ANNUAL REPORT 2019

Notes to the Consolidated Financial Statements

as at December 31, 2019

BUSINESS PERFORMANCE

Feintool International Holding AG, Industriering 8, 3250 Lyss, is a public limited company under Swiss law with headquarters in Lyss, Switzerland (“Company”). The consolidated financial statements for the period from January 1 to December 31, 2019, include the Company and its subsidiaries (“Feintool”). Feintool is the world’s leading technology group specializing in the development of fineblanking systems and a worldwide provider of high-quality and cost-effective fineblanked, formed steel components and punched electro sheet metal products. The Group maintains close partnerships with its customers across the entire fineblanking, forming and punching of electric engine components process – from component design, tool design and system construction through to large-scale series parts production. In addition to fineblanking, the Feintool Group also deploys other key processes such as precision forming and punching of electric engine components technology, and is the world’s only supplier of all-round solutions for the cost-effective manufacture of complex precision components.

With locations in Europe, US, China and Japan, the Feintool Group is represented in the world’s major automotive markets. Headquartered in Lyss, Switzerland, the Group has a headcount of 2 641. At its various locations, Feintool provides training for 91 young people mainly as polymechanics, constructing engineers and commercial employees.

GENERAL INFORMATION

The consolidated financial statements for the financial year are based on the financial statements of the Group companies as at December 31, 2019, which were prepared in accordance with consistent accounting policies.

The consolidated financial statements are prepared in accordance with Swiss law and the International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). The accounting principles of the SIX Swiss Exchange Listing Regulations have also been observed. In the management’s opinion, the consolidated financial statements give a true and fair view of the Group’s financial position, results of operations and cash flows.

The consolidated financial statements are prepared on a going-concern basis under the historical cost convention, with the exception of derivative financial instruments (measured at fair value) and net liability or assets from defined benefit plans (measured at present value of defined benefit obligations less fair value of plan assets).

The consolidated financial statements are prepared in Swiss francs (CHF), with amounts rounded to the nearest thousand (1 000). They are available in German and English. The German version is authoritative.

FINANCIAL COVENANTS

Further information on financial covenants is provided in Note 20.

KEY ESTIMATES

The consolidated financial statements contain assumptions and estimated amounts which affect the amounts reported. Should these estimates and assumptions prove incorrect or incomplete, this may substantially affect the amounts reported and therefore Feintool’s financial position, results of operations and cash flows.

Property, plant and equipment

Items of property, plant and equipment are carried at cost less accumulated depreciation. Feintool regularly reviews whether the depreciation period chosen at the time matches the actual useful life, or capacity utilization rate, of the item of property, plant and equipment. If significant differences between the depreciation period and useful life are identified, the depreciation period is adjusted accordingly. If the expected cash flows on the item of property, plant and equipment no longer cover future depreciation, impairment losses are recognized.

Leasing

In general, the right-of-use asset is initially recorded at the present value of the lease liability at the commencement of the lease term. This appraisal takes into account whether the ability to exercise renewal options is reasonably certain, or whether a termination option is not considered reasonably certain. In the case of indefinite leases, the value of the right-of-use asset and the amortization period are based on estimates of the economic life of such leases.

All assumptions are continuously reviewed.

Intangible assets/goodwill

The fair value of intangible assets is estimated at the date of acquisition. The residual value (difference between the purchase price and fair value of net assets acquired) represents goodwill. Most intangible assets acquired have a finite life and are therefore amortized. Goodwill is not amortized, but is instead tested annually for impairment. The allocation to intangible assets and goodwill on the acquisition date therefore has an effect on amortization in subsequent periods.

When testing goodwill for impairment, various estimates are made which require medium and long-term (terminal value) estimates. This relates to both internally projected data (cash flow, growth rates, etc.) and external parameters (discount rate). Should these estimates prove incorrect, significant changes in value might result. Further information is given in Note 18.2.

Current tax receivables and deferred tax assets

Feintool is liable to taxation in various jurisdictions. Provisions for income taxes incurred worldwide are based on estimates. For many transactions and calculations in its ordinary business, the tax charge is uncertain. If actual tax charges differ from the estimated charges, the corresponding adjustment is recognized in the financial year in which the definitive assessment is made. Management considers the corresponding estimates to be realistic and the corresponding provisions to be appropriate. Deferred tax assets are formed from temporary differences, and from tax loss carryforwards, but only if realization is deemed probable. The recoverable amount of capitalized tax assets recognized for loss carryforwards is therefore based on future forecasts for the relevant taxable entity over a period of several years. Should these future forecasts prove incorrect, significant changes in value might result. In a referendum held on May 19, 2019, Swiss voters adopted the Federal Act on Tax Reform and Old Age and Survivors’ Social Insurance Funding (STAF), thereby confirming the reform of corporate taxation in Switzerland. Feintool does not expect these changes to have a significant impact on its net assets, financial position, or results of operations. The effects of adoption in the Canton of Bern (which will not take place until 2022 at the earliest) cannot yet be estimated.

Further information is given in Notes 10 and 11.

Research & development

On its balance sheet, Feintool carries purchased as well as its own research and development work if the following conditions are met cumulatively:

  • Technical feasibility of completion of the intangible asset, so that it will be available for sale directly or indirectly
  • Intention to complete and sell the asset directly or indirectly
  • Ability to sell the asset directly or indirectly,
  • Evidence of the future benefit to the products of the intangible asset,
  • Availability of adequate financial, technical and other resources for conclusion of the development,
  • Reliable measurability of the production costs.
  • All the above points are based on assumptions. Should these assumptions prove incorrect or incomplete, this may substantially affect valuation of the corresponding intangible asset. Further information is given in Note 18.1.

    Provisions

    Provisions are recognized if (a) a present obligation to a third party has arisen as a result of a past event, (b) it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and (c) the amount of the obligation can be reliably estimated. Provisions are recognized for a number of possible events and are explained in detail in Note 23. By definition, however, they involve a higher degree of estimation than other items in the balance sheet, since the estimated obligations may result in a higher or lower outflow of funds depending on the outcome of the situation.

    Employee benefit plans

    Feintool operates defined benefit plans for its employees in three countries. Their accounting status is in part based on long-term actuarial assumptions, which may differ from reality. Reassessments arising from changes in assumptions regarding life expectancy, developments in the capital market and changes in discount rates can amount to considerable sums. These are recognized directly in equity (other comprehensive income). Calculation of the respective underlying percentages involves estimated amounts that may substantially affect the financial position and results of operations. Further information is given in Note 24.

    The Board of Directors and management believe the basis of planning and the assumptions to be realistic.

    Interest-bearing liabilities

    Feintool holds confirmed credit lines with various banks. These are considered to be financially noncurrent in nature, even if the individual installments have maturities of less than 360 days. The classification of interest-bearing liabilities as current or noncurrent is based on assumptions and estimates. These estimates are reviewed periodically, at least once a year. Details regarding the change in estimates can be found in note 20.

    SIGNIFICANT CHANGES IN ACCOUNTING POLICIES

    With the exception of newly issued or revised Standards and Interpretations that became effective in the financial year, Feintool essentially applies the same accounting policies as those applied in the previous year. On January 1, 2019, Feintool adopted the following new Standards and Interpretations:

    IFRS 16 – Leases

    Within the scope of the transition to IFRS 16, on January 1, 2019, the rights to use leased assets and the lease liabilitieswere recognized with a value of CHF 11.6 million. The transition to IFRS 16 was carried out according to the modified retrospective approach, whereby the company refrained from reassessing whether a contract contains a lease component for practical reasons. The comparative figures for prior-year periods have not been restated. As part of the first-time adoption of IFRS 16, Feintool is making use of the exemption and restating the value of right-of-use assets to reflect possible provisions for onerous leases, which are recognized on the Balance Sheet immediately before the date of first-time adoption. In addition, Feintool has decided not to apply the new provisions to leases that expire within twelve months of the date of initial adoption.

    Based on the operating lease obligations held on December 31, 2018, the value of lease liabilities was restated on the Statement of Financial Position as of January 1, 2019, as follows:

    01/01/2019

    in CHF 1 000

    Non-discounted operating lease liabilities at 12/31/2018

    13 716

    Discounted using the incremental interest rate at 01/01/2019

    12 968

    Carrying amount of the financial lease liabilities at 12/31/2018

    36 685

    Recognition exemption for leases with less than 12 months contract duration after transition date

    -2 545

    Recognition exemption for low-value assets

    -656

    Adjustment rental contract duration

    1 034

    Other

    833

    Additional lease liabilities at 01/01/2019

    48 319

    Lease liabilities were discounted using the incremental borrowing rate as of January 1, 2019. The weighted average borrowing rate stood at 2.4 %.

    Other new and revised standards

  • IFRIC 23 – Uncertainty over Income Tax Treatments
  • IFRS 9 – Amendments Prepayment Features with Negative Compensation
  • IAS 28 – Amendments Long-term Interests in Associates and Joint Ventures
  • Annual Improvements IFRS – 2015 to 2017 Cycle, IFRS 3, 11, IAS 12, 23
  • IAS 19 – Amendments Plan Amendments, Curtailment or Settlement
  • Feintool is either unaffected by these changes, or the changes have no material effect on its financial position, results of operations or cash flows.

    NEW ACCOUNTING REQUIREMENTS

    Various new IFRS regulations were published on the balance sheet date, but have not yet entered into force. Feintool decided against early adoption of the following standards, revised standards and interpretations. Feintool plans to adopt the changes from the financial years beginning on or after the date indicated:

  • Amendments to References to the Conceptual Framework in IFRS Standards
  • IFRS 3 – Amendments Definition of a Business (January 1, 2020)
  • IAS 1 and 8 – Amendments Definition of material (January 1, 2020)
  • IFRS 17 – Insurance Contracts (January 1, 2021)
  • Feintool is assessing the impacts of the revised Standards and Interpretations. Based on its initial findings, Feintool does not foresee any significant impacts on its financial position, results of operations or cash flows.

    BASIS OF CONSOLIDATION

    The consolidated financial statements in principle encompass the annual financial statements of Feintool International Holding AG, Lyss (Switzerland), in addition to the financial statements of all Group companies in which Feintool International Holding AG directly or indirectly owns more than 50 % of the voting rights or that it controls in any other way. A list of all investments is provided on page 90.

    The group of consolidated companies did not change in 2019.

    METHOD OF CONSOLIDATION

    All companies that Feintool controls are included in the consolidated financial statements according to the full consolidation method. Assets and liabilities as well as income and expenses are therefore included in full in the consolidated financial statements. Minority interests in equity and income are disclosed separately in the consolidated balance sheet and the statement of comprehensive income. Intercompany liabilities, credits, expenses and income are offset. Unrealized temporary gains on inventories or assets are eliminated on consolidation.

    ACQUISITIONS AND GOODWILL

    Newly acquired companies are consolidated using the acquisition method. The balance sheet and income statement are consolidated at the date on which control is obtained. The difference between the net fair value of the identifiable assets, liabilities and contingent liabilities of the acquiring party, on the one hand, and the purchase price, on the other, is recognized as goodwill. Acquisition costs are charged immediately to the statement of comprehensive income. After initial measurement, goodwill is reported at cost less any impairments. Goodwill is tested for impairment annually by calculating the recoverable amount (higher of fair value minus disposal costs and value in use) of the relevant cash generating units or group of cash generating units. Where the recoverable amount is less than the carrying amount, an impairment is recognized in the statement of comprehensive income.

    Decisions are often made on the level of the business units. Sales are centralized within the business units; orders are distributed across them on the basis of the specific skills of individual plants (machinery, employee experience). This optimizes cash flows for the business units, although the cash flows of the individual production locations change randomly. Feintool is deciding about impairments on the level of the business units.

    When a Group company is sold or control over a Group company is lost, the difference between the selling price and the net assets sold, including goodwill and cumulative foreign exchange gains, is recognized in the statement of comprehensive income under either “Other operating income” or “Other operating expenses”. The company is deconsolidated on the date on which control over it is lost.

    CURRENCY TRANSLATION

    The functional currency of the consolidated entities is the currency of their local economic environment. Transactions in foreign currencies are translated at the respective daily rate. Monetary assets and liabilities in foreign currency are converted into the functional currency at the rate of exchange prevailing on the balance sheet date. In principle, the exchange translation differences are reported in net financial income/finance costs. Non-monetary assets and liabilities at historical cost are translated at the exchange rate applicable at the time of the transaction.

    On consolidation, the balance sheet amounts of foreign subsidiaries are translated at closing rates, equity at historical rates and the amounts in the statements of comprehensive income and cash flows at average rates for the year. Exchange differences arising from translation differences in balance sheets and income statements are directly recognized in other comprehensive income and reported under shareholders’ equity. When a Group company is sold or liquidated, or when control over the company is lost, the cumulative translation differences are reclassified to net income as part of the gain or loss on disposal.

    Foreign currency gains on certain equity-type loans that form part of the net investment in a company are recognized in the statement of comprehensive income (other comprehensive income), provided settlement of these loans is neither planned nor likely to occur in the near future.

    The Feintool Group used the following exchange rates in financial years:

    2019

    2018

    Closing rate

    Average rate

    Closing rate

    Average rate

    China

    CNY 100

    13.8432

    14.2173

    14.2848

    14.6626

    Eurozone

    EUR 1

    1.0854

    1.1113

    1.1269

    1.1516

    Japan

    JPY 100

    0.8901

    0.9108

    0.8954

    0.8891

    Czech Republic

    CZK 100

    4.2719

    4.3312

    4.3807

    4.4836

    USA

    USD 1

    0.9662

    0.9930

    0.9842

    0.9774

    FINANCIAL ASSETS AND LIABILITIES

    Classification and Valuation of financial assets

    In the first instance Feintool Group classifies a financial asset as “Amortized costs”, as “Fair value through other comprehensive income – debt investments”, as “Fair value through other comprehensive income – equity investments” or as “Fair value through profit and loss” (“FVTPL”). Classification is based on the basis of the company’s business model for the control of financial assets and the characteristics of the contractual payment flows of the financial asset.

    A financial asset is to be evaluated at amortized cost if the following two conditions are met:

  • The financial asset is contained within the scope of a business model, the objective of which is to keep financial assets for the absorption of contractual payment flows, and:
  • The contractual conditions of the financial asset lead to payment flows at specified points in time that exclusively represent principal repayments and interest payments on the outstanding capital sum.
  • A financial asset is to be valued as “Fair value through other comprehensive income” if the following two conditions are met:

  • The financial asset is contained within the scope of a business model, the objective of which is the absorption of contractual payment flows and the sale of financial assets, and:
  • The contractual conditions of the financial asset lead to payment flows at specified points in time that exclusively represent principal repayments and interest payments on the outstanding capital sum.
  • On initial recognition of an equity instrument that is not held for trading, the Feintool Group may irrevocably elect to present subsequent changes in the investment’s fair value in OCI. This election is made on investment-by-investment basis.

    In the initial calculation, the Feintool Group values a financial asset (with the exception of a trade receivable with no significant financing component) at fair value. For financial assets that are not valued at fair value through profit or loss, the valuation takes place with the addition or deduction of transaction costs that can be attributed directly to the acquisition or the disbursement of the financial asset. Trade receivables with no significant financing components are initially recognized at the transaction price.

    The following valuation guidelines apply for the subsequent valuation of financial assets:

  • Financial assets at amortized cost:
  • The subsequent valuation of these assets is based on the procurement costs carried over. The interest earned is to be calculated according to the effective interest method. The procurement costs carried over are to be reduced by any depreciations. Interest earned, foreign currency gains and value adjustments are recorded through profit and loss.

  • Financial assets at FVTPL:
  • The subsequent valuation of these assets is recorded through profit and loss.

    Feintool does not currently apply hedge accounting. For this reason, the changes to IFRS 9 regarding hedge accounting do not have any impact on the Feintool Group.

    Impairment of financial assets

    Expected credit losses are recorded. This model applies for financial assets at amortized cost as well as for contract assets. At the Feintool Group, the financial assets at amortized costs consist of trade and other receivables, cash and cash equivalents, and other current and non-current financial assets.

    Under IFRS 9, the expected credit losses are valued based on one of the following two principles:

  • 12-month credit loss: default event is expected in the next 12 months;
  • credit loss expected over the duration: default event is expected over the full duration.
  • For trade and other receivables and similar receivables, the Feintool Group records the credit losses expected over the duration.

    A credit loss is expected in the following two cases:

  • The borrower is unlikely to pay its credit obligations;
  • the financial asset is overdue by more than 30 days.
  • The calculation of the expected credit losses takes into account experience values and future expected losses based on market development, client position, and other components.

    According to IFRS 9, the expected credit losses must likewise be evaluated with the following financial assets:

  • Cash and cash equivalents
  • Prepaid expenses and accrued income
  • Non-current financial assets
  • Feintool does not expect any material credit losses for these items.

    The avoidance of clumping risks and a concentration of the financial investments on first-rate counterparties should help to avoid bigger loan losses. The Feintool Group carries out its banking business exclusively with nationally and internationally renowned banks that boast a BBB rating or better. It specifies the type of transactions that the subsidiaries are permitted to carry out with the banks.

    Financial liabilities

    Financial liabilities mainly include debt and trade payables, which are measured at amortized cost. Financial liabilities designated at fair value through profit or loss (derivatives) are stated at fair value. Non-current financial liabilities are measured using the effective interest method. In addition to the actual interest payments, interest expenses therefore also include the amounts of annual interest cost and pro rata transaction costs.

    Financial liabilities are de-recognized when repaid.

    ABS-Program

    In the 2019 financial year, the Feintool Group entered into a revolving receivables purchase agreement with Weinberg Capital DAC (the program’s special purpose entity) governing the sale of trade receivables. The negotiated structure provides for the sale of the Feintool Group’s trade receivables as part of an ABS transaction, which was successfully initiated in December 2019. The receivables are being sold by the Feintool Group to the program’s special purpose entity.

    Under this ABS program with a maximum value of up to kCHF 16 281, the Feintool Group’s European subsidiaries sold receivables valued at kCHF 15 593 as of December 31, 2019, of which kCHF 1 700 was retained as purchase price retentions. These funds are held as hedging reserves but are not paid out and are recognized as other financial assets. The basis for the transaction is the assignment of trade receivables from individual Feintool companies to the program’s special purpose entity as part of an undisclosed assignment. The program’s special purpose entity does not have to be consolidated under IFRS 10, as Feintool has neither the decision-making power nor any significant vested interest and there is no link between decision-making power and the variability of returns from the program’s special purpose entity.

    The Feintool Group continues to perform receivables management (servicing) for the receivables sold.

    Feintool is meeting the requirements regarding the derecognition of financial liabilities in accordance with IFRS 9.3.2.1, as the receivables are transferred in accordance with IFRS 9.3.2.4 b). An assessment pursuant to IFRS 9.3.2.6 has shown that Feintool has neither substantially transferred nor retained all of the risks and rewards. This means that in accordance with IFRS 9.3.2.16, Feintool must recognize its continuing involvement.

    The maximum amount of the continuing involvement of kCHF 295, i.e. the amount for which Feintool is still liable for the default risk, will continue to be reported under trade receivables with a corresponding other financial liability. Any interest to be expected until receipt of payment is not recognized for reasons of materiality.

    BALANCE SHEET

    Cash and cash equivalents

    Cash and cash equivalents comprise cash holdings, balances on postal and bank accounts as well as fixed-term deposits with a maturity not exceeding 90 days.

    Trade receivables/other receivables

    This item contains accounts receivable from ordinary business activities. Bad debt provisions on trade receivables are calculated and recognized based on the expected credit losses. Other receivables are stated at their nominal amount less expected credit losses. Notes on the calculation of the expected credit loss can be found under “Financial assets and liabilities”.

    Inventories

    Raw materials and purchased goods are stated at weighted average cost. Finished and semi-finished goods are stated at cost of conversion including manufacturing overheads, but at no more than their net realizable values. Inventories with low turnover and obsolete items are written down. Work in progress is stated at the cost of conversion.

    Contract assets

    This item includes all contract assets less prepayments received and necessary allowances for identifiable risks. Recording of net sales of contract assets takes place over the specific period if several conditions are met. These conditions are explained in detail on page 42.

    If these conditions are not met, the income is recognized when the control is transferred. If it is expected that the costs from a construction contract will exceed the contractually agreed income, the expected overall loss from the order is charged immediately and in full to the statement of comprehensive income.

    The stage of completion of construction contracts is obtained from the ratio between the contract costs incurred and the total cost of the contract (cost-to-cost method), or based pro rata on the time spent (effort-expended method), provided the project can be assumed to proceed on a straight-line basis.

    Property, plant and equipment

    Items of property, plant and equipment are carried at cost less accumulated depreciation. Cost includes any costs attributable to bringing the asset to the condition necessary for it to operate in the intended manner. Borrowing costs are a component of cost if they are directly attributable to the asset. Subsequent maintenance costs are recognized in the carrying amount if the operational life is extended as a result or production capacity can be increased. Non-value-enhancing maintenance work and repairs are recognized in the income statement. Components of property, plant and equipment with different useful lives are recognized individually and depreciated separately. Depreciation is recognized on a straight-line basis over the estimated useful life. As a rule, land is not written down. Impairments (see separate section) are recognized when the carrying amount no longer appears to be recoverable. Such impairments are presented separately.

    As a rule, the following depreciation periods are applied:

  • Buildings: 20 to 40 years
  • Plant and equipment: 5 to 15 years
  • Vehicles: 3 to 5 years
  • IT hardware: 2 to 5 years
  • Capitalized costs that are closely linked to leased premises are depreciated over a maximum of the contractually agreed lease term.

    Government contributions (funding received) for assets (mostly property, plant and equipment) are deducted from the cost of acquisition or manufacture of the asset in question. As the funding usually comes with certain conditions attached that, if not complied with, would result in the funding having to be repaid, the funding received is also declared as a contingent liability.

    Leases

    Upon entering into a contract, the Feintool Group will assess whether the contract should be classified as a lease or contains a lease component. In making this assessment, which requires a certain degree of discretion, the Group will assess whether a specific asset is affected, whether the Group obtains substantially all the economic benefits from the use of the asset, and whether the Group has the right to control the use of the leased asset.

    The Feintool Group will recognize a right-of-use asset and a lease liability at the beginning of the lease term, except in the following two cases:

  • Leases of low-value assets
  • Short-term leases with a lease term of twelve months or less
  • In both cases, lease payments are recognized as an expense on the Consolidated Statement of Comprehensive Income on a straight-line basis over the term of the lease.

    The lease liability is initially measured at the present value of the lease payments payable over the lease term, discounted at the rate implicit in the lease. If this rate cannot be readily determined, the Feintool Group will use an incremental borrowing rate specific to the country, term, and currency of the contract. Lease payments include, for example, fixed and variable payments that depend on an index or rate known at the commencement of the lease. The lease liability is subsequently measured at cost less accumulated depreciation and accumulated impairment on the basis of the effective interest method and remeasured (with a corresponding adjustment to the right-of-use asset) if future lease payments change as a result of renegotiation, changes in an index or interest rate, or a revaluation of options.

    The right-of-use asset is initially measured at the amount of the lease liability, any initial direct costs, as well as restoration obligations, less any lease incentives granted. The right-of-use asset is amortized on a straight-line basis from the date of commencement to the end of the lease term unless ownership of the underlying asset is transferred to the company at the end of the lease term or the cost of the lease reflects the fact that the company will exercise a purchase option. In this case, the right-of-use asset is amortized over its useful economic life, which is determined in accordance with the rules for property, plant, and equipment. Similar to assets held by the Group, the recoverability of the right-of-use asset is also reviewed if there are indications of impairment.

    The right-of-use asset is recognized under property, plant, and equipment and the lease liability under current and noncurrent financial liabilities.

    The following contract terms or depreciation periods generally apply:

  • Property: 3 to 10 years
  • Machines: 5 to 15 years
  • Other tangible assets: 3 to 5 years
  • Further information is given in Notes 6, 17 and 20.

    Intangible assets

    Intangible assets primarily include goodwill, in acquisitions purchased customer relations, patents, software, land-use-rights and certain development costs. The latter are only capitalized if the technical feasibility of completing an asset that is ready for market can be demonstrated, the costs can be measured reliably and the costs appear to be feasible based on the marketplace. Intangible assets are capitalized at cost and amortized over their estimated useful life on a straight-line basis. Any impairments are recognized when the carrying amount no longer appears to be recoverable. Such impairments are presented separately.

    Intangible assets (with the exception of goodwill) have a finite life and are amortized as follows:

  • Patents, brands: max. 10 years
  • Capitalized development costs: 3 to 5 years, max. 10 years
  • Software: 2 to 5 years
  • In acqu. purchased customer relations: max. 15 years
  • Impairment

    The recoverable amount of assets (property, plant and equipment, intangible assets) is reviewed when events or changes in circumstances indicate that the assets may be overvalued. In addition, the recoverable amount of goodwill is reviewed at least annually. If the carrying amount exceeds the recoverable amount (higher of fair value less disposal costs and value in use), it is immediately written down to the net realizable value. When calculating value in use, future cash flows are discounted using a pre-tax discount rate. This discount rate reflects current market assessments and risks specific to the assets in question.

    Financial assets

    Financial assets include loans granted to third parties and rental deposits. Depending on their nature (see “Financial assets and liabilities”), financial assets are stated at fair value or measured at amortized cost using the effective interest method. Gains and losses on these financial assets are recognized in financial result.

    Current liabilities

    Current liabilities are those with a remaining term to maturity of less than one year. The current portion of non-current liabilities is also included.

    Accrued expenses and deferred income

    Expenditures incurred in the period at the end of the reporting year, for which no receipts are yet available, are recognized under accrued expenses and deferred income. On the other hand, revenues received in advance in the period at the end of the reporting year for which no work has yet been performed are also recognized here. In the Feintool Fineblanking Tech-nology segment in particular, it is often the case that clients are billed for fineblanking presses without all supplier invoices having been received as yet or all contractually agreed work on the press having been performed.

    Provisions

    Provisions are recognized if (a) a present obligation to a third party has arisen as a result of a past event, (b) it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and (c) the amount of the obligation can be reliably estimated. No provisions are recognized for future operating losses. Provisions are recognized for restructuring efforts when the Group company has a constructive obligation to implement restructuring as a result of communicating the plan to the individuals affected by it, and provided the costs can be reliably determined on the basis of a detailed plan. Reversals of provisions no longer required are recognized when the item for which the provision was originally recognized no longer exists or it is no longer probable that this item will occur.

    Deferred taxes

    Deferred taxes are accounted for using the balance sheet liability method. Under this method, the tax implications of temporary differences between carrying amounts in the consolidated financial statements and the tax base are recognized as a non-current liability or asset. They are generally calculated on the basis of actual or expected local rates of tax. Deferred tax liabilities are calculated for all taxable temporary differences. Deferred tax assets, including those for tax loss carryforwards and expected tax credits, are only recognized if it is probable that profits will be available for realizing the loss carryforwards and tax credits.

    Changes in deferred taxes are recognized in the income statement except for deferred taxes on amounts recognized directly in other comprehensive income, which are also recognized in other comprehensive income.

    Share-based payments

    Shares are issued to Group management as part of the remuneration at a contractually predefined amount. Individual members of the Board of Directors receive a contractually predefined number of shares.

    Employee benefit plans

    The Group operates various employee benefit plans, which differ depending on the circumstances of the individual com-pany. The benefit plans are financed through contributions made by the employer and/or the employee to state pension systems, separate legal entities (trusts, insurance companies) or through the accumulation of corresponding provisions in the balance sheet of the company itself.

    In the case of defined contribution plans, the accrued expenses correspond to the agreed contributions by the Group companies. In the case of defined benefit plans, the costs are calculated by independent experts in the form of an actuarial report using the projected unit credit method. The calculations are updated periodically. Benefit plans operated by external providers are funded plans, while the agreed commitments of the Group companies themselves are unfunded plans. The liability carried consists of the defined benefit obligation as defined by the actuary, less any assets recognized at fair value.

    The expense recorded in the statement of comprehensive income is an actuarial calculation of the cost less contributions from employees. This comprises:

  • Current service cost
  • Interest on the net defined benefit liability
  • Reassessments of defined benefit obligations
  • The current past service cost is recognized in personnel expense. The impact of changes in pension plan benefits is also reported in personnel expenses. The interest on the net defined benefit liability is recognized in financial expense. The expense or income from reassessments is recognized as other comprehensive income in the statement of comprehensive income.

    Other long-term obligations to employees, such as anniversaries or sabbatical leave programs are recognized using the same methodology, with the exception that any actuarial changes are recognized in personnel expense.

    Equity

    Equity represents the residual value (assets less liabilities). Capital reserves result from premium payments made by shareholders, transactions involving treasury shares, employee options and the fair value of conversion rights at the time of issue. Retained earnings comprise the income earned and retained by the Group as well as the reassessment of the net defined benefit liability (asset). Acquisitions of treasury stock are deducted from equity at cost. Other payments from equity instruments (derivatives classified as equity) are also taken directly as equity.

    REVENUE RECOGNITION

    Net sales – Revenue from contracts with customers

    Under IFRS 15, income is recorded from the point when the client takes control of the product or service. The following provides an overview of the fundamental valuation guidelines.

    Sale of series parts

    These net sales arise in the System Parts segment. The client gets control upon the delivery of the series parts – depending on the arrangement of the income terms. The net sales are recorded at this specific point in time. In the case of client complaints as a result of quality deficiencies, the client issues an invoice to Feintool. These complaints are dealt with swiftly and – where justified – are recorded in material expenditure.

    Sale of presses and tools

    These net sales arise in the Fineblanking Technology segment. The client gets control over the period of production of the presses, including peripheral devices and tools, as the process here is job production with corresponding specifications. Any dissolution of a contract results in invoicing of the manufacturing costs plus the calculated profit. Recording of net sales therefore takes place over the specific period if the following conditions are also met:

  • The value of the contract is greater than CHF 500 000 or the equivalent in foreign currency.
  • The income from the contract can be reliably calculated.
  • It is likely that the economic advantage linked to the contractual property asset of the company will accrue.
  • Contractual costs and the degree of completion of the production order can be determined reliably.
  • The expenditure for expected warranty costs is incorporated in the calculation, and a corresponding accrued liability is shown via the material expenditure across the whole period. In warranty cases, the press is repaired and the accrued costs charged to the accrued liability. Under IAS 18, when the above-mentioned criteria were met, net sales and expenditure for presses and tools were accounted for by means of POC methods. In terms of content, there is no change here under the new standard.

    The System Parts segment also sells tools in connection with parts production. Since these tools remain in the corresponding production facility for the parts production, invoicing takes place after the “Production Part Approval Process” (PPAP).

    Service contracts (in the press business)

    The service and inspection contract is similar to a framework agreement with a description of the service scope and the daily rates to be applied. Customers are charged once the service has been rendered. The recording of net sales takes place at the defined time.

    Other operating income/expenses

    Other operating income includes gains on the disposal of property, plant and equipment, investments and various smaller items of income, such as revenue from staff restaurants, IT costs charged to third parties and letting income.

    Other operating expenses include operating costs with the exception of material cost and personnel expenses as well as depreciation.

    Gains/losses on the disposal of property, plant and equipment are recognized when ownership and the incidental risks and rewards are transferred.

    Cost of materials

    The cost of materials includes the following costs associated with production:

  • Raw materials, consumables, and supplies
  • Trade parts
  • Third-party work on materials and goods
  • Direct procurement costs (freight, customs duties, etc.)
  • Recognition of adjustments in the value of acquired inventories
  • Income from recycling scrap metal is deducted from the cost of materials.

    Research & development

    Order-related development costs are capitalized as work in progress. Research & development costs are charged in full to the statement of comprehensive income in the year in which they are incurred, provided they are not capitalized. Development costs for new products are capitalized only if there is a likely prospect of realization in technical and market terms, the cost can be measured reliably and it is probable that the expected future economic benefit attributable to the asset will accrue to Feintool.

    Interest

    Interest is recognized using the effective interest method. Interest not yet received or paid is reported at the end of the reporting period in deferred income or expense. Interest is reported on the statement of comprehensive income under financial result.

    1 Segment information

    1.1 Products and services 2019 in CHF 1 000

    Fineblanking Technology

    System Parts

    Total segments

    Finance/Other

    Eliminations

    Total Group

    Net sales

    74 725

    573 914

    648 639

    -15 955

    632 684

    - Intersegment income

    -11 968

    -3 987

    -15 955

    15 955

    Total net sales – Group 1)

    62 757

    569 927

    632 684

    632 684

    Gross margin 2)

    23 902

    213 373

    237 275

    -3 981

    233 294

    EBITDA

    2 401

    70 335

    72 736

    -4 030

    -1 045

    67 661

    Depreciation and amortization

    -1 742

    -47 111

    -48 853

    -2 470

    2 522

    -48 801

    Operating profit (EBIT)

    659

    23 224

    23 883

    -6 500

    1 477

    18 860

    Financial expenses

    -24 804

    Financial income

    21 140

    Income taxes

    -4 545

    Net income attributable to Feintool Holding shareholders

    10 651

    Assets

    67 683

    619 177

    686 860

    251 968

    -232 549

    706 279

    Net working capital 3)

    8 488

    62 286

    70 774

    21 554

    -21 258

    71 070

    Investments in property, plant and equipment/intangible assets (incl. leases)

    993

    54 055

    55 048

    2 152

    -871

    56 329

    Number of employees

    170

    2 442

    2 612

    30

    2 641

    1.2 Geographical areas 2019

    Switzerland

    Europe excl. Switzerland

    America

    Asia

    Total

    Total net sales – Group 4)

    6 929

    349 793

    181 259

    94 703

    632 684

    thereof Germany

    243 043

    thereof USA

    128 881

    thereof Japan

    35 795

    thereof China

    49 997

    Fixed and intangible assets

    59 904

    225 453

    77 137

    91 241

    453 735

    The following footnotes are applicable to the 2019 and 2018 financial years.

    1) Total Net Sales include “Sales from products transferred over time” about CHF 33.7 million (prior year CHF 56.7 million). The net sales have been recognized in the Fineblanking Technology Segment. The remaining net sales in this segment mainly consist of tool sales and services.

    2) The gross margin is calculated as net sales less material costs, the change in finished and semi-finished goods and work in progress, and direct personnel costs.

    3) Net working capital comprises trade receivables, inventories, net assets of construction contracts and prepaid expenses and accrued income less trade payables, advance payments received from customers and accrued expenses and deferred income. The remaining receivables and liabilities is included in the calculation for “Finances/Other”.

    4) Net sales is allocated to countries based on the customer’s domicile.

    1.3 Products and services 2018 in CHF 1 000

    Fineblanking Technology

    System Parts

    Total segments

    Finance/Other

    Eliminations

    Total Group

    Net sales

    106 905

    586 921

    693 826

    -14 275

    679 551

    - Intersegment income

    -12 237

    -2 038

    -14 275

    14 275

    Total net sales – Group 1)

    94 668

    584 883

    679 551

    679 551

    Gross margin 2)

    38 496

    227 527

    266 023

    -1

    -3 253

    262 769

    EBITDA

    10 799

    84 932

    95 731

    -5 520

    -496

    89 715

    Depreciation and amortization

    -958

    -41 446

    -42 404

    -1 934

    2 139

    -42 199

    Operating profit (EBIT)

    9 841

    43 486

    53 327

    -7 454

    1 643

    47 516

    Financial expenses

    -21 867

    Financial income

    18 353

    Income taxes

    -13 524

    Net income attributable to Feintool Holding shareholders

    30 478

    Assets

    79 302

    601 958

    681 260

    241 102

    -217 082

    705 280

    Net working capital 3)

    7 961

    96 979

    104 940

    26 348

    -36 139

    95 149

    Investments in property, plant and equipment/intangible assets (incl. leases)

    2 258

    100 158

    102 416

    1 982

    -3 227

    101 171

    Number of employees

    174

    2 489

    2 663

    34

    2 697

    1.4 Geographical areas 2018

    Switzerland

    Europe excl. Switzerland

    America

    Asia

    Total

    Total net sales – Group 4)

    6 357

    365 366

    184 848

    122 980

    679 551

    thereof Germany

    248 766

    thereof USA

    133 794

    thereof Japan

    38 659

    thereof China

    59 584

    Fixed and intangible assets

    55 180

    232 220

    85 578

    75 288

    448 265

    The following explanations on the segment information apply to the financial years 2019 and 2018.

    The Fineblanking Technology segment comprises the development, manufacture and sale of presses, tools, peripheral systems and all related services.

    The System Parts segment develops, produces and sells high-precision system components and assemblies using fineblanking and forming technology as well as electronic sheet stamping. The segment also sells production-specific tools to third-party customers. The production and internal sale of tools is also included in this segment.

    For operational reasons, the tool making business in Switzerland has been shifted from Fineblanking Technology to the System Parts segment as of June 1, 2018. This affects 68 employees and assets amounting to CHF 3.3 million.

    “Finances/Other” essentially comprises the figures for Feintool International Holding AG, the German sub-holding company Feintool Holding GmbH and the real estate company included in the sub-holding company HL Holding AG.

    The operating profit/loss comprises all operating income and expenses directly attributable to the individual segments. This includes all cross-segment expenses, which are charged directly. Feintool’s financing is undertaken at the Group level. Financial expenses and income, financial liabilities as well as taxes, are therefore reported only at the Group level and do not appear in the segment reports. Feintool generates 18.4 % (previous year 17.2 %) of consolidated sales with one customer. Income is generated in all segments. With the other customers, the share is less than 12.3 % (previous year 12.8 %) in each case.

    There is no reconciliation of data in management reports and data contained in the financial reports, as internal and external reporting are subject to the same valuation principles.

    2 ACQUISITION OF INVESTMENTS

    On July 31, 2018, Feintool Holding GmbH, Bayreuth, Germany, acquired 100 % of the shares of the German company Stanzwerk Jessen GmbH with its subsidiaries Jela GmbH, SLTJ GmbH and Stanz- und Lasertechnik Jessen GmbH. SLTJ GmbH merged after that with Stanz- und Lasertechnik GmbH. The name of Stanz- und Lasertechnik Jessen GmbH was then changed to Feintool System Parts Jessen GmbH.

    01/01 – 12/31/2019

    08/01 – 12/31/2018

    2.1 Unconsolidated net operating income of the interests acquired

    in CHF 1 000

    in CHF 1 000

    Net Sales

    37 181

    18 123

    EBIT

    2 185

    1 547

    2.2 Consideration for the interests acquired

    in CHF 1 000

    Cash and cash equivalents

    43 257

    Total consideration

    43 257

    2.3 Identifiable assets and liabilities

    in CHF 1 000

    Cash and cash equivalents

    3 691

    Trade and other receivables

    4 853

    Inventories

    3 718

    Work in progress

    1 009

    Property, plant and equipment

    12 449

    Intangible assets 1)

    19 261

    Financial liabilities

    -34 321

    Trade and other payables

    -5 373

    Deferred tax liabilities

    -6 464

    Net identifiable assets

    -1 176

    1) In intangible assets is mainly the value of customer contracts and relationships contained.

    2.4 Goodwill at the acquisition date

    in CHF 1 000

    Total consideration

    43 257

    Net identifiable assets

    1 176

    Goodwill 1)

    44 433

    1) Goodwill at historical rates on the acquisition date. For the Feintool Group, goodwill represents the value that it would have had to pay in order to independently set up a profitable “greenfield” operation for the production of pressed parts from electrical sheets (qualified employees, market access, etc.). The acquisition of this company is related to the expected increase in e-mobility.

    The costs incurred by the Feintool Group for the acquisition of Stanzwerk Jessen GmbH and it’s subsidiaries Jela GmbH, SLTJ GmbH and Stanz- und Lasertechnik Jessen GmbH amounted to around CHF 0.8 million. In particular, this includes the fees of external lawyers and advisers. The costs were recognized in other operating expenses in the previous year.

    3 Net sales

    2019

    2018

    in CHF 1 000

    in CHF 1 000

    Gross sales 1)

    639 143

    687 828

    Sales deductions

    -6 459

    -8 277

    Total net sales

    632 684

    679 551

    1) Total gross sales include “sales generated over a period” of CHF 33.7 million (previous year CHF 56.7 million). These sales were generated in the Fineblanking Technology segment. For a further breakdown of sales, see Section 1.1 Segment information.

    4 capitalized Self-generated assets

    2019

    2018

    in CHF 1 000

    in CHF 1 000

    Self-generated presses

    181

    420

    Self-generated tools

    829

    483

    Capitalized development costs

    1 302

    1 467

    Other capitalized self-generated assets

    46

    57

    Capitalized self-generated assets

    2 358

    2 427

    5 Personnel expenses

    2019

    2018

    in CHF 1 000

    in CHF 1 000

    Salaries and wages

    158 835

    164 115

    Employee welfare expenses

    29 022

    24 712

    Other personnel expenses

    6 547

    6 081

    Total personnel expenses

    194 404

    194 908

    of which direct personnel expenses 1)

    102 576

    102 474

    of which indirect personnel expenses

    91 828

    92 434

    1) Direct personnel expenses are personnel expenses that can be directly assigned to the production process.

    The Group employed 2 641 staff at the end of the year under review (previous year 2 697) and 91 trainees (previous year 82).

    6 Other operating expenses

    2019

    2018

    in CHF 1 000

    in CHF 1 000

    Repair and maintenance

    56 886

    60 066

    EDV costs 1)

    3 325

    n/a

    Rental and leasing expenses 2)

    1 676

    5 173

    thereof expenses for short-term leases

    827

    n/a

    thereof expenses for low-value assets

    512

    n/a

    thereof miscellaneous

    337

    n/a

    Sales and marketing expenses

    2 395

    4 138

    Administration and distribution expenses

    10 979

    11 647

    Loss on the disposal of property, plant and equipment

    362

    541

    Taxes and duties (not including taxes on income)

    639

    1 614

    Other expenses

    1 941

    2 606

    Total other operating expenses

    78 203

    85 785

    1) This item will be presented separately from 2019 onwards. It is not possible to determine the corresponding figures for the previous year because the figures for the previous year are cumulative. The corresponding item was recognized under maintenance and repairs in the previous year.

    2) Rental and lease expenses were not recognized in more detail until the 2018 financial year. Due to the introduction of IFRS 16, this classification will be applied from the current financial year onwards.

    7 Other operating income

    2019

    2018

    in CHF 1 000

    in CHF 1 000

    Gain on the disposal of property, plant and equipment

    203

    1 013

    Other income 1)

    1 837

    1 725

    Total other operating income

    2 040

    2 738

    1) “Other income” includes income from staff restaurants, as well as sub-letting.

    8 Financial expenses

    2019

    2018

    in CHF 1 000

    in CHF 1 000

    Interest expense

    3 674

    3 859

    Other finance costs 1)

    771

    904

    Foreign exchange losses

    20 359

    17 104

    Total financial expenses

    24 804

    21 867

    1) Besides bank charges, other financial expenses include annual amortization of establishing cost for the promissory note/syndicated loan, market making costs and valuation expenses from hedging.

    9 Financial income

    2019

    2018

    in CHF 1 000

    in CHF 1 000

    Interest income

    139

    68

    Other financial income 1)

    64

    8

    Foreign exchange gains

    20 937

    18 277

    Total financial income

    21 140

    18 353

    1) Other financial income comprises valuation income from hedging.

    10 Income taxes

    2019

    2018

    10.1 Analysis of income taxes

    in CHF 1 000

    in CHF 1 000

    Tax credits/charges for the reporting period

    5 217

    11 752

    Tax credits/charges from previous years

    -393

    -447

    Deferred income taxes

    -279

    2 219

    Total income taxes

    4 545

    13 524

    2019

    2018

    10.2 Analysis of tax charge

    in CHF 1 000

    in CHF 1 000

    Earnings before taxes

    15 196

    44 002

    Weighted tax rate as % 1)

    26.5 %

    24.1 %

    Expected overall tax expense

    4 027

    10 612

    Non tax-deductible expense

    357

    348

    Non-taxable income

    -603

    -454

    Unrecognized tax loss carryforwards from the current year 2)

    1 774

    3 376

    Use of unrecognized loss carryforwards from previous years

    6

    Recognition of previously unrecognized loss carryforwards

    -428

    -111

    Use of unrecognized deductible temporary differences

    -124

    Tax credits/charges from previous years

    -393

    -447

    Effect of changes in tax rates

    -143

    -57

    Reassessment of prior year

    -329

    52

    Other effects

    277

    329

    Effective income tax expense

    4 545

    13 524

    Effective income tax expense as %

    29.9 %

    30.7 %

    1) The weighted tax rate is calculated from the income tax rates likely to apply to the income of the individual Group companies in the respective tax jurisdiction, which naturally varies according to the actual earnings figures.

    2) Unrecognized tax loss carryforwards from the current year refer to companies in Czeck Republic and China.

    11 Deferred taxes

    12/31/2019

    12/31/2018

    11.1 Carrying amounts

    in CHF 1 000

    Deferred tax assets

    Deferred tax liabilities

    Deferred tax assets

    Deferred tax liabilities

    Deferred taxes for temporary differences

    Current assets

    3 618

    1 470

    2 756

    1 442

    Non-current assets

    3 401

    31 623

    4 515

    30 893

    Provisions and other liabilities

    2 359

    1 157

    1 527

    2 605

    Employee benefit plans

    13 514

    792

    12 805

    527

    Loss carryforwards

    9 322

    9 046

    Other temporary differences

    969

    339

    Total gross values

    33 182

    35 042

    30 988

    35 467

    Netting

    -16 121

    -16 121

    -14 536

    -14 536

    Total carrying amounts

    17 061

    18 921

    16 452

    20 931

    of which recognized in the balance sheet as deferred tax assets

    17 061

    16 452

    of which recognized in the balance sheet as deferred tax liabilities

    18 921

    20 931

    Net deferred tax assets/liabilities

    1 860

    4 479

    Feintool does not disclose deferred taxes related to earnings not distributed as dividends, which will presumably be reinvested permanently in subsidiaries. The tax effect is estimated as not material.

    12/31/2019

    12/31/2018

    11.2 Statement of net deferred taxes assets/liabilities

    in CHF 1 000

    in CHF 1 000

    Start of period

    -4 479

    3 879

    Recognition and reversal of temporary differences

    136

    -2 276

    Temporary differences arising on tax rate changes

    143

    57

    Temporary differences arising on acquisition/sale of entities

    -6 464

    Temporary differences recognized directly in equity

    2 061

    240

    Translation differences

    279

    85

    End of period

    -1 860

    -4 479

    The temporary differences arising on the acquisition/sale of entities in the previous year relate to the acquisition of Stanzwerk Jessen GmbH and its subsidiaries.

    11.3 Unrecognized tax assets

    Deferred tax assets, including those for tax loss carryforwards and expected tax credits, are only recognized if it is probable that profits will be available against which the loss carryforwards and tax credits can be utilized.

    12/31/2019

    12/31/2018

    11.4 Tax loss carryforwards

    in CHF 1 000

    in CHF 1 000

    Total tax loss carryforwards

    69 476

    69 781

    of which recognized loss carryforwards

    39 661

    38 978

    Total unrecognized tax loss carryforwards

    29 815

    30 803

    of which expiring within 1 year

    1 218

    2 050

    of which expiring in one to five years

    8 969

    9 460

    of which expiring in more than five years

    19 628

    19 293

    Tax effects of unrecognized tax loss carryforwards

    7 778

    8 174

    Income taxes and information regarding the tax charge are shown in Note 10.

    12 Consolidated earnings per share

    2019

    2018

    12.1 Average number of shares outstanding

    Number

    Number

    Average number of shares outstanding

    4 914 842

    4 602 008

    Less number of treasury shares (weighted)

    -13 313

    -5 366

    Average number of shares outstanding – basic

    4 901 529

    4 596 642

    Average number of shares outstanding – diluted

    4 901 529

    4 596 642

    2019

    2018

    12.2 Net income Feintool Group

    in CHF 1 000

    in CHF 1 000

    Net income of the Feintool Group – basic

    10 651

    30 478

    Net income of the Feintool Group – diluted

    10 651

    30 478

    No dilution effects were recognized in the financial year.

    2019

    2018

    12.3 Earnings per share

    in CHF

    in CHF

    Basic earnings per share

    2.17

    6.63

    Diluted earnings per share

    2.17

    6.63

    Earnings per share are calculated on the basis of the consolidated net income for the financial year divided by the average number of shares in circulation. No dilution effects were recognized in the financial year.

    13 Receivables

    13.1 Trade and other receivables

    12/31/2019

    12/31/2018

    in CHF 1 000

    in CHF 1 000

    Trade receivables

    66 769

    85 757

    Valuation allowances

    -976

    -1 661

    Total trade receivables (net)

    65 793

    84 096

    Bills receivable

    5 798

    6 533

    Outstanding VAT credits

    9 183

    8 221

    Receivables from ABS program 1)

    1 667

    Other receivables

    2 539

    2 179

    Total trade and other receivables

    84 980

    101 029

    1) As of December 31, 2019, trade receivables with a value of kCHF 24 854 were sold under factoring and ABS programs (previous year factoring: kCHF 11 389).

    13.2 Maturity profile of receivables

    in CHF 1 000

    Carrying amount

    Not yet due

    Overdue up to 30 days

    Overdue for 31-90 days

    Overdue for 91-180 days

    Overdue for more than 180 days

    12/31/2019

    Trade receivables

    66 769

    50 597

    9 356

    3 300

    1 104

    2 412

    Valuation allowances

    -976

    -17

    -134

    -32

    -793

    Total receivables (net)

    65 793

    12/31/2018

    Trade receivables

    85 757

    64 796

    14 159

    4 006

    1 658

    1 138

    Valuation allowances

    -1 661

    -2

    -130

    -232

    -267

    -1 030

    Total receivables (net)

    84 096

    2019

    2018

    13.3 Valuation allowance on receivables

    in CHF 1 000

    in CHF 1 000

    Start of period

    -1 661

    -2 708

    Recognized

    -512

    -1 130

    Reversed

    1 034

    2 013

    Used

    163

    164

    End of period

    -976

    -1 661

    14 Inventories

    12/31/2019

    12/31/2018

    in CHF 1 000

    in CHF 1 000

    Raw material

    37 834

    41 738

    Finished and semi-finished goods

    51 416

    53 243

    Work in progress

    18 040

    20 457

    Valuation allowances on inventories

    -22 051

    -22 017

    Total inventories

    85 239

    93 421

    15 contract assets

    12/31/2019

    12/31/2018

    in CHF 1 000

    in CHF 1 000

    Contract assets

    16 283

    14 079

    Prepayments received

    -7 218

    -7 236

    Valuation allowances on construction contracts

    -147

    -419

    Total net contract assets

    8 918

    6 424

    The gross margin recorded under contract assets as at the closing date amounted to 35.0 % (previous year 38.0 %).

    16 Prepaid expenses and accrued income

    12/31/2019

    12/31/2018

    in CHF 1 000

    in CHF 1 000

    Prepaid expenses for customer orders 1)

    1 676

    807

    Issue costs of promissory note and syndicated loan

    565

    782

    Rental agreement 2)

    575

    Tax accruals

    2 295

    2 770

    Scrap and material income

    793

    1 203

    Other prepaid expenses and accrued income

    780

    642

    Total prepaid expenses and accrued income

    6 109

    6 779

    1) Prepaid expenses for customer orders includes expenses for constructions that are assigned to a specific order. These prepaid expenses are released on a straight-line basis over the course of the order.

    2) In 2019 Oberthausen purchased the rented property therefore rental agreement has been terminated.

    17 Property, plant and equipment

    2019

    2018

    17.1 Overview assets

    in CHF

    in CHF

    Own property, plant and equipment

    306 669

    297 874

    Right-of-use from leased assets

    51 223

    49 142

    Total carrying amounts

    357 892

    347 016

    17.2 Summary of own property, plant and equipment

    in CHF 1 000

    Real estate

    Machinery

    Other property, plant and equipment

    Total

    Cost of acquisition as at 01/01/2018

    106 838

    291 150

    45 734

    443 722

    Additions

    3 331

    15 170

    62 850

    81 351

    Disposals

    -785

    -4 985

    -534

    -6 304

    Reclassifications 1)

    8 866

    24 774

    -34 888

    -1 248

    Change in scope of consolidation 2)

    9 053

    3 176

    220

    12 449

    Translation differences

    -1 492

    -3 159

    -1 716

    -6 367

    As at 12/31/2018

    125 811

    326 126

    71 666

    523 603

    Additions

    2 779

    11 539

    36 117

    50 435

    Disposals

    -41

    -6 265

    -1 304

    -7 610

    Reclassifications 1)

    16 458

    24 304

    -40 672

    90

    Translation differences

    -3 186

    -8 033

    -1 834

    -13 053

    As at 12/31/2019

    141 821

    347 671

    63 973

    553 465

    Accumulated depreciation as at 01/01/2018

    -36 860

    -155 486

    -10 436

    -202 782

    Additions

    -3 992

    -23 424

    -1 781

    -29 197

    Disposals

    740

    3 154

    477

    4 371

    Translation differences

    254

    1 389

    236

    1 879

    As at 12/31/2018

    -39 858

    -174 367

    -11 504

    -225 729

    Additions

    -4 257

    -26 468

    -2 230

    -32 955

    Disposals

    36

    6 122

    782

    6 940

    Reclassifications

    -772

    -772

    Translation differences

    821

    4 572

    327

    5 720

    As at 12/31/2019

    -43 258

    -190 913

    -12 625

    -246 796

    Net carrying amounts

    As at 12/31/2018

    85 953

    151 759

    60 162

    297 874

    As at 12/31/2019

    98 563

    156 758

    51 348

    306 669

    1) Reclassifications include positions of immaterial assets amounting to kCHF -323 (previous year kCHF -157). There was no reclassification from immaterial assets to fixed assets (previous year kCHF 2 319).

    2) The change in the scope of consolidation in previous year applies to Stanzwerk Jessen GmbH with its subsidiaries.

    As part of the transition to IFRS 16, the values of finance leases (as of January 1, 2018, acquisition cost of kCHF 67 010 and accumulated amortization of kCHF 27 971) were also transferred from the previous year to the separate statement of changes in noncurrent assets (section 17.3).

    Other property, plant and equipment includes installations, vehicles and assets under construction. Assets under construction amounted to kCHF 39 300 in the year under review (previous year kCHF 48 874). Gains on asset disposals are recognized as other operating income (Note 7). A gain of kCHF 203 (previous year kCHF 1 013) was generated in the reporting year. Losses on asset disposals are stated as other operating expenses (Note 6). In the year under review, this loss totaled kCHF 362 (previous year kCHF 541). As at December 31, 2019, the Feintool Group had entered into purchase commitments for the purchase of property, plant and equipment totaling approx. CHF 42.4 million (previous year CHF 13.6 million).

    17.3 Summary of leased property, plant and equipment

    in CHF 1 000

    Real estate

    Machinery

    Other property, plant and equipment

    Total

    Cost of acquisition as at 01/01/2018

    67 010

    67 010

    Additions

    16 802

    16 802

    Disposals

    -4 708

    -4 708

    Reclassifications

    3 412

    3 412

    Translation differences

    -2 296

    -2 296

    As at 12/31/2018

    80 220

    80 220

    As at 01/01/2019 1)

    80 220

    80 220

    Recognition of right-of-use asset on initial applicaton of IFRS 16

    9 235

    431

    1 968

    11 634

    Adjusted balance at 01/01/2019 1)

    9 235

    80 651

    1 968

    91 854

    Additions

    -30

    2 354

    719

    3 043

    Disposals

    -23

    -3 961

    -242

    -4 226

    Reclassifications

    -510

    81

    -429

    Translation differences

    -48

    -2 625

    -37

    -2 710

    As at 12/31/2019

    9 134

    75 909

    2 489

    87 532

    Accumulated depreciation as at 01/01/2018

    -27 971

    -27 971

    Additions

    -8 255

    -8 255

    Disposals

    4 408

    4 408

    Reclassifications

    Translation differences

    740

    740

    As at 12/31/2018

    -31 078

    -31 078

    Additions

    -1 766

    -7 820

    -1 015

    -10 601

    Disposals

    4

    3 432

    77

    3 513

    Reclassifications

    772

    772

    Translation differences

    20

    1 056

    9

    1 085

    As at 12/31/2019

    -1 742

    -33 638

    -929

    -36 309

    Net carrying amounts

    As at 12/31/2018

    49 142

    49 142

    As at 01/01/19

    9 235

    49 573

    1 968

    60 776

    As at 12/31/2019

    7 392

    42 271

    1 560

    51 223

    1) As part of the transition to IFRS 16, on January 1, 2019, leases were recognized as right-of-use assets with a value of CHF 11.6 million. Detailed information can be found on page 34.

    In the 2019 financial year, interest expenses from lease liabilities were incurred in the amount of CHF 652 000 (previous year: CHF 650 000).

    18 Intangible assets

    18.1 Summary of intangible assets

    in CHF 1 000

    Goodwill

    Capitalized development costs 1)

    Software

    Other intangible assets 2)

    Total

    Cost of acquisition as at 01/01/2018

    23 177

    7 360

    6 808

    19 267

    56 612

    Additions

    1 934

    352

    731

    3 017

    Disposals

    -19

    -70

    -89

    Reclassifications

    157

    -2 319

    -2 162

    Change in scope of consolidation 3)

    44 433

    19 261

    63 694

    Translation differences

    -1 471

    -94

    -888

    -2 453

    As at 12/31/2018

    66 139

    9 294

    7 204

    35 982

    118 619

    Additions

    1 516

    1 331

    4

    2 851

    Disposals

    -170

    -170

    Reclassifications

    321

    321

    Translation differences

    -2 367

    -155

    -1 177

    -3 699

    As at 12/31/2019

    63 772

    10 810

    8 701

    34 639

    117 922

    Accumulated depreciation as at 01/01/2018

    -2 540

    -4 802

    -5 538

    -12 880

    Additions

    -1 482

    -981

    -2 284

    -4 747

    Disposals

    3

    3

    Reclassifications

    7

    7

    Translation differences

    68

    179

    247

    As at 12/31/2018

    -4 022

    -5 705

    -7 643

    -17 370

    Additions

    -1 684

    -972

    -2 597

    -5 253

    Disposals

    2

    164

    166

    Reclassifications

    -1

    -1

    Translation differences

    125

    254

    379

    As at 12/31/2019

    -5 706

    -6 551

    -9 822

    -22 079

    Net carrying amounts

    As at 12/31/2018

    66 139

    5 272

    1 499

    28 339

    101 249

    As at 12/31/2019

    63 772

    5 104

    2 150

    24 817

    95 843

    1) Research and development expenses amounting to kCHF 4 469 (previous year kCHF 4 381) were charged to the consolidated statement of comprehensive income.

    2) Other intangible assets primarily comprise patents and licenses, customer relations purchased within acquisitions as well as land-use-rights.

    3) The previous year change in the scope of consolidation applies to Stanzwerk Jessen GmbH with its subsidiaries.

    12/31/2019

    12/31/2018

    18.2 Other information – Goodwill

    in CHF 1 000

    in CHF 1 000

    Cash-generating unit System Parts China

    11 234

    11 593

    Cash-generating unit System Parts Fineblanking Europe

    3 291

    3 417

    Cash-generating unit System Parts Forming Europe

    6 941

    7 207

    Cash-generating unit System Parts Stamping Europe

    42 306

    43 923

    Total carrying amounts

    63 772

    66 139

    The following impairment test was performed for all business units in the financial year: The recoverable amounts for the cash-generating units are calculated on the basis of the value in use. The impairment test for goodwill was calculated using the DCF method (discounted cash flow method). The cash flows were discounted using the WACC (discount rate after tax). The future cash flows are based on a budget approved by the management for a period of three years and an extended projection over two years plus the residual value.

    The goodwill of the cash-generating unit System Parts Stamping Europe is allocated to Feintool System Parts Jessen GmbH and its subsidiaries acquired in the financial year 2018. The acquisition of this company is related to the expected increase in e-mobility.

    This development is expected to continue for at least the next ten years. For this reason, the period of future cash flows has been set at a total of eight years.

    2019

    2018

    18.3 Parameter for Discount rate

    System Parts China

    System Parts Europe

    System Parts China

    System Parts Europe

    Discount rate after taxes

    9.0

    7.9

    9.5

    8.3

    Market returns

    6.0

    6.0

    6.0

    6.0

    Growth rate in residual value

    2.5

    1.6

    2.5

    1.6

    The cash-generating units System Parts Fineblanking Europe, Forming Europe and Stamping Europe are included in the System Parts Europe group. As of the date of the impairment test, the recoverable amount of the cash-generating unit System Parts China exceeded the net carrying amount by kCHF 12 936 (previous year kCHF 10 273). An increase in the weighted average cost of capital to 9.75 % (previous year 10.1 %) leads to a situation where the value in use equates the net carrying amount. If the discount rate were to increase by 1 % (after taxes), the value in use for all other cash-generating units would still be above the value of the net assets plus goodwill.

    19 Financial assets

    12/31/2019

    12/31/2018

    in CHF 1 000

    in CHF 1 000

    Loans to third parties

    112

    88

    Receivables from the financing of customer tools

    1 940

    1 349

    Rental deposit accounts

    287

    313

    Financial assets

    2 339

    1 750

    The weighted average interest rate in the reporting period was 0.4 % (previous year 0.9 %). Loans to third parties consist of marketable securities and loans to staff. Receivables from the financing of customer tools refers to tools the customer has ordered but not yet or only partially paid for. Amortization is based on either the parts produced or an agreed payment plan. Ownership is normally transferred upon acceptance of the tool.

    20 Financial liabilities

    12/31/2019

    12/31/2018

    20.1 Current financial liabilities

    in CHF 1 000

    in CHF 1 000

    Current liabilities to banks

    27 583

    62 316

    Current portion of non-current liabilities to banks

    518

    530

    Current portion of lease liabilities

    11 818

    10 944

    Total current financial liabilities

    39 919

    73 790

    The weighted average interest rate in the reporting period was 1.7 % (previous year 1.7 %).

    12/31/2019

    12/31/2018

    20.2 Non-current financial liabilities

    in CHF 1 000

    in CHF 1 000

    Non-current promissory note

    70 551

    73 249

    Non-current liabilities to banks

    48 744

    5 960

    Non-current lease liabilities

    25 027

    25 741

    Total non-current financial liabilities

    144 322

    104 950

    The weighted average interest rate in the year under review was 1.4 % (previous year 1.3 %).

    On July 15, 2016, a promissory note was issued in the amount of EUR 65 million. The issuer, with a guarantee from Feintool International Holding AG, is Feintool Holding GmbH based in Germany. The loan is divided into three tranches with different maturities:

    – EUR 25 million, term until fiscal year 2021, fixed interest rate of 0.90 % 

    – EUR 25 million, term until fiscal year 2023, fixed interest rate of 1.10 % 

    – EUR 15 million, term until fiscal year 2026, fixed interest rate of 1.66 %

    Standard covenants are defined in the loan agreement. The only material covenant to be complied with is:

    – Equity ratio > 25 %

    As of December 31, 2019, all the covenants had been met.

    On June 13, 2017, Feintool signed a CHF 90 million syndicated loan agreement in cash loans with six banks with an option of increase about CHF 60 million. On May 17, 2018, this contract was extended and will now run until June 13, 2023. The syndicated loan defines a number of covenants, the principal one being:

    – Equity ratio > 30 %

    – Net senior debt/EBITDA < 3.0x

    As of December, 31st 2019, CHF 44.5 million of the syndicated loan had been used (previous period CHF 34.1 million) and all the covenants had been met. In accordance with the principle of substance over form, beginning in 2019, the syndicated loan will be recognized as a noncurrent financial liability, although the individual installments each have a term of less than 360 days. As a result of the difficult market environment at present, hardly any repayments are planned for the next year. The extension of the individual installments has been confirmed until the end of the contract, provided that the covenants are met.

    Credit agreements concluded on a bilateral basis with various banks also contain standard covenants. As of December 31, 2019, all the covenants had been met.

    If the Group or companies were unable to meet one or several covenants of the syndicated loan, promissory note or bilateral debts, the banks would have the right to terminate the loans at short notice.

    As at December 31, 2019, Feintool has CHF 45.5 million (previous year CHF 55.9 million) in unused, confirmed creditlines at the bank.

    2019

    2018

    20.3 Reconciliation of financial liabilities

    in CHF 1 000

    in CHF 1 000

    Start of period

    178 740

    134 247

    Cash flows net 1)

    -3 474

    -2 768

    Non-cash changes

    14 724

    42 765

    thereof acquisition

    34 321

    thereof new leases 2)

    14 724

    8 444

    Translation differences

    -5 749

    4 496

    End of period

    184 241

    178 740

    1) This item includes the borrowing of interest-bearing debt of kCHF 13 644 (previous year kCHF 74 800), the repayment of interest-bearing lease liabilities of kCHF 14 674 (previous year kCHF 23 627) and the repayment of interest-bearing debt of kCHF 2 444 (previous year kCHF 53 941).

    2) As part of the first-time adoption of IFRS 16, new leases were recognized with a value of kCHF 11 634.

    21 Trade and other payables

    12/31/2019

    12/31/2018

    in CHF 1 000

    in CHF 1 000

    Trade payables

    58 748

    50 052

    Prepayments from third parties

    5 177

    7 220

    Notes payable

    4 667

    4 992

    Liabilities from factoring and ABS 1)

    6 678

    2 088

    Social security liabilities

    4 339

    4 512

    Outstanding VAT liabilities

    1 138

    1 132

    Other liabilities

    1 858

    2 066

    Total trade and other payables

    82 605

    72 062

    1) Liabilities from factoring and ABS include all customer payments not yet forwarded and the corresponding liability in respect to the continuig involvement from ABS. Further information on the ABS program can be found on page 38.

    22 Accrued expenses and deferred income

    12/31/2019

    12/31/2018

    in CHF 1 000

    in CHF 1 000

    Accruals for salary, bonus, overtime, additional hours

    9 564

    11 552

    Outstanding accounts payable

    8 461

    11 193

    Outstanding installations and other work to be fulfilled in relation to customer orders

    11 700

    12 821

    Tax accruals

    2 273

    Accruals for environmental risks

    157

    855

    Other accrued expenses and deferred income

    1 448

    658

    Total accrued expenses and deferred income

    33 603

    37 079

    23 Provisions

    in CHF 1 000

    Warranties

    Other provisions

    Total

    Total provisions as at 01/01/2018

    2 380

    5 991

    8 371

    Recognized

    1 821

    5 072

    6 893

    Used

    -108

    -2 113

    -2 221

    Reversed

    -424

    -1 868

    -2 292

    Translation differences

    -17

    -241

    -258

    Total provisions as at 12/31/2018

    3 652

    6 841

    10 493

    of which current provisions

    1 868

    6 246

    8 114

    of which non-current provisions

    1 787

    592

    2 379

    Recognized

    377

    7 214

    7 591

    Used

    -188

    -3 284

    -3 472

    Reversed

    -130

    -3 024

    -3 154

    Translation differences

    -14

    -261

    -275

    Total provisions as at 12/31/2019

    3 697

    7 486

    11 183

    of which current provisions

    1 818

    6 928

    8 746

    of which non-current provisions

    1 882

    555

    2 437

    Provisions for actual warranty events cover the estimated cost arising from warranty services provided by the Group companies, which the company must cover for contractual reasons or due to its conduct. The outflow of funds occurs as and when the warranties are taken up, over a maximum of three years.

    “Other provisions” include provisions for restructuring, scrap rebates, customer complaints, price reductions that were not passed on and various small items. The expected duration of the outflow of funds is 1 to 2 years.

    24 Employee benefit plans

    12/31/2019

    12/31/2018

    24.1 Overview of net employee benefit liabilities (assets)

    in CHF 1 000

    in CHF 1 000

    Net defined benefit liability (asset)

    62 514

    56 924

    Anniversary benefits

    2 143

    2 020

    Other benefit obligations

    454

    105

    Total net employee benefit liabilities (assets)

    65 111

    59 049

    The assets of the employee benefit plans do not include treasury shares (previous year kCHF 0). The Group uses assets (tangible assets) belonging to the retirement fund with a value of kCHF 6 579 (previous year kCHF 6 619). The “Net defined benefit liability (asset)” item contains various benefit plans in Switzerland, Germany and Japan. The net liability from the Swiss plan amounts to kCHF 51 367 (previous year kCHF 47 329), the German plan to kCHF 10 281 (previous year kCHF 8 739) and the Japanese plan to kCHF 866 (previous year kCHF 856). On account of the materiality of the figures, only the Swiss and German plans are shown in Note 24.3 onwards.

    Swiss plan

    The majority of Feintool employees in Switzerland are insured against the risks of death, old age and disability through the semi-autonomous Feintool Group pension fund. The benefits provided by the Feintool Group’s pension fund exceed the minimum level prescribed by the Federal Occupational Old Age, Survivors’ and Disability Pension Act (BVG). The ordinary employer contributions comprise risk contributions of 2.2 % and age-related contributions of 5.5 %-14.0 % of the insured salary for credits to individual retirement assets. The typical retirement age is 65 for men and 64 for women. Employees have a right to early retirement from age 58, in which case the conversion rate is reduced in accordance with the longer expected pension payment period and the absence of contribution payments prior to retirement. Furthermore, employees can withdraw their retirement pension in full or in part as a lump sum. The amount of pension paid out is arrived at from the conversion rate, which is applied to the insured individual’s accumulated retirement savings at the time of retirement. In the case of retirement at age 65/64, the conversion rate is 5.6 % (previous year 5.8 %). Afterwards, it will fall by 0.2 % each year until it reaches 5.2 % in financial year 2021. This amendment to the regulations of the Swiss pension fund has been agreed on in financial year 2016. The accumulated retirement assets are arrived at from the employee and employer contributions paid into the individual savings account of each insured member, together with the interest credited to the retirement assets, vested benefits brought in and any voluntary payments made by the insured person. The interest rate paid on the retirement assets is set by the Board of Trustees each year.

    The legal form of the Feintool Group’s pension fund is that of a foundation. The Board of Trustees, which comprises an equal number of employee and employer representatives, is responsible for managing the foundation. The duties of the pension fund Board of Trustees are laid down in the BVG and in the rules of the pension fund. A temporary shortfall is permitted under the BVG. The Board of Trustees is required to take measures to rectify any underfunding within a reasonable period. Under the BVG, additional employer and employee contributions may be incurred if the pension fund exhibits a significant shortfall (shortfall < 90 % = considerable shortfall; in this instance, contributions to rectify the situation are essential). In these cases, the contributions to rectify the situation are split between the employer and the employee; the law does not require the employer to assume more than 50 % of the additional contributions. The BVG funding ratio of the Feintool Group pension fund was around 93.6 % as at December 31, 2019 (previous year 90.6 %). The Board of Trustees is the central coordination and monitoring body for the management of the assets. The pension assets are administered by a mandated, independent financial services provider. The Board of Trustees determines the investment strategy and tactical bandwidths in accordance with the statutory provisions. In accordance with its guidelines, the financial services provider is able to decide on the asset allocation subject to the statutory requirements concerning asset classes and bandwidths. In the financial year 2016, the company that established the pension fund committed to the addition of another CHF 1.2 million annually for the restructuring of the pension fund for the Feintool Group – along with the standard contributions – until a 100 % degree of coverage is achieved.

    German plans

    The German plans comprise:

  • A “Works Agreement on the Introduction of an Occupational Pension Plan” concluded on June 25, 1998 that was terminated effective December 31, 2005 with the announcement that new employees would no longer be able to join the pension scheme from January 1, 2006, and that any entitlements already accrued would be frozen effective December 31, 2005.
  • Individual commitments to certain managers
  • This essentially includes the right to a lifetime pension payable upon retirement, disability and/or death. The level of monthly pension entitlement on reaching the retirement age of 65, and on reaching age 63 at the earliest, amounts to 50 % of the annual pensionable income broken down into a monthly amount; the annual pensionable income is deemed to be the fixed annual income at the time the pension becomes due for payment.

    Japanese plan

    The Japanese plan includes all employees who have worked at the company for three or more years. Employees are entitled to a pension from age 60.

    Defined benefit obligation

    Plan assets

    Net defined benefit liability (asset)

    2019

    2018

    2019

    2018

    2019

    2018

    24.2 Change in defined benefit liability (asset)

    in CHF 1 000

    in CHF 1 000

    in CHF 1 000

    in CHF 1 000

    in CHF 1 000

    in CHF 1 000

    As at January 1

    180 758

    184 358

    -123 834

    -127 004

    56 924

    57 354

    Recognized in income statement

    Current service cost

    4 838

    4 894

    4 838

    4 894

    Interest cost (income)

    1 494

    1 180

    -993

    -752

    501

    428

    General and administrative expenses

    217

    186

    217

    186

    Total

    6 332

    6 074

    -776

    -566

    5 556

    5 508

    Recognized in other comprehensive income

    Expense/(income) from remeasurement of

    Actuarial loss/(gain) due to:

    Change in demographic assumptions

    34

    34

    Change in financial assumptions

    15 519

    -5 085

    15 519

    -5 085

    Experience adjustment

    -2 512

    -172

    -2 512

    -172

    Expense/(income) on plan assets (excluding interest income)

    -7 097

    4 983

    -7 097

    4 983

    Translation differences

    -438

    -294

    66

    -26

    -372

    -320

    Total

    12 569

    -5 517

    -7 031

    4 957

    5 538

    -560

    Other

    Contributions from employer

    -396

    -468

    -5 108

    -4 910

    -5 504

    -5 378

    Contributions from employees

    3 076

    3 228

    -3 076

    -3 228

    Benefits paid out

    -7 875

    -6 917

    7 875

    6 917

    Total

    -5 195

    -4 157

    -309

    -1 221

    -5 504

    -5 378

    As at December 31

    194 464

    180 758

    -131 950

    -123 834

    62 514

    56 924

    of which Swiss plans

    179 702

    167 839

    -128 335

    -120 510

    51 367

    47 329

    of which German plans

    11 645

    9 913

    -1 364

    -1 174

    10 281

    8 739

    of which Japanese plans

    3 117

    3 002

    -2 251

    -2 146

    866

    856

    The expected contributions made to the employee benefit plans for the following financial year amount to CHF 5.5 million in the case of employer contributions and CHF 3.1 million in the case of employee contributions.

    2019

    2018

    24.3 Plan assets of defined benefit plans

    in  %

    in  %

    Equities

    8.9

    7.2

    Bonds

    65.9

    65.8

    Real estate (including real estate funds)

    15.1

    14.9

    Other

    1.3

    1.2

    Cash

    8.9

    10.9

    Total

    100.0

    100.0

    Swiss plan

    The plan assets are invested by an AAA-rated bank in line with the predefined strategy. The following limits apply to investment:

  • Equities < 50 %
  • Bonds < 70 %
  • Real estate < 30 %
  • Alternative investments 0 %
  • Currencies other than the CHF are hedged. With the exception of directly held real estate, all investments are traded on a public exchange.

    German plan

    The German plan includes a reinsurance policy to cover pension liabilities. Assets from the insurance policy are included in plan assets.

    2019

    2018

    24.4 Defined benefit plan obligations – actuarial assumptions

    in  %

    in  %

    Swiss plan

    Discount rate

    0.3

    0.8

    Future increase in wages and salaries

    1.3

    1.3

    German plans

    Discount rate

    0.8

    1.8

    Future increase in wages and salaries

    0.0

    0.0 - 2.0

    Future increase in pensions

    1.8 - 2.0

    1.8 - 2.0

    2019

    2018

    24.5 Defined benefit plan obligations – actuarial assumptions

    in years

    in years

    Swiss plan

    Life expectancy at age 65 for newly retired persons

    Men

    22.6

    22.5

    Women

    24.7

    24.5

    Life expectancy at age 65 for employees currently aged 45

    Men

    24.4

    24.3

    Women

    26.4

    26.4

    German plans

    Life expectancy at age 65 for newly retired persons

    Men

    20.4

    20.2

    Women

    23.9

    23.8

    Life expectancy at age 65 for employees currently aged 45

    Men

    23.2

    23.0

    Women

    26.1

    26.0

    As at December 31, 2019, the weighted-average duration of pension benefit obligations was 15.3 years for the Swiss plan (previous year 14.4 years) and 19.2 - 19.8 years for the German plans (previous year 18.3 - 19.4 years). Feintool uses the BVG 2015 G mortality table in Switzerland and Heubeck in Germany for the hypothetical life expectancy.

    2019

    2018

    24.6 Defined benefit plan obligations – sensitivity analysis

    in CHF 1 000

    in CHF 1 000

    Swiss plan

    Change in discount rate -0.25 %

    6 784

    5 919

    Change in discount rate +0.25  %

    -6 330

    -5 538

    Change in wages and salaries -0.25 %

    -381

    -315

    Change in wages and salaries +0.25  %

    379

    310

    German plans

    Change in discount rate -0.25 %

    585

    481

    Change in discount rate +0.25  %

    -552

    -450

    Change in wages and salaries -0.25 %

    n/a

    n/a

    Change in wages and salaries +0.25  %

    n/a

    n/a

    25 Equity

    12/31/2019

    12/31/2018

    25.1 Share capital

    Number/CHF

    Number/CHF

    Number of shares

    4 914 842

    4 914 842

    Nominal value

    10

    10

    Share capital

    49 148 420

    49 148 420

    12/31/2019

    12/31/2018

    25.2 Changes of Share capital

    in CHF

    in CHF

    Start of period

    49 148 420

    44 629 710

    Increase

    4 518 710

    End of period

    49 148 420

    49 148 420

    On September 20, 2018, the Feintool Group concluded a capital increase. The transaction resulted in the creation of 451 871 new Feintool shares with a par value of CHF 10 each at the transaction price of CHF 112.50 each.

    12/31/2019

    12/31/2018

    25.3 Conditional capital – employee stock option plan

    in CHF 1 000

    in CHF 1 000

    Start of period

    558

    558

    Used

    End of period

    558

    558

    This conditional capital of 55 750 registered shares with a par value of CHF 10 each was created following the resolution of the Extraordinary General Meeting of July 2, 1998 for the payment of rights conferred under the employee stock option plan.

    12/31/2019

    12/31/2018

    25.4 Authorized capital

    in CHF 1 000

    in CHF 1 000

    Start of period

    1 482

    6 000

    Expired

    -6 000

    Created

    6 000

    Used

    -4 518

    End of period

    1 482

    1 482

    The “authorized capital” amounting to a maximum of CHF 6 000 000 created on April 19, 2016, by issuing a maximum of 600 000 new shares with a par value of CHF 10 each expired on April 19, 2018. By resolution of the General Meeting of April 24, 2018, the Board of Directors was authorized, if required, to create authorized capital amounting to a maximum of CHF 6 000 000 by issuing a maximum of 600 000 new shares with a par value of CHF 10 each. The new shares must be paid up in full. The Board of Directors is authorized to restrict or exclude the subscription right in certain cases. The shares may be issued in one or more steps. The authorization is limited to two years. The authorized share capital will expire on April 24, 2020. As of September 20, 2018, 451 871 new shares with a par value of CHF 10 each were issued as part of a capital increase. The shares were fully drawn from the “authorized share capital”.

    12/31/2019

    12/31/2018

    25.5 Treasury shares – changes

    Number

    in CHF 1 000

    Number

    in CHF 1 000

    Start of period

    17 141

    1 780

    6 406

    703

    Bought

    5 000

    19 909

    Sale/transfer

    -12 447

    -9 174

    End of period

    9 694

    852

    17 141

    1 780

    of which trading portfolio

    9 694

    17 141

    In the 2019 financial year, 5 000 shares were purchased at an average price of CHF 55.17 (previous year 19 909 shares at an average price of CHF 103.55) and 12 447 shares sold at an average price of CHF 66.09 (previous year 9 174 shares at an average price of CHF 108.05) for the share-based management remuneration. Treasury shares are reserved primarily for management remuneration.

    26 Capital participation plans

    As a component of the bonus, 12 447 shares (previous year 8 763) were allocated to the Board of Directors, the Group Management and other managers in the financial year at a transaction value of kCHF 748 (previous year kCHF 723). Of this amount, 5 000 shares have been distributed in January 2020, 5 619 shares in December 2019 and 1 828 shares in August 2019. All shares were transferred from treasury shares and were transferred directly to the ownership of the recipient.

    27 Off-balance sheet transactions, contingent liabilities

    12/31/2019

    12/31/2018

    in CHF 1 000

    in CHF 1 000

    Contingent obligations

    3 122

    3 585

    Contingent liabilities

    3 122

    3 585

    Contingent obligations comprise funding that has been received and is subject to certain conditions. In the event of a breach of these conditions, there is a risk that these funds or a portion of them will have to be repaid.

    Feintool owns properties at some locations that are either contaminated or suspected of being contaminated. Under the supervision of the local authorities, Feintool is remediating these plots of land to remove the corresponding pollution and contaminants. Based on our current assessment, these activities are not expected to have a significant impact on the Feintool Group’s net assets, financial position, or results of operations.

    At one location in Switzerland, a neighbor filled a suit due to excessive noise emissions from a production site. Together with the responsible authorities, Feintool is currently examining structural and organizational modifications with the aim of reducing the effects of the emissions. Feintool does not expect these modifications to have a material impact on the Group’s financial position, results of operations or cash flows.

    At the end of the reporting period, Feintool was not involved in any other court proceedings. However, disputes relating to product liability, promotional activities, labor law and unfair dismissals, anti-trust law, securities trading, sales and marketing practices, health and safety, environmental and tax-related claims, state investigations and copyright law are always a possibility. Such proceedings could result in substantial claims being brought against Feintool that may not be covered by insurance policies. Feintool believes, however, that any such proceedings would not have a significant effect on the Group’s financial position, operating results or cash flows.

    28 Assets pledged as security for own liabilities

    12/31/2019

    12/31/2018

    in CHF 1 000

    in CHF 1 000

    Real estate

    6 139

    6 162

    Machinery and equipment

    42 271

    49 142

    Assets pledged as security for own liabilities

    48 410

    55 304

    29 Economic risks

    Continuously growing protectionism with rising tariffs, the change in raw material and energy prices as well as the persistently high external trade imbalances entail risks for the future development of the global economy. These factors could lead to a decline in global economic growth. The inherent uncertainties cause stronger exchange rate fluctuations, and a continuation of the weakness of the euro in particular. The scenarios described could give rise to severe adverse effects for Feintool.

    Management of financial risks

    Financial risk management is based on the directives approved by the Board of Directors and Group Management. The principles of risk management and the processes applied are reviewed on a regular basis in order to address changes in the market environment and in Feintool’s activities.

    Besides standards for general financial risk management, these directives include standards for specific aspects of liquidity, interest rate, exchange rate and default risk management, the use of derivative financial instruments, capital procurement and the policy on investing surplus liquidity. Capital procurement within the Group is mostly undertaken on a centralized basis.

    Liquidity risk

    Liquidity risk denotes the risk that the Feintool Group may at some point in the future be unable to meet its regular payment obligations on time and in full. Feintool must ensure that the Group is able to meet its payment obligations at all times. This will be the case if sufficient funds can be generated by the cash flow from operating activities or if the necessary financial resources can be raised on the financial markets or from banking institutions. Feintool Group’s management considers an operating liquidity reserve equivalent to one month’s costs of the Group (approx. CHF 25 million) to be adequate. This liquidity reserve can also be secured through unused credit lines. Management receives regular reports on the Group’s present and anticipated liquidity status, giving it an overview of the liquidity situation.

    Feintool has a syndicated loan of CHF 90 million (previous year EUR 90 million), a promissory note in the amount of EUR 65 million (previous year EUR 65 million), bilateral credit loans and several leasing and rental contracts (more details in note 20).

    These contracts contain standard covenants, particularly

  • equity ratio > 30 %
  • net senior debt / EBITDA < 3.0 x
  • Were the Group or individual companies unable to meet these covenants, the banks would have the right to terminate the loans at short notice. As at December 31, 2019, all covenants had been met. As at December 31, 2019, Feintool had CHF 45.5 million (previous year CHF 55.9 million) in unused, confirmed credit lines at the bank.

    Financial liabilities – carrying amounts and cash outflows

    in CHF 1 000

    Carrying amounts

    Due within 1 year

    Due within 3 years

    Due within 5 years

    Due in more than 5 years

    Total

    12/31/2019

    Liabilities 1)

    71 951

    71 951

    71 951

    Accrued expenses and deferred income 2)

    10 066

    10 066

    10 066

    Current liabilities to banks

    27 583

    27 583

    27 583

    Lease liabilities

    36 845

    11 973

    18 790

    4 384

    2 267

    37 414

    Other liabilities to banks

    119 813

    1 331

    75 672

    29 364

    16 686

    123 053

    Total

    266 258

    122 904

    94 462

    33 748

    18 953

    270 067

    Foreign exchange futures 3)

    Cash inflows

    159

    159

    159

    Cash outflows

    12/31/2018

    Liabilities

    59 198

    59 198

    59 198

    Accrued expenses and deferred income

    12 706

    12 706

    12 706

    Current liabilities to banks

    62 316

    62 316

    62 316

    Lease liabilities

    36 685

    10 946

    18 866

    7 146

    227

    37 185

    Other liabilities to banks/bonds

    79 739

    530

    32 989

    32 003

    17 606

    83 128

    Total

    250 644

    145 696

    51 855

    39 149

    17 833

    254 533

    Foreign exchange futures 3)

    Cash inflows

    87

    87

    87

    Cash outflows

    31

    31

    31

    1) Excluding social security obligations, advance payments from third parties and outstanding VAT obligations.

    2) Excluding accruals for salary, bonus and overtime as well as outstanding installations and other work to be fulfilled in relation to customer orders.

    3) As at December 31, 2019, the contractual values of the forward exchange deals amounted to kCHF 12 344 (previous year kCHF 14 062).

    Interest rate risk

    Interest rate risk can have a negative impact on the Group’s earnings as a result of higher interest rates on borrowings or lower interest rates on assets. Furthermore, changes in interest rates can affect the fair value of underlying financial instruments. Depending on the expected trend in interest rates, Feintool obtains financing at either fixed or variable rates. There are currently financial liabilities from the promissory note loan due to fixed interest payments, from bank loans where half have fixed rates and half adjustable rates, and from lease liabilities with fixed rates, fixed terms and running amortization. Interest rate management is mostly undertaken on a centralized basis so as to limit the impact of interest rate changes on net financial income/finance costs.

    A 0.5 % increase in the adjustable interest rate would adversely affect pretax profits by kCHF 384.

    Exchange rate risk

    Owing to its geographical diversification, Feintool is exposed to exchange rate risk particularly in relation to the euro (EUR), US dollar (USD), the Chinese currency yuan (CNY), the Japanese yen (JPY) and the Czech (CZK). Changes in exchange rates can affect the fair value of existing financial instruments and in particular the expected future cash flows. As far as possible, the Group uses natural hedges in order to offset the impact of exchange rate fluctuations. It seeks to ensure that costs are incurred in the same currency as the resulting income. The resulting surpluses (euro in particular) and requirements (Swiss franc in particular) at Group level are coordinated centrally in the various currencies. The net position of the most important foreign currencies is hedged over a period of usually six to twelve months, as required.

    The Feintool Group’s exchange rate risk is calculated by way of the following sensitivity analysis. The table shows the impact on total earnings if foreign currencies were decreased by 5 % versus the Swiss franc and simultaneously all other variables were to remain the same.

    2019

    2018

    Sensitivity analysis exchange rate risk

    Base amounts in EUR 1 000 / USD 1 000

    Effect in CHF 1 000

    Base amounts in EUR 1 000 / USD 1 000

    Effect in CHF 1 000

    EUR – Comprehensive Incom

    -40 415

    2 248

    -13 929

    813

    USD – Comprehensive Income

    3 994

    -87

    3 450

    -78

    Other market risks

    The fair value of financial instruments may change as a result of exchange rates, interest rates or changes in credit ratings, and may therefore affect the Group’s financial position and earnings. Feintool seeks to minimize the net effect of market risks through a balanced financing and asset structure.

    Derivative financial instruments

    Derivative financial instruments are used to minimize existing interest rate or exchange rate risks. The positive and negative fair values in the Notes show current market values. The contract volumes also shown indicate the extent of the exposure to derivatives.

    Capital structure

    In terms of capital management, the Group’s objective is to ensure that the business has the financial means necessary to continue as a going concern, and to provide the resources required to achieve the Group’s objectives so that added value can be generated for shareholders and other stakeholders and a cost-effective, low-risk capital structure can be maintained. Among the criteria used by the Group to monitor its capital structure are the equity ratio and net financial liabilities. In addition, it monitors the main covenants (equity, senior net debt/EBITDA) under the syndicated loan agreement.

    The equity ratio is calculated as the ratio of equity to total assets. Net financial liabilities consist of current and non-current interest-bearing liabilities less cash and cash equivalents.

    The Group’s aims for an equity ratio of at least 40 % and for a net-debt/EBITDA ratio of less than 1. Comments on the aforementioned ratios are provided in the Financial Review (on page 24). In terms of dividends policy, Feintool aims to pay shareholders approximately 30 % of consolidated annual profit in the form of a dividend.

    Credit risk

    Feintool’s credit risk is the book value of the recognized financial assets with the exception of financial guarantees. In this case, the guaranteed amount corresponds to the credit risk.

    Default risk

    Default risk is the risk that a counterparty will be unable to meet its liabilities to the Group companies. By avoiding cluster risk and concentrating financial investments among first-class counterparties, it should be possible to avoid extensive credit default risk. The automobile sector is the focal point of Feintool’s operations. By definition, this market segment involves a certain risk for Feintool’s operations. As far as normal customer credit balances are concerned, outstanding receivables are constantly monitored as part of the process of regular reporting by the Group companies to Head Office. As at December 31, 2019, the overall default risk amounts to kCHF 125 202 (previous year kCHF 129 882). Feintool generates more than 18.4 % (previous year 17.2 %) of consolidated sales for one customer. Income is generated in all segments. With the other customers, the share is less than 12.3 % (previous year 12.8 %) in each case.

    The Feintool Group banks exclusively with renowned national and international institutions that have a minimum rating of BBB. It specifies the type of transactions that the subsidiary companies may conduct with the banks.

    30 Financial instruments

    30.1 Financial assets

    in CHF 1 000

    Financial assets at amortised cost

    Financial assets at fair value through profit and loss

    Total

    Cash and cash equivalents

    43 476

    43 476

    Prepaid expenses and accrued income 1)

    1 353

    159

    1 512

    Receivables

    75 797

    75 797

    Financial assets

    2 339

    2 339

    Total carrying amounts as at 12/31/2019

    122 965

    159

    123 124

    Cash and cash equivalents

    30 872

    30 872

    Prepaid expenses and accrued income 1)

    1 625

    87

    1 712

    Receivables

    92 778

    92 778

    Financial assets

    1 750

    1 750

    Total carrying amounts as at 12/31/2018

    127 025

    87

    127 112

    30.2 Financial liabilities

    in CHF 1 000

    Financial liabilities at amortised cost

    Financial liabilities at fair value through profit and loss

    Total

    Accrued expenses and deferred income 2)

    10 066

    10 066

    Trade payables

    71 951

    71 951

    Non-current financial liabilities

    39 919

    39 919

    Non-current financial liabilities

    144 322

    144 322

    Total carrying amounts as at 12/31/2019

    266 258

    266 258

    Accrued expenses and deferred income 2)

    12 706

    12 706

    Trade payables

    59 198

    59 198

    Non-current financial liabilities

    73 790

    73 790

    Non-current financial liabilities

    104 950

    104 950

    Total carrying amounts as at 12/31/2018

    250 644

    250 644

    The carrying amounts do not differ significantly from the fair values.

    1) Excluding accruals for commitment fees, prepaid expenses for customer orders rental agreements, prepaid insurance premiums and tax.

    2) Excluding accruals for salary, bonus and overtime as well as outstanding installations, tax and other work to be fulfilled in relation to customer orders.

    30.3 Fair value hierarchy

    Feintool has measured financial instruments at fair value and uses the following hierarchy to determine fair value.

    Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.

    Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices)

    Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs).

    Feintool holds only financial instruments in Level 2 amounting to kCHF 159 net (previous year kCHF 56).

    30.4 Classification of financial income/financial expenses

    in CHF 1 000

    Cash and cash equivalents

    Measured at fair value

    Loans and receivables

    Other financial liabilities

    Total

    Carrying amounts as at 12/31/2019

    43 476

    159

    78 136

    266 258

    Interest income/expenses

    139

    -3 674

    -3 535

    Other financial income/finance expenses

    -479

    -226

    -2

    -707

    Change in valuation allowances on customer receivables and bad debt losses

    472

    472

    Total net gain/loss 2019

    -479

    385

    -3 676

    -3 770

    Carrying amounts as at 12/31/2018

    30 872

    56

    94 528

    250 644

    Interest income/expenses

    68

    -3 859

    -3 791

    Other financial income/finance expenses

    -608

    -285

    -3

    -896

    Change in valuation allowances on customer receivables and bad debt losses

    1 047

    1 047

    Total net gain/loss 2018

    -608

    830

    -3 862

    -3 640

    Fair values

    Contract volumes

    30.5 Derivative financial instruments outstanding

    in CHF 1 000

    positive

    negative

    Futures contracts

    159

    12 344

    Currency instruments

    159

    12 344

    Total derivative financial instruments as at 12/31/2019

    159

    12 344

    Futures contracts

    87

    31

    14 062

    Currency instruments

    87

    31

    14 062

    Total derivative financial instruments as at 12/31/2018

    87

    31

    14 062

    Currency instruments primarily relate to the hedging of foreign-currency risks in euros. The life of the foreign exchange futures is a few months.

    31 Related parties

    31.1 Compensation paid to members of the Board of Directors and Group Management

    Levels of compensation paid to the Board of Directors and Group Management are defined by the Nomination and Compensation Committee and approved by the full Board of Directors. Total compensation (excluding tax-allowable expenses), specifically fees, salaries, credits, bonuses and benefits in kind agreed during the financial year and paid directly or indirectly to the members of the Board of Directors and Group Management, amounted to kCHF 2 672 (previous year kCHF 2 605).

    2019

    2018

    in CHF 1 000

    in CHF 1 000

    Pay (including cash bonuses), fees 1)

    1 579

    1 663

    Contributions to pension plans

    520

    414

    Share-based payment 2)

    573

    528

    Total

    2 672

    2 605

    1) Incl. benefits in kind

    2) For the Chairman of the Board of Directors, allocation of a predefined number of shares. The shares are locked in for five years. The valuation corresponds to the price at the time of allocation. For the 2019 financial year, the shares were transferred on January 3, 2020. Group Management is entitled to a predefined amount in Swiss francs. Remuneration is in the form of shares. The number of shares depends on the average price in October/November. The shares have a staggered lock-in period of 1-4 years. Disbursement took place in December.

    2019

    2018

    31.2 Other related parties

    in CHF 1 000

    in CHF 1 000

    Balance Sheet

    Other payables

    153

    145

    Income Statement

    Net sales

    24

    32 Major shareholders

    12/31/2019

    12/31/2018

    Date of notification

    Number

    Share of capital

    Number

    Share of capital

    Artemis Beteiligungen I AG and Michael Pieper

    09/20/2018

    2 473 349

    50.32 %

    2 473 349

    50.32 %

    Geocent AG 1)

    07/15/2013

    400 285

    8.14 %

    400 285

    8.14 %

    1) The notice dated July 15, 2013, comprised 400 285 shares or 8.97 % of the corresponding share capital. Following the capital increase on September 20, 2018, 400 285 shares correspond to a capital share of 8.14 %.

    33 Events after the balance sheet date

    There were no significant events after the balance sheet date.

    34 Approval of the consolidated financial statements

    The consolidated financial statements were authorized for issue by the Board of Directors on March 2, 2020 and will be submitted to the Annual General Meeting for approval on April 30, 2020.

    Diese Website verwendet Cookies, um sicherzustellen, dass Sie das beste Erlebnis auf unserer Website erhalten.Datenschutzerklärung