Half-Year Interim Report as at June 30, 2016

At a glance

GROUP KEY FIGURES

IFRS in EUR million	6M/2015	6M/2016	Change
Total Group revenues	780.4	757.0	-3.0 %
Sales revenues	642.0	649.8	1.2 %
Order backlog	881.5	1,010.2	14.6 %
EBITDA	63.0	62.7	-0.5 %
EBIT	16.0	18.4	14.8 %
Earnings after tax	-6.8	-7.9	n/a
Total assets	1,688.7	1,715.9	1.6 %
Equity	425.2	417.3	-1.9 %
Employees (on average over the year)	10,642	10,609	-0.3 %

OUTLOOK

in EUR million	Actual 2015	Forecast 2016
Total Group revenues	1,656	~ 1,650
EBIT	90.7	~ 75
Earnings after tax	29.0	~ 20 - 25

Summary

Total revenues of the BAUER Group at the end of the fi rst half of 2016 were EUR 757.0 million, 3.0 % below the previous year comparative (EUR 780.4 million). However, sales revenues grew by 1.2 % to EUR 649.8 million. EBIT increased by 14.8 % from EUR 16.0 million to EUR 18.4 million year-on-year. The Group's earnings after tax were EUR -7.9 million (previous year: EUR -6.8 million). The earnings fi gures are in line with our expectations.

The Group's order backlog for the period increased by 14.6 % year-on-year to EUR 1,010.2 million. This growth is mainly due to the Construction and Resources segments. Order backlog in the Equipment segment decreased primarily due to outsourcing the business with deep drilling rigs. Order intake development for specialist foundation engineering equipment matched our expectations.

Significant events and transactions

MACRO-ECONOMIC TRENDS

In spite of the great turbulence and political disruptions in many different regions of the world, the global economy has continued to record growth of about three percent. Internationally active companies can generate growth possibilities from this, even if the opportunities are moving from place to place much faster than in previous years.

For the construction industry, this growth remains a good base for its international business, since the global economy can only grow if the construction of buildings and infrastructure creates the necessary preconditions. Even better growth expectations beckon for companies in specialist foundation engineering, since construction is taking place in increasingly confi ned urban areas. This demands progressively higher buildings, which calls for extensive foundation work. Stationary and fl owing traffi c must be ever-increasingly transferred below ground, which also leads to growth in specialist foundation engineering.

A GENERAL VIEW OF OUR MARKETS

At present, there is a whole swathe of political and economic topics which have had the effect of entire markets falling away to a large extent at times, thereby impacting our business activities specifi cally in construction and in equipment sales.

Political tensions and the economic consequences of the Russia/Ukraine crisis mean that the construction business there has recorded a signifi cant decline, including in other countries in the region. Confl icts in the Middle East have led to construction activities tailing off in many countries. This applies for example in Iraq, Jordan, Lebanon as well as Turkey. The construction market in Egypt is set for a contraction following signifi cant investments in recent years. In Europe, many countries continue to suffer problems from the fi scal crises of recent years, meaning that fast growth is not to be expected. The UK's Brexit vote is generating additional uncertainty. In South America, Brazil's economy has drifted into a signifi cant recession in the wake of the largest corruption scandal in the country's history. The new opportunities presented by the end of sanctions against Iran will not be able to compensate for these issues by any means.

The second great infl uence on economic development results from the sustained low oil price. Many companies in the oil and gas sector are having to tighten their belts markedly and are currently not investing in new machines or services. This also has negative effects on associated businesses such as drilling for water. Oil-producing countries fi nd themselves in a fi nancial crisis to a greater or lesser extent due to the drop in revenues. Countries such as Angola or Nigeria are already struggling with signifi cant problems, while other countries such as Saudi Arabia or Abu Dhabi are still able to maintain construction at a reasonable level because of their large fi nancial reserves. However, all oil-producing countries will cut back on their investments in construction over coming years, and companies will have to adjust to this accordingly.

For the construction machinery market, the current overcapacities are the greatest infl uencing factor. Following the fi nancial crisis, the construction boom in China has led to a signifi cant rise in machine sales. About three years ago, more than half of the total global production of some designs was sold in China alone. As a result, local manufacturers totally overestimated the potential for the future and built up excessive capacity. With the end of the breakneck growth in construction, sales of construction equipment in China have declined by about 50 % over recent years. This has led to a 28 % crash in the global market.

Market/region	Situation	Status
Germany	- Good market situation overall, above all in residential building - Higher state budget for infrastructure measures planned	+
Europe	- Overall, rather weak markets in Western Europe; individual construction projects do offer opportunities - Brexit decision fosters uncertainty - Only slow positive development in Eastern Europe - Russia remains very weak	o –
Middle East & Central Asia	- Individual markets such as Qatar or Abu Dhabi are stable - Overall uncertainty due to the low oil price - India is experiencing somewhat of an upswing in dynamism	o
Asia-Pacific, Far East and Australia	- Positive development in many markets - Opportunities in large individual projects (Hong Kong)	+
Americas	- Good market situation in North America (USA, Canada) due to high infrastructure demand - Isolated opportunities in South America	+
Africa	- Slight construction growth with opportunities in individual markets	o

Overview of construction markets

– very weak - weak o stable + growing ++ growing strongly

This development prompted Chinese producers to reduce their capacities last year. As a result, far fewer Chinese machines were displayed at the Bauma – the world's largest fair for construction machinery – held in Munich in April 2016. Nevertheless, it will take some time for markets to fi nd their balance.

Our company has worked hard to respond to this market situation by continuing to develop our own machines and we have made signifi cant progress in energy consumption, noise emissions and productivity. We have bucked the general trend and succeeded in maintaining sales revenues at a stable level in past years; as a result, we have carved out a good starting position for the coming years.

These many diffi cult topics that infl uence our business activities are also offset by many positive developments in major economic areas. This include the entire North America region, many countries of the Far East and also various countries in Europe. In particular, Germany once again has growth in its construction sector. Central Asia is also providing a much more dynamic infl uence. Alongside this general development, we have special opportunities in each of our segments, as will be describe below.

CONSTRUCTION SEGMENT

in EUR '000	6M/2015	6M/2016	Change
Total Group revenues	369,907	331,863	-10.3 %
Sales revenues	319,959	298,529	-6.7 %
Order backlog	550,766	574,776	4.4 %
EBIT	10,397	5,276	-49.3 %
Earnings after tax	1,542	-4,173	n/a

Total Group revenues for the Construction segment were 10.3 % lower year-on-year at EUR 331.9 million. The start-up phases of some major projects were delayed and the previous year's fi gures have not been reached as a result. EBIT therefore decreased from EUR 10.4 million year-on-year to EUR 5.3 million for the period. The earnings after tax declined from EUR 1.5 million to EUR -4.2 million. We expect to catch up during the course of the second half of the year in terms of the size of the orders to be processed as a result of the project progress.

The order backlog in our Construction segment increased by 4.4 % to EUR 574.8 million (previous year: EUR 550.8 million). This means it continues to remain on its high level. The major project in Canada for building a cut-off wall for the Diavik diamond mine completed its mobilization phase in the second quarter and has made a good operational start. The overall order backlog is evenly distributed geographically across the world, providing a fi rm foundation for us to achieve our targets. In the Middle East, we are expecting a decline in the medium term as a result of the low oil price.

This positive development was supplemented by further interesting project opportunities, on which we are working at present. This includes the airport extension in Hong Kong by adding a third runway. The project requires a large amount of special foundation engineering activities, and we are looking forward to participating in this. The project also offers opportunities for our equipment sales, because a lot of machines will be required.

A signifi cant change has taken place in the management of BAUER Spezialtiefbau GmbH. Peter Teschemacher has retired after 36 years in the company, and he has passed on the role of Chairman of the Board of Directors to Arnulf Christa. He worked in the company since 2007 and his jobs have included responsibility for the regions of Africa and Southern Asia; he joined the board of directors in 2009.

EQUIPMENT SEGMENT

in EUR '000	6M/2015	6M/2016	Change
Total Group revenues	333,386	312,429	-6.3 %
Sales revenues	237,930	223,003	-6.3 %
Order backlog	156,979	141,080	-10.1 %
EBIT	8,426	13,368	58.7 %
Earnings after tax	-2,891	-61	n/a

Total Group revenues in the Equipment segment in the fi rst half-year decreased by 6.3 % year-on-year, from EUR 334.4 million to EUR 312.4 million. Sales revenues also fell by 6.3 % from EUR 237.9 million to EUR 223.0 million. EBIT increased from EUR 8.4 million to EUR 13.4 million year-on-year. Earnings after tax improved from EUR -2.9 million to EUR -0.1 million. Some large and special machines were delivered at the beginning of the year resulting in these increased earnings.

Order backlog in the Equipment segment decreased from EUR 157.0 million to EUR 141.1 million. This decrease is primarily due to the business with deep drilling rigs. The deep drilling business has now been integrated in the joint venture with Schlumberger. Order intake for the specialist foundation engineering equipment developed according to plan. which is above the prior year's fi gures. Generally speaking, the global construction machinery markets are relatively weak overall due to the decreasing market in China, the situation in Russia, and the low oil prices.

RESOURCES SEGMENT

in EUR '000	6M/2015	6M/2016	Change
Total Group revenues	102,081	138,980	36.1 %
Sales revenues	83,769	127,483	52.2 %
Order backlog	173,810	294,376	69.4 %
EBIT	-3,216	-81	n/a
Earnings after tax	-7,100	-4,399	n/a

After the fi rst half of 2016, total Group revenues in the Resources segment amounted to EUR 139.0 million, 36.1 % up yearon-year (EUR 102.1 million). EBIT amounted to EUR -0.1 million (previous year: EUR -3.2 million) and earnings after tax were EUR -4.4 million (previous year: EUR -7.1 million).

The Resources segment's performance at the beginning of the year was considerably better than last year, mainly due to major projects in the environmental business. The situation remains diffi cult on account of the poor exploration and water drilling business. However, it is pleasing that our subsidiary in Jordan will receive an order for processing and renewing a borehole fi eld in the domestic market. The utilization of the previously unused capacity will improve the situation there.

The segment has an excellent order backlog with a volume of EUR 294.4 million, 69.4 % up on the previous year. The major environmental project in Grenzach-Wyhlen received in July 2015 with a volume of more than EUR 100 million was the main reason for the signifi cant increase in order backlog compared with the previous year. Major preliminary activities for the project have been completed successfully and in July, the drilling work for the pile wall around the construction site starts and is expected to continue until January 2017.

Earnings, financial and net asset position

EARNINGS POSITION

Sales revenues increased year on year by 1.2 % to EUR 649.8 million. Consolidated revenues fell by 2.8 % to EUR 720.2 million, however. The main reason for this is the decline in other capitalized goods and services for own account and other income.

The Group's EBITDA for the half year fell by 0.5 % from EUR 63.0 million to EUR 62.7 million. The cost of materials and personnel expenses decreased somewhat less than consolidated revenues.

The EBIT at EUR 18.4 million was 14.8 % higher than the previous year's value of EUR 16.0 million. Depreciation of fi xed assets decreased by EUR 4.0 million, while write-downs of inventories due to use increased by EUR 1.4 million, as more machines were leased out than in the previous-year period.

Earnings after tax decreased slightly from EUR -6.8 million to EUR -7.9 million. Factors responsible for this were the rise in fi nancial expenses from EUR 19.5 million to EUR 21.8 million, lower fi nancial income as well as the lower share of the profi t or loss of associated companies accounted for using the equity method.

FINANCIAL POSITION

Our fi nancial position is developing in line with plans.

NET ASSET POSITIONS

The total assets increased by 3.5 % against the 2015 year-end (EUR 1,656.9 million) and by 1.6 % relative to June of the previous year, to 1,715.9 million. This increase is in line with our expectations. The business is heavily dependent on advance fi nancing, meaning that the rise in receivables and inventories in the course of the year usually extended the balance sheet. Our medium-term target is a substantial reduction in total assets relative to total Group revenues.

The assets side of the balance sheet grew compared to the year-end 2015, largely because of the rise in inventories, which increased by 11.2 % to EUR 498.0 million, while at the same time receivables and other assets decreased by 0.7 % to EUR 540.2 million.

On the liabilities side, equity decreased by EUR 33.9 million to EUR 417.3 million compared to the year-end closing, chiefl y due to the earnings as well as currency effects (EUR -6.2 million) and a revaluation of provisions for pensions due to interest (EUR -22.9 million less deferred taxes on these amounting to EUR 6.4 million).

Non-current debt decreased by 20.3 % from EUR 533.9 million at the year-end to EUR 428.7 million. At the same time, provisions for pensions rose by EUR 24.1 million. The actuarial interest rate for valuing pension obligations fell from 2.35 % to 1.40 % at the year-end. Non-current fi nancial liabilities decreased by 33.9 % from EUR 393.7 million to EUR 261.9 million at the year end, because the former syndicated loan had a term of less than one year at the balance sheet date.

Current debt increased by 26.6 % from EUR 671.8 million to EUR 869.9 million, which is as described largely due to the former syndicated loan. An additional effect was provided by the annually recurring rise in current fi nancial liabilities which is due to the higher fi nancing requirement of the working capital during the course of the year.

In total, fi nancial liabilities increased compared to the previous year by EUR 12.0 million.

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, 2015. We refer back to the Combined Management Report for fi nancial 2015.

Follow-up report

On 29 July 2016, the former syndicated loan agreement which was completed in April 2014 was replaced prior to its term by a new syndicated loan agreement with a volume of EUR 430 million. The new syndicated loan has a regular term of three years.

No further 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 June 30, 2016.

Full-year outlook

We forecast a positive trend for our business overall. Despite the diffi cult market environment with its numerous disruptions, the global construction market continued to record positive growth. The previous year brought numerous challenges, which we addressed by implementing consistent measures. Disruptions are likely to continue in the current year. Overall, however, we believe that we are in a position to sustainably improve our results again in the near future.

As reported in the annual report for 2015, we continue to forecast that total Group revenues for the 2016 fi nancial year will be around EUR 1.65 billion. We forecast earnings after tax of about EUR 20 to 25 million and EBIT of about EUR 75 million.

Interim consolidated financial statements (condensed)

CONSOLIDATED INCOME STATEMENT

	in EUR '000	Q2/2015	Q2/2016	6M/2015	6M/2016
1.	Sales revenues	342,430	332,126	641,990	649,767
2.	Changes in inventories	-2,332	12,344	48,194	47,093
3.	Other capitalized goods and services for own account	7,651	5,309	10,200	6,117
4.	Other income	1,470	4,869	40,290	17,185
	Consolidated revenues	349,219	354,648	740,674	720,162
5.	Cost of materials	-167,109	-181,338	-362,195	-353,412
6.	Personnel expenses	-93,510	-92,274	-184,836	-182,918
7.	Other operating expenses	-49,774	-45,667	-130,615	-121,111
	Earnings before interest, tax, depreciation and amortization (EBITDA)	38,826	35,369	63,028	62,721
8.	Depreciation and amortization a) Depreciation of fixed assets	-20,353	-18,292	-40,819	-36,785
	b) Write-downs of inventories due to use	-3,715	-3,563	-6,218	-7,576
	Earnings before interest and tax (EBIT)	14,758	13,514	15,991	18,360
9.	Financial income	1,121	1,507	2,940	2,174
10.	Financial expenses	-9,265	-10,662	-19,531	-21,763
11.	Share of the profit or loss of associated companies accounted for using the equity method	625	264	933	63
	Earnings before tax (EBT)	7,239	4,623	333	-1,166
12.	Income tax expense	-5,386	-2,859	-7,093	-6,696
	Earnings after tax	1,853	1,764	-6,760	-7,862
	of which attributable to shareholders of BAUER AG	1,352	466	-7,484	-9,574
	of which attributable to non-controlling interests	501	1,298	724	1,712
in EUR		Q2/2015	Q2/2016	6M/2015	6M/2016
	Basic earnings per share	0.08	0.03	-0.44	-0.56
	Diluted earnings per share	0.08	0.03	-0.44	-0.56
	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 STATEMENT OF COMPREHENSIVE INCOME

in EUR '000	Q2/2015	Q2/2016	6M/2015	6M/2016
Earnings after tax	1,853	1,764	-6,760	-7,862
Income and expenses which will not be subsequently reclassified to profit and loss
Revaluation of commitments arising from benefits to employees after termination of employment	21,571	-7,456	7,681	-22,882
Deferred taxes on that revaluation with no effect on profit and loss	-6,057	2,094	-2,156	6,426
Income and expenses which will be subsequently reclassified to profit and loss
Market valuation of derivative financial instruments	-2,526	3,841	-4,535	-3,065
Included in profit and loss	3,240	-3,718	3,769	2,566
Deferred taxes on financial instruments with no effect on profit and loss	-201	-36	215	139
Exchange differences on translation of foreign subsidiaries	-7,397	3,403	12,165	-6,253
Other comprehensive income	8,630	-1,872	17,139	-23,069
Total comprehensive income	10,483	-108	10,379	-30,931
of which attributable to shareholders of BAUER AG	10,395	-1,550	9,292	-30,558
of which attributable to non-controlling interests	88	1,442	1,087	-373

CONSOLIDATED BALANCE SHEET

	ASSETS in EUR '000	June 30, 2015	December 12, 2015	June 30, 2016
	A. Non-current assets
I.	Intangible assets	33,013	27,455	26,041
II.	Property, plant and equipment and investment property	457,660	404,356	398,301
	III. Investments accounted for using the equity method	42,426	132,553	128,890
	IV. Participations	3,613	3,613	3,460
V.	Deferred tax assets	27,780	27,190	36,390
	VI. Other non-current assets	7,423	7,722	7,834
	VII. Other non-current fi nancial assets	28,567	15,355	14,907
		600,482	618,244	615,823
	B. Current assets
I.	Inventories	476,146	444,629	498,005
II.	Receivables and other assets	568,640	544,329	540,195
	III. Effective income tax refund claims	2,464	2,300	2,902
	IV. Cash and cash equivalents	41,004	47,406	42,621
V.	Assets classifi ed as held for sale	0	0	16,350
		1,088,254	1,038,664	1,100,073
		1,688,736	1,656,908	1,715,896

	LIABILITIES in EUR '000	June 30, 2015	December 12, 2015	June 30, 2016
	A. Equity
I.	Equity of BAUER AG shareholders	404,831	438,842	405,701
II.	Non-controlling interests	20,395	12,368	11,627
		425,226	451,210	417,328
	B. Non-current debt
I.	Provisions for pensions	110,229	112,284	136,408
II.	Financial liabilities	389,301	393,694	261,929
	III. Other non-current liabilities	6,112	7,262	7,404
	IV. Deferred tax liabilities	12,853	20,664	22,960
		518,495	533,904	428,701
	C. Current debt
I.	Financial liabilities	403,300	318,700	542,702
II.	Other current liabilities	313,924	317,785	297,622
	III. Effective income tax obligations	9,362	16,955	11,348
	IV. Provisions	18,429	18,354	18,195
		745,015	671,794	869,867
		1,688,736	1,656,908	1,715,896

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	Hedging transactions reserve	Non controlling interests	Total
As at Jan. 1, 2015	73,001	38,404	286,112	3,149	-1,358	19,617	418,925
Earnings after tax	0	0	-7,484	0	0	724	-6,760
Exchange differences on translation of foreign subsidiaries	0	0	0	11,853	0	312	12,165
Revaluation of commitments arising from employee benefits after termination of employment	0	0	7,614	0	0	67	7,681
Market valuation of derivative financial instruments	0	0	0	0	-771	5	-766
Deferred taxes with no effect on profit and loss	0	0	-2,137	0	217	-21	-1,941
Total comprehensive income	0	0	-2,007	11,853	-554	1,087	10,379
Changes in basis of consolidation	0	0	-1,199	0	0	0	-1,199
Dividend payments	0	0	-2,570	0	0	-309	-2,879
Other changes	0	0	0	0	0	0	0
As at Jun. 30, 2015	73,001	38,404	280,336	15,002	-1,912	20,395	425,226
As at Jan. 1, 2016	73,001	38,404	317,752	10,909	-1,224	12,368	451,210
Earnings after tax	0	0	-9,574	0	0	1,712	-7,862
Exchange differences on translation of foreign subsidiaries	0	0	0	-4,317	0	-1,936	-6,253
Revaluation of commitments arising from employee benefits after termination of employment	0	0	-22,680	0	0	-202	-22,882
Market valuation of derivative financial instruments	0	0	0	0	-495	-4	-499
Deferred taxes with no effect on profit and loss	0	0	6,369	0	139	57	6,565
Total comprehensive income	0	0	-25,885	-4,317	-356	-373	-30,931
Changes in basis of consolidation	0	0	0	0	0	0	0
Dividend payments	0	0	-2,570	0	0	-381	-2,951
Other changes	0	0	-13	0	0	13	0
As at Jun. 30, 2016	73,001	38,404	289,284	6,592	-1,580	11,627	417,328

CONSOLIDATED STATEMENT OF CASH FLOWS

in EUR '000	6M/2015	6M/2016
Cash flows from operational activity:
Earnings before tax (EBT)	333	-1,166
Depreciation of fixed assets	40,819	36,785
Write-downs of inventories due to use	6,218	7,576
Financial income *	-2,940	-2,174
Financial expenses *	19,531	21,763
Other non-cash transactions and results of de-consolidations *	-22,535	-7,591
Dividends received	100	2,637
Result from the disposal of fixed assets	-674	-245
Result from associated companies accounted for using the equity method *	933	63
Change in provisions	630	482
Change in trade receivables	20,271	65,545
Change in receivables from construction contracts	-40,595	-54,101
Change in other assets and in prepayments and deferred charges	-22,111	-7,298
Change in inventories	-35,960	-68,332
Change in trade payables	7,910	-6,116
Change in liabilities from construction contracts	-7,436	-14,943
Change in other current and non-current liabilities	-15,970	-2,294
Cash and cash equivalents generated from day-to-day business operations	-51,476	-29,409
Income tax paid	-6,997	-12,487
Net cash from operating activities	-58,473	-41,896
Cash flows from investment activity:
Acquisition of property, plant and equipment and intangible assets	-35,031	-32,631
Proceeds from sale of fixed assets	7,778	6,871
Consolidation scope-related change in financial resources	96	-19
Net cash used in investing activities	-27,157	-25,779
Cash flows from financing activity:
Raising of loans and liabilities to banks	128,970	151,566
Repayment of loans and liabilities to banks	-23,743	-59,769
Repayment of liabilities from finance lease agreements	-4,331	-4,831
Dividends paid	-2,879	-2,951
Interest paid	-16,530	-20,424
Interest received	1,685	1,576
Net cash used in financing activities	83,172	65,167
Changes in liquid funds affecting payments	-2,458	-2,508
Influence of exchange rate movements on cash	1.627	-2,277
Total change in liquid funds	-831	-4,785
Cash and cash equivalents at beginning of reporting period	41,835	47,406
Cash and cash equivalents at end of reporting period	41,004	42,621
Change in cash and cash equivalents	-831	-4,785

* Previous year adjusted

SEGMENT REPORTING

in EUR '000	Construction		Equipment		Resources
January - June	2015	2016	2015	2016	2015	2016
Total revenues (Group)	369,907	331,863	333,386	312,429	102,081	138,980
Sales revenues with third parties	319,959	298,529	237,930	223,003	83,769	127,483
Sales revenues between business segments	6,905	6,788	24,275	22,950	1,440	373
Changes in inventories	0	-140	48,562	46,900	-368	333
Other capitalized goods and services for own account	118	116	2,211	1,603	265	215
Other income	20,157	6,930	15,086	8,787	3,739	1,357
Consolidated revenues	347,139	312,223	328,064	303,243	88,845	129,761
Earnings before interest, tax, depreciation and amortization (EBITDA)	35,468	26,035	24,303	30,130	1,779	5,600
Depreciation of fixed assets	-25,071	-20,759	-9,659	-9,186	-4,995	-5,681
Write-downs of inventories due to use	0	0	-6,218	-7,576	0	0
Earnings before interest and tax (EBIT)	10,397	5,276	8,426	13,368	-3,216	-81
Financial income	1,075	902	1,223	609	586	593
Financial expenses	-6,412	-7,558	-10,051	-9,372	-5,046	-5,815
Share of the profit or loss of associated companies accounted for using the equity method	-325	-156	6	-1,556	1,252	1,775
Income tax expense	-3,193	-2,637	-2,495	-3,110	-676	-871
Earnings after tax	1,542	-4,173	-2,891	-61	-7,100	-4,399

	31.12.2015	30.06.2016	31.12.2015	30.06.2016	31.12.2015	30.06.2016
SEGMENT ASSETS	616,089	607,488	818,061	817,367	269,254	296,340

in EUR '000		Others		Consolidation		Group
January - June	2015	2016	2015	2016	2015	2016
Total revenues (Group)	18,662	18,541	-43,677	-44,838	780,359	756,975
Sales revenues with third parties	332	752			641,990	649,767
Sales revenues between business segments	16,069	16,641	-48,689	-46,752	0	0
Changes in inventories	0	0	0	0	48,194	47,093
Other capitalized goods and services for own account	0	0	7,606	4,183	10,200	6,117
Other income	1,681	372	-373	-261	40,290	17,185
Consolidated revenues	18,082	17,765	-41,456	-42,830	740,674	720,162
Earnings before interest, tax, depreciation and amortization (EBITDA)	1,590	792	-112	164	63,028	62,721
Depreciation of fixed assets	-1,397	-1,590	303	431	-40,819	-36,785
Write-downs of inventories due to use	0	0	0	0	-6,218	-7,576
Earnings before interest and tax (EBIT)	193	-798	191	595	15,991	18,360
Financial income	5,017	5,320	-4,961	-5,250	2,940	2,174
Financial expenses	-2,983	-4,268	4,961	5,250	-19,531	-21,763
Share of the profit or loss of associated companies accounted for using the equity method	0	0	0	0	933	63
Income tax expense	-670	7	-59	-85	-7,093	-6,696
Earnings after tax	1,557	261	132	510	-6,760	-7,862

	31.12.2015	30.06.2016	31.12.2015	30.06.2016	31.12.2015	30.06.2016
SEGMENT ASSETS	362,055	402,819	-408,551	-408,118	1,656,908	1,715,896

Notes to the consolidated financial statements

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 August 9, 2016.

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 OF 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 Half-Year Interim Report to August 12, 2016 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, 2015, and as such should be read in conjunction with the consolidated fi nancial statements of BAUER AG to December 31, 2015.

3. BASIS OF CONSOLIDATION

The basis 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 %. 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 % of their voting rights. This is the result of state restrictions which stipulate that foreign investors may not hold more than 50 % of the voting rights in domestic companies. In such cases BAUER AG makes use of so-called agency constructions, whereby more than 50 % 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, or the option of control, is transferred to the Group. They are de-consolidated 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:

Resources segment:

On June 29, 2016, BAUER Resources GmbH sold 100 % of the shares in HGC Hydro-Geo-Consult GmbH, Freiberg to G.E.O.S Ingenieurgesellschaft mbH. The company was then de-consolidated. The de-consolidation had no material infl uence on the BAUER Group's balance sheet or earnings.

No changes have otherwise occurred to the basis of consolidation since December 31, 2015.

4. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

In this context we refer to our 2015 Annual Report, page 88.

5. ACCOUNTING POLICIES

The accounting policies applied as from January 1, 2016 correspond to those applied to the consolidated fi nancial statements to December 31, 2015, with the following exceptions:

On June 30, 2016, the BAUER Group reduced the discount rate for measuring its defi ned benefi t plan commitments in Germany to 1.4 %. (previous year: 2.35 %).

6. ASSETS CLASSIFIED AS HELD FOR SALE

Assets classifi ed as held for sale are assets that can be sold in their current condition and whose sale is highly probable. Disposal must be expected within one year from the time of reclassifi cation as held for sale. Such assets may be individual assets, groups of assets (disposal groups) or business operations (discontinued operations). Assets classifi ed as held for sale are no longer subject to scheduled amortization and are instead recognized at the lower of carrying amount and fair value less costs to sell.

On June 30, 2016, the assets classifi ed as held for sale amounted to EUR 16,350 thousand (previous year: EUR 0 thousand). These assets are technical equipment, machinery and supplies which are dedicated to the Resources segment, and can't be used for future orders in the oil and gas business. The disposal is expected to be completed in the fi rst half-year 2017. The reclassifi cation of technical equipment and machinery into assets classifi ed as held for sale had no infl uence to the net asset, fi nancial and earnings positions.

7. DISCLOSURES REGARDING FINANCIAL INSTRUMENTS

7.1 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.

7.2 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	June 30, 2016	Level 1	Level 2
Securities	AfS	0	0	0
Derivatives not in hedge accounting	FAHfT	3,594	0	3,594
Derivatives in hedge accounting	n/a	2,469	0	2,469
Total		6,063	0	6,063

LIABILITIES in EUR '000	IAS 39 category	June 30, 2016	Level 2
Derivatives not in hedge accounting	FLHfT	4,877	4,877
Derivatives in hedge accounting	n/a	1,394	1,394
Total		6,271	6,271

ASSETS in EUR '000	IAS 39 category	December 31, 2015	Level 2
Securities	AfS	0	0
Derivatives not in hedge accounting	FAHfT	917	917
Derivatives in hedge accounting	n/a	2,643	2,643
Total		3,560	3,560

LIABILITIES in EUR '000	IAS 39 category	December 31, 2015	Level 2
Derivatives not in hedge accounting	FLHfT	4,834	4,834
Derivatives in hedge accounting	n/a	1,969	1,969
Total		6,803	6,803

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

7.3 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 debt, 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 debt 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.

7.4 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 2015 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, 2015		Jun. 30, 2016
	Carrying amount	Fair value	Carrying amount	Fair value
Other non-current financial assets	15,355	13,907	14,907	14,784
Trade receivables	343,933	343,404	279,465	279,220
Liabilities to banks	376,628	384,999	243,899	252,223
Other non-current financial liabilities	4,414	4,409	4,978	4,933
Total	740,330	746,719	543,249	551,160

The carrying amounts of all other fi nancial assets and liabilities correspond to their fair value. In other respects we refer to pages 142 et seq. of the 2015 Annual Report.

8. 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.

9. 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 basis 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 % 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.

10. EVENTS AFTER JUNE 30, 2016

On July 29, 2016, the former syndicated loan agreement which was completed in April 2014 was replaced prior to its term by a new syndicated loan agreement with a volume of EUR 430 million. The new syndicated loan has a regular term of three years.

No further 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 June 30, 2016.

11. 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.

12. CONTINGENT LIABILITIES

Contingent liabilities arising from guarantees to third parties exist in an amount of EUR 127,840 thousand (December 31, 2015: EUR 112,035 thousand). In addition, we are subject to joint and several liability in respect of all joint ventures in which we participate.

ASSURANCE BY THE LEGAL REPRESENTATIVES

We hereby assure that, to the best of our knowledge, the condensed interim consolidated fi nancial statements give a true and fair view of the net assets, fi nancial position and earnings of the company in accordance with the accounting principles applicable to interim reporting, and that the interim Group Management Report depicts the course of business, including the earnings and overall situation of the Group, in such a way that a true and fair view is conveyed and the material opportunities and risks of the foreseeable development of the Group over the remaining course of the fi nancial year are set out.

Schrobenhausen, August 12, 2016

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

August 12, 2016	Half-Year Interim Report to June 30, 2016
November 14, 2016	Quarterly Statement 9M/Q3 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

Investor Relations Phone: +49 8252 97-1218 Fax: +49 8252 97-2900 [email protected] ir.bauer.de

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

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