Invest and grow - Bühler Annual Report 2017 · In August 2016, Bühler welcomed around 750...

ANNUAL REPORT 2016

Investand grow

Energy consumption per productive hour

(in GJ / 1,000h)

R & D expenses in % of turnover

(in %)

2016 at a glance

25 %

6 %

4 %9 %

8 %6 %

12 %

10 %

18 % 32 % 15 % 30 %

6 %

17 %

Turnover

by business area

Grain Logistics

Sortex & Rice

Grain Milling

Value Nutrition

Consumer Foods

Die Casting

Grinding & Dispersion

Leybold Optics

Turnover

by region

North America

South America

Europe

Middle East & Africa

South Asia

Asia

2015

10.82015

4.42016 2016

12.8 4.2

Turnover

(in CHF billion)

Order intake

(in CHF billion)

2015 20162015 2016 2015 2016 2015 2016

Net profit

(in CHF million)

Return on net operating assets (RONOA)

(in %)

EBIT

(in CHF million)

EBIT margin in %

2.47 2.54143 143

177 174

2015 2016

7.3 7.1

2.41 2.4522

19

Contents

Statement Interview

Group Report

Board of Directors

Ecological sustainability

Executive Board

Social sustainabilityEconomic sustainability

Our business13

All about rice

Governance

Sustain- ability

25

6

2

Financial Report

Partnership with customers

2016Highlightsof the year

4

102106

99

41

57

90

92

94

83

121

The Bühler GroupEvery day, billions of people come into contact with Bühler technologies to cover their basic needs for food and mobility. We are striving for innovations for a better world, with a special focus on healthy, safe, and sustainable solutions.

Advanced MaterialsBühler is a leading solution provider of die-casting and surface-coating technologies in high-volume application areas, such as automotive, optics, and inks. Our solutions and technologies enable efficient and clean mobility.

Grains & FoodWith leading industrial process technolo-gies and solutions, Bühler contributes significantly to feeding the world’s population, while setting the focus on food security and safety. We are a leader in processing grains, rice, cocoa, coffee, and other raw materials into intermediate and finished products for human and animal nutrition.

Stefan Scheiber, CEO Calvin Grieder, Chairman

2

Statement

Dear colleagues, customers, and business partners, As a Swiss-based company, 2016 marked the proof point that we have successfully navigated through the Euro/Swiss franc decoupling the year before. Mitigating actions such as financial hedging or increased working hours have been phased out. New chal-lenges were generated by low oil and raw material prices and increased regional instability.

Against these strong headwinds, Bühler showed a healthy performance in 2016. While continuing our policy of reinvesting profits, we managed to grow and gain marketshare. In comparison to last year’s decline of 4 %, order intake in 2016 was up 3 % to CHF 2.54 billion. Turnover rose by 2 % to CHF 2.45 billion, and profitability remained stable at an EBIT margin of 7.1 %. Other key financial figures also underscore the strong financial position of our company. With zero debt, net liquidity rose by 18 % to CHF 462 million at an equity ratio of 47 % (previous year: 46 %).

This success is the result of multiple factors: innovation, superior service, and best quality. We significantly increased our R & D investments to leverage global trends such as alterna-tive protein sources and e-mobility. Following our vision of “innovations for a better world” we invested into state-of-the-art insect processing and experienced a breakthrough by becoming a leading supplier for the lithium battery business. With additional service centers, we expanded our network to 92 locations, serving our customers “in the markets for the markets”. To continue delivering at the highest standards, we further invested into innovative production and engineering sites in Switzerland, Vietnam, and China – which is accompanied by the ongoing training and education of our staff. Their commitment and high quality work is outstanding and deserves our recognition and gratitude.

We can look positively into the future. Taking our solid foundation into account, and notwithstanding potentially fluctuating market conditions and regional developments, we are well positioned to increase growth and profitability in 2017 and the years to come.

We would like to thank you, our clients and partners, for your continued support. As a family-owned company, we will continue to place sustainability at the heart of everything we do.

Calvin Grieder Stefan Scheiber Chairman of the Board Chief Executive Officer

Statement of the Chairman and the CEO

Bühler Annual Report 2016

3

Bühler Networking DaysIn August 2016, Bühler welcomed around 750 customers, academics and partners to a unique industry event focusing on nutrition, sustainability, food safety, and the Internet of Things (IoT). Bühler has accepted the challenge of feeding nine billion people by 2050, and presented more than 30 innovations in the Solution Space.

Research cooperation between Bosch and BühlerBosch and Bühler are working together to create IoT solutions for the food industry. The two parties signed the commercial framework for this cooperation and presented an intelligent roller mill at the Bühler Networking Days.

Nestlé Innovation Award

The food giant Nestlé presented Bühler with its prestigious Research Award for 2016. Bühler received the prize for its innovative cooperation with Nestlé and its important contribution to the success of the Nescafé business.

New Bühler factory for the rice industry in Vietnam

Bühler opened a new plant for the production of rice processing machines in September 2016. With these new solutions, local rice processors can now offer their products at a quality that meets export standards. Around 5,000 rice processing plants produce over 45 million tonnes of rice in Vietnam.

Joint venture for insect processingBühler and Protix established a joint venture in order to commercialize insect rearing and processing solutions. The initial aim is to provide a sustainable protein source for aquaculture and poultry feeds.

Highlightsof the year

2016

4

Stefan Scheiber is the new CEOOn July 1, 2016, Stefan Scheiber succeeded Calvin Grieder as CEO, who decided to concentrate on his duties in the Board of Directors. This represents continuity as well as accelerated change at Bühler.

MyBühler customer portal

is live!Bühler launched a customer portal that

features 24/7 access, up-to-date product information, and a simple online ordering

process for its customers. It enables customers to order Bühler equipment

and spare parts with just a few clicks.

Product launchEcoline SBühler presented its new Ecoline S series at the Die Casting Trade Show in Shanghai, China. The cold-chamber die casting series combines advanced technology and sophisticated automation solutions. Casters will benefit from increases in productivity of up to 5 % and energy savings of up to 10 %.

Bühler accelerates e-mobility with new technologyElectric cars improve air quality and reduce CO2 emissions. Bühler is at the forefront of innovation. The company has developed a continuous manufacturing process for the key component of car batteries, the electrode slurries. In 2016, Bühler received several orders for plants on an industrial scale for this process solution.

Innovative Tubo conveyor systemBühler launched its innovative and flexible Tubo conveyor system. It has been successfully put into operation at the Locher brewery in Switzerland. Customers and partners chose Tubo as the “Best Innovation” at the 2016 Bühler Networking Days.

Modernization of sites in SwitzerlandBühler launched a modernization program to increase the competitiveness of its Swiss sites. The program is designed to improve production and logistics in factories. Steps in innovation and education will be announced soon.

HighlightsBühler Annual Report 2016

5

Interview

Mr. Scheiber, you have been the CEO of Bühler since July 1, 2016. How does it feel? Scheiber: It’s definitely a new dimension to head the whole Group and be its representative on behalf of the Board of Directors to our customers and the public. I feel it’s an honor and a privilege to embark upon this important mission. I was really pleased with the wave of support that I experienced from all sides – from the workforce and the Bühler family to the Board of Directors, my colleagues on the Executive Board, customers, and friends outside the organization. This feeling of support continues to this day.

Was this what you imagined the first few months would be like? Scheiber: I tried to prepare myself as best as possible. Look-ing back, my 25 years with Bühler were an essential part of this preparation. I have always worked with our customers in mind and was employed in almost every corporate function, 15 years of which outside of Switzerland. Until mid-2016, I was fully absorbed in leading the business of Grains & Food, so I bring quite some operational experience with me. Of course, the full dimensions of the new role become clear only when you actually begin.

Anticipating the futureCEO Stefan Scheiber and Chairman Calvin Grieder are leading the company together. They explain how they will ensure that Bühler is embracing the opportunities arising from the industrial transformation triggered by bits and bytes.


7

“New trends and needs drive demand for innovative solutions.”Stefan Scheiber, CEO

8

What was the most marked change for you? Scheiber: I am now leading colleagues who were once on the same hierarchical level, and I now coordinate my moves with the Board of Directors. Another very important point is the public visibility of the role. While Calvin Grieder was outwardly representing the company, my colleagues and I were able to work in his slipstream. This responsibility now falls to me.

Grieder: I’m pleased this responsibility is now in your hands.

Mr. Grieder, was it hard for you to let go? Grieder: Yes and no. Yes, because I invested a lot of passion in my task and have very strong emotional ties with the company and with many of my colleagues. I enjoyed coming to work every day. It was a dream job. With this in mind, you don’t just clear up your desk as if you were spring-cleaning when you leave. And no, because we had planned this trans-fer of leadership on a long-term basis and I therefore, after my 15 years at the helm, could look forward to focusing on some other duties. Also no, because I have full confidence in Stefan and his team. I believe that Bühler has never had such a good management team.

How do you share your tasks? Grieder: Just like any other well-managed company: on the basis of clear governance principles. The CEO and his team are in charge of the operations and the development of the company along the trends of the business. They also develop proposals for the strategic further development of the Group. The Board of Directors, which I chair, supervises corporate development and decides the next strategic steps together with the Executive Board.

Scheiber: It’s a true advantage for me to be able to rely on Calvin’s in-depth knowledge of the business, our customers, and the organization and also that we have a bond of trust developed over the decades we have known one another. His close ties with the industry certainly provide additional benefits. Consequently, it takes only a short time to find con-vincing solutions and new ideas together.

What does the new CEO Stefan Scheiber stand for besides executing his day-to-day business? Scheiber: I stand for full continuity and at the same time for accelerated change. We want to create innovations for a better world and also grow our business sustainably.

This sounds a bit like a contradiction in terms; what exactly do you mean? Scheiber: Under Calvin Grieder’s leadership over the past 15 years, Bühler managed to make it into the top league of global industrial providers of process technologies and solu-tions. Many important trends – for example the services business, digitalization, the energy issue, and the topics of food safety or mobility – were addressed at an early stage. Over the past few years, we have together worked out a five- year strategy – Bühler2020. I intend to continue it seamlessly.

Everything seems to be in order, so why modernize? Scheiber: We are living in a dynamic world that is changing at a breathtaking pace. As recently as ten years ago, there were no iPhones, and in five years’ time self-driving vehicles will be part of our everyday lives. For an industrial company, such as Bühler, this is opening up entirely new business opportunities – just think of predictive maintenance, which is already being well established in the aircraft industry today. If we want to seize these opportunities, Bühler must become more agile. We have launched the necessary projects, but have by far not yet arrived in the digital era.

Mr. Grieder, don’t you perceive this as hidden criticism? Grieder: Quite the opposite! This is exactly what I expect. I can only encourage the Executive Board to systematically and wholeheartedly tackle the required changes. I am quite unsentimental in this respect. And, of course, being able to focus on only one single office at Bühler is disencumbering. It is good to know that one of us can trigger important de-velopments from a distance or have a calming effect while the other is standing in the midst of the day-to-day battle. Having two functions is, after all, no coincidence and I am glad we have now filled it again in a highly beneficial way.

“We anticipate trends early and address them. This is what fascinates us.”Calvin Grieder, Chairman

InterviewBühler Annual Report 2016

9

What exactly are the cornerstones of your modernization program, Mr. Scheiber?Scheiber: My program is made up of four key elements: First, the renewal of our product portfolio with a focus on Internet of Things (IoT) technologies and the goal of gaining mar-ket share. This includes the development of new business models which are service related and based on data. Second, the modernization of our global manufacturing net-work – and therefore the modernization of our production site in Uzwil. Third, the continuing expansion of our services, especially new applications centers. And fourth, the attrac-tiveness of our organization for its employees – in particular generations Y and Z – including important aspects such as diversity and strong international management. All of this must ultimately lead to further growth.

Does the Chairman of the Board have anything to add to that? Grieder: Strategically speaking, no. This is, after all, at the heart of everything we have agreed upon in our Bühler2020 strategy. On the executive side, I will continue to urge that growth and profitability be further improved. Occasionally we get in the way of setting new ambitions. In this respect, I think we have yet to realize our full potential. On the other hand, we won’t change anything concerning our setup as a family-owned company without bank liabilities. This implies that we must finance our investments out of the cash flow we generate. As a family business we can be agile and manage the necessary changes fast. We therefore have an excellent chance to succeed. Scheiber: I totally agree, and we are busy working on the matter. Here, too, speed is a key aspect. Therefore, we will reduce project execution times, delivery times, and develop-ment cycles – without, however, compromising on quality.

Where do you see further potential for growth? Scheiber: The key words in this respect are feed and battery solutions. Measured against our technologies and solutions, we are still globally underrepresented as suppliers of feed production plants, though we have already managed to in-crease market share in China. We plan to multiply this suc-cess. In the field of battery production, we have developed a new process over the past few years. Now that we have received the first orders, it has undergone its baptism of fire in the marketplace. This technology has enabled us to launch a unique solution that boosts battery performance at an opportune time to join the boom in electromobility.

Grieder: We often anticipate trends years ahead of the game and develop solutions to address them. This is part of the fascination of our organization. Our credo is to transform challenges in the fields of food and mobility into sustainable business opportunities. This is why we research and develop

industrial-scale methods for processing insects, for instance. We know today that, as the global population continues to grow, proteins will become scarce – and with their high pro-tein content, insects will be part of the solution. In this area, we are determined to be players at the very forefront.

Are acquisitions also part of the growth strategy? Scheiber: Yes, they are. In our business, Advanced Materials, highly innovative technologies are involved. For example, in the area of electromobility, where we build plants for manu-facturing batteries, die casting light-alloy car components, or producing coatings. Such markets display an immense dynamism and therefore offer great potential. Also, Grains & Food has vast potential to grow. If we look at the worldwide potentials, we are still underrepresented in certain regions. Digitalization will change how we engineer our solutions. Here, measurement and control technology are becoming increasingly important. As yet, we lack certain related capa-bilities, and building them would take too long. This is where acquisitions might prove helpful.

What kind of leadership style can we expect of you as the CEO? Scheiber: I lead people through trust and transparency and will make every effort to communicate well. Content, quali-ty, and sustainability are not merely buzzwords. The world has become so fast-moving and complex that we as leaders must be predictable. We agree on goals with our employees and then support them in achieving or even exceeding them. Transparency and measurability are extremely important to me, and we are establishing an up-to-the-minute and mean- ingful monitoring system to this end. Communication and collaboration must be added to this: listen, put forward ideas, constructively exchange information on a global scale, and seek solutions.

As a leader, I create an environment where my employees are empowered to assume their responsibilities. In this way, I intend to initiate a paradigm shift from “push” to “pull.” If we manage to generate a need and demand from the market (pull), this will be more successful than foisting something upon the market or the organization (push). I am working on the assumption that everyone in a given area of activity shall accept the responsibility for what they are doing. It is important to me to mobilize the crea- tivity of everyone – while at the same time demanding the accountability that goes with it. Furthermore, we also want to have fun and take pleasure in our task of leading this superb company into the future. What could be better? I am looking forward to it! Engineering customer success with innovations for a better world.

10

“Going forward, we want to multiply our successes, particularly in feed and batteries.”Stefan Scheiber, CEO

InterviewBühler Annual Report 2016

11


13

Group Report

Group Report

Invest and grow 14

Business performance 16

Strategic investments 18

Service business 20

Sustainability 21

Employees 22

Outlook 23

14

Invest and growBühler continued to invest into new markets and applications and spurred on its growth.

In 2016, Bühler showed an ongoing healthy performance. Order intake increased substantially and turnover grew markedly. Profitability remained stable despite challenging market conditions such as volatile currencies, low raw material prices for oil and wheat, and political turmoil in many regions. The service business showed more-than-proportional growth. The Group continued to strongly reinvest its cash into strategic applications and markets. Market positions were strengthened by rolling out new technologies, process solutions, and services, and by adding new production capacities, for example for a manufacturing plant and equipment for rice processing in Vietnam or animal feed production in China. At the same time, Bühler launched a modernization program for its Swiss locations in the second half- year. Committed to sustainability, Bühler made further progress in providing solutions for meeting pressing challenges in the fields of nutrition and energy efficiency and in utilizing the potential of digitalization for its customers as well as its own development. The sound financial position of the company was further strengthened, e.g. by a remarkable in-crease of net liquidity. The carefully planned change in the top management went off smoothly and triggered new impetus – supported by the renewal of the Bühler brand.

Stronger growth is most evident in higher order intake.

2012 20122014 20142015 20152016 20162013 2013

Equity ratio

(in %)

Net liquidity

(in million CHF)

4145 45 46

+ 3 % 2016

+ 18 %377

464

Turnover

(in CHF billion)

2.41 2.32 2.33

Order intake

(in CHF billion)

2.34

2012 20122014 20142015 20152016 20162013 2013

2.362.58

+ 3 % + 2 %

317392

462

47

2.47 2.542.41 2.45


15

Group Report

On a growth pathOur growth stimulus was most evident in the higher order intake. Here, the Group achieved a turnaround in comparison to the previous year: Whereas order intake in 2015 shrank by 4 %, it increased in 2016 by 3 % to CHF 2.54 billion – a bridge of 7 percentage points. Turnover grew perceptibly by 2 % to nearly CHF 2.45 billion. Consequently, the already high order backlog reached a record high of CHF 1.6 billion. Profitability (EBIT) remained stable at CHF 174 million, which corresponds to an EBIT margin of 7 .1 % (previous year: 7 .3 %).

Strong financial positionNet profit remained stable at CHF 143 million. Again Bühler invested a high amount (CHF 71 million) into its worldwide asset base. Despite these expenditures, net liquidity grew significantly by 18 % to CHF 462 million. With an equity ratio of 47 % (previous year: 46 %), the Group is free from all bank liabilities on the reporting date at year-end. The return on net operating assets (RONOA) stayed on a high level of 19 % (previous year: 22 %). With this strong financial position, Bühler is well equipped to continue investing into its own future.

2012

2012

20122014

2014

20142015

2015

20152016

2016

20162013

2013

2013

Net profit

(in CHF million)

155

123 121

143 143

Return on net operating assets (RONOA)

(in %)

27

18 1822

19

EBIT

(in CHF million)

139 145

177 174168

Investments into asset base

(in CHF million)

2012 2014 2015 20162013

58

0

8288

54

71

+ 31%

16

The shared offering within the en-tire Bühler Group is a key diffe-rentiator in the market for Grain Logistics. In rice processing, for

instance, Bühler is the only player that offers comprehensive solutions from the paddy to the processed grain of rice. Grain Logistics was able to reinforce its market leadership position in the malting industry in 2016 and won all larger contracts in that area. An innovation highlight was the new Tubo con-veying system, a mechanical system for three-dimensional transportation. It was introduced at the Bühler Networking Days and awarded Best Innovation by Bühler’s customers.

The Grain Milling business area experienced a particularly en-couraging development, receiv-ing large orders from China.

Bühler was able to benefit from its capability of supplying not only single machines and system components, but also in delivering complete installations. This position as a provider of total solutions has become an increasingly important competitive differentiation factor also in emerging economies.

The Sortex & Rice business area positioned itself excellently by rolling out a new technology for

processing frozen fruits and vegetables. Extensive testing of the Sortex PolarVision with its new camera tech-

nology has shown that the sorting capacity is up to ten times better than that of comparable products of competi-tors. Customers rewarded this high performance by ordering numerous machines. With a global market share of around 30 %, Bühler achieved and maintained a leading position in rice processing in 2016. This strong position was bolstered by important projects such as the one awarded in Vietnam by Huang Phong (see page 58), which, with the help of Bühler, can now produce export-grade rice.

In the strategic feed market, in which Bühler is still globally underrepresented, the Group managed to expand its existing

leading position in China into additional Asian countries. In the coming years, Bühler will build a plant with an annual capacity of 60,000 tonnes for Woosung Feed Company, a Korean feed manufacturer.

The Consumer Foods business area was able to retain its already high market share. The most dy-namic performance was reported

in Chocolate, also thanks to large orders for the state-funded expansion of the cocoa processing industry in West Africa. After the integration of Bühler Bepex, Consumer Foods will, for the first time, offer complete solutions from the receipt of raw materials to all confectionery end products.

Business performancePositive development in both Grains & Food and Advanced Materials.

Order intake

CHF 1,956 million + 2 %Turnover

CHF 1,873 million – 1%

GrainMilling

Sortex & Rice

Grain Logistics

Value Nutrition

Consumer Foods

Grains & Food

Both business areas of Bühler, Grains & Food and Advanced Materials, contributed to the success of the Group in 2016. The strategy of engaging in two business areas that are both based on leading process technologies, services, and train-ing offerings, and which serve a wide range of industries, has proven its worth.

Grains & Food further expanded its market leadership in 2016. Advanced Materials continued its upswing after a strong 2015.


17

Group Report

The Die Casting business area once again exceeded its record results of the previous year – borne

by its undisputed technological leadership, extensive ser-vices, and booming aluminum applications in the automotive industry. The full portfolio of Bühler has led to market suc-cess in all key industries.

Grinding & Dispersion with its newly developed process for manufacturing electrode slurries – the core components of electric

batteries – has entered an entirely novel field of applicati-on. In the past years, this business area developed this efficient process together with a Chinese customer, and tested it in pilot plants. The customer has placed the first substantial orders for production lines. Its aim is to increase its efficiency by rapidly expanding its production capacities with the new Bühler manufacturing process. With this proof of the industrial maturity of the process, Bühler is now uniquely positioned in the field of electric batteries – a market of the future boosted by the boom in electric vehicles. Grinding & Dispersion also grew in established industries such as liquid packaging inks.

Order intake

CHF 554 million + 8 %Turnover

CHF 537 million + 9 %

Die Casting Leybold Optics


Grain Logistics

Sortex & Rice

Grain Milling

Value Nutrition

Consumer Foods

Die Casting


Leybold Optics

4 %9 %

8 %6 %

12 %

10 %

18 % 32 %

Turnover

by business area

Advanced Materials

Following its successful turn-around in the previous year, Leybold Optics continued its positive development in 2016,

achieving a historically high order intake in optics. Extensive orders for precision optics and coating lines for eyeglasses (ophthalmics) are driving this growth. The applications know-how and innovative solutions combined with global service support are key differentiators for Bühler.

18

Strategic investmentsBühler’s global setup and customer proximity proved to be the key to success, once again.

+ 892 service stations

BatteriesInsects

New applications

iRollPocket plant

New services

Swiss sitesModernization

+ 229 manufacturing sites

North AmericaStrong development, with major orders for Grain Milling, Brewing, Malting, and Chocolate. Brisk demand for sorters and die-casting machines and large orders in the field of inks.

South AmericaStrong growth and investments in the areas of Grain Milling and Grain Logistics in Brazil. Successes in Argentina, Chile, and other countries.

Large pasta line with

Ecothermatik sold.

Combined solution of

grain milling/ logistics.

Services and appli-

cation centers.

In line with its strategy of operating “in the region for the region,” Bühler invested substantial sums in 2016 to enter new markets, develop new applications, and further expand and update its global manufacturing network. Eight new service stations were added to the global network of nearly 100 locations with 60 workshops increasing our proximity to our customers; in Vietnam, a new factory for rice equipment was opened; new regional application centers were estab-lished, for example, in North America; the buildup of a new production site in China is ongoing; the company launched a modernization program for its locations in Switzerland and is about to capture the future growth markets of battery and insect processing.


19

Group Report

25 %

6 %

32 %

5 %5 %

47 %

4 %7 %

Südasien

North America South America Europe Middle East & Africa South Asia Asia

Employees

by region

Middle East & AfricaStrong local services in the entire region.

South AsiaHigh acceptance of atta process; high-tech dryer for paddy rice sold; large projects for milling and oil solutions. Important growth in Advanced Materials applications.

EuropeSignificant growth; large-scale investment projects in Bakery, Specialty Milling, Chocolate, and Nutrition as well as Automotive, Optics, and Inks.

ChinaStrong development, with successful sales of complete flour mills. Enhance-ment of leadership in feed mills. High demand from the automotive industry for aluminum die-casting solutions due to the shift from foreign to domestic investments. Successful entry into the battery business.

Modern- ization

program for Swiss

locations.

First class of

African Milling School

graduated.

New factory in Vietnam for rice.

Tuna fish-feed

plant sold.

Plant and service station in Myanmar.

Large orders for

mills in Turkey.

Investments into Grains & Food in Maghreb.

Strong growth in

Central and Eastern Europe.

New plants and services

for cocoa industry.

15 % 30 %

6 %

17 %

Turnover

by region

20

Service businessFast and professional service for our customers.

The company presented over 30 innovations at the Bühler Networking Days.

Order intake

CHF 587 million + 4 %Turnover

CHF 578 million + 7 %

From a sales perspective, the investment into the global service network is now beginning to pay off. Customers appreciate our ability to serve them locally out of one of 92 service stations worldwide. This resulted in a gain of 7 % to CHF 578 million, with which the service business show-ed an overproportional growth rate. The service share of turnover is now 24 % (previous year: 22 %).

Retrofits and new online platform MyBühlerThe activity contributing to this upturn was not the spare parts business alone, but also services such as retrofits. These extensive service packages are designed to update existing plants and equipment, ranging from single system compo-nents to complete overhauls using cutting-edge technolo-gies such as automatic control systems. Bühler differentiates itself with a holistic approach ranging from mechanics over electric installations to automation and integration into ERP systems. Customers benefit from higher yield, quality impro-vements of end products, less downtime, and lower energy consumption.

The introduction of the MyBühler online customer platform (www.mybuhler.com) was also of strategic significance to the services business. Customers registering with this portal find their Bühler products in it and can place online orders for spare parts. Several hundred pilot customers are already benefiting from this service. Plans are in place to greatly expand the range of services and the number of customers using it.


21

Group Report

Sustainability Innovation transforms trends and challenges into sustainable business opportunities.

For research and development.

CHF 109 million 2016

30 %Less energy and waste by 2020.

Innovation

Bühler is fully committed to sustainability with the ambition to contribute to a safe and secure global nutrition system as well as a responsible usage of natural resources to limit the effects of climate change. Sustainability was confirmed as the overarching goal and cross-company targets were agreed. Since 2013, the scope of the sustainability reporting of Bühler has continuously increased, now covering 17 major locations with 92 % of the productive work hours and 39 Key Performance Indicators (KPIs) (see Sustainability Report on pages 83–97). In 2016, Bühler reduced its own CO2 footprint by 15 %. By the year 2020, Bühler plans to reduce energy consumption and waste at customer sites by 30 %.

Bühler’s key lever to support these efforts is innovation: With new technologies and solutions the Group transforms global challenges and trends into new business opportunities. With this in mind, Bühler is placing the focus on two core topics of the future: sustainability (nutrition; availability and safety of foods and feeds; energy efficiency) and digitalization (Internet of Things).

Bühler Networking DaysThe Bühler Networking Days 2016 held in Uzwil at the end of August, demonstrated just how seriously the Group is taking its responsibility as a major industry player. Bühler convened 750 participants from the global grain processing industry – customers, scientists, industry partners, start-ups, and apprentices – in order to discuss ways and means to together develop ways of translating urgent challenges into new business opportunities.

The Networking Days, during which Bühler presented over 30 innovations, are representative of Bühler’s open, collaborative-innovation model which experienced a further push in 2016. The Group invested CHF 109 million in research and development, which corresponds to a share of turnover of 4.4 % (see Innovation Report on pages 36–39); incurred a partnership with the start-up accelerator MassChallenge; started a cooperation with Bosch to develop IoT-based solutions; and invested into a joint venture with Protix from the Netherlands to enter the market of proteins from insects.

+ 7 million

22

of employees recommend Bühler as an employer of choice.

88 %

EmployeesKnowledge transfer is part of Bühler’s business model.

Identify with the Bühler Group as my employer

Have you recommended Bühler Group as an employer?

I can … totally mostly partly less not

Yes, several times Yes, sometimes No, not yet

36 %

45 %

47 %

43 %

15 %

12 %

2 %

A key element of Bühler’s sustainability approach is training and education, not only for its employees, but also for customers. The African Milling School, which was inaugurated in March 2015, was a great success: The training courses are fully booked and the first class just finished their exams. Bühler operates 17 training centers globally offering more than 1,500 seminars for all aspects of its technologies and solutions. Bühler’s well regarded apprentice program was continued at the same level, now employing 579 trainees in Switzerland, Germany, USA, Brazil, South Africa, China, and India.

Bühler’s reputation as a global player and a good employer was confirmed in an impressive manner. Several internal and external studies underscored that Bühler is one of the leading employers globally and that its workforce strongly identifies with the company. Important indicators such as fluctuation and length of employment are far better than the industry average, confirming the high level of employee satisfaction. Overall, fluctuation decreased from 9.1 % in 2015 to 7.5 % in 2016. The background of this positive perception is a deep- seated corporate culture of mutual respect. Bühler places the greatest importance on top qualifications, supports its employees in receiving training, and also enables them to continue their education.

A new introduction in 2016 was the Management Trainee Program, in which seven new university graduates are offered the chance to closely follow a member of the Executive Board of Bühler for 12 months and thereby gain an in-depth understanding of corporate management.


23

Group Report

OutlookThe foundations are in place for a successful 2017.

Bühler closed a healthy year of operations in 2016. Regardless of day-to-day variations, the Group with its various business fields is excellently positioned in global growth markets – the processing of basic foods and advanced materials. With our global setup, we have achieved real customer proximity and we truly live up to our motto of being “locally relevant, globally leveraged”. Today’s megatrends such as the growing global population, increasing urbanization, or enhanced environmental aware-ness further benefit the strategic setup of the Group and unlock additional growth potential.

With our accomplishments in 2016, and a strong order backlog, we can look confidently toward 2017. The dyna-mic nature of market and technology trends, regional de-velopments, and political conditions makes predicting potential business outcomes increasingly challenging. Though we live in a fast-moving and complex world, Bühler has ad-justed to whatever situation it is presented with, with flexibility. Our collaborative innovation model and strong partner- ships with our customers, the science community, and with technology and industry partners enable the company to be adjusted as needed. In conjunction with our leading techno-logies and solutions, we aim to further increase our growth rate and profitability in 2017.

Our business

Our targets 26

Our values 27

Our future 28

Our businesses 32

Innovation 36


25

Our business

Our targetsWhat we strive for and why we exist.

Every day, billions of people come into contact with Bühler technologies to cover their basic needs for food and mobi-lity. With our industrial process technologies and solutions, we contribute significantly to feeding the world’s population, setting the focus on food security and safety. Global pro-ducers and processors of wheat, corn, rice, pasta, choco-late, and breakfast cereals rely heavily on us. We are also a leader in the area of animal feed. Furthermore, Bühler is a leading solution provider of die-casting and surface- coating technologies in high-volume application areas, such as automotive, optics, and inks. As a globally active Swiss family-owned business, we are particularly committed to sustainability.

Why we are here ° We want our customers to be successful.

° We want every human being to have access to healthy food.

° We want to protect the climate with energy-efficient cars, buildings, and machinery.

° We want to build safe and attractive workplaces.

° We want to remain independent as a company by achieving sustainable success.

What we do: our core° We develop the best food and feed processing solutions – focusing on security, safety, and nutrition.

° We develop the best material processing solutions, focusing on energy efficiency and best quality products.

° We provide knowledge and services to enable our employees and customers to be successful.

° We engineer customer success.

How we do business: our priorities° We develop sustainable solutions offering maximum performance and best return on investment.

° We as a global Swiss family enterprise are dedicated to top quality.

° We are always close to our customers, operating “in the region for the region”. We are a lifetime partner.

° We collaborate closely with our partners from the worlds of science, industry, and the public sector to create the solutions of tomorrow.

26

Our values act as an inner compass for our activities. They define who we are and how we behave. The five Bühler values help all employees take the right decisions and act in line with the Bühler Way:

° Trust

° Respect

° Recognition

° Involvement

° Passion

We strive to be trustworthy and trust in the contribution of others. We are proud of our own contribution and recognize the contribution of others. We show high involvement and commitment to what we are doing and are always ready to go the extra mile. We are passionate about our work and about our company and its purpose.

Our valuesOur core values define how we behave.

Working for a cause: Partners in Food SolutionsBühler supports the nonprofit organization Partners in Food Solutions with its vision to improve food security and nutrition to enrich lives around the world, together with some of the world’s largest food and agricultural companies. As of today, Partners in Food Solutions have helped strengthen the capacity of more than 600 food companies in Kenya, Zambia, Tanzania, Malawi, and Ethiopia, impacting nearly 829,000 local smallholder farmers who support an estimated 4.9 million family members. Bühler is proud to contribute to this great cause with financial support and skilled volunteers.


27

Our business

Our futureCore topics for our markets, customers, and the way we do business.

By 2050, there will be nine billion people on this planet. How can we provide them with healthy and safe food? Fewer carbon emissions, stiffer competition, new technologies: The global automotive industry faces numerous challenges. For Bühler, these trends mean new business opportunities. The company has identified five core topics that are decisive for this transformation: nutrition, food and feed safety, sustain-ability, the Internet of Things, and mobility.

NutritionHunger, micronutrient deficiencies, and overweight are the major issues we face when discussing the question of food. An estimated 840 million people suffer from hunger, and one third of the developing world’s population suffers from micronutrient deficiencies. At the same time, overweight remains a key issue for industrialized nations and is also be-coming a serious problem for the developing world. On top of that, there are indications of a huge protein shortage. In fact, calculations have shown that to feed the world’s grow-ing population, an additional 265 million tonnes of protein are required by 2050: an increase of around 50 %.

There are already solutions for the protein gap: Pulses are gluten-free, satiate, and are high in proteins, dietary fibers, and micronutrients. In the medium to long term, however, the use of new raw materials that are not in competition for arable land is inevitable. Insects and algae especially stand out as high-grade and sustainable sources of protein. For this reason, Bühler is working on using the potential of these alternative protein sources on an industrial scale to make food and feed.

50 % more proteins By 2050, we will need 265 million tonnes of protein to feed the world’s population. Bühler solutions make an important contribution.

28

Food and feed safetyFood safety is the game changer for food manufacturers. Hardly a day passes without news on food that is contami-nated, adulterated or has made people ill. We at Bühler have taken up the food safety challenge and are committed to in-novations for safe feed and food processing across the value chain. The strong focus on food safety is driven by growing global trade and increasing industrial food production. Also, progress in the detection of all sorts of contaminants leads to reassessment of food safety risks. Meanwhile, consumers’ trust in the agro-food industry is shaken by food safety alerts that sometimes go viral on social media.

Bühler’s approach to addressing food and feed safety issues starts with the safe handling of raw materials and includes innovative solutions for hygienic design and the elimination of harmful bacteria.

25 % of the grain crop contaminated A quarter of the grain crop is contaminated with dangerous mycotoxins. Sorting solutions from Bühler are a remedy for this problem.


29

Our business

Efficiency (the Internet of Things)The Internet of Things heralds a major innovative thrust and is clearly a focus area that is transforming the food industry. Net- worked sensors create enormous amounts of data and lead to new levels of process control and transparency. The unique combination of connectivity, cheap storage capacity, and high-performance computing power opens up new horizons.

Bühler’s vision is to enable the food industry to derive maximum benefit from all these technological developments for the customers. One possible use is predictive maintenance for machines. Thanks to continuous monitoring of vital operating parameters, it will be possible to predict the failure of a component or wearing part in advance and trigger the delivery of a spare part in a timely manner.

Bühler is laying the foundations for this today. We are cre-ating added value for our customers with innovative, data- driven services. For example, we already offer sensors that continuously check for color, granulation, and specks during flour production. Other sensors measure moisture content together with ash or protein content and enable optimization of production in real time. Another example is Anyware- Pro from Bühler Sortex: This remote monitoring application enables Bühler experts to support customers from anywhere in the world. Thanks to the integrated analysis of operating data, wheat processors can also increase their productivity.

SustainabilityBühler is setting ambitious targets to reduce energy, water, and resource consumption. By 2020, Bühler wants to reduce energy consumption and waste at customer sites by 30 %.

Higher energy efficiency isn’t just sustainable; it also makes economic sense. In the processing industries, energy accounts for up to 10 % of total cost. So, any saving trans-lates directly into higher margins. For example, the latest generation of the pasta-drying solution Ecothermatik reduces energy costs by up to 40 %. And the potential is by no means exhausted, as the majority of the energy consump-tion in the processing industry is caused by process heat.

Increased sustainability is also a top priority for animal feed: in aquaculture, for instance, currently the fastest growing section of the feed industry. Fish farms are often criticized because they use fish meal produced from fish caught in the wild as the basis for their feed. But with the use of Bühler’s extrusion technology, it is easy and efficient to give vegeta-ble raw materials the necessary properties to simulate the consistency of fish. In the not too distant future, alternative protein sources such as algae or insects will become more important as feedstuffs for fish and poultry.

30 % less energyBühler aims to reduce energy consumption by 30 % by 2020. With this target, one smaller thermal power plant is saved every six to eight years.

30

MobilityMobility is a basic need of today’s society. The increase in population and prosperity in emerging countries is boosting demand for cars. But the sharp growth of the automobile in-dustry is also associated with challenges. Transport accounts for 13 % of all greenhouse gas emissions and 75 % of this can be attributed to road traffic. As car production increases, so does the need for efficient and clean mobility. The key to cutting fuel consumption – and thereby also carbon emissions – is lightweight car design.

Bühler is a leading global provider of die-casting technology for the automotive industry. Lightweight design of engine blocks and structural components such as shock towers or cross-members is key to cutting fuel consumption and carbon emissions. Oil pans or transmission housing compo-nents are also being made of light alloys such as aluminum.

Another long-term mobility trend is electric vehicles: The International Energy Agency (IEA) estimates that of the 120 million new cars sold in 2030, every other one will be powered partly or fully by an electric motor. Hybrid or elec-tric vehicles require a battery as an internal energy storage device. Bühler has developed an innovative solution for pro-ducing electrode slurries. Their quality has a direct impact on the performance of batteries. In 2016, Bühler received multiple orders for electrode slurry production lines on an industrial scale.

13 % GHG emissions from cars The transport sector is responsible for 13 % of all greenhouse gas (GHG)emissions. Road traffic is responsible for 75 % of that. Bühler’s lightweight construction contributes towards clean mobility.

60 million electric vehicles By 2030, one in every two new vehicles will be powered partly or fully by an electric motor, that means 60 millions. The electrode slurries from Bühler are contributing significantly to this.


31

Our business

Our businesses Grains & Food

By 2050, the world population is projected to rise to nine billion. How can they all be provided with safe, healthy, and sustainable food? Technologies from Bühler business Grains & Food substantially contribute to supplying a growing global population with food staples based on corn, rice, or wheat and it is also a leader in pasta and chocolate production. In addition, Bühler is investing into new solutions for feed.

Grains & Food is outstandingly positioned in the food industry. For example, 65 % of all wheat is milled using technology that is supplied by Bühler. Bühler also makes an essential contribution to corn and rice processing. With its rice pro-cessing solutions, the company covers over 30 % of all global rice production. And in the grain processing industry, vol- umes are stupendous: About 2,500 million tonnes of corn, rice, and wheat are harvested and processed every year. For four billion people, wheat is the most important staple food. Another three billion live primarily on rice. Sorting wheat and corn is also becoming more and more important in order to ensure highest quality and avoid contamination. Also here, Bühler provides the latest technology.

Bühler is a global player not only in the field of such basic foods. Its market share in other applications is also impres-sive: More than 70 % of the world’s beer is brewed with maltthat is manufactured on Bühler equipment. Over one third of all breakfast cereals and industrially produced pasta are made on Bühler plants and equipment. Last but not least, Bühler processing lines produce 60 % of all chocolate goods.

Thanks to its worldwide service capacities and application centers, in which local solutions are produced, Bühler is highly appreciated as a partner of the food industry. The company is also strongly positioned in important growth markets such as aquafeed or processing of pulses. Insects are also becoming increasingly important for the feed indus-try. Bühler is excellently positioned to grasp these oppor-tunities, based on technology, skills, and its global network.

32

Grains & Food at a glance#1 in rice processing

in wheat processingin cereal processingin chocolate processingin malt processing

less energy used with the latest pasta drying solution Ecothermatik.

of all wheat worldwide is processed with Bühler equipment.

The majority

of all chocolate worldwide is processed with Bühler equipment.

265 m tonnes of protein To feed nine billion people by 2050, we need 50 % more protein.

140,000 grains per second A standard wheat mill processes more than 20 tonnes of wheat per hour and sorts around 140,000 grains per second for highest quality with Bühler optical sorters.

30 % of food is wasted From the field to the fork, a whopping 30 % of food is wasted.

of all cereal production worldwide is processed with Bühler equipment.

1/3

1/3of newly installed rice

plants use Bühler equipment.

About

Over

Around

2/3

>1/3


33

Our business

Our businesses Advanced Materials

Lower carbon emissions, fiercer competition, new tech-nologies: The global automotive industry faces numerous challenges. For Bühler, these trends mean new business opportunities.

The increase in population and prosperity in emerging coun-tries is boosting demand for cars. Aluminum engine blocks, gearboxes, oil pans, and structural components, head and tail light reflectors, electrode slurries for lithium-ion bat-teries, paints and protective lacquers, shaded windows, chrome-plated interior parts, and cameras for driver- assistance systems: Advanced Materials is a relevant equip-ment provider to the world’s automotive industry, offering innovative technologies with an optimized carbon footprint for ensuring safe and comfortable mobility.

The key to cutting fuel consumption – and thereby also car-bon emissions – is lightweight car design. Engine blocks, structural components such as shock towers or cross- members, as well as oil pans or transmission housing com-ponents are increasingly being made of light alloys such as aluminum instead of steel or cast iron. Bühler is a leading global provider of die-casting technology for the automotive industry. 25 % of all engine blocks are manufactured on Bühler die-casting machines. Bühler is the sole provider with production capacities in all three major markets of the global car-making industry.

Another long-term mobility trend is electric vehicles. Hybrid or electric vehicles require a battery as an internal energy storage device. Over the next few years, we expect to see a massive expansion of global production capacities for lithium-ion batteries. This is a growth market for Bühler: On the basis of the proven extrusion process technology, the Group has developed a solution for producing electrode slur-ries. Slurry quality has a direct impact on the performance of the storage cells. In 2016, Bühler received multiple orders for electrode paste production lines on an industrial scale. Market studies confirm the high market growth in battery production, creating promising business opportunities.

Bühler has also achieved a leading position in inks for pack-aging, and has advanced into various high-tech applica-tions such as color filters for LCD flat screens and metallic or ceramic pastes for electronic applications. The company is a world leader in coating systems for optical precision components such as high-precision filters, lenses, and beam splitters. Bühler also uses these abilities in coating systems for architectural glass and in barrier coating systems for packaging films.

34

Advanced Materials at a glance #1 in die casting

for offset inksfor reflector coatingsin process innovation for electrode pastes

50 % new electric cars By 2030, 50 % of new vehicles will be partly or completely driven by an electric motor.

GHG challenge The transport sector is responsible for 13 % of all greenhouse gases (GHG). 75 % of that is due to traffic.

20 % growth The market of advanced driver assistance systems is expected to grow 20 % per year in this decade.

88 million cars In 2015, 88 million vehicles were produced worldwide. In 2021, that number is likely to increase to around 113 million cars.

of all offset inks worldwide are manufactured with Bühler technology.

Bühler’s continuous process to produce electrode slurries for lithium-ion batteries.

Unique

of new cars worldwide have die-cast components produced

with Bühler technology.

Half About

60%


35

Our business

InnovationInnovative solutions are at the core of our success.

Bühler relies on innovation and research and development like no other solutions provider in the food industry. The company continuously works with clients, scientists, industry partners, start-ups, and trainees on new innovations, and it nurtures a culture of innovation and entrepreneurship with its employees. The company invested CHF 109 million in 2016, again a substantial sum in research and development (previous year: CHF 102 million), which is equivalent to 4.4 % of turnover.

Open innovationBühler brought together 750 participants at the Bühler Networking Days 2016, underlining its role as an import-ant enabler of industry collaboration. Customers, scientists, industry partners, start-ups, and trainees came together to discuss how pressing challenges can be transformed into new business opportunities. The Networking Days are part of Bühler’s open innovation model that is focused on coopera-tion. The company cooperates with many institutions around the world, including the ETH Zurich, the Ecole Polytechnic Federal de Lausanne, the University of St. Gallen, the UC London, Imperial College London, the Jiangnan University (Wuxi, China), the UNITECH university network, the Kansas State University, the University of Toronto, the University of Minnesota, the Canadian International Grain Institute, the University of Applied Sciences HTWG Konstanz, and the INM – Leibniz Institute for New Materials. Bühler operates an innovation satellite at the EPFL, and is a founding partner of the Swiss operations of one of the most important innova-tion and start-up accelerators in the world, MassChallenge. Through externally organized, internally carried out “Innova-tion Challenges,” Bühler involves its own employees as well as students at leading universities in its innovation process.

Customer proximity is essential for innovations for a better world.

30 innovations Presented at the Bühler Networking Days 2016.

36

Innovations for – and with – customers Bühler opens its application centers for customers in order to develop and test new process concepts, recipes, and end products together. In China, for instance, Bühler is sup-porting local chocolate producers with a special laboratory. Here more than 30 local experts help with developing country- specific confectionery and the production plants necessary for this. In the new food laboratory in Minnesota, US, clients are able to try out new food production methods and carry out tests on a complete processing line.

Only qualified staff can get the most out of the high-tech plants. That is why the Bühler training and education portfolio is crucial. Bühler is the main driving force be-hind the Swiss Milling School, which has already trained thousands of millers. In addition, the Group founded the African Milling School in 2015: In this technical milling school in Kenya, African millers are thoroughly trained based on the highest quality standards. The first-year group graduated from the technical school in 2016.

Tubo is the first and only tubular conveying system that uses individual pusher elements.

CHF 109 million for R&D Bühler invested CHF 109 million in research and development. This is equivalent to 4.4 % of the company’s turnover.


37

Our business

New products and solutions launched in 2016Bühler proved its innovative capacity in 2016 with many new features and innovations. These include the following highlights: Innovative conveying system Tubo: The new conveying system won the customer prize at the Bühler Networking Days. It is the first tubular conveying system in the world, the only one that continually feeds using individual push ele-ments. It uses considerably less space than other mechanical feeding techniques and offers a high degree of flexibility for the plant layout.

High-precision scale Tubex: The innovative high-pre-cision scale reduces energy costs by more than 90 %. It maximizes food safety and its operation is user-friendly. CombiMill process with more flexibility: The new Combi-Mill process allows the production of whole-wheat flour for flatbreads as well as dark and white flours with the same milling system. Clients benefit from the increase in produc-tion flexibility.

Energy-efficient pasta dryer Ecothermatik: The newest model of the pasta drying solution reduces energy consump-tion by up to 40 %.

Innovative operating system Wincos: The innovative Wincos plant control system enables significant gains in efficiency and quality, with a new design, intuitive user guidance, and display on mobile devices. More productivity with Ecoline S: Bühler completed its portfolio of die-casting cells with a solution for small found-ries, which offers high productivity and reliability and is very easy to use. Its operation is intuitive thanks to a touch screen. Energy-efficient MacroMedia: Applying Bühler’s latest MacroMedia technology in the predispersing process allows the direct usage of microbeads in the fine-grinding process. As a result, the overall process is around 30 % more productive and energy savings of about 50 % can be achieved.

Barrier coatings for food packaging film: With the latest Leybold Optics Pak T +, up to 1,500 kg film per hour can be coated with aluminum, with a width of 3.7 meters. The solution can also process transparent barrier coatings (aluminum-oxide).

Bühler’s Bakery Innovation Center.

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The opportunities of digitalizationGreat innovations in our core markets are on the horizon, particularly thanks to the Internet of Things. The availability of low-cost sensors and the possibility of storing large amounts of data in the Cloud and evaluating it in real time opens up opportunities for significant gains in efficiency in the food industry. For example, the important production parameters such as product moisture, temperature, or composition can be continually monitored and the production processes can be optimized in real time. In the future this will not only improve the productivity – the seamless transparency throughout the whole value chain also increases the food safety and contributes significantly towards reducing losses. That is all the more important, as when worldwide food losses are con-sidered together, they are the third largest CO2 emission in the world.

In order to make Bühler’s components and plants even better equipped with sensor technology, the company signed an agreement in September to expand the existing research and development partnership with Bosch. After a successful two-year research project, the companies want to commer-cialize MEMS sensors (micro-electro-mechanical systems) in food technologies from Bühler.

In 2016, Bühler launched its customer portal MyBühler, which features 24/7 access, current information, and a sim-ple online ordering process for customers.

4,000 employees More than a third of the workforce took part in the Bühler Innovation Challenge.

Process expertise is essentialBühler has more than 150 years of experience in processing valuable resources into high-quality end products. Along the way the company continually refined the process, and was thus instrumental in helping to shape the technological de-velopments. The key technologies are in the field of mecha-nic and thermal process technology and include things such as feeding, cleaning, sorting, mixing, roasting, drying, and shaping for processing grain and other resources. Process technology from Bühler is also used in the production and processing of technical materials and for die casting.

The Bühler Ecothermatik pasta dryer uses 40 % less thermal energy.


39

Our business

All about rice

Rice – the survivalist 42

“May your rice never burn” 44

Small grain, huge variety 46

A grain to feed the world 48

Excellent source of energy 50

In the region, for the region 52

Bühler and rice 54


41

All about rice

Rice – the survivalist

Over 7,000 years ago, rice was first successfully culti-vated in what is now China and Indonesia. The small grain has proven to be a true survivor: Today, it thrives both in lowlands below sea level and at altitudes above 2,000 meters. Although the sweet grass species is no water plant, it can be cultivated in so-called wet paddy cultivation thanks to its root aeration system. This bountiful method, which typically yields plant offshoots, produces around 80 % of today’s global rice crop. The fields are flooded with water so that the 1.2-meter high plants are in up to 20 centimeters of water. This keeps pests and weeds away.

Spectacular rice terracesA special form of paddy cultivation is planting in ex-pansive rice terraces that enable cultivation even on steep slopes thanks to a sophisticated irrigation sys-tem consisting of bamboo pipes and ducts.

In mountainous areas, rice is cultivated with upland or dryland rice farming. Higher expenses coupled with lower yields make the rice varieties from this form of cultivation comparatively expensive.

Rice is the oldest cultivated plant in the world.

42

All about riceBühler Annual Report 2016

43

“May your rice never burn”

Especially in Asian countries, rice symbolizes luck, prosperity, fertility, and immortality. Accordingly, a traditional New Year’s greeting in China is: “May your rice never burn.” For East Indians, the “divine plant” also has a soul, in Malaysia it is believed that each grain of rice provides a spirit with a home, and in Indonesia, the “Mother Rice” is honored.

Rice plays an important role at weddings: In India, a handful of rice grains is wound into the corner of the bride’s sari during the wedding vows or the newlyweds sprinkle blessed rice over each others’ heads. The custom in Europe of showering newlyweds with rice to bid them a fruitful marriage with many children is said, however, to have originated in China.

A seemingly meaningless and widespread tradition in the West is that of throwing rice on stage as the two main actors Janet and Brad appear during per-formances of the legendary musical “Rocky Horror Picture Show.“

There are many myths surrounding rice.

44


45

All about rice

Small grain, huge variety

White, black, red, brown, purple or green, long and thin or short and round, nutty, flowery or herbaceous, sticky-moist or almost completely dry: Scientists have identified around 120,000 different varieties of rice but “only” 10,000 of them have been cultivated.

Two groups of Oryza sativa, as botanists call today’s most commonly referred to rice plant species, are of particular importance: the indica and japonica varie-ties. The first accounts for around 80 % of global rice production. No wonder: Indica varieties are extre-mely robust and have adapted to tropical climates. A typical representative is long grain rice. The japonica varieties, however, can be found in especially temper- ate zones. They have a short, round to oval shape, swell during cooking and become slightly sticky.

Black wild rice is actually no true rice, but rather it is a descendant of the North American water grass Zizania plaustris.

Rice with a unique varietal richness.

46


47

A grain to feed the world

For more than half the world’s population, rice is a daily meal and the most important staple food. Where- as in western developed nations the grain is often merely served as side dish, in Asian countries such as Bangladesh it contributes up to 70 % of nutritional needs. Even in Indonesia and some African countries such as Sierra Leone, rice makes up around 50 % of people’s daily calorie intake.

Unlike other cereals such as corn, an overwhelming portion of the world production of rice is used for human consumption: Only 4 % ends up in animal feed, a further 3 % in industry, and 2 % is used as seed.

In the future, rice will become even more important as a staple food. Research efforts worldwide are now focusing on making plants more resistant to diseases and pests, to enhance their tolerance towards herbicides and thus increase yields. Genetic modifications also enrich the plants with vitamins and minerals in order to thwart nutrient de-ficiencies in various countries.

The most important staple food.

48


49

All about rice

Excellent source of energy

Rice is an excellent source of energy. It is low in fat, gluten-free, and contains 5 to 11 % of protein. This small grain, which contains about 350 kilocalories per 100 grams, primarily contains carbohydrates in the form of rice starch. They are easily broken down by the human body, which makes rice also an excellent energy provider for athletes.

Brown rice, which is not polished and therefore still enclosed in its nutrient-rich silver skin, has the highest vitamin and mineral content. It is, however, harder to digest than its further processed, white counterpart. An alternative is parboiled rice: The vitamins and minerals of the silver skin are detached in hot water and pressed into the interior of the grain under high pressure. Virtually all nutrients are pre- served in this manner.

Regardless of the type of processing, rice is free of gluten and thus an important constituent of the diet for people with allergies.

Rice really packs a punch.


51

All about rice

In the region, for the region

In 2016, a worldwide record crop of 750 million tonnes of paddy was achieved. This corresponds to just under 498 million tonnes of processed rice. Apart from a few large producers, it is mainly the 140 million small farmers mostly in developing countries that make a living growing rice. Not even 4 % of the world’s harvest comes from developed countries.

Although rice is now grown in over 100 countries on all continents except Antarctica, the majority (around 90 %) comes from Southeast Asia. The leading pro-ducing countries are China, India, and Indonesia. The bulk of the harvest, however, ends up in the bowls of the countries it is produced in – only 8 % enters into international trade.

The two largest rice exporters, each with about 10 million tonnes, are now India and Thailand. Other major suppliers for the world market are Vietnam, Pakistan, and the USA. Risotto rice from Italy is espe-cially popular in Europe. A large portion of this rice comes from the Po Valley, which is one of the most northern rice growing areas and makes up around one third of European rice production.

Rice is mainly eaten where it’s produced.


53

All about rice

Bühler and rice

Opened in 2013, the Bühler Competence Centre in Bangalore, India, covers an impressive space of 32,000 square meters across 7 floors. The location was chosen as the Centre of Competence for rice as India is not only one of the largest producers, but also consumers of rice. The strategic location also means that regional customers and prospects can conduct trials of an application and need not travel far.

The center is a dedicated training hub, providing courses suitable for all levels, including mill pro-prietors, managers, and operators. Applications mills provide customers with the ability to trial their products and have appropriate training. Rice research and development work is also conducted here, focusing on product development and process im-provements. Customers can thereby enhance their skills and acquire new operating techniques, without the need for expensive travelling costs.

Bühler has a presence in over 140 countries world-wide and has centers of competence in every major rice producing region. With its local offices Bühler provides an unparalleled level of service and exper-tise specific to each country’s needs, according to Bühler’s motto “In the region, for the region.”

Dedicated application centers to explore the world of rice.


55

Phung Hoang, Vietnam: Factor 5 58

Veronesi, Italy: Two like-minded friends 64

Bocar, Mexico: Number 140 is ready 70

Fine Chemicals, Nigeria: Sharing the lunch box 76



57


Phung Hoang, Vietnam: Bich Tuyen & Luong Trung Hieu

Factor 5

Bich Tuyen and Luong Trung Hieu are united in their vision of leading their country into a better future.

Things must happen very quickly now. It’s the end of 2014, and TET, the Vietnamese New Year’s Festival, is just around the corner. Bich Tuyen, a spirited 37-year-old business woman and owner of Phung Hoang Rice Mills, urges workers to speed up. Just a few days ago, she made a quick decision: She wanted to double her capacity to 400 tonnes a day. For this, she ordered new optical sorters, automatic bagging machines, and 30 new 100-tonne storage bins from Bühler. Half the factory has to be dismantled and installed again to accommodate the expansion. The clock is ticking. In less than three months, the plant is scheduled to be up and run-ning at full capacity again. Why the urgency? TET is more than just a religious festival; it also marks a change in time in the business world. During three long days, so the custom says, everything must be shut down; after that, business restarts with full power. “The best business is done just after TET. If we fail to start up the plant by then, we will lag behind during the whole business year,” says Bich Tuyen.

Partnership with customersBühler Annual Report 2016

59

“I want Vietnam to produce the best rice in the world.”Bich Tuyen, owner of Phung Hoang Rice Mills

The optical sorter Sortex S scans 20 million rice kernels a minute.

Entering the export businessThat’s one thing she doesn’t want to risk, come what may. For three years now, she has partnered with Bühler on the fast lane, modernizing and expanding her rice business at turbo-charged speed. With the new plant and the higher processing capacity, she plans at last to enter the export business on a big scale. She feels that her chance is coming, and 2016 is to bring her the first breakthrough.

This drive, this determination, this will to be successful: This is Bich Tuyen.

She is a woman from the Mekong Del-ta, and just like anyone else, she is the product of her home, of its landscape, climate, and culture. In her case, this means the endless terraced fields, the never-ending rich green colors, heat,

fertile fields – and: rice. Rice every- where. The region is the largest area in which this staple food is grown in Viet-nam; it is the southern breadbasket of the country with 25 million tonnes har-vested here every year. More than 1.6 million rice farmers cultivate Vietnam’s fields, 70 % of the country’s population work in agriculture. This is where Bich Tuyen grew up. Rice creates jobs. Rice creates life. And, rice was to become her life.

Bich Tuyen’s family, who live in the vil- lage of An Giang near the Cambodian border, operate a small-scale rice mill of the traditional type. “I grew up with rice,” she says. As she grew older, she gradually became a part of the family business, which she joined in 2005. The more she immersed herself in this discipline and became increasingly

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professional in it, the more the certain-ty she felt that this was her vocation: “I want Vietnam to produce the best rice in the world.” This is her vision. Vietnam today ranks third among the world’s rice exporters, just behind Thailand. But the image of the produce exported is not what it should be, mainly because of outdated technology which doesn’t take food safety needs into account and doesn’t allow rice pro-ducers to control their mills to achieve the highest efficiency and the best and consistent rice quality. Quality brand for VietnamBich Tuyen is painfully aware of this all – and she is determined to break the cy-cle. The opportunity she always waited for presented itself a mere two years into business. She decided on August 28, 2007, to set up her Phung Hoang com-

pany with the aim of building a quality brand for Vietnam and Southeast Asia. A brand that not only stands for top products, but also for ecological and social sustainability. “What is important to me is to ensure that we harmonize our business success with social needs and that we make a positive contribution to the development of our society,” says Bich Tuyen. As she sees it, rice is not only business, rice means life. And she wants a good life, not just for her-self, but for her employees.

In this, she is not alone. She has fellow fighters. One of them is Luong Trung Hieu, 40. He, too, is dreaming of lead-ing his country into a better future with rice. “Prime rice quality is not possible without prime rice processing technology,” he says. That is precisely what he intends to develop and build. After

graduating in mechanical engineering from Ho Chi Minh University, he too entered the rice business. He familiar- ized himself with the import and export business, installing rice mills in Indone-sia, the Philippines, and Cambodia. In 2009, he joined forces with a few col-leagues to set up his own company, Farmila Vietnam Ltd., which he incor-porated in 2013 in a joint venture with Bühler. The partners plan to align the rice solutions offered by Bühler with the needs of the local market.

It was just a matter of time before Bich Tuyen and Luong Trung Hieu met, which happened in 2013. They understood each other right away. “We noticed from the start that we share the same vision,” they say in unison. In Luong Trung Hieu, the rice lady finds her technical alter ego. And with the whole global Bühler organization backing him, Luong Trung Hieu can offer her something that no one else in the market can: a top-level integral solution ranging from reception and handling of the still moist, unhull- ed, and often dirty paddy rice, to cleaning, drying, hulling, polishing, sorting, and packing.

Bühler is serious about customer proxi-mity: In January 2013, the Group ope-ned its own location for rice technology and processing solutions in Vietnam.

It’s much harder to process rice than it is to process corn or wheat, requiring regional roots that match the existing regional peculiarities. Whereas all the other grain varieties are similar in the way they are grown, harvested, and ground into flour, the cultivation of rice has myriad facets. In particular, the rice kernel is not allowed to break despite the tough and efficient mechani-cal process it undergoes. Broken rice is of inferior quality and around 35 % less valuable. Bühler knows how to develop gentle processes and equipment that generate up to 5 % less broken kernels with its complete solution. That is pure money, and it does not take long to convince Bich Tuyen of this.

The self-made woman has confidence, ordering the first hullers in 2013 which remove the silver husk from the rice after threshing. Bich Tuyen enthuses: “From the very first day of our col-


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“Prime rice quality is not possible without

prime rice processing technology.”

Luong Trung Hieu, General Manager Bühler Vietnam

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“From the very first day of our collabora-tion, Bühler always delivered what they had promised.”Bich Tuyen, owner of Phung Hoang Rice Mills

laboration, Bühler always delivered what they had promised.” If issues occasionally cropped up in the pro-jects, the partners spoke openly with one another to clear away the problems. “We are honest in dealing with each other,” emphasizes Luong Trung Hieu. Thus, the hullers paved the way for the first large-scale project: a completely new rice reprocessing system equip-ped with state-of-the-art process tech-nologies and machinery. It all began on April 2014. Then, within record time, the partners set up the most advanced plant in Vietnam with an input capacity of 500 tonnes per day, 20 % better energy efficiency, maximum up- time, and top automation. Due to the two successful projects, Bich Tuyen start-ed to think in bigger terms coming up with an order for another new rice mill plant which again uses the complete solution from Bühler to process from wet paddy to rice to complete bagged rice for export with an input capacity of 400 tonnes per day.

Optical sorting ensures prime qualityThe equipment that stands out in this facility are the six Sortex S sorting lines. Each single rice kernel is optically as-sessed in the process, with the disco-lored or damaged ones removed. The Sortex S is by far the most advanced optical sorter in the marketplace, the Rolls-Royce among competitors. The machine scans 20 million kernels a minute with 250 data points and an outstanding hit rate. “This has enabled us to reach a quality level unknown up to now in Vietnam,” says a beaming Bich Tuyen. Because contaminated kernels are systematically removed from the food chain, Phung Hoang can now guarantee a top food safety stan-dard − a first in the Vietnamese market.

It’s early February 2016, and the pres-sure is on to move fast as TET, the New Year’s festival, is swiftly approaching. “Right from the beginning, we were aware of the fact that we were facing a ‘mission impossible’,” remembers

Luong Trung Hieu. But he, too, shows determination and makes an unusual decision: Every able-bodied individual in the office able to carry, bolt, cut, weld, and join things, is called on to lend a hand over the next few days at the construction site. Sales staff, design- ers, engineers, research and develop-ment people, and accountants worked hand in hand with the construction site specialists. “That impressed us tre-mendously,” says Bich Tuyen.

Together, the partners accomplish what seemed impossible: Before Tân Niên, the first day of TET, all the work was completed. Just after the New Year’s festival, Bich Tuyen goes into the export offensive, delivering 1,000 ton-nes of top-quality rice to Dubai.

What’s next for this enter- prising business woman? With the combination of highest quality, food safety and production efficiency, Phung Hoang has gained a leading market position in Vietnam. Inspired by this success, Bich Tuyen gets ready for making the next big step forward plan-ning to increase the plant’s capacity by the factor of five! “Our joint journey has just started,” smiles Bich Tuyen.


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Veronesi, Italy: Gianfranco Pandolfo & Giuseppe Baldrighi

Two like-minded friends

Curious, eager to learn, capable of changing: Gianfranco Pandolfo and Giuseppe Baldrighi are linked not only through their lifelong friendship, but also their shared urge to be successful.

When young Giuseppe Baldrighi was travelling happily through Lombardy in May 1987 after completing his training as an industrial electronics engineer, he happened to pass by a large construction site. Veronesi, a meat and sausage processor and producer, was building a new animal feed manufacturing facility. A large sign posted on the side of the road said the company was seeking new employees. Baldrighi immediately felt that this concerned him. He did not hesitate to write an application for a job and was soon invited for an interview – and was awarded the job after a short talk. It took them only a short time to agree, him and Gianfranco Pandolfo, the plant manager.

Despite the difference in age, one thing became immediately clear: Two like-minded friends had just met. For all their Lom-bard cordiality and relaxed friendliness, the two are also dynamic, ambitious, and quality freaks. “We function according to the principle that we’ll do it even better tomorrow,” says 60-year-old Pandolfo. This was the start of a friendship that has lasted to this day – and the continuation of the success story of Veronesi, to which both have contributed their share.


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Bühler technology places Veronesi at the vanguard of the feed industry.

With his attitude of “continuously striv-ing to improve,” the expert Pandolfo, who at that point of time had been with Veronesi for ten years, became the mentor of young Baldrighi. It was not long before he detected his quali-ties and fostered his development wher- ever he could. Together, with the help of a very special team, they transformed the factory in Cremona into a “best-in-class” plant, with Pandolfo showing Baldrighi how to achieve knowledge transfer, continuous improvement, and team work. Together they optimize the quality and the plant productivity, cre-ating the foundations for future evo-lution towards just-in-time philosophy (JIT) and the complete automation and informatization of various processes. Because both are successful, they

can embark on a career at Veronesi. Pandolfo is soon summoned back to the headquarters in Verona in order to fine-tune the production proces-ses of all factories on the basis of new IT systems to just-in-time production. Finally, in the mid-nineties, he is appointed head of Verona plant and subsequently head of all the factories of Veronesi – and has remained so to this day. At this point of time, Baldrighi helps build a new plant in Cuneo and is finally appointed as factory manager, for at that time the seventh production site.

Emphasis on quality control, automation, and traceabilityIt's people like these who can make their companies succeed. The people who perfectly fulfill the high quality de-

mands. For Veronesi’s needs were, and still are, anything but run-of-the-mill. “Our goal is not just to produce feed, but to bring healthy and tasty meat to the consumer,” says Pandolfo.

Almost 60 years ago, the Italian com-pany started producing high-quality animal feed, and is now doing so in seven plants across Italy. It places great emphasis on feed safety and therefore also on quality control, automation, and traceability. To achieve its ambitious goals, it has partnered with Bühler for 50 years now. One of its targets is to reach a zero cross-contamination level. Cross-contamination is caused by the presence of substances which are not part of the feed, but have been carried over from previously processed

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batches. Therefore, all process steps must be linked with the most advan-ced mechanical and pneumatic con-veying systems in order to minimize cross-contamination. But also the control of quality in all these conveying and processing steps during feed pro-duction is essential.

Online quality monitoring, and with it total traceability, is crucial nowadays. For instance, in case of a recall due to salmonella contamination, the feed miller must be able to backtrack every single step of the production process and trace every batch back to its ori-gin. “In almost endless discussions, we worked on finding ways and means to achieve this with the most complete process automation and networking

level possible,” remembers Baldrighi: “Veronesi is by far my most demanding customer,” he says.

Customer? Yes indeed, customer! For whereas the working life of Pandolfo continues to be centered on Veronesi, Baldrighi decided in 2001 to switch sides. Bühler had asked him whether he would join the company. The first time Baldrighi asked his supervisor, he (and Bühler) met with refusal; there was simply no alternative. The next attempt two years later was successful. After making the most of his engineering talents, he was tempted by the mission to be in direct contact with Italian feed customers and to make them happy by providing top-notch service. The next challenge came a mere four years

later: Baldrighi was offered the chance to switch from the engineering to the commercial side and to take charge of Feed, Oil, and Extrusion sales – which brought him back to work with his former employer. Nothing could have been better for all the parties. “With Giuseppe on Bühler’s side, we had gained someone who knew our needs intimately from his own experience and could thus offer us the best pos-sible advice,” says Pandolfo. And, on the personal side, he came into closer contact with his friend again.

40,000 measuring pointsensure qualityTogether, they continued to improve the quality system – based on a particular-ly pure version of the lean and flexible

“We worked hard to achieve the most complete

process automation and networking level.”

Giuseppe Baldrighi, Sales Manager Bühler


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automation system. Veronesi and Bühler have been working on this automation system for some 40 years now, steadily refining and perfecting it. Today, thousands of sensors measure a wide range of quality parameters such as temperature, pressure, time, weight or strength, feeding them into the system to allow online monitoring of all the pro-cess steps and parameters.

“Veronesi can inspect all the production operations in all our factories from a single centralized point, making sure that everything is running as planned,” says Baldrighi. At the same time, the control system allows integral and extremely efficient management of the entire production process. Several million data records are processed

every day, coming from around 40,000 measuring points in seven plants, with 30 ACOS servers forming the backbone. Should any important characteristics stray from the target values, this will immediately trigger alarm messages, which are escala-ted on the basis of clear criteria. “The people involved are continuously in- formed about quality and production, even through alerts, which are visible from my office on time,” says production manager Pandolfo.

Full control of the entire process chainThis enables the company to prove whenever required what has been processed and when it was processed along the entire process chain. Any-

one in a supermarket buying a pack-age of poultry meat or ham or a salami produced by Veronesi can retrace the process chain as far back as to the feed that has been fed to the individual chicken, hog, or cow and can see how production took place. “This places Veronesi at the vanguard of the feed industry,” says Baldrighi.

Modest as he is, his friend Gianfranco Pandolfo has no comment; but his smile shows that he in no way objects to this assessment.

“Tomorrow, we’ll do even better. We strive to

improve continuously.”Gianfranco Pandolfo,

Plant Manager Veronesi

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Veronesi is the biggest Italian feed producer, with seven plants across the country. The company’s headquarters are still in Verona, where founder Cavaliere del Lavoro Apollinare Veronesi built the first plant almost 60 years ago. A short time later, the company became a Bühler customer. Now, it runs one of the most advanced feed plants in Europe, especially from an automation point of view, using only state-of-the- art technology and equipment. The company is still family-owned.

Veronesi


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Bocar, Mexico: Alfredo Davila & Ueli Jordi

Number 140 is ready

Alfredo Davila and Ueli Jordi have been working in the automotive industry for years to increase the competitiveness of Bocar. As a Tier 1 supplier, the company must respond quickly and flexibly to ever new requirements for automobile manufacturers. A trusting cooperation and innovative solu-tions from Bühler help Bocar survive in this fiercely competitive market.

“We did well. Number 140 is ready,” says Alfredo Davila, Head of Processes at Bocar, to his neighbor. He is standing with his team in the giant Bocar factory hall, located at the gates of Saltillo in the Mexican state of Coahuila. At its highest point, the hall reaches 20 meters. Davila places his hands on his hips, stretches, and regards the most recent addition to his machinery with apprecia- tion: a Bühler die-casting machine from the Carat 220 series. Davila’s calm and kind gaze does not reveal the stresses of everyday life or the pressure from his customers, the car manufacturers. Before him, the Carat stands like a stoic giant. It is 130 tonnes heavy, 13 meters wide, 5 meters tall, and has a clamping force of 2,200 tonnes. Even under the harshest conditions it operates safely and reliably. Stairs lead to the heart of the machine: the closing unit, which will create body parts for a leading automobile manufacturer by the minute.


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“One partnership stands out in

particular: the one with Bühler.”

Alfredo Davila, Head of Processes at Bocar

A specially constructed vehicle trans-ports the liquid aluminum and pours it into the ladling furnace. The vehicle seems tiny next to the die-casting titan. The shimmering raw material flows from the tilted transport vessel and briefly transforms the production hall in a place of metamorphosis, whe-re liquid raw material is transfigured into any shape. The machine now closes and the melt is cast under high pressure with a loud bang in a die-cast mold within 50 milliseconds.

As the melt solidifies inside, the machine seems to pause. Davila holds his bre-ath. Time stands still. Finally, the closing unit opens and an industrial robot removes the newly created body part. A second robotic arm subsequently cleans the mold. The sprayed water evaporates in a hissing cloud of steam. But that is not all. The next cycle is lined up and the customer is in a rush. His production lines must never stop.

Ueli Jordi, Process Consultant at Bühler, stands beside Davila. He calm-ly watches the process. His decades of experience in die casting give him assurance and certainty of being able to solve any problem. Together with his partner and friend Alfredo Davila. Under their guidance, the new Carat die-casting machine was delivered to Mexico and installed. It is, however, by no means the first delivery.

Bocar has relied exclusively on die- casting machines from Bühler since 1958. And yet each delivery holds new challenges. The first, second, tenth, and this one as well, the 140th machine that Bühler has supplied to Bocar over nearly 60 years. Davila looks at Jordi. “Let’s celebrate,” he says. “We can be proud. The team did an outstanding job. We deserve a feast.”

Unique partnership since 1958In the beginning, there was one sin-gle machine. In 1958, Bühler delivered the first die-casting machine to Bocar, then still a small company in Mexico City founded by German immigrant Federico Baur. “A lot has happened since 1958,” says Davila. Bocar, the name made up of “Bombas” and “Carbonadores” – pumps and car-buretors – is now one of the leading

suppliers in the automotive industry in Mexico. The company supplies popular car brands around the world. Based on an idea, the founder created a company that now features 6,000 employees, 10 production sites throughout Mexico and development offices at the centers of the automotive industry: Detroit, Wolfsburg, and Yokohama.

Long-term relationships and stability form the company’s DNA, which is still owned by the Baur family. These values are essential to Bocar, and the company asks their suppliers also to adhere to them. “With the extremely high competitive pressure in the auto-motive industry, it is decisive to have strong relationships with partners. And one partnership in particular stands out: Bühler,” says Davila. “The pres-sure in the industry is high. We can’t afford to make any mistakes. Trust is very important. Trust in Bühler and in Ueli.” Jordi nods. He knows the condi-tions in the automotive industry all too well and values the trust of his long- standing partner.

Changes became necessaryUeli Jordi has worked for over 35 years in the die-casting industry, and since 2000, more and more for his customer Bocar. The former head of training at Bühler first started with conducting customer trainings at the Mexican com-pany. The ability to help Bocar improve its processes and increase producti-vity with their expertise is something that the Bocar management was well aware of. Consequently, Marcus Baur, the founder’s son and today’s Presi-dent, one day handed Jordi a list of 11 problems. “Can you help us?” he asked. Shortly thereafter, Jordi took over the key account management for Bocar.

At this time, Mexico had long since become an industrial nation. With the North American Free Trade Agreement (NAFTA), the country has access to the largest free trade area in the world. Mean- while, Mexico’s economy occupies the 14th place worldwide. Step by step, many international companies set up manufacturing sites in Mexico. GM, Ford, Chrysler, Volkswagen, Honda, Toyota, Nissan and many more, all relying on hecho en méxico. Along with the new manufacturers, the de-

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The latest addition to Bocar’s machinery: a Bühler die-casting machine Carat 220.

mands on the suppliers grew. This played into the hands of Bocar, for the company had always – with Bühler machines – focused on the highest quality in order to meet or exceed the tolerance limits of the original manufactu-rers. “With new customers, internatio-nal standards, and economic growth in Mexico, our situation changed significantly,” said Davila. “In terms of costs, we compete with suppliers from Asia, particularly from China. With regards to quality and delivery reliability, our customers demand the highest stan-dards and strictly penalize any devia-tion from the original drawings. And in order to keep our employees, we must also be a superior employer.” Some 50

years after the company’s founding, it became clear that Bocar had to funda-mentally revise its processes, in order to be successful in the market in the long term.

In close consultation, Davila and Jordi worked out a set of measures: The ob-jective was to sustainably increase the efficiency and thereby the productivity of the Bocar plants. At the same time, the high demands on quality and de-livery reliability were to be met. It was clear to both that they needed to build a powerful and well-trained team. Techni-cally, we were already up to date,” says Jordi. “But with regards to the proces-ses and collaboration in the factories,

there was still much to do. We needed to change our way of thinking.”

Therefore, Jordi’s great strength became the decisive factor: education and training. Davila is convinced that this was decisive for their success: “The training is intensive and takes several weeks, spread throughout one full year. We wanted to enhance the profile of the machine operators, thus giving support and recognition to those who ensure that the die-casting machines function properly every day. We also don’t call them operators anymore, but cell technicians in order to give the change a name.” With these measures, Bocar became more productive and compe-


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“Trust is very important. Trust in

Bühler, and in Ueli.”Alfredo Davila,

Head of Processes Bocar

titive. Productivity increased by 15 % over three years, which is equivalent to about two hours more operating time per machine. And the changes had also an impact on staff: Satisfaction increased with the cell technicians, and they stayed longer with the company. Through initial success and fruitful co-operation with the team in Mexico, Jor-di focused more and more on his work at Bocar. “In the beginning, I visited Alfredo’s team in Mexico perhaps four times a year. By 2016, this had turned into nine visits, usually for two weeks. And our cooperation became continually closer. I’m slowly becoming part of Bocar,” the longtime Bühler employee says and laughs, almost embarrassed. Since the beginning of the year, he has been 100 % responsible for the company after handing over all other mandates.

He is well-known in Saltillo as well as at the other sites and is warmly greeted by all sides. The staff at Bocar appreciate his experience and his persistent way of solving problems. And when he is not in Mexico, his internal clocks run in accordance with this North Amer- ican country. “My day starts a little later, but because of the time difference, it also lasts significantly longer. When I am in Switzerland, I maintain contact by teleconferencing daily with my part-ners, primarily Alfredo,” says Jordi. “For new developments, I am close to the action and can incorporate the latest

innovations from Bühler. We have been using 3D printing, for example, for very complex die-casting molds for nearly a decade.”

At the moment, teams are working to reduce the amount of cooling water from currently up to five liters per cycle to just a few milliliters. This will save considerably more than 1,000 liters per machine per day and is so economically and ecologically sensible that Jordi did not need much to convince his partner to take on the neces-sary development costs.

Davila, Jordi, and the core team at Bocar Saltillo celebrate the successful

commissioning of the new Carat as is customary for a Mexican family: with a barbecue outdoors. This marks the completion of a successful project. And no one questions whether and how things will continue. Because the new machine hall in Saltillo has only been filled halfway so far.

Bocar has planned further develop-ment and the necessary investments well in advance. Upcoming die-casting machines from Bühler have already been ordered. Jordi and Davila raise their glasses and toast one another. To the next project. To number 141. To a continued successful cooperation. As trusted partners.

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“We needed to change our way of thinking with regards to processes and collaboration.”Ueli Jordi, Process Consultant Bühler

Bocar The Bocar Group has around 6,000 employees and primarily serves the automotive industry. Key products include high-quality precision parts and complex assemblies made of pla-stic and aluminum for automotive appli-cations. The Group has ten production sites in Mexico and development offices in Germany, Japan, and the United States.


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Fine Chemicals, Nigeria: Rajeev Samant & Marco Lemmenmeier

Sharing the lunch box

This is the story of Rajeev Samant, Production Manager at Fine Chemicals, and Marco Lemmenmeier of Bühler, who became friends – and how they managed to turn the company into the Nigerian market leader in the field of liquid printing inks.

The convoy of cars lumbers across the gravel road. Rain has fallen in the night and the puddles slow down their advance. This does not appear to bother the drivers of the overfilled yellow taxis that are so typical of the streets of Lagos, the largest city in Nigeria and Africa: They simply continue to squeeze past on the left and right. The sellers posted along the road take advantage of the hour. The slow advance of the convoy gives them ample time to force their way between the vehicles and to peddle the wares that they are balancing on their heads – ranging from loaves of bread and windshield wipers to self-burned CDs.


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“If we plan to pro-duce prime products,

we need prime equipment.”

Rajeev Samant, Production Manager Fine Chemicals

Nigeria – this is Africa’s largest econ-omy with annual growth rates of 6 % and a gross domestic product of about 500 billion US dollars, on a par with Belgium. But 11 million people live in Belgium, and more than 180 million in Nigeria. For its prosperity, the country is dependent upon crude oil and its price. Yet despite the current reces- sion, Nigeria remains one of the hopes of the continent, with a growing middle class. And this also implies increasing consumer demands.

On and on the convoy moves, past goat slaughterhouses and bustling markets, until the driver suddenly turns off the road after well over an hour and the cars stop in front of a gate. A sign with white letters painted on a black background says “AVON.” This is the name of one of the partner companies of Bühler customer Fine Chemicals Ni-geria Ltd., which Marco Lemmenmeier, Technical Project Manager at Bühler, is visiting today. Today – April 29, 2014.

Out of another worldLemmenmeier is on an exploration trip and eager to know what is awaiting him. Just a few months ago, Fine Chemi- cals Production Manager Rajeev Samant went on an intelligence- gathering journey to the ChinaCoat trade show in China. Samant wanted to find out whether Bühler would be prepared to share his vision of turning Fine Chemicals into the Nigerian market and quality leader in

printing inks. At that time, the boom in the country encouraged him to set off on his trip. At that time, high- grade products still had to be imported. Until then, no domestic producer was able to meet the demand for quality inks, in particular for the more sophisticated processes.

Fine Chemicals was one of the many ink producers that you could not tell apart from their competitors, producing just a few tonnes of inks a day. Samant felt his moment had come and sought a technical counterpart. “If we plan to produce prime products, we need prime equipment,” says Samant.

He has been waiting impatiently for Lemmenmeier at the factory gate. The

two men understand each other im-mediately. Both of them want to move something. Both share the same vision; both are pragmatic; both are savvy engineers; both are receptive to inno-vations. And both have ties with India: one as an Indian expat in Nigeria, the other as a Swiss national who has lived and worked in India. This puts them at the same level right from the start.

After an initial tour of the factory, three things become absolutely clear to Lemmenmeier. First: This is a place where pioneering work must be done. The company’s process technologies and equipment are completely out of date, and everything is piecemeal. Almost 10 % of the raw material evapo-rates from open tanks and barrels in

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With Bühler equipment, Fine Chemicals now plans to export its high-quality goods.

the tropical climate of Nigeria. For the company, this is a significant financial loss, and it is an enormous burden on the health of workers as well as on the environment.

Process control here still means that someone pours solvents or pigments out of open buckets into the ink mix if the color intensity or viscosity are not correct. Second, it does not take the Bühler man long to realize that pros are at work here after all.

“Samant has a knack for inks, for engineering matters – he knows the fundamentals down to the very last detail,” says Lemmenmeier. “After all, this is not the first production sys-tem that he has built.” And third, he is

relieved to find that the existing building structure is sufficient to accommodate the new production line. That makes the whole project much easier to plan and implement.

Full commitmentMarco Lemmenmeier’s exploration trip ends as a full success – the go-ahead has been given. A quotation is needed. A pioneering project emerges for the country, which translates into a con-tract worth three million Swiss francs for Bühler.

A new production system emerges under high pressure in the form of a 3D digital plant model. The Bühler engineers design a semi-automatic production line tailored to the con-

ditions prevailing in Nigeria and the company’s operating crews: “A fully automatic process control sys-tem would overtax us,” says Samant.

Bühler designs and organizes a single- source wet-grinding line for its custo-mer, with a bead mill at its heart. The complexity involved is vexing. The components are imported from Europe, China, and India.

“Planning everything so that all the in-dividual components will arrive on site when they are need-ed is no trivial mat-ter,” says Lemmenmeier. But everyone is fully committed and pulling in the same direction. “A lot of passion has gone into this project,” agree Samant and Lemmenmeier.


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“Together with Bühler, we have transformed our vision into a reality and are now the market leaders in Nigeria.”Rajeev Samant, Production Manager

“A lot of passion has gone into this

project.”Marco Lemmenmeier,

Technical Project Manager Bühler

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Fine Chemicals

Fine Chemicals, the Nigerian market leader in the field of liquid printing inks, is active in numerous business areas such as printing inks, textile dyes, printing cylinders, cast polypropylene films, metallized coatings, and laminating adhesives. Its colors are omnipresent in everyday life of Africa’s largest eco-nomy: in printed magazines, food and consumables packaging, soaps, or even construction materials.

Drinking tea togetherIt takes one year and a half to complete the rebuild. One year and a half during which the partners get to know each other more closely. This starts with the customer’s courtesy of always meeting the Bühler people at the airport and ac-companying them. “Whenever we were in the country over the weekend, we were invited to the homes of our col-leagues,” remembers Lemmenmeier.

During the installation phase, the smooth relationship between Samant and Lemmenmeier develops into true friendship. During breaks, the project partners drink chai and also lunch to-gether. Lemmenmeier’s favorite dish: curry with roti – hard-boiled eggs in a hot sauce refined with Indian spices that is scooped with flat bread.

Samant even shares the lunch box from his home with Lemmenmeier. “This is truly great hospitality on the part of the customer,” says Lemmenmeier.

But then, just before project completion, a low point: Things have stop-ped moving on the construction site. Installation work had been advancing sluggishly for weeks. “Fine Chemicals wanted to start production as soon as possible, but was behind schedule with various jobs,” Lemmenmeier remem-bers. He pulls the emergency brake, withdraws the start-up team, and sets up an action list featuring all the unsett-led items that must be finalized before start-up.

Bühler withdraws for 30 days. “Even if it was a tough thing to do, it was in hind-sight the right decision that opened everyone’s eyes,” says Lemmenmeier today. The partners agree upon the next steps, especially that the new white inks production line is to be started up first. Samant is glad to be assisted by the realistic Swiss. He and his team make every effort, processing the task list one item at a time. This allows the plant to go on stream within the time agreed. On February 17, 2016, the first six tonnes of white high-quality printing ink flow into the barrels that the custo-mers of Fine Chemicals are already waiting for.

Thus, a new era of printing ink manu-facture is ushered in not only at Fine Chemicals, but also in the country as a whole and even the continent, for this is Africa’s very first semi-automatic print-ing ink production line of its kind. And it delivers right from the start what Bühler has promised. The output of Fine Che-micals has increased about twofold to some 10 tonnes, and the quality of the ink is outstanding and meets international standards – and also the evapo-ration of the hard-to-import solvents is a thing of the past.

“Together with Bühler, we have trans-formed our vision into reality and are now the market leaders in Nigeria,” says Samant – and is already getting ready for the next big leap. Thanks to its enhanced process expertise, Fine Chemicals is now expanding its range of action, for instance by launching new formulations for cardboard prin-ting applications. “With Bühler, we can further develop our business,” says Samant. And this is true not only in terms of the product portfolio, but also geographically speaking. Fine Che-micals now plans to enter the international market by exporting its high- quality goods, with neighboring coun-tries such as Ghana and Togo right at the top of the list.


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Overview 84

Ecological sustainability 90

Social sustainability 92

Economic sustainability 94

GRI G4 Content Index 96

Sustainability


83

Sustainability

What we did for the sustainability of our customers

Enabled more sustainable food processingWe have developed solutions that use less energy to process food and feature modern hygienic design. We have sponsored several academic research projects, and cofounded a new professorship on sustainable food processing at the Swiss Federal Institute of Technology.

Started the digital revolution in BühlerWith a new cloud platform, sensor technologies, partners, and data analytics competences, we are prepared to take our customers into the digital revolution through the Internet of Things.

Accelerated innovationWe have tapped again into the strength of our employees’ new business ideas through our Innovation Challenge 2016, and stepped up as a founding partner of the start-up accelerator MassChallenge Switzerland.

Renewed commitment to business conduct

We have once again revised and strenghtened our Code of Conduct, and extended it to all our suppliers and business partners.

Reduced energy consumption in die casting and coatingWe implemented automation functions for the optimal adjustment of energy in the operation of die- casting equipment and in ophthalmic optics coating machines. We have strenghtened academic partnership for the optimization of electrode slurry production for lithium-ion batteries.

customers trained in food and feed safety

200

Continuously focused on

occupational health and safety

Our employees across all functions have been trained in our principles

and measures for occupational health and safety. We aim for zero accidents at our own and at customers’ sites.

84

What we did for the sustainability of our operations

77.1

EnergyElectricity

Energy source:

44.1

2015 2016

36.6

Fossil energy sources

26.1

2015 2016

23.4

Renewable energy sources

2.6

2015 2016

2.5

– 15.7 %

2.92.9

20162015

Numbers of work-related injuries

Tonnes per 1,000 productive hours

Total waste

3,178 2016

– 14.5 %

Per 100 FTE

m3 per 1,000

productive hours

89.5

Total water usage

2016

+ 6.4 %

Employees trained in health and safety

Employees trained in food and feed safety

Employees trained in sustainability, nutrition, and IoT

Tonnes of CO2 equivalents

63,800

emissions

2016

– 15.4 %CO2

6,063

1,074

700

GJ per 1,000 productive hours


85

Sustainability

SustainabilityAs a Swiss-based family-owned company, we are particularly committed to sustainability.

As the United Nations Climate Change Conference in Paris showed, fighting global warming is one of the most pressing tasks of our time. By 2050, the world population will have grown to nine billion people. Thanks to economic growth and social progress, poverty is likely to decrease. However, this prospect is challenged by the changes in the climate pat-terns and their potentially disruptive effects on food supply, water resources, ecosystems, and human health.

The emissions of greenhouse gases (GHGs) are recognized as being the cause behind climate change. Food waste and the consumption of fossil fuels for transportation and con-ditioning of buildings are among the major contributors of GHG emissions.

The processes and plants developed by Bühler transform thousands of tonnes of grain every day into food, coat count-less square meters of architectural glass with heat-insulating films, cast a huge amount of lightweight construction com-ponents for the automotive industry and lithium-ion batteries for electric cars: As a global leader in technology, Bühler is responsible for developing solutions that enable clients to be

as efficient as possible with their resources. In this way, not only does Bühler create economic value for its clients, but it also significantly contributes to improve the environmental performance of their products, thereby reducing the global production of GHG.

Sustainability is Bühler’s central business principle. The com-pany committed itself in the Bühler2020 strategy to provide a significant and measurable contribution for a sustainable society. By 2020, Bühler wants to reduce energy consump-tion and waste at our customers’ sites by 30 %. This goal cannot be achieved only by optimizing existing processes. The manufacturing processes for food and materials will have to be completely reconsidered. For this, Bühler sets focus on three strategic areas of innovation:

° Balanced nutrition ° Food and feed safety° Resource efficiency

Bühler is also highly committed to improving its own sustain-ability performance and it reduced its environmental foot-print in 2016. Through the new Supplier Code of Conduct, Bühler’s suppliers and business partners have also been included in committing to become more sustainable.

Sustainability is a continual process. With clearly defined and measurable goals, Bühler can work towards improving quality of life and the environment step by step.

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Balanced nutritionOne of the greatest challenges in feeding the global popu-lation is the looming protein gap. By 2050, we will require 265 million additional tonnes of proteins. It will be even more if – as expected – meat consumption rises by as much as 44 % due to the higher standard of living in the emerging countries. This implies that we must change our eating habits to a more plant-based diet because the production of animal proteins requires large amounts of resources and is thus not sustainable. Cattle require about 20 kilograms of feed and 16,000 liters of water to build 1 kilogram of body weight. Moreover, the 1.3 billion plus head of cattle in the world emit large amounts of methane – an extremely aggressive greenhouse gas.

One promising approach to intensify the utilization of vegetable proteins for human nutrition are pulses: This gluten-free, satiating crop boasts a high content of pro-teins and dietary fiber and is becoming increasingly popular also in North America and Europe. Bühler enables its customers to make innovative products on the basis of pulses such as extruded meat substitutes, nutritious pasta based on peas or lentils, or healthy snack foods. They can thereby successfully differentiate themselves in the mar-ketplace and seize business opportunities as they emerge.

New business opportunities are also created in the area of alternative proteins such as insects and algae. Both are extremely efficient protein producers. Insects for instance can recycle as much as 70 % of nutrients from organic waste and require very little space. In the next few years, insects are likely to become more significant in the pro-duction of sustainable feeds in areas such as aquaculture. In the medium term, they will also play a role in human nu-trition. Bühler is engaged with several research institutes and insect processing companies to develop the leading processing solutions for insects on an industrial scale.

Food and feed safetyOne important area of activity of Bühler is food and feed safety across the value chain. It starts with safeguarding the value of raw materials in post-harvest handling to avoid the introduction of hazards such as chemical contaminants. For instance mycotoxins, which are produced by fungal mold that grows on food crops, pose a severe threat to humans and animals.

The Food and Agriculture Organization (FAO) of the United Nations estimates that 25 % of crops are contaminated, and climate change is increasing the prevalence of aflatoxin, one of the most poisonous mycotoxins. Bühler developed compressive solutions to minimize the burden of aflatoxin in cereal grains. Besides high-capacity drying to stabilize grain after harvest to prevent mold growth, the solution encom-passes grain cleaning to eliminate the highly contaminated grain fractions by mechanical cleaning and optical sorting at an early stage from the value chain. Valuable data on the performance of grain cleaning solutions could be generated in large-scale field tests in collaboration with experts from the European initiative MycoKey.

The high incidence of food-borne illness by harmful bacteria and the increasing number of food recalls is a global chal-lenge. Food manufacturers have to implement preventive measures to protect end-consumers from microbial hazards. Bühler solutions encompass a number of thermal proces-ses like steaming, roasting, or extruding that contribute to inactivate bacteria. Bühler’s process control, monitoring, and data storage solutions are key enablers for the validation of thermal processes for microbial inactivation as dictated by legal requirements. At the same time, Bühler is developing the innovative application for gentle non-thermal microbial inactivation of food raw materials.

Resourceefficiency

Food and feed safety

Balanced nutrition

30 % lesswaste and energy


87

Sustainability

Alarming spread of antimicrobial resistancesThe fact that two thirds of antibiotics are used in livestock production is contributing to an alarming spread of anti-microbial resistances (AMR). In 2016, the FAO launched an urgent call for action to reduce farm-driven AMR as part of the sustainable development goals. Bühler addresses this challenge with its comprehensive approach to ensure the safety of feed to support animal health across the value chain. One element is the reliable and efficient inactivation of bacteria in the feed pelleting process in combination with advanced process and product moisture control. Like- wise the solutions for reduction of mycotoxins in feed ma-terials are crucial to protect animal health and to reduce the necessity of antibiotics.

Last, but not least, hygienic design plays a key role in achieving higher levels of feed and food safety. For ex-ample, the new Sortex F optical sorter for frozen fruits and vegetables has been designed to the guidelines of the European Hygienic Engineering & Design Group (EHEDG). Its simple and rugged design allows efficient wet cleaning to reduce the risk of microbial contamination. The Diorit roller mill, too, offers maximum safety, thanks to its stain-less steel components that are in contact with the product and a design that ensure a homogenous product flow. Hygienic design not only reduces the risk of contamination. Because it enables plant and equipment to be cleaned with greater ease and within a shorter time, downtimes are shorter and productivity is higher.

Gains in resource efficiencyCore to Bühler’s sustainability strategy is delivering a higher level of energy efficiency. The company has therefore set itself the target to slash the energy requirement at customer sites by 30 % by the year 2020. Here it becomes evident that ecological sustainability and economic benefits are closely related: Because energy costs in the processing industry may account for as much as 10 % of the total operating cost, lower energy consumption trims the total cost and thereby improves the margin for the operating company. The specialists at Bühler have the know-how required to design grinding, extrusion, die-casting, or coating processes so that they will always be within the optimal range and thus offer high energy efficiency. Retrofit packages, which for example allow the control systems of old plants to be updated, result in significant energy savings.

Finally, innovating individual units, as well as complete solutions can bring a significant impact. In the processing industry the generation of process heat accounts for about 60 % of total energy consumption. In pasta production, the drying process is energy-intensive. With the Bühler Ecother-matik long-goods pasta dryer, energy consumption is re-duced by 40 % thanks to its special heat exchanger design. And the Ceres breakfast cereals dryer is designed to ensure that heat will enter the product more quickly, thus reducing the drying time. Mechanical energy is also a major factor. If motors of the best efficiency class were always applied, this would allow 2,800 terawatt-hours of electric power to be saved and 1.8 billion tonnes of GHG emissions to be avoided every year on a global scale. By using reluctance motors, Bühler has been able to slash the electric power requirement in an animal feed plant by 50 %.

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Reporting along the guidelines of the Global Reporting Initiative G4

Ecological Social Economic

Food security, safety, and nutrition

Health and safety Long-term profitability

Resource efficiency Culture of continuouslearning

Corporate governance

Environmental footprintof our sites

Fair and equal treatment Contribution to localeconomies

Bühler materiality aspects

To report accurately on sustainability, it is necessary to set measurable performance indicators and define a transparent evaluation method to measure and compare the yearly progress. Bühler has aligned the sustainability report with the requirements of the Global Reporting Initiative (G4), which is the leading international standard. In particular, Bühler’s re-porting is adapted from the core option of the GRI guidelines.

Our sustainability reporting has been expanded continually since 2013. At present, the 17 major Bühler sites out of a total of 25 sites are reporting on 39 key performance indicators (KPIs). The reporting sites account for 92 % of all productive hours.

In 2016, Bühler has reviewed all sustainability KPIs and aligned them with the Bühler2020 strategy. The year 2015 forms the baseline for the performance evaluation by 2020.

Materiality analysisBühler’s stakeholders are its customers, employees, sup-pliers, and other business partners, academia, the commu-nities in which Bühler operates, the regulatory authorities, governments, non-governmental organizations, as well as the environment.

Bühler fosters a continuing exchange with its stakeholders regarding all aspects of sustainability. These stakeholders were included when the most important materiality aspects were identified (see table below). The materiality aspects are constantly being revised and upgraded to reflect the market conditions and the changing priorities of the stakeholders.


89

Sustainability

Ecological sustainability

Notes Materiality aspect Our commitment Sustainability goals Key performance indicator (KPI) GRI G4- related KPI

Target 2020

Baseline 2015

Actual 2016

01 Food security, safety, and nutrition We set the standards for the reduction of food losses and for safe and healthy foods.

We continuously improve our solutions for safe and healthy foods.

Percentage of food-relevant R & D projects with focus to improve food safety. G4-PR1 50 % 28 % 29 %

Number of employees who received training in food safety since 2013. Additional (related to G4-PR1)

3,000 498 1,572

Percentage of food-relevant R & D projects with focus to improve nutrition. Additional (related to G4-PR1)

20 % 8 % 10 %

02 Resource efficiency We set the standards for resource- efficient solutions.

We continuously improve our solutions for resource efficiency.

Percentage of R & D projects with focus to improve energy efficiency per tonne of end product or finished piece.

Additional (related to G4-EN6, G4-EN7, G4-EN27)

70 % 24 % 29 %

Percentage of R & D projects with focus to improve product yield. G4-EN27 50 % 22 % 29 %

03 Environmental footprint of our sites We reduce the environmental footprint of our sites worldwide.

We reduce the energy and water consumption as well as CO2 emissions and waste.

Energy consumption relative to 1,000 productive hours, GJ/1,000h. G4-EN3/EN6 30 % reduction to baseline

12.8 10.8

CO2 equivalents relative to 1,000 productive hours, GJ/1,000h. G4-EN15 30 % reduction to baseline

91.5 77.1

Water consumption relative to 1000 productive hours, m3/1,000h. G4-EN8/EN10 30 % reduction to baseline

84.1 89.5

Amount of waste relative to 1,000 productive hours, tonne/1,000h. G4-EN23 30 % reduction to baseline

3,715 3,178

Amount of hazardous waste relative to 1,000 productive hours, tonne/1,000h. G4-EN23 30 % reduction to baseline

246 151

Number of significant fines for non-compliance with environmental laws. G4-EN29 0 0 0

We ensure the environmental compliance in our supply chain.

Percentage of top suppliers that have signed the Bühler Supplier Code of Conduct or have an own equivalent Code of Conduct.

G4-EN32 100 % 0 Roll-out ongoing

01 Drying effectively at high capacityUp to 40 % less thermal energy, 20 % less cooling energy and 10 % less energy consumption: The Bühler Ecothermatik long-cut pasta dryer combines energy efficiency and the best pasta product quality – and still takes up less room than conventional systems. Because energy costs add up to the total manufacturing costs of long goods such as spaghetti, the Ecothermatik also reduces the production costs.

The first Bühler Ecothermatik dryer was introduced in 2012 for capacities of 1,000 to 2,000 kg per hour. In 2016, a new, high-capacity version for processing 3,500 to 5,500 kg per hour was introduced. Produc- tion capacities of this magnitude are necessary for sustainable success in the market. The multi-stage configuration of the Ecothermatik systems combined with the shorter duration of drying allows to reduce the space requirements by up to 16 % in comparison to conventional systems.

02 A revolution in weighing With Tubex, Bühler launched a new generation of scales, which combines precision with the highest food security and great energy efficiency.

Instead of pneumatic cylinders, Tubex uses a new electro-mechanical drive concept. Supercapacitors store energy between the drive cycles and deliver power for the start-up. It is hugely energy efficient. The continuous running costs are 95 % lower than in conventional weighing scales.

Generous radii in the interior as well as contact materials made of stainless steel reduce the risk of product buildup or cross-contamination. Because there is no need for filter ma-terials or false air openings, the time required to clean is re-duced. This has the effect of reducing maintenance costs and total costs.

90


Target 2020

Baseline 2015

Actual 2016

01 Food security, safety, and nutrition We set the standards for the reduction of food losses and for safe and healthy foods.

We continuously improve our solutions for safe and healthy foods.

Percentage of food-relevant R & D projects with focus to improve food safety. G4-PR1 50 % 28 % 29 %

Number of employees who received training in food safety since 2013. Additional (related to G4-PR1)

3,000 498 1,572

Percentage of food-relevant R & D projects with focus to improve nutrition. Additional (related to G4-PR1)

20 % 8 % 10 %

02 Resource efficiency We set the standards for resource- efficient solutions.

We continuously improve our solutions for resource efficiency.

Percentage of R & D projects with focus to improve energy efficiency per tonne of end product or finished piece.

Additional (related to G4-EN6, G4-EN7, G4-EN27)

70 % 24 % 29 %

Percentage of R & D projects with focus to improve product yield. G4-EN27 50 % 22 % 29 %

03 Environmental footprint of our sites We reduce the environmental footprint of our sites worldwide.

We reduce the energy and water consumption as well as CO2 emissions and waste.

Energy consumption relative to 1,000 productive hours, GJ/1,000h. G4-EN3/EN6 30 % reduction to baseline

12.8 10.8

CO2 equivalents relative to 1,000 productive hours, GJ/1,000h. G4-EN15 30 % reduction to baseline

91.5 77.1

Water consumption relative to 1000 productive hours, m3/1,000h. G4-EN8/EN10 30 % reduction to baseline

84.1 89.5

Amount of waste relative to 1,000 productive hours, tonne/1,000h. G4-EN23 30 % reduction to baseline

3,715 3,178

Amount of hazardous waste relative to 1,000 productive hours, tonne/1,000h. G4-EN23 30 % reduction to baseline

246 151

Number of significant fines for non-compliance with environmental laws. G4-EN29 0 0 0

We ensure the environmental compliance in our supply chain.

Percentage of top suppliers that have signed the Bühler Supplier Code of Conduct or have an own equivalent Code of Conduct.

G4-EN32 100 % 0 Roll-out ongoing

03 High-quality protein from insects and algaeBy 2050, we will need an additional 265 million tonnes of protein per year (plus 50 %) in order to feed the grow-ing global population. Insects and algae play an im-portant role as sustainable alternatives to meat and fish. They are rich in protein, grow quickly, do not require much space, and do not compete with farmland.

Industrial plants for processing large quantities of algae or insects first need to be developed. Bühler initiated various research projects in 2016 concerning this. With a partner in China the company developed a pilot plant to extract insect meal as a replacement for conventional fish meal and a high-quality fat similar to palm kernel oil. At the World Food System Center (ETH Zurich), Bühler cofinanced a new professorship for sustainable food production.


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Sustainability

Social sustainability


Target 2020

Baseline 2015

Actual 2016

01 Health and safety We strengthen our corporate culture of health and safety.

We want to increase the safety of our products and our manufacturing locations.

Percentage of R & D projects with focus to improve operator safety of our technologies.

G4-PR1 50 % 48 % 43 %

Number of recordable work-related injuries per 100 full-time employees. G4-LA6 0 2.9 2.9

We enhance the health and well-being of our employees worldwide.

Sickness-related absenteeism (days per employee and year). G4-LA6 0 2 3.8

02 Culture of continuous learning We pursue our corporate culture of continuous learning.

We enable our employees worldwide to increase their level of relevant competencies.

Percentage of all employees who undergo the Employee Performance Management (EPM) process every year.

G4-LA10 and G4-LA11

80 % 80 % 86 %

The number of training days per full-time employee per year. G4-LA9 2 2 2.3

Percentage of training costs over total personnel costs per local Learning Center. Additional (related to G4-LA4)

1% 1.2 % 1.9 %

We ensure the sustained availability of core competencies in a dynamic context.

Percentage of High Potentials among all employees. Additional 5 % 2.8 % 3.1%

The key positions for the senior functions at management level 1, 2 and 3 have been defined and potential successors have been determined.

Additional (related to G4-LA12)

100 % 100 % 80 %

We offer attractive job opportunities and development for young employees.

Percentage of all apprentices who successfully pass their final apprenticeship examinations.


80 % 77 % 71%

We want to promote our culture of innovation and entrepreneurship across all organizational levels.

Percentage of employees participating in the Bühler Innovation Challenge (every two years).

Additional 60 % 34 % 32 %

Percentage of implemented business ideas from the Bühler Innovation Challenge. Additional 5 % NA 2 %

We want to enhance the integration of our partners into our innovation process.

Percentage of projects run in collaboration with partners (suppliers, customers, universities).


03 Fair and equal treatment We strengthen our corporate culture of fair and equal treatment.

We foster a workplace free from any discrimination.

Percentage of female employees. G4-LA12 20 % 15 % 16 %

01 Health and safetyProtecting life and health is an extremely important task. Bühler’s aim is to achieve zero accidents for its own sites and for its clients’ sites. Employees, con-tract partners, and everyone involved in the value chain should be protected. In order to achieve this goal, Bühler has implemented a workplace safety management system that meets all the relevant legal requirements.

Bühler management focused on health and safety again in 2016. The workplace safety policies were tightened and revised. Additionally, a new training program was developed and rolled out. It consists of an e-learning base module for all employees, an advanced module specifically designed for project employees, and a project-related module that includes also the customer's employees at the custo-mer site. More than 6,000 employees have success-fully completed the e-learning course. More training courses are being implemented in several projects.

02 Partnership with NGOsPartners in Food Solutions (PFS) is a non-profit organization that supports African food producers and millers with techni-cal and economic knowledge and expertise thanks to the voluntary work of employees from the partner companies. PFS was founded in 2009 by General Mills and includes several leading companies from the global food industry as partners.

Bühler became a partner in 2013. Since then, employees supported projects in Africa. In October 2016, a meeting of the founding partners took place at Bühler in Uzwil. In addi-tion to projects already running, Bühler will support more local training courses for food processing.

Bühler also joined the organization “One Young World” in 2016. This non-profit organization brings together young leaders from all over the world in order to develop solutions for the most pressing challenges worldwide.

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Target 2020

Baseline 2015

Actual 2016

01 Health and safety We strengthen our corporate culture of health and safety.

We want to increase the safety of our products and our manufacturing locations.

Percentage of R & D projects with focus to improve operator safety of our technologies.

G4-PR1 50 % 48 % 43 %

Number of recordable work-related injuries per 100 full-time employees. G4-LA6 0 2.9 2.9

We enhance the health and well-being of our employees worldwide.

Sickness-related absenteeism (days per employee and year). G4-LA6 0 2 3.8

02 Culture of continuous learning We pursue our corporate culture of continuous learning.

We enable our employees worldwide to increase their level of relevant competencies.

Percentage of all employees who undergo the Employee Performance Management (EPM) process every year.

G4-LA10 and G4-LA11

80 % 80 % 86 %

The number of training days per full-time employee per year. G4-LA9 2 2 2.3

Percentage of training costs over total personnel costs per local Learning Center. Additional (related to G4-LA4)

1% 1.2 % 1.9 %

We ensure the sustained availability of core competencies in a dynamic context.

Percentage of High Potentials among all employees. Additional 5 % 2.8 % 3.1%

The key positions for the senior functions at management level 1, 2 and 3 have been defined and potential successors have been determined.


100 % 100 % 80 %

We offer attractive job opportunities and development for young employees.

Percentage of all apprentices who successfully pass their final apprenticeship examinations.


80 % 77 % 71%

We want to promote our culture of innovation and entrepreneurship across all organizational levels.

Percentage of employees participating in the Bühler Innovation Challenge (every two years).


Percentage of implemented business ideas from the Bühler Innovation Challenge. Additional 5 % NA 2 %

We want to enhance the integration of our partners into our innovation process.

Percentage of projects run in collaboration with partners (suppliers, customers, universities).


03 Fair and equal treatment We strengthen our corporate culture of fair and equal treatment.

We foster a workplace free from any discrimination.

Percentage of female employees. G4-LA12 20 % 15 % 16 %

03 Viva: for the health of our employeesDoes pasta make you fat? Is chocolate unhealthy? Bühler’s employee health program Viva placed its focus on a balanced diet in 2016. Bühler employees were able to benefit from the company’s ex-pert knowledge: Based on scientific knowledge, but explained in simple terms, food scientists gave tips on how balanced eating habits and more exercise can be incorporated into the workplace. This was explained in entertaining videos, presentations, and panel discussions. The contributions took into account the diverse working conditions. For example, a mechanic burns more calories than a controller.

The campaign was well received by employees. Every seventh employee in Uzwil attended an event on the subject. The Viva program was also implemented in India. Other regions will follow in 2017, with nutrition guidelines adapted to each country’s culture.


93

Sustainability


Target 2020

Baseline 2015

Actual 2016

01 Long-term profitability We deliver long-term profitability. We remain a profitable and independent business 100 % own financing of growth. Additional (related to G4-EC1)

100 % 100 % 100 %

We increase our employer attractiveness for best talents.

Number of applications received per open position. Additional 30 16 23

Quote of terminations within the first 12 months of employment. Additional ≤ 5 % 9 % 3 %

Quote of terminations during the probation period. Additional ≤ 1% 1% 2 %

Quote of high potentials after 2 years of service. Additional 3 % 2 % 1%

Percentage of employee fluctuation. G4-LA1 < 8 % 9.1 % 7.5 %

02 Corporate governance We ensure an effective corporate governance approach.

We assure legal compliance and apply our Code of Conduct worldwide.

Percentage of new employees in the sales, purchasing, and management functions who have attended the online training against corruption and bribery.

G4-SO8 100 % 97 % 92 %

Number of companies audited on corruption prevention. G4-SO8 10 8 9

Number of companies audited on fraud prevention. G4-SO8 10 8 9

Number of relevant compliance fines (higher than CHF 200,000). G4-SO8 0 0 0

Number of whistleblowing cases per year. Additional (related to G4-SO8)

Best practice in definition with peers

11 5

Number of all compliance cases. Additional (related to G4-SO5 and G4-SO8)


64 47

03 Contribution to local economies We contribute to local economies. We contribute to the development of the local communities.

Number of projects supported by Bühler employees through Partners in Food Solutions and other non-governmental organizations.

Additional (related to G4-EC6)

10 0 Roll-out ongoing

Economic sustainability

01 E-mobility: in touch with researchThe University of Warwick Manufacturing Group (WMG) is one of seven centers in the High Value Manufacturing (HVM) Catapult in the UK, which pro-mote the transfer of knowledge and expertise in the industry. WMG, which is focused on environmentally friendly mobility, provides industry and research partners open access to its pilot plants.

In 2014, Bühler received the contract to build a scal-able pilot plant for manufacturing electrode slurries. This is a crucial process step in the development of high-performance lithium-ion batteries for electric vehicles. In the collaboration WMG and its research partners can benefit from Bühler’s unique expertise and Bühler has access to an outstanding platform as well as new potential clients in the fast-growing mar-ket of e-mobility.

02 Code of Conduct also for business partners The Code of Conduct details how we follow the central guiding principles for our business in the workplace. It is re-gularly checked to see if the Bühler guidelines are in line with international compliance standards, the changing market conditions, and the regulatory environment.

The strict and worldwide adherence to the law and ethical principles is imperative. It is the requirement for us to build a trusting relationship with our clients, business partners, and employees. Bühler revised its Code of Conduct for employees in 2016 and implemented a new Code of Conduct for suppliers. Both guides meet the highest international requirements regarding business ethics, working conditions, and human rights.

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Target 2020

Baseline 2015

Actual 2016

01 Long-term profitability We deliver long-term profitability. We remain a profitable and independent business 100 % own financing of growth. Additional (related to G4-EC1)

100 % 100 % 100 %

We increase our employer attractiveness for best talents.

Number of applications received per open position. Additional 30 16 23

Quote of terminations within the first 12 months of employment. Additional ≤ 5 % 9 % 3 %

Quote of terminations during the probation period. Additional ≤ 1% 1% 2 %

Quote of high potentials after 2 years of service. Additional 3 % 2 % 1%

Percentage of employee fluctuation. G4-LA1 < 8 % 9.1 % 7.5 %

02 Corporate governance We ensure an effective corporate governance approach.

We assure legal compliance and apply our Code of Conduct worldwide.

Percentage of new employees in the sales, purchasing, and management functions who have attended the online training against corruption and bribery.

G4-SO8 100 % 97 % 92 %

Number of companies audited on corruption prevention. G4-SO8 10 8 9

Number of companies audited on fraud prevention. G4-SO8 10 8 9

Number of relevant compliance fines (higher than CHF 200,000). G4-SO8 0 0 0

Number of whistleblowing cases per year. Additional (related to G4-SO8)


11 5

Number of all compliance cases. Additional (related to G4-SO5 and G4-SO8)


64 47

03 Contribution to local economies We contribute to local economies. We contribute to the development of the local communities.

Number of projects supported by Bühler employees through Partners in Food Solutions and other non-governmental organizations.

Additional (related to G4-EC6)

10 0 Roll-out ongoing

03 Supporting open innovation and new ideas Almost 4,000 employees – more than a third of the whole workforce – took part in the Bühler Innovation Challenge in 2016: They developed ideas, submitted innovation suggestions, and evaluated the submitted ideas based on their business potential. Corporate management chose the three best suggestions at the end of the competition that should be implemented.

Two ideas from the Innovation Challenge 2016 were developed further as part of the MassChallenge. Mass- Challenge is an independent non-profit organization that supports innovation projects and start-ups. It was founded in Boston and has accelerators in England, Is-rael, Mexico – and now also in Switzerland. Together with global leading companies such as Givaudan, Nestlé, GEA, and BarryCallebaut, Bühler is a founding partner of MassChallenge Switzerland, the first innova-tion support program of its kind in continental Europe.

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95

Sustainability

Global Reporting Initiative G4 Content Index

Standard disclosure Description Reported Answer or cross-reference

Strategy and Analysis

G4-1 Statement from the CEO on sustainability Annual Report 2016 “Message of the Chairman and the CEO”See also: www.buhlergroup.com à Home à About Bühler à Corporate Profile “Committed to sustainability”

Organizational Profile

G4-3 Name of the organization www.buhlergroup.com; Annual Report 2016 – Outside cover

G4-4 Primary brands, products, and / or services Annual Report 2016 – Our BusinessSee also: www.buhlergroup.com à Home à Industry Solutions / Process Technologies / Products / Services

G4-5 Location of the organization’s headquarter www.buhlergroup.com à Home à About Bühler à Worldwide à Bühler Switzerland (Headquarters)

G4-6 Number of countries where the organization operates, and names of countries where either the organization has significant operations or that are specifically relevant to the sustainability topics covered in the report

www.buhlergroup.com à Home à About Bühler à Worldwide

G4-7 Nature of ownership and legal form www.buhlergroup.com à Home à About Bühler à Corporate Profile à History à History HTML5

G4-8 Markets served (including geographic breakdown, sectors served, and types of customers and beneficiaries) www.buhlergroup.com à Home à About Bühler à Worldwide

G4-9 Scale of the reporting organization See Annual Report 2016: Financial Report

G4-10 Total workforce by employment type, employment contract, and region, broken down by gender The Bühler workforce is comprised of 11,123 employees, and approximately 97 % of the total workforce are full-time employees. Regional breakdown: North America 7 %; South America 4 %; Switzerland 22 %; Rest of Europe 25 %; Middle East & Africa 5 %; South Asia 5 %; Asia 32 %.Function breakdown: Sales 9 %; Customer Service 14 %; Fulfillment 22 %; R & D 6 %; Factory 39 %; Administration 10 %.Gender breakdown: female employees 16 %See also www.buhlergroup.com à Home à About Bühler à Career à Bühler as an employer

G4-11 Percentage of employees covered by collective bargaining agreements Estimate: Around 90 % of Bühler workforce is covered by collective bargaining agreements.

G4-12 Description of the supply chain of the organization In preparation

G4-13 Significant changes during the reporting period regarding size, structure, ownership, or supply chain In 2015, Urs Bühler transferred his shares to his three daughters Jeannine, Maya, and Karin Bühler. www.buhlergroup.com. à Home à About Bühler à Corporate Profile à History à History HTML5.See also: Annual Report 2015: Financial Report

G4-14 Explanation of whether and how the precautionary approach or principle is addressed by the organization For Corporate Policy, including Corporate Governance, Risk Management, Environment, People, Code of Conduct: see www.buhlergroup.com à Home à About Bühler à Corporate PolicyFor Organization chart, Board of Directors, Corporate Executive Committee: see www.buhlergroup.com à Home à About Bühler à Organization

G4-15 Externally developed economic, environmental, and social charters, principles, or other initiatives to which the organization subscribes or endorses

In preparation

G4-16 List memberships of associations (such as industry associations) and national or international advocacy organizations in which the organization: – holds a position on the governance body– participates in projects or committees– provides substantive funding beyond routine membership dues– views membership as strategic

Bühler is active in many organizations and associations, particularly those related to the scope of our business and our profession. Some of our significant memberships include the industry associations Swissmem, SwissHoldings, economiesuisse. See further memberships under: www.buhlergroup.com à Home à About Bühler à News à Details à Bühler joins “Partners in Food Solutions”www.buhlergroup.com à Home à Media à Media Releases à Media Releases Details à Bühler partners with global start-up accelerator MassChallenge to advance open innovation, www.buhlergroup.com à Home à About Bühler à Corporate Policy à Environment A full list of memberships is in preparation.

Identified Material Aspects and Boundaries

G4-17 List of entities included in the organization’s consolidated financial statements or equivalent documents Annual Report 2016 – Financial report

G4-18 Process for defining report content Annual Report 2016 – Sustainability report

G4-19 List of material aspects identified in the process for defining report content Annual Report 2016 – Sustainability report

G4-20 Aspect Boundary within the organization for each material aspect In preparation

G4-21 Aspect Boundary outside the organization for each material aspect In preparation

G4-22 Explanation of the effect of any restatements of information provided in earlier reports, and the reasons for such restatement There have been no restatements of data in this report.

G4-23 Significant changes from previous reporting periods in the scope and Aspect Boundaries There have been no significant changes to the report scope. Comprehensive aspect boundaries are in preparation.

Stakeholder Engagement

G4-24 List of stakeholder groups engaged by the organization Annual Report 2016 – Sustainability Report

G4-25 Basis for identification and selection of stakeholders with whom to engage Annual Report 2016 – Sustainability Report

G4-26 Approaches to stakeholder engagement, including frequency of engagement by type and by stakeholder group Annual Report 2016 – Sustainability Report

G4-27 Key topics and concerns that have been raised through stakeholder engagement, and how the organization has responded to those key topics and concerns, including through its reporting

Annual Report 2016 – Sustainability Report

Report Profile

G4-28 Reporting period (e.g., fiscal/calendar year) for information provided Annual Report 2016 – Cover page

G4-29 Date of most recent previous report Our most recent Sustainability Report was included in our Annual Report 2015, issued in February 2016. www.buhlergroup.com à Home à About Bühler à Media à Publications

G4-30 Reporting cycle Annual reporting cycle

G4-31 Contact point for questions regarding the report or its contents Bühler AG, Corporate Communications, Uzwil. Contact: [email protected]

G4-32 Table identifying the location of the Standard Disclosures in the report This report contains Standard Disclosures from the GRI Sustainability Reporting Guidelines.

G4-33 Policy and current practice with regard to seeking external assurance for the report Bühler did not seek external assurance for this report.

Governance

G4-34 Governance structure of the organization, including committees of the highest governance body responsible for decision-making on economic, environmental, and social impacts

Annual Report 2016 Governancewww.buhlergroup.com à Home à About Bühler à Corporate Policy à Corporate Governance

Ethics and Integrity

G4-56 Values, principles, standards, and norms of behavior Bühler values and principles: www.buhlergroup.com à Home à About Bühler à Corporate Profile à Corporate Values Corporate Code of Conduct: www.buhlergroup.com à Home à About Bühler à Corporate Policy à Corporate Governance

Fully Partially

96

Standard disclosure Description Reported Answer or cross-reference

Strategy and Analysis

G4-1 Statement from the CEO on sustainability Annual Report 2016 “Message of the Chairman and the CEO”See also: www.buhlergroup.com à Home à About Bühler à Corporate Profile “Committed to sustainability”

Organizational Profile

G4-3 Name of the organization www.buhlergroup.com; Annual Report 2016 – Outside cover

G4-4 Primary brands, products, and / or services Annual Report 2016 – Our BusinessSee also: www.buhlergroup.com à Home à Industry Solutions / Process Technologies / Products / Services

G4-5 Location of the organization’s headquarter www.buhlergroup.com à Home à About Bühler à Worldwide à Bühler Switzerland (Headquarters)

G4-6 Number of countries where the organization operates, and names of countries where either the organization has significant operations or that are specifically relevant to the sustainability topics covered in the report

www.buhlergroup.com à Home à About Bühler à Worldwide

G4-7 Nature of ownership and legal form www.buhlergroup.com à Home à About Bühler à Corporate Profile à History à History HTML5

G4-8 Markets served (including geographic breakdown, sectors served, and types of customers and beneficiaries) www.buhlergroup.com à Home à About Bühler à Worldwide

G4-9 Scale of the reporting organization See Annual Report 2016: Financial Report

G4-10 Total workforce by employment type, employment contract, and region, broken down by gender The Bühler workforce is comprised of 11,123 employees, and approximately 97 % of the total workforce are full-time employees. Regional breakdown: North America 7 %; South America 4 %; Switzerland 22 %; Rest of Europe 25 %; Middle East & Africa 5 %; South Asia 5 %; Asia 32 %.Function breakdown: Sales 9 %; Customer Service 14 %; Fulfillment 22 %; R & D 6 %; Factory 39 %; Administration 10 %.Gender breakdown: female employees 16 %See also www.buhlergroup.com à Home à About Bühler à Career à Bühler as an employer

G4-11 Percentage of employees covered by collective bargaining agreements Estimate: Around 90 % of Bühler workforce is covered by collective bargaining agreements.

G4-12 Description of the supply chain of the organization In preparation

G4-13 Significant changes during the reporting period regarding size, structure, ownership, or supply chain In 2015, Urs Bühler transferred his shares to his three daughters Jeannine, Maya, and Karin Bühler. www.buhlergroup.com. à Home à About Bühler à Corporate Profile à History à History HTML5.See also: Annual Report 2015: Financial Report

G4-14 Explanation of whether and how the precautionary approach or principle is addressed by the organization For Corporate Policy, including Corporate Governance, Risk Management, Environment, People, Code of Conduct: see www.buhlergroup.com à Home à About Bühler à Corporate PolicyFor Organization chart, Board of Directors, Corporate Executive Committee: see www.buhlergroup.com à Home à About Bühler à Organization

G4-15 Externally developed economic, environmental, and social charters, principles, or other initiatives to which the organization subscribes or endorses

In preparation

G4-16 List memberships of associations (such as industry associations) and national or international advocacy organizations in which the organization: – holds a position on the governance body– participates in projects or committees– provides substantive funding beyond routine membership dues– views membership as strategic

Bühler is active in many organizations and associations, particularly those related to the scope of our business and our profession. Some of our significant memberships include the industry associations Swissmem, SwissHoldings, economiesuisse. See further memberships under: www.buhlergroup.com à Home à About Bühler à News à Details à Bühler joins “Partners in Food Solutions”www.buhlergroup.com à Home à Media à Media Releases à Media Releases Details à Bühler partners with global start-up accelerator MassChallenge to advance open innovation, www.buhlergroup.com à Home à About Bühler à Corporate Policy à Environment A full list of memberships is in preparation.

Identified Material Aspects and Boundaries

G4-17 List of entities included in the organization’s consolidated financial statements or equivalent documents Annual Report 2016 – Financial report

G4-18 Process for defining report content Annual Report 2016 – Sustainability report

G4-19 List of material aspects identified in the process for defining report content Annual Report 2016 – Sustainability report

G4-20 Aspect Boundary within the organization for each material aspect In preparation

G4-21 Aspect Boundary outside the organization for each material aspect In preparation

G4-22 Explanation of the effect of any restatements of information provided in earlier reports, and the reasons for such restatement There have been no restatements of data in this report.

G4-23 Significant changes from previous reporting periods in the scope and Aspect Boundaries There have been no significant changes to the report scope. Comprehensive aspect boundaries are in preparation.

Stakeholder Engagement

G4-24 List of stakeholder groups engaged by the organization Annual Report 2016 – Sustainability Report

G4-25 Basis for identification and selection of stakeholders with whom to engage Annual Report 2016 – Sustainability Report

G4-26 Approaches to stakeholder engagement, including frequency of engagement by type and by stakeholder group Annual Report 2016 – Sustainability Report

G4-27 Key topics and concerns that have been raised through stakeholder engagement, and how the organization has responded to those key topics and concerns, including through its reporting

Annual Report 2016 – Sustainability Report

Report Profile

G4-28 Reporting period (e.g., fiscal/calendar year) for information provided Annual Report 2016 – Cover page

G4-29 Date of most recent previous report Our most recent Sustainability Report was included in our Annual Report 2015, issued in February 2016. www.buhlergroup.com à Home à About Bühler à Media à Publications

G4-30 Reporting cycle Annual reporting cycle

G4-31 Contact point for questions regarding the report or its contents Bühler AG, Corporate Communications, Uzwil. Contact: [email protected]

G4-32 Table identifying the location of the Standard Disclosures in the report This report contains Standard Disclosures from the GRI Sustainability Reporting Guidelines.

G4-33 Policy and current practice with regard to seeking external assurance for the report Bühler did not seek external assurance for this report.

Governance

G4-34 Governance structure of the organization, including committees of the highest governance body responsible for decision-making on economic, environmental, and social impacts

Annual Report 2016 Governancewww.buhlergroup.com à Home à About Bühler à Corporate Policy à Corporate Governance

Ethics and Integrity

G4-56 Values, principles, standards, and norms of behavior Bühler values and principles: www.buhlergroup.com à Home à About Bühler à Corporate Profile à Corporate Values Corporate Code of Conduct: www.buhlergroup.com à Home à About Bühler à Corporate Policy à Corporate Governance

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97

Sustainability

Group structure 100

Board of Directors 102

Executive Board 106

Advisory Board of Urs Bühler Innovation Fund 110

Collaboration principles 112

Compliance 114

Remuneration Report 116

Governance


99

Governance

Group structureBühler follows international standards of corporate governance.

As a non-listed, family-owned, but economically significant company, Bühler has decided to give special attention to the design of its corporate governance. As a consequence, Bühler’s corporate governance goes far beyond the statutory requirements of Swiss Corporate Law and incorporates, to a great extent, the recommendations contained in the “Swiss Code of Best Practice for Corporate Governance” issued by economiesuisse.

Bühler’s Articles of Incorporation set material parameters of the corporate governance system. The Articles of Incorpo-ration are complemented by Bühler’s Organizational Regula-tions, which further specify the responsibilities, competences and regulations of the governing bodies of the company.

Unless prescribed by law or the Articles of Incorporation, the management is delegated by the Board of Directors, with the power to subdelegate to the Chief Executive Officer, the Executive Board and its members. Separate Charters spe-cify the organization of the Nomination and Compensation Committee and the Audit Committee.

The Board of Directors has also issued a regulation governing the cooperation between the Board of Directors, the CEO / Executive Board, and the Urs Bühler Innovation Fund.

Bühler remains a family-owned companyIn 2014, Urs Bühler transferred his shares in Bühler to his three daughters Karin, Maya and Jeannine Bühler, each of whom now owns a third of the company. For the three sisters, continuity is the top priority as they want to build on the strengths and values of Bühler. They continue to maintain optimal general conditions for the company to operate in: a stable shareholder structure, a long-term orientation, steady com-pany management which is not subject to the constraints of quarterly reporting – but nevertheless a management style pursuing business success. The three owners are organized as a family holding and have a clear and unified voice in relation to the company and within the Board of Directors.

100

1 Jeannine Bühler succeeded Maya Bühler as Member of the Board of Directors on February 9, 2016.

CFOAndreas R. Herzog

CEO Stefan Scheiber

Executive Board

Business Areas

Grains & FoodJohannes Wick

CTOIan Roberts

Asia PacificDieter Voegtli

Advanced MaterialsSamuel Schär

Manufacturing & LogisticsHolger Feldhege

Human ResourcesDipak Mane

Board of Directors

Calvin Grieder (Chairman)Josef M. Müller (Vice Chairman)Konrad HummlerRuth Metzler-ArnoldJeannine Bühler 1

Linda YangFrank N. J. BraekenClemens Blum

Grain Logistics

Grains & Food Advanced Materials

Regions

Grain Milling

Consumer Foods


Value Nutrition

Die Casting

Leybold OpticsSortex & Rice

North America South America Europe

Middle East & Africa

South Asia Asia

Urs Bühler Innovation FundUrs Bühler (Chairman)


101

Governance

Board of Directors

102


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Governance

04030201

Board of Directors

1 Jeannine Bühler succeeded Maya Bühler as Member of the Board of Directors on February 9, 2016.Note: mandates as at December 31, 2016.

03 Konrad HummlerKonrad Hummler graduated in Law from the University of Zurich and in Economic Science from the US Univer-sity of Rochester. In the eighties, he acted as the personal assistant to the Chairman of the Board of Directors of what is now UBS, Dr. Robert Holzach. From 1991 to 2012, he was Managing Partner with unlimited liability of Wege-lin & Co. Private Bankers (St. Gallen). In addition to his bank activities, he was a member of the board of various com-panies, including Neue Zürcher Zeitung (NZZ), Swiss National Bank (SNB), or the German Stock Exchange. Since 2013, Konrad Hummler has headed M1 AG, a private think tank dealing with strategic issues of current interest. Konrad Hummler was appointed as a Member of the Board of Bühler in 2010 and as a Chairman of the Nomination and Compensation Committee in 2016. He is strongly committed to cultural and social projects. Konrad Hummler was born in 1953 and is Swiss.

01 Linda YangLinda Yang holds Bachelor’s degrees in both Mathematics and Business / Fi-nance from the Nan Kai University (Tianjin, China). She graduated from the Executive MBA program at the China Europe International Business School (CEIBS). Following various as-signments in China in the fields of research, consulting, and marketing, at companies such as at Procter & Gam-ble (China) Ltd., she acted from 2001 to 2004 for Nestlé (China) Ltd. as Head of Consumer Insight. Since then she has been the General Manager of BSI (Tianjin) Foods Co. Ltd., a subsidiary of Savencia Fromage & Dairy (previously known as Bongrain SA). From 2016, she co-leads the South East Asia de-velopment for Savencia. Thanks to her experience and training, Linda Yang has a proven understanding of the Chi-nese market. She has been a Member of the Bühler Board of Directors since 2014. Linda Yang was born in 1971 and is Chinese.

02 Clemens BlumClemens Blum holds a degree in Elec-tronic Engineering from Furtwangen University (Germany) and Business Management from Pforzheim Universi-ty (Germany). After holding various po-sitions in sales in different companies, he joined the Swiss Industrial Group (SIG) as Sales Director of SIG Positec Automation in 1992 and was nomi- nated General Manager in 1997. In 2000, Schneider Electric acquired the SIG Positec activities from SIG, and Clemens Blum then held various lea-ding positions within the Schneider Electric Group. As of July 2010, he is Executive Vice President of the Industry Business located in Foxborough (Mas-sachusetts / USA). Furthermore, he is a member of the Presiding Committee and Chairman of the working Group Information and Communication of the IBC International Business Congress e.V. Berlin. Clemens Blum was elected as a Member of the Board of Bühler in December 2015. Clemens Blum was born in 1955 and is German.

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04 Calvin GriederChairman

After being raised in the USA, Calvin Grieder graduated in Process Engineering from the Swiss Federal Institute of Technology in Zurich (ETH). He then held various management positions in Swiss and German companies (Georg Fischer, Bürkert, Mikron, and SIG) in the fields of measurement and control, automation and engineering. In these functions, he was primarily responsible for successfully establishing and expanding international businesses. In 2001, Calvin Grieder moved from Swisscom to Bühler Group as CEO. In February 2014, he was elected in addi-tion as Chairman of the Board of Direc-tors. As of June 30, 2016, Calvin Grie-der handed over the CEO function to Stefan Scheiber and remains as Chair-man of the Board of Directors. Further-more, he is Vice Chairman of the Boards of Givaudan SA and Implenia AG, as well as Member of the Förderstiftung Avenir Suisse. Calvin Grieder was born in 1955 and is Swiss.

07 Ruth Metzler-Arnold

Ruth Metzler studied Law at the Univer-sity of Freiburg i. Ue. and is a Federally Certified Auditor. From 1990 to 1999, she was active for Pricewaterhouse Coopers in St. Gallen. In addition, she was a member of the Cantonal Govern-ment of Appenzell IR (Director of Finan-ce) during three years. From 1999 to 2003, she headed the Federal Depart-ment of Justice and Police as Swiss Fe-deral Councilor. Ruth Metzler then held leading positions at Novartis and was a member of the board and of the audit committee of SIX Group. Ruth Metzler is chairwoman of the boards of Switzer-land Global Enterprise and Aquila & Co. AG. She is also a board member of AXA Winterthur, Fehr Advice, and a member of the council of the University of St. Gal-len (HSG). Since April 2016, Ruth Metz-ler is a member of the Board of Trustees of Förderstiftung Avenir Suisse. She is also a partner in a consultancy firm. Ruth Metzler was elected as a Member of the Board of Bühler in December 2011 and as Chairwoman of the Audit Committee in February 2014. Ruth Metzler-Arnold was born in 1964 and is Swiss.

06 Josef M. MüllerJosef M. Müller holds a degree in Busi-ness Administration. He joined the Nestlé Group in 1972, with subsequent assignments in Switzerland, Europe, the 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 since 2007. He has served as Presi-dent of Promarca, the Swiss Associa- tion of Branded Goods (Schweizeri-scher Markenartikelverband) since 2010. He is also a member of the board of Crown Holdings Inc. (Philadel-phia / USA) and of Packages Ltd. (Lahore / Pakistan). Josef Müller was born in 1947 and is Swiss.

08 Frank N. J. BraekenFrank N. J. Braeken graduated with a degree in Law and holds an MBA de-gree in Finance from the University of Leuven (Belgium). He is an alumnus of the Wharton Executive Program, Penn University (Philadelphia, USA). In his professional career, he specialized in finance and in general management. From 1996 to 2013, he held various management functions in different countries for Unilever, including a po-sition as Group Vice President of Uni-lever China (Shanghai), Executive Vice President of Unilever Namca (Dubai), and Executive Vice President of Unile-ver Africa (Dubai / Durban). Subsequent to leaving Unilever, Frank N. J. Braeken has acted as investment advisor and investor for large-scale agro and food enterprises on the African continent. In 2016, he was elected Chairman of the Board of Feronia Inc, a Toronto-listed palm oil producer on the African continent. He was elected to the Board of Directors of Bühler in 2014. Frank Brae-ken was born in 1960 and is Belgian.

05 Jeannine Bühler 1

After successfully completing her fe-deral vocational matriculation certificate and passerelle (supplementary exam certificate) in St. Gallen, Jeannine Bühler was awarded a Bachelor of Arts degree from the University of Zurich. She later received a Master of Arts in Social Sciences in journalism and com-munication sciences and political science. While still a student, she worked with foundations committed to cha-ritable and sustainable projects. Follo-wing completion of her studies, she joined the development organization Helvetas Swiss Intercooperation. Jean-nine Bühler was elected to the Board of Directors of Bühler in 2016, where she represents the Bühler family in one-ye-ar rotations with the two other owners. Jeannine Bühler was born in 1986 and is Swiss.


105

Governance

Executive Board

106


107

Governance

030201

01 Holger Feldhege Manufacturing & Logistics

Holger Feldhege graduated in Busi-ness Administration and holds a PhD in Production Management. He has extensive experience in the sales and service business as well as production, engineering, and logistics. He worked in various management positions at Mannesmann and ThyssenKrupp Elevator, spending more than seven years in Asia. Upon his return to Ger-many in 2010, Holger Feldhege took on the position of CEO Manufacturing for the business unit Central, Eastern, and Northern Europe and later Senior Vice-President Manufacturing Elevator for the worldwide group. In 2014, Hol-ger Feldhege joined Bühler as Head of Manufacturing & Logistics. Holger Feld-hege was born in 1968 and is German.

05 Samuel Schär Advanced Materials

After obtaining a diploma as a Physics Engineer from the Swiss Federal Insti-tute of Technology in Lausanne (EPFL) and accumulating three years of ex-perience with the consultancy McKin-sey, he joined Bühler in 2002, where he took charge of the Nanotechnolo-gy business unit in 2005. From 2009 to 2013, he bore overall responsibility for the Grinding & Dispersion business area, into which he integrated the Nanotechnology business unit. Samuel Schär has headed the Advanced Ma-terials business since 2013 and was appointed CEO of Advanced Materials as of September 2014. Samuel Schär was born in 1978 and is Swiss.

03 Dipak Mane Human Resources

After completing his studies in Chemi-cal Engineering at the Indian Institute of Technology, Dipak Mane worked in India for several years as an engineer in various positions. He joined Bühler India in 1992 as one of the first local employees. Step by step, he built Bühler India, starting in 2000 as Manag- ing Director and continuing from 2010 onward as Head of Region South Asia. In July 2015, he assumed the position of Chief Human Resources Officer for the Group. Dipak Mane was born in 1960 and is Indian.

02 Dieter Voegtli Asia Pacific

Dieter Voegtli is a Mechanical Engineer (Swiss Federal Institute of Technolo-gy in Zurich, ETH) and holds an MBA from INSEAD. He started his career in global power plant commissioning and as a Software Development Manager for ABB. Following that, he worked for eight years as Technical Director of Roche China Ltd. Dieter Voegtli has been President of Bühler Group China and Asia Pacific since 2009, after serv-ing as President of Bühler China since 2004. Dieter Voegtli was born in 1958 and is Swiss.

Executive Board

Note: mandates as at December 31, 2016.

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04 0605 07 08

08 Stefan Scheiber Chief Executive Officer

Stefan Scheiber graduated in Business Administration from the University of Applied Science in St. Gallen and later continued his education at the Institute IMD Lausanne and the Harvard Busi-ness School. From 1988, he worked for 15 years in various international management positions worldwide, in-cluding East and South Africa, Eastern Europe and Germany. In 1999, he took charge of the Brewing/Malting and Rice business units and thereafter assumed overall responsibility for Bühler in Ger-many. From mid-2005, Stefan Scheiber headed the Sales & Services division as a Member of the Executive Board. In 2009, he was assigned Division Man-ager of the Engineered Products Divi- sion which he reorganized into the Food Processing and the Advanced Material divisions. He led the Food Pro-cessing division as of 2009. In 2014, Stefan Scheiber integrated the Food Processing and the Grain Processing divisions, creating the Grains & Food business, which he led until 2016. Ste-fan Scheiber was appointed CEO of the Bühler Group as of July 1, 2016. Stefan Scheiber was born in 1965 and is Swiss.

07 Ian Roberts Chief Technology Officer

Ian Roberts graduated in chemical engineering and obtained a PhD in pro-cess engineering from the University of Wales, Great Britain. From 1997 through 2009, he held various management positions at Nestlé, acting among other things as an internal management consultant, as Director of Innovation for Nestlé Mexico, and as Director of the Chocolate Centre of Excellence in Switzerland. He has been Chief Tech-nology Officer at Bühler since 2011. Since December 2015, Ian Roberts chairs the Evaluation Board of Wyss Institute Zurich and is on the board of the start-up accelerator MassChallenge Switzerland. He received the European CTO of the year award in 2016. Ian Roberts was born in 1970 and is British.

06 Johannes Wick Grains & Food

Johannes Wick joined Bühler in 2014 and took over the management of Grain Milling, the largest business area. Since April 1, 2016, he leads the Bühler business Grains & Food. Before that, he worked for more than twenty years in different management positions in the energy and infrastructure sector at ABB, ABB Alstom Power, Iberdrola, and Alstom. Johannes Wick earned a Master’s degree in engineering at the ETH in Zurich with an exchange at the Technical University in Madrid. He ex-panded his knowledge with an MBA from IESE in Barcelona with an exchange at Sloan Management School of Business at the Massachusetts Institute of Technology (MIT) in Boston. Johannes Wick was born in 1969 and is Swiss.

04 Andreas R. Herzog Chief Financial Officer

After graduating in Business Adminis-tration, Andreas R. Herzog continued his studies in various postgraduate courses in marketing and finance management at business schools in France, Canada, and the USA. He occupied management positions at Ciba-Geigy, Swatch, and Swarovski. During his professional career he has worked in Switzerland, Mexico, Colom-bia, Ivory Coast and Germany. Andreas R. Herzog has been CFO of Bühler Group since 2002. He is also a mem-ber of the board of Bertrams AG, CCS Holding AG, and the advisory board of Commerzbank in Germany. Andreas Herzog was born in 1957 and is Swiss.


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Governance

Advisory Board of Urs Bühler Innovation Fund

Urs Bühler graduated as a mechanical engineer from the Swiss Federal Insti-tute of Technology in Zurich (ETH). After holding a number of positions in Switzer-land and abroad, 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 Bühler GmbH, Braunschweig (Germany). In 1986, Urs Bühler was appointed CEO of Bühler in Uzwil. He handed over the executive management duties of the com-pany to Calvin Grieder at the beginning of 2001. Urs Bühler has been a Member of the Board since 1981, from 1991 as its Vice-Chairman and from 1994 to 2014 as its Chairman. He was a member of the board of several Swiss companies. Urs Bühler was born in 1943 and is Swiss.

Hal Gurley holds Bachelor’s and Master’s degrees in Electrical Engineering from the Georgia Institute of Technology (USA), and an executive MBA from the Institute IMD (Switzerland). Before moving to Swit-zerland in 1995, Gurley was President and Founder of Automation Intelligence, an ad-vanced systems integration and software development firm based in the USA spe-cializing in realtime communications and control systems for industrial, robotic, and military applications. Prior to joining Cis-co in 2000, Gurley was Director Internet / IP at Swisscom. Before he moved into a global sales role in 2013, Gurley worked for over ten years in Cisco’s management and strategy consulting organization, en-gaging with service provider customer executives to accelerate business suc-cess using Internet and cloud technolo-gies for a competitive advantage. In his global sales leadership role, Hal Gurley is responsible for Cisco’s Cloud / Network Management and Automation software portfolio and go-to-market execution. He also serves as sole Managing Director and legal representative of Cisco Systems (Switzerland) GmbH. Hal Gurley was born in 1955. He is Swiss and American.

Dr. Matthias Kaiserswerth studied Com-puter Science at the Friedrich-Alexander University in Erlangen-Nuremberg (Ger-many) and at the McGill University in Mon-treal (Canada). He obtained his PhD in En-gineering from Erlangen University. From 1988 to 2015, Dr. Kaiserswerth worked for IBM. He has spent almost his entire career as a researcher in the areas of high-per-forming communication and security in Switzerland and the USA apart from mid-2002 to the end of 2005, when he was responsible for the global IBM business relations with a large international industrial customer. For more than eleven years Matthias Kaiserswerth was Director of the IBM Research Laboratory in Rüschlikon (Switzerland) until he became Managing Director of the non-profit Hasler Stiftung in Bern, in May 2015. This foundation sup-ports education, research, and innovation in information and communication tech-nologies. Dr. Kaiserswerth is Vice-Presi-dent of the Swiss Federal Commission for Technology and Innovation. Dr. Kaisers- werth was born in 1956. He is Swiss and German.

Urs Bühler

Chairman

Hal Gurley

Managing Director, Cisco Systems (Switzerland) GmbH

Dr. Matthias Kaiserswerth

Managing Director, Hasler Stiftung, Bern

110

Edward S. Steinfeld studied Government and Political Science at Harvard Universi-ty (USA) and holds a PhD in Political Sci- ence. From 1996 to 2013, Steinfeld was a professor of Political Economy and Man- agement at the Massachusetts Institute of Technology (USA). He also served as a visiting scholar at the Tsinghua University School of Public Policy and Management in Beijing from 2012 to 2013. From 2005 to 2013, he was Director of the China Energy Program at the MIT Industrial Performance Center. In 2013, Steinfeld moved to Brown University (USA), where he currently directs the Watson Institute for International and Public Affairs as well as the Brown China Initiative and is a Professor of the Department of Political Science. Beside his university engage-ment, Edward Steinfeld is a member of various boards of directors, academic and advisory boards in the USA, Asia, and Europe. In 2012, he was appointed as a Member of the China Advisory Board of Bühler Group. Edward Steinfeld was born in 1966 and is American.

Ian Roberts graduated in Chemical Engineering and obtained a PhD in Pro-cess Engineering from the University of Wales (Great Britain). From 1997 to 2009, he held various management positions at Nestlé, acting among other positions as internal management consultant at Swiss headquarters, as Director of Innovation for Nestlé Mexico, and as Director of the Chocolate Centre of Excellence in Swit-zerland. He has been Chief Technology Officer at Bühler since 2010. Furthermore, he is a member of the board of the academic institutions Wyss Institute, UNI-TECH and IFNC-EPFL. Ian Roberts was awarded European CTO of the Year 2016. Ian Roberts was born in 1970 and is British.

Edward S. Steinfeld

Professor of Political Science; Direc-tor, Thomas J. Watson, Jr. Institute for International and Public Affairs, Brown University

Ian Roberts

Chief Technology Officer

Urs Bühler Innovation Fund

The Urs Bühler Innovation Fund (UBIF) was established in 2014 to support the company’s innovation efforts. Bühler invests roughly 5 % of its turnover in research & development every year – developing breakthrough technologies and services to strengthen Bühler’s market position as well as exploiting new opportunities to stay ahead of the innovation curve. The Advisory Board, managing the UBIF, focuses on accelerating the innovation process within the company as well as on its advancements in the field of Internet of Things.


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Governance

Collaboration principles

Permitted external activities of the Board of Directors and the Executive BoardBühler’s Articles of Incorporation provide for a certain res-triction of the permitted external activities of the members of the Board of Directors. Members of the Board of Direc-tors may not hold more than four additional mandates in listed companies, eight additional mandates against remu-neration in unlisted companies and eight unpaid additional mandates. Not included in these limitations are mandates in companies affiliated with Bühler, corporate mandates of Bühler and mandates in associations, foundations, employee welfare foundations, charitable organizations and other comparable structures. However, no Board member shall hold more than twenty such additional mandates. Mandates refers to mandates in the supreme governing body of a legal entity registered in the commercial regis ter in Switzerland or elsewhere. Members of the Executive Board are limited to two mandates at public companies or other legal entities against remuneration and four unpaid mandates.

Elections and term of office of the Board of DirectorsBühler’s Articles of Incorporation provide for the annual election by the General Assembly of all Board members, its Chairman, and the members of its Nomination and Compen-sation Committee. Term of office shall be one year, starting with the General Assembly at which each individual member is elected and ending with the next following General As-sembly. The members of the Audit Committee are annually elected by the Board of Directors.

Election date and attendance For the year of first election to the Board of Directors, please refer to the individual curriculum vitae of each Board member on pages 104–105. At the General Assembly, the Board of Directors gives account to the shareholders on the atten-dance of Board and Committee meetings by each individual Board member.

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Areas of responsibilitiesThe Board of Directors is responsible for the ultimate direction, strategic supervision and control of the management of the Company, and for other matters which are, by law, under its responsibility. Such inalienable duties include, essentially, (i) the ultimate management of the Company, (ii) the determi-nation of its organization, (iii) the structuring of its accounting system and of the financial controlling, (iv) financial planning, (v) the appointment, removal and ultimate supervision of per-sons entrusted with the management and representation of the Company, (vi) the preparation of the business report as well as the General Assembly and the implementation of its resolutions.

Executive BoardThe Executive Board is responsible for all areas of operational management of the Company which are not reserved to the Board of Directors. The Executive Board is chaired by the Chief Executive Officer.

Urs Bühler Innovation Fund (UBIF) The Advisory Board of the Urs Bühler Innovation Fund sup-ports and advises the Board of Directors in innovation strat-egy matters as well as in defining and executing an innovati-on strategy that provides future-oriented answers to market trends and the needs of current and future customers.

External auditorsThe external auditors are appointed at the General Assembly and present the outcome of the audit to the Audit Committee.

Audit CommitteeThe Audit Committee shall monitor the integrity of the finan-cial statements of the Company, including its annual report. It promotes effective communication between management, internal, and external audit.

The Audit Committee regularly reviews the functionality and effectiveness of the internal control system. It supports the Board of Directors in corporate governance issues.

Nomination and Compensation CommitteeThe Nomination and Compensation Committee determines and agrees with the Board of Directors on the policy for the compensation of the members of the Board of Directors and of the Executive Board. It approves the design of, and determines targets for any performance-related compensa-tion schemes operated by the Company and approves the total annual payments made under such schemes. Within the parameters of the agreed policy the Nomination and Compensation Committee determines the total individual compensation package for each member of the Board of Directors as well as of the Executive Board and prepares the compensation report.

Work method of the Board of Directors and its committeesBoard meetings are held as often as matters require or upon the request of a Board member, but at least four times per year. The agenda of the meeting shall be announced when it is convened, and pertinent information, if needed, shall be sent in good time to each Board member. On unannounced items the Board can only decide if all members of the Board are in attendance. Decisions may also be taken by circulation, provided that none of the Board members request a formal meeting.

Meetings of the Board Committees are convened separate from the Board meetings and scheduled as often as business requires. The Board of Directors receives verbal updates after each meeting of its Committees by their Chairperson.


113

Governance

Compliance Effective corporate governanceEffective corporate governance is a precondition for Bühler to ensure a long-term and sustainable increase of its corporate value. We base this both on the Swiss Code of Best Practice for Corporate Governance and the OECD Principles of Cor-porate Governance. Corporate governance at Bühler is orga-nized with the interests of its stakeholders in mind, including customers, employees, suppliers, and public communities. They also comprise compliance with environmental and so-cial standards as well as an uncompromising commitment to financial integrity. As an international Swiss company, strict observation of local laws on a global scale and systematic and continuous monitoring of compliance in all markets are indispensable for Bühler. This is the only way to prevent oper-ating risks and an impairment of reputation which might be caused by violation of compliance rules.

An active Code of ConductThe Code of Conduct is part of the so-called “Bühler Essen-tials.” It serves all employees as a beacon showing them how to live the Group’s core corporate principles (Trust, Respect, Recognition, Involvement, and Passion) in their day-to-day jobs. It states what is expected of employees and business partners, defines the standards governing compliance with laws and regulations, and includes the fundamentals of communications, employee rights, health and safety, and financial integrity.

Bühler regularly reviews its own principles of corporate governance to ensure that they are up to date. Our Code of Conduct has been reviewed and now also includes binding standards for our business partners. The Code of Conduct is being continuously adjusted to ongoing changes in the environment. Furthermore, a new Supplier Code of Conduct has been introduced.

114

Trade compliance The newly set up Head of Trade Affairs function shall ensure that the goods exported out of Switzerland in the context of free-trade agreements are correctly declared and cleared through customs. This function became necessary as the complexity of customs formalities has increased drastically due to the numerous cross-border purchases of goods and services.

Group Internal AuditThe Internal Audit Department reports functionally to the chairwoman of the Audit Committee and administratively to the CFO. Meetings between internal and external auditors take place on a regular basis with the main focus to coordina-te internal and external audits. The audit plan is aligned with the strategy and key business risks. A yearly risk assessment is prepared by Group Internal Audit. It is the basis for the yearly audit plan, which is approved by the Audit Committee. The results of the audits are discussed with the management of the audited unit and major topics are presented to the Executive Board and the Audit Committee and thereafter reported to the Board of Directors. In 2016, 15 audits were carried out worldwide.

Group Internal Audit is responsible to review group-wide compliance with the Code of Conduct. Violations are repor-ted to the Audit Committee and the Executive Board.

Risk managementBühler reviews the risk geography of the Company on a regular basis. It has established an internal risk management process in order to manage, control, and contain identified risks. This process is under the responsibility of the Board of Directors.

Quality systemBühler has reviewed the changes of the revised ISO 9001:2015 (Quality) and ISO 14001:2015 (Environmental) requirements which have an impact on the Bühler Group Certification. Based on the gap analysis, a transition plan was developed. The implementation of the revised standards will be finalized in 2017, with the Recertification of the Bühler Group Quality and Environmental Management System through the certi-fied body SGS. In 2016, 19 sites were listed on the Bühler Quality System Group Certificate.

Clear rules against corruption and bribery The so-called ABC (Anti Bribery & Corruption) rules against bribery and corruption unmistakably state that no violations will be tolerated. They concern in particular collaboration with agents. It is mandatory for all employees in procurement, sales, and management functions to undergo a compre-hensive online training program (Web Based Training, WBT) after they have joined the company and to pass a final test.

New compliance organization structure proves its effectivenessBühler further decentralized the organizational structure of its compliance function in 2014. Since then, a regional com-pliance officer has acted as the first contact in eight Bühler regions, except for compliance cases involving special risks, which continue to be handled directly by the Compliance Board. This decentralization has greatly streamlined and accelerated the related processes. This is also because linguistic barriers have been eliminated and the regional compliance officers are familiar with the local regulations and conditions.

Redesigned compliance reportingIn the course of the reorganization of the compliance function, also the reporting process was redesigned. Clear accountability and defined actions ensure that compliance-related incidents are systematically reported to the central Compli-ance Board. This transparency is a precondition for ensuring that the company can gain the necessary insight from such incidents and take the required measures in response. We are happy to report that the awareness of the benefits of a transparent compliance reporting system have become increasingly acknowledged.


115

Governance

Remuneration Report

Recruit, develop, and alignBühler practices excellence in human resources, to motivate and develop its employees and in order to achieve the Bühler mission. The company wants to establish itself as the best in class for employee development, across the entire career span of its people. The Remuneration Policies are designed with this purpose in mind.

Remuneration governance

OverviewThe Members of the Nomination and Compensation Com- mittee (NCC) are elected by the General Assembly. The Board of Directors (BoD) appoints the Chairman from among the elected members. The NCC supports the BoD in the remuneration issues defined here, with responsibilities being retained by the BoD. The NCC is in charge of defining and periodically reviewing the Remuneration Policy. It prepares all the relevant decisions of the BoD in the area of remuneration, for the Members of the BoD, Members of the Executive Board (EB), and submits its proposals (remuneration type and annual remuneration) to the BoD. In addition, it submits proposals to the BoD defining the annual goals for success- and performance-related remuneration, and then defines the circle of potential recipients of this success- and performan-ce-related remuneration.

Nomination and Compensation CommitteeFor the year under review, the members of the NCC were Peter Quadri (Chairman until the General Meeting in February 2016), Konrad Hummler (took over the position as Chairman in February 2016), and Frank N. J. Braeken (joined in Febru-ary 2016). Permanent guests were Maya Bühler, Karin Bühler, the Chairman of the Board of Directors, the CEO, the Chief HR Officer, and the Head of HR. Four meetings were held. The NCC Chairman reported to the BoD after each meeting and the minutes were kept and distributed in a timely manner.

Authority chart

Subject Recommendation Final approval

Definition of Remuneration System and Policy for remuneration paid to the Board of Directors and the Executive Board

NCC Board of Directors

Development of variable remuneration schemes plus approval of all annually paid performance-related remuneration at Bühler Group

NCC Board of Directors

Definition of individual remuneration, including bonus, variable portion, shares-related remuneration, etc., to the Executive Board and the Board of Directors

NCC Board of DirectorsGeneral Assembly

116

Remuneration principlesBühler is committed to performance- and market-related remuneration. Success as a result of sound individual per-formance plus the success of the organization will impact the remuneration.

All employees, including the Executive Board, shall undergo a formalized annual performance appraisal process (Employ- ee Performance Management, EPM). The Individual Perfor-mance Goals are defined and agreed upon jointly with each employee at the start of the fiscal year. The financial success of the organization, which is measured on the basis of EBIT, also impacts performance-related remuneration.

Principles of remuneration policy

Fairness, consistency, and transparency

The remuneration schemes shall be simple, clearly structured, and transparent. They give consideration to the responsibilities and powers of the individual functions, thereby ensuring fair remuneration at all levels.

Performance-related remuneration

Variable remuneration is directly tied to the success of Bühler (EBIT) and to individual performance (EPM).

Long-term success sharing

Part of the remuneration of the Executive Board shall be paid in the form of blocked phantom options in order to ensure long-term sharing in the success of Bühler.

Orientation toward the labor market

In order to attract and retain talent, qualified and dedicated management staff and employees, remuneration shall be oriented toward the market environment and be regularly subjected to benchmarking.

Bühler values: TRRIP The remuneration policy is oriented toward the Bühler values of TRRIP (Trust, Recognition, Respect, Involvement, Passion). These values are incorporated in the above-mentioned principles and determine the “Bühler way of doing business” in all respects.


117

Governance

Remuneration elements

Overall remuneration model for employees and the Executive Board

Instrument Purpose Influencing factors

Fixed annual basic salary

Monthly cash remuneration

Regular, predictable remuneration for the specific function

Sphere of work, complexity, and responsibility of the function, competen-cies, and experience of the function owner, benchmarks

Performance- related variable portion

Annual cash remuneration

Remuneration for performance

Success of the organization (EBIT) and individual performance (EPM) on an annual basis

Deferred compensation plan

Deferred compensation plan with a vesting period of three years

Sharing in long-term success

Hierarchical positionof the function withinthe organization

Other employee benefits

Pension and insurance schemes; other fringe benefits

Protection against risks and coverage of expenses

Local legislation and market practice

118

Remuneration of the Board of DirectorsThe members of the Board of Directors shall receive a fixed cash payment and be remunerated as Committee Members (if applicable).

Office

Basic remuneration Membership in the Board of Directors

Additional remuneration

Chairmanship of the Board of DirectorsVice-Chairmanship of the Board of Directors

Chairmanship of the Audit CommitteeActivity in the Audit Committee

Chairmanship of the Nomination and Compensation Committee Activity in the Nomination and Compensation Committee

Other Committee Chairmanship / MembershipsOther activities

Expenses Only expenses incurred are reimbursed

Remuneration of the Executive BoardThe Members of the Executive Board shall receive a basic salary, a variable cash remuneration portion, employer con-tributions to pension funds and social security institutions, and long-term remuneration in the form of a deferred com-pensation plan with a vesting period of three years. In addi-tion, the remuneration package also includes transportation and housing allowance plus a life insurance premium.


119

Governance

Financial ReportBühler Annual Report 2016

121

Business Development 122

Financial Report Bühler Group 126Consolidated statement of income 127

Consolidated statement of comprehensive income 128

Consolidated statement of financial position 129

Consolidated statement of changes in equity 130

Consolidated statement of cash flows 132

Notes to the financial statements 133

Report of the statutory auditor 177

Financial Report

122

Business Development

Grain Milling, Bühler Group’s largest business area, in-creased turnover substantially by 12 % to CHF 781 million. This positive development helped Grain Milling to increase its market share in a number of industries. Order intake re-mained at CHF 743 million, which is slightly below the pre-vious year.

Geographically, the Grain Milling business area experienced a particularly encouraging development in China and Turkey, driven by an increasing demand for complete installations in these regions. North America and South Asia also developed strongly. South America and Middle East & Africa recorded positive development, particularly in the maize processing area.

Grain Milling focused on bringing innovations successfully to market and further diversifying its product portfolio. Its position as a provider of total solutions has become an in-creasingly important competitive differentiator in emerging economies. With the introduction of Prime Masa Nixtamal, the division further underlined its innovative power. This solu-tion uses substantially less water and produces a higher yield for the farmers. Other innovations included Jet-Mix, an inno-vative process for producing pre-ferment dough starters and sourdough, and a new dry-de-husking process.

Based on leading market positions, a strong order backlog, and a clear strategic direction, Grain Milling is entering 2017 with a positive outlook.

Grain Logistics achieved a slight increase of 0.3 % in its turn-over to CHF 206 million. The order intake decreased by 8.9 % to CHF 212 million. With around 8 % market share, the busi-ness unit was able to reinforce its strong position as one of the three largest players in the grain logistics industry.

The shared offering within the entire Bühler Group is a key differentiator in the market for Grain Logistics. In rice pro-cessing, for instance, Bühler is the only player that offers comprehensive solutions from the paddy to the processed grain of rice. As a result, Bühler became the global leader in rice processing in 2016 and also expanded its leading posi-tion in Asia. South America recorded an upturn after numer-ous challenging years. Cleaning machines and solutions for ship loading were particularly in demand in 2016 in that region.

Its advanced solutions and technology competencies were decisive in enabling the business to gain the largest single order in 2016. Grain Logistics was able to reinforce its market leadership position in the malting industry in 2016 and won all larger contracts in that area. An innovation highlight was the new Tubo conveying system, a mechanical system for three-dimensional transportation. It was introduced at the Bühler Networking Days and awarded Best Innovation by Bühler’s customers.

Order books are full and key growth drivers are supporting the positive development of Grain Logistics in 2017. In par-ticular, the business area is likely to make further progress in paddy processing as it strives to remain the market leader in malting solutions and rice processing. The service business also bears significant potential to grow for the business area.

781CHF m

Total turnover

32 %

Share of Group turnover

206 CHF m

Total turnover

8 %

Share of Group turnover

Grain Milling Grain Logistics


123


123

The turnover of Sortex & Rice increased by 6.6 % to CHF 217 million, as the business area started the year with full order books. Due to the very low rice price, however, investment activities in the rice processing industry decreased through-out the year, which led to a 3 % lower order intake, amounting to CHF 216 million.

Geographically, North and South America as well as Europe achieved excellent business results, whereas the Middle East and Africa remained slightly below expectations. South and Southeast Asia experienced low activities due to the low rice price. The decrease of activities in the rice processing indus-try was partly compensated by other sectors. 2016, the year of the pulses, brought strong orders for pulse-processing equipment. Optical sorting for nuts and coffee developed strongly as well.

The business area also further developed its plastic sorting offering. A strategic partnership enables the company to offer plastics recyclers a complete solution for plastic bottle and flake sorting. The Sortex & Rice business area also posi-tioned itself excellently by rolling out a new technology for processing frozen fruits and vegetables. Extensive testing of the Sortex PolarVision – with its new camera technology – has shown that the sorting capacity is up to ten times better than that of comparable products on the market. Customers rewarded this high performance by ordering numerous machines.

The outlook 2017 depends on the development of the rice price. The price of rice is likely to increase due to currently very low inventory levels, which in turn will lead to higher business activities for Sortex & Rice in the year to come. Growth opportunities are also expected to emerge from the increasing requirement of food safety.

Turnover of Value Nutrition decreased significantly by 14.6 % to CHF 434 million, compared to the previous year, which benefited from one large single order. The order intake in-creased significantly by 10.9 % to 540 million. Overall, the business area was able to keep its market share.

The year started slowly, particularly in the areas of feed and pasta, while the nutrition and the service business were able to compensate somewhat with growth levels in the double- digit range. Feed, one of Bühler Group’s strategic areas of growth, was able to strengthen its market presence, in par-ticular thanks to a strong second half-year. Geographically, demand from Western Europe, South Asia, and China has developed well due to the expansion of the global supply chain from Asia. Uncertainty in Eastern Europe continues to put a strain on business activities in that region. North and South America developed at relatively low levels, while ac-tivities in Africa advanced well but depended on a small num-ber of large projects.

The business area continued its strategy of offering innovative solutions to the market. Highlights included the feed port-folio for the global supply chain with CE Certification, the new oil cracker, the new food safe flaker, and the innovative dry-ing solutions from Aeroglide, as well as the Ecothermatik pasta dryer, which saves up to 40% of thermal energy, offer-ing economic and ecological advantages to the clients.

With full order books, Value Nutrition has a positive outlook for 2017. Growth is expected in particular in the Middle East, Africa, and Asia. Sales of individual machines and the service business are also expected to contribute to the positive de-velopment. The beneficial effect of the global supply chain is likely to remain in all areas.

217 CHF m 434 CHF m

Total turnover Total turnover

9 % 18 %

Share of Group turnover Share of Group turnover

Sortex & Rice Value Nutrition

124

Turnover of Consumer Foods decreased significantly by –11.3 % to CHF 236 million, while the order intake increased by 10.5 % to CHF 244 million. The Consumer Foods business area was able to retain its already high market share.

The most dynamic performance was reported in the choco-late area, also thanks to large orders for the state-funded expansion of the cocoa processing industry in West Africa. The growth in sales in the customer service business was equally positive. Coffee suffered a significant decrease in order intake, while a large order from the previous year re-sulted in an increase in turnover. Geographically, the picture is mixed: North America, Europe, and Africa retained their position, Japan showed signs of a recovery. Demand in the BRIC markets decreased clearly.

After the integration of the acquired chocolate specialist, Consumer Foods will, for the first time, be able to offer com-plete solutions from the receipt of goods to all confectionery end products. Investments in IoT solutions and the advance-ment of more compact solutions are also likely to have a positive long-term effect on the business.

Investment activity levels are likely to pick up in the consum-er food industry. This trend combined with the increased order backlog at year-end suggest a positive development in 2017. Also, the key industry event Interpack in May is ex-pected to have a positive effect on orders. The full offering, due to the integration of the acquired chocolate specialist, is likely to translate into orders and turnover relatively soon.

Die Casting increased its turnover by 7.3 % to a record level of CHF 298 million and reinforced its market leadership po-sition with a market share of 28 %. With an order intake of CHF 290 million, the business area achieved the second-best result of its existence, only second to the year 2015, when Die Casting benefited from a single large order of CHF 40 mil-lion.

The year 2016 was characterized by the automotive industry’s continued wave of investment. Cooperation with the original equipment manufacturers – the large car manufacturers – as well as the Tier 1 companies, was particularly encouraging. In China, growth was driven by strong investment from Chi-nese OEM’s and Tier 1’s. The business area continued its undisputed technological leadership position, offering exten-sive services and further advancing aluminum applications for the automotive industry. The complete portfolio of Bühler contributed to market success in all key industries. The launch of the new Ecoline S die-cast solution in Shanghai marked a highlight for the year. Casters will benefit from increases in productivity of up to 5 % and energy savings of up to 10 %.

With full order books, the business area expects the positive development to continue in 2017. Die Casting will continue to roll out its strategy of three hubs in North America, Europe, and China, ensuring proximity to its customers in the auto-motive industry. The planned expansion of the customer service business is also an important element of the growth strategy.

236 CHF m 298 CHF m


10 % 12 %


Consumer Foods Die Casting


125


125

Grinding & Dispersion achieved a strong increase in turnover and order intake to CHF 88 million and CHF 102 million re-spectively, up massively by 13.9 % and 38.3 % in comparison to the previous year. The strongest growth impulse came from the battery and inks sector. The individual machine busi-ness also went very well, while customer service remained comparative to the previous year.

The ink segment was driven by growing demand for liquid inks for packaging and digital printing. High-tech solutions, such as for LCD screens, were also in high demand. Geo-graphically, most regions recorded lively market activities. Performance in China, Japan, and India was particularly dynamic.

The business area continued to innovate with its new contin-uous process for manufacturing electrode slurries – one of the core process steps in the production of lithium-ion bat-teries, which has a significant impact on the overall perfor-mance of the batteries. A large customer from China has placed the first substantial orders for production lines and aims to expand its production capacities with the new Bühler manufacturing process. With this proof of the industrial maturity of the process, Bühler is now uniquely positioned in the field of lithium-ion batteries – a future growth market driven by the boom in electric vehicles: by 2050, 50 % of new vehicles are expected to be partly or completely driven by an electric motor.

With the advent of e-mobility, the largest growth market for the lithium-ion battery industry is opening up in Asia and in the midterm also in Europe and North America. In the grow-ing market for liquid inks, Grinding & Dispersion strives to further leverage its position as a market leader.

All business units contributed to record turnover of CHF 151 million (up 11.1%) with good levels of business ac-tivity. The order intake increased even more, by 23.0% to CHF 163 million. As a result, Leybold Optics was able to expand its market share in all areas. Thanks to orders being a substantial 23 % above the previous year’s level, the capac-ities of the business area are full.

Demand has shown increases for solutions in all key areas: precision optics, optoelectronics, the packaging industry, and the coating of architectural glass. Geographically, growth mostly originated from the Asian and European markets.

The process know-how and innovative solutions combined with global service support are key differentiators for the Leybold Optics. The business area launched Leybold Optics ECS 1350, a new solution for the anti-reflective coating in spectacle optics in China. With DynaJet in Europe and its pendant AluMet for the Asian market, Leybold Optics has also developed a powerful solution for the metallization pro-cess of car headlights.

The outlook for 2017 looks promising for Leybold Optics. Growth trends such as Asia’s increasing affluence, urbaniza-tion, and digitalization have potential for driving growth in this business area. The strategy of developing high-end products in Germany and the center of excellence in China for the Asian market is expected to contribute to the positive devel-opment of the business area going forward.

88 CHF m 151CHF m


4 % 6 %


Grinding & Dispersion Leybold Optics

126

Financial Report Bühler Group


127


127

Notes2016

CHF m2015

CHF m

Sales revenue 3.1 2,448.6 2,412.3

Changes in inventories of finished goods and work in progress 5.1 4.1

Other operating income 3.2 22.0 23.6

Total operating income 2,475.7 2,440.0

Cost of materials –1,047.4 –1,058.7

Employee benefit expenses 3.3 – 793.2 – 751.0

Other operating expenses 3.4 – 408.2 – 401.5

Net result from associates 4.3 4.6 4.5

Operating result before interest, taxes, depreciation and amortization (EBITDA) 231.5 233.3

Depreciation and amortization 4.1/ 4.2 – 57.9 – 56.2

Operating result before interest and taxes (EBIT) 173.6 177.1

Finance income 3.5 10.0 10.8

Finance costs 3.5 – 3.8 – 4.0

Financial result 6.2 6.8

Profit before taxes 179.8 183.9

Income taxes 3.6 – 36.5 – 41.2

Net profit 143.3 142.7

Attributable to:

A Owners of the parent 136.3 140.1

A Non-controlling interests 7.0 2.6

Consolidated statement of income

128

Notes2016

CHF m2015

CHF m

Net profit 143.3 142.7

Other comprehensive income

Translation differences of foreign operations – 5.2 – 28.9

Cash flow hedges

– Change in fair value –1.0 3.8

– Realized through statement of income 3.4 – 3.3

– Tax effect – 0.4 – 0.1

Net loss on hedge of net investment –1.1 –18.8

– Tax effect 0.1 1.4

Other comprehensive income to be reclassified to profit or loss in subsequent periods – 4.2 – 45.9

Actuarial gains and losses on defined benefit plans 4.11.3 –1.0 – 38.7

– Tax effect 1.6 6.9

Other comprehensive income not to be reclassified to profit or loss in subsequent periods 0.6 – 31.8

Total other comprehensive income – 3.6 – 77.7

Total comprehensive income 139.7 65.0

Attributable to:

A Owners of the parent 133.5 63.2

A Non-controlling interests 6.2 1.8

Consolidated statement of comprehensive income


129


129

Assets Notes 2016

CHF m2015

CHF m

Property, plant and equipment 4.1 415.1 400.4

Intangible assets 4.2 261.6 273.7

Investments in associates 4.3 33.5 29.0

Long-term financial assets 4.4 108.9 123.1

Deferred tax assets 3.6.4 43.0 38.5

Non-current assets 862.1 864.7

Inventories 4.5 365.6 347.8

Net assets of production orders in progress 4.6 326.9 291.3

Trade accounts receivable 4.7 532.3 506.4

Other accounts receivable, prepayments and accrued income 4.7 131.0 107.9

Current income tax assets 6.6 5.8

Marketable securities 2.3.2 60.2 63.2

Cash and cash equivalents 431.3 345.5

Current assets 1,853.9 1,668.0

Total assets 2,716.0 2,532.7

Equity and liabilities

Share capital 4.12 15.0 15.0

Capital reserves 185.1 185.1

Other reserves / retained earnings 1,048.2 929.9

Equity attributable to the owners of the parent 1,248.3 1,130.0

Non-controlling interests 28.2 24.8

Total equity 1,276.5 1,154.8

Long-term financial liabilities 2.2 122.7 136.6

Deferred tax liabilities 3.6.4 78.4 79.4

Defined benefit obligations 4.11.4 156.3 166.9

Long-term provisions 4.9 24.6 24.9

Non-current liabilities 382.0 407.8

Short-term financial liabilities 2.2 29.7 16.4

Trade accounts payable 4.8 242.2 240.5

Net liabilities of production orders in progress 4.6 366.0 338.7

Short-term provisions 4.9 44.7 46.3

Other short-term liabilities, accruals and deferred income 4.10 350.7 305.8

Current income tax liabilities 24.2 22.4

Current liabilities 1,057.5 970.1

Total liabilities 1,439.5 1,377.9

Total equity and liabilities 2,716.0 2,532.7

Consolidated statement of financial position

130

NotesShare capital

CHF mCapital reserve

CHF m

Retained earnings

CHF mHedge reserve

CHF m

Available- for-sale reserve CHF m

Foreign currency

translation reserves

CHF mTotal reserves

CHF m

Equity attributable

to the owners of the parent

CHF m

Non-controlling interests

CHF mTotal equity

CHF m

January 1, 2015 15.0 185.1 1,051.1 – 4.2 0.8 –143.4 1,089.4 1,104.4 41.4 1,145.8

Dividends paid 5.6 –15.0 –15.0 –15.0 – 3.3 –18.3

Changes in non-controlling interests 1.5 – 22.7 – 22.7 – 22.7 –15.1 – 37.8

Net profit 140.1 140.1 140.1 2.6 142.7

Other comprehensive income – 31.8 0.4 0.0 – 45.6 – 77.0 – 77.0 – 0.8 – 77.8

December 31, 2015 15.0 185.1 1,121.7 – 3.8 0.8 –189.0 1,114.8 1,129.8 24.8 1,154.6

January 1, 2016 15.0 185.1 1,121.7 – 3.8 0.8 –189.0 1,114.8 1,129.8 24.8 1,154.6

Dividends paid 5.6 –15.0 –15.0 –15.0 – 2.8 –17.8

Net profit 136.3 136.3 136.3 7.0 143.3

Other comprehensive income 0.6 2.0 0.0 – 5.4 – 2.8 – 2.8 – 0.8 – 3.6

December 31, 2016 15.0 185.1 1,243.6 –1.8 0.8 –194.4 1,233.3 1,248.3 28.2 1,276.5

Consolidated statement of changes in equity


131


131

NotesShare capital

CHF mCapital reserve

CHF m

Retained earnings

CHF mHedge reserve

CHF m

Available- for-sale reserve CHF m

Foreign currency

translation reserves

CHF mTotal reserves

CHF m

Equity attributable

to the owners of the parent

CHF m

Non-controlling interests

CHF mTotal equity

CHF m

January 1, 2015 15.0 185.1 1,051.1 – 4.2 0.8 –143.4 1,089.4 1,104.4 41.4 1,145.8

Dividends paid 5.6 –15.0 –15.0 –15.0 – 3.3 –18.3

Changes in non-controlling interests 1.5 – 22.7 – 22.7 – 22.7 –15.1 – 37.8

Net profit 140.1 140.1 140.1 2.6 142.7

Other comprehensive income – 31.8 0.4 0.0 – 45.6 – 77.0 – 77.0 – 0.8 – 77.8

December 31, 2015 15.0 185.1 1,121.7 – 3.8 0.8 –189.0 1,114.8 1,129.8 24.8 1,154.6

January 1, 2016 15.0 185.1 1,121.7 – 3.8 0.8 –189.0 1,114.8 1,129.8 24.8 1,154.6

Dividends paid 5.6 –15.0 –15.0 –15.0 – 2.8 –17.8

Net profit 136.3 136.3 136.3 7.0 143.3

Other comprehensive income 0.6 2.0 0.0 – 5.4 – 2.8 – 2.8 – 0.8 – 3.6

December 31, 2016 15.0 185.1 1,243.6 –1.8 0.8 –194.4 1,233.3 1,248.3 28.2 1,276.5

132

Notes2016

CHF m2015

CHF m


Financial result 3.5 – 6.2 – 6.8

Operating result before interest and taxes (EBIT) 173.6 177.1

Depreciation and amortization 4.1/ 4.2 57.9 56.2

Other items not affecting cash flow 1.8 – 2.3

Changes in provisions – 7.8 – 3.7

Changes in trade accounts receivable – 25.7 – 28.1

Changes in inventories –17.4 –1.7

Changes in trade accounts payable 1.2 55.5

Changes in net assets / liabilities of production orders in progress –14.7 –116.2

Changes in other net operating assets 23.3 –17.9

Gains / losses on disposal of fixed assets 0.2 0.6

Interest received 3.6 3.7

Interest paid –1.6 – 2.8

Income taxes paid – 32.4 – 21.4

Cash flow from operating activities 161.9 99.1

Purchase of property, plant and equipment – 67.7 – 50.4

Disposal of property, plant and equipment 9.5 5.1

Purchase of intangible fixed assets – 3.2 – 3.6

Cash flow from business combinations of group companies, net of cash – 0.9 – 7.4

Purchase of marketable securities – 22.4 – 40.3

Disposal of marketable securities 29.9 11.7

Purchase of long-term financial assets – 6.2 – 23.8

Disposal of long-term financial assets 7.3 3.2

Dividends received 3.9 1.3

Cash flow from investing activities – 50.0 –104.4

Repayment of financial liabilities – 7.6 –15.0

Acquisitions and other transactions with non-controlling interests 1.5 0.0 – 37.8

Dividends paid of Bühler Holding AG –15.0 –15.0

Dividends paid to non-controlling interests – 2.8 – 3.3

Cash flow from financing activities – 25.3 – 71.2

Translation differences – 0.8 –14.3

Changes in cash and cash equivalents 85.8 – 90.7

Cash and cash equivalents at the beginning of period 345.5 436.1

Cash and cash equivalents at the end of period 431.3 345.5

Consolidated statement of cash flows


133


133

The consolidated financial statements of Bühler Group and its subsidiaries (collectively, the Group) for the year ended December 31, 2016, were authorized for issue in accordance with a resolution of the Board of Directors on February 7, 2017. Bühler Holding AG (the Company or the parent) is a company incorporated and domiciled in Switzerland whose shares are privately held. The registered office is located at Uzwil, Switzerland.

The Group is a globally active solutions provider for the in-dustrial manufacturing of food and advanced materials. The worldwide solutions portfolio contains engineering, applica-tion development, manufacturing, services, and training.

These financial statements are the consolidated financial statements of Bühler Holding AG and its subsidiaries. The list of subsidiaries is presented on page 139.

The preparation of the consolidated financial statements in accordance with IFRS requires management to make esti-mates and assumptions that affect the reported amounts of revenue, expenses, assets, and liabilities and the related disclosures at the date of the financial statements. These estimates are based on management’s best knowledge of current events and possible future measures. However, ac-tual results could differ from those estimates.

If in future such estimates and assumptions, which are based on management’s best knowledge at the date of the financial statements, deviate from the actual circumstances, the orig-inal estimates and assumptions will be modified as appro-priate in the year in which the circumstances change.

The consolidated financial statements of the Bühler Group have been prepared in accordance with the International Fi-nancial Reporting Standards (IFRS) as issued by the Interna-tional Accounting Standards Board (IASB) and comply with Swiss law. The consolidated financial statements are based on the single-entity financial statements of the Group com-panies, which are prepared in accordance with consistent accounting principles. The consolidated financial statements are prepared under the historical cost convention. Any ex-ceptions to this general rule are outlined in the respective note. The overall accounting principles applied to the Annu-al Report as a whole are described below. The accounting policies related to specific line items are described in the notes to which they relate.

Due to rounding, the numbers do not necessarily correspond exactly with the totals.

The estimates and assumptions that may have a higher risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial periods relate primarily to long-term construction contracts, goodwill and, to a lesser extent, defined benefit obligations, deferred tax assets, provisions, and disclosure of contingent liabilities at the end of the reporting period.

Estimates related to specific line items are described in the notes to which they relate.

1. Group information

1.1 General information

1.2 Use of estimates

Notes to the financial statements

134

The individual financial statements of the Group companies are measured using the currency of the primary economic environment in which the entity operates (“the functional cur-rency”) and are translated into Swiss francs for consolidation. Year-end exchange rates are used for the statement of finan-cial position and annual average exchange rates for the state-ment of income. The consolidated statement of cash flows is also translated at annual average exchange rates.

Differences resulting from the application of these different exchange rates for the statement of financial position and the statement of income and from equity transactions are rec-ognized directly in the consolidated statement of compre-hensive income.

Goodwill arising on the acquisition of a foreign entity is ex-pressed in the functional currency of the foreign operation and is translated at the closing rate.

Foreign currency transactions translated into the functional currency are accounted for at the exchange rates prevailing at the date of the transactions; gains and losses resulting from the settlement of such transactions and from the trans-lation of monetary assets and liabilities denominated in for-eign currencies are recognized in the statement of income, except when they are deferred outside the statement of in-come as qualifying cash flow hedges.

Foreign exchange differences arising on monetary items that form part of a company’s net investment in a foreign opera-tion are reclassified to equity (currency translation adjust-ment) in the consolidated financial statements and are only fully recycled to the statement of income when Bühler Group loses control of a subsidiary or loses significant influence in an associate.

For foreign currency translation, the Bühler Group used the following exchange rates:

1.3 Foreign currency translation

Average exchange rates Closing rates 31.12.

2016 CHF

2015 CHF

2016 CHF

2015 CHF

ARS 0.07 0.10 0.07 0.08

BRL 0.28 0.29 0.31 0.25

CAD 0.74 0.75 0.76 0.71

CNY 0.15 0.15 0.15 0.15

CZK 0.04 0.04 0.04 0.04

EUR 1.09 1.07 1.08 1.08

GBP 1.34 1.47 1.26 1.47

INR 0.01 0.02 0.02 0.01

JPY 0.01 0.01 0.01 0.01

MXN 0.05 0.06 0.05 0.06

SGD 0.71 0.70 0.71 0.70

THB 0.03 0.03 0.03 0.03

USD 0.98 0.96 1.03 0.99

ZAR 0.07 0.08 0.07 0.06


135


135

Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. The cost of an ac-quisition is measured at the fair value of the consideration transferred at the date of exchange. For each business com-bination, the acquirer measures the non-controlling interest in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition costs incurred are expensed in the statement of income. Identifiable assets acquired and liabilities assumed in a busi-ness combination are measured initially at fair value at the date of acquisition, irrespective of the extent of any non-con-trolling interest assumed. When the Bühler Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circum-stances, and pertinent conditions as at the acquisition date.

If the business combination is achieved in stages, the acqui-sition date fair value of the Bühler Group’s previously held equity interest in the acquiree is remeasured to fair value as at the acquisition date in the statement of income.

Any contingent consideration to be transferred by the Group is recognized at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration are recognized in the statement of income.

Subsidiaries are consolidated from the date on which control is transferred to the Group and are no longer consolidated from the date that control ceases.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.

All intercompany transactions and balances between Group companies are eliminated in full.

Investments in associated companies are accounted for us-ing the equity method of accounting. These are companies over which the Group generally holds between 20 % and 50 % of the voting rights and has significant influence but does not exercise control. Goodwill arising on the acquisition is included in the carrying amount of the investment in asso-ciated companies. Equity accounting is discontinued when the carrying amount of the investment together with any long-term interest in an associated company reaches zero, unless the Group has in addition either incurred or guaranteed ad-ditional obligations in respect to the associated company.

Investments below 20 % are recognized at fair value and pre-sented as non-current financial assets. Changes in fair value are recognized directly in other comprehensive income.

The list of significant Group companies can be found on page 139.

1.4 Principles of consolidation

136

Additions

2016There were no significant additions in 2016.

2015Acquisition of Hosokawa Bepex GmbH, Leingarten, Germany. On September 30, 2015, the Group acquired 100 % of the shares in Hosokawa Bepex GmbH, Leingarten (renamed to Bühler GmbH, Leingarten). The company is a global plant supplier in the field of confectionery and bak-ery and offers solutions ranging from engineering, design, manufacturing, and installation to commissioning of entire plants.

From the date of acquisition, Bühler GmbH, Leingarten, con-tributed CHF 7.7 million of revenue and CHF 0.03 million to profit before tax. If the combination had taken place at the beginning of the year, revenue would have been CHF 21.0 mil-lion and profit before tax would have been CHF –1.9 million.

Establishment of Buhler Pakistan (Pvt.) Ltd. On April 28, 2015, the Group founded Buhler Pakistan (Pvt.) Ltd. with a capital of PKR 30.0 million. The company conducts sales activities and provides services to our customers in Pakistan.

Establishment of Shijiazhuang Buhler Mechanical Co. Ltd. On June 6, 2015, the Group founded Shijiazhuang Buhler Mechanical Co. Ltd. with a capital of CNY 2.0 million. The company conducts sales activ ities and provides ser-vices to our customers in China.

Establishment of Buhler DMCC, Dubai. On May 21, 2015, the Group founded Buhler DMCC, Dubai, with a capital of AED 0.05 million. The company is the new regional head-quarters for Middle East & Africa, conducts sales support and provides services to our customers in the region.

Acquisitions of additional interests

Acquisition of additional interest in Buhler (Changzhou) Machinery Co. Ltd., Liyang City. On January 18, 2015, the Group bought additional 20 % shares of Buhler (Changzhou) Machinery Co. Ltd., increasing its ownership to 100 %. A cash consideration of CHF 29.7 million was paid to the non-controlling shareholders. The carrying value of the net assets of Buhler (Changzhou) Machinery Co. Ltd. (excluding goodwill on the original acquisition) was CHF 50.1 million. Following is a schedule of additional interest acquired in Buhler (Changzhou) Machinery Co. Ltd.:

CHF m

Cash consideration paid to non-controlling shareholders 29.9

Carrying value of the additional interest 10.0

Difference recognized in retained earnings 19.9

Acquisition of additional interest in Buhler (Guangzhou) Food Machinery Co. Ltd., Guangzhou City. On August 8, 2015, the Group bought additional 20 % shares of Buhler (Guangzhou) Food Machinery Co. Ltd., increasing its owner-ship to 100 %. A cash consideration of CHF 2.3 million was paid to the non-controlling shareholders. The carrying value of the net assets of Buhler (Guangzhou) Food Machinery Co. Ltd. (excluding goodwill on the original acquisition) was CHF 5.8 million. Following is a schedule of additional interest acquired in Buhler (Guangzhou) Food Machinery Co. Ltd.:

CHF m




Acquisition of additional interest in Buhler Yijiete Color Sorting Machinery (Hefei) Co. Ltd., Hefei. On April 10, 2015, the Group bought additional 30 % shares of Buhler Yijiete Color Sorting Machinery (Hefei) Co. Ltd., increasing its ownership to 100 %. A cash consideration of CHF 5.5 million was paid to the non-controlling shareholders. The carrying value of the net assets of Buhler Yijiete Color Sorting Machinery (Hefei) Co. Ltd. (excluding goodwill on the original acquisition) was CHF 12.2 million. Following is a schedule of ad ditional interest acquired in Buhler Yijiete Color Sorting Machinery (Hefei) Co. Ltd.:

CHF m




1.5 Additions and disposals of Group companies


137


137

The acquisition-related costs in prior year were not material and were recognized as other operating expenses in the statement of income.

Market value 2015

CHF m

Cash and cash equivalents 0.4

Trade accounts receivable 2.8

Other receivables 4.1

Inventories 10.1

Net assets of production orders in progress 0.0

Current assets 17.4

Property, plant and equipment 7.2

Intangible assets 3.0

Financial assets 0.0

Deferred tax asset 1.3

Non-current assets 11.5

Trade accounts payable –1.1

Net liabilities of production orders in progress 0.0

Short-term provisions – 0.8

Other short-term liabilities, accruals and deferred income – 3.1

Current liabilities and provisions – 5.0

Deferred tax liabilities –1.1

Non-current liabilities and provisions –18.5

Non-current liabilities and provisions –19.6

Change in net assets 4.4

Non-controlling interests 0.0

Goodwill arising on acquisitions 3.4

Gain on sale of business 0.0

Addition (+) to / disposal (–) from the Group 7.8

Outstanding sale / purchase price payment and other non-cash items 0.0

Cash disposed (–) / acquired (+) 0.4

Cash flow from changes in the scope of consolidation – 7.4

The goodwill in the amount of CHF 3.4 million recognized in prior year comprises the value of expected synergies arising from the acquisitions.

138

Disposals

Any non-current assets held for sale and discontinued oper-ations are presented separately on the face of the balance sheet. This includes all those assets associated with the dis-continuation of entire lines of business or geographical areas of operation, which are to be realized through a sale trans-action rather than through continued use. Reclassifications are only made if management is committed to the sale and has started seeking buyers. In addition, the asset or dispos-al group must be available for sale in its current condition and its sale must be highly probable within one year. Non- current assets or disposal groups classified as held for sale are no longer depreciated. If necessary, they are written down for impairment.

The income and expenses of discontinued operations are separated from ordinary income and expenses in the state-ment of income for both the reporting period and the prior year down to the “profit after tax” level. The resulting gain or loss (after taxes) is presented separately in the statement of income.

There was no significant disposal in 2016 and 2015.


139


139

Name of company Country

Share capital in millions of local currency

Participation rate

Holding / Financing Company Held by

Switzerland

Bühler Holding AG, Uzwil CH CHF 15.0 C

Bühler AG, Uzwil CH CHF 30.0 100,0 % Bühler Holding AG, Uzwil

Bühler-Immo Betriebs AG, Uzwil CH CHF 0.1 100,0 % Bühler Holding AG, Uzwil

Bühler Management AG, Uzwil CH CHF 0.1 100,0 % Bühler Holding AG, Uzwil

UBIF AG, Uzwil CH CHF 4.0 100,0 % Bühler Holding AG, Uzwil

Bühler + Scherler AG, St. Gallen CH CHF 0.8 60,0 % Bühler Holding AG, Uzwil

Europe

Bühler CZ s.r.o., Zamberk CZ CZK 265.2 100,0 % Bühler Holding AG, Uzwil

Bühler Deutschland GmbH, Beilngries DE EUR 0.025 100,0 % Bühler AG, Uzwil

Bühler GmbH, Beilngries DE EUR 16.0 100,0 % Bühler Deutschland GmbH, Beilngries

Bühler Deutschland Holding GmbH, Braunschweig DE EUR 0.025 100,0 % C Bühler AG, Uzwil

Bühler Barth GmbH, Freiberg a.N. DE EUR 1.137 100,0 %Bühler Deutschland Holding GmbH, Braunschweig

Bühler GmbH, Bergneustadt DE EUR 0.275 100,0 %Bühler Deutschland Holding GmbH, Braunschweig

Bühler GmbH, Braunschweig DE EUR 12.629 100,0 %Bühler Deutschland Holding GmbH, Braunschweig

Leybold Optics Verwaltungs GmbH, Alzenau DE EUR 0.444 100,0 % C Bühler AG, Uzwil

Bühler Alzenau GmbH, Alzenau DE EUR 0.05 100,0 %Leybold Optics Verwaltungs GmbH, Alzenau

Bühler GmbH, Leingarten DE EUR 2.432 100,0 %Bühler Deutschland Holding GmbH, Braunschweig

Buhler S.A., Madrid ES EUR 0.06 100,0 % Bühler Holding AG, Uzwil

Bühler Haguenau S.A.S., Haguenau FR EUR 0.2 100,0 % Bühler Holding AG, Uzwil

Buhler UK Holdings Ltd., London GB GBP 3.6 100,0 % C Bühler Holding AG, Uzwil

Buhler Ltd., London GB GBP 1.0 100,0 % Buhler UK Holdings Ltd., London

Buhler Sortex Ltd., London GB GBP 1.25 100,0 % Buhler UK Holdings Ltd., London

Control Design & Development Ltd., Peterborough GB GBP 0.0001 100,0 % Buhler UK Holdings Ltd., London

Sortex Ltd., London GB GBP 0.001 100,0 % Buhler UK Holdings Ltd., London

Buhler Brescia s.r.l., Brescia IT EUR 0.01 100,0 % Bühler AG, Uzwil

Buhler S.p.A., Milano IT EUR 2.665 100,0 % Bühler Holding AG, Uzwil

Bühler B.V., Oldenzaal NL EUR 0.034 100,0 % Bühler Holding AG, Uzwil

1.6 Significant Group companies

140



Participation rate


North America

Buhler US Holding Inc., Minneapolis US USD 0.05 100,0 % C Bühler Holding AG, Uzwil

Buhler Aeroglide Corporation, Cary US USD 0.004 100,0 % Buhler US Holding Inc., Minneapolis

Buhler Inc., Minneapolis US USD 3.2 100,0 % Buhler US Holding Inc., Minneapolis

BuhlerPrince Inc., Holland US USD 0.375 100,0 % Buhler US Holding Inc., Minneapolis

Latin America

Buhler S.A., Buenos Aires AR ARS 1.1 100,0 % Bühler Holding AG, Uzwil

Buhler S.A., Joinville BR BRL 20.685 100,0 % Bühler Holding AG, Uzwil

Bühler Sanmak Industria de Maquinas Ltda., Blumenau BR BRL 10.0 100,0 % Bühler Holding AG, Uzwil

Buhler S.A. de C.V., Toluca MX MXN 50.0 100,0 % Bühler Holding AG, Uzwil

Middle East and Africa

Buhler (Private Joint Stock Co.), Teheran IR IRR 9250.0 100,0 % Bühler Holding AG, Uzwil

Buhler Limited, Nairobi KE KES 900.0 100,0 % Bühler Holding AG, Uzwil

Buhler (Pty) Ltd., Johannesburg ZA ZAR 11.371 100,0 % Bühler Holding AG, Uzwil

Buhler Properties (Pty) Ltd., Johannesburg ZA ZAR 0.0001 100,0 % Buhler (Pty) Ltd., Johannesburg


141


141



Participation rate


Asia

Bangsheng Bio-Technology Co. Ltd., Guangzhou CN CNY 8.51 100,0 % Bühler Holding AG, Uzwil

Buhler (Changzhou) Machinery Co. Ltd., Liyang City CN CNY 320.0 100,0 % Buhler (China) Holding Co. Ltd., Wuxi

Buhler (China) Holding Co. Ltd., Wuxi CN USD 123.6 100,0 % C Bühler Holding AG, Uzwil

Buhler (China) Machinery Manufacturing Co. Ltd., Wuxi CN CNY 150.0 100,0 % Buhler (China) Holding Co. Ltd., Wuxi

Buhler (Guangzhou) Food Machinery Co. Ltd., Guangzhou City CN CNY 51.0 100,0 % Buhler (China) Holding Co. Ltd., Wuxi

Buhler (Wuxi) Commercial Co. Ltd., Wuxi CN USD 5.5 100,0 % Buhler (China) Holding Co. Ltd., Wuxi

Buhler Sortex Optical Equipment (Hefei) Co. Ltd., Hefei CN CNY 18.0 100,0 % Buhler (China) Holding Co. Ltd., Wuxi

Buhler Aquatic Equipment (Changzhou) Co. Ltd., Liyang CN CNY 10.0 80,0 % Buhler (China) Holding Co. Ltd., Wuxi

Wuhan Mingbo Electromechanical Equipment Co. Ltd., Wuhan CN CNY 5.0 80,0 % Buhler (China) Holding Co. Ltd., Wuxi

Buhler Equipment (Xian) Co. Ltd., Xi’an CN CNY 28.0 100,0 % Bühler Holding AG, Uzwil

Buhler Food Ingredients (Guangzhou) Co. Ltd., Guangzhou CN USD 3.8 100,0 % Bühler Holding AG, Uzwil

Buhler Mechanical Equipment (Shenzhen) Co. Ltd., Shenzhen CN USD 4.0 100,0 % Bühler Holding AG, Uzwil

Wuxi Buhler Machinery Manufacturing Co. Ltd., Wuxi CN USD 23.0 51,0 % Bühler Holding AG, Uzwil

Buhler Leybold Optics Equipment (Beijing) Co. Ltd., Beijing CN CNY 10.1 100,0 % Bühler Alzenau GmbH, Alzenau

Buhler (India) Private Ltd., Bangalore IN INR 100.0 100,0 % Bühler Holding AG, Uzwil

Buhler K.K., Yokohama JP JPY 250.0 100,0 % Bühler Holding AG, Uzwil

Buhler Asia Private Limited, Singapore SG USD 13.675 100,0 % C Bühler Holding AG, Uzwil

Buhler Vietnam Company Limited, Ho Chi Minh City VN VND 47.893 94,0 % Buhler Asia Private Limited, Singapore

Buhler (Thailand) Ltd., Bangkok TH THB 110.0 100,0 % Buhler Asia Private Limited, Singapore

PT Buhler Indonesia, Jakarta ID IDR 10,500 100,0 % Buhler Asia Private Limited, Singapore

142

The Board of Directors of Bühler Group assesses corporate risks by undertaking systematic risk identification and analysis. Based on this assessment, the measures required for risk management in the company are defined and monitored. The corresponding meeting of the Board of Directors took place on December 14, 2016.

Capital management. One of the Group’s main objectives is to apply a wellmanaged 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. Bühler does not have to comply with any capital requirements imposed by third parties, since the extent of its financial liabilities to third parties is of a negligible magnitude. Group management reviews the capital structure of the Group and the equity of Group companies on a regular basis. As at December 31, 2016, the equity ratio stood at 47.0 % (prior year: 45.6 %).

As a result of its global activities, the Group is exposed to financial market risks (currency risk, interest rate risk, price risk), credit risks, and liquidity risks. Financial risk management focuses on the management of currency risk and credit risk. Derivative financial instruments are used to hedge certain risks. The risk management function is exercised by the Group Treasury department in close collaboration with the operating units, as well as in accordance with treasury directives.

Market risk. Bühler 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 and reports to the Finance Committee every month. In order to manage the volatility associated with these risks, the Group employs financial derivative instruments such as forward contracts and options.

Exchange rate risk. The Group reports in Swiss francs and is therefore exposed to exchange rate movements primarily in European, North American, South American and Asian currencies. Various contracts are concluded with a view to offsetting exchange raterelated changes in the value of assets, liabilities, and future transactions. Bühler also uses currency forwards and options for this purpose. Net investments in foreign Group companies are longterm in nature. Their fair value changes with exchange rates. Over the very long term, however, the change in the inflation rate should match the corresponding exchange rate movements, so that changes in the fair value of foreign investments will offset the exchange raterelated changes in value. For this reason, Bühler only hedges its investments in foreign Group companies in exceptional cases.

The following table shows the hypothetical repercussions of changes in the key currency pairs on profit after taxes. The volatility value used in the calculation is that of oneyear historical volatility as per December 31.

2016 Currency pair EUR / CHF USD / CHF

Volatility 7.5 % 10.3 %

Effect in profit and loss (rate increase) CHF m 7.4 –1.9

Effect in profit and loss (rate decrease) CHF m – 7.5 1.9

2015 Currency pair EUR / CHF USD / CHF

Volatility 7.7 % 10.4 %

Effect in profit and loss (rate increase) CHF m 0.2 – 3.5

Effect in profit and loss (rate decrease) CHF m – 0.9 3.2

2. Financial risk management


143


143

Commodity risk. Bühler is exposed to a certain degree to com modity price risk due to fluctuations in the prices of commodities required for production process. The Group does not conclude any significant futures, forwards, or options to hedge future commodity purchases.

Equity security risk. The Group buys shares in other companies in order to invest its liquid funds. It does so in accordance with the treasury strategy approved by the Board of Directors. This sets precise limits, including investments in shares. Bühler limits the risk across all asset classes by holding less than 5 % of the Group’s invested funds in any single outside company. Call or put options are covered by cash positions.

Interest rate risk. Interest rate risk arises from changes in interest rates that may affect the net assets and results of the Bühler Group. These risks are managed and monitored centrally. The robust liquidity situation and the fact that the Group is not reliant on external financing mean that interest rate changes have no material impact on the financial result of the Group.

Credit risk. Credit risks arise in connection with liquid funds, derivative financial instruments, investments with banks, marketable securities, and receivables from customers. In order to minimize potential losses on customers receivables, an Operational Risk Management (ORM) guideline has been drawn up. The evaluation of our customers’ financial reliability and / or the terms of payment and hedging on our deliveries are key concerns in this respect. In addition, it can be stated 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 book values stated represent the maximum credit risk. The default risk on marketable securities, derivative financial instruments, money market contracts, currentaccount deposits, and time deposits is minimized on one hand through the exclusive purchase of securities with at least an A rating, and on the other by selecting only financial institutions with at least an investment grade rating as the Group’s main global banks. The risks are monitored rigorously and kept within stipulated parameters. Group guidelines ensure that the Group’s credit risk visàvis financial insti tutions is limited. The limits set are regularly moni tored and adjusted. The Group does not expect to incur any loss as a result of its counterparties being unable to meet their contractual obligations, nor does it have any cluster risks with respect to individual sectors or countries.

Information to analysis of outstanding receivables and allowance for bad debts can be found in Note 4.7.

Liquidity risk. Liquidity risk refers to the risk of the Group being unable to fulfill its obligations when due or at a reasonable price. The Group Treasury department is responsible for monitoring liquidity, financing, and repayment. In addition, liquidity and financing risks and the related processes and guidelines are checked by corporate management. Bühler manages its liquidity risk on a consolidated basis, taking into account business policy, tax, financial and regu latory considerations. Free cash flow represents the main source of financing. If required, the Group also has recourse to approved lines of credit. Corporate management monitors the Group’s net liquidity position by means of ongoing forecasts based on expected cash flows.

144

A distinction is made between the following three categories:

A Financial assets “at fair value through profit or loss” are generally acquired with the intention of generating a profit from shortterm fluctuations in price.

A “Loans and receivables” include loans granted and accounts receivable.

A 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 measured at fair value, with fair value changes recognized in the financial result in the period in which they arise.

“Available for sale” financial assets are measured subsequent to their initial recognition at fair value, with unrealized gains and losses recognized in other comprehensive income. When the financial asset is either impaired or disposed of, the cumulative gain or loss previously recognized in the other comprehensive income is reclassified from equity to the statement of income. Provided that fair value cannot be reliably determined, availableforsale financial assets are measured at cost. This applies to financial assets that do not have a quoted market price in an active market and decisive parameters cannot be reliably estimated to be used in valuation models for the determination of fair value.

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

In 2014, the IASB issued the final version of IFRS 9 Financial Instruments, which replaces IAS 39 and all previous versions of IFRS 9. IFRS 9 is effective for annual periods beginning on or after January 1, 2018. The Group expects that these amendments will not have a significant impact and plans to adopt the new standard on the required effective date.

2.1 Financial assets

2016

Cash and cash

equivalents CHF m

Securities CHF m

Receivables and accruals

CHF m

Financial assets CHF m

Total book value

CHF m

Total market value

CHF m

Cash reserves 431.3 431.3 431.3

Financial assets “at fair value through profit or loss” 60.2 60.2 60.2

Loans and receivables 663.3 84.1 747.4 747.4

Financial assets “available for sale” 14.4 3.6 18.0 18.0

Total financial assets 431.3 74.6 663.3 87.7 1,256.9 1,256.9

As at December 31, 2016, capital commitments of CHF 13.0 million (prior year: 7.7 million) have not yet been drawn.


145


145

2015

Cash and cash

equivalents CHF m

Securities CHF m

Receivables and accruals

CHF m

Financial assets CHF m

Total book value

CHF m

Total market value

CHF m

Cash reserves 345.5 345.5 345.5

Financial assets “at fair value through profit or loss” 63.2 63.2 63.2

Loans and receivables 614.3 89.9 704.2 704.2

Financial assets “available for sale” 12.2 4.9 17.1 17.1

Total financial assets 345.5 75.4 614.3 94.8 1,130.0 1,130.0

Financial liabilities consist mainly of borrowings, which are initially recognized with the proceeds received, net of transaction cost incurred. Subsequently, the borrowings are measured at amortized cost using the effective interest method with any difference between net proceeds and the principal

value due on redemption being recognized in the statement of income over the term of the borrowings. Financial liabilities are derecognized when its contractual obligations are discharged, cancelled or expired.

2.2 Financial liabilities

2016

Financial liabilities

CHF m

Payables / accruals and

deferred income CHF m

Total book value

CHF m

Total market value

CHF m

Financial liabilities at amortized acquisition costs 135.1 592.9 728.0 728.0

Financial liabilities “at fair value through profit and loss” 17.3 17.3 17.3

Total financial liabilities 152.4 592.9 745.3 745.3

2015

Financial liabilities

CHF m

Payables / accruals and

deferred income CHF m

Total book value

CHF m

Total market value

CHF m

Financial liabilities at amortized acquisition costs 136.6 546.3 682.9 682.9

Financial liabilities “at fair value through profit and loss” 16.4 16.4 16.4


146

Maturity analysis

Cash outflow

2016

Book value Dec 31, 2016

CHF mTotal

CHF m< 1 year CHF m

1– 5 years CHF m

> 5 years CHF m

Trade accounts payable to third parties 238.9 238.9 238.9

Liabilities to associates, nonconsolidated companies and related parties 139.1 139.1 8.0 76.1 55.0

Liabilities others / accruals and deferred income 374.2 374.2 373.0 1.2

Derivative financial instruments held for hedging net 3.6 3.6 3.4 0.2

Total 755.8 755.8 623.3 77.5 55.0

Cash outflow

2015

Book value Dec 31, 2015

CHF mTotal

CHF m< 1 year CHF m

1– 5 years CHF m

> 5 years CHF m

Trade accounts payable to third parties 236.8 236.8 236.8

Liabilities to associates, nonconsolidated companies and related parties 152.4 152.4 20.2 77.2 55.0

Liabilities others / accruals and deferred income 316.1 316.1 311.3 4.8

Derivative financial instruments held for hedging net 6.4 6.4 7.1 – 0.7

Total 711.7 711.7 575.4 81.3 55.0


147


147

Derivative financial instruments and hedge accounting. Derivative financial instruments are initially recognized at cost and subsequently at fair value (replacement cost). The method applied in recognizing the resulting profits or losses depends on whether a derivative was designated for hedging purposes, and if so, on the type of position being hedged. Certain derivatives may be used to hedge foreign currency risks in connection with a transaction that is highly likely to take place in future, or to hedge a fixed commitment (hedging of cash flows). When the hedge is implemented, the Group documents the relationship between the hedging instrument and the risk being hedged, as well as setting out risk management objectives and strategies. Furthermore, the Group records its assessment of the effectiveness of the hedging instrument with respect to the hedged cash flows, both when the hedging transaction is concluded and on an ongoing basis.

The full fair value of a hedging derivative is classified as a noncurrent asset or liability when the remaining maturity of the hedged item is more than twelve months; it is classified as a current asset or liability when the remaining maturity of the hedged item is less than twelve months. Trading derivatives are classified as a current asset or lia bility.

The hedging of cash flows is undertaken for certain anticipated Groupinternal transactions as well as for the foreign

currency risk of firm commitments. The effective portion of the change in fair value of derivatives used for the hedging of cash flows is recognized in other comprehensive income. The ineffective portion of the hedging instrument is immediately recognized as financial result in the statement of income.

Amounts accumulated in other comprehensive income are recycled in the statement of income in the periods when the hedged item affects profit or loss. When a forecasted transaction is no longer expected to occur, the cumulative gain or loss that was recorded in other comprehensive income is immediately transferred to the statement of income.

Derivatives not designated as hedging instruments are accounted for at fair value through profit or loss. Changes in the fair value of these derivative instruments are recognized immediately as financial result in the statement of income.

Marketable securities. Marketable securities include those that are held for trading without participation features. Securities included in financial assets are categorized as available for sale.

Futures and options were entered into with banks mainly to hedge currency risks. The following positions were open as of December 31, 2016:

2.3 Marketable securities and derivative financial instruments

148

Contract or underlying principal amount Positive fair values Negative fair values

2.3.1 Derivative financial instruments2016

CHF m2015

CHF m2016

CHF m2015

CHF m2016

CHF m2015

CHF m

Currency-related instruments

Forward foreign exchange rate contracts 951.7 975.4 6.9 7.5 16.9 16.8

A held for trading 596.1 645.5 3.6 4.5 10.0 7.4

A cash flow hedges (effective part) 355.6 329.9 3.3 3.0 6.9 9.4

Overthecounter currency options 16.1 26.3 0.1 0.1 0.1 0.0

Total of currency-related instruments 967.8 1,001.7 7.0 7.6 17.0 16.8

Equity-related instruments

Overthecounter equity options 30.0 0.0 0.0 0.0 0.8 0.0

Total of equity-related instruments 30.0 0.0 0.0 0.0 0.8 0.0

Options 46.1 26.3 0.1 0.1 0.9 0.0

Futures 951.7 975.4 6.9 7.5 16.9 16.8

Sum of derivative financial instruments 997.8 1,001.7 7.0 7.6 17.8 16.8

Thereof included in securities and in shortterm financial liabilities 974.8 952.9 6.7 6.5 17.3 16.3

Thereof included in other longterm financial assets and financial liabilities 23.0 48.8 0.3 1.1 0.5 0.5

USD CHF m

EUR CHF m

Other currencies

CHF m

Total 2016

CHF m

Total 2015

CHF m

Currency-related instruments

Forward foreign exchange rate contracts 297.9 482.4 171.4 951.7 975.4

A held for trading 215.4 263.2 117.5 596.1 645.5

A cash flow hedges 82.5 219.2 53.9 355.6 329.9

Overthecounter currency options 0.0 16.1 0.0 16.1 26.3

Total of currency-related instruments 297.9 498.5 171.4 967.8 1,001.7

Equity-related instruments

Overthecounter equity options 0.0 0.0 30.0 30.0 0.0

Total of equity-related instruments 0.0 0.0 30.0 30.0 0.0

Options 0.0 16.1 30.0 46.1 26.3

Futures 297.9 482.4 171.4 951.7 975.4

Sum of derivative financial instruments 297.9 498.5 201.4 997.8 1,001.7

Positive replacement values are included in securities or longterm financial assets and negative replacement values are included in financial liabilities.


149


149

2.3.2 Marketable securities2016

CHF m2015

CHF m

Equity securities 4.8 4.2

Bonds 9.5 9.4

Derivative financial instruments 6.7 6.5

Accrued interest on debt securities 0.0 0.0

Other securities 39.2 43.1

Total marketable securities 60.2 63.2

The fair values of financial instruments that are actively traded on markets are based on the relevant trading exchange prices (offer prices) on the balance sheet reference date. Instruments of this nature are classified as Level 1. The fair values of financial instruments that are not actively traded on markets (e.g., derivative OTC instruments) are determined

using valuation models. If all the parameters required for the valuation are based on observable market data, the instrument in question is classified as Level 2. If one or more parameters are based on unobservable market data, the instrument is classified as Level 3. In the period under review as well as in the prior year no transfer occurred within the Levels.

2.4 Estimation of fair values

2016 CHF m Level 1 Level 2 Level 3 Total

Financial assets “at fair value through profit or loss” 53.5 53.5

Derivative financial assets 7.0 7.0

Financial assets “available for sale” 3.6 14.4 18.0

Total financial assets 53.5 10.6 14.4 78.5

Derivative financial liabilities 17.8 17.8


2015 CHF m Level 1 Level 2 Level 3 Total

Financial assets “at fair value through profit or loss” 56.8 56.8

Derivative financial assets 7.6 7.6

Financial assets “available for sale” 4.9 12.2 17.1

Total financial assets 56.8 12.5 12.2 81.5

Derivative financial liabilities 16.8 16.8


150

Revenue is recognized when it is probable that the economic benefits associated with the transaction will flow to the entity and the amount of the revenue can be measured reliably. Revenue is measured at the fair value of the consideration received net of sales taxes and discounts. Revenue from the sale of goods is recognized when delivery has taken place and the transfer of risks and rewards of ownership has been completed.

The Group accounts for customer projects using the percentageofcompletion method. Revenue (including an estimated share of the outcome of the contract) is recognized by reference to the stage of completion. The stage of completion is determined according to the costtocost method. The percentageofcompletion method involves the use of estimates and forecasts concerning future costs; actual costs may differ from these estimates. The forecasts 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 longterm construction contracts are recognized as an expense immediately. Losses on longterm construction contracts occur when the expected contract costs exceed the expected revenue.

2016 CHF m

2015 CHF m

Earnings from coordination of consortium business 0.0 1.4

Interest income from trade finance 2.1 1.2

Rental income 0.9 0.4

Gains from sale of fixed assets 2.3 0.9

Other operating income related parties 0.7 0.4

Others 16.0 19.3

Total 22.0 23.6

“Others” comprises a number of individually immaterial items which cannot be allocated to another line item.

CHF 1,777.9 million (prior year: CHF 1,753.4 million) of the total oper ating income was determined using the percentageofcompletion method in the reporting period.

In 2014, the IASB issued the final version of IFRS 15 Revenue from Contracts with Customers, which will supersede all current revenue recognition requirements under IFRS. IFRS 15 is effective for annual periods beginning on or after January 1, 2018. The Group is currently assessing the impact of IFRS 15 and plans to adopt the new standard on the required effective date.

3. Detailed information on consolidated statement of income

3.1 Sales revenue

3.2 Other operating income


151


151

2016 CHF m

2015 CHF m

Administration expenses 104.0 105.8

Rental and leasing expenses, dues 31.1 28.1

Energy, maintenance and repairs 29.3 30.3

Travel expenses 79.4 77.5

Outbound freight costs 66.6 63.5

Consultancy fees 13.4 10.0

Marketing costs 17.7 18.7

Agency fees 15.5 13.3

Other operating expenses related parties 25.2 26.0

Others 26.0 28.3

Total 408.2 401.5

2016 CHF m

2015 CHF m

Wages and salaries 607.7 578.3

Social security and employee benefit expenses 116.9 112.9

Other personnel expenses 68.6 59.8

Total 793.2 751.0

3.3 Employee benefit expenses

3.4 Other operating expenses

152

2016 CHF m

2015 CHF m

Interest income 4.1 4.5

Interest income from related parties 0.7 0.8

Realized gains from securities 5.2 4.2

Other financial income 0.0 1.3

Total finance income 10.0 10.8

Interest expenses – 0.3 – 0.9

Interest expenses from related parties –1.5 –1.5

Realized losses from securities – 0.3 – 0.5

Fair value adjustments net 1.7 – 0.6

Foreign exchange gains and losses net –1.1 1.3

Other financial expenses – 2.3 –1.8

Total finance expense – 3.8 – 4.0

Total 6.2 6.8

The continuously low interest rates in most major currencies resulted in an interest result including interest from related parties of CHF 3.0 million (prior year: CHF 2.9 million). Due to strict hedging of foreign currency risks the exchange rate fluctuations had no material impact on the foreign exchange result (2016: CHF –1.1 million, 2015: CHF 1.3 million).

3.5 Financial result


153


153

Income taxes comprise the tax expense in respect of all recognized profits for the reporting period. They include current and deferred income taxes. Current income taxes are calculated on taxable profit. Provisions 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 statement of financial position and their tax base taking into account actual or expected local tax rates. Changes in deferred tax balances are recognized in the statement of income, except when they relate to items recognized outside the statement of income, in which case the deferred tax is treated accordingly.

Current income tax relating to items recognized directly in equity is recognized in equity and not in the statement of income.

Deferred tax assets are only recognized for temporary differences and unused tax loss carryforwards to the extent that it is probable that future taxable profit will be available against which temporary differences or unused tax losses can be utilized. This assessment is based on estimates and therefore includes a degree of uncertainty.

3.6 Taxes

3.6.1 Income taxes2016

CHF m2015

CHF m

Income taxes relating to the reporting period – 40.1 – 39.0

Income taxes relating to prior periods –1.1 1.5

Deferred taxes due to temporary differences 3.4 – 2.2

Deferred taxes due to recognition of tax loss carryforwards 1.4 –1.4

Deferred taxes due to changes in tax rates – 0.1 – 0.1

Total – 36.5 – 41.2

Deferred taxes recognized directly in shareholders’ equity 1.3 8.2

3.6.2 Reconciliation of income taxes2016

CHF m2015

CHF m


Components of tax expenses:

Income taxes at anticipated tax rate – 40.1 – 40.4

Income and expenses not subject to tax 0.7 –1.6

Income taxes relating to prior periods –1.1 1.5

Deferred taxes due to changes in tax rates – 0.1 – 0.1

Effect of tax loss carryforwards 1.2 0.5

Effect of losses without recognition of deferred tax assets – 2.7 – 3.3

Other impacts 5.6 2.2

Income taxes disclosed (current and deferred) – 36.5 – 41.2

Total income taxes in % of profit before taxes 20.3 % 22.4 %

The anticipated tax rate was 22.3 % (prior year: 22.0 %) and consisted of the weighted average of the applicable local tax rates for income taxes. The tax rate decreased to 20.3 % in 2016 from 22.4 % in 2015. Contributory factors for the resulted tax rate included a sustainable tax management and the existence of a special tax effect in China.

154

3.6.3 Tax loss carry-forwards2016

CHF m2015

CHF m

Expiry

Unlimited 86.4 77.8

In more than five years 22.7 22.0

In two to five years 34.7 35.8

Within one year 1.3 0.2

Total 145.1 135.8

Tax loss carryforwards accounted for in deferred taxes 110.5 106.8

Tax effect on tax loss carryforwards unaccounted for 8.5 7.0

The change in tax loss carryforwards results from the use of tax losses in particular in China, Germany, and Spain as well as from the impact of additional tax loss carryforwards in particular in Germany, China, and South East Asia.

3.6.4 Deferred tax asset (+) / liability (–) per line item2016

CHF m2015

CHF m

Tangible fixed assets – 8.0 –12.0

Postemployment benefits 28.9 32.9

Provisions – 9.8 – 3.5

Other items – 77.0 – 87.5

Tax loss carryforwards 30.5 29.1

Total – 35.4 – 41.0

Recognized on the balance sheet as deferred tax liabilities – 78.4 – 79.4

Recognized on the balance sheet as deferred tax assets 43.0 38.5

Deferred tax assets and liabilities are offset if there is a legally enforceable right to set them off and if the calculations of income taxes relate to the same taxation authority.


155


155

Research costs are recognized in the statement of income in the period in which they are incurred. Development costs are capitalized only if, and to the extent that, the IFRS criteria are met and it is probable that the present value of the expected returns will exceed the development costs. Capitalized development costs are amortized on a systematic basis over the period in which the returns are expected to flow to the Group.

Research and development costs directly charged to the statement of income in the reporting period amounted to CHF 108.5 million (prior year: CHF 102.4 million).

3.7 Research and development costs

156

Property, plant and equipment is valued at acquisition or construction cost less depreciation and write-downs for im-pairment. Items of property, plant and equipment are depre-ciated on a straight-line basis over their estimated useful life, except for land, which is not depreciated. Estimated useful lives of major classes of depreciable assets are as follows:

A Building shell: 40 – 80 years A Installations / extensions: 20 – 25 years A Machinery and technical equipment: 10 years A Other tangible fixed assets: 3 –10 years

The estimated useful life of the assets is regularly reviewed and, if necessary, the future depreciation charge is acceler-ated.

Costs are only included in the asset’s carrying amount when it is probable that economic benefits associated with the item will flow to the Group in future periods and the cost of the item can be measured reliably.

Leases. Leases of property, plant and equipment where the Group has substantially all the risks and rewards of owner-ship are classified as finance lease. Property, plant and equipment acquired through a finance lease is capitalized at the date of the commencement of the lease term at the pres-ent value of the minimum future lease payment or, if lower, at the amount equal to the fair value of the leased asset as determined at the inception of the lease. The associated lia-bilities are recognized as either current or non-current finan-cial liabilities, depending on their due dates.

Leases where substantially all the risks and rewards of own-ership are not transferred to the Group are classified as op-erating leases. Payments under operating leases are charged to the statement of income on a straight-line basis over the period of the lease.

Assets under finance leases where the Bühler 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. Lease income from these fi-nance leases is subsequently recognized over the term of the lease based on the effective interest method.

In 2016, the IASB issued the final version of IFRS 16 Leases, which replaces IAS 17. IFRS 16 is effective for annual periods beginning on or after January 1, 2019. The Group is current-ly assessing the impact of IFRS 16 and plans to adopt the new standard on the required effective date.

Borrowing costs. Borrowing costs which are directly at-tributable to the acquisition, construction, or production of a qualified asset are capitalized as part of the cost of that asset.

Impairment of assets. At each reporting date, the Group assesses whether there is any indication that an asset may be impaired. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any. Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the smallest cash-generating unit to which the asset belongs. The recov-erable amount is the higher of an asset’s or cash-generating unit’s fair value less costs to sell and its value in use. If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount. Impairment losses are recognized im-mediately in the statement of income.

Where an impairment loss is subsequently reversed, the car-rying amount of the asset or cash-generating unit is in-creased to the revised estimate of its recoverable amount. However, this increased amount cannot exceed the carrying amount that would have been determined had no impairment loss been recognized for that asset or cash-generating unit in prior periods. A reversal of an impairment loss is recog-nized immediately in the statement of income.

4. Detailed information on consolidated statement of financial position

4.1 Property, plant and equipment


157


157

plant and equipment, which are not shown in the balance sheet, amounted to CHF 53.8 million (prior year: CHF 57.8 mil-lion) and are mainly related to investments in the factories in China.

Acquisition cost

Land and buildings

CHF m

Machinery and technical

equipment CHF m

Other tangible

assets CHF m

Assets under

construction CHF m

Total CHF m

January 1, 2015 297.8 303.3 134.4 27.8 763.3

Additions 3.5 12.9 9.0 25.2 50.6

Disposals – 7.0 – 24.2 – 4.7 – 0.2 – 36.2

Changes in the scope of consolidation 9.1 4.3 3.8 0.0 17.2

Reclassifications 22.6 7.9 4.3 – 31.9 2.9

Translation differences –14.4 –14.0 – 7.3 –1.4 – 37.1

December 31, 2015 311.6 290.2 139.5 19.5 760.7

Additions 15.0 16.3 12.7 23.8 67.8

Disposals – 0.8 –19.6 –12.2 – 2.2 – 34.8


Reclassifications 11.9 0.1 1.9 –14.0 – 0.1

Translation differences – 2.7 – 0.2 0.2 – 0.1 – 2.8

December 31, 2016 335.0 286.8 142.1 26.9 790.8

Depreciation

January 1, 2015 – 78.7 –173.8 –103.2 – 0.3 – 356.0

Additions – 8.6 –19.1 –11.2 – 0.1 – 39.0

Disposals 3.3 22.5 4.5 0.0 30.3

Changes in the scope of consolidation – 3.5 – 3.4 – 3.0 0.0 – 9.9

Impairment 0.0 0.0 0.0 0.0 0.0

Reclassifications 0.1 –1.2 –1.8 0.0 – 2.9

Translation differences 2.9 8.4 5.8 0.0 17.2

December 31, 2015 – 84.5 –166.6 –108.8 – 0.4 – 360.3

Additions – 9.5 –19.2 –11.7 – 0.2 – 40.6

Disposals 0.4 14.3 10.5 0.0 25.2


Impairment 0.0 – 0.1 0.0 0.0 – 0.1

Reclassifications – 0.5 0.2 0.0 0.2 – 0.1

Translation differences 0.4 0.1 – 0.3 0.0 0.2

December 31, 2016 – 93.7 –171.3 –110.3 – 0.4 – 375.7

Net book values

January 1, 2016 227.0 123.6 30.7 19.1 400.4

December 31, 2016 241.3 115.5 31.8 26.5 415.1

As in the pre vious year, the Group did not enter in financial lease contracts as lessee. Net loss on disposal of tangible fixed assets amounted to CHF – 0.2 million (prior year: net loss CHF – 0.6 million). Commitments relating to property,

158

Goodwill represents the excess of the aggregate of the con-sideration transferred and the amount recognized for the non-controlling interest over the fair value of the net identi-fiable assets acquired and liabilities assumed. Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill on acquisitions of associates is included in invest-ments in associates.

Goodwill is tested annually for impairment or whenever there are impairment indicators and is carried at cost less accu-mulated impairment losses.

If the consideration transferred is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized directly in the statement of income.

On disposal of a subsidiary, associate or joint venture, the related goodwill is included in the determination of profit or loss on disposal.

Goodwill on acquisitions of subsidiaries and interests in joint ventures is allocated to cash-generating units for the purpose of impairment testing. Impairment losses relating to goodwill cannot be reversed in future periods.

Acquired patents, licenses, trademarks, and similar rights are initially recorded at cost and amortized on a straight-line ba-sis over their estimated useful life or a period not exceeding 15 years. Intangible assets acquired through business com-binations are carried in the statement of financial position at the fair value allocated in the acquisition accounting and amortized over their estimated useful life.

Other intangible assets mainly comprise customer relation-ships, technologies, patents, and software.

4.2 Intangible assets


159


159

Acquisition costGoodwill

CHF m

Other intangible

assets CHF m

Total CHF m

January 1, 2015 273.1 155.3 428.4

Additions 0.0 3.7 3.7

Disposals 0.0 – 3.0 – 3.0

Changes in the scope of consolidation 3.4 5.0 8.4

Reclassifications – 0.0 3.3 3.3

Translation differences –18.2 –10.3 – 28.5

December 31, 2015 258.3 154.0 412.3

Additions 0.9 3.1 4.0

Disposals 0.0 – 0.6 – 0.6


Reclassifications 0.0 0.4 0.4

Translation differences 1.1 0.5 1.6

December 31, 2016 260.3 157.4 417.7

Amortization

January 1, 2015 – 29.7 – 97.7 –127.4

Additions 0.0 –17.2 –17.2

Disposals 0.0 3.0 3.0

Impairment 0.0 0.0 0.0

Changes in the scope of consolidation 0.0 – 2.1 – 2.1

Reclassifications 0.0 – 3.2 – 3.2

Translation differences 1.8 6.5 8.3

December 31, 2015 – 27.9 –110.7 –138.6

Additions 0.0 –17.3 –17.3

Disposals 0.0 0.6 0.6

Impairment 0.0 0.0 0.0


Reclassifications 0.0 – 0.2 – 0.2

Translation differences – 0.3 – 0.3 – 0.6

December 31, 2016 – 28.2 –127.9 –156.1

Net book values

January 1, 2016 230.4 43.3 273.7

December 31, 2016 232.1 29.5 261.6

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Growth rate estimates – The assumptions used in the calcu-lation reflect the long-term expected growth rate of the op-erational business and are based on the growth strategy of the Group.

Raw materials price inflation – Estimates are obtained from published indices relating to specific commodities. Past actual raw materials 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 forecast period. Market share is expected to be stable over the forecast period.

Result of the impairment test. The impairment tests performed on December 31, 2016, support the value of the carrying amount. Like in prior year, no impairment needs to be recognized.

Sensitivity to changes in assumptions. A possible in-crease in the discount rate of 1 percentage point result in the carrying amount not exceeding its recoverable amount (same as in prior year). A drop in sales of 5 percentage points result in the carrying amount not exceeding its recoverable amount (same as in prior year).

Impairment test

The recoverable amounts have been determined based on a value-in-use calculation. This calculation uses cash flow projections based on financial budgets approved by the re-spective division management covering a five-year period.

Key assumptions used in value-in-use calculations. The calculations of values in use are most sensitive to the follow-ing assumptions:

A Gross margin A Discount rate A Growth rate used to extrapolate cash flows beyond the budget period

A Raw materials price inflation A Market share assumptions

Gross margin – Gross margins are based on average values reported in the three years preceding the start of the forecast period. These gross margins are adjusted based on the lat-est available information regarding the actual gross margins as well as anticipated efficiency improvements over the fore-cast period.

Discount rate – The discount rates which are used to calcu-late the discounted present value of the future cash flows are derived from a capital asset pricing model using market data such as the yield on a ten-year government bond of the re-spective country or specific country risk premiums.


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161

Base data used

Goodwill 2016Book value

CHF m Discount rate Growth rate

Leybold Optics Verwaltungs GmbH, Alzenau 78.6 8.8 % 1.2 %

Buhler Aeroglide Corporation, Cary 63.7 9.6 % 1.2 %

Bühler Deutschland GmbH, Beilngries 36.9 8.8 % 1.2 %

Bühler Barth GmbH, Freiberg a.N. 15.9 8.8 % 1.2 %

Buhler Yijiete Color Sorting Machinery (Hefei) Co. Ltd., Hefei 7.0 11.2 % 3.1 %

Bangsheng Bio-Technology Co. Ltd., Guangzhou 6.7 11.2 % 3.1 %

Wuhan Mingbo Electromechanical Equipment Co. Ltd., Wuhan 6.0 11.2 % 3.1 %

Bühler Haguenau S.A.S., Haguenau 5.1 9.2 % 1.2 %

Bühler GmbH, Leingarten 4.3 8.8 % 1.2 %

Others 7.9 9.2 % –11.0 % 0.9 % – 2.5 %

Total at December 31, 2016 232.1

Base data used

Goodwill 2015Book value

CHF m Discount rate Growth rate

Leybold Optics Verwaltungs GmbH, Alzenau 79.1 9.9 % 1.2 %

Buhler Aeroglide Corporation, Cary 61.2 10.5 % 1.2 %

Bühler Deutschland GmbH, Beilngries 37.1 9.9 % 1.2 %

Bühler Barth GmbH, Freiberg a.N. 16.0 9.9 % 1.2 %

Buhler Yijiete Color Sorting Machinery (Hefei) Co. Ltd., Hefei 7.3 12.2 % 3.1 %

Bangsheng Bio-Technology Co. Ltd., Guangzhou 6.9 12.2 % 3.1 %

Wuhan Mingbo Electromechanical Equipment Co. Ltd., Wuhan 6.2 12.2 % 3.1 %

Bühler Haguenau S.A.S., Haguenau 5.1 10.4 % 0.9 %

Bühler GmbH, Leingarten 3.5 9.9 % 1.2 %

Others 8.0 10.3 % –12.4 % 0.9 % – 2.5 %

Total at December 31, 2015 230.4

162

4.3 Investments in associates

Net book values

Share in equity

CHF mGoodwill

CHF m2016

CHF m2015

CHF m

January 1 16.7 12.3 29.0 18.0

Reclassifications 0.0 0.0 0.0 0.0

Additions 0.0 0.0 0.0 10.1

Impairment 0.0 0.0 0.0 0.0

Share of net profit 4.6 0.0 4.6 4.5

Dividends received 0.0 0.0 0.0 – 0.9

Translation differences – 0.1 0.0 – 0.1 – 2.7

December 31 21.2 12.3 33.5 29.0

Translation differences are recognized in other comprehen-sive income. The attributable net result is shown under “oth-er operating income” in the statement of income.

Cumulative values of the associated companies2016

CHF m2015

CHF m

Share of sales revenue 33.4 31.8

Share of net profit 4.6 4.5

Balance sheet values:

Non-current assets 14.4 14.6

Current assets 23.9 21.9

Non-current liabilities 8.4 10.5

Current liabilities 8.7 9.3

Shareholders’ equity 21.2 16.7

The associated companies mainly comprise three compa-nies, two in Southern Europe and one in Switzerland. Bühler has a shareholding of 26 %, 49 %, and 35 % respectively. The figures are based on available preview closing data as of December 31, 2016.


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163

4.4 Long-term financial assets

December 31, 2016

Due 1– 5 years

CHF m> 5 years

CHF mTotal

CHF m

Securities 0.0 14.4 14.4

Overfunding of post-employment benefit plans 0.0 6.9 6.9

Loans to non-consolidated companies 0.2 0.0 0.2

Loans to associated companies 9.3 0.0 9.3

Other non-current financial assets 74.6 3.5 78.1

Total 84.1 24.8 108.9

December 31, 2015

Due 1– 5 years

CHF m> 5 years

CHF mTotal

CHF m

Securities 0.0 12.2 12.2

Overfunding of post-employment benefit plans 0.0 16.1 16.1

Loans to non-consolidated companies 0.5 0.0 0.5

Loans to associated companies 16.1 0.0 16.1

Other non-current financial assets 73.3 4.9 78.2

Total 89.9 33.2 123.1

164

Inventories are carried at the lower of cost or net realizable value. The cost of finished goods, semi-finished goods, and work in progress includes raw materials, direct labor, and other directly attributable costs and overheads based on the normal capacity of production facilities, excluding borrowing costs. Cost is determined using the standard cost method. Standard costs are regularly reviewed and, if necessary, re-vised in light of current conditions. Net realizable value is the estimated selling price less cost to completion and selling expenses. Obsolete inventories and goods with a low rate of inventory turnover are written down.

2016 CHF m

2015 CHF m

Production orders in progress 482.0 449.0

Advance payments from customers –155.1 –157.7

Net assets of production orders in progress 326.9 291.3

Production orders in progress 13.7 – 30.3

Advance payments from customers – 379.7 – 308.4

Net liabilities of production orders in progress – 366.0 – 338.7

Accumulated costs and recognized profits 1,965.9 1,766.8

In prior year, value adjustments deducted from inventories amounted to CHF – 36.6 million. No material reversals of val-ue adjustments of the prior year were recognized in the re-porting year.

Advance payments to suppliers are also included in inven-tories.

4.5 Inventories

4.6 Production orders in progress

Gross value CHF m

Value adjustments

CHF m2016

CHF m2015

CHF m

Raw materials and supplies 158.4 – 20.6 137.8 124.7

Unfinished goods 51.8 –11.4 40.4 42.1

Finished goods and merchandise 77.5 – 4.5 73.0 71.7

Work in progress 79.2 –1.2 78.0 83.7

Advance payments to suppliers 36.4 0.0 36.4 25.6

Total 403.3 – 37.7 365.6 347.8


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165

Trade and other accounts receivable are carried at the orig-inal invoice amount less allowances made for doubtful ac-counts, trade discounts, volume rebates, and similar items. Financing of customer orders using the Group’s own funds as part of its treasury strategy is included in this item.

Trade accounts receivable include supplier credits of CHF 84.4 million (prior year: CHF 73.4 million), which are fi-nanced in accordance with the treasury strategy.

4.7 Accounts receivable

2016 CHF m

2015 CHF m

A from third parties 538.2 512.4

A from non-consolidated companies 3.9 3.5

A from associates 0.3 0.5

A from related parties 0.0 0.1

Allowance for bad debts –10.1 –10.1

Total trade accounts receivable 532.3 506.4

2016 CHF m

2015 CHF m

Value added tax credits 36.4 38.2

Other accounts receivable

A from third parties 55.4 47.4

A from non-consolidated companies 1.0 1.9

Prepayments and accrued income 38.3 20.5

Allowance for bad debts – 0.1 – 0.1

Total other accounts receivable 131.0 107.9

166

Receivables outstanding analysis

Overdue

2016

Total book value

Dec 31, 2016 CHF m

Not due CHF m

< 3 months CHF m

4 – 6 months CHF m

7– 9 months CHF m

10 –12 months CHF m

> 12 months CHF m

Accounts receivable trade and other 668.2 527.4 64.9 32.8 11.3 7.4 24.4

Allowance for bad debts –10.2 0.0 – 0.4 0.0 – 0.5 – 0.2 – 9.1

Associated companies and other related parties 5.3 5.3

Total accounts receivable, net 663.3 532.7 64.5 32.8 10.8 7.2 15.3

Overdue

2015

Total book value

Dec 31, 2015 CHF m

Not due CHF m

< 3 months CHF m

4 – 6 months CHF m

7– 9 months CHF m

10 –12 months CHF m

> 12 months CHF m

Accounts receivable trade and other 618.5 512.1 52.2 17.3 9.4 7.2 20.3

Allowance for bad debts –10.1 0.0 – 0.6 0.0 – 0.3 – 0.3 – 8.9

Associated companies and other related parties 5.9 5.9

Total accounts receivable, net 614.3 518.0 51.6 17.3 9.1 6.9 11.4

Allowance for bad debts

2016 CHF m

2015 CHF m

January 1 –10.1 – 9.7

Additions – 4.5 – 4.2

Consumption 1.5 1.6

Release 2.7 1.6

Translation differences 0.2 0.6

December 31 –10.2 –10.1


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167

2016 CHF m

2015 CHF m

A to third parties 239.0 236.8

A to associates 0.7 1.4

A to non-consolidated companies 0.7 0.6

A to related parties 1.8 1.7

Total 242.2 240.5

4.8 Trade accounts payable

168

Provisions are recognized when Bühler has a legal or con-structive obligation arising from past events, an outflow of resources embodying economic benefits to settle the obli-gation is probable, and a reliable estimate can be made of this amount.

When the Group expects some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognized as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the statement of profit or loss net of any reimbursement.

If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When dis-counting is used, the increase in the provision due to the passage of time is recognized as a finance cost.

Warranty provisions are created with a view to meet potential guarantee obligations arising from the sale of machinery and technical equipment. The calculation is based on historic values as well as recognized claims.

Provisions for personnel expenses mainly include long-term employee benefits, such as long-service benefits, partial re-tirement, jubilee benefits, and deferred compensation plans.

Among other things the other provisions include provisions for pending legal cases, other project risks as well as a provision for restructuring of CHF 1.8 million (prior year: CHF 1.9 million).

Approximately 37 % (prior year: 36 %) of the cash outflows of the long-term provisions are expected to materialize within the next three years.

4.9 Short- and long-term provisions

Provisions for warranties

CHF m

Provisions for personnel expenses

CHF m

Other provisions

CHF m2016

CHF m2015

CHF m

January 1 34.7 25.9 10.5 71.2 85.9

Additions 23.0 13.3 19.6 55.9 43.3

Utilization –18.9 – 9.2 –15.6 – 43.7 – 41.1

Release – 8.0 –1.4 – 4.3 –13.7 –12.9

Changes in the scope of consolidation 0.1 – 0.1 0.0 0.0 1.2

Reclassification 0.1 0.0 – 0.1 – 0.0 0.4

Translation differences 0.0 – 0.1 – 0.2 – 0.3 – 5.6

December 31 31.0 28.4 9.9 69.3 71.2

Thereof short-term 25.1 10.9 8.7 44.7 46.3

Thereof long-term 5.9 17.5 1.2 24.6 24.9

The Group recognizes a collective valuation allowance based on its past experience of warranty costs on projects with similar conditions. Other known risks and risks related to projects with special conditions are estimated on a case-by-case basis and measured individually. The actual warranty costs incurred may differ from the costs provided for.


169


169

2016 CHF m

2015 CHF m

Value added tax owed 13.3 9.5

Advance payments 140.1 97.2

Other liabilities

A to third parties 38.0 37.0

A to non-consolidated companies 1.0 2.2

A to related parties 0.9 14.2

Personnel-related accruals 78.6 73.8

Other accruals and deferred income 78.8 71.9

Total 350.7 305.8

The company’s main defined benefit pension plans are in Switzerland and Germany. The defined benefit plans in Swit-zerland are funded through legally separate trustee adminis-tered funds. The cash funding of these plans, which may from time to time involve special payments, is designed to ensure that present and future contributions should be suf-ficient to meet future liabilities. The defined benefit plans in Germany are partially unfunded.

Pension plans in Switzerland. The company’s Swiss pen-sion plans contain a cash balance benefit formula, account-ed for as a defined benefit plan. Employer and employee contributions are defined in the pension fund rules in terms of an age-related sliding scale of percentages of salary. Un-der Swiss law the pension fund guarantees the vested ben-efit amount as confirmed annually to members. Interest may be added to member balances at the discretion of the Board of Trustees. At retirement date members have the right to take their retirement benefit as a lump sum, an annuity or part as a lump sum with the balance converted to a fixed annuity at the rates defined in the fund rules. The Board of Trustees may change the annuity at their discretion subject to the plan’s funded status including sufficient free funds as determined according to Swiss statutory valuation rules.

4.10 Other short-term liabilities, accruals and deferred income

4.11 Defined benefit obligations

Swiss pension law requires the Board of Trustees to take measures to resolve a statutory underfunding. The possible measures affect both employers and employees (risk sharing).

Pension plans in Germany. The company’s German pen-sion plans have defined benefit rights based on their length of service and / or final pensionable pay. The employer gives a direct promise to the employee to pay him a certain amount once he retires. At retirement date the value of their benefits is paid as an annuity. The company is required by German law to increase pensions in payment all three years accord-ing to price inflation, as measured by the Consumer Price Index or according to comparable pay grades. Direct pen-sion promises are usually funded via book reserve accruals. In 2008, the company set up a trust fund to fund their pen-sion liabilities for Bühler GmbH, Braunschweig. No material business combinations / curtailments / settlements occurred during the reported financial period.

Status of the company’s defined benefit plans. The status of the company’s defined benefit plans using actuarial as-sumptions determined in accordance with IAS 19 is summa-rized below.

170

Employee benefits – defined benefit plans. These plans are generally funded through payments to legally indepen-dent pension or insurance funds.

The aggregate of the present value of the defined benefit obligation and the fair value of plan assets for each plan is recorded in the balance sheet as net defined benefit liability or net defined benefit asset under long-term financial assets. The defined benefit obligation is determined annually by in-dependent actuaries using the projected unit credit method. If the fair value of the plan assets exceeds the present value of the defined benefit obligation, only a net pension asset is recorded, taking account of the asset ceiling.

Pension costs consist of three elements: service costs, net interest, and remeasurements of employee benefits.

Service costs are part of personnel expenses and consist of current service costs, past service costs (including gains / loss-es from plan amendments or curtailments) and gains / losses from plan settlements.

Net interest is recorded as part of personnel expenses and is determined by applying the discount rate to the net defined liability or net defined asset that exists at the beginning of the year.

The gains and losses resulting from the actuarial valuation are immediately recorded in other comprehensive income as remeasurements of employee benefits. The return on plan

assets (excluding interest based on the discount rate) and any change in the effect of an asset ceiling are also record-ed in this item. Remeasurements of employee benefits are not recycled through the income statement at any later point in time.

Pension assets and pension liabilities in different defined benefit plans are not offset unless the Group has a legally enforceable right to use the surplus in one plan to settle obligations in the other plan.

Employee benefits – defined contribution plans. In addi-tion to the defined benefit plans described above, some Group companies sponsor defined contribution plans based on local practices and regulations. The Group’s contributions to defined contribution plans are charged to the statement of income in the period to which the contributions relate.

Employee benefits – other long-term employment bene-fits. Other long-term employment benefits include jubilee, early retirement or other long-term service benefits, as well as deferred compensation, if not due to be settled within twelve months after the year-end.

The obligations for other long-term employment benefits are disclosed as provisions for personnel expenses. The mea-surement of these obligations differs from defined benefit plans in that all actuarial gains and losses are recognized immediately in the statement of income.

4.11.1 Actuarial assumptions 2016 2015

Discount rate (weighted) 0.7 % 1.6 %

Future salary increases 1.5 % 1.5 %

Future pension increases 0.2 % 0.2 %

The discount rates are determined by referencing market yields at the end of the reporting period on AA- and AAA- rated corporate bonds. In recent years, longevity has increased in all major countries in which the company spon-sors pension plans. The company sets mortality assump-tions after considering the most recent statistics available and uses generational mortality tables to estimate probable future mortality improvements.

Risk Sharing. Due to the current interest rate environment and increasing life expectancy, the defined benefit obligation was valued for the first time in 2016 using a risk sharing approach. This approach reflects the shared burden among employer and employees to keep the pension fund balanced in case this is necessary. The assumptions changed relate to the possible measures provided by Swiss pension law. This effect is disclosed in Note 4.11.3.


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171

Sensitivities of significant actuarial assumptions. The discount rate and the future increase in salaries were identi-fied as significant actuarial assumptions. The following im-pacts on the defined benefit obli gation are to be expected:

A 0.25 % increase / decrease in the discount rate would lead to an increase of 3.5 % (prior year: 3.5 %) / a decrease of 3.8 % (prior year: 3.5 %) in the defined benefit obligation.

A 0.25 % increase / decrease in the expected increase in salaries would lead to a decrease of less than 0.3 % (prior year: 0.5 %) / increase of less than 0.4 % (prior year: 0.5 %) in the defined benefit obligation.

The sensitivity analysis is based on realistically possible changes as of the end of the reporting year.

The average duration of the defined benefit plan obligation at the end of the reporting period is 14.3 years (prior year: 13.9 years).

The cost of defined benefit pension plans and other long-term employee benefits is determined using actuarial valua-tions. Actuarial valuations involve making assumptions about discount rates, future salary increases, mortality rates, and future pension increases. Due to the long-term nature of these plans, such estimates are subject to significant uncer-tainty.

4.11.2 Reconciliation of defined benefit obligation and fair value of plan assets2016

CHF m2015

CHF m

Defined benefit obligation at January 1 1,341.5 1,283.2

Interest costs 20.6 26.1

Current service costs (employer) 24.1 24.2

Contributions by plan participants 17.9 17.6

Past service costs 0.0 – 0.1

Benefits (paid) / deposited – 63.5 – 66.3

Business combinations 0.0 9.0

Other effects 0.7 0.6

Actuarial (gain) loss on obligation 54.9 56.6

Currency translation adjustments – 5.1 – 9.4

Defined benefit obligation at December 31 1,391.1 1,341.5

Reconciliation of the fair value of plan assets

Fair value of plan assets at January 1 1,190.7 1,185.1

Expected return on plan assets 18.1 24.1

Contributions by the employer 28.9 28.8

Contributions by plan participants 17.8 17.6

Benefits (paid) / deposited – 63.5 – 66.3

Actuarial gain (loss) on plan assets 53.9 7.1

Currency translation adjustments – 4.2 – 5.7

Fair value of plan assets at December 31 1,241.7 1,190.7

Actual return on plan assets 72.0 31.2

172

4.11.3 Remeasurements of employee benefits2016

CHF m2015

CHF m

Return on plan assets excluding interest income – 53.9 – 7.1

Current-year actuarial loss (gain) on benefit obligation:

A change in demographic assumptions – 5.3 0.4

A change in financial assumptions 133.2 66.0

A experience adjustments – 73.0 – 9.9

Change in effect of asset ceiling 0.0 –10.7

Remeasurements recognized in other comprehensive income 1.0 38.7

Cumulative amount recognized in other comprehensive income 286.0 285.0

4.11.4 Reconciliation of the amount recognized in the statement of financial position at year-end2016

CHF m2015

CHF m

Present value of funded defined benefit obligation 1,391.1 1,341.5

Fair value of plan assets 1,241.7 1,190.7

Deficit / (surplus) 149.4 150.8

Liability (asset) recognized in the statement of financial position 149.4 150.8

Thereof recognized as separate asset – 6.9 –16.1

Thereof recognized as separate liability 156.3 166.9

4.11.5 Pension expenses recognized in the statement of income2016

CHF m2015

CHF m

Current service costs (employer) 24.1 24.4

Net interest employee benefit 2.6 2.0

Past service costs 0.0 – 0.1

Other effects 0.7 0.9

Expenses recognized in the statement of income 27.4 27.2

Thereof service costs and administration costs 24.8 25.0

Thereof net interest on the net defined benefit liability (asset) 2.6 2.2

4.11.6 Best estimate of contributions2017

CHF m

Contributions by the employer 28.0


173


173

4.11.7 Plan assets at fair value consist of2016

CHF m2015

CHF m

Equity instruments third parties 337.7 301.0

Debt instruments third parties 368.8 358.8

Real estate 369.8 338.0

Cash and cash equivalents 38.8 80.4

Others 126.6 112.5

Total plan assets at fair value 1,241.7 1,190.7

Thereof quoted 1,241.5 1,111.5

Thereof unquoted 0.2 79.2

4.11.8 Information about the significant plans2016

Switzerland2016

Germany2015

Switzerland2015

Germany

Discount rate 0.6 % 1.3 % 1.4 % 2.4 %

Future salary increases 1.5 % 0.0 % 1.5 % 0.0 %

Costs of defined benefit plans 25.1 1.7 25.4 1.4

Remeasurements employee benefits –13.4 10.0 36.8 1.7

4.11.9 Defined contribution plan2016

CHF m2015

CHF m

Expenses for defined contribution plan 6.3 6.1

As of December 31, 2016, share capital amounted to CHF 15.0 million (prior year: CHF 15.0 million) and consisted of 105,000 (prior year: 105,000) registered shares with nom-inal value of CHF 100 each and 112,500 (prior year: 112,500) with nominal value of CHF 40 each.

4.12 Share capital

174

2016 CHF m

2015 CHF m

Sureties, guarantees and other obligations 2.0 1.4

Total 2.0 1.4

2016 CHF m

2015 CHF m

Leasing obligation up to one year 16.2 16.5

Leasing obligation as of one to five years 19.7 20.4

Leasing obligation over five years 8.7 12.4

Total 44.6 49.3

This item mainly includes obligations under long-term leasing agreements relating to properties in Germany, Switzerland, and Brazil.

In connection with the long-term loan from related parties of CHF 55 million and open legal cases, assets of CHF 45.0 mil-lion and CHF 1.4 million respectively (prior year: CHF 45.0 mil-lion and CHF 0.9 million) serve as collateral for own liabilities where the right of disposal is limited.

5. Other disclosures

5.1 Contingent liabilities

5.2 Off-balance sheet obligations under operating leases

5.3 Assets pledged or assigned to secure own liabilities


175


175

Related-party transactions. A loan towards the share-holders in the amount of CHF 70.0 million (prior year: CHF 70.0 million) is disclosed under other non-current finan-cial assets. Loans from the shareholders of CHF 121.5 million (prior year: CHF 132.2 million) are disclosed under long-term financial liabilities and of CHF 12.4 million under short-term financial liabilities. Other related-party positions are disclosed separately in the notes. Related-party transactions are con-ducted at arm’s length.

Liabilities to pension plans amounted to CHF 0.2 million as per 2016 (prior year: CHF 13.5 million) and are mainly related to a comprehensive restructuring of the Swiss pension fund in 2013. This amount is shown under other short-term liabil-ities.

Government grants are offset with the items of expense which they finance. Government grants related to assets are deducted from the assets in deriving the carrying amount of the asset. Like in prior year, the Group received no govern-ment grants in 2016. In 2012, the construction of a new die

Key management compensation. Key management (de-fined as Group Management and Board of Directors) re-ceived a total short-term compensation of CHF 8.2 million (prior year: CHF 6.8 million). In addition, pension and social security contributions of CHF 1.0 million (prior year: CHF 1.0 million) are recorded as expense. The provisions for other long-term benefits amount to CHF 5.6 million (prior year: CHF 3.2 million)

The Bühler Group operates deferred compensation plans for members of the management. The deferred compensation plans comprise a vesting period of three years and an exe-cution period of ten years from the grant date. The amounts are charged to the statement of income over the relevant vesting periods and are adjusted to reflect actual and ex-pected levels of vesting. The value of the deferred compen-sation is determined annually based on the Group’s annual profit for the three preceding years and equity at year-end.

casting factory in China has been subsidized by the govern-ment amounting to CHF 5.3 million. This government grant was recorded in 2012 whereas payments of CHF 3.7 million were received in 2013 and balance payment of CHF 1.6 mil-lion was received in 2015.

5.4 Related parties

5.5 Government grants

176

At the General Meeting, the Board of Directors proposes a dividend of CHF 18.0 million (prior year: CHF 15.0 million) or CHF 120 (prior year: CHF 100) per registered share with a nominal value of CHF 100 and CHF 48 (prior year: CHF 40)

The consolidated financial statements were released for pub-lication by the Board of Directors of the Bühler Holding AG on February 7, 2017.

No material events have occurred after the balance sheet date.

per registered share with a nominal value of CHF 40. The dividend payment to the shareholders of the Bühler Holding AG amounted to CHF 15.0 million in the financial year 2016 (prior year: CHF 15.0 million).

5.6 Proposal of the Board of Directors

5.7 Release for publication of the consolidated financial statements

5.8 Subsequent events


177


177

To the General Meeting of Bühler Holding AG, Uzwil Zürich, 7 February 2017

As statutory auditor, we have audited the consolidated financial statements of Bühler Holding AG, which comprise the con-solidated statement of income, consolidated statement of comprehensive income, consolidated statement of financial po-sition, consolidated statement of changes in equity, consolidated statement of cash flows and notes (pages 127 to 176), for the year ended 31 December 2016.

Board of Directors’ responsibility. The Board of Directors is responsible for the preparation of the consolidated financial statements in accordance with the 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 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 accounting 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 conducted our audit in accordance with Swiss law and Swiss Auditing Standards as well as the International Standards on Auditing. Those standards require that we plan and perform the audit to obtain reasonable assurance whether the consolidated financial statements are free from material 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 financial statements, whether due to fraud or error. In making those risk assess-ments, the auditor considers the internal control system relevant to the entity’s preparation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of ex-pressing an opinion on the effectiveness of the entity’s internal control system. An audit also includes evaluating the appro-priateness of accounting policies used and the reasonableness of accounting estimates made, as well as evaluating 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 31 December 2016, give a true and fair view of the financial position, the results of operations and the cash flows in accordance with the International Financial Reporting Standards (IFRS) and comply with Swiss law.

Other Matter. The consolidated financial statements of Bühler Holding AG for the year ended 31 December 2015, were audited by another firm of auditors whose report, dated 9 February 2016, expressed an unmodified opinion on those state-ments.

Report of the statutory auditor on the consolidated financial statements

178

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 Auditing Standard 890, we confirm that an internal con-trol system exists which has been designed for the preparation of consolidated financial statements according to the instruc-tions of the Board of Directors.

We recommend that the consolidated financial statements submitted to you be approved.

PricewaterhouseCoopers AG

René Rausenberger Richard Müller Audit expert Audit expert Auditor in charge

PublisherBühler AG, 9240 Uzwil

Concept / designartismedia GmbH, Stuttgart (Germany)

Realizationartismedia GmbH, Stuttgart (Germany)

Copywriting and editingBühler AGCorporate Communications, UzwilSimone Hofer, ZürichBoris Schneider, Zürich

PhotographsRalph Richter, DüsseldorfEhrin Macksey, Ho Chi Minh City Bernd Kammerer, Stuttgart

Printersgalledia ag, Flawil

This Annual Report is publishedin English and in German. The English version is binding.

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

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