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Annual Report 2016

Notes to the Financial Statements of feintool international holding ag

for the 2016 financial year

Principle

General

Feintool International Holding AG has its headquarters in Lyss, Switzerland. The 2016 financial statements were prepared in accordance with the provisions of Swiss accounting law (Art. 32 of the Swiss Code of Obligations). The main applied valuation principles that are not required by law are described in the following.

Treasury shares

Treasury shares are recognized at the time of acquisition at cost as a minus line item in equity. If they are sold at a later date, the profit or loss is taken to the income statement as financial income or expense.

Capital participation plans

Treasury shares are used for share-based payments to the Board of Directors and employees. They are recognized at a fixed price in the regulations for the issue. The corresponding expense including social security contributions is reported in personnel expenses.

Omission of cash flow statement and additional information in the Notes to the Financial Statements

Feintool International Holding AG prepares its consolidated financial statements in accordance with a recognized standard for accounting (IFRS) and consequently omits additional disclosures in the Notes to the Financial Statements and a report on the cash flow statement in these financial statements as set forth in the statutory provisions.

1 Trade and other receivables

1 Trade and other receivables
  12/31/2016 12/31/2015
  in CHF 1 000 in CHF 1 000
Accounts receivable – third parties 180 335
Accounts receivable – intercompany 8 302 9 196
Interest bearing receivable – intercompany 1) 4 787 4 802
Total trade and other current receivables 13 269 14 333

1)Interest bearing receivable related to zero balance cash pools

2 prepaid expenses and accrued income

2 prepaid expenses and accrued income
  12/31/2016 12/31/2015
  in CHF 1 000 in CHF 1 000
Prepaid expenses – third parties 515 544
Prepaid expenses – intercompany 218 180
Total prepaid expenses and accrued income 733 724

3 financial assets

3 financial assets
  12/31/2016 12/31/2015
  in CHF 1 000 in CHF 1 000
Financial assets – intercompany 40 678 46 454
Total financial assets 40 678 46 454

4 investments

4 investments
Company Locations, country   Capital December 31, 2016 December 31, 2015 Consoli dation method
Feintool International Holding AG Lyss, CH CHF 44 629 710 100 % 100 % Full
Feintool Engineering Co. Ltd. Atsugi, J JPY 400 000 000 100 % 100 % Full
Feintool Equipment AG Lyss, CH CHF 100 000 100 % 100 % Full
Feintool Fineblanking Technology (Shanghai) Co., Ltd. Shanghai, CN USD 2 500 000 100 % 100 % Full
Feintool Holding GmbH Amberg, GER EUR 818 000 100 % 100 % Full
Feintool System Parts Ettlingen GmbH Ettlingen, GER EUR 766 937 100 % 100 % Full
Feintool System Parts Jena GmbH Jena, GER EUR 3 068 000 100 % 100 % Full
Feintool System Parts Obertshausen GmbH Obertshausen, GER EUR 1 000 000 100 % 100 % Full
Feintool System Parts Oelsnitz GmbH Oelsnitz, GER EUR 550 000 100 % 100 % Full
Feintool System Parts Ohrdruf GmbH 1) Ohrdruf, GER EUR 2 556 000 100 % 100 % Full
Feintool Intellectual Property AG in Liq. 2) Lyss, CH CHF 100 000 100 % 100 % Full
Feintool Japan Co. Ltd Atsugi, J JPY 225 000 000 100 % 100 % Full
Feintool Precision System Parts (Taicang) Co. Ltd. 3) Taicang, CN USD 20 800 000 100 % 100 % Full
Feintool System Parts Lyss AG 4) 5) Lyss, CH CHF 3 100 000 100 % 100 % Full
Feintool System Parts Most s.r.o 6) Prague, CZ CZK 100 000 000 100 % n/a Full
Feintool Technologie AG Lyss, CH CHF 2 000 000 100 % 100 % Full
Feintool (Chongquing) Technology Co. Ltd. in Liq. 7) Chongquing, CN USD 61 000 100 % 100 % Full
Feintool U.S. Operations, Inc. Cincinnati, USA USD 31 421 631 100 % 100 % Full
Feintool Cincinnati, Inc. Cincinnati, USA USD 3 000 000 100 % 100 % Full
Feintool Equipment Corp. Cincinnati, USA USD 50 000 100 % 100 % Full
Feintool New York, Inc. White Plains, USA USD 500 000 100 % 100 % Full
One Holland Ave. Development LLC Cincinnati, USA USD 0 100 % 100 % Full
Feintool Tennessee, Inc. Nashville, USA USD 0 100 % 100 % Full
HL Holding AG Lyss, CH CHF 100 000 100 % 100 % Full
Columba GmbH Amberg, GER EUR 325 000 100 % 100 % Full
Vireo GmbH Jena, GER EUR 272 600 100 % 100 % Full

1)Feintool Holding GmbH holds a 60 % stake in Feintool System Parts Ohrdruf GmbH. The remaining 40 % is held by Feintool International Holding AG.

2)On March 21, 2016, Feintool Intellectual Property AG was placed in liquidation with the resolution of the General Meeting.

3)The share capital of Feintool Precision System Parts (Taicang) Co., Ltd. was increased by kUSD 3 200 on January 6, 2016.

4)Retroactively as of January 1, 2015, Feintool Teile & Komponenten AG Lyss and Feintool System Parts AG merged and were renamed Feintool System Parts Lyss AG.

5)Retroactively as of January 1, 2016, HL Immobilien AG and Feintool System Parts Lyss AG merged.

6)On October 12, 2016, Feintool International Holding AG, Lyss, established Feintool System Parts Most s.r.o. in Prague.

7)The dissolution of Feintool (Chongquing) Technology Co. Ltd. was applied for on January 1, 2015.

5 property, plant and equipment

5 property, plant and equipment
  12/31/2016 12/31/2015
  in CHF 1 000 in CHF 1 000
Furniture and fixtures 72 110
Automotive 10
Other fixed assets 190 173
Total property, plant and equipment 272 283

6 intangible assets

6 intangible assets
  12/31/2016 12/31/2015
  in CHF 1 000 in CHF 1 000
Cost for research and development 1 692 1 361
Software 108 135
Other intangible assets 72 32
Total intangible assets 1 872 1 528

7 trade and other current payables

7 trade and other current payables
  12/31/2016 12/31/2015
  in CHF 1 000 in CHF 1 000
Current liabilities – third parties 7 886 4 004
Current liabilities – related parties 158 214
Current liabilities – intercompany 891 804
Current liabilities – organs 13 172
Trade and other current payables 8 948 5 194

8 Current interest-bearing liabilities

8 Current interest-bearing liabilities
  12/31/2016 12/31/2015
  in CHF 1 000 in CHF 1 000
Current interest bearing liabilities – third parties 1
Current interest bearing liabilities – intercompany 1) 24 547 11 517
Total current interest bearing liabilities 24 548 11 517

1)Interest bearing liabilities related to zero balance cash pools

9 accrued expenses and deferred income

9 accrued expenses and deferred income
  12/31/2016 12/31/2015
  in CHF 1 000 in CHF 1 000
Accruals for salary, bonus, overtime, additional hours 2 034 1 705
Outstanding accounts payable 1 115 760
Tax accruals 1 696 1 396
Other accrued expenses 130 175
Accrued expenses – intercompany 306
Total accrued expenses and deferred expense 5 281 4 036

10 Provisions

Provisions include provisions for insurance payments in the amount of kCHF 533 (previous year kCHF 520) and provisions for anniversary benefits of kCHF 131 (previous year kCHF 129) and other items of kCHF 17 (previous year kCHF 0).

11 share capital

11 share capital
  12/31/2016 12/31/2015
  Number/CHF Number/CHF
Number of shares 4 462 971 4 462 971
Nominal value 10 10
Share capital 44 629 710 44 629 710

12 Conditional capital – employee stock option plan

The disclosure of the conditional capital is represented in Note 28.2 on page 67 of the Notes to the Financial Statements.

13 AUTHORIZED SHARE CAPITAL

The disclosure of treasury shares is reported in the Notes to the consolidated financial statements under Note 28.3 on page 67.

14 treasury shares

The disclosure of the treasury shares is represented in Note 28.4 on page 67 of the Notes to the Financial Statements.

15 operating income

15 operating income
  2016 2015
  in CHF 1 000 in CHF 1 000
Operating income – third party 277 335
     
Income from intercompany services 20 848 13 302
thereof licenses and patents 13 764 9 407
thereof other management services 7 084 3 895
     
Other intercompany income 6 826 5 295
thereof IT services 3 807 3 416
thereof internal services, building maintenance/services and staff restaurant 1 116 1 196
Total operating income 27 951 18 932

16 financial income

16 financial income
  2016 2015
  in CHF 1 000 in CHF 1 000
Interest income – third party 63 30
Interest income – intercompany 649 860
Foreign exchange gains 6 233 8 136
Total financial income 6 945 9 026

17 reversal of valuation allowance on investments

17 reversal of valuation allowance on investments
  2016 2015
  in CHF 1 000 in CHF 1 000
Reversal of valuation allowance on investments 12 000 1 000
Total reversal of valuation allowance on investments 12 000 1 000

18 personnel expenses

18 personnel expenses
  2016 2015
  in CHF 1 000 in CHF 1 000
Salaries and wages 6 309 5 487
Employee welfare expenses 1 147 949
Other personnel expenses 940 655
Total personnel expenses 8 396 7 091

19 other operating expenses

19 other operating expenses
  2016 2015
  in CHF 1 000 in CHF 1 000
Research and development 3 273 2 962
Information technology 2 795 2 261
Consulting 677 950
Corporate communication and investor relations 676 532
Rent 510 487
Staff restaurant 503 393
Capital tax 312
Patents and licenses 220 333
Other expenses 496 418
Total other operating expenses 9 462 8 336

20 financial expenses

20 financial expenses
  2016 2015
  in CHF 1 000 in CHF 1 000
Interest expense 77 40
Other finance costs (1) 721 882
Foreign exchange losses 5 568 9 895
Total financial expenses 6 366 10 817

1)Besides bank charges, other financial expenses include lead syndication commissions (annual amortization of establishing cost for the syndicated loan), valuation expenses from swap transactions and market making costs.

21 Contingent liabilities in favor of third parties

21 Contingent liabilities in favor of third parties
  2016 2015
  in CHF 1 000 in CHF 1 000
Guarantees and sureties for Group companies 13 893 18 511
Pledging of shares of Group companies within the scope of bank credit limits 1) 35 000 90 000
Subordination clauses in favor of subsidiaries 8 000 8 000
Joint and several liability as regards cash pooling p.m. p.m.
Joint and several liability as regards Swiss value added tax p.m. p.m.

1)The pledging of the shares of key subsidiaries in accordance with the syndicate agreement means that most of the Group's assets are indirectly pledged.

22 Major shareholders

The disclosure of the major shareholders is represented in Note 35 on page 75 of the Notes to the Financial Statements.

23 SHAREHOLDINGS OF GROUP MANAGEMENT AND THE BOARD OF DIRECTORS INCLUDING RELATED PARTIES

23 SHAREHOLDINGS OF GROUP MANAGEMENT AND THE BOARD OF DIRECTORS INCLUDING RELATED PARTIES
  12/31/2016 12/31/2015
  Number of registered shares Number of registered shares
Alexander von Witzleben, Chairman of the Board of Directors 1) 22 181 17 181
Dr. Michael Soormann, Deputy Chairman of the Board of Directors
Wolfgang Feil, Member of the Board of Directors
Dr. Kurt E. Stirnemann, Member of the Board of Directors
Thomas A. Erb, Member of the Board of Directors
Dr. Thomas Muhr, Member of the Board of Directors 2) 616 500 616 500
Dr. Rolf-Dieter Kempis, Member of the Board of Directors from 19 April 2016 on
Total Board of Directors 638 681 633 681
     
Heinz Loosli, CEO untill 31 August 2016 3) 3 217 8 382
Bruno Malinek, CEO from 1 September 2016 4) 1 064
Dr. Thomas F. Bögli, CFO 5) 3 098 2 796
Total Group Management 7 379 11 178

1)Held directly and indirectly; the 5 000 shares with a value of CHF 565 000 as remuneration for the 2016 financial year were assigned on January 3, 2017

2)Held by a subsidiary of Muhr und Bender KG and Dr. Thomas Muhr Beteiligungs AG

3)The 1 036 shares with a value of CHF 119 938 as remuneration for the 2016 financial year were assigned on December 16, 2016

4)The 777 shares with a value of CHF 89 953 as remuneration for the 2016 financial year were assigned on December 16, 2016

5)The 302 shares with a value of CHF 34 963 as remuneration for the 2016 financial year were assigned on December 16, 2016

24 Liabilities to employee benefit plans

There was a liability to the pension fund of kCHF 137 as of December 31, 2016 (previous year kCHF 0).

25 Unrecognized lease liabilities

As at December 31, 2016, there were unrecognized lease liabilities of kCHF 2 110 (previous year kCHF 2 087).

26 Events after the balance sheet date

Feintool International Holding AG signed an agreement for the acquisition of the Chinese forming plant "Schuler (Tianjin) Metal Forming Technology Center Co., Ltd." from the German Schuler Group on February 10, 2017. It should be completed at the end of March 2017.

27 PROPOSAL by THE BOARD OF DIRECTORS

The Board of Directors will propose to the Annual General Meeting that a dividend of CHF 2.00 per registered share be paid (previous year CHF 1.50 per share) from the capital reserves in respect of the 2016 financial year. This corresponds to a maximum total dividend distribution of kCHF 8 926 (previous year kCHF 6 694). The amount of the dividend distribution depends on the amount of the dividend-eligible shares at the time of the distribution. No dividends will be distributed on treasury shares.

  12/31/2016
  in CHF
(Loss)/Gain carryforward from previous year 28 199 697
Result for the year 20 586 722
Available earnings 48 786 419
   
Allocation from general legal reserves from capital contributions 8 925 942
Payment of a dividend of CHF 2.00 -8 925 942
Gain Carryforward 48 786 419