Bauer AG — Interim / Quarterly Report 2015

Nov 13, 2015

Interim Report as at September 30, 2015

GROUP KEY FIGURES JANUARY – SEPTEMBER 2015

IFRS in EUR million	9M/2014 *	9M/2015	Change	12M/2014 *
Total Group revenues	1,163.2	1,194.9	2.7 %	1,560.2
of which Germany	348.7	356.5	2.2 %	440.2
International	814.5	838.4	2.9 %	1,120.0
International in %	70.0	70.2	n/a	71.8
of which Construction	542.6	564.4	4.0 %	725.6
Equipment	498.1	496.6	-0.3 %	639.2
Resources	160.6	177.2	10.4 %	252.8
Other/Consolidation	-38.1	-43.3	n/a	-57.4
Consolidated revenues	1,136.4	1,134.8	-0.1 %	1,506.0
Sales revenues	1,013.7	1,018.8	0.5 %	1,375.7
Order intake	1,178.8	1,449.8	23.0 %	1,557.7
Order backlog	780.8	1,017.6	30.3 %	762.7
EBITDA	105.9	107.0	1.0 %	171.0
EBITDA margin in % (of sales revenues)	10.4	10.5	n/a	12.4
EBIT	38.3	36.4	-5.0 %	76.4
EBIT margin in % (of sales revenues)	3.8	3.6	n/a	5.6
Net result for the period	-5.0	-2.7	n/a	15.7
Capital investment in property, plant and equipment	36.7	58.8	60.2 %	64.1
Equity	410.6	419.5	2.2 %	418.9
Equity ratio in %	24.2	24.5	n/a	26.6
Total assets	1,700.2	1,710.7	0.6 %	1,575.1
Earnings per share	-0.36	-0.24	n/a	0.85
Return on equity after tax in %	n/a	n/a	n/a	3.7
Employees (on average over the year)	10,389	10,679	2.8 %	10,405
of which Germany	4,151	4,163	0.3 %	4,158
International	6,238	6,516	4.5 %	6,247

* Previous year's figures amended; see p. 8 et seq. and 2014 Annual Report p. 100 + p. 106

At variance with the consolidated revenues presented in the Group income statement, the total Group revenues presented here include portions of revenues from associated companies as well as revenues of non-consolidated subsidiaries and joint ventures.

Percentages are calculated on the basis of unrounded starting values (EUR thousand).

Summary

At the end of the third quarter of 2015 the BAUER Group recorded total revenues of EUR 1,194.9 million, up 2.7 percent versus the previous year (EUR 1,163.2 million). The Group's net result for the period was EUR -2.7 million (previous year: EUR -5.0 million). In our business, it is usual to post profi ts at the end of the third quarter of a normal year. Unfortunately, we were unable to do so due to expenses incurred by individual subsidiaries and comprehensive restructuring measures.

The realized and unrealized foreign currency gains and gains from foreign exchange forward contracts amounted to EUR 33.0 million and were the main reason for the steep rise in other income. Negative exchange rate effects in the amount of EUR 38.6 million offset this fi gure and also signifi cantly increased the other operating expenses. These fi gures are the result of currency management, which is of utmost importance in periods of large exchange rate fl uctuations.

We were generally satisfi ed with developments in the fi rst nine months in the Construction segment. However, business in the USA had a negative impact. In the Equipment segment we received a satisfactory number of orders in the fi rst three quarters. However, some orders will only be delivered in the last quarter, meaning that sales fi gures fell slightly short of expectations but were up on the previous year. Developments in the Resources segment differed. The developments in the environmental and water business are pleasing. However, particularly the drilling business requires further restructuring measures. Total earnings failed to meet expectations.

We once again have an overall positive outlook for the trend of our company. The Group's order backlog amounted to EUR 1,017.6 million, 30.3 percent up year-on-year. It has broken the billion barrier for the fi rst time in the history of the company. In the third quarter, we received a major project in our international specialist foundation engineering business for the construction of a cut-off wall for the Diavik diamond mine in Canada with a volume of around EUR 65 million. After the balance sheet date, we also received an order for work on the diaphragm wall of the Polavaram dam in India with a volume of around EUR 60 million. This project is a joint venture. These projects will provide a good basic volume for the near future. The Construction segment also works on various small and medium-sized projects, which are dispersed across our regions.

Orders for deep drilling rigs received by the Equipment segment in December particularly increased the order backlog year-on-year. In September, a non-binding letter of intent with Schlumberger, the world's leading supplier of technology, integrated project management and information solutions for customers in the oil and gas industry, was signed. In this letter of intent, negotiations towards a joint venture, which outlines a common approach for the development and construction of larger deep drilling rigs for the oil, gas and geothermal sectors, have been agreed. Both companies anticipate that the planned joint venture can soon achieve revenues of more than one hundred million euros and open up great opportunities for the future. The order situation for specialist foundation engineering equipment has remained almost unchanged with orders still having very short terms.

Order backlog in the Resources segment is 58.9 percent up year-on-year. At the end of July, the segment was awarded a remediation project in Germany for the former landfi ll Kesslergrube in Grenzach-Wyhlen, which is the single largest order in the history of the BAUER Group with a volume of more than EUR 100 million. The Resources segment also has interesting opportunities in other regions around the world.

As set forth in the 2014 Annual Report, we forecast total Group revenues for the full year 2015 of around EUR 1.6 billion and EBIT of around EUR 75 million. We continue to forecast profi t after tax of around EUR 18 to 23 million. As in the previous year, earnings will include non-operating profi t, which offset the negative effects of the restructuring measures and expenses incurred by individual subsidiaries.

Course of Business and Background Conditions

GENERAL ECONOMIC CLIMATE

The global economy remains on a positive growth path. However, the fundamental outlook has clouded over further in recent months. Developments still remained positive in Germany. Many issues such as the refugee crisis, the concerns about the future economic development in China, and the potential consequences of Volkswagen's emission scandal nevertheless clouded the view in this country as well.

Until the middle of the year, Germany's and Europe's main concern was the fi nancing of Greece. Great effort was expended to resolve this issue, at least temporarily. Today, the fl ood of refugees is a topic that has a fi rm grip on Europe. Only few countries, including Germany, are carrying the brunt of the huge infl ux. This has many potential consequences. On one hand, it is important for Germany to treat the asylum seekers responsibly and generously, but it also has to be made clear that even Germany has only a limited capacity to take in people. The issue is a political time bomb and may endanger Germany's political balance. This would be a dangerous situation for all involved.

On the other hand, the huge additional spending on construction measures, support and sustenance of the asylum seekers has the same effect as a major economic program. The money should not be spent on senseless buildings such as air-domes and container villages, but should be invested as quickly as possible into conventional buildings made from brick, wood or modular components, which create sustainable living space for the affected persons. This would give the German construction sector new momentum.

Volkswagen's emission scandal has been another major issue with an impact on German economic development. The company is one of the most important in Germany and its development therefore affects the country's economy as a whole. The drop in tax income alone, caused by the damage that has been created, will hit the government, federal states and municipalities hard. The damage this will cause to the image of other German products cannot be estimated at present.

Germany's construction sector developed positively overall. All political groups and government bodies have realized the enormous construction defi cit in Germany. In addition to the construction of living accommodation for refugees, residential construction is to be advanced considerably as there is an obvious lack of affordable living space. Large additional funds will be made available for infrastructure projects in the coming years so as to reduce the large defi cits, particularly with regard to road and railway bridges, in this sector as well. In addition, 15 public-private partnership projects will considerably expand construction activities in the coming years.

The political and administration sectors are concerned that the construction sector will not be able to deal with the rising demand and that prices will increase as a result. After many years of decreasing construction prices in Germany, however, the margin of the construction sector must increase. Both associations and representatives of the construction sector will have to make this clear statement.

Even though after Greece, the refugee crisis is making all the headlines, there are numerous other issues that also impact our company, some of them severely.

• The Russia/Ukraine confl ict remains unresolved. Battles in the crisis-hit region keep fl aring up and diplomatic efforts are getting rather less. If no solution is found, this would have a sustained impact in the global economy, and therefore also Germany. We are severely impacted by this situation in the affected countries. Fortunately, we were once again awarded construction projects in Russia in recent months.

• The economic developments in China are showing signifi cant distortions. Several areas of concern have come to light in recent months that may have a serious impact on future growth. The market for the construction equipment sector decreased considerably this year. As a result, the competition in this sector was forced to signifi cantly reduce their capacities to have any chance at all of remaining in the market. It would be astounding, by the way, if our sector were to remain an isolated case. It is rather likely that a number of other sectors will go through a similar negative development. The signifi cant losses on the Chinese stock markets in recent months fi t this picture. The distortions will also affect consumption and the purchasing of foreign luxury goods. As China is a key factor for the development of the overall global economy, serious consequences are to be expected.
• The crises in the Arab world are still ongoing. The Islamic State remains active in large parts of Iraq, thus adding to the great uncertainty in this region. Russia's involvement in military action in Syria and its support of the government regime may further aggravate the situation. One positive aspect is that the economies of numerous countries within the region remain unimpressed and continue to thrive. The Egyptian construction sector has been experiencing a surprising upturn as the local government is strongly supporting construction activities. After a construction period of just one year, the initial sailing of the extended Suez Canal section was celebrated. The economy of the countries on the Arabian peninsula continues to develop positively. Unfortunately, the low oil price is posing a risk to future economic developments in this region.
• It is very good news that it was possible to come to an agreement with Iran in the nuclear confl ict. This country, which is so important to the region, can now resume its international trade activities. This provides numerous opportunities.

The International Monetary Fund expects a slight slowdown of the global economy compared with recent months, based on the latest estimate of 3.1 percent in October. Growth in numerous regions such as the European Union is weak and might even recede signifi cantly in some others such as Russia. However, growth in the Far East, Middle East, and especially the USA will be able to overcompensate for this development.

A growing global economy will also strengthen the construction market as a whole as economic growth requires construction investments. Growth in the specialist foundation engineering sector continues to remain slightly stronger as an increasing lack of space means that construction projects have to be realized underground or on very small parcels of land. Urbanization, the increasing mobility of both humans and products, the problem sectors water and environmental protection, and the change in the energy sector are further driving construction.

Germany's construction sector is thriving at present, even though the construction statistics since the beginning of the year fall slightly short of the previous year, thus making it impossible for Germany to fully maintain its high standard. Apartments and private homes are regarded as an attractive investment at present as interest rates are low. Commercial construction developed positively on account of the positive economy and public sector construction benefi ted from increased activities in the infrastructure sector.

Overall, we forecast growth in the construction market that will be impacted by numerous disruptions. It therefore is a large challenge for us to continuously adapt the company's structure in this respect to enable our segments to fully utilize their diverse opportunities in the future.

At present, we are processing several large projects in the markets in order to strengthen the stability of our business in the coming years.

OVERVIEW OF INTERNATIONAL MARKETS

Germany

The German construction market will continue to see positive growth over the coming years. Residential construction is being buoyed up, above all because of the low interest rates. Public-sector construction is benefi ting from an enormous backlog of infrastructure work, something which governments now have much more money at their disposal to pay for. The commercial construction sector profi ts from the continuing upward trend in the industrial sector.

The widely anticipated positive effects of the shift in energy policy in Germany to favor renewable energies have been realized at least partially after a long time. A general agreement has now been reached regarding the power lines from the north to the south of Germany and these projects will now enter the fi nal planning phase. Long stretches of the lines will be laid underground, which will provide additional work for the construction sector. Conventional power plants will also be constructed in Bavaria to ensure suffi cient electricity supplies during peak times.

Europe

We predict that growth on construction markets in Western Europe will be modest over the coming years. Many countries have had to impose strict budget constraints which will hamper the further development of their infrastructure. There are nonetheless a number of opportunities for us in Europe, especially in Switzerland. In France, a new circular metro line is being built around Paris, and is requiring extensive construction activities. Other large cities also plan to extend their infrastructure. The European Union is currently planning a large economic program for developing the European infrastructure. This also affects Germany through the planned public-private partnership projects.

At least a slight upturn has been noticed again in Eastern Europe after many years. However, the crisis embroiling Russia and Ukraine is currently imposing a serious burden on these countries' development. Ukraine is practically no longer capable of maintaining a construction sector – due to lack of funds. Although Russia is attempting to save its construction sector, the fi nancial defi cits brought about by sanctions and the low oil price are forcing the country to pursue a policy of frugality. Commercial construction has almost shut down entirely. It can be assumed that Russia will suffer from the consequences of the crisis for years to come. Equipment sales will therefore not recover very quickly.

Middle East & Central Asia

The oil-rich and gas-rich countries of the Middle East, such as Abu Dhabi, Saudi Arabia and Qatar, have lots of large-scale construction projects in the pipeline and being carried out. Metro systems are being constructed in Doha and in Riyadh, while intensive extensions to railway lines are in progress throughout the entire region. Construction has also bounced back in Dubai in a big way.

Jordan and Lebanon are hamstrung by the situation in Iraq and Syria and the problem that is the Islamic State, as a result of which economic development has signifi cantly abated there. Many confl icts are still taking place in Egypt, with repeated incidents of rioting. Nevertheless, the construction sector in Egypt is currently experiencing an astonishing upturn. Considerable construction work is still required on the Suez Canal and the underground railway system in Cairo. Our subsidiary has landed considerable orders in this respect, and will be able to increase its sales signifi cantly given this market situation. It is impossible to continue working in Libya due to the chaotic situation there.

Asia-Pacifi c, Far East and Australia

Construction markets in the Far East remain pleasingly stable. Almost every country in the region is undertaking major infrastructure projects. In Hong Kong, construction sector capacities are being well utilized by extensive rail and road construction works. The planned airport expansion further drives development. The same is true in Singapore and Malaysia. For example, new underground railway lines and urban motorways are being constructed in Singapore. The port – one of the most important and biggest in the world – is being relocated. Economies such as Indonesia and the Philippines are also seeing healthy growth. The Australian economy has slowed down somewhat.

Americas

The USA's economy is returning to its role as the driver of global growth. A very high level of backlog demand has arisen in many infrastructure areas, due to a lack of adequate investment over recent decades. Great efforts will be made in the coming years to reduce this defi cit. Overall, we regard the situation as stable, and offering good opportunities for further growth in both our Construction and Equipment segments. Trends in the Canadian construction market are likewise positive. Interesting projects are regularly seen in Central America.

Africa

In Africa, it will be worthwhile actively pursuing new business, even though the economic weakness of the countries concerned means the business generated will not make a major contribution to our total Group revenues. Some countries have very good chances of improving their prosperity in the medium term based on their enormous raw material resources. Unfortunately, the commodity markets are very slow at the moment.

In general terms, our Equipment segment has similar opportunities to those of the Construction segment, as demand for machinery is dependent on construction markets.

At the end of July, the Resources segment was awarded a major order in its environmental sector in Germany and there are further interesting opportunities regarding large projects. Demand from the mining sector remains weak as the commodity markets are barely recovering. Demand for water-related products and services is increasing worldwide.

PERFORMANCE OF THE BAUER GROUP

In the fi rst nine months of 2015 total Group revenues of the BAUER Group increased 2.7 percent versus the same period last year, from EUR 1,163.2 million to EUR 1,194.9 million. This increase is also due to exchange rate effects, which increased other income year-on-year. The Group's net result for the period was EUR -2.7 million (previous year: EUR -5.0 million).

The Group's order backlog for the period increased by 30.3 percent year-on-year to a new high of EUR 1,017.6 million. This growth is mainly due to the Construction and Resources segments. Numerous construction projects, including major ones, were acquired and order backlog in the Resources segment increased signifi cantly, primarily due to the major project for the environmental sector in Grenzach-Wyhlen. The order backlog of the Equipment segment was up year-on-year due to the deep drilling rigs ordered in December 2014.

All in all, the order situation and the opportunities offered by the market provide a suitable foundation for further business growth.

	in EUR million	9M/2014 * Revenues	9M/2015 Revenues	Share 2015	Change against previous year	Order backlog
	BAUER Spezialtiefbau GmbH (BST)
	BST, Germany	102.1	94.8	7.9 %	-7.1 %	+
	Subsidiaries, Germany	7.4	14.4	1.2 %	94.6 %	+
	BST, international	63.0	74.6	6.2 %	18.4 %	+
	Subsidiaries, international	373.5	407.1	34.1 %	9.0 %	+
Construction	BST Group total	546.0	590.9	49.4 %	8.2 %	+
	SCHACHTBAU NORDHAUSEN GmbH incl. subsidiaries (SBN)	55.8	46.6	3.9 %	-16.5 %	•
	less intra-Group revenues and IFRS adjustments	-59.2	-73.1
	Construction total	542.6	564.4	47.2 %	4.0 %	+
	BAUER Maschinen GmbH (BMA)	293.5	316.5	26.5 %	7.8 %	•
	Equipment subsidiaries	327.4	364.3	30.5 %	11.3 %	•
Equipment	BMA Group total	620.9	680.8	57.0 %	9.6 %	•
	SBN	38.9	33.6	2.8 %	-13.6 %	•
	less intra-Group revenues and IFRS adjustments	-161.7	-217.8
	Equipment total	498.1	496.6	41.6 %	-0.3 %	•
	BAUER Resources GmbH (BRE)	11.2	14.2	1.2 %	26.8 %	++
	Resources subsidiaries	151.3	152.8	12.8 %	1.0 %	•
Resources	BRE Group total	162.5	167.0	14.0 %	2.8 %	+
	SBN	23.8	29.0	2.4 %	21.8 %	+
	less intra-Group revenues and IFRS adjustments	-25.7	-18.8
	Resources total	160.6	177.2	14.8 %	10.4 %	+
	BAUER Aktiengesellschaft (BAG)	23.1	25.5	2.1 %	10.4 %
Other	Other subsidiaries	1.7	1.8	0.2 %	5.9 %
	Total Other/services	24.8	27.3	2.3 %	10.1 %
	less intra-Group revenues and IFRS adjustments	-62.9	-70.6
	Group total (including minority interests)	1,163.2	1,194.9	100.0 %	2.7 %	+
	of which: Germany	348.7	356.5	29.8 %	2.2 %
	International	814.5	838.4	70.2 %	2.9 %

BREAKDOWN OF TOTAL GROUP REVENUES BY SUBSEGMENT

* See footnote on page 2

Notes on the table:

List also includes non-consolidated holdings

Valuation of orders in hand relative to budgeted sales:

• weak; - slightly weak; • adequate; + well adequate; ++ very well adequate; Percentages and totals are calculated on the basis of unrounded starting values Breakdown Germany/international according to country in which accounting figures were allocated. For reasons of complexity the figures are not absolutely precise.

Trends in our Business Segments

CONSTRUCTION SEGMENT

CONSTRUCTION KEY FIGURES

in EUR '000	9M/2014 *	9M/2015	Change	12M/2014 *
Total Group revenues	542,602	564,426	4.0 %	725,626
Sales revenues	501,267	499,404	-0.4 %	646,628
Order intake	519,167	697,752	34.4 %	677,865
Order backlog	471,542	584,266	23.9 %	450,940
EBIT	16,799	12,394	-26.2 %	26,033
Net result for the period	-1,289	-1,396	n/a	2,524
Employees (on average over the year)	5,767	6,178	7.1 %	5,675

* Previous year figures adjusted; the Structural Steel Engineering division of SCHACHTBAU NORDHAUSEN GmbH was reclassified from the Equipment to the Construction segment.

The total Group revenues of the Construction segment amounting to EUR 564.4 million were 4.0 percent up on the previous year. Almost all regions of the world experienced an upturn in business. EBIT decreased by EUR 4.4 million year-on-year to EUR 12.4 million for the period. The net result for the period deteriorated slightly from EUR -1.3 million in the previous year to EUR -1.4 million. The loss made by our business in the USA made it impossible to increase our fi gures year-on-year. The delays in the approval of the Center Hill Dam project had an additional negative impact in the current year. This created capacity bottlenecks, which also had an extremely negative impact on the subsidiary's other project business and led to restructuring measures.

Order backlog in our Construction segment increased by 23.9 percent to EUR 584.3 million (previous year: EUR 471.5 million). The construction of a cut-off wall for the Diavik mine in north Canada was once again another major project. We also were awarded numerous medium-sized projects. Order backlog is evenly distributed geographically across the world, providing a fi rm foundation for us to achieve our performance targets in the coming years. In addition to this positive development, we continue to see numerous opportunities for large-scale projects, which we are pursuing at present. The diaphragm walling works for a dam in India was another major project we were awarded after the close of the reporting period.

The construction business in Germany continued its positive developments despite revenues being slightly down due to a lack of major projects. In Russia, on the other hand, performance dropped signifi cantly. It is pleasing that we are once again able to work on several projects in this country. We also processed fewer projects in Switzerland and Indonesia in recent months, resulting in a performance drop in these countries. We recorded a positive performance in the fi rst nine months of the year in the USA, Central America, Egypt, the United Arab Emirates, Saudi Arabia, Qatar, Malaysia, Thailand, and the Philippines.

An appraisal of ongoing market trends in the construction sector was presented in the "Overview of international markets" section above.

Full-year outlook

For 2015, we are assuming that revenues will be slightly above the level of the previous year. EBIT and profi t after tax will be roughly on par with the previous year.

EQUIPMENT SEGMENT

EQUIPMENT KEY FIGURES

in EUR '000	9M/2014 *	9M/2015	Change	12M/2014 *
Total Group revenues	498,139	496,591	-0.3 %	639,151
Sales revenues	361,795	367,275	1.5 %	532,691
Order intake	514,985	497,537	-3.4 %	681,346
Order backlog	137,095	159,666	16.5 %	158,720
EBIT	25,613	24,585	-4.0 %	35,952
Net result for the period	4,265	4,150	-2.7 %	8,847
Employees (on average over the year)	2,941	2,914	-0.9 %	3,038

* See footnote on page 8

Total Group revenues in the Equipment segment in the fi rst nine months of this year decreased slightly by 0.3 percent yearon-year to EUR 496.6 million. Sales revenues rose 1.5 percent to EUR 367.3 million. EBIT decreased year-on-year from EUR 25.6 million to EUR 24.6 million. The net result for the period decreased from EUR 4.3 million in the previous year to EUR 4.2 million in the current year.

Earnings were impacted by various factors. On one hand, restructuring measures implemented at subsidiaries had a negative effect. On the other, one-time income was generated by selling 50 percent of the shares and revaluing the remaining 40 percent of the shares in SPANTEC Spann- & Ankertechnik GmbH. In the current year, the number of large and complex equipment with higher contribution margins delivered decreased year-on-year in the operating business. The weak exploration market also negatively affected our well drilling rig sales, creating losses in this area.

Order backlog in the Equipment segment increased from EUR 137.1 million to EUR 159.7 million. The main growth was generated by our deep drilling rigs and small equipment. The order backlog for large specialist foundation engineering equipment is roughly on par with the previous year. Order intake remains highly variable. Some markets are continually seeing new factors appear contributing to political uncertainty, which reduces customer willingness to invest. Despite the market conditions remaining extremely diffi cult, particularly due to the situation in Russia and the market shifts in China, the total number of orders was satisfactory. Business therefore remains very short-term in nature. Specialist foundation engineering machinery customers expect immediate delivery after ordering. Demand is nevertheless lively, thus we are forecasting sales growth to remain steady. We expect further positive deliveries to our customers in the last quarter.

For many years, we have had to put a particularly great effort into the equipment business in order to react to the uncertainties in the markets. The extreme developments in the Chinese construction machinery market and the situation in Russia are the main issues in this respect. Our strategy is to maintain an increasingly perfect, state-of-the-art product portfolio that meets the highest quality standards. A dynamic development team that is closely aligned with the markets ensures that we are very successful in our efforts. The Chinese market looks like it is going to normalize soon. Our business profi ts from the growing global markets overall. We have added new products such as deep drilling technology to our portfolio, thus expanding it by new growth markets. The planned joined venture with Schlumberger presents us with a great opportunity for the future.

Full-year outlook

We expect revenues for 2015 to be up on the previous year. Both EBIT and profi t after tax will be up year-on-year, also due to one-time income.

RESOURCES SEGMENT

RESOURCES KEY FIGURES

in EUR '000	9M/2014	9M/2015	Change	12M/2014
Total Group revenues	160,571	177,199	10.4 %	252,830
Sales revenues	150,334	151,633	0.9 %	195,860
Order intake	182,754	297,860	63.0 %	255,837
Order backlog	172,203	273,688	58.9 %	153,027
EBIT	-1,859	-1,183	n/a	15,932
Net result for the period	-7,183	-7,836	n/a	4,347
Employees (on average over the year)	1,391	1,290	-7.3 %	1,400

In the fi rst three quarters of 2015, total Group revenues in the Resources segment amounted to EUR 177.2 million, 10.4 percent up year-on-year (EUR 160.6 million). EBIT came to EUR -1.2 million (previous year: EUR -1.9 million). The net result for the period was EUR -7.8 million (previous year: EUR -7.2 million).

We still have to expend the most effort on our Resources segment. The developments in the environmental and water business are pleasing. We had to implement numerous further restructuring measures in our companies for the sale of well engineering materials to create a positive future for them. This also created a considerable fi nancial burden. In addition, we are still struggling severely to secure suffi cient orders for the execution of deep drillings to utilize our capacities in this area, particularly those of our subsidiary in Jordan. The restructuring measures in this company also created signifi cant costs.

The segment has an excellent order backlog with a volume of EUR 273.7 million, 58.9 percent up on the previous year. The Mining division of SCHACHTBAU NORDHAUSEN GmbH holds much of this total, with orders valued at EUR 30.5 million. Operations in this fi eld include numerous projects in Germany and a shaft driving for a mine in Kazakhstan. The large environmental project in Grenzach-Wyhlen described at the beginning with a volume of more than EUR 100 million signifi cantly boosted the segment's order backlog in July.

The Resources segment has the largest opportunities within the Group. Our product range is aimed directly at the large future markets water, environment, and natural resources. These markets contain many extraordinary projects that will be tendered globally in the near future.

Full-year outlook

For 2015, we are assuming that revenues will be on par with the previous year. Due to the high costs of the reorganization, EBIT and profi t after tax will decrease once again by the end of the year.

Earnings, financial and net asset position

Our consolidated balance sheet and consolidated statement of profi t or loss continue to bear the marks of the years following the fi nancial crisis, which entailed the need for signifi cantly higher funding of our business. Up-front fi nancing of our works additionally rose substantially in relation to a number of major construction projects for which the fi nal invoices have not yet been issued. The Equipment segment too is still clearly showing the impact of increased up-front fi nancing requirements, resulting from the need to hold greater inventories due to shortened delivery lead times. The loss recorded in 2013 and adjustments to provisions for pensions necessitated by IFRS have had a negative impact on our balance sheet – especially on the equity ratio. These changes will continue to affect us, though we will be working to improve the equity ratio in the years ahead.

It is normal in the specialist foundation engineering and related equipment business that the fi nancing needs of the companies concerned increase substantially early in the year, then decline towards the end of the year. This effect is attributable in part to customer payment practices, but also refl ects the seasonal nature of the business which necessitates boosting production at the start of the year in order to make deliveries in the summer when sales rise. This results in a signifi cant in-year rise in working capital. The same factors have a converse effect at year-end.

The high exchange rate effect in the fi rst half of 2015 should be taken into consideration when reading all of the disclosures below. The depreciation of the EUR/USD exchange rate had the most profound effect. It was 1.2166 at the end of 2014 and 1.1165 at the end of the third quarter.

EARNINGS

Consolidated revenues on the Group's consolidated statement of profi t or loss decreased 0.1 percent year-on-year for the period to EUR 1,134.8 million. The main reason was the changes in inventories, which decreased by 43.2 percent to EUR 47.6 million. The item other capitalized goods and services for own account, which mainly relates to equipment required for our own in-house construction operations as well as development costs, amounted to EUR 11.3 million for the fi rst nine months of the year (previous year: EUR 9.2 million). Other income rose signifi cantly by EUR 27.3 million to EUR 57.1 million. In this item, the realized and unrealized currency gains and gains from foreign exchange forward contracts increased from EUR 20.3 million in the previous year to EUR 33.0 million. This is primarily due to exchange rate fl uctuations in the fi rst half of the year. In addition, the sale of 50 percent of the shares in SPANTEC Spann- & Ankertechnik GmbH generated EUR 13.1 million in total. Sales revenues rose 0.5 percent year-on-year to EUR 1,018.8 million.

The development of the cost of materials, staff costs, depreciation, and amortization and other operating expenses items on the consolidated statement of profi t or loss differed signifi cantly.

At 8.5 percent, the cost of materials decreased considerably more than the consolidated revenues. In the service business in the Construction segment, year-to-year cost distribution often varies considerably due to order structure. Staff costs increased by 5.9 percent, mainly due to increased personnel expenses at our international construction sites.

Depreciation of fi xed assets increased by 6.3 percent, while write-downs of inventories due to use decreased by 5.0 percent as fewer machines were rented out than in the previous-year period. Other operating expenses increased by 19.8 percent, from EUR 164.6 million to EUR 197.1 million. The foreign currency losses previously explained increased this fi gure by EUR 23.7 million. They were closely related to exchange rate hedging measures.

The fi nancial expenses decreased by EUR 5.4 million year-on-year to EUR 30.4 million. The fi nancial income decreased to EUR 3.3 million (previous year: EUR 3.9 million).

Income tax expense amounted to EUR 13.3 million, EUR 2.2 million up year-on-year. Despite the loss posted in the fi rst nine months of the year, income taxes were created by group companies that posted profi t. We expect that full-year income tax expense will ultimately be slightly above 30 percent again.

The Group's net result for the period was EUR -2.7 million (previous year: EUR -5.0 million).

FINANCIAL POSITION

Our fi nancial position is developing in line with plans.

NET ASSET POSITIONS

Total assets increased 8.6 percent versus year-end 2014, and 0.6 percent versus September of the previous year. An inyear increase is normal in our business, for the reasons outlined above. When disregarding the exchange rate effects, however, total assets even decreased slightly year-on-year. Total assets development was slightly up on the rise in consolidated revenues. Our medium-term target is a substantial reduction in total assets relative to total Group revenues. According to our projections, however, the increase in total assets at the year-end will be slightly higher than the rate of rise in revenues.

Intangible assets and property, plant and equipment, and investment property decreased slightly by EUR 6.1 million compared with year-end 2014, primarily due to our reserved investment policy. Investments accounted for using the equity method increased by EUR 10.0 million, mainly due to the sale of 50 percent of the shares in SPANTEC Spann- & Ankertechnik GmbH and the revaluation of the remaining 40 percent of the shares. The deferred tax assets decreased from EUR 31.0 million since year-end to EUR 29.0 million. The valuation of provisions for pensions had a particular impact in this case (EUR -2.5 million). Total non-current assets increased by 2.4 percent versus the previous-year period. Inventories (particularly fi nished goods, work in progress and stock for trade) and receivables refl ect the currency effect described above and the annually recurring seasonal effect. The level of up-front fi nancing for our projects and inventories has thus risen accordingly. Inventories decreased by 3.5 percent and receivables and other assets increased by 3.4 percent year-onyear. Cash and cash equivalents increased by EUR 7.2 million against the year-end fi gure. Current assets decreased by 0.3 percent versus the previous-year period.

On the Equity and Liabilities side, equity increased by EUR 0.6 million against the end of last year. The key changes, alongside the loss made (EUR -2.7 million), are exchange rate changes (EUR +1.8 million), effects of interest rate changes on the valuation of provisions for pensions after deduction of deferred taxes (EUR +6.5 million), changes in the scope of consolidation (EUR -2.3 million), and the dividend payments (EUR -3.0 million). The provisions for pensions decreased by EUR 6.9 million compared with the end of the year, primarily due to a rise in the actuarial interest rate. The usual seasonal

additional fi nancing requirement was mainly covered by borrowings. Non-current liabilities to banks decreased by EUR 26.7 million compared with the fi rst nine months of the previous year, and increased by EUR 28.3 million compared with year-end. Current liabilities to banks increased by EUR 10.5 million year-on-year, and by EUR 94.8 million compared with year-end due to their seasonal nature. Deferred tax liabilities increased by EUR 1.1 million compared with year-end. Other liabilities, which are reported in current debt, were EUR 24.4 million up on year-end. The effective income tax obligations increased by EUR 5.6 million compared with year-end, due to a restructuring measure shortly before the end of the quarter, the sale of intangible assets without any effect on income within the Group.

DEVELOPMENT OF THE BAUER AG SHARE

The Bauer share fl uctuated but developed positively in the fi rst nine months of the year. In a very positive stock market environment, it climbed from its opening at EUR 13.38 to EUR 18.00 by mid-March. The share closed the fi rst quarter at EUR 17.91. It dropped in April and continued to fall back to EUR 15.54 by the end of the month. Following a short recovery back to EUR 17.22 by mid-May, the share dropped once again to EUR 14.85 by mid-June. The Bauer share was removed from the SDAX effective June 22. It closed the fi rst half of the year at EUR 15.37. In July, the share went up steeply once more in a positive stock market environment, and closed the month at EUR 17.36. In August, the share initially remained at around EUR 17 before dropping to EUR 14.29 on August 24 due to the slumping stock indices. While the DAX continued to drop, the Bauer share recovered to around EUR 17 by the beginning of September. In September, it did not manage to break out past the EUR 17 mark. The share only started climbing again in October and closed the month at EUR 19.20, following a very positive performance.

HUMAN RESOURCES

The number of employees increased slightly since September 30, 2014 (10,389) to an average 10,679 for the year. The number only increased in low-wage countries, especially Egypt and the United Arab Emirates, on the back of projects. The total number of employees in the Construction segment increased by 411, and dropped by 27 in the Equipment segment and 101 in the Resources segment.

FOLLOW-UP REPORT

No matters of special note which we would expect to have a material infl uence on the BAUER Group's balance sheet or earnings occurred after September 30, 2015.

OPPORTUNITIES AND RISKS

Material opportunities and risks are outlined in the individual sections of this Interim Report. There has been no material change in risks since the Annual Report dated December 31, 2014. Consequently, we refer back to the Combined Management Report for fi nancial 2014.

FULL-YEAR OUTLOOK

The global economic conditions have changed increasingly in recent months. All international companies therefore have to adapt to these changes, avoid risks and seize opportunities. We have made great effort to generate new opportunities in the past, and have succeeded in doing so. Order backlog in the Construction and Resources segments has increased signifi cantly. The diffi cult market environment in the Equipment segment is beginning to clear up, particularly now that the Chinese competitors have begun to reduce their overcapacities. We believe it to be a good sign that we are able to keep order intake in the Equipment segment stable during the signifi cant shifts in the markets. Another positive factor is that a permanent cooperation with Schlumberger, the leading global provider of services in the oil and gas sector, is looking increasingly likely. Despite our Resources segment still bothering us most, the excellent order backlog and the continuing interesting project opportunities indicate that this segment will have an increasing number of opportunities in the future.

We forecast a positive trend for our business overall. Although 2015 has continued to provide us with numerous challenges overall, we are very optimistic that we will be able to return to our growth path, which will also be clearly refl ected in the results over the coming years.

For full-year 2015 we predict:

• Total Group revenues of around EUR 1.6 billion.
• We forecast profi t after tax of around EUR 18 to 23 million. In accounting terms, this will mean EBIT of around EUR 75 million. As in the previous year, earnings will include non-operating profi t, which offset the negative effects of the restructuring measures and expenses incurred by individual subsidiaries.

As in previous years, we must again point out that BAUER Group revenue and earnings estimates are subject to considerably uncertainty in these turbulent times.

Our employees and executives have developed numerous new opportunities in recent months, which we will follow up intensively in the near future. The numerous current disruptions will not deter us from this objective.

Interim consolidated financial statements

CONSOLIDATED STATEMENT OF PROFIT OR LOSS

in EUR '000	Q3/2014	Q3/2015	9M/2014	9M/2015
1. Sales revenues	368,145	376,828	1,013,687	1,018,818
2. Changes in inventories	14,475	-623	83,779	47,571
3. Other capitalized goods and services for own account	3,215	1,087	9,176	11,287
4. Other income	18,515	16,816	29,780	57,106
CONSOLIDATED REVENUES	404,350	394,108	1,136,422	1,134,782
5. Cost of materials	-205,457	-187,485	-600,828	-549,680
6. Staff costs	-90,315	-96,079	-265,171	-280,915
7. Depreciation and amortization a) Depreciation of fixed assets	-20,129	-20,203	-57,429	-61,022
b) Write-downs of inventories due to use	-3,427	-3,420	-10,143	-9,638
8. Other operating expenses	-60,333	-66,531	-164,559	-197,146
OPERATING RESULT	24,689	20,390	38,292	36,381
9. Financial income	1,303	321	3,944	3,261
10. Financial expenses	-14,298	-10,891	-35,817	-30,422
11. Share of the profit or loss of associated companies accounted for using the equity method	-329	517	-263	1,450
EARNINGS BEFORE TAX	11,365	10,337	6,156	10,670
12. Income tax expense	-5,354	-6,228	-11,109	-13,321
NET RESULT FOR THE PERIOD	6,011	4,109	-4,953	-2,651
of which attributable to shareholders of BAUER AG	5,240	3,287	-6,106	-4,197
of which attributable to non-controlling interests	771	822	1,153	1,546
in EUR/share	Q3/2014	Q3/2015	9M/2014	9M/2015
Basic earnings per share	0.31	0.20	-0.36	-0.24
Diluted earnings per share	0.31	0.20	-0.36	-0.24

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

in EUR '000	Q3/2014	Q3/2015	9M/2014	9M/2015
Net result for the period	6,011	4,109	-4,953	-2,651
Income and expenses which will not be subsequently reclas sified to profit and loss
Revaluation of commitments arising from employee benefi ts after termination of employment	-8,523	1,347	-20,583	9,028
Deferred taxes on that revaluation with no effect on profit and loss	2,393	-379	5,780	-2,535
Income and expenses which will be subsequently reclassified to profit and loss
Market valuation of derivative fi nancial instruments	500	1,695	582	-2,840
Included in profi t and loss	-1,319	-335	-746	3,434
Deferred taxes on fi nancial instruments with no effect on profi t and loss	230	-382	193	-167
Differences from currency translation	10,675	-10,387	11,943	1,778
Other comprehensive income after tax	3,956	-8,441	-2,831	8,698
Total comprehensive income	9,967	-4,332	-7,784	6,047
of which attributable to shareholders of BAUER AG	8,644	-5,087	-9,071	4,205
of which attributable to non-controlling interests	1,323	755	1,287	1,842

Average number of shares in circulation (basic) 17,131,000 17,131,000 17,131,000 17,131,000 Average number of shares in circulation (diluted) 17,131,000 17,131,000 17,131,000 17,131,000

CONSOLIDATED BALANCE SHEET

ASSETS in EUR '000	Sep. 30, 2014 *	Dec. 31, 2014	Sep. 30, 2015
A. NON-CURRENT ASSETS
I. Intangible assets	33,871	34,440	31,228
II. Property, plant and equipment and investment property	442,649	446,909	443,993
III. Investments accounted for using the equity method	12,517	42,906	52,953
IV. Participations	3,613	3,613	3,613
V. Deferred tax assets	34,290	30,973	28,977
VI. Receivables from concession arrangements	40,065	0	0
VII. Other non-current assets	7,680	7,492	7,202
VIII. Other non-current financial assets	7,361	28,420	28,119
	582,046	594,753	596,085
B. CURRENT ASSETS
I. Inventories	487,359	439,184	470,236
II. Receivables and other assets	574,231	496,650	593,760
III. Effective income tax refund claims	2,647	2,661	1,599
IV. Cash and cash equivalents	53,915	41,835	49,040
	1,118,152	980,330	1,114,635
	1,700,198	1,575,083	1,710,720

	Sep. 30, 2014 *	Dec. 31, 2014	Sep. 30, 2015
Equity of BAUER AG shareholders	387,984	399,308	399,324
Non-controlling interests	22,622	19,617	20,171
	410,606	418,925	419,495
Provisions for pensions	104,268	116,358	109,457
Financial liabilities	451,817	387,816	413,371
	5,915	5,959	5,687
	16,080	13,123	14,267
	578,080	523,256	542,782
Financial liabilities	380,275	299,698	385,068
Other liabilities	302,863	305,861	330,267
	9,538	9,317	14,885
	18,836	18,026	18,223
	711,512	632,902	748,443
	1,700,198	1,575,083	1,710,720
	EQUITY AND LIABILITIES in EUR '000 A. EQUITY B. NON-CURRENT DEBT III. Other liabilities IV. Deferred tax liabilities C. CURRENT DEBT III. Effective income tax obligations IV. Provisions

* See footnote on page 2

CONSOLIDATED STATEMENT OF CASH FLOWS

in EUR '000	9M/2014	9M/2015
Cash flows from operational activity:
Earnings before tax	6,156	10,670
Depreciation of fixed assets	57,429	61,022
Write-downs of inventories due to use	10,143	9,638
Financial income received	-2,871	-2,791
Financial expenses paid	33,552	26,825
Other non-cash transactions	-4,646	-28,431
Dividends received	450	921
Result from the disposal of fixed assets	-1,391	-1,957
Change in provisions	6,396	1,663
Change in trade receivables	8,850	18,789
Change in receivables from construction contracts	-21,452	-77,630
Change in other assets and in prepayments and deferred charges	-10,833	-14,211
Change in inventories	-76,447	-42,219
Change in trade payables	-19,598	30,761
Change in liabilities from construction contracts	7,376	-13,768
Change in other current and non-current liabilities	-2,790	-11,187
Cash and cash equivalents generated from day-to-day business operations	-9,676	-31,905
Income tax paid	-12,949	-7,238
Net cash from operating activities	-22,625	-39,143
Cash flows from investment activity:
Acquisition of property, plant and equipment and intangible assets	-39,793	-56,052
Proceeds from sale of fixed assets	15,107	18,923
Consolidation scope-related change in financial resources	0	-2,047
Net cash used in investing activities	-24,686	-39,176
Cash flows from financing activity:
Raising of loans and liabilities to banks	185,497	167,098
Repayment of loans and liabilities to banks	-103,646	-47,869
Repayment of liabilities from finance lease agreements	-8,757	-5,871
Dividends paid	-2,325	-2,987
Interest paid	-33,551	-28,312
Interest received	4,097	2,815
Net cash used in financing activities	41,315	84,874
Changes in liquid funds affecting payments	-5,996	6,555
Influence of exchange rate movements on cash	2,694	650
Total change in liquid funds	-3,302	7,205
Cash and cash equivalents at beginning of reporting period	57,217	41,835
Cash and cash equivalents at end of reporting period	53,915	49,040
Change in cash and cash equivalents	-3,302	7,205

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

in EUR '000	Other revenue reserves and unappropriated net profit
	Subscribed capital	Capital reserve	Revenue reserves	Foreign currency translation	Reconciling item, IFRS	Hedging transactions reserve	Non-controlling interests	Total
As at Jan. 1, 2014 *	73,001	38,404	284,299	-6,492	10,387	-2,593	22,809	419,815
Net result for the period	0	0	-6,106	0	0	0	1,153	-4,953
Differences from currency translation	0	0	0	11,691	0	0	252	11,943
Revaluation of commitments arising from employee benefits after termination of employment	0	0	-20,404	0	0	0	-179	-20,583
Market valuation of derivative financial instruments	0	0	0	0	0	-177	13	-164
Deferred taxes with no effect on profit and loss	0	0	5,729	0	0	196	48	5,973
Total comprehensive income	0	0	-20,781	11,691	0	19	1,287	-7,784
Changes in scope of consolidation	0	0	0	0	0	0	0	0
Dividend payments	0	0	0	0	0	0	-2,325	-2,325
Other changes	0	0	49	0	0	0	851	900
As at Sep. 30, 2014 *	73,001	38,404	263,567	5,199	10,387	-2,574	22,622	410,606
As at Jan. 1, 2015	73,001	38,404	275,725	3,149	10,387	-1,358	19,617	418,925
Net result for the period	0	0	-4,197	0	0	0	1,546	-2,651
Differences from currency translation	0	0	0	1,543	0	0	235	1,778
Revaluation of commitments arising from employee benefits after termination of employment	0	0	8,950	0	0	0	78	9,028
Market valuation of derivative financial instruments	0	0	0	0	0	587	7	594
Deferred taxes with no effect on profit and loss	0	0	-2,513	0	0	-165	-24	-2,702
Total comprehensive income	0	0	2,240	1,543	0	422	1,842	6,047
Changes in scope of consolidation	0	0	-1,199	0	0	0	-1,079	-2,278
Dividend payments	0	0	-2,570	0	0	0	-417	-2,987
Other changes	0	0	-420	0	0	0	208	-212
As at Sep. 30, 2015	73,001	38,404	273,776	4,692	10,387	-936	20,171	419,495

* See footnote on page 2

SEGMENT REPORTING

in EUR '000	Construction		Equipment		Resources
January - September	2014 *	2015	2014 *	2015	2014	2015
Total revenues (Group)	542,602	564,426	498,139	496,591	160,571	177,199
Sales revenues with third parties	501,267	499,404	361,795	367,275	150,334	151,633
Sales revenues between business segments	10,330	10,328	28,839	37,254	2,529	2,052
Changes in inventories	-61	0	83,021	47,470	819	101
Other capitalized goods and services for own account	186	226	3,694	3,153	294	302
Other income	12,547	19,713	14,576	31,547	2,408	4,594
CONSOLIDATED REVENUES	524,269	529,671	491,925	486,699	156,384	158,682
OPERATING RESULT	16,799	12,394	25,613	24,585	-1,859	-1,183
Financial income	1,475	1,424	1,113	1,330	1,536	882
Financial expenses	-14,540	-10,212	-15,928	-15,099	-7,548	-8,269
Share of the profit or loss of associated com panies accounted for using the equity method	-536	-267	-56	76	329	1,641
Income tax expense	-4,487	-4,735	-6,477	-6,742	359	-907
NET RESULT FOR THE PERIOD	-1,289	-1,396	4,265	4,150	-7,183	-7,836

ADDITIONAL INFORMATION ON THE CONSOLIDATED STATEMENT OF PROFIT OR LOSS

Depreciation and amortization

Depreciation of fixed assets	-33,585	-36,785	-15,043	-13,805	-6,916	-8,771
Write-downs of inventories due to use	0	0	-10,143	-9,638	0	0
	Dec. 31, 2014 *	Sep. 30, 2015	Dec. 31, 2014 *	Sep. 30, 2015	Dec. 31, 2014	Sep. 30, 2015
SEGMENT ASSETS	577,401	637,650	768,487	805,431	264,276	294,635

in EUR '000	Other		Consolidation		Group
January - September	2014	2015	2014	2015	2014	2015
Total revenues (Group)	24,775	27,306	-62,924	-70,665	1,163,163	1,194,857
Sales revenues with third parties	291	506			1,013,687	1,018,818
Sales revenues between business segments	22,726	24,186	-64,424	-73,820	0	0
Changes in inventories	0	0	0	0	83,779	47,571
Other capitalized goods and services for own account	0	0	5,002	7,606	9,176	11,287
Other income	937	1,704	-688	-452	29,780	57,106
CONSOLIDATED REVENUES	23,954	26,396	-60,110	-66,666	1,136,422	1,134,782
OPERATING RESULT	-2,739	242	478	343	38,292	36,381
Financial income	5,597	7,313	-5,777	-7,688	3,944	3,261
Financial expenses	-3,578	-4,530	5,777	7,688	-35,817	-30,422
Share of the profit or loss of associated com panies accounted for using the equity method	0	0	0	0	-263	1,450
Income tax expense	-397	-847	-107	-90	-11,109	-13,321
NET RESULT FOR THE PERIOD	-1,117	2,178	371	253	-4,953	-2,651

ADDITIONAL INFORMATION ON THE CONSOLIDATED STATEMENT OF PROFIT OR LOSS

454	-57,429	-61,022
0	-10,143	-9,638
Sep. 30, 2015	Dec. 31, 2014	Sep. 30, 2015
-382,586	1,575,083	1,710,720

* See footnote on page 2

Notes to the interim consolidated financial statement

1. GENERAL INFORMATION

BAUER Aktiengesellschaft, Schrobenhausen (referred to in the following as BAUER AG) is a stock corporation under German law. Its registered offi ce is at BAUER-Strasse in Schrobenhausen, and the company is entered in the Register of Companies of Ingolstadt (HRB 101375).

The BAUER Group is a provider of services, equipment and products dealing with ground and groundwater. The Group markets its products and services all over the world. The operations of the Group are divided into three segments: Construction, Equipment and Resources.

These condensed consolidated fi nancial statements were released for publication on November 9, 2015.

Auditing

These condensed interim consolidated fi nancial statements and the interim Group Management Report have not been audited in accordance with section 317 of the German Commercial Code (HGB), nor have they been subjected to any review by an auditor.

2. BASIS FOR PREPARATION

BAUER AG prepares its condensed interim consolidated fi nancial statements in accordance with International Financial Reporting Standards (IFRS), the requirements of the International Accounting Standards Board (IASB), London, and the Interpretations of the International Financial Reporting Interpretations Committee (IFRIC), as applicable on the balance sheet date and recognized by the European Union. Only IASB Standards and Interpretations adopted by the Commission and duly published in the Offi cial Journal of the EU by the balance sheet date are applied.

The Interim Report to November 13, 2015 was prepared in condensed form on the basis of IAS 34, "Interim Financial Reporting", and as such does not include all the disclosures mandatory for full-year consolidated fi nancial statements. These condensed interim consolidated fi nancial statements are based on the Group's consolidated fi nancial statements to December 31, 2014, and as such should be read in conjunction with the consolidated fi nancial statements of BAUER AG to December 31, 2014.

3. BASIS OF CONSOLIDATION

The scope of consolidation includes BAUER AG and all major subsidiaries. Subsidiaries are all companies over which the parent has control in terms of fi nancial and corporate policy. This is routinely accompanied by a voting rights share of over 50 percent. When assessing whether control is exerted, the existence and effect of potential voting rights currently exercisable or convertible are considered.

In a small number of cases, companies are fully consolidated into the fi nancial statements of BAUER AG even though that company holds less than 50 percent of their voting rights. This is the result of state restrictions which stipulate that foreign investors may not hold more than 50 percent of the voting rights in domestic companies. In such cases BAUER AG makes use of so-called agency constructions, whereby more than 50 percent of the voting rights are commercially held in the company concerned, thus allowing for full consolidation.

Subsidiaries are included in the consolidated fi nancial statements (fully consolidated) from the point at which control is transferred to the Group. They are deconsolidated at the point when control ends. Companies of which BAUER AG is able, directly or indirectly, to exercise a signifi cant infl uence on the said companies' fi nancial and operating policy decisions (associated companies) are consolidated according to the equity method.

Changes at subsidiaries:

Construction segment:

On September 15, 2015, SCHACHTBAU NORDHAUSEN GmbH outsourced the Structural Steel Engineering division to SCHACHTBAU NORDHAUSEN Stahlbau GmbH. Up to this point, the Structural Steel Engineering division had been reported under the Equipment segment. This outsourcing had no other effect on the interim consolidated fi nancial statements of BAUER AG.

Equipment segment:

In the second quarter of fi nancial year 2015, 100 percent of the shares in BAUER Mexico S.A. de C.V. were sold to BAUER Resources GmbH (97.5 percent) and PURE Umwelttechnik GmbH (2.5 percent). These companies are reported in the Resources segment. This sale had no effect on the interim consolidated fi nancial statements of BAUER AG.

In the third quarter of fi nancial year 2015, BAUER Maschinen GmbH acquired the remaining 10 percent share in the minority shareholder of MAT Mischanlagentechnik GmbH and since then holds 100 percent of the shares in MAT Mischanlagentechnik GmbH. In addition, MAT Mischanlagentechnik GmbH, the transferor entity, was merged with BAUER Maschinen GmbH and discontinued in the process. The works in Immenstadt is continued under the name of MAT Mischanlagentechnik, a branch offi ce of BAUER Maschinen GmbH.

Disposals

By agreement dated September 9, 2015, BAUER Maschinen GmbH sold 50 percent of the shares in SPANTEC Spann- & Ankertechnik GmbH to SPANTEC Invest GmbH, effective September 15, 2015.

These are the effects of the sale:

a) Consideration received

in EUR '000	Sep. 15, 2015
Consideration received	12,509

b) Disposal of assets and liabilities due to the loss of control

in EUR '000	Sep. 15, 2015
Non-current assets
Intangible assets	448
Property, plant and equipment and investment property	425
Other non-current assets	47
Other non-current financial assets	4,592
Current assets
Inventories	1,304
Receivables and other assets	3,960
Cash and cash equivalents	2,143
Non-current debt
Pension provisions	-253
Other non-current liabilities	0
Other non-current financial liabilities	0
Deferred tax liabilities	-235
Current debt
Liabilities to banks	0
Liabilities from construction contracts (PoC)	0
Trade payables	-1,066
Other current liabilities	-443
Effective income tax obligations	-256
Net assets sold	10,666

c) Total effects from the sale of the shares in SPANTEC Spann- & Ankertechnik GmbH

in EUR '000	Sep. 15, 2015
Consideration received	12,509
Net assets surrendered	-10,666
Non-controlling interests	1,079
Fair value of the 40 % at-equity investment retained	10,200
Total income from the sale of shares	13,122

The total effect is included in other income.

d) Net infl ow of cash and cash equivalents from the sale of the shares in SPANTEC Spann- & Ankertechnik GmbH

in EUR '000	Sep. 15, 2015
Sales price paid for with cash and cash equivalents	0
Less: cash and cash equivalents disposed of as part of the sale	-2,143
Total net outflow of cash and cash equivalents disposed of as part of the sale	-2,143

The at-equity investment retained was measured at fair value due to the sale of the shares in SPANTEC Spann- & Ankertechnik GmbH. The fair value was determined from the discounted transaction price for the shares at the time they were sold. This method is part of level 3 of the fair value hierarchy stated in IFRS 13.

Resources segment:

On March 20, 2015, BAUER Resources Australia Pty. Ltd. was discontinued and therefore deconsolidated.

In the fi rst quarter of fi nancial year 2015, BAUER Resources Maroc S.A.R.L was included in the Group fi nancial statements for the fi rst time. The company was previously not consolidated owing to its minor importance.

No changes have otherwise occurred to the scope of consolidation since December 31, 2014.

4. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

In this context we refer to our 2014 Annual Report, page 105.

5. SIGNIFICANT ACCOUNTING POLICIES

The accounting policies applied as from January 1, 2015 correspond to those applied to the consolidated fi nancial statements to December 31, 2014, with the following exceptions:

On September 30, 2015, the BAUER Group increased the discount rate for measuring its provisions for pensions in Germany to 2.42 percent (previous year: 2.0 percent).

The amendments to IFRS 1, IFRS 3, IFRS 13 and IAS 40, which came into effect on January 1, 2015 as part of improvements to the International Financial Reporting Standards 2013 (Annual Improvement Project 2013), did not have any material effect on the interim consolidated fi nancial statements of BAUER AG.

IFRIC 21 also has to be applied since January 1, 2015. It regulates accounting for government levies not covered by IAS 12 "Income Taxes". This interpretation also does not have any material effect on the interim consolidatedfi nancial statements of BAUER AG.

6. DISCLOSURES REGARDING FINANCIAL INSTRUMENTS

6.1 Financial risk factors

In its business operations and fi nancing activities, the BAUER Group is subject to a wide range of market risks (foreign exchange rate, interest rate, raw material and liquidity risks, risk of default).

These condensed interim consolidated fi nancial statements do not include all disclosures and information relating to fi nancial risk management, so they should be read in conjunction with the consolidated fi nancial statements to December 31, 2014.

No changes to the management of fi nancial risks have been made since the end of the fi nancial year.

6.2 Carrying amounts and fair values

The fair values of fi nancial instruments are determined on the basis of one of the methods set out on the three following levels:

• Level 1: Quoted prices (adopted unchanged) on active markets for identical assets and liabilities
• Level 2: Directly or indirectly observable input data for the asset or liability other than quoted prices as per level 1
• Level 3: Applied input data which does not originate from observable market data for measurement of the asset and liability (non-observable input data)

The fi nancial instruments measured at fair value are assignable to the following levels:

ASSETS in EUR '000	IAS 39 category	Sep. 30, 2015	Level 1	Level 2
Securities	AfS	0	0	0
Derivatives not in hedge accounting	FAHfT	4,134	0	4,134
Derivatives in hedge accounting	n/a	1,611	0	1,611
Total		5,745	0	5,745

EQUITY AND LIABILITIES in EUR '000	IAS 39 category	Sep. 30, 2015	Level 1	Level 2
Derivatives not in hedge accounting	FLHfT	5,532	0	5,532
Derivatives in hedge accounting	n/a	5,115	0	5,115
Total		10,647	0	10,647

ASSETS in EUR '000	IAS 39 category	Dec. 31, 2014	Level 1	Level 2
Securities	AfS	0	0	0
Derivatives not in hedge accounting	FAHfT	485	0	485
Derivatives in hedge accounting	n/a	1,058	0	1,058
Total		1,543	0	1,543

EQUITY AND LIABILITIES in EUR '000	IAS 39 category	Dec. 31, 2014	Level 1	Level 2
Derivatives not in hedge accounting	FLHfT	9,108	0	9,108
Derivatives in hedge accounting	n/a	8,994	0	8,994
Total		18,102	0	18,102

In the fi rst nine months of the year, no reclassifi cation was undertaken between level 1 and 2 fi nancial instruments measured at fair value.

6.3 Methods for determining level 2 fair values

Level 2 derivatives comprise foreign exchange forward contracts, foreign exchange options, interest swaps and cross-currency swaps. The fair values of foreign exchange forward contracts and cross-currency swaps are measured separately at their respective forward prices and discounted to the reference date based on the corresponding interest rate curve. The market prices of foreign exchange options are determined by recognized option price models.

The fair values of the interest swaps correspond to the respective market value as determined by appropriate fi nancial valuation methods, such as by discounting expected future cash fl ows.

For cash and cash equivalents, current trade receivables and other current assets, current trade payables and other current liabilities, owing to their short remaining terms the carrying amount should be adopted as a realistic estimate of the fair value.

The fair values of non-current assets and non-current fi nancial assets and of non-current liabilities and non-current fi nancial liabilities correspond to the cash values of the payment fl ows linked to the assets, taking into account the applicable interest rate parameters, which refl ect changes in the terms and expectations of the market and of the respective parties. Investments are valued at cost, as no fair value can be reliably determined owing to the lack of an active market.

6.4 Fair value disclosures

The principles and methods of calculating fair value have essentially remained unchanged from the previous year. Detailed explanatory notes on the measurement principles and methods are set out in the 2014 Annual Report.

The fi nancial assets and liabilities of which the fair values differ from their carrying amounts are as follows:

in EUR '000	Dec. 31, 2014		Sep. 30, 2015
	Carrying amount	Fair value	Carrying amount	Fair value
Other non-current financial assets	28,420	27,973	28,119	27,721
Trade receivables	311,417	310,972	297,582	297,177
Liabilities to banks	364,771	378,016	393,100	407,467
Other non-current financial liabilities	10,013	9,904	5,427	5,417
Total	714,621	726,865	724,228	737,782

The carrying amounts of all other fi nancial assets and liabilities correspond to their fair value.

In other respects we refer to pages 158 et seq. of the 2014 Annual Report.

7. SEASONALITY

Our Construction segment undertakes many projects in regions where winter and other hostile weather conditions impact severely on site results in the fi rst quarter of the year and at the start of the second quarter. The fi rst quarter is also weak in terms of the performance of our Equipment segment, because customers only buy machines when they actually need them to carry out their construction works. For our Resources segment, wintry conditions at the start of the year mean that sales of well engineering materials are very weak.

Since most costs are fi xed, signifi cant losses are made in the fi rst quarter of each year. Beginning with the second quarter, those losses are balanced out as contribution margins improve. Break-even has normally not yet been achieved by the end of the second quarter. Most profi t is generated in the third and fourth quarters.

This annually recurring business cycle allows performance, sales and earnings in the various quarters to be compared against the corresponding reference periods, ignoring special factors.

8. NOTES ON SEGMENT REPORTING

The internal organizational and management structure and the internal system of reporting to the Management Board and Supervisory Board dictate the segmentation employed by the BAUER Group.

The BAUER Group comprises the Construction, Equipment and Resources segments. Transactions between the segments are conducted at market prices.

SCHACHTBAU NORDHAUSEN GmbH is the only Group company to operate in all three segments.

The assets and liabilities and income statement items of SCHACHTBAU NORDHAUSEN GmbH are assigned to the relevant segments.

Construction

The core business of the Construction segment is specialist foundation engineering. Complete excavation pits and foundation works, often in diffi cult subgrade conditions, are carried out for major infrastructure projects and buildings. In order to offer customers a full range of services, the companies of the BAUER Group additionally offer other construction services, often involving a major specialist foundation engineering element. Examples of this include bridges, environmental engineering, remediation and building renovation projects. The Construction segment is founded on the close interlinking of all construction activities.

Equipment

In the Equipment segment, machinery for all specialist foundation engineering processes and for deep drilling is developed and manufactured for worldwide distribution. The specialist foundation engineering equipment can be employed to produce large-diameter and small-diameter bores for piles, diaphragm walls, anchors, injections and wells. The deep drilling equipment can be employed to drill for geothermal energy, oil and gas. Equipment for ramming and ground improvement is also manufactured. The range is supplemented by a wide selection of add-on units and ancillary equipment, covering all the processes involved in specialist foundation engineering.

Resources

The Resources segment brings together all the Group companies providing products and services relating to the remediation and extraction of natural resources essential to human life. They include environmental technology companies involved in the treatment of ground and groundwater as well as companies involved in exploration drilling and mining of raw materials and drilling of wells and geothermal energy sources. This segment also includes companies which manufacture and sell materials for the engineering of bore holes, specifi cally for wells and geothermal energy sources.

The Other segment comprises the central services (accounting, human resources, IT etc.) provided by BAUER AG to the Group companies as well as other units not assignable to the separately listed segments, providing services such as in-house and external education and training and centralized research and development.

The intersegmental consolidation effects are grouped here under Consolidation. This includes offsetting of intra-Group sales between the segments as well as income and expenses and interim results. The intersegmental consolidation effects are adjusted within the respective segments.

Total Group revenues, consolidated revenues and sales revenues with third parties

The consolidated revenues refl ect the performance of all the companies included in the scope of consolidation. The total Group revenues represent the revenues of all the companies forming part of our Group. The difference between the consolidated revenues and the total Group revenues is derived from the revenues of the associated companies, from our subcontractor shares in joint ventures, and from the revenues of non-consolidated companies.

The sales revenues with third parties are allocated to the business segments according to the customer's location. No one customer accounts for more than 10 percent of total sales.

No breakdown of sales revenues by product and service, or by groups of comparable products and services, was available as per the balance sheet date.

9. EVENTS AFTER SEPTEMBER 30, 2015

No events of special note which we would expect to have a material infl uence on the BAUER Group's balance sheet or earnings occurred after the balance sheet date.

10. MATERIAL TRANSACTIONS WITH RELATED PARTIES

The relationships between fully consolidated Group companies and related companies and persons relate mainly to associated and joint-venture companies. Transactions with the said companies are transacted at standard market terms. In the period under review no material transactions were undertaken with related parties.

11. CONTINGENT LIABILITIES

Contingent liabilities arising from guarantees to third parties exist in an amount of EUR 3,240 thousand (December 31, 2014: EUR 5,112 thousand). In addition, we are subject to joint and several liability in respect of all joint ventures in which we participate.

Schrobenhausen, November 13, 2015

The Management Board

Chairman of the Management Board

Prof. Thomas Bauer Dipl.-Betriebswirt (FH) Hartmut Beutler Dipl.-Ing. Heinz Kaltenecker

FUTURE-RELATED STATEMENTS

This Interim Report contains future-related statements. Future-related statements are any statements which do not relate to historical facts and events, such as forecasts of future fi nancial earning power and indications of plans and expectations with regard to the development of the business of the BAUER Group and relating to the general economic climate or other factors to which the BAUER Group is subject. The use of words such as "believe", "expect", "predict", "forecast", "intend", "plan", "estimate", "aim", "likely", "assume" and similar formulations indicates that the statements in question are future-related. Future-related statements are subject to risks and many uncertainties which may mean that actual developments, earnings or levels of performance differ widely from those explicitly or implicitly assumed in the future-related statements.

Readers are advised that, in view of the said risks and uncertainties, no inappropriately high degree of confi dence should be placed in the likelihood of such statements proving to be accurate in the future. BAUER Aktiengesellschaft does not intend to, and assumes no obligation to, publish updates of such future-related statements in order to incorporate events or circumstances beyond the date of publication of this Interim Report.

DATES 2016

April 10, 2016	Publication of Annual Report 2015
	Annual Press Conference
	Analysts' Conference
May 13, 2016	Interim Report March 31, 2016
June 23, 2016	Annual General Meeting
August 12, 2016	Half-Year Interim Report June 30, 2016
November 14, 2016	Interim Report September 30, 2016

You will fi nd more information on the BAUER Group on the Internet at www.bauer.de.

PUBLISHED BY

BAUER Aktiengesellschaft BAUER-Strasse 1 86529 Schrobenhausen, Germany

Offi ce of the Management Board: Phone: +49 (0)8252 97-1215 Fax: +49 (0)8252 97-2900 E-mail: BAG@bauer.de

Registered place of business: 86529 Schrobenhausen, Germany Registered at the Local Court of Ingolstadt under HRB 101375

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