Autoneum Annual Report 2015

Plain-text annual report

5 1 0 2 t r o p e R l a u n n A m u e n o t u A Annual Report 2015 Autoneum is the global market and technology leader in acoustic and thermal management for vehicles. The company is a partner for the major light vehicle manufacturers around the world. Autoneum develops and produces multifunctional and lightweight com- ponents and systems for optimal protection against noise and heat. Autoneum’s innovations make vehicles quieter, lighter and safer and help to reduce fuel consumption and emissions. Key figures > Autoneum Annual Report 2015 Autoneum at a glance Net sales CHF million 1 954.7 2 085.9 EBIT CHF million 135.1 158.0* 2014 2015 2014 2015 4% 9% 40% Net sales by region 47% Net profit CHF million 102.8 36.268.7 Operating cash flow 2014 2015 CHF million 138.2 143.2* 2014 2015 9% 15% 39% Employees by region 37% Business Group Europe/Corporate Business Group North America Business Group Asia Business Group SAMEA *before non-recurring expenses Autoneum Annual Report 2015 Contents 1 Group report 02 Letter to shareholders 10 Business year at a glance 15 Autoneum from A to Z 42 Sustainability 44 Corporate Governance Financial report 62 Consolidated financial statements 104 Remuneration report 109 Financial statements of Autoneum Holding Ltd 119 Review 2011–2015 122 Important dates 2 Autoneum Annual Report 2015 Letter to shareholders Strong sales growth – further increase in profitability Dear shareholders Operational excellence, innovation leadership and the globally balanced production network of Autoneum have once again paid off in the past financial year: Despite a challenging market environment with corresponding economic headwinds triggered by a slump in demand in South America and Russia, Autoneum not only increased sales remarkably but was also operationally more profitable than ever. Notwithstanding the lower year-on-year net profit due to non-recurring expenses and a normalized tax ratio, the Board of Directors proposes an unchanged dividend of CHF 4.50 per share. Strong sales growth in weak market environment With 88.6 million light vehicles produced and a growth rate of only 1.4%, the global automotive industry in 2015 recorded its weakest growth momentum since the automotive crisis of 2009. While automobile production in Europe, North America and Asia grew, production volume in South America decreased due to the economic crisis and the related drop in demand over the previous year. In this low-impulse market environment, Autoneum was able to increase net sales in local currencies by 10.6% and thus significantly exceeded global market growth thanks to a good order situation and the corre- Autoneum Annual Report 2015 Letter to shareholders 3 Hans-Peter Schwald – Chairman of the Board Martin Hirzel – Chief Executive Officer sponding utilization of production capacities. Despite the strength of the Swiss franc, net sales in the company currency rose by 6.7% from CHF 1 954.7 million to CHF 2 085.9 million. Except Business Group SAMEA (South America, Middle East and Africa), all business groups contributed to this rise in sales. margin of 10.7% surpassed the previous year’s already high level. EBITDA after non-recurring expenses totaled CHF 191.5 million (2014: CHF 201.6 million). EBIT before non-recurring expenses improved by CHF 22.8 million to CHF 158.0 million. The EBIT margin of 7.6% surpassed the previous year’s margin by Profitability further increased Autoneum’s ongoing rise in profitability also continued through 2015. EBITDA increased by CHF 21.5 million to CHF 223.0 million before non-recurring expenses in relation to the payment of CHF 31.5 million to the German Federal Cartel Office. Accordingly, the EBITDA 7.6% The EBIT margin before non-recurring expenses improved from 6.9% to 7.6%. 4 Autoneum Annual Report 2015 Letter to shareholders High capacity utilization, material efficiency and operational excellence contributed to the once again improved results. 0.7 percentage points and exceeded the 7% mark for the first time in company history. High capacity utilization in Europe, material efficiency in North America and Asia as well as the increased productivity thanks to operational excellence contributed to the once again improved results. EBIT after non-recurring expenses amounted to CHF 126.5 million (2014: CHF 135.1 million). Investments in expansion of global presence Net profit decreased on the previous year by CHF 34.1 million to CHF 68.7 million. Despite the further improved operating result, non-recurring expenses associated with the payment to the German Federal Cartel Office and a higher tax burden resulted in the lower net profit. Whereas benefits from loss carryforwards recognized in 2014 led to a disproportionately low tax ratio of 14.4%, after adjustment for non-recurring expenses in relation to the payment to the German Federal Cartel Office, the tax ratio again attained a sustainable level of 28.8%. Invest- ments made predominantly to expand global presence, including in the US plants in Jeffersonville, Indiana, and Monroe, Ohio, and in the relocation of a Brazilian plant, amounted to CHF 120.7 million (2014: CHF 101.9 million). Operating cash flow decreased by CHF 26.5 million to CHF 111.7 million (2014: CHF 138.2 million) due to the payment to the German Federal Cartel Office, operational losses at Business Group SAMEA and the higher net working capital at December 31, 2015. The lower net profit also took effect on the total return on net assets (RONA), which at 17.7% before non-recurring expenses stood below the previous year’s level, but again significantly exceeded the cost of capital. The equity ratio of 35.7% was unchanged compared to the prior year. The decisive cause of net debt rising to CHF 105.4 million (2014: CHF 53.9 million) was a payment of CHF 31.5 million to the German Federal Cartel Office in June 2015. Earnings per share before non-recurring expenses were at CHF 15.92 (2014: CHF 17.03), and cash and cash equivalents on December 31, 2015, to- taled CHF 78.7 million (2014: CHF 140.9 million). Dividend payout at prior year’s level proposed Despite the lower year-on-year net profit, the Board of Directors will propose to the Annual General Meeting on March 30, 2016, the payment of an unchanged dividend of CHF 4.50 per share. Business Groups Net sales of Business Group Europe went up in 2015 by 13.1% in local currencies due to numerous production ramp-ups and thus signi- ficantly surpassed the already dynamic market growth in this region. Due to pronounced currency effects, net sales in Swiss francs only grew by 3.7% to CHF 833.2 million (2014: CHF 803.3 million). Crucial to the rise in EBIT of Business Group Europe from CHF 31.7 million to CHF 44.7 million was strong capacity utilization due to high-volume customer orders for models of European and Korean OEMs and gains in productivity through material efficiency, which among other things included lower scrap rates in production. The EBIT Autoneum Annual Report 2015 Letter to shareholders 5 Financial highlights CHF million Autoneum Group Net sales EBITDA EBITDA adjusted2 EBIT EBIT adjusted2 Net profit Net profit adjusted2 Return on net assets in % (RONA)3 Return on net assets in % (RONA) adjusted2,3 Operating cash flow Operating cash flow adjusted2 Investments in tangible and intangible assets Net debt at December 31 Employees at December 314 BG Europe Net sales EBIT BG North America Net sales EBIT BG Asia Net sales EBIT BG SAMEA5 Net sales EBIT 2015 2014 Change 2 085.9 100.0% 1 954.7 100.0% Organic growth1 10.6% 191.5 223.0 126.5 158.0 68.7 100.2 12.7% 17.7% 111.7 143.2 120.7 105.4 11 423 9.2% 10.7% 6.1% 7.6% 3.3% 4.8% 5.8% 201.6 201.6 135.1 135.1 102.8 102.8 20.3% 20.3% 138.2 138.2 101.9 53.9 10 681 10.3% 10.3% 6.9% 6.9% 6.7% –5.0% 10.6% –6.4% 16.9% 5.3% –33.2% 5.3% –2.5% 5.2% 6.9% 833.2 100.0% 803.3 100.0% 3.7% 13.1% 44.7 5.4% 31.7 3.9% 977.9 100.0% 882.7 100.0% 10.8% 8.8% 91.7 9.4% 75.1 8.5% 180.9 100.0% 145.3 100.0% 24.5% 20.6% 25.0 13.8% 19.9 13.7% 94.3 100.0% 123.9 100.0% –23.9% –5.7% –12.5 –13.3% 1.5 1.2% Share AUTN Share price at December 31 in CHF Market capitalization at December 31 Basic earnings per share in CHF Dividend per share in CHF6 202.40 938.1 9.12 4.50 169.50 783.0 17.03 4.50 19.4% 19.8% –46.4% 1 Change in local currencies. 2 EBITDA, EBIT, Net profit, RONA and Operating cash flow are disclosed before expenses in relation to the settlement with the German Federal Cartel Office in the amount of CHF 31.5 million in 2015. 3 Net profit before interest expenses in relation to average equity plus interest bearing liabilities. 4 Full-time equivalents including temporary employees but excluding apprentices. 5 Including South America, Middle East and Africa. 6 As proposed by the Board of Directors and subject to the approval of the Annual General Meeting. 6 Autoneum Annual Report 2015 Letter to shareholders 2 085.9 CHF million Net sales increased by 6.7% to CHF 2 085.9 million. In 2015, nearly 89 million light vehicles were produced globally. Earnings per share were at CHF 15.92.* 11 423 Autoneum employs more than 11 000 people worldwide. In a weak market environment, Autoneum not only increased net sales significantly in 2015, but was also operationally more profitable than ever before. Autoneum Annual Report 2015 Letter to shareholders 7 7.6 % The EBIT margin reached a new peak at 7.6%.* 10.6 % Autoneum achieved a double digit growth in net sales in local currencies. RONA % 7 7. 1 WACC % 5 8 . 158.0 CHF million EBIT rose by 16.9% to CHF 158.0 million.* 68.7 CHF million Due to non-recurring expenses, net profit decreased to CHF 68.7 million. The return on net assets (RONA) of 17.7% significantly surpassed the cost of capital (WACC).* * before non-recurring expenses 8 Autoneum Annual Report 2015 Letter to shareholders margin accordingly reached 5.4% of net sales for the first time, surpassing the previous year’s margin by 1.4 percentage points. Business Group North America grew organ ically by 8.8% in the reporting year. This was the result of supply for high-volume US and Japanese models. Almost all of the 15 best- selling car models in the USA were equipped with Autoneum products. Net sales in Swiss francs rose by 10.8% to CHF 977.9 million (2014: CHF 882.7 million). EBIT increased by CHF 16.6 million to CHF 91.7 million (2014: CHF 75.1 million). The EBIT margin of 9.4% was 0.9 percentage points above that of the previous year. The result achieved in North America improved thanks to lower material costs and the further expansion of vertical integration. Almost all of the 15 best-selling car models in the USA were equipped with Autoneum products. Business Group Asia again reported striking sales growth of 20.6% in local currencies, achieved through extensive series start-ups for models of international and local OEMs and with Japanese customers who were overpropor- tionately successful in China. In Swiss francs, sales improved by 24.5% to CHF 180.9 million (2014: CHF 145.3 million). EBIT of Business Group Asia rose by CHF 5.1 million to CHF 25.0 million, corresponding to a further increase in the EBIT margin to 13.8%. Material efficiency and continuous improvement of production standards contributed to the high EBIT margin. Net sales of Business Group SAMEA were decimated by the collapse in the main market Brazil. Whereas sales in local currencies declined by 5.7%, due to significant devaluation of the Brazilian real and Argentine peso, net sales in Swiss francs were reduced by 23.9% to CHF 94.3 million (2014: CHF 123.9 million). EBIT declined from CHF 1.5 million in the previous year to CHF –12.5 million. Burdening the result of Business Group SAMEA was the ongoing recession and associated massive drop in demand in Brazil, as well as non-recurring expenses associated with relocating a Brazilian plant. High production volumes in Turkey and South Africa were able to partly offset the declines in South American production. Changes to the Group Executive Board The Board of Directors of Autoneum Holding Ltd appointed Andreas Kolf as Head of Business Group Asia and member of the Group Executive Board of Autoneum Holding Ltd as of March 1, 2016. Andreas Kolf has many years of experi- ence as a managing director of international automotive suppliers and a profound knowledge of the Asian automotive market. He succeeds Dr Uwe Trautmann, who made a personal decision to leave the company at the end of February 2016 and return to Europe after 20 years in Asia. Uwe Trautmann headed Business Group Asia from 2007 until 2011 as a member of the Executive Committee of the Automotive Systems Division of Rieter Holding Ltd and served on the Group Executive Board of Autoneum Holding Ltd since its foundation in May 2011. The Board of Directors of Autoneum Holding Ltd and CEO Martin Hirzel regret Uwe Trautmann’s resigna- tion, thank him for his major contribution to the development of Business Group Asia and wish him all the best for this new stage in his life. Volker Eimertenbrink, Head of Business Group SAMEA and member of the Group Executive Board of Autoneum Holding Ltd, left Autoneum at the end of 2015 to take on new professional challenges. He assumed manage- ment of the Business Group SAMEA in March 2012. From 2008 until the separation of Autoneum in 2011, Volker Eimertenbrink was Autoneum Annual Report 2015 Letter to shareholders 9 CFO and member of the Executive Committee of the Automotive Systems Division of Rieter Holding Ltd. The Board of Directors of Autoneum Holding Ltd and CEO Martin Hirzel thank Volker Eimertenbrink for the work he has done and his loyal service to the company and wish him all the best for the future. The Board of Directors has appointed Fausto Bigi as his successor and member of the Group Executive Board. Fausto Bigi has long-standing experience in the global automotive supplier industry. He was already in charge of the South American business of the Automotive Systems Division of Rieter Holding Ltd from 2008 to 2011 and following the separation additionally held office at Autoneum as Deputy Head of Business Group SAMEA until 2012. The Brazilian citizen has taken over management of Business Group SAMEA on March 1, 2016, from CFO Dr Martin Zwyssig, who held charge temporarily since January 1, 2016. In order to ensure optimum control of the key SAMEA market of Brazil, the headquarters of the Business Group has been transferred from Winterthur, Switzerland, to São Paulo, Brazil. Outlook In 2016, a rise in global automobile production of 3% to approximately 91 million light vehicles is anticipated. By continuing its existing successful strategy implementation, Autoneum expects to increase net sales in local currencies in line with its mid-term financial targets by 4% to 5%. The Group’s 2015 operating margin should be exceeded in 2016. In 2016, Autoneum expects to increase net sales in local currencies by 4% to 5% and to exceed the Group’s 2015 operating margin. Thank you On behalf of the Board of Directors and the Group Executive Board, our thanks go to all associated with Autoneum: shareholders, customers and business partners with whom we share a trusting relationship, as well as to more than 11 000 employees worldwide who made the successes of the past years possible. Winterthur, March 2, 2016 Hans-Peter Schwald Chairman of the Board Martin Hirzel Chief Executive Officer 10 Autoneum Annual Report 2015 Business year at a glance Shaping the future by innovation leadership 2015 demonstrated how Autoneum’s success rests on intrinsic strengths: Innovation leadership, a broad customer base and global presence were instrumental to Autoneum and enabled it to successfully balance out a cyclically-induced decline in demand in major automotive markets. While the number of vehicles produced worldwide has hardly increased, Autoneum showed not only significant organic growth but also gained new customers and implemented a record number of successful production launches. Expertise at the service of consumers and the environment 2015 was focused more than ever on acoustic and thermal management for vehicles. Growth in regulation of traffic-related environmental burdens has led to continuing strong demand for lightweight components that combine noise and heat protection while reducing vehicle weight, fuel consumption and emissions. Looking ahead, demand for fuel-saving and aerodynamic Autoneum components will further intensify with the introduction of new vehicle test cycles that take into account higher speeds and accelerations. Measurement systems developed by Autoneum based on many years of expertise are now in worldwide use by the automotive industry, enabling automobile manufacturers to reliably predict the reduction potential of parts and systems even at the predevelopment stage. Faced with continuing high demand for the Isokell measuring system, in 2015 Autoneum launched a new version that measures the airborne noise insulation and the transmission loss of flat material samples as well as of formed components such as inner dashes or carpet systems. Beyond its products, Autoneum contributes to increasing driving comfort with measuring systems such as Isokell. Autoneum Annual Report 2015 Business year at a glance 11 provided barely any impulse with a year-on- year growth rate of only 1.4% and the automo- bile industry in South America and Russia experienced significant slumps in demand and production, Autoneum profited from numerous successful production ramp-ups as well as from the diverse and balanced customer base. It was broadened again in 2015 with the addition of local and international OEMs. In accordance with the strategic priority not only to generate sales but also to grow profitably, the record highs in operational profitability attained in past years were again exceeded. Thus, the EBIT margin before non-recurring expenses in relation to the payment of CHF 31.5 million to the German Federal Cartel Office reached 7.6%, surpassing the 7% mark for the first time in company history. After non-recurring expenses and due to a normalized tax ratio, net profit declined to CHF 68.7 million. There was also impressive confirmation of the company’s acoustics expertise in the reporting year. Once again, Autoneum was scientific leader of the Automotive Acoustics Conference held in June at the Swiss Federal Institute of Technology (ETH) in Zurich, Switzerland. At the 2015 conference, more than 200 experts and representatives of car manufacturers, suppliers and research institutions from 20 countries discussed challenges associated with new regulations in the field of vehicle acoustics. Numerous international customers attended a regional edition of the conference held in Detroit, Michigan, USA. Autoneum mounts in-house exhibitions at automobile manufactur- ers to present the extensive benefits of its product innovations to existing and potential customers. In 2015 these “Innovation Days” took place at various US OEMs in China and for the first time at a leading Korean OEM in its home market. Items on show included Theta-FiberCell engine encapsulations, underbody shields made of Ultra-Silent and Clean-Tuft technology for carpets. Growth path continued With a sales increase of more than 10% in local currencies, Autoneum achieved strong organic growth in 2015. Despite the strength of the Swiss franc, sales measured in the Group’s reporting currency also increased clearly. This market success was achieved in particular thanks to a good order situation and correspondingly high production volumes in Europe, North America and Asia. Whereas global automotive production Customer-driven expansion Autoneum further expanded its global presence in 2015 in accordance with high demand. In Mexico, Autoneum laid the foundation for a third production site and thus strengthened its position in this important North American growth market. The plant located in San Luis Potosí, approximately 400 kilometers northwest of Mexico City, will start the production of inner dashes, floor insulators and carpet systems in early 2017. From this 26 000-square-meter facility, Autoneum is to supply US and German OEMs producing locally for the North American 12 Autoneum Annual Report 2015 Business year at a glance market. US plants in Jeffersonville, Indiana, and Monroe, Ohio, which were newly put into operation in 2015, started the manufacturing of carpet systems and underbody shields for US and Japanese customers. Production capaci- ties at the Chinese plants in Taicang, Shenyang and Guangzhou were further extended in order to industrialize extensive existing serial orders for European, US and Chinese customers. In order to provide internationally producing customers with the accustomed high product quality for their South American manufacturing facilities too, an existing plant within the metropolitan area of São Paulo, Brazil, was relocated and its machinery renewed in line with the latest production standards. A variety of model ramp-ups resulted in high utilization of European, North American and Asian production capacity. Along with series production for models of European premium and volume OEMs, there was first-time supply of carpet systems, heatshields and hoodliners to a Korean OEM in Europe. In the USA, Autoneum shared in the market success of its customers, for example as evidenced by the fact that almost all of the 15 best-selling 2015 car models in the USA were fitted with products from Autoneum. New launches in China and India strengthened the market position of Autoneum at US custom- ers, while sales to Chinese OEMs increased further through supply of heatshields. Meanwhile, numerous large orders obtained in 2015 secure Autoneum’s future sales growth. These include high-volume orders for carpet systems from a German premium manufacturer in Europe as well as orders to supply textile underbody systems to the US production plants of German and Japanese customers and to produce carpet systems, heatshields and hoodliners for a Swedish OEM as part of its expansion program in China. Driving innovation in multifunctional lightweight components In the reporting year Autoneum again proved its innovation leadership in acoustic and thermal management with forward-looking products. With Clean-Tuft, the market leader extended its range of high-quality carpets by offering premi- um-quality tufted carpets for compact and mid-class vehicles, too. The innovative Clean-Tuft technology offers significant added value in terms of cleanability and durability compared to the needlepunch carpets commonly found in these classes of vehicles. With Prime-Light, an innovative quantum leap in inner dashes and floor insulators was achieved. Prime-Light marks the latest advancement of Autoneum’s successful Ultra-Light technology: Compared to previous Ultra-Light variants, components made from Prime-Light are even lighter and can also be pressed into many different shapes and thicknesses. Thus they adjust perfectly to the individual body-in-white shapes and take account of increasingly complex manufacturing processes in vehicle construction. Prime-Light- based inner dashes and floor insulators are made of thermoplastic cotton felt compounds, and depending on the specific application may contain up to 50% recycled materials. Prime-Light will be produced in series for models of US OEMs in North America and China as of 2016. To support OEMs in meeting globally in - creasing requirements for vehicle emissions and noise reduction, Autoneum now offers multifunc- tional engine covers made of Theta-FiberCell. This key technology takes into account customer-specific product requirements such as optimum noise protection and integrated thermal insulation. Compared to conventional engine covers made of plastic, Theta-FiberCell engine covers are lighter by over 50%, which corresponds to a weight reduction of up to one kilogram per vehicle. At the same time they absorb engine noise and thus contribute to improved acoustics in the passenger compart- ment, less exterior noise and enhanced driving comfort. Engine covers currently manu- factured in Europe will be produced in Asia and the USA in future as well. Autoneum Annual Report 2015 Business year at a glance 13 this improves ergonomics for manufacturing staff, while on the other hand, recycling or reuse of industrial waste minimizes the environmental impact of the produced components. In addi- tion, over 25 flawless new start-ups impressively demonstrated in 2015 the level of operational excellence that Autoneum has reached in its production processes since the separation in 2011. This was only possible due to a consis- tently implemented focus on process standard- ization and global best practice sharing. Opera- tional excellence was also decisive in maintaining profitability of the only Swiss production site in Sevelen, which produces predominantly for the eurozone, despite the abolishment of the euro/Swiss franc minimum exchange rate in January 2015 and the currency’s ensuing strength. Operational excellence as key success factor Continuous efficiency improvements are not only a central pillar of an automotive supplier’s business model but also represent a decisive competitive factor. It follows that operational excellence in all business areas is indispensable. Autoneum has launched eight “Group Initia- tives” encompassing various production-related topics, including recycling, maintenance and energy management and performs regular checks on their implementation at every site worldwide. One of these initiatives to implement standardized manufacturing processes in all plants is the Mizusumashi train. A Mizusumashi train is an electrically driven tugger that ensures optimal distribution of material on the shop- floor, to and from workers at their machines, in alignment with production processes. Applying this rhythm to the material flow reduces costs and energy consumption and increases production safety as well by substituting for forklifts. Another cost-saving effect is achieved through the use of exhaust systems for produc- tion waste, which are being introduced gradually across all production sites. On the one hand, Living our values – commitment to social responsibility The value-based High Performance Culture introduced in 2012 is both a framework and a guideline for the daily actions of our employ- ees. It is to be exemplified by executives of the company and adapted accordingly by staff. At the same time, the strong focus on corporate values implies particular attention to the needs of employees. Consequently, based on results of an employee satisfaction survey first conducted in 2014, concrete measures were defined and introduced in 2015. Among them was the introduction of local “Kaizen” officers to ensure the systematic collection and implementation of suggestions for improvement at their respective 14 Autoneum Annual Report 2015 Business year at a glance Autoneum sites. Within the scope of extending the company’s training and education program, executives at more than 20 plants for the first time received instruction in accordance with the “Engage Your Team” concept. In order to ensure full observance of legal and internal requirements in business transactions, Autoneum significantly expanded the 2015 course program in the area of compliance, with mandatory e-learning programs and trainings being introduced. Recognizing their social responsibility, almost all sites ran charitable CSR (Corporate Social Responsibility) activities in the reporting year. These included, for example, a golf tournament held annually at the Autoneum site in Bloomsburg, Pennsylvania, USA. Around 140 participants brought in more than 55 000 US dollars, which was donated to a charitable organization. On the occasion of “Breast Cancer Awareness Month” employees at the British plants and North American headquarters collected donations that went to benefit cancer research. Personnel at the Chinese plant in Guangzhou organized a charity bazaar, with proceeds going to support the fire department in Tianjin. Autoneumfrom A to Z What does “Operational Excellence” mean? How do engine encapsulations reduce vehicle emissions? And how is “Kaizen” implemented? Discover the world of Autoneum from A to Z! Autoneumfrom A to Z16 Customers of Autoneum: 17 A The automotive industry is a growth Automotive Industry industry driven by innovation and one of the most important global economic sectors. As the leading supplier of acoustic and thermal management solutions and one of the world’s top 100 suppliers, Autoneum produces components for almost all automobile manufacturers that make cars quieter, lighter and safer. Thanks to Autoneum, OEMs offer their customers not only driving comfort but also a sustainable driving experience. 18 B Autoneum is divided into four Business Business Groups Groups by region: Business Group Europe, Business Group North America, Business Group Asia and Business Group SAMEA (South America, Middle East and Africa). Almost 90% of Autoneum’s net sales are currently generated in Europe and North America. By 2020, the growth markets of Asia and SAMEA will already account for over 20% of the company’s sales. The decisive factor here is growth with global and regional customers in Asia – not only in China as the world’s largest automobile market, but also in Thailand, South Korea and India. BG Europe BG North America BG Asia BG SAMEA C CO2 CO2 emissions of vehicles are subject to increasing global regulation. For example, automobile manufacturers in the European Union are being required to reduce the average CO2 emissions of a vehicle from 130 grams at present to 95 grams per kilometer driven from 2021. The lightweight and aerodynamic products of Autoneum help to achieve this by reducing vehicle weight and fuel consumption, which in turn means lower emissions. 19 D While until now importance was attached primarily to reducing Decibel interior vehicle noise, in future the focus will be on reduction of exterior noise. Currently, light vehicles in the European Union are allowed to be up to 74 decibels loud – from 2025 onward, the limit will be 68 decibels. This means that four cars will then only be allowed to make as much noise as a single vehicle today. In order to achieve this reduction, Autoneum’s long-standing acoustics expertise is indispensable. E EHS – Environment, Health and Safety Whether on the shopfloor or in the office – safety always comes first at Autoneum. For this reason, training courses are held each year at all the company’s 50 locations that address various aspects such as the correct and safe operation of machines or power-saving work processes. The targeted further training of internal specialists to conduct these training courses makes a decisive contribution to the high safety standards at Autoneum. F Autoneum uses textile fibers Fibers for the manufacture of innovative Prime-Light inner dashes and floor insulators. Fiber-based products are particularly light and at the same time absorb interior and exterior vehicle noise. Lightweight Prime-Light insulators replace insulators made of heavy layer foam, thereby facilitating a weight saving of up to 50%. 22 G The global Global Presence presence of Autoneum is one of the company’s key success factors. With around 50 locations in over 20 countries, Autoneum stands for pro- duction in proximity to the customer and just- in-time delivery. Whether in the traditional key markets of Europe, North and South America and Asia or in growth markets such as Mexico, China and India – Autoneum is a reliable partner of automobile manufacturers throughout the world. Autoneum Locations with minority shareholders Investments in associates Licensees Argentina ⋅ Córdoba Belgium ⋅ Genk Brazil ⋅ Betim ⋅ Gravataí ⋅ São Paulo ⋅ Taubaté Canada ⋅ London, Ontario ⋅ Tillsonburg, Ontario Czech Republic ⋅ Bor ⋅ Choceň ⋅ Hnátnice France ⋅ Aubergenville ⋅ Blainville ⋅ Lachapelle-aux-Pots ⋅ Moissac ⋅ Ons-en-Bray China ⋅ Chongqing ⋅ Shanghai ⋅ Shenyang ⋅ Taicang ⋅ Guangzhou ⋅ Tianjin ⋅ Wuhan ⋅ Fuzhou Germany ⋅ Großostheim ⋅ Munich ⋅ Roßdorf- Gundernhausen ⋅ Sindelfingen Great Britain ⋅ Halesowen ⋅ Heckmondwike ⋅ Stoke-on-Trent India ⋅ Behror ⋅ Chennai Indonesia ⋅ Jakarta Italy ⋅ Santhià Japan ⋅ Aichi ⋅ Higashi Kyushu ⋅ Hiratsuka ⋅ Hiroshima ⋅ Kyushu ⋅ Shizuoka ⋅ Tokyo 23 Malaysia ⋅ Shah Alam Mexico ⋅ Hermosillo ⋅ Silao Poland ⋅ Katowice ⋅ Nowogard Portugal ⋅ Setúbal Russia ⋅ Ryazan South Africa ⋅ Rosslyn ⋅ Durban Taiwan ⋅ Taoyuan Thailand ⋅ Laem Chabang ⋅ Chonburi Turkey ⋅ Bursa South Korea ⋅ Incheon ⋅ Daegu Spain ⋅ A Rúa ⋅ Valldoreix Sweden ⋅ Göteborg Switzerland ⋅ Winterthur (HQ) ⋅ Sevelen USA ⋅ Aiken, South Carolina ⋅ Bloomsburg, Pennsylvania ⋅ Farmington Hills, Michigan ⋅ Jeffersonville, Indiana ⋅ Oregon-Lallendorf, Ohio ⋅ Oregon-Wynn, Ohio ⋅ Chicago Heights, Illinois ⋅ Jackson, Tennessee ⋅ Monroe, Ohio ⋅ Somerset, Kentucky ⋅ Tinley Park, Illinois ⋅ Valparaiso, Indiana 24 H High Performance Culture A motivating company culture that simultaneously targets employee commitment and satisfaction makes a significant contribution to long-term business success. Autoneum’s High Performance Culture is based on specific values and behaviors. The employees at all locations practice these values in their decisions and actions. This enables Autoneum to remain loyal to its overarching principles “Delight your customers”, “Enjoy your work” and “Fight for profits”. 25 I Innovation Leader has for decades been a global leader in the development and manufacture of components and systems for noise and heat protection with its innovative multifunctional products. Autoneum’s pioneering materials, technologies and products already offer OEMs today what the vehicle of tomorrow will need. Thanks to its research expertise, Autoneum 26 J In addition to its own numerous production facilities, Joint Venture Autoneum also successfully participates in joint ventures. Autoneum operates six joint ventures around the world with its long-standing Japanese partner and automobile supplier Nittoku for the supply of Japanese OEMs in North America and Asia. In addition, Autoneum cooperates with local partners in growth markets such as Turkey, South Africa, Thailand and South Korea, thereby ensuring optimum global presence as well as further growth. K The term “Kaizen” originates from Japanese and means “change Kaizen for the better”. Kaizen is based on the principle of continuous progress by means of a large number of individual measures. In 2015, Autoneum’s employees around the world submitted more than 10 000 improvement proposals including, among others, optimization possibilities for production processes. 27 L Lightweight construction has today become an Lightweight indispensable component of automotive development. Autoneum not only has implemented this trend at an early stage but also played a pioneering role in shaping it. Thanks to its lightweight products, fuel consumption and vehicle emissions are reduced – with both automobile manufacturers and consumers benefiting from this. 28 M Multifunctional noise and heat protection. While noise reduction contributes to enhanced driving comfort and a reduced environmental impact, sensitive components are simultaneously protected against heat. In addition, the products are recyclable. One product – multiple benefits! Autoneum’s products ideally combine vehicle N Autoneum’s non-woven carpets contribute Non-Woven Carpets to enhanced driving comfort by reducing the level of road noise penetrating the passenger compartment. Moreover, they are also dirt-resistant, easy to clean and visually appealing. Non-woven carpets such as Di-Light are largely used in compact and mid-range cars. For higher vehicle classes, Autoneum additionally offers multifunctional tufted carpets. 30 O Operational Excellence on a daily basis by our global workforce of over 11 000 employees. Whether best practice sharing, standardization of business and production processes, implementation of the Autoneum Production System (APS) or general efficiency and productivity enhancements – operational excellence is pursued throughout Autoneum. Operational excellence is practiced P Profitable Growth Autoneum focuses constantly on profitable growth as one of its six strategic priorities. Thanks to the selective acceptance of orders, operational excellence and the expansion of vertical integration, the company not only has continuously increased sales since the separation back in 2011, but with an operating margin of 7.6% is also an above-average successful automotive supplier. Q Quality orientation is the prerequisite for business success – this Quality particularly also applies to automotive suppliers as their components must satisfy the highest quality requirements of vehicle manufacturers. The quality of parts and systems is measured in “parts per million” (ppm). “Ppm” refers to the number of faulty parts (error rates) in component production. This means that out of a million produced parts only a given very small number may be defective. 31 R Autoneum keeps the environmental impact of its products Recycling as low as possible. To this end, the company focuses on production processes that facilitate a more efficient processing of the deployed raw materials and return production waste to the manufacturing cycle. At the same time, the application of reusable basic materials contributes to making a large share of the end products recyclable. S In order to support customers in the design phase of Simulation new models and in the further development of existing vehicles, Autoneum makes use of self-developed simulation software programs. This software serves to optimize the NVH (noise, vibration, harshness) performance of vehicles. The products and systems developed on the basis of these simulations are tested by means of specially designed measurement systems. 34 T Theta-FiberCell a key technology for engine encapsulations. Engine encapsulations keep the engine warm over a longer period. This means less fuel consumption and therefore lower CO2 emissions at the next cold start. The fiber-foam combination withstands temperatures of up to 200°C and reduces engine noise. With Theta-FiberCell, Autoneum has developed 35 U Underbody systems reduce the drag Underbody Systems of cars, thereby enhancing their aerodynamics. Autoneum’s Ultra-Silent underbody shields consist of textile fibers and offer various benefits compared with conven- tional underbody components made of plastic. They weigh only half as much as plastic parts and offer optimum stone chip protection. In addition, as a textile material Ultra-Silent absorbs interior and exterior vehicle noise much more effectively than hard plastic. 36 Vertical Integration as implemented in the Injection-Fiber-Process (IFP-R2) 1 Bale opener 2 IFP-R2 tower 3 IFP-R2 fiber cake 4 Molding 5 Cutting 6 Recycling 5 4 6 37 3 2 V 1 Vertical Integration is the expansion of vertical integration. Specifically, this means to increase the vertical range of manufacture by enhancing the in-house production of basic materials. This enables the entire potential of the value chain – from the basic materials to the final component – to be optimally utilized. An important success factor for Autoneum W Winterthur and the research center are located in Winterthur, Switzerland, in the canton of Zurich. Autoneum’s corporate headquarters 40 X With the separation and the going public of Autoneum, the year MM X I 2011 marks the starting point of the market leader’s growth path. Since then the company has consistently implemented its guiding principle of “continuous improvement”, enhanced its global presence, acquired new customers and in doing so multiplied its profitability. Y The Yuan, officially also called renminbi, is the currency of world’s Yuan largest automobile market: Over 23 million light vehicles were produced in China in 2015, and an increase to 30 million vehicles is forecast by 2020. Autoneum has therefore expanded its presence in this Asian growth market in recent years and today operates five production facilities in China. Z Mi z usumashi The Japanese term “Mizusumashi” means “water strider”. In a similar way as the water strider insect glides over the water’s surface, Mizusumashi trains move just as quickly and silently through the production facilities. These tugger trains ensure the continuous supply of shopfloor workers with materials and parts at their workstations. Compared with forklifts, Mizusumashi trains increase the cycle times of the material flow and facilitate more efficient and safer production. 42 Autoneum Annual Report 2015 Sustainability Sustainable action for long-term success Entrepreneurial activity significantly impacts developments in society. With its comprehensive sustainability management, Autoneum contributes to shaping society sustainably while ensuring long-term corporate success at the same time. Ecological, economic and social aspects are all integral to corporate development. Autoneum pursues the principle of responsible action consistently and across all its sites. Prudent management of employees and open dialogue with the public is just as much part of it as the careful use of natural resources. Accordingly, the company strives to minimize the environmental impact of its manufacturing processes. So in 2015, Autoneum implemented production-related measures to increase efficiency worldwide, in particular through cutting down consumption of energy and water as well as reducing waste. Thus, various sites of all four Business Groups increased the reuse of internal production scrap from the manu- facture of damping materials and pieces of felt. In addition, heavy foam production waste from European plants has been centrally recycled in Roßdorf-Gundernhausen, Germany, since 2015. For long-term reductions in energy consumption, systems for monitoring and analyzing electri- city consumption have been installed at several production sites in China. Improvements at the Chongqing plant alone led to a 10% decrease in consumption. Adjustments to production processes and equipment in Poland, Canada, China and the USA resulted in less water being consumed. Eco-efficient products In addition to Autoneum’s resource-saving production processes, its products also contribute to the sustainable protection of the environment: On the one hand, their lightweight construction reduces vehicle weight, resulting in lower fuel consumption and correspondingly lower CO2 emissions. On the other hand, they reduce the Autoneum Annual Report 2015 Sustainability 43 environmental impact of traffic by lessening the interior and exterior noise of vehicles. So for example, textile underbody shields made of Ultra-Silent decrease interior noise by up to two decibels and exterior noise by up to one decibel. Autoneum is the market leader for lightweight underbody systems; its Ultra-Silent fiber technology was developed with this specific approach in mind. In the past, this technology has been available only in Europe. In the reporting year Autoneum introduced Ultra-Silent in the North American market, responding to big demand from international OEMs. Its launch in China is planned for 2017. Focus on occupational safety The eco-efficiency of production sites is evaluated on a monthly basis according to specific indica- tors (KPIs). This data is also used to document compliance with customers’ sustainability requirements. Social criteria are recorded as well, including KPIs that quantify the level of occupational safety. Autoneum aims to ensure the best possible safety conditions at all sites and constantly strives to prevent accidents at the workplace. Numerous training courses and audits ensured that further extensions to the company’s environmental, health and safety management system, which were defined and implemen- ted at all production sites in 2014, were indeed applied according to specifications. Intensified knowledge management In line with its value of “continuous improve- ment”, in all areas of business Autoneum strives to further expand innovation leadership in the field of vehicle acoustics and thermal manage- ment. This calls for knowledge management within the company, an important part of this being regular transfer of know-how between specialists at different locations on specific products, technologies and production processes. In order to intensify this structured exchange of experience, existing expert networks dedicated to products such as tufted carpets and heatshields were augmented in 2015 by some expert networks focused on production processes. In these global committees, experts in the fields of research & development, techno- logy and manufacturing discuss the latest in-house research findings, develop optimized production flows and evaluate global trends as they relate to the respective expert networks. In 2015, Autoneum implemented worldwide measures to increase efficiency and hence reduce consumption of energy and water. 44 Corporate Governance Autoneum is a globally oriented company that is committed to creating long-term value. As such, it considers high standards of Corporate Governance of utmost importance. A policy of transparent information provision to its various stakeholder groups creates a basis for mutual trust. The rules and regulations of Corporate Gover- nance are laid out in numerous Autoneum documents, in particular the Articles of Asso - ciation1, the Organizational Regulations2 and the Board Committee Regulations. The content and structure of this report conform to the Corporate Governance guidelines and their related commentaries published by the SIX Swiss Exchange. capitalization as of December 31, 2015, was CHF 938.1 million. Autoneum Group consists of the four Business Groups Europe, North America, Asia, and SAMEA (South America, Middle East and Africa), the Corporate Finance department and those cross functions that report directly to the CEO. It includes all companies controlled by Autoneum Holding Ltd. Unless stated otherwise, the data pertain Within the framework of internal regula- to December 31, 2015. Information will be updated regularly on www.autoneum.com/ investor-relations. Some data refer to the financial section of this Annual Report. The Remuneration report can be found from page 104 onwards. 1 Group structure and shareholders Group structure Autoneum Holding Ltd is a company incorpo- rated under Swiss law, with its registered offices in Winterthur. Its shares are listed on the SIX Swiss Exchange (securities code 12748036, ISIN CH0127480363, symbol AUTN). Market 1 www.autoneum.com/investor-relations/corporate-governance/ 2 www.autoneum.com/about-autoneum/ tions, the Business Groups are responsible for the profitability of each individual company with the exception of those business activities and companies that report directly to the CEO. Each Business Group has been established for a clearly defined and demarcated specific market region. Each of these Business Groups conducts its business within the framework of the Organizational Regulations2 and under the leadership of the Business Group Head, who reports directly to the CEO of the Autoneum Group. The segment reporting information can be found on pages 78–80. The Corporate Finance department and those cross functions that report directly to the CEO support the CEO, the Business Group Autoneum Annual Report 2015 Corporate Governance 45 Heads, and the Board of Directors in their management and supervisory functions, and are responsible for the activities outside the Business Groups such as management of holding companies and pension funds. Subsidiary companies are founded based on legal, business and financial considerations. One responsible person (Head of Legal Unit) is appointed for each company. He is responsible for local financial management as well as for compliance with national laws and regulations and internal guidelines. ment organization of the Autoneum Group is independent of the legal structure of the Group and the individual companies. Significant shareholders As of December 31, 2015, Autoneum was aware of the following shareholders with 3% or more of all voting rights in the company: · Artemis Beteiligungen I Ltd; Centinox Holding Ltd; Michael Pieper, Hergiswil, Switzerland · PCS Holding Ltd, Warth-Weiningen; Peter Spuhler, Weiningen, Switzerland Companies with participation of further · Norges Bank (The Central Bank of Norway), shareholders are principally managed as described above and according to the respective agreements. 40 companies worldwide belonged to the Autoneum Group as of December 31, 2015. An overview on affiliates comprising the names, domiciles and share capital of the affiliates and the voting rights held by the Autoneum Group can be found on page 102. The manage- Oslo, Norway All notifications of shareholders with 3% or more of all voting rights in the company have been reported to the Disclosure Office of the SIX Swiss Exchange in accordance with Art. 20 of SESTA (Swiss Stock Exchanges and Securities Trading Act) and published via its electronic publication platform on www.six-exchange- Organization As per December 31, 2015 Autoneum Holding Ltd Board of Directors Autoneum Group Martin Hirzel CEO Corporate Finance Dr Martin Zwyssig CFO Business Group Europe Matthias Holzammer Business Group North America John T. Lenga (as of March 1, 2015) Business Group Asia Dr Uwe Trautmann (until February 29, 2016) Business Group SAMEA Volker Eimertenbrink (until December 31, 2015) Autoneum Annual Report 2015 Corporate Governance 46 regulation.com/en/home/publications/significant- shareholders.html, where also further details can be found. As of December 31, 2015, Autoneum Holding Ltd held 0.8% of the share capital (37 612 shares). Cross-holdings Autoneum has no information about cross- holdings of capital or voting shares exceeding the limit of 5%. 2 Capital structure Share capital On December 31, 2015, the share capital of Autoneum Holding Ltd totaled CHF 233 618.15. This was divided into 4 672 363 fully paid up registered shares with a par value of CHF 0.05 each. The shares are listed on the SIX Swiss Exchange (securities code 12748036, ISIN CH0127480363, symbol AUTN). Authorized share capital There is no authorized share capital available at Autoneum Holding Ltd. Contingent capital for issuing convertible and/ or warranty bonds or granting shareholder options The share capital may be increased by up to 700 000 fully paid registered shares with a nominal value of CHF 0.05 each in an amount not to exceed CHF 35 000 through the voluntary or mandatory exercise of conversion rights and/or warrants granted in connection with the issuance of bonds or similar financial instru- ments by the company or one of its Group com- panies on national or international capital markets, and/or through the exercise of option rights granted to the shareholders. The preemptive rights of the shareholders on the issuance of bonds or other financial instru- ments with which conversion rights and/or 3 www.autoneum.com/investor-relations/corporate-governance/ warrants are connected shall be excluded. The then current owners of conversion rights and/or warrants shall be entitled to subscribe to the new shares. The conditions of the conversion rights and/or warrants shall be determined by the Board of Directors. The acquisition of shares through the voluntary or mandatory exercise of conversion rights and/or warrants as well as each subsequent transfer of shares are subject to the restrictions in §4 of the Articles of Association3. In connection with the issuance of bonds or similar financial instruments with which conversion rights and/or warrants are connected, the Board of Directors is empowered to restrict or exclude the advance subscription rights of shareholders if (1) such instrument is issued for the financing or refinancing of the acquisition of corporations, parts thereof, equity holdings or investments or if (2) such instrument is issued (i) on national or international capital markets or (ii) to one or more financial investors. If the advance subscription rights are restricted or excluded by the Board of Directors, the follow- ing shall apply: the issuance of such instrument shall be made at prevailing market conditions, and the new shares shall be issued pursuant to the relevant conditions of that financial instru- ment. Conversion rights may be exercised during a maximum ten-year period, and warrants may be exercised during a maximum seven-year period, in each case from the date of the respec- tive issuance. The issuance of the new shares upon voluntary or mandatory exercise of conver- sion rights and/or warrants shall be made at conditions taking into account the market price of the shares and/or compara ble instruments with a market price at the time of issuance of the relevant financial instrument. Contingent capital for employee participation shares The share capital may be increased by a maxi- mum of CHF 12 500 through the issuance of up to 250 000 fully paid up registered shares Autoneum Annual Report 2015 Corporate Governance 47 is therefore no authorized share capital available at Autoneum Holding Ltd. Participation and dividend-right certificates Autoneum Holding Ltd has issued neither participation certificates nor dividend-right certificates. Shares Autoneum Holding Ltd has issued 4 672 363 fully paid up registered shares with a nominal value of CHF 0.05 each. Each registered share is entitled to dividends and entitles the holder to one vote at General Meetings of Autoneum Holding Ltd shareholders. The Board of Directors maintains a share register in which the owners and usufructuaries are registered with name/ company name and address with the following conditions. Only those persons listed in the share register will be recognized as company shareholders or usufructuaries. Any changes of name or address must be communicated to the company. Those who acquire registered shares must make written application for entry in the share register. The company can refuse such entry to parties who do not expressly declare that they have acquired and will hold these registered shares in their own names and for their own account. If persons fail to expressly declare in their registration applications that they hold the shares for their own account (“nominees”), the Board of Directors shall enter such persons in the share register with the right to vote, provided that the nominee has entered into an agreement with the company concerning his or her status, and further provided that the nominee is subject to a recognized bank or financial market supervision. After hearing the registered shareholder or nominee, the Board of Directors may cancel any registration in the share register made based on incorrect informa- tion with retroactive effect as of the date of registration. The relevant shareholder or nominee must be informed immediately of the cancella- tion. The Board of Directors regulates the details There have been no changes to the share capital of Autoneum Holding Ltd since the company’s founding on December 2, 2010. with a par value of CHF 0.05 each to employees of the company or one of its Group companies. The preemptive rights of the shareholders shall be excluded in connection with the issuance of convertible or warrant-bearing bonds or similar financial instruments. The issuance of these shares to employees will be in accordance with one or more regulations issued by the Board of Directors and will take appropriate account of employee performance, position and degree of responsibility, and economic viability criteria subject to §24 of the Articles of Association4. Shares or options may be issued to employees at a price lower than that quoted on the stock exchange. The acquisition of shares within the framework of the employee participation plan, as well as every subsequent transfer of these shares, is subject to the limitations set forth in §4 of the Articles of Association4. Changes in share capital There have been no changes to the share capital of Autoneum Holding Ltd since the company’s founding on December 2, 2010. The General Meeting of March 22, 2011, adopted a contingent share capital of CHF 35 000 (see page 46) and a contingent share capital of CHF 12 500 (see pages 46 and 47). The authorized share capital of CHF 47 500 adopted at the same General Meeting of March 22, 2011, expired after two years on March 22, 2013, without being utilized. It was not extended, and there 4 www.autoneum.com/investor-relations/corporate-governance/ Autoneum Annual Report 2015 Corporate Governance48 and issues the instructions necessary for compliance with the provisions set forth above. In special cases, the Board of Directors may grant exemptions from the rule concerning nominees and may delegate its duties. The company only recognizes one proxy per share. Voting rights and associated rights may only be exercised in relation to the company by a shareholder, usufructuary or nominee entered in the share register as having the right to vote. The registered shares of Autoneum Holding Ltd are issued in the form of securities and registered as book-entry securities (in the sense of the Book-Entry Securities Act) at SIX SIS Ltd. Book-entry securities with underlying shares of the company may not be transferred by way of assignment. Security interests for these book-entry securities cannot be granted by means of assignment. The company is entitled to convert at any time and without the approval of shareholders shares issued in the form of uncertificated securities into individual share certificates or global share certificates. Shareholders are not entitled to have shares issued in one particular form transformed into another form. Any shareholder is, however, entitled to request at any time that the company issues a certificate stating the number of shares registered in his or her name. Restrictions on share transfers and nominee registrations Those persons entered in the shareholders’ register are recognized as voting shareholders. Autoneum shares can be bought and sold without any restrictions. In accordance with §4 of the Articles of Association5, entry in the register of shareholders can be denied in the absence of an explicit declaration that the shares are held in the applicant’s own name and for the applicant’s own account. There are no other registration restrictions. Shares held in a fiduciary capacity are not principally entered in the shareholders’ register. However, as an exception to this rule, 5 www.autoneum.com/investor-relations/corporate-governance/ 6 www.autoneum.com/about-autoneum/ a nominee is entered in the register if the nominee in question has concluded a nominee agreement with Autoneum and is subject to a recognized bank or financial supervisory authority. The nominee exercises voting rights at the Annual General Meeting of sharehol- ders. At the request of Autoneum Holding Ltd, the nominee is obliged to disclose the name of the person on whose behalf it holds shares. A resolution of the General Meeting approved by the absolute majority of the voting shares represented is required in order to cancel the restrictions on share transfers. Convertible bonds and options Autoneum Holding Ltd has no convertible bonds or options outstanding. 3 Board of Directors The composition, general rights, duties and responsibilities of the Board of Directors of Autoneum Holding Ltd are pursuant to the Swiss Code of Obligations and the Autoneum Holding Ltd Articles of Association5 and Organizational Regulations6. Board membership Pursuant to the Articles of Association5, the Board of Directors of Autoneum Holding Ltd consists of no less than three and no more than nine members. As of December 31, 2015, the Board of Directors comprised six members, none of whom performed executive duties. The functions of Chairman of the Board and CEO are separated in order to ensure a good balance between the company management and supervisory bodies. Independence of non-executive members The Board of Directors consists of non-executive members, and none of the members has exercised any operational activities for Autoneum in the three financial years preced- Autoneum Annual Report 2015 Corporate Governance 49 ing the reporting period. The members of the Board of Directors and the companies repre- sented by them do not have any significant business relationships with companies of the Autoneum Group (but see page 100). cases. Nominations for election to the Board of Directors are made with due regard for the balanced composition of this body, taking industrial and international management experience and specialist knowledge into account. Permissible activities outside the Autoneum Group According to §20 of the Articles of Association7, no member of the Board of Directors may assume more than fifteen additional mandates and no more than five of these may be held with listed companies. This restriction does not apply to (a) mandates held with companies that control or are controlled by Autoneum Holding Ltd; (b) mandates assumed by a member of the Board of Directors by order of Autoneum Holding Ltd or companies under its control; (c) mandates held with companies that do not qualify as companies within the meaning of Art. 727, para. 1, clause 2 of the Swiss Code of Obligations; (d) mandates held with nonprofit organizations and foundations as well as pension funds. The number of mandates pursuant to (c) and (d) is limited to a total of 20. Mandates held with various legal entities that are under joint control or controlled by the same beneficial owner count as one mandate. Mandates held with the supreme management or administrative body of a legal entity that is required to be registered in the commercial register or an equivalent register abroad count as mandates. Election and term of office, principles of the election procedure The Chairman and the other members of the Board are elected individually by the General Meeting and for a one-year term of office, meaning from one Annual General Meeting to the next one. Board members can be reelected. They Internal organization The Board of Directors is responsible for the business strategy and supervisory management of the Autoneum Group and Group companies. It exercises a supervisory function over the persons who have been entrusted with the business management. The Board of Directors is responsible for all transactions that are not explicitly reserved for the General Meeting or other bodies according to the law, the Articles of Association7 and the Organizational Regulations8. It prepares the Annual General Meeting and makes the neces- sary arrangements for implementing resolutions adopted by the Annual General Meeting. The Board of Directors has the following decision- making authority: · composition of the business portfolio and strategic direction of the Group; · definition of the Group structure; · appointment and dismissal of the members of the Group Executive Board; · definition of the authority and duties of the Chairman and the committees of the Board of Directors as well as the CEO and CFO of the Autoneum Group and the Business Group Heads; · organization of accounting, financial control and financial planning; · approval of strategic and financial planning, the budget and the Annual Report with business review, financial statements, consolidated financial statements and Remuneration report; retire at the Annual General Meeting following their 70th birthday, although the Board of Directors can lift the age limit in individual · principles of financial and investment policy, personnel and social policy, management and communications; 7 www.autoneum.com/investor-relations/corporate-governance/ 8 www.autoneum.com/about-autoneum/ Autoneum Annual Report 2015 Corporate Governance5050 Board of Directors Hans-Peter Schwald (1959) Chairman Swiss national Rainer Schmückle (1959) Vice Chairman German national Michael Pieper (1946) Board member Swiss national First elected to the Board Board member since 2011 . Educational and professional background Lic. oec. HSG; owner and CEO of Artemis Holding Ltd . Other activities and interests Member of the Board of Directors of various Artemis and Franke subsidiaries worldwide; Board member, Berenberg Bank (Switzerland) Ltd, Zurich; Hero Ltd, Lenzburg; Forbo Holding Ltd, Baar; Adval Tech Holding Ltd, Niederwangen; Rieter Holding Ltd, Winterthur; AFG Arbonia-Forster-Holding Ltd, Arbon . Non-executive First elected to the Board Board member and Chairman since 2011 Educational and professional background Lic. iur. HSG, lawyer; Chairman of the Board of Directors of the legal practice of Staiger, Schwald & Partner Ltd, Zurich . Other activities and interests Chairman of the Board of Directors of Ruag Holding Ltd, Bern; Vice Chairman of the Board of Directors, Stadler Rail Ltd, Bussnang; Board member, Rieter Holding Ltd, Winterthur; Chairman, AVIA Association of Independent Importers of Petroleum Products, Zurich; Board member of other Swiss joint stock companies. Committees Chairman of the Strategy Committee; Member of the Audit, the Compensation and the Nomination Committee . Non-executive First elected to the Board Board member and Vice Chairman since 2011 Educational and professional background Dipl. Wirtsch.-Ing. University of Karlsruhe; from 1984 to 1997 various positions at the Daimler Group, including CFO and Senior Vice President IT of Freightliner LLC; from 1998 to 2000 first CFO and then CEO of Adtranz LLC; from 2001 to 2005 President and CEO of Freightliner LLC; from 2005 to 2010 COO of Mercedes Car Group; from 2010 to 2011 Operating Partner of Advent Internatio- nal; from 2011 to 2014 Chief Operating Officer and President Seating Components, Johnson Controls Inc.; from 2014 to 2015 CEO of MAG Group. Other activities and interests Member of the Board of Directors of Dometic Group Ltd, member of the Board of Directors of a privately held company. Committees Chairman of the Audit Committee; Member of the Strategy Committee . Non-executive Autoneum Annual Report 2015 Corporate Governance 51 This E. Schneider (1952) Board member Swiss national Peter Spuhler (1959) Board member Swiss national Ferdinand Stutz (1957) Board member Swiss national First elected to the Board Board member since 2011 . Educational and professional background Lic. oec. HSG; from 1991 to 1993 Chairman and CEO of listed company SAFAA, Paris; from 1994 to 1997 member of the Executive Board, Valora Group, as Managing Director of the Canteen and Catering Division; from 1997 to 2002 Executive Chairman and CEO of the Selecta Group; from 2004 until March 2014 Executive Chairman and CEO, Forbo Group; since 2014 Executive Chairman of the Board of Directors of Forbo Group . Other activities and interests Board member, Galenica SA, Bern; Rieter Holding Ltd, Winterthur Committees Chairman of the Compen- sation and the Nomination Committee . Non-executive First elected to the Board Board member since 2011 . Educational and professional background Majority shareholder and CEO of Stadler Rail Ltd, Bussnang . Other activities and interests Chairman of the Board, Stadler Rail Ltd, Bussnang, and of several other companies of the Stadler Rail Group, Aebi-Schmidt Holding Ltd, Burgdorf, and PCS Holding Ltd, Warth-Weiningen. Board member, Walo Bertschinger Central Ltd, Zurich; Allreal Holding Ltd, Baar; Rieter Holding Ltd, Winterthur; DSH Holding Ltd, Warth- Weiningen; Wohnpark Promenade Ltd, Frauenfeld; Vice Chairman of ZLE Betriebs Ltd, Zurich . Member of the National Council of the Swiss Parliament from 1999 to 2012 . Non-executive First elected to the Board Board member since 2011 . Educational and professional background Dipl. Giesserei-Ing. University of Duisburg; from 1982 to 1989 Operations Manager and Deputy Manager Foundry for Rieter Ltd, Winterthur; from 1989 to 1994 Department Manager and as of 1994 co-partner and Executive Director of Schubert & Salzer; from 1995 to 1997 Executive Director of Georg Fischer Eisenguss GmbH, Leipzig; from 1998 to 2009 member of the Management Board of Georg Fischer Ltd and CEO of GF Automotive; since 2009 owner and founder of Stutz Improvement Ltd . Other activities and interests Member of the Advisory Board of Halder Be teiligungsgesellschaft GmbH, Frankfurt; member of the Board of Directors or Advisory Board of other joint stock companies . Committees Member of the Audit, the Strategy, the Compensa tion and the Nomination Committee . Non-executive Autoneum Annual Report 2015 Corporate Governance52 · signature regulations and allocation of authority of Autoneum Holding Ltd; · principles of internal auditing; · decisions on investment projects involving expenditure in excess of CHF 10 million; · issuance of bonds and other significant financial market transactions; · incorporation, purchase, sale and liquidation of subsidiaries. The Board of Directors comprises the Chairman, the Vice Chairman and the other members. The Chairman of the Board of Directors and the members of the Compensation Committee are elected for a one-year term of office by the General Meeting. Apart from this, the Board of Directors is self-constituting. The Board of Directors appoints a secretary who need not be a member of the Board of Directors. The Vice Chairman deputizes for the Chairman in his absence. The Board of Directors has a quorum if the majority of members are present or if the Board members are able to communicate with each other by telephone, video conference, Internet or other electronic means. Motions of the Board of Directors are approved by a simple majority of the votes of the members present. In the case of a tie, the Chairman has the casting vote. Once a year the Board of Directors carries out a self-assessment. In 2015, the members of the Board of Directors met for five regular meetings. They all lasted around half a day, one of which was held abroad followed by a visit of a production plant. The attendance rate was 93%. In addition, four telephone conferences were held. The agendas for the Board meetings are drawn up by the Chairman. Any member of the Board can also propose items for inclusion on the agenda. Board meetings are generally also attended by the CEO and the CFO while the other members of the Group Executive Board attend as necessary regarding business matters concerning them. They give an overview of the results, outlook and budget of their operating units, and present those projects requiring the approval of the Board of Directors. Once a year the Board of Directors reviews its performance, internal working methods and cooperation with the Group Executive Board. This takes the form of a self-assessment and includes an assessment of the state of information of Board members with regard to the Group and its business development. Should there be a conflict of interest in the course of making decisions on business matters and items on the agenda, the respective Board member must stand aside prior to discussion of the matter in question and abstain from voting when passing a resolution. Committees Besides the Compensation Committee the Board of Directors has appointed an Audit, a Nomina- tion and a Strategy Committee from among its members in order to assist it in its duties. The committees are fundamentally advisory and preparatory bodies and have no decision- making powers; resolutions are passed by the Board as a whole. Each committee has written terms of reference specifying its tasks and responsibilities. The members of the Compensa- tion Committee have been elected by the Annual General Meeting. The Chairman and further members of the other committees are elected by the Board of Directors. The committees meet regularly and are required to prepare minutes of their meetings and recommendations for perusal at the regular meetings of the Board of Directors. Autoneum Annual Report 2015 Corporate Governance53 The Compensation Committee consists of three members. The Chairman of this committee is This E. Schneider. The other members are Hans-Peter Schwald and Ferdinand Stutz. The committee meets whenever the need arises, but at least twice a year. It draws up the principles for the remuneration of members of the Board of Directors, the Group Executive Board and senior management within the Autoneum Group, in particular bonus programs and share allocation plans (LTI), as well as the Remuneration report and the proposals con- cerning the total maximum remuneration amount for the Board of Directors and Group Executive Board to be submitted annually by the Board of Directors for approval by the share holders at the Annual General Meeting. The Nomination Committee consists of three members. This E. Schneider is Chairman of this committee, Hans-Peter Schwald and Ferdinand Stutz the other members. The committee meets whenever necessary, but at least twice a year. This committee stipulates the profile of requirements and the principles for selecting members of the Board of Directors and prepares the election of new members of the Group Execu- tive Board and their terms of employment. It is also briefed on succession plans for the Board of Directors, Group Executive Board and senior management, and the relevant development plans. The members of the Compensation and the Nomination Committee held four regular meetings in 2015. Each meeting lasted one to four hours. All committee members attended all meetings. The Strategy Committee consists of three members: Hans-Peter Schwald is Chairman; Rainer Schmückle and Ferdinand Stutz are the other members. The Strategy Committee meets at least twice a year. The meetings are also attended by the CEO and the CFO, and other members of The Audit Committee currently consists of three members of the Board. Its Chairman is Rainer Schmückle; the other members are Hans-Peter Schwald and Ferdinand Stutz. In the 2015 financial year none of the members of the Audit Committee performed executive duties. The Chairman is elected for one year. The Audit Committee meets at least twice each financial year. The meetings are also attended by the Head of Internal Audit, representatives of the statutory and Group auditors, the CEO and the CFO, and other members of the Group Executive Board and management as appropriate. The main duties of the Audit Committee are: · elaborating principles for external and internal audits for submission to the Board of Directors, and providing information on their implemen- tation; · assessing the work of the external and internal auditors as well as their mutual cooperation and reporting to the Board of Directors; · assessing the reports submitted by the statutory auditors as well as the invoiced costs; · overall supervision of risk management and acceptance of the Group Executive Board’s risk report addressed to the Board of Directors; · assisting the Board of Directors in nominating the statutory auditors and the Group auditors for submission to the Annual General Meeting; · scrutinizing the results of internal audits, approving the audit schedule for the following year and nominating the Head of Internal Audit; · the Chairman of the Audit Committee is responsible for accepting complaints (whistle- blowing) in connection with the Code of Conduct9. The Audit Committee met for two regular meet- ings in 2015. Both meetings lasted three to four-and-a-half hours. All committee members attended these meetings and received regular written reports from the internal auditors. 9 www.autoneum.com/about-autoneum/ Autoneum Annual Report 2015 Corporate Governance 54 the Group Executive Board and management as appropriate. The main duties of the strategy committee are: supporting and assisting the Board of Directors in strategic planning, especially in assessing market changes and developments affecting the Group; assessing Autoneum’s short- and long- term strategic orientation, in particular with regard to markets, customers, competitors, products and technologies; as well as support of strategically important projects. The Strategy Committee met in 2015 for one regular meeting and a two-day strategy workshop with the entire Group Executive Board. The regular meeting lasted four hours. All committee members attended the meeting, in the strategy workshop one member could not participate. The Strategy Committee met in 2015 for one regular meeting and a two-day strategy workshop with the entire Group Executive Board. Allocation of authority The Board of Directors delegates operational business management to the CEO. The members of the Group Executive Board report to the CEO. The allocation of authority between the Board of Directors and the CEO is stipulated in the Organizational Regulations10, while details of the tasks reserved for the Board of Directors can be found on pages 49–52 (“Internal Organization”). The cooperation between the Board of Directors, the CEO and the Business Groups is stipulated in the Group’s Organizational 10 www.autoneum.com/about-autoneum/ Regulations10, which include the following: The CEO draws up the strategic and financial planning statements and the budget with the Group Executive Board and submits them to the Board of Directors for approval. He reports regularly on the course of business as well as on risks and changes in personnel at the management level. In addition to periodic reporting, he is obliged to inform the Board of Directors immediately about any business transactions of fundamental importance. Information and control instruments regarding the Group Executive Board The Board of Directors receives a written monthly report on the key figures of the Group and the Business Groups from the Group Executive Board. This provides information on the balance sheet, cash flow and income statements as well as capital expenditure. The figures are compared with the budget and with the previous year. The Board of Directors is also informed at each meeting about the course of business, important projects and risks, as well as ongoing earnings and liquidity budget planning. Should the Board of Directors have to rule on major projects according to the Orga- nizational Regulations10, a written request is submitted prior to the meeting. The projects approved by the Board of Directors are monitored within the context of a special project controlling submitted to the Board of Directors every quarter. Once a year, the Board of Directors discusses and decides on the strategic plans drawn up by the Group Executive Board and the financial plan. Financial statements for publication are drawn up twice a year. Furthermore, the Chairman of the Board of Directors has a regular monthly meeting with the CEO and the CFO with respect to all major issues of corporate policy. The Board of Directors has initiated and implemented a comprehensive internal control system for risk monitoring in connection with business activities, which covers risk identifi- Autoneum Annual Report 2015 Corporate Governance55 Group Executive Board by order of Autoneum Holding Ltd or companies under its control; (c) mandates held with companies that do not qualify as companies within the meaning of Art. 727, para. 1, clause 2 of the Swiss Code of Obligations; (d) mandates held with nonprofit organizations and foundations as well as pension funds. The number of mandates pursuant to (c) and (d) is limited to a total of 20. Mandates held with various legal entities that are under joint control or controlled by the same beneficial owner count as one mandate. Mandates held with the supreme management or adminis trative body of a legal entity that is required to be regis- tered in the commercial register or an equivalent register abroad count as mandates. Management contracts There are no management contracts between Autoneum Holding Ltd and third parties. 5 Remuneration, shareholdings and loans The content and process for determining remu- neration and equity participation programs as well as information on the remuneration, share- holdings and loans of the Board of Directors and the Group Executive Board can be found in the Remuneration report on page 104. cation, analysis and control as well as risk reporting. Refer to pages 74–77 for details of this risk management process and on financial risk management. The members of the Audit Committee, the CEO, the CFO and appointed members of the management receive the internal audit reports. Internal audit conducted twelve regular audits in 2015. The results were discussed in detail with the Business Groups and the companies con- cerned, and appropriate measures have been initiated and monitored accordingly. Code of Conduct The Code of Conduct is an integral part of every employment contract of every employee. The Code of Conduct is explained to employ- ees in the individual units, and compliance with the same is verified regularly in the context of internal audits and by additional audits. The Code of Conduct can be found at www.autoneum.com/en/about-autoneum/ code-of-conduct/. 4 Group Executive Board The Group Executive Board had six members on December 31, 2015: the CEO, the CFO and the four Business Group Heads. For addi- tional information about the Group Executive Board members please refer to pages 56 and 57. Permissible activities outside the Autoneum Group According to §20 of the Articles of Association11, no member of the Group Executive Board may assume more than four additional man- dates and no more than five of these may be held with listed companies which are to be approved by the Board of Directors prior to the acceptance. This restriction does not apply to (a) mandates held with companies that control or are controlled by Autoneum Holding Ltd; (b) mandates assumed by a member of the 11 www.autoneum.com/investor-relations/corporate-governance/ Autoneum Annual Report 2015 Corporate Governance 56 Group Executive Board Martin Hirzel (1970) Chief Executive Officer (CEO) Swiss national Dr Martin Zwyssig (1965) Chief Financial Officer (CFO) Swiss national Dr Uwe Trautmann (1957) Head Business Group Asia* German national Member of the Group Executive Board since 2011 . Educational and professional background Degree in business administration (HWV); Gen - eral Management Program at Harvard Business School; from 1989 to 1994 Business Unit Controller of IBM (Switzerland) Ltd; from 1997 to 1999 Chief Controller International of Divi- sion Textile Systems for Rieter Holding Ltd; from 2000 to 2007 General Manager China of Rieter Holding Ltd; from 2007 to 2011 Head Business Group SAMEA, member of the Executive Committee of the Division Automo- tive Systems of Rieter Holding Ltd; in the current function since 2011 . Member of the Group Executive Board since 2014 . Educational and profes- sional background Master in Accounting and Finance, Dr oec. HSG, University of St. Gallen; from 1995 to 1997 Controller Swiss Bank Corporation; from 1997 to 2001 Divisional Controller Sarna Kunststoff Holding Ltd; from 2001 to 2002 Senior Vice President Finance & Controlling EMS-TOGO Group; from 2003 to 2008 Group CFO Schaffner Holding Ltd; from 2008 to 2013 Group CFO Ascom Holding Ltd; in the current function since 2014 . Other activities and interests Member of the Board of Directors of Belimo Holding Ltd, Hinwil . Member of the Group Executive Board since 2011 . Educational and profes- sional background Degree in mechanical engineering, Dr oec. Technische Hoch- schule Zwickau; from 1992 to 1997 responsible for the regional operations of the German company Aesculap Ltd in Penang, Malaysia; from 1997 to 2004 responsible for the Asian operations of the German company ZF Lenksysteme GmbH in Malaysia as well as in Shanghai as of 2002; from 2004 to 2007 CEO China operations of the German com- pany KGaA Hella & Co. in Shanghai; from 2007 to 2011 Head Business Group Asia, member of the Executive Commit- tee of the Division Automotive Systems of Rieter Holding Ltd; in the current function since 2011 . *until February 29, 2016 Autoneum Annual Report 2015 Corporate Governance57 Volker Eimertenbrink (1959) Head Business Group SAMEA German national Matthias Holzammer (1965) Head Business Group Europe German national John T. Lenga (1970) Head Business Group North America* . US national Member of the Group Executive Board since 2012 . Educational and professional background Degree in business engineering; from 1985 to 1995 production/value engineer and design engineer for Hymmen GmbH and Fr. Buschjost GmbH & Co.; from 1995 to 2008 at Faurecia Autositze GmbH in various leading positions in control- ling and engineering; from 2008 to 2011 CFO Automotive Systems Division of Rieter Holding Ltd; from 2011 to 2012 Head Corporate Controlling and Deputy CFO of Autoneum Management Ltd; in the function as Head Business Group SAMEA from 2012 to December 31, 2015 . Member of the Group Executive Board since 2012 . Educational and professional background Degree in business engineering; from 1993 to 2009 leading functions in opera- tions, plant management and general management at Brose Fahrzeugteile GmbH & Co. KG, Faurecia Sitztechnik GmbH & Co. KG and at Beru Ltd; from 2009 to 2011 Managing Director Production for Keiper GmbH & Co. KG (later Johnson Controls), last assignment as General Manager of the Product Business Unit “Metal Region Europe”; in the current function since 2012 . Member of the Group Executive Board since 2015 . Educational and profes- sional background Master in Arts from Bowling Green State University, USA; from 1994 to 1997 Financial Analyst with Ford Motor Company; from 1997 to 1999 Principal Business Analyst to the CEO for Little Caesar’s Enterprises; from 1999 to 2003 Financial Planning and Operational Analysis Leader US/ Canada for the US company Tower Auto- motive; from 2003 to 2005 Director of Financial Planning and Operational Analysis and from 2005 to 2007 Busi- ness Group Controller of Business Group North America for Rieter Holding Ltd; from 2007 to 2015 Chief Financial Officer Business Group North America of Rieter Holding Ltd/Autoneum Holding Ltd; in the current function since 2015 . *as of March 1, 2015 Autoneum Annual Report 2015 Corporate Governance58 6 Shareholders’ participatory rights Voting restrictions Autoneum Holding Ltd imposes no voting restrictions. Autoneum Holding Ltd imposes no voting restrictions. Statutory quorum General Meetings of Shareholders adopt reso- lutions with the absolute majority of represented voting shares unless the law or Articles of Association12 stipulate otherwise. Remuneration is approved with the majority of votes cast regardless of potential abstentions. Convocation of General Meeting, agenda publication, voting proxies General Meetings of Shareholders are called through publication in the Swiss Commercial Gazette by the Board of Directors at least 20 days prior to the event, with details of the agenda, pursuant to §8 of the Articles of Association12. Pursuant to §9 of the Articles of Association12, shareholders representing shares with a par value of at least CHF 20 000 can request the inclusion on the agenda of an item for discussion, with details of the relevant motions, by a closing date published by the company. Shareholders who do not attend Gen- eral Meetings personally can arrange to be represented by another shareholder by written power of attorney or by the independent vot- ing proxy by issuing written power of attorney and instructions pursuant to the signed registration form or electronically via the platform at https://autoneum.shapp.ch. The independent voting proxy is elected annually by the Annual 12 www.autoneum.com/investor-relations/corporate-governance/ General Meeting. Lic. iur. Ulrich B. Mayer, Attorney-at-Law, shall hold office as independent voting proxy until the closure of the 2016 Annual General Meeting. Entries in the shareholders’ register In order to ensure an orderly procedure, the Board fixes the reference date shortly before the shareholders’ meeting, by which time share - holders need to be entered in the share register in order to exercise their participation rights at the meeting. This reference date is published in the Swiss Commercial Gazette together with the invitation to the General Meeting. 7 Change of control and defensive measures Change of control clauses There are no change of control clauses in Autoneum contracts of employment and office. In the event of a change of control, all shares blocked within the framework of the Group Bonus Plan are vested. Obligation to submit an offer The legal provisions according to Art. 22 of SESTA are applicable. This states that a share- holder or a group of shareholders acting in concert who hold more than 33% of all shares must submit a takeover offer to the other shareholders. 8 Statutory auditors Duration of mandate and term of office of the lead auditor KPMG AG, Zurich, has been the statutory and Group auditor of Autoneum Holding Ltd and the Autoneum Group since the financial year 2011. Kurt Stocker, licensed audit expert, has been lead auditor for the Autoneum mandate at KPMG since the financial year 2011. The term of office of the lead auditor is limited to seven years. Autoneum Annual Report 2015 Corporate Governance 59 annually, and discusses auditing results with the external auditors in each case. 9 Information policy Autoneum maintains regular, open communica- tion with all stakeholders and relevant parties, in particular with investors, financial analysts and representatives of banks and the media. Communication takes place through the Annual Report and Semi-Annual Report, the Annual General Meeting and at least one media and financial analysts conference each year. Reporting on the financial year 2015 includes the Annual Report with review of the year, the annual and consolidated financial statements, the Corporate Governance report and Remuneration report, a media release as well as a presentation. The Annual Report can be ordered by shareholders using the form enclosed with the invitation to the Gener- al Meeting. It is also available for perusal at company headquarters no later than 20 days prior to the General Meeting. At the Annual General Meeting, the Board of Directors and the Group Executive Board provide informa- tion on the annual accounts and the course of company business and answer shareholders’ questions. Audit fees and additional fees KPMG and other auditors charged Autoneum Holding Ltd approximately CHF 1.1 million in the financial year 2015 for services in connec- tion with auditing the annual financial state- ments of the Group companies, the consolidated Autoneum Group accounts and the Remunera- tion report. KPMG and other auditors also charged Autoneum approximately CHF 0.5 million for additional services in the year under review, mainly for tax advisory services. Information instruments of the external auditors The external auditor informs the Audit Com- mittee in writing and verbally at every meeting about relevant auditing activities and other important facts and figures related to the company. Representatives of the external and internal auditors attend Audit Committee meetings to explain their activities and answer questions. The statutory auditors have access to the minutes of the meetings of the Board of Directors. Representatives of the external and internal auditors attend Audit Committee meetings. The Audit Committee of the Board of Directors makes an annual assessment of the performance, fees and independence of the statutory and Group auditors. It submits a proposal to the Board of Directors regarding who should be proposed for election as statutory auditors at the General Meeting. In addition, the Audit Com- mittee reviews the scope of external auditing, the auditing plans and relevant procedures Autoneum Annual Report 2015 Corporate Governance 60 Sources of information Autoneum provides extensive information to all interested parties. This is available online via the following links: · Articles of Association Autoneum Holding Ltd: www.autoneum.com/investor-relations/ corporate-governance · Organizational Regulations: www.autoneum.com/about-autoneum · Order of Annual Reports (printed version): www.autoneum.com/ investor-relations/reports · Share price: www.autoneum.com/ investor-relations/share · Presentations: www.autoneum.com/ investor-relations/presentations · Media releases: www.autoneum.com/investor- relations/media-releases · Subscription to media releases: www.autoneum.com/media/subscription/ · Sustainability: www.autoneum.com/ about-autoneum/sustainability · Contact: www.autoneum.com/contact Shareholders and the capital market are in- formed by media releases of significant changes and developments in the company. Share-price- relevant events are published in accordance with the ad hoc publicity requirements of the SIX Swiss Exchange. In addition, Autoneum maintains communication with investors, financial ana- lysts and representatives of the media at corre- sponding events. Should shareholders and other inter- ested parties wish to automatically receive the media releases, they may register at www.autoneum.com/media/subscription/. Autoneum Annual Report 2015 Corporate Governance Autoneum Financial Report 2015 Contents 61 Financial report 62 Consolidated financial statements 104 Remuneration report 109 Financial statements of Autoneum Holding Ltd 119 Review 2011–2015 62 Consolidated income statement CHF million Net sales Material expenses Employee expenses Other expenses Other income Earnings before interest, taxes, depreciation and amortization (EBITDA) Depreciation and amortization Earnings before interest and taxes (EBIT) Financial income Financial expenses Share of profit of associated companies Profit before taxes Income taxes Net profit Attributable to shareholders of Autoneum Holding Ltd to non-controlling interests Basic earnings per share in CHF Diluted earnings per share in CHF 100.0% 47.8% 26.1% 17.6% 0.7% 9.2% 3.1% 6.1% 5.2% 3.3% Notes (4) (5) (6) (7) (8) (9) (10) (15) (11) (12) (12) 2015 2 085.9 –998.1 –545.2 –366.6 15.5 191.5 –65.1 126.5 0.9 –20.2 1.9 109.2 –40.5 68.7 42.2 26.5 9.12 9.10 Consolidated statement of comprehensive income CHF million Net profit Currency translation adjustment Changes in fair value of fin. instruments available for sale Income taxes Total items that will be reclassified to income statement Remeasurement of defined benefit pension plans Income taxes Total items that will not be reclassified to income statement Other comprehensive income Total comprehensive income Attributable to shareholders of Autoneum Holding Ltd to non-controlling interests The accompanying notes on pages 66–102 are part of the consolidated financial statements. 2015 68.7 –30.6 5.2 - –25.4 –3.5 0.7 –2.8 –28.3 40.4 16.0 24.4 100.0% 49.3% 25.6% 15.6% 0.8% 10.3% 3.4% 6.9% 6.1% 5.3% 2014 1 954.7 –964.5 –499.8 –305.3 16.5 201.6 –66.5 135.1 1.0 –16.4 0.4 120.1 –17.3 102.8 78.9 23.9 17.03 16.97 2014 102.8 18.6 2.8 - 21.4 –18.8 5.3 –13.5 8.0 110.8 79.5 31.4 Autoneum Financial Report 2015 Consolidated financial statementsConsolidated balance sheet CHF million Assets Tangible assets Intangible assets Investments in associated companies Financial assets Deferred income tax assets Employee benefit assets Other assets Non-current assets Inventories Trade receivables Current income tax receivables Other assets Financial assets Cash and cash equivalents Assets of disposal group classified as held for sale Current assets Assets Shareholders’ equity and liabilities Equity attributable to shareholders of Autoneum Holding Ltd Equity attributable to non-controlling interests Total shareholders’ equity Borrowings Deferred income tax liabilities Employee benefit liabilities Provisions Other liabilities Non-current liabilities Borrowings Current income tax liabilities Provisions Trade payables Other liabilities Liabilities of disposal group classified as held for sale Current liabilities Liabilities 63 Notes 31.12.2015 31.12.2014 (13) (14) (15) (16) (11) (25) (17) (18) (19) (17) (16) (20) (21) (22) (23) (24) (11) (25) (26) (27) (24) (26) (27) (21) 433.5 409.6 9.8 8.3 35.3 31.7 1.0 33.7 553.6 130.9 254.9 7.4 77.4 0.8 78.7 11.0 10.0 6.4 31.2 32.0 6.2 40.9 536.2 130.5 220.3 4.7 65.9 0.9 140.9 - 561.1 1 114.7 563.0 1 099.3 301.3 96.2 397.5 170.9 10.8 28.8 54.4 19.9 284.8 14.0 10.0 14.8 243.3 148.1 2.2 432.3 717.1 303.5 89.0 392.5 175.3 9.9 31.7 42.8 17.1 276.8 20.4 8.5 11.7 250.4 139.0 - 430.0 706.8 Shareholders’ equity and liabilities 1 114.7 1 099.3 The accompanying notes on pages 66–102 are part of the consolidated financial statements. Autoneum Financial Report 2015 Consolidated financial statements64 Consolidated statement of changes in equity Attributable to the shareholders of Autoneum Holding Ltd CHF million At December 31, 2013 Net profit Other comprehensive income Total comprehensive income Capital increase Dividends paid1 Purchase of treasury shares Share-based remuneration Total transactions with owners At December 31, 2014 Net profit Other comprehensive income Total comprehensive income Capital increase Dividends paid1 Purchase of treasury shares Share-based remuneration Total transactions with owners Share capital Treasury shares Capital reserves 0.2 - –2.3 - 244.4 - - - - - - - - 0.2 - - - - - - - - - - - - –4.7 0.9 –3.7 –6.1 - - - - - –0.1 1.9 1.7 - - - –6.0 - - –6.0 238.3 - - - - –20.8 - - –20.8 Available for sale reserves Retained earnings 2.5 - 2.8 2.8 - - - - - 5.3 - 5.2 5.2 - - - - - 1.8 78.9 –13.4 65.5 - - - 0.9 0.9 68.2 42.2 –2.8 39.4 - - - 0.9 0.9 Currency transl. adjustm. –13.7 - 11.2 11.2 - - - - - Total 232.9 78.9 0.6 79.5 - –6.0 –4.7 1.9 –8.9 –2.5 - 303.5 42.2 –28.5 –26.2 –28.5 - 16.0 - Attributable to non- controlling interests 69.1 23.9 7.5 31.4 4.8 Total equity 302.0 102.8 8.0 110.8 4.8 –16.3 –22.3 - - –4.7 1.9 –11.5 –20.4 89.0 26.5 –2.1 24.4 0.1 392.5 68.7 –28.3 40.4 0.1 - - - - –20.8 –17.3 –38.1 –0.1 2.8 - - –0.1 2.8 –18.2 –17.2 –35.4 At December 31, 2015 0.2 –4.3 217.5 10.5 108.5 –31.1 301.3 96.2 397.5 1 Autoneum Holding Ltd paid a dividend of CHF 4.50 per share in 2015 (2014: CHF 1.30) as approved by the Annual General Meeting. The accompanying notes on pages 66–102 are part of the consolidated financial statements. Autoneum Financial Report 2015 Consolidated financial statements Consolidated statement of changes in equity Consolidated statement of cash flows Notes (9) (10) (11) (8) (15) (3) (13) (14) (3) (15) CHF million Net profit Dividend income Interest income Interest expenses Income tax expenses Depreciation and amortization Share of profit of associated companies Other non-cash income and expenses Change in net working capital Change in post-employment benefit assets and liabilities Change in non-current provisions Change in operating receivables within other non-current assets Change in operating liabilities within other non-current liabilities Gain from disposal of subsidiary or business Dividends received Interest received Interest paid Income taxes paid Cash flows from operating activities Investments in tangible assets Investments in intangible assets Investments in non-current financial assets Proceeds from disposal of tangible assets Proceeds from disposal of subsidiary or business, net of cash disposed of Investments in associated companies Investments in non-consolidated companies Investments in current financial assets Proceeds from sale of current financial assets Cash flows used in investing activities Dividends paid to shareholders of Autoneum Holding Ltd Dividends paid to non-controlling interests Proceeds from capital increase Purchase of treasury shares Proceeds from borrowings Repayment of borrowings Repayment of subordinated shareholder loans Cash flows used in financing activities Currency translation adjustment Change in cash and cash equivalents Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the year (20) The accompanying notes on pages 66–102 are part of the consolidated financial statements. 2015 68.7 –0.1 –0.7 12.3 40.5 65.1 –1.9 3.6 –48.7 –0.1 11.2 4.3 3.1 - 0.1 0.7 –12.0 –34.4 111.7 –119.1 –1.5 –1.5 0.8 –0.5 –0.5 –0.7 - - –123.1 –20.8 –17.3 0.1 –0.1 10.7 –16.0 - –43.5 –7.3 –62.2 140.9 78.7 65 2014 102.8 –0.2 –0.8 13.8 17.3 66.5 –0.4 –4.8 –12.0 –2.4 9.2 –9.8 –0.5 –1.8 0.2 0.8 –13.8 –25.9 138.2 –98.7 –3.1 –1.2 3.1 –8.0 –0.6 –0.8 –0.5 1.1 –108.8 –6.0 –16.3 4.8 –4.7 48.5 –16.3 –25.0 –15.0 8.5 22.9 117.9 140.9 Autoneum Financial Report 2015 Consolidated financial statements 66 Notes to the consolidated financial statements 1.1 Significant accounting policies Basis of preparation Autoneum Holding Ltd (“the Company”) was incorporated on December 2, 2010, as a Swiss corporation headquartered in Winterthur. The Company has been listed on the SIX Swiss Exchange (AUTN, ISIN: CH0127480363) since May 13, 2011. Autoneum Holding Ltd together with its subsidiaries will henceforth be referred to as “Autoneum Group”, “Group” or “Autoneum”. A list of subsidiaries and associated companies of Autoneum Group can be found in note 36 on page 102. The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS). The conso lidated financial statements are based on his toric cost, with the exception of specific financial instruments, which are measured at fair value. The consolidated financial statements were authorized for issue by the Board of Direc- tors on March 2, 2016, and are subject to ap- proval by the Annual General Meeting of share- holders on March 30, 2016. The consolidated financial statements are published exclusively in English. Due to round- ing, numbers presented throughout this report may not add up precisely to the totals provided. All ratios and variances are calculated using the underlying amount rather than the presented rounded amount. Significant accounting judgments, estimates and assumptions Financial reporting requires management to make judgments, estimates and assumptions that affect the application of the Group’s accounting policies and the reported amounts of assets, liabilities, contingent assets and contingent liabilities at the date of the financial statements, and reported amounts of revenue and expenses during the reporting period. When such estimates and assumptions deviate from the actual circumstances, the estimates and assumptions are updated in the reporting period in which the circumstances have changed. The estimates, assumptions and judg- ments relate primar ily to the areas of impair- ment, tangible assets, inventories, employee benefits, provisions, income taxes and whether Autoneum has control over an entity. The most significant elements of estimates and assumptions are as follows: Impairment losses on tangible assets are assessed based on estimated cash flows, which may vary from actual cash flows. Important assumptions to consider are useful lives, growth rates, achievable margins as well as discount rates. When assessing inventories, estimates for their recoverability based on the expected consumption of the corresponding item are considered. The valuation adjustments for inven- tories are determined for each item using a coverage analysis. The parameters are checked annually and modified if necessary. Changes in sales or other circumstances can lead to an adjustment of the book value accordingly. For defined benefit plans, actuarial valua- tions are done regularly, which are the basis for the employee benefit assets and liabilities in the balance sheet. These calculations are based on statistical and actuarial assumptions. In particular the present value of the defined bene- fit obligation is affected by assumptions such as discount rate, expected future salary growth and the life expectancy. Other assumptions for the valuation are derived from statistical data such as mortality tables and staff turnover rates. Actuaries are independent from Autoneum. Assumptions made by actuaries may differ signifi cantly from actual results. These deviations can ultimately have an effect on the Autoneum Financial Report 2015 Consolidated financial statements67 employee benefit assets or liabilities in future periods. In the course of the ordinary operating activities of Autoneum Group, obligations from guarantee and warranty, litigation and tax risk, and environmental risk can arise. Provisions for these obligations are measured on the basis of estimated future cash outflow. The outcome of these business transactions may result in claims against Autoneum that may be below or above the related provisions. Provisions for obligations from guarantee and warranty are recognized when damage has occurred and the related cash outflow can be estimated reliably, but a material uncertainty concerning the kind of damage and the kind of compensation exists. Provisions for litigation and tax risk comprise complex cases that include material uncertainties. Environ- mental provisions are recognized for the expec- ted costs for the cleanup and reconstruction of contaminated sites that are interdependent of many uncertainties, such as Autoneum’s share of the cost or the applicable approach for determining these costs. The financial impact of these cases for future periods can only be estimated, because uncertainties relating to amount and date of cash outflow exist. Assumptions in relation to income taxes include interpretations of the tax regulations in place in the relevant countries. The adequacy of these interpretations is assessed by the tax authorities. This can result, at a later stage, in changes in the income tax expenses. To determine whether a deferred income tax asset on tax loss carryforwards may be recognized requires judgment in assessing whether there will be future taxable profits against which these tax loss carryforwards can be offset. Assessing whether Autoneum has control over an entity includes all facts and circum- stances that may indicate that the Group is able to direct the relevant activities and key deci- sions. Autoneum concludes that it has control over the entities in which it holds 50% or more (refer to note 23, p. 91), based on specific rights allocated. Facts and circumstances indicating that Autoneum controls an entity may change and lead to a reassessment of the man- agement’s conclusion. Scope and methods of consolidation The consolidated financial statements of Autoneum Holding Ltd include the Company and its subsidiaries. Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control is lost. Acquisitions are accounted for using the acquisition method. Intercompany transactions are eliminated. If Autoneum does not have control over entities but significant influence, which is usually the case if Autoneum holds interests of between 20% and 50%, these investments are classified as associated companies and accounted for using the equity method. Interests of less than 20% where Autoneum does not have significant influence are accounted for at fair value. The subsidiaries and associated companies are listed in note 36 on page 102. Foreign currency translation Items included in the financial statements of each Group company are measured using the currency of the primary economic environment in which the company operates (“functional currency”). The consolidated financial statements are prepared in Swiss francs, which is the functional currency and the reporting currency of Autoneum Holding Ltd. Transactions in foreign currencies are trans- lated into the functional currency by applying the exchange rates prevailing on the date of the Autoneum Financial Report 2015 Consolidated financial statements68 transaction. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities de nomi- nated in foreign currencies are recognized in the income statement. For consolidation purposes, items in the balance sheet of foreign subsidiaries are trans- lated at year-end exchange rates, while income statement items are translated at average rates for the period. The resulting currency translation differences are recognized in other compre- hensive income and, in the event of a disposal of a foreign operation, transferred to the income statement as part of the gain or loss from disposal. Tangible assets Tangible assets are stated at historical cost less accumulated depreciation, which is recognized on a straight-line basis over the estimated useful life of the asset. Historical cost includes ex- penditures that are directly attributable to the acquisition of the assets. Useful life is deter- mined according to the expected utilization of each asset. The relevant ranges are as follows: Factory buildings Machinery and plant equipment Tools/IT equipment/furniture Vehicles 20–50 years 5–15 years 3–10 years 3–5 years Components of certain assets with different useful lives are depreciated separately. All gains or losses arising from the disposal of tangible assets are recognized in the income statement. Costs of maintenance and repair are charged to the income statement as incurred. The residual values and useful lives of tangible assets are reviewed, and adjusted if appropriate, at each balance sheet date. Leases Leased assets where Autoneum substantially bears all the risks and rewards of ownership (finance leases) are capitalized. Assets held under such finance leases are depreciated over the shorter of their estimated useful life or the lease term. The corresponding lease obli- gations, excluding finance charges, are included in borrowings. Lease installments are divided into an interest and a principal component. All other leases are classified as operating leases. Payments in respect of operating leases are charged to the income statement on a straight- line basis over the duration of the lease. Intangible assets Intangible assets such as product licenses, patents and trademark rights as well as software acquired from third parties are included in the balance sheet at acquisition cost and are amor- tized on a straight-line basis over a period of up to eight years. The residual values and useful lives of intangible assets are reviewed, and adjusted if appropriate, at each balance sheet date. Autoneum has neither in the current reporting period nor in the prior period intangible assets that have an indefinite useful life recorded in the balance sheet. Autoneum has no goodwill capitalized in the balance sheet. Impairment of assets Tan gible assets and intangible assets are tested for impairment if there are indications that, due to changed circumstances, their carrying value may no longer be fully recoverable. If such a situation arises, the recoverable amount is determined. This is the higher of its value in use and its fair value less cost to sell. Value in use is based on the estimated future cash flows, dis- counted to their present value using a pre-tax discount rate that reflects current market assess- ments of the time value of money and the risks specific to the asset. If the recoverable amount is below the carrying amount, a corresponding impairment loss is recognized in the income statement. Where the recoverable amount cannot be determined for an individual asset, it is determined for the cash generating unit to which the asset belongs. To determine the value of an Autoneum Financial Report 2015 Consolidated financial statements69 asset, estimates of the expected future cash flows from both usage and disposal are made. Research and development Research costs are recognized in the income statement when incurred. Development costs for major projects are capitalized as intangible assets if the cost can be measured reliably, if it can be demonstrated that the project is tech- nically feasible and is expected to generate future economic benefits and if Autoneum plans to provide sufficient resources in order to complete the development and to use or sell the intan- gible asset. Financial instruments All financial assets not carried at fair value through profit or loss are initially recognized at fair value plus transaction costs. Financial assets carried at fair value through profit or loss are initially recognized at fair value, and transaction costs are expensed in the income statement. Subsequent valuation depends on the cate- gory into which the financial assets are classified. Autoneum distinguishes between the following categories: Financial assets at fair value through profit or loss include financial assets held for trading and those that are designated as such at incep- tion. Assets in this category are presented as current assets if they are either held for trading or are expected to be realized within twelve months after the balance sheet date. For sub- sequent valuation, changes in fair value are recognized in the income statement. Derivative financial instruments with positive replacement value and marketable securities are assigned to this category. Loans and receivables are non-derivative presented as non-current assets. Subsequently, they are valued at amortized cost less impair- ment losses. Available-for-sale financial assets are non-derivative financial assets that are either classified as such or not assigned to any of the above categories. They are measured at market value as of the balance sheet date. Changes in the value are recorded in other comprehensive income prior to sale, and reclassified to income statement when they are sold. Any impairment is charged to the income statement immedi- ately. They are included in non-current assets unless management intends the disposal within twelve months after balance sheet date. Autoneum has no financial instruments that are classified as held-to-maturity. Financial liabilities at fair value through profit or loss are either held for trading purpos- es or designated as such. At their initial recog- nition and subsequently, financial liabilities at fair value through profit or loss are measured at fair value. Transaction costs directly identifiable to the purchase of these liabilities are immedi- ately expensed. Derivative financial instruments with negative replacement values are assigned to this category. All other financial liabilities are measured at amortized cost. Mainly trade payables, bor- rowings and other liabilities are assigned to this category. They are recognized initially at fair value, net of transaction costs incurred. Subse- quently, these financial liabilities are stated at amortized cost. Any difference between the proceeds (net of transaction costs) and the redemption value is recognized in the income statement over the period of the obligation using the effective interest method. financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than twelve months after the balance sheet date, in which case they are Inventories Raw material, consumables and purchased parts are valued at the lower of average cost or net realizable value. Semi-finished goods and finished goods are valued at the lower of manufacturing Autoneum Financial Report 2015 Consolidated financial statements70 cost or net realizable value. Valuation adjust- ments are made for obsolete materials and excess stock. Trade receivables Trade receivables are classified as “loans and receivables” and are stated at amortized cost, which usually equals the original invoice value less any impairment loss. The loss is measured as the difference between the invoiced amount and the expected payment. The allowances are established based on maturity structure and identifiable solvency risks. Cash and cash equivalents Cash and cash equivalents include bank accounts and time deposits with original maturities from the date of acquisition of up to three months. Equity Ordinary shares are classified as equity since the shares are non-redeemable and any dividends are discretionary. When shares are repurchased, the amount of the consideration paid is recognized as a deduction from equity and presented as a sepa- rate component in equity. When treasury shares are sold or reissued subsequently, the amount received is recognized as an increase in equity and the resulting surplus or deficit on the transaction is recognized in retained earnings. Provisions Provisions are recognized when the Group has a present legal or constructive obligation as a result of past events, it is probable that an out- flow of resources will be required to settle the obligation, and the amount can be reliably esti- mated. Provisions are discounted if the impact is significant. Income taxes Income taxes comprise both current and deferred income taxes. Normally income taxes are recog- nized in the income statement, unless they are linked to a position that is recognized in other comprehensive income. In this case, the income taxes are also recognized in other comprehen- sive income. Current income taxes are calculated and accrued on the basis of taxable income for the year. Deferred income taxes on temporary differences between carrying amounts of assets and liabilities for financial reporting purposes and amounts determined for local tax purposes are calculated using the lia bility method. De- ferred income taxes are measured at the tax rate expected to be applied to temporary differences when they reverse, using tax rates enacted or substantially enacted at the reporting date. Deferred income tax assets and liabilities are offset to the extent that an entity has a legally enforceable right to offset current income taxes, and the deferred income taxes relate to income taxes levied by the same taxation authority and relate to the same taxable entity. Temporary differences resulting from invest- ments in Group companies are not considered if Autoneum is able to control the timing of the reversal of the temporary differences and if it is probable that these temporary differences will not reverse in future. The tax impact of losses and deductible temporary differences is capitalized to the extent it appears probable that such losses will be offset in the future by taxable income. Employee benefits Employee pension plans are operated by certain subsidiaries, depending upon the level of cover- age provided by the government pension facilities in the various countries in which they are pres- ent. Some are provided by independent pension funds. If there is no independent pension fund, the respective obligations are shown in the bal- ance sheet under employee benefit liabilities. As a rule, pensions are funded by employees’ and employer’s contributions. Pension plans exist Autoneum Financial Report 2015 Consolidated financial statements71 Share-based payments Share-based payments to members of the Board of Directors, the Executive Board and senior management are measured at fair value at the grant date, and recognized in the income statement over the vesting period. For share- based payments that are settled with equity instruments a corresponding increase in equity is recognized. Revenue recognition Sales resulting from business activities are disclosed as revenue. Autoneum recognizes revenue when the significant risks and rewards of ownership of the goods were transferred to the customer. Revenues arising from services are recorded based on the stage of completion of the services. Credits, discounts and rebates are already deducted from net sales. Financing costs Borrowing costs that are directly attributable to the acquisition, construction or production of a qualified asset are capitalized as a part of the acquisition costs of the qualified asset. All other financing costs are recognized directly in the income statement. on the basis of both defined contribution and defined benefit. Pension liabilities arising from defined bene fit plans are calculated annually by inde- pendent actuaries using the projected unit credit method. The discount rate used for the calculation is based on interest rates of high-quality corporate bonds that are denomi- nated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension obligation. Remeasurement gains or losses are recognized in other comprehensive income. Pension costs relating to services rendered in the reporting period are recognized in the income statement as current service costs. Pension costs relating to services ren- dered in previous periods as a result of new or amended pension benefits are recognized in the income statement as past service costs. The net interest expenses or income on the net defined benefit liability or asset for the period is determined by applying the discount rate used to measure the defined benefit obligation at the beginning of the period to the then net defined benefit liability or asset, taking into account any changes in the net defined benefit liability (asset) during the period as a result of contribu- tions and benefit payments. The net interest expenses or income is recognized in financial expenses or income. The fair value of plan assets is deducted from the defined benefit obli- gations. Any asset resulting from this calcula- tion is only capitalized up to an amount not exceeding benefits from future contribution re- ductions or refunds. In the case of defined contribution plans, the contributions are recognized as expense in the period in which they incurred. Autoneum Financial Report 2015 Consolidated financial statements72 1.2 Changes in accounting policies and in presentation Adopted changes in accounting policies The adoption of new and revised standards had no effect on the consolidated financial state- ments 2015. Future changes in accounting policies The following new and revised standards and interpretations have been issued, but are not yet effective. They have not been applied early in these consolidated financial statements. How- ever, a preliminary assessment has been con- ducted by Group Management, and the expected impact of each standard and interpretation is presented in the table below. IFRS 9 “Financial Instruments” includes revised guidance on the classification and meas- urement of financial assets and financial liabili- ties, including a new expected credit loss model for calculating impairment, and supplements the new general hedge accounting requirements published in 2013. It also carries forward the guidance on recognition and derecognition of financial instruments from IAS 39. The Group is yet to assess IFRS 9’s full impact. IFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognized based on a five-step approach. Under IFRS 15, an entity recognizes revenue when control of the promised goods and services is transferred to the customer at an amount that reflects the consideration to which the entity expects to be entitled. It replaces existing revenue recognition guidance, including IAS 18, IAS 11 and IFRIC 13. IFRS 16 “Leases” brings most leases on the balance sheet for lessees under a single model, eliminating the distinction between operating and finance leases. For lessors, however, the account- ing remains largely unchanged. Under IFRS 16, a lessee recognizes a right-of-use asset and a lease liability. The right-of-use asset is treated similarly to other non-financial assets and depreciated accordingly. The lease liability is initially measured at the present value of the lease payments payable over the lease term, discounted at the rate implicit in the lease if this rate can be readily determined. If the rate cannot be readily determined, the lessee’s incremental borrowing rate should be used. IFRS 16 supersedes IAS 17 “Leases” and related interpretations. New standards or interpretations IFRS 15 Revenue from contracts with customers1 IFRS 9 Financial instruments1 IFRS 16 Lease1 Effective date Planned application by Autoneum January 1, 2018 January 1, 2018 January 1, 2018 January 1, 2018 January 1, 2019 January 1, 2019 Revisions and amendments of standards and interpretations Accounting for acquisitions of interests in joint operations (amendments to IFRS 11)3 January 1, 2016 January 1, 2016 Clarification of acceptable methods of depreciation and amortization (amendments to IAS 16 and IAS 38)3 January 1, 2016 January 1, 2016 Sale or contribution of assets between an investor and its associate or joint venture (amendments to IFRS 10 and IAS 28)3 Disclosure initiative (amendments to IAS 1)2 Annual improvements to IFRS 2012–2014 cycle2 postponed unknown January 1, 2016 January 1, 2016 January 1, 2016 January 1, 2016 1 The impact on the consolidated financial statements cannot yet be determined with sufficient reliability. 2 The impact on the consolidated financial statements is expected to result in additional disclosures or changes in presentation. 3 No impact or no significant impact is expected on the consolidated financial statements. Autoneum Financial Report 2015 Consolidated financial statements 73 Adopted changes in presentation The following changes in presentation were adopted in 2015: Balance sheet line items were newly defined in 2015 to increase the transparency level as described below. The prior year figures were ad- justed accordingly. • Financial assets in current and non-current assets are separated from other assets and are disclosed as a separate line item. • Post-employment benefit assets are separated from other assets and are disclosed as a separate line item. • Current income tax receivables are separated from other assets and are disclosed as a separate line item. • Advance payments to suppliers are included in the current portion of other assets. • Advance payments from customers are included in the current portion of other liabilities. Bank debts in the amount of CHF 40.6 million were reported as current borrowings as per December 31, 2014. Until December 31, 2019, the Group has the unconditional right to defer settlement as the liability cannot be called by the lender at any time without cause. Therefore, bank debts in the amount of CHF 40.0 million were disclosed as non-current borrowings at December 31, 2015. The classification of the prior year amount was adjusted accordingly. Due to changes in the Group’s reporting structure, a subsidiary that produces parts for Autoneum’s manufacturing lines, which was included in BG Europe, is now included in Corpo- rate. The prior year figures were adjusted ac- cordingly. The impact of this reclassification for 2015 is not materially different than for 2014. The major changes in the segment reporting are disclosed in the table below. CHF million Segment information BG Europe 2014 Net sales EBITDA EBIT Number of employees Reported Adjustment Restated 807.7 67.4 38.7 3 858 –4.4 –7.7 –7.0 –234 803.3 59.7 31.7 3 623 Autoneum Financial Report 2015 Consolidated financial statementsMarket and business risks resulting from developments in the relevant markets and of the products offered therein are assessed as part of the strategic planning and the financial plan- ning processes. On the other hand, these risks, as well as operational risks, are regularly reviewed at the monthly meetings within the Business Groups and with the CEO and the CFO of the Group. As a part of these meetings, other risks impacting actual performance against budget are also dealt with, in order to identify and implement corrective measures. Significant indi- vidual risks are included in the monthly reports to the attention of the CEO. Risks resulting from acquisitions, divest- ments or other major projects are monitored at Group level within the framework of competencies and approvals for the respective project. Such projects are reviewed in the monthly meetings of the CEO and CFO with the Business Groups. Quarterly review reports were prepared for the attention of the Board of Directors. Specific risks are addressed by periodic reports. Such reports cover environmental and work safety risks at the various sites, treasury risks and risks from legal actions and legal com- pliance. An aggregate review of all identified risks and of the instruments and measures to ad- dress these risks is performed on a semi-annual basis. The review results are reported to the Board of Directors and Group Executive Board. 74 2.1 Risk management process Autoneum maintains an Internal Control System with the objective of ensuring effectiveness and efficiency of operations, reliability of finan- cial reporting and compliance with applicable laws and regulations. The Internal Control System is an important part of the risk management system. The process of risk management is governed by the directive “Autoneum risk management system”, which was adopted by the Board of Directors. The directive defines the main cate- gories of risks, which serve as a basis of the risk management, and the bodies that deal within the Group with the various risks. In addition, the policy defines the procedures for detecting, reporting and managing risks, the criteria for quali tative and quantitative risk assessment as well as limits for reporting identified risks to the appropriate management levels. The directive defines the following main risk categories: strategic risks (market and product), operational risks, financial risks, litigation and other risks (e.g. political, legal, organizational, environmental and work safety risks). Besides the financial risks (refer to para- graph 2.2), the following risks within the main risk categories are a focus of Autoneum: • Strategic risks (market and product): These risks result on the one hand from different markets in which Autoneum is operating (local aspects, legal regulations, degree of maturity of markets). On the other hand, the risks result from the share of the customers in Autoneum’s sales, as well as from the technical and regula- tory requirements on Autoneum products. • Operational risks: These risks result from the technical development of orders until end of production, from the need for cost-efficient production and the possibility of interruptions in production. • Environmental and work safety risks. Autoneum Financial Report 2015 Consolidated financial statements75 2.2 Financial risk management Financial risk factors As a result of its worldwide activities, Autoneum is exposed to various financial risks, such as fluctuations in exchange rates, interest rates and stock market prices, credit risks and liquidity risks. Autoneum’s financial risk management has the aim to minimize the potential adverse impact of the development of the financial markets on the Group’s financial performance and to secure its financial stability. This includes the use of derivative financial instruments to hedge certain risk exposures. Financial risk management is carried out centrally for the Group, in accordance with the directives adopted by the Board of Directors and the Group Executive Board. Financial risks are identified primarily locally and evaluated and managed centrally in close cooperation with the Group’s legal units. Foreign exchange risk Foreign currency risks arise from investments in foreign subsidiaries (translation risk) and from transactions, assets or liabilities that are denom- inated in a currency other than the functional currency of a legal unit (transaction risk). In order to hedge transaction risks that cannot be reduced through offsetting transactions in the same foreign currency (natural hedging), sub- sidiaries may use forward contracts and curren- cy options, which are usually completed with the Group’s headquarters and from the latter by trading with banks. The majority of the business transacted in Autoneum’s foreign subsidiaries is in their functional currency. Nevertheless, the Group is exposed to foreign currency risks, mostly against the euro. Assuming that the euro against the Swiss franc as at December 31, 2015, would have been 15% stronger, and all other parameters remained the same, the profit before taxes would have been CHF 2.3 million higher (2014: CHF 0.9 million). In the opposite case, the profit before taxes would have been reduced to the same extent. This would mainly have been due to exchange gains/losses on trade receivables and payables. The companies’ cash holdings with banks are denominated mostly in the relevant functional currency. The foreign currency risks of cash positions in foreign currencies are reviewed periodically. Interest rate risk The interest risk of the Group relates to interest bearing assets and liabilities. Assets and lia- bilities with fluctuating interests result in cash flow risks, while fixed interest bearing assets and liabilities lead to a fair value interest risk if measured at fair value. Autoneum maintains, in consideration of seasonal fluctuations, a bal- anced relation between fixed and fluctuating interest bearing financial liabilities. The Group analyzes the interest risk on a net basis. A 1% higher interest rate would have reduced the profit before taxes of the Group by CHF 1.3 million (2014: CHF 1.2 million). No hedging of the interest rate risk was performed in the reporting period or in the prior period. Price risk Holding marketable securities exposes Autoneum to a risk of price fluctuation. Since Autoneum held no significant shares (except for treasury shares) or options at the end of the reporting period, no sensitivity analysis of fair value risk is prepared. Credit risk Credit risk arises from deposits and financial deriv atives held with financial institutions and from trade receivable accounts, other re ceiv- ables and marketable securities and interest bearing receivables. The maximum risk of these positions corresponds to the book values and Autoneum Financial Report 2015 Consolidated financial statementsmedium- and long-term financing with a group of banks in the amount of CHF 150.0 million (refer to note 24, p. 92), which expires in Decem- ber 2019. Furthermore, a bond in the amount of CHF 125.0 million with maturity as of December 14, 2017, was issued on the SIX Swiss Exchange. 76 is disclosed in note 30 on page 99. Significant relationships with financial institutions are basi- cally only entered into with counterparties rated no lower than “A” (according to Standard & Poor’s). Autoneum maintains business relation- ships with all significant automotive manufac- turers and, compared to the industry sector, has a geographically broad, diversified customer portfolio. Relevant risks of loss are considered low based on historical data. No customer accounted for more than 20.0% (2014: 16.8%) of Autoneum’s sales. Capital risk Autoneum Group maintains a healthy balance sheet with an adequate portion of equity. Autoneum aspires that the equity ratio shall not fall below 30% over a longer period. As of December 31, 2015, the equity ratio equaled 35.7% (2014: 35.7%). For the next few years, the dividend policy will depend on a number of factors, such as net profit and the financial situation of the Group, the demand for capital and liquidity, the general business environment as well as legal and contractual restrictions. Subject to the foregoing, the Group intends to distribute up to 30% of its net profit attributable to shareholders of Autoneum Holding Ltd. Dividends, if any, are expected to be declared and paid in Swiss francs. Liquidity risk The liquidity risk management of Autoneum includes the maintenance of sufficient reserves of cash and time deposits and the availability of funding through an adequate amount of credit lines. Due to the dynamic business environment in which the Group operates, it is the aim of the Group to ensure the financial stability and to maintain the necessary flexibility in funding by generating sufficient free cash flow and holding a reasonable amount of unused credit lines. Autoneum maintains a credit agreement for the Autoneum Financial Report 2015 Consolidated financial statementsThe table below shows the contractual maturities of Autoneum’s financial liabilities (including interest): 77 Contractual undiscounted cash flows Financial liabilities at December 31, 2015 CHF million Bond Bank debt Finance leasing obligations Other borrowings Trade payables Accrued expenses Non-income tax payables Other payables Total Financial liabilities at December 31, 2014 CHF million Bond Bank debt Finance leasing obligations Other borrowings Trade payables Accrued expenses Non-income tax payables Other payables Total Carrying amount 124.6 58.3 0.5 1.5 Less than 1 year 5.5 17.3 0.5 0.1 243.3 243.3 51.2 12.0 29.7 51.2 12.0 28.3 521.2 358.2 Carrying amount 124.4 67.3 0.7 3.3 Less than 1 year 5.5 20.9 0.2 2.2 250.4 250.4 42.2 14.4 33.2 42.2 14.4 31.4 535.8 367.2 1 to 5 years 130.5 46.5 - 1.8 - - - 1.4 180.2 More than 5 years - - - - - - - - - 1 to 5 years 135.9 50.9 0.5 1.6 - - - 1.8 190.7 More than 5 years - - - - - - - - - Total cash flow 136.0 63.8 0.5 1.8 243.3 51.2 12.0 29.7 538.4 Total cash flow 141.4 71.7 0.7 3.8 250.4 42.2 14.4 33.2 557.7 Contractual undiscounted cash flows Autoneum Financial Report 2015 Consolidated financial statements 78 3 Change in scope of consolidation and significant transactions In 2015, the companies Autoneum Mexico Operations, S. de R.L. de C.V., San Luis Potosí and Autoneum Mexico Servicios, S. de R.L. de C.V., San Luis Potosí were established. On July 23, 2014, Autoneum sold its subsidiary Porfima Due S.r.l., Torino (Italy), to the Italian automotive supplier STS acoustics S.p.A., Torino (Italy). The transaction resulted in a gain of CHF 1.8 million and a net cash outflow of CHF 8.0 million. Part of the purchase price was deferred. In 2015, the amount of CHF 0.5 million was paid as deferred purchase price. In 2014, the company Autoneum Korea Ltd., Seoul, was established. 4 Segment information Segment information is based on Autoneum Group’s internal organization and management structure as well as on the internal financial reporting to the Group Executive Board and to the Board of Directors. Chief operating decision maker is the CEO. Autoneum is the globally leading automobile supplier in acoustic and thermal management for vehicles. Autoneum develops and produces multifunctional and lightweight components and systems for noise and heat protection and thereby enhances vehicle comfort. The reporting is based on the following four reportable segments (Business Groups): BG Europe, BG North America, BG Asia and BG SAMEA (South America, Middle East and Africa). Corporate includes Autoneum Holding Ltd and the corporate center with its respective legal entities, an ope- ration that produces parts for Autoneum’s manufacturing lines, investments in associates and intersegment eliminations. Transactions between the Business Groups are made on the same basis as with independent third parties. EBITDA and EBIT in Corporate include expenses in relation to the settlement with the German Federal Cartel Office in the amount of CHF 31.5 million in 2015 (refer to note 29, page 98). Autoneum Financial Report 2015 Consolidated financial statements7979 BG Europe BG North America BG Asia BG SAMEA Total segments Corporate Total Group 825.9 977.9 180.2 93.4 2 077.5 8.4 2 085.9 7.3 833.2 70.6 8.5% - 977.9 117.8 0.7 180.9 32.8 0.9 94.3 –8.8 8.9 2 086.4 –8.9 –0.5 - 2 085.9 212.5 –20.9 12.1% 18.1% –9.3% 10.2% 191.5 9.2% –65.1 126.5 6.1% n/a –1.5 –22.5 n/a –7.8 25.0 –3.7 –12.5 13.8% –13.3% –63.5 148.9 7.1% 140.1 58.3 14.4 60.9 36.4 13.2 1 081.7 33.0 1 114.7 598.5 116.3 118.6 4.4 427 717.1 120.7 11 423 1 744 1 055 10 996 Segment information 2015 CHF million Third-party net sales Inter-segment net sales Net sales EBITDA as a % of net sales Depreciation and amortization –25.9 –26.1 EBIT as a % of net sales Assets at December 311 Liabilities at December 31 Investments in tangible and intangible assets Employees at December 312 44.7 5.4% 406.4 330.9 27.5 3 955 91.7 9.4% 474.3 172.9 61.2 4 243 Segment information 2014 CHF million Third-party net sales Inter-segment net sales Net sales EBITDA as a % of net sales BG Europe BG North America BG Asia BG SAMEA Total segments Corporate Total Group 795.4 882.7 145.2 123.3 1 946.6 8.0 1 954.7 - 0.1 0.6 8.6 145.3 123.9 1 955.3 7.9 803.3 59.7 7.4% 882.7 100.1 11.3% 18.6% 27.0 –7.1 19.9 13.7% 127.4 53.9 9.9 4.8 3.9% –3.3 1.5 1.2% 75.5 55.8 13.6 191.7 9.8% –63.4 128.3 6.6% 1 070.5 640.9 97.0 1 515 1 327 10 268 –8.6 –0.6 9.9 n/a –3.1 6.9 n/a 28.8 65.9 4.9 413 - 1 954.7 201.6 10.3% –66.5 135.1 6.9% 1 099.3 706.8 101.9 10 681 Depreciation and amortization –28.1 –25.0 EBIT as a % of net sales Assets at December 311 Liabilities at December 31 Investments in tangible and intangible assets Employees at December 312 31.7 3.9% 413.2 328.0 25.3 3 623 75.1 8.5% 454.4 203.2 48.2 3 803 1 Assets in Corporate include investments in associated companies in the amount of CHF 8.3 million (2014: CHF 6.4 million), refer to note 15 (p. 85). 2 Full-time equivalents including temporary employees but excluding apprentices. Autoneum Financial Report 2015 Consolidated financial statements 80 Net sales and non-current assets by country CHF million Switzerland1 USA Germany Great Britain China Remaining countries Total 1 Domicile of Autoneum Holding Ltd. Net sales 2015 2.3 745.3 198.6 183.5 162.2 794.1 Net sales 2014 1.5 Non-current assets 31.12.2015 37.7 Non-current assets 31.12.2014 41.3 626.3 244.6 177.7 125.7 778.9 180.1 9.1 17.0 43.8 155.6 443.3 156.8 7.1 16.1 38.5 159.9 419.7 2 085.9 1 954.7 Net sales are disclosed by location of customers. Non-current assets consist of tangible assets and intangible assets. The following customers accounted for more than 10% of annual net sales in 2015 or in 2014: Net sales to major customers CHF million Ford Honda BMW 2015 416.7 223.6 197.9 2014 327.5 201.6 213.3 Information on sales by product group is not available. The major customers generate turnover in all geographic segments. 5 Employee expenses CHF million Wages and salaries Social security expenses Pension expenses for defined contribution plans Pension expenses for defined benefit plans Other personnel expenses Total 2015 415.7 80.1 11.3 5.8 32.3 545.2 2014 389.1 65.7 7.4 5.1 32.5 499.8 Autoneum started a long-term incentive plan (LTI) for the management in 2012. Part of Autoneum’s net profit is converted into Autoneum shares, and the shares are allocated to defined beneficiaries. The shares become property of the beneficiaries after a vesting period of three years, if the benefi- ciaries are then still employed by an Autoneum company. Immediate vesting occurs in case of death or retirement of the beneficiary. In case of employment termination, shares not yet vested lapse without compensation. Exceptions are possible at the discretion of the Nomination and Compensation Com- mittee. The first vesting date was in spring 2015. Employee expenses resulting from share-based Autoneum Financial Report 2015 Consolidated financial statements8181 compensation are recognized over the vesting period. 3 783 shares (2014: 4 193 shares) valued at CHF 213.60 (2014: CHF 136.60) were granted in 2015, and expenses of CHF 0.6 million (2014: CHF 0.5 million) were recognized in wages and salaries. The Board of Directors and the Group Executive Board receive part of their remuneration in Autoneum shares. These transactions are disclosed in the Remuneration report (page 104–107). 6 Other expenses CHF million Energy, maintenance and repairs Marketing and distribution costs Miscellaneous expenses Operating leasing expenses Settlement with the German Federal Cartel Office1 Audit and consulting expenses IT and office expenses Insurance and other charges Total 1 Refer to note 29, page 98. 7 Other income 2015 148.8 63.0 36.5 32.6 31.5 20.9 16.9 16.3 2014 141.3 51.4 28.5 31.3 - 18.8 18.9 15.1 366.6 305.3 Other income contains mainly income generated with by-products arising during the manufacturing process. In 2014, the gain of CHF 1.8 million from the sale of the former subsidiary Porfima Due S.r.l., Torino (Italy), is included (refer to note 3, p. 78). 8 Depreciation and amortization CHF million Depreciation of tangible assets Amortization of intangible assets Total 9 Financial income CHF million Interest income Other financial income Total 2015 63.4 1.7 65.1 2015 0.7 0.3 0.9 2014 65.5 1.0 66.5 2014 0.8 0.2 1.0 Autoneum Financial Report 2015 Consolidated financial statements 82 10 Financial expenses CHF million Interest expenses Amortization of transaction costs Interest expenses for defined benefit pension plans Net foreign exchange losses Other financial expenses Total 11 Income taxes CHF million Current income taxes Deferred income taxes Total 2015 11.1 0.3 0.9 7.5 0.4 20.2 2015 39.6 0.8 40.5 2014 12.4 1.1 0.3 2.5 0.1 16.4 2014 33.3 –16.0 17.3 The decrease in the net deferred income tax assets by CHF 1.1 million (2014: decrease by CHF 21.4 million) relates to the deferred income tax expense recognized in the consolidated income statement of CHF 0.8 million (2014: deferred income tax income of CHF 16.0 million), to the deferred income tax income recognized in other comprehensive income of CHF 0.7 million (2014: income tax income of CHF 5.3 million) and to a currency translation adjustment of CHF –1.0 million (2014: CHF 0.1 million). Reconciliation of expected and actual income tax expenses: CHF million Profit before taxes Expected average tax rate Expected income tax expenses Non-taxable income and non-deductible expenses Current income taxes from prior periods Current year tax losses for which no deferred tax assets were recognized Utilization of previously unrecognized tax loss carry-forwards Change in unrecognized tax losses and deductible temporary differences Income taxes at other tax rates Impact of changes in tax rates Other effects Actual income tax expenses 2015 109.2 30.4% 33.2 4.7 4.4 12.4 –8.6 –1.4 –4.9 0.8 –0.1 40.5 2014 120.1 28.5% 34.2 1.4 2.8 5.7 –11.1 –18.6 2.8 0.1 - 17.3 The change in the expected average tax rate is due to the different geographic composition of profit or loss before tax. Autoneum Financial Report 2015 Consolidated financial statements8383 Deferred income tax assets and liabilities pertain to the following balance sheet line items: CHF million Tangible assets Inventories Other assets Employee benefit liabilities Provisions Other liabilities Tax loss carryforwards and tax credits Subtotal Offsetting Total Deferred income tax assets 31.12.2015 3.4 Deferred income tax liabilities 31.12.2015 –16.0 Deferred income tax assets 31.12.2014 2.2 Deferred income tax liabilities 31.12.2014 –12.9 5.4 2.5 1.8 3.7 5.0 27.0 48.8 –17.1 31.7 –0.8 –3.2 - –1.5 –6.4 –27.9 17.1 –10.8 3.3 2.1 2.2 5.7 14.5 24.6 54.6 –22.6 32.0 –0.9 –2.7 - –3.4 –12.6 –32.5 22.6 –9.9 No deferred tax assets have been recognized from deductible temporary differences in the amount of CHF 97.6 million (2014: CHF 107.6 million). Tax loss carryforwards in the amount of CHF 0.2 million (2014: nil) are recognized for Group companies which incurred losses in 2015 or 2014 (2014 or 2013) supported by increased future profitability and synergies as a result of restructuring. The table below discloses tax loss carryforwards and tax credits by their year of expiry: CHF million Less than 3 years In 3 to 7 years Thereafter Total Capitalized 31.12.2015 0.3 Non-capitalized 31.12.2015 2.8 Capitalized 31.12.2014 2.3 Non-capitalized 31.12.2014 15.6 8.7 66.9 75.9 19.4 300.3 322.5 1.0 64.9 68.2 14.1 328.6 358.3 The tax loss carryforwards for which no deferred income tax assets have been recognized originate primarily from countries with a tax rate between 19% and 40%. 12 Earnings per share Profit attributable to shareholders of Autoneum Holding Ltd1 CHF million 2015 42.2 2014 78.9 Average number of shares outstanding Average number of shares outstanding diluted Number of shares Number of shares 4 627 120 4 630 773 4 637 259 4 647 353 Basic earnings per share Diluted earnings per share CHF CHF 9.12 9.10 17.03 16.97 1 The LTI does not lead to a dilution effect in profit attributable to shareholders of Autoneum Holding Ltd. The average number of shares outstanding is calculated based on the number of shares issued less the weighted average number of treasury shares held. The consideration of shares granted but not yet vested in the course of the management’s long-term incentive plan (LTI) leads to a diluted average number of shares outstanding. Autoneum Financial Report 2015 Consolidated financial statements 84 13 Tangible assets CHF million Cost at January 1, 2015 Additions Disposals Reclassification Reclassification to assets of disposal group Currency translation adjustment Cost at December 31, 2015 Accumulated depreciation at January 1, 2015 Depreciation Disposals Reclassification Reclassification to assets of disposal group Currency translation adjustment Acc. depreciation at December 31, 2015 Net book value at January 1, 2015 Net book value at December 31, 2015 CHF million Cost at January 1, 2014 Additions Disposals Sale of subsidiary Reclassification Currency translation adjustment Cost at December 31, 2014 Accumulated depreciation at January 1, 2014 237.6 –129.2 Depreciation Disposals Sale of subsidiary Reclassification Currency translation adjustment Acc. depreciation at December 31, 2014 Net book value at January 1, 2014 Net book value at December 31, 2014 –8.5 7.9 0.2 –1.2 –2.7 –133.5 108.3 104.1 Land and buildings 237.6 Machinery and tools 934.4 0.9 –0.8 19.5 –9.3 –14.9 233.0 –133.5 –9.3 0.7 –2.4 8.0 8.5 –128.0 104.1 105.0 Land and buildings 237.5 2.1 –9.2 –2.5 5.0 4.7 Data processing equipment Vehicles and furniture Tangibles under construction 11.8 0.8 –0.4 1.2 - –1.4 12.0 –9.8 –1.0 0.4 - - 1.2 –9.3 2.0 2.7 16.2 0.4 –0.3 1.0 - –1.2 16.1 –12.4 –1.0 0.2 0.6 - 1.0 –11.7 3.8 4.4 87.1 96.6 - –80.0 –0.9 –4.5 98.3 - - - - - - - 87.1 98.3 20.3 –9.2 58.4 –31.8 –62.2 909.9 –721.7 –52.1 8.5 1.8 28.4 48.3 –686.8 212.7 223.1 Machinery and tools Data processing equipment Vehicles and furniture Tangibles under construction 897.4 14.1 –42.8 - 38.0 27.6 934.4 –690.4 –55.1 41.6 - 1.2 –18.9 –721.7 207.0 212.7 12.8 1.0 –2.1 - 0.1 –0.1 11.8 –11.0 –1.0 2.1 - - 0.1 –9.8 1.8 2.0 14.9 0.7 –0.4 - 0.8 0.3 16.2 –11.9 –0.8 0.5 - - –0.1 –12.4 3.0 3.8 47.5 80.9 –0.6 - –43.9 3.3 87.1 - - - - - - - 47.5 87.1 Total 1 287.1 119.1 –10.7 - –42.0 –84.2 1 269.3 –877.5 –63.4 9.8 - 36.4 58.9 –835.8 409.6 433.5 Total 1 210.1 98.7 –55.1 –2.5 - 35.8 1 287.1 –842.5 –65.5 52.1 0.2 - –21.8 –877.5 367.6 409.6 Additions in tangible assets comprise mainly investments in production facilities. The book value of the tangible assets financed by long-term leasing contracts is nil (2014: CHF 0.3 million). In both the reporting year and the prior year no borrowing costs were capitalized. Tangible assets in the amount of CHF 2.3 million (2014: CHF 0.1 million) are pledged as security for financial liabilities. Autoneum Financial Report 2015 Consolidated financial statements 14 Intangible assets CHF million Cost at January 1 Additions Currency translation adjustment Cost at December 31 Accumulated amortization at January 1 Amortization Currency translation adjustment Accumulated amortization at December 31 Net book value at January 1 Net book value at December 31 8585 2014 9.7 3.1 –0.1 12.7 –1.7 –1.0 0.1 –2.6 7.9 10.0 2015 12.7 1.5 –0.3 14.0 –2.6 –1.7 0.2 –4.1 10.0 9.8 Intangible assets comprise mainly investments in a new ERP system. In 2015, CHF 60.7 million was spent on research and development (2014: CHF 57.1 million). Autoneum Group invests in innovative materials and products, and in new efficient production technologies to support vehicle manufacturers in meeting challenging targets in acoustic comfort, fuel consumption and environmental emissions, in an increasingly cost-competitive environment. The focus in the last few years was in the development of extremely lightweight and acoustically efficient solutions for carpet, interior insulation and underbody aerodynamic covers and heatshields. In addition, emphasis was given to further developing Autoneum’s pioneering powertrain encapsu- lation solutions for the reduction of exterior noise and carbon dioxide emissions. Development costs must meet several criteria to be recognized as an intangible asset. Technical and financial resources must be available to ensure the completion of the development, and the costs attributed to the development must be reliably measured. Although for all major development projects in 2015 and 2014 this was the case, and the intention and ability to complete the projects was confirmed by the management, no development costs could be capitalized as intangible assets during the reporting year as in the previous year. Due to rapid technological changes, the required proof of future economic benefits could not be sufficiently supported. 15 Investments in associated companies Investments in associated companies comprise the 49% share in SHN CO., Ltd., Daegu (Korea), the 30% share in SRN Sound Proof Co., Ltd., Chonburi (Thailand), and the 25% share in Wuhan Nittoku Autoneum Sound-Proof Co. Ltd., Wuhan (China). The investments are measured using the equity method. The net book value of investments in associated companies changed as follows: CHF million Net book value at January 1 Additions Share of profit Currency translation adjustment Net book value at December 31 2015 6.4 0.5 1.9 –0.4 8.3 2014 4.9 0.6 0.4 0.5 6.4 Autoneum Financial Report 2015 Consolidated financial statements86 16 Financial assets CHF million Investments in non-consolidated companies Loans Other financial assets Total non-current portion Loans Marketable securities Total current portion 17 Other assets CHF million Other receivables Total non-current portion Prepaid expenses and accruals Advance payments to suppliers Fair value of derivative financial instruments Other receivables Total current portion Other receivables are non-interest bearing. 18 Inventories CHF million Raw materials and consumables Purchased parts Semi-finished and finished goods Work in progress Allowance Total 31.12.2015 21.1 31.12.2014 15.3 7.1 7.2 35.3 0.7 0.1 0.8 7.7 8.2 31.2 0.8 0.2 0.9 31.12.2015 33.7 31.12.2014 40.9 33.7 12.9 5.3 0.7 58.5 77.4 40.9 13.6 4.7 0.1 47.5 65.9 31.12.2015 31.3 31.12.2014 31.5 2.4 40.0 60.9 –3.7 130.9 2.7 36.8 62.4 –3.0 130.5 Autoneum Financial Report 2015 Consolidated financial statements19 Trade receivables CHF million Trade receivables nominal Allowance for doubtful trade receivables Total 8787 31.12.2015 264.7 31.12.2014 227.8 –9.8 254.9 –7.5 220.3 The following summarizes the movement in the allowance for doubtful trade receivables: CHF million Allowance at January 1 Additions and release Utilization Reclassification to assets of disposal group Currency translation adjustment Allowance at December 31 2015 –7.5 –3.5 0.5 0.5 0.2 –9.8 2014 –6.3 –1.0 0.4 - –0.6 –7.5 The collectability of trade receivables is monitored on an ongoing basis. An allowance for doubtful trade receivables is recorded, which is calculated from the difference between the invoiced amount and the expected payment. The table below sets forth the aging of trade receivables and the allowance for doubtful trade receivables, showing amounts that are not yet due as well as an analysis of overdue amounts. Trade receivables that are not due and that are not impaired are expected to be settled within the agreed payment terms. CHF million Not due Overdue 1 to 89 days Overdue 90 to 179 days Overdue 180 to 359 days Thereafter Total Nominal 31.12.2015 238.5 Allowance 31.12.2015 –9.2 Nominal 31.12.2014 216.1 Allowance 31.12.2014 –7.2 19.4 2.4 3.9 0.5 264.7 –0.1 –0.1 –0.2 –0.2 –9.8 8.3 1.3 0.9 1.1 227.8 0.0 –0.1 –0.1 –0.2 –7.5 Autoneum Financial Report 2015 Consolidated financial statements88 Trade receivables comprise receivables due from customers with the following credit rating (Standard & Poor’s long-term issuer rating): CHF million A– or higher BBB– to BBB+ BB+ or lower Not rated Total CHF million Not due Overdue 1 to 89 days Overdue 90 to 179 days Overdue 180 to 359 days Thereafter Total 31.12.2015 72.4 31.12.2014 80.6 89.3 84.3 8.8 254.9 65.1 65.0 9.6 220.3 Nominal 31.12.2015 238.5 Allowance 31.12.2015 –9.2 Nominal 31.12.2014 216.1 Allowance 31.12.2014 –7.2 19.4 2.4 3.9 0.5 264.7 –0.1 –0.1 –0.2 –0.2 –9.8 8.3 1.3 0.9 1.1 227.8 - –0.1 –0.1 –0.2 –7.5 At December 31, 2014, trade receivables with a book value of CHF 3.5 million (2014: CHF 5.4 million) were used as collateral for credit facilities with financing banks. In addition, trade receivables with a book value of CHF 2.5 million (2014: CHF 2.4 million) were sold to third parties based on factoring agreements and no material risks remain with Autoneum. Trade receivables include amounts denominated in the following major currencies: CHF million EUR USD CNY CAD GBP CHF BRL Other Total 20 Cash and cash equivalents CHF million Cash at banks Time deposit with original maturities up to 3 months Total 31.12.2015 103.4 31.12.2014 80.6 90.9 30.1 9.4 6.6 4.2 3.7 6.6 254.9 73.2 26.8 10.8 5.9 3.3 6.2 13.5 220.3 31.12.2015 77.1 31.12.2014 112.9 1.6 78.7 27.9 140.9 Autoneum Financial Report 2015 Consolidated financial statements8989 21 Assets and liabilities of disposal group classified as held for sale Autoneum’s US subsidiary UGN Inc. has sold its business in Chicago Heights, Illinois, to an affiliate of Angeles Equity Partners, LLC, Delaware, on February 2, 2016. With this transaction, UGN Inc. adjusts its product portfolio in the USA. The related assets and liabilities are consequently classified as held for sale as of December 31, 2015. The disposal group consists of the assets and liabilities listed below. Those assets and liabilities were reclassified to assets of disposal group classified as held for sale and liabilities of disposal group classified as held for sale. CHF million Tangible assets Other assets Non-current assets Inventories Trade receivables Other assets Current assets Assets of disposal group classified as held for sale Other liabilities Non-current liabilities Trade payables Other liabilities Current liabilities Liabilities of disposal group classified as held for sale 31.12.2015 5.6 0.3 5.9 1.1 3.8 0.2 5.1 11.0 0.1 0.1 1.9 0.1 2.0 2.2 Autoneum Financial Report 2015 Consolidated financial statements90 22 Shareholders’ equity Since the founding of Autoneum Holding Ltd on December 2, 2010, the number of registered shares has remained unchanged at 4 672 363, each with a nominal value of CHF 0.05 per share. The share capital amounts to CHF 233 618 and is as follows: Shares outstanding Treasury shares Total shares issued Nominal value per share Share capital Number of shares Number of shares Number of shares CHF CHF 31.12.2015 4 634 751 31.12.2014 4 619 183 37 612 4 672 363 0.05 233 618 53 180 4 672 363 0.05 233 618 Share capital The holders of shares are entitled to receive dividends and are entitled to one vote per share at general meetings of the Company. Conditional share capital For issuing bonds and/or granting shareholder options, the share capital can be increased by a maxi- mum of 700 000 paid registered shares with a par value of CHF 0.05 up to a maximum value of CHF 35 000. Furthermore, for the issue of shares to employees and subsidiaries, the share capital can be increased by a maximum of 250 000 paid registered shares with a par value of CHF 0.05 up to a maximum value of CHF 12 500. Treasury shares The following transactions with treasury shares were performed during the financial year: Treasury shares at January 1 Purchase of treasury shares Transfer of treasury shares Treasury shares at December 31 2015 in shares 53 180 634 –16 202 37 612 2015 in CHF million 6.1 0.1 –1.9 4.3 2014 in shares 36 062 28 069 –10 951 53 180 2014 in CHF million 2.3 4.7 –0.9 6.1 Capital reserves Capital reserves arising from the contribution of the Autoneum companies to the Group in the course of the separation in 2011 as well as capital contributions from non-controlling interests. Available for sale reserves The available for sales reserves contain changes in the fair value of non-consolidated investments. The reserves will be reclassified to the income statement at disposal. Retained earnings Retained earnings include accumulated earnings since the Group was established in December 2010. Autoneum Financial Report 2015 Consolidated financial statements9191 Currency translation adjustment The currency translation adjustment comprises all foreign exchange differences arising from the translation of the financial statements of foreign entities included in the consolidated financial statements. 23 Non-controlling interests The non-controlling interests derive from UGN Inc. (USA), Autoneum Erkurt Otomotive AS (Turkey), Tianjin Autoneum Nittoku Sound-Proof Co. Ltd. (China), Autoneum Nittoku (Guangzhou) Sound-Proof Co. Ltd. (China), Autoneum Nittoku Sound Proof Products India Pvt. Ltd., Autoneum Feltex (Pty) Ltd. (South Africa), Autoneum Portugal Lda. and Autoneum Korea Ltd. Due to disclosure restrictions in shareholder agreements, information on significant non-controlling interests is only disclosed on an aggregated level. The table below sets out aggregated financial information of the subsidiaries with non- controlling interests: CHF million Non-current assets Current assets Non-current liabilities Current liabilities Net assets Thereof non-controlling interests Net sales Net profit Other comprehensive income Total comprehensive income Thereof non-controlling interests Cash flows from operating activities Cash flows used in investing activities Cash flows used in financing activities Net change in cash and cash equivalents 31.12.2015 158.7 31.12.2014 149.5 166.6 –35.5 –90.4 199.4 96.2 2015 540.0 55.3 –5.0 50.4 24.4 68.5 –35.8 –43.6 –10.9 156.2 –34.0 –85.3 186.5 89.0 2014 467.6 50.5 14.8 65.3 31.4 60.2 –27.0 –29.3 4.0 Autoneum Financial Report 2015 Consolidated financial statements92 24 Borrowings CHF million Bond Bank debt Finance lease obligations Other borrowings Total at December 31, 2015 CHF million Bond Bank debt Finance lease obligations Other borrowings Total at December 31, 2014 Duration less than 1 year - Duration 1 to 5 years 124.6 Duration 5 and more years - 13.4 0.5 0.1 14.0 44.9 - 1.4 170.9 - - - - Duration less than 1 year - Duration 1 to 5 years 124.4 Duration 5 and more years - 18.0 0.2 2.2 20.4 49.3 0.5 1.0 175.3 - - - - Total 124.6 58.3 0.5 1.5 184.9 Total 124.4 67.3 0.7 3.3 195.6 On December 14, 2012, Autoneum Holding Ltd issued a fixed rate bond with a nominal value of CHF 125.0 million, which is listed on the SIX Swiss Exchange (AUT12, ISIN: CH0196770439). The bond carries a coupon rate of 4.375%, and has a term of five years with a final maturity on December 14, 2017. On December 31, 2015, the market value of the bond was CHF 132.0 million (2014: CHF 133.9 million). Autoneum maintains a long-term credit agreement with a banking syndicate in the amount of CHF 150.0 million, whereof CHF 40.0 million was drawn at year-end (2014: CHF 40.6 million). The line of credit may partly be used as a guarantee facility. The final maturity date is December 31, 2019. The interest rate is based on the LIBOR rate plus an applicable margin, which is determined based on the ratio of net debt to EBITDA. The credit agreement contains customary financial covenants, which include the ratio of net debt to EBITDA and a minimal financial equity. Compliance with finan- cial covenants is checked quarterly and reported to the banking syndicate. In fiscal years 2015 and 2014, the minimum financial requirements were met at all times. In addition to the aforementioned bond and the long-term credit agreement, local credit limits and borrowings exist in several countries with individual customary market conditions. The borrowings are denominated in the following currencies: CHF million CHF USD BRL Other EUR Total 31.12.2015 164.1 31.12.2014 165.4 8.2 7.8 4.8 - 14.3 11.1 3.6 1.2 184.9 195.6 Autoneum Financial Report 2015 Consolidated financial statements25 Employee benefits CHF million Post-employment benefit liabilities Other long-term employee benefits Employee benefit liabilities 9393 31.12.2015 27.7 31.12.2014 30.1 1.1 28.8 1.6 31.7 The costs for pensions are charged to employee and interest expenses and for the current reporting year totaled CHF 18.1 million (2014: CHF 12.8 million). Some employees participate in defined contribution plans whose insurance benefit results solely from the paid contributions and the return on investment on the plan asset. The other employees participate in defined benefit plans that are based upon direct benefits of Autoneum Group. Defined contribution plans The expenses for defined contribution plans totaled CHF 11.3 million in the current reporting year (2014: CHF 7.4 million). Defined benefit plans Autoneum maintains defined benefit pension plans in Switzerland, Great Britain, the USA and Canada. The most significant pension plans are the Swiss and the US pension plans. Those plans sum up to 81.7% (2014: 78.1%) of the Group’s defined benefit obligation and to 81.0% (2014: 78.5%) of the Group’s plan assets. The status of the defined benefit plans at year-end was as follows: CHF million Switzerland Fair value of plan assets at December 31 Present value of defined benefit obligation at December 31 Deficit at December 31 USA Fair value of plan assets at December 31 Present value of defined benefit obligation at December 31 Deficit at December 31 Other countries Fair value of plan assets at December 31 Present value of defined benefit obligation at December 31 Deficit at December 31 2015 2014 116.5 –122.3 –5.9 30.1 –47.2 –17.1 34.3 –38.0 –3.7 111.0 –111.1 –0.1 31.2 –49.4 –18.2 38.9 –44.5 –5.6 Total deficit at December 31 –26.7 –23.9 Recognized in the balance sheet as employee benefit assets as employee benefit liabilities 1.0 –27.7 6.2 –30.1 Autoneum Financial Report 2015 Consolidated financial statements94 Swiss pension plans Pension plans are governed by the Swiss Federal Law on Occupational Retirement, Survivors’ and Disability Pension Plans (BVG). The Group’s pension plans are administered by separate legal founda- tions, which are funded by regular employee and company contributions. Plan participants are insured against the financial consequences of old age, disability and death. The most senior govern- ing body of the pension plan is the Board of Trustees. The Board of Trustees is responsible for the investment of the plan assets. All investment decisions made by the Board of Trustees need to be within the guidelines set out in a long term investment strategy. This strategy is based on legal requirements, expected future contributions and expected future obligations and is reassessed at least once a year. All governing and administration bodies have an obligation to act in the interests of the plan participants. The final benefit is contribution-based with certain minimum guarantees. Due to these minimum guarantees, the Swiss plans are treated as defined benefit plans for the purpos- es of these IFRS financial statements, although they have many characteristics of defined contri- bution plans. Retirement benefits are based on the accumulated savings capital, which can either be drawn as a lifelong pension or as a lump sum payment. The pension is calculated by multiplying the balance of the savings capital with the applicable conversion rate. The plan is exposed to actu- arial risks, such as longevity risk, interest rate risk and market (investment) risk. In case of an underfunding, the Board of Trustees is required to take the necessary measures to ensure that full funding can be expected to be restored within a reasonable period. The measures may include increasing employee and company contributions, lowering the interest rate on retirement account balances or reducing prospective benefits. US pension plans The Group’s major defined benefit plans in the USA have been closed to new members. New employ- ees in the USA now join defined contribution plans. The defined benefit plans are subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA), which defines minimum standards such as the statutory minimum funded status. Pension plans in other countries Autoneum maintains defined benefit plans in Canada and in the Great Britain. The pension plan in Great Britain has been closed for new members. New employees join a defined contribution plan. The pension plan in Canada is open for all Canadian employees. The plan is funded, and the majority of the contributions are paid by the employer. Autoneum Financial Report 2015 Consolidated financial statementsThe movement in the defined benefit obligation over the year was as follows: CHF million Defined benefit obligation at January 1 Current service cost Past service cost Interest expenses Remeasurement gains and losses Employee contributions Benefits paid Currency translation adjustment 9595 2014 163.9 5.1 - 5.5 28.0 2.9 –6.5 6.1 2015 205.0 6.3 –0.6 4.6 4.4 3.0 –8.9 –6.2 Defined benefit obligation at December 31 207.6 205.0 The movement in the fair value of plan assets over the year was as follows: CHF million Fair value of plan assets at January 1 Interest income Return on plan assets excluding interest income Employer contributions Employee contributions Benefits paid Currency translation adjustment Fair value of plan assets at December 31 2015 181.1 3.7 0.9 6.8 3.0 –8.9 –5.7 180.9 2014 158.3 5.2 9.2 7.8 2.9 –6.5 4.2 181.1 The major categories of plan assets as a percentage of total plan assets were as follows: in % Equity Debt Real estate Other All equity and debt instruments are listed on a stock exchange. The amounts recognized in the income statement were as follows: CHF million Current service cost Past service cost Net interest expenses Pension expenses for defined benefit plans Recognized in the income statement: as employee expenses as interest expenses 31.12.2015 44 31.12.2014 44 33 10 13 2015 6.3 –0.6 0.9 6.6 5.8 0.9 31 6 19 2014 5.1 - 0.3 5.4 5.1 0.3 Autoneum Financial Report 2015 Consolidated financial statements96 The amounts recognized in the income statement result from plans in the following regions: CHF million Expense from defined benefit plans in Switzerland Expense from defined benefit plans in the USA Expense from defined benefit plans in other countries Total 2015 4.2 1.4 1.1 6.6 2014 3.4 1.0 1.0 5.4 The expected employer contributions for the Group’s defined benefit pension plans for 2016 amount to CHF 6.5 million. The expected benefit payments for 2016 are CHF 7.6 million. The effect from remeasurement of the defined benefit pension plans recognized in other comprehen- sive income is as follows: CHF million Remeasurement gains and losses from changes in demographic assumptions from changes in financial assumptions from experience adjustment Return on plan assets excluding interest income Total 2015 2014 1.0 - –5.4 0.9 –3.5 –3.9 –22.1 –2.0 9.2 –18.8 The table below discloses the main actuarial assumptions at year-end: Weighted average of all pension plans Discount rate Expected future salary growth Life expectancy for females at age of 65 Life expectancy for males at age of 65 in % in % in years in years 31.12.2015 2.2 31.12.2014 2.4 0.6 24.5 22.1 0.5 23.9 21.5 At December 31, 2015, the weighted average duration of the defined benefit obligation was 17.1 years (2014: 16.7 years). The table below shows the results of the sensitivity analysis. It was analyzed how expected changes in the discount rate and expected changes in the future salary growth would impact the defined benefit obligation. A change in the discount rate by 0.25 points or a change in the future salary growth rate by 0.5 points would have had the following effect on the defined benefit obligation: CHF million Increase in discount rate by 0.25 percentage point Decrease in discount rate by 0.25 percentage point Increase in future salary growth by 0.5 percentage point Decrease in future salary growth by 0.5 percentage point 31.12.2015 –8.2 31.12.2014 –8.0 8.7 2.1 –2.2 8.6 2.7 –2.7 Autoneum Financial Report 2015 Consolidated financial statements26 Provisions CHF million Provisions at January 1, 2015 Additions Utilization Release Reclassification Currency translation adjustment Provisions at December 31, 2015 Thereof non-current Thereof current Guarantee and warranty Litigation and tax risk Environ- mental Restruc- turing 5.3 - - –2.9 - - 2.4 2.0 0.4 27.4 17.5 –4.5 –2.9 - –0.6 37.0 33.7 3.3 10.5 0.9 - - –0.8 –0.3 10.3 10.3 - 0.9 - –0.8 - - –0.1 - - - Other 10.4 6.0 –2.9 –0.2 6.5 –0.2 19.4 8.4 11.0 9797 Total 54.5 24.4 –8.3 –6.0 5.7 –1.1 69.1 54.4 14.8 Guarantee and warranty provisions are related to the production and supply of goods or services and are based on experience. The non-current guarantee and warranty provisions of CHF 2.0 million are expected to be used over a period of one to two years on average. Litigation and tax risk provisions comprise provisions for expected costs resulting from investigations and proceedings of government agencies, provisions for court cases, such as claims brought up by workers for health- or accident-related incidents, and provisions for tax risks. The majority of litigation and tax risk provisions are expected to be used within the next two to three years. Environmental provisions contain the estimated costs for the cleanup of contaminated sites due to past industrial operations. The majority of provisions stem from legal entities within Business Group Europe. Long-term environmental provisions are expected to be used mainly over the next five to ten years. Restructuring provisions comprised legal and factual liabilities from restructuring. The provisions were fully utilized in 2015. Other provisions are made for contracts where the unavoidable costs to fulfill the obligation are greater than the expected economic benefits, as well as for other constructive or legal liabilities of Group companies. Cases in the amount of CHF 5.7 million that were reported as accrual in the prior year do now classify as provision and are reclassed accordingly. The majority of the remaining other non-current provisions are expected to be used within the next two to three years. Autoneum Financial Report 2015 Consolidated financial statements98 27 Other liabilities CHF million Advance payments from customers Other payables Total non-current portion Advance payments from customers Accrued holidays and overtime Accrued expenses and deferred income Fair value of derivative financial instruments Non-income tax payables Other payables Total current portion Other payables are non-interest bearing. 28 Other commitments 31.12.2015 18.5 31.12.2014 15.3 1.4 19.9 44.3 10.4 51.2 1.8 12.0 28.3 1.8 17.1 35.6 12.9 42.2 2.5 14.4 31.4 148.1 139.0 Some Group companies rent factory and office space under operating lease agreements. The leases have varying terms, escalation clauses and renewal rights. The future, cumulated minimum lease payments for operating leases are due as follows: CHF million Less than 1 year 1 to 5 years Thereafter Total 31.12.2015 24.8 31.12.2014 25.1 70.4 59.8 154.9 68.4 41.2 134.7 In the reporting period, CHF 32.6 million was charged to the income statement under operating leasing expenses (2014: CHF 31.3 million). At year-end, open commitments for large investments in tangible assets summed up to CHF 29.3 mil- lion (2014: CHF 24.9 million). 29 Contingent liabilities Along with other automobile suppliers, Autoneum Germany GmbH, a subsidiary of Autoneum Holding Ltd, was subject to investigations by the German Federal Cartel Office in 2013. The investiga- tions affected, among others, the market for floor systems and trunk trim. The investigations were closed in 2015 and led to a settlement payment of CHF 31.5 million. There are no single matters pending that Autoneum expects to be material in relation to the Group’s business, financial position or results of operations. Autoneum Financial Report 2015 Consolidated financial statements9999 30 Financial instruments The following tables summarize all financial instruments classified by categories according to IAS 39. CHF million Marketable securities1 Fair value of derivative financial instruments2 Total financial assets at fair value through profit or loss Cash at banks Time deposits with original maturities up to 3 months Loans Trade receivables Other receivables Other financial assets Total loans and receivables Investments in non-consolidated companies1 Total available-for-sale financial assets Total CHF million Borrowings Trade payables Accrued expenses Non-income tax payables Other payables Total financial liabilities at amortized cost Fair value of derivative financial instruments2 Total financial liabilities at fair value through profit or loss Total 1 Measured at fair values that are based on quoted prices in active markets (level 1). 2 Measured at fair values that are calculated based on observable market data (level 2). 31.12.2015 0.1 31.12.2014 0.2 0.7 0.9 77.1 1.6 7.7 254.9 92.2 7.2 440.7 21.1 21.1 462.6 0.1 0.3 112.9 27.9 8.4 220.3 88.3 8.2 466.1 15.3 15.3 481.6 31.12.2015 184.9 31.12.2014 195.6 243.3 51.2 12.0 29.7 521.2 1.8 1.8 523.0 250.4 42.2 14.4 33.2 535.8 2.5 2.5 538.3 Borrowings comprise the bond with a net book value of CHF 124.6 million (2014: CHF 124.4 million) and a fair value of CHF 132.0 million (2014: CHF 133.9 million) based on quoted prices in active markets. Refer to note 24 (p. 92) for further information. The book values of other financial instruments measured at amortized cost correspond to their fair values. Autoneum Financial Report 2015 Consolidated financial statements 100 31 Related parties Related parties are members of the Board of Directors and the Executive Board or close members of that person’s family, pension funds, associated companies as well as companies controlled by significant shareholders. Information on significant shareholders is disclosed in note 14 of the financial statements of Autoneum Holding Ltd on page 116. The following transactions were carried out with related parties: CHF million Interest paid to shareholders on shareholder loans Fees paid to the law firm of the Chairman of the Board of Directors 2015 - 0.1 2014 1.0 0.2 The total remuneration to the Board of Directors and to the Group Executive Board was as follows: CHF million Remuneration in cash Remuneration in shares of Autoneum Holding Ltd Employer contributions to pension plans Social security expenses 2015 5.0 2.1 0.2 0.3 2014 4.7 1.7 0.5 0.3 The compensation of the Board of Directors and of the Group Executive Board is disclosed in the Remuneration report on pages 104–107. Members of the Group Executive Board can deposit part of their cash remuneration as a receivable due from Autoneum Management Ltd. The interest rate of these deposits is in line with market conditions. Subordinated shareholder loans of CHF 25.0 million and an interest rate of 6% per annum were repaid on August 21, 2014. Year-end balances were as follows: CHF million Bonus accruals for Group Executive Board Liabilities due to Group Executive Board 32 Net debt CHF million Cash and cash equivalents Current financial assets Borrowings Net debt 31.12.2015 2.2 31.12.2014 2.1 0.1 1.0 31.12.2015 –78.7 31.12.2014 –140.9 –0.8 184.9 105.4 –0.9 195.6 53.9 Autoneum Financial Report 2015 Consolidated financial statements101101 33 Exchange rates for currency translation CHF Argentine peso Brazilian real Canadian dollar Chinese yuan Czech koruna Euro Pound sterling Indian rupee Polish zloty United States dollar ISO code ARS Units 1 Average rate 2015 0.10 Average rate 2014 0.11 Year-end rate 2015 0.08 Year-end rate 2014 0.12 BRL CAD CNY CZK EUR GBP INR PLN USD 1 1 100 100 1 1 100 100 1 0.30 0.76 15.38 3.94 1.07 1.48 1.50 25.64 0.97 0.39 0.83 14.86 4.41 1.21 1.51 1.50 28.97 0.92 0.25 0.71 15.25 4.00 1.08 1.47 1.49 25.51 0.99 0.37 0.85 15.94 4.34 1.20 1.54 1.56 27.91 0.99 34 Events after balance sheet date Autoneum’s US subsidiary UGN Inc. has sold its business in Chicago Heights, Illinois, to an affiliate of Angeles Equity Partners, LLC, Delaware, on February 2, 2016. With this transaction, UGN Inc. adjusts its product portfolio in the USA. The sale price of USD 43.7 million was received in cash at closing date of the transaction. Acquisition related costs in the amount of USD 0.3 million were recorded in the income statement of the reporting period. Refer to note 21 on page 89 for further in- formation. There were no other events between December 31, 2015, and March 2, 2016, which would necessitate adjustments to the book value of the Group’s assets or liabilities, or which require addi- tional disclosure in the consolidated financial statements. 35 Proposal of the Board of Directors For the year ended December 31, 2015, the Board of Directors proposes to the Annual General Meeting on March 30, 2016, a dividend of CHF 4.50 per share entitled to dividends. This represents a total distribution up to CHF 21.0 million. In 2015, a total dividend of CHF 20.8 million (CHF 4.50 per share entitled to dividends) was distributed to the shareholders of Autoneum Holding Ltd. Autoneum Financial Report 2015 Consolidated financial statements102 36 Subsidiaries and associated companies Switzerland Autoneum Holding Ltd, Winterthur Argentina Belgium Brazil Canada China Autoneum International Ltd, Winterthur Autoneum Management Ltd, Winterthur Autoneum Switzerland Ltd, Sevelen Autoneum Argentina SA, Córdoba Autoneum Belgium N.V., Genk Autoneum Brasil Têxteis Acústicos Ltda., São Bernardo do Campo Autoneum Canada Ltd., Tillsonburg Autoneum (Chongqing) Sound-Proof Parts Co. Ltd., Chongqing Autoneum (Shenyang) Sound-Proof Parts Co. Ltd., Shenyang Autoneum Nittoku (Guangzhou) Sound-Proof Co. Ltd., Guangzhou Tianjin Autoneum Nittoku Sound-Proof Co. Ltd., Tianjin Wuhan Nittoku Autoneum Sound-Proof Co. Ltd., Wuhan Czech Republic Autoneum CZ s.r.o., Choceň France Autoneum Holding France SASU, Lyon Autoneum France SASU, Aubergenville Germany Autoneum Germany GmbH, Roßdorf Great Britain Autoneum Great Britain Ltd., Stoke-on-Trent India Italy Korea Autoneum India Pvt. Ltd., New Delhi Autoneum Nittoku Sound Proof Products India Pvt. Ltd., Chennai Porfima Uno S.r.l., Torino SHN CO., Ltd., Daegu Autoneum Korea Ltd., Seoul Mexico Autoneum Mexico, S. de R.L. de C.V., Hermosillo Autoneum Mexico Operations, S. de R.L. de C.V., San Luis Potosí 1 Autoneum Mexico Servicios, S. de R.L. de C.V., San Luis Potosí 1 UGN de Mexico, S. de R.L. de C.V., Silao Servicios de Acoustical Solutions, S. de R.L. de C.V., Silao Netherlands Autoneum Netherland B.V., Weert Poland Portugal Russia Autoneum Poland Sp.z.o.o., Katowice Autoneum Portugal Lda., Setúbal Autoneum Rus LLC, Ryazan South Africa Autoneum Feltex (Pty) Ltd., Durban Spain Thailand Turkey USA Autoneum Spain S.A.U., Terrassa SRN Sound Proof Co., Ltd., Chonburi Summit & Autoneum (Thailand) Co., Ltd., Rayong Autoneum Erkurt Otomotive AS, Bursa Autoneum America Corporation, Farmington Hills Autoneum North America Inc., Farmington Hills UGN Inc., Tinley Park 1 The companies were established in 2015. 2 Autoneum has 49% of the capital rights. s t h g i r l a t i p a c d n a g n i t o V t n e m p o l e v e d & h c r a e s e R g n i d a r t / s e l a S n o i t c u d o r P n o i l l i m n i l a t i p a C d e t a d i l o s n o C d e t a i c o s s A CHF CHF CHF CHF ARS EUR BRL CAD CNY CNY CNY CNY CNY CZK EUR EUR EUR GBP INR INR EUR 0.2 • 7.0 • 1.3 • 0.3 • 22.5 • 8.0 • 147.7 • 0.0 • 49.3 • 49.2 • 75.8 • 47.2 • 76.9 206.2 • 39.8 • 8.0 • 11.2 • 41.8 • 293.6 • 220.0 • 0.0 • • KRW 2 640.0 • KRW MXN MXN MXN MXN MXN EUR PLN EUR RUB ZAR EUR THB THB TRY USD USD USD 240.0 • 0.0 • 49.5 • 0.1 • 0.1 • 0.1 • 2.0 • 20.8 • 1.2 • 0.8 • 11.1 • 10.8 • 100.0 • 10.0 • 3.1 • 130.4 • 47.2 • 1.0 • 100% 100% 100% • 100% • 100% 100% 100% • 100% 100% • 100% 51% 51% 25% 100% 100% 100% • 100% • 100% 100% 51% 100% 49% 60% 100% 100% 100% 50% 50% 100% 100% • 87% 100% 51% 100% 30% 51%2 51% 100% 100% • 50% • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • g n i c n a n fi / e c i v r e S • • • • • • • Autoneum Financial Report 2015 Consolidated financial statements 103103 Report of the statutory auditor on the consolidated financial statements to the General Meeting of Shareholders of Autoneum Holding Ltd, Winterthur As statutory auditor, we have audited the accompanying consolidated financial statements of Autoneum Holding Ltd, which comprise the balance sheet, income statement, statement of comprehensive income, statement of changes in equity, statement of cash flows and notes on pages 62 to 102 for the year ended December 31, 2015. Board of Directors’ responsibility The Board of Directors is responsible for the preparation of the consolidated financial statements in accordance with International Financial Reporting Standards (IFRS) and the requirements of Swiss law. This responsibility includes designing, implementing and maintaining an internal control system relevant to the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. The Board of Directors is further responsible for selecting and applying appropriate accounting policies and making accounting estimates that are reason- able in the circumstances. Auditor’s responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conduct- ed our audit in accordance with Swiss law and Swiss Auditing Standards as well as International Standards on Auditing. Those standards require that we plan and perform the audit to obtain reasonable assurance whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers the internal control system relevant to the entity’s preparation of the consoli- dated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control system. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the consolidated financial statements for the year ended December 31, 2015, give a true and fair view of the financial position, the results of operations and the cash flows in accordance with International Financial Reporting Standards (IFRS) and comply with Swiss law. Report on other legal requirements We confirm that we meet the legal requirements on licensing according to the Auditor Oversight Act (AOA) and inde- pendence (article 728 CO and article 11 AOA) and that there are no circumstances incompatible with our independence. In accordance with article 728a paragraph 1 item 3 CO and Swiss Auditing Standard 890, we confirm that an internal control system exists, which has been designed for the preparation of consolidated financial statements according to the instructions of the Board of Directors. We recommend that the consolidated financial statements submitted to you be approved. KPMG AG Kurt Stocker Licensed audit expert Auditor in charge Zurich, March 2, 2016 Kathrin Schünke Licensed audit expert Autoneum Financial Report 2015 Consolidated financial statements104 Remuneration report Authority and definition process The basic features of the remuneration policy are elaborated by the Compensation Committee (COC) and approved by the Board of Directors, which also approves the Group bonus plan and the long- term incentive plan (LTI). The Board of Directors fixes annually the remuneration of the Directors and of the members of the Group Executive Board, based on suggestions of the COC and within the limits approved by the shareholders. The Directors, whose remuneration is decided on, also partici- pate in the meeting. The Board of Directors reviews annually the main features of the remuneration policy, approves the fixed portion of the remuneration of the Group Executive Board members and defines the targets for the Group bonus plan as well as the parameters for the LTI. The Board of Directors has not engaged third-party consultants for the elaboration of the salary policy or of compensation programs. The Board of Directors annually submits the proposal for the maximum aggregate total compensation of the members of the Board of Directors and the Group Executive Board to the Annual General Meeting for prospective approval by the shareholders. For a detailed description of the rules on the vote on pay at the Annual General Meeting, reference is made to §14 of the Articles of Association (http://www.autoneum.com/fileadmin/user_upload/autoneum/Investor_ Relations/Articles_of_Association.pdf). For the rules in the Articles of Association on the principles applicable to performance-related pay and to the allocation of equity securities as well as the additional amount for payments to new members of the Group Executive Board appointed after the vote on pay at the Annual General Meet ing as well as on loans, credit facilities and post-employment benefits for members of the Board of Directors and the Group Executive Board, reference is made to §24 of the Articles of Association. Remuneration of the Board of Directors The remuneration of the Board of Directors consists of the annual fee and of the compensation for representation expenses. The remuneration is determined at the discretion of the Board of Directors, taking into consideration the remuneration at companies with comparable size, industry and globalization. The members of the Board of Directors may opt to obtain all or part of their remuneration in cash or in Autoneum shares. The cash component is paid out in December of the related business year. The shares are delivered in the respective year and blocked for three years. The share price appli- cable for the conversion of the remuneration into shares is based on the average trading price of the ten trading days following the dividend payment, discounted to reflect a three-year blocking period. Remuneration of the Group Executive Board Remuneration of the Group Executive Board consists of a fixed component, a performance-related bonus and the participation in the long-term incentive plan (LTI). Remuneration is determined at the discretion of the Board of Directors taking into consideration function, responsibility and experience, as well as remuneration at comparable industrial companies for which information is publicly avail able or known to the Directors from their experience or office at similar companies. Industrial Autoneum Financial Report 2015 Remuneration report105 companies are considered comparable with Autoneum if they are similar in terms of business sector, structure, size and international activity. The Board of Directors may define each year a portion of the basic salary which shall be paid in Autoneum shares. The number of shares is calculated considering the average trading price of the first ten trading days of the respective year. The granted shares are delivered in December of the respective year and blocked for three years. The members of the Group Executive Board may reach a performance-related remuneration of up to 80% of their basic salary, subject to the achievement or exceeding of defined minimum profitability and liquidity targets of the Group or of the Business Groups (BG), as well as to the achievement of agreed individual targets. The targets for the CEO and the CFO refer to the Group net profit margin (weighted with 52.5%), Group RONA (22.5%) and individual targets (25%). For the heads of the BG the targets refer to the Group net profit margin (17.5%), Group RONA (7.5%), BG EBIT margin (35%), BG free cash flow (15%) and individual targets (25%). Minimum and maximum limits are defined for the weighted targets. Achievement of the minimum limit is a condition for the bonus, while maximum bonus is achieved at the maximum limit. Bonus develops linearly between the two limits. Irrespective of the other targets, a bonus is only earned in case of a positive Group net profit. At least 40% of the bonus is paid in shares of Autoneum. Each member of the Group Execu- tive Board can opt for receiving up to 100% of the bonus in shares. The calculated bonus is multipli- ed by 1.4 and then converted into shares considering the average trading price of the first ten trading days in January of the following year. The resulting shares are blocked for three years. The long-term incentive plan (LTI) allows the Board of Directors to allocate part of the Group’s net profit to the beneficiaries defined in advance. Beneficiaries are the upper management of the Group, including the Group Executive Board. An allocation is only granted if Group net profit is posi- tive and exceeds a defined threshold. The total amount of Group net profit dedicated to the LTI is converted into Autoneum shares and the shares are allocated to the beneficiaries at fixed per centage rates, corresponding to the internal function levels. The shares become property of the beneficiaries after a vesting period of three years, if the beneficiaries are then still employed by an Autoneum company. Due to the three-year vesting period, the value of the LTI is in strong correlation to the Autoneum share price performance. Immediate vesting occurs in case of death or retirement of a beneficiary. In case of employment termination, shares not yet vested lapse without compensation. Exceptions are possible at the discretion of the COC. For the year 2015, 1% of Group net profit has been allocated (2014: 1%). There are no share options or share purchase plans. Autoneum Financial Report 2015 Remuneration report106 Remuneration to the members of the Board of Directors and Group Executive Board in 2015 CHF Board of Directors Hans-Peter Schwald, Chairman Fixed remuneration in shares1 in cash - 280 000 Rainer Schmückle, Vice Chairman 190 000 - Michael Pieper This E. Schneider Peter Spuhler Ferdinand Stutz Total CHF Group Executive Board All members - - - 100 000 130 000 100 000 120 000 50 000 310 000 660 000 Fixed remuneration Variable remuneration4 in shares5 in shares3 in cash in cash Other2 Total 49 800 329 800 25 000 215 000 25 239 125 239 29 591 159 591 27 396 127 396 32 310 202 310 189 336 1 159 336 LTI6 Other7 Total 3 274 004 32 108 989 824 1 198 512 206 892 773 743 6 475 083 Thereof Martin Hirzel, CEO 668 000 32 108 225 176 315 236 70 117 148 937 1 459 574 1 The applicable share price (average trading price during the defined period, less 16% for the three-year blocking period) was CHF 182.84. The transfer took place after deduction of applicable social security contributions and withholding taxes. 2 Other remuneration includes the employer’s portion of social insurance contributions as well as lump-sum remuneration for representation expenses. 3 The applicable share price during the defined period was CHF 174.50. 4 For the bonus calculation, the net profit has been adjusted for the settlement with the German Federal Cartel Office in the amount of CHF 31.5 million in 2015. 5 The part of the bonus opted to be paid out in shares (at least 40%) is multiplied by the factor 1.4 and then converted into shares using the average trading price for the first ten days in January 2016 (CHF 192.10). 6 The rights allocated in April 2016 will vest end of February 2019. 7 Other remuneration includes the employer’s portion of social insurance contributions, the employer’s portion of contributions to pension funds and other fringe benefits. Total remuneration to the Group Executive Board in 2015 includes remuneration to Volker Eimertenbrink (Head Business Group SAMEA until December 31, 2015), payable in 2016. Richard Derr who resigned from the Group Executive Board in 2015 has the bonus settled in cash. Remuneration to former members of the Board of Directors and of the Group Executive Board There has been no remuneration to former members of the Board of Directors or Group Executive Board. Directorships at other companies The Board of Directors decides on directorships of members of the Group Executive Board or senior management at other companies. When the directorship is exercised outside the contractual working time, the director’s remuneration received must not be surrendered to Autoneum. Autoneum Financial Report 2015 Remuneration report 107 Other2 Total 50 066 330 066 25 000 215 000 25 322 125 322 29 721 159 721 27 496 127 496 32 480 202 480 190 085 1 160 085 Remuneration to the members of the Board of Directors and Group Executive Board in 2014 CHF Board of Directors Hans-Peter Schwald, Chairman Fixed remuneration in shares1 in cash - 280 000 Rainer Schmückle, Vice Chairman 106 523 83 477 - 100 000 65 000 65 000 - 100 000 100 000 70 000 271 523 698 477 Michael Pieper This E. Schneider Peter Spuhler Ferdinand Stutz Total CHF Group Executive Board All members Thereof Martin Hirzel, CEO Fixed remuneration in cash in shares Variable remuneration in shares3 in cash LTI4 Other5 Total 2 893 853 636 542 - 1 209 989 887 905 190 303 863 664 6 045 714 - 293 654 274 008 70 075 174 790 1 449 069 1 The applicable share price (average trading price during the defined period, less 16% for the three-year blocking period) was CHF 156.52. The transfer took place after deduction of applicable social security contributions and withholding taxes. 2 Other remuneration includes the employer’s portion of social insurance contributions as well as lump-sum remuneration for representation expenses. 3 The part of the bonus opted to be paid out in shares (at least 40%) is multiplied by the factor 1.4 and then converted into shares using the average trading price for the first ten days in January 2015 (CHF 174.75). 4 The rights allocated in April 2015 will vest end of February 2018. 5 Other remuneration includes the employer’s portion of social insurance contributions, the employer’s portion of contributions to pension funds and other fringe benefits. Loans to directors or officers No loans have been granted to members of the Board of Directors or of the Group Executive Board. Other remuneration and payments to related parties There has been no further remuneration or payments to members of the Board of Directors or Group Executive Board in 2015 or in 2014. In 2015, CHF 87 678 (2014: CHF 211 138) of fees were paid to the law firm managed by the Chairman of the Board of Directors, for legal services provided. Autoneum Financial Report 2015 Remuneration report 108 Report of the Statutory Auditor on the remuneration report to the General Meeting of Shareholders of Autoneum Holding Ltd, Winterthur We have audited the accompanying remuneration report dated March 2, 2016, of Autoneum Holding Ltd for the year ended December 31, 2015. The audit was limited to the information according to articles 14–16 of the Ordinance against Excessive Compensation in Stock Exchange Listed Companies (Ordinance) contained in the tables “Remuneration to the members of the Board of Directors and of the Group Executive Board in 2015” and “Remuneration to the members of the Board of Directors and of the Group Executive Board in 2014” on pages 106 to 107 of the remuneration report. Responsibility of the Board of Directors The Board of Directors is responsible for the preparation and overall fair presentation of the remuneration report in accordance with Swiss law and the Ordinance against Excessive Compensation in Stock Exchange Listed Companies. The Board of Directors is also responsible for designing the remuneration system and defining individual remuneration packages. Auditor’s responsibility Our responsibility is to express an opinion on the accompanying remuneration report. We conducted our audit in accordance with Swiss Auditing Standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the remuneration report complies with Swiss law and articles 14–16 of the Ordinance. An audit involves performing procedures to obtain audit evidence on the disclosures made in the remuneration report with regard to compensation, loans and credits in accordance with articles 14–16 of the Ordinance. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatements in the remuneration report, whether due to fraud or error. This audit also includes evaluating the reasonableness of the methods applied to value components of remuneration as well as assessing the overall presentation of the Remuneration report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Opinion In our opinion, the remuneration report for the year ended December 31, 2015, of Autoneum Holding Ltd complies with Swiss law and articles 14–16 of the Ordinance. KPMG AG Kurt Stocker Licensed audit expert Auditor in charge Zurich, March 2, 2016 Kathrin Schünke Licensed audit expert Autoneum Financial Report 2015 Remuneration report Income statement of Autoneum Holding Ltd CHF million Income Dividend income Other financial income License income Total income Expenses Financial expenses Administration expenses Loss from disposal of subsidiary Taxes Total expenses Net profit for the year 109 Notes 2015 2014 (2) (3) 25.3 10.4 5.6 41.3 16.6 4.7 - 0.2 21.4 19.8 6.6 19.9 5.3 31.8 9.1 3.9 6.9 0.1 19.9 11.9 Autoneum Financial Report 2015 Financial statements of Autoneum Holding Ltd 110 Balance sheet of Autoneum Holding Ltd CHF million Assets Cash and cash equivalents Loans and receivables due from subsidiaries Loans and receivables due from third parties Accruals due from subsidiaries Accruals due from third parties Current assets Loans due from subsidiaries Loans due from third parties Investments Non-current assets Total assets Liabilities and shareholders’ equity Financial liabilities due to subsidiaries Accruals due to subsidiaries Accruals due to third parties Current liabilities Bond Financial liabilities due to banks Provisions Non-current liabilities Liabilities Share capital Legal capital reserves Retained earnings Balance brought forward Net profit for the year Treasury shares Shareholders’ equity Total liabilities and shareholders’ equity Notes 31.12.2015 31.12.2014 (4) (4) (5) (6) (7) (8) (9) (9) (9) 1.9 146.5 0.6 5.9 1.7 156.5 175.0 6.3 332.5 513.8 670.3 95.9 2.0 4.7 102.6 125.0 37.4 - 162.4 265.1 0.2 350.0 39.5 19.8 –4.3 405.2 670.3 10.3 107.8 0.7 5.5 1.4 125.7 234.1 7.6 267.1 508.9 634.6 52.2 1.7 6.0 59.9 125.0 33.3 11.9 170.2 230.1 0.2 370.8 27.7 11.9 –6.1 404.5 634.6 Autoneum Financial Report 2015 Financial statements of Autoneum Holding Ltd 111 Notes to the financial statements of Autoneum Holding Ltd 1 Principles General Autoneum Holding Ltd was incorporated on December 2, 2010, as a Swiss corporation headquartered in Winterthur. The company does not have any employees. These financial statements were prepared according to the provisions of the Swiss Law on Accoun- ting and Financial Reporting (32nd title of the Swiss Code of Obligations) for the first time. The presentation of the prior year figures was adjusted accordingly to allow comparability. Where not prescribed by law, the significant accounting and valuation principles applied are described below. Loans Loans granted in foreign currencies are translated at the rate at the balance sheet date, whereby unrealized losses are recorded but unrealized profits are not recognized. In the case where the currency effect of loans is hedged, both unrealized losses and profits are recognized. Treasury shares Treasury shares are recognized at acquisition cost and deducted from shareholders’ equity at the time of acquisition. In case of a sale, the gain or loss is recognized in the income statement as financial income or financial expenses. Financial liabilities due to banks and bond Financial liabilities are recognized in the balance sheet at nominal value. The issue costs for the bond and for finance agreements are recognized as accruals due from third parties and amortized on a straight-line basis over the maturity period. 2 Other financial income CHF million Interest income Net foreign exchange gains Other financial income Total 3 Financial expenses CHF million Interest expenses Net foreign exchange losses Other financial expenses Total 2015 10.3 - 0.1 10.4 2015 7.3 8.6 0.7 16.6 2014 15.0 4.0 0.8 19.9 2014 9.1 - - 9.1 Autoneum Financial Report 2015 Financial statements of Autoneum Holding Ltd 112 4 Loans and receivables due from subsidiaries Loans due from subsidiaries in current assets contains both current loans and cash pool receivables. The split at year-end is as follows: CHF million Current loans Cash-pool receivables Total 31.12.2015 118.9 31.12.2014 96.9 27.6 146.5 10.9 107.8 Non-current loans due from subsidiaries in the amount of CHF 10.6 million are subordinated. 5 Investments Autoneum Holding Ltd recapitalized subsidiaries by converting loans into equity in 2015 and 2014. Participation levels were increased accordingly. The subsidiaries and associated companies are listed in note 13 on page 115. They are owned directly or indirectly by Autoneum Holding Ltd. 6 Financial liabilities due to subsidiaries Financial liabilities due to subsidiaries in current liabilities contain both short-term loans and cash pool liabilities. The split at year-end is as follows: CHF million Current loans Cash-pool liabilities Total 7 Bond 31.12.2015 59.1 31.12.2014 10.3 36.8 95.9 41.8 52.2 On December 14, 2012, Autoneum Holding Ltd issued a fixed rate bond with a nominal value of CHF 125.0 million, which is listed on the SIX Swiss Exchange (AUT12, ISIN: CH0196770439). The bond carries a coupon rate of 4.375%, and has a term of five years with a final maturity on December 14, 2017. Autoneum Financial Report 2015 Financial statements of Autoneum Holding Ltd 113 8 Financial liabilities due to banks Autoneum maintains a long-term credit agreement with a banking syndicate in the amount of CHF 150.0 million. The line of credit may partly be used as a guarantee facility. The final maturity date is December 31, 2019. The interest rate is based on the LIBOR rate plus an applicable margin, which is determined based on the ratio of net debt to EBITDA. The credit agreement contains customary financial covenants, which include the ratio of net debt to EBITDA and a minimal financial equity. Compliance with financial covenants was checked quarterly and reported to the banking syndicate. In fiscal years 2015 and 2014, the minimum financial requirements were met at all times. 9 Shareholders’ equity Share capital The share capital amounts to CHF 233 618.15. It is divided into 4 672 363 fully paid registered shares with a par value of CHF 0.05 each. Conditional share capital For issuing bonds and/or granting shareholder options, the share capital can be increased by a maximum of 700 000 paid registered shares with a par value of CHF 0.05 up to a maximum value of CHF 35 000. Furthermore, for the issue of shares to employees and subsidiaries, the share capital can be increased by a maximum of 250 000 paid registered shares with a par value of CHF 0.05 up to a maximum value of CHF 12 500. Legal capital reserves These reserves include an amount of CHF 0.1 million (2014: CHF 21.0 million) whose distribution as dividends is not subject to income taxes in Switzerland and can be effected free of Swiss with- holding tax. The remaining part of the legal capital reserve does not benefit from the Swiss capital contribution principle. Treasury shares The following transactions with treasury shares were performed during the financial year: Treasury shares at January 1 Purchase of treasury shares Sale of treasury shares Transfer of treasury shares Treasury shares at December 31 2015 in shares 53 180 634 –12 891 –3 311 37 612 2015 in CHF million 6.1 2014 in shares 36 062 2014 in CHF million 2.3 0.1 –1.5 –0.4 4.3 28 069 –6 846 –4 105 53 180 4.7 –0.6 –0.4 6.1 Autoneum Financial Report 2015 Financial statements of Autoneum Holding Ltd 114 10 Guarantees and collateral provided Autoneum Holding Ltd has guaranteed CHF 27.2 million (2014: CHF 24.1 million) to financial institu- tions for granting credit facilities to direct and indirect subsidiaries and CHF 28.1 million (2014: CHF 23.8 million) to other third parties for securing transactions they entered into with direct and indirect subsidiaries. Furthermore, a financing commitment in the amount of CHF 12.2 million (2014: CHF 13.6 million) was given in favor of a subsidiary. 11 Shares allocated to the Board of Directors Part of the remuneration of the Board of Directors is paid in shares of Autoneum Holding Ltd. In 2015, 3 311 shares (2014: 4 105 shares) with a total value of CHF 660 000 (2014: CHF 698 447) were allocated. 12 Shares held by the Board of Directors or by the Group Executive Board The following shares were held by the Board of Directors or by the Group Executive Board including parties related to them (Art. 663c Swiss Code of Obligations): Number of shares Hans-Peter Schwald, Chairman Rainer Schmückle, Vice Chairman Michael Pieper This E. Schneider Peter Spuhler Ferdinand Stutz Total Board of Directors Martin Hirzel Martin Zwyssig Matthias Holzammer Richard Derr John T. Lenga Uwe Trautmann Volker Eimertenbrink Total Group Executive Board 31.12.2015 35 000 31.12.2014 33 000 2 171 947 768 4 338 802 871 2 113 2 171 947 245 3 850 853 035 1 756 1 794 261 1 841 057 9 796 780 3 650 n/a 170 2 575 2 565 7 512 - 2 593 3 480 n/a 2 818 1 645 19 536 18 048 Autoneum Financial Report 2015 Financial statements of Autoneum Holding Ltd 13 Subsidiaries and associated companies Switzerland Autoneum International Ltd, Winterthur Argentina Belgium Brazil Canada China Autoneum Management Ltd, Winterthur Autoneum Switzerland Ltd, Sevelen Autoneum Argentina SA, Córdoba Autoneum Belgium N.V., Genk Autoneum Brasil Têxteis Acústicos Ltda., São Bernardo do Campo Autoneum Canada Ltd., Tillsonburg Autoneum (Chongqing) Sound-Proof Parts Co. Ltd., Chongqing Autoneum (Shenyang) Sound-Proof Parts Co. Ltd., Shenyang Autoneum Nittoku (Guangzhou) Sound-Proof Co. Ltd., Guangzhou Tianjin Autoneum Nittoku Sound-Proof Co. Ltd., Tianjin Wuhan Nittoku Autoneum Sound-Proof Co. Ltd., Wuhan Czech Republic Autoneum CZ s.r.o., Choceň France Autoneum Holding France SASU, Lyon Autoneum France SASU, Aubergenville Germany Autoneum Germany GmbH, Roßdorf Great Britain Autoneum Great Britain Ltd., Stoke-on-Trent India Italy Korea Autoneum India Pvt. Ltd., New Delhi Autoneum Nittoku Sound Proof Products India Pvt. Ltd., Chennai Porfima Uno S.r.l., Torino SHN CO., Ltd., Daegu Autoneum Korea Ltd., Seoul Mexico Autoneum Mexico, S. de R.L. de C.V., Hermosillo Autoneum Mexico Operations, S. de R.L. de C.V., San Luis Potosí 1 Autoneum Mexico Servicios, S. de R.L. de C.V., San Luis Potosí 1 UGN de Mexico, S. de R.L. de C.V., Silao Servicios de Acoustical Solutions, S. de R.L. de C.V., Silao Netherlands Autoneum Netherland B.V., Weert Poland Portugal Russia Autoneum Poland Sp.z.o.o., Katowice Autoneum Portugal Lda., Setúbal Autoneum Rus LLC, Ryazan South Africa Autoneum Feltex (Pty) Ltd., Durban Spain Thailand Turkey USA Autoneum Spain S.A.U., Terrassa SRN Sound Proof Co., Ltd., Chonburi Summit & Autoneum (Thailand) Co., Ltd., Rayong Autoneum Erkurt Otomotive AS, Bursa Autoneum America Corporation, Farmington Hills Autoneum North America Inc., Farmington Hills UGN Inc., Tinley Park 1 The companies were established in 2015. No other changes in voting or capital rights took place. 2 Autoneum has 49% of the capital rights. 115 g n i c n a n fi / e c i v r e S • • • • • • s t h g i r l a t i p a c d n a g n i t o V t n e m p o l e v e d & h c r a e s e R g n i d a r t / s e l a S n o i t c u d o r P n o i l l i m n i l a t i p a C d e n w o y l t c e r i d n I d e n w o y l t c e r i D CHF CHF CHF ARS EUR BRL CAD CNY CNY CNY CNY CNY CZK EUR EUR EUR GBP INR INR EUR 7.0 • 1.3 • 0.3 • 22.5 8.0 • 147.7 • 0.0 49.3 49.2 75.8 47.2 76.9 206.2 • 39.8 • 8.0 11.2 • 41.8 • 293.6 220.0 0.0 • KRW 2 640.0 KRW MXN MXN MXN MXN MXN EUR PLN EUR RUB ZAR EUR THB THB TRY USD USD USD 240.0 0.0 49.5 • 0.1 • 0.1 0.1 2.0 • 20.8 1.2 • 0.8 • 11.1 10.8 • 100.0 10.0 3.1 130.4 • 47.2 1.0 • • • • • • • • • • • • • • • • • • • • • • • • • • • 100% 100% • 100% • 100% 100% 100% • 100% 100% • 100% 51% 51% 25% 100% 100% 100% • 100% • 100% 100% 51% 100% 49% 60% 100% 100% 100% 50% 50% 100% 100% • 87% 100% 51% 100% 30% 51%2 51% 100% 100% • 50% • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • Autoneum Financial Report 2015 Financial statements of Autoneum Holding Ltd 116 14 Significant shareholders At December 31, Autoneum knew that the following shareholders had more than 3% of the Company voting rights (in accordance with Art. 663c Swiss Code of Obligations): Artemis Beteiligungen I Ltd, Hergiswil, Switzerland, Centinox Holding Ltd, Hergiswil, Switzerland, and Michael Pieper PCS Holding Ltd, Weiningen, Switzerland, and Peter Spuhler Norges Bank (the Central Bank of Norway), Norway 31.12.2015 31.12.2014 20.28% 17.18% 3.00% 20.27% 18.26% n/a Details of the disclosures can be found at: www.six-exchange-regulation.com/de/home/publications/significant-shareholders.html 15 Events after balance sheet date There were no events between December 31, 2015, and March 2, 2016, which would necessitate adjustments to the book value of the Company’s assets or liabilities, or which require additional disclosure in the financial statements. Autoneum Financial Report 2015 Financial statements of Autoneum Holding Ltd Dividend proposal for the appropriation of profit CHF Balance brought forward Net profit for the year At the disposal of the Annual General Meeting Proposal Distribution of a dividend1 Carried forward to new account 117 2015 39 545 567 19 825 122 59 370 689 21 025 633 38 345 056 59 370 689 1 Shares held by Autoneum Holding Ltd at the time of dividend distribution are not entitled to dividends. The amount distributed will be reduced accordingly at the time of distribution. The Board of Directors proposes that a dividend of CHF 4.50 is paid per registered share. Autoneum Financial Report 2015 Financial statements of Autoneum Holding Ltd 118 Report of the statutory auditor on the financial statements to the General Meeting of Shareholders of Autoneum Holding Ltd, Winterthur As statutory auditor, we have audited the accompanying financial statements of Autoneum Holding Ltd, which comprise the balance sheet, income statement and notes on pages 109 to 116 for the year ended December 31, 2015. Board of Directors’ responsibility The Board of Directors is responsible for the preparation of the financial statements in accordance with the requirements of Swiss law and the Company’s articles of incorporation. This responsibility includes designing, implementing and maintaining an internal control system relevant to the preparation of financial statements that are free from material misstatement, whether due to fraud or error. The Board of Directors is further responsible for selecting and applying appropriate accounting policies and making accounting estimates that are reasonable in the circumstances. Auditor’s responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Swiss law and Swiss Auditing Standards. Those standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers the internal control system relevant to the entity’s preparation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control system. An audit also includes evaluating the appropri- ateness of the accounting policies used and the reasonableness of accounting estimates made, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements for the year ended December 31, 2015, comply with Swiss law and the Company’s articles of incorporation. Report on other legal requirements We confirm that we meet the legal requirements on licensing according to the Auditor Oversight Act (AOA) and inde- pendence (article 728 CO and article 11 AOA) and that there are no circumstances incompatible with our independence. In accordance with article 728a paragraph 1 item 3 CO and Swiss Auditing Standard 890, we confirm that an internal control system exists, which has been designed for the preparation of financial statements according to the instructions of the Board of Directors. We further confirm that the proposed appropriation of available earnings complies with Swiss law and the Company’s articles of incorporation. We recommend that the financial statements submitted to you be approved. KPMG AG Kurt Stocker Licensed audit expert Auditor in charge Zurich, March 2, 2016 Kathrin Schünke Licensed audit expert Autoneum Financial Report 2015 Financial statements of Autoneum Holding Ltd Review 2011–2015 Consolidated income statement CHF million Net sales BG Europe BG North America BG Asia BG SAMEA2 EBITDA as a % of net sales EBIT as a % of net sales Net profit as a % of net sales Return on net assets in % (RONA) Return on equity in % (ROE) Consolidated balance sheet at December 31 Non-current assets Current assets Equity attributable to shareholders of AUTN Equity attributable to non-controlling interests Total shareholders’ equity Non-current liabilities Current liabilities Total assets Net debt Shareholders’ equity in % of total assets Consolidated statement of cash flows Cash flows from operating activities Cash flows used in investing activities Cash flows used in financing activities Autoneum Financial Report 2015 Review 2011–2015 119 2015 2 085.9 20141 1 954.7 2013 2 053.3 2012 1 940.9 2011 1 682.4 833.2 977.9 180.9 94.3 191.5 9.2% 126.5 6.1% 68.7 3.3% 12.7% 17.4% 553.6 561.1 301.3 96.2 397.5 284.8 432.3 803.3 882.7 145.3 123.9 201.6 10.3% 135.1 6.9% 102.8 5.3% 20.3% 29.6% 536.2 563.0 303.5 89.0 392.5 276.8 430.0 1 114.7 1 099.3 105.4 35.7% 53.9 35.7% 901.6 892.4 128.3 138.4 184.3 9.0% 79.2 3.9% 36.2 1.8% 10.3% 12.5% 440.7 549.9 232.9 69.1 302.0 234.9 453.8 990.6 75.0 901.2 800.0 101.4 144.7 146.4 7.5% 77.3 4.0% 29.6 1.5% 10% 11.1% 434.4 517.5 213.2 62.3 275.5 237.0 439.4 951.9 123.0 888.0 571.3 91.8 140.6 104.2 6.2% 34.9 2.1% 2.3 0.1% 4.1% 0.9% 417.0 566.2 200.4 56.4 256.8 228.9 497.5 983.2 154.8 30.5% 28.9% 26.1% 111.7 –123.1 –43.5 138.2 –108.8 –15.0 165.7 –98.6 –20.7 114.9 –66.8 –36.4 35.6 –82.5 –10.6 Employees at December 313 11 423 10 681 10 816 10 799 10 424 1 Restated. 2 Including South America, Middle East and Africa. 3 Full-time equivalents including temporary employees but excluding apprentices. 120 Autoneum Financial Report 2015 Review 2011–2015 Information for investors CHF million Number of issued shares Share capital of Autoneum Holding Ltd Net profit of Autoneum Holding Ltd Market capitalization at December 31 as a % of net sales 2015 4 672 363 2014 4 672 363 2013 4 672 363 2012 4 672 363 2011 4 672 363 0.2 19.8 938.1 45.0% 0.2 11.9 783.0 40.1% 0.2 13.4 633.3 30.8% as a % of equity attr. to shareholders of AUTN 311.3% 258.0% 271.9% Data per share (AUTN) CHF Basic earnings per share Dividend per share1 Shareholders’ equity per share2 Share price at December 31 Share price development during the year High Low 2015 9.12 4.50 65.01 202.40 226.40 148.40 2014 17.03 4.50 65.71 169.50 209.30 129.10 2013 3.12 1.30 50.24 136.60 140.00 43.30 1 As proposed by the Board of Directors and subject to the agreement of the Annual General Meeting. 2 Equity attributable to shareholders of Autoneum Holding Ltd per share outstanding at December 31. 0.2 8.2 207.1 10.7% 97.2% 2012 2.61 0.65 45.65 44.35 57.95 36.00 0.2 14.2 228.6 13.6% 114.1% 2011 –2.13 - 49.38 48.95 119.00 43.75 122 Autoneum Annual Report 2015 Important dates Important dates · Annual General Meeting 2016: March 30, 2016 · Semi-Annual Report 2016: · Annual General Meeting 2017: March 30, 2017 July 26, 2016 Investors and Financial Analysts Dr Martin Zwyssig CFO T +41 52 244 82 82 investor@autoneum.com Media Dr Anahid Rickmann Head Corporate Communications T +41 52 244 83 88 media@autoneum.com All statements in this report which do not refer to historical facts are forecasts for the future which offer no guarantee whatsoever with respect to future performance; they embody risks and uncertainties which in- clude – but are not confined to – future global economic conditions, exchange rates, legal provisions, market conditions, activities by competitors and other factors which are outside the company’s control. March 2016 This is a translation of the original German text. © Autoneum Holding Ltd, Winterthur, Switzerland Text: Autoneum Management Ltd, Winterthur Design: atelier MUY, Zurich Illustration: Martin Mörck, Copenhagen Christoph Fischer, Lucerne Hokolo 3D, Hanover Photography: flashpoint studio, Freiburg i. Br. Publishing System: Multimedia Solutions AG, Zurich Printing: Druckmanufaktur, Urdorf Our Product Portfolio Engine Bay · Engine Encapsulations · Engine Covers · Hoodliners · Outer Dashes · Water Box Shields Interior Floor · Tufted Carpets · Non-Woven Carpets · Inner Dashes · Floor Insulators · Floor Mats Underbody · Underbody Shields · Heatshields · Wheelhouse Outer Liners · Floor Pans · Outer Tunnel Insulators Body Treatment · Dampers/Stiffeners · Sealants · Other Acoustic Parts July Market introduction of Prime-Light, a multifunctional lightweight technology for inner dashes and floor insulators. Highlights 2015 August Groundbreaking of new plant in San Luis Potosí, Mexico. October Successful launch of weight- and noise-reducing engine covers based on Theta-FiberCell. June Around 220 experts attend the internationally leading specialist event “Automotive Acoustics Conference” under the scientific direction of Autoneum in Zurich, Switzerland. September Opening of two new US production facilities in Jeffersonville, Indiana, and in Monroe, Ohio (UGN). < Product Portfolio Autoneum. Mastering sound and heat. 5 1 0 2 t r o p e R l a u n n A m u e n o t u A Autoneum Management Ltd Dr Anahid Rickmann Head Corporate Communications T +41 52 244 83 88 media@autoneum.com www.autoneum.com

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