FOREWORD FROM THE MANAGEMENT BOARD

Dear shareholders, dear business partners,

Neschen is 'back in the black' and in a sustainable way. The interim report 2014 shows one of the best interim results of the past years. The company was facing two and a half difficult years but the restructuring measures are an impressive success.

After having successfully sold the loss maker in the USA at the end of 2013 and in the first six months of 2014 the company could again concentrate on what they can do best: develop and market new products and to strengthen the company's basis by an expanded attractive portfolio and by reduced reject costs and quality costs.

Due to the consequently implemented restructuring measures, the hard work of the past months is now also evident in the result: on the basis of the gross profit and cost development, the Neschen Group can look back on a successful first half of the year 2014. This positive result is also reflected in the reported earnings. EBITDA with EUR 1.9 million (EBITDA-rate 5.9 %), EBIT with EUR 1.4 million (EBIT-rate 4.4 %) and the earnings after interest and taxes (EAT) with EUR 0.6 million (EAT-rate 2.1 %) are significantly above the comparison figures of the past year and give reason for optimism also for the second half of 2014.

This performance is not a coincidence: already in 2012 and 2013 - as reported at the last annual meeting - the foundation was laid by severe restructuring measures. The sales department was again restructered in January 2014. Internal sales were divided into the sales areas international key accounts and direct sales Germany. The positions of head of export sales, sales Germany and marketing were newly appointed. In 2013 product innovations were brought to market and between January and June 2014 another eleven new products were introduced to the market. With that, sales of products younger than 2 years (2013 and 2014) doubled in the first half year and contribute almost 6% of the total group sales of Neschen AG.

The segment of advertising industry is more and more cost-driven which increases the demand for printing media that are easy to use. The added value of these products are their properties which can be describes as "easy to apply - easy to remove". Neschen recognized this trend. With Easy Dot and other products Neschen provides a range of products which exactly meets the customers' requirements. Accordingly, we anticipate a further demand in this segment.

Additional growth opportunities due to newly developed technologies also open up in the area of "Industrial Applications". Presently, only a few companies in the coating industry are able to coat flexible materials with polyurethane adhesive. Neschen has the required know-how and already delivers this technology to industrial customers. The figures show the dynamics in this area: In the segment of industrial projects ("Industrial Applications") sales increased by 50% compared to the first six months of the previous year. For the second half of the year we already booked orders which confirm this positive trend for the future.

FOREWORD FROM THE MANAGEMENT BOARD

On 6 June of this year Neschen AG informed their shareholders about the transfer of the loans from J.P. Morgan to Sandton Capital Partners. Since then, negotiations are currently being held in order to achieve a complete restructuring of the liabilities of Neschen Benelux B..V. and Neschen AG. Meanwhile the standstill agreement has again been extended to ensure that Neschen will not be confronted with claims from Sandton which would exceed the financial financial capabilities of the company.

All in all, the positive factors confirm the company strategy of the Management Board and they will consequently continue this way. We would be pleased if our shareholders and business partners accompany us on this way.

Bueckeburg, August 2014

Henrik Felbier Michael Aupke

Speaker of the Management Board Management Board

Interim Management Report

Note on the reporting

With effect of 31 October 2013 Neschen AG together with Neschen Benelux B.V. separated from the US-business and sold the main assets of Neschen Corp. and Neschen Americas Corp. to an American company. The companies had been loss-making for many years. Liquidation of the still existing shell companies is expected within the next two years.

In the P&L statement "Discontinued operations" and in the balance position "Operations held for sale" the results or the assets and liabilities of these companies are shown separately according to IFRS, 5.

Report on the Group's income, financial and asset situation

During the reporting period from 1 January 2014 to 30 June 2014 the consolidated turnover of the Neschen Group of EUR 32.1 million was slightly above the level of the previous year for the first time after some years. Despite successful product launches and some successful trade fairs the Neschen Group, however, could not repeat the revenue increase from the first quarter 2014 in the second quarter. The unsettled framework conditions after taking over all claims on the part of J.P.Morgan Bank Dublin plc. and of Aldermanbury Investments Ltd. against Neschen AG including the existing bank loan of an amount of EUR 24.3 million by Sandton Capital Partners, New York / USA has led to uncertainty amongst customers and suppliers.

A positive aspect on the sales side is that the disappearance of the brand name "SEAL" did hardly have any effects on the operative business. The changeover to Neschen products was successful. Introduction of new products which contributed EUR 1.3 million to the total revenue in the first half year of 2014 as well as the significant expansion of sales in the area of "Industrial Application" compared to the previous year could not completely compensate the sales losses in other business areas like for example the display business (Expolinc).

The turnover development of the individual sales units varies. At Neschen AG, the area "Industrial Applications" and the export area achieved positive results whereas the national business slightly failed to meet the figures of the previous year. The trade fairs in 2014 did not lead to a noticeable increase in investments in advertising and marketing at our customers and thus in the sales of the Neschen AG. At the sales subsidiaries all companies with the exception of Neschen Austria GmbH showed a positive sales development compared to the previous year. Here efforts are still focussing on solving structural problems in the second half of the year.

Improvement of the gross margin from 44.1 % to 47.1 % reflects the shifts in the product portfolio in the first half year and the well-considered decision to refrain from low-margin revenues as well as reducing rejects in production. As a result, the Neschen group could report an increase of the gross margin from EUR 14.2 million to EUR 15.4 million.

Personnel and material expenses are almost the same compared to the previous year (EUR 0.1 million each), while depreciation and amortization with 0.5 million EUR continue to decline due to the low investment volume.

Interim Management Report

On the basis of the gross profit and cost development, the Neschen Group can look back on a successful first half of the year 2014. This positive result is reflected also in the reported earnings. EBITDA with EUR 1.9 million (EBITDA-rate 5.9 %), EBIT with EUR 1.4 million (EBIT-rate 4.4 %) and the earnings after interest and taxes (EAT) with EUR 0.6 million (EAT-rate 2.1%) are significantly above the comparison figures of the past year land give reason for optimism also for the second half of 2014. On the balance sheet, the fixed assets have been reduced as planned in the first half of the year 2014 (EUR 0.2 million) to EUR 10.7 million due to the low level of investments.

Inventories increased above average with EUR 8.7 million compared to EUR 7.2 million at the beginning of the year. On the one hand this development is the result of the necessary building up of stocks for the newly launched products in the first half of the year and on the other hand of increased safety stocks for the most successful products which are necessary to guarantee supplies on a sustainable basis.

Trade receivables developed according to the operative business and increased by EUR 1.4 million to EUR 8.5 million. The Neschen AG's external sales are mainly factored and are secured by means of trade credit insurance against breakdowns.

Trade payables, with a view to the purchasing of RHB materials (raw materials, consumables and supplies) and merchandise, increased by EUR 0.6 million to EUR 5.7 million seasonally adjusted.

Despite the profit in the first half of the year 2014 the equity capital of the Neschen AG with EUR -11.1 million is still negative. A restructuring of the liabilities side supported by the investors Sandton Capital Partners is necessary and also planned.

On the liquidity side is to note that payments or interest to Sandton Capital Partners, like before to J.P.Morgan Bank Dublin plc. are suspended. This means that the prerequisites have been created for the Neschen Group to fulfill their obligations without any restrictions.

DEVELOPMENT OF THE INDIVIDUAL COMPANIES

Development of Neschen AG

In the first half of the year 2014 Neschen AG had to accept a slight decline in turnover from EUR 24.2 million to EUR 23.9 million (-2 %) compared to the previous year.

"Industrial Applications" and export developed positively. Filmolux Deutschland, however, could not achieve the planned sales for the first half of the year. This is the sales area that is affected the most by the sales losses in the display area (Expolinc).

The divisions Easy Dot, Window Grip and Display Medien show strong growth rates in the product portfolio of Neschen AG. The new products Gudy Dot and Roler Dot from the division Mounting develop quite well. The book protection products from the Documents division show small but stable growth rates, the same applies to the machine business.

In view of the positive development of the gross margin from 40.4 % (2013) to 43.8 % (2014) there is an increase of the gross profit from EUR 9.9 million to 10.7 million compared to the previous year. There are only minor changes at the personnel costs at Neschen AG while material costs were significantly reduced by EUR 0.85 million after the disappearance of some special factors from the previous year.

In the first six months Neschen AG could generate an EBITDA of EUR 1.6 million (previous year EUR 0.3 million) and an EBIT of EUR 1.2 million (previous year EUR -0.3 million) which represents an EBITDA margin of 6.7 % or an EBIT margin of 4.8 %. After interest and taxes in the first half of the year 2014 at Neschen AG there was a profit of EUR 0.6 million, after the EAT result of the previous year had been negative with EUR -0.6 million after having been adjusted by the waiver of J.P.Morgan at an amount of EUR 6.8 million.

The equity capital according to HGB was EUR 1.3 million (approx. 6 % of the balance sheet total) on 30 June 2014 an thus, compared to the interim consolidated financial statements as of 31 December 2013 (in there: EUR 0.8 million) improved significantly from its own business.

Development of Filmolux SARL

The French sales company Filmolux SARL recovered in the first half of the year and emerged even stronger from the economic crisis 2013 in France. The turnover of EUR 7.9 million in the first six months 2013 are compared to a turnover of EUR 8.2 million (+4 %) in the same period of 2014. Regarding the growing competitive pressure and a slight shift in the product portfolio the gross margin with 36.0 % could not quite reach the one of the previous year (37.4 %).

A slight increase in personnel and material costs and a slightly increased interest expenses affected the results.

The result of the first half year 2014 of Filmolux SARL was slightly negative. The management expects a profit for the second half of the year.

DEVELOPMENT OF THE INDIVIDUAL COMPANIES

Development of Neschen Italia s.r.l.

The businesses of the Italian sales subsidiary developed very well after a change of the management and a change of the sales structure some months ago.

Compared to the previous year sales increased from EUR 2.2 million to EUR 3.0 million; in particular taking over some of the former SEAL customers of Neschen AG had a positive effect. Since also the gross margin increased from 30.5 % to 35.4 % in the first half of the year, increases in material costs could be compensated.

The Italian company within the Neschen Group achieved very satisfactory earnings after interests and taxes of almost EUR 150 thousand and a return on sales of 7 %.

Development of Neschen Benelux B.V.

In 2014 also the Dutch sales subsidiary Neschen Benelux B.V benefited in partial areas from the takeover of former SEAL customers of the Neschen AG. Whereas sales increased slightly from EUR 1.1 million (2013) to almost EUR 1.5 million, the gross margin slightly declined from 33.6 % to 26.7 %.

The organisational changes led to a minor increase in personnel and material costs. However, the company generated a positive result with just under EUR 50 thousand.

Development of Neschen Austria GmbH

The business performance of Neschen Austria GmbH has so far been less satisfactory. Also the first half of the year 2014 ended with a decline in sales of just under EUR 0.1 million to now EUR 0.7 million.

Measures like the reorganisation of the sales department, realignment of sales activities and replacement of the managing director that were introduced in the first half year of 2014 will only have a positive effect in the second half of the year 2014.

From today's point of view it can be assumed that the Austrian subsidiary will not be able to recover from the losses accumulated in the first half of the year. Neschen Benelux B.V. (Holding) is going to support Neschen Austria GmbH via a capital increase of EUR 300 thousand.

Development of Neschen Kft.

The Hungarian subsidiary Neschen Kft. with a turnover of EUR 0.2 million in the first half of the year with an almost balanced result plays only a minor role within the Neschen Group.

Neschen AG | www.neschen.com 10

OUTLOOK

From the Management Board's point of view, the excellent result confirms the strategic orientation of the Group. This also includes that the new products shall be further expanded. Especially reversible adhesives, like for example in the family of point and dot coatings, are in the focus of the new products. With that, one of our future key figures for the shareholders, namely the share of sales of products younger than 3 three years shall continue to increase.

In connection with the sales development a tendency in all business areas must be noted and thus, also in the graphics industry: producers of serial products like our digital print films and textiles increasingly address end-customers due to the meanwhile high degree of acceptance of online media and good logistics in Europe. This makes the Neschen trading business that operates under the label "Filmolux" more and more difficult. Therefore it is more important for Neschen to strengthen their own competence in research and development as it is the case now. This is the reason why Neschen has only a slight overall sales increase despite a considerable growth in the sales of new products. The amount of the products which are at the beginning of their product life cycle must replace the products with a decreasing turnover which are directly sold by their producers.

In the field of Industrial Applications the area of polyurethane adhesive will be strengthened. Next to films all other types of material will be bonded not just adhesive but permanently adhesive. During the past 12 months Neschen has built up a reputation as a competent and reliable partner in the market with pilot projects in that area. Most of the growth in revenue can be attributed to this technology which has also been developed by Neschen during the past 2 years.

Due to this positive development of the Neschen Group the financing partner Eurofactor could be convinced that the Delcredere risk dropped significantly. Accordingly, Eurofactor lowered the interest rates for Neschen AG and raised the prospect of further interest rate cuts. This will further increase the profitability of the Group - albeit with a small proportion. We consider this as being a further confirmation of the course which the company adopted in 2013.

Furthermore, on the basis of the half year financial statement 2014 the Management Board assumes that the earnings of the Group and the AG will continue to develop in a positive way.

In the meantime Sandton Capital Partner and Neschen AG reached an agreement concerning the forecast for continuation: as a first step regarding the ongoing negotiations for a final new credit structure, the present holder of the former J.P.Morgan credits against Neschen Benelux B.V. and Neschen AG agreed on a prolongation of the existing standstill agreement until 2 February 2015 and also undertakes to not make any claims against Neschen AG until the end of 2015 which would exceed the solvency of Neschen AG.

Neschen AG | www.neschen.com 11

OPPORTUNITIES AND RISKS REPORT

Opportunities

The advertising industry is more and more cost-driven which increases the demand for printing media that are easy to use. The added value of the products are their "easy to apply - easy to remove" properties. Neschen recognized this and with Easy Dot and other products Neschen provides a range of products which exactly meets the customers' requirements. A further increase in demand in this segment is expected.

Due to newly developed technologies additional growth potentials will be created. Presently, only a few companies in the coating industry are able to coat flexible materials with polyurethane adhesive. Neschen has the required know-how and already delivers this technology to industrial customers. This is the reason for the strong increase in the business with industrial customers. It also reduces the company's dependence on the cyclicality in the advertising industry.

Risks

The not yet negotiated framework conditions of the senior loan are still a risk. This could affect the earnings and the liquidity.

Uncertainties both on the customers and suppliers side which were caused by searching an investor are preventing a significantly better development.

There is also the trend that producers increasingly deliver directly to processors. This will create a sales risk for Neschen as distributor of merchandise.

New printing processes like the UV technology do not require laminates as pure surface protection because of the mechanically resistant print image. Furthermore, direct printing of flat surfaces which so far have been laminated with self-adhesive film is increasing.

Neschen AG | www.neschen.com 12

SELECTED EXPLANATORY NOTES

Accounting and valuation methods

The half year financial statement for the Neschen Group was prepared like the consolidated financial statement of 31December 2013 on the basis of the International Financial Reporting Standards (IFRS) and thus complies with the IFRS 34 for interim financial statements. The accounting and valuation methods have been adopted unchanged.

Group of consolidated companies

Substantial portions of the assets of the two American companies Neschen Corp. and Neschen Americas Corp. were sold with effect from 1 October 2013. Deconsolidation has not yet taken place. The companies are classified as "held for sale". For further information we refer to our publication of the preliminary, not audited financial statement as of 31 December 2013.

Dividends

During the reporting period no dividends have been paid out to shareholders.

Contingent liabilities

The contingent liabilities developed in the same manner as was described in the annual financial statements. No new liabilities of considerable importance have been entered into.

Review

The present interim financial report prepared on a consolidated basis was neither audited in accordance with § 317 of the German Commercial Code nor subjected to an audit review by the year-end auditors.

Shareholder structure / voting rights

Regarding the current shareholder structure and the relating voting rights we refer to our statements on the Neschen website www.neschen.de under the path "Investor Relations / shareholder and compulsory notifications / voting rights notifications".

Neschen AG | www.neschen.com 13

STATEMENT OF THE LEGAL REPRESENTATIVES

We assure to the best of our knowledge that in accordance with the applicable financial accounting principles for the for the interim reporting of the interim financial statement convey a view of the revenue, financial and asset position of the Group, which corresponds with the actual circumstances, and in the management report the business performance including the financial result and the position of the Group is portrayed in a manner that the significant opportunities and risks of the Group’s likely development are depicted.

Bueckeburg, August 2014

Henrik Felbier Michael Aupke

Speaker of the Management Board Management Board

Neschen AG | www.neschen.com 14

CONSOLIDATED BALANCE SHEET

in EUR(k) 30.06.2014 31.12.2013 1) 30.06.2013

Assets

Intangible assets 4.155 4.141 5.600

Fixed assets 10.687 11.009 12.046

Other financial assets 134 154 156

Deferred tax assets 302 302 889

Non-current assets 15.278 15.606 18.691

Inventories 8.740 7.206 11.449

Trade receivables 8.511 7.115 9.952

Other receivables and financial

assets 1.363 1.318 2.297

Liquid assets 706 1.459 1.313

Assets held for sale 28 157 0

Non-current assets 19.348 17.255 25.011

Balance sheet total 34.626 32.861 43.702

in EUR(k) 30.06.2014 31.12.2013

1) 30.06.2013

Liabilities

Share capital 13.125 13.125 13.125

Currency translation reserve 86 86 -2,950

Currency translation from operations held for

sale

-535 -409 0

Accumulated loss -24,365 -24,365 -15,212

Result for the period 626 5,356

Equity -11.063 -11.563 319

Provisions for pensions 407 376 449

Long-term provisions 219 201 483

Deferred taxes 1.498 1.498 38

Other non-current financial liabilities 5,755 5,723 1,709

Long-term dept capital 7.879 7.798 2.679

Income tax liabilities 100 41 265

Current provisions 1,084 882 1,960

Current financial liabilities 26,562 26,318 27,121

Other non-current financial liabilities 2,040 1,664 1,236

Trade payables 5,738 5,160 8,360

Other current liabilities 1,895 1,918 1,762

Liabilities in connection with assets held for

sale 391 643 0

Current dept capital 37.810 36.626 40.704

Balance sheet total 34.626 32.861 43.702

1) according to provisional, not audited annual fiancial statement 2013 of 20 June 2014

Consoidated balance sheet

Neschen AG | www.neschen.com 15

Consolidated balance sheet for the period of 1 January to 30 June

CONSOLIDATED INCOME STATEMENT

in EUR(k) 2014 2013

Group net income after minority interests 626 5,356

Currency differences settled with equity capital -126 182

Total earnings 500 5,538

Consolidated income statement for the period of 1 January to 30 June

in EUR(k) Revenue

Changes in inventories and other capitalise

own work

Other operating income

Material expenses

Personnel expenses

Depreciation/amortisation

Other operating expenses

Earnings from operating activities (EBIT)

Financing income

Financing expenses

Earnings before taxes

Income tax

Earnings from continuing operations

Earnings after tax from discontinued operations

Result for the period

2014

32,136

453

284

-17,235

-7,518

-484

-6,189

1,447

6

-753

700

-74

626

0

626

31,915

239

419

-17,980

-7,412

-645

-6,102

434

6,856

-770

6,520

-59

6,461

-1,105

5,356

1) adjusted by the discontinued operation Neschen Corporation, USA

Earnings per share

in Euro

Net income for the year attributable to the parent company

Number of bearer shares in the reporting period

Weighted average number of of bearer shares in

circulation within the reporting period

Result per share (diluted = undiluted)

2014

626,126.00

13,125,000

2013

5,356,223.00

13,125,000

13,125,000 13,125,000

0.05 0.41

(There were no diluting effects in either the reporting period or in the previous year)

Neschen AG | www.neschen.com 16

GROUP - STATEMENT OF CASH FLOW

in EUR(k) 30.06.2014 30.06.2013 Earnings from continued operations before

income tax

Earnings from discontinued operations before income

tax

700 6.520

0 -1.105

-/+ Taxes paid/ reimbursed taxes -15 -440

+/- Depreciations/attributions on fixed assets

484 581

+ Finance costs 753 736

- Earnings from refinancing 0 -6.853

- Interest paid -344 -198

+ Received interest 6 3

+/- Increase / decrease in long-term provisions 49 103

-/+ Profit / loss from the disposal of fixed assets

Changes due to the exchange rate of -5 0

+/- asset values

1

-6

+/- Increase / decrease in inventories -1,534 2,804

-/+ Increase / decrease in trade receivables

-1,396 1,213

+/- Increase / decrease in other assets -45 934

+/- Increase / decrease in short-term provisions 202 226

-/+ Increase / decrease in trade payables

578 -3,438

+/- Increase / decrease in other remaining liabilities -34 23 Changes of assets held for sale

+/- and liabilities -332 -1,202

Cash inflow / outflow from operating activities -932 -99

+/- Proceeds from disposal of assets 128 1.092

- Payments for investments in fixed assets -176 -129

Cash inflow / outflow from operating activities -48 963

+ Receipts from taking out loans 244 0

- Receipts from the repayment of loans 0 -1,602

Cash inflow / outflow from financing activities 244 -1,602

= Effective change in in cash and cash equivalents -736 -738

+ Cash and cash equivalents at the beginning of the period 1.459 2.373

Cash and cash equivalents corresponding to statement of cash flows

723 1,635

- Cash and cash equivalents from discontinued operations -17 -322

Cash and cash equivalents corresponding to balance sheet

706 1,313

Group - Statement of cash flow from 1 January to 30 June

Equity statement from 1 January to 30 June 2014

Statement of divisions as of 30 June

Segments Graphics "Industrial Applications" .

Documents Group

Number of employees

(average) 196 209 42 34 57 58 295 301

Interim financial statement 2014

Neschen AG | www.neschen.com 18

EQUITY STATEMENT / SEGMENT REPORTING

in EUR(k)

State

of

01/01/2014

Result for

the

period

Currency

translation

Outflow

State

of

30/06/2014 Share capital 13,125 0 0 0 13,125

Capital reserve 0 0 0 0 0

Currency translation reserve 86 0 0 0 86

Currency translation reserve from

discontinued divisions -409 0 -126 -535

Balance sheet loss -24,365 0 0 0 -24,365

Result for the period 0 626 0 0 626

Equity before

minority interests -11,563 626 -126 0 -11,063

Minority shares 0 0 0 0 0

Total shareholders' equity -11,563 626 -126 0 -11,063

Equity ratio

-35.2%

-31.9%

in EUR(k) 2014 2013 2014 2013 2014 2013 2014 2013

Revenue 24,129 24,544 2,561 1,642 5,446 5,729 32,136 31,915 Changes compared with the previous year

-1.7% 56.0% -5.0% 0.7% EBIT 1,036 352 55 -277 356 359 1,447 434

in % of total performance 4.3% 2.1% 6.5% 4.5% EBITDA 1,380 844 119 -224 432 459 1,931 1,079

in % of total performance 5.7% 4.6% 7.9% 6.0%

Equity statement from 1 January 2013 to 30 June 2013

in EUR(k)

State:

01/01/2013

-3,132

-5,219

-4,009

Result

for the

period

Currency

translation

Outflow

Share capital

Capital reserve Currency

translation reserve Balance

sheet loss

Result for the period

Equity before minority

interests Minority shares

Total shareholders' equity

State:

30/06/2013

Equity ratio -8.5% 0.7%