Dear Shareholders, - Von Roll

08 Overview Von RollCorporate GovernanceFinancial ReportingGlossary6–5152–6768–127128–134Dear Shareholders,Just six months have passed since I took onmy new role in the Board of Directors and asthe Chairman of the Executive Management ofVon Roll Holding AG. During the first 100 days,I met with many of our employees, customersand investors. We had extremely interestingdiscussions that contained many concrete suggestionsabout how we can become even better.I can assure you that we will continue todiscuss and work uncompromisingly on implementingthese suggestions and capitalizing onVon Roll’s potential for optimization that I andmy Executive Management colleagues haveidentified, which will pave the way for the successfulfuture of the company.A Successful Business Year in 20072007 was an important year in setting thecourse in our company’s long and varied history.The year saw successes, changes, andalso major challenges, some of which we havealready overcome and some that we still needto address. What were the highlights of the pastyear?The capital increase completed in October withgross proceeds of around CHF 323 million freesVon Roll up to invest further in new growth marketswithout neglecting its existing and successfulcore business. In our operational business,this means that we can concentrate morefully on achieving our goals over the long run.We were able to close out the business yearwith a very positive result. Group sales rose by16.6 percent to CHF 620 million. This figuremeans that we grew faster than the market andwere able to expand our market shares accordingly.Order intake increased from the previousyear by 18.5 percent to CHF 681 million. Theoperating result rose by 36.1 percent from theprevious year to CHF 48 million. Company earningsafter tax amounted to CHF 43 million. Thisreflects growth of 81.8 percent over the previousyear. Based on the positive result of theindividual finanical statement of Von Roll HoldingAG, the Board of Directors recommends adividend payment of CHF 0.10 per share for the2007 business year to the General Meeting ofShareholders.Global TrendsThe way that our business develops in thefuture will also be influenced by two globalmegatrends: demographic changes and urbanization.They will determine our business environmentover the long run and create considerablechallenges that we are already gettingready for today: a look at projections for theenergy markets of tomorrow shows that growthwill continue in the years to come despite discussionsabout a reduction in energy consumption.In 2007, the “Energy Information Administration”of the US Department of Energy (DOE)predicted an increase in global energy conReconciliation of operating incomein CHF 1,000 2007 2006Operating income 44,157 27,316Impairment 446 8,443Costs for extraordinary shareholders’ meeting 1,602 0Costs for termination of contracts with previous management 1,884 0Profit/loss from sale of fixed assets 10 –421Operating income (adjusted) 48,099 35,338

09 Overview Von RollCorporate GovernanceFinancial ReportingGlossary6–5152–6768–127128–134sumption of 57 percent by the year 2030 inits study entitled “System for the Analysis ofGlobal Energy Markets”. Accordingly, demandfor electronic and thermal insulation materialsand composites for various industrial applicationswill increase significantly.Portfolio Policy and PerformanceAs the global leader for insulation products,systems and services and as one of the industrialcompanies in Switzerland with the longesttraditions, we still currently focus on productsfor power production. In keeping with our acquisitionstrategy, we will invest in key technologiesthat will play an increasingly importantrole as global trends develop. These include,for example, technologies to supply scarce resourcessuch as energy and water and componentsto support various industries.Active portfolio management is thus an importantcornerstone of our strategy and simultaneouslyserves as both the basis of and an externalbenchmark for our performance. We willorient our portfolio around profitable growth.Which makes our strategic objective 100 percentclear: we want to be number one or twoin all markets that we are active in.The purchase of Shenzhen Mica is an excellentexample: Shenzhen Mica is the global marketleader of fire-resistant, mica-based cable tapesand thermal insulation sheets. With the completionof the 100 percent takeover on January11, 2008, we have once again become numberone on the market for mica-based and insulationproducts and we were able to furtherstrengthen our technological leadership in insulationmaterials. We have also secured longtermaccess to key raw material sources andtaken another step on the dynamically growingChinese market. We were also able to expandour position on the American, Asian andEuropean markets with the July 2007 acquisitionof the resin and varnish manufacturer JohnC. Dolph Company.Operational ExcellenceIn addition to the strategic realignment of ourcompany, we will focus our attention on improvingthe operating results of our business unitsin the coming months. Our goal is to steadilyincrease margins. We plan to achieve this goalby being successful among our global competitorsand providing outstanding performanceto our customers. Innovation, customer orientationand global competitiveness are the threemain areas of our focus. If we manage to putthem into practice, we will successfully overcomethe challenges posed by new markets.The Executive Management has spent a lot oftime over the last few months familiarizing itselfwith Von Roll’s strengths and weaknesses.Through this process, we have identified a numberof measures, some of which have alreadybeen implemented, that can boost the operationalefficiency of the business units. These include,for example, a price structure optimizationprogram, centralized procurement of rawmaterials and supplies needed around theworld and activities to reduce overheads.We are currently planning to restructure productioninto three cost-optimized productioncenters in Asia, Europe and America that aresupported by other sites that act as satellites.The European hub will be the traditional locationin Breitenbach. In a second step, we willharmonize the organizational and sales structureswith the company’s strategic realignment.In the new regionally organized structure, Von

Roll will be the central contact in the countriesin which we are active. In particular, we will givethe regional offi ces more sales responsibilityand those responsible on site will have additionalfreedom when dealing with our customers.Corporate CultureTo reach the goals described, all Von Roll employeesneed to base their actions on clearlydefi ned values. We thus initiated a process thatstrongly promotes the accountability of eachindividual Von Roll employee. We are strivingto create a corporate culture that is results-orientedand has our customers’ interests as itscore. To achieve this, we have to interact witheach other on the basis of mutual respect andacknowledgment, deal constructively with conflicts and more strongly encourage creative andinnovative thinking. The fi rst signs of thischange are already visible: greater transparency,improved communication and clearer responsibilities.over the long run – as long as the overall globaleconomic conditions continue to stay favorable.We guarantee you that we will continue to focusall of our energy on the interests of ourshareholders, our customers and our employees.The new course that our company is embarkingon would not have been possible withoutyour trust, your dedication and yoursolidarity. Which is why I extend our specialthanks to you.Au ZH, March 2008Thomas P. LimbergerChairman of the Board of Directors & CEO2008 Business Year – Global OpportunitiesWe are looking confi dently into the future. Thestrategic realignment of Von Roll is off to a goodstart: we have used the last six months to setnew standards for Von Roll in profi tability andvalue creation. We are planning to expand ourportfolio as the next key step in securing a successfulfuture. The resources generated fromthe capital increase will help us in this respect.For 2008, we have set clear performance targetsas part of our work program: a further increasein the EBIT margin with above averagemarket growth. We are confi dent that we willbe able to reach these ambitious goals andthus contribute to Von Roll’s profi table growth