Other disclosures

The changes in the consolidated Group did not have any material impact on the other disclosures; the same would have been reported in the prior-period consolidated financial statements.

Contingent liabilities (contingencies and commitments)

At present, there are no indications that any claims will be asserted under these obligations.

Other financial obligations from rental agreements and operating leases (minimum lease payments) amount to a total of € 25,724 thousand (previous year: € 22,494 thousand). Of these, € 11,012 thousand (previous year: € 10,389 thousand) is due within one year and € 12,203 thousand (previous year: € 10,402 thousand) due between one and five years. In the year under review, € 10,389 thousand was spent on these agreements.

Operating leases relate primarily to vehicles and real estate.

Finance leases relate almost entirely to real property. The term of the contract covers most of the useful life of the asset concerned, or there is a purchase option, as is the case for a property in Germany.

The annual obligations from IT services agreements amount to € 28,498 thousand (previous year: € 33,166 thousand) over a term of one to five years.

As in the previous year, there are no purchase price obligations from acquisitions of companies and no payment obligations from capitalisation measures at Group companies.

The aggregate purchase obligation for investments amounts to € 6,905 thousand (previous year: € 11,567 thousand). Almost all of the corresponding payments are due in 2011.

Other covenant agreements

In the year under review there are two guarantee credit facilities for € 10 million for which covenant agreements defined by the lender must be observed. Both agreements relate to defined equity limits and to a dynamic debt level. There are currently no risks that the agreed covenants will not be honoured.

Pursuant to section 21(1) of the WpHG [Wertpapierhandelsgesetz – German Securities Trade Act], KSB Stiftung [KSB Foundation], Stuttgart, notified us on 21 May 2008 that its voting interest in KSB AG, Frankenthal / Pfalz exceeded the 75.00 % threshold on 5 May 2008 and amounted to 80.24 % (711,453 voting shares) on this date. 0.54 % of the voting rights (4,782 voting shares) were held directly by KSB Stiftung and 79.70 % (706,671 voting shares) were attributed to KSB Stiftung pursuant to section 22(1), sentence 1, No. 1 of the WpHG. The voting rights attributed to KSB Stiftung were held by Klein Pumpen GmbH, Frankenthal.

A rental and services agreement has been entered into between KSB AG and Klein Pumpen GmbH. This resulted in the recognition of expenses of € 77 thousand (previous year: € 24 thousand) and income of € 8 thousand (previous year: € 9 thousand) at KSB AG in the year under review. No interest (previous year: interest of € 3 thousand) was paid on short-term cash deposits by Klein Pumpen GmbH with KSB AG. Short-term deposits by KSB AG with Klein Pumpen GmbH and by Klein Pumpen GmbH with KSB companies carry appropriate rates of interest. Liabilities to Klein Pumpen GmbH as at 31 December 2010 amounted to € 7 thousand (previous year: € 473 thousand).

All transactions are entered into on an arm’s length basis. This is also demonstrated by the dependent company report prepared in accordance with section 312 of the AktG [Aktiengesetz – German Public Companies Act].

The total remuneration of members of the Supervisory Board amounts to € 1,310 thousand for financial year 2010 (previous year: € 1,257 thousand), and the total remuneration of the Board of Management amounts to € 4,027 thousand (previous year: € 3,705 thousand). € 19,580 thousand (previous year: € 21,026 thousand) has been provided for pension obligations to former members of the Board of Management and their surviving dependants; total benefits paid to these persons amounted to € 1,436 thousand in the year under review (previous year: € 1,428 thousand). Additions of € 1,770 thousand (previous year: € 1,906 thousand) were made to the pension provisions for active and former members of the Board of Management.

Based on the relevant legal provisions, the Annual General Meeting on 19 May 2010 resolved not to disclose the remuneration of the Board of Management separately for each member and classified by components.

The members of the Supervisory Board and the Board of Management are listed before the presentation of the proposal on the appropriation of the net retained earnings of KSB AG.

Auditors

BDO AG, Frankfurt am Main, were appointed as the auditors and group auditors for financial year 2010 at the Annual General Meeting in on 19 May 2010. The expenses for financial year 2010 include audit fees of € 250 thousand (previous year: € 245 thousand). A further € 45 thousand (previous year: € 40 thousand) was incurred for the audits of German subsidiaries. In addition, fees of € 217 thousand (previous year: € 30 thousand) were incurred for other services.

Events after the reporting period

The tragic events in Japan have cast a new light on the discussion on the use of nuclear power as a source of energy. It is still too early to assess the extent to which this will impact on orders for energy industry components such as pumps and valves. In principle, KSB offers products suitable for all forms of energy conversion. Should the share of global electricity supplies accounted for by nuclear power fall in the future, this would drive up demand for conventional power plants or renewable energy facilities. From today‘s perspective, such a trend towards substitution would not put KSB at a disadvantage.

German Corporate Governance Code

The Board of Management and Supervisory Board of KSB AG issued the current statement of compliance with the recommendations of the Government Commission on the German Corporate Governance Code in accordance with section 161 of the AktG [Aktiengesetz – German Public Companies Act]. The statement of compliance is published on our web site (www.ksb.com) and has thus been made permanently accessible to our shareholders.