Komax Annual Report 2016

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Annual Report
2016

2014
I
Geschäftsbericht

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THE WAY TO MAKE IT

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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.

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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.

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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

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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

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KOMAX GROUP ANNUAL REPORT2016ANNUAL 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.

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KOMAX GROUP ANNUAL REPORT2016AN NUA L REPORT
IN BRIEF

Net sales
by region

Switzerland

20%

Asia������

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%

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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.

KOMAX GROUP
ANNUAL REPORT

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2016
ANN UA L REPORT
IN BRIEF

Operating profit (EBIT)

Shareholders’ equity

in TCHF

0
0
0
0
4

0
0
0
0
2

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

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

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

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.

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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

KOMAX GROUP
ANNU AL REPORT

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2016ANN 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.

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KOM AX GROUP
ANN UA L REPORT

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.

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KOMAX GROUP ANNUAL REPORT2016AN NUA L REPORT
LOCATIONS

15
production
sites

Headquarters:
Komax Holding AG
Dierikon, Switzerland

34
Komax companies
worldwide

Sales and
service support in
60
countries

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Komax production, sales
and service
Komax sales and service
Sales representative
Participation

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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.

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KOMAX GROUP ANNUAL REPORT2016Autonomous
driving

Increasing
pressure for
automation

ANN UA L REPORT
GL OB AL MEG ATRENDS

Electro-
mobility

Growing number of
vehicles and
wires

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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.

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KOMAX GROUP ANNUAL REPORT2016Demand 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.

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KOMAX GROUP ANNUAL REPORT2016ANNU 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.

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KOMAX GROUP ANNUAL REPORT2016ANN 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.

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KOMAX GROUP ANNUAL REPORT2016ANNUAL 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.

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KOMAX GROUP ANNUAL REPORT2016Ambitious
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

S
U
B

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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.

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KOMAX GROUP ANNUAL REPORT2016Solutions 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.

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KOMAX GROUP ANNUAL REPORT2016ANNU AL REPORT
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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.

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KOMAX GROUP ANNUAL REPORT2016ANN 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

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KOMAX GROUP ANNUAL REPORT2016ANNU 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.

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KOMAX GROUP ANNUAL REPORT2016ANN 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

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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

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.

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KOMAX GROUP ANNUAL REPORT2016ANN 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

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The way to make
the best connection

Measuring/cutting

Connector insertion

Harness sub-assembly

Stripping

Twisting

Taping

Harness

sub-assembly

Final assembly

Komax systems
t

Measuring/cutting

Stripping

Crimping

Twisting

Connector insertion

Taping

Cutting
Preprocessing

e
Wire harness manufacturer

Crimping

Wires
Contacts
Housings

Component manufacturer

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KOMAX GROUP ANNUAL REPORT2016ANN 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.

Integration of wire harness
Assembly

e
Original Equipment Manufacturer (OEM)

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.

Harness test systems

Testing

Warehouse
Shipping

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KOMAX GROUP ANNUAL REPORT2016

ANNU AL REPORT
BOARD OF DIRECTORS

Board
of Directors

As at 31 December 2016

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

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KOMAX GROUP ANNUAL REPORT2016Kurt 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,

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.

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KOMAX GROUP ANNUAL REPORT2016ANNUAL 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.

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KOMAX GROUP ANNUAL REPORT2016Headcount
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

Administration

Y
T

B
A
N

A
T
S
U
S

Y
T

L
A

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%

Switzerland

Europe

Africa

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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.

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KOMAX GROUP ANNUAL REPORT2016The 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 14001

OHSAS 18001

ISO 14001

DE AEOC 104360

ISO 14001

OHSAS 18001

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KOMAX GROUP ANNUAL REPORT2016ANNU 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.

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KOMAX GROUP ANNUAL REPORT2016ANN 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.

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KOMAX GROUP ANNUAL REPORT2016ANNUAL 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

218

204

530

407

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.

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KOMAX GROUP ANNUAL REPORT2016948.3m
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

N
O
T
A
M
R
O
F
N

S
R
O
T
S
E
V
N

R
O
F

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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

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

KOMAX GROUP
ANNU AL REPORT

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2016ANN UA L REPORT
INFORMATION FOR INVESTORS

e Geographical distribution of shareholdings

Switzerland

Other countries

Cleared shares

62%

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

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.

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KOMAX GROUP ANNUAL REPORT2016ANNU 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.

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.

KOMAX GROUP
ANNUAL REPORT

2016

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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

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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.

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KOMAX GROUP ANNUAL REPORT2016ANN 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.

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KOMAX GROUP ANNUAL REPORT2016ANNU 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.

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KOMAX GROUP ANNUAL REPORT2016ANN 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.

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KOMAX GROUP ANNUAL REPORT2016ANNU 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.

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KOMAX GROUP ANNUAL REPORT2016C 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

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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.

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KOMAX GROUP ANNUAL REPORT2016ANN 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.

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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.

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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

RC (Chairman)

AC (Chairman)

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.

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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.

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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.

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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.

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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.

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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.

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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”.

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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.

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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.

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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

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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.

N
O
T
A
S
N
E
P
M
O
C

T
R
O
P
E
R

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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

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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

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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.

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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.

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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

5 000

2 500

5 000

2 500

Annual
allocation of
restricted
shares1
60 000

30 000

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.

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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

–

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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.

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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

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.

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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

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

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

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.

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2016KOMAX GROUP ANNUAL REPORTANN 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

Options

9 135

3 713

703

844

1 068

n.s.

13 000

2 000

1 000

666

n.s.

8 800

3 275

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.

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2016KOMAX GROUP ANNUAL REPORTANNU 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%).

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2016KOMAX GROUP ANNUAL REPORTANN 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

Options

2 000

600

n.s.

3 000

n.s.

1 000

500

100

Options

7 000

6 000

Total Executive Committee

2 600

6 000

1 600

19 000

1 Head of the Medtech business unit until 15 April 2016.

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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

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2016KOMAX GROUP ANNUAL REPORTFIN 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

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KOMAX GROUP ANNUAL REPORT2016FINANCIAL REPORTComments 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.

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

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FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2016able 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%.

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KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2016FINANCIAL REPORTThe 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.

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FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2016The 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.

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KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2016FINANCIAL REPORTe 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.

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FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2016e 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

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

18 776

43 615

5 628

2 222

70 319

31 060

3 487

8 907

3 922

47 376

17 592

53 063

6 420

3 666

80 741

16 518

2 476

16 098

35 092

117 695

115 833

377

−2 105

25 382

288 256

311 910

369

−2 191

25 548

259 408

283 134

311 910

283 134

429 605

398 967

The notes on pages 86 to 141 are an integral component of these consolidated financial statements.

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KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2016FINANCIAL REPORTe 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

14/15/17

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

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

8 798

−14 938

43 798

7 690

36 108

−6 893

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.

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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

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

14 402

The notes on pages 86 to 141 are an integral component of these consolidated financial statements.

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KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2016FINANCIAL REPORTe 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

14/17

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

−34

−36 236

23 589

357

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

−4 923

−34 093

−25 093

14 387

−2 483

−2 105

4 349

5 465

−2 233

−5 623

−16 870

−5 113

−2 352

50 883

48 531

−7 205

6 315

−4 184

−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.

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FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2016e 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

5 457

−5 623

−45

131

5 224

35 489

40 713

−16 870

2 288

1 583

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

Distribution out of reserves from capital
contributions

Dividend paid

Transactions in treasury shares

Share-based payments

Balance on 31 December 2016

377

−2 105

25 382

−28 626

316 882

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

6 307

−9 157

−7 266

29 215

21 949

−9 157

1 419

286 170

−14 813

29 215

14 402

6 315

−9 157

1 473

−4 910

−2 002

−6 912

Comprehensive income after taxes

Capital increase from exercise of options

Distribution out of reserves from capital
contributions

Dividend paid

Share-based payments

Purchase of non-controlling interests
with no changes of control

Balance on 31 December 2015

369

−2 191

25 548

−29 760

289 168

283 134

The notes on pages 86 to 141 are an integral component of these consolidated financial statements.

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KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2016FINANCIAL REPORTe 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.

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FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT20162.1.2 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.

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KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2016FINANCIAL REPORT2.2.2 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.

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FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2016Segment 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.

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KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2016FINANCIAL REPORT2.4.2 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

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FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2016Property, 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

10–14

5–8

3–10

3–5

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.

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KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2016FINANCIAL REPORTFor 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.

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FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2016The 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

48 531

85 138

21 323

6 611

50 883

104 828

19 771

7 170

161 603

182 652

31.12.2016

31.12.2015

6 832

6 883

31 138

18 776

9 550

59 464

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.

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KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2016FINANCIAL REPORT2.9.2 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.

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FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT20162.10 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.

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KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2016FINANCIAL REPORT2.13 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.

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FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT20162.19 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.

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KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2016FINANCIAL REPORTActuarial 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.

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FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT20162.23 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.

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KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2016FINANCIAL REPORT2.25 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.

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FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2016Financial 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.

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KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2016FINANCIAL REPORT3.2 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

A−

n.s.

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.

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FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT20163.3 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.

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KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2016FINANCIAL REPORT31.12.2016

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

16 966

6 737

1 693

1 230

15 357

4 582

1 889

975

100

115

4 871

288

5 430

478

888

300

134

530

30 660

2 932

16 518

31 138

18 776

13 450

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.

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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

6 100

6 832

6 100

6 832

6 883

Level 1

Level 2

Level 3

Total

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

8 000

−1 900

6 100

4 527

6 801

−4 632

136

6 832

Contingent
consideration
receivables

Contingent
consideration
liabilities

2 423

2 104

4 527

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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.

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FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2016Employee 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.

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KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2016FINANCIAL REPORTCash 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%

7.16%

1.83%

652

151

803

TCHF

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”.

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),

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FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2016equivalent 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

−211

−64

927

2015

1 286

−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

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KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2016FINANCIAL REPORT7

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

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.

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

8 229

34 727

6 544

18 499

59 770

2015

8 331

2 633

−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”.

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FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2016In 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

19 054

19 236

–182

315

–497

–3 544

–4 041

–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

–0.79

–0.77

–4 021

–1.10

–1.08

Total

19 054

19 236

–182

315

–497

–3 544

–4 041

–1.08

–1.07

Total

60 256

67 911

–7 655

–762

–6 893

–1.89

–1.85

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KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2016FINANCIAL REPORTDetails 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

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FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT20162015

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

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

−1 321

19 333

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KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2016FINANCIAL REPORTThe 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.

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

5 501

2 000

1 064

8 611

111

5 693

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

−9

111

0 –1 year

1–5 years

0–1 year

1–5 years

107

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.

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FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2016Employee 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

−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.

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KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2016FINANCIAL REPORTResponsibility 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

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

Total as at 31 December

139 049

141 499

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FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2016The 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

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.

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KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2016FINANCIAL REPORTThe 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

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FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2016According 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%

2 154

2 231

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”.

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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

−24

−2

−99

173

221

−458

−537

−76

3 358

−3 358

−613

−712

3 386

876

1 623

1 108

620

7 740

7 851

2 567

10 431

315

−1 835

−1 350

19 607

160

1 354

−42

−15

−251

−123

−126

−172

−289

−194

−4 436

−986

7 255

1 660

4 565

8 131

4 087

177

1 917

−2 392

−7 427

45 482

494

499

−310

−467

−777

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

25 258

38 485

63 743

−33

−13

−7

−1 776

1 548

−42

−15

−192

−119

−126

617

708

809

619

−793

−121

−205

−175

−1 941

−773

9 482

4 746

1 107

2 027

3 282

2 726

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

−73

2 543

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.

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FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT201614.2 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

105

2 421

638

287

762

1 949

2 038

−2 054

896

392

−443

−344

−25

−592

−993

−659

−27

−17

−148

19 061

6 568

1 838

3 251

9 924

4 505

596

42 604

−1 047

79 159

16 248

−896

−210

95 436

−1 106

138 040

−2 153

7 434

−3 056

−192

45 743

627

1 177

4 145

5 949

−705

−6 128

−347

−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

−122

−61

−57

−72

−142

−93

Total movables

24 735

−547

Real estate

Buildings

Land

Real estate under construction

38 052

−300

Total real estate

38 052

−300

Total

62 787

−847

−427

−344

−21

−482

−975

−644

1 379

−15

10 536

536

554

816

667

−8

−49

4 305

1 235

1 693

4 495

2 994

−2 893

4 035

−72

25 258

20 485

−695

2 477

−1 049

38 485

−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.

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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

103

2 499

−22

2 157

28 824

3 000

−163

−2 068

−12 173

15 216

4 062

45 911

15 828

8 551

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

4 624

−9

Total

17 866

−9

−131

2 072

−1 650

1 492

9 474

4 060

5 742

45 911

6 116

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

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:

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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.

INJ

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

−103

3 626

−926

−50

14 868

4 051

29 157

12 828

6 416

Total

63 084

−255

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

3 282

−150

Total

15 716

−150

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−926

−50

1 934

9 192

4 050

5 676

29 157

1 342

4 624

8 204

6 416

−976

3 276

17 866

49 454

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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).

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

200

6 860

2016

1 311

191

1 549

5 311

2015

−7

6 667

6 660

2015

188

−3

1 121

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.

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FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2016Trade 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

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

556

1 036

13 450

12 405

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KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2016FINANCIAL REPORT20

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

−307

−2 588

−711

2 222

2015

6 348

2 462

−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.

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

Landesbank Baden-Württemberg, Germany

CHF

USD

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

8 720

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.

Other non-current liabilities

in TCHF

Accrual for personnel expenses

Contingent consideration

Total

31.12.2016

31.12.2015

990

2 932

3 922

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).

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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

370 168

306

370 474

59 850

−9 269

50 581

22 625

1 039

10 250

106

227

22 731

1 039

10 477

Wire

Corporate1

Group

312 216

1 451

313 667

312 225

1 451

313 676

59 670

−9 732

49 938

18 084

1 898

19 982

152

8 972

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

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KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2016FINANCIAL REPORT24.2

Information by geographical area

Net sales by location of purchasing party

Switzerland

Europe2

North and South America

Asia/Pacific

Total

2016

20151

in TCHF

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

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

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.

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FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT201625

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

305

495

2 498

2016

97 671

1 742

1 285

20 778

4 466

20151

1 188

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:

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KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2016FINANCIAL REPORT26.2.1 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

−84 047

−3 757

−3 660

CHF

92.67

0.00

66.91

118.33

66.21

No.

283 062

−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.

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FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT201626.2.2 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

2015

3 612

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.

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KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2016FINANCIAL REPORT26.2.4 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

2015

1 070

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.

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FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT201626.3 Breakdown of employees by country and areas of activity

2016

Production

Research and development

Engineering

Marketing and sales

Administration6

CH1

225

130

171

Total headcount at 31 December 2016

598

20157

Production

Research and development

Engineering

Marketing and sales

Administration6

CH1

213

111

146

Total headcount at 31 December 2015

530

Europe2

Americas3

Asia4

Africa5

Total

227

140

532

218

204

Europe2

Americas3

Asia4

Africa5

164

103

407

150

182

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.

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KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2016FINANCIAL REPORTExtraordinary 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).

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

6 894

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.

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

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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

287

−259

−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.

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KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2016FINANCIAL REPORT32.2 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.

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FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT201634

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

11 467

216

1 816

186

720

479

807

300

1 235

175

1 586

6 849

312

3 014

469

1 432

Total

6 630

13 181

415

4 678

7 057

150

2 497

3 092

20 826

1 468

13 524

1 901

37 719

−8 982

−2 433

−261

−65

−2 483

−587

−163

−580

−205

−606

−271

−20

−16

−11 741

−1 330

−3 601

−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

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

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.

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KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2016FINANCIAL REPORTThonauer 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 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.

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FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2016No 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 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.

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KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2016FINANCIAL REPORTSLE 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.

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FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2016With 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

2015

4 913

2 583

134

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.

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KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2016FINANCIAL REPORTReport 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.

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FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2016Audit 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.

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KOMAX GROUP ANNUAL REPORTFINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTS2016FINANCIAL REPORTOther 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.

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FINANCIAL REPORTCONSOLIDATED FINANCIAL STATEMENTSKOMAX GROUPANNUAL REPORT2016We 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

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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

6 342

479

2 075

29 829

98 004

43 810

107 023

74 996

5 057

180 705

2 025

2 000

61 243

5 358

176 218

1 992

264 783

244 811

308 593

351 834

315

4 120

5 332

3 087

1 025

13 961

27 630

41 591

377

6 371

2 100

388

66 955

4 529

487

514

72 953

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

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KOMAX GROUPANNUAL REPORT2016FINANCIAL REPORTFINANCIAL STATEMENTS OF KOMAX HOLDING AGe 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

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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.

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KOMAX GROUPANNUAL REPORT2016FINANCIAL REPORTFINANCIAL STATEMENTS OF KOMAX HOLDING AGFinancial 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.

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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.

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KOMAX GROUPANNUAL REPORT2016FINANCIAL REPORTFINANCIAL STATEMENTS OF KOMAX HOLDING AGTreasury shares

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

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

−1 167

−478

9 000

19 522

31.12.2016

31.12.2015

p.m.

3 207

1 407

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

Conditional
share capital
CHF

15 835

−8 250

7 585

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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.

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KOMAX GROUPANNUAL REPORT2016FINANCIAL REPORTFINANCIAL STATEMENTS OF KOMAX HOLDING AG11

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

Options

Chairman

Member

9 135

3 713

703

844

1 068

n.s.

13 000

2 000

1 000

666

n.s.

8 800

3 275

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

n.s.

1 000

500

100

7 000

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).

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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

Burghaun, Germany

Nuremberg, Germany

Epinay-sur-Seine, France

Burghaun, Germany

S. Domingos de Rana, Portugal

Grafenau, Germany

Hünfeld, Germany

Bucharest, Romania

Vienna, Austria

Budakeszi, Hungary

Brno, Czech Republic

Bratislava, Slovakia

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

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KOMAX GROUPANNUAL REPORT2016Purpose

Participation

Ordinary capital

Group services and management

R&D, engineering, production, marketing, sales

Sales

Administration

Sales

R&D, engineering, production, marketing, sales

Administration

R&D, engineering, production, marketing, sales

Sales

Engineering, production, sales

Sales

Holding of equity interests

R&D, engineering, production, marketing, sales

Sales

Engineering, production, marketing, sales

Sales

Holding of equity interests

Administration

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

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100%

25%

21%

CHF

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

TRY

RON

MAD

TND

BRL

USD

MXN

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

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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.

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KOMAX GROUPANNUAL REPORT2016Materiality

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.

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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

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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

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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

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

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

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.

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

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

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.

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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

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Komax Holding AG
Industriestrasse 6
6036 Dierikon
Switzerland

Phone +41 41 455 04 55
www.komaxgroup.com

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