Komax
Annual Report 2011

Plain-text annual report

1 1 0 2 t r o p e R l a u n n A x a m o k T i e k A m o T y A w e h T Annual Report 11 The wAy To mAke iT Brief profile The Komax Group is a global technology company that focuses on markets in the automation sector. As a leading manufacturer of innovative and high-quality solutions for the wire processing industry, for the production of modules for the photovoltaics market and for systems for the manu facture of self-medication solutions, Komax helps its customers implement economical and safe manufacturing processes, especially in the automotive supply, solar panel and pharmaceutical sectors. Wire business unit With its comprehensive product range, Komax Wire offers automated, intelligent solutions for all modern wire processing applications. In addition to both standard and customer-specific systems, we offer an extensive range of quality assurance modules and networking solutions for safe and efficient production. Moreover, with our sophisticated service offering, we continue to support our customers after their systems have been commissioned, thereby ensuring high availability and low impair- ment for their investment. Solar business unit Komax Solar focuses on process automation systems for the production of solar modules. These include stringers, which solder individual solar cells into what are known as strings; lay-up systems, which form individual strings into a matrix, and laminators, which take care of the final stage of sealing the fragile matrices. Medtech business unit Komax Medtech develops sophisticated, customer-specific machine systems for the automatic assembly of mass-produced medical devices, such as inhalers, insulin de- livery and injection systems. Komax Medtech also provides solutions for the efficient mass production of cartridges for inkjet printers. key figures in TCHF Order intake Revenues1) Gross profit in % of revenues EBITD in % of revenues Operating profit (EBIT) in % of revenues Group profit after taxes (EAT) in % of revenues Cash flow from operating activities Investments in non-current assets Free cash flow Research and development in % of revenues Basic earnings per share in CHF Number of employees 31.12. Total assets Non-current assets Current assets Intangible assets Net cash Shareholders’ equity2) in % of total assets 1) Revenues: net sales + other operating income. 2) Equity attributable to equity holders of the parent company. 2011 380 432 371 424 200 837 54.1 54 906 14.8 47 536 12.8 39 280 10.6 10 055 13 536 –61 23 526 6.3 11.68 1 140 361 448 112 454 248 994 34 339 5 604 246 994 68.3 2010 +/− in % 357 002 340 172 178 559 52.5 36 443 10.7 29 110 8.6 17 780 5.2 24 546 5 890 19 500 20 511 6.0 5.31 1 023 318 698 107 162 211 536 29 965 12 026 212 523 66.7 6.6 9.2 12.5 50.7 63.3 120.9 –59.0 129.8 –100.3 14.7 120.0 11.4 13.4 4.9 17.7 14.6 –53.4 16.2 operating profit (eBiT) in TCHF Shareholders’ equity and equity ratio in TCHF 40 000 20 000 0 −20 000 16.0% 300 000 8.0% 200 000 0% 100 000 −8.0% 0 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 EBIT EBIT in % of revenues1) Shareholders’ equity2) Equity in % of total assets Group profit after taxes (eAT) in TCHF Net working capital (NwC) in TCHF 40 000 20 000 0 −20 000 16.0% 150 000 8.0% 100 000 0% 50 000 −8.0% 0 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 EAT EAT in % of revenues1) NWC3) NWC in % of revenues1) 90.0% 60.0% 30.0% 0% 60.0% 40.0% 20.0% 0% 1) Revenues: net sales + other operating income. 2) Equity attributable to equity holders of the parent company. 3) Net working capital: receivables + inventories . /. current liabilities. Annual Report 2 Shareholders’ Letter 4 Locations 6 Business Model and Strategy 10 Board of Directors 12 Executive Committee Business Units 14 Wire 20 Solar 26 Medtech 32 Sustainability and Social Responsibility 35 Corporate Governance 44 Information for Investors 47 Financial Report 48 Consolidated Financial Statements 97 Financial Statements of Komax Holding AG 106 Corporate Structure Further Information 110 Glossary 112 Addresses 115 Five-Year Overview 54702 Komax_GB2011_Berichtsteil_E.indd 1 54702 Komax_GB2011_Berichtsteil_E.indd 1 12.03.12 16:52 12.03.12 16:52 2 Extremely successful 2011 Dear Shareholders, The year 2011 was an extraordinarily successful one for the Komax Group. We surpassed the previous year’s already very good results once more and achieved new records in revenues as well as operating profit and Group profit after taxes. Revenues rose 9.2% to CHF 371.4 million. In local currencies the increase was higher still at 16.1%. Operating profit (EBIT) came to CHF 47.5 million. The previous year’s EBIT margin saw a further increase of 4.2 percentage points to 12.8%, despite the –1.1 percentage point impact of currency effects. Group profit after taxes (EAT) rose 120.9% to CHF 39.3 million. Earnings per share also increased accordingly reaching CHF 11.68. Operating cash flow rose to CHF 54.9 million (+50.7%). The Komax Group continued to stand on a very firm financial foundation in 2011. Shareholders’ equity was CHF 247.0 million (2010: CHF 212.5 million), for an equity ratio of 68.3%. Net cash amounted to CHF 5.6 million. Successful business units Komax Wire saw further gains in demand for automation solutions in the year under review, especially on the part of customers in the automotive industry. The household appliance market was stable. In control cabinet production, a continuing move toward greater automation led to steady growth. In solar cables, by contrast, demand cooled noticeably during the year under review, due mainly to a cyclical contraction in the photovoltaic industry. Overall, the Wire business unit’s net sales grew 12.0% to CHF 217.8 million, while EBIT was a strong CHF 57.1 million (+19.3%). Although Komax Solar was affected by the challenges facing the photovoltaic industry, especially in the second half of the year, its net sales grew 11.8% in the year under review to CHF 70.8 million. Since the business unit invoices primarily in US dollars, local-currency growth was even higher. Following healthy operating income in the first half, deteriorating circumstances culminated in whole-year EBIT of CHF –3.4 million, a 42% improvement over the prior year. Komax Medtech’s main sales markets were vigorous for lengthy periods in 2011. Demand for self- medication devices and for inkjet printer cartridge assembly equipment was robust. Komax Medtech aimed for profitability over growth and increasingly focused on projects involving repeat business. Net sales reached CHF 83.8 million (2010: CHF 82.7 million). Following the previous year’s operating loss, the business unit achieved a respectable EBIT of CHF 3.8 million for the year under review. The EBIT margin of 4.6% is within striking distance of the mid-term target of 5%. 54702 Komax_GB2011_Berichtsteil_E.indd 2 54702 Komax_GB2011_Berichtsteil_E.indd 2 12.03.12 16:52 12.03.12 16:52 3 Annual Report 6 Business Model 14 Wire 20 Solar 26 Medtech 35 Corporate Governance 44 Investors 47 Financial Report 106 Corporate Structure Strengthening market position and organization Komax strengthened its market position and enhanced its organizational efficiency once more in financial year 2011. The marketing and distribution structure of the different business units underwent expansion, especially in Asia. In addition, we further optimized operating processes in each of the business units. Komax Wire entered into closer collaboration with Germany’s SLE quality engineering, in which it acquired a 30% stake. This is allowing Komax Wire to expand its product range by adding solutions for the increas- ingly important infotainment and quality control application areas. Komax Jinchen, a joint venture with a Chinese partner in which Komax holds a majority interest, commenced operations in May. The venture adds laminators to Komax Solar’s product range and enables it to meet the needs of the Chinese market in particular. Innovation In all business units Komax systematically invested in innovations to optimize the existing product range or in new developments. In the 2011 financial year, the Group spent CHF 23.5 million on research and devel- opment and employed 134 people in R&D. A word of thanks It is thanks to our customers and business partners that we were able to achieve impressive results in 2011. We are grateful for your trust and for the constructive partnership we enjoy with you. We will spare no effort to continue offering innovative solutions for your needs in future. Our employees, whose enormous motivation, great dedication and skill once again provided the foundation of the Komax Group’s success in the past year, deserve our very special thanks. And finally we thank you, our valued shareholders, for your trust and unwavering loyalty to our company. Higher dividend proposed At the General Meeting, the Board of Directors will propose an increase in the distribution from the capital contribution reserves from CHF 2.00 to CHF 4.00 per share. This reflects confidence in future business performance and the strength of the company. The dividend yield on the date of the Board resolution was an attractive 4.8%. For natural persons in Switzerland who hold shares as part of their personal assets, this distribution from the capital contribution reserves will be tax-free. Outlook Macroeconomic uncertainties continue to dominate economic developments and thus to impinge on the activities of our three business units. Visibility is poor and it is still generally difficult to predict how the situation will unfold. Komax Wire, Komax Solar and Komax Medtech provide solutions and services for structural growth markets. Hence, the long-term prospects remain favorable. Moreover, Komax remains cautiously opti- mistic about 2012. From our current perspective, we expect that the Group will also achieve a sound result this year. Leo Steiner Beat Kälin Chairman of the Board of Directors Chief Executive Officer 54702 Komax_GB2011_Berichtsteil_E.indd 3 54702 Komax_GB2011_Berichtsteil_E.indd 3 12.03.12 16:52 12.03.12 16:52 4 Customer proximity all around the world Komax has production plants in Switzerland, the United States, China, Malaysia and France and offers sales and service support in around 60 countries through its subsidiaries and independent agents. This carefully cultivated proximity to its markets and customers al- lows Komax to identify needs and trends at an early stage. With its many years of experience in the development of automation solu- tions, Komax is in a position to rapidly transform these insights into user-friendly solutions that it provides to customers all round the world. At the same time, its global distribution and service net- work guarantees fast response times. 54702 Komax_GB2011_Berichtsteil_E.indd 4 54702 Komax_GB2011_Berichtsteil_E.indd 4 12.03.12 16:52 12.03.12 16:52 5 Annual Report 6 Business Model 14 Wire 20 Solar 26 Medtech 35 Corporate Governance 44 Investors 47 Financial Report 106 Corporate Structure Komax production site Komax sales and service Komax participation Sales representative Headquarters Komax Holding AG Dierikon, Switzerland 54702 Komax_GB2011_Berichtsteil_E.indd 5 54702 Komax_GB2011_Berichtsteil_E.indd 5 12.03.12 16:52 12.03.12 16:52 6 Business model and strategy The Komax Group is a global technology company focusing on automation solutions. The Group’s core competency is mechatronics, the interdisciplinary interaction of precision engineering, electronics and information technology. In operational terms, the business is split into three segments (business units). These operate as auto- nomous brands in a number of different markets and fields of application: −− Komax Wire offers a comprehensive range of au- tomated, intelligent solutions for all modern wire processing applications. −− Komax Solar focuses on the core processes making up the back end of solar module produc- tion. −− Komax Medtech develops sophisticated, customer- specific machine systems for the automatic as- sembly of mass-produced medical devices. Komax Wire is the Group’s strongest business unit in terms of revenues. The wire processing industry is where Komax has its roots. This business has been built up and continuously developed over the last 35 years or so since the Group was founded. The Komax Solar and Komax Medtech business lines largely came into the Group around ten years ago as a result of acquisitions. Since then, the Group has streamlined its then very broad offering, moving towards the business model it has today. Growth-oriented strategy Komax pursues a strategy based on internal growth that is profitable in the long term supplemented by selective acquisitions. The company is keen to cre- ate value for all its stakeholders and endeavours to combine successful long-term business activity and commercial growth with environmentally-aware and socially responsible conduct. Group strategy is im- plemented by way of individually defined strategic measures at business unit level. The individual busi- ness units’ main strategic areas of focus are out- lined on pages 18, 24 and 30 of the Annual Report. 54702 Komax_GB2011_Berichtsteil_E.indd 6 54702 Komax_GB2011_Berichtsteil_E.indd 6 12.03.12 16:52 12.03.12 16:52 7 Annual Report 6 Business Model 14 Wire 20 Solar 26 Medtech 35 Corporate Governance 44 Investors 47 Financial Report 106 Corporate Structure 58% Wire Net sales by segment 19% Solar 23% Medtech Net sales by region in TCHF Switzerland Europe (incl. Africa) North/South America Asia Total 2011 2010 +/– in % 16 267 15 254 172 653 139 821 74 583 106 526 370 029 71 609 112 391 339 075 6.6 23.5 4.2 –5.2 9.1 Revenue growth target in % Komax Wire Komax Solar Komax Medtech Target 2011 2010 ~3–5% ~20% —1) 12% 12% 1% 112% 38% 10% 1) The Medtech business unit is in the systems business, i.e. it mainly manu- factures complex, customer-specific systems. In this business, targeted selection of the projects to be acquired is more important than sales growth per se. For that reason, no sales growth target has been defined for this unit for the time being. EBIT margin target in % Komax Wire Komax Solar Komax Medtech Target 2011 2010 ~20% 26.2% ~8% ~5% –4.9 4.6% 24.6% –9.4% –5.4% Selective acquisitions Komax’s main focus is on organic growth. However, potential acquisition candidates and any opportuni- ties that arise are carefully examined. Komax is in- terested in companies with the potential to help the Group and its business units achieve their strategic goals. Global production, local distribution and service network Komax has nine production sites worldwide, located in Switzerland, the United States, China, Malaysia and France. The Group also offers sales and service support in around 60 countries through subsidiaries and independent agents. It can therefore provide an efficient and competent service to its customers, most of whom operate globally, at all times. Komax has been steadily expanding its presence in the emerging economies in line with the steep rise in demand from these markets. This carefully cultivated proximity to its markets and customers allows Komax to identify needs and trends at an early stage. With its many years of expe- rience in the development of automation solutions, Komax is in a position to rapidly transform these in- sights into user-friendly solutions that it provides to customers all round the world. At the same time, its global distribution and service network guarantees fast response times. Growth and EBIT margin targets Progress can only be achieved if measurable goals have been defined. Thus, in March 2011, Komax de- fined a set of transparent, medium-term sales growth and EBIT margin targets for each of its business units. Komax Wire substantially surpassed its targets for 2010 and 2011 with margins of 24.6% and 26.2%, respectively. On the one hand, this was due to con- tinuous improvements in its operating performance. On the other, the business unit was able to capitalize on lean structures that had not yet been restored to full strength after the 2009 financial crisis. In the me- dium term, planned initiatives such as further strengthening the unit’s market position, forays into new areas of activity, and investments in innovative capacity will bring EBIT margins into the target range. 54702 Komax_GB2011_Berichtsteil_E.indd 7 54702 Komax_GB2011_Berichtsteil_E.indd 7 12.03.12 16:52 12.03.12 16:52 8 As yet, Komax Solar has not been able to achieve its EBIT margin target of around 8%. Al- though measures introduced in 2010 generated a substantial improvement in the margin and a posi- tive operating result in the first half of 2011, high levels of excess capacity and increasing declines in solar module prices plunged the solar industry into crisis from the middle of the year onwards. Komax Solar was also hit by this development, and this ulti- mately resulted in a negative EBIT figure for the year as a whole. Attractive markets The markets served by Komax have structural growth characteristics, and their need for automation solutions will continue to grow. By contrast, Komax Medtech has now achieved turnaround. The strategy of concentrating increas- ingly on projects providing repeat business has paid off. After a loss in 2010, the EBIT margin rose to 4.6% in 2011 and is thus within its medium-term target range. The divergent business models used by the three business units call for different degrees of capital commitment. The EBIT margins required to generate value for the Group thus differ from one business unit to another. Markets and customers its sales Komax Wire generates around 80% of through customers in the automotive industry. This is attributable to the fact that this industry is the most advanced in terms of automation. The large, standardized volumes of wires it needs to process and the stringent requirements in place with regard to finish quality make automated solutions the fa- voured option for this sector. The automotive industry is experiencing struc- tural growth. IHS Global Insight anticipates that the number of vehicles produced and sold worldwide will grow by an average of 5% a year between 2011 and 2018. However, the demand for automation solutions for processing the wires and wire harnesses in- stalled in vehicles is not determined solely by the number of cars produced and sold. The many tech- nical innovations in the automotive sector are at least as important. The trend towards miniaturiza- tion has created a need for thinner wires and smaller housings. Moreover, additional wire connectors are also required due to ever more extensive vehicle equipment, in particular with respect to functionality and safety, and for optimized or new drive systems. These factors encourage investments in automation solutions above and beyond those driven by volume growth. The other markets served by Komax Wire, such as control cabinet manufacturing, household appli- ances, other electronic devices and components, and solar cables, today account for around 20% of the unit’s sales and are thus still relatively insignifi- cant when taken individually. However, in view of the announced intention to increase penetration in these markets, they have the potential higher than proportional growth in the longer term. Komax Wire is very well positioned in the market for wire processing machines, with a global market share of around 40%. Komax Wire’s customer base includes all the globally active wire processing com- panies and it is well represented in the fragmented market for small-business customers. Komax Solar operates in the field of renewable energies. Today renewables, and in particular solar energy, have attained worldwide recognition as a safe and reliable energy source. It is anticipated that growth in renewables’ market share will outpace that of other sectors in future as the global demand for energy increases. Given a moderate growth sce- nario, EPIA, the European Photovoltaic Industry As- sociation, expects solar installations to grow from 39 gigawatts in 2010 to around 131 gigawatts in 2015. This corresponds to average annual growth of more than 20%. Komax Solar is thus operating in an interesting growth market. Recently, falling prices have brought the costs of solar energy closer to grid parity, thus increasing its attractiveness still further. In the last two years, solar module production has shifted to Asia, and especially China. Today, China’s share of global manufacturing volumes stands at around 80%, making it the key market for equipment suppliers. 54702 Komax_GB2011_Berichtsteil_E.indd 8 54702 Komax_GB2011_Berichtsteil_E.indd 8 12.03.12 16:52 12.03.12 16:52 9 Annual Report 6 Business Model 14 Wire 20 Solar 26 Medtech 35 Corporate Governance 44 Investors 47 Financial Report 106 Corporate Structure 47% Automotive Komax Wire Competitor 1 The Solar business unit is very well represented in China and is focusing its market cultivation efforts on the so-called tier 1 manufacturers. Komax Solar is one of the top three suppliers of stringers world- wide. The majority of Komax Medtech’s customers operate in the pharmaceuticals industry. Final de- mand for medical devices is enjoying a long-term growth trend. This is due partly to general demo- graphic developments, and partly to the increasing trend towards self-medication. Demand for auto- mation solutions for the production of self-medi- cation devices is linked to the investment behaviour of the pharmaceuticals industry. As a rule, new projects are awarded as part of invitations to tender. In the majority of cases, these are for solutions that are custom developed for a specific customer or product. Success in this business is very heavily depend- ent on the careful selection of projects and the es- tablishment of a balanced project portfolio. A well- structured project portfolio is founded upon a substantial proportion of projects providing repeat business, plus some new projects with the potential for repeat business. Over the course of last year, Komax Medtech improved its portfolio manage- ment and is now among the leading manufacturers in its sector. Net sales by industry 14% Others 20% Medtech 19% Solar Market shares Komax Wire Others Competitor 4 Competitor 3 Competitor 2 Market shares Komax Medtech Others Komax Medtech Competitor4 Competitor 3 Competitor 1 Competitor 2 54702 Komax_GB2011_Berichtsteil_E.indd 9 54702 Komax_GB2011_Berichtsteil_E.indd 9 12.03.12 16:52 12.03.12 16:52 10 Board of Directors Leo Steiner (1943) Max Koch (1949) Melk M. Lehner (1947) Non-executive, independent member of the Board of Directors since 1997, elected until 2014, Swiss national, resident in Meggen. Max Koch holds a degree in electri- cal engineering from ETH Zurich. After founding Komax in 1975, he headed the company until 1991 as CEO, and was Chairman of the Board of Directors until 1997. In the last three years, Max Koch has not been a member of Group Management or had any material business relationships with the Komax Group. Non-executive, independent member of the Board of Directors since 1997, Chairman of the Board of Directors since 2007, elected until 2012, Swiss national, resident in Steinhausen, member of the Board of Directors of listed com- pany Kardex AG, Zurich. Leo Steiner holds a degree in engi- neering from ETH Zurich. Before joining Komax, he worked at Hayek Engineering & Management Consulting, Zurich, Landis & Gyr, Zug, and Sulzer Escher-Wyss, Zurich. From 1992 to 2007, he was CEO of the Komax Group. In the last three years, Leo Steiner has not been a member of Group Manage- ment or had any material business relationships with the Komax Group. Non-executive, independent member of the Board of Directors since 1997, elected until 2013, Swiss national, resident in Zumikon, Chairman of the Board of Directors of Sihl Manegg Immobilien AG, Zurich, member of the Board of Directors of Landert Maschinen AG, Bülach. Melk M. Lehner holds a degree in mechanical engineering from ETH Zurich. He has held various management positions at Mettler-Toledo AG in Greifensee and Saurer AG in Arbon. In the last three years, Melk M. Lehner has not been a member of Group Management or had any material business relationships with the Komax Group. 54702 Komax_GB2011_Berichtsteil_E.indd 10 54702 Komax_GB2011_Berichtsteil_E.indd 10 12.03.12 16:52 12.03.12 16:52 11 Annual Report 6 Business Model 14 Wire 20 Solar 26 Medtech 35 Corporate Governance 44 Investors 47 Financial Report 106 Corporate Structure Daniel Hirschi (1956) Non-executive, independent member of the Board of Directors since 2005, elected until 2014, Swiss national, resident in Biel, Chairman of the Board of Directors of listed company Schaffner Holding AG, Luterbach, member of the Board of Directors of listed company Gavazzi Holding AG, Steinhausen and the privately owned company Benninger AG, Uzwil. Daniel Hirschi holds a degree in engineering. From 1983 to 2005, he was Head of the Switches business area at Saia-Burgess in Murten, and later Head of the Automotive Divi- sion. From 2001 he was CEO, and from 2003 member of the Board of Directors. From 2006 to 2009, Daniel Hirschi was CEO and member of the Board of Directors of Benninger AG in Uzwil, he has been a member of the Board of Directors since March 2009. In the last three years, Daniel Hirschi has not been a member of Group Management or had any ma- terial business relationships with the Komax Group. Hans Caspar von der Crone (1957) Non-executive, independent member of the Board of Directors since 1997, elected until 2012, Swiss national, resident in Zurich, member of the Board of Directors of Heineken Beverages Switzerland AG, Chur, and Heineken Re AG, Zug, a Swiss subsidiary of the Heineken Group. Hans Caspar von der Crone is an attorney at law. Following his studies, he lectured at the University of Zurich and was an employee and later a partner at law firm Hom- burger Rechtsanwälte, Zurich. Since 1997, he has been a Professor of Private, Commercial and Corporate Law at the University of Zurich. He is also a partner at law firm von der Crone Rechtsanwälte AG, Zurich. In the last three years, Hans Caspar von der Crone has not been a mem- ber of Group Management or had any material business relationships with the Komax Group. 54702 Komax_GB2011_Berichtsteil_E.indd 11 54702 Komax_GB2011_Berichtsteil_E.indd 11 12.03.12 16:52 12.03.12 16:52 12 Executive Committee Beat Kälin (1957) Andreas Wolfisberg (1958) Chief Financial Officer since 1996, at Komax since 1991, Swiss national, resident in Adligenswil. Andreas Wolfisberg is a Swiss Cer- tified Expert in Accounting and Controlling. Before joining Komax, he worked at Moos Stahl AG in Lucerne. Chief Executive Officer since 2007, at Komax since 2006, Swiss na- tional, resident in Birmensdorf, member of the Board of Directors of listed company Huber + Suhner AG, Pfäffikon. Beat Kälin holds a doctorate in engineering from ETH Zurich and an MBA from INSEAD. Until 1999, he held various management positions in the Elektrowatt Group, from 1999 to 2004, he was a member of the Group Executive Board of SIG Schweizerische Industrie- Gesellschaft Holding AG, Neuhausen, and from 2004 to 2006 a member of the Board of Management respon- sible for the Packaging Technology Division at Robert Bosch GmbH, Stuttgart. 54702 Komax_GB2011_Berichtsteil_E.indd 12 54702 Komax_GB2011_Berichtsteil_E.indd 12 12.03.12 16:52 12.03.12 16:52 13 Annual Report 6 Business Model 14 Wire 20 Solar 26 Medtech 35 Corporate Governance 44 Investors 47 Financial Report 106 Corporate Structure Matijas Meyer (1970) Walter Nehls (1957) Serge Peguiron (1961) Head Business Unit Wire since 2010, at Komax since 2007, Swiss national, resident in Root. Head Business Unit Solar and at Komax since 2008, German national, resident in Udligenswil. Head Business Unit Medtech and at Komax since 2005, Swiss national, resident in Neuchâtel. Matijas Meyer holds a degree in engineering from ETH Zurich and an MBA from Cranfield University (UK). Prior to his current position, he was Head of the site in Rousset (France). Before joining Komax, he worked at Tornos SA in Moutier and Unaxis/ESEC in Cham. Walter Nehls holds a bachelor de- gree from the University of Applied Sciences and Arts North- western Switzerland and an MBA from Lucerne University of Applied Sciences and Arts. Before joining Komax, he worked at ESEC SA in Cham, Schindler AG in Ebikon, Forbo/Siegling in Hannover (Germany) and Mania Technologie AG in Weilrod (Germany). Serge Peguiron holds a degree in engineering from ETH Zurich. Before joining Komax, he worked at Ismeca in La Chaux-de-Fonds, Valtronic in Les Charbonnières and Kudelski in Cheseaux. 54702 Komax_GB2011_Berichtsteil_E.indd 13 54702 Komax_GB2011_Berichtsteil_E.indd 13 12.03.12 16:52 12.03.12 16:52 14 Wire business unit Getting there safely Komax Wire’s wire processing systems help countless millions of people get about efficiently and safely, all round the world, all round the clock. The machines are able to process cables with wire diameters of just 0.02 mm2 fully automa- tically. Integrated inspections verify the quality of the contacts processed by the systems. Alpha 355 54702 Komax_GB2011_Berichtsteil_E.indd 14 54702 Komax_GB2011_Berichtsteil_E.indd 14 12.03.12 16:52 12.03.12 16:52 54702 Komax_GB2011_Berichtsteil_E.indd 15 54702 Komax_GB2011_Berichtsteil_E.indd 15 12.03.12 16:52 12.03.12 16:52 16 Further rise in revenues 2011 saw further growth in demand for automation solutions, particularly in the automotive supply industry. Komax Wire benefited from a global presence and strong market position to achieve another extraordinarily successful financial year. Net sales grew 12.0% to CHF 217.8 million, while EBIT was a strong CHF 57.1 million (+19.3%). Market trends and business performance Untroubled by worsening economic conditions, worldwide automotive markets saw a 6% expansion to 65.4 million units in 2011. Outside western Europe and Japan, all major markets witnessed positive growth. China and India grew 8% and 6% respec- tively, while the American market expanded by 10%. Demand in Brazil and Russia increased by 3% and 39%. By contrast, France, Italy, the UK and Spain reported significant contractions. Operating near capacity limits, parts of the automotive industry and its suppliers worldwide undertook investments in additional equipment. The market for household appliances held steady in 2011 while growth continued in electrical cabinet manufacturing. The trend toward greater automation in electrical cabinet manufacturing con- tinued. In solar cables, by contrast, demand cooled noticeably during the year under review in the wake of a cyclical contraction of the photovoltaic industry. Under these favourable overall circumstances, Komax Wire operated successfully once again. Ex- pectations voiced early in the year that demand could stagnate at a high level after the previous year’s strong growth proved unfounded. Order in- take, net sales and EBIT all saw marked increases. Komax Wire specializes in automated intelligent solutions for all modern wire processing applica- tions. The emphasis is on processes such as measuring, cutting, stripping and fitting contacts and connector housings to cables. In addition to both standard and customer-specific systems, it offers an extensive range of quality assurance modules and networking solutions for reliable and efficient production. Once equipment has been commissioned, Komax Wire provides customer support through a differentiated range of services to ensure that systems retain their value and per- formance capacity. Komax Wire has two production sites in Switzerland and one in Shanghai. Its Dierikon loca- tion is the world’s largest manufacturing facility for wire processing machinery. Subsidiaries in Ger- the United many, France, Portugal, Morocco, States, Brazil, India, Singapore, and China, along with agents in numerous other countries, provide global sales and service. Komax Wire’s systems are primarily used in the automotive supplier industry, which accounts for roughly 80% of net sales. The large volume of wir- ing used by this industry coupled with its tradition- ally high quality demands favour automated pro- duction processes. Komax Wire’s machines are also used in manufacturing household appliances and consumer electronics, producing solar panel cabling and building control cabinets. With an estimated market share of 40%, Komax Wire is the world leader in the niche mar- kets it serves. 54702 Komax_GB2011_Berichtsteil_E.indd 16 54702 Komax_GB2011_Berichtsteil_E.indd 16 12.03.12 16:52 12.03.12 16:52 17 Annual Report 6 Business Model 14 Wire 20 Solar 26 Medtech 35 Corporate Governance 44 Investors 47 Financial Report 106 Corporate Structure Key figures in TCHF 2011 2010 +/– in % Order intake Net sales 232 319 211 083 217 792 194 455 Operating profit (EBIT) 57 073 47 840 10.1 12.0 19.3 in % EBIT margin 26.2 % 24.6 % 541 478 13.2 4% Switzerland 41% Europe As at 31.12. Headcount Net sales by region 18% Asia 23% North/South America 14% Africa vation, efficiency and reliability. The global organiza- tion with its dense distribution and service network ensures customer and market proximity and guar- antees quick response times. As part of its efforts to provide customers with comprehensive solutions for all aspects of wire pro- cessing, Komax Wire entered into closer collabora- tion with SLE quality engineering, Grafenau, acquir- ing a 30% minority interest. SLE has extensive expertise in the production of semi-automatic equipment for processing coaxial cables and four- wire lines, in micrograph laboratories and in crimp force monitoring systems. Komax Wire presented the first fruits of this collaboration at Productronica in Munich, the most important trade show for the wire processing industry. A number of SLE-devel- oped quality assurance tools are also now part of Komax Wire’s product range. The book-to-bill ratio at the end of the year was 1.07. Net sales grew 12.0% to CHF 217.8 million, distributed over a broad spectrum of customers and products. In Europe, the ongoing automation of wire harness production, driven by the car makers, boosted demand for wire processing machines. Demand in North Africa was unexpectedly strong despite political unrest there. North America bene- fited from strong growth in the automotive market. However, sales in South America and Asia fell as a result of a base effect caused by major customers in both regions investing heavily in renewals in 2010. Komax Wire’s ten largest customers generated roughly one-third of net sales in 2011. The com- pany has had relationships with these key accounts for many years now. Such partnerships provide a context for candid dialogue and opportunities to obtain direct customer satisfaction feedback with a minimum time lag. EBIT for the 2011 financial year was a robust CHF 57.1 million (+19.3%). The strength of the Swiss franc had relatively little impact on the business unit’s result since a fairly high portion of value added is purchased and paid for in foreign currencies. Operations Capacity utilization was very high throughout the year at all locations. At the Dierikon site, additional temporary staff was hired to fill gaps during peak pe- riods. Flexible worktime models and the availability of a large pool of external workers with temporary em- ployment contracts proved advantageous, lending greater flexibility to the production process. Numerous measures at each location brought improvements in organizational efficiency further during the year under review. Production capacity in Switzerland was consolidated at two locations, Dierikon and Rotkreuz; the activities in Stans were transferred to Rotkreuz. The move was accompa- nied by a reorganization of certain operational pro- cesses to improve internal logistics, in some cases significantly reducing throughput times on certain assembly lines. A move to a new, more spacious lo- cation in Shanghai also set the stage for further opti- mization of operating processes and future growth. Marketing and distribution The Wire business unit exhibited at some 20 trade shows around the world in 2011. Since November the unit has presented itself autonomously under the name of Komax Wire, a brand that stands for inno- 54702 Komax_GB2011_Berichtsteil_E.indd 17 54702 Komax_GB2011_Berichtsteil_E.indd 17 12.03.12 16:52 12.03.12 16:52 18 In addition, Komax Wire developed a high- performance production planning system in collab- oration with DilT AG of Krailing near Munich. The system is designed to meet the needs of small to mid-sized wire harness producers. The new soft- ware system is distributed by both Komax Wire and DilT. Even with only a few machines, the benefits of networking the machines and optimizing process control soon become apparent in higher quality, fewer rejects, higher machine utilization and im- proved transparency and traceability. The Gamma 263 crimp-to-crimp machine that was launched in the second half of the year proved a hit. The launch exemplifies Komax Wire’s ability to bring innovations quickly to market. Compared to other machine types, the Gamma 263 is highly fo- cused in its functionality. Its reduced complexity makes it possible to sell the machine at favourable terms. Success through innovation Komax Wire spent 2011 around 7% of net sales on research and development. Measures set to develop further application areas outside the auto- motive sector have begun to bear promising fruit. in motion the previous year Innovation Market-oriented innovation is a key aspect of Komax Wire’s philosophy and a cornerstone of the business unit’s success. Each year up to 10% of net sales is reinvested in research and develop- ment. The unit cultivates a lively exchange with Swiss educational institutions and industry profes- sional communities. New product and application development, to- gether with basic research, accounts for over half of R&D spendings. A further 20% goes into platform development. The remainder consists of investments in product maintenance and safeguarding delivery capacity. Komax Wire spent some 7% of net sales on re- search and development in 2011, and employed 100 people worldwide in this area. Trends The electrical systems in today’s premium passen- ger cars are made up of as many as 1500 cables, with a total length of four kilometres and around 2 800 crimp contacts. While 90% of wire harness production is still done by hand, many of these pro- cesses can be automated. The implications for the growth potential of Komax Wire’s business are clear. Steadily rising labour costs in ostensibly low- wage countries will further favour investments in automation solutions. Fuel efficiency, weight reduction, cost pressure, efficiency improvements and ever-greater function- ality along with rising quality expectations are the challenges facing the automotive industry. Conse- quently, an ever-increasing number of smaller- diameter cables have to be packed into tight spaces in modern vehicles. This leads to miniaturi- zation, but vehicles are also using larger-diameter cabling due to the replacement of copper wire with aluminium and new drive train designs involving shielded high-voltage wiring. The need for secure transmission of steadily growing amounts of data will also entail the increasing use of twisted wire. Manual processes are becoming less capable of meeting these demands. Intelligent automation solu- tions in the form of standard machines or customer- specific applications, by contrast, are capable of mastering many of these challenges efficiently and economically while maintaining the highest quality standards. Strategy In striving to continually improve the organization’s efficiency and enhance its competitiveness, Komax Wire pursues four strategic priorities. First, it pursues further development of existing business along the value chain. This includes semi- automated and fully automated solutions with inte- grated quality assurance for such applications as airbag wire production, high-voltage cables and twisted and shielded cables for data transmission. Solutions for increasing availability and testing the productivity of installed systems are as much a part of this thrust as new intelligent software interfaces and expanded quality testing capabilities. The sec- ond strategic priority concerns innovation. Here, Komax Wire focuses on developing new solutions for the demands of the automotive industry and on further optimizing its product portfolio with a clear product platform strategy. Under the third strategic 54702 Komax_GB2011_Berichtsteil_E.indd 18 54702 Komax_GB2011_Berichtsteil_E.indd 18 12.03.12 16:52 12.03.12 16:52 19 Annual Report 6 Business Model 14 Wire 20 Solar 26 Medtech 35 Corporate Governance 44 Investors 47 Financial Report 106 Corporate Structure Groundbreaking competencies in the value chain Komax Wire systems Measuring/Cutting Stripping Crimping Twisting Connector insertion Harness subassembly Cables Contacts Housings Component manufacturer Cutting Preprocessing Final assembly Testing Warehouse Shipping Installation Assembly Wire harness manufacturer Original Equipment Manufacturer (OEM) Wires, contact parts and housings (connectors) are vendor parts for wire harness manufacturers. Finished wire har- nesses are used in vehicle electrical systems, household appliances and other electronic devices. Komax Wire supplies wire harness manufacturers with solutions for automated and efficient wire processing. Depending on complexity and safety standards, which are especially stringent in the automotive industry, wire harnesses cannot always be produced by machine. In final assembly, finished harnesses are assembled and tested by hand before being delivered to the OEM, who installs it in the final product. priority, Komax Wire will further improve its position in the Asian markets. The fourth strategic priority in- volves enhancing capabilities as a solutions provider, opening up new fields of application outside motor vehicles and expanding the customer-oriented after- sales business. Outlook The ever more extensive equipment installed in vehi- cles, new vehicle models and drive concepts, higher production volumes and the increasing automation of operating processes in all the application areas served by Komax Wire will continue to underpin the industry's investment in automation solutions for the production of wire harnesses. Visibility in this area still only extends to around two to three months into the future. Taking into ac- count all the information available, we expect Komax Wire’s net sales for the first half of 2012 to be in the area of the previous year's figure. 54702 Komax_GB2011_Berichtsteil_E.indd 19 54702 Komax_GB2011_Berichtsteil_E.indd 19 12.03.12 16:52 12.03.12 16:52 20 Solar business unit Electricity for bright sparks Komax Solar produces machines that process solar cells into solar mod- ules. Above all, solar module manufac- turers the world over appreciate the Komax machines’ efficient and stable processes. The real winners, though, are the people who get excep- tionally green electricity thanks to Komax Solar. XCELL X2 54702 Komax_GB2011_Berichtsteil_E.indd 20 54702 Komax_GB2011_Berichtsteil_E.indd 20 12.03.12 16:52 12.03.12 16:52 54702 Komax_GB2011_Berichtsteil_E.indd 21 54702 Komax_GB2011_Berichtsteil_E.indd 21 12.03.12 16:52 12.03.12 16:52 22 Asia driving growth After a good first half, conditions in the solar market worsened appreciably in the course of the year. The ensuing difficult market was not without impact on Komax Solar’s result. EBIT for the 2011 financial year came to CHF – 3.4 million. Net sales grew 11.8% to CHF 70.8 million. Efficient and reliable production processes com- bined with low reject rates are essential for the photovoltaic industry to establish itself as an alter- native to conventional electric power sources. With innovative technologies, Komax Solar offers solu- tions to help achieve this goal. Komax Solar deliber- ately focuses on the automation of a few core solar module production processes. This includes string- ers, which solder individual solar cells into what are known as strings; lay-up systems, which form individual strings into a matrix; and laminators, which take care of the final stage of sealing the solar modules. Solar energy on the rise Measured by installed capacity, photovoltaics are already the world’s third most important source of renewable energy. Komax Solar has production facilities in the United States, China and France. In addition, there are service and distribution locations in India, Sin- gapore, China, Portugal and Switzerland. Komax Solar is among the leading manufacturers in the markets it serves, particularly in stringers. Market trends and business performance 2011 was a challenging year for the photovoltaic industry. Two characteristic features of the sector proved truer than ever. First, the solar business re- mains a growth market. Despite uncertainties about government support programmes in core markets such as Germany and Italy, installed capacity saw growth of 28 gigawatts (+70%) to 67 gigawatts. After hydro and wind power, solar energy is the third most important renewable energy in terms of glob- ally installed capacity. Second, the market is cyclical. Surplus capacity phases are rapidly succeeded by shortages and vice versa. Significant excess capacity during the past year led to a sharp drop in solar module prices. Module manufacturers’ inventories rose as they found themselves unable to sell products on the same terms as before. Under these conditions, the mar- ket for equipment suppliers increasingly began to cool in turn after a strong first quarter. Still, a high volume of orders in hand helped shore up capacity utilization in the second half of the year. Solar mod- ule producers, however, began to sustain losses in the third quarter, and initial consolidation set in. This in turn increased the risks faced by equipment suppliers of postponed or cancelled orders and delinquent payments from customers. Despite the relatively weak second half, net sales grew 11.8% to CHF 70.8 million in 2011. Since Komax Solar invoices primarily in US dollars, local-currency growth was even higher. Equipment for the crystalline segment accounted for the bulk of net sales, together with income from installation of turnkey production lines. The key region of Asia was the biggest contributor to this growth. 54702 Komax_GB2011_Berichtsteil_E.indd 22 54702 Komax_GB2011_Berichtsteil_E.indd 22 12.03.12 16:52 12.03.12 16:52 23 Annual Report 6 Business Model 14 Wire 20 Solar 26 Medtech 35 Corporate Governance 44 Investors 47 Financial Report 106 Corporate Structure Key figures in TCHF 2011 2010 +/– in % Order intake Net sales 63 742 70 791 Operating profit (EBIT) –3 439 72 092 63 306 –5 932 –11.6 11.8 42.0 in % EBIT margin −4.9 % −9.4 % As at 31.12. Headcount Net sales by region 71% Asia 285 227 25.6 17% Europe 12% North/South America Innovation New competitors, mostly from Asia, are entering the markets that Komax Solar serves, often with products copied from the leading manufacturers. For example, Komax’s first-generation induction soldering process is now being copied by competi- tors. Komax Solar is maintaining its lead through ongoing investment in research and development. The company continues to improve the process; current stringers now use the fourth generation of the technology. Low capacity utilization in the second half had an unfavourable impact on the business unit’s prof- itability. Moreover, certain Komax Solar customers were affected by the difficult market environment, leading to allowances and write-offs against cus- tomer receivables. These two factors resulted in a loss at EBIT level in the second half of the year, while full-year EBIT came to CHF –3.4 million (+42.0%). While some solar module manufacturers are at risk of insolvency and may drop out of the market, the the leading manufacturers are preparing for next upswing and investing in the development of higher-efficiency modules. Many of these new ap- proaches require different cell interconnection tech- nologies. As one of the leading producers of this type of equipment, Komax Solar is in a strong starting po- sition. The induction soldering process developed by Komax Solar and implemented in the XCELL X2 stringer has gained a firm foothold in the market and become a benchmark. Operations Komax Solar’s core activities are now concentrated in York, PA, in the United States. This allows the or- ganization to quickly and flexibly develop solutions for solar module production using new or modified technologies. The plant has upgraded its structure and processes and received ISO 9001 accreditation in 2011. The newly founded Komax Jinchen commenced operations in May 2011. The company was founded in conjunction with a Chinese partner, with Komax holding the majority stake. Komax Jinchen devel- ops and produces laminators for solar modules. Marketing and distribution Komax Solar exhibited at five trade shows world- wide in 2011, including SNEC in Shanghai early in the year. SNEC is the world’s largest solar trade fair, attracting some 180 000 visitors. Komax Solar also exhibited for the first time at a fair in India, a market that is now starting to develop. The service and distribution organization in China was strengthened in response to growing volumes and market share. In April, new business premises were occupied in Shanghai. Komax Solar now has its own showroom, a training centre and a well-equipped regional spare parts warehouse in Shanghai. All signs indicate that Komax Solar’s global market share increased in the 2011 financial year. The solar industry sold some 70 to 80% of all equip- ment to China in 2011. With far over 100 installed stringers, Komax Solar holds a leading position in this key market. 54702 Komax_GB2011_Berichtsteil_E.indd 23 54702 Komax_GB2011_Berichtsteil_E.indd 23 12.03.12 16:52 12.03.12 16:52 24 The XCELL X2plus stringer, an advanced version of the successful XCELL X2 model, was brought to market in 2011. The XCELL X2plus features higher productivity with the same output quality, especially as regards cell breakage rates. Komax Solar spent some 7% of net sales on re- search and development in 2011, and employed 31 people worldwide in R&D. Trends and strategy Global warming, continuously growing demand for energy and the need to secure global energy sup- plies remain the growth drivers in the solar industry. Outlook There is no doubt that solar will remain an attractive market in the longer term. However, 2012 will be a very difficult year for the entire industry. When the market will pick up again is unclear. Most analysts do not expect the next upturn before mid-2012, and possibly not until the end of the year. What is certain, on the other hand, is that the Chinese mar- ket will continue to play a leading role going for- ward. Komax Solar will position itself in line with the prevailing conditions and prepare for the antici- pated recovery. And with its well-established pres- ence in the Chinese market, it is in an excellent po- sition. According to our present knowledge, we anticipate a substantial deterioration in net sales and an operational loss in 2012. Competitive position strengthened Komax Solar was able to further increase its market share in the 2011 financial year. The nuclear accident in Fukushima had no major short-term effect on the solar industry, but it did trigger a discussion of the true costs of conven- tional energy sources in many countries. Some countries resolved to give up nuclear energy as a result, while others engaged in vigorous debate on the subject. Moreover, an awareness of the need to upgrade power grids to absorb more electricity from renewable sources is beginning to develop. The rapid decline in the prices of photovoltaic prod- ucts is also bringing solar power nearer to grid par- ity faster than anticipated. It now appears likely that the major markets will reach grid parity sooner than previously expected. While the short-term outlook for the solar indus- try is clouded, Komax Solar’s focus on the back end of solar module production and its leading market position are a firm foundation from which to defend its position. With a strong position in the main mar- ket of China and ongoing innovation, Komax Solar is well-situated for the next upswing. 54702 Komax_GB2011_Berichtsteil_E.indd 24 54702 Komax_GB2011_Berichtsteil_E.indd 24 12.03.12 16:52 12.03.12 16:52 25 Annual Report 6 Business Model 14 Wire 20 Solar 26 Medtech 35 Corporate Governance 44 Investors 47 Financial Report 106 Corporate Structure Groundbreaking competencies in the value chain Komax Solar systems Stringers Lay-up systems Bussing systems Laminators Test equipment Silicon crystal or ingot Wafer production Solar cell production Solar module production Installation Electricity Monocrystalline or polycrystalline silicon ingots are produced from quartz sand. These ingots are then sliced into micron-thin wafers. Next, the wafers are chemically treated and coated to make solar cells. The cells are then grouped, connected together and installed in frames to form solar modules. This stage of manufacturing consists of many steps. Komax Solar produces machines to carry out these processes. Once the solar modules have been installed on rooftops or in solar farms, they generate electric power. 54702 Komax_GB2011_Berichtsteil_E.indd 25 54702 Komax_GB2011_Berichtsteil_E.indd 25 12.03.12 16:52 12.03.12 16:52 26 Medtech business unit Quality of life, please! Komax Medtech is helping to drive forward the trend towards self- medication. Global leaders in the pharmaceuticals industry rely on assembly systems from Komax Medtech because they combine precision with quality and speed of machining. 54702 Komax_GB2011_Berichtsteil_E.indd 26 54702 Komax_GB2011_Berichtsteil_E.indd 26 12.03.12 16:52 12.03.12 16:52 54702 Komax_GB2011_Berichtsteil_E.indd 27 54702 Komax_GB2011_Berichtsteil_E.indd 27 12.03.12 16:52 12.03.12 16:52 28 Turnaround achieved Komax Medtech achieved a turnaround in a challenging economic environment in financial year 2011. Structural optimization measures and a stronger focus on projects involving repeat business contributed substantially. Net sales came to CHF 83.8 million. After the previous year’s operating loss, EBIT in financial year 2011 was CHF 3.8 million (2010: – 4.4 million). Komax Medtech develops sophisticated, customer- specific machine systems for the automatic assem- bly of mass-produced medical products, such as inhalers and insulin delivery and injection systems. The business unit also produces systems for the ef- ficient mass production of inkjet printer cartridges. Komax Medtech’s systems are mainly used in the pharmaceutical industry. Purchase prices range from a few hundred thousand to several million Swiss francs, depending on complexity. Marked increased profitability After last year’s loss, this year’s EBIT margin has come close to its medium-term target of 5%. Komax Medtech uses standardized processes and documented process steps to ensure consis- tent compliance with the exceptionally high stan- dards that apply to medical projects. Various pro- cesses are certified accordingly. Komax Medtech has production facilities at two locations in Switzerland, in the United States and in Malaysia. Komax Systems LCF SA in La Chaux-de- Fonds, Switzerland is the largest location in terms of employee headcount and is the business unit’s centre of excellence. Market trends and business performance Technological advances in applications and the steadily growing number of usable substances have led to a steady rise in demand for devices for self- medication of drugs. Demand for machine systems to produce these devices has grown in parallel. In- in new inkjet printer cartridge assembly terest equipment has also been lively. Komax Medtech’s main sales markets in Britain, Ireland, Scandinavia, the United States and Asia were vigorous for lengthy periods in 2011. Net sales reached CHF 83.8 million. During fi- nancial year 2011 Komax Medtech built several sys- tems designed to assemble inhalation therapy inte- grating dose counter mechanism, for both dry powder and pressurize metered dose inhalers. One special challenge in these projects was incorporat- ing innovative dosage metering mechanisms into the applications. During the second half of the year Komax Medtech also delivered a fully integrated as- sembly line for diabetes treatment using the active ingredient GLP-1. In addition, the unit implemented numerous projects for medical applications as well as inkjet printer cartridge assembly systems. Following the previous year’s operating loss, Komax Medtech achieved a respectable EBIT of CHF 3.8 million for the year under review. The EBIT margin of 4.6% was near the mid-term target of 5%. Several factors contributed to this encouraging re- sult, particularly structural and organizational ad- justments to enhance the business unit’s perfor- repeat mance and the successful generation of business. 54702 Komax_GB2011_Berichtsteil_E.indd 28 54702 Komax_GB2011_Berichtsteil_E.indd 28 12.03.12 16:52 12.03.12 16:52 Operations Komax Medtech modified its production structures during financial year 2011. Assembly automation for medical applications was consolidated in La Chaux- de-Fonds. Rotkreuz will concentrate on medical equipment for laboratory automation. These effi- ciency-enhancing measures were the business unit’s response to a challenging economic environ- ment and currency-related competitive disadvan- tages. received organizational and staff Komax Systems Rockford, Illinois (USA) oper- ated near full capacity all year. The site in Penang (MY) reinforce- ments during the year under review. The additional engineering capacity made it possible to deliver the first locally designed and manufactured equipment for assembling catheters and safety syringes. Marketing and distribution Komax Medtech expanded its service team in 2011 and now provides customers with support 24 hours a day, seven days a week. The unit exhibited at five trade shows worldwide during the year under re- view. Innovation In collaboration with customers, Komax Medtech optimized the KSPilot platform for efficient manu- facture of pre-production batches. Special attention was given to the technology’s adaptability and scal- ability. This second generation of KSPilot was launched in mid-2011. The product can be used to simulate mass production conditions at the pre- production stage, a feature that significantly re- duces risks as a project advances. Komax Medtech now has four platforms covering a broad range of development stages in the manufacture of medical products and satisfying a wide spectrum of varied customer needs. In addition, Komax Medtech developed several key processes for assembling innovative medical devices in 2011. Notable examples include a pro- cess for high-speed assembly of the indexing spool 29 Annual Report 6 Business Model 14 Wire 20 Solar 26 Medtech 35 Corporate Governance 44 Investors 47 Financial Report 106 Corporate Structure Key figures in TCHF 2011 2010 +/– in % Order intake Net sales 84 371 83 778 Operating profit (EBIT) 3 840 73 827 82 691 –4 434 14.3 1.3 186.6 in % EBIT margin 4.6 % –5.4% 302 307 −1.6 8% Switzerland 51% Europe As at 31.12. Headcount Net sales by region 20% Asia 21% North/South America for a dose counter of a pressurized metered dose inhaler and a contactless occlusion test for the smallest gage needle applied in drug delivery sys- tems. These needles are used to deliver insulin and are bent into a U shape so they can be installed in more manageably sized delivery systems. Conven- tional standard test procedures that involve touch- ing the object during testing are unsuitable because they can damage the sensitive needles. Komax Medtech primarily invested in project- specific customer solutions and platforms in 2011. 54702 Komax_GB2011_Berichtsteil_E.indd 29 54702 Komax_GB2011_Berichtsteil_E.indd 29 12.03.12 16:52 12.03.12 16:52 Outlook Komax Medtech is finding that some customers are delaying investment decisions due to the ongoing uncertainties regarding developments in the world economy. Then again, a large number of customers have already announced projects that they plan to invest in as of the second half of 2012. Several of these projects are likely to generate repeat busi- ness. Komax Medtech is looking to build on the success of the previous year and achieve another positive operating result in 2012. 30 Trends and strategy The trend towards self-medication is set to con- tinue. Efforts to lower healthcare costs in the indus- trialized countries and to provide access to safe and cost-efficient treatment methods to broader segments of the population in developing countries will bolster demand for corresponding delivery ap- plications. Moreover, a growing number of people are contracting diabetes, particularly in emerging countries. The number of sufferers worldwide is ex- pected to rise from 330 million today to 550 million in 2030, which will further increase demand for in- sulin dispensing devices. In this connection, GLP-1 diabetes therapy offers promising market potential for self-medication devices. Legal safety requirements meant to protect pa- tients and healthcare workers against needle punc- ture injuries are becoming ever stricter. In response, Growth market for self- medication Thanks to its expertise and proximity to its markets, Komax Medtech is set to further improve its competitive position. the pharmaceutical industry is constantly develop- ing new delivery systems to enhance device safety when administering medicines and improve pa- tients’ quality of life. For Komax Medtech, the growing market seg- ment of self-medication systems is a strategic focus. The business unit will exploit its expertise and closeness to the market to expand its position. In addition, Komax Medtech will continue to apply its expertise in high-volume niche applications built on an existing technological base. 54702 Komax_GB2011_Berichtsteil_E.indd 30 54702 Komax_GB2011_Berichtsteil_E.indd 30 12.03.12 16:52 12.03.12 16:52 31 Annual Report 6 Business Model 14 Wire 20 Solar 26 Medtech 35 Corporate Governance 44 Investors 47 Financial Report 106 Corporate Structure Groundbreaking competencies in the value chain Komax Medtech systems Pre-assembly Final assembly Test Packaging Final product Raw material for device assembly Drug Device development Drug development Medical devices are products used to help diagnose or treat disease. Many of these devices contain active substances or medicines that are administered to patients with certain conditions or disease symptoms. Before a new medicine that is combined with a medical device can be launched, it has to undergo preclinical and clinical studies and gain approval from the competent regulatory authority. Komax Medtech plays an important role in this process: the business unit plans and builds assembly systems that put together the individual components of such medical products (raw materials, plastic parts for the devices, pre- filled medicines) in several steps on a semi-automated or fully automated basis. Komax Medtech then tests and packages the fully assembled final product (device plus medicine) and prepares it for shipping. When Komax Medtech delivers equipment to customers, a full qualifica- tion/testing package is performed documenting with evidence that expected results will be achieved at the end of the thorough acceptance procedures, to run safely the validation of the device, which is owned by the customer. 54702 Komax_GB2011_Berichtsteil_E.indd 31 54702 Komax_GB2011_Berichtsteil_E.indd 31 12.03.12 16:52 12.03.12 16:52 32 Sustainability and social responsibility The Komax Group is committed to upholding its responsibilities towards its different stakeholder groups. This commitment is expressed through the products and services it provides on the one hand and through the objectives and approach the company adopts on the other. Komax regards sus- tainability and social responsibility as integral parts of its corporate strategy. The basic tenets underlying Komax’s business practices are set out in its guiding principles. The Komax Group exercises responsibility towards peo- ple and the environment, and is keen to continu- ously develop its expertise in matters relating to sustainability and social responsibility. Group-wide code of conduct The way Komax is perceived by customers and sup- pliers, other business partners, shareholders and the general public, and the respect for and confi- dence in the company that these groups feel is de- pendent to a significant degree on the conduct of Komax’s employees. In 2009 Komax therefore intro- People and the environment Komax is keen to continuously build on its commit- ment to sustainability and social responsibility. duced a code of conduct which applies to all Group employees. The code of conduct defines general ethical rules of behaviour and guidelines on how to act towards the Group’s business partners and competitors. All employees are given training on the code of conduct when they join the company. Product sustainability The systems developed by Komax are character- ized by their exceptionally high quality. The Group’s global service network ensures that the systems are professionally maintained. This has a positive im- pact on their performance, value retention and life span as well as saving resources. Thanks to their modular construction, the systems can usually be adapted to new technological developments or changing needs. The Wire business unit supplies solutions for wire processing applications, in particular for the automotive supply industry. These solutions are also used to process wiring for new vehicle con- cepts such as electric and hybrid vehicles. By mak- ing it possible to machine-process ever smaller wire cross sections, Komax is helping to reduce vehicle weight and, as a result, fuel consumption. By providing solutions for solar module manu- facturing, the Solar business unit’s activities in the renewable energies field are actively helping to pro- vide an environmentally friendly and reliable energy supply for the future. The Medtech business unit, which makes sys- tems for self-medication applications manufactur- ing, is indirectly helping to reduce healthcare costs, improve access to medicines and thereby increase people’s quality of life. 54702 Komax_GB2011_Berichtsteil_E.indd 32 54702 Komax_GB2011_Berichtsteil_E.indd 32 12.03.12 16:52 12.03.12 16:52 33 Annual Report 6 Business Model 14 Wire 20 Solar 26 Medtech 35 Corporate Governance 44 Investors 47 Financial Report 106 Corporate Structure Sustainability in production Since the Komax Group’s business focuses mainly on the production of machines and systems, it gene- rates relatively low emissions in comparison to other industries. These are further reduced by our use of state-of-the-art production facilities. Over 50% of the production equipment at our Dierikon site has been newly acquired over the last five years. Wherever possible, Komax uses renewable en- ergies such as solar or hydroelectric power. In re- cent years, one of the Group’s sources of electricity has been RegioMix green power from small utilities in Central Switzerland. Komax’s commitment to the environment is also underscored by its own photo- its production voltaic power plant on the roof of building in Rotkreuz. Furthermore, Komax actively encourages its employees to use public transport. Waste materials from production activities, such as swarf and operating materials waste, are separated out and disposed of or recycled appro- priately. Waste volumes are being continuously re- duced within as part of optimization programmes. Komax’s products do not contain any ecologically harmful components. The company favours suppli- ers which demonstrate an environmentally aware approach and whose products conform to sustain- ability criteria. In 2011, a committee was formed to syste- matically develop the company’s commitment to sustainability. Among other things, the committee is charged with preparing the Dierikon site for ISO 14001 certification. Packages of measures for improving our environmental performance have been developed in a number of key thematic areas. Accompanying initiatives are also being imple- mented with a view to further raising employee awareness of environmental matters. With a work- force of around 350, Dierikon is the Group’s largest production site. Once it has secured the relevant certification, there are plans to apply the concept at other sites as well. In 2011, the La Chaux-de-Fonds site received an award from Energo for having cut its energy consumption by 10% compared to the previous year. Energo is a Swiss non-profit organization fi- nanced by cantons, cities, municipalities and pri- vate sector entities. It works in partnership with EnergieSchweiz to promote the federal government programme for a “20% reduction in CO2 by 2020”. Key figures1) 2011 2010 Electric power consumption in MWh 6 701 6 906 Electric power consumption per head in MWh 7.4 7.8 Water consumption (potable and industrial water) in m3 Water consumption (potable and industrial water) per head in m3 8 086 10 461 8.9 11.8 1) Covering the Komax production sites in Dierikon (CH), Rot- kreuz (CH), La Chaux-de-Fonds (CH), Rousset (F), York (USA), Rockford (USA), Penang (MY) and Shanghai (RC). Employees by business unit Komax Wire Komax Solar Komax Medtech Corporate Total 2011 2010 541 285 302 12 478 227 307 11 1 140 1 023 Employees by area of acitvity Production Research and Development Engineering Marketing and Sales Administration Total Employees by region Switzerland Europe Africa North/South America Asia Total 2011 2010 482 134 149 273 102 403 107 156 263 94 1 140 1 023 2011 2010 569 65 12 266 228 557 64 9 233 160 1 140 1 023 54702 Komax_GB2011_Berichtsteil_E.indd 33 54702 Komax_GB2011_Berichtsteil_E.indd 33 12.03.12 16:52 12.03.12 16:52 is an important Staff development topic at Komax. The Group organizes regular training for its employees and also provides financial support for individual training activities. Komax also encour- ages international exchanges to allow its staff to gain new experiences and career perspectives. Furthermore, Komax also invests in tomorrow’s workforce. In 2011, 58 apprentices were under- going training in seven professions at the Group’s Swiss sites. Komax Wire once again conducted an em- ployee survey at the Swiss sites in 2011. The results of this survey yielded a valuable foundation for the development and implementation of improvement measures. Employee satisfaction is systematically measured and evaluated in the course of annual performance review meetings. Komax satisfies all legal requirements governing working conditions in the countries it operates in. Reported absences due to accidents in 2011 were mainly the result of accidents suffered by employ- ees while engaging in leisure activities. Moreover, Komax actively encourages employees at site level to pursue a healthy lifestyle through initiatives such as sport and exercise offerings. 34 Contribution to regional development Komax has been firmly rooted in the Canton of Lucerne since 1975, and is one of the canton’s big- gest employers. Most of its other operating facilities worldwide have been based at the same site since their establishment, and this has generated a strong identification with the local area. This sense of sense of identification is expressed in various ways, notably considering local suppliers wherever eco- nomically possible and reasonable. Attractive employer As at end-2011, Komax employed 1140 staff worldwide, 11% more than in the previous year. This increase is due to the continued recovery in the relevant markets, restoration of structures which had been dismantled in 2009, the strengthening of our position in China including the first-time consolidation of Komax Jinchen. Person- nel expenses in the year under review amounted to CHF 103.6 million. the partial Equal opportunities and fair compensation Komax ensures that both genders receive equal treatment and are paid in line with market norms. The companies of the Komax Group ensure that their employees enjoy equal opportunities, equal treatment and fair employment conditions, receive pay that is in line with the market, and benefits that are in line with national and industry standards. Par- ticipation in the pay comparison survey conducted by industry association Swissmem showed that pay at both of the Wire business unit’s Swiss production sites is in line with market averages and that men and women receive equal pay. The proportion of women in the Group’s global workforce stood at 12% in 2011. Komax is not alone in having a rela- tively low proportion of women in its workforce. This is due to the relatively large number of technical ca- reers in the mechanical and electrical engineering industry. The Group’s staff turnover rate in 2011 was grat- ifyingly low, at below 9%. Komax has a very good reputation as an attractive employer. Among other things, this is highlighted by the fact that we were able to fill vacancies quickly in 2011, even in the tight market for management and skilled staff. 54702 Komax_GB2011_Berichtsteil_E.indd 34 54702 Komax_GB2011_Berichtsteil_E.indd 34 12.03.12 16:52 12.03.12 16:52 35 Corporate Governance 54702 Komax_GB2011_Berichtsteil_E.indd 35 54702 Komax_GB2011_Berichtsteil_E.indd 35 12.03.12 16:52 12.03.12 16:52 36 1 Corporate structure and shareholders Corporate structure The corporate structure is set out on pages 106 and 107 of the Annual Report. Komax Holding AG, the holding company of the Komax Group, has its headquarters in Dierikon (CH). Details on the place of listing, market capitali- zation, securities number and ISIN number are set out on page 44 (“Information for investors”). 2 Capital structure Capital in CHF Ordinary capital Conditional capital Authorized capital 340 088.00 44 912.00 0.00 Significant shareholders Shareholder/shareholder group Number of shares 31 Dec. 2011 % as at 31 Dec. 20111) Max Koch, Meggen, Switzerland Leo Steiner, Steinhausen, Switzerland Sarasin Investmentfonds AG, Basel, Switzerland 231 4012) 116 6503) 102 5104) 6.80 3.43 3.01 1) The calculation is based on the 3 400 880 registered shares listed in the Commercial Register as at 31 December 2011. 2) Plus stock options from the employee share incentive scheme (0.12%): 0.03% 1000 call options, CHF 145.06, duration 1.1.2008 – 31.12.2012 0.03% 1000 call options, CHF 42.78, duration 1.1.2009 – 31.12.2013 0.03% 1000 call options, CHF 75.68, duration 1.1.2010 – 31.12.2014 0.03% 1000 call options, CHF 94.25, duration 1.1.2011 – 31.12.2015 All stock options are subject to a three-year lock-in period and a two-year exercise period, exchange ratio 1:1, effective fulfilment. 3) Plus stock options from the employee share incentive scheme (0.34%): 0.15% 5000 call options, CHF 145.06, duration 1.1.2008 – 31.12.2012 0.06% 2000 call options, CHF 42.78, duration 1.1.2009 – 31.12.2013 0.06% 2000 call options, CHF 75.68, duration 1.1.2010 – 31.12.2014 0.07% 2500 call options, CHF 94.25, duration 1.1.2011 – 31.12.2015 All stock options are subject to a three-year lock-in period and a two-year exercise period, exchange ratio 1:1, effective fulfilment. 4) Reported figure as of 5 May 2010. All shareholdings that have been reported to Komax and the Disclosure Office of SIX Swiss Exchange as per art. 20 of the Federal Act on Stock Exchanges and Securities Trading (SESTA) and the provisions of the Stock Exchange Ordinance of the Swiss Fi- nancial Market Supervisory Authority (FINMA) and published on SIX Swiss Exchange AG’s electronic publication platform can be viewed at www.six-ex- change-regulation.com/obligations/disclosure/ major_shareholders_en.html. Cross-shareholdings There are no cross-shareholdings. Further details are provided in the sections below. Authorized and conditional capital in particular For information on conditional capital, please refer to the individual financial statements of Komax Holding AG, 101, and art. 3.2 of the Articles of As- sociation. The General Meeting of 13 May 2009 approved the creation of conditional capital to a maximum of CHF 46 248.00 to cover the exercising of option or subscription rights issued as part of the Executive and Employee Participation Program of Komax Holding AG. The subscription and advance sub- scription rights of shareholders in the company are excluded. 13 360 options were converted into shares with a par value of CHF 0.10 in 2010. In 2011, no options were exercised. Conditional capi- tal therefore amounted to CHF 44 912.00 as at 31 December 2011. The Komax Group had no authorized capital as at 31 December 2011. Capital changes Details of capital changes in 2011 and 2010 can be found on page 56 of the Financial Report. The cor- responding information for 2009 can be found on page 52 of the 2010 Annual Report. Shares, participation certificates and profit-sharing certificates As at 31 December 2011, Komax Holding AG has a share capital of CHF 340 088.00 distributed over 3 400 880 registered shares, with a par value of CHF 0.10 each. Each registered share entitles its holder to one vote at the General Meeting. Voting rights may only be exercised if the shareholder is listed in the share register as a “voting shareholder” (see also “Restrictions on transferability of shares and nominee registrations”). Registered shares are fully entitled to receive dividends. Komax Holding AG has not issued any partici- pation certificates or profit-sharing certificates. 54702 Komax_GB2011_Berichtsteil_E.indd 36 54702 Komax_GB2011_Berichtsteil_E.indd 36 12.03.12 16:52 12.03.12 16:52 Restrictions on transferability of shares and nominee registrations The Komax Holding AG share register is divided into the categories of “non-voting shareholders” and “voting shareholders”. Non-voting shareholders may exercise all property rights, but not the right to vote rights associated with that of voting. Voting or shareholders may exercise all rights associated with the share. Registration of an acquirer of shares as a “vot- ing shareholder” may be refused under Komax Holding AG’s Articles of Association if, as a result of such recognition, the acquirer would directly or in- directly hold more than 5% of the total number of shares recorded in the Commercial Register. Legal entities and groups with joint legal status which are connected through capital, voting rights, manage- ment or in some other manner, along with all natural persons, legal entities and groups with joint legal status which act in concert by virtue of agreement, syndicate or in some other manner, are regarded as a single acquirer for the purposes of this provision. This limitation also applies in the case of the acqui- sition of registered shares through the exercising of subscription rights, option rights or conversion rights. This restriction does not apply to the acqui- sition of shares through inheritance, division of an estate or joint marital property. The Board of Direc- tors may grant exceptions to the 5% limitation for good cause. Komax Holding AG’s Articles of Association also empower the Board of Directors to refuse entry in the share register if the acquirer does not expressly declare, at the request of the Board, that the shares were acquired in their own name and for their own account. Nominees are listed in the share register as “non-voting shareholders”. Convertible bonds and options Komax Holding AG has no outstanding convertible bonds. See pages 42 and 91 of the Financial Report for information on employee share options. 37 Annual Report 6 Business Model 14 Wire 20 Solar 26 Medtech 35 Corporate Governance 44 Investors 47 Financial Report 106 Corporate Structure 3 Board of Directors The Board of Directors has five members. No mem- ber of the Board of Directors was a member of the Executive Committee in the three years prior to the reporting period, nor do any members of the Board of Directors have any material business relationship with any of the Group companies. Members of the Board of Directors Appointed 1997 1997 1997 1997 2005 Term expires 2012 2013 2014 2012 2014 Committees AC, RC (Chairman) AC RC AC (Chairman) RC Leo Steiner, President Melk M. Lehner Max Koch Hans Caspar von der Crone Daniel Hirschi AC: Audit Committee RC: Remuneration/Nomination Committee There are no cross-involvements among the Board of Directors. Biographies of the individual Board Members are provided on pages 10 and 11. Election and term of office The Board of Directors of Komax Holding AG consists mainly of independent, non-executive members and is elected by the General Meeting. Under the Articles of Association it consists of three to seven mem- bers. Each member is elected individually. The maxi- mum term of office is three years; each member’s term of office is determined at the time of election. Individual terms are staggered so that roughly one- third of all Board members, but no more than three, are elected each year. Members may be re-elected. The term of office is not restricted. The terms of office of both Leo Steiner and Hans Caspar von der Crone will expire in 2012. The Board of Directors is proposing that both members be re- elected for a further period of office of three years. Furthermore, the Board of Directors is proposing that Kurt Haerri be appointed to the Board of Direc- tors at the General Meeting on 3 May 2012. Internal organization The Board of Directors consists of the Chairman and the other members of the Board. The Board of Directors organizes itself and elects its Chairman from among its ranks. If the Chairman is prevented from exercising his duties through illness or pro- 54702 Komax_GB2011_Berichtsteil_E.indd 37 54702 Komax_GB2011_Berichtsteil_E.indd 37 12.03.12 16:52 12.03.12 16:52 ance). The CEO and the CFO both attend meetings of the Audit Committee. On occasions the external auditor is invited to attend. The CFO represents the internal audit unit. Both bodies have access to the minutes of the meetings of the Board of Directors and the Executive Committee. The detailed tasks of the Audit Committee are set out in the Organiza- tional Regulations for the Audit Committee. −− Remuneration/Nomination Comittee The Remuneration Committee presently consists of Leo Steiner (Chairman), Max Koch and Daniel Hirschi. Meetings of the Remuneration/Nomination Committee take place as required and may be called by any member. In 2011, the Committee met twice, with all members being present on both oc- casions. On average, these meetings lasted three hours. These average times do not include the ex- tensive preparatory and follow-up work done by the individual members. The tasks of the Remunera- tion/Nomination Committee include discussion of basic HR questions, determining the compensation regulations and models for Group Management, and drawing up proposals for the amount of the compensation paid the CEO and members of the Board of Directors. The tasks of the Remuneration/ Nomination Committee are set out in detail in the Organizational Regulations of Komax Holding AG. 38 longed absence, the Board of Directors will appoint a Deputy. The Chairman – or if he is unable to at- the Deputy Chairman – is responsible for tend, chairing the meetings. The Board of Directors addi- tionally appoints a Secretary, who does not need to be a member of the Board of Directors. The Board of Directors meets as often as busi- ness requires, but no less than four times per year. Meetings are called by the Chairman of the Board. Each member of the Board of Directors may de- mand that a meeting be called by the Chairman to discuss a particular topic. The Board of Directors is deemed to have a quorum if an absolute majority of its members are present. The resolutions of the Board of Directors are adopted by an absolute majority of votes pre- sent, subject to a minimum of three. In the event of a tie, the Chairman casts the deciding vote. All res- olutions are minuted. In cases of urgency, a meeting of the Board of Directors may be held by telephone or other appropriate medium. Resolutions by circu- lar letter are permissible provided no Board Member calls for verbal discussion. All members were pre- sent at the four meetings of the Board of Directors that took place in 2011. On average, these meet- ings lasted around six hours. However, these aver- age times pertain to the actual duration of the meet- ings themselves, and do not take into account the extensive preparatory and follow-up work done by the individual members. The Board of Directors has formed two Committees from among its ranks: −− Audit Comittee The Audit Committee presently consists of Hans Caspar von der Crone (Chairman), Melk M. Lehner and Leo Steiner. The Committee meets at least twice a year. In 2011 the Committee met twice, with all members being present on both occasions. On average, these meetings lasted three hours. These average times do not include the extensive prepara- tory and follow-up work done by the individual members. The tasks of the Audit Committee include the overall supervision of the external and internal auditors, as well as financial reporting. The Audit Committee sets out the scope and schedule of the audit to be carried out by the two auditing bodies and also coordinates their work. Both the external and internal auditors report on their audit work, and the Audit Committee monitors implementation of the audit findings. Furthermore, the Audit Commit- tee also evaluates the reliability of the internal con- trol system and of the risk management, and ac- quires a picture of the extent to which statutory and internal regulations are being adhered to (compli- 54702 Komax_GB2011_Berichtsteil_E.indd 38 54702 Komax_GB2011_Berichtsteil_E.indd 38 12.03.12 16:52 12.03.12 16:52 39 Annual Report 6 Business Model 14 Wire 20 Solar 26 Medtech 35 Corporate Governance 44 Investors 47 Financial Report 106 Corporate Structure each meeting on a monthly basis. In addition, the Chairman of the Board of Directors and the CEO are in regular contact to discuss important questions of company policy. The risks associated with the Group’s commer- cial activities are systematically identified, analysed, monitored and managed through an institutional- ized risk management function. These risks are amalgamated into groups according to their nature, namely general external risks, business risks, finan- cial risks, risks arising in connection with corporate governance, and IT risks. The Executive Committee is responsible for the operational side of risk man- agement, whereby specially appointed process owners are assigned responsibility for the manage- ment of key individual risks. These individuals take specific measures and monitor their implementa- tion. Every year, the Executive Committee informs the Audit Committee of the risks that have been identified and the measures taken as part of risk management activities. The MIS of the Komax Group is organized as fol- lows: each subsidiary’s key balance sheet and profit and loss figures are compiled and consolidated once a month. The subsidiaries’ balance sheets, in- come statements, cash flow statements and various indicators are compiled and consolidated on a quar- terly, half-yearly and yearly basis. A comparison is then made with the previous year and the budget. The budget is checked for attainability against the quarterly statements for each individual company and on a consolidated basis. forecast Using key controls, the internal control system (ICS) ensures proper and efficient management, safeguards assets, prevents and identifies offences and errors, and ensures accurate and complete ac- counting records as well as timely preparation of reliable financial information. A report setting out the results of these investigations and the corre- sponding measures taken is submitted to the Audit Committee. Definition of areas of responsibility Under art. 716a par. 1 of the Swiss Code of Obliga- tions, the Board of Directors must fulfil the following non-transferable and inalienable duties: −− Overall management of the company and issu- ance of the necessary directives; −− Establishing the company’s organizational frame- work; −− Determining the principles of accounting, finan- cial controlling and financial planning, insofar as this is necessary for the management of the com- pany; −− Ultimate supervision of −− Appointing and removing the persons entrusted with managing and/or representing the company; the persons entrusted with managing the company, specifically with re- spect to prevailing legislation, the Articles of As- sociation, regulations and directives; −− Producing the Annual Report, making prepara- tions for the General Meeting and executing the resolutions passed by the General Meeting; −− Informing the courts in the event of excessive in- debtedness. The tasks, obligations and powers of the Board its Chairman, and the above-men- of Directors, tioned Committees are set out in detail in the Or- ganizational Regulations of Komax Holding AG. These regulations also define the rights, obligations and competencies of the CEO and the Executive Committee. The Organizational Regulations are re- viewed on a regular basis and amended where necessary. The most recent amendment was un- dertaken in August 2011. To the extent permitted by law and by the Arti- cles of Association, the Board of Directors has dele- gated operational management of the company to the CEO of the Komax Group. The Executive Com- mittee is made up of the CEO and four further mem- bers. The members of the Executive Committee are appointed by the Board of Directors at the proposal of the Remuneration/Nomination Committee. Information and control instruments vis-à-vis the Executive Committee The CEO informs the Board of Directors at each meeting about the course of business, the Group’s most important transactions and the status of the tasks delegated to the Executive Committee. The key data generated by the management information system (MIS) is discussed at length at meetings of the Board of Directors with the CEO and CFO. Moreover, the Board of Directors is also provided with full details of the current course of business and the financial situation of the Group between 54702 Komax_GB2011_Berichtsteil_E.indd 39 54702 Komax_GB2011_Berichtsteil_E.indd 39 12.03.12 16:52 12.03.12 16:52 The members of the Executive Committee re- ceive performance-based compensation. The tar- get salary (100%) consists of a fixed component (65 to 70%), a remuneration component which de- pends on the company’s result in comparison to the annual plan, and an individual performance compo- nent. The remuneration component that depends on the company’s result is calculated on the basis of key corporate figures (sales, EBIT, EAT, RONCE). The individual performance component is based on the attainment of previously agreed objectives. Here there is a 50/50 split between operating objectives and individual objectives. The variable salary com- ponent achievable by a member of the Executive Committee may not exceed the set target by more than 70%. In the 2011 financial year, the variable compensation component for members of the Ex- ecutive Committee amounted to between 25 and 85% of the fixed salary component. The compensation models for other members of management within the Komax Group also contain a performance-related component. In addition to their salary, members of the the Executive Committee, middle management as well as other staff of the Komax Group (a total of some 150 employees) may – in accordance with the com- pany’s share option guidelines – receive share op- tions as determined by the Remuneration Commit- tee. These options have a duration of five years and are subject to a three-year lock-in period. The exer- cise price of the options corresponds to the lower of the following two values: the average price of the fourth quarter of the preceding year, and the aver- age price in March of the year the option was is- sued. The individual allocation of options is at the discretion of the Board of Directors and the Execu- tive Committee. 40 The internal audit function evaluates the effec- tiveness of the ICS as well as of management and monitoring processes. It also supports the Execu- tive Committee in the risk management process. In- ternal audit duties are performed by the Finance & Accounting unit of Komax AG, Dierikon. This unit the scrutinizes the individual operating units of Group and the various business areas of the parent entity at regular intervals, and on the basis of an an- nually updated audit plan. The internal auditors re- port the results of their investigations to the Audit Committee. The Audit Committee reviews and ap- proves the scope of the audit, the audit plan, and the corresponding responsibilities. It also decides on any measures to be implemented as a result of internal audit findings. 4 Executive Committee The Executive Committee of the Group comprises the CEO, the business unit heads who report di- rectly to him, and the Chief Financial Officer (CFO). Function exercised since Dr Beat Kälin, CEO Andreas Wolfisberg, CFO Matijas Meyer, Head Business Unit Wire Walter Nehls, Head Business Unit Solar Serge Peguiron, Head Business Unit Medtech 2007 1996 2010 2008 2005 Biographies of the individual members of the Exec- utive Committee are provided on pages 12 and 13. 5 Compensations, shareholdings and loans Content and method of determining the compen- sation and the participation programmes The compensation of the Board of Directors is fixed (there is no variable salary component). The Board of Directors determines the amount of the fixed compensation to which its members are entitled at its own discretion and commensurate with their in- volvement and degree of responsibility. The com- pensation consists of a component paid in cash and a proportion provided in the form of options. Additional compensation may be granted for ex- traordinary efforts above and beyond normal Board activities. The salary and bonus of the CEO are deter- mined by the Board of Directors on the basis of the proposal submitted by the Remuneration Commit- tee. The overall compensation of the members of the Executive Committee is decided by the Remu- neration Committee (see also the general marks on the Remuneration Committee on page 38). 54702 Komax_GB2011_Berichtsteil_E.indd 40 54702 Komax_GB2011_Berichtsteil_E.indd 40 12.03.12 16:52 12.03.12 16:52 41 Annual Report 6 Business Model 14 Wire 20 Solar 26 Medtech 35 Corporate Governance 44 Investors 47 Financial Report 106 Corporate Structure Compensation for acting members of governing bodies In the 2011 financial year, the following levels of (gross) compensation were paid to active members of governing bodies: −− to members of the Board of Directors: CHF 743 680 −− to members of the Executive Committee: CHF 2 964 856 Details of the compensation paid to the Board of Directors and the Executive Committee can be found on pages 95 and 103 of the Financial Report. The above amounts include the allocation of options from the 2011 programme with an exer- cise price of CHF 94.25 and a taxable value of CHF 21.72. These options have a duration of five years (lock-in period of three years followed by an exercise period of two years). Details of the shares and options held by the Board of Directors and the Executive Committee can be found on page 104 of the Financial Report. Illustration of compensation development The basis for determining compensation for the Board of Directors and the Executive Committee was unchanged from the previous year. The in- crease in compensation is mainly due to changes in the composition of the Executive Committee and to the higher taxable value of options allocated in the 2011 financial year. Additional fees and remunerations In the year under review, no invoices were submit- ted to the Komax Group by members of the Board of Directors for additional services. Share allotments No shares were allotted either to members of the Board of Directors or to employees in the year under review. Agreements regarding severance payments No agreements regarding severance payments exist with members of the Board of Directors or with members of the Executive Committee. Compensation for former members of governing bodies No compensation was paid to former members of governing bodies in the 2011 financial year. Loans granted by governing bodies Komax Group companies have not granted any guarantees, loans, advances or credits to members of the Board of Directors or the Executive Commit- tee or parties closely linked to such persons as at 31 December 2011. No members of the Board of Directors or the Executive Committee or persons closely linked to them take or have taken part in Komax Group busi- ness outside their normal duties. 6 Shareholder participation rights Voting rights and representation restrictions Shareholders registered in the Komax Holding AG share register are entitled to vote; each share is en- titled to one vote. No single shareholder may di- rectly or indirectly exercise the votes of more than 5% of the total number of shares recorded in the Commercial Register for his own registered shares and shares voted by proxy. Legal entities and groups with joint legal status which are connected through capital, voting rights, management or in some other manner, along with all natural persons, legal entities and groups with joint legal status which act in concert by virtue of agreement, syndi- cate or in some other manner, are regarded as one person for the purposes of this provision. The Board of Directors may grant exceptions to this rule for good cause. This voting rights limitation does not apply to proxy holders of deposited shares, repre- sentatives of governing bodies or independent rep- resentatives pursuant to CO art. 689c and 689d. This voting rights limitation does not apply to shareholders who were registered as holding regis- tered shares amounting to more than 5% of votes for all shares at the time that the provision of the Ar- ticles of Association regarding limitation of voting rights was passed. Shareholders may be represented at the Gen- eral Meeting on the basis of a written power of at- torney by other shareholders, a proxy holder of de- posited shares, a representative of a governing body, or an independent proxy pursuant to CO art. 689c and 689d. The voting rights limitation may only be re- scinded by a resolution of the General Meeting, which requires a majority of votes cast. 54702 Komax_GB2011_Berichtsteil_E.indd 41 54702 Komax_GB2011_Berichtsteil_E.indd 41 12.03.12 16:52 12.03.12 16:52 42 Statutory quorums In addition to the resolutions specified in CO the Articles of Association of Art. 704, under Komax Holding AG, a two-thirds majority of votes cast and an absolute majority by value of shares voted is required to dismiss members of the Board of Directors. Convocation of the General Meeting /agenda The convocation of the General Meeting is gov- erned by applicable law. Shareholders representing at least 1% of the share capital can request that items be placed on the agenda for discussion by submitting the proposed motions in writing within the deadline published by the company. Entries in the share register In principle, any shareholder can be entered in the Komax Holding AG share register. Any person ac- quiring shares is listed as a “shareholder with voting rights” up to a maximum of 5% of the total number of shares published in the Commercial Register. Any person owning more than 5% of the published shares will be entered as a “non-voting shareholder” for the portion in excess of 5% (Komax Holding AG Articles of Association, Art. 6.4 et. seq.). This re- striction does not apply to the acquisition of shares through inheritance, division of an estate or joint marital property. The Board of Directors may grant exceptions for good cause. The Board of Directors can refuse entry in the share register if the acquirer does not expressly de- clare, at the request of the Board, that the shares were acquired in their own name and for their own account. After hearing the affected party, the com- pany may delete entries in the share register if such entries occurred in consequence of false state- ments by the acquirer. The acquirer must be in- formed of the deletion immediately. Nominees are listed in the share register as “non-voting shareholders”. Invitation to the General Meeting of 3 May 2012 All shareholders registered in the Komax Holding AG share register as per 2 May 2012 are entitled to vote in respect of the number of shares registered in their name at the General Meeting of 3 May 2012. Shareholders registered on 14 March 2012 will re- ceive an invitation indicating the proposals of the Board of Directors and a reservation and entry ticket coupon. Shareholders who acquire shares later and whose registration application is received by the Komax Holding AG share register no later than 2 May 2012 will receive the invitation at that time, or ballot materials will be waiting for them at the front desk of the General Meeting. Shareholders who dispose of their shares before the General Meeting are not entitled to vote. In the event of a partial sale or purchase of additional shares, the entry ticket received should be exchanged at the front desk on the date of the General Meeting. 7 Changes of control and defence measures Duty to make an offer Upon reaching or exceeding a threshold of 33 ¹/³%, a shareholder must submit an offer to all sharehold- ers for the purchase of their shares (Art. 32, Federal Act on Stock Exchanges and Securities Trading). The Articles of Association do not include “opting out” or “opting up” rules. Clauses on change of control At the Komax Group, change-of-control clauses are not included in employment contracts. Options The members of the Board of Directors, Executive Committee, and middle management are entitled to exercise their options in part or in full, without re- gard to the time limits, in the following cases: −− if Komax Holding AG or its subsidiaries sell(s) all assets relevant to the business; −− if one or more persons or companies merge(s) and conclude(s) a legally binding agreement for the purpose of acquiring shares in Komax Hold- ing AG, as a result of which they hold more than 50% of the voting rights (including any previous shareholdings); −− if another case of legal or economic disposal or liquidation of Komax Holding AG occurs; −− if Komax Holding AG is no longer traded on the stock exchange and no publicly traded shares of the company are available. 8 Auditors Duration of the mandate and term of office of the lead auditor PricewaterhouseCoopers AG, Basel, has been the statutory auditor of Komax Holding AG and the Komax Group’s consolidated financial statements since 1994. Pursuant to the provisions of the Swiss Code of Obligations, the lead auditor is replaced after a maximum term of seven years. The lead au- ditor has been responsible for the audit mandate since 2010. 54702 Komax_GB2011_Berichtsteil_E.indd 42 54702 Komax_GB2011_Berichtsteil_E.indd 42 12.03.12 16:52 12.03.12 16:52 43 Annual Report 6 Business Model 14 Wire 20 Solar 26 Medtech 35 Corporate Governance 44 Investors 47 Financial Report 106 Corporate Structure Holding AG publishes comprehensive financial re- sults twice a year, for the first half and for the full year. In addition to the financial results, sharehold- ers and financial markets are also regularly kept in- formed of significant changes and developments. Komax Holding AG publishes facts relevant to its share price in conformity with the disclosure poli- cies of SIX Swiss Exchange. The Listing Rules can be found at www.six-exchange-regulation.com (Admission). The official publication for company notices is of Commerce” the “Swiss Official Gazette (“Schweizerisches Handelsamtsblatt”). Information on share price trends, annual and half-year reports, the minutes of the most recent General Meeting, press releases and Komax Hold- ing AG’s Articles of Association are available at www.komaxgroup.com. Press conferences and presentations for analysts are held at least once a year. Contact Komax Holding AG Marco Knuchel Industriestrasse 6 CH-6036 Dierikon Phone +41 41 455 06 16 marco.knuchel@komaxgroup.com Auditing and additional fees PricewaterhouseCoopers invoiced the Komax Group CHF 519 273 in the 2011 financial year for services in connection with auditing the annual statements of Komax Holding AG and the Group companies as well as the consolidated statements of the Komax Group. In addition, the auditing company invoiced a fee amounting to a total of CHF 68 289 during 2011 fi- nancial year. This breaks down into a fee of CHF 27 794 for tax advisory work, and CHF 40 495 for legal advice. Supervisory and control instruments pertaining to the auditors The Audit Committee is responsible for evaluating the external auditors, who submit an audit report to the Board of Directors. At least one consultation is held each year between the external auditors and the Audit Committee, at which the material findings for each company (management letters) and the consolidated financial statements covered by the audit report are discussed in detail. The auditors also explain the audits conducted (audit and review) for each company along with recent changes in IFRS (International Financial Reporting Standards) and their impact on the Komax Group’s consoli- dated annual statements. The services provided by the statutory auditors are evaluated by the Audit Committee on the basis of the quality of reporting and the audit reports, the implementation of the audit plan and the level of co- operation with the internal audit team. The inde- pendence of the auditors is verified by comparing the fee for additional services charged by the exter- nal auditors with the audit fee, taking into account the scope of these additional services. The external auditors are selected by tender. The selection process is repeated annually. Every year the mandate of the auditors has to be con- firmed. In addition to the minimum statutory re- quirements, the selection criteria applied are pro- fessional qualifications, industry experience and value for money. Further details on the Audit Committee can be found under section 3. 9 Information policy Komax is committed to providing swift, transparent and simultaneous information for all stakeholders. The CEO, CFO, and the Head of Investor Relations and Corporate Communications are available as contact partners for information purposes. The consolidated financial statements are com- piled in conformity with IFRS standards. Komax 54702 Komax_GB2011_Berichtsteil_E.indd 43 54702 Komax_GB2011_Berichtsteil_E.indd 43 12.03.12 16:52 12.03.12 16:52 44 Information for investors 2011 was not an auspicious year for equity inves- tors in most industrial enterprises, especially among small and mid-caps. Although operating perfor- mance was quite good in many cases, the response from skittish financial markets was often cool. In the wake of growing concerns about the economy, equity portfolios became more defensive, especially during the second half of the year, and cyclical shares lost considerable value as a result. Share price development in CHF 120 110 100 90 80 70 60 50 January June December Komax Vontobel Small Cap Index Komax shares were not spared this trend. The strong Swiss franc and the company’s close involve- ment with the automotive and solar industries led many investors to pare back their exposure. The year-end share price on 30 December 2011 was CHF 68.75 (2010: CHF 102.00), a decline of 33%. Listing Komax is listed on SIX Swiss Exchange. Market cap- italization at the end of 2011 was CHF 233.8 million. ISIN Security number Bloomberg code Thomson Reuters code CH001070215 1070215 KOMN SW KOMN.S Geographical distribution of shareholdings Switzerland Other countries Shares pending registration of transfer 70% 7% 23% The majority of shares not held in Switzerland are held in the United Kingdom, Germany, Sweden and Luxembourg. Significant shareholders Information on significant shareholders can be found on page 36 of this report. 54702 Komax_GB2011_Berichtsteil_E.indd 44 54702 Komax_GB2011_Berichtsteil_E.indd 44 12.03.12 16:52 12.03.12 16:52 45 Annual Report 6 Business Model 14 Wire 20 Solar 26 Medtech 35 Corporate Governance 44 Investors 47 Financial Report 106 Corporate Structure Breakdown of shareholders by number of registered shares held 1–100 101–1 000 1 001–10 000 10 001–50 000 > 50 000 1 763 1 844 266 25 5 Free float The free float as defined by SIX Swiss Exchange stands at 93%. Dividends At the General Meeting, the Board of Directors will propose an increase in the distribution from the capital contribution reserves from CHF 2.00 to CHF 4.00 per share. This reflects confidence in future business performance and the strength of the com- pany. The dividend yield on the date of the Board resolution was an attractive 4.8%. For natural per- sons in Switzerland who hold shares as part of their personal assets, this distribution from the capital contribution reserves will be tax-free. Information on the Komax registered share Further information on the Komax registered share can be found on the internet at: www.komaxgroup.com Disclosure of shareholdings Under art. 20 of the Swiss Federal Act on Stock Ex- changes and Securities Trading (Stock Exchange Act), whosoever directly, indirectly or in concert with Key data Komax registered share Share capital as at 31.12. Number of shares as at 31.12. Average number of shares Par value per share Basic earnings (+)/loss (–) per share EBITD per share EBIT per share Shareholders' equity per share Dividend per share High Low Closing price as at 31.12. Average daily trade volume P/E (price-earnings ratio) as at 31.12. Dividend yield as at 31.12. in TCHF No. No. CHF CHF CHF CHF CHF CHF CHF CHF CHF No. % third parties acquires or disposes of shares, for his own account, in a company incorporated in Switzerland whose equity securities are listed, in whole or in part, in Switzerland and thereby attains, falls below or exceeds the threshold of 3, 5, 10, 15, 20, 25, 33 ¹/³, 50 or 66 ²/³ % of the voting rights, whether or not such rights may be exercised, shall notify the company and the stock exchanges on which the equity securities in question are listed. Financial calendar Annual General Meeting Dividend payment Half-year results 2012 3 May 2012 10 May 2012 21 August 2012 First information on the year 2012 15 January 2013 Annual media conference/analysts’ presentation 2012 Annual General Meeting 19 March 2013 3 May 2013 2011 340 2010 340 2009 339 2008 339 2007 336 3 400 880 3 400 880 3 387 520 3 387 520 3 359 063 3 375 217 3 349 278 3 319 791 3 323 199 3 288 479 0.10 11.68 16.14 13.98 72.63 4.001) 120.00 59.00 68.75 8 383 5.9 5.821) 0.10 5.31 10.72 8.56 62.49 2.00 103.00 73.10 102.00 6 173 19.5 1.96 0.10 −5.97 −4.28 −6.69 59.01 0.00 80.00 36.05 72.00 6 341 −12.1 0.00 0.10 6.99 11.54 9.18 65.56 2.00 175.00 48.95 53.90 8 932 0.10 9.86 15.27 12.88 66.83 6.50 217.20 152.00 181.00 12 247 7.7 3.71 18.6 3.59 1) Proposal of the Board of Directors of Komax Holding AG: distribution of CHF 4.00 per registered share from capital contribution reserves. 54702 Komax_GB2011_Berichtsteil_E.indd 45 54702 Komax_GB2011_Berichtsteil_E.indd 45 12.03.12 16:52 12.03.12 16:52 This page has been intentionally left blank. 54702 Komax_GB2011_Berichtsteil_E.indd 46 54702 Komax_GB2011_Berichtsteil_E.indd 46 12.03.12 16:52 12.03.12 16:52 47 Financial Report Consolidated Financial Statements 48 Comments 52 Consolidated Balance Sheet 53 Consolidated Income Statement 54 Consolidated Statement of Comprehensive Income 55 Consolidated Cash Flow Statement 56 Consolidated Statement of Shareholders’ Equity 57 Notes 96 Report of the Auditors Financial Statements of Komax Holding AG 97 Comments 99 Balance Sheet 100 Income Statement 101 Notes 106 Corporate Structure 108 Proposal for the Appropriation of Profit 109 Report of the Auditors E_FB_(CS5_Layout) [P].indd 47 E_FB_(CS5_Layout) [P].indd 47 12.03.12 14:06 12.03.12 14:06 48 Comments on the consolidated financial statements Income statement Order intake Orders totalled CHF 380.4 million in 2011, compared with CHF 357.0 million in 2010. This represents an in- crease of 6.6%. It was above all Europe and the US which contributed to the increase in the order intake. The order book stood at CHF 80.4 million as at 31 December 2011, compared to CHF 86.7 million at the end of 2010. Revenues (net sales and other operating income) Komax generated revenues of CHF 371.4 million in the 2011 financial year, which represents an increase in sales of 9.2% compared to 2010. The following is a breakdown of net sales by currency in 2011 (percent- ages in brackets are for the previous year): – CHF 33% (33%) – EUR 20% (17%) – USD 36% (40%) – Other foreign currencies 11% (10%) The percentage proportion of revenues in CHF remained unchanged in the year under review. Nonetheless, the consolidated currency impact in 2011 was much greater than in the previous year, as a direct conse- quence of the weak dollar and euro. Towards the end of this year, these two key currencies for Komax regained some of their strength. The foreign currency impact at net sales level was −6.9% in 2011 com- pared to −2.7% in the previous year. Gross sales in the EU rose by 7.0% to CHF 117.0 million in the year under review. In Europe as a whole they amounted to CHF 159.6 million, or 43.0% of gross sales. In other words, the proportion of sales accounted for by Europe once again increased sharply. In the Africa region, gross sales came in at CHF 31.0 million, an increase of more than 58% on the previous year. In addition, gross sales in North America rose slightly, with the total 2011 volume for this region coming in at CHF 56.2 million. There was a slight decrease in volumes in the Asia and South America regions (around 3% in each case). Despite a slight decline, the share of revenues accounted for by Asia amounted to 28.5 percentage points, which remains significantly above the average for the last five years. Gross profit The gross profit margin (gross profit as a percentage of revenues) amounted to 54.1% in the year under review, 1.6 percentage points higher than the previous year’s margin of 52.5%. The improvement in gross profit as a proportion of revenues was a result of margin improvements in both standard business and systems production. The higher gross profit margin was achieved at gross profit level despite the negative currency impact of −3.3 percentage points. Progress in project management and inventory management made a very significant contribution to the improved margin, as did changes in the product mix. Operating expenses Personnel expenses declined to 27.9% as a proportion of revenues, a decrease of 2.1 percentage points. This was attributable to the significant rise in sales, lower expenses at subsidiary companies abroad thanks to currency impacts, and the optimization of processes in all key business areas. The Komax Group was able to increase revenues per employee by 3.0% to TCHF 343 and net value added by 10.2% to TCHF 140 per employee. As at 31 December 2011, the Komax Group employed 1 140 staff, compared to 1 023 at the end of 2010. Headcount increased in all important regions in the year under review. Switzerland accounted E_FB_(CS5_Layout) [P].indd 48 E_FB_(CS5_Layout) [P].indd 48 12.03.12 14:06 12.03.12 14:06 49 Financial Report 48 Consolidated Financial Statements 97 Financial Statements of Komax Holding AG 106 Corporate Structure for 50% of the workforce, followed by North America at 22%. Asia accounted for a further 20%, of which the majority were based in Malaysia and China. In terms of individual areas, 42% of Komax staff were em- ployed in production/procurement in 2011, while 24% worked in marketing/sales (including customer ser- vice). Engineering accounted for 13% and research and development for a further 12%. Employees in the engineering area are primarily active in project business, whereas employees in research and development work in the innovation area of standard business. The remaining 9% were engaged in administration, in- cluding management and IT. The “other operating expenses” item also includes costs from changes to provisions and value adjustments amounting to CHF 2.4 million. Research and development expenditure R&D expenditure amounted to CHF 23.5 million in 2011, compared to CHF 20.5 million in 2010. R&D ex- penditure therefore amounted to 6.3% of revenues. In the income statement, the “other operating expenses” item contains third-party development services amounting to CHF 3.2 million. The remaining CHF 20.3 mil- lion primarily comprise own work capitalized on the part of our development staff. The increase in research and development expenditure compared to the previous year was the result of higher expenses in all seg- ments of the Komax Group. As at 31 December 2011, the Komax Group employed a total of 134 staff in R&D – the vast majority of them in Switzerland. Operating profit (EBIT) The Komax Group generated operating profit of CHF 47.5 million in the year under review. Given the nega- tive development of exchange rates, the currency impact of −1.1 percentage points in the 2011 financial year was kept within reasonable limits. At operating profit level, the Komax Group achieved the best result in its history in 2011. The higher operating profit can be attributed to the increase in sales, higher margins in all main business areas and markets, and improved processes. Further details on the segment reporting can be found on pages 88 to 90. Financial result The financial result amounted to CHF −1.4 million, of which CHF −1.5 million related to interest expenditure. Net interest expenses in the previous year amounted to CHF −2.2 million. The reduction in interest costs was due to lower interest rates on the syndicated loan. Other financial income of CHF 0.1 million mainly comprised realized and unrealized exchange rate results in both EUR and USD. Both currencies were still trading at a low level against the CHF as at the balance sheet date. Due to the minimal change compared with 31 December 2010, the difference resulting from valuation adjustments on foreign currencies is only marginal. Furthermore, a small gain was accrued on current hedges. Group result In the 2011 financial year, earnings before taxes (EBT) came in at CHF 46.1 million (12.4% of revenues), as against CHF 24.6 million in the previous year. The tax rate for the year under review came to 14.8% (2010: 27.7%). The significant fall in the tax rate was primarily attributable to tax credits from the US for develop- ment services provided in the last five years in particular. If the US tax credit and the non-capitalized tax loss carry-forwards from previous years are excluded from the calculation, the tax rate would have amounted to 20.2% in the year under review. Furthermore, the Komax Group benefited from a decline in tax rates at im- portant Group locations. Over the next few years, we are expecting tax rates to be below the long-term av- erage. Earnings after tax (EAT) reached CHF 39.3 million in 2011, and basic earnings per share amounted to CHF 11.68 compared to CHF 5.31 in the previous year. E_FB_(CS5_Layout) [P].indd 49 E_FB_(CS5_Layout) [P].indd 49 12.03.12 14:06 12.03.12 14:06 50 Balance sheet Assets As at 31 December 2011, current assets had risen by 17.7% to CHF 249.0 million, of which cash and cash equivalents amounted to CHF 52.1 million. As at the balance sheet date, the Komax Group can once again re- port a net cash position (CHF 5.6 million for the 2011 financial year compared to CHF 12.0 million in 2010). The overall increase in current assets was the result of a sharp rise in sales. The very pleasing development of business over the last few months of the year under review resulted in a strong increase in the level of trade re- ceivables. The same development also lay behind the increase in inventories. The trade receivables of CHF 127.3 million also include underfinanced projects of CHF 34.6 million net valued according to the POC method. These were CHF 2.6 million lower at the balance sheet date than at 31 December 2010. Overdue receivables are also reported in the notes to the consolidated annual financial statements. As at 31 December 2011, these amounted to CHF 34.1 million, of which just under 20% were overdue by more than 120 days. At the end of 2010, overdue receivables amounted to CHF 22.2 million. The main reason for higher value adjust- ments in the area of receivables was the difficult commercial and financial environment, particularly in the photovoltaics area. Liabilities Current liabilities amounted to CHF 62.9 million as at 31 December 2011. This amount also includes over- financed projects amounting to CHF 8.9 million net valued according to the POC method. At the end of 2010, the equivalent amount was CHF 9.7 million net. In addition, provisions for warranties and individual risks amounting to CHF 3.3 million (previous year: CHF 3.4 million) are also booked under current liabilities. The slight decline in provisions is attributable to the positive development in warranties in standard business in 2011. In addition, provisions of CHF 2.5 million were created in the year under review, while CHF 2.3 million of provisions were used. The figure for the re- versal of provisions that are no longer required was negligible (CHF 0.3 million). Non-current liabilities include deferred tax liabilities and bank loans. As at 31 December 2011, the latter were CHF 4.2 million higher than the previous year and amounted to CHF 46.6 million. The Komax Group continues to have access to a syndicated loan facility amounting to CHF 100 million, as well as other local lines of credit amounting to a maximum of CHF 10 million. The Group’s shareholders’ equity amounted to CHF 247.0 million as at 31 December 2011 (68.3% of the total assets), compared to CHF 212.5 million as at 31 December 2010. Compared to the previous year, the impact of currency translation differences was negligible at CHF 0.3 million (previous year: CHF 9.9 million). E_FB_(CS5_Layout) [P].indd 50 E_FB_(CS5_Layout) [P].indd 50 12.03.12 14:06 12.03.12 14:06 51 Financial Report 48 Consolidated Financial Statements 97 Financial Statements of Komax Holding AG 106 Corporate Structure Cash flow statement Cash flow from operating activities Cash flow from operating activities totalled CHF 48.0 million before the change in net current assets (2010: CHF 35.7 million), and CHF 10.1 million after the change in net current assets and provisions (2010: CHF 24.5 million). The positive cash flow is attributable to the strong increase in earnings after taxes. By con- trast, there was a strong increase in receivables and inventories compared to the previous year’s balance sheet date. Cash flow from investing activities The cash outflow from investing activities amounted to CHF 13.5 million gross, which represents an in- crease of CHF 7.6 million on the previous year. In addition to the acquisition of a minority stake in SLE qual- ity engineering GmbH & Co. KG in Germany (Wire segment) at a cost of CHF 2.2 million, the key gross in- vestments in 2011 can be assigned to the following categories: Machines/tools Infrastructure/offices Buildings/land IT Technology CHF 2.8 million CHF 1.3 million CHF 0.8 million CHF 1.9 million CHF 4.5 million After taking account of disposals, net investments came to CHF 10.1 million in 2011 compared to CHF 5.0 million the previous year. Free cash flow, i.e. cash flow from operating activities after deduction of net in- vestments, amounted to CHF −0.1 million, which represents a decline of CHF 19.6 million compared to the previous year. Cash flow from financing activities Bank loans amounting to CHF 4.0 million net were taken out in 2011. Furthermore, the Group benefited from an inflow of CHF 0.4 million net from the sale and acquisition of treasury shares, as well as an inflow of CHF 1.1 million from the purchase of non-controlling interests in Group companies. The dividend distribu- tion out of reserves from capital contributions amounted to CHF 6.8 million in 2011. No dividend was paid in 2010 as a result of the poor result for the 2009 financial year. E_FB_(CS5_Layout) [P].indd 51 E_FB_(CS5_Layout) [P].indd 51 12.03.12 14:06 12.03.12 14:06 52 Consolidated balance sheet in TCHF Assets Cash and cash equivalents Securities Trade receivables Other receivables and accrued income/prepaid expenses Inventories Total current assets Deferred tax assets Other non-current receivables Prepaid pension assets Investments in associates Property, plant and equipment Intangible assets Total non-current assets Total assets Liabilities and shareholders’ equity Trade payables Other payables and accrued expenses/deferred income Current income tax liabilities Provisions Total current liabilities Financial loans Deferred tax liabilities Total non-current liabilities Total liabilities Share capital Treasury shares Capital surplus (premium) Other reserves Equity attributable to equity holders of the parent company Non-controlling interest Total shareholders’ equity Notes 31.12.2011 31.12.2010 5 6 7 8 9 10 11 12 13 14 15 17 18 19 20 10 21 52 142 33 127 272 13 922 55 625 248 994 6 874 161 969 2 085 68 026 34 339 112 454 54 349 51 99 609 12 407 45 120 211 536 3 826 285 1 812 0 71 274 29 965 107 162 361 448 318 698 20 812 33 660 5 108 3 280 62 860 46 571 3 982 50 553 16 773 36 600 2 457 3 430 59 260 42 374 4 541 46 915 113 413 106 175 340 −3 086 51 405 198 335 246 994 1 041 248 035 340 −3 543 58 158 157 568 212 523 0 212 523 Total liabilities and shareholders’ equity 361 448 318 698 The notes on pages 57 to 95 are an integral component of these consolidated financial statements. E_FB_(CS5_Layout) [P].indd 52 E_FB_(CS5_Layout) [P].indd 52 12.03.12 14:06 12.03.12 14:06 53 Financial Report 48 Consolidated Financial Statements 97 Financial Statements of Komax Holding AG 106 Corporate Structure Consolidated income statement in TCHF Net sales Other operating income Cost of materials Personnel expenses Rental expenses Maintenance and repair expenses Representation and advertising expenses Depreciation Other operating expenses Operating expenses Operating profit before interest, taxes and extraordinary charges Extraordinary restructuring charges Operating profit before interest and taxes Financial income Financial expenses Group profit before taxes Taxes Group profit after taxes Of which attributable to: – Equity holders of the parent company – Non-controlling interest Attributable to equity holders of the parent company Basic earnings per share (in CHF) Diluted earnings per share (in CHF) Notes 2011 2010 22 23 24 14/15 26 27 28 28 29 370 029 339 075 1 395 1 097 170 587 103 632 4 109 5 796 11 270 7 370 21 124 161 613 102 165 3 625 5 103 11 097 7 333 19 250 323 888 310 186 47 536 0 47 536 7 418 −8 861 46 093 6 813 29 986 −876 29 110 5 159 −9 680 24 589 6 809 39 280 17 780 39 413 −133 39 280 30 30 11.68 11.48 17 780 0 17 780 5.31 5.23 The notes on pages 57 to 95 are an integral component of these consolidated financial statements. E_FB_(CS5_Layout) [P].indd 53 E_FB_(CS5_Layout) [P].indd 53 12.03.12 14:06 12.03.12 14:06 54 Consolidated statement of comprehensive income in TCHF Group profit after taxes Currency translation differences from foreign subsidiaries Currency translation differences from investments in associates Other comprehensive income after taxes 2011 39 280 −102 −115 −217 2010 17 780 −9 870 0 −9 870 Comprehensive income after taxes 39 063 7 910 Of which attributable to: – Equity holders of the parent company – Non-controlling interest 39 104 −41 39 063 7 910 0 7 910 The notes on pages 57 to 95 are an integral component of these consolidated financial statements. E_FB_(CS5_Layout) [P].indd 54 E_FB_(CS5_Layout) [P].indd 54 12.03.12 14:06 12.03.12 14:06 55 Financial Report 48 Consolidated Financial Statements 97 Financial Statements of Komax Holding AG 106 Corporate Structure Consolidated cash flow statement in TCHF Notes 2011 2010 Cash flow from operating activities Group profit after taxes Adjustment for non-cash items − Taxes − Depreciation and impairment of property, plant and equipment − Depreciation and impairment of intangible assets − Profit (–)/loss (+) from sale of non-current assets − Expense for share-based payments − Employee benefits − Net financial result − Other non-cash items Interest received and other financial income Interest paid and other financial expenses Taxes paid Cash flow before change in net current assets and provisions Increase (+)/decrease (–) in provisions Increase (–)/decrease (+) in trade receivables Increase (–)/decrease (+) in inventories Increase (+)/decrease (–) in trade payables Increase (–)/decrease (+) in other net current assets Total cash flow from operating activities Cash flow from investing activities Investments in property, plant and equipment Sale of property, plant and equipment Investments in intangible assets Investments in associates Total cash flow from investing activities Cash flow from financing activities Increase in financial liabilities Decrease in financial liabilities Purchase of treasury shares Sale of treasury shares Capital increase (share-based payments) Purchase of non-controlling interests in Group companies Distribution out of reserves from capital contributions Total cash flow from financing activities 39 280 17 780 29 14 15 28 14 15 20 20 6 813 5 705 1 665 −631 1 730 843 1 443 45 1 228 −1 982 −8 093 48 046 −131 −27 815 −10 116 4 224 −4 153 10 055 −5 268 3 420 −6 040 −2 228 −10 116 4 000 −158 −693 1 083 0 1 082 −6 753 −1 439 6 809 6 140 1 193 −397 1 755 446 4 521 0 1 954 −2 481 −2 014 35 706 776 −26 631 −1 513 2 532 13 676 24 546 −4 150 844 −1 740 0 −5 046 0 −2 186 −407 2 213 1 306 0 0 926 Effect of currency translations on cash and cash equivalents −707 −4 281 Increase (+)/decrease (–) in funds −2 207 16 145 Cash and cash equivalents at 1 January Cash and cash equivalents at 31 December 54 349 52 142 5 38 204 54 349 The notes on pages 57 to 95 are an integral component of these consolidated financial statements. E_FB_(CS5_Layout) [P].indd 55 E_FB_(CS5_Layout) [P].indd 55 12.03.12 14:06 12.03.12 14:06 56 Consolidated statement of shareholders’ equity 2011 in TCHF Attributable to equity holders of the parent company Other reserves Share capital Treasury shares Premium Currency differences Retained earnings Non-control- ling interest Total share- holders’ equity Balance on 1 January 2011 Other comprehensive income Group profit after taxes 340 −3 543 58 158 −23 220 180 788 −309 Comprehensive income after taxes 0 0 0 −309 Distribution out of reserves from capital contributions Transactions in treasury shares Share-based payments Purchase of non-controlling interest in Group companies −6 753 457 39 413 39 413 −67 1 730 0 92 −133 −41 212 523 −217 39 280 39 063 −6 753 390 1 730 1 082 1 082 Balance on 31 December 2011 340 −3 086 51 405 −23 529 221 864 1 041 248 035 2010 in TCHF Attributable to equity holders of the parent company Other reserves Share capital Treasury shares Premium Currency differences Retained earnings Non-control- ling interest Total share- holders’ equity Balance on 1 January 2010 339 −6 188 56 853 −13 350 162 245 Other comprehensive income after taxes Group profit after taxes Comprehensive income after taxes Capital increase from exercise of options 0 1 Transactions in treasury shares Share-based payments −9 870 0 0 −9 870 1 305 2 645 17 780 17 780 −839 1 602 0 0 199 899 −9 870 17 780 7 910 1 306 1 806 1 602 Balance on 31 December 2010 340 −3 543 58 158 −23 220 180 788 0 212 523 The notes on pages 57 to 95 are an integral component of these consolidated financial statements. E_FB_(CS5_Layout) [P].indd 56 E_FB_(CS5_Layout) [P].indd 56 12.03.12 14:06 12.03.12 14:06 57 Financial Report 48 Consolidated Financial Statements 97 Financial Statements of Komax Holding AG 106 Corporate Structure Notes to the consolidated financial statements General information 1 The Komax Group is active in the manufacture of machines and as at 31 December 2011 employed 1 140 people worldwide (2010: 1 023 employees). The parent company, Komax Holding AG, is domiciled in Dierikon, Canton Lucerne (Switzerland). The Komax Group’s business activities are focused on the devel- opment, production and sale of high-quality capital goods for precision engineering, electronics and infor- mation technology in the areas of wire-processing and automated production and assembly. The focus here is on highly automated production systems for the automotive, household appliances, electronics, telecom- munication, solar energy and medical technology sectors. The Komax Group sells to the world market. Komax has a network of 16 operating subsidiaries and around 40 independent agencies to ensure on-the- spot sales and service support. The present consolidated financial statements were adopted by the Board of Directors of Komax Holding AG on 6 March 2012 and released for publication. Their approval by the Annual General Meeting, scheduled for 3 May 2012, is pending. Summary of significant accounting policies 2 The significant recognition and measurement policies used in compiling the consolidated financial state- ments are presented in the paragraphs below. Unless otherwise stated, the methods described are always applied to the periods reviewed. Accounting policies 2.1 The consolidated financial statements of the Komax Group are based on the individual financial statements of the Group companies, compiled in accordance with uniform standards, as at 31 December 2011. The Group’s accounting is based on historical purchase or production cost. Exceptions to this rule relate to the marking to market of financial assets available for sale, and the valuation of financial assets and liabilities at agreed fair value with effect on the Income Statement (including derivative financial instruments). The con- solidated financial statements are structured in accordance with the International Financial Reporting Standards (IFRS) published by the International Accounting Standards Board (IASB) and comply with Swiss law and the Listing Rules of the SIX Swiss Exchange. 2.1.1 New standards and interpretations and amendments to published standards adopted by the Group Komax adopted the following new standards and amendments to existing standards in accordance with the requirements for the financial year commencing 1 January 2011. – IAS 1, “Presentation of Financial Statements” (applicable from 1 January 2011). The amendment clarifies the disclosure requirement in the statement of shareholders’ equity with respect to other income. This amendment has already been applied by Komax and therefore has no impact on the presentation of the consolidated financial statements. – IAS 24, “Related Party Disclosures” (applicable from 1 January 2011). This standard replaces the previous IAS 24, which came into force in 2003, and simplifies the definition of related party. However, the amend- ments have only affected the disclosures in the Notes to the financial statements. – IAS 34, “Interim Financial Reporting” (applicable from 1 January 2011). The amendment attaches more importance to the reporting of significant changes and transactions that have taken place since publication of the last full-year financial statements. The new provisions were taken into account by Komax accordingly in the 2011 half-year financial statements. E_FB_(CS5_Layout) [P].indd 57 E_FB_(CS5_Layout) [P].indd 57 12.03.12 14:06 12.03.12 14:06 58 – IFRS 3, “Business Combinations” (applicable from 1 July 2010). The changes to the accounting standard relate to the valuation of non-controlling interests in acquired companies, conditional purchase price payments and transactions with share-based payments. The changes currently have no impact on the consolidated financial statements of Komax, but will be applied accordingly to future business combina- tions. The following new standards and supplements to existing standards and interpretations, which enter into force in financial years beginning either on or after 1 January 2011, currently have no repercussions for the consolidated financial statements of the Komax Group: – IAS 32, “Financial Instruments: Presentation” (applicable from 1 February 2010). classification of rights issues. – IFRIC 13, “Customer Loyalty Programmes” (applicable from 1 January 2011). – IFRIC 14, “Prepayments of a Minimum Funding Requirement” (applicable from 1 January 2011). – IFRIC 19, “Extinguishing Financial Liabilities with Equity Instruments” (applicable from 1 July 2010). 2.1.2 New standards and interpretations and amendments to published standards that are not yet obligatory and are not being applied by the Group at an early stage – IAS 1, “Presentation of Financial Statements” (applicable from 1 July 2012). The amendment relates to the disclosure of the statement of comprehensive income. No material changes are anticipated for the consoli- dated financial statements of Komax. – IFRS 7, “Financial Instruments: Disclosures” (applicable from 1 July 2011). The adjustment clarifies the disclosure obligations for any transfers of financial assets. This change has no impact on Komax at the cur- rent time. – IFRS 9, “Financial Instruments” (applicable from 1 January 2015). This standard introduces new require- ments in relation to the classification and measurement of financial instruments. The impact on the financial statements of the Komax Group cannot yet be fully ascertained; from the current standpoint, however, no material changes or influences are anticipated. – IFRS 10, “Consolidated Financial Statements” (applicable from 1 January 2013). The standard replaces the previous standard IAS 27, “Consolidated and Separate Financial Statements” as well as the interpreta- tion SIC 12, “Consolidation – Special Purpose Entities”, and introduces changes in the assessment of how subsidiary companies are controlled. This may have an impact on a company’s scope of consolidation. No material changes are expected for the consolidated financial statements of Komax. – IFRS 11, “Joint Arrangements” (applicable from 1 January 2013). The new standard replaces the following guidelines that have hitherto applied for questions of accounting for joint ventures: IAS 31, “Interests in Joint Ventures” and SIC 13, “Jointly Controlled Entities – Non-Monetary Contributions by Venturers”. It sets out the conditions under which an investor is deemed to control a joint venture and must add it to the scope of consolidation, as well as what information must be disclosed. No material changes are expected for the consolidated financial statements of Komax. – IFRS 12, “Disclosure of Interests in Other Entities” (applicable from 1 January 2013). The standard sets out the information that must be disclosed in order to assess the existence of an interest in other entities as well as the associated risks and repercussions for a company’s asset, financing and income situation. Above all, this is likely to lead to additional disclosures or to amendments to the presentation of the consoli- dated financial statements. – IFRS 13, “Fair Value Measurement” (applicable from 1 January 2013). The standard defines what is meant by fair value, how market values should be measured, and what information should be reported. It is applied when another IFRS considers that a fair value measurement is required. From today’s perspective, no material changes or impact on the consolidated financial statements of Komax are expected. E_FB_(CS5_Layout) [P].indd 58 E_FB_(CS5_Layout) [P].indd 58 12.03.12 14:06 12.03.12 14:06 59 Financial Report 48 Consolidated Financial Statements 97 Financial Statements of Komax Holding AG 106 Corporate Structure – IAS 19, “Employee Benefits” (applicable from 1 January 2013). In this revised standard, the corridor ap- proach (i.e. the immediate recognition of gains or losses in earnings) is no longer permissible: instead, the actuarial gains or losses have to be recognized at the point they arise in other comprehensive income. The annual costs of defined benefit plans now include the net interest expense or income as per the net position of the plan while taking into account the discount rate for defined benefit obligations. Furthermore, both the disclosure regulations and the definition of benefits arising from the termination of employment contracts have been adjusted. As a result of the revised standard, the Komax Group expects greater volatility in pen- sion plan assets and employee benefit liabilities, as well as in consolidated shareholders’ equity. Scope of consolidation 2.2 2.2.1 Subsidiaries The consolidated financial statements incorporate the individual financial statements of Komax Holding AG, Dierikon, and its subsidiaries. The individual consolidated subsidiaries are listed on pages 106 and 107. Subsidiaries are fully consolidated if Komax Holding AG exercises control over their financial and business policies. As a rule, this is the case if Komax Holding AG directly or indirectly holds over 50% of the subsidi- ary’s voting capital. Subsidiaries are included in the consolidated financial statements (fully consolidated) from the date when the Group assumes control. They are deconsolidated from the date when control ends. Acquired subsidiaries are accounted for according to the acquisition method. Acquisition costs are equal to the fair value of the assets assumed, equity instruments issued and liabilities incurred or assumed at the date of exchange. Costs directly assignable to acquisitions will be directly booked to the income statement. Assets, liabilities and contingent liabilities identified during a merger are recognized at fair value on first con- solidation, regardless of the extent of minority interests. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of ac- quisition is less than the fair value of the net assets of the subsidiary acquired (negative goodwill), the differ- ence is recognized directly in the income statement. Intragroup transactions, balances and unrealized gains and losses from transactions between Group com- panies are eliminated. 2.2.2 Changes in the scope of consolidation Komax has signed a joint venture agreement with Yingkou Jinchen Machinery Co. Ltd., Yingkou City (Liaon- ing Province, China), as a result of which it has acquired a 51% of the share capital of CNY 16.0 million in Komax Jinchen Solar Equipment (Yingkou) Co. Ltd. The formation originated through a cash contribution from both parties. The Komax share amounted to CHF 1.1 million. The new subsidiary commenced its op- erating activity in the first half of 2011. The above-mentioned formation aside, there were no changes in the scope of consolidation either in the 2011 reporting year or in the previous year period. 2.2.3 Transactions with non-controlling interests Komax treats transactions with non-controlling interests as equity capital transactions with the owners. When non-controlling interests are acquired, the difference between the equivalent value paid per share and the corresponding acquired interest in the carrying value of the net assets of the subsidiary company is rec- ognized in shareholders’ equity. Any profit from the sale of non-controlling interests is likewise booked under shareholders’ equity. E_FB_(CS5_Layout) [P].indd 59 E_FB_(CS5_Layout) [P].indd 59 12.03.12 14:06 12.03.12 14:06 60 2.2.4 Shares in joint ventures and associates Ownership interests of between 20% and 50% and joint ventures over which Komax Holding AG exercises significant influence are accounted for according to the equity method and initially recognized at acquisition cost. Cumulative changes in the value of such holdings after acquisition are reported in the income state- ment and charged against the carrying value of the holding. If a cumulative loss equals or exceeds the value of the Group’s interest in an associate, no further losses are recorded unless the Group has assumed obli- gations for the associate or made payments on its behalf. Unrealized profits from transactions between Group companies and associates are eliminated in proportion to the Group’s interest in the affiliate. Interests of less than 20% are treated as held for trading and measured at fair value. They are reported within “Securities”. In the first half of 2011, Komax acquired 30% of SLE quality engineering GmbH & Co. KG and 30% of SLE quality engineering Verwaltungs GmbH for a combined total of CHF 2.2 million. Further details on the asso- ciated companies are provided on page 81. No investments in associated companies were held in the cor- responding prior year period. Komax held no investments below 20% and no interests in joint ventures at either 31 December 2011 or 31 December 2010. Segment reporting 2.3 Komax’s reportable segments are based on the Group’s strategic business areas, in which products using different technologies are manufactured and sold on the basis of independent marketing strategies. The internal organizational structure is fully geared towards the individual business areas, each of which comes under the responsibility of a separate head. The Executive Committee of the Komax Group is designated as the chief operating decision-maker. The information on the individual segments on a regular basis, enabling it to assess Board receives financial their profitability and decide the operational allocation of resources to the various areas. The financial data of the operating segments is established according to the same accounting principles set out here. Transfer prices between the operating segments are set on an “arm’s length” basis. The Executive Committee assesses the profitability of the segments on the basis of their earnings before interest and taxes (EBIT). Information on the assets and liabilities of the individual segments is not reported to the chief operating decision-maker, which is why such information is also not disclosed in external reporting. In accordance with internal reporting to the chief operating decision-maker, the Group has been disclosing information for its three business segments of Wire, Solar and Medtech from the 2009 financial year on- wards. The Wire segment essentially comprises the development, production, distribution and maintenance of wire processing machines and systems used primarily for wire production in the automotive and electron- ics industries. The Solar segment develops and produces machinery and customer-specific process solu- tions for the manufacturing of photovoltaic modules. The Medtech segment includes the design and production of assembly systems for the pharmaceutical industry (Medtech) as well as the manufacturing of assembly lines for inkjet cartridges (Inkjet). The development and manufacturing of systems for the assem- bly of mechanical and electronic components in the automotive and electronics sector (Mechanical and Electronic Systems Assembly) is also assigned to this segment. E_FB_(CS5_Layout) [P].indd 60 E_FB_(CS5_Layout) [P].indd 60 12.03.12 14:06 12.03.12 14:06 61 Financial Report 48 Consolidated Financial Statements 97 Financial Statements of Komax Holding AG 106 Corporate Structure Currency conversion 2.4 2.4.1 Functional currency and reporting currency Items included in the financial statements of each entity are measured using the currency that best reflects the economic substance of the underlying events and circumstances relevant to that entity (the functional currency). The consolidated financial statements are presented in Swiss francs, which is the functional cur- rency of the parent company, Komax Holding AG. 2.4.2 Transactions and balances Foreign currency transactions are translated into the functional currency at the rate prevailing on the date of the transaction. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognized in the income statement, except when taken to shareholders’ equity as a qualifying cash flow hedge. 2.4.3 Group companies The earnings and balance sheet figures of foreign business units with a functional currency other than the Swiss franc are translated to Swiss francs as follows: a) Assets and liabilities are translated at the exchange rate on the balance sheet date for each such date. b) Revenues and expenses are translated at the weighted average exchange rate for each income statement. c) All exchange rate gains and losses are reported on a separate line within the other reserves under shareholders’ equity. Exchange rate differences arising from the translation of net investments in foreign business units are rec- ognized under comprehensive income. When a foreign company is sold, these exchange rate differences are reported in income as part of the gain or loss from the sale. Goodwill and fair value adjustments occurring during the acquisition of a foreign company are treated as assets and liabilities of the unit and translated at the exchange rate on the balance sheet date. The most important year-end and average exchange rates were as follows: Currency USD EUR BRL CNY MYR Year-end rate 31.12.2011 Average rate 2011 Year-end rate 31.12.2010 Average rate 2010 0.950 1.230 0.511 0.151 0.300 0.900 1.250 0.545 0.139 0.295 0.950 1.260 0.572 0.144 0.307 1.060 1.420 0.614 0.159 0.332 E_FB_(CS5_Layout) [P].indd 61 E_FB_(CS5_Layout) [P].indd 61 12.03.12 14:06 12.03.12 14:06 62 Property, plant and equipment 2.5 Property, plant and equipment are accounted for at historical acquisition or production cost less accumu- lated depreciation. Depreciation is linear over the expected service lifetime. The specific depreciation peri- ods for various asset categories are: Asset category Machinery Tools Measuring, testing and controlling devices Operating installations Warehouse installations Vehicles Office furnishings and office machines Information technology Factory buildings Office buildings Land Years 7–10 7 5 10 10–14 5–8 5–10 3–5 33 40 no depreciation Maintenance, repair and minor renovation costs are charged directly to the income statement as expenses when incurred. Renovation work that increases the value and extends the service life of a tangible asset is capitalized if it is likely to generate future economic benefits for the Group, and the costs associated with the asset value can be reliably measured. Property, plant and equipment which have been eliminated from the business or sold are cleared from the property, plant and equipment account at their acquisition cost and with the associated accumulated depreci- ation. Any profits or losses resulting from the disposal of property, plant and equipment are recognized in the income statement. Financing costs for property, plant and equipment under construction are capitalized. Intangible assets 2.6 2.6.1 Goodwill Goodwill represents the excess of the cost of acquisition of a company over the fair value of the Group’s share of the net assets of the acquired company at the date of acquisition. Goodwill created through acqui- sition of a company is reported under intangible assets. Goodwill carried on the balance sheet is subjected to a semiannual impairment test and measured at the original acquisition cost less cumulative impairments. Impairments may not be reversed. For purposes of the impairment test, goodwill is broken down across cash-generating units (CGUs). The value is distributed over those CGUs or groups of CGUs that are expected to benefit from the merger that gave rise to the goodwill. 2.6.2 Patents Patents are recognized at historical acquisition cost less cumulative amortization. 2.6.3 Software Purchased software licenses are capitalized at acquisition or production cost plus costs incurred in ready- ing them for use. The total acquisition cost is amortized on a linear basis over three to five years. Costs as- sociated with the development or maintenance of software are recorded as expenses at the time they are incurred. E_FB_(CS5_Layout) [P].indd 62 E_FB_(CS5_Layout) [P].indd 62 12.03.12 14:06 12.03.12 14:06 63 Financial Report 48 Consolidated Financial Statements 97 Financial Statements of Komax Holding AG 106 Corporate Structure 2.6.4 Research and development expenditure Research and development costs are capitalized and written off on a straight-line basis over their useful life, provided the criteria for capitalization are met. No such expenses were capitalized in the year under review or in the previous year, as the tangible future benefits of these expenses cannot be accurately estimated. 2.6.5 Technology Acquired technology assets are recognized if they bring the company measurable benefits over a period of several years. They are valued at acquisition cost minus linear depreciation. Acquisition costs are written down in a linear way over a period of seven to ten years. Impairment of non-monetary assets 2.7 Assets with an indeterminate service lifetime are not amortized according to plan but subjected to an annual impairment test. Assets subject to planned amortization are also tested for impairment if events or changes in circumstances create a presumption that the carrying value can potentially no longer be realized. An impairment is recorded in the amount by which the asset’s carrying value exceeds its realizable value. The realizable value is the greater of the asset’s fair value less disposal costs and its use value. In determining impairments, assets are grouped according to the smallest separately identifiable cash-generating units. Financial assets 2.8 Financial assets are classified into the following categories: recognized at fair value through profit or loss, loans and receivables, held to maturity and available for sale. The classification depends on the purpose for which a given financial asset was acquired. The financial assets recognized in the consolidated balance sheet are assigned to the following categories: in TCHF Securities Total held for trading Cash and cash equivalents Trade receivables Other receivables Other non-current receivables Total loans and receivables The financial liabilities are allocated to the following categories: in TCHF Derivative financial instruments Total held for trading Financial liabilities (current and non-current) Trade payables Other payables Total at amortized cost 31.12.2011 31.12.2010 33 33 52 142 127 272 9 821 161 189 396 51 51 54 349 99 609 9 789 285 164 032 31.12.2011 31.12.2010 305 305 46 571 20 812 7 346 74 729 342 342 42 374 16 773 6 472 65 619 E_FB_(CS5_Layout) [P].indd 63 E_FB_(CS5_Layout) [P].indd 63 12.03.12 14:06 12.03.12 14:06 64 2.8.1 Financial assets at fair value through profit or loss This category comprises two subcategories: assets classified as “Held for trading” from the beginning, and those classified as “At fair value through profit or loss” from the beginning. A financial asset is assigned to this category if it was purchased in principle with the intent of short-term resale or designated as such by management. Derivatives also belong to this category if they are not qualified as hedges. Assets in this category are reported as current assets if they are either held for trading or are expected to be realized within 12 months of the balance sheet date. The “Securities” item reported separately in the balance sheet of the Komax Group is classified as “Financial assets held for trading”. Securities comprise capital market investments acquired for short-term resale. Securities purchases are recorded at their market price on the date of purchase and subsequently measured at fair value. Realized and unrealized gains and losses from changes in fair value are recognized directly in income. 2.8.2 Loans and receivables Loans and receivables are non-derivative financial assets with fixed or calculable payments that are not listed on an active market. They are regarded as current assets if they mature within 12 months of the bal- ance sheet date. If the period to maturity exceeds 12 months, they are carried as non-current assets. Short- term loans and receivables are reported in the consolidated balance sheet under “Cash and cash equiva- lents”, “Trade receivables” and “Other receivables and accrued income/prepaid expenses”, whereas long-term receivables are reported under “Other long-term receivables”. 2.8.3 Financial investments held to maturity Financial investments held to maturity are non-derivative financial assets with fixed or calculable payments and a fixed maturity that the entity wishes and is able to hold to the maturity date. The Komax Group con- solidated balance sheet does not include any financial assets in this category. 2.8.4 Financial assets available for sale Financial assets available for sale are non-derivative assets that were either assigned to this category or not assigned to any of those described above. They are carried as non-current assets unless management intends to dispose of them within 12 months of the balance sheet date. Komax does not hold any financial assets in this category. Purchases and sales of financial assets are posted at the settlement date, i.e. on the date when the asset is transferred. Financial assets in the “At fair value through profit or loss” category are carried at fair value, both at acquisition and after they are recognized for the first time. Associated transaction costs and gains and losses from financial assets are reported on the income statement for the corresponding period. Loans and receivables are carried at historical purchase price using the effective interest rate method. Fair values of listed investments are based on current offer prices. For assets without an active market, Komax applies suitable valuation measures to determine the fair value. These include reference to recent “arm’s-length” transactions, current market prices of other similar assets, discounted cash flow procedures and option price models based as far as possible on market data and as little as possible on company-spe- cific data. At each balance sheet date, a determination is made as to whether objective indications exist of impairment of a financial asset or group of assets. Any impairments are charged to income in the corresponding period. E_FB_(CS5_Layout) [P].indd 64 E_FB_(CS5_Layout) [P].indd 64 12.03.12 14:06 12.03.12 14:06 65 Financial Report 48 Consolidated Financial Statements 97 Financial Statements of Komax Holding AG 106 Corporate Structure Derivative financial instruments and hedging activities 2.9 Derivative financial instruments are initially measured at fair value as at the date when the contract is concluded. Subsequent measurement is likewise at fair value as at each balance sheet date. The method used to measure gains and losses depends on whether the derivative financial instrument was designated as a hedging instru- ment and, if so, on the type of item hedged. Derivative financial instruments may be designated as: a) hedges of fair value of a balance sheet asset or liability or off-balance-sheet fixed obligation (fair value hedge); b) hedges against risks of payment flow fluctuations associated with a balance sheet asset or liability or an anticipated and highly probable future transaction (cash flow hedge); or c) hedges of a net investment in a foreign business operation (net investment hedge). Since the Komax Group uses derivative financial instruments only to hedge against existing foreign ex- change and interest rate risks, such instruments do not qualify for hedge accounting. Foreign currency sur- pluses are hedged in accordance with financial planning (economic hedges), so that changes in fair value are charged directly to income as realized and unrealized gains or losses for the relevant period. Only stand- ardized instruments (currency forward and option contracts, interest rate and currency swaps) are used for hedging. Financing and hedging instruments are utilized in accordance with uniform rules throughout the Group. Inventories 2.10 Inventories are measured at the lower of purchase or production cost and net sales price. Purchase or pro- duction costs are determined using the weighted average method. Internally produced finished and semi- finished goods are measured at production cost in accordance with the state of completion. Production costs of finished and unfinished products include costs for product design, raw materials, direct personnel costs, other direct costs and overhead costs allocated to production (based on normal operating capacity). Purchase and production costs do not include costs of debt capital since products do not qualify as assets in the sense of IAS 23, “Borrowing Costs”, and any costs of debt capital cannot therefore be directly attrib- uted to products. The net sales price is the estimated proceeds of sale attainable in the normal course of business, less the necessary variable selling costs. Trade receivables 2.11 Trade accounts receivable are recorded at the original billed amount less provisions for bad debt. Bad debt provisions are formed if there are objective indications that not all the Group’s accounts receivable will be settled. Indications that an amount may not be recoverable include signs that the customer may be in seri- ous financial difficulties or if bankruptcy or financial reorganization appears probable. The allowance is stated separately and comprises the difference between the carrying amount of the receivable and the re- coverable amount. The amount of the allowance is charged to the income statement. An impairment loss is posted if the receivable is no longer recoverable. Non-current receivables are discounted to account for current value if the effects are material. 2.12 Manufacturing contracts Manufacturing contracts in the automated assembly and production business units, involving the customer- specific manufacture of systems, are valued according to the percentage-of-completion method (POC). On the balance sheet these are reported either under “Trade receivables” or “Other payables and accrued ex- penses/deferred income”, depending on the degree to which they are underfinanced or overfinanced. The percentage of completion is calculated according to the cost-to-cost method (costs incurred in relation to overall estimated costs of the contract). Anticipated project losses are fully expensed in the income state- ment. Any costs of debt capital are capitalized provided debt capital is raised for the purpose of financing the project and provided its costs can be directly attributed to a manufacturing contract. E_FB_(CS5_Layout) [P].indd 65 E_FB_(CS5_Layout) [P].indd 65 12.03.12 14:06 12.03.12 14:06 66 2.13 Cash and cash equivalents Cash and cash equivalents includes banknotes, sight deposits and other current, highly liquid financial as- sets with an original maturity of no greater than three months. Utilized current account overdrafts are shown on the balance sheet as payables to credit institutions under current financial liabilities. Shareholders’ equity 2.14 Ordinary shares are classified as equity. No preferred shares have been issued to date. Costs directly attributable to the issue of new shares are disclosed in equity as a net deduction from the proceeds. Treasury shares are recognized at the average weighted cost of acquisition, including the transaction costs assignable to them, and offset against equity. When treasury shares are purchased or sold, the considera- tion paid or received will be offset against equity. 2.15 Dividend payment Dividend distribution to the shareholders of Komax Holding AG is recognized as a liability in the consoli- dated financial statements in the period in which the dividend distribution is approved by the company’s shareholders. Trade payables 2.16 Trade payables are valued initially at fair value, which is normally the amount originally invoiced, and subse- quently measured at amortized cost. Financial liabilities 2.17 Financial liabilities are initially recognized at fair value after deducting any transaction costs. In subsequent periods they are measured at historical purchase price. Any differences between the amount paid out and the amount due is reported in income over the duration of the liability. Borrowings are classified as current liabilities unless the Group has an unconditional right to postpone set- tlement of the debt until al least 12 months after the balance sheet date. 2.18 Deferred taxes All the consolidated companies of the Komax Group are independently subject to tax, except for the com- panies in the USA that are affiliated to Komax Holding Corp. (Komax Systems Rockford Inc., Komax Solar Inc. and Komax Corp.). In the case of the other companies, it is not possible to offset the taxable profit of one consolidated company with the loss of another consolidated company. This should be remembered when comparing earnings with the tax burden. Deferred and future tax expenses are calculated on the basis of the comprehensive liability method. This method is based on the tax rates and tax regulations applicable on the balance sheet date or which have in essence been enacted and are expected to apply at the time the deferred tax claim is realized or the de- ferred tax liability is settled. Deferred and future taxes are calculated on the basis of the temporary differ- ences in value between the individual balance sheets and balance sheets for tax purposes. Such differ- ences primarily exist in the case of non-current assets, inventories and some provisions. Deferred tax assets are recognized in the amount corresponding to the probability that the Group companies in question will generate sufficient future taxable income to absorb the relevant positive differences in the tax assets. E_FB_(CS5_Layout) [P].indd 66 E_FB_(CS5_Layout) [P].indd 66 12.03.12 14:06 12.03.12 14:06 67 Financial Report 48 Consolidated Financial Statements 97 Financial Statements of Komax Holding AG 106 Corporate Structure Deferred tax liabilities are provided on temporary differences arising on investments in subsidiaries and as- sociates, except where the timing of the reversal of the temporary difference cannot be determined by the Group and it is consequently probable that the temporary difference will not reverse in the foreseeable future. Payments to employees 2.19 2.19.1 Employee benefits Employee pension and retirement benefits are based on the regulations and prevailing circumstances in those countries in which Komax is represented. In Switzerland, pension and retirement benefits are based on the defined benefit model in conformity with IAS 19, “Employee Benefits”. The consequences of compli- ance with IAS 19 for retirement benefits are detailed in Note 12. In the other countries, pension and retire- ment benefits are provided under defined contribution schemes. The provision for defined benefit plans stated in the balance sheet represents the present value of the defined benefit obligation (DBO) on the balance sheet date less the fair value of plan assets, adjusted for cumulative, non-recognized actuarial gains and losses. The DBO is calculated annually by an independent actuary according to the projected unit credit method. Past service costs are recognized immediately in income, unless the changes in the pension plan depend on the employee remaining with the company for a predefined period (until the vesting period). In such event, the past service costs are amortized on a straight-line basis over the vesting period. Actuarial gains and losses, which are based on experience adjustments and changes in actuarial assump- tions, are recognized in the income statement over the employee’s expected remaining period of service through the corridor approach. In the case of defined-contribution plans, the Group funds public or private retirement plans on the basis of statutory or contractual obligations or voluntary contributions. The Group has no payment obligations be- yond the payment of contributions. Contributions are recognized in personnel expenses as they become due. Prepayments of contributions are recognized as assets to the extent that a right to repayment or a re- duction in future payments exists. 2.19.2 Share-based compensation The Komax Group has initiated a share-based compensation plan involving grants of its own shares by way of a capital increase. The fair value of the employee services received for the options is included in person- nel expenses. The total amount of the expenses to be charged for employee options issued after 7 Novem- locked in is amortized over the vesting period and recognized in expenses. At each ber 2002 and still balance sheet date, the number of options expected to become exercisable and on which the reportable current value is based is estimated. The effects of any potentially relevant changes in initial estimates are taken into account in the income statement and by a corresponding charge to shareholders’ equity during the remaining time to the vesting date. Payments received upon exercise of the options are credited to sub- scribed capital (at par) and to capital reserves after deducting directly attributable transaction costs. 2.19.3 Other payments after termination of employment There are no liabilities for payments to pensioners after termination of employment. 2.19.4 Payments triggered by termination of employment In some countries, in which the Komax Group operates its own companies, there are local regulations for payment triggered by termination of employment. Komax complied with these legal requirements. The cor- responding expenses are booked under personnel expenses. E_FB_(CS5_Layout) [P].indd 67 E_FB_(CS5_Layout) [P].indd 67 12.03.12 14:06 12.03.12 14:06 68 2.19.5 Profit sharing and bonus plans For bonus payments and profit sharing, a liability is recognized based on an appraisal procedure involving Group profit after certain adjustments and the beneficiary’s individual targets. A provision is recorded in the consolidated financial statements in cases where a contractual liability exists. The expense is recognized in income under personnel expense. Provisions 2.20 Provisions are recorded if the Group has a current legal or constructive obligation arising from a past event and it is probable that settling this obligation will impact the asset base, and if the amount of the provision can be reliably estimated. Provisions for warranties are based on past payments, sales revenues in previous years and current con- tracts. Komax normally gives a one-year warranty on machines and systems. The other provisions relate to various obligations and liabilities associated with past events, the perfor- mance of which will in all probability result in an outflow of funds. 2.21 Revenue recognition The Komax Group’s consolidated income statement is compiled using the nature of expense method. Net sales comprise the fair value of considerations received or receivable for the sale of goods and services in the course of ordinary business activities after deducting VAT, returns, discounts and price reductions, and eliminating intragroup sales. Revenues are recognized as described below. 2.21.1 Sale of goods Revenue from the sale of goods is recognized when risk and rewards of ownership have been transferred to the buyer. All expenses connected with sales are recognized on an accrual basis. 2.21.2 Sale of services Revenue from the sale of services is recognized in accordance with progress on the service according to the ratio of completed to still outstanding service to be performed during the financial year in which the ser- vices are rendered. 2.21.3 Revenue recognition using the POC method In the automated assembly and production field, revenue is recognized according to the POC method. The Komax Group calculates the percentage of completion according to the ratio of production costs already incurred to forecast total production costs. 2.21.4 Interest and dividend income Interest income is accrued using the effective interest rate method. Dividend income is recognized at the date when the right to receive the payment originates. Leases 2.22 A lease under which a significant portion of the risks and rewards of ownership remain with the lessor is re- garded as an operating lease. Payments under operating leases (less any incentives provided by the lessor) are charged to income on a linear basis over the duration of the lease agreement. The Komax Group does not assume liabilities from financial lease contracts. Contractual relationships in which Komax acts as lessor are reported as financial leases if all risks and re- wards associated with ownership are essentially transferred to the lessee. At the beginning of the lease, lease payments are recognized in the balance sheet in the amount of the net investment value arising from the lease. Revenue is recorded in the same way as the direct sale of goods. Financial income is spread over the term of the lease. E_FB_(CS5_Layout) [P].indd 68 E_FB_(CS5_Layout) [P].indd 68 12.03.12 14:06 12.03.12 14:06 69 Financial Report 48 Consolidated Financial Statements 97 Financial Statements of Komax Holding AG 106 Corporate Structure Assets that are the subject of operating leases are reported in the balance sheet in accordance with their properties and are written down at the normal rates for similar assets. Lease income is recognized in the in- come statement on a linear basis over the term of the lease. Komax did not possess any significant assets that were the subject of operating leases in either the 2011 reporting year or the previous year. 2.23 Government grants Government grants are recognized if it is likely that the payments will be received and Komax can fulfil the conditions attached to such subsidies. These are recognized in “Other operating income”, regardless of when payment is received and on a pro-rata basis in the period in which the associated costs are incurred, and charged to the income statement as an expense. Grants relating to an asset are deducted from the carrying amount. 2.24 Restatement of previous years’ figures To ensure that figures are comparable, prior-year figures are restated if it becomes necessary when new provisions of the International Financial Reporting Standards (IFRS) are applied or existing standards are amended, or when changes are made in the presentation and structure of the financial statements during the reporting period. In the 2011 financial year, no changes were made that had a significant impact on the amounts stated in the balance sheet, income statement or cash flow statement of the Komax Group. E_FB_(CS5_Layout) [P].indd 69 E_FB_(CS5_Layout) [P].indd 69 12.03.12 14:06 12.03.12 14:06 70 Financial risk management 3 The Komax Group is exposed to various financial risks, for example currency, credit, liquidity and interest rate risks, through its business activities. The Group’s overall risk management strategy is focused on the unpredictability of developments in the financial markets and is intended to minimize the potential negative impact on the Group’s financial position. The Group uses derivative financial instruments to protect itself against interest rate, currency and credit risks. The risks are monitored and reported. Risk management is conducted by the finance department of Komax Holding AG in conformity with the guidelines issued by the Board of Directors. These guidelines set out procedures for the use of derivatives as well as dealing with foreign-currency, interest rate and credit risks. The guidelines are binding for all subsidiaries of the Komax Group. In addition, Komax conducts extensive annual analyses of financial risks as part of its risk management. The principal financial risks form an integral part of the internal control system (ICS) and are therefore subject to systematic, periodic review. Further, in consultation with a bank, the Komax Group prepares an extensive report each quarter on currency, interest, country and customer risks, using the value-at-risk method. Due to the increased volatility in foreign currencies, the Group continually improved and extended its risk management, particularly in relation to foreign exchange and country risks. Currency risk 3.1 The Komax Group operates internationally and is therefore exposed to a variety of foreign-exchange risks. Foreign currency risks arise from future cash flows, assets and liabilities recognized in the balance sheet and investment in foreign companies. Foreign currency items are assessed centrally by Group Treasury as part of the rolling financial planning pro- cess. Corporate guidelines specify that at least one third of foreign currency profits must be hedged through forward rate contracts. Up to 100% of the amount must be hedged if the current exchange rate is below the budgeted rate and the exchange rate for the foreign currency is expected to drop further relative to the functional currency. Komax is mainly exposed to currency risks relating to the US dollar and the euro. Assuming that the euro had been 10% weaker against the Swiss franc on 31 December 2011 and that all other parameters had been largely unchanged, the EBIT margin would have been 0.2 percentage points (2010: 0.2 percentage points) lower. Conversely, if this exchange rate had been 10% higher, the margin would have risen by the same amount. Assuming that the US dollar had been 10% weaker against the Swiss franc on 31 December 2011 and that all other parameters had been largely unchanged, the EBIT margin would have been 1.0 per- centage points (2010: 1.2 percentage points) lower. Conversely, if this exchange rate had been 10% higher, the margin would have risen by the same amount. The main reasons for these changes would have been currency gains and losses on receivables, payables and other current receivables and liabilities. The Komax Group generated around 20% of sales in euros. The largest customer grouping in the eurozone area is based in Germany, followed at some distance by Komax customers in France, Italy and Austria, re- spectively. Sales in the other eurozone countries are relatively insignificant. As a result of the ongoing debt crisis, the Komax Group has further tightened its credit policy and adjusted its processes accordingly. The Group is not currently exposed to any exceptional default risks as a result of the difficult ongoing situation in certain eurozone countries. Credit risk 3.2 instruments and receiv- Credit risks may exist with regard to bank account balances, derivative financial ables from customers. Banks must have a minimum credit rating of “A” before the Komax Group will enter into a material business relationship with them. Moreover, all risks pertaining to cash and cash equivalents are further minimized by using a variety of banks rather than one single bank. E_FB_(CS5_Layout) [P].indd 70 E_FB_(CS5_Layout) [P].indd 70 12.03.12 14:06 12.03.12 14:06 71 Financial Report 48 Consolidated Financial Statements 97 Financial Statements of Komax Holding AG 106 Corporate Structure There is no significant concentration of potential credit risks within the Group. There are binding policies to ensure that sales to customers are made only if the customer has shown reasonable payment performance in the past. Moreover, outstanding receivables are monitored at the corporate level on a monthly basis. Contracts for derivative financial instruments and financial transactions are only entered into with banks of the highest financial solidity. The Group also has a business policy that limits credit risk associated with indi- vidual financial institutions through use of multiple banks. Management does not anticipate any significant losses on the receivables outstanding as at 31 December 2011 that have not already been taken into account in the value adjustments as per Note 7. The following table shows the receivables and credit limits of the main counterparties as of the reporting date: in TCHF Counterparty Deutsche Bank1) Credit Suisse1) UBS1) Customer A Customer B Customer C Rating Credit limit Amount held Credit limit Amount held 31.12.2011 31.12.2010 A+ A A Group 2 Group 2 Group 2 12 357 20 000 20 000 n/a n/a n/a 11 621 10 333 10 321 5 326 4 973 3 006 12 437 20 000 20 000 n/a n/a n/a 6 215 12 143 12 261 2 391 2 225 1 644 1) Creditor as part of the CHF 100.0 million syndicated loan agreement under the stewardship of Credit Suisse (participating banks: Basler Kantonalbank, Credit Suisse, Deutsche Bank, Luzerner Kantonalbank, UBS, and Zürcher Kantonalbank). Komax assigns its customers to the following groups: Group 1: New customer (business relationship established within the past 12 months) Group 2: Existing customer (business relationship established more than 12 months ago) with no history of overdue payments Group 3: Existing customer (business relationship established more than 12 months ago) with some over- due payments in the past but no defaults Capital risk 3.3 In the management of its capital, the Komax Group pays special attention to ensuring that the Group is able to continue to operate, that shareholders receive an appropriate return for their risks and that financial ratios are optimized, taking the cost of capital into account. To achieve these targets, Komax may adjust its dividend payment, issue new shares, or sell assets in order to scale back its debt. Komax monitors its capital structure principally through the gearing factor and net debt. The latter is calcu- lated from the total outstanding interest-bearing debts of the Group, including liabilities from finance leas- ing, minus cash and cash equivalents. The gearing factor is calculated by dividing net debt at the balance sheet date by the operating profit before interest, taxes, depreciation and amortization (EBITDA) over the last 12 months (rolling). This resulted in a net cash position (previous year: net cash) at the end of the liabilities as at reporting year, as cash and cash equivalents and securities exceeded existing financial 31 December 2011. The Group’s financial liabilities are subject to externally regulated capital requirements (covenants). These essentially provided for a maximum gearing factor of 2.5 as at 31 December 2011. In addition, the self-fi- nancing ratio (i.e. the Group’s reported equity plus subordinated loans minus goodwill divided by total as- sets less goodwill) may not fall below 50% at any balance sheet date. The Komax Group has complied with all capital requirements since the contract signing date as well as at 31 December 2011. E_FB_(CS5_Layout) [P].indd 71 E_FB_(CS5_Layout) [P].indd 71 12.03.12 14:06 12.03.12 14:06 72 Liquidity risk 3.4 Prudent liquidity risk management involves maintaining sufficient reserves of cash and cash equivalents and liquid securities as well as financing capacity through an adequate volume of approved lines of credit. The amount of cash required for operations is reviewed annually and monitored on a monthly basis by the finance department. Given the business environment in which Komax operates, it is also essential for the Group to maintain the necessary flexibility in financing by maintaining sufficient unused lines of credit. The table below provides a breakdown of the Komax Group’s primary and derivative financial liabilities by maturity, based on the remaining maturity from the reporting date until the contractually agreed payment date. The table shows carrying amounts as the impact of discounting is negligible. in TCHF 31.12.2011 Financial liabilities (current and non-current)1) Trade payables Other payables Derivative financial instruments 31.12.2010 Financial liabilities (current and non-current)1) Trade payables Other payables Derivative financial instruments 0–30 days 31–60 days 61–90 days 91–120 days 121 days −1 year 1–5 years Total 0 16 163 4 342 0 0 11 190 4 038 0 0 2 658 882 19 0 3 226 543 17 0 1 922 1 072 0 0 719 1 351 0 0 43 947 0 0 589 291 0 0 26 103 168 46 571 0 0 56 0 42 374 1 049 249 149 0 0 249 46 571 20 812 7 346 243 42 374 16 773 6 472 415 1) The cash outflow from future interest payments amounts to CHF 0.777 million for outstanding financial liabilities as at 31 December 2011 and CHF 2.027 million for outstanding financial liabilities as at 31 December 2010. Interest rate risk 3.5 Neither at 31 December 2011 nor at the previous year’s balance sheet date did the Komax Group possess any assets that were subject to any material rate of interest. The Group’s financial risk policy is to finance long-term investments with long-term liabilities, which gives rise to an interest rate risk. Where there is a significant interest rate risk, the related cash flow risks are hedged through interest rate swaps. With respect to the syndicated loan, which as at 31 December 2011 had been utilized to the amount of CHF 44.0 million (31 December 2010: CHF 40.0 million), an interest rate swap with a notional principal amount of CHF 20.0 million was concluded for the entire contract period of around three years which fixes the LIBOR rate at a level of 1.165% p.a. Furthermore, the interest margin is dependent on the level of indebtedness of the Group. As lending amounts are in each case drawn on in tranches with a term of one to three months, the Komax Group is only subject to short-term fluctuations in LIBOR. The overall risk with respect to changes in the market rate of interest is low. Moreover, there was a net cash position of CHF 5.6 million as at 31 December 2011 (31 December 2010: net cash of CHF 12.0 million). For these reasons, no sensitivity analysis of interest rate risk was undertaken. Determination of fair value 3.6 The fair value of financial assets that are traded on an active market is calculated as the number of securi- ties held, multiplied by the closing price on the reporting date. The fair value of financial assets that are not traded on an active market is determined with the aid of a var- iety of valuation methods. E_FB_(CS5_Layout) [P].indd 72 E_FB_(CS5_Layout) [P].indd 72 12.03.12 14:06 12.03.12 14:06 73 Financial Report 48 Consolidated Financial Statements 97 Financial Statements of Komax Holding AG 106 Corporate Structure Key recognition and measurement assumptions Key assumptions and sources of uncertainty in relation to estimates 4 4.1 Preparation of the consolidated financial statements in conformity with IFRS requires the Board of Directors and Group Management to make estimates and assumptions, whereby such estimates and assumptions have an effect on the accounting principles applied and are reflected in the amounts stated under assets, liabilities, income and expenses. Their estimates and assumptions are based on past experience and on various other factors deemed applicable in the current situation. These form the basis for reporting those assets and liabilities that cannot be measured directly from other sources. The actual values may differ from these estimates. Estimates and assumptions are reviewed on at least a quarterly basis. Changes in estimates are required when the circumstances on which the estimates are based have altered, or when new or additional informa- tion is available. These changes are recognized in the reporting period in which the estimate was adjusted. The most important assumptions about future developments and most important sources of uncertainty in relation to estimates that could necessitate significant adjustments to reported assets and liabilities over the coming 12 months are shown below. Recognition of revenue according to POC method 4.2 Automated assembly and production contracts are measured according to the POC method, provided the assessment meets the requirements of IAS 11. Although projects are assessed monthly and in good faith in accordance with comprehensive project management guidelines, subsequent corrections may be required. These corrections are made in the following period and may have a positive or negative impact on revenue in this period. Impairment of non-current assets 4.3 Property, plant and equipment, goodwill and intangible assets are tested for impairment at least twice each year. To determine whether impairment exists, estimates are made of the expected future cash flows arising from use. Actual cash flows may differ from the discounted future cash flows based on these estimates. Factors such as changes in the planned use of property, plant and equipment, restructuring, reorganization and closure of facilities, changes in the market situation, technical deficiencies in relation to machinery and systems, or sub-projected sales of machines, spare parts and systems, may shorten useful life or result in an impairment. Employee benefits 4.4 Employees of the Group in Switzerland are insured under defined benefit retirement schemes in conformity with IAS 19. Calculations of the reported credits and liabilities in relation to these schemes are based on dy- namic actuarial calculations as well as the expected return on the assets of the retirement plans. The pre- sent value of the liabilities relating to the defined benefit schemes is particularly dependent on assumptions such as the discount rate used to calculate the present value of future pension liabilities, future rises in salary and increases in other compensation paid to employees. The Group’s independent actuaries addi- tionally use statistical data such as the likelihood of departure and mortality rate of insured individuals. The actuaries’ assumptions may differ substantially from actual events due to changes in market conditions and the economic environment, higher or lower rates of departure, longer or shorter life expectancy of insured individuals as well as other estimated factors. These differences may have an influence on the assets and liabilities stated in relation to employee benefits in future reporting periods. E_FB_(CS5_Layout) [P].indd 73 E_FB_(CS5_Layout) [P].indd 73 12.03.12 14:06 12.03.12 14:06 74 Provisions 4.5 In relation to machines and systems already delivered, Komax calculates the necessary warranty provisions on the balance sheet date on the basis of analysis and estimates in conformity with IAS 37. The actual costs may differ from the provisions stated. Any differences may affect the provision carried for warranty events in future reporting periods and therefore the reported result for the period. Current and deferred income taxes 4.6 In determining the assets and liabilities from current and deferred income taxes, estimates must be made on the basis of existing tax laws and ordinances. Numerous internal and external factors may have favour- able and unfavourable effects on the assets and liabilities from income taxes. These factors include changes in tax laws and ordinances, as well as the way they are interpreted, in addition to changes in tax rates and the total amount of taxable income for the particular location. Any changes may affect the assets and liabil- ities from current and deferred income taxes carried in future reporting periods. Cash and cash equivalents 5 The cash and cash equivalents amounting to CHF 52.1 million (2010: CHF 54.3 million) include demand deposits and call money. The composition of the call money and the applicable interest rates can be found in the table below. Currency EUR EUR SGD Total 6 Securities in TCHF Shares Total Interest rate 31.12.2011 TCHF Interest rate 31.12.2010 TCHF 1.20% 0.70% 0.05% 65 1 169 108 1 342 1.20% 0.50% 1.70% 838 1 386 109 2 333 31.12.2011 31.12.2010 33 33 51 51 The Komax Group uses forex forward and option contracts as well as interest rate and currency swaps to hedge currency and interest rate risks on cash and cash equivalents. As at 31 December 2011, an interest rate swap with a notional principal amount of CHF 20.0 million and a negative fair value of CHF 0.31 million (31 December 2010: CHF 20.0 milion with a negative fair value of CHF 0.34 million) was outstanding. The following volumes were transacted in the corresponding financial year: 2011: EUR 0.8 million, USD 12.8 million 2010: EUR 4.8 million, USD 14.5 million Negative fair values are included in the “Other payables and accrued expenses/deferred income” item, positive fair values under “Other receivables and accrued income/prepaid expenses”. E_FB_(CS5_Layout) [P].indd 74 E_FB_(CS5_Layout) [P].indd 74 12.03.12 14:06 12.03.12 14:06 75 Financial Report 48 Consolidated Financial Statements 97 Financial Statements of Komax Holding AG 106 Corporate Structure 7 Trade receivables in TCHF Trade receivables less provision for impairment Accruals for systems1) less prepayments for systems Receivables arising from POC 31.12.2011 31.12.2010 96 762 −4 061 130 243 −95 672 34 571 63 937 −1 537 134 115 −96 906 37 209 Total 127 272 99 609 1) For manufacturing contracts of systems, the inventory includes all costs associated with the systems as well as the production costs. The order costs comprise all costs attributable to the contract from the date the order is received until the balance sheet date. The order proceeds per manufacturing contract are recorded as at 31 December according to the POC. The carrying value of trade receivables corresponds to the fair value of the goods and services in question. The total amount of costs incurred and profits disclosed (less disclosed losses) on manufacturing contracts amounted to CHF 170.7 million as at 31 December 2011 (2010: CHF 168.0 million). Overfinanced projects totalling CHF 40.5 million (2010: CHF 33.9 million) are included in the “Other payables and accrued ex- penses/deferred income” item (see Note 18), while underfinanced projects in the amount of CHF 130.2 mil- lion (2010: CHF 134.1 million) are stated under “Trade receivables”. Net sales for 2011 include sales on manufacturing contracts which remained outstanding on the balance sheet date and amounted to CHF 113.0 mil- lion (2010: CHF 114.7 million), equivalent to 30.5% of net sales for 2011 (2010: 33.8%). CHF 90.6 million (2010: CHF 100.5 million) of this represents costs incurred and CHF 22.4 million (2010: CHF 14.1 million) recognized contribution margins. Overdue trade receivables that had not been written down amounted to CHF 34.1 million on 31 December 2011 (31 December 2010: CHF 22.2 million). Their maturity structure is set out in the following table: in TCHF as at 31.12.2011 as at 31.12.2010 0–30 10 031 8 136 31–60 6 565 3 547 61–90 8 357 5 557 91–120 2 390 1 453 >120 6 748 3 556 Total 34 091 22 249 Number of days No collateral has been received as security for overdue trade receivables for which no valuation allowance has been made. Valuation allowances totalling CHF 4.1 million were recognized for trade receivables as at 31 December 2011 (31 December 2010: CHF 1.5 million). The table shows the change versus the previous year: in TCHF Total 1 January Allowances for doubtful accounts Depreciation of irrecoverable receivables Unused amounts reversed Currency differences Total 31 December 2011 1 537 2 645 −114 −108 101 4 061 2010 676 1 392 −118 −258 −155 1 537 E_FB_(CS5_Layout) [P].indd 75 E_FB_(CS5_Layout) [P].indd 75 12.03.12 14:06 12.03.12 14:06 76 Trade receivables are classified into the three main currencies used by the Group, with a fourth group for all other currencies. in TCHF CHF EUR USD Other currencies 31.12.2011 31.12.2010 34 102 12 140 33 754 16 766 16 611 11 987 25 462 9 877 Total trade receivables (gross) 96 762 63 937 8 Other receivables and accrued income/prepaid expenses in TCHF Other receivables Prepayments to suppliers Accruals Total 31.12.2011 31.12.2010 6 850 2 971 4 101 4 900 4 889 2 618 13 922 12 407 Other receivables mainly comprise tax credits due from state authorities (tax authorities). The accruals in- clude amongst others prepayments for insurance benefits and credits for maintenance and servicing work not yet carried out. 9 Inventories in TCHF Manufacturing components and spare parts Semi-finished goods/work in process Finished goods Total The inventories are not pledged to third parties. The change in write-downs of inventories is as follows: in TCHF Total 1 January Write-downs charged to income statement Used to write off obsolete inventories Unused amounts reversed Currency differences Total 31 December 31.12.2011 31.12.2010 24 332 8 433 22 860 21 332 5 557 18 231 55 625 45 120 2011 7 428 5 813 −2 247 −1 013 −78 2010 7 784 2 320 −1 593 −719 −364 9 903 7 428 The expenditure recognized in the income statement in connection with the value adjustments of invento- ries amounts to CHF 4.8 million (2010: CHF 1.6 million). E_FB_(CS5_Layout) [P].indd 76 E_FB_(CS5_Layout) [P].indd 76 12.03.12 14:06 12.03.12 14:06 77 Financial Report 48 Consolidated Financial Statements 97 Financial Statements of Komax Holding AG 106 Corporate Structure 10 10.1 Deferred taxes Statement of carrying values in TCHF 31.12.2011 31.12.2010 Property, plant and equipment/intangible assets Trade receivables and inventories1) Provisions Tax-loss carryforwards Tax credits Other items Total deferred tax assets (gross) 620 4 877 647 1 359 2 300 924 10 727 358 2 219 391 2 289 0 1 003 6 260 Offset against deferred tax liabilities −3 853 −2 434 Balance sheet deferred tax assets Property, plant and equipment/intangible assets Trade receivables and inventories Provisions Other items Total deferred tax liabilities (gross) 6 874 4 605 2 128 659 443 7 835 3 826 4 235 1 289 715 736 6 975 Offset against deferred tax assets −3 853 −2 434 Balance sheet deferred tax liabilities Net deferred tax assets (+)/tax liabilities (–) 1) Including unrealized intragroup profits. 10.2 Statement of changes in TCHF Net total as at 1 January Deferred tax income (+)/tax expense (–) Currency translation differences Net total as at 31 December 3 982 2 892 2011 −715 3 513 94 2 892 4 541 −715 2010 3 096 −3 087 −724 −715 The total of the temporary differences relating to investments in affiliated companies for which no deferred taxes have been reported came to CHF 18.3 million as at 31 December 2011 (2010: CHF 18.3 million). All changes in deferred taxes are included in the income statement for the corresponding periods. As at 31 De- cember 2011 deferred tax assets of CHF 3.0 million (2010: CHF 1.6 million) in connection with tax-loss carryforwards of CHF 9.3 million (2010: CHF 4.8 million) were not capitalized. Thereof CHF 0.9 million will expire between 1–5 years and CHF 8.4 million in more than 5 years. E_FB_(CS5_Layout) [P].indd 77 E_FB_(CS5_Layout) [P].indd 77 12.03.12 14:06 12.03.12 14:06 78 11 Other non-current receivables in TCHF 31.12.2011 31.12.2010 Present value of minimum lease payments Rent deposit and other non-current receivables Total 54 107 161 162 123 285 Komax has lease agreements with various customers for the financing of machine purchases. The leasing period is normally between 36 and 60 months. The agreements are subject to termination, with the lessee being required to bear the cost of termination. All agreements envisage the purchase of the leased asset at the end of the term, either as a fixed agreement or in the form of a purchase option. It is the duty of the les- see to ensure that the leased asset is properly insured. Non-current receivables from financing leases are recognized in the “Other non-current receivables” item, current receivables from financing leases in the “Trade receivables” item. Details can be found in the table below: in TCHF 31.12.2011 31.12.2010 Gross investment in the lease less unguaranteed residual value in favour of lessor less unearned finance income Present value of minimum lease payments in TCHF Gross investment in the lease Present value of minimum lease payments in TCHF Gross investment in the lease Present value of minimum lease payments 180 0 −18 162 0–1 year 1–5 years 124 108 56 54 0–1 year 1–5 years 1 063 1 024 181 162 1 244 0 −58 1 186 31.12.2011 Total 180 162 31.12.2010 Total 1 244 1 186 As at 31 December 2011, just as on the previous year’s balance sheet date, no value adjustments needed to be recognized for irrecoverable minimum lease payments. E_FB_(CS5_Layout) [P].indd 78 E_FB_(CS5_Layout) [P].indd 78 12.03.12 14:06 12.03.12 14:06 Financial Report 48 Consolidated Financial Statements 97 Financial Statements of Komax Holding AG 106 Corporate Structure 79 2010 7 943 3 432 269 2011 8 363 3 026 269 12 Employee benefits (IAS 19) in TCHF Current service cost Interest cost Amortization of service cost not yet recorded Total employee benefits expenditure of the Komax Group 11 658 11 644 Expected return on plan assets Employee contributions Total employee benefits income of the Komax Group 3 886 2 573 6 459 4 085 2 622 6 707 Employee benefits result of the Komax Group1) −5 199 −4 937 Employer contributions Prepayments to the employee benefits plan during the financial year 4 355 −844 4 491 –446 1) The employee benefits expenditure of CHF 5.199 million (2010: CHF 4.937 million) is recognized in the income statement under personnel expenses. Komax maintains retirement benefit plans for its employees in Switzerland and abroad. In conformity with IFRS, the retirement benefit plans in Switzerland are defined benefit schemes. For the principal defined ben- efit pension schemes, the net expenditure for employee benefits is shown above. Benefits in accordance with IAS 19 are recognized in the balance sheet of the Komax Group under “Prepaid pension assets” and in the consolidated income statement under “Personnel expenses”. The changes in prepayments recorded in the consolidated balance sheet with respect to the defined benefit schemes were as follows: in TCHF Total 1 January Employee benefits costs of the Komax Group Employer contributions Total 31 December Defined benefit obligations developed as follows: in TCHF Total 1 January Current service cost Interest cost Payments made to and by beneficiaries (net) Impact of curtailment Actuarial gains (–)/losses (+) Total 31 December 2011 1 812 −5 199 4 355 2010 2 258 −4 937 4 491 969 1 812 2011 2010 110 032 105 584 8 363 3 026 −6 348 0 −3 099 7 943 3 432 0 −10 081 3 154 111 974 110 032 E_FB_(CS5_Layout) [P].indd 79 E_FB_(CS5_Layout) [P].indd 79 12.03.12 14:06 12.03.12 14:06 80 The present value of plan assets developed as follows: in TCHF Total 1 January Expected return on plan assets Employee contributions Employer contributions Payments made to and by beneficiaries (net) Impact of curtailment Actuarial gains (+)/losses (–) Total 31 December Available assets break down as follows: % Assets held in shares Assets held in bonds Assets held in real estate Other assets Total 2011 2010 103 628 102 123 3 886 2 573 4 355 −6 348 0 −7 673 4 085 2 622 4 491 0 −10 081 388 100 421 103 628 31.12.2011 31.12.2010 31.9 25.1 32.1 10.9 35.7 23.5 30.3 10.5 100.0 100.0 The available assets of the retirement benefit scheme of Komax AG do not include shares of Komax Holding AG or real estate properties used by the Group. The expected return on assets is based on the investment policy of the Board of Trustees. Expected returns on fixed-interest investments are based on the effective gross interest rates at the balance sheet date. Expected returns from equity securities reflect the effective returns empirically determined as obtainable in the long term on the respective markets. The following table contains information concerning the current state of overfunding or underfunding of the retirement benefit schemes operated in Switzerland and the figures in the consolidated balance sheet: in TCHF Fair value of plan assets Present value of funded obligations Overfunding (+)/underfunding (–) Unrecognized actuarial gains (–)/losses (+) Unrecognized past service cost 31.12.2011 31.12.2010 100 421 −111 974 −11 553 10 862 1 660 103 628 −110 032 −6 404 6 287 1 929 Recognized as assets in the consolidated balance sheet 969 1 812 The effective return on plan assets in the 2011 reporting year was CHF −3.787 million (2010: CHF 3.164 mil- lion). Employer contributions for the 2012 business year are expected to amount to CHF 4.355 million. E_FB_(CS5_Layout) [P].indd 80 E_FB_(CS5_Layout) [P].indd 80 12.03.12 14:06 12.03.12 14:06 81 Financial Report 48 Consolidated Financial Statements 97 Financial Statements of Komax Holding AG 106 Corporate Structure The following table shows the degree of cover (funding) of defined benefit obligations, the effect of differ- ences in the expected and the effective return on plan assets, and the actuarial adjustments to benefit obli- gations in the past five years: in TCHF 31.12.2011 31.12.2010 31.12.2009 31.12.2008 31.12.2007 Fair value of plan assets Present value of funded obligations Overfunding (+)/underfunding (–) Difference between expected and effective return on plan assets Actuarial adjustments to benefit obligations 100 421 −111 974 −11 553 −7 673 4 552 103 628 −110 032 −6 404 388 2 341 102 123 −105 584 −3 461 5 206 3 335 95 266 −105 297 −10 031 −25 153 −354 114 341 −100 957 13 384 −3 068 −938 The retirement benefit liabilities are valued using assumptions based on the following economic and demo- graphic parameters (weighted average): % Discount rate Estimated wage growth rate Increase in current pensions (expectancy of future benefits) Expected return on plan assets Average life expectancy on reaching retirement at age 65: Years Men Women 2011 2.75 1.00 0.00 3.75 2011 18.9 21.4 2010 2.75 1.00 0.25 3.75 2010 17.9 21.0 Defined-contribution retirement schemes No costs for defined-contribution plans of foreign subsidaries had to be recognized in the income statement under personnel expenses, neither in the 2011 business year nor in the previous year. The liabilities aris- ing from these retirement benefit plans amounted to CHF 0.11 million as at 31 December 2011 (31 Decem- ber 2010: CHF 0.14 million). They are recognized in the balance sheet under “Other payables and accrued expenses/deferred income”. Investments in associates 13 In the first half of 2011, Komax acquired 30% of SLE quality engineering GmbH & Co. KG and 30% of SLE quality engineering Verwaltungs GmbH for a combined total of CHF 2.2 million. The investment value in the associated company is calculated via the equity method. The valuation of investments as at 31 December 2011 was based on the unaudited financial statements. Any changes in these statements will be taken into account in the following period. The investment value of CHF 2.1 million reported as at 31 December 2011 (previous year: CHF 0) is equivalent to the proportion of equity held. There are no contingent liabilities. The proportion of profit is negligible and included in the “Other operating expenses” under “Other expenditure”. E_FB_(CS5_Layout) [P].indd 81 E_FB_(CS5_Layout) [P].indd 81 12.03.12 14:06 12.03.12 14:06 82 14 14.1 Property, plant and equipment Property, plant and equipment 2011 Changes in gross values in TCHF Asset category Movables Machinery Tools/operating equipment Warehouse equipment Vehicles Office furnishings Information technology Prepayments for movables Total movables Real estate Buildings Land Prepayments for real estate Total real estate Costs 1.1.2011 Currency differences Reclassifi- cations Additions Disposals Costs 31.12.2011 15 588 5 775 1 956 2 145 7 099 6 100 526 39 189 74 776 11 656 46 86 478 −13 63 −15 −18 1 −15 0 3 −97 −31 0 −128 205 −2 0 0 323 0 −526 0 46 0 −46 0 1 743 1 261 0 717 366 374 14 −2 077 −1 253 −177 −416 −232 −1 831 0 15 446 5 844 1 764 2 428 7 557 4 628 14 4 475 −5 986 37 681 793 0 0 793 −4 068 0 0 −4 068 71 450 11 625 0 83 075 Total 125 667 −125 0 5 268 −10 054 120 756 Changes in depreciation in TCHF Asset category Accumulated depreciation 1.1.2011 Currency differences Reclassifi- cations Accumulated depreciation on disposals Depreciation 2011 Accumulated depreciation 31.12.2011 Net value property, plant & equipment 31.12.2011 Movables Machinery Tools/operating equipment Warehouse equipment Vehicles Office furnishings Information technology Prepayments for movables Total movables Real estate Buildings Land Prepayments for real estate Total real estate 9 749 3 832 1 176 1 404 3 501 5 168 0 24 830 29 563 0 0 29 563 −16 −6 −4 −9 −11 −17 0 −63 −40 0 0 −40 Total 54 393 −103 0 0 0 0 0 0 0 0 0 0 0 0 0 −2 004 1 244 −863 −176 −406 −223 −1 831 0 −5 503 569 101 360 666 450 0 8 973 3 532 1 097 1 349 3 933 3 770 0 6 473 2 312 667 1 079 3 624 858 14 3 390 22 654 15 027 −1 762 2 315 30 076 0 0 0 0 0 0 −1 762 2 315 30 076 41 374 11 625 0 52 999 −7 265 5 705 52 730 68 026 No impairments had to be booked on property, plant and equipment during the 2011 reporting year. As at 31 December 2011, no contractual obligations were existing in respect of the acquisition of property, plant and equipment. Future liabilities arising from operating lease agreements amount to: Due 2012: CHF 2.5 million. Due 2013–2016: CHF 6.8 million. E_FB_(CS5_Layout) [P].indd 82 E_FB_(CS5_Layout) [P].indd 82 12.03.12 14:06 12.03.12 14:06 83 Financial Report 48 Consolidated Financial Statements 97 Financial Statements of Komax Holding AG 106 Corporate Structure 14.2 Property, plant and equipment 2010 Costs 1.1.2010 Currency differences Reclassifi- cations Additions Disposals Costs 31.12.2010 Changes in gross values in TCHF Asset category Movables Machinery Tools/operating equipment Warehouse equipment Vehicles Office furnishings Information technology Prepayments for movables Total movables Real estate Buildings Land Prepayments for real estate Total real estate 17 058 6 128 2 006 2 363 7 246 6 392 0 −292 −135 −52 −234 −312 −177 0 41 193 −1 202 76 236 11 992 0 −1 796 −336 0 88 228 −2 132 −16 −19 26 0 9 0 0 0 0 0 0 0 0 1 362 313 0 462 430 541 526 −2 524 15 588 −512 −24 −446 −274 −656 0 5 775 1 956 2 145 7 099 6 100 526 3 634 −4 436 39 189 470 0 46 516 −134 0 0 −134 74 776 11 656 46 86 478 4 150 −4 570 125 667 Total 129 421 −3 334 Changes in depreciation in TCHF Asset category Accumulated depreciation 1.1.2010 Currency differences Reclassifi- cations Accumulated depreciation on disposals Depreciation 2010 Accumulated depreciation 31.12.2010 Net value property, plant & equipment 31.12.2010 Movables Machinery Tools/operating equipment Warehouse equipment Vehicles Office furnishings Information technology Prepayments for movables Total movables Real estate Buildings Land Prepayments for real estate Total real estate 10 993 3 604 1 079 1 613 3 335 5 434 0 26 058 −240 −118 −21 −132 −237 −152 0 −900 27 871 −614 0 0 0 0 27 871 −614 Total 53 929 −1 514 −6 −21 24 0 3 0 0 0 0 0 0 0 0 −2 397 1 399 −281 −23 −405 −271 −654 0 648 117 328 671 540 0 9 749 3 832 1 176 1 404 3 501 5 168 0 5 839 1 943 780 741 3 598 932 526 −4 031 3 703 24 830 14 359 −131 2 437 29 563 0 0 0 0 0 0 −131 2 437 29 563 45 213 11 656 46 56 915 −4 162 6 140 54 393 71 274 No impairments had to be booked on property, plant and equipment during the 2010 reporting year. As at 31 December 2010, no contractual obligations were existing in respect of the acquisition of property, plant and equipment. Future liabilities arising from operating lease agreements amount to: Due 2011: CHF 2.2 million. Due 2012–2015: CHF 5.6 million. E_FB_(CS5_Layout) [P].indd 83 E_FB_(CS5_Layout) [P].indd 83 12.03.12 14:06 12.03.12 14:06 84 15 15.1 Intangible assets Intangible assets 2011 Changes in gross values in TCHF Asset category Intangible assets Software Patents Goodwill Technology Prepayments Total Changes in depreciation in TCHF Asset category Intangible assets Software Patents Goodwill Technology Prepayments Total Costs 1.1.2011 Currency differences Reclassifi- cations Additions Disposals Costs 31.12.2011 10 918 4 147 26 126 0 16 −13 0 0 0 0 16 0 0 0 −16 1 169 −602 0 0 4 523 348 0 0 0 0 11 488 4 147 26 126 4 523 348 41 207 −13 0 6 040 −602 46 632 Accumulated depreciation 1.1.2011 Currency differences Reclassifi- cations Accumulated depreciation on disposals Depreciation 2011 Accumulated depreciation 31.12.2011 Net value intangible assets 31.12.2011 7 130 4 112 0 0 0 −12 0 0 0 0 11 242 −12 0 0 0 0 0 0 −602 1 225 0 0 0 0 9 0 431 0 7 741 4 121 0 431 0 3 747 26 26 126 4 092 348 −602 1 665 12 293 34 339 Goodwill impairment test Goodwill acquired through previous acquisitions is allocated to the cash generating units at operating seg- ment level. The allocation is determined by the strategic intention behind the acquisition of each entity. Cash-Generating Unit (CGU) in TCHF Wire Solar Medtech (MTS) Inkjet (INJ) Total Segment 31.12.2011 31.12.2010 Wire Solar Medtech Medtech 10 330 3 765 10 076 1 955 10 330 3 765 10 076 1 955 26 126 26 126 The recoverable amount of a CGU is obtained from the calculation of its value in use. These calculations are based on projected cash flows derived from the five-year plan issued by the Board of Directors. Assump- tions for the calculation of value in use were as follows: 2011 Gross profit margin Average growth rate Discount rate (pre-tax) Wire 58.5% 0.5% 6.7% Solar 44.0% 16.4% 6.8% MTS 50.7% 3.7% 6.2% INJ 35.6% −9.0% 6.5% E_FB_(CS5_Layout) [P].indd 84 E_FB_(CS5_Layout) [P].indd 84 12.03.12 14:06 12.03.12 14:06 85 Financial Report 48 Consolidated Financial Statements 97 Financial Statements of Komax Holding AG 106 Corporate Structure 2010 Gross profit margin Average growth rate Discount rate (pre-tax) Wire 58.1% 2.4% 9.0% Solar 48.0% 21.2% 10.3% MTS 51.3% 7.0% 8.5% INJ 36.1% −16.6% 9.2% Management has determined the budgeted gross profit margin based on past developments and expecta- tions regarding the future development of the market. The discount rates applied are interest rates before taxes and reflect the specific risks of the operating segments in question. The impairment test performed showed that the value of the goodwill was sustainable and revealed no signs of any impairment. 15.2 Intangible assets 2010 Changes in gross values in TCHF Asset category Intangible assets Software Patents Goodwill Costs of incorporation Prepayments Changes in depreciation in TCHF Asset category Intangible assets Software Patents Goodwill Costs of incorporation Prepayments Costs 1.1.2010 Currency differences Reclassifi- cations Additions Disposals Costs 31.12.2010 10 895 4 153 26 949 4 0 −254 −6 −823 −1 0 0 0 0 0 0 0 1 724 −1 447 0 0 0 16 0 0 −3 0 10 918 4 147 26 126 0 16 1 740 −1 450 41 207 Total 42 001 −1 084 Accumulated depreciation 1.1.2010 Currency differences Reclassifi- cations Accumulated depreciation on disposals Depreciation 2010 Accumulated depreciation 31.12.2010 Net value intangible assets 31.12.2010 7 583 4 106 0 4 0 −228 −4 0 −1 0 Total 11 693 −233 Ownership restrictions for own liabilities 16 Assets pledged to secure own liabilities: in TCHF Book value real estate Lien on real estate Utilization (indemnification syndicated loan) 0 0 0 0 0 0 −1 408 0 0 −3 0 1 183 10 0 0 0 7 130 4 112 0 0 0 3 788 35 26 126 0 16 −1 411 1 193 11 242 29 965 31.12.2011 31.12.2010 47 733 52 965 46 963 51 373 55 450 43 132 Real estate consists of land and buildings in Switzerland and North America. E_FB_(CS5_Layout) [P].indd 85 E_FB_(CS5_Layout) [P].indd 85 12.03.12 14:06 12.03.12 14:06 86 Trade payables 17 The carrying amounts of trade payables are allocated to the currencies shown in the table. The carrying amounts reflect their fair value. in TCHF CHF EUR USD Other currencies Total trade payables 18 Other payables and accrued expenses/deferred income in TCHF Other payables Liabilities related to defined contribution plans Prepayments by customers Accrual for personnel expenses Commission payments to representatives Invoices not yet received Other accruals 31.12.2011 31.12.2010 8 735 4 222 4 209 3 646 5 757 3 671 4 066 3 279 20 812 16 773 31.12.2011 31.12.2010 7 346 265 2 211 8 607 1 909 1 741 2 654 6 472 388 7 233 7 472 982 2 015 2 357 Accrued expenses/deferred income 17 122 20 059 Prepayments on systems1) less accruals/deferrals in respect of systems Liabilities arising from POC Total 1) See also Note 7. 49 406 −40 479 8 927 43 625 −33 944 9 681 33 660 36 600 Other payables mainly comprise amounts due to state authorities (tax authorities). Their carrying amounts are allocated to the currencies shown in the table: in TCHF CHF EUR USD Other currencies Total other payables 31.12.2011 31.12.2010 4 776 421 127 2 022 7 346 4 365 443 122 1 542 6 472 E_FB_(CS5_Layout) [P].indd 86 E_FB_(CS5_Layout) [P].indd 86 12.03.12 14:06 12.03.12 14:06 87 Financial Report 48 Consolidated Financial Statements 97 Financial Statements of Komax Holding AG 106 Corporate Structure 19 Provisions in TCHF Warranty provisions Total 1 January Additional provisions Amounts utilized during the year Unused amounts reversed Currency differences 2011 2010 3 430 2 490 −2 304 −327 −9 2 740 3 056 −2 067 −157 −142 Total 31 December 3 280 3 430 Warranty provisions include material and personnel costs in relation to warranty work. Provisions for war- ranty are reviewed and adjusted annually. 20 Financial loans Credit Suisse, Zurich1) Credit Suisse, Zurich1) 2) Credit Suisse, Zurich1) M&T Bank, York (PA) Total Currency CHF CHF CHF USD 2011 Interest 2.06% 0.89% 0.88% 3.75% 31.12.2011 in TCHF 20 000 18 606 5 000 2 965 46 571 2010 Interest 3.69% 2.50% 0.00% 3.75% 31.12.2010 in TCHF 20 000 19 243 0 3 131 42 374 1) Utilized credit facilities as part of the CHF 100.0 million syndicated loan agreement under the stewardship of Credit Suisse (participating banks: Basler Kantonalbank, Credit Suisse, Deutsche Bank, Luzerner Kantonalbank, UBS, and Zürcher Kantonalbank). 2) Utilized credit line amounting to CHF 19.0 million as at 31 December 2011 (previous year: CHF 20.0 million) less transaction costs of CHF 0.4 million (previous year: CHF 0.8 million). As at 31 December 2011, the Komax Group had unutilized credit lines of CHF 56.5 million (previous year: CHF 58.2 million). The average interest on financial loans was 2.08% in 2011, compared with 3.19% in the previous year. The fair value of non-current financial loans corresponds to their carrying value. Share capital 21 As at 31 December 2011, the share capital amounted to CHF 340 088. This comprised 3 400 880 fully paid- up registered shares, each with a par value of CHF 0.10. There were no changes to the share capital com- pared to the previous year (2010: increase by CHF 1 336). As at 31 December 2011, the Group held 27 483 treasury shares (2010: 30 800). E_FB_(CS5_Layout) [P].indd 87 E_FB_(CS5_Layout) [P].indd 87 12.03.12 14:06 12.03.12 14:06 88 22 22.1 Segment reporting Information by segment 2011 in TCHF Wire Solar Medtech Corporate1) Group Net sales from external customers Net sales from other segments 216 482 1 310 70 343 448 82 914 864 290 −2 622 370 029 0 Total net sales 217 792 70 791 83 778 −2 332 370 029 EBIT 57 073 −3 439 3 840 −9 938 47 536 Investment in non-current assets Sale of non-current assets Depreciation 5 517 2 979 4 454 5 139 1 1 388 591 440 1 483 2 289 0 45 13 536 3 420 7 370 2010 in TCHF Wire Solar Medtech Corporate1) Group Net sales from external customers Net sales from other segments 193 488 967 63 093 213 82 403 288 91 −1 468 339 075 0 Total net sales 194 455 63 306 82 691 −1 377 339 075 EBIT 47 840 −5 932 −4 434 −8 364 29 110 Investment in non-current assets Sale of non-current assets Depreciation 4 978 589 4 303 145 186 1 567 767 61 1 412 0 8 51 5 890 844 7 333 1) Including elimination of intersegment revenues. Costs allocated to Corporate include expenses arising in conjunction with the Komax Group’s option plan, expenses and income arising from bookings for defined benefit pension schemes according to IAS 19, the salaries of Group management, compensation for the Board of Directors, as well as the costs of Komax Holding AG. 54702 Komax_GB2011_Finanzteil_E.indd 88 54702 Komax_GB2011_Finanzteil_E.indd 88 12.03.12 17:30 12.03.12 17:30 89 Financial Report 48 Consolidated Financial Statements 97 Financial Statements of Komax Holding AG 106 Corporate Structure The table shows the reconciliation of the total of the reportable segments’ EBIT to the Group profit/loss after taxes: in TCHF EBIT Financial income Financial expenses Group profit before taxes Taxes Group profit after taxes 2011 47 536 7 418 −8 861 46 093 6 813 2010 29 110 5 159 −9 680 24 589 6 809 39 280 17 780 Net sales from external customers were generated in the following five operating segments: in TCHF Wire1) Solar Medtech (MTS) Inkjet (INJ) Mechanical and Electronic Systems Assembly (MES/EES) Total 1) Including Corporate sales. 22.2 Information by geographical area 2011 2010 216 772 193 579 70 343 54 680 22 468 5 766 63 093 38 016 37 170 7 217 370 029 339 075 Net sales by location of purchasing party Switzerland Europe1) North and South America Asia/Pacific Total Net sales by location of service provider Switzerland Europe1) North and South America Asia/Pacific Total Non-current assets by location of service provider2) Switzerland Europe1) North and South America Asia/Pacific Total 1) Including Africa. 2011 in TCHF 16 267 172 653 74 583 106 526 370 029 2011 in TCHF 159 847 45 045 110 691 54 446 370 029 2011 in TCHF 80 971 3 918 17 018 2 704 % 4.4 46.6 20.2 28.8 100.0 % 43.2 12.2 29.9 14.7 100.0 % 77.4 3.7 16.3 2.6 2010 in TCHF 15 254 139 821 71 609 112 391 339 075 2010 in TCHF 134 980 35 630 102 864 65 601 339 075 2010 in TCHF 78 246 4 146 17 265 1 867 % 4.5 41.2 21.1 33.2 100.0 % 39.8 10.5 30.3 19.4 100.0 % 77.1 4.1 17.0 1.8 104 611 100.0 101 524 100.0 Change % 6.6 23.5 4.2 −5.2 9.1 Change % 18.4 26.4 7.6 −17.0 9.1 Change % 3.5 −5.5 −1.4 44.8 3.0 2) Without deferred tax assets and prepaid pension assets. E_FB_(CS5_Layout) [P].indd 89 E_FB_(CS5_Layout) [P].indd 89 12.03.12 14:06 12.03.12 14:06 90 Domiciled in Switzerland, the Komax Group is active in three other geographical areas where it is repre- sented with its own companies. The commercial revenues of the Group are predominantly generated in Europe, North and South America and the Asia/Pacific region. Net sales are assigned on the basis of the country in which the customer is based (location of service recipient). In addition, reporting is also under- taken on the basis of the country in which the sales company has its headquarters (location of service pro- vider). Assets are listed as per the headquarters of the company to which they belong. The Europe region also includes the sales generated and assets located in Africa (particularly South Africa and Morocco). Significant customers 22.3 Neither in the 2011 reporting year nor in the previous year did the Komax Group generate sales amounting to 10% or more of Group turnover with any individual customer. 23 Other operating income in TCHF Own work capitalized Government grants Gains from the disposal of property, plant and equipment 2011 479 285 631 2010 485 215 397 Total other operating income 1 395 1 097 24 24.1 Information on personnel Personnel expenses in TCHF Wages and salaries Share-based payments Social security and pension contributions Other personnel costs (training and development) 2011 82 442 1 730 16 857 2 603 2010 82 270 1 755 16 106 2 034 Total personnel expenses 103 632 102 165 Personnel expenses include all performance-related compensation for the past business year. Further de- tails on employee benefits are given in Note 12. E_FB_(CS5_Layout) [P].indd 90 E_FB_(CS5_Layout) [P].indd 90 12.03.12 14:06 12.03.12 14:06 91 Financial Report 48 Consolidated Financial Statements 97 Financial Statements of Komax Holding AG 106 Corporate Structure Share option plan of the Komax Group 24.2 The executive share ownership scheme for directors and management of the Komax Group includes a share option plan. The option plan was introduced in 1998 and is designed to give executives and selected employees added interest in shareholder value and enable them to share in the company’s success. The stock option plan takes the form of share-based compensation settled in equity instruments by means of a capital increase (equity-settled plan). The number of options allocated depends on the individual perfor- mance of the entitled employee. The options granted entitle holders to subscribe one Komax Holding AG share per option and are valid for five years. They have a predetermined exercise price and are subject to a three-year lock-in period. Outstanding at beginning of year Granted Exercised Forfeited Expired Outstanding at end of year 2011 No. 315 749 88 525 0 −3 423 −73 523 327 328 Weighted average exercise price CHF 100.42 94.25 0.00 70.57 141.94 89.74 2010 No. 306 690 85 975 −13 360 −3 761 −59 795 315 749 Weighted average exercise price CHF 107.02 73.65 97.75 81.48 97.59 100.42 Of the 327 328 outstanding options (2010: 315 749), 80 304 options were exercisable as at 31 December 2011 (2010: 73 749). No options were exercised in the year under review (2010: 13 360). The following table summarizes information on options granted and not yet exercised as at 31 December 2011: Expiry date 31 December 2012 2013 2014 2015 Total Number 80 304 79 741 78 908 88 375 327 328 Exercise price CHF 145.06 42.78 75.68 94.25 The fair value of the options granted in the 2011 financial year – as determined by the Enhanced American Model, an approach based on the binomial model concept – amounted to CHF 30.16 (2010: CHF 17.87). The key parameters for the valuation model are the share price of CHF 102.00 (2010: CHF 72.00) on the day granted, the exercise price listed above, the standard deviation for the expected share price return of 45.8% (2010: 42.8%), the option term of five years and the risk-free interest rate of 1.04% (2010: 1.38%). The anticipated dividend yield is 3.23% (2010: 2.43%). The volatility of 45.8% used in these calculations represents an arithmetic average of the historical volatility of Komax Holding AG for the last four years and that of a representative peer group. E_FB_(CS5_Layout) [P].indd 91 E_FB_(CS5_Layout) [P].indd 91 12.03.12 14:06 12.03.12 14:06 92 24.3 Breakdown of employees by country and areas of activity 2011 Production Research and development Engineering Marketing and sales Administration6) Total headcount at 31 December 2011 2010 Production Research and development Engineering Marketing and sales Administration6) Total headcount at 31 December 2010 CH1) 245 102 81 96 45 569 CH1) 220 83 98 109 47 557 EU2) Americas3) Asia4) Africa5) Total 6 10 0 42 7 65 121 110 13 46 61 25 9 22 63 24 266 228 0 0 0 11 1 12 482 134 149 273 102 1 140 EU2) Americas3) Asia4) Africa5) Total 7 10 1 38 8 64 105 8 40 57 23 71 6 17 51 15 233 160 0 0 0 8 1 9 403 107 156 263 94 1 023 1) Komax AG, Dierikon (including operating facility in Rotkreuz), Komax Systems LCF SA, La Chaux-de-Fonds. 2) Komax companies in the EU: Germany, France, Portugal. 3) Komax companies in North and South America: USA, Brazil. 4) Komax companies in Asia: Singapore, China, Malaysia, India. 5) Komax companies in Africa: Morocco, South Africa. 6) Including management/IT. Average number of employees 24.4 The average number of employees in 2011 was 1 081 compared with 1 022 in the previous year. Development expenditure 25 The aggregate development expenditure for new and further development of Komax products contains personnel expenses, material costs and costs for third-party development contracts. They amount to CHF 23.5 million, equivalent to 6.3% of revenues, compared with CHF 20.5 million or 6.0% of revenues in the previous year. Other operating expenses 26 Other operating expenses amount to CHF 21.1 million (2010: CHF 19.3 million) and comprise the following positions: in TCHF Expenditure on operating equipment and energy Third party services for development expenses Legal and consultancy expenses Expenditure on administration and sales Other expenditure 2011 4 611 3 170 3 419 2 121 7 803 2010 4 231 3 937 2 202 2 068 6 812 Total other operating expenses 21 124 19 250 E_FB_(CS5_Layout) [P].indd 92 E_FB_(CS5_Layout) [P].indd 92 12.03.12 14:06 12.03.12 14:06 93 Financial Report 48 Consolidated Financial Statements 97 Financial Statements of Komax Holding AG 106 Corporate Structure Extraordinary restructuring charges 27 In the 2011 financial year no extraordinary restructuring charges occurred. The extraordinary restructuring charges of CHF 0.9 million from the year 2010 comprise additional personnel expenses arising from the re- lease of staff necessitated by the poor market situation. Furthermore, these also include the costs resulting from social plans drawn up for the staff in question. 28 Financial result in TCHF Financial income Interest income Income from securities Exchange rate gains on foreign currencies Total financial income Financial expenses Interest expenses Securities expenses Exchange rate losses on foreign currencies Total financial expenses Total financial result 2011 2010 211 45 7 162 7 418 1 712 25 7 124 8 861 470 15 4 674 5 159 2 645 210 6 825 9 680 −1 443 −4 521 The financial income includes gains of CHF 0.10 million (2010: CHF 1.47 million) on financial assets held for trading. Exchange rate losses amounting to CHF –0.23 million (2010: CHF –0.37 million) resulting from finan- cial liabilities held for trading are taken into account in the financial expenses. The positions include both book gains and losses and realized gains and losses. 29 Taxes in TCHF Current income taxes Deferred tax income (–)/tax expenses (+) Total Analysis of the tax rate in TCHF Group profit before taxes Expected tax expenses Impact of non-capitalized tax-loss carryforwards Effect of changes in tax rate Tax credits/charges from previous years Effect of non-deductible expenses Effect of non-taxable income Non-reclaimable withholding taxes Others Effective tax expenses 2011 10 326 −3 513 6 813 2010 24 589 6 345 1 334 −694 −154 287 −187 0 −122 6 809 2010 3 722 3 087 6 809 % 25.8 5.4 −2.8 −0.6 1.2 −0.8 0.0 −0.5 27.7 2011 46 093 8 716 777 −47 −3 268 82 −84 752 −115 6 813 % 18.9 1.7 −0.1 −7.1 0.2 −0.2 1.6 −0.2 14.8 E_FB_(CS5_Layout) [P].indd 93 E_FB_(CS5_Layout) [P].indd 93 12.03.12 14:06 12.03.12 14:06 94 As the Group is internationally active, its income taxes are dependent on a number of different tax jurisdic- tions. The expected average Group tax rate is equivalent to the weighted average of tax rates of those countries in which the Group is active. Due to the composition of the taxable income of the Group, as well as changes in local tax rates, this Group tax rate varies from year to year. 30 Earnings per share (EPS) in CHF 2011 2010 Group profit (attributable to equity holders of the parent company) Weighted average number of outstanding shares Basic earnings per share Group profit (attributable to equity holders of the parent company) Weighted average number of outstanding shares Adjustment for dilutive effect of share options Weighted average number of outstanding shares for calculating diluted earnings per share Diluted earnings per share 39 412 969 3 375 217 11.68 39 412 969 3 375 217 56 670 3 431 887 11.48 17 779 467 3 349 278 5.31 17 779 467 3 349 278 52 106 3 401 384 5.23 Basic earnings per share are calculated by dividing the consolidated net earnings by the average number of shares outstanding during the fiscal year, excluding treasury shares. Diluted earnings per share are calcu- lated by adding all option rights which would have had a dilutive effect to the average number of shares out- standing. Contingent liabilities 31 Guarantees in favour of subsidiaries amounting to CHF 3.3 million (2010: CHF 5.7 million) are listed in the notes to the financial statements of Komax Holding AG. Apart from additional guarantees amounting to CHF 1.5 million (2010: CHF 1.6 million) in favour of third parties at subsidiaries, there were no other contin- gent liabilities towards third parties or Group companies. Events after the balance sheet date 32 No material events occurred between the balance sheet date and the approval of the consolidated financial statements by the Board of Directors on 6 March 2012 which might adversely affect the information content of the 2011 consolidated financial statements or which would require disclosure. Related-party transactions 33 Aside from a loan of CHF 0.37 million granted to an associate, there were no outstanding items with respect to related parties (2010: none). In the year under review, no transactions were entered into with members of management in key positions in connection with the sale and purchase of goods and services (2010: CHF 0.28 million). However, rental payments amounting to CHF 0.11 million (2010: CHF 0.13 million) were made in relation to a production facility. With the exception of the regular employer contributions to the pension fund, no transactions were effected with related parties (2010: none). E_FB_(CS5_Layout) [P].indd 94 E_FB_(CS5_Layout) [P].indd 94 12.03.12 14:06 12.03.12 14:06 95 Financial Report 48 Consolidated Financial Statements 97 Financial Statements of Komax Holding AG 106 Corporate Structure Compensation for the Executive Committee and Board of Directors In fiscal 2011, the Group’s Executive Committee comprised five (2010: five) members. In conformity with IFRS 2 for the statement of share-based payments, the total compensation for the Executive Committee, including the five (2010: five) directors, is as follows: in TCHF Executive Committee Board of Directors Total Total Salaries and bonus payments1) Share-based payments 2011 2 530 603 2010 2 354 349 2011 603 196 2010 580 107 2011 3 133 799 2010 2 934 456 Total 3 133 2 703 799 687 3 932 3 390 1) Including the post-employment benefits of CHF 0.19 million for the financial year 2011 (2010: CHF 0.16 million). A detailed breakdown of the compensation paid to the Board of Directors and the Executive Committee is provided in the notes to the financial statements of Komax Holding AG on pages 103 and 104. E_FB_(CS5_Layout) [P].indd 95 E_FB_(CS5_Layout) [P].indd 95 12.03.12 14:06 12.03.12 14:06 96 Report of the statutory auditor to the general meeting of Komax Holding AG Dierikon Report of the statutory auditor on the consolidated financial statements As statutory auditor, we have audited the consolidated financial statements of Komax Holding AG, which comprise the balance sheet, income statement, statement of comprehensive income, cash flow statement, statement of shareholders’ equity and notes (pages 52 to 95), for the year ended 31 December 2011. Board of Directors’ Responsibility The Board of Directors is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the 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 and fair presentation 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 reasonable in the circumstances. Auditor’s Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with Swiss law and Swiss Auditing Standards as well as the 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 and fair presentation of the consolidated 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 31 December 2011 give a true and fair view of the financial position, the results of operations and the cash flows in accordance with the 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 independence (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. PricewaterhouseCoopers Ltd Gerd Tritschler Audit expert Auditor in charge Basel, 9 March 2012 Petra Schwick Audit expert E_FB_(CS5_Layout) [P].indd 96 E_FB_(CS5_Layout) [P].indd 96 12.03.12 14:06 12.03.12 14:06 97 Financial Report 48 Consolidated Financial Statements 97 Financial Statements of Komax Holding AG 106 Corporate Structure Comments on the financial statements of Komax Holding AG Balance sheet Assets 1 The Group’s current loans increased by CHF 0.9 million in total. This increase is the result of newly granted loans to subsidiary companies. In the year under review, a new company was founded in the form of Komax Jinchen Solar Equipment (Ying- kou) Co. Ltd., China, in which Komax Holding AG has a 51% stake. In addition, a minority stake of 30% was acquired in both SLE quality engineering GmbH & Co KG and SLE quality engineering Verwaltungs GmbH in Germany. The participation in Komax France Sàrl., France, was increased by EUR 1.4 million. The existing participation loans in Komax Holding Corp., USA, and Komax Corp., USA, were reclassified under non-current financial loans. In addition, further non-current loans were granted to Komax Solar Inc., USA, and Komax Systems Rockford Inc, USA. Liabilities 2 The current account debt of Komax Holding AG towards Komax AG, Switzerland, was reduced to CHF 46.6 million in the 2011 financial year as a result of the offsetting against the dividend of Komax AG, Switzerland, for the 2010 financial year (CHF 21.0 million). The agreement on a CHF 100.0 million credit facility signed in 2009 between Komax and a syndicate of banks led by Credit Suisse is valid until 31 January 2013. The agreement provides the Group with the nec- essary entrepreneurial flexibility, guarantees the financing of commercial operations, and ensures the con- tinued implementation of corporate strategy. CHF 44.0 million of this credit line was being utilized as at 31 December 2011. The “Loans Group” balance sheet item relates to a financial loan amounting to USD 4.0 million granted by Komax Corp., USA, and a loan of EUR 0.5 million granted by Komax France Sàrl., France. In accordance with the prevailing capital contribution principle, capital contributions (share premiums) made after 31 December 1996 are disclosed in the separate equity item “Capital contribution reserves”. Repay- ments to shareholders from this account are treated as equal to the repayment of nominal capital and are therefore not subject to withholding tax. The self-financing ratio decreased by 0.6 percentage points from 68.3% in 2010 to 67.7% in 2011. Reserves for treasury shares were reduced from their prior-year level of CHF 3.5 million to CHF 3.1 million as at 31 December 2011. These reserves are valued at the weighted average acquisition value of the trea- sury shares held. E_FB_(CS5_Layout) [P].indd 97 E_FB_(CS5_Layout) [P].indd 97 12.03.12 14:06 12.03.12 14:06 98 Income statement Revenues 3 The dividend income of Komax Holding AG came from Komax AG, Switzerland, (CHF 21.0 million), Komax Systems Malaysia Sdn. Bhd., Malaysia, (CHF 0.3 million), and Komax Management AG, Switzerland, (CHF 0.3 million). Services to Group companies comprise revenues from holding fees and licences. Financial term financial loans, and realized gains from sales of securities. income includes interest on loans granted to Group companies, exchange rate gains on short- Expenditure 4 Administration expenses comprise compensation for the Board of Directors, patent and licensing costs, legal and advisory expenses, and other operating expenses. Financial expenses contain interest on loans payable to third parties and Group companies as well as real- ized and unrealized exchange rate losses. As a result of the sharp decline in exchange rates, exchange rate losses were once again higher than in the previous year (by CHF 0.3 million), thereby increasing financial ex- penses by CHF 7.0 million (USD exchange rate losses) and CHF 0.8 million (EUR exchange rate losses). The valuation of treasury shares added CHF 1.1 million to financial expenses, whereas this valuation adjustment weighed on the financial result to the tune of CHF 0.4 million in 2010. Taxes 5 The taxes of CHF 0.2 million relate to non-reclaimable withholding taxes. E_FB_(CS5_Layout) [P].indd 98 E_FB_(CS5_Layout) [P].indd 98 12.03.12 14:06 12.03.12 14:06 99 Financial Report 48 Consolidated Financial Statements 97 Financial Statements of Komax Holding AG 106 Corporate Structure 31.12.2011 31.12.2010 1 786 1 889 23 1 660 4 2 196 3 142 183 1 214 0 102 827 101 925 369 240 0 39 108 798 108 699 126 195 2 228 11 433 48 013 187 869 123 240 0 20 604 30 810 174 654 296 667 283 353 249 46 550 519 3 4 415 51 736 44 000 44 000 124 47 069 769 1 1 900 49 863 40 000 40 000 95 736 89 863 340 2 286 3 086 32 207 148 816 0 14 196 200 931 340 2 286 3 543 38 960 152 338 4 661 −8 638 193 490 Balance sheet in TCHF Assets Cash and cash equivalents Treasury shares Other receivables third parties Other receivables Group Other receivables associates Financial loans Group Financial loans associates Accrued income/prepaid expenses Total current assets Investments in subsidiaries Investments in associates Participation loans Group Financial loans Group Total non-current assets Total assets Liabilities and shareholders’ equity Other liabilities third parties Other liabilities Group Accrued expenses/deferred income Provisions Loans Group Total current liabilities Loans third parties Total non-current liabilities Total liabilities Share capital General statutory reserves Reserves for treasury shares Capital contribution reserves Free reserves Retained earnings Profit/loss after taxes Total shareholders’ equity Total liabilities and shareholders’ equity 296 667 283 353 E_FB_(CS5_Layout) [P].indd 99 E_FB_(CS5_Layout) [P].indd 99 12.03.12 14:06 12.03.12 14:06 100 Income statement in TCHF Dividend income Services to Group companies Financial income Total income Administrative expenses Financial expenses Other expenses Total expenses Profit/loss before taxes Taxes Profit/loss after taxes 2011 21 588 814 4 828 27 230 1 895 10 312 660 12 867 2010 90 619 3 649 4 358 2 300 10 130 572 13 002 14 363 −8 644 167 −6 14 196 −8 638 E_FB_(CS5_Layout) [P].indd 100 E_FB_(CS5_Layout) [P].indd 100 12.03.12 14:06 12.03.12 14:06 101 Financial Report 48 Consolidated Financial Statements 97 Financial Statements of Komax Holding AG 106 Corporate Structure Notes to the 2011 financial statements 1 Contingent liabilities in TCHF Joint liability for Group taxation value-added tax Guarantees (in favour of subsidiaries) in EUR in USD in CHF Total 31.12.2011 31.12.2010 p. m. p. m. 173 1 054 2 071 3 298 422 1 437 3 835 5 694 Conditional capital 2 As at 1 January 2011, the conditional capital consisted of 449 120 registered shares, each with a par value of CHF 0.10, created for management and employee share ownership schemes. No options were converted into shares in the reporting year 2011 (2010: 13 360 options). There was no increase in the conditional capital. Change in conditional share capital in 2011 Number of conditional registered shares Par value CHF Conditional share capital CHF Opening amount as at 1 January 2011 449 120 0.10 44 912 Reduction in conditional share capital as a result of exercise of options in 2011 0 − 0 Closing amount as at 31 December 2011 449 120 0.10 44 912 E_FB_(CS5_Layout) [P].indd 101 E_FB_(CS5_Layout) [P].indd 101 12.03.12 14:06 12.03.12 14:06 102 3 Treasury shares Change in 2011 Opening amount Purchases (avg. CHF 102.92/share) Sales (avg. CHF 108.50/share) Closing amount 1.1.2011 Additions Disposals 31.12.2011 30 800 6 683 10 000 27 483 Total 30 800 6 683 10 000 27 483 Change in 2010 Opening amount Purchases (avg. CHF 80.95/share) Sales (avg. CHF 85.54/share) Closing amount 1.1.2010 Additions Disposals 31.12.2010 51 797 4 996 25 993 30 800 Total 51 797 4 996 25 993 30 800 4 Major shareholders at 31 December 2011 Shareholder/shareholder group Max Koch, Meggen at 31 December 2010 Shareholder/shareholder group Max Koch, Meggen Nordea Investment Funds S.A., Luxembourg No. of shares Interest1) 231 401 6.8% No. of shares Interest1) 231 401 181 406 6.8% 5.4% 1) Calculated on the basis of 3 400 880 shares that were registered as at the balance sheet date of 31 December 2011 (2010: 3 387 520). Externally regulated capital requirements (covenants) 5 The Group’s financial enants) as per the syndicated loan agreement: liabilities are subject to the following externally regulated capital requirements (cov- – The gearing factor may not exceed 2.5 either at 31 December 2011 or thereafter at each quarter-end bal- ance sheet date. – The self-financing ratio (i.e. the Group’s reported equity plus subordinated loans less goodwill divided by total assets less goodwill) may not fall below 50% at any balance sheet reference date. The Komax Group has complied with all capital requirements since the contract signing date as well as at 31 December 2011. Within the scope of the syndicated loan agreement, Komax Holding AG guarantees for the liabilities of any member of the Komax Group. E_FB_(CS5_Layout) [P].indd 102 E_FB_(CS5_Layout) [P].indd 102 12.03.12 14:06 12.03.12 14:06 103 Financial Report 48 Consolidated Financial Statements 97 Financial Statements of Komax Holding AG 106 Corporate Structure Risk assessment 6 A detailed description of risk management can be found on pages 70 to 72 of Note 3 to the consolidated financial statements. Remuneration of the Board of Directors and Executive Committee 7 The compensation paid to the members of the Board of Directors and Executive Committee includes, in particular, fees, wages, bonuses and the allocation of options in the context of the share-based compensa- tion from the employee participation programme. The variable remuneration is dependent on the business result and the fulfilment of key individual tasks. All amounts are gross and include social security contribu- tions payable by employees. Of the employer’s contribution towards social security, pension fund contribu- tions are shown. The following benefits were paid out in the 2011 and 2010 financial years: CHF Board of Directors Leo Steiner Daniel Hirschi Max Koch Melk M. Lehner Hans Caspar von der Crone Total Board of Directors Executive Committee Beat Kälin1) Gross value of salaries and fees during the financial year Gross value of cash bonuses Allocation number of options Tax value of options2) BVG contribu- tions Chairman 227 500 92 500 92 500 92 500 97 500 602 500 0 0 0 0 0 0 2 500 1 000 1 000 1 000 1 000 54 300 21 720 21 720 21 720 21 720 6 500 141 180 0 0 0 0 0 0 Total remuner- ation 2011 281 800 114 220 114 220 114 220 119 220 Total remuneration 2010 215 660 105 330 105 330 105 330 110 330 743 680 641 980 Member Member Member Member CEO Total other members of Executive Committee 424 138 990 303 356 263 571 052 8 000 12 000 173 760 260 640 62 400 1 016 561 126 300 1 948 295 911 528 1 648 859 Total Executive Committee 1 414 441 927 315 20 000 434 400 188 700 2 964 856 2 560 387 1) Highest-compensated member of Executive Committee. 2) The options were valued on the basis of their tax value. This is CHF 21.72 for the 2011 options, which have an exercise price of CHF 94.25 and a duration of five years (three years to vest, two years to exercise). E_FB_(CS5_Layout) [P].indd 103 E_FB_(CS5_Layout) [P].indd 103 12.03.12 14:06 12.03.12 14:06 104 8 Holdings of shares and options Assets (in units) Board of Directors Leo Steiner Daniel Hirschi Max Koch Melk M. Lehner Chairman Member Member Member Hans Caspar von der Crone Member 31.12.2011 Shares Options 31.12.2010 Shares 116 650 200 231 401 11 000 9 300 11 500 4 000 4 000 4 000 4 000 116 650 200 231 401 11 000 9 300 Options 18 282 4 000 4 000 4 360 4 000 Total Board of Directors 368 551 27 500 368 551 34 642 Executive Committee Beat Kälin Andreas Wolfisberg Walter Nehls Serge Peguiron Matijas Meyer CEO CFO Head of BU Solar Head of BU Medtech Head of BU Wire 2 300 700 400 620 600 32 000 13 000 10 000 11 500 6 100 2 300 700 400 620 400 31 000 12 000 7 000 10 400 3 400 Total Executive Committee 4 620 72 600 4 420 63 800 No loans or credits were granted to members of the Board of Directors, members of the Executive Commit- tee or related parties of these persons during the 2011 and 2010 financial years. There are no outstanding loans or credits to these persons. There are no other items requiring disclosure under sections 663b, 663bbis and 663c of the Swiss Code of Obligations. E_FB_(CS5_Layout) [P].indd 104 E_FB_(CS5_Layout) [P].indd 104 12.03.12 14:06 12.03.12 14:06 This page has been intentionally left blank. E_FB_(CS5_Layout) [P].indd 105 E_FB_(CS5_Layout) [P].indd 105 12.03.12 14:06 12.03.12 14:06 106 Corporate structure Direct and indirect equity participation as at 31 December 2011 Komax Holding AG Dierikon, Switzerland Purpose: Holding of equity interests Listed on: SIX Swiss security ID code: 1070215 Share capital: CHF 340 088 Market capitalization: CHF 233 810 500 100% Komax Management AG Dierikon, Switzerland Founded: 1986 Purpose: Group services and management Ordinary capital: CHF 100 000 100% Komax Systems Malaysia Sdn. Bhd. Penang, Malaysia Founded: 2006 Purpose: Engineering, production, sales Ordinary capital: MYR 3 000 000 100% Komax AG1) Dierikon, Switzerland Founded: 1978 Purpose: R&D, engineering, production, marketing, sales Ordinary capital: CHF 5 000 000 100% Komax France Sàrl. Epinay-sur-Seine, France Founded: 1992 Purpose: R&D, engineering, production, marketing, sales Ordinary capital: EUR 1 500 000 100% Komax Systems LCF SA La Chaux-de-Fonds, Switzerland 100% Komax Portuguesa S.A. S. Domingos de Rana, Portugal Acquired: 2005 Purpose: Engineering, production, marketing, sales Ordinary capital: CHF 2 500 000 Founded: 1991 Purpose: Sales Ordinary capital: EUR 1 500 000 100% Komax Shanghai Co. Ltd. Shanghai, China Founded: 2002 Purpose: R&D, production, sales Ordinary capital: USD 200 000 100% Komax Deutschland GmbH Nuremberg, Germany Founded: 1994 Purpose: Sales Ordinary capital: EUR 400 000 1) Incl. operating facility Komax AG, Rotkreuz. 2) Subsidiaries of Komax Holding Corp. E_FB_(CS5_Layout) [P].indd 106 E_FB_(CS5_Layout) [P].indd 106 12.03.12 14:06 12.03.12 14:06 107 Financial Statements 48 Financial Statements of Komax Group 97 Financial Statements of Komax Holding AG 106 Corporate Structure 100% Komax Singapore Pte. Ltd. Singapore 100% Komax SA Pty. Ltd. Port Elizabeth, South Africa 100% Komax Holding Corp. Buffalo Grove, Illinois, USA Founded: 1994 Purpose: Sales Ordinary capital: SGD 100 000 Founded: 2001 Purpose: Sales Ordinary capital: ZAR 200 Founded: 1980 Purpose: Holding of equity interests Ordinary capital: USD 8 160 000 100% Komax Comercial do Brasil Ltda. São Paulo, Brazil Founded: 1994 Purpose: Sales Ordinary capital: BRL 200 000 100% Komax Maroc Sàrl. Mohammédia, Morocco Founded: 2001 Purpose: Sales Ordinary capital: MAD 100 000 51% Komax Jinchen Solar Equipment (Yingkou) Co. Ltd. Yingkou, China Founded: 2011 Purpose: R&D, engineering, production Ordinary capital: CNY 16 000 000 100% Komax Solar Inc.2) York, Pennsylvania, USA Acquired: 2000 Purpose: R&D, engineering, production, marketing, sales Ordinary capital: USD 150 30% SLE quality engineering GmbH & Co KG Grafenau, Germany Acquired: 2011 Purpose: R&D, engineering, production, marketing, sales Ordinary capital: EUR 5 700 000 100% Komax Systems Rockford Inc.2) Rockford, Illinois, USA Acquired: 2000 Purpose: Engineering, production, marketing, sales Ordinary capital: USD 10 000 100% Komax Automation India Pvt. Ltd. Gurgaon, India Founded: 2008 Purpose: Sales Ordinary capital: INR 10 000 000 30% SLE quality engineering Verwaltungs GmbH Grafenau, Germany Acquired: 2011 Purpose: Administration Ordinary capital: EUR 25 000 100% Komax Corp.2) Buffalo Grove, Illinois, USA Founded: 1980 Purpose: Sales Ordinary capital: USD 1 000 000 E_FB_(CS5_Layout) [P].indd 107 E_FB_(CS5_Layout) [P].indd 107 12.03.12 14:06 12.03.12 14:06 108 Proposal for the appropriation of profit The Board of Directors proposes the following appropriation of profit and payout (which is not subject to withholding tax) from the capital contribution reserves: in CHF 31.12.2011 31.12.2010 Balance carried forward from previous year Profit/loss after taxes Reversal of free reserves Transfer from capital contribution reserves Total available for distribution Payout from capital contribution reserves of CHF 4.00 per registered share (2010: CHF 2.00) which is not subject to withholding tax1) Allocation to free reserves Profit carried forward Total 0 14 195 845 0 13 603 520 27 799 365 13 603 520 14 000 000 195 845 4 661 246 −8 637 765 3 976 519 6 801 760 6 801 760 6 801 760 0 0 27 799 365 6 801 760 1) The stated amount covers the requirement for the payout from capital reserves for all registered shares outstanding. Registered shares which will be issued after 1 January 2012 upon exercise of options are also entitled to the payout from capital reserves. Therefore, the stated amount may be subject to changes. E_FB_(CS5_Layout) [P].indd 108 E_FB_(CS5_Layout) [P].indd 108 12.03.12 14:06 12.03.12 14:06 109 Financial Report 48 Consolidated Financial Statements 97 Financial Statements of Komax Holding AG 106 Corporate Structure Report of the statutory auditor to the general meeting of Komax Holding AG Dierikon Report of the statutory auditor on the financial statements As statutory auditor, we have audited the financial statements of Komax Holding AG, which comprise the balance sheet, income statement and notes (pages 99 to 107), for the year ended 31 December 2011. 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 appropriateness of the accounting policies used and the reasonableness of accounting esti- mates 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 31 December 2011 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 independence (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 state-ments 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. PricewaterhouseCoopers Ltd Gerd Tritschler Audit expert Auditor in charge Basel, 9 March 2012 Petra Schwick Audit expert E_FB_(CS5_Layout) [P].indd 109 E_FB_(CS5_Layout) [P].indd 109 12.03.12 14:06 12.03.12 14:06 110 Glossary Mechatronics Crimping The term mechatronics describes the synergistic interaction between the specialist disciplines of mechanical engineering, electrical engi- neering and computer engineering in the design and manufacture of industrial products and in process design. Crimping is a bonding technique whereby two components are joined together by plastic deformation. It thus constitutes an alternative to conventional bonding methods such as soldering or welding. Crimp connections are predominantly used in mass production settings with non-stop assembly of single strands. Crimp force monitoring Measurement and monitoring of crimping processes during wire con- nector crimping. Micrograph laboratory Stripping Twisting Solar cell Solar module Stringing Micrographs are an important criterion for analysing the quality of crimp connections and ensuring traceability in production. Micrograph laboratories analyse and document the quality of crimp connections, using colour pictures. Process whereby a section of the insulating cover (or “insulation sleeve/sheath”) of an electrical conductor (wire or flex) is removed up to a specific required length to allow the wire to be connected to ano- ther component. Process whereby wires are twisted against one another and wound to- gether into a spiral. Twisted pairs are a low-cost way of preventing electromagnetic interference. A solar cell, or photovoltaic cell, is an electronic component that con- verts short-wave radiation energy, usually sunlight, directly into elec- tricity. A solar module, or photovoltaic module, converts sunlight directly into electricity. Its most important components are a number of solar cells. Process whereby individual solar cells are joined together in individual “strings” using soldering strips. E_FB_(CS5_Layout) [P].indd 110 E_FB_(CS5_Layout) [P].indd 110 12.03.12 14:06 12.03.12 14:06 111 Further Information 110 Glossary 112 Addresses 115 Five-Year Overview Wafer Inhaler Pen Wafers are circular discs of less than 1mm in thickness. They are manufactured from mono- or polycrystalline (semiconductor) blanks (so-called ingots) and are usually used as a substrate (base plate) for electronic components. Device used in the treatment of asthma, bronchitis and other chronic or acute respiratory diseases. Injection device, for example for administering insulin, characterized by its ease of use. Self-medication Self-treatment with medicines. E_FB_(CS5_Layout) [P].indd 111 E_FB_(CS5_Layout) [P].indd 111 12.03.12 14:06 12.03.12 14:06 112 Addresses Komax Jinchen Solar Equipment (Yingkou) Co. Ltd. CN-115000 Yingkou Phone +86 417 3252 372 +86 417 3252 402 Fax Croatia Mikom D.O.O. HR-49247 Zlatar Bistrica Hrvatska Phone +385 49 462 034 Fax +385 49 461 839 mikom@mikom.hr Czech Republic Komax Deutschland GmbH DE-90449 Nürnberg Phone +49 911 32 49 50 +49 911 32 49 550 Fax matthias.klaus@komaxgroup.com Denmark Matech Systems ApS DK-7190 Billund Phone +45 75 33 89 49 Fax +45 75 33 89 46 info@matechsystems.dk Egypt Sigma Group Egypt EG-11361 Kairo Phone +202 2644 7245 Fax +202 2642 3604 info@sigma-g.com El Salvador Komax Service Office HN-San Pedro Sula Cortes Honduras Phone +1 9932 5200 guillermo.lopez@komaxgroup.com Estonia Gammeter OU EE-76606 Keila Phone +372 671 22 52 Fax +372 671 22 53 info@gammeter.ee Headquarters Komax Holding AG CH-6036 Dierikon Phone +41 41 455 04 55 Fax +41 41 450 42 66 info.din@komaxgroup.com Botswana Edge Africa Wire Processing Solutions ZA-6055 Port Elizabeth Phone +27 41 395 5800 Fax +27 41 365 0138 brian@edgea.co.za Angola Komax Portuguesa PT-2785-034 S. Domingos de Rana Phone +351 21 444 8480 Fax +351 21 444 8499 miguel.peres@komaxgroup.com Brazil Komax Comercial do Brasil Ltda. BR-06440-110 Barueri/São Paulo Phone +55 11 3028 1112 Fax +55 11 4689 1221 andre.pedroni@komaxgroup.com Argentina El Proveedor S.R.L. AR-Buenos Aires Phone +54 11 476 136 07 +54 11 476 136 07 Fax nmatus@elproveedorsrl.com.ar Australia Suba Engineering Pty. Ltd. AU-2200 Bankstown N.S.W. Phone +61 297 900 900 Fax +61 297 083 040 subasyd@suba.com.au Austria Thonauer GmbH AT-1230 Wien Phone +43 1 804 28 710 Fax info@thonauer.at +43 1 804 28 7110 Belarus Asber BY-220018 Minsk Phone +375 17 258 1166 +375 17 258 2550 Fax info@asber.by Belgium Smans N.V. BE-2300 Turnhout Phone +32 1442 4401 Fax +32 1442 6072 info@smans.com Bulgaria Tekuni Eood BG-1415 Dragalevtsi Phone +359 897 761 159 Fax info@tekuni.biz +359 297 530 32 Canada Komax Corporation US-Buffalo Grove, IL 60089-4507 Phone +1 847 537 6640 Fax +1 847 537 5751 info.buf@komaxgroup.com China Komax Shanghai Co. Ltd. CN-201100 Shanghai Phone +86 21 2416 5668 Fax +86 21 2416 5669 andy.lau@komaxgroup.com Beijing Office Phone +86 10 5162 7825 +86 10 5278 6140 Fax Changchun Office Phone +86 431 8455 2252 +86 431 8455 2251 Fax Chendu Office Phone +86 28 8738 24 85 +86 28 8738 24 86 Fax Guangzhou Office Phone +86 20 2886 0648 +86 20 3878 0400 Fax Kontakt Shandong Office Phone +86 631 5990 475 +86 631 5990 465 Fax Production Sales and service Participation Sales representative E_FB_(CS5_Layout) [P].indd 112 E_FB_(CS5_Layout) [P].indd 112 12.03.12 14:06 12.03.12 14:06 113 Further Information 110 Glossary 112 Addresses 115 Five-Year Overview Finland Gammeter OY FI-33101 Tampere Phone +358 3380 2211 Fax +358 3380 2244 info@gammeter.fi France Komax France FR-93806 Epinay-sur-Seine Phone +33 14 940 1313 Fax +33 14 940 1329 denis.loizon@komaxgroup.com Komax France FR-13106 Rousset Phone +33 44 229 1200 Fax +33 44 229 1212 info.ros@komaxgroup.com Germany Komax Deutschland GmbH DE-90449 Nürnberg Phone +49 911 32 49 50 Fax +49 911 32 49 550 matthias.klaus@komaxgroup.com SLE quality engineering GmbH & Co. KG DE-94481 Grafenau Phone +49 911 32 49 50 Fax +49 911 32 49 550 AAT Aston GmbH DE-90257 Nürnberg Phone +49 911 32 66 210 Fax +49 911 32 66 299 info@aston.de Great Britain KPE Ltd. GB-Hants SO31 5QA Phone +44 845 519 2418 Fax +44 238 045 4675 bthornton@kpeltd.co.uk Honduras Komax Service Office HN-San Pedro Sula Cortes Honduras Phone +1 9932 5200 guillermo.lopez@komaxgroup.com Hungary Thonauer Kereskedelmi és Szerviz Kft. HU-1113 Budapest Phone +36 1372 7700 Fax +36 1372 7709 hungary@thonauer.net India Komax Automation India Pvt. Ltd. IN-122016 Gurgaon Phone +91 124 4599 100 Fax +91 124 4599 101 pradeep.kaura@komaxgroup.com Indonesia Komax Singapore Pte. Ltd. SG-368357 Singapur Phone +65 6285 9713 Fax +65 6285 9714 larry.wee@komaxgroup.com Ireland Kinetic Electronics Ltd. IE-Co. Offaly Phone +353 5793 21014 Fax +353 5793 21014 sean@kinetic.ie Israel Tamir Engineering & Development Ltd. IL-49170 Petach-Tiqva Phone +972 3922 9422 Fax +972 3922 9411 tamireng@netvision.net.il Italy Cofilimacchine S.R.L. IT-20853 Biassono Phone +39 039 232 41 25 Fax +39 039 232 21 45 info@cofilimacchine.it Japan MCM Cosmic KK JP-Tokyo 191-0062 Phone +81 42 582 7911 Fax +81 42 582 7922 info@mcmcosmic.co.jp Korea Hansung Tech Cc. Ltd. KR-463-828 Kyunggi-Do Phone +82 31 781 3971 Fax +82 31 781 3975 hiin@hansungtech.co.kr Latvia Gammeter OU EE-76606 Keila Phone +37 2671 2251 Fax +37 2671 2253 info@gammeter.ee Luxembourg Smans N.V. BE-2300 Turnhout Phone +32 1442 4401 Fax +32 1442 6072 info@smans.com Malaysia Komax KL MY-58000 Kuala Lumpur Phone +60 37981 2662 Fax +60 37987 8662 barron@pc.jaring.my Komax Systems Malaysia Sdn. Bhd. MY-11900 Penang Phone +60 4627 2233 Fax +60 4627 2231 gerard.probst@komaxgroup.com Mexico Komax Corporation US-El Paso, TX 79936 Phone +1 915 591 4551 Fax +1 915 591 5868 enrique.romero@komaxgroup.com Montenegro Mikom D.O.O. HR-49247 Zlatar Bistrica Hrvatska Phone +385 49 462 034 Fax +385 49 461 839 mikom@mikom.hr Morocco Komax Maroc MA-20800 Mohammédia Phone +212 5 2330 5285 +212 5 2330 5173 Fax fabien.molinier@komaxgroup.com Netherlands Smans N.V. BE-2300 Turnhout Phone +32 1442 4401 Fax +32 1442 6072 info@smans.com New Zealand Suba Engineering Ptv. Ltd. AU-2200 Bankstown N.S.W. Phone +61 297 900 900 Fax +61 297 083 040 subasyd@suba.com.au Nicaragua Komax Service Office HN-San Pedro Sula Cortes Honduras Phone +1 9932 5200 guillermo.lopez@komaxgroup.com Norway Adcontact AB SE-17207 Sundbyberg Phone +46 8445 3600 Fax +46 8445 3610 info@adcontact.se Philippines Neuftech Philippines Inc. PH-4027 Calamba Laguna Phone +63 49 545 4056 Fax +63 49 545 4262 jdcntech@pldtdsl.net Poland JP International PL-02-743 Warschau Phone +48 22 843 3566 +48 22 847 4888 Fax jpint@jpint.it.pl Evoltec PL-02-676 Warschau Phone +48 22 550 27 40-44 Fax tomasz.pawlowski@evoltec.pl +48 22 550 27 45 E_FB_(CS5_Layout) [P].indd 113 E_FB_(CS5_Layout) [P].indd 113 12.03.12 14:06 12.03.12 14:06 114 Spain Estanflux S.A. ES-08023 Barcelona Phone +34 9 3351 6151 Fax +34 9 3352 3845 comercial@estanflux.es sat@estanflux.com Sweden Adcontact AB SE-17207 Sundbyberg Phone +46 8445 3600 Fax +46 8445 3610 info@adcontact.se Switzerland Komax AG CH-6036 Dierikon Phone +41 41 455 04 55 Fax +41 41 450 42 66 info.din@komaxgroup.com Komax AG CH-6343 Rotkreuz Phone +41 41 799 45 00 Fax +41 41 799 45 01 info.rok@komaxgroup.com Komax Systems LCF SA CH-2301 La Chaux-de-Fonds Phone +41 32 924 71 11 Fax +41 32 924 71 15 info.lcf@komaxgroup.com Taiwan Chain Year Industr. Corp. RC-221 Taipei Hsien Phone +886 22 691 3568 Fax +886 22 691 3586 sales@chainyear.com.tw Thailand DKSH (Thailand) Ltd. TH-10310 Bangkok Phone +66 2652 7901-10 Fax +66 2652 9417-18 weilun.tsao@dksh.com Tunesia Reemi TN-2000 Le Bardo Phone +216 71 222 811 Fax +216 71 519 913 reemi@planet.tn Turkey Unitek Elektrik San. Ve Tic. Ltd. Sti. TR-34852 Maltepe – Istanbul Phone +90 216 518 9440 +90 216 518 9436 Fax info@unitek-elektrik.com Portugal Komax Portuguesa PT-2785-034 S. Domingos de Rana Phone +351 21 444 8480 Fax +351 21 444 8499 miguel.peres@komaxgroup.com Romania SC Thonauer Automatic S.R.L. RO-024011 Bukarest Phone +40 21335 1287 Fax +40 21336 9534 sales@thonauer.ro Russia Ostec RU-121467 Moskau Phone +7 495 788 4444 +7 495 788 4442 Fax igor.volkov@ostec-group.ru Ostec RU-195009 St. Petersburg Phone +7 911 849 7986 Fax +7 495 788 4442 eugene.belov@ostec-group.ru Komax Moskau RU-125190 Moskau Phone +7 495 363 5532 Fax +7 495 363 5532 info.rus@komaxgroup.com Serbia Mikom D.O.O. HR-49247 Zlatar Bistrica Hrvatska Phone +385 49 462 034 Fax +385 49 461 839 mikom@mikom.hr Singapore Komax Singapore Pte. Ltd. SG-368357 Singapur Phone +65 6285 9713 +65 6285 9714 Fax larry.wee@komaxgroup.com Slovakia Thonauer SPOL S.R.O. SK-81339 Bratislava Phone +421 2527 33664 Fax +421 2527 33665 info@thonauer.sk Slovenia Mikom-si D.O.O. SI-3320 Velenje Phone +386 3 8919 310 Fax +386 3 8919 311 mikom-si@siol.net South Africa Edge Africa Wire Processing Solutions ZA-6055 Port Elizabeth Phone +27 41 395 5800 +27 41 365 0138 Fax brian@edgea.co.za Ukraine Wireworks UA-79015 Lviv Phone +38 067 673 0314 Fax +38 032 245 1193 andriy.tytomyr@wireworksua.com Uzbekistan Ostec RU-121467 Moskau Phone +7 495 788 4444 Fax +7 495 788 4442 igor.volkov@ostec-group.ru USA Komax Corporation US-Buffalo Grove, IL 60089-4507 Phone +1 847 537 6640 +1 847 537 5751 Fax info.buf@komaxgroup.com Komax Systems Rockford Inc. US-Rockford, IL 61109 Phone +1 815 229 3800 Fax +1 815 229 5491 bill.hoff@komaxgroup.com Komax Solar Inc. US-York, PA 17402 Phone +1 717 755 6800 Fax +1 717 755 4300 brian.micciche@komaxsolar.com Vietnam Ho Chi Minh Office DKSH Technology Co. Ltd. VN-Ho Chi Minh City Phone +84 38 125 806 Fax +84 38 125 807 ngoc.thihong.vu@dksh.com Hanoi Office DKSH Technology Co. Ltd. VN-Hanoi Phone +84 34 9424 725 Fax +84 34 9424 730 huu.viet.nguyen@dksh.com All other countries Komax AG CH-6036 Dierikon Phone +41 41 455 04 55 Fax +41 41 450 42 66 info.din@komaxgroup.com Production Sales and service Participation Sales representative E_FB_(CS5_Layout) [P].indd 114 E_FB_(CS5_Layout) [P].indd 114 12.03.12 14:06 12.03.12 14:06 115 Further Information 110 Glossary 112 Addresses 115 Five-Year Overview 2011 2010 2009 2008 2007 371 424 200 837 54.1 54 906 14.8 47 536 12.8 39 280 10.6 7 370 10 055 13 536 −61 23 526 6.3 361 448 112 454 248 994 246 994 68.3 340 5.2 7 333 24 546 5 890 19 500 20 511 6.0 318 698 107 162 211 536 212 523 66.7 340 340 172 178 559 52.5 211 504 120 169 56.8 36 443 −14 504 10.7 −6.9 29 110 −22 672 8.6 −10.7 17 780 −19 835 23 226 342 733 192 636 348 818 199 454 56.2 39 091 11.4 31 119 9.1 6.8 7 972 29 268 8 744 21 717 25 248 7.4 322 086 108 397 213 689 222 098 69.0 339 57.2 51 296 14.7 43 259 12.4 32 674 9.4 8 037 23 770 6 720 17 358 21 547 6.2 310 946 111 573 199 373 224 491 72.2 336 99 988 85 669 31.0 2 000 24 680 19 683 1 138 309 137 130 3 388 0.10 175.00 48.95 53.90 27.6 2 000 13 507 20 034 1 050 343 159 151 3 359 0.10 217.20 152.00 181.00 −9.4 8 168 −8 196 14 414 −21 513 20 101 9.5 290 855 114 187 176 668 199 899 68.7 339 90 956 31.3 44 524 0 −6 270 987 209 87 79 3 388 0.10 80.00 36.05 72.00 113 413 106 175 31.4 46 571 0 5 604 1 140 343 147 140 3 401 0.10 120.00 59.00 68.75 No. No. 1 000 CHF CHF CHF CHF 33.3 42 374 0 12 026 1 023 333 135 127 3 401 0.10 103.00 73.10 102.00 Five-year overview in TCHF Revenues1) Gross profit in % of revenues EBITD in % of revenues Operating profit/loss (EBIT) in % of revenues Group profit/loss after taxes (EAT) in % of revenues Depreciation Cash flow from operating activities Investments in non-current assets Free cash flow Research and development in % of revenues Total assets Non-current assets Current assets Shareholders’ equity2) in % of total assets Share capital Total liabilities in % of total assets Non-current financial loans Current financial loans Net cash (+)/net indebtedness (−) Headcount (at year-end) Revenues per employee3) Gross value added per employee3) Net value added per employee3) Shares4) Par value High Low Closing price on 31.12. 1) Revenues: net sales + other operating income. 2) Equity attributable to equity holders of the parent company. 3) Calculated on the basis of average headcount. 4) Changes resulting from the exercising of option rights. E_FB_(CS5_Layout) [P].indd 115 E_FB_(CS5_Layout) [P].indd 115 12.03.12 14:06 12.03.12 14:06 116 Komax Holding AG Investor Relations and Corporate Communications Marco Knuchel Industriestrasse 6 CH-6036 Dierikon Phone +41 41 455 06 16 marco.knuchel@komaxgroup.com Financial calendar Annual General Meeting Dividend payment Half-year results 2012 3 May 2012 10 May 2012 21 August 2012 First information on the year 2012 15 January 2013 Annual media conference/analysts’ presentation 2012 Annual General Meeting 19 March 2013 3 May 2013 E_FB_(CS5_Layout) [P].indd 116 E_FB_(CS5_Layout) [P].indd 116 12.03.12 14:06 12.03.12 14:06 Forward-looking statements The present Annual Report contains forward-looking statements in relation to Komax which are based on current assumptions and expectations. Unfore- seeable events and developments could cause actual results to differ ma- terially from those anticipated. Exam- ples include: changes in the economic and legal environment, the outcome of legal disputes, exchange rate fluctu- ations, unexpected market behaviour on the part of our competitors, negative publicity and the departure of members of management. The forward-looking statements are pure assumptions, made on the basis of information that is currently available. This Annual Re- port is available in English and German. The original German version is binding. Imprint Published by: Komax Holding AG, Dierikon Concept and realisation: Linkgroup AG, Zürich www.linkgroup.ch Steiner Communications, Zürich/Uitikon www.steinercom.ch Illustration: Corinna Staffe, Lyon www.corinnastaffe.com Photography: Zeljko Gataric, Zürich, www.gataric-fotografie.ch Produced on a climate neutral basis by Linkgroup. 0328549 1 1 0 2 t r o p e R l a u n n A x a m o k T i e k A m o T y A w e h T Komax Holding AG Industriestrasse 6 CH-6036 Dierikon Switzerland Phone +41 41 455 04 55 www.komaxgroup.com 

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