Komax Annual Report 2017

FY2017 Annual Report · Komax

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Annual Report

2017

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The Komax Group is a pioneer as well
as the market and technology leader in auto-
mated wire processing solutions. It is
aiming to consolidate this leading position
and set the pace on the trends that are
important today, such as electro-mobility
and autonomous driving. To this end,
it is channeling above-average investment
into research and development.

For the period 2017–2021, Komax has set
itself ambitious targets – for 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 shareholders – in
the form of an attractive dividend policy and
corresponding stock market valuation.

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KEY FIGURES

in TCHF

Order intake 2

Gross profit

in % of revenues

Investments in non-current assets

Free cash flow

Net working capital 3

in % of revenues

Total assets

Net debt (–) / net cash (+)

2017

2016 1

+/− in %

21.5

3.4

–2.7

449 736

370 246

256 476

247 943

62.8

22 201

–7 582

63.3

22 827

441

–1 819.3

168 361

136 540

23.3

37.3

33.8

414 458

357 060

16.1

–10 544

17 008

–162.0

Revenues in CHF
(2016: 373m) 4

409

23.8

RONCE
(2016: 26.6%) 1

Operating profit (EBIT)
in TCHF

21%

14%

60 000

50 000

40 000

30 000

20 000

10 000

13.4

13.2

15.8

14.1

13.5

7
9
2
3
4

2
0
1
8
4

8
3
9
9
4

4
2
4
5
5

9
6
0
5
5

2013 1

2014 1

2015 1

2016 1

2017

EBIT

EBIT in % of revenues

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1 841

Headcount as at 31.12.2017
(31.12.2016: 1 633 employees)

%2.0

Dividend yield as at 31.12.2017
(31.12.2016: 2.6%)

59.2

Payout ratio
(2016: 63.4%) 1

1 Since the start of 2017, the consolidated financial

statements have been drawn up in accordance with
Swiss GAAP FER. The prior-year figures have been
revised accordingly. The years 2013–2015 are reported
according to IFRS.

2 Order intake of the Medtech business unit, which was

sold in April 2016, is not included.

3 Net working capital: receivables + inventories

./. current liabilities.

4 Revenues of the Medtech business unit, which was

sold in April 2016, are not included.

Shareholders’ equity
in TCHF

320 000

240 000

160 000

80 000

73.8

73.2

71.0

68.9

62.3

100%

75%

50%

25%

5
8
9
3
6
2

8
6
1
4
8
2

4
3
1
3
8
2

4
7
1
6
4
2

8
7
1
8
5
2

2013 1

2014 1

2015 1

2016 1

2017

Shareholders’ equity

Shareholders’ equity in % of total assets

Group profit after taxes (EAT)
in TCHF

50 000

40 000

30 000

9.9

10.3

9.3

20 000

7.8

7.6

10 000

9
2
1
5
2

3
4
7
7
2

5
1
2
9
2

3
0
7
8
3

1
0
1
2
4

2013 1

2014 1

2015 1

2016 1

2017

EAT

EAT in % of revenues

R&D expenditure
in TCHF

40 000

30 000

20 000

7.7

7.1

8.0

7.4

9.0

10 000

8
0
9
4
2

6
7
7
5
2

5
1
3
5
2

1
7
0
9
2

8
6
6
6
3

2013 1

2014 1

2015 1

2016 1

2017

R&D

R&D in % of revenues

15%

12%

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CORPORATE
GOVERNANCE
47

COMPENSATION
REPORT
59

ANNUAL REPORT 2017
CONTENTS

FINANCIAL REPORT

Consolidated financial
statements
74

Financial statements of
Komax Holding AG
118

Five year overview
129

ANNUAL REPORT

Shareholders’ letter
02

Locations
04

Market and innovation
10

Interview with
Chairman and CEO
18

Global megatrends
22

Business model
and strategy
26

Board of Directors and
Executive Committee
34

Sustainability and
social responsibility
36

Information
for investors
43

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ANNUAL REPORT 2017
SHAREHOLDERS’ LETTER

DEAR SHAREHOLDER

In 2017, the Komax Group
further expanded its position as
market and technology leader.
The financial year was cha
racterized by strong growth in
order intake and revenues,
numerous successful product
launches, two acquisitions,
significant investment in research
and development as well as
digitalization, a number of pro
jects to expand production
capacity, and the breakthrough
in the aerospace market
segment. Komax considers itself
to be on track with implemen
tation of its 2017–2021 strategy,
and is confident about
business development in 2018.

The sharp rise in both order intake and revenues underlines
the point: Komax once again grew more strongly than the
market in 2017. While revenues increased by 9.6% to CHF
408.5 million (2016: CHF 372.7 million), the order intake rose
by as much as 21.5% to CHF 449.7 million (2016: CHF 370.2
million). The growth in revenues comprises internal growth
(+6.0%) and acquisition-driven growth (+2.2%), as well as the
positive foreign currency influence (+1.4%). In 2017, Komax

changed its accounting standard from IFRS to Swiss GAAP
FER, and revised the prior-year figures accordingly. These
prior-year figures now exclude both the revenues (CHF 19.1
million) and the order intake (CHF 9.3 million) of the Medtech
business unit, which was sold in April 2016.

Europe (+8.0%), Asia (+10.3%), and Africa (+47.1%)
all contributed to the strong revenue growth. By contrast,
Komax recorded a slight decline in revenues in North/South
America (–2.1%). However, following a sharp decline in the
first half of the year (–5.8%), North/South America then recov-
ered in the second half, almost reaching the prior-year level.
In the US in particular, investment activity picked up as the
year progressed, with the result that the decline in revenues
in the earlier part of the year was partly reversed. The new
Alpha 530/550 machine platform for the core business of
Komax (crimp to crimp) penetrated the market in all regions in
2017, making a significant contribution to growth. In addition,
our customers responded to the various new solutions we
launched in 2017 – which cover the entire value chain – very
rapidly and positively.

26% rise in R&D expenditure
In order to further expand its leading position over the next
few years, Komax invested CHF 36.7 million in research and
development (R&D). This equates to 9.0% of revenues (2016:
7.4%), and an increase of CHF 7.6 million on the previous year.
The two acquisitions executed in 2017 (Laselec and Practical
Solution) also contributed to this increase. Issues such as
electro-mobility and autonomous driving give Komax further
opportunities to develop unique selling features. Komax is
keen to grasp these opportunities, which is why it intends to
channel some 8%–9% of revenues into research and develop-
ment over the coming years too.

Despite this significant rise in proactive investment to
ensure a sustainably successful future, Komax nonetheless
generated operating profit (EBIT) of CHF 55.1 million, thereby
essentially matching the prior-year figure (CHF 55.4 million).
The additional R&D expenditure had the effect of reducing the
EBIT margin by 1.8 percentage points. Yet despite this, Komax
was still able to report an EBIT margin of 13.5% in 2017 (2016:
14.1%). Another drag on profitability was the strong increase
in inventories to CHF 92.0 million (2016: CHF 70.4 million).
Around half of this increase relates to machinery that is
now either complete or nearly complete, but has yet to be
converted into revenues.

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ANNUAL REPORT 2017
SHAREHOLDERS’ LETTER

be ready for occupation in the second half of 2019, while the
three other buildings are expected to be ready towards the
end of 2018.

High payout ratio
The Board of Directors is proposing to the Annual General
Meeting an unchanged distribution of CHF 6.50 per share.
This represents a substantial payout ratio of 59.2%. Due to
the strong result and the positive outlook, the proposed dis-
tribution is at the upper end of the strategic bandwidth of
50%–60%, and this despite the significant investment in the
expansion of capacity. The distribution comprises a dividend
of CHF 5.00 and a distribution from capital contribution re-
serves of CHF 1.50. The latter is tax-free for persons domi-
ciled in Switzerland who hold shares as part of their private
assets. The dividend yield (calculated on the basis of the 2017
year-end closing price of the Komax share) amounts to 2.0%.

Outlook
The Komax Group remains very well positioned, and considers
itself to be on track with the implementation of its 2017–2021
strategy. For the 2018 financial year, Komax is confident of
delivering a result that will support the attainment of its ambi-
tious medium-term targets. Komax expects to grow more
strongly than the market and to increase profitability slightly –
despite continuing to invest heavily in research and develop-
ment. Demand for automation solutions in the area of wire
processing continues to rise. Thanks to its innovative strength
and broad spectrum of solutions, Komax is ideally placed to
seize the growth opportunities that present themselves.

Yours sincerely,

Dr. Beat Kälin
Chairman of the
Board of Directors

8 March 2018

Matijas Meyer
CEO

Long delivery times of customer-specific systems
This delayed conversion into revenue is one of the reasons for
the Group’s high book-to-bill ratio of 1.10 (2016: 0.99). An-
other contributory factor was the large number of customer-
specific systems ordered in 2017. Orders of this type tend to
have longer delivery times than serial production machines. A
good example of this is the large order received by Komax at
the end of 2017 from the aerospace industry. The delivery of
the corresponding systems to automate wire processing for
this customer will extend over the years 2018 to 2020. This
large order represents a milestone both for Komax and for the
aerospace industry. For Komax, this is the first order worth
millions from this market segment, while for the aerospace
industry the degree of automation in wire processing that will
be achieved through the ordered systems represents a pio-
neering development.

Financial base remains strong
Group profit after taxes (EAT) rose by 8.8% to CHF 42.1 mil-
lion (2016: CHF 38.7 million). This result was reduced by
the sum of CHF 3.6 million as a result of a value adjustment
on a loan to an associated company. By making this value
adjustment, Komax has drawn a line under the participation
that dates back to the Komax Solar era. Basic earnings per
share increased to CHF 11.05 (2016: CHF 10.34). Komax
continues to be very robustly financed. As at 31 December
2017, shareholders’ equity totaled CHF 258.2 million (2016:
CHF 246.2 million) while the equity ratio stood at 62.3%
(2016: 68.9%). Free cash flow amounted to CHF –7.6 million
(2016: CHF 0.4 million), while net debt stood at CHF 10.5 mil-
lion (2016: net cash of CHF 17.0 million).

Investment in capacity expansion
Both the two acquisitions made in 2017 and the investment in
capacity expansion had an impact on free cash flow. Thanks
to the takeover of the assets of Practical Solution (as per
3 March 2017), Komax has strengthened its position in the
growing market in Asia, acquiring a third Asian development
site in Singapore to join its existing sites in Shanghai and To-
kyo. To strengthen its presence in the aerospace market seg-
ment, Komax acquired Laselec SA as per 1 October 2017;
this French company develops laser-supported solutions for
the stripping and marking of wires and intelligent assembly
boards for wire harness production.

In order to deliver the growth it has planned for the coming
years, Komax is investing in the expansion of its production
capacity in a targeted way. In 2017, work began on a new
building at the Group’s headquarters in Switzerland, and
three further construction projects are planned for 2018 – two
in Germany, and one in Hungary. In total, Komax will be in-
vesting more than CHF 90 million in new infrastructure be-
tween 2017 and 2019. The new building in Switzerland should

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ANNUAL REPORT 2017
LOCATIONS

AROUND
THE WORLD

The Komax Group has a presence in all key production
regions of its customers. Having had its finger on the
pulse of industry for more than 40 years, Komax is able to
develop appropriate, highvalue and innovative auto
mation solutions for local requirements in global markets.

production

sites19

Komax produces in Europe, Asia,
North and South America, and Africa,
and provides sales and service support
in more than 60 countries through its
subsidiaries and independent agents.

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ANNUAL REPORT 2017
LOCATIONS

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

Headquarters:
Komax Holding AG
Dierikon, Switzerland

countries with
sales and

service support60

Komax
companies

worldwide38

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ANNUAL REPORT 2017
LOCATIONS

GLOBAL PRODUCTION,
LOCAL DISTRIBUTION AND
SERVICE NETWORK

Komax produces standardized products as well as
customerspecific systems at 19 locations worldwide,
and has a unique global distribution and service
network. Customer proximity together with short re
action and supply times are crucial to success. For
that reason, Komax has consistently been applying the
motto “global local” for many years. More than 1 800
employees currently work in the 38 companies of the
Komax Group worldwide.

The latest North
American site is
located in Irapuato
in the Bajío region
in the Federal State
of Guanajuato in
Mexico.

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ANNUAL REPORT 2017
LOCATIONS

Komax produces standardized (off-the-shelf) products for wire processing at locations in Switzerland,
Germany, France, China, Japan, and Singapore. The test systems of the TSK brand are manufactured
in Germany, Bulgaria, Turkey, the US, Mexico, Brazil, Tunisia, and China. Customer proximity is very
important when it comes to ensuring short supply times for testing adapters. Customer-specific sys-
tems are produced at sites in Switzerland, Germany, France, and Hungary. With production sites in all
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.

The extension building
in Dierikon will have
total floor space of
more than 20 000 m2,
spread across seven
floors (lower ground
floor, ground floor,
five stories).

Ongoing expansion of production capacity
The demand for automation solutions continues to rise, which means Komax is coming up against its
capacity limits at a number of locations. For this reason, Komax has consistently been investing in the
expansion of its production capacity in recent years, such as in 2016 in the case of Komax SLE in
Grafenau, Germany, and TSK in Ergene/Tekirdag, Turkey.

In 2017, Komax opened a newly built plant in Irapuato, Mexico, which specializes in the production
of TSK test systems. The site lies right at the heart of the Mexican automotive market. This region is
home not only to a number of different automotive plants, but also to the major automotive suppliers –
which means the customers of Komax.

In order to further expand the production of TSK test systems in Europe too, Komax founded a com-
pany in Bulgaria at the end of 2017. This is located in Yambol. Employees commenced production op-
erations in December.

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ANNUAL REPORT 2017
LOCATIONS

Investment of more than CHF 70 million at headquarters
The very strong order situation means that Komax is also increasingly reaching the limits of its capacity
in Switzerland, and already in 2016 rented a third location in central Switzerland (Küssnacht am Rigi). In
order to optimize the collaboration of staff in Switzerland as well as improve logistics, Komax is invest-
ing more than CHF 70 million in an extension building at its headquarters in Dierikon. The goal is for all
employees in Switzerland to be working at this site one day.

The ground-breaking ceremony for this major project took place in mid-August 2017. The new pro-
duction and office building will be situated right next to the existing buildings. It is designed so that each
floor can be used for both production and administration. Thanks to the high-density building design,
Komax is using the available space optimally, and will therefore have a vertical factory that should be
ready for occupation in the second half of 2019.

Expansion in Germany and Hungary
In addition to the extension building in Switzerland, Komax will be investing in three further locations in
2018: at Komax SLE in Grafenau, Germany, at Kabatec in Burghaun, Germany, and at Komax Thonauer
in Budakeszi, Hungary.

Komax SLE has already quadrupled its original production and office area with a new-build complet-
ed in 2016, and is now about to embark on the next extension project. This will have the effect of more
than doubling the existing floor space of some 5 000 m2. At its location in Grafenau, Komax produces
customer-specific systems for the manufacture of data lines and antennae. The production of these
systems takes up a large amount of space for a long period of time. At the same time, the demand for
machinery made in Grafenau has risen significantly – and will rise further, making a new building essen-
tial. The principal reason for the rise in demand is the fact that vehicles are becoming increasingly inte-
grated, with driver assistance systems becoming widespread and autonomous driving on public roads
not that far off in the future.

Komax SLE in Grafenau
is the center of compe-
tence for infotainment
and high-frequency
technology in the auto-
motive sector.

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ANNUAL REPORT 2017
LOCATIONS

At the end of 2018,
Kabatec will have a new
production and assembly
plant as well as a separate
three-stories office build-
ing in Burghaun.

As the demand for taping and assembly technology also continues to rise, Komax is also investing in a
new-build for Kabatec, a company it acquired in 2016. The new site, which will likewise be located in
Burghaun, offers Kabatec the option of a further expansion at a later date. In 2017, Komax amalgamat-
ed its two companies active in the area of taping technology – Kabatec and Ondal Tape Processing –
under the name Kabatec, and the employees of these two companies will now jointly occupy the new
site.

The rising demand for electric vehicles is an opportunity for Komax, as new solutions are required for
the automated processing of high-voltage wires. Komax develops and produces these at its electro-
mobility center of competence in Budakeszi, Hungary. Komax Thonauer brought the first machines to
market in this field in 2017. Global production of hybrid and electric vehicles will rise significantly over
the next few years. This in turn entails an increase in demand for solutions for the automatic processing
of the wires in these vehicles. In order to meet this demand, Komax is erecting a new building in Buda-
keszi.

All three buildings in Germany and Hungary are expected to be ready for occupation at the end of

2018, and have an aggregated investment volume of more than CHF 20 million.

Komax is close to its customers
The Komax Group provides sales and service support in more than 60 countries through its subsidiaries
and independent agents. Around 150 employees work in Komax’s global service organization. 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. Customers can also submit their orders via the e-com-
merce platform Komax Direct.

Customer proximity as well as 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 innovative 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 seeks to en-
sure that costs and revenues are generated/incurred in the same currencies to the greatest extent
possible.

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ANNUAL REPORT 2017
MARKET AND INNOVATION

DYNAMIC
MARKET

Demand for automation solutions in the area of wire
processing increased further in 2017. Komax
benefited greatly from this development, recording a
significant rise in both order intake and revenues.
Momentum was particularly dynamic in the automo
tive market segment, although the aerospace,
telecom & datacom, and industrial market segments
likewise contributed to growth.

The automotive industry showed itself to be in robust shape once again in 2017. Global production of
cars and light commercial vehicles increased by 2.2% to some 95 million vehicles (source: IHS Markit).
According to IHS Markit, the largest automotive market remains China, which produced some 28 million
vehicles last year. That was 1.8% more than in 2016. In comparison to 2016 (+15.4%), growth has slowed
significantly. The European market is in good health, having produced 22.1 million vehicles (+3.5%).

North America was one of the few regions to record no growth in 2017. The world’s third-largest
market produced 17.2 million vehicles, or 3.9% less than in 2016. South America recorded growth
of 19.7% (3.3 million vehicles produced). This is almost exclusively attributable to the production
per formance of Brazil (+26.2%), which has returned to the path of growth (2016: –10.3%). For 2018,
IHS Markit is forecasting a 1.8% increase in global vehicle production.

Strong growth in order intake and sales
The rise in vehicle production and the sharp increase in pressure to automate wire processing ensured
a powerful rise in both the order intake and the revenues of Komax. While revenues rose by 9.6% to
CHF 408.5 million, the order intake rose by as much as 21.5% to CHF 449.7 million. The aerospace,
telecom & datacom, and industrial market segments likewise benefited from the ever-strengthening trend
towards automation, making their own significant contribution to Komax’s growth.

The book-to-bill ratio came in at a high 1.10, a significant rise on the prior-year figure of 0.99. One of
the reasons for this rise is the significant number of customer-specific systems ordered in 2017. Orders
of this type often have longer delivery times than serial production machines. A good example is the
major order received from the aerospace industry for a number of systems for automated wire process-
ing. The delivery dates for these systems range from 2018 to 2020. To ensure that the revenues from
these systems are appropriately booked over the period in question, in keeping with their degree of
completion, Komax applies the POC (percentage of completion) method to large orders of this kind.

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ANNUAL REPORT 2017
MARKET AND INNOVATION

Order intake and revenues
in CHF million

500

400

300

200

100

7
.
9
4
4

5
.
8
0
4

2
.
0
7
3

7
.
2
7
3

2017

2016 1

Order intake

Revenues

Komax enjoyed stronger growth than the market as a whole. A contributory factor here was the signifi-
cant growth rates seen in Europe, Asia and Africa. The strongest rise of all was recorded in Africa
(+47.1%). Due to the increasing scarcity of personnel resources in Eastern Europe, a number of wire
harness manufacturers have been strengthening their presence in North Africa. In North/South America,
Komax recorded a slight decline in revenues (–2.1%). Following a sharp decline in the first half of the
year, North/South America then recovered in the second half, almost matching the prior-year figure.
In the US in particular, investment activity picked up as the year progressed, with the result that the
decline in sales in the earlier part of the year was partly reversed. In South America, Brazil remains by
far the most important market for Komax. The strong momentum in China meant that Komax sold more
in Asia than in North/South America for the first time ever, to the point where Asia has now become the
second-strongest region for the Group. Market observations suggest that this dynamism will persist in
the individual regions, at least for the first half of 2018.

Revenues by region

2017

2016 1

+/– in %

in CHF million

Switzerland

Europe

Asia/Pacific

North/South America

Africa

Total

8.8

199.3

81.4

76.2

42.8

7.5

184.5

73.8

77.8

29.1

408.5

372.7

17.3

8.0

10.3

–2.1

47.1

9.6

The strong growth recorded in China is also reflected in the breakdown of revenues by currency. The
proportion of revenues booked in CNY increased from 11.5% to 14.1%. The changes in the key curren-
cies are set out on page 100.

12.03.18 14:46

1 Since the start of 2017, the con-

solidated financial statements have
been drawn up in accordance with
Swiss GAAP FER. The prior-year
figures have been revised accord-
ingly; order intake and revenues of
the Medtech business unit, which
was sold in April 2016, are not
included.

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ANNUAL REPORT 2017
MARKET AND INNOVATION

Market segments and service

Komax focuses on four market segments. The core business is the automotive market segment, which
accounts for more than 85% of revenues. Komax is continuously strengthening its presence in the oth-
er three segments – aerospace, telecom & datacom, and industrial – and exploiting the synergy poten-
tial 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.

Automotive
The automotive segment is by far the most important market
segment for Komax. There are a number of reasons for this. In
no other industry is the volume of wires to be processed so
large; over the next five years, the volume of wires to be pro-
cessed in the automotive industry is expected to rise by 2%–3%
annually. In addition, the number of vehicles being produced
continues to rise. In 2017, some 95 million vehicles were pro-
duced. Although the automotive industry has no peer when it
comes to the degree of standardization and automation in the
production process, there is still plenty of potential for addition-
al automation steps, as wire harnesses are still manufactured
by hand to a large extent.

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.
Komax secured expertise in the aerospace area in a targeted way through
its acquisition of Laselec in 2017 (see page 30). The degree of automation
of wire processing in the aerospace industry is at a very low level. However,
as the barriers to entry in this market are very high for suppliers, it has taken
several years for Komax to record its first major success. The breakthrough
was made in 2017. Following negotiations lasting many years, Komax suc-
ceeded in winning new orders for several large-scale systems from two leading
companies in this field.

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ANNUAL REPORT 2017
MARKET AND INNOVATION

Telecom & Datacom
Large volume data transfer and the permanent networking of people
have become standard practice in the telecom & datacom market seg-
ment. The wiring used for these applications is being increasingly used in
vehicles too, as cars become evermore interconnected, with compre-
hensive information systems that will facilitate autonomous driving in fu-
ture. Komax can therefore also use the experience gained from the tele-
com & datacom market segment in the automotive segment.

Industrial
The processing of wires for industrial applications, such as electric control
cabinets, for example, often involves working with very small batches. To
ensure that automation is nevertheless a cost-efficient option for control cab-
inet manufacturers, Komax has developed specific machines of the Zeta
type. These machines manufacture all the various different wires that are
needed automatically, ensuring that they are in the right sequence and of the
right length. This has the effect of reducing manual labor to a minimum. Man-
ual processes such as cutting, stripping, marking, and sleeve insertion are
rendered obsolete. Automation of this kind has proven its worth in the area
of wire processing in the automotive industry for many years, and is now in-
creasingly finding its way into industrial applications.

Service
In all market segments, customers benefit from Komax’s global distribu-
tion and service network. Among other things, the service offering in-
cludes the Komax Academy, which provides a modular training program,
including final certification. The training modules are tailored to custom-
ers’ needs. Training programs are currently offered for all machines of-
fered by Komax. These are broken down into the following modules: Ba-
sic (operators), Advanced (machine setters and maintenance technicians),
Specialist (shift managers, production heads, service technicians), and
Expert (future instructors). Participants receive certification based on
both theoretical and practical learning assessments – involving standard-
ized global criteria with identical quality levels. Komax offers training
courses in nine countries: Brazil, China, Germany, Mexico, Romania,
Switzerland, Singapore, Tunisia, and the US. Training is available in Ger-
man, English, Chinese, Spanish, and Portuguese.

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ANNUAL REPORT 2017
MARKET AND INNOVATION

HIGH DEGREE
OF INNOVATION

In order to consolidate its market and technology
leadership, Komax has been investing in research and
development at an aboveaverage rate – and will
do so even more in future. Global developments such
as electromobility and autonomous driving give
Komax the opportunity to demonstrate once again
its exceptional ability to innovate.

Over the last few years, Komax has invested some 7%–8% of Group revenues in research and devel-
opment (R&D), and it will increase this figure to around 8%–9% over the next few years. In 2017, Komax
invested 9.0% (2016: 7.4%) of Group revenues – or CHF 36.7 million – in research and development.
That is some 26% more than the previous year. This figure includes expenditure on both internal devel-
opment services (CHF 29.6 million) and the development services of third parties (CHF 7.1 million).

R&D expenditure
in CHF million

7.7

7.1

8.0

7.4

9.0

12%

9
.
4
2

8
.
5
2

3
.
5
2

1
.
9
2

7
.
6
3

2013 1

2014 1

2015 1

2016 1

2017

R&D

R&D in % of revenues

1 Since the start of 2017, the consolidated
financial statements have been drawn
up in accordance with Swiss GAAP FER.
The prior-year figures have been revised
accordingly. The years 2013–2015 are
reported according to IFRS.

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MARKET AND INNOVATION

Electro-mobility and autonomous driving
The automotive industry is currently in a state of flux, and the race to develop the “mobility of the future”
is also having an impact on Komax. Issues such as electro-mobility and autonomous driving give
Komax further opportunities to develop unique selling features. But if these opportunities are to be
seized, the course needs to be set today. For this reason, Komax is increasing its investment in
research and development. The technological transformation of the automotive industry means a rise
in manufacturing demands, and the customers of Komax are confronted with a number of unusual
challenges. In order to ensure the latest customer requirements are met in the best possible way,
Komax often works with leading companies from the automotive industry on development projects.

366 staff employed in research and development and engineering
As at 31 December 2017, the Komax Group employed a total of 200 employees (2016: 166) in the area
of research and development. The majority (142 employees) work in Switzerland. In addition, Komax
has development units in China, Germany, France, Japan, and Singapore. This innovative strength is
additionally bolstered through 166 engineers (2016: 177) who make a key contribution through the de-
velopment of customer-specific applications. The personnel costs of these employees are not con-
tained in research and development expenditure if the staff in question have worked directly on custom-
er projects. There are a number of reasons for the year-on-year increase of approximately 20% in
headcount in the research and development area. In addition to the two acquisitions made in 2017
(Laselec and Practical Solution), this increase is also attributable to Komax’s determination to consist-
ently seize the opportunities that present themselves in the current market environment. This increase
in headcount should be viewed as a form of investment in a sustainably successful future.

Multiple awards
The innovative successes of Komax have convinced not only the company’s customers in 2017, but
also a number of specialist juries. These juries have conferred upon Komax the Red Dot Design Award,
the Productronica Innovation Award, and the Innovation Prize of the Chamber of Commerce and Indus-
try of Central Switzerland (IHZ). Komax received the renowned Red Dot Design Award for its design of
the Mira 230, a benchtop machine for the professional stripping of electrical wires. Another jury singled
out the Sylade 7H laser wire stripper from Laselec (see page 17) for the Productronica Innovation
Award. Two other innovations were also nominated: the Mira 340 developed by Komax Japan and the
completely new operating software Komax HMI (see page 16). Furthermore, Komax was awarded
the IHZ Innovation Prize for the first time since 1987. This was for its Alpha 530/550 machine platform
(fully automatic crimping machine), the development of which required the deployment of around
50 employees over many years.

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ANNUAL REPORT 2017
MARKET AND INNOVATION

New products

Thanks to its targeted investment in research and development, Komax succeeds in bringing a variety
of new products and product enhancements to market every year. 2017 was no different in this regard.
Komax was able to demonstrate its technology leadership impressively, setting new standards with
numerous market launches. Below we provide a selection of these new products.

Komax HMI
Fully automated, high-performance wire processing machines
are complex things. In order to allow these machines to none-
theless be operated in a way that is as straightforward, efficient
and error-free as possible, Komax has spent many years devel-
oping its operating software Komax HMI (Human Machine In-
terface). Thanks to consistent logic and direct guidance, opera-
tion of this software can be learned in a short space of time. It
helps the user avoid errors during setup and changeover, as
well as during the production process itself, and assists with the
manufacture of products of reliably high quality. At the same
time, the reject rate is minimized. Thanks to an open interface,
Komax HMI can be linked to a manufacturing execution system
such as Komax MES. This facilitates the transparent analysis of
production data in real time – and at any time. All data is docu-
mented and traceable without exception.

Lambda 240 SP
The significance of electro-mobility continues to rise, and this development will
become even more accentuated over the next few years. Produced by Komax
Thonauer in Hungary, the Lambda 240 SP is a compact, semi-automatic solu-
tion for processing the shielded braid of high-voltage wires. Ultimate precision
is called for if the shielded wires that are used in electrical vehicles are to avoid
being damaged during processing. The cutting tube ensures that the inner in-
sulation is not damaged during stripping, while the shielded braid is trimmed
with the utmost precision. The reliable, controlled stripping of inner conductors
and the removal of filling material is then executed by a freely configurable,
rotating cutting unit.

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ANNUAL REPORT 2017
MARKET AND INNOVATION

Omega 740 / 750
For wire harness production with double-sided in-
sertion of housings, Komax has developed fully au-
tomatic block loader machines in the form of the
Omega 740 (five process modules) and Omega 750
(eight process modules). As manual steps, i.e. in-
terim storage of individual wires and transport, are
no longer required with the Omega, savings are
made in both time and logistics. Cutting, crimping,
and loading of the terminals all take place on the
same machine. The Omega series is the economi-
cal answer to ongoing miniaturization and ever
smaller production batches. Thanks to these ma-
chines, a variety of stand-alone wire harnesses can
be manufactured simultaneously. The automatic
wire changer provides up to 36 different wires from
the entire cross-section range without any need for
changeovers.

Sylade 7H
The Sylade 7H from Laselec is the handheld version of the Sylade 7 benchtop
laser wire stripper. The patented Sylade laser technology uses high-precision
semiconductor lasers that rotate around the wire perfectly and cut the insula-
tion to the programmed depth with great repetition accuracy. At the touch of a
button, the laser beam can process round, non-round, shielded, and twisted-
pair wires with even the thinnest of insulation. Sylade 7H is perfectly suited for
processing the wires used in the aerospace industry, but it is also suitable for
industrial applications – such as the processing of aluminum wires for cars
where the sensitive braids must not be damaged under any circumstances.

KTR 160
Kabatec has developed the KTR 160 taping machine for
taping wire harnesses and modules, such as door wire har-
nesses, battery wire harnesses, and roof wire harnesses. It
is also well suited to the taping of high-voltage wires with
large cross-sections. As cost considerations require wire
harness manufacturers to develop their products ever more
efficiently and with ever higher quality, requirements as re-
gards the operability and process accuracy of the corre-
sponding machinery are continually rising. With the KTR
160, Kabatec has developed a stable, agile machine that
significantly increases efficiency in the manufacture of wire
harnesses – thanks to the high-precision belt feed system,
operational assistance in the form of an intuitive touch
screen and an automatically closing protective hood.

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ANNUAL REPORT 2017
INTERVIEW

2017 financial year and 2017–2021 strategy

INVESTING TO GENERATE
FURTHER GROWTH

Komax strengthened its market leadership in 2017,
putting itself in a good position to exploit the
growth opportunities offered by new technologies
such as electromobility and autonomous driving.

Beat Kälin, how would you assess the 2017
financial year?
Beat Kälin: In 2017, Komax reached a number of important
milestones on its way to fulfilling its ambitious medium-
term targets for 2017–2021. These include the successful
launch of numerous new products, the step-by-step
integration of the companies acquired in 2016, the expan-
sion of the Group’s market presence in Asia, the
acquisition of Laselec, the booking of the first major order
from the aerospace industry, and the start of work on
the capacity expansion in Dierikon.

So is Komax on track from a strategic perspective?
Beat Kälin: The automotive market, which is by far the most
important market for us, is going through a fascinating
period right now. Themes such as electro-mobility and auto-
nomous driving will change the industry. As market and
technology leader, we have the opportunity to actively shape
this transformation and further strengthen our leading
position. In 2017, we took a number of steps to achieve this
and thus lay the groundwork for lasting success.

Matijas Meyer, what have you done specifically?
Matijas Meyer: New technologies bring new challenges.
If we are to meet these challenges, it is crucial that we get to
grips with them at an early stage. This is the only way of
ensuring that we can bring new solutions to market. A good
example of this is electro-mobility. True, only just over 1%

Beat Kälin, Chairman

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of the 95 million vehicles produced globally in 2017 had
electric engines. So the number of high-voltage wires requir-
ing incorporation into car engines is still relatively low.
But we have nonetheless been preoccupied with this theme
for quite a while now, and were therefore able to bring a
number of convincing solutions for the processing and test-
ing of high-voltage wires to the market in 2017. Thanks
to the high-voltage center of competence we established in
Hungary last year, we are well positioned to deal with the
eventuality of electric vehicle production rising dramatically
over the next few years.

What kind of potential do you see in autonomous
driving?
Matijas Meyer: Autonomous driving essentially offers us
far greater opportunities than electro-mobility. Because the
former phenomenon requires a very large number of
sensors, which accordingly means additional wires to be
processed. What’s more, the very highest quality – to
the point of zero tolerance in the error rate – is called for,
as is the seamless traceability of the individual process
stages. This by definition requires the deployment of auto-
mation solutions, which is very positive for us. Thanks
to our targeted investment in research and development,
I am confident that we are very well equipped to meet
the challenges of autonomous driving.

“ As market and techno
logy leader, we have
the opportunity to actively
shape the transformation
and further strengthen our
leading position.”

Beat Kälin

You spent a record CHF 36.7 million on research and
development in 2017. Was that a strategic decision?
Beat Kälin: Due to the developments mentioned earlier,
the automotive industry is currently in a state of upheaval.
In addition, there are a number of trends unfolding that
will keep ratcheting up the pressure on manufacturers to
automate wire processing. So the companies that want
to be successful in the future need to be investing now –
because the next few years will decide who has the edge
in these new technologies. Obviously we are determined to
remain the number 1 and increase our advantage even

Matijas Meyer, CEO

further. It was therefore a strategically important decision
to increase our investment in research and development to
8%–9% of revenues.

But that will squeeze margins ...
Matijas Meyer: In the short term, this higher expenditure
will mean slightly less strong growth in EBIT. But we are ab-
solutely convinced that this investment will pay off in the
medium to long-term, thus enabling us to achieve our ambi-
tious 2021 EBIT target of CHF 80–100 million.

What does that mean for 2018?
Matijas Meyer: We are continually working to improve
our operational excellence and thereby increase profitability.
For 2018, we are anticipating an increase in EBIT in
absolute figures. However, given the very high sums we are
continuing to channel into research and development
and the ever-greater proportion of customer-specific systems,
there will be limits to our ability to increase the EBIT
margin this year.

Are these customer-specific systems comparable
to the systems business of the Medtech business unit,
which you divested back in 2016?
Beat Kälin: Our first response to new challenges in the
market is typically to develop customer-specific solutions.
Only once demand has reached a certain critical size
do we start the cost-intensive process of developing a serial
production machine. We therefore aim to develop a serial
production machine or at least a modular solution once it

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INTERVIEW

has become clear that demand is sufficiently great, as
well as standardized. At the moment, for example, we are
proceeding with the development of the first solutions
for the processing of high-voltage wires. However, these
customer-specific systems are not comparable to the
high-risk systems business, as the corresponding orders are
significantly smaller than they were for Medtech. More-
over, the orders we receive now always relate to our core
area, in other words, the automation of wire processing.

How did the business with serial production machines
develop in 2017?
Matijas Meyer: Our new Alpha 530/550 machine platform
has enabled us to successfully penetrate the market in
our core business (crimp to crimp) in all regions. The new
machines are proving very popular with our customers,
and have replaced existing products much more quickly than
we had expected. In 2017, we launched a number of
new products along the entire value chain. This investment
of personnel and financial resources has been re-
warded: The market has received our new solutions very
quickly and positively. As is customary after all new
product launches, we will now set about optimizing our
production processes continuously so that we can gradually
improve profitability.

“ The market has received
our new solutions very
quickly and positively.”

Matijas Meyer

In 2017 you received your first major order from the
aerospace industry. Did the client in question order
serial production machines or customer-specific
systems?
Matijas Meyer: Basically these are customer-specific
systems, though they are based on the serial production ma-
chines of the Zeta type. The receipt of this seven-figure
order in 2017 was a milestone that we have been working for
years to achieve. This project is only implementable
because we can bring together experts from different fields
who possess great expertise and offer outstanding so-
lutions for individual process stages. These also include the
laser applications of our subsidiary Laselec. Thanks to
our systems, the automation of wire processing in the aero-

space industry will reach unprecedented levels. That’s
why we are confident of being able to win further customers
and generate further orders in this market segment over
the next few years.

Are large orders of this kind the reason why the order
intake has risen more strongly than revenues?
Matijas Meyer: Customer-specific systems tend to have
longer delivery times, which is one of the reasons for
the high current book-to-bill ratio of 1.10. Another reason is
that some CHF 10 million worth of machinery is already
complete or nearly complete, but has not yet fed through
into revenue. That makes it all the more impressive that
we have still been able to boost revenues by 9.6%. Of that
figure, the lion’s share – or 6.0% – was organic. I was
particularly pleased to see the order intake increase by 21.5%
to some CHF 450 million. This rise shows that we were
able to increase our market share, and that we are on course
to achieve our ambitious targets for 2017–2021. This is all
down to the work of more than 1 800 Komax employees,
who played such a large part in our ability to excite our cus-
tomers time and again with new solutions in 2017. So many
thanks for this outstanding commitment!

Komax generated higher Group profit after taxes
(EAT) in 2017 than it did in 2016. So why have you not
increased the dividend?
Beat Kälin: In our 2017–2021 strategy, we specified that the
payout ratio would amount to 50%–60% of EAT. With
the distribution proposed by the Board of Directors, we are
paying out more than 59%, right at the top end of that
bandwidth. In addition, you should not forget that we will be
investing more than CHF 90 million in infrastructure pro-
jects over the period 2017–2020. So it’s actually a very posi-
tive sign that we can distribute more than 59% of profit
to our shareholders, despite this high level of investment.

Is that investment a response to capacity issues?
Matijas Meyer: There are a number of different reasons for
the various construction projects. At our headquarters
in Switzerland, work began in August 2017 on a large new
production and office building encompassing some
20 000 m2. The goal is for all employees in Switzerland – who
are currently spread across three different sites – to be
based at our headquarters one day. The new building is ex-
pected to be ready for occupation in the second half of
2019. As I mentioned earlier, we are currently in the process
of buil ding up our high-voltage center of competence in
Hungary. In order to meet the rising demand for high-voltage
solutions in the future, we need significantly more capacity.
As things stand, we are expecting the new building to be
completed by the end of 2018.

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INTERVIEW

exception. So in the event of a vehicle model being subject
to a general recall due to an error in its wire processing,
this traceability is a huge benefit. Because this means the
prob lem can be better contained, which in turn means a
significant reduction in the number of vehicles that have to
be recalled. We are currently working on a number of
different digitalization themes that will help us to offer our
customers greater added value over the coming years.

What are the big themes on your agenda in 2018?
Matijas Meyer: As mentioned earlier, we are investing
strongly in research and development, as well as in new pro-
duction sites. Adhering to our budgets and achieving
our targets will require us to maintain a sharp focus here.
The optimization of our processes is an ongoing theme.
We have had to work on that continuously as a result of the
huge growth – both organic and acquisition-based –
achieved over the last few years. Process optimization is a
crucial aspect for us if we are to continue to increase pro-
fitability. The integration of the companies and employees
acquired in 2017 is another area of focus. There are
numerous other themes that I could mention too. But in
summary, I can confirm that I am very confident that
we will make further progress in the implementation of our
2017–2021 strategy in 2018 too.

“ Our success is all down
to the work of our more
than 1 800 employees,
who played such a large
part in our ability to
excite our customers
time and again with new
solutions in 2017.”

Matijas Meyer

And why are you building in Germany?
Matijas Meyer: Komax SLE in Grafenau is our center of com-
petence for infotainment and high-frequency technology
in the automotive sector. The customer-specific systems we
build there will be increasingly in demand, particularly in
connection with the theme of autonomous driving. We will
be more than doubling the existing space with an ex-
tension that will provide enough room to build all the systems
we require. In addition, the demand for taping and as-
sembly technology is also on the rise. We are therefore con-
structing a new building for Kabatec in Burghaun. We are
planning to complete both of these construction projects by
the end of 2018.

In addition to your building projects, you are also in-
vesting in digitalization. Which has the greater priority?
Beat Kälin: We need both! In 2017, we introduced a new
ERP system in Switzerland and in Singapore, which will be
important if we are to simplify processes and increase
efficiency. However, we have a fair bit of homework to com-
plete before we reach that stage, which is not uncommon
for a large ERP project of this kind. We will be introducing
ERP at other locations over the next few years. Digital
transformation is essentially a key strategic theme for Komax.
It encompasses not just internal digitalization, but also
supporting customers during this transformation.

How do you support your customers?
Matijas Meyer: By developing solutions that enable them to
implement industry 4.0 in their production processes.
For example, our operating software Komax HMI, which we
launched in 2017, allows our customers to network their
machines with a manufacturing execution system. This means
they can analyze their production data in real time, at any
time. All data is documented and therefore traceable without

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ANNUAL REPORT 2017
GLOBAL MEGATRENDS

GLOBAL
MEGATRENDS

The demand for automation solutions is rising con
tinuously and accelerating the growth of Komax.
Global megatrends such as environmental awareness,
safety, and integrated and affordable vehicles are
major drivers of this phenomenon. Each of these trends
is resulting in more and new types of wire being
installed into vehicles, and automated processing is
increasingly required for reasons of quality, efficiency,
complexity, cost, miniaturization, and traceability.

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 interconnectedness. In-
fotainment systems in vehicles are becoming increasingly comprehensive and complex, while integrat-
ed information systems are laying the basis for the future: autonomous driving. The need for greater
road traffic safety represents a further megatrend. Here the emphasis is now no longer just on protec-
tion 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 pres-
sure to automate wire processing further.

More wires per vehicle
Together, these megatrends are driving the ongoing electrification of vehicles. Accordingly, the number
of wires that need to be assembled per vehicle is on the rise. The electrical systems in today’s compact
passenger cars comprise as many as 1 300 wires, 2 300 crimp contacts, and 250 plug housings. Full-
size vehicles require as many as 1 800 wires, 3 200 crimp contacts, and 300 plug housings. Innovations
in vehicle construction, new functionalities, and an ever-rising fit-out level in all vehicle classes are
leading to a further increase in demand for wires and crimp contacts. This trend, which has been per-
ceptible for a number of years now, will accelerate and strengthen further in the future.

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GLOBAL MEGATRENDS

Pressure for automation
A large part of the wire harness manufacturing process is still done by hand, but rising wage costs and
an increasing scarcity of personnel resources are driving the trend towards 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. Furthermore, the end-to-end traceability of the individual process steps cannot be ensured
with the same degree of reliability that comes with automation solutions. For example, in the absence
of automation, the retrospective search for a source of error is more complicated. Intelligent automation
solutions, quality assurance tools, and systems for testing harnesses before they are installed in vehi-
cles help to guarantee and increase the efficiency and reliability of the production process. This has
been recognized by automotive manufacturers, who are therefore increasingly calling on their suppliers
to further automate their production processes.

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 automotive 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 miniaturiza-
tion is being driven forward. In order to reduce manufacturing costs, weight, and fuel consumption, the
individual components to be processed are becoming ever smaller, which makes manual processing
more difficult or even impossible.

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 in regional cycles, it has also
grown much more strongly than the automotive industry. Forecasts for global automotive demand indi-
cate average annual growth of around 2% to 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 complexity of electrical systems, the
ongoing process of miniaturization, and greater quality and efficiency demands on the part of automo-
tive manufacturers – are just as important as drivers of automation solutions. Moreover, due to the
emergence of new types of wire (e.g. for infotainment systems or electrical vehicles) and new materials
(e.g. aluminum), Komax is being presented with the opportunity to develop additional unique selling
features and therefore generate further growth. When viewed together, these factors give Komax addi-
tional growth potential of some 2% to 3% annually.

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 vehicles 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 repu-
tational damage.

Komax possesses a broad spectrum of solutions that provides its customers with convincing an-
swers to the current global megatrends. 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 product range, Komax is in a very good position to generate growth outside the
automotive industry, too.

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ANNUAL REPORT 2017
GLOBAL MEGATRENDS

GLOBAL MEGATRENDS

Safety

Environmental
awareness

Affordable
vehicles

Integrated
vehicles

GROWTH DRIVERS

Number of wires

Complexity of
vehicle power
supply systems

Quality and
efficiency
demands

Miniaturization

New types of
wires and
new materials

ADVANTAGES OF KOMAX

Technology
leader

Broadest solution
portfolio

High degree of
innovation

Global distribu-
tion and service
network

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ANNUAL REPORT 2017
GLOBAL MEGATRENDS

NUMBER OF VEHICLES PRODUCED
WORLDWIDE 1

per year

39
million

49
million

58
million

75
million

95
million

1980

1990

2000

2010

2017

1 Passenger cars and light commercial vehicles (source: IHS Markit).

INCREASING ELECTRIFICATION

Compact

1300

2 300

250

Wires

Crimp contacts

Plug housings

Wire length
(total)

Full-size

1800

3 200

350

2 000 m

4 000 m

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BUSINESS MODEL AND STRATEGY

BUSINESS
MODEL AND
STRATEGY

Developing solutions for automated wire processing
in four market segments is Komax’s strength.
Here Komax is a pioneer, as well as a market and
technology leader, and is looking to further
consolidate this leading global position. To this end,
it pursues four key strategic priorities. Above
average profitability and further sustainable growth
are important objectives here. This goes hand in
hand with environmentally conscious, socially aware,
and responsible conduct towards all stakeholder
groups.

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, crimping, taping wires,
block loading, and testing wire harnesses. Komax offers its customers fully automated and semi-auto-
mated serial production models as well as customer-specific systems (for all degrees of automation and
individualization), which optimize processes while at the same time increasing productivity. These are
supplemented by an extensive range of quality assurance modules, testing devices and networking
solutions for the reliable and efficient production of wire harnesses. Solutions that increase the availa-
bility of installed systems and test their productivity also form part of the range, as does intelligent
software. All of this gives Komax’s customers the ideal armory with which to consolidate and increase
their competitive advantage.

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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 this global leadership position,
Komax pursues a growth strategy that involves four key priorities:

Solutions along the value
chain

Innovative production
concepts

Increase in global reach

Development of
non- automotive markets

Solutions along the value chain
Thanks to many decades of experience and its proximity to its customers, Komax understands their
needs and offers them a comprehensive range of innovative and reliable automation solutions. The of-
fering covers the most capital-intensive and critical processes of customer value chains – from mea-
suring and cutting wires to the taping process and finally the testing of the completed wire harness (see
pages 32 and 33). 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. Thanks to a number of acquisitions in recent
years, Komax has succeeded in closing the existing gaps in its spectrum of products and solutions, with
the result that it can now offer its customers end-to-end solutions. To enable its customers to continue
to increase productivity in the future, Komax works with a number of partners in the fields of logistics
and software, among others. Komax strives to network and manage the individual processes in the
value chain, such as through the Komax MES (Manufacturing Execution System), a form of production
control software for the wire processing industry 4.0 launched in collaboration with iTAC Software.

Innovative production concepts
For a market leader like Komax, innovations are of maximum strategic importance. Komax has therefore
been investing in innovations to optimize its existing product range, as well as in new developments, for
many years (see pages 16 and 17). Every year, Komax channels some 8%–9% of revenues into re-
search and development. 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, skillfully combining differ-
ent processes and technologies reduces interfaces and lead times. At the same time, processing reli-
ability is increased.

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Increase in global reach
Komax has 19 production sites located in Europe, Asia, North
and South America, and Africa. The company provides sales and
service support in more than 60 countries through its subsidi-
aries 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 combined with the
shortest possible response and supply times.

R+D expenditure accounts for
%

of revenues8 –9

To remain competitive, Komax customers need to be flexible
and select the optimal economic locations for their production
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
likewise has to show flexibility. For this reason, Komax seeks to expand its global reach in a targeted
way, be it through acquisitions – as described in the section entitled “Selective acquisitions” – or
through the establishment of new sites (see from page 6). Komax’s strong global presence is also
reflected in the percentage breakdown of its revenues by region. The individual regions – Europe (in-
cluding Africa), Asia/Pacific, and North/South America – each generated between 19% and 61% of
Komax revenues in 2017.

Development of non-automotive markets
Komax now generates more than 85% of its revenues through customers in the automotive industry.
Market estimates indicate that some 60% of globally processed wiring is used in automotive manufac-
turing. 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 auto-
mated solutions.

In addition to the automotive industry, there are countless other markets in which numerous wires
are processed. Komax focuses predominantly on three additional market segments (see pages 12 and
13), all of which have synergy potential with the core business: aerospace, telecommunications, and
data communication (telecom & datacom) and industrial applications (industrial). These areas currently
account for a relatively minor share of sales. However, Komax is seeking to increase penetration in
these markets, as they offer attractive growth opportunities in the longer term. If these opportunities are
to be harnessed, targeted investment in marketing and sales will continue to be essential. The success
of this approach over many years is bearing fruit, as is evident from the fact that a first major order was
received in 2017 from the aerospace industry, for example. Thanks to the large-scale systems that
Komax will deliver to the customer between 2018 and 2020, the automation of wire processing will be
raised to a level that has never been seen before in the aerospace industry.

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 automotive
industry is considerable. The three new market segments are already addressing issues such as safety,
lightweight construction, multimedia, small-batch production, and integrated production/Industry 4.0,
and in some cases have been doing so for years. Komax draws on these experiences when developing
automation solutions for the automotive industry. Conversely, the aerospace, telecom & datacom and
industrial market segments benefit from Komax’s great expertise in the core business: in particular,
Komax can adapt existing automotive solutions and, where necessary, specifically develop new prod-
ucts for particular segments.

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Selective acquisitions

The primary goal of the Komax Group is to grow organically. In addition, potential candidates and op-
portunities for acquisitions are carefully examined as part of a clearly defined acquisition strategy that
revolves around its four key strategic priorities. Komax intends to strengthen its leading 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; increase in global reach). In the reporting year, Komax acquired the assets of Practical Solution
(incl. some 30 employees working at the development and production site in Singapore and the distri-
bution site in Shanghai), as well as the French company Laselec (see page 30). Practical Solution
strengthens Komax’s position in the growth market that is Asia, while Laselec opens up the aerospace
market segment for Komax as well as facilitating the further development of non-automotive markets.

Brands of Komax Group

The acquisitions of recent years mean that the Komax Group is present in the market with four further
brands in addition to the Komax brand itself.

Komax manufactures innovative serial production machines as well as customer-specific systems for
automated wire processing. These are used for the automation of various processes, such as cutting,
stripping, labelling, crimping, and twisting, but they can also be used for the fully automatic production
of entire wire harnesses. Komax’s customers are active primarily in the automotive, aerospace, telecom
& datacom, and industrial market segments.

When it was founded by Max Koch in 1975, Komax was just a three-man operation. But even in
these very early days, the company was noted for its pioneering spirit. It launched the first cutting and
stripping machine with a stepping motor drive after just one year, and would go on to develop the
world’s first microprocessor-controlled fully automatic crimping machine in 1982. Expansion abroad
likewise started at an early stage – with the foundation of Komax USA in 1981.

Komax’s headquarters and largest production site are located in Dierikon, Switzerland. Outside of

Europe, Komax has production sites in Asia.

TSK develops and sells test systems and adaptation units for testing wire harnesses and further electri-
cal-electronic assemblies and components. TSK products are used predominantly in the automotive
supplier industry and wherever the functionality of complex assemblies needs to be tested in order to
recognize errors within the manufacturing process at an early stage.

TSK has decades of experience in quality assurance in wire assembly. The company was founded in
1983 by Helmut Kahl as Test Systeme Kahl, or TSK for short, and has its headquarters in Porta West-
falica, Germany. The TSK Group manufactures in Europe, North and South America, Africa, and Asia. It
has been part of the Komax Group since August 2012.

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Thonauer was founded in 1988 by Friedrich Thonauer in Austria, and is headquartered in Vienna. In
addition to Austria, Thonauer is also represented in Romania, the Czech Republic, Hungary, and Slova-
kia. The main focus of its activities is the sale of machines for wire processing, particularly for the auto-
motive, electric systems, and electronics industries.

The Thonauer Group employs around 70 people and has been part of Komax since 2016. Prior to
this acquisition, the two companies had been working together very successfully as partners for de-
cades. Thonauer has been Komax’s representative in seven countries in Central and Eastern Europe
right from the start.

Kabatec is a global market leader in the field of taping technology systems. This leading technology
company, which is headquartered in Burghaun, Germany, specializes in taping, bundling, and fixing of
holding parts to wire harnesses.

Founded in 2008, its core expertise involves the development and production of semi-automatic and
fully automatic machines for processing adhesive and non-adhesive tapes. It mainly serves customers
in the automotive supply industry, offering them both serial production machines and customized sys-
tems.

Kabatec employs around 70 people and has been part of Komax since July 2016. The two compa-

nies had enjoyed a strategic partnership for several years prior to that.

Headquartered in Toulouse (France), Laselec develops laser-based solutions for stripping and marking
wires as well as intelligent assembly boards for wire harness manufacturing. These are used mainly in
the aerospace industry. The company was founded in 2001 and has a subsidiary in the US, among
others.

Laselec is one of the leading companies in the world for the development and production of serial
production machines and customized solutions for laser-based wire processing. The company meets
all significant international quality standards in the aviation industry and counts renowned aircraft
manufacturers among its customers.

Laselec employs around 70 people and has been part of Komax since October 2017. Komax ac-
quired a 20% stake in Laselec back in 2015, and the two companies have been working successfully
together on various projects since then. Thanks to this partnership, Laselec’s solutions have increasing-
ly found their way into the automotive industry.

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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 consolidate its leading position and increase the value of
the company further via profitable growth.

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

Through a business strategy that is geared to long-term success, Komax is seeking to create sustain-
able value that will benefit investors, too. It has set itself the goal of distributing 50%–60% of Group
profit after taxes (EAT) to its shareholders every year until 2021.

The targeted revenues figure of CHF 500–600 million by 2021 is to be achieved through both organ-
ic and acquisition-based growth. Here Komax is anticipating that it can deliver, between now and 2021,
an annual organic growth rate that at least matches the continuous rise in automotive production 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 (to CHF 80–100 million) by 2021.

Revenues (in CHF million) 2

EBIT (in CHF million)

RONCE (in %) 3

Payout ratio (in % of EAT)

2017

408.5

55.1

23.8

59.2

2016 1

372.7

55.4

26.6

63.4

1 Since the start of 2017, the consolidated financial statements have been drawn up in accordance with Swiss

GAAP FER. The prior-year figures have been revised accordingly.

2 The revenues of the Medtech business unit, which was sold in April 2016, are not included.
3 The return on net capital employed (RONCE) is calculated on the basis of EBIT and average net capital em-
ployed. Average net capital employed is the sum of all current and non-current operating assets (excluding
intangible assets and deferred tax assets), adjusted for non-interest-bearing liabilities. Non-interest-bearing
liabilities are the short-term debt capital amounts available to the operating business on which no interest is
payable (excluding provisions and accruals/deferrals).

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SOLUTIONS ALONG THE
VALUE CHAIN

Komax automation
solutions at work
Komax MES –
Manufacturing
Execution System

Order

Planning

Drawing

Production data

Omega 750

Taping

Pre-assembly line

Cutting area

Raw material

Supply

Alpha 550

bt 722

KTR 160

Final assembly

Testing

Final product

Delivery

TS1500 HV

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The majority of Komax customers are wire harness manufacturers whose business consists of process-
ing the individual wires – predominantly by hand – into wire harnesses and delivering these to vehicle
manufacturers (OEMs). Komax offers its customers a wide range of solutions and systems for the auto-
mated and efficient processing of wires and for the taping and testing of wire harnesses. These are used
in the cutting room, at the pre-assembly stage, and when taping and testing. In addition, Komax sup-
ports its customers along the entire value chain – from planning through to delivery – with the Komax
MES. This software automates the planning, controlling, monitoring and analysis of all resources and
production processes. This has the effect of optimally deploying machines, materials, and employees,
so that wire harnesses can be completed to deadline, as well as to the requisite quality.

Cutting, stripping, crimping, block loading
With the Omega 750, the cutting, stripping, crimping, and
loading of terminals is undertaken with just one machine.
The end product is a wire harness fitted with contact housings
on both sides, produced in a fully automated way.

Cutting, stripping, crimping
Fully automatic crimping (crimp to crimp) and twisting machines
at work in the cutting room. For the double-sided crimping
and fitting of seals, Komax customers use the fully automated
Alpha 550 crimping machine, which among other things can
also twist and tinplate the braids.

Semi-automatic crimping
In order to be able to process individual lines at the pre-assem-
bly stage, customers use a machine like the bt 722 benchtop
crimping press. The programmable crimp height, integrated
crimp force analysis and bad crimp cutter ensure a final product
of top quality.

Taping
In order to reduce sources of noise and prevent electromagnetic
disruptions, wire harnesses are taped; such as with the
KTR 160 from Kabatec, for example. The act of bundling wires
or attaching clips to wire harnesses is likewise covered
by this section of the value chain.

Testing
Before Komax customers deliver the completed wire harnesses
to the OEM, they subject every single wire harness to a connec-
tion test (electrical test). For this they resort to the test systems
of TSK, such as the TS1500 HV for high-voltage wires.

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BOARD OF DIRECTORS

BOARD OF
DIRECTORS

Daniel Hirschi holds a degree in engineering.
From 1983 to 2005 he held various mana-
gement functions at Saia-Burgess in Murten,
where he was CEO from 2001, and Delegate
of the Board of Directors from 2003. From
2006 to 2009, Daniel Hirschi was CEO and
Delegate of the Board of Directors of
Benninger 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 relationships with the
Komax Group.

David Dean (1959)
Nonexecutive, independent member of
the Board of Directors since 2014, elec ted
until 2018, Swiss national, resident in
Meilen, member of the Board of Directors
of listed company Agta Record AG,
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
Bossard Group since 2005. He was the
company’s CFO from 1998 to 2004,
and its Corporate Controller before that.
David Dean is an expert in accounting
and controlling. He holds a federal diploma
and is a certified accountant. Further-
more, 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)
Nonexecutive, dependent member
and Chairman of the Board of Directors
since 2015, elected until 2018, Swiss
national, resident in Birmensdorf, member
of the Board of Directors of the listed
company Huber + Suhner AG, Pfäffikon ZH,
and member of the Investment
Committee of the Valyou investment
foundation, Neuhaus.

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 Schweizer-
ische Industrie-Gesellschaft Holding AG,
Neuhausen, from 2004 to 2006 he was
a member of the Board of Management re-
sponsible 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)
Nonexecutive, independent member
of the Board of Directors since 2005,
ViceChairman since 2014, elected until
2018, Swiss national, resident in Biel,
member of the Board of Directors of the
listed company Schaffner Holding AG,
Luterbach, and the listed company
Gavazzi Holding AG, Steinhausen.

As at 31 December 2017

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EXECUTIVE COMMITTEE

EXECUTIVE
COMMITTEE

Matijas Meyer (1970)
Chief Executive Officer (CEO) since 2015,
at Komax since 2007, Swiss national,
resident in Ebikon.

Matijas Meyer holds a degree in engineer-
ing from ETH Zurich and an MBA from
Cranfield University (UK). Prior to his current
position, he was Head Business Unit Wire
and Head of the site in Rousset (FR). Be-
fore 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 Beteili
gungs AG, Baar.

Andreas Wolfisberg is a Swiss Certified
Expert in Accounting and Controlling.
Before joining Komax, he worked at von
Moos Stahl in Lucerne.

since 1987, and was based in China from
1996 to 2003. He returned to Shanghai
in 2017, where he currently manages the
new installations business of Schindler
China. From 2006 to 2013, Kurt Haerri was
the President of the Swiss-Chinese
Chamber of Commerce. He is also a lec turer
at ETH Zurich, where he is respon sible
for the Asia module of an Exe cutive 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.

Roland Siegwart (1959)
Nonexecutive, independent member of
the Board of Directors since 2013, elected
until 2018, Swiss national, resident in
Schwyz. Member of the Board of Directors
of Evatec Holding AG, Trübbach, GE
Inspection Robotics AG, Zurich, and NZZ
Mediengruppe (owner of the Neue Zürcher
Zeitung), Zurich, Trustee of the Gebert Rüf
Foundation, Basel.

Roland Siegwart holds a master’s degree
in mechanical engineering as well as a
doctorate from ETH Zurich. He was pro-
fessor at EPFL Lausanne from 1996 to
2006, and Vice-President of Research and
Corporate Relations at ETH Zurich from
2010 to 2014. He 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. In the last
three years, Roland Siegwart has not
been a member of the Executive Committee
or had any material business relationships
with the Komax Group.

Andreas Häberli (1968)
Nonexecutive, independent member of
the Board of Directors since 2017, elec ted
until 2018, Swiss national, resident in
Bubikon.

Andreas Häberli holds a master’s degree
in electrical engineering from ETH Zurich.
He then went on to obtain a doctorate
(Dr. sc. tech.) at ETH Zurich’s Laboratory
for Physical Electronics. Since 2003,
he has held various management roles at
the dormakaba Group (formerly Kaba
Group), where he has been Chief Techno-
logy Officer (CTO) and a member of the
Executive Committee since 2011. He was a
member of the Executive Board of Sen-
sirion AG in Stäfa from 1999 to 2003, and
worked for Invox Technology (Canada/
USA) from 1997 to 1999. In the last three
years, Andreas Häberli has not been a
member of the Executive Committee or
had any material business relationships
with the Komax Group.

Kurt Haerri (1962)
Nonexecutive, independent member of
the Board of Directors since 2012, elected
until 2018, Swiss national, resident in
Birrwil.

Kurt Haerri holds a degree in mechanical
engineering from Lucerne University
of Applied Sciences as well as an Execu-
tive MBA HSG from the University of
St. Gallen. He has worked for Schindler

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SUSTAINABILITY AND SOCIAL RESPONSIBILITY

SUSTAINABILITY
AND SOCIAL
RESPONSIBILITY

Sustainability and social responsibility are core ele
ments of Komax’s corporate strategy. They are
incorporated not only into the Group’s longterm tar
gets, but also into its operating activities. Komax is
determined to develop its competencies in questions
of sustainability and social responsibility on an on
going basis – for the benefit of its stakeholders and
the environment.

The way Komax is perceived by its customers, business partners, shareholders, and other stakeholders
depends to a significant extent on the conduct of its employees. For this reason, Komax has a code of
conduct that is binding for all employees of the Group and reviewed on a regular basis. The code of
conduct defines general 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 protection. All employees are given training on the code of conduct when they join the
company.

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times5

less energy
required to cool a
control cabinet

Product sustainability

The machines developed by Komax are characterized by their
exceptionally high quality and longevity. The Group’s own global
service network and its collaboration with partners ensure that
these machines are professionally maintained. This has a posi-
tive impact on their performance, value retention, and life span,
as well as saving resources generally. Komax also ensures ser-
vicing and the availability of upgrades and replacement parts
years beyond its contractual obligations. Thanks to their modu-
lar construction, the machines can usually be adapted to new
technological developments or changing needs.

Increasing energy efficiency
When developing new machines, Komax goes to great lengths to ensure that the consumption of re-
sources is continuously reduced – both in the production process and during the life cycles of the ma-
chines at the factories of its customers. For example, in a recently developed type of machine now sold
in large numbers, particular attention was paid to the consumption of electricity for the ventilation of a
control cabinet. The ventilation of the new machines requires only a fifth of the electricity of the previous
model. Thanks to the optimized cooling concept and the improved performance of the fans, the new
machines are able to work at higher environmental temperatures, despite their lower energy consump-
tion. If one extrapolates the energy saving achieved on one single machine to the annual production of
these two machine models, the annual saving works out at more than 300 MWh. Moreover, Komax has
also ensured oil-free pneumatics for this new generation of machine, which likewise has positive reper-
cussions for the environment.

Declining consumption of fuel and materials
Komax supplies solutions for wire processing applications, in particular for the automotive supply in-
dustry. These solutions are also used to process wiring for new fuel-saving propulsion concepts such
as electric and hybrid vehicles. Moreover, the innovative technologies mean that ever smaller wire cross-
sections and innovative materials such as aluminum 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 custom-
ers’ expectations and the extent of their loyalty are measured by means of regular satisfaction analyses
conducted in conjunction with external partners. Komax sets particular store by customer feedback on
improvement potential.

In 2011, Komax launched its “Oekomax” program in Switzerland with the aim of continually optimiz-
ing environmental protection. Ever since, a team comprising employees from various areas of the com-
pany has been looking at sustainability issues. The spectrum of themes ranges from campaigns that
motivate employees to be sparing in the use of resources through to ideas as to how the energy effi-
ciency of newly developed machinery can be increased.

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Sustainability in procurement

The company believes in long-term partnerships, and selects
suppliers which demonstrate an environmentally aware ap-
proach 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 environ-
mentally aware and ethical way. Compliance with agreed guide-
lines and indicators is reviewed in regular supplier audits. If
violations are uncovered, a supplier partnership may be immedi-
ately terminated as a result.

reduction in
consumption of
electricity and
drinking water by
2021

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.

Sustainability in production

The Komax Group’s business focuses mainly on the production of machines and systems, as well as
provision of the corresponding maintenance services. A large proportion of the company’s value crea-
tion consists of engineering services. The majority of components are manufactured and supplied by
third parties, which means that actual production at Komax primarily comprises the assembly of com-
ponents. Accordingly, Komax generates relatively few emissions compared to other industrial compa-
nies.

Operational Excellence
Highly automated, state-of-the-art production systems are used for strategically important components
that Komax manufactures 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 materials and wastewater are recycled or then disposed of
appropriately. Waste volumes are continuously reduced as part of optimization programs. Wherever
possible, Komax uses renewable energies such as solar or hydroelectric power. For example, in Swit-
zerland – the country in which Komax has the highest production volume – the company obtains natural
energy from Central Switzerland’s RegioMix scheme, and has its own photovoltaic power plant on the
roof of its production building in Rotkreuz.

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SUSTAINABILITY AND SOCIAL RESPONSIBILITY

Key factors in Komax’s pursuit of Operational Excellence include safety and the protection of its em-
ployees’ health. Management attaches high priority to this issue, which is why internal processes are
regularly reviewed for safety and health risks. Furthermore, employees are sensitized to possible risks
in the workplace at the individual production sites in a targeted way. The low number of occupational
accidents over a period of many years is testimony to the success of initiatives in this area. In 2017, the
number of registered occupational accidents throughout the Komax Group recorded a slight year-on-
year decline from a low level – from 34 to 32 incidents. This trend should be viewed all the more posi-
tively since the Komax workforce completed some 10% more working hours in 2017 than it did in 2016,
as a result of the Group’s strong growth and the associated rise in headcount. As in previous years,
reported absences due to accidents in 2017 were mainly the result of accidents suffered by employees
while engaging in leisure activities. Komax has set itself the target of reducing occupational accidents
by 10% (compared with the average for 2016 and 2017) by 2021.

Certification status and integrated management system
The key production locations of the Komax Group, namely in Brazil, China, Germany, France, Switzer-
land, Tunisia, Turkey, Hungary, and the US, 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 Automatic in Bucharest all have ISO 14001 certification. These six sites employ around 890
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

France

Austria

TSK Prüfsysteme GmbH

Laselec SA

Thonauer Gesellschaft m.b.H.

Romania

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

Komax Thonauer Kft.

USA

Komax Corporation

TSK Innovations Co.

ISO 9001

ISO 14001

OHSAS 18001

ISO 14001

DE AEOC 104360

ISO 14001

OHSAS 18001

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 2018 and 2020 for the Swiss sites in
Dierikon and Rotkreuz. For example, the target is to reduce energy consumption by at least 6% by the
end of 2018 (2014 basis: 2 822 MWh or 5.9 MWh per head). Despite the strong growth in revenues since
2014, which was related to a substantial rise in headcount, Komax had largely stabilized its electricity
consumption by the end of 2017: in total, consumption rose only slightly to 2 888 MWh; in per head
terms, however, consumption was down by around 17% to 4.9 MWh. EnAW pursues a systematic ap-
proach to help more than 3 800 manufacturing firms, industrial plants and service companies increase
energy efficiency and reduce their CO2 emissions.

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SUSTAINABILITY AND SOCIAL RESPONSIBILITY

Komax is successively expanding its reporting on sustainability issues. In the table below, for instance,
it is disclosing consumption data for production sites outside of Switzerland for the first time. This data
details consumption figures for the majority of large production sites where 60% of all Komax Group
employees work. In extending its reporting in this way, Komax has also set itself targets for reducing the
consumption of electricity and drinking water at these production sites. By 2021, the aim is to have
lowered the consumption of electricity and drinking water by 5% versus 2017.

Sustainability key figures

Consumption 1

Electricity in MWh

Electricity per head in MWh

Drinking water in m3

Drinking water per head in m3
Waste 2

Refuse in kg

Refuse per head in kg
Accidents 3

2017

2016

4 517

4.0

7 457

6.6

4 087

3.9

7 900

7.5

39 099

36 134

60.7

60.4

Number of occupational accidents

Number of occupational accidents
for every 1 000 employees

22.2

26.0

1 Covering the production sites in Dierikon (CH), Rotkreuz (CH), Küssnacht am Rigi (CH), Grafenau (DE), Porta

Westfalica (DE), El Paso (US), Colombo (BR), Shanghai (CN), Tokyo (JP).

2 Covering the production sites in Dierikon (CH), Rotkreuz (CH), Küssnacht am Rigi (CH).
3 Covering all production sites of the Komax Group.

Contribution to regional development

Komax has been firmly rooted in the Canton of Lucerne, Switzerland, since 1975, where it is one of the
region’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 qualified la-
bor. 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 and distribution sites that the Group has established around the world since 1975
remain in their original locations, which generates a strong sense of identification with local areas.
Among other things, this manifests itself in the fact that a large number of employees can be recruited
regionally and preference can be given to local suppliers wherever this is feasible and makes commer-
cial sense.

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SUSTAINABILITY AND SOCIAL RESPONSIBILITY

Attractive employer

At the end of 2017, Komax employed 1 841 staff worldwide (2016: 1 633). Average headcount in 2017
worked out at 1 720 employees (2016: 1 609 employees). This increase is primarily explained by the two
acquisitions, the persistently strong development of business, and the corresponding new appoint-
ments at various locations. Personnel expenses in the year under review amounted to CHF 137.0 million
(2016: CHF 131.6 million).

2017

Production

Research and development

Engineering

Marketing and sales

Administration 2

Total headcount as at 31 December 2017

2016

Production

Research and development

Engineering

Marketing and sales

Administration 2

Total headcount as at 31 December 2016

CH 1

Europe 1

Americas 1

Asia 1

Africa 1

Total

231

142

194

644

263

182

633

110

231

110

247

674

200

166

625

176

1841

Europe

Americas

Asia

Africa

Total

225

130

171

598

227

140

532

218

204

617

166

177

518

155

1 633

1 The individual companies and their locations are listed on page 106.
2 Including management.

The companies of the Komax Group ensure that their employees enjoy equal opportunities, equal treat-
ment and fair employment conditions, receive pay that is in line with the market, and benefits that are in
line with national and industry standards. Participation in the pay comparison survey conducted by in-
dustry association Swissmem showed that pay at the Swiss production sites is in line with market av-
erages and that men and women receive equal pay. The proportion of women in the Group’s global
workforce remained unchanged at around 19% in 2017 (2016: 19%). Komax is not alone within the in-
dustry in having a relatively low proportion of women in its workforce. The main reason for this phenom-
enon 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. In 2017 it amounted to just
over 7% (2016: less than 6%). Komax has a very good reputation as an attractive employer, which is
partly explained by its corporate culture. This is characterized by mutual respect, trust, and awareness
of the paramount importance of quality. Moreover, the needs of employees themselves are not neglect-
ed, despite ambitious targets. As part of an active staff development policy, Komax organizes regular
management seminars and training for its employees, as well as providing financial support for individ-
ual training activities. Komax also encourages international exchanges to allow its staff to gain new
experiences and career perspectives.

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ANNUAL REPORT 2017
SUSTAINABILITY AND SOCIAL RESPONSIBILITY

Major investment in tomorrow’s workforce
Komax is committed to the training of tomorrow’s professional specialists as a way of safeguarding its
global market and technology leadership. In 2017, 44 apprentices (2016: 41) were undergoing training
in seven professions at the Group’s Swiss sites. 35 apprentices (2016: 33) were being trained in Germa-
ny (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 various 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 mechanical workshops and assem-
bly areas for the specific apprenticeship subjects. The budding professionals are supervised by a moti-
vated 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 benefits
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. More-
over, the company supports the people it has trained in their professional development and further vo-
cational training.

Satisfied and healthy employees
Employee satisfaction is systematically measured and evaluated in the course of annual performance
review meetings. Komax uses the results of regular employee surveys as a valuable basis for developing
and implementing improvement measures. The results of the surveys conducted with external partners
were for the most part highly positive, and in many cases were significantly above the industry average.
In 2017, employee surveys were conducted at all sites in Switzerland and Germany.

It goes without saying that Komax satisfies all legal requirements with respect to working conditions
in the countries it operates in. Furthermore, it actively promotes the health of its staff at the various lo-
cations by means of various measures. In Switzerland, for example, the occupational health manage-
ment scheme “fit@work” means that staff benefit from free sports offers, fruit campaigns, and work-
shops and specialist talks, among other things. In order to promote the health of its workforce, Komax
also takes part in the “bike to work” initiative that takes place in Switzerland every year. This involves
Komax encouraging its employees to commute by bike as often as possible in the month of June. In
2017, 108 employees participated in this initiative, racking up more than 29 000 kilometers in the saddle.

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ANNUAL REPORT 2017
INFORMATION FOR INVESTORS

INFORMATION
FOR
INVESTORS

Komax cultivates a policy of open and transparent
communication with its investors. It allows sharehold
ers to participate in the company’s success through
its attractive, sustainable dividend policy (payout ratio
50%–60%).

Over the course of 2017, the daily closing price of the Komax share ranged between CHF 243.50 and
CHF 319.50. The year-end closing price was CHF 319.50. This represents an increase of 27.2% on the
closing price of the previous year. The value of the Komax share has risen by a multiple of roughly 4.5
over the last five years. The SPI Extra slightly more than doubled its points tally over the same timeframe.

Share price development

in CHF

350

300

250

200

150

100

2013

2014

2015

2016

2017

2018

Komax
SPI Extra TR

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ANNUAL REPORT 2017
INFORMATION FOR INVESTORS

Listing

Komax is listed on SIX Swiss Exchange. The market capitalization of the Komax Group at the end of
2017 was CHF 1.225 billion.

ISIN

Security number

Bloomberg code

Thomson Reuters code

CH0010702154

1070215

KOMN SW

KOMN.S

Geographical distribution of shareholdings

The majority of shares not held in Switzerland are held in the United Kingdom, Germany, Luxembourg,
and the United States.

29% Cleared shares

11% Other countries

60% Switzerland

Breakdown of shareholders by number of registered shares held

1–100

101–1 000

1 001–10 000

10 001–100 000

> 100 000

3 082

1 713

220

The shareholder base widened significantly in 2017. At the end of 2017, 5 048 shareholders were en-
tered in the share register. This represents an increase of 1 898 shareholders compared to the end of
2016.

Free float

The free float as defined by SIX Swiss Exchange stands at 95%.

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ANNUAL REPORT 2017
INFORMATION FOR INVESTORS

%59

payout ratio

Disclosure of shareholdings /
significant shareholders

Under Art. 110 of the Financial Market Infrastructure
Act, FinMIA, anyone who acquires or sells equity se-
curities on their own account and thereby attains,
falls below or exceeds the threshold of 3, 5, 10, 15,
20, 25, 331∕3, 50 or 662∕3% of the voting rights in a
company (whether or not such rights may be exer-
cised), is subject to a reporting obligation. Informa-
tion 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 ac-
quires 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.

Dividend policy

The Board of Directors defined an attractive dividend policy in its 2017–2021 strategy. Based on the
very pleasing 2017 result, the Board of Directors is proposing to the Annual General Meeting of 19 April
2018 a distribution at the upper end of the strategic bandwidth (payout ratio 50%–60%): CHF 6.50 per
share (2016: CHF 6.50), of which CHF 1.50 will be distributed from capital contribution reserves. The
payout ratio is therefore 59.2% (2016: 63.4%), and the dividend yield as of 31 December 2017 stood at
2.0%. 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.

Financial calendar

Annual General Meeting

Dividend payment

Halfyear results 2018

Investors Day

Preliminary information on 2018 financial year

Annual media and analyst conference on the 2018 financial results

Annual General Meeting

19 April 2018

25 April 2018

21 August 2018

26 October 2018

22 January 2019

14 March 2019

16 April 2019

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ANNUAL REPORT 2017
INFORMATION FOR INVESTORS

Key data Komax registered share

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

Highest price

Lowest price

Closing price as at 31 Dec.

Average daily trading volume

P/E (priceearnings ratio) as at 31 Dec.

Dividend yield as at 31 Dec.

No.

CHF

No.

2017

383

2016 1

2015 1

2014 1

2013 1

377

369

361

352

3 834 482

3 774 148

3 691 651

3 605 101

3 523 780

3 810 276

3 741 364

3 652 728

3 552 840

3 458 379

0.10

11.05

17.35

14.45

67.33

6.50 2

319.50

243.50

319.50

12 274

28.9

2.0 2

0.10

10.34

17.22

14.81

65.23

6.50

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

251.25

194.90

152.40

138.00

180.10

122.90

124.60

72.35

251.25

194.90

144.50

135.30

8 191

24.3

2.6

7 881

24.4

3.1

8 613

18.9

3.5

9 999

18.5

3.3

1 Since the start of 2017, the consolidated financial statements have been drawn up in accordance with Swiss GAAP FER. The prior-year

figures have been revised accordingly. The years 2013–2015 are reported according to IFRS.

2 Proposal of the Board of Directors of Komax Holding AG: distribution of CHF 6.50 per registered share.

Further information on the Komax registered share can be found on the Internet at
www.komaxgroup.com.

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CORPORATE GOVERNANCE 2017
CONTENTS

CORPORATE
GOVERNANCE

Corporate structure
and shareholders
48

Shareholder
participation rights
56

Changes of control
and defense measures
57

Auditors
57

Information policy
58

Capital structure
49

Board of Directors
51

Executive Committee
55

Compensations,
shareholdings and
loans
56

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ANNUAL REPORT 2017
CORPORATE GOVERNANCE

Ensuring good corporate governance is very important to Komax. Objectives in this area include safe-
guarding company value and success in the interest of customers, shareholders, staff, creditors, sup-
pliers, and the public, as well as the provision of transparent, rapid, and simultaneous information to all
stakeholder groups. Komax takes as its starting point the principles and regulations of the “Swiss Code
of Best Practice” of Economiesuisse and the Directive on Information Relating to Corporate Gover-
nance (Directive Corporate Governance, DCG) of SIX Exchange Regulation, and gives account of devel-
opments 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 gov-
ernance and initiates the corresponding adjustments where appropriate.

1 Corporate structure and shareholders

Corporate structure
The Group structure and subsidiaries belonging to the Group are set out on pages 106 and 107 of the
Annual Report. With the exception of Komax Holding AG, no companies with listed participation secu-
rities 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 43 to 46 (“Information for investors”).

Major shareholders
Shareholders whose share of the company’s share capital exceeds or falls below the thresholds of 3, 5,
10, 15, 20, 25, 33¹∕3, 50 and 66²∕3% have a reporting obligation under the 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 2017:

Shareholder / Shareholder group

Veraison SICAV, Zurich, Switzerland

Max Koch, Meggen, Switzerland

Swisscanto Fondsleitung AG, Zurich, Switzerland

Leo Steiner, Steinhausen, Switzerland

Number of shares
31.12.2017

Share in %
31.12.2017 1

196 229 2

190 285

132 410 3

126 954

5.199

5.042

3.508

3.364

1 The calculation is based on the 3 774 148 registered shares listed in the Commercial Register as at 31 December 2017.
2 Notification of breach of 5% threshold on 23 May 2015.
3 Notification of breach of 3% threshold on 16 December 2016.

All shareholdings reported to Komax Holding AG and the Disclosure Office of SIX Swiss Exchange
during the 2017 financial year as per Art. 120 of the Financial Market Infrastructure Act have been
published on SIX Swiss Exchange AG’s electronic publication platform, and can be viewed at
www.six-exchange-regulation.com/en/home/publications/significant-shareholders.html.

Cross-shareholdings
There are no cross-shareholdings.

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ANNUAL REPORT 2017
CORPORATE GOVERNANCE

383 448.20

1 551.80

0.00

2 Capital structure

Capital

in CHF

Ordinary capital

Conditional capital

Authorized capital

Further details are provided in the sections below.

Authorized and conditional capital in particular
For detail on conditional capital, please see page 99 of the consolidated financial statements of Komax
Holding AG as well as 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 Programs of Komax Holding AG. The subscription and advance subscrip-
tion rights of the remaining shareholders in the company are excluded.

The allocation of options was undertaken in a framework determined by the Remuneration Commit-
tee. The option plan of Komax Holding AG was authoritative. The individual allocation of options 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 exercise 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 programs. Further information on the
Komax Group’s employee participation programs, can be found on pages 66 and 67 and 109 to 111 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, 2016 82 497 and for 2017 60 334.
Conditional capital therefore amounted to CHF 1 551.80 as at 31 December 2017.

The new capital created in 2017 was reported within the deadline stipulated under Art. 635h of the

Swiss Code of Obligations (CO).

The Komax Holding AG has no authorized capital.

Capital changes
Details of capital changes in 2016 and 2017 can be found on page 76 of the Financial Report. The cor-
responding information for 2015 can be found on page 85 of the financial section of the 2016 Annual
Report.

Shares, participation certificates, and bonus certificates
As at 31 December 2017, Komax Holding AG had fully paid-up capital of CHF 383 448.20 and distribut-
ed over 3 834 482 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 regis-
ter as a “voting shareholder” (see also “Restrictions on transferability of shares and nominee registra-
tions” on page 50). Registered shares are fully entitled to receive dividends. Komax Holding AG has not
issued any participation certificates or bonus certificates.

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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 persons, legal entities and groups
with joint legal status which act in concert by virtue of agreement, syndicate or in some other manner,
are regarded as a single acquirer for the purposes of this provision. This limitation also applies in the
case of the acquisition of registered shares through the exercising of subscription rights, option rights
or conversion rights. No requests for an exception were made in the year under review. This restriction
does not apply to the acquisition of shares through inheritance, division of an estate or joint marital
property.

Komax Holding AG’s Articles of Association (Section 6 paras. 5 and 6) also empower the Board of
Directors to refuse entry in the share register if the acquirer does not expressly declare, at the request
of the Board, that the shares were acquired in his/her own name and for his/her own account. Nominees
are listed in the share register as “non-voting shareholders.” After hearing the affected party, Komax
Holding AG may delete entries in the share register if such entries occurred 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 page 109 of the Annual
Report.

Management transactions
The Listing Rules of SIX Swiss Exchange stipulate a disclosure obligation for management transactions.
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 2017 financial year. Published notifications can
be found at www.six-exchange-regulation.com/en/home/publications/management-transactions.html
(website of SIX Swiss Exchange).

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CORPORATE GOVERNANCE

3 Board of Directors

The Board of Directors comprised six individuals as at 31 December 2017. Other than the Chairman, 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 rela-
tionship with any Group companies.

Members of the Board of Directors

Beat Kälin, Chairman

Daniel Hirschi, Vice-Chairman

David Dean

Andreas Häberli

Kurt Haerri

Roland Siegwart

AC: Audit Committee
RC: Remuneration Committee

Appointed

Term expires

Committees

2015

2005

2014

2017

2012

2013

2018

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 34 and 35 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 mandates 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 four addi-
tional mandates for listed companies, five additional mandates for non-listed companies, and five addi-
tional 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 dif-
ferent companies that belong to the same corporate group count as a single mandate. Mandates un-
dertaken 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 in respect of the company. The reimbursement of expenses does not count as
compensation.

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 elect-
ed individually by the Annual General Meeting for a term lasting until the end of the next Annual Gener-
al 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 reg-
ulations regarding the appointment of the Chairman and the members 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 19 April 2018.

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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 be-
comes 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 member 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 invitation 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 meeting within 14 days of receiv-
ing the request.

The Board of Directors is deemed to have a quorum if an absolute majority of its members are pres-
ent 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 cas-
es of urgency, a meeting of the Board of Directors may be held by telephone or other appropriate me-
dium. Resolutions by circular letter are permissible provided no Board member calls for verbal discus-
sion. Five ordinary meetings of the Board of Directors took place in 2017, with all members being
present on all occasions. On average, these meetings lasted around eight hours. However, these aver-
age times pertain to the actual duration of the meetings themselves, and do not take into account the
preparatory and follow-up work done by the individual members. Within the Board of Directors, there
are two committees that are exclusively made up of non-executive Board members:

– Remuneration Committee
This committee amalgamates the tasks of a remuneration and nomination committee. The Remunera-
tion 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 Gen-
eral Meeting. Re-election is permissible. The current members are Daniel Hirschi (Chair), Beat Kälin, and
Roland Siegwart. The Board of Directors is proposing to the Annual General Meeting of 19 April 2018
the re-election of Beat Kälin and Roland Siegwart, and the election of Andreas Häberli as a new Com-
mittee member.

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 remain-
ing period of office.

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 meetings 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 members of the Board of Directors.
In 2017, the Committee held two ordinary meetings as well as one extraordinary meeting; in each
case, all members were present. On average, these meetings lasted a good four 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 fulfilment
of the compensation and staff policy duties assigned to it by current legislation and the Articles of As-
sociation. 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 ap-
pointment 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 Remuneration Committee can be found in the
Compensation Report on pages 59 to 71.

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– 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 2017, with all members being present on both
occasions. On average, these meetings lasted four hours. These average times do not include the pre-
paratory and follow-up work done by the individual members.

The tasks of the Audit Committee include the overall supervision of the external and internal auditors,
as well as financial reporting. The Audit Committee sets out the scope and schedule of the 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 reliabil-
ity of the internal control system and risk management, and acquires a picture of the extent 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 invited
to attend. The CFO represents the internal audit unit. Both bodies have access to the minutes of the
meetings of the Board of Directors and Executive Committee. The detailed tasks and competencies of
the Audit Committee are set out in the Organizational Regulations for the Audit Committee.

Definition of areas of responsibility
According to Art. 716a para. 1 CO and Section 19 of the Articles of Association, the Board of Directors
must fulfil the following tasks:
– Overall management of the company and issuance of the necessary directives
– Defining the company’s organizational structure
– Determining the principles of accounting, financial controlling and financial planning, insofar

as this is necessary for the management of the company

– Appointing and removing the persons entrusted with managing and/or representing the

company

– Ultimate supervision of the persons entrusted with managing the company, specifically

with respect to prevailing legislation, the Articles of Association, regulations, and directives

– Producing the Annual Report, making preparations for the Annual General Meeting and

executing the resolutions passed by the Annual General Meeting

– Drawing up the Compensation Report
– Informing the courts in the event of excessive indebtedness
– Passing resolutions on supplementary contributions for shares not fully paid in
– Resolutions for the approval of capital increases and the resulting amendments to the

Articles of Association

The tasks, obligations and powers of the Board of Directors, its Chairman, and the above-mentioned
Committees are set out in detail in the Articles of Association, the Organizational 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 necessary. The most recent adjust-
ments have been in force since 1 January 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 Com-
mittee 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.

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Information and control instruments in respect of 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 ques-
tions 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 amal-
gamated into groups according to their nature, namely general external risks, business 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.

The MIS of the Komax Group is organized as follows: each subsidiary’s key balance sheet and prof-
it and loss figures are compiled and consolidated once a month. The subsidiaries’ balance sheets, in-
come statements, cash flow statements and various indicators are compiled and consolidated on a
quarterly, half-yearly and yearly basis. A comparison is then made with the previous year and the
budget. The budget forecast is checked for attainability against the quarterly statements for each indi-
vidual company and on a consolidated basis.

Using key controls, the internal control system (ICS) ensures proper and efficient management, safe-
guards assets, prevents and identifies offences and errors, and ensures accurate and complete ac-
counting records as well as timely preparation of reliable financial information. A report setting out the
results of these investigations and the corresponding measures taken is submitted to the Audit Com-
mittee.

The internal audit function evaluates the effectiveness of the ICS as well as management and moni-
toring 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 business areas of the parent
entity at regular intervals, and on the basis of an annually updated audit plan. The internal auditors re-
port the results of their investigations to the Audit Committee. The Audit Committee reviews and ap-
proves the scope of the audit, the audit plan, and the corres ponding responsibilities. It also decides on
any measures to be implemented as a result of internal audit findings.

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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

Biographies of the individual members of the Executive Committee are provided on page 35.

Other activities and interests
Aside from the mandates listed on page 35, 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
2017.

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 manage-
ment 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 compa-
ny or do not control the company shall be two additional mandates for listed companies, two additional
mandates for non-listed companies, and five additional mandates for charitable 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 different companies that belong to the same corpo-
rate group count as a single mandate. Mandates undertaken by a member of the Executive Committee
at the behest of a Group company are not covered by the additional mandate restriction. Executive
Committee members may not accept any of the above-mentioned mandates without the prior written
approval of the Board of Direct ors. The assumption of mandates other than those stipulated above is
permissible without numerical restriction, as long as these mandates are unremunerated and do not
interfere with the Executive Committee member’s fulfilment of his obligations regarding the company.
The reimbursement 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.

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5 Compensations, shareholdings and loans

Details of compensations, shareholdings and loans are set out in the Compensation Report on pages
59 to 71 of this Annual Report.

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 en-
titled 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 Commer-
cial 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.

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 elec-
tronic or written power of attorney. The Chair of the Annual General Meeting shall decide on the permis-
sibility 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 repre-
sented, unless prevailing legislation or the Articles of Association contain mandatory provisions 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 and agenda
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.

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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 im-
mediately. Nominees are listed in the share register as “non-voting shareholders.”

Invitation to the Annual General Meeting of 19 April 2018
All shareholders registered in the Komax Holding AG share register as at 5.00 p.m. on 12 April 2018 are
entitled to vote in respect of the number of shares registered in their name at the Annual General Meet-
ing of 19 April 2018. Shareholders registered on 14 March 2018 will receive an invitation indicating the
proposals of the Board of Directors together with a reservation and entry ticket coupon. Shareholders
who acquire shares later and whose registration application is re ceived by the Komax Holding AG share
register no later than 12 April 2018 will receive the invitation at that time, or ballot materials will be wait-
ing 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.

7 Changes of control and defense 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 opt-
ing-out or opting-up regulations.

Clauses on change of control
At the Komax Group, change-of-control clauses are not included in employment contracts. However,
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.

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 Ko-
max 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 2017.

Audit fee
PricewaterhouseCoopers invoiced the Komax Group CHF 702 963 in the 2017 financial year for servic-
es 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.

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Additional fees
During the 2017 financial year, PricewaterhouseCoopers invoiced additional fees amounting to total
CHF 87 644. This breaks down into fees of CHF 30 292 for tax and legal advice and CHF 57 352 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 report 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 (man-
agement 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 Swiss GAAP FER 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 Commit-
tee 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
comparing the fee for additional services charged by the external auditors with the audit fee, taking into
account the scope of these additional services.

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 Swiss GAAP FER 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 in-
formed of significant changes and developments.

Komax Holding AG publishes facts relevant to its share price in conformity with the disclosure poli-
cies of SIX Swiss Exchange 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 company notices is the
“Swiss Official Gazette of Commerce” (“Schweizerisches Handelsamtsblatt”).

Information on share price trends, annual and half-year reports, the financial calendar, the minutes
of the most recent Annual General Meeting, media releases, and Komax Holding AG’s Articles of Asso-
ciation and Organizational Regulations are available at www.komaxgroup.com. Media and analyst con-
ferences 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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COMPENSATION REPORT 2017
CONTENTS

COMPENSATION
REPORT

Compensation,
shareholdings and
options held by
the Board of Directors
in 2017 (audited)
68

Compensation,
shareholdings and
options held by
the Executive Committee
in 2017 (audited)
69

Report of the auditors
71

Introduction by the
Chairman of the
Remuneration Committee
60

Tasks and competencies
of the Remuneration
Committee
61

Provisions of the
Articles of Association
on compensation
62

Principles of
compensation policy
63

Structure of the
compensation system
64

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 2017 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.

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Introduction by the Chairman of the Remuneration Committee

Dear Shareholder,

The 2017 financial year developed very positively for Komax, and showed that the company is on track
to meet its strategic objectives. The Remuneration Committee looked at a number of personnel issues
in 2017, as well as reviewing the compensation system. On behalf of the Remuneration Committee,
I would like to provide you with more detail on this over the following paragraphs.

In 2017, we evaluated several potential members for the Board of Directors, all of whom possess
considerable expertise in the area of digital transformation. In the person of Dr. Andreas Häberli, we
have found a proven specialist who was elected to our Board of Directors with a resounding majority at
the 2017 Annual General Meeting. Given the continuous growth of recent years, we have also looked
at the organizational structure of the Komax Group. With an eye on good corporate governance, we
have decided to expand the Executive Committee from two to five members. The planned change will
enter into force with effect from 1 January 2019, assuming the 2018 Annual General Meeting approves
the proposed compensation for the expanded Executive Committee. Three heads of core business
areas that focus primarily on the development and production of automation solutions along the value
chain are being promoted to the Executive Committee: Marc Schürmann (wire processing), Marcus
Setterberg (test systems), and Günther Silberbauer (customer-specific solutions).

We reviewed the compensation systems of the Board of Directors and the Executive Committee in
2017, and have geared the performance indicators of the Executive Committee to the 2017–2021 stra-
tegic targets. These performance indicators (revenues, EBIT, RONCE, individual targets) are now
aligned with the medium-term financial targets. There was no need to adjust the compensation system
of the Board of Directors.

At the next Annual General Meeting on 19 April 2018, we will be proposing approval of the maximum
possible total compensation for the Board of Directors and the Executive Committee for the 2019 finan-
cial year. In addition, you will as usual be given the opportunity at the Annual General Meeting to cast
an advisory vote on this Compensation Report and thereby express your opinion on our compensation
system. We are aware of our responsibility in this area. I can therefore assure you that we will continue
to adopt a restrained approach to the budget available. When you read the Compensation Report, you
will see that the compensation granted to both the Board of Directors and the Executive Committee in
2017 was in keeping with the provisions of the Articles of Association.

You can find detailed information on our compensation model and the compensation granted to the

Board of Directors and the Executive Committee in 2017 on the following pages.

Yours sincerely,

Daniel Hirschi
Chairman of the Remuneration Committee

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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 remunera-
tion 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 program
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 compensation,
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 program

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

Evaluation of the performance of the other members
of the Executive Committee

CEO

Committee

BoD

AGM

proposes

approves

proposes

submits

proposes

approves

proposes

approves

proposes

approves

approves
(binding vote)

proposes

approves

Individual compensation of the other members of the Executive Committee

proposes

approves

Compensation Report

proposes

approves

confirms
(advisory
vote)

Under the Articles of Association, the Remuneration Committee consists of a maximum of three
non-executive members of the Board of Directors. The Committee is elected by the Annual General
Meeting. Members’ term of office ends with the conclusion of the next Annual General Meeting. Re-elec-
tion is permissible. The 2017 Annual General Meeting elected Daniel Hirschi (Chairman), Beat Kälin, and
Roland Siegwart to the Committee.

The Remuneration Committee meets as often as business requires, but at least twice a year, gener-
ally in March and December. Compensation issues are discussed at the March meeting. These discus-
sions 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 Compen-
sation Report. At the December meeting, staffing questions are discussed, along with corporate gov-
ernance issues. In addition, the performance targets for the CEO and the other members of the Execu-

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tive Committee are set for the following year. In the reporting year, the Committee held two ordinary
meetings and one extraordinary meeting; 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 advi-
sory (non-voting) 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 avail-
able 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.

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 program.

– 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
participation program.

– The Board of Directors determines the conditions for the performance-related com-

pensation component on an annual basis. These are linked to the attainment of one or
more performance criteria, whereby these criteria are either company-related and/or
individual in 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 Committee

– 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
binding vote of the AGM

– 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.

Pension benefits

– The pension benefits of members of the Executive Committee are only paid within

occupational domestic and foreign pension plans provided by the company or its Group
companies.

– The 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/articles-of-association.

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ANNUAL REPORT 2017
COMPENSATION REPORT

4 Principles of compensation policy

Board of Directors
The members of the Board of Directors only receive fixed compensation. This ensures that they are
independent in their supervision of the Executive Committee. Their compensation is paid in cash and
restricted shares, thereby ensuring alignment with the long-term interests of shareholders. 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 respect to sustain-
ability 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 exception-
al performance and to retain them in the long term. The amount of compensation awarded reflects the
company’s long-term financial success.

Performance
orientation

A significant proportion of compensation is directly linked to the operating and financial
performance of the company and the attainment of individual objectives.

Alignment with
shareholder interests

A proportion of compensation consists of Performance Share Units, which are intended
to align the interests of management more closely with the long-term interests of
the 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 listed international Swiss industrial companies of com-
parable complexity, size, and geographic reach. The sources used for the benchmark
comparison are publicly accessible data such as compensation reports and the Ethos
study on remuneration in Swiss companies. With no benchmark comparison having
been undertaken in recent years, various specific benchmarks studies were conducted
in 2017, on the basis of which the compensation of the members of the Executive
Committee was reviewed. The results of the study indicate that there is no need to
adjust the target amounts for compensation.

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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ANNUAL REPORT 2017
COMPENSATION REPORT

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 alignment
of their interests with the long-term interests of shareholders, their compensation is paid partly in cash
and partly in restricted shares. The allocation of share options to members of the Board of Directors has
been discontinued.

The amount of compensation depends on the responsibilities of the individual as well as the time

taken up by their mandate, and is based on the following structure:

in CHF

Chairman of the Board of Directors

Vice-Chairman of the Board of Directors

Board member and Chairman of a committee

Board member without committee chairmanship

Basic annual
fee

Attendance
fee

187 500

75 000

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 lock-in period is three years. In the event
of retirement, death, or disability, the entitlement to restricted shares is calculated on a pro rata tempo-
ris basis. In such cases, the lock-in period may be either continued or rescinded at the discretion of the
Board of Directors. In the event of a change in company control, the lock-in period is automatically
rescinded.

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 2017.

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 pension plans
of Komax.

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ANNUAL REPORT 2017
COMPENSATION REPORT

CEO and Executive Committee

5.2
In keeping with the principles of performance orientation and alignment with the long-term interests of
shareholders, the CEO and the other members of the Executive Committee receive a fixed salary com-
ponent, a variable, performance-related cash bonus, a long-term incentive component in the form of
Performance Share Units, and occupational benefits.

Fixed compensation

Attract, retain,
motivate

Function, market
comparability

–

Ongoing

Monthly cash
payments

Purpose

Driver

Performance criterion

Period

Instrument

Cash bonus

Long-term
incentive system

Pay for performance

Align with
shareholder interests,
pay for performance

Financial
and individual
performance

Revenues, EBIT,
individual objectives

One year

Yearly cash payment

Function

RONCE

Three years

Performance Share
Units (PSUs)

Retirement savings /
insurance plan

Occupational benefits

Protect against risks

Market comparability –

Ongoing

a) 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 regula-
tions. Expense allowances are not included, as these are not considered compensation.
The fixed salary component and the cash bonus for 100% target attainment form the so-called target
salary. The target salary is determined on the basis of the following factors:
–
–
–
–

the tasks and responsibilities of the individual functions
the standard market compensation rate for the function in question (external benchmark)
an internal peer comparison (internal benchmark)
the individual profile of the function holder, e.g. skills, capabilities, experience, and
performance
the company’s available financial affordability

–

b) 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 values relevant to the 2017 financial year were Group revenues and Group EBIT.
The Board of Directors determines the performance achievement level and the amount of the cash bo-
nus payable to the CEO annually on the recommendation of the Remuneration Committee. 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 exceeded, the cash bonus may amount to
a maximum of 175% of the target bonus or a maximum of 100% of annual fixed compensation.

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ANNUAL REPORT 2017
COMPENSATION REPORT

Target attainment
The attainment of financial targets is evaluated after the end of the financial year; it may fall anywhere
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 non-quantita-
tive objectives of a predominantly strategic nature, such as the opening up of new markets, the devel-
opment 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%.

Financial performance

CEO and CFO

25% Revenues (Group)
50% EBIT (Group)

Individual performance

25% individual objectives

Payout bandwidth

0%–175%

The cash bonus is generally paid in April of the following year.

c) Long-term incentive system
To ensure that the interests of the Executive Committee are aligned with long-term shareholder inter-
ests, the Komax Group has a long-term incentive system linked to the company’s financial performance.
This plan comprises Performance Share Units (PSUs) with a three-year vesting period that are depend-
ent on the attainment of a performance target (average RONCE figure over three years) and the contin-
uation of the employment relationship. 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 closing
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 is dependent on the average RONCE figure over three years compared 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 pay-
out 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:
–

RONCE figure below threshold value: 0% of PSUs are converted into shares
(forfeiture rate of 100%)
RONCE figure achieved: 100% of PSUs are converted into shares
RONCE figure 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 inter-
polation.

Number of shares allocated at
time of vesting

Number of PSUs originally
granted to the individual
in question

Vesting factor
(0%–150%)

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ANNUAL REPORT 2017
COMPENSATION REPORT

Duration of plan

Plan period (2017 – 2019)

2017 plan year

2018 plan year

2019 plan year

Average RONCE figure

1 January 2017
allocation of PSUs

31 December 2019
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 vesting 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 deter-
mined at the discretion of the Board of Directors.

d) 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 base 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 benefits 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.

e) Other provisions in employment contracts
The employment contracts of members of the Executive Committee are concluded for an inde finite
period and stipulate a maximum notice period of 12 months. They do not contain any severance agree-
ment or change of control provisions.

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ANNUAL REPORT 2017
COMPENSATION REPORT

6 Compensation, shareholdings and options held

by the Board of Directors in 2017

Section 6 of the Compensation Report was audited by the company’s external auditor.

Compensation

6.1
In 2017, members of the Board of Directors received total compensation of CHF 898 274 (2016:
CHF 904 330), of which CHF 661 250 was paid out in cash (2016: CHF 673 750), CHF 181 667 in
the form of restricted shares (2016: CHF 175 417) and CHF 55 357 as social benefit contributions
(2016: CHF 55 163). Contributions to pensions plans amounted to CHF 0 (2016: CHF 0).

in CHF

Basic annual fee 1

Allocation
restricted
shares 2

Social
benefits 3

Total
compensation
2017

Total
compensation
2016

Beat Kälin

Daniel Hirschi

David Dean

Andreas Häberli 4

Kurt Haerri

Roland Siegwart

Leo Steiner 5

Chairman

Member

220 000

102 500

97 500

53 750

92 500

95 000

n.s.

60 000

30 000

25 000

16 667

25 000

n.s.

11 537

10 314

9 536

5 482

9 147

9 341

n.s.

291 537

142 814

132 036

75 899

126 647

129 341

n.s.

300 287

149 551

136 078

n.s.

130 689

134 731

52 994

Total Board of Directors

661 250

181 667

55 357

898 274

904 330

1 Basic annual fee in cash (incl. expense allowance) and attendance fees.
2 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 2017 was CHF 259.07.

3 Includes mandatory employer contributions to social insurance. This amount entitles members of the Board of Directors to draw the maximum insured

pension benefits in the future.

4 Member of the Board since 12 May 2017.
5 Member of the Board until 12 May 2016.

No compensation was paid to former members of the Board of Directors for the 2016 and 2017 financial
years. Komax Group companies had not granted any guarantees, loans, advances, or credits to mem-
bers of the Board of Directors or parties closely linked to such persons as at 31 December 2017. 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 2017

6.2
As at the end of 2016 and 2017, members of the Board of Directors had the following holdings of shares
and/or options in the company:

Assets in units

31.12.2017

31.12.2016

Beat Kälin

Daniel Hirschi

David Dean

Andreas Häberli 1

Kurt Haerri

Roland Siegwart

Chairman

Member

Options

8 507

4 429

1 830

1 799

940

4 000

1 000

9 135

3 713

1 068

n.s.

703

844

13 000

2 000

666

n.s.

2 000

1 000

Total Board of Directors

17 505

7 000

15 463

18 666

1 Member of the Board since 12 May 2017.

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ANNUAL REPORT 2017
COMPENSATION REPORT

7 Compensation, shareholdings and options held

by the Executive Committee in 2017

Section 7 of the Compensation Report was audited by the company’s external auditor.

Compensation

7.1
In 2017, members of the Executive Committee received total compensation of CHF 1 363 710 (2016:
CHF 1 546 147). Of this amount, CHF 749 383 was paid in the form of fixed compensation (2016: 780 626),
CHF 245 278 in the form of cash bonuses (2016: CHF 383 959), CHF 230 000 were granted in the form
of Performance Share Units (2016: CHF 226 806) and CHF 139 049 comprised social security and pen-
sion fund contributions (2016: CHF 154 756).

Fixed
compensation 1

Cash bonus 2

Allocation
Performance
Share Units 3

Social
benefits 4

Total
compensation
2017

Total
compensation
2016

CEO

433 500

155 268

160 000

78 007

826 775

846 403

315 883

90 010

70 000

61 042

536 935

699 744

749 383

245 278

230 000

139 049

1 363 710

1 546 147

in CHF

Matijas Meyer 5

Total other members of
the Executive Committee 6

Total Executive
Committee

1 Expense allowances are not included in the fixed compensation as these are not considered as compensation.
2 Bonus for 2017, to be paid in April 2018.
3 Fixed amount in CHF: is divided by the share price as per allocation date (average closing price over the last 60 trading days prior to allocation) and

rounded up to the nearest number of full shares. The share price applied in 2017 was CHF 241.98.

4 Includes mandatory employer contributions to social insurance of CHF 28 483 as well as contributions to occupational benefits (BVG). This amount enti-

tles members of the Executive Committee to draw the maximum state-insured pension benefits in the future.

5 Highest compensated member of Executive Committee in 2017.
6 With the sale of the Medtech business unit on 15 April 2016, the Head of the Medtech business unit left the Executive Committee. The CFO is therefore

the only other member of the Executive Committee.

Notes on the compensation overview
In 2017, the CEO’s cash bonus amounted to 36% of fixed compensation (2016: 52%). This payout
level is due to the development of revenues and EBIT and the attainment of individual objectives. For
the other member of the Executive Committee (CFO), the cash bonus amounted to 28% of fixed com-
pensation (2016: 46%).

The PSUs granted to the CEO in the year under review corresponded to 37% of annual fixed com-

pensation (2016: 37%) and 22% for the CFO (2016: 23%).

The overall variable compensation of the CEO in 2017 therefore amounted to 73% of the annual
fixed compensation (2016: 89%) and that of the CFO 50% (2016: 69%). This is in line with the provi-
sions of the company’s Articles of Association, which allows for a maximum level of 100% of annual
fixed base 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 109 to 111 of the Financial
Report.

No compensation was paid to former members of the Executive Committee for the 2016 and 2017
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
2017. No members of the Executive Committee or persons closely linked to them are or were involved
in Komax Group transactions outside their normal duties.

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ANNUAL REPORT 2017
COMPENSATION REPORT

Holdings of shares and options as at 31 December 2017

7.2
As at the end of 2016 and 2017, members of the Executive Committee had the following holdings of
shares and/or options in the company:

Assets in units

31.12.2017

31.12.2016

Matijas Meyer

Andreas Wolfisberg

CEO

CFO

Total Executive Committee

Options

4 000

600

4 600

2 000

600

2 600

3 000

6 000

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ANNUAL REPORT 2017
COMPENSATION REPORT

Report of the statutory auditor to the Annual General Meeting of Komax Holding AG, Dierikon

We have audited the accompanying remuneration report (Art. 6 and 7) of Komax Holding AG for the year ended 31 De-
cember 2017.

Board of Directors’ responsibility
The Board of Directors is responsible for the preparation and overall fair presentation of the remuneration report in accord-
ance with Swiss law and the Ordinance against Excessive Compensation in Stock Exchange Listed Companies (Ordi-
nance). The Board of Directors is also responsible for designing the remuneration system and defining individual remuner-
ation packages.

Auditor’s responsibility
Our responsibility is to express an opinion on the accompanying remuneration report. We conducted our audit in accord-
ance 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 se-
lected depend on the auditor’s judgment, including the assessment of the risks of material misstatements in the remuner-
ation 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 presentation of the remuneration report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Opinion
In our opinion, the remuneration report of Komax Holding AG for the year ended 31 December 2017 complies with Swiss
law and articles 14–16 of the Ordinance.

PricewaterhouseCoopers AG

Thomas Brüderlin
Audit expert
Auditor in charge

Korbinian Petzi
Audit expert

Basel, 9 March 2018

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FINANCIAL REPORT 2017
CONTENTS

FINANCIAL
STATEMENTS OF
KOMAX HOLDING AG

Balance sheet
118

Income statement
119

Notes
120

Proposal for the
appropriation of profit
125

Report of the auditors
126

CONSOLIDATED
FINANCIAL
STATEMENTS

Consolidated
income statement
74

Consolidated
balance sheet
75

Consolidated statement
of shareholders’ equity
76

Consolidated
cash flow statement
77

Notes
General information
78

Performance
81

Operating assets
and liabilities
89

Capital and financial
risk management
97

Group structure
101

Other information
108

Report of the auditors
114

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Consolidated income statement

in TCHF

Net Sales

Other operating income

Revenues

Change in inventory of unfinished and finished goods

Cost of materials

Gross profit

Personnel expenses

Depreciation on property, plant, and equipment

Depreciation on intangible assets

Other operating expenses

Operating profit (EBIT)

Financial result

Ordinary profit

Non-operating result

Extraordinary result

Group profit before taxes (EBT)

Income taxes

Group profit after taxes (EAT)

Of which attributable to:

– Shareholders’ of Komax Holding AG

– Non-controlling interest

Basic earnings per share (in CHF)

Diluted earnings per share (in CHF)

Notes

2017

20161

407 275

1 234

408 509

8 076

–160 109

256 476

–136 982

–7 705

–3 341

–53 379

55 069

–819

54 250

–99

–3 601

50 550

–8 449

42 101

11.05

10.99

1.2

1.3

2.4

2.6

1.3

1.4

1.5

1.6

1.7

100.0

62.8

13.5

13.3

12.4

10.3

389 455

2 365

391 820

5 911

–149 788

247 943

–131 588

–6 914

–2 082

–51 935

55 424

–2 148

53 276

–198

–3 688

49 390

–10 687

38 703

10.34

10.22

100.0

63.3

14.1

13.6

12.6

9.9

1 Since the start of 2017, the consolidated financial statements have been drawn up in accordance with Swiss GAAP FER. The prior-year figures have been

revised accordingly (see accounting policies).

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FINANCIAL REPORT 2017CONSOLIDATED FINANCIAL STATEMENTSConsolidated balance sheet

in TCHF

Assets

Cash and cash equivalents

Securities

Trade receivables

Other receivables

Inventories

Accrued income and prepaid expenses

Assets held for sale

Total current assets

Property, plant, and equipment

Non-operating properties

Intangible assets

Investments in associates

Deferred tax assets

Other non-current receivables

Total non-current assets

Total assets

Liabilities

Current financial liabilities

Trade payables

Other payables

Current provisions

Accrued expenses and deferred income

Total current liabilities

Non-current financial liabilities

Other non-current liabilities

Deferred tax liabilities

Total non-current liabilities

Total liabilities

Share capital

Capital surplus

Treasury shares

Retained earnings

Equity attributable to shareholders’ of Komax Holding AG

Notes

31.12.2017

31.12.20161

2.1

2.2

2.3

2.4

2.5

2.6

4.3

1.6

2.7

3.1

2.8

3.1

1.6

3.2

59 291

99 723

29 459

92 020

3 803

6 785

48 531

85 190

25 319

70 410

2 429

291 102

70.2

231 879

64.9

93 719

14 480

13 021

2 136

123 356

83 741

5 311

14 294

670

12 169

8 996

29.8

125 181

35.1

414 458

100.0

357 060

100.0

22 348

34 438

2 359

19 361

78 506

69 856

2 710

5 208

77 774

156 280

383

28 649

–4 054

233 200

258 178

18 776

28 146

2 222

21 097

70 319

31 445

3 922

5 200

40 567

110 886

377

27 670

–2 105

220 232

246 174

18.9

18.8

37.7

62.3

19.7

11.4

31.1

68.9

100.0

Total liabilities and shareholders’ equity

414 458

100.0

357 060

1 Since the start of 2017, the consolidated financial statements have been drawn up in accordance with Swiss GAAP FER. The prior-year figures have been

revised accordingly (see accounting policies).

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FINANCIAL REPORT 2017CONSOLIDATED FINANCIAL STATEMENTSConsolidated statement of shareholders’ equity

in TCHF

Notes

Share
capital

Premium

Treasury
shares

Goodwill
offset

Currency
differences

Other
retained
earnings

Total
retained
earnings

Equity
share-
holders’ of
Komax
Holding AG

369

25 548

–2 191

–29 760

289 168

259 408

283 134

–38 866

29 760

–32 861

–41 967

369

25 548

–2 191

–38 866

256 307

217 441

241 167

3.2

5 457

–5 623

2 288

–2 105

2 060

131

3.2

2.6

38 703

5 465

–5 623

–16 870

1 583

–2 105

4 348

1 714

–19 893

–732

377

27 670

–2 105

–58 759

–732

279 723

220 232

246 174

377

27 670

–2 105

–58 759

–732

279 723

220 232

246 174

Balance on
31 December 2015
(according to IFRS)

Swiss GAAP FER
adjustments1

Balance on 1 January 2016
Swiss GAAP FER

Group profit after taxes

Capital increase from
exercise of options

Distribution out of
reserves from capital
contributions

Dividend paid

Purchase of treasury shares

Sale of treasury shares

Share-based payments

Goodwill offset with
shareholders’ equity

Currency translation
differences recorded in
the reporting period

Balance on
31 December 2016

Balance on
1 January 2017

Group profit after taxes

Capital increase from
exercise of options

Distribution out of
reserves from capital
contributions

Dividend paid

Share-based payments

Goodwill offset with
shareholders’ equity

Currency translation
differences recorded in
the reporting period

Balance on
31 December 2017

3.2

6 707

–5 728

–2 098

149

Purchase of treasury shares

3.2

42 101

6 713

–5 728

–19 094

772

–2 098

921

2.6

–13 267

383

28 649

–4 054

–72 026

1 724

303 502

233 200

258 178

2 456

1 Since the start of 2017, the consolidated financial statements have been drawn up in accordance with Swiss GAAP FER. The prior-year figures have been

revised accordingly (see accounting policies).

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FINANCIAL REPORT 2017CONSOLIDATED FINANCIAL STATEMENTS
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

− Net financial result

− Other non-cash items

Interest received and other financial income

Interest paid and other financial expenses

Taxes paid

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 participations2
Sale of Group companies3

Purchase of minority interests

Decrease in granted loans

Sale of securities

Total cash flow from investing activities

Free cash flow

Cash flow from financing activities

Decrease in current financial liabilities

Decrease in non-current financial liabilities

Increase in current financial liabilities

Increase in non-current financial liabilities

Capital increase (share-based payments)

Distribution out of reserves from capital contributions

Dividend paid

Purchase of treasury shares

Sale of treasury shares

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

Notes

2017

20161

42 101

38 703

1.6

2.4/2.5

2.6

1.4

2.4/2.5

2.6

3.2

8 449

7 898

3 341

−50

921

819

2 475

1 345

−2 566

−10 101

−11 409

−15 526

2 691

−3 628

26 767

−18 742

259

−3 459

−17 163

4 100

650

10 687

7 105

2 082

−190

1 714

2 148

1 333

1 507

−6 631

−11 766

−1 149

3 703

−7 154

2 420

−7 606

36 906

−18 171

1 086

−4 656

−34

−36 428

23 589

−2 233

357

–34 349

–36 465

–7 582

441

−153

−1 075

37 795

6 713

−5 728

−19 094

−2 098

16 360

1 982

10 760

48 531

59 291

−2 483

14 309

5 465

−5 623

−16 870

−2 105

4 349

–2 880

–2 352

50 883

48 531

1 Since the start of 2017, the consolidated financial statements have been drawn up in accordance with Swiss GAAP FER. The prior-year figures have been

revised accordingly (see accounting policies).

2 Less cash and cash equivalents acquired.
3 Less cash and cash equivalents sold.

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FINANCIAL REPORT 2017CONSOLIDATED FINANCIAL STATEMENTSNotes to the consolidated financial statements

General information
Headquartered in Dierikon, Switzerland, Komax Holding AG (parent company), together with its subsid-
iary companies (the Komax Group), is a pioneer and market leader in the field of automatic wire pro-
cessing, providing clients with innovative, future-oriented solutions in any situation that calls for precise
contact connections.

The present consolidated financial statements were adopted by the Board of Directors of Komax Hold-
ing AG on 8 March 2018 and released for publication. Their approval by the Annual General Meeting,
scheduled for 19 April 2018, is pending.

Accounting policies
The consolidated financial statements of the Komax Group are based on the individual financial state-
ments of the Group companies, compiled in accordance with uniform standards, as at 31 December
2017. With effect from 1 January 2017, the consolidated financial statements have been drawn up in
accordance with the entire existing guidelines of Swiss GAAP FER (Swiss Accounting and Reporting
Recommendations). Furthermore, the provisions of the Swiss company law have been complied with.
The consolidated financial statements are based on the principle of historic acquisition cost (with the
exception of securities and derivative financial instruments, which are recorded at their fair values), and
have been drawn up under the “going concern” assumption.

The accounting and valuation principles relevant to an understanding of the annual financial statements
are described in the relevant explanatory notes.

Adjustments in connection with the change of accounting principles
In its media release of 21 March 2017, Komax announced that it was changing its accounting standard
from IFRS to Swiss GAAP FER with effect from the 2017 financial year. The change was driven by the
following key considerations:
– The constant widening of the scope of regulation under IFRS and the ever-increasing num-

ber of complex and formal detailed regulations.

– The Swiss GAAP FER accounting standard is particularly suited to the needs of medium-

sized companies like the Komax Group.

– The latter standard continues to guarantee shareholders transparent reporting in keeping

with the “true and fair” principle.

The accounting standards applied in the preparation and presentation of the consolidated financial
statements for 2017 deviate from the consolidated financial statements for 2016 drawn up in accor-
dance with IFRS in the following key points:

Goodwill from acquisitions and associated companies

a)
Goodwill and technologies from acquisitions and associated companies are directly offset against re-
tained earnings in shareholders’ equity, in keeping with the option that applies at the point of acquisition
under Swiss GAAP FER 30 “Consolidated financial statements.” Under IFRS, goodwill was capitalized
and reviewed for impairment on an annual basis, whereas prior to acquisitions not capitalized technol-
ogies were separately capitalized as part of the purchase price allocation process and amortized over
their estimated economic lifetime. According to Swiss GAAP FER, they are not separately recognized,
but remain subsumed under goodwill. Under Swiss GAAP FER, transaction costs incurred in connec-
tion with acquisitions are treated as a component part of acquisition costs. Under IFRS, transaction
costs were recognized in the income statement.

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FINANCIAL REPORT 2017CONSOLIDATED FINANCIAL STATEMENTSEmployee benefits

b)
Under Swiss GAAP FER 16 “Pension benefit obligations,” the economic obligations and benefits of
Swiss pension schemes are ascertained on the basis of figures drawn up in accordance with Swiss
GAAP FER 26 “Accounting of pension plans.” The economic impact of the pension schemes of foreign
subsidiaries is ascertained in accordance with locally applied valuation methods. Employer contribution
reserves and comparable items are capitalized under Swiss GAAP FER 16. Under IFRS, defined-bene-
fit pension plans were calculated according to the “projected unit credit method” and recorded in the
balance sheet in accordance with IAS 19.

Tax-loss carry forwards

c)
Komax has elected not to capitalize future tax savings from offsettable tax-loss carry forwards. The use
of these tax-loss carry forwards is recorded upon realization. Under IFRS, deferred tax claims in con-
nection with tax losses were taken into account to the extent that it was deemed probable that future
taxable profits would be generated so that these losses could be used in the foreseeable future.

Deferred income taxes

d)
The above-mentioned valuation and accounting adjustments have the corresponding repercussions for
deferred income taxes in the balance sheet and the income statement.

Reclassification in shareholders’ equity

e)
As part of the changeover to Swiss GAAP FER, the cumulative currency translation differences were
reset/reversed as of 1 January 2016 and offset against retained earnings. Under Swiss GAAP FER, the
result from divestments (discontinued operations) therefore only contains the currency translation dif-
ferences arising after 1 January 2016.

The presentation and format of the balance sheet, income statement, statement of shareholders’ equity,
and cash flow statement were adjusted in keeping with the requirements of Swiss GAAP FER. Prior
periods were adjusted accordingly to facilitate comparability with the new presentation of the current
reporting period (restatement). The repercussions of the above-mentioned adjustments for sharehold-
ers’ equity and the income statement of Komax are summarized in the following tables:

Adjustment effects − shareholders’ equity

in TCHF

Shareholders’ equity under IFRS

Adjustments under Swiss GAAP FER

31.12.2016

01.01.2016

311 910

283 134

Offsetting of goodwill against shareholders’ equity

−47 441

−30 662

Offsetting of technology against shareholders’ equity
as component part of goodwill (incl. deferred taxes)

IAS 19 adjustments (incl. deferred taxes)

Non-capitalization of deferred taxes from
offsettable tax-loss carry forwards

−9 712

7 732

−8 204

13 919

−16 315

−17 020

Shareholders’ equity under Swiss GAAP FER

246 174

241 167

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FINANCIAL REPORT 2017CONSOLIDATED FINANCIAL STATEMENTSAdjustment effects − Group profit after taxes (EAT)

in TCHF

Group profit after taxes (EAT) under IFRS

Adjustments under Swiss GAAP FER

Transaction costs from acquisitions

Amortization of intangible assets

IAS 19 adjustments (incl. deferred taxes)

Discontinued operations (effect of currency translation differences)

Impact of non-capitalization of deferred taxes from offsettable tax-loss carry forwards

Group profit after taxes (EAT) under Swiss GAAP FER

2016

35 489

192

1 492

−963

944

1 549

38 703

Key recognition and measurement assumptions

Preparation of the consolidated financial statements requires the Board of Directors and Group Management to
make estimates and assumptions, whereby such estimates and assumptions have an effect on the accounting
principles applied and are reflected in the amounts stated under assets, liabilities, income, expenses, and related
disclosures. Their estimates and assumptions are based on past experience and on various other factors deemed
applicable in the current situation. These form the basis for reporting those assets and liabilities that cannot be
measured directly from other sources. The actual values may differ from these estimates. The following material
estimates are included in the consolidated financial statements:

Recognition of revenue according to POC method

Current and deferred income taxes

Impairment of property, plant, and equipment

Impairment of intangible assets and goodwill

Contingent consideration

Provisions

Page

Key events of the reporting period
As mentioned in the Shareholders’ letter on pages 2 and 3, the year 2017 was characterized by strong
growth in order intake and revenues, the acquisitions of Laselec and Practical Solution, as well as sig-
nificant investment in research and development. The operating profit matches almost the prior-year
figure and Group profit after taxes rose by 8.8%.

The credit line of the syndicated loan agreement was increased from CHF 100 million to CHF 140 million
in order to ensure the financing of the high investments. Mainly due to these investments, free cash flow
resulted in a negative figure. With an equity ratio of more than 62%, Komax continues to be very robust-
ly financed.

With effect from 1 January 2017, Komax changed the accounting standard from IFRS to Swiss GAAP
FER. The accounting policies disclose in detail that this change mainly had an impact on the valuation
of goodwill, the employee benefits and the deferred tax assets.

Events after the balance sheet date
No significant events occurred between the balance sheet date and the approval of the consolidated
financial statements by the Board of Directors on 8 March 2018 which might adversely affect the infor-
mation content of the 2017 consolidated financial statements or which would require disclosure.

E_01_GB_Komax_Finanzbericht_2017 [P].indd 80

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FINANCIAL REPORT 2017CONSOLIDATED FINANCIAL STATEMENTS
Performance

1
In this section, we provide details of the 2017 result of the Komax Group. In addition to earnings per
share, we also provide details on revenues, expenses, the financial result, and taxes.

The operating profit (EBIT) of the Komax Group decreased from CHF 55.4 million in 2016 to CHF 55.1
million in 2017. The chart below illustrates the year-on-year change between the current reporting peri-
od and the prior-year.

in CHF million

8.5

– 5.4

55.4

–2.0

–1.4

55.1

EBIT 2016

Gross
proﬁt

Personnel
expenses

Depreciation

Operating
expenses

EBIT 2017

Segment information

1.1
The Komax Group is a global technology company that focuses on markets in the automation sector.
As a manufacturer of innovative and high-quality solutions for the wire processing industry, Komax
helps its customers implement economical and safe manufacturing processes, especially in the auto-
motive supply sector. All Group companies are active in wire processing, have a uniform client base,
and are centrally managed. The Board of Directors and the Group Executive Committee, which make
the key strategic and operating decisions, manage the Komax Group primarily on the basis of the finan-
cial statements of the individual companies, the Management Information System, and the consolidated
financial statements. Due to the commercial similarity and interconnections of the Group companies,
Komax presents its business in amalgamated form as a single segment, in accordance with Swiss
GAAP FER 31.

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FINANCIAL REPORT 2017CONSOLIDATED FINANCIAL STATEMENTSUp until the sale of the Medtech business unit in April 2016, the Komax Group had two segments. The
corresponding segment information is set out below:

in TCHF

2017

20161

Net sales from external customers

Net sales from other segments

Total net sales

EBIT

Wire2

Medtech

Group

Wire2

Medtech

Group

407 275

−

407 275

55 069

−

407 275

370 398

19 057

389 455

−

407 275

370 398

19 057

389 455

55 069

55 202

222

55 424

1 Since the start of 2017, the consolidated financial statements have been drawn up in accordance with Swiss GAAP FER. The prior-year figures have been

revised accordingly (see accounting policies).

2 Including elimination of intersegment revenues and corporate costs.

Revenues
Revenues by region

1.2
a)
The percentage breakdown of revenues by region is as follows:

2017

2.2% Switzerland

19.9% Asia/Pacific

18.6% North and
South America

10.5% Africa
48.8% Europe

2016

2.3% Switzerland

18.9% Asia/Pacific

22.2% North and
South America

7.4% Africa
49.2% Europe

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FINANCIAL REPORT 2017CONSOLIDATED FINANCIAL STATEMENTSConstruction contracts

b)
In the current reporting period, sales of CHF 11.7 million (2016: CHF 23.3 million) were recorded from
long-term construction contracts on the basis of the POC method.

Other operating income

in TCHF

Own work capitalized

Government grants

Gains from the disposal non-current assets

Other income

Total other operating income

2017

820

184

116

114

1 234

20161

1 630

305

362

2 365

1 Since the start of 2017, the consolidated financial statements have been drawn up in accordance with Swiss GAAP FER. The

prior-year figures have been revised accordingly (see accounting policies).

Key recognition and measurement assumptions

Automated assembly and production contracts are measured according to the POC method, provided the as-
sessment meets the requirements of Swiss GAAP FER 22 “Long-term contracts”. Although projects are assessed
monthly and in good faith in accordance with comprehensive project management guidelines, subsequent cor-
rections may be required. These corrections are made in the following period and may have a positive or negative
impact on revenue in this period.

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FINANCIAL REPORT 2017CONSOLIDATED FINANCIAL STATEMENTSRecognition and measurement

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. For any intermediated transactions, only the value of
services provided by Komax itself is reported. Transactions with a number of individually identifiable component parts
are recorded and valued separately.

Sale of goods: Revenue from the sale of goods is recognized when risk and rewards of ownership have been trans-
ferred to the buyer. All expenses connected with sales are recognized on an accrual basis.

Sale of services: Revenue from the sale of services is recognized in accordance with progress on the service accord-
ing to the ratio of completed to still outstanding services to be performed during the financial year in which the services
are rendered.

Manufacturing contracts: Manufacturing contracts in the automated assembly and production business units, in-
volving the customer-specific manufacture of systems, are valued according to the “percentage of completion” method
(POC method) in accordance with Swiss GAAP FER 22. On the balance sheet, these are reported either under “Trade
receivables” or “Other payables,” 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 recognized in full in the income statement. Any costs of
debt capital are capitalized provided debt capital is raised for the purpose of financing the project and its costs can be
directly attributed to a manufacturing contract.

Leases with Komax as lessor: Contractual relationships in which Komax acts as lessor are reported as financial
leases if all risks and returns associated with ownership are essentially transferred to the lessee. At the beginning of
the lease, lease payments are recognized in the balance sheet in the amount of the net investment value arising from
the lease. Revenue is recorded in the same way as the direct sale of goods. Financial income is spread over the term
of the lease.

Assets that are the subject of operating leases are reported in the balance sheet in accordance with their character-
istics, and are written down at the normal rates that apply to assets of that type. Lease income is recognized in the
income statement on a linear basis over the term of the lease.

Leases with Komax as lessee: Only in exceptional cases does Komax act as lessee in financial lease agreements. A
financial lease arises when the lessor transfers virtually all the risks and benefits associated with ownership of the leas-
ing object to the lessee. At the beginning of the contract term, the object in question is recorded on the balance sheet
as both an investment asset and a liability at its fair value or (if lower) at the net cash value of future leasing payments.
Every lease instalment is broken down into financing costs on the one hand and repayment of the residual debt on
the other, so that the interest rate remains constant for the residual liability. Financing costs are booked directly to the
income statement as an expense. Capitalized leasing objects are depreciated over their estimated economically useful
lives, or (if lower) over the contractual period in question.

An operating lease agreement arises when a substantial proportion of the risks associated with ownership remain with
the lessor. Payments for operating leasing agreements are booked to the income statement as an expense in a linear
way for the entire duration of the agreement.

Government grants: Government grants are recognized if it is likely that the payments will be received and Komax can
fulfil the conditions attached to such subsidies. These are recognized in “Other operating income,” regardless of when
payment is received, and on a pro rata basis in the period in which the associated costs are incurred, and charged to
the income statement as an expense. Grants relating to an asset are deducted from the carrying amount.

E_01_GB_Komax_Finanzbericht_2017 [P].indd 84

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FINANCIAL REPORT 2017CONSOLIDATED FINANCIAL STATEMENTS1.3
a)

Expenses
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 (in particular training and development)

2017

20161

−109 448

−102 369

−1 090

−284

−21 581

−4 579

−1 777

−1 541

−21 271

−4 630

Total personnel expenses

−136 982

−131 588

1 Since the start of 2017, the consolidated financial statements have been drawn up in accordance with Swiss GAAP FER. The

prior-year figures have been revised accordingly (see accounting policies).

Other operating expenses

in TCHF

Expenditure on operating equipment and energy

Rental expenses

Repair and maintenance expenses

Third-party services for development expenses

Representation and marketing expenses

Legal and consultancy expenses

Shipping and packaging expenses

Expenditure on administration and sales

Other expenditure

2017

−2 238

−3 078

−13 955

−7 128

−11 593

−4 225

−6 114

−2 921

−2 127

20161

−2 266

−2 886

−12 542

−6 064

−11 338

−5 040

−6 649

−3 102

−2 048

Total other operating expenses

−53 379

−51 935

1 Since the start of 2017, the consolidated financial statements have been drawn up in accordance with Swiss GAAP FER. The

prior-year figures have been revised accordingly (see accounting policies).

1.4

Financial result

in TCHF

Financial income

Interest income

Exchange rate gains on foreign currencies

Total financial income

Financial expenses

Interest expenses

Exchange rate losses on foreign currencies

Change in fair value of contingent consideration arrangements

Total financial expenses

Result from associated companies

Total financial result

2017

20161

454

7 078

7 532

−1 241

−7 636

−8 877

526

−819

333

6 245

6 578

−1 802

−6 984

−79

−8 865

139

−2 148

1 Since the start of 2017, the consolidated financial statements have been drawn up in accordance with Swiss GAAP FER. The

prior-year figures have been revised accordingly (see accounting policies).

E_01_GB_Komax_Finanzbericht_2017 [P].indd 85

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FINANCIAL REPORT 2017CONSOLIDATED FINANCIAL STATEMENTS

Recognition and measurement

Interests: Interest income and expenses are accrued using the effective interest rate method.

Non-operating and extraordinary result

1.5
The non-operating result includes the income and expenses from non-operating properties.

The extraordinary result contains expenses of CHF 3.6 million relating to an impairment of a loan grant-
ed to an associated company. In the corresponding prior-year period, the expenses incurred in connec-
tion with the restructuring at the Porta Westfalica site in Germany (CHF 2.4 million) and the result from
the sale of the former Medtech business unit (CHF 1.3 million) are contained in the extraordinary result.

Recognition and measurement

Non-operating result: Non-operating result is expense and income which arise from events or transactions that
clearly differ from the usual business activities of the organisation.

Extraordinary result: Expense and income which arise extremely rarely in the context of the ordinary operations and
which are not predictable are considered as extraordinary.

1.6
a)

Taxes
Income taxes

in TCHF

Current income taxes

Deferred tax income (+) / tax expenses (–)

Total income taxes

2017

−8 766

317

20161

−10 636

−51

−8 449

−10 687

1 Since the start of 2017, the consolidated financial statements have been drawn up in accordance with Swiss GAAP FER. The

prior-year figures have been revised accordingly (see accounting policies).

Analysis of the tax rate

in TCHF

Group profit before taxes (EBT)

Expected tax expenses

Impact of non-capitalized
tax-loss carry forwards

Utilization of non-capitalized
tax-loss carry forwards

Effect of changes in tax rate

Tax credits / charges from prior-years

Effect of non-deductible expenses

Effect of non-taxable income

Non-reclaimable withholding taxes

Others

Effective tax expenses

2017

50 550

−7 521

−1 475

384

161

−189

136

−119

129

−8 449

14.9

2.9

−0.8

−0.1

−0.3

0.4

−0.3

0.2

−0.2

16.7

20161

49 390

−7 959

−4 516

1 228

−17

1 293

−287

−563

−10 687

16.1

9.1

−2.5

0.0

−2.6

0.6

−0.1

1.1

−0.1

21.6

1 Since the start of 2017, the consolidated financial statements have been drawn up in accordance with Swiss GAAP FER. The

prior-year figures have been revised accordingly (see accounting policies).

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FINANCIAL REPORT 2017CONSOLIDATED FINANCIAL STATEMENTSAs the Group is internationally active, its income taxes are dependent on a number of different tax juris-
dictions. The expected income tax rate is equivalent to the weighted average of tax rates of those
countries in which the Group is active. Due to the composition of the taxable income of the Group, as
well as changes in local tax rates, this Group tax rate varies from year to year.

The expected tax rate based on the ordinary result was at 14.5% (2016: 15.5%).

Deferred tax assets and liabilities

in TCHF

31.12.2017

31.12.20161

Property, plant, and equipment / intangible assets

Trade receivables and inventories2

Provisions

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

Net deferred tax assets (+) / tax liabilities (–)

9 870

4 107

1 146

684

15 807

−2 786

13 021

3 137

3 534

1 152

171

7 994

9 666

3 160

1 145

1 080

15 051

−2 882

12 169

3 722

2 715

726

919

8 082

−2 786

−2 882

5 208

7 813

5 200

6 969

1 Since the start of 2017, the consolidated financial statements have been drawn up in accordance with Swiss GAAP FER. The

prior-year figures have been revised accordingly (see accounting policies).

2 Including unrealized intragroup profit.

The non-capitalized and unused tax-loss carry forwards expire as follows:

in TCHF

Expiry of unutilized tax-loss carry forwards

31 December 2017

31 December 2016

Within 5 years

After more than
5 years

3 382

2 034

65 888

62 379

Total

69 270

64 413

This results in a deferred tax claim (not recognized in the balance sheet) for as yet unutilized tax-loss
carry forwards of CHF 19.6 million (31 December 2016: CHF 22.0 million) as well as CHF 3.4 million
(31 December 2016: CHF 3.5 million) not recognized tax credits.

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FINANCIAL REPORT 2017CONSOLIDATED FINANCIAL STATEMENTSKey recognition and measurement assumptions

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 favorable and
unfavorable effects on the assets and liabilities from income taxes. These factors include changes in tax laws
and ordinances, as well as the way they are interpreted, in addition to changes in tax rates and the total amount
of taxable income for the particular location. Any changes may affect the assets and liabilities from current and
deferred income taxes carried in future reporting periods.

Recognition and measurement

Deferred taxes: 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 es-
sence 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-cur-
rent 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.

Loss carry forwards: Future tax savings from offsettable tax-loss carry forwards are not capitalized. The use of these
tax-loss carry forwards is recorded upon realization.

Temporary differences on investments in subsidiaries and associates: Deferred tax liabilities are provided on
temporary differences arising on investments in subsidiaries 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.

1.7

Earnings per share (EPS)

in CHF

2017

20161

Group profit (attributable to equity holders of the parent company)

42 100 813

38 703 234

Weighted average number of outstanding shares

Basic earnings per share

3 810 276

3 741 364

11.05

10.34

Group profit (attributable to equity holders of the parent company)

42 100 813

38 703 234

Weighted average number of outstanding shares

Adjustment for dilution effect of share options

Weighted average number of outstanding shares for
calculating diluted earnings per share

Diluted earnings per share

3 810 276

3 741 364

22 094

46 729

3 832 370

3 788 093

10.99

10.22

1 Since the start of 2017, the consolidated financial statements have been drawn up in accordance with Swiss GAAP FER. The

prior-year figures have been revised accordingly (see accounting policies).

Recognition and measurement

Earnings per share: Basic earnings per share are calculated by dividing the consolidated net earnings by the average
number of shares outstanding during the fiscal year, excluding treasury shares. Diluted earnings per share are calcu-
lated by adding all option rights and non-vested equity rights which would have had a dilutive effect to the average
number of shares outstanding.

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12.03.18 14:27

FINANCIAL REPORT 2017CONSOLIDATED FINANCIAL STATEMENTSOperating assets and liabilities

2
In this section we describe the current and non-current operating assets and liabilities. Among other
things, this includes further details on receivables, inventories, tangible assets, and intangible assets.

2.1
a)

Current receivables
Trade receivables

in TCHF

Trade receivables

less provision for impairment

Accruals for construction contracts

less prepayments for construction contracts

Receivables arising from POC

Total

31.12.2017

31.12.20161

94 413

−302

12 516

−6 904

5 612

99 723

83 519

−1 142

6 125

−3 312

2 813

85 190

1 Since the start of 2017, the consolidated financial statements have been drawn up in accordance with Swiss GAAP FER. The

prior-year figures have been revised accordingly (see accounting policies).

Overdue trade receivables that had not been written down amounted to CHF 21.6 million on 31 Decem-
ber 2017 (31 December 2016: CHF 19.2 million). Their maturity structure is set out in the following table:

in TCHF

Number of days

1–30

31–60

61–90

91–120

>120

Total

as at 31 December 2017

as at 31 December 20161

8 698

8 275

6 134

2 653

2 532

3 658

1 646

2 659

2 631

1 923

21 641

19 168

1 Since the start of 2017, the consolidated financial statements have been drawn up in accordance with Swiss GAAP FER. The

prior-year figures have been revised accordingly (see accounting policies).

Other receivables

b)
In addition to prepayments to suppliers of CHF 1.1 million (31 December 2016: CHF 0.7 million), other
receivables mainly comprise credits due from government organizations (tax authorities) and bills re-
ceivable.

Recognition and measurement

Current receivables: Receivables are recorded at nominal value. Impaired receivables are value-adjusted on an indi-
vidual basis; no flat-rate value adjustments are calculated for the remaining portfolio.

For manufacturing contracts of systems, the inventory includes all costs associated with the systems as well as the
production costs. The order costs comprise all costs attributable to the contract from the date the order is received until
the balance sheet date. The order proceeds per manufacturing contract are recorded as at 31 December according
to the POC.

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FINANCIAL REPORT 2017CONSOLIDATED FINANCIAL STATEMENTS

2.2

Inventories

in TCHF

Manufacturing components and spare parts

Semi-finished goods / work in process

Finished goods

Gross value inventories

less impairment

Inventories

31.12.2017

31.12.20161

53 336

13 974

33 371

100 681

−8 661

92 020

41 724

9 038

28 037

78 799

−8 389

70 410

1 Since the start of 2017, the consolidated financial statements have been drawn up in accordance with Swiss GAAP FER. The

prior-year figures have been revised accordingly (see accounting policies).

Recognition and measurement

Inventories: Inventories are valued at the lower of acquisition / production costs and net market value. Acquisition /
production costs encompass all direct and indirect expenses incurred in bringing inventories to their current location or
state (full costs). Discounts are treated as acquisition price reductions. For all inventory components, the ascertainment
of value is undertaken for the most part in accordance with the FIFO method. The current market price in the sales
market in question is assumed when determining net market value.

Assets held for sale

2.3
The building in York (USA) that was reported under non-operating properties in the past, is shown as
held for sale since the end of 2017. The sales process has been started at the end of 2017 and was
already concluded in January 2018. In addition, the building in S. Domingos de Rana (Portugal) is also
reported as held for sale and was therefore regrouped from the property, plant, and equipment. The
sales process has also been started at the end of 2017 and is expected to be completed in the first
quarter 2018.

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FINANCIAL REPORT 2017CONSOLIDATED FINANCIAL STATEMENTS
2.4

Property, plant, and equipment

in TCHF

Costs

Undeveloped
property

Land

Buildings Machines and
equipment

Other tangible
fixed assets

Assets under
construction

Total
property, plant,
and equipment

As at 31 December 20151

1 141

15 727

72 057

37 391

7 756

4 770

138 842

Additions

Disposals

Change in scope of consolidation

Reclassifications

Currency differences

As at 31 December 20161

Additions

Disposals

Change in scope of consolidation

Reclassifications

Currency differences

494

1 635

−467

−76

15 197

189

−633

112

7 851

−310

3 358

−537

5 458

−2 015

−4 566

458

−73

82 424

36 653

670

−76

379

−3 810

628

3 269

−769

1 285

−6

2 243

−377

−944

−26

8 652

1 915

−477

165

2 606

−3 816

3 560

12 520

−95

18 171

−3 169

−5 011

−712

148 121

18 563

−1 322

1 803

−4 495

899

As at 31 December 2017

1 635

14 949

80 215

40 462

10 323

15 985

163 569

Depreciation

As at 31 December 20151

Additions

Disposals

Change in scope of consolidation

Currency differences

As at 31 December 20161

Additions

Disposals

Change in scope of consolidation

Reclassifications

Currency differences

As at 31 December 2017

Book values

As at 31 December 20151

As at 31 December 20161

As at 31 December 2017

–38 485

–20 571

–4 687

−2 543

−3 044

−1 327

−55

1 952

3 060

−14

318

948

−5

–41 010

–18 617

–4 753

−2 756

−3 461

−1 488

−116

2 802

−207

479

−979

−20

381

−36

−69

–41 287

–22 598

–5 965

1 141

1 635

15 727

15 197

14 949

33 572

41 414

38 928

16 820

18 036

17 864

3 069

3 899

4 358

4 770

3 560

15 985

–63 743

−6 914

2 343

4 008

−74

–64 380

−7 705

860

−1 131

2 802

−296

–69 850

75 099

83 741

93 719

1 Since the start of 2017, the consolidated financial statements have been drawn up in accordance with Swiss GAAP FER. The prior-year figures have been

revised accordingly (see accounting policies).

Key recognition and measurement assumptions

Property, plant, and equipment are tested for impairment at least once a year. To determine whether impairment
exists, estimates are made of the expected future cash flows arising from use. Actual cash flows may differ from
the discounted future cash flows based on these estimates.

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FINANCIAL REPORT 2017CONSOLIDATED FINANCIAL STATEMENTS
Recognition and measurement

Property, plant, and equipment: Property, plant, and equipment are accounted for at historical acquisition or pro-
duction cost less accumulated depreciation. Borrowing costs that incurred during the construction phase through the
financing of assets under construction, are part of the acquisition cost if they are material. Depreciation is linear over
the expected service lifetime.

Depreciation period

Asset category

Machinery

Tools

Measuring, testing, and controlling devices

Operating installations

Warehouse installations

Vehicles

Office equipment

Information technology

Factory buildings

Office buildings

Land

2.5

Non-operating properties

Changes in gross values

in TCHF

Total as at 1 January

Additions

Regrouping to assets classified as held for sale

Currency differences

Total as at 31 December

Changes in depreciation

in TCHF

Total as at 1 January

Depreciation

Regrouping to assets classified as held for sale

Currency differences

Total as at 31 December

Net value non-operating properties

Recognition and measurement

Years

7–10

10–14

5–8

3–10

3–5

no depreciation

2016

6 660

200

6 860

2016

–1 311

−191

−47

–1 549

5 311

2017

6 860

179

−6 771

−268

2017

–1 549

−193

1 679

Non-operating properties: 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.

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FINANCIAL REPORT 2017CONSOLIDATED FINANCIAL STATEMENTS2.6
a)

Intangible assets
Movements in the intangible assets

in TCHF

Costs

Software

Patents

Software in
implementation

Total
intangible assets

As at 31 December 20151

14 868

4 051

Additions

Disposals

Change in scope of consolidation

Reclassifications

Currency differences

As at 31 December 20161

Additions

Disposals

Change in scope of consolidation

Reclassifications

Currency differences

2 499

−163

−1 987

−24

15 215

4 062

3 074

−66

141

8 518

149

As at 31 December 2017

27 031

4 063

Depreciation

As at 31 December 20151

Additions

Disposals

Change in scope of consolidation

Currency differences

As at 31 December 20161

Additions

Disposals

Change in scope of consolidation

Currency differences

As at 31 December 2017

Book values

As at 31 December 20151

As at 31 December 20161

As at 31 December 2017

–9 192

–4 050

−2 072

131

1 650

–9 474

−3 339

−117

−99

−10

–4 060

−2

−1

–12 969

–4 063

5 676

5 741

14 062

6 416

8 551

418

6 416

2 157

−22

8 551

385

−8 518

418

25 335

4 656

−163

−1 976

−24

27 828

3 459

−66

141

150

31 512

–13 242

−2 082

131

1 650

–13 534

−3 341

−117

−100

–17 032

12 093

14 294

14 480

1 Since the start of 2017, the consolidated financial statements have been drawn up in accordance with Swiss GAAP FER. The

prior-year figures have been revised accordingly (see accounting policies).

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FINANCIAL REPORT 2017CONSOLIDATED FINANCIAL STATEMENTS
Goodwill

b)
Goodwill is offset against Group shareholders’ equity upon the acquisition of a subsidiary or the interest
in an associated company. Assuming a useful life of 5 years for trading companies acquired and 10
years for production operations acquired plus depreciation on a straight-line basis, the theoretical cap-
italization of goodwill would have the following impact on the consolidated balance sheet:

in TCHF

Historical costs as at 1 January

Additions

Disposals

Currency differences

Historical costs as at 31 December

Theoretical accumulated depreciation
as at 1 January

Theoretical depreciation

Theoretical depreciation on disposals

Currency differences

Theoretical accumulated depreciation
as at 31 December

Theoretical net book value
31 December

Goodwill
subsidiaries

Goodwill
associated
companies

57 308

14 797

−41

72 064

–17 781

−6 673

–24 366

47 698

1 530

−1 530

–303

−115

418

2017

Total

58 838

14 797

−1 530

−41

72 064

–18 084

−6 788

418

Goodwill
subsidiaries

37 362

32 016

−12 102

57 308

–24 574

−5 282

12 102

−27

Goodwill
associated
companies

1 504

2016

Total

38 866

32 042

−12 102

1 530

58 838

–150

−153

–24 724

−5 435

12 102

−27

–24 366

–17 781

–303

–18 084

47 698

39 527

1 227

40 754

The capitalisation and depreciation of the goodwill would have the following theoretical impacts on the
shareholders’ equity and the group profit after taxes:

in TCHF

Shareholders’ equity according to balance sheet

Theoretical capitalization of net book value of goodwill

Theoretical tax impacts

Theoretical shareholders’ equity

in TCHF

Group profit after taxes (EAT) according to income statement

Theoretical goodwill depreciation

Theoretical impact of goodwill disposals

Theoretical tax impacts

Theoretical Group profit after taxes (EAT)

31.12.2017

31.12.2016

258 178

47 698

715

246 174

40 754

985

306 591

287 913

2017

42 101

−6 788

418

−235

35 496

2016

38 703

−5 435

12 102

45 398

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FINANCIAL REPORT 2017CONSOLIDATED FINANCIAL STATEMENTSKey recognition and measurement assumptions

Intangible assets and Goodwill are tested for impairment if indicators reflect a possible impairment. To determine
whether impairment exists, estimates are made of the expected future cash flows arising from use. Actual cash
flows may differ from the discounted future cash flows based on these estimates.

Recognition and measurement

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.

Patents: Patents are recognized at historical acquisition cost less cumulative amortization. Acquisition costs are writ-
ten down in a linear way over patent life.

Research and development: Research and development expenditure is fully charged to the income statement. These
costs are contained in the positions “Personnel expenses” and “Other operating expenses.”

Goodwill: Companies acquired over the course of the year are revalued and consolidated at the point of acquisition in
keeping with standardized Group principles. The difference between the acquisition cost (including material transaction
costs) and the prorated fair value of the net assets acquired is described as goodwill. Any potentially existing but not
previously capitalized intangible assets taken over as part of the acquisition – such as brands, technology, rights of use,
or client lists – are not separately recognized, but remain subsumed under goodwill. Goodwill can also arise from invest-
ments in associated companies, whereby this amounts to the difference between the acquisition cost of the investment
and the prorated fair value of the net assets acquired. The goodwill resulting from acquisitions is directly offset against
Group shareholders’ equity. If the purchase price contains components that are dependent on future results, these
components are estimated as accurately as possible at the point of acquisition and then capitalized. In the event of
deviations when the purchase price is definitively settled at a later date, the goodwill offset against shareholders’ equity
is adjusted accordingly. In case of disposal, acquired goodwill offset with equity at an earlier date is to be considered
at original cost to determine the profit or loss recognised in the income statement.

2.7

Other non-current receivables

in TCHF

31.12.2017

31.12.20161

Present value of minimum lease payments

Non-current loans to associates

Contingent consideration

Rent deposit and other non-current receivables

Total

1 337

799

2 136

5 501

2 000

1 449

8 996

1 Since the start of 2017, the consolidated financial statements have been drawn up in accordance with Swiss GAAP FER. The

prior-year figures have been revised accordingly (see accounting policies).

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FINANCIAL REPORT 2017CONSOLIDATED FINANCIAL STATEMENTS
2.8
a)

Other liabilities
Other payables

in TCHF

Prepayments by customers

Contingent consideration

Current income tax liabilities

Prepayments on construction contracts

less accruals / deferrals in respect of construction contracts

Liabilities arising from POC

Other positions

Total other payables

31.12.2017

31.12.2016

11 355

4 357

4 978

5 077

−2 451

2 626

11 122

34 438

7 456

3 900

5 628

2 640

−1 955

685

10 477

28 146

Key recognition and measurement assumptions

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 assumed.

Current provisions

in TCHF

Total as at 1 January

Additional provisions

Change in scope of consolidation

Amounts utilized during the year

Unused amounts reversed

Currency differences

Total as at 31 December

2017

2 222

2 126

113

−1 448

−672

2 359

2016

3 666

2 141

−287

−2 588

−711

2 222

Current provisions are warranty provisions that include material and personnel costs in relation to war-
ranty work.

Key recognition and measurement assumptions

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. 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.

Recognition and measurement

Provisions: Provisions are formed if the Group has a current legal or constructive obligation arising from an event in
the past, if it appears probable that the asset base will be negatively impacted by settlement of the obligation, and if the
amount of the provision can be reliably determined. Provisions for warranties are based on past payments, revenues in
prior-years and current contracts. Komax normally gives a one-year warranty on machines and systems.

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FINANCIAL REPORT 2017CONSOLIDATED FINANCIAL STATEMENTSCapital and financial risk management

3
In addition to details on shareholders’ equity, details are also provided on financial risk management at
the Komax Group.

3.1

Financial liabilities

in TCHF

Current account liabilities

Bank liabilities

Currency

31.12.2017

31.12.20161

EUR

CHF

EUR

USD

46 000

18 906

4 950

16 000

9 265

6 180

Total financial liabilities

69 856

31 523

1 Since the start of 2017, the consolidated financial statements have been drawn up in accordance with Swiss GAAP FER. The

prior-year figures have been revised accordingly (see accounting policies).

Komax Holding AG finalized an agreement with a bank syndicate for credit line amounting to CHF 140
million. Additionally there are further local credit lines for subsidiaries available amounting to CHF 20
million (up to a maximum of CHF 25 million). As at 31 December 2017 the Group has drawn on this
credit limit to the amount of CHF 74.2 million (31 December 2016: CHF 35.5 million).

Credit lines Komax Group
in CHF million

160

140

120

100

0
6
1

4
7

3
1
1

6
3

31.12.2017

31.12.2016

Total credit lines

Utilized credit lines

The maturities of the financial liabilities (without interests) are as follows:

in TCHF

less than 1 year

1–5 years

Over 5 years

Total

as at 31 December 2017

as at 31 December 20161

966

514

67 592

29 374

1 298

1 635

69 856

31 523

1 Since the start of 2017, the consolidated financial statements have been drawn up in accordance with Swiss GAAP FER. The

prior-year figures have been revised accordingly (see accounting policies).

Recognition and measurement

Financial liabilities: Financial liabilities comprising bank loans, mortgages, and bonds are valued at amortized cost.
Financial liabilities are recorded as current liabilities in the balance sheet unless the Group has the unconditional right to
defer settlement of the liability to a point in time at least twelve months after the relevant balance sheet date.

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FINANCIAL REPORT 2017CONSOLIDATED FINANCIAL STATEMENTS
Shareholders’ equity

3.2
This section shows the change in shareholders’ equity compared to the prior-year.

Shareholders’ equity
in CHF million

400

350

300

250

200

150

100

4
1
4

8
5
2

7
5
3

6
4
2

31.12.2017

31.12.2016

Balance sheet total

Shareholders’ equity

Share capital

Balance sheet date

31 December 2017

31 December 2016

31 December 2015

Number of
shares

3 834 482

3 774 148

3 691 651

Par value
in CHF

0.10

Par value
in CHF

383 448

377 415

369 165

All registered shares are fully paid up. The share capital increased due to the exercise of options com-
pared to the prior-year.

Treasury shares

Total as at 1 January

Purchases

Sales

Transfer
(share-based compensation)

2017

Number

Average
price
in CHF

Purchase
costs (avg.)
in TCHF

Number

9 000

8 000

233.85

262.27

0.00

2 105

2 098

19 522

9 000

−18 355

Average
price
in CHF

112.27

233.85

112.27

2016

Purchase
costs (avg.)
in TCHF

2 191

2 105

−2 060

−636

233.85

−149

−1 167

112.27

−131

Total as at 31 December

16 364

247.75

4 054

9 000

233.85

2 105

Both at the end of the reporting year and at the end of the prior-year period, all treasury shares were
envisaged for share-based compensation programs. All treasury shares are held by Komax Holding AG.
Neither the other Group companies nor the staff pension scheme of Komax AG hold any shares of Ko-
max Holding AG.

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FINANCIAL REPORT 2017CONSOLIDATED FINANCIAL STATEMENTSc)

Conditional capital

Total as at 1 January

Exercise of options

Total as at 31 December

2017

Number

75 852

−60 334

15 518

Par value
in CHF

Conditional
share capi-
tal in CHF

Number

Par value
in CHF

0.10

7 585

158 349

−6 033

−82 497

1 552

75 852

0.10

2016

Conditional
share capital
in CHF

15 835

−8 250

7 585

There was no increase in conditional capital either in 2016 or in 2017. Conditional capital is created for
management and employee share ownership schemes.

Reserves

d)
The non-distributable reserves amounted to CHF 8.0 million as at 31 December 2017 (31 December
2016: CHF 4.5 million).

Recognition and measurement

Treasury shares: Treasury shares are recognized at the average weighted cost of acquisition, including the trans-
action costs assignable to them, and are then offset against shareholders’ equity. When treasury shares are sold or
issued, the consideration received is credited to shareholders’ equity.

Issuance of shares: Costs that are directly assignable to the issuance of new shares are recognized in shareholders’
equity in net form as a deduction from the issue proceeds.

Preferred shares: No preferred shares have been issued to date.

Financial risk management

3.3
The Komax Group is exposed to various financial risks, for example currency, credit, liquidity, and inter-
est 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 poten-
tial negative impact on the Group’s financial position. The Group uses derivative financial instruments
to protect itself against interest rate, currency, and credit risks. Risk management is conducted by the
finance department of Komax Holding AG in conformity with the guidelines issued by the Board of Di-
rectors. 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.

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FINANCIAL REPORT 2017CONSOLIDATED FINANCIAL STATEMENTSCurrency risk

a)
The Komax Group operates internationally and is therefore exposed to a variety of foreign exchange
risks. Foreign currency risks arise from future cash flows, assets, and liabilities recognized in the bal-
ance sheet, and investment in foreign companies. Komax Group generates its revenues in the following
currencies:

2017

10.3% CHF

12.4% Others

14.1% CNY

17.1% USD

2016

15.9% CHF

11.3% Others

11.5% CNY

18.6% USD

46.1% EUR

42.7% EUR

The most important year-end and average exchange rates were as follows:

Currency

USD

EUR

CNY

Year-end rate
31.12.2017

Average rate
2017

Year-end rate
31.12.2016

Average rate
2016

0.990

1.180

0.152

1.000

1.110

0.147

1.030

1.090

0.148

0.990

1.100

0.151

Komax is mainly exposed to currency risks relating to the USD, the EUR, and the CNY. Assuming that
the average rates 2017 against the CHF had been 10% lower respectively higher and that all other pa-
rameters remained largely unchanged, the EBIT margin would have been changed as follows:

EUR/CHF average rate +/– 10%

USD/CHF average rate +/– 10%

CNY/CHF average rate +/– 10%

Change EBIT margin 2017

Change EBIT margin 2016

+/– 1.0%-pt.

+/– 0.8%-pt.

+/– 1.1%-pt.

+/– 0.7%-pt.

+/– 0.6%-pt.

Credit risk

b)
Credit risks may exist with regard to bank account balances, derivative financial instruments, and re-
ceivables from customers. Komax regularly reviews the independent ratings of financial institutions.
Moreover, all risks pertaining to cash and cash equivalents are further minimized by using a variety of
banks rather than one single bank.

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FINANCIAL REPORT 2017CONSOLIDATED FINANCIAL STATEMENTSCapital risk

c)
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 fi-
nancial 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.

Liquidity risk

d)
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.

Interest rate risk

e)
Neither at 31 December 2017 nor at the prior-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 fi-
nance 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.

Group structure

4
This section contains details on the scope of consolidation, including any changes (acquisitions, busi-
ness areas to be discontinued). The list of investments additionally contains all direct and indirectly held
investments as per 31 December 2017.

Scope of consolidation

4.1
The consolidated financial statements incorporate the individual financial statements of Komax Hold-
ing AG, Dierikon, and its subsidiaries.

In addition to the acquisitions listed under Note 4.2, two further subsidiaries were founded in 2017,
namely Komax Manufacturing de México S. de R.L. de C.V., Mexico, and Komax Bulgaria EOOD, Bul-
garia. In the prior-year period, other than the acquisitions listed in Note 4.2 and the sale of the former
Medtech business unit (see Note 4.4), there were no changes in the scope of consolidation.

Recognition and measurement

Subsidiaries: Subsidiaries are fully consolidated if Komax Holding AG exercises control over their financial and busi-
ness policies. As a rule, this is the case if Komax Holding AG directly or indirectly holds more than 50% of the subsid-
iary’s voting capital.

Date of consolidation: Subsidiaries are included in the consolidated financial statements from the date on which the
Group assumes control. They are deconsolidated from the date on which control is ceded.

Intragroup eliminations: Intragroup transactions, intragroup balances, and unrealized gains or losses from transac-
tions between Group companies are eliminated from the scope of consolidation.

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101

FINANCIAL REPORT 2017CONSOLIDATED FINANCIAL STATEMENTS4.2
a)

Business combinations
Acquisitions 2017

in TCHF

Acquired net assets at fair value

Cash and cash equivalents

Securities

Trade receivables

Other receivables

Inventories

Accrued income and prepaid expenses

Property, plant, and equipment

Intangible assets

Deferred tax assets

Other non-current receivables

Total assets

Current financial liabilities

Trade payables

Other payables

Current provisions

Accrued expenses and deferred income

Non-current financial liabilities

Other non-current liabilities

Deferred tax liabilities

Total liabilities

Acquired net assets

Acquisition costs

Goodwill

Total consideration

Contingent consideration

Investment in associates

Transferred consideration

less acquired cash and cash equivalents

Net cash out 2017

Practical
Solution

Laselec

Total

1 176

1 230

4 499

5 729

1 597

4 132

579

891

365

3 700

1 276

618

346

7 902

−74

−863

−316

−113

−1 450

−1 655

−386

−38

579

891

365

4 876

1 276

672

346

9 132

−74

−863

−316

−113

−1 450

−1 655

−386

−38

−4 895

3 007

198

4 237

198

10 298

14 797

13 305

19 034

1 006

2 755

9 544

−579

8 965

2 603

2 755

13 676

−579

13 097

Laselec
As at 1 October 2017 Komax has taken over 100% of Laselec SA in Toulouse (France) and its subsidiary
in Grand Prairie (USA). The acquired company generated in the fourth quarter revenues of CHF 3.9
million and a profit after taxes of around CHF 0.9 million.

102

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FINANCIAL REPORT 2017CONSOLIDATED FINANCIAL STATEMENTSPractical Solution
As at 3 March 2017 Komax has taken over the business of Practical Solution Pte Ltd, Singapore, as well
as Practical Solution Trading (Shanghai) Co., Ltd, China, by means of an asset deal. With the business
acquired Komax generated revenues of CHF 1.0 million and a profit after taxes of CHF 0.1 million in
2017.

Acquisitions 20161

in TCHF

Acquired net assets at fair value

Cash and cash equivalents

Securities

Trade receivables

Other receivables

Inventories

Accrued income and prepaid expenses

Property, plant, and equipment

Intangible assets

Deferred tax assets

Other non-current receivables

Total assets

Current financial liabilities

Trade payables

Other payables

Current provisions

Accrued expenses and deferred income

Other non-current liabilities

Deferred tax liabilities

Total liabilities

Acquired net assets

Acquisition costs

Goodwill

Thonauer
Group

Ondal Tape
Processing
GmbH

Kabatec
GmbH & Co.
KG

SLE
Electronics
USA, Inc.

6 246

11 467

178

1 816

720

186

479

807

20 826

1 468

−8 982

−2 363

−331

−65

−587

−74

−89

−580

300

1 235

158

1 586

312

6 849

10 524

−2 483

−205

−439

−20

−438

−16

−11 741

−1 330

−3 601

469

1 432

1 901

Total

6 630

13 181

353

4 678

2 497

7 057

150

34 719

−2 483

−9 774

−2 876

−20

−858

−580

−81

−16 672

9 085

138

6 923

1 901

18 047

192

9 350

4 987

16 863

816

32 016

Total consideration

18 435

5 125

23 786

2 717

50 063

Contingent consideration

Transferred consideration

less acquired cash and cash equivalents

1 504

16 931

−6 246

5 297

204

7 005

5 125

−84

18 489

−300

2 513

43 058

−6 630

Net cash out 2016

10 685

5 041

18 189

2 513

36 428

1 Since the start of 2017, the consolidated financial statements have been drawn up in accordance with Swiss GAAP FER. The

prior-year figures have been revised accordingly (see accounting policies).

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103

FINANCIAL REPORT 2017CONSOLIDATED FINANCIAL STATEMENTS
Thonauer Group
Komax acquired 100% of Thonauer Gesellschaft m.b.H. in Vienna, Austria, including all its subsidiaries
with effect from 1 January 2016. The acquired company achieved CHF 38.7 million revenues 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 Jan-
uary 2016. The acquired company achieved CHF 4.4 million revenues in 2016, as well as CHF 0.4 million
profit after taxes.

Kabatec GmbH & Co. KG
Komax acquired 100% of Kabatec GmbH & Co. KG in Burghaun, Germany, with effect from 1 July 2016.
The acquired company achieved CHF 4.9 million revenues in the second half of 2016, as well as CHF
0.9 million profit after taxes.

SLE Electronics USA, Inc.
With effect from 1 February 2016, Komax acquired SLE Electronics USA, Inc., in El Paso, USA, by
means of an asset deal. The repercussions of the acquisition of the business of SLE Electronics USA,
Inc., for the presentation of the consolidated year-end results are not significant.

Investments in associates

4.3
Komax holds interests in Xcell Automation Inc., York (USA), which is accounted for as associated com-
pany. The valuation of investments as at 31 December 2017 was based on the unaudited financial
statements. Any changes in these statements will be taken into account in the following period.

As at the end of 2016 Komax still held 20.8% on Laselec SA, Toulouse (France). As at 1 October 2017
Komax acquired 100% of Laselec SA whereupon such company will be fully consolidated.

in TCHF

Participation

31.12.2017

31.12.20161

Xcell Automation Inc., USA

Laselec SA, France

Total investments in associates

25.0%

−

593

670

1 Since the start of 2017, the consolidated financial statements have been drawn up in accordance with Swiss GAAP FER. The

prior-year figures have been revised accordingly (see accounting policies).

Recognition and measurement

Investments in associates: Companies in which the Komax Group holds at least 20% of voting rights but in which it
has a stake of less than 50% or on which it exerts a key influence in other ways are recognized by the equity method,
and initially recorded at the corresponding acquisition cost.

104

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FINANCIAL REPORT 2017CONSOLIDATED FINANCIAL STATEMENTS

Discontinued operations

4.4
Komax did not divest or discontinue any business areas in the current reporting period. By contrast, in
2016 Komax sold the Medtech business unit, comprising the three companies Komax Systems LCF SA,
Switzerland, Komax Systems Malaysia Sdn. Bhd., Malaysia, and Komax Systems Rockford Inc., USA.

In 2016, the sales generated by the discontinued business areas amounted to CHF 19.1 million, while
the operating profit amounted to CHF 0.2 million. The following net assets were sold in 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

Medtech1

6 865

49 510

16 374

72 749

−34 714

−598

−35 312

37 437

1 Since the start of 2017, the consolidated financial statements have been drawn up in accordance with Swiss GAAP FER. The

prior-year figures have been revised accordingly (see accounting policies).

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105

FINANCIAL REPORT 2017CONSOLIDATED FINANCIAL STATEMENTS
4.5

Equity holdings

Direct and indirect equity participation as at 31 December 2017

Place

Dierikon, Switzerland

Burghaun, Germany

Yambol, Bulgaria

Nuremberg, Germany

Epinay-sur-Seine, France

Burghaun, Germany

S. Domingos de Rana, Portugal

Grafenau, Germany

Budakeszi, Hungary

Toulouse, France

Hünfeld, Germany

Bucharest, Romania

Vienna, Austria

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, Mexico

Buffalo Grove, Illinois, USA

York, Pennsylvania, USA

Grand Prairie, Texas, USA

Colombo, Brazil

El Paso, Texas, USA

York, Pennsylvania, USA

Gurgaon, India

Tokyo, Japan

Shanghai, China

Singapore

Shanghai, China

Company

Switzerland

Komax Management AG

Komax AG

Europe

Kabatec GmbH & Co. KG

Komax Bulgaria EOOD

Komax Deutschland GmbH

Komax France Sàrl.

Komax Kabatec Verwaltungs GmbH

Komax Portuguesa S.A.

Komax SLE GmbH & Co. KG

Komax SLE Verwaltungs GmbH

Komax Thonauer Kft.

Laselec SA

Ondal Tape Processing GmbH

SC Thonauer Automatic s.r.l.

Thonauer Gesellschaft m.b.H.

Thonauer spol. s.r.o.

Thonauer s.r.o.

TSK Beteiligungs GmbH

TSK Prüfsysteme GmbH

TSK Test Sistemleri San. Ltd. Şti.

TSK Test Systems SRL

Africa

Komax Maroc Sàrl.

TSK Tunisia s.a.l.

North/South America

Komax Comercial do Brasil Ltda.

Komax Corp.

Komax de México S. de R.L. de C.V.

Komax Manufacturing de México S. de R.L. de C.V.

Komax Holding Corp.

Komax York Inc.

Laselec Inc.

TSK Sistemas de Testes do Brasil Ltda.

TSK Innovations Co.

Xcell Automation Inc.

Asia

Komax Automation India Pvt. Ltd.

Komax Japan K.K.

Komax Shanghai Co. Ltd.

Komax Singapore Pte. Ltd.

TSK Test Systems (Shanghai) Co. Ltd.

Komax Holding AG
Dierikon, Switzerland

Purpose: Holding of equity interests
Listed on: SIX Swiss Exchange
Swiss security ID code: 001070215
Share capital: CHF 383 448
Market capitalization: CHF 1.225 billion

106

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FINANCIAL REPORT 2017CONSOLIDATED FINANCIAL STATEMENTSPurpose

Participation

Consolidation

Ordinary capital

Group services and management

R&D, engineering, production, marketing, sales

Engineering, production, marketing, sales

Sales

Administration

Sales

R&D, engineering, production, marketing, sales

Administration

Engineering, production, sales

R&D, engineering, production, marketing, sales

Sales

Holding of equity interests

R&D, engineering, production, marketing, sales

Engineering, production, marketing, sales

Sales

Engineering, production, marketing, sales

Sales

Production

Holding of equity interests

Administration

Sales

Engineering, production, marketing, sales

R&D, engineering, production, marketing, sales

Sales

R&D, production, marketing, sales

R&D, production, sales

Engineering, production, marketing, sales

100%

25%

100%

Full consolidation

CHF

EUR

BGN

EUR

HUF

EUR

100 000

5 000 000

100 000

600 000

400 000

1 500 000

25 000

1 500 000

5 700 000

25 000

10 000 000

545 280

30 000

Full consolidation

RON

2 200 000

Full consolidation

EUR

CZK

EUR

TRY

RON

36 336

200 000

6 639

4 000 000

1 764 700

265 500

110 152

Full consolidation

MAD

10 000 000

Full consolidation

TND

366 000

Full consolidation

Equity method

Full consolidation

BRL

USD

MXN

USD

BRL

USD

INR

JPY

USD

SGD

CNY

200 000

1 000 000

3 000

8 160 000

150

362 500

1 000 000

560 000

10 000 000

90 000 000

4 410 000

2 600 000

3 275 902

107

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FINANCIAL REPORT 2017CONSOLIDATED FINANCIAL STATEMENTSOther information

5
This section contains all the information not addressed in the previous sections, e.g. information on
employee benefits and share-based compensation.

5.1

Employee benefits

in TCHF

2017

2016

Pension plans with surplus cover

Total

in TCHF

Surplus cover
as per FER 26

Economic share
within the Group

2 816

Change compared
to prior-year /
expense of
reporting period

Contributions accrued
for the period

Employee benefits
expenditure in
personnel expenses

2017

2016

Pension plans with
surplus cover

Total

4 168

3 883

The employee benefits expenditure stated only comprises contributions made to the benefit schemes
at the expense of the company.

The pension plans with surplus cover are related to the staff pension scheme of Komax AG in Switzer-
land. The coverage rate amounted to 117.4% as at 31 December 2017 (31 December 2016: 115.2%).
The actuarial calculations are based on a technical interest rate of 2.5% (31 December 2016: 2.75%)
as well as the technical basis of BVG 2015 (31 December 2016: BVG 2015).

There were no material employer contribution reserves neither as at 31 December 2017 nor as at
31 December 2016.

Recognition and measurement

Employee benefits: The key companies are based in Switzerland, where employee benefits are amalgamated in a
legally independent foundation regulated by the Federal Law on Old-Age, Survivors’ and Disability Insurance (“BVG”).
No significant pension plans are managed abroad. The ascertainment of any surplus or shortfall in respect of Swiss
pension plans is undertaken on the basis of the annual financial statements of the corresponding pension schemes
in accordance with Swiss GAAP FER 26. Any benefit arising from employer contribution reserves is recognized as an
asset. The capitalization of an additional economic benefit (as a result of a pension scheme having surplus cover) is not
intended, nor are the prerequisites for such a step met. An economic obligation is carried as a liability if the prerequi-
sites for the creation of a provision are met.

108

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FINANCIAL REPORT 2017CONSOLIDATED FINANCIAL STATEMENTSShare-based compensation

5.2
As per 31 December 2017, the Komax Group had the following share-based compensation agree-
ments:

Share option plan of the Komax Group

a)
The share option plan takes the form of share-based compensation settled in equity instruments by
means of a capital increase (equity-settled plan) for the board of directors and the Komax Group man-
agement. The number of options allocated depends on the individual performance of the entitled em-
ployee. The options granted entitle holders to subscribe one Komax Holding AG share per option and
are valid for five years. They have a predetermined exercise price and are subject to a three-year lock-in
period.

Outstanding as at 1 January

Granted

Exercised

Forfeited

Expired

2017

Weighted
average
exercise price

2016

Weighted
average
exercise price

Number

95 173

−72 134

−4 550

CHF

Number

115.46

0.00

115.00

0.00

67.03

186 637

−84 047

−3 757

−3 660

CHF

92.67

0.00

66.91

118.33

66.21

Outstanding as at 31 December

18 489

129.21

95 173

115.46

The allocation of share options was discontinued at the end of 2015. As an alternative to selling a reg-
istered 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 exer-
cise price. A corresponding accrual of CHF 0.6 million (31 December 2016: CHF 2.5 million) for 2 971
options (31 December 2016: 19 321 options) was taken into account as per 31 December 2017. The
market value of the Komax Holding AG share as per 31 December 2017 of CHF 319.50 (31 December
2016: CHF 251.25) was used for calculation purposes together with an average exercise price of CHF
129.21 (31 December 2016: CHF 123.55). The expenses were spread over three years, in keeping with
the lock-in period.

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109

FINANCIAL REPORT 2017CONSOLIDATED FINANCIAL STATEMENTSKomax Performance Share Unit Plan (PSU)

b)
The plan (equity-settled plan) for the executive management comprises PSUs with a three-year vesting
period which are dependent on the attainment of a performance target and the continuation of the em-
ployment 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 Direc-
tors. The payout multiplier may range between 0% and 150%. The actual value of the allocation at the
end of the vesting period is therefore dependent on the payout multiplier and the development of the
share price over the course of the vesting period. In the event of any termination of the employment
relationship, pro rata vesting applies at the ordinary vesting date.

Terms of outstanding rights as at 31 December 2017

Number of outstanding rights

Vesting period

Allocation

Fair value on the day of granting

Total fair value at allocation

2015–2017

2016–2018

2017–2019

3 948

3 years

2018

139.45

550

2 758

3 years

2019

175.19

483

1 999

3 years

2020

241.98

484

CHF

TCHF

Komax Long-term Share Incentive Plan

c)
The plan (equity-settled plan) for managers is currently not linked to profitability conditions, and con-
tains 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 payout at the end of the vesting period in shares is dependent on the share price develop-
ment during the vesting period. In the event of any termination of the employment relationship, pro rata
vesting 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

2017

6 770

2 495

−154

9 111

2016

3 612

3 158

6 770

The fair value on the day of granting amounted to CHF 241.98 (2016: CHF 175.19).

110

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FINANCIAL REPORT 2017CONSOLIDATED FINANCIAL STATEMENTSKomax Long-term Cash Incentive Plan

d)
The plan (cash-settled plan) for managers is currently not linked to profitability conditions, and contains
a three-year vesting period. The actual payout at the end of the vesting period is determined at the end
of the performance period, and is based on a multiplication of the allocation amount by the share price
performance factor (ratio of final share price to starting share price).

Number of rights

Total as at 1 January

Granted 1 January

Forfeited

Transferred to participants

Total as at 31 December

2017

2 795

1 473

2016

1 070

1 725

4 268

2 795

The fair value on the day of granting amounted to CHF 222.94 (2016: CHF 166.09).

Komax Restricted Share Plan

e)
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 resigna-
tion from office as a result of retirement, death, or disability, the entitlement to restricted shares is cal-
culated on a pro rata temporis basis. In such cases, lock-in periods may be either continued or rescind-
ed at the discretion of the Board of Directors. In the 2017 financial year, 636 shares (2016: 873 shares)
with a fair value of CHF 259.07 (2016: CHF 218.11) on the date of granting were allocated to the Board
of Directors.

Recognition and measurement

Share-based compensation: All share-based compensation granted to staff is estimated at fair value as per the date
it is granted, and is charged evenly across the vesting period to the corresponding income statement positions within
the operating result. In the case of compensation plans involving remuneration in the form of equity instruments, the
expense of the granted compensation is booked as an increase 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.

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111

FINANCIAL REPORT 2017CONSOLIDATED FINANCIAL STATEMENTS5.3

Related party transactions

Transactions with associated companies

in TCHF

Sale of goods and services

Purchase of goods and services

Interest income

Extraordinary expenses

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

2017

661

−410

125

−3 601

1 337

2016

897

−485

192

110

1 201

5 501

Related party transactions include members of the Board of Directors, members of the Executive Com-
mittee, pension funds, and key shareholders, as well as companies controlled by the same. In the year
under review, no transactions were entered into with closely linked persons in connection with the sale
and purchase of goods and services (2016: none). With the exception of the regular employer contribu-
tions to the pension fund, no transactions were effected with related parties (2016: none).

Off-balance-sheet transactions
Contingent liabilities

5.4
a)
Aside from a service performance guarantee of CHF 1.1 million (31 December 2016: CHF 1.4 million),
there were other guarantees of CHF 4.4 million (31 December 2016: CHF 4.0 million) granted, these al-
most exclusively comprise guarantees granted to customers for advance payments. In addition to the
above-mentioned guarantees, there were other contingent liabilities associated with the sale of busi-
ness units that could protect the buyer against potential tax, legal, and/or other imponderables in con-
nection with the acquired business unit. On the basis of its current risk appraisal, Komax does not ex-
pect any cash outflows in connection with the above-mentioned contingent liabilities.

Ownership restrictions for own liabilities

in TCHF

Book value real estate

Lien on real estate

Utilization

31.12.2017

31.12.2016

8 534

4 248

3 658

7 721

3 924

3 893

The pledged assets will be used to secure own liabilities.

Contractual obligations

c)
As at 31 December 2017, contractual obligations of CHF 28.4 million were existing in respect of the
acquisition of property, plant and equipment (31 December 2016: CHF 0.9 million). Future liabilities
arising from operating lease agreements amount to CHF 2.5 million due in 2018 and CHF 4.1 million due
in 2019–2022 (31 December 2016: CHF 2.0 million due in 2017 and CHF 3.5 million due in 2018−2021).

112

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FINANCIAL REPORT 2017CONSOLIDATED FINANCIAL STATEMENTSOther key accounting principles
Key figures not defined under Swiss GAAP FER

5.5
a)
By stating its free cash flow in the cash flow statement, the Komax Group is reporting an item that is not
in conformity with Swiss GAAP FER but is nonetheless a key figure for Komax, as well as being widely
used and recognized in the financial sector. This key figure is an amalgamation of cash flow from oper-
ating activities and cash flow from investing activities. In the income statement Komax discloses the
revenues as an additional subtotal that is not defined under Swiss GAAP FER. This subtotal includes
beside the net sales as well the other operating income and is being used for the calculation of impor-
tant key figures. As gross profit is an important key figure for Komax, the corresponding interim total is
reported separately in the income statement. Gross profit comprises revenues (net sales and other
operating income) minus the cost of materials and changes in inventory of unfinished and finished
products.

Currency conversion

Recognition and measurement

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.

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 trans-
actions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognized in
the income statement.

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 shareholders’ equity and reported on a separate line within

the retained earnings.

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.

Other important accounting policies

Recognition and measurement

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 financial liabilities.

Trade payables: Trade payables are valued initially at fair value, which is normally the amount originally invoiced, and
subsequently measured at amortized cost.

Transactions with minorities: Changes in ownership interests in subsidiaries are recognized as equity capital trans-
actions provided control remains intact.

Impairment of non-monetary assets: Assets subject to planned amortization are also tested for impairment if events
or changes in circumstances create a presumption that the carrying value can potentially no longer be realized. An
impairment is recorded in the amount by which the asset’s carrying value exceeds its realizable value. The realizable
value is the greater of the asset’s fair value less disposal costs and its use value. In determining impairments, assets
are grouped according to the smallest separately identifiable cash-generating units.

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113

FINANCIAL REPORT 2017CONSOLIDATED FINANCIAL STATEMENTSReport 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 2017 and the consolidated income statement,
consolidated cash flow statement, consolidated statement of changes in equity 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 on pages 74 to 113 give a true and fair view
of the consolidated financial position of the Group as at 31 December 2017 and its consolidated financial perfor-
mance and its consolidated cash flows for the year then ended in accordance with Swiss GAAP FER and comply
with Swiss law.

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 consoli-
dated 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 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 six group companies in five countries. Our audit scope addressed
62% of net sales of the Group.
Additionally, an audit of account balances was performed at one other Group company, which addressed a
further 14% of net sales of the Group.
We obtained additional assurance through the audits of the statutory financial statements of a further eight
companies (six different countries). These addressed a further 15% of net sales of the Group.

–

As key audit matters, the following areas of focus were identified:
–
–

Revenue recognition in the appropriate period
Change to Swiss GAAP FER

Audit scope
We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the
consolidated financial statements as a whole, taking into account the structure of the Group, the accounting pro-
cesses and controls, and the industry in which the Group operates.
The consolidated financial statements include within their scope 38 entities. We identified six Group companies for
which, in our opinion, an audit of the complete financial information was necessary on the grounds of their size or
risk characteristics. For one other Group company, an audit of account balances was performed to address signif-
icant items adequately. We obtained additional assurance from the timely performance of audits of the statutory
financial statements of eight Group companies.
All of the Group companies in the described audit scope were audited by local national PwC firms. None of the
Group companies excluded from our audit of the consolidated financial statements accounted individually for
more than 5% of Group net sales.
The Group auditor performed the audit of the consolidation, the acquisition concluded in 2017 and the change of
accounting framework from International Financial Reporting Standards (IFRS) to Swiss GAAP FER.
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.

Materiality

Audit scope

Key audit
matters

114

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FINANCIAL REPORT 2017CONSOLIDATED FINANCIAL STATEMENTSMateriality
The scope of our audit was influenced by our application of materiality. Our audit opinion aims to provide reasona-
ble 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
expected 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,
together 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, rounded

Rationale for the
materiality 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 quali-
tative reasons.

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 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 scope
for judgement involved in determining, as required,
exactly when the risks and rewards associated with
services rendered are transferred in accordance with
the Swiss GAAP FER accounting requirements.
On the basis of the agreed delivery terms (Incoterms),
the expected average delivery times until the effective
transfer of the risks and rewards of ownership to the
customer and taking into account special cases (e.g.
delivery delays), Komax realises revenue from sales of
goods in the period in which it transfers the risks and
rewards of ownership.
Please refer to page 84 of the notes to the consolidated
financial statements.

We checked on a sample basis that revenue was recog-
nised in the correct period for the months of December
2017 and January 2018. For the selected samples, we
assessed the underlying Incoterms and in critical cases
checked the average delivery times. In some cases, we
interviewed the persons responsible, including those
from other departments.
We concluded that the criteria for revenue recognition
in the appropriate period in accordance with the Swiss
GAAP FER requirements were complied with in the
consolidated financial statements for the year ended
31 December 2017.

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115

FINANCIAL REPORT 2017CONSOLIDATED FINANCIAL STATEMENTSChange to Swiss GAAP FER

Key audit matter

How our audit addressed the key audit matter

The change in accounting framework from IFRS to
Swiss GAAP FER in 2017 resulted in numerous chang-
es to the existing accounting policies. These changes
are summarised on pages 78 to 80 of the annual report.
The change in accounting framework affects various
items in the consolidated financial statements, notably
the treatment of goodwill, intangible assets, deferred
tax assets arising from tax loss carry forwards and tax
credits, and pension obligations.
The effects of the change in accounting framework have
a significant influence on the presentation of the con-
solidated financial statements and require estimates
to be made in exercising the options relating to Swiss
GAAP FER; for this reason, they were a focus of the
audit procedures performed in the year under review.

–

We examined the effects of the change in accounting
framework from IFRS to Swiss GAAP FER as follows:
–

We obtained from Management a summary of the
effects of the change in accounting framework,
which included an analysis of the effects on the
consolidated financial statements and, in particu-
lar, on the opening balance sheet as at 1 January
2016.
On the basis of this assessment by Management,
we compared the newly elaborated accounting
policies, the information presented in the balance
sheet, income statement and cash flow statement,
and the disclosures in the notes with the require-
ments of Swiss GAAP FER and, with the help of
one of our specialists, we assessed their correct
application. The most significant changes affected
the following items on the balance sheet:
–

Identifiable intangible assets and goodwill re-
lating to various acquisitions were offset
against equity in accordance with the chosen
option, which led to a decrease of CHF 38.9
million in shareholders’ equity as at the open-
ing balance sheet date.
The application of Swiss GAAP FER resulted
in a decrease in the pension obligations and a
corresponding increase in shareholders’ equi-
ty of CHF 13.9 million as at the opening bal-
ance sheet date.
In accordance with the chosen option, the de-
ferred tax assets arising from tax loss carry
forwards were no longer capitalised, which
led to a decrease in shareholders’ equity of
CHF 17.0 million at the opening balance sheet
date.

–

We tested the correct calculation and implemen-
tation of the effects of the change in accounting
framework on the consolidated financial state-
ments for the year ended 31 December 2016 and
on the opening balance sheet as at 1 January 2016.
We concluded that the first-time application of the ac-
counting policies in accordance with Swiss GAAP FER
in the accompanying consolidated financial statements
was performed and presented correctly.

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 Swiss GAAP FER 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 misstatement, 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 either intends to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.

116

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FINANCIAL REPORT 2017CONSOLIDATED FINANCIAL STATEMENTS

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 opinion. Reasonable 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 con-
solidated financial statements.
As part of an audit in accordance with Swiss law 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 mis-
statement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, for-
gery, 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
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
conclusions 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
activities 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.

–

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 inter-
nal 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 to communicate with 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 pre-
cludes 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
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

Thomas Brüderlin
Audit expert
Auditor in charge

Basel, 9 March 2018

Korbinian Petzi
Audit expert

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117

FINANCIAL REPORT 2017CONSOLIDATED FINANCIAL STATEMENTS

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

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

31.12.2017

31.12.2016

2 011

2 092

2 433

74 598

81 174

66 066

1 238

204 870

23.0

996

3 290

9 594

29 829

43 810

74 996

5 057

180 705

2 025

2 000

272 174

77.0

264 783

Total assets

353 348

100.0

308 593

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

Total non-current liabilities

Total liabilities

Share capital

Capital contribution reserves

Other statutory capital reserves

Statutory profit reserves

Profit reserves determined by resolution

Retained earnings

Profit after taxes

Treasury shares

Total shareholders’ equity

385

3 389

886

144

4 858

65 109

69 967

383

7 350

2 000

100

240 903

262

36 437

−4 054

283 381

1.4

18.4

19.8

315

4 120

5 332

3 087

1 025

13 961

27 630

41 591

377

6 371

2 000

100

237 903

573

21 783

−2 105

80.2

267 002

Total liabilities and shareholders’ equity

353 348

100.0

308 593

14.2

85.8

100.0

4.5

9.0

13.5

86.5

100.0

118

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FINANCIAL REPORT 2017FINANCIAL STATEMENTS OF KOMAX HOLDING AGIncome statement of Komax Holding AG

in TCHF

Dividend income

Other financial income

Other operating income

Total income

Financial expenses

Personnel expenses

Other operating expenses

Value adjustment on financial investment

Direct taxes

Total expenses

Profit after taxes

2017

37 734

8 759

637

47 130

−4 392

−419

−3 262

−2 370

−250

2016

38 499

10 612

1 031

50 142

−20 242

−4 004

−3 775

−338

−10 693

−28 359

36 437

21 783

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119

FINANCIAL REPORT 2017FINANCIAL STATEMENTS OF KOMAX HOLDING AGNotes to the 2017 financial statements of Komax Holding AG

Principles
General

1
1.1
These annual financial statements were drawn up according to the provisions of Swiss accounting 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 recognized
accounting standard (Swiss GAAP FER), 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. 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 income statement
as financial income or financial expense.

Share-based compensation

1.5
If treasury shares are used for the share-based compensation of Board members, the difference be-
tween 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
Other current receivables from Group companies decreased by a total of CHF 7.2 million. This balance
sheet item contains open interest receivables in respect of subsidiary companies.

The Group’s current financial loans increased by a total of CHF 44.8 million. This balance sheet item
likewise encompasses the current account loan of Komax Holding AG towards Komax AG, Switzerland.

Financial investments Group comprise non-current financial loans. The Group’s financial investments
have decreased as a result of repayments and reclassifications of loans. The “Financial investments
associates” item comprises a non-current financial loan to Xcell Automation Inc., USA.

120

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FINANCIAL REPORT 2017FINANCIAL STATEMENTS OF KOMAX HOLDING AGLiabilities

2.2
The amount outstanding from the acquisition of Kabatec GmbH & Co. KG, Germany, is reported un der
“Other current liabilities third parties.”

The provisions relate to taxes on earnings as well as open tax claims in respect of corporation tax to be
paid on the holding in Komax SLE GmbH & Co. KG, Germany.

Komax Holding AG and a syndicate of banks led by Credit Suisse have a valid credit agreement for a
credit limit of CHF 140.0 million. The 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 2017, the Group
had drawn on this credit limit to the amount of CHF 46.0 million, USD 5.0 million and EUR 12.0 million
(total drawing: CHF 65.1 million).

In accordance with the applicable capital contribution principle, capital contributions (share premiums)
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 repayment of nominal
capital and are not subject to withholding tax.

Income

2.3
Dividend income amounted to CHF 37.7 million in the year under review (2016: CHF 38.5 million).

Other financial income contains interest income on granted loans as well as realized and unrealized
exchange rate gains on cash and cash equivalents, and loans in foreign currency.

Other operating income comprises billed amounts for holding fees and licences, as well as incidental
revenues of third parties and the Group.

Expenses

2.4
The “Financial expenses” item comprises, among other things, interest expenses and commissions,
securities losses, and unrealized and realized exchange rate losses on cash and cash equivalents, and
loans in foreign currency.

Personnel expenses comprise compensation paid to the Board of Directors as well as the cash settle-
ment of options redeemed.

The “Other operating expenses” item includes patents and licence costs, advisory and legal expenses,
investor relations expenses, representation expenses, insurance premiums, and other operating ex-
penditure items.

One individual loan was the subject of an impairment in the year under review. This amount is displayed
in the row “Value adjustment on financial investment.”

Direct taxes contain expenses for taxes on earnings and corporation tax.

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121

FINANCIAL REPORT 2017FINANCIAL STATEMENTS OF KOMAX HOLDING AGCompany and legal form, registered office

3
Company:
Legal form:
Registered office: Dierikon, Canton Lucerne

Komax Holding AG
Aktiengesellschaft (company limited by shares)

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 106 and 107 of the
consolidated financial statements.

Treasury shares

6
Details of the treasury shares of Komax Holding AG are provided in the consolidated financial state-
ments on page 98.

Contingent liabilities

in TCHF

Joint liability for Group taxation value-added tax

31.12.2017

31.12.2016

p.m.

Guarantees

in EUR

in USD

in CHF

Total

2 725

1 109

570

4 404

3 207

1 407

4 614

From the total contingent liabilities of CHF 4.4 million (2016: CHF 4.6 million) CHF 3.3 million (2016: CHF
3.2 million) are contingent liabilities in favor of subsidiaries.

Conditional capital

8
Details of the conditional capital of Komax Holding AG are provided on page 99 of the consolidated fi-
nancial statements.

122

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FINANCIAL REPORT 2017FINANCIAL STATEMENTS OF KOMAX HOLDING AG9

Major shareholders

Shareholder / shareholder group at 31 December 2017

No. of shares

Share in %1

Veraison SICAV, Zurich, Switzerland2

Max Koch, Meggen, Switzerland

196 229

190 285

5.2%

5.0%

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, Zurich, Switzerland3

218 329

187 069

185 127

5.9%

5.1%

5.0%

1 Calculated on the basis of 3 774 148 shares that were registered as at the balance sheet date of 31 December 2017 (31 De-

cember 2016: 3 691 651).

2 Notification of breach of 5% threshold on 23 May 2015.
3 Reported 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 requirement
(covenant) as per the syndicated loan agreement:

The gearing factor may not exceed 3.25 either at 31 December 2017 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 2017. Within the scope of the syndicated loan agreement, Komax Holding AG guaran-
tees for the liabilities of any member of the Komax Group.

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123

FINANCIAL REPORT 2017FINANCIAL STATEMENTS OF KOMAX HOLDING AG11

Holdings of shares and options

Assets in units

31.12.2017

31.12.2016

Board of Directors

Beat Kälin

Daniel Hirschi

David Dean

Andreas Häberli1

Kurt Haerri

Roland Siegwart

Total Board of Directors

Executive Committee

Matijas Meyer

Andreas Wolfisberg

Total Executive Committee

Options

Chairman

Member

CEO

CFO

8 507

4 429

1 830

1 799

940

17 505

4 000

600

4 600

4 000

1 000

7 000

9 135

3 713

1 068

n.s.

703

844

13 000

2 000

666

n.s.

2 000

1 000

15 463

18 666

2 000

600

2 600

3 000

6 000

1 Member of the Board of Directors since 12 May 2017.

Net release of hidden reserves

12
The total amount of the net released hidden reserves amounted to CHF 2.1 million (2016: CHF 1.4
million).

124

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FINANCIAL REPORT 2017FINANCIAL STATEMENTS OF KOMAX HOLDING AG
FINANCIAL REPORT 2017
PROPOSAL FOR THE APPROPRIATION OF PROFIT

Proposal for the appropriation of profit

The Board of Directors proposes the following appropriation of profit, payout from the capital contribu-
tion 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

31.12.2017

31.12.2016

262 290

573 368

36 437 429

21 783 182

5 751 723

5 661 222

Total available for distribution

42 451 442

28 017 772

Payout from capital contribution reserves of CHF 1.50 per
registered share (2016: CHF 1.50) which is not subject to withholding tax1

Dividend of CHF 5.00 gross per registered share (2016: CHF 5.00)1

Allocation to free reserves

Profit carried forward

Total

5 751 723

19 172 410

17 000 000

527 309

5 661 222

18 870 740

3 000 000

485 810

42 451 442

28 017 772

1 The stated amount covers the requirement for the payout from capital reserves for all registered shares outstanding. Registered
shares which will be issued after 1 January 2018 upon exercise of options are also entitled to the payout from capital reserves.
Therefore, the stated amount may be subject to changes.

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125

FINANCIAL REPORT 2017
FINANCIAL STATEMENTS OF KOMAX HOLDING AG

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 De-
cember 2017 and the income statement and notes for the year then ended, including a summary of significant
accounting policies.
In our opinion, the accompanying financial statements as at 31 December 2017 on pages 118 to 125 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 1 400 000
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 key audit matter the following area of focus has been identified:
–

Valuation of investments in subsidiaries

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 sig-
nificant accounting estimates that involved making assumptions and considering future events that are inherently
uncertain. 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.

Materiality
The scope of our audit was influenced by our application of materiality. 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
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 financial
statements as a whole.

Overall materiality

CHF 1 400 000

How we determined it

0.5% of net assets, rounded

Rationale for the
materiality bench-
mark applied

We chose net assets 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 140 000 identified
during our audit as well as any misstatements below that amount which, in our view, warranted reporting for quali-
tative reasons.

Materiality

Audit scope

Key audit
matters

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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 shares of the capital of subsidiaries held by the
Komax Holding AG are recognised in the financial
statements under “Investments in subsidiaries” (CHF
204.9 million).
Investments in subsidiaries are valued individually and
stated at acquisition cost less necessary impairment
charges.
The company tests these investments for impairment
by comparing the book value of the investment with the
shareholders’ equity according to Swiss GAAP FER or
the value in use of the subsidiary concerned. To deter-
mine the value in use, an in-depth valuation analysis is
performed using cash flow forecasts based on the busi-
ness plans approved by Management and the Board of
Directors.
This valuation analysis is based on Management’s as-
sumptions, which involve significant scope for judge-
ment. For this reason, we deemed the impairment
testing of investments in subsidiaries to be a key audit
matter.
Please refer to note 1.3 (Investments in subsidiaries).

Where a book value was higher than the recorded
shareholders’ equity, we performed a detailed analy-
sis of the impairment test performed by the client.
This included:
–

Discussion with Management of the results and fu-
ture prospects of specific subsidiaries.
Assessment of the correctness and mathematical
accuracy of the applied valuation methods.
Plausibility check of the assumptions applied by
rate,
Management concerning
longterm growth rates and margins.
Where possible, we compared the results of the
year under review with the forecasts made in the
prior year and assessed the appropriateness of the
prior year’s assumptions.

the discount

–

We consider the valuation process and the assump-
tions applied by Management to be adequate and a
sufficient basis for testing the impairment of invest-
ments 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 pro-
visions of Swiss law and the company’s articles of incorporation, and for such internal control as the Board of
Directors determines is necessary to enable the preparation of financial statements that are free from material
misstatement, 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 either intends 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.
Reasonable 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. Misstate-
ments can arise from fraud or error and are considered material if, individually or in the aggregate, they could rea-
sonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

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127

FINANCIAL REPORT 2017FINANCIAL STATEMENTS OF KOMAX HOLDING AGAs part of an audit in accordance with Swiss law 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 financial statements, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is suffi-
cient 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 Company’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 condi-
tions that may cast significant doubt on the entity’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 dis-
closures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our con-
clusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future
events or conditions 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 inter-
nal 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 to communicate with 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 mat-
ters 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 com-
pany’s articles of incorporation. We recommend that the financial statements submitted to you be approved.

PricewaterhouseCoopers AG

Thomas Brüderlin
Audit expert
Auditor in charge

Basel, 9 March 2018

Korbinian Petzi
Audit expert

128

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FINANCIAL REPORT 2017FINANCIAL STATEMENTS OF KOMAX HOLDING AG

FIVE YEAR OVERVIEW

FURTHER INFORMATION 2017
FIVE YEAR OVERVIEW

in TCHF

Income statement

Revenues

Gross profit

in % of revenues

EBITD

in % of revenues

Operating profit (EBIT)

in % of revenues

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 liabilities

Current financial liabilities

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

Highest price

Lowest price

Closing price as at 31 December

2017

20161

20151

20141

20131

408 509

256 476

62.8

66 115

16.2

55 069

13.5

42 101

10.3

11 046

36 668

9.0

123 356

291 102

258 178

62.3

383

156 280

37.7

69 856

−10 544

414 458

26 767

22 201

−7 582

No.

1 841

238

118

112

3 834

0.10

319.50

243.50

319.50

No. 1 000

CHF

391 820

247 943

315 093

205 941

363 338

220 188

323 959

196 634

63.3

64 420

16.4

55 424

14.1

38 703

9.9

8 996

29 071

7.4

125 181

231 879

246 174

68.9

377

65.4

59 123

18.8

49 938

15.8

29 215

9.3

9 185

25 315

8.0

160 940

238 027

283 134

71.0

369

60.6

57 663

15.9

48 102

13.2

27 743

7.6

9 561

25 776

7.1

145 562

242 490

284 168

73.2

361

110 886

115 833

101 882

31.1

31 445

17 008

357 060

36 906

22 827

441

1 633

255

122

116

3 774

0.10

251.25

180.10

251.25

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

26.3

23 670

29 211

388 052

30 295

15 566

14 412

1 498

261

126

119

3 605

0.10

152.40

124.60

144.50

60.7

52 577

16.2

43 297

13.4

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

357 591

31 734

8 032

24 545

1 282

262

125

117

3 524

0.10

138.00

72.35

135.30

1 Since the start of 2017, the consolidated financial statements have been drawn up in accordance with Swiss GAAP FER. The prior-year figures have been

revised accordingly (see accounting policies). The years 2013–2015 are reported according to IFRS.

2 Equity attributable to equity holders of the parent company.
3 Calculated on the basis of the average headcount.
4 Changes resulting from the exercising of option rights.

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129

Komax Holding AG
Investor Relations / Corporate Communications
Roger Müller
Industriestrasse 6
6036 Dierikon
Switzerland

Phone +41 41 455 04 55
komaxgroup.com

Financial calendar

Annual General Meeting

Dividend payment

Half-year results 2018

Investors Day

19 April 2018

25 April 2018

21 August 2018

26 October 2018

Preliminary information on 2018 financial year

22 January 2019

Annual media and analyst conference
on the 2018 financial results

Annual General Meeting

14 March 2019

16 April 2019

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.

130

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Imprint

Published by:
Komax Holding AG, Dierikon

Design and realization:
Linkgroup AG, Zurich
www.linkgroup.ch
Steiner Kommunikationsberatung,
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
komaxgroup.com

E_00_GB_Komax_Umschlag_2017 _P_-gelöst.indd 1

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