2013 ANNUAL REPORTFREUDENBERG GROUP

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Freudenberg is a globally active technology company offering its customers innovative, sophisticated and tailor-made solutions. The Group’s products are part of everyday life all over the world – usually invisible, but always indispensable.

Seals, vibration control components, filters, nonwovens, surface treatment products, medical device components, mechatronic products, release agents, specialty lubricants, mechanical cleaning products, software solutions and IT services all make a valuable contribution to thousands of applications in over 30 markets. Without Freudenberg, cars would emit more CO2, indoor air would not be clean and wounds would not heal as fast. It is our pleasure to present these and other examples in this Annual Report.

HIGHLIGHTS

FREUDENBERG GROUPPro-rata

2012At-equity

2012*At-equity

2013 Sales [€ million]

Germany 1,494 1,210 1,059EU (excluding Germany) 1,621 1,562 1,553Other European countries 315 311 327North America 1,342 1,291 1,267South/central America 351 343 306Asian 1,057 824 1,002Africa/Australia 142 140 132

Total sales 6,322 5,681 5,646 consolidated profit 433 438 399cash flow from operating activities 532 445 516cash flow from investing activities - 348 - 186 - 520Depreciation and amortization 274 238 238Balance sheet total 6,060 5,677 5,873Equity 2,818 2,668 2,775Personnel expenses 1,820 1,719 1,728 Workforce (as at Dec. 31) 37,453 30,786 33,245Workforce (annual average) 37,684 32,769 33,293

BUSINESS AREAS**Pro-rata

2012Pro-rata

2013 Total sales [€ million] 6,322 6,623

Seals and Vibration control Technology*** 3,679 3,828Nonwovens and Filtration*** 1,149 1,228Home and cleaning Solutions*** 713 710Specialties and Others*** 989 1,052

Workforce (as at Dec. 31) 37,453 39,897

Seals and Vibration control Technology 25,036 26,917Nonwovens and Filtration 5,135 5,707Home and cleaning Solutions 2,964 2,914Specialties and Others 4,318 4,359

* Figures adjusted due to the application of IFRS 11 prior to the mandatory application date. Please refer to the section entitled “Presentation of figures for the previous year” in the Notes to the consolidated Financial Statements for further details.

** The figures for the Business Areas are presented in line with internal reporting procedures under which joint ventures are consolidated on a pro-rata basis.

*** Including intra-company sales

THE FREUDENBERG GROUP

Freudenberg is a family-owned group of companies active on the global stage. Its 16 Business Groups operate on various markets and in various sectors of industry.

Freudenberg offers its customers in the passenger car and commercial vehicle industry, mechanical and plant engineering, textile and apparel, construction, mining and heavy industry, energy, chemical, and the oil and gas sectors tailor-made, innovative technological products and services. Customer groupings also include companies in the medical technology, civil aviation, rail vehicles and semiconductor sectors.

Freudenberg develops and manufactures seals, vibration control technology components, filters, nonwovens, surface treatment products, release agents and specialty lubricants, medical technology and mechatronic products.

Freudenberg develops software solutions and IT services primarily for small- and medium-sized enterprises. Consumers enjoy the benefits of Freudenberg’s state-of-the-art household products marketed under the vileda®, O-Cedar®, Wettex®, Gala® and SWASH® brands.

Creativity, quality, diversity and innovative strength are the company’s cornerstones. Reliability and responsible con-duct rank among the basic values of the company which was founded 165 years ago. Freudenberg is committed to partnerships with customers, and believes in a long-term orientation, financial solidity and the excellence of approximately 40,000 employees in about 60 countries. Freudenberg sees itself as an enterprise of entrepreneurs. Operational business is in the hands of independent companies whose management conducts business under their own responsibility. These individual companies in turn belong to Business Groups.

Parent Company (strategic management) Freudenberg & co. Kommanditgesellschaft

Parent Company (business operations) Freudenberg SE

Seals and Vibration Control Technology Business Area

Nonwovens and Filtration Business Area

Home and Cleaning Solutions Business Area

Business Group Business Group Business Group

Freudenberg Sealing Technologies

FreudenbergNonwovens

Freudenberg Home and cleaning Solutions

NOK-Freudenberg Group china 1, 2 Freudenberg PolitexNonwovens

Freudenberg Oil & Gas Technologies

Freudenberg Schwab Vibration control 2

Freudenberg Filtration Technologies

EagleBurgmann

Dichtomatik 2

Helix Medical

TrelleborgVibracoustic 1

Specialties and Others Business Area

Business Group

Freudenberg chemical Specialities

Freudenberg NOK Mechatronics 1, 3

Freudenberg IT

Freudenberg New Technologies

Divisions

Freudenberg Real Estate Management

Freudenberg Service Support

Freudenberg Insurance

1 Fully consolidated at-equity 2 Integrated in Freudenberg Sealing Technologies from January 1, 2014 3 Renamed enmech effective January 1, 2014

Freudenberg has two parent companies: Freudenberg & Co. Kommanditgesellschaft is the strate-gic parent company, Freudenberg Societas Europaea (Freudenberg SE) is the parent company with responsi-bility for managing business operations. The corporate bodies of Freudenberg & Co. Kommanditgesellschaft are the Management Board, the Board of Partners and the Partners’ Meeting. The corporate bodies of Freudenberg SE are the Board of Management, the Supervisory Board and the General Meeting. The Management Board of Freudenberg & Co. Kommanditgesellschaft and the Board of Management of Freudenberg SE have the same members. This also applies to the Board of Partners of Freudenberg & Co. Kommanditgesellschaft and the Supervisory Board of Freudenberg SE.

Freudenberg is a family company. It is owned by some 320 heirs to the founding father Carl Johann Freudenberg.

CONTENTS

Supervisory Board, Board of ManagementManagement of the Business Groups and Divisions Report of the Supervisory BoardForeword of the Board of Management

Management Report of the Freudenberg GroupBusiness Developments and General Economic ConditionsSales and Earnings Position of the Freudenberg GroupFinancial Position of the Freudenberg GroupAssets, Equity and Liabilities of the Freudenberg GroupReview of Operations by Business AreaResearch and DevelopmentHuman ResourcesResponsible ConductPost-Reporting Date EventsRisks and OpportunitiesOutlook

Financial Report – Consolidated Financial StatementsConsolidated Statement of Financial PositionConsolidated Statement of Profit or LossConsolidated Statement of Profit or Loss and Other Comprehensive IncomeConsolidated Statement of Cash FlowsConsolidated Statement of Changes in EquityNotes to the Consolidated Financial Statements

Shareholdings of the Freudenberg Group

Independent Auditor’s Report

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BOARD OF MANAGEMENT*

Dr. Mohsen Sohi, Frankfurt am MainSpeaker

Dr. Ralf Krieger, St. Leon-Rot

Christoph Mosmann, Mannheim

SUPERVISORY BOARD*

Dr. Wolfram Freudenberg, StuttgartChairmanEntrepreneur

Prof. Dr. Dieter Kurz, LindauDeputy ChairmanChairman of the Shareholder Council of the Carl Zeiss Foundation

Martin Wentzler, Großhesselohe Deputy Chairman Attorney

Martin Freudenberg, HeidelbergEntrepreneur

Dr. Maria Freudenberg-Beetz, WeinheimBiologist

Dr. Mathias Kammüller, DitzingenManaging Director of TRUMPF GmbH + Co. KG

Robert J. Koehler, WiesbadenChairman and Chief Executive Officer of SGL CARBON SE

Dr. Richard Pott, LeverkusenFormer member of the Board of management of Bayer AG

Walter Schildhauer, Stuttgart Managing Partner of speedwave GmbH

Dr. Christoph Schücking, Frankfurt am MainAttorney and Notary Public

Mathias Thielen, Zürich, Switzerland

Dr. Emanuel Towfigh, BonnSenior Research Fellow at Max Planck Instituteand Attorney

COMPANY BOARDS

*as at December 31, 2013

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MANAGEMENT OF THE BUSINESS GROUPS AND DIVISIONS*

Management Business Group

Claus Möhlenkamp (Speaker), Dr. Arman Barimani (CTO), Freudenberg Sealing TechnologiesLudger Neuwinger-Heimes (CFO), Dieter Schäfer (COO)

Yasuhiro Shimokawa (CEO and Speaker), Dr. Erek Speckert (CEO) NOK-Freudenberg Group China

Richard Schmidt (CEO and President), Craig Barnhart (CFO) Freudenberg Oil & Gas Technologies

Thomas Plingen (CEO), Kathrin Siegel (CFO), Jörn Clasen (COO) Freudenberg Schwab Vibration Control

Dr. Stefan Sacré (Chairman), Jochen Strasser (CFO), EagleBurgmann Michael Stomberg (COO)

Ludger Patt (Speaker), Dr. Marco Leccese (CFO), Dichtomatik Thomas Hahn (President Dichtomatik Americas)

Dr. Jörg Schneewind (CEO and President), Michael A. Hawkins (CFO), Helix MedicalDr. Max Gisbert Kley (President Europe and Global Business Development)

Hans-Jürgen Goslar (Speaker), Norbert Schebesta (CFO), TrelleborgVibracoustic Lennart Johansson (Managing Director), Jim Law (Managing Director)

Bruce R. Olson (Chairman), Dr. Frank Heislitz (CTO), Freudenberg NonwovensDr. René Wollert (CFO)

Richard Shaw (Chairman), Dr. Rocco Marsico (CTO), Freudenberg Politex Nonwovens Dr. Riccardo Forni (CFO)

Dr. Andreas Kreuter (Speaker), Thomas Herr (CFO), Freudenberg Filtration TechnologiesDr. Jörg Sievert (COO)

Dr. Klaus Peter Meier (Chairman), Arndt Miersch (CTO), Freudenberg Home and Frank Reuther (CFO) Cleaning Solutions

Hanno D. Wentzler (Chairman), Dr. Jörg Matthias Großmann (CFO) Freudenberg Chemical Specialities

Dr. Manfred Egner (CEO), Christoph Neumann (CFO), Freudenberg NOK MechatronicsChristophe Luciani (CSO), Bruno Conrath (Member)

Horst Reichardt (Speaker and CEO), Dr. Sebastian Weiss (CFO) Freudenberg IT

Wolfgang Schneider (Speaker and CEO), Dr. Gerd Eßwein (CTO) Freudenberg New Technologies

Division

Ulrich Kerber (CEO), Gerhard Freiwald (CTO), Frank Schmitt (CFO) Freudenberg Real Estate Management

*as at December 31, 2013

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Dr. Wolfram Freudenberg (Chairman)

The consolidated annual financial statements were drawn up for Freudenberg SE for the first time in 2012. Freudenberg SE bundles all Freudenberg business with the exception of Freudenberg & Co. KG and the Freudenberg Service Support and Freudenberg Insurance Divisions.

The present annual financial statements were also drawn up for Freudenberg SE and in addition reflect the new International Financial Reporting Standards (IFRS) 10, 11 and 12 which refer in particular to changes in accounting procedures for 50:50 joint ventures. This has led among other things to significant differences in sales and head-count data compared with the figures published for the 2012 financial year (please refer to page 102 for further details).

In the 2013 financial year, the Board of Management and the Supervisory Board held regular and detailed discussions on the progress of the Group and major individual business transactions on the basis of oral and written reports.

Business policy was agreed in consultation between the two bodies and updated where necessary in joint deliberations. In addition, the Chairman of the Supervisory Board discussed current business developments with the members of the Board of Management on a regular basis and in a spirit of partnership. Deputy Supervisory Board Chairman Martin Wentzler was increasingly involved in these consultations.

Six meetings of the Supervisory Board were held in the year under review. At each of these meetings, the Super-visory Board consulted on ongoing key projects in the Group which focus on reviewing the factors of relevance to the Group’s success and adjusting them to changed conditions. One such key project is the organizational realignment of the Freudenberg Group. Boston Consulting Group is providing support for this project.

The Group continued its buy and build strategy in 2013, proactively developing the portfolio further. The issues addressed by the Supervisory Board included the acqui-sition of the Vector Technology Group, the acquisition of 50 percent of the shares of Cambus Teoranta, Spiddal, Ireland, and the purchase of the shares of the Capol Group. The Supervisory Board furthermore consulted on

REPORT OF THE SUPERVISORY BOARD

In 2012, Freudenberg established Freudenberg Societas Europaea (hereinafter: Freudenberg SE) to manage operations under the roof of the strategic management parent company Freudenberg & Co. Kommanditgesellschaft (hereinafter: Freudenberg & Co. KG), both Weinheim, Germany, with a view to making the corporate law structures more transparent and simpler. The Group implemented the changes resulting from this realignment in the 2013 financial year. A new employee representative body at European level has been set up during the course of the realignment process. The constituent meeting of the Freudenberg European Works Council was held at the beginning of 2013.

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developments in the participations in joint ventures and associated companies such as NOK Corporation and Japan Vilene Company Ltd., both registered in Tokyo, Japan, and TrelleborgVibracoustic. In addition, the Super-visory Board addressed the restructuring of some Business Groups.

The Audit Committee met three times in the year under review and consulted on issues such as the risk manage-ment system and the rules of the German Corporate Governance Code.

The Personnel Committee met three times in 2013. At the beginning of the year the relevant bodies accepted the request of Dr. Martin Stark to be allowed to step down from the position as Board of Management member. Dr. Martin Stark left the Board of Management effective January 31, 2013.

Werner Wenning stepped down from the Supervisory Board on June 30, 2013. The company and the Super-visory Board would like to thank him for the good and constructive cooperation. Dr. Richard Pott became a new member of the Supervisory Board on July 1, 2013.

The Chairman of the Supervisory Board is Dr. Wolfram Freudenberg. The co-equal Deputy Chairmen are Prof. Dr. Dieter Kurz and Martin Wentzler.

The consolidated financial statements and the manage-ment report for 2013 and the annual financial statements

of Freudenberg SE were audited by Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft, Mannheim, Germany, and were approved without reservation. The Supervisory Board approved the consolidated financial statements and the management report and the annual financial statements of Freudenberg SE and, following examination, concurred with the auditor’s findings.

The Supervisory Board examined the report on relation-ships with affiliated companies (dependent company report) and approved the report together with the auditor’s conclusions. Following final review, the Supervisory Board has no reservations in respect of the closing statement by the Board of Management on the dependent company report.

The Supervisory Board expresses its sincere thanks and deep respect to all employees, the Business Group managing bodies and the Board of Management for their outstanding work and great personal commitment in the year under review.

Weinheim, March 28, 2014 For the Supervisory Board

Dr. Wolfram Freudenberg Chairman

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FOREWORD OF THE BOARD OF MANAGEMENT

Freudenberg will be 165 years old in 2014 and is today more innovative and successful than ever before. As a values- based company, long-term oriented and globally-present with a widely diversified product portfolio, we have again grown profitably and sustainably – despite a challenging economic environment and the negative effect of exchange rates. We were able to raise our productivity and have considerably increased our investment in innovation.

Dr. Mohsen Sohi (Speaker)

The present consolidated annual financial statements have been drawn up on the basis of the Freudenberg Societas Europaea (Freudenberg SE), Weinheim, Germany. The new accounting standards IFRS 10, 11 and 12 have been applied for the first time. This means that the 50:50 joint ventures in which Freudenberg does not have industrial leadership no longer appear in the consolidated financial statements as 50 percent hold-ings, but are consolidated for the first time in accordance with the equity method. Significant changes result from this with regard to sales, total assets, the equity ratio and the number of employees included in the consolidated financial statements.

The NOK-Freudenberg Group China, TrelleborgVibracoustic and Freudenberg NOK Mechatronics Business Groups are consolidated in the financial statements in accordance with the equity method for the first time. Sales and the

number of employees, as well as assets and liabilities are therefore not taken into consideration.

In accordance with these accounting rules, at €5,646.1 million, 2013 sales fell below the 2012 level (€5,681.3 million). The inclusion of Vibracoustic before the company was integrated in the TrelleborgVibracoustic joint venture in July 2012 should be taken into consid-eration here. If the inclusion of Vibracoustic for part of 2012 is eliminated, sales rose by 6.7 percent from €5,291.4 million in 2012 to €5,646.1 million in 2013 (a more detailed explanation of this can be found on page 17).

Profit from operations amounted to €457.3 million (previous year: €531.6 million) and consolidated profit totaled €398.8 million (previous year: €437.7 million). The decline in consolidated profit is principally due to high one-off extraordinary income in 2012. Free cash flow totaled €-3.8 million (previous year: €258.8 mil-lion). With an equity ratio of 47.3 percent (previous year: 47.0 percent), the Freudenberg Group remains in a very good, comfortable equity situation. Cash at bank and in hand stood at €672.9 million (previous year: €652.2 million) at the year end.

Freudenberg SE’s rating remains good. Moody’s assessed Freudenberg SE for the first time, giving the company a rating of Baa1 and confirming the outlook as “stable”.

Occupational health and safety, environmental protection and corporate social responsibility are firmly anchored in Freudenberg’s corporate values. We were able to make further improvements in all these areas in 2013.

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For the fourth year in succession, we are able to report record 2013 sales of €6,622.5 million (previous year: €6,321.7 million) based on the former consolidation basis. This represents an increase of 4.8 percent. Consolidated profit totaled €401.5 million and is based on a considerable improvement in operating income in comparison to the previous year (consolidated profit: €432.7 million), which includes high one-off extraordinary income.

In spite of an increase in business, the total number of accidents remained at a low level and the number of serious accidents fell from seven to six.

To make our values-based culture more visible to the pub-lic, in 2013 we undertook activities that led to becoming a signatory to the United Nations Global Compact in the middle of January 2014. The Global Compact is a volun-tary corporate responsibility initiative which currently has over 10,000 participants – including 7,000 businesses from more than 140 countries – who commit to aligning their operations to values and sustainability. The principles underlying the Global Compact are also anchored in the Freudenberg Group’s Guiding Principles. There are a total of ten principles in the four fields of Human Rights, Labor, Environment and Anti-Corruption.

The company made great progress in implementing its strategy and proactively developed its portfolio further. We want to continue to grow profitably and sustainably – with our usual financial prudence: both in our established businesses as well as in our strategic growth markets: chemical surface treatment, medical technology, oil and gas industry, industrial filtration and vibration control tech-nology for high-growth industry segments and rail vehicles.

We have defined these strategic business fields for accelerated growth under a buy and build strategy and strengthened the areas of the oil and gas industry, medical technology, industrial filtration and chemical surface treat-ment through acquisitions and internal investments.

– Freudenberg Oil & Gas Technologies acquired the Vector Technology Group in January 2013 – one of the

largest suppliers of sealing solutions for high integrity applications in the upstream field.

– With effect from January 1, 2013 Helix Medical acquired 50 percent of the shares of Cambus Teoranta, Spiddal, Ireland. The joint venture manufactures high-quality precision components for the medical device industry.

– Freudenberg Filtration Technologies acquired Aquabio Limited, Worcester, UK, a leading specialist in water treatment and wastewater filtration systems for industrial applications, with effect from March 1, 2013.

– Freudenberg Chemical Specialities entered the market for food additives through the acquisition of the shares in the Capol Group, a leading global supplier of release agents, glazes and sealing agents for the confectionery industry, on August 7, 2013.

We have also continued to expand our position in our established areas of business. The integration of Vibracoustic and the automotive anti-vibration busi-ness of Trelleborg AB, Trelleborg, Sweden, in the TrelleborgVibracoustic joint venture is well under way. TrelleborgVibracoustic and shareholders of the Turkish company HSS Otomotiv ve Lastik Sanayi A.S., Bursa, Turkey, founded a 50:50 joint venture in June 2013 for the manufacture of commercial vehicle air springs. With the establishment of this joint venture, TrelleborgVibracoustic has become the second largest air spring manufacturer in Europe and the third largest world-wide.

Freudenberg Sealing Technologies acquired PTFE Compounds GmbH, Biere near Magdeburg, Germany,

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with effect from January 1, 2014, further developing its materials competence. In addition, Freudenberg Sealing Technologies acquired the remaining shares in Freudenberg Sealing Technologies Sanayi ve Ticaret A.S., Bursa, Turkey.

We have also made further progress in expanding our busi-ness internationally. This is especially true of our activities in the USA, Brazil, China, India and Russia. To benefit fully from the strengths of our Group and to create processes which are efficient, we have opened new Freudenberg Regional Corporate Centers in the USA and Brazil and established a Freudenberg Regional Corporate Center for the Indian market.

Our company has always been innovation-driven. This is essential to our corporate culture. With the creation of the position of Chief Technology Officer at the beginning of the financial year and with a new organization, we have intensified the innovative strength of the entire Freudenberg Group still further. As a cross-group innovation driver, Freudenberg New Technologies is a strategic pillar of the Group. It works closely with the Business Groups to support their technology and product development efforts in their market segments.

The success of our Group as a broadly-diversified con-glomerate is based on entrepreneurship and the readi-ness to change. In the middle of the 1990s the company intensified its partnerships with customers through the creation of independent Business Groups. In the meantime our processes and structures have become complex, our customers more demanding and the markets more diverse. After two decades of this organizational structure, the activities of our Business Groups were at times no longer

completely aligned with the interests of the entire Group. The complexity of the organization was hampering our ability to act in an entrepreneurial manner.

We established an organizational framework in a com-prehensive project to prepare Freudenberg for its future challenges. The aim of the organizational change is to coordinate entrepreneurship, value for customers and growth in every Business Group, in such a way so that the Group can harness its entire potential, develop its performance excellence and raise efficiency. The Board of Management and Supervisory Board have decided to develop Freudenberg in four dimensions. This includes effective management, alignment of the Business Groups and Corporate Functions and the role of the Freudenberg Regional Corporate Centers. We will be working on the implementation of the measures necessary to achieve these aims in 2014.

Alongside this, we are working very intensively at improving the efficiency of our administrative processes throughout the entire Group.

We worked very hard on further key projects in 2013. One example was the global talent management process, through which we ensure the future career development of our employees throughout the Group. In this way we are able to ensure that Freudenberg will also have a sufficient number of highly-skilled leaders in the future, to achieve the Group’s challenging, strategic targets. An essential element in this process is the devel-opment programs for top-manage ment. These programs were created jointly with the international INSEAD Busi ness School.

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Further, we have reviewed our strategic and operational planning process and identified improvement potential. Currently we are working on an improved process together with experts as a basis for our 2015 to 2017 strategic period. With regard to our annual operational planning and its implementation, we have improved the process so that we are well-prepared for negative developments and that the Business Groups are in a better position to achieve their targets.

In addition, we have refined the Freudenberg Group risk management system and optimized processes.

To make our Group more visible and attractive through- out the world for all stakeholders, we are working on strengthening the Freudenberg corporate brand. Only a pro- active and well-managed corporate brand can convey the right image to the market.

We will continue working intensively on all of these key projects in the current financial year.

Outlook

We expect a small improvement in the global economy in the coming year. Economic growth in the advanced economies will improve slightly. For emerging economies, in particular China and India, we expect a high growth rate, albeit lower than in previous years.

In spite of the differing developments in the individual regions, we aim to grow faster than the market. To achieve this, we will offer our customers new, innovative solutions and continue with our key projects. This will help us to tap

into the Group potential, increasing our efficiency and improving our excellence in everything we do. On the whole, we expect moderate growth.

We will continue to act with our usual prudence, keeping a careful watch on economic developments, reacting to market changes quickly and consistently. We will continue to manage our business systematically with considerable operational efficiency and flexibility as well as solid finan-cial management.

Appreciation and thanks

We would like to thank everyone who has made a contribution to mastering the challenges successfully. First and foremost, we would like to thank our employees who, with their know-how, commitment and flexibility, have made Freudenberg’s success possible. We would also like to extend our appreciation to all our customers and business partners for their confidence and cooperation. In 2014 we will strive to make a valuable contribution each and every day to ensure their success. This is our ultimate objective.

Weinheim, March 28, 2014 For the Board of Management

Dr. Mohsen SohiSpeaker

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BUSINESS DEVELOPMENTS AND GENERAL ECONOMIC CONDITIONS

Matters of particular significance in the 2013 financial year

The global economic climate progressively improved during 2013. Furthermore, raw material prices remained at a stable level. The Freudenberg Group profited from these positive developments, and continued its strong sales growth in the 2013 financial year by marketing innovative products, displaying a high level of customer orientation and flexibility, and through structured and sustained expansion in growth markets and strategic business areas.

The Freudenberg Group was not, however, entirely immune to individual regional trends. High unemployment and the negative consumer climate in southern and eastern Europe, for example, curbed growth. In addition, unfavorable exchange rate developments, particularly with regard to the Japanese yen and US dollar, had a negative effect on the Freudenberg Group’s sales and earnings.

Freudenberg continued with the realignment of its corpo-rate law structures in the 2013 financial year with a view to simplifying the shareholding structures at the organi-zational levels below the parent companies. This process commenced at the Freudenberg Home and Cleaning Solutions Business Group.

During the year under review the company created an organizational framework to better equip the Group to master future challenges. The transparent organization is designed to allow the Freudenberg Group to leverage

its full potential, achieve excellence in all areas and attain the highest efficiency in its operations. Freudenberg is evolving in four dimensions. These include effective corpo-rate management, the orientation of the Business Groups and Corporate Functions, and the role of Freudenberg’s Regional Corporate Centers.

Apart from these activities, Freudenberg again devoted great attention to other key projects in 2013:

The global talent management process addresses the further development of employees beyond the bounda-ries of individual Business Groups with a view to ensuring that, going forward, Freudenberg has a sufficient number of managers with the qualifications required to achieve the ambitious strategic goals. The development programs for top managers jointly developed with the international INSEAD Business School are one of the central elements in this process.

Furthermore, Freudenberg reviewed the operational and strategic planning process and identified improvement potential. In respect of annual operational planning and its implementation, Freudenberg has among other things optimized the process to better enable the Business Groups to meet their targets. In addition, Freudenberg has fine-tuned the risk management system and optimized processes. The Freudenberg Group is also working on strengthening the Freudenberg global brand in order to make the Group more visible and more attractive to a global audience. Freudenberg will continue to devote great attention to all of these key projects in 2014.

During the year under review, Freudenberg continued to expand its presence in the growth markets of medical tech-nology and oil and gas technology through acquisitions

MANAGEMENT REPORT OF THE FREUDENBERG GROUP

In the 2013 financial year the Freudenberg Group reported sales of €5,646.1 million (previous year: €5,681.3 million). Consolidated profit ran at €398.8 million (previous year: €437.7 million). At December 31, 2013, the Freudenberg Group workforce totaled 33,245 employees (previous year: 30,786 employees).

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under the buy and build strategy. Helix Medical acquired 50 percent of the shares of Cambus Teoranta, Spiddal, Ireland effective January 1, 2013. The company manu-factures high-quality precision components for the medical device industry. Freudenberg Oil & Gas Technologies acquired the Vector Technology Group at the beginning of 2013. The company is one of the leading designers and manufacturers of engineered, innovative sealing solutions and differentiated seal products for the upstream segment of the oil and gas market. The Business Group also purchased the business of Caledyne Ltd., Aberdeen, UK. The company has patented unique metal-to-metal solutions for down-hole technologies in high pressure, high temperature areas.

Freudenberg also proactively developed its portfolio in its growth markets of industrial filtration and chemical surface treatment. Freudenberg Filtration Technologies acquired Aquabio Limited, Worcester, UK, effective March 1, 2013. Aquabio Limited is a leading specialist in water treatment and wastewater filtration systems for industrial applications. The acquisition of the company gives the Freudenberg Group additional know-how in water filtration. Furthermore, Freudenberg Chemical Specialities acquired the shares of the Capol Group. The company is a major supplier of release agents, glazes and sealing agents for the confectionery industry – an attractive market segment in a long-term context.

Freudenberg also expanded its position in established business. In January 2013, Klüber Lubrication, part of the Freudenberg Chemical Specialities Business Group, acquired the PFPE grease business of Solvay Specialty Polymers Italy S.P.A., Bollate, Italy, the global leader in high performance specialty polymers. Furthermore, Chem-Trend, also part of the Freudenberg Chemical

Specialities Business Group, acquired the business in release agents for composite materials of Zyvax Inc., Boca Raton, USA. The acquisition allows Chem-Trend to offer an expanded portfolio of product technologies for use in the fiber-reinforced plastic segment and the growing advanced composites market.

Freudenberg’s Dichtomatik Business Group acquired the business of the seal specialist Budlar Flexible Prod-ucts Inc., Cambridge, Canada. The highly-specialized niche company supplies customers with tailored butt joint vulcanized o-rings and sealing rings. Dichtomatik is expanding its portfolio with this purchase and acquiring additional expertise on the Canadian market. Moreover, Freudenberg Sealing Technologies further expanded its materials expertise in the manufacture of seals based on PTFE compounds by acquiring 90 percent of PTFE Compounds Germany GmbH, Biere, Germany, effective January 1, 2014.

In Colmar, France, Freudenberg Nonwovens invested €5 million in expanding production capacity for the Evolon® microfilament range. Freudenberg Filtration Technologies commissioned two logistics centers for cabin air filters in the year under review: One in Kaisers-lautern, Germany, and the other in Potvorice, Slovakia. With the construction of two modern multi-purpose halls, Freudenberg can serve the steadily-growing European market for cabin air filters even more effectively.

The Freudenberg Group also further expanded its activities in world regions. A Freudenberg Filtration Technologies sales company began operating in the greater area of Nizhniy Novgorod, Russia, at the beginning of the year. The Business Group also opened a new site in Jacareí, Brazil, to expand capacities further in order to keep pace

Management Report – Business Developments and General Economic Conditions

The Freudenberg Group began applying the International Financial Reporting Standards IFRS 10, 11 and 12 effective January 1, 2013, prior to the mandatory application date. As a result, the 50:50 joint ventures where the Freudenberg Group does not exercise control are consolidated by the equity method. Sales and workforce data as well as items concerning assets and liabilities are therefore no longer included in the consolidated financial statements on a pro-rata basis. Consequently, the NOK-Freudenberg Group China, TrelleborgVibracoustic and Freudenberg NOK Mechatronics Business Groups are consolidated by the equity method for the first time.

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created new, modern sites for the Freudenberg Regional Corporate Centers in the USA and Brazil and set up a Freudenberg Regional Corporate Center for the Indian market.

Permanent improvement has always been part of Freudenberg’s mission. The aim is to achieve efficient workflows in both production and administration. During the year under review the Group launched a comprehensive project addressing improvements in the efficiency of administrative processes throughout the company. Freudenberg will continue to devote great attention to this project in 2014. One example of optimizing manufacturing processes can be found at the Freudenberg Nonwovens facility in Kaiserslautern, Germany, where the Business Group commissioned a regranulation unit in the year under review. This plant allows materials rejected from the production process to be reused down to the last fiber.

A second example refers to a new line at Freudenberg Sealing Technologies which has automated the typical injection molding process for manufacturing energy saving seals. The line comprises a 100-tonne press and a robot for trimming the seals. That increases process stability and reduces cycle time as well as generating less scrap. Furthermore, Freudenberg Politex Nonwovens has reduced CO2 emissions from staple fiber nonwoven production in Novedrate, Italy, by a further 4 percent.

There was a change in the Board of Management in 2013. Following a careful review, the relevant company bodies accepted the request of Dr. Martin Stark to be allowed to step down from the position as Board of Management member. Dr. Martin Stark left the Board of Management effective January 31, 2013.

with high growth in the air filters business in South Amer-ica. The Brazilian filter business has tripled in the last five years. Freudenberg erected a new filter production plant in Chengdu, Western China. The Freudenberg Group is investing approximately €4.5 million in response to rising demand for automotive filters and is expanding its global production network. EagleBurgmann KE Pvt. Ltd., Chennai, India, invested €900,000 in a new production facility and added solutions for nonmetal expansion joints and metal bellows to its portfolio.

Freudenberg Sealing Technologies extended its com-mitment in India. NOK-Freudenberg Asia Holding Co. Pte. Ltd., Singapore, increased its share in the joint venture with the Singh family, and now holds over 74 percent of Sigma Freudenberg NOK Pvt. Ltd, New Delhi, India. The Business Group also extended its activities in Turkey and acquired the shares of the company now known as Freudenberg Sealing Technologies Sanayi ve Ticaret A.S., Bursa, Turkey, from the joint venture partner Coşkunöz Holding, Bursa, Turkey.

TrelleborgVibracoustic also invested in the growth markets of India and Turkey, fully integrating Trelleborg’s Indian activities in Noida, India, and the joint venture shareholdings in Mohali, India, and Bursa, Turkey. TrelleborgVibracoustic and the Turkish company HSS Otomotiv ve Lastik Sanayi A.S., Bursa, Turkey, established a 50:50 joint venture to produce air springs for commer-cial vehicles in June 2013. With the formation of the joint venture, TrelleborgVibracoustic has become the second biggest air spring manufacturer in Europe and the third largest worldwide.

In order to fully leverage the strengths of the Freudenberg Group and to ensure efficient processes, the Group

13

Global economic situation

The global economic climate progressively improved during 2013. On several occasions during the first half of the year the European monetary union appeared to have been pushed to its limit. Greece, Spain, Portugal and Italy could not halt their economic downturn. At the same time, the BRIC countries, usually strong growth drivers, reported weaker growth rates: Brazil (2013: 2.3 percent), Russia (1.3 percent), India (4.5 percent) and China (7.7 per-cent). These negative signals caused uncertainty in many companies which therefore postponed investment projects, thus compounding the weak trend.

Confidence in the effectiveness of the measures initiated by governments and central banks, and thus the will-ingness to clear the investment backlog only emerged from the middle of the year. The traditional industrialized nations of the USA (1.9 percent), Japan (1.5 percent) and Germany (0.4 percent) showed comparatively robust growth: The US economy benefited from the wage restraint of recent years and from low energy

prices as a result of national oil and gas production activities. Growth in the Japanese economy was boosted by the central bank’s expansive monetary policy. German exports increased further and Germany con-tinued to rank among the growth table leaders in the eurozone (minus 0.4 percent). The countries of South East Asia once again showed very robust growth and are increasingly positioning themselves as attractive produc-tion locations for global companies.

Developments in the Freudenberg Group’s key sales markets in 2013 were as follows: Growth in the interna-tional automotive industry was once again strongest in

China, where government obstacles to the purchase and registration of vehicles did not bring a sustained deceler-ation in growth. New registrations for the full year rose by 18 percent, and production also rose by 18 percent. The USA was another important driver for the global automotive industry; good economic developments there triggered a 7.5 percent increase in demand for light vehi-cles, with production also rising by 7.5 percent. In Europe,

GDP growthRegion 2012 2013Eurozone - 0.7 % - 0.4 %

Germany 0.7 % 0.4 %

France 0.0 % 0.3 %

Italy - 2.5 % - 1.9 %

Spain - 1.6 % - 1.2 %

Portugal - 3.2 % - 1.4 %

Ireland 0.2 % 0.3 %

Greece - 6.4 % - 3.7 %

United Kingdom 0.3 % 1.8 %Source: National statistical offices

EUROZONE

GDP growthRegion 2012 2013USA 2.8 % 1.9 %

Mexico 3.9 % 1.1 %

Brazil 1.0 % 2.3 %

Argentina 1.9 % 3.5 %

Japan 1.4 % 1.5 %

Russia 3.4 % 1.3 %

China 7.8 % 7.7 %

Taiwan 1.5 % 2.1 %

India 3.2 % 4.5 %Source: National statistical offices

WORLD REGIONS

Management Report – Business Developments and General Economic Conditions

14

In the USA (4 percent) and Germany (3 percent), the world’s two leading producing nations for medical technology, growth slackened further in 2013, but still remained at a solid level.

Global consumer demand again remained relatively steady despite the economic uncertainty.

Raw material prices fluctuated during the course of the year, sometimes also showing a slightly negative trend which, however, stabilized towards the end of the year. The annual average price for crude oil was US$109 per barrel, 1.8 percent down on the previous year.

The euro rallied slightly against the US dollar in 2013. The annual average exchange rate was US$1.33/€ compared with US$1.29/€ in the previous year.

the financial and debt crisis continued to impact business. Despite the first positive signs in Spain, the eurozone recorded an overall decline of 5 percent in new registra-tions, with production down 0.5 percent.

Given the reluctance to commit to capital investments, there was only moderate growth in the global mechanical and plant engineering sector (1 percent). In Germany, production dipped slightly by just under 2 percent. At 2.5 percent, the decline in the eurozone was more marked. The USA reported further growth of 1.5 percent on the back of a strong plus for the previous year. In China, growth was on a par with the previous year and ran at around 9 percent.

In the textile and apparel industry, the world market leader China only managed to grow production by 7 percent in 2013. Rising wage levels in the People’s Republic of China gave a competitive edge to manufacturers in other countries in South East Asia and they were thus able to grow market share in North America and the eurozone in particular, at the expense of local manufacturers. Textile and apparel production fell by some 3 percent in the USA and by 2.5 percent in Europe.

The recession in the eurozone construction industry continued. Overall, production dropped by 3 percent in 2013. While the industry finally began to pick up again slightly (3 percent) in Spain following a long lean spell, Italy (11 percent), Poland (13 percent) and Portugal (16 percent) recorded double-digit downturns. There was a significant improvement in the real estate market in the USA, which boosted activity in the domestic construction industry by almost 5 percent. Growth was even higher in Japan (10 percent) and China (9.5 percent).

REAL GDP DEVELOPMENT IN BRIC COUNTRIES AND GERMANY SINCE 2007Index 2007 = 100

170

160

150

140

130

120

110

100

90

Source: National statistical offices

2007 2008 2009 2010 2011 20132012

China

India

BrazilRussia

Germany

15

Products and markets

The 2013 financial year was characterized by a rise in demand on almost all markets and developments became increasingly positive in the second half of the year.

As a result of the consolidation at-equity applied for the first time, sales by the 50:50 joint ventures – including the NOK-Freudenberg Group China, TrelleborgVibracoustic and Freudenberg NOK Mechatronics Business Groups – are no longer included.

Since these Business Groups contribute significantly to automotive OEM business, the share of automotive business in Freudenberg sales reported last year for the 2012 financial year declines from 35 percent (pro-rata consolidation method) to 29 percent (at-equity consolida-tion method). These sales include the entire Vibracoustic business for the first half of 2012. Due to the consolidation at-equity, TrelleborgVibracoustic sales for 2013 are not included, and the share of sales attributable to the auto-motive sector in 2013 is therefore 24 percent.

Application of the at-equity consolidation method also had an impact in the general industry sector, but the effects on the presentation of sales by sectors are not as severe.

The second most important customer grouping for the Freudenberg Group after the automotive OEM busi-ness was the mechanical and plant engineering sector accounting for a total of 16 percent (previous year: 16 percent). Business with final users and spare parts business accounted for some 13 percent (previous year:

13 percent), respectively 8 percent (previous year: 7 per-cent) of total sales. Other major customer groupings for the Freudenberg Group are the textile and apparel industry with 7 percent (previous year: 5 percent), energy and water with 6 percent (previous year: 5 percent), construc-tion with 6 percent (previous year: 6 percent), the chemical industry with 4 percent (previous year: 4 percent) and the medical and pharmaceutical industry with 4 percent (pre-vious year: 3 percent).

With few exceptions, the regional distribution of sales remained largely unchanged in 2013. The Freudenberg Group generated 28 percent of total sales (previous year: 28 percent) in the European Union (excluding Germany). Germany accounted for 19 percent (previous year: 21 percent) of total sales. This is attributable to the fact that sales by TrelleborgVibracoustic in 2013 are not included. The Other European countries accounted for 6 percent (previous year: 5 percent). Business in North America accounted for 22 percent of total sales (previous year: 23 percent). 5 percent (previous year: 6 percent) of total sales were generated in South America. The share attributable to the Asia region was 18 percent (previous year: 15 percent). The Freudenberg Group generated 2 percent (previous year: 2 percent) of total sales in Africa/Australia. Asia accounted for the strongest regional growth in sales, particularly as a result of the remeas-urement of the Chinese and South Korean 50:50 joint ventures.

SALES BY SECTORS[%]

Energy andwater 6Chemical 4 Medical and pharmaceutical 4Textile and apparel 7

Construction 6

Mechanical and plant engineering 16

Other industry sectors 12

Final users 13 Spare parts business 8

Automotive OEMs 24

At-equity

SALES BY REGIONS[%]

Africa/Australia 2

Asia 18

South/Central America 5

North America 22

Germany 19

EU (excluding Germany) 28

Other European countries 6

At-equity

Management Report – Business Developments and General Economic Conditions

16

The most important non-controlling interests held by Freudenberg concern the Japanese companies NOK Corporation and Japan Vilene Company Ltd. (JVC), both registered in Tokyo, Japan.

The NOK Group manufactures and supplies sealing products, flexible printed circuits, roll products for office equipment and further products such as specialty lubricants.

JVC manufactures nonwovens for the clothing, automotive, electrical and consumer goods industries as well as for applications in the medical sector and filtration.

The proven partnership between Freudenberg and these two Japanese companies has already lasted more than 50 years. Numerous activities in the USA, Asia (China and India) and in Europe have been jointly established during the decades-long partnership.

Further details can be found in note (4) Investments in joint ventures and note (5) Investments in associated companies in the Notes to the Consolidated Financial Statements.

Consolidated group

At year-end 2013, the number of companies in the Freudenberg Group totaled 498 located in 56 countries. 468 of these companies were included in the consoli-dation. 392 companies, including 129 production and 164 sales companies, were fully consolidated.

Investments in joint ventures and associated companies

The joint ventures with Trelleborg AB, Trelleborg, Sweden, and NOK Corporation, Tokyo, Japan, are of major importance for Freudenberg.

The purpose of the TrelleborgVibracoustic joint venture with Trelleborg AB is to strengthen activities in the auto-motive business. Trelleborg AB and Freudenberg Societas Europaea (hereinafter: Freudenberg SE), Weinheim, Germany, each hold a stake of 50 percent.

NOK-Freudenberg Group China is a 50:50 joint venture between the Japanese NOK Corporation and Freudenberg SE with the objective of serving the high-growth Chinese market with locally-produced and imported sealing products.

Freudenberg NOK Mechatronics is a further joint venture of Freudenberg and NOK Corporation. The joint venture’s business activities range from the development and pro-duction of mechatronic solutions based on large flexible printed circuits, ready-for-use SMD assembly flat wiring harnesses which can integrate switches, sensors, LED and other functional components, and connector technology.

17

SALES AND EARNINGS POSITION OF THE FREUDENBERG GROUP

Sales

For the management of its operating activities, Freudenberg consolidates the sales figures of its joint ventures by the pro-rata method in its internal reporting. This ensures both greater transparency as regards the interaction of business processes, including the activi-ties of the joint ventures, and, as in the case of 2013, improves comparability with the previous year’s figures.

On this basis, the Freudenberg Group recorded sales of €6,622.5 million in the year under review (previous year: €6,321.7 million), thus setting a new record. Overall, sales rose by 4.8 percent or €300.8 million year-on-year. Adjusted for the effects of acquisitions and disinvestments to the amount of €148.1 million and exchange rate effects, sales were 4.5 percent or €286.5 million higher than the previous year. Sales increased in almost all Business Areas.

On the basis of the application of IFRS 11, which pre-scribes the use of the equity method, to external financial reporting prior to the mandatory application date, sales for 2013 were €5,646.1 million, as the 50:50 joint ventures without control by Freudenberg are no longer included in the consolidated financial statements by the pro-rata method.

In the consolidated financial statements, the values for the 2012 financial year have also been restated on this basis in order to ensure that the figures of the Freudenberg Group for the 2013 financial year are comparable with those for 2012.

Nevertheless, one aspect which makes comparability problematic is the first-time application of equity consol-idation to the TrelleborgVibracoustic joint venture. This means that the 50 percent share of Freudenberg in the sales of the joint venture is no longer included for the entire 2013 financial year. However, in the case of 2012, the pro-rata share of sales has only been eliminated from the restated figures for the second half of the year as the joint venture was established in July 2012. Even on the basis of the new equity consolidation method for joint ventures, the sales of the Vibracoustic Business Group from January to July, 2012, amounting to €389.9 million, are still included in the restated figures.

If the inclusion of Vibracoustic for part of 2012 is elimi-nated, sales grew by 6.7 percent from €5,291.4 million in 2012 to €5,646.1 million in 2013 (see diagram above).

5,646.1

2012

5,291.4

2013

6,622.5

2012

6,321.7

2013

SALES DEVELOPMENT – EFFECT OF AT-EQUITY METHOD [€ MILLION]

Pro-rata At-equity

6,000

7,000

5,000

4,000

3,000

2,000

1,000

0

5,681.3Vibracoustic

+ 4.8 % + 6.7 %

SALES DEVELOPMENT [€ MILLION]

6,000

7,000

5,000

4,000

3,000

2,000

1,000

02008

5,050.1

2009

4,200.8

2010

5,481.4

2011

6,006.5

2011 SE

5,991.9

2012 2013

6,321.7 6,622.5

Joint ventures are consolidated on a pro-rata basis under internal reporting procedures. Figures based on Freudenberg & Co. KG until 2011.

Pro-rata

FREUDENBERG GROUP

2012 2013

Sales [€ million] 5,681.3 5,646.1

Profit from operations [€ million] 531.6 457.3

Consolidated profit [€ million] 437.7 398.8

Workforce 30,786 33,245

At-equity

Management Report – Business Developments and General Economic ConditionsSales and Earnings Position of the Freudenberg Group

18

Consolidated profit was €398.8 million (previous year: €437.7 million).

Non-financial key performance indicators are presented and commented in the section on “Responsible conduct”.

FINANCIAL POSITION OF THE FREUDENBERG GROUP

Financing management

Freudenberg SE is responsible for all the financing activities of the Freudenberg Group, thus ensuring the Freudenberg Group has sufficient liquid funds at all times. Freudenberg Group companies obtain the financing they require via cash pools or loans provided by the internal financing companies – for legal, fiscal and other reasons financing in some countries also takes the form of bank loans guaranteed by Freudenberg SE. The Freudenberg Group pursues a conservative approach with regard to capital structure.

Freudenberg does not expose itself to financial risks through speculation with derivative financial instruments but uses such instruments only for hedging, and therefore reducing, risks in connection with underlying transac-tions. Future transactions are only hedged if there is a high probability of occurrence. In order to ensure the identification and management of all financing risks,

EARNINGS POSITION

Freudenberg uses the operating result as a control param-eter for internal reporting. This is the profit from operations without special effects such as the cost of major restruc-turing measures.

Applying pro-rata consolidation for joint ventures, the operating result in 2013 was €512.9 million, represent-ing a year-on-year increase of €63.3 million. On the basis of the equity method, the profit from operations in 2013 was €457.3 million, representing a year-on-year decrease of €74.3 million. This decrease in profit from operations was mainly due to high one-off other income in 2012, in particular the extraordinary effect of income from the contribution of the Vibracoustic Business Group to the TrelleborgVibracoustic joint venture in July 2012.

Contribution margins increased with higher sales; the reasons included improved capacity utilization, produc-tivity enhancement measures and the implementation of price increases on the market. Selling costs rose in proportion to sales. Administration expenses grew as a result of the global expansion strategy and higher pay increases. Various restructuring measures implemented in 2013 were insufficient to compensate for this increase in full.

Research and development expenses grew by 1.6 per cent from €188.5 million in 2012 to €191.5 million in 2013.

19

Management Report – Business Developments and General Economic ConditionsFinancial Position of the Freudenberg Group

the Freudenberg Group pursues a holistic approach to financial risk management. The existing financial risks are identified and limited in an institutionalized control loop.

Although financing conditions have loosened signifi-cantly compared with previous years, credit and cap-ital markets continue to be volatile. This also impacts the financing conditions for industrial companies. The Freudenberg Group is in a good position to tackle these challenges thanks to its conservative finance policy. Liquidity measures include high reserves of liquid funds and committed credit lines with core banks. In the year under review, the repayment and re-issue of the cer-tificates of indebtedness which have been used since 2008 was the largest single financing measure. The new, extended due date structure in this context provides additional financing security.

Cash flow from operating activities

Cash flow from operating activities in the 2013 financial year amounted to €515.9 million, corresponding to a year-on-year increase of €70.7 million. This development is in particular attributable to the change of €128.4 mil-lion in profit and loss on the disposal of intangible assets, tangible assets, investment properties and financial assets. In the previous year, this item included income from the disposal of financial assets in connection with the disposal of the Vibracoustic Business Group.

Cash flow from investing activities

The outflow of funds from investing activities in the 2013 financial year amounted to €519.7 million and is therefore significantly higher than the previous year (€186.4 million). Major investing activities focused on the Freudenberg Sealing Technologies, EagleBurgmann and Freudenberg Chemical Specialities Business Groups and the acquisition of companies.

Cash flow from financing activities

Cash flow from financing activities in the 2013 financial year was €54.5 million (previous year: €-270.6 million).

While payments to the shareholders and non-controlling interests remained at the same level as the previous year, the change is mainly the result of the repayment of a loan to TrelleborgVibracoustic.

The Freudenberg Group can meet all of its payment obligations at any time..

2012 2013Cash flow from operating activities 445.2 515.9Cash flow from investing activities - 186.4 - 519.7Cash flow from financing activities - 270.6 54.5

Cash and cash equivalents at beginning of year 682.1 652.2Changes in cash and cash equivalents with effect on payments - 11.8 50.7Changes in cash and cash equivalents from exchange rate differences - 1.5 - 21.9Changes in cash and cash equivalents from changes in consolidated group - 16.6 - 8.1Cash and cash equivalents at end of year 652.2 672.9

Securities and cash at bank and in hand 652.2 672.9

SUMMARY OF CASH FLOWS [€ MILLION]

20

ASSETS, EQUITY AND LIABILITIES OF THE FREUDENBERG GROUP

Dec. 31, 2012 Dec. 31, 2013 Change[€ million] [%] [€ million] [%] [%]

ASSETS Intangible assets, tangible assets and investment properties 1,993.2 35.2 2,193.8 37.3 10.1Other non-current assets 1,258.7 22.1 1,282.0 21.8 1.9Non-current assets 3,251.9 57.3 3,475.8 59.1 6.9Inventories and current receivables 1,723.9 30.3 1,678.2 28.6 - 2.7Other current assets 694.5 12.3 711.1 12.2 2.4Current assets 2,418.4 42.6 2,389.3 40.8 - 1.2Non-current assets held for sale and disposal groups 7.0 0.1 7.5 0.1 7.1

5,677.3 100.0 5,872.6 100.0 3.4EQUITY AND LIABILITIESEquity 2,668.0 47.0 2,774.9 47.3 4.0Long-term provisions 559.3 9.9 555.0 9.4 - 0.8Other non-current liabilities 632.8 11.1 857.3 14.6 35.5Non-current liabilities 1,192.1 21.0 1,412.3 24.0 18.5Current liabilities 1,817.2 32.0 1,685.4 28.7 - 7.3Liabilities in connection with non-current assets held for sale and disposal groups 0.0 0.0 0.0 0.0 0.0

5,677.3 100.0 5,872.6 100.0 3.4

21

At €5,872.6 million (previous year: €5,677.3 million), the total assets of the Freudenberg Group increased by €195.3 million

The rise in the balance sheet total is chiefly attributable to the increase in non-current assets, mainly as a result of the acquisition-driven increase in intangible assets.

The fall in current assets is chiefly the result of the fall in receivables from TrelleborgVibracoustic, which was partly offset by the increase of €20.7 million in securities and cash at bank and in hand. The increase in securities in cash and bank and in hand and the decrease in finan-cial debt had a positive effect on net debt, which fell by €106.4 million to €519.1 million.

The equity ratio rose to 47.3 percent (previous year: 47.0 percent). This was chiefly attributable to the posi-tive result. Exchange rate developments and dividend payments to Freudenberg & Co. Kommanditgesellschaft, Weinheim, had a partially offsetting effect.

The long-term portion of financial debt, including the major part of the newly issued certificates of indebted-ness, accounted for about €191 million of the rise of €220.2 million in non-current liabilities.

The reduction of €131.8 million in current liabilities is chiefly attributable to the fall in short-term financial debt (about €277 million), especially as a result of the repay-ment of loans under certificates of indebtedness which were due. This was mainly offset by the increase in trade payables and other short-term provisions.

Dec. 31, 2012 Dec. 31, 2013 Change[€ million] [€ million] [%]

Securities and cash at bank and in hand 652.2 672.9 3.2Financial debt 1,277.7 1,192.0 - 6.7Net debt 625.5 519.1 - 17.0

Developments in the assets, liabilities, financial position and earnings position of the Freudenberg Group were stable. The Freudenberg Group was therefore able to meet its growth forecast and sales targets. The events reported in the section “Post-reporting date events” do not change this assessment.

Management Report – Financial Position of the Freudenberg Group

22

Less friction, more environmental protection

23

Reducing fuel consumption and thereby lowering emissions is still at the top of the automotive industry’s wish list. Freudenberg Sealing Technologies is making a valuable contribution to achieving these goals with its LESS (Low Emission Sealing Solutions) package, which combines advanced sealing solutions that help further reduce emissions from cars and trucks as well as harnessing other efficiency potential in internal combustion engines with mature seal technology for alternative fuels and drive concepts such as electric cars.

One example from the LESS package is the Levitex gas-lubricated mechanical seal, where the slide ring interacts with a counter-ring to form a cushion of air, resulting in up to 90 percent less frictional loss than a conventional crankshaft seal ring. Because the seal is almost friction-free, operating time is longer, there is less wear, lower consumption and ultimately less environmental pollution, with CO2 emissions per kilometer reduced by as much as one gram.

24

Business development

For Freudenberg Sealing Technologies the 2013 finan-cial year was in general very satisfactory. The Business Group’s automotive business developed well, particularly in North America. In Europe, sales remained roughly on a par with the previous year.

Business with industrial customers was challenging. Demand fell in both Europe and North America. The high-margin distribution business in particular saw sales decline. One of the main reasons for weak industrial demand was continued global economic uncertainty, particularly during the first half of the year. Towards the end of the year, though, business with industrial customers picked up significantly.

Freudenberg Sealing Technologies has divided business into specific market segments which are served on a tar-geted basis. The continuous dialog with customers ena-bles the Business Group to anticipate their expectations and requirements and translate these into appropriate

FREUDENBERG SEALING TECHNOLOGIES

Annual figures

In the year under review, the Business Group reported a sustained increase in sales to €1,695.4 million (previous year: €1,684.8 million) and profit. Freudenberg Sealing Technologies employed 13,301 employees as at December 31, 2013 (previous year: 11,999 employees). The increase is chiefly attributable to acquisitions.

REVIEW OF OPERATIONS BY BUSINESS AREA

The Freudenberg Group’s four Business Areas – Seals and Vibration Control Technology, Nonwovens and Filtration, Home and Cleaning Solutions, and Specialties and Others – focus on long-term, sustainable and profitable growth. We have an in-depth understanding of our customers’ needs and can harness our high technical expertise and enormous innovative strength to constantly improve our products, thus making an important contribution to helping our customers solve the challenges they face.

SEALS AND VIBRATION CONTROL TECHNOLOGY BUSINESS AREA

In the 2013 financial year, the Seals and Vibration Control Technology Business Area comprised the following eight Business Groups:

Freudenberg Sealing Technologies EagleBurgmann NOK-Freudenberg Group China Dichtomatik Freudenberg Oil & Gas Technologies Helix Medical Freudenberg Schwab Vibration Control TrelleborgVibracoustic

In 2013, roughly three quarters of sales in this Business Area were generated by the automotive industry and the mechanical and plant engineering industry. Sales in this Business Area rose to €3,827.8 million (previous year: €3,679.1 million). The headcount at year-end rose to 26,917 (previous year: 25,036).

25

Freudenberg uses the sales by the joint ventures based on the pro-rata consolidation and the operating result as internal control parameters. For this reason, the sales and workforce data in the section entitled “Review of Operations by Business Area” are presented on a pro-rata basis. In the consolidated financial statements, however, the 50:50 joint ventures are consolidated by the equity method. Sales and workforce data as well as assets and liabilities items are therefore not taken into consideration. This primarily concerns the NOK-Freudenberg Group China, TrelleborgVibracoustic and Freudenberg NOK Mechatronics Business Groups.

solutions. Freudenberg Sealing Technologies combines technological know-how with knowledge of the special requirements and customer wishes in the various market segments.

In regional terms, Freudenberg Sealing Technologies focuses on the BRIC countries – i.e. Brazil, Russia, India and China – with their significant growth opportunities. Furthermore, the Business Group is also targeting stable growth in Europe and North America.

Key events

Materials know-how is one of the most important success factors for Freudenberg Sealing Technologies. The materials the Business Group uses for its seals are mainly produced in-house and therefore comply with the company’s own high quality standards. One outstanding example of this is the development of a new standard polyurethane which goes to market in 2014.

The new generation of polyurethane was developed for a wide array of uses. The material is significantly more resistant to water and withstands major temperature fluc-tuations. The usage spectrum ranges between -40 and +120°C. This was made possible by a specific modifica-tion of the polyurethane components responsible for its temperature characteristics which does not compromise the material’s other properties. As a result, manufacturers no longer need to store different versions of components such as hydraulic cylinders. A new production hall for the new material is being built in Schwalmstadt. Investment totals €4.2 million.

Furthermore, Freudenberg Sealing Technologies expanded its materials expertise in the manufacture of seals based on PTFE compounds by acquiring 90 percent of PTFE

Compounds Germany GmbH, Biere, Germany, effective January 1, 2014. The medium-sized company develops and produces high-quality PTFE compounds and is a supplier and partner for various industries, particularly the automotive industry

Freudenberg already made a strategic investment in new know-how in multi-component injection molding production technology and in forward-looking plastic products through the joint venture with the Schneegans Group concluded in 2012. The multi-component injection molding production method developed by Schneegans enables the manufacture of sophisticated thermoplastic seal components, such as components for automotive engine compartments, in only a few processing steps. Moreover, these plastic products support carmakers in their efforts to reduce vehicle weight and thus lower CO2 emissions.

In 2013, Freudenberg Sealing Technologies again pursued an acquisition strategy designed to strengthen the global presence in defined regions.

The former Freudenberg Seals and Vibration Control Technology and Freudenberg NOK General Partner-ship Business Groups were combined back in 2011 to form Freudenberg Sealing Technologies. The European, American and Indian business was brought together under one roof. Business in China was added in January 2014 in the shape of the NOK-Freudenberg Group China joint venture co-managed by Freudenberg Sealing Technologies and NOK Corporation. To this end, Freudenberg Sealing Technologies established a dedicated region for China. Going forward, global customers are to be served from a single source. Some 2,300 employees are currently employed at the sites in Changchun and Wuxi, both China.

Management Report – Review of Operations by Business Area

26

interacts with a counter-ring to form a cushion of air, result-ing in 90 percent less frictional loss than a conventional crankshaft seal ring. This reduces CO2 emissions by 0.5 to 1 gram/km during driving. Furthermore, longer operating times are possible due to decreased wear.

The newly-developed Gamesa G11X nacelle seal is the first nacelle seal for wind turbines. It was installed for the first time on the Canary Islands in April 2013. The seal ensures a constant pressure in the nacelle and can close extreme gaps caused by nacelle deformation. The seal has a long service life of 20 years and can be replaced even under extreme conditions.

The high-temperature Plug & Seal connection used in engine construction is also already in use. Customers benefit from increased resistance to high temperatures. This connection is also cost-effective because installation is easy and only requires a few steps.

In order to feed the world’s growing population, food production will have to almost double by 2050. For the food industry, this means greater automation with longer machine times, coupled with high flexibility for swift product changeovers. Sealing solutions from Freudenberg Sealing Technologies meet these challenges. One topical example is external-sealing Hygienic Usit rings made by Freudenberg. In combination with precisely-dimensioned special screws and cap nuts, these rings prevent any kind of contamination in the area between the nuts and the hexagonal screws, thereby achieving the highest level of safety in food production and minimizing servicing and maintenance for operators. Another example of the innovative strength of Freudenberg Sealing Technologies in the food industry is the Fluoroprene XP sealing mate-rial which prevents the adulteration of taste in food production.

The Business Group has among other things also expanded its commitment in India. NOK-Freudenberg Asia Holding Co. Pte. Ltd. increased its share in the joint venture with the Singh family and now holds a 74 percent share of Sigma Freudenberg NOK Pvt. Ltd. Some 1,100 employees are currently employed at the site in Basma, Northern India. Freudenberg Sealing Technologies is establishing a dedicated region for India in order to serve customer wishes there even more effectively.

In addition, Freudenberg Sealing Technologies acquired the remaining shares in the Turkish company Freudenberg Sealing Technologies Sanayi ve Ticaret A.S. The facility was already a partner production plant for the Oil Seals Division. The company with its workforce of 135, which produces some 100 million bearings annually, especially for the automotive industry, is now wholly-owned by Freudenberg Sealing Technologies, which plans to use this step to further expand its business opportunities in Turkey in the context of its growth initiative and to expand the production of sealing solutions for general industry and the automotive aftermarket business.

The Business Group invested some €4 million in new production halls and other site infrastructure at the facility inOberwihl, Germany. It is planned to invest a further lion – alsoin production halls and site infrastructure – in a second step.

Freudenberg Sealing Technologies innovates in numerous areas, from design and materials production through to mature, finished products. One promising product is a cell frame seal, a mounting structure for large pouch-type cells in lithium-ion batteries which is currently at the design analysis stage.

The Levitex gas-lubricated mechanical seal comes extremely close to the vision of a friction-free seal. The slide ring

Freudenberg Sealing Technologies 2012 2013Sales [€ million] 1,684.8 1,695.4Workforce 11,999 13,301

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NOK-Freudenberg Group China, Freudenberg Schwab Vibration Control and Dichtomatik were brought together under the roof of Freudenberg Sealing Technologies on January 1, 2014.

Profile:The Technology Specialist Freudenberg Sealing Technologies is a supplier, development and service partner for worldwide customers in the automotive indus-try, civil aviation, mechanical engineering, shipbuilding, food and pharmaceuticals, agricultural and construction machinery, and many other sectors.

Based on the Simmerring®, which was developed by Freudenberg in 1929, Freudenberg Sealing Technologies has built up a broad and continuously expanding range of seals. Success is based on the in-depth knowledge of pro-cesses, innovative development methods and advanced materials – regardless of whether the product is a cus-tomized solution or a complete sealing package to meet complex specifications.

A global network of production and sales companies brings Freudenberg Sealing Technologies close to its customers in 32 different market segments. Together with its long-standing partner NOK Corporation, Tokyo, Japan, Freudenberg Sealing Technologies is expanding its customer-oriented competence further, above all in the growth markets of China, India and Brazil, as well as in North America.

Products and services Simmerrings, diaphragms, high-precision molded parts, bellows, dust boots, hydraulic accumulators, O-rings, seals for hydraulic and pneumatic applications, frame gaskets,

silicone seals, shock absorber seals, valve stem seals and various special seals; sealing packages for engines, gearboxes, brakes, axles and steering systems; rubber, plastic and PTFE components for suspensions; special seals for electrical and fuel systems; sealing solutions for special applications

Production locations Austria, Brazil, Canada, Czech Republic, Estonia, France, Germany, Hungary, India, Italy, Mexico, Spain, Turkey, UK, USA

Freudenberg Sealing Technologies GmbH & Co. KG 69465 Weinheim | Germany Phone: +49 6201 80-6666 Fax: +49 6201 88-6666 E-mail: info@fst.com www.fst.com

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Business development

Growth at NOK-Freudenberg Group China once again outpaced the Chinese automotive industry. This was due inter alia to strong growth among Japanese automakers. Furthermore, production of actuators and bonded piston seals in China has expanded. Both segments show signi-ficant potential for growth.

Sales in the general industry sector were largely on a par with the previous year – in part thanks to the further expansion of the distributor network and the market initia-tives in the heavy hydraulics sector.

NOK-Freudenberg Group China reported a further increase in earnings despite steadily rising wages costs and growing competition. This was in part due to the higher share of local production, efficiency measures in production and exchange rate effects resulting from a weaker Japanese yen.

Key events

The strategic priorities at NOK-Freudenberg Group China in 2013 concerned personnel development, produc-tion localization and automation, and maintaining and expanding market shares.

NOK-Freudenberg Group China moved into the world’s largest factory for sealing technology in Wuxi in 2012. Processes were optimized further during the year under review, generating cost savings. NOK-Freudenberg Group China was integrated in the Freudenberg Sealing

NOK-FREUDENBERG GROUP CHINA

Annual figures

In 2013, the NOK-Freudenberg Group China joint venture grew sales to €260.3 million (previous year: €227.1 million) – based on Freudenberg’s 50 percent participation in the joint venture, the share of sales attributable to Freudenberg is €130.2 million (previous year: €113.6 million).

The rise in sales in 2013 is mainly due to the start of accumulator production in Changchun, strong organic growth in the automotive industry and the recovery of business with Japanese carmakers in the wake of the China-Japan island dispute.

The headcount at year-end attributable to Freudenberg rose to 1,306 employees (previous year: 1,190 em ployees) – chiefly due to sales growth and the expan-sion of the local sales and production organization.

NOK-Freudenberg Group China [based on pro-rata consolidation]

2012 2013

Sales [€ million] 113.6 130.2Workforce 1,190 1,306

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LocationsChina, Hong Kong

NOK-Freudenberg Group China Suite 14 B to H International Ocean Shipping Building 720 Pudong Avenue Shanghai 200120 | P.R. of China Phone: +86 21 5036-6900 Fax: +86 21 5036-6307 E-mail: nfgc.headquarter@nfgc.com.cn www.nfgc.com.cn

Technologies Business Group effective January 1, 2014 and is jointly managed by Freudenberg Sealing Techno-logies and NOK Corporation.

Profile:NOK-Freudenberg Group China is a 50:50 joint ven-ture between NOK Corporation, Tokyo, Japan, and Freudenberg serving the high-growth Chinese market with locally-produced and imported sealing products. The joint venture supplies numerous European, US, Japanese and Chinese customers in the automotive and general industry sectors in China. In cooperation with the partners NOK Corporation and Freudenberg Sealing Technologies, the locally-manufactured product range is continuously expanded in line with market requirements. Market success is based on those factors which also account for the success of the Freudenberg/NOK Corporation network in other regions, namely technological leader-ship and quality.

Products and services Production and sale of seals for the automotive industry such as Simmerrings, valve stem seals, shock absorbers, steering column seals, drivetrain seals, bellows, dust caps, O-rings, frame gaskets, membranes and torsional vibration dampers. The product range also includes seals for gen-eral mechanical engineering applications such as hydrau-lic and pneumatic seals or seals for washing machines as well as vibration control elements for the electronics and consumer goods industry which are either produced in China or imported from Europe, North America or Japan.

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Solutions for the most demanding applications

31

Oil and gas production places extraordinarily high demands on materials and technologies. Because reserves are sometimes located several kilometers below ground, extremely high pressures occur during well drilling operations. Safety devices known as blowout preventers are used to “prevent” the uncontrolled flow of liquids and gases in the event of a sudden pressure surge. Freudenberg Oil & Gas Technologies produces sealing components for these blowout preventers.

The American Petroleum Institute (API), the largest U.S. trade association for the oil and natural gas industry, has defined mandatory requirements for all blowout preventer OEMs and their suppliers. Freudenberg Oil & Gas Technologies recently developed new elastomer compounds for blowout preventer seals. Initial test findings indi-cate that the Freudenberg product exceeds the performance requirements for API certification. Certification criteria include the manufacturing process and product performance. API certification would mean that Freudenberg Oil & Gas Technologies could supply OEMs and drilling companies direct, thus expanding its market potential.

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remained at a high level because global oil consumption increased slightly in 2013. Non-OPEC states reported a rise in production, while crude oil production levels in the OPEC states fell.

Freudenberg Oil & Gas Technologies continued to focus on specific market segments in the year under review as the Business Group set its sights on becoming the leading supplier of advanced sealing solutions and differentiated sealing products for the oil and gas industry.

Key events

Freudenberg Oil & Gas Technologies made significant progress in implementing Freudenberg’s strategy to expand activities in the oil and gas sector based on a buy and build approach. The Business Group acquired the Vector Technology Group in early 2013, a leading single source supplier of high-integrity sealing solutions for the most challenging applications in the upstream segment. The company mainly designs and manufactures connector products used in offshore platforms and subsea installa-tions. These products feature proprietary and patented metal-to-metal seal technology.

Integration of the Vector Technology Group made good progress in the year under review and focused on the integration of the workforce and on improving structures; this led among other things to rationalization in supply chain processes and production processes.

The Business Group also purchased the business of Caledyne Ltd. The company has patented unique metal-to-metal solutions for down-hole technologies in high pressure, high temperature areas.

FREUDENBERG OIL & GAS TECHNOLOGIES

The Business Group changed its name from Freudenberg Oil & Gas to Freudenberg Oil & Gas Technologies during the year under review. The new name underscores the technical solution and material development capabilities with regard to components for the oil and gas industry.

Annual figures

Freudenberg Oil & Gas Technologies grew sales to €140.4 million (previous year: €52.4 million) in 2013. At year-end, the Business Group had a headcount of 690 employees (previous year: 349 employees). These increases in sales and workforce are in particular attributable to the acquisition of the Vector Technology Group during the year under review.

Business development

Market conditions for Freudenberg Oil & Gas Techno-logies in the onshore oil and gas production segment improved progressively during the year, particularly in North America. Global activities in the offshore segment

Freudenberg Oil & Gas Technologies 2012 2013Sales [€ million] 52.4 140.4Workforce 349 690

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At the end of 2012 the Business Group commenced work on transforming the IT system structure into a homo geneous global landscape. One example is the introduction of a new Enterprise Resource Planning (ERP) system, which is now available at over half of the Business Group’s sites. Implementation is scheduled for completion by the end of 2014.

Investments by Freudenberg Oil & Gas Technologies in the year under review included projects at the Houston, USA, facility such as replacing existing plant with new installations that not only increase productivity but also improve occupational health and safety and environmen-tal protection.

The Business Group erected warehousing facilities in North America and also took steps to ensure the availa-bility of products near the Marcellus Shale in Pennsylvania and the Eagle Ford Formation in Western Texas.

In 2013, Freudenberg Oil & Gas Technologies continued its work on key projects for the growing circle of customers. Many products are based on innovative elastomer and thermoplastic materials. In addition, the Business Group expanded the specialist materials and products testing facil-ity in Houston. Going forward, this is where product devel-opments will be tested by simulating the conditions in which they will operate. These laboratory tests set Freudenberg Oil & Gas Technologies apart from its competitors.

Relocation

At the end of December 2013, Freudenberg Oil & Gas Technologies relocated its headquarters from rented premises to a property in Houston built by Freudenberg

Real Estate Management which also houses the Eagle-Burgmann headquarters for the America region.

Profile:Freudenberg Oil & Gas Technologies provides innova-tive sealing solutions and differentiated sealing products to the global oil and gas industry. The Business Group focuses on solutions for applications in the upstream seg-ment, i.e. exploration and production, such as the markets for drilling/BOP (pressure control) products, wellhead equipment, fracturing services, offshore oil and gas platforms, flow lines and subsea installations. With some 700 employees, Freudenberg Oil & Gas Technologies serves a wide range of customers including oil and gas producing companies, original equipment manufacturers (OEMs) and engineering and service companies that provide technologies, equipment and services for produc-ing oil and gas from land-based and offshore platforms throughout the world. Freudenberg Oil & Gas Technolo-gies has its own materials development and product test-ing lab where new materials and solutions are developed and in-house verification testing and customized tests for customers’ specified requirements are performed.

Products and servicesElastomer O-rings and specialty seals, ram and annular blow-out preventer seal elements and seal kits, engineered thermoplastic seals, seal stacks and assemblies, standard and proprietary metal seal gaskets, spiral wound gaskets, and sheet gaskets. Vector Technology Group, acquired at the beginning of 2013 is a major single source supplier of high integrity sealing solutions for the most demanding industrial applications. Featured products are the SPO®

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FREUDENBERG SCHWAB VIBRATION CONTROL

Annual figures

The Business Group generated sales of €51.4 million (previous year: €56.0 million) in the year under review. The headcount at December 31, 2013 was 257 (previous year: 252 employees).

Business development

Global competition among vehicle manufacturers in the rail industry intensified in 2013. Manufacturers pursued an aggressive price policy with regard to major calls for tender, while market growth was either restrained or stagnating. The resulting price pressure was passed on to suppliers. Freudenberg Schwab Vibration Control never-theless almost entirely maintained its share and supplier position with key accounts.

Compact Flange, the Techlok® Clamp Connector and the ROV-operated Optima® Subsea Connector.

LocationsAustralia, Brazil, Canada, Malaysia, Norway, Singapore, United Arab Emirates, UK, USA

Freudenberg Oil & Gas Technologies 10035 Brookriver Drive, Suite 400 Houston, Texas 77040 | USAPhone: +1 281 233-1400E-mail: info@fogt.com www.fogt.com

Freudenberg Schwab Vibration Control 2012 2013Sales [€ million] 56.0 51.4Workforce 252 257

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One strategic focus for Freudenberg Schwab Vibration Control was the further expansion of business in China. Orders there in 2013 were well up on the previous year.

Furthermore, expanding business with customers in the construction and agricultural machinery sector of the mobile machinery segment proceeded as planned. In addition, the Business Group added air spring bellows to the product range.

Key events

The transfer of industrial customers from Simrit® to Freudenberg Schwab Vibration Control was completed in the year under review. The Business Group was formed effective January 1, 2012 from Freudenberg Schwab and the Simrit® brand vibration control technol-ogy business of Freudenberg Sealing Technologies.

Freudenberg Schwab Vibration Control launched series production of the “HALL” innovation – a hydraulic axle guide bearing for rail vehicles – for further customers in the year under review, and work on developing “HALL” into an active control system progressed.

Freudenberg Schwab Vibration Control was integrated in the Freudenberg Sealing Technologies Business Group effective January 1, 2014.

Profile:Freudenberg Schwab Vibration Control is a leading supplier of technology for vibration control components and system solutions used in the rail vehicle industry, the wind energy industry, agricultural and construction machin-ery and other industries. Products made by Freudenberg Schwab Vibration Control are designed to reduce vibration in order to enhance safety, service life and the comfort of customer applications. Innovative products and a holistic approach to vibration control engineering make Freudenberg Schwab Vibration Control a development partner for prestigious industrial customers all over the world.

Freudenberg Schwab Vibration Control operates on global markets from its locations in Adliswil, Switzerland, Velten and Laudenbach, both Germany, and Beijing, China, and has sales offices in the UK, France, Sweden and Russia.

Products and services Vibration control components and systems for rail vehicles, energy generation, agricultural and construction machinery and other industries

Locations China, Germany, Switzerland

Freudenberg Schwab Vibration Control AG 8134 Adliswil | SwitzerlandPhone: +41 44 711-1717Fax: +41 44 710-0542E-mail: info@freudenberg-schwab.comwww.freudenberg-schwab.com

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economies, the proven cost and liquidity management was systematically continued.

Key events

Major projects in the Mechanical Seals Division included the further optimization of processes for handling orders for special seals. In addition, the spare parts business was further strengthened.

Relocation of production from Wolfratshausen to Euras-burg was successfully completed. As a result, all mech-anical seal production is now located at one site. The administration departments remain in Wolfratshausen.

In the year under review, EagleBurgmann concluded the integration of the business of SealPots Inc., Romeo, USA, purchased in 2012. The acquisition brought the Business Group the envisaged increase in regional production capacity for supply systems. The SealPots facility in Broken Arrow, USA, moved to a new building in mid-2013 pro-viding additional space for administration, production and testing facilities. The move also enabled the company to streamline workflows and meet growing demand in North and South America.

In the year under review, EagleBurgmann achieved a major success in end user business in Ecuador, where orders valued at over US$20 million were placed for new sealing equipment and maintenance at an entire refinery.

With regard to the further optimization of administrative structures at EagleBurgmann, activities focused on improv-ing purchasing processes, combining national companies, and developing a concept to pool back office structures. ERP has now been fully rolled out at the main production

EAGLEBURGMANN

Annual figures

EagleBurgmann sales in the 2013 financial year ran at €760.1 million (previous year: €815.6 million). The head-count at December 31, 2013 was 5,881 (previous year: 5,844 employees).

Business development

Business development in the world regions in 2013 was mixed. The market in India remained weak and there were the first signs of a weaker trend in other Asian countries. On the other hand, developments in America – particu-larly South America – and in Europe during the year under review were better.

However, negative developments in exchange rates, particularly for the Japanese yen, had a significant impact on EagleBurgmann’s sales. A stronger focus on end user business contributed to improving earnings. This offset the effect of lower sales on earnings. In light of the macro economic environment in the eurozone and other

EagleBurgmann 2012 2013Sales [€ million] 815.6 760.1Workforce 5,844 5,881

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are highly complex dynamic seal systems such as mechani-cal seals and supply units or special gaskets for a diversity of applications and sectors of industry. A workforce of some 6,000 employees in over 70 subsidiaries develops and produces EagleBurgmann seal solutions which custom-ers around the world can rely on. A close-knit global sales and service network testifies to an international presence and customer proximity. The products are installed wher-ever safety and reliability are major design considerations when sealing demanding mediums under the most chal-lenging technical conditions, for example in the oil and gas, refinery, chemical, pharmaceutical, energy, food process-ing, paper, water, shipbuilding, aerospace and mining industries.

Products and services Mechanical seals, gas lubricated seals, carbon float-ing ring seals, magnetic couplings, seal supply systems, stuffing box packings, flat gaskets, expansion joints; TotalSealCare® Services; environmentally compatible solu-tions, standardization of sealing systems and application testing; after-sales service with assembly, commissioning, repair and damage analysis, sealing technology seminars and practical training

Production locations Austria, Brazil, China, Denmark, Germany, India, Italy, Japan, Mexico, Turkey, USA

EagleBurgmann Germany GmbH & Co. KG Äußere Sauerlacher Straße 6–1082515 Wolfratshausen | GermanyPhone: +49 8171 23-0Fax: +49 8171 23-1214E-mail: info@eagleburgmann.comwww.eagleburgmann.com

location in Wolfratshausen. Global ERP roll out was initi-ated in 2013. The ERP system has already been success-fully launched at some locations – including Austria, China and Singapore – and will be successively introduced at other locations.

In the year under review, EagleBurgmann delivered the world’s largest agitator seal in China. The seal weighing 1,500 kilograms has been installed in a PTA plant (pure terephthalic acid). As the operator of the plant expects a two-year operating period without interruptions, continu-ous availability of the seal is an absolutely vital criterion because it is deployed in the crystallizer, which is the heart of the system.

Under the MatRessource initiative, the Federal Ministry of Education and Research granted funding worth €2.2 mil-lion in 2013 to EagleBurgmann and six further industrial partners and research institutes to develop new technol-ogies aimed at improving resource efficiency. The aim of the EkoDiSc project is to develop a new diamond silicon carbide material system. In order to facilitate applications in series-production, EagleBurgmann plans to achieve a significant reduction in the cost of manufacturing the new material compared with DiamondFace® technology while preserving the same robustness and a comparable reduc-tion in friction losses.

Profile:EagleBurgmann figures among the internationally leading companies for industrial sealing technology. The Business Group manufactures and markets a broad range of high-quality products – from individual designs right through to large-batch productions, irrespective of whether these

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Seals for a challenging project

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The Lee Tunnel in London is part of a gigantic construction project to build a 39-kilometer sewage tunnel in the English capital by 2015. The aim is to prevent what is known as mixed water (rainwater mixed with sewage) from entering the River Thames during heavy rainfall. The tunnel, which will reach depths of between 25 and 80 meters, will follow the course of the River Thames – passing under Tower Bridge (photo) on its way.

Seals manufactured by EagleBurgmann are being used in the Lee Tunnel. Installed in the sewage pumps at a pumping station 85 meters under the ground, they will transport the mixed water to the sewage treatment works in the London district of Beckton.

EagleBurgmann designed and built the seals especially for use in these pumps. The size proved quite a challenge, because these sewage pumps are the largest in the world. Each pump weighs 52 metric tons, and each seal weighs in at 300 kilograms. Another unusual feature is their spilt design which makes it possible to replace only individual damaged parts during servicing rather than the entire seal.

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Key events

Dichtomatik further strengthened its presence in world regions in the year under review. In China, the sales company founded in 2012 was able to win important new customers. In Brazil, the warehousing facility was restructured and expanded, thus improving performance for customers and helping to win market share.

In April 2013 the Business Group purchased the business of the Canadian sealing expert Budlar Flexible Products Inc. The highly-specialized niche company is the leading supplier of hot-spliced customized O-rings and cords in Canada, a major regional market. With the acquisition, Dichtomatik is adding to its product portfolio, acquiring additional know-how and expanding its position in the Canadian market.

A new building and an extension of the European central warehouse were commissioned in Hamburg in October.

In the e-commerce sector, constant improvements are a crucial success factor. In the year under review, Dichtomatik therefore again upgraded its website and web shop, offering customers an efficient and comfort-able application that simplifies day-to-day business.

Dichtomatik was integrated in the Freudenberg Sealing Technologies Business Group effective January 1, 2014. Dichtomatik will continue to be managed as an inde-pendent trading company within Freudenberg Sealing Technologies.

DICHTOMATIK

Annual figures

In 2013, Dichtomatik with its headcount of 502 employees (previous year: 483 employees) generated sales of €105.8 million (previous year: €102.5 million). Sales growth is in part attributable to the acquisition of the business of Budlar Flexible Products Inc.

Business development

There were mixed developments in the market for techni-cal seals – the relevant market for Dichtomatik – in 2013, and the global trend was in general somewhat restrained. Business development in North America was positive on the back of a robust economic climate. In Europe, on the other hand – particularly southern Europe – the financial and debt crisis curbed demand. Business with industrial customers was more dynamic than business with technical dealers.

Dichtomatik 2012 2013Sales [€ million] 102.5 105.8Workforce 483 502

41

Profile: Dichtomatik is Freudenberg’s sales organization in the market for technical seals. The Dichtomatik group is a global organization with regional headquarters in Hamburg, Germany, for Europe and in Shakopee, USA, for North and South America; the group also operates its own companies in a further eleven countries. Dichtomatik is the market leader as regards product range and depth as well as effective logistics. Some 55,000 standard articles are available ex warehouse and the product program also includes roughly 115,000 custom-tailored variants. The seals are used in numerous applications ranging from industry to the technical trade. Dichtomatik’s service offering includes the procurement of special seals, technical consulting and customized deliveries.

Products and servicesO-rings, back-up rings, cords, x-rings, cover seals, rotary shaft seals, v-rings, axial seals VRM, radial seals, circlips, piston seals, rod seals, u-rings, packings, wipers, guide rings, guide strips

LocationsAustria, Brazil, Canada, China, France, Germany, Hungary, Italy, Mexico, Netherlands, Sweden, UK, USA

Dichtomatik Vertriebsgesellschaftfür technische Dichtungen mbHAlbert-Schweitzer-Ring 122045 Hamburg | GermanyPhone: +49 40 669 89-0Fax: +49 40 669 89-101E-mail: mail@dichtomatik.dewww.dichtomatik.de

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HELIx MEDICAL

Annual figures

Helix Medical grew sales in 2013 to €104.8 million (previous year: €68.1 million), chiefly as a result of the first full-year consolidation of MedVenture Technology Corpo-ration, Jeffersonville, USA, acquired in 2012. At year-end, the Business Group had a headcount of 849 employees (previous year: 818 employees).

Business development

Growth at Helix Medical in 2013 was not only attribut-able to acquisitions, but also to the performance in all regions. The Business Group now serves the majority of the world’s 20 most important medical device manufactur-ers and is a leading player in many sectors of the health-care market, such as the market for minimally invasive products.

In the USA, Helix Medical’s most important sales market, comprehensive multi-year healthcare reform began. This led to market reluctance, as customers, suppliers and medical device manufacturers have to operate much more efficiently so that healthcare funds can provide care for an addi-tional approx. 15-30 million people. Companies like Helix Medical, which bring technology-based solutions efficiently to market, will profit from this reform.

Key events

Helix Medical made further progress in implementing Freudenberg’s strategy to expand activities in the medical technology sector based on a buy and build approach. The Business Group acquired 50 percent of the share of Cambus Teoranta effective January 1, 2013. The joint venture manu-factures high-quality precision components for the medical device industry. Apart from advanced manufacturing technol-ogies such as laser precision cutting, Cambus Teoranta also offers customers innovative coating technologies.

Cambus Teoranta complements the special catheter prod-ucts manufactured by VistaMed Ltd., Carrick-on-Shannon, Ireland, where Helix Medical also holds a 50 percent share. VistaMed Ltd. expanded capacity in the year under review in response to growing demand on the market for technically mature catheter systems. Expansion includes a cleanroom production facility and a technical laboratory that guarantees fast project processing times.

In the year under review, the Business Group also focused on the integration of MedVenture Technology Corporation acquired in 2012.

Helix Medical 2012 2013Sales [€ million] 68.1 104.8Workforce 818 849

43

Furthermore, Helix Medical continued to invest in environmental protection and occupational health and safety initiatives. Two plants in Europe complied with the ISO 14001 standard.

One of many successful projects in 2013 was the devel-opment of an innovative drug dosage device which improves performance and reduces total cost.

In 2013, Helix Medical also won an innovation award for a silicone extrusion with an opaque exterior layer that blocks all light. The pharmaceutical tubing protects light sensitive substances and dispenses with an error-prone and cost-intensive step in the manufacturing process that had previously been unavoidable.

Profile: Helix Medical is a leading global manufacturer of medical devices for the biotech, healthcare and phar-maceutical industries, as well as in vitro diagnostics. The Business Group runs more than ten medical manufacturing operations located within the USA, Europe, South America and Asia. Helix Medical provides custom manufacturing services for medical devices, components, and subas-semblies – from a single component program to turnkey contract manufacturing. In addition to its custom manufac-turing operations, Helix Medical also manufactures and markets the HelixMark® brand of platinum-cured silicone tubing and fluid handling components for the pharmaceu-tical and biotech industries. The medical device division called InHealth Technologies develops and manufactures

Blom-Singer™ voice restoration products that are distributed worldwide.

Products and services Thermoplastic molding, silicone molding (HCR, LSR), silicone and thermoplastic extrusions, complex diagnostic and therapeutic catheters, assembly, packaging, sterili-zation, and engineering services

Locations China, Costa Rica, Germany, Ireland, USA

Helix Medical, LLC 1110 Mark Avenue Carpinteria, California 93013 | USAPhone: +1 805 684-3304Fax: +1 805 684-1934E-mail: info@helixmedical.com www.helixmedical.com

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TRELLEBORGVIBRACOUSTIC

Annual figures

In 2013, TrelleborgVibracoustic extended its market posi-tion in an environment that remained challenging. Good business in North America and Asia compensated for stagnating sales in Europe. Sales rose from €792.5 million for the second half of 2012 to €1,679.5 million. The joint venture began operating on July 2, 2012. For this reason, only half a year is included for 2012 while sales for the full year are included for 2013. Based on the 50 percent shareholding, pro-rata sales attributable to Freudenberg ran at €839.7 million (previous year: €396.3 million). The pro-rata headcount for Freudenberg increased to 4,131 (previous year: 4,101 employees) – primarily due to further expansion of business and the full integration of the companies in India and Turkey previously operated as joint ventures.

Business development

TrelleborgVibracoustic’s largest single order came from North America. Chassis components for General Motors’ new C1XX platform will be delivered from 2015. BMW placed a major order with the Micro-Cellular Urethane Business Unit, the smallest unit to date: Starting in 2016, the unit will produce micro-cellular urethane springs for the global “35up” platform at facilities in the USA, Europe and China.

As a worldwide market and technology leader for anti-vibration components and modules, TrelleborgVibracoustic is well positioned to profit from growth in emerging auto-motive markets.

The integration process at both joint venture partners is progressing to schedule and brings new opportunities and synergies through strategic investments and systematic structural and process optimization. Consequently, the joint venture is well prepared to continue on its profitable growth path even under more difficult market conditions.

Key events

At year-end, TrelleborgVibracoustic integrated the Indian activities of Trelleborg in Noida and increased the shareholding in Sigma Vibracoustic (India) PVT. LTD in Mohali as well as the shareholding Beltan Vibracoustic Titresim Elemanlari Sanayi ve Ticaret A.S., Bursa, Turkey, to 100 percent.

In June 2013, TrelleborgVibracoustic and the share-holders of the Turkish company HSS Otomotiv ve

TrelleborgVibracoustic[based on pro-rata consolidation]

2012(until July, 1 Vibracoustic)

2012 (from July, 2 TrelleborgVibracoustic)

2013

Sales [€ million] 389.9 396.3 839.7Workforce 4,101 4,131

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Lastik Sanayi A.S. formed a 50:50 joint venture to produce commercial vehicle air springs. The new company named Vibracoustic CV Air Springs GmbH is headquartered in Hamburg. This joint venture makes TrelleborgVibracoustic the second- largest air springs manufacturer in Europe and the third-largest worldwide. TrelleborgVibracoustic is well positioned in the premium air springs segment and delivers its Aircruise brand products to the major European truck, bus and trailer manufacturers. HSS Otomotiv ve Lastik Sanayi A.S. with its Blacktech brand holds a large share of the air springs aftermarket. Combining these two strong brands generates a broader product portfolio for OEMs and dealers.

TrelleborgVibracoustic sets new standards in lightweight construction: In the year under review, the engine mount development team in Nantes, France, developed a light-weight engine mount made of plastic. It weighs 500g less than a competitor’s product and can withstand loads up to 215 percent higher. One example of enhanced customer service came from the Hamburg facility, which developed a mobile air springs workshop which can be used to “fine tune” prototypes at the customers’ premises.

The new third-generation axle test bench in Hamburg is a unique selling proposition. It measures vibrations of complete axles systems and optimizes performance by adding new components without needing to physically test a vehicle. Cooperation with automobile manufactur-ers can thus commence at a very early stage in the devel-opment process and vibration engineering problems can be identified promptly and jointly solved. Customers are extremely keen to use the test bench, which not only

enhances TrelleborgVibracoustic’s reputation, but also generates revenue from development. This mobile test bench is an attractive tool for presenting products, acquir-ing customers and winning series orders.

The sustainability of production processes has also been improved: Chassis Mount production in Hamburg uses ground nutshells instead of costly plastic granules to clean the vulcanization molds. The cleaning process is not only more environmentally friendly, but also costs 60 percent less and generates less dust.

Even though most markets in Europe are stagnating, TrelleborgVibracoustic succeeded in growing sales with European automakers. This is attributable to the strong position with premium car manufacturers who continue to enjoy a disproportionately high share of ongoing growth in Asia. TrelleborgVibracoustic is systematically expanding capacities in Asia in order to benefit more extensively from this growth.

Relocation

Preparations began in 2013 to transfer the produc-tion of commercial vehicle components from the plant in Forsheda, Sweden, to other plants in the TrelleborgVibracoustic production network. Similarly, some sections of air spring production for commercial vehicles at the new Vibracoustic CV Air Springs GmbH joint venture will be successively relocated from Hungary to Turkey. These steps are necessary to safeguard the competitiveness and profitability of the business areas in a market characterized by falling sales and growing price pressure.

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Just under a year after the merger, TrelleborgVibracoustic relocated its headquarters to Darmstadt, a city with an excellent transport infrastructure. More than 50 employees from the central functions as well as TrelleborgVibracoustic’s management have their offices at this location.

TrelleborgVibracoustic has further optimized its overall structure in engineering, production and administration to safeguard sustained competiveness and profitability. The measures include pooling European engineering resources in “Centers of Excellence” for specific business areas. The Breuberg facility is to become the European “Center of Excellence” for the Micro-Cellular Urethane business area and will also function as the global center for material development. The Breuberg engine mount development team will relocate to Weinheim in order to increase efficiency by concentrating activities at one location. It is also planned to transfer the engineering resources of the Chassis Mounts business area to Ham-burg and Nantes.

Profile: Trelleborg Vibracoustic is a worldwide market and technology leader for antivibration components and mod-ules for the global automotive industry. The company’s portfolio of products for passenger cars and commercial vehicles is unique on the automotive market. These pio-neering products reduce unwanted vibration and noise and improve ride comfort.

Products and services Engine mounts, transmission mounts, components for chassis, air springs, torsional vibration dampers, isolators and dampers, MCU (microcellular urethane) jounce bumpers

LocationsBrazil, China, Czech Republic, France, Germany, Hungary, India, Japan, Mexico, Poland, Romania, Russia, South Africa, South Korea, Spain, Sweden, Turkey, USA

TrelleborgVibracoustic GmbH64293 Darmstadt | GermanyPhone: +49 6151 3964-0Fax: +49 6151 3964-444E-mail: contact@tbvc.comwww.tbvc.com

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Annual figures

In 2013, the Business Group with its workforce of 3,193 employees (previous year: 2,976 employees) generated sales of €660.0 million (previous year: €650.5 million).

Business development

The 2013 financial year was an encouraging year for Freudenberg Nonwovens. Although sales remained almost constant, there was a significant improvement in the operating result. This was mainly attributable to higher profitability in the Interlinings and Technical Nonwovens Divisions. This development has created a good basis for profitable growth.

FREUDENBERG NONWOVENS

NONWOVENS AND FILTRATION BUSINESS AREA

The former Nonwovens Business Area was renamed Nonwovens and Filtration in January 2013, thus better reflecting the activities of the Business Groups belonging to this area.

Freudenberg Nonwovens Freudenberg Politex Nonwovens Freudenberg Filtration Technologies

Moreover, since 2012 Freudenberg Filtration Technologies has been offering filter systems that are not based on nonwovens. The major markets for the Business Area are textile and apparel, automotive, energy, health, horticulture and construction.

Effective January 1, 2013, Freudenberg began exercising control over the 50:50 joint ventures located in China and South Korea belonging to the Freudenberg Nonwovens and Freudenberg Filtration Technologies Business Groups; these joint ventures are now fully consolidated. This has generated an additional effect on sales in the amount of €52.4 million and increased the headcount figure by 532. The Business Group generated total sales of €1,227.9 million (previous year: €1,149.0 million) in the 2013 financial year. At year-end 2013, the headcount was 5,707 compared with 5,135 employees at the close of the previous financial year.

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Key events

The global restructuring measures in the Interlinings Division were largely completed during the year under review. The reorganization of this Division at the Wein-heim location stabilized and grew earning power. The various production locations in Italy were brought together. Furthermore, interlinings nonwoven production in Asia was transferred from China to Taiwan.

During the course of 2013, Freudenberg Nonwovens invested in several projects in the automotive sector with a view to positioning new innovative products in the market place. Innovations of note included the devel-opment of a separator for lithium-ion batteries and the market launch of Lutraflor®, a particularly lightweight and ecologically sustainable automotive carpet material. Going forward, Lutraflor® is to help secure market share in the automotive carpeting segment in the face of the anticipated market changes.

Well-known customers were won for the innovative Vildona® Airliner 2.0 insole with its exceptional breath-ability properties. Innovative applications for advanced wound care have been developed and are currently being tested.

Profile:Freudenberg Nonwovens develops, produces and markets nonwoven products for a wide range of appli-cations. These products are used as interlinings for the garment industry and for technical applications such as battery separators, for acoustic purposes to provide sound absorption, as fireblockers in furniture and as cable insulation. In the medical and hygiene sector,

However, exchange rate fluctuations in both Latin America and Asia had a negative impact on sales. The devaluation of the Japanese yen led to a decline in sales, particularly in spunlaid business.

Freudenberg Nonwovens was nevertheless able to further extend its leading global position in the Spunlaid Division. The upswing in the automotive industry, particularly in Asia, had a positive effect on tuft business. In addition, Freudenberg Nonwovens won North America’s largest carpet maker as a customer.

Business with Evolon® microfilaments enjoyed global growth. As a result, production capacities in Europe were expanded. Freudenberg Nonwovens commissioned a further production line for Evolon® microfilament products in Colmar.

Further investments to strengthen the Spunlaid Division include the technological upgrading of the facilities in Durham, USA, and Kaiserslautern. A new production line is being constructed in Brazil to reinforce the company’s market position in the hard-fought hygiene market.

Thanks to innovations such as solutions for cleaning printing plates, developments in the Industrial Nonwovens Division were pleasing. A medical care product for transdermal applications launched in North America in cooperation with Japan Vilene Company Ltd. opens up further growth potential.

In the Interlinings Division, the global growth initiative in the menswear segment generated a very good per-formance despite the negative conditions as a result of the financial and debt crisis. There was an increase in woven and knitted interlinings in line with the rise in textile production in Asia, while sales of nonwoven interlinings in Europe declined.

Freudenberg Nonwovens 2012 2013Sales [€ million] 650.5 660.0Workforce 2,976 3,193

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nonwovens from Freudenberg offer the highest comfort and safety. Freudenberg was one of the first companies to introduce nonwovens on the market and continues to set the global standard with a constant stream of new ideas such as Lutraflor®, SoundTex® and Vildona®. Freudenberg Nonwovens operates a global sales network and manufac-tures at 20 locations worldwide. The company has enjoyed very close cooperation with Japan Vilene Company Ltd., Tokyo, Japan, the Japanese market leader in nonwovens, for many decades.

Products and services Interlinings, industrial nonwovens, spunlaid

Production locationsArgentina, Brazil, China, France, Germany, India, Italy, South Africa, South Korea, Spain, Taiwan, UK, USA

Freudenberg Vliesstoffe SE & Co. KG 69465 Weinheim | GermanyPhone: +49 6201 80-5009Fax: +49 6201 88-5009E-mail: info@freudenberg-nonwovens.com www.freudenberg-nw.de

FREUDENBERG POLITEx NONWOVENS

Annual figures

In 2013, Freudenberg Politex Nonwovens generated sales of €220.0 million (previous year: €217.6 million).

The headcount at December 31, 2013 was 572 (previ-ous year: 626 employees). The decrease is mainly due to restructuring measures. Declining demand for roofing reinforcements in western Europe necessitated restruc-turing at the locations in Novedrate and Pisticci, both Italy – combined with cutbacks in capacity and a focus on production at the most advanced and efficient lines. In addition, the Padding Division, which was not part of core business, was spun off and the relevant production lines in Novedrate were sold.

Business development

In the construction industry the situation in western Europe in 2013 remained difficult. During the first half of the year in particular, demand in the roofing reinforcements sector centered on repair and refurbishment activities. In the sec-ond half of the year, the Business Group began work on

Freudenberg Politex Nonwovens 2012 2013Sales [€ million] 217.6 220.0Workforce 626 572

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many projects that had previously been shelved due to the economic situation. Freudenberg Politex profited from this upturn and recorded positive business development.

The construction industry in other markets, most notably Turkey and Russia, showed steady growth chiefly driven by the need to expand and modernize infrastructure. In this environment, Freudenberg Politex Nonwovens was able to reinforce its position as the world leader in poly-ester roofing reinforcements thanks to an extended range of newly-developed specialty products, know-how in spunlaid and staple fiber technology, and close ties with customers all over the world.

Key events

Freudenberg Politex Nonwovens continued its efforts to optimize the supply chain; these efforts included reducing raw material consumption and implementing programs to optimize processes, improve energy efficiency and enhance product quality.

The polyester-based spunbond production line at the Russian plant in Nizhniy Novgorod commissioned in 2012 was in operation throughout 2013. This investment made Freudenberg Politex Nonwovens the only player on the growing Russian market able to offer the entire range of both staple and spunbond polyester-based nonwovens for roofing reinforcements.

The Business Group again enhanced the sustainable and efficient handling of resources. One example is a further 4 percent reduction in CO2 emissions by the staple fiber production unit in Novedrate.

The “Zero Landfill” project was rolled out at all of the Business Group’s sites. The objective is to recycle waste

and reduce landfill. The project will run for several years. Landfill at the facility in Colmar, France, was cut by 12 per-cent year-on-year.

The new technical polymer division made encouraging progress in 2013 – thanks to intensive business activities. These technical polymers are an important raw material used by customers to manufacture roofing membranes. Freudenberg Politex Nonwovens is offering customers added value solutions that combine additional products (polyester nonwoven backings and customer-tailored compounds for bitumen modifiers) with services.

Profile:Freudenberg Politex Nonwovens, headquartered in Novedrate, Italy, is the world leader in the production and marketing of polyester nonwovens, mainly used as rein-forcements for bituminous roofing membranes. A broad range of products is furthermore sold to the construction industry for different applications. Technical polymers used as bitumen modifiers round off the product program.

A large share of these products are manufactured with recycled polyester obtained in-house from post-consumer PET bottles. This integrated production cycle not only recy-cles waste, but also significantly reduces CO2 emissions.

Products and services Roofing: Staple and spunbonded polyester nonwovens (standard or glass filament reinforced) used as backing for bituminous roofing membranes

Construction materials: Products for waterproofing, thermal insulation, sound absorption, heat reflection, drainage, reinforcements and other applications

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Polymers: Plastomer compounds made of recycled materials used as modifiers in bitumen impregnation, polyester fibers and flakes

Locations China, France, Italy, Poland, Russia, USA

Freudenberg Politex S.r.l. Strada Provinciale Novedratese 17/a22060 Novedrate (CO) | ItalyPhone: +39 031 793-111Fax: +39 031 793-202E-mail: mk@politex.itwww.freudenbergpolitex.com

FREUDENBERG FILTRATION TECHNOLOGIES

Annual figures

Freudenberg Filtration Technologies grew sales to €347.9 million (previous year: €280.9 million) on the back of increases in all regions and market segments. The headcount at year-end was 1,942 (previous year: 1,533 employees).

Business development

Global sales of micronAir® cabin air filters were at a high level thanks to growing OEM business, particularly in Asia, and a robust global aftersales market. Overall, sales in the industrial filtration business (Viledon®) also developed well despite weak demand in southern Europe; however, very short-term demand fluctuations which call for a high degree of flexibility in production and order management in general are expected to continue.

Freudenberg Filtration Technologies 2012 2013Sales [€ million] 280.9 347.9Workforce 1,533 1,942

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Key events

The Business Group strengthened its market presence in the BRIC countries in the year under review. At the begin-ning of the year, a sales company began operating in the greater area of Nizhniy Novgorod in order to ensure direct local supply and customer support in the attractive emerging market in Russia. In Chengdu, Sichuan Province, the Business Group opened its third production facility in China in March. Freudenberg Filtration Technologies and its joint venture partner Japan Vilene Company Ltd. are thus responding to growing demand for automotive filters in Western China. On the back of strong sales growth in South America, Freudenberg Filtration Technologies opened a new, larger site in Jacareí, near São Paulo, Brazil.

Water and wastewater filtration in the field of industrial process water is a high-growth market. In order to parti-cipate in this trend, the Business Group acquired the British company Aquabio Limited effective March 1, 2013. Aquabio Limited is a leading specialist in water and wastewater filtration systems for industrial applications and a pioneer in the development and production of complete membrane bioreactor filtration technology for the efficient recycling or reuse of industrial wastewater. The high-performing filter systems are mainly used in the food, beverage, paper, pharmaceutical and chemical industries.

The Business Group built two new logistics centers in Potvorice, Slovakia, and Kaiserslautern to serve growing demand for cabin air filters in Europe. The two multi- purpose halls optimize the integration of logistic work processes, thus shortening lead times and allowing the Business Group to react more quickly to changes in the market.

Other activities worthy of note in 2013 included pro-cess and cost optimization programs and the expansion of global market segment activities.

In the year under review, Freudenberg Filtration Tech-nologies developed air filters for high-performance indoor air cleaners sold on the Asian market that not only arrest particles but also provide effective pro-tection against germs and formaldehyde, a toxic gas frequently found in Asia – particularly in new buildings. In gas phase filtration, a service program specially tailored to meet the requirements of corrosion protec-tion was launched. Viledon NEXX filter bags made of Evolon material are the next generation of surface filters for use wherever large quantities of dust are encoun-tered. Compared to conventional filter bags they are lighter and tougher, sturdy and durable, and achieve lower operating pressure differentials. Viledon NEXX filter bags extend filtration cycles and cleaning intervals, reduce outlay on maintenance and replacement and save energy.

Growing global awareness of air and water quality and the need for efficient industrial processes are the main drivers for further growth in the filtration market. In Asia in particular, awareness of the need to reduce particle emissions and to protect people and make processes more efficient by using filtration systems is growing. More stringent filtration specifications reflect this.

The automotive market gave a very robust performance in 2013 in both vehicle production and in the after-market with significant growth in Asia and the USA. Cabin air filters are an important component for drive safety, ride comfort and system protection, and these products are fitted and regularly replaced in almost all series- produced new vehicles.

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The Business Group participates in the stable develop-ment of the industrial filtration market with its very diverse range of filter applications. Key drivers are the availability of high energy-efficiency solutions and the extensive tech-nical know-how in many process-critical filter applications.

Profile:As a global technology leader in air and liquid filtration, Freudenberg Filtration Technologies develops and pro-duces high-performance, energy-efficient filtration solu-tions which improve the efficiency of industrial processes, conserve resources, protect people and the environment and thus enhance the quality of life. With its Viledon® and micronAir® global brands, Freudenberg Filtration Technologies offers customers innovative filter elements and systems for the energy, health, and transport (auto-motive, rail, marine, aviation) sectors, general ventilation and cleanroom technology, and for highly-specialized applications. Viledon® stands for reliable process air optimization and high-quality liquid filtration solutions. micronAir® cabin air filters provide health protection and ride comfort, micronAir® engine intake air filters improve engine performance. Products to improve indoor air quality in buildings, and a comprehensive range of system solutions (e.g. development and construction of air intake systems) and services (e.g. Viledon®filterCair air quality management) round off the product portfolio.

Products and services Intake, exhaust and recirculating air filters for air con-ditioning, ventilation and cleanroom systems; filters and filter media for residential applications, air conditioning systems, office equipment, respiratory masks and vacuum cleaners; filter media for liquid filtration (coolants and lubricants, foodstuff, hydraulics and fuels); support media

for membranes; cabin air filters; engine intake air filters; water filtration and wastewater reuse systems; gas phase filtration components and systems; intake air systems for gas turbines and compressors; air quality management; filter testing; training and consulting

Production locations Argentina, Australia, Brazil, China, Germany, India, Italy, Japan, Mexico, Slovakia, South Africa, South Korea, Thailand, USA

Freudenberg Filtration Technologies SE & Co. KG 69465 Weinheim | Germany Phone: +49 6201 80-6264Fax: +49 6201 88-6299E-mail: info@freudenberg-filter.comwww.freudenberg-filter.com

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New broom for the Indian market

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Most households in India use brooms made of natural grass to sweep floors. This natural product is the bestselling cleaning product in the country, but there is one major drawback: Small pieces of the broom, such as grass seeds, tend to be discarded, particularly when the broom is new – that causes more dust and dirt.

Freudenberg Gala Household Products and Freudenberg Home and Cleaning Solutions followed the bionics principle when developing a new broom for the Indian market and designed synthetic components that copy the performance of natural grass brooms. The individual bristles are first split and then formed into a strip brush which is wound round a flexible core, thus recreating the effect of a grass bundle with a finely branched exterior and a firm but flexible core. Freudenberg based the design on nature’s blueprint – and then added some improvements. The new broom does not discard any particles, so it does not create its “own” dust, a fact reflected in its official name – the “No Dust Broom”. On top of that, it lasts three times longer than the natural grass broom, cleans more thoroughly and is ergonomically designed.

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While markets in southern Europe, eastern Europe and North America declined due to the impact of the finan-cial and debt crisis combined with high unemployment, the Asia/Pacific, Middle East, South America and Russia regions recorded solid growth. Negative exchange rate effects impacted sales development, particularly during the second half of the year.

The Business Group responded to the challenging market situation with product innovations and growth initiatives, thereby improving the market position and achieving local-currency sales growth in almost all regions. Adjusted for exchange rate and consolidation effects the Business Group recorded solid growth of approximately 3 percent, higher than the market trend.

Key events

In the year under review, Freudenberg Home and Cleaning Solutions focused on expanding business significantly in the growth regions of Asia/Pacific, India, the Middle East, Turkey and Russia, on launch-ing product innovations, accompanied by advertising activities, and substantially broadening the distribution basis with strategic retail partners. The first pan-Arabian advertising campaign kicked off in the Middle East, vileda® made its successful debut in South Korea, Home Depot joined the ranks of key accounts in the USA, and the first Professional products were launched in Japan and China. The Business Group also expanded

FREUDENBERG HOME AND CLEANING SOLUTIONS

During the year under review the company changed its name from Freudenberg Household Products to Freudenberg Home and Cleaning Solutions. The new name highlights the fact that the company is active in both the consumer and the professional sectors.

Annual figures

The Business Group generated sales of €710.4 million (previous year: €712.6 million) in the year under review. The headcount at December 31, 2013 was 2,914 (previ-ous year: 2,964 employees).

Business development

The market environment for Freudenberg Home and Cleaning Solutions stabilized at a low level in 2013.

HOME AND CLEANING SOLUTIONS BUSINESS AREA

The Home and Cleaning Solutions Business Area comprises the Freudenberg Home and Cleaning Solutions Business Group, whose vileda®, O-Cedar®, Wettex®, Gala® and SWASH® brands are active in the mechanical cleaning and laundry care segments for final users and professional cleaning companies.

Freudenberg Home and Cleaning Solutions 2012 2013Sales [€ million] 712.6 710.4Workforce 2,964 2,914

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Profile:Freudenberg Home and Cleaning Solutions is one of the leading international manufacturers of brand cleaning articles and systems and laundry care products. The company is the market leader in almost all countries. Products are marketed under the brand names of vileda®, O-Cedar®, Wettex®, Gala® and SWASH®. The Business Group‘s success factors are detailed knowledge of the market, innovations, new and effective products and a pronounced customer orientation. These are complemented by international market and customer research, innovation centers and production facilities in all regions of the world and a dedicated sales network in over 35 countries.

Products and services Floor cleaning equipment, household cloths, cleaning articles, household gloves, mats, laundry care products such as ironing boards and clothes driers, cleaning systems for professional applications

Locations Australia, Belgium, Canada, Chile, China, Croatia, Czech Republic, Denmark, Finland, France, Germany, Greece, Hong Kong, Hungary, India, Indonesia, Italy, Jordan, Malaysia, Mexico, Netherlands, New Zealand, Norway, Poland, Portugal, Romania, Russia, Serbia, Slovenia, Spain, Sweden, Taiwan, Thailand, Turkey, UK, USA

Freudenberg Home and Cleaning Solutions GmbH Im Technologiepark 1969469 Weinheim | GermanyPhone: +49 6201 80-871000Fax: +49 6201 88-874000E-mail: info@fhp-ww.comwww.vileda.de

its e-commerce activities further, with sales in this sector almost doubling.

The Business Group acquired the remaining shares in the local partner in Thailand, and Jump Distributors (Thailand) Co Ltd, Nonthaburi, Thailand, is therefore now wholly- owned by Freudenberg Home and Cleaning Solutions. Furthermore, the Business Group acquired the remaining shares in the FHP-Berner USA LP, Aurora, USA, joint ven-ture with SP Berner Plastic Group S.L., Valencia, Spain.

Effective January 15, 2014, Freudenberg Home and Cleaning Solutions acquired the Marigold household gloves business from Comasec SAS, Gennevilliers, France. Comasec SAS is a company belonging to the Ansell Group, a global leader in glove protection solutions for industrial applications. The agreement covers the global trademark rights for the Marigold brand, as well as the consumer household gloves business in the UK, Ireland, Italy, Netherlands, Hong Kong and Japan.

The Romanian business of Freudenberg Home and Cleaning Solutions was transferred to a distributor.

Freudenberg Home and Cleaning Solutions developed several new, award-winning products and improved existing product lines in the year under review. The most successful items worldwide were the ViRobi robotic duster and the Easy Wring & Clean cleaning system, named “Product of the Year 2013” by the trade journal “Lebensmittel Praxis”. The new three-dimensional microfiber products manufactured in-house and the new generation of brooms based on the “toothbrush technology” contrib-uted to solid growth.

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Business development

Freudenberg Chemical Specialities continued its long- standing growth trajectory in 2013 despite unfavorable exchange rates. The positive trend was driven by an increase in demand in key industries, particularly the auto-motive industry and the general industry sector, as the year progressed.

Business development was bolstered by the generally stable global economic climate and the very gradual recovery on key markets in southern Europe. In almost all regions, the Business Group outperformed the market. Once again, the core industrial markets in Europe and the countries belonging to the North American Free Trade Agreement (NAFTA) proved to be reliable sales genera-tors. Furthermore, in particular the presence in the global emerging markets of China, Brazil, India and Russia,

FREUDENBERG CHEMICAL SPECIALITIES

Annual figures

The Business Group generated sales of €797.6 million (previous year: €737.8 million) in 2013. The headcount rose from 3,079 in the previous year to 3,107.

SPECIALTIES AND OTHERS BUSINESS AREA

The Specialties and Others Business Area comprises the following Business Groups: Freudenberg Chemical Specialities as well as Freudenberg NOK Mechatronics Freudenberg New Technologies Freudenberg IT Freudenberg Immobilien Management

which primarily operate internally. During the year under review, the companies in this Business Area generated sales of €1,052.2 million (previous year: €989.3 million). At year-end 2013, the headcount was 4,359 compared with 4,318 at year-end 2012. Well over half of the sales generated by this Business Area are attributable to the Freudenberg Chemical Specialities Business Group, which supplies the automotive and mechanical and plant engineering industries as well as many other sectors. The Freudenberg NOK Mechatronics Business Group manufactures products mainly for the automotive industry, including mechatronic solutions based on large flexible printed circuits. Freudenberg IT is an IT service provider primarily serving small and medium-sized businesses in various branches of industry and the trade sector.

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Freudenberg Chemical Specialities 2012 2013Sales [€ million] 737.8 797.6Workforce 3,079 3,107

Furthermore, the Business Group strengthened its existing Divisions through acquisitions. Klüber Lubrication pur-chased the Fomblin® brand specialty lubricants business (PFPE greases) of Solvay Specialty Polymers Italy S.P.A. Chem-Trend acquired the business in release agents for composite materials of Zyvax Inc. Preparations began in the SurTec Division to make the first bolt-on acquisitions in Portugal and Japan under the long-term buy and build strategy.

Projects to strengthen the regional organizations and expand technical infrastructure are running to plan. Plants in India and China have been expanded in several con-struction stages since 2012. Some of these phases were commissioned in the year under review. The new plant in Brazil has reached the planning stage.

Profile:The Business Group comprises the largely autonomous divisions of Klüber Lubrication, Chem-Trend, SurTec, OKS, and Capol, which became the fifth division in August 2013. Klüber Lubrication is one of the world’s leading manufacturers of specialty lubricants. Its custom-ized tribological solutions are almost exclusively sold direct to customers in virtually all industries and markets. Chem-Trend is a world market leader for release agents used to manufacture composite, rubber, plastic, metal and polyurethane molded parts. SurTec is a leading supplier of surface treatment and electroplating products. OKS specializes in performance lubricants and in repair and maintenance products sold via industrial distributors. Capol is one of the world leaders in the market for con-fectionery industry additives.

which had begun early and subsequently systematically expanded, fostered positive business development.

The Business Group gave high priority to further devel-oping and proactively supporting market segments with especially attractive growth prospects. Various opera-tions-related projects strengthened the market position and served the long-term optimization of internal processes and cost structures; such projects included the successful rollout of a standardized ERP platform for the Business Group’s European companies.

Freudenberg Chemical Specialities has a presence in all major regional markets and supplies almost all industries and economic sectors. The Divisions enjoy an outstanding market position thanks to the broad product portfolio, sustained innovative strength and an exceptional level of customer orientation with numerous development partners and tailor-made solutions. Expanding the leading market position in defined niches and applications, strengthening innovation leadership and the further internationalization of business are strategic priorities. The Business Group is planning extensive investments in order to meet the forecast rise in demand in Asia and South America and to expand the research and development infrastructure at production locations.

Key events

The Business Group entered the food additives market – a segment with significant growth potential – in August with the acquisition of the shares of the Capol Group, a major supplier of glazes, release agents and sealing agents for the confectionery industry. The integration projects ran to schedule with the focus on strengthening the market posi-tion, in terms of both regions and market segments.

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FREUDENBERG NOK MECHATRONICS

Annual figures

At €46.4 million, sales by Freudenberg NOK Mechatronics could not quite reach the prior-year level of €48.4 million – on the basis of the 50 percent pro-rata consolidation, sales of €23.2 million are reported for Freudenberg (previous year: €24.2 million). The head-count at year-end attributable to Freudenberg was 174 (previous year: 176 employees).

Business development

Following a successful first half-year in 2013, sales took a slight dip in the second six months as a result of the portfolio changeover from wiring harnesses for doors to mechatronic products.

Products and services Oils, greases, waxes, pastes, bonded coatings, dry lubri-cants, solid lubricants, anticorrosion products, chemotech-nical products for MRO, hydraulic fluids, cleaning agents, release agents for die casting, composites, rubber and polymer processing, surface treatment products, industrial parts cleaning and electroplating, glazes, release agents and sealing agents for the confectionery industry

Locations Argentina, Australia, Austria, Belgium, Brazil, Chile, China, Croatia, Czech Republic, Denmark, Egypt, Finland, France, Germany, India, Italy, Japan, Malaysia, Mexico, Netherlands, Norway, Poland, Portugal, Romania, Russia, Serbia, Singapore, Slovakia, Slovenia, South Africa, South Korea, Spain, Sweden, Switzerland, Thailand, Turkey, United Arab Emirates, UK, USA, Vietnam

Freudenberg Chemical Specialities SE & Co. KGGeisenhausenerstraße 781379 München | GermanyPhone: +49 89 7876-0Fax: +49 89 7876-1600E-mail: info@fcs-munich.comwww.fcs-munich.com

Freudenberg NOK Mechatronics[based on pro-rata consolidation]

2012 2013

Sales [€ million] 24.2 23.2Workforce 176 174

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Profile:Freudenberg NOK Mechatronics is a 50:50 joint venture between Freudenberg and NOK Corporation, Tokyo, Japan. Business activities range from the development and production of mechatronic solutions based on large flexible printed circuits, ready-for-use SMD assembly flat wiring harnesses which can integrate switches, sensors, LED and other functional components, and connector technology. Experience in research, development and production drawn from the joint venture partners makes the company a competent and reliable development part-ner and supplier, particularly for the automotive industry, module suppliers and harness makers.

Products and services Mechatronic solutions based on large flexible printed circuits including connector technology with and without SMD assembly, heating and antenna foils, component assembly

Locations Germany, Hungary

enmech GmbH & Co. KG69465 Weinheim | GermanyPhone: +49 6201 80-3896Fax: +49 6201 88-3896E-mail: info@enmech.dewww.enmech.com

Apart from a significant improvement in productivity, a further focus of activities in the year under review lay in restructuring the Business Group; these activities will be completed mid-2014. The Berlin facility was expanded into a customer-oriented technology center including highly-automated front end production. The Business Group also made preparations to combine all final finish-ing activities at the Pécel location in Hungary with a view to simplifying the complex supply chain activities.

Key events

Freudenberg NOK Mechatronics won a major order for a battery wiring project for use in the lithium-ion batter-ies in a mild hybrid system to feature in different vehicle platforms. Furthermore, the Business Group developed a complete rear lighting module comprising plastic mount, flex on aluminum and integrated LED technology in coop-eration with a customer; the module has already gone into series production. In the medical technology sector, a flex application (body sensing) to monitor the post-operative lung function of patients was developed and pre-produc-tion parts have already been delivered.

To give the Business Group an even more independent profile, the new brand name of “enmech” was launched in the fourth quarter of 2013. The Business Group officially changed its name from Freudenberg NOK Mechatronics to “enmech” effective January 1, 2014. The new name of “enmech” places a clearer emphasis on the Business Group’s function as an enabler for its customers in the field of flexible printed circuit-based mechatronic products.

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Natural performance

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One challenge facing ship operators is how to run their ships efficiently while at the same time complying with environmental legislation. Specialty lubricants manufactured by the Freudenberg company Klüber Lubrication help them meet both of these goals. The lubricants play a significant part in reducing friction, wear and energy consumption while simultaneously complying with strict legal requirements.

Klüber Lubrication currently offers three lubricant product lines that meet what are known as the EAL (Environ-mentally Acceptable Lubricants) requirements of the US Environmental Protection Agency. These requirements are of international significance and stipulate that lubricants which may come into contact with water must, among other things, be non-toxic and biodegradable.

Klüber Lubrication products are used in the marine industry to lubricate rudder systems, propellers (photo), stern tubes, etc.

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The long-standing partnership with companies such as SAP helps Freudenberg IT develop innovative solutions and allows the company to offer customers the entire portfolio of an IT service provider.

Key events

During the year under review, the Business Group translated current megatrends in the IT business such as Industry 4.0, big data, cloud computing, and mobility into concrete applications. Freudenberg IT assumes the role of an enabler for its customers, in other words, the Business Group paves the way for future-critical tech-nologies. One concrete example is the “FIT Shop Floor Suite”. Freudenberg IT bundles process know-how from over 30 years of manufacturing practice, best-of-breed developments from Industry 4.0 companies such as SAP, and the profound scientific control optimization of Fraunhofer.

One particular focus of activities at Freudenberg IT is Industry 4.0 – an IT-supported, decentralized control architecture for automated production processes. In cooperation with a market research institute, the Business Group has been publishing the detailed findings of a study on Industry 4.0 on a regular basis since August 2013. The study reflects the status quo of IT in small and medium-sized manufacturing companies in Germany and mirrors their arrangements for Industry 4.0.

The Business Group received several ISO certifications and partner certificates in the year under review, clearly setting it apart from competitors. Freudenberg IT was, for example, one of only seven companies worldwide to be certified for hosting services in the SAP HANA Enterprise Cloud. The Business Group was also named

FREUDENBERG IT

Annual figures

Freudenberg IT generated sales of €133.6 million (previous year: €134.7 million) in the year under review. Efforts to translate the above-average sales volume of the previous year resulting from major projects into long-term operating business were by and large successful. As at December 31, 2013, the Business Group had a head-count of 694 employees (previous year: 686 employees).

Business development

In the year under review, the market for SAP products, one of Freudenberg IT’s core areas, again outpaced the over-all IT market. Global sales drivers included topics such as cloud infrastructures, business analytics and big data.

The Business Group has its roots in the small and medium- sized manufacturing industry and offers in-depth know-how of the processes that take place in factories, particu-larly in the field of consulting.

Freudenberg IT 2012 2013Sales [€ million] 134.7 133.6Workforce 686 694

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for Manufacturing Execution System), optimizing the inte-gration between production control and the ERP system, and is an enabler for Industry 4.0. The Business Group also offers cloud computing solutions which Freudenberg IT customers can use to outsource IT without any investment risk. That means users are free to focus completely on their core business without having to address IT issues.

Products and servicesOutsourcing, cloud computing, consulting for SAP and MES

LocationsChina, Germany, Mexico, USA

Freudenberg IT SE & Co. KG69465 Weinheim | GermanyPhone: +49 6201 80-8000Fax: +49 6201 88-8000E-mail: info@freudenberg-it.comwww.freudenberg-it.com

an “Advanced Cloud and Managed Services Certified Partner” by Cisco.

Customer satisfaction has again risen compared with the previous year. Several existing customer have extended their contracts and numerous new customers were won.

A comprehensive restructuring project in Solution Consulting was rolled out with the aim of achieving greater market and customer proximity. Measures included setting up profit centers for the Automotive, Mechanical & Plant Engineering, High Tech and Diversified Industries units.

Site changes

In the year under review, Freudenberg IT further expanded the locations in Germany and more particularly the USA. In China, the Business Group moved into a new data center. The Business Group established a new legal entity, Freudenberg IT, S.A. de C.V., in Mexico City, Mexico, in 2013.

Profile:Freudenberg IT is a global, full-service IT provider with 30 years of excellence as a reliable partner for small- and medium-sized industrial enterprises (SMEs). The portfolio of services covers all facets of the modern SAP landscape, from a variety of outsourcing offer-ings through system optimization and system operating services to process and SAP consulting. In particular for SMEs in the manufacturing and automotive industries Freudenberg IT is an MES specialist (MES is the acronym

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external creative minds by launching a global idea competition.

Freudenberg New Technologies also focused closely on the strategic search fields. In the “Water” search field, for example, a project on water treatment in oil and gas production commenced. Development projects were also initiated for new materials such as lightweight materials and fiber composites.

The conclusion of the technical development phase marked a major milestone in the scaffolene® (biore-sorbable nonwoven) project. Freudenberg’s industrial part-ners can now embark on the medical or pharmaceutical approval process. The technology has been successfully transferred to industrial scale production under individual customer projects and the clinical approval process has already started. Further innovative pre-developments in wound care, drug delivery and biosurgery were also initiated.

In the year under review, Purtex® (PUR Technologies for Pure Textiles) made its debut with its own stand at the ISPO trade fair in Munich, Germany, the world’s largest sports fair, and at Techtextil in Frankfurt, Germany, the leading international trade fair for technical textiles. The first reference customers were won in the fashion industry. Wear resistance, lifetime and comfort are the overriding factors. In addition to the fashion industry and applications in blinds/sunshades and fabrics for furniture, Purtex® is also focusing on mattress covers.

Freudenberg FCCT SE & Co. KG, Weinheim, achieved a major marketing success with the first major series deliv-ery of a gas diffusion layer installed in a residential fuel cell. As a result, the product has reached industrial status. In the automotive market, potentially the largest fuel cell

FREUDENBERG NEW TECHNOLOGIES

Annual figures

In the 2013 financial year, sales by Freudenberg New Technologies amounted to €34.9 million (previous year: €34.0 million). The largest share of sales was gener-ated by Freudenberg Forschungsdienste SE & Co. KG, Weinheim. At December 31, 2013, the headcount at Freudenberg New Technologies was 266 employees (previous year: 272 employees).

Business development

Activities in 2013 concentrated in particular on idea generation and projects relating to Freudenberg’s focus strategic areas.

Key events

The New Business Development Division at Freudenberg New Technologies made further progress with the Freudenberg Idea Pool – the point of contact for inno-vative business ideas throughout the Group – and moved forward with its globalization. The Business Group also expanded the search for new business ideas to include

Freudenberg New Technologies 2012 2013Sales [€ million] 34.0 34.9Workforce 272 266

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The New Business Development Division at the lead com-pany reinforces the innovative strength of Freudenberg. The Idea Pool takes up ideas from employees as well as creative minds from outside the Group and transforms them into specific business.

Forschungsdienste SE & Co. KG functions as a partner for customers in the development of new and the optimization of existing materials and processes and as an experienced service provider for damage analysis and other research services.

Freudenberg FCCT SE & Co. KG develops fuel cell components such as seals, gas diffusion layers and filters.

Freudenberg Venture Capital GmbH reviews participa-tions in start-up companies offering innovations in fields related to Freudenberg activities and puts up venture capital where appropriate.

Products and services Development, testing, computation, materials analysis, intellectual property rights management, patent and trade mark research, fuel cell components, bioresorbable non-wovens and venture capital

Location Germany

Freudenberg New Technologies SE & Co. KG69465 Weinheim | GermanyPhone: +49 6201 80-2659Fax: +49 6201 88-3094E-mail: fnt@freudenberg.dewww.fnt-kg.de

market, new partnerships with well-known automakers were formed in 2013. Freudenberg FCCT SE & Co. KG will position itself for all of these partnerships as a com-petent supplier with a unique product portfolio of fuel cell components (gas diffusion layers, seals, filters, humidifiers).

Freudenberg Forschungsdienste SE & Co. KG supported Freudenberg Business Groups in various development projects in 2013. The company also further intensified its activities in the strategic growth fields of medical technol-ogy and oil & gas. One example is a project to develop new catheter systems launched with Helix Medical. Cooperation with Freudenberg Oil & Gas Technologies was expanded in fields such as material development and coating technology. In addition, projects on active bearings were initiated with Freudenberg Schwab Vibration Control.

In cooperation with several Business Groups, Freudenberg Forschungsdienste SE & Co. KG successfully conducted a key project on applications for renewable raw materials such as lignin. A further strategic focus in 2013 was the globalization of R&D services for the Business Groups, with work on this continuing in the current financial year.

Profile:Freudenberg New Technologies mainly serves cus-tomer within the Freudenberg Group. The Business Group comprises the lead company Freudenberg New Technologies SE & Co. KG together with Freudenberg Forschungs dienste SE & Co. KG, Freudenberg FCCT SE & Co. KG and Freudenberg Venture Capital GmbH, all Weinheim, Germany. This organizational structure allows a focused approach to innovation and new busi-ness at Freudenberg.

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The criteria for decisions to invest in real estate and the locations for such investments were determined in line with strategy. Likewise, a structured basis for the utilization of non-core real estate was created. In addition, a vision for long-term planning at Weinheim industrial park was drawn up.

Key events

In 2013, the Division worked on further developing real estate management and on the much-needed harmoni-zation of numerous business processes.

The Division concluded several construction projects in the year under review and handed these over to their users. These projects included a production hall in Reichelsheim for Freudenberg Sealing Technologies GmbH & Co. KG, Weinheim, a production and logistics hall in Potvorice for Freudenberg Filtration Technologies and a production hall in Sroda Slaska, Poland, for TrelleborgVibracoustic.

Freudenberg Oil & Gas Technologies relocated its headquarters from rented premises to a property in Houston built by Freudenberg Real Estate Management which also houses the EagleBurgmann headquarters for the America region. Furthermore, Freudenberg Real Estate Management handed over the new Freudenberg Regional Corporate Center North America in Plymouth, USA, to the users in August. In addition, planning of a new Freudenberg Chemical Specialities plant in Valinhos,

FREUDENBERG REAL ESTATE MANAGEMENT

A Freudenberg Real Estate Management project: The new Freudenberg Regional Corporate Center North America in Plymouth, Michigan, USA

Annual figures

In 2013, the Freudenberg Real Estate Management Division with its headcount of 55 employees (previous year: 57 employees) generated sales of €57.0 million (previous year: €53.6 million).

Business development

In the year under review, real estate prices all over the world picked up as a result of the low interest rate level. The only exceptions were the countries of southern Europe. The positive economic climate in Germany led to a 3-5 percent rise in construction prices. For Freudenberg Real Estate Management, calls for tender have become more protracted and more costly.

Freudenberg Real Estate Management 2012 2013Sales [€ million] 53.6 57.0Workforce 57 55

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Freudenberg Immobilien Management GmbH 69465 Weinheim | Germany Phone: +49 6201 80-6724 Fax: +49 6201 88-6724 E-mail: info@freudenberg-immobilien.com www.freudenberg-immobilien.com

Brazil, commenced. In Weinheim, the Division began the construction of a children’s daycare center and a multi-purpose hall for production and research and develop-ment. In Kaiserslautern, the Division built a logistics hall for Freudenberg Filtration Technologies.

Freudenberg Real Estate Management was once again successfully certified to ISO 9001 in 2013.

Profile:The Freudenberg Real Estate Management Division was set up in 2008. Under the guidance of the lead company Freudenberg Immobilien Management GmbH, Weinheim, Germany, the Division is responsible for all real estate issues relating to Freudenberg worldwide. Activities focus on the provision of real estate (corporate real estate management) for all Freudenberg companies. Real estate no longer required for operational purposes is let or sold to external customers.

Products and services The Division is responsible for the purchase and develop-ment of land and erection of buildings, the purchase or sale, hire, rental or management of production buildings, warehouses or offices as well as consultancy and engi-neering services on all real estate issues.

LocationsGermany, USA

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reinforced Freudenberg’s innovative strength. Along with the new Innovation Corporate Function, Freudenberg is driving forward its innovation management, innovation marketing and funding management.

In the 2013 financial year the Freudenberg Group again honored the achievements of both employees and exter-nal scientists in the area of innovation:

In 2013, the Freudenberg Group expensed a total of €193.0 million (previous year: €191.8 million) for research and development, with more than half of this sum accounted for by the Freudenberg Sealing Technologies, Freudenberg Chemical Specialities and EagleBurgmann Business Groups. During the year under review, 1,936 employees (previous year: 1,973 employees) were employed in research and development throughout the Freudenberg Group, with the regional focus in Germany, where 1,161 employees (previous year: 1,271 employees) were employed.

The goal of all activities by the Freudenberg Group in the field of research and development is to boost the share of new product sales. To that end, the focused, customer- oriented innovation activities of the Business Groups are complemented by various strategic elements.

The Freudenberg New Technologies Business Group performs research and development services primarily for internal customers, and develops new business via the New Business Development and Venture Capital Divisions.

Implementation of the new function of Chief Technology Officer in January of the year under review has further

RESEARCH AND DEVELOPMENT

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– With the global “ideaTrophy”, Freudenberg extended the search for new business ideas to include external creative minds and experts. The competition focused in particular on ideas in the seven strategic search fields of renewable energies, water, health, renewable raw materials, surface technology, oil and gas, and railways and vibration control for general industry.

– The Karl Freudenberg Prize for outstanding scientific achievement was awarded to Dr. Daniela Mauceri from Heidelberg University.

– The Carl Freudenberg Prize went to Dr. Stefan Beer, Dr. Stefanie Grollius and Dr. Gerhard Robens; for the first time in 2013, the prizes were presented on the occasion of the Carl Benz Lecture at the Karlsruhe Institute of Technology.

Freudenberg has participated in research and devel-opment projects supported by the German government and the EU for many years. These funded research and development collaborations between industrial com-panies and scientific institutions can address issues and problems that can only be jointly solved. In the 2013 financial year a total of seven German companies in

the Freudenberg Group received funding for a total of 22 collaborative research and development projects (18 German projects, 4 EU projects) running until the end of 2013 or beyond.

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companies located in the vicinity of Freudenberg opera-tions send their young people to Freudenberg for training.

Talent management process

Freudenberg rolled out a new talent management process throughout the Group in 2013. The objective is to establish a uniform standard for talent management across the entire Freudenberg Group to achieve compa-rability in the assessment process and to facilitate per-sonnel development beyond the boundaries of individual Business Groups.

Overall, headcount development was positive on the back of continued dynamic growth. Based on the consolidation at-equity, the headcount rose significantly in Europe (excluding Germany) to 8,375 (previous year: 7,572), in Asia to 6,231 (previous year: 4,874) and in North America to 7,200 (previous year: 6,872). This was attributable in particular to increases as a result of acqui-sitions. Freudenberg took control of 50:50 joint ventures in China and South Korea belonging to the Freudenberg Nonwovens and Freudenberg Filtration Technologies Business Groups and these are included in full in the consolidated accounts. This resulted in an additional 532 employees in the headcount for Asia.

The headcount in Africa/Australia remained largely unchanged at 416 (previous year: 457), with the same applying for the headcount of 1,485 (previous year: 1,476) in South America/Central America. In Germany, the number of employees rose slightly to 9,538 (previous year: 9,535).

In 2013, 170 young people began their training at Freudenberg’s German companies. In total, 528 people were training at Freudenberg in Germany as at December 31, 2013. The spectrum ranges from a two-year commercial or technical apprenticeship to dual studies at a university of cooperative education. Freudenberg has acquired a reputation for the high standard of its training, as is confirmed by the fact that

HUMAN RESOURCES

In our internal reporting – where the joint ventures are included on a pro-rata basis – the headcount as at December 31, 2013, was 39,837 (previous year: 37,453 employees). Based on the consolidation at-equity, the Freudenberg Group employed 33,245 employees (previous year: 30,786 employees). Personnel expenses increased to €1,727.9 million (previous year: €1,719.1 million). Of these personnel expenses, social security contributions and costs of pensions and assistance and related benefits amounted to €344.0 million, on a par with the previous year.

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The concept covers standardized assessment systems and is based on coordinating skills profiles and poten-tials definitions. Individual agreements on the next development steps are agreed on the basis of these appraisals with a view to preparing employees for future tasks.

The first Global Talent Management Conference with the participation of all Business Groups took place in February 2013. The Business Groups presented their Level 1 managers and their high potentials. Regional Talent Dialogues to discuss development perspectives throughout the Group for identified talents from the respective regions took place in the fall in North Amer-ica, South America, China and India.

A Regional Talent Dialogue for Europe is planned for 2014.

Regional activities

Germany and EuropeThe Freudenberg Group organizes leadership training for management talent in all regions. The Freudenberg Leadership Development Program for Level 1 manag-ers has already become a tradition in Germany. The first training for management talent at Freudenberg’s European companies took place in the year under review.

The Freudenberg Leadership Development Program brings together employees from all Business Groups. One aim is to create the framework for participants to establish a close and durable network. In order to further strengthen and expand this effect, the first “alumni day” for the Freudenberg Leadership Development Program was held in the year under review.

North AmericaDuring the year under review, Freudenberg continued the Leadership Program launched in North America in 2012. The program aims, among other things, to promote diver-sity. 20 employees with different cultural backgrounds took part in three one-week modules held at various Freudenberg locations in North America and designed to teach leadership skills and illustrate the value of diver-sity in teams.

South AmericaFreudenberg organized the third leadership program for middle management in South America. New elements such as the skills profiles of the Group’s talent manage-ment process were added to the program in the year under review. The objective is to gain an insight into the management performance of each participant and to define both individual and collective development plans. The program also encourages networking among the participants. 20 participants successfully completed the program in February 2014.

Africa/Australia 416

Asia 6,231

Germany 9,538

North America 7,200

South/CentralAmerica 1,485

Europe (excluding Germany) 8,375

WORKFORCE BY REGION (AS AT DEC. 31, 2013)

At-equity

North America 8,042

South/CentralAmerica 1,870

Europe (excluding Germany) 10,186

Africa/Australia 428

Asia 8,989

Germany 10,382

Pro-rata

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pension scheme. Freudenberg is thus rewarding the performance and loyalty of its employees and strengthen-ing their identification with the company.

In the year under review, a project team also began work on drafting a program to reduce the fluctuation rate among production operatives and strengthen their identification with Freudenberg.

IndiaIn India, Freudenberg consolidated various training initia-tives introduced at all organizational levels in 2011 and 2012. During the year under review, special learning kits were distributed to all employees who had previously taken part in these programs with a view to underpinning the effectiveness of the training with the help of follow-up learning material. At the same time, 2013 saw the intro-duction of coaching programs for line managers aimed at transferring responsibility for the development of team members to them, with the HR department assuming a supporting role.

In addition, several training programs were carried out in various departments.

ChinaThe fluctuation rate on the Chinese labor market in 2013 was again extremely high. While personnel turnover at Freudenberg in China is below the national average, there is nevertheless potential for improvement, particu-larly at production locations, because production opera-tives account for 80 percent of fluctuation.

As a result of the situation on the Chinese job market, the time and effort required to recruit, induct, train and retain employees is high. In personnel work, talent management with a view to supporting Freudenberg’s sustainable growth in China has evolved into a key issue. The follow-ing projects were implemented or introduced in the year under review:

The fourth Freudenberg China Talent Summit, a two-year program for management talent featuring intensive training modules, challenging project work and the targeted communication of perspectives throughout the Freudenberg Group, commenced in 2013. The program prepares high potentials in China for their first manage-ment posts. Candidates from earlier programs now hold senior management positions in China. The program includes contributions from international managers.

A pension plan for China was launched on January 1, 2014. The program is designed to give Freudenberg employees in China the opportunity to contribute to a company

WORKFORCE BY REGION (AS AT DEC. 31, 2013)

Africa/ Australia

457 416

Asia

4,874

6,231

South/Central America

1,476 1,485

North America

6,872 7,200

Europe (excluding Germany)

7,5728,375

Germany

9,535 9,538

2012 2013

11,000

9,000

7,000

5,000

3,000

1,0000

At-equity

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Group-wide development programs for top management

Freudenberg approved Group-wide development pro-grams for top management in the year under review – a Strategic Leadership Program for Level 1 management and a Business Leadership Program for Level 2 manage-ment. These programs are key building blocks in the new global talent management process and are being rolled out in 2014. They bring together employees from various Business Groups and create an overarching Freudenberg network for top managers in order to meet the demands of growing internationalization and market changes, which call for international teams who share their know-ledge with one another, thus creating new ideas and solutions.

The programs have been drawn up by an international project team from Freudenberg and the well-respected INSEAD Business School and are tailored to the needs of Freudenberg. Each program comprises three one-week modules held at various locations around the world. Core themes include leadership and strategy.

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(previous year: €11.4 million). Direct investments in environ-mental protection amounted to €2.8 million (previous year: €1.9 million).

The share of direct investments in environmental protec-tion, occupational health and safety in total investments in tangible assets, intangible assets and investment proper-ties increased to 6.9 percent (previous year: 6.7 percent).

Preventive health careThe Group further expanded preventive health care management in the year under review. Various pro-grams implemented Freudenberg’s health care principles throughout the company. Internal surveys on health care infrastructure served to identify improvement potential and define corresponding measures. Health care performance indicators, such as the sickness rate, have been recorded since 2011. The transparency brought by this process has already led to a series of improvement projects.

Particular attention was devoted to addressing the challenges associated with demographic change. One key issue for the Business Groups was designing work-places to ergonomic standards. Freudenberg Sealing Technologies has drawn up a guideline on ergonomics setting out criteria and recommendations for designing and equipping the Business Group’s workplaces. In addi-tion, employees attend training sessions on ergonomics.

How to cope with psychological stress was another focus of health care efforts. Freudenberg Home and Cleaning Solutions in the UK, for example, implemented an anti-stress project. Employees were shown how to identify and appropriately manage stress both on a personal level and among their colleagues.

Environmental protection, occupational health and safety

The priority goals of the Freudenberg Group are the avoid-ance of all accidents, preventive health care, and reducing the impact of business activities on the environment.

The Freudenberg Group signed the United Nations Global Compact in January 2014 – this is a voluntary corporate responsibility initiative where companies commit to aligning their operations to values and sustainability.

For the first time in 2013, the data for environmental protection, occupational health and safety are based on the consolidation at-equity. This has various effects, one of them impacting the calculation of the LDI rate, where it is no longer possible to present a continuation of the long- standing downward trend. The Freudenberg Group is nevertheless persevering in its efforts to reduce the LDI rate in 2014.

Management systemsThe introduction of management systems relating to occu-pational health and safety (OHSAS 18001) and environ-mental protection (ISO 14001 or EMAS) continued in the 2013 financial year. 86 percent of Freudenberg Group production facilities now operate an occupational health and safety management system pursuant to OHSAS 18001 and 86 percent of Freudenberg Group production sites operate an environmental protection management system pursuant to ISO 14001 or EMAS.

InvestmentsIn the year under review, direct investments in occu-pational health and safety amounted to €10.6 million

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Occupational safetyOccupational safety measures focus on changing the behavior of all employees. One example of these efforts is the numerous projects implemented under the “We all take care” environmental protection and occupational safety initiative. One of the winning projects in the year under review was a project at Freudenberg Nonwovens called “Trainees take care of safety” which encourages trainees to start mastering workplace safety at an early stage in their working lives. Working in a team, the trainees developed proposals to deal with unsafe work situations, and then implemented these ideas cost- effectively and with a minimum of red tape.

Based on the consolidation at-equity, the total number of accidents resulting in more than one day’s absence in the year under review amounted to 111 (previous year: 102). The corresponding LDI rate (LDI is the acronym for Lost Day Incident, i.e. all accidents at work involving at least one day’s absence per 1,000 employees) was 3.4 (previous year: 3.3). Referred to one million working hours, the rate was 1.9 (previous year: 1.8). The number of serious accidents fell from seven to six.

Environmental protectionNumerous products manufactured by the Freudenberg Group help customers achieve efficient and sustainable resource management. Internally, Freudenberg fosters this approach both during the manufacture of products and with regard to the design of new buildings and the modernization of existing ones.

One example is Purtex®, a textile impregnation that – unlike fluorocarbon-based textile finishes – does not contain any substances that are considered in any way

dangerous, either to humans or the environment. At Freudenberg Home and Cleaning Solutions, new prod-ucts undergo an evaluation process during the develop-ment stage to assess sustainability performance. New products must perform better than their predecessors.

The LESS (Low Emission Sealing Solutions) package developed by Freudenberg Sealing Technologies stands for environmentally-friendly, resource-conserving mobility. The package features advanced sealing technology that helps save fuel and reduce emissions, thus harness-ing the maximum engine efficiency potential, and also includes mature series solutions for alternative fuels as well as alternative drivetrain concepts, such as electric cars.

One example from the LESS package is the Levitex gas- lubricated mechanical seal. Lower frictional losses reduce CO2 emissions per kilometer by as much as one gram.

Energy managementMany site projects and Business Group initiatives oriented to the Freudenberg “Responsible Conduct” guideline focus on sustainable energy use with a view to reducing the environmental impact of business activities. Energy managers have begun their work at many Business Groups and initiated numerous improve-ments to existing plant such as heating systems, com-pressors, ventilation and steam generation units. Some Freudenberg sites have begun to introduce a certified energy management system pursuant to DIN EN ISO 50001 in order to achieve a sustainable reduction in energy consumption.

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Social responsibility The Freudenberg Group sees its social responsibility as an integral part of its corporate governance and practices this responsibility both inside the company and externally. Freudenberg’s “Responsibility” Guiding Principle states: “Our company and its family shareholders together are committed to protecting the environment and being responsible corporate citizens in all countries and commu-nities where we do business …” In the 2013 financial year, many of the Group’s companies, sites and employees around the world again engaged in local projects and initiatives in the spirit of responsible corporate citizenship. In addition, numerous internal assistance and support pro-grams are available to the Group’s own employees.

The following examples illustrate the long-term nature of these local projects: In the year under review, many young people again completed their training at Freudenberg’s nonprofit training center opened in 2009 in Nagapattinam in the Indian state of Tamil Nadu south of Chennai, and successfully found employment.

The Nagapattinam region, with a population chiefly comprising low-income agricultural workers and fishermen, was hardest hit by the tsunami in 2004. To give the young people in the area a sustainable basis for a better future and to meet the above-average need for high-quality training, the training center gives young people the oppor-tunity to complete dual study courses that are unique in India to train as welders, plumbers, engine mechanics and machine fitters. Once they have completed their train-ing, the young people stand a good chance of earning their own living while helping to improve the region’s infrastructure.

Key dataIn 2013, Freudenberg consumed 1.6 million megawatt hours (previous year: 1.5 million megawatt hours). The break-down by sources of energy is as follows:

Outsourced energy supplies (power, steam and district heat generated outside Freudenberg; 0.94 million mega watt hours)

Natural gas (0.62 million megawatt hours) Fuel oil (0.03 million megawatt hours)

This energy consumption of 1.6 million megawatt hours translates into costs totaling approximately €122 million. Energy costs accounted for 2.2 percent of total sales (previous year: 2.1 percent).

There was one event with a significant environmental impact in 2013 (previous year: one event):

A fire broke out in the production hall of the SurTec do Brasil Ltda. facility in São Bernardo do Campo, Brazil. No one was injured. The production building was damaged and production was interrupted. The supply chain was not affected. No wastewater or any water used to extinguish the fire was released. The fire was caused by an electrical fault.

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An elementary school was rebuilt with Freudenberg’s help and opened in 2009 in Haijin, a town in Sichuan province, China, almost completely destroyed by an earthquake in May 2008. The building provides some 300 students with the right setting for a successful start to their education. Freudenberg employees visit the school each year and organize various activities such as the summer school project, extra tuition and a Christmas party. Over 70 Freudenberg employees volunteered for the 2013 one-week summer camp and taught the children English, Chinese culture and sport.

In 2013, 66 young people gathered valuable experience in a foreign country under Freudenberg’s TANNER youth exchange program. Since the program was launched in 1999, 928 children of employees have spent time with host families at Freudenberg locations all over the world and gained a first-hand insight into a different culture. As a result, the young participants, their parents and host

families have a greater sense of belonging to the world-wide Freudenberg community. A collective exchange in Parets del Vallès, Spain, involving seven young people was a special highlight in the year under review.

Freudenberg Stiftung is the largest Partner of Freudenberg & Co. Kommanditgesellschaft. In keeping with its statutes, earnings from the foundation are used to promote science and education, and to strengthen peaceful coexistence in society. The work of the founda-tion focuses on children and young people. All projects seek to integrate these groups in society. The projects are always motivated by a specific need for action which is either drawn to the direct attention of the foundation or stimulated by scientific research: Young people from immigrant families who cannot find a vocational training opportunity, children who find school difficult because of their lack of German language skills, right-wing extremist youth groups, small business entrepreneurs who cannot find advice or support from existing institutions, or schools wishing to open their doors to extra-curricular activities but lacking the necessary resources.

Supporting social institutions and initiatives in the cities and communities where Freudenberg is active is a basic tenet of the Freudenberg Group and derived from the Group’s Guiding Principles. One example of this social commit-ment is the “Wir tun was …” initiative at the Weinheim location which focuses on support for projects concerned with the issues of tolerance, charity and a sense of com-munity. Donations are earmarked for specific purposes.

Management Report – Responsible Conduct

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Advances in wound care

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In modern wound care the medical consensus is that wounds heal quicker if the wound environment is kept moist. Freudenberg Nonwovens is the first company to market wound dressings that combine hydroactive nonwovens and nonwovens made of chitosan fibers. This shortens treatment time and cost quite substantially, particularly with reference to chronic wounds.

Chitosan is a biopolymer derived from the shells of sea crustaceans which helps wounds to heal and stems blood loss very swiftly. Hydroactive nonwovens allow maximum flexibility, and adapt perfectly to fit the wound bed and the patient’s movements. An absorbent core of hydroactive fibers is combined with a nonwoven made of chitosan fibers. When the fibers come into contact with the exudate they form a kind of gel, thus permanently keeping the wound moist. Wound dressings from Freudenberg can absorb large amounts of exudate, with one square meter absorbing up to ten liters of wound fluid.

In order to meet the very diverse specifications that apply to wound care, Freudenberg Nonwovens designs solutions tailor-made to suit individual customers’ requirements. The portfolio includes six standard products which can be customized in various ways.

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As part of the organizational realignment, the former NOK-Freudenberg Group China, Freudenberg Schwab Vibration Control and Dichtomatik Business Groups have been brought together under the roof of Freudenberg Sealing Technologies, and a new Real Estate Corporate Function has been set up; these changes became effective on January 1, 2014.

Effective January 15, 2014, Freudenberg Home and Cleaning Solutions acquired the Marigold household gloves business from Comasec SAS. Comasec SAS is a company belonging to the Ansell Group, a global leader in glove protection solutions for industrial applications. The acquisition covers the global trademark rights for the Marigold brand, as well as the consumer household gloves business in the UK, Ireland, Italy, Netherlands, Hong Kong and Japan.

These events did not exercise any material effect on the net assets, financial position or results of operations.

POST-REPORTING DATE EVENTS

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development, as well as various strategic initiatives, play a key role in achieving this goal. Entrepreneurial oppor-tunities are included in the annual planning process and monitored throughout the year. Long-term opportunities for profitable growth are identified as part of the strategy process.

As a supplier, Freudenberg is exposed in particular to the business- and product-related risks and opportunities associated with developments in the sectors the company serves. The Group’s broad diversification with regard to different markets, customer groupings and regions distributes risks. Freudenberg responds to the fluctuating order behavior of customers with high capacity flexibility, supported by active working capital management.

Many countries continue to face significant structural problems. Not only countries in Europe, but also other economies are still feeling the effects of the financial and debt crisis and have to deal with macroeconomic challenges such as sovereign debt or unemployment. The economies in Asia, however, continue to power the global economy, albeit on a less pronounced scale. Freudenberg has engaged in Asia for many years and further extended its activities in potential growth markets – among other things through acquisitions. We expect developments in this region to be significantly more dynamic than on markets in Europe and the USA. Freudenberg will continue to invest in its five strategic growth areas of chemical surface treatment, filtration, oil and gas, medical technology, and vibration control technology for rail vehicles, wind power and agricultural and construction machinery with a view to handling cyclical fluctuations in the various sectors more effectively going forward.

Freudenberg is exposed to numerous risks inseparably associated with entrepreneurial action. A risk management system for the timely identification and control of risks and the prompt initiation of countermeasures to safeguard the company is in place throughout the Freudenberg Group. This decentralized system is oriented to the organiza-tional structure of the Group. The Group’s organizational guideline on risk management forms the framework for the risk management system and is specifically adjusted to the requirements of the business units. The organizational structure of the Freudenberg Group underwent a thorough review in 2013 and adjustments were made in some areas.

The companies of the Freudenberg Group supply infor-mation on the current status of major risks under a regular reporting procedure by which the most important risk prevention or risk reduction measures are listed for each risk and any early warning indicators reviewed. A regu-lar exchange of experience with other companies and external experts ensures that new findings are incorporated in the Freudenberg Group’s risk management process, thereby ensuring the further development of the risk man-agement system. Developments that could threaten the con-tinued existence of the Freudenberg Group are identified in good time by the risk management system.

The objective of the Freudenberg Group’s risk manage-ment system is not to avoid all potential risks, but rather to create the leeway for taking a deliberate decision to enter into a risk backed by a comprehensive knowledge of the essential information. Entrepreneurial action therefore also involves identifying and harnessing opportunities and thus safeguarding and expanding the company‘s com-petitiveness. The product portfolio structure, the regional orientation, strategic acquisitions, focused research and

RISKS AND OPPORTUNITIES

Management Report – Post-Reporting Date EventsRisks and Opportunities

84

Various raw materials and processes used in production have a differing impact on the environment and the work-place. The aim is to continuously reduce negative effects. In the selection and further development of raw materials, processes and methods, Freudenberg is committed to protecting its employees and the environment. This applies both to storing and processing raw materials and to the disposal of production residue. Many product develop-ments are subjected to a gate process which among other things ensures that new products have a better environ-mental performance than their predecessors. There has, for example, been a noticeable reduction in the use of for-maldehyde in binders in recent years. The more stringent statutory requirements introduced during this period have been met.

The Oeko-Tex criteria were adopted as an internal threshold in 2012. The long-term objective is to ban formaldehyde from Freudenberg products.

Under the implementation program for REACh (European Regulation on Registration, Evaluation, Authorization and Restriction of Chemicals), REACh coordinators have been appointed at all European Business Groups. The coordi-nators meet once or twice a year, the agenda at these meetings includes a discussion of current developments or the reaction of customers and suppliers to the REACh regulation and regulations of a similar nature.

Freudenberg’s “We all take care” initiative launched more than ten years ago calls on every employee to engage personally in improving environmental protection and occupational health and safety. Other key themes covered by the initiative are corporate social responsibility and site risks. The initiative is constantly evolving and is

Compliance with the statutory framework takes various forms. On the one hand, responsibility is systematically delegated. Strict compliance with legislation is consid-ered a matter of course. On the other hand, wherever possible efforts are made to surpass the standards prescribed by laws and regulations (in other words, both workplace and behavioral standards are designed to guarantee compliance with the minimum statutory requirements).

Furthermore, Freudenberg is exposed to the risk of litigation primarily as a result of warranty and product liability risks. Freudenberg seeks to avoid these risks through extensive quality assurance measures and controls. Specific quality management strategies such as “Six Sigma” (zero defects) are used to handle quality risks and the appropriate programs are initiated.

On the procurement market, Freudenberg faces risks relating to the availability of raw materials and their price trends, particularly steel, crude oil derivatives and rubber. Freudenberg companies respond to these risks with tar-geted purchasing activities and by reviewing the utiliza-tion of substitute raw materials and alternative production processes. Long-term contracts are concluded where feasible and meaningful.

A further risk for Freudenberg that is becoming increas-ingly obvious is the difficulty involved in retaining and developing talent. Various measures, such as a talent management process which ensures that Freudenberg employees throughout the Group receive further training and acquire the skills needed by the company on the basis of harmonized talent management programs and standards, are in place to respond to this risk.

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supported by top management and senior executives in the Business Groups.

The Freudenberg Group is developing a growing number of occupational health measures for its older employees; these measures cater for national and regional factors.

Internal and external audit processes monitor the imple-mentation of HSE programs by the Business Groups, for example in respect of fire protection. The objective is to raise awareness for fire protection and prevent production interruptions and delivery shortfalls. The findings of the audits are systematically evaluated and measures imple-mented throughout the relevant Business Groups.

The Freudenberg Group depends on data and informa-tion that is chiefly stored electronically and communicated by electronic means. This applies both with reference to internal business processes and to business pro-cesses with customers and suppliers. The Freudenberg Group responds to IT security risks by operating an IT security management system oriented to the ISO/IEC 27001:2005(E) international standard. The aim of the IT security guidelines issued by the Board of Management is to preserve the confidentiality, availability and integrity of information, prescribing the procedures to this end. The Business Groups conduct a comprehensive risk monitoring and implement appropriate measures.

An assessment of IT security in the Group forms a reg-ular part of the annual reporting procedure. Numerous internal communication measures encourage a heightened awareness on the part of employees with regard to the correct handling of information and information processing systems.

In its capacity as a provider of IT outsourcing services, Freudenberg offers its customers the standard guarantees regarding the availability and performance of the hard-ware made available to them. Failure to comply with these guarantees could result in customers filing claims for dam-ages. Technical risks are primarily covered by redundant data centers in different geographical locations.

The Freudenberg Group has a Risk Committee which is tasked with the identification, analysis and control of the financial risk profile of the Freudenberg Group. This Com-mittee discusses and defines existing and future processes concerning the methodology and control of financial risk management.

Various measures to safeguard liquidity are in place which allow Freudenberg to react swiftly to unexpected liquidity- related risks. Such risks are hedged by the Group’s solid banking and shareholders’ financing and its high liquid reserves. The company has an above-average equity ratio, a stable level of Partners’ reserves and comprehensive credit lines.

As a globally active group, Freudenberg is exposed to currency and interest rate risks. Monitoring of these risks is implemented in the risk management process. Because the currency risks of the various companies have a partially offsetting effect, the effective foreign exchange risk is determined for the Group as a whole.

Interest rate risks arise from possible changes in the market rate and can lead to changes in the market value of fixed interest investments. To reduce interest rate risks, Freudenberg makes funds available to the subsidiaries in the form of loans or via cash pools. Vice versa, these

Management Report – Risks and Opportunities

86

The Group Accounting & Controlling Corporate Function is responsible for compilation of the consolidated financial statements of the Freudenberg Group. It defines minimum requirements regarding reporting content submitted by the companies and controls and monitors the time frame and process requirements for the consolidated financial state-ments. Group Accounting & Controlling is also responsible for the central administration of changes in shareholding structures and updates the list of companies included in the Freudenberg Group consolidation accordingly.

The standards for IFRS reporting as regularly updated form the basis for compiling the IFRS financial statements of the parent company Freudenberg SE and of all domes-tic and foreign subsidiaries included in the consolidation.

The necessary information concerning the coordinated and punctual compilation of the consolidated financial statements in compliance with the relevant accounting laws and standards is available to all Freudenberg employees involved in this process via the Freudenberg intranet. There are binding instructions for internal coordi-nation and the preparation of financial statements.

Freudenberg uses a standard software tool for the con-solidated accounting process. This tool is used throughout the company worldwide and clearly defines user rights observing the principle of the separation of functions.

The system covers both reporting by the Freudenberg companies and the consolidated financial statements. Additional controls are implemented in the consolidation process. This process is also supported by a software tool for the automatic reconciling of balances throughout the company. The individual companies have a local internal

Freudenberg companies channel surplus liquidity to the central finance department. Currency and interest rate risks are hedged to a meaningful extent.

Internal guidelines for companies in the Freudenberg Group clearly specify that derivative financial instruments may not be used for speculative purposes, but only for hedging risks in connection with underlying transactions and associated financing operations.

In its rating published in April 2013, the rating agency Moody’s reaffirmed the company’s creditworthiness (referred to Freudenberg SE) as Baa1 and confirmed the outlook as “stable”. The Baa1 rating gives Freudenberg very good creditworthiness at investment grade level. Companies with this rating standard have comparatively low interest costs because the likelihood of loan default is significantly lower. For that reason, banks and other credit institutions charge a lower risk premium.

The implementation of controls is designed to establish an appropriate level of security to ensure that the consol-idated accounting process is carried out in compliance with the relevant accounting laws and standards. The internal control system set up for this purpose includes measures intended to ensure the complete, accurate and timely transmission and presentation of information of relevance to the preparation of the consolidated financial statements and the consolidated management report of the Freudenberg Group. The Board of Management of the Freudenberg Group bears overall responsibility for the internal control system.

To this end, Freudenberg has initiated the following main measures:

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control system which is the responsibility of the respective Business Group. If Shared Service Centers are respon-sible for the financial processes, then the internal control system of the Shared Service Centers applies.

The Group Accounting & Controlling Corporate Function provides support for local contact partners throughout the entire reporting process. It organizes seminars for the employees involved in this process in the event of important changes in accounting procedures and IT applications, thereby guaranteeing a consistently high standard of reporting. In 2013, preparations began to transfer the reporting process for environmental protec-tion and occupational health and safety to the central reporting system.

There is a clear demarcation of tasks between the Corporate Function and the companies. The separation of functions and the dual control principle are systematically applied.

Actuarial reports and evaluations are compiled by special-ist service providers or appropriately qualified employees. The Freudenberg Group auditor and the auditors of the various consolidated companies review the functionality and compliance of the consolidated reporting process as part of the auditing procedure. Suggestions for improve-ment are published regularly in a management letter.

In addition, the functionality and compliance of processes of relevance to financial reporting are monitored regularly under an internal auditing process.

The complete package of processes, systems and con-trols adequately ensures that the consolidated reporting

process is in line with IFRS and other regulations and laws of relevance to financial reporting and is reliable.

The Freudenberg Group attaches considerable impor-tance to its research and development activities. By con-tinually expanding these activities, the company not only counteracts possible risks arising from rapid technological change, but also safeguards its competitive edge through its technology leadership and harnesses new opportuni-ties in growth markets. Central topics are electro-mobility, the further development of the strategic growth areas as well as resource- and energy-saving manufacturing processes.

The analysis of present risks concludes there are no risks which could pose a threat to the continued existence of the Freudenberg Group.

Freudenberg largely implements the rules of the German Corporate Governance Code on a voluntary basis. Restrictions relate in particular to the publication of individ-ual executive compensation for the Board of Management and the Supervisory Board.

Management Report – Risks and Opportunities

88

At the beginning of 2014, many countries are still facing significant structural problems. However, after two years during which growth in global economic output was well below average, there are signs that the pace of growth is beginning to accelerate. Freudenberg anticipates sat-isfactory business development during the first half of the year on the back of improved economic conditions. We expect to see moderate momentum in the global econ-omy during the course of the year. That is based among other things on a stable economic situation in eastern Europe.

There will be a slight improvement in economic growth in the advanced economies. Although the European finan-cial and debt crisis is not over yet, the ensuing macroeco-nomic strains have been reduced to such an extent that gross domestic product in the eurozone – Freudenberg’s largest sales region – is expected to grow by 1 percent in 2014, with Germany again producing an above- average performance compared with other EU countries. We expect to see German gross domestic product grow by 1.5 percent.

In the USA, the statutory debt limit increase agreed at the beginning of 2014 averted a major risk, but the critical factor will be whether the planned exit from the expan-sive U.S. monetary policy is successful. We expect a 2.5 percent rise in U.S. gross domestic product.

As far as the emerging economies are concerned, we continue to anticipate high growth rates in gross domestic

product – albeit at a slightly lower level compared with previous years in some cases. Assuming reforms in China have an impact, we expect this key market for Freudenberg to grow by 7.5 percent in 2014. This year’s elections in India and Brazil may increase uncertainty about further developments, put currencies under addi-tional pressure, and impact investment activity. We expect 6 percent growth in India, and 2.3 percent growth in Brazil. In Russia, the forecast is for 2.0 percent growth, higher than the previous year.

We intend to outperform our markets in spite of the differ-ing forecasts for the individual regions. To that end, we will be offering customers new innovative solutions and will be driving our key projects forward. That should help us leverage Group potential more effectively, increase our efficiency and achieve excellence in everything we do.

The Freudenberg Group will continue to invest in its five strategic growth areas of chemical surface treatment, medical technology, the oil and gas industry, industrial filtration, and vibration control technology for high-growth industrial segments and rail vehicles. Furthermore, we will intensify our activities in Brazil, Russia, India and China in line with market opportunities.

We will continue to act prudently, keep a careful watch on economic developments, and respond swiftly and systematically to market changes. We will systematically pursue our business strategy with high operating efficiency and flexibility, and with solid financial management.

OUTLOOK

89

Risks for Freudenberg arise from the availability of raw materials and raw material price trends, in particular steel, crude oil derivatives and rubber. While raw material prices remained at a stable level in 2013, we expect higher volatility going forward. The companies in the Freudenberg Group are responding to this with targeted purchasing initiatives and by reviewing the openings to use substitute raw materials or alternative production methods.

We anticipate moderate growth in sales and operating result for the Freudenberg Group in the 2014 financial year. All Business Areas are likely to contribute to this growth.

The changes in our organizational framework resolved at the end of the 2013 financial year will support sales growth. We expect further sales momentum from the integration of the Dichtomatik sales organization in Freudenberg Sealing Technologies. Conversely, Freudenberg Schwab Vibration Control can benefit from cross-selling opportunities and the materials know-how of the sealing expert. For the NOK-Freudenberg Group China joint venture, integration under the roof of Freudenberg Sealing Technologies will generate market benefits in par-ticular with reference to global customers.

Freudenberg Nonwovens and Freudenberg Politex Nonwovens will jointly harness economies of scale in the new Freudenberg Performance Materials Business Group and improve their process technologies. They will extend

their materials know-how and release greater resources for innovation as a result of this union.

Freudenberg Home and Cleaning Solutions will expand business further by broadening its global distribution activi-ties, above all in the Asian growth markets.

The Freudenberg Chemical Specialities Business Group can tap new potential in the food industry through its recent acquisition of the Capol Group.

The Helix Medical and Freudenberg Oil & Gas Technologies Business Groups will grow further through innovations and targeted acquisitions.

These changes put us in an even better position to leverage the potential of our Group as a broad-based technology enterprise.

Weinheim, March 28, 2014

The Board of Management

Management Report – Outlook

90

Clean air – courtesy of Freudenberg filters

91

Fumes from furniture, flooring or painting can cause contaminant loads indoors. All over the world, there is a growing desire to reduce these loads. In Asia, protection from formaldehyde – a contaminant gas often found in new buildings – is particularly important. High-performance mobile room air cleaners fitted with special filters developed by Freudenberg Filtration Technologies have been providsing this protection since 2013.

The filters are specially designed for conditions on the Asian market such as high humidity, and ensure a pleasant and, above all, healthy indoor climate because they reliably arrest viruses, bacteria and fine dust, etc. as well as formaldehyde.

The filter media used are so-called combi filters – and function in the same proven way as the combi filters used in micronAir cabin air filters. The multi-layered structure absorbs particles of all sizes, from coarse to ultra-fine. An extra layer of coconut shell-based high-performance activated carbon additionally absorbs odors and gases.

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93

FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTSFREUDENBERG SE

94 Consolidated Statement of Financial Position95 Consolidated Statement of Profit or Loss 96 Consolidated Statement of Profit or Loss and Other Comprehensive Income97 Consolidated Statement of Cash Flows98 Consolidated Statement of Changes in Equity99 Notes to the Consolidated Financial Statements

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION

[€ million] Note Jan. 1, 2012 Dec. 31, 2012 Dec. 31, 2013Restated Restated

ASSETS Intangible assets (1) 569.1 601.1 786.7Tangible assets (2) 1,503.0 1,371.3 1,387.8Investment properties (3) 22.3 20.8 19.3

Investments in joint ventures (4) 149.0 346.7 348.3Investments in associated companies (5) 710.5 687.0 691.6Other financial assets 86.1 103.7 106.2

Financial assets 945.6 1,137.4 1,146.1Other non-current assets (7) 22.1 42.1 53.0Deferred taxes (20) 66.0 79.2 82.9Non-current assets 3,128.1 3,251.9 3,475.8Inventories (6) 737.9 648.9 697.7

Trade receivables 870.5 785.3 846.3Other current assets 136.1 289.7 134.2

Current receivables (7) 1,006.6 1,075.0 980.5Current tax assets 13.2 42.3 38.2Securities and cash at bank and in hand (8) 682.1 652.2 672.9Current assets 2,439.8 2,418.4 2,389.3Non-current assets held for sale and disposal groups (9) 7.1 7.0 7.5 5,575.0 5,677.3 5,872.6EQUITY AND LIABILITIES Subscribed capital 450.0 450.0 450.0Capital reserves 50.2 50.2 50.2Retained earnings 1,709.8 1,873.8 1,951.8Equity without non-controlling interests 2,210.0 2,374.0 2,452.0Non-controlling interests 289.6 294.0 322.9Equity (10) 2,499.6 2,668.0 2,774.9

Provisions for pensions (11) 370.4 465.7 465.9Other long-term provisions (12) 90.4 93.6 89.1

Long-term provisions 460.8 559.3 555.0Financial debt 827.4 481.8 672.9Other non-current liabilities 49.8 53.6 63.4

Liabilities (13) 877.2 535.4 736.3Deferred taxes (20) 111.6 97.4 121.0Non-current liabilities 1,449.6 1,192.1 1,412.3Other current provisions (12) 308.3 308.2 355.7Current tax liabilities 70.7 72.0 42.8

Financial debt 489.1 795.9 519.1Trade payables 514.2 411.5 468.8Other current liabilities 243.1 229.6 299.0

Liabilities (13) 1,246.4 1,437.0 1,286.9Current liabilities 1,625.4 1,817.2 1,685.4Liabilities in connection with non-current assets held for sale and disposal groups (9) 0.4 0.0 0.0 5,575.0 5,677.3 5,872.6

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Financial Report – Consolidated Statement of Financial Position Consolidated Statement of Profit or Loss

CONSOLIDATED STATEMENT OF PROFIT OR LOSS

[€ million] Note 2012 2013Restated

Sales (14) 5,681.3 5,646.1Cost of sales (15) - 3,673.6 - 3,512.0Gross profit 2,007.7 2,134.1Selling expenses - 943.0 - 996.0Administrative expenses - 510.9 - 530.5Research and development expenses (16) - 188.5 - 191.5Other income (17) 214.1 64.3Other expenses (18) - 73.6 - 58.2Income from investments in joint ventures (4) 25.8 35.1Profit from operations 531.6 457.3Income from investments in associated companies (5) 47.5 66.1Other investment result 8.1 5.8Other interest and similar income 15.2 10.5Interest and similar expenses (19) - 38.1 - 46.4Financial result 32.7 36.0Profit before income taxes 564.3 493.3Income taxes (20) - 126.6 - 94.5Consolidated profit 437.7 398.8

Profit attributable to Freudenberg 401.6 352.4Profit attributable to non-controlling interests (21) 36.1 46.4

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[€ million] Note 2012 2013Restated

Consolidated profit 437.7 398.8 Other comprehensive income: Remeasurement of defined benefit plans (11) -119.0 12.7Income tax relating to each item of other comprehensive income that will not be reclassified to profit or loss 37.0 - 4.2Items that will not be reclassified to profit or loss - 82.0 8.5

Exchange rate differences (10) - 113.4 - 291.2Changes in value of securities (10) - 0.5 23.0Changes in value of derivative financial instruments (10) 3.2 6.2Share in other comprehensive income of joint ventures (4) - 3.3 - 0.9Share in other comprehensive income of associated companies (5) 30.8 81.3Miscellaneous comprehensive income - 9.8 - 21.7Income tax relating to each item of other comprehensive income that will be reclassified to profit or loss when specific conditions are met

0.4 - 1.0

Items that will be reclassified subsequently to profit or loss when specific conditions are met

- 92.6 - 204.3

Other comprehensive income for the year - 174.6 - 195.8

Total comprehensive income for the year 263.1 203.0Of which attributable to Freudenberg 240.0 151.3Of which attributable to non-controlling interests 23.1 51.7

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

97

Financial Report – Consolidated Statement of Profit or Loss and Other Comprehensive Income

Consolidated Statement of Cash Flows

[€ million] Note 2012 2013 Restated

Profit before income taxes 564.3 493.3Current income taxes - 117.8 - 112.4Depreciation, amortization and impairment losses on intangible assets, tangible assets, investment properties and financial assets less write-ups

237.8 237.6

Profit or loss on disposal of intangible assets, tangible assets, investment properties and financial assets

- 135.3 - 6.9

Other expenditure and income not affecting payments - 56.9 - 82.1Changes in inventories, trade receivables and other assets - 48.7 - 100.8Changes in trade payables and other liabilities - 31.7 29.4Changes in provisions 33.5 57.8Cash flow from operating activities (22) 445.2 515.9

Cash inflow from disposals of intangible assets, tangible assets and investment properties

18.5 23.1

Cash outflow from acquisitions in intangible assets, tangible assets and investment properties

- 273.2 - 229.3

Cash inflow from disposals of financial assets 5.2 21.5Cash outflow from acquisitions in financial assets - 15.7 - 9.6Payments in connection with the disinvestment/investment of consolidated companies less cash acquired or disposed of

78.8 - 325.4

Cash flow from investing activities - 186.4 - 519.7 Payments to shareholders/non-controlling interests - 94.7 - 95.9Cash inflow from the take-up/cash outflow from the repayment of financial debts - 168.4 147.1Cash inflow from disposals of loans and securities held as non-current assets 9.5 4.8Cash outflow from acquisitions of loans and securities held as non-current assets - 17.0 - 1.5Cash flow from financing activities - 270.6 54.5 Changes in cash and cash equivalents with effect on payments - 11.8 50.7Changes in cash and cash equivalents from changes in consolidated group - 16.6 - 8.1Changes in cash and cash equivalent from exchange rate differences - 1.5 - 21.9Cash and cash equivalents at beginning of year 682.1 652.2Cash and cash equivalents at end of year 652.2 672.9

Securities and cash at bank and in hand 652.2 672.9

CONSOLIDATED STATEMENT OF CASH FLOWS

98

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

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Status Jan. 1, 2012 450.0 50.2 1,709.8 2,210.0 289.6 2,499.6Consolidated profit 401.6 401.6 36.1 437.7Appropriation of profit - 76.0 - 76.0 - 18.7 - 94.7Other comprehensive income - 161.6 - 161.6 - 13.0 - 174.6Status Dec. 31, 2012 450.0 50.2 1,873.8 2,374.0 294.0 2,668.0

Consolidated profit 352.4 352.4 46.4 398.8Appropriation of profit - 73.3 - 73.3 - 22.8 - 96.1Other comprehensive income - 201.1 - 201.1 5.3 - 195.8Status Dec. 31, 2013 450.0 50.2 1,951.8 2,452.0 322.9 2,774.9

See also the explanatory remarks on equity in note (10) to the Consolidated Financial Statements. The figures as at Jan. 1, 2012 and Dec. 31, 2012 are restated.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

General

The Freudenberg Group is an international industrial group mainly active as a supplier to the automotive, mechanical engineering, textile and apparel throughout the world. The Group’s portfolio also includes medical technology and consumer goods.

The consolidated financial statements of Freudenberg Societas Europaea (hereafter Freudenberg SE), Weinheim, Germany, for 2013 have been drawn up in accordance with the International Financial Reporting Standards (IFRS) as they are to be applied in the European Union (EU) as of the date of the statement of financial position (December 31, 2013). Comparative figures for the previous financial year were based on the same principles.

Freudenberg SE has availed itself of the right as laid down in Sec. 315a (3) HGB (Handelsgesetzbuch, “German Commercial Code”) to set up its consolidated financial statements in accordance with IFRS.

The Group currency is the euro. All amounts are indicated in million euros unless otherwise stated.

In the 2013 financial year, the application of the following amended and new standards and new interpretations was binding for the first time:

- IFRS 1: Amendment to IFRS 1 – Severe Hyperinflation and Removal of Fixed Assets for First-Time Adopters

- IFRS 1: Amendment to IFRS 1 – Government Loans

- IFRS 7: Amendment to IFRS 7 – Disclosures – Offsetting Financial Assets and Financial Liabilities

- IFRS 13: Fair Value Measurement

- IAS 1: Amendment to IAS 1 – Presentation of Items of Other Comprehensive Income

- IAS 12: Amendment to IAS 12 – Deferred Tax: Recovery of Underlying Assets

- IAS 19: Employee Benefits

- IFRIC 20: Stripping Costs in the Production Phase of a Surface Mine

- Various standards: Annual Improvements to IFRSs 2009 – 2011 Cycle

As a result of the amendment to IAS 1, the items of other comprehensive income that may be reclassified subsequently to profit or loss under certain conditions and items that will not be reclassified to profit or loss in future are to be presented separately. The effects can be seen in the Consolidated Statement of Profit or Loss and Other Comprehensive Income.

Financial Report – Consolidated Statement of Changes in EquityNotes to the Consolidated Financial Statements

100

The amended requirements of IAS 19 call for the full disclosure of net pension obligations and therefore the immediate recognition of actuarial gains and losses in equity. Furthermore, interest costs and income are to be determined using a uniform interest rate on the basis of net pension obligations. The effects on the consolidated financial statements can be seen in the presentation of figures for the previous year in the following section.

The first-time application of the other new and amended standards and IFRIC 20 had no effect or no material effect on the consolidated financial statements.

In addition, Freudenberg applied the following new standards and amendments to existing standards, the application of which was not yet mandatory, on a voluntary basis for the consolidated financial statements as at December 31, 2013:

- IFRS 10: Consolidated Financial Statements

- IFRS 11: Joint Arrangements

- IFRS 12: Disclosure of Interests in Other Entities

- Amendment to IFRS 10, IFRS 11, IFRS 12: Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests in Other Entities: Transition Guidance

- Amendment to IFRS 10, IFRS 12, IAS 27: Investment Entities

- IAS 27: Separate Financial Statements

- IAS 28: Investments in Associates and Joint Ventures

The new requirements of IFRS 10 supersede the requirements concerning consolidated financial statements previously stated in IAS 27 Consolidated and Separate Financial Statements and in Interpretation SIC-12 Consolidation – Special Purpose Entities. IAS 27 therefore only remains applicable to the financial statements of individual companies. IFRS 10 establishes a uniform concept of control which applies to all entities, including special-purpose entities. The first-time application of these standards had no effect on the consolidated financial statements of Freudenberg.

IFRS 11 supersedes the previous standard IAS 31 Interests in Joint Ventures and interpretation SIC-13 Jointly Controlled Entities – Non-Monetary Contributions by Venturers. Under the new requirements, joint ventures must be included in the consolidated financial statements only by the equity method in accordance with IAS 28. The effects on the consolidated financial statements are described in the presentation of the previous year’s figures in the following section.

101

Financial Report – Notes to the Consolidated Financial Statements

The IASB and the IFRS Interpretations Committee have published additional standards, interpretations and amendments the application of which was not yet binding for the 2013 financial year. The application of these standards, interpretations and amendments is subject to endorsement by the EU which, in some cases, is still pending.

Standards/Interpretations Application binding from*

Endorsed by EU

Probable impact

IFRS 7 and IFRS 9

Amendments to IFRS 7 and IFRS 9 – Mandatory Effective Date and Transition Disclosures

Open** No Additional disclosures required in notes in first year of application

IFRS 9 Financial Instruments: Classification and Measurement

Open** No Changes in the classification and measurement of financial assets, especially equity instruments; it is not yet possible to assess the scope of the effects

IFRS 9 Financial Instruments: Hedge Accounting and Amendments to IFRS 9, IFRS 7 and IAS 39

Open** No No significant impact, probably additional disclosures required in notes

IAS 19 Amendment to IAS 19 – Defined Benefit Plans: Employee Contributions

July 1, 2014 No No significant impact

IAS 32 Amendment to IAS 32 – Offsetting Financial Assets and Financial Liabilities

January 1, 2014 Yes None

IAS 36 Amendment to IAS 36 – Recoverable Amount Disclosures for Non-Financial Assets

January 1, 2014 Yes Amended disclosures required in notes

IAS 39 Amendment to IAS 39 – Novation of Derivatives and Continuation of Hedge Accounting

January 1, 2014 Yes None

IFRIC 21 Levies January 1, 2014 No NoneVarious standards

Annual Improvements to IFRSs 2010 – 2012 Cycle

July 1, 2014 No None

Various standards

Annual Improvements to IFRSs 2011 – 2013 Cycle

July 1, 2014 No None

*From this date or for reporting periods beginning after this date.** With the publication of IFRS 9 Financial Instruments: Hedge Accounting and Amendments to IFRS 9, IFRS 7 and IAS 39, the mandatory date of first application was

rescinded. However, earlier application of IFRS 9 is possible.

102

Presentation of figures for the previous year The following table shows the adjustments which had to be made to the consolidated statements of financial position as at January 1, 2012 and December 31, 2012 as a result of the new requirements of IAS 19, the application of which was mandatory from January 1, 2013, and the voluntary application of standard IFRS 11 before it became mandatory:

[€ million]Prior to

adjustmentsIAS 19

revisedIFRS 11 After

adjustments Status Jan. 1, 2012 Non-current assets 3,135.2 - 37.2 30.1 3,128.1Current assets 2,565.8 0.0 - 118.9 2,446.9 5,701.0 - 37.2 - 88.8 5,575.0

Equity 2,566.7 - 66.4 - 0.7 2,499.6Non-current liabilities 1,437.4 29.2 - 17.0 1,449.6Current liabilities 1,696.9 0.0 - 71.1 1,625.8 5,701.0 - 37.2 - 88.8 5,575.0 Status Dec. 31, 2012 Non-current assets 3,367.4 - 41.1 - 74.4 3,251.9Current assets 2,692.2 0.0 - 266.8 2,425.4 6,059.6 - 41.1 - 341.2 5,677.3

Equity 2,817.7 - 143.1 - 6.6 2,668.0Non-current liabilities 1,169.3 102.0 - 79.2 1,192.1Current liabilities 2,072.6 0.0 - 255.4 1,817.2 6,059.6 - 41.1 - 341.2 5,677.3

The new requirements of IAS 19 resulted in increases in the provisions for pensions in the consolidated statement of financial position of €48.8 million as at January 1, 2012 and €153.8 million as at December 31, 2012.

The voluntary application of IFRS 11 before it became mandatory resulted in a reduction in tangible assets in the consoli-dated statement of financial position of €101.1 million as at January 1, 2012 and €258.9 million as at December 31, 2012. Investments in joint ventures rose by €149.1 million as at January 1, 2012 and €348.1 million as at December 31, 2012. Sales for the 2012 financial year were reduced by €640.4 million and the cost of sales by €512.6 million. The effects on the other items of the consolidated statement of profit or loss were not significant.

103

Financial Report – Notes to the Consolidated Financial Statements

Consolidated group

Apart from Freudenberg SE, 68 (previous year: 77) German and 323 (previous year: 316) foreign affiliated companies, with respect to which Freudenberg SE has the power to direct the relevant activities of the company, the right to variable returns from the company and the ability to affect such variable returns, are fully consolidated.

Freudenberg holds a 25-percent stake in EagleBurgmann Japan Co., Ltd., Tokyo, Japan, the partner in the joint venture in the field of mechanical seals operated within the EagleBurgmann Business Group. Eagle Industry Co., Ltd., Tokyo, Japan, also holds a 25-percent stake in EagleBurgmann Germany GmbH & Co. KG, Wolfratshausen, Germany. According to the Joint Venture Agreement, Freudenberg exercises control over affiliated companies of the EagleBurgmann Group in which Freudenberg holds less than half of the voting rights of the other company; such affiliated companies are therefore fully consolidated.

Nine (previous year: eight) German and 53 (previous year: 60) foreign joint ventures are included in the consolidated financial statements. These legally independent companies are managed jointly with the partner company in each case. Both parties hold rights to the net assets of the companies. The joint ventures are consolidated by the equity method.

In addition, 14 (previous year: 14) foreign associated companies are included in the consolidated financial statements. Freudenberg does not control these companies but only exercises a significant influence. These companies are consolidated by the equity method.

All affiliated companies, joint ventures and associated companies are listed under “Shareholdings of the Freudenberg Group“.

In the year under review, 26 companies were included in the consolidated financial statements as fully consolidated affiliated companies for the first time. 28 companies which had previously been fully consolidated were no longer included as fully consolidated affiliated companies due to sale, liquidation or merger. The timing of the initial consolidation was determined on the basis of the date when Freudenberg SE started to exercise financial control.

Vector Technology Group AS with headquarters in Drammen, Norway, was included in the consolidated financial statements with effect from January 1, 2013. This step further expanded the Freudenberg Oil & Gas Technologies Business Group within the seals and vibration control technology strategic business area.

Furthermore, the Capol Group, with headquarters in Elmshorn, Germany, was consolidated for the first time with effect from August 1, 2013. This acquisition reinforced business in chemical specialities.

In 2013, the balance of the amount expended on acquisition activities and the amount received as a result of disinvest-ment activities was €-325.4 million (previous year: €78.8 million).

104

The changes in the consolidated group had the following effects on the net assets, financial position and results of operations:

[€ million] Dec. 31, 2012 Dec. 31, 2013Non-current assets 84.5 307.3Current assets - 188.3 97.7Non-current liabilities - 44.4 54.7Current liabilities - 56.2 327.4Sales - 332.1 106.8

Consolidation methods

The acquisition costs of the shareholdings concerned are set off against the pro-rata share in the fair value of the equity of the companies concerned as of the date of acquisition according to the purchase method. Assets and liabilities are also included in the consolidated statement of financial position at their fair values as of the acquisition date. Any remaining differences are shown as goodwill.

Inter-company profits and losses, sales, expenses and income and all receivables and payables between consolidated companies are eliminated. Deferred taxes are set up on consolidation transactions affecting net income.

Joint ventures and associated companies are consolidated by the equity method on the basis of financial statements drawn up in accordance with IFRS.

The differences arising from the acquisition of shareholdings in joint ventures and associated companies form part of the book value of the shareholding in the company concerned. Amortization is not recognized on goodwill in subsequent periods. An impairment test is carried out on the book value of the shareholding in the joint venture or associated company as a whole.

Accounting and measurement principles

The consolidated financial statements are based on the annual accounts of Freudenberg SE and the consolidated companies. All the annual accounts concerned were drawn up as at December 31, 2013.

In accordance with IFRS 10, the accounts of the individual companies to be included in the consolidated financial statements have been drawn up applying uniform accounting and measurement methods.

Acquired intangible assets are capitalized at acquisition cost and amortized on a systematic basis.

105

Financial Report – Notes to the Consolidated Financial Statements

Amortization is based on the following useful lives:

Software 3 to 8 yearsPatents and licenses depending on contract term

An impairment test is carried out on goodwill at least once per year and an impairment loss is shown if the value of such assets is found to have been impaired.

For the impairment test, the value in use of the cash-generating unit to which the goodwill is allocated is determined in accordance with IAS 36 on the basis of a five-year plan, applying the discounted cash flow method. In line with internal management reporting, the cash-generating units are determined on the basis of the Business Groups. The discount rates used are based on the WACC (“weighted average cost of capital”) determined separately for each cash-generating unit. An impairment loss is recognized if the carrying amount of the cash-generating unit is in excess of discounted future cash flows.

Impairments of capitalized goodwill are shown under other expenses in the consolidated statement of profit or loss.

Provided that such assets meet the requirements of IAS 38, internally generated intangible assets are carried as assets at production cost and are amortized on a systematic basis over their useful lives, if their useful lives are finite.

If the useful life of intangible assets is not considered to be finite, no amortization is effected. An intangible asset may be regarded as having an indefinite useful life when, based on an analysis of all of the relevant factors, there is no fore-seeable limit to the period over which the asset is expected to generate net cash flows for the Group.

Tangible assets are capitalized at acquisition or production cost. In the case of assets produced by Group companies,production cost also includes directly attributable cost as well as pro-rata overheads and depreciation.

Borrowing costs are capitalized as part of acquisition or production cost in the case of qualifying assets.

Expenditure for repairs and maintenance is generally shown as expenses. Such expenditure is only capitalized if future economic benefits in connection with such expenditure are probable and the acquisition or production cost can be reliably measured.

Movable non-current assets and industrial buildings are depreciated over their useful lives. This approach normally corresponds to straight-line depreciation.

106

Systematic depreciation is determined on the basis of the following useful lives:

Buildings max. 50 yearsMachinery and equipment 5 to 25 yearsOther fixtures, fittings and office equipment 3 to 20 years

In addition, an impairment loss is recognized if the fair value less costs to sell or value in use of an asset falls below the book value. If the impairment of an asset reflected by a write-down in the past is reduced or eliminated, the impairment loss is reversed. The updated acquisition or production cost represents the upper limit of measurement in such cases.

Taxable grants and tax-free investment subsidies, normally paid by public bodies, are set off against acquisition or production cost.

In accordance with IAS 17, tangible assets leased under finance leases are recognized as assets and written off over their economic useful life if substantially all the risks and rewards associated with the ownership of the leased asset lie with the lessee. Such assets are carried at the fair value of the leased asset at the inception of the lease or, if lower, at the present value of the minimum lease payments. A liability of the same amount is also shown on the statement of financial position.

In the case of operating leases, lease payments are recognized as expenses.

Land and buildings held to earn rentals from third parties are dealt with as investment properties. Such properties are measured at acquisition cost. Investment properties which consist of movable assets and buildings are depreciated over their useful lives. This approach normally corresponds to straight-line depreciation. As a general principle, systematic depreciation is calculated on the basis of a maximum useful life of 50 years and effected on a straight-line basis. The fair value is determined by the discounted cash flow method.

Participations are shown at acquisition cost or, if lower, at fair value.

Investments in joint ventures and associated companies are shown at acquisition cost on first-time consolidation and subsequently adjusted for changes in the share of the shareholder in the net assets of the company concerned.

Long-term loans are discounted if the amount of such discount is significant.

Inventories are shown at acquisition or production cost or at net realizable value, where this is lower. Inventories of raw materials and consumables and merchandise are measured by the weighted average cost method. Production cost includes directly attributable costs as well as production and material overheads and depreciation.

107

Financial Report – Notes to the Consolidated Financial Statements

Receivables and other assets are recognized at amortized cost. Impairments are recognized for individual risks identified on the basis of analyses which are not covered by credit insurance. Impairments are effected using a separate account if circumstances become apparent as a result of which certain receivables are subject to risks in excess of the general credit risk. The amortized cost is approximately equivalent to the fair value of the assets concerned. Long-term receivables are discounted if the amount of such discount is significant.

In principle, securities carried as non-current or current assets are available for sale. Such securities are therefore recorded at the market value as of the statement of financial position date. Value changes are shown under equity without an effect on net income.

Cash at bank or in hand is shown at its nominal value. Cash held in foreign currencies is converted using the exchange rate as of the statement of financial position date.

Non-current assets and groups of assets held for sale are shown separately in the statement of financial position if they are available for immediate sale in their present condition and the sale of such assets is highly probable within the next 12 months. Such assets are shown at the lower of fair value less costs to sell and book value. Systematic depreciation is not recognized on such assets from the date of reclassification. Liabilities included in a disposal group are shown sepa-rately under liabilities.

The requirement for the reversal of the impairment of assets has been complied with both for non-current and for current assets. Unless individual standards call for a different measurement, the updated acquisition or production cost represents the upper limit of measurement in such cases.

Provisions for pensions and similar obligations are determined by the projected unit credit method using actuarial princi-ples, taking into account future income and pension trends. Service cost and the net interest on the net defined benefit liability are recognized with an impact on profit or loss. Remeasurements of the net defined benefit liability are disclosed under other comprehensive income.

Deferred taxes are calculated on temporary differences between the book values of assets and liabilities in the consolidated statement of financial position and their tax bases, taking into account the applicable national income tax rates valid on the date of realization and already in force on the statement of financial position date. In addition, deferred tax assets are recognized for tax losses carried forward if it is likely that such losses will be usable by the company. Deferred tax assets and liabilities are only set off against each other in cases where the income taxes concerned are levied by the same tax authority and concern the same period.

Other provisions allow for all recognizable risks and uncertain obligations towards third parties which will probably result in an outflow of resources which can be reliably estimated. Such provisions are recognized at their most probable settle-ment value and discounted if the amount of such discount is significant. Reimbursement rights in this connection are shown separately under other assets.

108

Liabilities are shown at their face value or at the repayment or settlement value, where this is higher. Non-current liabilities are discounted if the amount of such discount is significant.

Sales and other income are recognized at the fair value of the consideration received or receivable when the services are performed or the goods or products concerned are delivered.

The consolidated statement of cash flows is broken down into cash flows from operating, investing and financing activities. Effects arising from changes in the consolidated group and the effects of exchange rate differences have been eliminated from the consolidated statement of cash flows. The influence of these effects on cash and cash equivalents is indicated separately.

In connection with the drawing-up of the consolidated financial statements, it has been necessary to make assumptions and estimates concerning certain assets and liabilities (for example, as regards the useful life of assets with a finite useful life or the parameters for determining pension liabilities). Actual future figures may deviate from these estimates.

Fair value is determined on the basis of input factors in three defined categories. The following fair value measurement hierarchy is applied:

Level 1: Use of quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.

Level 2: Determination of fair value using measurement procedures based on observed input factors for similar assets or liabilities in active markets or for identical assets or liabilities in markets that are not active.

Level 3: Measurement of assets and liabilities using measurement methods based on unobservable inputs as adequate observable market data are not available for the measurement of fair value.

Currency translations

The financial statements of all companies included in the consolidated financial statements which are not located in the eurozone are drawn up in the national currencies concerned. This is the currency of the primary economic environment in which the companies concerned operate (concept of functional currency).

In the accounts of individual companies, foreign-currency receivables and liabilities are translated at the exchange ratesas of the date of the statement of financial position.

Goodwill created as a result of acquisitions on or after March 31, 2004, is carried as an asset of the economically independent foreign companies concerned in their respective functional currencies.

109

Financial Report – Notes to the Consolidated Financial Statements

In the consolidated financial statements, the financial statements of all companies not located in the eurozone are translated in accordance with the following principles:

Statement of financial position items are translated at the middle rate as of the date of the statement of financial position.

■ Statement of profit or loss items are translated at average annual exchange rates.

■ Differences arising from the use of different exchange rates are recognized in equity without an effect on net income.

The same principles are used in the case of investments in joint ventures and associated companies consolidated by the equity method.

The exchange rates of currencies used for currency conversion which are material to the annual financial statements developed as follows:

Country Currency Closing rate Average rate 1 Euro = Dec. 31, 2012 Dec. 31, 2013 2012 2013 Brazil BRL 2.6953 3.2519 2.5288 2.8976India INR 72.2231 85.2246 69.0521 78.5205Japan JPY 113.6111 144.5122 103.4110 130.3060Norway NOK 7.3634 8.3614 7.4654 7.8681Turkey TRY 2.3557 2.9450 2.3141 2.5646USA USD 1.3183 1.3767 1.2918 1.3301

Differences arising from the use of different exchange rates compared with the previous year are shown in the statement of changes in intangible and tangible assets with respect to non-current assets and in the consolidated statement of profit or loss and other comprehensive income with respect to equity.

110

(1) Intangible assets Changes in intangible assets from January 1 to December 31, 2012:

[€ million] Conc

essi

ons

and

licen

ses

Goo

dwill

Paym

ents

mad

e on

acc

ount

Tota

l

ACQUISITION/PRODUCTION COST Status Jan. 1, 2012 458.8 382.3 13.7 854.8Changes in consolidated group 9.4 39.7 0.2 49.3Exchange rate differences - 7.8 - 3.8 0.0 - 11.6Additions 17.1 0.0 0.9 18.0Write-ups/revaluations 0.0 0.0 0.0 0.0Disposals - 8.0 - 0.9 0.0 - 8.9Reclassifications 18.4 0.0 - 14.7 3.7Status Dec. 31, 2012 487.9 417.3 0.1 905.3 AMORTIZATION Status Jan. 1, 2012 258.8 26.9 0.0 285.7Changes in consolidated group - 9.4 0.0 0.0 - 9.4Exchange rate differences - 3.5 - 0.1 0.0 - 3.6Additions – systematic 39.5 0.0 0.0 39.5Impairment losses 0.0 0.0 0.0 0.0Write-ups/revaluations 0.0 0.0 0.0 0.0Disposals - 7.5 - 0.5 0.0 - 8.0Reclassifications 0.0 0.0 0.0 0.0Status Dec. 31, 2012 277.9 26.3 0.0 304.2 Book value Dec. 31, 2012 210.0 391.0 0.1 601.1Book value Dec. 31, 2011 200.0 355.4 13.7 569.1

111

Financial Report – Notes to the Consolidated Financial Statements

Changes in intangible assets from January 1 to December 31, 2013:

[€ million] Conc

essi

ons

and

licen

ses

Goo

dwill

Paym

ents

mad

e on

acc

ount

Tota

l

ACQUISITION/PRODUCTION COST Status Jan. 1, 2013 487.9 417.3 0.1 905.3Changes in consolidated group 159.8 111.5 0.0 271.3Exchange rate differences - 32.9 - 24.2 0.0 - 57.1Additions 15.7 1.1 0.6 17.4Write-ups/revaluations 0.0 0.0 0.0 0.0Disposals - 15.4 - 0.8 - 0.2 - 16.4Reclassifications 1.0 0.0 0.3 1.3Status Dec. 31, 2013 616.1 504.9 0.8 1,121.8 AMORTIZATION Status Jan. 1, 2013 277.9 26.3 0.0 304.2Changes in consolidated group 0.0 0.0 0.0 0.0Exchange rate differences - 12.1 - 0.2 0.0 - 12.3Additions – systematic 49.2 0.0 0.0 49.2Impairment losses 0.1 0.0 0.0 0.1Write-ups/revaluations 0.0 0.0 0.0 0.0Disposals - 6.3 0.0 0.0 - 6.3Reclassifications 0.2 0.0 0.0 0.2Status Dec. 31, 2013 309.0 26.1 0.0 335.1 Book value Dec. 31, 2013 307.1 478.8 0.8 786.7Book value Dec. 31, 2012 210.0 391.0 0.1 601.1

Goodwill was subjected to an impairment test as at December 31, 2013. The basic assumptions used for determining the value in use of the cash generating units included a growth rate of 2.0 percent (previous year: 2.0 percent) and the WACCs ranging from 6.3 percent to 9.7 percent (previous year: ranging from 6.0 percent to 9.0 percent). On this basis, no impairment loss was identified.

An impairment test was also carried out with a variation in the discount rate of up to plus/minus 2.0 percentage points. On this basis too, there was no need to record an impairment loss.

112

(2) Tangible assets Changes in tangible assets from January 1 to December 31, 2012:

[€ million] Land

and

bui

ldin

gs

Mac

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nd

equi

pmen

t

Oth

er fi

xtur

es, f

ittin

gs

and

offic

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uipm

ent

Paym

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mad

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acc

ount

Wor

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pro

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Tota

l

ACQUISITION/PRODUCTION COST Status Jan. 1, 2012 939.4 2,137.4 809.7 27.6 80.4 3,994.5Changes in consolidated group - 3.2 - 223.0 - 179.1 - 4.3 - 21.9 - 431.5Exchange rate differences - 8.5 - 15.0 - 4.1 0.2 - 0.3 - 27.7Additions 21.0 62.1 51.4 19.4 101.3 255.2Write-ups/revaluations 0.0 0.0 0.0 0.0 0.0 0.0Disposals - 4.6 - 63.2 - 40.6 - 0.7 - 0.8 - 109.9Reclassifications 19.1 62.1 25.7 - 26.5 - 84.1 - 3.7Status Dec. 31, 2012 963.2 1,960.4 663.0 15.7 74.6 3,676.9 DEPRECIATION Status Jan. 1, 2012 432.9 1,460.2 598.0 0.0 0.4 2,491.5Changes in consolidated group 1.7 - 139.7 - 133.3 0.0 0.0 - 271.3Exchange rate differences - 5.2 - 12.0 - 3.2 0.0 0.0 - 20.4Additions – systematic 27.1 101.0 66.9 0.0 0.0 195.0Impairment losses 0.0 2.4 0.1 0.0 0.0 2.5Write-ups/revaluations 0.0 - 0.8 0.0 0.0 0.0 - 0.8Disposals - 3.6 - 51.0 - 36.1 0.0 0.0 - 90.7Reclassifications 0.5 1.3 - 2.0 0.0 0.0 - 0.2Status Dec. 31, 2012 453.4 1,361.4 490.4 0.0 0.4 2,305.6 Book value Dec. 31, 2012 509.8 599.0 172.6 15.7 74.2 1,371.3Book value Dec. 31, 2011 506.5 677.2 211.7 27.6 80.0 1,503.0

113

Financial Report – Notes to the Consolidated Financial Statements

Changes in tangible assets from January 1 to December 31, 2013:

[€ million] Land

and

bui

ldin

gs

Mac

hine

ry a

nd

equi

pmen

t

Oth

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xtur

es, f

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and

offic

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uipm

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Paym

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mad

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acc

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Wor

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ACQUISITION/PRODUCTION COST Status Jan. 1, 2013 963.2 1,960.4 663.0 15.7 74.6 3,676.9Changes in consolidated group 35.2 67.7 15.9 1.2 0.2 120.2Exchange rate differences - 29.1 - 59.9 - 15.3 - 0.8 - 3.7 - 108.8Additions 20.3 48.0 48.8 14.4 80.3 211.8Write-ups/revaluations 0.0 0.0 0.5 0.0 0.0 0.5Disposals - 3.5 - 72.0 - 24.6 - 1.7 - 0.8 - 102.6Reclassifications 17.8 44.2 21.2 - 19.4 - 64.9 - 1.1Status Dec. 31, 2013 1,003.9 1,988.4 709.5 9.4 85.7 3,796.9 DEPRECIATION Status Jan. 1, 2013 453.4 1,361.4 490.4 0.0 0.4 2,305.6Changes in consolidated group 15.9 42.7 11.9 0.0 0.0 70.5Exchange rate differences - 13.4 - 39.6 - 10.8 0.0 0.0 - 63.8Additions – systematic 28.9 95.8 57.8 0.0 0.0 182.5Impairment losses 0.0 2.6 0.1 0.0 0.0 2.7Write-ups/revaluations 0.0 - 0.1 0.4 0.0 0.0 0.3Disposals - 2.8 - 64.2 - 21.6 0.0 - 0.1 - 88.7Reclassifications 0.4 - 2.0 1.6 0.0 0.0 0.0Status Dec. 31, 2013 482.4 1,396.6 529.8 0.0 0.3 2,409.1 Book value Dec. 31, 2013 521.5 591.8 179.7 9.4 85.4 1,387.8Book value Dec. 31, 2012 509.8 599.0 172.6 15.7 74.2 1,371.3

In the financial year under review, Freudenberg received government grants for tangible assets in the amount of €0.1 million (previous year: €0.9 million). The grants mainly concerned investment promotion and were netted against acquisition costs.

114

Leased assets

Leased assets are recognized under non-current assets at the following book values:

[€ million] Dec. 31, 2012 Dec. 31, 2013 Intangible assets 0.5 0.3Land and buildings 2.2 3.7Machinery and equipment 0.4 0.9Other fixtures, fittings and office equipment 3.8 2.5Book value of leased assets recognized 6.9 7.4

The finance lease contracts were concluded at arm’s-length business conditions. Such leases normally include favorable purchase options. The lease contracts do not provide for any contingent rent payments or significant restrictions.

[€ million] Up

to 1

yea

r

1 to

5 y

ears

Ove

r 5 y

ears

Dec

. 31,

201

2

Up

to 1

yea

r

1 to

5 y

ears

Ove

r 5 y

ears

Dec

. 31,

201

3

Finance leasesMinimum lease payments 2.4 3.3 0.0 5.7 2.5 1.4 1.9 5.8Discount 0.1 0.2 0.0 0.3 0.1 0.1 0.3 0.5Present value 2.3 3.1 0.0 5.4 2.4 1.3 1.6 5.3 Operating leases Minimum lease payments 61.3 109.9 41.4 212.6 61.7 92.8 37.3 191.8

Lease payments totaling €81.0 million (previous year: €77.4 million) under operating leases were recognized with an effect on net income.

115

Financial Report – Notes to the Consolidated Financial Statements

(3) Investment properties

Details of land and buildings held by the Freudenberg Group as investment properties are shown in the table below:

[€ million] Third-party use Rent income

2012 100 % 3.82013 100 % 3.9

There were no significant direct operating expenses in the year under review or in the previous year.

There are no restrictions on the saleability of investment properties. Freudenberg is not under any contractual obli-gations to purchase, build or develop investment properties. Furthermore, Freudenberg is not under any contractual obligations to repair or maintain such investment properties going beyond its statutory obligations.

116

Changes in investment properties from January 1 to December 31, 2012:

[€ million]

ACQUISITION/PRODUCTION COST Status Jan. 1, 2012 48.2Changes in consolidated group 0.0Exchange rate differences 0.0Additions 0.0Write-ups/revaluations 0.0Disposals 0.0Reclassifications 0.0Status Dec. 31, 2012 48.2 DEPRECIATION Status Jan. 1, 2012 25.9Changes in consolidated group 0.0Exchange rate differences 0.0Additions – systematic 1.5Impairment losses 0.0Write-ups/revaluations 0.0Disposals 0.0Reclassifications 0.0Status Dec. 31, 2012 27.4 Book value Dec. 31, 2012 20.8Book value Dec. 31, 2011 22.3

117

Financial Report – Notes to the Consolidated Financial Statements

Changes in investment properties from January 1 to December 31, 2013:

[€ million]

ACQUISITION/PRODUCTION COST Status Jan. 1, 2013 48.2Changes in consolidated group 0.0Exchange rate differences 0.0Additions 0.0Write-ups/revaluations 0.0Disposals 0.0Reclassifications 0.0Status Dec. 31, 2013 48.2 DEPRECIATION Status Jan. 1, 2013 27.4Changes in consolidated group 0.0Exchange rate differences 0.0Additions – systematic 1.5Impairment losses 0.0Write-ups/revaluations 0.0Disposals 0.0Reclassifications 0.0Status Dec. 31, 2013 28.9 Book value Dec. 31, 2013 19.3Book value Dec. 31, 2012 20.8

The fair value of investment properties is €38.2 million (previous year: €37.1 million) and was calculated on the basis of discounted cash flows (level 3).

118

(4) Investments in joint ventures

The joint venture agreements with Trelleborg AB, Trelleborg, Sweden, and NOK Corporation, Tokyo, Japan, are of major importance for Freudenberg.

The purpose of the TrelleborgVibracoustic joint venture with Trelleborg AB is to strengthen activities in the automotive business. Trelleborg AB and Freudenberg SE each hold a stake of 50 percent.

NOK-Freudenberg Group China is a 50:50 joint venture between the Japanese NOK Corporation and Freudenberg SE with the objective of serving the high-growth Chinese market with locally-produced and imported sealing products.

The parent companies of these joint ventures published the following figures in their consolidated financial statements:

[€ million]

TrelleborgVibracoustic GmbH, Darmstadt, Germany

NOK-Freudenberg Asia Holding Co., Pte. Ltd.,

Singapore Dec. 31, 2012 Dec. 31, 2013 Dec. 31, 2012 Dec. 31, 2013

Current assets 498.5 568.9 116.0 135.6Of which: cash and cash equivalents 112.9 168.4 42.5 48.3

Non-current assets 591.8 640.1 89.5 118.8Current liabilities 559.2 593.2 46.2 63.0

Of which: current financial liabilities 282.1 241.6 3.5 3.5Non-current liabilities 152.3 190.5 1.5 0.8

Of which: non-current financial liabilities 5.2 3.7 0.0 0.0Equity 378.8 425.3 157.8 190.6Freudenberg share 50.0 % 50.0 % 50.0 % 50.0 %At-equity measurement 189.4 222.4* 78.9 95.3

2012 2013 2012 2013

Sales 792.5 1,679.5 227.1 260.3Profit or loss from continuing operations 7.4 40.4 23.8 29.4Other comprehensive income - 10.1 - 12.9 - 1.5 - 3.9Total comprehensive income - 2.7 27.5 22.3 25.5

Of which: depreciation and amortization - 43.5 - 67.1 - 15.3 - 12.1Of which: interest income 0.5 1.1 0.3 0.3Of which: interest expenses - 6.4 - 8.8 - 0.8 - 0.5Of which: income tax expense or income - 4.8 - 28.2 - 6.3 - 10.8

* The difference between the pro-rata share in equity and the at-equity measurement, amounting to €9.8 million, is the result of unilateral payments to equity by the shareholders.

119

Financial Report – Notes to the Consolidated Financial Statements

TrelleborgVibracoustic GmbH did not pay dividends to Freudenberg in the financial year under review or in the previous financial year. From NOK-Freudenberg Asia Holding Co. Pte. Ltd., Freudenberg received dividends in the amount of €1.9 million (previous year: €0.0 million).

The total carrying amount of interests in all individual joint ventures which are not material was €30.6 million (previous year: €78.4 million).

The pro-rata share of the profit or loss from continuing operations of all individual joint ventures classed as not material was €0.2 million (previous year: €10.2 million) and the pro-rata share in other comprehensive income was €-3.7 million (previous year: €0.4 million). The pro-rata share in total comprehensive income was therefore €-3.5 million (previous year: €10.6 million).

(5) Investments in associated companies

The most important non-controlling interests of Freudenberg were those in the Japanese companies NOK Corporation and Japan Vilene Company Ltd. (JVC), both with registered offices in Tokyo, Japan.

The NOK Group manufactures and supplies sealing products, flexible printed circuits, roll products for office equipment and further products such as specialty lubricants.

JVC manufactures nonwovens for the clothing, automotive, electrical and consumer goods industries as well as for applications in the medical sector and filtration.

These two significant associated companies published the following figures in their consolidated interim financial statements as at December 31 in each case:

[¥ million] NOK Corporation Japan Vilene Company Ltd. Dec. 31, 2012 Dec. 31, 2013 Dec. 31, 2012 Dec. 31, 2013

Current assets 278,666 297,699 24,502 26,283Non-current assets 264,208 337,115 25,553 29,181Current liabilities 176,938 188,821 12,924 12,108Non-current liabilities 77,891 79,959 8,701 8,861

2012 2013 2012 2013

Sales 520,568 576,390 48,150 51,987Profit or loss from continuing operations 18,572 28,470 938 3,341Other comprehensive income 12,155 53,092 351 3,424Total comprehensive income 30,727 81,562 1,289 6,795

120

NOK Corporation also reported non-controlling interests in the amount of ¥30,195 million (previous year: ¥23,603 million).

The increase in the other comprehensive income of the two companies is due to exchange differences on translating financial statements in foreign currencies and to effects from changes in the value of securities available for sale.

Freudenberg received dividends in the amount of €6.5 million (previous year: €7.3 million) from NOK Corporation and €1.7 million (previous year: €2.2 million) from Japan Vilene Company Ltd.

These associated companies were consolidated on the basis of their interim financial statements as at December 31, 2013.

[€ million] NOK Corporation Japan Vilene Company Ltd. Dec. 31. 2012 Dec. 31, 2013 Dec. 31. 2012 Dec. 31, 2013

Pro-rata share in equity 586.6 584.5 75.0 64.2Goodwill 7.1 7.1 0.6 0.6At-equity measurement 593.7 591.6 75.6 64.8Freudenberg share 25.10 % 25.10 % 27.68 % 33.40 %

In the year under review, the share of Freudenberg in Japan Vilene Company Ltd. was increased from 27.68 to 33.40 percent. This increase is due to the elimination of treasury stock of JVC.

As at December 31, 2013, the market values of the shareholdings were €517.2 million (¥74,746.9 million) (previous year: €511.8 million; ¥58,146.1 million) for NOK Corporation and €68.3 million (¥9,871.9 million) (previous year: €52.8 million; ¥5,993.1 million) for Japan Vilene Company Ltd.

The total carrying amount of interests in all associated companies classed as not material was €35.2 million (previous year: €17.7 million).

The pro-rata share in the profit or loss from continuing operations of all individual associated companies classed as not material was €7.8 million (previous year: €4.8 million) and the pro-rata share in the other comprehensive income of these companies was €-3.3 million (previous year: €-0.8 million). The pro-rata share in the total comprehensive income was therefore €4.5 million (previous year: €4.0 million).

121

Financial Report – Notes to the Consolidated Financial Statements

(6) Inventories

Inventories break down as follows:

[€ million] Dec. 31, 2012 Dec. 31, 2013 Raw materials and consumables 190.8 202.4Work in progress 94.0 104.3Finished goods and merchandise 361.2 389.5Payments made on account 2.9 1.5 648.9 697.7

Inventories rose by €48.8 million compared with the previous year, chiefly as a result of adaptation to market demand. After eliminating the effects of changes in the consolidated group and exchange rate effects, inventories rose by about 4 percent.

Write-downs of inventories totaling €22.6 million (previous year: €21.5 million) were recognized as expenses in the reporting year.

Write-ups totaling €11.3 million (previous year: €8.1 million) were effected on inventories as the reason for the impairment losses concerned no longer existed.

The inventories shown are not subject to any significant restrictions on title or disposal.

(7) Receivables

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Trade receivables 785.3 0.0 785.3 846.3 0.0 846.3Other assets 289.7 42.1 331.8 134.2 53.0 187.2 1,075.0 42.1 1,117.1 980.5 53.0 1,033.5

After adjustment for effects resulting from changes in the consolidated group and exchange rate effects, trade receivables rose by about 7 percent.

122

The other assets include pension plan assets in excess of the corresponding pension obligations in the amount of €25.4 million (previous year €18.7 million).

The other assets also include other tax receivables in the amount of €38.0 million (previous year: €38.7 million) and l iability insurance claims totaling €6.5 million (previous year: €6.5 million).

The claims for reimbursement in connection with recognized provisions, which are included in other assets, are shown in the other provisions under note (12).

(8) Securities and cash at bank and in hand

[€ million] Dec. 31, 2012 Dec. 31, 2013 Securities 95.2 153.8Checks and cash in hand 4.4 5.8Cash at banks 552.6 513.3 652.2 672.9

The securities mainly concern commercial papers issued by industrial companies.

(9) Non-current assets held for sale and disposal groups

This item includes land in Berlin, Germany, held for sale with a book value of €7.5 million (previous year: €7.0 million).

123

Financial Report – Notes to the Consolidated Financial Statements

(10) Equity

The subscribed capital in the amount of €450.0 million (previous year: €450.0 million) consists of 450 million no-par-value registered shares. The sole shareholder of Freudenberg SE is Freudenberg & Co. Kommanditgesellschaft, Weinheim (hereafter: Freudenberg & Co. KG).

The reserves break down as follows:

[€ million] Dec. 31, 2012 Dec. 31, 2013 Capital reserves 50.2 50.2Retained earnings 1,873.8 1,951.8 1,924.0 2,002.0

The capital reserves consist of contributions in kind made by the shareholder.

The retained earnings include net income earned by the Group in the past and not distributed as well as reserves of companies included in the consolidated financial statements including expenses and income recorded without effect on profit or loss.

The Board of Management proposes that the 2013 net retained profit in the amount of €713.7 million (previous year: €592.9 million) should be carried forward to new account.

In the reporting year, income (+) and expenses (-) which had previously been recorded without an effect on net income with respect to the following components of other comprehensive income were reclassified to the statement of profit or loss:

[€ million] Dec. 31, 2012 Dec. 31, 2013 Exchange rate differences 3.0 - 1.7Securities 0.0 - 0.2Derivative financial instruments 0.0 - 5.9 3.0 - 7.8

Tax effects in connection with income (+) and expenses (-) recorded without an effect on net income in 2013 break down as follows:

[€ million] Dec. 31, 2012 Dec. 31, 2013 Remeasurements of defined benefit pension plans 37.0 - 4.2Derivative financial instruments 0.4 - 1.7Securities and other items 0.0 0.7 37.4 - 5.2

124

Non-controlling interests

The rise in non-controlling interests in the equity of consolidated affiliated companies from €294.0 million to €322.9 million is mainly the result of the allocation of profit for the year as well as higher non-controlling interests as a result of the change in control of companies previously consolidated at-equity to fully consolidated companies. Dividend payments and exchange rate differences had an offsetting effect.

In the case of the following affiliated company, the consolidated financial statements include significant non-controlling interests in the amount of 25 percent of the shares

[€ million]Freudenberg-NOK General Partnership, Plymouth, USA Dec. 31, 2012 Dec. 31, 2013

Profit (+)/loss (-) attributable to non-controlling interests 8.9 10.5Total amount of non-controlling interests 80.9 90.7

This affiliated company is included in the consolidated financial statements with the following values:

[€ million]Freudenberg-NOK General Partnership Dec. 31, 2012 Dec. 31, 2013

Current assets 268.6 293.7Non-current assets 195.5 193.6Current liabilities 77.3 80.6Non-current liabilities 64.8 61.5

2012 2013Sales 486.0 496.9Profit (+)/loss (-) 11.8 36.6Total comprehensive income 5.9 24.7

Freudenberg-NOK General Partnership paid dividends in the amount of €1.5 million (previous year: €1.8 million) to the holder of the non-controlling interests.

Other non-controlling interests especially concern the EagleBurgmann Business Group, where they arise as a result of the contractual agreements concerning control.

125

Financial Report – Notes to the Consolidated Financial Statements

(11) Provisions for pensions

The provisions for pensions mainly concern German, US and British companies. This item includes obligations arising from current pensions and future pension entitlements.

The Freudenberg Group pension scheme consists of both defined contribution and defined benefit pension plans. Defined benefit plans include both fixed salary and final salary plans.

The pension obligations of German companies are commitments financed by provisions. These obligations are subject to the rules of the pension plan concerned and the applicable statutory provisions. The plans include benefit commitments dependent on service periods and on salaries and provide for disability benefits and benefits for surviving dependents as well as for retirement benefits.

The pension obligations of US and British companies are mainly funded commitments, financed chiefly by employers’ contributions. These plans are managed by third party pension funds. The representatives of the pension funds are legally obliged to act in the interest of all participants in the plan. In cooperation with investment advisers, they are responsible for the development and regular review of investment strategies for the plan assets. Commitments based on age and years of service include both retirement benefits and certain forms of survivor benefits. Most US and British plans are frozen and future entitlements can no longer be earned by plan participants.

All defined benefit schemes of the Freudenberg Group are subject to typical actuarial risks, especially investment and interest risks.

Current service cost and net interest on the net defined benefit liability are disclosed in the statement of profit or loss under personnel expenses in the relevant functional areas.

In the case of the defined contribution plans, there are no additional obligations apart from the payment of contributions. Contributions paid are expensed under personnel expenses and amounted to €63.9 million in 2013 (previous year: €61.4 million).

The value of provisions for defined benefit plans was calculated on actuarial principles by the projected unit credit method. For the German companies, the calculation was based on the following actuarial assumptions:

Dec. 31, 2012 Dec. 31, 2013 Discount rate 3.30 % 3.30 %Pension trend 2.00 % 2.00 %

126

As a result of the pension plan regulations, the assumed trend in salaries and wages only had an effect on the value of pension obligations in exceptional cases.

In the case of the foreign companies, the actuarial assumptions used for the calculations were within the following ranges:

Dec. 31, 2012 Dec. 31, 2013 Discount rate 3.3 % – 5.1 % 4.2 % – 5.1 %Salary trend 0.0 % – 3.3 % 0.0 % – 2.9 %Pension trend 0.0 % – 3.1 % 0.0 % – 3.3 %

Net pension obligations are shown in the following items of the statement of financial position:

[€ million] Dec. 31, 2012 Dec. 31, 2013

Provisions for pensions 465.7 465.9Other assets 18.7 25.4Net pension obligations 447.0 440.5

Net pension obligations are calculated as follows:

[€ million] Dec. 31, 2012 Dec. 31, 2013 Present value of funded obligations 280.3 271.3Fair value of plan assets - 271.9 - 281.4Surplus (-)/deficit (+) 8.4 - 10.1Present value of unfunded obligations 438.6 450.6Net pension obligations 447.0 440.5

127

Financial Report – Notes to the Consolidated Financial Statements

In the year under review, defined benefit obligations developed as follows:

[€ million] 2012 2013 Present value of defined benefit obligations, Jan. 1 612.8 718.9Current service cost 7.0 13.4Interest cost 29.2 25.2Gains (-) and losses (+) from remeasurement of plan obligations 129.2 - 5.1Past service cost - 3.8 2.6Contributions by plan participants 0.3 0.0Liabilities extinguished on settlements - 3.2 0.0Benefits paid - 31.3 - 30.3Reclassifications/other changes - 21.9 7.4Exchange rate differences 0.6 - 10.2Present value of defined benefit obligations, Dec. 31 718.9 721.9

In the year under review, plan assets developed as follows:

[€ million] 2012 2013 Fair value of plan assets, Jan. 1 244.0 271.9Interest income 10.8 11.0Gains (-) and losses (+) from remeasurement of plan assets 10.2 7.6Contributions by employer 24.2 11.0Contributions by plan participants 0.3 0.0Liabilities extinguished on settlements - 2.7 0.0Benefits paid - 13.1 - 12.3Reclassifications/other changes - 3.4 0.5Exchange rate differences 1.6 - 8.3Fair value of plan assets, Dec. 31 271.9 281.4

The fair value of plan assets is distributed as follows:

Plan assets with quoted prices in active markets:

[€ million] Dec. 31, 2012 Dec. 31, 2013 Equity instruments 105.7 133.7Interest-bearing securities 150.8 133.3Other assets 15.4 14.1 271.9 281.1

128

Plan assets without quoted prices in active markets:

[€ million] Dec. 31, 2012 Dec. 31, 2013 Other assets 0.0 0.3 0.0 0.3

The expected return on plan assets is calculated on the basis of the market prices of plan assets as of the respective date.

In the reporting year, gains and losses from the remeasurement of the defined benefit pension liability and plan assets developed as follows:

[€ million] 2012 2013 Gains (+) and losses (-) from remeasurement, Jan. 1 - 86.5 - 201.3 Gains (+) and losses (-) from remeasurement of pension obligation - 129.2 5.1

Of which as a result of changed financial assumptions - 128.1 5.0Of which as a result of changed demographic assumptions - 0.3 - 1.6Of which as a result of experience-based adjustments - 0.8 1.7

Gains (+) and losses (-) from remeasurement of plan assets 10.2 7.6Reclassifications/other changes 4.2 - 2.0Exchange rate differences 0.0 2.6Gains (+) and losses (-) from remeasurement, Dec. 31 - 201.3 - 188.0

In 2014, contributions in the amount of €9.9 million (previous year: €11.5 million) will probably be made to the pensionfund.

The weighted average duration of defined benefit pension obligations as at the end of the reporting year was 15.5 years (previous year: 14.3 years).

The possible changes in the defined benefit obligation as a result of changes in the discount rate, a major actuarial assumption, were calculated on the basis of the projected unit credit method. If the discount rate as at the statement of financial position date had been 0.25 percentage points lower, the present value of defined benefit pension obligations as at the statement of financial position date would have been €29.0 million higher. If the discount rate as at the statement of financial position date had been 1.00 percentage points higher, the present value of defined benefit pension obliga-tions as at the statement of financial position date would have been €96.7 million lower.

129

Financial Report – Notes to the Consolidated Financial Statements

(12) Other provisions

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Status Jan. 1, 2013 239.7 29.1 19.3 113.7 401.8Increases 180.9 32.5 22.2 83.0 318.6Unwinding of discount and effect of change in discount rate - 0.2 0.0 0.0 0.1 - 0.1Amounts used - 143.4 - 10.7 - 17.0 - 56.6 - 227.7Reversal - 20.7 - 3.7 - 1.6 - 15.3 - 41.3Exchange rate differences - 6.1 - 0.4 - 1.3 - 4.3 - 12.1Other changes - 0.8 - 0.1 2.1 4.4 5.6Status Dec. 31, 2013 249.4 46.7 23.7 125.0 444.8

Of which long-term 73.4 2.4 1.0 12.3 89.1Of which short-term 176.0 44.3 22.7 112.7 355.7 Reimbursement claims connected with provisions and shown in the statement of financial position under other assets 1.0 0.0 0.0 2.3 3.3

The provisions for personnel obligations mainly include other long- and short-term employee benefits, especially for vacation not taken, social security contributions and partial retirement.

The miscellaneous provisions include, inter alia, provisions for litigation risks, restructuring, advertising and environmental protection.

130

(13) Liabilities

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Liabilities to banks (= financial debt) 310.6 8.8 20.4 339.8 48.8 106.4 90.3 245.5Other financial debt, including leasing 3.8 8.1 0.0 11.9 6.8 2.2 1.6 10.6Shareholder’s loans 320.0 300.0 0.0 620.0 310.0 225.0 75.0 610.0Accounts of Freudenberg & Co. KG Partners 161.5 144.5 0.0 306.0 153.5 172.4 0.0 325.9Financial debt 795.9 461.4 20.4 1,277.7 519.1 506.0 166.9 1,192.0Trade payables 411.5 0.0 0.0 411.5 468.8 0.0 0.0 468.8Advance payments received on orders 11.3 0.0 0.0 11.3 15.8 0.0 0.0 15.8Miscellaneous liabilities 218.3 52.8 0.8 271.9 283.2 62.1 1.3 346.6Other liabilities 229.6 52.8 0.8 283.2 299.0 62.1 1.3 362.4 1,437.0 514.2 21.2 1,972.4 1,286.9 568.1 168.2 2,023.2

The average interest rate on long-term liabilities to banks is 1.83 percent (previous year: 1.64 percent).

131

Financial Report – Notes to the Consolidated Financial Statements

The interest payable on the certificates of indebtedness (“Schuldscheindarlehen”) included in the liabilities to banks isbased on variable and fixed components. Cash flows for variable and fixed interest and repayment of principal willprobably be as follows from 2014 to 2023:

[€ million] Book value Cash flows Dec. 31, 2012 2013Certificates of indebtedness 267.5 272.5 Dec. 31, 2013 2014 2015 2016 – 2023Certificates of indebtedness 170.00 3.3 3.4 188.4

In the reporting year, other financial debt includes, for the first time, loans granted by third parties, on the long-term component of which interest is payable at an average rate of 2.20 percent. This item also includes liabilities in connection with finance leasing, with an average interest rate of 4.11 percent (previous year: 4.00 percent). Further details are given in the information on finance leases under note (2).

Interest on shareholder’s loans is payable at a rate between 1.62 and 3.87 percent (previous year: between 1.30 and 4.15 percent).

As in the previous year, the interest rates applicable to accounts of Freudenberg & Co. KG Partners vary between 1.00 and 5.50 percent.

Miscellaneous liabilities include liabilities for tooling cost contributions, other taxes, outstanding wages and salaries, holiday pay and special bonuses, as well as liabilities in connection with social security.

132

Contingent liabilities and other financial commitments

[€ million] Dec. 31, 2012 Dec. 31, 2013 Contingent liabilities Liabilities in connection with notes 7.6 5.2Liabilities in connection with guarantees 5.3 3.5Miscellaneous contingent liabilities 6.8 5.8 19.7 14.5 Other financial commitments Commitments arising from leasing contracts* 203.9 190.0Purchase commitments in connection with intangible assets 0.0 0.2Purchase commitments in connection with tangible assets 35.9 20.3Purchase commitments in connection with the delivery of goods and services 50.4 70.3Miscellaneous commitments 3.7 5.1 293.9 285.9

* See also the explanatory remarks on leased assets in note (2) to the Consolidated Financial Statements.

In addition, the following contingent liabilities and other financial commitments concern joint ventures:

[€ million] Dec. 31, 2012 Dec. 31, 2013 Contingent liabilities Liabilities in connection with guarantees 30.3 2.0Liabilities in connection with warranty agreements 0.6 0.2 30.9 2.2 Other financial commitments Commitments arising from leasing contracts* 36.7 29.0Purchase commitments in connection with intangible assets 0.0 0.2Purchase commitments in connection with tangible assets 2.1 6.0Purchase commitments in connection with the delivery of goods and services 8.9 6.1 47.7 41.3

* See also the explanatory remarks on leased assets in note (2) to the Consolidated Financial Statements.

133

Financial Report – Notes to the Consolidated Financial Statements

Additional information on financial instruments

The term “financial instrument” is used to refer to any contract that gives rise to both a financial asset of one enterprise and a financial liability or equity instrument of another enterprise. A distinction is made between primary and derivative financial instruments. Primary financial instruments in the case of the purchase or sale of assets are recognized at the settle-ment date, i.e. the delivery of the asset concerned. Derivative financial instruments are recognized as of the trade date. In the event of loss of control over the contractually agreed rights to a financial asset, the asset concerned is derecognized. Financial liabilities are derecognized on the statement of financial position when the commitment is discharged or can-celled, or expires.

Under IAS 39, financial instruments are divided into the following categories:

Loans and receivables This category includes financial assets with fixed or determinable payments that are not quoted in an active market.

Held-to-maturity investments Held-to-maturity investments are financial assets with fixed or determinable payments and fixed maturity that an entity has the positive intention and ability to hold to maturity.

Available-for-sale financial assets This category includes all the other financial assets which cannot be allocated to any of the categories mentioned above.

Financial assets or financial liabilities at fair value through profit or loss. These include: – financial assets or financial liabilities held for trading and – financial assets or financial liabilities designated by the entity as at fair value through profit or loss upon

initial recognition.

The Freudenberg Group does not hold any financial assets or financial liabilities for trading purposes.

Freudenberg did not avail itself of the fair value option under IAS 39 under which it is possible to measure any financial asset or financial liability at fair value through profit or loss.

134

Primary financial instruments

Primary financial instruments are assigned to categories on the basis of the relevant items in the statement of financial position. The allocation to the categories unambiguously defines the accounting and measurement of the instruments.

Loans, receivables and liabilities are recognized at amortized cost. Available-for-sale financial assets are recognized at fair value without effect on net income except where the fair value of such assets cannot be reliably determined. In such cases, these assets are recognized at acquisition costs. Any impairments are shown in the statement of profit or loss with an effect on net income.

[€ million] Loan

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ASSETS Other financial assets 16.6 13.9 73.2 103.7Trade receivables 785.3 785.3Other assets 244.9 244.9Securities and cash at bank and in hand 652.2 652.2 1,699.0 13.9 73.2 1,786.1 LIABILITIES Financial debts 1,277.7 1,277.7Trade payables 411.5 411.5Other liabilities 133.6 133.6 1,822.8 1,822.8

135

Financial Report – Notes to the Consolidated Financial Statements

[€ million] Loan

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ASSETS Other financial assets 11.9 13.2 81.1 106.2Trade receivables 846.3 846.3Other assets 91.9 91.9Securities and cash at bank and in hand 672.9 672.9 1,623.0 13.2 81.1 1,717.3 LIABILITIES Financial debts 1,192.0 1,192.0Trade payables 468.8 468.8Other liabilities 161.2 161.2 1,822.0 1,822.0

The Freudenberg Group currently does not hold any held-to-maturity investments.

The fair values of financial assets and liabilities recognized at amortized cost are approximately equal to their book values.

The fair values of financial instruments held by the Freudenberg Group and measured at fair value were determined on the basis of active markets (level 1 input factors) at €13.2 million (previous year: €13.9 million).

136

Credit risks

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Trade receivables 785.3 625.9 111.3 20.7 6.1 3.5 2.5Other assets 244.9 237.5 0.4 0.0 0.3 0.1 5.4

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Trade receivables 846.3 685.7 119.9 16.8 4.7 5.0 1.9Other assets 91.9 83.3 1.8 0.2 0.1 1.1 4.1

In the case of trade receivables and other assets for which no impairments have been recognized and which are not past due, no defaults are expected. The major part of trade receivables (normally between 70 and 90 percent of each receivable) is covered by credit insurance. Otherwise, the book value represents the maximum credit risk associated with each receivable.

Thereof: not impaired as at Dec. 31, 2012 and past due within the following time

Thereof: not impaired as at Dec. 31, 2013 and past due within the following time

137

Financial Report – Notes to the Consolidated Financial Statements

Impairment losses to trade receivables developed as follows:

[€ million] 2012 2013 Impairment losses as at Jan. 1 22.8 20.7Changes in consolidated group - 1.3 1.2Exchange rate differences - 0.1 - 0.5Additions (expenses for impairments) 7.6 8.3Amounts used - 3.5 - 3.0Reversals (write-ups) - 4.8 - 4.7Impairment losses as at Dec. 31 20.7 22.0

Impairment losses to other assets developed as follows:

[€ million] 2012 2013 Impairment losses as at Jan. 1 1.8 1.9Additions (expenses for impairments) 0.1 0.1Amounts used 0.0 - 0.1Impairment losses as at Dec. 31 1.9 1.9

In the year under review, impairment losses to receivables totaling €4.7 million (previous year: €4.8 million) were reversed as the reason for the impairment no longer applied and impairment losses in the amount of €8.4 million (previous year:€7.7 million) were set up. These impairment losses were recognized where payments were no longer expected or nolonger expected in full.

138

Derivative financial instruments

Freudenberg SE is responsible for all the financing activities of the Freudenberg Group and also operates the cash management system for the entire Freudenberg group of companies. Group companies obtain the financing they require via cash pools or loans provided by internal financing companies or, in some countries, in the form of bank loans guaranteed by Freudenberg SE.

The limits of action, responsibilities and control procedures in connection with derivative financial instruments are laid down in a binding form in internal directives for Group companies. The Freudenberg Group does not expose itself to additional financial risks through speculation with derivative financial instruments but uses such instruments only for hedging, and therefore reducing, risks in connection with underlying transactions. Future transactions are only hedged if there is a high probability of occurrence.

Freudenberg SE uses derivative financial instruments for hedging interest rate and foreign exchange risks.

Fair values are determined on the basis of quoted prices, accepted market information systems or discounted cash flows.

Derivative financial instruments for hedging recognized assets or liabilities (fair value hedges) are shown in the state-ment of financial position at fair value. Changes in the fair value are recorded in the statement of profit or loss. Financial instruments for hedging future cash flows (cash flow hedges) are also included in the statement of financial position at fair value, but changes in the fair value of such instruments are recognized without effect on net income under retained earnings, taking into consideration the applicable income taxes. Such changes are recognized in the statement of profit or loss when the underlying transactions concerned are effected. Ineffective portions of hedge transactions are always recognized in the statement of profit or loss.

The face value of derivatives entered into for interest rate hedging (long-term interest rate swaps) was €0.7 million (previous year: €190.8 million). As at December 31, 2013, the negative net fair value of the interest rate swaps was €0.1 million (previous year: €6.1 million). These derivatives were used for hedging rising interest rates and the cash flow risk of variable interest payables.

As at December 31, 2013, the face value of currency futures concluded for hedging foreign exchange risks and still open was €14.4 million (previous year: €101.2 million). The positive fair value of these instruments as at December 31, 2013 was €0.2 million (previous year: €0.4 million).

Of the total volume of derivatives, 4.6 percent (previous year: 65.3 percent) had a term of more than one year.

139

Financial Report – Notes to the Consolidated Financial Statements

The following fair values of derivative financial instruments are included in the other assets and other liabilities respectively:

[€ million] Dec. 31, 2012 Dec. 31, 2013 Other assets Currency futures 0.4 0.2 Other liabilities Interest rate swaps 6.1 0.1

The value changes (gains) in the case of interest rate swaps and currency futures (cash flow hedges), amounting to €0.4 million (previous year: €3.2 million), are recognized in equity.

The interest rate swaps are mainly intended to hedge risks of interest changes with respect to variable-interest loans on a long-term basis.

The fair values of currency futures were determined on the basis of the quoted currency future prices for similar financial instruments (level 2) and the fair values of the interest rate swaps were determined by discounting future cash flows on the basis of observable forward interest rates and contractually agreed interest rates (level 2).

Risks in connection with financial instruments

The Freudenberg Group is exposed to risks resulting from changes in exchange rates and interest rates and uses con-ventional derivative instruments such as interest rate swaps, caps and currency futures to hedge risks in connection with business operations and financing to a limited extent. The use of these instruments is governed by Freudenberg Group directives within the risk management system which lay down limits on the basis of the value of the underlying transactions, define approval procedures, exclude the use of derivative instruments for speculative purposes, minimize credit risks and govern internal reporting and the separation of functions. Compliance with these directives and the proper handling and measurement of transactions are regularly verified, observing the principle of separation of functions. Furthermore, risk management for financial instruments is integrated in the Freudenberg Group risk management system.

The risks which are hedged are chiefly as follows:

Interest rate risk:

In the case of fixed-interest loans or investments, there is a risk that changes in the market interest rate will affect the market value of the item concerned (market-value risk contingent on interest rates). In contrast, variable interest loans and invest-ments are not subject to this risk as the interest rate is adjusted to reflect changes in the market situation with a very short delay. However, there is a risk with respect to future interest payments as a result of short-term fluctuations in market interest rates (cash flow risk contingent on interest rates).

140

Risks associated with interest rate changes mainly affect long-term items. A fall in long-term interest rates results in a decrease in the fair value shown on the statement of financial position for derivative financial instruments concluded for interest rate hedging.

If market interest rates had been 0.5 percentage points higher or lower, on average, as of December 31, 2013, this would have had only an insignificant impact on net income.

As a general principle, external borrowings are repaid when due. The only interest rate risk related to these borrowings is therefore associated with variable-interest borrowings.

Currency risk:

The primary financial instruments are chiefly held in the functional currency.

Exchange rate differences caused by the conversion of financial statements into the Group currency are not taken into consideration.

If the value of the euro against major currencies (USD, GBP and JPY) had been 10 percent higher as of December 31, 2013, the profit before income taxes would have been €5.7 million (previous year: €5.5 million) lower. If the value of the euro against major currencies (USD, GBP and JPY) had been 10 percent lower as of December 31, 2013, the profit before income taxes would have been €6.9 million (previous year: €6.8 million) higher.

Liquidity risk:

Risks connected with cash flow fluctuations are identified at an early stage by the cash flow planning system already in place. As a result of Freudenberg‘s good rating (Baa1) and the credit lines granted by banks on a binding basis, Freudenberg can access ample sources of funds at all times.

Credit risk:

Specific provisions and individualized generic provisions are recognized to take account of identifiable risks not covered by credit insurance. Otherwise, the book value represents the maximum credit risk.

Freudenberg SE only concludes derivative financial instruments with national and international banks of at least investment grade rating. Credit risks are largely eliminated by distributing hedges between several banks and a policy of applying caps to individual banks.

141

Financial Report – Notes to the Consolidated Financial Statements

(14) Sales

Sales include revenue from the sale of goods amounting to €5,461.8 million (previous year: €5,504.6 million), services in the amount of €129.7 million (previous year: €116.3 million) and licenses in the amount of €13.2 million (previous year: €26.9 million). Other sales totaled €41.4 million (previous year: €33.5 million).

(15) Cost of sales

Cost of sales indicates the cost of goods and services sold. Apart from individual directly attributable costs, such as personnel expenses and material expenses, overheads, including depreciation/amortization, are also shown under cost of sales.

(16) Research and development expenses

Apart from personnel and material expenses, research and development expenses chiefly include the cost of licenses and patents occurring in the course of development projects.

(17) Other income

Other income mainly includes income from disposals of financial assets, income from secondary business and income from disposals of non-current assets. Exchange rate gains were set off against exchange rate losses.

(18) Other expenses

Among other items, other expenses include losses on disposals of non-current assets and financial assets. Following the offsetting of exchange rate gains, the net exchange rate loss was €17.0 million (previous year: net exchange rate gain of €3.3 million).

(19) Interest and similar expenses

Interest expenses include interest on shareholder’s loans in the amount of €15.7 million (previous year: €6.0 million) and interest payable to the Partners of Freudenberg & Co. KG in the amount of €10.1 million (previous year: €8.8 million).

NOTES TO THE CONSOLIDATED STATEMENT OF PROFIT OR LOSS

142

(20) Income taxes

This item shows German corporation tax (plus solidarity surcharge) and municipal trade taxes and similar taxes on income payable in other countries.

The figure also includes deferred taxes on temporary differences between the tax balance sheets and commercial balance sheets of individual companies, on adjustments to uniform measurement within the Freudenberg Group and on consolidation transactions.

Deferred taxes are calculated at the tax rates applicable in the countries concerned.

Income taxes break down as follows (expense (-)/income (+)):

[€ million] 2012 2013 Current taxes related to the reporting period - 126.2 - 114.3Current taxes related to prior periods 8.4 1.9Deferred taxes - 8.8 17.9 - 126.6 - 94.5

The amount of deferred tax income related to changes in tax rates was €0.7 million (previous year: €0.0 million).

In the reporting year, deferred taxes related to transactions recognized directly under equity resulted in a reduction in equity of €5.2 million (previous year: increase in equity of €37.4 million).

As of December 31, 2013, tax losses carried forward amounted to €323.9 million (previous year: €329.4 million). Deferred tax assets were recognized in respect of tax losses carried forward totaling €27.8 million (previous year: €15.5 million). Deferred tax assets were not recognized in respect of tax losses carried forward with a total amount of €296.1 million (previous year: €313.9 million) as it is not expected that these losses will be usable.

In the reporting year, tax losses carried forward totaling €6.9 million (previous year: €5.1 million) for which no deferred tax assets had been recognized were used.

143

Financial Report – Notes to the Consolidated Financial Statements

Deferred taxes concern temporary differences and tax losses carried forward with the following amounts:

[€ million] Def

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Intangible assets 7.0 57.4 6.4 84.2Tangible assets 6.5 110.2 6.2 103.2Financial assets 0.2 0.2 1.4 0.0Inventories 23.8 0.9 26.4 0.7Receivables 7.7 8.5 7.0 8.9Other assets 4.7 0.6 2.6 1.2Provisions for pensions 63.0 0.0 61.6 0.1Other provisions 34.8 1.4 36.3 0.9Liabilities 14.7 1.0 13.1 1.1Other liabilities 0.3 5.4 0.4 5.8Tax losses carried forward 4.7 0.0 6.6 0.0 167.4 185.6 168.0 206.1 Offsetting - 88.2 - 88.2 - 85.1 - 85.1

Recognized in statement of financial position 79.2 97.4 82.9 121.0

No deferred tax items were set up on temporary differences arising from shareholdings totaling €29.6 million (previous year: €31.6 million) as short-term dividend payments are not expected.

Reconciliation of expected income tax with actual income tax expense

Freudenberg SE and its German subsidiaries are subject to corporation tax (plus solidarity surcharge) and the municipal trade tax on income. Income realized in other countries is taxed at the rates applicable in the countries concerned. The tax rate of 29 percent (previous year: 29 percent) used for calculating the expected tax expense is based on the structure of the Freudenberg Group relevant for taxation. It is calculated as the weighted average of the tax rates for the regions in which the Freudenberg Group realized its main income.

144

[€ million] 2012 2013 Profit before income taxes 564.3 493.3Expected income tax expense (-)/income (+) - 163.6 - 143.1Different tax rates:

In Germany 0.2 0.7In other countries - 0.5 0.1

Tax portion of: Non-taxable income 94.5 66.2Non-deductible expenses - 36.6 - 17.8

Current taxes related to prior periods 8.4 1.9New assessment of deferred tax for corporation tax - 15.6 0.0Tax portion of new tax losses carried forward for which no deferred tax assets were recognized - 16.5 - 4.3Tax portion of tax losses carried forward and used for which no deferred tax assets were recognized 1.2 1.3Other taxation effects 1.9 0.5Actual income tax expense - 126.6 - 94.5Effective tax rate (percent) 22.4 19.2

(21) Profit or loss attributable to non-controlling interests

[€ million] 2012 2013 Profit 41.0 49.9Loss - 4.9 - 3.5 36.1 46.4

(22) Notes to the Consolidated Statement of Cash Flows

Freudenberg recognizes checks, cash in hand, cash at bank and short-term securities with an original term of up to three months as cash and cash equivalents.

The cash flow from operating activities takes into account payments for taxes amounting to €138.9 million (previous year: €148.1 million), dividends received in the amount of €24.0 million (previous year: €34.0 million) – including dividends received from joint ventures totaling €5.2 million (previous year: €10.8 million) and associated companies totaling €11.1 million (previous year: €14.9 million) – as well as interest paid of €46.4 million (previous year: €38.1 million) and interest received of €8.8 million (previous year: €14.2 million).

Payments to shareholders and non-controlling interests include dividends paid to the shareholder and to holders of non-controlling interests in Group companies.

145

Financial Report – Notes to the Consolidated Financial Statements

Application of Sec. 264 (3), HGB (Handelsgesetzbuch, “German Commercial Code”) and Sec. 264b, HGB

The following German companies of the Freudenberg Group took advantage of the exemption regulations of Sec. 264 (3), HGB, Sec. 264b, HGB:

Burgmann International GmbH, WolfratshausenCapol GmbH, ElmshornChem-Trend (Deutschland) GmbH, Maisach/GernlindenCorteco GmbH, WeinheimCT Beteiligungs-GmbH, MunichDS Beteiligungs-GmbH, WeinheimDS Holding-GmbH, WeinheimEagleBurgmann Espey GmbH, MoersEagleBurgmann Germany GmbH & Co. KG, WolfratshausenExterna Handels- und Beteiligungsgesellschaft mitbeschränkter Haftung, WeinheimFCS-Munich GmbH, WeinheimFFT Beteiligungs-GmbH, WeinheimFHP Export GmbH, WeinheimFHP Holding GmbH, WeinheimFIT Service GmbH, WeinheimFreudenberg Chemical Specialities SE & Co. KG, MunichFreudenberg Dichtungs- und Schwingungstechnik GmbH, BerlinFreudenberg DS Tooling Center GmbH & Co. KG, WeinheimFreudenberg FCCT SE & Co. KG, WeinheimFreudenberg Filtration Technologies SE & Co. KG, WeinheimFreudenberg Forschungsdienste SE & Co. KG, WeinheimFreudenberg Gygli GmbH, WeinheimFreudenberg Handels- und Beteiligungs-GmbH, WeinheimFreudenberg Haushaltsprodukte Augsburg GmbH, AugsburgFreudenberg Home and Cleaning Solutions GmbH, WeinheimFreudenberg Immobilien Management GmbH, WeinheimFreudenberg IT Information Services SE & Co. KG, WeinheimFreudenberg IT SE & Co. KG, WeinheimFreudenberg IT Solution Consulting SE & Co. KG, Weinheim

FURTHER NOTES

Freudenberg Mechatronics GmbH & Co. KG, WeinheimFreudenberg New Technologies SE & Co. KG, WeinheimFreudenberg Oil & Gas GmbH, WeinheimFreudenberg Politex GmbH, WeinheimFreudenberg Process Consulting GmbH, WeinheimFreudenberg Process Seals GmbH & Co. KG, WeinheimFreudenberg Schwab GmbH, VeltenFreudenberg Schwab Vibration Control GmbH & Co. KG,VeltenFreudenberg Sealing Technologies GmbH & Co. KG, WeinheimFreudenberg Venture Capital GmbH, WeinheimFreudenberg Vliesstoffe SE & Co. KG, WeinheimFV Beteiligungs-GmbH, WeinheimFV Holding GmbH, WeinheimFV Logistik SE & Co. KG, WeinheimFV Service SE & Co. KG, KaiserslauternFV Verwaltungs-SE & Co. KG, WeinheimHelix Medical Europe GmbH, WeinheimIntegral Accumulator GmbH & Co. KG, WeinheimKlüber Lubrication Deutschland SE & Co. KG, MunichKlüber Lubrication GmbH, WeinheimKlüber Lubrication München SE & Co. KG, MunichLederer GmbH, ÖhringenMerkel Freudenberg Fluidtechnic GmbH, HamburgOKS Spezialschmierstoffe GmbH, Maisach/GernlindenRE Coatings Holding GmbH, ElmshornSeal Trade Eurasburg GmbH, EurasburgSurTec Deutschland GmbH, ZwingenbergSurTec International GmbH, BensheimVileda Gesellschaft mit beschränkter Haftung, Weinheim

146

Material expenses

[€ million] 2012 2013 Raw materials, consumables and merchandise purchased 2,187.5 2,025.4Services purchased 196.9 168.6 2,384.4 2,194.0

Personnel expenses

[€ million] 2012 2013 Wages and salaries 1,375.1 1,383.9Social security contributions and costs of pensions and assistance 344.0 344.0 1,719.1 1,727.9

Workforce

In the year under review, an average of 33,293 (previous year: 32,769) persons were employed in the following functions:

2013 Germany Other countries TotalProduction 5,588 14,519 20,107Sales 1,689 5,513 7,202Research and development 1,161 775 1,936Administration 1,158 2,890 4,048 9,596 23,697 33,293

Research and development

In the year under review, expenses for research and development activities amounted to €193.0 million (previous year: €191.8 million). Of this amount, €10.9 million (previous year: €24,5 million) were charged to third parties. The figure includes government grants for research and development projects totaling €3.7 million (previous year: €3.9 million).

147

Financial Report – Notes to the Consolidated Financial Statements

Related party disclosure

Relations with the parent company Freudenberg & Co. KG, joint ventures, associated companies and other related parties within the scope of normal business activities were as follows:

2012 [€ million] Sa

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Parent company 4.4 1.2 0.0 1.2 361.5 300.0 661.5Joint ventures 72.3 206.3 0.0 206.3 16.5 0.0 16.5Associated companies 17.6 4.1 0.0 4.1 16.5 0.0 16.5Other related parties 3.6 1.5 0.0 1.5 25.2 0.0 25.2

97.9 213.1 0.0 213.1 419.7 300.0 719.7

2013 [€ million] Sa

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Parent company 4.5 1.2 0.0 1.2 386.1 300.0 686.1Joint ventures 68.0 29.8 0.0 29.8 8.5 0.0 8.5Associated companies 19.7 4.4 0.0 4.4 11.8 0.0 11.8Other related parties 3.6 1.8 0.0 1.8 26.5 0.0 26.5

95.8 37.2 0.0 37.2 432.9 300.0 732.9

The total remuneration of members of the Board of Management amounted to €7.7 million (previous year: €12.2 million).Loans to members of the Board of Management amounted to €0.2 million (previous year: €0.6 million). The interest rate is 2.25 percent and is to rise to 2.50 percent by 2014. The loans are due for repayment no later than June 2, 2014.

The total remuneration of former members of the Board of Management was €8.5 million. An amount of €25.6 million (previous year: €13.9 million) was assigned to provisions for pension obligations to former members of the Board of Management.

The members of the Supervisory Board and Board of Management of Freudenberg SE are listed under “Company Boards”.

Receivables Payables

Receivables Payables

148

Dr. Wolfram Freudenberg, Chairman of the Supervisory Board, is a shareholder of Freudenberg Stiftung GmbH, Weinheim (hereafter: Freudenberg Stiftung).

Freudenberg Stiftung is a foundation established with the object of holding a donated participation of €12.7 million (previous year: €12.7 million) in Freudenberg & Co. KG and using the income from this participation for benevolent and charitable purposes. Any surplus liquid funds held by the foundation are invested in the parent company Freudenberg & Co. KG. The interest income from these funds at normal market conditions amounting to €1.1 million (previous year: €1.0 million) was used for the purposes of the foundation.

Fees of the Auditor

The auditor, Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft, performed the following services in the 2013 financial year:

[€ million] 2013 Auditing services 1.6 Other assurance services 0.1Tax advisory services 0.1Other services 0.4Fees of the auditor 2.2

Major events after the date of the statement of financial position

Up to March 28, 2014 (the date when the annual report was approved for publication by the Supervisory Board), there were no events of major significance for the net assets, financial position and results of operations of the Freudenberg Group.

Weinheim, March 28, 2014

Freudenberg SEThe Board of Management

149

Financial Report – Notes to the Consolidated Financial StatementsShareholdings

No. Company Country Share of capital [%]

Freudenberg SE, Weinheim (parent company) Germany –

I. Affiliated companiesProduction companies, Germany

1 Capol GmbH, Elmshorn Germany 100.002 Chem-Trend (Deutschland) GmbH, Maisach/Gernlinden Germany 100.003 EagleBurgmann Espey GmbH, Moers Germany 75.004 EagleBurgmann Germany GmbH & Co. KG, Wolfratshausen Germany 75.005 Freudenberg DS Tooling Center GmbH & Co. KG, Weinheim Germany 100.006 Freudenberg Filtration Technologies SE & Co. KG, Weinheim Germany 100.007 Freudenberg Haushaltsprodukte Augsburg GmbH, Augsburg Germany 100.008 Freudenberg Interlining SE & Co. KG, Weinheim Germany 100.009 Freudenberg Schwab Vibration Control GmbH & Co. KG, Velten Germany 100.00

10 Freudenberg Sealing Technologies GmbH & Co. KG, Weinheim Germany 100.0011 Freudenberg Vliesstoffe SE & Co. KG, Weinheim Germany 100.0012 Helix Medical Europe GmbH, Kaiserslautern Germany 100.0013 Integral Accumulator GmbH & Co. KG, Weinheim Germany 75.0014 Klüber Lubrication München SE & Co. KG, Munich Germany 100.0015 Lederer GmbH, Öhringen Germany 100.0016 Merkel Freudenberg Fluidtechnic GmbH, Hamburg Germany 100.0017 OKS Spezialschmierstoffe GmbH, Maisach/Gernlinden Germany 100.0018 SurTec Deutschland GmbH, Zwingenberg Germany 100.00

Production companies, other countries19 Freudenberg S.A. Telas sin Tejer, Villa Zagala Argentina 100.0020 Klüber Lubrication Argentina S.A., Buenos Aires Argentina 100.0021 EagleBurgmann Australasia Pty. Ltd., Ingleburn Australia 25.0022 Freudenberg Filtration Technologies (Aust) Pty. Ltd., Braeside Australia 55.0023 Klüber Lubrication Benelux S.A./N.V., Dottignies Belgium 100.0024 Chem-Trend Industria e Comercio de Produtos Quimicos Ltda., Valinhos Brazil 100.0025 EagleBurgmann do Brasil Vedacoes Ltda., Campinas, São Paulo Brazil 75.0026 Freudenberg Nao-Tecidos Ltda., Jacareí Brazil 100.0027 Freudenberg-NOK-Componentes Brasil Ltda., São Paulo Brazil 75.0028 Klüber Lubrication Lubrificantes Especiais Ltda., Barueri Brazil 100.0029 SurTec do Brasil Ltda., São Bernardo do Campo, São Paulo Brazil 100.0030 Burgmann Dalian Co. Ltd., Dalian China 40.0031 Burgmann Shanghai Ltd., Shanghai China 40.0032 Chem-Trend Chemicals (Shanghai) Co., Ltd., Qingpu China 100.0033 Freudenberg & Vilene Filter (Changchun) Co., Ltd., Changchun China 37.5034 Freudenberg & Vilene Interlinings (Nantong) Co. Ltd., Nantong China 50.0035 Freudenberg & Vilene Nonwovens (Suzhou) Co. Ltd., Suzhou China 50.00

SHAREHOLDINGS OF THE FREUDENBERG GROUPAS AT DECEMBER 31, 2013

150

No. Company Country Share of capital [%]

36 Freudenberg Vilene Filter (Chengdu) Co. Ltd., Chengdu China 50.0037 Klüber Lubrication Industries (Shanghai) Co., Ltd., Qingpu China 100.0038 Ningbo Asia Shine Co., Ltd., Zhejiang China 100.0039 Ningbo E&J Brushes Co., Ltd., Zhejiang China 100.0040 SurTec Metal Surface Treatment Technology Co. Ltd., Hangzhou China 100.0041 Helix Medical LATR srl., San José Costa Rica 100.0042 EagleBurgmann Bredan A/S, Ringkøbing Denmark 75.0043 EagleBurgmann KE A/S, Vejen Denmark 75.0044 OÜ Merinvest, Kuressaare-Mullutu Estonia 80.0045 Freudenberg Evolon S.A.S.U., Colmar France 100.0046 Freudenberg Joints Elastomères SAS, Langres France 100.0047 Freudenberg Joints Plats SAS, Chamborêt France 100.0048 Freudenberg Politex S.A., Colmar France 100.0049 Freudenberg S.A.S., Langres France 100.0050 SurTec France S.A.S., Cugnaux France 100.0051 Freudenberg Nonwovens LP, Littleborough United Kingdom 100.0052 Freudenberg Technical Products LP, North Shields United Kingdom 75.0053 Scott-Matrix Limited, Newcastle Upon Tyne United Kingdom 100.0054 Vector International UK Limited, Port Talbot United Kingdom 100.0055 APEC (Asia) Limited, Hong Kong Hong Kong 100.0056 EagleBurgmann India Pvt. Ltd., Pune India 50.0057 EagleBurgmann KE Pvt. Ltd., Chennai India 75.0058 EagleBurgmann Mascot India Private Limited, Mira Road East, Thane India 33.9759 Freudenberg Filtration Technologies India Private Limited, Pune India 100.0060 Freudenberg Gala Household Product Pvt. Ltd., Mumbai India 60.0061 Freudenberg Nonwovens India Pvt. Ltd., Chennai India 100.0062 Klüber Lubrication India Pvt. Ltd., Bangalore India 90.0063 SurTec Chemicals India Pvt. Ltd., Pune India 100.0064 Corcos Industriale S.a.s. di Externa Italia S.r.l., Pinerolo Italy 100.0065 EagleBurgmann BT S.p.A., Arcugnano Italy 75.0066 FHP di R. Freudenberg S.A.S., Milan Italy 100.0067 Freudenberg Tecnologie di Filtrazione S.a.s. di Externa Holding S.r.l., Milan Italy 100.0068 Marelli e Berta S.A.S. di Externa Holding s.r.l., Sant’ Omero Italy 100.0069 Politex S.a.s. di Freudenberg Politex s.r.l., Novedrate Italy 100.0070 Trasfotex s.r.l., Quaregna Italy 70.0071 EagleBurgmann Japan Co., Ltd., Tokyo Japan 25.0072 Freudenberg Vileda Jordan Ltd., Amman Jordan 51.0073 Freudenberg Oil & Gas Canada Inc., Nisku Canada 100.0074 Freudenberg-NOK Inc., Tillsonburg Canada 75.0075 EagleBurgmann Manufacturing Malaysia SDN. BHD., Petaling Jaya Malaysia 25.0076 Freudenberg Oil & Gas Technologies Sdn. Bhd., Kuala Lumpur Malaysia 100.00

151

No. Company Country Share of capital [%]

77 EagleBurgmann Mexico S.A. de C.V., Cuautitlán Mexico 75.0078 EagleBurgmann Production Center S.A. de C.V., Santiago de Querétaro Mexico 75.0079 Freudenberg Telas sin Tejer S.A. de C.V., León Mexico 100.0080 Freudenberg-NOK de Mexico S.A. de C.V., Cuautla Mexico 75.0081 Freudenberg-NOK de Queretaro, S.A. de C.V., Querétaro Mexico 75.0082 Klüber Lubricacion Mexicana S.A. de C.V., Querétaro Mexico 100.0083 Freudenberg Household Products B.V., Arnhem The Netherlands 100.0084 Freudenberg Oil & Gas Technologies AS, Drammen Norway 100.0085 EagleBurgmann Production Center Judenburg GmbH, Judenburg Austria 75.0086 Freudenberg Spezialdichtungsprodukte Austria GmbH & Co. KG, Kufstein Austria 100.0087 Klüber Lubrication Austria Ges.m.b.H., Salzburg Austria 100.0088 Freudenberg Politex OOO, Nizhniy Novgorod Russia 100.0089 Freudenberg Household Products A.B., Norrköping Sweden 100.0090 SurTec Cacak d.o.o., Čačak Serbia 70.0091 Freudenberg Oil & Gas Pte. Ltd., Singapore Singapore 100.0092 Freudenberg Filtration Technologies Slovensko, s.r.o., Potvorice Slovakia 90.0093 Freudenberg Espana S.A., Componentes, S.en C. i.L., Barcelona Spain 100.0094 Freudenberg Espana S.A., Telas sin Tejer, S.en C., Barcelona Spain 100.0095 Freudenberg Iberica S.A., S.en C., Parets del Vallès Spain 100.0096 Klüber Lubrication GmbH Ibérica S.en C., Barcelona Spain 100.0097 EagleBurgmann Seals S.A. (Pty) Ltd., Edenvale South Africa 75.0098 Freudenberg Nonwovens (Pty.) Ltd., Cape Town South Africa 100.0099 SurTec South Africa Pty. Ltd., Pretoria South Africa 100.00

100 Chem-Trend Korea Ltd., Anseong-si South Korea 100.00101 Korea Filtration Technologies Co., Ltd., Seoul South Korea 50.00102 EagleBurgmann Taiwan Co., Ltd., Yenchao Taiwan 25.00103 Freudenberg & Vilene Nonwovens (Taiwan) Co. Ltd., Yangmei, Taoyuan Taiwan 50.00104 Freudenberg Far Eastern Spunweb Comp. Ltd., Taoyuan, Taoyuan Taiwan 60.18105 EagleBurgmann (Thailand) Co., Ltd., Rayong Thailand 25.00106 ALUCON s.r.o., Lázně Bělohrad Czech Republic 100.00107 EagleBurgmann Bredan s.r.o., Jílové u Prahy Czech Republic 75.00108 Tésneni a pruzne elementy k.s., Opatovice nad Labem Czech Republic 100.00109 Freudenberg Coskunöz Kalip Sanayi ve Ticaret A.S., Bursa Turkey 75.00110 Freudenberg Sealing Technologies Sanayi ve Ticaret A.S., Bursa Turkey 100.00111 Klüber Lubrication Yaglama Ürünleri Sanayi ve Ticaret A.S., Istanbul Turkey 100.00112 Freudenberg Simmerringe Kft., Kecskemét Hungary 100.00113 Freudenberg Tömítés Ipari Kft., Lajosmizse Hungary 100.00114 Chem-Trend Limited Partnership, Howell USA 100.00115 Dichtomatik Americas, LP, Shakopee USA 100.00116 FHP-Berner USA LP, Aurora USA 100.00117 Freudenberg Filtration Technologies LP, Hopkinsville USA 100.00

Shareholdings

152

No. Company Country Share of capital [%]

118 Freudenberg Household Products LP, Aurora USA 100.00119 Freudenberg Oil & Gas, LLC, Houston USA 100.00120 Freudenberg Spunweb Company, Durham USA 100.00121 Freudenberg Texbond L.P., Macon USA 100.00122 Freudenberg-NOK General Partnership, Plymouth USA 75.00123 Helix Medical, LLC, Carpinteria USA 100.00124 International Seal Company, Inc., Santa Ana USA 75.00125 KL Texas L.P. dba SUMMIT INDUSTRIAL PRODUCTS, Tyler USA 100.00126 Klüber Lubrication North America LP, Londonderry USA 100.00127 Lakes Region Manufacturing, L.L.C., Belmont USA 75.00128 MedVenture Technology Corporation, Jeffersonville USA 100.00129 SurTec, Inc., Middleburg Heights USA 100.00130 Vector Group Inc., Houston USA 100.00131 Freudenberg Oil and Gas FZE, Dubai United Arab

Emirates100.00

Sales companies, Germany132 Access Textil Vertriebs GmbH, Weinheim Germany 100.00133 Corteco GmbH, Weinheim Germany 100.00134 Dichtomatik Vertriebsgesellschaft für technische Dichtungen mbH, Hamburg Germany 100.00135 FHP Export GmbH, Weinheim Germany 100.00136 Freudenberg Gygli GmbH, Weinheim Germany 100.00137 Freudenberg Process Seals GmbH & Co. KG, Weinheim Germany 100.00138 Klüber Lubrication Deutschland SE & Co. KG, Munich Germany 100.00139 Purtex GmbH, Weinheim Germany 100.00140 Seal Trade Eurasburg GmbH, Eurasburg Germany 75.00141 Vileda Gesellschaft mit beschränkter Haftung, Weinheim Germany 100.00

Sales companies, other countries142 Chem-Trend Australia Pty Ltd, Victoria Australia 100.00143 Freudenberg Household Products Pty. Ltd., Melbourne Australia 100.00144 Freudenberg Pty. Ltd., Thomastown Australia 100.00145 Klüber Lubrication Australia Pty. Ltd., Melbourne Australia 100.00146 EagleBurgmann Belgium B.V.B.A., St.-Job-in’t-Goor Belgium 75.00147 FHP Vileda S.C.S., Verviers Belgium 100.00148 Klüber Lubrication Belgium Netherlands S.A., Dottignies Belgium 100.00149 Vector Tecnologia do Brasil Ltda., Rio de Janeiro Brazil 99.90150 Freudenberg Productos del Hogar Ltda., Santiago de Chile Chile 100.00151 Klüber Lubrication Chile Ltda., Santiago de Chile Chile 100.00152 Chem-Trend (Shanghai) Trading Co. Ltd., Shanghai China 100.00153 Dichtomatik (China) Co., Ltd., Shanghai China 100.00

153

No. Company Country Share of capital [%]

154 EagleBurgmann Trading (Shanghai) Co. Ltd., Shanghai China 50.00155 Freudenberg & Vilene International (Shanghai) Trading Co., Ltd., Shanghai China 50.00156 Freudenberg Household Products (Suzhou) Co., Ltd., Suzhou China 100.00157 Freudenberg Politex Ltd., Shanghai China 100.00158 Freudenberg Spunweb (Shanghai) Trading Co., Ltd., Shanghai China 60.18159 Jump International Trading (Shanghai) Co Ltd, Shanghai China 100.00160 Klüber Lubrication (Shanghai) Co., Ltd., Shanghai China 100.00161 SurTec Chemical and Engineering (Hangzhou) Co. Ltd., Hangzhou China 100.00162 Klüber Lubrication Nordic A/S, Skovlunde Denmark 100.00163 SurTec Scandinavia ApS, Fredericia Denmark 100.00164 Freudenberg Filtration Technologies Finland Oy, Naantali Finland 100.00165 Freudenberg Household Products Oy Ab, Helsinki Finland 100.00166 Freudenberg Simrit Oy, Vantaa Finland 100.00167 KE-Burgmann Finland Oy, Vantaa Finland 75.00168 Chem-Trend France S.A.R.L., Illkirch-Graffenstaden France 100.00169 Corteco SAS, Nantiat - La Couture France 100.00170 Dichtomatik S.A.S, Mâcon Loché France 100.00171 EagleBurgmann S.A.S. (France), Sartrouville France 75.00172 FHP Vileda S.A., Gennevilliers France 100.00173 Freudenberg Filtration Technologies SAS, Les Ulis - Courtaboeuf France 100.00174 Klüber Lubrication France S.A.S., Valence France 100.00175 FHP Hellas S.A., Kifisia-Athens Greece 100.00176 Aquabio Ltd., Worcester United Kingdom 100.00177 Capol (U.K.) Limited, Ness, Cheshire United Kingdom 100.00178 Chem-Trend (UK) LP, Halifax United Kingdom 100.00179 Corteco Ltd., Lutterworth United Kingdom 100.00180 Dichtomatik Ltd., Derby United Kingdom 66.00181 EagleBurgmann Industries UK LP, Warwick United Kingdom 75.00182 Freudenberg Filtration Technologies UK Limited, Elland United Kingdom 100.00183 Freudenberg Household Products LP, Rochdale United Kingdom 100.00184 Freudenberg Oil & Gas UK Ltd., Aberdeen United Kingdom 100.00185 Freudenberg Simrit LP, Lutterworth United Kingdom 75.00186 KE-Burgmann UK Ltd., Congleton United Kingdom 75.00187 Klüber Lubrication Great Britain Ltd., Halifax United Kingdom 100.00188 SurTec Chemicals UK Ltd., Birmingham United Kingdom 51.00189 VC UK LP, New York United Kingdom 100.00190 Freudenberg Textile Technologies, S.A., Guatemala City Guatemala 100.00191 E&J (HK) Co Ltd, Hong Kong Hong Kong 100.00192 Freudenberg & Vilene Int. Ltd., Hong Kong Hong Kong 50.00193 Freudenberg Household Products Ltd., Hong Kong Hong Kong 100.00194 Jump (Asia) Distributors Ltd, Hong Kong Hong Kong 100.00

Shareholdings

154

No. Company Country Share of capital [%]

195 Klüber Lubrication China Ltd., Hong Kong Hong Kong 100.00196 TIA (HK) Co Ltd, Hong Kong Hong Kong 100.00197 xETEx Trading Limited, Hong Kong Hong Kong 50.00198 Chem-Trend Chemicals Co. Pvt. Ltd., Bangalore India 100.00199 PT EagleBurgmann Indonesia, Bekasi, West Java Province Indonesia 24.98200 PT. Jump Distributors Indonesia, Jakarta Indonesia 100.00201 Chem-Trend Italy del Dr. Gian Franco Colori S.a.s., Milan Italy 100.00202 Corcos Simrit S.a.s. di Externa Italia S.r.l., Pinerolo Italy 100.00203 Corteco S.r.l. (a socio unico), Pinerolo Italy 100.00204 Dichtomatik S.a.s. di Externa Italia S.r.l., Genoa Italy 100.00205 EagleBurgmann Italia S.r.l., Osnago Italy 75.00206 Freudenberg S.p.A., Milan Italy 100.00207 Klüber Lubrication Italia S.a.s. di G. Colori, Milan Italy 100.00208 Marelli & Berta Interfodere S.a.s. di Externa Holding S.r.l., Milan Italy 100.00209 Chemlease Japan K.K., Kobe Japan 51.00210 Freudenberg Spunweb Japan Company, Ltd., Osaka Japan 60.18211 Dichtomatik Canada, Inc., Markham Canada 100.00212 EagleBurgmann Canada Inc., Milton, Ontario Canada 75.00213 EagleBurgmann Nova Magnetics Ltd., Dartmouth Canada 75.00214 Freudenberg Household Products Inc., Laval Canada 100.00215 Freudenberg Nonwovens Inc., London, Ontario Canada 100.00216 TOO Freudenberg Oil & Gas, Atyrau Kazakhstan 100.00217 EagleBurgmann Colombia, S.A.S., Bogotá Colombia 75.00218 Freudenberg Kucanski proizvodi d.o.o., Zagreb Croatia 100.00219 SurTec d.o.o., Split Croatia 100.00220 EagleBurgmann (Malaysia) SDN. BHD., Petaling Jaya Malaysia 25.00221 Freudenberg Household Products (Malaysia) Sdn Bhd, Puchong Malaysia 100.00222 Klüber Lubrication (Malaysia) Sdn. Bhd., Kuala Lumpur Malaysia 100.00223 Chem-Trend Comercial, S.A. de C.V., Querétaro Mexico 100.00224 Dichtomatik de Mexico S.A. de C.V., Querétaro Mexico 95.50225 Freudenberg Productos del Hogar, S.A. de C.V., Mexico City Mexico 100.00226 Dichtomatik B.V., Zwolle The Netherlands 66.60227 EagleBurgmann Netherlands B.V., Veenendaal The Netherlands 75.00228 SurTec Benelux B.V., Reuver The Netherlands 55.00229 EagleBurgmann Norway AS, Skedsmokorset Norway 75.00230 Freudenberg Household Products AS, Skedsmokorset Norway 100.00231 Vestpak AS, Sandnes Norway 100.00232 Dichtomatik Handelsgesellschaft mbH, Vienna Austria 95.00233 EagleBurgmann Austria GmbH, Salzburg Austria 75.00234 SurTec Produkte und Systeme für die Oberflächenbehandlung GesmbH,

GuntramsdorfAustria 100.00

155

No. Company Country Share of capital [%]

235 EagleBurgmann Philippines, Inc., Cavite Philippines 22.58236 Chem-Trend Polska sp. z o.o. spólka komandytowa, Janikowo Poland 100.00237 EagleBurgmann Poland sp. z o.o., Warsaw Poland 75.00238 FHP Vileda Sp. z o.o., Warsaw Poland 100.00239 Freudenberg Politex Sp. z o.o., Lodz Poland 100.00240 Freudenberg Simrit Polska Sp. z o.o., Warsaw Poland 95.00241 Freudenberg Vilene Sp. z o.o., Lodz Poland 100.00242 Klüber Lubrication Polska Sp. z o.o., Poznan Poland 100.00243 SurTec Polska Sp. z o.o., Wroclaw Poland 100.00244 Freudenberg Household Products Vileda Societate in Comandita, Bucharest Romania 100.00245 SurTec Romania s.r.l., Braşov Romania 55.00246 EagleBurgmann OOO, Zavolzhie Russia 75.00247 Freudenberg Filtration Technologies OOO, Nizhniy Novgorod Russia 100.00248 Freudenberg Household Products Eastern Europe OOO, St. Petersburg Russia 70.00249 Freudenberg Vileda Eastern Europe OOO, Moscow Russia 100.00250 Klüber Lubrication OOO, Moscow Russia 100.00251 OOO Freudenberg Sealing Technologies, Moscow Russia 100.00252 OOO SurTec, Moscow Russia 100.00253 EagleBurgmann Saudi Arabia Ltd., Khobar Saudi Arabia 51.00254 Dichtomatik A.B., Landskrona Sweden 85.00255 EagleBurgmann Sweden AB, Norrköping Sweden 75.00256 Freudenberg Simrit A.B., Stockholm Sweden 100.00257 EagleBurgmann (Switzerland) AG, Höri Switzerland 75.00258 Freudenberg Gygli AG, Zug Switzerland 100.00259 Freudenberg Schwab Vibration Control AG, Adliswil Switzerland 100.00260 Freudenberg Simrit AG, Zurich Switzerland 100.00261 Klüber Lubrication AG (Schweiz), Zurich Switzerland 100.00262 Freudenberg proizvodi za domacinstvo d.o.o., Belgrade Serbia 100.00263 Chem-Trend Singapore Pte. Ltd., Singapore Singapore 100.00264 EagleBurgmann KE Pte. Ltd., Singapore Singapore 75.00265 EagleBurgmann Singapore Pte. Ltd., Singapore Singapore 25.00266 Klüber Lubrication South East Asia Pte. Ltd., Singapore Singapore 100.00267 SurTec SK s.r.o., Vráble Slovakia 100.00268 Freudenberg Gospodinjski Proizvodi d.o.o., Maribor Slovenia 100.00269 SurTec Adria d.o.o., Radovljica Slovenia 100.00270 EagleBurgmann Iberica S.A., Madrid Spain 75.00271 Vileda Ibérica S.A., S.en C., Parets del Vallès Spain 100.00272 Freudenberg & Vilene International Lanka (Private) Limited, Colombo Sri Lanka 50.00273 Freudenberg Filtration Technologies (Pty) Ltd., Cape Town South Africa 100.00274 Klüber Lubrication (Pty.) Ltd., Randhart South Africa 100.00275 EagleBurgmann Korea Co., Ltd., Gyeonggi-Do South Korea 25.00

Shareholdings

156

No. Company Country Share of capital [%]

276 SurTec Korea Co., Ltd., GyeongNam South Korea 100.00277 Freudenberg Household Products (Taiwan) Co., Ltd., Taipeh Taiwan 100.00278 Chem-Trend Trading (Thailand) Co. Ltd., Bangkok Thailand 100.00279 Jump Distributors (Thailand) Co Ltd, Nonthaburi Thailand 100.00280 Klüber Lubrication (Thailand) Co., Ltd., Bangkok Thailand 100.00281 Lucky Gecko Co Ltd, Nonthaburi Thailand 100.00282 EagleBurgmann Czech s.r.o., Prague Czech Republic 75.00283 Freudenberg Potreby pro domácnost, k.s., Prague Czech Republic 100.00284 Freudenberg Vilene s.r.o., Prostějov Czech Republic 100.00285 Klüber Lubrication CZ, s.r.o., Brno Czech Republic 100.00286 SurTec CR s.r.o., Vrané nad Vltavou Czech Republic 100.00287 EagleBurgmann Endüstriyel Sizdirmazlik Sanayi ve Ticaret Ltd., Istanbul Turkey 75.00288 Freudenberg Household Products Evici Kullanim Araclari Sanayi ve Ticaret A.S.,

IstanbulTurkey 100.00

289 Freudenberg Vilene Tela Sanayi ve Ticaret A.S., Istanbul Turkey 100.00290 Dichtomatik Kft., Budapest Hungary 80.00291 EagleBurgmann Hungaria Kft., Budapest Hungary 75.00292 Freudenberg Háztartási Cikkek Kereskedelmi BT, Budapest Hungary 100.00293 Capol LLC, Northbrook USA 100.00294 EagleBurgmann Industries LP, Houston USA 75.00295 EagleBurgmann KE, Inc., Hebron USA 75.00296 Freudenberg Nonwovens Limited Partnership, Durham USA 100.00297 EagleBurgmann Venezuela, C.A., Caracas Venezuela 41.25298 EagleBurgmann Middle East FZE, Dubai United Arab

Emirates60.00

299 EagleBurgmann Vietnam Company Limited, Ho Chi Minh City Vietnam 25.00300 SurTec Viet Nam Co., Ltd., Ho Chi Minh City Vietnam 100.00

Administration and other companies, Germany301 2. Freudenberg Beteiligungs-GmbH, Weinheim Germany 100.00302 Beteiligungsgesellschaft Carl Freudenberg mbH, Weinheim Germany 100.00303 Burgmann Industries Holding GmbH, Wolfratshausen Germany 75.00304 Burgmann International GmbH, Wolfratshausen Germany 100.00305 Carl Freudenberg KG, Weinheim Germany 100.00306 CT Beteiligungs-GmbH, Munich Germany 100.00307 DS Beteiligungs-GmbH, Weinheim Germany 100.00308 DS Holding-GmbH, Weinheim Germany 100.00309 DS Verwaltungs-GmbH, Weinheim Germany 100.00310 EagleBurgmann Germany Verwaltungs-GmbH, Wolfratshausen Germany 75.00311 Externa Handels- und Beteiligungsgesellschaft mit beschränkter Haftung,

HeddesheimGermany 100.00

157

No. Company Country Share of capital [%]

312 FCS-Munich GmbH, Weinheim Germany 100.00313 FFT Beteiligungs-GmbH, Weinheim Germany 100.00314 FHP Holding GmbH, Weinheim Germany 100.00315 FIT Service GmbH, Weinheim Germany 100.00316 Fremecs GmbH & Co. KG, Weinheim Germany 100.00317 Fremecs Holding GmbH, Weinheim Germany 100.00318 Freudenberg Chemical Specialities SE & Co. KG, Munich Germany 100.00319 Freudenberg Dichtungs- und Schwingungstechnik GmbH, Berlin Germany 100.00320 Freudenberg FCCT SE & Co. KG, Weinheim Germany 100.00321 Freudenberg Forschungsdienste SE & Co. KG, Weinheim Germany 100.00322 Freudenberg Handels- und Beteiligungs-GmbH, Weinheim Germany 100.00323 Freudenberg Home and Cleaning Solutions GmbH, Weinheim Germany 100.00324 Freudenberg Immobilien Management GmbH, Weinheim Germany 100.00325 Freudenberg IT Information Services SE & Co. KG, Weinheim Germany 100.00326 Freudenberg IT SE & Co. KG, Weinheim Germany 100.00327 Freudenberg IT Solution Consulting SE & Co. KG, Weinheim Germany 100.00328 Freudenberg Mechatronics Beteiligungs-GmbH, Weinheim Germany 100.00329 Freudenberg Mechatronics GmbH & Co. KG, Weinheim Germany 100.00330 Freudenberg New Technologies SE & Co. KG, Weinheim Germany 100.00331 Freudenberg Oil & Gas GmbH, Weinheim Germany 100.00332 Freudenberg Politex GmbH, Weinheim Germany 100.00333 Freudenberg Process Consulting GmbH, Weinheim Germany 100.00334 Freudenberg Schwab GmbH, Velten Germany 100.00335 Freudenberg Venture Capital GmbH, Weinheim Germany 100.00336 Freudenberg Verwaltungs- und Beteiligungs-GmbH, Weinheim Germany 100.00337 Freudenberg Wohnbauhilfe GmbH, Weinheim Germany 100.00338 FSVC Verwaltungs-GmbH, Velten Germany 100.00339 FV Beteiligungs-GmbH, Weinheim Germany 100.00340 FV Holding GmbH, Weinheim Germany 100.00341 FV Logistik SE & Co. KG, Weinheim Germany 100.00342 FV Service SE & Co. KG, Kaiserslautern Germany 100.00343 FV Verwaltungs-SE & Co. KG, Weinheim Germany 100.00344 Kaul GmbH, Elmshorn Germany 100.00345 Klüber Lubrication GmbH, Weinheim Germany 100.00346 RE Coatings Holding GmbH, Elmshorn Germany 100.00347 SurTec International GmbH, Bensheim Germany 100.00

Administration and other companies, other countries348 Freudenberg Produtos do Lar Ltda., São Paulo Brazil 100.00349 Freudenberg Servicos Corporativos da America do Sul Ltda., São Paulo Brazil 100.00350 EagleBurgmann (Shanghai) Investment Management Co. Ltd., Shanghai China 50.00

Shareholdings

158

No. Company Country Share of capital [%]

351 Freudenberg IT (Suzhou) Co., Ltd., Suzhou China 100.00352 Freudenberg Management (Shanghai) Co. Ltd., Shanghai China 100.00353 Freudenberg Real Estate (Yantai) Co. Ltd., Yantai China 100.00354 Chem-Trend A/S, Copenhagen Denmark 100.00355 EBI Atlantic A/S, Vejen Denmark 75.00356 EBI Middle-East A/S, Vejen Denmark 60.00357 SPECI-TEx ApS, Vejen Denmark 75.00358 Freudenberg Immobilier SAS, Chamborêt France 100.00359 Alantechnologies Ltd., Birmingham United Kingdom 51.00360 Chem-Trend (UK) Ltd., Halifax United Kingdom 100.00361 Chem-Trend China Investments Ltd., Halifax United Kingdom 100.00362 EagleBurgmann Industries UK Ltd., Warwick United Kingdom 75.00363 FCS Interim UK Ltd., Halifax United Kingdom 100.00364 Filtamark Ltd., Elland United Kingdom 100.00365 Freudenberg Limited, Littleborough United Kingdom 100.00366 Freudenberg Technical Products Ltd., North Shields United Kingdom 75.00367 Freudenberg Vileda Ltd., Rochdale United Kingdom 100.00368 VC UK Ltd., New York United Kingdom 100.00369 Freudenberg Trading (Hongkong) Ltd., Hong Kong Hong Kong 100.00370 Externa Holding S.r.l., Milan Italy 100.00371 Externa Italia S.r.l., Pinerolo Italy 100.00372 Freudenberg Italia S.a.s. di Freudenberg S.p.A., Milan Italy 100.00373 Freudenberg Politex S.r.l., Novedrate Italy 100.00374 Freudenberg-NOK St Malaysia Sdn. Bhd., Kuala Lumpur Malaysia 75.00375 Freudenberg IT, S.A. de C.V., Mexico City Mexico 100.00376 Vector Technology Group AS, Drammen Norway 100.00377 Freudenberg Austria GmbH, Kufstein Austria 100.00378 Freudenberg Schuh GmbH, Marchtrenk Austria 100.00379 Chem-Trend Polska Sp. z o.o., Kobylnica Poland 100.00380 FIM Polska Sp. z o.o., Środa Ślaska Poland 100.00381 Freudenberg Household Products SRL, Bucharest Romania 100.00382 Freudenberg Management Imobiliar SRL, Bucharest Romania 100.00383 Freudenberg Nonwovens Romania S.R.L., Braşov Romania 100.00384 EBI Asia Pacific Pte. Ltd., Singapore Singapore 25.00385 EBI Asia Pte. Ltd., Singapore Singapore 50.00386 Freudenberg IT Singapore Pte. Ltd., Singapore Singapore 100.00387 Freudenberg Immobilienmanagement Slovakia, s.r.o, Potvorice Slovakia 100.00388 Freudenberg Espana S.A., Barcelona Spain 100.00389 Freudenberg Ibérica S.A., Barcelona Spain 100.00390 Vileda Iberica S.A., Barcelona Spain 100.00391 TPE správni s.r.o., Opatovice nad Labem Czech Republic 100.00

159

No. Company Country Share of capital [%]

392 Freudenberg IM Hungária Kft., Budapest Hungary 100.00393 Freudenberg IT Hungary Kft., Budapest Hungary 100.00394 Chem-Trend Holding LP, Wilmington USA 100.00395 EagleBurgmann Industries Inc., Houston USA 75.00396 FCS Holding Inc., Wilmington USA 100.00397 FHP-Berner USA Inc., Wilmington USA 100.00398 Freudenberg Household Products Inc., Aurora USA 100.00399 Freudenberg IT LP, Durham USA 100.00400 Freudenberg North America Limited Partnership, Plymouth USA 100.00401 Freudenberg Real Estate L.P., Wilmington USA 100.00402 Freudenberg Texbond Inc., Delaware USA 100.00403 Freudenberg U.S.A. Holdings, Inc., Manchester USA 100.00404 Freudenberg-NOK Holdings, Inc., Manchester USA 75.00405 Intpacor Inc., Manchester USA 100.00406 Klüber Lubrication North America Inc., Londonderry USA 100.00407 Pellon Corporation, Durham USA 100.00408 Upper Bristol Ramp, LLC, Wilmington USA 75.00

II. Investments in joint ventures (consolidated by equity method)Germany409 Freudenberg NOK Mechatronics GmbH & Co. KG, Weinheim Germany 50.00410 Schneegans Freudenberg GmbH & Co. KG, Emmerich am Rhein Germany 50.00411 SF GmbH, Emmerich am Rhein Germany 50.00412 TrelleborgVibracoustic GmbH, Darmstadt 1) Germany 50.00

Other countries413 Cambus Teoranta, Spiddal Ireland 50.00414 VistaMed Ltd., Carrick-on-Shannon Ireland 50.00415 Corfina s.r.l., Pinerolo Italy 50.00416 Schneegans Freudenberg Silicon Ges.m.b.H, Losenstein Austria 50.00417 NOK-Freudenberg Asia Holding Co. Pte. Ltd., Singapore 2) Singapore 50.00418 Freudenberg NOK Mechatronics Hungary Bt., Pécel Hungary 50.00

III. Investments in associated companies (consolidated by equity method)Germany

Other countries419 Bicomfiber S.A., Buenos Aires Argentina 24.00420 Euro China Socks Ltd, Hong Kong Hong Kong 29.00421 Japan Vilene Company Ltd., Tokyo Japan 33.40422 NOK Corporation, Tokyo Japan 25.10

Shareholdings

160

1) Consolidated financial statements including Trelleborg Automotive do Brasil Industria e Comercio de Autopecas Ltda., Brazil Vibracoustic do Brasil Indústria e Comércio de Artefatos de Borracha Ltda., Brazil Trelleborg Automotive Design (Shanghai) Co. Ltd., China Vibracoustic (Shanghai) Sales and Trading Co., Ltd., China Vibracoustic (Yantai) Co., Ltd., China Vibracoustic CV Air Springs (Yantai) Co., Ltd., China Wuxi Trelleborg Vibration Isolators Co. Ltd., China Zhangjiagang Trelleborg Kunhwa Automotive Components Co. Ltd., China Vibracoustic CZ s.r.o., Czech Republic Trelleborg Automotive France SA, France Trelleborg Modyn SAS, France Trelleborg Automotive Germany GmbH, Germany Vibracoustic Asia Holding GmbH, Germany Vibracoustic CV Air Springs GmbH, Germany Vibracoustic Germany Holding GmbH, Germany Vibracoustic GmbH & Co. KG, Germany Trelleborg Hong Kong Holdings Ltd., Hong Kong Vibracoustic CV Air Springs Magyarország Kft., Hungary Sigma Vibracoustic (India) PVT. LTD., India Trelleborg Automotive India Pvt Ltd, India Trelleborg Japan KK, Japan Trelleborg Kunhwa Co. Ltd., South Korea Trelleborg Servicios SA de CV, Mexico Trelleborg YSH SA de CV, Mexico Vibracoustic de Mexico S.A. de C.V., Mexico Vibracoustic Polska Sp. z o.o., Poland Trelleborg Automotive S.r.l., Romania Trelleborg Automotive OOO, Russia Vibracoustic-Ikhwezi (Proprietary) Ltd., South Africa Trelleborg Automotive Cascante SAU, Spain Trelleborg Automotive Spain SA, Spain Trelleborg Participaciones SL, Spain Trelleborg Automotive China Holding AB, Sweden Trelleborg Automotive Forsheda AB, Sweden Trelleborg Automotive Group AB, Sweden Trelleborg Wuxi Holding AB, Sweden Beltan Vibracoustic Titresim Elemanlari Sanayi ve Ticaret A.S., Turkey Blacktech Otomotiv Sanayi ve Ticaret A.S., Turkey HSS Otomotiv ve Lastek Sanayi A.S., Turkey Trelleborg Cerkezköy Ithalat ve Ihracat Otomotiv Ticaret AS, Turkey Trelleborg Otomotiv Sanayi Ve Ticaret AS, Turkey Trelleborg Automotive USA Inc., USA Vibracoustic North America Holdings Inc., USA Vibracoustic North America LP, USA

2) Consolidated financial statements including Changchun NOK-Freudenberg Oilseal Co., Ltd. China Corteco China Co. Ltd., China Merkel NOK-Freudenberg Co. Ltd., China NOK-Freudenberg Group Sales (China) Co., Ltd., China NOK-Freudenberg Group Trading (China) Co., Ltd., China Wuxi NOK-Freudenberg Oilseal Co., Ltd., China NOK-Freudenberg Hong Kong Ltd., Hong Kong Sigma Freudenberg NOK PVT. Ltd., India

No. Company Country Share of capital [%]

423 NOK Klüber Co., Ltd., Tokyo Japan 49.00424 ZET Gaskets Sp.z.o.o., Brzostek Poland 35.00425 ST Ibérica Lda., Albergaria-a-velha Portugal 100.00426 Klüber Lubrication Korea Ltd., Seoul South Korea 48.00427 Korea Vilene Co., Ltd., Pyeongtaek South Korea 50.00428 Freudenberg & Vilene Filter (Thailand) Co. Ltd., Chonburi Thailand 50.00429 Ishino Gasket North America L.L.C., Plymouth USA 37.50430 ISE Industrial Sealing Equipment JLT, Dubai United Arab

Emirates36.75

431 SurTec Middle East (L.L.C.), Sharjah United Arab Emirates

35.00

161

Independent Auditor’s Report

INDEPENDENT AUDITOR’S REPORT

We have audited the Consolidated Financial Statements prepared by the Freudenberg SE, Weinheim, comprising the Consolidated Statement of Financial Position, the Consolidated Statement of Profit or Loss, the Consolidated Statement of Profit or Loss and Other Comprehensive Income, the Consolidated Statement of Cash Flows, the Consolidated Statement of Changes in Equity and the Notes to the Consolidated Financial Statements, together with the Group Management Report for the fiscal year from January 1 to December 31, 2013. The preparation of the Consolidated Financial Statements and the Group Management Report in accordance with IFRSs as adopted by the EU, and the additional requirements of German commercial law pursuant to Sec. 315a (1) HGB [“Handelsgesetzbuch”: “German Commercial Code”] are the responsibility of the parent company’s management. Our responsibility is to express an opinion on the Consolidated Financial Statements and on the Group Management Report based on our audit.

We conducted our audit of the Consolidated Financial Statements in accordance with Sec. 317 HGB and German gen-erally accepted standards for the audit of financial statements promulgated by the Institut der Wirtschaftsprüfer [Institute of Public Auditors in Germany] (IDW). Those standards require that we plan and perform the audit such that misstatements materially affecting the presentation of the net assets, financial position and results of operations in the Consolidated Finan-cial Statements in accordance with the applicable financial reporting framework and in the Group Management Report are detected with reasonable assurance. Knowledge of the business activities and the economic and legal environment of the Group and expectations as to possible misstatements are taken into account in the determination of audit procedures. The effectiveness of the accounting-related internal control system and the evidence supporting the disclosures in the Consolidated Financial Statements and the Group Management Report are examined primarily on a test basis within the framework of the audit. The audit includes assessing the annual financial statements of those entities included in consoli-dation, the determination of entities to be included in consolidation, the accounting and consolidation principles used and significant estimates made by management, as well as evaluating the overall presentation of the Consolidated Financial Statements and the Group Management Report. We believe that our audit provides a reasonable basis for our opinion.

Our audit has not led to any reservations.

In our opinion, based on the findings of our audit, the Consolidated Financial Statements comply with IFRSs as adopted by the EU, the additional requirements of German commercial law pursuant to Sec. 315a (1) HGB and give a true and fair view of the net assets, financial position and results of operations of the Group in accordance with these requirements. The Group Management Report is consistent with the Consolidated Financial Statements and as a whole provides a suitable view of the Group’s position and suitably presents the opportunities and risks of future development.

Mannheim, March 28, 2014

Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft

Prof. Dr. Wollmert GrathwolWirtschaftsprüfer Wirtschaftsprüfer[German Public Auditor] [German Public Auditor]

PROJEcT TEAM:corporate communications:cornelia Buchta-NoackAndreas BaldaufStephan HansGroup Accounting & controlling:Volker christEllen FichtnerTanja HeilmannAnja KillianFlorian KunzMartina LorenzSuse MannspergerBodo PeischSteve Scheffel

DESIGN:m & s communication, Düsseldorf, Germany

PHOTOS:123rf, Nidderau, GermanyABB, Helsinki, FinlandIsabel Briskorn, Milan, Italycorbis Images, Düsseldorf, GermanyGetty Images, Dublin, IrelandDennis Löw, Düsseldorf, GermanyGerald Schilling, Ketsch, GermanyMarco Schilling, Weinheim, Germany

PRODUcTION:Druckhaus Diesbach, Weinheim, Germany

EDITORIAL INFORMATION

Published by:Freudenberg Group69465 Weinheim, Germanywww.freudenberg.com

www.freudenberg.com

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