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1. General information about Balda

The Balda Aktiengesellschaft (also: Balda AG or BAG) has its registered office at Bergkirchener Straße 228 in 32549 Bad Oeynhausen, Germany.

The Balda Group develops and produces complete plastic assemblies, electronic products and products for the medical technology industry. Balda customers are leading companies in the mobile radio, consumer electronics, electronic communications, pharmaceutical and medical technology markets. The Group is internationally positioned with production units in China, Malaysia and Germany. A subsidiary in the USA serves North American customers for product design and development. Within the scope of its shareholding in a leading touch screen manufacturer in China, Balda is participating in the dynamic development of the touch screen display market.

2. Notes to the Balda AG consolidated financial

statements

The consolidated financial statements of Balda AG as of 31 December 2010 were prepared in accordance with § 315 a of the German Commercial Code (HGB) and the provisions applicable on the reporting date and approved by the European Union of the International Financial Reporting Standards (IFRS) of the International

Accounting Standards Board (IASB), London, as well as the interpretations of the International Financial Reporting Interpretations Committee (IFRIC).

The Board of Directors of Balda AG prepared the consolidated financial statements on 7 March 2011. The Supervisory Board of Balda AG dealt with the consolidated financial statements in its meeting on 25 February 2011.

The consolidated financial statements were prepared in Euro. Unless stated otherwise, all figures are specified in thousand Euro (TEUR). This can result in rounding differences. The individual financial statements of the consolidated companies were prepared on the reporting date of the consolidated financial statements.

In accordance with IAS 1, Balda prepared the consolidated balance sheet according to the maturities. All asset and liability items with a residual period of over one year are classified as long-term.

The profit and loss statement has been prepared according to the total expense format.

The financial statements of the companies included in the consolidated financial statements are based on uniform accounting and valuation principles that comply with the IFRS.

3. Information about the consolidation

3. a. Scope of consolidation

The consolidated financial statements include the financial statements of Balda AG and of the companies in which it holds a majority stake (its subsidiaries) as of 31 December of each year. Balda AG is considered to hold majority stakes if it has the possibility to define the financial and managerial policy of a company to gain economically from it.

Apart from Balda AG, the consolidated financial statements include 6 domestic (previous year: 6) and 13 foreign (previous year: 15) subsidiaries by way of full consolidation. A stake in a foreign associated company that together with its 13 subsidiaries was valued at equity up to 29 October 2010, will be valued thereafter as financial holding at market value.

On 07 October 2010 Balda AG established Balda Investments Netherlands B.V. It is responsible for handling the Balda investments outside Germany.

With effect from 07 June 2010, Balda sold its shares in the Indian company, Balda Motherson Solution India Ltd. In addition, the Group sold its shares in the Hungarian Balda Solutions Hungaria Kft. on 30 April 2010.

The disposal of the following assets and liabilities of the divested companies resulted in a deconsolidation gain as follows:

in TEUR Scope of consolidation

Losses from divestments 2010 Short-terms assets -3,654 Short-terms assets -3,176 Short-term liabilities 2,380 Long-term liabilities 48

Minority shares in equity capital 2,010

Foreign currency translation -1,319

Disposal proceeds 2,553

Deconsolidation gain 1,158

3. b. Consolidation method and equity valuation

The capital consolidation is done according to the acquisition method. On the acquisition of a company, the assets and liabilities of the corresponding subsidiaries are valued at their fair value at the time of acquisition. If the acquisition costs of the company exceed the fair value of the identifiable assets and liabilities acquired, the company shows this capitalised difference as goodwill. If negative goodwill remains, Balda immediately enters it against profits. The shares of minority shareholders are shown to the extent of the minority share in the fair value of the reported assets and liabilities.

The income and expenditure of subsidiaries sold during the course of the year are included in the consolidated profit and loss statement until the end of control.

Receivables and corresponding liabilities and provisions between the Group companies are offset against each other.

The shares in associated companies are valued in these consolidated financial statements by applying the equity method. In the initial consolidation, shares in associated companies are shown at acquisition cost in the balance sheet. In the subsequent accounting, the value of holdings changes to the extent of the Group's share in the profit for the period of the associated company. Distributed dividends reduce the holding value. Losses due to depreciation reduce the holding value. Losses that exceed the Group's share in associated companies are not reported.

3. c. Currency conversion

All the foreign companies of the Balda Group operate the financial, economic and organisational aspects of their business independently. The incorporated financial statements of these Group companies are prepared in the respective functional currency.

Within the scope of the consolidation, the assets and liabilities of the Group's foreign companies are translated at the exchange rate at the reporting date. Income and expenditure are translated at the average rate for the period. The Group recognises the differences compared with the exchange rate at the reporting date directly in the equity separately under the foreign currency translation. The differences recorded in the foreign currency translation are reapportioned in the profit and loss statement if returns from the sale of a subsidiary are recorded.

Exchange rate differences from the consolidation of debts and income and expenditure are offset in revenue.

Goodwill resulting from the acquisition of foreign subsidiaries is treated by the Group as assets of the financially independent subsidiary and translated at the spot rate on the reporting date (IAS 21.47). The resulting

exchange rate differences are recorded in the foreign currency translation.

Transactions in foreign currency are converted at the exchange rate at the time of the transaction.

The exchange rates taken as basis for the foreign exchange translation related to Euro 1 developed as follows:

Average spot-exchange rate on balance sheet date

Annual average exchange rate

31 December Fiscal year

Currencies ISO Code 2010 2009 2010 2009

US Dollar USD 1.3252 1.4333 1.3247 1.3905

Chinese Renminbi CNY 8.7336 9.7752 8.9558 9.4850

Malaysian Ringgit MYR 4.0800 4.9068 4.2483 4.8883

II. Information on the consolidated financial statements