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

ühle

r A

G

Ann

ual R

epo

rt 2

008

2008, prepared for the future.

Annual Report

Group profile

Buhler is the global specialist and technology partner in the supply of plants and services for processing grain and food as well as for manufacturing high-grade materials. The Group holds leading market positions as a provi-der of flour production and feed manufacturing installations, but also pasta and chocolate lines and aluminum die casting systems.

The core technologies of Buhler are mechanical and thermal process engineering. Buhler designs, develops, constructs, and installs plants and advises, trains, and coaches its customers.

Thanks to its extensive expertise and the wealth of experience that it has accumulated over the decades, Buhler is in a position to develop unique and innovative solutions for its customers, enhancing their market success. Through its consistently high quality, Buhler has come to be known over the years as a reliable partner. It owes this reputation to its international service organization, which provides support to its customers around the world whenever and wherever they need it and throughout the life cycle of their plants.

Buhler is active in over 140 countries and has 7,700 employees worldwide. In fiscal 2008, the Buhler Group generated sales of CHF 1,893 million.

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

ühle

r A

G

Ann

ual R

epo

rt 2

008

2008, prepared for the future.

Annual Report

Group profile

Buhler is the global specialist and technology partner in the supply of plants and services for processing grain and food as well as for manufacturing high-grade materials. The Group holds leading market positions as a provi-der of flour production and feed manufacturing installations, but also pasta and chocolate lines and aluminum die casting systems.

The core technologies of Buhler are mechanical and thermal process engineering. Buhler designs, develops, constructs, and installs plants and advises, trains, and coaches its customers.

Thanks to its extensive expertise and the wealth of experience that it has accumulated over the decades, Buhler is in a position to develop unique and innovative solutions for its customers, enhancing their market success. Through its consistently high quality, Buhler has come to be known over the years as a reliable partner. It owes this reputation to its international service organization, which provides support to its customers around the world whenever and wherever they need it and throughout the life cycle of their plants.

Buhler is active in over 140 countries and has 7,700 employees worldwide. In fiscal 2008, the Buhler Group generated sales of CHF 1,893 million.

Group (in mill. CHF)

Sales

EBIT Result

Order bookings

0

0

0

0

1,000

1,000

1,000

1,000

158.1

1,891.1

101.2138.3

1,837.7

130.2

1,893.11,773.4

1,610.6

103.0

1,619.4

120.3

2,000

2,000

2,000

2,000

200620072008

Sales by Division (in %) Sales by regions (in %)

1 Grain Processing 56%

2 Engineered Products 34%

3 Die Casting 9%

12

3

Grain Processing Grain Milling, Feed & Biomass, Sortex & Rice, Grain Handling, Malting

Engineered Products Chocolate & Cocoa, Pasta & Extruded Products, Aeroglide, Grinding & Dispersion,

Thermal Processes, Nanotechnology

Die Casting Die Casting

Business Units

Key figures

1,893.1

Changein mill. CHF in %

2006 2007 2008

Sales 1,610.6 1,773.4 6.7 1,893.1

Order bookings 1,691.4 1,837.7 2.9 1,891.1

Backlog of orders 817.2 870.9 8.9 948.0

EBIT 103.0 138.3 14.3 158.1

EBIT margin in % 6.4 7.8 8.4

EBITDA 133.4 169.4 15.2 195.2

Result for this year 120.3 130.2 – 22.3 101.2

Investments in tangible and intangible assets 67.4 60.1 22.0 73.3

R&D expenditures 70.1 74.4 10.6 82.3

Balance sheet total 1,694.8 1,898.2 – 1.4 1,871.6

Net liquidity 240.4 303.1 13.7 344.7

Return on Operational Assets in % 27.0 29.8 31.6

Number of employees as of Dec. 31 6,626 6,890 11.2 7,661(without temporary staff)

Group

1 Western Europe 35%

2 Eastern Europe 13%

3 Americas 19%

4 Asia 19%

5 Africa 9%

6 Middle East 5%

2

4

65

3

1

Group (in mill. CHF)

Sales

EBIT Result

Order bookings

0

0

0

0

1,000

1,000

1,000

1,000

158.1

1,891.1

101.2138.3

1,837.7

130.2

1,893.11,773.4

1,610.6

103.0

1,619.4

120.3

2,000

2,000

2,000

2,000

200620072008

Sales by Division (in %) Sales by regions (in %)

1 Grain Processing 56%

2 Engineered Products 34%

3 Die Casting 9%

12

3

Grain Processing Grain Milling, Feed & Biomass, Sortex & Rice, Grain Handling, Malting

Engineered Products Chocolate & Cocoa, Pasta & Extruded Products, Aeroglide, Grinding & Dispersion,

Thermal Processes, Nanotechnology

Die Casting Die Casting

Business Units

Key figures

1,893.1

Changein mill. CHF in %

2006 2007 2008

Sales 1,610.6 1,773.4 6.7 1,893.1

Order bookings 1,691.4 1,837.7 2.9 1,891.1

Backlog of orders 817.2 870.9 8.9 948.0

EBIT 103.0 138.3 14.3 158.1

EBIT margin in % 6.4 7.8 8.4

EBITDA 133.4 169.4 15.2 195.2

Result for this year 120.3 130.2 – 22.3 101.2

Investments in tangible and intangible assets 67.4 60.1 22.0 73.3

R&D expenditures 70.1 74.4 10.6 82.3

Balance sheet total 1,694.8 1,898.2 – 1.4 1,871.6

Net liquidity 240.4 303.1 13.7 344.7

Return on Operational Assets in % 27.0 29.8 31.6

Number of employees as of Dec. 31 6,626 6,890 11.2 7,661(without temporary staff)

Group

1 Western Europe 35%

2 Eastern Europe 13%

3 Americas 19%

4 Asia 19%

5 Africa 9%

6 Middle East 5%

2

4

65

3

1

Content

2 Fiscal 2008 at a glance3 Our road to success4 Buhler process technology6 Foreword, Chairman of the Board and CEO10 Present worldwide 12 Lantmännen Cerealia, Denmark24 Urbano, Brazil 34 Market developments36 Grain Processing38 Engineered Products40 Die Casting42 BDW technologies, Germany52 Bogasari Flourmills, Indonesia 64 Kogta, India76 Human resources78 Risk management and Corporate Governance80 Sustainability 81 Organization chart 82 Corporate management84 Board of directors86 Zotter, Austria

97 Financial report98 Economic development100 Financial report Bühler AG137 Financial report Bühler Holding AG

Increase in sales and operating result.

In the past year, Buhler generated sales (turnover) of CHF

1,893 million or 7% more than in 2007, and yet again in-

creased its EBIT margin, by 8.4%. Thus, the organization

succeeded in raising its operating profitability to the values

aimed at. Order bookings at the end of the year amounted

to CHF 1,891 million, exceeding the level of the previous

year by 3%. Adjusted for exchange rates, the increases

were significantly higher due to the stronger Swiss franc.

On the other hand, the result for the year was below the

level of a year ago because of the weak financial perfor-

mance. The cash flow developed positively.

Solid development of “Grain Processing”.

This division showed an excellent performance with a sub-

stantial increase in sales and an above-proportional rise

in the result. Grain Processing thus further expanded its

position as a market leader in the selected segments of the

grain processing industry.

Firmly established in “Engineered Products”.

This division achieved somewhat higher organic sales, but

the result remained slightly below the value of the previous

year. Engineered Products is excellently positioned for fu-

ture growth with its expanded range of processes such as

nut roasting, coffee production, and drying technologies.

Difficult market environment for “Die Casting”.

The general slump in the automotive industry also had an

impact on the supplier industries. In this difficult market

environment, Die Casting was unable to achieve the high

sales level of the year before. However, new trends such as

energy efficiency will maintain the competitive edge of this

division in the longer term.

Above-average growth in India and China.

In India, Buhler achieved sales growth of 19% especially

with solutions in the Grain Milling and the Sortex & Rice

business units as well as in the Customer Service business,

and this despite a devaluation of the Indian currency by

about 20%. In China, sales even soared by 35%. In Europe,

business developed on a stable basis. The sole setbacks

were suffered in Southeast Asia and in the Middle East.

Buhler acquires Aeroglide.

The U.S. Aeroglide company has been part of the Buhler

Group since mid-2008. This market leader in the me-

chanical engineering industry with its drying and other

thermal processes caters to the Food, Feed, and Indus-

try market segments. As a vendor, Aeroglide has sup-

plemented the Buhler product portfolio for years. This

acquisition will enable the joint development of optimally

matched plant solutions.

Fiscal 2008 at a glance.

2

Sustainable growth.

With its solid equity base, Buhler aims to achieve sustain-

able annual sales growth of at least 6 percent. In order to

secure its long-term viability, the Group is striving for an

average EBIT margin of 8 percent.

Customers’ success as the yardstick.

The Buhler portfolio comprises plant and equipment, ser-

vices, and technologies enabling customers to success-

fully differentiate themselves in the marketplace and thus

to generate high added value.

Balanced portfolio.

Buhler is active in attractive segments of food and materi-

als processing and is a specialist in processes designed to

transform raw materials into valuable foods or engineering

materials. In its respective markets, Buhler strives to hold a

leading position (Number 1 or Number 2).

Efficiency through services.

The extensive range of services offered by Buhler ensures

that customers can operate their production plants efficient-

ly throughout the life cycle of the equipment. This also al-

lows continuous adjustment to changes in raw materials or

to new consumer needs.

In the region – for the region.

Buhler operates in over 140 countries worldwide through

40 of its own sales and service companies and several

agencies. The locally based staff are thoroughly familiar

with the wide variety of requirements existing in the local

markets. Development efforts as well as production are tai-

lored to the needs of customers in the various regions and

are, whenever possible, localized.

Focus on innovations.

About half of sales revenue (turnover) is generated with

products that are less than five years old. Buhler spends

an average of about four to five percent of total annual

sales on basic research and applications development.

Quality leadership.

High-grade engineering solutions are manufactured at 15

sites around the globe, which all comply with the same

stringent Buhler quality standards. Buhler masters the en-

tire supply chain and ensures on-schedule delivery and in-

stallation of its products worldwide.

Strong workforce base.

Worldwide, Buhler makes continuous and substantial ef-

forts to develop and strengthen its local workforce base.

Outstanding commitment and exceptional performance of

employees are rewarded accordingly. Unified leadership

principles and strengthening of the corporate culture are

top priorities.

Our road to success.

3

Buhler can look back on almost 150 years of experience in transforming valuable raw materials into higher-grade end prod-ucts. Over these years, the organization has continuously refined the processes applied and thus left a strong imprint on the development of process technologies. The Group’s core technologies are in the area of mechanical and thermal process technology. Among others, they include handling, cleaning, grading, sorting, grinding, blending & mixing, and shaping pro-cesses for grain and other raw materials. Buhler process tech nology is also applied in the production and upgrading of engineering materials and in the field of die casting. The plant and equipment developed by Buhler is in operation at cus-tomers’ sites worldwide – in the food industry, the chemical industry, the automotive industry, and others.

4

From raw materials to higher-value end products, thanks to Buhler.

Grain

Coffee beans

Pigments,oxides

Aluminum,magnesium

Cocoa beans

Oilseeds

Biomass

Paddy rice

Crude oil,monomers

5

Breakfast cerealsDrying

Food ingredients

CoffeeCleaning, grading Roasting Grinding

Printing inks, paints, ceramics,additives, cosmetics, materialsfor electronic components

Dispersion Wet grinding Formulating

Die cast components for auto-motive, household appliances, and consumer electronics

Die casting Shaping, temperature control, spraying ExtractionLadling

RiceHulling Whitening, polishing Mixing

DryingExtrusionMixing

ExtrusionKneading Drying Cooling

Mixing

Mixing

FlakesSteamingHulling Flaking Cooling

Grinding, size reduction

MaltKilningGerminating

Cocoa massCleaning, grading Crushing Grinding

ChocolateConchingRefining Molding

Grinding

Vegetable oilCleaning, grading Crushing Conditioning Pressing (Extraction)Flaking

Household pellets,industry pellets

Cleaning, grading Grinding Pelleting CoolingConditioning

Flour

Pasta

Aquafeed, petfoodDryingExtrusionMixing

Plastics (PET, PA, PC, SAP)Crystallization Drying Solid-state condensation

Coating DryingMixing Extrusion

Steeping

Cleaning, gradingstorage, handling

Cleaning, gradingstorage, handling

Sifting Packing

Formulated feed, pelletsPelletingHygienizingMixing Cooling

Buhler process technologies.

Excellently prepared to face the future.

Dear Sir, dear Madam. Buhler once again looks back on a

successful fiscal year, having achieved a record year and thus

its long-term targets. This success was attained despite a

sharp decline in Nonfood sales in the fourth quarter. Order

bookings increased by 2.9% to CHF 1,891 million (adjusted

for acquisitions and exchange rates by 0.4%). Sales (turn-

over) reached the level of CHF 1,893 million, which translates

into a rise of 6.4% adjusted for acquisitions and exchange

rates. The EBIT margin developed at an above-proportional

rate, reaching a new record level with 8.4%. This result is

owed to all the Food business units, first and foremost to

Grain Milling; Feed & Biomass; and Chocolate, Cocoa & Cof-

fee. Group profits amounted to CHF 101 million, which is be-

low last year’s level (CHF 130 million) due to the negative fi-

nancial result caused by the financial market crisis. The oper-

ating cash flow improved sharply in the year under review,

rising to 11.6% of total sales revenue (previous year: 7.5%).

A year marked by major changes. The year under review

was characterized by exceptionally large changes of almost

all factors relevant to our business – from consumer behavior,

the preparedness of producers in the various markets to

spend capital, the rise and fall in prices for raw commodities

and raw engineering materials, to exchange rate fluctuations

and the availability of credit for our customers. In this volatile

environment, our diversified Food and Nonfood portfolio

proved to be a great strategic advantage.

Activities related to the processing of basic foods developed

above expectations, with the fourth quarter showing a weaker

result throughout than the first nine months. In the Nonfood

units, business developed along different lines. Whereas the

Thermal Processes business unit, which is active in a cyclical

environment, excelled with sales growth of 50%, demand for

solutions in the Die Casting and Grinding & Dispersion busi-

ness units plummeted due to the weakness in the automotive

and electronics industries. In all, however, this shortfall was

offset by the growth in the other divisions. The high volatility of

the U.S. dollar in the past year had a significant impact on the

sales revenue. Adjusted for exchange rates, Group sales

would have been some CHF 88 million higher.

Good Customer Service business. The high-margin Cus-

tomer Service business once again stood out with its total

growth of 12%. With the exception of Die Casting, the divi-

sions boosted their Customer Service revenues. We forged

ahead with this activity especially in the local markets and now

have a strong local crew in the field for permanent servicing of

our equipment. Today, Customer Services account for some

20% of total Group sales.

6

Urs

Bü

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left

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in U

zwil.

7

Strong growth in China and India. The global reach of our

Sales and Service organization creates closeness to custom-

ers and familiarity with regional markets and thus an edge in

knowledge. Our business units utilized this advantage among

other things by developing solutions “for the regions within

the regions” which are tailored to local needs. Sales develop-

ment was outstanding in Central and South America, fol-

lowed by Africa with +17%. In North America, business hov-

ered at roughly the same level as the previous year. In West-

ern Europe, sales rose by a little more than 9%. In Eastern

Europe, our intensive marketing efforts generated growth of

7%. Only in the Middle East did sales slip, by 33%, due to the

lack of a number of large-scale projects in Saudi Arabia. Also

Southeast Asia declined due to project postponements. On

the other hand, business in China with 35% and in India with

19% higher turnover developed excellently. In these Asian

markets, we are increasingly supplying also locally developed

solutions and products.

Convincing profitability. In the past year, Buhler once again

increased its profitability. Significant factors leading to this

result included continuous improvement of in-house proces-

ses and the “Total Synchro” production system launched last

year. Seamless blending of all services provided to custom-

ers – from order receipt to start-up at the customer’s site –

enabled the production process to be substantially reduced.

Other factors include efficient management of project costs

and the procurement volume, which is now at a level of about

CHF 760 million. In this area, Buhler slashed costs with its

professional supply management system, although the cost

of raw engineering materials and energy are still at a high level.

Innovation program. In the year under review, Buhler spent

CHF 82 million on research and development, which trans-

lates into a respectable 4.3% of total sales. Of this amount,

some 20% were invested in basic research and about 30% in

the refining of existing products. The other half of the funds

were applied for so-called “breakthrough opportunities” de-

signed to allow Buhler and its customers to achieve a higher

degree of differentiation in the marketplace. Thus, the Grain

Milling business unit launched a new range of its main grind-

ing equipment and the Chocolate, Cocoa & Coffee business

unit a novel solution for depositing chocolate. Die Casting is

working on a new die casting system that will be rolled out in

the current year.

Investing in the future. In the past year, Buhler invested

some CHF 85 million in the expansion and updating of its

global sites. Of this, about CHF 15 million were spent on ma-

chining equipment and technical installations. Among other

things, sheet and plate production was updated at the manu-

facturing site in Uzwil. This included the renewal of the com-

plete plant layout, of the plate and sheet warehouse, and of

the fabrication tools. In Uzwil, also a modern Customer Cen-

ter was officially opened in March 2008 for welcoming the

more than 1,800 visitor delegations that come to Uzwil every

year from all corners of the world.

Buhler Sortex, the global leader in the development and pro-

duction of optical sorters, moved together with Buhler Lon-

don to new premises. In addition, the organizations of Buhler

China and Buhler Wuxi were merged in a single site in the year

under review without seriously affecting ongoing operations.

Also the transfer of the factory was started, which is a major

challenge for the relevant project team due to the high capac-

ity utilization of the factory.

8

Strategic market expansion. In the year under review,

Buhler acquired the U.S. drying system manufacturer Aero-

glide. Integration of this company, which up to now has been a

supplier to Buhler, will enable the joint development of opti-

mally matched solutions to be intensified. The Die Casting divi-

sion made a significant step in entering the Japanese market

by launching a joint venture with the Japanese company JSW

(Japan Steel Works). Since then, a collaboration agreement in

the areas of sales and the manufacture of cold-chamber die

casting systems has been added to the initial service agree-

ment.

Human resources. In the year under review, the number of

employees rose to 7,700 (previous year 6,900), of which 300

joined the Buhler Group from the acquired companies. An-

other 300 employees were hired alone for the factories in

China. As in the previous year, Buhler employees in Switzer-

land accounted for around 35% of the Group’s total payroll,

which attests to the high competitiveness of this site.

Warm thanks go to Hans Peter Kunz, who retired and handed

over the management of the Manufacturing & Logistics divi-

sion to Martin Menrath in November 2008. In February 2009,

Stefan Scheiber took charge of the Engineered Products divi-

sion from Erwin Frei, who has left our organization.

Outlook and thanks. Even if order bookings slowed down in

the first months of 2009, the 9% higher backlog of orders at

the end of 2008 and the existing portfolio provide a strong

basis for stable business. However, individual business units

and especially the Die Casting division face a challenging

year, in which further shrinkage is expected. We do not ex-

pect the markets to recover in 2009 already. Nonetheless, we

are confident that we will master the challenges of this year

and succeed in maintaining our sales volumes. Profitability is

likely to slip due to lower capacity utilization.

The outstanding result achieved in 2008 would never have

been possible without our employees around the world. We

owe them our sincere thanks for their valued efforts, their ini-

tiative, and their professional and business-minded attitude.

We also thank our customers and our business partners for

their confidence in our organization and their pleasant col-

laboration.

Urs Bühler Calvin Grieder

Chairman of the Board Chief Executive Officer

9

In this year’s Annual Report, customers from all corners of the

world offer us an insight into their companies, their business

environment, and the challenges that they meet day in, day

out. They are representative of all our customers and the part-

nership-based collaboration that they experience with our

Group.

The examples selected show Buhler as a competent partner

for providing process technology, consulting, development,

and services – driven by the desire to continuously roll out in-

novative solutions for its customers so as to enable them to

generate added value and a competitive advantage in the

marketplace.

The extensive range of products and services that our organi-

zation has recently supplied to customers includes, for in-

stance, the construction of a state-of-the-art, fully automated,

large-scale grain mill in Denmark or a much smaller-scale

plant allowing an Austrian chocolate producer to transform

his varied and creative visions into a reality. Or a new pasta

production plant enabling a Brazilian pasta-maker to enter an

entirely new market segment with higher value added.

High-grade structural die cast components for the automo-

tive industry are manufactured on Buhler die casting systems,

and Buhler has also developed a localized lentil process tai-

lored to the needs of the Indian market. Another example from

Indonesia shows how the Buhler Customer Service organiza-

tion upgraded an existing facility to raise its productivity and

thus its competitiveness.

We extend our warmest thanks to the companies Lantmän-

nen Cerealia, Urbano, BDW technologies, Bogasari Flourmills,

Kogta, and Zotter. Their staff accompanied our photogra-

phers while touring their plants, offering them expert informa-

tion and valuable support and thus also allowing them to

shoot these impressive portraits.

Buhler sales sitesBuhler sales and manufacturing sitesSelected customer sites

Urbano, Brazil

24

Present worldwide.

10

64

86

Kogta, India

Zotter, Austria

BDW technologies, Germany

42

Bogasari Flourmills, Indonesia

52

12Lantmännen Cerealia, Denmark

11

FULLY AUTOMATIC GRAIN PROCESSING IN DENMARK, THANKS TO BUHLER.

14

Lantmännen Cerealia, Denmark. Lantmännen Cerealia, which is part of the Scandinavian Lantmännen Group, is one of Europe’s largest and most up-to- date grain mills. The complex, which went into operation in 2008, comprises two flour mills with grinding capacities of 480 metric tons and 240 tons, respec-tively, and a rye mill with a processing capacity of 180 tons per 24 hours. The byproducts obtained in the course of the production process are processed into pellets on a pellet mill and sold to feed manufacturers. The mill, which is equipped with state-of-the-art Buhler process technology, runs fully automati-cally around the clock and is entirely controlled from its multimedia information center. Its operating staff members communicate through radio links and are alerted by SMS or e-mail in the event of irregularities. To implement this, it was necessary to equip all the plant sections with sensors – from the grain storage bins and the cleaning system to the grinding lines and the flour storage bins with the bagging line and loadout section. The new Buhler Win CoS.r2 automation system continuously monitors the plant, ensuring a high product consistency and optimizing energy consumption. All data are recorded, allowing a detailed analysis and traceability of all product streams at all times. Close collaboration between Lantmännen and Buhler has allowed a production plant to be crea ted which operates fully automatically and based on the latest production methods in industrial grain processing.

15

30 KMor 18% less electrical wiring is required thanks to the AIS bus system.

Automated throughout. Automation is nothing new. It

has been systematically developed since the start of

the last century. Its goal is to allow individual machines

or entire production systems to operate without hu-

man intervention and also to monitor their operation on

the basis of preselected parameters. As for the basic

de sign of a process automation system – such as the

one installed in the production plant of the Lantmännen

mill in Denmark – a distinction is made between

three different levels in the automation pyramid. At the

top, we find the process level, where the entire pro-

cess is controlled on the basis of the specific applica-

tion. Below is the control and monitoring level, in

which the data transmitted from the bottommost level

are interlinked. To consistently automate a large-

scale plant, its technical components such as motors,

production equipment, sensors, or operating ele-

ments must be inte grated in a single network using bus

technology. Bus technology enables several units

to simultaneously exchange and process data. The au-

tomation principle is easiest to understand when

considered from bottom to top.

At the bottommost level are the peripheral devices: cut-

ting-edge analytical instruments and weighing equip-

ment, precision-adjusted machine controllers, and so-

phisticated apparatus. They are responsible for the

accurate measurement of parameters such as energy

consumption, material throughput, or pro duct quanti-

ties as well as temperature and air humidity.

At the second level, the control and monitoring level, the

data are interlinked and the predefi ned production

processes are controlled. Example: A motor powering a

roll will not start before a high-level probe measuring

a material level indicates the required value.

The art of automation consists of correctly interpreting

the data and processing it smartly. This is done at

the third level, the process control level. Here, the oper-

ating staff can plan, monitor, and fi ne-tune processes

through a PC operator terminal. For this process-specif-

ic application, over one million lines of code were

programmed: This is the true technical masterpiece of

the Buhler WinCoS.r2 system.

2.8 MILL. KWHAnnual power reduction thanks to the smart Buhler heat recovery system.

WinCoS.r2.The automation system controls the entire plant. Control and monitoring level.

Interlinking of the data trans mitted from the field level by bus technology.

Field level.Production level with continuous measurement of the operating condition.

Process control level.Data processing, planning, monitoring, and fi ne-tuning of the process.

16

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17

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.

23

VALUABLE RICE PASTA IN BRAZIL,THANKS TO BUHLER.

26

Urbano, Brazil. Urbano Agroindustrial Ltda., a family-owned business, proces-ses over 350,000 metric tons of rice annually and is thus one of Brazil’s five largest rice millers. In its total of six rice mills, the paddy rice is hulled, polished, and upgraded, then sold to consumers in the form of white premium rice or white, brown, or parboiled rice. When the paddy is processed into finished rice products, a certain amount of broken rice grains are produced. These so- called brokens are typically ground and marketed as rice fl our. But in its constant quest for new products, Urbano identified a niche for rice pasta in the Brazilian market. This prompted the company to join forces with Buhler and to put its idea of buil ding its own pasta factory into practice. The difference between a stan-dard wheat pasta production line and a rice pasta line lies in the special configu-ration of the extrusion press and a few modifications in the thermal treatment of the raw material. Since the line went into service in September 2008, Urbano has been producing finest gluten-free pasta at a rate of 1,400 kilograms an hour. Thanks to Buhler, this rice miller can now process rice flour into a product with higher added value.

27

3,000 KGof short goods an hour can be produced per press line by the Polymatik TPXZ.

13,206spaghetti strands can be deposited simultaneously. (Applies to six-stick spreader)

Mixer/kneader.Self-cleaning process ensuring hygienic production.

Head section with die.The homogeneous dough is spread uniformly across the

extrusion die at the outlet.

Press screw.Short retention times spare the dough and ensure optimal quality.

Polymatik – Perfect dough made by a sanitary and

fl exible process. The Buhler Polymatik® dough ex-

trusion press produces pasta from durum, hard or soft

wheat and also from gluten-free raw materials such

as corn (maize) and rice – and this with high reliability

and top sanitation. The dry raw materials are fed into

the mixer/kneader together with water and if required

additional ingredients such as egg or tomato powder.

The mixer/kneader is equipped with a powerful, corotat-

ing twin shaft which propels the mass forward while

at the same time mixing and kneading it.

The dough is force-conveyed through the mixer/

knea der on the basis of the “fi rst in – fi rst out” principle.

This offers substantial advantages since each dough

particle undergoes exactly the same treatment within

exactly the same time. This produces top dough

homogeneity. The color pigments are preserved, and

the protein framework is optimally developed. This

gives the pasta the brilliant color and excellent cooking

properties so highly appreciated by consumers.

The dough is fed into the extrusion press barrel, where

it is compressed to build up the required pressure. In

the Polymatik head – the diffusor – it is spread uniform-

ly across the entire die and then extruded through

the die holes.

Thanks to its straightforward design, the Polymatik®

is characterized by its unique flexibility in catering to

specifi c customer needs. Because the dough so to

speak forces itself out on its own, recipe changes are

possible within a matter of seconds. The self-clean-

ing process ensures absolute sanitary production.

28

Pho

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ft: T

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oly

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ik® s

yste

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and

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ads

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pas

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29

30

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31

32

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akin

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to

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horiz

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ryer

.

33

Market developments.

Volatile markets.

The past fiscal year was characterized in various respects

by occasionally hectic market conditions, also in terms of

agricultural commodity prices. In addition, certain trends in

consumer behavior have further intensified. Both develop-

ments are relevant to the business development of Buhler.

Fluctuating wheat prices.

Driven by the high demand for grain and speculative trad-

ing, wheat prices tripled between the summer of 2006 and

mid-2008. The excellent harvest in 2008 then led to a sur-

prising plunge, causing the grain price to plummet to an

all-time low in the final quarter. This marked volatility was

a great challenge for the grain processing industry. How-

ever, margins came under pressure especially in smaller

businesses, whereas large companies in the industry were

able to hedge their wheat costs and also to demand higher

product prices. As a result, the high grain prices in the first

half-year often led customers to invest in existing plants in

order to maximize their yield of high-grade flours by fine-

tuning their production processes. On the other hand, in

other business units such as Pasta & Extruded Products,

capital spending only picked up when prices slipped.

Grain consumption on the rise around the world.

In 2008, flour output increased in all industrialized countries.

Instead of meat, fish, or eggs, people consumed more bread,

baked products, and pasta. But eating habits are also in-

creasingly changing in emerging countries, with bread in-

creasingly replacing rice. Together with the continuous rise

in the global population, this is leading to a higher demand

for grain.

Healthy and safe foods.

Sanitation and safety requirements in food production are

becoming more stringent worldwide. In order to satisfy legal

regulations, producers are therefore investing in the expan-

sion of their plants. Also the high demand for convenience

food is stimulating the market. Furthermore, consumers are

increasingly asking for foods offering them high nutritional

value. This is boosting demand for specialty mills for making

coarsely ground and whole-grain products.

Decrease in freight costs.

The berthing times of a ship are automatically added to the

price of grain. As a consequence, short loading and unloading

times are important for ensuring high operating efficiency of

grain terminals. In the past year, the freight rates dropped back

to the level of the previous years. Today, the lease of a Pana-

max class ship will typically cost USD 4,000 per day, versus

USD 70,000 before 2007. In the medium term, the necessity to

invest capital in order to increase efficiency will rise.

34

Rising prices for cocoa beans.

For many years, the cocoa market was characterized by

massive oversupply, which depressed prices. Only in 2007

did consumption for the first time clearly outpace produc-

tion. In August 2008, the International Cocoa Organization

forecast an excess in demand of 88,000 metric tons. In

conjunction with the assumption that the harvests in Africa

would be rather weak, this led to a sharp price hike in the

first half-year of 2008. It soon subsided, only to become

stronger again toward the end of the year. Cocoa bean

processors took advantage of this situation and invested in

new plants, while on the other hand the chocolate industry

showed more restraint due to the higher raw commodity

prices.

Raw materials prices.

In 2008, the raw materials prices rose even more sharply

than in the previous year. In February, global steel produc-

tion reached an all-time high. In conjunction with enormous

prices hikes, this led to an instability throughout the supply

chain. In June, the price of iron ore doubled yet again, trig-

gering further price rises. But in the fourth quarter demand

collapsed virtually overnight. Although producers immedi-

ately throttled output, the raw materials prices came under

pressure and dropped sharply.

Decline in sales in the automotive industry.

In the year under review, vehicle production plunged in the

U.S., with some 40% fewer cars being sold in January 2009

from a year ago. But the number of units also plummeted in

Europe by 27%, and in Japan by 20%. Even in the emerg-

ing countries, car sales were below the level of a year ago.

This decline also had an impact on the vendor industry. On

the other hand, trends such as the reduced size of engine

blocks and the increasing application of light alloys in mak-

ing structural components are generating demand for new

Die Casting applications. This will allow at least part of the

shortfall in demand to be offset.

35

Grain Processing. Profitable growth.

Overview 2008. The Grain Processing division increased

sales (turnover) in fiscal 2008 by 5% to CHF 1066 million.

Business was especially brisk in the Malting and Grain Mill-

ing business units, Grain Milling with turnover for the first

time passing the CHF 600 million mark. Order bookings

amounted to CHF 1,132 million and were thus about 7%

higher than the previous year. Relative to sales revenue, the

result of the division increased at an above-proportional rate

from a year ago.

Development of the business units. With sales of CHF

612 million (previous year: CHF 599 million), the Grain Milling

business unit once again achieved excellent growth at a high

level. It owes this result to the services provided for the base

of installed plants and repeat orders from satisfied custom-

ers. Continuous marketing efforts allowed an encouraging

number of new customers to be gained. In particular the

market in the CIS countries has reopened, including orders

from Georgia and Turkmenistan. Also two large-scale proj-

ects in South Korea deserve special mention. The integration

of the Brewing segment in the Grain Milling business unit has

resulted in a higher market penetration and improved cost

efficiency. In all, the strategy of differentiating the product

portfolio and the range of services has proven its worth in the

marketplace and is a significant success factor. The main

machines manufactured in China, in conjunction with local

sourcing of plant components, will serve a new customer

segment in India, Africa, and South America.

In the Feed & Biomass business unit, the Feed and Oil seg-

ments developed excellently and more than offset the weaker

business in the Wood segment. With sales of CHF 180 mil-

lion, the unit slightly exceeded the value of a year ago. The

newly created export business to Southeast Asia with ma-

chines made in China has already achieved initial successes.

The Sortex & Rice business unit generated a turnover of CHF

148 million in 2008, most of which was due to the growth in

demand for sorters, of which 26% more were sold. Sales rev-

enue growth of the entire business unit was just under 3%

and was substantially affected by the weakness of the British

pound. Rice Milling has grown especially in Europe beside

North and South America, whereas the expansion in the

Asian markets has not yet developed as expected. Thus,

overall sales were at the level of the previous year.

The Grain Handling business unit can look back on a suc-

cessful year, having increased its sales revenue by 15% to

CHF 65 million. Orders were mainly received from Europe,

the Middle East, and South America, where ship loading ter-

minals for grain and soybeans were installed.

In a highly cyclical environment, the Malting business unit

generated sales of CHF 62 million in 2008 and thus accom-

plished the turnaround. This improvement is the result of sig-

nificant new projects and the Customer Service business.

Innovation and development. In the year under review,

the Grain Processing division spent CHF 35 million in the

development of new solutions for producing safe foods and

hygienic feeds. The focus was on compliance with food hy-

giene regulations and product traceability. For satisfying

these requirements, the Grain Milling business unit launched

a new roller mill and a new purifier. The Feed & Biomass

business unit centered its efforts on the development of a

new pellet mill and a new single-screw extruder for produc-

ing aquafeeds. Both systems were developed within a few

months by a joint Chinese-European team at Buhler China.

Large progress has also been made in the improvement of

plant and energy efficiency.

Outlook. With a backlog of orders of CHF 605 million or

about 13% more than a year before, the Grain Processing

division faces the future with confidence. We assume that

the food industry will not feel the effects of the economic cri-

sis to the same extent as other industries. While we rate the

opportunities for Europe and America lower, we expect con-

tinued growth especially in the BRIC countries.

36

57.4% Grain Milling

16.9% Feed & Biomass

13.8% Sortex & Rice

6.1% Grain Handling

5.8% Malting

Sales by business units in %

Effective January 1, 2008, the Rice and Sortex business units were merged. The Brewing business unit was integrated in Grain Milling. The figures of the previous year have been adjusted accordingly.

2006 2007 2008

540.8 598.9 612.3

145.6 177.8 179.8

121.5 143.5 147.5

70.1 56.1 64.5

29.0 40.4 61.9

907.0 1,016.7 1,066.0

56.3

Total sales Grain Processingin mill. CHF

1,066.0

Sales by business units in mill. CHF

Share of Group sales in %

37

200620072008

Engineered Products. Strategic market expansion.

Overview 2008. Sales revenues of the Engineered Prod-

ucts division amounted to CHF 644 million. The increase of

CHF 105 million or 19% is essentially the result of the acqui-

sition of the Buhler Barth and Aeroglide companies in 2007

and 2008. Purely organic growth was 2%, with the individual

business units developing along very different lines. The or-

der bookings of the division amounted to CHF 586 million or

just under 2% more than in the previous year. The result thus

falls slightly short of that in the year before.

Development of the business units. The Pasta & Extrud-

ed Products business unit increased sales (turnover) mod-

erately to CHF 149 million. The decline in wheat prices

slightly increased capital spending by pasta producers.

Most orders were received from new markets such as North

Africa, India, or the CIS countries such as Turkmenistan and

Belorussia. Following a strong first half-year, Extruded Prod-

ucts felt customers’ diminishing preparedness to invest in

new plant and equipment.

In the first half-year, the Chocolate, Cocoa & Coffee busi-

ness unit moved in a dynamic and active environment. But in

the second half, uncertainties in the markets caused re-

nowned cocoa processors and chocolate producers to

postpone their capital investment projects. Nonetheless,

the high backlog of orders at the end of 2007 and the strong

first half of 2008 still produced total organic growth of 7%.

With additional 11% of acquired growth, total sales revenue

rose by 18% and reached the level of CHF 324 million. For the

first time, Buhler Barth contributed to this result with a full

fiscal year. In the year under review, a partnership-based col-

laboration agreement was signed with the Italian coffee spe-

cialist Petroncini Impianti for developing and selling solutions

for the industrial production of roasted and ground coffee.

Aeroglide, a provider of drying technology for the food and

other industries, joined Buhler in the middle of the year under

review and generated sales of CHF 39 million in the second

half-year.

The Grinding & Dispersion business unit generated a turn-

over of CHF 82 million and thus fell short of last year’s result.

Whereas the European markets showed relative stability,

business suffered mainly in Asia and the U.S. from the slump

in the automotive and electronics industries, whose vendors

procure the systems offered by this business unit.

Although the consolidation process in the PET industry

continues unabated, the Thermal Processes business unit

achieved sales in the year under review of CHF 49 million or

an appreciable 53% more than the year before. A contribu-

tion to this was made on the one hand by the successful

launch of a new compact PET recycling system. On the other

hand, Buhler process technology was selected for almost

all capital investment projects for new PET SSP bottle-grade

and industrial yarn applications.

The as yet young Nanotechnology business unit specializes

in the processing and upgrading of nanoparticles for making

ready-to-use nanodispersions as additives. The first appli-

cations have been successfully marketed.

Investments and developments. In the year under review,

the Engineered Products division invested some CHF 29 mil-

lion in various projects. In the spring, the Chocolate, Cocoa &

Coffee business unit presented a novel chocolate depositing

system in the form of its Flexishot product. For the Pasta &

Extruded Systems business unit, the focus was on the further

development of the Polymatik pasta extrusion press. Beside

the completion of its MicroMedia family, the Grinding & Dis-

persion business unit concentrated its efforts on the devel-

opment of a new three-roll mill. This machine has been pri-

marily designed for the production of high-performance ma-

terials used in solar, electronics, and medical applications.

Outlook. The backlog of orders at the end of the year 2008

was CHF 291 million. It is currently hard to assess the differ-

ent markets. But we must assume that they will not recover

before the second half-year. The goal of the division is espe-

cially to identify the market opportunities arising from the in-

creased demand for lower-priced foods of impeccable qual-

ity and to satisfy customer needs in the emerging markets –

primarily in Asia – by providing customized solutions and

top-class service. The Pasta and Thermal Processes busi-

ness units, the global drying processes business, and the

Chocolate, Cocoa & Coffee business unit expect good op-

portunities to arise in the fields of quality assurance and up-

grading processes.

38

23.1% Pasta & Extruded Products

50.4% Chocolate & Cocoa

6.1% Aeroglide

12.7% Grinding & Dispersion

7.6% Thermal Processes

0.1% Nanotechnology

Sales by business unit in %

Aeroglide sales consolidated from July 2008.

Total Sales Engineered Productsin mill. CHF

644.1

2006 2007 2008

153.4 145.7 149.0

215.8 274.0 324.4

39.2

81.6 86.9 81.9

43.8 31.9 48.8

0.2 1.1 0.8

494.8 539.6 644.1

34.0

Sales by busines units in mill. CHF

Share of Group sales in %

39

200620072008

Die Casting. Difficult market environment.

Overview 2008. Sales revenue (turnover) of the Die Casting

division amounted to CHF 168 million, which is about 16%

lower than a year ago. Order bookings were stable and sat-

isfactory up to the third quarter. But due to the general slump

in the automotive industry, they lost a lot of impetus in the fi-

nal quarter, dropping to CHF 152 million (previous year: CHF

182). Despite systematic cost management and timely mea-

sures, the division achieved a lower result than in the excep-

tionally good year before.

Regional markets. In China, which is an important growth

market for Buhler, the division succeeded for the first time in

supplying a major local customer with complete die casting

cells for manufacturing car engine blocks. We consider this

to also be a significant long-term showcase project in the

top market segment. The division’s presence in Asia was

also intensified by the successful start of the joint venture

with Japan Steel Works. This collaboration agreement in-

cludes the sales, service, and manufacturing of die casting

machines and complete automated manufacturing cells.

In Japan, two trends are emerging in the form of a tendency

to apply lower locking forces and to enhance energy effi-

ciency which are also being increasingly discussed on a

global scale. In India, business developed much more mod-

erately than in the previous years, here too because of man-

ufacturers’ restraint to spend capital due to excess capaci-

ties. On the other hand, the Korean market promises a con-

tinued stable development in view of its successful automo-

bile production activities.

Business in the U.S. remained stuck at a low level. Due to the

massive weakness of the North American carmakers, their

suppliers were reluctant to invest capital to enhance their pro-

ductivity and thus to meet the considerable cost pressures.

In South America, on the other hand, business picked up

briskly in 2008. Capital spending was especially lively in Bra-

zil, which is an indication of the continuing strategic signifi-

cance of this site for the producers of die cast components.

In Europe, Germany and Italy are the largest markets for die

casting systems, with Germany ranking first in terms of tech-

nology and sales volume. Beside the sophisticated pro-

cesses for manufacturing engine blocks and structural

components for cars, this is also reflected in the market suc-

cess of the new CARAT machine series. Growth in the East-

ern European regions was not very pronounced in the rele-

vant markets. Buhler expects to score initial successes in

Russia after an intensive marketing phase. The automotive

industry there is reorganizing under the umbrella of large

corporations and is prepared to invest in promising future

technologies. Overall, the Customer Service business de-

clined slightly due to the continuing economic weakness,

though service packages for machine overhauls or retrofits

were very successful. A range of consulting services com-

pletes the extensive services portfolio.

Innovation and development. The CARAT die casting

machine series launched a year ago with its innovative two-

platen technology is now also available with locking forces

ranging from 1,050 to 4,200 kN. The division is also working

on solutions to further cut energy consumption and reduce

the cycle time. In all, the Die Casting division invested some

CHF 11 million in research and development.

Outlook. The backlog of orders at the end of 2008 amount-

ed to CHF 43 million and was thus lower than in the previous

years. The weakness in the automotive industry and the re-

lated excess global foundry capacities are preventing a rap-

id recovery. But for the second half-year, Die Casting ex-

pects markets to pick up slightly. The various government-

induced measures in favor of the automotive industry are

likely to restart the capital spending that has been stopped

up to now. However, it is unlikely that the high level reached

in 2007 will be attained anytime soon again.

40

200820072006

200.9190.3

Total sales Die Casting in mill. CHF

168.0

8.9

168.0Total sales

Share of Group sales in %

41

HIGH-GRADE STRUCTURAL CAST COM PONENTS FROM GERMANY, THANKS TO BUHLER.

44

BDW technologies GmbH, Germany. The company, set up in 1926, was the first die caster to quantity-produce large-area structural components for the automotive industry. It has been the acknowledged technology leader in this area ever since. Its main customers include automobile manufacturers and their direct vendors. In addition, BDW technologies possesses extensive capabilities in the field of alloy development and heat treatment. In these areas, it protects its innovative, efficiency-boosting proprietary solutions by patents and licenses. Its aluminum-silicon Aural-2TM casting alloys and AuralthermTM heat treatment process plus its latest Aural-5TM alloy, which boasts unequaled ductile properties without requiring any additional heat treatment, are now firmly established in the fi elds of automotive engineering and quantity manufacture. Another milestone will be the implementation of its new InSol-thermTM heat treatment process in volume production processes. For such casting applications, BDW technologies utilizes the High-Q-CastTM vacuum die casting process on Buhler die casting machines to exploit the full potential of the aluminum alloys used.

This enables components to be cast which offer optimal mechanical characteris-tics. In the event of a car crash, they will absorb a defined amount of energy and thus help protect the car’s passengers. Moreover, aluminum structural com-ponents contribute greatly to reducing a car’s weight, which is a hot topic in connection with current CO2 discussions. For the expansion of its factory in Markt Schwaben, BDW technologies relies on Buhler die casting equipment. A com-plete casting cell equipped with a high-tonnage machine (locking force: 3,200 kN) is already in round-the-clock service. It is distinguished by its high production rate and the consistently top-class quality of the components manufactured. Ad-ditional two-platen machines from the new Buhler CARAT series will soon go into operation to produce sophisticated components for automatic power trans-missions, among other parts.

45

100 KGless weight translate into about 0.3 to 0.5 liters lower fuel consumption per 100 kilometers.

Structural die cast components – light, stable, safe.

In order to satisfy the increasing environmental re-

quirements in automotive engineering, it is necessary

to continuously reduce the vehicle body weight. The

apt response of the industry to this trend is to apply die

cast aluminum components. For example, some 28

kilograms can be trimmed off a mid-size car’s weight by

building the doors of aluminum instead of steel. After

all, 100 kilograms less weight translates into about 0.3

to 0.5 liters lower fuel consumption per 100 kilo-

meters and correspondingly lower CO2 emissions. And

aluminum is not only lighter – it is also easy to recycle.

To date, die cast aluminum components have been

used especially for the chassis, the engine block,

and the gearbox. Now they are appearing more and

more also in structural body components. However,

in this area also the mechanical requirements increase.

This applies particularly to safety-relevant elements

such as the center pillar.

The center pillar (B-pillar) in a car is the door post, the

connection between the front and back doors: When

exposed to a side impact, it must absorb a large por -

tion of the crash energy, which requires a certain de -

gree of ductility. When a car overturns, the center pillar

has the life-saving function of stabilizing the passen-

ger cell to prevent vertical deformation. This not only

calls for a so phisticated alloy, but also for cutting-

edge manufacturing processes.

BDW applies the High-Q-CastTM die casting process for

this purpose. This enables the thin-section compo-

nents with complex geometries to be made which the

au to motive industry requires. Car body elements

that used to be welded together from several parts can

now be designed as a single multifunctional die

cast component. Thus, die casting technology allows

lighter-weight com pon ents to be quantity-produced

– and this with top precision and less process scrap.

33%is the weight reduction of a passenger cell containing 69% aluminum compared with a pure steel car body.

Full-aluminum car body.State-of-the-art manufacturing processes such as aluminum die casting enable light-weight constructions to be made which offer excellent mechanical characteristics.

Center pillar as a structural cast component. Multifunctional car body elements such as

the safety-relevant center pillar are manufactured by the High-Q-CastTM process.

46

47

The

pro

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hall

with

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new

CA

RA

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astin

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achi

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48

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49

50

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artin

Mik

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, Buh

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.P

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po

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51

COMPETITIVE IN THEASIAN MARKETS, THANKSTO BUHLER SERVICES.

54

Bogasari Flourmills, Indonesia. The Bogasari company is part of the Indofood Group, a food producer with a total of 62,000 employees. In addition to two major flour mills located in Jakarta and Surabaya, the company also operates a pasta factory. It produces some 60,000 metric tons of pasta annually, of which 80 percent are exported to the surrounding Asian countries. The pasta factory in the north of Jakarta was set up in 1991. The short-goods and long-goods pasta production lines which Buhler installed at that time have been in service ever since. The Bogasari company recently decided to upgrade its plant. A detailed analysis conducted by a Buhler customer service team showed how its produc-tivity, reliability, and product quality could be improved. Along with a complete mechanical overhaul, individual important plant components such as the water metering and semolina feed systems were replaced. The reconditioned short-goods line and the two long-goods lines now once again offer maximum up time and produce pasta of top quality. Bogasari is thus well equipped to further in-crease its export business.

55

98%production plant uptime can be achieved aftera complete overhaul.

Customer services generating added value. In

order to guarantee efficient plant operation over the

years, Buhler has developed service and retrofit

package solutions which range from simple consulting

services to complete replacement of plant com-

ponents. Such a package offers customers numerous

benefi ts: The Buhler specialists – the plant doctors –

who have been thoroughly familiar with the equipment

for years check every customer plant fi rst for weak-

nesses in process technology and the mechanical sys-

tems. Then they propose updates or customized

partial solutions. The components will later on also be

installed by specialized personnel. For the pasta

producer Bogasari, the retrofi t program implemented

as part of a complete plant overhaul included, among

others, the following solutions:

Feed and metering units. Careful preventive mainte-

nance may spare businesses a lot of trouble and

save them a lot of money. This retrofi t package offers

preventive rebuilding of the water metering and

semolina feeding systems, which – thanks to cutting-

edge tools – also generate added value during

pro duction through accurate measurement of raw

material consumption, consistently high product

quality thanks to reproducible blends, and conve -

nient operation.

Control system update. Just like programs de-

signed for private PCs, machine control systems also

offer increasingly higher ease and reliability of ope-

ration. With a specific retrofit package, Buhler experts

update control systems to state-of-the-art levels.

The result: easy operation through the “Pastelec” PC

visualization system and improved service support

through a modem link.

Moisture addition zone. The installation of an addi-

tional moisture addition zone with a dew point monitor

enhances the quality of the end product. Achieve -

ment of a constant moisture distribution ensures perfect

pasta consistency and ultimately increases the yield.

40different service packages can be ordered individually and as required from the Buhler plant doctor.

Turbothermatik pasta line. Restored to state-of-the-art levels thanks to complete reconditioning.

Control systems. Easy operation through thePC visualization system.

Metering systems.Measurement and control of the exact water consumption.

56

57

Pho

to o

n th

e le

ft: Y

eti K

usen

dan

g w

ork

s in

the

pac

kag

ing

dep

artm

ent o

f Bo

gas

ari.

Pho

to o

n th

e rig

ht: T

he n

ew w

ater

met

erin

g s

yste

m is

cru

cial

for a

chie

ving

a c

ons

iste

nt p

asta

qua

lity.

58

The

sho

rt-g

oo

ds

line

(rig

ht) b

eing

reco

nditi

one

d.

59

60

Bef

ore

and

aft

er: T

he e

xist

ing

sem

olin

a fe

ed s

yste

m (l

eft)

was

co

mp

lete

ly re

pla

ced

by

stat

e-o

f-th

e-ar

t Buh

ler t

echn

olo

gy.

61

62

63

Pho

to o

n th

e le

ft: M

alik

i car

ries

out

the

qua

lity

chec

ks.

Pho

to o

n th

e rig

ht: A

gus

tiono

Bha

kti i

s in

cha

rge

of p

rod

uctio

n at

Bo

gas

ari.

LENTIL PRODUCTIONFOR THE INDIAN MARKET, THANKS TO BUHLER.

66

Kogta, India. This family-run business, which was set up in the western part of India in the sixties, originally specialized in lentil trading. But soon the company started investing in its own processing plant. Today, it processes some 200 metric tons of lentils on six highly automated production lines for export to over 30 countries under the Daal Pariwar brand. One of Kogta’s specialties is the produc-tion of “gram fl our,” a fl our made from chickpeas which is considered to be a staple food in India and the surrounding countries. Gram flour contains a large number of valuable proteins and is gluten-free. Kogta started its collaboration with Buhler some ten years ago, when it purchased a cleaning machine. Ever since, the company has relied on Buhler technology and services in all its expansion stages. The decisive arguments were gentle processing to preserve the nutrients, process know-how, and the automation solutions offered. In addition to a Sortex sorter, a number of machines are also applied which Buhler Bangalore specially developed and manufactured to cater to the needs of this lentil processor.

67

200 TKogta Dal daily processes all varieties of pulses.

Pulses – top-class processing. Pulses such as lentils,

gram, and mung beans are high-grade foods which

are staples especially in the Asian countries. India is

one of the largest producers of pulses. Only after

the raw material has been carefully processed in the

Dal mills will the pulses satisfy the rigorous quality

standards in terms of nutritional value, digesti bility, and

ease of preparation. This traditional process com-

prises several separate steps.

In an initial operation, the raw material is freed from

foreign matter with the help of classifi er (MTRA) and

destoner (MTSC). Then the seeds are graded into three

sizes by a Buhler MTRA Separator. Passing through

the material inlet, the grains are fed to a double-deck

shaking sieve whose inclination can be fl exibly ad-

justed. On the top sieve deck, the large impurities are

removed, and on the lower deck the fine ones. In

addition, the attached aspiration channel removes low-

density particles by a current of air.

Following sizing, the pulses are hulled in order to

re move the hard, cellulose-containing and therefore

indigestible seed hull. This process is much more

diffi cult to perform with lentils and similar produce than

with, say, rice or grain. The goal is to separate the

hull from the two high-nutrient cotyledons, which stick

closely to the kernel. For this purpose, the hulls

are fi rst superfi cially scratched by an emery roll, then

treated with vegetable oil, moistened, and dried

again. To become completely detached, the hulls must

undergo this operation several times.

After hulling, the seeds are dried again and then split.

Splitting further enhances the digestibility of pulses,

which is why split pulses are so popular in India. Pulses

must also be moistened for splitting the two cotyle-

dons. In a last stage, discolored kernels are optically

sorted out by a Sortex machine and – depending on

the specifi c product – polished. State-of-the-art Buhler

technology has allowed the yield of the overall

process to be appreciably increased.

25%of global pulses production is done in India.

Aspiration channel.Removes low-density matter by a current of air.

Coarse and sand screens.Separate coarse and fine impurities from the product by sieving.

68

Pho

to o

n th

e le

ft: T

he M

TS

C m

achi

ne. D

evel

op

ed to

rem

ove

hig

h-d

ensi

ty im

pur

ities

(e.g

. sto

nes)

fro

m th

e le

ntils

. P

hoto

on

the

right

: Mr.

Pre

m K

og

ta is

Man

agin

g D

irect

or o

f the

Ko

gta

gro

up o

f ind

ustr

ies.

69

70

Vie

w o

f the

pro

duc

tion

hall.

71

72

Pho

to o

n th

e le

ft: C

lean

ed m

ung

bea

ns b

efo

re o

ptic

al s

ort

ing

. P

hoto

on

the

right

: Kis

hor J

. Cho

udha

ry o

per

ates

the

pla

nt fr

om

the

cont

rol r

oo

m.

73

74

Thi

s in

stal

latio

n cl

eans

and

so

rts

the

lent

ils.

75

Human Resources.

Employees by functions 2008

(in %)

1 Sales 9%

2 Customer Service 10%

3 Engineering 13%

4 Research and Development 4%

5 Manufacturing and Logistics 45%

6 Administration 10%

7 Others 9%

Employees by regions 2008

(in percent and absolute figures)

1 Switzerland 39% 2,966

2 Rest of Europe 21% 1,643

3 Asia 25% 1,914

4 North America 7% 553

5 Latin America 3% 236

6 Africa 3% 192

7 Middle East 2% 157

1

2

3

4

6 75 1

2

3

4

6

7

5

76

More employees as a result of acquisitions. As of the

end of the year, Buhler employed 7,660 persons worldwide.

This growth of 11 percent is essentially due to the integra-

tion of two companies acquired, Aeroglide and Barth. The

number of employees in Switzerland remained at the level

of previous year, about 3,000 persons.

Qualified employees as the basis for success. Even if

the general situation has recently changed somewhat, quali-

fied and well-trained specialist staff are still hard to find in

the European labor market. Beside strengthening its own

employee base, Buhler is therefore recruiting outside talent

and for this purpose is collaborating closely with universities

and universities of applied science. Buhler offered several

students an internship as an opportunity to gain initial experi-

ence on the job. In the eyes of prospective employees, Buhler

is an especially attractive employer thanks to the interesting

jobs offered and the Group’s international orientation. Geo-

graphical mobility is encouraged and is being eagerly taken

advantage of by employees. This may be in the form of an

internship, a brief stint abroad, or prolonged activity in a for-

eign country. Such continuous exchange fosters the sharing

of knowledge worldwide and ensures that the corporate val-

ues are lived everywhere.

Investing in continuing education. Employee develop-

ment is a high priority for Buhler. It is individually planned

on the basis of annual performance appraisals and agree-

ment on defined goals. Buhler maintains a number of ca-

reer programs – on the one hand leadership training for a

line career in management, on the other hand training for

specialist careers either as experts or as project managers.

The “Buhler Lead” management program identifies candi-

dates capable of occupying a future top position and so

to speak forms an in-house assessment. Moreover, sales

and service staff worldwide are trained to meet their future

challenges in a program specifically designed to cater to

the needs of the capital goods and services sector. Buhler

also offers a wide range of individual continuing education

opportunities, which 2,200 employees took advantage of

in 2008. Top among these events were specific specialist

courses and language courses.

77

International apprenticeship exchange. Group-wide,

Buhler offers some 400 apprenticeships for training young

people in commercial or technical vocations, of which 290 in

Switzerland. In order to ensure the permanent availability of

an adequate pool of qualified specialists, and to offer young

local people a better opportunity to enter the labor market,

the apprenticeship training program based on the Swiss

model is also implemented in the affiliated companies in Ger-

many, India, China, South America, and Africa. In Switzerland,

Buhler is taking a new approach in the industry with its techni-

cal vocations concept, which was introduced in 2008. In the

specialist subjects, apprentices now all undergo virtually the

same basic training in the first year in preparation for future in-

terdisciplinary projects. Starting in the second apprenticeship

year, they deepen their knowledge in the specific vocation

they have selected. They are offered the opportunity to take

part in cross-vocational projects. This means that they work in

teams on real customer projects and are also accountable for

budgets and schedules. As part of a pilot project, five appren-

tices spent two months in a Buhler factory in China in 2008.

In Switzerland, some two thirds of all apprentices remain with

Buhler as regular employees after completing their training.

Sharing corporate success. Employees in Switzerland

benefit from a unified bonus system that covers all hierarchi-

cal levels. If the Group achieves a minimum EBIT margin that

is defined at the start of the year, employees receive a finan-

cial payment which is social-security-insured. Performance-

related employee bonus systems are also in place in the in-

ternational affiliated companies; they are tailored to the local

conditions.

Social policy. Representatives from the European affiliated

companies form the European Works Council. In the past

year, four new members and a new chairman were elected

as replacements. Group Management maintain an open dia-

log with employees and provide regular information on ongo-

ing projects and the business situation.

On a global basis, women account for an average of 15 per-

cent of all employees. The highest share of women in the

workforce is in Asia, with almost 20 percent, and the low-

est in Switzerland with just under 13 percent. Buhler has

pursued an equal-pay policy for men and women for many

years. The average age of employees is 42. With about

7 percent worldwide and 3 percent in Switzerland, Buhler

has a comparatively low staff turnover rate. The average

years of service is 14 years. On average, employees stay

longest with the organization in Switzerland and in Europe

(almost 17 years), and shortest in Asia (7 years).

Communications. Buhler utilizes various communications

channels and maintains a regular dialog with its employees

and outside stakeholders. Twice a year, the Group Man-

agement members are available to all employees around

the world during a Live Chat on the Intranet for receiving

direct answers to their questions. On the Internet (www.

buhlergroup.com), Buhler provides an extensive range of

information for anyone interested. Furthermore, the Group

regularly publishes media releases on business develop-

ments and other relevant activities.

Financial risk management. Among other things, the

treasury policy approved by the board of directors and

corporate management regulates the management of risks

and opportunities in interest and exchange management

(asset and liability policy, foreign exchange policy). In addi-

tion, the guidelines regulate the financing principles for the

Group and Group companies, including the dividend policy.

Our bank policy defines, among other things, the oppo-

site parties limits for money and foreign currency trading.

In 2007, an overlay management strategy was approved

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

nancial policies are decided and checked in the course

of the monthly meetings of the Buhler finance committee.

The board of directors grants guidelines authority 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, has been completely revised

and replaced by the Operative Risk Management (ORM)

system. The ORM system regulates commercial project

and contract risk management at Buhler. The commercial

contract rules lead to the best possible agreements with

customers and limit the opposite parties risks.

The tax principles, which were also approved by the board

of directors, cover the main issues of direct taxes, value-

added tax, transfer prices, and compliance. They support

the organization of Group structures for existing legal enti-

ties as well as legal entities to be complemented.

Operational risk management. The ORM system cov-

ers the risk analysis of the quotation and sales process for

all major projects. On the other hand, such projects are

subjected to permanent success checking throughout the

fulfillment process using a database analysis. This enables

modifications leading to risks or opportunities to be identi-

fied. Moreover, corrections and insights for future projects

are provided within a short time.

The integral Business Risk Management system devel-

oped in 2006 supports strategic planning. On the basis of

interviews with the heads of the business units, risk and

opportunity inventories are created for the divisions. The

analyses take account of some 20 important business per-

spectives such as markets; customers; technologies; and

environmental factors related to the economy, taxation, leg-

islation, and finance. In addition to the qualitative inventory,

quantitative data is obtained for EBIT@risk using Monte

Carlo simulations. In the regular meetings held by the risk

committee, risk management measures are defined and as-

signed to the relevant risk owners for implementation. In

2008, the most important long-term and strategic risk and

opportunity analyses were added to the assessments of the

operational business models. The main conclusions have

been taken into account in mid-term planning.

The above-described operational and financial risk manage-

ment tools offer the corporate management and the board

of directors a set of instruments in compliance with the re-

quirements of OR 663 b. In addition, they offer the manage-

ment direct support, 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

liability, property, business interruption, transportation, and

plant installation.

Risk management and corporategovernance.

78

Internal Audit Group. The Internal Audit Group depart-

ment is an auditing and controlling body that is indepen-

dent of the management. In administrative matters, it re-

ports to the CFO, and in technical matters to the board

committee.

Beside conducting financial and operational audits, its

functions also include 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, the audits to be per-

formed 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 internal audit reports,

which are made available to the board committee, the cor-

porate management, and outside auditors. The Internal

Audit Group department maintains a regular dialog with

outside auditors in order to exchange reports and the infor-

mation they provide on risks and to coordinate activities.

Beside various audits performed in Group companies out-

side Switzerland, the focus in fiscal 2008 was especially

on the documentation of the internal auditing system in the

financial processes in compliance with the provisions of

Art. 728 a,b OR (new).

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

internal powers and responsibilities and optimally design-

ing the interaction between the board of directors, the cor-

porate management, and the Internal Audit Group depart-

ment. Corporate governance is a high priority for Buhler. Its

guidelines reflect an attitude which characterizes all corpo-

rate management activities. This also includes a corporate

strategy committed to sustainable ethical principles.

79

Accepting responsibility for the environment. For Buhler,

environmental protection is an important business mission.

An environmental management concept allows systematic

consideration to be given to ecological aspects and gives

them the necessary significance beside economic and social

matters. Its guidelines are binding upon all Buhler manufac-

turing sites worldwide. Buhler was one of Switzerland’s first

companies whose production facilities were ISO 14001-certi-

fied (1996) and have successfully passed all intermediate and

recertification audits. Prudent consumption of resources is a

high priority. Due to a slight increase in output and a larger

building volume, energy consumption at the Group’s sites

in Switzerland increased from 129.4 terajoules to 155.1 tera-

joules. The entire water consumption in Uzwil dropped from

65,218 cubic meters to 56,300 cubic meters, which – among

other factors – is attributable to process improvements in the

factory. The different types of waste are separated and all but

completely recycled. In the past year, the surface treatment

system in Uzwil was replaced and switched from wet paint to

powder paint. This has reduced the production of volatile or-

ganic compounds (VOCs) by 75 percent. Buhler complies with

the targets defined by the REACH directive of the European

Union. If Buhler does not register the substances applied itself,

it demands a confirmation from the respective suppliers stat-

ing that the substances purchased from them is in conformity

with the REACH directives.

Saving energy at customers’ sites. In addition to our own

in-plant efforts, our environmental protection philosophy

also focuses on the products and services that we provide

to customers. Combined, the plants we have supplied to

all parts of the world offer a high potential for conserving

resources. Approximate calculations have revealed that we

install an electric drive power of about 220 to 250 mega-

watts every year. An analysis conducted shows that overall,

the plants we supply achieve a high energy efficiency. But

with new standards on the horizon, the goal now is to make

further improvements. In an in-house competition, Buhler

engineers therefore defined measures apt to further cut en-

ergy consumption. For example, the energy consumption

of a grain mill can be appreciably reduced by utilizing the

process exhaust air for a heat recovery system. As a result,

during the cold season, it is not necessary to heat the fresh

air introduced into the grinding process to the same high

extent as before in order to achieve the required constant

air inlet temperature of about 15 degrees Celsius.

Improved industrial safety. Employee safety is a top prior-

ity especially in plant and equipment manufacturing compa-

nies. For years now, Buhler has made considerable efforts to

prevent occupational accidents and to mitigate their conse-

quences. In the past year, a large number of measures once

again enabled us to diminish the occurrence of incidents

and thus to reduce industrial accident insurance premiums.

For example, employees were trained in their respective

specialist areas in the responsible treatment of chemicals, in

fire protection measures, and in proper handling of loads. A

campaign entitled “Check Your Behavior”, in particular, sen-

sitized employees to safety issues. Employee safety training

is also ensured by a compulsory safety course, including a

final test. It has been designed and put into practice together

with Buhler apprentices. Outside companies also intensively

utilize this safety training opportunity.

As one of the first companies worldwide active in the field

of nanotechnology, the Buhler Partec business unit intro-

duced a certified risk management system in 2007. In the

past year, TüV Süd reviewed and recertified the system used

by Buhler Partec on the basis of established criteria and

safety requirements. Buhler Partec’s main goal is to gain an

extensive overview of strategically relevant legislative and

social developments and to ensure that new findings from

the fields of science and engineering are continuously inte-

grated in the orientation of business activities.

Sustainability.

80

Sales & Services Calvin Grieder

Manufacturing & Logistics Martin Menrath

Finance & Administration Andreas R. Herzog

Corporate Technology Diethelm Boese

Die Casting Achim Klotz

CEO Calvin Grieder

Grain Processing Bruno Mendler

Grain Milling

Feed & Biomass

Sortex & Rice

Grain Handling

Malting

Organization chart.

Engineered Products Stefan Scheiber

Chocolate & Cocoa

Pasta & Extruded Products

Aeroglide

Grinding & Dispersion

Thermal Processes

Nanotechnology

81

Organization chart as per March 1, 2009.

Co

rpo

rate

man

agem

ent:

Erw

in A

. Fr

ei,

Ste

fan

Sch

eib

er,

Mar

tin M

enra

th,

Cal

vin

Gri

eder

, A

ndre

as R

. H

erzo

g,

Bru

no M

end

ler,

Ach

im K

lotz

(f.l.

t.r.)

.82

Corporate management.

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 was in charge of the Buhler

Engineered Products division from 2006 until early 2009.

Stefan Scheiber (1965, Swiss) Engineered Products

He graduated in business administration from the University

of Applied Science in St.Gallen and later on continued his ed-

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

he worked for over ten years for Buhler in various manage-

ment functions abroad, including East and South Africa,

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

global organization of the Brewing and Rice business unit

and then assumed overall responsibility for Buhler Germany.

From mid-2005, Stefan Scheiber headed the Sales & Ser-

vices division. He has been in charge of the Engineered Prod-

ucts division since February 2009.

Martin Menrath (1955, German) Manufacturing & Logistics

Following an apprenticeship as an aircraft engine mechanic

and obtaining his university-level entrance qualifications, he

graduated from the University of Engineering in Munich in aero-

space engineering and later on obtained a doctorate from the

faculty of aircraft propulsion. He has accumulated vast indus-

trial management experience in the fields of production, devel-

opment, and logistics at companies such as MTU, Rolls-Royce

Deutschland, last as speaker of executive management, and

as member of the executive management of Krauss-Maffei

Wegmann GmbH & CO KG. He took charge of the Manufactur-

ing & Logistics division in 2008.

Calvin Grieder (1955, American and Swiss )

Chief Executive Officer

He graduated in process engineering from the Swiss Federal

Institute of Technology Zurich (ETH). Then he occupied a

number of management positions in companies engaged in

the fields of control engineering, automation, and plant con-

struction. 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.

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 Uni-

versity of Applied Science in Winterthur and obtained an ex-

ecutive 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.

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 renow-

ned business school. He then worked with the Schenk com-

pany in Darmstadt, switching in 1989 to Balzers AG, an inter-

national company 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.

83

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 2008. The main sub-

jects discussed at the meetings were mid-term planning of

business development and implementation of an internal risk

management system. The main decisions made were to ac-

quire a company in the U.S. for integration in the Engineered

Products division and to expand a production site in Germany.

The three-member board committee met six times to discuss

especially the internal audits and implementation of the inter-

nal audit system (IKS).

The members of corporate management were present at two

board meetings, during which mid-term planning and the budg-

et were discussed.

Urs Bühler *

(1943, Swiss)

Chairman

Graduate mechanical engi-

neer from the Swiss Federal

Institute of Technology

Zurich (ETH). After a number

of positions inside and

outside Switzerland, he was

appointed to the corporate

management of Bühler AG in

1975, in charge of sales

and development. From 1980

to 1984, he was president

of Buhler GmbH, Braunsch-

weig. In 1986, Urs Bühler

was appointed CEO of

Bühler AG, Uzwil. He hand-

ed over the executive man-

agement 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-chairman and since

June 1994 as its chairman.

Dr. Benno Schneider *

(1942, Swiss)

Vice-Chairman

Obtained his doctorate in

law (Dr. iur.) from the Univer-

sity of Berne and became

an attorney at law. After filling

various management func-

tions in law and administra-

tion, 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 construction industries.

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 Fed-

eral Department of Foreign

Affairs, last as Swiss ambas-

sador to Iraq and China, inter-

rupted by studies in Hong

Kong and Los Angeles. Since

1995, he has been active as

a member of the board and/

or advisory council in differ-

ent Chinese and international

companies and in humani-

tarian projects. He lives pri-

marily in China and Thailand.

Dr. Erwin Schurtenberger

has been a member of the

board since 1995.

Calvin Grieder **

(1955, American and Swiss)

He graduated in process

engineering from the Swiss

Federal Institute of Tech-

nology Zurich (ETH). Then he

occupied a number of

management positions in

companies engaged in

the fields of control engineer-

ing, automation, and plant

construction. In these func-

tions, he was primarily in

charge of establishing and

expanding in ternational

business. In 2001, Calvin

Grieder switched from

Swisscom to the Buhler

Group, which he has head-

ed as CEO since then.

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

84

Dr. Hans-Ulrich Doerig

(1940, Swiss)

Studied economy at the Uni -

versity 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 man-

agement of the Credit Suisse

Group starting in 1981. In

1998, he was appointed 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 mem-

ber 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 com -

mittee. 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. For Crown

Holdings, he was active in

various international func-

tions up to 1996, for the last

six years as President Glo-

bal Plastics Packaging and

member of the Group Ex-

ecutive Board. From 1996 to

2000, he was President and

CEO of the SICPA Group in

Lausanne, the global leader

in the security inks business.

Since 2001 he serves on the

boards of several Swiss and

foreign companies. Hans J.

Löliger has been a member

of the board of Bühler AG

since 2004.

Peter Quadri

(1945, Swiss)

Graduated in 1969 in econo-

my and business administra-

tion from the University of

Zurich as lic. oec. publ. In

1970, he joined IBM as a

systems engineer and spe-

cialist for software and oper-

ating systems. Following

various positions in the U.S.,

Denmark, and Switzerland,

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, with

subsequent assignments in

Switzerland, Europe, USA

and South Africa. He then

spent several 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 to 2007

of the Nestlé Greater China

Region. Josef M. Müller has

been a member of the board

of Bühler AG since 2007.

85

CREATIVE CHOCOLATEVARIETY FROM AUSTRIA, THANKS TO BUHLER.

88

Zotter, Austria. Trained as a cook and confectioner, Josef Zotter has been using the term “hand-scooped” for his layered and filled chocolate bars since 1995. What started in the backroom of a confectioner’s shop reached a new dimension in 2007, when the visitor-friendly “ChocolateFactory” was opened in the Aus-trian town of Riegersburg. However, it was not until he installed his own chocolate production system starting with the cocoa bean that this resourceful chocolate-maker was able to develop his full creativity. Today, the company’s range of prod-ucts includes over 180 different chocolate creations with such exceptional taste combinations such as “mountain cheese, walnut and grapes” or “celery, truffles, and port wine”. The raw materials that Josef Zotter uses are organically grown and obtained from fair trade and sustainability organizations.

The wide variety of recipes and the relatively small production volume of 500 kilo-grams per hour place special demands on the production system. Josef Zotter therefore relies on the extensive know-how and process technology of Buhler. The Buhler system offers him the necessary flexibility and process reliability – from cocoa bean and nut roasting to nougat or gianduja production and the molding of chocolate articles ranging from very small sizes to very large sizes with a weight of 1.5 kilograms. Thus, Josef Zotter is excellently equipped to turn any of his cre -ative ideas into a reality.

89

0.05 GRAMis the weight tolerance of the FlexiShot system with portions up to 14 grams.

FlexiShot – Gentle processing of chocolate. In choco-

late production, utmost care is necessary when it

comes to depositing the sweet mass. In this process

operation, the molten chocolate is metered by a

pump from a tank through a nozzle into a mold, where

it solidifies into a bar or some other chocolate deli-

cacy. With its FlexiShot system, Buhler has developed

a new depositing process which minimizes waste

and spares the chocolate.

The Buhler FlexiShot system does not use rigid noz-

zles, but elastic valves instead. Liquid chocolate is

drawn within fractions of a second from the tank into

the hollow cylinder of the nozzle, applying a simple

pumping principle. Then the inlet valve is closed. As

soon as the hollow cylinder moves, the outlet valve

opens and the portion of chocolate mass can be depos-

ited in the mold. The elastic nozzles automatically

adjust to the pressure and the flow characteristics of

the chocolate mass. This modular system offers the

advantage of allowing chocolates of varying viscosities

to be produced with the same nozzle and the same

setting, which reduces maintenance times and enables

faster production changes.

The FlexiShot system copies nature, working like

a human heart with its valves (volumetric pump prin -

ciple). Cardiac valves, too, are built of resilient cell

layers and adjust to the changing fl ow characteristics of

the blood and the fl ow pressure. Moreover, the new

technology allows larger valve openings to be applied,

which are important for depositing filled masses

such as nut chocolate. Another advantage is the shorter

nozzle opening time, which prevents air from enter -

ing and unintentional discharge of chocolate mass. This

means drip-free depositing, highly accurate metering

of the portions, and thus less wastage and more end

product.

2–4 MSis the nozzle response time to pressure.

Elastic valves. Heart of the FlexiShot nozzle.

Opens automatically if the pressure in the material becomes excessively

high. The valves adjust automatically to the viscosity.

Modular depositing plate. With hollow pistons, which are each equipped with a FlexiShot nozzle. The nozzles are modeled after the human heart valves.

90

91

The

“E

LK”

conc

he re

fines

the

cho

cola

te m

ass

for t

est r

ecip

es.

92

Pho

to o

n th

e le

ft: T

he V

ersi

Sho

t dep

osi

ting

mac

hine

fills

the

mo

lds

with

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ose

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now

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and

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cola

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reat

ions

.

93

94

95

A g

ener

al o

verv

iew

of t

he p

rod

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roce

ss –

the

“Ver

sim

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twin

-sha

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ixer

in th

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Financial report

97

98 Economic development

100 Financial report Buhler Group100 Consolidated income statement 101 Consolidated balance sheet 102 Consolidated cash flow statement103 Changes in shareholders’ equity 104 Notes to the financial statements134 Report of the statutory auditor

135 Financial report Buhler Holding AG 136 Income statement Buhler Holding AG 137 Balance sheet Buhler Holding AG 138 Notes to the financial statements Buhler Holding AG 140 Group companies Buhler Holding AG142 Report of the statutory auditor

Economic environment and order intake. Buhler reported strong

order intake right up until the fall of 2008. As of the fourth quarter, though,

order bookings in some business units declined as the global economic

crisis began to unleash its full force. Though orders recovered towards the

end of the year, they were below the previous year’s level for the individual

months. Including the two acquisitions, Barth and Aeroglide, order book-

ings came to CHF 1,891.1 million, which was an increase of 2.9% versus

the previous year (0.4% adjusted for acquisitions and currency effects).

Order intake was higher than in 2007 in all regions except South America

and Southeast Asia.

Operating profit again higher. Sales revenues came to CHF 1,893.1

million, marking a gain of CHF 119.7 million or 6.7% (6.4% after adjust-

ment for acquisitions and currency effects) on the previous year (CHF

1,773.4 mill ion). Buhler acquired 100% of the shares of the US com-

pany Aeroglide in Raleigh, North Carolina on June 23, 2008. Aeroglide

manufactures drying systems for a variety of applications. Buhler Barth

AG, Freiberg a.N., acquired at the end of 2007, only contributed to sales

as of 2008.

Both EBITDA (CHF 195.2 million) and EBIT (CHF 158.1 million) grew faster

than sales. EBITDA was up 15.2% versus the previous year and EBIT

14.3%. EBIT relative to sales revenues came to 8.4% (prior year: 7.8%).

Commodity prices for steel, nickel and zinc, which weakened in the sec-

ond half of 2008, have not yet had a positive effect on the income state-

ment because some delivery contracts were long term. Personnel expen-

ditures stood at 32.4% of sales revenues (prior year: 32.8%), which was

still higher than the target of 30% set by Corporate Management.

Financial result hard hit by financial crisis. Whereas Buhler report-

ed financial profit of CHF 25.6 million in 2007, in 2008 the company had to

adjust its financial investments in the wake of the financial crisis and to

take a loss. The financial result was further impacted by major fluctuations

in exchange rates. The loss of CHF 32.2 million is thus CHF 57.8 million

lower than the profit reported the previous year. As a result, active though

conservative management of nonoperating liquidity was restricted until

further notice to liquidity management, while investments were limited to

bonds, though there was no change to the long-term strategy. Financial

policy is submitted once a year to the Board of Directors for approval.

Net income dragged down by financial result. Owing to the finan-

cial loss, the company’s profit for the year fell by 22.3% to CHF 101.2 mil-

lion (prior year: CHF 130.2 million). Income tax was low at CHF 24.7 mil-

lion (prior year: CHF 33.7 million) and 19.6% of profit before taxes (prior

year: 20.6%).

Economic development Comments on assets, finances and earnings

2007 2008

Cash flow from operations 132.6 219.7

Cash flow from investments – 54.4 – 140.8

Free cash flow 78.2 78.9

Free cash flow trend (CHF m)

–250 0 250

98

Economic development Financial report Buhler Group

Financial Report Buhler Holding AG

99

Solid balance sheet with no third-party debt. Equity fell from CHF

931.4 million at end-2007 by CHF 48.5 million to CHF 882.9 million at

end-2008 despite a modest dividend payout. The main reasons for this

decline are the lower valuation of the pension fund assets and exchange

rate losses on balance sheet items. As a result, the equity ratio fell from

49.1% to 47.2%.

The Group has high short-term liquidity reserves of CHF 412.1 million

(prior year: CHF 448.6 million) and long-term investments of CHF 31.9

million (prior year: CHF 33.6 million). On balance, short and long-term

investments (cash, securities, long-term financial assets) fell by only

CHF 38.2 million to CHF 444.0 million (prior year: CHF 482.2 million) de-

spite the acquisition of Aeroglide and the substantial investments in

production capacity and infrastructure (CHF 84.7 million versus prior

year CHF 62.7 million). All investments were made without third-party fi-

nancing. As a result of the acquisition, goodwill increased by CHF 74.7

million to CHF 100.8 million (prior year: CHF 26.1 million). No impairment

charges had to be taken. With short and long-term liabilities of CHF 16.5

million (prior year: CHF 19.1 million), the Group is virtually free of debt.

The Group’s net liquidity increased in the year under review by CHF 41.6

million to CHF 344.7 million (prior year: CHF 303.1 million). At end-2008,

net liabilities for production orders had risen by CHF 75.0 million to CHF

115.8 million (prior year: CHF 40.8 million) thanks to professional man-

agement of the financing required for customer projects. Short and long-

term provisions fell by CHF 9.2 million to CHF 89.2 million (prior year: CHF

98.4 million).

In the year under review, it was decided, in the context of the succession

plan of the family owning the business, to spin off the companies UZE AG

und Buhler-Immo AG, both domiciled in Uzwil, at the beginning of 2009.

The net assets of CHF 155.2 million held for the spin-off are recognized

separately in the balance sheet.

High return on net operating assets. For some years, Buhler has

made great efforts to optimize net current assets. In recent years, for in-

stance, RONOA has been steadily improved and in the year under review

the return on net operating assets was a high 31.6% (prior year: 29.8%).

Cash flow lower owing to acquisition. Owing to the acquisition made

in the USA, high investments in fixed assets and translation differences

from the cash holdings of foreign subsidiaries, cash flow was CHF 25.1 mil-

lion lower than in the previous year.

Particularly noteworthy is the CHF 87.1 million increase in cash flow from

operations, which is due to a reduction in capital tied up especially in re-

ceivables and project financing. Furthermore, securities holdings were

reduced to minimize risk in the midst of the financial crisis.

Research and development. The Group attaches great importance to

sustainable innovative activities. Accordingly, investments in research

and development in the year under review were a high CHF 82.3 million

(prior year: CHF 74.4 million), equivalent to 4.3% of sales revenues (prior

year: 4.2%). The investments are charged directly to the income state-

ment in full in the year in which they incurred. The main research and de-

velopment site is located in Switzerland.

Outlook. In the past business year, Buhler posted record highs for sales

revenues and EBIT amid the first signs of the economic crisis. The only

downside was the financial result, which was negative after years in

which it had made a positive contribution to the Group’s net income. The

impact of the global economic crisis on the Group is difficult to predict at

present. In all likelihood, though, the continuous improvement in sales

and profitability in recent years will not be repeated in 2009. However,

Buhler is well positioned to meet the challenges ahead thanks to its

broadly diversified product portfolio, its global reach and the continuous

improvement in its corporate structures and processes.

RONOA trend (in %)

2007 29.8

2008 31.6

Investment trend for R&D (CHF m)

2007 74.4

2008 82.3

2008 2007 See notes CHF m CHF m

Sales 1 1,893.1 1,773.4

Changes in semi-finished and finished product inventories 9.0 12.0

Other operating income 2 38.7 48.7

Total operating income 1,940.8 1,834.1

Cost of materials – 787.3 – 755.7

Personnel expenses 3 – 612.6 – 581.5

Other operating expenses 4 – 345.7 – 327.5

Operating result before interest, taxes, depreciation and amortization (EBITDA) 195.2 169.4

Depreciation and amortization 8/9 – 37.1 – 31.1

Operating result before interest and taxes (EBIT) 158.1 138.3

Financial income 5 56.4 51.2

Financial expenses 6 – 88.6 – 25.6

Profit before taxes 125.9 163.9

Income taxes 7 – 24.7 – 33.7

Profit for the year 101.2 130.2

Attributable to:

> Equity holders of the parent 96.3 129.4

> Minority interests 4.9 0.8

Consolidated income statement

100

As at December, 31

Dec 31, 2008 Dec 31, 2007 See notes CHF m CHF m

Assets

Tangible fixed assets 8 251.7 372.3

Investment properties 8 0.5 44.2

Intangible assets 9 144.3 77.6

Long-term financial assets 10 32.0 33.6

Deferred tax assets 11 10.6 16.3

Non-current assets 439.1 544.0

Inventories 12 242.8 233.7

Net assets of production orders in progress 13 180.4 192.7

Trade accounts receivable 14 333.7 405.0

Other accounts receivable, prepayments and accrued income 15 65.7 70.1

Current income tax assets 6.0 4.1

Securities 24 50.9 126.4

Cash and cash equivalents 361.2 322.2

Current assets 1,240.7 1,354.2

Assets held for sale 16 191.8 0.0

Total assets 1,871.6 1,898.2

Shareholders’ equity and liabilities

Share capital 17 15.0 15.0

Capital reserves 185.1 185.1

Other reserves/Retained earnings 18 652.9 693.0

Shareholders’ equity attributable to equity holders of the parent 853.0 893.1

Minority interests 29.9 38.3

Total equity 882.9 931.4

Long-term financial liabilities 9.3 11.7

Deferred tax liabilities 11 76.7 129.4

Long-term post-employment benefit obligations 19 89.2 79.8

Long-term provisions 20 44.0 45.7

Non-current liabilities 219.2 266.6

Short-term financial liabilities 7.2 7.4

Trade accounts payable 21 135.9 144.0

Net liabilities of production orders in progress 13 296.2 233.5

Short-term provisions 20 45.2 52.7

Other short-term liabilities, accruals and deferred income 22 234.4 241.4

Current income tax liabilities 14.0 21.2

Current liabilit ies 732.9 700.2

Total liabilities 952.1 966.8

Liabilities directly associated with assets held for sale 16 36.6 0.0

Total shareholders’ equity and liabilit ies 1,871.6 1,898.2

Consolidated balance sheet

Economic development Financial report Buhler Group

Financial Report Buhler Holding AG

101

2008 2007 See notes CHF m CHF m

Profit for the year 101.2 130.2

Depreciation and amortization 8/9 37.1 31.1

Other items not affecting cash flow 10.6 2.4

Changes in provisions – 29.3 1.9

Changes in trade accounts receivable 60.8 – 36.1

Changes in inventories –19.4 – 7.3

Changes in trade accounts payable – 5.3 5.6

Changes in net assets/liabilities of production orders in progress 73.9 – 24.1

Changes in other net operating assets – 9.1 38.1

Gains/losses on disposal of fixed assets – 0.8 – 9.2

Cash flow from operating activities 219.7 132.6

Additions to tangible fixed assets – 84.7 – 62.7

Disposals of tangible fixed assets 5.0 13.4

Additions to non-consolidated participations – 6.5 – 3.3

Disposals of non-consolidated participations 0.0 1.5

Disposals of and additions to securities 28.7 8.1

Additions to long-term financial assets –3.8 –1.5

Disposals of long-term financial assets 7.4 1.8

Additions to intangible assets – 0.6 – 0.8

Government grants received 34 11.7 12.0

Cash flow from changes in the scope of consolidation 25 – 98.0 –19.7

Cash flow from movements with minority interests 0.0 – 3.2

Cash flow from investing activities –140.8 – 54.4

Changes in financial liabilities 2.1 – 4.1

Dividends paid by Buhler Holding AG –8.0 – 5.0

Dividends paid to minority interests – 1.7 – 2.8

Cash flow from financing activities –7.6 –11.9

Translation differences – 32.3 – 2.2

Changes in cash 39.0 64.1

Cash at the beginning of period 322.2 258.1

Cash at the end of period 361.2 322.2

Income taxes paid – 36.1 – 29.9

Interest paid – 4.0 – 2.2

Interest received 12.8 12.6

Dividends received 0.1 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.

102

Changes in shareholders’ equity

Additional information regarding other reserves see note 18.

Statement of income and (expenses) recognized directly in consolidated equity 2008 2007 CHF m CHF m

Profit for the year 101.2 130.2

Actuarial losses on benefit obligations and

effect of IAS 19, § 58 (b) after taxes – 79.5 – 5.5

Translation differences – 49.2 – 4.4

Unrealized gains/losses – 0.3 0.0

Total income and (expense) for the year recognized directly in equity – 27.8 120.3

Attributable to

Equity holders of the parent – 31.5 119.3

Minority interests 3.7 1.0

– 27.8 120.3

Equity attributable to the equity Capital Other Retained holders of Minority Share capital reserves reserves earnings the parent interests Total equity CHF m CHF m CHF m CHF m CHF m CHF m CHF m

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 – 5.0 – 5.0 –1.3 – 6.3

Changes in minority interests –1.5 –1.5 16.4 14.9

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

January 1, 2008 15.0 185.1 –12.2 705.2 893.1 38.3 931.4

Total income for the year recognized

directly in equity – 49.5 18.0 – 31.5 3.7 – 27.8

Dividends – 8.0 – 8.0 –1.7 – 9.7

Changes in minority interests – 0.6 – 0.6 –10.4 –11.0

December 31, 2008 15.0 185.1 – 61.7 714.6 853.0 29.9 882.9

103Economic development Financial report Buhler Group

Financial Report Buhler Holding AG

Notes to the financial statements

Business activities

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

especially technologies for the production of foods and engineering ma-

terials. Buhler is active in over 140 countries and employs some 7,700

people worldwide. In fiscal 2008, the Group generated sales revenue of

CHF 1,893 million.

Consolidation principles

Basis of accounting. The annual consolidated financial statements of

the Buhler Group are prepared in accordance with the International Fi-

nancial Reporting Standards (IFRS) and applicable Interpretations and in

compliance with the Swiss Code of Obligations.

The annual consolidated financial statements are based on the audited

single-entity financial statements of the Group companies, which are

prepared in accordance with consistent accounting principles.

The annual consolidated financial statements are prepared under the

historical cost convention. Any exceptions to this general rule are out-

lined in the following accounting policies.

The preparation of the annual consolidated financial statements in ac-

cordance with generally accepted accounting principles requires the use

of assumptions and estimates. These estimates are made to the best of

the Group’s knowledge of current events and possible future measures,

but may differ from actual outcomes.

Key changes in the basis of accounting. Where applicable, the Group

introduced new and revised International Financial Reporting Stan-

dards and Interpretations as of January 1, 2008 or retrospectively as of

January 1, 2007.

> IFRIC 11 – IFRS 2 – Group and Treasury Share Transactions. The

interpretation is concerned with the recognition of share-based pay-

ment arrangements according to IFRS 2. The application of this

interpretation has no impact on the consolidated financial statements

of Buhler. > IFRIC 12 – Service Concession Arrangements. The interpretation

provides guidelines that clarify certain issues relating to the recogni-

tion and measurement of service concession arrangements. The

application has no influence on the consolidated financial statements

of Buhler. > IFRIC 14 – The Limit on a Defined Benefit Asset, Minimum Funding

Requirements and their Interaction. This interpretation provides

guidance on how to assess the limit on the amount of surplus in a de-

fined benefit scheme that can be recognized as an asset under

IAS 19. This interpretation is relevant for Buhler.

Standards, Interpretations, and amendments published but not

yet applied.

New and revised standards and interpretations that are relevant for Buhler

and whose effects are currently being evaluated:

> IFRS 3 revised – Business Combinations (applicable as from July 1,

2009) contains a further development of the purchase method for

business combinations. Material changes relate to the measurement

of minority interests, the recognition of successive company pur-

chases, and the treatment of conditional components of the purchase

price and the auxiliary costs of the purchase.> IAS 1 revised – Presentation of financial statements (applicable as from

January 1, 2009) particularly differentiates more clearly between

changes in shareholders’ equity that have the nature of profit or loss,

and those that result from transactions with shareholders. In future,

these transactions must be more clearly distinguished from each other.> IAS 23 revised – Borrowing costs (applicable as from January 1,

2009) makes it mandatory to capitalize borrowing costs and other

costs that arise in connection with the borrowing of funds and are

directly attributable to a qualified asset as part of the purchase and

conversion costs. Under the Group’s former accounting principles,

these costs were reported as expense under Interest Expense.> IAS 27 revised – Consolidated and separate financial statements (ap-

plicable as from July 1, 2009) contains changed rules for the purchase

and sale of minority interests without loss of control, and for account-

ing for the loss of control of a subsidiary should this occur.

Further new and revised standards and interpretations of no

practical relevance:> IFRS 8 – Operating Segments> IFRS 1 revised – First time adoption of IFRS> IFRS 2 revised – Share-based payment > IAS 1 – Amendment> IAS 32 revised – Financial instruments: Presentation > IAS 39 revised – Financial instruments: Recognition and measurement> Improvements to IFRSs> IFRIC 13 – Customer Loyalty Programs> IFRIC 15 – Agreements for construction of real estates> IFRIC 16 – Hedges of a net investment in a foreign operation> IFRIC 17 – Distributions of Non-cash Assets to Owners

The Buhler Group does not elect to apply issued and amended Standards

and interpretations before they become effective. It does not expect any

significant effects on the annual consolidated financial statements or is

currently investigating the effects.

104

Basis and methods of consolidation. The annual consolidated finan-

cial statements include Buhler Holding AG based in Uzwil, Switzerland

and all domestic and foreign companies in which the Group holding com-

pany, directly or indirectly, holds more than 50% of the voting rights.

The annual consolidated financial statements are prepared using the full

consolidation method, under which assets, liabilities, income, and ex-

penses are included in full, all inter-company items (accounts receivable

and payable, income and expenses) are eliminated, and minority inter-

ests in equity and profit or loss are disclosed separately. Unrealized gains

and losses arising on inter-company transactions are eliminated in profit

or loss. Business combinations are accounted for using the purchase

method. The cost of an acquisition is measured as the fair value of the

assets transferred to the seller and liabilities incurred or assumed at the

date of exchange, plus any costs directly attributable to the acquisition.

Identifiable assets acquired and liabilities and contingent liabilities as-

sumed in a business combination are measured initially at their fair value

at the acquisition 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 acquired is recognized 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 over which the Buhler Group has significant influence (usu-

ally as a result of holding 20% to 50% of the voting power) are accounted

for using the equity method and presented as investments in associated

companies. Under the equity method, the shareholders’ equity and the

result are included in the annual consolidated financial statements on a

pro-rata basis.

Investments below 20% are recognized at fair value and presented as

non-current financial assets. Changes in fair value are recognized di-

rectly in equity.

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

scope of consolidation changed as follows:

Additions.> Aeroglide Corporation, Raleigh> Buhler Mechanical Engineering Research & Development (Wuxi) Co.

Ltd., Wuxi> Yanzhou Buhler Mechanical Co. Ltd., Shandong> Buhler-Immo Betriebs AG, Uzwil> JSW & Buhler Machinery Ltd., Tokyo

Significant accounting estimates and judgments. The Buhler Group

makes estimates and assumptions concerning future events. These are

based on historical experience and forecasts for the future.

The assumptions made may differ from actual outcomes. Listed below

are the estimates and assumptions which may have a material effect on

the financial statements for the subsequent year.

Revenue and expenses under long-term construction contracts are ac-

counted for using the percentage-of-completion method. Revenue (in-

cluding a carefully estimated share of the outcome of the contract) is rec-

ognized by reference to the stage of completion. The stage of completion

is determined according to the cost-to-cost-method. The percentage-of-

completion method involves the use of estimates and forecasts concern-

ing future costs; actual costs may differ from these estimates. The fore-

casts are reviewed on a regular basis and adapted where necessary.

These changes affect costs, the stage of completion, and both realized

and anticipated profits. Any changes in estimates are recognized in the

period in which they occur. Losses identified on long-term contracts are

recognized as an expense immediately. Losses on long-term contracts

occur when the expected contract costs exceed the expected revenue.

105Economic development Financial report Buhler Group

Financial Report Buhler Holding AG

2008 2007 2008 2007 CHF CHF CHF CHF

Europe 1 EUR 1.587900 1.644100 1.492500 1.660000

Great Britain 1 GBP 2.000600 2.401800 1.560000 2.250000

USA 1 USD 1.078800 1.200500 1.065000 1.130000

Canada 1 CAD 1.020900 1.120200 0.877500 1.157500

Brazil 1 BRL 0.600660 0.617414 0.457550 0.638750

Argentina 1 ARS 0.341468 0.385525 0.308800 0.358650

Japan 1 JPY 0.010470 0.010197 0.011760 0.010000

India 1 INR 0.024865 0.028953 0.022000 0.028700

China 1 CNY 0.155325 0.157917 0.156000 0.155000

Mexico 1 MXN 0.097735 0.109858 0.077100 0.103600

Sweden 1 SEK 0.165522 0.177892 0.137500 0.175600

South Africa 1 ZAR 0.133300 0.173900 0.114300 0.165700

Iran 1 IRR 0.000114 0.000130 0.000109 0.000121

Closing rates 31.12.Average exchange rates

A collective valuation allowance is recognized based on past experience

for expected warranty costs on projects with similar conditions. Other

known risks and risks related to projects with special conditions are esti-

mated on a case-by-case basis and measured individually. The actual

warranty costs incurred may differ from the costs provided for.

The fair value of intangible assets acquired in a business combination is

estimated. Any 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 amor-

tized, but reviewed annually for possible impairment. The estimate of the

allocation to intangible assets and goodwill therefore influences the

write-downs. In addition, various assumptions are made in performing

the goodwill impairment test that require medium- and long-term esti-

mates to be made. These concern both in-house planning data (cash

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

Post-employment benefit obligations are measured on the basis of partly

long-term actuarial assumptions that may differ from reality. The assump-

tions underlying these measurements are listed in Note 19. Changes in

assumptions, such as interest rates, future wage and salary increases, or

the life expectancy of the beneficiaries, may have a substantial impact on

the provisions recognized.

Foreign currency translation. The annual financial statements of the

foreign Group companies are prepared in the local currency and translated

into Swiss francs for consolidation. Year-end exchange rates are used for

the balance sheets and annual average exchange rates for the income

statements. The consolidated cash flow statement is also translated at

annual average exchange rates.

Differences resulting from the application of these different exchange rates

for the balance sheet and the income statement and from equity transac-

tions are recognized directly in consolidated equity.

Translation differences arising on foreign-currency Group loans that are an

equity investment are recognized directly in equity.

For foreign currency translation, the Buhler Group used the following

exchange rates:

Foreign currency translation

106

Measurement principles

Tangible fixed assets. Tangible fixed assets are recognized at cost less

deprecation and write-downs for impairment. Items of tangible fixed as-

sets are depreciated on a straight-line basis over their estimated useful

life, that is for:

Investment properties are also carried in the balance sheet at cost less

depreciation and write-downs for impairment. The fair values of such

properties, which are reported separately in the Notes, are based mainly

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

Repair and maintenance expenses are charged directly to the income

statement. Only costs for repairs that increase an item’s value are recog-

nized as part of that asset and depreciated over its remaining useful life.

Leases. Tangible fixed assets financed through long-term finance leases

is recognized and depreciated in the same way as other assets. The as-

sociated liabilities are recognized as either current or non-current finan-

cial liabilities, depending on their due dates.

Assets under operating leases are not recognized in the balance sheet.

The expenses are charged directly to the income statement.

Whether an arrangement contains a lease is determined on the basis of

the economic substance of the arrangement on the date it was concluded.

This requires an assessment as to whether fulfillment of the arrangement

depends on the use of a specific asset or specific assets and whether the

arrangement conveys a right to control the use of the asset.

Assets under finance leases where the Buhler Group acts as lessor are

recognized as receivables in the amount of the net investment. The risks

and rewards incidental to ownership are transferred to the lessee.

Intangible assets. Goodwill is that portion of the purchase price of an

equity investment which cannot be allocated to assets that can be sepa-

rately identified or recognized. It is carried in the balance sheet at cost less

accumulated write-downs (impairment). Goodwill is reviewed for impair-

ment annually and when there are indications that its carrying amount may

exceed its recoverable amount. Any impairment losses are recognized as

an expense immediately and not reversed. Negative goodwill arising from

business combinations is recognized as income immediately.

Patents, licenses, trademarks, and similar rights are carried in the balance

sheet at cost and amortized on a straight-line basis over their expected

useful life or a period not exceeding fifteen years. In 2008 the amortization

period was extended from ten to fifteen years due to the purchase price

allocation for the acquired company Aeroglide Corporation. Intangible

assets stemming from business combinations are carried in the balance

sheet at fair value and amortized over their expected useful life.

Impairment of assets. Assets (excluding goodwill) are reviewed for

impairment whenever events or changes in circumstances indicate that

their carrying amount may exceed their recoverable amount. If the carry-

ing amount does exceed the recoverable amount (the higher of fair value

less costs to sell and value in use), it is written down to the recoverable

amount.

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 ac-

quired with the intention of generating a profit from short-term fluctua-

tions in price. > “Held to maturity” investments are those with a fixed maturity that the

Buhler Group has the positive intention and ability to hold to maturity.> “Loans and receivables” include loans granted and accounts receiv-

able. > All other financial assets are classified as “available for sale”.

Financial assets “at fair value through profit or loss” are recognized on

acquisition at cost and subsequently at fair value, with fair value changes

recognized in net financial income/finance cost. “Held to maturity” in-

vestments are measured using the effective interest method.

“Available for sale” financial assets are measured subsequent to their ini-

tial recognition at fair value, with unrealized gains and losses recognized

in retained earnings until the assets’ disposal, at which time they are

taken to net financial income/finance cost. Impairment losses are recog-

nized in profit or loss rather than directly in equity.

107Economic development Financial report Buhler Group

Financial Report Buhler Holding AG

Buildings

> Building shell 25 –100 years

> Installations/extensions 15 – 35 years

Machinery and technical equipment 8 –16 years

IT hardware 2 – 4 years

Other tangible fixed assets 3 – 7 years

Derivative financial instruments are recognized on acquisition at cost and

subsequently at fair value (replacement cost). Except for financial instru-

ments that meet the conditions for a cash flow hedge, changes in the fair

value of derivative financial instruments are recognized in net financial

income/finance cost.

Purchases and sales are recognized at the trade date rather than at the

settlement date.

The fair values of financial assets that are traded in an active market are

based on the fair values at the end of the reporting period. The fair values

of financial assets that are not traded in an active market are determined

using valuation techniques.

Financial liabilities consist mainly of borrowings, which are measured at

(discounted) cost. Liabilities from trading activities “at fair value through

profit and loss” are carried in the balance sheet at fair value.

Financial assets are derecognized when Buhler relinquishes control over

them, that is when the related rights are sold or expire. Financial liabilities

are derecognized when discharged.

Non-current assets held for sale and liabilities associated with non-

current assets held for sale. Any non-current assets held for sale and

discontinued operations are presented under this item. This includes all

those assets associated with the discontinuation of entire lines of busi-

ness or areas of operation, or balance sheet items or disposal groups

containing at least one non-current asset plus any associated liabilities,

which are to be realized through a sale transaction rather than through

continued use. Reclassifications are only made if management is com-

mitted to the sale and has started seeking buyers. In addition, the asset

or disposal group must be available for sale and its sale must be highly

probable within one year. Non-current assets or disposal groups classi-

fied as held for sale are no longer depreciated. If necessary, they are writ-

ten down for impairment.

The income and expenses of discontinued operations are separated from

ordinary income and expenses in the income statement for both the re-

porting period and the prior-year down to the “profit after tax” level. The

resulting gain or loss (after taxes) is presented separately in the income

statement.

Inventories. Purchased inventories are measured at the cost of pur-

chase and self-constructed inventories at manufacturing cost. If their net

realizable value is lower, they are written down. The purchase costs of

raw materials, consumables, and supplies are determined using the

weighted average cost method. Finished goods and work in progress are

measured at standard costs (based on normal capacity utilization; ex-

cluding borrowing costs). Obsolete inventories and goods with a low rate

of inventory turnover are written down. Advance payments to suppliers

are also included in inventories.

Accounts receivable. Trade and other accounts receivable are stated

at their nominal amount less the necessary valuation allowances. Ex-

tended customer finance refinanced using the Group’s own funds as part

of its treasury strategy is included in this item.

Securities. Marketable securities include those that are held for trading

without participation features. Securities included in financial assets are

categorized as available for sale.

Cash and cash equivalents. Cash and cash equivalents include cash in

hand and post office and bank deposits. They are carried at nominal

amount.

108

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

rity arrangements, there are also autonomous post-employment benefit

plans in place at numerous Group companies. The form of these plans,

some of which are defined contribution and some defined benefit plans,

and the coverage they provide depend on the conditions in the specific

country in question. They are normally funded by employee and employer

contributions.

The employer contributions paid or payable to defined contribution plans

are recognized in the income statement.

In the case of defined benefit plans, the present value of anticipated be-

nefits is determined using the projected unit credit method after deduction

of any plan assets. Current service cost, which relates to employee ser-

vice during the reporting period, is recognized in the income statement.

Past service cost, relating to employee service in previous periods and

resulting from the introduction of new or improved benefits, is recognized

in the income statement as employee benefit expense on a straight-line

basis until the benefits become vested. Actuarial calculations are revised

by independent experts periodically or in the event of material changes.

In the meantime, amounts are carried over. All actuarial gains and losses

are recognized in the balance sheet immediately and presented as an

equity movement in the statement of recognized income and expense.

The effect of the limit on any plan surplus is also recognized as an equity

movement in the statement of recognized income and expense. Advance

contribution payments (employers’ contribution reserves) are presented

under long-term financial assets. In accordance with IFRIC 14, any other

assets resulting from surpluses in defined benefit plans are limited to the

value of the maximum future savings from reduced contributions. Liabili-

ties are fully provisioned.

Participation plans. Since 2008 there has been a phantom option plan

in place for members of management based on phantom shares of Buhler.

Awards depend on the organizational position of the employee. Buhler

determines the value of the phantom option annually based on the

Group’s annual profit for the three preceding years and equity. The phan-

tom options are cash-settled and valid for ten years from the date of grant.

The phantom options are re-assessed at each balance sheet date and a

corresponding liability is recognized.

Provisions. Provisions are recognized when Buhler has a present obliga-

tion as a result of a past event, an outflow of resources is probable, and a

reliable estimate can be made of the amount of the obligation. In accor-

dance with IAS 19, the present value of provisions for jubilee or other long-

service benefits is determined using the projected unit credit method.

Borrowing costs. Borrowing costs are recognized in the income state-

ment.

Taxes. Income taxes comprise the tax expense in respect of all recog-

nized profits for the reporting period. They include current and deferred

income taxes. Current income taxes are calculated on taxable profit. Pro-

visions for deferred taxes are calculated according to the liability method.

Deferred taxes are recognized for temporary differences between the

carrying amounts of assets and liabilities in the consolidated balance

sheet and their tax base taking into account actual or expected local tax

rates. Changes in deferred taxes are included in tax expense.

Deferred tax assets are only recognized for temporary differences and

unused tax loss carry-forwards to the extent that it is probable that they

will be realized in the foreseeable future.

Research and development. Research costs are recognized in the in-

come statement in the period in which they incur. Development costs are

capitalized only if, and to the extent that, the IFRS criteria are met and it

is highly probable that the present value of the expected returns will

exceed the development costs. Capitalized development costs are am-

ortized on a systematic basis over the period in which the returns are

expected to flow to the Group.

Construction contracts, revenue and profit recognition. Invoices

for goods and services are recorded as gross revenue when the goods

are delivered or the services rendered. Gross revenue is presented exclu-

sive of sales and value added taxes and after deduction of discounts and

returns. Long-term construction contracts are accounted for using the

percentage-of-completion method. The stage of completion is deter-

mined using the cost-to-cost method. The costs include a risk premium.

The risk premium was increased in the reporting period. This change had

a negative effect of CHF 5.0 million on the result in 2008. The consoli-

dated income statement includes the pro-rata revenue and a carefully

estimated share of the outcome of the contract; the consolidated bal-

ance sheet includes the relevant assets or liabilities after offsetting ad-

vance payments.

109Economic development Financial report Buhler Group

Financial Report Buhler Holding AG

Financial risk management

Buhler has Group-wide guidelines in place governing the monitoring and

management of financial risks. Derivative financial instruments and secu-

rities are measured on the basis of the fair values at the end of the report-

ing period.

Financial assets Cash and Receivables Financial Total Total cash equivalents Securities & Accruals Assets Book value Market value 2008 CHF m CHF m CHF m CHF m CHF m CHF m

Cash reserves 361.2 361.2 361.2

Financial assets “at fair value through profit or loss” 50.9 50.9 50.9

Loans & receivables 441.3 3.1 444.4 444.4

“available for sale” 15.2 15.2 15.2

Total financial assets 361.2 50.9 441.3 18.3 871.7 871.7

Cash and Receivables Financial Total Total cash equivalents Securities & Accruals Assets Book value Market value 2007 CHF m CHF m CHF m CHF m CHF m CHF m

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

Financial liabilities Payables/ accruals and Financial deferred Total Total liabilities income book value market value2008 CHF m CHF m CHF m CHF m

Financial liabilities at amortized acquisition costs 23.8 370.3 394.1 394.1

Financial liabilities “at fair value through profit and loss” 5.5 – 5.5 5.5

Total 29.3 370.3 399.6 399.6

Payables/ accruals and Financial deferred Total Total liabilities income book value market value2007 CHF m CHF m CHF m CHF m

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

110

Market risk. Buhler is exposed to market risks that relate primarily to

exchange rates, interest rates, and the fair value of investments in liquid

financial assets. The Group monitors these risks on an ongoing basis in

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

the volatility associated with these risks, the Group makes sporadic use

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

from physical exposures and derivative instruments in line with budgeted

amounts and expected opportunities. This includes observing the prin-

ciple that Buhler will not engage in any financial transactions that involve

an inestimable risk at the transaction date.

Exchange rate risk. The Group reports in Swiss francs and is therefore

exposed to exchange rate movements, primarily in European, North

American, Asian, and South American currencies. Various contracts are

concluded with a view to offsetting exchange rate-related changes in as-

sets, liabilities, and future transactions. Buhler also uses currency for-

wards and options to hedge certain revenues it expects to receive in for-

eign currency.

Net investments in foreign Group companies are long term in nature.

Their fair value changes as exchange rates change. Over the long term,

however, the change in the inflation rate should match the exchange rate

movements such that changes in the fair value of foreign investments

offset the exchange rate-related changes in value. For this reason,

Buhler hedges its investments in foreign Group companies only in ex-

ceptional cases.

Commodity risk. The Group is only exposed to limited price risk on prob-

able purchases of certain raw materials used in the Group’s business.

Changes in commodity prices may cause the gross margin of the relevant

business unit to change, but should not normally exceed 10% of that mar-

gin. In 2007, Buhler implemented a Commodity Overlay Management

Strategy for the main commodities, namely aluminum, nickel, copper, and

energy (crude oil). Within this strategy, Buhler carries out raw material

futures, commodity futures and commodity option transactions.

Interest rate risk. Interest rate risk arises from changes in interest rates

that may affect the net assets and results of operations of the Buhler

Group. Financial income is exposed to the risk of changes in the underly-

ing markets in which Buhler is invested. The risks are managed and

monitored centrally.

Equity risk. The Group buys shares in other companies in order to invest

its liquid funds. It does so in accordance with the treasury strategy ap-

proved by the Board of Directors. This sets precise limits, including for

investments in shares. Buhler limits the risk across all asset classes by

holding less than 5% of the Group’s invested funds in any one outside

company. 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 risk. Counterparty risk is the credit risk, or risk of default,

on marketable securities, derivative financial instruments, money-market

contracts, current-account deposits, and time deposits. Counterparty

risk is minimized by buying only securities which have at least an “A” rat-

ing and choosing as counterparties only banks and financial institutes

which have at least an “A” rating at the transaction date. These risks are

carefully monitored and kept within predefined parameters. Group guide-

lines ensure that credit risk in respect of financial institutions is limited.

The limits are monitored and adjusted on a regular basis. The Group does

not expect any losses as a result of the counterparties’ inability to fulfill

their contractual obligations and does not have any appreciable concen-

tration of risk in respect of particular industries or countries.

Credit risk. Credit risk arises when customers are unable to fulfill their

obligations as agreed. The “Operational Risk Diagram”, which has been

applied for several years now, was completely revised and was replaced

by the “Operational Risk Management” (ORM) in 2008. The evaluation of

our customers’ financial reliability and/or the terms of payment and the

hedging of our deliveries are all key concerns. In addition, it can be said

that none of our customers has outstanding payments accounting for

more than 5% of Group sales. The nominal value of the trade accounts

receivable less valuation allowances is considered an approximation of

the receivables’ fair value. The fair values stated represent the maximum

credit risk.

111Economic development Financial report Buhler Group

Financial Report Buhler Holding AG

Allowance for bad debts 2008 2007 CHF m CHF m

January 1 – 9.9 – 7.4

Creation – 6.6 – 2.8

Consumption 2.8 0.9

Release 2.4 0.2

Changes in scope of consolidation – 0.4 – 0.4

Changes from foreign exchange rates – 0.5 – 0.4

December 31 –12.2 – 9.9

Receivable outstanding analysis Total overdue book value Dec 31, 2008 not due < 3 months 4 – 6 months 7– 9 months 10 –12 months > 12 months2008 CHF m CHF m CHF m CHF m CHF m CHF m CHF m

Accounts receivable

trade and other 403.7 312.6 57.4 11.6 7.7 3.7 10.7

Allowance for bad debts –12.2 – –1.4 – 0.3 – 0.4 –1.6 – 8.5

Associated companies and

other related parties

Total accounts receivable, net 391.5 312.6 56.0 11.3 7.3 2.1 2.2

Total overdue book value Dec 31, 2007 not due < 3 months 4 – 6 months 7– 9 months 10 –12 months > 12 months2007 CHF m CHF m CHF m CHF m CHF m CHF m CHF m

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 – – 0.6 – 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

112

Liquidity risk. Liquidity risk refers to the risk arising when the Group is

unable to fulfill its obligations when due or at a reasonable price. The

Group Treasury department is responsible for monitoring liquidity, financ-

ing, and repayment. In addition, liquidity and financing risks and the re-

lated processes and guidelines are checked by corporate management.

Buhler manages its liquidity risk on a consolidated basis and taking into

account business policy, tax, financial, or regulatory considerations. Bank

loans are the main source of finance. Corporate management monitors

the Group’s net liquidity position by means of ongoing forecasts based on

expected cash flows.

Financial liabilities 2008: book value and cash flow Cash Outflow Book value Dec 31, 2008 Total < 1 year 1–5 years > 5 years2008 CHF m CHF m CHF m CHF m CHF m

Trade payables 135.9 135.9 135.9 – –

Financial liabilities – – – – –

Foreign exchange contracts:

> Cash inflow 97.0 97.0 92.3 4.7

> Cash outflow – 95.7 – 95.7 – 91.0 – 4.7

> Net 1.3 1.3 1.3 –

Liabilities others/accruals and deferred income* 258.2 258.2 236.1 22.1

Total 395.4 395.4 373.3 22.1 –

* including liabilities to associates and other related parties of CHF 7.7 Mio. Cash Outflow Book value Dec 31, 2007 Total < 1 year 1–5 years > 5 years2007 CHF m CHF m CHF m CHF m CHF m

Trade payables 144.0 144.0 144.0 – –

Financial liabilities 1.6 1.6 1.6 – –

Foreign exchange contracts:

> Cash inflow 45.7 45.7 43.3 2.4

> Cash outflow – 45.3 – 45.3 – 43.0 – 2.3

> Net 0.4 0.4 0.3 0.1 –

Liabilities others/accruals and deferred income* 256.7 256.7 245.0 11.7

Total 402.7 402.7 390.9 11.8 –

* including liabilities to associates and other related parties of CHF 6.2 Mio.

113Economic development Financial report Buhler Group

Financial Report Buhler Holding AG

Value at risk. The Group uses a value-at-risk calculation (VAR) to esti-

mate the potential 30-day fair value loss on its financial instruments, re-

ceivables, and liabilities.

A period of thirty days is used because it is assumed that, due to the scale

of the positions, not all can be closed within a very short time. The VAR

calculation encompasses the Group’s financial liabilities, short- and

long-term financial investments, foreign currency and commodity for-

ward contracts, and options. It includes customer receivables and sup-

plier liabilities denominated in foreign currencies and loans to foreign

Group companies.

The VAR calculation estimates the loss under normal market conditions

and at a confidence interval of 95%. The Group uses a delta-normal

model to determine the correlations observed between fluctuations in

interest rates, equity markets, and currencies. To calculate VAR, these

correlations are determined bearing in mind interest rates, equity market

movements, and changes in foreign currencies and commodity prices

over a period of 90 days.

The following table shows the estimated potential 30-day pre-tax loss

under normal market conditions, as calculated using the VAR model:

The increased risk value is primarily due to the increased foreign currency

volatility for about the same exposure as in previous year. Investment posi-

tions in shares and bonds have been significantly lower at year end 2008

The VAR calculation is a risk measurement tool that can be used to make

a statistical estimate of the maximum possible 30-day loss resulting from

unfavorable fluctuations in interest rates, currencies, and equity prices

under normal market conditions. The calculation does not claim to give

the fair value losses that Buhler will actually suffer. Buhler is not in a posi-

tion to predict actual future market movements and does not claim that

these VAR calculations are representative of future market changes or

their actual effects on Buhler’s future results or financial position.

In addition to these VAR analyses, Buhler also uses the maximum draw-

down method. The aim of such stress tests is to simulate a worst-case

scenario. For these calculations, Buhler uses the most unfavorable mar-

ket change in each category within a 30-day period over the past ten

years. The greatest loss assumed for 2008 and 2007 was as follows:

As mentioned in the VAR calculation the changes are mainly related to the

foreign currency positions.

In the risk analysis, Buhler considers this worst-case scenario to be toler-

able insofar as it would reduce profits, but not jeopardize the Group’s

solvency and/or its current good credit rating. Although it is very unlikely

that all the worst-case fluctuations would occur simultaneously as repre-

sented in the model, the market may be subject to greater fluctuations in

the future than it has been in the past. Moreover, in such a worst-case

scenario, corporate management could take appropriate action to re-

duce the risk to Buhler.

Capital risk management. One of the Group’s main objectives is to

apply a well-managed capital management system in order to ensure the

continuity of the Group and generate added value for all stakeholders.

Another goal is to optimize the cost of capital.

Buhler does not have to comply with any capital requirements imposed

by third parties since the amount of financial debt is of a negligible mag-

nitude.

Risk assessment. The Board of Directors of Buhler Group assesses the

corporate risks within the framework of systematic risk identification and

analysis. Based on this assessment, measures for risk management in

the company are defined and monitored. In 2008 the Board of Directors

dealt with corporate risk assessment at its meetings on August 20-21

and December 18.

Dec 31, 2008 Dec 31, 2007 CHF m CHF m

All instruments 13.2 5.0

Analyzed by instrument

> Exchange rate-related instruments 13.1 7.1

> Equity market-related instruments 0.4 5.6

> Interest rate-related instruments 0.9 0.9

Dec 31, 2008 Dec 31, 2007 CHF m CHF m

Exchange rate-related instruments 12.2 14.6

Equity market-related (incl. commodities) instruments 0.6 12.4

Interest rate-related instruments 0.9 1.5

All instruments 13.7 28.5

114

115Economic development Financial report Buhler Group

Financial Report Buhler Holding AG

The position “Others” contains reversal of provisions, interest income

from trade finance, commissions and other operating income third par-

ties not belonging to the core business.

2 Other operating income 2008 2007 CHF m CHF m

Other operating income related parties 0.3 0.8

Capitalized goods and services for own account 1.2 0.9

Rental income 2.8 2.4

Gains from sale of tangible fixed assets 1.2 10.4

Others 33.2 34.2

Total 38.7 48.7

3 Personnel expenses 2008 2007 CHF m CHF m

Wages and salaries 500.4 468.3

Social security and employee benefit expenses 80.5 82.0

Other personnel expenses 31.7 31.2

Total 612.6 581.5

1 Sales

CHF 1,262.1 million (prior year CHF 1,181.4 million) of the total operating

income was determined using the percentage-of-completion method in

the reporting period.

4 Other operating expenses 2008 2007 CHF m CHF m

Administration expenses 79.8 77.6

Rental and leasing expenses, dues 24.1 22.1

Energy, maintenance and equipment costs 33.0 27.5

Travel expenses 57.0 50.4

Outbound freight costs 52.3 51.8

Consultancy fees 10.5 8.8

Marketing costs 13.1 11.4

Agency fees 26.4 20.3

Warranty costs, loss orders 11.0 21.2

Others 38.5 36.4

Total 345.7 327.5

Foreign exchange gains are the result of the netting of currency flows and

benefit from currency volatility. The item fair value adjustments reflects the

market development for the securities. Their mark-to-market valuations

are accounted for under financial items. Interest and income from securi-

ties together with other income from financial assets decreased by CHF

5.6 million due to lower interest rates.

5 Financial income 2008 2007 CHF m CHF m

Interest and income from securities 14.0 13.9

Other income from financial assets 3.5 9.2

Fair value adjustments 6.7 0.3

Foreign exchange gains 32.2 27.5

Interest income from related parties 0.0 0.3

Total 56.4 51.2

Financial expenses increased considerably versus the previous year. The

main drivers were the negative developments of almost all currencies vs.

CHF plus the sharply higher volatility. Interest expense and realized

losses on securities and fair value adjustments include the losses in-

curred because of the financial crisis on the liquidity placed in interna-

tional markets and instruments.

6 Financial expenses 2008 2007 CHF m CHF m

Interest and similar expenses 29.2 5.0

Fair value adjustments 11.3 7.5

Currency exchange losses 47.3 12.7

Interest expenses related parties 0.8 0.4

Total 88.6 25.6

116

117Economic development Financial report Buhler Group

Financial Report Buhler Holding AG

The anticipated tax rate amounts to approx. 27.3% (prior year 28.3%) and

is composed of the weighted average of the applicable local tax rates for

income taxes. The value from the prior year was adjusted due to new

calculations.

2008 20077.2 Reconciliation of income taxes CHF m CHF m

Profit before taxes 125.9 163.9

Components of tax expenses:

Income taxes at anticipated tax rate – 34.4 – 46.4

Income and expenses not subject to tax – 0.5 4.6

Income taxes relating to prior periods – 0.4 1.5

Deferred taxes due to changes in tax rates 12.7 8.6

Effect of tax loss carry-forwards 1.6 0.6

Effect of losses without recognition of deferred tax assets –1.1 – 0.2

Other impacts – 2.6 – 2.4

Income taxes disclosed (current and deferred) – 24.7 – 33.7

Total income taxes in % of profit before taxes 19.6% 20.6%

2008 20077.3 Tax loss carry-forwards CHF m CHF m

Expiry

Unlimited 6.5 11.7

In more than 5 years 15.1 19.5

In 2 to 5 years 8.1 2.6

Within one year 0.1 0.0

Total 29.8 33.8

Tax loss carry-forwards accounted for in deferred taxes 13.4 18.0

Tax ef fect on tax loss carry-forwards unaccounted for 3.1 4.1

2008 20077.1 Income taxes CHF m CHF m

Income taxes relating to the reporting period – 34.7 – 32.4

Income taxes relating to prior periods – 0.4 0.9

Deferred taxes due to temporary differences –1.9 –11.5

Deferred taxes due to first time utilization of tax losses carryforward – 0.4 0.7

Deferred taxes due to changes in tax rates 12.7 8.6

Total – 24.7 – 33.7

Deferred taxes recognized directly in shareholders’ equity 12.0 1.2

7 Taxes

The reduction in tax loss carry-forwards is mainly based on the use of tax

loss carry-forwards in Germany.

8 Movements of tangible fixed assets Machinery Land and and technical Other tangible Assets under Investment properties buildings equipment fixed assets construction Total CHF m CHF m CHF m CHF m CHF m CHF m

Acquisition cost

January 1, 2007 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

Changes in the scope of consolidation 0.0 0.0 1.6 1.0 0.0 2.6

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

Additions 0.8 26.4 15.7 8.9 20.9 72.7

Disposals – 0.9 – 8.0 – 7.0 – 6.9 0.0 – 22.8

Changes in the scope of consolidation 0.0 4.8 2.5 0.8 0.0 8.1

Reclassifications – 79.4 – 230,3 –16,0 1.9 – 25.3 – 349.1

Translation differences – 0.1 –13.3 – 8.8 – 6.5 – 0.5 – 29.2

December 31, 2008 0.5 182.8 199.8 113.9 17.5 514.5

Depreciation

January 1, 2007 – 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

Changes in the scope of consolidation 0.0 0.0 0.0 0.0 0.0 0.0

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

Additions – 0.5 – 7.0 –13.6 –10.9 0.0 – 32.0

Disposals 0.0 1.5 6.7 6.5 0.0 14.7

Changes in the scope of consolidation 0.0 0.0 0.0 0.0 0.0 0.0

Impairment 0.0 0.0 0.0 0.0 0.0 0.0

Reclassifications 36.4 108.4 15.4 – 0.1 0.0 160.1

Translation differences 0.0 2.3 5.7 5.2 0.0 13.2

December 31, 2008 0.0 – 49.4 –129.0 – 83.9 0.0 – 262.3

Net book values

January 1, 2008 44.2 248.6 70.2 31.1 22.4 416.5

December 31, 2008 0.5 133.4 70.8 30.0 17.5 252.2

Comments regarding the movements of tangible fixed assets are on the

following page.

118

119Economic development Financial report Buhler Group

Financial Report Buhler Holding AG

The reclassifications of CHF 189.0 million are related to the planned spin-

off of UZE AG, Uzwil, and Buhler-Immo AG, Uzwil, in 2009. Balance sheet

items of both companies are shown in assets held for sale/liabilities di-

rectly associated with assets held for sale (see Note 16).

Additions in «Land and buildings» contain offsetted government grants of

CHF 11.7 million (see Note 34).

Values of UZE AG and Buhler-Immo AG are included in the amounts of the

following section. Rental income on investment properties amount to

CHF 1.7 million (prior year CHF 1.5 million) and operating costs of proper-

ties with rental income to CHF 0.4 million (prior year CHF 0.8 million). As

in the prior year, there are no operating costs of properties without rental

income in the reporting year. The market value of investment properties

amounts to CHF 52.4 million (prior year CHF 54.4 million). To a large ex-

tent, these investment properties involve land. The determination of

market values of the investment properties is primarily done by internal

property specialists. The book value of leased tangible fixed assets was

CHF 0.1 million (prior year CHF 0.2 million). The fire insurance values

(usually reinstatement values) of tangible fixed assets as at December 31,

2008 amounted to CHF 1,039.9 million (prior year CHF 1,005.7 million).

Net gains on disposal of tangible fixed assets (including assets held for

sale) amounted to CHF 0.8 million (prior year CHF 9.2 million) and resulted

mainly from sales of investment properties and machines in Switzerland.

Accumulated depreciation as at December 31, 2008 includes impairment

on assets of CHF 29.3 million (prior year CHF 29.3 million) with respect to

investment properties and CHF 50.2 million (prior year CHF 50.5 million)

with respect to land, buildings and other tangible fixed assets including re-

classified assets of companies UZE AG and Buhler-Immo AG. CHF 3.0

million remain in impairment after the planned separation as per 1.1.2009.

Commitments relating to investments in investment properties amount to

CHF 0.0 million (prior year CHF 0.8 million) whereas investments in land,

buildings and other tangible fixed assets amount to CHF 4.1 million (prior

year CHF 4.7 million).

9 Movements of intangible assets Other intangible Goodwill assets Total CHF m CHF m CHF m

Acquisition cost

January 1, 2007 14.3 28.1 42.4

Additions 0.0 0.8 0.8

Disposals 0.0 –1.6 –1.6

Changes in the scope of consolidation 12.8 46.8 59.6

Reclassifications 0.0 0.1 0.1

Translation differences –1.0 0.2 – 0.8

December 31, 2007 26.1 74.4 100.5

Additions 0.0 0.6 0.6

Disposals 0.0 – 3.3 – 3.3

Changes in the scope of consolidation 66.1 32.3 98.4

Adjustment in valuation 11.1 – 33.0 – 21.9

Reclassifications 0.0 0.4 0.4

Translation differences – 2.5 – 4.2 – 6.7

December 31, 2008 100.8 67.2 168.0

Amortization

January 1, 2007 0.0 – 21.9 – 21.9

Additions 0.0 – 2.6 – 2.6

Disposals 0.0 1.7 1.7

Changes in the scope of consolidation 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

Additions 0.0 – 5.1 – 5.1

Disposals 0.0 3.3 3.3

Changes in the scope of consolidation 0.0 0.0 0.0

Reclassifications 0.0 – 0.4 – 0.4

Translation differences 0.0 1.4 1.4

December 31, 2008 0.0 – 23.7 – 23.7

Net book values

January 1, 2008 26.1 51.5 77.6

December 31, 2008 100.8 43.5 144.3

The increase in goodwill and other intangible assets from changes in con-

solidation scope refers to the acquisition of Aeroglide Corporation, Ra-

leigh NC. The adjustment in valuation results from the closing valuation of

the balance sheet from the acquisition of Bühler Barth AG, Freiberg a.N.

in 2007.

120

121Economic development Financial report Buhler Group

Financial Report Buhler Holding AG

10 Long-term financial assets

Due more than 1 to 5 years 5 years TotalDecember 31, 2008 CHF m CHF m CHF m

Securities 0.0 1.6 1.6

Overfunding of post-employment benefit plans 0.0 13.6 13.6

Loans to non-consolidated companies 0.0 0.0 0.0

Other non-current financial assets 1.3 15.5 16.8

Total 1.3 30.7 32.0

Due more than 1 to 5 years 5 years TotalDecember 31, 2007 CHF m CHF m CHF m

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

11 Deferred tax assets and liabilities 2008 2007 CHF m CHF m

Net book values

Tangible fixed assets – 11.1 – 37.7

Post-employment benefits 14.7 9.4

Provisions 0.0 0.1

Other items – 73.8 – 91.3

Tax loss carry-forwards 4.1 6.4

Total – 66.1 –113.1

Recognized on the balance sheet as deferred tax liabilities – 76.7 –129.4

Recognized on the balance sheet as deferred tax assets 10.6 16.3

The significant decrease in tangible fixed assets is due to the planned

spin-off of the companies UZE AG and Buhler-Immo AG (see Note 16).

No further substantial tax liabilities are expected due to dividend payouts

of Group companies. Deferred tax assets and liabilities are offset if there

exists a legally enforceable right to set them off and if the calculations of

income taxes relate to the same taxation authority.

12 Inventories Value Gross value adjustments 2008 2007 CHF m CHF m CHF m CHF m

Raw materials and supplies 104.0 –15.4 88.6 83.3

Unfinished goods 74.6 – 8.5 66.1 60.8

Finished goods and merchandise 40.2 –10.2 30.0 34.3

Work in progress 38.5 –1.8 36.7 33.9

Advance payments to suppliers 21.4 21.4 21.5

Total 278.7 – 35.9 242.8 233.7

Value adjustments deducted from inventories in the prior year amounted

to CHF – 35.8 million. No material reversal of value adjustments of the

prior year were recognized in the reporting year.

122

13 Production orders 2008 2007 CHF m CHF m

Production orders in progress 315.5 359.1

Advance payments from customers –135.1 –166.4

Net assets of production orders in progress 180.4 192.7

Production orders in progress 92.3 60.0

Advance payments from customers – 388.5 – 293.5

Net liabilities of production orders in progress – 296.2 – 233.5

Accumulated costs and recognized profits 1,884.2 1,636.4

The trade accounts receivable include CHF 48.7 million (prior year CHF

57.1 million) which are financed through own funds in accordance with

the treasury strategy. A generally high degree of liquidity characterizes

these items.

CHF 28.6 mil l ion (prior year CHF 35.4 mil l ion) of these wil l not be due

within the next 12 months.

14 Trade accounts receivable 2008 2007 CHF m CHF m

Trade accounts receivable

> from third parties 344.0 414.1

> from non-consolidated companies 1.0 0.8

> from related parties 0.0 0.0

Allowance for bad debts –11.3 – 9.9

Total 333.7 405.0

123Economic development Financial report Buhler Group

Financial Report Buhler Holding AG

15 Other accounts receivable, prepayments and accrued income 2008 2007 CHF m CHF m

Value added tax credits 14.0 10.7

Other accounts receivable

> from third parties 36.7 47.0

> from non-consolidated companies 1.1 2.4

> from related parties 0.0 0.3

Prepayments and accrued income 13.9 9.7

Total 65.7 70.1

There were no assets held for sale in the prior year. In 2008, it was decided,

in the context of the succession plan of the family owning the business, to

spin off a larger part of the Swiss properties (UZE AG and Buhler-Immo

AG, both located in Uzwil), from the Group as per January 1, 2009. The

planned spin-off will be executed as an equity transaction.

16 Assets held for sale 2008 CHF m

Cash and cash equivalents 0,4

Trade accounts receivable 0,3

Other accounts receivable, prepayments and accrued income 0,9

Inventories 0,5

Current assets 2,1

Tangible fixed assets 146,1

Investment properties 43,1

Long-term financial assets 0,5

Non-current assets 189,7

Assets held for sale 191,8

Short-term financial liabilities – 2,9

Trade accounts payable – 2,6

Short-term provisions – 0,1

Other short-term liabilities, accruals and deferred income – 3,1

Current income tax liabilities – 0,5

Current liabilities and provisions – 9,2

Deferred tax liabilities – 20,2

Long-term post-employment benefit obligations –1,9

Long-term provisions – 5,3

Non-current liabilities and provisions – 27,4

Liabilities directly associated with assets held for sale – 36,6

Net assets held for sale 155,2

Impact of group internal accounts receivable and liabilities 5,2

Expected reduction in equity due to the spin-off 160,4

17 Share capital

As of December 31, 2008 share capital amounted to CHF 15.0 million (prior

year CHF 15.0 million) and consisted of 150,000 (prior year 150,000) regis-

tered shares with nominal value of CHF 100 each (prior year CHF 100).

124

19.1 Actuarial assumptions 2008 2007

Discount rate 3.7% 3.4%

Expected rate of return on plan assets 4.7% 4.6%

Future salary increases 1.5% 1.5%

Future pension increases 0.2% 0.7%

19 Post-employment benefit plans

18 Other reserves Hedge Available for Translation reserve sale investments differences Total CHF m CHF m CHF m CHF m

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

> Deferred taxes on unrealized gains/losses 0.0 0.0

December 31, 2007 0.0 1.0 –13.2 –12.2

January 1, 2008 0.0 1.0 –13.2 –12.2

Translation differences – 49.2 – 49.2

Available for sale financial assets:

> Unrealized gains/losses – 0.4 – 0.4

> Deferred taxes on unrealized gains/losses 0.1 0.1

December 31, 2008 0.0 0.7 – 62.4 – 61.7

125Economic development Financial report Buhler Group

Financial Report Buhler Holding AG

2008 200719.2 Reconciliation of defined benefit obligation and fair value of plan assets CHF m CHF m

Defined benefit obligation at January 1 1,230.3 1,167.8

Interest costs 41.1 44.5

Current service costs (employer) 30.8 26.0

Contributions by plan participants 16.1 15.4

Past service costs 0.5 0.0

Benefits (paid)/deposited – 75.9 – 61.2

Business combinations 0.0 0.0

Curtailment and settlements 0.0 – 0.1

Actuarial (gain)/loss on obligation (balancing figure) –126.1 39.9

Currency translation adjustments –16.0 – 2.0

Defined benefit obligation at December 31 1,100.8 1,230.3

Reconciliation of the fair value of plan assets

Fair value of plan assets at January 1 1,253.7 1,205.6

Expected return on plan assets 59.4 55.2

Contributions by the employer 88.1 28.4

Contributions by plan participants 16.1 15.4

Benefits (paid)/deposited – 75.9 – 61.3

Business combinations 0.0 0.0

Curtailment and settlements 0.0 0.0

Actuarial gain/(loss) on plan assets (balancing figure) – 295.8 13.9

Currency translation adjustments –11.5 – 3.5

Fair value of plan assets at December 31 1,034.1 1,253.7

Actual return on plan assets – 236.3 69.0

2008 200719.3 Statement of income and (expense) recognized directly in consolidated equity CHF m CHF m

Current year actuarial loss (gain) on plan assets 295.8 –13.9

Current year actuarial loss (gain) on benefit obligation –126.1 39.9

Effect of IAS 19, § 58 (b) limitation – 77.5 –19.2

Currency translation adjustments 0.0 0.0

Amount recognized outside profit and loss: loss (gain) 92.2 6.8

Cumulative amount recognized outside profit and loss 90.4 –1.7

126

2008 200719.7 Plan assets at fair value consist of CHF m CHF m

Equity instruments of the company 0.0 0.0

Equity instruments third parties 383.8 536.6

Debt instruments of the company 0.0 0.0

Debt instruments third parties 263.9 355.2

Properties occupied by or used by the company 0.0 0.0

Properties not occupied by and not used by the company 214.3 243.7

Others 172.1 118.2

Total plan assets at fair value 1,034.1 1,253.7

2008 200719.4 Reconciliation of the amount recognized in the balance sheet at the end of the year CHF m CHF m

Present value of funded defined benefit obligation 1,093.4 1,158.6

Fair value of plan assets 1,034.1 1,253.7

Difference 59.3 – 95.1

Present value of unfunded defined benefit obligation 7.4 71.6

Unrecognized (past) service costs 0.0 0.0

Amounts not recognized because of IAS 19, § 58 (b) limitation 10.8 88.5

Liability/(asset) recognized in balance sheet 77.5 65.0

Of which recognized as separate asset –13.6 –14.8

Of which recognized as separate liability 91.1 79.8

2008 200719.5 Pension expenses recognized in profit or loss CHF m CHF m

Current service costs (employer) 30.8 26.0

Interest costs 41.1 44.5

Expected return on plan assets – 59.4 – 55.1

Past service costs 0.5 0.0

Effect of curtailment and settlements 0.0 – 0.1

Currency translation adjustments 0.0 0.0

Expenses recognized in profit or loss 13.0 15.3

200919.6 Best estimate of contributions CHF m

Contributions by the employer 24.0

127Economic development Financial report Buhler Group

Financial Report Buhler Holding AG

2008 2007 2006 200519.8 Comparison of deficit/surplus CHF m CHF m CHF m CHF m

Present value of defined benefit obligation 1,100.8 1,230.3 1,167.8 1,128.7

Fair value of plan assets 1,034.1 1,253.7 1,205.6 1,112.9

Deficit/(surplus) 66.7 – 23.4 – 37.8 15.8

Experience adjustments on defined benefit obligation –1.9 – 43.3 – 0.2 0.0

Experience adjustments on plan assets –295.8 13.9 49.2 0.0

Provisions for personnel expenses mainly include other long-term em-

ployee benefits, such as long-service benefits, partial retirement and ju-

bilee benefits. The addition in 2008 of CHF 9.2 million mainly affect par-

ticipation plans (see Note 31). Almost 50% of the cash outflows of the

long-term provisions are expected within the next three years.

20 Short- and long-term provisions

Provisions for Provisions for personnel Provisions for Other warranties expenses restructuring Provisions 2008 2007 CHF m CHF m CHF m CHF m CHF m CHF m

January 1 48.4 28.0 0.0 22.0 98.4 85.1

Additions 34.3 9.2 1.6 9.7 54.8 64.8

Utilization – 20.8 – 4.3 0.0 – 9.3 – 34.4 – 26.1

Release –12.6 – 0.2 0.0 – 7.9 – 20.7 – 27.1

Changes in the scope of consolidation 1.3 0.0 0.0 0.0 1.3 1.1

Reclassification 0.0 0.0 0.0 – 5.4 – 5.4 0.0

Present value adjustment 0.0 0.0 0.0 0.2 0.2 0.2

Translation differences – 2.5 – 0.9 0.0 –1.6 – 5.0 0.4

December 31 48.1 31.8 1.6 7.7 89.2 98.4

Of which short-term 36.5 4.6 0.0 4.1 45.2 52.7

Of which long-term 11.6 27.2 1.6 3.6 44.0 45.7

2008 200719.9 Defined contribution plan CHF m CHF m

Expenses for defined contribution plan 2.2 2.5

Of the liability of CHF 91.1 million recognized in the balance sheet , CHF

1.9 million is shown in liabilities directly associated with assets held for

sale (see Note 16).

Within a Contractual Trust Arrangement (CTA), assets of CHF 54.5 mil-

lion were transferred in 2008 in Germany to a trustee for the external fi-

nancing of part of the operating retirement benefit. Since the transferred

assets are to be qualified as plan assets according to IAS 19, long-term

defined benefit obligations were balanced with the transferred assets in

2008. Thus, the long-term defined benefit obligations were reduced by

CHF 54.5 million. The transferred assets affect equity instruments third

parties (CHF 27.5 million) and debt instruments third parties (CHF

27.0 million). Being a non-cash item, this transaction had no impact on

the consolidated cash flow statement.

The expected yield from investments is based on long-term market expec-

tations and expert actuarial opinions that take into account the asset al-

location as well as closely observing and monitoring current develop-

ments. Given the long-term nature of the various categories of investment,

an expected yield of 4.7% can still be used for calculation purposes.

128

21 Trade accounts payable 2008 2007 CHF m CHF m

Trade accounts payable

> to third parties 134.6 143.0

> to non-consolidated companies 1.3 1.0

Total 135.9 144.0

22 Other short-term liabilities, accruals and deferred income 2008 2007 CHF m CHF m

Value added tax owed 9.1 5.2

Advance payments 63.1 57.2

Other liabilities

> to third parties 35.8 37.8

> to non-consolidated companies 1.5 3.0

> to related parties 0.3 0.1

Vacation and overtime 24.9 26.8

Other accruals and deferred income 99.7 111.3

Total 234.4 241.4

23 Information on financial leases (Buhler Group as lessor) 2008 2007 CHF m CHF m

Gross receivables from finance leases:

> Not later than 1 year 2.4 2.4

> Later than 1 year and not later than 5 years 5.0 7.6

> Later than 5 years 0.0 0.0

Gross receivables from financial leases 7.4 10.0

Unearned future finance income on financial leases – 0.9 –1.6

Net investment in financial leases 6.5 8.4

Analyzing net investment in financial leases

> Not later than 1 year 1.9 1.7

> Later than 1 year and not later than 5 years 4.6 6.7

> Later than 5 years 0.0 0.0

Net receivables from financial leases 6.5 8.4

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

129Economic development Financial report Buhler Group

Financial Report Buhler Holding AG

24 Securities and derivative financial instruments

2008 2007 2008 2007 2008 200724.1 Derivative financial instruments CHF m CHF m CHF m CHF m CHF m CHF m

Currency-related instruments

Forward foreign exchange rate contracts 95.6 45.5 5.4 0.4 3.3 0.1

Over the counter currency options 192.0 225.6 3.5 2.3 1.8 1.9

Cross currency swaps 0.0 0.0 0.0 0.0 0.0 0.0

Total of currency-related instruments 287.6 271.1 8.9 2.7 5.1 2.0

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 0.0 0.0 0.0 0.0 0.0

Commodities futures 16.5 2.1 1.6 0.0 0.4 0.2

Total derivative financial instruments

included in securities and in short-term

financial liabilities 304.1 273.2 10.5 2.7 5.5 2.2

Contract or underlying principal amount Positive fair values Negative fair values

Other Total Total USD EUR currencies 2008 2007 CHF m CHF m CHF m CHF m CHF m

Currency-related instruments

Forward foreign exchange rate contracts 47.9 19.3 28.4 95.6 45.5

Over the counter currency options 44.2 133.3 14.5 192.0 225.6

Cross currency swaps 0.0 0.0 0.0 0.0 0.0

Total of currency-related instruments 92.1 152.6 42.9 287.6 271.1

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 0.0

Commodities futures 16.5 0.0 0.0 16.5 2.1

Total derivative financial instruments 108.6 152.6 42.9 304.1 273.2

Forward contracts, swaps and option contracts were entered into with

banks mainly to hedge currency risks.

The following positions were open at year-end:

Positive replacement values are included in securities and negative re-

placement values are included in financial liabilities.

130

Aeroglide Aeroglide Corporation Corporation Book value Market value Total 2008 2008 2007 CHF m CHF m CHF m

Cash and cash equivalents 1.4 1.4 14.3

Trade accounts receivable 12.7 12.5 3.1

Other accounts receivable. prepayments and accrued income 2.4 2.0 1.1

Inventories 2.4 2.4 4.1

Net assets of production orders in progress 2.7 2.7 0.9

Current assets 21.6 21.0 23.5

Tangible fixed assets 6.7 8.1 2.6

Intangible assets 17.8 32.3 46.8

Deferred tax assets 0.5 0.0 0.0

Non-current assets 25.0 40.4 49.4

Trade accounts payable – 6.4 – 6.4 – 2.1

Net liabilities of production orders in progress – 5.8 – 5.8 – 5.8

Short-term provisions –1.3 –1.3 –1.1

Other short-term liabilities. accruals and deferred income –11.2 – 10.0 – 7.8

Current liabilities and provisions – 24.7 – 23.5 –16.8

Deferred tax liabilities – 0.3 – 4.6 –14.6

Non-current liabilities and provisions – 33.3 – 33.3 0.0

Non-current liabilities and provisions – 33.6 – 37.9 –14.6

Change in net assets –11.7 0.0 41.5

Minorities 0.0 – 20.5

Effect of foreign exchange 0.0 0.2

Goodwill arising on acquisitions 66.1 12.8

Addition- (+) / Disposal (–) from the group 66.1 34.0

Replacement of loan from previous owner – 33.3 0.0

Cash disposed of (–) / acquired (+) 1.4 14.3

Cash flow from changes in the scope of consolidation – 98.0 –19.7

25 Additions and disposals of Group companies

2008 2007 CHF m CHF m

Equity securities 1.7 58.6

Debt securities 34.6 61.4

Derivative financial instruments 10.5 2.7

Accrued interest on debt securities 0.2 0.8

Other securities until 12 months 3.9 2.9

Total securities 50.9 126.4

24.2 Securities

The significant decrease in equity securities refers to realized losses

(see Note 6) and the CTA-transaction in Germany (see Note 19).

131Economic development Financial report Buhler Group

Financial Report Buhler Holding AG

2008

Acquisition Aeroglide Corporation, USA. On June 23, 2008 the

Group acquired 100% of the shares of Aeroglide Corporation, in Raleigh,

North Carolina, USA. The acquired company develops, produces, sup-

plies and maintains equipment for a large number of different thermal

processes and operates internationally mainly with customers from the

food industry. The goodwill on the acquisition of CHF 66.1 million is at-

tributable to the fair value of expected synergies. The acquired business

contributed sales of CHF 39.2 million and a net profit of CHF 1.8 million.

The sales and net profit of Aeroglide Corporation of the total year cannot

be disclosed for practical reasons.

Establishment of Buhler-Immo Betriebs AG, Uzwil. On July 22, 2008

Buhler-Immo Betriebs AG in Uzwil was established with a capital of CHF

0.1 million. The company acquires, sells and administers the operating

Group properties located in Uzwil.

Establishment of Buhler Mechanical Engineering Research & De-

velopment (Wuxi) Co. Ltd., China. On June 16, 2008 Buhler Mechani-

cal Engineering Research & Development (Wuxi) Co. Ltd. was established

with a capital of CNY 13.705 million. The company engages in research,

development, design and engineering of mechanical engineering tech-

nology, food/feed/beverage science and technology, conveying and

loading/unloading engineering technology and automation control tech-

nology, and supply of technical services.

Establishment of Yanzhou Buhler Mechanical Co., Ltd., China. On

October 29, 2008 Yanzhou Buhler Mechanical Co., Ltd. was established

with a capital of CNY 2.5 million. The company engages in the processing,

selling and maintenance of milling mechanical parts.

Establishment of JSW & Buhler Machinery Ltd., Tokyo. On July 30,

2008 JSW & Buhler Machinery Ltd. was established with a capital of JPY

90 million as a joint venture with the Japanese company JSW (Japan

Steel Works).

2007

Acquisition Buhler 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 operates

worldwide. The final calculation of the net asset value in 2008 resulted in

adjustments to the purchase price allocation as at December 31, 2007.

The value of the intangible assets decreased from EUR 22.5 million to

EUR 7.6 million whereas goodwill increased from EUR 7.8 million to EUR

14.8 million.

Establishment of Buhler Management AG, Uzwil. On November 22,

2007 Buhler 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 deals in machines and raw ma-

terials and is involved in import and export. In addition Buhler (Wuxi)

Commercial Co. Ltd. provides services to its 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.

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 reported in the

three years preceding the start of the budget period. These are increased

over the budget period for anticipated efficiency improvements.

Discount rate – Discount rates reflect management’s estimate of the spe-

cific risks. This is the benchmark used by management to assess operat-

ing performance. In determining appropriate discount rates, regard has

been given to the yield on a ten-year government bond of the respective

country at the beginning of the budgeted year.

Growth rate estimates – The assumptions used in the calculation reflect

the long-term expected growth rate of the operational business and are

based on the growth strategy of the Group.

Raw material price inflation – Estimates are obtained from published indi-

ces 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 assumes that the unit’s

position, relative to that of its competitors, may not change significantly

over the budget period. Market share is expected to be stable over the

budget period.

Sensitivity to changes in assumptions. The impairment tests per-

formed support the value of the carrying amount. No impairment needed

to be recognized in 2008 or 2007. If the cash flow forecasts were based

on zero growth, the carrying amount would not exceed the realizable

value.

132

2008 2007 CHF m CHF m

Bills discounted 2.8 5.0

Sureties, guarantees and other obligations 3.1 5.3

Total 5.9 10.3

27 Contingent liabilities

Contingent liabilities to third parties are comprised as follows:

28 Off-balance sheet obligations under operating leases

Book value Base data usedGoodwill 2008 CHF m Discount rate Growth rate

BuhlerPrince Inc., Holland 11.4 10.0% 1.5%

Bühler Barth AG, Freiberg a.N. 22.1 9.0% 1.0%

Aeroglide Corporation, Raleigh 66.1 10.0% 1.0%

Others 1.2

Total at December 31, 2008 100.8

Book value Base data used Goodwill 2007 CHF m 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

2008 2007 CHF m CHF m

Leasing obligation up to one year 4.5 4.7

Leasing obligation as of 1 to 5 years 13.7 15.0

Leasing obligation over 5 years 8.4 11.0

Total 26.6 30.7

This item mainly includes obligations under long-term leasing agreements

relating to properties in the US, in Great Britain and in Germany.

29 Research and development costs

Research and development costs directly charged to the income state-

ment in the reporting period amounted to CHF 82.3 million (prior year

CHF 74.4 million). The main research and development unit is located at

the Uzwil headquarters.

133Economic development Financial report Buhler Group

Financial Report Buhler Holding AG

2008 2007 CHF m CHF m

Carrying amount of real estate 3.4 2.8

Nominal amount used 1.1 0.5

Actual amount used 0.6 0.3

Borrowers’ notes in the following amounts were created with respect to

mortgages:

There are additional assets of CHF 0.6 million (prior year CHF 0.0 million)

where the right of disposal is limited as these serve as collateral for own

liabilities.

30 Assets pledged or assigned to secure own liabilities

31 Participation plans

The expenses for the phantom option plan in the operating result of 2008

amounted to CHF 7.8 million. There is a liability for the option plan in the

same amount. 4,200 phantom options were granted in 2008. 3,150 op-

tions were vested immediately and 1,050 options have a vesting period

of three years. No options were exercised or expired in the reporting pe-

riod. The value of one option amounted to CHF 2,101 as per December

31, 2008. The relevant parameters were included as follows: capitalized

expected Group profit 2008, 2009 and 2010, expected equity 2010.

32 Related parties

32.1 Related party transactions . Balance positions from related parties

are shown separately in the notes. Liabilities to pension plans amounted to

CHF 0.5 million as per 2008 (prior year CHF 0.9 million). Related-party

transactions are effected at arm’s length.

32.2 Key management compensation. The key management com-

pensation (short-term employee benefits to Board of Directors and

Group management) amounted to CHF 9.2 million in the reporting period

(prior year CHF 8.7 million). Additionally, 3,200 options were granted

(see note 31).

33 Proposal of the Board of Directors

At the General Meeting, the Board of Directors proposes a dividend of

CHF 12.0 million (prior year CHF 8.0 million) or CHF 80.0 (prior year

CHF 53.33) per registered share for the fiscal year 2008. The dividend

payment to the shareholders of the Buhler Holding AG amounted to

CHF 8.0 million in the financial year 2008 (prior year CHF 5.0 million) or

CHF 53.33 (prior year CHF 33.33) per share respectively.

34 Government Grants

Government grants are offset with the items of expense which they fi-

nance. Government grants related to assets are deducted from the assets

in arriving at the carrying amount of the asset. A necessary relocation in

China has been granted by the government. Payments of CHF 25.3 million

are expected for the new business location. Of this amount CHF 11.7 mil-

lion was received in 2008 (prior year CHF 5.1 million).

35 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 26, 2009.

36 Subsequent events

No material events have occurred after the balance sheet date.

134

Report of the statutory auditor on the consolidated financial statements

As statutory auditor, we have audited the accompanying consolidated fi-

nancial statements of Buhler Holding AG, which comprise the balance

sheet, income statement, cash flow statement, statement of changes in

equity and notes (pages 100 to 133 and 140 to 141) for the year ended

December 31, 2008.

Board of Directors’ responsibility. The Board of Directors is respon-

sible for the preparation and fair presentation of the consolidated finan-

cial statements in accordance with International Financial Reporting

Standards (IFRS) and the requirements of Swiss law. This responsibility

includes designing, implementing and maintaining an internal control

system relevant to the preparation and fair presentation of consolidated

financial statements that are free from material misstatement, whether

due to fraud or error. The Board of Directors is further responsible for

selecting and applying appropriate accounting policies and making ac-

counting estimates that are reasonable in the circumstances.

Auditor’s responsibility. Our responsibility is to express an opinion on

these consolidated financial statements based on our audit. We con-

ducted our audit in accordance with Swiss law and Swiss Auditing Stan-

dards and International Standards on Auditing (ISA). Those standards

require that we plan and perform the audit to obtain reasonable assur-

ance whether the consolidated financial statements are free from mate-

rial misstatement.

An audit involves performing procedures to obtain audit evidence about

the amounts and disclosures in the consolidated financial statements.

The procedures selected depend on the auditor’s judgment, including the

assessment of the risks of material misstatement of the consolidated fi-

nancial statements, whether due to fraud or error. In making those risk

assessments, the auditor considers the internal control system relevant

to the entity’s preparation and fair presentation of the consolidated finan-

cial statements in order to design audit procedures that are appropriate

in the circumstances, but not for the purpose of expressing an opinion on

the effectiveness of the entity’s internal control system. An audit also in-

cludes evaluating the appropriateness of the accounting policies used

and the reasonableness of accounting estimates made, as well as evalu-

ating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and

appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements for the year ended

December 31, 2008 give a true and fair view of the financial position, the

results of operations and the cash flows in accordance with IFRS and

comply with Swiss law.

Report on other legal requirements

We confirm that we meet the legal requirements on licensing according to

the Auditor Oversight Act (AOA) and independence (article 728 CO) and

that there are no circumstances incompatible with our independence.

In accordance with article 728a paragraph 1 item 3 CO and Swiss Audit-

ing Standard 890, we confirm that an internal control system exists,

which has been designed for the preparation of consolidated financial

statements according to the instructions of the Board of Directors.

We recommend that the consolidated financial statements submitted to

you be approved.

Ernst & Young Ltd

Thomas Stenz Michael Schawalder

Licensed audit expert Licensed audit expert

(Auditor in charge)

Report of the statutory auditorTo the General Meeting of Buhler Holding AG, Uzwil, St.Gallen, March 26, 2009

135

Financial report Buhler Holding AG

Economic development Financial report Buhler Group

Financial Report Buhler Holding AG

Income Statement Buhler Holding AG

2008 2007 See notes CHF m CHF m

Income from subsidiaries 2 58.0 54.2

Financial income 3 6.5 6.5

Other income 4 4.3 2.6

Reversal of value adjustments 5 0.0 1.2

Total income 68.8 64.5

Expense from subsidiaries 5 –11.2 0.0

Financial expenses 6 – 6.3 – 3.9

Other expenses –1.0 – 0.2

Taxes – 0.2 – 0.7

Net income for the year 50.1 59.7

136

Balance sheet Buhler Holding AG As at December 31

2008 2007 See notes CHF m CHF m

Assets

Investments in subsidiaries 7 458.3 465.1

Loans to Group companies 8 33.5 4.1

Non-current assets 491.8 469.2

Accounts receivable from Group companies 9 88.9 102.2

Other accounts receivable 0.0 1.8

Prepayments and accrued income 0.0 0.5

Cash and cash equivalents 0.3 4.0

Current assets 89.2 108.5

Total Assets 581.0 577.7

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 177.9 126.2

Net income for the year 50.1 59.7

Shareholders’ equity 526.1 484.0

Liabilities to Group companies 10 45.8 89.4

Liabilities to third parties 0.3 0.0

Short-term provisions 11 8.7 3.5

Accruals and deferred income 0.1 0.8

Short-term liabilities 54.9 93.7

Total liabilities 54.9 93.7

Total shareholders’ equity and liabilities 581.0 577.7

Economic development Financial report Buhler Group

Financial Report Buhler Holding AG

137

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 a supplement 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

companies.

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 participa-

tions or the reversal of value adjustments which are no longer required.

6 Financial expenses

Financial expenses primarily include interest expenses paid to Group com-

panies, 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 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 cash management.

10 Liabilities to Group companies

These liabilities are primarily owed to Buhler AG, Uzwil.

11 Provisions

This item mainly includes provisions for currency risks relating to loans to

Group companies and accounts receivable from Group companies.

138

The statutory obligation of appropriation to reserves is waived as the legal

reserve amounts to 50% of the paid-in share capital.

2008 2007 CHF m CHF m

Result for the year 50.1 59.7

Balance brought forward from prior year 177.9 126.2

Available earnings at the disposal of the general meeting 228.0 185.9

The Board of Directors proposes to the general meeting:

> The distribution of a dividend 12.0 8.0

> Carry forward to new accounting period 216.0 177.9

13 Major shareholders

Urs Bühler, Uzwil: 100% of voting rights

15 Risk assessment

The risk assessment pursuant to the Swiss Code of Obligations OR 663 b,

section 12, has been conducted at Group level by the Board of Directors

of Buhler Holding AG/Buhler AG at the meetings of the Board of Directors

(see Risk Assessment under Financial Risk Management in the Notes to

the consolidated financial statements).

2008 2007 CHF m CHF m

Sureties and guarantee obligations in favor of Group companies 298.3 324.6

12 Sureties and guarantee obligations

14 Proposal of the Board of Directors for the appropriation of available earnings

Economic development Financial report Buhler Group

Financial Report Buhler Holding AG

139

Group companies Buhler Holding AGAs at December 31, 2008. All companies listed are included as fully consolidated companies (C).

Production Engineering Share capital Partici- Distribution in 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

Buhler-Immo Betriebs AG, Uzwil CH CHF 0.1 100.0 % Buhler Holding AG, Uzwil C

Innopan Ingredients AG, Uzwil CH CHF 0.75 100.0 % 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 AG, Uzwil C

Richard Frisse GmbH, Bad Salzuflen DE EUR 1.023 100.0 % Buhler 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

140

Production Engineering Share capital Partici- Distribution in 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

Aeroglide Corporation, Raleigh US USD 0.004 100.0 % Buhler AG, Uzwil C

Buhler Sortex Inc., Stockton US USD 1.0 100.0 % Buhler Holding AG, Uzwil C

Buhler (Canada) Inc., Markham 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 11.371 100.0 % Buhler Holding AG, Uzwil C

Buhler Properties (Pty) Ltd.,

Johannesburg ZA ZAR 0.0001 100.0 % Buhler (Pty) Ltd., Johannesburg C

Asia

Buhler (India) Private 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 CNY 10.764 100.0% 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 CNY 1.655 100.0% 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 CNY 26.508 100.0% Buhler Holding AG, Uzwil C

Buhler Mechanical Engineering Research

and Development (Wuxi) Co. Ltd., Wuxi CN CNY 13.705 100.0% Buhler Holding AG, Uzwil C

Buhler (Private Joint Stock Co.), Teheran IR IRR 5,000.0 100.0% Buhler Holding AG, Uzwil C

Yanzhou Buhler Mechanical Co.

Ltd., Yanzhou CN CNY 2.5 100.0% Buhler (Wuxi) Commercial Co. Ltd., Wuxi C

Economic development Financial report Buhler Group

Financial Report Buhler Holding AG

141

Report of the statutory auditor on the financial statements

As statutory auditor, we have audited the accompanying financial state-

ments of Buhler Holding AG, which comprise the balance sheet, in-

come statement and notes (pages 136 to 141) for the year ended De-

cember 31, 2008.

Board of Directors’ responsibility. The Board of Directors is responsi-

ble for the preparation of the financial statements in accordance with the

requirements of Swiss law and the company’s articles of incorporation.

This responsibility includes designing, implementing and maintaining an

internal control system relevant to the preparation of financial statements

that are free from material misstatement, whether due to fraud or error.

The Board of Directors is further responsible for selecting and applying

appropriate accounting policies and making accounting estimates that

are reasonable in the circumstances.

Auditor’s responsibility. Our responsibility is to express an opinion on

these financial statements based on our audit. We conducted our audit in

accordance with Swiss law and Swiss Auditing Standards as well as the

International Standards on Auditing (ISA). Those standards require that

we plan and perform the audit to obtain reasonable assurance whether

the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about

the amounts and disclosures in the financial statements. The procedures

selected depend on the auditor’s judgment, including the assessment of

the risks of material misstatement of the financial statements, whether

due to fraud or error. In making those risk assessments, the auditor con-

siders the internal control system relevant to the entity’s preparation of

the financial statements in order to design audit procedures that are ap-

propriate in the circumstances, but not for the purpose of expressing an

opinion on the effectiveness of the entity’s internal control system. An

audit also includes evaluating the appropriateness of the accounting

policies used and the reasonableness of accounting estimates made, as

well as evaluating the overall presentation of the financial statements. We

believe that the audit evidence we have obtained is sufficient and appro-

priate to provide a basis for our audit opinion.

Opinion. In our opinion, the financial statements for the year ended De-

cember 31, 2008 comply with Swiss law and the company’s articles of

incorporation.

Report on other legal requirements

We confirm that we meet the legal requirements on licensing according to

the Auditor Oversight Act (AOA) and independence (article 728 CO) and

that there are no circumstances incompatible with our independence.

In accordance with article 728a paragraph 1 item 3 CO and Swiss Audit-

ing Standard 890, we confirm that an internal control system exists,

which has been designed for the preparation of financial statements ac-

cording to the instructions of the Board of Directors.

We further confirm that the proposed appropriation of available earnings

complies with Swiss law and the company’s articles of incorporation. We

recommend that the financial statements submitted to you be approved.

Ernst & Young AG

Thomas Stenz Michael Schawalder

Licensed audit expert Licensed audit expert

(Auditor in charge)

To the General Meeting of Buhler Holding AG, Uzwil, St.Gallen, March 26, 2009

142

Report of the statutory auditor

Economic development Financial report Buhler Group

Financial Report Buhler Holding AG

143

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 15, 27, 45, 55, 67, 89)

Photographers

Peter Tillessen, Zürich (CH), (Pages 42–75)

Raffael Waldner, Zürich (CH), (Cover; Pages 12–33, 86–95)

Stephan Knecht, Zürich (CH), (Pages 7, 82)

Litho

Roger Bahcic, Zürich (CH)

Print

Druckerei Flawil AG, Flawil (CH)

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

ler

AG

A

nnua

l Rep

ort

200

8

2008, prepared for the future.

Annual Report

Group profile

Buhler is the global specialist and technology partner in the supply of plants and services for processing grain and food as well as for manufacturing high-grade materials. The Group holds leading market positions as a provi-der of flour production and feed manufacturing installations, but also pasta and chocolate lines and aluminum die casting systems.

The core technologies of Buhler are mechanical and thermal process engineering. Buhler designs, develops, constructs, and installs plants and advises, trains, and coaches its customers.

Thanks to its extensive expertise and the wealth of experience that it has accumulated over the decades, Buhler is in a position to develop unique and innovative solutions for its customers, enhancing their market success. Through its consistently high quality, Buhler has come to be known over the years as a reliable partner. It owes this reputation to its international service organization, which provides support to its customers around the world whenever and wherever they need it and throughout the life cycle of their plants.

Buhler is active in over 140 countries and has 7,700 employees worldwide. In fiscal 2008, the Buhler Group generated sales of CHF 1,893 million.