficiency and quality of products and services. A number of single projects were derived from these measures for The continuous expansion of the Balanced Scorecard (BSC) to all areas improves the strategy process and accordingly the execution of the Company s strategy in the various divisions. This expansion of the BSC to all areas completes the introduction. Attention will continue to be directed to the best quality of products and services in 2010 with an increasing focus on system quality. Moreover, it will continue to be necessary to optimize production quality with regard to testing quality and product quality in production. The software component and the complexity of the products is increasing steadily so that the focus will continue to be on test automation in software qualification. Another focus in the current year will be to clearly orient and define the products according to customer benefit. In this context, the quality tool QFD (House of Quality) will be reviewed for suitability in the context of a pilot project. Loewe s consistent premium brand strategy will thereby be in focus. Annual Shareholders Meeting on May 26, 2009 At the Shareholders Meeting of Loewe AG held in Munich on May 26, 2009, all seven items on the agenda were adopted with only a few opposing votes. The agenda included a resolution for an authorization to acquire and to utilize treasury shares Loewe AG

71 Corporate governance declaration in accordance with the German Accounting Law Modernization Act (BilMoG) The Company has published the corporate governance declaration to be issued in accordance with BilMoG on its website in the area Loewe AG, Investor Relations, under the heading Corporate Governance. The declaration is available for download there. Events after the balance sheet date In an ad hoc announcement in accordance with Section 15 of the German Securities Trading Act (WpHG), Loewe AG reported concerning the planned majority acquisition of at least 75 % of the shares of the unlisted company MacroSystem Digital Video AG, Wetter (Ruhr). The conclusion of the acquisition is tied to the adoption of the insolvency plan by the creditors meeting and the fulfillment of additional contractually agreed conditions. The execution of the agreement is planned for the end of March Through the planned acquisition of a majority interest, Loewe will strengthen its development competence and acquire additional expertise in multimedia networking. Explanatory report of the Executive Board on the disclosures pursuant to Section 315 (4) of the German Commercial Code (HGB) Except for sub-section 7, last paragraph, the following information has not changed from fiscal year On December 31, 2009, the Company s share capital amounted to EUR 13,009,229. It is divided into 13,009,229 no-par value bearer shares. All shares confer the same rights. Each share confers one vote in the Annual Shareholders Meeting and the same participation in profits. 2. No voting rights restrictions exist. No restrictions relating to the transfer of shares are known. 3. The direct or indirect interests in the share capital which exceed 10 % of the voting rights and reported to the Company are listed in the Notes on page 129 et seq. 4. No shares with special rights exist, in particular such conferring supervisory powers. 5. No system of control of voting rights exists for the event that employees hold an interest in the capital and do not directly exercise their control rights. 6. The members of the Company s Executive Board are appointed and removed by the Supervisory Board pursuant to the provisions of Section 84 of the German Stock Corporation Act. The Articles of Incorporation of Loewe AG provide no further provisions in this regard. The Shareholders Meeting decides on amendments to the Articles of Incorporation using a simple majority of the votes cast and of the share capital represented, unless the law mandatorily requires other procedures. Management Report

72 7. Pursuant to Section 76 (1) of the German Stock Corporation Act, the Executive Board is required to manage the Company under its own responsibility and represents the Company judicially and extra-judicially pursuant to Section 78 (1) of the German Stock Corporation Act. Pursuant to Section 5 of the Articles of Incorporation, authorized and conditional capital exists a) By resolution of the Shareholders Meeting on June 2, 2005, new authorized capital was created in the amount of EUR 5,200,000. This resolution authorized the Executive Board, with consent of the Supervisory Board, to increase the Company s share capital until no later than June 1, After the partial utilization through the capital increase in October 2005, the authorized capital still amounts to EUR 2,598,154. See page 113 et seq. of the Notes of Loewe AG for further details. b) Additional conditional capital of up to EUR 398,400, divided in up to 398,400 shares, exists for the implementation of a stock option plan. The option program expired on July 1, The option rights were forfeited without the Company being obligated to provide any form of compensation. See page 113 of the Notes for further details. By resolution of the Annual Shareholders Meeting on May 26, 2009, the Company was authorized to acquire treasury shares for the Company of up to a total of 10 % of its share capital via the stock exchange or via a public offer to buy addressed to all shareholders. Together with the other shares held by the Company or to be treated as such in accordance with Sections 71d and 71e of the German Stock Corporation Act, the acquired shares may not at any time constitute more than 10 % of the share capital. The Executive Board was further authorized, with consent of the Supervisory Board, to offer the acquired shares to all shareholders, to sell them via the stock exchange, to offer them to or recall them from third parties in connection with business transactions without the necessity of an another resolution of the Shareholders Meeting being required for this. See page 114 et seq. of the Notes for details. 8. Public Offerings for the purchase of shares of the Company are governed solely by the Articles of Incorporation and the law, including the provisions of the German Securities Purchase and Takeover Act (WpÜG). The Shareholders Meeting has not authorized the Executive Board to take any actions falling within the former s sphere of responsibility in order to thwart the success of potential takeovers. 9. No compensation agreements of the Company were entered into with the members of the Executive Board or employees. Compensation of the Executive Board of Loewe AG The compensation of the three Executive Board members of Loewe AG consists of two components, fixed and incentive compensation. The amount of the incentive compensation for the Executive Board is based on the targets defined by the personnel committee of the Supervisory Board for the fiscal year in question. In addition to strategic goals, these targets primarily include economic figures of the Loewe Group. See page 33 of the Corporate Governance Report and page 135 of the Notes for comprehensive information on the individual compensation of the Executive Board Loewe AG

73 Opportunities and risks of future development Risk management at Loewe Intense global competition characterizes the market for consumer electronics. As a comparatively small company, it is all the more important for Loewe to identify risks that are inseparable from business activity and reduce them to an acceptable level. Anticipatory risk management contributes to sustainable development and increasing earning power. Forward-looking risk management By clearly defining risk areas and fields, Loewe is able to systematically identify, evaluate and document existing individual risks. An essential component of this process is the evaluation of possible impacts on the Company s financial position and performance. The remaining residual risk is determined by evaluating existing safeguards and estimating probabilities of occurrence. It is the task of every person responsible for risks to promptly develop measures for avoiding, reducing and hedging risk and to implement them promptly if necessary. In the subsequent risk monitoring process, the efficiency of the countermeasures is reviewed and their implementation is monitored. The risk management system is an integral component of Loewe s entire planning, controlling, and reporting process. A transparent reporting system of managerial accounting makes it possible to detect discrepancies in key data early, so that actions can be initiated or operational changes implemented in time. Despite such measures, even the installed risk management system cannot guarantee that all risks are completely ruled out. The major risks are described below. Premium positioning in the home entertainment market The most important opportunities are in the successful positioning of the Company as a premium provider in the market for high-quality flat-panel sets and home entertainment systems. For the implementation of our product and price policy oriented to quality and stability of value, the price premiums achievable, the costs of manufacturing the products and the achievable sales volumes must be kept in reasonable balance. Loewe already practices strict cost discipline but also makes targeted investments in the positioning as a premium brand. Only if customers identify with Loewe products based on their quality and product characteristics will they also be willing to pay a higher price. This is the only way to compensate for the higher costs and generate an adequate contribution to margin. Premium brand offers Loewe opportunity for clear differentiation in the market In the next few years, many households will be replacing their picture-tube units with flat-panel sets. This trend is supported by technological innovations, the above-average market growth for large-screen LCD TVs in Europe and the increased brand awareness of consumers. This opens up attractive opportunities for Loewe to differentiate itself through high-end, fully featured sets and generate attractive margins. Product design and individual design and equipment features will continue to be an important differentiating and positioning criterion. In particular, the modular flexibility of Loewe products (recording to hard disk, digital reception of high-definition media, connectivity to MP3 players and PC networks through Network Mediaplayer, etc.) will provide customers individual and customized solutions with added value. As part of a balanced product mix, the clear focus is on the high-definition digital media of the future. In addition to sound systems, new rack systems perfectly match Loewe TV sets and technology to the Home Cinema System. In the meantime, several rivals have increased competition in Loewe s target segment in both design and features. In this environment, the potential for sales and thus attainable contributions to margin could be limited for Loewe. In the future, it will be necessary for Loewe to set itself apart from the competition through unique selling points and differentiating features in order to ensure the valuebased marketing of individual home entertainment systems at stable prices. Management Report

74 Sales and earnings risks could also arise if new products are not launched in time or if production of current products is started late due to unavailability of materials. Systematic project controlling and permanent monitoring of critical success factors make it possible to identify discrepancies early and initiate appropriate countermeasures. To increase planning predictability in production, sales forecasts are subject to ongoing review using market analyses, intense market observation, etc. Furthermore, the Loewe world of brand experience, which in addition to the attractive products, includes in particular the standardized, high-quality retail presentation, the brand communication and premium service, makes an important contribution to premium positioning and differentiation. Intensifying the international training activities of qualified retailers should enable our retail partners to better tailor their individual sales pitches to the end customer and offer brand-adequate service in the future. Impacts of the global financial crisis Loewe s important markets in Spain and the Netherlands were hit hard by the financial crisis The present economic conditions in parts of Europe significantly strained Loewe s business development, especially its export business, in This applies in particular to the important Spanish and Dutch markets. The current outlook for the European core markets is clouded by considerable uncertainty, primarily related to the intensity of the economic downturn in the export markets and in private consumption. Like many other companies, Loewe has had to deal with the severe recession and adjust production capacity through appropriate measures. Problems with automotive suppliers have also resulted in the cancellation of contract manufacturing of tuners in automotive electronic systems. The dampened economic conditions could limit sales potential in the next few quarters and the planned contributions to margin for Loewe in this segment. To be able to respond flexibly and proactively to changes, we will very closely monitor the economic developments in our core European markets. Expansion of technological differentiation potentials Sustainable and credible premium positioning requires that important product features of flat-panel display sets and home entertainment systems, such as picture and sound quality, user interfaces or system capability, are judged positively in direct competition. Should this not be convincingly possible, there is the risk of a negative impact on the achievable price premiums and sales potentials. Loewe therefore concentrates on areas of technology that offer customers added value and present opportunities for differentiation. The new platform for slim TV sets will not only make it possible to design even thinner sets, it will also lead to new highly promising applications such as applications with an Internet connection. In addition, this platform includes the module-based decryption system CI PLUS. To minimize the risks of increasing complexity of technical platforms and further increase the reliability of new product generations, new chip concepts, for example, are also selected by taking into account the provided software. If, however, established chip suppliers withdraw from the entertainment electronics sector, it will be necessary to develop alternative platforms and concepts. This would tie up resources and entail the risk of startup delays. To minimize this risk and to implement the announced development objectives, human resources were increased in software development. Dependence on external development and cooperation partners can impact the product introduction and accordingly the generation of sales potential. Through more intensive cooperation with external partners and detailed project descriptions, we intend to increase startup reliability to be able to respond early to possible problems in the implementation process. Furthermore, the acquisition of an at least 75 % majority interest in MacroSystem Digital Video AG should increase our expertise in the multimedia networking of home entertainment systems Loewe AG

75 Another risk is represented by the lack of continuous standardization in Europe for the reception of high-definition television. In the premium segment, this may possibly lead to the postponement of planned purchases. Through intensive cooperation in committees, including on the European level, Loewe actively participates in the standardization process. Furthermore, existing contacts with institutions, universities and research facilities of significant companies are intensively exploited and continuously expanded. LCD TVs with new LED backlighting technologies are currently being introduced to the market, resulting in price pressure on established technologies. Loewe will also respond to this trend and offer the first LCD flat-panel display sets with technologically fully developed LED backlighting technology in the current fiscal year. The establishment of strategic partnerships, e. g. cooperative agreements with research institutions on subsidized projects and constant observation of the activities of the technology leaders makes it possible to identify and select relevant technologies in good time. Attractive purchasing conditions and availability of materials Competitive procurement conditions and adequate availability of materials are of great significance especially for the higher priced, large-screen LCD panels. Our lower purchasing volume of flat panels and important components compared with the competition makes it more difficult to achieve attractive purchasing conditions. Supplier delays, delivery shortfalls or quality defects can also lead to temporary production disruptions and thereby negatively impact the earnings situation. The general financial and economic crisis has caused procurement risk to rise on the supplier side, which is apparent in, among other things, an increasing number of insolvencies. Furthermore, there is a risk that future cost reductions on the purchasing side will not compensate for the negative impact of lower sales volumes and declining sales prices. The financial crisis may increase procurement risk Loewe counteracts these problems by systematically bundling volume with key suppliers, reducing component diversity and qualifying alternative components and suppliers. Supplier selection, evaluation and control procedures, which can also include an evaluation of the financial situation, are used to limit procurement risks. Using comprehensive supply chain management, Loewe attempts to systematically minimize purchasing risks and optimize the procurement and production process. If technically feasible, relations with second-source suppliers are established to avoid production disruptions if product discontinuations are announced or suppliers become insolvent. However, the maintenance of several procurement sources also ties up human resources. Management Report

76 Furthermore, we are systematically expanding existing agreements and continuously coordinating demand directly with suppliers and their partner organizations. Product quality and liability risks Successful and long-term implementation of the premium strategy presupposes an exceptional level of quality. High standards apply to the reliability and safety of products. If these standards are fallen short of by a large margin, there is the risk of damage to the reputation of the Loewe brand with a long-term adverse impact on the Company s earning power. Technical problems can lead to time-intensive and expensive rework and repair measures. In addition, deteriorating product quality can result in higher warranty expenses and replacements as a gesture of goodwill. It has become more difficult to achieve high quality goals in recent years because measures to increase performance led to greater stress on the assemblies used. The chief causes for defects in picture-tube sets in the past related to the picture-tubes used, line output transformers and soldering in 100Hz picture-tube sets of the production period March 1999 to October This prompted a number of rework and safety inspection campaigns. The now sole production of flat-panel display products should make a higher quality level possible. Intensive and permanent quality assurance Furthermore, Loewe products are under constant quality monitoring in the production process. Intensive tests are performed on the pilot series. In addition, a repair detection, control and tracking system makes it possible to determine the need for spare parts and the failure rates of the products on the market at an early time. This enables us to initiate countermeasures early and avoid subsequent errors. Because of the high material component in flat-panel display sets, the quality of our suppliers becomes increasingly important. In addition to detailed supplier evaluations, Loewe regularly performs product/ system audits and on-site acceptance inspections. Personnel risks An aging and simultaneously shrinking population in Germany contains the risk that it will not be possible to recruit adequately qualified personnel in the future. In addition, inadequate succession policies could result in locational disadvantages or loss of know-how. Loewe made preparations early on for counteracting this demographic change. We continuously establish contacts with potential future employees by building up close relations with schools, vocational schools and regional universities. At the same time, Loewe regularly participates in vocational training and human resources events. Another important pillar is in-house training. Strategy-oriented competency management is used to systematically identify employee expertise and potential, and specific employee development and support of career growth is initiated Loewe AG

77 IT risks In information technology, protection against unauthorized data access or data abuse is becoming more and more important; however, it cannot be completely guaranteed. Loewe counteracts these risks through, among other things, technical protective measures such as use of virus scanners, firewall systems and access controls at the company and user level. Foreign subsidiaries Loewe generates roughly 40 % of its sales abroad. In Belgium, Italy, France, the Netherlands, Austria and the UK, marketing of Loewe s products is performed by subsidiaries. In all other countries, independent distributors perform this function. The advantage of having its own subsidiaries is the more direct relationship with the customer, facilitating better implementation of Loewe s premium strategy and higher sales margins. This is associated with higher operational risk because the marketing organization s fixed costs are incurred independent of the sales revenue achieved. To limit these risks, we have avoided costly decentralized warehousing by shipping directly to customers in Italy, France, Austria and the UK. Essential administrative functions are centrally located in Germany in order to keep fixed costs of Loewe s foreign companies at a minimum. In addition to the current reporting, quarterly meetings are held with the persons responsible for the countries in order to detect deviations early and to initiate countermeasures. Financing risks A syndicate agreement tied to compliance with covenants and concluded with the principal banks in the amount of EUR 50 million (maturing on June 30, 2012) and a factoring agreement (term to maturity until June 30, 2010) with an additional financing volume of EUR 35 million are available to ensure Loewe s medium-term financing. Negotiations concerning follow-up financing for factoring are already in progress. Loewe s financing secured Only small short-term liabilities to banks existed as of December 31, 2009, and no use has been made of factoring. Monthly Group liquidity planning is prepared for one year in advance for regular liquidity control. Moreover, multiyear financial planning was developed to secure medium-term and long-term liquidity. Even in the current financial and economic crisis, we assume that Loewe s solid capital structure and existing financing agreements should prevent Loewe s growth potential from being limited in the years to come due to the financial situation. Financial investment risk The cash and cash equivalents available in accordance with our financial planning are invested in interest-bearing overnight money and term financial investments with banks subject to the deposit protection fund. Through the described selection of investments, we seek the greatest possible risk minimization. The goal of Loewe s capital management strategy is to safeguard the business operations, increase the company value, create a sound capital basis for the financing of the business policy, and guarantee dividend payments and debt servicing. Management Report

78 Currency risks Appreciation of the U.S. dollar in relation to the euro can lead to higher procurement costs The currency risk for Loewe is primarily limited to the procurement of LCD panels that are predominantly settled in U.S dollars. Accordingly, an appreciation of the U.S. dollar in relation to the euro will lead to higher procurement costs. To control the associated exchange rate risk, guidelines were established that guarantee a proportional hedge of the price risk. To this end, the anticipated foreign currency volume is determined using a rolling 18 month projection and up to a defined percentage is hedged by forward exchange transactions, call options and zero cost options. In addition, billing in GBP to the subsidiary Loewe UK Ltd., Irvine, Scotland constitutes a smaller risk. Legal risks Legal risks arise primarily from complaint and warranty claims, claims for compensatory damages and lawsuits. Recognizable legal risks are covered either by insurance or if recognizable liabilities already exist to an adequate degree by provisions. Nonetheless, losses can arise that are not or are only inadequately insured or significantly exceed the provisions. Risk Management and Financial Derivatives See pages 124 to 126 of the Notes for details concerning risk management in connection with financial derivatives as well as credit and market risks. Overall estimation of the risk situation The described risks have the potential of having a significant adverse impact on the financial position and financial performance of the Loewe Group. From the present perspective and considering all the known facts and circumstances, there are currently no risks that could endanger the continued existence of the Loewe Group in the foreseeable future. Control and risk management process with regard to accounting The Executive Board bears complete responsibility for the internal control and risk management system with respect to the accounting process. All companies included in the consolidated financial statements are integrated via a clearly defined management and reporting organization. Structural organization The responsible local financial accounting departments are responsible for preparing the financial statements of the foreign subsidiaries of Loewe AG in accordance with local accounting principles. The separate financial statements of Loewe AG, Loewe Opta GmbH and the consolidated financial statements of Loewe AG in accordance with IFRS are prepared centrally in the Finance and Accounting department in Kronach. The separate financial statements for all Group companies except Loewe Belgium are prepared within a uniform SAP R/3 accounting system. The central accounting service center in Kronach supports and coordinates the preparation of the financial statements of the Loewe subsidiaries Loewe AG

79 The accounting of the consolidated financial statements is based on a standardized consolidated chart of accounts in which the data of the separate financial statements are reconciled by machine. The consolidation is accomplished technically using specially designed accounting software and supporting subsystems, including, for example the determination of deferred taxes in accordance with IAS 12. Workflow organization The separate financial statements and the consolidated financial statements are prepared using a detailed project overview. The employees responsible continuously monitor the process. Internal procedural and accounting standards that are regularly adjusted to external and internal developments exist for materially important balance sheet items and accounting procedures. The financial statements of all consolidated Group companies are prepared in accordance with uniform accounting policies and included in the consolidated financial statements. All companies are included in the scope of consolidation and are fully consolidated. The work involved in preparing the separate financial statements and the consolidated financial statements is performed following the principles of segregation of functions and dual control. The accuracy and completeness of all data relevant to the financial statements is ensured by a large number of plausibility checks as well as preventive and subsequent controlling. Internal audit The financial accounting organization in all companies of the Loewe Group is a regular component of audits of the internal control system and all associated value-added processes. Furthermore, as part of its auditing activity, Group Auditing regularly performs a test for plausibility of the risk management system of each division and risks reported in it. The auditing activity is based on the audit plan coordinated annually with the Audit Committee of the Supervisory Board. The Group-wide risk management system with regard to the accounting process ensures that accurate and reliable information is prepared. Management Report

80 Outlook Overall economic trend European gross domestic product expected to grow modestly in the next two years The global turmoil caused by the financial and economic crisis has significantly calmed down in the most recent quarters. Fiscal policy measures in particular have noticeably improved the current economic situation in Germany and Europe. It is thus anticipated that after a 4.0 % decline in calendar year 2009, the European gross domestic product will grow moderately by 1.1 % in 2010 and by 1.8 % in Nonetheless, it cannot yet be assumed that a self-sustaining upturn will occur in the years 2010 and The higher unemployment level in Germany and Europe as well as an increasing rate of inflation could have a negative impact on private consumption. This could lead to postponed purchases of high-end premium products. Industry trend In an improved economic environment, the LCD TV market will continue to grow in Europe in the next few years, due in particular to the high replacement demand and increasing ownership of more than one set. From today s perspective, the 3 % growth of the value of this market in 2009 will be followed by growth of approximately 10 % in 2010, due in particular to the FIFA World Cup in South Africa and the market launch of HDTV in Germany. Loewe expects that technological innovations such as TV sets with LED backlighting and new 3D televisions will cause the value of the European market for LCD TVs to continue to grow on a sustained basis by approximately 10 % in The dynamic growth engines will continue to be large-screen TV sets, which are of particular importance for Loewe. Loewe We base our forecasts for the Company on the aforementioned economic expectations, in particular with regard to moderate growth of the European gross domestic product in the next two fiscal years. Assuming that the price of the euro in relation to the U.S. dollar remains relatively stable and that the cost structure does not change significantly, Loewe forecasts profitable growth for fiscal years 2010 and From the present perspective, the number of employees will also not significantly exceed the figure for Investment volume is at the reduced level of the previous year and in 2010 will mainly be focused on tools for products, efficient production facilities and presentation systems for adequate presentation of the brand. In addition, Loewe will continue to systematically implement its targeted measures in strategically important areas, such as the qualitative and quantitative expansion of distribution in selected European core markets. The Company will also continue its product offensive with the launch of large-screen, high-definition LCD TVs with LED backlighting in the current year. In the future, the product portfolio will be even more closely tailored to the international product requirements of the core markets. Furthermore, Loewe will continuously add new, innovative speaker and multiroom solutions to its home entertainment systems line in Financing is on a solid basis Loewe AG

81 Overall statement concerning the future development The Company expects sales to grow moderately in the current 2010 fiscal year. Loewe s innovative home entertainment solutions put it in a very good position for repeating its high level of sales in Germany in Profitable double-digit growth in sales will be realized in the other key European markets. As a premium brand, Loewe will continue to focus systematically on results with cost discipline and value-based marketing and expects EBIT for 2010 as whole to remain at the level of the previous year. Assuming that the value of the European market for LCD TVs will grow by about 10 % and Loewe maintains its high margin level, growth in earnings can be expected for Moreover, Loewe s sound capital structure and wide-ranging financing agreements put the Company in an optimal position for the future. Moderate growth in sales projected Kronach, February 19, 2010 The Executive Board Frieder C. Löhrer Gerhard Schaas Oliver Seidl Management Report

82 Style. Icon Loewe AG

83 Loewe Art

84 Loewe AG

85 Minimalism is the Guiding Principle. When it comes to good music, the notes you don t play are just as important as the ones that you do play. The same applies to design. Loewe has mastered the art of tastefully fusing minimalistic design with sophisticated technology. Loewe Art subscribes to the theory of tasteful reduction, lightness and elegance, whether the component hangs like a picture on the wall or is cradled in a floor stand as an object in space. Its slender, pure silhouette houses extensive technical features even home cinema with complete surround sound is possible. The Loewe Art also is a minimalist when it comes to electricity consumption. Its Eco-Standard mode reduces energy use by up to 20 percent. The Loewe Art: a child of the times. Loewe Art

86

87 Consolidated Financial Statements, Notes Contents Consolidated Income Statement 84 Consolidated Balance Sheet 85 Consolidated Cash Flow Statement 86 Statement of Changes in Equity 87 Notes to the Consolidated Financial Statements 88 Corporate Bodies and Offices Held 133 Responsibility Statement 138 Independent Auditor s Report 139 Consolidated Financial Statements, Notes

88 Consolidated Income Statement for the Year Ended December 31, 2009 Notes No EUR thousands % EUR thousands % Sales 1 323, , Cost of sales 2 229, , Gross margin 94, , Selling expenses 3 74, , General and administrative expenses 4 8, , Other operating income 5 6, , Other operating expenses 6 4, , Income from investments EBIT 13, , Interest and similar income 7 1, , Interest and similar expenses 8 3, , Profit from ordinary activities (EBT) 11, , Income tax expense 9 3, , Profit after tax 8, , Minority interests Net income 10 8, , Profit carried forward 13,455 8,015 Dividend payment 6,505 3,513 Allocation to retained earnings 2,700 9,900 Distributable profit 12,268 13,455 Earnings per share Basic * Diluted ** * Number of shares issued as of December 31 13,009,229 13,009,229 ** Weighted average number of shares pursuant to IFRS 13,009,229 13,009,229 Statement of Comprehensive Income EUR thousands Profit after tax 8,104 19,031 Other comprehensive income Change in fair value of hedges 3,185 2,710 Tax effects Gains and losses recognized directly in equity 2,303 1,963 Comprehensive income 5,801 20,994 thereof: attributable to shareholders of Loewe AG 5,715 20,816 attributable to minority interests Loewe AG

89 Consolidated Balance Sheet as of December 31, 2009 EUR thousands Assets Notes No. Dec. 31, 2009 Dec. 31, 2008 Non-current assets Intangible assets 11 6,539 5,890 Property, plant and equipment 12 40,084 42,559 Financial assets 13 1,573 1,140 Income tax assets Miscellaneous non-current financial assets Deferred taxes 16 10,939 11,322 59,700 61,563 Current assets Inventories 17 50,464 51,106 Trade accounts receivable 18 85,326 88,819 Income tax assets Miscellaneous current financial assets 20 2,070 3,914 Cash and cash equivalents 21 36,081 37, , ,232 Total assets 234, ,795 Liabilities and shareholders equity Shareholders equity Equity attributable to equity holders of the parent 22 Subscribed capital (conditional capital EUR 398,400) 13,009 13,009 Capital reserve 46,986 46,986 Retained earnings 16,200 13,500 Other reserve 824 1,479 Accumulated profit 12,268 13,455 87,639 88,429 Minority interests 23 1,325 1,239 88,964 89,668 Non-current liabilities Provisions for pensions and similar obligations 24 40,312 40,951 Other non-current provisions 25 17,120 17,024 Non-current financial liabilities ,344 57,526 60,319 Current liabilities Income tax provisions 27 4,591 4,417 Other current provisions 28 46,547 49,178 Current financial liabilities Trade accounts payable 30 23,077 29,008 Miscellaneous current financial liabilities 31 12,389 9,253 87,542 92,808 Total liabilities and shareholders equity 234, ,795 Consolidated Financial Statements, Notes

90 Consolidated Cash Flow Statement for the Year Ended December 31, 2009 EUR thousands Operating activities EBIT 13,513 28,497 Interest paid 1, Interest payments received 1,311 1,800 Depreciation and amortization of non-current assets 20,279 20,422 Other non-cash items 2,132 1,663 Decrease (+) in non-current receivables Decrease ( )/increase (+) in pension provisions 639 1,517 Increase (+) of other non-current provisions 96 1,842 Income taxes paid 2,401 3,572 Cash flow before changes in net current assets 29,064 48,017 Change in net current assets Decrease (+) in inventories 642 1,168 Decrease (+) in trade accounts receivable and other assets 3,845 9,986 Decrease ( )/increase (+) in other current provisions 2,631 3,445 Decrease ( )/increase (+) in trade accounts payable and other liabilities 4,348 1,079 Change in net current assets 2,492 15,678 Net cash from operating activities 26,572 63,695 Investing activities Payments for purchases of intangible assets and property, plant and equipment 18,546 23,567 Payments for purchases of financial assets Proceeds from disposals of intangible assets and property, plant and equipment Net cash from investing activities 18,814 23,844 Free cash flow, total 7,758 39,851 Financing activities Dividend payment 6,505 3,513 Repayment ( ) of loans 2, Net cash from financing activities 8,755 4,450 Cash-effective change in liquidity ,401 Composition of liquidity Dec. 31, 2009 Dec. 31, 2008 Change Cash and cash equivalents 36,081 37,231 1,150 Short-term bank loans Use of factoring Liquidity 36,076 37, Loewe AG

91 Statement of Changes in Equity Group equity changed as follows in the years 2008 and 2009: Number of shares Subscribed capital Capital reserve Retained earnings Other reserve Accumulated profit/loss Equity attributable to equity holders of the parent Minority interests Total equity units EUR thousands EUR thousands EUR thousands EUR thousands EUR thousands EUR thousands EUR thousands EUR thousands Balance as of Dec. 31, ,009,229 13,009 46,986 3, ,015 71,126 1,061 72,187 Dividend payment for ,513 3,513 3,513 Change in fair value of hedges 1,963 1,963 1,963 Net income as of Dec. 31, ,853 18, ,031 Allocation to retained earnings 9,900 9,900 Balance as of Dec. 31, ,009,229 13,009 46,986 13,500 1,479 13,455 88,429 1,239 89,668 Dividend payment for ,505 6,505 6,505 Change in fair value of hedges 2,303 2,303 2,303 Net income as of Dec. 31, ,018 8, ,104 Allocation to retained earnings 2,700 2,700 Balance as of Dec. 31, ,009,229 13,009 46,986 16, ,268 87,639 1,325 88,964 Consolidated Financial Statements, Notes

92 Notes to the Consolidated Financial Statements About Loewe The Loewe Group develops, produces and distributes electronic, electrotechnical and mechanical products and systems of every type as well as parts of the same, in particular in the field of consumer electronics and communications technology (home entertainment systems). The Company s main products are TV sets and home cinema solutions. The parent company is recorded under the name of Loewe AG in the Commercial Register (HRB 3004) of the Local Court Coburg, Germany. The Company s registered offices are located at Industriestrasse 11, Kronach, Germany. The Executive Board prepared the final version of the consolidated financial statements on February 19, 2010 and they have been released for publication. Basis of Presentation As an exchange-listed parent company, Loewe AG participates in the Regulated Market as defined by Section 2 (5) of the German Securities Trading Act (WpHG) (listed in the German selection index SDAX). Pursuant to Section 315a of the German Commercial Code (HGB), the consolidated financial statements were prepared (as in the previous year) in accordance with the International Financial Reporting Standards (IFRS) as adopted in the European Union. All International Financial Reporting Standards (IFRS, formerly IAS) whose application is mandatory for fiscal 2009 as well as the interpretations of the International Financial Reporting Interpretations Committee (IFRIC, formerly SIC) were duly considered. In recent years, the International Accounting Standards Board (IASB) has made various changes to the existing IFRSs and issued new IFRSs and interpretations of the International Financial Reporting Interpretation Committee (IFRIC). IFRS 8, Operating Segments (issued in November 2006) must be applied for the first time for fiscal years beginning on or after January 1, It requires the disclosure of information concerning the operating segments of an enterprise and replaces the obligation to determine primary and secondary segment reporting formats. The application of IFRS 8 has no material influence on these consolidated financial statements. In September 2007, the IASB issued a new version of IAS 1 Presentation of Financial Statements. The application of the revised version of IAS 1 is mandatory for fiscal years beginning on or after January 1, Material changes concern in particular the presentation of equity and the income statement. Loewe applies this regulation in the form of a separate presentation of the consolidated income statement and a separate statement of comprehensive income following the two statement approach. In January 2008, the IASB issued the revised standard IFRS 2 Share-based Payment. Changes relate to the accounting of share-based commitments for cash payment. The application of the revised version of IFRS 2 is mandatory for fiscal years beginning on or after January 1, The application of the revised IFRS 2 has no influence on these consolidated financial statements Loewe AG

93 In March 2008, the IASB issued the revised standard IAS 23 Borrowing Costs. In the future, it will accordingly be mandatory to include interest on borrowed capital for the acquisition or production of a qualifying asset in determining the cost of the asset. The application of the revised version of IAS 23 is mandatory for fiscal years beginning on or after January 1, The application of the revised IAS 23 has no influence on these consolidated financial statements. In January 2008, the IASB issued a new version of IFRS 3 Business Combinations and a revision of IAS 27 Consolidated and Separate Financial Statements. The application of the revisions is obligatory for transactions executed in fiscal years beginning on or after July 1, IFRS 3 introduces changes in the recognition of business combinations. The changes resulting from IFRS 3 and IAS 27 must be applied prospectively and will influence future acquisitions as well as transactions of shareholders with minority interests. The application of the revised IFRS 3 and IAS 27 has no influence on these consolidated financial statements. In March 2009, the IASB issued amendments improving the disclosure requirements for financial instruments in IFRS 7 Disclosures to expand the reporting of the fair value measurement of financial instruments. The amendments introduce a three-level hierarchy for disclosures making a distinction between fair values based on the significance of the input factors included in the measurement. They also clarify the extent to which observed market data are available for the determination of fair value. In addition, the amendments enhance the existing requirements for the disclosure of liquidity risk by clarifying the scope of the liabilities to be included in a summary of maturities. The expanded disclosures must be applied for fiscal years beginning on or after January 1, 2009 and Loewe applies them accordingly. In February 2008, the IASB issued an amendment to IAS 32 and IAS 1 concerning Puttable Financial Instruments which must be applied in fiscal years beginning on or after January 1, The amendments in IAS 32 require that specific puttable financial instruments and obligations arising from liquidation be classified as equity if specific criteria are fulfilled. The corresponding amendment of IAS 1 requires specific disclosures in the notes concerning such puttable financial instruments classified as equity. These amendments currently have no influence on Loewe s accounting. Furthermore, IFRIC 16 Hedges of a Net Investment in a Foreign Operation was issued in July This interpretation clarifies for example the recognition of the foreign currency risk involved in translation of the functional currency of the foreign operation into the functional currency of the parent company and in what cases hedging effects must be reclassified from equity to profit or loss. The interpretation is valid for fiscal years beginning on or after October 1, These amendments currently have no influence on Loewe s accounting. The Improvements to International Financial Reporting Standards 2008 resulted in a large number of amendments to IFRS and IAS, including the correction of inconsistencies between individual standards. Depending on which standard was amended, the amendments are applicable to fiscal years beginning on or after January 1, 2009 or July 1, These amendments are not expected to have any influence or will have only an immaterial influence on the consolidated financial statements of Loewe. Consolidated Financial Statements, Notes

94 In July 2008, the IASB issued amendments to IAS 39 Eligible Hedged Items Amendment to IAS 39 Financial Instruments: Recognition and Measurement to simplify the requirements for hedge accounting by clearly defining the risks that may be designated as a hedged risk. Clarification was also provided with regard to what portion of the cash flow of a financial instrument may be designated as a hedged item. The amendments are valid for fiscal years beginning on or after July 1, These amendments are not expected to have any influence or will have only an immaterial influence on the consolidated financial statements of Loewe. As part of the annual Improvement Project, a large number of amendments to IFRS, IAS and interpretations were made in April Depending on the amendment concerned, the amendments are applicable to fiscal years beginning on or after January 1, 2009, July 1, 2009 or January 1, The amendments have so far not been adopted by the EU as European law. The IASB has published additional standards and interpretations that have in the meantime been adopted by the EU as European law and also some that have not yet been adopted. They are not expected to have any material influence on the consolidated financial statements of Loewe. The consolidated financial statements have been prepared in euros. The figures in the consolidated balance sheet, the consolidated income statement, the statement of comprehensive income, the notes and the consolidated cash flow statement as well as the consolidated statement of shareholders equity have been rounded to thousands of euros (EUR thousands). Material Discretionary Decisions, Estimates and Assumptions In preparing the consolidated financial statements, discretionary decisions, estimates and assumptions are made that affect the level of assets, liabilities and the disclosure of contingent liabilities as well as the amounts of income and expense recognized as of the balance sheet date. These decisions include subjective measurements and estimates based on facts which are inherently characterized by uncertainty and may be subject to change. Over time, these estimates and assumptions can change and materially influence the presentation of the Company s financial position and performance. For an understanding of the underlying risks of financial reporting and the impacts that these estimates and assumptions can have on the consolidated financial statements, the material estimates and associated assumptions shown below are of critical importance. With regard to the useful life of intangible assets and property, plant and equipment, the expected useful life is estimated. Estimates are also made in determining the impairments of intangible assets and property, and plant and equipment. Among other things, the estimates relate to the cause, the date and the amount of an impairment. In making these estimates, management assumes an anticipated utilization, among other things. Should the demand for individual products not develop in such a way, this could result in both a loss of income and possibly impairment losses due to write-downs to fair value of the assets. The recognition of deferred taxes, which primarily consist of unused tax carryforwards and temporary differences, is based on estimates by management of the level and occurrence of taxable income available for use in the future. For this purpose, the expected taxable income is derived from the corporate planning. When taking into account the realizable prices or technical risk with regard to inventories, estimates are made based on market data and empirically established figures. These estimates can vary from the prices that can be realized later in the sales market. By its nature, the recognition and measurement of provisions, in particular provisions for warranties, is associated with estimates Loewe AG

95 Scope of consolidation The following companies were consolidated as of the reporting date of December 31, Parent company Subscribed capital Interest 2009 (no change from 2008) Loewe AG, Kronach EUR 13,009, Subsidiaries Loewe Opta GmbH, Kronach, Germany EUR 23,010, % Loewe Opta Benelux N.V./S.A., EUR 61, % Antwerp, Belgium Subsidiary of EUR 90, % Loewe Opta Benelux N.V./S.A.: Loewe Opta Netherland B.V. Nieuwegein, Netherlands (uncalled capital EUR 72,604.83) Loewe France S.A.S., EUR 150, % Strasbourg, France Loewe Italiana S.r.l., EUR 100, % Bolzano, Verona, Italy Loewe Austria GmbH, EUR 35, % Vienna, Austria Loewe UK Ltd., GBP 50, % Irvine, United Kingdom Loewe Opta, Inc., USD 1, % Wilmington, Delaware, USA The subsidiary ceased business activities in By year-end 2007, the company had settled the remaining warranty obligations in the U.S. The company will now be maintained solely for the purpose of maintaining Loewe brand rights in the U.S. In an ad hoc announcement in accordance with Section 15 of the German Securities Trading Act (WpHG), Loewe AG reported concerning the planned majority acquisition of at least 75 % of the shares of the unlisted company MacroSystem Digital Video AG, Wetter (Ruhr). The conclusion of the acquisition is tied to the adoption of the insolvency plan by the creditors meeting and the fulfillment of additional contractually agreed conditions. The execution of the agreement is planned for the end of March Consolidated Financial Statements, Notes

96 Principles of Consolidation The financial statements of the consolidated Group companies were prepared in accordance with uniform accounting policies and included in the consolidated financial statements. All companies are included in the scope of consolidation and are fully consolidated. The financial statements of the individual subsidiaries are included using the purchase method, with the costs of acquiring the investment offset against the value of shareholders equity at the time of acquisition. The financial statements of the subsidiaries included in the consolidated financial statements are prepared in accordance with local law for the reporting dates of the consolidated financial statements, and except for the annual financial statements of Loewe Opta, Inc., are reviewed by independent auditors. Intercompany expenses and income, receivables and payables as well as profits and losses between the companies included in the consolidated financial statements have been eliminated. All currency translation differences are recognized in income. Currency Translation Each company within the group of companies represents an integrated unit. The functional currency is the reporting currency, the euro. The items presented in the annual financial statements of the Group companies are measured using the functional currency. Any foreign currency transactions are initially translated using the spot rate of the day of the transaction. Assets and liabilities are translated from the foreign currency to the functional currency using the rate prevailing on the reporting date. All consolidated companies except Loewe UK Ltd., Irvine, United Kingdom and Loewe Opta, Inc., USA are located in the eurozone. In accordance with IAS 21 The Effects of Changes in Foreign Currency Exchange Rates, currency translation in the balance sheet was based on the reference rate of the European Central Bank (ECB) as of the closing date and on the average rate for the year 2009 in the income statement. Currency rates Country Currency EUR Closing rate Average rate United Kingdom GBP 1 Euro US USD 1 Euro Loewe AG

97 Accounting Policies The accounting policies detailed below remain unchanged from those used in fiscal The useful life of intangible assets is limited. They are recognized at cost and amortized on a straightline basis over their estimated useful life. The Group s development costs are capitalized insofar as they meet the criteria specified in IAS 38 Intangible Assets. They are capitalized at the personnel and other administrative costs incurred for their specific projects. If capitalized development costs are no longer covered by future cash flows, write-downs are recognized under cost of sales. Amortization is charged on a straight-line basis over the period during which the developed products are likely to be produced and sold. The following useful lives and amortization rates are applied: Useful life Amortization rates, p. a Software 2 to 6 years 2 to 6 years 17 to 50 % 17 to 50 % Development costs 2 years 2 years 50 % 50 % Property, plant and equipment Loewe AG prepared its consolidated financial statements in accordance with IFRS/IAS for the first time as of December 31, At that time, hidden reserves in land and buildings uncovered as the result of a valuation survey were disclosed and recognized as an asset. There were no hidden reserves in other balance sheet items. Production facilities and machinery as well as other equipment, factory and office equipment are reported at cost less accumulated depreciation. Additions during the fiscal year are reported at cost. Buildings are depreciated on a straight-line basis over their estimated useful life. Production facilities, machinery, other equipment, factory and office equipment are depreciated over their useful life, in some cases on a straight-line basis and in other cases under the declining-balance method. Writedowns are recognized on product-related investments that cannot be expected to be fully used, or used at all, due to a shortening of the product lives or a reduction or phase-out of the production volumes. For additions to depreciable non-current assets, depreciation is taken only pro rata temporis for the period between purchase or manufacture and year-end. Low-value assets costing less than EUR 150 are immediately written off in full. Consolidated Financial Statements, Notes

98 The following depreciation rates are applied for straight-line depreciation (per annum): Buildings 2 % to 10 % Production facilities and machinery 10 % to 20 % Other equipment, factory and office equipment 5 % to 33 % Equity investments and investment securities recognized as financial assets are measured at cost or fair value. Other loans are reported at cost less principal payments and are individually written down to the extent necessary. Non-current income tax assets for the current and earlier periods are recognized at the amount at which a reimbursement from the revenue authorities is expected. Miscellaneous non-current financial assets are recognized at their nominal amount. Non-interest bearing receivables are recognized at present value. Impairment losses are recognized in income if the realizable amount of the asset is less than the carrying amount. Under IAS 12 Income Taxes, deferred taxes are computed on the basis of the temporary differences between the consolidated financial statements and the tax accounts. Deferred tax claims from loss carryforwards are recognized if utilization is probable. Deferred taxes based on items that are directly recognized in equity are not recognized in the income statement but in equity. The tax rate uniformly applicable to the Group is 27.9 % (2008: 27.5 %). Inventories are recognized at cost. In addition to direct materials and direct labor, costs of conversion also include the related indirect materials and indirect labor. Interest on debt capital is not included in the costs of conversion. Inventories that cannot be sold or those for which their likely selling price, after deduction of costs still to be incurred, would not cover their cost, are written down as necessary. Trade accounts receivable are reported at their principal amount less specific valuation allowances for credit risks. Cash discounts, interest and processing costs are accounted for by general valuation allowances. Receivables in foreign currencies are measured at the rate prevailing on the reporting date. The amount recognized for current income tax assets relates to the claim for payment of the corporation tax credit under Section 37 (5) of the Corporation Tax Act. The credit is recognized at fair value using an interest rate appropriate to the maturity and free of risk. Miscellaneous current financial assets are reported at their nominal amount less specific valuation allowances Loewe AG

99 Forward exchange transactions, spread options and call options are concluded as a proportional hedge of the currency risk for existing purchase contracts. The measurement reflects fair value (mark-to-market method) and is based on the calculation bases provided by the banks. The asset value of positive intrinsic values of the derivatives is recognized in miscellaneous current financial assets. Any negative net asset value of these financial derivatives is shown in miscellaneous current financial liabilities. The hedging transactions are recognized in accordance with IAS 39 and explained in accordance with IFRS 7. The effective portion of the change in value of hedging instruments that include cash flow hedges is recognized directly in equity (Other reserves) with no effect on income until the gain or loss on the hedged item is recognized after recognition of deferred taxes. Loewe fulfills the requirements for the use of hedge accounting as established by IAS 39. At the beginning of a hedging transaction, both the relationship between the financial instrument used as a hedging instrument and the hedged item as well as the goal and strategy of the hedge are documented. This includes both the specific assignment of the hedging instruments to the corresponding future transactions as well as the estimation of the degree of effectiveness of the hedging instruments used. Existing hedging transactions are constantly monitored for effectiveness. Financial assets and financial liabilities are reported by applying IAS 39 Financial Instruments: Recognition and Measurement. Cash and cash equivalents in the form of cash on hand, checks on hand and bank balances are shown at their nominal amounts. Foreign currency balances are reported at the rate prevailing on the reporting date. Subscribed capital is reported at nominal value. Changes in equity not recognized in income are recognized in Other provisions unless they are based on capital transactions with shareholders. These primarily refer to the fair value of derivative financial instruments and the related deferred tax effects. Minority interests relate to non-controlling interests in subsidiaries. They are reported at their pro rata value in equity. Provisions for pensions and similar obligations are calculated in accordance with IAS 19 Employee Benefits using the projected unit credit method and are substantiated by actuarial reports. Pursuant to Section 16 Employee Pension Act, pension adjustments to be rectified are also recognized in the pension provisions shown. Changes in pension provisions are recognized in the income statement. Other noncurrent provisions relate to economic obligations that are expected to become due after more than 12 months after the reporting date. They are reported at the expected settlement values in order to include both obligations to deliver and as well as the interest effect. Consolidated Financial Statements, Notes

100 Non-current financial liabilities reflect bank loans with a term to maturity longer than one year. They are shown in the balance sheet at amortized cost using the effective interest method. Income tax provisions contain taxes likely to be payable. It was not necessary to report deferred tax liabilities because there were country-based possibilities for setting them off against deferred tax assets. Other current provisions relate to economic obligations that are expected to become due within one year. The level of the provisions is set at the amounts anticipated to be payable in Current financial liabilities, trade accounts payable and all miscellaneous current financial liabilities are also recognized at their repayment amounts. Government grants are recognized if there is reasonable assurance that the associated conditions have been met. In both years under review, only expenserelated grants from grants received for research and development costs were reported in accordance with IAS 20 Accounting for Government Grants and Disclosure of Government Assistance. Expense-related grants are recognized as income over the periods necessary to match them with the related costs that they are intended to compensate, on a systematic basis. Income Statement Sales revenues and other operating income are recognized as soon as the services have been rendered or the goods or products have been delivered or the risk has been transferred to the customer. They are recognized after sales deductions such as rebates or discounts. Sales revenues are reported excluding value added tax. Operating expenses are recognized in income on the date of performance or when incurred. Interest income or expense is accrued; if applicable, by applying the effective interest method. Income tax expense relates to the direct income taxes as well as deferred taxes Loewe AG

101 Notes to the Income Statement The cost-of-sales method as set forth in IAS 1.92 is used. Sales (1) * Sales represent net revenues from the sale of the Company s own products, merchandise, and related services after all sales deductions. Sales broken down by product group are as follows: EUR thousands % EUR thousands % LCD televisions 280, , Plasma televisions DVD players/recorders 7, , Audio 15, , Other revenues 20, , Total 323, , The significant decline in sales of LCD televisions was primarily caused by the weakness in the core European markets outside of Germany due to the fragile overall economic situation. The decline in other revenues is primarily due to the lower production of high-end electronic modules for OEM products compared to the previous year, especially in the automotive area. Sales by region were as follows: EUR thousands % EUR thousands % Germany 192, , Europe excluding Germany 126, , Rest of world 4, , Total 323, , * The numerals refer to the numbers indicated in the income statement and the balance sheet. Consolidated Financial Statements, Notes

102 While a sales decline of only EUR 6,623 thousand (3.3 %) was recorded in Germany, sales in the rest of Europe declined by EUR 41,057 thousand (24.5 %). Weaker market demand in Spain and the Netherlands was the main cause for this decline. This decline in sales in European countries outside of Germany is also explained by the fact that sales volume continued to be lower in Australia and the CIS. Cost of Sales (2) The cost of sales comprises the cost of materials for the manufacture of Loewe products, the cost of purchased merchandise as well as the cost of labor and non-personnel costs needed to achieve these sales, unless these costs are shown under administrative and selling expenses, which are reported separately. Cost of sales breaks down as follows: EUR thousands Raw materials and supplies 165, ,973 Merchandise 13,164 14, , ,087 Purchased services 1,366 1,569 Personnel and social security costs 34,275 37,989 Depreciation of property, plant and equipment and amortization of software 9,222 9,829 Amortization of capitalized development costs 5,964 6,663 Capitalized development costs 5,997 6,047 Other non-staff administrative costs 5,747 5,258 Total 229, ,348 The decline in value of the raw materials and supplies used is the result of more favorable purchasing conditions in addition to the lower business volume than in the year before. The reduction in personnel and social security costs is mainly attributable to the production-related lower cost of labor and the decline in variable salary components Loewe AG

103 Selling Expenses (3) Selling expenses comprise the following: EUR thousands Personnel and social security costs 20,294 19,398 Advertising costs 19,403 21,750 Freight 8,730 9,106 Warranty expenses 4,999 7,997 Depreciation of property, plant and equipment and amortization of software 4,355 3,311 Dues, fees, and similar expenses 3,442 3,356 Travel and hospitality expenses 2,383 2,391 Allocation to allowances on receivables 1, Other non-staff administrative costs 8,796 8,550 Total 74,005 75,946 The decline in advertising costs is primarily due to measures to cut costs in this area. The reduction in warranty expenses is primarily due to lower allocations to provisions for warranties than in the year before because of the reduced production volume. The increase in depreciation and amortization is primarily due to higher investments in Loewe POS systems at retail partners and the resulting higher depreciation and amortization base. The higher allocation to allowances on receivables is related to the currently poor overall economic situation in the core European markets and the associated possibility of economic problems of Loewe retailers. Consolidated Financial Statements, Notes

104 General and Administrative Expenses (4) The following expenses were incurred for administration: EUR thousands Personnel and social security costs 7,247 8,041 Depreciation of property, plant and equipment and amortization of software Other non-staff administrative costs and overheads Total 8,731 9,534 The following fees of the Group auditor are included as an expense within general and administrative expenses: EUR thousands Audit services (financial statements) Audit-related services (interim and special audits) Other services 4 3 Total The fees charged by other auditors for the separate financial statements of foreign subsidiaries are not shown here Loewe AG

105 Other Operating Income (5) Other operating income comprises the following: EUR thousands Income from the release of provisions 2,971 2,676 Goods and services invoiced 2,445 2,528 Income from the Joint Development Center 0 2,415 Subsidies for development projects Miscellaneous income Total 6,511 8,951 Income from the reversal of provisions mainly applies to provisions for licenses that are no longer needed and statute-barred known risks. No income was received for the Joint Development Center with Sharp in the year under review, as no joint projects were carried out. Miscellaneous other operating income is for the most part offset by corresponding other operating expenses. Other Operating Expenses (6) Other operating expenses relate to: EUR thousands Goods and services invoiced 2,445 2,528 Expenses for the Joint Development Center 0 2,415 Expenses for rework of company-manufactured products Expenses for subsidized development projects Costs for canceled purchase contracts Severance payments to employees Miscellaneous operating expenses 1, Total 4,815 6,638 The expenses for rework of company-manufactured products continue to primarily relate to the inspection campaign of 100Hz CRT sets from the production period between March 1999 and October The sets were inspected by authorized workshops to rule out any existing residual long-term risks from manufacturing-related weak points in specific soldered rivet joints. Consolidated Financial Statements, Notes

106 Interest Income (7) Interest and similar income results from: EUR thousands Overnight money and term money investments 1, Interest on current bank balances Interest and bank charges passed on Total 1,311 1,800 The decline in interest income is primarily due to the significantly lower interest level compared to the previous year. Interest Expense (8) Interest and similar expenses comprise the following: EUR thousands Interest on amounts allocated to provisions for pensions, anniversary bonuses and death benefits 2,059 1,889 Interest, commitment fees and processing fees paid to banks Factoring interest and fees Miscellaneous expenses equivalent to interest Total 3,075 2,756 The increase in miscellaneous expenses equivalent to interest is primarily due to the recognition of interest rate risks from a not yet completed tax audit for the period 2001 to Loewe AG

107 Income Taxes (9) Income taxes for Germany and outside of Germany are broken down as follows: EUR thousands Current taxes Germany 1,957 2,732 Outside of Germany 423 1,280 2,380 4,012 Deferred taxes Germany 1,151 4,918 Outside of Germany ,265 4,498 Total 3,645 8,510 Income taxes include both the income taxes to be paid directly as well as deferred taxes. Deferred tax assets and liabilities are recognized for temporary differences between figures stated in the consolidated balance sheet and the tax accounts as well as for tax loss carryforwards. The breakdown by tax expense is as follows: EUR thousands Current tax expenses 1,448 4,053 Tax expenses (+) and income ( ) unrelated to the accounting period Deferred tax expenses 1,265 4,498 Total 3,645 8,510 Consolidated Financial Statements, Notes

108 The applicable average tax rate for current taxation and the determination based on all deferred taxes in Germany is comprised as follows: in % Trade tax Corporate income tax Solidarity surcharge The increase in the applicable trade tax rate results from an increase of the trade tax rate of assessment of the city of Kronach. The average effective tax rate is 31.0 % and is thus 3.1 percentage points higher than the applicable tax rate of 27.9 %. The higher effective corporation tax is primarily due to tax effects from the previous years (7.9 %). Valuation allowances on deferred taxes on deferred tax assets on loss carryforwards ( 4.7 %) and tax effects from tax rate changes ( 1.2 %) had the opposite effect. Reconciliation of the applicable tax rate to the average effective tax rate: in % Applicable income tax rate Difference in local tax rate Tax effects from previous years Tax effects from tax rate changes Non-deductible levies minus tax-exempt income Effects from loss carryforwards Other tax effects Loewe AG

109 Earnings Per Share (10) To calculate earnings per share, the net income of EUR 8,018 thousand is divided by the 13,009,229 outstanding shares in Loewe. This results in earnings per share of EUR 0.62 in the year under review (2008: EUR 1.45). The weighted average number of shares in accordance with IAS 33 Earnings per Share results in unchanged earnings per share of EUR 0.62 (2008: EUR 1.45), as the number of Loewe shares did not change in the year under review. Overview Net income (EUR thousands) 8,018 18,853 Basic/diluted earnings per share in EUR Basic/diluted earnings per share (weighted average) determined according to IAS in EUR Number of shares issued 13,009,229 13,009,229 Weighted average number of shares issued determined according to IAS 13,009,229 13,009,229 Number of shares issued and options 13,009,229 13,009,229 Authorized capital still available (2005 Authorized Capital) 2,598,154 2,598,154 Available capital from employee options (conditional capital) 398, ,400 Diluted earnings per share are not shown due to the fact that no rights of third parties to subscribe to the securities are associated with the available 2005 Authorized Capital or the conditional capital. Consolidated Financial Statements, Notes

110 Notes to the Balance Sheet Intangible Assets (11) The changes in intangible assets were as follows: EUR thousands Software and similar assets Development costs Advance payments Intangible assets Carrying amounts on January 1, , ,964 Cost (accumulated) 7,636 17, ,981 Additions 960 6, ,247 Disposals At Cost 1,235 5, ,391 Carrying Amounts Reclassifications Current amortization/impairment Amortization 657 5, ,602 Impairment Accumulated amortization/impairment 6,534 13, ,002 Currency differences Carrying amounts on December 31, , ,890 Cost (accumulated) 7,355 18, ,892 Additions 841 6, ,618 Disposals At Cost , ,730 Carrying Amounts Reclassifications Current amortization/impairment Amortization 719 5, ,991 Impairment 0 1, ,012 Accumulated amortization/impairment 7,112 9, ,275 Currency differences Carrying amounts on December 31, ,052 5, ,539 Intangible assets primarily include product and IT software and development costs. Project expenses for in-house product developments recorded in detail are shown in the capitalized development expenses. The total cost of development charged to expense in 2009 came to EUR 16,094 thousand (2008: EUR 15,648 thousand), not including development cost subsidies received and transferred costs. Total amortization/impairment of intangible assets includes impairment losses of EUR 1,012 thousand (2008: EUR 718 thousand) due to capitalizable development costs no longer covered by future income Loewe AG

111 Property, Plant and Equipment (12) The changes in financial assets were as follows: EUR thousands Land and buildings Production facilities and machinery Other equipment, factory and office equipment Property, plant and equipment Carrying amounts on January 1, ,030 2,826 16,786 39,642 Cost (accumulated) 40,780 17,880 97, ,695 Additions 8 3,060 13,252 16,320 Disposals At Cost 0 2,205 4,786 6,991 Carrying Amounts Reclassifications Current depreciation/impairment Depreciation 967 1,011 9,822 11,800 Impairment ,297 Accumulated depreciation/impairment 21,717 14,360 86, ,410 Currency differences Carrying amounts on December 31, ,071 4,425 19,063 42,559 Cost (accumulated) 40,789 18, , ,969 Additions ,482 10,928 Disposals At Cost ,181 13,930 Carrying Amounts Reclassifications Current depreciation/impairment Depreciation 945 1,101 10,330 12,376 Impairment Accumulated depreciation/impairment 22,663 14,711 84, ,849 Currency differences Carrying amounts on December 31, ,190 3,792 18,102 40,084 Land and buildings as well as production facilities and machinery are used for production in Kronach. Other equipment, factory and office equipment includes office furniture, factory and office equipment, high-quality presentation systems for sales as well as tools used by suppliers. EUR 2,078 thousand (2008: EUR 1,612 thousand) is recognized for advance payments and facilities under construction. Total depreciation/impairment on property, plant and equipment includes impairment losses of EUR 900 thousand (2008: EUR 1297 thousand) due to phase-outs of equipment and capitalized tools and production facilities no longer needed or no longer covered by future income. Consolidated Financial Statements, Notes

112 Financial Assets (13) The changes in financial assets were as follows: EUR thousands Equity investments Investment securities Other loans Financial assets Carrying amounts on January 1, Cost (accumulated) Additions Disposals At Cost Carrying Amounts Current amortization Accumulated amortization Carrying amounts on December 31, , ,140 Cost (accumulated) 25 1, ,163 Additions Disposals At Cost Carrying Amounts Current amortization Accumulated amortization Carrying amounts on December 31, , ,573 Equity investments in sector-specific interest groups are between 7 % and 10 % of the share capital of the investees and refer to investments in poolings of interests for business purposes of the Group. The portfolio of securities has been assigned as collateral (guarantee deposit for insurance) for existing part-time retirement obligations and employee-financed pension benefits. Income Tax Assets Non-Current (14) The amount recognized of EUR 291 thousand (2008: EUR 325 thousand) relates to the claim for payment of the corporation tax credit under Section 37 (5) of the Corporation Tax Act. The credit is recognized at fair value Loewe AG

113 Miscellaneous Non-Current Financial Assets (15) The following are reported as miscellaneous non-current financial assets with a residual maturity of more than one year: EUR thousands Receivables from investees Pension plan cost insurance Total Deferred Taxes (16) The deferred tax assets reported in the Group primarily include income taxes on loss carryforwards that are likely to be offsettable against a deferred tax claim of EUR 4,678 thousand (2008: EUR 5,457 thousand) as well as temporary differences between the amounts recognized in the consolidated financial statements and those reported in the tax accounts of EUR 6,261 thousand (2008: EUR 5,865 thousand). The deferred taxes are apportioned to the following significant balance sheet items and loss carryforwards: EUR thousands Deferred tax assets Deferred tax liabilities Deferred tax assets Deferred tax liabilities Intangible assets 4,294 1,476 4,575 1,331 Property, plant and equipment 63 1, ,203 Inventories Other assets Pension provisions 3, ,949 0 Other provisions 2, , Liabilities 1,845 3,734 1,101 3,432 13,426 7,165 12,611 6,746 Loss carryforwards 4, , ,104 7,165 18,068 6,746 Netting 7,165 7,165 6,746 6,746 Total 10, ,322 0 thereof recognized in equity (Other reserves) Consolidated Financial Statements, Notes

114 Deferred tax liabilities are set off against deferred tax assets if the requirements set forth in IAS relating to taxation authorities have been met. As of the reporting date, realizable loss carryforwards of roughly EUR 17 million still existed (2008: roughly EUR 20 million). They are considered nettable. As in 2008, no deferred tax assets are recognized on existing loss carryforwards of Loewe Opta Inc., USA in the amount of EUR 8.3 million (2008: EUR 8.6 million) due to the low probability of realization. Furthermore, the loss carryforwards were also measured according to their realizability at other foreign subsidiaries and allowances were created in the amount of EUR 2.8 million (2008: EUR 1.2 million). Inventories (17) The inventories are broken down as follows: EUR thousands Raw materials and supplies 14,176 15,375 Work in progress 1,735 1,251 Finished goods and merchandise 34,553 34,480 Total 50,464 51,106 The costs of inventories include write-downs of EUR 7,155 thousand (2008: EUR 6,478 thousand) in order to ensure the loss-free valuation of finished goods and merchandise in accounting for obsolete inventories. Write-downs of EUR 1,999 thousand (2008: EUR 1,770 thousand) have been recognized on raw materials and supplies and on work in progress. Trade Accounts Receivable (18) Trade accounts receivable amounted to EUR 85,326 thousand (2008: EUR 88,819 thousand) and consisted entirely of accounts receivable from business operations. Factoring reduced the accounts receivable by a total of EUR 4 thousand (2008: EUR 143 thousand). The amount reported for trade accounts receivable includes adequate allowances for insolvency risks, cash discount reductions, processing costs, and interest. Allowances for potential insolvency risks are measured individually. Existing credit insurance is accordingly recognized, as are letters of credit, bank guarantees, and credit insurance that are additionally available for some international receivables. Moreover, the default risk is low due to the fact that the receivables portfolio is broadly diversified. In addition, credit limit checks contribute to limiting risk. Furthermore, the factoring company bears the default risk for assigned receivables Loewe AG

115 The maximum remaining default risk for Loewe is equal to the carrying amount of the receivable. The allowances changed as follows: EUR thousands Balance as of January 1 3,684 4,033 Allocations (expenses for allowances) 1, Utilization Releases Balance as of December 31 5,059 3,684 The higher allocation to allowances on receivables is related to the currently poor overall economic situation in the core European markets and the associated possibility of economic problems of Loewe retailers. All trade accounts receivable are due within one year. The carrying amounts have the following maturity structure: EUR thousands Carrying amount of the trade accounts receivable 85,326 88,819 thereof neither impaired nor past due on the closing date 82,546 85,483 thereof not impaired and past due on the closing date in the following time ranges: less than 30 days 1,645 2,717 between 30 and 90 days between 91 and 180 days more than 180 days Receivables past due for more than 90 days primarily refer to VAT amounts that can only be reclaimed from the tax authorities after final derecognition of the respective trade accounts receivable. With regard to the trade accounts receivable that were neither impaired nor past due, as of the closing date there was no evidence to suggest that the debtors would not comply with their payment obligations. Of the trade accounts receivable that had already been written down, EUR 51 thousand (2008: EUR 80 thousand) was collected in the fiscal year. Consolidated Financial Statements, Notes

116 Income Tax Assets Current (19) The current income tax assets of EUR 391 thousand (2008: EUR 162 thousand) include tax reimbursement claims in connection with advance payments and the current portion of the claim to payment of the corporation tax credit under Section 37 (5) of the Corporation Tax Act. Miscellaneous Current Financial Assets (20) The assets relate to: EUR thousands Positive value of financial derivatives 545 2,177 Assets arising from advance payments Credit balances with suppliers Advances for travel expenses and personnel Claims on insurance companies/forwarding agents Other current claims Total 2,070 3,914 The decline in the positive intrinsic value of financial derivatives is due to the less favorable EUR/USD exchange rate on the date the Loewe purchase was hedged compared to the reporting date. All miscellaneous current financial assets are due within one year. Cash and Cash Equivalents (21) The cash and cash equivalents consist of current deposits and time deposit investments with commercial banks of EUR 36,081 thousand (2008: EUR 37,231 thousand), which can be withdrawn on short notice Loewe AG

117 Shareholders Equity Equity Attributable to Equity Holders of the Parent (22) As of the reporting date, the Company s share capital of EUR 13,009,229 is fully paid in and has not changed from the previous year. It is divided into 13,009,229 no-par value bearer shares. The capital reserve exclusively contains premium on the capital stock issued. The reporting of a separate legal reserve in accordance with Section 150 (1) and (2) of the German Stock Corporation Act is not necessary owing to the size of the existing capital reserve. In the line Fair value measurement of hedging instruments, other reserve includes changes in value of derivatives not recognized in income (plus deferred tax assets of EUR 319 thousand [previous year minus tax liabilities of EUR 563 thousand]) which are used as hedging instruments in the sense of a cash flow hedge and which can be proved to be effective for the purposes of IAS 39. For the past fiscal year a dividend of EUR 0.50 per share or a total of EUR 6,505 thousand was distributed from the distributable profit. Consistent with practice under German commercial law, EUR 2,700 thousand of the net income generated by Loewe AG in 2009 was allocated to retained earnings. Together with the Group profit carried forward from the previous year and after deduction of the dividend payment for 2008, the remaining amount of EUR 2,724 thousand will be reported as Group distributable profit of EUR 12,268 thousand as of December 31, Loewe will propose to the Annual Shareholders Meeting on May 20, 2010 to pay a dividend of EUR 0.25 per share. The planned total dividend payout will amount to EUR 3,252 thousand. The statement of changes in equity is shown as a separate table. Additional conditional capital of 398,400 shares exists for the implementation of a stock option plan. In accordance with the resolution of the Shareholders Meeting, the conditional capital increase was used to grant pre-emptive rights to the members of the Executive Board, authorized signatories, and executives of the Company as well as managing directors, authorized signatories, and executives of affiliated companies. The option program expired on July 1, The option rights were forfeited without the Company being obligated to provide any form of compensation. By resolution of the Shareholders Meeting on June 2, 2005, new authorized capital was created in the amount of EUR 5,200,000. This resolution authorized the Executive Board, with the consent of the Supervisory Board, to increase the Company s share capital by up to a total of EUR 5,200,000 through the issue of up to 5,200,000 no-par value bearer shares in exchange for contributions in kind or cash contributions on one or more occasions until no later than June 1, 2010 (2005 Authorized Capital). The shareholders must be granted pre-emptive rights. However, the Executive Board is authorized, with the consent of the Supervisory Board, to exclude the pre-emptive rights of the shareholders for fractional amounts as well as to establish the further content of the rights inherent in shares and the conditions for the issue of shares. After partial utilization, the authorized capital as of June 2, 2005 (2005 Authorized Capital) still amounted to EUR 2,598,154. Consolidated Financial Statements, Notes

118 By resolution of the Shareholders Meeting on May 26, 2009, the Company was authorized to acquire treasury shares under the following conditions: 1. The Company is authorized to acquire treasury shares equaling up to 10 % of its share capital existing on the date of the resolution. Together with the other shares held by the Company or to be treated as such in accordance with Sections 71d and 71e of the German Stock Corporation Act, the acquired shares may not at any time constitute more than 10 % of the share capital. 2. The authorization can be exercised by the Company or by third parties for its account in entire or partial amounts and on one or several occasions in pursuing one or several purposes. The authorization is valid until November 25, At the discretion of the Executive Board, the shares may be acquired via the stock exchange or via a public offer to buy addressed to all shareholders of the Company. a. If the acquisition is made via the stock exchange, the purchase price to be paid by the Company per share of the Company (not including ancillary acquisition costs) may not be more than 10 % higher or lower than the average closing prices on the three trading days preceding the acceptance of the obligation. In this connection, with regard to each trading day, the closing price is the final price determined in the final auction, or if such a final price is not determined on the trading day concerned, the last price of the Company s share determined in continuous trading in the XETRA trading system (or a comparable successor system) of the Frankfurt Stock Exchange. b. If the acquisition is made via a public offer to buy addressed to all shareholders of the Company, the purchase price per share offered by the Company (not including ancillary acquisition costs) may not be more than 10 % higher or lower than the average of the closing prices (as defined in letter a) above) on the three trading days before the record date. Record date is the day the Company announces its decision to issue a public offer, or in the case of a change of offer, the day of the Executive Board s final decision concerning the change of offer. The offer to buy can include conditions. If more shares are tendered to the Company for repurchase than the total number offered by the Company for repurchase, the Company will carry out the acquisition in proportion to the tendered shares. The Company can provide a preferential acceptance of low share numbers of up to 100 shares tendered per shareholder. 4. The Executive Board is authorized, with the consent of the Supervisory Board, to use the shares acquired under this authorization for all purposes allowed by law but also for the following purposes in particular: a. The shares may be recalled without the necessity of another resolution of the Annual Shareholders Meeting being required for the recall or its implementation. b. The shares can be transferred against performance in kind. c. The shares can also be sold in another manner than via the stock exchange if the shares are sold in exchange for cash at a price that is not substantially lower than the stock exchange price of the shares at the time of the sale. If the shares sold are offered to the shareholders while not safeguarding their subscription right, they may in aggregate not exceed 10 % of the share capital, and specifically neither on the date this authorization takes effect or on the date of its exercise. 5. The authorizations in letters 4. b) and c) also apply to shares of the Company that are acquired based on Section 71d sentence 5 of the German Stock Corporation Act Loewe AG

119 6. The authorizations in letter 4. can be exercised on one or several occasions, entirely or in parts, individually or collectively. 7. The subscription right of the shareholders to treasury shares can be excluded with the consent of the Supervisory Board if it is used in accordance with the authorizations in letters 4. b) to c). The 10 % limit applicable to sales of treasury shares in accordance with the authorization in letter 4. c) while excluding the subscription right must be applied to shares that are issued during the term of this authorization from authorized capital while excluding the subscription right in accordance with Section 186 (3) sentence 4 of the German Stock Corporation Act. 8. The currently existing authorization to acquire and use treasury shares issued by the Company s Annual Shareholders Meeting on June 9, 2008 and time-limited until December 8, 2009, is hereby canceled if no use of it has been made to this date. Minority Interests (23) Minority interests are held by Loewe Opta GmbH, Kronach (1 %), and at Loewe Opta Benelux N.V./S.A. (10 %). This item changed as follows: EUR thousands Balance at the beginning of the period 1,239 1,061 Additions Balance at the end of the period 1,325 1,239 thereof: Loewe Opta GmbH Loewe Opta Benelux N.V./S.A. 1, ,325 1,239 Under the terms of the profit and loss transfer agreement between Loewe AG and Loewe Opta GmbH of April 21, 2001, the minority shareholder, who has held a 1 % interest in the share capital of Loewe Opta GmbH since 1997, receives an annual equalization payment in the amount of EUR 73.6 thousand pursuant to Section 304 of the German Stock Corporation Act. Consolidated Financial Statements, Notes

120 Provisions for Pensions and Similar Obligations (24) Pension provisions relate to individual and collective commitments to pay pensions to employees. The earned pension claims are basically salary-dependent (predominantly with a stipulated upper limit) and are based on the duration of employment of entitled employees. Provisions for pension obligations have been calculated in accordance with actuarial standards. The Richttafeln 2005 G (mortality tables) by Dr. Klaus Heubeck were used to determine mortality and invalidity. To calculate pension obligations, the discount rate and the expected increases in wages, salaries and pensions were assessed to reflect the long-term trend; the economic assumptions on which the calculation is based are therefore as follows: in % Discount rate Anticipated annual increases in wages and salaries Anticipated annual increases in pensions The present value of the pension obligations of the Loewe Group was recognized as a provision in the amount of EUR 40,312 thousand (2008: EUR 40,951 thousand). The pension obligations were determined for both reporting dates on the basis of actuarial valuations under the projected unit credit method in accordance with IAS Loewe AG

121 The changes in pension provisions were as follows: EUR thousands Balance as of January 1, ,434 a. Changes not recognized in income Pension payments in ,273 Additions for employee-financed pension commitments 88 2,185 37,249 b. Changes recognized in income Reported under interest expenses Interest expense for own commitments 1,818 Reported as personnel expenses under cost of sales, selling expenses and administrative expenses Current service cost 518 Actuarial losses 1,366 1,884 Balance as of December 31, ,951 a. Changes not recognized in income Pension payments in ,326 Additions for employee-financed pension commitments 83 2,243 38,708 b. Changes recognized in income Reported under interest expenses Interest expense for own commitments 1,978 Reported as personnel expenses under cost of sales, selling expenses and administrative expenses Current service cost 438 Actuarial losses Balance as of December 31, ,312 Actuarial gains and losses are recognized in income when incurred. Consolidated Financial Statements, Notes

122 The following is anticipated for 2010: EUR thousands Pension payments 2,530 Interest expense for own commitments 1,923 Current service cost 413 Other Non-Current Provisions (25) Other non-current provisions comprise the following: EUR thousands Warranty obligations 6,545 6,291 Personnel costs 7,335 5,418 License fees 3,240 5,315 Total 17,120 17,024 Non-current provisions are recognized for warranties for services that must be provided 12 to 39 months, or in some cases 12 to 63 months, after the reporting date. They are recognized on the basis of a general warranty period of three or five years plus a three-month grace period. The increase in provisions resulted from the extension of some warranty periods to up to five years as well as from increased costs of the service department and additional service and goodwill payments to sales partners outside of Germany. Non-current provisions for personnel costs are recognized primarily for part-time retirement contracts with employees (terms of 2 to 6 years), obligations for future employment anniversary payments (terms of 2 to 25 years) and possible long-term settlement obligations from the collectively agreed pay framework agreement (ERA) in Germany. License fee provisions are recognized for risks resulting from infringements of industrial property rights and the payment of license fees that will be incurred in two to three years. The change in other non-current provisions is shown together with other operating provisions in Note Loewe AG

123 Non-Current Financial Liabilities (26) Non-current financial liabilities amounted to EUR 94 thousand (2008: EUR 2,344 thousand) and relate exclusively to a bank loan at Loewe Opta GmbH. The loan is secured by mortgage. The large decline in the balance is due to a special payment on principal made in the year under review. The existing long-term loan is at market interest rates. Interest expense from the long-term loan is expected to be EUR 27 thousand for 2010 and EUR 1 thousand for the remaining time to maturity. Income Tax Provisions (27) Income tax provisions are comprised as follows: EUR thousands Provision for income tax payments, current year 1,331 2,417 Risks from previous years 3,260 2,000 4,591 4,417 At the present time, it must be expected that the assessments will be made during the next fiscal year. Other Current Provisions (28) Other current provisions with an anticipated utilization within one year comprise the following: EUR thousands Provisions for: Annual sales compensation 20,068 22,009 Warranty obligations 8,894 8,567 Personnel costs 8,265 9,780 Rework of company-manufactured products 1, Other provisions 8,036 7,889 Total 46,547 49,178 Provisions for annual sales compensation were determined based on the agreements covering bonuses and other compensation. They apply largely to Germany. The decline is related to the reduced sales volume compared to the previous year. Consolidated Financial Statements, Notes

124 Provisions for warranties are calculated based on anticipated warranty costs in the future, allowing for a general warranty period of three years. The increase is the result of increased costs of the service department and additional service and goodwill payments to sales partners. Provisions for personnel costs essentially comprise holiday pay, variable remuneration to be paid and the current component of part-time retirement contracts. The provisions for rework of company-manufactured products continue to be primarily recognized for the safety inspection campaign with respect to 100Hz CRT sets from the production period between March 1999 and October The sets were inspected by authorized workshops to rule out existing residual long-term risks from manufacturing-related weak points in specific soldered rivet joints. The inspection campaign is now being phased out. The miscellaneous provisions include, among other things, items for cancellation costs, third-party product liability claims, and additional costs that may be incurred. The total other provisions (non-current and current) changed as follows in 2009: EUR thousands Annual sales compensation Cost of warranties Personnel costs License fees Miscellaneous provisions Total other provisions Balance as of January 1, ,458 11,716 12,658 6,096 8,987 60,915 Additions 22,009 9,412 10,249 1,453 6,577 49,700 Utilization 20,954 6,213 7, ,102 41,737 Reversals , ,676 Balance as of December 31, ,009 14,858 15,198 6,190 7,947 66,202 thereof: non-current 0 6,291 5,418 5, ,024 thereof: current 22,009 8,567 9, ,947 49,178 Balance as of January 1, ,009 14,858 15,198 6,190 7,947 66,202 Additions 20,118 8,845 8, ,255 48,255 Utilization 21,944 8,206 8, ,039 47,819 Reversals , ,971 Balance as of December 31, ,068 15,439 15,600 3,800 8,760 63,667 thereof: non-current 0 6,545 7,335 3, ,120 thereof: current 20,068 8,894 8, ,760 46, Loewe AG

125 Current Financial Liabilities (29) No current drawing credits existed as of the reporting date (2008: EUR 15 thousand) except for a current repayment of a portion of the principal of a long-term loan in the amount of EUR 938 thousand (2008: EUR 937 thousand). Interest is at market rates. With a comparable utilization of the lines, the interest from short-term drawing credits in fiscal 2010 will not exceed the expense of fiscal Trade Accounts Payable (30) Trade accounts receivable of EUR 23,077 thousand (2008: EUR 29,008 thousand) result primarily from deliveries of materials, services and deliveries of merchandise. The decline resulted primarily from lower accounts payable to panel suppliers due to the existence of a year-end inventory in 2008 for specific panel groups. All trade accounts payable are due within one year. Miscellaneous Current Financial Liabilities (31) All miscellaneous current financial liabilities are due in less than one year and can be broken down as follows: EUR thousands Taxes and social security charges due 5,386 4,411 Customer credit balances 2,209 2,124 Fair value of hedged financial assets 1, License fee liabilities 1,364 1,202 Liabilities to personnel Sundry liabilities Total 12,389 9,253 The rise in negative fair values from existing financial hedging agreements results from the stronger rate of the US dollar as compared to the hedged average rate. Consolidated Financial Statements, Notes

126 Additional disclosures on financial instruments in accordance with IFRS 7 The following table shows the carrying amounts and fair values of all financial instruments recognized in the consolidated financial statements. Amount recognized in the balance sheet EUR thousands December 31, 2009 * December 31, 2008 * Category Carrying amount Amortized cost Market value recognized in equity Fair value Carrying amount Amortized cost Market value recognized in equity Fair value Assets Non-current financial assets Equity investments (2) 25 ** 25 ** 25 ** 25 ** Financial investments (2) 1,527 1,527 1,527 1,091 1,091 1,091 Other non-current financial assets (3) Current financial assets Trade accounts receivable (3) 85,326 85,326 85,326 88,819 88,819 88,819 Miscellaneous current financial assets (3) 1,525 1,525 1,525 1,737 1,737 1,737 Derivatives with hedging relationship n. a ,177 2,177 2,177 Cash and cash equivalents (3) 36,081 36,081 36,081 37,231 37,231 37,231 Liabilities and shareholders equity Non-current liabilities Financial liabilities (4) ,344 2,344 2,344 Current liabilities Financial liabilities (4) Trade accounts payable (4) 23,077 23,077 23,077 29,008 29,008 29,008 Miscellaneous current financial liabilities (4) 10,700 10,700 10,700 9,118 9,118 9,118 Derivatives with hedging relationship n. a. 1,689 1,689 1, Loewe AG (1) Held-to-Maturity Investments (HtM) (none were held as of the reporting date) (2) Available-for-Sale Financial Assets (AfS) (3) Loans and receivables (LaR) (4) Financial Liabilities Measured at Amortized Cost (FLAC) * No market values to be recognized in income existed as of the reporting date. ** The absence of an active market makes it impossible to determine a fair value for equity investments, for which reason they are measured at amortized cost. No sale of the financial instruments is planned.

127 Cash and cash equivalents, trade accounts receivable, and other receivables primarily have short residual maturities. For that reason, the carrying amounts as of the closing date correspond to the fair value. The fair values of the non-current assets with residual maturities longer than one year correspond to the discounted repayment amounts. Notes to the Cash Flow Statement The cash flow statement was prepared in accordance with IAS 7 Cash Flow Statements. The changes in cash and cash equivalents and the cash flows of significance to them are broken down by operating, investing, and financing activity. Cash flows from operating activities are reported using the indirect method. The change and composition of the cash flows are shown in a cash flow statement as a separate component of the consolidated financial statements. The individual items of the cash flow statement are as follows: Net cash from operating activities Net cash from operating activities was clearly positive at EUR 26,572 thousand; however it declined year-on-year by EUR 37,123 thousand. The significant decrease is primarily due to the lower EBIT (EUR 14,984 thousand) compared to the previous year, the lower provisions for pensions and other current provisions (EUR 3,270 thousand) and the reduction in trade payables (EUR 5,931 thousand). The presentation of the change in net current assets has been adjusted for the non-cash changes in the value of financial hedging instruments. The other non-cash effects result primarily from the interest expenditure on pension provisions. Net cash from investing activities In fiscal 2009, the Loewe Group invested EUR 7,618 thousand (2008: EUR 7,247 thousand) for intangible assets and EUR 10,928 thousand (2008: EUR 16,320 thousand) for property, plant and equipment. Net cash from financing activities The cash-effective changes comprise the dividend payment for fiscal 2008, scheduled repayments and a special payment on the principal of a long-term loan. Cash-effective change in liquidity Cash and cash equivalents decreased overall by EUR 997 thousand to EUR 36,076 thousand. The factoring agreement is handled like a bank overdraft facility and is therefore included in cash and cash equivalents. Consolidated Financial Statements, Notes

128 Risk Management and Financial Derivatives Risk management Loewe AG has a centralized risk management approach for identifying, measuring and controlling risks. With respect to its assets, liabilities and planned transactions, Loewe AG is in particular subject to market and price risks as well as risks arising from interest rate and exchange rate changes. Currency risks arising from planned foreign-currency expenditures are largely reduced by forward exchange transactions, call options and zero cost options using a rolling 18 month projection. A substantial portion of the expected foreign currency expenditures is currently covered in this manner. The effectiveness of the risk control is reviewed on a regular basis. The goals, principles, responsibilities and competencies for the finance department are set down in Group internal guidelines with binding effect and following the principle of segregation of functions. Derivative financial instruments (hedge accounting) The hedging transactions used to hedge the currency risk for existing purchase contracts are based on the following figures: Hedge volume USD million EUR million Intrinsic value EUR thousands Longest residual maturity until Positive Negative Forward exchange transactions May 31, ,372 Spread options (zero cost options) May 31, Total ,689 The above derivative financial instruments are recognized at fair value. In line with the following hierarchy provided by IAS 39 for the measurement of financial instruments at fair value: Level 1 quoted (unadjusted) market prices in an active market for identical assets or liabilities Level 2 methods in which all input parameters that have a substantial impact on the measured fair value are either directly or indirectly observable Level 3 methods using input parameters that have a substantial impact on the measured fair value and are not based on observed markets, the financial instruments recognized at fair value are assigned to Level Loewe AG

129 With respect to their residual maturity, the existing currency hedging transactions are broken down as follows: USD thousands Volume Balance thereof maturing in: 12/31/ Forward exchange transactions 54,000 43,000 11,000 Spread options 19,000 14,000 5,000 Total 73,000 57,000 16,000 EUR thousands Equivalent amount Balance thereof maturing in: 12/31/ Forward exchange transactions 38, , ,457.1 Spread options 13, , ,541.8 Total 52, , ,998.9 EUR thousands Intrinsic value Balance thereof maturing in: 12/31/ Forward exchange transactions, positive Forward exchange transactions, negative 1, , Spread options, positive Spread options, negative Total 1, , The derivative financial instruments are used for hedging the risk of purchases in foreign currency. Their use is in compliance with relevant Group guidelines. The efficiency of the hedging relationships required according to IFRS is in conformity with the intention pursued by Loewe that only risks from designated hedged items are hedged by derivatives, and derivatives may not be entered into at any time for speculative purposes. Consolidated Financial Statements, Notes

130 The positive value of the forward exchange transactions and spread options is recognized in miscellaneous current financial assets, the negative value in miscellaneous current financial liabilities. As the hedging transactions are used to hedge future payment flows and must be seen as cash flow hedges, the offsetting entry of the market value change is recognized directly in equity (within other reserve) with no effect on income in the amount of EUR 1,143 thousand. Deferred tax assets in the amount of EUR 319 thousand are recognized in this reserve. As a result of the realization of hedged items, EUR 1,906 thousand (excluding deferred tax component) was reclassified together with the hedged item from the cumulative income and expenses recognized directly in equity into the income statement in the year under review. Credit risks Despite the currently difficult overall economic situation, the credit risks can still be seen as slight due to the fact that the receivables portfolio is broadly diversified and transactions are only entered into with business partners who have an excellent credit rating. In addition, risk is mitigated by a system of credit lines. In all cases, the maximum default risk is limited to the carrying amount of the receivable in question. Specific valuation allowances are only recognized for customer receivables. With receivables before valuation allowances amounting to EUR 90,385 thousand (2008: EUR 92,503 thousand), valuation allowances were recognized in the amount of EUR 5,059 thousand (2008: EUR 3,684 thousand). The portfolio of receivables for which no valuation allowances were set up contains no receivables with significant payment disruptions. Market risks Currency risks The foreign currency risk for Loewe is essentially limited to the procurement of LCD panels and components that are settled in US dollars and yen. The anticipated foreign currency volume is determined using a rolling 18-month projection with the objective of hedging a significant, defined percentage with forward exchange transactions, call options and zero cost options. In addition, since the establishment of Loewe UK Ltd. in fiscal year 2007, currency translation gains and losses have resulted from the relationship of the EUR to the GBP. Interest rate risks Most of the Company s non-current financial liabilities carry fixed interest rates. The other interestbearing receivables and liabilities bear variable interest rates. Other market price risks No appreciable price risks exist, as Loewe holds only insignificant shares in investment funds Loewe AG

131 Liquidity risks To ensure long-range financing, a syndicate agreement tied to compliance with covenants with a total volume of EUR 50 million was concluded with a banking syndicate in This line of credit is intended to finance the business operations as well as the planned capital expenditure of the Loewe Group and has been committed until June 30, The loans granted may be utilized either by Loewe Opta GmbH or Loewe AG. The factoring agreement with Fortis Commercial Finance may be utilized for up to EUR 35 million and runs until June 30, Negotiations concerning follow-up financing for factoring are already in progress. Furthermore, independent lines of credit totaling EUR 6.3 million were granted to foreign companies in the Group by their banks. The size of the existing lines is sufficient to exclude any significant liquidity risks. Financial investment risks The cash and cash equivalents available in accordance with our financial planning are invested in banks subject to the deposit protection fund. Through this selection of investments, we seek the greatest possible risk minimization. The goal of Loewe AG s capital management strategy is to safeguard the business operations, increase the company value, create a sound capital basis for the financing of the business policy, and guarantee dividend payments and debt servicing. Goals and methods of financial risk management Capital management The primary goal of the Group s capital management is to secure a credit rating appropriate for the support of its operating activities and a positive equity ratio. The Group manages its capital structure and undertakes the necessary business adjustments in light of changed general economic conditions. No changes of the goals, guidelines and methods were undertaken as of December 31, 2009 and December 31, Contingencies and other financial obligations Outstanding contributions for affiliated companies pursuant to Section 24 of the German Private Limited Companies Act (GmbHG) amount to EUR 31 thousand (2008: EUR 31 thousand). Consolidated Financial Statements, Notes

132 The following other financial liabilities exist: EUR thousands Total liabilities from tenancy and servicing agreements and leases due in ,910 (previous year: 2009) 3,509 due between 2011 and ,754 (previous year: between 2010 and 2013) 3,246 due after ,575 (previous year: after 2013) 1,750 The Loewe Group has entered into various operating lease agreements for factory and office equipment, rental properties and motor vehicles. The terms usually range between two and three years. Most of the leases provide no renewal option. Transactions with shareholders The business relations with companies of the Sharp Group extended to the following areas in fiscal year 2009: Deliveries of panels to Loewe Joint Development Center (JDC) in Kronach for the provision of joint development services All agreements are concluded on an arm s length basis. Furthermore, as a shareholder, Sharp cannot be classified as a related party. Sharp has no influence over Loewe management, is not represented on the Loewe Supervisory Board and does not participate in any decision-making processes at Loewe. Other Disclosures Staff and personnel costs The average number of employees breaks down as follows: Employees Industrial workers Salaried employees Employees as defined by Section 314 (1) sub-section No.4 HGB Trainees Total 1,042 1, Loewe AG

133 On December 31, 2009, the number of employees in the Group totaled 1,072 (2008: 1,027). The operating expenses incurred for personnel costs are broken down as follows: EUR thousands Wages and salaries 52,404 54,730 Social security contributions 9,003 8,833 Expenses for pensions and other employee benefits 409 1,865 Total 61,816 65,428 The decline in personnel costs is primarily due to lower variable remuneration components as a result of not reaching defined targets. In addition, the reduction in the number of pensioners with no change of the calculation bases made it possible to lower the allocation to provisions for pensions. Events after the reporting date In an ad hoc announcement in accordance with Section 15 of the German Securities Trading Act (WpHG), Loewe AG reported concerning the planned majority acquisition of at least 75 % of the shares of the unlisted company MacroSystem Digital Video AG, Wetter (Ruhr). The conclusion of the acquisition is tied to the adoption of the insolvency plan by the creditors meeting and the fulfillment of additional contractually agreed conditions. The execution of the agreement is planned for the end of March Through the planned acquisition of a majority interest, Loewe will strengthen its development competence and acquire additional expertise in multimedia networking. Information pursuant to Section 160 (1) No. 8 of the German Stock Corporation Act The Company published the following announcement in Börsen-Zeitung No. 28 of February 10, 2005: Notification pursuant to 25 (1) WpHG (German Securities Trading Act) In accordance with Section 21 (1) of the German Securities Trading Act, the Company has received a notification concerning shareholdings exceeding 10 % and 25 % of the voting rights: Sharp Corporation, 22-22, Nagaike-Cho, Abeno-Ku, Osaka , Japan ( Sharp ) has notified us that with the recording of the implementation of a capital increase of Loewe AG ( Loewe ) on February 3, 2005, it has exceeded the threshold of 10 % and 25 % of the voting rights in Loewe and now directly and indirectly holds % of the voting rights in Loewe. Of that amount, pursuant to 22 (1) sentence 1 No. 1 German Securities Trading Act, 6.73 % of the voting rights must be attributed to Sharp, which are held by its fully owned subsidiary Sharp International Finance (UK) Plc, Sherbourne House, The Croxley Centre, Watford, Hertfordshire, WD18 8WT, United Kingdom. Consolidated Financial Statements, Notes

134 The Company published the following announcement in Börsen-Zeitung No. 213 of November 4, 2005: Notification pursuant to 25 (1) WpHG (German Securities Trading Act) In accordance with 21 (1) German Securities Trading Act, the Company has received a notification concerning shareholdings not meeting 10 % of the voting rights. J & A Vermögensverwaltung GmbH has notified us that it fell short of the threshold of 10 % of the voting rights in Loewe AG on November 2, 2005 and now holds 9.72 % of the voting rights in Loewe AG. These voting rights are attributable to Dr. Rainer Hecker in accordance with Section 22 (1) No. 1 of the German Securities Trading Act. The Company published the following announcement in Börsen-Zeitung No. 216 of November 9, 2005: Publication pursuant to Section 25 (1) of the German Securities Trading Act The Company has received a voluntary notification pursuant to Section 21 of the German Securities Trading Act. Dr. Rainer Hecker, Joseph-Haydn-Straße 9, Kronach, has notified us that with the recording of the capital increase of Loewe AG on February 3, 2005, he held % of the voting rights in Loewe AG and with the recording of the capital increase of Loewe AG on November 2, 2005, he now holds % of the voting rights in Loewe AG. Of the voting rights in Loewe AG held by J & A Vermögensverwaltung GmbH, Joseph-Haydn-Straße 9, Kronach, % were attributable to him on February 3, 2005 and 9.72 % on November 2, 2005 in accordance with 22 (1) No. 1 German Securities Trading Act. The Company made the following notification to the German Financial Supervisory Authority (BaFin) on June 25, 2007 and simultaneously conveyed it to the Commercial Register: Publication of a voting rights announcement pursuant to Section 26 (1) of the German Securities Trading Act (WpHG) with the goal of Europe-wide dissemination In the name of Electra QMC Europe Development Capital Fund plc, Dublin, Ireland as well as in the name of and by order of the additional persons named below, the following was reported to the Company on June 25, 2007 pursuant to Sections 21 (1), 22 of the German Securities Trading Act: The share of the voting rights in Loewe AG with registered offices in Kronach (address: Industriestr. 11, D Kronach) held by the persons named below on June 20, 2007 exceeded the thresholds of 3 %, 5 % and 10 % of the voting rights, following which they held % of the voting rights (corresponding to 1,318,050 voting rights from the same number of shares): 1. Electra QMC Europe Development Capital Fund plc with registered offices in Dublin, Ireland (address: c/o RBC Europe Dexia Investor Services Ireland, Georges Quay House, 43 Townsend Street, Dublin 2, Ireland); 2. Electra Quoted Management Ltd. with registered offices in London, United Kingdom (address: Paternoster House, 65 St. Paul s Churchyard, London EC4M 8AB, United Kingdom); 3. Electra Kingsway Holdings Ltd. with registered offices in London, United King-dom (address: Paternoster House, 65 St. Paul s Churchyard, London EC4M 8AB, United Kingdom); 4. Electra Partners Group Ltd. with registered offices in London, United Kingdom (address: Paternoster House, 65 St. Paul s Churchyard, London EC4M 8AB, United Kingdom); Loewe AG

135 5. Nmas1 Agencia de Valores S.A. with registered offices in Madrid, Spain (address: Padilla 17, Madrid, Spain); and 6. Nmas Uno IBG S.A. with registered offices in Madrid, Spain (address: Padilla 17, Madrid, Spain). All of the aforementioned 1,318,050 voting rights are directly held by Electra QMC Europe Development Capital Fund plc. Pursuant to Section 22 (1) sentence 1 No. 1 in conjunction with sentence 3 of the German Securities Trading Act, each of the aforementioned 1,318,050 voting rights from the shares held by Electra QMC Europe Development Capital Fund plc are fully attributable to the persons named above in subsections 2 to 6. These shares are held by the persons named above in subsections 2 to 6 as follows through Electra QMC Europe Development Capital Fund plc, a company directly or indirectly controlled by them: Electra QMC Europe Development Capital Fund plc is a company directly under the joint control of Electra Quoted Management Ltd. and Nmas1 Agencia de Valores S.A. For its part, Electra Quoted Management Ltd. is directly controlled by Electra Kingsway Holdings Ltd. and the latter is directly controlled by Electra Partners Group Ltd. Nmas1 Agencia de Valores S.A. is in turn directly controlled by Nmas Uno IBG S.A. Information pursuant to Section 161 of the German Stock Corporation Act Joint declaration by the Executive Board and Supervisory Board of Loewe AG pursuant to Section 161 of the German Stock Corporation Act regarding the recommendations of the Government Commission of the German Corporate Governance Code The Executive Board and Supervisory Board of Loewe AG hereby issue the following declaration of conformity pursuant to Section 161 of the German Stock Corporation Act regarding the recommendations of the Government Commission of the German Corporate Governance Code : 1. Loewe AG will continue to comply with the recommendations of the German Corporate Governance Code as amended on June 18, 2009, published in the electronic Federal Gazette on August 5, 2009, with the following exception: In concluding or renewing Executive Board contracts with members of the Executive Board currently in office, no severance payment cap will be agreed for the protection of established rights and for the prevention of unequal treatment of members of the Executive Board (sub-section (4) sentence 1 of the Code). 2. Loewe AG has complied with the recommendations of the German Corporate Governance Code as amended on June 6, 2008, published in the electronic Federal Gazette on August 8, 2008 since its last declaration of conformity of November 28, 2008 except for the recommendation set forth in sub-section (4) sentence 1 (severance payment cap in concluding Executive Board contracts). This declaration of conformity has been continuously accessible to the shareholders on the Internet ( since November 27, Loewe also publishes the notifications concerning directors dealings pursuant to Section 15a of the German Securities Trading Act as well as the annual document pursuant to Section 10 of the German Securities Prospectus Act on the Internet ( Consolidated Financial Statements, Notes

136 Segment Reporting The Home Entertainment Systems division is engaged in the sale of television sets manufactured internally and under cooperative agreements as well as DVD players/recorders, audio components and other consumer electronics products. This division is the only segment in terms of industries. The table on page 97 shows the national and international sales generated with external customers in this segment. As there is only a single segment by industry and by region, we have refrained from presenting a detailed segment report. For information on the mandatory disclosures for the single business segment, please refer to the relevant sections of the consolidated financial statements and notes. Following the discontinuation of the U.S. business in 2004, the continuing Home Entertainment Systems division is exclusively organized in the European region as Loewe AG, Loewe Opta GmbH, the subgroups Loewe Opta Benelux N.V./S.A., Loewe France S.A.S., Loewe Austria GmbH, Loewe UK Ltd. and Loewe Italiana S.r.l. The non-current assets (excluding deferred taxes) come to EUR 44,543 thousand (2008: EUR 46,585 thousand) in Germany and EUR 4,218 thousand (2008: EUR 3,656 thousand) outside of Germany. These relate primarily to property, plant and equipment. No sales revenues exceeding 10 % of total sales are generated with any single customer Loewe AG

137 Corporate Bodies and Offices Held Corporate Bodies of the Parent Company Loewe AG Supervisory Board The following are members of the Supervisory Board: Chairman Dr. Rainer Hecker, former Chief Executive Officer of Loewe AG, Kronach, former Chairman of the Management Board of Loewe Opta GmbH, Kronach, Germany residing in Mannheim Deputy Chairman Dr. Mark Wössner, Former Chairman of the Executive Board and former Chairman of the Supervisory Board of Bertelsmann AG, Munich, residing in Munich Additional members of the Supervisory Board Dr. Axel Berger, Vice-President of the German Finance Reporting Enforcement Panel, Berlin, residing in Rösrath Dr. Gerhard Heinrich, Partner and Managing Director of Heinrich & Cie. Unternehmensberatungs GmbH, Frankfurt/Main, residing in Frankfurt/Main Dr. Sönke Mehrgardt, Managing Partner with MVP Munich Venture Partners and former member of the Executive Board of Infineon Technologies AG, Munich, residing in Deisenhofen Dr. Michael Witzel, Partner of Lovells Law Firm LLP, Munich residing in Munich Consolidated Financial Statements, Notes

138 Members of the Personnel Committee are Dr. Rainer Hecker, Dr. Mark Wössner and Dr. Michael Witzel. Dr. Rainer Hecker was appointed chairman of the committee. The Audit Committee is made up of Dr. Axel Berger, Dr. Rainer Hecker and Dr. Sönke Mehrgardt. Dr. Axel Berger was appointed chairman of the committee. Members of the Nominating Committee are Dr. Rainer Hecker, Dr. Axel Berger and Dr. Mark Wössner. Dr. Rainer Hecker was appointed chairman of the committee. The other offices held by members of the Supervisory Board are shown on pages 136 and 137. Please refer to page 137 for an overview of the offices held by members of the Executive Board and for information on shares held by members of the Executive Board and Supervisory Board. The remuneration of the Supervisory Board totaled EUR 154 thousand in 2009 and was made up of fixed remuneration and performance-linked payments. Remuneration of the Company s Supervisory Board members is broken down as follows: EUR Total remuneration for 2009 thereof: fixed remuneration for 2009 thereof: performance-linked remuneration for 2009 Prof. Dr. Eberhard Scheffler (2008) (24,647) (15,575) (9,072) Dr. Rainer Hecker 44,536 36,136 8,400 (2008) (32,104) (20,341) (11,763) Dr. Mark Wössner 28,800 22,500 6,300 (2008) (38,126) (22,500) (15,626) Dr. Gerhard Heinrich 19,200 15,000 4,200 (2008) (25,416) (15,000) (10,416) Dr. Sönke Mehrgardt 19,200 15,000 4,200 (2008) (25,416) (15,000) (10,416) Helmut Ricke (2008) (12,777) (8,242) (4,535) Dr. Axel Berger 23,546 19,346 4,200 (2008) (16,765) (10,884) (5,881) Dr. Michael Witzel 19,200 15,000 4,200 (2008) (25,416) (15,000) (10,416) Total 154, ,982 31,500 (2008) (200,667) (122,542) (78,125) Loewe AG

139 Executive Board The following were appointed as members of the Company s Executive Board in fiscal year 2009: Frieder C. Löhrer, Engineer, Kronach Chief Executive Officer Gerhard Schaas, Engineer, Rödental Oliver Seidl, Graduate in business administration, Bad Boll The members of the Executive Board are simultaneously managing directors of Loewe Opta GmbH. No remuneration is paid for these activities. Remuneration of the Company s Executive Board members is broken down as follows: EUR Total remuneration for 2009 thereof: fixed remuneration for 2009 thereof: variable remuneration for 2009 Additional remuneration through allocation to provisions for pensions Dr. Rainer Hecker (2008) (508,618) (213,118) (295,500) (0) Frieder C. Löhrer 795, , ,000 69,004 (2008) (723,247) (258,747) (464,500) (54,495) Gerhard Schaas 602, , ,000 41,245 (2008) (741,186) (291,186) (450,000) (257,553) Oliver Seidl 573, , ,000 71,408 (2008) (721,575) (271,575) (450,000) (92,248) Total 1,971, ,360 1,050, ,657 (2008) (2,694,626) (1,034,626) (1,660,000) (404,296) The provision for pensions for the active Executive Board members comes to EUR 1,929 thousand (2008: EUR 1,748 thousand). The entitlement arising from the pension commitment is based on the general principles of company pension commitments. Amounts totaling EUR 191 thousand (2008: EUR 137 thousand) were paid as pensions to former members of the Executive Board and to members who had resigned. The provisions set aside for these pensions come to EUR 3,629 thousand (2008: EUR 3,732 thousand). Consolidated Financial Statements, Notes

140 Other offices held by members of the Supervisory Board of Loewe AG: Dr. Rainer Hecker Loewe Opta GmbH, Kronach, Germany (Chairman of the Supervisory Board) Gesellschaft für Unterhaltungs- und Kommunikationselektronik (gfu) mbh, Frankfurt/Main (Chairman of the Supervisory Board) Bayerische Landeszentrale für neue Medien (BLM), Munich (Member of the Administrative Council) Spectral Audio Möbel GmbH, Bietigheim-Bissingen (Chairman of the Advisory Board) Dr. Mark Wössner Douglas Holding AG, Hagen (Member of the Supervisory Board) ecircle AG, Munich (Chairman of the Supervisory Board) Heidelberger Druckmaschinen AG, Heidelberg (Chairman of the Supervisory Board) Dr. Axel Berger Loewe Opta GmbH, Kronach, Germany (Deputy Chairman of the Supervisory Board) Berlin-Hannoversche Hypothekenbank AG, Berlin (Member of the Supervisory Board) Dr. Gerhard Heinrich Prevent AG, Hamburg (Chairman of the Supervisory Board) Validd AG, Mainz (Member of the Supervisory Board) Dr. Sönke Mehrgardt Fludicon GmbH, Darmstadt (Chairman of the Advisory Board) Agnion Energy Inc., Pfaffenhofen (Chairman of the Advisory Board) Silicon Line GmbH, Munich (Chairman of the Advisory Board) CPM GmbH, Munich (Member of the Advisory Board) Loewe AG

141 Dr. Michael Witzel Eramon AG, Gersthofen (Chairman of the Supervisory Board) AP-Stiftung ggmbh, Speyer (Member of the Advisory Board) Metallgesellschaft AG, Elsteraue (Chairman of the Supervisory Board) BMG Capital AG, Frankfurt/Main (Member of the Supervisory Board) Graphit Kropfmühl AG, Hauzenberg (Deputy Chairman of the Supervisory Board) PFW Aerospace AG, Speyer (Member of the Supervisory Board) Offices held by members of the Executive Board of Loewe AG: Frieder C. Löhrer Vistec AG, Vision Technologies, Olching (Member of the Supervisory Board) MAX.P AG, Strategische Immobilien-Beratung, Düsseldorf (Member of the Supervisory Board) Gerhard Schaas IGR Interessengemeinschaft für Rundfunkschutzrechte GmbH, Düsseldorf (Chairman of the Supervisory Board) IGR Interessengemeinschaft für Rundfunkschutzrechte e. V., Düsseldorf (Chairman of the Board of Directors) Shares held by the Executive Board and Supervisory Board on December 31, 2009: As of December 31, 2009, the Executive Board held 158,458 (2008: 158,476) shares in Loewe AG. No options have been granted. One member of the Supervisory Board directly holds 550,000 Loewe shares (2008: 550,000). Consolidated Financial Statements, Notes

142 Responsibility Statement Responsibility statement pursuant to Section 37 y No. 1 WpHG and Sections 297 (2) sentence 4, 315 (1) sentence 6 HGB To the best of our knowledge, and in accordance with the applicable reporting principles, the consolidated financial statements give a true and fair view of the assets, liabilities, financial position, and profit or loss of the Group, and the management report of the Group includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal opportunities and risks associated with the expected development of the Group. Kronach, February 19, 2010 The Executive Board Frieder C. Löhrer Gerhard Schaas Oliver Seidl Loewe AG

143 Independent Auditor s Report We have audited the consolidated financial statements prepared by Loewe AG, Kronach consisting of the income statement, statement of comprehensive income, balance sheet, statement of changes in equity, cash flow statement and notes as well as the group management report for the financial year from January 1 to December 31, The preparation of the consolidated financial statements and the group management report in accordance with the International Financial Reporting Standards (IFRS), as applicable in the EU, and the additional requirements of German commercial law pursuant to Section 315a (1) of the German Commercial Code (HGB) is the responsibility of the Company s legal representatives. Our responsibility is to express an opinion on the consolidated financial statements and the group management report based on our audit. We conducted our audit in accordance with Section 317 of the (HGB) and German generally accepted standards for the audit of financial statements as promulgated by the Institut der Wirtschaftsprüfer (IDW/Institute of German Auditors). Those standards require that we plan and perform the audit in such a way that we can detect with reasonable assurance any misstatements materially affecting the presentation of the net assets, financial position and results of operations in the consolidated financial statements in accordance with the applicable financial reporting framework and in the group management report. Knowledge of the business activities and the economic and legal environment of the Group and expectations as to possible misstatements are taken into account in the determination of audit procedures. The effectiveness of the accounting-related internal control system and the evidence supporting the disclosures in the consolidated financial statements and the group management report are examined primarily on a test basis within the framework of the audit. The audit includes assessing the annual financial statements of those entities included in consolidation, the determination of the entities to be included in consolidation, the accounting and consolidation principles used and significant estimates made by the legal representatives, as well as evaluating the overall presentation of the consolidated financial statements and the group management report. We believe that our audit provides a reasonable basis for our opinion. Our audit has not led to any reservations. In our opinion based on the findings of our audit, the consolidated financial statements comply with the IFRSs as applicable in the EU, the additional requirements of German commercial law pursuant to Section 315a (1) of the HGB and give a true and fair view of the net assets, financial position and results of operations of the Group in accordance with these requirements. The Group management report is consistent with the consolidated financial statements and as a whole provides a suitable view of the Group s position and suitably presents the opportunities and risks of future development. Mönchengladbach, February 19, 2010 Abstoß & Wolters OHG Wirtschaftsprüfungsgesellschaft Steuerberatungsgesellschaft Quacken Auditor Cramer Auditor Consolidated Financial Statements, Notes

144 Sound. Galore Loewe AG

145 Loewe Audio

146 Loewe AG

147 Sound Aplenty in Every Room. Breathtaking, enchanting home entertainment. Imposing sound brings the big screen to life by reinforcing powerful images. And that s exactly what loudspeakers by Loewe aim to do. Loudspeaker systems by Loewe have attained a market share of 3.8 percent in Europe. The electrostatic concept has electrified audiophiles in particular. Lifelike sound, produced by a membrane a mere 0.01 millimeter thick, impresses listeners everywhere. Still another success factor, in addition to straightforward design and perfect sound, is the multi-room concept. You can listen to a symphony by Gustav Mahler in the bedroom, cool jazz by Miles Davis in the living room and the latest pop hits in the children s room. Thanks to Loewe Individual Sound, you can have your musical cake and eat it too. Loewe Audio

148 Loewe AG

149 Service Contents Glossary 146 Financial Calendar 147 Publications 148 Contacts/Publication Credits 149 Service

150 Glossary The current comprehensive glossary and explanation of technical terms, sorted in numerical and alphabetical order, is available at the Loewe website under Support. To protect the environment, we have deliberately decided that this extensive list should no longer be printed in the Loewe Annual Report Loewe AG

151 Financial Calendar Publication of the 2009 Financial Statements of the Loewe Group Thursday, March 25, 2010, 9:30 a.m., Munich DVFA Analysts Conference Thursday, March 25, 2010, 4 p.m., Frankfurt/Main Publication of the Q1 Report (01/01 3/31/2010) Conference call on Wednesday, May 5, 2010, 10:00 a.m. Eleventh Annual Shareholders Meeting of Loewe AG Thursday, May 20, 2010, 11:00 a.m., Munich, Alte Kongresshalle, Theresienhöhe 15 Publication of the Q2 Report (01/01 6/30/2010) Conference call on Wednesday, August 4, 2010, 10:00 a.m. Publication of the Q3 Report (01/01 9/30/2010) Conference call on Wednesday, November 3, 2010, 10:00 a.m. Publication of the Key Figures for the 2010 financial year Conference call on Thursday, January 27, 2011, 10:00 a.m.

152 Publications The following publications can be requested from Loewe Investor Relations in German and/or English: Loewe annual report Loewe quarterly reports Loewe complete product range These publications can also be obtained via the Internet at in the area Loewe AG Investor Relations or you can order them using our online contact form.

153 Contacts/Publication Credits Loewe AG Industriestrasse 11 D Kronach Germany PO Box 1554 D Kronach Germany Investor Relations: + 49 (0) 9261/ [email protected] Telefax: + 49 (0) 9261/ Public Relations: + 49 (0) 9261/ [email protected] Customer Care Center: + 49 (0) 1801/ [email protected] Telephone switchboard: + 49 (0) 9261/99-0 Internet: Ticker symbol: LOE WKN: ISIN: DE Loewe shares are traded in the Prime Standard segment of the German Stock Exchange. Classic All share Prime All share CDAX In addition to the annual report, Loewe publishes interim reports on a quarterly basis that include the consolidated financial statements. The quarterly reports are complemented by conference calls with journalists and analysts. Published by: Loewe AG, Kronach Industriestrasse Kronach Germany Concept/Design: Kuhn, Kammann & Kuhn AG, Cologne Photography: Fotostudio Gick, Michelau (p. 4) Translation: Gehlert GmbH, Legal & Financial Translations, Frankfurt/Main Printing: Aumüller Druck GmbH & Co. KG, Regensburg

154 Loewe AG Industriestrasse Kronach Germany Loewe Stock Ticker symbol: LOE ISIN Code: DE Phone: + 49 (0) [email protected]