Nabaltec_E_GB2016

T R O P E R T N E M E G A N A M D E T A D I L O S N O C DESCRIPTION OF THE BUSINESS ENTERPRISE 27 Nabaltec has fine precipitated aluminum hydroxide production sites in the two most impor- tant demand-driven markets in Europe and the US. This permits Nabaltec to produce cost- efficiently in customer proximity and, therefore, to serve the most significant markets directly. However, production at the Corpus Christi site in the US was temporarily halted at the end of August 2016 due to the fact that the raw materials supplier, Sherwin Alumina, was compelled to discontinue operations because of a Chapter 11 bankruptcy procedure. Its customers have been supplied from Germany ever since. Also within the business division “Technical Ceramics,” Nabaltec products have excellent growth potential thanks to a wide range of applications and relevant target markets. In the ceramic raw materials segment, the market for reactive aluminum oxide is developing over proportionally well due to increasing refractory industry requirements. Markets for technical ceramics and the abrasive industry also continue showing solid growth. The market for reactive aluminum oxide is developing over- proportionally well Nabaltec maintains very close contacts with customers through its sales team and its technical support staff. All sales team members have specialized technical and chemical expertise so that expert advice is guaranteed at all times. This proximity to our clients is fundamental for the concerted, client-specific design and development of our products. CORPORATE STRUCTURE Nabaltec, based in Schwandorf, was formed in 1994 and, in 1995, acquired the specialty alumina division of VAW aluminium AG. In September 2006, the company was transformed into a stock corporation and has been listed in the Open Market (Entry Standard) segment of the Frankfurt stock exchange since November 2006. Since March 2017 they are included in the new market segment “Scale.” Nabaltec AG holds a 51% interest in Nashtec LLC (USA). Its partner, Allied Alumina LLC, holds a 49% interest (as of 31 December 2016). In the past, Nashtec LLC purchased key raw materials, particularly the aluminum hydroxide required for the production of APYRAL®, from Sherwin Alumina LLC, a wholly-owned subsidiary of Allied Alumina LLC. On 11 January 2016, Sherwin Alumina LLC filed for bankruptcy under Chapter 11 of the United States Bankruptcy Code (“Chapter 11 procedure”) with the United States Federal Bankruptcy Court in Corpus Christi, Texas, USA. Sherwin Alumina has discontinued operations because of the Chapter 11 procedure and Nabaltec AG’s US subsidiary Nashtec was forced to halt production at the end of August 2016. Since then, customers which had previously been supplied by Nashtec have been receiving their products from Germany. Nabaltec AG’s goal is to continue to operate Nashtec based on a stand-alone solution. However, that has no effect on the qualification of Nashtec LLC as a subsidiary of Nabaltec AG. In the first quarter of 2016, Nabaltec established a wholly-owned subsidiary, Nabaltec Asia Pacific K.K., based in Tokyo, Japan, which will market and distribute Nabaltec AG’s entire port- folio of products. Nabaltec Asia Pacific K.K. is not included in Nabaltec AG’s consolidated financial statements, but is instead recognized at the cost of the shares, since it is not material for Nabaltec AG’s financial, earnings and liquidity position. Nabaltec AG did not have any other participations or subsidiaries as at 31 December 2016. Reflecting the characteristics of the target and buyers’ markets, Nabaltec AG’s operations are divided into two divisions, each in turn comprising of market segments and business units. Nabaltec AG divides its operations into two business divisions Annual Report 2016 | Nabaltec AG ||||

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