Form and content of annual reports

The basic German financial statements are a balance sheet and a profit and loss
account. The notes thereto are the subject of an “appendix” (Anhang). The
financial statements are accompanied in the annual report by the auditor’s
report and the proposal or resolution for profit appropriation. Finally, the
annual report includes the directors’ report (the so-called “business report” or
Lagebericht).

The directors’ report should discuss the business situation of the
company and also specifically mention major risks and opportunities, a
description of the internal control system, the future outlook for the company,
any important subsequent events, anticipated development of the company’s
business and the branches it maintains. The directors’ report is subject to audit
inasmuch as the auditors must read it and satisfy themselves that it is not at
variance with other published information or otherwise misleading, before they
may pass an opinion on the financial statements.

Quoted companies must also publish a cash flow statement and a declaration of
compliance with the Code of Corporate Governance (see F. 5 above). Instances
of non-compliance are to be explained.