Bauer AG — Interim / Quarterly Report 2016

May 13, 2016

Quarterly Statement Q1 2016

At a glance

GROUP KEY FIGURES

IFRS in EUR million	3M/2015	3M/2016	Change
Total Group revenues	409.1	383.2	-6.3 %
Sales revenues	299.6	317.6	6.0 %
Order backlog	848.2	1,001.0	18.0 %
EBITDA	24.2	27.4	13.0 %
EBIT	1.2	4.8	n/a
Earnings after tax	-8.6	-9.6	n/a
Net assets	1,738.0	1,700.7	-2.1 %
Equity	417.5	420.4	0.7 %
Employees (on average over the year)	10,593	10,634	0.4 %

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

In the fi rst three months of 2016, total Group revenues of BAUER Group decreased by 6.3 % year-on-year, from EUR 409.1 million to EUR 383.2 million. This drop is the result of a decrease in the changes in inventories and other income due to fewer currency gains. Sales revenues, on the other hand, increased by 6.0 %. EBIT increased from EUR 1.2 million to EUR 4.8 million year-on-year. Group earnings after tax amounted to EUR -9.6 million (previous year: EUR -8.6 million) and was primarily impacted by increased tax effects.

The Group's order backlog for the period increased by 18.0 % year-on-year to EUR 1,001.0 million. This growth is mainly due to the Construction and Resources segments. Numerous projects, including major ones, were acquired in the Construction segment and order backlog in the Resources segment increased signifi cantly, primarily due to the major project for the environmental business in Grenzach-Wyhlen received in July 2015. Order backlog in the Equipment segment decreased primarily due to the spin-off of the business with deep drilling rigs. Order intake development of the segment matched our expectations.

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

Significant events and transactions

CONSTRUCTION SEGMENT

in EUR '000	3M/2015	3M/2016	Change
Total Group revenues	193,470	159,872	-17.4 %
Sales revenues	156,039	143,584	-8.0 %
Order backlog	513,341	584,667	13.9 %
EBIT	4,861	1,011	-79.2 %

Total Group revenues for the Construction segment were 17.4 % lower year-on-year at EUR 159.9 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 4.9 million year-on-year to EUR 1.0 million for the period. We expect to catch up during the course of the year due to progress made on the projects and the size of the projects to be processed.

Order backlog in our Construction segment increased by 13.9 % to EUR 584.7 million (previous year: EUR 513.3 million). We acquired contracts for numerous major projects in the past quarters. Order backlog is evenly distributed geographically across the world, providing a fi rm foundation for us to achieve our targets. This positive development was supplemented by further interesting project opportunities, on which we are working at present.

EQUIPMENT SEGMENT

in EUR '000	3M/2015	3M/2016	Change
Total Group revenues	173,821	164,964	-5.1 %
Sales revenues	100,495	107,788	7.3 %
Order backlog	161,574	129,216	-20.0 %
EBIT	-887	5,904	n/a

Total Group revenues in the Equipment segment in the fi rst three months of this year decreased by 5.1 % year-on-year, from EUR 173.8 million to EUR 165.0 million. Sales revenues, on the other hand, grew by 7.3 %, from EUR 100.5 million to EUR 107.8 million. EBIT increased from EUR -0.9 million to EUR 5.9 million year-on-year. 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 161.6 million to EUR 129.2 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. 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. In contrast, interest at our booth at this year's Bauma, the largest construction machinery trade fair in the world in Munich, was encouragingly positive. Our numerous innovations, particularly for reducing energy consumption and noise emissions, and for increasing productivity have met with keen interest.

RESOURCES SEGMENT

in EUR '000	3M/2015	3M/2016	Change
Total Group revenues	54,251	71,547	31.9 %
Sales revenues	42,860	65,911	53.8 %
Order backlog	173,273	287,132	65.7 %
EBIT	-2,918	-1,592	n/a

In the fi rst three months of 2016, total Group revenues in the Resources segment amounted to EUR 71.5 million, 31.9 % up year-on-year (EUR 54.3 million). EBIT came to EUR -1.6 million (previous year: EUR -2.9 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. The short-term outlook is uncertain due to the complicated situation in the Middle Eastern and African markets. On the other hand, the environmental business has acquired good contracts and has opportunities for acquiring more. Also the Mining division developed positively.

The segment has an excellent order backlog with a volume of EUR 287.1 million, 65.7 % up on the previous year. The Mining division of SCHACHTBAU NORDHAUSEN GmbH contributes to this total, with orders valued at EUR 34.8 million. Operations in this fi eld include numerous projects in Germany and a shaft driving for a mine in Kazakhstan. 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.

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

INCOME STATEMENT

	in EUR '000	3M/2015	3M/2016
1.	Sales revenues	299,560	317,641
2.	Changes in inventories	50,526	34,749
3.	Other capitalized goods and services for own account	2,549	808
4.	Other income	38,820	12,316
	Consolidated revenues	391,455	365,514
5.	Cost of materials	-195,086	-172,074
6.	Personel expenses	-91,326	-90,644
7.	Other operating expenses	-80,841	-75,444
	Earnings before interest, tax, depreciation and amortization (EBITDA)	24,202	27,352
8.	Depreciation and amortization a) Depreciation of fixed assets	-20,466	-18,493
	b) Write-downs of inventories due to use	-2,503	-4,013
	Earnings before interest and tax (EBIT)	1,233	4,846
9.	Financial income	1,819	667
10.	Financial expenses	-10,266	-11,101
11.	Share of the profit or loss of associated companies accounted for using the equity method	308	-201
	Earnings before tax (EBT)	-6,906	-5,789
12.	Income tax expense	-1,707	-3,837
	Earnings after tax	-8,613	-9,626
	of which attributable to shareholders of BAUER AG	-8,836	-10,040
	of which attributable to non-controlling interests	223	414
in EUR		3M/2015	3M/2016
	Basic earnings per share	-0.52	-0.59
	Diluted earnings per share	-0.52	-0.59
	Average number of shares in circulation (basic)	17,131,000	17,131,000

STATEMENT OF COMPREHENSIVE INCOME

in EUR '000	3M/2015	3M/2016
Earnings after tax	-8,613	-9,626
Income and expenses which will not be subsequently reclassified to profit and loss
Revaluation of commitments arising from employee benefits after termination of employment	-13,890	-15,426
Deferred taxes on that revaluation with no effect on profit and loss	3,901	4,332
Income and expenses which will be subsequently reclassified to profit and loss
Market valuation of derivative financial instruments	-2,009	-6,906
Included in profit and loss	529	6,284
Deferred taxes on financial instruments with no effect on profit and loss	416	175
Exchange differences on translation of foreign subsidiaries	19,562	-9,656
Other comprehensive income	8,509	-21,197
Total comprehensive income	-104	-30,823
of which attributable to shareholders of BAUER AG	-1,103	-29,008
of which attributable to non-controlling interests	999	-1,815

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

CONSOLIDATED BALANCE SHEET

ASSETS in EUR '000		Mar. 31, 2015	Dec. 31, 2015	Mar. 31, 2016
	A. Non-current assets
I.	Intangible assets	33,986	27,455	26,479
II.	Property, plant and equipment and investment property	466,282	404,356	411,320
	III. Investments accounted for using the equity method	42,736	132,553	130,658
	IV. Participations	3,613	3,613	3,460
V.	Deferred tax assets	41,011	27,190	33,414
	VI. Other non-current assets	7,929	7,722	7,865
	VII. Other non-current financial assets	28,794	15,355	15,340
		624,351	618,244	628,536
	B. Current assets
I.	Inventories	486,820	444,629	472,390
II.	Receivables and other assets	582,154	544,329	532,794
	III. Effective income tax refund claims	3,569	2,300	2,837
	IV. Cash and cash equivalents	41,137	47,406	64,162
		1,113,680	1,038,664	1,072,183
		1,738,031	1,656,908	1,700,719

	EQUITY AND LIABILITIES in EUR '000	Mar. 31, 2015	Dec. 31, 2015	Mar. 31, 2016
	A. Equity
I.	Equity of BAUER AG shareholders	397,006	438,842	409,821
II.	Non-controlling interests	20,529	12,368	10,566
		417,535	451,210	420,387
	B. Non-current debt
I.	Provisions for pensions	131,106	112,284	127,742
II.	Financial liabilities	393,342	393,694	388,559
	III. Other non-current liabilities	6,333	7,262	7,172
	IV. Deferred tax liabilities	18,340	20,664	22,628
		549,121	533,904	546,101
	C. Current debt
I.	Financial liabilities	427,276	318,700	418,674
II.	Other current liabilities	314,143	317,785	281,680
	III. Effective income tax obligations	10,213	16,955	15,722
	IV. Provisions	19,743	18,354	18,155
		771,375	671,794	734,231
		1,738,031	1,656,908	1,700,719

CONSOLIDATED STATEMENT OF CASH FLOWS

in EUR '000	3M/2015	3M/2016
Cash flows from operational activity:
Earnings before tax (EBT)	-6,906	-5,789
Depreciation of fixed assets	20,466	18,493
Write-downs of inventories due to use	2,503	4,013
Financial income *	-1,819	-667
Financial expenses *	10,266	11,101
Other non-cash transactions and results of de-consolidations *	-31,639	14,549
Result from the disposal of fixed assets	104	-252
Result from associated companies accounted for using the equity method *	308	-201
Change in provisions	217	205
Change in trade receivables	-3,567	57,321
Change in receivables from construction contracts	-23,307	-36,522
Change in other assets and in prepayments and deferred charges	-18,230	-18,760
Change in inventories	-35,005	-40,179
Change in trade payables	-7,298	-13,471
Change in liabilities from construction contracts	1,903	-14,183
Change in other current and non-current liabilities	15,075	-12,177
Cash and cash equivalents generated from day-to-day business operations	-76,929	-36,519
Income tax paid	-2,467	-5,184
Net cash from operating activities	-79,396	-41,703
Cash flows from investment activity:
Acquisition of property, plant and equipment and intangible assets	-14,074	-30,284
Proceeds from sale of fixed assets	3,733	4,108
Consolidation scope-related change in financial resources	96	0
Net cash used in investing activities	-10,245	-26,176
Cash flows from financing activity:
Raising of loans and liabilities to banks	106,472	119,227
Repayment of loans and liabilities to banks	-10,734	-19,071
Repayment of liabilities from finance lease agreements	-2,259	-2,642
Dividends paid	-87	0
Interest paid	-8,012	-10,484
Interest received	789	553
Net cash used in financing activities	86,169	87,583
Changes in liquid funds affecting payments	-3,472	19,704
Influence of exchange rate movements on cash	2,774	-2,948
Total change in liquid funds	-698	16,756
Cash and cash equivalents at beginning of reporting period	41,835	47,406
Cash and cash equivalents at end of reporting period	41,137	64,162
Change in cash and cash equivalents	-698	16,756

* Previous year adjusted

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 18, 2016	Publication Annual Report 2015 Annual Press Conference Analysts' Conference
May 13, 2016	Quarterly Statement Q1 2016
June 23, 2016	Annual General Meeting
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

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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