6 1 0 2 T R O P E R L A U N N A X A M O K Annual Report 2016 2014 I Geschäftsbericht D E S U C O F E V T A V O N N I E U Q N U I L A B O L G THE WAY TO MAKE IT E_00_GB_Komax_UG_2016 _P_-gelöst.indd 3 15.03.17 10:00 The Komax Group intends to further consolidate its market and technology leadership. With this in mind, it has set ambitious medium-term targets for the 2017–2021 period, which cover growth, profitability, and return on capital. Through its business strategy, which is geared to long-term success, Komax aims to create sustainable value. This approach also benefits Komax shareholders in the form of an attractive dividend policy and corresponding stock market valuation. Komax focuses systematically on the wire processing business, and seeks to implement four key strategic priorities in four market segments. E_00_GB_Komax_UG_2016 _P_-gelöst.indd 4 15.03.17 10:00 Market segments AUTOMOTIVE AER OSPACE TELECOM/DATACOM INDUSTRIAL In addition to the core automotive market, Komax focuses on the aerospace, telecom/datacom and industrial market segments, exploiting synergy potential wherever possible. E_00_GB_Komax_UG_2016 _P_-gelöst.indd 5 15.03.17 10:00 Key strategic priorities Solutions along the value chain Innovative produc- tion concepts Increase in global reach Development of non- automotive markets Success factors Business tracks Megatrends Many years’ Experience Great Entrepreneurial freedom Leading Market position Advantage through Innovation Clear Strategy Targets 2017–2021 500– 600 80– 100 Avg. 25 50– 60 Revenues 2021 in CHF million EBIT 2021 in CHF million RONCE (return on net capital employed) in % Payout ratio in % of EAT E_00_GB_Komax_UG_2016 _P_-gelöst.indd 6 15.03.17 10:00 CORPORATE GOVERNANCE 47 COMPENSATION REPORT 61 CONTENTS FINANCIAL REPORT Consolidated financial statements 76 Financial statements of Komax Holding AG 146 Corporate structure 154 Five-year-overview 160 ANNUAL REPORT In brief 2 Shareholders’ letter 6 Locations 8 Global megatrends 11 Business model and strategy 16 Board of Directors and Executive Committee 28 Sustainability and social responsibility 30 Information for investors 37 Market segments and Komax Academy 41 E_00_GB_Komax_2016 _P_-gelöst.indd 1 1 14.03.17 08:47 KOMAX GROUP ANNUAL REPORT2016 ANNUAL REPORT IN BRIEF Komax is a globally active technology group specializing in automation solutions for selected processes. With its innovative and high-quality solutions for the wire proces - sing industry, Komax helps its customers implement economical and safe manufac- turing processes, especially in the automo- tive supply sector. e Komax offers a comprehensive range of automated, intelligent processing solu- tions for all wire processing applications. Standardized and customer-specific sys- tems are supplemented by an extensive range of quality assurance modules, test- ing devices, and networking solutions for the reliable and efficient production of wire harnesses. Moreover, a sophisticated service offering supports customers around the world after their systems have been commissioned, thereby ensuring high availability and low impairment for their investment. 2 E_00_GB_Komax_2016 _P_-gelöst.indd 2 14.03.17 08:47 KOMAX GROUP ANNUAL REPORT2016 AN NUA L REPORT IN BRIEF Net sales by region 2% Switzerland 20% Asia������ 8% Africa 49% Europe 21% North-/ South America Order intake +6.3% 373.0m Revenues in CHF +18.4% Share price CHF 251.25 +28.9% Dividend yield 2.6% S E R U G F I S T C A F D N A E_00_GB_Komax_2016 _P_-gelöst.indd 3 3 14.03.17 08:47 KOMAX GROUP ANNUAL REPORT2016 ANNU AL REPORT IN BRIEF Key figures in TCHF Order intake Revenues2 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’ equity3 in % of total assets 2016 20151 +/− in % 370 246 348 386 372 972 315 093 238 486 205 941 63.9 65.4 6.3 18.4 15.8 61 058 59 123 3.3 16.4 18.8 50 581 49 938 1.3 13.6 15.8 39 530 10.6 35 489 9.5 36 767 22 827 2 674 29 020 7.8 9.49 1 633 36 108 11.5 9.5 29 215 21.5 9.3 49 612 –25.9 18 850 21.1 24 519 –89.1 25 315 14.6 8.0 8.00 1 347 18.6 21.2 7.7 22.9 –2.6 41.4 429 605 398 967 197 726 160 940 231 879 238 027 69 918 17 393 49 454 34 365 –49.4 311 910 283 134 10.2 72.6 71.0 1 As a result of the sale of Komax Medtech, the 2015 figures have been restated (see Note 9 to the Consolidated Financial Statements 2016). 2 Revenues: net sales + other operating income. 3 Equity attributable to equity holders of the parent company. 4 KOMAX GROUP ANNUAL REPORT E_00_GB_Komax_2016 _P_-gelöst.indd 4 14.03.17 08:47 2016 ANN UA L REPORT IN BRIEF Operating profit (EBIT) Shareholders’ equity in TCHF in TCHF 0 0 0 0 4 0 0 0 0 2 0 2 1 0 2 3 1 0 2 4 1 0 2 5 1 0 2 6 1 0 2 EBIT EBIT in % of revenues1 Group profit after taxes (EAT) in TCHF 0 0 0 0 3 0 0 0 5 1 0 2 1 0 2 3 1 0 2 4 1 0 2 5 1 0 2 6 1 0 2 % 4 1 % 7 % 0 % 0 1 % 5 % 0 0 0 0 0 0 2 0 0 0 0 0 1 0 2 1 0 2 3 1 0 2 4 1 0 2 5 1 0 2 6 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 2 1 0 2 3 1 0 2 4 1 0 2 5 1 0 2 6 1 0 2 % 0 6 % 0 3 % 0 % 0 6 % 0 3 % 0 EAT EAT in % of revenues1 NWC 3 NWC in % of revenues1 As a result of the sale of Komax Medtech, the 2015 figures have been restated (see Note 9 to the Consolidated Financial Statements 2016). 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_2016 _P_-gelöst.indd 5 5 14.03.17 08:47 KOMAX GROUP ANNUAL REPORT2016 ANNU AL REPORT SHAREHOLDERS’ LETTER Dear Shareholder The 2016 financial year was an intensive one for the Komax Group in many respects, as it was characterized by various events that will be im- portant to the company’s future success. These included the sale of the Medtech business unit, four acquisitions, the establishment of a new lo- cation in Mexico, the restructuring exercises in Porta Westfalica, Germany, the formulation of the 2017–2021 strategy, and the launch of numerous new products. Komax has responded well to the challenges presented by these events, while at the same time achieving a very pleasing result. Significant rise in revenues Order intake increased by 6.3% to CHF 370.2 million (2015: CHF 348.4 million) while consoli- dated revenues rose by as much as 18.4% to CHF 373.0 million (2015: CHF 315.1 million). Internal growth amounted to 8.8%. The foreign currency effect at revenues level amounted to +0.8%. Operating profit (EBIT) excluding one-off expenses rose to around CHF 57 million (2015: CHF 49.9 million). Komax incurred one-off ex- penses in 2016 to optimize various areas of its or- ganization with the aim of strengthening its future market position. This included restructuring at the Porta Westfalica site, which generated costs of CHF 2.4 million. Furthermore, EBIT was re- duced by an additional amount of approximately CHF 4 million to CHF 50.6 million owing to ex- traordinary expenses in Turkey, the establishment of the new location in Mexico, and the higher costs of the option program (due to expire in 2018) that is the result of the strong rise in the share price. a contributory factor to the success of the sale. The prior-year figures in this report have been ad- justed accordingly as a result of this divestment, and Komax Medtech is reported under “Result from discontinued operations”, in conformity with IFRS 5. The “Result from discontinued opera- tions” amounted to CHF –4.0 million (2015: CHF –6.9 million). In particular, this figure includes taxes, transaction costs, and foreign currency losses that impacted on the income statement as a result of the sale, as well as the difference bet- ween the realized earn-out (CHF 4.1 million) and the maximum possible earn-out (CHF 6.0 million). This earn-out reduction is explained by a slow- down in business at the divested Medtech busi- ness unit in the second half of the year, as well as by the fact that Komax was able to assign signifi- cant warranties to GIMA. Strong financial foundation Group profit after taxes from continuing opera- tions rose by 9.5% to CHF 39.5 million (2015: CHF 36.1 million). Group profit after taxes (EAT) rose even more strongly, namely by 21.5% to CHF 35.5 million (2015: CHF 29.2 million). As a result, basic earnings per share increased to CHF 9.49 (2015: CHF 8.00). The Komax Group remains in very strong financial shape: as at 31 December 2016, shareholders’ equity totalled CHF 311.9 million (2015: CHF 283.1 million) while the equity ratio stood at 72.6% (2015: 71.0%). Free cash flow came in at CHF 2.7 million (2015: CHF 24.5 million). The decline compared to the previous year is a reflection of Komax’s significant acquisition activ- ity in 2016. Net cash declined to CHF 17.4 million (2015: CHF 34.4 million). This very robust financial footing enables Komax to continue to make above-average investments in research and development, as well as in distribution and marketing activities. In addition, Komax has the financial resources to drive forward the further development of the Group in a targeted way. Successful sale of Komax Medtech Komax spent a considerable period of time look- ing for a suitable strategic buyer for its Medtech business unit. It finally found such a candidate in the form of GIMA, a subsidiary of Italy’s IMA Group, and duly completed the sale in the first half of 2016. The timing of the sale was ideal: the record-high order intake at Komax Medtech was Higher distribution In view of the very pleasing result and the positive outlook, the Board of Directors is proposing to the Annual General Meeting an increase in the distribution from CHF 6.00 to CHF 6.50 per share. This corresponds to a high payout ratio of 69.1%, which is above the strategic bandwidth of 50%–60%. The distribution comprises a dividend 6 KOMAX GROUP ANNU AL REPORT E_00_GB_Komax_2016 _P_-gelöst.indd 6 14.03.17 08:47 2016 ANN UA L REPORT SH AREHO LD ER S’ LETTER Thank you The result achieved by the Komax Group in 2016 is very pleasing, and the company accordingly owes a considerable debt of gratitude to its 1 600 or so employees. Without their tireless dedication, innovative spirit, and day-to-day willingness to go the extra mile for the needs of the Group’s customers, such a result would not be possible. Our thanks also go to our customers and busi- ness partners for their trust and their constructive working relations that frequently date back many years. Finally, we would also like to thank our shareholders, whose commitment to Komax we greatly value. Outlook The Komax Group is very well positioned, and is confident of achieving a result in the 2017 financial year that is in line with its strategic targets for 2017–2021. After the first two months of 2017, we expect momentum in the automotive industry to remain strong, and anticipate that demand for automation solutions for wire processing will re- main high. The above applies only if the political and global economic framework remains stable. The constant rise in the number of vehicles being manufactured, the ever-increasing number of wires that need to be integrated into the indi- vidual vehicles, the many new types of wire, and the growing need for miniaturization are all positive trends for Komax. With its broad and innovative spectrum of solutions, Komax is ideally equipped for a successful future. Yours sincerely, Dr. Beat Kälin Chairmann of the Board of Directors Matijas Meyer CEO 9 March 2017 of CHF 5.00 and a distribution from capital contri- bution reserves of CHF 1.50. The latter is tax-free for persons domiciled in Switzerland who hold shares as part of their private assets. The divi- dend yield (calculated on the basis of the 2016 year-end closing price of the share) amounts to an attractive 2.6%. Investment in distribution and marketing services In 2016, the Komax Group succeeded in increa- sing net sales significantly not only in Europe in- cluding Africa (+16.6%), but also in North/South America (+21.0%) and Asia/Pacific (+18.9%). Contributory factors here included not just the var- ious acquisitions (Thonauer Group, SLE Electro- nics USA, Ondal Tape Processing and Kabatec), but also in particular a number of new products that enjoyed successful market launches. In order to be able to position the new products optimally and establish an even stronger footing in market segments outside the automotive industry (aero- space, telecom/datacom, industrial), Komax in- vested more strongly in marketing and distribution services. This additional expenditure – which was incurred in the second half of 2016 in particular – depressed profitability. However, they represent a valuable investment in helping the Group to achieve its ambitious growth targets. New Board of Directors Having formulated the 2017–2021 strategy, the Board of Directors decided to strengthen its existing competencies in the area of digital trans- formation. It is therefore proposing to the Annual General Meeting that Dr. Andreas Häberli be elected as a new member of the Board of Directors. The remaining five members of the Board of Directors are all standing for re-election. Changeover from IFRS to Swiss GAAP FER The Komax Group changed its accounting stan- dard from IFRS to Swiss GAAP FER with effect from 1 January 2017. This changeover has been driven by the relentless increase in scope of the IFRS standards as well as the ever-increasing number of complex and formal individual regula- tions. The Swiss GAAP FER standard is particularly suited to the needs of medium-sized international companies like the Komax Group. It will continue to guarantee transparent reporting for shareholders in accordance with the “true and fair” principle. E_00_GB_Komax_2016 _P_-gelöst.indd 7 14.03.17 08:47 KOM AX GROUP ANN UA L REPORT 7 2016 ANNUAL REPORT LOCATI ONS The Komax Group has a presence in all key production centers of its customers. Hav ing had its finger on the pulse of industry for more than 40 years, Komax is able to develop appropriate, high-value and innovative automation solutions for local requirements in global markets. 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_2016 _P_-gelöst.indd 8 14.03.17 08:48 KOMAX GROUP ANNUAL REPORT2016 AN NUA L REPORT LOCATIONS 15 production sites Headquarters: Komax Holding AG Dierikon, Switzerland 34 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_2016 _P_-gelöst.indd 9 9 14.03.17 08:48 KOMAX GROUP ANNUAL REPORT2016 ANNU AL REPORT LOCATIONS Komax customers can place orders online at any time using the Komax Direct e-commerce platform. e Global production, local distribution and service network Komax has 15 production sites worldwide. Komax produces standardized (off-the-shelf) products for wire processing at locations in Switzerland, Germany, China and Japan. The TSK brand of test systems is manufactured in Germany, Tur- key, the US, Brazil, China and Tunisia. Customer proximity is very important when in ensuring short supply times for test- ing adapters. Customer-specific systems are produced at sites in Switzerland, Germany, the US and China. With pro- duction sites in the most important market regions of the world, Komax is well positioned to meet the expectations of its global customers, who require suppliers to have a local presence. Global service organization 150 employees Continuous expansion of production capacity In order to meet the growing demand for automation solu- tions, Komax invested in the expansion of its production ca- pacity at various locations in 2016. This includes the building extensions in Grafenau, Germany, and Ergene/Tekirdag, Tur- key, for example. While the employees at the German loca- tion manufacture customer-specific systems, the workforce at the Turkish location specializes in testing systems. In ad- dition, Komax has established a new location in Mexico. The very strong order situation means that Komax is also reaching the limits of its capacity in Switzerland. It has therefore rent- ed a third location in Küssnacht am Rigi, central Switzerland. In order to simplify staff collaboration and streamline processes in Switzerland, Komax is planning a newbuild at its headquarters in Dierikon. The aim is to have all employees working at this location by the end of 2019. Ground- breaking is due to take place in 2017. Komax is close to its customers The Komax Group provides sales and service support in around 60 countries through subsidi- aries and independent agents. This gives Komax a unique global presence that enables it to provide efficient and competent support to its customers – both local and global – at all times. This is because customer proximity and short reaction and supply times are crucial. This allows Komax to keep its finger on the pulse of industry and develop needs-driven, high-value and inno- vative automation solutions for local requirements in global markets by drawing on over 40 years’ experience. 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. 10 E_00_GB_Komax_2016 _P_-gelöst.indd 10 14.03.17 08:48 KOMAX GROUP ANNUAL REPORT2016 Autonomous driving Increasing pressure for automation ANN UA L REPORT GL OB AL MEG ATRENDS Electro- mobility Growing number of vehicles and wires S D N E R T A G E M L A B O L G E_00_GB_Komax_2016 _P_-gelöst.indd 11 11 14.03.17 08:48 KOMAX GROUP ANNUAL REPORT2016 ANNUAL REPORT GLOBAL MEGATRENDS Global megatrends are accelerating Komax’s growth. Issues such as environ- mental awareness, safety, and the rise of integrated and affordable vehicles are help- ing to drive up the number of wires installed in modern cars. Since maximum quality at the lowest possible cost is required, wire processing is becoming increasingly auto- mated. Komax has solutions for its custo- mers that provide a compelling response to global megatrends. 12 E_00_GB_Komax_2016 _P_-gelöst.indd 12 14.03.17 08:48 KOMAX GROUP ANNUAL REPORT2016 Demand for automation solutions continues to grow. ANN UA L REPORT GL OB AL MEG ATRENDS Numerous growth drivers Increasing demands offer opportunities for unique selling points. e Trends Global megatrends support Komax’s business in the long term. These include growing environmental awareness on the part of consumers and the associated goal of emission- free vehicles. A key role will be played in this respect by electro-mobility. Another megatrend is increasing intercon- nectedness. Infotainment systems in vehicles are becoming increasingly comprehensive and complex, while integrated information systems are laying the basis for the future: auto- nomous driving. The need for greater road traffic safety rep- resents a further megatrend. Here the emphasis is now no longer just on protection in the event of an accident, but above all on avoiding accidents. As a consequence, the number of sensors in vehicles will continue to rise. Finally, a global megatrend towards affordable vehicles is emerging. This requires greater cost efficiency in manufacturing, which in turn is increasing the pressure to automate wire proces- sing further. More wires per vehicle Together, these megatrends are driving the ongoing electri- fication of vehicles. Accordingly, the number of wires that need to be assembled per vehicle is on the rise. The elec- trical systems in today’s compact passenger cars comprise as many as 1 300 cables, 2 300 crimp contacts, and 250 plug connectors. Premium vehicles require as many as 1 800 cables, 3 200 crimp contacts, and 300 plug connectors. Innovations in vehicle construction, new functionalities, and an ever-rising fit-out level in all vehicle classes are leading to a further in- crease in demand for cables and crimp contacts. This trend, which has been in evidence for a number of years now, is only likely to accelerate and strengthen in future. Pressure for automation A large part of the cable harness manufacturing process is still done by hand, but 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 demands. Intelligent automation solutions, quality assurance tools, and systems for testing harnesses before they are installed in vehicles help to guarantee and increase the efficiency and reliability of the production process. This has been recognized by automotive manufacturers, who are increasingly calling on their suppliers to further automate their production processes. E_00_GB_Komax_2016 _P_-gelöst.indd 13 13 14.03.17 08:48 KOMAX GROUP ANNUAL REPORT2016 ANNU AL REPORT GLOBAL MEGATRENDS Increasing complexity and miniaturization The automotive industry is increasingly demanding subsystems 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 automo- tive industry, but also upstream suppliers and business partners. Furthermore, the individual subsystems and assemblies, particularly harnesses, are becoming ever more complex. At the same time, the process of miniaturization is being driven forward. In order to reduce manufac- turing costs, weight, and fuel consumption, the individual components to be processed are becoming ever smaller, which makes manual processing more difficult or even impossible. Advantages for Komax In recent years, Komax has benefited from the overall boom in the automotive industry. Thanks to its global presence, it has not only been able to balance out differences regional cycles, it has also grown much more strongly than the automotive industry. Forecasts for global automotive demand indicate average annual growth of around 3% over the next few years. However, the demand for automation solutions for wire processing is only partly determined by the number of vehicles produced and sold. For Komax, the factors referred to above – the increasing complex- ity of electrical systems, the ongoing process of miniaturization, and greater quality and efficiency demands on the part of automotive manufacturers – are just as important as drivers of automa- tion solutions. Moreover, new types of cable (e.g. for infotainment systems or electrical vehicles) and new materials (e.g. aluminium) are opening up further growth avenues for Komax. 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 require considerable time and expense – at the cost of productivity and profitability – to repair or replace once they have been fitted in a vehicle. Moreover, functional defects in the electronic systems of delivered vehicles can result in serious reputational damage. Komax is also seeing a number of trends from the automotive industry gain momentum in other market segments in which it is active. Thanks to its expertise and the market proximity of its pro duct range, Komax is in a very good position to generate growth outside the automotive industry, too. 14 E_00_GB_Komax_2016 _P_-gelöst.indd 14 14.03.17 08:48 KOMAX GROUP ANNUAL REPORT2016 ANN UA L REPORT GL OB AL MEG ATRENDS e New products As Komax always operates at the very cutting edge of technological development, increasing demands are not just growth drivers but opportunities to create further unique selling points. For this reason, Komax launches new products and product enhancements every year, as the fol- lowing examples from the 2016 financial year show: Mira 230 Komax launched the compact, easy to handle Mira 230 to enable customers to fulfill smaller orders quickly, at high productivity, and with reproducible quality. This program- mable stripping machine was developed by Komax Japan, and has already attracted numerous buyers not just in the automotive industry but also in other market segments such as telecom/datacom. Digital Lean Wiring Komax further advanced the automation of cabinet control construction in 2016 by launching DLW (Digital Lean Wiring) software. This software simplifies the re cording of production data, includ- ing cable length, and offers a virtual wiring facility. The production data can then be loaded into a wire processing machine, which produces the ready-to- install cables. If a Zeta 630 is used for wire processing, for example, not only is quality better, but the time needed to produce a control cabinet can be re- duced by up to 50%. Zeta 630 Komax also developed the Zeta 630, a new solution specifically for the industrial market segment and intend- ed for use in control cabinet construction. It assembles all the different wires automatically, preparing them in the right sequence and length, and minimizing manual work. The wires then simply need to be installed in the control cabinet. Manual processes such as cutting, stripping, marking, and pressing are rendered obsolete – even from batch sizes as small as one single wire. The Zeta 630 is an adaptation of the Zeta 633, which has proven successful in automotive wire processing for many years. Komax MES In conjunction with iTAC Software, a partner for production- control software, Komax developed an MES (Manufacturing Execution System) for the wire processing industry 4.0. The Komax MES manages the entire wire harness production process: machinery, manual workstations, operating equip- ment, material flow, and resources. It enables wire harness manufacturers to produce their complex products to dead- line and to the desired quality, while making optimum use of production materials as well as material and immaterial re- sources. Since the specific features of the machines can be mapped in detail, products can always be manufactured in strict compliance with requirements. The MES fully supports all Komax machines as well as all other machines. E_00_GB_Komax_2016 _P_-gelöst.indd 15 15 14.03.17 08:48 KOMAX GROUP ANNUAL REPORT2016 ANNUAL REPORT BUSINESS MODEL AND STRATEGY Komax focuses on automating the wire pro- cessing business in four market segments, and is keen to further consolidate its market and technology leadership. To this end, it pursues four key strategic priorities. The most important of these are above-average profitability and further sustainable growth. This strategy goes hand in hand with envi- ronmentally conscious, socially aware and responsible conduct towards all stakeholder groups. 16 E_00_GB_Komax_2016 _P_-gelöst.indd 16 14.03.17 08:48 KOMAX GROUP ANNUAL REPORT2016 Ambitious targets ANN UA L REPORT B USINESS MODEL AND STRATEGY High degree of innovation Market and technology leader 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_2016 _P_-gelöst.indd 17 17 14.03.17 08:48 KOMAX GROUP ANNUAL REPORT2016 ANNU AL REPORT BUSINESS MODEL AN D S TRATE GY e Focus on wire processing business Ever since the sale of the Medtech business unit to Italy’s IMA Group in April 2016, Komax has been focusing on the remaining Wire business unit, i.e. the wire processing business. Komax 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, fitting contacts (crimping), taping cables, fitting connector housings and testing wire harnesses (see pages 26 and 27). Komax offers its customers both fully and semiautomatic standardized models, as well as customer-specific systems. These are supplemented by an extensive range of quality as- surance modules and networking solutions for the reliable and efficient production of wire har- nesses. Solutions that increase the availability of installed systems and test their productivity also form part of the range, as does intelligent software. e Four key strategic priorities Komax has more than 40 years’ experience in the development of customer-oriented solutions for wire processing. The company is both the technology and market leader in its field, with a market share more than twice that of its nearest competitor. In order to further strengthen its global leadership, Komax pursues a growth strategy that involves four key strategic priorities: solutions along the value chain, innovative production concepts, an increase in global reach, and the development of non-automotive markets. Solutions along the value chain Komax offers its customers a comprehensive range of innovative and reliable automation solu- tions. The offering covers the most capital-intensive and critical processes of customer value chains – from measuring and cutting wires to testing the finished wire harnesses. Komax relies not only on its proprietary developments, but also on the expertise of established partners. As a result, customers receive solutions for the key wire processing applications from a single source. This approach is unique in the world. Komax continuously drives forward development of its business with a view to closing gaps in its offering as well as networking and managing the individual processes of the value chain. By ac- quiring the two global leaders in taping technology in 2016 – Ondal Tape Processing GmbH and Kabatec GmbH & Co. KG – Komax has succeeded in closing a gap in its value chain. Innovative production concepts For a market leader like Komax, innovations are of maximum strategic importance. For this rea- son, the Komax Group has for many years been 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 processes. All activities are systematically geared to customer needs and expectations. That is why Komax typically employs interdisciplinary teams – consisting of marketing experts, product managers and development engineers – on innovation projects. For example, skilfully combining different processes and technologies reduces interfaces and lead times. At the same time, processing reliability is increased. 18 E_00_GB_Komax_2016 _P_-gelöst.indd 18 14.03.17 08:48 KOMAX GROUP ANNUAL REPORT2016 Solutions from a single source: the breadth of the Komax range is unique worldwide. R&D expenses 7%– 8% of revenues ANN UA L REPORT B USINESS MODEL AND STRATEGY In recent years, Komax has invested around 7%–8% of rev- enues in research and development annually, employing no less than 166 staff in this area as at 31 December 2016. In addition, some 180 engineers make a substantial contribu- tion to innovation at Komax by developing customer-specific applications. University partnerships and knowledge trans- fer activities also play their part in keeping the Komax Group at the forefront of technological progress. In order to remain a technology leader, Komax will continue to invest strongly in innovation, as well as in distribution and marketing activities. Topics such as digital transformation, Industry 4.0 and the Internet of things are of great strategic importance to Komax in this respect. Increase in global reach Komax has 15 production sites located in Europe, North and South America, Asia and Africa. The company provides sales and service support in around 60 countries through its sub- sidiaries and independent agents, which gives it a unique global presence. It has set itself the goal of being close to its customers so that it can provide outstanding service com- bined with the shortest possible response and supply times. To remain competitive, Komax customers need to be flexible and select the optimal economic locations for their produc- tion processes – in other words, set up operations wherever their end customers are. This is also true for Komax. To ensure it stays close to its customers, including when these customers choose to relocate their operations, Komax has to show flexi- bility, too. For this reason, it is keen to systematically expand its global reach. Its acquisition of the Thonauer Group in 2016 has increased Komax’s presence in seven countries in the high- growth region of Central and Eastern Europe. Moreover, by opening a branch in Thailand and constructing a production, distribution, and service center in Mexico, the Komax Group also ex- panded its presence in Asia and Central America in the reporting year. Komax’s strong global presence is also reflected in the net sales generated by the individual regions. Net sales by region 2016 20151 +/− in % in TCHF Switzerland Europe (incl. Africa) North/South America Asia/Pacific Total 5 950 4 723 213 216 182 843 77 851 73 457 64 347 61 763 26.0 16.6 21.0 18.9 370 474 313 676 18.1 1 As a result of the sale of Komax Medtech, the 2015 figures have been restated in accordance to IFRS 5. E_00_GB_Komax_2016 _P_-gelöst.indd 19 19 14.03.17 08:48 KOMAX GROUP ANNUAL REPORT2016 ANNU AL REPORT BUSINESS MODEL AN D S TRATE GY Development of non-automotive markets Komax now generates between 85% and 90% of its revenues through customers in the auto- motive industry. Market estimates indicate that some 60% of globally processed wiring is used in automotive 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 are key arguments in favor of automated solutions. In addition to the automotive industry, there are countless other markets in which numerous wires are processed. Komax focuses pri- marily on three additional market segments (see page 41 ff.): aerospace, telecommunications and data communication (telecom/datacom) and industrial applications (industrial). These areas cur- rently account for a relatively minor share of sales. However, Komax is seeking to increase pene- tration in these markets, as they offer attractive growth opportunities in the longer term. If this objective is to be achieved, targeted investment in marketing and sales will be essential over the next few years. The megatrends evident in the automotive sector are influencing these three market segments in different ways. However, the potential for synergies with the existing core business in the auto- motive industry is considerable. The three “new” market segments are already addressing issues such as safety, lightweight construction, multimedia, small-batch production, and integrated pro- duction/Industry 4.0, and in some cases have been doing so for years. Komax will draw on these experiences when it develops automation solutions for the automotive industry. Conversely, the aerospace, telecom/datacom and industrial market segments will benefit from Komax’s great expertise in the core business: in particular, Komax can adapt existing automotive solutions and, where necessary, specifically develop new products for particular segments. e Selective acquisitions Komax’s main focus is on internal growth. In addition, potential candidates and opportunities for acquisitions are carefully examined as part of a clearly defined acquisition strategy that revolves around implementation of the four key strategic priorities. Komax intends to strengthen its lead- ing market position with further acquisitions and participations. The acquisitions made in recent years have played a significant role in the implementation of the strategic priorities. Examples of such acquisitions include the TSK Group (2012; solutions along the value chain), SLE quality engineering (2014; innovative production concepts) and Thonauer Group (2016; expansion of global reach). Furthermore by acquiring a 20.75% holding in the French company Laselec in 2015, Komax also took an important step in the development of non- automotive markets. Laselec specializes in laser-assisted cable stripping and marking solutions as well as intelligent layout boards for wire harness production. These are currently used primarily in the aerospace industry. 20 E_00_GB_Komax_2016 _P_-gelöst.indd 20 14.03.17 08:48 KOMAX GROUP ANNUAL REPORT2016 ANN UA L REPORT B USINESS MODEL AND STRATEGY e Ambitious targets for 2017–2021 The Komax Group is distinguished by its very robust equity base and strong profitability. This solid foundation enables Komax to systematically pursue opportunities to develop the company further. As an additional benefit, it offers security in challenging times. For the strategy period 2017–2021, Komax has set itself ambitious targets for growth, profitability, and return on capital. These are designed to cement its leading position and increase the value of the company further via profitable growth. Through a business strategy that is geared to long- term success, Komax is seeking to create sustainable value that will benefit investors, too. It has set itself the goal of distributing 50%–60% of Group profit after taxes (EAT) to shareholders every year for the next five years. The targeted revenues figure of CHF 500–600 million by 2021 is to be achieved through both or- ganic and acquisition-based growth. Here Komax is anticipating that it can deliver, over the next five years, an organic growth rate that at least matches the continuous rise in automotive produc- tion and the increasing number of wires in vehicles (CAGR: 4%–6%). Komax has positioned itself as a total solution provider. It supports its customers with solutions along the entire value chain. Since the profitability of the solutions it supplies can fluctuate, Komax's focus is not on the EBIT margin, but on increasing absolute EBIT by 2021 (to CHF 80–100 million). Targets Revenues (in CHF million) EBIT (in CHF million) RONCE (in %) Payout ratio (in % of EAT) 2021 2016 500–600 80–100 373.0 50.6 2017–2021 Avg. 25 50–60 2016 24.2 69.1 E_00_GB_Komax_2016 _P_-gelöst.indd 21 21 14.03.17 08:48 KOMAX GROUP ANNUAL REPORT2016 ANNU AL REPORT BUSINESS MODEL AN D S TRATE GY 2016 financial year and 2017–2021 strategy Fully equipped to exploit megatrends Komax has a successful year behind it, and is outstandingly positioned for a promising future. Beat Kälin, Chairman “The sale of the Medtech business unit has increased our entrepreneurial freedom.” Beat Kälin, what were the focus areas of the 2016 financial year? Beat Kälin: It was a very intensive year for Komax, involving a lot of changes. Not only did we sell the Medtech busi- ness unit, we also made four acquisitions involving a total of seven companies. In addition, we formulated the new 2017–2021 strategy. But most crucially, all these additional challenges did not prevent us from delivering a very good result. Matijas Meyer, what do you make of the result? Matijas Meyer: It’s a pleasing one. We managed to sig- nificantly increase both revenues (+18.4%) and Group profit after taxes (EAT, +21.5%) compared to the very good prior-year figures. Although CHF 55 million or so of revenues was lost as a result of the sale of the Medtech business unit, we were able to compensate for these lost revenues during 2016. 22 E_00_GB_Komax_2016 _P_-gelöst.indd 22 14.03.17 08:48 KOMAX GROUP ANNUAL REPORT2016 ANN UA L REPORT B USINESS MODEL AND STRATEGY the right buyer in GIMA, a subsidiary of Italy’s IMA Group. The timing of the sale was ideal: because in the months leading up to it, Komax Medtech’s order intake reached a record high. The divestment and the associated focus on the Wire business has increased the Group’s entrepre- neurial freedom in its core business. Doesn’t this narrower focus also come with risks attached? Beat Kälin: The key factor is whether the market on which you are focusing is basically functioning well, and whether the long-term prospects look good. Mobility is a real mega- trend, and there is no reason to anticipate any slump in global vehicle production over the next few years. Quite the opposite: The automotive sector is continuing to grow in economically strong regions. In Asia, for example, vehicle Matijas Meyer, CEO “8.8% of our 2016 revenues growth was organic, which is impressive.” production is rising hand in hand with prosperity. Techno- logical progress is another growth driver for Komax: the number of wires in cars is growing all the time, and many of these wires are getting ever smaller. To process these efficiently, cost-effectively, and to the very highest quality standards, automation solutions like those we offer will become ever more important for our customers. But you have customers outside the automotive in- dustry, too... Matijas Meyer: That’s true. While the automotive industry is our core market and accounts for the lion’s share of our sales, we are present in other markets, too. Over the next few years, we will be looking to develop the aerospace, telecom/datacom and industrial market segments in par- ticular. Among other things, we want to use the experi- ence we gain in these segments to make further advances Automation solutions of the type we offer are becoming increasingly important to our customers. Thanks to acquisitions... Matijas Meyer: Partly, but not exclusively. 8.8% of our revenues growth was organic, which is impressive. Al- though geographically broad-based, this growth was most pronounced in North America, China as well as in Central and Eastern Europe. All of which sounds like a problem-free year... Matijas Meyer: Competition in our niche market is fierce, and is increasingly weighing on profitability. This problem actually became more acute in the second half of 2016. It is only because we are so innovative that we have been able to resist this continuous price pressure to some ex- tent. The volatile currency situation is also a challenge, as this can have both a positive and a negative impact on our results. How are you responding to these challenges? Matijas Meyer: If we want to maintain our position as market and technology leader, we need to constantly op- timize our processes and continue to systematically devel- op our business model. That’s why we took the decision in 2016 to exit module testing (end-of-line tests for doors, seats, etc.) and focus on harness testing (testing wire har- nesses) instead. This meant we had to restructure and reduce headcount at the Porta Westfalica location in Ger- many, and this pushed our result down CHF 2.4 million. Other areas that incurred one-off costs included the es- tablishment of a new location in Mexico, extraordinary expenses in Turkey, and the higher costs of the option program (due to expire in 2018) that is the result of the strong rise in the share price. What did the sale of the Medtech business unit in April 2016 achieve? Beat Kälin: The sale was an intensive process because it was important for us to find a strategic buyer for Komax Medtech who would be able to further develop the busi- ness. All of this took time, but we finally managed to find E_00_GB_Komax_2016 _P_-gelöst.indd 23 23 14.03.17 08:48 KOMAX GROUP ANNUAL REPORT2016 ANNU AL REPORT BUSINESS MODEL AN D S TRATE GY in the automotive market. We are aware that strength- ening these segments will entail greater distribution and marketing activity, as well as the associated costs, but we are convinced that this strategy will pay off in the longer term. Would you describe these market segments as a kind of diversification? Matijas Meyer: No, the individual market segments actually complement one another, and have nothing to do with diversification. The non-automotive markets are automat- ing wire processing too. This is why we are keen to adapt existing automotive solutions in particular, and where necessary develop new products specifically for the indi- v idual segments. Where do these “new” segments fit into your strategy? Beat Kälin: Our 2017–2021 strategy pursues four key strategic priorities: solutions along the value chain, inno- vative production concepts, an increase in global reach, and the development of non-automotive markets. So the market segments referred to earlier essentially encapsulate our fourth strategic priority. When you say “solutions along the value chain”, do you mean new products? Matijas Meyer: By acquiring Ondal Tape Processing and Kabatec in 2016, we closed a key gap in our customers’ value chain because taping accounts for about 25% of the time it takes to manufacture a wire harness. Going forward, we will continue to seek to close existing gaps and further develop solutions with the aim of driving for- ward automation. This will see Komax increasingly make the transformation from a supplier of individual machines to a total solution provider that brings together the indi - v idual stages of the value chain. Where is this transformation leading? Matijas Meyer: The transformation is manifesting itself in many different ways, and the market segments discussed earlier are contributing to it. The Komax mindset used to be product-oriented, whereas now it is market-segment- oriented. Or to give another example: we used to position ourselves as a provider of capital goods. Nowadays we are increasingly a supplier of services with a service net- work that is unique in the world. Among these services are the Komax Academy and the Komax MES (Manufacturing Execution System) developed in partnership with iTAC Software. What is the strategic significance of the other acquisitions you made in 2016? Beat Kälin: Our acquisitions are always directly related to our strategic priorities. Both the asset deal with SLE Elec- tronics USA and the acquisition of Thonauer Group were 24 Komax is increasingly trans- forming itself from a supplier of individual machines to a total solution provider. driven by the desire to increase our global reach. Whereas with SLE Electronics USA we are focusing on the Mexican market, Thonauer Group has access to customers in Cen- tral and Eastern Europe. Thonauer Group is present in sev- en countries: Austria, the Czech Republic, Slovenia, Slo- vakia, Hungary, Romania, and Moldavia. Will there be more acquisitions? Matijas Meyer: If the opportunity for an acquisition arises and it fits our strategy, we will certainly examine it careful- ly. However, we are not aiming to make numerous acqui- sitions every year. Integrating seven new companies, as we did in 2016, is a huge task. Nonetheless, I’m pleased that we have been able to make these acquisitions. I’m certain that the companies we have acquired and their workforces represent a very good fit with Komax, and will be instrumental in helping us to provide an even more comprehensive service to our customers. You have now embarked on the first year of the 2017–2021 strategy. How did you arrive at these ambitious targets? Beat Kälin: We always set ourselves targets in the past, but were less active in communicating them. It was im- portant to us to be able to show investors what we are seeking to achieve in the medium term as regards growth, profitability, and return on capital. This kind of trans- parency encourages understanding of our business model and obviously provides us with an incentive to deliver. If you are the market leader and you set your sights low, you are ultimately doing yourself no favors. So the Board of Directors defined targets that will challenge senior exec- utive management. E_00_GB_Komax_2016 _P_-gelöst.indd 24 14.03.17 08:48 KOMAX GROUP ANNUAL REPORT2016 ANN UA L REPORT B USINESS MODEL AND STRATEGY Matijas Meyer, how will you set about fulfilling these high expectations? Matijas Meyer: Well, we’re in a promising starting posi- tion. But if we are to achieve these targets, we will have to improve continuously, optimize our processes, and dem- onstrate our technology leadership every year by bring- ing out different innovations. To achieve sales of CHF 500–600 million by 2021, we will have to increase the cur- rent figure by more than 34%. The current global mega- trends will assist in this regard, and small acquisitions should also help us achieve our targets. To achieve our EBIT target (CHF 80–100 million), we will have to deliver an increase of more than 58%. And if we want an average RONCE of 25%, we will have to stick to our existing strat- egy and continue to employ our capital efficiently. How confident are you of achieving these targets? Matijas Meyer: Komax has outstanding employees, whom I would like to sincerely thank at this point for the great dedication they have shown down the years. Without them, ambitious targets of this nature would be inconceiv able. But if we all keep doing our very best for our cus tomers every day, just like we’ve always done, I’m confident that Topics such as Industry 4.0 and the Internet of Things form part of our strategy, and will feed through into future market services. 50% to 60% of group profit after taxes (EAT). As we are keen to be both transparent and reliable in this respect, we are communicating this policy actively. How important are topics such as digitalization and Industry 4.0 at Komax? Matijas Meyer: Digital transformation is underway at Komax. For example, this can be seen in the fact that we are introducing a global ERP system in 2017, which will be implemented at all our companies over the next few years. But digitalization is also a key factor when it comes to developing new products. Topics such as Industry 4.0 and the Internet of Things form part of our strategy, and will feed through into future market services. What themes will preoccupy you in 2017? Matijas Meyer: There’s quite a wide spectrum, but I would like to mention three in particular: first, the integration of new companies with new staff and new products. You cannot complete a task like that in just a couple of months, so this process will make demands of us in 2017, too. Second, the theme of innovation, which will receive plenty of attention in 2017. We intend to underscore this by launch- ing various new products. The third theme relates to our headquarters in Dierikon: work will begin in 2017 on our new building, which is set to increase our capacity and ultimately house all our Swiss operations. The idea is that all Swiss jobs will be based in Dierikon by the end of 2019. All these themes will contribute to the successful imple- mentation of our strategy. we will be successful and achieve our five-year targets. That’s always assuming nothing occurs to do lasting da- mage to the global economy and slow down economic growth in a major way. Komax has communicated a dividend policy for the first time... Beat Kälin: The purpose of our strategy is to consolidate our leading position. That means continuing to be very in- novative and responding to our customers’ needs in the best possible way. If we do this successfully, Komax will create sustainable value, and our shareholders should participate in this development. That’s why we have intro- duced an attractive dividend policy with a payout ratio of E_00_GB_Komax_2016 _P_-gelöst.indd 25 25 14.03.17 08:48 KOMAX GROUP ANNUAL REPORT2016 ANNU AL REPORT BUSINESS MODEL AN D S TRATE GY The way to make the best connection Measuring/cutting Connector insertion Harness sub-assembly Stripping Twisting Taping t Harness sub-assembly e Final assembly Komax systems t Measuring/cutting Stripping Crimping Twisting Connector insertion Taping e Cutting Preprocessing e Wire harness manufacturer Crimping Wires Contacts Housings Component manufacturer 26 E_00_GB_Komax_2016 _P_-gelöst.indd 26 14.03.17 08:48 KOMAX GROUP ANNUAL REPORT2016 ANN UA L REPORT B USINESS MODEL AND STRATEGY 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 endusers. Komax supplies these companies with sys- tems for automated and efficient wire processing, as well as with systems for testing wire harnesses. Komax solutions are used in customers’ value chains for preprocessing, final assembly and testing. The wire harness manufacturer then supplies the OEM (original equipment manu- facturer), which integrates the wire harness into the final product. e Integration of wire harness Assembly e Original Equipment Manufacturer (OEM) 27 14.03.17 08:48 Quality Komax possesses a wide range of innova- tive monitoring solutions that test the qual- ity of crimp connections during production and document the corresponding test re- sults. In addition, TSK brand testing sys- tems test the reliability of wire har nesses. Machinery description Low order volumes and just-in-time production 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. t Harness test systems e Testing e Warehouse Shipping E_00_GB_Komax_2016 _P_-gelöst.indd 27 KOMAX GROUP ANNUAL REPORT2016 ANNU AL REPORT BOARD OF DIRECTORS Board of Directors As at 31 December 2016 28 from 2001, and Delegate of the Board of Directors from 2003. From 2006 to 2009, Daniel Hirschi was CEO and Del- egate of the Board of Directors of Bennin- ger AG in Uzwil; he was a member of the Board of Directors of the same company from 2009 to August 2016. In the last three years, Daniel Hirschi has not been a member of the Executive Committee or had any material business relation- ships with the Komax Group. David Dean (1959) Non-executive, independent member of the Board of Directors since 2014, elected until 2017, Swiss national, resident in Meilen, member of the Board of Directors of listed company Agta Record AG, Fehraltorf, as well as Trumpf AG, Baar, and member of the “Industry Executive Advisory Board” of the “Executive MBA in Supply Chain Management” at ETH Zurich. David Dean has been CEO of the Bos- sard 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. Beat Kälin (1957) Non-executive, dependent member and Chairman of the Board of Directors since 2015, elected until 2017, 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 May 2015 he was CEO of the Komax Group. Daniel Hirschi (1956) Non-executive, independent member of the Board of Directors since 2005, Vice-Chairman since 2014, elected until 2017, 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. Daniel Hirschi holds a degree in engi- n eering. From 1983 to 2005 he held various management functions at Saia- Burgess in Murten, where he was CEO E_00_GB_Komax_2016 _P_-gelöst.indd 28 14.03.17 08:48 KOMAX GROUP ANNUAL REPORT2016 Kurt Haerri (1962) Non-executive, independent member Roland Siegwart (1959) Non-executive, independent member of the Board of Directors since 2012, of the Board of Directors since 2013, elected until 2017, Swiss national, elected until 2017, Swiss national, resident in Birrwil. Kurt Haerri holds a degree in mechan- ical 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 program. 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. resident in Schwyz. Member of the Board of Directors of Evatec Holding AG, Trübbach, GE Inspection Ro- botics AG, Zurich, and NZZ Medien- gruppe (owner of the Neue Zürcher Zeitung), Zurich, a Trustee of the Gebert Rüf Foundation, Basel. 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 center of ETH Zurich and the University of Zurich, since 2015. He 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 Corporate 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 material busi- ness relationships with the Komax Group. ANN UA L REPORT EXE CUTIVE COMMITTEE Executive Committee Matijas Meyer (1970) Chief Executive Officer (CEO) since 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. Andreas Wolfisberg (1958) Chief Financial Officer (CFO) since 1996, at Komax since 1991, Swiss national, resident in Adligenswil, 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. E_00_GB_Komax_2016 _P_-gelöst.indd 29 29 14.03.17 08:48 KOMAX GROUP ANNUAL REPORT2016 ANNUAL REPORT SUSTAINABILITY AND SO CIAL RE S P O NSI B I L IT Y The Komax Group upholds its responsibil- ities towards its stakeholder groups through the systems it produces, the services it provides, or the goals and attitude of the company. The basic tenets underlying the Komax Group’s business practices are set out in its guiding principles and in its code of con- duct. It exercises responsibility towards people and the environment, and is keen to continuously develop its competencies in matters relating to sustainability and social responsibility. Komax regards sustainability and social responsibility as an integral part of its corporate strategy. 30 E_00_GB_Komax_2016 _P_-gelöst.indd 30 14.03.17 08:48 KOMAX GROUP ANNUAL REPORT2016 Headcount 1 633 ANN UA L REPORT SUSTAINA BIL ITY AND SO CI AL RE SP O NSIBILITY Employees by area of activity 32% Marketing and sales 9% 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 11% 10% 38% Research and development Employees by region ������� Asia ������� North/ South America 33% 37% 12% 13% 5% Switzerland Europe Africa E_00_GB_Komax_2016 _P_-gelöst.indd 31 31 14.03.17 08:48 KOMAX GROUP ANNUAL REPORT2016 ANNU AL REPORT SUSTAINABILITY AND SOC IA L RESP O NSI 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 behavior and guidelines on how to act towards the Group’s business partners and competitors. In addition, it addresses issues such as discrimination, safety, health and environmental protec- tion. All employees are given training on the code of conduct when they join the company. 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. Declining consumption of fuel and materials Komax supplies solutions for wire-processing applications, in particular for the automotive sup- ply 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 cross sections and innovative materials such as aluminium can be machine-processed, thereby contributing to a reduction in vehicle weight and, as a result, fuel consumption. In addition, the automated taping solutions, for example, help Komax customers to use less adhesive tape then they would in the case of manual taping. Komax’s products do not contain any ecologically harmful components. The attainment of cus- tomers’ expectations and the extent of their loyalty are measured by means of regular satisfac- tion 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. 32 E_00_GB_Komax_2016 _P_-gelöst.indd 32 14.03.17 08:48 KOMAX GROUP ANNUAL REPORT2016 The environment, health protection, and occupa- tional safety are all viewed as a holistic system. ANN UA L REPORT SUSTAINA BIL ITY AND SO CI AL RE SP O NSIBILITY Energy savings target 2017: to reduce electricity consumption by 5% 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. Operational Excellence Highly automated, state-of-the-art production systems are used for strategically important components that Komax man- ufactures in-house. These are based on lean management 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 mate- rials and wastewater are recycled or then disposed of appro- priately. Waste volumes are continuously reduced as part of optimization programs. Wherever possible, Komax uses re- newable 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. Certification status and integrated management system The key sites of the Komax Group, which are located in Switzerland, the US, Germany, Turkey, Brazil, and China, are all ISO 9001 certified. In addition, Komax AG’s sites in Dierikon, Rotkreuz and Küssnacht am Rigi, Komax SLE in Grafenau, TSK in Porta Westfalica, and SC Thonauer Au- tomatic in Bucharest all have ISO 14001 certification. These six sites employ around 810 people. All have integrated management systems that encompass all company processes, the environ- ment, health protection, and workplace safety. Country Company Certification Switzerland Komax AG Brazil China TSK do Brasil Ltda. Komax Shanghai Co. Ltd. Germany Komax SLE GmbH & Co. KG TSK Prüfsysteme GmbH Austria Romania Thonauer Gesellschaft m.b.H. SC Thonauer Automatic s.r.l. Czech Republic Thonauer spol. s.r.o. Tunisia Turkey TSK Tunisia s.a.l. TSK Test Sistemleri Ltd. Şti. Hungary Thonauer Kft. USA Komax Corporation TSK Innovations Co. ISO 9001 ISO 9001 ISO 9001 ISO 9001 ISO 9001 ISO 9001 ISO 9001 ISO 9001 ISO 9001 ISO 9001 ISO 9001 ISO 9001 ISO 9001 ISO 14001 OHSAS 18001 ISO 14001 DE AEOC 104360 ISO 14001 ISO 14001 OHSAS 18001 E_00_GB_Komax_2016 _P_-gelöst.indd 33 33 14.03.17 08:48 KOMAX GROUP ANNUAL REPORT2016 ANNU AL REPORT SUSTAINABILITY AND SOC IA L RESP O NSI B IL IT Y Resource and energy savings targets In collaboration with the Energy Agency for the Economy (Energie-Agentur der Wirtschaft, EnAW), Komax has established resource and energy savings targets for 2017 and 2020 for the Swiss sites in Dierikon and Rotkreuz. For example, the target is to reduce energy consumption by at least 5% by the end of 2017 (2014 basis: 2 822 MWh or 5.9 MWh per head). Despite the strong growth in sales since 2014, which went hand-in-hand with a substantial rise in headcount, Komax had re- duced its electricity consumption by the end of 2016: in total, consumption was cut to 2 754 MWh, which equates to a per head reduction of about 15% to 5.0 MWh. From 2017 onwards, resource and energy savings targets for the Küssnacht am Rigi site will also be factored into considerations. 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, facilitates very high productivity, and has a large pool of highly qual- ified labor. As well as being an important employer in the region, Komax is also committed to advancing young people in a number of different areas (including education, sport, the arts, and social involvement). The production sites that the Group has established around the world since 1975 remain in their original locations, and this has generated 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 re- cruited regionally and preference can be given to local suppliers wherever this is feasible and makes commercial sense. e Attractive employer At the end of 2016, Komax employed 1 633 staff worldwide (2015: 1 347). This increase is primar- ily attributable to acquisitions, the persistently strong development of business and the associ- ated increase in headcount at the sites in Switzerland, Germany and the US, as well as the estab- lishment of the company in Mexico. Personnel expenses in the year under review amounted to CHF 125.9 million (2015: CHF 106.2 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 ben- efits that are in line with national and industry standards. Participation in the pay comparison survey conducted by industry association Swissmem showed that pay at the Wire business unit’s Swiss production sites is in line with market averages and that men and women receive equal pay. The proportion of women in the Group’s global workforce stood at around 19% in 2016 (2015: 17%). Komax is not alone within the industry in having a relatively low proportion of women in its workforce. 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. Active employee development The Group’s staff turnover rate has been gratifyingly low for many years and amounted to less than 6% in 2016 (2015: less than 7%). Komax has a very good reputation as an attractive em- ployer. Among other things, this is highlighted by the fact that vacancies can often be filled quickly, even in the tight market for management and skilled staff. As part of an active staff de- velopment 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. 34 E_00_GB_Komax_2016 _P_-gelöst.indd 34 14.03.17 08:48 KOMAX GROUP ANNUAL REPORT2016 ANN UA L REPORT SUSTAINA BIL ITY AND SO CI AL RE SP O NSIBILITY Targeted investment in tomorrow’s workforce Komax is committed to the training of tomorrow’s professional specialists as a way of safeguard- ing its global market and technology leadership. In 2016, 41 (2015: 47) apprentices were under- going training in seven professions at the Group's Swiss sites. In addition, 33 apprentices (2015: 26) were being trained in Germany (Grafenau, Porta Westfalica and Burghaun). 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 mechani- cal 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 ben- efits 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 company’s locations abroad. Moreover, the company supports the people it has trained in their professional development and further vocational training. Very positive results from employee surveys Employee satisfaction is systematically measured and evaluated in the course of annual perfor- mance 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 condi- tions 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 2016 were mainly the result of acci- dents 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. 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. E_00_GB_Komax_2016 _P_-gelöst.indd 35 35 14.03.17 08:48 KOMAX GROUP ANNUAL REPORT2016 ANNUAL REPORT SUSTAINABILITY AND SO CIAL RE S P O NSI B I L IT Y 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 Waste (refuse) in kg Waste (refuse) per head in kg Employees by area of activity2 Production Research and development Engineering Marketing and sales Administration Total Employees by region2 Switzerland Europe Africa North/South America Asia Total 2016 2 754 5.0 2015 2 859 5.4 3 759 4 262 6.8 8.0 35 584 38 465 64.5 72.5 617 166 177 518 155 503 143 161 424 116 1 633 1 347 598 532 81 218 204 530 407 78 150 182 1 633 1 347 1 Covering the production sites in Dierikon (CH) and Rotkreuz (CH). 2 As a result of the sale of Komax Medtech, the 2015 figures have been restated in accordance to IFRS 5. 36 E_00_GB_Komax_2016 _P_-gelöst.indd 36 14.03.17 08:48 KOMAX GROUP ANNUAL REPORT2016 948.3m market capitalization in CHF High free float 95% ANN UA L REPORT INFORMATION FOR INVESTORS Payout ratio 69% Attractive dividend yield 2.6% Geographical distribution of shareholdings 9% 29% Cleared shares Other countries � ��� 62% 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_2016 _P_-gelöst.indd 37 37 14.03.17 08:48 KOMAX GROUP ANNUAL REPORT2016 ANNU AL REPORT INFORMATION FOR I NVE S TORS The equity markets experienced strong fluctuations in 2016. Contributory factors here included a number of political events, such as the surprising vote by the UK electorate to leave the Euro- pean Union (EU), the election of Donald Trump as US President, and the failed constitutional referendum in Italy. Stock markets were quick to recover, however, soon shrugging off the ini- tially negative expectations of the impact that each of these events would have. In the US, in fact, Trump’s election fuelled hopes of accelerated economic growth, which had the effect of inspiring many a share price. Over the course of 2016, the daily closing price of the Komax share ranged between CHF 180.10 and CHF 251.25. The share closed the year at CHF 251.25, which translates into a year-on-year rise of 28.9%. The value of the Komax share has risen by a multiple of 3.5 over the last five years. The SPI Extra doubled its points tally over the same timeframe. e Share price development in CHF 250 200 150 100 50 2012 2013 2014 2015 2016 Komax SPI Extra TR e Listing Komax is listed on SIX Swiss Exchange. Market capitalization at the end of 2016 was CHF 948.3 million. ISIN Security number Bloomberg code Thomson Reuters code CH0010702154 1070215 KOMN SW KOMN.S 38 KOMAX GROUP ANNU AL REPORT E_00_GB_Komax_2016 _P_-gelöst.indd 38 14.03.17 08:48 2016 ANN UA L REPORT INFORMATION FOR INVESTORS e Geographical distribution of shareholdings Switzerland Other countries Cleared shares 62% 9% 29% The majority of shares not held in Switzerland are held in the United Kingdom, Luxembourg, the United States and Germany. 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 1 702 1 209 204 26 9 At the end of 2016, 3 150 shareholders were entered in the share register. The shareholder base increased by 349 persons in 2016. e Disclosure of shareholdings / significant shareholders Under Art. 110 of the 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 oder 662∕3% of the voting rights in a company (whether or not such rights may be exercised), is subject to a reporting obligation. Information on these significant shareholders can be found on page 48 of this report. The reporting obligation applies to anyone who directly, indirectly 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 discretion. Disclosure must be made to the company and stock exchanges on which the equity securities in question are listed. e Free float The free float as defined by SIX Swiss Exchange stands at 95%. e Dividend policy The Board of Directors defined an attractive dividend policy in its 2017–2021 strategy. As a result of the very pleasing 2016 result and the positive outlook, the Board of Directors will be proposing to the Annual General Meeting on 12 May 2017 a distribution that extends beyond the strategic bandwidth (payout ratio 50%–60%): CHF 6.50 per share (2015: CHF 6.00), of which CHF 1.50 will be distributed from capital contribution reserves. The payout ratio is therefore 69.1%, and the dividend yield as of 31 December 2016 stood at an attractive 2.6%. 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. E_00_GB_Komax_2016 _P_-gelöst.indd 39 39 14.03.17 08:48 KOMAX GROUP ANNUAL REPORT2016 ANNU AL REPORT INFORMATION FOR I NVE S TORS e Financial calendar Annual General Meeting Dividend payment Half-year results for 2017 Preview of full-year results for 2017 Annual media and analyst conference on the 2017 financial results Annual General Meeting e Key data Komax registered share 12 May 2017 18 May 2017 24 August 2017 23 January 2018 20 March 2018 19 April 2018 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. % 2016 377 20151 369 2014 361 2013 352 2012 344 3 774 148 3 691 651 3 605 101 3 523 780 3 443 789 3 741 364 3 652 728 3 552 840 3 458 379 3 404 850 0.10 9.49 16.32 13.52 82.64 6.502 251.25 180.10 251.25 8 191 26.5 2.62 0.10 8.00 16.19 13.67 76.70 6.00 0.10 7.64 15.99 13.34 78.82 5.00 0.10 7.33 14.92 12.29 74.92 4.50 194.90 152.40 138.00 122.90 124.60 72.35 194.90 144.50 135.30 7 881 8 613 9 999 24.4 3.1 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 1 As a result of the sale of Komax Medtech, the 2015 figures have been restated in accordance to IFRS 5. 2 Proposal of the Board of Directors of Komax Holding AG: distribution of CHF 6.50 per registered share. e Information on the Komax registered share Further information on the Komax registered share can be found on the Internet at www.komaxgroup.com. 40 KOMAX GROUP ANNUAL REPORT 2016 E_00_GB_Komax_2016 _P_-gelöst.indd 40 14.03.17 08:48 ANN UA L REPORT MAR KET SEG MENTS AND KO MAX ACADEMY S T N E M G E S T E K R A M Y M E D A C A X A M O K D N A 2016 KOM AX GROUP ANN UA L REPORT 41 E_00_GB_Komax_2016 _P_-gelöst.indd 41 14.03.17 08:48 ANNU AL REPORT MARKET SEGMENTS A ND KOM AX ACA D E M Y Komax focuses on four market segments. The core business is the automotive market segment, which accounts for some 85%–90% of revenues. Komax is contin- uously strengthening its presence in the other three segments – aerospace, telecom/ datacom and industrial – and exploiting the synergy potential with the core business. All segments benefit from the global service network of the Komax Group and from service offerings such as the Komax Academy. 42 E_00_GB_Komax_2016 _P_-gelöst.indd 42 14.03.17 08:48 KOMAX GROUP ANNUAL REPORT2016 ANN UA L REPORT MAR KET SEG MENTS AND KO MAX ACADEMY Automotive Around 60% of the cables processed in the world are installed in cars. The automotive industry leads the way when it comes to standardization and automation, which makes it by far the most important market segment for Komax. Around 90 million vehicles are manufactured every year, and the number is still growing. As well as being supported by the consistent rise in the number of vehicles, Komax’s growth strategy is also being driven by the increasing number of cables in cars, as well as the growing pressure on suppliers to automate their processes. As a result, the number of wires requiring processing globally is expected to rise by 4%–6% annually over the next five years. E_00_GB_Komax_2016 _P_-gelöst.indd 43 43 14.03.17 08:48 KOMAX GROUP ANNUAL REPORT2016 ANNU AL REPORT MARKET SEGMENTS A ND KOM AX ACA D E M Y Aerospace Issues such as safety, lightweight construction, and lower emissions have been at the forefront of developments in aerospace for many years. Komax can draw on these experiences when it comes to its core business too, as these issues are also gaining in importance in the automotive industry. The Group systematically consolidated its expertise in aerospace in 2015 by acquiring a minority stake in Laselec, a French company headquartered in Toulouse. Among the products Laselec develops are laser-assisted solutions for stripping and marking cables that are primarily intended for the aerospace industry. 44 E_00_GB_Komax_2016 _P_-gelöst.indd 44 14.03.17 08:48 KOMAX GROUP ANNUAL REPORT2016 ANN UA L REPORT MAR KET SEG MENTS AND KO MAX ACADEMY Industrial The processing of wires for industrial applications, such as elec- tric control cabinets, for example, often involves working with very small batches. To ensure that automation is nevertheless a cost-efficient option for control cabinet manufacturers, Komax has adapted its Zeta 633, a tried-and-trusted product in the automotive segment. Launched in 2016, the Zeta 630 assembles complete wire harnesses fully automatically, without any need for retooling. This example shows how Komax can exploit synergy potential between different market segments. Telecom/ Datacom Large volume data transfer and the permanent network- ing of people have become standard practice in the telecom/datacom market segment. The wiring used for these applications is being increasingly used in vehicles too, as cars become ever more interconnected, with comprehensive information systems that will facilitate autonomous driving in future. E_00_GB_Komax_2016 _P_-gelöst.indd 45 45 14.03.17 08:48 KOMAX GROUP ANNUAL REPORT2016 ANNU AL REPORT MARKET SEGMENTS A ND KOM AX ACA D E M Y Komax Academy The Komax Academy is a service offering that gives participants the benefit of a new, modular training programme which includes certification. The training modules are tailored to customers’ needs. Training programs are available for all the machines cur- rently marketed by Komax, and comprise three modules: Basic (operator), Advanced (setup and maintenance technician) and Specialist (shift manager, production manager, or service technician). The most advanced module (Expert) is designed for future instructors. Komax offers courses at five locations around the world, in Swit- zerland, the US, Brazil, China, and Singapore. Training is available in German, English, Chinese, Spanish, and Portuguese. By attending these courses, customers enhance their skills in handling Komax machinery and in wire processing generally. 46 E_00_GB_Komax_2016 _P_-gelöst.indd 46 14.03.17 08:48 KOMAX GROUP ANNUAL REPORT2016 C ORPOR AT E GOVERNANCE CONTENTS Corporate structure and shareholders 48 Capital structure 49 Board of Directors 51 Executive Committee 55 Compensations, shareholdings and loans 56 Shareholder participation rights 56 Changes of control and defence measures 58 Auditors 59 Information policy 60 E C N A N R E V O G E T A R O P R O C E_00_GB_Komax_2016 _P_-gelöst.indd 47 47 14.03.17 08:48 KOMAX GROUP ANNUAL REPORT2016 ANNU AL REPORT CORPO RATE GOVERNA NCE Corporate Governance Ensuring good corporate governance is very important to Komax. Objectives in this area include safeguarding company value and success in the interest of customers, shareholders, staff, credi- tors, 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 regu- lations 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 Reg- ulation, 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 Directors regularly looks at the issue of corporate governance and initiates the corresponding adjustments where appropriate. 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 37 to 40 (“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 Financial Market Infrastructure Act (FinMIA). According to the disclosure reports submitted, the company had the following major shareholders holding more than 3% of the votes as at 31 December 2016: Shareholder / Shareholder group Veraison SICAV, Zurich, Switzerland Max Koch, Meggen, Switzerland Vontobel Fonds Services AG, Switzerland Credit Suisse Funds AG, Switzerland Leo Steiner, Steinhausen, Switzerland Fondation Ethos, Switzerland Swisscanto Fondsleitung AG, Switzerland Number of shares 31.12.2016 218 329 2 187 069 3 185 127 4 138 992 5 126 954 6 116 486 7 112 362 8 Share in % 31.12.2016 1 5.914 5.067 5.015 3.765 3.439 3.155 3.044 1 The calculation is based on the 3 691 651 registered shares listed in the Commercial Register as at 31 December 2016. 2 Repor ted figure of exceeding the threshold of 5 percent on 23 May 2015. 3 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. 4 Repor ted figure as at 7 October 2016. 5 Repor ted figure as at 10 September 2014. 6 Plus stock options from the employee incentive scheme (0.07%): 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. 7 Repor ted figure as at 5 October 2016. 8 Repor ted figure as at 16 December 2016. 48 E_00_GB_Komax_2016 _P_-gelöst.indd 48 14.03.17 08:48 KOMAX GROUP ANNUAL REPORT2016 ANN UA L REPORT CO RP OR ATE GOVERNANCE All shareholdings reported to Komax Holding AG and the Disclosure Office of SIX Swiss Exchange during the 2016 financial year as per Art. 120 of the Financial Market Infrastucture Act have been published on SIX Swiss Exchange AG’s electronic publication platform, and can be viewed at www.six-exchange-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 377 414.80 7 585.20 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 151, 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, thereby allowing the share capital of the company at that time to rise by up to CHF 46 248 to cover the exercising of option or subscription rights issued as part of the Executive and Employee Participation Programmes of Komax Holding AG. The subscription 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 program- mes can be found on pages 69 and 129 to 132 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 exer- cised in 2013 amounted to 79 991; the figure for 2014 was 81 321, for 2015 86 550 and for 2016 82 497. Conditional capital therefore amounted to CHF 7 585.20 as at 31 December 2016. The new capital created in 2016 was reported within the deadline stipulated under Art. 635h of the Swiss Code of Obligations (CO). The Komax Holding AG has no authorized capital. E_00_GB_Komax_2016 _P_-gelöst.indd 49 49 14.03.17 08:48 KOMAX GROUP ANNUAL REPORT2016 ANNU AL REPORT CORPO RATE GOVERNANCE Capital changes Details of capital changes in 2015 and 2016 can be found on page 85 of the Financial Report. The corresponding information for 2014 can be found on page 92 of the financial section of the 2015 Annual Report. Shares, participation certificates and bonus certificates As at 31 December 2016, Komax Holding AG had fully paid-up capital of CHF 377 414.80, distrib- uted over 3 774 148 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 15% 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. No requests for an ex- ception 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 129 and 130 of the Annual Report. 50 E_00_GB_Komax_2016 _P_-gelöst.indd 50 14.03.17 08:48 KOMAX GROUP ANNUAL REPORT2016 ANN UA L REPORT CO RP OR ATE GOVERNANCE 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 towards the company in this respect. A total of 28 notifications were submitted in the 2016 financial year. Published notifications can be found on the website of SIX Swiss Exchange at www.six-exchange-regulation.com/en/home/publications/management-transactions.html. e 3 Board of Directors The Board of Directors comprised five individuals as at 31 December 2016. Other than the Chair- man, 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 AC: Audit Committee RC: Remuneration Committee Appointed Term expires Committees 2015 2005 2014 2012 2013 2017 2017 2017 2017 2017 RC RC (Chairman) AC (Chairman) AC RC 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 28 and 29 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_2016 _P_-gelöst.indd 51 51 14.03.17 08:48 KOMAX GROUP ANNUAL REPORT2016 ANNU AL 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. The Chairman and all other members of the Board of Directors will be proposed for re-election at the next Annual General Meeting on 12 May 2017. In addition, the Board of Directors is proposing the election of Andreas Häberli as a new Board member. 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. Five ordinary and seven extraordinary (telephone) meetings of the Board of Directors were held in 2016. All Board Members were present at the ordinary meetings, while at two of the extraordinary meetings one Board Member was excused in each case. On average, these meetings lasted around four hours. However, these average times per- tain to the actual duration of the meetings themselves, and do not take into account the prepa- ratory 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 Gen- eral Meeting of 12 May 2017 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. 52 E_00_GB_Komax_2016 _P_-gelöst.indd 52 14.03.17 08:48 KOMAX GROUP ANNUAL REPORT2016 ANN UA L REPORT CO RP OR ATE GOVERNANCE 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 2016, the Committee held two ordinary meetings as well as three extraordinary meetings that took the form of telephone conferences; in each case, all members were present. 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 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 61 to 74. – Audit Committee The members of the Audit Committee are David Dean (Chair) and Kurt Haerri. The Committee meets at least twice a year. Two ordinary meetings took place in 2016, with all members being present on both occasions. 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 in- vited to attend. The CFO represents the internal audit unit. Both bodies have access to the minutes of the meetings of the Board of Directors and 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_2016 _P_-gelöst.indd 53 53 14.03.17 08:48 KOMAX GROUP ANNUAL REPORT2016 ANNU AL 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-men- tioned Committees are set out in detail in the Articles of Association, the Organizational Regula- tions 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 Executive Committee. The relevant regulations are reviewed on a regular basis and amended where neces- sary. The most recent amendment was undertaken in December 2016 (entry into force from 1 Jan- uary 2017). 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 the CFO. The members of the Executive Committee 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. 54 E_00_GB_Komax_2016 _P_-gelöst.indd 54 14.03.17 08:48 KOMAX GROUP ANNUAL REPORT2016 ANN UA L REPORT CO RP OR ATE GOVERNANCE 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 sub- mitted 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 and the CFO. Matijas Meyer, CEO Andreas Wolfisberg, CFO Function exercised since 2015 1996 René Ronchetti (Head of the Medtech business unit since 2012) stepped down from the Execu- tive Committee following completion of the sale of the Medtech business unit on 15 April 2016. Biographies of the individual members of the Executive Committee are provided on page 29. Other activities and interests Aside from the mandates listed on page 29, 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 2016. E_00_GB_Komax_2016 _P_-gelöst.indd 55 55 14.03.17 08:48 KOMAX GROUP ANNUAL REPORT2016 ANNU AL 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 Direc- t ors. 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 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 61 to 74 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/articles-of-association. 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 15% 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. 56 E_00_GB_Komax_2016 _P_-gelöst.indd 56 14.03.17 08:48 KOMAX GROUP ANNUAL REPORT2016 ANN UA L REPORT CO RP OR ATE GOVERNANCE 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 rep- resenting 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 15% of the total number of shares published in the Commercial Register. Any person owning more than 15% of the published shares will be entered as a “non-voting shareholder” for the portion in excess of 15% (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 can 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_2016 _P_-gelöst.indd 57 57 14.03.17 08:48 KOMAX GROUP ANNUAL REPORT2016 ANNU AL REPORT CORPO RATE GOVERNANCE Invitation to the Annual General Meeting of 12 May 2017 All shareholders registered in the Komax Holding AG share register as at 5.00 p.m. on 5 May 2017 are entitled to vote in respect of the number of shares registered in their name at the Annual General Meeting of 12 May 2017. Shareholders registered on 15 March 2017 will receive an invi- tation 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 5 May 2017 will receive the invitation at that time, or ballot materials will be waiting for them at the front desk of the Annual General 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. 135 FinMIA). 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. 58 E_00_GB_Komax_2016 _P_-gelöst.indd 58 14.03.17 08:48 KOMAX GROUP ANNUAL REPORT2016 ANN UA L REPORT CO RP OR ATE GOVERNANCE 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 704 988 in the 2016 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 2016 financial year, PricewaterhouseCoopers invoiced additional fees amounting to total CHF 53 573. This breaks down into fees of 10 947 for tax and legal advice and CHF 42 626 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_2016 _P_-gelöst.indd 59 59 14.03.17 08:48 KOMAX GROUP ANNUAL REPORT2016 ANNU AL REPORT CORPO RATE GOVERNANCE e 9 Information policy Komax Holding AG informs all stakeholders transparently, rapidly, and simultaneously. The CEO, CFO, and the Head of Investor Relations and Corporate Communications are available as contact partners for information purposes. The consolidated financial statements are 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. The official publication for com- pany notices is the “Swiss Official Gazette of Commerce” (“Schweizerisches Handelsamtsblatt”). Information on share price trends, annual and half-year reports, the financial calendar, the min- utes of the most recent Annual General Meeting, media releases and Komax Holding AG’s Articles of Association and Organizational Regulations are available at www.komaxgroup.com. Media and analyst conferences are held at least once a year. Anyone who wants to receive all media releases of Komax Holding AG by e-mail should sign up to the mailing list on the Komax website. Contact Komax Holding AG Roger Müller Industriestrasse 6 6036 Dierikon Switzerland Phone +41 41 455 06 16 roger.mueller@komaxgroup.com 60 E_00_GB_Komax_2016 _P_-gelöst.indd 60 14.03.17 08:48 KOMAX GROUP ANNUAL REPORT2016 C OMPEN SATIO N REPORT CONTENTS Introduction by the Chairman of the Remuneration Committee 62 Tasks and competencies of the Remuneration Committee 63 Provisions of the Articles of Association on compensation 64 Principles of compensation policy 65 Structure of the compensation system 66 Compensation, shareholdings and options held by the Board of Directors in 2016 (audited) 70 Compensation, shareholdings and options held by the Executive Committee in 2016 (audited) 72 Report of the auditors 74 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 2016 is disclosed in detail. The Compensation Report has been drawn up in accordance with the provisions of the Ordi n 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_01_GB_Komax_Vergütungsbericht_2016 _P_-gelöst.indd 61 61 14.03.17 08:48 KOMAX GROUP ANNUAL REPORT2016 ANNU AL REPORT COMPENSATI ON REPO RT e 1 Introduction by the Chairman of the Remuneration Committee Dear Shareholder, As Chairman of the Remuneration Committee, it gives me great pleasure to present to you the Compensation Report for the 2016 financial year. Having completed the implementation of numerous adjustments to the compensation system last year, the Remuneration Committee focused this year more on staffing issues. These included management development and succession planning strategies. In addition, we examined the composition of the Board of Directors and established the requirements profile for a future mem ber with a view to proposing a new member of the Board of Directors at the 2017 Annual Gener al Meeting. At the same time, the Remuneration Committee also fulfilled its tasks in connection with compen sation of the members of the Board of Directors and the Executive Committee. This involved aligning the performance indicators for the variable compensation of the Executive Committee with the 2017–2021 strategic targets. We seek to achieve the greatest possible legal security for our company. For that reason, at the next Annual General Meeting on 12 May 2017, we will once again be requesting approval of the maximum possible total compensation for the Board of Directors and the Executive Committee for the 2018 financial year. I can assure you that we are conscious of our responsibility and will adopt a restrained approach with respect to the budget granted to us. In addition, at the 2017 Annual General Meeting, you will once again be given the opportunity to cast an advisory vote on this Compensation Report and thereby express your opinion on our compensation system. Detailed information on our compensation model and the compensation granted to the Board of Directors and the Executive Committee in 2016 can be found on the following pages. Yours sincerely, Daniel Hirschi Chairman of the Remuneration Committee 62 E_01_GB_Komax_Vergütungsbericht_2016 _P_-gelöst.indd 62 14.03.17 08:48 2016KOMAX 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 nonexecutive 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. Reelection is permissible. The 2016 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 members of the Executive Committee for the previous year, the determination of the individual compensation payable to members of the Board of Directors and the Executive Committee, and the approval of the Compensation Report. At the December meeting, staffing questions are discussed, along with E_01_GB_Komax_Vergütungsbericht_2016 _P_-gelöst.indd 63 63 14.03.17 08:48 2016KOMAX GROUP ANNUAL REPORT ANNU AL REPORT COMPENSATI ON REPO RT corporate governance issues. 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 held two ordinary meetings as well as three extraordinary meetings that took the form of telephone conferences; in each case, all members were present. The Chairman of the Committee may invite the CEO and other members of the Executive Committee to meetings in an advisory (nonvoting) capacity. However, they do not take part in discussions concerning their own perfor mance and compensation. The Committee Chairman reports to the Board of Directors on the activities of the Committee after every Committee meeting. 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. 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 Principles for the compensation of members of the Executive Committee – 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 compensation 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. – Members of the Executive Committee receive a fixed base salary, variable performance- related compensation, and shares and/or options under the company’s employee par- ticipation programme. – The Board of Directors determines the conditions for the performance-related compen- sation 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 nature. – 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 significantly 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 calculated 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 Commit- tee – The Annual General Meeting holds a separate vote each year on the total amount of compensation payable to the Board of Directors and to the Executive Committee. – The vote has binding effect, and applies for the coming financial year to the relevant total maximum amounts that may be paid to members of the Board of Directors and the Executive Committee. Additional sum for pay- ments to members of the Executive Committee appointed after the bind- ing vote of the AGM Pension benefits – 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 compensation payable to the Executive Committee. – 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 benefits and the employer contributions are solely drawn from the above-men- tioned occupational plans. – Retirement benefits are provided solely within the context of the company’s ordinary pension plans. The Articles of Association of Komax Holding AG can be found at www.komaxgroup.com/articlesofassociation. 64 E_01_GB_Komax_Vergütungsbericht_2016 _P_-gelöst.indd 64 14.03.17 08:48 2016KOMAX GROUP ANNUAL REPORT ANN UA L REPORT CO MP ENSATIO N REPORT 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 longterm 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. The amount of compensation awarded reflects the company’s longterm 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 shareholders. Furthermore, there is a direct correlation between the amount of compensation paid and the long-term success of the company. Market comparability The compensation rates are in line with the market when compared with similar positions in comparable companies. Fair compensation The compensation reflects the job profile, the responsibility, the capabilities and the experience of the function holder. Transparency The compensation system is straightforward and transparent. The compensation paid to the Executive Committee is determined on the basis of the following key factors: Practice of competitors Performance Available financial re- sources of the company and market situation Compensation paid by other international Swiss industrial companies of comparable complexity, size, and geographic reach. The sources used for the benchmark compari- son are publicly accessible data such as compensation reports and the Ethos study on remuneration in Swiss companies. 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 2016, no specific benchmark study was performed during the reporting year. 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. Budget-related considerations, inflation, and wage trends in the local market. E_01_GB_Komax_Vergütungsbericht_2016 _P_-gelöst.indd 65 65 14.03.17 08:48 2016KOMAX GROUP ANNUAL REPORT ANNU AL REPORT COMPENSATI ON REPO RT 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 longterm 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 lockin 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 lockin 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 lockin period is automatically rescinded. 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 2016. 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. 66 E_01_GB_Komax_Vergütungsbericht_2016 _P_-gelöst.indd 66 14.03.17 08:48 2016KOMAX GROUP ANNUAL REPORT ANN UA L REPORT CO MP ENSATIO N REPORT CEO and Executive Committee 5.2 In keeping with the principles of performance orientation and alignment with the longterm inter ests of shareholders, the CEO and the other members of the Executive Committee receive a fixed salary component, a variable, performancerelated cash bonus, a longterm 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 Function EBIT margin Three years Financial and individual performance EAT, EBIT, individual objectives One year Yearly cash payment Occupational benefits Protect against risks Market comparability – Ongoing 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 socalled 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_01_GB_Komax_Vergütungsbericht_2016 _P_-gelöst.indd 67 67 14.03.17 08:48 2016KOMAX GROUP ANNUAL REPORT ANNU AL REPORT COMPENSATI ON REPO RT 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 50% for the CEO and for the other members of the Executive Committee. CEO and CFO The cash bonus for the CEO and CFO is based entirely on the financial performance of the Komax Group. The reference value for the 2016 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 Com mittee. 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 objectives are not attained, the cash bonus may fall to zero. If all objectives are significantly ex ceeded, the cash bonus may amount to a maximum of 200% of the target bonus or a maximum of 100% of annual fixed compensation. Business unit heads 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 2016, as in previous years, the following key financial figures were relevant for the business unit heads: – margin on Group profit after taxes (EAT), weighted at 20% – absolute EBIT of the business unit, weighted at 50% Target attainment The attainment of financial targets is evaluated after the end of the financial year; it may fall any where within a bandwidth 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 nonquantitative 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. 68 E_01_GB_Komax_Vergütungsbericht_2016 _P_-gelöst.indd 68 14.03.17 08:48 2016KOMAX GROUP ANNUAL REPORT ANN UA L REPORT CO MP ENSATIO N REPORT 5.2.3 Long-term incentive system To ensure that the interests of the Executive Committee are aligned with longterm shareholder interests, the Komax Group has a longterm incentive system linked to the company’s financial performance. This plan consists of Performance Share Units (PSUs) subject to a threeyear vest ing period conditional upon the fulfillment of a performance target (EBIT target margin) and con tinuous 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. Calculation of PSU allocation 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 2016, the value of the PSUs granted to the CEO amounted to 37% of his fixed base salary, while the value of PSUs granted to other members of the Executive Committee amounted to between 11% and 23%. Duration of plan Plan period (LTI 2016 – 2018) 2016 plan year 2017 plan year 2018 plan year 1 January 2016 allocation of PSUs Average EBIT margin 31 December 2018 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_01_GB_Komax_Vergütungsbericht_2016 _P_-gelöst.indd 69 69 14.03.17 08:48 2016KOMAX GROUP ANNUAL REPORT ANNU AL REPORT COMPENSATI ON REPO RT 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 f inite period and stipulate a maximum notice period of 12 months. They do not contain any sever ance agreement or change of control provisions. 5.2.6 Changes to the compensation system from 2017 The structure of the compensation system will remain unchanged in 2017. However, to ensure that the Executive Committee can be assessed against the 2017–2021 strategic targets, the perfor mance indicators for the variable compensation component (cash bonus and longterm incentive system) will be adjusted accordingly. e 6 Compensation, shareholdings and options held by the Board of Directors in 2016 Section 6 of the Compensation Report was audited by the company’s external auditor. Compensation 6.1 In 2016, members of the Board of Directors received total compensation of CHF 904 330 (2015: CHF 949 041), of which CHF 673 750 was paid out in cash (2015: CHF 710 000), CHF 175 417 in the form of restricted shares (2015: CHF 190 000) and CHF 55 163 as social benefit contributions (2015: CHF 49 041). Contributions to pensions plans amounted to CHF 0 (2015: CHF 0). The de cline in overall compensation is primarily attributable to changes in the membership of the Board of Directors. in CHF Basic annual fee Allocation restricted shares1 Social benefits2 Total compensation 2016 Total compensation 2015 Beat Kälin3 Daniel Hirschi Kurt Haerri Roland Siegwart David Dean Leo Steiner4 Chairman Member Member Member Member Member Hans Caspar von der Crone5 Member 228 750 108 750 96 250 100 000 101 250 38 750 n.s. 60 000 30 000 25 000 25 000 25 000 10 417 n.s. 11 537 10 801 9 439 9 731 9 828 3 827 n.s. 300 287 149 551 130 689 134 731 136 078 52 994 n.s. 175 421 134 754 126 925 126 925 129 619 200 301 55 096 Total Board of Directors 673 750 175 417 55 163 904 330 949 041 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 2016 was CHF 218.11. 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, then member until 12 May 2016. 5 Member of the Board until 8 May 2015. 70 E_01_GB_Komax_Vergütungsbericht_2016 _P_-gelöst.indd 70 14.03.17 08:48 2016KOMAX 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 2016 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 2016. 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 2016 6.2 As at the end of 2015 and 2016, members of the Board of Directors had the following holdings of shares and/or options in the company: Assets in units 31.12.2016 31.12.2015 Beat Kälin Daniel Hirschi Kurt Haerri Roland Siegwart David Dean Leo Steiner1 Chairman Member Member Member Member Member Shares Options Shares Options 9 135 3 713 703 844 1 068 n.s. 13 000 2 000 2 000 1 000 666 n.s. 8 800 3 275 88 63 803 123 301 19 000 3 000 2 500 1 666 666 7 500 Total Board of Directors 15 463 18 666 136 330 34 332 1 Chairman of the Board of Directors until 8 May 2015, then member until 12 May 2016. E_01_GB_Komax_Vergütungsbericht_2016 _P_-gelöst.indd 71 71 14.03.17 08:48 2016KOMAX GROUP ANNUAL REPORT ANNU AL REPORT COMPENSATI ON REPO RT e 7 Compensation, shareholdings and options held by the Executive Committee in 2016 Section 7 of the Compensation Report was audited by the company’s external auditor. Compensation 7.1 In 2016, members of the Executive Committee received total compensation of CHF 1 546 147 (2015: CHF 1 954 628). Of this amount, CHF 780 626 was paid in the form of fixed compensation (2015: 1 084 207), CHF 383 959 in the form of cash bonuses (2015: CHF 370 148), CHF 226 806 were granted in the form of Performance Share Units (2015: CHF 342 500) and CHF 154 756 com prised social security and pension fund contributions (2015: CHF 157 773). The decline in overall compensation in 2016 is primarily attributable to the departure of a member of the Executive Committee as a consequence of the sale of the Medtech business unit in April 2016. in CHF Fixed base salary1 Cash bonus2, 3 Allocation Performance Share Units3, 4 Social benefits5 Total compensation 2016 Matijas Meyer6 CEO 408 410 213 750 150 000 74 243 846 403 Total compensation 2015 684 848 Total other members of the Executive Committee7 Total Executive Committee 372 216 170 209 76 806 80 513 699 744 1 269 780 780 626 383 959 226 806 154 756 1 546 147 1 954 628 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 2016, to be paid in April 2017. 3 With the sale of the Medtech business unit and the associated depar ture of the Head of the business unit from the Executive Committee, his variable compensation component was calculated on a pro rata basis and then directly paid out (cash bonus) or transferred (shares from PSU Plan). 4 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 2016 was CHF 175.19. 5 Includes mandator y employer contributions to social insurance of CHF 38 854 as well as contributions to occupational benefits (BVG). This amount entitles members of the Executive Committee to draw the maximum stateinsured pension benefits in the future. 6 CEO since 11 May 2015 and head of the Wire business unit. Highest compensated member of Executive Committee in 2016. 7 In connection with the significant extra workload relating to the sale of the Medtech business unit (from July 2015 to April 2016) the Head of the Medtech business unit was paid special compensation amounting to CHF 63 000 in total. This is not included in the compensation over view. Notes on the compensation overview: In 2016, the cash bonus of the CEO amounted to 52% of fixed base salary (2015: 41%). 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 43% to 46% of fixed base sal ary (2015: 19% to 46%). 72 E_01_GB_Komax_Vergütungsbericht_2016 _P_-gelöst.indd 72 14.03.17 08:48 2016KOMAX 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 37% of annual fixed basic salary (2015: 34%), while the corresponding figures for PSUs allocated to the other mem bers of the Executive Committee were 11% to 23% (2015: 23% to 44%). The overall variable compensation of the CEO in 2016 therefore amounted to 89% of the annual fixed basic salary (2015: 75%) and that of the other members of the Executive Committee to between 54% and 69% (2015: 54% to 88%). 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 129 to 132 of the Financial Report. No compensation was paid to former members of the Executive Committee for the 2015 and 2016 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 2016. 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 2016 7.2 As at the end of 2015 and 2016, members of the Executive Committee had the following holdings of shares and/or options in the company: Assets in units 31.12.2016 31.12.2015 Matijas Meyer Andreas Wolfisberg René Ronchetti1 CEO/Head Business Unit Wire CFO Head Business Unit Medtech Shares Options 2 000 600 n.s. 3 000 3 000 n.s. Shares 1 000 500 100 Options 7 000 6 000 6 000 Total Executive Committee 2 600 6 000 1 600 19 000 1 Head of the Medtech business unit until 15 April 2016. E_01_GB_Komax_Vergütungsbericht_2016 _P_-gelöst.indd 73 73 14.03.17 08:48 2016KOMAX GROUP ANNUAL REPORT ANNU AL REPORT COMPENSATI ON REPO RT 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) of Komax Holding AG for the year ended 31 December 2016. 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 2016 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 2017 74 E_01_GB_Komax_Vergütungsbericht_2016 _P_-gelöst.indd 74 14.03.17 08:48 2016KOMAX GROUP ANNUAL REPORT FIN ANC IAL REPORT CONTENTS CONSOLIDATED FINANCIAL STATEM ENTS FINANCIAL STATEM EN TS OF KOM AX HOLDING AG Balance sheet 146 Income statement 147 Notes 148 Corporate structure 154 Proposal for the appropriation of profit 156 Report of the auditors 157 Comments 76 Consolidated balance sheet 81 Consolidated income statement 82 Consolidated statement of comprehensive income 83 Consolidated cash flow statement 84 Consolidated statement of shareholders’ equity 85 Notes 86 Report of the auditors 142 E_00_FB_Komax_2016 _P_-gelöst.indd 75 75 14.03.17 08:47 KOMAX GROUP ANNUAL REPORT2016FINANCIAL REPORT Comments on the consolidated financial statements The business of Komax Medtech was sold to GIMA, a subsidiary of Italy’s IMA Group, in April 2016. As the cumulative criteria of IFRS 5 (“Non-current Assets Held for Sale and Discontinued Operations”) are met, the standard was applied accordingly and the result of the Medtech seg- ment was reported under EBIT as “Result from discontinued operations”. The previous year’s figures have likewise been revised. The following notes to the consolidated financial statements do not therefore contain any figures from the discontinued operations, except where explicitly mentioned. Since April 2016, the activity of the Komax Group has been wholly restricted to the Wire segment. e Income statement Order intake Order intake increased by 6.3% to CHF 370.2 million (2015: CHF 348.4 million). Revenues (net sales and other operating income) Consolidated revenues rose by as much as 18.4% to CHF 373.0 million (2015: CHF 315.1 million). Internal growth amounted to 8.8%, while the book-to-bill ratio stood at 0.99. The following is a breakdown of net sales by currency in 2016 (percentages in brackets are for the previous year): – CHF 14% (16%) – USD 18% (18%) – EUR 45% (49%) – Other foreign currencies 23% (17%) The rise in net sales in other foreign currencies is attributable to growth in China on the one hand and the acquisition of Thonauer Group on the other. The Komax Group generated 12% of its sales in CNY. In addition, the newly acquired companies in Hungary and Romania, two important markets for the Komax Group, both bill in local currency. The sharp decline in net sales in CHF is attributable to the increasing amount of billing in EUR, as well as the acquisitions of Thonauer Group, Kabatec GmbH & Co. KG and Ondal Tape Processing GmbH. At +0.8%, the foreign cur- rency impact at net sales level was in positive territory. This is in contrast to the previous year, when a negative figure (–4.0%) was reported, above all due to the SNB’s decision in January 2015 to no longer enforce a floor for the currency pair EUR/CHF. Net sales in Europe amounted to CHF 190.1 million in 2016. This equates to 51.3% of total net sales. North and South America accounted for the second-largest proportion of net sales in the 2016 financial year, namely 21.0%. Sales in the US and Mexico developed particularly impressive- ly once more during 2016. Sales in South America remain sluggish. This is attributable to ongoing economic difficulties and pressure on the Brazilian currency. Nevertheless, the Real has stabilized in recent months. Despite all these challenges, Brazil remains by far the most important South American market for Komax. In Africa, net sales came in at CHF 29.1 million, slightly below the previous year’s level (CHF 31.0 million). In Asia, consolidated net sales increased from CHF 61.8 million to CHF 73.5 million. This equates to an increase of no less than 18.9%. The increase in Asia was largely due to internal growth. Gross profit The level of gross profit differs by product group, and the corresponding sales deviations from one business year to the next can sometimes be significant. Furthermore, the value creation of products per customer order is not directly comparable. Gross profit amounted to CHF 238.5 million, which equates to a margin of 63.9%. In 2015, we generated a gross profit of CHF 205.9 million, which resulted in a margin of 65.4%. The decline in the margin by 1.5 percentage points is the result of the product mix, substantial individual orders involving a discount, and an in- crease in standard products involving a higher material proportion. On the other hand, we were 76 E_00_FB_Komax_2016 _P_-gelöst.indd 76 14.03.17 08:47 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2016 able to further improve productivity, while the currency impact at gross profit level worked out slightly on the positive side. Operating expenses Personnel expenses amounted to 33.8% of revenues in the year under review, compared to 33.7% in 2015. This figure is therefore virtually unchanged compared to the previous year, de- spite the fact that we also incurred one-off costs in Turkey as well as for the establishment of the new location in Mexico. On the other hand, we were able to further increase efficiency, particu- larly in the manufacture of our key products. The Komax Group generated revenues per employee of TCHF 243 in 2016, compared to TCHF 248 in 2015. The slight decrease in revenues per em- ployee is explained by the change in the product mix, the incorporation of the administrative employees of a major subsidiary in Germany, and the various acquisitions (integration of a num- ber of distribution companies). As at 31 December 2016, the Komax Group employed a total of 1 633 people compared to 1 347 at the end of 2015. The increase is above all attributable to the acquisitions and the expansion of the Group’s locations in North America, Germany and Switzer- land. Research and development expenditure R&D expenditure amounted to CHF 29.0 million compared to CHF 25.3 million in 2015. It there- fore accounted for 7.8% of revenues in 2016, compared to 8.0% the previous year. The “Other operating expenses” item in the income statement includes CHF 6.1 million for third-party devel- opment services (2015: CHF 4.3 million). The lion’s share of internal development services amounting to CHF 22.9 million comprises the capitalized work of the Group’s own development staff. The increase in research and development expenditure compared to the previous year is first and foremost attributable to higher expenses for the development of new products in the machinery business and along the value chain in wire processing. As at 31 December 2016, the Komax Group employed a total of 166 staff in R&D – the vast majority of them in Dierikon (Swit- zerland). In addition, we also have development units in Germany, China and Japan. The 177 employees listed under engineering work directly on customer projects. Their staff costs are therefore not included in research and development expenditure. The increase in the engineering area is explained by the good business performance of the Komax companies in Germany and Switzerland for customer-specific solutions in the areas of semi-automatic machinery, the Zeta machine group, and taping. A substantial proportion of the production activity of these sub-areas involves individual machines with a relatively high application component, which require signifi- cantly greater engineering input than the other Wire areas. Operating profit (EBIT) The Komax Group generated an operating profit before extraordinary restructuring charges of CHF 53.0 million in the year under review. This corresponds to a return of 14.2% and is therefore below the previous year’s result of 15.8%. The decline in the margin by 1.6 percentage points is attributable to the start-up costs incurred in Mexico in the second half of 2016, the poor perfor- mance of the module testing business in the first half of 2016, higher costs from the option pro- gramme, acquisition costs, extraordinary expenses in Turkey, and slightly lower overall margins. These lower margins have fed through at EBIT level to the tune of some 0.6 percentage points. The result of CHF 53.0 million does not include the restructuring costs incurred in the module testing business, which Komax has now exited. After factoring in the special costs, the EBIT margin amounted to 13.6%. E_00_FB_Komax_2016 _P_-gelöst.indd 77 77 14.03.17 08:47 KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2016FINANCIAL REPORT The EBIT margin of the Wire area (excluding Corporate) amounted to 16.2% in 2016 compared to 19.0% in 2015. The extraordinary expenses, which include the start-up costs for Mexico, one of the world’s largest markets for the wire processing business, accounted for some 50% of the margin decline. The foreign currency impact at EBIT level was small at +0.2%. This is attributable to natural hedging as well as the relatively stable exchange rates of key currencies EUR and USD. Financial result The financial result amounted to CHF –2.2 million compared to CHF –6.1 million the previous year. The significant improvement in the financial result is attributable to the dramatically lower valua- tion adjustments to foreign currency items than the previous year. Result from discontinued operations The sale price of the business unit Medtech in April 2016 included a contingent consideration for Komax for the 2016 financial year. Following the first half of 2016, we were in a position to expect a further purchase price payment of CHF 6.0 million on the basis of an estimate on the part of the buyer (GIMA). Due to a slowdown in the development of the business of the divested Medtech business unit and the assignment of significant guarantees, the final payment actually amounted to CHF 4.1 million, rather than the maximum payment of CHF 6.0 million anticipated after the first half of 2016. Group result Profit before taxes (EBT) and before the result from discontinued operations amounted to CHF 48.4 million (13.0% of revenues) in the 2016 financial year, compared to CHF 43.8 million the previous year (13.9% of revenues). After factoring in the result from discontinued operations, the tax rate for the year under review amounted to 20.0% (2015: 20.8%). Profit after tax amount- ed to CHF 35.5 million, which was 21.5% higher than the prior-year figure. The basic earnings per share amounted to CHF 9.49 (2015: CHF 8.00). e Balance sheet In contrast to the income statement (application of IFRS 5), the balance sheet figures for the prior year include the business unit Medtech, which means the year-on-year changes have limit- ed meaningfulness. In the following commentary, we therefore focus on the items as at 31 De- cember 2016. Assets Current assets amounted to CHF 231.9 million as at 31 December 2016. Trade receivables are for the most part receivables from customers, which have declined despite significantly higher reve- nues than the previous year. In addition, less than 5% represent accruals/deferrals in respect of assets relating to the POC method. Other receivables and accrued income/prepaid expenses mainly comprise tax credits due from state authorities (tax authorities) and bills receivable, par- ticularly in China. Inventories including finished and semi-finished goods amounted to CHF 70.4 million as at 31 December 2016. The volume of finished and semi-finished goods has fallen sharply compared to the balance sheet date of 31 December 2015. However, inventory provisions have decreased as a proportion of overall inventories, this being the result of rigorous inventory control manage- ment. Furthermore, it is important for the Komax Group to be able to deliver standard products rapidly, particularly in regions like Asia and North America. This is one reason for the rise in fin- ished products. 78 E_00_FB_Komax_2016 _P_-gelöst.indd 78 14.03.17 08:47 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2016 The rise in non-current assets is primarily the result of higher deferred tax assets, tangible assets, and intangible assets. In the case of tangible assets, the key drivers were the new building in Mexico, the building extensions in Grafenau, Germany, and the location in Turkey. In the case of intangible assets, the key drivers were the technology value for Kabatec, amounting to CHF 3.0 million, and the goodwill payments for the acquisitions, amounting to CHF 28.8. The sale of the Medtech business resulted in a Goodwill decline of CHF 12.1 million, of which some 15% re- quired a value adjustment via the “Result from discontinued operations” position. Liabilities Current liabilities amounted to CHF 70.3 million as at 31 December 2016. Considerably more than 50% of trade payables comprise liabilities in foreign currencies. Current liabilities also in- clude overfinanced projects of just CHF 0.7 million net valued according to the POC method (previous year, including Medtech construction contracts: CHF 13.3 million). The remaining cur- rent liabilities have changed only slightly compared to 31 December 2015. Furthermore, current liabilities also include provisions amounting to CHF 2.2 million (31 Decem- ber 2015: CHF 3.7 million). The decline in provisions is the result of accruals/deferrals in connec- tion with warranty services in the Wire business unit that were concluded in 2016. At CHF 0.7 million, the figure for the reversal of provisions no longer required was lower than in the previous year (CHF 1.5 million). The decrease in warranty commitments is also a result of the high delivery quality of our standard products. Non-current liabilities recorded a year-on-year increase of CHF 12.3 million. The increase in non-current financial loans is the result of acquisitions. These were more than CHF 12 million higher than the payment received in 2016 for the sale of the business unit Medtech. Liabilities from defined-benefit pension plans as per IAS 19 decreased by CHF 7.2 million. This decline is attributable on the one hand to the sale of the company Komax Systems LCF SA, Switzerland, and the resulting lower pension fund liabilities, and on the other to an absence of interest on the extra-mandatory portion, which is a direct consequence of low interest rate assumptions as per IAS 19. In addition, the Komax Group concluded a new syndicated loan in December 2016. This has a credit limit of CHF 100 million with the option to increase this by a further CHF 40 million. In ad- dition, the Group has access to further local credit lines of up to maximal CHF 25 million. All covenants and other pertinent provisions were once again fully complied with at all times in 2016, both with respect to the previous and the new syndicated loan facility. The shareholders’ equity attributable to shareholders of the parent company amounted to CHF 311.9 million as at 31 December 2016 (72.6% of the balance sheet total), compared with CHF 283.1 million as at 31 December 2015 (71.0% of the balance sheet total). Compared to the previous year, the impact of conversion differences was this time positive at CHF 1.1 million (2015: CHF –7.5 million). At the Annual General Meeting of Shareholders in the KKL (Culture and Convention Center) Lu- cerne on 12 May 2017, the Board of Directors of Komax Holding AG will propose a dividend payment of CHF 6.50 per share, consisting of a distribution from capital contribution reserves of CHF 1.50 per registered share, which will be exempt from withholding tax, and a dividend of CHF 5.00 gross. Last year the distribution amounted to CHF 6.00 per share. E_00_FB_Komax_2016 _P_-gelöst.indd 79 79 14.03.17 08:47 KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2016FINANCIAL REPORT e Cash flow statement The application of IFRS 5 to the cash flow statement does not give rise to any adjustments. Cash flow from operating activities Cash flow from operating activities prior to changes in net current assets and provisions amount- ed to CHF 46.2 million (2015: CHF 46.5 million), or CHF 36.8 million after changes in net current assets and provisions (2015: CHF 49.6 million). The lower cash flow from operating activities is primarily the result of changes to “Other net current assets”. In 2015, the Komax Group received significant cash inflows from prepayments in respect of POC transactions. Following the sale of the Medtech business unit, the POC business volume is now dramatically lower, and we there- fore receive far fewer prepayments. Cash flow from investing activities The cash outflow from investing activities amounted to CHF 34.1 million net. Net investment ex- cluding the acquisition and sale of companies amounted to CHF 21.4 million and was therefore higher than the average investment volume of CHF 15 to CHF 18 million. This is attributable to the investments in buildings in Germany, Turkey and Mexico. Investments in participations amounted to a total of CHF 36.3 million. The largest net cash outflow was the acquisition of Ka- batec GmbH & Co. KG for CHF 18.0 million, with a takeover date of 1 July 2016. In addition, the Komax Group acquired Ondal Tape Processing GmbH with effect from 1 January 2016, which entailed a net cash outflow of CHF 5.0 million. By making these takeovers, the Komax Group has acquired the two market leaders in taping. Thonauer Group, comprising five companies in Cen- tral and Eastern Europe, was acquired for the sum of CHF 10.7 million. All the acquired compa- nies delivered good to very good results in 2016. In addition, the Komax Group acquired the tangible assets of SLE Electronics USA, Inc., in El Paso, along with its workforce. This will enable the Komax Group to further consolidate its market position in Mexico in particular. The Komax Group received a cash inflow of CHF 23.2 million during 2016 as a result of the sale of the Medtech business unit. In addition, the Komax Group will receive a contingent considera- tion of CHF 4.1 million in 2017, as well as CHF 2.0 million at a later stage for the remaining hold- ing in Komax Systems Malaysia Sdn. Bhd., Malaysia. The repayment of granted loans comprised amortizations in respect of the loans to associated companies. Free cash flow, i.e. cash flow from operating activities after deduction of net investments, amounted to CHF 2.7 million. Excluding the acquisitions and the sale of the Medtech business unit, free cash flow would have amounted to CHF 15.4 million. Cash flow from financing activities Bank loans amounting to CHF 11.9 million net were taken out in 2016. This was primarily driven by the Group’s acquisitions over the course of the 2016 financial year. In addition, the exercising of employees’ options generated positive cash flow of CHF 5.5 million. The distribution from capital contribution reserves and the dividend payments amounted to a total of CHF 22.5 million in 2016. The effect of currency translations on cash and cash equivalents was negligible in 2016 compared to the previous year. As at 31 December 2016, cash and cash equivalents stood at CHF 48.5 million. 80 E_00_FB_Komax_2016 _P_-gelöst.indd 80 14.03.17 08:47 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2016 e Consolidated balance sheet in TCHF Assets Cash and cash equivalents Trade receivables Other receivables and accrued income / prepaid expenses Inventories 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 Financial liabilities Trade payables Other payables and accrued expenses / deferred income Current income tax liabilities Provisions Total current liabilities Financial loans Deferred tax liabilities Defined benefit plan liabilities Other non-current 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 Total liabilities and shareholders’ equity Notes 31.12.2016 31.12.2015 5 6 7 8 10 11 13 17 14 15 18 19 20 21 10 12 22 23 48 531 85 138 27 852 70 358 231 879 27 914 8 611 2 231 5 311 83 741 69 918 197 726 50 883 104 828 22 546 59 770 238 027 21 809 7 170 2 059 5 349 75 099 49 454 160 940 429 605 398 967 78 18 776 43 615 5 628 2 222 70 319 31 060 3 487 8 907 3 922 47 376 0 17 592 53 063 6 420 3 666 80 741 16 518 2 476 16 098 0 35 092 117 695 115 833 377 −2 105 25 382 288 256 311 910 369 −2 191 25 548 259 408 283 134 0 0 311 910 283 134 429 605 398 967 The notes on pages 86 to 141 are an integral component of these consolidated financial statements. E_00_FB_Komax_2016 _P_-gelöst.indd 81 81 14.03.17 08:47 KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2016FINANCIAL REPORT 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, taxes and extraordinary charges Extraordinary restructuring charges Operating profit before interest and taxes Financial income Financial expenses Group profit before taxes Taxes Group profit after taxes 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) 1 Prior-year figures restated in accordance with Note 9. Notes 2016 20151 24 25 26 14/15/17 28 29 30 30 31 9 32 32 32 32 370 474 313 676 2 498 1 417 134 486 125 942 5 174 9 548 10 742 10 477 23 638 320 007 52 965 −2 384 50 581 6 566 −8 763 48 384 8 854 39 530 −4 041 35 489 35 489 0 35 489 9.49 9.37 10.57 10.44 109 152 106 210 3 524 8 871 8 929 9 185 19 284 265 155 49 938 0 49 938 8 798 −14 938 43 798 7 690 36 108 −6 893 29 215 29 215 0 29 215 8.00 7.83 9.89 9.68 The notes on pages 86 to 141 are an integral component of these consolidated financial statements. 82 E_00_FB_Komax_2016 _P_-gelöst.indd 82 14.03.17 08:47 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2016 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 2016 35 489 6 046 −822 5 224 1 130 4 1 134 6 358 2015 29 215 −8 423 1 157 −7 266 −7 496 −51 −7 547 −14 813 Comprehensive income after taxes 41 847 14 402 Of which attributable to: – Equity holders of the parent company – Non-controlling interest 41 847 0 41 847 14 402 0 14 402 The notes on pages 86 to 141 are an integral component of these consolidated financial statements. E_00_FB_Komax_2016 _P_-gelöst.indd 83 83 14.03.17 08:47 KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2016FINANCIAL REPORT 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 Decrease in granted loans Purchase (–) / sale (+) of securities Total cash flow from investing activities Cash flow from financing activities Increase in financial liabilities Decrease in financial liabilities Purchase of treasury shares Sale of treasury shares Capital increase (share-based payments) Purchase of non-controlling interests 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 2016 2015 35 489 29 215 31 14/17 15 12 30 14 15 13 34 22 22 26 35 5 10 285 7 105 3 574 −180 1 714 520 2 942 1 639 1 507 −6 631 −11 766 46 198 −1 149 2 786 −7 468 2 420 −6 020 36 767 −18 171 1 033 −4 656 6 −34 −36 236 23 589 0 357 19 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 0 −34 093 −25 093 14 387 −2 483 −2 105 4 349 5 465 −2 233 −5 623 −16 870 −5 113 87 −2 352 50 883 48 531 0 −7 205 0 0 6 315 −4 184 −9 157 −9 157 −23 388 −2 947 −1 816 52 699 50 883 The notes on pages 86 to 141 are an integral component of these consolidated financial statements. 84 E_00_FB_Komax_2016 _P_-gelöst.indd 84 14.03.17 08:47 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2016 e Consolidated statement of shareholders’ equity 2016 in TCHF Balance on 1 January 2016 Other comprehensive income Group profit after taxes Attributable to equity holders of the parent company Other reserves Notes Share capital Treasury shares Premium Currency differences Retained earnings Non- control ling interest Total shareholders’ equity 369 −2 191 25 548 −29 760 289 168 1 134 0 0 1 134 5 457 −5 623 −45 131 5 224 35 489 40 713 −16 870 2 288 1 583 0 0 283 134 6 358 35 489 41 847 5 465 −5 623 −16 870 2 243 1 714 Comprehensive income after taxes Capital increase from exercise of options 26 0 8 Distribution out of reserves from capital contributions Dividend paid Transactions in treasury shares Share-based payments 26 Balance on 31 December 2016 377 −2 105 25 382 −28 626 316 882 0 311 910 2015 in TCHF Balance on 1 January 2015 Other comprehensive income Group profit after taxes Attributable to equity holders of the parent company Other reserves Notes 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 −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 Comprehensive income after taxes Capital increase from exercise of options 26 0 8 Distribution out of reserves from capital contributions Dividend paid Share-based payments Purchase of non-controlling interests with no changes of control 26 35 Balance on 31 December 2015 369 −2 191 25 548 −29 760 289 168 0 283 134 The notes on pages 86 to 141 are an integral component of these consolidated financial statements. E_00_FB_Komax_2016 _P_-gelöst.indd 85 85 14.03.17 08:47 KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2016FINANCIAL REPORT 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 2016 employed 1 633 people worldwide (2015: 1 347 employees). The parent company, Komax Holding AG, is domiciled in Dierikon, Canton Lucerne (Switzerland). The Komax Group’s business activi- ties are focused on the development, production and sale of high-quality capital goods for preci- sion 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, aerospace, household appliance, electronics and telecommunication sectors. The Komax Group sells to the world market. Komax has a network of 26 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 9 March 2017 and released for publication. Their approval by the Annual General Meeting, scheduled for 12 May 2017, 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 2016. 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 2016, none of which had a material impact on the consolidated financial statements. 86 E_00_FB_Komax_2016 _P_-gelöst.indd 86 14.03.17 08:47 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2016 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 Komax Group will change its accounting standard to Swiss Accounting and Reporting Rec- ommendations (Swiss GAAP FER) with effect from 1 January 2017. The Group is currently ana- lyzing the repercussions of this changeover. 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. E_00_FB_Komax_2016 _P_-gelöst.indd 87 87 14.03.17 08:47 KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2016FINANCIAL REPORT 2.2.2 Changes in the scope of consolidation In the 2016 reporting year, Komax acquired 100% of Ondal Tape Processing GmbH in Hünfeld, Germany, 100% of Thonauer Gesellschaft m.b.H. in Vienna, Austria, and all subsidiary companies as well as 100% of Kabatec GmbH & Co. KG in Burghaun, Germany. In addition, Komax acquired SLE Electronics USA, Inc., in El Paso, USA, by means of an asset deal. Further details on the acquisitions made can be found in Note 34. In addition to the above-mentioned acquisitions, Komax also sold its Medtech business unit – comprising the three companies Komax Systems LCF SA, Switzerland, Komax Systems Malaysia Sdn. Bhd., Malaysia, and Komax Systems Rock- ford Inc., USA – in 2016. Further details on the sale of Komax Medtech are set out in Note 9. In the prior-year period, Komax founded new subsidiaries in Romania and Mexico. Other than these new enterprises, there were no changes in the scope of consolidation in 2015. 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 acquisition 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”. Komax held around 20% in Laselec SA, Toulouse (France), as well as a 25% interest in Xcell Automation Inc., York (USA). Further details on associated companies are provided in Note 13 on page 119. Komax held no material investments below 20% and no interests in joint ventures at either 31 December 2016 or 31 December 2015. 88 E_00_FB_Komax_2016 _P_-gelöst.indd 88 14.03.17 08:47 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2016 Segment reporting 2.3 Since the sale of the Medtech business unit, the Komax Group has only been active in the Wire area. Wire-processing products are based on the same technologies and the same marketing strategy. The sale of all our products and services is managed by local subsidiary companies or Key Account Managers worldwide. The internal organizational structure is geared around the different processes for each product. The Executive Committee of the Komax Group is designated as the chief operating decision maker. It receives financial information on the individual subsidiary companies and key products on a regular basis, enabling it to assess their profitability and decide the operational allocation of resources to the various areas. The Executive Committee is made up of the CEO and CFO. The financial data of the subsidiaries is established according to the same accounting principles set out here. Transfer prices between the individual companies are set on an “at arm’s length” basis. The Executive Committee evaluates the profitability of the companies on the basis of earn- ings before interest and tax (EBIT), while also taking into account the individual revenue streams along the value chain. In keeping with the internal reports provided to the chief operating decision maker, the Group has reported results for the Wire and the Corporate areas since the sale of the Medtech business unit during the 2016 financial year. Komax parted company with its former Solar segment in 2014. It then successfully completed the sale of Komax Medtech on 15 April 2016. Both segments are reported as “Non-current Assets Held for Sale and Discontinued Operations” under IFRS 5, and therefore no longer form part of the company’s segment reporting. With effect from 2016, Komax thus has only one business unit. 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, aerospace, manufactur- ing and electronics industries. All Group companies are active in the Wire segment, and are centrally managed. Due to the commercial similarity and interconnections of these Group com- panies, Komax presents its business in amalgamated form on the basis of internal reporting. 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. E_00_FB_Komax_2016 _P_-gelöst.indd 89 89 14.03.17 08:47 KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2016FINANCIAL REPORT 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 the other compre- hensive income 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 exchange rate differences are reported in income as part of the gain or loss from the sale. Goodwill and fair value adjustments occurring during the acquisition of a foreign company are treated as assets and liabilities of the unit and translated at the exchange rate on the balance sheet date. The most important year-end and average exchange rates were as follows: Year-end rate 31.12.2016 Average rate 2016 Year-end rate 31.12.2015 Average rate 2015 1.030 1.090 0.317 0.148 0.240 0.990 1.100 0.283 0.151 0.246 1.000 1.090 0.253 0.154 0.241 0.970 1.090 0.308 0.155 0.246 Currency USD EUR BRL CNY RON 90 E_00_FB_Komax_2016 _P_-gelöst.indd 90 14.03.17 08:47 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2016 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 equipment Information technology Factory buildings Office buildings Land Years 7–10 7 5 10 10–14 5–8 3–10 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 equipment 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. E_00_FB_Komax_2016 _P_-gelöst.indd 91 91 14.03.17 08:47 KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2016FINANCIAL REPORT 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. Acquisition costs are written down in a linear way over a period of ten years. 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. Acquisition 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. 92 E_00_FB_Komax_2016 _P_-gelöst.indd 92 14.03.17 08:47 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2016 The financial assets recognized in the consolidated balance sheet are assigned to the following categories: in TCHF Contingent consideration 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 Contingent consideration 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 31.12.2016 31.12.2015 6 100 0 6 100 48 531 85 138 21 323 6 611 0 21 21 50 883 104 828 19 771 7 170 161 603 182 652 31.12.2016 31.12.2015 6 832 51 6 883 31 138 18 776 9 550 59 464 4 527 0 4 527 16 518 17 592 7 878 41 988 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 cate gory 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. E_00_FB_Komax_2016 _P_-gelöst.indd 93 93 14.03.17 08:47 KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2016FINANCIAL REPORT 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 cat- egory 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. 94 E_00_FB_Komax_2016 _P_-gelöst.indd 94 14.03.17 08:47 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2016 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 op- tion 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. E_00_FB_Komax_2016 _P_-gelöst.indd 95 95 14.03.17 08:47 KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2016FINANCIAL REPORT 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 pro- vided 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 ac- cordance 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 account overdrafts are shown on the balance sheet as payables to credit institutions under current finan- cial 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. 96 E_00_FB_Komax_2016 _P_-gelöst.indd 96 14.03.17 08:47 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2016 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 York 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 subsidi- aries 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 12. 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 as- sets. 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. E_00_FB_Komax_2016 _P_-gelöst.indd 97 97 14.03.17 08:47 KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2016FINANCIAL REPORT Actuarial gains and losses, which are based on experience adjustments and changes in actuarial assumptions, are recognized in the other comprehensive income. 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 per- sonnel 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 grant- ed, and is charged evenly across the vesting period to the corresponding income statement po- sitions 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 cur- rent 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. 98 E_00_FB_Komax_2016 _P_-gelöst.indd 98 14.03.17 08:47 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2016 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. 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 – represent a separate major line of business or geographical area of operations – 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. E_00_FB_Komax_2016 _P_-gelöst.indd 99 99 14.03.17 08:47 KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2016FINANCIAL REPORT 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 be- ginning 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 2016 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. On 15 April 2016, Komax concluded the sale of Komax Medtech to GIMA, a subsidiary of the Italian IMA Group. The entire equity of Komax Systems LCF SA, Switzerland, the entire equity of Komax Systems Rockford Inc., USA, and 76% of the equity of Komax Systems Malaysia Sdn. Bhd., Malaysia, was transferred to the buyer. The affected segment is therefore being reclassified under discontinued operations, in keeping with IFRS 5, “Non-current Assets Held for Sale and Discontinued Operations”. The amounts in the income statement for the prior-year period have been adjusted accordingly. In accordance with IFRS 5, the amounts in the prior-year balance sheet have not been adjusted. Further details on IFRS 5 can be found in Note 9. With the exception of the application of IFRS 5, no adjustments were made that have any signif- icant impact on the consolidated financial statements of the Komax Group. 100 E_00_FB_Komax_2016 _P_-gelöst.indd 100 14.03.17 08:47 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2016 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. 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 2016, particularly in relation to foreign exchange and country risks in emerg- ing 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 cur- rency 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 2016 and that all other parameters remained largely unchanged, the EBIT margin would have been 1.1 percentage points (2015: 1.6 percentage points) lower. Conversely, if this exchange rate had been 10% higher, 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 2016 and that all other parameters had been largely unchanged, the EBIT margin would have been 0.7 percentage points (2015: 0.8 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 2016 and that all other parameters had been largely unchanged, the EBIT margin would have been 0.6 percentage points (2015: 0.5 percentage points) lower. Conversely, if this exchange rate had been 10% high- er, 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. E_00_FB_Komax_2016 _P_-gelöst.indd 101 101 14.03.17 08:47 KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2016FINANCIAL REPORT 3.2 Credit risk Credit risks may exist with regard to bank account balances, derivative financial instruments and receivables from customers. Komax regularly reviews the independent ratings of financial institu- tions. 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. Management does not anticipate any significant losses on the receivables outstanding as at 31 December 2016 that have not already been taken into account in the value adjustments as per Note 6. The following table shows the receivables of the main counterparties as of the reporting date: in TCHF Counterpar ty Credit Suisse1 Deutsche Bank Bank of Shanghai UBS1 Customer A Customer B Customer C 31.12.2016 31.12.2015 Rating Amount held Amount held A− A− n.s. A Group 2 Group 2 Group 2 7 413 5 492 4 188 3 225 15 098 11 592 5 492 8 971 14 238 2 076 5 888 8 065 7 123 6 637 1 Creditor as par t of the CHF 100.0 million syndicated loan agreement under the stewardship of Credit Suisse (par ticipating banks: Basler Kantonalbank, Credit Suisse, Landesbank Baden-Wür ttemberg, 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. 102 E_00_FB_Komax_2016 _P_-gelöst.indd 102 14.03.17 08:47 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2016 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 equiv- alents and securities exceeded existing financial liabilities as at 31 December 2016 and as at 31 December 2015. The Group’s financial liabilities are subject to externally regulated capital requirements ( covenants). The covenants of the syndicated loan agreement essentially provided for a maxi- mum gearing factor of 3.25 as at 31 December 2016. The Komax Group has complied with all capital requirements since the contract signing date as well as at 31 December 2016. 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. E_00_FB_Komax_2016 _P_-gelöst.indd 103 103 14.03.17 08:47 KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2016FINANCIAL REPORT 31.12.2016 in TCHF Financial liabilities (current and non-current)1 Trade payables Other payables Derivative financial instruments Other non-current liabilities 31.12.2015 Financial liabilities (current and non-current)1 Trade payables Other payables 1–30 days 31–60 days 61–90 days 91–120 days 121 days –1 year 1–5 years Total 78 16 966 6 737 0 0 0 0 1 693 1 230 3 0 0 15 357 4 582 1 889 975 100 115 4 871 44 0 0 288 5 430 0 1 478 4 0 0 30 888 300 1 134 0 0 0 28 530 30 660 0 0 0 2 932 16 518 0 0 31 138 18 776 13 450 51 2 932 16 518 17 592 12 405 1 The cash outflow from future interest payments amounts to CHF 0.2 million for outstanding financial liabilities as at 31 December 2016 and CHF 0.0 million for outstanding financial liabilities as at 31 December 2015. Interest rate risk 3.5 Neither at 31 December 2016 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 2016, the syndicated loan had been utilized to the amount of CHF 27.6 million (31 December 2015: CHF 16.7 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 market rate of interest is low. Moreover, there was a net cash position of CHF 17.4 million as at 31 December 2016 (31 December 2015: CHF 34.4 million). For these reasons, no sensitivity analysis of interest rate risk was undertaken. 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. 104 E_00_FB_Komax_2016 _P_-gelöst.indd 104 14.03.17 08:47 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2016 The table below shows the assets and liabilities that have been valued at fair value. 31.12.2016 in TCHF Assets Contingent consideration Total assets Liabilities Contingent consideration Derivative financial instruments Total liabilities 31.12.2015 in TCHF Assets Derivative financial instruments Total assets Liabilities Contingent consideration Total liabilities Level 1 Level 2 Level 3 Total 0 0 0 0 0 0 0 0 51 51 6 100 6 100 6 832 0 6 832 6 100 6 100 6 832 51 6 883 Level 1 Level 2 Level 3 Total 0 0 0 0 21 21 0 0 0 0 4 527 4 527 21 21 4 527 4 527 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: 31.12.2016 in TCHF Total as at 1 January 2016 Impact of business combinations Impact of sale of subsidiaries Cash receipts and payments Fair value changes recognized in the income statement Total as at 31 December 2016 31.12.2015 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 receivables Contingent consideration liabilities 0 0 8 000 0 −1 900 6 100 4 527 6 801 0 −4 632 136 6 832 Contingent consideration receivables Contingent consideration liabilities 0 0 0 0 0 2 423 2 104 4 527 105 E_00_FB_Komax_2016 _P_-gelöst.indd 105 14.03.17 08:47 KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2016FINANCIAL REPORT For the determination of the fair value of a contingent consideration, profit and revenue forecasts as well as the current exchange rates are used that might result in a higher or lower fair value measurement. In addition, the continued employment of certain selling shareholders was as- sumed. Further information on business combinations and the purchase of non-controlling interests are provided in Notes 34 and 35. 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 impairment at least once a year. To determine whether impairment exists, estimates are made of the expect- ed future cash flows arising from use. Actual cash flows may differ from the discounted future cash flows based on these estimates. Factors such as changes in the planned use of property, plant and equipment, restructuring, reorganization and closure of facilities, changes in the market situation, technical deficiencies in relation to machinery and systems, or sub- projected sales of machines, spare parts and systems may shorten useful life or result in an impairment. 106 E_00_FB_Komax_2016 _P_-gelöst.indd 106 14.03.17 08:47 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2016 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 factors 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 interpret- ed, 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. E_00_FB_Komax_2016 _P_-gelöst.indd 107 107 14.03.17 08:47 KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2016FINANCIAL REPORT Cash and cash equivalents 5 The cash and cash equivalents amounting to CHF 48.5 million (2015: CHF 50.9 million) include demand deposits and call money. The composition of the call money and the applicable interest rates can be found in the table below. Currency EUR INR CNY Total 31.12.2016 31.12.2015 Interest rate TCHF Interest rate 0.42% 6.72% 0.00% 0.00% 7.16% 1.83% 652 151 0 803 TCHF 0 152 945 1 097 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 2016, three option contracts of a total of USD 6.0 million with a negative fair value of CHF 0.1 million (31 December 2015: two option contracts of a total of USD 4.0 million with a positive fair value of CHF 0.0 million) were outstanding. The following volumes were transacted in the corre- sponding financial year: 2016: EUR 0.0 million, USD 13.0 million 2015: EUR 7.0 million, USD 10.0 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”. 6 Trade receivables in TCHF Trade receivables less provision for impairment Accruals for systems1 less prepayments for systems Receivables arising from POC 31.12.2016 31.12.2015 83 252 −927 6 125 −3 312 2 813 94 857 −1 081 80 046 −68 994 11 052 Total 85 138 104 828 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 8.1 million as at 31 December 2016 (2015: CHF 91.6 million). Overfinanced projects totalling CHF 2.0 million (2015: CHF 11.6 million) are included in the “Other payables and accrued expenses / deferred income” item (see Note 19), while under- financed projects in the amount of CHF 6.1 million (2015: CHF 80.0 million) are stated under “Trade receivables”. Revenues for 2016 include sales on manufacturing contracts which remained outstanding on the balance sheet date and amounted to CHF 6.9 million (2015: CHF 1.1 million), 108 E_00_FB_Komax_2016 _P_-gelöst.indd 108 14.03.17 08:47 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2016 equivalent to 1.9% of revenues for 2016 (2015: 0.4%). CHF 5.3 million (2015: CHF 1.6 million) of this represents costs incurred and CHF 1.6 million (2015: CHF 0.5 million losses) recognized contri- bution margins. Overdue trade receivables that had not been written down amounted to CHF 19.1 million on 31 December 2016 (31 December 2015: CHF 16.6 million). Their maturity structure is set out in the following table: in TCHF as at 31.12.2016 as at 31.12.2015 Number of days 1–30 8 275 10 462 31–60 2 653 3 299 61–90 3 658 790 91–120 2 659 794 >120 1 871 1 293 Total 19 116 16 638 No collateral has been received as security for overdue trade receivables for which no valuation allowance has been made. Valuation allowances totalling CHF 0.9 million were recognized for trade receivables as at 31 December 2016 (31 December 2015: CHF 1.1 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 Depreciation of irrecoverable receivables Unused amounts reversed Currency differences Total as at 31 December 2016 1 081 107 14 −211 −64 0 927 2015 1 286 4 0 −59 −39 −111 1 081 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) 31.12.2016 31.12.2015 9 637 28 860 20 951 15 202 8 602 83 252 23 540 32 271 22 104 12 165 4 777 94 857 E_00_FB_Komax_2016 _P_-gelöst.indd 109 109 14.03.17 08:47 KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2016FINANCIAL REPORT 7 Other receivables and accrued income / prepaid expenses in TCHF Other receivables Prepayments to suppliers Accruals Contingent consideration Total 31.12.2016 31.12.2015 20 599 724 2 429 4 100 27 852 16 270 3 501 2 775 0 22 546 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. 8 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 31.12.2016 31.12.2015 36 541 9 038 24 779 70 358 2016 8 950 2 896 627 −1 349 −1 868 −1 050 23 8 229 34 727 6 544 18 499 59 770 2015 8 331 2 633 0 0 −907 −598 −509 8 950 The expenditure recognized in the income statement in connection with the value adjustments of inventories amounts to CHF 1.8 million (2015: CHF 2.0 million). Discontinued operations 9 Komax sold the Komax Medtech business unit in 2016. The affected segment is therefore being reclassified under discontinued operations, in keeping with IFRS 5, “Non-current Assets Held for Sale and Discontinued Operations”. The amounts in the income statement for the prior-year period have been adjusted accordingly. As the transaction has already been concluded in April 2016, no assets and liabilities of the discontinued operations have been presented as “Assets classified as held for sale” and “Liabilities classified as held for sale”. 110 E_00_FB_Komax_2016 _P_-gelöst.indd 110 14.03.17 08:47 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2016 In the prior-year period, the former Komax Solar business unit was also still reported under dis- continued operations. The balance of remaining assets and liabilities of the discontinued opera- tions was negligible as at 31 December 2016, and is no longer reported separately. Result from discontinued operations: 2016 in TCHF Revenues Expenses Result before taxes Taxes Result after taxes from discontinued operations Result on sale of subsidiaries after taxes Result from discontinued operations 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) 2015 in TCHF Revenues Expenses Result before taxes Taxes Solar Medtech – – – – – – – – – – – Solar 5 573 8 441 –2 868 4 19 054 19 236 –182 315 –497 –3 544 –4 041 –4 041 0 –1.08 –1.07 Medtech 54 683 59 470 –4 787 –766 Result from discontinued operations –2 872 –4 021 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) –2 872 0 –0.79 –0.77 –4 021 0 –1.10 –1.08 Total 19 054 19 236 –182 315 –497 –3 544 –4 041 –4 041 0 –1.08 –1.07 Total 60 256 67 911 –7 655 –762 –6 893 –6 893 0 –1.89 –1.85 E_00_FB_Komax_2016 _P_-gelöst.indd 111 111 14.03.17 08:47 KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2016FINANCIAL REPORT Details on sale of subsidiaries: 2016 in TCHF Received consideration Contingent consideration Total consideration Net assets sold Result on sale of subsidiaries before taxes and reclassification of foreign currency translation reserve Reclassification of foreign currency translation reserve Taxes on sale of subsidiaries Result on sale of subsidiaries after taxes Net assets sold: 2016 in TCHF Cash and cash equivalents Other current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities Total net assets sold Cash flows from discontinued operations: 2016 in TCHF Cash flow from operating activities Cash flow from investing activities Cash flow from financing activities Total cash flows Solar Medtech – – – – – – – – 30 028 6 100 36 128 37 901 –1 773 –655 –1 116 –3 544 Solar Medtech – – – – – – – – 6 865 49 510 18 503 74 878 34 714 2 263 36 977 37 901 Solar Medtech – – – – 5 286 23 035 –2 495 25 826 Total 30 028 6 100 36 128 37 901 –1 773 –655 –1 116 –3 544 Total 6 865 49 510 18 503 74 878 34 714 2 263 36 977 37 901 Total 5 286 23 035 –2 495 25 826 Cash flow from investing activities includes CHF 23.2 million from the sale of Group companies. 112 E_00_FB_Komax_2016 _P_-gelöst.indd 112 14.03.17 08:47 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2016 2015 in TCHF Cash flow from operating activities Cash flow from investing activities Cash flow from financing activities Solar 2 524 261 –2 765 Medtech 3 565 –2 276 –436 Total cash flows 20 853 Total 6 089 –2 015 –3 201 873 Deferred taxes 10 10.1 Statement of carrying values in TCHF 31.12.2016 31.12.2015 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 9 666 3 160 1 145 12 756 3 527 2 255 32 509 −4 595 27 914 3 722 2 715 726 919 8 082 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 −4 595 −5 764 3 487 2 476 Net deferred tax assets (+) / tax liabilities (–) 24 427 19 333 1 Including unrealized intragroup profit. 10.2 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 Net total as at 31 December 2016 19 333 351 −822 −80 6 976 −2 173 842 24 427 2015 17 107 2 410 1 157 −20 0 0 −1 321 19 333 113 E_00_FB_Komax_2016 _P_-gelöst.indd 113 14.03.17 08:47 KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2016FINANCIAL REPORT The total of the temporary differences relating to investments in affiliated companies for which no deferred taxes have been reported came to CHF 52.3 million as at 31 December 2016 (2015: CHF 32.6 million). As at 31 December 2016, deferred tax assets of CHF 8.4 million (2015: CHF 6.0 million) in connection with tax-loss carryforwards of CHF 26.7 million (2015: CHF 18.8 million) were not capitalized. Thereof CHF 2.0 million will expire between one and five years and CHF 24.7 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. 11 Other non-current receivables in TCHF 31.12.2016 31.12.2015 Present value of minimum lease payments Non-current loans to associates Contingent consideration Rent deposit and other non-current receivables Total 46 5 501 2 000 1 064 8 611 111 5 693 0 1 366 7 170 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 31.12.2016 31.12.2015 Gross investment in the lease less unguaranteed residual value in favor of lessor less unearned finance income Present value of minimum lease payments 31.12.2016 in TCHF Gross investment in the lease Present value of minimum lease payments 31.12.2015 in TCHF Gross investment in the lease Present value of minimum lease payments 120 0 −9 111 0 –1 year 1–5 years 72 65 48 46 0–1 year 1–5 years 107 79 120 111 227 −16 −21 190 Total 120 111 Total 227 190 As at 31 December 2016, just as on the previous year’s balance sheet date, no value adjustments needed to be recognized for irrecoverable minimum lease payments. 114 E_00_FB_Komax_2016 _P_-gelöst.indd 114 14.03.17 08:47 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2016 Employee benefits (IAS 19) 12 12.1 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 Effect of sale of subsidiaries Total employee benefits expenditure of the Komax Group Interest income on plan assets Employee contributions Total employee benefits income of the Komax Group 2016 −6 990 −878 1 665 −6 203 792 2 671 3 463 2015 −8 065 −1 173 0 −9 238 1 124 2 939 4 063 Employee benefits result of the Komax Group1 −2 740 −5 175 Employer contributions Prepayments to the employee benefits plan during the financial year 3 885 1 145 4 259 −916 1 The employee benefits expenditure of CHF 2.7 million (2015: CHF 5.2 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 Impact on other comprehensive income 2016 894 5 152 6 046 2015 −8 174 −249 −8 423 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. E_00_FB_Komax_2016 _P_-gelöst.indd 115 115 14.03.17 08:47 KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2016FINANCIAL REPORT 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 Effect of sale of subsidiaries Total as at 31 December 2016 2015 157 597 6 990 878 811 −5 754 −1 317 6 177 150 093 8 065 1 173 −9 908 −10 220 8 986 9 408 −17 426 0 147 956 157 597 The Board of Trustees of the Komax pension fund in Switzerland made no new plan adjustments in 2016 or in 2015. 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 Effect of sale of subsidiaries 2016 2015 141 499 143 334 792 2 671 3 885 811 5 152 −15 761 1 124 2 939 4 259 −9 908 −249 0 Total as at 31 December 139 049 141 499 116 E_00_FB_Komax_2016 _P_-gelöst.indd 116 14.03.17 08:47 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2016 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 2016 2015 147 956 139 049 157 597 141 499 Overfunding (–) / underfunding (+) as at 31 December 8 907 16 098 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 0 0 0 0 0 0 Recognized liability as at 31 December 8 907 16 098 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 31.12.2016 31.12.2015 63 596 26 525 42 398 6 530 46 102 27 447 44 714 23 236 139 049 141 499 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. Around 91% of disposable assets were publicly listed as at 31 December 2016 (2015: 91%). 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. E_00_FB_Komax_2016 _P_-gelöst.indd 117 117 14.03.17 08:47 KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2016FINANCIAL REPORT The retirement benefit liabilities are valued using assumptions based on the following economic and demographic parameters (weighted average): in % Discount rate Estimated wage growth rate Increase in current pensions (expectancy of future benefits) 2016 0.60 0.50 0.00 2015 0.80 0.50 0.00 The projected interest rate for savings balances is now determined separately for the mandatory and extra-mandatory portions. The interest rate is 1.0% for the mandatory portion (2015: 1.25%), which corresponds to the BVG minimum interest rate for 2017, while no interest is paid on the extra-mandatory portion (2015: 1.25%). At a value of 10.5, the weighted average duration of the defined benefit plan liabilities as at 31 December 2016 is just above ten years. Average life expectancy on reaching retirement at age 65 or 64, respectively: Retirement at end of the reporting period in years Men Women 2016 20.2 23.2 2015 21.5 24.9 For the valuation of defined benefit plans as at 31 December 2016, the generation tables were applied (2015: generation tables). Moreover, a capital withdrawal ratio of 40% (2015: 40%) was assumed upon retirement. This value was determined on the basis of empirical values for all retirements over the last 15 years or so. The valuation of the net defined benefit obligations is particularly sensitive to changes in the dis- count rate, life expectancy and wage growth rate, and the increase in current pensions. The fol- lowing 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 118 2016 2015 3 151 −2 683 −25 312 34 014 6 638 −3 170 3 617 −3 082 −29 229 39 807 8 121 −3 904 14 984 17 890 E_00_FB_Komax_2016 _P_-gelöst.indd 118 14.03.17 08:47 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2016 According to the most recent actuarial estimates, the Group expects employer contributions amounting to CHF 4.0 million for 2017. The expected cash outflows for benefits to be paid within the next year amount to CHF 2.1 million, while those for benefits to be paid within the next two to five and five to ten years amount to CHF 8.0 million and CHF 9.0 million respectively. 12.2 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 2016 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 2016 (31 December 2015: CHF 0.1 million). They are recognized in the balance sheet under “Other payables and accrued expenses / deferred income”. Investments in associates 13 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 2016 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 31.12.2016 31.12.2015 25.0% 20.8% 77 2 154 2 231 63 1 996 2 059 As at 31 December 2016 the breakdown of investments in associates of CHF 2.2 million (31 December 2015: CHF 2.1 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 31.12.2016 31.12.2015 12 201 11 626 2 559 3 662 7 783 3 315 701 1 530 2 231 3 017 3 389 8 594 2 660 555 1 504 2 059 1 The goodwill of CHF 1.5 million as at 31 December 2016 (31 December 2015: CHF 1.5 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. No dividends were distributed to Komax in 2016 (2015: none). The associated companies generated revenues of some CHF 27.0 million in 2016 (2015: CHF 28.3 million). The proportional contribution to profit is negligible and included in the “Other oper- ating income” under “Other income”. E_00_FB_Komax_2016 _P_-gelöst.indd 119 119 14.03.17 08:47 KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2016FINANCIAL REPORT 14 Property, plant and equipment 14.1 Property, plant and equipment 2016 Changes in gross values in TCHF Movables Machinery Tools / operating equipment Warehouse equipment Vehicles Office equipment Information technology Assets under construction Total movables Real estate Buildings Land Real estate under construction Total real estate Total Changes in depreciation in TCHF Movables Machinery Tools / operating equipment Warehouse equipment Vehicles Office equipment Information technology Assets under construction Total movables Real estate Buildings Land Real estate under construction Total real estate Total Costs 1.1.2016 Currency differences Reclassi- fications Additions Disposals Classifica- tion IFRS 5 Costs 31.12.2016 Change in scope of consolida- tion 19 061 −143 6 568 1 838 3 251 9 924 4 505 596 45 743 72 057 16 868 4 174 93 099 138 842 −43 30 −24 83 −2 0 −99 173 64 0 0 221 0 −458 0 −537 −76 3 358 0 0 −3 358 −613 −712 0 0 3 386 876 88 1 623 1 108 620 39 7 740 7 851 13 2 567 10 431 315 −1 835 −1 350 19 607 4 8 160 1 354 76 0 −42 −15 −251 −123 −126 0 −172 −289 −194 −4 436 −986 0 7 255 1 660 4 565 8 131 4 087 177 1 917 −2 392 −7 427 45 482 5 494 0 499 −310 −467 0 −777 0 0 0 0 82 424 16 832 3 383 102 639 18 171 2 416 −3 169 −7 427 148 121 Accumulated depreciation 1.1.2016 Currency differences Reclassi- fications Accumulated depre ciation on disposals Depreci- ation 2016 Classifica- tion IFRS 5 Accumulat- ed depre- ciation 31.12.2016 Net value property, plant & equipment 31.12.2016 10 536 4 305 1 235 1 693 4 495 2 994 0 25 258 38 485 0 0 38 485 63 743 −33 −13 22 −7 38 12 0 19 55 0 0 55 74 0 0 0 0 0 0 0 0 0 0 0 0 0 −1 776 1 548 −42 −15 −192 −119 −126 0 617 70 708 809 619 0 −793 −121 −205 −175 −1 941 −773 0 9 482 4 746 1 107 2 027 3 282 2 726 0 10 125 2 509 553 2 538 4 849 1 361 177 −2 270 4 371 −4 008 23 370 22 112 −73 2 543 0 0 0 0 −73 2 543 0 0 0 0 41 010 0 0 41 010 41 414 16 832 3 383 61 629 −2 343 6 914 −4 008 64 380 83 741 No impairments had to be booked on property, plant and equipment of the continuing operations during the 2016 reporting year. As at 31 December 2016, contractual obligations of CHF 0.9 million were existing in respect of the acquisition of property, plant and equipment. Future liabilities arising from operating lease agreements amount to CHF 2.0 million due in 2017, CHF 3.5 million due in 2018–2021. 120 E_00_FB_Komax_2016 _P_-gelöst.indd 120 14.03.17 08:47 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2016 14.2 Property, plant and equipment 2015 Changes in gross values in TCHF Movables Machinery Tools / operating equipment Warehouse equipment Vehicles Office equipment Information technology Assets under construction Total movables Real estate Buildings Land Real estate under construction Total real estate Total Changes in depreciation in TCHF Costs 1.1.2015 Currency differences Reclassi - fications Additions Disposals IAS 40 reclassi- fication 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 Accumulated depreciation on disposals Depreci ation 2015 IAS 40 reclassi- fication Accumulated depreciation 31.12.2015 Movables Machinery Tools / operating equipment Warehouse equipment Vehicles Office equipment Information technology Assets under construction 9 721 4 174 1 238 1 693 4 845 3 064 0 −122 −61 −57 −72 −142 −93 0 Total movables 24 735 −547 Real estate Buildings Land Real estate under construction 38 052 −300 0 0 0 0 Total real estate 38 052 −300 Total 62 787 −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 operating lease agreements amounted to CHF 2.5 million due in 2016, CHF 6.6 million due in 2017–2020. E_00_FB_Komax_2016 _P_-gelöst.indd 121 121 14.03.17 08:47 KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2016FINANCIAL REPORT 15 15.1 Intangible assets Intangible assets 2016 Changes in gross values in TCHF Intangible assets Software Patents Goodwill Technology Software in implementation Total Changes in depreciation in TCHF Costs 1.1.2016 Currency differences Reclassi- fications Additions Disposals Classifica- tion IFRS 5 Costs 31.12.2016 Change in scope of consolida- tion 14 868 4 051 29 157 12 828 6 416 67 320 −23 0 103 0 0 80 22 2 499 0 0 0 0 0 0 −22 2 157 81 11 28 824 3 000 0 −163 −2 068 0 0 0 0 0 −12 173 0 0 15 216 4 062 45 911 15 828 8 551 0 4 656 31 916 −163 −14 241 89 568 Accumulated depreciation 1.1.2016 Currency differences Reclassi- fications Accumulated depre ciation on disposals Depreci- ation 2016 Classifica- tion IFRS 5 Accumulated depre ciation 31.12.2016 Net value intangible assets 31.12.2016 Intangible assets Software Patents Goodwill Technology Software in implementation 9 192 4 050 0 4 624 0 −9 0 0 0 0 Total 17 866 −9 0 0 0 0 0 0 −131 2 072 −1 650 0 0 0 0 10 0 1 492 0 0 0 0 0 9 474 4 060 5 742 2 0 45 911 6 116 0 9 712 8 551 −131 3 574 −1 650 19 650 69 918 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 31.12.2016 31.12.2015 Wire 45 911 Medtech Medtech 0 0 45 911 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: 122 E_00_FB_Komax_2016 _P_-gelöst.indd 122 14.03.17 08:47 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2016 2016 Gross profit margin Average growth rate Discount rate (pre-tax) 2015 Gross profit margin Average growth rate Discount rate (pre-tax) Wire 64.8% 5.0% 5.8% MTS n.s. n.s. n.s. INJ n.s. n.s. n.s. Wire MTS INJ 64.6% 5.0% 6.7% 49.3% 10.9% 5.8% 45.8% 0.3% 7.1% Management has determined the budgeted gross profit margin based on past developments and expectations regarding the future development of the market. As in the prior year, no additional growth rate after the forecast period is taken into account. The discount rates applied are interest rates before taxes and reflect the specific risks of the operating segments in question. The im- pairment test performed showed that the value of the goodwill was sustainable and revealed no signs of any impairment. 15.2 Intangible assets 2015 Changes in gross values in TCHF Intangible assets Software Patents Goodwill Technology Software in implementation Costs 1.1.2015 Currency differences Reclassi - fi cations 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 Total 63 084 −255 0 5 467 −976 67 320 Accumulated depreciation 1.1.2015 Currency differences Reclassi - fi cations Accumulated depreciation on disposals Depreci ation 2015 Accumulated depreciation 31.12.2015 Net value intangible assets 31.12.2015 Changes in depreciation in TCHF Intangible assets Software Patents Goodwill Technology Software in implementation 8 334 4 100 0 3 282 0 −150 0 0 0 0 Total 15 716 −150 E_00_FB_Komax_2016 _P_-gelöst.indd 123 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 49 454 123 14.03.17 08:47 KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2016FINANCIAL REPORT Ownership restrictions for own liabilities 16 Assets pledged to secure own liabilities: in TCHF Book value real estate Lien on real estate Utilization 31.12.2016 31.12.2015 7 721 3 924 3 893 37 092 50 000 16 720 Real estate secured by mortgages consists of land and buildings in Germany (2015: Switzerland). 17 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 2016 6 660 0 0 200 6 860 2016 1 311 191 0 0 47 1 549 5 311 2015 0 −7 6 667 0 6 660 2015 0 188 −3 1 121 5 1 311 5 349 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 2016 (2015: CHF 0.0 million). The operating expenses directly attributable to investment properties and borne by Komax in 2016 were not significant. The fair value of investment properties of CHF 6.7 million (2015: CHF 6.5 million) was valued by external experts on the basis of the market values of comparable properties. 124 E_00_FB_Komax_2016 _P_-gelöst.indd 124 14.03.17 08:47 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2016 Trade payables 18 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 19 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 6. 31.12.2016 31.12.2015 8 692 6 954 1 346 727 1 057 8 169 5 388 2 203 482 1 350 18 776 17 592 31.12.2016 31.12.2015 13 450 813 7 456 14 902 1 971 1 817 2 521 28 667 2 640 −1 955 685 43 615 12 405 348 8 455 11 810 1 913 2 399 2 421 26 998 24 912 −11 600 13 312 53 063 Other payables mainly comprise amounts due to state authorities (tax authorities) as well as a contingent consideration of CHF 3.9 million (31 December 2015: CHF 4.5 million). Their carrying amounts are allocated to the currencies shown in the table: in TCHF CHF EUR USD CNY Other currencies Total other payables 31.12.2016 31.12.2015 2 969 8 003 207 318 1 953 4 014 6 750 49 556 1 036 13 450 12 405 E_00_FB_Komax_2016 _P_-gelöst.indd 125 125 14.03.17 08:47 KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2016FINANCIAL REPORT 20 Provisions Warranty provisions in TCHF Total as at 1 January Additional provisions Change in scope of consolidation Classified as held for sale Amounts utilized during the year Unused amounts reversed Currency differences Total as at 31 December 2016 3 666 2 141 20 −307 −2 588 −711 1 2 222 2015 6 348 2 462 0 0 −3 538 −1 475 −131 3 666 Warranty provisions include material and personnel costs in relation to warranty work. Provisions for warranty are reviewed and adjusted annually. 21 Financial loans 2016 31.12.2016 2015 31.12.2015 Currency Interest rate in TCHF Interest rate in TCHF Credit Suisse, Switzerland1, 2 Credit Suisse, Switzerland1 Credit Suisse, Switzerland1 Landesbank Baden-Württemberg, Germany CHF USD EUR EUR 0.70% 1.40% 0.70% 1.00% Total 15 615 6 180 5 450 3 815 31 060 0.80% 0.00% 0.80% 0.00% 7 798 0 8 720 0 16 518 1 Utilized credit facilities as par t of the CHF 100.0 million syndicated loan agreement under the stewardship of Credit Suisse (par ticipating banks: Basler Kantonalbank, Credit Suisse, Landesbank Baden-Wür ttemberg, Luzerner Kantonalbank, UBS and Zürcher Kantonalbank). 2 Utilized credit line amounting to CHF 16.0 million as at 31 December 2016 (31 December 2015: CHF 8.0 million) less transaction costs of CHF 0.4 million (31 December 2015: CHF 0.2 million). As at 31 December 2016, the Komax Group had unutilized credit lines of CHF 77.6 million (31 December 2015: CHF 104.0 million). The average interest on financial loans was 0.91% in 2016, compared with 0.81% in the previous year. The fair value of non-current financial loans corresponds to their carrying value. 22 Other non-current liabilities in TCHF Accrual for personnel expenses Contingent consideration Total 31.12.2016 31.12.2015 990 2 932 3 922 0 0 0 Share capital 23 As at 31 December 2016, the share capital amounted to CHF 377 415 (2015: 369 165). This com- prised 3 774 148 (2015: 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 8 250 in relation to 2015 (2015: CHF 8 655). As at 31 December 2016, the Group held 9 000 treasury shares (2015: 19 522 treasury shares). 126 E_00_FB_Komax_2016 _P_-gelöst.indd 126 14.03.17 08:47 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2016 24 24.1 Segment reporting Information by segment 2016 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 20152 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 Corporate1 Group 369 709 306 370 015 459 0 459 370 168 306 370 474 59 850 −9 269 50 581 22 625 1 039 10 250 106 0 227 22 731 1 039 10 477 Wire Corporate1 Group 312 216 1 451 313 667 9 0 9 312 225 1 451 313 676 59 670 −9 732 49 938 18 084 1 898 19 982 152 8 972 80 213 232 9 185 1 Including elimination of intersegment revenues. 2 Prior-year figures restated in accordance with Note 9. 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 Direc- tors, 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 1 Prior-year figures restated in accordance with Note 9. 2016 50 581 6 566 −8 763 48 384 8 854 39 530 −4 041 35 489 20151 49 938 8 798 −14 938 43 798 7 690 36 108 −6 893 29 215 127 E_00_FB_Komax_2016 _P_-gelöst.indd 127 14.03.17 08:47 KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2016FINANCIAL REPORT 24.2 Information by geographical area Net sales by location of purchasing party Switzerland Europe2 North and South America Asia/Pacific Total 2016 20151 in TCHF % in TCHF 5 950 213 216 77 851 73 457 1.6 57.6 21.0 19.8 4 723 182 843 64 347 61 763 % 1.5 58.3 20.5 19.7 370 474 100.0 313 676 100.0 Net sales by location of service provider Switzerland Europe2 North and South America Asia/Pacific Total 2016 in TCHF % in TCHF 106 412 137 413 68 343 58 306 28.7 37.2 18.4 15.7 109 679 90 037 60 467 53 493 20151 % 35.0 28.6 19.3 17.1 370 474 100.0 313 676 100.0 Non-current assets by location of service provider3 2016 in TCHF % in TCHF 128 812 20 816 18 051 2 133 75.8 12.3 10.6 1.3 103 160 12 899 19 671 3 401 2015 % 74.2 9.3 14.1 2.4 169 812 100.0 139 131 100.0 22.1 Switzerland Europe2 North and South America Asia/Pacific Total 1 Prior-year figures restated in accordance with Note 9. 2 Including Africa. 3 Without deferred tax assets. +/− % 26.0 16.6 21.0 18.9 18.1 +/− % −3.0 52.6 13.0 9.0 18.1 +/− % 24.9 61.4 −8.2 −37.3 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 2016 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. 128 E_00_FB_Komax_2016 _P_-gelöst.indd 128 14.03.17 08:47 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2016 25 Other operating income in TCHF Own work capitalized Government grants Gains from the disposal of property, plant and equipment Other income Total other operating income 1 Prior-year figures restated in accordance with Note 9. 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) 2016 1 630 68 305 495 2 498 2016 97 671 1 742 1 285 20 778 4 466 20151 1 188 0 127 102 1 417 20151 83 133 1 514 1 114 16 747 3 702 Total personnel expenses 125 942 106 210 1 Prior-year figures restated in accordance with Note 9. Personnel expenses include all performance-related compensation for the past business year. Further details on employee benefits are given in Note 12. 26.2 Share-based compensation plans As per 31 December 2016, the Komax Group had the following share-based compensation agree- ments: E_00_FB_Komax_2016 _P_-gelöst.indd 129 129 14.03.17 08:47 KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2016FINANCIAL REPORT 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. 2016 Weighted average exercise price 2015 Weighted average exercise price Outstanding at beginning of year Granted Exercised Forfeited Expired No. 186 637 0 −84 047 −3 757 −3 660 CHF 92.67 0.00 66.91 118.33 66.21 No. 283 062 0 −86 550 −4 380 −5 495 Outstanding at end of year 95 173 115.46 186 637 CHF 86.68 0.00 73.70 78.39 94.25 92.67 Of the 95 173 outstanding options (2015: 186 637), 21 039 were exercisable as at 31 December 2016 (2015: 20 044). Options exercised in 2016 led to the issue of 82 497 shares (2015: 86 550) at a price of CHF 66.91 per share (2015: CHF 73.70). Additional 1 550 options (2015: none) were settled in cash at a price of CHF 66.92 per option. The weighted average share price at the time of exercising was CHF 208.31 (2015: CHF 157.73). The following table summarizes information on options granted and not yet exercised as at 31 December 2016: Expir y date 31 December 2017 2018 Total Exercise price CHF 67.03 129.21 Number 21 039 74 134 95 173 The allocation of share options was discontinued in 2015. 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 2.5 million (31 December 2015: CHF 1.2 million) for 19 321 options (31 December 2015: 28 288 options) was taken into account as per 31 December 2016. The market value of the Komax Holding AG share as per 31 December 2016 of CHF 251.25 (31 December 2015: CHF 194.90) was used for calcula- tion purposes together with an average exercise price of CHF 123.55 (31 December 2015: 129.21). The expenses were spread over three years, in keeping with the lock-in period. 130 E_00_FB_Komax_2016 _P_-gelöst.indd 130 14.03.17 08:47 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2016 26.2.2 Komax Performance Share Unit Plan Performance Share Units (PSUs) are a variable compensation element within the employee share ownership program, and are designed to facilitate a lasting increase in company value, alignment 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 (equity-settled plan). The plan comprises PSUs with a three-year vesting period which are dependent on the attain- ment 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 pay- out 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 employ- ment relationship, pro rata vesting applies at the ordinary vesting date. Terms of outstanding rights as at 31 December 2016 Number of outstanding rights Vesting period Allocation Fair value on the day of granting Total fair value at allocation 2015–2017 2016–2018 4 685 3 years 2018 139.45 653 3 636 3 years 2019 175.19 637 CHF TCHF As per 31 December 2016, 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 (equi- ty-settled 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 contribute 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 number 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 pay- out 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 vest- ing applies at the ordinary vesting date. Number of rights Total as at 1 January Granted 1 January Forfeited Transferred to participants Total as at 31 December 2016 3 612 3 158 0 0 2015 0 3 612 0 0 6 770 3 612 The fair value on the day of granting amounted to CHF 175.19 (2015: CHF 139.45). As per 31 De- cember 2016, no rights were eligible for activation or transfer. E_00_FB_Komax_2016 _P_-gelöst.indd 131 131 14.03.17 08:47 KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2016FINANCIAL REPORT 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 (cash-settled 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 compa- ny and the sustainable increase in its value. The plan is currently not linked to profitability condi- tions, 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 allo- cation amount by the share price performance factor (ratio of final share price to starting share price). Number of rights Total as at 1 January Granted 1 January Forfeited Transferred to participants Total as at 31 December 2016 1 070 1 725 0 0 2015 0 1 070 0 0 2 795 1 070 The fair value on the day of granting amounted to CHF 166.09 (2015: CHF 139.45). As per 31 De- cember 2016, 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 program. The aim of the share-based compensation com- ponent 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 (equity-settled plan); 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 restricted 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 2016 financial year, 873 shares (2015: 478 shares) with a fair value of CHF 218.11 (2015: CHF 165.94) on the date of granting were allocated to the Board of Directors. 132 E_00_FB_Komax_2016 _P_-gelöst.indd 132 14.03.17 08:47 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2016 26.3 Breakdown of employees by country and areas of activity 2016 Production Research and development Engineering Marketing and sales Administration6 CH1 225 130 28 171 44 Total headcount at 31 December 2016 598 20157 Production Research and development Engineering Marketing and sales Administration6 CH1 213 111 20 146 40 Total headcount at 31 December 2015 530 Europe2 Americas3 Asia4 Africa5 Total 227 20 95 140 50 532 66 1 35 86 30 60 15 9 94 26 218 204 39 0 10 27 5 81 Europe2 Americas3 Asia4 Africa5 164 19 95 103 26 407 35 1 25 68 21 52 12 11 83 24 150 182 39 0 10 24 5 78 617 166 177 518 155 1 633 Total 503 143 161 424 116 1 347 1 Komax AG, Dierikon (including operating facilities in Rotkreuz and Küssnacht am Rigi). 2 Komax companies in Europe: Austria, Czech Republic, France, Germany, Hungar y, Por tugal, Romania, Slovakia, Turkey. 3 Komax companies in Nor th and South America: Brazil, Mexico, USA. 4 Komax companies in Asia: China, India, Japan, Singapore. 5 Komax companies in Africa: Morocco, Tunisia. 6 Including management. 7 Prior-year figures restated in accordance with Note 9. 26.4 Average number of employees The average number of employees in 2016 was 1 536 compared with 1 273 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 29.0 million, equivalent to 7.8% of revenues, compared with CHF 25.3 million or 8.0% of revenues in the previous year. Other operating expenses 28 Other operating expenses amount to CHF 23.6 million (2015: CHF 19.3 million) and comprise the following positions: in TCHF Expenditure on operating equipment and energy Third-party services for development expenses Legal and consultancy expenses Expenditure on administration and sales Shipping and packaging expenses Other expenditure 2016 5 003 6 064 4 124 3 064 3 593 1 790 20151 4 732 4 267 3 627 2 093 3 006 1 559 Total other operating expenses 23 638 19 284 1 Prior-year figures restated in accordance with Note 9. E_00_FB_Komax_2016 _P_-gelöst.indd 133 133 14.03.17 08:47 KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2016FINANCIAL REPORT Extraordinary restructuring charges 29 Komax focuses on harness testing at its location in Porta Westfalica, Germany. It exited the module testing business. The associated headcount reduction resulted in restructuring costs of CHF 2.4 million in 2016 (2015: none). 30 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 1 Prior-year figures restated in accordance with Note 9. 2016 20151 516 6 050 6 566 1 790 0 6 894 79 8 763 −2 197 979 7 819 8 798 1 416 252 11 166 2 104 14 938 −6 140 The financial income includes CHF 0.0 million in the current year (2015: CHF 0.2 million) on finan- cial assets recognized at fair value through profit or loss. Exchange rate losses amounting to CHF 0.1 million (2015: CHF 0.5 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. 31 Taxes in TCHF Current income taxes Deferred tax income (–) / tax expenses (+) Total 1 Prior-year figures restated in accordance with Note 9. 2016 10 536 −1 682 8 854 20151 9 020 −1 330 7 690 134 E_00_FB_Komax_2016 _P_-gelöst.indd 134 14.03.17 08:47 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2016 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 1 Prior-year figures restated in accordance with Note 9. 2016 48 384 8 446 869 125 −1 304 295 −67 562 −72 8 854 % 17.5 1.8 0.3 −2.7 0.6 −0.2 1.2 −0.2 18.3 20151 43 798 7 405 0 287 −259 92 −3 248 −80 7 690 % 16.9 0.0 0.7 −0.6 0.2 −0.0 0.6 −0.2 17.6 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 in- come of the Group, as well as changes in local tax rates, this Group tax rate varies from year to year. Earnings per share (EPS) 32 32.1 Basic earnings per share in CHF 2016 20151 Weighted average number of outstanding shares 3 741 364 3 652 728 Group profit (attributable to equity holders of the parent company) Result from continuing operations Result from discontinued operations 39 529 935 36 107 686 −4 040 957 −6 893 077 Total profit attributable to equity holders of the parent company 35 488 978 29 214 609 Basic earnings per share Basic earnings per share from continuing operations Basic earnings per share from discontinued operations Total basic earnings per share 1 Prior-year figures restated in accordance with Note 9. 10.57 −1.08 9.49 9.89 −1.89 8.00 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. E_00_FB_Komax_2016 _P_-gelöst.indd 135 135 14.03.17 08:47 KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2016FINANCIAL REPORT 32.2 Diluted earnings per share in CHF 2016 20151 Weighted average number of outstanding shares 3 741 364 3 652 728 Adjustment for non-vested equity rights and dilution effect of share options 46 729 78 304 Weighted average number of outstanding shares for calculating diluted earnings per share 3 788 093 3 731 032 Group profit (attributable to equity holders of the parent company) Result from continuing operations Result from discontinued operations 39 529 935 36 107 686 −4 040 957 −6 893 077 Total profit attributable to equity holders of the parent company 35 488 978 29 214 609 Diluted earnings per share Diluted earnings per share from continuing operations Diluted earnings per share from discontinued operations Total diluted earnings per share 1 Prior-year figures restated in accordance with Note 9. 10.44 −1.07 9.37 9.68 −1.85 7.83 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 33 Aside from a service performance guarantee of CHF 1.4 million (31 December 2015: CHF 1.6 million), there were other guarantees of CHF 4.0 million (31 December 2015: CHF 9.5 million) granted, these almost exclusively comprise guarantees granted to customers for advance pay- ments. In addition to the above-mentioned guarantees, there were other contingent liabilities associated with the sale of business units that could protect the buyer against potential tax, legal, and/or other imponderables in connection with the acquired business unit. On the basis of its current risk appraisal, Komax does not expect any cash outflows in connection with the above- mentioned contingent liabilities. 136 E_00_FB_Komax_2016 _P_-gelöst.indd 136 14.03.17 08:47 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2016 34 Business combinations 34.1 Acquisitions 2016 in TCHF Acquired net assets at fair value Cash and cash equivalents Securities Trade receivables Other receivables and accrued income / prepaid expenses Inventories Deferred tax assets Other non-current receivables 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 Other non-current liabilities Total liabilities Acquired net assets Goodwill Thonauer Group Ondal Tape Processing GmbH Kabatec GmbH & Co. KG SLE Electronics USA, Inc. 6 246 19 11 467 216 1 816 186 97 720 59 84 0 479 24 807 22 0 33 19 300 0 1 235 175 1 586 6 849 53 312 3 014 0 0 0 0 469 0 0 1 432 0 Total 6 630 19 13 181 415 4 678 7 057 150 2 497 3 092 20 826 1 468 13 524 1 901 37 719 0 −8 982 −2 433 −261 0 −65 0 0 −2 483 −587 −163 0 0 0 −580 −205 −606 −271 −20 −16 0 −11 741 −1 330 −3 601 0 0 0 0 0 0 0 0 −2 483 −9 774 −3 202 −532 −20 −81 −580 −16 672 9 085 138 9 923 1 901 21 047 9 350 4 987 13 671 816 28 824 Total consideration 18 435 5 125 23 594 2 717 49 871 Contingent consideration 1 504 0 5 297 204 7 005 Transferred consideration Less acquired cash and cash equivalents 16 931 −6 246 5 125 −84 18 297 −300 2 513 0 42 866 −6 630 Net cash out 2016 10 685 5 041 17 997 2 513 36 236 If new information regarding facts or circumstances comes to light within a year of the time of acquisition, and these facts or circumstances existed at the point of acquisition and would have resulted in corrections to the above-mentioned amounts or the creation of additional provisions, the balance sheet value of the corporate acquisition will be adjusted. E_00_FB_Komax_2016 _P_-gelöst.indd 137 137 14.03.17 08:47 KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2016FINANCIAL REPORT Thonauer Group Komax acquired 100% of Thonauer Gesellschaft m.b.H. in Vienna, Austria, including all its sub- sidiaries with effect from 1 January 2016. Thonauer Group has successfully represented Komax in seven Central and Eastern European countries ever since it was founded in 1988. The current team numbers some 50 people. As well as Komax Wire’s products, Thonauer Group also distrib- utes products from other suppliers for such areas as cable processing, mising and dispensing, and EMI shielding. This makes Thonauer Group a perfect fit for the service and distribution net- work of Komax Wire, which is expanding its presence in one of the world’s fastest-growing re- gions as the result of the acquisition. The goodwill results 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. The transaction costs directly attributable to the acquisition amounted to CHF 0.2 million and are reported in the operating result within “Other operating expenses”. The agreement contains contingent consideration arrangements of EUR 1.4 million, which will apply if certain sales and performance metrics are exceeded in 2016 and 2017. The contingent consideration in question is divided equally between 2016 and 2017, and will become due for payment following a review of the annual results. Komax has factored in CHF 1.5 million as a contingent consideration, which is equivalent to the fair value at the time of acquisition. As at 31 December 2016, the fair value of the contingent consideration had not changed. CHF 0.05 million of contingent liabilities were taken over in the form of guarantees in favour of third parties. These comprise guarantees granted to customers for advance payments that they have made. The fair value of trade and other receivables amounted to CHF 11.6 million, of which CHF 11.5 million related to trade receivables. The acquired company achieved CHF 38.7 million net sales in 2016, as well as CHF 2.9 million profit after taxes. Ondal Tape Processing GmbH Komax acquired 100% of Ondal Tape Processing GmbH in Hünfeld, Germany, with effect from 1 January 2016. This company employs about 20 people and is a global leader in the develop- ment of machinery for the user-guided and program-controlled bundling and taping of cable harnesses. With this acquisition, Komax is further expanding the Wire business unit’s position as a supplier of sophisticated solutions for every stage of its customers’ value creation chain. The goodwill results 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. The transaction costs directly attributable to the acquisition were insignificant and are reported in the operating result within “Other operating expenses”. The agreement has involved no contingent consideration arrangement. 138 E_00_FB_Komax_2016 _P_-gelöst.indd 138 14.03.17 08:47 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2016 No contingent liabilities were taken over from the acquired company. The fair value of trade and other receivables amounted to CHF 0.5 million, of which CHF 0.5 mil- lion related to trade receivables. The acquired company achieved CHF 4.4 million net sales in 2016, as well as CHF 0.4 million profit after taxes. Kabatec GmbH & Co. KG Komax acquired 100% of Kabatec GmbH & Co. KG with effect from 1 July 2016. Kabatec is a young technology company in Burghaun, Germany. It employs over 30 people and focuses on the development and production of high-performance cable taping technologies. Komax and Ka- batec have been working in a strategic partnership for several years already. The aim of this ac- quisition and the takeover of Ondal Tape Processing GmbH is to amalgamate and make more efficient use of innovation in taping technology so that customers can benefit from the ongoing development of cable harness taping and bundling solutions. The goodwill results 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. The transaction costs directly attributable to the acquisition amounted to CHF 0.2 million and are reported in the operating result within “Other operating expenses”. The agreement contains contingent consideration arrangements of EUR 5.0 million, which will apply if certain sales metrics for 2016 are met and certain selling shareholders continue to be employed. Komax has factored in CHF 5.3 million as a contingent consideration, which is equiv- alent to the fair value at the time of acquisition. As at 31 December 2016, the fair value of the contingent consideration had increased by only a negligible amount. No contingent liabilities were taken over from the acquired company. The fair value of trade and other receivables amounted to CHF 1.4 million, of which CHF 1.2 mil- lion related to trade receivables. The acquired company achieved CHF 4.9 million net sales in the second half of 2016, as well as CHF 0.9 million profit after taxes. Had the acquisition taken place on 1 January 2016, the net sales of the Komax Group would have amounted to CHF 374.6 million, with profit after tax com- ing in at CHF 36.7 million. E_00_FB_Komax_2016 _P_-gelöst.indd 139 139 14.03.17 08:47 KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2016FINANCIAL REPORT SLE Electronics USA, Inc. With effect from 1 February 2016, Komax acquired SLE Electronics USA, Inc., in El Paso, USA, by means of an asset deal. The purchase price amounted to CHF 2.7 million, of which CHF 0.2 million will not become due until twelve months after completion of the transaction. The goodwill paid amounts to CHF 0.8 million and results primarily from the capabilities and technical exper- tise of the workforce, as well as from the synergies expected to result from the process of inte- grating the company into Komax Wire’s existing business. The transaction costs directly attribut- able to the acquisition were insignificant and are reported in operating profit within “Other operating expenses”. The agreement involves no contingent consideration arrangement, nor were any contingent liabilities assumed. The repercussions of the acquisition of the business of SLE Electronics USA, Inc., for the presentation of the consolidated year-end results are not sig- nificant. 34.2 Acquisitions 2015 Komax did not make any acquisitions in 2015. Purchase of non-controlling interest 35 No transactions with non-controlling interests were effected in 2016. On 1 January 2015, Komax acquired the remaining 40% of SLE quality engineering GmbH & Co. KG as well as SLE quality engineering Verwaltungs GmbH, Germany, 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 36 As announced on 3 February 2017, Komax is strengthening its position in the growing market in Asia with the takeover of assets of Practical Solution Pte Ltd, Singapore, and also Practical Solu- tion Trading (Shanghai) Co., Ltd, China. The asset deal with Practical Solution, signed on 3 Feb- ruary 2017, is a further strategic step by Komax to increase its global reach. At the beginning of March 2017, Komax took over assets and around 30 employees at the development and produc- tion site in Singapore (Practical Solution Pte Ltd), as well as at the distribution location in Shang- hai (Practical Solution Trading [Shanghai] Co., Ltd). Following this takeover, Komax will have a total of three development sites in Asia: Singapore, Shanghai and Tokyo. Practical Solution has made a name for itself in Asia with innovative cable processing products for the automotive in- dustry, among other things. With this new development team, Komax now has the opportunity to develop additional solutions specifically for the Asian market. Komax and Practical Solution have already had a distribution partnership for a number of years in which they sell each other’s prod- ucts. To ensure continuity, Hong Hee Meng, the vendor of the Practical Solution assets, will as- sist Komax in Singapore in an advisory role. For this transaction a cash outflow of CHF 1.2 million for assets and inventories as well as CHF 4.5 million for goodwill is expected. 140 E_00_FB_Komax_2016 _P_-gelöst.indd 140 14.03.17 08:47 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2016 With the exception of the before-mentioned events, no material events occurred between the balance sheet date and the approval of the consolidated financial statements by the Board of Directors on 9 March 2017 which might adversely affect the information content of the 2016 con- solidated financial statements or which would require disclosure. Related parties 37 37.1 Transactions with related parties Transactions with associated companies in TCHF Sale of goods and services Purchase of goods and services Interest income Trade receivables as at 31 December Other receivables (current and non-current) as at 31 December Granted loans as at 31 December Trade payables as at 31 December 2016 897 485 192 110 1 201 5 501 68 2015 4 913 2 583 134 87 1 121 5 693 139 In the year under review, no significant transactions were entered into with members of manage- ment in key positions in connection with the sale and purchase of goods and services (2015: none). With the exception of the regular employer contributions to the pension fund, no transac- tions were effected with related parties (2015: none). 37.2 Compensation for the Executive Committee and Board of Directors As at 31 December 2016, the Group’s Executive Committee comprised two (2015: three) mem- bers. In conformity with IFRS 2 for the statement of share-based payments, the total compensa- tion for the Executive Committee, as well as the five (2015: 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 55 (2015: TCHF 49). Executive Committee in TCHF Fixed base salary and cash bonus1 Share-based payments Total 2016 729 175 904 2016 1 319 227 1 546 2015 759 190 949 2015 1 612 343 1 955 1 Including the post-employment benefits of CHF 0.2 million (2015: CHF 0.2 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 70 and 72. E_00_FB_Komax_2016 _P_-gelöst.indd 141 141 14.03.17 08:47 KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2016FINANCIAL REPORT Report of the statutory auditor to the General Meeting of Komax Holding AG, Dierikon Report on the audit of the consolidated financial statements Opinion We have audited the consolidated financial statements of Komax Holding AG and its subsidiaries (the Group), which comprise the consolidated balance sheet as at 31 December 2016 and the consolidated income statement, consol- idated statement of comprehensive income, consolidated statement of shareholders’ equity and consolidated cash flow statement for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies. In our opinion, the accompanying consolidated financial statements (pages 81 to 141) give a true and fair view of the consolidated financial position of the Group as at 31 December 2016 and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRS) and comply with Swiss law. Basis for opinion We conducted our audit in accordance with Swiss law, International Standards on Auditing (ISAs) and Swiss Audit- ing Standards. Our responsibilities under those provisions and standards are further described in the “Auditor’s responsibilities for the audit of the consolidated financial statements” section of our report. We are independent of the Group in accordance with the provisions of Swiss law and the requirements of the Swiss audit profession, as well as the IESBA Code of Ethics for Professional Accountants, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Our audit approach Overview − Overall Group materiality: CHF 2 500 000 − We concluded full scope audit work at four Group companies in three countries. Our audit scope ad- dressed 48% of the revenue and 55% of the assets of the Group. Materiality − Additionally, specified audit procedures were concluded at a further nine Group companies in six coun- Audit Scope tries, which cover a further 19% of revenue and 21% of the assets of the Group. − We obtained additional assurance through the audits of the statutory financial statements of 15 Group companies in eleven different countries. These addressed a further 27% of the revenue and 23% of the assets of the Group. Key audit matters As a key audit matter, the following area of focus was identified: Revenue recognition in the appropriate period Materiality The scope of our audit was influenced by our application of materiality. Our audit opinion aims to provide reasonable assurance that the consolidated financial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if, individually or in aggregate, they could reasonably be expect- ed to influence the economic decisions of users taken on the basis of the consolidated financial statements. Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall materiality for the consolidated financial statements as a whole as set out in the table below. These, togeth- er with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and in aggregate, on the consolidated financial statements as a whole. Overall Group materiality CHF 2 500 000 How we determined it 5% of Group profit before taxes Rationale for the materi- ality benchmark applied We chose Group profit before taxes as the benchmark because, in our view, it is the benchmark against which the performance of the Group is most commonly measured, and it is a generally accepted benchmark for materiality considerations. We agreed with the Audit Committee that we would report to them misstatements above CHF 250 000 identified during our audit as well as any misstatements below that amount which, in our view, warranted reporting for qualitative reasons. 142 E_00_FB_Komax_2016 _P_-gelöst.indd 142 14.03.17 08:47 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2016 Audit scope We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the consoli- dated financial statements as a whole, taking into account the structure of the Group, the accounting processes and controls, and the industry in which the Group operates. The consolidated financial statements comprise 37 entities. We identified four Group companies for which, in our opin- ion, an audit of the complete financial information was necessary on the grounds of their size or risk characteristics. For a further nine Group companies, specified audit procedures were performed to address material items as required. We obtained additional assurance from the timely performance of the audits of the statutory financial statements of 15 Group companies. All of the Group companies in the described scope were audited by local PwC firms in the various countries. None of the Group companies excluded from our audit of the consolidated financial statements accounted individually for more than 5% of the revenue or the total assets of the Group. The audit of the consolidation process and other Group-specific topics (including goodwill impairment testing according to IAS 36 and post-employment benefits according to IAS 19) was performed by the Group auditor. To provide appropriate guidance to and monitor the work of the auditors of the Group companies, the Group audit team performed selected reviews of the audit working papers and held telephone conferences with the auditors of the Group companies. Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Revenue recognition in the appropriate period Key audit matter How our audit addressed the key audit matter We consider revenue recognition in the appropriate period to be a key audit matter because of the need to determine exactly when the risks and rewards associated with deliv- eries are transferred in accordance with the IFRS account- ing requirements (IAS 18). Komax realises revenue from the sale of goods in the peri- od in which it transfers the risks and rewards of ownership. Please refer to the notes to the consolidated financial statements, 2.23. On the basis of the agreed delivery terms (Incoterms), the expected average delivery time until the effective transfer of the risks and rewards of ownership to the buyer, and taking into account special cases (e.g. delivery delays), our audit of revenues focussed on checking in which period the risks and rewards of ownership were transferred and in which period the revenue should be recognised. We checked on a sample basis the revenue booked for the months of December 2016 and January 2017. We per- formed our audit as follows: The Accounting department provided us the details of the revenue booked for December 2016 and for January 2017. On the basis of this information, we examined the related documents (e.g. invoices and delivery notes) for our se- lected samples. Using these documents along with the underlying Incoterms and our understanding of the aver- age delivery times, we checked that these revenues were recognised in the appropriate period. In some cases, we interviewed the persons responsible, including those from other business units. We concluded that the criteria for revenue recognition in the appropriate period in accordance with the IFRS re- quirements were complied with in the consolidated finan- cial statements as at 31 December 2016. E_00_FB_Komax_2016 _P_-gelöst.indd 143 143 14.03.17 08:47 KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2016FINANCIAL REPORT Other information in the annual report The Board of Directors is responsible for the other information in the annual report. The other information comprises all information included in the annual report, but does not include the consolidated financial statements, the stand-alone financial statements and the remuneration report of Komax Holding AG and our auditor’s reports thereon. Our opinion on the consolidated financial statements does not cover the other information in the annual report and we do not express any form of assurance conclusion thereon. In connection with our audit of the consolidated financial statements, our responsibility is to read the other information in the annual report and, in doing so, consider whether the other information is materially inconsistent with the consol- idated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Board of Directors for the consolidated financial statements The Board of Directors is responsible for the preparation of the consolidated financial statements that give a true and fair view in accordance with IFRS and the provisions of Swiss law, and for such internal control as the Board of Directors determines is necessary to enable the preparation of consolidated financial statements that are free from material mis- statement, whether due to fraud or error. In preparing the consolidated financial statements, the Board of Directors is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors intends either to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Auditor’s responsibilities for the audit of the consolidated financial statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opin- ion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Swiss law, ISAs and Swiss Auditing Standards will always detect a material misstatement when it exists. Misstate- ments can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. As part of an audit in accordance with Swiss law, ISAs and Swiss Auditing Standards, we exercise professional judge- ment and maintain professional scepticism throughout the audit. We also: − Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, inten- tional omissions, misrepresentations, or the override of internal control. − Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made. − Obtain an understanding of internal control relevant to the audit 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 Group’s internal control. − Conclude on the appropriateness of the Board of Directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclu- sions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. − Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. − Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activi- ties within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion. 144 E_00_FB_Komax_2016 _P_-gelöst.indd 144 14.03.17 08:47 FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2016 We communicate with the Board of Directors or its relevant committee regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the Board of Directors or its relevant committee with a statement that we have complied with relevant ethical requirements regarding independence, and communicate to them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the Board of Directors or its relevant committee, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public dis- closure about the matter or when, in extremely rare circumstances, we determine that a matter should not be commu- nicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on other legal and regulatory requirements In accordance with article 728a paragraph 1 item 3 CO and Swiss Auditing Standard 890, we confirm that an internal control system exists which has been designed for the preparation of consolidated financial statements according to the instructions of the Board of Directors. We recommend that the consolidated financial statements submitted to you be approved. PricewaterhouseCoopers AG Korbinian Petzi Audit expert Gerd Tritschler Audit expert Auditor in charge Basel, 9 March 2017 E_00_FB_Komax_2016 _P_-gelöst.indd 145 T R O P E R L A I C N A N I F 145 14.03.17 08:47 KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2016 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 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 Group 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 31.12.2016 31.12.2015 996 3 290 9 594 41 6 342 479 2 075 38 29 829 98 004 0 60 55 30 43 810 107 023 74 996 5 057 180 705 2 025 2 000 61 243 5 358 176 218 1 992 0 264 783 244 811 308 593 351 834 315 4 120 5 332 82 3 087 1 025 13 961 27 630 27 630 41 591 377 6 371 2 100 388 66 955 4 529 80 487 514 72 953 16 720 16 720 89 673 369 6 538 2 100 Profit reserves determined by resolution 237 903 232 903 Retained earnings Profit after taxes Treasury shares Total shareholders’ equity 573 21 783 −2 105 −21 22 464 −2 192 267 002 262 161 Total liabilities and shareholders’ equity 308 593 351 834 146 E_00_FB_Komax_2016 _P_-gelöst.indd 146 14.03.17 08:47 KOMAX GROUPANNUAL REPORT2016FINANCIAL 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 Direct taxes Total expenses Profit after taxes 2016 38 499 10 612 1 031 50 142 20 242 4 004 3 775 338 28 359 21 783 2015 30 309 6 794 545 37 648 10 909 950 2 902 423 15 184 22 464 E_00_FB_Komax_2016 _P_-gelöst.indd 147 T R O P E R L A I C N A N I F 147 14.03.17 08:47 KOMAX GROUP ANNUAL REPORT2016FINANCIAL REPORTFINANCIAL REPORTFINANCIAL STATEMENTS OF KOMAX HOLDING AG e Notes to the 2016 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 hidden reserves for the purpose of securing the company’s lasting prosperity. 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. Granted loans are valued at the respective balance sheet date, whereby unrealized losses are accounted for but unrealized gains are not (imparity principle). Investments 1.3 Investments are initially recognized at cost. The valuation of investments is reviewed annually on an individual basis and if necessary adjusted to a lower recoverable amount. 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 in- come 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 “Other current receivables third parties” item contains a proportion of the unsettled amount in relation to the sale of Komax Medtech. Current receivables from Group companies increased by a total of CHF 7.5 million. This balance sheet item includes the current account loan of Komax Holding AG to Komax AG, Switzerland, which now records a credit balance vis-à-vis Komax AG, Switzerland, as at 31 December 2016. The Group’s current loans decreased by a total of CHF 68.2 million. 148 E_00_FB_Komax_2016 _P_-gelöst.indd 148 14.03.17 08:47 KOMAX GROUPANNUAL REPORT2016FINANCIAL REPORTFINANCIAL STATEMENTS OF KOMAX HOLDING AG Financial investments comprise non-current financial loans as well as participatory loans. “Finan- cial investments Group” have increased as a result of newly granted loans to subsidiaries. The “Financial loans associates” item comprises non-current financial loans to Laselec SA, France, and Xcell Automation Inc., USA. The value of the holdings in Komax Shanghai Co. Ltd., China, and Komax de México S. de R.L. de C.V., Mexico, increased in the year under review. In addition, the Group acquired Ondal Tape Pro- cessing GmbH, Germany, at the beginning of the year, as well as Kabatec GmbH & Co. KG, Ger- many, as of 1 July 2016. Komax Holding AG holds 100% of both companies. As a result of the sale of Komax Medtech, the holdings in Komax Systems Malaysia Sdn. Bhd., Malaysia, and Komax Systems LCF SA, Switzerland, no longer apply. The “Investments in associates” balance sheet item contains the holding in Laselec SA, France. The holding in question amounted to 20.8% as at 31 December 2016 (2015: 20.4%). Liabilities 2.2 The current account loan of Komax Holding AG vis-à-vis Komax AG, Switzerland, now exhibits a credit balance as per the balance sheet date. This has the effect of reducing the “Current inter- est-bearing liabilities Group” balance sheet item by CHF 63.0 million. In addition, this item con- tains a financial loan amounting to USD 4.0 million granted by Komax Corp., USA. The amount outstanding from the acquisition of Kabatec GmbH & Co. KG, Germany, is reported under “Other current liabilities third parties”. The provisions relate to open corporation taxes which have to be paid on the holdings in Komax SLE GmbH & Co. KG, Germany, and Kabatec GmbH & Co. KG, Germany. The existing credit agreement between Komax Holding AG and a bank syndicate, which runs until 31 July 2017 and involves a credit limit of CHF 120.0 million, was prematurely replaced by a new credit agreement on 9 December 2016. The new credit agreement between Komax Holding AG and a bank syndicate led by Credit Suisse has a credit limit of CHF 100.0 million, including a one-off option to increase this limit by CHF 40.0 million. This credit agreement is valid until 31 January 2022. In addition, there is an option to extend the credit agreement by one year to 31 January 2023. 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 2016, the Group had drawn on this credit limit to the amount of CHF 16.0 million, USD 6.0 million and EUR 5.0 million (total drawing: CHF 27.6 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 in the same way as the re- payment of nominal capital and are not subject to withholding tax. The self-financing ratio increased by 12.0 percentage points, from 74.5% as per 31 December 2015 to 86.5% as per 31 December 2016. E_00_FB_Komax_2016 _P_-gelöst.indd 149 T R O P E R L A I C N A N I F 149 14.03.17 08:47 KOMAX GROUP ANNUAL REPORT2016FINANCIAL REPORTFINANCIAL REPORTFINANCIAL STATEMENTS OF KOMAX HOLDING AG Income 2.3 The majority of dividend income come from Komax AG, Switzerland (CHF 36.0 million). Other dividend payments were made by Komax Singapore Pte. Ltd., Singapore, 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. In addition, this item contains the positive holding result from the sale of Komax Medtech. Other operating income comprises billed amounts for holding fees and licenses, as well as inci- dental revenues of third parties and the Group. Expenses 2.4 The “Financial expenses” item comprises, among other things, interest expenses and commis- sions, 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 exchange-rate losses, particularly in the case of the USD items. This item also contains holding losses in connection with the sale of Komax Med- tech. Personnel expenses comprise compensation paid to the Board of Directors as well as the provi- sion for future cash settlement of options redeemed. The “Other operating expenses” item includes patents and licence costs, advisory and legal ex- penses, investor relations expenses, representation expenses, insurance premiums, and other operating expenditure items. Direct taxes contain expenses for corporation tax and non-reclaimable withholding taxes. 3 Company: Legal form: Registered office: Company and 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. 150 E_00_FB_Komax_2016 _P_-gelöst.indd 150 14.03.17 08:47 KOMAX GROUPANNUAL REPORT2016FINANCIAL REPORTFINANCIAL STATEMENTS OF KOMAX HOLDING AG Treasury shares 6 No. Total as at 1 January Purchases avg. CHF 233.85/share (2015: avg. CHF 0.00/share) Sales avg. CHF 236.93/share (2015: avg. CHF 0.00/share) Granted from share-based compensation plan avg. CHF 112.27/share (2015: avg. CHF 112.27/share) Total as at 31 December 7 Contingent liabilities in TCHF Joint liability for Group taxation value-added tax Guarantees in EUR in USD in CHF Total 2016 19 522 9 000 −18 355 2015 20 000 0 0 −1 167 −478 9 000 19 522 31.12.2016 31.12.2015 p.m. p.m. 3 207 1 407 0 4 614 2 049 1 559 5 918 9 526 From the total contingent liabilities of CHF 4.6 million (2015: CHF 9.5 million) CHF 3.2 million (2015: CHF 8.0 million) are contingent liabilities in favor of subsidiaries. Conditional capital 8 As at 1 January 2016, the conditional capital consisted of 158 349 registered shares, each with a par value of CHF 0.10, created for management and employee share ownership schemes. 82 497 options were converted into shares in 2016 (2015: 86 550). There was no increase in the condi- tional capital. Change in conditional share capital Number of conditional registered shares Par value CHF Opening amount as at 1 January 2016 Reduction in conditional share capital as a result of exercise of options in 2016 Closing amount as at 31 December 2016 158 349 −82 497 75 852 0.10 0.10 0.10 Conditional share capital CHF 15 835 −8 250 7 585 E_00_FB_Komax_2016 _P_-gelöst.indd 151 T R O P E R L A I C N A N I F 151 14.03.17 08:47 KOMAX GROUP ANNUAL REPORT2016FINANCIAL REPORTFINANCIAL REPORTFINANCIAL STATEMENTS OF KOMAX HOLDING AG 9 Major shareholders Shareholder / shareholder group at 31 December 2016 No. of shares Share in %1 Veraison SICAV, Zurich, Switzerland2 Max Koch, Meggen, Switzerland Vontobel Fonds Services AG, Switzerland3 Shareholder / shareholder group at 31 December 2015 Max Koch, Meggen, Switzerland Veraison SICAV, Zurich, Switzerland2 218 329 187 069 185 127 5.9% 5.1% 5.0% No. of shares Share in %1 187 069 180 488 5.2% 5.0% 1 Calculated on the basis of 3 691 651 shares that were registered as at the balance sheet date of 31 December 2016 (2015: 3 605 101). 2 Repor ted figure of exceeding the threshold of 5 percent on 23 May 2015. 3 Repor ted figure as at 7 October 2016. Externally regulated capital requirements (covenants) 10 The Group’s financial liabilities are subject to the following externally regulated capital require- ment (covenant) as per the syndicated loan agreement: The gearing factor may not exceed 3.25 either at 31 December 2016 or thereafter at each quarter-end balance sheet date. The Komax Group has complied with all capital requirements since the contract signing date as well as at 31 December 2016. Within the scope of the syndicated loan agreement, Komax Holding AG guarantees for the liabilities of any member of the Komax Group. 152 E_00_FB_Komax_2016 _P_-gelöst.indd 152 14.03.17 08:47 KOMAX GROUPANNUAL REPORT2016FINANCIAL REPORTFINANCIAL STATEMENTS OF KOMAX HOLDING AG 11 Holdings of shares and options Assets in units 31.12.2016 31.12.2015 Board of Directors Beat Kälin Daniel Hirschi Kurt Haerri Roland Siegwart David Dean Leo Steiner1 Shares Options Shares Options Chairman Member Member Member Member Member 9 135 3 713 703 844 1 068 n.s. 13 000 2 000 2 000 1 000 666 n.s. 8 800 3 275 88 63 803 123 301 19 000 3 000 2 500 1 666 666 7 500 Total Board of Directors 15 463 18 666 136 330 34 332 Executive Committee Matijas Meyer Andreas Wolfisberg René Ronchetti2 CEO / Head BU Wire 2 000 CFO Head BU Medtech 600 n.s. 3 000 3 000 n.s. 1 000 500 100 7 000 6 000 6 000 Total Executive Committee 2 600 6 000 1 600 19 000 1 Chairman of the Board of Directors until 8 May 2015 and subsequently member until 12 May 2016. 2 Member of the Executive Committee until 15 April 2016. Net release of hidden reserves 12 The total amount of the net released hidden reserves amounted to CHF 1.4 million (2015: CHF 0.0 million). E_00_FB_Komax_2016 _P_-gelöst.indd 153 T R O P E R L A I C N A N I F 153 14.03.17 08:47 KOMAX GROUP ANNUAL REPORT2016FINANCIAL REPORTFINANCIAL REPORTFINANCIAL STATEMENTS OF KOMAX HOLDING AG FINANC IAL REPORT CORPO RATE STRUC TU RE Komax Group Companies e Direct and indirect equity participation as at 31 December 2016 Place Dierikon, Switzerland Dierikon, Switzerland Burghaun, Germany Nuremberg, Germany Epinay-sur-Seine, France Burghaun, Germany S. Domingos de Rana, Portugal Grafenau, Germany Grafenau, Germany Hünfeld, Germany Bucharest, Romania Vienna, Austria Budakeszi, Hungary Brno, Czech Republic Bratislava, Slovakia Porta Westfalica, Germany Porta Westfalica, Germany Ergene / Tekirdag, Turkey Bistrita, Romania Mohammédia, Morocco Tunis, Tunisia São Paulo, Brazil Buffalo Grove, Illinois, USA Irapuato, Guanajuato, Mexico Buffalo Grove, Illinois, USA York, Pennsylvania, USA Colombo, Brazil El Paso, Texas, USA Gurgaon, India Tokyo, Japan Shanghai, China Singapore Shanghai, China York, Pennsylvania, USA Toulouse, France Company Komax Management AG Komax AG Kabatec GmbH & Co. KG Komax Deutschland GmbH Komax France Sàrl. Komax Kabatec Verwaltungs GmbH Komax Portuguesa S.A. Komax SLE GmbH & Co. KG Komax SLE Verwaltungs GmbH Ondal Tape Processing GmbH SC Thonauer Automatic s.r.l. Thonauer Gesellschaft m.b.H. Thonauer Kft. Thonauer spol. s.r.o. Thonauer s.r.o. TSK Beteiligungs GmbH TSK Prüfsysteme GmbH TSK Test Sistemleri San. Ltd. Sti. TSK Test Systems SRL Komax Maroc Sàrl. TSK Tunisia s.a.l. Komax Comercial do Brasil Ltda. Komax Corp. Komax de México S. de R.L. de C.V. Komax Holding Corp. Komax York Inc. TSK do Brasil Ltda. TSK Innovations Co. Komax Automation India Pvt. Ltd. Komax Japan K.K. Komax Shanghai Co. Ltd. Komax Singapore Pte. Ltd. TSK Test Systems (Shanghai) Co. Ltd. Xcell Automation Inc. Laselec SA Komax Holding AG Dierikon, Switzerland Purpose: Holding of equity interests Listed on: SIX Swiss Exchange Swiss security ID code: 001070215 Share Capital: CHF 377 414.80 Market capitalization: CHF 948.3 million 154 E_00_FB_Komax_2016 _P_-gelöst.indd 154 14.03.17 08:47 KOMAX GROUPANNUAL REPORT2016 Purpose Participation Ordinary capital Group services and management R&D, engineering, production, marketing, sales R&D, engineering, production, marketing, sales Sales Sales Administration Sales R&D, engineering, production, marketing, sales Administration R&D, engineering, production, marketing, sales Sales Sales Engineering, production, sales Sales Sales Holding of equity interests R&D, engineering, production, marketing, sales R&D, engineering, production, marketing, sales Sales Sales Engineering, production, marketing, sales Sales Sales Sales Holding of equity interests Administration Engineering, production, marketing, sales Engineering, production, marketing, sales Sales R&D, production, marketing, sales R&D, production, sales Sales Engineering, production, marketing, sales R&D, engineering, production, marketing, sales R&D, engineering, production, marketing, sales E_00_FB_Komax_2016 _P_-gelöst.indd 155 100% 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% 100% 100% 100% 100% 100% 25% 21% CHF CHF EUR EUR EUR EUR EUR EUR EUR EUR 100 000 5 000 000 100 000 400 000 1 500 000 25 000 1 500 000 5 700 000 25 000 30 000 RON 2 200 000 EUR HUF CZK EUR EUR EUR TRY RON MAD TND BRL USD MXN USD USD BRL USD INR JPY USD SGD CNY USD EUR 36 336 10 000 000 200 000 6 639 4 000 000 1 764 700 265 500 110 152 10 000 000 366 000 200 000 1 000 000 3 000 8 160 000 150 362 500 1 000 000 10 000 000 90 000 000 2 110 000 100 000 3 275 902 560 000 545 280 T R O P E R L A I C N A N I F 155 14.03.17 08:47 KOMAX GROUP ANNUAL REPORT2016FINANCIAL 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 31.12.2016 31.12.2015 573 368 −20 995 21 783 182 22 464 085 5 661 222 5 537 477 Total available for distribution 28 017 772 27 980 567 Payout from capital contribution reserves of CHF 1.50 per registered share (2015: CHF 1.50) which is not subject to withholding tax1 Dividend of CHF 5.00 gross per registered share (2015: CHF 4.50)1 Allocation to free reserves Profit carried forward Total 5 661 222 5 537 477 18 870 740 16 612 430 3 000 000 485 810 5 000 000 830 660 28 017 772 27 980 567 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 2017 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_2016 _P_-gelöst.indd 156 14.03.17 08:47 KOMAX GROUPANNUAL REPORT2016 Materiality Audit Scope Key audit matters Report of the statutory auditor to the General Meeting of Komax Holding AG, Dierikon Report on the audit of the financial statements Opinion We have audited the financial statements of Komax Holding AG, which comprise the balance sheet as at 31 December 2016, income statement for the year then ended and notes, including a summary of significant accounting policies. In our opinion, the accompanying financial statements (pages 146 to 156) as at 31 December 2016 comply with Swiss law and the articles of incorporation. Basis for opinion We conducted our audit in accordance with Swiss law and Swiss Auditing Standards. Our responsibilities under those provisions and standards are further described in the “Auditor’s responsibilities for the audit of the financial statements” section of our report. We are independent of the entity in accordance with the provisions of Swiss law and the requirements of the Swiss audit profession and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Our audit approach Overview − − Overall materiality: CHF 1 100 000 We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the financial statements as a whole, taking into account the structure of the entity, the accounting processes and controls, and the industry in which the entity operates. As a key audit matter, the following area of focus was identified: Valuation of investments in subsidiaries Materiality The scope of our audit was influenced by our application of materiality. Our audit opinion aims to provide reasonable assurance that the financial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements. Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall materiality for the financial statements as a whole as set out in the table below. These, together with qualita- tive considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and in aggregate, on the financial state- ments as a whole. Overall materiality CHF 1 100 000 How we determined it 0.5% of net assets Rationale for the materiality benchmark applied We chose net assets as the benchmark for determining materiality. We chose net as- sets as the benchmark for materiality considerations because the Company primarily holds investments and grants loans to Group companies. We agreed with the Audit Committee that we would report to them misstatements above CHF 110 000 identified during our audit as well as any misstatements below that amount which, in our view, warranted reporting for qual- itative reasons. E_00_FB_Komax_2016 _P_-gelöst.indd 157 T R O P E R L A I C N A N I F 157 14.03.17 08:47 KOMAX GROUP ANNUAL REPORT2016FINANCIAL REPORTFINANCIAL REPORTFINANCIAL STATEMENTS OF KOMAX HOLDING AG Audit scope We designed our audit by determining materiality and assessing the risks of material misstatement in the financial statements. In particular, we considered where subjective judgements were made; for example, in respect of signif- icant accounting estimates that involved making assumptions and considering future events that are inherently un- certain. As in all of our audits, we also addressed the risk of management override of internal controls, including among other matters consideration of whether there was evidence of bias that represented a risk of material mis- statement due to fraud. Report on key audit matters based on the Circular 1/2015 of the Federal Audit Oversight Authority Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Valuation of investments in subsidiaries Key audit matter How our audit addressed the key audit matter The shareholdings in the capital of subsidiaries held by Komax Holding AG are recognised in the financial state- ments under “Investments in subsidiaries” (CHF 181 mil- lion). Investments in subsidiaries are valued individually at acquisition cost less any necessary impairment charges. The company tests these investments for impairment by comparing the book value of the investment with the shareholders’ equity according to IFRS or the value in use of the subsidiary concerned. To determine the value in use, an in-depth valuation analysis is performed using cash flow forecasts based on the business plans approved by Management and the Board of Directors. This valuation analysis is based on Management’s as- sumptions, which involve significant scope for judgement. For this reason, we deemed the impairment testing of in- vestments in subsidiaries to be a key audit matter. Please refer to Note 1.3 (Investments). Firstly, we compared the book values of the investments in the subsidiaries with the subsidiaries’ shareholders’ eq- uity according to IFRS as at the balance sheet date. Where the book value was higher than the recorded share- holders’ equity, we performed an impairment test based on an analysis of the existing business plans. The analysis consisted of the following: − We assessed the assumptions applied by Manage- ment concerning long-term growth rates and margins. Where possible, we compared the results of the year under review with the forecasts made in the prior year. We assessed also the appropriateness of the prior year’s assumptions. We performed an assessment of the appropriate- ness of the discount rate used in the calculation. We consider the principles and the assumptions applied by Management to be appropriate and sufficient for the impairment testing of investments in subsidiaries. − − Responsibilities of the Board of Directors for the financial statements The Board of Directors is responsible for the preparation of the financial statements in accordance with the provi- sions of Swiss law and the company’s articles of incorporation, and for such internal control as the Board of Direc- tors determines is necessary to enable the preparation of financial statements that are free from material misstate- ment, whether due to fraud or error. In preparing the financial statements, the Board of Directors is responsible for assessing the entity’s ability to con- tinue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors intends either to liquidate the entity or to cease operations, or has no realistic alternative but to do so. Auditor’s responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Rea- sonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Swiss law and Swiss Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with Swiss law and Swiss Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: − − − Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are 158 E_00_FB_Komax_2016 _P_-gelöst.indd 158 14.03.17 08:47 KOMAX GROUPANNUAL REPORT2016FINANCIAL REPORTFINANCIAL STATEMENTS OF KOMAX HOLDING AG − appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Conclude on the appropriateness of the Board of Directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the entity’s ability to continue as a going concern. If we conclude that a ma- terial uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or condi- tions may cause the entity to cease to continue as a going concern. We communicate with the Board of Directors or its relevant committee regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the Board of Directors or its relevant committee with a statement that we have complied with rele- vant ethical requirements regarding independence, and communicate to them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the Board of Directors or its relevant committee, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on other legal and regulatory requirements 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 company’s articles of incorporation. We recommend that the financial statements submitted to you be approved. PricewaterhouseCoopers AG Korbinian Petzi Audit expert Gerd Tritschler Audit expert Auditor in charge Basel, 9 March 2017 E_00_FB_Komax_2016 _P_-gelöst.indd 159 T R O P E R L A I C N A N I F 159 14.03.17 08:47 KOMAX GROUP ANNUAL REPORT2016FINANCIAL REPORTFINANCIAL REPORTFINANCIAL STATEMENTS OF KOMAX HOLDING AG FURTHER INFORMATI ON FIVE-YEAR OVERVI EW Five-year 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 as at 31 December 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 December 63.9 61 058 16.4 50 581 13.6 39 530 10.6 −4 041 35 489 9.5 10 477 29 020 7.8 197 726 231 879 311 910 72.6 377 117 695 27.4 31 060 78 17 393 429 605 36 767 22 827 2 674 1 633 243 123 116 3 774 0.10 251.25 180.10 251.25 No. No. 1 000 CHF CHF CHF CHF 2016 20155 2014 2013 2012 372 972 238 486 315 093 205 941 363 338 220 188 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 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 65.7 344 122 528 34.1 56 765 0 938 357 591 359 533 31 734 8 032 24 545 45 222 9 033 27 627 1 498 1 282 1 330 261 126 119 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 65.4 59 123 18.8 49 938 15.8 36 108 11.5 −6 893 29 215 9.3 9 185 25 315 8.0 160 940 238 027 283 134 71.0 369 29.0 16 518 0 34 365 398 967 49 612 18 850 24 519 1 347 248 128 121 3 692 0.10 194.90 122.90 194.90 115 833 101 882 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. 5 Prior-year figures restated in accordance with Note 9 of the consolidated financial statements. 160 E_00_FB_Komax_2016 _P_-gelöst.indd 160 14.03.17 08:47 KOMAX GROUPANNUAL REPORT2016 Komax Holding AG Investor Relations and Corporate Communications Roger Müller Industriestrasse 6 6036 Dierikon Switzerland Phone +41 41 455 04 55 www.komaxgroup.com Financial calendar Annual General Meeting Dividend payment Half-year results 2017 First information on the year 2017 Annual media and analyst conference on the 2017 financial results Annual General Meeting 12 May 2017 18 May 2017 24 August 2017 23 January 2018 20 March 2018 19 April 2018 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 behavior 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. Imprint Published by: Komax Holding AG, Dierikon Concept and realization: Linkgroup AG, Zurich www.linkgroup.ch Publishing platform PublishingSuite® Linkgroup AG, Zurich www.linkgroup.ch Steiner Communications, Zurich/Uitikon www.steinercom.ch Produced on a climate-neutral basis by Multicolor Print AG, Baar E_00_GB_Komax_UG_2016 _P_-gelöst.indd 8 15.03.17 10:00 6 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_2016 _P_-gelöst.indd 1 15.03.17 09:59
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