ANNUAL REPORT 2021
Notes to the Financial Statements of feintool international holding ag
as at December 31, 2021
Feintool International Holding AG has its headquarters in Lyss, Switzerland. The 2021 financial statements were prepared in accordance with the provisions of Swiss accounting law (Art. 32 of the Swiss Code of Obligations). The main applied valuation principles that are not required by law are described in the following.
Treasury shares are recognized at the time of acquisition at cost as a minus line item in equity. In the event of resale, the profit or loss is booked in the income statement and not directly into equity. In the prior year such a difference was taken to equity and reported under free retained earnings.
Capital participation plans
Treasury shares are used for share-based payments to the Board of Directors and employees. They are recognized at a fixed price in the regulations for the issue and transferred to the entitled beneficiary. The corresponding expense including social security contributions is reported in personnel expenses.
In accordance with the principle of substance over form, all of the company’s leases and rental agreements with third parties are recognized on the balance sheet from, with the exception of short-term contracts (12 months or less) and low-value assets. The right-of-use asset is capitalized on the balance sheet. Afterwards, 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. Upon initial recognition, the right-of-use asset is measured at the present value of the lease liability upon commencement of the lease term. The lease liability corresponds to the present value of future lease payments discounted at an average interest rate of 1.7 % and reduced by the amortization payments.
Short-term leases (<1 year) and low-value leases continue to be recognized under other operating expenses in each accounting period in which resulting expenses are incurred.
Intercompany rental and lease agreements continue to be recognized as rental and lease expenses in each accounting period in which resulting expenses are incurred. This means that the right-of-use asset leased under such contracts is not capitalized, nor is a lease liability recognized. A total of kCHF 147 is recognized as an expense from such contracts in the income statement for 2021 (previous year kCHF 147).
Omission of cash flow statement and additional information in the Notes to the Financial Statements
Feintool International Holding AG prepares its consolidated financial statements in accordance with a recognized standard for accounting (IFRS) and consequently omits additional disclosures in the Notes to the Financial Statements and a report on the cash flow statement in these financial statements as set forth in the statutory provisions.
1 Trade and other receivables
1) Interest bearing receivable related to zero balance cash pools
2 prepaid expenses and accrued income
3 property, plant and equipment
3.1 Own property, plant and equipment
3.2 Property, plant and equipment in lease
4 intangible assets
5 financial assets
1) Feintool Automotive System Parts (Tianjin) Co. Ltd. carried out a capital increase in the amount of EUR 3.85 million in the financial year.
2) Feintool Holding GmbH holds a 60 % stake in Feintool System Parts Ohrdruf GmbH. The remaining 40 % is held by Feintool International Holding AG.
3) Retroactively as of January 1, 2021, HL Holding AG and Feintool System Parts Lyss AG merged.
7 Current interest-bearing liabilities
1) Interest bearing liabilities related to zero balance cash pools.
8 trade and other payables
9 accrued expenses and deferred income
10 Non-current financial liabilities
1) On June 13, 2017, Feintool signed a CHF 90 million syndicated loan agreement in cash loans with six banks and a term until June 13, 2022. On May 17, 2018, this contract was extended and will now run until June 13, 2023. In March 2020, it became apparent that Feintool was likely to breach individual financial covenants in its financial agreements over the course of 2020. In June 2020, Feintool signed an amendment to the agreement with the banks concerned that essentially increases the credit line by CHF 30 million to CHF 120 million and suspends the critical covenants until December 30, 2021. In their place, covenants relating to minimum profitability requirements and “available funds” (liquid funds and unused credit lines) were added to the agreement. As of December 31, 2021, CHF 27.9 million of the syndicated loan had been used (previous period: CHF 63.7 million). The acquisition of the company Kienle + Spiess GmbH will temporarly increase the net debt. Therefore the covenant net debt / EBITDA was increased until end of November 2022.
11 non-current Provisions
Non-current provisions include provisions for insurance payments in the amount of kCHF 372 (previous year kCHF 541) and provisions for anniversary benefits of kCHF 79 (previous year kCHF 108).
12 share capital
12.1 Share capital
12.2 General legal reserves from capital contributions
The statutory reserves from capital contributions include the premium from capital increases, less the previous dividend distributions. The distribution from reserves from capital contributions is treated in the same way as the repayment of capital for tax purposes. The Swiss Federal Tax Administration (FTA) has confirmed that the reported reserve from capital contributions is recognized as a capital contribution pursuant to Art. 5 (1bis) Swiss Withholding Tax Act.
13 Conditional capital – employee stock option plan
The disclosure of the conditional capital is represented in section 24.2 of the Notes to the Financial Statements.
14 AUTHORIZED SHARE CAPITAL
The disclosure of authorized share capital is reported in section 24.3 of the Notes to the consolidated financial statements.
15 treasury shares
The disclosure of the treasury shares is represented in section 24.4 of the Notes to the Financial Statements.
16 operating income
17 financial income
18 personnel expenses
Feintool International Holding AG employed 37 staff at the end of the year (previous year 35; calculated in Full Time Equivalents and incl. Apprentices and trainees).
19 other operating expenses
1) In 2020 we shown the staff restaurant and capital tax separately. From 2021 these cost will flow into other expenses.
20 financial expenses
1) Besides bank charges, other financial expenses include lead syndication commissions (annual amortization of establishing cost for the syndicated loan), valuation expenses from currency hedges and market making costs.
21 Prior-period Expenses
Prior-period expenses relates to prior-period expenses from intercompany services.
22 Contingent liabilities in favor of third parties
On July 15, 2016, a promissory note are still outstanding the amount of EUR 40 million and a new promissory note was borrow on July 15,2021 in the amount of EUR 35 million. The issuer, with a guarantee from Feintool International Holding AG, is Feintool Holding GmbH based in Germany.
23 Major shareholders
The disclosure of the major shareholders is represented in section 31 of the Notes to the Financial Statements.
24 SHAREHOLDINGS OF GROUP MANAGEMENT AND THE BOARD OF DIRECTORS INCLUDING RELATED PARTIES
1) Held directly and indirectly; the 5 000 shares with a value of CHF 291 500 as remuneration for the 2021 financial year were assigned on January 3, 2022.
2) The General Meeting on April 30, 2020, elected Christian Mäder and Dr. Marcus Bollig to the Board of Directors.
The shares are valued at a price of CHF 58.30 (previous year: CHF 55.20) as of December 31, 2021. This results in a total value of kCHF 3 585 (previous year: kCHF 2 889).
25 Liabilities to employee benefit plans
There was no liability to the pension fund as of December 31, 2021 (previous year kCHF 0).
26 Events after the balance sheet date
On December 6th 2021, Feintool agreed to acquire Kienle + Spiess GmbH, a major manufacturer of stators and rotors for electric drives. The acquisition will significantly strengthen Feintool’s position in E-lamination and extend its manufacturing footprint. The approval by the antitrust authorities was received end of February 2022. The preliminary share purchase price is estimated at EUR 71 million plus debt and pension liabilities of around EUR 100 million and depends on purchase price elements such as net debt and actual working capital in relation to target working capital. The exact amount and distribution of the assets are not yet known. Kienle + Spiess GmbH generated sales of approximately EUR 140 million in 2020/2021.
27 PROPOSAL by THE BOARD OF DIRECTORS
The Board of Directors will propose to the Annual General Meeting an ordinary dividend of CHF 0.50 per registered share for the financial year 2021.
Since the general legal reserves and retained earnings have reached 50 % of the share capital, no further allocation will be made.
In addition to the ordinary dividend as proposed above, the Board of Directors will request that an additional dividend of CHF 0.50 per registered share be distributed from the capital contribution reserves:
This corresponds to a maximum total dividend distribution of kCHF 4 915 (previous year kCHF 0). The amount of the dividend distribution depends on the amount of the dividend-eligible shares at the time of the distribution. No dividends will be distributed on treasury shares.