Financial Overview

(in million EUR)

	FY2009	FY2008	Rate of change (%)	Factors
Overall
Sales	2,160.1	2,912.0	(25.8)	-
EBIT	(116.3)	55.7	-	-
Wiring Systems Division
Sales	1,224.6	1,510.5	(18.9)	1)
EBIT	(78.5)	23.4	-	2)

Factors
Wiring Systems division
1)
-The economic and financial crisis seriously affected the Wiring Systems division at the beginning of 2009. However, the business steadily recovered as the year progressed; to the extent that fourth-quarter sales were again well above the comparable figure of the previous year. This revival was the result above all of the start-up of new projects with customers in the multinational automotive industry. To a minor extent the Company also benefited from the German scrappage premium and similar subsidies in other countries, which stimulated the demand above all for small and compact class cars. In this market segment, the Company supplies products for the Dacia Logan, Peugeot 207 and Seat Ibiza models, among others. In its Wiring Systems division, the Company generated external sales of 1,224.6 million Euros in fiscal year 2009. Compared with the previous year’s figure of 1,510.2 million Euros this corresponded to a decreased of about 19%. With the exception of China, the Company declined in all regions. The largest contributors to sales in 2009 included cable harnesses and wiring systems for vehicles of the PSA, Mercedes Benz and BMW automotive groups.

2)
-The largest ever cost reduction program trimmed production, personnel and material costs by 18% year on year in 2009. The Wiring Systems division was thereby able to stem the losses due to the sales decrease and return to generating a positive result in the second half of 2009. At the same time, however, these measures incurred substantial restructuring expenses totaling 38.1 million Euros in 2009 (5.2 million Euros in 2008). In addition, the impact of revaluation as part of allocating the prices of major acquisitions as well as impairment of non-current assets had to be absorbed in the amount of 13.6 million Euros (14.1 million Euros in 2008). Overall, the EBIT of the Wiring Systems division came to a loss in 2009 of 78.5 million Euros.

Start-up of Various New and Follow-on Projects

-Production of wiring systems and cable harnesses for the new Mercedes C-Class and E-Class, the Vito, Viano and Sprinter vans, which are manufactured in China, as well as for BNW's Z4, 3 Series, 5 Series GT and 7 Series.

-Production of engine cable harnesses for the Fiat Panda and supply the successor models to the Opel Astra and Zafira as well as GM's Gentra small car, which is being supplied by its joint venture Daekyeung in Korea.

Contracts

-The Company obtained a number of new and follow-on orders. Upon completion, projects now in the order book will provide total sales revenue of about 9.0 million Euros. Existing and follow-on contracts account for roughly 54% of this total and 46% involve new projects.

-From within the automotive industry, the Company received orders during 2009 among others from PSA group to equip a new line of small Peugeot cars, for which the Company will supply the complete wiring system starting in 2012. The Company also supplies another French car-maker’s low-cost vehicles with cable harnesses. Also significant is the first order from Nissan, which forms a good basis for the further cooperation with Nissan in other countries.

-Various new orders were also received from the commercial vehicle segment in 2009. In addition to the order placed by the KAMAZ/Cummins joint venture in Russia, the Company won a follow-on project from Cummins; for a period of five years various product lines of the world’s largest independent diesel engine manufacturer will be fitted with the Company’s cable harnesses. The Company will also supply the complex wiring systems for the next generation of farming machinery made by the German manufacturer Claas and equip a new line of Fendt/ACGO tractors with cable systems.

Expansion of business in Russia

-In 2009, the Company started at its new Naberezhnye Chelny facility in the immediate vicinity of the large Russian truck manufacturer KAMAZ. The facility commenced production of various cable systems of the commercial vehicle manufacturer in the third quarter.

-In addition, another new contract will raise the facility’s capacity utilization in the future: from the autumn 2010 onwards the Company shall be making cable harnesses in Naberezhnye Chelny for the joint venture between KAMAZ and the engine manufacturer Cummins.

-The Company’s other Russian facility in Gorodets gained a strategically especially important contract in 2009 with Nissan, which ordered the complete wiring systems for its X-Trail off-roader, being manufactured in Russia from 2011.

Mechatronic Components: Start of Production

-The Company commenced series production of electric and electronic components in 2009. A facility with three production lines was set up for this purpose at its plant in Arad, Romania. The components are part of the wiring systems and are a valuable addition to its range of products and services. Product range includes high-voltage fuses, fuse and relay boxes as well as cable conduits and equipment boxes. Several of the components were already developed by the Company in the past, but production was outsourced up to now.

-The Components business unit’s first customers include BMW and GM. In the third quarter of 2009, the Company started series production of power distribution boxes for GM’s new global compact car generation in Asia and Europe – which includes the successor models of the Opel Astra and Zafia. For example, the wiring systems the Company supply for Opel Astra contain for the first time a master power distribution components produced by the Company itself as well as two fuse and relay boxes. For BMW, the Company equips the new Z4 roadster with cable harnesses including a power distributor.

R&D Expenditure

(in million EUR)

	FY2009	FY2008	FY2007
Overall	71.1	88.3	55.9

-In addition to the head office of the Wiring Systems division in Kitzingen, the Company has its development offices around the world. A new Engineering Center was set up Seoul, Korea, in the first quarter of 2007. The Company has further development centers in the United States, the United Kingdom, Slovakia, Tunisia and China.

-The Intedis joint venture supports the Wiring systems division in the design and simulation of complex wiring system architectures. In the future, the Company's recently acquired R&D center in France with a sub-office in Morocco will also play a key role in the international network of the Company's competence centers.

Product Development

Alternative drive concepts
-In 2009, the Company stepped up its involvement in the currently still small but very promising segment of alternative drive systems and its very well prepared for the future electromobility market. For years now the Company has been supplying the American motor vehicle industry with special cable harnesses for hybrid vehicles. Building on its long-standing experience in the area of hybrid technology, the Company is developing solutions suited to other alternative drive technologies. Among other things, a specialized project team is working on a complete high-voltage cable system.

-During 2009, the Company participated in various projects around the world involving alternative drive systems. In a concept study this included the development of high and low-voltage harnesses for the fuel cell powered compact car of German carmaker. For a small electric car of Tata Motor, the Company designed the complete high-voltage systems.

Capital Expenditure

(in million EUR)

	FY2009	FY2008
Wire & Cable Solutions Division	37.1	53.1
Wiring Systems Division	41.6	93.6
Company's Total Capital Expenditure	83.2	336.6

-For the year of 2009, the capital expenditure in Wiring Systems division was focused on expanding capacity in North Africa in connection with new projects for the automotive industry, extension of the production facility in Durango, Mexico, the new plant for component production in Romania as well as the additional production facility in Serbia.