CMS Annual Report 2012

A N N U A L R E P O R T 2 0 1 2

Key figures

2012 2011 in €m in €m

Earnings figuresRevenues 235.4 175.9EBITDA 27.5 18.6Operating income (EBIT) 14.1 6.5Net profit from continuing operations 5.8 0.8

Key balance sheet figuresBalance sheet total 242.0 203.7Equity 49.2 44.1Net debt 132.7 112.1

Cash flowCash flow from operating activities 13.3 19.1

A N N U A L R E P O R T 2 0 12

CROSS Motorsport Systems at a Glance 04Group Structure 04Statement by the Management Board 05Bodies of the Company 06Shareholdings 08Report of the Supervisory Board 14

Group Status Report 2012 15

Consolidated Financial Statements 2012 27Consolidated Balance Sheet 28Consolidated Income Statement 30Consolidated Statement of Comprehensive Income 31Consolidated Cash Flow Statement 32Schedule of Development of Shareholders’ Funds 34Notes to the Consolidated Financial Statements 36Independent Auditor’s Report 76

Statement of all Legal Representatives 78

Imprint 79

CROSS Motorsport Systems AG | Annual Report 2012

4 group structureSimplified presentation as of 31 December 2012

pankl racing systems Ag

Wp components gmbH

Wp performance systems gmbH Wethje group1

Wp suspension B.V.(in liquidation)

58.31%

cross Automotive Holding gmbH

CROSS Motorsport Systems AG

100%

100%

100%

100% 50%

100%

1 44% are held by CROSS Lightweight Technologies Holding GmbH, 6% are held by Pierer Invest Beteiligungs GmbH

stAtement By tHe mAnAgement BoArd 5

CROSS Motorsport Systems AG is a consortium of specialized, international racing-technology companies with majority interests in leading brand companies, such as Pankl Racing Systems AG and WP Performance Systems GmbH, as well as a 50% share in Wethje Holding GmbH.

The overall business year 2012 developed very satisfactory for the CROSS Motorsport Systems Group. The market environment was positive throughout the year in all segments. The consolidated total group revenue increased by 33% to € 235.4m. This extreme growth was based on a massive revenue expansion in the core segments as well as the integration of new business areas, especially at the WP Group. The company’s profit situation was further improved and the EBIT was more than doubled compared to the previous year amounting to € 14.1m.

In business year 2012 the Pankl Group generated the biggest revenue growth (+21%), the highest revenue (€ 127.7m) and the best operating result (€ 10.4m) in the company’s history. Further, intensive racing activities and comprehensive develop-ment orders in all racing series enabled Pankl to significantly expand business and win important orders in the “high performance” and “aerospace” segments, which led and will further lead to a significant expansion of business.

Through the investment in a German development company for high-tech turbo chargers in September, the pankl group successfully entered the promising turbo charger business. In the “aerospace” segment the group recorded a significant increase, especially at the Austrian subsidiary. In particular through the qualification of several new components at Euro- pean helicopter producers, revenues were doubled in the current business year. In order to meet the increasing demand, the group made significant investments in the expansion of production capacities, which mainly concerns the production facilities expansion in Bruck upon Mur and Kapfenberg and serves as the basis for further growth.

Due to the overall good economic situation as well as the changes in regulations in the racing segment, which were already concluded for 2013 and 2014 as well as the herewith connected development- and testing activities, the Pankl Group expects an increase in revenues also in 2013.

In business year 2012 the Wp group further expanded its core business in a stable market environment. Business activities were further expanded through the acquisition of the exhaust- and frame production from KTM. WP is now in the position to develop, test and manufacture the complete chassis of a motorcycle. In addition, WP puts great emphasis on continuous product development. In 2012 a new, semi-active chassis for motorcycles was developed to series-production readiness and a modern, process-oriented production method was introduced in the radiator segment. Through the revenue increase in the core business and the two new segments, the WP Group achieved revenues of € 108.0m, which equals a revenue increase of more than 50%. WP also made significant invest-ments in connection with the expansion of new production capacities in Muderfing in the past business year.

The Wethje group – in which the CROSS Motorsport Systems Group holds 50% - also expanded business through intensive activities in connection with racing and in particular through new development orders in the automotive series segment. In total, revenues increased by 15% to € 24.4m.

In 2012 Wethje considerably expanded the new Resin Transfer Moulding (RTM)-technology in order to strengthen the OEM series business. In summer 2012 the automotive RTM-business of Schweizer Airex AG was acquired and relocated to Pleinting. In order to secure the necessary capacities for the dispatched serial orders in the mid-term, the construction of a plant and the establishment of a technology investment program at the site in Pleinting were initiated. The introduction of the new SAP ERP-system is another important milestone in the company’s history.

Due to the stable financial situation of subsidiaries with still high equity ratios and matching-maturity financing, there will be new opportunities on the market for the companies of the CROSS Motorsport Systems Group also in 2013.

Wels, April 2013

Alfred HörtenhuberCEO


Bodies of tHe compAny

MANAGEMENT BOARD

6

Alfred Hörtenhuber (CEO) Appointed until January 2018; First-time appointed: February 2008

After taking his school leaving exam Alfred Hörtenhuber began his career as sales assistant at K. Rosenbauer KG in Leonding in 1975 and afterwards as export manager for Western Europe. He completed a management training at the MZSG St. Gallen and the IMD Lausanne. In 1985 he joined the Miba Group, where he started out as marketing manager. In 1990 he became member of the Management Board and was responsible for marketing, research and development of Miba Sintermetall AG. In 1998 he was appointed member of the Management Board of Miba AG and CEO of the Miba Friction Group. Since 2008 Alfred Hörtenhuber has been member of the Management Board of CROSS Motorsport Systems AG and since October 2010 also member of the Management Board of CROSS Industries AG.

Other functions:

– Member of the Supervisory Board of Pankl Racing Systems AG

– Member of the Supervisory Board of KTM AG

(since 26 September 2012)

Friedrich Roithner (CFO) Appointed until June 2018; First-time appointed: February 2010

After graduating from the Johannes Kepler University, Linz (Business Administration), Friedrich Roithner started his career at Ernst & Young GmbH. After three years he left the company and joined Austria Metall AG, where he worked as member of the Management Board from 2002 until 2006. From March 2008 until June 2010 Friedrich Roithner was member of the Management Board of Unternehmens Invest AG; in July 2010 he joined the Management Board of CROSS Industries AG, of CROSS Motorsport Systems AG as well as CROSS Immobilien GmbH. In January 2011 he was appointed CFO of KTM AG.

Other functions:

– Deputy Chairman of the Supervisory Board of

BRAIN FORCE HOLDING AG

– Member of the Supervisory Board of Pankl Racing Systems AG

(since 27 April 2012)

SUPERvISORY BOARD

Stefan Pierer Chairman

Josef Blazicek Deputy Chairman (since 12 September 2012)

Ernst Chalupsky Member

Rudolf Knünz Deputy Chairman (until 12 September 2012)

Manfred De Bock Member (until 27 July 2012)

7

Wolfgang Plasser (COO Racing) Appointed until May 2017; First-time appointed: October 2008

After graduating from the University of Economics and Business Administration in vienna (International Business Administration) Wolfgang Plasser worked at KPMG Austria GmbH from 1987 to 1991 and later as manager of the controlling division at Invest- mentbank Austria AG. From 1998 to 2003 he held the position of CFO at vossen AG and since February 2003 he has been partner of the Qino Group and shareholder of Ocean Consulting GmbH. Since 2004 Wolfgang Plasser has been member of the Management Board of Pankl Racing Systems AG.

Other functions:

– CEO of Pankl Racing Systems AG

Bodies of the Company


O N E S T O P T E C H N O L O G Y.

pAnKL rAcin

g systems Ag

MiLEStOnES OF tHE BuSinESS yEAR

Record growth and record result in business year 2012 Increase in revenues by 21.1% to € 127.7m,

operative improvement of results by 47.8% to € 10.4m Increase of the operative group result by 33.2% to € 5.9m Expansion of sites in Bruck upon Mur and Kapfenberg,

new production technologies and automation systems at all sites

Entrance into turbo charger business through the acquisition of APC – Advanced Propulsion Concept GmbH in Mannheim – now “Pankl – APC Turbosystems GmbH”

Integration of the Californian crank shaft manufacturer SP Crankshaft – the whole crank assembly can now be produced in-house for all high-end motorsport applications

Investment program in the amount of € 16m for business year 2013 planned

KEy FiGuRES in €m 2012 2011

Revenues 127.7 105.4EBITDA 19.9 15.2EBIT 10.4 7.0Net profit of the year 5.9 4.5Balance sheet total 149.8 119.4Equity 69.6 64.4Net debt 46.8 32.0Free cash flow (12.2) 3.8

SHAREHOLDER StRuCtuRE as of 31/12/2012

15%Free float

27%Qino Group

58%CROSS Group


Wp group


Increase in revenues by more than 50% to € 108.0m Take over of the exhaust- and frame production

from KTM – WP is now able to develop, produce and test the whole chassis of a motorcycle

Expansion of new production capacities at the site in Munderfing

Development of a new semi-active chassis for motorcycles until series-production readiness

New process oriented production process launched in the radiator segment


Revenues 108.0 69.9EBITDA 8.5 6.6EBIT 6.3 5.2Net profit of the year 5.3 3.7Balance sheet total 52.5 40.7Equity 19.8 16.0Net debt 11.0 5.9

100%CROSS Group



WetHje group


Increase in revenues by 15% to € 24.4m Considerable expansion of the new business area “RTM (Resin Transfer Moulding)-technology”

Takeover of the automotive RTM-business of the Swiss Airex AG in Summer 2012 and relocation to Pleinting

Successful launch of the new SAP ERP-system


Revenues 24.4 21.2EBIT 0.6 0.3EBIT margin 2.5% 1.4%

94%CROSS Group


6%Pierer Invest

Beteiligungs GmbH

report of tHe superVisory BoArd14

In business year 2012 the Supervisory Board of CROSS Motor- sport Systems AG held four meetings, thus fulfilling its duties required by law and under the articles of association.

The Management Board of CROSS Motorsport Systems AG regularly reported to the Supervisory Board on the business development and the economic state of the corporation, including its associated companies. The annual financial statements and the management report for business year 2012 as well as the consolidated financial statements and group management report for business year 2012 were audited by KPMG Austria AG Wirtschaftsprüfungs- und Steuerberatungsgesell-schaft, Linz. The audit did not give rise to any objections and the individual and consolidated statements for business year 2012 were granted an unqualified audit certificate.

The auditor certified that the accounting and the annual financial statements as of 31 December 2012 are consistent with the applicable law, that the annual financial statements give a true and fair view in all material aspects of the company’s net assets, financial position and results of operations for business year 2012 in accordance with generally accepted accounting

principles, and that the management report is consistent with the annual financial statements. Further, the auditor certified that the consolidated financial statements give a true and fair view in all material respects of the group’s net assets and financial position for business year 2012 as well as of the results of operations and cash flows for the past business year in accordance with the International Financial Reporting Standards (IFRS) – as applicable in the EU-, and that the other details in the group management report do not misrepre-sent the group’s situation and the legal requirements from exemption of preparing a group statement in accordance with Austrian law are met.

The Supervisory Board concurs with the auditor’s report. After obtaining the final results of its review of the management report and group management report, the annual financial statements and consolidated financial statements as well as its management review, the Supervisory Board also raised no objections. Having been accepted by the Supervisory Board, the annual financial statements can be deemed approved pursuant to article 96 (4) Stock Corporation Law (AktG). The Supervisory Board acknowledged the consolidated financial statements and the group management report for business year 2012.

The Supervisory Board suggests that KPMG Austria AG Wirtschaftsprüfungs- und Steuerberatungsgesellschaft, Linz. be appointed independent auditor for the business year from 1 January to 31 December 2013.

Wels, April 2013

Stefan PiererChairman of the Supervisory Board

G R O U P S T A T U S R E P O R T 2 0 12

table of Contents

Business Development and Company Status 16Financial Situation 17Human Resources 19Important Events after the Balance Sheet Date 19Risk Report 19Financial Risk Management 21Research, Development and Sustainability 24Environment 24Corporate Social Responsibility 24Outlook 25


group stAtus reportfor Business Year 2012

16

The business year of CROSS Motorsport Systems AG comprises the period from 1 January 2012 to 31 December 2012.

As of the reporting date CROSS Motorsport Systems AG holds majority interests in Pankl Racing Systems AG as well as in WP Performance Systems GmbH (formerly: WP Suspension Austria GmbH).

In a first step, CROSS Motorsport Systems AG acquired 50% of shares in Wethje Immobilien GmbH (formerly: Wethje Ent- wicklungs GmbH) and 50% of shares in Wethje Holding GmbH (formerly: Wethje Carbon Composite GmbH) from PF Beteili- gungsverwaltungs GmbH (formerly: Peguform Beteiligungs GmbH) in business year 2012 on the basis of the share purchase agreement of 13 December 2012. In a second step the 50% share in Wethje Immobilien GmbH (formerly: Wethje Entwick-lungs GmbH) was sold to Wethje Holding GmbH on the basis of the share purchase agreement of 13 December 2012. As a result, CROSS Motorsport Systems AG holds 50% of shares in Wethje Holding GmbH in addition to the company’s majority interest in Pankl Racing Systems AG and WP Performance Systems GmbH as of the reporting date on 31 December 2012.

Business year 2012 developed very satisfactory for the CROSS Motorsport Systems Group. The market environment developed positively in all segments throughout the year. Consequently, the consolidated overall revenue of the group was increased by 33% to € 235.4m. This significant growth was supported by a considerable increase in revenues in the core segments as well as the integration of new business areas, in particular at the WP Group. The financial situation was further improved and the EBIT was more than doubled compared to the previous year.

Through intensive racing activities and extensive development assignments in all racing series the pankl group was able to considerably expand business. In the High Performance segment as well as in the Aerospace segment Pankl was able to win essential assignments, which led and will further lead to a significant expansion of business.

Business deVeLopment And compAny stAtus

Through the acquisition of APC – Advanced Propulsion Concept GmbH, a German turbocharger-development-company in September, the Pankl Group managed to enter the promising turbocharger business. In addition, significant growth was achieved in the Aerospace segment as well as at Austrian subsidiaries. In particular through the qualification of several new components at European helicopter manufacturers, the group was able to double revenues in the current business year.

In total the Pankl Group increased revenues by 21% to € 127.7m. In order to meet the increasing demand, the company had to make considerable investments involving the expansion of production capacities. This mainly regarded the expansion of the plants at the locations in Bruck upon Mur and Kapfenberg.

In a stable market environment the Wp group managed to further expand the core business in business year 2012. In addition, business activities were also expanded through the acquisition of the exhaust- and frame production from KTM. Now WP is able to develop, test and produce the complete chassis of a motorcycle. One focal point of WP is also the continuous development of products. In 2012 a new, series- production ready, semi-active motorcycle chassis was developed and a state-of-the-art, process-oriented production procedure introduced in the Radiator segment. As a result of the revenue increase in the core business and the two new segments, the WP Group generated revenues of € 108.0m, which equals a revenue plus of more than 50%. WP also made considerable investments in connection with the expansion of new production capacities at the site in Munderfing in the past business year.

Since CROSS Motorsport Systems AG basically performs functions of a holding company, the status report covers the development of its subsidiaries as well as of the group in business year 2012.

1.

17Group Status Report

RESuLt AnALySiS

In the past business year the group result of CROSS Motor- sport Systems AG amounted to € 5.8m (previous year: € 0.8m). Revenues in 2012 amounted to € 235.4m (previous year: € 175.9m).

The sales revenues can be divided among the holding companies as follows (see table below).

The Pankl Group generated a record result with regards to both sales and revenues. This extraordinary good result development can be attributed to good results in both segments of Pankl Racing Systems AG.

The revenue increase in the WP Group can be mainly attributed to the integration of the exhaust- and frame production of KTM-Sportmotorcycle AG. Although the WP Group achieved a record high in revenues, individual orders are subject to significant pressure. Price increases for individual components from external suppliers cannot be passed on to customers. The financial situation can be mainly attributed to a good cover- age of fixed costs at the current revenue level.

BALAnCE SHEEt AnALySiS

As of 31 December 2012 the balance sheet total amounted to € 242.0m, which is an increase of 18.8% compared to the same period in the previous year. Non-current assets increased from € 111.9m to € 133.5m in business year 2012, which is mainly a result of increased investments in 2012 by 287.5% in comparison to the same period of the previous year.

The group’s working capital employed increased from € 49.2m to € 67.9m in the reporting period. This can be mainly attributed to the higher level of receivables and inventories. Liquid assets of the group amounted to € 10.0m as of 31 December 2012 and decreased by € 2.3m compared to the previous year.

The net debts of the CROSS Motorsport Systems Group amounted to € 132.7m as of 31 December 2012 (previous year: € 112.1m) out of which € 104.6m (previous year: € 98.3m) can be allotted to non-current liabilities.

As of the reporting date on 31 December 2012 the group’s equity ratio amounted to 20.3% (previous year: 21.7%).

finAnciAL situAtion2.

Revenues in €m 2012 2011

Pankl Racing Systems AG 127.7 105.4WP Group 108.0 69.9CROSS Motorsport Systems AG (Holding) 1.0 1.2Consolidation (1.2) (0.6)cross motorsport systems group 235.4 175.9

EBit in €m 2012 2011

Pankl Racing Systems AG 10.4 7.0WP Group 6.3 5.2CROSS Motorsport Systems AG (Holding) (0.8) (3.2)Consolidation (1.7) (2.5)cross motorsport systems group 14.1 6.5


18

LiquiDity AnALySiS

The group’s operative cash flow amounts to € 13.3m and consists of the group’s cash flow from results (€ 19.4m) and changes in inventories, receivables, current liabilities and current provisions (€ –6.1m).

The group investment cash flow in the amount of € –32.1m comprises additions in property, plant and equipment and financial assets in the amount of € –32.0m, the purchase of shares in subsidiaries for € –1.0m as well as revenues from asset sales of € 0.9m.

The group cash flow from financing activities amounts to € 16.5m and is a result of increased investment activities.

In the business year bond liabilities in the amount of € –50.2m were paid off and financing liabilities (€ 31.6m) as well as group financing of CROSS Industries AG (€ 35.6m) taken out.

invEStMEntS

In business year 2012 investments in property, plant and equipment and intangible assets in the amount of € 32m (previous year: € 9.7m) were made. This considerable increase can be mainly attributed to the expansion of sites of the Pankl Group in Bruck upon Mur and Kapfenberg, which was necessary in particular through the good order situation in the Aero- space segment and upcoming large-scale projects in the High Performance segment.

KEy FinAnCiAL PERFORMAnCE inDiCAtORS

2012 2011 15M 2009/10 in €m in €m in €m

Earning figuresRevenues 235.4 175.9 167.7EBITDA 27.5 18.6 18.3EBIT 14.1 6.5 3.2Result after taxes 5.8 0.8 (1.1)EBITDA margin 11.7% 10.6% 10.9%EBIT margin 6.0% 3.7% 1.9%Operating cash flow 13.3 19.1 6.6

Balance sheet figuresBalance sheet total 242.0 203.7 211.9Equity 49.2 44.1 42.9Equity ratio 20.3% 21.7% 20.2%Working capital employed1 67.9 49.2 46.4Net debt2 132.7 112,1 120.8

1 Working capital employed: Trade receivables plus inventories less trade liabilities2 Net debt: Bank liabilities plus bond liabilities plus liabilities from finance lease and other financing less cash and cash equivalents

The Company Group Status Report Consolidated Financial Statements Statement of all Legal Representatives


As a global corporation, the CROSS Motorsport Systems Group is confronted with a large number of potential risks. The Management and Supervisory Boards are regularly informed about any risks that could have a significant effect on business development. The management introduces measures for pre- venting, minimizing and hedging of risks in a timely manner.

CROSS MOtORSPORt SyStEMS AG AS A HOLDinG COMPAny

The profit situation of CROSS Motorsport Systems AG is characterized by expenses in connection with financing, share purchases as well as project expenses and mainly depends on the dividend policy of its holding companies. The interest in the Pankl Group currently makes up the biggest and most essential interest.

DEPEnDEnCy OF tHE WP GROuP FROM KtM

The WP Group generates a considerable part of its revenue through the KTM Group. Therefore the result- and asset development of these companies is dependent on the supply relation-ship with KTM.

ECOnOMiC DEvELOPMEnt OF tHE MOtORCyCLE inDuStRy

The production and sale of motorcycles (including spare parts) are dependent on economic trends and depend on general economic conditions, such as industrial production, interest rates, fuel costs as well as consumer spending and preferences on the motorcycle market. From year to year the volume of the OEM production including the demand for spare parts is subject to strong fluctuations in Europe and the rest of the world. These fluctuations may lead to changes in demand and purchasing of WP-products.

As of the balance sheet date 1,601 people (previous year: 1,232 employees) were employed in the CROSS Motorsport Systems Group. This increase by 369 employees can be mainly attributed to the acquisition of the exhaust- and frame production by the WP Group from KTM-Sportmotorcycle AG as well as to the good order situation at Pankl Racing Systems AG.

Our employees have always been the key factor for the company’s success. This is also the reason, why we focus our

Regarding the important events after the balance sheet date please refer to the notes to the consolidated financial state-ments (item 26).

attention on responsible human resource management. In this respect our apprenticeship program plays an important role, allowing our future technicians to learn and perfect company- specific processes. Moreover we try to fill management positions internally, which provides numerous career- and advancement opportunities for our staff. Apart from the employees’ commit-ment, another great benefit is that executives already know and understand the company and the business environment.

HumAn resources

importAnt eVents After tHe BALAnce sHeet dAte

risK report

3.

4.

5.


20

RiSK PECuLiAR tO tHE tRADE/RACinG

Demand on the racing market is strongly affected by changes of regulations. Since the racing season 2007 only homologated v8-engines may be used in Formula 1. In summer 2011 a new resolution on a new Formula 1 engine (v6) as of 2014 was passed by the FIA World Motor Sport Council. Furthermore there will be an annual homologation cycle in the course of continuous improvement of efficiency. Especially in the next few years these changes in regulations will lead to high development- and testing activities in the respective racing teams.

In certain other racing classes new regulations and changes in regulations will lead to increased development- and testing activities as well. These changes already take into consideration the general trend of engine downsizing and hybridization in the automobile industry and thus represent a new technological challenge for motorsport participants. In this connection there might be the risk that the challenges may not be met in a sufficient manner, however it might be as well an opportunity for Pankl to further expand market shares and further strengthen their leading market position.

ECOnOMiC DEvELOPMEnt OF tHE AutOMOBiLE- AnD AEROSPACE inDuStRy

In general, a growing interest in motorsport as a marketing platform can be observed due to the excellent economic situation of automobile companies, allowing Pankl to profit from intensified racing activities. While automobile manufacturers reduced their motorsport budgets and individual manufacturers even dropped out of different racing series in 2008 due to the global economic crisis, more and more automobile manufac-turers started to engage themselves in racing again as of 2009/2010. Currently new development opportunities arise for Pankl through various changes in respective racing classes.

In comparison to the automobile industry, the aerospace industry belongs to a late-cyclic segment. After a recognizable recovery as of mid-2010, the aerospace industry experienced a trend reversal only in the second half of 2011. In particular at the civil helicopter manufacturers a sustainable, positive trend can be observed. This positive development in the Aerospace segment is expected to continue for Pankl, and was also enhanced by the introduction of new components.

CHAnGES On tHE PROCuREMEnt-, RAW MAtERiAL- AnD SALES MARKEtS

The procurement market poses a risk to the WP Group. This risk is relevant with regard to quantity, quality and prices. The WP Group reacts to these risks with continuous auditing of existing and potential suppliers as well as by concluding long-term offtake agreements. The quality of the provided materials is monitored on a regular basis.

The risk in connection with the procurement markets is currently considered to be high. The supply with certain raw materials (aluminium alloys, special steel and plastic) is currently very difficult and may lead to bottlenecks. The price development of raw materials is difficult to predict, which may have effects on the WP Group.

The Pankl Group needs high quality (raw-)materials, such as high-grade steel, titanium- and aluminium alloys for the production of individual components. Timely availability of raw materials is – especially in the view of a reviving economy – depended on careful planning of future order volumes. A short- age of materials might lead to delays in production and deliveries or higher material expenses. Since Pankl buys the majority of raw materials abroad, the company is subject to numerous risks including economic or political disruptions, delays in transport or exchange rate fluctuations. Each of the above mentioned risks might have a negative impact on the company’s business operations.

REPORtinG On tHE ACCOuntinG-RELAtED, intERnAL COntROL- AnD MAnAGEMEnt SyStEM

The responsibility for the establishment and organization of an accounting-related, internal control- and risk management system as well as for guaranteeing the adherence to all legal requirements lies with the Management Board. The group accounting of the CROSS Motorsport Systems Group is organized within CROSS Motorsport Systems AG and is under the direct control of the CFO.



The accounting manual of CROSS Industries AG, which is updated on a regular basis, forms the foundation for the group’s accounting and reporting. Therein specified are the uniform group key accounting- and reporting requirements according to IFRS.

Continuous review of goodwill values (impairment) and group assets, which can be allocated to respective corporate divisions, takes place at the corporate headquarters. Continuous review of goodwill values (impairment) for subsidiaries integrated into the subgroups is done directly at the group subsidiaries. Adherence to the applicable standards is ensured and monitored at management meetings on a regular basis.

All transactions of the group are recorded, settled and booked with different software solutions (ERP-systems). In smaller companies in some countries accounting is outsourced to local tax advisers. The companies provide the holding with reporting packages comprising all relevant accounting data for the income statement, the balance sheet and cash flow on a quarterly basis. The information is then entered into the central consolidation system. Provided that the affiliates use the same system as the parent company, the data transfer takes place automatically; only in national companies with other systems the recording is done manually. This information is reviewed and analysed by CROSS Motorsport Systems AG and forms the basis for reporting of the CROSS Motorsport Systems Group according to IFRS.

There is currently no individual internal revision unit. However, the above described internal control- and reporting system is set up to enable the Management Board to identify risks and quickly react to them.

For the internal management reporting we use a common planning- and reporting software or EXCEL. For the transfer of actual data from the primary system, automated interfaces were created for the most part. The data input for forecast calculations is partly done through a standardized process. Reporting is done for each group company and, if necessary also for various business areas. In addition to reporting on the operative result development for the respectively expired month, also a business year preview is prepared. These reports also provide a summary of the most important events or deviations from the budget figures, the previous year’s period as well as the respective previous forecast calculations and, if necessary, an updated assessment of individual risks.

The explained financial information in connection with the quarterly figures forms the basis of reporting by the Manage-ment Board to the Supervisory Board. At regular meetings the Supervisory Board is informed about the economic development by means of consolidated presentations comprising reporting, result development with budget- and previous year’s comparisons, forecast calculations, consolidated financial reports, employee- and order developments as well as selected financial indicators.

6.

PRinCiPLES OF FinAnCiAL RiSK MAnAGEMEnt

Regarding its assets, debts and planned transactions, the CROSS Motorsport Systems Group is exposed to credit-, market-, and liquidity risks. The aim of financial risk management is therefore to control and limit these risks. The Management and Supervisory Boards are regularly informed about any risk that could have a significant effect on business development.

The basic principles of financial risk management are laid down and monitored by the Supervisory Board as well as the Management Board. Group treasury is in charge of implementation.

A quantitative presentation of the following risks can be found in the notes to the consolidated financial statements, see note (23) “Financial risk management“.

finAnciAL risK mAnAgement


22

CuRREnCy RiSKS

The group is confronted with currency risks, when financial assets and debts are in a currency that is not the local one for the company concerned. The group companies issue the majority of bills in their local currency and finance themselves to a large extent in the local currency. Investments are primarily made in the national currency of the investing group company. As a result, the currency items are usually closed naturally.

A considerable part of revenues and costs of the group, in particular in the Pankl Group is not recorded in euro, but in a foreign currency (especially in US dollars). Possible exchange rate fluctuations can prove disadvantageous for the value of such interests.

Sensitivity analyses were carried out for the currency risks involved in financial instruments that show the impact of hypothetical changes in exchange rates on earnings (after tax) and equity. Therefore the balances affected at the balance sheet date were taken as a basis. It was assumed for the analysis that the risk on the balance sheet date basically represents the risk during the business year. The group tax rate used was 25%. In addition, the analysis was also based on the assumption that all other variables, especially interest rates, remain constant. Included in the analysis were currency risks for financial instruments that are denominated in a currency deviating from the functional one and of a monetary nature. Currency risks from euro items in subsidiaries whose functional currency deviates from the euro were added to the currency risk for the functional currency of the relevant subsidiary. Risks involved in foreign currency items which were in another currency than the euro were aggregated at group level. Exchange rate differences resulting from converting financial statements into the group currency are not taken into account.

intERESt RAtE RiSKS

The financial instruments primarily have variable interest rates both on the assets and liability side. As a result, the risk lies in rising expense interest rates and falling income interest rates due to an adverse change in the market interest rates. In individual cases the risk is observed by interest swaps.

Interest rate risks are therefore generally the result of primary financial instruments with variable interest rates (cash flow risk). Sensitivity analyses were carried out for the interest rate risks involved in these financial instruments that show the impact of hypothetical changes in market interest rate levels on earnings (after tax) and group equity. The balances affected at the balance sheet date were taken as the basis. It was assumed for the analysis that the risk at the balance sheet date basically represents the risk during the business year. The group tax rate used was 25%. In addition, the analysis was also based on the assumption that all other variables, especially exchange rates, remain constant.

OtHER MARKEt PRiCE RiSKS

In addition to currency- and interest rate risks, the CROSS Motorsport Systems Group is also exposed to other price risks, which however play a minor role for the group.

Moreover, the company is also exposed to energy price risks and raw material price risks in connection with procurement and production.

DEFAuLt RiSKS (CREDit RiSK)

The default risk for receivables towards customers has increased in the course of the economic crisis, it is however still regarded rather low as the risk rating of new and already existing customers is checked regularly. The default risk for other financial instruments shown on the asset side is also considered low, given the fact that the contracting parties are solely debtors with high credit ratings.



The group is exposed to credit risks from derivate financial instruments, which arise in case a contracting party fails to meet contractual obligations. The group’s contractual parties are international banks.

On the basis of ratings carried out by renowned rating agencies, the risk for the group can be regarded as low.

In the CROSS Motorsport Systems Group default risks are hedged to a great extent by bad debt insurance on the one hand and bank securities (guarantees, letters of credit) on the other hand. Internal guidelines define the default risks and give procedures for controlling them.

When derivative financial instruments have a positive market value the default risk is limited to the cost of replacing them. Given that the contracting parties are solely banks with high credit ratings, the risk involved can be regarded as low.

On the asset side the amounts shown represent the maximum default risk, since no general offsetting agreements exist.

Regarding the recognized financial trade and other receivables that were neither written off nor in default, there were no signs as of the balance sheet date that the debtors may not fulfil their payment obligations.

LiquiDity RiSKS

A major aim of financial risk management in the CROSS Motorsport Systems Group is to ensure liquidity and financial flexibility at all times.

In view of the global financial crisis, which has also had an immediate effect on the commercial banks used by the group, securing short- and medium-term liquidity has top priority.

The medium- and long-term liquidity requirements are met by issuing company shares and bonds, taking out bank loans as well as by capital increases.

For further information please refer the notes to the consolidated financial statements.

The derivate financial instruments concluded by the group are basically concluded in order to hedge against currency risks. In addition, derivate financial instruments are used to provide security against fluctuations in future cash flows from recognized foreign currency liabilities, which are subject to uncertainty as a result of exchange rate and interest rate fluctuations.

DERivAtES AnD HEDGinG

Derivate financial instruments are used to hedge interest rate- and currency risks in connection with financing. All derivate financial instruments are recorded under the category “At fair value through profit or loss (trading)“ and recognized at fair value affecting income. Fair value changes are recognized in the group’s income statement.

The determination of the fair value of applied derivate financial instruments is carried out exclusively on the basis of an assessment carried out by a bank.

The group is exposed to credit risks from derivate financial instruments, which arise in case a contracting party fails to meet contractual obligations. The group’s contractual parties are international banks. On the basis of ratings carried out by renowned rating agencies, there is no considerable risk for the group.

RiSKS FROM RESEARCH AnD DEvELOPMEnt

Research and development plays a major role for the CROSS Motorsport Systems Group. However the research and development process involves the risk of not meeting develop-ment goals as well as the risk that new developments might not be accepted on the market. In order to minimize this risk, the market is continuously monitored and development activities are carried out in coordination with customers.


24

In business year 2012 expenses for research and development of the group amounted to € 2.0m (previous year: € 2.0m). The products of all group subsidiaries are on a very good perfor-mance level, as a result of which customers demand consistent development. The product life cycle strongly deviates depending on the respective customer. A major part of our development activities is customized. As a result, capitalization of develop-ment costs in subsidiaries is carried out only to a minimal extent of not at all.

Research and development services represent a major part of the strategic planning of the Pankl Group. Through the acquisition of a German turbocharger development company another competency was acquired in the area of advanced charging- and air management systems for combustion engines.

In particular in the Racing segment, technology leadership is one of the key success factors. All components and systems have to be continuously developed and improved in order to meet highest customer requirements.

Knowledge gained in the framework of research and develop-ment in the Racing segment is systematically applied in the segments High Performance and Aerospace and therefore strengthens Pankl’s market position in these business areas.Both the Pankl- and the WP Group pursue a consistent and sustainable path with regards to the improvement of their quality management systems and all internal and external processes for product manufacturing as well as quick reactions to market requirements. Especially in the Aerospace segment Pankl has developed from a toll manufacturer to an equal partner for helicopter manufacturers in the past business years.


reseArcH, deVeLopment And sustAinABiLity7.

8.

9.

BBRZ (education and rehabilitation center) to run the canteen of our Pankl-Kapfenberg facility in order to help integrating handicapped persons. By now the Pankl canteen is also used by employees of neighbouring companies.

Environmentally responsible behavior and sustainable production are of great importance to the CROSS Motorsport Systems Group. In the previous business year there were no expenses in connection with the purchase of CO2-certificates. The Pankl Group is not registered for the national allocation plan (NAP).

Our operating entities choose, which social projects are supported by the company, because they know the local needs and requirements. Since we strive to assume socio-political responsibility, for many years we have been appointing

enVironment

corporAte sociAL responsiBiLity


In its assessment for business year 2013 the management anticipates further growth.

Although the order situation for the first half of 2013 is on a good level, framework conditions are still hard to predict in the long-term. Therefore a continuous verification and critical assessment of the market situation is emphasized to be able to implement immediate measures to stabilize the earning position, if necessary. In individual segments we are still working on rationalization measures.

A major focus in the CROSS Motorsport Systems Group is laid on the development of new products and components, which is a key factor for the successful development of the company in the future. Apart from that, the expansion into new product areas and the herewith-connected broader market position- ing of the WP Group constitute a strategically important step for the long-term securing of the company.

Because of the good overall economic situation as well as already concluded changes in regulations in the Racing segment for 2013 and 2014 and herewith connected development- and

testing activities, the Pankl Group expects growing revenues in 2013. In business year 2012 the Pankl Group was able to win important orders in the Aerospace segment, which will lead to further business expansion in the current business year. Thanks to high investments in the past business year Pankl formed the basis for further growth.

In business year 2013 the order situation at the WP Group was slightly below previous year’s level, as a result of which we anticipate a slight decrease in revenues in the current year. A further decline of the industry is still possible in many European countries due to public budget consolidation measures. For the WP Group risks in connection with business development may occur due to the tense situation on the suppliers’ side. The biggest threat for result development in 2013 is posed by an unexpected drop of revenues or a further tightening margin pressure.

As a result of the stable financial situation in all subsidiaries with high equity ratios and financing with matching maturities, new market opportunities will arise for companies of the CROSS Motorsport Systems Group in 2013.


10. outLooK

Wels, 29 March 2013

The Management Board of CROSS Motorsport Systems AG

Alfred Hörtenhuber Friedrich Roithner Wolfgang PlasserCEO CFO COO

C O N S O L I D A T E DF I N A N C I A L S TAT E M E N T S 2 012

Table of Contents

Consolidated Balance Sheet 28Consolidated Income Statement 30Consolidated Statement of Comprehensive Income 31Consolidated Cash Flow Statement 32Schedule of Development of Shareholders’ Funds 34

Notes to the Consolidated Financial Statements 36

Independent Auditor’s Report 76


ASSeTS in €k 31 Dec 2012 31 Dec 2011

Short-term aSSetS

Cash and cash equivalents 10,001 12,321Accounts receivable from trade 20,328 18,185Accounts receivable from affiliated companies 13,706 9,493Inventory– Raw materials 28,537 20,498– Unfinished goods 17,121 15,329– Finished products and goods 13,723 10,437– Payments on account 102 351Advance payments made 807 671Receivables and other short-term asset 4,172 4,507 108,497 91,792

Long-term aSSetS

Financial fixed assets– Participations in affliated companies 4,222 4,172– Participations in associated companies 6,582 0– Loans 2,003 2,143Tangible fixed assets– Land 3,515 3,489– Buildings 18,033 18,609– Technical facilities and machinery 34,137 27,225– Fixtures and furnishings 3,971 2,653– Payments on account 13,420 1,509Goodwill 22,981 21,196Intangible fixed assets 16,653 16,647Deferred tax assets 3,463 4,155Receivables from affiliated companies 4,477 10,149 133,457 111,947

total assets 241,954 203,739

(11)

(12)

(13)

(12)

(14)

(15)

(16)

(16)

(10)

ConSoLidated BaLanCe Sheetas of 31 December 2012

28

liAbiliTieS AnD ShARehOlDeR’S equiTy in €k 31 Dec 2012 31 Dec 2011

Short-term LiaBiLitieS

Financial liabilities 22,561 23,530Bonds 13,574 0Accounts payable from trade 22,173 15,647Accounts payable from affiliated companies 1,386 1,070Provisions 1,271 945Liabilities from income taxes 200 1Advance payments made 615 204Other short-term liabilities 16,569 10,783 78,349 52,180

Long-term LiaBiLitieS

Financial liabilities 65,982 30,379Bonds 0 63,768Liabilities for personnel 3,812 2,142Deferred tax liabiliites 4,602 4,991Liabilities from affiliated companies 35,577 0Other long-term liabilities 4,434 6,036 114,407 107,316

SharehoLder’S equity

Share capital 1,000 1,000Capital reserves 18,462 18,462Other reserves including retained earnings (3,085) (5,918)Minority interests 32,821 30,699 49,198 44,243

total liabilities and shareholder’s equity 241,954 203,739

The following notes to the consolidated financial statements are an integral part of the consolidated balance sheet.

(18)

(18)

(20)

(18)

(18)

(18)

(21)

(10)

(17)

(17)

(17)

29Consolidated Balance Sheet


in €k 2012 2011

Revenues 235,400 175,864Cost of goods sold (186,901) (137,753)gross margin 48,499 38,111

Sales expenditure (10,314) (10,084)R&D expenditure (1,974) (1,988)Administration costs (23,361) (21,189)Other operating expenses (874) (303)Other operating income 2,172 2,005operating income (eBit) 14,148 6,552

Interest income 494 1,601Interest expenses (5,807) (7,201)Result from at-equity valuation 0 698Other financial and participation result (706) 254Pre-tax profit 8,129 1,904

Tax on income and earnings (2,356) (1,112)net profit of the year 5,773 792thereof shareholders of parent company 3,787 (675)

thereof minority interests 1,986 1,467

The following notes to the consolidated financial statements are an integral part of the consolidated income statement.

(04)

(05)

(05)

(05)

(05)

(07)

(08)

(09)

(09)

(09)

(09)

(10)

ConSoLidated inCome Statementfor Business Year 2012

30

in €k Shareholders Minority Total of parent interests company

2012net profit of the year 3,787 1,986 5,773– Currency conversiong (189) (32) (221)– Financial instruments (555) (396) (951)– Deferred taxes on financial instruments 139 99 238revenues and expenses recognized in the income statement (605) (329) (934)– Actuarial losses (613) (35) (648)– Deferred taxes on actuarial losses 153 9 162revenues and expenses not recognized in the income statement (460) (26) (486)Other income (1,065) (355) (1,420)total comprehensive income 2,722 1,631 4,353

2011net profit of the year (675) 1,467 792– Currency conversiong 274 318 592– Financial instruments (51) (39) (89)– Deferred taxes on financial instruments 13 10 22revenues and expenses recognized in the income statement 236 289 525– Actuarial losses (4) (13) (17)– Deferred taxes on actuarial losses 1 3 4revenues and expenses not recognized in the income statement (3) (10) (13)Other income 233 279 512total comprehensive income (442) 1,746 1,304

The following notes to the consolidated financial statements are an integral part of the consolidated statement of comprehensive income.

ConSoLidated Statement of ComPrehenSive inComefor Business Year 2012

31


in €k 2012 2011

ConSoLidated CaSh fLow from oPerating aCtivitieS

Net profit of the year 5,773 775Depreciation of fixed assets 13,367 12,042Allocation (relase) of long-term provisions for personnel 554 109Profit (loss) from equity consolidation 0 172Profit (loss) from the sale of assets (287) (198)Other non-cash expenses (income) (1) (27)Consolidated cash flow from results 19,406 12,873

Increase (decrease) of inventories including prepayments on account (12,831) (3,525)Increase (decrease) of trade receivables, advance payments, other short- and long-term assets and deferred taxes (6,795) 4,585Increase (decrease) of trade liabilities, advance paymements and other short- and long-term liabilities 12,435 5,138Increase (decrease) of tax provisions, deferred taxes and other provisions 1,310 (592)Increase (decrease) in currency rate differences and other non-cash expenses (221) 592 (6,102) 6,198 13,304 19,071

+

+ (–)

– (+)

– (+)

+ (–)

– (+)

– (+)

+ (–)

+ (–)

+ (–)

ConSoLidated CaSh fLow Statementfor Business Year 2012

32

in €k 2012 2011

ConSoLidated CaSh fLow from inveStment aCtivitieS

Investmenst in intangible assets and fixed assets (outflow of funds for investments) (31,980) (8,355)Investments in financial assets (50) (4,462)Purchase (sale) of shares in subsidiaries (942) (2,730)Disposal of intangible and fixed assets 714 708Disposal from financial assets 97 7,378Currency rate differences from fixed assetes 74 (308) (32,087) (7,769)

ConSoLidated CaSh fLow from finanCing aCtivitieSDividend payments to third parties (877) (50)Shareholder contribution 0 2,500Increase (decrease) of financial liabilities towards affiliated companies 35,577 (313)Increase (decrease) of short- and long-term financial liabilities 31,548 (5,192)Increase (decrease) from finance lease 409 (780)Increase (decrease) from bonds (50,194) (8,996) 16,463 (12,831)

ConSoLidated CaSh fLow

Consolidated cash flow from operating activities 13,304 19,071Consoldiated cash flow from investment activities (32,087) (7,769)Consolidated cash flow from financing activities 16,463 (12,831)Change in the liquidity of the group (2,320) (1,529)Starting cash and cash equivalents of the group 12,321 13,850Closing cash and cash equivalents of the group 10,001 12,321consisting of: cash in hand, cheques, cash at bank 10,001 12,321

Dividends received 500 0Interest received 111 3,570Interest paid (4,513) (6,826)Income tax paid (729) (182)

The following notes to the consolidated financial statements are an integral part of the consolidated cash flow statement.

–

–

+ (–)

+

+

+ (–)

–

+

+ (–)

+ (–)

+ (–)

+ (–)

+

33Consolidated Cash Flow Statement


in €k Share Capital Other Fair value Adjustments Total Shares of Total capital reserve reserves reserve, currency non-controlling group incl. retained AfS- conversion shareholders equity earnings securities

2012as of 01/01/2012 1,000 18,462 (6,201) 0 283 13,544 30,699 44,243Total profit/loss directly included in equity 0 0 3,327 (416) (189) 2,722 1,631 4,353Dividens to third parties 0 0 0 0 0 0 (877) (877)Purchase of shares in subsidiaries 0 0 111 0 0 111 1,368 1,479as of 31/12/2012 1,000 18,462 (2,763) (416) 94 16,377 32,821 49,198

2011as of 31/12/2010 1,000 15,962 (5,696) 38 9 11,313 31,569 42,882Changes due to application of IAS 19 (rev. 2011) 0 0 67 0 0 67 32 99as of 01/01/2011 1,000 15,962 (5,629) 38 9 11,380 31,601 42,981Total profit/loss directly included in equity 0 0 (678) (38) 274 (442) 1,746 1,304Shareholder contribution 0 2,500 0 0 0 2,500 0 2,500Decrease of minority interest by purchase of Pankl Racing Systems AG shares 0 0 106 0 0 106 (2,598) (2,492)Dividens to third parties 0 0 0 0 0 0 (50) (50)as of 31/12/2011 1,000 18,462 (6,201) 0 283 13,544 30,699 44,243

The following notes to the consolidated financial statements are an integral part of the schedule of development of shareholders’ funds.

SCheduLe of deveLoPment of SharehoLderS’ fundSfor Business Year 2012

34

in €k Share Capital Other Fair value Adjustments Total Shares of Total capital reserve reserves reserve, currency non-controlling group incl. retained AfS- conversion shareholders equity earnings securities

2012as of 01/01/2012 1,000 18,462 (6,201) 0 283 13,544 30,699 44,243Total profit/loss directly included in equity 0 0 3,327 (416) (189) 2,722 1,631 4,353Dividens to third parties 0 0 0 0 0 0 (877) (877)Purchase of shares in subsidiaries 0 0 111 0 0 111 1,368 1,479as of 31/12/2012 1,000 18,462 (2,763) (416) 94 16,377 32,821 49,198

2011as of 31/12/2010 1,000 15,962 (5,696) 38 9 11,313 31,569 42,882Changes due to application of IAS 19 (rev. 2011) 0 0 67 0 0 67 32 99as of 01/01/2011 1,000 15,962 (5,629) 38 9 11,380 31,601 42,981Total profit/loss directly included in equity 0 0 (678) (38) 274 (442) 1,746 1,304Shareholder contribution 0 2,500 0 0 0 2,500 0 2,500Decrease of minority interest by purchase of Pankl Racing Systems AG shares 0 0 106 0 0 106 (2,598) (2,492)Dividens to third parties 0 0 0 0 0 0 (50) (50)as of 31/12/2011 1,000 18,462 (6,201) 0 283 13,544 30,699 44,243

The following notes to the consolidated financial statements are an integral part of the schedule of development of shareholders’ funds.

35Schedule of Development of Shareholders’ Funds


the ComPany

CROSS Motorsport Systems AG, located in Wels, focuses on the manufacturing and distribution of vehicles as well as the acquisition, administration and realization of shareholdings, in particular in the automotive industry. CROSS Motorsport Systems AG is registered with the commercial register Wels, Austria, commercial register certificate FN 177514 a.

The following table shows the fully consolidated group companies or subgroups, the interest held (taking direct and indirect interests into account), the voting rights held as well as the corporate purpose (as of 31 December 2012):

Subsidiaries Share Voting rights Corporate purpose

Pankl Racing Systems AG 58.31% 58.31% Development, production and distribution of engine-, drivetrain and chassis parts for the racing industry, high-performance vehicles and the aerospace industryWP Performance Systems GmbH 100.00% 100.00% Development, production and distribtion (formerly: WP Suspension Austria GmbH) of suspension elementsWP Components GmbH 100.00% 100.00% Production and distribution of radiators (formerly: WP Radiator GmbH) and equipment for combustion engines

CROSS Motorsport Systems AG, Wels, is a 100% subsidiary of CROSS Industries AG, Wels, and is fully consolidated in their consoli-dated financial statements as of 31 December 2012.

PrinCiPLeS of aCCounting and BaLanCing and vaLuation methodS

PRinCiPleS OF ACCOunTinG

The annual consolidated financial statements as of 31 December 2012 were prepared in accordance with the International Financial Reporting Standards (IFRS), issued by the International Accounting Standards Board (IASB), and the interpretations of the International Financial Reporting Interpretations Committee (IFRIC), to the extent used in the EU. According to article 245a, Austrian Business Enterprise Code (Unternehmensgesetzbuch, UGB), which was added in the framework of the Consolidated Financial Statement Law (Konzernabschlussgesetz), these consolidated financial statements based on IFRS fulfill all Austrian reporting requirements.

Changes in Reporting RulesThe following changes were passed by the IASB for already existing IFRS, and several new IFRS and IFRIC were enacted, which were already adopted by the EU Commission and are thus mandatory applicable as of 1 January 2012:

– IFRS 7 “Information Requirements for the Transfer of Financial Assets”

Due to the first-time application of the mentioned IFRS, there are no major changes in comparison to the previous year. There were no changes of balancing- and valuation methods.

Future Changes in Reporting RulesThe IASB and IFRIC have passed further standards and interpretations, which however are not yet binding in business year 2012 and have not yet been adopted by the EU Commission. These standards and interpretations are as follows:

noteS to the ConSoLidated finanCiaL StatementSfor Business Year 2012

36

i.

ii.

(01)

Standard/Amendment Coming eu endorse- Coming into force ment into force iASb eu

IAS 1 Presentation of Financial Statements – Presentation of Items of Other Comprehensive Income 01/07/2012 yes 01/07/2012IAS 12 Income Taxes: Deferred Tax: Recovery of Underlying Assets 01/01/2012 yes 01/01/2013IAS 19 Employee Benefits – Amendments 01/01/2013 yes 01/01/2013IAS 27 Separate Financial Statements 01/01/2013 yes 01/01/2014IAS 28 (Amended 2011) Investments in Associates and Joint Ventures 01/01/2013 yes 01/01/2014IAS 32 Financial Instruments: Presentation – Balancing of Financial Assets and Liabilities 01/01/2014 yes 01/01/2014IFRS 1 First Time Adoption of IFRS – Hyperinflation and Elimination of the Fixed Conversion Moment for First-Time Adopters 01/07/2011 yes 01/01/2013IFRS 1 Government Loans 01/01/2013 yes 01/01/2013IFRS 7 Financial Instruments: Disclosures – Offsetting Financial Assets and Financial Liabilities 01/01/2013 yes 01/01/2013IFRS 9 Financial Instruments 01/01/2015 postponed –IFRS 10 Consolidation 01/01/2013 yes 01/01/2014IFRS 11 Joint Arrangements 01/01/2013 yes 01/01/2014IFRS 12 Information to the Notes to the Financial Statements 01/01/2013 yes 01/01/2014IFRS 13 Fair Value Measurement 01/01/2013 yes 01/01/2013IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine 01/01/2013 yes 01/01/2013Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27) 01/01/2014 no –Transition Guidance (Amendments to IFRS 10, IFRS 11 and IFRS 12) 01/01/2013 no –Annual Improvements to IFRS 2009–2011 (May 2012) 01/01/2013 no –

IAS 19 (rev. 2011) Employee Benefits – adopted by the EU on 5 June 2012 – is mandatory for business years that start on or after 1 January 2013. Early adoption is permissible; hence the CROSS Motorsport Systems Group has already applied IAS 19 (rev. 2011) in business year 2012 for the first time. The effect of the early adoption is described in the accounting- and valuation methods.

Apart from this, IAS1 “Presentation of Financial Statements – Presentation of Items of Other Comprehensive Income” is applied prematurely as well.

In May 2011 IASB issued three new standards covering the handling of subsidiaries, joint arrangements and the disclosure of interests in other entities.

IFRS 10 builds on existing principles by identifying a comprehensive concept of control as the determining factor in whether an entity should be included in the consolidated financial statements. According to the new concept, an investor has control when the investor has the power to decide on relevant processes, has rights to variable returns from its involvement and has the ability to affect those returns through its power.

IFRS 11 regulates the accounting of joint operations and joint ventures and replaces IAS 31. Joint arrangements are to be included in the consolidated financial statements using the at equity method in accordance with IAS 28. The option of proportionate consolidation will no longer apply.

IFRS 12 defines disclosure requirements regarding interests in subsidiaries, joint arrangements, interests in associates, structured entities and unconsolidated entities.

In May 2011 IASB issued IFRS 13 – Fair Value Evaluation. This new standard defines fair value and standardizes disclosures of fair value evaluations of both financial and non-financial items.

37Notes to the Consolidated Financial Statements


In November 2009 the IASB issued IFRS 9 – Financial Instruments – changing the classification and the measurement of financial assets. It uses a single approach to determine whether a financial asset is measured at amortized cost or at fair value, replacing the different rules in IAS 39. The European Financial Reporting Advisory Group postponed its endorsement advice to adopt IFRS 9 in the EU to take more time to consider the output from the IASB project on the improvement of accounting of financial instruments.

Effects in connection with the application of IFRS 9 on the consolidated financial statements of CROSS Motorsport Systems AG are currently evaluated.

Apart from that, no major effects on the consolidated financial statemens of CROSS Motorsport Systems AG are expected.

basis of PreparationThe accounting of the companies included in the group financial statements is based on the standardized accounting principles. These principles were applied by all of the companies included. The companies included in the group financial statements set up their financial statements at the group’s balance sheet date (31 December).

The consolidated financial statements are set up in thousand Euros (€k) (rounded according to the commercial rounding method). Where rounded amounts and percentages are aggregated, rounding differences may occur due to the use of software.

The included financial statements for all the key, fully consolidated domestic and foreign companies that are subject to auditing under national regulations or undergo auditing voluntarily were audited by independent auditors and provided with unqualified audit certi-ficates.

The valuation is based on the continuation of the company. Interest payments and operational expenses of CROSS Motorsport Systems AG can be covered from the expected dividend yield.

In April 2012 CROSS Industries AG and its 100% subsidiary CROSS Motorsport Systems AG restructured their equity financing and established long-term loans to cover the future finance requirements of their companies and made a credit line in the amount of up to € 140m available. € 40m (short-term refinancing) will be repaid until 30 June 2014. € 100m (long-term refinancing) will be repaid until 31 December 2017 at the latest.

The new credit lines were mainly used for the premature repayment of the bonds of CROSS Industries AG and CROSS Motorsport Systems AG. In this connection CROSS Motorsport Systems AG repurchased bonds with a nominal value of € 2.5m. Moreover, a bond repurchase tender was placed. In the course of the bond repurchase bonds with a nominal value of approximately € 48m were repurchased.

In October 2012 CROSS Industries AG issued a bond with a nominal value of € 75m, a coupon of 4.625% and a term until October 2018. Two-thirds of the issuing proceeds were used for the partial premature repayment of the long-term refinancing of the CROSS Group concluded in April 2012. One third of the issuing proceeds will be used within the CROSS Group for the financing of the planned organic business growth, including investments and any future acquisitions, as well as for general business purposes.

The operative companies of the CROSS Motorsport Systems Group are independently financed for the mid- and long-term.

The consolidated financial statements were approved by the Management Board of CROSS Motorsport Systems AG on 28 March 2013 and will be released for publication after the approval by the Supervisory Board, presumably at its meeting on 24 April 2013.

SCOPe OF COnSOliDATiOn

The subsidiaries are included in the annual consolidated financial statements for the time during which the parent company exercises control over their assets and business.

The annual consolidated financial statements as of 31 December 2012 consist of the annual financial statements of CROSS Motorsport Systems AG and its subsidiaries, which partially set up consolidated fiscal statements based on legal requirements.

CROSS Motorsport Systems AG’s business year 2012 covers the period from 1 January 2011 to 31 December 2012 (twelve months).

38

(02)


The consolidated financial statements of Pankl Racing Systems AG as of 31 December 2012 and the annual financial statements of WP Performance Systems GmbH (formerly: WP Suspension Austria GmbH) and WP Components GmbH (formerly WP Radiator GmbH) were included by the way of full consolidation into the consolidated financial statements of CROSS Motorsport Systems AG as of 31 December 2012; WP Suspension B.V. is included at-cost.

Changes in the Scope of ConsolidationCarrillo acquisitions, inc., irvine, uSaIn connection with the integration of Carillo Industries, Inc. into CP-CARRILLO, LLC, which was initialized already in 2009, Carrillo Industries, Inc. was founded as a 100%-subsidiary of Pankl Holdings, Inc. on 23 December 2011.

Pankl aerospace innovations, LLC, Cerritos, uSaPankl Aerospace Innovations, LLC was founded on 13 June 2012 as a 100%-subsidiary of Pankl Aerospace Systems, Inc. The company creates development concepts for the helicopter market.

aPC – advanced Propulsion Concept gmbh, mannheim, germanyOn 28 September 2012 a purchase- and transfer agreement on the purchase of 51% of shares in APC – Advanced Propulsion Concept GmbH was concluded. According to this agreement Pankl Racing Systems AG can exercise their voting rights as of 1 October 2012.

The acquisition had the following impact on the balance sheet:

in €k Value as per opening statement of financial position

Cash and cash equivalents 3,214Other short-term assets 1,014Property, plant and equipment 729Other long-term assets 719assets 5,676

Short-term liabilities 677Long-term liabilities 956Passive deferred taxes 192Liabilities 1,825

equity (net assets) 3,851

Net assets of the company 3,851Assets of non-controlling shareholders 1,887Reward transferred 3,750goodwill 1,786

Reward transferred 3,750thereof paid in 2012 3,750

Acquired cash 3,214net cash flow 536

The capitalized goodwill can be mainly attributed to potential synergies, primarily in connection with the cooperation with Pankl Engine Systems GmbH & Co KG and Pankl Drivetrain Systems GmbH & Co KG. In the time period from the acquisition to the balance sheet date, APC – Advanced Propulsion Concept GmbH contributed € 1,771k to the group turnover and € 244k to group earnings.

The companies are classified under the segment “Pankl Racing Systems AG”.



Changes within the Consolidation Scope of CROSS industries AG (Transactions under Joint Control)

exhaust- and frame productionUpon the conclusion of the purchase agreement of 22 December 2011 the segments exhaust- and frame production were sold by KTM-Sportmotorcycle AG to WP Components GmbH (formerly: WP Radiator GmbH) and WP Performance Systems GmbH (formerly: WP Suspension Austria GmbH) with effect of 1 January 2012. As a result the number of employees of the WP Group increased by 178 people.

In the consolidated financial statements of the CROSS Motorsport Systems Group the following assets and liabilities are transfered as of 1 January 2012 in connection with the segment purchase.

in €k 01/01/2012

Assets 1,361Inventories 4,082assets 5,443

Personnel provisions (1,116)debts (1,116)

Carrillo industries, inc.Carrillo Industries, Inc. was liquidated after the finalization oft he integration in CP-CARRILLO, LLC as of 31 August 2012.

wethje groupUpon the conclusion of the share purchase agreement of 13 December 2012 50% of shares in Wethje Holding GmbH (formerly: Wethje Carbon Composite GmbH), Hengersberg, Germany, as well as 50% of shares in Wethje Immobilien GmbH (formerly: Wethje Entwick- lungs GmbH), Vilshofen-Pleinting, Germany, were sold by PF Beteiligungsverwaltungs GmbH, Wels, for a total of € 6,582k. Also as of 13 December 2012 shares in Wethje Immobilien GmbH were sold to Wethje Holding GmbH. The purchase price was charged against existing receivables.

In business year 2012 the scope of consolidation changed as follows:

Fully Consolidated consolidated at-equity

As of 01/01/2012 18 0Additions to the consolidation scope 3 2Disposals through liquidation (1) 0Disposals from the consolidation scope 0 (1)as of 31/12/2012 20 1thereof foreign companies 10 1

The companies included in the consolidated financial satements are to be found in the list of shareholdings per 31 December 2012, see item (28).

Consolidation MethodsCapital consolidation: The first consolidation was carried out on 1 October 2009 using the acquisition method according to IFRS 3 (2008). On the acquisition date – the date when the control is transferred – the revalued identifiable assets and liabilities of the acquired company are compared to the equivalent; the amount attributable to the non-controlled interests, if applicable and the fair value of the

40 The Company Group Status Report Consolidated Financial Statements Statement of all Legal Representatives

shares already held at acquisition date. A remaining positive amount is activated as goodwill, a remaining negative amount will be revaluated as “acquisition below market value” realized as earning in the income statement. The costs related to the acquisition are recorded as an expense.

transactions with non-controlling shareholders, not resulting in a loss of control, are realized directly and solely in equity, without adjustments of assets and liabilities of the company or the goodwill.

Mergers carried out before 1 October 2009 were pursued according to transitional provisions.

In the consolidation of income and expenses, intercompany sales and other income were set off with material and other inter-company expenses. Thus, the consolidated income statement only records external turnover.

All debts, receivables and loans of consolidated companies are allocated in the debt consolidation.

interim results from the intercompany sales of inventories and assets were eliminated.

deferred taxes from consolidation are recognized against income in the consolidation processes in the income statement.

Shares of non-controlling shareholders in equity are listed separately within the equity capital. Minority interests are regrouped into liabilities if the right to tender applies.

Shares in associated companies and in joint ventures are recognized at equity according to iaS 28 respectively according to the voting right in iaS 31. Changes of the shares of the group after the acquisition of shares are recognized in the net assets of the associated company/joint venture. If the loss attributable to the group exceeds the shareholding in the associated company/joint venture, the book value of this shareholding (including long-term investments) is written off completely. Further losses are only recognized, if the group is obliged to pay or did pay already. The financial statements of the associated companies/joint ventures are set up or transferred to IFRS in all major issues. The goodwill of the associated company/joint venture is included in the book value of the shareholding and is not amortized as scheduled.

Currency conversion: The group currency is the Euro. Subsidiaries located outside the Euro-zone are regarded as economically independent companies. Under the functional currency concept, the assets and liabilities reported in the individual financial statements for these companies, including goodwill reported and value adjustments resulting from initial consolidation, are therefore translated at the average exchange rate at the balance sheet date and the items recognized in income statement at the weighted average exchange rate for the business year. Any resultant foreign currency profits and losses are recognized in the statement of comprehensive income as “other income” without affecting net income.

In the balance sheets of group companies transactions in foreign currencies were recorded at the exchange rate on the transaction date. When the balance sheet was prepared, the foreign currency items were translated at the reporting date rate. All exchange rate differences are recorded as income or expense in the individual financial statements for the period in which they occurred.

The main foreign exchange rates used for currency translation in the consolidated financial statements showed the following trends over the year:

in €k Closing rate Average rate 31/12/2012 31/12/2011 2012 2011

US dollar 1.3194 1.2939 1.2856 1.3917British pound 0.8161 0.8353 0.8111 0.8678



ACCOunTinG AnD VAluATiOn MeThODS

The accounting of the companies included in the consolidated financial statements is based on standardized accounting and valuation methods. They are identical to those used in the business year 2011 except for the new obligatory standards.

Several positions in the income statement and balance sheet are summarized to improve the clearness and informative value. These positions are separately illustrated in the notes to the consolidated financial statements. Any short-term assets and liabilities are basically realized within twelve months after the balance sheet date. All other assets and liabilities are basically realized beyond this period.

Consolidated income StatementThe consolidated income statement was drawn up using the cost of sales method.

turnover is reported after the transfer of risk or after the time when a service was performed, as the case may be, less cash discounts, customer bonuses and other discounts.

other operating income is recognized if a financial benefit is likely from the contract forming the basis of it and there is a reliable use for the income.

interest income is realized in due consideration of the effective interest rate; dividends are reported when the legal right is constituted.

Consolidated balance SheetCash and cash equivalents include cash on hand, cash in banks, checks and fixed-term deposits for a maximum of three months, and are reported at fair value at the balance sheet date.

accounts receivable and other assets are reported at the nominal value, while receivables in foreign currencies are reported converted at the current rate, less any adjustments necessary due to recognizable risks. Indicators for value adjustments are financial difficulties, insolvency, breach of contract and default of payment by customers. The value adjustments are composed of numerous individual positions, none of which is essential taken individually. Additionally value adjustments according to risk groups are conducted to consider general credit risks. Financial receivables are allocated to the “loans and receivables” category and reported using the amortized cost method.

Recognizable risks are considered by adequate value adjustments. Non-interest bearing receivables with a maturity period of over one year are recorded at the discounted present value. Foreign currency receivables are valued at the mean rate of exchange at balance sheet date.

inventories are valued at acquisition or manufacturing costs or, if lower, the realizable selling price (lower of cost or net realizable value) on the balance sheet dates. For this purpose, the average value method is used. Adjustments for variability (adjustments because of limited usability) are applied.

Acquisition costs include all costs incurred for the item to achieve the required state and to be shipped to the relevant location. Manu- facturing costs include material and production costs as well as appropriate parts of the material and production overheads. Administra-tive and distribution overheads are not part of the manufacturing costs.

42

(03)


financial assets: Shares in associated companies, unless they are fully consolidated, and investments in the category “available for sale” (at cost) are recognized in the financial assets at acquisition cost, as their fair value cannot reliably be determined. Loans are recognized in the category “loans and receivables” at amortized cost. Other financial assets are recognized in the category “available for sale” at fair value not affecting income.

Value adjustments are conducted if the future cash flows are below the current book value. Loans are discounted to the present value if their interest rate is lower than the prevailing market rate.

tangible assets are valued at acquisition or manufacturing costs, less scheduled depreciation. Scheduled depreciation is calculated according to the linear depreciation method with the following life expectancy:

effective life

Buildings 8 to 33 yearsMachines/tools 5 to 15 yearsFixtures and furnishings 2 to 10 years

All direct costs, including separable material and production overheads, are recorded in the manufacturing costs of self-constructed assets. Financing costs resulting from the direct allocation of borrowed capital or the application of an average capitalization interest rate to the expenses incurred are capitalized according to IAS 23.

Non-scheduled depreciation is carried out when the expected discounted earnings (future cash flows) fall short of the current book values.

If tangible assets are financed with leasing contracts that give the company rights similar to those of an owner, the items are shown on the balance sheet. They are reported at the present value of the minimum lease payments to be expected in the future. At the same time, a corresponding liability is shown on the balance sheet as lease liabilities. Straight-line depreciation is used over the normal useful life of these tangible assets. Amortization is deducted from the lease liability. The interest component in the lease liability is directly recognized in the income statement.

goodwill is not subject to regular depreciation, but undergoes an annual impairment test and appropriate depreciation is taken into consideration in net income as required.

The depreciation requirement for the consolidated financial statements as of 31 December 2012 is calculated based on current planning according to the discounted cash flow method. Therefore the achievable amount (net profit on sales) of the cash generating units – i. e. the higher amount of the fair value less cost of sale and value in use – has to be estimated. The calculation is based on the following parameters:

WACC Mid-term Growth interest planning parameters rate for following years

31/12/2012Pankl Group 8.03% 2013 – 2016 2.00% 25%WP Group 8.44% 2013 – 2015 1.00% 25%

31/12/2011Pankl Group 8.10% 2012 – 2015 2.00% 25%WP Group 7.74% 2012 – 2014 2.00% 25%



An evaluation of the goodwill did not result in an impairment loss (previous year: € 0k).

Assumptions are based on the valuation of future trends by the management and on internal and external resources. The management of the group companies set up middle- and long-term planning, based on an economic recovery in the medium-term. Assessments regarding goodwill are especially sensitive in the following areas:

An increase of the discount rate by 1% as well as a decrease of the plant future cash flow by 10% would not have resulted in an impairment loss, just like in the previous year.

intangible assets are capitalized at acquisition- and manufacturing cost and valued less scheduled amortization. Scheduled depreciation is calculated using the straight-line method based on the following periods of useful life:

effective life

Software 3 to 8 yearsOther intangible assets 3 to 10 years

Intangible assets with an indefinite useful life, as for example the brand names, capitalized during the original purchase price allocation, are not amortized regularly, but are subjected to an annual impairment test and any depreciation recognized in the income statement. For this impairment test the same parameters as for the impairment test of goodwill are used.

allocations for active and passive deferred taxes are created for business transactions expected to have tax implications, and are either already reflected in the group financial statements or in tax balance sheet (timing differences). Deferred taxes for losses carried forward are set up according to their feasibility. Deferred tax items on both the asset and liability side are reported balanced out if they are subject to the same tax jurisdiction. Calculations are based on the normal income tax rate in the relevant country at the time of the anticipated reversal of the difference in value.

Liabilities are reported at the amounts repayable, while foreign currency liabilities are converted at the reporting date rate. Financial debts are allocated to the “Financial liabilities at amortized cost” category.

The social capital obligations consist of obligations for severance payments, pensions and anniversary bonuses. Moreover, statutory provisions require the CROSS Motorsport Systems Group to make severance payments to all employees in Austria whose employment contracts commenced before 1 January 2003 if the employer terminates the contract or the employee retires. This defined benefit obligation depends on the number of years of service and the income at the time of termination or retirement. For all employees in Austria whose contracts commenced after 31 December 2002, 1.53% of their salaries are paid monthly into a company employee benefit fund, where the contributions are saved in employees’ accounts and paid out to them on termination of their employment contract or transferred as credit to another fund. The group is only obliged to pay the contributions that are reported under expenses in the fiscal year for which they were paid (defined contribution obligation).

As a result of individual bargaining agreements, several group companies are obliged to pay retirement benefits (defined benefit obligation). As a result of collective bargaining agreements companies of the CROSS Motorsport Systems Group are required to pay employees in Austria jubilee benefits once they have reached a certain number of years in service (minimum years of service: 25) (defined benefit obligation).

The value of defined benefit obligations for pensions and severance payments is determined using the projected unit credit method specified in IAS 19 Employee Benefits on the basis of actuarial assumptions. This projected unit credit method takes into consideration both the known benefits accrued at the balance sheet date and the increases in salaries and pensions to be expected in the future. It involves determining the present value of the defined benefit obligation (DBO) and offsetting it against the fair value of the existing plan assets at the balance sheet date if necessary.


Until now any differences at the end of the year (actuarial gains or losses) between the severance payment obligations calculated according to plan and the actual projected benefit obligations were recognized in the income statement. According to IAS 19 (rev. 2011) the difference less deferred taxes is recognized directly in the comprehensive income in business year 2012.

The voluntary premature application of IAS 19 (rev. 2011) changes the accounting method, which is considered retrospectively according to the transitional provision IAS 19.173. The amounts of the comparison period and of the opening statement as of 1 January 2011 were adjusted as follows:

The accumulated actuarial losses less deferred taxes as of 1 January 2011 in the amount of € 293k and actuarial losses less deferred taxes accrued in business year 2011 in the amount of € 13k were reclassified from the group profit respectively from the liabilities from deferred taxes into the IAS 19 reserve for actuarial profits and losses in the group equity. This results in an increase of equity capital as of 31 December 2011 of € 103k.

The retrospective application results in an decrease of the comprehensive income for business year 2011 in the amount of € 4k.

In detail, changes in connection with the group equity development, group balance sheet and group comprehensive income development are as follows:

the development of the iaS 19 reserve for actuarial profits and losses in the group equity

in €k 2011

Accumulated actuarial losses as of 01/01 (391)less 25% deferred tax 98iaS 19 reserve as of 01/01 (293)

Actuarial losses in the business year (17)less 25% deferred tax 4iaS 19 reserve as of 31/12 (306)

Changes in group equity development, the group balance sheet and the group comprehensive income statement are as follows:

in €k 2011 Adjustment 2011 iAS 19 adjusted (rev. 2011)

Liabilities from deferred taxes 5,094 (103) 4,991

Equity majority shareholders 13,477 67 13,544Equity minority shareholders 30,663 36 30,699

Income statement 775 17 792Other income 525 (13) 512total income 1,300 4 1,304



Provisions for warranties are set up at the time the products are sold and thus affect net income.

Other provisions are set up in case obligations towards third parties exist, insofar as the utilization of these provisions is more likely than not and the expected amount of the required provision can be estimated reliably.

government grants and subsidies are recognized as soon as it is certain that the group will receive them and the group can meet the specified requirements. Grants and subsidies are generally recognized in the income statement on the basis of a direct connection with the relevant costs that will be settled by the grant or subsidy.

investment grants from public funds that are shown as individual positions in the financial statements of the companies are shown in the consolidated financial statements under long-term borrowed funds.

Contingent liabilities are possible or present liabilities that are based on past events, where the discharge of resources is estimated to be possible but unlikely. According to IFRS, these liabilities have to be reported in the notes to the consolidated financial statements and not in the balance sheet.

Derivative Financial instrumentsUnder IAS 39, derivatives must generally be valued at their market value. Depending on the degree of certainty that the transaction will take place, different rules apply regarding how the hedge connection between the underlying transaction and the derivative (hedge accounting) is shown in the balance sheet – separately for reported assets and liabilities – as well as for binding contracts (firm commitments) and expected transactions (forecasted transactions).

A cash flow hedge exists when variable payment flows from assets, liabilities and expected business transactions that are subject to a fair value risk are hedged. If the requirements for a cash flow hedge are met, the effective component of the fair value fluctuations of the hedging instrument must be recognized in the group’s equity without affecting the operating result. It is only reported in the income statement when the transaction takes place. Eventual changes due to inefficiencies of these derivate financial instruments are reported in full and recognized in the income statement.

Hedging transactions that do not meet the criteria for hedging instruments defined in IAS 39 are classified as trading transactions and recognized in the financial assets “At fair value through profit or loss” category (held for trading). Fair market value changes are recognized in full in the income statement for the current period and reported in the financial results.

estimates and uncertainties in Cases of Discretionary Decisions and AssumptionsTo a certain extent, estimates and assumptions have to be made in the consolidated financial statements. These estimates have an impact on the balance sheet assets and liabilities, the disclosure of contingent liabilities at the balance sheet date, and the reporting of expenses and income in the business year. The subsequent actual amounts may then differ from such estimates. This applies in particular to the impairment of goodwill and intangible assets with an indefinite useful life and to the assets and liabilities reported at the time of initial consolidation, including purchase price allocations.

The most important balance sheet items, where the valuation related to the planned useful life is based on estimates, are tools (tangible assets) and capitalized development costs (intangible assets). Estimates are also based on deferred tax assets for losses carried forward regarding the period of utilization for the losses carried forward.

In addition, there are uncertainties regarding the valuation of receivables, inventories and the recognition and valuation of obligations for social capital and other provisions


noteS to the ConSoLidated inCome Statement

neT SAleS

in €k 2012 2011

Pankl Group 127,685 105,396WP Group 107,978 69,907Others and consolidation (263) 561 235,400 175,864

PReSenTATiOn OF exPenSeS

The individual items of the income statement can be broken down as follows according to the cost of sale method:

Cost of sale

in €k 2012 2011

Cost of materials and expenses for purchased services 112,051 79,456Personnel expenses 54,112 38,766Depreciation and amortization of tangible assets and intangible assets including low-value assets 9,973 8,290Other operating expenses 10,765 11,241 186,901 137,753

distribution expenses

in €k 2012 2011

Cost of materials and expenses for purchased services 2,873 2,325Personnel expenses 5,569 4,420Depreciation and amortization of tangible assets and intangible assets including low-value assets 742 1,704Other operating expenses 1,130 1,635 10,314 10,084

expenses for research and development

in €k 2012 2011

Cost of materials and expenses for purchased services 864 417Personnel expenses 1,913 1,437Depreciation and amortization of tangible assets and intangible assets including low-value assets 332 303Other operating income/expenses (1,135) (169) 1,974 1,988

47

iii.

(04)

(05)

Notes to the Consolidated Financial Statements


administration expenses

in €k 2012 2011

Cost of materials and expenses for purchased services 2,133 4,540Personnel expenses 11,474 8,912Depreciation and amortization of tangible assets and intangible assets including low-value assets 2,320 1,745Other operating expenses 7,434 5,992 23,361 21,189

Scheduled depreciation and impairment on assets are shown in the income statement under their corresponding operating area (see above).

The expenses for the audit of the business year 2012 carried out by KPMG Austria AG Wirtschaftsprüfungs- und Steuerberatungs-gesellschaft can be broken down as follows:

in €k 2012 2011

Audit of separate financial statements 135 120Audit of consolidated financial statements 96 94Special audits 0 33Other services 25 18 256 265

MAnAGeMenT bOARD ReMuneRATiOn AnD STAFF inFORMATiOn

The total salaries paid by the CROSS Motorsport Systems Group for the Management Board’s activities and their administrative duties amounted to € 1,371k (previous year: € 998k). Severance payments in the amount of € 0k (previous year: € 30k) were made.

A remuneration totaling € 14k (previous year: € 22k) will be proposed for the Supervisory Board of CROSS Motorsport Systems AG for the business year 2012 (to be paid in business year 2013).

As of the balance sheet date, there are no pending loans and advances granted to members of the Supervisory Board of CROSS Motorsport Systems AG.

employees

2012

As of 31/12/2011 1,232Changes in business year 369as of 31/12/2012 1,601thereof workers 1,031

thereof employees 570

Employee expenses in business year 2012 amounted to € 73,068k (previous year: € 53,552k).

48

(06)


OTheR OPeRATinG exPenSeS

in €k 2012 2011

Guarantee expenses 609 303Other expenses 265 0 874 303

OTheR OPeRATinG inCOMe

in €k 2012 2011

Grants 868 1,419Income from the sale of fixed assets 287 198Remaining other income 1,017 388 2,172 2,005

FinAnCiAl- AnD inVeSTMenT ReSulT

The financial- and investment result can be broken down as follows:

in €k 2012 2011

Financial income 494 1,601Financial expenses (5,807) (7,201)Result from at-equity holdings 0 698Other financial and investment result (706) 254 (6,019) (4,648)

The financial income and financial expenses mainly include interest income and expenses.

The other financial- and investment results mainly include foreign currency effects, losses from financial instrumens as well as bank fees and other income and expenses.

inCOMe TAxeS

The group’s income tax income and expenses can be broken into current and deferred taxes as follows:

in €k 2012 2011

Current tax (1,853) (569)Deferred tax (503) (543) (2,356) (1,112)

49

(07)

(08)

(09)

(10)



Taxes on income and earnings, which are paid or owed in the individual countries as well as deferred taxes are recognized as income taxes. The Austrian companies in the CROSS Group are subject to a corporation tax rate of 25.0%. Calculation of foreign income taxes is based on the laws passed or regulations applicable in the individual countries. The income tax rates applied to foreign companies vary from 20% to 40%.

Offsetting and reconciliation from the expected tax expenses for the business year (application of the total group tax rate of 25.0% to the pre-tax profit of € 2,033k (previous year: € 1,887k) to the actual tax expenses/income can be shown as follows:

in €k 2012 2011

Expected tax expenses/income (2,033) (472)Non-temporary differences and other tax additions and disposals 683 (1,744)Use/value adjustment of losses carried foreward (1,843) 1,301Taxes from prior periods (68) (97)Effects of foreign tax rates 278 (249)Others 627 149 (2,356) (1,112)

The capitalized tax losses of the CROSS Motorsport Systems Group carried forward can be summarized as follows:

in €k losses thereof Remaining Deferred carried value losses tax forward adjusted carried assets forward

31/12/2012CROSS Motorsport Systems AG, Wels 21,038 (21,038) 0 0Pankl Racing Systems AG, Bruck upon Mur 6,238 0 6,238 1,560Pankl Emission Control Systems GmbH, Kapfenberg 0 0 0 0Pankl Racing Systems UK Ltd., Bicester, Great Britain 0 0 0 0Pankl Automotive Slovakia s.r.o., Topolcany, Slovakia 1,640 (1,640) 0 0Pankl Aerospace Systems, Inc., Cerritos, USA 6,647 (4,163) 2,484 989WP Components GmbH (formerly: WP Radiator GmbH), Munderfing 399 (399) 0 0 35,962 (27,240) 8,722 2,549

31/12/2011CROSS Motorsport Systems AG, Wels 13,616 (13,616) 0 0Pankl Racing Systems AG, Bruck upon Mur 8,392 0 8,392 2,098Pankl Emission Control Systems GmbH, Kapfenberg 1,074 0 1,074 269Pankl Racing Systems UK Ltd., Bicester, Great Britain 350 0 350 91Pankl Automotive Slovakia s.r.o., Topolcany, Slovakia 4,153 (4,153) 0 0Pankl Aerospace Systems, Inc., Cerritos, USA 6,260 (3,551) 2,709 1,079WP Radiator GmbH, Munderfing 303 (303) 0 0 34,148 (21,623) 12,525 3,537

For losses carried forward of CROSS Motorsport Systems AG, Pankl Automotive Slovakia s.r.o. and WP Components GmbH (formerly: WP Radiator GmbH) as well as Pankl Aerospace Systems, Inc. deferred taxes were capitalized only partially or not at all, as they may be carried forward only to a limited extent and a future utilization is not guaranteed.


According to the Austrian corporate tax law (Körperschaftssteuergesetz) depreciations of shareholdings affecting taxes have to be claimed after 7 years and depreciations of goodwill affecting taxes after 15 years. The active deferred taxes include deferred taxes for open 1/7-depreciation in the amount of € 808k (previous year: € 1,150k).

No active deferred tax was set for open 1/7-depreciation according to article 12 of the Austrian corporate tax law (Körperschaftsteuer- gesetz) in the amount of € 7,793k (previous year: € 11,404k).

The active and deferred taxes can be calculated from the following balance sheet items:

in €k 31/12/2012 31/12/2011

active deferred taxesCurrent assets 0 0Non-current assets– Assets 892 1,160– Losses carried forward 2,549 3,537Current liabilities 270 30Others 742 378 4,453 5,105Net balance (990) (950) 3,463 4,155

Passive deferred taxesCurrent assets (72) (97)Non-current assets– Assets (1,563) (2,173)– Intangible assets (3,916) (3,623)Current liabilities 0 0Others (41) (48) (5,592) (5,941)Net balance 990 950 (4,602) (4,991)

Deferred taxes in the business year have developmed as follows:

in €k 2012 2011

Deferred taxes (net) as of 01/01 (836) (264)Changes in the scope of consolidation (192) (78)Other changes including foreign currency (8) 23Deferred taxes affecting income (503) (543)Deferred taxes not affecting income 400 26deferred taxes (net) as of 31/12 (1,139) (836)

According to IAS 12.39 no deferred tax was set up for temporary differences in connection with bonds to subsidiaries.



noteS to the ConSoLidated finanCiaL StatementS

CASh AnD CASh equiVAlenTS

Cash and cash equivalents include cash on hand, cash in banks, checks and fixed-term deposits in the amount of € 10,001k (previous year: € 12,321k).

As of the balance sheet date there are no limitations in connections with availability of cash- and cash equivalents.

TRADe ACCOunTS ReCeiVAble, ShORT- AnD lOnG-TeRM ASSeTS

The adjustments to receivables developed as follows:

in €k Trade Receivables Other Financial receivables towards financial assets, affiliated receivables loans companies (short- and long-term)

As of 01/01/2011 2,663 654 18 0Changes in the consolidation scope 0 0 0 0Currency conversion 18 0 0 0Additions 100 0 0 0Use (1,773) 0 0 0Disposals (80) (654) (18) 0as of 31/12/2011 = 01/01/2012 928 0 0 0

Changes in the consolidation scope 0 0 0 0Currency conversion 9 0 0 0Additions 105 0 0 0Use (526) 0 0 0Disposals (859 0 0 0as of 31/12/2012 431 0 0 0

The expenses for completely writing off trade accounts receivables amounted to € 3k (previous year: € 0k).

Income from payments of written off trade accounts receivables amounted to € 47k (previous year: € 0k).

Short-term receivables and other assets are made up as follows:

in €k 31/12/2012 31/12/2011

other short-term financial assets 410 1,811

Receivables towards financial authorities 363 157Other short-term and non-financial assets 3,399 2,539other short-term and non-financial assets 3,762 2,696

4,172 4,507

52

iv.

(11)

(12)


inVenTORieS

in €k 31/12/2012 31/12/2011

Raw and auxiliary materials and supplies 28,537 20,498Unfinished goods 17,121 15,329Finished goods and products 13,723 10,437Payments on account 102 351 59,483 46,615

Value adjustments for inventories in the amount of € 5,183k (previous year: € 4,934k) were recorded for products where the net realizable value (sale price less addable distribution- and administration costs) is lower than the acquisition- or production costs. The carrying amount of inventories carried at fair value less costs to sell as of 31 December 2012 amounts to € 5,713k (previous year: € 7,045k).

FinAnCiAl ASSeTS

in €k 31/12/2012 31/12/2011

Shares in affiliated companies 4,222 4,172Shares in associated companies 6,582 0Loans 2,003 2,143 12,807 6,315

The book values of financial assets have developed as follows:

in €k As of Currency Additions Disposals As of 01/01/2012 conversion 31/12/2012

Shares in affiliated companies 4,172 0 50 0 4,222Shares in associated companies 0 0 7,086 (504) 6,582Loans 2,143 (43) 0 (97) 2,003 6,315 (43) 7,136 (601) 12,807

On 13 December 2012 50% of shares in Wethje Holding GmbH (formerly: Wethje Carbon Composite GmbH), Hengersberg, Germany, as well as 50% of shares in Wethje Immobilien GmbH (formerly: Wethje Entwicklungs GmbH), Vilshofen-Pleinting, Germany, were purchased by PF Beteiligungsverwaltungs GmbH, Wels, for a total of € 6,582k. On 13 December 2012 the shares in Wethje Immobilien GmbH were sold to Wethje Holding GmbH.

The following investments were also reported at-equity:

in €k Profit investment Good will share valuation 31/12/2012 2012 31/12/2012

Shares in associated companiesWethje Holding GmbH, Hengersberg, Germany 0 6,582 1,938

53

(13)

(14)



The following chart shows the summarized financial information regarding interests in associated companies (100% respectively):

in €k balance sheet Sales Result Assets liabilities date

Wethje Holding GmbH, Hengersberg, Germany 31/12/2012 24,405 225 26,310 19,709

TAnGible ASSeTS

in €k Real buildings Technical Factory- and Advanced Total estate equipment and business payments machinery equipment and facilities under construction2012acquisition- and manufacturing costsAs of 01/01/2012 3,527 34,105 82,351 12,559 1,509 134,051Currency conversion 0 2 (138) (49) 0 (185)Additions/disposals due to changes in the consolidation scope 0 0 492 118 197 807Additions 28 891 11,112 2,748 16,551 31,330Transfers 0 67 4,541 154 (4,826) (64)Disposals 0 (33) (2,546) (1,197) (11) (3,787)as of 31/12/2012 3,555 35,032 95,812 14,333 13,420 162,152

accumulated depreciationAs of 01/01/2012 38 15,496 55,126 9,906 0 80,566Currency conversion 0 4 (126) (47) 0 (169)Additions/disposals due to changes in the consolidation scope 0 0 51 27 0 78Additions 2 1,532 8,772 1,655 0 11,961Transfers 0 0 0 0 0 0Disposals 0 (33) (2,148) (1,179) 0 (3,360)as of 31/12/2012 40 16,999 61,675 10,362 0 89,076

Book value as of 31/12/2012 3,515 18,033 34,137 3,971 13,420 73,076Book value as of 31/12/2011 3,489 18,609 27,225 2,653 1,509 53,485

54

(15)


in €k Real buildings Technical Factory- and Advanced Total estate equipment and business payments machinery equipment and facilities under construction2011acquisition- and manufacturing costsAs of 01/01/2011 3,165 34,354 79,014 12,633 819 129,985Currency conversion 0 26 424 89 0 539Additions/disposals due to changes in the consolidation scope 0 0 428 35 0 463Additions 38 501 5,250 1,386 2,189 9,364Transfers 371 (280) 1,348 (246) (1,378) (185)Disposals (47) (496) (4,113) (1,338) (121) (6,115)as of 31/12/2011 3,527 34,105 82,351 12,559 1,509 134,051

accumulated depreciationAs of 01/01/2011 94 14,534 51,592 9,657 0 75,877Currency conversion 0 21 395 95 0 511Additions/disposals due to changes in the consolidation scope 0 0 0 0 0 0Additions 2 1,402 6,950 1,433 0 9,787Transfers (11) 12 7 (8) 0 0Disposals (47) (473) (3,818) (1,271) 0 (5,609)as of 31/12/2011 38 15,496 55,126 9,906 0 80,566

Book value as of 31/12/2011 3,489 18,609 27,225 2,653 1,509 53,485Book value as of 31/12/2010 3,071 19,820 27,422 2,976 819 54,108

The application of IAS 36 did not result in unscheduled impairment expenses or revaluation in the intangible assets and goodwill.

Companies of the Pankl Group lease land with buildings and machinery to a certain exetent via leasing contracts, which according to IFRS are classified as financial leasing contracts if they imply a transfer of ownership. The leasing contracts attract only variable interest. There are call options, primarily for the buldings. Debt which refers to leased assets is accounted for using the time value of the leasing asset or the lower net present value of future minimum leasing paymens. Leasing objects from financial leasing contracts are recorded as tangible assets (land and buldings, machinery and applicances and other tangible assets) as follows.

The following items of the tangible fixed assets comprise capitalized capital lease:

in €k 31/12/2012 31/12/2011

Leasing machineryAcquisition cost 6,650 5,434Accumulated depreciation (2,904) (1,954)Book value 3,746 3,480



inTAnGible ASSeTS

in €k Concessions, industrial Goodwill Total property rights, similar rights and benefits as well as licenses derived from them2012acquisition- and manufacturing costsAs of 01/01/2012 31,265 23,196 54,461Currency conversion (29) (1) (30)Additions/disposals due to changes of the consolidation scope 754 1,786 2,540Additions 651 0 651Transfers 63 0 63Disposals (1,020) 0 (1,020)as of 31/12/2012 31,684 24,981 56,665

accumulated depreciationStand am 01/01/2012 14,618 2,000 16,618Currency conversion (15) 0 (15)Additions/disposals due to changes of the consolidation scope 42 0 42Additions 2,406 0 2,406Transfers (1,000) 0 (1,000)Disposals (1,020) 0 (1,020)as of 31/12/2012 15,031 2,000 17,031

Book value as of 31/12/2012 16,653 22,981 39,634Book value as of 31/12/2011 16,647 21,196 37,843

2011acquisition- and manufacturing costsAs of 01/01/2011 30,981 22,901 53,882Currency conversion 82 181 263Additions/disposals due to changes of the consolidation scope 220 114 334Additions 364 0 364Transfers 185 0 185Disposals (567) 0 (567)as of 31/12/2011 31,265 23,196 54,461

accumulated depreciationAs of 01/01/2011 12,871 2,000 14,871Currency conversion 56 0 56Additions/disposals due to changes of the consolidation scope 0 0 0Additions 2,255 0 2,255Transfers 0 0 0Disposals (564) 0 (564)as of 31/12/2011 14,618 2,000 16,618

Book value as of 31/12/2011 16,647 21,196 37,843Book value as of 31/12/2010 18,110 20,901 39,011

56

(16)


The capitalized goodwill in the amount of € 22,981k (previous year: € 21,196k) is made up as follows:

in €k 31/12/2012 31/12/2011

Pankl Group 19,806 18,021WP Group 3,175 3,175 22,981 21,196

In the business year there was no unscheduled depreciation of goodwill, just like in the past business year.

GROuP equiTy

The development of the group equity in business year 2011 and 2012 is presented on page 34.

The share capital as of 31 December 2012 amounts to € 1,000k and is divided into 1,000,000 nominal shares with a nominal value of € 1.00 each. The rights conferred on the holders of the shares are those ordinarily conferred under the Austrian Stock Companies Act. They include the right to payment of dividends pursuant to a resolution of the Annual General Meeting together with the right to vote at the Annual General Meeting. All of the interests were fully paid. The share capital reported in the consolidated financial statements as well as the capital reserves correspond to the figures reported in the individual financial statements of CROSS Motorsport Systems AG.

The group’s reserves include transactions from the capital consolidation, which strengthen the equity as well as other equity trans - actions not affecting results including the revaluation of financial assets and the result of the business year.

Reserves from exchange rate differences comprise all price differences resulting from the conversion of annual financial statements of consolidated subsidiaries, which have been prepared in foreign currencies.

The minority shareholdings comprise shareholdings of third parties in the equity of consolidated subsidiaries.

Capital managementThe aim of capital management is to maintain a strong capital basis so that an appropriate yield for the company’s shareholders reflecting the company’s risk situation can be further generated, the future development of the company ensured and also so that benefits for other stakeholders can be generated. Management views capital exclusively as book equity according to IFRS. As of the balance sheet date the equity ratio amounted to 20.3% (previous year: 21.7%).

The capital management of the CROSS Motorsport Systems Group aims at ensuring equity resources to its group companies that meet the local requirements. All external capital requirements were met in the reporting year.

ACCOunTS PAyAble

In April 2012 CROSS Industries AG – together with its 100% subsidiary CROSS Motorsport Systems AG – restructured its financing and entered into long-term loan arrangements. This new equity financing was concluded to repay the bonds of CROSS Industries AG and CROSS Motorsport Systems AG prematurely. In this context CROSS Industries AG and CROSS Motorsport Systems AG issued a repurchase offer in May 2012. In the course of this repurchase offer bonds with a nominal value of € 47,893k were repurchased. As of 31 December 2012 bonds with a nominal value of € 13,588k were outstanding, which will be repayed in 2013.

57

(17)

(18)



The financial- and bond liabilities are made up as follows:

in €k 31/12/2012 31/12/2011

Bond 13,574 63,768Liabilities towards banks 88,543 53,909 102,117 117,677thereof short-term 36,135 23,530

thereof long-term 65,982 94,147

The lease payments from finance lease agreements for the next years can be broken down as follows:

in €k leasing payments Fair market value 31/12/2012 31/12/2011 31/12/2012 31/12/2011

Up to 1 year 797 733 708 7022 to 5 years 1,915 1,553 1,792 1,442Mote than 5 years 52 0 52 0 2,764 2,286 2,552 2,144

Payments due to minimum lease payments recorded as expense (interest expense) in business year 2012 amounted to € 0k (previous year: € 9k). Expenses from finance lease agreements do not include any material, contingent rental payments.

Finance lease agreements are mainly concluded for a basic lease period between three and five years. After the basic lease period has expired the agreement provides either a purchase option or a purchase requirement. Interest rates of the agreements are mostly variable and underlie current reference rates.

There are no considerable future minimum payments from sublease agreements.

Other short-term debts can be mainly broken down in personnel liabilities in the amount of € 5,893k (previous year: € 2,904k), as liabilities from the accrual of interest in the amount of € 430k (previous year: € 2,022k) and other short-term liabilities in the amount of € 9,295k (previous year: € 5,857k).

COnTinGenCieS, lien RiGhTS AnD liAbiliTieS

Registered liens amount to € 47,959k (previous year: € 26,173k) and can be broken down as follows:

in €k 31/12/2012 31/12/2011

Tangible assets 41,712 22,321Receivables 6,247 3,852 47,959 26,173

As of the balance sheet date liabilities towards banks were secured by pledged securities (1,814,117 Pankl shares) with a market value of € 41,725k (previous year: € 29,676k). In addition, the shares in the WP Group were pledged.

As of the balance sheet date there were purchasing obligations in the amount of € 2,227k (previous year: € 0k).

58

(19)


PROViSiOnS

The group forms provisions for guarantees, gestures of goodwill and complaints for known, expectable individual cases. The expected expenses are mainly based on former experiences. Estimates of future expenses are inevitably subject to numerous uncertainties, which can lead to an adjustment of the formed provision. It cannot be excluded that the actual expenses for these measures exceed the therefore formed provision in an unforeseeable way. As of 31 December 2012 a total amount of € 995k (previous year: € 1,042k) for provisions for guarantees and gestures of goodwill was balanced.

During the business year provisions have developed as follows:

in €k As of Currency Additions Changes in Disposals use Reclassi- As of 01/01/2012 conversion the scope fication 31/12 /2012 of consoli- dationShort-term provisons for:Guarantees 199 0 78 0 0 (98) 557 736Impending losses 135 0 2 0 0 (135) 0 2Restructuring measures 126 2 106 0 0 (103) 0 131Others 485 0 189 0 0 (272) 0 402 945 2 375 0 0 (608) 557 1,271

Long-term provisions for:Guarantees 843 0 0 0 0 (27) (557) 259Restructuring measures 103 2 0 0 0 (105) 0 0 946 2 0 0 0 (132) (557) 259

SOCiAl CAPiTAl ObliGATiOnS

Social capital obligations include provisions for:

in €k 31/12/2012 31/12/2011

Severance pay 3,474 2,004Anniversary bonus 338 138 3,812 2,142

59

(20)

(21)



During the last two business years social capital obligations developed as follows:

in €k 31/12/2012 31/12/2011

Projected benefit obligationAs of 01/01 2,366 2,250Service cost 194 129Interest expenses 146 92Payments made (230) (123)Actuarial gain/loss 693 18Disposals (224) 0Others 867 0as of 31/12 3,812 2,366

Plan assetsAs of 01/01 224 217Payments made 0 7Disposals (224) 0as of 31/12 0 224

net debt (projected benefit obligation less plan assets) 3,812 2,142

Income and expenses recorded in the income statement are made up as follows:

in €k 2012 2011

Service expense 194 129Interest expanse 146 92 340 221

The valuation of obligations is subject to the following assumptions:

in €k 2012 2011

Interest rate 4.00% 5.00%Wages and salary trend 3.00% 3.00%Pension age 56.5 – 65 years 56.5 – 62 yearsPension age for women/men 61.5 – 65 years 61.5 – 62 years

Taking the very long average terms and high average life expectancy into consideration, the interest rate was determined on the basis of market interest rates.

Staff fluctuation is determined for each company and taken into account depending on age/service. The actuarial assumptions are based on mortality tables for the individual country. The statutory retirement age for each country was selected as the retirement age.

Expenses for contribution-defined pension schemes mainly affect the employee provision fund in Austria and amount to € 753k (previous year € 498k).


In the last five years the cash value of performance-oriented obligations developed as follows:

in €k 30/09/2008 30/09/2008 31/12/2010 31/12/2011 31/12/2012

Obligation value 1,971 1,816 2,033 2,142 3,812

A change (±0.5 percentage points) of the parameters “interest rate” and “wages and salary trend” would have changed the present value of the future payments as follows:

in €k Change Change –0.5 percent- +0.5 percentage points age points

Interest rate 6.9% (6.2%)Wages and salary trend (6.3%) 6.9%

noteS to the ConSoLidated CaSh fLow

TAx, inTeReST AnD DiViDenD PAiD

Amounts paid are listed below the consolidated cash flow.

other exPLanationS

FinAnCiAl inSTRuMenTS AnD FinAnCiAl RiSk MAnAGeMenT

basisThe CROSS Motorsport Systems Group holds primary and derivative financial instruments. Primary financial instruments mainly include financial assets, trade accounts receivable, deposits with banks, bank loans, trade accounts payable, financial liabilities and bonds. The amount of financial instruments is shown in the balance sheet and described in the notes to the consolidated financial statements.

Derivative financial instruments are generally used to hedge existing change in interest rate and foreign exchange risks. The use of derivative financial instruments is subject to appropriate authorization and control procedures in the group. A linkage to an underlying transaction is mandatory, commercial transactions are not permitted.

Acquisitions and sales of any financial instruments are recognized on the settlement date.

The financial instruments are generally valued at cost at the time of addition. The financial instruments are written off if the rights to payments from the investment have expired or been transferred and the group has basically transferred all the risks and rewards that are involved in ownership.

61

v.

(22)

vi.

(23)



book Values, Fair Values and net Result of the Financial instrumentsThe book values, fair values and valuation techniques for financial assets (financial instruments on the asset side) can be broken down into the following classifications and categories according to IAS 39 and IAS 17:

in €k book Fair Amount stated acc. to iAS 39 Amount value value Continued Acquisition Fair value Fair value stated acquisition cost affecting not acc. to cost net income affecting iAS 17 net income31/12/2012Loans and receivables 50,925 50,925Cash and cash equivalents 10,001 10,001 ◊ – – – –Trade receivables 20,328 20,328 ◊ – – – –Receivables towards affiliated companies 18,183 18,183 ◊ – – – –Other financial receivables (short- and long-term) 410 410 ◊ – – – –Financial assets – loans 2,003 2,003 ◊ – – – –

financial assets available-for-sale 4,222 4,222Financial assets – shares in affiliated companies 4,222 4,222 – ◊ – – – 55,147 55,147

31/12/2011Loans and receivables 54,102 54,102Cash and cash equivalents 12,321 12,321 ◊ – – – –Trade receivables 18,185 18,185 ◊ – – – –Receivables towards affiliated companies 19,642 19,642 ◊ – – – –Other financial receivables (short- and long-term) 3,922 3,922 ◊ – – – –Financial assets – loans 2,143 2,143 ◊ – – – –

financial assets available-for-sale 4,172 4,172Financial assets – shares in affiliated companies 4,172 4,172 – ◊ – – – 58,274 58,274

Trade receivables and other financial receivables generally have short maturity periods. The recognized values are therefore approxi-mately the same as the fair values. The fair values for long-term loans are, where material, determined as the present value of the payments involved in the debts on the basis of the market parameters effective at the time.

Financial assets of the valuation category available-for-sale comprise equity instruments not listed on the stock exchange, whose fair value was not certainly determinable. The equity instruments are reported in the above charts in the category available-for-sale (at cost) and are balanced at acquisition cost.


The book values, fair values and assigned values of financial debts (financial instruments on the liabilities’ side) can be broken down as follows according to classes or valuation categories under IAS 39 or IAS 17:

in €k book Fair Amount stated acc. to iAS 39 Amount value value Continued Acquisition Fair value Fair value stated acquisition cost affecting not acc. to cost net income affecting iAS 17 net income31/12/2012financial liabilities at amortized cost 165,870 167,931Liabilities towards banks 85,991 86,760 ◊ – – – –Trade liabilities 22,173 22,173 ◊ – – – –Liabilities towards affiliated companies 36,963 38,255 ◊ – – – –Bonds 13,574 13,574 ◊ – – – –Other financial liabilities (short- and long-term) 7,169 7,169 ◊ – – – –

financial liabilities at fair value through profit or loss 951 951Other financial liabilities – derivates with negative market value (trading) 951 951 – – ◊ – –

others 2,552 2,552Liabilities from finance lease 2,552 2,552 – – – – ◊

169,373 171,434

31/12/2011financial liabilities at amortized cost 140,498 145,602Liabilities towards banks 51,766 51,840 ◊ – – – –Trade liabilities 15,647 15,647 ◊ – – – –Liabilities towards affiliated companies 1,070 1,070 ◊ – – – –Bonds 63,768 68,798 ◊ – – – –Other financial liabilities (short- and long-term) 8,247 8,247 ◊ – – – –



in €k book Fair Amount stated acc. to iAS 39 Amount value value Continued Acquisition Fair value Fair value stated acquisition cost affecting not acc. to cost net income affecting iAS 17 net incomefinancial liabilities at fair value through profit or loss 0 0Other financial liabilities – derivates with negative market value (trading) 0 0 – – ◊ – –

others 2,143 2,143Liabilities from finance lease 2,143 2,143 – – – – ◊

142,641 147,745

Trade liabilities and other financial liabilities usually have short remaining lifetimes. The balanced values approximately represent the fair values. Fair values of bank liabilities, financial liabilities and bonds, as far as they are material, are determined at fair market value of payments connected to the debts on the basis of respectively valid market parameters.

Classification of financial instruments by valuation methodThe current market value of financial instruments is determined by listed market prices for the identical instrument in active markets (level 1). In case no listed market price on active markets is available, the current market value is determined by valuation methods, whose parameters are based on monitorable market data (level 2). Otherwise the determination of the current market value is based on valuation methods whose parameters are not based on monitorable market data (level 3):

in €k level 1 level 2 level 3 Total

31/12/2012financial assetsStocks 0 0 0 0financial liabilitiesDerivate financial instruments 0 951 0 951

31/12/2011financial assetsStocks 0 0 0 0financial liabilitiesDerivate financial instruments 0 0 0 0

The net result from the financial instruments in the classifications and measurement categories according to IAS 39 includes net profit/loss, total interest income/expenditure and impairment losses, and can be broken down as follows:


in €k From From From From net result interest subsequent value disposal (total) valuation at adjustment result fair value

2012Loans and receivables 494 0 (20) 44 518At fair value through profit or loss (fair value option) 0 0 0 50 50At fair value through profit or loss (trading) 0 (63) 0 0 (63)Financial liabilities at amortized cost (5,437) 0 0 0 (5,437) (4,943) (63) (20) 94 (4,932)

2011Loans and receivables 1,597 0 652 0 2,249At fair value through profit or loss (fair value option) 0 0 0 145 145At fair value through profit or loss (trading) 4 (52) 0 0 (48)Financial liabilities at amortized cost (6,980) 0 0 0 (6,980) (5,379) (52) 652 145 (4,634)

Changes of the value adjustment regarding loans and receivables is reported under other operating expenses. The part from the subsequent valuation not affecting income at fair value of financial assets available-for-sale is reported in the fair value provision AfS stocks. Other components of the net income are included in financial income/financial expenses.

Financial Risk ManagementPrinciples of financial risk managementRegarding its assets, debts and planned transactions, the CROSS Motorsport Systems Group is exposed to credit, market and liquidity risks. The aim of financial risk management is therefore to control and limit these risks. The Management and Supervisory Boards are regularly informed about any risks that could have a significant effect on business development.

The basic principles of financial risk management are laid down and monitored by the Management Board. Group treasury and decentralised treasury units are in charge of implementation.

Currency risksThere are currency risks for the group when financial assets and debts are in a currency that is not the local one for the company concerned. The group companies issue the majority of bills in their local currency and finance themselves to a large extent in the local currency. Investments are primarily in the national currency of the investing group company. As a result, the currency items are usually closed naturally.

Sensitivity analyses were carried out for the currency risks involved in financial instruments that show the impact of hypothetical changes in exchange rates on earnings (after tax) and equity. The balances affected at the balance sheet date were taken as basis. It was assumed for the analysis that the risk on the balance sheet date basically represents the risk during the business year. The group tax rate used was 25%. In addition, the analysis was also based on the assumption that all other variables, especially interest rates, remain constant. Included in the analysis were currency risks for financial instruments that are denominated in a currency deviating from the functional one and of a monetary nature. Currency risks from Euro items in subsidiaries whose functional currency deviates from



the Euro were added to the currency risk for the functional currency of the relevant subsidiary. Risks involved in foreign currency items not in Euros were aggregated at group level. Exchange rates differences resulting from converting financial statements into the group currency are not taken into account.

Revaluation of the Euro – on the basis of the above assumptions – by 10% against all other currencies on the balance sheet date would have reduced the earnings (after tax) by € 31k (previous year: € 78k) and the group equity by € 31k (previous year: € 78k).

Devaluation of the Euro – on the basis of the above assumptions – by 10% against all other currencies on the balance sheet date would have increased the earnings (after tax) by € 15k (previous year: € 22k) and increased the group equity by € 15k (previous year: € 22k).

interest rate risksThe financial instruments primarily have variable interest rates both on the asset and liability side. As a result, the risk lies in rising expense interest rates and falling income interest rates due to an adverse change in the market interest rates. The risk is observed by a constant monitoring of the money and capital markets as well as by the implementation of fixed interest rate payer swaps.

Interest rate risks are therefore generally the result of primary financial instruments with variable interest rates (cash flow risk). Sen- sitivity analyses were carried out for the interest rate risks involved in these financial instruments that show the impact of hypothetical changes in market interest rate levels on earnings (after tax) and group equity. The balances affected at the balance sheet date were taken as the basis. It was assumed for the analysis that the risk at the balance sheet date basically represents the risk during the business year. The group tax rate used was 25%. In addition, the analysis was also based on the assumption that all other variables, especially exchange rates, remain constant.

A rise (fall) in the market interest rate level – on the basis of the above assumptions – by 50 basic points at the balance sheet date would have reduced (increased) the earnings (after tax) by € 193k (previous year: € 133k) and group equity by € 193k (previous year: € 133k). The sensitivity of the share capital was influenced by the sensitivity of earnings (after tax).

other market Price risksIn addition to currency and interest rate risks, the CROSS Motorsport Systems Group is also exposed to other price risks (mainly energy price risks and commodity price risks from procurement and production) that, as a whole, are however of lesser importance to the group.

default risks (Credit risks)The default risk is the risk of financial losses arising because a contracting party of a financial instrument fails to meet payment obligations.

The default risk involved in receivables from customers can be considered low, as the risk rating of new and existing customers is checked regularly and security is demanded. The default risk of financial instruments on the asset side can be considered low, as the contracting parties are debtors with high credit ratings.

Moreover, the group is exposed to a credit risk resulting from derivative financial instruments, should the parties not meet their contractual obligations. The contract parties are international financial institutions.

On the basis of their ratings, carried out by highly respected agencies, the risk for the group can be regarded as low.


In the CROSS Motorsport Systems Group, default risks are hedged to a great extent by bad debt insurance on the one hand and bank securities on the other (guarantees, letters of credit). Internal guidelines define the default risks and give procedures for controlling them. When derivative financial instruments have a positive market value, the default risk is limited to the costs of replacing them. Given that the contract parties are solely banks with high credit ratings, the risk involved can be classed as low.

On the asset side, the amounts shown represent the maximum default risk as there are no general offsetting agreements.

The book values of the receivables can be broken down as follows:

in €k book Thereof: Thereof: As of the reporting date not impaired Thereof value As of the and due in the following periods of time impaired reporting up to 30 to 60 to More than date neither 30 days 60 days 90 days 90 days impaired nor overdue

31/12/2012Trade receivables 20,328 12,712 4,720 945 991 427 533Receivables towards affiliated companies 18,183 13,760 4,385 13 0 25 0Other financial receivables (short- and long-term) 410 410 0 0 0 0 0Financial assets – loans 2,003 2,003 0 0 0 0 0 40,924 28,885 9,105 958 991 452 533

31/12/2011Trade receivables 18,185 13,550 3,056 696 148 370 365Receivables towards affiliated companies 19,642 19,452 115 4 0 71 0Other financial receivables (short- and long-term) 1,811 1,811 0 0 0 0 0Financial assets – loans 2,143 2,143 0 0 0 0 0 41,781 36,956 3,171 700 148 441 365

Regarding the recognized financial trade and other receivables that were neither subject to impairment nor in default, there were no signs at the balance sheet date that the debtors may not fulfill their payment obligations.

Book values of financial assets that otherwise would have been impaired or overdue and the terms of which were renegotiated, amounted to € 0k (previous year: € 0k).



Liquidity risksA major aim of financial risk management in the CROSS Group is to ensure liquidity and financial flexibility at all times. In view of the global financial crisis, which has also had an immediate effect on the commercial banks used by the group, securing short and medium- term liquidity is top priority. The medium- and long-term liquidity requirement is assured by the issuance of company shares and bonds and borrowing.

Moreover we refer to item (01) “Liquidity” in the notes to the consolidated financial statements.

The maturity periods of the financial debts can be broken down as follows:

in €k book Remaining lifetime value up to 1 to More than 1 year 5 years 5 years

31/12/2012financial liabilities at amortized cost 165,870 61,980 99,429 4,461Liabilities towards banks 85,991 21,853 59,745 4,393Trade liabilities 22,173 22,173 0 0Liabilities towards affiliated companies 36,963 1,386 35,577 0Bonds 13,574 13,574 0 0Other financial liabilities (short- and long-term) 7,169 2,994 4,107 68

financial liabilities at fair value through profit or loss 951 951 0 0Other financial liabilities – derivates with negative market value (trading) 951 951 0 0

others 2,552 708 1,792 52Liabilities from finance lease 2,552 708 1,792 52 169,373 63,639 101,221 4,513

31/12/2011financial liabilities at amortized cost 140,498 42,834 94,323 3,341Liabilities towards banks 51,766 22,829 25,691 3,246Trade liabilities 15,647 15,647 0 0Liabilities towards affiliated companies 1,070 1,070 0 0Bonds 63,768 0 63,768 0Other financial liabilities (short- and long-term) 8,247 3,288 4,864 95

financial liabilities at fair value through profit or loss 0 0 0 0Other financial liabilities – derivates with negative market value (trading) 0 0 0 0

others 2,143 701 1,442 0Liabilities from finance lease 2,143 701 1,442 0 142,641 43,535 95,765 3,341


The contractually agreed (undiscounted) cash flows (interest and amortization payments) for the financial debts can be broken down as follows:

in €k book Cash flows 2013 Cash flows 2014 to 2017 Cash flows from 2018 value interest interest Redemp- interest interest Redemp- interest interest Redemp- fixed variable tion fixed variable tion fixed variable tion

31/12/2012financial liabilities at amortized cost 165,870 2,887 1,777 61,980 4,499 3,617 99,429 82 163 4,461Liabilities towards banks 85,991 1,708 1,169 21,853 3,143 2,401 59,745 82 163 4,393Trade liabilities 22,173 0 0 22,173 0 0 0 0 0 0Liabilities towards affiliated companies 36,963 708 608 1,386 1,299 1,216 35,577 0 0 0Bonds 13,574 433 0 13,574 0 0 0 0 0 0Other financial liabilities (short- and long-term) 7,169 38 2,994 57 4,107 68

financial liabilities at fair value through profit or loss 951 0 0 951 0 0 0 0 0 0Other financial liabilities – derivates with negative market value (trading) 951 0 0 951 0 0 0 0 0 0

others 2,552 36 57 708 39 73 1,792 0 0 52Liabilities from finance lease 2,552 36 57 708 39 73 1,792 0 0 52 169,373 2,923 1,834 63,639 4,538 3,690 101,221 82 163 4,513



in €k book Cash flows 2012 Cash flows 2013 to 2016 Cash flows from 2017 value interest interest Redemp- interest interest Redemp- interest interest Redemp- fixed variable tion fixed variable tion fixed variable tion

31/12/2011financial liabilities at amortized cost 140,498 4,600 1,488 42,834 2,714 1,237 94,323 0 262 3,341Liabilities towards banks 51,766 442 1,472 22,829 600 1,218 25,691 0 262 3,246Trade liabilities 15,647 0 0 15,647 0 0 0 0 0 0Liabilities towards affiliated companies 1,070 0 0 1,070 0 0 0 0 0 0Bonds 63,768 4,079 0 0 2,039 0 63,768 0 0 0Other financial liabilities (short- and long-term) 8,247 79 16 3,288 75 19 4,864 0 0 95

financial liabilities at fair value through profit or loss 0 0 0 0 0 0 0 0 0 0Other financial liabilities – derivates with negative market value (trading) 0 0 0 0 0 0 0 0 0 0

others 2,143 0 75 701 0 93 1,442 0 0 0Liabilities from finance lease 2,143 75 701 93 1,442 0 0 142,641 4,600 1,563 43,535 2,714 1,330 95,765 0 262 3,341

The chart includes all financial instruments that were held at the balance sheet date and where payments have already been agreed upon on a contractual basis. Budgeted figures for any additional future financial liabilities are not included. Working capital loans are assumed to have a twelve-month-term. These loans are regularly renewed and are, therefore, available to the company for a longer period of time. Foreign exchange balances were converted using the exchange rate at the balance sheet date.

Variable interest payments were estimated based on the most recent interest rate fixing before the balance sheet date. Financial liabilities repayable at any time are allocated to the group with the shortest maturity.

Derivatives and hedgingThe following table shows the nominal and balanced fair values of derivate financial instruments (book values). Thereby a distinction is made whether they are integrated in effective hedging relationship according to IAS 39 (fair value hedge and cash-flow hedge) or not.

in €k 31/12/2012 31/12/2011 nominal book value Fair value nominal book value Fair value value value

derivate with cash flow hedge relationforward rate agreementInterest rate swap (until 2017) 20,000 (951) (951) 0 0 0


OPeRATinG leASe AGReeMenTS

In addition to the finance lease agreements, there are rental and lease agreements in the CROSS Group that can be classified as operating lease agreements on account of their economic content. Leasing contracts include lease payments that are usually based on variable amounts.

In business year 2012 payments from lease payments (lease or rent expenses) from operating leasing relations recorded as expenses amounted to € 2,802k (previous year: € 2,074k). Reported expenses for operating leasing relations do not include considerable contingent lease payments or payments from sublease.

The use of lease assets not reported under tangible assets (mostly lease of office- and administration buildings, storage buildings, leasing of CNC machinery, vehicles and computer equipment) entails obligations to third parties totaling € 16,690k (previous year: € 12,666k) that are payable as follows:

in €k 2012 2011

Up to 1 year 3,743 2,9882 to 5 years 12,577 8,944More than 5 years 370 734 16,690 12,666

The reported expenses from operating leases neither include payments from subleases recognized as expenses, nor significant contingent rental payments.

The operating leasing agreements are exclusively subject to variable interest rates; purchase options are partly provided.

In business year 2012 a long-term lease agreement on the rental of a building was finalized. The planned minimum payments from the contract are as follows:

in €k 2012 2011

Up to 1 year 780 4122 to 5 years 2,730 3,120More than 5 years 0 390 3,510 3,922

SeGMenT RePORTinG

Segment Reportig by business AreasThe operating activities of the company are managed by the segments “Pankl Racing Systems AG”, “WP Group” and “Others and consolidation”. The segment “Other“ includes CROSS Motorsport Systems AG and effects from purchase price allocation (PPA). The segmentation of business areas and the presentation of the segment results is carried out according to the IFRS 8 “Management Approach” and follows internal reports of the management information system to the Management Board as key operating decision maker.

71

(24)

(25)



The EBIT serves as the segment management parameter and describes the operating result of the period before the financial result and taxes.

in €k Pankl WP Group Others Consoli- Group – Racing and PPA dation continued Systems AG operations

2012Revenues 127,685 107,978 973 (1,236) 235,400thereof inner-group 670 0 566 (1,2369 0

EBIT 10,380 6,263 (2,458) (37) 14,148Interest income 98 35 362 (1) 494Interest expenses (1,571) (527) (3,710) 1 (5,807)Assets 149,762 52,499 99,609 (59,916) 241,954Liabilities 80,151 32,665 80,176 (236) 192,756Investments 25,864 6,116 1 0 31,981Depreciation 9,598 2,233 1,536 0 13,367thereof unscheduled 0 0 0 0 0

2011Revenues 105,396 69,907 1,152 (591) 175,864thereof inner-group 0 0 591 (591) 0

EBIT 7,025 5,188 (5,662) (16) 6,535Interest income 207 157 1,131 106 1,601Interest expenses (1,303) (673) (5,119) (106) (7,201)Assets 119,351 40,726 118,424 (74,762) 203,739Liabilities 54,968 24,739 80,038 (146) 159,599Investments 7,765 1,883 80 0 9,728Depreciation 8,203 1,431 2,408 0 12,042thereof unscheduled 0 0 0 0 0

Segment reporting by regionsThe distribution according to regions for external sales is made according to the location of respective customers, in case of segment assets according to the place, where assets are located.

in €k 2012 2011

Austia 98,052 54,905Rest of Europe 95,129 85,324North America 34,707 29,988Others 7,512 5,647 235,400 175,864

eVenTS AFTeR The bAlAnCe SheeT DATe

No events occurred after the balance sheet date that require reporting

72

(26)


buSineSS RelATiOnS TO AFFiliATeD COMPAnieS AnD PeRSOnS

Shares of CROSS Motorsport Systems AG, Wels, are held 100.00% by CROSS Industries AG, Wels. Shares of CROSS Industries AG, Wels are held by 50.05% by Pierer Invest Beteiligungs GmbH (formerly: KP Invest Beteiligungs GmbH), Wels; by 25.03% by Pierer Industrie AG, Wels, and 24.92% by Unternehmens Invest AG, Wels. Pierer GmbH, Wels, and Knünz GmbH, Dornbirn, respectively hold 50.00% of shares in Pierer Invest Beteiligungs GmbH (formerly: KP Invest Beteiligungs GmbH), Wels. Mr. Stefan Pierer is is the sole shareholder and CEO of Pierer GmbH, Wels, and Mr. Rudolf Knünz is sole shareholder and CEO of Knünz GmbH, Dornbirn.

In business year 2012 no dividends from business year 2011 were paid to shareholders.

mr. Stefan Pierer holds the following positions in the CROSS Group:– CEO of CROSS Industries AG, Wels– CEO of KTM AG, Mattighofen– CEO of KTM-Sportmotorcycle AG, Mattighofen– Managing Director of PF Beteiligungsverwaltungs GmbH, Wels– Managing Director of CROSS Informatik GmbH, Wels– Managing Director of CROSS Services GmbH, Ursensollen, Germany (liquidated as of 31/12/2012)– Chairman of the Supervisory Board of CROSS Immobilien AG, Wels– Chairman of the Supervisory Board of CROSS Motorsport Systems AG, Wels– Chairman of the Supervisory Board of Pankl Racing Systems AG, Bruck upon Mur– Chairman of the Supervisory Board of BRAIN FORCE HOLDING AG, Vienna– Member of the Supervisory Board of SMP Deutschland GmbH (formerly: Peguform GmbH), Bötzingen, Germany– Chairman of the Supervisory Board of Wirtschaftspark Wels Errichtungs- und Betriebs-Aktiengesellschaft, Wels

mr. rudolf Knünz holds the following positions in the CROSS Group:– Chairman of the Supervisory Board of CROSS Industries AG, Wels– Deputy Chairman of the Supervisory Board of KTM AG, Mattighofen– Deputy Chairman of the Supervisory Board of KTM-Sportmotorcycle AG, Mattighofen– Deputy Chairman of the Supervisory Board of CROSS Immobilien AG, Wels (until 12/09/2012)– Deputy Chairman of the Supervisory Board of CROSS Motorsport Systems AG, Wels (until 12/09/2012)– Deputy Chairman of the Supervisory Board of Pankl Racing Systems AG, Bruck upon Mur (until 31/01/2013)

Related party transactions are reported as follows:

in €k Receivables liabilities income expense

2012CROSS Industries AG, Wels 2 35,814 29 1,269Subsidiaries of CROSS Industries AG 18,181 1,149 83,898 3,200Other affiliated companies 0 684 11 505Other affiliated persons 0 0 0 14 18,183 37,647 83,938 4,988

2011CROSS Industries AG, Wels 3,253 231 8 3,415Subsidiaries of CROSS Industries AG 17,571 86 44,975 1,297Other affiliated companies 1,174 2,467 105 1,393Other affiliated persons 0 0 0 0 21,998 2,784 45,088 6,105

73

(27)



Mr. Ernst Chalupsky is member of the Supervisory Board of CROSS Motorsport Systems AG as well as partner at Saxinger, Chalupsky & Partner Rechtsanwälte GmbH, Wels. Consulting- and other services in the amount of € 1k (previous year: € 21k), carried out by Saxinger, Chalupsky & Partner Rechtsanwälte GmbH, Wels, were used on standard terms and conditions. On the balance sheet date there were open liabilities in the amount of € 0k (previous year: € 1k) towards Saxinger, Chalupsky & Partner Rechtsanwälte GmbH, Wels.

Comprehensive trade relationsships at arms lenghts exist with companies of the CROSS Group. The WP Group and the Pankl Group supply the KTM Group with high-quality products at market-based prices with a total volume of € 82,738k (previous year: € 43,166k). At the balance sheet date open receivables towards the KTM Group amounted to € 11,566k (previous year: € 6,119k).

liST OF equiTy inTeReSTS AS OF 31/12/2012

The following companies were included into the consolidated financial statements apart from the parent company:

Company initial Participation Type of consolidation consolidation date

Pankl groupPankl Racing Systems AG, Bruck upon Mur 01/01/2008 58.31% FCPankl Engine Systems GmbH & Co KG, Bruck upon Mur 01/01/2008 58.31% FCPankl Drivetrain Systems GmbH & Co KG, Kapfenberg 01/01/2008 58.31% FCPankl Racing Systems UK Ltd., Bicester, Great Britain 01/01/2008 58.31% FCAPankl Holdings, Inc., Carson City, Nevada, USA 01/01/2008 58.31% FCACapital Technology Beteiligungs GmbH, Bruck upon Mur 01/01/2008 58.31% FCCP-CARRILLO, LLC, Irvine, USA 01/01/2008 40.82% FCAPerformance Equipment Company, LLC, Irvine, USA 01/01/2008 40.82% FCAPankl Emission Control Systems GmbH, Kapfenberg 01/01/2008 58.31% FCPankl Aerospace Systems, Inc., Cerritos, USA 01/01/2008 58.31% FCAPankl Engine Systems, Inc., Irvine, USA 27/07/2011 58.31% FCAPankl Beteiligungs GmbH, Kapfenberg 01/01/2008 58.31% FCPankl Schmiedetechnik GmbH & Co KG, Kapfenberg 01/01/2008 58.31% FCPankl Aerospace Systems Europe GmbH, Kapfenberg 01/01/2008 58.31% FCPankl Automotive Slovakia s.r.o., Topolcany, Slovakia 01/01/2008 58.31% FCAPankl Aerospace Innovations, LLC, Cerritos, USA 13/06/2012 58.31% FCACarrillo Acquisitions, Inc., Irvine, USA 23/12/2011 58.31% FCAPankl Japan, Inc., Tokyo, Japan – 58.31% NCPankl – APC Turbosystems GmbH (formerly: APC – Advanced Propulsion Concept GmbH), Mannheim, Germany 28/09/2012 29.74% FCA

74

Legend:FC Full consolidation, AustriaFCA Full consolidation, abroadNC Not consolidated due to little or no significance, Austria

(28)


Company initial Participation Type of consolidation consolidation date

wP groupWP Performance Systems GmbH (formerly: WP Suspension Austria GmbH), Munderfing 30/11/2007 100.00% FCWP Components GmbH (formerly: WP Radiator GmbH), Munderfing 21/05/2010 99.98% FCWP Suspension B.V., Malden, Netherlands – 100.00% NCWP Cooling Systems (Dalian) Co., Ltd., Dalian, China – 99.98% NCWP Radiator Italia S.r.l., Vinovo, Italy – 99.98% NCWP Germany GmbH, Ursensollen, Germany – 100.00% NC

bODieS OF CROSS MOTORSPORT SySTeMS AG

In business year 2012 the followign members were appointed to the Supervisory Board:

– Stefan Pierer, Chairman– Rudolf Knünz, Deputy Chairman (until 12/09/2012)– Josef Blazicek, Deputy Chairman (from 12/09/2012)– Ernst Chalupsky– Manfred De Bock (until 27/07/2012)

In business year 2012 the following, collectively authorized members were appointed to the management Board:

– Alfred Hörtenhuber, CEO– Friedrich Roithner– Wolfgang Plasser

Wels, 29 March 2013



75

Legend:FC Full consolidation, AustriaFCA Full consolidation, abroadNC Not consolidated due to little or no significance, Austria

(29)



76

RePORT On The COnSOliDATeD FinAnCiAl STATeMenTS

We have audited the accompanying consolidated financial statements of CROSS Motorsport Systems AG, Wels, for the reporting period from 1 January 2012 to 31 December 2012. These consolidated financial statements comprise the balance sheet as at 31 December 2012, and the income statement, the consolidated statement of comprehensive income, the cash flow statement and the statement of changes in equity for the year then ended, and the notes.

Management’s Responsibility for the Consolidated Financial Statements and Accounting System

Management is responsible for the accounting system and for the preparation and fair presentation of these consolidated financial statements in accordance with the International Financial Reporting Standards (IFRSs) as adopted by the EU. This responsibility includes: designing, implementing and maintaining internal control as management determines is necessary to enable the preparation of consoli-dated financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditor’s Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with laws and regulations applicable in Austria and International Standards on Auditing, issued by the International Auditing and Assurance Standards Board (IAASB) of the International Federation of Accountants (IFAC). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the group’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

indePendent auditor’S rePort

77

Opinion

Our audit did not give rise to any objections. In our opinion, which is based on the results of our audit, the consolidated financial state-ments comply with legal requirements and present fairly, in all material respects, the financial position of the group as at 31 December 2012 and its financial performance for the period from 1 January 2012 to 31 December 2012 in accordance with generally accepted accounting principles in the International Financial Reporting Standards (IFRSs) as adopted by the EU.

RePORT On OTheR leGAl RequiReMenTS (GROuP MAnAGeMenT RePORT)

Austrian legal requirements require us to verify whether the group management report is consistent with the financial statements and whether the other disclosures made in the group management report do not give rise to misconception of the position of the group. The auditor’s report should also include a statement whether the group management report is consistent with the consolidated financial statements.

In our opinion, the group management report is consistent with the consolidated financial statements.

Linz, 29 March 2013

KPMG Austria GmbHWirtschaftsprüfungs- und Steuerberatungsgesellschaft

signed by:Ernst Pichler ppa Daniela KöberlWirtschaftsprüfer Wirtschaftsprüfer

(Austrian Chartered Accountant) (Austrian Chartered Accountant)

This report is a translation of the original report in German, which is solely valid. Publication of the consolidated financial statements together with our auditor’s opinion may only be made if the consolidated financial statements and the group management report are identical with the audited version attached to this report. Article 281 section 2 UGB applies.

Independent Auditor’s Report


78

We confirm to the best of our knowledge that the consolidated financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the group as required by the applicable accounting standards and that the group management report gives a true and fair view of the development and performance of the business and the position of the group, together with a description of the principal risks and uncertainties the group faces.

We confirm to the best of our knowledge that the separate financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the parent company as required by the applicable accounting standards and that the management report gives a true and fair view of the development and performance of the business and the position of the company, together with a descrip-tion of the principal risks and uncertainties the company faces.

Wels, April 2013



Statement of aLL LegaL rePreSentativeS

79

Owner and publisher:CROSS Motorsport Systems AGEdisonstrasse 14600 Wels, Austria

Registered at the Regional Court Wels: FN 177514 a

Concept and design: marchesani_kreativstudio, 1080 Vienna

Photos: CROSS archives

While every care was taken in compiling this Annual Report and checking that the data it contains is correct, slight differences in totals from adding up rounded amounts and percentages, typographical errors and misprints cannot be excluded.

This report and the forward-looking statements it contains were prepared on the basis of all the data and information available at the time of going to press. We wish to point out, however, that various factors may cause the actual results deviate from the forward-looking statements given in the report.

imPrint


CROSS Motorsport Systems AGEdisonstrasse 14600 Wels, Austria

T: +43 (0)7242 69402F: +43 (0)7242 [email protected]

CMS Annual Report 2012

Documents

Transcript of CMS Annual Report 2012