2007, sustainable success. · NEWTRONIC ROLLER MILL. Reduction passage Pneumatic bottom aspiration Break passage Inlet Pneumatic direct aspiration. 6. HIGH-NUTRITION ANIMAL FEEDS

2007, sustainable success.

Annual Report

Bühler AGCH-9240 Uzwil, SwitzerlandT +41 71 955 11 11F +41 71 955 33 79www.buhlergroup.com

Group profile.

Buhler is the global specialist and technology partner in the field of plant design & construction and services for transforming renewable raw materials into foods and synthetic materials into highgrade functional products and valuable materials.

Our core technologies are in mechanical and thermal process engineering, which our customers apply for producing foods, coatings, and die cast components.

We apply the knowledge we have gained over the decades to generate added value for our customers and to offer comp rehensive services. We do this throughout the life cycle of the plants we build by developing innovative ideas in close cooperation with our customers, ensuring a high level of productivity, and being present on a global scale.

Buhler is active in over 140 countries and employs some 6,900 people worldwide. In fiscal 2007, the Group generated sales of CHF 1,770 million.

Büh

ler

AG

A

nnua

l Rep

ort

200

7

2007, sustainable success.

Annual Report

in mill. CHF

2006 2007 2006 2007 2006 2007

Sales (turnover) 907.0 1,016.7 494.8 539.6 190.3 200.9

Share of Group sales in % 56.2 57.3 30.7 30.4 11.8 11.3

Order bookings 941.6 1,062.9 554.3 576.8 175.0 181.7

Backlog of orders Dec. 31 485.2 536.4 236.3 271.0 84.6 59.6

R & D expenditures 33.6 33.3 22.5 27.4 8.2 7.7

1,773.4

in mill. CHF Change in %

2006 2007

Sales 1,610.6 10.1 1,773.4

Order bookings 1,691.4 8.6 1,837.7

Backlog of orders Dec. 31 817.2 6.6 870.9

EBIT 103.0 34.3 138.3

EBIT margin in % 6.4 7.8

EBITDA 133.4 27.0 169.4

Result for the year 120.3 8.2 130.2

Investments in tangible and intangible assets 67.4 -10.8 60.1

R & D expenditures 70.1 6.1 74.4

Balance sheet total 1,694.8 12.0 1,898.2

Net liquidity 240.4 26.1 303.1

Return on Operational Assets in % 27.0 29.8

Number of employees as of Dec. 31 6,626 4.0 6,890(without temporary staff)

Group

Key figures

Share of Group sales in %

Business units

> Milling

> Feed Milling/Oil Milling

> Sortex

> Grain Handling

> Brewing/Malting

> Rice Milling

Grain Processing

Business units

> Chocolate & Cocoa

> Pasta & Extruded Products

> Grinding & Dispersion

> Thermal Processes

> Nanotechnology

EngineeredProducts

Die Casting

1,016.7 539.6 200.9

57.3 30.4 11.3

Business units

> Die Casting

The previous year’s figures have been restated to reflect the retroactive change to the principles of accounting governing employee benefits (IAS 19).

in mill. CHF

2006 2007 2006 2007 2006 2007

Sales (turnover) 907.0 1,016.7 494.8 539.6 190.3 200.9

Share of Group sales in % 56.2 57.3 30.7 30.4 11.8 11.3

Order bookings 941.6 1,062.9 554.3 576.8 175.0 181.7

Backlog of orders Dec. 31 485.2 536.4 236.3 271.0 84.6 59.6

R & D expenditures 33.6 33.3 22.5 27.4 8.2 7.7

Share of Group sales in %

Business units

> Milling

> Feed Milling/Oil Milling

> Sortex

> Grain Handling

> Brewing/Malting

> Rice Milling

Grain Processing

Business units

> Chocolate & Cocoa

> Pasta & Extruded Products

> Grinding & Dispersion

> Thermal Processes

> Nanotechnology

EngineeredProducts

Die Casting

1,016.7 539.6 200.9

57.3 30.4 11.3

Business units

> Die Casting

02 Innovative solutions

70 ForewordChairman of the Board and CEO

74 Divisions74 Grain Processing76 Engineered Products78 Die Casting

80 Corporate information80 In all the world’s markets82 Human resources84 Quality, environment, and safety86 Risk management88 Corporate management90 Board of directors92 Organization chart

93 Financial report94 Economic development96 Financial report, Bühler AG

133 Financial report, Bühler Holding AG

The hallmark of the Buhler Technology Group has always

been its high innovation power. Since being set up almost

150 years ago, the global company has time and again set

trends and triggered new developments.

This Annual Report is dedicated to selected new solutions

developed by Buhler and explains their underlying prin-

ciples on one page using text and images. But the various

processes will not deploy their full power before they have

been tailored together with our customers to the specific

application. Only what helps our customers achieve a com-

petitive edge or generate added value can be considered

to be an innovative solution.

We thank our customers for opening their doors to our

photographers, offering us an insight into their businesses.

Buhler sales sitesBuhler sales and manufacturing sitesSelected customer sites

Sadia, Brazil

16

Innovative solutions.

5034

64Küpper & Schmidt, Portugal

Wuxi NutriRice, China Konti, Ukraine

Kolson, Pakistan

26

Top Food, Taiwan

04

58Lantmännen, Sweden

44Ultimate Rice, Thailand

STRONG TOGETHER IN THE GRAIN MARKET IN TAIWAN, THANKS TO BUHLER.

Top Food, Taiwan. Over the past years, the situation of flour millers has changed sub-stantially in Taiwan. The formerly heavily regulated market was liberalized. As a conse-quence, various small and often unprofitable businesses shut down their production fa-cilities. The owners of the Formosa Oilseed mill took a different approach. They pursued the idea of building a new production plant. For this purpose, they set up the Top Food company with the goal of involving additional companies in this venture. Today, the for-merly independent flour mills Ta Fong and Kuo Hsing are also shareholders of Top Food. Each participating miller retains his brand, but at the same time profits from the benefits of a state-of-the-art milling plant. Thus, the size of the facility ensures a much higher profitability than up to now when its capacity is sufficiently utilized. Moreover, the new building was constructed in the direct vicinity of the port, which has drastically cut logistics costs.

1 Taichung Harbor near the mill building. 2 The Puromat purifier separates the pure semolina from the bran. 3 Mr.Tai Wen Te, Vice Plant Manager. 4 The plant is controlled and monitored from a centralized location using the Buhler WinCoS system. 5 The roller mills grind some 1,000 metric tons of grain a day. 6 The MPAK-824 plansifter sifts and grades the flours.

1

2

3

4

The new plant guarantees perfect production of the locally required top-quality flours. The grinding process was designed by Buhler with the different requirements of the three com-panies involved in mind. Three types of flour can be transferred after grinding directly to the bagging line. The two high-capacity blending systems with automatic micro-dosing devices enable any special customer needs to be readily and flexibly satisfied, be it high-protein flours or flours with a different gluten quality. The WinCoS process control system matched to the plant ensures that the individual process operations are performed in the correct se-quence and in a product-oriented way.

INNOVATIVE SOLUTIONS FOREWORD

DIVISIONSCORPORATE INFORMATION

1011

5

If you know that a grain is ground from the inside, then you

already know something about modern milling. The days

when wheat was crushed and ground under a heavy millstone

are finally gone. The heart of a grain of wheat is the light-

colored endosperm consisting of starch and gluten protein, which makes up around 82 percent of the grain, along

with the small, fatty germ. Endosperm and germ are surrounded by the darker aleuron layer, which makes up

about 7 percent of the grain, has the highest mineral content and mostly remains stuck to the bran. Wholemeal

contains the aleuron layer and also the outermost husk layers of the grain, i.e. the epidermis and the fruit and

seed coats.

These days, ultramodern roller mills grind wheat in several milling stages to yield many different flours. In a first step,

two counter-rotating corrugated rolls tear the grain right open. Then the grain is reduced layer by layer from the

inside out in further milling stages. After each milling stage, the resultant fine flour is sifted out from the coarse meal

and larger endosperm particles, i.e. the semolina. This is achieved by passing the flour through gyratory screens

in “plansifters”. One grinding pass and one sifting pass together form a mill stream, and the sifted flours from such

a mill stream are known as mill stream flours. Each mill stream flour has different characteristics in terms of com-

ponent substances and baking properties. A high quality roller mill is distinguished by the fact that the contact

pressure between two grinding rolls can be accurately adjusted and then kept constant for long periods of time.

Good flour needs more than good machinery. To produce a marketable flour with the desired (baking) properties,

the miller has to blend different mill stream flours. At Top Food in Taiwan, six types of high-quality finished flour are

blended in parallel from the total of 57 individual flours produced by 20 precisely adjusted mill streams. Making

sure that each flour exactly meets the required specifications is the true art of milling.

A WHEAT GRAIN CONTAINS

82% starchy white endosperm.

AT TOP FOOD IN TAIWAN, FROM

57 FLOURS 6 types of high quality flour are blended in parallel.

THE ART OF MILLING WITH THE NEWTRONIC ROLLER MILL.

Reduction passage

Pneumatic bottom aspiration

Break passage

Inlet

Pneumatic direct aspiration

6

HIGH-NUTRITION ANIMAL FEEDS IN BRAZIL, THANKS TO BUHLER.

1

2

INNOVATIONENVORWORT

DIVISIONENCORPORATE INFORMATION

3738

3

4

Sadia, Brazil. The listed Sadia Food Group is the world’s largest manufacturer of re-frigerated and deep-frozen foods and is one of Brazil’s major meat producers. Closely related to these activities is the group’s in-house production of animal feeds, since – beside optimal rearing methods – the quality of the feed is also crucial in meat produc-tion. Formulated feeds today are enriched with vitamins, minerals, and active agents. They must therefore be carefully balanced and produced in a consistently high quality. To achieve this, Sadia relies on Buhler technology.

–

5

2021

Currently, Buhler is building one of the world’s largest feed manufacturing plants for Sadia in Lucas de Rio Verde, with a planned output capacity of about 120,000 metric tons a month. One building incorporates four compounding lines. At the same time, two different varieties each can be produced for poultry feed and swine feed. The plant is the first in Brazil to satisfy the rigor-ous European feed standards. The company employs 58,000 persons and exports more than half of its products to over 100 countries.

1 The feed production facility of Sadia in Lucas de Rio Verde. 2 José Daniel Melo is in charge of the entire feed manufacturing process. 3 The Vertica hammer mill grinds the raw materials. 4/5 Commissioning of the plant is scheduled for the spring of 2008. The first two lines went into service on schedule in November. 6 Hymix and Hytherm: The raw material is sanitized by the addition of steam. 7 Hymode and Hypac: The pellet mill produces the feed pellets.



6

In order to form feed pellets from corn, high-protein byproducts from oil

production or other plant-based raw materials, the dry raw materials are

first treated with hot steam (conditioning). This sets the scene for energy-

efficient pelletization (compaction) of the raw materials and simultane-

ously ensures better pellet quality. Because much more stringent feed safety requirements apply to today’s feedstuffs

industry, Buhler’s HYSYS system includes an additional hygienizing step between conditioning and compaction. The

most important thing is to eliminate pathogenic micro-organisms such as salmonella.

The HYSYS system consists of four modules, namely the HYMIX mixer, the HYTHERM hygienizer, the HYPAC pellet

mill and the HYMODE control unit. The degree of hygienization is determined by the temperature and dwell time

of the raw materials in the mixing and hygienizing modules. The temperature in the hygienizing module should be

between 80 and 90 °C and the dwell time around 2 minutes. At the same time, the walls of the modules must be

heated by electrical trace heating, so that the saturated steam condenses only on the surface of the micro-organisms

so as to eliminate them.

A control module specially developed for this application ensures that all parameters can be precisely adjusted and

monitored. However, another decisive factor is the quality of the raw materials and of the steam, i.e. the raw material

used must not contain too large a number of pathogenic micro-organisms otherwise the desired bacterial count

reduction cannot be achieved with the set hygienizing parameters (temperature, time).

THE HYPAC COMPACTING SYSTEM PROCESSES UP TO

50 Tof compound feed per hour into pellets.

AT A MAXIMUM HYGIENIZING TEMPERATURE OF

95 ºCthe HYTHERM module eliminates pathogenic micro-organisms.

STERILE FEEDS THANKSTO HYSYS.

HYMIXIntensive and homo-

geneous mixing of steam and compound

feed particles. HYTHERMEfficient destruction of pathogenic organisms to improve pellet quality and increase pellet mill throughput.

HYMODEFully automatic control from conditioning and compacting to cooling.

HYPACThe most modern compacting

technology with low space requirement thanks to advanced

pellet mill design.

7

TOP FLEXIBILITY IN PASTA AND SNACK FOODS PRODUCTION IN PAKISTAN, THANKS TO BUHLER.

1

2

3

Kolson, Pakistan. The family-owned company K.S. Sulemanji Esmailji & Sons (Pvt) Ltd., in short Kolson, is an acknowledged pioneer in pasta production. The company, which today also sells snack foods, breakfast cereals, and cookies (biscuits), applies a new Buhler C–line for making its pasta. It produces far more than ten different short-goods shapes such as macaroni as well as a variety of snack foods. One of the peculiarities of the line is that it can be used for making snack pellets from either precooked or uncooked raw materials. This offers Kolson a high level of flexibility and enables the company to effi-ciently produce a wider variety of products. The Buhler C–line produces attractively shaped high-quality end products with outstanding cooking characteristics and has several times the output of existing systems. Kolson employs some 12,000 per-sons and is certified to ISO 22000 International Food Safety Management System (FSMS) as well as ISO 9001.

1 The pasta and snack foods factory of Kolson was set up in 1942 and is located in the port city of Karachi. 2 Kolson staff with the pasta C–line.3 The mixing systems prepare the different raw materials. 4 Muhammad Hussain works in the packaging department. 5 The hot-extrusion sec-tion of the line is used for precooking raw ma-terials used for making snack foods.

4

An extruder is effectively a high-performance cooking pot

with ultra-effective stirrer and giant strainer in one, extending

over several meters. The term extrusion generally denotes

forcing a substance out through a die. A meat mincer, for

instance, could in principle be regarded as an extruder. Extruders are made up of one or more screws in a tight-

fitting barrel. At one end raw material is fed in and at the other end the product is forced through a die and

possibly chopped up. In between, the mash to be extruded is processed thermally by the heating system of the

barrel and mechanically by the geometry and rotational speed of the screws.

The dry raw materials – for instance rice, wheat or potato flour – are mixed with water or hot steam and other in-

gredients such as salt or even cocoa powder in the preconditioner and precooked. The ingredients then enter

the screw, where they are exposed to the action of heat, mechanical force and time – just as happens on a small

scale in any kitchen. However, in the extruder the heat is primarily produced by “agitating”, that is by mechani -

cal energy. The “dough” is firmly compressed by rotation of the screws, rubbed open as it were, and so heated.

The rotational speed of the two screws and the shear forces determine the temperature and degree of gelatiniza-

tion of the product and thus its texture and quality. Raw product composition is, however, also a factor. Rice,

for instance, makes the product harder, while adding more wheat softens the dough strand forced out of the end

of the die. High torques, fast screw speeds and high pressures in the extruder offer greater leeway for par -

ameter optimization. However, product quality is not only dependent on the structure of the extruder but above all

on the skill and experience of the operator.

A MODERN TWIN-SCREW EXTRUDER CAN PROCESS

20,000 KGof raw products every hour.

A PRESSURE OF UP TO

300 BARcan be applied in the extruder.

Feeder

MotorPreconditioner

THE TWIN-SCREW EXTRUDER – A “MASTER CHEF”.

Die

Cutter

Screws

Barrel Touch-screen operator terminal Gear train

5

TOP-CLASS CHOCOLATE PRODUCTION IN UKRAINE, THANKS TO BUHLER.

1

2

3637

Konti, Ukraine. Growth of this Kiev-based confectionery producer continues unabated. What started ten years ago as the dream of an initiative chocolate aficionado has evolved into a company which today generates almost USD 500 million and holds a significant share in the Ukrainian market. Right from the outset, and in every expansion stage, Konti placed its confidence in the extensive expertise of Buhler. From the reception and clean-ing of the raw materials to the roasting system and the finished molded chocolate articles, you will find Buhler technology at work everywhere. Even the supply of the entire water and compressed air infrastructure was entrusted to Buhler. The various recipes for milk and dark chocolate, chocolate fillings, and coating masses were also created in close cooperation between Buhler and Konti. After all, the chocolate articles are expected to appeal to the local consumers.

1 The factory premises of Konti with the new office building. 2 Nut sorting system from Buhler Barth. 3 Olga Kyemzhi, Food Technologist. 4 Vladimir Lysenko, Chief mechanic.5 The Volu-Shot depositing machine produces the lids of chocolates and filled chocolate bars. 6 Finer 1800-V five-roll refiners for refining the chocolate masses. 7 The Chocomaster 620 molding system molds up to 1,400 kilograms of bars or chocolates.



3

INNOVATIONENVORWORT


3738

4

5

6

4041



As we let a chocolate melt in our mouths we are unlikely to be thinking about

the clever technology behind the chocolatier’s tiny works of art. There is

no greater challenge than that of producing the thin chocolate shells that

are subsequently filled with tenderly melting or even liquid centers.

Cold stamping technology is the best way of producing the most uniformly thin chocolate shells with accurate weights

and complex geometries. This method involves plunging a deep-frozen stamp into a mold filled with chocolate, so

simultaneously shaping and stabilizing the shell. However, it is important for the atmosphere to be very dry, because

otherwise ice crystals form on the stamp and the chocolate shell stays stuck to the stamp.

The modern eye and palate yearn for variety, leading producers to constantly create new types of chocolates. But this

is a problem for the cold stamping method, because every time a production changeover to a new product format is

needed, the stamping plate has to be changed and the dry air atmosphere has to be reestablished, which uses up large

amounts of time and power.

Herein lies the strength of the innovative “FlexiStamp™” multiple stamping head made by Buhler Bindler: it consists

of up to four different stamping plates, arranged with their backs around a rotatable shaft and each having its own

individual refrigerant supply. To produce a new shell shape, the stamping head can simply be turned to the correspond-

ing product format – either manually or automatically. Stamping plates are only cooled when they are active. Not

only that, but the dry air atmosphere is maintained and does not have to be reestablished again with every new choco-

late format. These features save energy and time and so cut production costs.

THE STAMP IS PLUNGED FOR

1.5-3 SECinto the chocolate.

WITH THIS TRIPLE STAMPING HEAD, UP TO

5,760filled small articles can be produced every minute.

Individual stamping plate coolant supply. Individual

cooling prevents unneces-sary energy loss when

stamping plates are idle.

Stamping plates with variable stamp geometry. Thanks to cold stamping technology, complex shapes are also possible.

Stamping head shaft, which can be turned manually or auto-matically during changeover.

Triple stamping head.

THE WAY TO CHOCOLATEHEAVEN: FLEXISTAMP.TM

77

HIGH SORTING CAPACITY FOR TOP-CLASS RICE IN THAILAND, THANKS TO BUHLER.

1

2

3

4647

Ultimate Rice, Thailand. The rice mill is located north of Bangkok in the excellently irri-gated central plain of the Chao Phraya river and is one of the leading producers and ex-porters of top-class parboiled Thai rice. The company processes over 700 metric tons of rice a day. In the wharf nearby, up to 2,000 metric tons of rice a day are sorted and packed for export and then shipped. The processing facility has been using Buhler Sortex sorting equipment since 2004. Last year, another six machines were added, with an ejection sys-tem purpose-designed for handling Thai rice. The Sortex Z+ sorts all types of contami-nants, especially yellowish discolorations, insect-damaged grains, and kernels with bran streaks. In some cases, it also removes foreign matter such as stones or glass. The ma-chines’ high sorting capacity helps improve the quality of the end product, making it fit for export. In addition, Ultimate Rice benefits from higher added value.

1 Ultimate Rice was set up in 1974 and today employs 60 persons. 2 Company founder Likhit Luesakulkitpaisal. 3/4 The Sortex Z+, equipped with high-resolution optics, is one of the most efficient sorters for the further processing of rice.



4

Feed hopper

Vibrators for product feed

Preaccelerator plate

Optional camera

Optional camera

Ejector

Accept receptacle

Reject receptacle

Background

Standard camera

Foreground lighting

Country-born children who had to help with the apple harvest on the farm during their

autumn holidays know what matters when it comes to separating out rotten fruit:

speed and accuracy. It’s no different with the latest SORTEX Z+ color sorter, except

that this machine sorts not big pieces of fruit but billions of tiny rice grains at in-

credibly high speed. Sorting a cereal product such as rice involves firstly separating out the grains so that each

one can be looked at individually. This is usually achieved by passing the rice over vibrating trays onto chutes,

which then convey the grains downwards. At the end of the chute, the rice grains fall one after the other past the

camera. If they don’t meet the set criteria, the control device sends a corresponding signal to a valve, triggering

a blast of compressed air for ejecting the grain, which is then discarded. Thanks to a preaccelerator plate which the

Buhler Sortex engineers have mounted at the front of the chute, the machine can be fed even more quickly. All in

all, it has proven possible to increase capacity for rice by roughly 10 percent.

The aim of grain sorting is primarily to eject as many defective grains as possible, while keeping ejection of good

grains to a minimum. In a first pass, a certain proportion of accept product, i.e. of usable grains, is always

ejected. For this reason, the rejects are sorted a second time. This “gleaning” minimizes the proportion of good

rice present in the reject product.

With its high resolution, the SORTEX Z+ optical sorter is the most efficient rice sorting system available. It can

check up to 150,000 grains of rice per second, which adds up to an unimaginable 540 million grains per hour.

Every rice grain is looked at from two sides. The optical system has 2,048 pixel cameras, and infrared sensors if

needed. Bad grains are removed from the stream of cereal by 256 ejection nozzles using a strong, highly accu-

rate blast of compressed air. Discolored, unripe or chalky rice grains are discarded. In addition, minuscule pieces

of stone, glass or plastic are detected with an infrared camera and also reliably separated from the rice.

DEFECTIVE GRAINS ARE SHOT OUT FROM

256ejection nozzles.

EVERY SECOND

150,000rice grains can be sorted.

SORTED, WITH SORTEX Z+.

A JOINT VENTURE FOR HIGH-VITAMIN RICE IN CHINA, THANKS TO BUHLER.

1

2

3

Wuxi NutriRice, China. The Dutch company DSM and Buhler operate a joint venture for producing NutriRice in the Chinese city of Wuxi. The rice grains, which are enriched with vitamins and minerals, are produced on the basis of a jointly developed process, to which DSM contributed its knowledge of micronutrients and Buhler its process technology and experience in food processing. Rice flour and nutrients are shaped into perfect rice grains that cannot be distinguished from natural grains. The vitamins that they contain are reli-ably enclosed and hardly washed out. Wuxi NutriRice Co. Ltd. sells NutriRice grains to rice millers, who add it to their rice at a ratio of 1 or 2 per 100. For rice millers and retailers, NutriRice opens up new oppor-tunities for adding a high-grade and profitable product to their existing product ranges.

1 Employees of Wuxi NutriRice Co. Ltd. 2 The extruder produces fortified rice grains. 3 Then the grains are dried. 4 NutriRice enriched with beta-carotene. 5 Rice flour serves as the raw material for producing NutriRice.

4

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5

Around one third

of the world’s

population con-

sumes insufficient

vitamins and minerals. While it is well known, for

instance, that vitamin A deficiency can lead to blind-

ness and an iodine deficiency may result in cretinism,

it is also now known that such visible consequences

are merely the tip of the iceberg. Nutrient deficien-

cies, particularly in early childhood, have a much

more frequent impact on mental and physical devel-

opment than is clinically apparent.

The cause is usually an unbalanced diet consisting

mainly of starchy foods such as rice, wheat or corn.

Although such a diet provides enough calories, it

does not provide sufficient quantities of the micro-

nutrients needed for good health. For instance,

polishing causes rice to lose many of its B vitamins,

such as folic acid, together with iron and zinc.

Adding these and other nutrients again is difficult: if

they stick to the rice grains at all, they still tend mostly

to be washed out again on washing and cooking.

Treated rice grains also tend to look obvious, leading

the consumer to regard them as contaminants and

discard them.

With NutriRice, Buhler and DSM have achieved a real

breakthrough: they have developed a method of

producing rice flour from broken rice and reshaping it

into perfect rice grains in a special extrusion process.

The desired vitamins and minerals are enclosed within

the extruded grains. This makes the enriched grains

totally unobtrusive, and virtually none of the nutrients

are washed out: for example tests have shown that

more than 90 percent of added vitamin A or added

folic acid reach the plate. The rice grains are mixed in

a ratio of 1 or 2:100 with natural rice, to ensure that

consumers take in sufficient nutrients.

WITH NUTRIRICE

75-95%of the added nutrients and vitamins reach the plate.

NUTRIRICE – GOODAND HEALTHY.

1 Rice has a naturally high vitamin and mineral content. 2 Many important micronutrients are lost during processing. 3 Polished rice is rich in carbohydrates but has a low vitamin and mineral content. 4 Broken rice is processed to yield rice flour. 5 The rice flour is enriched with vitamins and minerals. 6 The shape and color are flexibly adapted to the rice grains. 7 NutriRice retains its nutrient content during storage, washing and cooking.

3

4

5

6

7

2

1

SUSTAINABLE ETHANOL PRODUCTION IN SWEDEN, THANKS TO BUHLER.

1

2

3 4

6061

Lantmännen, Sweden. Lantmännen, a major Scandinavian group of companies, is in-volved in the production of foods, bioenergy, and agriculture. Its owners are some 44,000 Swedish farmers, and it employs 13,000 persons. For over seven years, Lantmännen has been a successful producer of ethanol, relying on the vast know-how of Buhler in the con-ditioning and processing of the raw material. From reception to cleaning and grinding, Buhler equipment ensures the best possible preparation of the grain prior to the fermenta-tion process. The byproduct from this process, the so-called dried distiller’s grains with solubles (DDGS), is transformed by Buhler process technolo-gy into pellets optimally suited for making animal feeds due to their high protein content. Lantmännen will continue to rely on Buhler in the future, with an expansion of the existing facil-ity now under construction. It will go on stream in the course of 2008.

1 The ethanol production facility operated by Lantmännen in Norrköping, Sweden. 2 Gunnar Johannsson schedules ethanol system main-tenance. 3 The feed pellet mill for processing DDGS. 4 Stones and other contaminants are removed from the grain by a destoner. 5 Sandra Halldin, process operator, ensures smooth operation.



Ethanol can be extracted from plants which contain sugar

or from substances, such as starch or cellulose, which can be

converted into sugar. While Brazil gets most of its alter-

native fuel from sugar cane, in the USA the commonest raw

material is corn. More than 25 percent of the USA’s corn harvest is currently converted into bioethanol. By 2012,

today’s annual production of 21 million tons of bioethanol is to be increased to 36 million tons.

When producing ethanol from corn, only the starchy portion is used. Conventionally, the entire corn kernel is ground

and the starch is converted into sugar at high temperatures by an enzymatic process. Ethanol is then produced

from the sugar by fermentation using yeast cells. The ethanol obtained is then purified by distillation and dehydro-

genation and concentrated as required. The remaining solid residues are separated, dried, pelletized and sold

as protein-rich animal feed.

Corn is roughly 70 percent starch, 8 percent protein and 4 percent fat. The rest is made up of water, fiber, sugar

and various minerals. By fractionating (splitting) the corn kernel into its individual components, Buhler’s Selective

Milling method unlocks the full potential of every kernel of corn. The unfermentable parts are removed and sep-

arated into a bran fraction and a germ fraction. The germs are processed into valuable edible corn oil, while the

bran is used as feedstuff. The starch content in the remaining endosperm increases as a result of removal of

the unfermentable parts and therefore makes actual ethanol production more efficient. In this way, using Buhler’s

Selective Milling process increases the production capacity of an existing ethanol plant by 15–20 percent and

reduces the amount of energy used to produce ethanol by 10 percent.

ENERGY USAGE DROPS BY

10%if the corn kernel is fractionated first.

A CORN KERNEL CONTAINS

70% starch, which can be fermented to yield ethanol.

CORN YIELDS MORE THANKSTO SELECTIVE MILLING.

Endosperm. The starch content of the corn kernel is converted into sugar with the help of enzymes and then fermented.

Hull (bran). Fibers which are processed into high-quality feedstuffs for animal breeding.

Germ. The high-quality vegetable fats from the germ are used in cooking.

PELLETS

ETHANOL

CORN OIL

5

SOPHISTICATED DIE CAST COMPONENTS FROM PORTUGAL,THANKS TO BUHLER.

1

2

6667

Küpper & Schmidt, Portugal. This die casting foundry, which is part of the Schmidt Leichtmetall Gruppe, specializes in the manufacture of technologically demanding die cast components for the European automotive industry. In its factory near Porto, it oper-ates 15 fully automatic die casting systems with locking forces up to 1,400 metric tons. All of its die casting machines were supplied by Buhler. In a new hall, the company put a new CARAT 130 two-platen machine into service some months ago. One of the main reasons for the decision to opt for the new CARAT was the restricted space available in the pro-duction hall. The area originally set aside for an 840-ton machine was sufficient to accom-modate a CARAT 130 machine with a locking force of 1,300 metric tons, thanks to its compact, very short design. The results achieved to date in routine production confirm the benefits offered by the new Buhler machine series – the casting of sophisticated compo-nents without flash and with high efficiency. Moreover, the Schmidt Leichtmetall Gruppe operates its own die-making department and a manufacturing shop equipped with state-of-the-art machining and assembly equipment with robotized CNC centers. It enables the company to supply ready-to-in-stall die cast components to its customers.

1 The production facility of Küpper & Schmidt in S.Tiago de Riba-Ul. 2 Umbellino Duarte, mechanic, in charge of die casting machine maintenance. 3 The compact design of the CARAT reduces its space requirement.



Metal casting was one of the first industrial methods ever devel-

oped: a number of historical periods, such as the bronze age and

the iron age, have even been named after the materials used.

Since then, casting technology has moved on a long way, with one

of today’s most important techniques being die casting. In die casting, molten metal – for instance aluminum,

magnesium or zinc – flows into a die between two die mounting platens, where it cools and solidifies. A modern die

casting machine essentially consists of a shot unit and a die closing unit. The hot metal flows rapidly and under

high pressure from the shot unit into the die, which is clamped in the die closing unit between the two platens. The

greater the shot pressure of the metal and the size of the casting, the greater the force with which the die halves

must be clamped together and therefore the greater the required die locking force of the machine. Foundrymen call

the process of filling the die simply “the shot”, a process which lasts just a few milliseconds.

In a conventional die casting machine, die closure is brought about using a toggle joint – a concept which is now

more than 80 years old. The die halves are pressed together prior to the shot by the toggle link, which is braced

against a rigid third platen. Thanks to its lever action, the steel toggle joint can develop a large die closing force,

which is also necessary to obtain a casting of sufficient quality with small amounts of flash. This technique is

known as “three-platen” technology.

With the two-platen method, Buhler has developed an innovation which improves die closure still further. As its

name suggests, the method does away with the third platen and toggle joint. The closing force is applied by

four hydraulic clamping cylinders, which press the two platens firmly together. The clamping cylinders are encap-

sulated to protect them from the harsh foundry atmosphere and are able to exert closing forces ranging from

1,050 to 4,400 tons depending on machine size, these forces also being distributed more evenly over the entire

surface area of the platens. This results in a very significant increase in component quality.

ALUMINUM FLOWS AT A TEMPERATURE OF AROUND

650 ºCinto the die, which is itself heated to 250 °C.

IN THE CARAT SERIES A DIE CLOSING FORCE OF 1,500 T TO

4,400 Tis applied to press the platens together.

MORE POWER THANKS TOTWO-PLATEN TECHNOLOGY.

Fixed platen

Die

Clamping cylinder

Drive unit

Locking block

Moving platen

4

3

Sustainable business development.

Dear Sir or Madam. Buhler significantly increased its sales

and profits in the past year, achieving a level never attained

before in the history of the Group. Order bookings increased

to CHF 1,838 million compared with CHF 1,691 million a year

ago. Consolidated sales (turnover) grew 10% to CHF 1,773

million, with an EBIT margin of 7.8% which grew markedly

by 22%. The corporate result of CHF 130 million is slightly

higher than in the previous year.

Encouraging development of market position. The solid

economy in many markets allowed Buhler to achieve sound

growth, especially in the Feed, Sortex, and Chocolate & Co-

coa business units. With more than 20% higher sales, these

units further expanded their market position.

Also the other business units achieved good results, though

the general conditions were less favorable for them. They

faced high raw materials costs and a downturn in the grain

market. Wheat prices rose in 2007 to a level never reached

before, which put pressure on the margins of the grain pro-

cessing industry. As a consequence, planned capital invest-

ments were postponed or delayed, which had an impact es-

pecially on the order bookings of the Milling, Grain Handling,

and Pasta & Extruded Products business units. The Die

Casting division was able to maintain its position in the

fiercely contested automotive market. In the Brewing/Malt-

ing and Rice Milling business units, a trend reversal for the

better can be perceived.

The high-margin Customer Service business once again de-

veloped excellently, achieving growth of 15%. In some cases,

it accounts for as much as one quarter of sales revenues in

the divisions. This growth goes to show that customer ser-

vices and consulting offer customers true added value.

Growth was primarily organic. Only the full consolidation of

the U.S. die casting machine manufacturer Prince acquired

in 2006 contributed CHF 25 million to growth. The influence

of exchange rates is all but neutral.

Urs Bühler, Chairman of the Board (left), and Calvin Grieder, Chief Executive Officer (right), in the newly built Buhler Customer Center in Uzwil.

LÖSUNGEN FÜR UNSERERE KUNDENVORWORT


3637

Strong growth in Europe and in new markets. In the past

year, Buhler continued to build regional platforms in all major

markets. The success of this concept was particularly evident

in the Americas, where sales grew 24% from a year ago, and

in East Europe, where the new market organization generat-

ed growth exceeding 20%. The European markets developed

excellently, growing 15%. The regional organizations were

substantially expanded also in Asia. In India, Buhler’s sales

increased 37%, whereas China suffered from low order book-

ings in the first half of the year under review. This was espe-

cially due to the changes in credit granting that the Chinese

government initiated. Sales in Africa were also lower than in

the previous year. The Near East, on the other hand, grew

sharply by 64%.

New production system. Once again, Buhler markedly in-

creased its profitability despite the sharp rises in raw materi-

als and energy prices. As in the past years, one of the main

factors contributing to this was efficient cost management at

all levels and the further improvement of in-house processes.

In the year under review, a concept for the first time became

effective which had a substantial impact on profitability and

will continue to do so in the future. Buhler introduced a new

production system which is modeled on an idea implemented

by the Toyota car company. “Total Synchro,” as the system is

called at Buhler, ensures that all services provided to custom-

ers intermesh seamlessly – from order receipt to hand-over

to the customer, with the individual customer orders setting

the rhythm. Following pilot projects in the assembly shop in

Uzwil and in the Chocolate & Cocoa and Grinding & Disper-

sion business units, this concept is now being rolled out on a

global scale in all business units. It requires staff at all levels

to think differently and will produce a lasting change in our

corporate culture.

Investing in the future. The focus of all our efforts is on find-

ing new solutions enabling our customers to achieve a higher

level of differentiation in their respective markets. In the past

year, Buhler therefore spent over CHF 74 million on research

and development. That is about CHF 4 million more than in the

previous year. About one third of these funds were spent on

the development of innovative solutions. Two thirds were in-

vested in the targeted optimization of products and improve-

ment of productivity. This ratio will continue to be changed in

the future in favor of so-called “breakthrough opportunities.”

In the year under review, the Buhler London sales organiza-

tion and the Sortex business unit moved to a new building,

which also accommodates sorter production. In China, two

factories had to be relocated due to urban development

projects. The first project was completed by the end of 2007.

Our main factory in Wuxi will start production at the new site

in 2008. The factory rebuild in Braunschweig is progressing

on schedule.

Strategic market expansion. In the year under review,

Buhler acquired a 51% stake in the German family-owned

company G.W. Barth AG. This plant supplier to the confec-

tionery and food processing industries is a global leader in

the field of roasting systems and cocoa and nut processing.

The company is being integrated in the Chocolate & Cocoa

business unit and opens up new opportunities for Buhler

in related market segments. The current site of G.W. Barth

will be retained in the German town of Freiberg and will be

expanded into a joint center of competence. G.W. Barth has

70 employees and generated sales of EUR 25 million.

The Die Casting division has made a large stride in developing

the Japanese market. It signed a joint venture agreement with

the Japanese company JSW (Japan Steel Works). It has

started with a sales and service agreement between the two

companies. In the medium term, it will also cover manufac-

turing, engineering, and research & development.

Human resources. The number of employees increased in

the year under review by 4% to 6,900. Thus, the Buhler Group

once again created new jobs. Staffing levels increased pri-

marily outside Switzerland, especially for strengthening our

local sales and service force. One third of all employees are

still located in Switzerland. Their number has been main-

tained constant, which demonstrates the high competitive-

ness of this site.

The Annual General Meeting in 2007 appointed Josef M. Müller,

a former Nestlé manager, to the board of directors. Thus, an-

other competent personality from the food industry has

joined the Buhler board of directors

Outlook and thanks. The existing portfolio continues to of-

fer a strong basis for healthy growth, even if individual busi-

ness units are facing considerable challenges due to the high

raw materials prices and weaknesses in certain markets. But

we are confident in view of our above-average order backlog

of CHF 871 million. We firmly believe that we can continue the

success of the past year and that, building upon the high level

already achieved, we will once again markedly increase our

sales and profits.

We owe the outstanding result of 2007 to the large dedication

of our competent and business-minded staff worldwide. They

took up the challenges and were prepared to try out novel

approaches. They deserve our warm thanks for their extraor-

dinary commitment. And we thank our customers for their

confidence and pleasant collaboration.

Urs Bühler Calvin Grieder

Chairman of the Board Chief Executive Officer

7273

INNOVATIVE SOLUTIONSFOREWORD


Grain Processing. Growth at a high level.

Business development. In fiscal 2007, the Grain Process-

ing division increased its sales by 12% to CHF 1,017 million

and thus for the first time ever passed the mark of one billion

Swiss francs. Above-average organic growth was achieved

by the Feed, Sortex, and Malting business units. Order book-

ings grew by CHF 121 million to CHF 1,063 million. Despite

the sharp rises in materials and energy costs, the result was

improved at a higher than proportional rate from a year ago.

Market development. Due to high demand and low har-

vests, the prices of wheat and other agricultural produce

almost doubled in the course of fiscal 2007. Toward the end

of the year, this to a certain extent restrained investments in

the flour milling industry, a situation which affected espe-

cially the Milling business unit. But overall, the markets in

Asia, Russia, and South America showed encouraging

growth. Attractive opportunities also existed for the various

business units in Europe and the U.S.

In the year under review, the Milling business unit further

strengthened its already strong market position and

achieved sales of CHF 574.4 million. This growth of 11% was

generated on the one hand by a large number of follow-up

projects of satisfied customers, and on the other hand by

new customers and ethanol plants. In Southeast Asia, India,

Africa, and South America, success was achieved through

market-specific solutions. Moreover, demand for noodles

and bakery products is high in Asia, which stimulates the

flour market. In Europe, efficiency enhancements and the

need to comply with legal food sanitation regulations were

the main factors driving the milling industry’s investments.

Despite a lack of large-scale projects and a decline in animal

feed production in Europe, the Feed business unit continued

its vigorous growth of the previous year. Sales increased

22% from CHF 145.6 million to CHF 177.8 million. The Oil-

seeds and Wood Pellets segments made a large contribu-

tion to this result.

The Sortex business unit generated sales of CHF 110.2 mil-

lion in 2007, which translates into 19% growth. With the ex-

ception of China, it further expanded its strong market posi-

tion. The launch of the new SORTEX K line of sorters for sort-

ing fresh and deep-frozen foods such as fruit and vegetables

on the basis of color, shape, and size has already met with

high acceptance in the marketplace. As of the end of Febru-

ary 2007, the Rice business unit was integrated in the Sortex

business unit. Buhler Sortex generates about half of its sales

revenues in the rice market and can round off its product

portfolio by this integration of Rice activities. Together, the

business units will focus especially on the key markets in In-

dia, China, and Southeast Asia in the field of rice processing.

The Rice business unit achieved sales of CHF 33.4 million

(previous year: CHF 29.2 million).

The Grain Handling business unit was unable to repeat the

sharp business volume increase of the previous years. The

high price of raw materials delayed investments. Sales

amounted to CHF 56.1 million, which is appreciably below

the level of a year ago. On the other hand, profitability im-

proved.

The Brewing/Malting business unit generated sales of CHF

64.8 million and thus grew 19%. In a highly cyclic market, es-

pecially Malting profited from strong demand because a

number of projects postponed in the past were implemented

in 2007 due to the higher malt prices. In view of the close

technological relationship between Brewing and Milling, the

two business units were merged effective January 1, 2008.

This will produce valuable synergies in sales, engineering,

development, and customer service.

Innovation and development. The focus is on food sani-

tation and the retraceability of the value-adding chain. At the

same time, convenience, health, and nutritional aspects are

becoming increasingly significant. In all, the Grain Process-

ing division invested CHF 33.3 million in developing new so-

lutions for producing safe foods and hygienic animal feeds.

Outlook. With a backlog of orders of CHF 536.4 million, the

Grain Processing division faces the future with confidence,

again expecting marked growth in sales in 2008. But overall,

the division believes that this year will be difficult, since the

higher prices of raw materials might affect investment deci-

sions for large-scale projects.

56.5% Milling

17.5% Feed Milling/Oil Milling

10.8% Sortex

5.5% Grain Handling

6.4% Brewing/Malting

3.3% Rice Milling

Sales by business units in %

200520062007

2005 2006 2007

499.4 515.5 574.4

106.7 145.6 177.8

79.9 92.3 110.2

66.2 70.1 56.1

55.7 54.3 64.8

39.2 29.2 33.4

847.1 907.0 1,016.7

Total sales Grain Processingin mill. CHF

1,016.7

Sales by business units in mill. CHF

Total sales

Engineered Products.Increasing profitability.

Business development. In an essentially favorable market

environment, the Engineered Products division achieved

sales of CHF 539.6 million, which translates into growth of

CHF 44.8 million or 9%. This includes CHF 117 million sales

in Customer Service, which grew 9% and goes to show the

importance of the Customer Service business for the divi-

sion. Order bookings amounted to CHF 576.8 million com-

pared with CHF 554.3 million in the previous year. Especially

encouraging is the fact that the Chocolate & Cocoa business

unit continued to develop, contributing a higher-than-pro-

portional share to the growth of the division. The result of

the division has developed very positively, since it achieved

growth without any additional increase in costs.

Market development. The truth that chocolate consump-

tion will increase as a country’s prosperity rises has been

confirmed. Niche providers and industry giants alike ex-

panded their global capacities in the past year. This favor-

able situation benefited the Chocolate & Cocoa business

unit, which also succeeded in entering the Chinese market

together with international chocolate producers. In the year

under review, the Chocolate & Cocoa business unit once

again achieved a brilliant result. Without appreciably raising

its staffing levels, the unit generated sales of CHF 274.0 mil-

lion and thus exceeded the previous year’s already high level

by 27%. Moreover, Buhler acquired a majority stake in the

German plant supplier G.W. Barth effective November 22,

2007. This is expected to increase future sales by another

CHF 40 million.

Sales of the Pasta and Extruded Products business unit

declined slightly from a year ago, reaching CHF 145.7 million

in 2007. Especially the Pasta business felt the dampening

effect of the high grain prices. The industry’s willingness to

invest slackened off particularly in the top market segment.

On the other hand, the Extrusion Systems unit was highly

successful, thanks to a number of large-scale contracts.

With sales of CHF 86.9 million (previous year CHF 81.6 mil-

lion), the Grinding & Dispersion business unit has gained

some impetus. Its traditional printing inks market remained

stable. In India, China, and East Europe, some interesting

projects were realized. Today, systems for the production of

materials used in making flat LCD and plasma display

screens account for a substantial part of total business.

Due to existing overcapacities, the PET industry is under-

going a consolidation phase. As a consequence, only a few

investments were made in new PET plants. On the other

hand, market developments were encouraging in the field of

“bottle-to-bottle” PET recycling. In this challenging market

environment, the Thermal Processes business unit achieved

sales of CHF 31.9 million, which is below last year’s level.

The Nanotechnology business unit specializes in the pro-

cessing and upgrading of nanoparticles and in the produc-

tion of ready-to-use nanoparticle and nano-soft-structure

dispersions. In the year under review, this as yet young busi-

ness unit succeeded in seizing some of the many existing

opportunities, generating sales of CHF 1.1 million (previous

year: CHF 0.2 million) and thus to achieve a small break-

through. This is all the more significant because the present

nanomaterials market shows signs of consolidating and in-

dividual providers have disappeared.

Innovations and developments. In the past fiscal year,

the Engineered Products division spent over CHF 27.4 mil-

lion on research & development. The focus in the Pasta &

Extruded Products business unit was on a process for

extruding vegetable proteins. The Grinding & Dispersion

business unit concentrated on the development of its new

MicroMedia series for manufacturing nanodispersions and

on optimizing existing products. The Thermal Processes

business unit dedicated its research efforts to the further

development of a manufacturing process for PET pellets

which requires less energy and raw materials.

Outlook. The backlog of orders as of the end of 2007 was

CHF 271.0 million. Therefore, the Engineered Products divi-

sion expects growth on approximately the same order for

the current year, with the situation varying for the individual

business units. While the markets of the Pasta & Extrusion

and Thermal Processes business units are not so favorable,

Chocolate & Cocoa, Grinding & Dispersion, and Nanotech-

nology expect a good year.

50.8% Chocolate & Cocoa

27.0% Pasta & Extruded Products

16.1% Grinding & Dispersion

5.9% Thermal Processes

0.2% Nanotechnology

Sales by business units in %

Total sales Engineered Productsin mill. CHF

539.6

2005 2006 2007

179.9 215.8 274.0

162.5 153.4 145.7

72.3 81.6 86.9

48.1 43.8 31.9

0.6 0.2 1.1

463.4 494.8 539.6

Sales by business units in mill. CHF

Total sales

200520062007

Die Casting.Position maintained.

Business development. In the past year, the Die Casting

division generated sales of CHF 200.9 million, which is al-

most 6% higher than a year ago. The shortfall in order book-

ings in mid-year was offset by the end of the year. Compared

with the previous year, orders received increased by about

4% to CHF 181.7 million. A positive impact on the develop-

ment of business resulted from customer service at the U.S.

die casting company Prince acquired in 2006. Thanks to sys-

tematic cost management and timely adjustment of global

capacities, the result was improved from 2006.

Market development. In all, worldwide capital spending

on aluminum and magnesium die casting systems remained

at the level of a year ago. Whereas the weakness of the Amer-

ican automotive industry reduced the preparedness of ven-

dors to invest in the U.S., the Buhler Die Casting division

benefited in Europe from the continued good business cli-

mate. Germany was even the largest single market of the Die

Casting division in 2007, thanks to the high investment rate of

casting companies. Also East Europe developed encourag-

ingly. Capital spending in that region was attributable more

to the sharp growth in the local markets than the relocation of

production capacities from the West to the East. Stability

characterized the difficult markets in China, India, and Korea.

The numerous local competitors tend to concentrate on the

small-machine segment so that Buhler is focusing especially

on the potential for high-tonnage machines with locking

forces exceeding 1,000 metric tons. These are applied pri-

marily for manufacturing sophisticated high-quality compo-

nents such as engine blocks, crankcases, or gearboxes. In

India, too, a trend exists toward higher-grade machines with

higher locking forces. In Japan, a cooperation agreement

was signed with Japan Steel Works to improve development

of the Japanese market. One of the division’s particular high-

lights is the successful sale of the first two-platen die casting

machine (CARAT 400 Compact) – the largest in the world – to

a leading automobile manufacturer. Another breakthrough

was the entry into the demanding world of structural auto-

motive components with a machine with 3,200 metric tons’

locking force.

The Customer Service business once again developed en-

couragingly. The service packages developed in the previous

years, including the reconditioning and retrofitting of existing

production systems, achieved significant successes also in

2007. One of the most prominent examples in this connection

are the services offered by BuhlerPrince in the U.S. and with

a cooperation partner in Italy.

Innovation and development. At the GIFA 2007 casting

trade show in Germany, Buhler Die Casting presented its

new CARAT 130 Compact die casting system. The new de-

sign based on the Buhler two-platen technology met with

lively interest, and the machine is now in service at the first

customers’ sites. The machine series is available with lock-

ing forces ranging from 1,050 to 4,400 metric tons. Compared

with the conventional toggle joint technology, the CARAT

machine requires less space. Its high uptime, low mainte-

nance requirement, and improved die closing unit enhance

efficiency in the production of technically sophisticated cast

components. Productivity is increased also by the process

for filling the shot sleeve in the secondary process time

(Speedial), which was also presented at the GIFA. In applica-

tions at customer sites, cycle times are reduced by as much

as 15%.

Outlook. The backlog of orders as of the end of 2007

amounted to CHF 59.6 million and was lower than expected.

Nonetheless, Buhler Die Casting is confident that a good

year lies ahead due to the development of business in the

first months and expects further growth. On the one hand,

the number of orders received for the CARAT die casting

machine have increased nicely. On the other hand, the ex-

pansion of the sales organization in East Europe will stimu-

late business. Furthermore, the joint venture entered into

with Japan Steel Works and the planned manufacture of

Buhler machines in Japan will increase acceptance in the

Japanese marketplace.

200720062005

190.3177.3

Total sales Die Castingin mill. CHF

200.9

200.9Total sales

In all the world’s markets.

Aiming for customers’ success. Buhler is present with

40 companies, numerous sales offices, and various agen-

cies in some 140 countries around the world. More than

1,400 sales and service staff are at work every day for the

Group’s customers worldwide. This global orientation has a

long tradition. Buhler has been present in France for over

115 years, in Spain and Italy for over 110 years, and in South

America for 80 years. Buhler can also look back on a long

activity in Asia, having been represented by its own com-

pany for over 60 years in Japan and over 25 years in China.

The sales and service organizations of Buhler are grouped in

regional platforms, which – beside sales and service – also

fulfill functions such as engineering, sourcing, manufactur-

ing, and logistics. This broad and global sales and service is

a crucial success factor for Buhler. Its employees on site are

familiar with the requirements of the local markets, which al-

lows a customized range of services to be provided close to

the customer.

In the past year, Buhler further pushed the establishment of

the regional platforms in all the important markets. The suc-

cess of the concept is evident in many places, including East

Europe, where the creation of the new market organization

triggered powerful growth. The regional organizations were

substantially expanded also in China and India. In Singapore,

a new service platform was established and the range of

services offered was extended. In Yokohama, Japan, the

“Regional Application Development and Education Center”

(RADEC) started operations for the Grinding & Dispersion

business unit in 2007. Taiwan, South Korea, and Japan are

considered to be the leading nations in the development of

new technologies and applications in the printing inks, digi-

tal printing, color filter, and electronics industries. Respond-

ing to this situation, Buhler’s new center offers existing and

prospective customers in the region access to the facilities

for conducting tests, developing applications, and training

personnel.

Global production is efficient. The principle of market

development through regional factories or vendors charac-

terizes Buhler’s production structure and was further devel-

oped in 2007. Buhler’s manufacturing facilities in North

America, South Africa, India, and in the Chinese cities of

Shenzhen, Xian, and Changzhou mainly supply customers

in the respective regions. The factories in Uzwil (Switzer-

land), Braunschweig (Germany), Wuxi (China), and Madrid

(Spain) ship their goods on a global scale. All sites adhere to

the rigorous Buhler quality standards. Decentralized order

processing enables customer needs to be directly satisfied

in the different regions. At the same time, this is a prerequi-

site for providing services at optimized cost by utilizing cost

advantages while at the same time minimizing transaction

costs.

In the Chinese city of Wuxi, Buhler’s newest production fa-

cility is currently under construction in a rapidly growing de-

velopment zone adjacent to the local airport. This allows

productivity to be increased in the processes between sales,

engineering, supply management, and production. Con-

struction of the new building became necessary because of

an urban development project in Wuxi. The sales organiza-

tion will relocate in the second quarter of 2008, and the fac-

tory will move by the end of the current fiscal year. The fac-

tory in Changzhou also had to move due to an urban devel-

opment project and has relocated to a new building some

kilometers away without any major problems being encoun-

tered.

The restructuring of the buildings in Braunschweig, which

started in early September 2006, is progressing according

to schedule and will be completed by mid-2009. Despite

considerable restrictions, all orders were processed on

schedule. Real estate and buildings not required for opera-

tions were successfully sold. The remaining property – to

which a new access road has been added – allows an opti-

mal design of the organization and will fulfill requirements

also in the long term.

In 2007, the sorter production facility in the United Kingdom

also moved. The former factory was located on the future

premises of the Olympic Games 2012 and therefore had to

be relocated. The new building and the move took place

without any major interruption of output.

Platforms for supply chain management. The on-sched-

ule start-up of a plant is a must for Buhler customers. For

each plant supplied, an average of some 5,000 components

or 500 metric tons of material must be available on site in

good time. This crucial job is fulfilled by the Buhler Supply

Chain Management department. It also assures supplies of

spare and wear parts to customers. A total of about 40,000

shipments are handled annually.

These jobs are processed by so-called regional “supply plat-

forms,” which are responsible for ensuring timely provision

of the products from Buhler factories or from subcontrac-

tors located in the different regions. In 2007, the Southeast

Asia platform with its base in Singapore was added to the

traditional platforms in South America, North America,

South Africa, China, and Europe. In addition to the decen-

tralization of logistics functions, engineering functions must

also be decentralized for regional order handling. Shipping

logistics are handled through an outside specialist.

Sourcing as a strategic success factor. With a total vol-

ume of CHF 730 million (previous year: CHF 660 million), the

sourcing of raw materials, components, and finished prod-

ucts are crucial for Buhler. The Procurement department of

Buhler is oriented worldwide to the organization of the pro-

duction sites. West Europe with about 70% remains the

most important sourcing market. However, the significance

of the other markets is increasing steadily. In the past year,

the emphasis was on expanding the supplier networks in

East Europe and Asia for raw materials and cast compo-

nents. In India and China, most of the goods required for lo-

cal production are already being procured on site. Despite

the rise in raw materials prices, the total sourcing cost was

reduced last year by about 3%. This trend was assisted,

among other things, by new forms of collaboration with stra-

tegic suppliers.

The increasing complexity of the components to be pro-

cured and the sharp rise in raw materials prices require care-

ful control over the roughly 5,000 vendors. Sourcing activi-

ties are subject to proven commercial guidelines that are

applicable throughout the Group. The suppliers’ services

are continuously assessed and rated on the basis of clear

criteria. In addition, the purchasers in the local procurement

organizations are regularly trained and the processes

checked on site. The efforts of the global Supply Manage-

ment staff were recognized in the spring of 2007 with an im-

portant distinction. In a rating of the renowned Fraunhofer

Institute, the Procurement department of Buhler achieved

the excellent fifth place among a total of 125 European com-

panies assessed.

8081



Higher staffing levels in Asia. As of the end of the year

under review, Buhler employed 6,900 persons, which trans-

lates into a rise of 4% from a year ago. Buhler mainly hired

new employees for expanding its global sales and service

platform. The number of persons employed in Switzerland –

2,863 – remained at the level of the previous year.

Investing in future success. For Buhler, constant train-

ing and continuing education are very high priorities. The

focus on the one hand is on targeted programs for new and

existing management staff in order to enhance their personal

development and train them in specialist subjects. This also

includes an in-house assessment process for candidates for

top future management positions in addition to the appropri-

ate coaching. A second emphasis is on centrally organized

courses for individual continuing education of employees.

Numerous employees took advantage of the wide range of

training opportunities offered in 2007, with about one fifth of

the roughly 1,400 attendees coming from the international af-

filiated companies. A third range of training opportunities are

available at a local level and give consideration to the specific

requirements of the sales organizations. In 2007, the global

sales and service staff attended a three-day course in which,

headed by the affiliate managers, case studies tailored to

local conditions were solved. The personal development of

every employee is also fostered by the annual performance

review meetings with supervisors and the jointly defined per-

formance goals.

At present, 400 apprentices worldwide are undergoing train-

ing at Buhler in commercial and technical vocations. The in-

tegral vocational training approach is designed to prepare

young people technically, methodologically, and socially for

the diverse requirements they will have to satisfy in their

future jobs. For a number of years, Buhler has applied the

Swiss apprenticeship training model also abroad. It is highly

sought-after by local young people. In China, 50 and in Ban-

galore in India 27 apprentices are receiving such training. In

Switzerland, Buhler will introduce an entirely novel voca-

tional training model in 2008. Regardless of the specific

vocation selected, technical apprentices will in the future

complete an introductory year providing them with an insight

1 Administrative Functions 10.0%

2 Customer Service 10.0%

3 Sales 9.0%

4 Engineering 13.0%

5 Research and Development 4.0%

6 Manufacturing and Logistics 45.0%

7 Others 9.0%

1 Switzerland 41.6% 2,863

2 Rest of Europe 23.5% 1,620

3 Asia 22.9% 1 ,579

4 North America 4.5% 311

5 Latin America 2.9% 199

6 Africa 2.4% 168

7 Middle East 2.2% 151

Human Resources.

1

2

3

46 75 1

2

3

46

7

5

Employees by functions 2007

(in % )

Employees by regions 2007

(in % and absolute figures)

into a broad range of activities. Toward the end of their

training, they may be delegated abroad on international as-

signments at customers’ sites or Buhler factories outside

Switzerland. Buhler is convinced that this novel concept will

prepare apprentices even better for meeting the future re-

quirements of the networked world of labor.

Personnel marketing. In order to cope with the future

growth of the Group, Buhler is giving a high priority to the

strengthening of its staff base by selecting the best possible

candidates. After joining the organization, employees are

familiarized with the company and its services in various

induction programs. Graduates from universities of applied

science and technical universities inside and outside

Switzerland are particularly important in the recruitment

process. In the past year, Buhler once again successfully

took part in various trade shows to present itself. In addition,

several interns were offered the opportunity to gather their

first professional experience at Buhler.

Sharing success with employees. A standard bonus

system has been in place at Buhler in Switzerland since

2006, which includes all employees at all hierarchical levels.

This enables them to share the success of the Group. If the

Group achieves a defined minimum EBIT margin, a financial

amount will be disbursed which is covered by social secu-

rity. Performance-based bonus systems adjusted to the

local conditions are also in place for employees in the inter-

national affiliates.

Social policy. The representatives from the Group met

twice last year with the European Works Council for infor-

mation events in which members of corporate management

provided information on ongoing projects and discussed

future challenges that Buhler is facing. At the autumn con-

ference in Madrid, the foundations were laid for a construc-

tive collaboration that is intended to go beyond pure report-

ing. At Buhler, men and women have for years now been on

an equal footing in terms of wages and salaries. As is typical

of the industry that Buhler is engaged in, women accounted

for a low 14% of the total workforce.

Communications. Buhler utilizes different in-house and

outside communications channels for informing employees

and maintaining a regular dialog with them. Thus, corporate

management members are available to employees world-

wide twice a year in a Live Chat on the Intranet, during which

questions are directly answered.

On the Internet (www.buhlergroup.com), Buhler provides an

extensive range of information for anyone interested in the

Group. Moreover, Buhler publishes regular media releases

on business developments and relevant activities.

8283



Top quality. High quality is a prerequisite for Buhler to

secure its success in the long term. Therefore, the identi-

cal quality standards apply to all products and services

provided by Buhler worldwide. Quality assurance goes far

beyond customer-related processes, for quality enhance-

ment measures also cover human resources planning, or-

ganization development, and supply management. Buhler

operations have been ISO 9001-certified for years.

As part of the in-house “5-Star Quality” project, Buhler

continuously strives to increase the quality of its project

handling process. This effort focuses primarily on the sys-

tematic analysis of defined metrics and the initiation of ac-

tion if deviations are found. As in the past, project results

again improved markedly last year. Warranty costs once

again declined significantly in the year under review and

now amount to no more than about 1.5% of sales revenues.

At the Swiss production sites, over 9,000 suggestions

for improvement were received, which cut manufacturing

costs by CHF 2.2 million annually. The results achieved go

to show that quality continues to be perceived as an in-

creasingly important part of everyday work by employees

and the management staff alike.

Total Synchro. Buhler made an important stride toward

further improving quality awareness by launching the “Total

Synchro” project. The purpose of this concept is to ensure

that all services provided for customers intermesh seam-

lessly – from order booking to hand-over to the customer.

The project started with the switch-over to a fixed-cycle as-

sembly line approach in Uzwil. At the same time, so-called

“Just Do It Rooms” were installed in the business units,

where the decision-makers from all functions involved in

the process chain meet regularly to align their knowledge

of orders.

Daily spot information visualizes discrepancies between

the target and actual states of an order, triggering fast deci-

sions and actions for the customer’s benefit. In the course

of the year, the concept was rolled out in Braunschweig,

Yokohama, and at Buhler Bindler.

“Total Synchro” comprises the entire order handling process

and is today applied in the Chocolate & Cocoa, Grinding &

Dispersion, and Milling business units. The new work cul-

ture is already yielding perceptible improvements in terms

of reduced cycle times, schedule compliance, productivity,

and quality. The high commitment of the management staff

and employees to implement this change is producing a

high inherent dynamism meeting with an encouraging level

of acceptance.

Quality, environment, and safety.

8485

Protecting the environment. Buhler understands envi-

ronmental protection as an important corporate responsi-

bility. Its environmental management concept allows the

systematic processing of ecological aspects, giving them

the necessary weight beside fulfilling commercial and so-

cial requirements. Its guidelines are binding upon all Buhler

factories worldwide. The entire Buhler production organi-

zation was ISO 140001-certified in 1996 as one of the first

companies in Switzerland. Since then, all intermediate

audits and recertifications have been passed. One high

priority is to use resources sparingly. Energy consumption

at the Uzwil site has remained all but constant over the

past years, despite a rise in output. In 2006, it amounted

to 135.4 terajoules, which translates into 45.6 gigajoules

per person employed. In a comparison with 46 other com-

panies from the Swiss mechanical engineering industry,

Buhler is positioned in the first and therefore best quarter

in terms of per-capita energy consumption. Water usage

dropped in the year under review by one third to 9,200

cubic meters, thanks to the installation of control valves in

the fresh-water supply lines to the treatment baths. Virtu-

ally all waste is recycled. Systematic grading allows scrap

metal to achieve a better price in the marketplace.

But also the services and products provided by Buhler take

environmental protection into account and help utilize re-

sources consciously. For example, an innovative solution

developed by Buhler in the field of grain cleaning ensures

compliance with the food law limits by separating micro-

organism-infested or damaged grains. Another example is

the recycling of PET bottles, which is only possible on the

basis of a Buhler process. Moreover, the plant and equip-

ment that Buhler supplies in most cases greatly reduces

energy and raw materials consumption, thanks to the state-

of-the-art technology they are based on. In the production

of ethanol, the prior fractionation of the corn (maize) kernel –

a Buhler-developed process – cuts the energy requirement

by about 10%.

Improvement of industrial safety. The safety of em-

ployees is a top priority especially in the field of plant

and equipment construction. For years, Buhler has made

considerable efforts to prevent accidents on the job and

to mitigate consequential damage. The many measures

taken in the year under review once again allowed the

number of incidents to be reduced. Thus, employees were

instructed in their areas of specialization on how to handle

chemicals, prevent fires, and transport loads in a respon-

sible manner. The safety training of employees is ensured

by a safety adventure course including a final test. It was

designed by Buhler apprentices. Also outside companies

frequently use this safety training facility.

As one of the first companies to enter the nanotechnology

business worldwide, the Buhler Partec business unit intro-

duced a certified risk management system. The German

TÜV Süd testing authority tested and certified the system

on the basis of established criteria and safety requirements.

Buhler Partec’s primary aim in this is to provide an exten-

sive overview over strategically relevant developments at

the legislative and social levels and to ensure that new find-

ings from science and technology will be continuously in-

corporated in the orientation of corporate activities.



Financial risk management. The board of directors and

corporate management approved and introduced the cor-

porate treasury policy in 2003. Among other things, it regu-

lates the management of risks and opportunities in interest

and exchange management (asset and liability policy, for-

eign exchange policy). In addition, the guidelines regulate

the financing principles for the Group and Group compa-

nies, including the dividend policy. Among other things, the

bank policy defines the opposite parties limits for money

and foreign exchange trading.

In 2007, an overlay management strategy was approved

for the commodity risk. All activities covered by these fi-

nance policies are decided and checked in the course of

the monthly meetings of the Buhler finance committee. This

committee includes the CFO, corporate treasury, finan-

cial services, and the financial managers of Bühler GmbH

Braunschweig. The board of directors grants guidelines au-

thority as part of the annual budget process. Reporting and

risk analysis according to IFRS 7 are detailed in the note to

the financial statements.

The Operational Risk Diagram (ORD), which has proven its

worth for some years now, regulates financial control in the

processing of plant construction projects. The commercial

contract rules lead to the best possible agreements with

customers, causing bad-debt losses to diminish over the

past years. Today, they have become insignificant. The tax

principles, which were also created by the board of direc-

tors, cover the main issues of direct taxes, value-added

tax, transfer prices, and compliance. They support the or-

ganization of Group structures for existing legal entities as

well as legal entities to be complemented.

Operational risk management. All major customer proj-

ects are compiled in databases, and the related opportuni-

ties and risks are determined during project processing.

Beside the consideration of individual projects, risk and op-

portunity patterns are identified with the aid of data mining

technology. These patterns, in turn, support the proactive

assessment of new business. The integral Business Risk

Management system developed in 2006 supports strategic

planning. On the basis of interviews with the heads of the

business units, risk and opportunity inventories are cre-

ated for each business unit. They refer to the roughly 20

most important business perspectives such as markets;

customers; technology; and environmental factors related

to the economy, taxation, legislation, and finance. In ad-

dition to the qualitative inventory, quantitative data is ob-

tained for EBIT@risk using Monte Carlo simulations. In the

regular meetings held by the risk committee, risk manage-

ment measures are defined and assigned to the relevant

risk owners for implementation.

The operational and financial risk management tools offer

the board of directors and corporate management a set

of instruments in compliance with the requirements of OR

663 b. In addition, they offer the management direct sup-

port, thanks to their integrative design.

Beside business risk management, the corporate treasury

department in its capacity as a risk center of competence

manages the common international insurance policies for li-

ability, property, business interruption, transport, and plant

installation.

Risk Management.

8687

Internal Audit Group. The Internal Audit Group depart-

ment is an auditing and controlling body that is independent

of the management. In administrative matters, it reports to

the CFO, and in technical matters to the board committee.

Beside conducting financial and operational audits, its

function also includes the monitoring of compliance with

in-house and outside guidelines by all divisions, business

units, affiliated companies, and personnel provision trusts

within the Group. Special attention is paid to the effective-

ness and efficiency of the internal control and checking

systems. The Internal Audit Group department identifies

risks and creates suggestions for improvement along the

entire value-adding chain. Based on a Group-wide risk

analysis, audits to be performed are defined annually and

approved by the board committee. The audit results are

discussed in detail with the CEO, the CFO, and the local

management staff and presented to the board committee.

All audit findings and recommendations are recorded in in-

ternal audit reports, which are made available to the board

committee, corporate management, and outside auditors.

The Internal Audit Group department maintains a regular

dialog with outside auditors in order to exchange reports

and the information they provide on risks and to coordinate

activities.

Beside various audits performed in Group companies out-

side Switzerland, the focus in fiscal 2007 was especially on

the development of a concept for documenting the internal

auditing system in the financial processes in compliance

with the provisions of Art. 728 a, b OR (new), the revision

of the SAP authorization concept, and the management of

a project for the extensive redesign of the travel manage-

ment policy of the Group.

Swiss Code of Best Practice for Corporate Gover-

nance. Buhler bases its corporate governance activities

on the principles of the Swiss Code of Best Practice, al-

though this is not mandatory for non-listed companies. The

Swiss Code is a useful instrument for clearly defining inter-

nal powers and responsibilities and optimally designing the

interaction between the board of directors, corporate man-

agement, and the Internal Audit Group department. Corpo-

rate governance is a high priority for Buhler. Its guidelines

reflect an attitude which characterizes all corporate man-

agement activities. This also includes a corporate strategy

committed to sustainable ethic principles.



Corporate management.

Hans Peter Kunz (1945, Swiss) Manufacturing & Logistics

After completing his studies as a mechanical engineer and

working in consulting at the ETH Institute of Industrial Engi-

neering and Management (BWI), he switched to industry. He

held a number of management positions at Hilti and Schindler,

including stays of several years in Germany, Japan, and China,

before joining Buhler in 2001. He has headed the Manufactur-

ing & Logistics division since 2002.

Andreas R. Herzog (1957, Swiss) Chief Financial Officer

After graduating in business administration, he continued his

studies in various post-graduate courses in marketing and

finance management at business schools in Canada and

France. Then he occupied management positions in finance

and controlling at Ciba-Geigy, Swatch, and last as Vice Presi-

dent Finance at Swarovski in Switzerland, Latin America,

West Africa, and Germany. He has been CFO of the Buhler

Group since 2002.

Bruno Mendler (1954, Swiss) Grain Processing

He graduated in mechanical engineering from the Zurich

University of Applied Science in Winterthur and obtained an

executive MBA post-graduate degree from the University of

St.Gallen. During 20 years, he was a member of the SIG tech-

nology group in various management positions. From 1999 to

2003, he was managing director of SIG Pack Systems AG

after having been head of unit, marketing manager, and sales

representative in the company. He switched to Buhler in 2003,

taking charge of the Grain Processing division in 2004.

Calvin Grieder (1955, American and Swiss)

Chief Executive Officer

He graduated in process engineering from the Swiss Federal

Institute of Technology in Zurich. Then he occupied a number

of management positions in companies engaged in the fields

of automation and plant construction. In these functions, he

was primarily in charge of establishing and expanding inter-

national business. In 2001, Calvin Grieder switched from

Swisscom to the Buhler Group, which he has headed as CEO

since then.

Achim Klotz (1960, German) Die Casting

After completing his mechanical engineering studies at the

University of Engineering in Darmstadt, he continued his edu-

cation in marketing and business administration at a re-

nowned business school. He then worked with the Schenk

company in Darmstadt, switching in 1989 to Balzers AG, an

international group active in the coatings industry. There, he

was first in charge of sales, joining the corporate management

team later on. Achim Klotz has headed the Die Casting divi-

sion since 1998. He was concurrently in charge of Buhler

North America from 2001 to 2005.

Stefan Scheiber (1965, Swiss) Sales & Service

Business administration graduate from the University of Ap-

plied Science St.Gallen who later on continued his education

at the IMD Lausanne and other institutes. From 1988, he

worked for over ten years for Buhler in various management

functions abroad, including East and South Africa, East

Europe, and Germany. In 1999, he took charge of the global

organization of the Brewing and Rice business units and then

assumed overall responsibility for Buhler in Germany. Stefan

Scheiber has headed the Sales & Services division since

2005.

Dr. Erwin A. Frei (1957, Swiss) Engineered Products

Graduated from the Swiss Federal Institute of Technology in

Zurich in surveying and geodesy and obtained his doctorate

from the University of Berne in astronomy. Later on, he com-

pleted a post-graduate course to obtain an executive MBA

degree from the University of St.Gallen. Erwin A. Frei occu-

pied various management positions at Leica Geosystems

and headed Leica Geosystems HDS in the U.S. as president

and CEO from 2001 to 2005. He has been in charge of the

Buhler Engineered Products division since 2006.

Corporate management: Hans Peter Kunz, Andreas R. Herzog, Bruno Mendler, Calvin Grieder, Achim Klotz, Stefan Scheiber, Erwin A. Frei (f.l.t.r.)

8889



Board of directors.

The board of directors of Bühler AG and Bühler Holding AG

has eight members. They are elected for a three-year term of

office. The age limit is 70 years.

The board of directors met four times in 2007. The main sub-

jects discussed at the meetings were reviews of the long-

term strategy and the mid-term planning of business devel-

opment. The main decisions were to set up a management

company and to acquire a German company in the Engi-

neered Products division.

The three-member board committee met six times to discuss

especially the internal audits and management staff planning.

The members of corporate management were present at two

board meetings, during which mid-term planning, strategic

goals, and the budget were discussed.

Urs Bühler *

(1943, Swiss)

Chairman

Graduate mechanical engi-

neer from the Swiss Federal

Institute of Technology (ETH)

Zurich. After a number of

positions inside and outside

Switzerland, he was ap-

pointed to the corporate

management of Bühler AG

in 1975, in charge of sales

and development. From

1980 to 1984, he was presi-

dent of Bühler GmbH,

Braunschweig. In 1986, Urs

Bühler was appointed CEO

of Bühler AG, Uzwil. He

handed over the executive

management duties of

Bühler AG to Calvin Grieder

at the start of 2001. Urs

Bühler has been a member

of the board since 1981,

from 1991 as its vice-chair-

man and since June 1994

as its chairman.

Dr. Benno Schneider *

(1942, Swiss)

Vice-Chairman

Obtained his doctorate in

law (Dr. iur.) from the Uni-

versity of Berne and became

an attorney at law. After

filling various management

functions in law and adminis-

tration, he was appointed

secretary general of the

Swiss Federal Department

of Justice and Police (EJPD)

in 1976. In 1985, he retired

from this function to open

his own attorney’s office in

St.Gallen, which specializes

in business and corporate

law. Beside his activity as

an attorney, Dr. Benno

Schneider is also an entre-

preneur in the plastics and

the construction business.

He has been a member of

the board since 1992 and its

vice-chairman since 1994.

Dr. Erwin Schurtenberger

(1940, Swiss)

Studied political science

(dipl. IEP), linguistics (lic.

phil.), and political economy

(Dr. phil.) at the University of

Paris. From 1969 to 1995,

he worked in the Swiss

Federal Department of For-

eign Affairs, last as Swiss

ambassador to Iraq and

China, interrupted by stud-

ies in Hong Kong and Los

Angeles. Since 1995, he

has been active as a mem-

ber of the board and/or

advisory council in different

Chinese and international

companies and in humani-

tarian projects. He lives

primarily in China and Thai-

land. Dr. Erwin Schurten-

berger has been a member

of the board since 1995.

Calvin Grieder * *

(1955, American and Swiss)

Chief Executive Officer

He graduated in process

engineering from the Swiss

Federal Institute of Tech-

nology (ETH) Zurich. Then

he held a number of differ-

ent management positions

in companies active in the

field of automation and

plant construction. In these

functions, he was primarily

in charge of establishing

and expanding international

business. In 2001, Calvin

Grieder switched from

Swisscom to the Buhler

Group, which he has

headed as CEO since then.

* Board committee ** Calvin Grieder is executive member of the board. The other members are nonexecutive members of the board.

Dr. Hans-Ulrich Doerig

(1940, Swiss)

Studied economy at the

University of St.Gallen. After

obtaining his doctorate and

working for five years with

J.P. Morgan in New York,

he was active in the top

management of the Credit

Suisse Group starting in

1981. In 1998, he was ap-

pointed vice-president of

the Credit Suisse Group

management in Zurich, with

the function of Group Chief

Risk Officer. In April 2003,

the general meeting elected

him as member of the board

of the Credit Suisse Group.

He is vice-chairman of the

board of the Credit Suisse

Group and chairman of the

risk committee. Dr. Hans-

Ulrich Doerig has been

a member of the board of

Bühler AG since 2004.

Hans J. Löliger *

(1943, Swiss)

Studied business adminis-

tration in London and Phila-

delphia. After ten years in

the storage and material

handling equipment busi-

ness, he joined the Crown

Cork & Seal Company, Phila-

delphia in 1977 where he

held several international

positions. For the last six

years he was President of

Crown Holdings Global

Plastics Packaging Busi-

ness and a Member of the

Group Executive Board.

From 1996 to 2000, he was

president and CEO of the

SICPA Group in Lausanne,

the global leader in the secu-

rity inks business. Hans J.

Löliger has joined the board

of Bühler AG in 2004.

Peter Quadri

(1945, Swiss)

Graduated in 1969 in eco-

nomy and business adminis-

tration from the University

of Zurich as lic. oec. publ. In

1970, he joined IBM as a

systems engineer and spe-

cialist for software and

operating systems. Follow-

ing various positions in the

U.S., Denmark, and Switzer-

land, he was president of

IBM Switzerland from 1998

to April 2006. Peter Quadri

was appointed member

of the board of Bühler AG in

2006.

Josef M. Müller

(1947, Swiss)

With a degree in business

administration, he joined the

Nestlé Group in 1972,

where he held a number of

positions in Switzerland,

Europe, the U.S., and South

Africa. He then spent sev-

eral years as a sales and

marketing manager in the

Far East. From 1992 to

1995, he headed Nestlé

Pakistan, and from 1995 to

1998 Nestlé Korea. In

mid-1998, Josef M. Müller

took charge of Nestlé China,

and from mid-2000 of the

Nestlé Greater China Re-

gion with a total of 13,000

employees und 21 produc-

tion sites. In the autumn

of 2007, he retired from

Nestlé. Josef M. Müller has

been a member of the board

of Bühler AG since 2007.

9091



Sales & Services Stefan Scheiber

Manufacturing & Logistics Hans Peter Kunz

Finance & Administration Andreas R. Herzog

Corporate Development Diethelm Boese

Die Casting Achim Klotz

CEO Calvin Grieder

Grain Processing Bruno Mendler

Grain Milling

Feed & Biomass

Sorting & Rice

Grain Handling

Malting

Organization chart.

Engineered Products Erwin A. Frei

Chocolate & Cocoa

Pasta & Extruded Products

Grinding & Dispersion

Thermal Processes

Nanotechnology

Organization chart as per 1.1. 2008.

Financial report

94 Economic development

96 Financial report Buhler Group96 Consolidated income statement97 Consolidated balance sheet98 Consolidated cash flow statement99 Changes in shareholders’ equity

100 Notes to the financial statements132 Report of the group auditors

133 Financial report Buhler Holding AG134 Income statement Buhler Holding AG135 Balance sheet Buhler Holding AG136 Notes to the financial statements Buhler Holding AG138 Group companies Buhler Holding AG 140 Report of the statutory auditors

Economic environment. In fiscal 2007, Buhler received a consistently

high number of orders throughout the year. The economic environment

supported demand for products and services in most markets. Only Af-

rica and the Middle East were below last year’s values. The backlog of

orders as of the end of 2007 is 6.6% above the previous year and there-

fore forms a solid basis for the current fiscal year.

Operating result marked increased. Order bookings increased in

2007 by CHF 146.3 million or 8.6% to CHF 1837.7 million. The total per-

formance of the Group amounts to CHF 1834.1 million (previous year:

CHF 1675.4 million). The sales revenues of CHF 1773.4 million are CHF

162.8 million or 10.1% above the level of a year ago (CHF 1610.6 million).

This development is mainly due to organic growth in all business units.

Effective November 22, 2007, Buhler acquired a majority stake in the

German plant supplier G.W. Barth. The Prince company (U.S.A.) acquired

in mid-2006 was consolidated across the entire year with additional CHF

25 million. Of total sales, CHF 1184.4 million or 66.6% (previous year:

CHF 1083.9 million or 67.3%) were determined on the basis of the POC

method (Percentage Of Completion).

Both EBITDA (CHF 169.4 million) and EBIT (CHF 138.3 million) are sub-

stantially higher than the values of a year ago. EBITDA improved from the

previous year by 27.0% and EBIT by 34.3%. Relative to sales revenues,

EBIT amounts to 7.8% (previous year: 6.4%). Despite the continued rise

in raw materials prices (steel, nickel, zinc), the material costs declined

slightly by 1.1 percentage points to 42.6% of sales. The personnel costs

relative to sales improved in the year under review by 1.5 percentage

points to 32.8%, although the provisions for success bonuses were sub-

stantially higher. Moreover, consideration must be given to the fact that

the factory employs a high share of temporary staff in order to achieve

maximum flexibilization of cost structures. The other operating expenses

increased relative to sales revenues by 0.8 percentage points to CHF

327.5 million, especially as a result of higher provisions for warranties. In

its financial statement for 2007, the Group switched from the Corridor to

the SORIE method in the context of IAS19 (pension fund), which had a

positive effect on the operating result due to the over-coverage of the

pension fund. The values of the previous year were adjusted accordingly.

Financial result affected only slightly, despite negative develop-

ment in financial markets. The financial result diminished relative to

the previous year by 8.9% to CHF 25.6 million (previous year: CHF 28.1

million). The reason for this lies in the market value adjustments due to the

emerging financial market crisis in the second half of 2007. The lower

valuations were largely offset by foreign currency gains and the other

earnings from financial assets. In fiscal 2007, the Group started hedging

its risks related to raw materials purchases by rolling out a master strat-

egy (Overlay Management Strategy). In its treasury policy, Buhler is com-

mitted to a proactive yet conservative management of the liquidity not

required for operations. This is carefully verified at least once annually, if

necessary adjusted to the new conditions, and presented to the Board of

Directors for approval.

Economic developmentComments on the assets, f inancial, and earnings situation

1 Europe 42.6%

2 Americas 19.9%

3 Asia 22.1%

4 Africa 10.3%

5 Middle East 5.1%

Sales by regions

2007 (in %)

1 Europe 46.2%

2 Americas 17.9%

3 Asia 19.8%

4 Africa 8.4%

5 Middle East 7.7%

Sales by regions

2006 (in %)

1

2

45

3

1

2

4

5

3

ECONOMIC DEVELOPMENTFINANCIAL REPORT BUHLER GROUP

FINANCIAL REPORT BUHLER HOLDING AG9495

Corporate result improved yet again. The corporate result increased

in the period under review from CHF 120.3 million by CHF 9.9 million or

8.2% to CHF 130.2 million, although earnings taxes rose drastically by CHF

22.9 million to CHF 33.7 million. In this connection, however, we must point

out that earnings taxes in the previous year were exceptionally low due to

a one-time liquidation of deferred taxes of CHF 26.6 million as a result of a

change in taxation in the Canton of St.Gallen. The tax rate in the year under

review was 20.6% (previous year: 8.2%).

Solid balance sheet without outside debt. Equity increased thanks

to moderation in dividend payments and to the high corporate result from

CHF 802.5 million as of the end of 2006 by CHF 128.9 million to CHF

931.4 million as of the end of fiscal 2007. Thus, the equity ratio increased

despite a higher balance sheet total by CHF 203.4 million to 49.1% (previ-

ous year: 47.4%).

The Group has high liquidity reserves of CHF 448.6 million (previous year:

CHF 394.4 million) on a short-term basis and CHF 33.6 million (previous

year: 32.2 million) as long-term assets. In all, the short-term and long-

term assets increased by CHF 55.6 million, despite an acquisition in

Chocolate in Germany and high capital investments in production ca-

pacities and infrastructure in Germany, India, China, and Switzerland. All

investments were made without outside financing. With short-term and

long-term financial liabilities totaling CHF 19.1 million (previous year:

17.7 million), the Group is virtually debt-free. Net liquidity increased by

CHF 62.7 million to CHF 303.1 million (previous year: CHF 240.4 million).

Net items of production orders in progress as of the end of 2007 shows a

liability surplus of CHF 40.8 million (previous year: CHF 61.3 million). The

short-term and long-term provisions as of the end of 2007 amounted to

CHF 98.4 million, which is CHF 13.3 million higher than in the previous

year.

High interest rates on capital employed. Buhler makes great efforts

to optimize the capital it employs and to reduce its net working capital. In

the past years, the RONOA improved steadily. In the year under review,

this ratio amounted to 29.8% (previous year: 27.0%).

Markedly higher free cash flow. The cash flow is CHF 89.6 million

higher than in the previous year. The cash flow from operating activities

increased markedly from a year ago.

The outflow of funds in capital investments is CHF 39.3 million lower than

in the previous year, due to the sale of securities and to government grants

in connection with two real estate projects in England and China. In addi-

tion, capital spending on tangible assets increased from a year ago by CHF

2.3 million. To sum up, it can be said that the operating free cash flow in-

creased from the previous year by CHF 62.5 million, despite high invest-

ments in the past fiscal year and without taking into account the changes

in securities and financial assets.

High investments in research and development. Spending on re-

search and development, which was fully accounted for in the profit and

loss statement in the year of accrual, increased in 2007 by CHF 4.3 mil-

lion to CHF 74.4 million and amounts to 4.2% of sales. The investments

refer to research projects in operating activities and to basic research for

corporate developments. The main research and development site is at

the headquarters in Switzerland. An R&D Center is currently being set up

in China.

Strategy for growth by acquisitions. In order to ensure that Buhler

can achieve its long-term corporate goals, the Group will increasingly

evaluate possible acquisitions in the coming years. Buhler has the finan-

cial resources required for such an undertaking. Corporate management

have therefore established the related internal structures and processes

and thus laid the necessary basis.

Outlook. In the past fiscal year, Buhler achieved sales (turnover) and

profitability at a level never known before in the 147-year history of the

Group. Nonetheless, corporate management have further raised the bar

for the coming fiscal years. The high backlog of orders as of the end of

2007 of just under CHF 900 million fills us with confidence for fiscal 2008.

What is difficult to asses is the impact of the ongoing financial market

crisis on the non-monetary economy in general and plant construction in

particular. Buhler strives to respond to economic developments with

minimum delay on the basis of flexible cost structures and professional

risk management.

2006 2007

Cash flow from operating activities 79.2 132.6

Cash flow from investing activities – 93.7 –54.4

Free cash flow – 14.5 78.2

Development of free cash flow (mill. of CHF)

–150 0 150

Development of capital (mill. of CHF)

2006 70.1

2007 74.4

2007 2006See notes mil l. of CHF mill. of CHF

Sales 1 1,773.4 1,610.6

Changes in semi-finished and finished product inventories 12.0 19.1

Other operating income 2 48.7 45.7

Total operating income 1,834.1 1,675.4

Cost of materials – 755.7 – 704.5

Personnel expenses 3 – 581.5 – 552.5

Other operating expenses 4 – 327.5 – 285.0

Operating result before interest, taxes, depreciation and amortization (EBITDA) 169.4 133.4

Depreciation 8/9 – 31.1 – 30.2

Impairment 8/9 0.0 – 0.2

Operating result before interest and taxes (EBIT) 138.3 103.0

Financial income 5 51.2 45.6

Financial expenses 6 – 25.6 – 17.5

Profit before taxes 163.9 131.1

Income taxes 7 – 33.7 – 10.8

Profit for the year 130.2 120.3

Attributable to:

Equity holders of the parent 129.4 116.5

Minority interests 0.8 3.8

Consolidated income statement



As at December, 31

Dec 31, 2007 Dec 31, 2006See notes mill. of CHF mill. of CHF

Assets

Tangible fixed assets 8 372.3 345.5

Investment properties 8 44.2 43.5

Intangible fixed assets 9 77.6 20.5

Long-term financial assets 10 33.6 32.2

Deferred tax assets 11 16.3 16.9

Non-current assets 544.0 458.6

Inventories 12 233.7 223.3

Net assets of production orders in progress 13 192.7 172.6

Trade accounts receivable 14 405.0 369.3

Other accounts receivable, prepayments and accrued income 15 70.1 71.8

Current income tax assets 4.1 4.8

Securities 126.4 136.3

Cash 322.2 258.1

Current assets 1,354.2 1,236.2

Total assets 1,898.2 1,694.8

Shareholders’ equity and liabilities

Share capital 17 15.0 15.0

Capital reserves 185.1 185.1

Other reserves / Retained earnings 18 693.0 580.2

Shareholders’ equity attributable to equity holders of the parent 893.1 780.3


Total equity 931.4 802.5

Long-term financial liabilities 11.7 11.1

Deferred tax liabilities 11 129.4 114.0

Long-term post-employment benefit obligations 19 79.8 83.7

Long-term provisions 20 45.7 34.4

Non-current liabilities 266.6 243.2

Short-term financial liabilities 7.4 6.6

Trade accounts payable 21 144.0 134.2

Net liabilities of production orders in progress 13 233.5 233.9

Short-term provisions 20 52.7 50.7

Other short-term liabilities, accruals and deferred income 22 241.4 208.1

Current income tax liabilities 21.2 15.6

Current liabilities 700.2 649.1

Total liabilities 966.8 892.3

Total shareholders’ equity and liabilities 1,898.2 1,694.8

Consolidated balance sheet

2007 2006See notes mill. of CHF mill. of CHF


Depreciation and amortization 8/9 31.1 30.2

Impairment 8/9 0.0 0.2

Other items not affecting cash flow 2.4 – 4.4

Changes in provisions 1.9 – 33.5

Changes in trade accounts receivable –36.1 – 17.0

Changes in inventories –7.3 – 15.8

Changes in trade accounts payable 5.6 – 13.0

Changes in net assets/liabilities of production orders in progress –24.1 32.3

Changes in other net operating assets 38.1 – 17.5

Gains/losses on disposal of fixed assets –9.2 – 2.6

Cash flow from operating activities 132.6 79.2

Additions to tangible fixed assets –62.7 – 60.4

Disposals of tangible fixed assets 13.4 10.8

Additions to non-consolidated participations –3.3 – 0.2

Disposals of non-consolidated participations 1.5 0.1

Disposals and additions to securities 8.1 –14.1

Additions to long-term financial assets –1.5 – 8.9

Disposals of long-term financial assets 1.8 1.2

Additions to intangible fixed assets –0.8 –0.8

Government grants received 12.0 0.0

Cash flow from changes in the scope of consolidation 25 –19.7 – 23.6

Cash flow from movements with minority interests –3.2 2.2

Cash flow from investing activities –54.4 – 93.7

Changes in financial liabilities –4.1 – 7.9

Dividends paid –7.8 – 3.2

Cash flow from financing activities –11.9 – 11.1

Translation differences –2.2 0.1

Changes in cash 64.1 – 25.5

Cash at the beginning of period 258.1 283.6

Cash at the end of period 322.2 258.1

Income taxes paid –21.7 – 25.7

Interest paid –2.2 – 2.8

Interest received 12.6 11.6

Dividends received 0.2 0.2

Consolidated cash flow statement

Changes in provisions include changes in short- and long-term provi-

sions, long-term post-employment benefit obligations and deferred

taxes.

Changes in shareholders’ equity

Additional information regarding other reserves see note 18.

Statement of income and (expenses) recognized directly in consolidated equity

2007 2006 mill. of CHF mill. of CHF


Actuarial losses on benefit obligations and

effect of IAS 19, § 58(b) after taxes – 5.5 – 8.3

Translation differences – 4.4 – 4.0

Unrealized gains/losses 0.0 0.9

Total income and (expenses) for the year recognized directly in equity 120.3 108.9

Attributable to

Equity holders of the parent 119.3 106.0


120.3 108.9

Equity attributableto the equity

Capital Other Retained holders of MinorityShare capital reserves reserves earnings the parent interests Total equity

mill. of CHF mill. of CHF mill. of CHF mill. of CHF mill. of CHF mill. of CHF mill. of CHF

January 1, 2006 before restatement 15.0 185.1 –5.5 498.9 693.5 16.2 709.7

Restatement – 16.7 –16.7 – 0.4 – 17.1

January 1, 2006 after

restatement 15.0 185.1 –5.5 482.2 676.8 15.8 692.6

Total income for the year

recognized directly in equity – 2.2 108.2 106.0 2.9 108.9

Dividends – 2.5 –2.5 – 0.7 – 3.2

Changes in minority interest 4,2 4,2

December 31, 2006 15.0 185.1 –7.7 587.9 780.3 22.2 802.5

January 1, 2007 15.0 185.1 –7.7 587.9 780.3 22.2 802.5

Total income for the year

recognized directly in equity –4.5 123.8 119.3 1.0 120.3

Dividends – 6.5 –6.5 – 1.3 – 7.8

Changes in minority interest 16.4 16.4

December 31, 2007 15.0 185.1 –12.2 705.2 893.1 38.3 931.4



Notes to the financial statements

Business activities

Buhler is a global leader in the supply of process engineering solutions,

especially for technologies for the production of foods and engineering

materials. Buhler is active in over 140 countries and employs a total of

6,900 persons worldwide. In fiscal 2007, the Group generated sales

(turnover) of CHF 1,773 million.

Consolidation principles

Accounting principles. The consolidated financial statements of the

Buhler Group are prepared in accordance with the International Financial

Reporting Standards (IFRS), including Interpretations and in compliance

with the Swiss Code of Obligations.

The consolidation is based on the audited individual financial statements

of the Group companies, prepared in accordance with consistent ac-

counting principles.

The consolidated financial statements are prepared based on the histori-

cal cost method. Any exceptions are described in the following account-

ing principles.

The preparation of the consolidated financial statements in accordance

with generally accepted accounting principles requires the application of

assumptions and estimates. These estimates were determined in all con-

science on the basis of the information available on current events and

possible future measures but may vary from the actual results.

Changes in accounting policies. If applicable, the Group introduced

new and revised International Financial Reporting Standards and Inter-

pretations as from January 1, 2007 or retrospectively from January 1,

2006.

> IFRS 7 – Financial Instruments: Disclosures. The new standard

requires additional information in the consolidated annual financial

statement 2007 on the financial instruments held by the Group.> IAS 1 – Presentation of Financial Statements. The revised standard

requires additional information on equity management goals, guide-

lines, and processes in the consolidated annual financial statement

2007.> IFRIC 7 – Applying the Restatement Approach under IAS 29. The

interpretation contains guidelines for the application of IAS 29 the

first time high inflation is detected.> IFRIC 8 – Scope of IFRS 2. According to the interpretation, IFRS 2

shall also be applied to transactions in which the Group cannot

unambiguously identify the service obtained.> IFRIC 9 – Reassessment of Embedded Derivatives. The interpre-

tation regulates the valuation of embedded derivatives during the

period of contract validity.

> IFRIC 10 – Interim Financial Reporting and Impairment. This inter-

pretation requires that impairments of goodwill and certain financial

assets in interim financial statements may not be reversed in the

financial statement for the full year.

Standards, interpretations, and modifications published but not

yet applied.

> IFRS 2 – Share Based Payments – Vesting Conditions and Cancellations> IFRS 3 revised – Business Combinations> IFRS 8 – Operating Segments> IAS 1 revised – Presentation of Financial Statements> IAS 23 revised – Borrowing Costs> IAS 27 revised – Consolidated and Separate Financial Statements> IFRIC 11 – IFRS 2 – Group and Treasury Share Transactions> IFRIC 12 – Service Concession Arrangements> IFRIC 13 – Customer Loyalty Programmes> IFRIC 14 – The Limit on a Defined Benefit Asset, Minimum Funding

Requirements and their Interaction

The Buhler Group does not use the option of applying approved standards

and modified standards before they enter into force. No substantial ef-

fects are expected on the consolidated annual financial statement, or the

effects are currently being investigated.

Changes in accounting principles. The alternative treatment of actu-

arial gains and losses allowed by IAS 19 (revised), “Employee Benefits”,

§93A-D, was implemented with effect from January 1, 2006 (with restate-

ment of the prior year figures). All actuarial gains and losses (and the re-

lated deferred income taxes) are now recognized immediately in the bal-

ance sheet and reported as an equity movement in the statement of

recognized income and expenses. Previously, actuarial gains and losses

were amortized in the income statement over the average remaining pe-

riod of employment of the relevant employees, insofar as they exceeded

10% of the higher amount of the present value of the benefit obligation

and of the plan assets. Furthermore, the effect of the limit in §58(b) in

connection with net assets of pension plans is also recorded as an equity

movement in the statement of recognized income and expenses. Previ-

ously the effect of this limit was reported in the income statement.

Moreover, the method of calculating the provision for seniority premiums

in Switzerland was adjusted, leading to a higher provision as of January

1, 2006.

The previous year was adjusted accordingly with the following effects:

(see table on p. 101).

Scope and methods of consolidation. The consolidated financial

statements include Buhler Holding AG with registered office in Uzwil

(Switzerland) as well as all domestic and foreign companies in which the

Group holding company, directly or indirectly, holds more than 50% of the

voting rights.

The consolidation is based on the full consolidation method. In accor-

dance with this method, 100% of the assets and liabilities as well as ex-

penses and income are included in the consolidated financial statements,

all inter-company items (accounts receivable and liabilities, expenses and

income) are eliminated, and interests of minority shareholders in the

shareholders’ equity and result of operations are disclosed separately.

The effects of the elimination of unrealized inter-company profits from in-

tra-group shipments are reflected in the income statement. The purchase

method of accounting is used to account for business combinations. The

cost of an acquisition is measured as the fair value of the assets trans-

ferred to the seller and liabilities incurred or assumed at the date of ex-

change, inclusive costs directly attributable to the acquisition. Identifiable

assets acquired and liabilities and contingent liabilities assumed in a busi-

ness combination are measured initially at their fair values at the acquisi-

tion date, irrespective of the extent of any minority interest. The excess of

the cost of acquisition over the fair value of the identifiable net assets ac-

quired is recorded as goodwill. Companies acquired or disposed of during

the year are included in the consolidated financial statements from the

date of acquisition or up to the date of disposal.

Companies on which the Buhler Group has a material influence (usually in

the form of a voting interest of 20% to 50%) are included according to the

equity-method and recorded under investments in associated companies.

Pursuant to the equity-method, the shareholders’ equity and the result are

included in the consolidated financial statements on a pro-rata basis.

Investments below 20% are recorded at fair value and included in long-

term financial assets. Changes in fair values are directly recorded under

shareholders’ equity.

Changes in the scope of consolidation. In the reporting period the

scope of consolidation changed as follows:

Additions.> Bühler Barth AG, Freiberg a.N.> Buhler (Wuxi) Commercial Co. Ltd., Wuxi> Bühler Management AG, Uzwil> Sortex Ltd., London (formerly Sortex Ltd., now: Buhler Sortex Ltd.)

Significant accounting estimates and judgements. The Buhler

Group makes estimates and assumptions which concern future events.

They are based on historical empirical values and expectations for the

future.

The assumptions made may differ from the actual results. Stated below

are the estimates and assumptions which might have a substantial effect

on the financial statement of the subsequent year.

Revenues under long-term construction contracts are recognized using

the percentage-of-completion method of accounting. Turnover is real-

ized based on the stage of completion including a conservatively esti-

mated margin. The stage of completion is determined according to the

cost-to-cost-method. The percentage-of-completion method involves

the use of assumptions and projections regarding future costs; the ac-

After Before Effect fromrestatement restatement restatement

2006 in mill. of CHF in mill. of CHF in mill. of CHF

Sales 1,610.6 1,612.6 –2.0

Cost of materials –704.5 –706.0 1.5

Personnel expenses –552.5 –559.1 6.6

EBIT 103.0 96.9 6.1

Income taxes –10.8 –9.4 –1.4

Profit for the year 120.3 115.6 4.7

Equity 802.5 823.4 –20.9

Deferred tax assets 16.9 13.6 3.3

Deferred tax liabilities 114.0 121.1 –7.1

Long-term post-employment benefit obligations 83.7 60.5 23.2

Long-term provisions 34.4 28.2 6.2

Short-term provisions 50.7 49.9 0.8



Year-end exchange ratesAverage exchange rates

tual costs may differ from these assumptions. The forecasts are reviewed

on a regular basis. These reviews may lead to a revision of estimated

costs, stage of completion, current earnings and anticipated earnings.

The changes in estimates are recognized in the period when they occur.

Losses identified on long-term-contracts are recognized in the period

when they are identified. Losses on long-term-contracts occur when the

expected costs of goods sold exceed the expected revenue.

A flat-rate allowance is made for expected warranty costs for projects

with similar conditions on the basis of empirical values. Additionally

known risks and risks related to projects with special terms and condi-

tions are estimated on a case-by-case basis and valued individually. The

actual warranty costs incurred may differ from the costs allowed for.

In acquisitions, the fair value of the acquired intangible assets is esti-

mated. Any residual value (difference between the purchase price and

the net assets acquired) is goodwill. The intangible assets acquired have

a finite life and are therefore amortized. Goodwill has an indefinite life and

is not amortized, but reviewed annually for possible impairment. The es-

timate of the respective shares of intangible assets and goodwill there-

fore influences the amortizations. In addition, in the goodwill impairment

test, various assumptions are made which require medium-term and

long-term estimates. This concerns both in-house planning data (cash

flow, growth rates, etc.) and outside parameters (discount rate).

Calculation of the post-employment benefit obligation is based on partly

long-term actuarial assumptions which may differ from reality. The as-

sumptions underlying these calculations are listed in Note 19. Changes

in the assumptions such as interest rates, future wage and salary in-

creases, or the life expectancy of the beneficiaries may have a substantial

impact on the provisions stated.

Foreign currency translation. The annual financial statements of the

foreign Group companies are established on the basis of local currencies

and converted into Swiss francs for consolidation. For the balance sheets,

the year-end exchange rates are used, and for the income statements the

average annual exchange rates. The consolidated cash flow statement is

also converted to average annual exchange rates.

Differences arising from the application of the above-mentioned different

conversion rates for the balance sheet and the income statement and from

equity transactions are balanced with the consolidated equity without af-

fecting the operating result.

Conversion differences of corporate loans in foreign currencies of a par-

ticipating nature are balanced directly with the equity without affecting the

operating result.

For foreign currency translation, the Buhler Group uses the following ex-

change rates:

2007 2006 2007 2006CHF CHF CHF CHF

Europe 1 EUR 1.644100 1.574200 1.660000 1.607500

Great Britain 1 GBP 2.401800 2.307900 2.250000 2.390000

USA 1 USD 1.200500 1.254700 1.130000 1.222500

Canada 1 CAD 1.120200 1.108100 1.157500 1.047500

Brazil 1 BRL 0.617414 0.577403 0.638750 0.572100

Argentina 1 ARS 0.385525 0.408194 0.358650 0.398350

Japan 1 JPY 0.010197 0.010787 0.010000 0.010260

India 1 INR 0.028953 0.027694 0.028700 0.027700

China 1 CNY 0.157917 0.157372 0.155000 0.156000

Mexico 1 MXN 0.109858 0.115219 0.103600 0.112800

Sweden 1 SEK 0.177892 0.169986 0.175600 0.178200

South Africa 1 ZAR 0.173900 0.186400 0.165700 0.174500

Iran 1 IRR 0.000130 0.000135 0.000121 0.000132

Foreign currency translation

Valuation principles

Tangible fixed assets. Tangible fixed assets are included in the balance

sheet at purchase or manufacturing cost less scheduled depreciation and

value adjustments with respect to permanent impairments of value. De-

preciation is made on a linear basis over the estimated period of utilization,

that is, for:

Investment properties are also included in the balance sheet at purchase

cost less scheduled depreciation and value adjustments with respect to

permanent impairments of value. The current market values of such

properties, which are separately stated in the notes, are mainly based on

in-house calculations (comparison with values of similar objects).

Repair and maintenance expenses are charged directly to the income

statement. Only value-enhancing costs are capitalized and depreciated

over the relevant residual period of utilization of the asset.

Leasing. Tangible fixed assets financed through long-term financial

leasing contracts are capitalized and depreciated in the same way as the

other assets. The associated liabilities are included in the short-term or

long-term financial liabilities, depending on their due dates.

Operating leasing assets are not included in the balance sheet. Expenses

are charged directly to the income statement.

The question as to whether an agreement includes a leasing relationship

is determined on the basis of the commercial contents of the agreement

at the point of time of signing. This requires an assessment as to whether

the fulfillment of the contractual agreement depends on the utilization of

a given asset or given assets and whether the agreement makes provi-

sion for a right to utilize the asset.

Assets from a financial leasing agreement in which the Buhler Group acts

as lessor are included as receivables to the amount of the net investment

value. The opportunities and risks associated with legal ownership are

transferred to the lessee.

Intangible assets. Goodwill is that part of the purchase price of a par-

ticipating interest which cannot be allocated to assets that can be individu-

ally identified or separately stated. It is included in the balance sheet at the

purchase value minus cumulated value adjustments (impairment). The car-

rying amount of goodwill is reviewed annually for value reductions and also

upon indications of overvaluation. Any impairment losses are immediately

booked as expenses and not reversed. Negative goodwill from business

combinations is immediately booked as income.

Patents, licenses, trademarks, and similar rights are included in the bal-

ance sheet at purchase price and amortized on a linear basis over their

expected period of utilization, but no longer than ten years. Intangible as-

sets from business combinations are included in the balance sheet at cur-

rent market values and amortized over the expected period of utilization.

Impairment of assets. The carrying amount of assets (except goodwill)

is always reviewed whenever an overvaluation of the book values ap-

pears to be possible due to changed circumstances or events. If the book

value exceeds the value that can be realized (the higher of the two

amounts from net selling price and value in use), the book value will be

reduced.

Financial assets and liabilities. A distinction is made between the fol-

lowing four categories:

> Financial Assets “at fair value through profit or loss” are generally

acquired with the intention to profit from short-term price fluctua-

tions. > Financial assets “held to maturity” are investments with a fixed

maturity that the Buhler Group wants to hold and is capable of

holding up to maturity.> “Loans and receivables” include loans and accounts receivable. > All other financial assets are categorized as “available for sale”.

The financial assets “at fair value through profit or loss” are included in the

balance sheet at their purchase cost when purchased and afterward at

the current market value, with the market value changes being included

in the financial result. The financial assets “held to maturity” are valued

according to the effective-interest method.

Financial assets available for sale, after initial recognition, are valued at

fair value with unrealized gains and losses being recorded under other

reserves until disposal; upon disposal they are included in the financial

result. Permanent impairments are not charged to shareholders’ equity

but directly to the income statement.

Derivative financial instruments are included in the balance sheet at pur-

chase prices when bought and after that at current market values (re-

placement value). With the exception of financial instruments which fulfill

the requirements of a “cash flow hedge”, the market value differences of

the derivative financial instruments are included in the financial result.

Buildings

> Building shell 25–100 years

> Installations/Expansion 15–35 years

Machinery and technical equipment 8–16 years

EDP-hardware 2–4 years

Other tangible fixed assets 3–7 years

102103


FINANCIAL REPORT BUHLER HOLDING AG

Purchases and sales are recognized at the transaction date and not at the

delivery date.

Fair values of financial assets which are traded in an active market repre-

sent the market value at the year-end. Fair values of financial assets

which are not traded in an active market are determined on the basis of

valuation methods.

Financial liabilities mainly comprise financial debts which are valued at

their (discounted) costs. Liabilities from trading activities “at fair value

through profit and loss” are included in the balance sheet at current mar-

ket values.

Financial assets are removed from the books when Buhler has relin-

quished control over them, that is, when the related rights have been sold

or have expired. Financial liabilities are removed from the books when

they have been redeemed.

Non-current assets held for sale and associated liabilities. If any,

these items include the long-term assets and liabilities held for sale of dis-

continued business units (“non-current assets held for sale and discontin-

ued operations”). These include all those assets of a business unit related

to the discarding of entire business fields, or balance sheet items or sale

groups containing at least one long-term asset plus possibly associated li-

abilities which are to be realized through a sale and no longer through con-

tinued utilization. Reclassification is only effected if the management have

decided on the sale and started seeking buyers. In addition, the object or

the sale group must be sellable, and the sale must in all probability take

place within one year. Long-term assets or sale groups which are classified

as “for sale” are no longer amortized on a regular basis. If necessary, a value

adjustment is made by an impairment.

Income and expenses of “discontinued operations” are separated from the

regular income and expenses in the income statement of the reporting pe-

riod and of the comparative period of the previous year down to the “profit

after taxes” level. The resulting profit or loss (after taxes) is separately stated

in the income statement.

Inventories. Purchased inventories are valued at cost, internally pro-

duced inventories are valued at manufacturing cost. If the net realizable

value is lower, adjustments are made. The purchase costs of raw materi-

als, auxiliary materials, and operating supplies are determined on the

basis of the average cost method. The unfinished goods, finished goods,

and work in progress are valued at standard costs (based on normal ca-

pacity; without inclusion of interest on debt capital). Obsolete inventories

and goods with a low rate of inventory turnover are value-adjusted. Ad-

vance payments to suppliers are also included in inventories.

Accounts receivable. Trade accounts receivable and other accounts re-

ceivable are stated at their nominal values minus the necessary value adjust-

ments. Extended customer finance transactions which are sourced from

own funds according to the treasury strategy are included here.

Securities. Marketable securities include investments held for trading

without participation features. Securities included in financial assets are

categorized as available for sale.

Cash. Cash includes cash, post- and bank deposits and is valued at

nominal amounts.

Post-employment benefits. In addition to the compulsory social se-

curity arrangements, autonomous post-employment benefit plans are in

place at numerous Group companies. Type and coverage of these plans,

the terms of which are partly contribution-defined and partly benefit-de-

fined, depend on the relevant country-specific conditions. They are nor-

mally financed from employee and employer contributions.

With respect to defined contribution plans employers’ contributions paid

and owed are recognized in the income statement.

With respect to defined benefit plans, the present value of anticipated

entitlements is determined according to the projected-unit-credit meth-

od after deduction of any plan assets. Current service costs relating to

work performed during the reporting period are recognized in the income

statement. Past service costs relating to work performed in the past and

resulting from new or improved benefit schemes are recognized in the

income statement as employee benefit expenses on a straight-line basis

until the date of entitlement. Independent experts accomplish actuarial

recalculations periodically or if material changes occur. In-between ex-

trapolations take place. All actuarial profits and losses are immediately

included in the balance sheet and stated as part of the income (expenses)

recognized directly in the consolidated equity. In addition, the effect of

the upper value limit of any overcoverage of insurance plans is also stated

as part of the income (expenses) recognized directly in the consolidated

equity. Advance contribution payments (employers’ contribution re-

serves) are recorded under long-term financial assets. Any other surplus

of plan assets under post-employment benefit plans is only recognized to

the extent that it is available to the Buhler Group for future contribution

refunds or reductions.

Provisions. Provisions are established when a present obligation exists

that has arisen from an event in the past, an outflow of funds is probable,

and a reliable estimate of the amount of the obligation is possible. The cash

value of provisions for anniversary or seniority gifts is determined analo-

gously to IAS 19 according to the projected-unit-credit method.

Interest on debt capital. Interest on debt capital affects the income

statement.

Taxes. Income taxes include tax expenses in respect of all recognized

profits of the reporting period. They include current and deferred income

taxes. Current income taxes are calculated on the basis of the taxable

result. The provisions for deferred taxes are calculated according to the

liability method. Provision is made for taxes on the temporary valuation

differences between Group and tax values taking into account actual or

anticipated local tax rates. The changes in the amounts of deferred taxes

are included in the tax expenses.

Deferred tax assets from temporary valuation differences and from un-

used tax loss carry-forwards are only capitalized to the extent that their

realization appears likely in the foreseeable future.

Research and development. Research costs affect the income state-

ment in the period in which they are incurred. Development costs are only

capitalized and only to the extent that the IFRS criteria are fulfilled and the

cash value of the expected returns is very likely to exceed the develop-

ment costs. Capitalized development costs are systematically depreci-

ated over the expected period in which the returns are received.

Production orders, revenue and profit recognition. Invoices for

shipments and services are recorded as gross sales revenues at the time

of delivery/provision of services. Gross sales revenues are shown without

sales and value added taxes and after deduction of rebates and goods

returned. Large long-term production orders are valued in accordance

with the percentage-of-completion method. The stage of completion is

determined in line with the cost-to-cost method. The consolidated in-

come statement comprises the pro-rata sales revenues, including a

conservatively estimated attributable profit, and the balance sheet com-

prises the corresponding net assets or net liabilities after offsetting

against advance payments.

104105



Financial risk management

Group-wide guidelines exist for monitoring and handling financial risks.

Derivative financial instruments and securities are valued according to the

market values on the balance sheet date.

Financial assets Receivables/

Cash and prepayments and Financial Total Totalcash equivalents Securities accrued income assets Book value Fair value

2007 mill. of CHF mill. of CHF mill. of CHF mill. of CHF mill. of CHF mill. of CHF

Cash reserves 322.2 322.2 322.2

Financial assets “at fair value through profit or loss” 126.4 126.4 126.4

Loans & receivables 475.1 8.2 483.3 483.3

“available for sale” 10.5 10.5 10.5

Total financial assets 322.2 126.4 475.1 18.7 942.4 942.4

Receivables/Cash and prepayments and Financial Total Total

cash equivalents Securities accrued income assets Book value Fair value2006 mill. of CHF mill. of CHF mill. of CHF mill. of CHF mill. of CHF mill. of CHF

Cash reserves 258.1 258.1 258.1

Financial assets “at fair value through profit or loss” 136.3 136.3 136.3

Loans & receivables 441.1 9.8 450.9 450.9

“available for sale” 8.4 8.4 8.4

Total financial assets 258.1 136.3 441.1 18.2 853.7 853.7

Financial liabilities Payables/

accruals andFinancial deferred Total Totalliabilities income Book value Fair value

2007 mill. of CHF mill. of CHF mill. of CHF mill. of CHF

Financial liabilities at amortized acquisition costs 16.9 385.4 402.3 402.3

Financial liabilities “at fair value through profit and loss” 2.2 2.2 2.2

Total 19.1 385.4 404.5 404.5

Payables/ accruals and

Financial deferred Total Totalliabilities income Book value Fair value

2006 mill. of CHF mill. of CHF mill. of CHF mill. of CHF

Financial liabilities at amortized acquisition costs 16.1 342.3 358.4 358.4

Financial liabilities “at fair value through profit and loss” 1.6 1.6 1.6

Total 17.7 342.3 360.0 360.0

Market risks. Buhler is exposed to market risks which are related primar-

ily to exchange rates, interest rates, and the market value of investments

in liquid financial assets. The Group monitors these risks continuously in

the context of monthly financial committee meetings. In order to manage

the volatility associated with these risks, the Group sporadically applies

derivative financial instruments. The goal is to limit the total risk arising

from physical exposures and derivative instruments within the scope of

budgeted values and expected opportunities. This includes the principle

which says that Buhler will not engage in any financial transactions con-

taining a risk that cannot be assessed at the point of time the transaction

is concluded.

Exchange rate risks. The Group reports in Swiss francs. The Group is

therefore exposed to exchange rate fluctuations primarily with regard to

European, North American, Asian, and South American currencies. A

number of contracts are concluded in order to offset exchange-rate-in-

duced changes on assets, liabilities, and future transactions. Buhler also

applies futures contracts and currency options to hedge certain revenues

expected in foreign currency.

Net investments in foreign Group companies are of a long-term nature.

Their market value changes as the exchange rates change. However, over

a very long period of time, the difference in the inflation rate should equal

the exchange rate fluctuations so that market value adjustments of invest-

ments abroad will offset the exchange-rate-induced changes in value. For

this reason, Buhler hedges its investments in foreign Group companies

only in exceptional cases.

Raw materials risks. The Group is only exposed to a limited price risk on

anticipated purchases of certain raw materials which are used in the

Group’s business. Price changes of raw materials may lead to a change in

the gross margin of the relevant business unit, but are normally unlikely to

exceed 10% of this margin. For this purpose, a Commodity Overlay Man-

agement Strategy was implemented in 2007 for the main raw materials –

aluminum, nickel, copper, and energy (crude oil). Within this strategy,

Buhler carries out raw materials futures, commodity futures, and com-

modity options transactions.

Interest rate risks. Risks related to interest rates arise from changes in

interest rates which might affect the assets and income situation of the

Buhler Group. The financial income is exposed to the fluctuation risks of

the underlying markets in which investments are made. The risks are cen-

trally managed and monitored.

Stockmarket risks. The Group buys shares of other companies to invest

its liquid funds. This is done within the framework of the treasury strategy

approved by the board of directors. It sets precisely defined limits, includ-

ing those for investments in shares. Buhler basically limits the risk of all

asset classes by ownership in a given outside company of less than 5% of

the Group’s invested funds. Call options are sold on shares which Buhler

owns, and put options are sold on shares which Buhler intends to purchase

and for which it retains the funds required.

Counterparty risks. The counterparty risks include the solvency risk of

marketable securities, the financial loss risk of derivative financial instru-

ments and money market contracts, and the credit risk of current account

holdings and fixed-term deposits. The solvency risk is minimized by buy-

ing only securities which have at least an “A” rating. The financial loss risk

and credit risk are reduced by choosing only banks and financial institutes

as counterparties which have at least an “A” rating when a transaction is

closed. These risks are carefully monitored and kept within predefined

parameters. Corporate guidelines ensure that the credit risk is limited with

regard to financial institutes. The limits are regularly monitored and ad-

justed. The Group does not expect any losses from to the fact that coun-

terparties are unable to fulfill their contractual obligations, and it does not

have any appreciable cluster risks with regard to certain industries or

countries.

Credit risks. Credit risks arise when customers are unable to fulfill their

agreed obligations. For some years now, the entire Buhler organization

has successfully applied its “Operational Risk Diagram” to control the

counterparty risk arising from customer business. The valuation of the fi-

nancial solvency of our customers and/or the terms and conditions of

payment and the hedging of our supplies are a core concern in this re-

spect. In addition, it can be said that none of our customers’ outstanding

payments account for more than 5% of the Group’s sales revenues. The

nominal value of the trade accounts receivable minus value adjustments

is considered as an approximation of the fair value of the receivables. The

maximum credit risk equals the book values stated.

106107



Allowance for bad debts2007 2006

mill. of CHF mill. of CHF

January 1 –7.4 –9.1

Additions –2.8 –0.9

Utilization 0.9 0.8

Release 0.2 1.5

Changes in scope of consolidation –0.4 0.0

Translation differences –0.4 0.3

December 31 –9.9 –7.4

Receivable ageing analysis

Total overdue Book value

Dec 31, 2007 not due < 3 months 4–6 months 7–9 months 10–12 months > 12 months2007 mill. of CHF mill. of CHF mill. of CHF mill. of CHF mill. of CHF mill. of CHF mill. of CHF

Accounts receivable

trade and other 479.4 388.4 52.9 9.2 9.0 6.9 13.0

Allowance for bad debts –9.9 0.0 –0.6 –0.2 –0.5 –1.8 –6.8

Associated companies and

other related parties

Total accounts receivable, net 469.5 388.4 52.3 9.0 8.5 5.1 6.2

Total overdue Book value

Dec 31, 2006 not due < 3 months 4–6 months 7–9 months 10–12 months > 12 months2006 mill. of CHF mill. of CHF mill. of CHF mill. of CHF mill. of CHF mill. of CHF mill. of CHF

Accounts receivable

trade and other 442.4 338.1 69.6 8.8 4.8 9.9 11.2

Allowance for bad debts –7.4 0.0 –1.6 –0.1 –0.4 –0.4 –4.9

Associated companies and

other related parties

Total accounts receivable, net 435.0 338.1 68.0 8.7 4.4 9.5 6.3

108109



Liquidity risk. The liquidity risk describes the risk arising when the Group

is unable to fulfill its obligations at due date or at a reasonable price. The

Group Treasury department is responsible for monitoring liquidity, financ-

ing, and redemption. In addition, the liquidity and financing risks as well as

the related processes and guidelines are supervised by corporate man-

agement. Buhler manages its liquidity risk on a consolidated basis and

according to business policy, taxation, financial, or supervisory consider-

ations. The main source for financing is bank credits. Corporate manage-

ment monitors the net liquidity of the Group on the basis of ongoing fore-

casts which are based on expected cash flows.

Financial liabilities: book value and maturity

Maturity Book value

Dec 31, 2007 Total < 1 year as of 1–5 years > 5 years2007 mill. of CHF mill. of CHF mill. of CHF mill. of CHF mill. of CHF

Trade payables 144.0 144.0 144.0

Financial liabilities 1.6 1.6 1.6

Derivative financial instruments 2.2 2.2 2.2

Liabilities others/accruals and deferred income* 256.7 256.7 245.0 11.7

Total 404.5 404.5 392.8 11.7

*including liabilities to associates and other related parties of CHF 6.2 Mio.

Maturity Book value Dec 31, 2006 Total < 1 year as of 1–5 years > 5 years

2006 mill. of CHF mill. of CHF mill. of CHF mill. of CHF mill. of CHF

Trade payables 134.2 134.2 134.2

Financial liabilities 2.0 2.0 1.7 0.3

Derivative financial instruments 1.6 1.6 1.6

Liabilities others/accruals and deferred income* 222.2 222.2 211.4 10.8

Total 360.0 360.0 348.9 11.1

*including liabilities to associates and other related parties of CHF 9.5 Mio.

Dec 31, 2007 Dec 31, 2006 mill. of CHF mill. of CHF

All instruments 5.0 4.4

Analyzed according to instruments

> Instruments related to exchange rates 7.1 6.7

> Instruments related to stock markets 5.6 3.0

> Instruments related to interest rates 0.9 0.7

Dec 31, 2007 Dec 31, 2006 mill. of CHF mill. of CHF

Instruments related to exchange rates 14.6 13.7

Instruments related to stock markets

(including raw materials) 12.4 6.4

Instruments related to interest rates 1.5 1.1

All instruments 28.5 21.2

Value at Risk. The Group applies a value-at-risk calculation (VAR) to es-

timate the potential 30-day loss of the market value of its positions in

financial instruments, receivables, and liabilities.

A period of thirty days is used because it is assumed that due to the mag-

nitude of the positions not all items can be closed within a very short time.

The VAR calculation covers the financial liabilities of the Group, short-term

and long-term financial investments, foreign currency futures and raw

materials futures contracts as well as options. The calculation covers

foreign-currency customer receivables and supplier liabilities as well as

loans to foreign Group companies.

The VAR calculation is based on normal market conditions and uses a

confidence interval of 95%. The Group applies a delta-normal model to

determine the observed inter-relationships between the fluctuations of

interest rates, stock markets, and currencies. For calculating the VAR

amounts, these inter-relationships are determined by giving consideration

to interest rates, stock market movements, and changes in foreign curren-

cies and the prices of raw materials over a period of 90 days.

The following chart shows the estimated potential 30-day loss before taxes

under normal market conditions, based on the VAR model calculation:

The VAR calculation is a risk appraisal instrument for conducting a statisti-

cal estimate of the maximum possible 30-day loss incurred as a result of

unfavorable fluctuations in interest rates, currencies, and share prices

under normal market conditions. The calculation does not claim to state

losses on market values which Buhler will actually suffer. Buhler is not in a

position to predict actual future market movements and does not claim

that these VAR calculations are representative for future market changes

or for their actual effects on the future results or the financial position of

Buhler.

In addition to these VAR analyses, Buhler applies the so-called maximum-

draw-down method. The aim of such stress tests is to simulate a worst-

case scenario. For these calculations, Buhler applies the most unfavor-

able market change in each category within a period of 30 days over the

past ten years. For the years 2007 and 2006, the highest loss assumed

was as follows:

In the risk analysis, Buhler considers this worst-case scenario as accept-

able in so far as even if it reduces profits, it will not jeopardize the Group’s

ability to make payments and/or its currently good credit-standing. Al-

though it is very unlikely that, as represented in the model, all the worst-

case fluctuations will occur simultaneously, the market may be exposed to

wider fluctuations in the future than in the past. Moreover, in such a worst

case, corporate management could take appropriate action to reduce the

risk for Buhler.

110111



Currency sensitivity analysis. A change in the exchange rate of the

USD relative to the CHF of 10% would have a positive or negative impact

on the profit before taxes of about CHF 4.4 million. A change in the ex-

change rate of the EUR relative to the CHF of 10% would have a positive or

negative impact on the profit before taxes of about CHF 9.2 million.

Capital risk management. One of the Group’s main objectives is to ap-

ply a well-governed capital management system in order to ensure the

continuity of the Group and to generate additional value for all stakehold-

ers. Another goal is to optimize the capital costs.

Buhler does not have to comply with any capital-related instructions im-

posed by third parties. As part of the financial management of the Group,

the capital is monitored on the basis of the debt-to-equity ratio. This ratio

is calculated by dividing the total financial debt by the equity, exclusive of

minority interests.

The debt-to-equity ratio as of December 31, 2007 and 2006 was as fol-

lows:

2007 2006 mill. of CHF mill. of CHF

Total financial debt 19.1 17.7

Total equity (without minority interests) 893.1 780.3

Gearing ratio 0.02 0.02

The position “Others” contains reversal of provisions, interest income from

trade finance, commissions and other operating income third parties not

belonging to the core business.

2 Other operating income2007 2006


Other operating income related parties 0.8 0.4

Capitalized goods and services for own account 0.9 3.8

Rental income 2.4 2.6

Gains from sale of fixed assets 10.4 3.9

Others 34.2 35.0

Total 48.7 45.7

3 Personnel expenses2007 2006


Wages and salaries 468.3 444.5

Social security and employee benefit expenses 82.0 81.7

Other personnel expenses 31.2 26.3

Total 581.5 552.5

1 Sales

CHF 1,181.4 million (prior year CHF 1,083.9 million) of the total operat-

ing income was determined using the percentage-of-completion

method in the reporting period.

4 Other operating expenses2007 2006


Administration expenses 77.6 69.8

Rental and leasing expenses, dues 22.1 20.7

Energy, maintenance and equipment costs 27.5 26.4

Travel expenses 50.4 49.6

Outbound freight costs 51.8 51.9

Consultancy fees 8.8 8.4

Marketing costs 11.4 12.1

Agency fees 20.3 24.3

Warranty costs, loss orders 21.2 5.8

Others 36.4 16.0

Total 327.5 285.0

112113



Foreign exchange gains are the result of the netting of currency flows and

benefit from currency volatility. The item fair value adjustments reflect the

positive markets for the securities. Their mark-to-market valuations are

accounted for under financial items. Interest and securities income as

well as other income from financial investments have increased due to

higher interest rates.

5 Financial income2007 2006


Interest and income from securities 13.9 15.0

Other income from financial assets 9.2 2.7

Fair value adjustments 0.3 6.5

Foreign exchange gains 27.5 21.4

Interest income from related parties 0.3 0.0

Total 51.2 45.6

The increase in financial expenses is mainly due to the higher volume of

foreign currency hedges and mirrors partly the increased results of mark-

to-market valuations on derivative instruments. The other positions

comprise value adjustments for financial investments classified as finan-

cial assets at fair value through profit or loss. Due to declining financial

markets in the 2nd half of 2007, negative value adjustments arose.

6 Financial expenses2007 2006


Interest and similar expenses 5.0 4.1

Fair value adjustments 7.5 2.9

Currency exchange losses 12.7 10.0

Interest expenses related parties 0.4 0.5

Total 25.6 17.5

The anticipated tax rate amounts to approx. 25.2% (prior year 27.7%) and

is composed of the weighted average of the applicable local tax rates for

income taxes.

2007 20067.2 Reconciliation of income taxes mill. of CHF mill. of CHF

Profit before taxes 163.9 131.1

Components of tax expenses:

Income taxes at anticipated tax rate –41.4 – 34.6

Income and expenses not subject to tax 4.1 0.3

Income taxes relating to prior periods 0.9 – 1.3

Deferred taxes due to changes in tax rates 8.6 26.6

Effect of tax loss carry-forwards 0.7 1.1

Effect of losses without recognition of deferred tax assets –3.9 – 1.1

Other impacts –2.7 – 1.8

Income taxes disclosed (current and deferred) –33.7 – 10.8

Total income taxes in % of profit before taxes 20.6 % 8.2 %

2007 20067.3 Tax loss carry-forwards mill. of CHF mill. of CHF

Expiry

Unlimited 28.9 14.3

In more than 5 years 19.5 13.2

In 2 to 5 years 2.6 1.2

Within one year 0.0 0.0

Total 51.0 28.7

Tax loss carry-forwards accounted for in deferred taxes 29.2 13.6

Tax effect on tax loss carry-forwards unaccounted for 4.1 4.4

2007 20067.1 Income taxes mill. of CHF mill. of CHF

Income taxes relating to the reporting period –32.4 – 29.3

Income taxes relating to prior periods 0.9 – 1.3

Deferred taxes due to temporary differences –11.5 – 8.4

Deferred taxes due to first time utilization of tax losses carryforward 0.7 1.6

Deferred taxes due to changes in tax rates 8.6 26.6

Total –33.7 – 10.8

Deferred taxes recognized directly in shareholders’ equity 1.2 – 2.4

7 Taxes

The increase in tax loss carry-forwards is mainly based on legal changes

in the calculation method in Germany.

114115



8 Movements of tangible fixed assetsMachinery

Land and and technical Other tangible Assets underInvestment properties buildings equipment fixed assets construction Total

mill. of CHF mill. of CHF mill. of CHF mill. of CHF mill. of CHF mill. of CHF

Acquisition cost

January 1, 2006 72.0 368.2 202.0 108.8 8.1 759.1

Additions 3.6 10.8 15.1 11.9 25.2 66.6

Disposals – 1.1 – 3.1 – 11.6 – 11.3 0.0 – 27.1

Changes in the scope of consolidation 0.0 4.1 1.3 0.8 0.4 6.6

Reclassifications 4.3 1.5 1.9 0.0 –7.7 0.0

Translation differences 0.0 – 1.0 0.7 –0.1 0.4 0.0

December 31, 2006 78.8 380.5 209.4 110.1 26.4 805.2

Additions 2.1 15.9 13.8 12.2 15.3 59.3

Disposals – 1.1 – 9.1 – 12.8 – 8.2 – 0.1 – 31.3


Reclassifications 0.3 17.0 0.4 1.0 – 19.1 – 0.4

Translation differences 0.0 – 1.1 1.0 – 0.4 – 0.1 – 0.6

December 31, 2007 80.1 403.2 213.4 115.7 22.4 834.8

Depreciation

January 1, 2006 – 35.1 – 152.2 – 139.7 – 82.7 0.0 – 409,7

Additions – 0.4 – 5.6 – 12.0 – 9.6 0.0 – 27.6

Disposals 0.1 1.8 10.0 10.6 0.0 22.5


Impairment 0.0 0.0 – 0.2 0.0 0.0 – 0.2

Reclassifications 0.1 – 0.1 0.0 0.0 0.0 0.0

Translation differences 0.0 – 0.3 – 0.6 – 0.3 0.0 – 1.2

December 31, 2006 – 35.3 – 156.4 – 142.5 – 82.0 0.0 – 416.2

Additions – 0.4 – 5.9 – 12.4 – 9.8 0.0 – 28.5

Disposals 0.0 7.9 11.8 7.4 0.0 27.1


Impairment 0.0 0.0 0.0 0.0 0.0 0.0

Reclassifications – 0.2 0.0 0.8 – 0.4 0.0 0.2

Translation differences 0.0 – 0.2 – 0.9 0.2 0.0 – 0.9

December 31, 2007 – 35.9 – 154.6 – 143.2 – 84.6 0.0 – 418.3

Net book values

January 1, 2007 43.5 224.1 66.9 28.1 26.4 389.0

December 31, 2007 44.2 248.6 70.2 31.1 22.4 416.5

Comments regarding the movements of tangible fixed assets are on the

following page.

Rental income of investment properties in the financial year amounted to

CHF 1.5 million (prior year CHF 0.9 million) and operating expenses of

investment properties generating rental income were CHF 0.8 million

(prior year CHF 0.6 million). The operating expenses of investment prop-

erties not generating rental income have not been incurred in the financial

years reported. The fair values of the investment properties in the finan-

cial year amounted to CHF 54.4 million (prior year 59.9 million). Invest-

ment properties are largely comprised of land. The fair values of the in-

vestment properties were determined above all by internal real estate

agents. The book values of leased tangible fixed assets amount to CHF

0.2 million (prior year 0.3 million). The fire insurance values (usually rein-

statement values) of tangible fixed assets as at December 31, 2007

amounted to CHF 1,005.7 million (prior year CHF 1,027.0 million). Net-

gains on disposal of tangible fixed assets (including non-current assets

held for sale) amounted to CHF 9.2 million (prior year CHF 2.6 million) and

resulted mainly from sales of land and investment properties in Germany

and in Switzerland.

Accumulated depreciation as at December 31, 2007 include impairment

on assets of CHF 29.3 million (prior year CHF 29.4 million) with respect to

investment properties and CHF 50.5 million (prior year CHF 51.0 million)

with respect to land, buildings and other tangible fixed assets. Commit-

ments relating to investments in investment properties amount to CHF

0.8 million (prior year CHF 0.8 million) whereas investments in land, build-

ings and other tangible fixed assets amount to CHF 4.7 million (prior year

CHF 9.6 million).

116117



9 Movements of intangible fixed assets Other intangible

Goodwill fixed assets Totalmill. of CHF mill. of CHF mill. of CHF

Acquisition cost

January 1, 2006 1.2 24.0 25.2

Additions 0.0 0.8 0.8

Disposals 0.0 – 0.3 – 0.3

Changes in the scope of consolidation 13.1 3.5 16.6

Reclassifications 0.0 0.2 0.2

Translation differences 0.0 – 0.1 – 0.1

December 31, 2006 14.3 28.1 42.4

Additions 0.0 0.8 0.8

Disposals 0.0 – 1.6 – 1.6


Recflassifications 0.0 0.1 0.1

Translation differences – 1.0 0.2 – 0.8

December 31, 2007 26.1 74.4 100.5

Amortization

January 1, 2006 0.0 – 19.5 – 19.5

Additions 0.0 – 2.6 – 2.6

Disposals 0.0 0.3 0.3


Impairment 0.0 0.0 0.0

Reclassification 0.0 – 0.2 – 0.2

Translation differences 0.0 0.1 0.1

December 31, 2006 0.0 – 21.9 – 21.9

Additions 0.0 – 2.6 – 2.6

Disposals 0.0 1.7 1.7


Impairment 0.0 0.0 0.0

Reclassifications 0.0 – 0.2 – 0.2

Translation differences 0.0 0.1 0.1

December 31, 2007 0.0 – 22.9 – 22.9

Net book values

January 1, 2007 14.3 6.2 20.5

December 31, 2007 26.1 51.5 77.6

The increase in Goodwill refers to the acquisition of Bühler Barth AG, Frei-

berg a.N. The increase in other intangible assets from changes in scope of

consolidation is due to the acquisition of Bühler Barth AG, Freiberg a.N.

10 Long-term financial assets

Due more than1 to 5 years 5 years Total

December 31, 2007 mill. of CHF mill. of CHF mill. of CHF

Securities 0.0 2.0 2.0

Overfunding of post-employment benefit plans 0.0 14.8 14.8

Loans to non-consolidated companies 4.2 0.0 4.2

Other non-current financial assets 2.0 10.6 12.6

Total 6.2 27.4 33.6

Due more than1 to 5 years 5 years Total

December 31, 2006 mill. of CHF mill. of CHF mill. of CHF

Securities 0.0 2.2 2.2

Overfunding of post-employment benefit plans 0.2 13.8 14.0

Loans to non-consolidated companies 4.5 0.0 4.5

Other non-current financial assets 3.1 8.4 11.5

Total 7.8 24.4 32.2

118119



12 InventoriesValue

Gross value adjustments 2007 2006mill. of CHF mill. of CHF mill. of CHF mill. of CHF

Raw materials and supplies 100.4 –17.1 83.3 73.2

Unfinished goods 69.0 –8.2 60.8 59.1

Finished goods and merchandise 43.1 –8.8 34.3 39.6

Work in progress 35.5 –1.7 33.8 29.7

Advance payments to suppliers 21.5 21.5 21.7

Total 269.5 –35.8 233.7 223.3

Value adjustments deducted from inventories in the prior year amounted

to CHF –33.2 million. No material reversal of value adjustments of the

prior year were recognized in the reporting year.

11 Deferred tax assets and liabilities2007 2006


Net book values

Tangible fixed assets – 37.7 – 40.0

Post-employment benefits 9.4 13.5

Provisions 0.1 0.7

Other items – 91.3 – 76.4

Tax loss carry-forwards 6.4 5.1

Total – 113.1 – 97.1

Recognized on the balance sheet as deferred tax liabilities – 129.4 – 114.0

Recognized on the balance sheet as deferred tax assets 16.3 16.9

No material additional tax liabilities due to dividend payments from Group

companies are expected. Deferred tax assets and liabilities are offset, if

there exists a legally enforceable right to set them off, and if the calcula-

tions of income taxes relate to the same taxation authority.

15 Other accounts receivable, prepayments and accrued income2007 2006


Value added tax credits 10.7 19.0

Other accounts receivable

From third parties 47.0 41.1

From non-consolidated companies 2.4 0.4

From related parties 0.3 0.4

Prepayments and accrued income 9.7 10.9

Total 70.1 71.8

13 Production orders2007 2006


Production orders in progress 359.1 338.9

Advance payments from customers – 166.4 – 166.3

Net assets of production orders in progress 192.7 172.6

Production orders in progress 60.0 – 14.3

Advance payments from customers – 293.5 – 219.6

Net liabilities of production orders in progress – 233.5 – 233.9

Accumulated costs and recognized profits 1,636.4 1,088.7

The trade accounts receivable include CHF 57.1 million (prior year CHF 72.8

million) which are financed through own funds in accordance with the trea-

sury strategy. A generally high degree of liquidity characterizes these items.

CHF 35.4 million (prior year CHF 30.7 million) of these will not be due within

the next 12 months.

14 Trade accounts receivable2007 2006


Trade accounts receivable

From third parties 414.1 375.9

From non-consolidated companies 0.8 0.5

From related parties 0.0 0.3

Allowance for bad debts – 9.9 – 7.4

Total 405.0 369.3

120121



18 Other reservesHedge Available for Translation

reserve sale investments differences Totalmill. of CHF mill. of CHF mill. of CHF mill. of CHF

January 1, 2006 – 0.7 0.9 – 5.7 –5.5

Translation differences – 3.1 – 3.1

Available for sale financial assets:


Deferred taxes on unrealized gains/losses 0.0 0.0

Cash-Flow Hedge:


Deferred taxes on unrealized gains/losses –0.2 – 0.2

December 31, 2006 0.0 1.1 – 8.8 –7.7

January 1, 2007 0.0 1.1 – 8.8 –7.7

Translation differences –4.4 –4.4

Available for sale financial assets:

Unrealized gains/losses –0.1 –0.1


Cash-Flow Hedge:



December 31, 2007 0.0 1.0 –13.2 –12.2

There are no assets held for sale, neither in the reporting year nor in the

prior year.

16 Assets held for sale

17 Share capital

As of December 31, 2007 share capital amounts to CHF 15,0 million (prior

year CHF 15,0 million) and consists of 150,000 (prior year 150,000) reg-

istered shares with nominal value of CHF 100 each (prior year CHF 100).

2007 200619.2 Reconciliation of defined benefit obligation and fair value of plan assets mill. of CHF mill. of CHF

Defined benefit obligation at January 1 1,167.8 1,128.7

Interest costs 44.5 43.2

Current service costs (employer) 26.0 23.9

Contributions by plan participants 15.4 14.0

Past service costs 0.0 0.0

Benefits (paid)/deposited – 61.2 – 47.9

Business combinations 0.0 0.0

Curtailment and settlements – 0.1 0.0

Actuarial (gain)/loss on obligation (balancing figure) 39.9 4.4

Currency translation adjustments – 2.0 1.5

Defined benefit obligation at December 31 1,230.3 1,167.8

Reconciliation of the fair value of plan assets

Fair value of plan assets at January 1 1,205.6 1,112.9

Expected return on plan assets 55.2 51.1

Contributions by the employer 28.4 26.7

Contributions by plan participants 15.4 14.0

Benefits (paid)/deposited – 61.3 – 47.9

Business combinations 0.0 0.0

Curtailment and settlements 0.0 0.0

Actuarial gain/(loss) on plan assets (balancing figure) 13.9 49.2

Currency translation adjustments – 3.5 – 0.4

Fair value of plan assets at December 31 1,253.7 1,205.6

Actual return on plan assets 69.0 100.3

19.1 Actuarial assumptions 2007 2006

Discount rate 3.4% 3.8%

Expected rate of return on plan assets 4.6% 4.6%

Future salary increases 1.5% 1.5%

Future pension increases 0.7% 0.7%

19 Post-employment benefit plans

122123



2007 200619.4 Reconciliation of the amount recognized in the balance sheet at the end of the year mill. of CHF mill. of CHF

Present value of funded defined benefit obligation 1,158.6 1,099.1

Fair value of plan assets 1,253.7 1,205.6

Underfunds –95.1 –106.5

Present value of unfunded defined benefit obligation 71.6 68.7

Unrecognized (past) service costs 0.0 0.0

Amounts not recognized because of IAS 19, § 58(b)-limitation 88.5 107.5

Liability/(asset) recognized in balance sheet 65.0 69.7

Thereof recognized as separate asset –14.8 –14.0

Thereof recognized as separate liability 79.8 83.7

2007 200619.5 Pension expenses recognized in profit or loss mill. of CHF mill. of CHF

Current service costs (employer) 26.0 23.9

Interest costs 44.5 43.2

Expected return on plan assets – 55.1 – 51.1

Past service costs 0.0 0.2

Effect of curtailment and settlements – 0.1 0.0

Currency translation adjustments 0.0 0.0

Expenses recognized in profit or loss 15.3 16.2

200819.6 Best estimate of contributions mill. of CHF

Contributions by the employer 28.1

2007 200619.3 Statement of income and (expense) recognized directly in consolidated equity mill. of CHF mill. of CHF

Current year actuarial loss (gain) on plan assets – 13.9 – 49.2

Current year actuarial loss (gain) on benefit obligation 39.9 4.4

Effect of IAS 19, § 58(b) limitation – 19.2 55.7

Currency translation adjustments 0.0 0.0

Amount recognized outside profit and loss: loss (gain) 6.8 10.9

Cumulative amount recognized outside profit and loss – 1.7 – 8.4

2007 2006 200519.8 Comparison of deficit/surplus mill. of CHF mill. of CHF mill. of CHF

Present value of defined benefit obligation 1,230.3 1,167.8 1,128.7

Fair value of plan assets 1,253.7 1 205.6 1,112.9

Deficit/(surplus) – 23.4 – 37.8 15.8

Experience adjustments on defined benefit obligation – 43.3 – 0.2 0.0

Experience adjustments on plan assets 13.9 49.2 0.0

2007 200619.9 Defined Contribution Plan mill. of CHF mill. of CHF

Expense for defined contribution plan 2.5 2.3

Provisions for personnel expenses mainly include other long-term em-

ployee benefits, such as long-service benefits, partial retirement and

jubilee benefits. Almost 40% of the cash outflows of the long-term provi-

sions are expected within the next three years.

20 Short- and long-term provisionsProvisions for

Provisions for personnel Provisions for Otherwarranties expenses restructuring provisions 2007 2006

mill. of CHF mill. of CHF mill. of CHF mill. of CHF mill. of CHF mill. of CHF

January 1 38.5 25.1 0.0 21.5 85.1 84.6

Additions 46.6 6.7 0.0 11.5 64.8 49.3

Utilization – 20.3 – 2.7 0.0 – 3.1 – 26.1 – 28.7

Release – 17.2 – 1.9 0.0 – 8.0 – 27.1 – 23.8


Reclassification 0.0 0.6 0.0 – 0.6 0.0 0.7

Present value adjustment 0.0 0.0 0.0 0.2 0.2 0.2

Translation differences 0.0 0.2 0.0 0.2 0.4 0.3

December 31 48.4 28.0 0.0 22.0 98.4 85.1

Thereof short-term 36.5 4.9 0.0 11.3 52.7 50.7

Thereof long-term 11.9 23.1 0.0 10.7 45.7 34.4

2007 200619.7 Plan assets at fair value consists of mill. of CHF mill. of CHF

Equity instruments of the company 0.0 0.0

Equity instruments third parties 536.6 489.7

Debt instruments of the company 0.0 0.0

Debt instruments third parties 355.2 413.0

Properties occupied by or used by the company 0.0 0.0

Properties not occupied by and not used by the company 243.7 213.5

Others 118.2 89.4

Total plan assets at fair value 1,253,7 1,205,6

124125



21 Trade accounts payable2007 2006


Trade accounts payable

To third parties 143.0 133.2

To non-consolidated companies 1.0 1.0

Total 144.0 134.2

22 Other current liabilities, accruals and deferred income2007 2006


Value added tax owed 5.2 5.9

Advance payments 57.2 41.8

Other liabilities

To third parties 37.8 34.8

To non-consolidated companies 3.0 1.1

To related parties 0.1 0.1

Vacation and overtime 26.8 31.1

Other accruals and deferred income 111.3 93.3

Total 241.4 208.1

23 Information to financial leases (Buhler Group as lessor)2007 2006


Gross receivables from finance lease:

Not later than 1 year 2.4 1.5

Later than 1 year and not later than 5 years 7.6 11.3

Later than 5 years 0.0 0.0

Gross receivables from finance lease 10.0 12.8

Unearned future finance income on finance lease – 1.6 – 2.6

Net investment in finance lease 8.4 10.2

Analyzing net investment in finance lease:

Not later than 1 year 1.7 0.8

Later than 1 year and not later than 5 years 6.7 9.4

Later than 5 years 0.0 0.0

Net receivables from finance lease 8.4 10.2

Additional information:

Allowance for bad debts 0.0 0.0

Unguaranteed residual values accruing to the benefit of the lessor 0.0 0.0

Contingent rents recognized as income in the period 0.0 0.0

24 Securities and derivative financial instruments

2007 2006 2007 2006 2007 200624.1 Derivative financial instruments mill. of CHF mill. of CHF mill. of CHF mill. of CHF mill. of CHF mill. of CHF

Currency related instruments

Forward foreign exchange rate contracts 45.5 56.9 0.4 0.6 0.1 0.5

Over the counter currency options 225.6 249.3 2.3 2.4 1.9 1.1

Cross currency swaps 0.0 0.0 0.0 0.0 0.0 0.0

Total of currency related instruments 271.1 306.2 2.7 3.0 2.0 1.6

Interest rate related instruments

Interest rate swaps 0.0 0.0 0.0 0.0 0.0 0.0

Forward rate agreements 0.0 0.0 0.0 0.0 0.0 0.0

Total of interest rate related instruments 0.0 0.0 0.0 0.0 0.0 0.0

Options on securities 0.0 2.4 0.0 0.0 0.0 0.1

Commodities futures 2.1 0.0 0.0 0.0 0.2 0.0

Total derivative financial instruments

included in securities and in short-term

financial liabilities 273.2 308.6 2.7 3.0 2.2 1.7

Contract or underlying principal amount Positive fair values Negative fair values

Other Total TotalUSD CHF currencies 2007 2006

mill. of CHF mill. of CHF mill. of CHF mill. of CHF mill. of CHF

Currency related instruments

Forward foreign exchange rate contracts 24.8 8.1 12.6 45.5 56.9

Over the counter currency options 225.6 0.0 0.0 225.6 249.3

Cross currency swaps 0.0 0.0 0.0 0.0 0.0

Total of currency related instruments 250.4 8.1 12.6 271.1 306.2

Interest rate related instruments

Interest rate swaps 0.0 0.0 0.0 0.0 0.0

Forward rate agreements 0.0 0.0 0.0 0.0 0.0

Total of interest rate related instruments 0.0 0.0 0.0 0.0 0.0

Options on securities 0.0 0.0 0.0 0.0 2.4

Commodities futures 2.1 0.0 0.0 2.1 0.0

Total derivative financial instruments 252.5 8.1 12.6 273.2 308.6

Forward contracts, swaps and option contracts were entered into with

banks mainly to hedge currency risks.

There were the following open positions at year-end:

Positive replacement values are included in securities and negative

replacement values are included in financial liabilities.

126127



2007 2006


Equity securities 58.6 41.7

Debt securities 61.4 85.9

Derivative financial instruments 2.7 3.0

Accrued interest on debt securities 0.8 1.1

Other securities until 12 months 2.9 4.6

Total securities 126.4 136.3

24.2 Securities

Bühler Barth AG Bühler Barth AG Freiberg a.N. Freiberg a.N.

Book value Fair value Total2007 2007 2006

mill. of CHF mill. of CHF mill. of CHF

Cash and cash equivalents 14.3 14.3 13.4

Trade receivables 7.1 3.1 10.6

Other receivables 1.1 1.1 1.4

Inventories 8.0 4.1 12.0

Net assets of production orders in progress 0.0 0.9 0.0

Current assets 30.5 23.5 37.4

Fixed assets 1.8 2.6 6.6

Intangible assets 0.1 46.8 3.5

Deferred tax assets 0.0 0.0 3.4

Non-current assets 1.9 49.4 13.5

Trade payables – 2.1 – 2.1 – 3.5

Accruals and deferred income/prepayments – 6.8 – 5.8 – 8.1

Net liabilities of production orders in progress 0.0 – 5.8 0.0

Short-term provisions – 1.5 – 1.1 – 3.2

Other short-term liabilities – 12.3 – 2.0 –1.6

Current liabilities and provisions – 22.7 – 16.8 –16.4

Deferred tax liabilities 0.0 – 14.6 – 1.2

Non-current liabilities and provisions 0.0 0.0 – 8.5

Non-current liabilities and provisions 0.0 – 14.6 – 9.7

Change in net assets 9.7 41.5 24.8

Minorities – 20.5 –1.9

Reclassification from current assets 0.0 1.3

Reclassification to (+) from (–) financial assets 0.0 –1.2

Effect of foreign exchange 0.2 0.0

Goodwill arising on acquisitions 12.8 13.1

Addition (+) / Disposal (–) from the group 34.0 36.1

Cash disposed of (–) / acquired (+) 14.3 12.5

Cash flow from changes in the scope of consolidation – 19.7 – 23.6

25 Additions and disposals of group companies

128129



2007

Acquisition Bühler Barth AG, Freiberg a.N. (formerly G.W. Barth

AG, Freiberg a.N.). On November 22, 2007 the Group acquired 51% of

the shares of G.W. Barth AG, Freiberg a.N. The acquired company, a

system supplier to the confectionery and food industries, provides ser-

vices, equipment, production installations, and turnkey factories espe-

cially for the treatment and processing of cocoa and nuts and acts world-

wide. The goodwill of CHF 12.8 millions comprises the fair value of

expected synergies arising from the acquisition of G.W. Barth AG, Frei-

berg a.N. The purchase price allocation was not finally closed on Decem-

ber 31, 2007, because the closing measurement of the balance sheet

items could not be carried out. Sales and net profit of G.W. Barth AG,

Freiberg a.N. cannot be disclosed due to reasons of practicability.

Establishment of Bühler Management AG, Uzwil. On November 22,

2007 Bühler Management AG in Uzwil was established with a capital of

CHF 0.1 million. The company provides management services to the en-

tire Buhler Group.

Establishment of Buhler (Wuxi) Commercial Co. Ltd. On July 16,

2007 Buhler (Wuxi) Commercial Co. Ltd. in Wuxi was established with a

capital of CHF 4.2 million. The company is dealing in machines and row

materials and carries on an import and export trade. In addition Buhler

(Wuxi) Commercial Co. Ltd. is providing services to the customers.

Establishment of Sortex Ltd., London. On May 17, 2007 Sortex Ltd. in

London was established as a trading company with a capital of CHF

2,250.

2006

Acquisition IdraPrince Inc., Holland. On August 10, 2006 the Group

acquired 100% of the shares of IdraPrince Inc., Holland. The investment

is being held by Bühler Druckguss AG, Uzwil. The purpose and scope of

the business of the acquired company is production and sale of Die Cast-

ing machines and spare parts as well as providing services to the custom-

ers. The acquired company was mainly focused on the North American

market and customers.

Acquisition Buhler (Changzhou) Machinery Co., Ltd. On January 18,

2006 the Group acquired 80% of the shares of Buhler (Changzhou) Ma-

chinery Co. Ltd. The company‘s business purpose covers the designing,

manufacturing and selling of animal feed and conveying equipment for

the Chinese market.

Consolidation of Bühler + Scherler AG. The company Bühler + Scherler

AG was newly included in the scope of consolidation as per January 1,

2006.

26 Impairment tests

The recoverable amounts have been determined based on a value in use

calculation. This calculation uses cash flow projections based on finan-

cial budgets approved by the respective division management covering

a five-year period.

Key assumptions used in value in use calculations. The calculation

of values in use are most sensitive to the following assumptions: > Gross margin> Discount rate> Growth rate used to extrapolate cash flows beyond

the budget period> Raw materials price inflation> Market share assumptions

Gross margin – Gross margins are based on average values achieved in

the three years preceding the start of the budget period. These are in-

creased over the budget period for anticipated efficiency improvements.

Discount rate – Discount rates reflect management‘s estimate of the

specific risks. This is the benchmark used by management to assess

operating performance. In determining appropriate discount rates, re-

gard has been given to the yield on a ten-year government bond of the

respective country at the beginning of the budgeted year.

Groth rate estimates –Rates are based on published industry research.

Raw materials price inflation – Estimates are obtained from published

indices relating to specific commodities. Past actual raw material price

movements have been used as an indicator of future price movements.

Market share assumptions – The management assesses that the unit’s

positions, relative to its competitors, might not change significantly over

the budget period. Market share is expected to be stable over the budget

period.

Sensitivity to changes in assumptions. With regard to the assess-

ment of value in use, management believes that no reasonably possible

change in any of the above key assumptions would cause the carrying

value of the unit to materially exceed its recoverable amount.

2007 2006mill. of CHF mill. of CHF

Bills discounted 5.0 6.9

Sureties, guarantees and other obligations 5.3 6.3

Total 10.3 13.2

27 Contingent liabilities

Contingent liabilities to third parties are comprised as follows:

28 Off-balance sheet obligations under operating leases2007 2006


Leasing obligation up to one year 4.7 4.0

Leasing obligation as of 1 to 5 years 15.0 9.8

Leasing obligation over 5 years 11.0 7.2

Total 30.7 21.0

This item mainly includes obligations under long-term leasing agreements

relating to properties in the US, in Great Britain and in Germany. The in-

crease is mainly due to the increase in scope of consolidation as well as

due to a long-term lease contract in Germany.

Book value Base data usedGoodwill 2007 mill. of CHF Discount rate Growth rate

BuhlerPrince Inc., Holland 12.1 11.4 % 1.5 %

Bühler Barth AG, Freiberg a.N. 12.8 8.6 % 1.0 %

Others 1.2

Total at December 31, 2007 26.1

Book value Base data usedGoodwill 2006 mill. of CHF Discount rate Growth rate

BuhlerPrince Inc., Holland 13.1 10.4 % 1.0%

Others 1.2

Total at December 31, 2006 14.3

130131




Carrying amount of real estates 2.8 5.9

Nominal amount used 0.5 0.5

Actual amount used 0.3 0.3

Borrowers’ notes in the following amounts were created with respect to

mortgages:

There are no other assets (prior year CHF 2.2 million) where the right of dis-

posal is limited as these serve as collateral for own liabilities.

30 Assets pledged or assigned to secure own liabilities

31 Related parties

31.1 Related party transactions. Balance positions from related par-

ties are shown separately in the notes. Liabilities towards pension plans

amount to CHF 0.9 million as per 2007 (prior year CHF 0.5 million). Re-

lated-party transactions are effected at arm’s length.

31.2 Key management compensation. The key management com-

pensation (short-term employee benefits to Board of Directors and Group

management) amounted to CHF 8.7 million in the reporting period (prior

year CHF 9.8 million).

32 Proposal of the Board of Directors

At the General Meeting, the Board of Directors proposes a dividend of

CHF 8.0 million (prior year CHF 5.0 million) or CHF 53.33 (prior year CHF

33.33) per registered share for the fiscal year 2007. The dividend pay-

ment to the shareholders of the Buhler Holding AG amounted to CHF 5.0

million in the financial year 2007 (prior year CHF 1.5 million) or CHF 33.33

(prior year CHF 10.00) per share respectively.

33 Government Grants

Government grants are offset with the items of expense which they fi-

nance. Government grants related to assets are deducted from the as-

sets in arriving at the carrying amount of the asset. A necessary relocation

in China has been granted by government. Payments of CHF 25.3 million

are granted for the new business location. The disbursements will be

paid in five installments, whereas the first one of CHF 5.1 million was re-

ceived in 2007. In Europe government grants of CHF 2.6 million to ensure

employees were kept in the area and CHF 4.3 million for fit out costs were

received.

34 Release for publication of the consolidated financial statements

The consolidated financial statements were released for publication by

the Board of Directors of the Buhler Holding AG on March 27, 2008.

35 Subsequent events

No material events have occurred after the balance sheet date.

29 Research and development costs

Research and development costs directly charged to the income state-

ment in the reporting period amounted to CHF 74.4 million (prior year

CHF 70.1 million). The major research and development unit is located at

the Uzwil headquarters.

St.Gallen, March 27, 2008

As group auditors, we have audited the consolidated financial statements

(income statement, balance sheet, cash flow statement, statement of

changes in shareholders’ equity and notes on pages 96 to 131 and 138

to 139) of Buhler Holding AG for the year ended December 31, 2007.

These consolidated financial statements are the responsibility of the

board of directors. Our responsibility is to express an opinion on these

consolidated financial statements based on our audit. We confirm that

we meet the legal requirements concerning professional qualification

and independence.

Our audit was conducted in accordance with Swiss Auditing Standards

as well as the International Standards on Auditing (ISA), which require that

an audit be planned and performed to obtain reasonable assurance about

whether the consolidated financial statements are free from material mis-

statement. We have examined on a test basis evidence supporting the

amounts and disclosures in the consolidated financial statements. We

have also assessed the accounting principles used, significant estimates

made and the overall consolidated financial statement presentation. We

believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements give a true and fair

view of the financial position, the results of operations and the cash flows

in accordance with the International Financial Reporting Standards (IFRS)

and comply with Swiss law.

We recommend that the consolidated financial statements submitted to

you be approved.

Ernst & Young AG

Thomas Stenz Michael Schawalder

Swiss Certified Accountant Swiss Certified Accountant

(in charge of the audit)

Report of the group auditorsTo the General Meeting of Buhler Holding AG, Uzwil

132133



Financial report Buhler Holding AG

Income statement Buhler Holding AG


Income from subsidiaries 2 54.2 29.3

Financial income 3 6.5 5.0

Other income 4 2.6 11.7

Reversal of value adjustments 5 1.2 0.0

Total income 64.5 46.0

Expense from subsidiaries 5 0.0 – 5.1

Financial expenses 6 – 3.9 – 4.1

Other expenses – 0.2 – 1.2

Taxes – 0.7 – 0.6

Net income of the year 59.7 35.0

Balance sheet Buhler Holding AGAs of December 31


Assets

Investments in subsidiaries 7 465.1 445.3

Loans to Group companies 8 4.1 40.3

Non-current assets 469.2 485.6

Accounts receivable from Group companies 9 102.2 51.2

Other accounts receivable 1.8 1.3

Prepayments and accrued income 0.5 0.1

Cash and cash equivalents 4.0 3.0

Current assets 108.5 55.6

Total Assets 577.7 541.2

Shareholders’ equity and liabilities

Share capital 15.0 15.0

General legal reserves 7.5 7.5

Free reserves 275.6 275.6

Available earnings brought forward from prior year 126.2 96.2

Net income of the year 59.7 35.0

Shareholders’ equity 484.0 429.4

Liabilities to Group companies 10 89.4 108.0

Short-term provisions 11 3.5 3.1

Accruals and deferred income 0.8 0.7

Short-term liabilities 93.7 111.8

Total liabilities 93.7 111.8

Total shareholders’ equity and liabilities 577.7 541.2

134135



Notes to the financial statements Buhler Holding AG

1 General information

The financial statements of Buhler Holding AG were prepared in accor-

dance with the provisions of the Swiss Code of Obligations.

From a legal point of view, shareholders hold an interest in Buhler Holding

AG whose balance sheet and income statement are presented above.

From an economic point of view, the consolidated financial statements

are relevant to the shareholders of Buhler Holding AG. The balance sheet

and income statement of Buhler Holding AG are presented as supple-

ment to the consolidated financial statements.

Except for the notes presented below, there are no circumstances which

require reporting pursuant to Article 663 b of the Swiss Code of Obliga-

tions.

2 Income from subsidiaries

This position mainly comprises dividend income from subsidiaries and

other participations.

3 Financial income

Financial income mainly includes interest income on loans to Group com-

panies.

4 Other income

This item comprises repayments from subsidiaries for past loss assump-

tions.

5 Reversal of value adjustments / Expense from subsidiaries

This item comprises the net amount of value adjustments on participations

respectively the reversal of value adjustments which are no more required.

6 Financial expenses

Financial expenses primarily include interest expenses paid to Group

companies, in particular to Buhler AG, Uzwil as well as exchange losses.

7 Investments in subsidiaries

Investments in subsidiaries are valued at acquisition cost less economi-

cally necessary value adjustments. Major investments in subsidiaries

held directly or indirectly by Buhler Holding AG are listed in the section

“Group companies of the Buhler Holding AG” of the financial statements.

8 Loans to Group companies

Loans to Group companies are granted at arm’s length conditions and

are typically granted long term (more than one year).

9 Accounts receivable from Group companies

Accounts receivable from Group companies mainly include short-term

loans extended to Group companies for working capital financing and as

part of the cash management.

10 Liabilities to Group companies

These liabilities are primarily owed to Buhler AG, Uzwil.

11 Short-term provisions

This item mainly includes provisions for currency risks relating to loans to

Group companies and accounts receivable from Group companies.

The statutory obligation of appropriation to reserves is waived as the legal

reserve amounts to 50% of the paid-in share capital.


Result of the year 59.7 35.0

Balance brought forward from prior year 126.2 96.2

Available earnings at the disposal of the general meeting 185.9 131.2

The Board of Directors proposes to the general meeting:

> The distribution of a dividend 8.0 5.0

> Carry forward to new accounting period 177.9 126.2

13 Major shareholders

Urs Bühler, Uzwil: 100% of voting rights


Sureties and guarantee obligations in favour of Group companies 324.6 332.8

12 Sureties and guarantee obligations

14 Proposal of the Board of Directors for the appropriation of available earnings

136137



Group companies Buhler Holding AGAs at December 31, 2007. All companies listed are included as fully consolidated companies (C).

Production Engineering

Share capital Partici- Distributionin millions of pation Services/ Consoli-

Name of company Country local currency rate Financing Held by dation

Switzerland

Buhler Holding AG, Uzwil CH CHF 15.0

Buhler AG, Uzwil CH CHF 30.0 100.0 % Buhler Holding AG, Uzwil C

Buhler Management AG, Uzwil CH CHF 0.1 100.0 % Buhler Holding AG, Uzwil C

Buhler Druckguss AG, Uzwil CH CHF 7.8 100.0 % Buhler Holding AG, Uzwil C

UZE AG, Uzwil CH CHF 0.1 100.0 % Buhler Holding AG, Uzwil C

ASE Buhler AG, Uzwil CH CHF 0.5 100.0 % Buhler Holding AG, Uzwil C

Buhler-Immo AG, Uzwil CH CHF 5.0 100.0 % Buhler Holding AG, Uzwil C

Veripan Ingredients AG, Uzwil CH CHF 0.75 66.0 % Buhler Holding AG, Uzwil C

Buhler + Scherler AG, St.Gallen CH CHF 0.8 59.7 % Buhler Holding AG, Uzwil C

Europe

Buhler Bindler GmbH, Bergneustadt DE EUR 0.275 100.0 % Buhler Holding AG, Uzwil C

Buhler GmbH, Braunschweig DE EUR 12.629 100.0 % Buhler Holding AG, Uzwil C

Buhler PARTEC GmbH, Saarbrücken DE EUR 0.125 100.0 % Buhler AG, Uzwil C

Buhler Druckgiessysteme GmbH,

Frankfurt DE EUR 0.767 100.0 % Buhler Holding AG, Uzwil C

Richard Frisse GmbH, Bad Salzuflen DE EUR 1.023 100.0 % Buhler Holding AG, Uzwil C

Buhler Barth AG, Freiberg a.N. DE EUR 1.137 51.0 % Buhler AG, Uzwil C

Buhler S.p.A., Milano IT EUR 2.6 100.0 % Buhler Holding AG, Uzwil C

Buhler S.A., Madrid ES EUR 2.176 100.0 % Buhler Holding AG, Uzwil C

Buhler AB, Malmö SE SEK 10.0 100.0 % Buhler Holding AG, Uzwil C

Buhler S.à.r.l., Paris FR EUR 2.55 100.0 % Buhler Holding AG, Uzwil C

Buhler UK Holdings Ltd., London GB GBP 3.6 100.0 % Buhler Holding AG, Uzwil C

Buhler Ltd., London GB GBP 1.0 100.0 % Buhler UK Holdings Ltd., London C

Sortex Ltd., London GB GBP 0.001 100.0 % Buhler UK Holdings Ltd., London C

Buhler Sortex Ltd., London GB GBP 1.25 100.0 % Buhler UK Holdings Ltd., London C

Control Design & Development Ltd.,

Peterborough GB GBP 0.0001 100.0 % Buhler UK Holdings Ltd., London C

Production Engineering

Share capital Partici- Distributionin millions of pation Services/ Consoli-

Name of company Country local currency rate Financing Held by dation

North America

Buhler Inc., Minneapolis US USD 3.2 100.0 % Buhler Holding AG, Uzwil C

BuhlerPrince Inc., Holland US USD 0.375 100.0 % Buhler Druckguss AG, Uzwil C

Buhler Sortex Inc., Stockton US USD 1.0 100.0 % Buhler Holding AG, Uzwil C

Buhler (Canada) Inc., Toronto CA CAD 0.000001 100.0 % Buhler Holding AG, Uzwil C

Latin America

Buhler S.A., Buenos Aires AR ARS 1.1 100.0 % Buhler Holding AG, Uzwil C

Buhler Limitada, Joinville BR BRL 20.685 100.0 % Buhler Holding AG, Uzwil C

Buhler S.A. de C.V., Metepec MX MXN 50.0 100.0 % Buhler Holding AG, Uzwil C

Africa

Buhler (Pty) Ltd., Johannesburg ZA ZAR 11.37 100.0 % Buhler Holding AG, Uzwil C

Buhler Properties (Pty) Ltd.,

Johannesburg ZA ZAR 0.0001 100.0 % Buhler (Pty) Ltd., Johannesburg C

Asia

Buhler (India) Ltd., Bangalore IN INR 100.0 100.0% Buhler Holding AG, Uzwil C

Buhler K.K., Yokohama JP JPY 250.0 100.0% Buhler Holding AG, Uzwil C

Buhler Equipment Engineering (Wuxi)

Co. Ltd., Wuxi CN CHF 2.1 100.0% Buhler Holding AG, Uzwil C

Buhler Mechanical Equipment

(Shenzhen) Co. Ltd., Shenzhen CN CNY 4.857 100.0% Buhler Holding AG, Uzwil C

Wuxi Buhler Machinery Manufacturing

Co. Ltd., Wuxi CN CNY 82.0 51.0% Buhler Holding AG, Uzwil C

Buhler (Shanghai) Trading Co. Ltd.,

Shanghai CN USD 0.2 100.0% Buhler Holding AG, Uzwil C

Buhler Equipment (Xi’an) Co. Ltd., Xi’an CN CNY 28.0 100.0% Buhler Holding AG, Uzwil C

Buhler Industrial (Shenzhen) Co. Ltd.,

Shenzhen CN CNY 16.289 100.0% Buhler Holding AG, Uzwil C

Buhler (Changzhou) Machinery Co. Ltd.,

Liyang City CN CNY 80.0 80.0% Buhler Holding AG, Uzwil C

Changzhou Buhler Mechanical and Buhler (Changzhou) Machinery Co.

Electric Engineering Co. Ltd., Liyang City CN CNY 3.0 80.0% Ltd., Liyang City C

Buhler (Wuxi) Commercial Co. Ltd., Wuxi CN USD 3.5 100.0% Buhler Holding AG, Uzwil C

Buhler (Private Joint Stock Co.), Teheran IR IRR 5,000.0 100.0% Buhler Holding AG, Uzwil C

138139



St.Gallen, March 27, 2008

As statutory auditors, we have audited the accounting records and the

financial statements (income statement, balance sheet and notes on

pages 134 to 139) of Buhler Holding AG for the year ended December 31,

2007.

These financial statements are the responsibility of the board of directors.

Our responsibility is to express an opinion on these financial statements

based on our audit. We confirm that we meet the legal requirements con-

cerning professional qualification and independence.

Our audit was conducted in accordance with Swiss Auditing Standards

as well as the International Standards on Auditing (ISA), which require

that an audit be planned and performed to obtain reasonable assurance

about whether the financial statements are free from material misstate-

ment. We have examined on a test basis evidence supporting the

amounts and disclosures in the financial statements. We have also as-

sessed the accounting principles used, significant estimates made and

the overall financial statement presentation. We believe that our audit

provides a reasonable basis for our opinion.

In our opinion, the accounting records and financial statements and the

proposed appropriation of available earnings comply with Swiss law and

the company’s articles of incorporation.

We recommend that the financial statements submitted to you be ap-

proved.

Ernst & Young AG

Thomas Stenz Michael Schawalder

Swiss Certified Accountant Swiss Certified Accountant

(in charge of the audit)

Report of the statutory auditorsTo the General Meeting of Buhler Holding AG, Uzwil

Publisher

Bühler AG, 9240 Uzwil (CH)

Design and Artwork

New Identity Ltd., Basel (CH)

Text

Bühler AG

Corporate Communications, Uzwil (CH)

Matthias Meili, Zürich (CH), (Pages 14, 24, 32, 42, 49, 57, 62, 68)

Photographers

Peter Tillessen, Zürich (CH), (Pages 35–43, 58–69, 71, 88)

Raffael Waldner, Zürich (CH), (Cover; Pages 4–33, 44–57)

Litho

Roger Bahcic, Zürich (CH)

Print

Druckerei Flawil AG, Flawil (CH)

Bühler AGCH-9240 Uzwil, SchweizT +41 71 955 11 11F +41 71 955 33 79www.buhlergroup.com

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