ANNUAL REPORT 2013

* minus cash & marketable securities** current assets minus current liabilities

facts & figures

in euro million 2013 2012 2011 2010

Net sales 497.7 496.0 528.5 374.6

Operating income 497.8 513.8 549.5 384.7

Result from ordinary activities 29.8 36.8 58.3 29.0

Net profit 20.3 23.7 40.4 25.1

Gross cash flow 59.8 64.0 82.8 41.6

Equity 185.1 174.1 165.3 125.7

Interest bearing net debt* 76.5 88.8 77.4 13.4

Fixed assets 195.4 194.2 171.6 111.4

Working Capital** 186.3 152.0 149.0 139.5

Total assets* 404.2 417.8 405.0 286.6

Return on result from ordinary activities 6.0% 7.2% 10.6% 7.5%

Return on gross cash flow 12.0% 12.5% 15.1% 10.8%

Equity ratio* 45.8% 41.7% 40.8% 43.9%

Long term capital ratio** 78.7% 75.5% 71.9% 68.2%

Employees 2,435 2,429 2,364 1,926

Operating income per employee 0.20 0.21 0.23 0.20

1

page 2

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page 28

Management Board

History

Strategy & Positioning

The Companies of Berndorf AG

Operating Review

Trading Environment

Revenue

Earnings

Financial Position

Investment

Research & Developement

Employees

Risk & Opportunity Management

Outlook

Report of the Supervisory Board

Financials

Balance Sheet

Income Statement

Cashflow Statement

Auditor‘s Report

Addresses

CONTENT

2

“We can enjoy success at Berndorf today thanks to the years of hard work and systematic steps taken by many of the Group companies in building their reputations as ‘hidden champions’ of the Austrian and German export sectors with good growth prospects.”

Peter Pichler, Chief Executive Officer,

Chairman of the Management Board;

at Berndorf since 1990

3

CHAIRMAN OF THE MANAGEMENT BOARD PETER PICHlER

Peter Pichler, CEO

Born in Graz in 1958, Peter Pichler studied social sci-

ences and economics in Graz and Vienna, and com-

pleted his Ph.D. in 1983.

A keen art lover, Peter Pichler’s career took a decisive

turn in the late 1980s, as he moved from banking to in-

dustry and joined the Berndorf AG Management Board.

Peter Pichler on his first encounter with Berndorf:

“I got to know Berndorf AG, and former Management

Board member and current Supervisory Board Chair-

man Norbert Zimmermann when I was part of the Chase

Manhattan Bank (Austria) team that handled the ma-

nagement buyout. It was the first project of this scale in

my banking career and it was a tremendous success. To

this day I’m grateful for having had the opportunity to

be involved. The project sparked my passion for entre-

preneurship and industrial management.

When I was offered a seat on the Berndorf AG Manage-

ment Board in 1990, I didn’t hesitate for a second be-

fore accepting. Since then I’ve developed strong ties to

Berndorf, and to the Group’s management team, owners

and employees. I’ve never regretted making the switch

from banking to industry, and since we moved here my

wife, my three daughters and I have felt right at home

in the region.”

Peter Pichler has been CEO of the Berndorf Group since

2008.

4

“We have our sights set on growth. But it is also important that we maintain a stable financial base, and that the pro-cess fits with our corporate culture. Quick profits are not Berndorf Group‘s main fo-cus. Instead, we are dedicated to pro-viding first-class products and services that are recognised worldwide, and that enhance our reputation with customers and support the people who work for the Group over the long term.”

Dietmar Müller, Chief Financial Officer,

Member of the Management Board;

at Berndorf since 1990

5

MEMBER OF THE MANAGEMENT BOARD

DIETMAR MüllER

Dietmar Müller, CFO

Dietmar Müller was born in linz in 1964. He received

his degree in social sciences and economics from Vi-

enna University of Economics and Business in 1990.

Dietmar Müller’s cosmopolitan outlook smoothed his

transition from university life to a career with hidden

champion and global leader Berndorf Band.

Dietmar Müller on keeping an open mind and taking re-

sponsibility at Berndorf:

I spent five years in the USA with Berndorf, working

in Chicago and Charlotte, and another two in Düssel-

dorf in Germany. My inquisitiveness and appreciation

of different cultures – something I picked up during

my childhood in New Delhi – were a great help during

my time abroad. Open-mindedness, sensitivity to other

people and mutual respect have shaped and cemented

my liberal view of the world.

And I’ve seen these values in action at Berndorf since

day one, combined with a passion for entrepreneurship

and new challenges, and a willingness to assume re-

sponsibility. We’ve also developed a strong team spirit

which means that employees at all levels are prepared

to embrace change. All of these ingredients have gone

into creating a working environment that is the founda-

tion of the Berndorf Group’s outstanding reputation as

an employer, and a company that lives up to its respon-

sibilities even when the going gets tough. And that is

something extremely valuable.”

Dietmar Müller has been CFO of the Berndorf Group

since 2008.

6

“As a Group that is active around the globe, it is vital for us to keep moving forward. The tools we have put in place in this regard include the Berndorf Acade-my, the Best in Class programme that has been running for three years, and our annual internal innovation competition. These initiatives enable us to promote staff development, improve our processes and pave the way for a stream of new innovations, strengthening our position still further.”

Franz Viehböck, Chief Technical Officer,

Member of the Management Board;

at Berndorf since 2002

7

MEMBER OF THE MANAGEMENT BOARD FRANZ VIEHBöCk

Franz Viehböck, CTO

Born in Vienna in 1960, Franz Viehböck studied elec-

trical engineering at Vienna University of Technology

and was awarded his degree in 1985. After training as

an astronaut, he spent time at the MIR space station

in 1991.

As part of an elite group of fewer than 500 people who

have gone into space, former Boeing manager Franz

Viehböck brought his pioneering spirit to Berndorf Band

when he joined the company’s management team in

2002.

Franz Viehböck on creating space for Berndorf’s continued

growth:

“I can still clearly remember the construction of the

Great Bear production plant at the Berndorf Band site.

I think the plant is still a very powerful symbol of our

attitude to growth. We lay the foundations for future

expansion by investing heavily in research and develop-

ment, new plant and machinery, and staff training and

development.

We benefit from having a culture that encourages peo-

ple to learn from their mistakes and find improvements

instead of looking for scapegoats. I’ve felt at home in

this environment from the moment I arrived. We’re free

to focus all of our energies on the Group’s ongoing de-

velopment. Berndorf’s culture and values are what set

the company apart, and in my view they are also vital to

the Group’s success. So nurturing our corporate culture

will remain one of my biggest priorities.”

Franz Viehböck has been CTO of the Berndorf Group

since 2008.

8

BERNDORF AG HISTORY

1843

Alfred krupp and

Alexander Schoeller found

Berndorfer Metallwerke

1874

First company in Austria

using electricity

1900

Global market leader for tableware,

approximately 3,000 employees

1938

Incorporation into the

krupp Group,

arms production

1945

Company under Soviet

administration,

removal of all machinery

1957

Merger with the Ranshofen

aluminium plant to form

Vereinigte Metallwerke

Ranshofen-Berndorf

1986

Restructuring and

reorganisation under

Norbert Zimmermann’s leadership

1988

Management buyout by

nine-member management team

1991

Participation in Silica

Verfahrenstechnik

1994

Participation in PC Electric

1995

Acquisition of Schoeller-Bleckmann

Oilfield Equipment (SBO)

1997

Acquisition of Aichelin

IPO of Schoeller-Bleckmann

Participation in Joh. Pengg

1999

Cooperation between Berndorf Band

and HUECk Engraving

2005

Capital increase of SBO and

reduction of shares to 31%, start

of an investment programme worth

€150 million at SBO

2006

Joint venture of lumpi-Berndorf

Draht- und Seilwerk

SBO Spin-off

2007

Acquisitions of HASCO,

SAFED and

Rheinische Press Pad

2008

New Board of Directors

at Berndorf AG

2011

Acquisition of stoba

Präszisionstechnik

2012

Acquisition of Bosio

Acquisition of suppliers of

Aichelin China

9

STRATEGY & POSITIONING

Medium sized companies,

managed decentralized

The Berndorf Group comprises a

number of internationally active

companies which are very well posi-

tioned in niche markets. These me-

dium-sized companies are managed

on a decentralized, entrepreneurial

basis by managing directors who

are fully authorised to take swift,

strategic decisions. This structure

enables us to respond quickly and

flexibly to customer and market

needs. Our corporate culture em-

phasises trust and openness. The

fact that managing directors and

employees own shares and profit

participation rights in their own lead

companies contributes considerably

to the Group’s success by boosting

the entrepreneurial involvement of

the entire workforce. This employee

shareholding scheme, which was re-

vised in 2004, has proved a great

success. This direct participation

in the success of the company also

strengthens the desire of employees

to remain with the company.

„Hidden Champions“

Our policy of strategically positio-

ning our companies in niche mar-

kets enables them to gain a substan-

tial share of their market and makes

each one of them a „hidden cham-

pion“ amongst Austrian and German

exporters. Our companies maximise

their competitiveness by carefully

targeting their product programmes

and maintaining an awareness of

their own strengths. We believe that

our efficient innovation processes

and global approach to the marke-

ting of products, solutions and ser-

vices will secure our market-leading

position and drive our future growth.

Long term perspective

Acquisitions and restructuring are

amongst the core competencies of

Berndorf Group. We have shown on

a number of occasions that we can

act quickly to offer successful entre-

preneurs, employees, suppliers and

customers a partnership opportunity

with genuine long-term prospects.

Indeed, we place great value on a

culture of mutual trust and respect

in working towards an optimum so-

lution for all parties.

After the management buyout in

1988, the Berndorf Group elected

to transform itself into an internati-

onally focused company. Whilst only

2% of our employees worked abroad

in 1988, by 2013, this figure had

increased to three-quarters. Interna-

tional and export sales now account

for 95% of Group revenues.

Tool making and plant construction

metalworking

The companies in the Berndorf

Group specialise in high-tech tool-

making, plant engineering and

construction, and metalworking. Our

employees are skilled in all of the

production processes involved in the

manufacture of high-tech niche pro-

ducts, including forging, drilling and

milling using highly sophisticated,

state-of-the-art machines, levelling,

grinding, polishing, welding and

texturing – all with great precision

and to extremely fine tolerances. We

also design and develop plant and

machinery for innovative process

technologies.

Global outlook

The Berndorf Group is an internatio-

nal concern with more than 60 pro-

duction and service companies in

over 20 countries, mainly in Europe,

the USA, China, India and Brazil.

Over the past few years, Berndorf

Group has turned itself into a suc-

cessful international group. This

success will form the basis for fur-

ther growth, powered equally by in-

novation and a strong desire to sha-

pe the future.

10

Tool & mould making

HASCO Hasenclever GmbH + Co kG

HASCO Austria Gesellschaft m.b.H.

HASCO form-service AB

HASCO Suisse AG

HASCO Internorm ltd.

HASCO Encounter ltd.

HASCO Trading (Shenzhen) Co. ltd.

HASCO France S.A.R.l.

HASCO Normalien Mexico S.A. De C.V.

HASCO Iberica S.l.U.

HASCO Portuguesa lda.

HASCO America Inc.

HASCO Polska SP zo.o.

HASCO Canada Inc.

HASCO Singapore (PTE) lTD.

HASCO India Pvt. ltd.

OOO HASCO RU

Automotives stoba Präzisionstechnik GmbH & Co. kG

stoba Sondermaschinen GmbH

stoba Präzisionstechnik Uk ltd.

Steel belt technology

Berndorf Band GmbH

Berndorf Band Engineering GmbH

Berndorf Sondermaschinen-bau Ges.m.b.H.

Berndorf Belt Technology, Inc.

Beijing Baidefu Technology Developement Co., ltd.

Berndorf Band latinoamérica S.A.S.

Nippon Belting Co., ltd.

Berndorf Steel Belt Systems Co. ltd.

SBS Steel Belt Systems s.r.l.

SBS Steel Belt Systems USA Inc.

THE COMPANIES AT BERNDORF AG

Surface technology

HUECk Rheinische GmbH

HUECk Engraving GmbH & Co. kG

OOO Rheinische Technology

11

Heat treatment

Aichelin Ges.m.b.H.

Aichelin Service GmbH

Aichelin Heat Treatment Systems (Beijing) Co., ltd.

SAFED Suisse S.A.

SAFED France S.A.S.

SAFED Industrieöfen GmbH

Bosio d.o.o.

EMA Indutec GmbH

NOXMAT GmbH

Aichelin Tianjie Heat Treatment Systems (Tangshan) Co., ltd.

Tangshan Aichelin Pioneer Heat Treatment Systems Co., ltd.

Aichelin Unitherm Heat Treatment Systems India Pvt. ltd.

Aichelin Heat Treatment Systems Inc.

EMA Induction Technology Beijing Co., ltd.

NOXMAT Energy Technique Beijing Co., ltd.

A-Sistemas de Tratamentos Tèrmicos ltda.

Prompech ltd., Co.

Pool construction

Berndorf Metall- und Bäderbau GmbH

Berndorf Bäderbau s.r.o.

Berndorf Bäderbau Deutschland GmbH

Berndorf Bäderbau Schweiz AG

Berndorf Bäderbau Sp. z o.o

Berndorf Bäderbau Sk s.r.o.

Berndorf Bäderbau srl

Process engineering

Silica Verfahrenstechnik GmbH

Silica Anlagenbau GmbH & Co. kG

Joint Ventures

Joh. Pengg AG

PC Electric GmbH

lumpi-Berndorf Draht- und Seilwerk GmbH

Easyfocus GmbH

FerRobotics Compliant Robot Technology GmbH

Imagination Computer Services GmbH

Online Media Communications Design GmbH

Plasmo Industrietechnik GmbH

Berndorf Group consolidated

Berndorf Group

12

OPERATING REVIEW TRADING ENVIRONMENT, REVENUE AND EARNINGS

Most challenging year since

the crisis of 2008/09

From an economic point of view

2013 had relatively few bright spots.

In Austria, the effects of very mo-

dest growth rates were compounded

by a rise in unemployment of almost

one percentage point, and stagnant

consumer spending. After a weak

start to the year, economic output

began a faltering recovery in the se-

cond half. Unlike many of the coun-

tries in the eurozone, the Austrian

economy avoided recession but the

Austrian Institute of Economic Re-

search (WIFO) put real GDP growth

for 2013 at 0.3%, the weakest

figure since the crisis of 2008/09.

End of weak period

The business sector went through a

particularly difficult time in 2013,

resulting in a year-on-year decline

in gross fixed investment of 1.4%.

According to the Austrian National

Bank (OeNB) the economy is now

emerging from this period of stag-

nation. Despite the disappointing

developments in 2013, incomes

and production in Austria remained

at very high levels by international

comparison. Replacement invest-

ments that had previously been de-

layed due to lower nominal operating

surpluses are now back on the table.

The OeNB sees the conditions for

future growth as significantly impro-

ved, with signals indicating stronger

export growth for Austrian compa-

nies in the fourth quarter of 2013

also pointing in this direction, in its

view.

Highly resilient

in times of economic crisis

In the year that marked the 170th

anniversary of industrial production

in Berndorf, the 60-plus subsidiari-

es that make up the Berndorf Group

worldwide once again proved their

resilience in an extremely challen-

ging economic environment. Despite

the difficult climate and the fact that

it faced its toughest year since the

crisis of 2008/09, the Group held

revenue at the previous year’s level

in 2013. Consolidated revenue con-

tinues around only 10% short of the

all-time record set in 2011.

Group revenue for 2013 amounted

to EUR 498 million (m), up from

EUR 496m in 2012. The fiercer the

competition in the international mar-

kets it serves, the more the Group

benefits from the leading positions

held by Group companies in the wide

range of sectors they serve worldwi-

de. Whether they specialise in flat-

tening, grinding, welding, polishing,

structuring or chroming, many of the

Group’s subsidiaries burnished their

reputation as “hidden champions”

with extremely strong prospects for

growth. The Best in Class internal

optimisation programme, which nu-

merous Group companies have par-

ticipated in since its inception in

2011, helped to fuel this dynamism.

Berndorf subsidiaries reap

rewards of internationalisation

In 2013 economic developments

were extremely sluggish in Europe,

the group’s home market. Weak tra-

de between euro area countries cur-

bed growth. In contrast, increasing

internationalisation and the global

networks maintained by many Bern-

dorf companies translated into satis-

factory annual profit for the Group.

Similar to revenue, profit for the

period was largely in line with the

previous year’s total, falling short by

only a small margin.

13

in per cent TOTAL CAPITAL YIELD

2009 2010 2011 2012 20130%

3%

6%

9%

12%

15%

SHARE OF BUSINESS AREASOF TOTAL CONSOLIDATED TURNOVER

6%

20% 21%

30%

Heat treatment Surface technology

Automotives Pool construction

16%

Steel belt technology

Process engineering

2%

Tool & mould making

5%

Berndorf Bäderbau continued to

feel the full force of the effects of

the debt crisis on public spending in

2013. Due to logistical constraints,

this company’s scope of opera-

tions is limited to swimming pool

construction in Europe. Weakness

in the markets in this region was

refl ected in full in operating profi t,

leading to another wave of job losses

during the year. The strategy of brea-

king into new markets is now being

pursued with a streamlined team.

Emerging markets

Although global economic growth

outside Europe slowed signifi cantly

in 2013, it continued to be a positive

force for the Berndorf Group, even

given the slowdown in emerging mar-

kets. Subsidiaries with long-standing

experience in Asian markets deliver-

ed above average growth. By respon-

ding to demand fl exibly and focusing

on their own strengths, the compa-

nies in the Berndorf Group were able

to take developments in their stride.

Weak earnings

Profi t on ordinary activities in 2013

was EUR 29.8m, down by 19.1% on

the EUR 36.8m recorded in the pre-

vious year. This decline is mainly due

to weak operating profi t in the tool-

making and automotive segments.

Extraordinary income and extra-

ordinary expense for 2013 mainly

comprise the costs of restructuring

measures including a social plan

and winding up a foreign subsidiary

in the pool construction business,

as well as restructuring measures

in the heat treatment segment, and

income related to the reversal of an

extraordinary provision in the tool-

making segment.

14

OPERATING REVIEW FINANCIAl POSITION, INVESTMENT

The Berndorf Group’s total assets

rose by EUR 15.5m year-on-year,

and stood at EUR 520m at the

end of the reporting period. Equity

advanced by EUR 11.2m to EUR

182m.

Strong equity ratio

The equity ratio edged up in 2013,

from 34.5% to 35.6%. Adjusted for

cash and marketable securities, the

equity ratio was 45.8%, an improve-

ment on the 2012 figure of 41.7%.

Gross cash flows from operating

activities totalled EUR 60m (2012:

EUR 64m).

Liquidity safeguards flexibility

The Berndorf Group has cash and

marketable securities amounting to

EUR 116.2m (2012: EUR 87.2m)

which can be used to make additio-

nal investments at any time.

These liquid assets provide consi-

derable flexibility, allowing us to re-

act quickly and effectively in times

of economic uncertainty, and to

support the growth of our subsidia-

ries and the Group as a whole. They

mean that the Group is well-positi-

oned in volatile conditions. Net debt

dropped from EUR 88.8m to 76.5m.

Long-term finance

Creating the ideal production con-

ditions and a modern, inspiring

working environment for employees

is a key goal of the investment pro-

grammes at Berndorf sites. These

measures are funded without re-

course to external finance, in spite

of the considerable sums involved.

The Berndorf Group’s positive per-

formance despite a challenging ope-

rating environment in 2013 made it

possible to efficiently build up the

necessary reserves for such invest-

ments. long-term finance is secured

via promissory notes.

Detailed, forward-looking liquidity

planning ensures that the Group has

the resources it needs to maintain

financial independence in the futu-

re. At present, the Group makes only

limited use of factoring to collect

receivables, and none of our receiva-

bles are securitised. The Group con-

tinues to favour extremely cautious

accounting methods, avoiding the

use of generous valuations.

Investment

Developments in 2013 were shaped

by the successful conclusion of the

investment programmes – some of

which had run for several years – at

various Berndorf Group companies.

Thanks to new technologies and pro-

duction logistics, HASCO and stoba

can vie for leading positions in their

markets, as can Berndorf Band,

where investments in the quality of

equipment have been supplemented

by significantly improved opportuni-

ties for teamwork within the organi-

sation.

Berndorf AG continued to monitor

a number of promising acquisition

targets in 2013. Following major ad-

ditions to the Group in previous ye-

ars, 2013 brought the acquisition of

a smaller interest in a manufacturer

of automated quality assurance and

control systems.

Group investment was down to EUR

35.9m, or approximately 59% of

gross cash flows, compared with

EUR 52m a year earlier. Group com-

panies financed investment princi-

pally from their operating cash flows.

Investment in intangible assets and

15

plant, property and equipment was

EUR 29.3m, while depreciation and

amortisation totalled EUR 31.2m.

About EUR 5.1m were invested in

financial assets.

BALANCE SHEET STRUCTURE

2013 2012

54%

46%

52%

48%

58%

42%

54%

46%

Equity

Liabilities

Fixed assets

Current assets

* minus cash & marketable securities

*

in MEUR

INCOME FROMORDINARY ACTIVITIES

2009 2010 2011 2012 20130

15

30

45

60

75

in per cent EQUITY RATIO net

2009 2010 2011 2012 20130%

10%

20%

30%

40%

50%

16

Research and development

A willingness to experiment and

innovate has been at the heart of

many of mankind’s greatest achie-

vements. Years of industrial en-

deavour gave rise to the entrepre-

neurial spirit which ushered in the

late nineteenth-century Gründerzeit,

an era of incredible progress. For the

Berndorf Group, 2013 marked 170

years of industrial excellence at the

place where it all began.

Since then the combination of in-

novation and the Berndorf brand

has proved to be an enduring

force. The companies in the Bern-

dorf Group continue to stand for

patience and perseverance when

it comes to developing exciting

ideas. In its third year, the Berndorf

Group’s Innovationskaiser competiti-

on had already established itself as

a fixed highlight on the annual plan-

ning schedules for numerous subsi-

diaries.

In total eight companies went head

to head in a bid to claim the 2013

award, with a 16-strong team from

stoba Präzisionstechnik in Back-

nang, Germany winning over the jury.

Their award-winning entry, a tiny

valve dubbed the “Turboschnecke”

measuring just 0.2 millimetres, in-

creases injection accuracy in diesel

engines, helping to significantly cut

truck CO2 emissions worldwide.

The annual competition is intended

to boost long-term awareness of the

importance of innovation, irrespec-

tive of current economic trends, and

to recognise the achievements of the

Group companies’ research and de-

velopment teams.

Human resources

In 2013 the Berndorf Group had an

average of 2,435 employees at fully

consolidated subsidiaries, of whom

1,188 were non-salaried and 1,247

were salaried employees.

The Group sees itself as a global

company with a European outlook,

and although over 90% of revenue

comes from operations or customers

in foreign countries, almost a quar-

ter of the workforce is still based in

Austria, the Group’s historic heart-

land. This reflects our unequivocal

commitment to our Austrian base

– in particular lower Austria, home

to our sites at Berndorf, Mödling and

Guntramsdorf, as well as to Thörl

in Styria. Just over half of all Bern-

dorf Group employees are based in

Germany. With the dedication, skills

and commitment of almost 2,500

employees ensuring that customer

requirements are met day after

day, their career development is a

core consideration for the Berndorf

Group.

The Berndorf Academy, the Group’s

development programme for high

potentials, was established to ena-

ble employees to hone their team

leadership skills in accordance with

Berndorf’s corporate values. The

launch of the Berndorf Executive

Academy for managers and the ta-

lents@berndorf program for studen-

ts looking to start their career round

out the group-wide staff develop-

ment programme. These two new

additions also help to promote net-

working between employees, as well

as between different segments and

Group companies.

Combined with the work of the inter-

nal technical training centre for skil-

led workers, this development en-

sures that the subsidiaries have the

people needed to hold their own in

the face of increasingly stiff compe-

OPERATING REVIEW RESEARCH AND DEVElOPMENT, HUMAN RESOURCES, RISk AND OPPORTUNITY MANAGEMENT

17

tition. At the same time, at Aichelin,

Berndorf Band and Silica, a number

of key management positions were

filled in 2013, bringing some for-

midable external expertise into the

Group.

Risk and opportunity management

Risk awareness among staff and al-

ertness to the risks associated with

procurement, distribution, customer

retention and the technological de-

velopment of our products is suc-

cessfully embedded and strongly

pronounced throughout the Group.

Each of the Group’s business seg-

ments has an internal control sys-

tem (ICS) as part of its enterprise

risk management system, so that

risk awareness is established and

defined as a formal, transparent re-

quirement. This area is also covered

in the rules and procedures of the

various subsidiaries. The Group-wide

financial management guidelines

which have been fully implemented

by the subsidiaries serve to promote

the flexible deployment of working

capital.

Our diverse product portfolio pro-

vides a cushion against the impact

of cyclical downturns, and our broad

customer base minimises our expo-

sure to sudden falls in demand.

We negotiate fixed interest rates

in order to manage financial risks

wherever necessary. Where appro-

priate, currency risks are balanced

by means of currency futures trans-

actions and local production. Varia-

tions in prices of base materials can

largely be passed on to customers.

liquidity risk is limited, thanks to

sufficient equity (gross equity ratio:

35.6%, net equity ratio: 45.8%) and

cash and marketable securities of

EUR 116.2m. Default risks are kept

to a minimum by insurance and the

subsidiaries’ broad customer base.

The risks faced by the Berndorf

Group remain manageable and do

not present any cause for concern

regarding the continued success of

our operations.

Events after the reporting period

There were no events after the re-

porting period with an impact on

the disclosures made regarding the

2013 financial year.

OPERATING REVIEW

RESEARCH AND DEVElOPMENT,HUMAN RESOURCES,RISk AND OPPORTUNITY MANAGEMENT

WORKFORCE

2009 2010 2011 2012 20130

500

1,000

1,500

2,000

2,500

in per cent EMPLOYEES WORLDWIDE

11% 41%

19%

Austria

AmericaGermany

27%

Asia

2%

Rest of Europe

* including non consolidated subsidiaries

*

18

Outlook for 2014

After two weak years the global

economic recovery can now be

felt, and there are signs of mode-

rate growth across the board. Al-

though growth rates are cooling off

in emerging economies, industrial

nations – most notably the US –

are gaining momentum. Thanks to

their well-established strong global

networks, the companies of the

Berndorf Group have been able to

respond to these developments at

an early stage and get into position

in growth markets in good time.

Positive developments in Berndorf’s

key markets are equally or even

more significant, with the eurozone

emerging from recession in the se-

cond quarter of 2013. The Austrian

National Bank expects the difference

in macroeconomic performance seen

in individual eurozone countries as a

result of the debt crisis to gradually

become less pronounced.

Coupled with improved orders in the

fourth quarter of 2013, this forecast

gives reason for optimism that Aus-

trian industrial export growth will ac-

celerate during the next two years.

Exports will also be buoyed by the

recovery in key markets including

Germany, the USA and parts of Eas-

tern Europe. The economic recovery

is also seen as further bolstering tra-

de, which is forecasted to grow by

3.6% in 2014 and 4.0% in 2015

according to the latest outlook pub-

lished by the Austrian Institute of

Economic Research.

Strategic alignment

This marked improvement in overall

sentiment points towards an immi-

nent uptick in investment spending.

Owing to the fact that capital goods

manufacturers account for a high

proportion of the companies in the

Berndorf Group, this development

should have a positive influence on

consolidated revenue and profit in

2014 and the years after that. We

want to use a proactive manage-

ment approach in line with our risk

management policy and healthy li-

quidity to harness this potential and

improve our market position across

all business segments.

Favourable finance conditions and

the demand for spares indicate that

a strong cycle of sustained invest-

ment in equipment can be expected.

After the muted investment behavi-

our witnessed in recent years, this

dynamic will be driven by catching

up on overdue investment and inven-

tory build-ups. Measures aimed at

harnessing the full potential of this

development include continuation

of the Best-in-Class programme,

which is at the heart of the Bern-

dorf Group’s ability to respond to the

constantly changing demands of the

markets it serves.

Investment in high-tech production

equipment bears fruit

Berndorf AG is committed to sup-

porting its subsidiaries’ efforts to

expand their market leadership in

highly specialised, growth-oriented

industrial markets, and to ensure

that they are equipped with the best

possible technology, infrastructure

and organisational structures. Bur-

geoning growth in the European and

US markets is an important early

opportunity for Berndorf Group com-

OPERATING REVIEW OUTlOOk

19

panies such as HASCO and stoba to

demonstrate their ability to respond

quickly to opportunities as they arise

through their effi cient value chains.

We also expect developments in Asia

to bring opportunities for companies

with a strong presence in the region

such as Aichelin, Berndorf Band and

Joh. Pengg. Although growth has re-

cently fallen short of expectations in

these emerging economies, we be-

lieve the region will remain highly

dynamic. Economic growth in China

is still around the 7% mark.

The Berndorf Group expects 2014

to be a promising year that signals

the start of a period of solid growth

in key industrial sectors. Berndorf

Group companies will use their own

independent fi nancial and organis-

ational resources to harness the

long-term benefi ts of these develop-

ments for their growth strategies and

the success of the Group as a whole.

In light of this, the Group expects

earnings to be slightly above those

of the 2013 fi nancial year.

We see ourselves as a group of com-

panies that is characterised by in-

dustrial traditions, technological and

development expertise, and forward-

looking organisational structures.

Our employees’ entrepreneurial

mindset gives our operations the le-

vel of openness and willingness to

learn that is needed to succeed and

assure customer satisfaction in a di-

verse global market place. The visi-

onary Supervisory Board and owners

continue to support us every step of

the way.

We would like to take this oppor-

tunity to thank all of the Group’s

employees for their hard work and

dedication during the past year, and

are certain that we are in an excel-

lent position to meet the challenges

ahead with their continued support.

Franz Viehböck Peter Pichler Dietmar Müller

Berndorf, 19 March 2014

20

In the 2013 fi nancial year, the Supervisory Board held

four meetings and performed its duties in accordance

with the law and the articles of association.

The Board of Directors informed the Supervisory Board at

regular intervals verbally and in writing about the course

of business and about the situation of the Group and the

Group companies. The Supervisory Board discussed in

detail all transactions and measures requiring its appro-

val. At the meetings of the Supervisory Board, members

particularly discussed acquisitions, the economic situati-

on of the Group companies and their outlook, measures

to improve competitiveness and market position, as well

as the Group’s investment and fi nancial planning.

The 2013 fi nancial statements and consolidated fi nan-

cial statements of Berndorf AG prepared by the Board

of Directors, and the consolidated management report

summarised in the management report, were audited by

Deloitte Wirtschaftsprüfungs GmbH. Examination of the

fi nancial statements and consolidated fi nancial state-

ments did not reveal any material grounds for objection

and were thus awarded an unqualifi ed opinion.

The Supervisory Board agrees with the result of the audit,

with the fi nancial statements including the management

report and proposal for the appropriation of net income

submitted by the Board of Directors, and approves the

fi nancial statements in accordance with § 125 par. 3 of

the Austrian Stock Exchange Act (Aktiengesetz), which

are thus considered adopted. The Board also agrees with

the consolidated fi nancial statements prepared in accor-

dance with § 246 of the Austrian Corporate Code (Unter-

nehmensgesetzbuch).

We would like to express our sincere thanks to the mem-

bers of the Board of Directors and to all employees for

their dedication and outstanding performance.

Berndorf, March 2014

Norbert Zimmermann, Chairman of the Supervisory Board

REPORT OF THE SUPERVISORY BOARD

21

Sonja Zimmermann

Shareholders‘ Representative

Wilfried Zimmermann

Shareholders‘ Representative

Thomas Riecker

Shareholders‘ Representative

Michael Lokay

Employee Representative

Rainer Koller

Employee Representative

Norbert Zimmermann

Chairman of the Supervisory Board

Shareholders‘ Representative

22

IN TEUR 2013 2012

A. Fixed assets 195,376 194,166I. Intangible assets 3,067 3,1921. Concessions, copyrights and other rights 2,079 1,9122. Goodwill 988 9803. Advance payments 0 300

II. Property, plant and equipment 144,946 142,7561. land, buildings and improvements on leasehold property 44,746 41,2262. Machinery, plant and equipment 58,169 66,4333. Other machinery, plant and equipment 25,405 25,5024. Advance payments and assets under construction 16,625 9,595

III. Financial assets 47,362 48,2181. Investments in affiliated companies (not consolidated) 10,233 15,1042. Investments 15,900 12,155 a) Investments in associated companies (consolidated) 8,418 8,096 b) Investments in associated companies (not consolidated) 7,164 3,740 c) Other investments 319 3193. loans to affiliated companies (not consolidated) 79 2184. Marketable securities and rights 19,684 20,3985. Other loans 1,466 344 B. Current assets 322,706 308,845 I. Inventories 76,189 94,3161. Raw materials and supplies 27,784 32,768 2. Work in progress less prepayments from customers 23,236 34,0693. Finished goods and trading stock less prepayments from customers 10,906 9,8604. Merchandise 9,646 8,7545. Service not yet invoiced less prepayments from customers 3,816 2,6596. Advance payments less prepayments from customers 801 6,206 II. Receivables and other assets 130,327 127,3261. Trade accounts receivable 82,675 79,8052. Accounts receivable from affiliated companies (not consolidated) 8,200 6,2053. Accounts receivable from associated companies 1,984 3,0814. Other receivables and assets 37,468 38,235 III. Marketable securities 17,448 20,388 IV. Cash on hand and in banks 98,741 66,815 C. Prepaid Expenses 2,281 1,944 (incl. deferred taxes of TEUR 1,354; prev. year: TEUR 1,171) TOTAL ASSETS 520,363 504,955

FINANCIAlS BAlANCE SHEET (ASSETS)

23

IN TEUR 2013 2012

A. Shareholders‘ equity 182,015 170,662I. Capital stock 11,000 11,000 II. Participation certificate 1,222 1,222 III. Capital surplus 1,778 1,778 IV. Reserves 20,546 20,826V. Translation component 1,872 2,810VI. Minority interests 45,007 38,308VII. Unappropriated retained earnings 100,591 94,718 (thereof retained earnings TEUR 87,950; prev. year: TEUR 76,338) B. Untaxed reserves 3,045 3,478 1. Reserve from accelerated depreciation and other special write-off 2,713 3,120 2. Other untaxed reserves 332 358 C. Grants 450 534Grants, § 3 Abs 1 Z 6 EStG

D. Accrued liabilities 75,710 81,0281. Accrual for serverence payments 8,864 8,9092. Accruals for pensions 19,451 18,628 3. Tax accruals 1,883 4,0854. Other accruals 45,512 49,405

E. Liabilities 258,508 248,639 1. loans 0 10,5002. Bank loans and overdrafts 192,673 165,5423. Advance payments 20,833 28,482 4. Trade accounts payable 20,121 22,4265. Accounts payable to affiliated companies (not consolidated) 2,494 1,798 6. Accounts payable to associated companies 71 37 7. Other liabilities 22,318 19,854

F. Deferred income 635 614

TOTAL LIABILITIES 520,363 504,955

Contingent liabilities 41,388 33,918

BAlANCE SHEET (lIABIlITIES)

24

IN TEUR 2013 2012

1. Net sales 497,653 495,978 2. Decrease / increase in finished and unfinished goods and work in progress -3,803 10,934 3. Own work capitalized 3,981 6,906 4. Other operating income 11,576 10,431 a) Income from sale of property, plant and equipment 318 165 b) Income from reversal of accruals 3,809 3,285 c) Other 7,449 6,980 5. Costs of materials and purchased services -215,555 -229,967 a) Cost of raw materials, supplies and trading stock -176,376 -191,201 b) Cost of purchased services -39,179 -38,766 6. Personnel expenses -144,669 -143,355 a) Wages -42,167 -43,608 b) Salaries -73,740 -71,063 c) Allocation of accrual for severance payments -2,142 -2,779 d) Expenses for pensions -1,700 -1,139 e) Expenses for statutory social security and payroll related contributions -23,979 -23,745 f) Other social benefit -941 -1,021 7. Amortization on intangible and depreciation on tangible assets -30,067 -27,175 8. Other operating expenses -83,655 -83,229 a) Taxes -846 -857 b) Other -82,809 -82,372 9. OPERATING INCOME 35,461 40,523

FINANCIAlS INCOME STATEMENT

25

IN TEUR 2013 2012

10. Income from investments 2,794 1,895 a) Affiliated companies 1,293 753 b) Associated companies 1,501 1,142 11. Income from other longterm securities and loans 771 795 12. Other interest and similar income 1,561 1,984 (thereof affiliated companies: TEUR 145; prev. year: TEUR 169) 13. Income from retirements and writeup of financial assets and marketable securities 44 702 14. Expenses related to financial assets and marketable securities -2,940 -456 a) Amortization -1,124 -190 b) Other -1,816 -266 15. Interest and similar expenses -7,909 -8,623 (thereof affiliated companies: TEUR 10; prev. year: TEUR 15) 16. RESULT FROM FINANCIAL ACTIVITIES -5,679 -3,704 17. RESULT FROM ORDINARY ACTIVITIES 29,782 36,818 18. Extraordinary income 454 0 19. Extraordinary expense -4,031 -4,182 20. EXTRAORDINARY RESULT -3,576 -4,182 21. Income taxes -5,886 -8,967 22. NET PROFIT 20,320 23,669 23. Transfer from untaxed reserves 433 430

24. Minority interests -8,111 -5,720

25. Retained earnings / accumulated losses 87,950 76,338 26. DIVIDENDS DECLARED AND PAYABLE 100,591 94,718

26

IN TEUR 2013 2012

Result from ordinary activities 29,782 36,818Transition to the net cash flow from operating activities: Depreciation / write-back of depreciation of fixed assets 30,968 27,296 Profit / loss on the sale of fixed assets -149 -763 Release of investment grants -108 -140

Changes in inventories, receivables and other assets 16,950 9,765Changes in provisions and accruals, excluding corporate income tax -2,619 -1,675Changes in trade and other liabilities -9,853 -2,341Net cash flow from ordinary activities 64,971 68,960

Net cash flow from extraordinary activities -2,078 -1,754Payments for corporate income taxes -8,409 -14,719Net cash flow from operating activities 54,484 52,487

Cash received from the sale of fixed assets (excl. financial assets) 2,792 1,408Cash received from the sale of financial assets and other financial investments 1,238 1,529 Payments from first-time consolidated companies and associated companiesand other payments from additionally bought shares -423 -1,089Payments for fixed assets (excl. financial assets) purchased during the year -29,264 -40,982Payments for financial assets purchased during the year -3,724 -11,127Net cash flow from investment activities -29,381 -50,261

Capital contribution from shareholders -8,631 -13,507Repayments of loans -10,500 -34,500Proceeds of new loans 23,523 64,270Net cash flow from financial activities 4,392 16,263 Effective payment changes in cash and cash equivalents 29,495 18,489Changes arising from exchange rates or other changes -736 -206Cash received on consolidation of subsidiaries 227 7

liquid funds at the beginning of the year / period 87,203 68,913liquid funds at the end of the year / period 116,189 87,203

Composition of liquid funds Cash on hand and in banks 98,741 66,815Marketable securities (current assets) 17,448 20,388

Luiqid funds 116,189 87,203

FINANCIAlS CASH FlOW STATEMENT

27

The operational review and consolidated financial state-

ments of Berndorf Aktiengesellschaft, Berndorf, for the

year ended 31 December 2013 (comprising the balance

sheet, income statement and cash flow statement) shown

in the annual report are abridged versions. The abridged

version of the consolidated financial statements does not

include a consolidated statement of changes in equity

for the year ended 31 December 2013 or notes to the

accounts.

However, pursuant to section 281(2)(3) UGB [Austrian

Business Code], we hereby state that the consolidated

financial statements of Berndorf Aktiengesellschaft,

Berndorf for the year ended 31 December 2013, drawn

up in accordance with the statutory requirements, com-

prising the consolidated balance sheet as at 31 Decem-

ber 2013, and the consolidated income statement, cash

flow statement and statement of changes in equity for

the year then ended, as well as the notes to the ac-

counts, were given an audit certificate by Deloitte Audit

Wirtschaftsprüfungs GmbH.

The full consolidated financial statements and audit cer-

tificate have not yet been disclosed in the official gazette

section of the Wiener Zeitung and entered in the com-

pany register of the Republic of Austria under reg. no.

FN 115391i.

Vienna, March 2014

Deloitte Audit Wirtschaftsprüfungs GmbH

Dr. Christoph Waldeck

Mag. Andrea kraus

Auditors

AUDITOR‘S REPORT

28

Berndorf AG

leobersdorfer Str. 26

2560 Berndorf – Austria

T: +43 / 2672 / 829 00

F: +43 / 2672 / 834 26

www.berndorf.at

HASCO Hasenclever GmbH + Co KG

Römerweg 4

58513 lüdenscheid – Germany

T: +49 / 2351 957 / 0

F: +49 / 2351 957 / 237

www.hasco.com

stoba Präzisionstechnik

GmbH & Co. KG

lange Äcker 8

71522 Backnang – Germany

T: +49 / 7191 806 / 115

F: +49 / 7191 806 / 169

www.sto-tec.de

Aichelin Ges.m.b.H

Fabrikgasse 3

2340 Mödling – Austria

T: +43 / 2236 / 236 46-200

F: +43 / 2236 / 222 291

www.aichelin.at

Berndorf Band GmbH

leobersdorfer Str. 26

2560 Berndorf – Austria

T: +43 / 2672 / 800

F: +43 / 2672 / 84 176

www.berndorf-band.at

HUECK Rheinische GmbH

Helmholtzstr. 9

41747 Viersen – Germany

T: +49 / 2162 / 94694-0

F: +49 / 2162 / 94694-51

www.hueck-rheinische.com

Berndorf Metall- und

Bäderbau GmbH

leobersdorfer Str. 26

2560 Berndorf – Austria

T: +43 / 2672 / 836 40

F: +43 / 2672 / 836 40-49

www.berndorf-baederbau.com

Silica Verfahrenstechnik GmbH

Wittestr. 24

13509 Berlin – Germany

T: +49 / 30 / 435 73 5

F: +49 / 30 / 435 73 300

www.silica.de

Joh. Pengg AG

Thörl 5

8621 Thörl – Austria

T: +43 / 3861 / 5090

F: +43 / 3861 / 2318

www.wire-pengg.com

PC Electric GmbH

Diesseits 145

4973 St. Martin – Austria

T: +43 / 7751 / 61 220

F: +43 / 7751 / 69 69

www.pcelectric.at

Lumpi-Berndorf Draht- und

Seilwerk GmbH

Binderlandweg 7

4030 linz – Austria

T: +43 / 732 / 381 271-0

F: +43 / 732 / 383 848-20

www.lumpi-berndorf.at

ADDRESSES

IMPRINT

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