5 1 0 2 T R O P E R L A U N N A X A M O K Annual Report 2015 2014 Geschäftsbericht THE WAY TO MAKE IT E_00_GB_Komax_UG_2015_(CC_Layout) [P].indd 3 14.03.16 08:55 E_00_GB_Komax_UG_2015_(CC_Layout) [P].indd 4 14.03.16 08:55 CORPORATE GOVERNANCE 55 COMPENSATION REPORT 69 CONTENTS FINANCIAL REPORT Consolidated financial statements 84 Financial statements of Komax Holding AG 145 Corporate structure 154 FURTHER INFORM ATION Glossary 158 Five-year overview 159 ANNUAL REPORT In brief 2 Shareholders’ letter 6 Locations 8 Business model and strategy 10 Board of Directors and Executive Committee 18 Business Unit Wire 20 Business Unit Medtech 28 Sustainability and social responsibility 36 Information for investors 42 Vocational training 47 E_00_GB_Komax_2015_(CC_Layout) [P].indd 1 1 1 11.03.16 17:49 KOMAX GROUP ANNUAL REPORT2015 COMPANY IN BRIEF The Komax Group is a globally active tech- nology company specializing in automation solutions for selected processes. With its innovative and high-quality solutions for the wire-processing industry and systems for the assembly of self-medication devices, Komax helps its customers implement eco- nomical and safe manufacturing processes, especially in the automotive supply and pharmaceutical sectors. e Komax Wire offers a comprehensive range of automated, intelligent processing solutions for all wire-processing applica- tions. Standard and customer-specific systems are supplemented by an exten- sive range of quality assurance modules, testing devices, and networking solutions for the reliable and efficient production of wire harnesses. Moreover, a sophisti- cated service offering supports customers around the world after their systems have been commissioned, thereby ensuring high availability and low impairment for their investment. e Komax Medtech develops complex customer-specific systems for the automatic assembly of medical devices for self-medication, such as inhalers and insulin delivery or injection systems. It offers its customers solutions at all development levels of a project, from the concept phase through to large-volume line production. Integral validation con- cepts that are geared to internationally accepted standards and a wide range of service options complete the offering. 2 E_00_GB_Komax_2015_(CC_Layout) [P].indd 2 11.03.16 17:49 KOMAX GROUP ANNUAL REPORT2015 C OMPANY IN BRIEF 48% Europe Net sales by region 18% Asia 23% North- / South America 3% Africa Switzerland 8% ���� ��� 13% Others 75% Automotive Net sales by industry 12% Medtech Order intake +20.4% 368.5m Revenues in CHF +1.4% Share price CHF 194.90 +35% Dividend yield 2.8% S E R U G F I S T C A F D N A E_00_GB_Komax_2015_(CC_Layout) [P].indd 3 3 11.03.16 17:49 KOMAX GROUP ANNUAL REPORT2015 COMPANY IN BRIEF 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 from continuing operations 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 Headcount (at year-end) No. 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. 4 2015 2014 +/− in % 442 836 367 702 20.4 368 462 363 338 236 116 220 188 1.4 7.2 64.1 60.6 56 708 57 663 –1.7 15.4 15.9 46 732 48 102 –2.8 12.7 13.2 32 087 8.7 43 660 –26.5 12.0 29 215 27 743 5.3 7.9 49 612 18 850 24 519 26 669 7.2 8.00 1 580 7.6 30 295 15 566 14 412 25 776 7.1 7.64 1 498 398 967 388 052 160 940 145 562 238 027 242 490 49 454 34 365 47 368 29 211 283 134 284 168 71.0 73.2 63.8 21.1 70.1 3.5 4.7 5.5 2.8 10.6 –1.8 4.4 17.6 –0.4 E_00_GB_Komax_2015_(CC_Layout) [P].indd 4 11.03.16 17:49 KOMAX GROUP ANNUAL REPORT2015 C OMPANY IN BRIEF Operating profit (EBIT) Shareholders’ equity in TCHF in TCHF 0 0 0 0 4 0 0 0 0 2 0 1 1 0 2 2 1 0 2 3 1 0 2 4 1 0 2 5 1 0 2 EBIT EBIT in % of revenues1 Group profit after taxes (EAT) in TCHF 0 0 0 0 4 0 0 0 0 2 0 1 1 0 2 2 1 0 2 3 1 0 2 4 1 0 2 5 1 0 2 % 4 1 % 7 % 0 % 0 1 % 5 % 0 0 0 0 0 0 2 0 0 0 0 0 1 0 1 1 0 2 2 1 0 2 3 1 0 2 4 1 0 2 5 1 0 2 Shareholders’ equity2 Equity in % of total assets Net working capital (NWC) in TCHF 0 0 0 0 5 1 0 0 0 5 7 0 1 1 0 2 2 1 0 2 3 1 0 2 4 1 0 2 5 1 0 2 % 0 6 % 0 3 % 0 % 0 6 % 0 3 % 0 EAT EAT in % of revenues1 NWC 3 NWC in % of revenues1 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. E_00_GB_Komax_2015_(CC_Layout) [P].indd 5 5 11.03.16 17:49 KOMAX GROUP ANNUAL REPORT2015 ANNUAL REPORT SHAREHOLDERS’ LETTER Dear Shareholders, The decision by the Swiss National Bank to abandon the minimum euro/franc exchange rate got 2015 off to a tumultuous start. It forced our entire organization to analyze the new param- eters and then formulate and implement prompt damage limitation measures. We believe we did this very well. Despite the hostile environment, we can once again look back on a very success- ful year. Moreover, we have set a new direction for the Komax Group. After reviewing all the strategic options for Komax Medtech, the focus is now on the sale of this business unit. As a result, the Komax Group will concentrate on its core business in the future. This will present numerous oppor- tunities, which we will seize with the aim of gen- erating further profitable growth. Order intake increased by 20.4% to CHF 442.8 million and consolidated revenues increased by 1.4% to CHF 368.5 million (2014: CHF 363.3 million). Currency influences weighed on growth to the tune of –3.0 percent. Operating profit (EBIT) reached CHF 46.7 million (2014: CHF 48.1 million). The EBIT margin was 12.7%. Cur- rency influences here amounted to –1.5 percent- age points. The removal of the cap on the mini- mum euro-franc exchange rate also left its mark on the financial result: As a result of one-off, non-cash currency losses, particularly on loans, financial expenses rose to CHF 7.7 million (2014: CHF 1.3 million). Group profit after taxes from continuing operations nevertheless amounted to CHF 32.1 million (2014: CHF 43.7 million). Earn- ings from discontinued operations amounted to CHF –2.9 million (2014: CHF –15.9 million). This figure essentially comprises non-cash charg- es for valuation adjustments. Group profit after taxes reached CHF 29.2 million (2014: CHF 27.7 million), resulting in an increase in basic earnings per share to CHF 8.00 (2014: CHF 7.64). The Komax Group remains in extremely robust finan- cial health. On the balance sheet date, sharehold- ers’ equity stood at CHF 283.1 million (2014: 6 CHF 284.2 million) while the equity ratio stood at 71.0% (2014: 73.2%). Free cash flow amounted to a high CHF 24.5 million (2014: CHF 14.4 million). Net cash increased to CHF 34.4 million (2014: CHF 29.2 million). In view of the pleasing growth in earnings, the comfortable equity base and positive outlook, the Board of Directors is proposing to the Annual General Meeting an in- crease in the distribution to shareholders from CHF 5.00 to CHF 6.00 per share, of which CHF 4.50 will be paid out as a dividend and CHF 1.50 distributed from capital contribution reserves. The payout ratio is therefore 75%. The dividend yield on the date of the Board resolution stood at an attractive 2.8%. Dividend payments from the capital contribution reserves are tax-free for natural persons living in Switzerland who hold shares as part of their private assets. Komax Wire After a very positive first half of the year, momen- tum picked up further in the second half. Ac- cordingly, Komax Wire was again able to exceed the previous year’s impressive performance, des- pite the strength of the franc. The Europe and North/South America regions generated the strongest growth in 2015. The key drivers of this pleasing development were the persistently robust health of the automotive industry and the continuing trend to further automate manual processes and enhance processing quality in wire- processing. In addition, the preference for higher-quality, complex processing solutions was confirmed. Order intake increased by 15.1% to CHF 348.4 million (2014: CHF 302.6 million). Net sales rose by 6.2% to CHF 313.3 million (2014: CHF 295.0 million). Internal growth amounted to more than 10%. EBIT came in at CHF 59.7 million (2014: CHF 55.3 million). Following the acquisition of a minority stake in Laselec, the takeover of Thonauer Group, and the establishment of affiliates in Romania and Mexico, Komax Wire has further strengthened its technological and geographic base. Moreover, it has redefined the industry benchmark with its new generation of fully automatic crimping machines. On the operational side, the focus is on delivering improvements through continuous scrutiny and further optimization of established processes. In view of the successes it has achieved, Komax Wire intends to adhere to its chosen growth- E_00_GB_Komax_2015_(CC_Layout) [P].indd 6 11.03.16 17:49 2015KOMAX GROUP ANNUAL REPORT ANN UA L REPORT SH AREHO LD ER S’ LETTER by the entire workforce on a day-to-day basis is truly impressive. We would also like to thank our customers and business partners for their confi- dence and constructive partnership. Last but not least, we thank you, our valued shareholders, for your ongoing commitment to our company. Outlook The current macroeconomic environment remains characterized by wide-ranging uncertainty. Against this backdrop, Komax is focusing on the fac- tors that it can directly influence itself, and is therefore looking to its clear strengths such as its innovative drive and customer orientation. Based on these foundations, Komax will further enhance its profile and continue to seize – after careful scrutiny – opportunities to further ad- vance the company. From today’s standpoint, we envisage another good result for 2016. Dr. Beat Kälin Chairman of the Board of Directors Matijas Meyer Chief Executive Officer generating course. At the beginning of 2016, it further consolidated its leading market position by acquiring Ondal Tape Processing and the business of SLE Electronics USA. Komax Medtech After a subdued start to 2015, Komax Medtech witnessed a powerful increase in its order intake as the year developed, with the cumulative order intake amounting to an exceptional CHF 94.5 million (2014: CHF 65.1 million). In addition to repeat business, which in some cases is released over a period of several years, numerous com- mercially interesting projects involving existing applications and processes were acquired from new customers. However, since these orders were placed relatively late in 2015 and some of them have lead times of several months, this pleasing development has not yet fed through into the income statement. Indeed, the volatile devel- opment of business had the effect of weighing on capacity utilization at the business unit’s three locations. Net sales revenue reached CHF 54.7 million (2014: CHF 68.6 million). Given the rela- tively high proportion of value creation in Swit- zerland, Komax Medtech also suffered from the strength of the franc. EBIT accordingly amount- ed to CHF –2.6 million (2014: CHF 1.2 million). Relations with our shareholders and thanks By maintaining an intensive dialogue, the Board of Directors builds up an ever-evolving picture of the multifaceted opinions of shareholders and proxies on issues of importance to the future of the company. These include the debate sur- rounding the controversial issues of voting right restrictions and the compensation paid to the senior management bodies of companies. The Board of Directors takes the views put for- ward by shareholders very seriously, and takes them into account in its deliberations. Accordingly, the agenda of the upcoming Annual General Meeting will include a proposal to increase the registration and voting rights restriction from 5 to 15%, and an advisory vote on the compensation paid to senior managers last year. The pleasing business result, which surpasses that of last year, was better than we anticipated. A powerful contributory factor here was the high motivation and great dedication of all Komax Group employees, who deserve our thanks for their exemplary performance. The spirit shown E_00_GB_Komax_2015_(CC_Layout) [P].indd 7 7 11.03.16 17:49 2015KOMAX GROUP ANNUAL REPORT ANNUAL REPORT LOCATI ONS The Komax Group has a presence in all key production centres of its customers. It has its finger on the pulse of industry and understands its needs. Komax develops appropriate, high-value and innovative auto- mation solutions for local requirements in global markets by drawing on its 40 years’ experience. e Komax produces in Europe, North and South America, Asia and Africa, and provides sales and service support in some 60 countries through its subsidiaries and independent agents. 8 E_00_GB_Komax_2015_(CC_Layout) [P].indd 8 11.03.16 17:50 KOMAX GROUP ANNUAL REPORT2015 AN NUA L REPORT LOCATIONS 16 production sites Headquarters: Komax Holding AG Dierikon, Switzerland 30 Komax companies worldwide Sales and service support in 60 countries D N U O R A D L R O W E H T Komax production, sales and service Komax sales and service Sales representative Participation E_00_GB_Komax_2015_(CC_Layout) [P].indd 9 9 11.03.16 17:50 KOMAX GROUP ANNUAL REPORT2015 ANNUAL REPORT BUSI NESS MODEL AND STR ATE G Y Komax pursues a strategy aimed at delivering above-average profitability and ongoing sus- tainable growth. This strategy goes hand in hand with environmentally conscious, socially aware and responsible conduct towards all stake- holder groups. The Group’s strategy provides the framework in which its business units, which are largely autonomous and active in a number of different markets, operate. 10 E_00_GB_Komax_2015_(CC_Layout) [P].indd 10 11.03.16 17:50 KOMAX GROUP ANNUAL REPORT2015 Technology leader Highly innovative ANN UA L REPORT B USINESS MODEL AND STR ATEGY Highly profitable Net sales Medtech 15% by segment�� Wire 85% D N A L E D O M Y G E T A R T S S S E N I S U B E_00_GB_Komax_2015_(CC_Layout) [P].indd 11 11 11.03.16 17:50 KOMAX GROUP ANNUAL REPORT2015 ANNUAL REPORT BUSI NESS MODEL AND STR ATEG Y e Komax Wire – benchmark for the wire-processing industry Komax Wire specializes in innovative solutions for all wire-processing applications and for the testing of wire harnesses. The emphasis is on processes such as measuring, cutting, stripping and fitting contacts and connector housings to cables, and on the testing of wire harnesses. Standard and customer-specific systems are supplemented by an extensive range of quality assurance modules and networking solutions for the reliable and efficient production of wire harnesses. The business unit also supplies testing systems. These systems test the functions of mechatro nic assemblies, such as doors, seats and cockpits, measuring not only electrical parameters but also a wide range of physical properties. Komax Wire offers its customers a comprehensive range of efficient and reliable automation solutions. Here the business unit relies not only on proprietary developments, but also on the expertise of established partners that may be acquired or incorporated into a select specialist network. This enables Komax Wire to continuously expand its leading market position. Komax Wire differentiates itself from its competitors through its leading technologies, unmatched innovativeness, comprehensive range of wire-processing solutions and test systems, and a glob- al service and distribution network. Komax Wire is the global leader in its field, with a market share more than twice that of its nearest competitor. Komax Wire pursues four key strategic priorities. First, it is continuing to develop its existing business along the value chain. This involves fully automatic and semi-automatic solutions with integrated quality assurance. Solutions for increasing availability and testing the productivity of installed systems are as much a part of this as new intelligent software interfaces and expanded quality testing capabilities. In the development of innovative manufacturing concepts, the second strategic priority, Komax Wire focuses on new solutions for the customer- and application-spe- cific demands of wire-processing industries, and on optimizing the product portfolio by means of a clear product platform strategy. The third strategic priority of Komax Wire is to further expand its global reach. Fourthly, it will continue to advance into areas of application outside the auto- motive industry. These include areas such as the aerospace industry, telecoms, data communi- cation and additional industrial applications, particularly control cabinet manufacturing. All stra- tegic priorities are pursued with the aim of continuously increasing the operational effectiveness and efficiency of Komax Wire, and achieving above-average, profitable growth. Komax Wire’s offering covers the most capital-intensive and critical processes of its customers’ value creation chains. Customers receive single-source solutions for the key wire-processing applications from Komax Wire – a feature that makes Komax unique in the world. In the future, the diverse competencies that Komax Wire unites under a single roof will give rise to new innovative production concepts that will further simplify wire harness producers’ processes and drive forward automation in the targeted industries. 12 E_00_GB_Komax_2015_(CC_Layout) [P].indd 12 11.03.16 17:50 2015KOMAX GROUP ANNUAL REPORT The markets served by Komax enjoy a profile of structural growth. The global need for automation solutions will further increase. ANN UA L REPORT B USINESS MODEL AND STR ATEGY e Komax Medtech Around 20% EBIT margin at Komax Wire Komax Medtech develops customer-specific machine sys- tems for the automatic assembly of medical products such as inhalers or insulin administration and injection systems. Komax Medtech also produces systems for the efficient mass production of inkjet printer cartridges and the assem- bly of vehicle transmissions. The sales price of such systems ranges between a few hundred thousand and several million Swiss francs, depending on their complexity. Medical devices in particular are subject to especially rigor- ous cleanliness, quality and safety requirements. Komax Medtech has many years of experience in this field, and has standardized and certified validation processes in place to ensure that its systems comply with all relevant standards. It also complies with the requirements of Good Automated Manufacturing Practice, an internationally recognized set of guidelines. Komax Medtech’s top priority is to stabilize profitability, which depends very heavily on careful project selection, the development of a well-balanced portfolio, and efficient execution. A well-structured project portfolio contains a sub- stantial proportion of projects providing repeat business, plus some new projects with the potential for repeat busi- ness. Komax Medtech is endeavouring to continue to reduce its dependency on individual large projects and to distribute its capacity across a bigger number of orders. As the principal focus of the Komax Group is the wire business, all strategic options are being reviewed for Komax Medtech. The primary focus of this review is on the sale of this business unit. e Sales growth and EBIT margin targets As part of its transparent information policy, Komax has announced measurable medium-term net sales growth and EBIT margin targets for the two business units. These should be viewed as guides for internal performance management purposes and for the financial markets. The two business units have different targets. These take into account the different growth momentum of the corresponding end-customer markets, as well as differences in market pos- itioning, business model and capital employed. Komax Wire has an annual sales growth target of 3 to 5%. With an average annual growth rate of around 10% (CAGR) since 2010, this target has been significantly exceeded. Despite the high growth, the EBIT margin has remained within the target range of around 20% or higher. No growth target was defined for Komax Medtech, as the development of sales and profitability depends almost entirely on projects for sophisticated customer-specific systems. The decisive criterion for success here is the ability to select the right projects and implement them efficiently. The target EBIT margin for this business unit is 5%. Komax Medtech has not succeeded in reach- ing this target in recent years. E_00_GB_Komax_2015_(CC_Layout) [P].indd 13 13 11.03.16 17:50 2015KOMAX GROUP ANNUAL REPORT ANNUAL REPORT BUSI NESS MODEL AND STR ATEG Y e Selective acquisitions Komax’s main focus is on internal growth. In addition, poten- tial candidates and opportunities for acquisitions are careful- ly examined as part of a clearly defined acquisition strategy. Komax Wire intends to consolidate its leading market pos- ition with further strategy-compliant acquisitions and partici- pations. e Global production, local distribution and service network Acquisitions complement the activities of Komax Wire perfectly and open up interesting growth opportunities. R&D expenses 7.2% of revenues 406 employees in R&D and engineering Komax has 16 production sites worldwide. Komax Wire pro- duces standardized (off-the-shelf) products for wire process- ing at two locations in Switzerland, as well as in Germany, China and Japan. The TSK brand of test systems is manufac- tured in Germany, Turkey, the US, Brazil, China and Tunisia in order to ensure short supply times for test adapters. The business segment, which encompasses customer-specific systems (value-added business), has centres in Switzerland, Germany, the US and China. Komax Medtech produces its systems in Switzerland, the US and Malaysia. With three production sites in the most import- ant market regions of the world, the business unit is well po- sitioned to meet the expectations of its customers, who are increasingly demanding that suppliers have a local presence. Furthermore, the Group provides sales and service support in around 60 countries through subsidiaries and independent agents. It can therefore provide efficient and competent support to its customers, most of whom operate globally, at all times. Komax is steadily expanding its presence in the emerging economies in line with the rise in de- mand from these markets, as customer proximity is a decisive factor. This allows Komax to keep its finger on the pulse of industry and develop needs-driven, high-value and innovative automa- tion solutions for local requirements in global markets by drawing on 40 years’ experience. More- over, with its global sales and service organization, Komax guarantees short supply and response times. This global orientation reduces the impact of currency fluctuations. Moreover, Komax’s hedging strategy ensures that costs and sales are incurred in the same currencies to the greatest extent possible. 14 E_00_GB_Komax_2015_(CC_Layout) [P].indd 14 11.03.16 17:50 2015KOMAX GROUP ANNUAL REPORT ANN UA L REPORT B USINESS MODEL AND STR ATEGY e High degree of innovation Innovations play a key role in Komax’s success as a market leader. For many years now, the Group has been continuously investing in innovations to optimize its existing product range, as well as in new developments that aim to increase the efficiency and safety of customer pro- cesses. All activities are systematically geared to customer needs and expectations. That is why Komax typically employs interdisciplinary teams – consisting of marketing experts, product man- agers and development engineers – on innovation projects. For example, skilfully combining dif- ferent processes and technologies reduces interfaces and lead times. At the same time, process- ing reliability is increased. In recent years, Komax has invested more than 7% of revenues in research and development, and employed no less than 146 staff in this area in 2015. In addition, some 260 engineers make a substantial contribution to innovation at Komax by developing customer-specific applications. University partnerships and knowledge transfer activities also play their part in keeping the Komax Group at the forefront of technological progress. e Markets and customers Komax Wire currently generates around 90% of its sales through customers in the automotive industry. Market estimates indicate that some 60% of globally processed wiring is used in auto- motive manufacturing. This high proportion is explained by the fact that the automotive industry is peerless when it comes to standardization and automation. The high volume of wires needed for large-batch processing and the stringent requirements in place with regard to finish quality make automated solutions the favoured option for this sector. Over the last five years, Komax Wire has benefited from the overall boom in the automotive in- dustry. Thanks to its global presence, it has been able to balance out the differences in regional cycles to achieve average growth of some 10% – over a third more than the industry itself. Fore- casts for global automotive demand indicate average annual growth of 3 to 4% over the next few years. However, the demand for automation solutions to process the individual wires and wire harnesses installed in vehicles is only partly determined by the number of cars produced and sold. Other key growth drivers include increasingly complex functionalities as well as optimized or new drive systems. Driver assistance, security, and monitoring systems are quickly becoming more commonplace, and it is only a matter of time until autonomous vehicles start to appear. At the same time, the ongoing process of miniaturization is leading to demand for ever thinner or lighter wires and smaller housings, which remain difficult to process and insert by hand. New materials such as aluminium, for example, offer further growth potential. Developments of this kind, together with the ongoing rise in quality demands from automotive manufacturers, are driv- ing supplier companies’ investments in automation solutions even more strongly than vehicle manufacturing volume growth. Komax Wire is benefiting from these developments. E_00_GB_Komax_2015_(CC_Layout) [P].indd 15 15 11.03.16 17:50 2015KOMAX GROUP ANNUAL REPORT ANNUAL REPORT BUSI NESS MODEL AND STR ATEG Y Furthermore, the increasingly widespread principle of zero-error tolerance is driving up demand for testing systems capable of ensuring that the wire harnesses and assemblies installed in ve- hicles work perfectly. This is understandable, as defective wire harnesses and components re- quire considerable time and expense – at the cost of productivity and profitability – to repair or replace once they have been fitted in a vehicle. Furthermore, functional defects in the electronic systems of delivered vehicles can result in serious reputational damage. The other markets serviced by Komax Wire, such as the aerospace industry, telecoms, data com- munication and industrial appliances (control cabinet manufacturing) today account for a rela- tively small proportion of the unit’s sales. However, Komax Wire is seeking to increase penetra- tion in these markets, as they offer attractive growth opportunities in the longer term. A further step in this direction was taken in January 2015 with the acquisition of a 20% stake in the French company Laselec. Laselec develops laser-assisted cable stripping and marking solutions as well as intelligent interactive wire harness layout boards for wire harness production, which are cur- rently used primarily in the aerospace industry. Komax Medtech primarily advises and supplies customers from the pharmaceutical industry, i.e. pharmaceutical companies and their suppliers. Demand for medical devices is benefiting from a long-term rising trend. This is due partly to general demographic developments, and partly to the increasing trend towards the injection of medications and self-medication. Demand for automa- tion solutions for the assembly of devices is linked to the investment behaviour of the pharma- ceutical industry. However, demand does not grow in a linear fashion, and is therefore difficult to predict. As a rule, new projects are awarded as part of invitations to tender. In the majority of cases, these are for solutions that are developed for a specific customer or product. 16 E_00_GB_Komax_2015_(CC_Layout) [P].indd 16 11.03.16 17:50 2015KOMAX GROUP ANNUAL REPORT ANN UA L REPORT B USINESS MODEL AND STR ATEGY Net sales by region 2015 2014 +/− in % in TCHF Switzerland Europe (incl. Africa) North / South America Asia Total Sales growth target in % Komax Wire Komax Medtech EBIT margin target in % Komax Wire Komax Medtech 10 747 10 314 205 947 200 455 4.2 2.7 83 390 66 961 70 274 18.7 81 810 –18.2 367 045 362 853 1.2 Target ~3–5 –1 6.2 –20.3 ~20 ~5 19.0 –4.7 15.1 0.7 18.7 1.7 1 The Medtech business unit is in the systems business, i.e. it mainly manufactures 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. E_00_GB_Komax_2015_(CC_Layout) [P].indd 17 17 11.03.16 17:50 2015KOMAX GROUP ANNUAL REPORT ANNUAL REPORT BOARD OF DIRECTORS Board of Directors Daniel Hirschi (1956) Non-executive, independent member of the Board of Directors since 2005, Vice-Chairman since 2014, elected until 2016, Swiss national, resident in Biel, Chairman of the Board of Directors of listed company Schaffner Holding AG, Luterbach, and member of the Board of Directors of listed company Gavazzi Holding AG, Stein- hausen, as well as the privately owned company Benninger AG, Uzwil. Daniel Hirschi holds a degree in engin- eering. From 1983 to 2005 he held various management functions at Saia- Burgess in Murten, where he was CEO from 2001, and Delegate of the Board of Directors from 2003. From 2006 to 2009, Daniel Hirschi was CEO and Dele- gate of the Board of Directors of Benninger AG in Uzwil, and he has been a member of the Board of Directors of the same company since March 2009. In the last three years, Daniel Hirschi has not been a member of the Executive Committee or had any material business relationships with the Komax Group. Beat Kälin (1957) Non-executive, dependent member and Chairman of the Board of Directors since 2015, elected until 2016, Swiss national, resident in Birmensdorf, Chairman of the Board of Directors of listed company Huber + Suhner AG, Pfäffikon (ZH). Beat Kälin holds a master’s degree and a doctorate in engineering from ETH Zurich. He also holds an MBA from INSEAD. Up 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, from 2004 to 2006 he was a member of the Board of Management responsible for the Packaging Technology Division at Robert Bosch GmbH, Stuttgart (DE), and from 2007 until 8 May 2015 he was CEO of the Komax Group. David Dean (1959) Non-executive, independent member of the Board of Directors since 2014, elected until 2016, Swiss national, resident in Meilen, member of the Board of Directors of Agta Record AG in Fehraltorf and of Trumpf AG in Baar, as well as member of the Indus- try Executive Advisory Board of the Executive MBA in Supply Chain Management at ETH Zurich. David Dean has been CEO of the Bossard Group since 2005. He was the company’s CFO from 1998 to 2004, and its Corporate Controller before that. David Dean is an expert in accounting and controlling. He holds a federal diploma and is a certified accountant. Furthermore, he has also completed management training at Harvard Business School and IMD Lausanne. In the last three years, David Dean has not been a member of the Executive Committee or had any material business relationships with the Komax Group. Kurt Haerri (1962) Non-executive, independent member of the Board of Directors since 2012, elected until 2016, Swiss national, resident in Birrwil. Kurt Haerri holds a degree in mechani- cal engineering from Lucerne University of Applied Sciences and graduated from the University of St. Gallen with an Executive MBA HSG. He has been working for Schindler since 1987, and was based in China from 1996 to 2003. Today, he is responsible for Global Installation & Fulfillment at Schindler Management AG. From 2006 to 2013, Kurt Haerri was the President of the Swiss-Chinese Chamber of Commerce. He is also a lecturer at ETH Zurich, where he is responsible for the Asia module of an executive MBA pro- gramme. In the last three years, Kurt Haerri has not been a member of the Executive Committee or had any material business relationships with the Komax Group. 18 E_00_GB_Komax_2015_(CC_Layout) [P].indd 18 11.03.16 17:50 2015KOMAX GROUP ANNUAL REPORT ANN UA L REPORT EX ECUTIVE CO MMITTEE holds a master’s degree in mechanical engineering and a doctorate from ETH Zurich. He was professor at EPFL Lausanne from 1996 to 2006, and Vice-President of Research and Corpo- rate Relations at ETH Zurich from 2010 to 2014. In the last three years, Roland Siegwart has not been a member of the Executive Committee or had any ma- terial business relationships with the Komax Group. Leo Steiner holds a degree in engineer- ing 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 the Executive Committee or had any material business relation- ships with the Komax Group. Leo Steiner (1943) Non-executive, independent member of the Board of Directors since 1997, Chairman of the Board of Directors from 2007 to 2015, elected until 2016, Swiss national, resident in Steinhausen. Andreas Wolfisberg (1958) Chief Financial Officer (CFO) since René Ronchetti (1968) Head Business Unit Medtech and at 1996, at Komax since 1991, Swiss Komax since 2012, Swiss national, national, resident in Adligenswil, resident in Murten. Chairman of the Board of Directors of Kowema Beteiligungs AG, Baar. Andreas Wolfisberg is a Swiss Certified Expert in Accounting and Controlling. Before joining Komax, he worked at von Moos Stahl in Lucerne. René Ronchetti holds a degree in engin- eering (computer science) from Berne University of Applied Sciences. He is also a qualified industrial engineer and holds an MBA from Strathclyde University (UK). His most important positions before joining Komax were at RUAG in Berne and Geneva, Oerlikon Balzers in Paris, and Ascom Autelca in Berne and Paris. Roland Siegwart (1959) Non-executive, independent member of the Board of Directors since 2013, elected until 2016, Swiss national, resident in Schwyz. Board member of Evatec, Trübbach, and Alstom Ins- pection Robotics, Zurich. Roland Siegwart has been Professor of Robotics at ETH Zurich since July 2006 and Co-Director of the newly-founded Wyss Translational Center Zurich, a joint research centre of ETH Zurich and the University of Zurich, since 2015. He Executive Committee Matijas Meyer (1970) Chief Executive Officer (CEO) since 11 May 2015 and Head Business Unit Wire since 2010, at Komax since 2007, Swiss national, resident in Ebikon. 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 (FR). Before joining Komax, he worked at Tornos SA in Moutier and OC Oerlikon / ESEC in Cham. E_00_GB_Komax_2015_(CC_Layout) [P].indd 19 19 11.03.16 17:50 2015KOMAX GROUP ANNUAL REPORT ANNUAL REPORT BUSI NESS UNIT WI RE Thanks to its unique market position, Komax Wire was once again able to surpass the previous year’s ambitious targets in 2015, overcoming the strength of the franc to deliver another excellent set of results backed up by strong profitability. The EBIT margin of 19.0% remained in the target range while exceeding the prior-year level. 20 E_00_GB_Komax_2015_(CC_Layout) [P].indd 20 11.03.16 17:50 KOMAX GROUP ANNUAL REPORT2015 Headcount 1332 ANN UA L REPORT B USINESS UNIT WIRE 348.4m order intake in CHF +15.1% 313.3m Net sales in CHF 48% Europe ����� Net sales by region 19% Asia 2% Switzerland 21% North / South America 10% Africa S S E N I S U B T I N U E R W I E_00_GB_Komax_2015_(CC_Layout) [P].indd 21 21 11.03.16 17:50 KOMAX GROUP ANNUAL REPORT2015 ANNUAL REPORT BUSI NESS UNIT W IRE e Market trends and business performance In 2015, Komax Wire shrugged off the challenge posed by the strong franc and once again gen- erated growth in excess of the previous year’s ambitious targets. The drivers of this pleasing development were the persistently robust state of the automotive industry together with the un- broken trend in wire processing towards the automation of manual processes and improved processing quality. Demand proved particularly strong in the Europe and North/South America regions. The order intake of CHF 348.4 million again exceeded the prior-year level significantly (2014: CHF 302.6 million), while net sales increased by 6.2% to CHF 313.3 million (2014: CHF 295.0 million). Internal growth (i.e. adjusted for acquisition and currency effects) amounted to around 10%. The book-to-bill ratio at the end of the year was a high 1.1. The business unit closed the year with its order book at a record level. There was a broad-based spread of business with respect to both the product spectrum and the customer mix. The standard business with crimp-to-crimp machines and the associated acces- sories proved strong as usual. Furthermore, the recently emerged trend towards higher-quality and complex processing solutions became stronger. Thanks to the large installed base of ma- chinery, both the spare parts business and the service business again performed strongly. The business with value-added projects likewise developed very pleasingly. A substantial number of interesting orders were acquired and processed. These involve the development of tailor-made solutions based on either standard machinery or fully and semi-automatic processing cells. In the year under review, Komax Wire acquired its first-ever orders from the aerospace industry, par- ticularly for systems with integrated laser technologies. EBIT in the year under review rose to CHF 59.7 million (2014: CHF 55.3 million). The EBIT margin increased to 19.0% (2014: 18.7%) and was therefore still within target range. The high EBIT mar- gin is a reflection of the business unit’s strong innovativeness, competitive product range, and high productivity. The result is all the more impressive given that the euro conversion rate dete- riorated significantly during 2015, while Komax Wire was simultaneously dealing with strong growth and investments in further market expansion. e Operations Komax Wire drove forward the continuing expansion of its global production network in response to the emerging global demand trend. Projects to expand the available production capacity were initiated at seven sites. In Mexico, work commenced on the construction of a new plant to aug- ment the existing sites. Moreover, Komax Wire’s production network now includes several refer- ence plants for wire-testing systems. Further measures to increase operating efficiency were systematically implemented at all locations. Due to the very healthy order book, capacity utilization was generally high at all locations in the year under review. 22 E_00_GB_Komax_2015_(CC_Layout) [P].indd 22 11.03.16 17:50 2015KOMAX GROUP ANNUAL REPORT Measures are continuously being implemented to boost both productivity and efficiency. ANN UA L REPORT B USINESS UNIT WIRE Book-to-bill ratio 1.1 EBIT margin remained within target area. e Marketing and sales Proximity to its customers, a rigorous focus on their needs, and ongoing commitment to improving their satisfaction lev- els are core values of Komax Wire. As such, they remained at the forefront of efforts in 2015. Activities in this area included an enhancement of e-commerce solutions and an expan sion of the training programme for customer employees. The business unit’s direct service and distribution network in the fast-growing central and eastern Europe regions was ex- panded significantly by the acquisition of Vienna-based Thonauer Group and the establishment of a distribution com- pany for testing systems in Romania. Initiatives to position Komax Wire as a professional and effi- cient partner to companies outside the automotive industry were further refined. At Productronica in Munich, the world’s largest trade fair for the wire-processing industry, the busi- ness unit presented its solutions for the first time under a new identity divided up by market segment. In addition to its solutions for the automotive industry, Komax Wire exhibited its ideas for the industrial applications, telecom/datacom, and aerospace market segments. Moreover, it expanded its network of partner companies. By taking a stake in Laselec, a company specializing in laser-assisted cable stripping and marking solutions as well as intelligent forming boards for wire harness production, Komax has gained a foothold in the aerospace industry and can offer its customers access to pioneering technologies. Komax Wire was present at all the major trade fairs worldwide, giving a convincing demonstra- tion of its extensive competencies and the strength of its network. e Innovation Komax Wire is keen to maintain and expand its innovation leadership by continuously bringing new, unique solutions to the market. These innovations are based on a clear understanding of customer needs, partnerships with other market players, extensive expertise and collaboration with customers, and interdisciplinary idea sharing among employees working in very different areas and locations. Research and development expenditure in 2015 amounted to more than 7% of net sales. In the year under review, Komax Wire employed some 143 staff worldwide in this area, which once again came up with a number of pioneering innovations such as the Alpha 530/550. This new generation of automatic crimping machines sets new benchmarks with respect to productivity, flexibility and precision. Its novel features have been very positively received by customers and industry circles alike. Komax Wire also obtains input from the systematic analysis of customer feedback and regular experience sharing with specialist industry groups and tertiary education institutions. Another major contribution to innovation within the business unit is made by the 161 engineers working on application development for customer-specific systems, since these people work directly with customers. E_00_GB_Komax_2015_(CC_Layout) [P].indd 23 23 11.03.16 17:50 2015KOMAX GROUP ANNUAL REPORT ANNUAL REPORT BUSI NESS UNIT W IRE e Trends Developments in vehicle construction are leading to a lasting increase in demand for automation solutions. Market leader Market share is more than twice that of its nearest competitor. Internal growth of around 10% Global megatrends such as the rise in environmental aware- ness among consumers, increasing interconnectivity in everyday life and automotive products, and the need for greater safety and affordability in automotive transport will help to bolster Komax Wire’s business in the long term. In general, these trends are resulting in the further “electrifica- tion” of vehicles, which in turn increases demand for prefab- ricated cables. The development trends that have emerged in recent years are therefore likely to speed up and intensify in the future. The automotive industry is increasingly demanding subsys- tems and components that deliver more, weigh less, take up less space, and operate extremely reliably, while at the same time being cheap to procure. These demands are not only confronting direct suppliers to the automotive industry but also upstream suppliers and business partners. For a group like Komax, which continually operates at the forefront of technological development, these increasing demands first and foremost represent opportunities and potential growth drivers. The electrical systems in today’s premium passenger cars are made up of as many as 1 000 cables, with a good 2 000 crimp contacts. Developments in vehicle construction, new functionalities, and an ever-rising fit-out level in all vehicle classes are leading to a further steady increase in demand for cables and crimp contacts. Fur- thermore, the individual subsystems and assemblies, particularly harnesses, are becoming ever more complex. At the same time, given the growing trend towards miniaturization with a view to reducing manufacturing costs, weight and fuel consumption, the individual components to be processed are becoming ever smaller, which makes manual processing more difficult – or even impossible. A large part of the cable harness manufacturing process is still done by hand, but inexorably rising wage costs are making it worthwhile to invest in automation solutions. As systems become increasingly complex, the potential sources of error in manual wire processing and assembly become more numerous. Manual processes are becoming less capable of meeting these de- mands. Intelligent automation solutions, quality assurance tools, and systems for testing har- nesses before they are installed in assemblies and vehicles help to guarantee and increase the efficiency and reliability of the production process. This has been recognized by automotive manu facturers, who are increasingly calling on their suppliers to further automate their produc- tion processes. Furthermore, wire-processing is required in numerous other sectors of industry. Particularly in sectors that use largely standardized, high-volume processes, the challenges are similar to those faced by the automotive industry. With its know-how, the market proximity of its product range, and its marketing expertise, Komax Wire is extremely well positioned to make further inroads into these markets. 24 E_00_GB_Komax_2015_(CC_Layout) [P].indd 24 11.03.16 17:50 2015KOMAX GROUP ANNUAL REPORT ANN UA L REPORT B USINESS UNIT WIRE e Outlook Supported by the dynamic momentum of the automotive industry, as well as the ongoing global trend towards the further automation of manual processes in wire processing and increased pro- cessing quality, we expect demand to remain strong from today’s perspective. Komax Wire has started the year with a strong order book. Given this backdrop, the business unit can be expect- ed to post another good result for the first half of 2016. Key figures in TCHF Order intake Net sales Operating profit (EBIT) in % EBIT margin As at 31 Dec. Headcount 2015 2014 +/− in % 348 386 302 610 15.1 313 316 294 964 59 652 55 292 6.2 7.9 19.0 18.7 1 332 1 177 13.2 E_00_GB_Komax_2015_(CC_Layout) [P].indd 25 25 11.03.16 17:50 2015KOMAX GROUP ANNUAL REPORT ANNUAL REPORT BUSI NESS UNIT W IRE The way to make the best connection Measuring / cutting Stripping Twisting Connector insertion Harness sub-assembly Komax Wire systems t Measuring/cutting Stripping Crimping Twisting Connector insertion e Cutting Preprocessing t Harness sub-assembly e Final assembly Crimping Wires Contacts Housings Component manufacturer e Wire harness manufacturer 26 E_00_GB_Komax_2015_(CC_Layout) [P].indd 26 11.03.16 17:50 2015KOMAX GROUP ANNUAL REPORT Machinery description Low order volumes and just-in-time pro- duction are hallmarks of today’s wire manu facturing industry. Fully automated solutions therefore have to deliver – and will have to continue to deliver – high pro- ductivity and flexibility combined with max- imum precision. The latest generation of Komax’s Alpha 530/550 – fully automatic machines for single-sided and double- sided seal insertion – sets a new bench- mark: maximum unit cost efficiency and flexible production output paired with out- standing quality. Quality Komax possesses a wide range of innova- tive monitoring solutions that test the quality of crimp connections during pro- duction and document the corresponding test results. In addition, TSK brand testing systems test the reliability of wire har- nesses and mechatronic assemblies such as seats, bumpers and cockpits. ANN UA L REPORT B USINESS UNIT WIRE e Wires, contact parts and housings (connectors) are vendor parts for wire harness manufacturers. The latter are specialized companies (typically sup- pliers) that serially process individual wires to create wire harnesses for vehicle electrical systems, elec- tronic devices and applica- tions for a host of different industries, sectors and end-users. Komax Wire supplies these companies with systems for automat- ed and efficient wire pro- cessing, as well as with systems for testing wire harnesses and mechatron- ic assemblies prior to final installation. Komax solu- tions are used in custom- ers’ value creation chains for preprocessing, final as- sembly and testing. The wire harness manufacturer then supplies the OEM (original equipment manu- facturer), which integrates the wire harness into the final product. t Harness test systems Modul test systems e Testing e Warehouse Shipping e Installation Assembly E_00_GB_Komax_2015_(CC_Layout) [P].indd 27 e Original Equipment Manufacturer (OEM) 27 11.03.16 17:50 2015KOMAX GROUP ANNUAL REPORT ANNUAL REPORT BUSI NESS UNIT MEDTECH Although 2015 was another challenging year for Komax Medtech, it nonetheless ended with an exceptionally high order intake. However, the unpredictable and erratic devel- opment of new orders had negative capacity repercussions at all sites. Furthermore, the strong Swiss franc undermined the competi- tiveness of the La Chaux-de-Fonds site vis-à-vis its international rivals. 28 E_00_GB_Komax_2015_(CC_Layout) [P].indd 28 11.03.16 17:50 KOMAX GROUP ANNUAL REPORT2015 Headcount 237 ANN UA L REPORT B USINESS UNIT MEDTECH 94.5m order intake in CHF +45.1% 54.7m net sales in CHF Net sales by region 41% Europe ����� 36% North / South America 11% Switzerland 12% Asia S S E N I S U B H C E T D E M T I N U E_00_GB_Komax_2015_(CC_Layout) [P].indd 29 29 11.03.16 17:50 KOMAX GROUP ANNUAL REPORT2015 ANNUAL REPORT BUSI NESS UNIT M EDTECH e Market trends and business performance The modest order intake in the first months of 2015 and the strength of the franc presented major challenges for Komax Medtech right from the start of the year. The predicted orders then duly materialized in the second half of the year, so that Komax Medtech actually ended the year with an extraordinarily high order intake of CHF 94.5 million. In addition to repeat business, which in some cases is released over a period of several years, numerous commercially interesting pro- jects involving existing applications and processes were acquired from new customers. However, since these orders were placed late in 2015 and some of them have lead times of several months, this pleasing development has not yet fed through into the income statement. Instead, the volatile order intake and uneven capacity utilization weighed on all sites’ results. Net sales declined to CHF 54.7 million (2014: CHF 68.6 million). Given the relatively high propor- tion of value creation in Switzerland, Komax Medtech also suffered from the strength of the Swiss franc. EBIT accordingly amounted to CHF –2.6 million (2014: CHF 1.2 million). e Operations Having concluded in March that the planned sales and income targets could not be achieved, management took action to adjust structures at the La Chaux-de-Fonds site and reduce costs. The measures initiated in previous years to increase efficiency were systematically continued in 2015. The key areas of focus included important project and risk management activities in the systems business, cost transparency and controlling, and improvements to internal processes. In the spring of 2015, the US operation moved into new premises in Rockford. This means that assembly space in the US has now approximately doubled. Enhancing medtech expertise and expanding the site brought rewards in the second half of 2015 in the form of a major order involv- ing a series of assembly lines for patch pumps for the delivery of insulin. Given the stagnating demand for printer cartridge assembly systems, the Penang site was in- creasingly used as an internal subsupplier of modules, particularly by La Chaux-de-Fonds. This had the effect of optimizing cost structures and capacity utilization at the various sites. e Marketing and sales Komax Medtech was present at six trade fairs and numerous medical technology conferences in 2015. Its service offering was further differentiated and expanded to meet customers’ specific needs. Moreover, numerous measures such as the launch of a dialogue-oriented customer mag- azine were implemented. 30 E_00_GB_Komax_2015_(CC_Layout) [P].indd 30 11.03.16 17:50 2015KOMAX GROUP ANNUAL REPORT Record figure for order intake Interesting projects from new customers Book-to-bill ratio 1.7 ANN UA L REPORT B USINESS UNIT MEDTECH e Innovation In the customer-specific systems business, a significant pro- portion of value is created by engineering services that model handling and process solutions in a variety of combi- nations. Efficiency and reliability in both implementation and operational use are crucially important to customer and manu facturer alike. For this reason, Komax Medtech analy- ses its handling and processing solutions on a continuous basis, and channels the results of ongoing customer feed- back into solutions. Accordingly, Komax Medtech took ac- count of the increasing need for flexible systems for small volumes by further consolidating its expertise as a systems integrator. It succeeded in further reducing lead times by in- creasingly integrating third-party technologies, modules, and platforms into its own systems. For customers, this results in increased flexibility when it comes to selecting the configura- tion of their production lines. Thanks to the introduction of new concepts and technol- ogies, assembly lines were further developed and improved. Here the focus was on increasing standardization, reducing complexity, and improving ease of maintenance. E_00_GB_Komax_2015_(CC_Layout) [P].indd 31 31 11.03.16 17:50 2015KOMAX GROUP ANNUAL REPORT ANNUAL REPORT BUSI NESS UNIT M EDTECH e Trends Trend towards self- medication is set to continue. Komax Medtech is a global leader in its niche. The markets in which Komax Medtech is active are primar- ily driven by two growth factors. On the one hand, an in- creasing number of medications are delivered by injection, while on the other, the number of cases of diabetes and the number of asthma patients will unfortunately continue to rise over the coming years. The World Health Organization (WHO) estimates that 347 million individuals worldwide are now affected by the former condition, with a further 6 mil- lion new cases occurring every year. The main drivers of this trend are high-fat diets, obesity and a lack of physical activity. The number of asthma sufferers, which is currently around 235 million, is also set to rise. Diabetes and asthma patients are already able to treat their conditions themselves, and the trend towards self-medication is set to continue, as new applica- tions and treatments make this form of administration ever simpler and safer. The unrelenting pressure to contain health care costs and efforts to increase the quality of life of the affected individuals are driving forward the development of new applications for administering treatments, which is in turn increasing the demand for medical product assembly systems. The global market for automation solutions for self-medication applications is therefore likely to grow further. In- vestment volumes can fluctuate heavily from year to year, however, as these are dependent on the rate of innovation in end products, the approval processes of national authorities, and the need to renew existing assembly lines. With its many years of experience and strong technical expertise, Komax Medtech is one of the recognized global market leaders in systems for the manufacture of insulin delivery applications and inhalers. Komax Medtech is determined to preserve this position. In order to smooth out market fluctuations more effectively, the business unit will increasingly be using existing plat- forms, processes and competencies to target further niche markets. Stabilizing profitability is Komax Medtech’s top priority. This cannot be achieved through sales growth alone, however, because in the customer-specific systems business, an increasing num- ber of projects has the effect of adding rather than diversifying risks unless sufficient care is ex- ercised in project selection. Commercial success therefore hinges on selecting the projects to be acquired with utmost care and processing them efficiently. 32 E_00_GB_Komax_2015_(CC_Layout) [P].indd 32 11.03.16 17:50 2015KOMAX GROUP ANNUAL REPORT ANN UA L REPORT B USINESS UNIT MEDTECH e Outlook The commercial environment facing Komax Medtech remains challenging. However, given its strong order book at the start of the year, with its numerous repeat projects and highly promising orders from new customers, Komax Medtech is confident that net sales will increase in 2016 on the back of better balanced capacity utilization and that profitability will increase beyond the target range. Key figures in TCHF Order intake Net sales Operating profit (EBIT) in % EBIT margin As at 31 Dec. Headcount 2015 2014 +/− in % 94 450 54 681 –2 589 65 092 45.1 68 640 –20.3 1 200 n.s. –4.7 1.7 237 307 –22.8 E_00_GB_Komax_2015_(CC_Layout) [P].indd 33 33 11.03.16 17:50 2015KOMAX GROUP ANNUAL REPORT ANNUAL REPORT BUSI NESS UNIT M EDTECH The way to make engineered solutions for medical device projects Komax Medtech systems t t Final assembly and insertion of drug Pre-assembly of devices – Aligning and placing – Gluing – Welding – Printing – ... t – Flow test – Density test – Visual controls – … Pre-assembly Final assembly Testing e Raw material for device assembly e Drug q Device development q Drug development 34 E_00_GB_Komax_2015_(CC_Layout) [P].indd 34 11.03.16 17:50 2015KOMAX GROUP ANNUAL REPORT ANN UA L REPORT B USINESS UNIT MEDTECH e Medical devices are products used in treatment and therapy. Many of these devices contain active substances or medicinal products that patients with certain conditions or symptoms can self-administer or inject. Before a new medical product that is combined with a medical instrument can be launched, it has to undergo preclinical and clinical trials and gain approval from the relevant regulatory authority. Komax Medtech plays an important role in this process: The business unit plans and builds systems that integrate various combin- ations of handling and process solutions so that they can semi-automatically or fully auto- matically assemble the components of medical products (individual parts and pre-filled medi- cines) in several steps. Komax Medtech’s systems then test and package the fully assembled final product (device plus active substance) and prepare it for shipping. By using standard- ized and certified validation processes, Komax Medtech also ensures that its systems fulfil all standards, and that the expected results are delivered at the end of the process. t Packaging Final product E_00_GB_Komax_2015_(CC_Layout) [P].indd 35 35 11.03.16 17:50 2015KOMAX GROUP ANNUAL REPORT ANNUAL REPORT SUSTAINABILITY AND SOCI A L R ESP O NSI B IL I TY The Komax Group upholds its responsibi- lities towards its stakeholder groups.This 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 sustain- ability and social responsibility as an integ- ral part of its corporate strategy. The basic tenets underlying the Komax Group’s busi- ness practices are set out in its guiding principles and in its code of conduct. It exer- cises responsibility towards people and the environment,and is keen to continuously develop its competencies in matters relating to sustain ability and social responsibility. 36 E_00_GB_Komax_2015_(CC_Layout) [P].indd 36 11.03.16 17:50 KOMAX GROUP ANNUAL REPORT2015 Headcount 1 580 ANN UA L REPORT SUSTAINABILITY A ND S OCIAL RE SPO NS IBILITY Employees by area of activity 28% Marketing and sales 8% Administration Y T I L I B A N I A T S U S Y T I L I B I L A I S N O P S E R C O S D N A Production Engineering 9% 17% 38% Research and development ����� Asia ����� Employees by region 15% 41% Switzerland 14% North / South America 5% Africa 25% Europe E_00_GB_Komax_2015_(CC_Layout) [P].indd 37 37 11.03.16 17:50 KOMAX GROUP ANNUAL REPORT2015 ANNUAL REPORT SUSTAINABILITY AND SOCI AL RE SPO NS I B IL IT Y e Group-wide code of conduct The way Komax is perceived by customers and suppliers, other business partners, shareholders and the general public, and the respect for and confidence in the company that these groups feel, are dependent to a significant degree on the conduct of Komax’s employees. Komax therefore has a code of conduct which applies to all Group employees. These principles are periodically reviewed to ensure that they are up to date. 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. The same applies to the employees of any acquired companies. e Product sustainability The systems developed by Komax are characterized by their exceptionally high quality and lon- gevity. The Group’s own global service network and its collaboration with partners ensure that these systems are professionally maintained. This has a positive impact on their performance, value retention and lifespan, as well as saving resources generally. Komax also ensures servicing and the availability of upgrades and replacement parts years beyond its contractual obligations. 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 fuel-saving propulsion concepts such as electric and hybrid vehicles. Moreover, the innovative technologies of Komax mean that ever-smaller wire crosssections and innovative materials such as aluminium can be machine-processed, thereby contributing to a reduction in vehicle weight and, as a result, fuel consumption. The Medtech business unit, which develops systems for medical device manu- facturing, is indirectly helping to reduce health care costs, improve access to medicines and thereby increase people’s quality of life. Komax’s products do not contain any ecologically harmful components. The attainment of customers’ expectations and the extent of their loyalty are measured by means of regular satisfaction analyses conducted in conjunction with external partners. Komax sets particular store by customer feedback on improvement potential. e Sustainability in procurement The company believes in long-term partnerships, and selects suppliers which demonstrate an environmentally aware approach and whose products conform to sustainability criteria. This is ascertained with the assistance of a supplier evaluation questionnaire, which evaluates new as well as existing partners on the basis of uniform criteria. These criteria include the status that suppliers attach to sustainability, quality, price, supply chain, delivery reliability, and production technology. Furthermore, in a code of conduct drawn up specially for suppliers, Komax obliges its suppliers to comply with legislation and to act in an environmentally aware and ethical way. Compliance with agreed guidelines and indicators is reviewed in annual supplier audits. If viola- tions are uncovered, a supplier partnership may be immediately terminated as a result. In addition to the investment volume, key criteria when evaluating and selecting new production systems include energy efficiency, environmental friendliness and the economical use of resources. 38 E_00_GB_Komax_2015_(CC_Layout) [P].indd 38 11.03.16 17:50 2015KOMAX GROUP ANNUAL REPORT The environment, health protection, and occupa- tional safety are all viewed as a holistic system. ANN UA L REPORT SUSTAINABILITY A ND S OCIAL RE SPO NS IBILITY Power consumption is targeted to be reduced by a further 5% by 2017 in collaboration with the Energy Agency for Economy. Staff turnover rate less than 7% e Sustainability in production The Komax Group’s business focuses mainly on the produc- tion of machines and systems, as well as provision of the corresponding maintenance services. A large proportion of the company’s value creation consists of engineering ser- vices. The majority of components are manufactured and supplied by third parties, which means that actual produc- tion at Komax primarily comprises the assembly of compo- nents. Accordingly, Komax generates relatively few emis- sions compared to other industrial companies. Highly automated, state-of-the-art production systems are used for strategically important components that Komax manufactures inhouse. These are based on lean manage- ment concepts, the aims of which include the avoidance of errors and minimization of rejects. The careful and efficient use of resources has top priority: wherever possible, waste materials and wastewater are recycled or disposed of appro- priately. Waste volumes are continuously reduced as part of optimization programmes. Wherever possible, Komax uses renewable energies such as solar or hydroelectric power. For example, the Group obtains green power from Central Switzerland’s RegioMix scheme and has its own photovoltaic power plant on the roof of its production building in Rotkreuz. The key sites of the Komax Group, which are located in Switzerland, the US, Germany, Turkey, Brazil, and China, are all ISO 9001-certified. Furthermore, Komax AG’s two sites in Dierikon and Rotkreuz, TSK in Porta Westfalica, and SLE quality engineering in Grafenau have all obtained ISO 14001 certification. These four sites employ around 730 people. All have integrated management systems that encompass all company processes, the environment, health care protection, and workplace safety. Furthermore, in collaboration with the Energy Agency for the Economy (Ener- gie-Agentur der Wirtschaft, EnAW), Komax has established resource and energy savings targets for 2017 and 2020 for the Dierikon and Rotkreuz sites. For example, the target is to reduce en- ergy consumption by a further 5% by 2017 (basis: 2014). EnAW pursues a systematic approach to help some 3 000 manufacturing firms, industrial plants and service companies increase energy efficiency and reduce their CO2 emissions. e Contribution to regional development Komax has been firmly rooted in the Canton of Lucerne since 1975, and is one of the canton’s biggest employers. The Group is committed to Switzerland as a business location because it offers a good environment and facilitates very high productivity. Its other operating facilities worldwide have also been based at the same sites since their establishment, and this has gener- ated a strong sense of identification with the local area. Among other things, this manifests itself in the fact that a large number of employees can be recruited regionally and preference can be given to local suppliers wherever this is feasible and makes commercial sense. E_00_GB_Komax_2015_(CC_Layout) [P].indd 39 39 11.03.16 17:50 2015KOMAX GROUP ANNUAL REPORT ANNUAL REPORT SUSTAINABILITY AND SOC IAL RE S P O NSI B I L IT Y e Attractive employer At the end of 2015, Komax employed 1580 staff worldwide (2014: 1 498). This increase is essen- tially attributable to new appointments at the Group’s sites in Central Switzerland, Turkey, Tu- nisia and Germany, which in turn were prompted by the further expansion of Komax Wire’s or- ganization in response to persistently strong business development. Personnel expenses in the year under review amounted to CHF 131.0 million (2014: CHF 118.5 million). 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. Participation in the pay comparison survey conducted by industry association Swissmem showed that pay at both of the Wire business unit’s Swiss pro- duction 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 around 17% in 2015 (2014: 16%). Komax is not alone within the industry in having a relatively low proportion of women in its work- force. The main reason for this phenomenon is the large number of technical positions within the company, for which the recruitment potential among women is limited. The Group’s staff turnover rate has been gratifyingly low for many years and amounted to less than 7% in 2015 (2014: less than 9%). Komax has a very good reputation as an attractive em- ployer. Among other things, this is highlighted by the fact that vacancies can be filled quickly, even in the tight market for management and skilled staff. As part of an active staff development policy, Komax organizes regular management seminars and training for its employees, as well as providing financial support for individual training activities. Komax also encourages international exchanges to allow its staff to gain new experiences and career perspectives. At the same time, Komax is a firm believer in the importance of targeted investment in tomorrow’s workforce. In 2015, 47 apprentices were undergoing training in eight professions at the Swiss locations (2014: 45). Furthermore, 26 apprentices were undergoing training in Porta Westfalica and Grafenau (2014: 26). Employee satisfaction is systematically measured and evaluated in the course of an- nual performance review meetings. Komax uses the results of regular employee surveys as a valuable basis for developing and implementing improvement measures. The results of the surveys conducted in conjunction with external partners were very positive, and far above the industry average. It goes without saying that Komax satisfies all legal requirements with respect to working conditions in the countries it operates in. Komax management attaches great import ance to employee health and safety, and internal processes are regularly examined for health and safety risks. As in previous years, reported absences due to accidents in 2015 were mainly the result of accidents suffered by employees while engaging in leisure activities. Komax actively encourages employees at site level to pursue a healthy lifestyle through initiatives such as sport and exercise offerings. e Certification status Komax Group Country Company Certification Switzerland Komax AG China USA Komax Systems LCF SA Komax Shanghai Co. Ltd. Komax Corporation TSK Innovations Co. Germany TSK Prüfsysteme GmbH ISO 9001 ISO 9001 ISO 9001 ISO 9001 ISO 9001 ISO 9001 ISO 14001 OHSAS 18001 ISO 14001 SLE quality engineering GmbH & Co. KG ISO 9001 ISO 14001 DE AEOC 104360 Brazil Turkey Tunesia TSK do Brasil Ltda. TSK Test Sistemleri Ltd. Sti. TSK Tunisia s.a.l. ISO 9001 ISO 9001 ISO 9001 40 E_00_GB_Komax_2015_(CC_Layout) [P].indd 40 11.03.16 17:50 2015KOMAX GROUP ANNUAL REPORT AN NUA L REPORT SUSTAINA BIL ITY AND SO CI AL RE SP O NS IBILITY Environmental indicators1 Electric power consumption in MWh Electric power consumption per head in MWh Water consumption (potable and industrial water) in m3 Water consumption (potable and industrial water) per head in m3 Employees by business unit Komax Wire Komax Medtech Corporate Total Employees by area of activity Production Research and development Engineering Marketing and sales Administration Total Employees by region Switzerland Europe Africa North / South America Asia Total 1 Covering the production sites in Dierikon (CH) and Rotkreuz (CH). 2015 2 859 5.4 2014 2 822 5.9 2 958 5 007 5.6 10.5 1 332 237 11 1 177 307 14 1 580 1 498 606 146 260 435 133 597 150 246 376 129 1 580 1 498 645 407 78 220 230 622 345 58 210 263 1 580 1 498 E_00_GB_Komax_2015_(CC_Layout) [P].indd 41 41 11.03.16 17:50 2015KOMAX GROUP ANNUAL REPORT ANNUAL REPORT INFORMATION FOR I NVESTOR S After a positive start, the Swiss National Bank surprised the stock market on 15 January 2015 by announcing that it was scrapping the guaranteed minimum exchange rate of CHF 1.20 against the euro with immediate effect. Both the foreign exchange markets and the stock markets reacted immediately and dramatically. 42 E_00_GB_Komax_2015_(CC_Layout) [P].indd 42 11.03.16 17:50 KOMAX GROUP ANNUAL REPORT2015 ANN UA L REPORT INFORMATION FOR INVESTORS 719.5m market capitalization in CHF Payout ratio 75% High free float 95% Attractive dividend yield 2.8% Geographical distribution of shareholdings 10% Other countries 25% Cleared shares � 65% �� Switzerland I N O T A M R O F N I S R O T S E V N I R O F E_00_GB_Komax_2015_(CC_Layout) [P].indd 43 43 11.03.16 17:50 KOMAX GROUP ANNUAL REPORT2015 ANNUAL REPORT INFORMATION FOR I NVESTOR S Foreign investors in particular chose to realize their currency gains and abruptly became mass sellers of Swiss stocks. Komax’s share price slumped temporarily by around 20%. The panic then subsided as early as February. Prices rebounded rapidly, partly due to an absence of any alternative asset class capable of offering similar appealing returns to equities in the prevailing low-interest environment, but also as a result of the strong annual results and remarkably robust outlooks issued by companies for the year under review. Towards mid-year, however, the latest episode in the Greek debt saga temporarily poured cold water on the euphoria. As additional factors, the feared turnaround in the interest rate cycle in the US and doubts as to the strength of the Chinese economy led to huge fluctuations in the equity markets. e Share price development in CHF 250 200 150 100 50 2011 2012 2013 2014 2015 Komax Vontobel Small Cap Index Despite this challenging backdrop, Komax’s share price continued to rise, closing 2015 some 35% up at CHF 194.90. It has therefore more than doubled in value over the last four years. e Listing Komax is listed on SIX Swiss Exchange. Market capitalization at the end of 2015 was CHF 719.5 million. CH0010702154 1070215 KOMN SW KOMN.S ISIN Security number Bloomberg code Thomson Reuters code 44 E_00_GB_Komax_2015_(CC_Layout) [P].indd 44 11.03.16 17:50 2015KOMAX GROUP ANNUAL REPORT ANN UA L REPORT INFORMATION FOR INVESTORS e Geographical distribution of shareholdings Switzerland Other countries Cleared shares 65% 10% 25% The majority of shares not held in Switzerland are held in the United Kingdom, Luxembourg and the United States. e Significant shareholders Information on significant shareholders can be found on page 56 of this report. e Breakdown of shareholders by number of registered shares held 1–100 101–1 000 1 001–10 000 10 001–50 000 > 50 000 e Free float 1 426 1 135 195 36 9 The free float as defined by SIX Swiss Exchange stands at 95%. e Dividends The Board of Directors is keen to adhere to its attractive dividend policy, and will propose to the Annual General Meeting a distribution of CHF 6.00 per share, of which CHF 1.50 will be distribut- ed from capital contribution reserves. The payout ratio is therefore 75%. The dividend yield on the date of the Board resolution stood at an attractive 2.8%. Distributions from the capital con- tribution reserves are tax-free for natural persons living in Switzerland who hold shares as part of their private assets. e Information on the Komax registered share Further information on the Komax registered share can be found on the Internet at www.komaxgroup.com. E_00_GB_Komax_2015_(CC_Layout) [P].indd 45 45 11.03.16 17:50 2015KOMAX GROUP ANNUAL REPORT ANNUAL REPORT INFORMATION FOR I NVESTOR S e Disclosure of shareholdings With effect from 1 January 2016, under Art. 110 of the Federal Act on Financial Market Infrastruc- tures (Financial Market Infrastructure Act, FinMIA), anyone who acquires or sells equity securities on their own account and thereby attains, falls below or exceeds the threshold of 3, 5, 10, 15, 20, 25, 331/3, 50 or 662/3% of the voting rights in a company (whether or not such rights may be ex- ercised), is subject to a reporting obligation. This obligation applies to anyone who directly, indir- ectly or in concert with third parties acquires or disposes of shares in a company incorporated in Switzerland whose equity securities are listed in whole or in part in Switzerland. It also applies to anyone who can exercise the voting rights attached to such equity securities at their own discre- tion. Disclosure must be made to the company and stock exchanges on which the equity securi- ties in question are listed. e Financial calendar Annual General Meeting Dividend payment Half-year results for 2016 Preview of full-year results for 2016 Media briefing/presentation to analysts of 2016 financial statements Annual General Meeting e Key data Komax registered share 12 May 2016 19 May 2016 23 August 2016 17 January 2017 21 March 2017 12 May 2017 Share capital as at 31 Dec. in TCHF Number of shares as at 31 Dec. Average number of outstanding shares Par value per share Basic earnings per share EBITD per share EBIT per share Shareholders’ equity per share Distribution per share High Low Closing price as at 31 Dec. Average daily trading volume P/E (price-earnings ratio) as at 31 Dec. Dividend yield as at 31 Dec. No. No. CHF CHF CHF CHF CHF CHF CHF CHF CHF No. % 2015 369 2014 361 2013 352 2012 344 2011 340 3 691 651 3 605 101 3 523 780 3 443 789 3 400 880 3 652 728 3 552 840 3 458 379 3 404 850 3 375 217 0.10 8.00 15.52 12.79 76.70 6.001 194.90 122.90 194.90 7 881 24.4 2.81 0.10 7.64 15.99 13.34 78.82 5.00 0.10 7.33 14.92 12.29 74.92 4.50 152.40 138.00 124.60 72.35 144.50 135.30 8 613 9 999 18.9 3.5 18.5 3.3 0.10 2.81 6.44 3.95 68.56 2.00 97.10 61.25 71.00 6 608 25.3 2.8 0.10 11.68 16.14 13.98 72.63 4.00 120.00 59.00 68.75 8 383 5.9 5.8 1 Proposal of the Board of Directors of Komax Holding AG: distribution of CHF 6.00 per registered share. 46 E_00_GB_Komax_2015_(CC_Layout) [P].indd 46 11.03.16 17:50 2015KOMAX GROUP ANNUAL REPORT ANN NU AL R EPORT VOCATIONA L TRA INING 26 apprentices and 9 vocational profiles in Germany 235 specialists trained since company was founded 47 apprentices and 8 vocational profiles in Switzerland I L A N O T A C O V G N I N I A R T 2015 KO MAX GROUP AN NUA L REPORT 47 E_00_GB_Komax_2015_(CC_Layout) [P].indd 47 11.03.16 17:50 ANNNU AL REPORT VOCATIONAL TRAINING Komax currently has 47 apprentices in training in Switzerland as well as 26 in Germany. Since the company was founded, 235 appren- tices have completed their vocational training with Komax in Switzerland. The Komax Group regards training appren tices as a ben- efit to the company and to Switzerland as a centre of production. Apprentice positions are offered for multi-skilled mechanics, IT specialists, electronics technicians, design engineers, automation technicians, logist- icians, operational maintenance specialists, and business-related occupations. 48 E_00_GB_Komax_2015_(CC_Layout) [P].indd 48 11.03.16 17:50 KOMAX GROUP ANNUAL REPORT2015 ANN NU AL R EPORT VOCATIONA L TRA INING e Komax is the global market leader in wire-processing solutions. To ensure this remains unchanged, the company is actively committed to training the professionals of tomorrow and strengthening the dual education system. The passion, sense of responsibility, and dedication of the company’s workforce play a crucial role in its success. This in turn is supported by the Komax culture, which is characterized by mutual respect, specialist expertise, and a strong quality mindset. Komax offers its apprentices a wide-ranging training experience. The young professionals are right at the heart of the action, actively following every step of a machine’s development from inception through to production readiness. During their training, they get an insight into the vari- ous departments’ activities and thus gain an understanding of the numerous processes that take place in a company. Komax has state-of-the-art workstations as well as well-equipped mechan- ical workshops and assembly areas for the specific apprenticeship subjects. The budding profes- sionals are supervised by a motivated team of trainers who not only possess strong technical and teaching skills, but also sensitivity to the social needs of the young people in their charge. In addition to professional training, Komax also offers apprentices a number of interesting bene- fits such as language courses, cultural events, preventive health measures, and its own team-building events. Once apprentices have completed their training, Komax helps them make the transition into full professional life, either at the site where they trained or at one of the com- pany’s locations abroad. Moreover, the company supports the people it has trained in their pro- fessional development and further vocational training. IT specialist Ivo Wiegenbröker An IT apprenticeship at Komax is hugely varied and very interesting. What I like most is being able to quickly sort out people’s problems and seeing their satisfaction. Swiss certificate of competence, third year of apprenticeship E_00_GB_Komax_2015_(CC_Layout) [P].indd 49 49 11.03.16 17:50 KOMAX GROUP ANNUAL REPORT2015 ANNNUA L REPORT VOCATIONAL TRAINING Automation technician Joël Iselin I’m benefiting from a truly wide-ranging training scheme. I’m gaining insights into what goes on in the workshop and the electrical and mechanical aspects of pre-assembly and final assembly. I really enjoy testing assemblies and helping to set up systems ready for operation. Swiss certificate of competence, third year of apprenticeship 50 E_00_GB_Komax_2015_(CC_Layout) [P].indd 50 11.03.16 17:50 2015KOMAX GROUP ANNUAL REPORT ANN NU AL R EPORT VOCATIONA L TRA INING Business specialist Caroline Züsli The work may be wide-ranging and challenging, but there’s no shortage of fun. Learning is fun when you do it in a relaxed working atmosphere as part of a friendly team. Swiss certificate of competence, third year of apprenticeship Design engineer Flavio Palombella I love the variety of the work at Komax. As a design engineer, I get to put together the parts I design on a PC, which means I’m constantly gaining experience. Swiss certificate of competence, third year of apprenticeship 51 11.03.16 17:50 E_00_GB_Komax_2015_(CC_Layout) [P].indd 51 2015KOMAX GROUP ANNUAL REPORT ANNNUA L REPORT VOCATIONAL TRAINING Multi-skilled mechanic Daniel Wymann In addition to helping to assemble machines, my main tasks include working as part of a team and getting to know what various assemblies do. I enjoy these activities, which is why I decided to major in assembly technology. Major in assembly technology, Swiss certificate of competence, fourth year of apprenticeship Catior sit eum vid mi, odit ipsaeped ut exerias in rerspelit laborerunt alicabori dolendandi diore nonetur. Gendande sum et officae. Et que volut inus, con cones eaquiati tendit dendit eniminvero quatatio et aut odi doluptatur ad qui sim rae alis que reraeped. EFZ, X. Lehrjahr 52 E_00_GB_Komax_2015_(CC_Layout) [P].indd 52 11.03.16 17:50 2015KOMAX GROUP ANNUAL REPORT ANN NU AL R EPORT VOCATIONA L TRA INING Multi-skilled mechanic Pascal Ludin I particularly like the friendly atmosphere at work. Working with various specialists from different departments means you build up a broad professional knowledge that you can make use of in any situation. Major in CNC manufacturing, Swiss certificate of competence, third year of apprenticeship E_00_GB_Komax_2015_(CC_Layout) [P].indd 53 53 11.03.16 17:50 2015KOMAX GROUP ANNUAL REPORT ANNNUA L REPORT VOCATIONAL TRAINING Electronics technician Nathanael Birrer I gain a lot of valuable experience when I help the special- ists to develop a machine which then actually goes into service. Being able to work alongside experienced profes- sionals in a hands-on environment is a huge advantage that other training facilities don’t offer. Swiss certificate of competence, third year of apprenticeship 54 E_00_GB_Komax_2015_(CC_Layout) [P].indd 54 11.03.16 17:50 2015KOMAX GROUP ANNUAL REPORT C ORPOR AT E GOVE RNANCE CONTENTS Corporate structure and shareholders 56 Capital structure 57 Board of Directors 59 Executive Committee 63 Compensations, shareholdings and loans 64 Shareholder participation rights 64 Changes of control and defence measures 66 Auditors 67 Information policy 68 Ensuring good corporate governance is very important to Komax. Objectives in this area include safeguarding company value and suc- cess in the interest of customers, shareholders, staff, creditors, suppliers and the public, as well as the provision of transparent, rapid and simultaneous information to all stakeholder groups. Komax takes as its starting point the principles and regulations of the Swiss Code of Best Practice of economiesuisse and the Directive on Information Relating to Corporate Governance (Directive Corporate Governance, DCG) of SIX Exchange Regulation, and gives account of developments in this area each year in the Annual Report. The key elements are laid down in the Articles of Association, the Organizational Regulations, and the Regulations on the Remuneration Committee and the Audit Committee. In addition, the Board of Direc- tors regularly looks at the issue of corporate governance and initiates the corresponding adjustments where appropriate. E C N A N R E V O G E T A R O P R O C E_00_GB_Komax_2015_(CC_Layout) [P].indd 55 55 11.03.16 17:50 KOMAX GROUP ANNUAL REPORT2015 ANNUAL REPORT CORPO RATE GOVERNANCE Corporate Governance On 20 November 2013, the Federal Council issued the Ordinance against Excessive Remuner- ation in Listed Companies Limited by Shares (ERCO). ERCO introduced the core elements of the Minder initiative, which was accepted by the Swiss electorate on 3 March 2013 and aimed to strengthen shareholder rights. It also imposes on listed Swiss companies requirements in connection with the compensation of the Board of Directors and the Executive Board. ERCO entered into force on 1 January 2014 and gave companies a transitional period of two years in which to adjust their Articles of Association. Komax decided to implement these requirements rapidly, submitting the proposed amendments to its Articles of Association for approval at the 2014 Annual General Meeting. An overview of the amendments to the Articles of Association is provided in the invitation to the 2014 Annual General Meeting, which is published on the website www.komaxgroup.com. e 1 Corporate structure and shareholders Corporate structure The Group structure and subsidiaries belonging to the Group are set out on pages 154 and 155 of the Annual Report. With the exception of Komax Holding AG, no companies with listed participation securities form part of the scope of consolidation. Komax Holding AG, the holding company of the Komax Group, has its headquarters in Dierikon, Switzerland. Details on the place of listing, market capitalization, security and ISIN numbers are set out on pages 42 to 46 (“Information for investors”). Major shareholders Shareholders whose share of the company’s share capital exceeds or falls below the thresholds of 3, 5, 10, 15, 20, 25, 331∕3, 50 and 662∕3% have a reporting obligation (under the Federal Act on Stock Exchanges and Securities Trading (SESTA) and the Stock Exchange Ordinance of the Swiss Financial Market Supervisory Authority (SESTO-FINMA) until 31 December 2015, and under Article 110 of the Financial Market Infrastructure Act (FMIA) since 1 January 2016). Accord- ing to the disclosure reports submitted, the company had the following major shareholders hold- ing more than 3% of the votes as at 31 December 2015: Shareholder / Shareholder group Max Koch, Meggen, Switzerland Veraison, SICAV, Zurich, Switzerland Vontobel Fonds Services AG, Switzerland Credit Suisse Funds AG, Switzerland Leo Steiner, Steinhausen, Switzerland Number of shares 31.12.2015 187 069 2 180 488 3 179 800 4 138 992 5 123 301 6 Share in % 31.12.2015 1 5.189 5.006 4.987 3.855 3.420 1 The calculation is based on the 3 605 101 registered shares listed in the Commercial Register as at 31 December 2015. 2 Plus stock options from the employee incentive scheme (0.04%): 0.03% 1 000 call options, CHF 67.03, duration 1.1.2013 – 31.12.2017 0.01% 416 call options, CHF 129.21, duration 1.1.2014 – 31.12.2018 All share options are subject to a three-year lock-in period and a two-year exercise period, exchange ratio 1:1, effective fulfilment. 3 Repor ted figure as of 23 Mai 2015. 4 Repor ted figure as of 4 Dezember 2015. 5 Repor ted figure as of 10 September 2014. 6 Plus stock options from the employee incentive scheme (0.21%): 0.07% 2 500 call options, CHF 66.21, duration 1.1.2012– 31.12.2016 0.07% 2 500 call options, CHF 67.03, duration 1.1.2013 – 31.12.2017 0.07% 2 500 call options, CHF 129.21, duration 1.1.2014 – 31.12.2018 All share options are subject to a three-year lock-in period and a two-year exercise period, exchange ratio 1:1, effective fulfilment. 56 E_00_GB_Komax_2015_(CC_Layout) [P].indd 56 11.03.16 17:50 2015KOMAX GROUP ANNUAL REPORT ANN UA L REPORT CO RP OR ATE GOVER NANCE All shareholdings reported to Komax Holding AG and the Disclosure Office of SIX Swiss Ex- change during the 2015 financial year 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 Financial Market Supervisory Authority (SESTO-FINMA) have been published on SIX Swiss Exchange AG’s electronic publication platform, and can be viewed at https://www.six-ex- change-regulation.com/de/home/publications/significant-shareholders.html. Cross-shareholdings There are no cross-shareholdings. e 2 Capital structure Capital in CHF Ordinary capital Conditional capital Authorized capital 369 165.10 15 834.90 0.00 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, page 150, and Art. 3.2 of the Articles of Association. The Annual General Meeting of 13 May 2009 approved the creation of new conditional capital up to a maximum of CHF 18 000.00, thereby allowing the share capital of the company at that time to rise by up to CHF 46 248.00 to cover the exercising of option or subscription rights issued as part of the Executive and Employee Participation Programmes of Komax Holding AG. The subscrip- tion and advance subscription rights of the remaining shareholders in the company are excluded. The allocation of options was undertaken in a framework determined by the Remuneration Com- mittee. The option plan of Komax Holding AG was authoritative. The individual allocation of op- tions was at the discretion of the Board of Directors and senior management. These options have a duration of five years and are subject to a three-year lock-in period. The predetermined exer- cise price of the option corresponds to the lower of the following two values: the average price of the fourth quarter of the preceding year, or the average price in March of the year the option was issued. The allocation of share options was discontinued in 2015 and replaced by share- based programmes. Further information on the Komax Group’s employee participation pro- grammes can be found on pages 77 and 134 to 137 of the Annual Report. In 2010, 13 360 options were converted into shares with a par value of CHF 0.10. In 2011, no options were exercised, and in 2012, 42 909 options were exercised. The number of options ex- ercised in 2013 amounted to 79 991; the figure for 2014 was 81 321 and for 2015 86 550. Condi- tional capital therefore amounted to CHF 15 834.90 as at 31 December 2015. The new capital created in 2015 was reported within the deadline stipulated under Art. 635h of the Swiss Code of Obligations (CO). The Komax Group has no authorized capital. E_00_GB_Komax_2015_(CC_Layout) [P].indd 57 57 11.03.16 17:50 2015KOMAX GROUP ANNUAL REPORT ANNUAL REPORT CORPO RATE GOVERNANCE Capital changes Details of capital changes in 2014 and 2015 can be found on page 92 of the Financial Report. The corresponding information for 2013 can be found on page 90 of the financial section of the 2014 Annual Report. Shares, participation certificates and bonus certificates As at 31 December 2015, Komax Holding AG had fully paid-up capital of CHF 369 165.10, distrib- uted over 3 691 651 registered shares with a par value of CHF 0.10 each. Each registered share entitles the holder to vote at the Annual General Meeting as long as 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 participation certificates or bonus certificates. 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 or rights associated with that of voting. “Voting shareholders” may exercise all rights associated with the share (Articles of Association, Section 6 para. 2). Registration of an acquirer of shares as a “voting shareholder” may be refused under Komax Holding AG’s Articles of Association (Section 6 para. 4) if, as a result of such recognition, the acquirer would directly or indirectly 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, management or in some other manner, along with all natural per- sons, 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 acquisition of registered shares through the exercising of subscription rights, option rights or conversion rights. The Board of Directors may grant exceptions to the 5% limitation for good cause. No requests for an exception were made in the year under review. This restriction does not apply to the acquisition of shares through inheritance, division of an estate or joint marital property. Komax Holding AG’s Articles of Association (Section 6 paras. 5 and 6) 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 his/her own name and for his/her own account. Nominees are listed in the share register as “non-voting shareholders”. After hearing the affected party, Komax Holding AG may delete entries in the share register if such entries oc- curred in consequence of false statements by the acquirer. The acquirer must be informed of the deletion immediately. Convertible bonds and options Komax Holding AG has no outstanding convertible bonds. Details on employee options can be found above under “Authorized and conditional capital in particular” as well as on pages 77 and 134 to 137 of the Annual Report. 58 E_00_GB_Komax_2015_(CC_Layout) [P].indd 58 11.03.16 17:50 2015KOMAX GROUP ANNUAL REPORT ANN UA L REPORT CO RP OR ATE GOVER NANCE Management transactions The Listing Rules of SIX Swiss Exchange stipulate a disclosure obligation for management trans- actions. The Board of Directors has issued a set of regulations to comply with these provisions. Members of the Board of Directors and Executive Committee have a disclosure obligation to- wards the company in this respect. A total of 19 notifications were submitted in the 2015 financial year. Published notifications can be found on the website of SIX Swiss Exchange (https://www. six-exchange-regulation.com/en/home/publications/management-transactions.html). e 3 Board of Directors The Board of Directors comprised six individuals as at 31 December 2015. Other than the Chair- man, who was elected in May of the reporting year, no member of the Board of Directors was a member of the Executive Committee in the three financial years prior to the reporting period, and no member of the Board of Directors has any material business relationship with any Group companies. Members of the Board of Directors Beat Kälin, Chairman Daniel Hirschi, Vice-Chairman David Dean Kurt Haerri Roland Siegwart Leo Steiner AC: Audit Committee RC: Remuneration Committee Appointed Term expires Committees 2015 2005 2014 2012 2013 1997 2016 2016 2016 2016 2016 2016 RC RC (Chairman) AC (Chairman) AC RC AC There are no cross-involvements among the Board of Directors. Biographies of the individual Board members and details of their other activities and interests are provided on pages 18 and 19 of the Annual Report. Statutory regulations with respect to the number of permissible activities as per Art. 12 para. 1 point 1 ERCO According to Section 21 para. 3 of the Articles of Association, the number of permissible man- dates of members of the Board of Directors in the highest management or administrative bodies of legal entities which are obliged to have themselves entered in the Commercial Register or in a corresponding foreign register and which are not controlled by the company or do not control the company shall be 4 additional mandates for listed companies, 5 additional mandates for non- listed companies, and 5 additional mandates for charitable organizations, as long as this does not involve any breach of statutory provisions and in particular the due diligence obligations of the Board of Directors. Mandates with different companies that belong to the same corporate group count as a single mandate. Mandates undertaken by a member of the Board of Directors at the behest of a Group company or to exercise an office under public law are not covered by the restriction on additional mandates described above. The assumption of mandates other than those stipulated above is permissible without numerical restriction, as long as these mandates are unremunerated and do not interfere with the Board member’s fulfilment of his/her obligations vis-à-vis the company. The reimbursement of expenses does not count as compensation. E_00_GB_Komax_2015_(CC_Layout) [P].indd 59 59 11.03.16 17:50 2015KOMAX GROUP ANNUAL REPORT ANNUAL REPORT CORPO RATE GOVERNANCE Election and term of office According to the Articles of Association (Section 14 para. 1), the Board of Directors consists of three to seven members. It is predominantly composed of independent, non-executive members, who are elected individually by the Annual General Meeting for a term lasting until the end of the next Annual General Meeting. The Annual General Meeting also elects the Chairman. Members may be re-elected. There is no restriction on the length of a member’s term of office. The Articles of Association provide no regulations regarding the appointment of the Chairman and the mem- bers of the Board of Directors that deviate from statutory provisions. Leo Steiner will not be standing for re-election at the next Annual General Meeting on 12 May 2016. All other members of the Board of Directors are being proposed for re-election. Moreover, in its agenda item of 25 February 2016, VERAISON SICAV nominates Andreas Herzog and Gerard van Kesteren as new members of the Board of Directors. Internal organization The Board of Directors consists of the Chairman and a maximum of six other Board members. With the exception of the Chairman, who is also elected by the Annual General Meeting unless that position becomes vacant during the year, the Board of Directors organizes itself. If the office of Chairman becomes vacant during the period of office, the Board of Directors will nominate a new Chairman for the remaining period of office, whereby this person must be an existing mem- ber of the Board of Directors. The Chairman is responsible for chairing meetings. The Board of Directors additionally appoints a Secretary, who does not need to be a member of the Board of Directors. The Board of Directors meets as often as business requires, but no less than four times per year. It convenes at the in- vitation of the Chairman. Each member of the Board of Directors is also entitled to demand that a meeting be called to discuss a particular topic. In this case, the Chairman convenes the meet- ing within 14 days of receiving the request. The Board of Directors is deemed to have a quorum if an absolute majority of its members are present in person. The resolutions of the Board of Directors are adopted by an absolute majority of votes present. In the event of a tie, the Chairman casts the deciding vote. All resolutions are minuted. In cases of urgency, a meeting of the Board of Directors may be held by telephone or other appropriate medium. Resolutions by circular letter are permissible provided no Board member calls for verbal discussion. All members were present at the eight meetings of the Board of Directors that took place in 2015. On average, these meetings lasted around four hours. How- ever, these average times pertain to the actual duration of the meetings themselves, and do not take into account the preparatory and follow-up work done by the individual members. Within the Board of Directors, there are two committees that are exclusively made up of non-executive Board members: – Remuneration Committee This committee amalgamates the tasks of a remuneration and nomination committee. The Remu- neration Committee consists of a maximum of three non-executive members. The Committee is elected by the Annual General Meeting. Members’ term of office ends with the conclusion of the next Annual General Meeting. Re-election is permissible. The current members are Daniel Hirschi (Chair), Beat Kälin and Roland Siegwart. The Board of Directors is proposing to the Annual General Meeting of 12 May 2016 the re-election of Daniel Hirschi, Beat Kälin and Roland Siegwart. The Articles of Association provide no regulations regarding the appointment of Committee mem- bers that deviate from statutory provisions. If a member leaves the company prior to completing his term of office, the Board of Directors will appoint a replacement from among its number for the remaining period of office. 60 E_00_GB_Komax_2015_(CC_Layout) [P].indd 60 11.03.16 17:50 2015KOMAX GROUP ANNUAL REPORT ANN UA L REPORT CO RP OR ATE GOVER NANCE The Remuneration Committee meets as often as business requires, but at least twice a year. The invitation, which contains details of the agenda items, is issued in writing at least ten days prior to the meeting. The CEO and other members of the Executive Committee may attend these meet- ings in an advisory capacity. However, they do not take part in discussions concerning their own compensation. The Committee Chairman reports to the Board of Directors on the activities of the Committee after every meeting. The minutes of Committee meetings are made available to mem- bers of the Board of Directors. In 2015, the Committee met twice, with all members being present on both occasions. On aver- age, these meetings lasted three hours. These average times do not include the preparatory and follow-up work done by the individual members. The tasks of the Remuneration Committee include supporting the Board of Directors in the fulfil- ment of the compensation and staff policy duties assigned to it by current legislation and the Articles of Association. In particular, the Remuneration Committee puts forward proposals on remuneration policy and prepares all relevant decision-making material for the Board of Directors with respect to the appointment and remuneration of members of the Board of Directors and the Executive Committee. The detailed tasks and competencies of the Remuneration Committee are formulated in a set of Regulations for the Remuneration Committee. Further details on the Remu- neration Committee can be found in the Compensation Report on pages 69 to 81. – Audit Committee The members of the Audit Committee are David Dean (Chair), Kurt Haerri and Leo Steiner. The Committee meets at least twice a year. In 2015, the Committee met three times, with all members being present on each occasion. On average, these meetings lasted three hours. These average times do not include the preparatory and follow-up work done by the individual members. The tasks of the Audit Committee include the overall supervision of the external and internal au- ditors, as well as financial reporting. The Audit Committee sets out the scope and schedule of the audits to be carried out by the two auditing bodies and also coordinates their work. Both the external and internal auditors draw up a report on their audit work, and the Audit Committee monitors implementation of the audit findings. Furthermore, the Audit Committee evaluates the reliability of the internal control system and risk management, and acquires a picture of the ex- tent to which statutory and internal regulations are being adhered to (compliance). The CEO and the CFO both attend meetings of the Audit Committee. The external auditor is invit- ed to attend. The CFO represents the internal audit unit. Both bodies have access to the minutes of the meetings of the Boards of Directors and Executive Committee. The detailed tasks and competencies of the Audit Committee are set out in the Organizational Regulations for the Audit Committee. E_00_GB_Komax_2015_(CC_Layout) [P].indd 61 61 11.03.16 17:50 2015KOMAX GROUP ANNUAL REPORT ANNUAL REPORT CORPO RATE GOVERNANCE Definition of areas of responsibility According to Art. 716a para. 1 CO and Section 19 of the Articles of Association, the Board of Directors must fulfil the following tasks: – – – Overall management of the company and issuance of the necessary directives Defining the company’s organizational structure Determining the principles of accounting, financial controlling and financial planning, insofar as this is necessary for the management of the company Appointing and removing the persons entrusted with managing and/or representing the company Ultimate supervision of the persons entrusted with managing the company, specifically with respect to prevailing legislation, the Articles of Association, regulations and directives Producing the Annual Report, making preparations for the Annual General Meeting and executing the resolutions passed by the Annual General Meeting Drawing up the Compensation Report Informing the courts in the event of excessive indebtedness Passing resolutions on supplementary contributions for shares not fully paid in Resolutions for the approval of capital increases and the resulting amendments to the Articles of Association – – – – – – – The tasks, obligations and powers of the Board of Directors, its Chairman, and the above- mentioned Committees are set out in detail in the Articles of Association, the Organizational Reg- ulations of Komax Holding AG, and the Regulations for the Remuneration Committee and the Audit Committee. These also define the rights, obligations and competencies of the CEO and Ex- ecutive Committee. The relevant regulations are reviewed on a regular basis and amended where necessary. The most recent amendment was undertaken in August 2014. To the extent permitted by law and by the Articles of Association, the Board of Directors has dele- gated operational management of the company to the CEO of the Komax Group. The Executive Committee is made up of the CEO and two further members. The members of the Executive Com- mittee are appointed by the Board of Directors at the proposal of the Remuneration Committee. Information and control instruments vis-à-vis the Executive Committee The CEO informs the Board of Directors at each ordinary meeting about the course of business, the Group’s most important transactions and the status of the tasks delegated to the Executive Committee. In addition, the key data generated by the management information system (MIS) is discussed at length with the CEO and CFO at these meetings. The Board of Directors is provided with full details of the current course of business and the financial situation of the Group between each meeting. 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 commercial activities are systematically identified, ana- lyzed, monitored and managed through an institutionalized risk management function. These risks are amalgamated into groups according to their nature, namely general external risks, busi- ness risks, financial risks, risks arising in connection with corporate governance, and IT risks. The Executive Committee is responsible for the operational side of risk management, whereby specially appointed process owners are assigned responsibility for the management of key individ ual risks. These process owners take specific measures and monitor their implementation. Every year, the Executive Committee informs the Audit Committee of the risks identified and measures taken as part of risk management activities. 62 E_00_GB_Komax_2015_(CC_Layout) [P].indd 62 11.03.16 17:50 2015KOMAX GROUP ANNUAL REPORT ANN UA L REPORT CO RP OR ATE GOVER NANCE The MIS of the Komax Group is organized as follows: each subsidiary’s key balance sheet and profit and loss figures are compiled and consolidated once a month. The subsidiaries’ balance sheets, income statements, cash flow statements and various indicators are compiled and con- solidated on a quarterly, half-yearly and yearly basis. A comparison is then made with the previ- ous year and the budget. The budget forecast is checked for attainability against the quarterly statements for each individual company and on a consolidated basis. 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 com- plete accounting records as well as timely preparation of reliable financial information. A report setting out the results of these investigations and the corresponding measures taken is submit- ted to the Audit Committee. The internal audit function evaluates the effectiveness of the ICS as well as management and monitoring processes. It also supports the Executive Committee in the risk management process. Internal audit duties are performed by the Finance & Accounting unit of Komax Management AG, Dierikon. This unit scrutinizes the individual operating units of the Group and the various busi- ness areas of the parent entity at regular intervals, and on the basis of an annually updated audit plan. The internal auditors report the results of their investigations to the Audit Committee. The Audit Committee reviews and approves the scope of the audit, the audit plan, and the corres- ponding responsibilities. It also decides on any measures to be implemented as a result of internal audit findings. e 4 Executive Committee The Executive Committee of the Group comprises the CEO, the Chief Financial Officer (CFO) and the head of the Medtech business unit. Matijas Meyer, CEO Andreas Wolfisberg, CFO Rene Ronchetti, Head Business Unit Medtech Function exercised since 2015 1996 2012 Biographies of the individual members of the Executive Committee are provided on page 19. Other activities and interests Aside from the mandates listed on page 19, the members of the Executive Committee did not exercise any activities on management or supervisory bodies of significant Swiss and foreign corporate entities, institutions or foundations under private or public law outside the Komax Group as at 31 December 2015. E_00_GB_Komax_2015_(CC_Layout) [P].indd 63 63 11.03.16 17:50 2015KOMAX GROUP ANNUAL REPORT ANNUAL REPORT CORPO RATE GOVERNANCE Statutory regulations with respect to the number of permissible activities as per Art. 12 para. 1 ERCO The number of permissible mandates of members of the Executive Committee in the highest management or administrative bodies of legal entities which are obliged to have themselves entered in the Commercial Register or in a corresponding foreign register and which are not con- trolled by the company or do not control the company shall be 2 additional mandates for listed companies, 2 additional mandates for non-listed companies, and 5 additional mandates for char- itable organizations, as long as this does not involve any breach of statutory provisions and in particular the applicable due diligence obligations and the duty of loyalty. Mandates with differ- ent companies that belong to the same corporate group count as a single mandate. Mandates undertaken by a member of the Executive Committee at the behest of a Group company are not covered by the additional mandate restriction. Executive Committee members may not accept any of the above-mentioned mandates without the prior written approval of the Board of Direct- ors. The assumption of mandates other than those stipulated above is permissible without nu- merical restriction, as long as these mandates are unremunerated and do not interfere with the Executive Committee member’s fulfilment of his obligations vis-à-vis the company. The reim- bursement of expenses does not count as compensation. Management contracts No management agreements exist with companies or natural persons outside of the Group in relation to transferred management responsibilities. e 5 Compensations, shareholdings and loans Details of compensations, shareholdings and loans are set out in the Compensation Report on pages 69 to 81 of this Annual Report. e 6 Shareholder participation rights The fundamental participation rights of shareholders are set out in the Swiss Code of Obligations (CO) and supplemented by the provisions of the company’s Articles of Association. There are no regulations on participation in the Annual General Meeting that deviate from statutory provisions. The Articles of Association of Komax Holding AG are available in electronic form on the website www.komaxgroup.com. Voting rights and representation restrictions Shareholders registered in the Komax Holding AG share register are entitled to vote; each share is entitled to one vote. Treasury shares do not confer the right to vote. No single shareholder may directly or indirectly exercise the votes of more than 5% of the total number of shares recorded in the Commercial Register for his/her 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, syndicate or in some other manner, are regarded as one person for the purposes of this provision. Representation by the independent proxy remains reserved. The Board of Directors may grant exceptions to this rule for good cause. No exceptions were granted in this respect in the year under review. 64 E_00_GB_Komax_2015_(CC_Layout) [P].indd 64 11.03.16 17:50 2015KOMAX GROUP ANNUAL REPORT ANN UA L REPORT CO RP OR ATE GOVER NANCE The 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 Articles of Association regarding limitation of voting rights was passed. Shareholders may be represented at the Annual General Meeting by another shareholder with voting rights on the basis of a written power of attorney, and by the independent proxy on the basis of electronic or written power of attorney. The Chair of the Annual General Meeting shall decide on the permissibility of representation. The independent proxy is elected by the Annual General Meeting up until the end of the next Annual General Meeting. The Articles of Association provide no regulations regarding the appointment of the independent proxy that deviate from statutory provisions. The statutory voting rights limitation may be removed by a resolution by the Annual General Meeting. Such a resolution must be carried by an absolute majority of voting shares represented. Statutory quorums The Annual General Meeting votes and passes its resolutions with the absolute majority of votes represented, unless prevailing legislation or the Articles of Association contain mandatory provi- sions under which resolutions have to be passed in a different way. In addition to the resolutions specified in CO Art. 704, under the Articles of Association of 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 Annual General Meeting of shareholders The convocation of the Annual General Meeting is governed 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 by the deadline published by the company. Entries in the share register Any person acquiring 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, Section 6 para. 4). This restriction 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 additionally 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 his/her own name and for his/her own account. After hearing the affected party, the company may delete entries in the share register if such entries occurred in consequence of false statements by the acquirer. The acquirer must be informed of the deletion immediately. Nominees are listed in the share register as “non-voting shareholders”. E_00_GB_Komax_2015_(CC_Layout) [P].indd 65 65 11.03.16 17:50 2015KOMAX GROUP ANNUAL REPORT ANNUAL REPORT CORPO RATE GOVERNANCE Invitation to the Annual General Meeting of 12 May 2016 All shareholders registered in the Komax Holding AG share register as at 5.00 p.m. on 6 May 2016 are entitled to vote in respect of the number of shares registered in their name at the Annu- al General Meeting of 12 May 2016. Shareholders registered on 16 March 2016 will receive an invitation indicating the proposals of the Board of Directors together with a reservation and entry ticket coupon. Shareholders who acquire shares later and whose registration application is re- ceived by the Komax Holding AG share register no later than 6 May 2016 will receive the invita- tion at that time, or ballot materials will be waiting for them at the front desk of the Annual Gen- eral Meeting. Shareholders who dispose of their shares before the Annual 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 Annual General Meeting. e 7 Changes of control and defence measures Duty to make an offer Upon reaching or exceeding a threshold of 331⁄3%, a shareholder must submit an offer to all shareholders for the purchase of their shares (Art. 32, Federal Act on Stock Exchanges and Securities Trading). The Articles of Association do not contain any opting-out or opting-up regulations. Clauses on change of control At the Komax Group, change-of-control clauses are not included in employment contracts. How- ever, the members of the Board of Directors, Executive Committee and middle management are entitled to exercise their options or share-based remuneration in part or in full, without regard to the applicable time limits, in the event of a change in control. 66 E_00_GB_Komax_2015_(CC_Layout) [P].indd 66 11.03.16 17:50 2015KOMAX GROUP ANNUAL REPORT ANN UA L REPORT CO RP OR ATE GOVER NANCE e 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 auditor has been responsible for the audit mandate since 2010. Audit fee PricewaterhouseCoopers invoiced the Komax Group CHF 673 421 in the 2015 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. Additional fees During the 2015 financial year, PricewaterhouseCoopers invoiced a fee amounting to total CHF 106 796. This breaks down into a fee of 31 739 for tax and legal advice and CHF 75 057 for transaction services and other consultancy fees. Information instruments of the external audit The Audit Committee is responsible for evaluating the external auditors, who submit an audit re- port to the Board of Directors and senior management. At least two consultations are 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 consolidated annual statements. The ser- vices 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 cooperation with the internal audit team. The independence of the auditors is verified by compar- ing the fee for additional services charged by the external auditors with the audit fee, taking into account the scope of these additional services. E_00_GB_Komax_2015_(CC_Layout) [P].indd 67 67 11.03.16 17:50 2015KOMAX GROUP ANNUAL REPORT ANNUAL REPORT CORPO RATE GOVERNANCE e 9 Information policy Komax Holding AG is committed to providing swift, transparent and simultaneous information for all stakeholders. The CEO, CFO, and the Head of Investor Relations and Corporate Communica- tions are available as contact partners for information purposes. The consolidated financial statements are compiled in conformity with IFRS standards. Komax Holding AG publishes comprehensive financial results twice a year, for the first half and the full year. In addition to the financial results, shareholders and the financial markets are also regularly informed of significant changes and developments. Komax Holding AG publishes facts relevant to its share price in conformity with the disclosure policies of SIX Swiss Exchange Ltd. (ad hoc publicity, Art. 72 of the Listing Rules). The Listing Rules can be downloaded at www.six-exchange-regulation.com under “Admission”. The official publication for company notices is the “Swiss Official Gazette of Commerce” (“Schweizerisches Handelsamtsblatt”). Information on share price trends, annual and half-year reports, the financial calendar, the minutes of the most recent Annual General Meeting, press releases and Komax Holding AG’s Articles of Association and Organizational Regulations 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 6036 Dierikon Switzerland Phone +41 41 455 06 16 marco.knuchel@komaxgroup.com 68 E_00_GB_Komax_2015_(CC_Layout) [P].indd 68 11.03.16 17:50 2015KOMAX GROUP ANNUAL REPORT C OMPEN SATIO N REPORT CONTENTS Introduction by the Chairman of the Remuneration Committee 70 Tasks and competencies of the Remuneration Committee 71 Provisions of the Articles of Association on compensation 72 Principles of compensation policy 73 Structure of the compensation system 74 Compensation, shareholdings and options held by the Board of Directors in 2015 (audited) 78 Compensation, shareholdings and options held by the Executive Committee in 2015 (audited) 80 Report of the auditors 82 This Compensation Report provides an overview of the compensation policy and compensation systems of Komax Holding AG, as well as the principles used to determine the compensation of the Board of Directors and the Executive Committee. In addition, the compen- sation paid in 2015 is disclosed in detail. The Compensation Report has been drawn up in accordance with the provisions of the Ordin- ance against Excessive Remuneration in Listed Companies Limited by Shares (ERCO), the Directive Corporate Governance (DCG) of SIX Swiss Exchange, and the principles of the Swiss Code of Best Practice for Corporate Governance of economiesuisse. I N O T A S N E P M O C T R O P E R E_00_GB_Komax_2015_(CC_Layout) [P].indd 69 69 11.03.16 17:50 KOMAX GROUP ANNUAL REPORT2015 ANNUAL REPORT COM PENSATI ON REPORT e 1 Introduction by the Chairman of the Remuneration Committee Dear Shareholders, As Chairman of the Remuneration Committee, it falls to me to present to you the Compensation Report for the 2015 financial year. In 2015, the work of the Remuneration Committee focused on the implementation of the modifi- cations to the compensation system adopted in 2014. Among other things, these include the discontinuation of the allocation of share options to members of the Board of Directors and the Executive Committee, and the introduction of a performance-related, share-based, long-term incentive plan for members of the Executive Committee. We are confident that our new compensation system delivers reasonable yet attractive remuner- ation that reflects market conditions, is in line with our corporate strategy, and aligns the inter- ests of management even more closely with the long-term interests of the shareholders. At the upcoming Annual General Meeting on 12 May 2016 we will again conduct a binding vote on the maximum possible total compensation payable to the Board of Directors and the Execu- tive Committee in the 2017 financial year, as this is the approach that offers the best possible legal certainty for the company. We are conscious of our responsibility, and will manage the budget granted to us prudently. For the first time, moreover, you will be given the opportunity to express your opinion on this Compensation Report in an advisory vote. On the next few pages you will find full details of our compensation model and the compensation awarded to the Board of Directors and the Executive Committee for 2015. Yours sincerely Daniel Hirschi Chairman of the Remuneration Committee 70 E_00_GB_Komax_2015_(CC_Layout) [P].indd 70 11.03.16 17:50 2015KOMAX GROUP ANNUAL REPORT ANN UA L REPORT CO MP ENSATIO N REPORT e 2 Tasks and competencies of the Remuneration Committee Under the Articles of Association, Organizational Regulations and Regulations of the Remuner- ation Committee of Komax Holding AG, the Remuneration Committee is the supervisory body for staff and compensation policy within the Komax Group. The Committee amalgamates the tasks of a remuneration and nomination committee. It has the following responsibilities and competencies: – Development and regular review of staff policy and compensation policy, including the principles of variable compensation and shareholding programme Annual review of and determination of the maximum total compensation amounts payable to the Board of Directors and the Executive Committee, as well as preparation of the related proposals to the Annual General Meeting Proposal on the individual compensation payable to members of the Board of Directors and the CEO within the limits approved by the Annual General Meeting Resolutions on the compensation payable to the other members of the Executive Committee within the limits approved by the Annual General Meeting Succession planning for the Board of Directors, Executive Committee, and other key functions Annual assessment of the independence of the members of the Board of Directors Annual assessment of the performance of the CEO and the members of the Executive Committee Preparation of the Compensation Report – The Committee monitors and regularly discusses trends and developments in the area of com- pensation, including any changes to statutory provisions or changes to provisions on corporate governance. – – – – – – Delineation of competencies Compensation policy, including the principles of variable compensation and participation programme Maximum total compensation for the Board of Directors and the Executive Committee Individual compensation of the members of the Board of Directors Evaluation of the performance of the CEO Compensation of the CEO CEO Committee BoD AGM proposes approves proposes submits proposes approves proposes approves proposes approves approves (binding vote) Evaluation of the performance of the other members of the Executive Committee proposes approves Individual compensation of the other members of the Executive Committee proposes approves Compensation Report proposes approves confirms (advisory vote) Under the Articles of Association, the Remuneration Committee consists of a maximum of three non-executive members of the Board of Directors. The Committee is elected by the Annual Gen- eral Meeting. Members’ term of office ends with the conclusion of the next Annual General Meet- ing. Re-election is permissible. The 2015 Annual General Meeting elected Daniel Hirschi (Chair- man), Beat Kälin and Roland Siegwart to the Committee. The Remuneration Committee meets as often as business requires, but at least twice a year, gen- erally in March and December. Compensation issues are discussed at the March meeting. These discussions include the assessment of the individual performance of the CEO and other mem- bers of the Executive Committee for the previous year, the determination of the individual com- pensation payable to members of the Board of Directors and the Executive Committee, and the E_00_GB_Komax_2015_(CC_Layout) [P].indd 71 71 11.03.16 17:50 2015KOMAX GROUP ANNUAL REPORT ANNUAL REPORT COM PENSATI ON REPORT approval of the Compensation Report. At the December meeting, nominations and succession planning are discussed, along with corporate governance. In addition, the performance targets for the CEO and the other members of the Executive Committee are set for the following year. In the year under review, the Committee met twice, with all Committee members present on both occasions. The Chairman of the Committee may invite the CEO and other members of the Exec- utive Committee to meetings in an advisory (non-voting) capacity. However, they do not take part in discussions concerning their own performance and compensation. The Committee Chairman reports to the Board of Directors on the activities of the Committee after every Committee meet- ing. The minutes of Committee meetings are made available to all members of the Board of Directors. Furthermore, the Committee may call in external consultants and draw on their assistance when fulfilling its duties. In 2015, Hostettler & Company, Zurich, provided independent advice on com- pensation matters. This is the only mandate that Hostettler & Company holds with the Komax Group. e 3 Provisions of the Articles of Association on compensation In compliance with the Ordinance against Excessive Remuneration in Listed Companies Limited by Shares (ERCO), the Articles of Association contain provisions relating to remuneration which are reproduced below in abbreviated form (as an excerpt) and set out in detail in sections 13 and 25 of the Articles of Association: – Principles for the compensation of members of the Board of Directors: Members of the Board of Directors receive fixed compensation in cash as well as in shares and/ or options under the company’s employee participation programme. The calculated value (fair value) of the shares and/or options at the time of allocation may not exceed the amount of com- pensation paid in cash. The Board of Directors determines the conditions that apply to shares and/or options. The lock-in periods are at least three years. – Principles for the compensation of members of the Executive Committee: Members of the Executive Committee receive a fixed base salary, variable performance-related compensation, and shares and/or options under the company’s employee participation pro- gramme. The Board of Directors determines the conditions for the performance-related com- pensation component on an annual basis. These are linked to the attainment of one or more performance criteria, whereby these criteria are either company-related and/or individual in na- ture. The target amount may not exceed 50% of the annual fixed compensation. If targets are not attained, the performance-related compensation may fall to zero. If all targets are signifi- cantly exceeded, it may go up to a maximum of 100% of the annual fixed compensation. The Board of Directors determines the conditions that apply to shares and/or options. The calculat- ed value (fair value) of the shares and/or options at the time of allocation may not exceed 100% of the annual fixed compensation. The lock-in periods are at least three years. – Binding vote on the compensation paid to the Board of Directors and Executive Committee: The Annual General Meeting holds a separate vote each year on the total amount of compensa- tion payable to the Board of Directors and to the Executive Committee. This vote is binding. It applies to the relevant total maximum compensation amounts that may be awarded to members of the Board of Directors and the Executive Committee for the following financial year. – Additional sum for payments to members of the Executive Committee appointed after the binding vote of the Annual General Meeting: The additional amount for the compensation of members of the Executive Committee appointed after the Annual General Meeting may not exceed 30% of the approved total amount of compen- sation payable to the Executive Committee. 72 E_00_GB_Komax_2015_(CC_Layout) [P].indd 72 11.03.16 17:50 2015KOMAX GROUP ANNUAL REPORT AN NUA L REPORT COMP ENSATION REPORT – Pension benefits: The pension benefits of members of the Executive Committee are only paid within occupational domestic and foreign pension plans provided by the company or its Group companies. The ben- efits and the employer contributions are solely drawn from the above-mentioned occupational plans. Retirement benefits are provided solely within the context of the company’s ordinary pen- sion plans. The Articles of Association of Komax Holding AG can be found at www.komaxgroup.com/en/ About-Komax/Corporate-Governance/Articles-of-Incorporation/. e 4 Principles of compensation policy Board of Directors The members of the Board of Directors only receive fixed compensation. This ensures that they are independent in their supervision of the Executive Committee. Their compensation is paid in cash and restricted shares, thereby ensuring alignment with the long-term interests of sharehold- ers. The amount of compensation reflects the importance of the mandate in question, and is generally based on the typical levels of compensation paid to board members of other listed Swiss industrial companies of comparable size and complexity. Executive Committee The compensation policy for members of the Executive Committee is determined by the Board of Directors. It is geared to key principles that take into account the corporate strategy of the Komax Group, which aims for profitable growth, as well as the company’s wider values with re- spect to sustainability and social responsibility. The compensation system is intended to provide an incentive to create and preserve value for shareholders. It is also designed to motivate top managers to achieve exceptional performance and to retain them in the long term. Ultimately, the amount of compensation awarded reflects the company’s long-term financial success. Performance orientation A significant proportion of compensation is directly linked to the operating and financial performance of the company and the attainment of individual objectives. Alignment with shareholder interests A proportion of compensation consists of Performance Share Units, which are intended to align the interests of management more closely with the long-term interests of the share- holders. Furthermore, there is a direct correlation between the amount of compensation paid and the long-term success of the company. Market comparability Compensation is in line with that paid for similar positions in comparable companies. Fair compensation The compensation reflects the job profile, the responsibility, the capabilities and the experi- ence of the function holder. Transparency The compensation system is straightforward and transparent. E_00_GB_Komax_2015_(CC_Layout) [P].indd 73 73 11.03.16 17:50 2015KOMAX GROUP ANNUAL REPORT ANNUAL REPORT COM PENSATI ON REPORT The compensation paid to the Executive Committee is determined on the basis of the following key factors: – Practice of competitors: Compensation paid by other international Swiss industrial companies of comparable complexity, size, and geographic reach. The sources used for the benchmark comparison are publicly acces- sible data such as compensation reports and the Ethos study on remuneration in Swiss com- panies. In view of the fact that the target amounts for the compensation of the CEO and other members of the Executive Committee remained unchanged in 2015, no specific benchmark study was performed during the reporting year. – Performance: The financial performance of the company and its relevant business areas, and the attainment of individual targets agreed as part of the annual performance management process. – Available financial resources of the company and market situation: Budget-related considerations, inflation, and wage trends in the local market. e 5 Structure of the compensation system Board of Directors 5.1 The members of the Board of Directors only receive fixed compensation. To strengthen the align- ment of their interests with the long-term interests of shareholders, their compensation is paid partly in cash and partly in restricted shares. The allocation of share options to members of the Board of Directors has been discontinued. The amount of compensation depends on the responsibilities of the individual as well as the time taken up by their mandate, and is based on the following structure: in CHF Chairman of the Board of Directors Vice-Chairman of the Board of Directors Board member and Chairman of a committee Board member without committee chairmanship Basic annual fee Attendance fee 187 500 75 000 75 000 75 000 5 000 2 500 5 000 2 500 Annual allocation of restricted shares1 60 000 30 000 25 000 25 000 1 Fixed amount in CHF: is divided by the share price as per allocation date (average closing price over the last 40 trading days prior to allocation) and rounded up to the nearest number of full shares. The basic annual fee in cash (incl. expense allowance) and attendance fees are paid out in June and December for the current calendar year. Restricted shares are allocated at the end of the member’s period of office shortly before the Annual General Meeting; the lock-in period is three years. In the event of retirement, death, or disability, the entitlement to restricted shares is calcu- lated on a pro rata temporis basis. In such cases, the lock-in period may be either continued or rescinded at the discretion of the Board of Directors. In the event of a change in company control, the lock-in period is automatically rescinded. 74 E_00_GB_Komax_2015_(CC_Layout) [P].indd 74 11.03.16 17:50 2015KOMAX GROUP ANNUAL REPORT ANN UA L REPORT CO MP ENSATIO N REPORT Additional compensation may be paid for exceptional efforts that cannot be considered part of the ordinary Board of Directors activity. No such additional compensation was paid in 2015. The Compensation granted to members of the Board of Directors is subject to the standard social security deductions. The members of the Board of Directors do not participate in the staff pen- sion plans of Komax. CEO and Executive Committee 5.2 In keeping with the principles of performance orientation and alignment with the long-term inter- ests of shareholders, the CEO and the other members of the Executive Committee receive a fixed salary component, a variable, performance-related cash bonus, a long-term incentive component in the form of Performance Share Units, and occupational benefits. Purpose Driver Performance criterion Period Instrument Fixed base salary Attract, retain, motivate Function, market comparability – Ongoing Monthly cash payments Cash bonus Long-term incentive system Pay for performance Align with shareholder interests. Pay for performance Financial and individual performance EAT, EBIT, individual objectives One year Function EBIT margin Three years Occupational benefits Protect against risks Market comparability – Ongoing Yearly cash payment Performance Share Units (PSUs) Retirement savings / insurance plan 5.2.1 Fixed compensation The fixed compensation component consists of a fixed base salary and a fixed company car allowance, to which members of the Executive Committee are entitled according to the current expense regulations. Expense allowances are not included, as these are not considered compen- sation. The fixed salary component and the cash bonus for 100% target attainment form the so-called target salary. The target salary is determined on the basis of the following factors: – – – – the tasks and responsibilities of the individual functions the standard market compensation rate for the function in question (external benchmark) an internal peer comparison (internal benchmark) the individual profile of the function holder, e.g. skills, capabilities, experience and performance the company’s available financial affordability – E_00_GB_Komax_2015_(CC_Layout) [P].indd 75 75 11.03.16 17:50 2015KOMAX GROUP ANNUAL REPORT ANNUAL REPORT COM PENSATI ON REPORT 5.2.2 Cash bonus The cash bonus depends on the financial performance of the company and its business areas as well as the attainment of the individually agreed objectives in the year under assessment. The target value (target bonus) is expressed as a proportion of fixed annual basic salary, and amounts to 40% for the CEO and up to 50% for the other members of the Executive Committee. The cash bonus for the CEO and CFO is based entirely on the financial performance of the Komax Group. The reference value for the 2015 financial year was the margin on Group profit after taxes (EAT). The Board of Directors determines the performance achievement level and the amount of the cash bonus payable to the CEO annually on the recommendation of the Remuneration Commit- tee. This also forms the basis for determining the performance achievement level and cash bonus of the CFO, which is likewise determined by the Remuneration Committee. If performance objec- tives are not attained, the cash bonus may fall to zero. If all objectives are significantly exceeded, the cash bonus may amount to a maximum of 200% of the target bonus or a maximum of 100% of annual fixed compensation. The cash bonus payable to the other member of the Executive Committee is calculated as fol- lows: 70% on the basis of financial performance and 30% on the basis of individual performance. The performance achievement level and corresponding bonuses are determined by the Remuner- ation Committee on the recommendation of the CEO. If performance objectives are not attained, the cash bonus may fall to zero. If all objectives are significantly exceeded, the cash bonus may amount to a maximum of 170% of the target bonus or a maximum of 85% of annual fixed com- pensation. In 2015, as in previous years, the following key financial figures were relevant for the business unit head: – margin on Group profit after taxes (EAT), weighted at 20% – absolute EBIT of the business unit, weighted at 50% Attainment of financial targets is assessed after the end of the financial year and may fluctuate within a range of 0% to 200%. The individual performance component is based on the attainment of personal objectives agreed as part of the annual performance management process. These objectives may also include non-quantitative objectives of a predominantly strategic nature, such as the opening up of new markets, the development of new products, the management of key projects, and leadership objectives. Attainment of personal objectives is evaluated after the end of the financial year and may fluctuate within a range of 0% to 100%. CEO and CFO Business unit heads Financial performance 100% EAT margin (Group) Individual performance – 20% EAT margin (Group) 50% EBIT (business unit) 30% individual objectives Payout bandwidth 0–200% 0–170% The cash bonus is generally paid in April of the following year. 76 E_00_GB_Komax_2015_(CC_Layout) [P].indd 76 11.03.16 17:50 2015KOMAX GROUP ANNUAL REPORT ANN UA L REPORT CO MP ENSATIO N REPORT 5.2.3 Long-term incentive system In 2015, the Board of Directors decided to discontinue the existing employee participation plan involving share options. Instead, and in an effort to bring the interests of the Executive Commit- tee into closer alignment with long-term shareholder interests, it implemented a new, independ- ent, long-term incentive plan. This plan consists of Performance Share Units (PSUs) subject to a three-year vesting period conditional upon the fulfillment of a performance target (EBIT target margin) and continuous employment. The Board of Directors determines the allocation amounts in CHF, taking account of the importance of the function and its impact on corporate results. The number of PSUs allocated is calculated by dividing a fixed CHF amount by the average clos- ing share price during the 60 days preceding the start of the vesting period. The allocation may amount to a maximum of 662⁄3% of fixed base salary. The actual payout at the end of the vesting period takes the form of shares, and depends on the average EBIT margin over three years com- pared to the target margin determined in advance by the Board of Directors. The payout factor may range between 0% and 150%. The actual value of the allocation at the end of the vesting period depends therefore on the payout factor and the development of the share price over the course of the vesting period. Shares are definitively issued according to the following vesting rule: – EBIT margin below the threshold value: 0% of PSUs are converted into shares (forfeiture rate of 100%) – EBIT margin target achieved: 100% of PSUs are converted into shares – EBIT margin target at maximum performance level: 150% of PSUs are converted into shares (cap) The payout factor between the threshold value, the target level, and the cap is obtained by linear interpolation. Number of shares allocated at time of vesting = Number of PSUs originally granted to the individual in question X Vesting factor (0–150%) In 2015, the value of the PSUs granted to the CEO amounted to 34% of his fixed base salary, while the value of PSUs granted to other members of the Executive Committee amounted to between 23% and 44%. Duration of plan: Plan period (LTI 2015–2017) 2015 plan year 2016 plan year 2017 plan year Average EBIT margin 1 January 2015 allocation of PSUs 31 December 2017 vesting: allocation of shares (payout factor between 0 and 150%) In the event of any termination of the employment, pro rata vesting applies at the ordinary vesting date. The calculation is based on the number of whole months that have elapsed within the vest- ing period until the departure date. Dismissals for cause are excluded from this regulation; in such cases, all unvested PSUs immediately forfeit and become worthless. In the event of a change in control, accelerated pro rata vesting applies. The calculation is based on the number of whole months that have elapsed until the date of change in control. This date is determined at the discretion of the Board of Directors. E_00_GB_Komax_2015_(CC_Layout) [P].indd 77 77 11.03.16 17:50 2015KOMAX GROUP ANNUAL REPORT ANNUAL REPORT COM PENSATI ON REPORT 5.2.4 Occupational benefits Members of the Executive Committee are insured under Komax’s ordinary staff pension scheme in Switzerland. The amount insured is the annual fixed basic salary multiplied by a factor of 1.2 in order to additionally insure at least a proportion of the variable compensation. Contributions are graduated by age, and are shared equally between the insured and the employer. The bene- fits of the plan go beyond the statutory requirements of the Swiss Federal Law on Occupational Retirement, Survivors’ and Disability Pension Plans, and are in line with the market practice of other industrial companies in Switzerland. 5.2.5 Other provisions in employment contracts The employment contracts of members of the Executive Committee are concluded for an inde- finite period and stipulate a maximum notice period of 12 months. They do not contain any sev- erance agreement or change of control provisions. e 6 Compensation, shareholdings and options held by the Board of Directors in 2015 Section 6 of the Compensation Report was audited by the company’s external auditor. Compensation 6.1 In 2015, members of the Board of Directors received total compensation of CHF 949 041 (2014: CHF 1 011 219), of which CHF 710 000 was paid out in cash (2014: CHF 746 250), CHF 190 000 in the form of restricted shares (2014: CHF 223 745 in share options) and CHF 49 041 as social benefit contributions (2014: CHF 41 224). Contributions to pensions plans amounted to CHF 0 (2014: CHF 0). The decline of the total compensation is primarily justified by the heterogeneous composition of the Board resulting from the generation change. in CHF Basic annual fee Allocation restricted shares1 Social benefits2 Total compensation 2015 Total compensation 2014 Beat Kälin3 Leo Steiner4 Daniel Hirschi Kurt Haerri Roland Siegwart David Dean5 Chairman Member Member Member Member Member Hans Caspar von der Crone6 Member 131 875 151 875 97 500 95 000 95 000 97 500 41 250 35 000 39 583 30 000 25 000 25 000 25 000 10 417 Max Koch7 Member n.s. n.s. 8 546 8 843 7 254 6 925 6 925 7 119 3 429 n.s. 175 421 200 301 134 754 126 925 126 925 129 619 55 096 n.s. n.s. 321 166 133 501 136 198 133 501 91 678 144 288 50 887 Total Board of Directors 710 000 190 000 49 041 949 041 1 011 219 1 Fixed amount in CHF: is divided by the share price as per allocation date (average closing price over the last 40 trading days prior to allocation) and rounded up to the nearest number of full shares. The share price applied in 2015 was CHF 165.94. 2 Includes mandator y employer contributions to social insurance. This amount entitles members of the Board of Directors to draw the maximum insured pension benefits in the future. 3 Member and Chairman of the Board since 8 May 2015. 4 Chairman of the Board of Directors until 8 May 2015 and subsequently member. 5 Member of the Board since 7 May 2014. 6 Member of the Board until 8 May 2015. 7 Member of the Board until 7 May 2014. 78 E_00_GB_Komax_2015_(CC_Layout) [P].indd 78 11.03.16 17:50 2015KOMAX GROUP ANNUAL REPORT ANN UA L REPORT CO MP ENSATIO N REPORT No compensation was paid to former members of the Board of Directors for the 2015 and 2014 financial years. Komax Group companies had not granted any guarantees, loans, advances or credits to members of the Board of Directors or parties closely linked to such persons as at 31 December 2015. No members of the Board of Directors or persons closely linked to them are or were involved in Komax Group transactions outside their normal duties. Holdings of shares and options as at 31 December 2015 6.2 As at the end of 2015 and 2014, members of the Board of Directors had the following holdings of shares and/or options in the company: Assets in units 31.12.2015 31.12.2014 Beat Kälin1 Leo Steiner2 Daniel Hirschi Kurt Haerri Roland Siegwart David Dean3 Chairman Member Member Member Member Member Hans Caspar von der Crone4 Member Shares Options Shares Options 8 800 123 301 3 275 88 63 803 n.s. 19 000 7 500 3 000 2 500 1 666 666 n.s. n.s. 120 650 2 200 25 0 740 11 300 n.s. 10 000 4 000 2 500 1 666 666 4 000. Total Board of Directors 136 330 34 332 134 915 22 832 1 Member and Chairman of the Board since 8 May 2015. 2 Chairman of the Board of Directors until 8 May 2015 and subsequently member. 3 Member of the Board since 7 May 2014. 4 Member of the Board until 8 May 2015. E_00_GB_Komax_2015_(CC_Layout) [P].indd 79 79 11.03.16 17:50 2015KOMAX GROUP ANNUAL REPORT ANNUAL REPORT COM PENSATI ON REPORT e 7 Compensation, shareholdings and options held by the Executive Committee in 2015 Section 7 of the Compensation Report was audited by the company’s external auditor. Compensation 7.1 In 2015, members of the Executive Committee received total compensation of CHF 1 954 628 (2014: CHF 3 062 579). Of this amount CHF 1 084 207 was paid in the form of fixed compensation (2014: 1 430 399), CHF 370 148 in the form of cash bonuses (2014: CHF 870 077), CHF 342 500 were granted in the form of Performance Share Units (2014: CHF 501 670 in share options) and CHF 157 773 comprised social security and pension fund contributions (2014: CHF 260 433). The decline in overall compensation in 2015 is primarily attributable to the departure of a member of the Executive Committee, a lower degree of target achievement for the cash bonus, and to a lower grant value under the new LTI plan (for details see below). in CHF Fixed base salary1 Cash bonus2 Allocation Performance Share Units3 Social benefits4 Total compensation 2015 Total compensation 2014 Matijas Meyer5 Beat Kälin6 CEO CEO Total other members of the Executive Committee Total Executive Committee 361 107 147 407 123 333 n.s. n.s. n.s. 53 001 n.s. 684 848 n.s. n.s. 1 148 091 723 100 222 741 219 167 104 772 1 269 780 1 914 488 1 084 207 370 148 342 500 157 773 1 954 628 3 062 579 1 Includes, in addition to the fixed base salar y, fixed company car allowances in accordance with the current expense regulations. Expense allowances are not included as these are not considered as compensation. 2 Bonus for 2015, to be paid in April 2016. 3 Fixed amount in CHF: is divided by the share price as per allocation date (average closing price over the last 60 trading days prior to allocation) and rounded up to the nearest number of full shares. The share price applied in 2015 was CHF 139.45. 4 Includes mandator y employer contributions to social insurance of CHF 49 771 as well as contributions to occupational benefits (BVG). This amount entitles members of the Executive Committee to draw the maximum state-insured pension benefits in the future. 5 CEO since 11 May 2015 and head of the Wire business unit. Highest compensated member of Executive Committee in 2015. 6 CEO until 8 May 2015. Highest compensated member of Executive Committee in 2014. Notes on the compensation overview: In 2015, the cash bonus of the CEO amounted to 41% of fixed base salary (2014: 92%). This payout level is related to the development of the EAT performance. The cash bonuses paid to the other members of the Executive Committee amounted to between 19% and 46% of fixed base salary (2014: 22 bis 62%). 80 E_00_GB_Komax_2015_(CC_Layout) [P].indd 80 11.03.16 17:50 2015KOMAX GROUP ANNUAL REPORT ANN UA L REPORT CO MP ENSATIO N REPORT The PSUs allocated to the CEO in the year under review were equivalent to 34% of annual fixed basic salary (2014: 54% in share options), while the corresponding figures for PSUs allocated to the other members of the Executive Committee were 23 to 44% (2014: 0 to 37% in share options). The overall variable compensation of the CEO in 2015 therefore amounted to 75% of the annual fixed basic salary (2014: 146%) and that of the other members of the Executive Committee to between 54% and 88% (2014: 38% to 96%). This is in line with the provisions of the company’s Articles of Association, which allows for a maximum level of 100% of annual fixed basic salary for each element of variable compensation. Further details on the participation plans can be found in the notes to the consolidated financial statements, on pages 134 to 137 of the Financial Report. No compensation was paid to former members of the Executive Committee for the 2015 and 2014 financial years. Komax Group companies had not granted any guarantees, loans, advances or credits to members of the Executive Committee or parties closely linked to such persons as at 31 December 2015. No members of the Executive Committee or persons closely linked to them are or were involved in Komax Group transactions outside their normal duties. Holdings of shares and options as at 31 December 2015 7.2 As at the end of 2015 and 2014, members of the Executive Committee had the following holdings of shares and/or options in the company: Assets in units Beat Kälin1 Matijas Meyer2 Andreas Wolfisberg René Ronchetti CEO CEO / Head Business Unit Wire CFO Head Business Unit Medtech 31.12.2015 31.12.2014 Shares Options n.s. 1 000 500 100 n.s. 7 000 6 000 6 000 Shares 7 300 0 500 50 Options 29 000 9 000 9 000 7 000 Total Executive Committee 1 600 19 000 7 850 54 000 1 CEO and Member of the Executive Committee until 8 May 2015. 2 CEO since 11 May 2015 and Head Business Unit Wire. E_00_GB_Komax_2015_(CC_Layout) [P].indd 81 81 11.03.16 17:50 2015KOMAX GROUP ANNUAL REPORT ANNUAL REPORT COM PENSATI ON REPORT Report of the statutory auditor to the Annual General Meeting of Komax Holding AG, Dierikon We have audited the accompanying remuneration report (Art. 6 and 7) dated 4 March 2016 of Komax Holding AG for the year ended 31 December 2015. Board of Directors’ responsibility The Board of Directors is responsible for the preparation and overall fair presentation of the remuneration report in accordance with Swiss law and the Ordinance against Excessive Compensation in Stock Exchange Listed Compa- nies (Ordinance). The Board of Directors is also responsible for designing the remuneration system and defining in- dividual remuneration packages. Auditor’s responsibility Our responsibility is to express an opinion on the accompanying remuneration report. We conducted our audit in accordance with Swiss Auditing Standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the remuneration report complies with Swiss law and articles 14–16 of the Ordinance. An audit involves performing procedures to obtain audit evidence on the disclosures made in the remuneration report with regard to compensation, loans and credits in accordance with articles 14–16 of the Ordinance. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstate- ments in the remuneration report, whether due to fraud or error. This audit also includes evaluating the reason- ableness of the methods applied to value components of remuneration, as well as assessing the overall presenta- tion of the remuneration report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Opinion In our opinion, the remuneration report of Komax Holding AG for the year ended 31 December 2015 complies with Swiss law and articles 14–16 of the Ordinance. PricewaterhouseCoopers AG Korbinian Petzi Audit expert Gerd Tritschler Audit expert Auditor in charge Basel, 9 March 2016 82 E_00_GB_Komax_2015_(CC_Layout) [P].indd 82 11.03.16 17:50 2015KOMAX GROUP ANNUAL REPORT FIN ANC IAL REPORT CONTENTS CONSOLIDATED FINANCIAL STATEM ENTS FINANCIAL STATEM EN TS OF KOM AX HOLDING AG Balance sheet 145 Income statement 146 Notes 147 Corporate structure 154 Proposal for the appropriation of profit 156 Report of the auditors 157 Comments 84 Consolidated balance sheet 88 Consolidated income statement 89 Consolidated statement of comprehensive income 90 Consolidated cash flow statement 91 Consolidated statement of shareholders’ equity 92 Notes 93 Report of the auditors 144 E_00_FB_Komax_2015_(CC_Layout) [P].indd 83 83 11.03.16 17:48 KOMAX GROUP ANNUAL REPORT2015FINANCIAL REPORT Comments on the consolidated financial statements e Income statement Order intake Order intake totalled CHF 442.8 million in 2015, compared with CHF 367.7 million in 2014. This represents an increase of around 20%. Both segments managed to increase their order intake significantly compared to the previous year. Revenues (net sales and other operating income) Komax generated revenues of CHF 368.5 million in the 2015 financial year. This represents an increase in revenues of 1.4% compared to 2014. The following is a breakdown of net sales by currency in 2015 (percentages in brackets are for the previous year): – CHF 20% (30%) – USD 23% (19%) – EUR 43% (33%) – Other foreign currencies 14% (18%) The abandonment of the minimum EUR/CHF exchange rate by the SNB in mid-January presented the Komax Group with major challenges. Through targeted measures, such as natural hedging, adjustments to pricing, and further process optimizations, the repercussions for profitability were kept within long-term limits. Since April 2015, customers in the Eurozone have been receiving Swiss invoices for the most part in EUR, rather than in CHF as before. This explains much of the rise in sales in EUR in 2015. On the other hand, the Komax Group benefited from higher average USD and RMB exchange rates compared to the previous year. In addition, the proportion of USD invoices increased by 4 percentage points, as business development was very strong in the US and Mexico in 2015. The Chinese currency, which accounts for the lion’s share of other foreign currency, was relatively stable against CHF in 2015, and continues to correlate strongly with USD. At –3.0%, the foreign currency impact at net sales level over the year as a whole was heavily in negative territory, but this impact was significantly reduced further down the income statement, namely at gross profit and EBIT level. Net sales in Europe amounted to CHF 185.7 million in 2015. This equates to some 51% of total net sales. North America accounted for the second-largest proportion of sales in the 2015 finan- cial year, namely 21.0%. Sales in the US and Mexico developed particularly impressively. By contrast, business in South America continued to be sluggish, a development attributable to persistently difficult economic conditions and the weakness of the Brazilian real. Nonetheless, Brazil remains by far the most important South American market for Komax. In the Africa region, net sales came in at CHF 31.0 million, slightly below the previous year’s level (CHF 32.9 million). By contrast, consolidated net sales in Asia declined by around 18% compared to the previous year. Gross profit The foreign currency impact at gross profit level amounted to –1.7 percentage points in the year under review. Despite the negative foreign currency impact, the gross profit margin of 64.1% improved sharply compared to the previous year (60.6%). In the Wire segment, a key driver of the increase in gross profit was the growth in customer-specific systems. The proportion accounted for by materials in these systems is lower than in standard machinery. On the other hand, person- nel expenses are higher for customer-specific systems, i.e. there is a shift within the cost structure. 84 E_00_FB_Komax_2015_(CC_Layout) [P].indd 84 11.03.16 17:48 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2015 Operating expenses Personnel expenses amounted to 35.6% of revenues in the year under review, compared to 32.6% in 2014. Among other things, the increase is attributable to the rise in customer-specific systems in the Wire business unit. Furthermore, we consistently expanded the scope of services provided in all key markets of the Komax Group, further increased internal development expen- ses, which predominantly comprise personnel expenses, and stepped up our sales and market- ing efforts in a targeted way with the aim of opening up new markets. The Komax Group generated revenues per employee of CHF 239 thousand in 2015, compared to CHF 261 thousand in 2014. The decline in revenues per employee in the Wire business unit is explained by the change in the product mix and has no repercussions for its EBIT margin. In the Medtech business unit, the decline is attributable to the low order intake in the first half of the year and the resulting lower sales compared to the previous year. As per 31 December 2015, the Komax Group employed a total of 1 580 people compared to 1 498 at the end of 2014. Research and development expenditure R&D expenditure amounted to CHF 26.7 million compared to CHF 25.8 million in 2014. It there- fore accounted for 7.2% of revenues in 2015, compared to 7.1% the previous year. The “Other operating expenses” item in the income statement includes CHF 4.5 million for third-party devel- opment services. The lion’s share of internal development expenses of CHF 22.2 million primar- ily comprises own work on the part of our development staff. The increase in research and devel- opment expenditure compared to the previous year is primarily attributable to higher expenditure at Komax Wire. As at 31 December 2015, the Komax Group employed a total of 146 staff in R&D, the vast majority of them in central Switzerland. In addition, we have development departments in China and Japan responsible for developing products for both the Asian and global markets. The 260 employees listed under engineering in note 26.3, work directly on customer projects. Their staff costs are therefore not included in research and development expenditure. The in- crease in the engineering area is explained by the robust development of customer-specific sys- tems of the Wire business unit. Operating profit (EBIT) The Komax Group generated an operating profit of CHF 46.7 million in the year under review. This corresponds to a return of 12.7% and is therefore slightly below the previous year’s result of 13.2%. The foreign currency impact at EBIT level amounted to –1.5 percentage points. The Komax Group therefore did not match the prior-year margin primarily as a result of the foreign currency impact. Moreover, the Medtech business unit reported a loss of CHF –2.6 million . In the Wire business unit, by contrast, profit increased to CHF 59.7 million, which represented a per- centage improvement of 18.7% to 19.0%. This was achieved despite the difficult currency situa- tion in the year under review. The Corporate area had a significantly higher level of operating expenses (CHF +1.8 million). This was attributable to the costs of the acquisitions completed as per 1 January 2016, the higher employee benefits expenditure according to IAS 19 and the sig- nificantly higher valuation from the option programme. Further details on segment reporting can be found on pages 132 to 134. E_00_FB_Komax_2015_(CC_Layout) [P].indd 85 85 11.03.16 17:48 KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2015FINANCIAL REPORT Financial result The financial result amounted to CHF –7.7 million, of which CHF –4.2 million net related to the foreign currency valuation. The significant rise in realized and unrealized exchange-rate losses is attributable to the sharp decline in the value of EUR following the SNB’s decision of 15 January 2015. In addition, we deferred the remaining payment of CHF 2.1 million for the takeover of SLE quality engineering GmbH & Co. KG in the financial result. The remaining payment is significantly higher than expected as a result of the very healthy development of the company’s business in Grafenau, Germany. The company has significantly increased both sales and profit since it was acquired by Komax. Group result In the 2015 financial year, profit before taxes from continuing operations (EBT) amounted to CHF 39.0 million (10.6% of revenues), compared to CHF 46.8 million (12.9% of revenues) in the previ- ous year. The tax rate for the year under review amounted to 19.2% (2014: 11.5%). The tax rate was calculated after deduction of the result from discontinued operations. The sharp rise in the tax rate to around 19% is almost in line with the long-term average expected percentage rate of 20%. The strong rise compared to the previous year is explained by the sale of the Solar busi- ness as well as the high negative financial result in 2015. Group profit after taxes (EAT) amounted to CHF 29.2 million in 2015 (2014: CHF 27.7 million) with basic earnings per share amounting to CHF 8.00, slightly higher than the prior-year figure of CHF 7.64. e Balance sheet Assets As per 31 December 2015, current assets excluding cash and cash equivalents had decreased by 1.4% to CHF 187.1 million. Cash and cash equivalents amounted to CHF 50.9 million at the end of the reporting period, a year-on-year decrease of just under CHF 1.8 million. The decrease in current assets excluding cash and cash equivalents is primarily explained by the elimination of the “Assets classified as held for sale” position of CHF 8.9 million. Trade receivables declined slightly. On the other hand, the level of inventories recorded a year-on-year rise, this correlates with the significant rise in sales in the Wire business unit. The figure of CHF 104.8 million for trade receivables also includes underfinanced projects of CHF 11.1 million net according to the POC method. These declined by CHF 11.7 million compared to the level reported at 31 December 2014. Overdue receivables are also reported in the notes to the consolidated financial state- ments. As at 31 December 2015, these amounted to CHF 16.6 million, of which 7.8% were over- due by more than 120 days. At the end of 2014, overdue receivables amounted to CHF 15.8 million, however, the proportion of receivables overdue by more than 120 days has fallen. As a result of the healthy commercial and financial environment at both Komax Wire and Komax Med- tech, no material increase in impairments in the receivables area is anticipated in the future. Liabilities Current liabilities amounted to CHF 80.7 million as at 31 December 2015. This amount also in- cludes overfinanced projects amounting to CHF 13.3 million net valued according to the POC method (2014: CHF 4.8 million). Furthermore, current liabilities also include provisions amounting to CHF 3.7 million (2014: CHF 6.3 million). The decline in provisions is the result of accruals/deferrals in connection with warranty services in the Wire business unit that were for the most part concluded in 2015. At CHF 1.5 million, the figure for the reversal of provisions no longer required was higher than in the previous year (CHF 0.7 million). 86 E_00_FB_Komax_2015_(CC_Layout) [P].indd 86 11.03.16 17:48 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2015 Non-current liabilities recorded only a slight year-on-year rise of CHF 1.3 million to CHF 35.1 million. Liabilities from defined-benefit pension plans as per IAS 19 increased sharply by CHF 9.3 million. On the other hand, non-current financial loans declined. Although the Komax pension fund once again recorded a positive result in 2015, the assets were not sufficient to achieve full cover due to the new, much lower technical interest rate of 0.8%. The impact of the reduction in the technical interest rate from 1.1% to 0.8% and further adjustments to parameters led to an increase in liabilities from defined-benefit pension plans from CHF 6.8 million as at 31 December 2014 to CHF 16.1 million as at 31 December 2015. The Komax Group continues to have access to a CHF 120 million syndicated loan facility, as well as other local credit lines up to a maximum of CHF 15 million. All covenants and other pertinent provisions were once again fully complied with at all times in 2015. The shareholders’ equity attributable to shareholders of the parent company amounted to CHF 283.1 million as at 31 December 2015 (71.0% of the balance sheet total), compared with CHF 284.2 million as at 31 December 2014. No non-controlling interests are reported for 2015. Compared to the previous year, the impact of conversion differences was substantially negative at CHF –7.5 million (2014: CHF 6.7 million), as the exchange rate for EUR on the balance sheet date was significantly lower against CHF than the year before. The same was true for the ex- change rates of a number of emerging market currencies. e Cash flow statement Cash flow from operating activities Cash flow from operating activities prior to changes in net current assets and provisions amount- ed to CHF 46.5 million (2014: CHF 39.8 million), or CHF 49.6 million after changes to net current assets and provisions (2014: CHF 30.3 million). The positive cash flow is the result of the increase in Group profit after taxes and the strong decline in net current assets, despite the increase in sales. Cash flow from investing activities The cash outflow from investing activities amounted to CHF 25.1 million net, which represents a significant increase of CHF 9.2 million on the previous year. The increase in investments is primarily attributable to loans granted to associates. In addition, Komax acquired a participation of around 20% in Laselec SA, France. The focal point of both tangible and intangible asset in- vestments in the year under review was the construction/expansion of buildings at various loca- tions as well as the expansion of the global network (hardware and software). Free cash flow, i.e. cash flow from operating activities after deduction of net investments, amounted to CHF 24.5 million, which represents a rise of CHF 10.1 million compared to the pre- vious year. The increase is primarily attributable to the very healthy cash flow from operating activities of CHF 49.6 million as at the end of 2015 (2014: CHF 30.3 million). Cash flow from financing activities Bank loans amounting to CHF 7.2 million net were repaid in 2015. In addition, positive cash flow of CHF 6.3 million was generated by the exercising of employees’ options. The distribution out of reserves from capital contributions amounted to CHF 9.2 million. In addition, dividends of CHF 9.2 million were distributed. The partial payment for the remaining holding in SLE quality engineering GmbH & Co. KG fed through into the cash flow statement to the tune of CHF 4.2 million. The effect of the currency translation amounted to a high CHF –2.9 million. The cash flow statement shows a slight overall decline in funds of CHF 1.8 million. E_00_FB_Komax_2015_(CC_Layout) [P].indd 87 87 11.03.16 17:48 KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2015FINANCIAL REPORT e Consolidated balance sheet in TCHF Assets Cash and cash equivalents Securities Trade receivables Other receivables and accrued income / prepaid expenses Inventories Assets classified as held for sale Total current assets Deferred tax assets Other non-current receivables Investments in associates Investment property 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 Liabilities classified as held for sale Total current liabilities Financial loans Deferred tax liabilities Defined benefit plan 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 31.12.2015 31.12.2014 5 6 7 8 9 10 11 12 14 18 15 16 19 20 21 10 22 11 13 23 50 883 0 104 828 22 546 59 770 0 52 699 182 106 139 19 959 54 642 8 869 238 027 242 490 21 809 7 170 2 059 5 349 75 099 49 454 160 940 20 452 2 472 17 0 75 253 47 368 145 562 398 967 388 052 17 592 53 063 6 420 3 666 0 80 741 16 518 2 476 16 098 35 092 19 745 36 317 5 617 6 348 81 68 108 23 670 3 345 6 759 33 774 115 833 101 882 369 −2 191 25 548 259 408 283 134 0 283 134 361 −2 245 28 398 257 654 284 168 2 002 286 170 Total liabilities and shareholders’ equity 398 967 388 052 The notes on pages 93 to 143 are an integral component of these consolidated financial statements. 88 E_00_FB_Komax_2015_(CC_Layout) [P].indd 88 11.03.16 17:48 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2015 e 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 and taxes Financial income Financial expenses Group profit before taxes Taxes Group profit after taxes from continuing operations Result from discontinued operations 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) Earnings per share from continuing operations Basic earnings per share (in CHF) Diluted earnings per share (in CHF) Notes 2015 2014 24 25 26 15/16/18 28 29 29 30 10 31 31 31 31 367 045 362 853 1 417 485 132 346 131 038 5 378 9 601 11 347 9 976 22 044 143 150 118 479 5 005 8 729 10 075 9 561 20 237 321 730 315 236 46 732 8 470 −16 191 39 011 6 924 32 087 −2 872 48 102 3 307 −4 584 46 825 3 165 43 660 −15 917 29 215 27 743 29 215 0 29 215 8.00 7.83 8.78 8.60 27 137 606 27 743 7.64 7.42 12.09 11.75 The notes on pages 93 to 143 are an integral component of these consolidated financial statements. E_00_FB_Komax_2015_(CC_Layout) [P].indd 89 89 11.03.16 17:48 KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2015FINANCIAL REPORT e Consolidated statement of comprehensive income in TCHF Group profit after taxes Revaluation of defined benefit plans Income taxes Items that will not be reclassified to the income statement Currency translation differences from foreign subsidiaries Currency translation differences from investments in associates Items that may be reclassified subsequently to the income statement Other comprehensive income after taxes 2015 29 215 −8 423 1 157 −7 266 −7 496 −51 −7 547 −14 813 2014 27 743 −8 175 1 084 −7 091 6 747 −4 6 743 −348 Comprehensive income after taxes 14 402 27 395 Of which attributable to: – Equity holders of the parent company – Non-controlling interest 14 402 0 14 402 26 916 479 27 395 The notes on pages 93 to 143 are an integral component of these consolidated financial statements. 90 E_00_FB_Komax_2015_(CC_Layout) [P].indd 90 11.03.16 17:48 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2015 e Consolidated cash flow statement in TCHF 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 Sale of intangible assets Investments in associates Investments in Group companies and participations1 Sale of Group companies and participations2 Increase in granted loans Purchase (–) / sale (+) of securities Total cash flow from investing activities Cash flow from financing activities Decrease in financial liabilities Sale of treasury shares Capital increase (share-based payments) Purchase of non-controlling interests Distribution out of reserves from capital contributions Dividend paid Total cash flow from financing activities Effect of currency translations on cash and cash equivalents Increase (+) / decrease (–) in funds Cash and cash equivalents at 1 January Cash and cash equivalents at 31 December 1 Less cash and cash equivalents acquired. 2 Less cash and cash equivalents sold. Notes 2015 2014 29 215 27 743 30 15/18 16 13 29 15 16 14 33 22 26 34 5 6 928 6 895 3 276 −64 1 492 916 7 732 −102 1 803 −3 377 −8 246 46 468 −2 561 434 −4 410 −1 380 11 061 49 612 −13 383 233 −5 467 257 −1 810 0 0 −4 923 0 −25 093 −7 205 0 6 315 −4 184 −9 157 −9 157 −23 388 −2 947 −1 816 52 699 50 883 3 601 7 627 8 183 58 1 366 −1 416 1 164 222 487 −1 335 −7 949 39 751 1 684 −10 158 817 2 360 −4 159 30 295 −10 545 467 −5 021 455 −134 −817 −106 0 −182 −15 883 −7 039 839 7 065 0 −16 003 −98 −15 236 1 320 496 52 203 52 699 91 91 The notes on pages 93 to 143 are an integral component of these consolidated financial statements. E_00_FB_Komax_2015_(CC_Layout) [P].indd 91 11.03.16 17:48 KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2015FINANCIAL REPORT e Consolidated statement of shareholders’ equity 2015 in TCHF Balance on 1 January 2015 Other comprehensive income Group profit after taxes Comprehensive income after taxes Capital increase from exercise of options Distribution out of reserves from capital contributions Dividend paid Share-based payments Purchase of non-controlling interests with no changes of control Attributable to equity holders of the parent company Other reserves Share capital Treasury shares Premium Currency differences Retained earnings Non- control ling interest Total shareholders’ equity 361 −2 245 28 398 −22 213 279 867 2 002 0 8 −7 547 0 0 −7 547 6 307 −9 157 54 −7 266 29 215 21 949 −9 157 1 419 0 286 170 −14 813 29 215 14 402 6 315 −9 157 −9 157 1 473 −4 910 −2 002 −6 912 Balance on 31 December 2015 369 −2 191 25 548 −29 760 289 168 0 283 134 2014 in TCHF Balance on 1 January 2014 Other comprehensive income Group profit after taxes Comprehensive income after taxes Capital increase from exercise of options Distribution out of reserves from capital contributions Dividend paid Transactions in treasury shares Share-based payments Equity contribution by non-controlling interests Equity outflow due to non-controlling interests Attributable to equity holders of the parent company Other reserves Share capital Treasury shares Premium Currency differences Retained earnings Non- control ling interest Total shareholders’ equity 352 −2 919 37 345 −29 083 258 290 0 9 6 870 0 0 6 870 7 056 −16 003 674 −7 091 27 137 20 046 165 1 366 666 −127 606 479 −98 1 439 −484 264 651 −348 27 743 27 395 7 065 −16 003 −98 839 1 366 1 439 −484 Balance on 31 December 2014 361 −2 245 28 398 −22 213 279 867 2 002 286 170 The notes on pages 93 to 143 are an integral component of these consolidated financial statements. 92 E_00_FB_Komax_2015_(CC_Layout) [P].indd 92 11.03.16 17:48 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2015 e Notes to the consolidated financial statements General information 1 The Komax Group is active in the manufacture of machines, and as at 31 December 2015 employed 1 580 people worldwide (2014: 1 498 employees). The parent company, Komax Holding AG, is domiciled in Dierikon, Canton Lucerne (Switzerland). The Komax Group’s business activities are focused on the development, production and sale of high-quality capital goods for precision engineering, electronics and information 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 appliance, electronics, telecommunication and medical technology sectors. The Komax Group sells to the world market. Komax has a network of 22 operating subsidiaries and around 50 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 4 March 2016 and released for publication. Their approval by the Annual General Meeting, scheduled for 12 May 2016, is pending. Summary of significant accounting policies 2 The significant recognition and measurement policies used in compiling the consolidated finan- cial statements 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 2015. 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 state- ment (including derivative financial instruments). The consolidated financial statements are struc- tured 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 implemented various minor changes to existing standards and interpretations in 2015, none of which had a material impact on the consolidated financial statements. E_00_FB_Komax_2015_(CC_Layout) [P].indd 93 93 11.03.16 17:48 KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2015FINANCIAL REPORT 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 The Group is currently reviewing the possible repercussions of other new and revised standards and interpretations that will take effect from 1 January 2016 or at a later date. Komax is not applying these early. With the exception of the following new IFRS standards, an initial analysis indicates that these will not have any material impact on the overall result or financial situation of the Group. IFRS 9 “Financial Instruments”: This standard is applicable from 1 January 2018, but early – application is permissible. The Group is currently assessing the impact of IFRS 9. IFRS 15 “Revenue from Contracts with Customers”: This standard is applicable – from 1 January 2018, but early application is permissible. The Group is currently IFRS 16 “Leases”: The standard is applicable from 1 January 2019 onward, whereby early assessing the impact of IFRS 15. – application of the standard is permissible as long as IFRS 15 “Revenue from Contracts with Customers” is already (i.e. also early) fully applied. The Group is currently assessing the impact of IFRS 16. 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 154 and 155. 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 subsidiary’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 consolidation, 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 acquisition is less than the fair value of the net assets of the subsidiary acquired (negative goodwill), the difference is recognized directly in the income statement. Intragroup transactions, balances and unrealized gains and losses from transactions between Group companies are eliminated. 94 E_00_FB_Komax_2015_(CC_Layout) [P].indd 94 11.03.16 17:48 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2015 2.2.2 Changes in the scope of consolidation In the 2015 reporting year, Komax founded new subsidiaries in Romania and Mexico. Other than these new enterprises, there were no changes in the scope of consolidation in 2015. In the prior-year period, Komax acquired the majority of SLE quality engineering GmbH & Co. KG and SLE quality engineering Verwaltungs GmbH on 1 January 2014. Further details on these ac- quisitions are provided in Note 33 on pages 141 and 142. In addition, Komax and its Chinese partner Yingkou Jinchen Machinery Co. Ltd. signed an agreement whereby Yingkou Jinchen Ma- chinery Co. Ltd. acquired Komax’s 51% holding in the Komax Jinchen joint venture. This trans- action was completed in July 2014 after it had been approved by the relevant Chinese authorities. Other than the above-mentioned transactions, there were no changes in the scope of consolida- tion in the prior-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 recognized in shareholders’ equity. Any profit from the sale of non- controlling interests is likewise booked under shareholders’ equity. 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 acquisi- tion are reported in the income statement 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 obligations for the associate or made pay- ments on its behalf. Unrealized profits from transactions between Group companies and associ- ates are eliminated in proportion to the Group’s interest in the affiliate. As Komax typically does not exercise any material influence on companies in which it holds an interest of less than 20%, and deems these interests to be potentially sellable at any point, they are treated as “held for trading” and measured at fair value. They are reported under “Securities”. In 2015, Komax acquired a holding of around 20% in Laselec SA, Toulouse (France), for a total of CHF 2.0 million. In addition, Komax has held a 25% interest in Xcell Automation Inc., York (USA), since 2014. Further details on associated companies are provided in Note 14 on page 124. Komax held no material investments below 20% and no interests in joint ventures at either 31 December 2015 or 31 December 2014. E_00_FB_Komax_2015_(CC_Layout) [P].indd 95 95 11.03.16 17:48 KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2015FINANCIAL REPORT Segment reporting 2.3 Komax’s reportable segments are based on the Group’s strategic business areas, in which prod- ucts using different technologies are manufactured and sold on the basis of independent market- ing strategies. The internal organizational structure is fully geared towards the individual busi- ness 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. They receive financial information on the individual segments on a regular basis, enabling it to assess 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 “at 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 onwards. In 2013, Komax announced that it was selling its Solar business. In the second half of 2014, Komax sold its 51% interest in the Komax Jinchen joint venture to its Chinese partner Yingkou Jinchen Machinery Co. Ltd. In addition, the remaining activities of Komax Solar were transferred to the management team of Komax Solar as part of a management buyout. This business unit is reported as “Non-current Assets Held for Sale and Discontinued Operations” under IFRS 5, and therefore no longer forms part of the company’s segment report- ing. With effect from 2014, Komax only has two business units. The Wire segment essentially comprises the development, production, distribution and maintenance of wire-processing ma- chines and systems used primarily for wire production in the automotive and electronics indus- tries. 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 car- tridges (Inkjet). The development and manufacturing of systems for the assembly of mechanical and electronic components in the automotive and electronics sector (Mechanical and Electronic Systems Assembly) is also assigned to this segment. 2.4 Currency conversion 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 currency of the parent company, Komax Holding AG. 96 E_00_FB_Komax_2015_(CC_Layout) [P].indd 96 11.03.16 17:48 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2015 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 for- eign 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 recognized in other comprehensive income and 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 recognized under comprehensive income. When a foreign company is sold, these ex- change 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 31.12.2015 Average rate 2015 Year-end rate 31.12.2014 Average rate 2014 1.000 1.090 0.253 0.154 0.232 0.970 1.090 0.308 0.155 0.256 1.000 1.210 0.376 0.161 0.286 0.920 1.230 0.395 0.149 0.285 E_00_FB_Komax_2015_(CC_Layout) [P].indd 97 97 11.03.16 17:48 KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2015FINANCIAL REPORT Property, plant and equipment 2.5 Property, plant and equipment are accounted for at historical acquisition or production cost less accumulated depreciation. Depreciation is linear over the expected service lifetime. The specific depreciation periods for various asset categories are: Asset categor y 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 depreciation. 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 equip- ment under construction are capitalized. Investment property 2.6 Investment property encompasses land and buildings held with a view to generating rental income or for purposes of capital appreciation, and not for internal production purposes, the delivery of goods or the provision of services, administrative purposes, or sales in the context of ordinary business activity. Investment property is valued at acquisition or construction cost less cumulative depreciation. The fair values of these properties are disclosed in the Notes. Intangible assets 2.7 2.7.1 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 acquisition of a company is reported under “Intangible assets”. Goodwill carried on the balance sheet is subjected to an annual impairment test and measured at the original acquisition cost less cumulative impairments. Impairments may not be reversed. 98 E_00_FB_Komax_2015_(CC_Layout) [P].indd 98 11.03.16 17:48 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2015 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. 2.7.2 Patents Patents are recognized at historical acquisition cost less cumulative amortization. 2.7.3 Software Purchased software licenses are capitalized at acquisition or production cost plus costs incurred in readying them for use. The total acquisition cost is amortized on a linear basis over three to seven years. Costs associated with the development or maintenance of software are recorded as expenses at the time they are incurred. 2.7.4 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 future economic benefits of these expenses cannot be accurately estimated. 2.7.5 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. Acquisi- tion costs are written down in a linear way over a period of five to ten years. Impairment of non-monetary assets 2.8 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 impair- ment 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 2.9 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. E_00_FB_Komax_2015_(CC_Layout) [P].indd 99 99 11.03.16 17:48 KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2015FINANCIAL REPORT The financial assets recognized in the consolidated balance sheet are assigned to the following categories: in TCHF Securities Derivative financial instruments Total at fair value through profit or loss Cash and cash equivalents Trade receivables Other receivables and prepayments to suppliers Other non-current receivables Total loans and receivables The financial liabilities are allocated to the following categories: in TCHF Derivative financial instruments Total at fair value through profit or loss Financial liabilities (current and non-current) Trade payables Other payables Total at amortized cost 31.12.2015 31.12.2014 0 21 21 50 883 104 828 19 771 7 170 182 0 182 52 699 106 139 17 135 2 472 182 652 178 445 31.12.2015 31.12.2014 0 0 16 518 17 592 12 405 46 515 552 552 23 670 19 745 7 398 50 813 2.9.1 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 catego- ry 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 twelve months of the balance sheet date. The “Securities” position, which is reported separately in the Komax Group’s balance sheet, is classified as financial assets carried “At fair value through profit or loss”. 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. 100 E_00_FB_Komax_2015_(CC_Layout) [P].indd 100 11.03.16 17:48 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2015 2.9.2 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 twelve months of the balance sheet date. If the period to maturity exceeds twelve months, they are carried as non-current assets. Current loans and receivables are reported in the consolidated balance sheet under “Cash and cash equivalents”, “Trade receivables” and “Other receivables and accrued income / prepaid expenses”, whereas long-term receivables are reported under “Other long-term receivables”. 2.9.3 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 consolidated balance sheet does not include any financial assets in this category. 2.9.4 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 twelve 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., 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, which are posted in the “At fair value through profit or loss” category, are reported on the income statement for the correspond- ing 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-specific 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_00_FB_Komax_2015_(CC_Layout) [P].indd 101 101 11.03.16 17:48 KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2015FINANCIAL REPORT 2.10 Derivative financial instruments and hedging activities Derivative financial instruments are initially measured at fair value as at the date when the con- tract 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 instrument 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); 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 exchange and interest rate risks, Komax does not use hedge accounting in the sense of IAS 39. Foreign currency surpluses 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 standardized 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 2.11 Inventories are measured at the lower of purchase or production cost and net sales price. Pur- chase or production costs are determined using the weighted average method. Internally pro- duced 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 prod- uct 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 attributed to prod- ucts. The net sales price is the estimated proceeds of sale attainable in the normal course of business, less the necessary variable selling costs. 2.12 Trade receivables 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 serious 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 recoverable 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. 102 E_00_FB_Komax_2015_(CC_Layout) [P].indd 102 11.03.16 17:48 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2015 2.13 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 expenses / 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 statement. 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. 2.14 Non-current assets held for sale Non-current assets held for sale are reported separately under current assets. Immediately before their first-time classification as assets held for sale, the value of the assets is determined in accordance with prevailing accounting principles. Subsequently, non-current assets held for sale are reported at the lower of carrying amount and fair value minus cost to sell. Non-current assets held for sale are not depreciated / amortized. 2.15 Cash and cash equivalents Cash and cash equivalents includes banknotes, sight deposits and other current, highly liquid financial assets with an original maturity of no greater than three months. Utilized current ac- count overdrafts are shown on the balance sheet as payables to credit institutions under current financial liabilities. 2.16 Shareholders’ equity 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 trans- action costs assignable to them, and offset against equity. When treasury shares are purchased or sold, the consideration paid or received will be offset against equity. 2.17 Dividend payment Dividend distribution to the shareholders of Komax Holding AG is recognized as a liability in the consolidated financial statements in the period in which the dividend distribution is approved by the company’s shareholders. 2.18 Trade payables Trade payables are valued initially at fair value, which is normally the amount originally invoiced, and subsequently measured at amortized cost. E_00_FB_Komax_2015_(CC_Layout) [P].indd 103 103 11.03.16 17:48 KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2015FINANCIAL REPORT 2.19 Financial liabilities Financial liabilities are initially recognized at fair value after deducting any transaction costs. In subsequent periods, they are measured at historical purchase price. Any difference 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 settlement of the debt until at least twelve months after the balance sheet date. 2.20 Deferred taxes All the consolidated companies of the Komax Group are independently subject to tax, except for the companies in the US 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. 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 deferred tax liability is settled. Deferred and future taxes are calculated on the basis of the temporary differences in value between the individual balance sheets and balance sheets for tax purposes. Such differences 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. Deferred tax liabilities are provided on temporary differences arising on investments in subsidiar- ies and associates, 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. 2.21 Payments to employees 2.21.1 Employee benefits Employee pension and retirement benefits are based on the regulations and prevailing circum- stances 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 compliance with IAS 19 for retirement benefits are detailed in Note 13. In the other countries, pension and retirement 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. The DBO is calculated annually by an independent actuary according to the projected unit credit method. The recognition of pension assets is limited to the present value of any economic benefits available from refunds from the plans or reductions in future contributions to the plans. Past service costs are recognized immediately in income. Actuarial gains and losses, which are based on experience adjustments and changes in actuarial assumptions, are recognized in the other comprehensive income. 104 E_00_FB_Komax_2015_(CC_Layout) [P].indd 104 11.03.16 17:48 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2015 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 beyond 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 reduction in future payments exists. 2.21.2 Share-based compensation All share-based compensation granted to staff is estimated at fair value as per the date it is granted, and is charged evenly across the vesting period to the corresponding income statement positions within the operating result. In the case of compensation plans involving remuneration in the form of equity instruments, the expense of the granted compensation is booked as an in- crease in shareholders’ equity, and any funds received from the exercise of this compensation following the vesting period are booked as a change in shareholders’ equity. The fair value of the amount that is to be paid to employees in respect of share appreciation rights and settled in the form of cash is booked as an expense with a corresponding increase in debt over the period in which employees acquire unrestricted access to these payments. 2.21.3 Other payments after termination of employment There are no liabilities for payments to pensioners after termination of employment. 2.21.4 Payments triggered by termination of employment In some countries, in which the Komax Group operates its own companies, there are local regu- lations for payment triggered by termination of employment. Komax complies with these legal requirements. The corresponding expenses are booked under personnel expenses. 2.21.5 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 provi- sion is recorded in the consolidated financial statements in cases where a contractual liability exists. The expense is recognized in income under personnel expenses. 2.22 Provisions 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 contracts. 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 performance of which will in all probability result in an outflow of funds. E_00_FB_Komax_2015_(CC_Layout) [P].indd 105 105 11.03.16 17:48 KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2015FINANCIAL REPORT 2.23 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. 2.23.1 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. 2.23.2 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 services to be performed during the finan- cial year in which the services are rendered. 2.23.3 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. 2.23.4 Interest and dividend income Interest income is accrued using the effective interest rate method. Dividend income is recog- nized at the date when the right to receive the payment originates. represent a separate major line of business or geographical area of operations is part of a single coordinated plan to dispose of a separate major line of business or 2.24 Discontinued operations Discontinued operations are a component part of Group business whose business area and cash flows are clearly separated from the rest of the Group, and which – – geographically distinct business area, or – Classification as discontinued operations occurs upon the sale of the activities in question or as soon as the business area fulfils the criteria for being “Held for sale”, whichever occurs first. If a business area is classified as a discontinued operation, the income statement for the compara- tive year is adjusted as if the business area had been discontinued from the start of that year. is a subsidiary company acquired exclusively with a view to resale. 106 E_00_FB_Komax_2015_(CC_Layout) [P].indd 106 11.03.16 17:48 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2015 2.25 Leases A lease under which a significant portion of the risks and rewards of ownership remains with the lessor is regarded 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 material liabilities from financial lease contracts. Contractual relationships in which Komax acts as lessor are reported as financial leases if all risks and rewards 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. 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 income 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 2015 report- ing year or the previous year. 2.26 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 in- come”, 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 relat- ing to an asset are deducted from the carrying amount. 2.27 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 2015 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. 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 deriva- tive 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. E_00_FB_Komax_2015_(CC_Layout) [P].indd 107 107 11.03.16 17:48 KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2015FINANCIAL REPORT 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, 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, the Group continually improved and extended its risk management in 2015, particularly in relation to foreign exchange and country risks in emerging markets. 3.1 Currency risk 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 recog- nized 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 process. Corporate guidelines specify that up to 100% of the amount can 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 USD, the EUR and the CNY. Assuming that the average rate of the EUR against the CHF had been 10% lower in 2015 and that all other parameters remained largely unchanged, the EBIT margin would have been 1.4 percentage points (2014: 0.6 percentage points) lower. Conversely, if this exchange rate had been 10% high- er, the margin would have risen by the same amount. Assuming that the average rate of the USD against the CHF had been 10% lower in 2015 and that all other parameters had been largely unchanged, the EBIT margin would have been 0.8 percentage points (2014: 0.7 percentage points) lower. Conversely, if this exchange rate had been 10% higher, the margin would have risen by the same amount. If the average rate of the CNY against the CHF had been 10% lower in 2015 and that all other parameters had been largely unchanged, the EBIT margin would have been 0.4 percentage points (2014: 0.5 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. 3.2 Credit risk Credit risks may exist with regard to bank account balances, derivative financial instruments and receivables from customers. Banks must have a minimum credit rating of “BBB” before the Komax Group will enter into a material and long-term 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. 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 individual financial institutions through use of multiple banks. 108 E_00_FB_Komax_2015_(CC_Layout) [P].indd 108 11.03.16 17:48 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2015 Management does not anticipate any significant losses on the receivables outstanding as at 31 December 2015 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 Counterpar ty Deutsche Bank1 Credit Suisse1 UBS1 Bank of Shanghai Customer A Customer B Customer C 31.12.2015 31.12.2014 Rating Credit limit Amount held Credit limit Amount held A− A A n.s. Group 2 Group 2 Group 2 13 080 25 000 24 000 0 n.s. n.s. n.s. 14 238 8 971 5 888 2 076 8 065 7 123 6 637 13 632 25 000 24 000 0 n.s. n.s. n.s. 12 649 8 605 3 250 4 963 14 823 7 988 5 647 1 Creditor as par t of the CHF 120.0 million syndicated loan agreement under the stewardship of Credit Suisse (par ticipating 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 twelve months). Group 2: Existing customer (business relationship established more than twelve months ago) without defaults in the past. Group 3: Existing customer (business relationship established more than twelve months ago) with defaults in the past. 3.3 Capital risk 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 calculated from the total outstanding interest-bearing debts of the Group, including liabilities from finance leasing, 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 twelve months (rolling). This resulted in a net cash position (previous year: net cash) at the end of the reporting year, as cash and cash equivalents and securities exceeded existing financial liabilities as at 31 December 2015 and as at 31 December 2014. The Group’s financial liabilities are subject to externally regulated capital requirements ( covenants). These essentially provided for a maximum gearing factor of 2.75 as at 31 December 2015. In addition, the self-financing ratio (i.e. the Group’s reported equity plus subordinated loans minus goodwill divided by total assets less goodwill) may not fall below 50% at any balance sheet date. E_00_FB_Komax_2015_(CC_Layout) [P].indd 109 109 11.03.16 17:48 KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2015FINANCIAL REPORT The Komax Group has complied with all capital requirements since the contract signing date as well as at 31 December 2015. 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 con- tractually agreed payment date. The table shows carrying amounts as the impact of discounting is negligible. 31.12.2015 in TCHF Financial liabilities (current and non-current)1 Trade payables Other payables 31.12.2014 Financial liabilities (current and non-current)1 Trade payables Other payables Derivative financial instruments 1–30 days 31–60 days 61–90 days 91–120 days 121 days –1 year 1–5 years Total 0 15 357 4 582 0 16 380 4 834 0 0 1 889 975 0 2 081 590 8 0 288 5 430 0 994 594 84 0 30 888 0 280 526 0 0 28 530 0 10 854 146 16 518 0 0 23 670 0 0 167 16 518 17 592 12 405 23 670 19 745 7 398 405 1 The cash outflow from future interest payments amounts to CHF 0.0 million for outstanding financial liabilities as at 31 December 2015 and CHF 0.3 million for outstanding financial liabilities as at 31 December 2014. Interest rate risk 3.5 Neither at 31 December 2015 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. If there is a significant interest rate risk, the related cash flow risks are hedged through interest rate swaps. As at 31 December 2015, the syndicated loan had been utilized to the amount of CHF 16.7 million (31 December 2014: CHF 24.0 million). 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 six months, the Komax Group is only subject to short-term fluctuations in LIBOR. The overall risk with respect to changes in the mar- ket rate of interest is low. Moreover, there was a net cash position of CHF 34.4 million as at 31 December 2015 (31 December 2014: CHF 29.2 million). For these reasons, no sensitivity analysis of interest rate risk was undertaken. 110 E_00_FB_Komax_2015_(CC_Layout) [P].indd 110 11.03.16 17:48 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2015 3.6 Determination of fair value The valuations at fair value follow a three-stage hierarchy based on the type of valuation parameters incorporated into the valuation techniques applied: – Level 1 parameters are quoted prices for identical assets or liabilities in active markets. A company uses these prices, insofar as they exist, to determine the fair value without any further adjustment. – Level 2 parameters relate to other observable factors. – Level 3 parameters are non-observable input parameters that have to be further developed in order to replicate the assumptions that would be used by market participants to determine an appropriate price for the asset or liability in question. The table below shows the assets and liabilities that have been valued at fair value. 31.12.2015 in TCHF Assets Derivative financial instruments Total assets Liabilities Contingent consideration Total liabilities 31.12.2014 in TCHF Assets Securities Total assets Liabilities Derivative financial instruments Total liabilities Level 1 Level 2 Level 3 Total 21 21 0 0 0 0 0 0 0 0 4 527 4 527 21 21 4 527 4 527 Level 1 Level 2 Level 3 Total 0 0 552 552 182 182 0 0 0 0 0 0 182 182 552 552 The change in carrying values associated with Level 3 financial instruments, valued using signifi- cant unobservable inputs during the reporting period, is set forth below: in TCHF Total as at 1 January 2015 Purchase of non-controlling interest Recognized losses at fair value Total as at 31 December 2015 Contingent consideration 0 2 423 2 104 4 527 For the determination of the fair value of a contingent consideration, a profit forecast as well as the current exchange rates are used that might result in a higher or lower fair value measurement. E_00_FB_Komax_2015_(CC_Layout) [P].indd 111 111 11.03.16 17:48 KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2015FINANCIAL REPORT 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 esti- mates 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 assump- tions 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 at least on a quarterly basis. Changes in estimates are required when the circumstances on which the estimates are based have altered, or when new or additional information 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 twelve 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 as well as goodwill and intangible assets are tested for impair- ment at least once a 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 prop- erty, 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. 112 E_00_FB_Komax_2015_(CC_Layout) [P].indd 112 11.03.16 17:48 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2015 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 dynamic actuarial calculations as well as the expected return on the assets of the retirement plans. The present 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 com- pensation paid to employees. The Group’s independent actuaries additionally 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. 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. 4.6 Current and deferred income taxes 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 fac- tors may have favourable 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 liabilities from current and deferred income taxes carried in future reporting periods. Cash and cash equivalents 5 The cash and cash equivalents amounting to CHF 50.9 million (2014: CHF 52.7 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 CNY INR EUR Total 31.12.2015 31.12.2014 Interest rate TCHF Interest rate 1.83% 7.16% 0.00% 2.86% 8.34% 0.00% 945 152 0 1 097 TCHF 1 541 191 25 1 757 E_00_FB_Komax_2015_(CC_Layout) [P].indd 113 113 11.03.16 17:48 KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2015FINANCIAL REPORT 6 Securities in TCHF Shares Total 31.12.2015 31.12.2014 0 0 182 182 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 Decem- ber 2015, two option contracts of a total of USD 4.0 million with a positive fair value of CHF 0.0 million (31 December 2014: two option contracts of a total of USD 4.0 million with a negative fair value of CHF 0.2 million) were outstanding. In addition, there was an interest rate swap with a notional principal amount of CHF 20.0 million and a negative fair value of CHF 0.4 million out- standing as at the end of 2014. The following volumes were transacted in the corresponding financial year: 2015: EUR 7.0 million, USD 10.0 million 2014: EUR none, USD 6.0 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”. 7 Trade receivables in TCHF Trade receivables less provision for impairment Accruals for systems1 less prepayments for systems Receivables arising from POC 31.12.2015 31.12.2014 94 857 −1 081 80 046 −68 994 11 052 84 722 −1 286 77 686 −54 983 22 703 Total 104 828 106 139 1 For manufacturing contracts of systems, the inventor y includes all costs associated with the systems as well as the pro- duction 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 91.6 million as at 31 December 2015 (2014: CHF 93.7 million). Overfinanced projects totalling CHF 11.6 million (2014: CHF 16.0 million) are included in the “Other payables and accrued expenses / deferred income” item (see Note 20), while under- financed projects in the amount of CHF 80.0 million (2014: CHF 77.7 million) are stated under “Trade receivables”. Revenues for 2015 include sales on manufacturing contracts which remained outstanding on the balance sheet date and amounted to CHF 40.5 million (2014: CHF 57.4 million), equivalent to 11.0% of revenues for 2015 (2014: 15.8%). CHF 35.7 million (2014: CHF 49.4 million) of this represents costs incurred and CHF 4.8 million (2014: CHF 8.0 million) recognized contribution margins. 114 E_00_FB_Komax_2015_(CC_Layout) [P].indd 114 11.03.16 17:48 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2015 Overdue trade receivables that had not been written down amounted to CHF 16.6 million on 31 December 2015 (31 December 2014: CHF 15.8 million). Their maturity structure is set out in the following table: in TCHF as at 31.12.2015 as at 31.12.2014 Number of days 1–30 10 462 8 135 31–60 3 299 3 300 61–90 91–120 790 1 199 794 1 482 >120 1 293 1 683 Total 16 638 15 799 No collateral has been received as security for overdue trade receivables for which no valuation allowance has been made. Valuation allowances totalling CHF 1.1 million were recognized for trade receivables as at 31 December 2015 (31 December 2014: CHF 1.3 million). The table shows the change in valu- ation allowances: in TCHF Total as at 1 January Allowances for doubtful accounts Change in scope of consolidation Classified as held for sale Depreciation of irrecoverable receivables Unused amounts reversed Currency differences Total as at 31 December 2015 1 286 4 0 0 −59 −39 −111 1 081 2014 2 156 129 5 −644 −241 −91 −28 1 286 Trade receivables are classified into the main currencies used by the Group, with an additional group for all other currencies: in TCHF CHF EUR USD CNY Other currencies Total trade receivables (gross) 31.12.2015 31.12.2014 23 540 32 271 22 104 12 165 4 777 94 857 29 885 21 195 16 367 11 244 6 031 84 722 E_00_FB_Komax_2015_(CC_Layout) [P].indd 115 115 11.03.16 17:48 KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2015FINANCIAL REPORT 8 Other receivables and accrued income / prepaid expenses in TCHF Other receivables Prepayments to suppliers Accruals Total 31.12.2015 31.12.2014 16 270 3 501 2 775 22 546 15 684 1 451 2 824 19 959 Other receivables mainly comprise tax credits due from state authorities (tax authorities) and bills receivable. The accruals include, among 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 as at 1 January Write-downs charged to income statement Change in scope of consolidation Classified as held for sale Used to write off obsolete inventories Unused amounts reversed Currency differences Total as at 31 December 31.12.2015 31.12.2014 34 727 6 544 18 499 59 770 2015 8 331 2 633 0 0 −907 −598 −509 8 950 32 217 6 343 16 082 54 642 2014 8 928 2 379 753 −808 −2 068 −960 107 8 331 The expenditure recognized in the income statement in connection with the value adjustments of inventories amounts to CHF 2.0 million (2014: CHF 1.4 million). Discontinued operations 10 As announced in 2013, Komax is exiting the Solar business. As in the corresponding prior-year period, the criteria of IFRS 5, “Non-current Assets Held for Sale and Discontinued Operations”, were met as per 31 December 2015. The segment concerned is therefore reclassified as discon- tinued operations. The balance of remaining assets and liabilities of the discontinued operations is negligible, and is no longer reported separately as at 31 December 2015. The amounts in question are reported under the balance sheet positions “Other receivables and accrued in- come / prepaid expenses” and “Other payables and accrued expenses / deferred income”. 116 E_00_FB_Komax_2015_(CC_Layout) [P].indd 116 11.03.16 17:48 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2015 Result from discontinued operations: in TCHF Revenues Expenses Result before taxes Taxes 2015 5 573 8 441 –2 868 4 2014 19 101 34 582 –15 481 436 Result from discontinued operations –2 872 –15 917 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) Assets and liabilities classified as held for sale: –2 872 0 –0.78 –0.77 –15 817 –100 –4.45 –4.33 in TCHF 31.12.2015 31.12.2014 Assets classified as held for sale Trade receivables Other receivables and accrued income / prepaid expenses Inventories Property, plant and equipment Total assets classified as held for sale Liabilities classified as held for sale Other payables and accrued expenses / deferred income Total liabilities classified as held for sale Cash flows from discontinued operations: in TCHF Cash flow from operating activities Cash flow from investing activities Cash flow from financing activities Total cash flows 0 0 0 0 0 0 0 2015 2 524 261 –2 765 20 4 347 30 4 254 238 8 869 81 81 2014 –4 901 609 2 971 –1 321 117 11.03.16 17:48 E_00_FB_Komax_2015_(CC_Layout) [P].indd 117 KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2015FINANCIAL REPORT Deferred taxes 11 11.1 Statement of carrying values in TCHF 31.12.2015 31.12.2014 Property, plant and equipment / intangible assets Trade receivables and inventories1 Provisions Tax-loss carryforwards Tax credits Other items Total deferred tax assets (gross) Offset against deferred tax liabilities Balance sheet deferred tax assets Property, plant and equipment / intangible assets Trade receivables and inventories Provisions Other items Total deferred tax liabilities (gross) Offset against deferred tax assets Balance sheet deferred tax liabilities 1 851 3 061 1 237 13 561 3 424 4 439 27 573 −5 764 21 809 4 746 2 312 747 435 8 240 2 067 4 692 1 426 11 687 3 424 1 646 24 942 −4 490 20 452 4 608 2 209 673 345 7 835 −5 764 −4 490 2 476 3 345 Net deferred tax assets (+) / tax liabilities (–) 19 333 17 107 1 Including unrealized intragroup profit. 11.2 Statement of changes in TCHF Net total as at 1 January Credited (+) respectively charged (–) to the income statement Credited (+) respectively charged (–) to the other comprehensive income Credited (+) respectively charged (–) to shareholders’ equity from share-based compensation plans Change in scope of consolidation Classified as held for sale Currency translation differences 2015 17 107 2 410 1 157 −20 0 0 −1 321 2014 10 056 5 052 1 084 0 486 −628 1 057 Net total as at 31 December 19 333 17 107 The total of the temporary differences relating to investments in affiliated companies for which no deferred taxes have been reported came to CHF 32.6 million as at 31 December 2015 (2014: CHF 33.9 million). As at 31 December 2015, deferred tax assets of CHF 6.0 million (2014: CHF 5.5 million) in connection with tax-loss carryforwards of CHF 18.8 million (2014: CHF 18.3 million) were not capitalized. Thereof CHF 1.9 million will expire between one and five years and CHF 16.9 million in more than five years. Deferred tax assets related to taxable losses of relevant Group entities are recognized to the extent it is considered probable that future taxable profits will be available against which such losses can be utilized in the foreseeable future. 118 E_00_FB_Komax_2015_(CC_Layout) [P].indd 118 11.03.16 17:48 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2015 12 Other non-current receivables in TCHF 31.12.2015 31.12.2014 Present value of minimum lease payments Non-current loans to associates Rent deposit and other non-current receivables Total 111 5 693 1 366 7 170 211 700 1 561 2 472 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 ter- mination, 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 lessee to ensure that the leased asset is properly in- sured. 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 31.12.2015 31.12.2014 Gross investment in the lease less unguaranteed residual value in favour of lessor less unearned finance income Present value of minimum lease payments 31.12.2015 in TCHF Gross investment in the lease Present value of minimum lease payments 31.12.2014 in TCHF Gross investment in the lease Present value of minimum lease payments 227 −16 −21 190 0–1 year 1–5 years 107 79 120 111 0–1 year 1–5 years 168 142 252 211 420 −17 −50 353 Total 227 190 Total 420 353 As at 31 December 2015, just as on the previous year’s balance sheet date, no value adjustments needed to be recognized for irrecoverable minimum lease payments. E_00_FB_Komax_2015_(CC_Layout) [P].indd 119 119 11.03.16 17:48 KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2015FINANCIAL REPORT Employee benefits (IAS 19) 13 13.1 Defined benefit plans Komax maintains retirement benefit plans for its employees in Switzerland and abroad. In con- formity with IFRS, the retirement benefit plans in Switzerland are defined benefit schemes. For the principal defined benefit pension schemes, the net expenditure for employee benefits is shown below. Benefits respectively liabilities in accordance with IAS 19 are recognized in the balance sheet of the Komax Group under “Prepaid pension assets” respectively “Defined benefit plan liabilities” and in the consolidated income statement under “Personnel expenses”. in TCHF Current service cost Interest cost Total employee benefits expenditure of the Komax Group Interest income on plan assets Employee contributions Total employee benefits income of the Komax Group 2015 8 065 1 173 9 238 1 124 2 939 4 063 2014 6 420 1 372 7 792 1 422 2 875 4 297 Employee benefits result of the Komax Group1 −5 175 −3 495 Employer contributions Prepayments to the employee benefits plan during the financial year 4 259 −916 4 911 1 416 1 The employee benefits expenditure of CHF 5.2 million (2014: CHF 3.5 million) is recognized under personnel expenses. The effect of the revaluation of defined benefit retirement schemes on the other comprehensive income is shown in the table below: in TCHF Actuarial gains (+) and losses (–) Gains (+) and losses (–) from the revaluation of pension fund assets Change to the asset ceiling of pension fund assets 2015 −8 174 −249 0 2014 −19 644 7 928 3 541 Impact on other comprehensive income −8 423 −8 175 Benefits agreements for employees in Switzerland are concluded on the basis of pension plans regulated by the Federal Law on Occupational Old-Age, Survivors’ and Disability Insurance (“BVG”). The pension plans of the Group are managed by a legally independent foundation which is financed by regular employee and employer contributions. The final pension benefits are dependent on contributions and involve specified minimum guarantees. On the basis of these minimum guarantees, the pension plans in Switzerland are assigned to defined benefit pension plans in this year’s accounts, even though they exhibit many of the characteristics of defined contribution pension plans. Any shortfall in cover can be eliminated through a variety of methods, such as increasing employee and employer contributions, lowering the interest rate for retirement assets, reducing future benefits claims, or suspending the right to make advance withdrawals. 120 E_00_FB_Komax_2015_(CC_Layout) [P].indd 120 11.03.16 17:48 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2015 Responsibility for the investment strategy of the funded pension plans lies with the Board of Trustees of the pension fund. Asset-liability studies are conducted on a regular basis. These studies review the liabilities arising from the pension plans and evaluate different investment strategies with respect to the interdependent key variables such as expected profits, expected risks, expected contributions and the expected financing status of the plan. The aim of the asset-liability study is to ensure the appropriate diversification of assets within the plan. The investment strategy is being developed with a view to optimizing the expected profits, controlling risks and restricting fluctuations in the statutory cover ratio in an effective, sustainable manner. The asset-liability study contains strategies for aligning the cash flows of the underlying assets with the anticipated liabilities of the plans. The pension fund assets are managed by both internal and external asset managers. The invest- ment results are monitored by the management bodies of the pension fund on a regular basis. Defined benefit obligations developed as follows: in TCHF Total as at 1 January Current service cost Interest cost Payments made to and by beneficiaries (net) Remeasurements: – Experience adjustments – Changes in demographic assumptions – Changes in financial assumptions 2015 2014 150 093 8 065 1 173 −9 908 −10 220 8 986 9 408 123 857 6 420 1 372 −1 200 −3 464 357 22 751 Total as at 31 December 157 597 150 093 The Board of Trustees of the Komax pension fund in Switzerland made no new plan adjustments in 2015 or in 2014. The present value of plan assets developed as follows: in TCHF Total as at 1 January Interest income on plan assets Employee contributions Employer contributions Payments made to and by beneficiaries (net) Remeasurements on plan assets 2015 2014 143 334 127 398 1 124 2 939 4 259 −9 908 −249 1 422 2 875 4 911 −1 200 7 928 Total as at 31 December 141 499 143 334 E_00_FB_Komax_2015_(CC_Layout) [P].indd 121 121 11.03.16 17:48 KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2015FINANCIAL REPORT The amount recorded in the consolidated balance sheet with respect to the defined benefit schemes was as follows: in TCHF Present value of funded obligations Fair value of plan asset Overfunding (–) / underfunding (+) as at 31 December Limitation of the recognition of plan assets as at 1 January Change to the limitation of the recognition of plan assets Limitation of the recognition of plan assets as at 31 December Recognized liability as at 31 December 2015 2014 157 597 141 499 16 098 0 0 0 16 098 150 093 143 334 6 759 3 541 −3 541 0 6 759 The recognition of pension plan assets is limited to the cash value of all available economic benefits of reimbursements from the plans or reductions in future contributions to the plans. Available assets break down as follows: in TCHF Assets held in shares Assets held in bonds Assets held in real estate Other assets Total 31.12.2015 31.12.2014 46 102 27 447 44 714 23 236 49 923 29 822 40 655 22 934 141 499 143 334 The staff pension scheme of Komax AG invests in the following different asset categories with the aim of achieving an appropriate balance between risk and return: – shares and bonds, most of which are listed on an exchange; – real estate, which primarily comprises Swiss properties held by a foundation whose investors are exclusively pension funds; other investments, including cash assets and money market instruments whose issuers are financial institutions with a credit rating of at least “A”, as well as other, primarily alternative investments. These are used for risk management purposes and in some cases have exchange-listed prices. – 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. 122 E_00_FB_Komax_2015_(CC_Layout) [P].indd 122 11.03.16 17:48 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2015 The retirement benefit liabilities are valued using assumptions based on the following economic and demographic parameters (weighted average): % Discount rate Estimated wage growth rate Increase in current pensions (expectancy of future benefits) 2015 0.80 0.50 0.00 2014 1.10 0.80 0.00 At a value of 10.7, the weighted average duration of the defined benefit plan liabilities as at 31 December 2015 is just above ten years. Average life expectancy on reaching retirement at age 65 or 64, respectively: Retirement at end of the reporting period: Years Men Women 2015 21.5 24.9 2014 19.9 23.1 For the valuation of defined benefit plans as at 31 December 2015, the generation tables were applied (2014: 2014 period tables). Moreover, a capital withdrawal ratio of 40% (2014: 0%) was assumed upon retirement. This value was determined on the basis of empirical values for all re- tirements over the last 15 years or so. The valuation of the net defined benefit obligations is particularly sensitive to changes in the discount rate, life expectancy and wage growth rate, and the increase in current pensions. The following table summarizes the repercussions of a change in these assumptions on the cash value of the defined benefit obligation: in TCHF Life expectancy 1 year increase 1 year decrease Discount rate 1.0% increase 1.0% decrease Wage growth rate 1.0% increase 0.5% decrease Increase in current pensions 1.0% increase 2015 2014 3 617 −3 082 −29 229 39 807 8 121 −3 904 3 335 −3 709 −24 927 33 865 8 007 −6 130 17 890 16 553 According to the most recent actuarial estimates, the Group expects employer contributions amounting to CHF 4.3 million for 2016. The expected cash outflows for benefits to be paid within the next year amount to CHF 1.9 million, while those for benefits to be paid within the next two to five and five to ten years amount to CHF 7.3 million and CHF 8.1 million respectively. E_00_FB_Komax_2015_(CC_Layout) [P].indd 123 123 11.03.16 17:48 KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2015FINANCIAL REPORT 13.2 Defined contribution plans No material costs for defined contribution plans of foreign subsidiaries had to be recognized in the income statement under personnel expenses, neither in the 2015 business year nor in the previous year. The liabilities arising from these retirement benefit plans amounted to CHF 0.1 million as at 31 December 2015 (31 December 2014: CHF 0.1 million). They are recognized in the balance sheet under “Other payables and accrued expenses / deferred income”. Investments in associates 14 Komax holds interests in Laselec SA, Toulouse (France), and Xcell Automation Inc., York (USA), which are accounted for as associated companies. The valuation of investments as at 31 Decem- ber 2015 was based on the unaudited financial statements. Any changes in these statements will be taken into account in the following period. in TCHF Xcell Automation Inc., USA Laselec SA, France Total investments in associates Participation 31.12.2015 31.12.2014 25.0% 20.4% 63 1 996 2 059 17 0 17 As at 31 December 2015 the breakdown of investments in associates of CHF 2.1 million (31 December 2014: CHF 0.0 million) is as follows: in TCHF Current assets Non-current assets Current liabilities Non-current liabilities Total net assets Komax share of net assets Implicit Komax goodwill1 Book value of investments in associates 31.12.2015 31.12.2014 11 626 3 017 3 389 8 594 2 660 555 1 504 2 059 3 292 1 567 3 611 1 180 68 17 0 17 1 The goodwill of CHF 1.5 million as at 31 December 2015 (31 December 2014: CHF 0.0 million) is related to the investment in Laselec SA, France. The impairment test, which is based on projected cash flows, showed that the value of the goodwill is sustainable and revealed no signs of any impairment. There are no contingent liabilities. The proportional contribution to profit is negligible and includ- ed in the “Other operating income” under “Other income” (2014: “Other operating expenses” under “Other expenditure”). 124 E_00_FB_Komax_2015_(CC_Layout) [P].indd 124 11.03.16 17:48 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2015 15 Property, plant and equipment 15.1 Property, plant and equipment 2015 Changes in gross values in TCHF 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 Total Changes in depreciation in TCHF 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 Total Costs 1.1.2015 Currency differences Reclassi- fications Additions Disposals IAS 40 reclassi - fi cation Costs 31.12.2015 17 483 6 283 1 708 3 252 7 194 4 426 2 258 −373 −114 −115 −171 −116 −158 0 105 0 0 2 421 638 287 762 1 949 2 038 0 0 −2 054 896 392 −443 −344 −25 −592 −993 −659 0 −27 0 −17 0 −148 0 0 19 061 6 568 1 838 3 251 9 924 4 505 596 42 604 −1 047 79 159 16 248 29 −896 −210 0 95 436 −1 106 138 040 −2 153 0 0 0 0 0 0 7 434 −3 056 −192 45 743 627 1 177 4 145 5 949 −705 −6 128 0 0 −347 0 −705 −6 475 72 057 16 868 4 174 93 099 13 383 −3 761 −6 667 138 842 Accumulated depreciation 1.1.2015 Currency differences Reclassi- fications Depreci- ation 2015 Accumulat- ed depre- ciation on disposals IAS 40 reclass-i fi cation Accumulat- ed depre- ciation 31.12.2015 9 721 4 174 1 238 1 693 4 845 3 064 0 24 735 −122 −61 −57 −72 −142 −93 0 −547 38 052 −300 0 0 38 052 62 787 0 0 −300 −847 0 0 0 0 0 0 0 0 0 0 0 0 0 −427 −344 −21 −482 −975 −644 0 1 379 −15 10 536 536 83 554 816 667 0 0 −8 0 −49 0 0 4 305 1 235 1 693 4 495 2 994 0 −2 893 4 035 −72 25 258 20 485 −695 2 477 −1 049 38 485 0 0 0 0 0 0 0 0 −695 2 477 −1 049 38 485 33 572 16 868 4 174 54 614 −3 588 6 512 −1 121 63 743 75 099 Net value property, plant & equipment 31.12.2015 8 525 2 263 603 1 558 5 429 1 511 596 No impairments had to be booked on property, plant and equipment of the continuing operations during the 2015 reporting year. As at 31 December 2015, no contractual obligations were existing in respect of the acquisition of property, plant and equipment. Future liabilities arising from oper- ating lease agreements amount to: CHF 2.5 million due in 2016, CHF 6.6 million due in 2017–2020. E_00_FB_Komax_2015_(CC_Layout) [P].indd 125 125 11.03.16 17:48 KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2015FINANCIAL REPORT 15.2 Property, plant and equipment 2014 Changes in gross values in TCHF 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 1.1.2014 Currency differences Reclassi - fications Additions Change in scope of consolidation Disposals Classification IFRS 5 Costs 31.12.2014 19 727 6 059 1 896 3 019 7 399 4 699 107 42 906 76 800 11 699 51 88 550 145 119 14 34 190 66 0 568 795 38 0 833 −7 106 0 0 0 0 −99 0 51 0 −51 0 0 1 763 301 26 699 197 806 2 250 6 042 310 4 164 29 4 503 10 28 24 0 0 9 0 −1 695 −2 460 17 483 −303 −36 −407 −330 −1 141 0 −27 −216 −93 −262 −13 0 6 283 1 708 3 252 7 194 4 426 2 258 71 −3 912 −3 071 42 604 1 224 347 0 1 571 −21 0 0 −21 0 0 0 0 79 159 16 248 29 95 436 10 545 1 642 −3 933 −3 071 138 040 Total 131 456 1 401 Changes in depreciation in TCHF Accumulated depreciation 1.1.2014 Currency differences Reclassi - fications Accumulated depreciation on disposals Depreci ation 2014 Classification IFRS 5 Accumulated depreciation 31.12.2014 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 Total 10 730 3 962 1 259 1 492 4 691 3 593 0 25 727 74 59 15 28 130 51 0 357 35 142 225 0 0 35 142 60 869 0 0 225 582 3 0 0 0 0 0 0 0 0 0 0 0 −3 −1 563 1 252 −769 −302 −36 −313 −330 −1 141 0 479 81 527 592 570 0 −27 −81 −41 −238 −9 0 9 721 4 174 1 238 1 693 4 845 3 064 0 −3 685 3 501 −1 165 24 735 17 869 −21 2 706 0 0 0 0 −21 2 706 0 0 0 0 38 052 0 0 41 107 16 248 29 38 052 57 384 −3 706 6 207 −1 165 62 787 75 253 Net value property, plant & equipment 31.12.2014 7 762 2 109 470 1 559 2 349 1 362 2 258 No impairments had to be booked on property, plant and equipment of the continuing operations during the 2014 reporting year. As at 31 December 2014, no contractual obligations were existing in respect of the acquisition of property, plant and equipment. Future liabilities arising from operating lease agreements amounted to: CHF 2.6 million due in 2015, CHF 6.4 million due in 2016–2019. 126 E_00_FB_Komax_2015_(CC_Layout) [P].indd 126 11.03.16 17:48 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2015 16 16.1 Intangible assets Intangible assets 2015 Changes in gross values in TCHF Intangible assets Software Patents Goodwill Technology Prepayments Total Changes in depreciation in TCHF Intangible assets Software Patents Goodwill Technology Prepayments Total Costs 1.1.2015 Currency differences Reclassi- fications Additions Disposals Costs 31.12.2015 14 105 4 101 29 157 12 828 2 893 −255 103 1 841 0 0 0 0 0 0 0 0 0 0 −103 3 626 −926 −50 0 0 0 14 868 4 051 29 157 12 828 6 416 63 084 −255 0 5 467 −976 67 320 Accumulated depreciation 1.1.2015 Currency differences Reclassi- fications Depreci- ation 2015 Accumulat- ed depre- ciation on disposals Accumulat- ed depre- ciation 31.12.2015 Net value intangible assets 31.12.2015 8 334 4 100 0 3 282 0 −150 0 0 0 0 15 716 −150 0 0 0 0 0 0 −926 −50 0 0 0 1 934 0 0 9 192 4 050 5 676 1 0 29 157 1 342 4 624 0 0 8 204 6 416 −976 3 276 17 866 49 454 Goodwill impairment test Goodwill acquired through previous acquisitions is allocated to the cash-generating units at op- erating segment level. The allocation is determined by the strategic intention behind the acquisi- tion of each entity. Cash-generating unit (CGU) in TCHF Wire Medtech (MTS) Inkjet (INJ) Total Segment 31.12.2015 31.12.2014 Wire Medtech Medtech 17 008 10 195 1 954 29 157 17 008 10 195 1 954 29 157 The recoverable amount of a CGU is obtained from the calculation of its fair value less costs to sell. These calculations are based on projected cash flows derived from the five-year plan issued by the Board of Directors. Assumptions for the calculation of the fair value less costs to sell were as follows: E_00_FB_Komax_2015_(CC_Layout) [P].indd 127 127 11.03.16 17:48 KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2015FINANCIAL REPORT 2015 Gross profit margin Average growth rate Discount rate (pre-tax) 2014 Gross profit margin Average growth rate Discount rate (pre-tax) Wire MTS INJ 64.6% 5.0% 6.7% 49.3% 10.9% 5.8% 45.8% 0.3% 7.1% Wire MTS INJ 62.4% 5.3% 6.7% 51.0% 10.6% 6.2% 43.3% −6.7% 7.1% Management has determined the budgeted gross profit margin based on past developments and expectations 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 re- vealed no signs of any impairment. 16.2 Intangible assets 2014 Changes in gross values in TCHF Intangible assets Software Patents Goodwill Technology Prepayments Total Changes in depreciation in TCHF Intangible assets Software Patents Goodwill Technology Prepayments Total 128 Costs 1.1.2014 Currency differences Reclassi - fi cations Additions Change in scope of consolidation Disposals Classification IFRS 5 Costs 31.12.2014 13 949 4 145 30 397 17 351 1 167 87 0 476 0 0 987 2 308 0 0 0 0 0 0 −987 2 713 220 0 1 875 0 0 −3 114 0 0 0 0 −332 −44 −3 591 −4 523 0 14 105 4 101 29 157 12 828 2 893 67 009 563 0 5 021 2 095 −3 114 −8 490 63 084 Accumulated depreciation 1.1.2014 Currency differences Reclassi - fi cations Accumulated depreciation on disposals Depreci ation 2014 Classification IFRS 5 Accumulated depreciation 31.12.2014 Net value intangible assets 31.12.2014 9 688 4 139 0 3 664 0 17 491 59 0 0 0 0 59 0 0 0 0 0 0 −3 100 2 012 −325 −39 0 8 334 4 100 5 771 1 0 29 157 0 0 1 342 −1 724 3 282 0 0 0 9 546 2 893 0 0 0 0 −3 100 3 354 −2 088 15 716 47 368 E_00_FB_Komax_2015_(CC_Layout) [P].indd 128 11.03.16 17:48 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2015 Ownership restrictions for own liabilities 17 Assets pledged to secure own liabilities: in TCHF Book value real estate Lien on real estate Utilization (indemnification syndicated loan) 31.12.2015 31.12.2014 37 092 50 000 16 720 44 189 50 000 24 000 Real estate secured by mortgages consists of land and buildings in Switzerland (2014: Switzer- land and USA). 18 Investment property Changes in gross values in TCHF Total as at 1 January Disposals Reclassification from property, plant and equipment Currency differences Total as at 31 December Changes in depreciation in TCHF Total as at 1 January Depreciation Accumulated depreciation on disposals Reclassification from property, plant and equipment Currency differences Total as at 31 December Net value investment property 2015 0 −7 6 667 0 6 660 2015 0 188 −3 1 121 5 1 311 5 349 2014 0 0 0 0 0 2014 0 0 0 0 0 0 0 Since 1 January 2015, the building in York (USA) has been disclosed as an investment property in accordance with IAS 40 and was therefore reclassified from property, plant and equipment. The building is leased to third parties under an operating lease and measured using the cost model. Rental income is dependent on the commercial success of the tenant and amounted to CHF 0.0 million in 2015. The operating expenses directly attributable to investment properties and borne by Komax in 2015 were not significant. The fair value of investment properties of CHF 6.5 million was valued by external experts on the basis of the market values of comparable properties. E_00_FB_Komax_2015_(CC_Layout) [P].indd 129 129 11.03.16 17:48 KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2015FINANCIAL REPORT Trade payables 19 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 CNY Other currencies Total trade payables 20 Other payables and accrued expenses / deferred income in TCHF Other payables Liabilities for social security and pension funds Prepayments by customers Accrual for personnel expenses Commission payments to representatives Invoices not yet received Other accruals Accrued expenses / deferred income Prepayments on systems1 less accruals / deferrals in respect of systems Liabilities arising from POC Total 1 See also Note 7. 31.12.2015 31.12.2014 8 169 5 388 2 203 482 1 350 8 543 4 146 3 273 851 2 932 17 592 19 745 31.12.2015 31.12.2014 12 405 348 8 455 11 810 1 913 2 399 2 421 26 998 24 912 −11 600 13 312 7 398 295 6 927 11 069 1 889 1 180 2 778 23 843 20 829 −16 048 4 781 53 063 36 317 Other payables mainly comprise amounts due to state authorities (tax authorities) as well as a contingent consideration of CHF 4.5 million (31 December 2014: no contingent consideration). Their carrying amounts are allocated to the currencies shown in the table: 31.12.2015 31.12.2014 4 014 6 750 49 556 1 036 12 405 4 291 1 092 0 244 1 771 7 398 in TCHF CHF EUR USD CNY Other currencies Total other payables 130 E_00_FB_Komax_2015_(CC_Layout) [P].indd 130 11.03.16 17:48 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2015 21 Provisions Warranty provisions in TCHF Total as at 1 January Additional provisions Change in scope of consolidation Amounts utilized during the year Unused amounts reversed Currency differences 2015 6 348 2 462 0 −3 538 −1 475 −131 2014 4 454 4 646 149 −2 270 −711 80 Total as at 31 December 3 666 6 348 Warranty provisions include material and personnel costs in relation to warranty work. Provisions for warranty are reviewed and adjusted annually. 22 Financial loans Credit Suisse, Zurich1 Credit Suisse, Zurich1, 2 Credit Suisse, Zurich1 Total 2015 31.12.2015 2014 31.12.2014 Currency Interest rate in TCHF Interest rate in TCHF CHF CHF EUR 0.00% 0.80% 0.80% 0.81% 0.80% 0.00% 0 7 798 8 720 16 518 20 000 3 670 0 23 670 1 Utilized credit facilities as par t of the CHF 120.0 million syndicated loan agreement under the stewardship of Credit Suisse (par ticipating banks: Basler Kantonalbank, Credit Suisse, Deutsche Bank, Luzerner Kantonalbank, UBS and Zürcher Kantonalbank). 2 Utilized credit line amounting to CHF 8.0 million as at 31 December 2015 (31 December 2014: CHF 4.0 million) less transaction costs of CHF 0.2 million (31 December 2014: CHF 0.3 million). As at 31 December 2015, the Komax Group had unutilized credit lines of CHF 104.0 million (31 December 2014: CHF 99.9 million). The average interest on financial loans was 0.81% in 2015, compared with 0.82% in the previous year. The fair value of non-current financial loans corres- ponds to their carrying value. Share capital 23 As at 31 December 2015, the share capital amounted to CHF 369 165. This comprised 3 691 651 fully paid-up registered shares, each with a par value of CHF 0.10. As a result of the exercising of option rights, the share capital increased by CHF 8 655 in relation to 2014 (2014: CHF 8 132). As at 31 December 2015, the Group held 19 522 treasury shares (2014: 20 000 treasury shares). E_00_FB_Komax_2015_(CC_Layout) [P].indd 131 131 11.03.16 17:48 KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2015FINANCIAL REPORT 24 24.1 Segment reporting Information by segment 2015 in TCHF Net sales from external customers Net sales from other segments Total net sales EBIT Investment in non-current assets Sale of non-current assets Depreciation 2014 in TCHF Net sales from external customers Net sales from other segments Total net sales EBIT Investment in non-current assets Sale of non-current assets Depreciation Wire Medtech Corporate1 Group 312 218 54 677 9 366 904 1 098 4 −961 141 313 316 54 681 −952 367 045 59 652 −2 589 −10 331 46 732 18 084 152 8 958 678 1 805 1 898 20 660 80 213 233 9 976 Wire Medtech Corporate1 Group 292 484 68 629 2 480 11 65 −816 361 178 1 675 294 964 68 640 −751 362 853 55 292 1 200 −8 390 48 102 13 549 1 994 284 8 530 2 823 134 0 208 15 677 286 9 561 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. The table shows the reconciliation of the total of the reportable segments’ EBIT to the Group profit after taxes: in TCHF EBIT Financial income Financial expenses Group profit before taxes Taxes Group profit after taxes from continuing operations Result from discontinued operations Group profit after taxes 132 2015 46 732 8 470 −16 191 39 011 6 924 32 087 −2 872 29 215 2014 48 102 3 307 −4 584 46 825 3 165 43 660 −15 917 27 743 E_00_FB_Komax_2015_(CC_Layout) [P].indd 132 11.03.16 17:48 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2015 Net sales from external customers were generated in the following four operating segments: in TCHF Wire1 Medtech (MTS) Inkjet (INJ) Mechanical and Electronic Systems Assembly (MES / EES) Total 1 Including Corporate sales. 24.2 Information by geographical area Net sales by location of purchasing party 2015 2014 312 368 44 014 4 772 5 891 294 224 55 446 8 149 5 034 367 045 362 853 Switzerland Europe1 North and South America Asia / Pacific Total 2015 in TCHF % in TCHF 10 747 205 947 83 390 66 961 2.9 56.2 22.7 18.2 10 314 200 455 70 274 81 810 2014 % 2.8 55.3 19.4 22.5 +/− % 4.2 2.7 18.7 −18.2 367 045 100.0 362 853 100.0 1.2 Net sales by location of service provider Switzerland Europe1 North and South America Asia / Pacific Total 2015 in TCHF % in TCHF 139 861 38.1 140 619 89 400 78 106 59 678 24.3 21.3 16.3 86 821 66 183 69 230 2014 % 38.8 23.9 18.2 19.1 +/− % −0.5 3.0 18.0 −13.8 367 045 100.0 362 853 100.0 1.2 Non-current assets by location of service provider2 Switzerland Europe1 North and South America Asia / Pacific Total 1 Including Africa. 2 Without deferred tax assets. 2015 in TCHF % in TCHF 103 160 12 899 19 671 3 401 74.2 9.3 14.1 2.4 94 880 9 912 17 384 2 934 2014 % 75.8 7.9 13.9 2.4 139 131 100.0 125 110 100.0 +/− % 8.7 30.1 13.2 15.9 11.2 133 E_00_FB_Komax_2015_(CC_Layout) [P].indd 133 11.03.16 17:48 KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2015FINANCIAL REPORT Domiciled in Switzerland, the Komax Group is active in three other geographical areas where it is represented 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 as- signed on the basis of the country in which the customer is based (location of purchasing party). In addition, reporting is also undertaken on the basis of the country in which the sales company has its headquarters (location of service provider). 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 Tunisia and Morocco). 24.3 Significant customers Neither in the 2015 reporting year nor in the previous year did the Komax Group generate sales amounting to 10% or more of Group revenues with any individual customer. 25 Other operating income in TCHF Own work capitalized Gains from the disposal of property, plant and equipment Other income Total other operating income Information on personnel 26 26.1 Personnel expenses in TCHF Wages and salaries Share-based payments settled with equity instruments Share-based payments settled in cash Social security and pension contributions Other personnel costs (training and development) 2015 1 188 127 102 1 417 2015 103 208 1 542 1 114 20 768 4 406 2014 267 218 0 485 2014 96 391 1 194 195 16 916 3 783 Total personnel expenses 131 038 118 479 Personnel expenses include all performance-related compensation for the past business year. Further details on employee benefits are given in Note 13. 26.2 Share-based compensation plans As per 31 December 2015, the Komax Group had the following share-based compensation agreements: 134 E_00_FB_Komax_2015_(CC_Layout) [P].indd 134 11.03.16 17:48 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2015 26.2.1 Share option plan of the Komax Group The executive share ownership scheme for directors and management of the Komax Group in- cludes a share option plan. The option plan was introduced in 1998 and is designed to give ex- ecutives and selected employees added interest in shareholder value and enable them to share in the company’s success. The share 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 performance 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. 2015 Weighted average exercise price 2014 Weighted average exercise price Outstanding at beginning of year Granted Exercised Forfeited Expired No. 283 062 0 −86 550 −4 380 −5 495 CHF 86.68 0.00 73.70 78.39 94.25 No. 292 159 79 057 −81 321 −3 130 −3 703 Outstanding at end of year 186 637 92.67 283 062 CHF 75.34 129.09 87.76 84.14 75.68 86.68 Of the 186 637 outstanding options (2014: 283 062), 20 044 were exercisable as at 31 December 2015 (2014: 28 628). Options exercised in 2015 led to the issue of 86 550 shares (2014: 81 321) at a price of CHF 73.70 per share. The weighted average share price at the time of exercising was CHF 157.73 (2014: CHF 138.96). The following table summarizes information on options granted and not yet exercised as at 31 December 2015: Expir y date 31 December 2016 2017 2018 Total Exercise price CHF 66.21 67.03 129.21 Number 20 044 89 352 77 241 186 637 The allocation of share options was discontinued in 2015. The fair value of the options granted in the 2014 financial year – as determined by the enhanced American model, an approach based on the binomial model concept – amounted to CHF 29.51. The key parameters for the valuation model were the share price of CHF 135.30 on the day granted, the exercise price listed above, the standard deviation for the expected share price return of 36.0%, the option term of five years, and the risk-free interest rate of 0.44%. The anticipated dividend yield was 3.13%. The volatility of 36.0% used in these calculations represented an arithmetic average of the historical volatility of Komax Holding AG for the last four years and that of a representative peer group. E_00_FB_Komax_2015_(CC_Layout) [P].indd 135 135 11.03.16 17:48 KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2015FINANCIAL REPORT As an alternative to selling a registered share of Komax Holding AG, Komax Holding AG has the right to pay the cash sum equivalent to the difference between the market value of the registered share at the point of exercising and the exercise price. A corresponding accrual of CHF 1.2 million (31 December 2014: CHF 0.2 million) for 28 288 options (31 December 2014: 38 163 op- tions) was taken into account as per 31 December 2015. The market value of the Komax Holding AG share as per 31 December 2015 of CHF 194.90 (31 December 2014: CHF 144.50) was used for calculation purposes together with an exercise price of CHF 129.21 (31 December 2014: 129.21). The expenses will be spread over three years, in keeping with the lock-in period. 26.2.2 Komax Performance Share Unit Plan Performance Share Units (PSUs) are a variable compensation element within the employee share ownership programme, and are designed to facilitate a lasting increase in company value, align- ment of the interests of plan participants with those of shareholders, and the long-term retention of Executive Committee members at Komax Holding AG. As part of their overall compensation package, plan participants are granted rights to shares on an annual basis. The plan comprises PSUs with a three-year vesting period which are dependent on the attainment of a performance target and the continuation of the employment relationship. The number of PSUs allocated is calculated by dividing a fixed amount by the average closing share price during the 60 days preceding the start of the vesting period. The actual payout at the end of the vesting period takes the form of shares, and is dependent on the average EBIT margin over three years compared to the target margin determined in advance by the Board of Directors. The payout multiplier may range between 0% and 150%. The actual value of the allocation at the end of the vesting period is therefore dependent on the payout multiplier and the development of the share price over the course of the vesting period. In the event of any termination of the employment relationship, pro rata vesting applies at the ordinary vesting date. Number Total as at 1 January 2015 Granted 1 January Forfeited Transferred to participants Total as at 31 December 2015 Rights 0 4 606 0 0 4 606 The fair value on the day of granting amounted to CHF 139.45. As per 31 December 2015, no rights were eligible for activation or transfer. 26.2.3 Komax Long-term Share Incentive Plan In order to strengthen the long-term nature of compensation and enhance the retention of man- agers, plan participants are granted shares as part of the Long-term Share Incentive Plan. The aim of these share-based compensation components is to align the interests of plan participants more closely with those of shareholders in Komax Holding AG by creating an incentive to contrib- ute to the further success of the company and the sustainable increase in its value. The plan is currently not linked to profitability conditions, and contains a three-year vesting period. The num- ber of shares allocated is calculated by dividing a fixed amount by the average closing share price during the 60 days preceding the start of the vesting period. The actual payout at the end of the vesting period in shares is dependent on the share price development during the vesting period. In the event of any termination of the employment relationship, pro rata vesting applies at the ordinary vesting date. 136 E_00_FB_Komax_2015_(CC_Layout) [P].indd 136 11.03.16 17:48 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2015 Number Total as at 1 January 2015 Granted 1 January Forfeited Transferred to participants Total as at 31 December 2015 Rights 0 3 612 0 0 3 612 The fair value on the day of granting amounted to CHF 139.45. As per 31 December 2015, no rights were eligible for activation or transfer. 26.2.4 Komax Long-term Cash Incentive Plan In order to strengthen the long-term nature of compensation and enhance the retention of man- agers, plan participants are granted compensation that is dependent on share price performance as part of the Long-term Cash Incentive Plan. The aim of these compensation components is to align the interests of plan participants more closely with those of shareholders in Komax Holding AG by creating an incentive to contribute to the further success of the company and the sustain- able increase in its value. The plan is currently not linked to profitability conditions, and contains a three-year vesting period. The actual payout at the end of the vesting period is determined at the end of the performance period, and is based on a multiplication of the allocation amount by the share price performance factor (ratio of final share price to starting share price). Number Total as at 1 January 2015 Granted 1 January Forfeited Transferred to participants Total as at 31 December 2015 Rights 0 1 070 0 0 1 070 The fair value on the day of granting amounted to CHF 139.45. As per 31 December 2015, no rights were eligible for activation or transfer. 26.2.5 Komax Restricted Share Plan In accordance with the Articles of Association of Komax Holding AG, members of the Board of Directors receive, in addition to fixed compensation in cash, shares and/or options within the company’s employee share ownership programme. The aim of the share-based compensation component is to align the interests of Board members more closely with those of shareholders by creating an incentive to contribute to the further success of the company and the sustainable increase in its value. Restricted shares are allocated to Board members at the end of their period of office shortly before the Annual General Meeting; the lock-in period is three years. In the event of resignation from office as a result of retirement, death, or disability, the entitlement to restrict- ed shares is calculated on a pro rata temporis basis. In such cases, lock-in periods may be either continued or rescinded at the discretion of the Board of Directors. In the 2015 financial year, 478 shares with a fair value of CHF 165.94 on the date of granting were allocated to the Board of Directors. E_00_FB_Komax_2015_(CC_Layout) [P].indd 137 137 11.03.16 17:48 KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2015FINANCIAL REPORT Europe2 Americas3 Asia4 Africa5 Total 26.3 Breakdown of employees by country and areas of activity 2015 Production Research and development Engineering Marketing and sales Administration6 CH1 263 114 72 149 47 Total headcount at 31 December 2015 645 164 19 95 103 26 407 61 1 58 74 26 79 12 25 85 29 220 230 2014 Production Research and development Engineering Marketing and sales Administration6 CH1 248 122 80 121 51 Europe2 Americas3 139 15 77 91 23 68 1 50 68 23 Asia4 117 12 31 76 27 Total headcount at 31 December 2014 622 345 210 263 39 0 10 24 5 78 Africa5 25 0 8 20 5 58 606 146 260 435 133 1 580 Total 597 150 246 376 129 1 498 1 Komax AG, Dierikon (including operating facility in Rotkreuz), Komax Systems LCF SA, La Chaux-de-Fonds. 2 Komax companies in Europe: Germany, France, Por tugal, Turkey, Romania. 3 Komax companies in Nor th and South America: USA, Brazil. 4 Komax companies in Asia: Singapore, China, Malaysia, India, Japan. 5 Komax companies in Africa: Morocco, Tunisia. 6 Including management / IT. 26.4 Average number of employees The average number of employees in 2015 was 1 542 compared with 1 394 in the previous year. Development expenditure 27 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 26.7 million, equivalent to 7.2% of revenues, compared with CHF 25.8 mil- lion or 7.1% of revenues in the previous year. Other operating expenses 28 Other operating expenses amount to CHF 22.0 million (2014: CHF 20.2 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 Shipping and packaging expenses Other expenditure 2015 5 547 4 527 4 070 2 291 3 706 1 903 2014 4 878 4 552 3 850 2 238 3 129 1 590 Total other operating expenses 22 044 20 237 138 E_00_FB_Komax_2015_(CC_Layout) [P].indd 138 11.03.16 17:48 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2015 29 Financial result in TCHF Financial income Interest income Exchange rate gains on foreign currencies Total financial income Financial expenses Interest expenses Securities expenses Exchange rate losses on foreign currencies Change in fair value of contingent consideration arrangements Total financial expenses Total financial result 2015 2014 313 8 157 8 470 1 440 252 12 395 2 104 16 191 −7 721 145 3 162 3 307 1 276 242 3 066 0 4 584 −1 277 The financial income includes CHF 0.2 million in the current year (2014: none) on financial assets recognized at fair value through profit or loss. Exchange rate losses amounting to CHF –0.5 million (2014: CHF –0.6 million) resulting from financial liabilities recognized at fair value through profit or loss are taken into account in the financial expenses. The positions include both book gains and losses and realized gains and losses. 30 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 2015 9 334 −2 410 6 924 2014 46 825 3 215 277 118 −778 316 −62 122 −43 3 165 2014 8 217 −5 052 3 165 % 6.9 0.6 0.2 −1.7 0.7 −0.1 0.3 −0.1 6.8 2015 39 011 6 385 0 323 −258 272 −3 289 −84 6 924 % 16.4 0.0 0.8 −0.7 0.7 −0.0 0.7 −0.2 17.7 As the Group is internationally active, its income taxes are dependent on a number of different tax jurisdictions. 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. E_00_FB_Komax_2015_(CC_Layout) [P].indd 139 139 11.03.16 17:48 KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2015FINANCIAL REPORT 31 Earnings per share (EPS) 31.1 Basic earnings per share in CHF 2015 2014 Weighted average number of outstanding shares 3 652 728 3 552 840 Group profit (attributable to equity holders of the parent company) Result from continuing operations Result from discontinued operations 32 086 197 42 954 153 −2 871 588 −15 817 324 Total profit attributable to equity holders of the parent company 29 214 609 27 136 829 Basic earnings per share Basic earnings per share from continuing operations Basic earnings per share from discontinued operations Total basic earnings per share 8.78 −0.78 8.00 12.09 −4.45 7.64 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. 31.2 Diluted earnings per share in CHF Weighted average number of outstanding shares Adjustment for non-vested equity rights and dilution effect of share options Weighted average number of outstanding shares for calculating diluted earnings per share Group profit (attributable to equity holders of the parent company) Result from continuing operations Result from discontinued operations 2015 2014 3 652 728 78 304 3 552 840 103 676 3 731 032 3 656 516 32 086 197 42 954 153 −2 871 588 −15 817 324 Total profit attributable to equity holders of the parent company 29 214 609 27 136 829 Diluted earnings per share Diluted earnings per share from continuing operations Diluted earnings per share from discontinued operations Total diluted earnings per share 8.60 −0.77 7.83 11.75 −4.33 7.42 Diluted earnings per share are calculated by adding all option rights and non-vested equity rights which would have had a dilutive effect to the average number of shares outstanding. Contingent liabilities 32 Guarantees amounting to CHF 9.5 million (2014: CHF 5.1 million) are listed in the notes to the financial statements of Komax Holding AG. Apart from additional guarantees amounting to CHF 1.6 million (2014: CHF 0.9 million) in favour of third parties at subsid iaries, there were no other contingent liabilities towards third parties or Group companies. Sureties comprise almost exclusively guarantees granted to customers for advance payments. 140 E_00_FB_Komax_2015_(CC_Layout) [P].indd 140 11.03.16 17:48 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2015 Business combinations 33 33.1 Acquisitions 2015 Komax did not make any acquisitions in 2015. 33.2 Acquisitions 2014 Since March 2011, Komax had held a 30% stake in SLE quality engineering GmbH & Co. KG. On 1 January 2014, Komax acquired a further 30% and therefore the majority of the company as part of an orderly succession arrangement. The company is affiliated to the Wire business unit. At the same time, it also acquired a further 30% of SLE quality engineering Verwaltungs GmbH. In view of SLE quality engineering’s extensive expertise in the development and production of semi-automatic equipment for processing coaxial cables and four-wire lines, in micrograph laboratories and in crimp force monitoring systems, the company’s products represent a further valuable extension of Komax Wire’s already extensive product range. In return, Komax Wire will support SLE quality engineering by making available its acknowledged competencies in all areas of wire processing along with its global sales and service network. The goodwill resulted primarily from the capabilities and technical expertise of the workforce, and from the synergies expected to result from the process of incorporating the company into Komax Wire’s existing business. in TCHF Acquired net assets at fair value Cash and cash equivalents Trade receivables Other receivables and accrued income / prepaid expenses Inventories Deferred tax assets Property, plant and equipment Intangible assets Total assets Financial liabilities Trade payables Other payables and accrued expenses / deferred income Current income tax liabilities Provisions Deferred tax liabilities Total liabilities Acquired net assets Non-controlling interest Goodwill Purchase costs Investment in associates less acquired cash and cash equivalents Net cash out 576 1 743 545 4 253 495 1 642 220 9 474 −2 096 −1 312 −2 298 −12 −149 −10 −5 877 3 597 −1 439 1 875 4 033 −2 019 −576 1 438 141 E_00_FB_Komax_2015_(CC_Layout) [P].indd 141 11.03.16 17:48 KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2015FINANCIAL REPORT The agreement has involved no contingent consideration arrangement. An initial down payment of CHF 0.6 million was made in 2013. The remaining amount of CHF 1.4 million was settled in 2014. The transaction costs directly attributable to the acquisition were insignificant and are reported in the operating result within “Other operating expenses”. No contingent liabilities were taken over from the acquired companies. The fair value of trade receivables and other receivables amounted to CHF 2.0 million, of which CHF 1.7 million related to trade receivables. The acquired company contributed CHF 14.3 million towards net sales in 2014, as well as CHF 1.8 million to Group profit after taxes. Thereof CHF 1.1 million were attributable to equity holders of the parent company. Purchase of non-controlling interest 34 On 1 January 2015, Komax acquired the remaining 40% of SLE quality engineering GmbH & Co. KG as well as SLE quality engineering Verwaltungs GmbH, thus increasing its holding from 60% to 100%. The carrying amount of the net assets acquired was CHF 2.0 million at the time of acquisition. The consideration was recognized at CHF 6.9 million, resulting in a reduction of CHF 4.9 million in the proportion of retained earnings attributable to shareholders of the parent company. The effect of the changes on the percentage shareholdings in the two companies is summarized below: in TCHF Fair value of net assets acquired Consideration recognized Reduction in the proportion of retained earnings attributable to equity holders of the parent company 2015 2 002 –6 912 −4 910 Events after the balance sheet date 35 As announced on 21 December 2015, Komax acquired Thonauer Group as part of a long-term succession arrangement. The pending approval of the Romanian Competition Council was is- sued in February 2016. Thonauer’s presence in seven countries in the fast-growing central and eastern European market makes it an ideal fit for Komax Wire’s service and distribution network. In addition, Komax acquired 100% of Ondal Tape Processing GmbH in Hünfeld, Germany, as per 1 January 2016. Ondal Tape Processing GmbH is a global leader in the construction of machinery for the user-guided and program-controlled bundling and taping of cable harnesses. The com- pany’s products represent a further valuable enhancement of Komax Wire’s already comprehen- sive product range. With the acquisition of the business of SLE Electronics USA, Inc., in El Paso, USA, at the begin- ning of 2016, Komax further consolidated its geographical and technological leading market position. 142 E_00_FB_Komax_2015_(CC_Layout) [P].indd 142 11.03.16 17:48 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2015 With the exception of the before-mentioned events, for which a combined cash outflow of CHF 17.9 million is anticipated, no material events occurred between the balance sheet date and the approval of the consolidated financial statements by the Board of Directors on 4 March 2016 which might adversely affect the information content of the 2015 consolidated financial state- ments or which would require disclosure. Related parties 36 36.1 Transactions with related parties In 2015, goods and services worth CHF 4.9 million were sold to associated companies (2014: CHF 0.8 million). In addition, goods and services to a value of CHF 2.6 million were procured from associated companies (2014: CHF 1.0 million). As per 31 December 2015, receivables of CHF 1.2 million (2014: CHF 0.6 million) as well as liabilities of CHF 0.1 million (2014: CHF 0.5 million) were outstanding vis-à-vis associated companies. In addition, loans granted to associated companies amounting to CHF 5.7 million (2014: CHF 0.7 million) were outstanding as at 31 December 2015, for which interest income of CHF 0.1 million (2014: CHF 0.0 million) was booked in the reporting year. In the year under review, no significant transactions were entered into with members of management in key positions in connection with the sale and purchase of goods and services (2014: none). With the exception of the regular employer contributions to the pension fund, no transactions were effected with related parties (2014: none). 36.2 Compensation for the Executive Committee and Board of Directors In fiscal 2015, the Group’s Executive Committee comprised three (2014: four) members. In con- formity with IFRS 2 for the statement of share-based payments, the total compensation for the Executive Committee, including the six (2014: six) directors, was as follows: Board of Directors in TCHF Basic annual fee1 Share-based payments Total 1 Including the post-employment benefits of TCHF 49 (2014: TCHF 41). Executive Committee in TCHF Fixed base salary and cash bonus1 Share-based payments Total 2015 759 190 949 2015 1 612 343 1 955 2014 787 224 1 011 2014 2 561 502 3 063 1 Including the post-employment benefits of CHF 0.2 million (2014: CHF 0.3 million). A detailed breakdown of the compensation paid to the Board of Directors and the Executive Committee is provided in the Compensation Report on pages 78 and 80. E_00_FB_Komax_2015_(CC_Layout) [P].indd 143 143 11.03.16 17:48 KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2015FINANCIAL REPORT 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 accompanying consolidated financial statements of Komax Holding AG, which comprise the balance sheet, income statement, statement of comprehensive income, cash flow statement, statement of changes in equity and notes (pages 88 to 143), for the year ended 31 December 2015. Board of Directors’ responsibility The Board of Directors is responsible for the preparation and fair presentation of the consolidated financial state- ments 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 assur- ance 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 con- solidated financial statements. The procedures selected depend on the auditor’s judgment, including the assess- ment 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 prepa- ration 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 appropri- ate to provide a basis for our audit opinion. Opinion In our opinion, the consolidated financial statements for the year ended 31 December 2015 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 in- dependence. In accordance with article 728a paragraph 1 item 3 CO and Swiss Auditing Standard 890, we confirm that an in- ternal 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 AG Gerd Tritschler Audit expert Auditor in charge Basel, 9 March 2016 Korbinian Petzi Audit expert 144 E_00_FB_Komax_2015_(CC_Layout) [P].indd 144 11.03.16 17:48 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2015 e Balance sheet of Komax Holding AG in TCHF Assets Cash and cash equivalents Other current receivables third parties Other current receivables Group Other current receivables associates Financial loans Group Financial loans associates Accrued income / prepaid expenses Assets with observable market prices Total current assets Financial investments Group Financial investments associates Investments in subsidiaries Investments in associates Other non-current receivables third parties Total non-current assets Total assets Liabilities and shareholders’ equity Trade payables Current interest-bearing liabilities third parties Other current liabilities third parties Other current liabilities Group Accrued expenses / deferred income Provisions Total current liabilities Non-current interest-bearing liabilities third parties Total non-current liabilities Total liabilities Share capital Statutory capital reserves Statutory profit reserves 31.12.2015 31.12.20141 6 342 479 2 075 38 626 255 2 672 4 98 004 117 571 55 30 0 0 26 182 107 023 121 336 61 243 5 358 176 218 1 992 0 66 169 656 161 363 0 236 244 811 228 424 351 834 349 760 388 66 955 4 529 80 487 514 72 953 16 720 16 720 89 673 369 6 538 2 100 193 72 949 1 60 762 153 74 118 24 000 24 000 98 118 361 9 388 2 100 Profit reserves determined by resolution 232 903 213 403 Retained earnings Profit for year Treasury shares Total shareholders’ equity −21 22 464 −2 192 195 28 441 −2 246 262 161 251 642 Total liabilities and shareholders’ equity 351 834 349 760 1 The presentation of the prior-year balance sheet was adjusted as a result of amendments to Swiss accounting law (Section 32 of the Swiss Code of Obligations). E_00_FB_Komax_2015_(CC_Layout) [P].indd 145 145 11.03.16 17:48 KOMAX GROUP ANNUAL REPORT2015FINANCIAL REPORTFINANCIAL REPORTFINANCIAL STATEMENTS OF KOMAX HOLDING AG e Income statement of Komax Holding AG in TCHF Dividend income Other financial income Other operating income Total income Financial expenses Personnel expenses Other operating expenses Value adjustment on investments in subsidiaries Direct taxes Total expenses Profit for year 2015 30 309 6 794 545 37 648 10 909 950 2 902 0 423 15 184 22 464 20141 29 657 4 780 593 35 030 2 370 724 2 690 622 183 6 589 28 441 1 The presentation of the prior-year figures was adjusted as a result of amendments to Swiss accounting law (Section 32 of the Swiss Code of Obligations). 146 E_00_FB_Komax_2015_(CC_Layout) [P].indd 146 11.03.16 17:48 KOMAX GROUPANNUAL REPORT2015FINANCIAL REPORTFINANCIAL STATEMENTS OF KOMAX HOLDING AG e Notes to the 2015 financial statements of Komax Holding AG Principles General 1 1.1 These annual financial statements were drawn up according to the provisions of Swiss account- ing law (Section 32 of the Swiss Code of Obligations). The key valuation principles applied other than those prescribed by law are described below. Here it should be remembered that use has been made of the option to create and release silent reserves for the purpose of securing the company’s lasting prosperity. The Board of Directors decided on 1 January 2015 as the date for the first-time application of the new provisions of Swiss accounting law. For purposes of comparability, the prior-year infor- mation was adjusted in line with the requirements of the new accounting guidelines. The annual financial statements approved by the Annual General Meeting are legally binding. As Komax Holding AG draws up a set of consolidated financial statements in line with a recog- nized accounting standard (IFRS), it has elected not to include in these financial statements – in keeping with statutory guidelines – explanatory notes on interest-bearing liabilities and audit fees, as well as the presentation of a cash flow statement. Financial investments 1.2 Financial investments comprise non-current financial loans as well as participatory loans. Grant- ed loans are valued at the respective balance sheet date, whereby unrealized losses are account- ed for but unrealized gains are not (imparity principle). Investments 1.3 Investments are initially recognized at cost. The valuation of investments is reviewed annually and if necessary adjusted to a lower recoverable amount in their category. Treasury shares 1.4 Treasury shares are recorded at the time they are acquired as minus items in shareholders’ equity, at acquisition cost. In the event of a later resale, the profit or loss is recognized in the income statement as financial income or financial expense. Share-based compensation 1.5 If treasury shares are used for the share-based compensation of Board members, the difference between the acquisition cost and the actual payment to Board members when the shares are allocated is booked to personnel expenses. Information on balance sheet and income statement positions Assets 2 2.1 The Group’s short-term loans decreased by a total of CHF 19.6 million. This decrease is primarily attributable to loan repayments. Financial investments comprise non-current financial loans as well as participatory loans. The Group’s financial investments have decreased as a result of repayments and reclassifications to shareholders’ equity. The position “Financial loans associates” comprises long-term financial loans to Laselec SA, France, and Xcell Automation Inc., USA. E_00_FB_Komax_2015_(CC_Layout) [P].indd 147 147 11.03.16 17:48 KOMAX GROUP ANNUAL REPORT2015FINANCIAL REPORTFINANCIAL REPORTFINANCIAL STATEMENTS OF KOMAX HOLDING AG In the reporting year, the values of the participations in Komax France Sàrl., France, Komax Japan K.K., Japan, TSK Prüfsysteme GmbH, Germany, and SLE quality engineering GmbH & Co. KG, Germany, were increased. In addition, TSK Testsystems SRL, Romania, was founded as per the beginning of April, and the company Komax de México S. de R.L. de C.V., Mexico, was founded in November. Each company is wholly owned by Komax Holding AG. The balance sheet position “Investments in associates” contains the holding in Laselec SA, France, which was acquired as per the start of the year. The holding in question amounts to 20.4%. Liabilities 2.2 The current account debt of Komax Holding AG towards Komax AG, Switzerland, declined to CHF 63.0 million in the 2015 financial year. The dividend of Komax AG, Switzerland, for the 2014 financial year (CHF 29.0 million) was offset against the current account debt. In addition, a finan- cial loan of USD 4.0 million granted by Komax Corp., USA, exists. Both loans are reported under the balance sheet position “Current interest-bearing liabilities Group”. The amount outstanding from the acquisition of SLE quality engineering GmbH & Co. KG, Germany, is reported under “Other current liabilities third parties”. The provisions relate to open tax assets for taxes on earnings and corporation tax which has to be paid on the holding in SLE quality engineering GmbH & Co. KG, Germany. In 2012, Komax Holding AG and a syndicate of banks led by Credit Suisse concluded a lending agreement for a credit limit of CHF 120.0 million that is valid until 31 July 2017. The credit line provides the Group with the necessary entrepreneurial flexibility, guarantees the financing of commercial operations, and ensures the continued implementation of corporate strategy. As at 31 December 2015, CHF 8.0 million and EUR 8.0 million were being utilized (total utilization: CHF 16.7 million). In accordance with the applicable capital contribution principle, capital contributions (share pre- miums) made after 31 December 1996 are disclosed in the separate equity item “Statutory capital reserves”. Repayments to shareholders from this account are treated as equal to the repayment of nominal capital and are not subject to withholding tax. The self-financing ratio increased by 2.6 percentage points, from 71.9% in 2014 to 74.5% as per 31 December 2015. 148 E_00_FB_Komax_2015_(CC_Layout) [P].indd 148 11.03.16 17:48 KOMAX GROUPANNUAL REPORT2015FINANCIAL REPORTFINANCIAL STATEMENTS OF KOMAX HOLDING AG Income 2.3 The majority of dividend revenues comes from Komax AG, Switzerland (CHF 29.0 million). Other dividend payments were made by Komax Management AG, Switzerland, and Komax Deutschland GmbH, Germany. Other financial income contains interest income on granted loans as well as realized and unreal- ized exchange-rate gains on cash and cash equivalents and loans in foreign currency. Other operating income comprises billed amounts for holding fees and licences. Expenses 2.4 The “Financial expenses” position comprises, among other things, interest expenses and com- missions, securities losses, and unrealized and realized exchange-rate losses on cash and cash equivalents and loans in foreign currency. Foreign exchange-rate developments vis-à-vis the Swiss franc in the year under review resulted in substantial exchange-rate losses, particularly in the case of the EUR and USD positions. The financial expenses position also includes the price adjustment for the acquisition of the holding in SLE quality engineering GmbH & Co. KG, Germany. Personnel expenses comprise compensation paid to the Board of Directors as well as cash settlement of options redeemed. The “Other operating expenses” position includes patents and licence costs, advisory and legal expenses, investor relations expenses, representation expenses, insurance premiums, and other operating expenditure items. Direct taxes contain expenses for corporation tax and non-reclaimable withholding taxes. Company and legal form, registered office 3 Company Legal form Registered office Komax Holding AG Aktiengesellschaft (company limited by shares) Dierikon, Canton Lucerne Full-time employees 4 Komax Holding AG does not have any employees. Participations 5 The direct and indirect participations of Komax Holding AG are set out on pages 154 and 155. E_00_FB_Komax_2015_(CC_Layout) [P].indd 149 149 11.03.16 17:48 KOMAX GROUP ANNUAL REPORT2015FINANCIAL REPORTFINANCIAL REPORTFINANCIAL STATEMENTS OF KOMAX HOLDING AG Treasury shares 6 No. Total as at 1 January Purchases avg. CHF 0.00/share (2014: avg. CHF 0.00/share) Sales avg. CHF 0.00/share (2014: avg. CHF 140.30/share) Granted from share-based compensation plan avg. CHF 112.27/share (2014: avg. CHF 0.00/share) Total as at 31 December 7 Contingent liabilities in TCHF Joint liability for Group taxation value-added tax Guarantees (in favour of subsidiaries) in EUR in USD in MYR in CHF Total 2015 20 000 0 0 2014 26 000 0 −6 000 −478 0 19 522 20 000 31.12.2015 31.12.2014 p.m. p.m. 2 049 1 559 0 5 918 9 526 2 929 1 094 379 677 5 079 From the total contingent liabilities of CHF 9.5 million (2014: CHF 5.1 million) CHF 8.0 million (2014: CHF 5.1 million) are contingent liabilities in favour of subsidiaries. Conditional capital 8 As at 1 January 2015, the conditional capital consisted of 244 899 registered shares, each with a par value of CHF 0.10, created for management and employee share ownership schemes. 86 550 options were converted into shares in 2015 (2014: 81 321). There was no increase in the conditional capital. Change in conditional share capital Number of conditional registered shares Par value CHF Opening amount as at 1 January 2015 Reduction in conditional share capital as a result of exercise of options in 2015 Closing amount as at 31 December 2015 244 899 −86 550 158 349 0.10 0.10 0.10 Conditional share capital CHF 24 490 −8 655 15 835 150 E_00_FB_Komax_2015_(CC_Layout) [P].indd 150 11.03.16 17:48 KOMAX GROUPANNUAL REPORT2015FINANCIAL REPORTFINANCIAL STATEMENTS OF KOMAX HOLDING AG 9 Major shareholders Shareholder / shareholder group at 31 December 2015 No. of shares Share in %1 Max Koch, Meggen Veraison SICAV, Zurich2 Shareholder / shareholder group at 31 December 2014 Max Koch, Meggen 187 069 180 488 5.2% 5.0% No. of shares Share in %1 216 069 6.1% 1 Calculated on the basis of 3 605 101 shares that were registered as at the balance sheet date of 31 December 2015 (2014: 3 523 780). 2 Announced on 23 May 2015. Externally regulated capital requirements (covenants) 10 The Group’s financial liabilities are subject to the following externally regulated capital require- ments (covenants) as per the syndicated loan agreement: – The gearing factor may not exceed 2.75 either at 31 December 2015 or thereafter at each quarter-end balance 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 2015. Within the scope of the syndicated loan agreement, Komax Holding AG guarantees for the liabilities of any member of the Komax Group. E_00_FB_Komax_2015_(CC_Layout) [P].indd 151 151 11.03.16 17:48 KOMAX GROUP ANNUAL REPORT2015FINANCIAL REPORTFINANCIAL REPORTFINANCIAL STATEMENTS OF KOMAX HOLDING AG 11 Holdings of shares and options Assets in units 31.12.2015 31.12.2014 Board of Directors Beat Kälin1 Leo Steiner2 Daniel Hirschi Kurt Haerri Roland Siegwart David Dean Hans Caspar von der Crone3 Shares Options Shares Options Chairman 8 800 19 000 n.s. n.s. Member 123 301 Member Member Member Member Member 3 275 88 63 803 n.s. 7 500 3 000 2 500 1 666 666 n.s. 120 650 10 000 2 200 25 0 740 11 300 4 000 2 500 1 666 666 4 000 Total Board of Directors 136 330 34 332 134 915 22 832 Executive Committee Beat Kälin4 Matijas Meyer5 Andreas Wolfisberg René Ronchetti CEO n.s. n.s. 7 300 29 000 CEO / Head BU Wire 1 000 CFO Head BU Medtech 500 100 7 000 6 000 6 000 0 500 50 9 000 9 000 7 000 Total Executive Committee 1 600 19 000 7 850 54 000 1 Member and Chairman of the Board of Directors since 8 May 2015. 2 Chairman of the Board of Directors until 8 May 2015. 3 Member of the Board of Directors until 8 May 2015. 4 CEO and Member of the Executive Committee until 8 May 2015. 5 Head BU Wire until 8 May 2015, CEO of the Komax Group and Head BU Wire since 11 May 2015. 152 E_00_FB_Komax_2015_(CC_Layout) [P].indd 152 11.03.16 17:48 KOMAX GROUPANNUAL REPORT2015FINANCIAL REPORTFINANCIAL STATEMENTS OF KOMAX HOLDING AG This page has been intentionally left blank. E_00_FB_Komax_2015_(CC_Layout) [P].indd 153 11.03.16 17:48 Komax Group Companies e Direct and indirect equity participation as at 31 December 2015 Place Dierikon, Switzerland Dierikon, Switzerland La Chaux-de-Fonds, Switzerland Epinay-sur-Seine, France Nuremberg, Germany S. Domingos de Rana, Portugal Buffalo Grove, Illinois, USA York, Pennsylvania, USA Rockford, Illinois, USA Buffalo Grove, Illinois, USA Irapuato/Guanajuato, Mexico São Paulo, Brazil Mohammédia, Morocco Shanghai, China Penang, Malaysia Tokyo, Japan Singapore Gurgaon, India Porta Westfalica, Germany Porta Westfalica, Germany Bistrita, Romania El Paso, Texas, USA Colombo, Brazil Tunis, Tunisia Ergene / Tekirdag, Turkey Shanghai, China Grafenau, Germany Grafenau, Germany York, Pennsylvania, USA Toulouse, France Company Komax Management AG Komax AG Komax Systems LCF SA Komax France Sàrl. Komax Deutschland GmbH Komax Portuguesa S.A. Komax Holding Corp. Komax Solar Inc. Komax Systems Rockford Inc. Komax Corp. Komax de México S. de R.L. de C.V. Komax Comercial do Brasil Ltda. Komax Maroc Sàrl. Komax Shanghai Co. Ltd. Komax Systems Malaysia Sdn. Bhd. Komax Japan K.K. Komax Singapore Pte. Ltd. Komax Automation India Pvt. Ltd. TSK Beteiligungs GmbH TSK Prüfsysteme GmbH TSK Test Systems SRL TSK Innovations Co. TSK do Brasil Ltda. TSK Tunisia s.a.l. TSK Test Sistemleri San. Ltd. Sti. TSK Test Systems (Shanghai) Co. Ltd. SLE quality engineering Verwaltungs GmbH SLE quality engineering GmbH & Co. KG Xcell Automation Inc. Laselec SA Komax Holding AG Dierikon, Switzerland Purpose: Holding of equity interests Listed on the SIX Swiss Exchange Swiss security ID code: 001070215 Share capital: CHF 369 165.10 Market capitalization: CHF 719.5 million 154 E_00_FB_Komax_2015_(CC_Layout) [P].indd 154 11.03.16 17:48 KOMAX GROUPANNUAL REPORT2015FINANCIAL REPORTCORPORATE STRUCTURE Purpose Participation Ordinary capital Group services and management R&D, engineering, production, marketing, sales R&D, engineering, production, marketing, sales Sales Sales Sales Holding of equity interests Administration Engineering, production, marketing, sales Sales Production, sales Sales Sales R&D, production, sales Engineering, production, sales R&D, production, marketing, sales Sales Sales Holding of equity interests R&D, engineering, production, marketing, sales Sales Engineering, production, marketing, sales Engineering, production, marketing, sales Engineering, production, marketing, sales R&D, engineering, production, marketing, sales Engineering, production, marketing, sales Administration R&D, engineering, production, marketing, sales R&D, engineering, production, marketing, sales R&D, engineering, production, marketing, sales 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 25% 20% CHF CHF CHF EUR EUR EUR USD USD USD USD MXN BRL 100 000 5 000 000 13 250 000 1 500 000 400 000 1 500 000 8 160 000 150 10 000 1 000 000 3 000 200 000 MAD 10 000 000 USD MYR 200 000 3 000 000 JPY 90 000 000 SGD 100 000 INR 10 000 000 EUR EUR RON USD BRL TND TRY CNY EUR EUR USD EUR 4 000 000 1 764 700 110 400 1 000 000 362 500 366 000 265 500 3 275 902 25 000 5 700 000 560 000 545 280 E_00_FB_Komax_2015_(CC_Layout) [P].indd 155 155 11.03.16 17:48 KOMAX GROUP ANNUAL REPORT2015FINANCIAL REPORTFINANCIAL REPORTCORPORATE STRUCTURE FINANC IAL REPORT PROPOSAL FOR THE AP P RO PR IATIO N O F P R O F I T e Proposal for the appropriation of profit The Board of Directors proposes the following appropriation of profit, payout from the capital contribution reserves (which is not subject to withholding tax) as well as a dividend: in CHF Balance carried forward from previous year Profit after taxes Transfer from capital contribution reserves 31.12.2015 31.12.2014 −20 995 195 211 22 464 085 28 441 284 5 537 477 9 012 753 Total available for distribution 27 980 567 37 649 248 Payout from capital contribution reserves of CHF 1.50 per registered share (2014: CHF 2.50) which is not subject to withholding tax1 Dividend of CHF 4.50 gross per registered share (2014: CHF 2.50)1 Allocation to free reserves Profit carried forward Total 5 537 477 16 612 430 9 012 753 9 012 753 5 000 000 19 500 000 830 660 123 742 27 980 567 37 649 248 1 The stated amount covers the requirement for the payout from capital reser ves for all registered shares outstanding. Regis- tered shares which will be issued after 1 Januar y 2016 upon exercise of options are also entitled to the payout from capital reser ves. Therefore, the stated amount may be subject to changes. 156 E_00_FB_Komax_2015_(CC_Layout) [P].indd 156 11.03.16 17:48 KOMAX GROUPANNUAL REPORT2015 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 accompanying financial statements of Komax Holding AG, which com- prise the balance sheet, income statement and notes (pages 145 to 156), for the year ended 31 December 2015. Board of Directors’ responsibility The Board of Directors is responsible for the preparation of the financial statements in accordance with the require- ments 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 ma- terial 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 per- form 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 finan- cial 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 assess- ments, the auditor considers the internal control system relevant to the entity’s preparation of the financial state- ments 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 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 2015 comply with Swiss law and the com- pany’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 in- dependence. In accordance with article 728a paragraph 1 item 3 CO and Swiss Auditing Standard 890, we confirm that an in- ternal control system exists which has been designed for the preparation of financial statements according to the instructions of the Board of Directors. We further confirm that the proposed appropriation of available earnings complies with Swiss law and the compa- ny’s articles of incorporation. We recommend that the financial statements submitted to you be approved. PricewaterhouseCoopers AG Gerd Tritschler Audit expert Auditor in charge Basel, 9 March 2016 Korbinian Petzi Audit expert E_00_FB_Komax_2015_(CC_Layout) [P].indd 157 157 11.03.16 17:48 KOMAX GROUP ANNUAL REPORT2015FINANCIAL REPORTFINANCIAL REPORTFINANCIAL STATEMENTS OF KOMAX HOLDING AG FURTHER INFORMATI ON GLOSSARY Glossary Mechatronics The term mechatronics describes the synergistic interaction between the specialist disciplines of mechanical engineering, electrical engineering and computer engineering in the design and manufacture of industrial products and in process design. Stripping 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 con- nected to another component. Crimping Crimping is a bonding technique whereby two components are joined together by plastic de- formation. 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 connector crimping. Micrograph laboratory Micrographs are an important criterion for analysing the quality of crimp connections and ensur- ing traceability in production. Micrograph laboratories analyse and document the quality of crimp connections, using colour pictures. Twisting Process whereby wires are twisted against one another and wound together into a spiral. Twisted pairs are a low-cost way of preventing electromagnetic interference. Inhaler Device used in the treatment of asthma, bronchitis and other chronic or acute respiratory dis eases. Pen Injection device, for example for administering insulin, characterized by its ease of use. Self-medication Self-treatment with medicines. 158 E_00_FB_Komax_2015_(CC_Layout) [P].indd 158 11.03.16 17:48 KOMAX GROUPANNUAL REPORT2015 Five-year overview FU RTHE R IN FORMATION FIVE-Y EAR OVERVIEW in TCHF Income statement Revenues1 Gross profit in % of revenues EBITD in % of revenues Operating profit (EBIT) in % of revenues Group profit after taxes from continuing operations in % of revenues Result from discontinued operations Group profit after taxes (EAT) in % of revenues Depreciation Research and development in % of revenues Balance sheet 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 (−) Total assets Cash flow statement Cash flow from operating activities Investments in non-current assets Free cash flow Employees Headcount (at year-end) Revenues per employee3 Gross value added per employee3 Net value added per employee3 Key data Komax registered share Shares4 Par value High Low Closing price on 31.12. 2015 2014 2013 2012 2011 368 462 236 116 64.1 56 708 15.4 46 732 12.7 32 087 8.7 −2 872 29 215 7.9 9 976 26 669 7.2 160 940 238 027 283 134 71.0 369 115 833 29.0 16 518 0 34 365 398 967 49 612 18 850 24 519 363 338 220 188 60.6 57 663 15.9 48 102 13.2 43 660 12.0 −15 917 27 743 7.6 9 561 25 776 7.1 145 562 242 490 284 168 73.2 361 101 882 26.3 23 670 0 29 211 388 052 30 295 15 566 14 412 323 959 196 634 60.7 52 577 16.2 43 297 13.4 35 064 10.8 −9 935 25 129 7.8 9 280 24 908 7.7 136 616 220 975 263 985 73.8 352 92 940 26.0 25 543 4 044 22 616 288 216 170 188 59.0 22 189 7.7 13 617 4.7 n.s. n.s. n.s. 9 426 3.3 8 572 24 633 8.5 141 231 218 302 236 111 65.7 344 371 424 200 837 54.1 54 906 14.8 47 536 12.8 n.s. n.s. n.s. 39 280 10.6 7 370 23 526 6.3 112 454 248 994 246 994 68.3 340 122 528 113 413 34.1 56 765 0 938 31.4 46 571 0 5 604 357 591 359 533 361 448 31 734 8 032 24 545 45 222 9 033 27 627 10 055 13 536 –61 No. 1 580 1 498 1 282 1 330 1 140 239 119 113 3 692 0.10 194.90 122.90 194.90 261 126 119 3 605 0.10 152.40 124.60 144.50 262 125 117 3 524 0.10 138.00 72.35 135.30 246 108 100 3 444 0.10 97.10 61.25 71.00 343 147 140 3 401 0.10 120.00 59.00 68.75 No. 1 000 CHF CHF CHF CHF 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_00_FB_Komax_2015_(CC_Layout) [P].indd 159 159 11.03.16 17:48 KOMAX GROUP ANNUAL REPORT2015 Komax Holding AG Investor Relations and Corporate Communications Marco Knuchel Industriestrasse 6 6036 Dierikon Switzerland Phone +41 41 455 04 55 www.komaxgroup.com Financial calendar Annual General Meeting Dividend payment Half-year results 2016 First information on the year 2016 Annual media conference / analysts’ presentation Annual General Meeting 12 May 2016 19 May 2016 23 August 2016 17 January 2017 21 March 2017 12 May 2017 Forward-looking statements The present Annual Report contains forward-looking statements in relation to Komax which are based on current assumptions and expectations. Unforeseeable events and developments could cause actual results to differ materially from those anticipated. Examples include: changes in the economic and legal environment, the outcome of legal disputes, exchange rate fluctuations, 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 Report is available in English and German. The original German version is binding. 160 E_00_FB_Komax_2015_(CC_Layout) [P].indd 160 11.03.16 17:48 KOMAX GROUPANNUAL REPORT2015 Imprint Published by: Komax Holding AG, Dierikon Concept and realization: Linkgroup AG, Zurich www.linkgroup.ch Publishing platform PublishingSuite® Linkgroup, Zurich www.linkgroup.ch Steiner Communications, Zurich/Uitikon www.steinercom.ch Produced on a climate-neutral basis by Linkgroup AG E_00_GB_Komax_UG_2015_(CC_Layout) [P].indd 6 14.03.16 08:55 5 1 0 2 T R O P E R L A U N N A X A M O K Komax Holding AG Industriestrasse 6 6036 Dierikon Switzerland Phone +41 41 455 04 55 www.komaxgroup.com E_00_GB_Komax_UG_2015_(CC_Layout) [P].indd 1 14.03.16 08:54