Company

STAKEHOLDER DIALOGUE

As an international concern, we have to deal with a wide range of different stakeholder groups. These include our many customers, suppliers and other business partners, while our stock market listing also requires us to engage in regular interchange with various interested parties such as shareholders, market analysts and the media. We regard meeting all those different demands in an appropriate manner as being a vital task.

CUSTOMERS AND PARTNERS

For our construction and machinery manufacturing businesses especially, the long-standing professional and collaborative relationships that exist with our customers are extremely important. Customer satisfaction is of course our top priority. A key factor in attaining it is the quality and efficiency of our machinery and services. We also seek to convey something of our corporate culture to our partners by hosting events such as our now traditional in-house exhibition.

In 2010 the BAUER Maschinen Group companies were once again represented at the world's largest construction machinery trade fair, Bauma, in Munich. The fair saw the presentation of many new products, including the biggest rotary drilling rig ever built, the BG 50, and the new fully hydraulic cable excavator, the MC 128. We of course also made use of the event to meet with our customers and to exchange news and views with them.

We routinely survey our customers' satisfaction on completing a construction project. We have devised the "BAUER Partnering" model for the German construction market as a means of enhancing collaborative partnership with our customers. Our certification to DIN EN ISO 9001 further reflects the high demands we impose upon ourselves in terms of quality.

The Group's in-house education and training facility, BAUER Training Center GmbH (BTC), provides training both to company employees and to customers' staff. The BTC hosts a wide range of seminars offering technical training as well as practical tips and advice for machinery customers.

OPERATOR'S PERMIT

In the winter of 2010 the BAUER Training Center became the first institution in Germany to be licensed to conduct tests and issue permits to drilling rig and pile-driver operators. The testing is accredited by the Central Association of the German Construction Industry and the Central Association of the German Building Trade as well as by the construction industry employer's liability insurance association Berufsgenossenschaft Bau. The course teaches the participants about the theory underlying the practical operation of the equipment. On the approximately 6,000 square metre training circuit created at the plant in Aresing, test candidates have the opportunity to experience for themselves how a rig responds in practice when undergoing stability, tilt and load tests. The courses are conducted by qualified Bauer trainers, and conclude with the operator's permit test.

SUPPLIERS AND SUBCONTRACTORS

A climate of mutual trust and confidence, fairness and partnership is particularly important when working with suppliers and subcontractors. We try to create and maintain such a working relationship based on a win/win approach. This collaborative approach is vital in assuring the quality of the components or subcontracted services provided, and thus also of the end product. In return, we commit ourselves to a process of fair and open competition. In addition to our main Purchasing departments at Group headquarters, we also operate local purchasing structures based on the lead-buyer concept.

All employees involved in the procurement process are required to adhere to a code of ethics and to comply with purchasing guidelines. All external sourcing is subjected to a compliance check by our Purchasing and Customs departments as a matter of policy. Suppliers are ratified on the basis of EC and US sanctions lists. The Quality Management department maintains a database of approved suppliers. New suppliers must meet standardized approval criteria and sign a declaration committing them to uphold our moral standards. Regular audits of our suppliers and subcontractors in Germany and abroad safeguard compliance with our requirements over the long term.

BAUER Spezialtiefbau GmbH obligates its construction subcontractors to guarantee their workers the terms and minimum pay rates applicable in the European Union. In the Equipment segment, many suppliers are based in countries where health and safety standards are guaranteed by law. The quality control procedures implemented by our Purchasing departments minimize safety risks in use of our products resulting from their sourcing. Regular supplier surveys on environmental aspects are additionally conducted.

EMPLOYEES

The foundation stones of any company are of course its employees. Their commitment and know-how play a vital role in the success of the business. That is why a whole section of this report is devoted to them.

SHAREHOLDERS

We are committed to maintaining close investor relations, and to a policy of openness in communications between the Management Board and shareholders, market analysts and investors. In 2010 a total of 15 analysts published regular reports on Bauer. The interest of private investors, who attend the Annual General Meeting every year in great numbers, likewise remains high. The Old Welding Shop building at the company's headquarters in Schrobenhausen always provides an impressive setting for the event.

We also believe it is important to provide our shareholders with appropriate returns on their investment. This is a key factor in establishing and maintaining a relationship based on mutual trust and confidence. Our dividend policy is founded on the three key pillars of return on investment, continuity, and safeguarding the equity base. Since 2010, BAUER AG has participated in the climate reporting system of the Carbon Disclosure Project (CDP), which operates on behalf of the world's major investors in collecting data on listed companies' emissions and climate strategies.

MEDIA

It is also a company’s duty to provide the public at large with information and news about our business as appropriate. For this purpose, we maintain routine contacts with the various print media, radio and TV outlets. Our media relations extend from local newspapers, through the financial press and major news agencies, to trade journals. We attempt to meet the needs of all interested parties as far as possible, and also place resources at the disposal of the media in relation to issues and debates extending beyond our own business activities. In 2010, as well as providing extensive interviews with members of the Management Board we also worked closely with a radio station on the production of a feature about family-owned businesses, for example, and contributed to a TV piece on the training involved in acquiring a construction machinery operator's permit.

FEDERAL, STATE AND LOCAL GOVERNMENT

As a major company within the SME sector, we contribute considerably to the public purse through the taxes we pay. The business is based in Schrobenhausen, a small town of some 17,000 inhabitants in Upper Bavaria. We are by far the largest employers in the town. Some 1,900 people work at the Schrobenhausen facility alone. The many other locations in which we operate throughout the world also benefit financially from our economic activity.

RESEARCH AND SCIENCE

"Passion for Progress" – the slogan adopted by the BAUER Group – is a clear indication that innovation is key for us as a global market leader in the machinery manufacturing business. In our Construction segment, too, the development and improvement of construction techniques and processes is a vital factor in enhancing efficiency and providing solutions to problems on-site. The same applies to our most recent field of business, the Resources segment. That is one reason why we maintain extensive contacts and engage in numerous cooperation agreements with universities and technical colleges. In 2007 we established the BAUER Research Board as an instrument to provide even more intensive focus on the development of new technologies – always with an eye to translating basic research findings into marketable products or viable construction techniques.

COMMUNITY

In today's hectic, fast-moving world, investing time, effort and money in the public good is no longer always feasible for many people and businesses. But our community needs such commitment, because the many volunteers devoting their time and efforts on a daily basis to clubs, trade bodies, schools and colleges – to name just a few instances – are more vital than ever before. This is a view backed by the companies of the BAUER Group and their employees. It is also an area in which company head Professor Thomas Bauer is very much a role model: "I believe that business owners have an obligation to devote a portion of their time to their community. I spend about a quarter of my time on such community work, and I intend to continue doing so."

Alongside his roles as President of the Central Association of the German Construction Industry and of the Bavarian Construction Industry Association, Professor Bauer is also State Treasurer of the CSU (Christian Social Union) political party and an Honorary Professor at the Technical University of Munich. He was also a district councillor in the Neuburg-Schrobenhausen district for many years. Finance Director Hartmut Beutler, too, is committed to roles outside of the business, as Chairman of the Chamber of Industry and Commerce Board for Neuburg-Schrobenhausen and as a board member of the Ingolstadt Regional Management Initiative. The third member of the Management Board of BAUER AG, Heinz Kaltenecker, is a member of the board of the German Geotechnical Society. The head of the human resources department of BAUER AG is a member of the board of trustees of the SIS Swiss International School Ingolstadt (SISI).

These are just four examples of how the company's Management Board and its employees are contributing to the public good. Many members of staff routinely conduct lectures and make presentations at universities and technical colleges, thereby aiding the cause of public education.

The various Group companies are just as committed to their local communities as their employees. That commitment extends from supporting clubs, academic institutions and other special projects by way of donations and contribution of know-how, through active membership of professional and trade bodies, to hosting guided factory tours and open days for nursery children, school and college students and other interest groups.

SPONSORSHIPS PROVIDED BY BAUER AG

Many Group companies are members of associations and other trade or professional bodies, and support and promote their interests both by the membership fees they pay and, in some cases, by contributing the know-how and time of their personnel. Since 2008, BAUER AG has been providing major funding to sponsor a foundation professorship in labour law, specializing in construction industry labour law, at the Hochschule Deggendorf academy. A selection of other BAUER AG memberships and sponsorships are listed below by way of example:

German Industry Africa Association
Board of Trustees of the SIS Swiss International School Ingolstadt (SISI)
Ingolstadt Regional Management Initiative
East Asian Association
Innovation Agency for the German Science System
Neuburg Education and Science Association

The BAUER Foundation is a charitable institution which every year donates considerable amounts of money or contributions in kind to support the arts, culture, research and education, or community facilities.

FAMILY DONATIONS

The Bauer family donated EUR 100,000 to the municipality of Schrobenhausen to sponsor local children's day nurseries. In doing so, Professor Thomas Bauer believes it is important to support the outstanding work being done by the existing facilities. "We do not intend to establish our own in-house childcare facility, as it would create subsidized competition, and that is something which we would not wish to do." BAUER AG additionally provided start-up grants of EUR 8,000 to each of the local nurseries.

The family donated a further EUR 50,000 to the Technical University of Munich's charitable foundation. This foundation, established in 2010, seeks to safeguard the competitiveness of the university and ensure its independence from state funding. It includes a sponsorship programme for the best doctoral students in the university's Graduate School.

VALUE ADDED STATEMENT 2010

The global operations of the BAUER Group make a major contribution in terms of value added. In 2010 they generated EUR 377 million, benefiting the economies of the countries in which the Group operates. Most of the added value was paid out to our employees. The portion retained within the Group can be utilized for capital investment and future growth.