Report by the Board of Directors

Changing the Consolidation of the Jointly Owned Company of EB and AUDI as of January 1, 2013

EB has started to apply the new IFRS 10 and IFRS 11 standards from the beginning of 2013 and will consolidate GmbH, a jointly owned company with Audi Electronics Venture GmbH (AEV), applying the proportionate consolidation method. As a result of the change in the method of consolidation, the proportion of net sales and operating result of GmbH consolidated into Elektrobit groupīs financial statements will decrease from the previous 100% to 51%. The change in the consolidation method has no effect on EBīs net result. According to the rules of proportionate consolidation method, the consolidated statement will also include 49% of the net sales of other Elektrobit group companies to GmbH.

In the 2013 financial reporting EB has presented the profit and loss statement and balance sheet from 2012 for comparison restated, assuming that the proportionate consolidation method according to the above mentioned standards would have been applied already in 2012.

Elektrobit Corporationīs subsidiary company Elektrobit Automotive GmbH holds a 51% stake in GmbH, with AEV holding the remaining 49%. Previously, since its establishment in 2009, GmbH has been brought into the consolidated statements as subsidiary and its net sales and operating result have been consolidated in the Elektrobit groupīs financial statements in full.

The new IFRS 10 and IFRS 11 standards for consolidated financial statements and joint arrangements took effect on 1st of January 2014, but they may be applied as of 1st of January 2013. The accounting standard IFRS 10 sets out the rules for presenting and preparing consolidated financial statements when an entity controls one or more other entities. IFRS 11 establishes principles for financial reporting by parties to a joint arrangement. According to the standard, joint arrangements are defined either as “joint venturesī or “joint operationsī. GmbH is deemed to fulfill the criteria of a “joint operationī, whereby it is required that a proportionate consolidation method be applied at the latest when the new standard takes effect.