Gr-Annual-Report-2001.Pdf

Information Request Card

I would like to receive information by Andritz Group Key Figures 1998-2001 (IAS) Key Figures 2001 Post E-Mail My e-mail address is: Sales by Business Area Order Intake by Business Area in MEUR 2001 20001) 1999 1998 Other information

Order Intake 1,121 1,083 638 605 Feed Technology Others Feed Technology Others 8% 2% 10% 3% Order Backlog (Dec. 31) 740 939 514 524 Please tick where applicable Environment and Environment and Andritz AG Sales 1,319 937 656 666 Process Technologies Process Technologies 10% 13% Investor Relations EBITDA2) 95 63 38 35 Rolling Mills and Rolling Mills and Name: Strip Processing Lines Strip Processing Lines Stattegger Strasse 18 13% 17% EBITDA Margin 7.2% 6.7% 5.8% 5.2% A-8045 Graz EBITA3) 68 44 23 21 Address: Austria EBITA Margin 5.2% 4.7% 3.5% 3.2% Earnings Before Interest and Tax (EBIT) 55 34 21 20 ✂ Earnings Before Tax (EBT) 60 34 32 40 Net Income for the Year 37 20 20 37 Pulp and Paper 67% Pulp and Paper 57% Cash Flow from Information Request Card Operating Activities 72 43 40 51

Capital Expenditure 4) 24 21 17 13 I would like to receive information by

Employees at Year-End 4,545 4,241 3,021 2,991 Post (excluding apprentices) Employees by Business Area Employees by Region E-Mail My e-mail address is:

Feed Technology Others Others 9% Netherlands 15% 5% 4% France 4% Environment and Great Britain Other information Process Technologies Germany 9% 1% Extract from Balance Sheet 10% Rolling Mills and Strip Processing Lines 12% Please tick where applicable North America Andritz AG 23% Andritz AG Investor Relations in MEUR 2001 20001) 1999 1998 Stattegger Strasse 18 Name: Stattegger Strasse 18 Austria A-8045 Graz, Austria A-8045 Graz Northern Europe 25% Tel.: +43 316 6902-0 Address: Austria Fixed Assets 317 339 120 116 25% Current Assets 625 595 685 703 Fax: +43 316 6902 415 Pulp and Paper 58% E-Mail: [email protected] Total Assets 942 934 805 819 ✂ Internet: http://www.andritz.com Shareholders’ Equity 5) 230 161 358 376 Equity-to-Assets Ratio (%) 24 17 45 46 For information please contact: Minority Interests 9 60 10 6 Information Request Card Order Intake by Region Sales by Region Michael Buchbauer Provisions 178 159 112 110 Corporate Communications/Investor Relations I would like to receive information by Liabilities incl. Deferred Income 484 517 296 284 E-mail: [email protected] Post Share Capital 95 73 73 73 Others Others 1% 2% Tel.: +43 316 6902 2979 Asia E-Mail 14% Asia South America My e-mail address is: 24% South America 10% Editor: 7% Michael Buchbauer Other information Notes: North America North America 27% 28% Design: 1) Includes consolidation of Andritz-Ahlstrom Corporation from July 1, 2000 Europe Europe 41% 46% Grafikatelier Sabine A. Müller 2) EBITDA: Earnings before interest, tax, depreciation and amortization of goodwill Please tick where applicable Andritz AG 3) EBITA: Earnings before interest, tax and amortization of goodwill Investor Relations 4) Additions to tangible assets and intangible assets Printed by: Name: Stattegger Strasse 18 5) Shareholders’ equity w/o minority interests Print & Art Faksimile GmbH, Graz We engineer the future A-8045 Graz Address: Austria We engineerthefuture

Annual Report 2001 Annual Report2001 We engineerthefuture Sales Range Global Presence Report oftheSupervisoryBoard Consolidated FinancialStatements2001 Environmental Protection Quality Andritz Automation eBusiness Andritz Shares The BusinessAreas Status Report Letter fromtheManagingBoard Corporate Profile The BusinessAreasataGlance The Year 2001atAndritz Milestones intheHistoryofAndritz Corporate Mission Highlights ofthe2001BusinessYear/ Contents drse 116 114 - Addresses - SurveyofAndritzGroup Companies ulo 20 17 11 15 Pulp andPaper 10 - Outlook - Employees - ResearchandDevelopment - The2001BusinessYear - GeneralEconomicConditions Other Operations/HydraulicMachines Feed Technology Environment andProcessTechnologies Rolling MillsandStripProcessingLines ae ilSrie iiin 40 38 36 31 - PaperMillServicesDivision 29 33 - Tissue MachinesDivision 27 - FiberPreparationSystemsDivision - MechanicalPulpingSystemsDivision Paper MillTechnologies - PulpMillServicesDivision - KraftMillSystemsDivision - Wood ProcessingDivision Pulp MillTechnologies 121 112 111 73 71 70 68 66 64 8 6 4 3 2 1 22 60 54 48 42 Andritz Group KeyFigures 1998-2001(IAS) 7 November2002 First threeQuartersof2002 8 August2002 First Halfof2002 13 May2002 First Quarterof2002 17 April2002 Annual GeneralMeeting 14 March2002 Full Year Resultsof2001 Financial Calendar2002 (Grazer Congress) Highlights of the 2001 Business Year

Clearly improved market and competitive position

Sales and EBIT reach record levels, increase in profitability

Surge of Net Income

Successful Initial Public Offering

Purchase of the remaining 50% stake in Andritz-Ahlstrom

Corporate Mission "A Global Market Leader in High-Tech Production Systems for Pulp and Paper, Steel and Other Specialized Industries" Milestones in the History of Andritz

1852 local market position for feed mill Andritz is founded by Josef Körösi as plants (later renamed Sprout-Matador a foundry and machine works. A/S) strengthens Andritz’ Feed Tech- nology Business Area. 1900 Transformation into a stock holding 1998 company. In January, Andritz buys 75% of Sund- wiger Eisenhütte Maschinenfabrik 1950 GmbH & Co. based in Hemer, Ger- Creditanstalt-Bankverein buys the many. Sundwig is a leading supplier majority of shares. of cold rolling mills and strip processing lines for the international steel 1987 industry. AGIV AG, an investment company headquartered in Frankfurt, Germany, 1999 becomes new major owner. AGIV AG sells its shareholding in Andritz to a consortium, consisting of 1990 The Carlyle Group, GE Capital, Unter- Andritz buys Sprout-Bauer, a leading nehmensinvest AG, Deutsche Beteili- global producer of systems for gungs AG, Custos Privatstiftung mechanical pulp and feed, based in (founded by Andritz President & CEO Pennsylvania, USA. The purchase of Wolfgang Leitner) and other mem- Sprout-Bauer marks the beginning of bers of the Andritz Managing Board. the strategic and technological new orientation of Andritz. 2000 Andritz buys a 50% stake in Andritz- 1992 Ahlstrom, previously Ahlstrom By buying Durametal Corporation in Machinery Group, making Andritz a Tualatin, Oregon, USA, Andritz ac- leading global supplier of production quires a successful refiner plate systems for all types of pulp, includ- manufacturer. Soon after, it dramati- ing chemical recovery systems. cally strengthened its position on the With the acquisition of Universal Mil- North American market. ling Technology (UMT) Andritz becomes a global market leader in the 1994 field of feed technology as well. In mid-1994, Andritz buys the Kone Wood Group, a leading supplier of 2001 wood processing equipment for the Andritz AG is first listed on the Vienna pulp industry. Stock Exchange on June 25, 2001.

1995 At the end of June, Andritz buys the The purchase of Jesma-Matador A/S, remaining 50% stake in Andritz-Ahl- a Danish company with an excellent strom.

Andritz 2001

2 The Year 2001 at Andritz

January July Jiangxi Paper Co. Ltd. (China) entrusts Andritz AG From China, Andritz receives a contract for three tis- with the supply of a 550 ADMT/d RT/RTS-TMP sue machines and for the highest-capacity push system* including high-consistency post bleaching pickling line in China, worth over 40 MEUR, confirm- for a new paper machine producing newsprint from ing and extending its leading position as a supplier local pine. in this region.

February August One of the largest producers of copper, Compañia Andritz continues its successful business develop- Minera Disputada de las Condes Ltda. (Chile), en- ment during the first half of 2001. It reports increas- trusts Andritz AG with the supply of two Hyperbaric es in Sales, Earnings and Order Intake. Filters – HBF 60/5. These high performance pressure filters will be used for dewatering copper ore con- October centrate. Disputada has operated Andritz Hyperbaric Andritz-Ahlstrom receives a letter of intent from Filters for 10 years now. Zellstoff Stendal GmbH in Saxony-Anhalt, Germany, for major chemical recovery systems for a green- March field kraft mill. The total value of the letter of intent Andritz presents the financial results for the year is approximately 95 MEUR. 2000 with record values for Sales, Order Intake and Order Backlog and a marked increase in Earnings November before Interest and Tax (EBIT). Despite difficult economic conditions, Andritz suc- ceeds in boosting its Sales, Order Intake and Earn- May ings for the first three quarters of 2001. A clear The contract for supply of a deinking system for increase in the EBITDA margin is achieved. secondary fiber treatment to produce newsprint and SC paper is signed by Yanbin Shixian Bailu Paper December Co., Ltd., one of the largest paper producers in Jilin The City of Singapore awards Andritz a contract for Province (China), and Andritz in a formal ceremony. supply of a drum drying system consisting of five lines, each with a water evaporation rate of 11 t/h. Andritz presents the financial results for the first With the large systems supplied to Bran Sands, quarter of 2001 and reports substantial increases in Glasgow, Cardiff, Louisville and Singapore as the Sales, Order Intake and Earnings. most recent one, Andritz is the global leader in this market segment. June Markku Hänninen is appointed President of Andritz- The ATX Committee resolves that Andritz AG is to Ahlstrom as of July 1, 2001. be included in the ATX share index of the Vienna Stock Exchange as of January 21, 2002. Andritz shares are listed for the first time on the Vienna Stock Exchange on June 25, 2001.

Andritz AG buys the remaining 50% stake in Andritz- *R = Retention Time, T = Temperature, S = Speed, Ahlstrom, Finland. TMP = Thermo-mechanical pulp

Andritz 2001

3 The Business Areas of the Andritz Group at a Glance

Pulp and Paper

Profile The Pulp and Paper Business Area is one of the global leaders in the supply of plants, systems, processes and services for production of all types of pulp, for chemical recovery in kraft pulp production, for fiber preparation in paper making, tissue production systems, and engineered, customized and technologically advanced wear and spare parts. Extensive services complete the large product portfolio.

Share of total Sales: Products Plants, systems, processes and services approx. 67%

/ for all production steps in the / for making tissue paper: Crescent- woodyard Former machines, through-air dry- / for manufacturing chemical pulp, ing machines and tissue machines including chemical recovery with the TissueFlexTM*) shoe press. / for mechanical pulp for the paper / Services: original spare parts, and board industry and mechanical engineered, customized and techno- fibers for production of MDF fiber logically advanced wear parts, plant boards rebuilds and modernization / for treatment of recycled paper, fiber preparation for all paper- *)Trademark of Voith Paper, cooperation making processes as well as sludge partner of Andritz dewatering

Rolling Mills and Strip Processing Lines

Profile The Rolling Mills and Strip Processing Lines Business Area designs and constructs complete lines for the production of cold-rolled carbon steel, stainless steel and non- ferrous metal strip. The Andritz Group is the only supplier to master all processes involved in the manufacture of stainless steel (rolling, annealing and pickling) on a comprehensive basis and can supply all the production systems through a single source.

Share of total Sales: Products approx. 13% Equipment for the steel, non-ferrous metal and aluminium industry:

/ Cold rolling mills / Finishing systems / Strip processing lines / Regeneration plants / Surface treatment systems / Continuous heat treatment systems

Andritz 2001

4 Environment and Process Technologies

Profile The Environment and Process Technologies Business Area’s product range covers the entire spectrum of technologies for mechanical and thermal treatment of sludge from municipal and industrial sewage sludge plants. Critical machines and components (screens, crushers, drum and belt thickeners, belt filter presses, centrifuges, dryer drums and fluidized bed dryers) are developed and produced in-house. The Andritz Group is a global market leader for systems for mechanical and thermal sludge treatment. Share of total Sales: approx. 10% Products Plants, systems, machines and processes for

/ Process water treatment / Sludge drying / Mechanical waste water treatment / Thermal sludge utilization / Sludge thickening / Industrial solid/liquid separation / Sludge dewatering

Feed Technology

Profile The Feed Technology Business Area is the global market leader for development and production of systems, machines and processes for the industrial production of animal feed. This comprises complete feed mill lines as well as unit equipment for grinding and mixing, expanding, pressing, extruding, cooling, vacuum coating and drying. The Business Area also supplies plants and systems for industrial production of biofuel pellets.

Products Share of total Sales: approx. 8% / Size reduction systems / Dryers and cooling equipment / Conditioners and expanders / Pellet coating systems / Pellet mills / Spare and wear parts / Extruders

Other Operations/Hydraulic Machines

Profile Other Operations/Hydraulic Machines encompass Andritz Group activities such as the planning, development, and manufacture of water turbines, large-scale pumps for selected applications, pumps for the primary and secondary loop in nuclear power stations, centrifugal pumps for the pulp and paper industry, space technology components.

Products Share of total Sales: / Water turbines / Reactor pumps approx. 2% / Large-scale pumps / Space technology components / Centrifugal pumps

Andritz 2001

5 Company Profile

The Company Andritz, the listed Technology Group based in Graz, Austria, is a world market leader Boards in developing and manufacturing advanced, customized production systems for pulp and paper making, the steel and other specialized industries (sewage sludge dewatering and drying, feed industry). Each of the Business Areas also offers special Managing Board services – for instance sale of original spare parts or technologically advanced enginee- Wolfgang Leitner red wear parts. (President and CEO) Over the past few years the Group has grown by over 10% per year on average and Markku Hänninen (as of 1 January 2002) in 2001 achieved Sales of over 1,300 MEUR. It has been profitable since 1987.

Franz Hofmann The Andritz Group was first listed on the Vienna Stock Exchange on June 25, 2001. Friedrich Papst From the beginning of 2002, Andritz shares have been quoted in the Prime Market – the top stock exchange segment – and were included in the ATX share index of the Bernhard Rebernik Vienna Stock Exchange as of January 21, 2002.

Supervisory Board Business Areas

Appointed Members: The activities of the Andritz Group are focused within four Strategic Business Areas, Kurt Stiassny which offer high-tech production systems, plants and services for (Chairman)

Hans Albrecht / Producing pulp and (tissue) paper (Pulp and Paper Business Area, approx. 67% of (Deputy Chairman) Group Sales),

Michael Hildisch / Processing steel (Rolling Mills and Strip Processing Lines Business Area, approx. Christian Nowotny 13% of Group Sales),

Anton Schneider / Processing and treating waste water and sludge (Environment and Process Tech- nologies Business Area, approx. 10% of Group Sales), and Hellwig Torggler

/ Producing animal feed (Feed Technology Business Area, approx. 8% of Group Sales). Delegated Members:

Johann Tschrischnig In all four Stategic Business Areas the Andritz Group is one of the global market leaders in the different market segments. Brigitta Wasserbauer

Andreas Martiner The company’s activities also comprise production of different hydraulic machines, e.g. water turbines, pumps for the pulp and paper industry, as well as components for space technology (Other Operations/Hydraulic Machines, approx. 2% of Group Sales).

Employees and Locations

The Andritz Group has a global staff of over 4,500 employees and more than 60 affiliates, distribution and service companies. There are 16 production sites in Austria, Germany, Finland, Denmark, France, Netherlands, Great Britain, USA, Canada and China.

Andritz 2001

6 In its research centers in Europe and in USA, Andritz develops innovative processes on an on-going basis. These processes employ patented and other proprietary technology and have helped the Group obtain its top position. Its global presence and the technology leadership strengthen the Group’s competitive position and ensure that important strategic company goals are reached.

Strategy

The strategic target of the Andritz Group is organic growth through intensive re- Growth through search and development and utilization of synergies between the Business Areas, research & combined with the acquisition of complementary products and technologies. The development and goal is to become a comprehensive supplier of complete process lines in each of the complementary Business Areas. Pursuant to this strategy, a number of businesses have been purchased acquisitions over the past few years and successfully integrated into the Group. For example, the acquisition of the Finnish company Andritz-Ahlstrom Corporation has enabled the Andritz Group to become a global leader for high-tech production systems for all types of pulp, including chemical recovery. Similarly, with the purchase of UMT, An- dritz advanced to global market leadership for feed technology.

Continuous growth of the services business is a further very important growth area Extension of the for the Group. The services business, which accounts for approximately 25% of over- services business all Sales, comprises the supply of original spare parts and of technologically advanced engineered wear parts. Other services include comprehensive Mill Audits, which help customers identify potentials of optimizing production and of saving money. In addition, within the framework of an extensive eBusiness Project of the Andritz Group, special customer-oriented Internet solutions have been implemented. For instance, the Pulp and Paper Business Area’s Service Club, which was established in early 2002, offers a wide range of customized services, from online spare parts ordering to complete plant documentation and production sequences with online support.

Cost management and future-oriented pre-emptive restructuring have helped secure Intelligent cost the Group’s long-term profitability. management and pre-emptive restructuring Financial Goals

The Group’s financial goals are:

/ Long-term Sales growth of approx. 10% per year on average

/ EBITDA margin of over 7% (EBITDA as % of Sales)

/ A Return on Capital Employed (ROCE) of over 20%

/ A dividend payout ratio of at least 30% of the Net Income for the Year.

Andritz 2001

7 Letter from the Managing Board

Ladies and Gentlemen, Dear Shareholders,

Improved market 2001 was the most successful business year in the long history of Andritz. Despite position and the very difficult economic environment, which was additionally exacerbated by the Earnings despite tragic terrorist attacks in the United States, Andritz succeeded in extending its mar- weak economy ket position and in achieving considerable improvements of its most important financial key figures. Group Sales and Earnings before Interest and Tax (EBIT) increased to historical records. There are two reasons for this: Firstly the Andritz Group has succeeded in establishing itself further in its markets as a comprehensive supplier of overall systems. In this regard, it has enhanced its market position clearly on account of the last year’s strategically important purchases, Andritz-Ahlstrom and UMT. Secondly the consistent pursuit of both cost management and pre-emptive restructuring has increased the Group’s profitability. This strategy will be continued in the future. The planned merger of the two Finnish affiliates, Andritz-Ahlstrom and Andritz Oy, and the closure of the UMT production site in Hull, England as of Decem- ber 31, 2001, are two important actions in support of this.

Successful IPO Andritz AG’s Initial Public Offering in June 2001 was an outstanding event for our company. In spite of the problems on the international financial markets when An- dritz went public, we were able to place 2 million new shares successfully with established institutional investors at home and abroad. A most remarkable factor was the high level of participation by our own employees. A total of 8% of the volume issued was subscribed by Andritz employees, which shows just how closely Andritz employees identify with the company.

Inclusion in the Since January 1, 2002, Andritz shares have been quoted in the highest segment of Prime Market and the Vienna Stock Exchange, the Prime Market, and since January 21, have been in ATX included in the Vienna Stock Exchange index (ATX). High transparency, quick supply of information and active Investor Relations vis-à-vis our shareholders are clearly defined company goals.

Purchase of the As a consequence of a contractual clause related to the IPO, Andritz was able to buy remaining 50% the remaining 50% of Andritz-Ahlstrom Corporation. The full ownership of Andritz- stake in Andritz- Ahlstrom permits the latter’s complete organizational and product-related integra- Ahlstrom tion into the Pulp and Paper Business Area. To this end, the re-organization of the Business Area into Pulp Mill Technologies and Paper Mill Technologies (effective Re-organization January 1, 2002) was implemented. This customer-oriented bundling of the product of Pulp and and system know-how of both Andritz and Andritz-Ahlstrom makes us one of the glo- Paper Business bal market leaders for high-tech production systems and processes for the pulp and Area paper industry, with additional synergies being utilized, the competitive situation being improved and a further Earnings improvement being achieved. Markku Hänninen, President of Andritz-Ahlstrom, was appointed as member of the Managing Board of Andritz AG beginning January 1, 2002.

Andritz 2001

8 Andritz AG Managing Board, from left to right: Franz Hofmann, Markku Hänninen, Wolfgang Leitner (President & CEO), Friedrich Papst, Bernhard Rebernik

An important focus of the past year was the implementation of the eBusiness project Successful start of for the Andritz Group. The goal is to turn the opportunities that Internet Technologies Andritz eBusiness offer into advantages for our customers. Both simplifying business processes in the project value-added chain and creating client-specific, personalized and transaction-oriented web solutions are of great importance to our customers. With the successful re-launch of the Andritz public website and the implementation of the Pulp and Paper Service Club the first two eBusiness solutions of this ambitious project have been realized.

Leading economic research institutes predict that the difficult economic conditions Good Order will likely persist in 2002. During the second or third quarter of 2002 a slight recov- Backlog and high ery is expected. With a good Order Backlog, satisfactory project activity in the markets project activity as a which Andritz serves and the letters of intent received, we expect business to devel- basis of satisfac- op favorably in the current year. The logical continuation of Group integration for tory business optimum exploitation of synergies and the management of projects according to development in deadlines and customer requirements will continue to be priority goals for the Group 2002 in 2002. Another focus will be continuous expansion of the services business and optimization of existing production capacity.

The Managing Board wishes to thank all employees in the Group for their contribution during the year under review. Only on account of this input, active cooperation and diligence of each employee has it been possible for Andritz to hold its own in a very difficult competitive environment and to achieve the best annual result ever in our history. We also thank our customers and business partners for the confidence they have placed in us in the past business year. We assure them that we will perform to their requirements fully during the year to come.

Wolfgang Leitner Friedrich Papst Bernhard Rebernik (President and CEO)

Franz Hofmann Markku Hänninen (Member of the Managing Board since January 1, 2002)

Andritz 2001

9 Status Report

General Economic Conditions

Considerable Economic growth became much weaker during 2001. In each of the large economic slowing of the regions – the USA, Europe and Japan/Asia – the economy cooled off, a trend that world economies was further intensified by the terrorist attacks of September 11 in the United States. in 2001 The terrible events in New York and Washington hit the USA during a time of particular economic vulnerability. Partly as a consequence of the expansionary interest USA: Interest policy of the American Federal Reserve Board (during 2001, interest rates were low- rates at lowest ered 11 times to the lowest level in 40 years), at the beginning of the third quarter of level in 40 years 2001 the USA was poised to enter a phase of economic recovery. A rise in order intake and a gradual increase in construction activity gave reason to expect a slight accel- Delay in econom- eration in economic growth. However, the terrorist attacks left American consumers ic upswing as a and companies in a state of apprehension, the consequence being a drop in private result of terrorist consumption and restrictive investment policies of companies. The US economy attacks declined during the third quarter – for the first time since the early 1990’s – by 1.3%. During the fourth quarter, there was a slight growth of 0.2 %. In total, the economic growth for year 2001 should be approximately 1.1% (2000: 4.1%) in the USA.

Europe: The economic development in Euroland was similar to the United States. Declining Conservative exports, which came as a result of the weak demand from the Americas, consider- interest policy ably receding investment activity by companies and diminished consumer spending of ECB weakened the economy significantly. In the view of a harmonized rate of inflation of plainly over 2%, the European Central Bank (ECB), which is strongly oriented toward securing monetary stability, pursued a reluctant policy of interest rate cuts. The Euro- land in 2001 saw total growth of approx. 1.6%, compared to 3.3% in 2000. Austria’s economy, which is strongly dependent on exports, did not succeed in uncoupling from this development. Its economic growth decreased to approx. 1.1% in 2001, versus 3.2% for 2000.

China is experi- The economic development in Asia and South America experienced considerable encing sustained regional variations in 2001. It shrank in Japan, Hong Kong, South Korea, Singapore high economic and Taiwan, but in China, an important buyer country for Andritz products (rolling growth mills and strip processing lines, pulp and tissue paper machines, increasingly also environmental and process technology equipment) the gross national product increased approx. 7.6%, maintaining the already high level of the previous year (+8.0% in 2000).

South America was affected increasingly by the economic downturn in the USA. Its economic growth declined somewhat from the previous year.

Sources: RZB, WIFO; OECD, OeNB

Andritz 2001

10 Status Report

The 2001 Business Year

Note: For better comparability, the figures of the Consolidated Income Statement as well as the Cash flow for the year 2000 are presented pro forma including Andritz-Ahlstrom.

Sales The 2001 Sales of the Andritz Group rose to 1,318.7 MEUR, the highest value in the Sales are at the history of the company. Compared to 2000, Sales increased by 18.7% (2000: 1,111.4 highest level in the MEUR). company’s history

The Pulp and Paper Business Area increased its annual Sales by 22.9% due to the very favorable development of Andritz-Ahlstrom, where Sales went up 21.2% over those of 2000. Rolling Mills and Strip Processing Lines was faced with a slight decline of its Sales (-1.0%). All other Business Areas in the Group saw their Sales rise: Envi- ronment and Process Technologies by 1.6%, Feed Technology by 57.7% due to the consolidation of Universal Milling Technology, and Other Operations/Hydraulic Machines by 14.5%.

With a share of 67.0% (2000: 64.7%) in the total Group Sales, Pulp and Paper is the largest Business Area of the Group. Rolling Mills and Strip Processing Lines and Environment and Process Technologies contribute 12.7% and 10.3% respectively (2000: 15.2% and 12.0%). The Sales share of the Feed Technology Business Area increased from 6.1% in 2000 to 8.0% in 2001. The Andritz Group’s Other Oper- ations/Hydraulic Machines contributed 2.0% to the Sales (2000: 2.0%).

Sales by Business Area

Feed Technology Others 8% 2%

Environment and Process Technologies 10% Rolling Mills and Strip Processing Lines 13%

Pulp and Paper 67%

Andritz 2001

11 Status Report

Sales by Business Area

MEUR 2001 2000*) % change Pulp and Paper 883.0 718.6 +22.9% Rolling Mills and Strip Processing Lines 167.4 169.1 -1.0% Environment and Process Technologies 135.3 133.2 +1.6% Order Intake by Region Feed Technology 107.0 67.8 +57.7% Other Operations 26.0 22.7 +14.5% Others Total Group 1,318.7 1,111.4 +18.7% 1%

Asia *) Pro forma including Andritz-Ahlstrom, without UMT 24%

Geographically, the largest market for the Andritz Group was Europe: It accounted for 46.1% of the total Sales (2000: 47.2%). The share of the Ameri- cas, 37.5%, showed a slight increase (2000: 33.5%). Asia dropped from 17.0% in the previous year to 14.2% in 2001.

Order Intake and Order Backlog Order Intake showed a satisfactory development during the year in spite of the very difficult economy. It amounted to 1,120.9 MEUR, slightly less than in 2000 (1,233.0 MEUR). It is to be noted, however, that especially Andritz-Ahl-

South America strom had a particularly high Order Intake, 506.2 MEUR, in 2000 (2001: 339.4 7% MEUR). Also, the order received from Zellstoff Stendal GmbH in October

North America 2001, in the form of a Letter of Intent worth 95 MEUR, is not contained in the 27% Europe Order Intake for 2001. The contract is expected to take effect in the second 41% quarter of 2002 after the overall financing concept has been finalized, whereupon it will be booked as Order Intake. Pulp and Paper had the largest share in the Order Intake: 57.3% (2000: 71.9%), followed by Rolling Mills and Strip Processing Lines, 17.5% (2000: 10.6%) and Environment and Process Techno- logies, 12.5% (2000: 9.6%). Feed Technology’s share increased to 10.0% – mainly on account of the consolidation of UMT (2000: 5.7%). The Andritz Group’s Other Operations/Hydraulic Machines accounted for 2.6% of the total Order Intake (2000: 2.2%).

The distribution by regions shows the increasing importance of Asia, especially China. The receipt of some major reference orders for (stainless-) steel and tissue paper production equipment boosted the Asian proportion from 10.7% in 2000 to 23.5% in 2001. Order Intake from Europe and America reached 40.8% and 34.3% respectively (2000: 41.6% and 46.5%).

The Andritz Group’s Order Backlog was 740.4 MEUR as of December 31, 2001, 21.1% less than in the previous year (Dec. 31, 2000: 938.6 MEUR), when the Order Backlog had reached an exceptionally high value.

Andritz 2001

12 Status Report

Earnings The Earnings of the Andritz Group in 2001 developed very favorably. All essential Higher Earnings financial ratios improved considerably from the previous year, due to the improved due to improved competitive position that the Andritz Group has achieved as a supplier of overall market position systems. In the Pulp and Paper Business Area, above all, the acquisition of the and efficient cost remaining 50% stake in Andritz-Ahlstrom led to an enhancement of the Andritz management market position despite a difficult economic environment. Efficient cost management and pre-emptive restructuring also continued successfully.

EBITDA (Earnings before Interest, Tax, Depreciation and Amortization of goodwill) EBITDA reaches rose to 94.5 MEUR or 36.9% over the figure for year 2000. It is the best result that record level Andritz has ever achieved. The EBITDA margin (EBITDA as % of Sales) rose from 6.2% in 2000 to 7.2% in year 2001. EBIT (Earnings before Interest and Tax) advanced Increase in profita- 56.5% over the previous year, reaching 54.6 MEUR in year 2001 (2000: 34.9 MEUR). bility

The Andritz Group’s Financial Result for 2001 was 5.5 MEUR against 0.4 MEUR in 2000. This rise is basically attributable to the significantly increased net liquidity.

The Earnings before Tax (EBT) amounted to 60.1 MEUR (2000: 35.3 MEUR).

The Net Income for the Year after deducting Minority Interests was 33.6 MEUR (2000: 17.1 MEUR), an increase of 96.1% compared to the previous year.

Andritz Group Key Figures

MEUR 2001 2000*) % change

Sales 1,318.7 1,111.4 +18.7% EBITDA 94.5 69.1 +36.9% EBITDA Margin 7.2% 6.2% – EBITA 68.0 47.6 +42.9% EBITA Margin 5.2% 4.3% – Earnings before Interest and Tax (EBIT) 54.6 34.9 +56.5% Earnings before Tax 60.1 35.3 +70.2% Net Income for the Year (including minorities) 37.5 19.6 +91.3%

*) Pro forma including Andritz-Ahlstrom, w/o UMT

Andritz 2001

13 Status Report

Net Worth Position and Capital Structure

Andritz AG’s Initial Public Offering (on June 25, 2001), as well as the purchase of the remaining 50% stake in Andritz-Ahlstrom and the first-time consolidation of UMT caused a shift of some essential balance sheet items as of December 31, 2001.

Increase of the Equi- Due to the placement of two million new shares in the course of going public (initial ty-to-Assets ratio to issue price: 21 EUR per share) and the favorable Earnings development, Share- 24.5% holders’ Equity of the Andritz Group increased from 160.7 MEUR as of December 31, 2000 to 230.3 MEUR as of December 31, 2001. The equity-to-assets ratio rose to 24.5%, compared to 17.2% on December 31, 2000. This high ratio signals a solid and balanced financial structure. The Minority Interests, due to acquisition of the remaining 50% of Andritz-Ahlstrom, went down to 9.3 MEUR (31.12.2000: 60.2 MEUR). No other balance sheet items were subject to any major changes from the year before.

The traditionally low Net Working Capital of the Group amounted to 123.6 MEUR or 9.4% of Sales as of December 31, 2001 (December 31, 2000: 102.5 MEUR or 10.9% of Sales).

Net liquidity surged Net liquidity of the Andritz Group underwent a very favorable development, amount- to 77.3 MEUR ing to 77.3 MEUR as of December 31, 2001 and rising considerably over the previous year (31.12.2000: 45 MEUR).

Cash Flow and Capital Expenditure Cash flow from operating activities increased to 71.9 MEUR in 2001 (2000: 50.5 MEUR). All investments in tangible and intangible assets could thus be financed from Cash flow, as has been the case during previous years.

Cash Flow from Operating Activities and Capital Expenditure, 1998 to 2001

in MEUR

72 70 Capital expenditure

Cash flow 60

51 51 50

40 40

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0 1998 1999 2000 2001

Andritz 2001

14 Status Report

Research and Development

The continued focus on our R&D activities is a declared strategic goal of the Andritz Research and Group. Steady new and further developments of processes, systems, products and Development as an services are the only means by which the Group’s competitiveness can be further important strategic strengthened and its market leadership extended. goal of the Andritz Group With over 150 employees in R&D and many research centers and pilot plants located all over the world, the Andritz Group continues to develop innovative, proprietary processes, equipment and technology that are protected by patents and intellectual property rights. The most essential research facilities and pilot plants are located in Springfield (Ohio, USA), Glens Falls (New York, USA), Graz, Vienna (Austria), Kotka (Finland), and Châteauroux (France). The Group also cooperates with the Biotechno- logical Institute in Kolding (Denmark).

During 2001, 18.4 MEUR, or 1.4% of total sales, was invested in Research and Devel- Expenditure for opment. Including the expenditure for contract-related development, the total R&D R&D: over 3% of expenditure amounted to over 3% of Sales. Sales

The Research and Development activities in the Andritz Group’s largest Business Area, Pulp and Paper, concentrated on the following priorities: minimizing water consumption and improving environmental compatibility in kraft mill bleaching processes, improvements in the field of refiner systems for optimized fiber quality, at the same time achieving a reduction in energy input, and numerous other product and system improvements in the tissue machines, fiber preparation and wood processing areas.

Application of our in-house developed automation and sensor technology was also a strong focus in all Divisions of the Pulp and Paper Business Area.

Andritz 2001

15 Status Report

The development activities of the Rolling Mills and Strip Processing Lines Business Area were focussed on the process-technology side of strip processing (electrolytic pickling of stainless steel, electrolytic galvanization in a radial cell with insoluble anodes). Membrane technology is being pilot-tested for use in regeneration plants. Additionally, a new reactor design for acid regeneration was realized at a customer’s plant. Computer simulations of process sequences were drawn up with the aim of achieving improved plant integration and control.

The main area of R&D work for Environment and Process Technologies centered on the development of centrifuges for industrial processes as well as standardization of sewage sludge drying systems and product improvements in dewatering systems both for municipal and industrial applications.

The Feed Technology Business Area succeeded in developing and marketing a number of new products in 2001. Examples are a new generation of dryers, a high-capacity (16 t/h) extruder, a hammer mill for fine grinding, which also offers very high capacity, and a newly developed automation system for extruder plants.

The test facility which is operated together with the Biotechnological Institute in Kol- ding, Denmark, was enlarged, especially in the sector of special feed. Customers can use a complete extruder line with dryer and vacuum coater for trial purposes.

Andritz 2001

16 Status Report

Employees

As of December 31, 2001, the Andritz Group had a total of 4,545 employees, an increase of 304 employees or 7.2% over the same date in 2000. The figure for 2000 did not contain the UMT Group with its 227 employees as at December 31, 2001.

1,143 are Andritz AG employees (2000: 1,072) and 3,402 employees (2000: 3,169) of Andritz Group companies.

The regional distribution of the Group’s personnel remained virtually unchanged Global balanced from the year 2000: 25% work in Northern Europe, 25% in Austria, 23% in North staff structure America, 9% in Germany, 1% in Great Britain, 4% in France, 4% in the Netherlands and the remaining 9% in other countries of the world.

Regional Distribution of Andritz Group Employees

Others 9% Netherlands 4% France 4% Great Britain 1% Germany 9%

North America 23%

Austria 25%

Northern Europe 25%

The goals formulated with regard to personnel development in the Andritz Group Further extension of were followed up consistently and successfully during the past year. Systematic func- the personnel devel- tional training for employees was given high priority. Training programs involving opment both internal courses and meaningful external seminars were attended by all employee groups. Seminars were offered to promote individual personal development. Group-wide training in business management and employee leadership, which has been conducted for several years, is now being revised and developed. More than 100 employees from different functional areas and from all companies in the Group participated in this promotional “Management Challenge Program“.

At production sites, service centers and on-site at customers’ mills, Andritz relies on its highly skilled specialists who have undergone basic instruction in the company’s own training centers but whose practical and theoretical training never stops over the entire career at Andritz.

Andritz 2001

17 Status Report

Andritz 2001

18 Status Report

A benchmarking process made last year comparing Andritz with other international industrial groups proved our personnel development concept to be targeted and attractive.

Employee discussions and assessments, which are being held more consistently, are an important factor in systematically determining the training needs of each employee and, in addition, support an active communications culture.

Full integration of Andritz-Ahlstrom employees was prepared by drafting an all-out organizational development project. Several workstreams for structuring a future- oriented follow-up and build-up organization included members from the Andritz- Ahlstrom team.

Vacant positions were filled in time despite the pronounced increased shortage of Vacant positions qualified workers in a free labor market. New employees were recruited from com- filled in time mitted, well-versed graduates from vocational high-schools, colleges and universi- ties. Adding new employees with initial successful occupational experience to a staff of many long-term and very experienced employees ensures that the qualification structure of the personnel is future-oriented.

The Andritz Group appears as an attractive employer, which is expressed, amongst Low turnover as other factors, by the comparatively low labor turnover. This fact is also underpinned a sign of high by the participation of so many of the employees in the IPO subscription program. employee satisfaction

Andritz 2001

19 Status Report

Outlook

Only moderate Leading economic research institutes have predicted a slight recovery of the global recovery predicted economy in 2002. According to forecasts, the upswing will take place rather slowly by economic and will not start until the second or even the third quarter. The United States is like- research institutes ly to be the first of the three major economic areas to leave the trough and be back on the road of growth. The low level of interest rates and increased government spending should give the essential impetus for the future upswing. Europe’s economy is also expected to recover during 2002, but with a certain time lag of one or two quarters. According to forecasts, Japan will remain at the rear of the leading economic regions. No significant, sustained economic upswing is to be expected for 2002.

Given these general conditions, the markets where Andritz is active (Pulp & Paper and Steel) can be expected to recover slightly in the course of 2002.

Analysts expect According to forecasts, the global pulp market should – after a weak development at slight increase in the beginning of the year – undergo a slight increase in demand and in pulp pricing demand and during 2002. The general economic recovery of the large industrial nations and mas- prices of pulp sive production cuts by the large pulp producers over the past months should lead toward a minor increase in pulp prices in the course of year 2002. Increased project activity is expected for South America and some single regions in Asia.

Continuing high A similar development is predicted for the global steel and stainless steel markets. growth of steel Here, too, only a slight upward trend in steel consumption is expected to take place consumption in along with the development of the overall economy in 2002. According to the Inter- China national Iron and Steel Institute, IISI, the development will vary greatly from one region to another. The demand in North America and Europe is predicted to rise only somewhat above the 2001 level, but China is said to be looking ahead to further large growth rates of between 6% and 8%, especially in the area of stainless steel consumption.

Andritz expects In the light of these forecasts and assumptions, the Andritz Group expects a satisfac- satisfactory business tory business development for 2002. These expectations are, firstly, founded on the development for good Order Backlog, which was about 740 MEUR as of December 31, 2001. Secondly, 2002 continued satisfactory project activity is to be expected for 2002 in the markets that are relevant to the Group. In China and South America, above all, where Andritz enjoys a strong competitive position, some larger projects in the field of steel, stainless steel and pulp are expected to materialize. Additionally, a number of investment decisions are planned for systems and processes for municipal waste water and sludge treatment and also feed technology – fields in which Andritz has global leadership.

Andritz 2001

20 Status Report

If, however, against all expectations of forecasting institutes, world economy growth stagnates or even recedes in 2002 and no upswing materializes, this would likely not leave the business development of the Andritz Group unaffected.

The intensified consolidation and integration of the affiliates acquired last year continue to be a central issue in 2002. The re-organization of the Pulp and Paper Busi- ness Area, whose goal is even better customer focus, will boost Andritz’ competitive position decidedly. Complete implementation of this new organization is one of the priority goals for 2002. Aided by the consistent cost and capacity management An- dritz is aiming at an increase in profitability. The further expansion of the services business by all Business Areas will back this development.

Andritz 2001

21 Pulp and Paper

Andritz 2001

22 Business Area Managers: Profile Markku Hänninen (Pulp Mill Technologies, as of The Pulp and Paper Business Area is one of the global leaders in January 1, 2002) the supply of plants, systems, processes and services for the pro- Bernhard Rebernik duction of fiber and pulp for all paper grades (chemical pulp, (Paper Mill Technologies) mechanical pulp and recycled fibers) including chemical recovery for kraft mill plants, paper stock preparation systems, tissue production systems, and engineered, customized and technologically advanced wear parts (refiner plates, chipper knives, screen baskets, etc.).

The successful acquisition of complementary product areas over the past few years enables the Pulp and Paper Business Area to supply complete processing lines from log handling in the wood- room to making equipment for different types of pulp and certain paper grades.

In 2001, Andritz successfully completed the acquisition of Andritz- Ahlstrom with the purchase of the remaining 50% stake. With this acquisition, this Business Area has become the leading supplier of production systems for all pulp types, including chemical recovery, and strengthened its competitive position in fiber preparation and recycled fiber technologies.

Following the integration of Andritz-Ahlstrom, the Pulp and Paper Business Area was newly organized at the beginning of 2002. In the interest of stronger customer and market orientation the Business Area was structured into "Pulp Mill Technologies”, consisting of the Wood Processing, Kraft Mill Systems, and Pulp Mill Services Divisions, and "Paper Mill Technologies”, comprising the Mechan- ical Pulping Systems, Fiber Preparation Systems, Tissue Machines and Paper Mill Services Divisions.

Under the existing cooperation agreement between Andritz AG and Voith Paper, the businesses of Andritz and Andritz-Ahlstrom Corporation in the field of fiber preparation are operated separately and will continue to be so until expiration of the agreement on June 30, 2002. Thereafter, Andritz will combine these activities in the newly implemented Fiber Preparation Division. The Business Area’s new organization will be completely in place by then.

In each major market, the Pulp and Paper Business Area has a number of service and sales locations. In the emerging regions of Asia and Latin America, Andritz has improved its strong foothold considerably with excellent reference deliveries.

Andritz 2001

23 Pulp and Paper Business Area

Market Development

Despite forecasts by international institutes at the end of 2000 predicting economic recovery as from mid-2001, the global pulp market weakened considerably in 2001. The slowdown of global economic growth which began during the second half of 2000 continued undiminished throughout 2001, leading to a tangible decline in the demand for pulp and paper. Despite massive production cuts by the international pulp producers, Norscan inventories rose to close to two million tonnes by the end of the first quarter of 2001 and decreased to 1.5 million tonnes by the end of Octo- ber. Due to the latent over-supply the price for NBSK (Northern Bleached Softwood Kraft Pulp) decreased from approx. 700 USD at the beginning of the year to a low of just over 400 USD in mid-September 2001. When some pulp producers in North America indicated their intention to increase pulp prices gradually during the fourth quarter, pulp prices began to recover slightly toward mid-September. Generally, demand by the paper industry remained quite moderate during the second half of 2001. Only from China was there increased interest.

In spite of the difficult economic conditions, Key Figures for the Pulp and Paper Business Area (IAS) there were many project opportunities, with MEUR 2001 2000*) 1999 1998 wide regional differences. Few projects were

Sales 883.0 718.6 328.5 358.7 awarded in Asia, and only some in China for Order Intake 642.8 886.6 298.2 309.3 deinking and tissue paper mills. Virtually no Order Backlog 31.12. 431.5 665.5 195.3 225.6 larger investment projects were carried out in EBITDA 69.8 44.6 25.0 24.2 North America, but in South America, especi- EBITDA Margin 7.9% 6.2% 7.6% 6.7% ally in Brazil, and also in Europe, project activ- EBITA 53.9 30.8 18.2 17.6 ity was quite brisk. Here, some large projects EBITA Margin 6.1% 4.3% 5.5% 4.9% for rebuilds of existing plants and construction Capital Expenditure 10.8 15.0 8.6 7.4 of new pulp mills were awarded. Employees 2,626 2,656 1,426 1,434 Due to the softness of the pulp and paper mar-

*) pro forma including ket the investment volume of the industry was Andritz-Ahlstrom on the decline. As market research institutes estimate, capital expenditure by pulp and

Key Figures Andritz-Ahlstrom (IAS) paper makers decreased by approx. 20% in 2001. Most projects consisted of replacement MEUR 2001 2000 1999 1998 investments or upgrading existing equipment.

Sales 493.4 407.0 335.0 417.9 Decisions to build greenfield pulp mills or Order Intake 339.4 506.2 398.4 323.9 paper mills were rare. Order Backlog 31.12. 260.3 402.3 285.2 182.3 EBITDA 29.5 18.4 -10.0 25.5 EBITDA Margin 6.0% 4.5% n.sp. 6.1% EBITA 24.5 12.9 -15.4 19.8 EBITA Margin 5.0% 3.2% n.sp. 4.7% Capital Expenditure 4.5 3.3 3.8 3.3 Employees 1,201 1,255 1,354 1,497

Andritz 2001

24 Pulp and Paper Business Area

Deinking line with disk filters and screw presses

Business Development in 2001

Note: All following comparative figures for 2000 include Andritz-Ahlstrom on a pro forma basis.

The Sales and Order Intake figures for the Pulp and Paper Segments reflect the new organization of the Business Area and were calculated retroactively for 2000.

In 2001, the Pulp and Paper Business Area developed satisfactorily. Sales reached Marked increase in 883.0 MEUR (2000: 718.6 MEUR) and were thus 22.9% above those of the previous Sales year. This increase is for the major part attributable to the good development of Andritz-Ahlstrom, whose Sales increased 21.2% over 2000, to 493.4 MEUR (2000: 407.0 MEUR).

Order Intake, 642.8 MEUR, was 27.5% less than in the previous year (2000: 886.6 MEUR). This is attributable to the generally weak global pulp and paper markets during last year and the related very conservative investment policy of international pulp and paper producers. Order Intake in 2001 by Andritz-Ahlstrom was 339.4 MEUR. Com- pared to the extraordinary high level of the previous year, this was a 33.0% decline (2000: 506.2 MEUR).

The Letter of Intent received at the end of October 2001 from Zellstoff Stendal GmbH, Receipt of an LOI Germany, for the purchase of large chemical recovery systems for a greenfield pulp worth 95 million mill in Saxony-Anhalt is especially worth mentioning. Andritz-Ahlstrom was en- Euros trusted with supplying extensive chemical recovery systems for the total project value of approx. 95 million Euros. The contract is expected to take effect in the second quarter of 2002 after the overall financing concept has been finalized, whereupon it will be booked as Order Intake.

Andritz 2001

25 Pulp and Paper Business Area

The receipt of contracts for the supply of three tissue machines for China was instru- mental in the Business Area’s further extending its position in this growth region.

Increase in The Earnings and EBITDA margin of the Pulp and Paper Business Area developed Earnings and favorably. Despite a difficult economic environment, the Business Area was able to profitability boost its results in 2001 in a very competitive sector. This is a result of the acquisition of Andritz-Ahlstrom, which has enhanced the Business Area’s market position. Another factor is successful cost management. The EBITDA of the Business Area increased 56.5% over 2001 to 69.8 MEUR (2000: 44.6 MEUR). Profitability expressed as EBITDA margin increased from 6.2% in 2000 to 7.9% in 2001. Andritz-Ahlstrom was able to continue the positive Earnings development achieved in 2000 and increased its EBITDA by 60.3% to 29.5 MEUR (2000: 18.4 MEUR).

Business Development 2001 by Business Segments

Pulp Mill Technologies In spite of the difficult economic environment, Pulp Mill Technologies saw a satisfactory development during year 2001. Sales increased 26.9% from the previous year and reached 518.7 MEUR (2000: 408.9 MEUR). Each of the three Divisions of the Pulp Mill Technologies – Wood Processing, Kraft Mill Systems and Pulp Mill Services – achieved considerable Sales increases. Order Intake amounted to 324.9 MEUR and was thus 38.6% below the exceptional high level in 2000. This decline is due to the weak development of the market and the accompanying receding investment activity by pulp and paper producers. Also, the order received from Zellstoff Stendal GmbH in October 2001, which is worth 95 MEUR, is not contained in the Order Inta- ke for 2001. This order is likely to come into effect during the second quarter in 2002.

Paper Mill Technologies Paper Mill Technologies also proceeded well in 2001. Sales increased 17.7% over the previous year and were 364.3 MEUR (2000: 309.6 MEUR). All four Divisions – Mechanical Pulping Systems, Fiber Preparation Systems, Tissue Machines and Paper Mill Services – recorded increased Sales. The Order Intake by Paper Mill Technolo- gies declined slightly. It was 318.0 MEUR and thus 11.1% below the previous year’s value (2000: 357.6 MEUR). Viewed by Divisions the development is quite distinct. While the Order Intake by the Mechanical Pulping Systems and Fiber Preparation Systems Divisions receded from the previous year, the Tissue Machines and Paper Mill Services experienced increases. Especially the Tissue Machines Division was successful in increasing its Order Intake considerably.

Andritz 2001

26 Pulp and Paper Business Area Pulp Mill Technologies

Division Manager: Jarmo Viiala Wood Processing Division (Hollola, Finland)

Profile

The Wood Processing Division is the world’s leading supplier of systems, equipment and processes for all steps required in a woodyard – from the arrival of logs to their subsequent preparation into wood chips – for the production of chemical and mechanical pulps.

The Wood Processing Division is headquartered in Hollola, Finland and has sites in Sweden, USA, Canada, Brazil and Austria.

Business Development in 2001

Despite the difficult conditions on the pulp and paper market the Wood Processing Division progressed favorably during 2001. Sales were increased over those achieved during the previous year. The Division succeeded in keeping or extending its leading position in the major markets of Northern and Central Europe, South America and the USA.

Order Intake, however, considerably declined in comparison to the previous year, when the Divi- sion booked a record Order Intake. The main reason is the generally slowing market development.

Major Orders

HHQ-ChipperTM with During 2001, the Wood Processing Division received major orders from key custom- horizontal log feed ers all over the world.

The Division booked an order for a complete wood and chip processing installation from Lenzing AG in Austria. The delivery includes the first horizontal-fed HHQ-Chip- perTM in Central Europe.

Andritz groundwood processing know-how was impressively confirmed by an order from Myllykoski Paper Oy, Finland, for a major modernization, including a high- capacity slasher deck for the mill’s groundwood plant.

Other important orders came from Celulose Beira Industrial (Celbi) S.A in Portugal, as well as from other well-known mills in Nordic countries, China, South America and Central Europe.

Andritz 2001

27 Pulp and Paper Business Area

Pulp Mill Technologies

Research and Development

The main focus of R&D activity is the further development of a system to optimize chip quality and yield for a customer’s selected pulp quality. The first installation of this system, called Total Chip Quality Package, was completed and has shown remarkable results.

Development work for a new system for debarking tropical plantation hardwoods (e.g. acacia, which is difficult to peel because of its long-fiber barks, and eucalyptus) has continued successfully.

Also a new system was developed to debark frozen logs. The full-scale test installation has demonstrated good results, and the tests will be carried on and intensified over the coming months.

Two complete Andritz wood processing lines

Andritz 2001

28 Pulp and Paper Business Area Pulp Mill Technologies

Division Manager: Hannu Tynkkynen Kraft Mill Systems Division (Kotka, Finland)

Profile

The Kraft Mill Systems Division is the world’s leader in the supply of systems, machines and processes used in the production of chemical pulp, and in the recovery of chemicals used in the pulping process.

The products of this Division are continuous digesters, washers, bleaching equipment, recovery boilers, evaporation systems, recausticizing systems, lime kilns and effluent evaporators.

The Kraft Mill Systems Division is based in Kotka, Finland, with significant operations in Alpharetta, Georgia, USA. The Division maintains research laboratories in Kotka, Finland and Glens Falls, New York, USA.

New evaporation plant with calcium deactivation and liquor heat treatment Business Development in 2001 concentrator

Sales of the Division were increased significantly during year 2001.

Some very significant projects were concluded in 2001, amongst them Stora Enso’s new fiberline in Imatra, Finland, where Andritz-Ahlstrom received an award for being the Number One process supplier in the project. The start-up of Metsä Botnia´s new fiberline in Joutseno, Finland, was also on schedule. The Division supplied the entire washing and bleaching line based on the proven DD WasherTM.

Andritz 2001

29 Pulp and Paper Business Area

Pulp Mill Technologies

Order Intake of the Division fell considerably from the exceptionally high Order In- take level of 2000. This downward trend in bookings reflects the general weak development of capital investments in the pulp and paper industry in 2001. It is to be noted that the order received from Zellstoff Stendal GmbH in October 2001, in the form of a Letter of Intent worth 95 MEUR, is not contained in the Order Intake for 2001.

Despite the difficult markets, the Division maintained its leading market position for production systems for chemical pulp and chemical recovery.

Major Orders

Bowater Inc., USA, ordered the supply of a complete fiberline for its mill in Catawba, South Carolina.

VCP, Brazil, placed an order for a chemical recovery system with evaporation technology.

To Nippon Paper, Japan, the Division will supply a continuous digester.

Zellstoff Stendal GmbH of Saxony-Anhalt, Germany, in October 2001 gave the Division a Letter of Intent for supply of extensive chemical recovery systems for a greenfield kraft pulp mill. The contract is scheduled to take effect during the second quarter of 2002 and to be booked as Order Intake.

Research and Development

Reductions in fresh water and energy consumption in production processes are important goals of our pulp and paper industry customers. Better control of emissions is also very critical to meet the environmental permits of investments. Taking these trends into account, the research and development work focused on the advancement of continuous cooking technology, re-use of process water and maximizing the energy output of recovery boilers.

Drum Displacer™ washer system feed

Andritz 2001

30 Pulp and Paper Business Area Pulp Mill Technologies

Division Manager: Risto Hämäläinen Pulp Mill Services Division (Savonlinna, Finland)

Profile

The Pulp Mill Services Division encompasses the service activities for the Wood Processing and Kraft Mill Systems Divisions. Primary emphasis is on production efficiency and availability services (engineered wear parts, replacement parts, equipment rebuilds and upgrades) to kraft pulp mills and woodyards supplied either by Andritz or other equipment manufacturers.

Apart from the traditional services business the Division is currently working on new continuous improvement and online support solutions to increase the competitiveness and availability at customers’ plants further.

The Pulp Mill Services Division serves the large installed base of Andritz equipment all over the world, with the core of the sales being obtained from North America and Europe.

Headquarters for the Pulp Mill Services Division is in Savonlinna, Finland. The Division is managed through sales and service locations worldwide, providing fast and responsive services to local customers. Production facilities for rebuilds and parts are located in Finland and the USA.

Business Development in 2001

The Pulp Mill Services Division progressed very favorably in 2001. Both the Sales and the Order Intake increased from the previous year.

While Order Intake from the USA was stagnant at the level of the previous year, growth was particularly strong in Northeast Europe and also in Asia-Pacific. Investments were for the most part for modernization and replacement of existing plants.

A new service center was opened in Imatra, Finland, supporting mills in Southeast Finland.

Replacement of lime kiln shell section

Andritz 2001

31 Pulp and Paper Business Area

Pulp Mill Technologies

Wichtige Auftragseingänge

Im Bereich Holzplatztechnik wurden bei einem kanadischen Kunden Sanierungs- und Umbauarbeiten an einem von einem Mitbewerber gelieferten Portalkran durch- geführt. Dabei wurde nicht nur die Lagerkapazität unterhalb des Krans vergrößert, sondern auch die Fahrgeschwindigkeit erhöht und eine dem Stand der Technik ent- sprechende Elektronik eingebaut.

Bei Stora Enso in Port Hawkesbury, Kanada, wurden die Entrindungstrommeln durch eine neue Schweißtechnik, die die vor kurzem von Andritz erworbene Firma Industrial Welding eingebrachte hatte, saniert. Dadurch konnte die Lebensdauer der bereits sehr abgenützten Trommeln um einige Jahre verlängert werden.

Im Bereich Kraftzellstoffanlagen wurde die Division mit dem Umbau von Rückge- winnungskesseln, Zellstoffwaschanlagen und Sortiersystemen beauftragt.

Portucel S.A., Portugal, erteilte der Division für das Werk in Setubal den bisher größ- ten Serviceauftrag. Er umfasst das komplette Service und die Wartung der gesamten Faserlinie.

P.H. Glatfelter, USA, erteilte den Auftrag zur Modernisierung einer bestehenden Rückgewinnungsanlage mit dem Ziel, die Verbrennung von nicht kondensierbaren Gasen zu ermöglichen. Dieses Projekt folgt damit den neuesten amerikanischen Gesetzesauflagen in Bezug auf Rauchgas-Emissionen.

Stora Enso, Finnland, und Phoenix Pulp and Paper, Thailand, beauftragten die Erneuerung bzw. Erweiterung von Rückgewinnungsanlagen.

Zahlreiche Aufträge zur Erneuerung bzw. Erweiterung von Verdrängungswäscher- Systemen kamen von namhaften Kunden in Russland, Neuseeland, Finnland und Spanien.

Forschung und Entwicklung

Die im Jahr 2001 begonnenen Entwicklungsarbeiten am sogenannten OPETM-Kon- zept (Overall Production Efficiency) zur kontinuierlichen Verbesserung und Optimie- rung des gesamten Produktionsprozesses wurden im Berichtsjahr weiter forciert. Diese Lösung wurde erfolgreich bei namhaften Kunden in den USA und Europa implementiert.

Im Zuge der Errichtung eines Service-Centers in Savonlinna, das sich – basierend auf neuesten Informationstechnologien – auf die Online-Diagnostik und -Überwachung von Anlagen konzentriert, wurden umfangreiche Investitionen getätigt.

Ebenso wurde ein neues Verfahren zur Ausrichtung von Kalköfen während des Pro- duktionsprozesses entwickelt.

Andritz 2001

32 Pulp and Paper Business Area Paper Mill Technologies

Division Managers: Humbert Köfler (Vienna, Austria) Rudolf Sand Mechanical Pulping Systems Division (Graz, Austria)

Profile

The Mechanical Pulping Systems Division is one of the leading global suppliers of complete systems for producing high-quality mechanical pulps for the Paper and Board industry as well as fibers for Medium Density Fiberboard (MDF). Equipment for pulp dewatering, washing and high-consistency bleaching, now integrated in the Mechanical Pulping Systems Division with the reorganization of the Pulp and Paper Business Area, complete the product portfolio and make the Division a comprehensive supplier of systems for mechanical pulp production.

Complete dewatering and baling systems are offered for the production of market pulp, with capacities of up to 3,000 tonnes/day. Such systems include pulp dewatering machines with a working width of over eight meters and with high-pressure presses, shoe presses and complete pulp baling lines.

The Division mainly operates through its Vienna and Graz locations, where it is also headquartered. The main production facility is located in Graz. Other significant centers of activity are Muncy, Pennsylvania, Springfield, Ohio, Alpharetta, Georgia, all in the USA, and Montreal, Quebec, Canada.

Business Development in 2001

The Sales by the Division were increased in 2001 compared to the previous year. The Order Intake declined during year 2001 from 2000. This is due mainly to the fact that no major sheet drying system contract for a new pulp mill was awarded during the Screw press for pulp year under review. washing in a BCTMP line

Andritz 2001

33 Pulp and Paper Business Area

Paper Mill Technologies

Integration of the product rights for the cross-cutter and baling lines, acquired from Lamb-Grays Harbor Co. in 2000, into the product family was concluded successfully, with improvements to many aspects of the design and functionality.

Another highlight in 2001 was the successful start-up of the largest Pressurized Refining System in the fiberboard industry. Supplied to Kunz/KFB in Germany, the system includes an S 2070-1CP refiner with a motor power of 12 MW and a capacity of more than 1000 BDMT/d. This installation includes several machines with the biggest throughput ever implemented.

Major Orders

Jiangxi PM, China, ordered a state-of-the-art 550 ADMT/d RT/RTS-TMP plant with high-consistency bleaching technology. This low energy-consuming process allows the use of pine wood to produce newsprint in a very economical way.

Also in China, Gaotang placed an order for the newly developed PRC-APMP System. This is a refining process for hardwood chips and enables paper mills to replace expensive pulp imports for their production of fine paper grades.

With two high-speed refiners type 3068, Holmen Paper in Hallstavik, Sweden, is modernizing its existing TMP plant by converting two lines to Andritz’ advanced RTS technology and by extending its existing bleach plant.

Stora Enso has increased the capacity of its present TMP plant at the Summa, Fin- land mill by adding two reject refiners to the system.

Andritz Series 2070 refiner for large throughputs and special applications in the MDF industry

Andritz 2001

34 Pulp and Paper Business Area

Paper Mill Technologies

Taking these two lines into account the new RTS process has met with global accept- RTS Process is ance: a total of thirteen plants are in operation or under construction, and it has defi- widely accepted nitely become the most progressive mechanical pulping process.

UPM Kymmene, Lapeenranta, Finland, placed a repeat order for a second groundwood rejects refining line.

The Division further received orders from important customers in China for a total of six pressure refiners for fiberboard production. Its now undisputed world market leadership was thus further expanded.

Research and Development

The Division developed several new processes and products during the year. One focus has been the development of the RTS process which gives improved fiber with reduced energy consumption. Current efforts are concentrating on process optimization through the pre-treatment of wood chips (RT pretreatment.)

Another focus was to further improve the process for refining of hardwood chip sources (PRC-APMP Process). Together with the high-consistency bleaching technology and washing, this process optimizes the utilization of chemicals and energy consumption and upgrades optical fiber properties. It opens a wider spectrum of uses for hardwoods such as eucalyptus.

Major improvements were achieved in optimizing the feed concepts to refiners.

Development work for Medium Density Fiberboard production centers on technologies and processes for utilizing sawdust. These respond especially to the needs of fiberboard producers in Europe and yield high-quality fibers at low energy input.

In the field of dewatering engineering, a new disc filter, an Andritz and Andritz-Ahl- strom inter-company development that combines the strengths of the present two filter designs, was developed. Marketing for the new product is to begin in the second quarter of 2002.

In high-consistency bleaching, the product range was supplemented with further model sizes for high-consistency chemical mixers and bleach tower discharge systems. This makes adaptation to a given plant size easier and reduces capital expenditure for customers.

Andritz 2001

35 Pulp and Paper Business Area

Paper Mill Technologies

Division Managers: Jarmo Häkkinen (Kotka, Finland) Christian Pedratscher Fiber Preparation Systems Division (Graz, Austria)

Profile

Fiber Preparation Systems is a new Division created in the course of the reorganization of the Pulp and Paper Business Area that will combine the activities of Andritz and Andritz-Ahlstrom in the stock preparation areas as of July 1, 2002.

Under the existing cooperation agreement between Andritz AG and Voith Paper, the businesses of Andritz and Andritz-Ahlstrom are operated separately and will continue to be so until expiration of the agreement on June 30, 2002. Andritz AG will continue to offer Voith technology and components until mid-2002 in Austria, Eastern Europe, Russia and China, and Andritz-Ahlstrom will continue to promote its own proprietary technology, products and components globally.

As the product and system know-how of Andritz and Andritz Ahlstrom is to be combined as of July 1, 2002, the Fiber Preparation Systems Division is a global supplier of systems, equipment and services for all papermaking processes such as recycled fiber processing, fiber stock preparation, paper machine approach systems, broke handling as well as paper mill internal water loop handling, sludge and reject handling.

The Division has its headquarters in Kotka, Finland and Graz, Austria, with significant operations in Glens Falls, New York, USA.

Business Development in 2001

The Development of the Division in 2001 was satisfactory, with Sales increased from the previous year.

In China, the deinking lines that were ordered by Huatai Paper and Nanping Paper in 2000 were successfully handed over to the customers. Four disc filters (two as thickeners and two The Division’s Order Intake receded in comparison to the previous year. This is due as savealls) for UPM- Kymmene's PM4 to the declinig investment activity in the paper industry. machine for LWC paper production

Andritz 2001

36 Pulp and Paper Business Area

Paper Mill Technologies

Major Orders

In the wake of the successful installations at Gebr. Lang, Ger- many, the Division received orders from the Myllykoski Group for pulp and sludge dewatering equipment for Madison Paper, USA, and Hürth, Germany.

SCA Laakirchen, Austria, Norske Skog Parenco, Netherlands and Renteria, Spain, also ordered dewatering machines for their deinking plants from Andritz. A large number of single orders further underlines Andritz’ lead in this product segment.

Two Chinese customers, Guangxi Guitang Group Co. Ltd. and Changde Hengan Paper Products Co. ordered three fiber preparation lines.

In the summer of 2001, the Division received another order for a rebuild of the secondary fiber treatment system from Kartonsan, the largest produc- FibreFlow® drum pulper for processing er of folding boxboard in Turkey. This order is a continuation of a long-term success- waste paper into ful cooperation between Kartonsan and Andritz begun back in 1985. With this rebuild high-quality recycled pulp Kartonsan places further emphasis on the quality of the finished stock for its board production.

Yanbin Shixian Bailu Paper Co. Ltd., one of the largest paper producers in the Jilin Province (China), selected Andritz for the supply of a deinking system for secondary fiber treatment to produce newsprint and SC-paper. It will be the seventh deinking line supplied to China during the last years, showing once again the strength of An- dritz in this important growth market.

Contracts for supply of complete approach flow systems for paper machine systems were obtained by the Division from SCA Laakirchen, Austria, Holmen Paper, Sweden, UPM-Kymmene, Finland and Germany, Myllykoski Hürth, also in Germany, Cartiera di Cadidavid, Italy, OAO Arkangelisk, Russia and Nine Dragon, Lee & Man as well as Taishan Paper, all of them in China.

In December, Stora Enso placed the order for a pulper drum for recycling papers (FibreFlow® Drum), coarse screening, pulp and sludge dewatering and screens for the approach flow system for a new newsprint paper line in Langerbrugge in Belgium.

Research and Development

R&D activities, started in the previous year for advancing and optimizing the Fibre- Flow® Drum concept (pulper drum) and the Short Flow concept, a new system in the approach flow sector, were continued in the year under review.

Development of a new generation of screens and an improved concept for treating OCC is also under way.

Andritz 2001

37 Pulp and Paper Business Area

Paper Mill Technologies

Division Manager: Rudolf Greimel Tissue Machines Division (Graz, Austria)

Profile

The Tissue Machines Division provides all modern types of tissue machines, including CrescentFormer technology, Through-Air Drying technology and machines with the patented TissueFlexTM*) shoe press. Ventilation and drying systems with high-efficiency hoods for tissue and other paper and board grades complement the product portfolio.

Andritz and Voith Paper are parties in a cooperation agreement for tissue machines. The parties share know-how and conduct joint research and development. Andritz is responsible for the production and sale of tissue machines in Europe, Asia and Africa.

In the USA, Voith Andritz Tissue LLC, a 50:50 joint venture of Andritz and Voith Paper, headquartered in Janesville, Wisconsin, USA, supplies state-of-the-art tissue technology and related services to the NAFTA markets. The Tissue Machines Division is based in Graz, Austria.

*)Trademark of Voith Paper, cooperation partner of Andritz

Business Development in 2001

The Division performed well during the business year. Sales were increased significantly from those in year 2000.

To British LPC Group plc the Division supplied a CrescentFormer tissue machine with patented TissueFlexTM press for an annual capacity of 50,000 tonnes. This tissue machine system is equipped with the latest shoe press technology for producing exceptionally high-grade tissue. While Andritz TissueFlexTM systems had been included in previous upgrade contracts, the British installation is the first-ever TissueFlexTM press installed as part of a new machine.

The receipt of a high number of important orders, especially from China, is also reflected in the development of the Order Intake. It was increased markedly over that CrescentFormer- in 2000. Tissue machine

Andritz 2001

38 Pulp and Paper Business Area

Paper Mill Technologies

Major Orders

Guangxi Guitang Group Co. Ltd., China, entrusted Andritz with an order for the sup- Three orders for ply of two CrescentFormer tissue machines. Due to a high portion of bagasse pulp in CrescentFormer the furnish, the tissue paper can be produced at low cost. Guitang makes this special tissue machines pulp itself, from sugar cane after sugar production. from China confirm leadership in this A further order for a CrescentFormer tissue machine was placed by Changde Hengan region Paper Products Co. Ltd., China. This is the second tissue machine for Hengan, the first one having been successfully installed by Andritz in 1998. These supplies will strengthen the good position that Andritz has on the Chinese tissue market.

Dunapack Ltd. of Dunaujvaros, Hungary, entrusted Andritz with the extension of the heat recovery and exhaust air system for the existing linerboard machine, with the aim of increasing machine capacity and reducing energy consumption.

Papierfabrik Rieger GmbH - a longstanding customer of Andritz - ordered an extension of the machine and hall ventilation equipment for its board mill in Trostberg, Germany. Andritz equipment will be a major factor in the overall project to improve the production capacity of the board machine.

The elimination of dust at the dry end of tissue machines is becoming more and more important to tissue producers. Andritz was awarded the supply of dust removal systems by tissue mills in England and Germany. The Andritz dust removal equipment – developed in-house – considerably reduces the dust concentration in machine halls, thus improving the operators' work environment. It also ensures higher production capacity of the tissue machine.

Research and Development

Following the trend towards higher tissue qualities, development efforts in the Tissue Machines Division focus on the advancement of the proven Through-Air Drying and on optimization of the TissueFlexTM shoe press in commercial installations.

In addition, R&D in the field of tissue machines centers on further improvements on dust removal systems in paper machine dryer sections.

In the area of high-efficiency drying, the development of a new hood generation for very high impingement temperatures (up to 700oC) with the aim of increasing the drying capacity of tissue machines has been finalized.

TissueFlexTM Shoe Press

Andritz 2001

39 Pulp and Paper Business Area

Paper Mill Technologies

Division Manager: Sergio Torza Paper Mill Services Division (Muncy, Pennsylvania, USA)

Profile

Paper Mill Services encompasses the service activities for the Mechanical Pulping Systems and Fiber Preparation Systems Divisions.

Primary emphasis is on traditional aftermarket services (engineered wear parts, replacement parts, equipment rebuilds and upgrades) to existing customers. The two major wear parts are refiner plates and wedgewire screen cylinders, which are manufactured in Andritz proprietary plants.

Additionally, the Division offers innovative approaches for increasing reliability, efficiency and equipment availability of machines and systems in the paper industry.

Headquarters for the Paper Mill Services Division is Muncy, Pennsylvania, USA. The Division is managed through major geographic regions, each with at least one Andritz Service Center equipped to provide fast and responsive services to local customers. Production of refiner plates is performed in Tualatin, Oregon and Muncy, Pennsylvania in the USA. Production of replacement screen baskets is performed in Brantford, Ontario, Canada.

Business Development in 2001

Both the Sales and Order Intake by the Division experienced growth in 2001.

The refiner plate Sales varied over the regions. Although refiner plate Sales were down nearly 10% in North America due to mill closures and production curtailments, Sales in Europe were up approx. 15%, up over 50% in South America, and up over 15% in Southeast Asia.

Major Orders

Several products were introduced in all areas to improve performance of existing equipment. This string of innovations has brought to Andritz several rebuild orders, for instance, the rebuild of the press section of a dewatering line at Zellstoff Pöls AG, Austria, performance upgrades on dewatering machines in Japan (Oji Paper, Fuji mill), North America and China (Guangzhou mill), and a complete rebuild of a disc filter in Germany (MD Papier Plattling).

Top: Durametal's state-of-the-art high-consistency plate pattern

Bottom: Energy cost is saved by optimized fiber transport through the refiner

Andritz 2001

40 Pulp and Paper Business Area

Paper Mill Technologies

Refiner upgrades and spare parts orders included Pacifica Papers Ltd, Stora Enso Port Hawkesbury, both Canada, Norske Skog Golbey, France and Stora Enso Summa, Finland.

Large spare parts contracts were obtained from Homanit MDF plant, North Carolina, USA, as a five-year contract.

Further service orders related to increasing the availability of Andritz equipment and reducing operating costs, including rebuilds of the press zone on twin wire presses (Pöls pulp mill, Austria) and bleach towers (Aylesford, Great Britain), the latter resulting in a considerable boost in the availability of the bleach plant.

Research and Development

In 2001, Andritz’ subsidiary Durametal introduced several new proprietary products such as DuraGlideTM for low-consistency refiners, the Chip DoctorTM inner ring, which improves the efficiency of high consistency refiners, and milled bar refiner plates for special stock preparation applications. These innovations will maintain the Division’s status as the major supplier of solutions to refiner plants around the world.

The successful upgrade of Bauer 485 Refiners to maximize horsepower in the existing infrastructure has opened up new opportunities, permitting customers to increase quality and capacity without spending money for new installations, foun- dations, or piping.

With the goal of achieving further process automation and preventive maintenance – to keep downtime low – special sensors and systems were developed which make Swing Door of a Series S2000 remote diagnosis of production runs possible. refiner with refiner plate mounted

Andritz 2001

41 Rolling Mills and Strip Processing Lines

Andritz 2001

42 Business Area Manager: Profile

Peter Gravert The Rolling Mills and Strip Processing Lines Business Area plans, develops and constructs complete lines for the production of cold- rolled carbon steel, stainless steel and non-ferrous metal strip. These lines consist of plants for cold-rolling, surface processing, finishing, acid regeneration and production of metal oxides. The know-how and the critical (in terms of quality) components are proprietary developments which the Group produces in its own production plants.

The Andritz Group is the only supplier in the world to master all processes involved in the manufacture of stainless steel (rolling, annealing and pickling) on a comprehensive basis and to supply all the production systems through a single source. This fact elimi- nates the number of customer interfaces and permits front-to-end optimization of the processes viewed against special customer requirements.

The Rolling Mills and Strip Processing Lines Business Area operates via Andritz AG (Austria), Andritz-Ruthner Inc. (USA), Thermtec B.V. (Netherlands), Sundwig GmbH (Germany) and Sundwig- Kohler GmbH (Germany) and has manufacturing and assembly lines in Graz (Austria) and Hemer (Germany).

Andritz 2001

43 Rolling Mills and Strip Processing Lines Business Area

Market Development

The relevant steel and stainless steel markets for the Andritz Group weakened during 2001 in step with the decline in the global economy. Timewise and geographically there were great differences in the development. During the first half year, there was brisk project activity in Europe and in China. A number of major projects were awarded, mainly in the important stainless steel sector. Steel companies in the USA made practically no capital investments. During the second half year, due to the accelerated downswing in global economies, project activity slackened in Europe as well. Most projects were postponed, only in China was there no noticeable slowing.

Given the difficult economic environment and high competitive pressure, the price situation on the supplier side was quite tense throughout the year.

Basically, worldwide steel consumption seems to have receded approx. 1% to 2% in 2001 as the data of the International Iron and Steel Institute (IISI) show. Steel consumption in Asia, which accounts for over 40% of the market and is the most important buyer region, grew 3% to 4%, while in the United States and Europe it was 5% down. On the other hand, stainless steel consumption in 2001 seems to have risen approx. 1% or 2% over the previous year, with an above-average growth in consumption in China.

Worldwide steel production declined approx. 1% in 2001 versus 2000 according to IISI data, a fact that is due to global inventories being reduced. Production cuts occurred primarily in North America, Europe and partly also in Japan. Source: IISI, October 2001

Key Figures for the Rolling Mills and Strip Processing Lines Business Area according to IAS

MEUR 2001 2000 1999 1998

Sales 167.4 169.1 140.8 135.0 Order Intake 196.3 130.2 141.9 112.6 Order Backlog 31.12 159.2 141.2 180.2 179.0 EBITDA 8.7 8.7 7.5 6.9 EBITDA Margin 5.2% 5.1% 5.3% 5.1% EBITA 6.1 6.4 5.7 4.6 EBITA Margin 3.7% 3.8% 4.0% 3.5% Capital Expenditure 3.4 1.9 2.9 1.7 Employees 562 522 551 536

Andritz 2001

44 Rolling Mills and Strip Processing Lines Business Area

Business Development in 2001

The Rolling Mills and Strip Processing Lines Business Area looks back on a very suc- Order Intake cessful year. For all the tight pricing and sales situations that came as a result of the reaches record weak economic environment, Order Intake increased 50.8% from the previous year’s level value to the all-time record of 196.3 MEUR (2000: 130.2 MEUR). In Europe and in the growing Chinese market some major orders for cold rolling mills, stainless steel treatment lines, push pickling and acid regeneration lines were won and the Busi- ness Area’s leadership was strengthened in these regions.

The Sales by the Business Area were 167.4 MEUR in 2001 (2000: 169.1 MEUR), a The push-pickline line slight decline of 1.0% that is attributable to the lower level of the Order Backlog as of with the highest capacity December 31, 2000. in Europe, at Thyssen- Krupp Stahl, Bochum (Germany)

Andritz 2001

45 Rolling Mills and Strip Processing Lines Business Area

Push pickling line The successful start-up of a high-capacity push pickling line with integrated skin-pass with the highest mill at ThyssenKrupp Stahl AG, Bochum, Germany, deserves special mentioning. capacity in Europe This line has the highest capacity in all of Europe (960,000 tonnes per year, goes on line operating speed up to 200 meters per minute and strip thickness up to 12.5 mm).

EBITDA reached 8.7 MEUR despite the adverse economic background (2000: 8.7 MEUR). Profitability (EBITDA margin) rose to 5.2% (2000: 5.1%).

Major Orders

The recognized global position that Andritz holds in respect of systems for the stainless steel industry was corroborated impressively by the contract for an annealing and pickling line from Krupp Thyssen Nirosta, Krefeld, the largest stainless steel producer in the world. The affiliates that are united under the roof of the Business Area, Sundwig GmbH, Thermtec B.V. and Ruthner Surface Technologies will supply the mechanical equipment, including the inline skin-pass mill, furnace with annealing and cooling section and the cleaning and pickling section, complete with automation. The receipt of this order confirms that Andritz’s customers agree with the pursued strategy of offering complete process lines.

Rolling Mills and Strip Processing Lines Division succeeded in securing major orders in China as well, leading to a further improved market leadership. Kunming Iron & A view into the finish- Steel Co. and Handan ordered push pickling lines and acid regeneration systems, ing room at KTN Krupp Thyssen Nirosta, Baosteel, Baoxin and Tayuan Iron & Steel Co. ordered chemical treatment sections Krefeld (Germany). The for a stainless steel pickling line, a mixed acid regeneration plant, slitting lines and photo shows slitting lines LZ 3N, LZ 4N and skinpass mills. LZ 5N for stainless steel strip

Andritz 2001

46 Rolling Mills and Strip Processing Lines Business Area

Pickled coils on exit coil ramp in a push pickling line in Bochum, (Germany)

Jiangyin Changfa Antifinger Print Steel Co. Ltd., China, entrusted the Business Area with the supply of an electrolytic (Gravitel) galvanizing line.

Plansee AG, Reutte, Austria, placed an order for a cold rolling mill with combined four-high/S6-high stand for rolling molybdenum and molybdenum alloys, niobium and tantalum strip and plates. With the new, modern rolling mill, Plansee AG will boost both its production capacity and quality.

Rolling mill orders also came from KTN, F.G. Theis, Giebel, Sundwiger Messingwerk, all in Germany. The Business Area’s leadership in the field of flatness measuring and adjusting systems was confirmed by a number of orders.

Novolipezk Combine in Russia ordered an inspection line.

Research and Development

A major goal of the research and development program during the year was optimization of the process-technology aspects of organic coating, for electrolytic pickling of stainless steel and electrolytic galvanization of carbon steel strip. The SBC (Strip Bow Control) system was launched successfully. Computer simulations of process runs are used for achieving improved plant integration.

Membrane technology is being tested for use in regeneration plants in a pilot plant.

Andritz 2001

47 Environment and Process Technologies

Andritz 2001

48 Business Area Managers: Profile

Olaf Jansen The Environment and Process Technologies Business Area has a strong focus on sewage sludge dewatering and drying. Its product Johannes Kappel range covers the entire spectrum of technologies for mechanical and thermal treatment of sludge from municipal and industrial sewage sludge plants. The Business Area handles the full range from planning, fabrication, installation and start-up work of complete plants to the entire automation and safety equipment. Critical machines and components (screens, crushers, drum and belt thickeners, belt filter presses, centrifuges, dryer drums and fluidized bed dryers) are developed and produced in-house. The Andritz Group is a global market leader for systems for mechanical and thermal sludge treatment.

Industrial process technology is another important sector for the Business Area. Andritz supplies filtration systems (hyperbaric drum and disc filters as well as vacuum filters of different types) especially for coal and ore suspension treatment. In addition, An- dritz addresses applications in the pigment and filler industry.

The Business Area’s extensive product portfolio in the industrial and municipal solid/liquid separation is supplemented by a large range of screens, sieves and filters, offering Andritz customers several technical solutions for almost all applications.

The Business Area operates direct from the Graz (Austria) headquarters and through its affiliates Andritz-Ruthner Inc. (USA), An- dritz GmbH (Germany), Andritz S.A. (France), Andritz Ingeniería S.A. (Spain), Andritz Technologies Ltd. (China), Andritz Ltd. (Great Britain), Andritz Pty. Ltd. (Australia) and Guinard Centrifugation S.A. (France). Production sites are in Graz (Austria), Châteauroux (France), Pittsburg (USA) and Foshan (China).

Andritz 2001

49 Environment and Process Technologies Business Area

Market Development

The municipal waste water and sludge treatment market continues to represent the largest sales market of the Environment and Process Technologies Business Area. In 2001, the business for unit components (continuous screens, centrifuges and belt filter presses) regained momentum in Britain, traditionally a good market for Andritz. In Germany and North America, on the other hand, investment activity by public au- thorities was quite reluctant. No change has occurred in the dynamic development in France and Spain, where Andritz enjoys a strong market position. Also, the development in some overseas markets like Korea, Malaysia, Singapore, Chile, Australia and Eastern Europe is quite favorable. Increasing sales and project activity give reason to hope for gradual revival in the future.

The offering of complete sludge treatment lines during the past year was concentrated more on Central Europe and Asia. However, the project situation gives reason to assume that apart from these regions, Southern Europe and Australia might develop into future buyer markets for Andritz.

Globally speaking the operators of large plants are showing increasing interest in buying service. On account of its large installed base – more than 100 plants worldwide – Andritz is well positioned to provide these services.

In the industrial process technology sector, Environment and Process Technologies are profiting from the stabilization of the economic climate in China and Russia and some countries in South America. The mining industry in these regions has an enor- mous demand for equipment, rebuilds and extensions for recovery of flotate.

Key Figures for the Environment and Process Technologies Business Area according to IAS

MEUR 2001 2000 1999 1998

Sales 135.3 133.2 97.3 70.8 Order Intake 140.6 118.6 123.6 100.8 Order Backlog 31.12. 99.7 96.3 110.8 77.5 EBITDA 9.0 5.9 1.5 -4.7 EBITDA Margin 6.7% 4.4% 1.5% n.sp. EBITA 7.2 4.0 -0.5 -6.1 EBITA Margin 5.3% 3.0% n.sp. n.sp. Capital Expenditure 1.9 3.1 2.0 1.1 Employees 435 421 396 260

Andritz 2001

50 Environment and Process Technologies Business Area

Business Development in 2001

Environment and Process Technologies succeeded in further improving all financial Centrifuges achieve key figures in 2001. Especially the sludge dewatering and drying sector extended its the fourth record leadership, and for the centrifuge business, 2001 was the fourth record year in a row. year in a row

The Business Area’s Sales increased 1.6% during year 2001 to 135.3 MEUR (2000: 133.2 MEUR).

Order Intake also underwent a very favorable development. It was 140.6 MEUR and thus 18.5% higher than in 2000 (118.6 MEUR).

Earnings also developed positively. The Business Area was successful in pursuing the favorable earnings trend of the previous years and in increasing the EBITDA to 9.0 MEUR (2000: 5.9 MEUR), which is mainly due to the rising volume of centrifuge and drying plant sales. Profitability (EBITDA margin) rose to 6.7% (2000: 4.4%).

The first of four sludge drying plants for Southern Water, England, was placed in operation in 2001

Andritz 2001

51 Environment and Process Technologies Business Area

Major Orders

Andritz receives Following a tender call with very strong international competition, the city of Singa- order for supply of pore placed an order with Andritz for a DDS (drum drying system). The plant to be a dryer system supplied by Andritz consists of five lines, each with an evaporation capacity of from Singapore – eleven tonnes of water per hour and will be the largest of its kind in the world. The the largest in the large systems supplied to Cardiff, Glasgow, Bran Sands, Louisville in the USA and world now also Singapore, underline the leadership of Andritz in this field. Singapore is the largest order ever received by the Business Area and also marks a breakthrough on the growing Southeast Asian market, with very high reference effect on other countries in this region.

The Business Area also received orders for industrial sludge drying equipment from The second development stage for the large two well-known pulp and paper mills. In this industry Andritz has traditionally en- sludge drying plant in joyed a strong foothold with its mechanical sludge dewatering equipment. Palm Bran Sands in the north of England was accepted paper mill, for instance, selected Andritz for a follow-up order, after the system com- by Northumbrian Water missioned two years previously had fulfilled all customer expectations. in 2001

Andritz 2001

52 Environment and Process Technologies Business Area

In the Southeast United States, where as many as five Andritz drying systems have been placed in service, Environment and Process Tech- nologies was again successful in 2001. Pinellas County Waste Water Authority, Florida, USA, ordered Andritz drying equipment for a sewage treatment near St. Petersburg, Florida.

Continuous follow-up on the Russian market also yielded successful results. The supply of four vacuum disc filters for Belowskaja mining operations in Kuzbass (Siberia), Russia, deserves special mention. They will be used for filtering coal concentrate.

Mosvodokanal, the water supply company for the city of Moscow, Rus- sia, has ordered the supply of a total of nine PowerDrain gravity dewatering tables. This equipment will be used for mechanical thickening of sludges from the two largest sewage treatment systems in the city.

Among the supply of centrifuges, the large order received from the city of Santiago de Chile, already the second from this authority, is particularly noteworthy. Andritz affiliate Guinard Centrifugation will supply five decanter centrifuges of the D7LL type. With over 280 units sold in 2001, Andritz has become the leader in sludge dewatering centrifuges.

Research and Development

Andritz has been a The central point of Research and Development work of the Business Area has been reliable partner to the plant optimization based on the evaluation of operating experience, which brings mining industry for many years, supplying better performance and efficiency of single components. Safety standards have also Hyperbaric Filters been adapted in line with this experience. (photo) and heavy-duty belt filter presses A new plant concept was developed for fluidized bed drying, which enables a more compact construction, ease of maintenance and handling. This concept is now implemented in the course of an order being filled in a paper mill in Germany. In addition, adaptation of drying systems to the large boilers used in mono or co-combustion of sewage sludge was also emphasized.

The range of centrifuge models was supplemented with a few new sizes for industrial and municipal applications. In addition, Andritz developed systems for remote diagnosis with which all essential operating parameters can be measured and evaluated.

Andritz 2001

53 Feed Technology

Andritz 2001

54 Business Area Managers: Profile

Finn N. Jensen The Feed Technology Business Area develops and constructs (Sprout-Matador) systems, machines and processes for the industrial production of David Billingsley animal feed. This comprises complete feed mill lines as well as unit (UMT) equipment for grinding and mixing, expanding, pressing, extruding, cooling, vacuum coating, and drying.

The Business Area also supplies plants and systems for industrial production of biofuel pellets.

Nearly half of the Business Area’s Sales come from aftermarket services for installed equipment.

With the acquisition of Universal Milling Technology (UMT) in November 2000, Andritz has become a global market leader in feed technology.

The Feed Technology Business Area operates primarily through Sprout-Matador (Denmark), Andritz Inc. (USA), and UMT (Nether- lands). It has production facilities in Esbjerg (Denmark), Muncy (USA), Boxtel and Deurne (both in the Netherlands).

Andritz 2001

55 Feed Technology Business Area

Market Development

The international feed market improved slightly during the year 2001 and continued the upward trend begun in the previous year. The market grew by approximately 3% for the first time in two years.

Development of the market for conventional feed – which, at an average annual rate of about 1% to 2%, grows considerably less quickly than the special feed market – varied regionally. While in Continental Europe and North America practically no capital investments in new feed producing plants were made, Eastern Europe, South Ame- rica and Asia were characterized by a somewhat higher project activity.

In the special feed market, the focus segment of the Feed Technology Business Area, higher demand for salmon feed production systems was noticeable, especially during the first half of 2001. In Norway and Chile, the two most important salmon- producing countries, project activity was excellent. The drop in the prices of salmon during the third quarter in 2001 caused many large projects to be postponed. The market for other aquaculture feed (fish and crab feed) also developed positively, especially in Asia.

The project activity for pet food producing equipment proceeded slightly toward the end of the year in Europe and Latin America. The Business Area was successful in securing and extending its competitive position.

Key Figures for the Feed Technology Business Area according to IAS

MEUR 2001*) 2000 1999 1998

Sales 107.0 67.8 59.6 69.0 Order Intake 112.6 70.7 53.5 61.7 Order Backlog 31.12. 27.6 14.3 11.5 17.6 EBITDA 4.7 4.6 0.6 4.0 EBITDA Margin 4.4% 6.8% 1.0% 5.8% EBITA 0.9 2.4 -1.4 2.1 EBITA Margin 0.9% 3.5% n.sp. 3.0% Capital Expenditure 6.7 0.8 1.7 1.8 Employees 676 412 408 464

*) Including first-time consolidation of UMT

Andritz 2001

56 Feed Technology Business Area

Hammermill for fine grinding

Business Development in 2001

Note: In 2001, UMT was for the first time consolidated in the Group’s Financial Statements, the figures for 2000 are without UMT.

The business development of the Feed Technology Business Area in 2001 was characterized by the difficult market conditions in North America, increased expenditure for project work and Research and Development as well as the results of UMT being below expectations.

The Business Area’s Sales were 107.0 MEUR in 2001 (2000: 67.8 MEUR). This mark- Improvement in ed increase by 57.8% resulted from the first-time consolidation of UMT during the Sales and Order year under review (+4.3% without UMT). Intake

The development of Order Intake was quite similar, it was increased 59.3% to 112.6 MEUR (2000: 70.7 MEUR) over the year. Without UMT, Order Intake would have been 5.1% above that in 2000.

Andritz 2001

57 Feed Technology Business Area

Earnings develop- The Feed Technology’s Earnings during the year under review did not proceed as ment below expected. As a result of the sluggish development of the feed market in North Amer- expectations ica and the related heightened price pressure many projects experienced a weaken- ing of margins. Increased expenditure for Research and Development and an unsat- isfactory Earnings situation at UMT were also encumbering. EBITDA was 4.7 MEUR, slightly above the level of the previous year (2000: 4.6 MEUR).

Due to the successful integration and restructuring of UMT, a substantial improvement in Earnings can be expected in 2002.

Extruder with automation system and expansion control equipment (patent pending) Major Orders

Most of the orders received in 2001 were valued between 0.5 MEUR and 1.5 MEUR. Orders related mainly to extrusion systems for special feed and production systems for industrial production of pellets for domestic animal feed and fuel.

Important reference orders were won, mainly in the special feed area, in Asia, South America and Northern Europe. In these regions, Feed Technology considerably increased its market and competitive position.

The development of the Order Intake for production systems for fuel pellets was satisfactory, with some orders being booked especially in Asia and Central Europe.

Andritz 2001

58 Feed Technology Business Area

Research and Development

Research and Development activities were focused on the continued development of extrusion plants and systems for special feed.

A new generation, "Combizone" dryer, a high-capacity extruder for 16 tonnes per Successful launch hour, a hammer mill for fine grinding at highest capacity and an advanced automation of new products system for extrusion plants were successfully launched on the market.

The development work for a new grinding system for larger capacities (50 to 100 tonnes per hour) for conventional feed was intensified. The product will be launched during the first half of 2002.

A new test center for extruder technology was implemented in cooperation with the Construction of a Danish Biotechnological Institute. Its establishment is likely to increase the market posi- test center for tion of the Business Area in the field of extrusion systems, products and in service. extruders .

The newly developed Combizone dryer

Andritz 2001

59 Other Operations Hydraulic Machines

Andritz 2001

60 Manager Other Operations/ Profile Hydraulic Machines:

Other Operations/Hydraulic Machines encompasses Andritz Group Manfred Wörgötter activities such as the planning, development and manufacture of water turbines, large-scale pumps for selected applications, pumps for the primary and secondary loops in nuclear power stations, centrifugal pumps for the pulp and paper industry, and space technology components.

The main markets are Europe, China and some Southeast Asian countries.

Andritz 2001

61 Other Operations/Hydraulic Machines

Market Development

The general conditions for the Business Area’s main product, water turbines, remained quite strained during 2001. There were but a few modernization projects, and the investment activity by utility companies in Europe was feeble. The competitive and pricing situation for turbines remained difficult all through the year.

Where new installations in Austria are concerned, the business segment of small power stations was somehow revived, and there were projects for a station output below 10 MW.

In China the project activity continued to be brisk, with some promising projects for turbines and also for large-scale pumps.

Business Development in 2001

The Andritz Group’s Other Operations/Hydraulic Machines in year 2001 increased Sales to 26.0 MEUR (2000: 22.7 MEUR). Compared to the previous year, this is a considerable increase of 14.5%.

Order Intake also developed favorably. Despite difficult conditions in the markets, the amount was increased to 28.6 MEUR in 2001 (2000: 26.8 MEUR).

The business with stock pumps developed positively in Europe and especially also in China. Andritz is well positioned in this region thanks to the Andritz-Kenflo Joint Venture in Foshan (Andritz share: 60%), it extended its market leadership in 2001.

Toward the middle of the year the Business Area launched a newly developed headbox fan pump. The first orders came in shortly after.

One strong pillar of the Business Area was the services business. Rebuilds and modernizations for water turbines and turbine governors, spare parts supplies to nuclear power stations, centrifugal pumps for the pulp and paper industry accounted for approx. 40% of the overall Order Intake. The new electronic turbine governor was sold to two power stations in Austria.

Key Figures for Other Operations according to IAS The earnings development of Other Opera- tions in 2001 failed to come up to expectations. MEUR 2001 2000 1999 1998 Difficulties encountered in the course of hand-

Sales 26.0 22.7 29.5 32.4 ling two large orders which were due to unex- Order Intake 28.6 26.8 21.2 20.8 pected problems with two major subsuppliers Order Backlog 31.12. 22.6 20.3 16.2 24.6 led to a marked decline in results. EBITDA EBITDA 2.3 5.3 3.6 4.4 amounted to 2.3 MEUR (2000: 5.3 MEUR). Pro- EBITDA Margin 8.9% 23.3% 12.2% 13.6% fitability as EBITDA margin was still high: 8.9%. EBITA -0.1 3.9 0.8 3.0 EBITA Margin n.sp. 17.2 2.7% 9.3% Capital Expenditure 0.9 1.3 1.5 1.5 Employees 246 230 240 297

Andritz 2001

62 Other Operations/Hydraulic Machines

Major Orders

For a Chinese water power station Andritz will supply key components for the turbines.

An order for the electromechanical equipment for a pumping station in Africa is also noteworthy.

Further orders for DAAR rings for Ariane 5 launcher rockets were booked.

Research and Development

Together with ASTRÖ (Anstalt für Strömungsmaschinen), research activities were carried out and intensified in the field of hydraulics development. By developing peak hydraulics with efficiencies far higher than in competitive products, it was possible to proceed successfully with the marketing of the new headbox fan pump.

Developments also concerned the shaft seals of nuclear power station pumps to strengthen the services business.

Further Research and Development activities concentrated on developing new products for headbox fan pumps, which are used in the pulp and paper industry. A clear boost of the business volume is expected for the coming years.

The development of our a proprietary turbine governor was concluded. It is selling successfully and is superior to other turbine governors both technically and cost- wise.

Successful launch of the new Andritz fan pump

Andritz 2001

63 Andritz Shares

Initial Public Offering

Andritz Shares were first listed and officially traded on the Stock Exchange in Vien- na on June 25, 2001. A total two million new shares were placed as a stock capital increase and publicly offered to national and international investors. The issue price was 21 Euros per share.

On July 25, 2001 half of the Greenshoe option of the company was exercised (150,000 non-par value shares). They were shares exclusively held by existing shareholders. The entire placing volume, including Greenshoe, was thus 45.15 MEUR.

Since January 1, 2002, Andritz shares have been quoted in the top segment of the Vienna Stock Exchange, the Prime Market, and have been part of the ATX since January 21, 2002.

Andritz Ownership Structure

Carlyle: ~31%

Certus: ~24%

Free Float: ~16%

GE Capital: ~6% UIAG, Univest: ~13% Management: ~2% Deutsche Beteiligungs AG: ~6% AGIV AG: ~2%

Major Key Figures for Andritz Shares

Security Identification Number AT 000 0730007 ISIN-Code 073000 First Listing Day June 25, 2001 Types of Shares no-par value shares, bearer shares Number of Shares 13 million Free Float approx. 16% Stock Exchange Vienna (Prime Market), Frankfurt (Unofficial Market) Ticker Symbols Reuters: ANDR.VI Bloomberg: ANDR,AV Stock Exchange Indices ATX; WBI ATX Weighting approx. 0.65% Free Float Factor 0.25

Andritz 2001

64 Andritz Shares versus ATX

115

Development of the Share Price 110

105 Since the first listing day, Andritz shares developed solidly. In a generally quite difficult and volatile 100 stock exchange environment, the Andritz share price increased 3.8% from the first listing day to the 95 ATX end of 2001, outperforming the ATX share index of the Vienna Stock Exchange, which dropped 7.6% 90 over the same time. The lowest closing price of the

Andritz share was 20.52 EUR and was noted on 85 June 25, 2001, the highest closing price came on

August 29, 2001, when the price reached 23.50 80 2001 Jul Aug Sep Oct Nov Dec Euros.

Trading Volume

The average daily trading volume of Andritz shares between their first listing on June 25, 2001 and December 31, 2001 amounted to about 19,802 shares or 417,101 EUR. Andritz shares rank 34th place in the turnover statistics of the most frequently traded stocks on the Vienna Stock Exchange. The market capitalization of Andritz on the basis of the final price on December 31, 2001 was 276.9 MEUR.

Investor Relations

In the course of the Initial Public Offering, a large number of national and internation- Active Investor al institutional investors was visited. In Vienna, a roadshow was held, presenting the Relations company to smaller investors and representatives of financial institutions. Company presentations on a regular basis were held before analysts. Various one-on-one meetings with large investors in Austria (Vienna) and abroad (Helsinki, Frankfurt) complete the Investor Relations activities of the past year with their strong orientation to transparency. The new Internet pages of the Andritz Group also contain a comprehensive section on Investor Relations (www.andritz.com/investors).

The following investment banks published regular research reports on Andritz during 2001: Deutsche Bank, ERSTE Bank, Raiffeisen Zentralbank.

Information on Andritz Shares

Andritz Investor Relations Stattegger Strasse 18, A-8045 Graz Tel.: +43 316 6902 2979, Fax: +43 316 6902 465 Internet: www.andritz.com E-mail: [email protected]

Andritz 2001

65 eBusiness

Creating value Intensive utilization of new media, with the increased application of internet-based added through customer and system solutions, are important strategic targets of the Andritz Group. eBusiness Consistent use of eBusiness-methods will provide essential support for business processes with customers, suppliers and employees, making the processes much easier and less costly. Creating a joint benefit and value-added for Andritz Stake- holders is a priority goal.

eBusiness For quicker and more efficient achievement of this goal the eBusiness project team, Connectivity which was first established in November 2000 and which is composed of represen- Model tatives from all Business Areas in the Andritz Group, created what it termed "Andritz- eBusiness Connectivity Model". Its aim is implementation of the opportunities that Internet technologies offer for the benefit of all users. To secure this goal each of the single eBusiness projects was evaluated critically against the background motto "eBusiness is Business” before being realized.

A total of nine All these projects had their main starting points in making the business processes eBusiness along the value-added chain more effective and efficient and also to offer customers solutions finalized new services. The focal point of activities in 2001 were: eService-Business, eProcure- in 2001 ment and eMarketing. A total of nine eBusiness solutions were finalized in 2001.

Andritz Web Services for Customers

Under the heading "One face to the Customer", new and individualized Web Services, with which the Andritz Group meets its customers as a global partner, were developed. The main starting point is creation of eBusiness solutions with a customer- related content (customized and personalized).

Andritz 2001

66 Andritz Service Club

The Andritz Service Club is a Web Portal for customers from the Pulp and Paper industry. Registered visitors to the site are offered the following customized contents: Status of an order, dispatch papers retrievable online, special information on products and services, operating and maintenance instructions for Andritz machines, problem solution platform and design/sizing programs for Andritz systems.

Online Ordering for Wear Parts

Wear Parts – refiner plates, for instance – can be ordered online. In addition to the ordering functionality this solution has a statistics and evaluation package that offers the user precise information on the transactions handled over the previous two years.

MyMill.com

MyMill.com is a complete, customized and personalized Extranet solution. Custom- ers can order all spare parts online, and the complete plant documentation plus general service information can be recalled at any time online.

OPE Remote

OPE Remote is a Web solution to increase productivity of processes (OPE = Overall Production Efficiency). With online access to production critical data of the customer process control system, Andritz experts can come to the rescue of customers if there are difficulties in production or the wish to improve processes. Web technology places Andritz in a position to provide know-how immediately and without expensive time consuming travelling.

Advantages for Andritz eBusiness solutions hold essential advantages for Andritz in that customer relations can be intensified further, for instance by being able to react more quickly to customer requirements or by greater transparency in processing orders. To be successful, this is of the essence, especially in the services business.

Secondly, with joint Web solutions the integration of the Andritz locations is intensified. Getting in touch with Andritz more quickly and efficiently is made easier for Andritz’ partners.

Andritz 2001

67 Andritz Automation

In addition to lower purchase costs, users of technological production systems are especially interested in such factors as sustained value of the plant over its useful life ("Life Cycle Value") and the quality of the products made with these systems. These customer requirements can be met by integrated automation solutions.

Andritz The Andritz Group recognized this trend early on, and Andritz Automation activities Automation: 200 were extended further during year 2001. Currently approx. 200 engineers are engineers all over employed in automating Andritz plants and Andritz technologies. A Group-wide the world organization makes sure that the global automation and process know-how is utilized and advanced jointly.

Research and Development in Automation

New automation solutions that increase customer value from operating Andritz plants are elaborated in research and development projects together with customers. During the past year a number of projects such as online quality control, optimization of rolling processes, condition monitoring for plants and simulations for processes were started and successfully concluded.

Process Simulation

Short start-up times and trouble-free plant operation are achieved by process simulation before the actual start-up. Simulation of dynamic processes supports testing and optimization of the DCS system software and user training.

The first pilot application was carried out for Aracruz, Brazil, in the field of bale handling logistics.

Remote Condition Monitoring System (CMS)

Higher plant availability and lower downtime, combined with low operating and maintenance costs are important factors for the paper industry, the steel industry and environmental protection.

To provide quick, competent aid to our customers’ service teams, Andritz CMS permits viewing the current plant status from anywhere in the world, using the latest information technology. The advantage of the Andritz CMS compared to commercial systems for Data Logging and vibration analysis is the specific adaptation of sensor systems and software to the plants supplied by the Andritz Group.

Andritz 2001

68 Realized Automation Solutions and consistent Product Advancements

On the basis of the technological know-how in different Business Areas, automation systems are designed according to the latest state-of-the-art and tested before being supplied to the site with simulation equipment.

A special challenge is the continued development of the sensors for control of the product quality produced with Andritz systems.

The system solutions that Andritz has developed for wood processing, BarkScan™, BarkScan™, Wood- WoodScan™, LogScan™, offer online quality control of the wood raw material input Scan™, LogScan™: for the pulp industry. With the DrumMatic™, production sequences are optimized in Technologically woodyards. These products are successfully used, for instance at the following mills: challenging system Metsä-Botnia Joutseno, Finland, Cartiere Burgo, Italy, and Lenzing, Austria. solutions for wood processing Modernizations of the refiner lines at Plum Creek, USA, with automation and visual- ization components have brought about ease of operation and have good examples for systematic extension of automation activities.

At LPC and ICT, tissue paper mills in England and Poland, automation and electrical engineering equipment from the high-voltage and low-voltage systems to the field units and the Andritz Tissue-Matic process control system were planned, made and started up.

In rolling mill technology, the POS (Process Optimizing System) was developed further and placed in operation at First Copper in Taiwan. This system measures plant parameters online and optimizes the pass plans for cold rolling processes. The rolling mills at First Copper and Chien Shing, both in Taiwan, run with the latest AC and DC technology in the megawatt range. This integration of the power electronics was planned and started by Andritz Group automation engineers.

The entire automation technology including efficient connection to the production control level was supplied to EKO-Stahl and ThyssenKrupp Stahl in Bochum, Ger- many, and thus, Andritz equipment integrated into the Customer’s production chains logistically.

Andritz 2001

69 Quality

Apart from well-trained employees who are prepared to take responsibility, the com- plexity of Andritz’ systems also requires manufacturing standards of the highest level and systematic organization of the sequences that are required for planning, manufacture and installation. Thorough knowledge of the technologies that are essential for the customers are the prerequisite for developing machines, plants and processes with which warranty values can be met and surpassed.

Key components whose design and manufacture needs special knowledge and equipment are produced at one of 16 production sites run by the Andritz Group. Other components are made by sub-suppliers that Andritz selects and whose quality it monitors. These suppliers have long-term experience in co-operating with An- dritz and are a key factor in the cost leadership of the Andritz Group.

During the year under review the organizational aspects of quality assurance for out- sourcing were newly defined, streamlining the planning and realization flows of quality audits.

Transition to a paperless system of quality documentation was started, and this makes it possible to prepare the documentation for plant quality in an electronic for- mat for each order.

With the acquisition of a pressurized container permit for China and of the ASME-N certificate and the ensuing improvement and demonstration of the quality capabili- ties of our engineering and order processing departments, marketability of certain products in China was improved.

Work on process-oriented presentation of management systems in the meaning of ISO9001: 2000 continued successfully.

Andritz 2001

70 Environmental Protection

Respect for the environment and conservation of natural resources have historically Environmental been central themes of the Andritz Group. Therefore, environmental protection has protection as an had a prominent place in the corporate philosophy, and all employees actively live integral element by these standards. Andritz "environmental protection assignees” ensure that the of the corporate environmental protection rules defined by the Company are implemented with con- Andritz philoso- sistency. Active and even proactive environmental protection, plus an increasingly phy heightened awareness among employees of the very notion of environmental protection, are clearly defined goals for the future.

During the year, the main focus of the environmental protection program continued Ökoprofit award to be measures to save materials and resources in production processes and to re- for the seventh duce the quantities of residual waste by optimizing the existing waste management time in a row system. The result has been a considerable reduction of energy and disposal cost. The measures introduced and the results achieved have been confirmed by the receipt of an award from the local Environment Authority as a "Graz Ökoprofit” company, now for the seventh time in a row.

The goal for 2002 is optimization of the existing waste management system, by examining possible further uses of the waste material and conservation of resources as a main aspect of material purchase.

Environmental protection is an important subject not only within our operations but Andritz products also with the products we develop. One design goal is to create systems that contri- are environ- bute to protecting nature and to recycling raw materials. To reduce environmental mentally friendly pollution and operating costs are prioritized goals for the benefit of customers.

In the area of Pulp and Paper, the Andritz Group offers sophisticated systems and Leading supplier processes for efficient recovery of chemicals used in the production of kraft pulp. The of chemical range of products offered runs from recovery boilers to black liquor evaporation and recovery recausticizing systems, to effluent evaporation. The long-term experience in chemi- processes cal recovery places the Andritz Group first and foremost among global suppliers in this area, as a large installed base at renowned customers confirms.

The drying systems for sewage sludge developed and constructed by Environment and Process Technologies also help save raw materials and reuse waste. With these plants, the sewage sludge that is a by-product of cleaning municipal and industrial effluents is dried and converted into granulate which can be used as fuel, fertilizer or soil improver, or as aggregate material in the brick and cement industry.

Andritz pressure filters make reuse of coal from the coal slurry in mining operations possible. The recovered coal can be treated to obtain a commercial product, and the sludge lagoons where the coal wastes used to be collected can be recultivated.

Andritz 2001

71 Environmental Protection

Acid regeneration Finally, the Rolling Mills and Strip Processing Lines Business Area also offers a num- process to re- ber of environmentally protective devices, whose good economy also lowers opera- duce operating ting expenses. The PYROMARS system for stainless steel, as well as other regener- costs ation systems that Andritz developed, recover the spent pickling acid from pickling plants. The acids are returned to the process and can be used once again. The results are a reduction of pickling costs and largely waste-water free pickling operations. There is no environmental pollution because with this process, all loops for liquids are closed.

The Chemcoater is used in strip coating systems (e.g. electrolytic or hot-dip galvanizing and painting lines) for application with the so-called no-rinse process. This is a closed system, hence no chromate goes into the waste water.

Regenerative burners in continuous annealing furnaces for stainless steel strip provide energy savings of 10% to 20% over the central recuperator system. At the same time, the lowest NOx values are achieved.

A regeneration plant for treating used pickling acids

Andritz 2001

72 Consolidated Financial Statements 2001 of the Andritz Group according to IAS

Independent Auditors’ Report 74

Consolidated Balance Sheet 75

Consolidated Income Statement 76

Consolidated Cash Flow Statement 77

Consolidated Statement of Shareholders’ Equity 78

Notes to the Consolidated Financial Statements 79

Andritz 2001

73 Independent Auditors’ Report

We have audited the accompanying consolidated group balance sheet of Andritz AG ("Andritz Group”) as at 31 December 2001, and the related consolidated statement of income, consolidated cash flow statement and consolidated statement of shareholders’ equity for the year then ended. These group financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these group financial statements based on our audit.

We conducted our audit in accordance with International Standards on Auditing ("ISA”) as published by the Inter- national Federation of Accountants ("IFAC”). Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the group financial statements give a true and fair view of the consolidated financial position of the Andritz Group as at 31 December 2001 and of the consolidated results of its operations and its consolidated cash flows for the year then ended in accordance with International Accounting Standards ("IFRS”).

We confirm, that the accompanying status report is in compliance with the group financial statements and that the legal requirements are met for the exemption of the obligation of preparing group financial statements and a status report according with Austrian law.

Vienna, 26 February 2002

Arthur Andersen Wirtschaftsprüfungsgesellschaft mbH

Andritz 2001

74 Consolidated Balance Sheet as at December 31, 2001 and 2000

2001 2000 Notes (in TEUR) (in TEUR)

Assets Intangible assets 5,908 7,816 Goodwill 147,982 155,500 Property, plant and equipment 126,775 128,897 Shares in associated companies 3,276 3,126 Investments 11,572 21,389 Fixed and financial assets 1. 295,513 316,728

Deferred tax assets 18. 21,114 22,131

Inventories 2. 118,134 105,268 Advance payments made 3. 25,287 23,385 Trade accounts receivable 4. 212,945 200,151 Cost and earnings of projects under construction in excess of billings 5. 99,392 92,646 Other receivables 6. 34,204 31,704 Prepayments and deferred charges 9,393 7,093 Marketable securities 7,908 19,122 Cash and cash equivalents 117,835 116,186 Current assets 625,098 595,555

Total Assets 941,725 934,414

Shareholders' Equity and Liabilities Share capital 94,510 72,700 Capital reserves 45,966 1,931 Amounts due to agreed capital increase (thereof share capital: EUR 7,270,000) 0 27,000 Retained earnings 89,854 59,027 Shareholders' equity 230,330 160,658

Minority interests 9,345 60,219

Provisions for severance payments 10. 23,468 22,003 Provisions for pensions 10. 14,424 19,837 Other provisions 140,552 117,528 Provisions 9. 178,444 159,368

Liabilities for deferred taxes 18. 39,605 37,011

Non-current interest bearing borrowings 976 32,683 Interest bearing borrowings 47,494 57,640 Trade accounts payable 142,379 124,947 Billings in excess of cost and earnings of projects under construction 5. 94,823 142,617 Advance payments received 73,618 31,854 Liabilities for current taxes 3,540 11,212 Other liabilities 12. 121,171 116,205 Liabilities 11. 484,001 517,158

Total Shareholders' Equity and Liabilities 941,725 934,414

The following notes to the consolidated financial statements form an integral part of this consolidated balance sheet.

Andritz 2001

75 Consolidated Income Statement for the years ended December 31, 2001 and 2000

2001 2000 Notes (in TEUR) (in TEUR)

Sales 13. 1,318,701 936,847 Changes in inventories of finished goods and work in progress 8,669 979 Capitalized cost of self-constructed assets 1,225 212 1,328,595 938,038

Other operating income 14. 19,018 17,656 Cost of materials (802,435) (538,615) Personnel expenses 15. (289,932) (222,956) Other operating expenses 16. (160,715) (131,211) Earnings before interest, taxes, depreciation and amortization (EBITDA) 94,531 62,912

Depreciation and amortization (without amortization of goodwill) (26,539) (18,595) Earnings before interest, taxes and amortization of goodwill (EBITA) 67,992 44,317

Amortization of goodwill (13,404) (10,318) Earnings before interest and taxes (EBIT) 54,588 33,999

Income/expenses from investments in associated companies 325 (212) Interest result 3,093 (814) Other income/expenses from financing activities 2,105 919 Financial results 17. 5,523 (107)

Earnings before taxes (EBT) 60,111 33,892

Income taxes 18. (22,635) (13,675) Net income 37,476 20,217

Share of profit/loss due to minority interests (3,882) (2,397) Net income excluding minority interests 33,594 17,820

Earnings per non par value share (in EUR) 19. 2.82 1.78

Proposed or paid dividend per non par value share (in EUR) 0.90 0.30

Weighted average number of non par value shares 11,916,667 10,000,000

The following notes to the consolidated financial statements form an integral part of this consolidated income statement.

Andritz 2001

76 Consolidated Cash Flow Statement for the years ended December 31, 2001 and 2000

2001 2000 (in TEUR) (in TEUR)

Earnings before taxes (EBT) 60,111 33,892 Interest result (3,093) 814 Depreciation and amortization of fixed assets 39,811 28,989 Income/Expense from investments in associated companies (393) 212 Changes in accrued expenses (420) (1,998) Results from the sale of fixed and financial assets (1,482) (1,757) Taxes paid (19,244) (24,672) Interest received 12,670 16,206 Interest paid (10,941) (13,766) Gross Cash flow 77,019 37,920

Changes in inventories (10.962) (3.613) Changes in advance payments made (1.912) (5.107) Changes in receivables, prepayments and deferred charges (21,264) (33,722) Changes in short-term provisions and accruals 19,104 (6,326) Changes in advance payments received 41,618 2,347 Changes in liabilities and deferred income (31,713) 51,885 Cash flow from operating activities 71,890 43,384

Payments received for asset disposals 9,197 2,127 Payments made for investments in fixed tangible and intangible assets (24,058) (20,810) Payments made for investments in financial assets (1,778) (7,968) Cash flow due to business acquisitions 0 15,067 Cash flow due to purchase of minority interests (58,449) 0 Cash flow from investing activities (75,088) (11,584)

Changes in interest bearing borrowings (41,877) 30,181 Repayment of bridge-loan 0 (356,403) Dividends paid by Andritz AG (3,000) 0 Dividends paid to minority shareholders (962) (717) Amounts due to capital increase 39,745 24,800 Payments made by associated companies 184 124 Cash flow from financing activities (5,910) (302,015)

Change in cash and cash equivalents (9,108) (270,215)

Changes in cash and cash equivalents resulting from exchange rate fluctuations (457) (865) Cash and cash equivalents at the beginning of the period 135,308 406,388 Cash and cash equivalents at the end of the period 125,743 135,308 Thereof marketable securities 7,908 19,122 Thereof cash-in-hand, cheques, bank deposits and cash equivalents 117,835 116,186

The following notes to the consolidated financial statements form an integral part of this consolidated cash flow statement.

Andritz 2001

77 Consolidated Statement of Shareholders’ Equity

Amounts due to agreed Currency Share Capital capital Retained IAS 39 translation (in TEUR) Notes capital reserves increase earnings Reserve adjustment Total

Status as at 1 January 2000 72,673 1,931 0 21,647 14,698 110,949

Net income excluding minority interests 17,820 17,820 Currency translation adjustments 4,070 4,070 Amounts due to agreed capital increase 27,000 27,000 Capital increase 27 (27) 0 Other changes 819 819 Status as at 31 December 2000 72,700 1,931 27,000 40,259 18,768 160,658

Status as at 1 January 2001 72,700 1,931 27,000 40,259 0 18,768 160,658

Adjustment 1.1.2001 due to IAS 39 18. (372) (372) Net income excluding minority interests 33,594 33,594 Dividend payments 8. (3,000) (3,000) Currency translation adjustments 1,910 1,910 Capital increase 7,270 19,730 (27,000) 0 Initial public offering 14,540 27,460 42,000 Costs of initial public offering 18. (3,155) (3,155) Changes to IAS 39 reserve (1,498) (1,498) Other changes 193 193 Status as at 31 December 2001 94,510 45,966 0 71,046 (1,870) 20,678 230,330

The following notes to the consolidated financial statements form an integral part of this consolidated statement shareholders’ equity.

Andritz 2001

78 Notes to the Consolidated Financial Statements as at December 31, 2001 and 2000

A. General

Andritz AG ("Andritz”) is incorporated under the laws of the Republic of Austria and is listed at on the Vienna Stock Exchange since June 2001. The Andritz Group (the "Group”) is a leading producer of high technology industrial machinery and operates in four main strategic business areas: Pulp and Paper, Rolling Mills and Strip Processing Lines, Environmental and Process Technologies and Feed Technology.

The average number of employees in the Group was 4,498 in 2001 and 3,832 in 2000. The registered office address of the Group is located at Stattegger Strasse 18, 8045 Graz, Austria.

The consolidated financial statements are the responsibility of the management and will be acknowledged by the Supervisory Board. The comparability of prior year figures is limited due to the acquisition of Andritz-Ahlstrom Group which has been consolidated in 2000 since July 1.

Various amounts and percentages set out in this consolidated financial statements have been rounded and accordingly may not total.

B. Summary of significant Accounting Policies

The principal accounting policies adopted in preparing the financial statements of Andritz are as follows: a. General

The accompanying financial statements are prepared in accordance with the standards formulated by the Interna- tional Accounting Standards Committee (IASB). The accompanying financial statements have been prepared under the historical cost convention, except for marketable securities which are stated at their fair values. For these financial statements prepared in accordance with IFRS based on §245a of Austrian Commercial Code the legal requirements are met for the exemption of the obligation of preparing group financial statements. b. Changes of Accounting Standards

Following the introduction of IAS 39 (Financial Instruments: Recognition and Measurement) available-for-sale investments are carried at fair value and all derivative financial instruments have been recognised as assets or liabilities. The opening balance of equity (retained earnings and hedging reserve) as at January 2001 has been adjusted. Prior year comparative figures have not been restated. Changes in fair values for available-for-sale investments in 2001 have resulted in negligible income effects. The hedging reserve for losses from cash flow hedges increased from EUR 325 thousand as of January 1, 2001 to EUR 1,821 thousand as of December, 2001.

Andritz 2001

79 Notes to the Consolidated Financial Statements as at December 31, 2001 and 2000

c. Reporting Currency

The Group financial statements are prepared in EURO.

d. Principles of Consolidation

The consolidated financial statements of the Group include Andritz and the companies that it controls. This control is normally evidenced when Andritz owns, either directly or indirectly, more than 50% of the voting rights of a company’s share capital and is able to govern the financial and operating policies of an enterprise so as to benefit from its activities. The equity and net income attributable to minority shareholders’ interests are shown separately in the balance sheets and income statements, respectively. The purchase method of accounting is used for acquired businesses. Guinard Centrifugation SA, France, ("Guinard”) was fully consolidated for the first time in 1999 although Andritz only controls 50% of the voting shares. The Group is able to control the business activities of Guinard. Guinard has been strictly included in the internal reporting and control structure of the Group. Companies acquired or disposed of during the year are included or excluded, accordingly, in the consolidated financial statements from the date of acquisition or from the date of disposal. Joint Ventures with equal voting rights are consolidated on a proportionate basis.

e. Major Differences between Austrian and IAS Accounting Principles

Goodwill: In accordance with IAS 22, goodwill from capital consolidation is capitalized and amortized over the useful life. The Austrian Commercial Code allows a credit to reserves, with no effect on the income statement. Construction Contracts: According to Austrian accounting regulations, sales and profits are first realised upon customer invoicing (completed contract method). Under IAS 11, order completion is accounted using the percentage of completion method in accordance with progress and pro rata profit realisation. The extent of completion is established by considering the ratio of accumulated costs to estimated total costs to complete each contract (cost- to-cost method). Deferred Taxes: The Austrian Commercial Code requires the creation of deferred tax provisions for temporary differences if a tax liability is expected to arise when these differences are reversed. IAS require the creation of deferred taxes for all temporary differences which arise between financial statements prepared for tax purposes and IAS financial statements, measured at actual or enacted tax rates. Deferred tax assets must also be recorded for unused loss carry forwards and unused tax credits which are expected to be offset against taxable profits in the future. Other Provisions: In contrast to the Austrian Commercial Code, IAS interprets the principle of prudence differently with respect to provisions. IAS tends to place stricter requirements on the probability of an event occurring and on estimating the amount of the provisions. According to Austrian Commercial Code certain amounts reported as liabilities under IAS would be normally shown as provisions. Provisions for Pensions: In keeping with the Austrian Commercial Code, provisions for pensions are calculated by an actuary without incorporating the effect of future wage and salary increases. Under IAS, provisions for pensions are calculated using the projected unit credit method, based on a discount rate determined by reference to market yields on high quality corporate bonds and an expected compensation increase. Marketable Securities: Austrian accounting principles require securities to be recorded at the lower of acquisition costs or market value. Under IAS marketable securities are valued at market prices, and the changes in these market prices are credited or charged directly to the income statement.

Andritz 2001

80 Notes to the Consolidated Financial Statements as at December 31, 2001 and 2000

Foreign Currency Transactions: These two accounting systems require different treatments for unrealized profits arising from the valuation of foreign exchange items as of the balance sheet date. According to Austrian law, only unrealized losses are recorded, where IAS also requires the recognition of unrealized profits. Non-current Securities: In accordance with IAS non-current securities of the Group are classified as "available for sale” and are valued at their quoted market price at the balance sheet date. The Austrian Commercial Code requires a valuation at acquisition costs or a lower market value if there is a sustainable decrease. Hedging: With the adoption of IAS 39, the Group has designated its forward exchange contracts as cash flow hedges and carries them at fair value. Changes in the fair value of a hedging instrument that qualifies as a highly effective cash-flow hedge are recognised directly in the hedging reserve in shareholders’ equity. The Austrian Commer- cial Code does not require a valuation of hedging contracts at fair value as of the balance sheet date but the impact of the hedged rates have to be considered for valuation of assets and liabilities. f. Changes in Presentation of Balance Sheet Items

Certain amounts concerning personnel and order related costs have been reclassified from provisions to other liabilities in 2001. For comparison reasons prior year figures have been adopted accordingly.

C. Acquisitions and Other Changes in Scope of Consolidation

Andritz-Ahlstrom

At June 30, 2001 the Group acquired the remaining 50% interest in Andritz-Ahlstrom OY for a cash price of EUR 57,960 thousand. Andritz-Ahlstrom and its subsidiaries ("Andritz-Ahlstrom”) have been fully consolidated into the Group Financial statement as of end of last year already. The additional goodwill of EUR 2,515 thousand arising from the surplus of the purchase price for the remaining shares over the minority interests of EUR 55,445 thousand as of the date of the purchase will be amortized on a straight-line basis over the remaining period of 14 years. Andritz-Ahl- strom contributed to the Group’s net income EUR 10,183 thousand of which EUR 2,174 thousand has been transferred to minority interests for the period until the purchase of the remaining shares of Andritz-Ahlstrom.

In addition, other minor business acquisitions and changes in scope of consolidation took place, which did not lead to material changes in the business position of the Group.

Inter-company balances and transactions, including inter-company profits and unrealized profits and losses have been eliminated. The consolidated financial statements have been prepared using uniform accounting policies for like transactions and other events in similar circumstances. These uniform accounting policies are not used for the financial statements of associated companies.

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81 Notes to the Consolidated Financial Statements as at December 31, 2001 and 2000

D. Accounting and Valuation Principles

a. Intangible Assets

Intangible assets are accounted for at acquisition cost. After initial recognition, intangible assets are accounted for at cost less accumulated amortization and any accumulated impairment losses. Intangible assets are amortized on a straight-line basis over the best estimate of their useful lives. The amortisation period and the amortization method are reviewed annually at each financial year-end.

Concessions, industrial rights and similar rights and values Amounts paid for concessions, industrial rights and similar rights and values are capitalized and then amortized on a straight-line basis over the expected periods of benefit. The expected useful lives vary from 3 to 15 years.

Goodwill The excess of the cost of an acquisition over the Company’s interest in the fair value of the net identifiable assets and liabilities acquired as at the date of the exchange transaction is recorded as goodwill and recognised as an asset in the balance sheet. Goodwill is carried at cost less accumulated amortisation and accumulated impairment losses. Goodwill is amortized on a straight-line basis over its useful life. The amortization period is determined at the time of the acquisition based upon the particular circumstances and ranges from 10 to 15 years. The unamortised balances are reviewed at each balance sheet date by assessing the probability of continuing future benefits. If there is an indication that goodwill may be impaired, the recoverable amount is determined for the cash-generating unit to which the goodwill belongs. If the carrying amount is higher than the recoverable amount, an impairment loss is recognised. Goodwill and negative goodwill arising from business combinations before 1 January 1995 were written off against reserves.

b. Property, Plant and Equipment

Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. When assets are sold or retired, their cost and accumulated depreciation are eliminated from the accounts and any gain or loss resulting from their disposal is included in the income statement. The initial cost of property, plant and equipment comprises its purchase price, including import duties and non- refundable purchase taxes and any directly attributable costs of bringing the asset to its working condition and location for its intended use. Expenditures incurred after the fixed assets have been put into operation, such as repairs and maintenance and overhaul costs, are normally charged to income in the period in which the costs are incurred. Depreciation is calculated on a straight-line basis over the following estimated useful lives: Buildings 20 – 50 years Machinery and technical equipment 4 – 10 years Tools, office equipment and vehicles 3 – 10 years

In the majority of cases, depreciation is taken in full for those assets added during the first half of the financial year; for assets added during the second six months, one half of the annual depreciation is charged. Low-value assets are capitalised and fully written off in the year of purchase.

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82 Notes to the Consolidated Financial Statements as at December 31, 2001 and 2000

The useful life and depreciation methods are reviewed periodically to ensure that the method and period of depreciation are consistent with the expected pattern of economic benefits from items of property, plant and equipment. Assets in the course of construction represent plant and properties under construction and are stated at cost. These include costs of construction, plant and equipment and other direct costs. They are not depreciated until such time as the relevant assets are completed and put into operational use. c. Financial Assets and Investments in associated Companies

These long-term investments consist primarily of shares in associated companies and non-current securities. Investments in associated companies (generally investments of between 20% to 50% in a company’s equity) where a significant influence is exercised by the Group are accounted for by using the equity method. An assessment of investments in associates is performed when there is an indication that the asset has been impaired or the impairment losses recognised in prior years no longer exist. Other non-current securities held on a long-term basis are classified as available-for-sale investments and valued at fair value. Changes of these fair values are recognised as gains or losses in the income statement. d. Finished Goods, Work in Progress, Raw Materials

Inventories, including work in progress, are valued at the lower of cost and net realisable value, after provision for obsolete and slow moving items. Net realisable value is the selling price in the ordinary course of business, less the costs of completion, marketing and distribution. Cost is determined primarily on the basis of the FIFO method. For processed inventories, cost includes the applicable allocation of fixed and variable overhead costs. Unrealisable inventory has been fully written off. Contracts other than construction contracts are valued at production costs. For these contracts the revenue is recognised when the ownership of the goods is transferred ("completed contract method”). e. Construction Contracts

Receivables from construction contracts and the related sales are accounted for using the percentage of completion method. The construction contracts are determined by the terms of the individual contract, which are agreed at fixed prices. The extent of completion ("stage of completion”) is established by the cost-to-cost method. Reliable estimates of the total costs and sales prices and the actual figures of the accumulated costs are available on a monthly basis. Estimated contract profits are recorded in earnings in proportion of recorded sales. In cost-to-cost method sales and profits are recorded after considering the ratio of accumulated costs to estimated total costs to complete each contract. Changes to total estimated contract costs and losses, if any, are recognised in the income statement of the period in which they are determined. For remaining technological and financial risks which might occur during the remaining construction period, an individually assessed amount is included in the estimated contract costs. Impending losses out of the valuation of construction contracts are recognised at the time of occurrence. Impending losses are recognised when it is probable that the total contract costs will exceed the contract revenues. For possible customer warranty claims provisions are accounted for according to the profit realisation. At the completion of a contract the remaining warranty risk is reassessed.

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83 Notes to the Consolidated Financial Statements as at December 31, 2001 and 2000

f. Trade Accounts Receivable

Receivables are stated at face value, after allowances for doubtful accounts.

g. Marketable Securities

Marketable securities consist of governmental bonds and bonds of first-class banks that are traded in liquid markets. They are held for the purpose of investing in liquid funds and are not generally intended to be retained on a long- term basis. Marketable securities are stated at the market value. Adjustments in valuation are included in the income statement. Interest received on trading securities is reported as interest income. On a disposal of an investment, the difference between the net disposal proceeds and the carrying amount is included in the income statement.

h. Cash and Cash Equivalents

Cash includes cash in hand and cash with banks. Cash equivalents might include short-term deposits with non-banks with original maturities of three months or less and that are not subject to any risk of change in value.

i. Share Capital

Only ordinary shares exist and all shares are issued and have the same rights. At the extraordinary shareholders’ meeting of the Company held on 6 September 2000 the share capital of the Com- pany of ATS 1 billion was converted into Euros on the basis of the official exchange rate. In addition, it was resolved to convert the shares from par value shares to non par value shares. As a result, the converted share capital of EUR 72,700,000 was divided into 10,000,000 shares of non par value. At the same shareholders’ meeting the shareholders resolved to authorise the Managing Board to increase the nominal value of the Company’s share capital with prior approval of the Supervisory Board by an amount of up to EUR 36,350,000 through the issue of up to 5,000,000 shares in bearer or registered form and for a contribution in cash or in kind. This increase has been authorised for a maximum of five years from the registration of the amendment to the Articles of Association in the commercial register which took place on 19 September 2000. Out of this authori- sation Andritz issued 1,000,000 shares at the end of 2000. For these shares an amount of EUR 27.0 million was paid by the shareholders (thereof EUR 24.8 million before 31 December 2000). This increase was registered in the commercial register on 26 January 2001. At the 94th ordinary shareholders’ meeting the shareholders resolved to authorize the Managing Board to increase the nominal value of the Company’s share capital with prior approval of the Supervisory Board by a further amount of up to EUR 10,905,000 through the issue of up to 1,500,000 shares in bearer form and for contribution in cash or kind, so that authorized capital was increased to EUR 39,985,000 or 5,500,000 shares respectively.

In the course of the Company’s IPO out of this authorization Andritz issued 2,000,000 shares in June 2001, the issue price was fixed at EUR 21 per share. This increase was registered in the commercial register on 23 June 2001.

Consequently the share capital amounts to EUR 94,510,000 divided into 13,000,000 shares of non par value.

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84 Notes to the Consolidated Financial Statements as at December 31, 2001 and 2000

j. Capital Reserves

Capital Reserves are created in accordance with Austrian requirements and include share premium amounts. k. Provisions

A provision is recognised when, and only when, an enterprise has a present obligation (legal or constructive) as a result of a past event and it is probable (i.e. more likely than not) that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. Where the effect of the time value of money is material, the amount of a provision is the present value of the expenditures expected to be required to settle the obligation. l. Other Accounting and Valuation Principles

Financial Instruments Financial assets and financial liabilities carried on the balance sheet include cash and cash equivalents, marketable securities, trade and other accounts receivable and payable, long-term receivables, borrowings and investments. The accounting policies on recognition and measurement of these items are disclosed in the respective accounting policies found in these notes. Financial instruments are classified as assets or liabilities in accordance with the substance of the contractual arrangement. Therefore interest, dividends, gains and losses relating to these financial instruments classified as an asset or a liability are reported as expense or income. Financial instruments are offset when the Group has a legally enforceable right to offset and intends to settle either on a net basis or to realise the asset and settle the liability simultaneously.

Hedging The Group uses forward exchange contracts to mitigate exposure to foreign currency risk out of projects and regularly business in foreign currency. According to the Group’s hedging policy all forward contracts are used for highly probable future Cash flows for these projects or regularly sales and can therefore be classified as cash flow hedges. Changes in the fair value of a hedging instrument that qualifies as a highly effective cash-flow hedge are recognised directly in the hedging reserve in shareholders’ equity. If the hedged cash flow results in the recognition of an asset or a liability, all gains or losses previously recognised directly in equity are transferred from equity and included in the initial measurement of the cost or carrying value of the asset or liability. Otherwise, for all other cash-flow hedges, gains and losses initially recognised in equity are transferred from hedging reserve to net profit or loss in the same period or periods during which the hedged firm commitment or forecast transaction affects the income statement.

When the committed or forecast transaction is no longer expected to occur, any net cumulative gain or loss previously reported in equity is transferred to the income statement.

All investments in a foreign entity are long-term investments and presently a sale of such investments is not expected to occur in the foreseeable future. According to the Group’s hedging policy there are no hedges of net investments in foreign currencies.

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85 Notes to the Consolidated Financial Statements as at December 31, 2001 and 2000

Derivative Financial Instruments All derivative financial instruments are designated as hedging instruments. Only fixed forward exchange rate contracts are used for hedging of currency risks.

Research and Development Costs Expenditures for research and development are charged against income in the period incurred because the criteria for capitalisation (IAS 38) are not met. In 2001 EUR 18,425 thousand and in 2000 EUR 17,864 thousand have been recognised as an expense.

Revenue Recognition (except for Construction Contracts) Revenue is recognised when it is probable that the economic benefits associated with the transaction will flow to the enterprise and the amount of the revenue can be measured reliably. Sales are recognised net of sales taxes and dis- counts when delivery has taken place and transfer of risks and rewards has been completed. Interest is recognised on a time proportion basis that reflects the effective interest rate of the asset. Dividends are recognised when the shareholder’s right to receive payment is established.

Borrowing Costs Borrowing costs are generally expensed as incurred.

Impairment of Assets Property, plant and equipment and intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Whenever the carrying amount of an asset exceeds its recoverable amount, an impairment loss is recognised in income for items of property, plant and equipment and intangibles carried at cost. Recoverable amounts are estimated for individual assets or, if it is not possible, for the cash-generating unit.

m. Foreign Currency

Foreign Currency Transactions Foreign currency transactions are recorded in the reporting currency by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction. Exchange rate differences arising on the settlement of monetary items at rates different from those at which they were initially recorded during the periods are recognised in the income statement in the period in which they arise.

Foreign Entities Foreign consolidated subsidiaries are regarded as foreign entities since they are financially, economically and orga- nisationally autonomous. Their reporting currencies are their respective local currencies. Financial statements of foreign consolidated subsidiaries are translated at year-end exchange rates with respect to the balance sheet. Expense and revenue items are translated using the average exchange rates for the year. All resulting translation differences are included in a currency translation reserve in equity. Any goodwill arising on the acquisition of a foreign entity is recorded using the exchange rate at the effective date of the transaction. Exchange differences arising on a monetary item that, in substance, forms part of the Group’s net

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86 Notes to the Consolidated Financial Statements as at December 31, 2001 and 2000

investment in a foreign entity are classified as equity in the consolidated financial statements until disposal of the net investment. n. Employee Benefits

Defined Benefit Plans (Provisions for Pensions) Some Group companies provide defined benefit pension plans for certain employees. The funds are valued every year by professionally qualified independent actuaries. The obligation and costs of pension benefits are determined using a projected unit credit method. The projected unit credit method considers each period of service as giving rise to an additional unit of benefit entitlement and measures each unit separately to build up the final obligation. Past service costs are recognised on a straight-line basis over the average period until the amended benefits become vested. Gains or losses on the curtailment or settlement of pension benefits are recognised when the curtailment or settlement occurs. Actuarial gains or losses are amortised based on the expected average remaining working lives of the employees. The pension obligation is measured at the present value of estimated future Cash flows using different discount rates for different countries. In 1999 part of the pension obligations were transferred to a multi-employer pension fund. According to IAS 19.30 these pension obligations were accounted as a defined contributions plan, although the obligations met the criteria of a defined benefit plan. All surplus or deficit in the plan will affect the future contributions of the Group. No material amounts are expected out of future deficits, as the initial funding seems to be sufficient to cover future deficits. Other Group companies provide defined contribution plans for certain employees. The related costs are expensed as they occur.

Severance Payments In certain countries the Group is also obliged by law to pay termination indemnities in some cases of termination of employment. No termination indemnities are payable for voluntary termination at the request of the employee. Expenses related to termination indemnities are accrued. o. Income Taxes

The income tax charge is based on profit for the year and considers deferred taxation. Deferred taxes are calculated using the balance sheet liability method. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax assets and liabilities are measured using the tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the balance sheet date. The measurement of deferred tax liabilities and deferred tax assets reflects the tax consequences that would follow from the manner in which the enterprise expects, at the balance sheet date, to recover or settle the carrying amount of its assets and liabilities. Deferred tax assets and liabilities are recognised regardless of when the timing difference is likely to reverse.

Deferred tax assets are recognised when it is probable that sufficient taxable profits will be available against which the deferred tax assets can be utilised. At each balance sheet date, the Group re-assesses unrecognised deferred tax

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87 Notes to the Consolidated Financial Statements as at December 31, 2001 and 2000

assets and the carrying amount of deferred tax assets. The enterprise recognises a previously unrecognised deferred tax asset to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. The Group conversely reduces the carrying amount of a deferred tax asset to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all of that deferred tax asset to be utilised. Deferred tax is charged or credited directly to equity if the tax relates to items that are credited or charged, in the same or a different period, directly to equity, including exchange differences arising on the translation of inter-company loans.

E. Segments

Business Segments For management purposes the Group is organised on a worldwide basis into four major operating businesses. The strategic business units are the basis upon which the Group reports its primary segment information. Financial information on business and geographical segments is presented in section I (see "segment information” below). There are no material inter-segment transactions. All consolidation entries are included in the relevant segment. According to the monthly reporting scheme, which is the basis for the primary segment information, all sales and all direct and indirect expenses (including overhead and administrative costs) are allocated to business segments.

Net segmental assets consist of: • intangible fixed assets, property, plant and equipment; • current assets not including cash and cash equivalents and marketable securities; and • liabilities not including interest bearing borrowings, liabilities for taxes and personnel related costs of each segment.

F. Contingencies

Contingent liabilities are not recognised in the financial statements. They are disclosed unless the possibility of an outflow of resources embodying economic benefits is remote. A contingent asset is not recognised in the financial statements but disclosed when an inflow of economic benefits is probable.

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88 Notes to the Consolidated Financial Statements as at December 31, 2001 and 2000

G. Notes to the Balance Sheet

1. Changes in Fixed and Financial Assets

2001 Acquisition or Production Costs:

Balance Changes Balance as at Currency due to as at 1 January translation business 31 December (in TEUR) 2001 differences Additions Disposals acquisitions Transfers 2001

Concessions, industrial rights and similar rights and values 27,003 439 2,667 2,270 0 (613) 27,226 Advance payments on intangible assets 0 0 0 0 0 0 0 Total intangible assets 27,003 439 2,667 2,270 0 (613) 27,226

Goodwill 249,100 7,301 3,162 0 0 613 260,176

Land and buildings 133,619 2,080 2,517 2,888 0 (1,721) 133,607 Technical equipment and machinery 132,888 2,429 7,119 3,513 0 1,355 140,278 Other equipment, factory and office equipment 72,933 1,401 11,897 7,908 63 1,006 79,391 Assets in course of construction 1,986 59 (607) 448 0 (564) 426 Advance payments on tangible assets 110 0 111 110 0 0 112 Total property, plant and equipment 341,536 5,969 21,037 14,866 63 76 353,814

Shares in affiliated companies 8,765 38 22 8.471 (20) 0 333 Other investments (participations) 521 0 0 377 0 43 188 Shares in associated companies 3,126 (59) 393 184 0 0 3,276 Other loans 520 (6) 19 45 0 0 488 Non-current securities 12,596 20 947 2,379 0 (43) 11,141 Advance payments on financial assets 0 0 4 0 0 0 4 Total financial assets 25,528 (6) 1,385 11,455 (20) 0 15,431

Total fixed and financial assets 643,167 13,703 28,249 28,592 43 76 656,647

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89 Notes to the Consolidated Financial Statements as at December 31, 2001 and 2000

Depreciation and Amortization

Balance Changes Balance as at Currency due to as at 1 January translation business 31 December (in TEUR) 2001 differences Additions Disposals acquisitions Transfers 2001

Concessions. industrial rights and similar rights and values 19,187 357 4,592 2,204 0 (614) 21,317 Advance payments on intangible assets 0 0 0 0 0 0 0 Total intangible assets 19,187 357 4,592 2,204 0 (614) 21,317

Goodwill 93,600 4,576 13,404 0 0 614 112,194

Land and Buildings 58,775 1,110 3,713 343 0 (1,789) 61,467 Technical equipment and machinery 96,243 1,651 9,449 3,398 0 489 104,434 Other equipment, factory and office equipment 57,621 1,214 8,785 7,532 19 1,029 61,137 Assets in course of construction 0 0 0 0 0 0 0 Advance payments on tangible assets 0 0 0 0 0 0 0 Total property, plant and equipment 212,639 3,976 21,947 11,272 19 (271) 227,038

Shares in affiliated companies 571 0 0 264 0 0 307 Other investments (participations) 50 0 0 0 0 0 50 Shares in associated companies 0 0 0 0 0 0 0 Other loans 358 0 0 0 0 0 358 Non-current securities 34 0 (132) 34 0 0 (132) Advance payments on financial assets 0 0 0 0 0 0 0 Total financial assets*) 1,013 0 (132) 298 0 0 583

Total fixed and financial assets 326,439 8,909 39,810 13,775 19 (271) 361,133

*) Impairment losses

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90 Notes to the Consolidated Financial Statements as at December 31, 2001 and 2000

Net Book Value

Net book Net book Costs as at value as at value as at 31 December Accumulated 31 December 31 December (in TEUR) 2001 depreciation 2001 2000

Concessions, industrial rights and similiar rights and values 27,226 21,317 5,909 7,816 Advance payments on intangible assets 0 0 0 0 Total intangible assets 27,226 21,317 5,909 7,816

Goodwill 260,176 112,194 147,982 155,500

Land and buildings 133,607 61,467 72,140 74,844 Technical equipment and machinery 140,278 104,434 35,844 36,645 Other equipment, factory and office equipment 79,391 61,137 18,254 15,312 Assets in course of construction 426 0 426 1,986 Advance payments on tangible assets 112 0 112 110 Total property, plant and equipment 353,814 227,038 126,776 128,897

Shares in affiliated companies 333 307 26 8.194 Other investments (participations) 188 50 138 471 Shares in associated companies 3,276 0 3,276 3,126 Other loans 488 358 130 162 Non-current securities 11,141 (132) 11.273 12,562 Advance payments on financial assets 4 0 4 0 Total financial assets 15,431 583 14,848 24,515

Total fixed and financial assets 656,647 361,133 295,514 316,728

Impairment Loss

Due to the lower level of business activity in some markets where the Group is active the capacity utilization of certain manufacturing facilities is expected to be lower than the break-even level. Updated analyses were prepared to determine if there is an impairment of assets. For certain units which met these tests the impaired assets including buildings, machinery and equipment were written down to their recoverable value which is their net selling price. Net selling price is determined using the best estimate available for the disposal of these assets on an arm´s length basis between knowledgeable willing parties. For the year 2001 the group recorded in depreciation a non-cash impairment loss for these manufacturing facilities of EUR 2,472 thousand (buildings EUR 1,376 thousand, technical equipment and machinery EUR 1,096 thousand).

In addition, impairment loss of EUR 1,865 thousands has been recognised in 2001 for intangible assets (patents and industrial rights) due to changed production processes and changed market outlook. This impairment charge represents a partial write-off to the recoverable amount based on estimates of their net selling prices.

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91 Notes to the Consolidated Financial Statements as at December 31, 2001 and 2000

Goodwill

(in TEUR) 2001 2000

Andritz Ahlstrom 60,174 60,471 Acquisition of Andritz AG 77,474 83,434 Other 10,334 11,595 147,982 155,500

2. Inventories

(in TEUR) 2001 2000

Finished goods 37,815 29,078 Work in process 58,018 51,754 Raw materials 22,300 24,436 118,134 105,268 The shown inventories are valued at cost.

3. Advance Payments Made

The advance payments made and presented in the balance sheet relate to open purchase orders for contracts.

4. Trade Accounts Receivables

(in TEUR) 2001 2000

Accounts receivable 216,413 203,422 Allowance for doubtful accounts (3,468) (3,271) 212,945 200,151

5. Construction Contracts

(in TEUR) 2001 2000

Contract revenue recognised as sales in the period 858,147 572,432 Contract costs incurred and recognised profits (less recognised losses) to date 1,023,539 739,219 Advances received and progress billings 806,560 789,190 Amount of retentions 860 1,747

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92 Notes to the Consolidated Financial Statements as at December 31, 2001 and 2000

The billings in excess of costs and earnings of projects under construction represent, primarily, payments from customers for work, which is not performed yet.

6. Other Receivables

(in TEUR) 2001 2000

Receivables from associated companies 17 168 Receivables from affiliated companies 0 1,426 Other receivables 34,187 30,110 34,204 31,704

7. Statement of Receivables

2001 Thereof Thereof remaining remaining term term (in TEUR) Total under 1 year over 1 year

Trade accounts receivable 212,945 205,904 7,041 Cost and earnings of projects under construction in excess of billings 99,392 98,939 453 Other receivables 34,204 34,082 121 346,541 338,925 7,616

2000 Thereof Thereof remaining remaining term term (in TEUR) Total under 1 year over 1 year

Trade accounts receivable 200,151 196,207 3,944 Cost and earnings of projects under construction in excess of billings 92,646 92,646 0 Other receivables 31,704 30,511 1,193 324,501 319,364 5,137

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93 Notes to the Consolidated Financial Statements as at December 31, 2001 and 2000

8. Retained Earnings

Dividends Cash dividends declared for the years 2001 and 2000 were as follows:

(in TEUR) 2001 2000

Ordinary shares, non-par value 11,700 3,000

The dividend for 2001 will be proposed by the Managing Board. The dividend for 2000 was paid to the shareholders at the end of March 2001.

On 25 February 2002 the Managing Board authorised the consolidated financial statements for the year ended 31 December 2001 according to IAS. On 26 February 2001 the management authorised the consolidated financial statements for the year ended 31 December 2000 according to IAS to be issued to its Supervisory Board. The Super- visory Board is made up solely of non-executives and includes representatives of employees. The consolidated financial statements were presented for information purposes only to the Supervisory Board and subsequently acknowledged by the meeting of shareholders. The Supervisory Board and the meeting of shareholders acknowledged the consolidated financial statements.

9. Provisions

Balance Changes as at Currency due to 1 January translation business 31 December (in TEUR) 2001 differences acquisitions Use Reversal Addition 2001

Provisions for severance payments 22,003 0 0 0 187 1,651 23,467 Provisions for pensions 19,837 249 0 3,896 1,810 44 14,424 Longterm provisions 41,840 249 0 3,896 1,996 1,695 37,891

Other provisions 117,528 828 0 27,334 12,239 61,769 140,552 Total 159,368 1,077 0 31,230 14,235 63,464 178,443

Other provisions consist primarily of order related provisions (2001: EUR 119,592 thousand; 2000: EUR 102,285 thousand). The provisions for order related costs consist primarily of provisions for warranties and contingencies and are expected to be incurred within the next three financial years.

Restructuring A detailed plan of restructuring was completed and approved by the Supervisory Board in November 2001. The restructuring plan is designed to streamline the production within the Group. The Group recorded a restructuring charge of EUR 8,817 thousands to cover the costs of reducing certain sectors of its workforce and facilities to levels more appropriate to expected business requirements. The balance is comprised of EUR 4,523 thousand for the reduction of employees and EUR 4,293 thousands for closing of excess facilities.

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94 Notes to the Consolidated Financial Statements as at December 31, 2001 and 2000

10. Employee Benefit Obligations

Defined Benefit Plan for Pensions Some Group companies in Austria, USA, Germany and Sweden provide defined benefit pension plans for some clas- ses of employees. Provisions for pension obligations are established for benefits payable in the form of retirement, disability and surviving dependant pensions. The benefits offered vary according to the legal, fiscal and economic conditions of each country. Benefits are dependent on years of service and in some cases on the respective employee’s compensation.

The following table reconciles the funded status of defined benefit plans to the amounts recognised in the balance sheet:

(in TEUR) 2001 2000

Present value of funded defined benefit obligations 16,437 25,925 Fair value of plan assets (2,904) (15,256) 13,534 10,669

Present value of unfunded defined benefit obligations 1,613 11,446 Unrecognised actuarial gains/losses (740) (3,372) Unrecognised past service costs 16 1,094 Net liability in balance sheet 14,424 19,837

Pension expense is comprised of the following:

(in TEUR) 2001 2000

Current service costs 278 411 Interest expense on obligations 861 1,601 Expected return on plan assets 0 (876) Net actuarial gains/losses recognised (90) 383 Past service costs 182 (15) Effect of any curtailment or settlement (344) 1,544 889 3,048 Payments to defined contribution plans 12,813 7,105 13,702 10,153

Principal actuarial assumptions used to determine pension obligations as of 31 December were as follows:

(in per cent) 2001 2000

Discount rate 6.5% 6.5% Expected return on plan assets 8.5% 8.5% Wage and salary increases 3.0% 3.0% Retirement benefit increases 2.5% 2.5%

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95 Notes to the Consolidated Financial Statements as at December 31, 2001 and 2000

In prior years Andritz transferred some of the pension liabilities to a multi-employer pension fund. This pension plan is accounted as a defined contribution plan although the obligations met the criteria for a defined benefit plan. The plan covers some full-time employees and provides for contribution ranging from 3% to 5% of salary.

Severance Payments

(in TEUR) 2001 2000

Present value of unfunded defined benefit obligations 23,468 22,003 Net liability in balance sheet 23,468 22,003

Severance expense is comprised of the following:

(in TEUR) 2001 2000

Current service costs 1,263 1,028 Interest expense on obligations 1,335 1,315 Net actuarial gains/losses recognised (141) (2,323) Effect of any curtailment or settlement 0 1,115 2,458 1,135 Payments to defined contribution plans 397 5 2,855 1,140

Principal actuarial assumptions used to determine serverance obligations as of 31 December were the same as used for pension obligations.

Management Share Option Plan

A selected group of executives employed by the Group as at 1 June 2001 were eligible to participate in a Mana- gement Share Option Plan in connection with the Initial Public Offering. Each eligible executive who has subscribed Shares having an aggregate subscription value calculated at the Offer Price (21 EUR per share) of at least 20,000 EUR (each such subscription a "Private Investment”) is eligible for a special remuneration in the form of option rights. These option rights can be exercised provided that the average price of the Shares during two separate assessment periods exceeds a certain percentage of the Offer Price. The first assessment period will run for a period of three months preceding the second anniversary of the initial listing of the Shares on the Vienna Stock Exchange, whereas the second assessment period will run for a period of three months preceding the third anniversary of the initial listing of the Shares on the Vienna Stock Exchange. If the average market value of the Shares exceeds the Offer Price by 15% in the first assessment period (Option 1) or by 20% in the second assessment period (Option 2), the eligible executive will be entitled to purchase up to a maximum of 1,500, 2,500 and 5,000 Shares with respect to Opti- on 1 or Option 2 at the Offer Price depending on the seniority of the relevant executive, provided that the relevant executive can prove uninterrupted ownership of his Private Investment until the end of the assessment period. The options can be exercised only once and are not transferable. Option 2 can only be exercised if during the fist assessment period the average market value of the Shares does not exceed the Offer Price by 15%, making the exercise

Andritz 2001

96 Notes to the Consolidated Financial Statements as at December 31, 2001 and 2000

of Option 1 impossible. The options can only be exercised at given times. Each participant may subscribe up to 50% of the number of Shares stated in the Average Price Notice immediately after exercise of the option and payment of the pro-rata subscription price, the relevant participant can subscribe up to the remaining 25% of the Shares set out in the notice on the exercise of the option. At the end of a six-month term from the exercise of the option and payment of the remaining subscription price, the relevant participant can subscribe up to the remaining 25% of the Sha- res set out in the notice on the exercise of the option. Due to legal requirements, executives in the United States will not be allowed to make a Private Investment but will be granted option rights. 37 executives are participating in the Management Share Option Plan, together they are eligible to exercise options for the purchase of 116,000 shares. Andritz may either provide these shares by issue of new shares out of authorised share capital or by repurchase of own shares what has to be approved by the Shareholders‘ Meeting.

11. Statement of Liabilities

2001 Thereof Thereof Thereof remaining remaining remaining term under term between term over (in TEUR) Total 1 year 1 and 5 years 5 years

Non-current interest bearing borrowings 976 0 960 16 Interest bearing borrowings 47,494 47,494 0 0 Trade accounts payable 142,379 140,880 1,499 0 Billings in excess of costs and earnings of projects under construction 94,823 94,440 383 0 Advance payments received 73,618 73,618 0 0 Liabilities for current taxes 3,540 3,540 0 0 Other liabilities 121,171 119,776 1,121 274 484,001 479,748 3,963 290

2000 Thereof Thereof Thereof remaining remaining remaining term under term between term over (in TEUR) Total 1 year 1 and 5 years 5 years

Non-current interest bearing borrowings 32,683 0 32,653 30 Interest bearing borrowings 57,640 57,640 0 0 Trade accounts payable 124,947 124,463 484 0 Billings in excess of costs and earnings of projects under construction 142,617 138,704 3,913 0 Advance payments received 31,854 31,854 0 0 Liabilities for current taxes 11,212 11,212 0 0 Other liabilities 116,204 114,601 1,318 284 517,157 478,474 38,368 314

Andritz 2001

97 Notes to the Consolidated Financial Statements as at December 31, 2001 and 2000

The interest bearing borrowings consist primarily of current bank loans at floating interest rates and fixed rates.

Property, plant and equipment amounting to EUR 419 thousand and EUR 2,032 thousand as at 31 December 2001 and 2000, respectively, has been pledged as security for long-term debt.

12. Other Liabilities

(in TEUR) 2001 2000

Payables to affiliated companies 51 29 Payables to associated companies 436 36 Other personnel related costs 30,436 31,826 Other order related costs 31,985 29,677 Deferred income 3,200 3,476 Other 55,063 51,161 121,171 116,205

H. Notes to the Consolidated Income Statement

13. Sales

(in TEUR) 2001 2000

Contract revenue recognised as sales in the period 858,147 572,432 Other 460,554 364,415 1,318,701 936,847

14. Other Operating Income

(in TEUR) 2001 2000

Profit on disposal of fixed assets excluding financial assets 1,749 1,379 Exchange rate gains 2,487 3,302 Rental income 1,268 1,301 Other 13,514 11,674 19,018 17,656

Andritz 2001

98 Notes to the Consolidated Financial Statements as at December 31, 2001 and 2000

15. Personnel Expenses

(in TEUR) 2001 2000

Wages 65,320 45,486 Salaries 167,084 132,988 Pension expenses 13,702 10,153 Severance and termination expenses 6,627 983 Social security and payroll related duties 30,247 25,801 Other social payments 6,953 7,545 289,932 222,956

16. Other Operating Expenses

(in TEUR) 2001 2000

Exchange rate losses 4,899 3,099 Sales expenses 75,186 58,884 Administration expenses 22,455 16,667 Other 58.175 52,561 160,715 131,211

17. Financial Results

(in TEUR) 2001 2000

Income / expenses from investments in associated companies 325 (212)

Other interest and similar income 10,495 13,057 Interest and similar expenses (7,401) (13,871) Interest result 3.093 (814)

Income / expenses from investments 7 1 Impairment losses of financial assets (30) (76) Profit on disposal of short-term securities 2,184 2,138 Income from write-ups of financial assets 163 0 Reductions to market value of short-term securities (218) (1,642) Profit / losses on disposal of long-term financial assets 0 498 Other income / expenses from financing activities 2,105 919 5,523 (107)

Andritz 2001

99 Notes to the Consolidated Financial Statements as at December 31, 2001 and 2000

18. Income Taxes

(in TEUR) 2001 2000

Current tax expense (16,985) (6,337) Deferred tax income relating to the origination and reversal of temporary differences (5,650) (7,338) (22,635) (13,675)

Changes in the deferred income tax account consist of the following:

(in TEUR) 2001 2000

Tax assets 22,131 18,824 Tax provision for deferred taxes (37,011) (28,257) Balance as at 31 December, as previously stated (14,880) (9,433)

Deferred taxes from changes in consolidation range 1,399 10,426 Defered taxes from changes in group structure 0 (8,648) Deferred tax expense relating to the origination and reversal of temporary differences Income statement charge (5,650) (7,338) Foreign exchange differences 274 781 Tax effect on IAS 39 reserve 938 0 Tax effect of foreign exchange translation differences (572) (668) (18,491) (14,880) thereof Deferred tax assets 21,114 22,131 Provision for deferred taxes (39,605) (37,011)

The reconciliation of the effective tax rate to the statutory tax rate is as follows:

(in TEUR) 2001 2000

Earnings before taxes (EBT) 60,110 33,892 Tax at the applicable tax rate (34% in 2001 and 2000) (20,437) (11,523) Tax effect of income not taxable in determining taxable profit (non-temporary differences) (977) (4,326) Tax effect of changes in valuation allowance (2,421) 1,827 adjustment of using new tax rates 1,200 347 (22,635) (13,675) Tax charge per statutory book 16,985 6,337 Changes in deferred taxes (5,650) (7,338)

Andritz 2001

100 Notes to the Consolidated Financial Statements as at December 31, 2001 and 2000

Income tax effects related to tax deductible IPO costs are directly recognised in capital reserve in equity.

Deferred tax assets and provisions for deferred taxes as at 31 December 2001 and 2000 are the result of the following temporary valuation and accounting differences between book values in the IAS consolidated financial statements and the relevant tax bases:

2001 2000 Deferred tax Deferred tax (in TEUR) asset provision asset provision

Intangible assets 2,197 (467) 2,417 (84) Tangible assets 2,797 (9,702) 2,558 (10,527) Financial assets 249 (150) 2 0 Inventories 140,946 (363) 149,848 (349) Receivables 2,993 (22,239) 751 (17,608) Short-term securities and shares 0 (537) 2 (898) Other assets 1,562 (22) 283 0 150,744 (33,480) 155,861 (29,466) Provisions 18,250 (5,804) 15,709 (2,489) Liabilities 4,876 (152,649) 6,182 (162,263) Deferred income 1 (687) 0 (2,522) 23,127 (159,140) 21,891 (167,274) Tax loss carry-forwards 8,429 0 11,179 0 Deferred tax assets/provisions 182,300 (192,620) 188,931 (196,740) Valuation allowance for deferred tax assets (6,502) 0 (4,104) 0 Other deferred taxes from consolidation 0 (2,607) (430) (2,537) IAS 39 reserve 938 0 0 0 Offset within legal tax units and jurisdiction (155,622) 155,622 (162,266) 162,266 Net deferred tax assets and provisions 21,114 (39,605) 22,131 (37,011)

19. Earnings per Share

Basic earnings per share (see Consolidated Income Statement) are calculated by dividing the net profit for the period attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.

Andritz 2001

101 Notes to the Consolidated Financial Statements as at December 31, 2001 and 2000

I. Segment Information

Segment information is prepared on the following basis:

Business Segments The Andritz Group conducts the majority of its business activities in the following areas: a. Pulp and Paper (P+P) b. Rolling Mills and Strip Processing Lines (WB) c. Environment and Process Technologies (EP) d. Feed Technology (FT) All other minor business activities are included in "Other”.

Geographical Segments The Group’s activities are conducted predominantly in Europe, North America and Asia.

2001 Business Segment Data

(in TEUR) P + P WB EP FT Other Total

Sales 882,992 167,391 135,309 107,000 26,009 1,318,701 Segment result before amortisation of goodwill 53,852 6,131 7,225 920 (136) 67,992 Net segmental assets 166,658 2,996 43,161 35,238 8,223 256,275 Capital expenditure 10,772 3,445 1,919 6,704 863 23,703 Depreciation and amortisation on tangible and intangible fixed assets 15,943 2,560 1,825 3,773 2,439 26,539 thereof impairment losses 2,730 79 315 1,213 4,337 Share of net profit / loss of associates 325 325 Investment in associates 3,276 3,276

Andritz 2001

102 Notes to the Consolidated Financial Statements as at December 31, 2001 and 2000

Geographical Segment Data

Rest of the world North and con- (in TEUR) Europe America Asia solidation Total

External sales 607,485 367,563 187,711 155,943 1,318,701 Total assets 1,161,553 158,581 4,932 (383,342) 941,724 Capital expenditures 20,070 3,208 78 347 23,703

2000 Business Segment Data

(in TEUR) P + P WB EP FT Other Total

Sales 543,999 169,130 133,155 67,844 22,719 936,847 Segment result before amortisation of goodwill 27,564 6,447 3,992 2,390 3,924 44,317 Net segmental assets 155,641 1,154 33,520 27,555 21,353 239,223 Capital expenditures 13,714 1,926 3,121 780 1,269 20,810 Depreciation and amortisation on tangible and intangible fixed assets 10,890 2,213 1,906 2,224 1,362 18,595 Share of net profit / loss of associates (212) (212) Investment in associates 3,126 3,126

Geographical Segment Data

Rest of the world North and con- (in TEUR) Europe America Asia solidation Total

External sales 461,711 273,479 155,136 46,521 936,847 Total assets 1,146,034 157,167 3,725 (372,512) 934,414 Capital expenditures 16,623 3,958 216 13 20,810

Andritz 2001

103 Notes to the Consolidated Financial Statements as at December 31, 2001 and 2000

J. Notes to Cash Flow Statements

Cash flows from Acquisition of Subsidiaries

(in TEUR) 2001 2000

Cash and cash equivalents 0 74,470 Receivables 0 141,952 Inventories 0 13.964 Fixed assets 0 82,154 Financial assets 0 4,252 Accounts payable and accrued expenses 0 (171,914) Short-term and long-term loans 0 (47,128) Net assets/liabilities acquired 0 97,750 Cash and cash equivalents 0 (74,470) Goodwill (2,807) 10,448 Changes in minority interests (55,642) (48,795) Net cash flow (58,449) (15,067)

K. Financial Instruments

a. Foreign Exchange Risk Management The Group only enters into fixed forward foreign exchange contracts in managing its foreign exchange risk resulting from Cash flows from current business activities. Transaction risk is calculated in each foreign currency and includes currency denominated assets and liabilities and certain off-balance sheet items such as highly probable future Cash flows for firm commitments and highly probable purchases and sales. The currency risks of the Group occur due to the fact that the Group operates and has production and sales in different countries worldwide. With the adoption of IAS 39, the Group has designated its forward exchange contracts as cash flow hedges and carries them at fair value.

b. Liquidity Risks The group’s policy is to maintain sufficient cash and cash equivalents or have available funding through an adequate amount of credit facilities to meet its commitments. Any excess cash is invested mostly in listed securities which are actively traded.

Andritz 2001

104 Notes to the Consolidated Financial Statements as at December 31, 2001 and 2000

c. Credit Risks Credit risks, or the risk of counterparties defaulting, are controlled by the application of credit approvals, limits and monitoring procedures. Where appropriate, the corporation obtains guarantees from governmental export agencies or similar private institutions to reduce the risk of a counterpart defaulting. Credit risk associated with the investment of liquid funds and securities is limited by the fact that the Group works only with financial partners who can demons- trate sound creditworthiness. For some financial assets and financial liabilities the Group has a legally enforceable right to set off. These amounts are only reported on a net basis. For all existing risks, valuation allowances are included, so that the Managing Board believes that no other credit risk will occur. d. Interest Risk Managing Board believes that the exposure to interest rate risk of financial assets and liabilities is negligible. Consequently, derivative instruments for hedging of interest risks are not used within the Group.

The weighted average effective interest rates at the balance sheet date were as follows:

2001 2000

Cash on current accounts 1.4% 2.6% Short term deposits 3.3% 4.9% Securities, short term 4.8% 7.4% Securities, long term 6.1% 3.9%

Overdraft on current accounts 5.1% 6.5% Short term loans 3.5% 4.9% Long term loans 2.5% 5.8%

Andritz 2001

105 Notes to the Consolidated Financial Statements as at December 31, 2001 and 2000

e. Fair Value of Financial Instruments

Fair Value Estimation

The fair value of forward foreign exchange contracts is determined using forward exchange market rates at the balance sheet date. The fair values of the forward contracts are confirmed to the Group by financial institutions.

At the balance sheet date, the fair values of forward contracts designated as cash flow hedges were as follows:

Remaining period

not more exceeding than Total Total (in TEUR) 1 year 1 year 2001 2000

Forwards used to hedge anticipated sales US dollars (3,752) (122) (3,874) 5,346 Swedish crowns 1,361 0 1,361 1,660 Other currencies (198) 0 (198) (651)

Forwards used to hedge firm purchase US dollars 368 0 368 (2,230) Swedish crowns (5) 0 (5) (4,236) Other currencies (412) 0 (411) (381) (2,638) (122) (2,759) (492)

Fair values of forward contracts designated as cash flow hedges are classified as current assets or liabilities.

(in TEUR) 2001 2000

Forward contracts with positive fair values 2,749 12,034 Forward contracts with negative fair values (5,508) (12,526) (2,759) (492)

The group’s principal financial instruments not carried at fair value are cash and cash equivalents, trade receivables, other current assets, other non current assets, trade and other payables, bank overdrafts, long-term borrowings.

Cash and Cash Equivalents, Current Investments and other Non-current Financial Assets The carrying amount of cash and other financial assets approximates fair value due to the relatively short-term maturity of these financial instruments.

Andritz 2001

106 Notes to the Consolidated Financial Statements as at December 31, 2001 and 2000

Non-current and Current Securities The fair values of publicly traded instruments are stated based on quoted market prices. For all other instruments for which there are no quoted market prices, a reasonable estimate of fair value has been calculated based on the expected Cash flows or the underlying net asset base for each investment. Non-current securities of the Group are classified as "available for sale” and are valued at their quoted market price at the balance sheet date.

Receivables and Payables The historical cost carrying amounts of receivables and payables which are all subject to normal trade credit terms approximate their fair values.

Short-term Borrowings The carrying amount approximates fair value because of the short period to maturity of those instruments.

Long-term Borrowings The fair value of the long-term debts is based on the current rates available for debt with the same maturity profile. The fair value of non-current borrowings and other payables with variable interest rates approximates their carrying amounts. The carrying amount is equal to the estimated fair value of the Group’s financial instruments. Management believes that the exposure to interest rate risk of financial assets and liabilities was negligible.

Impact of Adoption of IAS 39 at 1 January 2001 The group adopted IAS 39 as of 1 January 2001. In accordance with the transitional provisions of that standard, the comparative financial statements for periods prior to the effective date of the standard have not been restated. The impact of the valuation of available-to-sale investments according to IAS 39 on net profit or loss for 2001 as well as on the equity was negligible. The table below shows the movements in the hedging reserve in equity in respect to gains and losses on forward contracts designated as cash flow hedges during the period.

(in TEUR) Hedging Reserve

Adoption of IAS 39 at 1 January 2001: Gains/(losses) or remeasurement to fair value (492) Deferred income taxes 167 Balance at 1 January 2001 (325)

Movements in the period: Gains and losses from changes in fair value (2,708) Deferred income taxes thereon 921 Transfers to income statement 441 Deferred income taxes thereon (150) Balance at 31 December 2001 (1,821)*

*) In the hedging reserve acc. to the Consolidated Statement of Shareholders’ Equity, an additional amount of TEUR 49 is included which arises from the valuation of available-for-sales investments.

Andritz 2001

107 Notes to the Consolidated Financial Statements as at December 31, 2001 and 2000

L. Leases

The Group and its subsidiaries have entered into various operating lease agreements for machinery, offices and other facilities as lessees. Lease terms do not contain restrictions on the Group’s activities concerning dividends, additional debt or further leasing. Rent expense amounts to EUR 7,850 thousand in 2001 and EUR 5,958 thousand in 2000 respectively.

Future lease payments under non-cancellable operating lease are as follows:

(in TEUR) 2001 2000

Next 1 year 2,892 2,586 1 year through 5 years 6,969 3,089 After 5 years 160 143 10,021 5,818

M. Commitments

Commitments arising from contracts for expenditure on property, plant and equipment are only in the normal course of business. For 2001 these commitments amount to EUR 1,523 thousand and for 2000 to EUR 1,030 thousand.

N. Contingent Liabilities

a. Litigation

Various legal actions and claims are pending or may be asserted in the future against Group companies from litiga- tions and claims incidental to the ordinary course of business. These mainly include matters relating to warranties and infringement on intellectual property rights. Related risks have been analysed as to likelihood of occurrence. Alt- hough the outcome of these matters cannot always be ascertained with precision the Managing Board believes that no material liabilities are likely to result.

Andritz-Ahlstrom, Inc. (since renamed Andritz Inc.), is the defendant in eleven multi-party lawsuits in the state court in Louisiana and Mississippi in the United States alleging personal injury and wrongful death arising from exposure to asbestos contained, inter alia, in products supplied by Andritz-Ahlstrom, Inc. or its predecessors. The Managing Board does not believe (having taken appropriate legal advice) that any of these law suits is meritorious. In the event that any of the plaintiffs prevail in any of these law suits, the Managing Board further believes that the Group's exposure to this asbestos litigation is adequately covered by means of an indemnity obligation from Ahlstrom and one or more policies of insurance.

Andritz 2001

108 Notes to the Consolidated Financial Statements as at December 31, 2001 and 2000

b. Other

(in TEUR) 2001 2000

Outstanding bank guarantees concerning contracts with customers 167,697 84,618 Other contingent liabilities 15,505 976

According to several contracts the customer is entitled to hold retention until the end of the warranty period. In order to redeem these retentions bank guarantees were submitted to the customer. In addition, other bank and company guarantees were issued as guarantees for advance and progress payments from customers. The management believes that the provisions for warranties and the shown liabilities are sufficient. No additional financial outflows from these guarantees are expected. In some cases Andritz has similar retention agreements with suppliers. In order to settle these retentions Andritz receives bank guarantees from the suppliers.

O. Related Party Transactions

Only minor business relations exist with the shareholders.

The shareholders are:

Carlyle Europe Partners 31% Certus 24% Unternehmens Invest AG and Univest 13% GE Capital Equity Holdings BV 6% Deutsche Beteiligungs AG 6% AGIV AG 2% Management 2% Free Float 16%

Emoluments of the Managing Board

A provision of EUR 3,948 thousand in 2001 (EUR 3,991 thousand in 2000) has been recorded for pensions of former members of the Managing Board and their dependants; the current year expense for these pensions amounted to EUR 231 thousand (EUR 389 thousand in 2000).

Managing Boards total remuneration was approximately EUR 2,351 thousand in 2001 and EUR 1,847 thousand in 2000.

Andritz 2001

109 Notes to the Consolidated Financial Statements as at December 31, 2001 and 2000

P. List of Consolidated Subsidiaries

Place of Incorporation Ownership interest direct indirect

Material Affiliated Companies

Andritz Denmark A/S Esbjerg/Denmark 100% Sprout-Matador A/S Esbjerg/Denmark 100% Andritz (USA), Inc. Arlington/Texas/USA 100% Andritz Inc. Muncy/Pennsylvania/USA 100% Andritz-Ruthner, Inc. Arlington/Texas/USA 100% Durametal Corporation Tualatin/Oregon /USA 100% Guinard Centrifugation S.A. Vélizy/France 50% Andritz S.A. Vélizy/France 100% Andritz Ingenieria S.A. San Sebastian/Spain 100% Andritz GmbH Hemer/Germany 100% Sundwig GmbH Hemer/Germany 75% Andritz Ltda. Sao Paulo/Brazil 100% Andritz Oy Hollola/Finland 100% Andritz Ltd./Ltée. Montreal/Canada 100% Andritz AB Örnsköldsvik/Sweden 100% Andritz Ltd. Chesterfield/UK 100% Andritz-Kenflo Foshan Pump Co. Ltd. Foshan/China 60% U.M.T. Limited Hull/UK 100% U.M.T. Deurne B.V. Deurne/Netherlands 100% U.M.T. Boxtel B.V. Boxtel/Netherlands 100% Universal Milling Technology S.A. Saint Martin Le Beau/France 100% Andritz-Ahlstrom Ltda. Curitiba/Brazil 100% Andritz-Ahlstrom Oy Helsinki/Finland 100% Andritz-Ahlstrom Holdings USA Inc. Alpharetta/Georgia/USA 100% Andritz-Ahlstrom Inc. Alpharetta/Georgia/USA 100% Kamyr Canada Inc. Montreal/Canada 100% Andritz-Ahlstrom AB Stockholm/Sweden 100% Andritz-Ahlstrom GmbH Kirchheim/Germany 100% Andritz-Ahlstrom KK Tokyo/Japan 100%

Graz, 25 February 2002

Wolfgang Leitner Markku Hänninen Franz Hofmann Friedrich Papst Bernhard Rebernik

Andritz 2001

110 Report of the Supervisory Board of Andritz AG

The Supervisory Board was regularly informed by the Managing Board both verbally and in writing of the situation of the company and of its development as well as of major business transactions. The transactions that were subject to approval by the Supervisory Board were investigated and reviewed together with the Managing Board.

Walter Rotschädl vacated his seat as a delegated member of the Supervisory Board in March 2001. Andreas Martiner was appointed as his successor.

Markku Hänninen was appointed as Member of the Managing Board beginning January 1, 2002.

The Financial Statement of Andritz AG and the Consolidated Financial Statements for year 2001 were audited (also including the accounts) by Arthur Andersen Wirtschaftsprüfungsgesellschaft m.b.H., Vienna, who had been appointed as auditors by the Meeting of Shareholders and who certified the Financial Statements.

The Supervisory Board has examined the Financial Statement certified by the Auditors as well as the proposed appropriation of profit and the Status Report of the Managing Board and concurs with the result of the Audit.

The Supervisory Board has approved the Financial Statement, which is herewith adopted in compliance with Article 125 para. 2 of the Corporation Act.

Graz, March 2002

Kurt Stiassny Chairman of the Supervisory Board

Andritz 2001

111 Global Presence

Hudiksv Hedemor Karlstad

Esbjerg Vejle

Hull Chesterfield Corby Rotterdam Boxtel Hemer Montreal Deurne Kirc Brantford Velizy Mettmann Edmonton Janesville Glens Falls St. Martin-le-Beau Schweig- Lahr Tualatin Springfield house Lenexa Châteauroux Muncy Canonsburg Ventura Pell City Arlington Barcelona Pittsburg Alpharetta Madrid Norcross

Carapina

São Paulo

Production site Curitiba Porto Alegre/RS Sales office

Puerto Montt Andritz 2001

112 The Andritz Group has a global staff of over 4,500 employees and more than 60 subsidiaries, distribution and service companies. There are 16 production sites in Austria, Germany, Finland, Denmark, France, the Nether- lands, Great Britain, USA, Canada and China.

Örnsköldsvik For a survey of the most important sites of the Andritz Varkaus vall Hollola Group and their addresses please refer to the following Savonlinna ora Kotka pages: Helsinki Stockholm St. Petersburg e Andritz Group Companies 114 at a Glance

Addresses of the rchheim/Teck Andritz Group Companies 116 Vienna r Graz

Beijing

Tokyo

Foshan New Delhi

Bangalore Chennai

Jakarta

Durban

Andritz 2001 Dandenong Auckland 113 Pulp and Paper Busines Andritz Group Locations Pulp Mill Technologies

Wood Processing Kraft Mill Systems Services Mechanical Pulping Systems EUROPE Austria Andritz AG, Graz Andritz AG, Vienna Denmark Sprout-Matador A/S, Esbjerg Sprout-Matador A/S, Vejle England Andritz Ltd., Chesterfield UMT Limited, Hull Frisby Extrusion Services Ltd., Corby Finland Andritz Oy, Helsinki Andritz Oy, Hollola Andritz Oy, Kotka Andritz Oy, Savonlinna Andritz Oy, Varkaus France Andritz S.A., Vélizy-Villacoublay Andritz S.A., Schweighouse/Moder Guinard Centrifugation S.A., Vélizy-Villacoublay Guinard Centrifugation S.A., Châteauroux UMT S.A., St. Martin Le Beau Germany Andritz GmbH, Hemer Sundwig GmbH, Hemer Sundwig Kohler GmbH, Lahr Andritz GmbH, Kirchheim/Teck Andritz GmbH, Mettmann Netherlands U.M.T. B.V, Deurne U.M.T. B.V., Boxtel Thermtec B.V., Rotterdam Russia LLC Andritz, St. Petersburg Spain Andritz Ingeniería S.A., Madrid Andritz Ingeniería S.A., Barcelona Sweden Andritz AB, Örnsköldsvik Andritz AB, Stockholm Andritz AB, Hedemora Andritz AB, Hudiksvall Andritz AB, Karlstad AMERICAS Brazil Andritz Ltda., São Paulo Andritz Ltda., Carapina Andritz Brasil Ltda., Curitiba Sprout-Matador do Brasil Ltda., Porto Alegre/RS Chile Sprout-Matador A/S Chile Ltda., Puerto Montt Canada Andritz Ltd./Ltée., Montreal, QC Andritz Ltd./Ltée., Brantford, ON Andritz Ltd./Ltée., Edmonton, AB USA Andritz Inc., Alpharetta, GA Andritz Inc., Springfield, OH Andritz Inc., Muncy, PA Andritz Inc., Norcross, GA Andritz Inc., Glens Falls, NY Andritz Inc., Pell City, AL Andritz Inc., Lenexa, KS Andritz Inc., Ventura, CA Andritz-Ruthner, Inc., Arlington, TX Andritz-Ruthner, Inc., Canonsburg, PA Andritz-Ruthner, Inc., Pittsburg, TX Durametal Corp., Tualatin, OR Voith-Andritz Tissue LLC, Janesville, WI ASIA China Andritz-Kenflo, Foshan, Guangdong Andritz AG Representative Office, Beijing Andritz Oy Representative Office, Beijing Andritz Technologies Ltd., Foshan, Guangdong India Andritz Technologies Pvt. Ltd., Bangalore Andritz Oy Liaison Office, New Delhi Enmas Andritz Limited, Chennai Indonesia Andritz AG Representative Office, Jakarta PT. Andritz Indonesia, Jakarta Japan Andritz K.K., Tokyo

AUSTRALIA Andritz Pty. Ltd., Dandenong, VIC New Zealand Andritz (ANZ) Ltd., Auckland

AFRICA South Africa Andritz South Africa (Pty.) Ltd., Durban ess Area

Paper Mill Technologies Rolling Mills and Strip Environment and Feed Technology Hydraulic Machines Processing Lines Process Technologies

Fiber Preparation Tissue Machines Services Systems

Andritz Group Companies

Europe Sprout-Matador A/S Andritz Oy Skomagervej 12 Kyminlinnantie 6 Austria 7100 Vejle 48600 Kotka Denmark Finland Phone: +45 72 160 300 Phone: +358 20 450 5555 Andritz AG Fax: +45 72 160 390 Fax: +358 20 450 5540 Stattegger Strasse 18 E-Mail: [email protected] 8045 Graz Austria England Kraft Mill Systems Phone: +43 316 6902 0 Fax: +358 20 450 5190 Fax: +43 316 6902 415 Andritz Ltd. E-Mail: [email protected] Fiber Preparation Systems Unit B, Sheepbridge Centre Fax: +358 20 450 5422 Sheepbridge Lane, Chesterfield Andritz AG Derbyshire S41 9RX Pulp and Paper Mill Services Eibesbrunnergasse 20 England Address: Lasimestarintie 5 1120 Vienna Phone: +44 1 246 260660 Fax: +358 20 450 5048 Austria Fax: +44 1 246 260760 Phone: +43 1 81 195 0 E-Mail: [email protected] Works Fax: +43 1 81 37 645 Fax: +358 20 450 5045

Rolling Mills and Strip UMT Limited Processing Lines Stockholm Road Andritz Oy Phone: +43 1 81 195 0 Sutton Fields Industrial Estate Lypsyniemenkatu 5 Fax: +43 1 81 37 645 Hull HU7 0XL 57200 Savonlinna E-Mail: [email protected] England Finland Phone: +44 1482 82 5119 Phone: +358 20 450 5555 Mechanical Pulping Systems Fax: +44 1482 83 9806 Phone: +43 1 81 195 0 Fax: +358 20 450 6220 E-Mail: [email protected] Fax: +43 1 81 55 358 Frisby Extrusion Services Ltd. E-Mail: [email protected] Tyson Courtyard, Cronin Road Works Weldon South Ind. Est. Kraft Mill Systems Fax: +358 20 450 6239 Corby, Northants NN18 8AZ Phone: +43 1 81 195 6235 England Kraft Mill Systems Fax: +43 1 81 195 6301 Phone: +44 1536 263 545 Fax: +358 20 450 6336 Fax: +44 1536 205 184 E-Mail: [email protected] Fiber Preparation Systems Anstalt für Strömungsmaschinen Fax: +358 20 450 6384 Gesellschaft mbH Andritzer Reichsstrasse 68B Pulp and Paper Mill Services 8045 Graz Finland Fax: +358 20 450 6446 Austria Andritz Oy Tel.: +43 316 692 728 0 Tammasaarenkatu 1 Fax: +43 316 691 575 Andritz Oy 00180 Helsinki E-Mail: [email protected] Relanderinkatu 2 Finland 78200 Varkaus Phone: +358 20 450 5555 Finland Fax: +358 20 450 5150 Denmark Phone: +358 20 450 5555 E-Mail: [email protected] Fax: +358 20 450 5974 Sprout-Matador A/S E-Mail: [email protected] Andritz Oy Glentevej 5-7 Keskikankaantie 9 Päivärinne Works 6705 Esbjerg 15870 Hollola Address: Kiertotie 21-23 Denmark Finland Fax: +358 20 450 5971 Phone: +45 72 160 300 Phone: +358 20 450 5555 Fax: +45 72 160 301 Fax: +358 20 450 6711 Kraft Mill Systems/Recovery Boilers E-Mail: [email protected] E-Mail: [email protected] Address: Relanderinkatu 2 Fax: +358 20 450 5974

Andritz 2001

116 Andritz Group Companies

Kraft Mill Systems/Evaporators Germany U.M.T. Boxtel B.V. Address: Kiertotie 25 Ladonkseweg 1 B Fax: +358 20 450 5972 Andritz GmbH 5281 RN Boxtel Stephanopeler Strasse 22 Netherlands Pulp and Paper Mill Services 58675 Hemer Phone: +31 411 65 3500 Fax: +358 20 450 5975 Germany Fax: +31 411 65 3505 Phone: +49 2372 96 96 0 Thermtec B.V. France Fax: +49 2372 96 96 50 E-Mail: [email protected] Wijnhaven 76 3011 WT Rotterdam Andritz S.A. Andritz GmbH Netherlands 2-4 Avenue de l’Europe Heinkelstrasse 19-21 Phone: +31 10 413 7628 / 10 280 1660 78140 Vélizy-Villacoublay 73230 Kirchheim/Teck Fax: +31 10 404 7356 France Germany E-Mail: [email protected] Phone : +33 1 392 60 550 Phone: +49 7021 50 74 0 Fax : +33 1 392 60 560 Fax: +49 7021 50 7410 E-Mail: [email protected] Russia Andritz GmbH Andritz S.A. Industriestrasse 15A LLC Andritz Z.I. Zinsel 40802 Mettmann 4th Krasnoarmeiskaya Street 4A 67590 Schweighouse sur Germany 198005 St. Petersburg Moder Phone: +49 2104 91970 Russia France Fax: +49 2104 12054 Phone: +7 812 316 0913 Phone: +33 3880 72730 Fax: +7 812 110 1582 Fax: +33 3880 72732 Sundwig GmbH E-Mail: [email protected] Stephanopeler Strasse 22 58675 Hemer Spain Guinard Centrifugation S.A. Germany 2-4 Avenue de l’Europe Phone: +49 2372 54 0 Andritz Ingeniería S.A. 78140 Vélizy-Villacoublay Fax: +49 2372 54 200 Agustin y Antonia, 12 France E-Mail: [email protected] 28700 S. Sebastián de los Reyes Phone : +33 1 392 60 660 Madrid Fax : +33 1 392 60 666 Sundwig Kohler GmbH Spain E-Mail: Airport Lahr Phone : +34 91 663 6409 [email protected] Europastrasse A 65 Fax : +34 91 651 1931 77933 Lahr E-Mail : [email protected] Guinard Centrifugation S.A. Germany Allée de la Garenne – Z.I. Phone: +49 7821 9949 0 Andritz Ingeniería S.A. 36000 Châteauroux Fax: +49 7821 9949 100 Calle Riera, 11-bajos France E-Mail: [email protected] 08190 Sant Cugat del Vallés Phone : +33 2 54 61 3333 Barcelona Fax: +33 2 54 61 3300 Spain Netherlands Phone: +34 93 674 9482 Universal Milling Technology S.A. Fax: +34 93 674 9315 Za des Grillonnières U.M.T. Deurne B.V. 37270 Saint Martin Le Beau Indumastraat 9-13 France 5753 RJ Deurne Phone : +33 247 50 6364 Netherlands Fax : +33 247 50 2066 Phone : +31 493 31 4344 E-Mail: [email protected] Fax: +31 493 31 0030

Andritz 2001

117 Andritz Group Companies

Sweden Americas Canada

Andritz AB Brazil Andritz Ltd./Ltée. Artullsvägen 1 3339 rue Griffith Street 89121 Örnsköldsvik Andritz Ltda. Ville St-Laurent, Montreal Sweden Rua Tabapua, 627 cjt. 92 Quebec H4T 1W5 Phone: +46 660 295 300 Andar Canada Fax: +46 660 295 399 04533-012 São Paulo Mechanical Pulping Systems E-Mail: [email protected] Brazil Phone: +1 514 731 0404 Phone: +55 11 3168 6114 Fax: +1 514 731 8558 Andritz AB Fax: +55 11 3846 2098 Ivarshyttevägen 4 E-Mail: [email protected] 77633 Hedemora Andritz Brasil Ltda. Wood Processing Sweden Rua Presidente Faria, 248 – 10° Floor Phone: +1 514 738 3707 Phone: +46 225 63550 CEP 80020-290 Curitiba-PR Fax: +1 514 731 9422 Fax: +46 225 63551 Brazil E-Mail: [email protected] E-Mail: [email protected] Phone: +55 41 304 7611 Fax: +55 41 224 0014 Andritz AB Andritz Ltd./Ltée. Jakobsbergsvägen 2 Andritz Ltda. Service Center 82443 Hudiksvall Av. Presidente Castelo Branco, 1577, 45 Roy Blvd. Sweden Sala 203 Brantford Phone: +46 650 15570 Caixa Postal 32 – Cep. 29.160-970 – Ontario N3R 7K1 Fax: +46 650 15579 Carapina – Serra Canada E-Mail: [email protected] Espirito Santo Phone: +1 519 754 4590 Brazil Fax: +1 519 754 4594 Andritz AB Phone: +55 27 9941 8107 E-Mail: [email protected] Gräsdalsgatan 7 Fax: +55 27 3318 1761 65343 Karlstad E-Mail: [email protected] Andritz Ltd./Ltée. Sweden Service Center Phone: +46 54 55 54 50 Sprout-Matador do Brasil Ltda. 3448-78 Avenue Fax: +46 54 55 54 59 Rua Vicente de Fontoura, 2352/402 Edmonton E-Mail: [email protected] CEP 90460-002, Porto Alegre/RS Alberta T6B 2X9 Brazil Canada Andritz AB Phone: +55 51 3328 9850 Phone: +1 780 465 3344 Gävlegatan 22 Fax: +55 51 3328 8563 Fax: +1 780 440 4354 10031 Stockholm E-Mail: [email protected] Sweden Phone: +46 8 736 2500 Fax: +46 8 736 2529 Chile

Sprout-Matador A/S Chile Ltda. Seminaro 202 Puerto Montt Chile Phone: +56 65 434 366 Fax: +56 65 434 367 E-Mail: [email protected]

Andritz 2001

118 Andritz Group Companies

USA Andritz Inc. Andritz-Ruthner, Inc. 302 Research Drive, Suite 300 125 Technology Drive, Andritz Inc. Norcross GA 30092 Southpoint Industrial Park 10745 Westside Parkway USA Canonsburg, PA 15317 Alpharetta, GA 30004 USA Mechanical Pulping Systems USA Phone: +1 770 613 7050 Rolling Mills and Strip Processing Phone: +1 770 640 2500 Fax: +1 770 613 7055 Lines Fax: +1 770 640 9454 Phone: +1 724 745 7599 E-Mail: [email protected] Wood Processing Fax: +1 724 745 9570 Phone: +1 770 613 7000 Kraft Mill Systems E-Mail: [email protected] Fax: +1 770 613 7055 Fax: +1 770 640 2603

Pulp and Paper Mill Services Andritz-Ruthner, Inc. Fax: +1 770 640 2455 Andritz Inc. 110 Dickson Street Service Center Pittsburg, TX 75686 Wood Processing Cogswell Avenue Industrial Park USA Fax: +1 770 640 9454 Pell City, AL 35125 Phone: +1 903 856 0445 USA Feed Technology Fax: +1 903 856 3498 Phone: +1 205 338 3331 Fax: +1 770 640 2676 Fax: +1 205 338 3334 Durametal Corporation 9560 S.W. Herman Road Andritz Inc. Andritz Inc. Tualatin, OR 97062 TS Division 35 Sherman Street USA 8259 Melrose Drive Muncy, PA 17756 Phone: +1 503 692 0850 Lenexa, KS 66214 USA Fax: +1 503 692 1169 USA Phone: +1 570 546 8211 E-Mail: [email protected] Phone: +1 913 541 1703 Fax: +1 570 546 1306 Fax: +1 913 541 1631 E-Mail: [email protected] Durametal Corporation [email protected] 35 Sherman Street Andritz Inc. Muncy, PA 17756 Service Center Andritz Inc. USA 1565 Callens Road 101 Ridge Street Phone: +1 570 546 8211 Ventura, CA 93003 Glens Falls, NY 12804 Fax: +1 570 546 1312 USA USA E-Mail: [email protected] Phone: +1 805 642 7419 Phone: +1 518 793 5111 Fax: +1 805 642 7476 Fax: +1 518 793 1917 Voith Andritz Tissue LLC 101 South Main Street, Suite 400 Fiber Preparation Systems Andritz-Ruthner, Inc. Janesville, WI 53545 1010 Commercial Blvd. South Fax: +1 518 745 2858 USA Arlington, TX 76001 Phone: +1 608 758 5920 Pulp and Paper Mill Services USA Fax: +1 608 758 5935 Fax: +1 518 745 7005 Phone: +1 817 465 5611 E-Mail: [email protected] Fax: +1 817 468 3961 Fiberline R&D Facility E-Mail: [email protected] Fax: +1 518 745 2971

Andritz Inc. R&D Facility 3200 Upper Valley Pike Springfield, OH 45504 USA Phone: +1 937 390 3400 Fax: +1 937 390 6827

Andritz 2001

119 Andritz Group Companies

Asia Andritz Oy Australia Liaison Office 7, M.G. Bhawan, Flat No. 202-206 China Andritz Pty. Ltd. Local Shopping Centre, 56-58 Gaine Road Madangir Road Andritz-Kenflo Foshan Pump Co. Dandenong South, Victoria 3175 New Delhi 110 062 Ltd. Australia India 14 He Bin Road Phone: +61 38 795 9800 Phone: +91 11 608 3324 Foshan, Guangdong 528000 Fax: +61 39 799 4899 Fax: +91 11 608 1227 China E-Mail: [email protected] Phone: +86 757 280 2050 Enmas Andritz Limited Fax: +86 757 281 7010 V Floor, Guna Buildings Annexe, E-Mail: [email protected] New Zealand 304-305 Anna Salai, Teynampet Andritz AG Andritz (ANZ) Ltd. Chennai-600 018 Representative Office Beijing 1450 Alfriston Road India Catic Plaza, Room 1604 Alfriston Phone: +91 44 459 977 No. 18 Beichen East Road, Auckland 1750 Fax: +91 44 432 2412 Chaoyang District New Zealand 100101 Beijing Phone: +64 9 266 2641 China Fax: +64 9 266 2645 Phone: +86 10 8497 0637 Indonesia Fax: +86 10 8497 0638 PT. Andritz Indonesia E-Mail: [email protected] Gedung Bank Panin Pusat, 3rd Floor Africa JI. Jend. Sudirman 1 Andritz Oy Senayan, Jakarta 10270 Representative Office Beijing South Africa Indonesia 27-02 CITIC Building Phone: +62 21 725 0137 19 Jian Guo Men Wai Daije Andritz South Africa (Pty) Ltd. Fax: +62 21 571 0896 100004 Beijing Suite 105 A, York House, China Aubrey Drive Andritz AG Phone: +86 10 6500 6413 Glenashley 4022 Representative Office Jakarta Fax: +86 10 6500 6415 Durban Jln. HOS. Cokroaminoto No. 81 South Africa 2nd Floor, Jakarta Pusat Andritz Technologies Ltd. Phone: +27 31 562 8909 Indonesia 14 He Bin Road, Foshan Fax: +27 31 562 8936 Phone: +62 21 324 423 528000 Guangdong Province Fax: +62 21 324 753 China ‚ E-Mail: [email protected] Phone: +86 757 280 2046 Fax: +86 757 280 2047 E-mail: [email protected] Japan

India Andritz K. K. Toyo-cho, Shinei Bldg., 7F 4-chome 3-1 Toyo, Koto-ku, Andritz Technologies Pvt. Ltd. Tokyo Makam Plaza, 2nd Floor 135-0016 Japan No. 63/1, 3rd Main Road Phone: +81 3 5634 3450 18th Cross, Malleswaram Fax: +81 3 5634 3460 Bangalore-560 055 India Phone: +91 80 346 5995 Fax: +91 80 346 5997 E-Mail: [email protected]

Andritz 2001

120 Sales Range

Pulp and Paper Kraft Mill Systems

Fiberline systems Wood Processing / Cooking / Wood processing plants and equipment Washing / / Turnkey woodyards Knot separation and screening / / LogPorterTM portal cranes Oxygen delignification / / PowerFeedTM drum infeed conveyors Bleaching / / De-icing conveyors Bleached pulp screening / Slasher decks / Debarking drums Chemical recovery systems / / Drum - chipper process lines Black liquor evaporation / / HHQ-ChipperTM and other disc chippers Effluent evaporation / / Breakage chippers Condensate stripping / Heat recovery / Chip and bark processing plants and equipment Chemical recovery boilers / JetScreenTM / Chip screens Cooking liquor chemical preparation / / HQ-SizerTM for oversize management Recausticizing / / Rechippers White liquor oxidation / / Bark shredders Lime reburning / Bark presses

Conveying, stacking and reclaiming Mechanical Pulping Systems systems for chip and bark Refiner systems / TM TM Screw reclaimers like PowerScrew , CenterScrew , / Complete mechanical pulping systems from TM TM ParaScrew , and CantiScrew chip washer to final bleached pulp, including / TM Help pre-steaming bins and dischargers refining, screening, cleaning, dewatering and heat recovery systems Groundwood processing plants and equipment / Refiners for high, medium, and low-consistency / Automatic grinder charging systems systems / TM LogScan log-sorting system / Complete panelboard (HDF, MDF) refining systems / Control, simulation and training systems for Automation systems for woodyards all types of refiners and refiner systems / DrumMaticTM for debarking process optimization

/ TM LogScan for automatic log sorting Pulp washing and bleaching systems / TM BarkScan for wood-loss measurement / Medium and high-consistency bleach plants for / TM WoodScan for debarking degree measurement mechanical pulp and annual fibers / Bleaching stages based on peroxide, oxygen, ozone and dithionite / Wash presses / Medium and high-consistency mixers / Medium and high-consistency tower feed and discharge systems / Medium-consistency pumps

Andritz 2001

121 Sales Range

Dewatering systems Ventilation and Drying Equipment / Twin wire presses / High-efficiency Yankee dryer hoods / Screw presses / Hall ventilation systems / Paper and board machine ventilation systems Wet-end systems for market pulp / Impingement dryers for paper and board machines / Dewatering systems for sheet and flash drying / Web stabilizers and steam blow boxes / Heavy duty presses, shoe presses / Dust extraction systems / Web cross cutters and layboys / Bale transport and finishing lines

Pulp & Paper Mill Services

Fiber Preparation / OPETM agreements (Overall Production Efficiency) C Level: inspections, special maintenance, shutdown Paper machine approach systems maintenance / Screening B Level: C Level + continuous remote process and / Cleaning condition monitoring, responsibility / De-aeration for availability / Closed loops A Level: C + B Levels + maintenance, complete / White water treatment responsibility for Overall Production / Filler recovery Efficiency / Broke handling

/ Upgrades Recycled fiber systems - Modernization of old equipment for improved / Pulping systems including reliability and efficiency FibreFlow® drum pulping / Screening / Rebuilds / Cleaning - Reconditioning of wearing equipment / De-inking - Own service shops in Finland and USA / Disperging - Trained partner service shops in Portugal, / Bleaching South Africa, Brazil, Indonesia and New Zealand

Dewatering systems / Spare part services / Disc filters and disc thickeners (Hydrodisk) - Spare parts, wear parts / Twin wire presses - Inventory management / Screw presses / Gravity tables with PolyScan flocculent optimisation / Field services system - 24-hour emergency help / Screw presses and belt presses for sludge dewatering - Troubleshooting, optimization - Operator and maintenance training - Inspections and audits Tissue Machines (Voith Paper design) - Shutdown planning, coordination and work / Greenfield systems and modernizations / Crescent formers, S-Wrap and C-Wrap twin wire formers for single-ply or multi-layer sheet formation / Through-air dryers, TissueFlexTM shoe presses

Andritz 2001

122 Sales Range

Rolling Mills and Strip Regeneration and oxide plants Processing Lines / Plants for regeneration of waste acid and rinse water from pickling carbon steel (hydrochloric acid) and Equipment for the steel, stainless stainless steel (PYROMARS mixed acid process) / steel, non-ferrous metals and Plants for producing high-purity magnesium oxide aluminium industry Annealing furnaces Rolling mills / Vertical furnaces (including muffle furnaces) / Turnkey cold rolling mills / Horizontal furnaces / Two-high, four-high, combined mills and S-high mills / 6, 12, 20-high rolling mills Turnkey systems for producing / Skin-pass mills / Foils for screen masks / Roll adjustment and strip thickness regulation / Thermostatic bimetals systems / Razor blade strip / Flatness measuring and adjustment systems / Special material for the electronics industry / Stainless steel strip Strip Processing Lines / Push pickling lines / Continuous pickling lines for carbon steel / Annealing and pickling lines for hot-rolled stainless steel strip for cold-rolled stainless steel strip for hot and cold-rolled stainless steel strip with electrolytic or acid pickling (horizontal or vertical design) with horizontal furnaces / Degreasing plants / Electrolytic galvanizing lines (Gravitel) / Electrolytic tinning lines / Hot-dip galvanizing systems / Carbon-steel coating lines / Combined aluminium annealing and coating lines / Stainless steel bright annealing lines with vertical muffle furnaces / Grinding, sandblasting, polishing and customized surface treatment systems

Finishing Systems / Slitting lines / Cut-to-length lines / Packing lines for narrow and wide coils and for plates / Large levelling machines and precision levelling machines

Andritz 2001

123 Sales Range

Environment and Process Feed Technology Technologies Raw material size reduction Water Treatment / Hammermills / Sand filtration systems / Disc mill refiners / Roller mills Waste Water Treatment / Crumblers / Raked and perforated plate screens / Static and rotary screens and sieves Mixing of feed ingredients / Horizontal ribbon mixers Sludge thickening / Horizontal paddle mixers / Belt thickeners / Vertical mixers / Drum thickeners / Decanter centrifuges Weighing and metering / Hopper scales Sludge dewatering / Loss-in-weight weighing systems / Belt filter presses / Micro ingredients weighers / High-performance decanter centrifuges / Belt weighers / FlocSave flocculent preparation system / Liquid dosing equipment

Sludge drying Conditioning and expanding / Drum drying plants / Single-shaft conditioners / Fluidized bed drying plants / Twin-shaft conditioners / Thermal feed expanders Thermal sludge utilization / EcoDry granulate burning plant Pelleting / Pellet mills, gear driven Industrial solid/liquid separation / Pellet mills, belt driven / Hyperbaric pressure filters / Vacuum filters Extrusion / Belt filter presses / Single-screw extruders / Decanter centrifuges / Screen centrifuges Drying and cooling of pellets / Horizontal belt dryers / Horizontal belt coolers / Counter-flow coolers

Coating of pellets / Drum coaters / Vacuum coaters / Micro fluid systems

Andritz 2001

124 Sales Range

Dust separation filters Hydraulic Machines / Filters for conveyor aspiration / Rectangular free standing filters Water turbines / Modularly built filters / Kaplan turbines / Cylindrical free standing filters / Francis turbines / Intake hopper filters / Pelton turbines / Storage pumps Material separation and cleaning / Shut-off devices / Roto-shaker screeners / Compact turbines / Rotary feed dressers / Turbine governors

Conveying equipment Large-scale pumps / Chain conveyors / Axial-flow pumps / Bucket elevators / Mixed-flow pumps / Screw conveyors / Volute casing pumps / Rotary valves / Pumping stations

Process controls Centrifugal pumps / Pellet mill/Feed expander controls / Stock pumps / Extruder controls / Medium-consistency pumps / Dryer/Cooler controls / Fan pumps / Hammermill controls / Pumps for flue-gas desulphurization systems / Weight controls

Reactor pumps Wear and spare parts / Main-coolant pumps / Pellet mill dies and rolls / Secondary-loop pumps / Expander and extruder screws / Components for handling fuel elements / Extruder dies and barrels / Hammermill screens and hammers Space technology / Components for launcher rockets

Andritz 2001

125 Notes

Andritz 2001

126 Notes

Andritz 2001

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