Interim Report

Additional information

CUSTOMER AND QUALITY INITIATIVE CONTINUES

We launched our Customer and Quality initiative [see "Internet"] in the previous year and continued it in the first half of 2011. Measures affecting long-distance and regional transport, as well as freight transport and the infrastructure, were developed in nine projects. The purpose of these measures was to ensure the highest possible level of operational quality, especially during difficult operational situations which could, for example, arise during unusual weather conditions. In view of possible hot weather periods, preventive measures, including the reduction of airconditioning outages, were taken. In addition, passengers should be better informed by optimizing the flow of information during operational disturbances.

INVESTIGATIONS AT DB INTERNATIONAL

KPMG, an audit firm, has been retained to conduct a special investigation at DB International GmbH (DBI) [see "Internet"] following charges arising from preliminary investigation proceedings opened by the public prosecutor’s office in Frankfurt am Main.

The prosecutor accused former DBI employees of making payments and in-kind donations to decision makers abroad in the past, either directly or via third parties. The allegations have been partially confirmed by the special investigation and resulted in DBI taking appropriate action. The official investigations are continuing.

QUALITY GATES INTRODUCED IN PROCUREMENT PROJECTS

In previous years we experienced quality problems in the procurement of new rail vehicles. These problems led to delayed deliveries, unsatisfactory reliability and availability, as well as deficient certification materials.

The introduction of milestones (Quality Gates) in procurement projects is intended to identify and minimize project risks at an early stage, thereby ensuring the highest possible level of quality in the contractually agreed, and on-time, delivery of rail vehicles in the future. Quality Gates involve up to ten fixed dates at which time the client measures and evaluates the quality and completeness of the goods and services that have been provided at that time by the supplier.

Each Quality Gate will be reviewed during a meeting of the client with the supplier. During the meeting the supplier will present the concrete status of the project and the progress made to date based on a Quality Gate criteria list. The supplier will also present the critical path required for the further fulfillment of the contractually agreed standards of quality and delivery times. The client will then state his conclusion as well as his overall assessment of project risks and will decide about passing through the Quality Gate. The industry side has welcomed this procedure. In the interim the Quality Gate process is being used in eight procurement projects and preparations are being made to apply it in five others.

Last modified: 04.08.2011