Consolidated Financial Statements - L. Possehl & Co. mbH

Annual Report 2005
HEALTHY GROWTH –
Profi table and Robust

At a glance
L. Possehl & Co. mbH is a management holding company based in Lübeck, Germany. Under our leadership, there
were approximately 4,300 people employed worldwide during the reporting period, working in about 50 various
companies toward the joint success of the Group. Our subsidiaries are divided into three core business segments:
Production, Trading and Services. They are each extremely independent in their market operations. In 2005, the
Group achieved annual sales of € 809 million, with profi t from ordinary operations totaling € 36 million.
Key Figures
2001 2002 2003 2004 2005
Earnings
Sales € million 1,084 1,076 1,016 695 809
International € million 655 619 436 474 565
Germany € million 429 456 580 221 244
Result from ordinary operations € million -6 28 9 22 36
Consolidated net profi t € million -34 21 7 17 26
Dividend € million - 5 3 5 5
EBIT ratio % -1.9 3.4 2.6 3.9 5.3
Return on equity before taxes % -14.0 17.2 10.8 13.3 20.6
Balance sheet
Balance sheet total € million 541 499 493 442 533
Fixed assets € million 190 172 157 147 150
Capital expenditures € million 39 25 39 37 24
Depreciation € million 57 27 31 18 19
Cash and cash equivalents € million 13 12 10 45 57
Other current assets € million 331 307 321 249 324
Shareholders’ equity € million 187 184 174 182 202
Equity ratio % 34.6 36.9 35.3 41.1 37.9
Financial data
Net debt € million 118 93 103 40 35
Gearing (net debt/equity) % 63.1 50.5 59.2 22.2 17.3
Employees
Total number of employees Ø 4,578 4,281 4,373 3,659 4,267
Germany Ø 1,882 1,890 1,815 789 1,190
International Ø 2,696 2,391 2,558 2,870 3,077

One of our most critical strengths is our company composition:
We are focused when it comes to the various industries
and diversifi ed in our corporate portfolio.
Production
Our business division Production is comprised
of experienced industrial companies
whose efforts are focused on the production
of promising products for the future.
The special characteristics of these companies
include a high level of specialization
as well as particular niche know-how. Our
customers stem from the areas of trade,
craft and the processing industry.
Precious Metals Processing
Heimerle – Meule GmbH, Pforzheim
Electronics
Possehl Electronics N.V.,
‘s-Hertogenbosch (Netherlands)
Elastomer-Processing
Harburg-Freudenberger Maschinenbau
GmbH, Hamburg
Special-Purpose Construction
Possehl Spezialbau GmbH, Wiesbaden
Textile Finishing Systems*
A. Monforts Textilmaschinen GmbH & Co.
KG, Mönchengladbach
Cleaning Machines*
Hako Holding GmbH & Co. KG,
Bad Oldesloe
2005 2004
Sales 459.8 326.6
EBT
Capital
29.0 13.8
expenditures 15.6 16.0
Employees 3,914 3,284
* since 2006
Our Group
Trading
Taking center stage in the Trading business
division is International Trading, which is
comprised of goods for both industry and
the trades across the entire globe. This
business segment is based on many years
of experience coupled with a network that
has grown and developed from within.
Trading is the origin of Possehl’s business
activities.
International Trading
Possehl Erzkontor GmbH, Lübeck
Possehl Inc., Park Ridge, New Jersey (USA)
2005 2004
Sales 338.9 359.2
EBT
Capital
11.7 13.2
expenditures 1.3 2.0
Employees 238 256
L. Possehl & Co. mbH
Services
April 2005
Acquisition of Harburg-Freudenberger
Maschinenbau GmbH, Hamburg
Within the Services business segment, we
gear our focus on service areas that augment
our portfolio in a meaningful way.
Locally we offer services in the area of
environmental protection and outside of
Germany we offer services in the areas
of insurance and freighting services for
commercial undertakings, shipping companies,
shipyards and freight forwarders,
to name a few.
Environmental Protection
Possehl Umweltschutz GmbH, Lübeck
Broker Activities
Lubeca Versicherungskontor GmbH,
Lübeck
Teutonia Fracht- und Assekuranzkontor
GmbH, Lübeck
2005 2004
Sales 10.1 9.3
EBT
Capital
1.4 1.3
expenditures 0.3 0.3
Employees 70 70

Investments
By means of our Investments business segment,
we acquire and hold fi nancial investments.
Prerequisites for being included
in our range of participating interests are
that a company be profi table over the long
term and that its business activities fi t into
our portfolio.
Norddeutsche Affi nerie AG, Hamburg
Equity interest: 10 %
o.m.t. Oberfl ächen- und Materialtechnologie
GmbH & Co. KG, Lübeck
Equity interest: 25 %
Holsteiner Humus und Erden GmbH,
Lübeck
Equity interest: 33.33 %
Milestones in 2005/2006
January 2006 January 2006 February 2006 April 2006
Disposal of a 10%
share in Süd-Chemie
AG, Munich
Acquisition of a majority share
in Hako Holding GmbH & Co. KG,
Bad Oldesloe
Acquisition of the
remaining shares in
Possehl Electronics
N.V., ‘s-Hertogenbosch,
Netherlands
Sales by business segment
in € million
338.9
■ Services
■ Trading
■ Production
Acquisition of A. Monforts
Textilmaschinen GmbH & Co. KG,
Mönchengladbach
10.0
459.8

Table of Contents
Letter from the Executive Board 2
Company Boards 4
Letter from the Advisory Council 5
HEALTHY GROWTH – Profi table and Robust 7
Group Management Report 12
Overview 12
Group structure and business activities 12
General economic conditions and course of business 16
Net assets, earnings and fi nancial position 16
Employees 23
Research and development 24
Risk management 25
Supplementary report and outlook 26
Consolidated Financial Statements 28
Auditors’ Report 49
Overview of Participations 50
Contacts and Imprint
1

2
Uwe Lüders
Dr Egon Rudolph
Letter from the Executive Board
Letter from the Executive Board
DEAR BUSINESS PARTNERS, DEAR READERS,
We can once again look back on a successful fi scal year:
earnings before taxes jumped by 65 % to € 36.3
million, with sales growth of 16 %. These fi gures
prove that we are on a profi table course of
growth. This satisfactory trend is the result
of the fi rst-time consolidation of the world
market leader for tire production systems,
Harburg-Freudenberger, which we acquired
in April of 2005, as well as from the consid-
erable increase in productivity and important
structural improvements in the existing
business segments.
Because of this good business development,
the holding company L. Possehl &
Co. mbH can pay out a dividend of € 5
million to the Possehl Stiftung (Possehl
Foundation) from its € 9.5 million net profi t
for the year 2005.
All business divisions of the Possehl Group achieved
positive results in fi scal year 2005. The Electronics and
International Trading business divisions continue to be the
main contributors to these good results. Despite the fi nancing of
the acquisition of Harburg-Freudenberger, we were able to reduce the net
debt from € 40.4 million to the current € 35.5 million. This gives us an extremely solid
balance sheet again in 2005.
Overall, we were able to fully realize the objectives we had planned for the year under review.
We are also on the targeted growth course with respect to the budgeted data for the current
fi scal year.
In addition to the acquisition of Harburg-Freudenberger, we also acquired the remaining 19.9 % interest in Possehl
Electronics N.V. for our Electronics business division from our Hong Kong-Chinese partner, effective at the beginning
of the year 2006. Due to the exclusive, operational control of this business division, growth opportunities
for other companies within our Group are also evolving, as is the possibility of using the advantages provided by
an Asian location.
Also effective at the beginning of the year 2006, we acquired operational control of the international cleaning
and sweeping machine specialist Hako Holding GmbH & Co. KG in Bad Oldesloe through a majority interest. With
this acquisition of shares we were able to establish a new business division, further strengthening the Group.

With sales of approximately € 350 million and 2,100 employees, Hako is one of the worldwide leading
manufacturers of machines for indoor and outdoor cleaning, as well as for property maintenance.
The company provides high-quality, economically effi cient solutions for the professional cleaning and
preservation of indoor and outdoor surfaces. The strengths of this company, which was previously
family-owned for over 50 years, lie in its custom-made, innovative quality products and its closemeshed
sales and service network.
With the disposal of our shares in Süd-Chemie AG carried out in early 2006, we took advantage of
the opportunity to further improve our fi nancial strength. The fi nancial resources from the sale of
our minority interest in Süd-Chemie expand our scope for the additional purchase of other business
divisions.
By means of the acquisition of A. Monforts Textilmaschinen GmbH & Co. KG in Mönchengladbach on
April 1, 2006, we reaffi rm our growth objectives for the current fi scal year as well. The Monforts
Textilmaschinen Group, with its 375 employees, last achieved sales of approximately € 110 million
and is a world market and technology leader in textile fi nishing systems in the high-quality segment.
The tradition-rich family undertaking, founded in 1884, manufactures textile machines and systems
for the processing and coating of woven and knitted goods and is the most important manufacturer,
offering virtually a complete vertical range of manufacture in the fi eld of textile fi nishing. This
Mönchengladbach-based company is internationally represented through its production locations in
Austria (Wolkersdorf – St. Stephan), Switzerland (Oberaach) and via a joint venture in China (Hong
Kong, Shenzhen). Its percentage of exports is over 90 %. With respect to worldwide sales, the company
is focusing on the growth markets of Asia.
In 2006, the Possehl Group will grow in size, with sales of over € 1.2 billion and more than
6,700 employees. It will thereby further increase its strength and robustness. We will use this strong
foundation to increase our corporate value on a sustained basis.
Our strategic orientation envisions Possehl as a suitable successor owner or new owner of
medium-sized companies. When competing with private equity investors, we successfully set
ourselves apart by offering family businesses a long-term, solidly laid-out and secure view toward
the future following acquisition. To further strengthen the Possehl Group, we will continue with our
policy of growth in 2006. In order to accomplish this, we will continue to seek out company owners
who wish to transfer their enterprises over to safe and responsible hands.
Yours sincerely,
Uwe Lüders Dr Egon Rudolph
3

4
Company Boards
EXECUTIVE BOARD
Uwe Lüders
Lübeck, Chairman
Dr Egon Rudolph
Bad Schwartau
since May 19, 2005
Dr Fred Wilsdorf
Hamburg
until March 31, 2006
SUPERVISORY BOARD
Dr Helmuth Pfeifer
Lübeck, Chairman
Attorney and Notary Public
Gerd Rischau
Lübeck, Deputy Chairman
Senator (ret.)
Volker Fritz *
Gutenberg
Applications engineer
* elected by employees
Company Boards | Letter from the Advisory Council
ADVISORY COUNCIL
Dr Lutz Peters
Hamburg, Chairman
CEO of AOH Nahrungsmittel GmbH & Co. KG
Dr Helmuth Pfeifer
Lübeck, Deputy Chairman
Attorney and Notary Public
Dr Stephan Bartelt
Lübeck
Businessman
Dr Manfred Biermann
Lübeck
Certifi ed Public Accountant
Theo Dräger
Lübeck
Chairman of the Supervisory Board of Dräger Medical AG & Co. KG
Gerd Rischau
Lübeck, until April 25, 2005
Senator (ret.)
Dr Werner Marnette
Hollenstedt, since April 25, 2005
Chairman of the Executive Board of Norddeutsche Affi nerie AG
Martin Salzmann
Lübeck
Entrepreneur

Dr Lutz Peters
Letter from the Advisory Council
LADIES AND GENTLEMEN,
The Executive Board of L. Possehl & Co. mbH has kept the Advisory Council informed on a regular basis during
fi scal year 2005 regarding the course of business, the earnings and fi nancial position of the company, investment
activities and possible corporate acquisitions.
The Advisory Council has advised the Executive Board and performed the duties incumbent
upon it in its role as the corporate supervisory board. The Advisory Council has been
comprehensively informed about important business transactions within the scope of the
regular reporting procedures as well as outside of the advisory council meetings. A timely
and detailed relaying of information regarding the progress of business as well as the
economic position of the company and the individual Group companies was thereby
assured. The chairman of the Advisory Council also remained in close contact with the
Chairman of the Executive Board of the company.
The Advisory Council convened for four ordinary and two extraordinary meetings in fi scal
year 2005. During these meetings, the Advisory Council discussed in detail the company
situation, the completed and pending corporate purchases and disposals, the consolidated
fi nancial statements of the company and the corporate strategy. The Advisory Council reviewed all important individual
business transactions and made decisions regarding any events brought forth that required its approval.
Of particular signifi cance were the discussions and approvals regarding the acquisition of the company currently
trading under the name of Harburg-Freudenberger Maschinenbau GmbH, the majority acquisition of Hako Holding
GmbH & Co. KG and the acquisition of the remaining 19.9 % of shares in Possehl Electronics N.V. Detailed advice
was also provided regarding the disposal of the 10 % share in Süd-Chemie AG and the management buy-out of
Bewehrungstechnik Pätau-Possehl GmbH.
The annual fi nancial statements and the consolidated fi nancial statements were prepared according to the
principles of the German Commercial Code (HGB). BDO Deutsche Warentreuhand Aktiengesellschaft,
Wirtschafts prüfungsgesellschaft, Hamburg, audited the individual and consolidated fi nancial statements of
L. Possehl & Co. mbH, the management report and group management report and provided them each with an
unqualifi ed auditors’ certifi cate.
In its meeting of May 4, 2006, in the presence of the auditors, the Advisory Council provided detailed advice as
to the auditors’ report as well as the main points and results of the audit. The Advisory Council agreed with the
results of the audit without any objections.
5

6
In agreement with the Supervisory Board of the company, the Advisory Council approved the
annual fi nancial statements and the consolidated fi nancial statements and recommends that the
share holder approve the annual fi nancial statements. The Advisory Council agrees with the Executive
Board’s proposal on the appropriation of profi ts.
Dr Egon Rudolph has been appointed as a member of the Executive Board, effective as of May 19,
2005. On March 31, 2006 Dr Fred Wilsdorf stepped down from the Executive Board of L. Possehl &
Co. mbH. The Advisory Council thanks him for his contributions.
Mr. Senator Gerd Rischau (ret.) stepped down from the Advisory Council of the company as of
April 25, 2005. The Advisory Council would like to thank Mr. Rischau for the work he performed
while on this board. The shareholder has appointed Dr Werner Marnette as the new member of the
Advisory Council, effective as of April 25, 2005.
The Advisory Council would like to thank the Executive Board, the managing directors of the Group
companies and all employees of the Possehl Group for their dedicated and successful service during
the past fi scal year.
Lübeck, May 4, 2006
The Advisory Council
Dr Lutz Peters
Chairman
Letter from the Advisory Council | HEALTHY GROWTH

HEALTHY
GROWTH –
Profi table and Robust
Possehl has already evolved very successfully for more than six generations under this motto.
This guideline helps us through turbulent times such as these, in particular.
Following the initial corporate acquisitions of the past year and in the fi rst few months of the
current year, we are continuing to be on the lookout for new partners – partners that fi t with us,
are capable and have a solid foundation, a good market position and a positive image. They stem
from mature industries with robust structures and ideally render a service that is diffi cult to
replace. We are open-minded and look forward to having new members join our Group.
We promise all of our companies that they will have the capacity to grow, and with a healthy
corporate perspective. We grow because our companies develop successfully. We preserve their
corporate scope for development and support them on a strategic and fi nancial level. Our com-
panies grow because they are able to concentrate on that which sets them apart: achieving good
performance, on the basis of their particular know-how and their many years of experience.
7

Our goal is to achieve optimum profi t, not maximum profi t.
We manage our business according to healthy, operational income
objectives. We want to generate a solid dividend each year
along with appropriate economic means for fi nancing incomeoriented
growth. Our companies come from production, trading
and special services areas. What they have in common is the fact
that they operate in robust market structures, their business is
clearly defi nable and their success is not speculative.
Growing –
healthily!

Continuing to develop –
for the long term!
Quality is the central basis for success. We are interested in longterm
success. That is why we make sure that the business of our
companies is based on a strong foundation – and that their business
has prospects for the long run as well. We also ensure that
our companies keep these prospects in mind.
Truly solid success is reached through steadiness and planning,
not by chance. When we incorporate a new company into our
Group, we have not only thoroughly checked it out beforehand
to ensure that it will fi t with us. We have also scoped out the
path that it will embark upon with us. We want our companies to
develop over the long term and be successful.

Being successful –
together!
If the parts win, the sum of the parts wins even more. A company that is globally
positioned with its group of companies needs a solid link to hold the various parts
together and provide orientation. As a holding company, we have a key role in this
regard. We have developed a sustainable philosophy over the past several generations,
which we carry on in our companies. We support our companies by providing
them with security; and we promote them by challenging their entrepreneurial
spirit. As a holding company, we thrive on strong and successful companies.
And vice versa: our companies profi t from our strong holding capability.

Mastering challenges –
with strength from within
Our companies are strong. But they, too, must stand up to strong competition in
their business on a daily basis. They draw on their long-standing experience and
special know-how to accomplish this. As a result, their products and services are
excellent across the board. The particular strength of our companies lies in the
fact that their products and services are unique and not easy to come by from the
competition.
As a strategic management holding company, we carve out objectives and routes
together with our companies. The companies themselves then set out on these
different routes – operating largely under their own responsibility. We can depend
on our companies! The reason for this is that they have outstanding executives in
the top positions, who are very familiar with their market and its challenges. As the
holding company, we maintain the required closeness by means of fi rm fi nancial
management and a regular system of reporting. We can therefore head off a crisis
at an early stage.

12
Overview 12
Group structure and business activities 12
General economic conditions and course of business 16
Net assets, earnings and fi nancial position 16
Employees 23
Research and development 24
Risk management 25
Supplementary report and outlook 26
Overview | Group structure and business activities
Group Management Report
OVERVIEW
Possehl grows and increases earnings
Fiscal year 2005 was a successful one for the Possehl Group. Following
a decline in the previous year, sales revenues in the
reporting period were able to advance by double digits to
€ 808.7 million. The Group net profi t for the year also
increased signifi cantly by € 9.6 million to € 26.5
million. This positive development pertains to
virtually all Group divisions. The successful acquisition
of the Harburg-Freudenberger Group
on April 1, 2005 also contributed considerably
to the positive sales and earnings trend.
All operating business divisions
developing positively
Following the extensive portfolio changes
made over the last several years, we were
back in the black for all of the operating
business divisions of our Group in fi scal
year 2005.
Growth trend continues as year
commences
The high level of liquid funds on hand and the
good cash fl ow enable us, in addition to internal,
organic growth, to also grow by means of further
acquisitions. Important steps were taken in this direction
at the beginning of the year 2006 through taking over a
majority interest in the Hako Group and through the acquisition of the
Monforts Textilmaschinen Group.
GROUP STRUCTURE AND BUSINESS ACTIVITIES
The Group structure is divided into four business segments
L. Possehl & Co. mbH is the managing holding company of the operational
companies that belong to the Possehl Group. The Possehl Group is involved in the
business segments of Production, Trading, Services and in the management of
investments. The following summary provides an overview of the individual business
segments in the reporting year:

PRODUCTION BUSINESS SEGMENT
The Production business segment includes the four business divisions
Precious Metals Processing, Electronics, Elastomer-Processing and
Special-Purpose Construction.
Precious Metals Processing: Heimerle + Meule is a full-service provider
for the recycling of precious metals, in particular gold, silver and
platinum. The reclaimed materials are further processed into semi-fi nished
products, salts and alloys. Customers include the jewelry industry,
automobile suppliers, the electric and electronics industries and
dental companies.
The semi-fi nished products are provided to the jewelry industry in the
form of wires, bands, tubes and molded ring blanks. The range of services
is augmented by small electroplating devices, electroplating baths
and services in decorative commercial electroplating. The dental division
supplies dentists and dental laboratories with precious metal dental
alloys, modern veneered ceramics and innovative dental devices.
Contact materials in various shapes are manufactured in Pforzheim for
companies involved in electrical engineering. Bands and drum goods
can be commercially electroplated in a high-performance electroplating
process.
L. Possehl & Co. mbH
Production Trading Services Investments
Precious Metals Processing
Electronics
Elastomer-Processing
Special-Purpose Construction
International Trading
Environmental Protection
Broker Activities
Electronics: this business division and the companies within it specialize
in the production of lead frames. The focus of activities is in Asia
– China, Malaysia and Singapore.
Lead frames are primarily copper-based, multi-channel conductor and
carrier units to which silicon chips are attached. As an integrated lead
frame manufacturer, Possehl Electronics is taking over the stamping
and etching production of the copper elements, as well as the subsequent
electroplate coating and special mounting. The scope of products
ranges from the low-channel discrete components, which are used
for individual transistors or light-emitting diodes, to power lead frames,
which must meet particularly high thermal demands, to lead frames
for integrated circuits, as used in mobile telephones, motor vehicles or
computers, for example.
Possehl Electronics has already achieved a large market share with
respect to European customers. But even the Asian growth markets
– primarily China – are continuing to take on more importance. With
its operating companies in Europe, Asia and North America, Possehl
Electronics is now number fi ve among the globally active producers and
providers of lead frames for the semiconductor industry. The two North
American sites are also among the leading providers of copper-based
plug connections.
Elastomer-Processing: The Harburg-Freudenberger Group is the
global market leader for tire production systems. With its 150-year tradition,
this company is comprised of three divisions, specifi cally natural
rubber, rubber compound and edible oil technology.
13

14
Harburg-Freudenberger provides the rubber and natural rubber processing
industry with an extensive range of machinery and know-how for all
of the essential production stages, from raw material preparation to
natural rubber processing to vulcanization. Plants that produce tires
are therefore particularly important.
In the fi eld of edible oil technology, worm extruders for the preparation
of oilseed as well as for meat and bonemeal production, machines
for solvent extraction for the edible oil industry and refi ning systems
for plant and animal oils and fats have been developed, produced and
marketed for over 80 years.
The group has two internal production sites in Harburg (natural rubber
technology, edible oil technology) and in Freudenberg (rubber compound
technology) as well as subsidiaries in the USA, Croatia and the
new sales companies in France and Russia established in 2005.
Special-Purpose Construction: The Construction business division
is positioned as a specialist for surface processing in airport, industrial
and road construction. The companies in this business division
include sites in Germany, the Netherlands, Austria, Slovenia, Croatia,
Spain, France and Belarus. The managing company is Possehl
Spezialbau GmbH in Wiesbaden.
The companies of the Spezialbau Group carry out maintenance and
repair work on traffi c areas made of asphalt and concrete. These special
constructive measures serve both to preserve the substance and
to improve the surface characteristics of traffi c areas in interior and
exterior zones. Its competence as a full-service provider is the reason
for the good market position enjoyed by the Group.
Through its joint technology and the Katfi x and EP-Grip products,
Possehl Spezialbau is involved in both the new construction of streets
and the preservation, repair and safeguarding of existing traffi c routes.
The group of companies manufactures high-quality building protection
products on the basis of reaction resins, which are known on the market
as cds-building protection products. Another important brand-name
product of Possehl Spezialbau is its anti-skid facings in the form of
coatings for runways, which help improve fl ight safety both at home and
abroad. The coating system developed by Possehl Spezialbau reduces
the off-times on runways during installation and is being used throughout
Europe at numerous large civilian and military airports.
Group structure and business activities
Group Management Report
TRADING BUSINESS SEGMENT
The Trading business segment is represented at Possehl by the International
Trading unit. The companies of the Erzkontor- and Possehl Inc.
Group belong to this unit. The companies of the Erzkontor Group are
represented primarily in Europe and Asia; the regional focal point of
activities of the Possehl Inc. Group is in North and South America.
Possehl Erzkontor: Possehl Erzkontor GmbH is one of the two management
companies of the Possehl Group and concentrates mainly on
international trading. The business is operated primarily from the central
offi ce in the Hanseatic city of Lübeck, with the help of a subsidiary
in Hong Kong and offi ces in Krefeld, Paris, Bratislava, Jekaterinburg,
Beijing, Dalian and Chennai. Affi liated companies in Schiedam, Wesel,
Krefeld and Duisburg round out the activities of the group.
The main areas of concentration of the Erzkontor Group are in commercial
trade with raw materials for the fi reproof and metallurgical
industry, the chemical, welding electrode, cement, plastics and paper
industries. Trade activities include representing well-known mines and
producers as well as free commercial transactions. In addition to the
drop shipment business, the storage and processing sector also plays
an important role.
With its commercial and technical competence as a long-term provider
of industrial minerals, its international know-how and global orientation,
the Erzkontor Group is assured of a strong position in the market. This
position could also be expanded during the last several years due to the
fact that additional activities were grouped around the actual core business
– international trading in raw materials for the fi reproof and metallurgical
industry. Today, with the help of modern grinding aggregates,
crushing and sifting plants, the Erzkontor Group can manufacture all of
the usual standard grains and grinding fi nenesses at various locations
within Europe. All processing operations are certifi ed according to the
applicable DIN EN ISO norms. Three German operating sites also have
the special approvals required for the processing and mixing of waste
materials from the steel and other industries.
Possehl Inc.: During the reporting period, the USA-based Possehl Inc.
Group consisted of the two primary trading companies Possehl Inc.
and Alumina Trading Co., fi ve affi liated companies and a purchasing

company. It sells industrial raw materials to customers in North and
South America. The group’s main business consists of trading in industrial
raw materials for the fi reproof, metallurgy and chemical fi elds. The
Possehl Inc. Group rounds out its range of offerings with shipping and
logistics services. The People’s Republic of China therefore serves the
American companies as a signifi cant source of procurement.
SERVICES BUSINESS SEGMENT
The Services business segment includes the companies
Possehl Umweltschutz GmbH and the broker activities of Lubeca
Versicherungskontor GmbH and Teutonia Fracht- und Assekuranzkontor
GmbH.
Environmental Protection: A recognized specialist, Possehl Umweltschutz
handles the new construction, reconstruction and expansion
and revision of tank farms. The company remedies pollution mishaps
and oil spills on national highways and autobahns as well as bodies of
water and gathers solid and liquid waste materials which are conveyed
to thermal recycling.
The Gesellschaft für das Recycling kontaminierter Industriebrachen
mbH (GRKI) (recycling of contaminated brownfi elds company) operates
four recycling yards in the urban area of Lübeck.
Broker Activities: Lubeca Versicherungskontor GmbH offers insurance
services of all types for the private, commercial and industrial
sectors. By means of its many years of excellent connections to the entire
insurance market, favorable coverage solutions can be worked out
with customers. The activities of Lubeca Versicherungskontor GmbH
are rounded out by the historically evolved transport insurance division,
in which the company is authorized to sign for and re-present a number
of domestic and overseas insurers as an authorized agent of the insurer
with stock exchange authorization.
Teutonia Fracht- und Assekuranzkontor GmbH arranges the global
transport of containers as well as bulk cargo and bulk goods. Included
in its activities are the chartering of ships and cargo, the clearance of
seagoing vessels and completing all transactions within the environment
of ship’s agents and ship’s brokers. The company also acts as
an insurance broker both in the placement and handling of insurance
transactions in the product and transport sector.
HOLDING COMPANY/INVESTMENTS
In this business segment, we combine the parent company L. Possehl
& Co. mbH and the minority and/or fi nancial participations held by
the parent company either directly or indirectly. The major participating
interests on the balance sheet date are comprised of 30 % in Hako
Holding GmbH & Co. KG, 10 % in Norddeutsche Affi nerie AG and 10.1 %
in Süd-Chemie AG.
Hako Group: By acquiring a 30 % interest in Hako Holding GmbH &
Co. KG in the year 2004, Possehl took the fi rst step in setting up a new
business division. In early 2006, this commitment was strengthened
by means of a majority acquisition. Since that time, Hako has come to
form its own business division within the Possehl Group.
The Hako Group, headquartered in Bad Oldesloe, is one of the worldwide
leading manufacturers of professional cleaning machines and has
an extensive sales and service network in Europe as well as representative
offi ces on three other continents. The Hako Group also manufactures
cleaning machines via its US subsidiary Minuteman and distributes
them in the USA. Specifi cally, the Hako range of products includes
equipment for plant and building cleaning, exterior cleaning and property
maintenance as well as special and municipal vehicles that can be
used in many applications.
Norddeutsche Affi nerie AG: As part of the disposal of Hüttenwerke
Kayser AG in the year 1999, Possehl received 10 % of the shares in
Norddeutsche Affi nerie AG (NA). The NA Group, located in Hamburg, is
the largest integrated copper producer in Europe and the world’s largest
copper recycler. The market value of our participation increased
signifi cantly as a result of the positive business development of NA during
the past year.
15

16
GENERAL ECONOMIC CONDITIONS
AND COURSE OF BUSINESS
Overall economy: Euro zone lags behind the
global economic upswing
The global economy continued to develop dynamically in the year under
review; it grew by a good 4 %. The considerable increase in the price
of crude oil – in particular in the fi rst half of the year – as well as the
increase in price of the most important industrial raw materials had
only a slightly negative effect on this positive trend. The fundamental
growth engines were again China and the USA. Both national economies
triggered important growth incentives in other industrial countries
through their high demand for imports.
The economy was clearly more restrained in the Euro zone, however,
despite the fact that economic activity increased slightly over the last
several months of the year. The high price of crude oil and low internal
demand, in particular in Germany, had a noticeable braking effect
on economic development. The gross national product in Germany increased
by only 0.9 % in 2005.
The US dollar had an exchange rate ratio of € 1.36 per US dollar at the
beginning of last year, making it very weak. It recovered again during
the course of the year and amounted to € 1.18 per US dollar at the
end of the year. In an annual average the US dollar was quoted with an
exchange rate of € 1.24, leaving it virtually unchanged compared to
the previous year.
Business trend for the Group: Possehl profi ts from an
international spirit of optimism
The overall economic development had a varied effect on the companies
of the Possehl Group. While the Electronics business division in
particular profi ted from the positive development in Asia, business in
the precious metals sector was rather weak due to the low domestic
demand. International Trading was able to maintain its favorable position
in this inconsistent economic environment and achieve almost as
satisfactory a result as in the previous year.
Economic conditions | Net assets, earnings, fi nancial position
FINANCIAL POSITION
Group Management Report
NET ASSETS, EARNINGS
AND FINANCIAL POSITION
INCOME POSITION OF THE GROUP
Group achieves double-digit sales growth
Sales revenues climbed by 16.3 % compared to the previous year from
€ 695.1 million to € 808.7 million. A crucial factor for the signifi cant
increase in sales is the fi rst time inclusion of the Harburg-Freudenberger
Group in the consolidated fi nancial statements on April 1, 2005.
Sales of € 127.0 million accrued to the Group for the 9-month period.
Adjusted for the business division acquired in the reporting year and
the halted business activities of Nordstahl GmbH during the previous
year, sales revenue increased by 3.8 % compared to the previous year.
With the exception of the Precious Metals Processing business division,
all of the business divisions contributed to the increase in sales.
The increase in sales stretches across almost all geographic regions.
Domestic sales, however, show the smallest increase at a solid 10 %
due to the strong export orientation of the Harburg-Freudenberger
companies.
Due to the acquisition of the Harburg-Freudenberger Group, the share
of sales of the Production segment increased further. It amounts to
57 % of total sales for the reporting year and therefore increased by
5 percentage points. The share of sales accruing to International Trading
is 42 %; the Services division continues to contribute 1 % to total
sales.
Sales by business segment
in € million
338.9
■ Services
■ Trading
■ Production
10.0
459.8

Gross earnings improve by 36 %
Gross earnings grew signifi cantly by € 73.2 million or 36.4 % to € 274.5
million. The acquisition of the Harburg-Freudenberger Group is also
refl ected in this positive development. Offsetting this was the decline in
gross earnings in the International Trading and Precious Metals Processing
divisions. The Electronics business division was again able to record
an increase in gross earnings in 2005, as in the previous year.
Comparable operating expenditure clearly below that
of the previous year
Based on the comparable fi gures of the previous year, the other operating
expenses declined signifi cantly. The personnel expenses in particular,
adjusted for changes to the companies included in the consolidation,
could be considerably reduced. The cost reduction and effi ciency
improvement program introduced in the Electronics division already
showed initial success during the reporting year.
Earnings before taxes increase by 65.1 %
The Group earnings before taxes (EBT) improved signifi cantly by € 14.3
million to € 36.3 million. The previous business divisions together with
the newly consolidated Harburg-Freudenberger Group contributed to
this increase in earnings. The Electronics division, in particular, was
able to increase earnings before taxes by over 50 % with a slight increase
in sales. Earnings before taxes in International Trading at € 11.7
million were slightly below the very good earnings of the previous year.
All other operating business divisions also reported positive earnings.
Segment earnings EBT
in € million, excluding the holding company
■ Services
■ Trading
■ Production
1.3
13.2
13.8
2004 2005
1.4
11.7
29.0
The holding company earnings also increased signifi cantly compared
to the previous year. In addition to decreased personnel expenses, the
dividend of Norddeutsche Affi nerie AG, which was absent the previous
year, had a positive effect on the holding company earnings of € 2.2
million.
The return on equity before income tax increased from 13.3 % in the
previous year to 20.6 % in the reporting period. The profi t to sales
ratio (EBIT/sales) also increased considerably by 1.4 percentage points
to 5.3 %.
Group net income for the year increases to € 26.5 million
The Group net income for the year before shares to third parties increased
by € 9.6 million to € 26.5 million. Due to one-time tax burdens,
the income tax rate increased from 15.9 % in the previous year to
23.9 % in the reporting year, causing the increase in Group net income
for the year to lag slightly behind the increase in earnings before taxes.
The Group tax rate continues to be below the regular tax rate in the
reporting year, however, due to the utilization of tax loss carryovers in
some countries.
EARNINGS POSITION IN THE PRODUCTION
BUSINESS SEGMENT
in €T
2005 2004 Change %
Sales 459,795 326,649 40.7
EBT 28,990 13,828 109.7
Capital expenditures 15,480 15,997 -3.2
Precious Metals Processing: Strong demand for industrial
semi-fi nished products partially compensates for declines
in the dental area
The activities in the Precious Metals Processing business division were
affected by a weak economy during the past year. Competition continued
to increase, in particular in the jewelry and dental areas. Sales
compared to the previous year therefore declined by 5 %.
17

18
Slumps in the dental segment were especially sharp. The effects of the
health reform adopted by the federal government at the end of 2004
played a role in this development. Since 2005, social statutory health
insurance companies have been providing fi xed subsidies related to
fi ndings instead of percentage of cost subsidies for dental services. Together
with the start-up diffi culties of the health reform, this resulted in
a signifi cant decline in sales in 2005. Added to this is the fact that the
tendency to use base metal alloys and total ceramics for tooth replacement
continues in practice.
Although volume sales of jewelry alloys declined along with weak economic
development, gross income in jewelry semi-fi nished products
was maintained. Increased customer acquisition, an expansion of the
value added level and an increase in precious metals prices contributed
to this success.
A strong demand for industrial semi-fi nished products – mainly for
contact making materials in the wire and belt sector – as well as the
increased sales of chemicals and baths for electroplating technology
partially compensated for the slowing down of business activities in
the dental sector.
The adoption of the new product line “Colorit” in the jewelry segment
also compensated for the declines, as did the increases in tubing and
bars. The ring blanks sector continues to be one of the support pillars
of the business. Expansion of the silver alloy and platinum ring areas is
anticipated for this sector.
Heimerle + Meule confronted the overall declining market development
by implementing restructuring measures and cost reduction programs.
The company also undertook some organizational restructuring as
part of this effort, which also entailed a reduction in the number of
employees.
By restructuring the company into business divisions with responsibility
for results, Heimerle + Meule is anticipating positive incentives for
further business development. Based on the considerable improvement
in business at the beginning of the year 2006 and initial success in
the cost saving measures that have been implemented, the company
is already anticipating a noticeable sales and earnings recovery for the
current year. Intensifying sales activities both at home and abroad is
expected to further expand market share in all product divisions.
Net assets, earnings, fi nancial position
Group Management Report
Electronics: Business in Asia developing well
The Electronics business division is reporting a very successful fi scal
year. The effi ciency improvement measures introduced in the previous
year, the objectives of which were to achieve greater utilization of machinery,
improved product quality and lower production costs, brought
about a signifi cant improvement in performance in 2005. At the same
time, new products were introduced to the market, while customer
relations were intensifi ed and new markets in previously unsupported
regions were serviced.
The market environment continues to be strained, however. Price competition
on the sales markets remains strong and the purchase prices
for copper again increased by about 50 % during the course of the year.
This resulted in a slight decline in the gross profi t margin compared to
the previous year.
Possehl Electronics was able to follow the growth of the market in the
case of semiconductor products. Sales increased from € 168.4 million
to € 177.2 million. All of the Asian sites therefore developed positively.
The Malaysian site was able to develop a series of “best practice approaches”,
which are now being transferred to other production sites.
Successful product transfers also took place. Connector components,
which we previously produced only in the US, are meanwhile being
manufactured in Malaysia as well. Together with the very successful
site for etching technology in Singapore, we service mainly customers
in Southeast Asia from this site. Taiwan was revamped as an important
market region for the semiconductor sector.
In northern Asia we are continuing with the transfer strategy from Hong
Kong to other regions in China which was started the previous year.
For the current fi scal year, we are also planning to expand production
capacities by creating a new Chinese site. Based on the reorientation,
we were able to achieve a positive statement of income at the Hong
Kong site for 2005. This should also be assured for the coming year
due to increases from, among other things, the successful smart card
business.
The most diffi cult position on the market can be seen in the Electronics
business division in Europe. At the two operating sites in the Netherlands
and in France we will have to exert a great deal of effort in the
future as well to safeguard our competitive position.

Elastomer-Processing: Pleasing business development
The Elastomer-Processing business division (Harburg-Freudenberger
Group) demonstrated very positive business development during
the reporting period. Continued investment activity within the tire
industry resulted in an increase in both incoming orders and sales.
The market recovery stretched across regional producers as well
as to globally operating tire manufacturers. By working the market
successfully, this business division was able to further cement existing
customer relationships and successfully expand the base of customers
during the past year.
Signifi cant sales growth was achieved in the natural rubber technology
division due to increased demand, particularly for heating presses. But
demand in the rubber compound technology area was also satisfactory.
The Harburg-Freudenberger Group achieved sales that were not quite
as strong in the tire lay-up machines and in the extrusion division.
The edible oil division also achieved very positive development in order
backlog. Production expansion in the fi eld of bio-diesel, among other
things, reaped profi ts for this division.
Sales from services also increased signifi cantly, parallel to the increased
sales from mechanical systems.
In addition to Harburg-Freudenberger Maschinenbau GmbH and its two
domestic production sites, the subsidiary in Croatia also achieved a noticeable
increase in sales. Due to the strong business expansion in the
fi eld of heating presses, the number of people employed was able to be
increased. The production and sales company in the USA also achieved
positive results during the period under review. A higher degree of independent
operation together with an increase in trading activities for the
German parent company was a decisive factor in this case.
Two new sales companies were established in France and Russia during
the period under review. Business is expected to expand over the next
several years.
The positive development of this business division will presumably continue
in 2006. The backorders, which continue to be at a high level, indicate
that sales will be at the previous years‘ level. However the market
opportunities arising from new and existing business relations are seen
alongside intense quality and pricing competition in all relevant product
areas. The research and development measures taken hold of in the
past as well as the excellent market positioning of products and service
of the Harburg-Freudenberger Group lead us to expect a positive, but
overall slowly evolving corporate development in the future.
Special-Purpose Construction: Revenue from truck
tolls will lend further impetus to the successful
business development
The long-standing building crisis that started in the mid-1990s continued
again into 2005. It has likely to have bottomed out during this year,
however. The truck toll introduced in 2005 will have a positive effect on
the business of the current year. The fi rst public funds for expanding
traffi c routes have already begun to fl ow in. During the next several
years, a total of 51 % of the toll income is expected to fl ow into this division,
thus for example into a plan for countering traffi c jams as well as
into an expansion program for various sections of the autobahn.
Our Spezialbau Group focuses its activities on the fi elds of jointing technology
and coating work both for the new construction of streets and
for the preservation, repair and safeguarding of traffi c routes. Based on
the positive framework conditions, there is a promising market volume
for these business activities in the future.
Possehl Spezialbau was able to become successfully established on
the market in 2005. Sales increased by almost 6 % compared to the
previous year. The major reasons for this success were a broad range of
offerings, internal product development, good machinery and a broad
presence throughout Germany and Europe.
In addition to the management company in Wiesbaden, the success
within the subsidiaries also contributed to the good performance – even
though the diffi cult situation with the Spanish company burdened the
fi nancial statements of 2005 once again. All of the other subsidiaries
clearly exceeded their planned objectives. A number of different large
projects for the coating of runways, which help increase fl ight safety in
airports at home and abroad, were able to be successfully completed.
Another important factor for the business success of the business
division is the fact that the parent companies and subsidiaries utilize
combined synergies in their collaboration.
19

20
Investments in the equipment and vehicle fl eet further improved the
technical equipping of the construction site division. This ensures
a high level of productivity for the current and future rendering of
services and guarantees that the company can continue to achieve
good profi ts.
The strategic goals for the business division remain unchanged: growth
at home and abroad, expansion of market share and improvement of
the year-round utilization. In the cds coating division work is currently
underway on developing innovative products; they are expected to
strengthen the market position and ensure steady growth. Heightened
marketing activities on the international level are also expected to expand
business volume in this sector.
Contact with the airports in western, eastern and southern Europe will
also be stepped up with the aim of improving year-round utilization. In
addition to the public contractors, Possehl Spezialbau will continue to
place even more emphasis on industrial and commercial construction.
The backlog of orders from 2005 ensures a good start to the season,
which will be lagging somewhat due to the long-lasting wintry conditions
at the beginning of the fi scal year 2006.
EARNINGS POSITION IN THE TRADING
BUSINESS SEGMENT
in €T
2005 2004 Change %
Sales 338,878 359,157 -5.7
EBT
Earnings from affi liated
11,699 13,207 -11.4
companies 313 536 -41.6
Capital expenditures 1,329 2,003 -33.7
The Trading business segment reports an overall decline in sales by
€20.3 million to € 338.9 million. The main reason for this is the fact
that at the end of the year 2004, a large portion of the trading activities
of Nordstahl GmbH had been halted. Adjusted for this effect, the sales
revenues increased by 5.6 % compared to the previous year.
Net assets, earnings, fi nancial position
Group Management Report
Erzkontor Group: Good results form the basis for
expanding business activities
The European steel industry, important for the Erzkontor Group,
reported utilization in 2005 at a continued high level, even though there
was a decline in production of 2.5 % compared to the previous year.
This decline amounted to 4 % in Germany. The price for fi reproof raw
materials was at a very high level due to the steel boom in the year
2004 and in the 1st quarter of 2005, so that Possehl Erzkontor GmbH
was able to again reach the transaction value of the previous year despite
the reduced sales.
In the other product divisions such as metallurgy and plastics, price
and margin increases could be achieved to some extent. This was possible
in particular because of a partial business expansion. Another
infl uential factor was the oil price development and/or scarcity of raw
materials.
In order to utilize the advantages of a broad value added chain, the
range of services of the Erzkontor Group also includes services such as
processing, storage, quality control and logistics.
The subsidiary Possehl Erzkontor Hong Kong reported a signifi cant
increase in sales. It expanded the fi reproof business with India in
particular. The other companies of the Erzkontor Group were able to
maintain the sales level of the previous year, and in some cases even
considerably increase it. Despite a greater cost burden from interest
rate increases in the dollar zones, the Erzkontor Group again achieved
an overall excellent result in the reporting year.
The German economy is expected to grow by between 1.0 and 1.5 % in
2006. Even greater growth rates are predicted for the steel and foundry
industry, which leads the Erzkontor Group to expect a high demand for
fi reproof and metallurgical raw materials.
The group is making an increased effort to set up new business activities
in the plastics, dyeing and paper industry. Moreover, the geographic
expansion of the key business segment toward Eastern Europe,
Turkey and the Middle East will be further intensifi ed.

Possehl Inc. Group: American trading activities turn
out to be very successful
In fi scal year 2005, the Possehl Inc. Group was again able to achieve the
high sales level of the previous year. The earnings that were achieved
from these sales were equally positive. Expanding the range of products
by adding chemicals together with the good market position in
Central and South America guaranteed the success of our American
trading activities.
At the beginning of the year 2006 we handed over our products from
the non-fi reproof division to our previous American partner. The trade
in industrial raw materials for the steel and foundry industry for North
America that remained with Possehl Inc. enabled a closer tie to the
Erzkontor Group, which was operating primarily in Europe.
EARNINGS POSITION IN THE SERVICES
BUSINESS SEGMENT
in €T
2005 2004 Change %
Sales 10,067 9,316 8.1
EBT 1,394 1,319 5.7
Capital expenditures 315 252 25.0
Sales with services continue to advance
The Services division was again able to increase its sales level as
in the previous year. With revenues of € 10.0 million, the group of
companies in the insurance, transport, tank protection, reconstruction
and gravel industry reported growth of about 8 % compared to
the reference period.
The largest share of this positive development was claimed by
Possehl Umweltschutz GmbH, which was able to generate its jump in
sales mainly by supplying a rather large construction project from its
own gravel sources. The company also succeeded in holding its ground
in the diffi cult tank protection segment, which is burdened by the high
price of oil and the resulting consumer behavior, through its good
service and by expanding the market territory to Mecklenburg-West
Pomerania.
GRKI achieved sales and earnings at the level of the previous year
through the operation of the recycling yards.
Broker activities also
record good earnings
The struggle for market share based on price intensifi ed in the insurance
market during the reporting period. This also characterized the
business development of Lubeca Versicherungskontor GmbH. Our
company was nevertheless able to successfully hold its own on the
market.
Teutonia Fracht- und Assekuranzkontor GmbH played a role in the increased
demand for freight space, the price of which again increased
signifi cantly.
The companies in the Services division are anticipating that business
volume will remain at the same high level for the next several years.
NET ASSETS AND FINANCIAL POSITION
Financial management and fi nancial position: The Group
continues to have a high level of liquidity
The fi nancing of the Possehl Group is handled centrally for the most
part, with the goal of ensuring the cost-effective and secure provision
of liquidity for all Group companies. At the same time, an attempt is
made to invest the cash in banks in the most profi table way.
As of the balance sheet date, the net debt of the Group is € 35.5 million
(previous year: € 40.4 million). It therefore decreased by € 4.9
million or 12.1 %. The inventory of cash and cash equivalents increased
together with a slight increase in liabilities due to banks by € 12.1 million
to € 56.7 million. This was possible even though the purchase
price for the acquisition of the Harburg-Freudenberger Group was paid
completely from internal funds.
The gearing as a ratio of net debt to equity once again improved during
the reporting period. The value declined from 22.2 % to 17.3 %. Taking
into account the shares in Norddeutsche Affi nerie AG held in the
fi nancial assets as well as the shares in Süd-Chemie AG reported within
the current assets, there is once again a positive net liquidity on the
balance sheet date. The shares in Süd-Chemie AG were disposed of at
the beginning of fi scal year 2006. An infl ow of liquidity of € 37.3 million
resulted from this sale. This enabled us to continue fi nancing the
growth of the Group largely from our own internal funds.
21

22
Net debt in € million
Net assets, earnings, fi nancial position | Employees
2005 2004
Cash and cash equivalents 56.7 44.6
Liabilities due to banks 92.2 85.0
Net debt -35.5 -40.4
Cash fl ow and capital expenditures: High level of
operating cash fl ow and capital expenditures at the level
of the previous year
Group funds statement (summary) in € million
2005 2004
Cash fl ow from operating activities 24.0 16.6
Cash fl ow from investing activities -27.2 -0.1
Cash fl ow from fi nancing activities 14.3 18.7
Change affecting payment 11.1 35.2
Financial resources as of December 31 56.7 44.6
The cash fl ow from current business activities increased in the reporting
year by € 7.4 million to € 24.0 million. A crucial factor for this
positive development is fi rst and foremost the higher Group earnings,
with the repeated increase in working capital leading to further commitment
of capital.
Balance sheet structure
in € million
Fixed assets
Current assets
Group Management Report
442.1
295.4
2004 2005 2005 2004
The investment volume in tangible and intangible assets of € 17.0 million
was at the level of the previous year (€ 17.7 million). The Electronics
business division largely determined this volume, as it did in 2004.
€ 9.3 million was invested in technical systems and machinery as well
as in tools for the processing of customer orders. The Harburg-Freudenberger
Group essentially made investments for the replacement of
its machinery and erected an assembly hall at its site in Freudenberg.
The Construction business division focused on the procurement of
replacements of the construction site equipment. Overall, the Possehl
Group made primarily replacement and rationalization investments in
2005, with the regional area of focus being in the growth market of the
Far East.
Outgoing payments for fi nancial investments during the reporting
period pertained mainly to the Harburg-Freudenberger Group, while in
the previous year they accrued mainly to the acquisition of the 30 %
interest in Hako Holding GmbH & Co. KG.
The positive cash fl ow from fi nancing activities of € 14.3 million (previous
year: € 18.7 million) are based principally on higher short-term
bank debts for fi nancing the increased working capital as well as on an
increase in the clearing account with the Possehl Stiftung.
Assets Liabilities
146.7
533.5 533.5
150.2
383.3
202.4
105.2
92.2
133.7
442.1
181.6
78.8
85.0
96.7
Shareholders’ equity
Provisions
Liabilities due to banks
Other liabilities

Net assets: Balance sheet total increases by 20.7 %
The Group balance sheet total increased during the reporting period
by € 91.4 million to € 533.5 million. The increase in assets accrues almost
exclusively to the current assets, while the fi xed assets increased
only slightly.
The shares we hold in Norddeutsche Affi nerie AG continue to comprise
the main item being reported within the participations, while the Süd-
Chemie shares have been reorganized into the current assets due to
the disposal during the new year.
The stock exchange price of the NA share developed very well during
2005, so that the silent reserves in our block of shares increased
considerably.
Within the current assets, the inventory holdings increased in particular
by € 48.0 million to € 148.3 million. This increase accrues mainly to
International Trading and the fi rst-time consolidation of the Harburg-
Freudenberger Group. In International trading, the request by our customers
to keep consignment stocks on the books is continuing to intensify.
Trade receivables increased overall by € 27.1 million to €150.6
million. This increase can be traced back almost exclusively to the revised
scope of consolidation.
The non-recourse selling of receivables as part of an asset-backed securities
transaction reduced the receivables portfolio by € 16.4 million.
At the same time, the working capital increased by about 14 % compared
to the previous year, to € 192.4 million. This increase is therefore
due mainly to the exchange rate.
Group equity increases by € 20.8 million
Alongside the increased assets, equity that is now higher by € 20.8
million as well as the mainly short-term outside capital that increased
by € 70.6 million can be noted on the liabilities side.
The increase in equity from € 181.6 million to € 202.4 million is based
mainly on the Group net income for the year of € 26.5 million. In addition,
the weaker Euro compared to the previous year had a positive
effect on the amount of Group equity. Contrary to this was the instant
offsetting of goodwill from the acquisition of the Harburg-Freudenberger
Group as well as the dividend to the Possehl Stiftung.
Despite the absolute increase in Group equity, the equity ratio was reduced
from 41.1 % to 37.9 % due to the considerably higher balance
sheet total. The long-term tied-up assets continue to be covered in full
by the equity.
EMPLOYEES
Group demonstrates a high level of internationality
The Possehl Group employed an annual average of 4,267 employees
worldwide during the reporting period. Compared to the previous year,
this represents an increase of 608 persons. Due to the fi rst-time inclusion
of the Harburg-Freudenberger Group, the number of employees
within the Group increased by an average of 822 employees, while the
number of employees in the Precious Metals and Electronics divisions
declined slightly during the same period.
Employees by segment
Number
238
70
■ Holding company
■ Services
■ Trading
■ Production
45
3,914
Total: 4,267
In accordance with the international orientation of the Possehl Group,
72 % of our employees are working outside of Germany. This percentage
has declined somewhat compared to the previous year, since Harburg-
Freudenberger Maschinenbau GmbH employed a total of 632 persons
at their two production sites in Germany as of December 31, 2005.
23

24
The proportion of employees working in Germany will increase again
during the current fi scal year due to the fi rst-time consolidation of
the Hako Group. Irrespective of this, we are assuming that due to the
strong economic growth in Asia, the proportion of jobs in this region
will increase again for the long term.
Successful employee advancement and training
Qualifi ed and dedicated employees assure the success of Possehl. To
ensure our competitive edge, we will continue unabated to invest in the
qualifi cation and training of our employees.
The measures used for advancing and developing the achievement potential
of our employees make up one of the central features of our
personnel policy. Of key importance is our decentralized management
principle, which enables senior executives and young executives to
have a high degree of development, responsibility and decision-making
capacity. Through targeted encouragement of communication and
the exchange of information – including among the individual business
divisions and companies of the Group – we use the available know-how
across the entire Group.
In addition to the advancement of our executives, we place great value
on the continuing education of young people. During the reporting period,
the Group trained 49 young people, primarily at the domestic sites.
This is almost double the number trained during the previous year. It is
our goal to further increase the number of openings for apprentices and
the training quota within the Group.
Employees | Research and development | Risk management
Group Management Report
RESEARCH AND DEVELOPMENT
Possehl companies achieve customer-oriented product
improvements again in 2005
Within the Precious Metals Processing business division, the development
of a high gold-bearing, extra fi rm defl agration alloy for the dental
segment was completed and introduced into the market in 2005.
A new silver-palladium defl agration alloy was also adopted into the
range of products following the successful completion of development.
The characteristics of a palladium alloy were improved for the jewelry
segment and adapted to market requirements.
Following the concentration of research and development activities in
Asia, the Electronics business division continued to move forward in
2005 with the development of the QFN (quad fl at no-lead) technology in
its successor products. The development efforts were even intensifi ed
in the area of smart cards. The ongoing technological development for
minimizing surfaces, expanding functions during stamping and broadening
the etching process also played an even more important role.
In close coordination with customers, the Harburg-Freudenberger Group
developed new control platforms for tire lay-up machines. The edible oil
technology launched a screw extrusion press with an advanced scope
of function and a completely new type of direct drive concept. In the
rubber compound product division, a new compound supplier control
developed on the basis of the Java program language was successfully
put into operation at the customer’s premises.
The Construction business division also expanded its existing range of
products and developed new products and procedures, in particular in
the area of the cds products (coverings, seals and mortar for the repair
and coating of industrial and traffi c areas). The increased international
orientation of this business division also requires that the product
range be expanded to new application areas. The construction fi rms
also have at their disposal the cds laboratory, the cds application technology
and their own structural engineering laboratory in a supporting
and advisory role.

RISK MANAGEMENT
Based on a system of regular monitoring, no overall risks that could
endanger its continued existence can be identifi ed for the Possehl
Group.
Potential corporate risks always in focus
The Possehl Group management is continuously working on the further
development if its risk management system. In addition to an assessment
of the general risk potential, the Possehl Group also analyzes the
company-specifi c risks. In this way, management and control boards
can detect potential factors that may endanger the continued existence
of the company early on and develop defense strategies. This minimizes
the risks for the individual companies and the Group as a whole.
In addition to risks, the Group management always has its eye on corporate
opportunities: potential opportunities are identifi ed, their risk
potential is analyzed and they are further pursued depending on the
respective valuation.
In order to limit the risks for the entire Possehl Group, we have in the
past conscientiously invested in fi elds with different types of opportunity
and risk profi les when selecting the business divisions. We conscientiously
strive for a situation of no synergies between the individual
business divisions of our Group.
The Group works with an effective system
for risk monitoring
Included among the components of the Possehl risk monitoring system
are the domestic fi nancial clearing system, the accounts receivable reporting
system, the operating and strategic planning with the monthly
reporting system, the regular quarterly meetings between the Executive
Board of the holding company and the managing directors of the
operating companies and the investment controlling. This systematic
and close collaboration with the managing directors of our subsidiaries
enables us to detect unfavorable situations in good time and undertake
suitable corrective measures.
Individual risks within the business segments
are dealt with appropriately
The special operating risks have different characteristics in the individual
business segments:
In the Production division, the optimization of processing times and
thorough quality assurance and monitoring of procurement and manufacturing
are of utmost importance. It is therefore important for the
production business divisions – Precious Metals Processing, Electronics,
Elastomer-Processing and Construction – to recognize, analyze and
appropriately minimize the special manufacturing and processing risks
at an early stage by means of suitable key data. A special risk in the
Electronics segment is that of only being able to partially pass on the
burden of the rising price of copper to our customers.
Specifi c procurement risks are defi nitive for the companies in the Trading
division. On one hand, price fl uctuations for commercial and preliminary
products represent a permanent risk, and on the other hand
the availability of the trade goods and raw materials must be assured
at all times. Especially in times of strong market demand and limited
offerings, the good supplier relations of the Possehl companies pay off,
which as a rule are secured by long-term contractual ties. In addition,
all of the companies watch the market continuously with the help of
their international networks. Taking into account the effects of commitment
of capital, they follow the practice of far sighted stockpiling and
use the broadest possible geographic distribution of sources. Back-toback
transactions are therefore standard in trading.
In addition, the loss of receivables outstanding represents a permanent
business risk across all business divisions. The Group therefore places
special emphasis on the monitoring and safeguarding of outstanding
accounts.
If required, all business divisions safeguard against risks of currency
and interest rate changes resulting from international corporate
activities by using suitable hedging tools. Contingent or non-contingent
derivatives are only concluded within the Group to hedge against physical
inventories or transactions.
25

26
A malfunction of the electronic data processing can have a negative impact
only in subareas due to our widely distributed business segments
and corporate structures. To counteract these IT risks as well, the
Possehl Group has at its disposal data backup systems, authorization
plans and virus and access protections systems, as well as emergency
plans, to name a few.
Classic risk management is supplemented by
credit investigations and accounts receivable
management
As part of its risk management, the Possehl Executive Board monitors
the economic risks of its operating businesses using established
controlling instruments. As a supplement to the monthly reporting,
Possehl uses credit investigations and an active accounts receivable
management system. In accordance with the internal Group guidelines,
purchasing and selling transactions above certain individual business
segment limits must be coordinated with the executive board of the
holding company the same as acquisitions or investments.
We check all yield assumptions centrally in the preparation phase
and during the approval process and monitor their compliance
during realization. For companies with longer production times, central
risk management also focuses on reports concerning incoming orders
and backlog of orders as well as pre-calculation tests above certain
value limits.
The D&O (Directors’ and Offi cers’) insurance assures against any misconduct
by legal representatives or executive staff of the companies of
the Possehl Group that may result in damages to third parties or within
the Possehl Group.
In addition, through its own in-house insurance brokerage company,
Lubeca, Possehl has an instrument for central monitoring and safeguarding
of all insurance contracts. Work has begun on establishing a
worldwide loan insurance program, which already includes a signifi cant
portion of our companies even today.
Risk management | Supplementary report and outlook
Group Management Report
SUPPLEMENTARY REPORT AND OUTLOOK
Growth policy already successfully implemented
in the fi rst quarter
The Possehl Group has continued to further pursue its growth policy at
the beginning of the year 2006 as well:
On January 1, 2006 L. Possehl increased its stake in Hako Holding
GmbH & Co. KG from 30 % to about 56 % of the shares, thereby taking
over corporate leadership. As an independent business division within
the Possehl Group, Hako will further develop its good position on the
market for cleaning and property maintenance machines.
In the Electronics business division, we acquired the remaining shares
in Possehl Electronics N.V. on February 17, 2006, making us the sole
shareholder. This acquisition of shares gives us the opportunity to use
the benefi ts of Asian locations within the Electronics division, but also
in the entire Possehl Group, to further advantage.
Mönchengladbach-based textile machine manufacturer
Monforts acquired
We took another important step in our growth on March 31, 2006 by
acquiring all business shares in A. Monforts Textilmaschinen GmbH &
Co. KG. The Monforts Group is the world market and technology leader
for textile fi nishing systems in the high-quality sector. In addition to
the main company in Mönchengladbach, it encompasses the two subsidiaries
in Austria and Switzerland as well as a joint venture in China.
Excluding the joint venture, the Monforts Group achieved annual sales
of approximately € 110 million during the past fi scal year with a staff
of 375.
By acquiring the Monforts Group, we not only succeeded in continuing
on our course of growth, but also realized a further balancing of risks in
our portfolio at the same time. As with the Hako Group, the Monforts
Group is being managed as an independent business division within the
Production segment.

Shares in Süd-Chemie sold off
At the beginning of the current fi scal year 2006, we sold off our
block of shares of about 10 % held in Süd-Chemie AG. The cash fl ow
resulting from the sale is now available to us for the further expansion
of our Group.
World economy will continue to grow
We are assuming that the worldwide upswing will continue undiminished
for the next two years. The positive trend will continue to be carried
primarily by the USA as well as by the newly industrializing countries
China and India. Increasing growth rates are also anticipated for
the Euro zone, even though these rates will lag behind those of the
American and Asian rates. According to current predictions, economic
development in Germany will decline again as early as the year 2007
due to the impending tax increases.
Possehl remains on a profi table course of growth
Due to its broad composition, Possehl will profi t from the pleasing economic
development occurring worldwide. We are going on the assumption
of Group sales of about € 1.2 billion for the coming fi scal year. This
signifi cant increase will be achieved primarily because of the acquisitions
carried out at the beginning of the year 2006. But the existing
business division will also continue their profi table course of growth.
Only in International Trading do we foresee a decline in sales, due to the
reorganization of our American business.
Risks for the future development of the Possehl Group may result primarily
from a worldwide slowing down of the economy. The Electronics
business division is also dependent on the cyclical development of
the semiconductor industry. Because of the diversifi ed composition of
the Possehl Group and the associated balancing of risk, we are able to
compensate for rather weak developments in individual business divisions.
We see signifi cant market opportunities, in particular by making increased
use of the advantages from the Asian sites. The acquisition
of the remaining shares in our Possehl Electronics will provide us with
the additional potential for increasing growth and effi ciency here for
the entire Group.
Signifi cantly increased consolidated earnings expected
For fi scal year 2006 we anticipate signifi cantly higher consolidated
earnings. In addition to the one-time profi t from the disposal of our
Süd-Chemie participation, the new cleaning and textile fi nishing systems
business divisions will be the primary contributors.
Following the completion of restructuring, we also anticipate an
increase in earnings for the Precious Metals Processing business
division. Only in the area of International Trading do we assume
any decline in earnings, and that is due to the reorganization of the
American business.
We will continue to pursue the adopted course of growth even beyond
fi scal year 2006. In this regard, we expect a further increase in sales
for fi scal year 2007.
27

28
Consolidated income statement 29
Consolidated statement of cash fl ows 30
Consolidated balance sheet 31
Consolidated fi xed-assets analysis 32
Consolidated equity analysis 34
Segmental reporting 34
Notes to the consolidated statements 36
Auditor’s report 49
Income statement
Consolidated Financial Statements

Consolidated income statement in €T
from January 1 to December 31, 2005
Notes 2005 2004
Net sales
Changes in fi nished goods, work in progress
1 808,740 695,122
and own work capitalized 2 26,044 8,780
Other operating income 3 19,076 16,781
Cost of materials 4 579,331 519,385
Gross profi t 274,529 201,298
Personnel expenses 5 129,015 101,802
Depreciation 6 19,194 18,270
Other operating expenses 7 86,472 56,216
Investment result 8 471 1,480
Interest result 9 -6,975 -5,103
Other fi nancial result 10 2,922 574
Result from ordinary operations/net profi t before taxes 36,266 21,961
Income taxes 11 8,668 3,488
Other taxes 12 1,102 1,595
Consolidated net profi t 26,496 16,878
Minority interests 4,305 4,189
29

30
Statement of cash fl ows | Balance sheet
Consolidated Financial Statements
Consolidated statement of cash fl ows in €T
from January 1 to December 31, 2005
2005 2004
Consolidated net profi t 26,496 16,878
Write-ups/write-downs on fi xed assets 19,194 18,680
Changes in accruals and provisions -668 7,214
Other non-cash expenses and income -1,220 -578
Gains and losses from the disposal of fi xed assets -1,152 -1,572
Changes in working capital -18,612 -24,022
(1) Cash fl ow from operating activities 24,038 16,600
Proceeds from the disposal of intangible and tangible fi xed assets
Proceeds from the disposal of fi nancial investments and from the disposal
2,408 2,967
of consolidated companies and business units 10,102 28,697
Payments for investments in intangible and tangible fi xed assets
Payments for fi nancial investments and the acquisition
-17,036 -17,169
of consolidated companies and business units -22,710 -14,640
2) Cash fl ow from investing activities -27,236 -145
Payments to shareholders (including minority interests) -5,000 -3,868
Changes in bank debt 6,908 -12,667
Changes in other fi nancial claims/debt 12,365 35,250
3) Cash fl ow from fi nancing activities 14,273 18,715
Cash-relevant changes from (1) to (3) 11,075 35,170
Exchange rate, scope of consolidation and valuation related changes in fi nancial resources 1,043 -469
Cash and cash equivalents at the beginning of the year 44,558 9,857
Cash and cash equivalents at the end of the year 56,676 44,558

Consolidated balance sheet in €T
as of December 31, 2005
ASSETS Notes 12/31/2005 12/31/2004
A. Fixed assets
I. Intangible assets 13 1,761 1,132
II. Property, plant and equipment 14 90,213 77,901
III. Financial assets 15 58,199 67,649
150,173 146,682
B. Current assets
I. Inventories 16 148,307 100,281
II. Receivables and other assets 17
1. Trade receivables 150,559 123,484
2. Other receivables and other assets 20,788 25,248
171,347 148,732
III. Marketable securities
IV. Cash and cash equivalents, Bundesbank balances,
18 4,561 169
balances at banks and checks 56,676 44,558
380,891 293,740
C. Prepaid expenses and deferred taxes 2,395 1,666
Total assets 533,459 442,088
SHAREHOLDERS’ EQUITY AND LIABILITIES Notes 12/31/2005 12/31/2004
A. Shareholders’ equity
I. Subscribed capital 19 30,678 30,678
II. Retained earnings 108,486 107,009
III. Consolidated net profi t 41,801 29,435
IV. Minority interests 21,402 14,485
202,367 181,607
B. Provisions
1. Provisions for pensions 20 47,637 36,300
2. Other provisions 21 57,512 42,506
105,149 78,806
C. Liabilities
1. Liabilities due to banks 22 92,205 85,011
2. Trade payables 52,613 29,903
3. Other liabilities 80,807 66,539
225,625 181,453
D. Deferred income 318 222
Total shareholders’ equity and liabilities 533,459 442,088
31

32
Consolidated Financial Statements
Consolidated fi xed-assets analysis in €T
from January 1 to December 31, 2005
Balance at
01/01/05
Changes in
scope of
consolidation
Fixed assets
I. Intangible assets
1. Concessions, commercial property rights and similar rights
and assets as well as licenses thereto 4,053 1,155
2. Goodwill 424 1,841
4,477 2,996
II. Property, plant and equipment
1. Land, equivalent titles and buildings
(including on leased land) 64,460 246
2. Production plant and machinery 160,878 12,743
3. Other plant, factory and offi ce equipment 43,473 9,508
4. Prepayments and construction in progress 1,347 398
270,158 22,895
III. Investments
1. Shares of affi liated companies 13,705 0
2. Loans to affi liated companies 0 0
3. Investments in associated companies 13,578 0
4. Other investments 5,314 7,705
5. Loans under investor/investee relations 4,431 0
6. Other long-term securities 36,295 0
7. Other long-term loans 2,828 21
76,151 7,726
Total fi xed assets 350,786 33,617
Fixed-assets analysis

Acquisition or manufacturing costs
Additions Disposals Reclassifi cations
Balance at
12/31/05
Cumulative
depreciation as of
12/31/2005
Book values
12/31/05
Depreciation
in 2005
949 983 158 5,332 3,774 1,558 776
7 0 0 2,272 2,069 203 72
956 983 158 7,604 5,843 1,761 848
4,992 855 2 68,845 28,281 40,564 2,479
8,335 30,488 1,908 153,376 115,379 37,997 12,619
3,763 7,279 291 49,756 40,089 9,667 3,248
3,315 694 -2,381 1,985 0 1,985 0
20,405 39,316 -180 273,962 183,749 90,213 18,346
13 0 0 13,718 4,973 8,745 0
70 0 0 70 0 70 0
1,604 643 0 14,539 534 14,005 0
112 9,582 0 3,549 2,928 621 112
0 4,431 0 0 0 0 0
789 0 -4,561 32,523 4 32,519 0
159 594 0 2,414 175 2,239 0
2,747 15,250 -4,561 66,813 8,614 58,199 112
24,108 55,549 -4,583 348,379 198,206 150,173 19,306
33

34
Equity analysis | Segmental reporting
Consolidated Financial Statements
Consolidated equity analysis in €T
from January 1 to December 31, 2005
Consolidated
Currency
01/01/2004
net profi t Dividends translation
Subscribed capital L. Possehl & Co. mbH 30,678
Retained earnings 151,879 12,689 -3,000
Cumulative other result -20,847 -2,596
Group equity excluding minority interests 161,710 12,689 -3,000 -2,596
Minority interests 14,662 4,189
Cumulative other earnings of minority interests -2,481 -646
Minority interests 12,181 4,189 -646
Shareholders’ equity 173,891 16,878 -3,000 -3,242
Segmental reporting in €T
Production Trading
by business segment 2005 2004 2005 2004
External sales 459,795 326,649 338,878 359,157
Segmental EBT 28,990 13,828 11,699 13,207
Depreciation of PP&E -16,878 -16,555 -1,349 -1,320
Depreciation of current assets -584 -2,008 -224 -347
Other non-cash items 22,947 3,147 4,102 2
Result from associated companies 0 0 313 536
Result from other companies 0 0 -112 4
Interest income 1,297 238 732 325
Interest expenses -3,511 -3,150 -4,181 -2,060
Segmental assets 248,763 162,335 179,289 161,939
Capital expenditures 15,550 15,997 1,329 2,003
Segmental liabilities 143,116 100,887 125,287 111,735
Employees (number of) 3,914 3,284 238 256
by region Germany Other Europe
External sales 244,245 220,849 188,352 154,007
Segmental assets 256,115 233,259 44,834 37,868
Capital expenditures 13,109 24,293 3,466 1,543

Other
changes
in equity
12/31/2004/
01/01/2005
Consolidated
net profi t Dividends
Currency
translation
Other
changes
in equity 12/31/2005
30,678 30,678
267 161,835 22,191 -5,000 -2,122 176,904
-1,948 -25,391 10,004 -11,230 -26,617
-1,681 167,122 22,191 -5,000 10,004 -13,352 180,965
-1,239 17,612 4,305 497 22,414
-3,127 2,115 -1,012
-1,239 14,485 4,305 2,115 497 21,402
-2,920 181,607 26,496 -5,000 12,119 -12,855 202,367
Services Holding Transition Group
2005 2004 2005 2004 2005 2004 2005 2004
10,067 9,316 0 0 0 0 808,740 695,122
1,394 1,319 -3,984 -7,633 -1,833 1,240 36,266 21,961
-537 -576 -542 -624 0 395 -19,306 -18,680
-59 -31 -32 -284 0 -1 -899 -2,671
215 399 839 -2,087 -401 558 27,702 2,019
0 0 1,078 389 0 0 1,391 925
0 0 -808 551 0 0 -920 555
64 66 3,176 3,606 -1,511 -1,671 3,758 2,564
-127 -133 -4,424 -3,993 1,510 1,669 -10,733 -7,667
7,994 8,867 278,163 254,904 -189,920 -157,446 524,289 430,599
315 252 31,323 18,782 -24,409 195 24,108 37,229
5,342 6,565 114,912 97,761 -75,348 -64,396 313,309 252,552
70 70 45 49 4,267 3,659
Asia America Other regions Group
185,638 152,808 174,648 147,977 15,857 19,481 808,740 695,122
114,237 84,255 105,967 69,254 3,136 5,963 524,289 430,599
6,452 10,201 1,065 904 16 288 24,108 37,229
35

36
I. GENERAL INFORMATION
Consolidated Financial Statements
The consolidated fi nancial statements of L. Possehl & Co. mbH (hereinafter
referred to as L. Possehl) for fi scal year 2005 were prepared according
to the provisions of the German Commercial Code (HGB). The
fi nancial statements of the subsidiaries included in the consolidated
fi nancial statements are based on the balance sheet date of the fi nancial
statements of L. Possehl.
In order to improve clarity and meaning of the consolidated fi nancial
statements, individual items of the balance sheet and income statement
are combined and individually reported and explained in the
notes with the respective previous years’ amounts. Due to its essential
content of information, the individual accounts receivable, provisions
and liabilities of the balance sheet are reported separately. The income
statement is structured according to the cost of production method.
The consolidated fi nancial statements are drawn up in thousands (’000)
of Euro.
II. GROUP OF CONSOLIDATED COMPANIES AND
ASSOCIATED AFFILIATES
Besides L. Possehl, the consolidated fi nancial statements include 12
German and 33 international production, trading and services companies,
in which L. Possehl holds, whether directly or indirectly, the majority
of voting rights. Overall, nine subsidiaries are not fully consolidated
because of the minor importance on the net assets, fi nancial position
and earnings of the Group. Please refer to the attached overview of
participations for more information (see p. 56).
The following signifi cant changes in the group of consolidated companies
compared to the previous year should be mentioned:
In a purchase agreement dated March 24, 2005, L. Possehl acquired
all of the business shares in Harburg-Freudenberger Maschinenbau
GmbH, based in Hamburg, as well as its subsidiaries Harburg-Freudenberger
Belišce d.o.o. and HF Rubber Machinery, Inc. During the reporting
period, Harburg-Freudenberger Maschinenbau GmbH established
two additional subsidiaries in France and Russia, with the latter not yet
being included in the consolidated fi nancial statements due to their
minor importance.
Notes
The two companies Possehl do Brasil Ltda. and Nástrojárna Possehl
Electronic s.r.o. were disposed of during the reporting year and deconsolidated
at the beginning of the fi scal year.
Moreover, Nordstahl GmbH was merged with L. Possehl at the beginning
of the fi scal year.
Due to the acquisition of the Harburg-Freudenberger Group, Group
sales increased by about € 127 million. The consolidated balance sheet
total increased by a solid € 55 million as a result of this acquisition, and
the number of employees increased on average 822. The other changes
to the group of consolidated companies have not had a signifi cant impact
on the net assets, fi nancial position and earnings of the Group.
Major participations are measured according to the equity method if
they have a signifi cant infl uence. The number of associated companies
remains unchanged at 7.
III. GROUP ACCOUNTING PRINCIPLES
The annual fi nancial statements of the companies included in the
consolidated fi nancial statements are prepared in accordance with
standard accounting and valuation principles. If the fi nancial statements
of associated companies deviate from the Group’s standard
accounting principles, they are adjusted accordingly in the event
of signifi cant variations.
The consolidation of capital takes place according to the book value
method by offsetting the participation book value against the prorated
equity at the time of acquisition or addition. A positive amount resulting
from the difference of the participation book value and prorated equity
is offset against retained earnings.
The participations measured according to the provisions for associated
affi liates are reported by applying the book value method, i.e.
associated affi liates are carried at the prorated equity as of the date
of their acquisition or fi rst-time inclusion in the consolidated fi nancial
statements. Any resultant net equity under cost is offset against the
reserves retained from earnings. In case of net equity above cost, the
item is limited to the historical costs at the time of the initial consolidation.
In subsequent years, the value is adjusted for the prorated earnings
of these companies impacting earnings, with profi t distributions
for the previous years subtracted not impacting earnings.

In accordance with Article 312 Para. 6 HGB and based on the consolidated
fi nancial statements prepared by Hako Holding GmbH & Co. KG,
which include a total of 31 companies, Hako is to be included in the
consolidated fi nancial statements of L. Possehl according to the equity
method.
Receivables and payables, as well as sales, expenses and gains in
income among consolidated companies are set off against one another.
Unless immaterial, intercompany profi t eliminations were performed
for intra-subgroup transactions. Internal sales from supply of own products
are reclassifi ed as own work capitalized or changes in inventory
unless they are not negligible.
Due to their immaterial effect on the net assets, fi nancial position and
earnings of the Group, there are no intercompany profi ts to be eliminated
from supply and service relationships with associated companies.
The bad loan losses on Group-internal receivables performed in the
individual fi nancial statements as well as the write-off on shares of consolidated
companies are eliminated.
Required deferred tax payments are recognized for earnings-relevant
consolidation processes.
IV. CURRENCY TRANSLATION
The carrying values of the foreign subsidiaries are translated throughout
at the mean current rate as of the balance sheet date. The differences
resulting from exchange rate changes compared to the end of
the previous fi scal year are offset against the reserves retained from
and not recognized in net income. The currency used by the parent
company is the Euro.
Expenses and income including the consolidated net profi t are translated
at the monthly average exchange rates. Currency differences from
the application of different rates for translating the balance sheet and
the income statement are treated as neutral in their effect on earnings
in accordance with DRS 14.
The following exchange rates are used for translating the most important
foreign currencies within the Group:
Reporting date rate in € Average rate in €
Country Currency 2005 2004 2005 2004
USA USD 0.84767 0.73416 0.80470 0.80520
China RMB 0.10500 0.08990 0.09950 0.09850
Hong Kong HKD 0.10932 0.09445 0.10343 0.10338
Malaysia MYR 0.22430 0.19296 0.21342 0.21211
Singapore SGD 0.50948 0.44920 0.47819 0.47619
In the analysis of fi xed assets and provisions and in the development of
bad loan provisions, the differences resulting from the currency translation
of the beginning levels as of the balance sheet date of December
31, 2005 compared with the previous year’s exchange rate are offset
with retained earnings not impacting earnings.
37

38
Consolidated Financial Statements
V. NOTES TO THE CONSOLIDATED
INCOME STATEMENT
1. Net sales
For the split of consolidated external sales in the amount of
€ 808,740,000 (previous year: € 695,122,000) by business segment
and region, please refer to the segmental reporting section.
2. Changes in fi nished goods, work in progress
and own work capitalized
in €T
Increase in fi nished goods
2005 2004
and work in progress 22,811 5,012
Other own work capitalized 3,233 3,768
26,044 8,780
3. Other operating income
in €T
Income from the
2005 2004
reversal of provisions
Income from the disposal of
6,793 4,691
fully consolidated subsidiaries 1,719 1,442
Income from rents and leases 1,533 1,273
Income from handling charges 1,460 1,296
Currency gains 1,875 1,160
Insurance reimbursements
Income from the disposal of
442 560
tangible assets and write-ups
Income from the reversal of bad loan
provisions and receipt of written-off
628 438
receivables 1,151 258
Other 3,475 5,663
19,076 16,781
Notes
The income from the disposal of fully consolidated subsidiaries combines
the result from the disposal of individual assets and liabilities of
subsidiaries no longer included in the scope of consolidation. The deconsolidation
is completely earnings-relevant, including the previously
existing differences included in the consolidated fi nancial statements.
The income from the disposal of investments is reported under the
investment result if it concerns not fully consolidated affi liated,
associated and other participations; otherwise it is reported under the
fi nancial result.
4. Cost of materials
in €T
Expenses for raw materials and
2005 2004
supplies and goods received 562,147 503,943
Expenses for services received 17,184 15,442
579,331 519,385
5. Personnel expenses
in €T 2005 2004
Wages and salaries 105,993 83,185
Social security contributions 15,703 11,379
Retirement expenses 7,319 7,238
129,015 101,802
The average number of employees by group amounted to:
2005 2004
Wage earners 2,979 2,670
Salaried employees 1,239 962
Apprentices/trainees 49 27
4,267 3,659

6. Depreciation
Depreciation of property, plant and equipment amounts to € 18,346,000
(previous year: € 17,764,000) and depreciation of intangible assets
amounts to € 848,000 (previous year: € 506,000). An extraordinary
amount of € 488,000 (previous year € 1,968,000) on tangible assets
is included.
7. Other operating expenses
in €T 2005 2004
Other administrative expenses 9,208 5,812
Other operating expenses 13,762 8,168
Freight expenses 9,127 6,622
Other sales and marketing expenses 17,166 8,016
Insurance expenses 3,756 3,169
Other personnel expenses 7,693 2,879
Expenses for rents and leases 3,300 2,842
Currency expenses
Legal, IT and other
2,065 2,812
consulting services 6,957 4,501
Maintenance expenses
Expenses from the addition of
8,609 2,376
individual and lump-sum allowances
Other losses in value
1,543 1,109
of current assets
Losses from the disposal of fully
362 513
consolidated subsidiaries 345 0
Losses from the disposal of tangible assets 427 308
Other 2,152 7,089
86,472 56,216
The losses from the disposal of investments are reported under the
investment result if they concern not fully consolidated affi liated, associated
and other participations, otherwise they are reported under
the fi nancial result.
8. Investment result
in €T
Income from participations
2005 2004
in associated companies 1,604 1,147
Income from other participations 0 4
Income from profi t transfers
Losses from the disposal
0 564
of other participations -310 0
Expenses from loss assumption
Expenses for participations
-498 0
in associated companies
Write-downs on participations
-213 0
in associated companies
Write-downs on
0 -222
other participations -112 -13
471 1,480
9. Interest result
in €T
Income from loans of
2005 2004
fi nancial fi xed assets 158 130
Other interest and similar income 3,600 2,434
Interest paid and similar expenses -10,733 -7,667
-6,975 -5,103
Interest expense for expenses related to affi liated companies amounts
to € 240,000. In the previous year, an interest result of € 560,000
related to affi liated companies.
10. Other fi nancial result
in €T
Income from marketable securities
2005 2004
(dividends received) 2,922 749
Write-offs on loans 0 -175
2,922 574
39

40
11. Income taxes
Consolidated Financial Statements
Deferred taxes of the individual fi nancial statements are included if they
are in accordance with the uniform accounting and valuation principles
of the Group. Otherwise, adjustments are made, e.g. for the deferred
tax assets for tax carry forwards.
As far as consolidation measures result in deferred taxes, the business
and country-specifi c average tax rates between 7.5 % and 40 % are
applied. The income taxes in the reporting year include a deferred tax
in the amount of € 1,247,000.
Of the tax expense, € 3,563,000 pertains to previous years.
12. Other taxes
The other taxes are mainly non-deductible sales tax outside of Germany
in addition to property, property transfer and motor vehicle taxes.
VI. NOTES TO THE CONSOLIDATED STATEMENTS
OF CASH FLOWS
The statement of cash fl ows was drawn up following the scheme of
DRS 2. The liquid funds include only the inventory of cash and cash
equivalents (cash, Bundesbank balances and balances at other banks
as well as checks). The changes in liquid funds resulting from exchange
rate changes are reported separately.
The other non-cash expenses essentially include allocations to specifi c
provisions as well as expenses related to depreciation or disposal of
current or fi xed assets. Income is mainly the result of equity assessments,
release of specifi c provisions and value recoveries in inventory
assets.
Notes
VII. NOTES TO THE CONSOLIDATED BALANCE SHEET
Fixed assets
On the basis of the Group’s uniform expected economic life, the depreciable
fi xed assets are principally carried during the probably economic
life applying a linear distribution of purchasing/manufacturing costs.
Required extraordinary write-offs on intangible, tangible and fi nancial
assets are accounted for.
Detailed information can be found in the analysis of the Group’s
fi xed assets. The historical acquisition/manufacturing costs as of
01/01/2005 include adjustments from the currency translation which
are neutral in effect on profi ts amounting to € 272,000 offsetting
intangible assets and € 23,457,000 offsetting tangible fi xed assets.
13. Intangible assets
in €T 12/31/2005 12/31/2004
1. Concessions, commercial
property rights and similar
rights and assets as well as
licenses hereto 1,558 963
2. Goodwill 203 169
1,761 1,132
The main item is software amounting to € 1,503,000 (previous year:
€ 935,000), for which a three-year period of use is assured.
Goodwill resulting from fi rst-time capital consolidation is directly
offset against retained earnings, in the reporting year mainly from the
fi rst consolidation of the Harburg-Freudenberger Group an amount of
€ 11,319,000 in net terms.

14. Property, plant and equipment
in €T 12/31/2005 12/31/2004
1. Land, equivalent titles and
buildings (including on leased land) 40,564 35,693
2. Production plant and machinery 37,997 33,358
3. Other plant, factory
and offi ce equipment 9,667 7,611
4. Prepayments and
construction in progress 1,985 1,239
90,213 77,901
The production costs include appropriate shares of required material
and production overhead as well as production plant related depreciation.
Low value assets are completely written off in the year of purchase
and recorded in the fi xed asset analysis as disposals.
The linear depreciation of the purchase/production costs – reduced by
grants, if necessary – is mainly based on the following assumed useful
economic life:
Buildings 20 – 50 years
Production plant and machinery 5 – 10 years
Tools 1 – 3 years
Offi ce furniture 10 years
Offi ce equipment 3 – 5 years
Transportation vehicles 3 – 5 years
In order to take into account the highly fl uctuating utilization rates
of the tools used in the Electronics division, a method combining
depreciation by usage with a maximum term of depreciation of four
years is applied.
15. Financial assets
in €T 12/31/2005 12/31/2004
1. Shares of affi liated companies 8,745 8,732
2. Loans to affi liated companies 70 0
3. Investments in associated companies 14,005 13,044
4. Other investments
5. Loans to companies with
which the company is linked
621 2,498
by participation 0 4,431
6. Long-term investments 32,519 36,291
7. Other long-term loans 2,239 2,653
58,199 67,649
The list of shareholdings has been fi led and deposited with the Local
Court of Lübeck under No. HRB 9.
The following Germany-based subsidiaries made use of the exemption
provision of Article 264 Para. 3 HGB during the reporting year 2005:
Heimerle + Meule GmbH, Pforzheim
Harburg-Freudenberger Maschinenbau GmbH, Hamburg
Possehl Erzkontor GmbH, Lübeck
Possehl Beteiligungsverwaltung GmbH, Lübeck
The associated participations valued at-equity are carried with their
prorated earnings, taking into account profi t distributions. The changes
are reported in the analysis of fi xed assets as additions and disposals,
respectively.
The not fully consolidated shares in subsidiaries and the other participations
are carried at historical cost – if applicable, less non-scheduled
depreciation. Interest-free or low-interest bearing loans are reported at
cash value. Personnel loans are reported at their nominal value.
The non-current marketable securities are carried at cost.
41

42
Current assets
16. Inventories
Consolidated Financial Statements
in €T 12/31/2005 12/31/2004
1. Raw materials and supplies 31,018 18,619
2. Work in progress,
unfi nished services 12,275 13,740
3. Finished products and goods 99,802 60,096
4. Prepayments 5,212 7,826
148,307 100,281
Inventories are carried at the lower of cost or market. Write-downs for
inventory risks stemming from the time of storage and reduced realizable
values are accounted for to a reasonable extent. The rule of lossfree
valuation is accounted for. In addition to the cost of materials and
individual labor costs, the costs of production include reasonable production
overhead.
The precious metals inventories are valued pursuant to the principle of
lower of cost or market applying the LIFO method.
The prepayments of € 92,530,000 received on orders (previous year:
€ 4,112,000) were directly offset against fi nished products and goods.
Notes
17. Receivables and other assets
in €T 12/31/2005 12/31/2004
1. Accounts receivable 150,559 123,484
2. Other receivables
and other assets
Receivables due from
associated companies
Receivables due from companies
with which the company is linked
1 1,663
by participating interests 1,274 1,099
Other assets
thereof with a term of
19,513 22,486
more than 1 year (1,164) (1,127)
20,788 25,248
Accounts receivable and other assets are carried at nominal values less
adjustments for identifi able individual risks. In addition to individual
adjustments on accounts receivable of € 4,274,000 (previous year:
€ 2,296,000), the general credit risk is covered by a general provision
for doubtful accounts of € 2,739,000 (previous year: € 2,638,000).
The other assets mainly include tax reimbursement claims from corporate,
withholding and sales taxes in the overall amount of € 9,172,000
(previous year: € 11,490,000).
18. Marketable securities
The statement of securities pertains to the shares in Süd-Chemie AG
reclassifi ed from the fi xed assets and disposed of at the beginning of
the coming fi scal year and is drawn up at the Group acquisition costs.

19. Shareholders’ equity
The design of the equity analysis is patterned after DRS 7.
The equity held by the sole shareholder Possehl Stiftung of the parent
company L. Possehl & Co. mbH is reported as the subscribed capital.
Apart from the retained earnings of the parent company, the retained
earnings include the adjustment item from the currency translation of
foreign fi nancial statements as well as the setting-off of goodwill and
existing net equity losses.
They developed as follows during the year under review:
in €T
Retained earnings as of January 1, 2005 107,009
Currency translation differences 10,004
Discontinuations 2,722
Change in consolidation of adjustment items -11,319
Other consolidation procedures 70
Retained earnings as of December 31, 2005 108,486
The transition from the Group’s net profi t to the consolidated net profi t
is as follows:
in €T
Consolidated net profi t 26,496
Minority interests -4,305
Previous year’s consolidated net profi t 18,773
Currency differences 837
Consolidated profi t 41,801
20. Provisions for pensions
The pension obligations in the amount of € 47,637,000 exist mainly for
the parent company and the German subsidiaries. The provisions for
pensions include 1,310 future pensions (previous year: 551) and 896
(previous year: 698) current pensions for entitled active and former
employees as well as surviving dependents. The amount of the pension
obligations depends on the term of employment and the total salaries
or contributions of the benefi ciaries.
The valuation follows the tables of Dr Klaus Heubeck from the year
2005 and uses an interest rate of 6 % to the partial value pursuant to
Article 6a EStG (income tax law). The difference between the tables
of 2005 and 1998 was added in completely if the new tables result in
a higher amount, and in the case of a smaller provision, the reversal
amount is released over a period of time of three years according to
the provision of Article 6a Para. 4 EStG. In addition, obligations for
adjusting the current pensions in accordance with Article 16 BetrAVG
by € 1,580,000 (previous year € 1,552,000) are taken into account.
21. Other provisions
in €T 12/31/2005 12/31/2004
1. Provisions for deferred taxes 3,358 3,354
2. Other tax provisions 6,663 3,263
3. Other provisions 47,491 35,889
57,512 42,506
All identifi able risks and uncertain obligations are included to a reasonable
extent as tax or other provisions applying sound business judgment.
The deferred tax assets and the deferred tax liabilities result from the
differences between commercial and tax accounts of German and
international Group companies. Moreover, deferred taxes are offset
against earnings-relevant consolidation entries. Deferred tax assets
and deferred tax liabilities are balanced. The recognition of a deferred
tax asset from tax carry forwards is not realized.
43

44
Consolidated Financial Statements
in €T 12/31/2005 12/31/2004
Deferred tax liabilities 6,190 5,467
Deferred tax assets -2,832 - 2,113
Provisions for deferred taxes 3,358 3,354
The other tax provisions and other provisions developed as follows in
the year under review:
Exchange
Change in
scope of Reclassifi -
in €T 01/01/05 rate effect Consolidation cation Use Release Allocations 12/31/05
Other tax provisions 3,263 195 1,424 0 -1,623 -253 3,657 6,663
Personnel 16,740 799 6,595 58 -19,258 -844 18,858 22,948
Impending losses
Warranty and indemnity
3,753 127 10 0 -336 -377 52 3,229
contracts 4,190 294 3,956 448 -1,937 -2,661 2,141 6,431
Accounting 954 37 381 16 -1,529 -11 1,552 1,400
Accounts receivable 1,440 106 2,168 106 -2,931 -917 4,519 4,491
Other 8,812 404 841 -581 -5,165 -1,049 5,730 8,992
Other provisions 35,889 1,767 13,951 47 -31,156 -5,859 32,852 47,491
The item personnel covers anniversary gifts, holiday claims, overtime,
pre-retirement, and annual bonus payments as well as other personnel
obligations.
The item accounting includes the subsequent accounting work as well
as the internal and external expenses for drawing up and auditing the
fi nancial statements.
The item other includes the future payment obligations from fees and
notices, risks and uncertain obligations, from life annuities, legal disputes
and claiming of payments.
Notes

22. Liabilities
in €T
1. Liabilities due to banks
(previous year)
2. Accounts payable
(previous year)
3. Other liabilities
Notes payable
(previous year)
Due to affi liated companies
(previous year)
Due to companies with which the company
is linked by a participating interest
(previous year)
Other liabilities
(previous year)
Other liabilities
(previous year)
Liabilities are recognized with their redemption amounts.
Rights of lien and retention of ownership supply security in the amount
of € 1,031,000 (previous year: € 2,769,000).
Other liabilities
in €T 12/31/2005 12/31/2004
Taxes 1,865 1,652
Social security 1,377 1,149
Shareholders
49,267 45,891
thereof due to the Possehl Stiftung
(49,167) (45,891)
Other 15,002 5,793
Other liabilities 67,511 54,485
Up to
1 year
75,040
(67,098)
52,598
(29,903)
-
(302)
13,107
(11,644)
189
(108)
67,044
(54,040)
80,340
(66,094)
1 – 5
years > 5 years Total
17,148
(17,827)
15
(-)
-
(-)
-
(-)
-
(-)
434
(342)
434
(342)
17
(86)
-
(-)
-
(-)
-
(-)
-
(-)
33
(103)
33
(103)
92,205
(85,011)
52,613
(29,903)
-
(302)
13,107
(11,644)
189
(108)
67,511
(54,485)
80,807
(66,539)
45

46
VIII. CONTINGENT LIABILITIES
Consolidated Financial Statements
in €T 12/31/2005 12/31/2004
Notes endorsed and discounted 442 236
Suretyships and guarantees 1,797 1,587
Guarantees/warranties 2,055 2,024
Collateralization of third-party debts 67 0
IX. OTHER FINANCIAL OBLIGATIONS
in €T
Rental/leasing and other
contractual obligations
12/31/2005 12/31/2004
(nominal values)
with a term to maturity of
49,077 29,343
up to 1 year 14,014 3,460
1 – 5 years 7,049 21,908
> 5 years 28,014 3,975
from fi xed-asset purchase commitments 880 1,709
49,957 31,052
X. FINANCIAL DERIVATIVES
Financial derivatives are used for the purpose of currency and interest
rate hedges within the Group. Only unconditional forwards on
currencies and currency or interest rate swaps are used.
Notes
The currency forwards are forwards on a US dollar, CAD or Euro basis
not traded at an exchange. In addition to the hedging of balance sheet
items, in the near future upcoming payment obligations from procurement
processes are also hedged against expected adverse currency
trends.
The terms of currency swaps are always short-term, while interest
swaps extend to June 2009. Valuation is based on the mark-to-market
method.
The nominal and market values of derivatives can be seen in the
following overview:
in €T
Nominal
value
12/31/2005
Market
value
12/31/2005
Currency forwards 20,537 -627
Interest rate swaps 17,581 492
Currency swaps 38,001 -2
The market value of the fi nancial instruments is calculated from the
valuation of all transactions as of the balance sheet date without
taking the underlying transactions into account. Risks from the negative
development of derivatives or from the contract partner, which makes
it necessary to set up an impending loss provision, did not exist as of
the balance sheet date.

XI. NOTES TO THE SEGMENTAL REPORTING
General information
The segmentation of the Group’s activities follows the internal reporting
structure and the management of the Group according to the business
segments. On a secondary level, there is a regional split by geographic
regions. Activities and regions that cannot be specifi cally allocated are
combined in a category called “Others”.
Business segments
The Production segment is comprised of the business divisions
Electronics, Precious Metals Processing, Special-Purpose Construction
and the business division acquired during the year under review,
Elastomer-Processing.
The Trading segment includes those Group companies that are involved
in the international raw materials trading of minerals, ores, metals,
plastics and chemicals. The product range is rounded out by upstream
and downstream preparation, grinding and processing activities.
The combined activities of the Services segment include the Group’s
companies in environmental protection and the brokerage of insurance
and transport services.
Central service functions that are rendered through holding and intermediate
holding companies are combined in the Holding segment together
with the held fi nancial investments.
Geographic regions
Secondary segmenting is based on the regions of Germany, other
Europe, Asia and America.
Segmental data
The data in the segmental reporting is based on the accounting and
reporting methods applied in the consolidated fi nancial statements
and explained in the notes to the consolidated fi nancial statements.
They are prepared in the sense of economically and legally independent
companies, i.e. without eliminating inter-segmental processes. The
transition of the balance sheet and income statement items to the
items of the consolidated balance sheet and income statement accordingly
represents the extent of the inter-segmental consolidation.
The external sales revenue includes revenue from the sale of the products
and/or the rendering of services to third parties. The inter-segmental
sales result from supply and service relations among the individual
segments. They are offset based on market prices. None of the
sales across the segments are subject to elimination.
As the segmental result, the earnings before taxes (EBT) are reported.
For the differentiation of the segmental assets, the tax claims are subtracted
from the gross assets. The segmental liabilities include provisions
and long- and short-term debt/liabilities excluding tax liabilities.
The balance from other non-cash items includes mainly write-ups,
changes in bad loan losses, provisions (excluding tax provisions) and
changes in inventories.
The inter-segmental lock-in of capital between the operating subsidiaries
of the individual business segments and the holding companies, in
particular the parent company, becomes apparent in the transition of
the segmental assets, liabilities and fi nancial result.
For geographic segmenting, sales are segmented according to the location
of the customer. The segmental assets and investments follow the
location of the respective Group company.
47

48 Notes | Auditors’ report
Consolidated Financial Statements
XII. TOTAL REMUNERATION OF THE EXECUTIVE
AND SUPERVISORY BOARD
The total remuneration paid to Executive Board members for their
services on behalf of the parent company and subsidiaries totaled
€ 1,843,000 (previous year: € 1,524,000), that paid to the Advisory
Council members totaled € 100,000 (previous year: € 0), and that for
Supervisory Board members amounted to € 14,000 (previous year:
€ 135,000).
Former members of the Executive Board and their surviving dependents
received € 711,000 (previous year: € 684,000). The obligations
from current pension payments and vested pension rights are covered
by provisions amounting to € 7,540,000 (previous year: € 7,646,000).
XIII. PROPOSAL ON THE APPROPRIATION OF
PROFITS OF THE PARENT COMPANY
in €
Net profi t 2005 9,394,023.62
Profi t brought forward from the previous year 106,205.55
Net income for the year 9,500,229.17
A proposal was made to disburse from the net income for the year
of € 9,500,229.17 a partial amount of € 5,000,000.00 to the sole
partner, the Possehl Stiftung, and to allocate € 4,500,000.00 to
the other retained earnings and to carry forward the remaining
amount of € 229.17 to a new account.
Lübeck, April 12, 2006
L. Possehl & Co. mbH
The Executive Board
Uwe Lüders Dr Egon Rudolph

Auditors’ report
We have audited the consolidated fi nancial statements prepared by L. Possehl & Co. mbH – consisting
of the balance sheet, income statement, notes, statement of cash fl ows, and consolidated equity
analysis as well as the segmental reporting – and the group management report for the fi scal year from
January 1, 2005 to December 31, 2005. The preparation of the consolidated fi nancial statements and the
group management report in accordance with German Commercial Code regulations is the responsibility
of the company’s legal representatives. Our responsibility, based on our audit, is to express an opinion on
the company’s consolidated fi nancial statements and its group management report.
We have conducted our statutory group audit according to the provisions of Art. 317 HGB and with due
regard to the standards on the audit of fi nancial statements generally accepted in Germany as established
by IDW, the Institute of Sworn Public Auditors & Accountants in Germany. Those standards require
that we plan and perform the audit to obtain reasonable assurance that any misstatement or fraud
which has a material impact on the view of the net assets, fi nancial position and results of operations as
presented by the consolidated fi nancial statements in accordance with generally accepted accounting
principles and by the group management report is identifi ed. When planning the audit procedures, knowledge
and understanding of the Group’s business, its economic and legal environment as well as sources
of potential errors are given due consideration. An audit includes examining, largely on a test basis, the
accounting-related internal control system’s effectiveness and the evidence supporting the amounts and
disclosures in the consolidated fi nancial statements and the group management report. The audit also
involves assessing the annual fi nancial statements of companies included in the consolidated fi nancial
statements, the defi nition of the consolidation group, the accounting and consolidation principles used,
and signifi cant estimates made, by the auditee’s legal representatives, as well as evaluating the overall
presentation of the consolidated fi nancial statements and the group management report. We believe that
our audit provides a reasonable basis for our opinion.
Our audit did not result in any objections or exceptions.
It is our opinion based on the knowledge and information obtained during the audit that the consolidated
fi nancial statements, with due regard to the generally accepted accounting principles, present fairly,
in all material respects, the Group’s net assets, fi nancial position and results of operations. The group
management report agrees with the consolidated fi nancial statements and gives a true and fair view of
the Group’s overall position and the risks and opportunities inherent in its future development.
Hamburg, April 12, 2006
BDO Deutsche Warentreuhand
Aktiengesellschaft
Wirtschaftsprüfungsgesellschaft
Dyckerhoff Herbers
Auditor Auditor
49

50
Shareholdings
as of December 31, 2005
Name Location
Consolidated subsidiaries
Share of
capital in %
Precious Metals Processing
Heimerle + Meule GmbH Pforzheim/Germany 100.00
Electronics
Possehl Electronics N.V. ‘s-Hertogenbosch/Netherlands 80.10
Possehl Electronics Deutschland GmbH Wedel/Germany 100.00
Possehl Electronics France S. A. Roche Ia Molière/France 100.00
Possehl Electronics Nederland B. V. ‘s-Hertogenbosch/Netherlands 100.00
Possehl Electronics Maroc S. A. R. L. Casablanca/Morocco 100.00
Possehl Electronics Hong Kong Ltd. Hong Kong/China 100.00
Possehl Laminates Ltd. Hong Kong/China 100.00
Shenzhen Possehl SEG Electronics Co. Ltd. Shenzhen/China 79.67
Possehl Electronics (Malaysia) Sdn. Bhd. Malakka/Malaysia 100.00
Possehl Electronics Singapore Pte. Ltd. Jurong Town/Singapore 100.00
Possehl Connector Services Illinois, LLC Elk Grove Village/Illinois/USA 100.00
Possehl Connector Services SC, Inc. Rock Hill/South Carolina/USA 100.00
Possehl (Malaysia) Sdn. Bhd. Malakka/Malaysia 100.00
Special-Purpose Construction
Possehl Spezialbau GmbH Wiesbaden/Germany 100.00
Possehl Aannemingsmaatschappij B. V. Oosterhout/Netherlands 100.00
Possehl Spezialbau Ges.m.b.H. Griffen/Austria 100.00
Possehl Iberica S.A. Madrid/Spain 100.00
Possehl Posebne Gradnje d. o. o. Maribor/Slovenia 100.00
Possehl Posebne Gradnje d. o. o. Jastrebarsko/Croatia 100.00
Possehl Spezstroj AGmbH Minsk/Belarus 100.00
Elastomer-Processing
Harburg-Freudenberger Maschinenbau GmbH Hamburg/Germany 100.00
Harburg-Freudenberger France S.A.R.L. Paris/France 100.00
Harburg-Freudenberger Belisce d.o.o. Belisce/Croatia 95.00
HF Rubber Machinery, Inc. Topeka/Kansas/USA 100.00
Overview of Participations
Overview of Participations

Shareholdings
as of December 31, 2005
Name Location
Share of
capital in %
International Trading
Possehl Erzkontor GmbH Lübeck/Germany 100.00
IRS Stahlhandel GmbH Krefeld/Germany 100.00
Mineralmahlwerk C. Welsch GmbH Wesel/Germany 100.00
Van Mannekus & Co. B. V. Schiedam/Netherlands 100.00
GeoCrete B.V. Schiedam/Netherlands 100.00
Possehl Erzkontor Hong Kong Limited Hong Kong/China 100.00
Possehl, Inc. Park Ridge/New Jersey/USA 100.00
Possehl AE Athens/Greece 99.00
Alumina Trading Co. Park Ridge/New Jersey/USA 50.00
Possehl (H.K.) Limited Hong Kong/China 100.00
Sino-American Shipping Co. Park Ridge/USA 100.00
Possehl S. A. de C. V. Cuautitlan/Mexico 61.09
Moliendas Industriales Possehl S. A. de C. V. Cuautitlan/Mexico 99.99
Possehl Inc. Argentina Buenos Aires/Argentina 100.00
Services
Possehl Umweltschutz GmbH Lübeck/Germany 100.00
Gesellschaft für das Recycling kontaminierter Industriebrachen mbH Lübeck/Germany 100.00
Teutonia Fracht- und Assekuranzkontor GmbH Lübeck/Germany 100.00
Lubeca Versicherungskontor GmbH Lübeck/Germany 100.00
Participations
Possehl Beteiligungsverwaltung GmbH Lübeck/Germany 100.00
Possehl (H.K.) Holdings Ltd. Hong Kong/China 100.00
51

52
Shareholdings
as of December 31, 2005
Name Location
Non-consolidated subsidiaries
(of minor importance for the Group’s net assets, fi nancial position and earnings)
Overview of Participations
Share of
capital in %
Deutscher Eisenhandel AG Berlin/Germany 99.86
Ravené Possehl-Stahl Verlegegesellschaft mbH Berlin/Germany 100.00
Possehl Sicherheitstechnik GmbH Lübeck/Germany 100.00
Lübeck Linie GmbH Lübeck/Germany 100.00
Rudolf Scheele & Co. GmbH Lübeck/Germany 100.00
Ravené Stal Polska Sp.zo.o. Szczecin/Poland 100.00
Harburg-Freudenberger RUS Moscow/Russia 80.00
Possehl Connector Services Inc. Rock Hill/South Carolina/USA 100.00
Possehl S. Africa (Proprietary) Ltd. Johannesburg/South Africa 100.00
Associated companies
o.m.t. Oberfl ächen- und Materialtechnologie GmbH Lübeck/Germany 25.00
Beck & Co. Industriebedarf GmbH & Co. KG Neuss/Germany 48.75
Holsteiner Humus und Erden GmbH Lübeck/Germany 33.33
Possehl Kehrmann GmbH Duisburg/Germany 50.00
Hako Holding GmbH & Co. KG Bad Oldesloe/Germany 30.00
Van Mannekus Universal V. O. F. Oudenbosch/Netherlands 50.00
Tianjin Huade Mineral Product Co. Ltd. Tanggu/China 30.00
Other non-associated companies
Above 20%
Aravio Grundstücksverwaltungsgesellschaft mbH & Co. Objekt Braunschweig KG Wiesbaden/Germany 90.00
Aristo Grundstücksverwaltungsgesellschaft mbH & Co. Objekt Halle KG Wiesbaden/Germany 95.70
Pafravo Grundstücksverwaltungsgesellschaft mbH & Co., Vermietungs-KG Pöcking/Germany 94.00
Patrimo Grundstücksverwaltungsgesellschaft mbH & Co. KG Pöcking/Germany 94.00
Bahners GmbH Neuss/Germany 50.00
Flender Werft AG Lübeck/Germany 24.00
Steinsvik Olivin AS Folkestad/Norway 21.81
Major investments
Norddeutsche Affi nerie AG Hamburg/Germany 10.00
Süd-Chemie AG Munich/Germany 10.17
Overview of Participations

CONTACTS AND IMPRINT
L. Possehl & Co. mbH
Beckergrube 38-52
23552 Lübeck, Germany
Phone: 49 (0) 451 148 – 0
Fax: 49 (0) 451 148 – 255
E-mail: info@possehl.de
Please contact:
Mario Schreiber
Head of Corporate Communications
Phone: 49 (0) 451 148 – 304
Fax: 49 (0) 451 148 – 1153
E-mail: mschreiber@possehl.de
Notes
The annual report is available in both German and English.
More information on the company is available on our website at
www.possehl.de.
Imprint
Editor: The Executive Board of L. Possehl & Co. mbH
Coordinator: Mario Schreiber
Concept and design: Berichtsmanufaktur, Hamburg
Photos: Possehl Group, Gettyimages, Corbis
Status: May 2006
© L. Possehl & Co. mbH, Lübeck

www.possehl.de